<PAGE>
Semiannual Report
New America
Growth
Fund
June 30, 1996
T. Rowe Price
<PAGE>
REPORT HIGHLIGHTS
- ---------------------------------------
. Overcoming a rapid rise in interest
rates, stocks extended their most
recent surge that began in
December 1994.
. The environment favored your fund,
as the economy's apparently modest
growth encouraged investors to seek
noncyclical stocks with earnings
momentum.
. The fund's 14.52% and 38.11%
returns for the first half and past
12 months, respectively, exceeded
the S&P 500 Stock Index and the
Lipper Growth Funds Average for
both periods.
. The business services sector was
the major contributor to performance.
We reduced exposure to consumer
services and increased holdings of
financial services companies.
. While we would not be surprised by a
correction, we are optimistic that our
service-oriented, growth companies
will do well in the moderate growth
environment we expect.
<PAGE>
Fellow Shareholders
Despite a substantial rise in interest rates, the stock market extended the
remarkable surge that began in December 1994. In a period when the economy was
perceived to be growing slowly, investors returned to growth stocks, and your
fund performed well.
<TABLE>
<CAPTION>
PERFORMANCE COMPARISON
- -----------------------------------------------
Periods Ended 6/30/96 6 Months 12 Months
- -----------------------------------------------
<S> <C> <C>
New America Growth Fund 14.52% 38.11%
...............................................
S&P 500 10.10 26.00
...............................................
Lipper Growth Funds Average 10.08 22.20
...............................................
</TABLE>
For both the 6- and 12-month periods ended June 30, the fund exceeded the
unmanaged Standard & Poor's 500 Stock Index and an average of growth stock
funds by a considerable margin.
Market Environment
The long bull market continued in the first half even though one of its main
supports over the past 14 years, falling interest rates, evaporated. A major
decline in long-term interest rates from over 14% in January 1982 to under 6% by
the end of 1995 had helped propel the stock market to all-time highs. However,
long-term rates rose over one percentage point to just above 7% in the first
half of 1996, reflecting perceptions of a strengthening economy and fears of an
increase in the rate of inflation. The stock market diverged from the bond
market, and, driven by huge cash inflows into U.S. equity mutual funds, stocks
continued their ascent.
The market's continued advance to record highs with returns well above its long-
term average of 10% to 11% per year contributed to a surge in speculative
activity. Record mutual fund inflows, feverish merger and acquisition activity,
and an unprecedented number of initial and secondary stock offerings were all
signs that the market was becoming overheated and that a correction might be
imminent.
Given the economy's apparently modest growth rate, many investors sought
companies that seemed likely to prosper regardless of the economic environment.
Therefore, growth stocks did well while cyclical stocks and those sensitive to
rising interest rates lagged. Energy service stocks were also strong performers,
benefiting from higher natural gas prices and rising demand.
1
<PAGE>
PORTFOLIO REVIEW
The recent environment was favorable for your fund, with its emphasis on high-
growth companies operating primarily in noncyclical, service industries. In the
first half, the top contributors to the fund were almost all in the business
services category: HFS, a hotel and real estate agency franchiser that recently
entered the rental car business and continued to exceed earnings estimates by a
considerable margin; Republic Industries, a fast-growing company involved in
electronic security systems, used car retailing, and waste disposal, which
announced several major acquisitions during the quarter; and two waste
management companies that plan to merge, USA Waste Services and Sanifill.
The worst detractors to performance were concentrated in two industries, health
maintenance organizations (HMOs) and retailing. HMOs United HealthCare and
PacifiCare Health Systems were hurt by investor perceptions of rising medical-
cost inflation and by an excessively competitive pricing environment. Micro
Warehouse, a catalog retailer of computer hardware and software, and General
Nutrition, the nation's leading retailer of vitamins and nutritional
supplements, each suffered from declining sales increases and earnings
shortfalls. The stock of a third retailer, Revco, a drug store operator,
performed poorly in the period as a proposed merger was blocked by the Federal
Trade Commission.
The portfolio remains well diversified in the services sector within the
following broad categories:
<TABLE>
<CAPTION>
SECTOR DIVERSIFICATION
- ----------------------------------------------
12/31/95 6/30/96
- ----------------------------------------------
<S> <C> <C>
FinancialServices 10% 15%
..............................................
