-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, bp5J2Cu9qHmuyvTF6OnB/RTLh9NrXecvuoZb8esj+fVQTxypdSUTk2DdyS7tZWZM Mp9X1oxlqB6N3f/xwaUXzA== 0000950161-94-000003.txt : 19940304 0000950161-94-000003.hdr.sgml : 19940304 ACCESSION NUMBER: 0000950161-94-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940303 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE NEW AMERICA GROWTH FUND CENTRAL INDEX KEY: 0000773485 STANDARD INDUSTRIAL CLASSIFICATION: FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 40 SEC FILE NUMBER: 811-04358 FILM NUMBER: 94514456 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE COMMON STOCK FUND DATE OF NAME CHANGE: 19851003 N-30D 1 ANNUAL REPORT OF T. ROWE PRICE NEW AMERICA GROWTH FUND Fellow Shareholders I am pleased to report that the New America Growth Fund had a good fourth quarter and another excellent year, outperforming the unmanaged market indices shown below and the average growth mutual fund for both the quarter and the full year. For longer-term periods (three years, five years, and since inception in 1985), New America has ranked consistently in the top performance quartile in the growth fund universe. Performance Comparison Periods Ended 12/31/93 3 Months 12 Months New America Growth Fund 3.0% 17.4% S&P 500 2.3 10.1 Nasdaq Composite 1.8 14.7 Lipper Growth Fund Average 2.3 10.6 Principal only Capital Gain Distributions On December 21, the Fund's Board of Trustees declared an $0.89 per-share long-term capital gain distribution and a $0.24 short-term gain payable to shareholders of record on that date. These distributions were reflected on the statement or check mailed to you in early January and on Form 1099-DIV mailed later in the month. Market Environment Stock prices rose for the third consecutive year, spurred primarily by continued economic recovery, stable inflation, and further declines in long-term interest rates. Additionally, heightened interest in buying stocks especially through mutual funds, helped maintain strong demand for equities throughout the year. The benefits of an improving economy, low interest rates, and strong financial markets are boosting public confidence about the future. The housing market is recovering from its long slump, and purchases of consumer durables were very strong in 1993. The economy is entering 1994 with a great deal of momentum. The economic landscape is not all positive, of course. The economy still faces many serious challenges: stubbornly high federal budget deficits, persistent trade deficits due to weak exports, continued high levels of business and consumer debt, and the burden of higher corporate and individual tax rates. Against this backdrop, the best performing stock groups were consumer and business cyclicals, such as housing, autos, and capital goods. In general, growth stocks underperformed the market for the second consecutive year; within the growth universe, the best returns were provided by the more economically sensitive technology sector, which is not a major emphasis in your Fund. We are particularly pleased, therefore, with New America's 1993 prformance considering that its investment program focuses on companies operating principally in service businesses that can achieve consistent earnings growth regardless of the economic cycle. Performance Review How did your Fund fare so well in an environment more favorable to cyclical companies? There was one important trend on our side: small- and mid-sized company stocks outperformed large-company stocks for the third consecutive year, and the portfolio was strongly oriented toward rapidly growing, mid-cap companies. For example, the Fund's largest holding, CUC International, a direct mail provider of value-oriented consumer service programs and a participant in the developing interactive home-shopping field, almost doubled in price during the year. Other strong mid-cap holdings included discount broker Charles Schwab, comic book leader Marvel Entertainment, and payroll processor Paychex. The Fund's largest holdings generally performed well during the year, and we avoided much of the punishment meted out to stocks of companies reporting earnings shortfalls. However, two former investments that did not escape this fate were retailer Merry-Go-Round and restaurant company ShowBiz Pizza Time, both eliminated from the