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<F1> 1.8 14.7
Lipper Growth Fund Average 2.3 10.6
<F1> 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<F1> 9/30/85<F1>
17.44% 20.48% 17.16%
<F1> 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<F1> 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
<F1> 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<F1> 23
McCaw Cellular Communications 21
Promus Companies<F1> 20
SEI<F1> 20
Paychex 19
United HealthCare 18
Total 281 cents
Ten Worst Contributors
Foundation Health - 20 cents
Sallie Mae 19
Merry-Go-Round Enterprises<F2> 17
ShowBiz Pizza Time<F2> 16
Topps 12
WMX Technologies<F2> 10
Staples<F2> 9
Wal-Mart 8
HealthCare COMPARE<F2> 8
ADVO 8
Total - 127 cents
<F2> 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.
<TABLE>
<CAPTION>
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<F2> Dividends Distributions Dividends Investment Fund S&P 500
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1985<F1> $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
<FN>
<F1> From inception 9/30/85 to 12/31/85.
<F2> Includes short-term capital gains of $0.24 in 1987 and $0.24 in 1993.
</FN>
</TABLE>
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 <F1> 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 <F1> Consolidated Stores 9,938
150,000 Duty Free International 2,981
250,000 <F1> Fred Meyer 9,000
300,000 <F1> General Nutrition Companies 8,550
100,000 Home Depot 3,950
191,300 <F1> Jones Apparel Group 5,715
175,000 <F1> Kohl's 8,794
185,000 <F1> Little Switzerland 1,711
195,000 <F1> Nautica Enterprises 5,168
181,341 <F1> Office Depot 6,098
350,000 Phillips-Van Heusen 13,125
200,000 <F1> Software Etc. 1,975
200,000 TJX 5,825
300,000 <F1> Toys "R" Us 12,262
95,092
ENTERTAINMENT & LEISURE_15.6%
482,500 shs. <F1> Autotote (Class A) $ 10,615
650,000 BLOCKBUSTER Entertainment 19,906
400,000 <F1> International Family Entertainment
(Class B) 8,150
109,950 <F1> King World Productions 4,219
100,000 <F1> Marvel Entertainment 2,725
375,000 <F1> Mirage Resorts 8,953
100,000 <F1> New Line Cinema 2,588
423,750 <F1> President Riverboat Casinos 9,322
150,000 <F1> Promus Companies 6,863
130,000 <F1> Savoy Pictures 2,730
350,000 Topps 2,450
350,000 Turner Broadcasting Systems (Class B) 9,450
200,000 <F1> Viacom (Class B) 8,975
96,946
MEDIA/COMMUNICATION SERVICES_5.5%
214,700 <F1> ALC Communications 6,173
200,000 <F1> McCaw Cellular Communications (Class A) 10,100
158,000 <F1> Mobile Telecommunication Technologies 3,832
137,500 <F1> Vanguard Cellular 4,022
110,000 Vodafone, ADR 9,817
33,944
RESTAURANTS/FOOD DISTRIBUTION_3.8%
108,900 <F1> Consolidated Products 1,089
64,900 <F1> Foodmaker 633
50,000 <F1> Hamburger Hamlet Restaurants 419
100,000 <F1> Outback Steakhouse 3,837
296,200 Sbarro 13,070
208,500 <F1> Shoney's 4,821
23,869
PERSONAL SERVICES_6.1%
791,531 <F1> 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 <F1> American Medical Response 3,750
294,500 Columbia Healthcare 9,792
500,000 <F1> Foundation Health 15,500
122,243 <F1> HEALTHSOUTH Rehabilitation 3,087
44,500 <F1> 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 <F1> Physician Corporation 6,887
95,000 <F1> 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 <F1> BISYS Group 3,214
205,000 First Financial Management 11,634
496,500 <F1> FIserv 9,558
350,000 SEI 9,187
33,593
ENVIRONMENTAL SERVICES_0.9%
260,000 <F1> Sanifill 5,655
ENERGY SERVICES_2.7%
233,200 <F1> Enterra 4,780
150,000 Schlumberger 8,869
180,000 <F1> Smith International 1,575
123,000 <F1> Weatherford International 1,307
16,531
OTHER BUSINESS SERVICES_10.1%
555,000 ADVO 9,990
207,300 <F1> Catalina Marketing 10,365
150,000 Danka Business Systems 6,000
154,850 <F1> Hospitality Franchise 8,226
337,500 Paychex 11,812
215,000 <F1> Payco American 2,258
250,000 Pittston Services 7,219
131,500 <F1> 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
<F1> 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<F1> _
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%<F1> 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
<F1> 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.