Consumer Services 42 33
..............................................
Business Services 46 49
..............................................
Reserves 2 3
..............................................
Total 100% 100%
</TABLE>
Overall, the business services sector contributed almost two-thirds of the
portfolio's performance in the first half, and the portfolio's weighting in
this sector rose slightly as a result. We also added new holdings in this sector
including Republic Industries, discussed above, and Apria Healthcare, a rapidly
growing provider of home health services.
The consumer services weighting dropped significantly. We trimmed some of our
retail holdings in the first half as we saw less long-term
2
<PAGE>
opportunity in the sector than 5 or 10 years ago. The megatrend in retailing,
which created many fortunes in the 1980s and early 1990s, was the development of
discount superstore chains in numerous categories. Today, there are few niches
left to exploit. Also within the consumer category, we sold several
communications companies that either had disappointed relative to our
expectations or were experiencing slowing growth rates.
Some of the proceeds from sales in the consumer sector were redeployed into
financial services, where we added positions in PMI Group, a major player in the
growing mortgage insurance industry, Norwest, a well-managed bank with
significant consumer finance operations, and Green Tree Financial, a fast-
growing consumer finance company specializing in manufactured housing loans.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
- ------------------------------------------------
New America
As of 6/30/96 Growth Fund S&P 500
- ------------------------------------------------
<S> <C> <C>
Earnings Growth Rate
Estimated Next 5 Years* 18.8% 11.7%
................................................
Profitability - Return on
Equity Latest 12 Months 17.3 19.6
................................................
Divident Yield on Stocks 0.4 2.2
................................................
P/E Ratio (Based on Next 12
Months' Estimated Earnings) 21.2X 15.9X
................................................
</TABLE>
* Earnings forecasts are based on T. Rowe
Price research and are in no way indicative
of future investment returns.
We continue to seek companies with exceptional growth prospects in all economic
climates, and the portfolio's growth characteristics remain strong. Most of our
companies reinvest their earnings back in their businesses rather than pay high
dividends so that they can maintain or even increase their earnings growth. In
fact, many pay no dividends at all in order to sustain steady earnings increases
of 20% or more annually.
OUTLOOK
For a year and a half, investors enjoyed virtually ideal conditions: enough
economic growth to drive increasing corporate profits, but not so much that the
Federal Reserve had to tighten monetary policy. We see challenges looming.
Interest rates have risen significantly without disturbing a somewhat
speculative stock market, and we wonder how long this can persist. The political
pendulum seems to be reversing: hostility toward business and investors has been
manifested lately in several Federal Trade Commission rulings, the Clinton
Administration's
3
<PAGE>
resolute opposition to capital gains tax reduction, and the passage of
legislation increasing the minimum wage. There is also nascent evidence that the
widespread corporate cost-cutting efforts of recent years, which have driven
corporate profits (and, to some extent, the stock market), are winding down or
possibly reversing. One final, critical issue to monitor is inflation: while we
do not expect a resurgence, there are disquieting signs in the labor and
commodities markets, and we have probably seen the lows in inflation for this
cycle.
We would not be surprised to encounter a stock market correction, but we remain
optimistic about the long-term prospects for the portfolio's companies. Their
relatively noncyclical, service-oriented businesses should fare comparatively
well in the moderate economic growth environment we anticipate.
Respectfully submitted,
/s/ John H. Laporte
John H. Laporte
President and
Chairman of the Investment Advisory Committee
/s/ Brian W. H. Berghuis
Brian W. H. Berghuis
Executive Vice President
July 18, 1996
4
<PAGE>
T. Rowe Price New America Growth Fund
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Highlights
- ---------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/96
- ---------------------------------------------------------------------
<S> <C>
HFS 3.9%
.....................................................................
United HealthCare 2.9
.....................................................................
ADT 2.8
.....................................................................
Franklin Resources 2.0
.....................................................................
Catalina Marketing 2.0
- ---------------------------------------------------------------------
Cardinal Health 2.0
.....................................................................
ACE Limited 2.0
.....................................................................
CUC International 2.0
.....................................................................
SunGard Data Systems 2.0
.....................................................................
Paging Network 1.9
- ---------------------------------------------------------------------
First Data 1.9
.....................................................................