portfolio during the year. The Fund even fared relatively well in the troubled health care sector, where top holding Medco Containment was acquired by Merck late in the year, and HMO United HealthCare and hospital operator Columbia Healthcare handily outstripped the market. The only major disappointment in the health care sector was a decline for the year in HMO Foundation Health, one of our top holdings, which was hurt by the loss of a major government contract. However, the stock recovered strongly in the fourth quarter to become the top performer for that period. Portfolio Strategy and Outlook We did not make significant changes in the portfolio weightings of the Fund's three principal sectors _ financial services, consumer services, and business services _ shown in the table below. However, the broad categories mask some changes in our industry weightings. Within the consumer sector, for example, we increased our entertainment and gaming holdings by adding to our BLOCKBUSTER Entertainment position early in the year and establishing positions in the Promus Companies and Autotote. In business services, we reduced our overall health care weighting but kept our major holdings intact. We added two distribution companies, Alco Standard and Danka Business Systems, which performed quite well. Sector Diversification 12/31/92 12/31/93 Financial Services 15% 15% Consumer Services 48 49 Business Services 30 32 Reserves 7 4 Total 100% 100% As always, we emphasize companies which dominate their businesses, have outstanding managements, and develop well-conceived business strategies that should enable them to maintain their above-average earnings growth for the next three to five years. We remain biased toward smaller and mid-size growth companies and prefer those we can hold for a number of years. Many of our most successful stocks have been owned for well over three years. The portfolio's current earnings growth, profitability, and valuation characteristics are shown below. Financial Comparison New America Growth Fund S&P 500 Earnings Growth Rate Estimated Next 5 Years 21.4% 7.0% Profitability - Return on Equity Latest 12 Months 18.1% 11.0% Dividend Yield on Stocks 0.6% 2.7% P/E Ratio (Based on next 12 months estimated earnings) 18.3x 16.1x Our outlook for the stock market is constructive for 1994, and we expect another moderate advance in prices. With economic growth accelerating, corporate earnings getting stronger, and inflation and interest rates surprisingly stable, this is the time in the economic cycle when stocks should continue to rise. Your Fund's prospects are also positive in our view. So far, investors seem to be more focused on the beneficiaries of the economic upturn than on the consistent growth companies your portfolio favors. However, our emphasis on small and mid-sized growth companies should continue to be well rewarded, and, if our portfolio companies can deliver 20% or better earnings growth overall, we are confident that the Fund will continue to be rewarding for shareholders over the next several years. Respectfully submitted (signature) John H. Laporte President and Chairman of the Investment Advisory Committee (signature) Brian W. H. Berghuis Executive Vice President January 28, 1994 Twenty-Five Largest Holdings December 31, 1993 Percent of Company Net Assets CUC International 4.6% BLOCKBUSTER Entertainment 3.2 Foundation Health 2.5 United HealthCare 2.5 Phillips-Van Heusen 2.1 Sbarro 2.1 Toys "R" Us 2.0 Paychex 1.9 First Financial Management 1.9 State Street Boston 1.8 Wal-Mart 1.8 Alco Standard 1.8 Autotote 1.7 Catalina Marketing 1.7 McCaw Cellular Communications 1.6 ADVO 1.6 Consolidated Stores 1.6 Vodafone 1.6 Columbia Healthcare 1.6 FIserv 1.5 Turner Broadcasting Systems 1.5 President Riverboat Casinos 1.5 SEI 1.5 Fred Meyer 1.5 Viacom 1.4 Total 48.5% Officers and Trustees John H. Laporte, President/Trustee Brian W. H. Berghuis, Executive Vice President Donald W. Dick, Jr., Trustee Addison Lanier, Trustee Paul M. Wythes, Trustee Gregory V. Donovan, Vice President Henry H. Hopkins, Vice President James S. Riepe, Vice President John Wakeman, Vice President Lenora V. Hornung, Secretary Carmen F. Deyesu, Treasurer David S. Middleton, Controller Chart Number 1: Performance Comparison Chart (see Appendix) Total Return Performance Periods Ended December 31, 1993 