Olsten 1.9
.....................................................................
General Nutrition 1.8
.....................................................................
Comcast 1.8
.....................................................................
Sanifill 1.7
- ---------------------------------------------------------------------
MGIC Investment 1.7
.....................................................................
USA Waste Services 1.7
.....................................................................
Revco 1.7
.....................................................................
Vodafone 1.6
.....................................................................
Apria Healthcare 1.6
- ---------------------------------------------------------------------
Home Depot 1.6
.....................................................................
PriceCostco 1.6
.....................................................................
Columbia/HCA Healthcare 1.6
.....................................................................
Republic Industries 1.6
.....................................................................
Quorum Health Group 1.6
- ---------------------------------------------------------------------
Total 48.9%
</TABLE>
5
<PAGE>
T. Rowe Price New America Growth Fund
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Highlights
- -----------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended June 30, 1996
Ten Best Contributors Ten Worst Contributors
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
HFS 69(cents) United HealthCare -28(cents)
.................................... ......................................
Republic Industries * 30 Micro Warehouse 25
.................................... ......................................
Catalina Marketing 28 General Nutrition 21
.................................... ......................................
USA Waste Services 26 Viacom 14
.................................... ......................................
SunGard Data Systems 25 ADVO 14
.................................... ......................................
Sanifill 23 PacifiCare Health Systems 13
.................................... ......................................
ADT 23 Revco 12
.................................... ......................................
Paychex 21 Cellstar ** 11
.................................... ......................................
Cardinal Health 21 Mobile Telecommunication
.................................... ......................................
PriceCostco 17 Technologies ** 5
- ------------------------------------ ......................................
Total 283(cents) Vencor * 4
--------------------------------------
Total -147(cents)
<CAPTION>
12 Months Ended June 30, 1996
Ten Best Contributors Ten Worst Contributors
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
HFS 137(cents) Micro Warehouse -26(cents)
.................................... ......................................
Paychex 44 Office Depot ** 19
.................................... ......................................
ADT 41 Mobile Telecommunication
....................................
Catalina Marketing 38 Technologies ** 12
.................................... ......................................
America Online 37 Loewen Group ** 10
.................................... ......................................
Money Store 32 Browning-Ferris ** 8
.................................... ......................................
Tommy Hilfiger 31 Dollar General ** 8
.................................... ......................................
SunGard Data Systems 31 Viacom 7
.................................... ......................................
CUC International 30 Cellstar ** 7
.................................... ......................................
Republic Industries * 30 Vencor * 4
- ------------------------------------ ......................................
Total 451(cents) Scholastic * 2
--------------------------------------
Total -103(cents)
</TABLE>
* Position added
** Position eliminated
6
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with a broad-based average or index. The index
return does not reflect expenses, which have been deducted from the fund's
return.
[NEW AMERICA GROWTH FUND CHART APPEARS HERE]
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
<TABLE>
<S> <C> <C> <C> <C>
Periods Ended 6/30/96 1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
New America Growth Fund 38.11% 20.17% 20.35% 14.11%
...............................................................................
</TABLE>
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
7
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
Unaudited
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 34.91 $ 25.42 $ 28.04 $ 24.86 $ 22.79 $ 14.66
....................................................................
Investment activities
Net investment income 0.02 (0.12) (0.07) (0.08) (0.04) (0.02)
....................................................................
Net realized and
unrealized gain (loss) 5.05 11.36 (2.02) 4.39 2.29 9.02
....................................................................
Total from
investment activities 5.07 11.24 (2.09) 4.31 2.25 9.00
....................................................................
Distributions
Net realized gain -- (1.75) (0.53) (1.13) (0.18) (0.87)
....................................................................
NET ASSET VALUE
End of period $ 39.98 $ 34.91 $ 25.42 $ 28.04 $ 24.86 $ 22.79
--------------------------------------------------------------------
Ratios/Supplemental Data
Total return 14.52% 44.31% (7.43)% 17.44% 9.89% 61.95%
.................................................................................................
Ratio of expenses to
average net assets 1.01%+ 1.07% 1.14% 1.23% 1.25% 1.25%
.................................................................................................
Ratio of net investment
income to average
net assets 0.11%+ (0.46)% (0.27)% (0.39)% (0.44)% (0.12)%
.................................................................................................
Portfolio turnover rate 34.7%+ 56.2% 31.0% 43.7% 26.4% 42.3%
.................................................................................................
Average commission
rate paid $ 0.0819 -- -- -- -- --
.................................................................................................
Net assets, end of period
(in millions) $ 1,342 $ 1,028 $ 646 $ 619 $ 480 $ 232
.................................................................................................
</TABLE>
+ Annualized.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
T. Rowe Price New America Growth Fund
- -------------------------------------------------------------------------------
Unaudited June 30, 1996
<TABLE>
<CAPTION>
Statement of Net Assets Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
Common Stocks 97.1%
FINANCIAL SERVICES 15.3%
<S> <C> <C>
Bank and Trust 1.3%
Norwest 500,000 $ 17,438
................................................................................
17,438
............
Insurance 6.0%
ACE Limited 575,000 27,025
................................................................................
MGIC Investment 400,000 22,450
................................................................................
PMI Group 325,000 13,812
................................................................................
UNUM 275,000 17,119
................................................................................
80,406
.............
Investment Services 2.0%
Franklin Resources 450,000 27,450
................................................................................
27,450
.............
Other Financial Services 6.0%
ADVANTA (Class B) 48,100 2,195
................................................................................
Fannie Mae 400,000 13,400
................................................................................
Freddie Mac 175,000 14,962
................................................................................
Green Tree Financial 500,000 15,625
................................................................................
Household International 200,000 15,200
................................................................................
Mercury Finance 700,000 8,925
................................................................................
Money Store 475,000 10,420
................................................................................
80,727
.............
Total Financial Services 206,021
.............
CONSUMER SERVICES 33.1%
Retailing/General Merchandisers 1.6%
PriceCostco * 1,000,000 21,500
................................................................................
21,500
.............
Retailing/Specialty Merchandisers 12.7%
AutoZone * 318,000 11,051
................................................................................
Circuit City Stores 500,000 18,063
................................................................................
Cole National (Class A) *+ 800,000 16,000
................................................................................
Eckerd * 900,000 20,362
................................................................................
General Nutrition * 1,400,000 24,412
................................................................................
Home Depot 400,000 21,600
................................................................................
</TABLE>
9
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Kohl's * 500,000 $ 18,312
................................................................................
Revco * 930,000 22,204
................................................................................
Tommy Hilfiger * 350,000 18,769
................................................................................
170,773
.............
Entertainment and Leisure 3.6%
Disney 200,000 12,575
................................................................................
La Quinta Inns 500,000 16,750
................................................................................
Viacom (Class A) * 100,000 3,812
................................................................................
Viacom (Class B) * 400,000 15,550
................................................................................
48,687
.............
Media/Communication Services 9.1%
AirTouch Communications * 600,000 16,950
................................................................................
America Online * 139,400 6,081
................................................................................
Comcast (Class A Special) 906,300 16,653
................................................................................
Comcast (Class A) 413,700 7,654
................................................................................
Cox Communications (Class A) * 200,000 4,325
................................................................................
Gaylord Entertainment 600,000 16,950
................................................................................
Paging Network * 1,073,600 25,565
................................................................................
PanAmSat * 200,000 5,775
................................................................................
Vodafone ADR 600,000 22,125
................................................................................
122,078
..............
Restaurants/Food Distribution 2.6%
Boston Chicken* 500,000 16,219
................................................................................
Lone Star Steakhouse & Saloon * 200,000 7,538
................................................................................
Outback Steakhouse * 300,000 10,312
................................................................................
34,069
..............
Personal Services 3.5%
CUC International * 750,000 26,625
................................................................................
Service Corp. 350,000 20,125
................................................................................
46,750
..............
Total Consumer Services 443,857
..............
BUSINESS SERVICES 48.2%
Health Care Services 10.6%
Apria Healthcare * 700,000 21,963
................................................................................
Columbia/HCA Healthcare 400,000 21,350
................................................................................
HealthSouth * 250,086 9,003
................................................................................
</TABLE>
10
<PAGE>
T. Rowe Price New America Growth Fund
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Net Assets Shares/Par Value
- -------------------------------------------------------------------------------
In Thousands
<S> <C> <C>
PacifiCare Health Systems (Class B) * 225,000 $ 15,272
................................................................................