Since Inception 1 Year 5 Years 9/30/85 17.44% 20.48% 17.16% Average Annual Compound Total Return Income return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. Contributions to the Net Asset Value Per Share Three Months Ended December 31, 1993 Ten Best Contributors Foundation Health 16 cents SEI 11 Phillips-Van Heusen 9 Pittston Services 8 Sotheby's 8 Alco Standard 8 Physician Corporation 8 Hospitality Franchise 7 United HealthCare 7 Vodafone 7 Total 89 cents TEN WORST CONTRIBUTORS President Riverboat Casinos - 11 cents Software Etc. 10 Viacom 10 Mobile Telecommunication Technologies 8 BISYS Group 7 Countrywide Credit 7 MBIA 6 Schlumberger 5 North American Mortgage 5 FIserv 5 Total - 74 cents Position added Twelve Months Ended December 31, 1993 Ten Best Contributors CUC International 66 cents BLOCKBUSTER Entertainment 40 Charles Schwab 30 Marvel Entertainment 24 Autotote 23 McCaw Cellular Communications 21 Promus Companies 20 SEI 20 Paychex 19 United HealthCare 18 Total 281 cents Ten Worst Contributors Foundation Health - 20 cents Sallie Mae 19 Merry-Go-Round Enterprises 17 ShowBiz Pizza Time 16 Topps 12 WMX Technologies 10 Staples 9 Wal-Mart 8 HealthCare COMPARE 8 ADVO 8 Total - 127 cents Position eliminated Investment Record T. Rowe Price New America Growth Fund The table below shows the investment record of one share of the T. Rowe Price New America Growth Fund, purchased at the initial offering price of $10.00, for the period 9/30/85 through 12/31/93. Over this time, stock prices in general have risen. The results shown should not be considered a representation of the income or capital gain or loss which may be realized from an investment made in the Fund today.
Per-Share Data With Capital Gains and Income Dividends Annual Taken in Cash Reinvested in Additional Shares Total Return On Investment % Change Year Net Capital Capital Ended Asset Gain Income Gain Income Value of 12/31 Value Distributions Dividends Distributions Dividends Investment Fund S&P 500 1985 $11.85 _ _ _ _ $11.85 18.5 % 17.2 % 1986 13.14 $0.30 $0.10 $0.30 $0.10 13.55 14.4 18.7 1987 10.45 1.39 0.06 1.46 0.06 12.28 -9.4 5.3 1988 12.38 _ _ _ _ 14.55 18.5 16.5 1989 16.90 0.23 _ 0.27 _ 20.14 38.4 31.6 1990 14.66 _ 0.17 _ 0.20 17.67 -12.2 -3.1 1991 22.79 0.87 _ 1.05 _ 28.62 61.9 30.3 1992 24.86 0.18 _ 0.23 _ 31.45 9.9 7.6 1993 28.04 1.13 _ 1.43 _ 36.93 17.4 10.1 Total $4.10 $0.33 $4.74 $0.36 From inception 9/30/85 to 12/31/85. Includes short-term capital gains of $0.24 in 1987 and $0.24 in 1993.
Statement of Net Assets (Value in thousands) T. Rowe Price New America Growth Fund/December 31, 1993 Common Stocks_96.0% FINANCIAL SERVICES_15.4% Value BANK & TRUST_3.1% 200,000 shs. BANC ONE $ 7,825 300,000 State Street Boston 11,250 19,075 INSURANCE_3.0% 125,000 AMBAC 5,250 99,000 MBIA 6,225 132,190 Mutual Assurance 2,875 81,000 Transatlantic Holdings 4,242 18,592 INVESTMENT SERVICES_2.8% 160,000 Alex. Brown 3,960 250,000 Charles Schwab 8,094 131,000 Duff & Phelps 2,882 150,000 Raymond James Financial 2,494 17,430 OTHER FINANCIAL SERVICES_6.5% 250,000 Countrywide Credit 6,281 75,000 Fannie Mae 5,888 120,000 Freddie Mac 5,985 433,333 Mercury Finance 8,287 150,000 North American Mortgage 3,806 155,000 Sallie Mae 6,956 150,000 Student Loan Corporation 2,831 40,034 Total Financial Services 95,131 CONSUMER SERVICES_48.2% RETAILING/GENERAL MERCHANDISERS_1.8% 450,000 Wal-Mart 11,250 RETAILING/SPECIALTY RETAILERS_15.4% 500,000 Consolidated Stores 9,938 150,000 Duty Free International 2,981 250,000 Fred Meyer 9,000 300,000 General Nutrition Companies 8,550 100,000 Home Depot 3,950 191,300 Jones Apparel Group 5,715 175,000 Kohl's 8,794 185,000 Little Switzerland 1,711 195,000 Nautica Enterprises 5,168 181,341 Office Depot 6,098 350,000 Phillips-Van Heusen 13,125 200,000 Software Etc. 1,975 200,000 TJX 5,825 300,000 Toys "R" Us 12,262 95,092 ENTERTAINMENT & LEISURE_15.6% 482,500 shs. Autotote (Class A) $ 10,615 650,000 BLOCKBUSTER Entertainment 19,906 400,000 International Family Entertainment (Class B) 8,150 109,950 King World Productions 4,219 100,000 Marvel Entertainment 2,725 375,000 Mirage Resorts 8,953 100,000 New Line Cinema 2,588 423,750 President Riverboat Casinos 9,322 150,000 Promus Companies 6,863 130,000 Savoy Pictures 2,730 350,000 Topps 2,450 350,000 Turner Broadcasting Systems (Class B) 9,450 200,000 