Quorum Health Group * 800,000 21,100
................................................................................
United HealthCare 775,000 39,137
................................................................................
Vencor * 478,800 14,603
................................................................................
142,428
.............
Distribution Services 5.2%
Airgas * 500,000 9,500
................................................................................
Alco Standard 375,000 16,969
................................................................................
Cardinal Health 375,000 27,047
................................................................................
Patterson Dental * 450,000 16,200
................................................................................
69,716
.............
Computer Services 6.2%
BISYS Group * 400,000 15,025
................................................................................
Ceridian * 326,000 16,463
................................................................................
First Data 317,180 25,256
................................................................................
SunGard Data Systems * 660,000 26,441
................................................................................
83,185
..............
Environmental Services 4.9%
Republic Industries * 513,000 14,973
................................................................................
Republic Industries *# 212,000 6,188
................................................................................
Sanifill * 458,900 22,601
................................................................................
USA Waste Services * 750,000 22,219
................................................................................
65,981
.............
Energy Services 5.1%
BJ Services * 400,000 14,050
................................................................................
Camco International 350,000 11,856
................................................................................
Schlumberger 225,000 18,956
................................................................................
Smith International * 400,000 12,050
................................................................................
Western Atlas * 200,000 11,650
................................................................................
68,562
.............
Other Business Services 16.2%
ADT * 2,000,000 37,750
................................................................................
ADVO 775,000 8,041
................................................................................
Catalina Marketing * 300,000 27,450
................................................................................
Corporate Express * 516,900 20,708
................................................................................
Global DirectMail * 243,600 9,622
................................................................................
HFS * 750,000 52,500
................................................................................
Micro Warehouse * 345,000 6,814
................................................................................
</TABLE>
11
<PAGE>
T. Rowe Price New America Growth Fund
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Net Assets Shares/Par Value
- -------------------------------------------------------------------------------
In Thousands
<S> <C> <C>
Olsten 850,000 $ 24,969
................................................................................
Paychex 300,000 14,419
................................................................................
Scholastic * 250,000 15,562
................................................................................
217,835
.............
Total Business Services 647,707
.............
Miscellaneous Common Stocks 0.5% 6,176
.............
Total Common Stocks (Cost $865,954) 1,303,761
.............
Short-Term Investments 2.9%
Bank Notes 0.4%
Bank of America, 5.02%, 7/16/96 $5,000,000 4,999
................................................................................
4,999
.............
Commercial Paper 2.5%
Banque Nationale de Paris, 5.40%, 7/25/96 3,000,000 2,989
................................................................................
BMW U.S. Capital, 5.39%, 8/12/96 3,000,000 2,981
................................................................................
Den Danske, 5.38%, 8/12/96 3,000,000 2,981
................................................................................
Great Lakes Chemical, 4(2), 5.35%, 7/11/96 1,000,000 998
................................................................................
Investments in Commercial Paper through a joint
account, 5.49 - 5.68%, 7/1/96 2,547,518 2,548
................................................................................
Kredietbank N.A. Finance, 5.40%, 7/3/96 4,100,000 4,099
................................................................................
Mobil Australia Finance, 4(2), 5.30%, 8/2/96 3,000,000 2,986
................................................................................
National Rural Utilities Cooperative Finance,
5.40%, 7/11/96 2,500,000 2,496
................................................................................
Preferred Receivables Funding
5.32%, 7/2 - 7/9/96 8,000,000 7,994
...........................................................................
5.40%, 7/10/96 1,000,000 999
...........................................................................
Statoil (Den Norske Stats Oljeselskap),
5.37%, 7/22/96 3,000,000 2,991
................................................................................
34,062
.............
Total Short-Term Investments (Cost $39,061) 39,061
</TABLE>
.............
12
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Net Assets Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
<S> <C>
Total Investments in Securities
100.0% of Net Assets (Cost $905,015) $1,342,822
Other Assets Less Liabilities (502)
.............
NET ASSETS $1,342,320
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 665
Accumulated net realized gain/loss - net of distributions 77,549
Net unrealized gain (loss) 437,807
Paid-in-capital applicable to 33,574,432 shares of no par
value capital stock outstanding; unlimited number of shares
authorized 826,299
.............
NET ASSETS $1,342,320
-------------
NET ASSET VALUE PER SHARE $ 39.98
----------------
</TABLE>
+ Affiliated company
* Non-income producing
# Securities contain some restrictions as to public resale--total of such
securities at period-end amounts to 0.5% of net assets.
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors."
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
Unaudited
Statement of Operations
- -------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months
Ended
6/30/96
<S> <C>
Investment Income
Income
Dividend $ 5,505
Interest 1,053
...........
Total income 6,558
...........
Expenses
Investment management 3,986
Shareholder servicing 1,645
Custody and accounting 82
Registration 82
Prospectus and shareholder reports 59
Directors 12
Legal and audit 12
Miscellaneous 15
...........
Total expenses 5,893
...........
Net investment income 665
...........
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 71,698
Change in net unrealized gain or loss on securities 82,949
...........
Net realized and unrealized gain (loss) 154,647
...........
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 155,312
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
T. Rowe Price New America Growth Fund
- -------------------------------------------------------------------------------
Unaudited
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/96 12/31/95
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 665 $ (3,671)
Net realized gain (loss) 71,698 58,011
Change in net unrealized gain or loss 82,949 236,779
.........................
Increase (decrease) in net assets from operations 155,312 291,119
.........................
Distributions to shareholders
Net realized gain - (49,223)
.........................
Capital share transactions *
Shares sold 290,931 267,361
Distributions reinvested - 48,036
Shares redeemed (132,133) (175,229)
.........................
Increase (decrease) in net assets from capital
share transactions 158,798 140,168
.........................
Net Assets
Increase (decrease) during period 314,110 382,064
Beginning of period 1,028,210 646,146
.........................
End of period $1,342,320 $1,028,210
-------------------------
* Share information
Shares sold 7,666 8,445
Distributions reinvested - 1,396
Shares redeemed (3,548) (5,804)
.........................
Increase (decrease) in shares outstanding 4,118 4,037
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1996
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price New America Growth, Inc. (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on September 30, 1985.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price at the time 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. Listed securities that are not traded on a particular day
and securities that are regularly traded in the over-the-counter market are
valued at the mean of the latest bid and asked prices. Other equity
securities 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
Trustees, best to reflect fair value.
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.
Affiliated Companies Investments in companies 5% or more of whose
outstanding voting securities are held by the fund are defined as "Affiliated
Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
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 the 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 and may differ from those determined in accordance with
generally accepted accounting principles.
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T. Rowe Price New America Growth Fund
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NOTE 2 - INVESTMENT TRANSACTIONS
Commercial Paper Joint Account The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $344,498,000 and $198,162,000, respectively, for the
six months ended June 30, 1996.
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 June 30, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $905,015,000, and net unrealized gain
aggregated $437,807,000, of which 447,488,000 related to appreciated
investments and $9,681,000 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, of which $738,000 was payable at June 30, 1996. The fee is computed
daily and paid monthly, and consists 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 0.305% for assets in excess
of $50 billion. At June 30, 1996, and for the six months then ended, the
effective annual group fee rate was 0.33% and 0.34%, respectively. The fund
pays a pro rata share of the group fee based on the ratio of its net assets
to those of the group.
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T. Rowe Price New America Growth Fund
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In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund receives
certain other services. The manager computes the daily share price and
maintains the financial records of the fund. T. Rowe Price Services, Inc., is
the fund's transfer and dividend disbursing agent and provides shareholder
and administrative services to the fund. T. Rowe Price Retirement Plan
Services, Inc., provides subaccounting and recordkeeping services for certain
retirement accounts invested in the fund. The fund incurred expenses
pursuant to these related party agreements totaling approximately $1,468,000
for the six months ended June 30, 1996, of which $186,000 was payable at
period-end.
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T. Rowe Price Shareholder Services
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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.
Knowledgeable Service Representatives
By Phone Shareholder service representatives are available Monday through
Friday from 8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
Call 1-800-225-5132 to speak directly with a representative who will be able
to assist you with your accounts.
In Person Visit one of our Investor Center locations to meet with a
representative who will be able to assist you with your accounts. You can
also drop off applications or obtain prospectuses and other literature.