Viacom (Class B) 8,975 96,946 MEDIA/COMMUNICATION SERVICES_5.5% 214,700 ALC Communications 6,173 200,000 McCaw Cellular Communications (Class A) 10,100 158,000 Mobile Telecommunication Technologies 3,832 137,500 Vanguard Cellular 4,022 110,000 Vodafone, ADR 9,817 33,944 RESTAURANTS/FOOD DISTRIBUTION_3.8% 108,900 Consolidated Products 1,089 64,900 Foodmaker 633 50,000 Hamburger Hamlet Restaurants 419 100,000 Outback Steakhouse 3,837 296,200 Sbarro 13,070 208,500 Shoney's 4,821 23,869 PERSONAL SERVICES_6.1% 791,531 CUC International 28,495 155,000 Jenny Craig 1,763 483,500 Sotheby's 7,434 37,692 Total Consumer Services 298,793 BUSINESS SERVICES_31.4% HEALTH CARE SERVICES_10.5% 150,000 American Medical Response 3,750 294,500 Columbia Healthcare 9,792 500,000 Foundation Health 15,500 122,243 HEALTHSOUTH Rehabilitation 3,087 44,500 Integrated Health Services 1,263 125,773 Merck 4,323 T. Rowe Price New America Growth Fund/Statement of Net Assets (Cont'd) 144,300 shs. Owens & Minor $ 3,319 275,500 Physician Corporation 6,887 95,000 Syncor International 2,126 200,000 United HealthCare 15,175 65,222 DISTRIBUTION SERVICES_1.8% 200,000 Alco Standard 10,950 COMPUTER SERVICES_5.4% 186,300 BISYS Group 3,214 205,000 First Financial Management 11,634 496,500 FIserv 9,558 350,000 SEI 9,187 33,593 ENVIRONMENTAL SERVICES_0.9% 260,000 Sanifill 5,655 ENERGY SERVICES_2.7% 233,200 Enterra 4,780 150,000 Schlumberger 8,869 180,000 Smith International 1,575 123,000 Weatherford International 1,307 16,531 OTHER BUSINESS SERVICES_10.1% 555,000 ADVO 9,990 207,300 Catalina Marketing 10,365 150,000 Danka Business Systems 6,000 154,850 Hospitality Franchise 8,226 337,500 Paychex 11,812 215,000 Payco American 2,258 250,000 Pittston Services 7,219 131,500 Viking Office Products 6,427 62,297 Total Business Services 194,248 Miscellaneous_1.0% 6,336 Total Common Stocks (Cost_$415,890) 594,508 Convertible Bonds_0.1% $ 270,000 Consolidated Products, Cv. Sub. Deb., 10.00%, 11/30/02 756 Total Convertible Bonds (Cost_$270) 756 Short-Term Investments_5.3% CERTIFICATES OF DEPOSIT_0.8% 5,000,000 Banque Nationale de Paris,3.22%,3/7/94 4,996 COMMERCIAL PAPER_4.5% 5,000,000 Bank of Nova Scotia, 3.25%, 1/21/94 4,961 4,300,000 BT Securities, 3.25%, 1/3/94 4,299 $5,000,000 Caisse Nationale Des Telecommunications, 3.27%, 1/21/94 $ 4,961 1,000,000 Citicorp, VRMTN, 3.55%, 12/7/94 999 5,000,000 Finnish Export Credit Ltd., 3.30%, 1/28/94 4,958 5,000,000 Goldman Sachs Group, LP, VRNTS, 3.47%, 6/3/94 5,000 6,000 Harvard University, 3.20%, 1/3/94 6 2,500,000 Morgan Stanley Group, VRMTN, 3.475%, 3/15/95 2,500 27,684 Total Short-Term Investments (Cost_$32,680) 32,680 Total Investments in Securities_101.4% (Cost_$448,840) 627,944 Other Assets Less Liabilities - (1.4)% (8,826) Net Assets Consisting of: Accumulated realized gains/losses - net of distributions $ 1,502 Unrealized appreciation of investments 179,104 Paid-in-capital applicable to 22,082,772 no par value shares of beneficial interest outstanding; unlimited number of shares authorized 438,512 Net Assets_100.0% $619,118 Net Asset Value Per Share $28.04 Non-income producing VRMTN Variable rate medium term note VRNTS Variable rate note The accompanying notes are an integral part of these financial statements. Statement of Operations T. Rowe Price New America Growth Fund/Year Ended December 31, 1993 Amounts in Thousands INVESTMENT INCOME Income Dividends $ 3,296 Interest 1,178 Total income $ 4,474 Expenses Investment management fees 3,989 Shareholder servicing fees & expenses 2,144 Custodian and accounting fees & expenses 159 Prospectus & shareholder reports 97 Registration fees & expenses 84 Legal & auditing fees 30 Trustees' fees & expenses 16 Miscellaneous 18 Total expenses 6,537 Net investment income (2,063) REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain 27,571 Change in unrealized appreciation or depreciation 61,725 Net gain on investments 89,296 INCREASE IN NET ASSETS FROM OPERATIONS $ 87,233 The accompanying notes are an integral part of these financial statements. Statement of Changes in Net Assets T. Rowe Price New America Growth Fund Year Ended December 31, 1993 1992 Amounts in Thousands INCREASE (DECREASE) IN NET ASSETS Operations Net investment income $ (2,063) $ (1,448) Net realized gain on investments 27,571 3,282 Change in unrealized appreciation or depreciation of investments 61,725 40,747 Increase in net assets from operations 87,233 42,581 Distributions to shareholders Net realized gain on investments (23,859) (3,424) Capital share transactions Sold 8,619 and 17,135 shares 223,466 386,308 Distributions reinvested of 839 and 134 shares 23,019 3,260 Redeemed 6,689 and 8,122 shares (170,970) (180,225) Increase in net assets from capital share transactions 75,515 209,343 Total increase 138,889 248,500 NET ASSETS Beginning of year 480,229 231,729 End of year $ 619,118 $ 480,229 The accompanying notes are an integral part of these financial statements. Notes to Financial Statements T. Rowe Price New America Growth Fund / December 31, 1993 Note 1 - Significant Accounting Policies T. Rowe Price New America Growth Fund (the Fund) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. A) Valuation - Equity securities listed or regularly traded on a securities exchange (including NASDAQ) are valued at the last quoted sales price on the day the valuations are made. A security which is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Other equity securities and those listed securities that are not traded on a particular day are valued at a price within the limits of the latest bid and asked prices deemed by the Board of Trustees, or by persons delegated by the Board, best to reflect fair value. Debt securities are generally traded in the over-the-counter market and are valued at a price deemed best to reflect fair value as quoted by dealers who make markets in these securities or by an independent pricing service. Short-term debt securities are valued at their cost which, when combined with accrued interest, approximates fair value. Assets and liabilities for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by, or under the supervision of, the officers of the Fund, as authorized by the Board of Trustees. B) Other - Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on an identified cost basis. Dividend income and distributions to shareholders are recorded by the Fund on the ex-dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. C) Accounting Change - Effective as of the beginning of the year, the Fund adopted a recently issued accounting standard related to shareholder distributions and discontinued the practice of equalization. These changes resulted in a reclassification to paid-in-capital of permanent differences between tax and financial reporting of net investment income and net realized gains/losses. The cumulative effect of these changes as of December 31, 1992 increased Accumulated net investment income - net of distributions by $2,157,000, decreased Accumulated realized gains/losses - net of distributions by $80,000, and decreased Paid-in-capital by $2,077,000. The results of operations and net assets were not affected by these changes. Note 2 - Portfolio Transactions Purchases and sales of portfolio securities, other than short-term and U.S. Government securities, aggregated $297,050,000 and $220,151,000, respectively, for the year ended December 31, 1993. Note 3 - Federal Income Taxes No provision for federal income taxes is required since the Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. At December 31, 1993, the aggregate cost of investments for federal income tax and financial reporting purposes was $448,840,000 and net unrealized appreciation aggregated $179,104,000, of which $192,169,000 related to appreciated investments and $13,065,000 to depreciated investments. Note 4 - Related Party Transactions The investment management agreement between the Fund and T. Rowe Price Associates, Inc. (the Manager) provides for an annual investment management fee, computed daily and paid monthly, consisting of an Individual Fund Fee equal to 0.35% of average daily net assets and a Group Fee. The Group Fee is based on the combined assets of certain mutual funds sponsored by the Manager or Rowe Price-Fleming International, Inc. (the Group). The Group Fee rate ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in excess of $34 billion. The effective annual Group Fee rate at December 31, 1993 and for the year then ended was 0.35%. The Fund pays a pro rata portion of the Group Fee based on the ratio of the Fund's net assets to those of the Group. Under the terms of the investment management agreement, the Manager is required to bear any expenses through December 31, 1993, which would cause the Fund's ratio of expenses to average net assets to exceed 1.25%. Thereafter, the Fund is required to reimburse the Manager for these expenses, provided average net assets have grown or expenses have declined sufficiently so as not to cause the Fund's ratio of expenses to average net assets to exceed 1.25% in any month, and that no such reimbursement shall be made to the Manager after December 31, 1995. During the year ended December 31, 1987, $326,000 of management fees were not accrued by the fund pursuant to an annual state limitation. In 1988, the Fund obtained a variance from this limitation which permitted the 1987 fees to be reimbursed to the Manager. The unaccrued fees from 1987 were to be reimbursed to the Manager only to the extent that doing so would not cause the Fund's ratio of expenses to average net assets to exceed any expense limitation then in effect. Pursuant to these provisions, the remaining $278,000 of fees were reimbursed to the Manager during the year ended December 31, 1993. T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc. (RPS) are wholly owned subsidiaries of the Manager. TRPS provides transfer and dividend disbursing agent functions and shareholder services for all accounts. RPS provides subaccounting and recordkeeping services for certain retirement accounts invested in the Fund. The Manager, under a separate agreement, calculates the daily share price and maintains the financial records of the Fund. For the year ended December 31, 1993 the Fund incurred fees totalling approximately $1,883,000 for these services provided by related parties. At December 31, 1993, these investment management and service fees payable were $564,000. Financial Highlights T. Rowe Price New America Growth Fund For a share outstanding throughout each Year Ended December 31, 1993 1992 1991 1990 1989 NET ASSET VALUE, BEGINNING OF YEAR $24.86 $22.79 $14.66 $16.90 $12.38 Investment Activities Net investment income (0.08) (0.04) (0.02) 0.13 _ Net realized and unrealized gain (loss) 4.39 2.29 9.02 (2.20) 4.75 Total from Investment Activities 4.31 2.25 9.00 (2.07) 4.75 Distributions Net investment income _ _ _ (0.17) _ Net realized gain (1.13) (0.18) (0.87) _ (0.23) Total Distributions (1.13) (0.18) (0.87) (0.17) (0.23) NET ASSET VALUE, END OF YEAR $28.04 $24.86 $22.79 $14.66 $16.90 RATIOS/SUPPLEMENTAL DATA Total Return 17.4% 9.9% 61.9% (12.2)% 38.4% Ratio of Expenses to Average Net Assets 1.23% 1.25% 1.25% 1.25% 1.50% Ratio of Net Investment Income to Average Net Assets (0.39)% (0.44)% (0.12)% 0.81% (0.02)% Portfolio Turnover Rate 43.7% 26.4% 42.3% 41.7% 39.6% Net Assets, End of Year (in thousands) $619,118 $480,229 $231,729 $95,697 $134,065 Number of Shareholder Accounts, End of Year 39,000 34,000 20,000 16,000 17,000 Excludes expenses in excess of a 1.25% voluntary expense limitation in effect through December 31, 1993. Report of Independent Accountants To the Shareholders and Board of Trustees of T. Rowe Price New America Growth Fund In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the selected per share data and information (which appears under the heading "Financial Highlights") present fairly, in all material respects, the financial position of T. Rowe Price New America Growth Fund at December 31, 1993, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the selected per share data and information for each of the five years in the period then ended, in conformity with generally accepted accounting principles. These financial statements and selected per share data and information (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1993 by correspondence with custodians and brokers and, where appropriate, the application of alternative auditing procedures for unsettled security transactions, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE Baltimore, Maryland January 19, 1994 Shareholder Services To help shareholders monitor their current investments and make decisions that accurately reflect their financial goals, T. Rowe Price offers a wide variety of information and services_at no extra cost. Telephone Services Access Your Account 24 Hours a Day by Calling 1-800-638-2587. Tele*Access(R)_Gives you your account balance, date and amount of your last transaction, latest dividend payment, and fund prices and yields. Also, lets you purchase, exchange, or redeem shares. Shareholder Service Representatives are available from 8:00 a.m. to 10:00 p.m., Monday- Friday, and Saturday from 9:00 a.m. to 5:00 p.m., E.T. Call 1-800-225-5132. Shareholder Service Center_Call to exchange shares or move money between your bank and fund accounts. Account Services Checking_Write checks for $500 or more on any money market and most bond fund accounts. Automatic Investing_Build your account over time by investing directly from your bank account or paycheck. A low, $50 minimum makes it easy to get started. Automatic Withdrawal_If you need money from your fund account on a regular basis, you can establish scheduled, automatic redemptions. Dividend and Capital Gains Payment Options_Reinvest all or some of your distribu-tions or take them in cash. We give you maximum flexibility and convenience. Investment Information Combined Statement_A comprehensive overview of your T. Rowe Price accounts. The summary page gives your earnings by tax category, provides total portfolio value, and lists your investments by type_stock, bond, and money market. Detail pages itemize account transactions by fund. Quarterly Shareholder Reports_Portfolio managers review the performance of the funds in plain language and discuss T. Rowe Price's economic outlook. The T. Rowe Price Report_A quarterly newsletter with relevant articles on market trends, personal financial planning, and T. Rowe Price's economic perspective. Insights_A library of information that includes reports on mutual fund tax issues, investment strategies, and financial markets. Detailed Investment Guides_Our widely acclaimed Asset Mix Worksheet, College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also available on disk for PC use) and Guide to Risk-Adjusted Performance can help you determine and reach your investment goals. Discount Brokerage Trade stocks, bonds, options, and precious metals at substantial savings over full-cost brokers. Tele*Trade_Call this automated phone service after business hours to place your orders. Fax*Trade_Buy and sell by simply faxing your order. Tele*Quote_Provides 24-hour access to stock and option quotes. Money Fund Sweep Feature_Buy and sell securities and have your "sweep" account automatically debited or credited. Dividend and interest payments are credited daily. If you have questions or would like to add a service to your account, please call our Shareholder Service Center. T. Rowe Price No-Load Mutual Funds Stability Prime Reserve Summit Cash Reserves U.S. Treasury Money California Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money Conservative Income Adjustable Rate U.S. Government Short-Term Bond Short-Term Global Income Summit Limited-Term Bond U.S. Treasury Intermediate Florida Insured Intermediate Tax-Free Maryland Short-Term Tax-Free Bond Summit Municipal Intermediate Tax-Free Insured Intermediate Bond Tax-Free Short-Intermediate Income Global Government Bond GNMA New Income Spectrum Income Summit GNMA U.S. Treasury Long-Term California Tax-Free Bond Georgia Tax-Free Bond Maryland Tax-Free Bond New Jersey Tax-Free Bond New York Tax-Free Bond Summit Municipal Income Tax-Free Income Virginia Tax-Free Bond Aggressive Income High Yield International Bond Tax-Free High Yield CONSERVATIVE Growth Balanced Capital Appreciation Dividend Growth Equity Income Growth & Income Spectrum Growth Growth Blue Chip Growth European Stock Growth Stock International Stock Japan Mid-Cap Growth New Era Small-Cap Value Aggressive Growth International Discovery Latin America New America Growth New Asia New Horizons OTC Science & Technology Call if you want to know about any T. Rowe Price fund. We'll send you a prospectus with more complete information, including management fees and other expenses. Read it carefully before you invest or send money. Appendix Chart Number 1: Performance Comparison Chart New America Growth Fund Performance Comparison A line graph compares the 12/31/93 value of a hypothetical $10,000 investment made in the New America Growth Fund at inception (9/30/85) and a simular investment made in the S&P 500 Index. At 12/31/93, the Fund investment would have been worth $36931 and the S&P Index investment would have been worth $33645. -----END PRIVACY-ENHANCED MESSAGE-----