Automated 24-Hour Services
Tele*Access/(R)/ Call 1-800-638-2587 to obtain information such as account
balance, date and amount of your last transaction, latest dividend payment,
and fund prices and yields. Additionally, you can request prospectuses,
statements, new account and tax forms; reorder checks; and initiate purchase,
redemption, and exchange orders for identically registered accounts.
T. Rowe Price OnLine Through a personal computer via dial-up modem, you can
replicate all the services available on Tele*Access.
Account Services
Checking Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield and Emerging Markets Bond Funds).
Automatic Investing Build your account over time by investing directly from
your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to move investments systematically from one
fund account to another, such as from a money fund to a stock fund. A low $50
minimum makes it easy to get started.
19
<PAGE>
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
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
distributions, or take them in cash. We give you maximum flexibility and
convenience.
Discount Brokerage*
Investments Available You can trade stocks, bonds, options, precious metals,
and other securities at a savings over regular commission rates.
To Open an Account Call a shareholder service representative at
1-800-225-5132.
Investment Information
Combined Statement A comprehensive overview of your T. Rowe Price accounts is
provided. The summary page gives you 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.
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 This is a quarterly newsletter with relevant
articles on market trends, personal financial planning, and T. Rowe Price's
economic perspective.
Performance Update This quarterly report reviews recent market developments
and provides comprehensive performance information for each T. Rowe Price
fund.
Insights This library of information includes reports on mutual fund tax
issues, investment strategies, and financial markets.
Detailed Investment Guides Our widely acclaimed Asset Mix Worksheet, College
Planning Kit, Personal Strategy Planner, Retirees Financial Guide, and
Retirement Planning Kit (also available on disk for PC use) help you
determine and reach your investment goals.
* T. Rowe Price Discount Brokerage is a division of T. Rowe Price Investment
Services, Inc. Member NASD/SIPC.
20
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T. Rowe Price Mutual Funds
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<TABLE>
<S> <C> <C>
STOCK FUNDS BOND FUNDS International/Global
...................... ......................
Emerging Markets Bond
Domestic Domestic Taxable
Global Government Bond
Balanced Corporate Income
International Bond
Blue Chip Growth GNMA
Short-Term Global Income
Capital Appreciation High Yield
Capital Opportunity New Income Money Market
......................
Dividend Growth Short-Term Bond
Taxable
Equity Income Short-Term U.S. Government
Prime Reserve
Equity Index Spectrum Income
Summit Cash Reserves
Growth & Income Summit GNMA
U.S. Treasury Money
Growth Stock Summit Limited-Term Bond
Tax-Free
Health Sciences U.S. Treasury Intermediate
California Tax-Free Money
Mid-Cap Growth U.S. Treasury Long-Term
New York Tax-Free Money
Mid-Cap Value
Domestic Tax-Free Summit Municipal
New America Growth Money Market
New Era California Tax-Free Bond Tax-Exempt Money
New Horizons* Florida Insured
Intermediate Tax-Free Blended Asset
OTC ......................
Georgia Tax-Free Bond
Science & Technology Personal Strategy Balanced
Maryland Short-Term
Small-Cap Value* Tax-Free Bond Personal Strategy Growth
Spectrum Growth Maryland Tax-Free Bond Personal Strategy Income
Value New Jersey Tax-Free Bond
T. Rowe Price No-Load
New York Tax-Free Bond Variable Annuity
International/Global ......................
Summit Municipal Income
Equity Income Portfolio
Emerging Markets Stock Summit Municipal
Intermediate International Stock Portfolio
European Stock
Tax-Free High Yield Limited-Term Bond Portfolio
Global Stock
Tax-Free Income New America Growth Portfolio
International Discovery
Tax-Free Insured Personal Strategy Balanced
International Stock Intermediate Bond Portfolio
Japan Tax-Free Short-Intermediate
Latin America Virginia Short-Term
Tax-Free Bond
New Asia
Virginia Tax-Free Bond
</TABLE>
*Closed to new investors.
21
<PAGE>
For yield, price, last transaction,
and current balance, 24 hours,
7 days a week, call:
1-800-638-2587 toll free
For assistance with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution
only to shareholders and to others who have
received a copy of the prospectus of the
T. Rowe Price New America Growth Fund/(R)/.
[LOGO OF T.ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor
