<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
Nineteen ninety-five was another record-breaking year for the stock market. The
Dow Jones Industrial Average broke through 4000 then 5000 on the way to its best
year since 1975. The Standard & Poor's 500 Stock Index recorded similarly strong
gains. The market climbed steadily with less of a correction along the way than
in any year on record. Sharply falling interest rates, a strong bond market, and
a healthy economy were the primary stimulants to the strong stock market
performance.
Your fund performed well in both absolute and relative terms. Its 6-and 12-
month returns of 20.6% and 44.3%, respectively, outstripped by a wide margin the
unmanaged S&P 500 as well as the average growth mutual fund for both periods.
New America Growth Fund celebrated its tenth birthday in September, and we are
pleased to report that its 393.4% cumulative return since inception also
outperformed the S&P 500 (367.9%) and the Lipper Growth Fund Average (301.9%).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 12/31/95
6 Months 12 Months
-------- ---------
<S> <C> <C>
New America Growth Fund 20.6% 44.3%
S&P 500 14.5 37.6
Lipper Growth Fund
Average 11.1 30.8
- --------------------------------------------------------------------------------
</TABLE>
YEAR-END DISTRIBUTIONS
On December 26, the fund's Board of Trustees declared a short-term capital gain
distribution of $0.26 per share and a long-term distribution of $1.49, payable
to shareholders of record on that date. Your check or statement confirming this
distribution was mailed in early January, and Form 1099-DIV, which you will need
for your 1995 taxes, was sent toward month-end.
MARKET ENVIRONMENT
The major driver behind the 1995 market surge was the sharp decline in long-term
interest rates from nearly 8% at year-end 1994 to under 6% by year-end 1995.
Falling rates have underpinned this long bull market, which began in 1982. (When
rates backtracked in 1994, the rally stalled.) The Federal Reserve reversed
course in July 1995, cutting short-term rates for the first time in three years,
as the economy appeared to have achieved a "soft landing" of slower but more
sustainable growth. A related positive for the stock market was the lack of
major inflationary pressures, and this together with falling rates enabled
price/earnings ratios to expand.
Corporate profit growth also continued to exceed expectations, while
slowing from 1994's torrid pace. Strong profits and rising margins are a tribute
to the increased competitiveness of U.S. companies in the global arena.
Managements of most major U.S. corporations have undertaken massive cost-cutting
programs, including layoffs and restructurings, to become more competitive and
boost their stock prices.
Another major contributor to last year's strong financial markets was Wall
Street's perception of a changed political attitude in Washington. After winning
control of Congress in the November 1994 elections, the Republicans pushed for
sweeping changes to reduce the government's involvement in the economy and
increase reliance on private market forces. This was viewed very favorably by
stock and bond market investors. Not surprisingly, the reappearance of gridlock
and infighting toward year-end, which cast doubt on deficit reduction and the
proposed capital gains tax cut, stalled the market's advance, at least
temporarily.
<PAGE>
The Fed's success in slowing growth led investors to seek companies that
seemed likely to prosper regardless of the cyclical environment. Cyclical
stocks, particularly consumer-related, lagged, while growth stocks did well. The
current environment has been favorable for your fund, with its emphasis on high-
growth companies operating primarily in noncyclical, service sector industries.
This focus helped the fund outperform in 1995.
PORTFOLIO REVIEW
While technology stocks' impressive gains for much of the year grabbed the
headlines, most growth stocks did well. Your fund generally shuns the more
cyclical and volatile technology sector, but several large portfolio holdings
benefited from the market's love affair with the Internet. AMERICA ONLINE, the
fastest growing company in the burgeoning on-line services field, almost doubled
in price after we bought it late in the second quarter. Top holding CUC
INTERNATIONAL, which has a small but rapidly growing division offering on-line
shopping and other services, was also touched by Internet euphoria and rose over
50% for the year.
The market's search for companies with strong, consistent earnings growth
intensified as the year went on and helped focus attention on many of our
largest holdings. The top contributor to performance for the last six months and
the full year was HFS, a leading franchiser of hotel brands including Howard
Johnson, Ramada, and Days Inn. During 1995, the company entered the residential
housing field by acquiring major franchiser, Century 21. HFS stock tripled in
price during the year. Several leading HMOs, which came under pressure in the
first half, contributed strongly to performance in the second half, namely
UNITED HEALTHCARE and new holding PACIFICARE HEALTH SYSTEMS.
Half of the fund's worst performers were in the consumer sector, where
retailing and restaurant companies generally lagged, particularly late in the
year as consumers pulled in their horns. Nevertheless, this sector produced some
winners. Vitamin and health product retailer GENERAL NUTRITION rose more than
50% for the year, while men's sportswear designer TOMMY HILFIGER doubled
following our initial purchase in March.
After sharply paring our consumer holdings and boosting business services
stocks in 1994, we made relatively small sector shifts in 1995, as shown in the
table. Within the consumer sector, however, we continued to reduce our retailing
and restaurant commitments while adding significantly to the media/communication
field with new holdings such as CAPITAL CITIES/ABC, soon to close a merger with
WALT DISNEY; cable TV companies COMCAST and COX COMMUNICATIONS; and leading
paging company PAGING NETWORK. We also continued to build our business services
holdings, adding large positions in ADT and OLSTEN.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Sector Diversification
- --------------------------------------------------------------------------------
12/31/94 12/31/95
-------- --------
<S> <C> <C>
Financial Services 12% 10%
Consumer Services 41 42
Business Services 43 46
Reserves 4 2
-------- --------
Total 100% 100%
- --------------------------------------------------------------------------------
</TABLE>
We continued to seek companies with exceptional growth prospects in all
economic climates, and the portfolio's growth characteristics remained strong.
Most portfolio companies plow their earnings back into their businesses rather
than pay high dividends, so that they can maintain or increase their earnings
momentum. In fact, many pay no dividends at all in order to help deliver
sustainable earnings growth of 20% to 25% per year.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Portfolio Characteristics
- --------------------------------------------------------------------------------
New America
Growth Fund S&P 500
----------- -------
<S> <C> <C>
Earnings Growth Rate
Estimated Next 5 Years 20.8% 7.0%
Profitability-Return on
Equity Latest 12 Months 16.1 16.5
Dividend Yield on Stocks 0.4 2.3
P/E Ratio (Based on Next 12
Months' Estimated Earnings) 19.7X 15.8X
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
OUTLOOK
Our outlook for the equity markets in 1996 remains positive. Most of the forces
that underpinned the market's advance last year are still in place, albeit
somewhat less pronounced. The economy continues to grow, inflation and interest
rates remain low, and demand for U.S. equities is robust. On the negative side,
corporate earnings growth is slowing and more companies are reporting earnings
shortfalls. In Washington, the President and the Congress appear stalemated in
their negotiations over the budget. Stock and bond markets are both undergoing
corrections as we write, which should not be surprising given 1995's stellar
advances.
We continue to believe that the fund is well positioned for the economic
environment we anticipate in 1996. Our portfolio companies should show strong
earnings gains even as the overall rate of corporate profit growth slows. While
your fund will always focus on service-related holdings, we may take advantage
of the flexibility provided by our charter to gradually expand our exposure to
promising nonservice businesses that meet our growth criteria. (The prospectus
allows up to 25% of assets to be invested in such companies.) Any significant
purchases outside the service sector will of course be discussed in our reports
to you.
While valuation levels have risen for many growth companies, we are
comfortable with the portfolio's valuation level and optimistic that the fund
will continue to generate attractive returns over the next several years.
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
January 18, 1996
- --------------------------------------------------------------------------------
A Word on Market Corrections
- --------------------------------------------------------------------------------
After the stock market's spectacular run in 1995, concerns about a "correction"
have intensified. Most market observers consider a correction to be a short and
sometimes steep decline following a period of rising prices. Moderate
corrections of around 10% have been quite common, occurring on average about
once every two years over the last half-century, according to Ned Davis
Research.
The market as measured by the Dow Jones Industrial Average has not
experienced a moderate correction since early 1994. Furthermore, the Dow last
hit a bear market bottom -- defined as a drop of at least 20% -- in October
1990. Therefore, it would not be surprising to see a modest pullback in 1996, on
the order of 5% to 10%. In fact, as we write, the market has gotten off to a
rocky start.
Corrections are not only common, but can be beneficial for long-term
investors, especially those who invest in regular amounts through dollar cost
averaging. In a correction, overall stock prices decline, often leading to more
attractive valuations and good buying opportunities. History has shown that
investors who continue to buy through a downturn fare quite well. In fact, the
Dow has proven resilient in the aftermath of past corrections of around 10%,
taking an average of just six months to recover its losses, according to Ned
Davis. (To realize the benefits of dollar cost averaging, you should be prepared
to continuously purchase securities over a period of time, in up and down
markets. This approach does not assure a gain nor protect you from a loss in
declining markets.)
We raise the issue of a market correction not as a prediction, but as a
reminder that stock prices do not move in only one direction. If you are
satisfied that your investments are appropriate for your various objectives, we
recommend that you stay the course when a correction eventually occurs.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
Contributions to the Change in Net Asset Value Per Share
- --------------------------------------------------------------------------------
T. Rowe Price New America Growth Fund
<TABLE>
<CAPTION>
Six Months Ended December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TEN BEST CONTRIBUTORS
- --------------------------------------------------------------------------------
<S> <C>
HFS 68c
United HealthCare 43
CUC International 29
PacifiCare Health Systems 28
Paging Network 27
America Online 23
Paychex 23
Money Store 22
General Nutrition 22
Tommy Hilfiger 19
- --------------------------------------------------------------------------------
Total 304c
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TEN WORST CONTRIBUTORS
- --------------------------------------------------------------------------------
<S> <C>
Office Depot - 23c
Loewen Group** 10
Browning-Ferris** 8
Dollar General** 8
Mobile Telecommunication Technologies 7
Circuit City Stores 6
PriceCostco 5
Vodafone 5
Sbarro 2
Micro Warehouse 2
- --------------------------------------------------------------------------------
Total - 76c
================================================================================
</TABLE>
* Position added
** Position eliminated
<TABLE>
<CAPTION>
Twelve Months Ended December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TEN BEST CONTRIBUTORS
- --------------------------------------------------------------------------------
<S> <C>
HFS* 80c
CUC International 58
First Data 45
Paychex 41
United HealthCare 36
Money Store 35
General Nutrition 34
MGIC Investment 31
Paging Network* 31
Tommy Hilfiger* 29
- --------------------------------------------------------------------------------
Total 420c
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TEN WORST CONTRIBUTORS
- --------------------------------------------------------------------------------
<S> <C>
Office Depot - 13c
AnnTaylor Stores** 10
Sbarro 8
Autotote 6
Toys "R" Us** 6
Browning-Ferris** 5
PriceCostco 5
Foundation Health** 3
Pittston Services** 2
Brinker 2
- --------------------------------------------------------------------------------
Total - 60c
================================================================================
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
Twenty-Five Largest Holdings
- --------------------------------------------------------------------------------
December 31, 1995
<TABLE>
<CAPTION>
Percent of
Company Net Assets
- ----------------------------------------------------------------- ----------
<S> <C>
CUC International 3.9%
United HealthCare 3.0
HFS 3.0
ADT 2.6
Paging Network 2.4
Comcast 2.3
Viacom 2.3
General Nutrition 2.3
Capital Cities/ABC 2.1
First Data 2.1
Vodafone 2.1
Franklin Resources 2.0
Alco Standard 2.0
Cardinal Health 2.0
MGIC Investment 2.0
Olsten 1.9
<CAPTION>
Percent of
Company Net Assets
- ----------------------------------------------------------------- ----------
<S> <C>
Catalina Marketing 1.8%
SunGard Data Systems 1.8
Revco 1.8
ADVO 1.8
PacifiCare Health Systems 1.8
Office Depot 1.7
Columbia/HCA Healthcare 1.7
Paychex 1.7
Quorum Health Group 1.6
- --------------------------------------------------------------------------------
Total 53.7%
================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
Periods Ended December 31, 1995
1 Year 5 Years 10 Years
------ ------- --------
<S> <C> <C>
44.31% 22.80% 16.85%
- --------------------------------------------------------------------------------
</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.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Note: The index return does not reflect expenses, which have been deducted from
the fund's return.
5
<PAGE>
- --------------------------------------------------------------------------------
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 price of $10.00, for the
period 9/30/85 through 12/31/95. Over this time, stock prices in general have
risen. The results shown should not be considered as 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
<TABLE>
<CAPTION>
With Capital Gains and Income Dividends
Taken in Cash Reinvested in Additional Shares Annual Total Return
------------------------------------- -------------------------------------- on Investment
Year Net Capital Capital % Change
Ended Asset Gain Income Gain Income Value of -------------------
12/31 Value Distributions/1/ Dividends Distributions Dividends Investment Fund S&P 500
- ------- ------ ---------------- --------- ------------- --------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1985/2/ $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
1994 25.42 0.53 -- 0.70 -- 34.19 -7.4 1.3
1995 34.91 1.75 -- 2.35 -- 49.34 44.3 37.6
- -----------------------------------------------------------------------------------------------------------------
Total $6.38 $0.33 $7.79 $0.36
=================================================================================================================
</TABLE>
/1/ Includes short-term capital gains of $0.24 in 1987; $0.24 in 1993; $0.08 in
1994; and $0.26 in 1995.
/2/ From inception 9/30/85 to 12/31/85.
6
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price New America Growth Fund / December 31, 1995
- --------------------------------------------------------------------------------
(values in thousands)
<TABLE>
<CAPTION>
Value
----------
<C> <S> <C>
- ----------------------------------------------------------------------------------------------
Common Stocks -- 98.0%
- ----------------------------------------------------------------------------------------------
FINANCIAL SERVICES -- 10.4%
<C> <S> <C>
INSURANCE -- 4.1%
275,000 shs ACE Limited................................................. $ 10,931
375,000 MGIC Investment............................................. 20,344
200,000 UNUM........................................................ 11,000
42,275
INVESTMENT SERVICES -- 2.0%
413,100 Franklin Resources.......................................... 20,810
OTHER FINANCIAL SERVICES -- 4.3%
100,000 Fannie Mae.................................................. 12,412
150,000 Freddie Mac................................................. 12,525
100,000 Household International..................................... 5,913
499,999 Mercury Finance............................................. 6,625
437,500 Money Store................................................. 6,836
44,311
TOTAL FINANCIAL SERVICES 107,396
- ----------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 41.7%
- ----------------------------------------------------------------------------------------------
RETAILING/GENERAL
MERCHANDISERS -- 1.2%
800,000 * PriceCostco................................................. 12,300
RETAILING/SPECIALTY
MERCHANDISERS -- 14.1%
420,000 * AutoZone.................................................... 12,128
500,000 Circuit City Stores......................................... 13,812
725,000 *+ Cole National (Class A)..................................... 10,059
225,000 * Eckerd...................................................... 10,041
1,000,000 * General Nutrition........................................... 23,250
250,000 Home Depot.................................................. 11,969
250,000 * Kohl's...................................................... 13,125
900,000 * Office Depot................................................ 17,775
650,000 * Revco....................................................... 18,362
350,000 * Tommy Hilfiger.............................................. 14,831
145,352
ENTERTAINMENT AND LEISURE -- 2.8%
150,000 * Mirage Resorts.............................................. 5,175
100,000 * Viacom (Class A)............................................ 4,588
400,000 * Viacom (Class B)............................................ 18,950
28,713
MEDIA/COMMUNICATION SERVICES -- 16.4%
350,000 * AirTouch Communications..................................... 9,887
300,000 * America Online.............................................. 11,194
<CAPTION>
Value
----------
<C> <S> <C>
175,000 shs Capital Cities/ABC.......................................... $ 21,591
200,000 * CellStar.................................................... 5,225
906,300 Comcast (Class A Special)................................... 16,483
413,700 Comcast (Class A)........................................... 7,291
700,000 * Cox Communications
(Class A)................................................ 13,650
400,000 Frontier.................................................... 12,000
350,000 Gaylord Entertainment....................................... 9,713
325,000 * Mobile Telecommunication
Technologies............................................. 6,947
1,020,000 * Paging Network.............................................. 24,544
400,000 * PanAmSat.................................................... 8,850
600,000 Vodafone ADR................................................ 21,150
168,525
RESTAURANTS/FOOD DISTRIBUTION -- 2.2%
250,000 * Brinker..................................................... 3,781
158,500 * Lone Star Steakhouse
& Saloon................................................. 6,073
300,000 * Outback Steakhouse.......................................... 10,781
102,500 Sbarro...................................................... 2,204
22,839
PERSONAL SERVICES -- 5.0%
1,187,296 * CUC International........................................... 40,516
250,000 Service Corp................................................ 11,000
51,516
TOTAL CONSUMER SERVICES 429,245
- ----------------------------------------------------------------------------------------------
BUSINESS SERVICES -- 45.6%
- ----------------------------------------------------------------------------------------------
HEALTH CARE SERVICES -- 8.9%
350,000 Columbia/HCA Healthcare..................................... 17,763
250,086 * HealthSouth................................................. 7,284
207,100 * PacifiCare Health Systems
(Class B)................................................ 18,069
772,000 * Quorum Health Group......................................... 16,888
475,000 United HealthCare........................................... 31,112
91,116
DISTRIBUTION SERVICES -- 5.9%
250,000 * Airgas...................................................... 8,313
450,000 Alco Standard............................................... 20,531
375,000 Cardinal Health............................................. 20,531
410,000 * Patterson Dental............................................ 11,121
60,496
COMPUTER SERVICES -- 6.8%
400,000 * BISYS Group................................................. 12,200
300,000 * Ceridian.................................................... 12,375
38,300 * DST Systems................................................. 1,092
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
----------
<C> <S> <C>
317,180 shs First Data.................................................. $ 21,211
154,500 * FIserv...................................................... 4,625
660,000 * SunGard Data Systems........................................ 18,563
70,066
ENVIRONMENTAL SERVICES -- 2.6%
458,900 * Sanifill.................................................... 15,316
600,000 * USA Waste Services.......................................... 11,325
26,641
ENERGY SERVICES -- 4.3%
325,000 * BJ Services................................................. 9,425
350,000 Camco International......................................... 9,800
225,000 Schlumberger................................................ 15,581
400,000 * Smith International......................................... 9,400
44,206
OTHER BUSINESS SERVICES -- 17.1%
1,750,000 * ADT......................................................... 26,250
700,000 ADVO........................................................ 18,200
300,000 * Catalina Marketing.......................................... 18,825
394,000 * Corporate Express........................................... 11,820
200,000 * DIMAC....................................................... 5,450
400,000 * Global DirectMail........................................... 11,000
375,000 * HFS......................................................... 30,656
213,000 * Micro Warehouse............................................. 9,266
500,000 Olsten...................................................... 19,750
356,250 Paychex..................................................... 17,701
150,000 * Viking Office Products...................................... 6,984
175,902
TOTAL BUSINESS SERVICES 468,427
MISCELLANEOUS COMMON STOCKS -- 0.3% 2,638
TOTAL COMMON STOCKS (COST $652,848) 1,007,706
- ----------------------------------------------------------------------------------------------
Short-Term Investments -- 2.0%
- ----------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT -- 0.3%
$3,000,000 Wachovia Bank Georgia,
5.75%, 1/31/96........................................... 3,000
COMMERCIAL PAPER -- 1.7%
5,000,000 ANZ (Delaware), 5.668%,
2/9/96................................................... 4,929
5,000,000 Caisse des Depots
et Consignations,
4(2), 5.77%, 1/18/96..................................... 4,958
<CAPTION>
Value
----------
<C> <S> <C>
$5,000,000 Cheltenham & Glouster,
5.58%, 2/8/96............................................ $ 4,962
1,000,000 International Nederland
Bank, 5.47%, 3/22/96..................................... 986
1,187,872 Investments in Commercial
Paper through a joint
account, 5.90-6.05%,
1/2/96................................................... 1,187
17,022
TOTAL SHORT-TERM INVESTMENTS (COST $20,022) 20,022
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 100.0% OF
NET ASSETS (COST $672,870) 1,027,728
- ----------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES.................................................. 482
----------
NET ASSETS CONSIST OF: Value
--------
<S> <C> <C>
Accumulated net realized gain/loss
- net of distributions........................... $ 5,851
Net unrealized gain (loss).......................... 354,858
Paid-in-capital applicable to
29,456,295 shares of no par
value capital stock outstanding;
unlimited number of
shares authorized................................ 667,501
--------
NET ASSETS..................................................................... $1,028,210
==========
NET ASSET VALUE PER SHARE...................................................... $34.91
======
- ----------------------------------------------------------------------------------------------
</TABLE>
+ Affiliated company
* Non-income producing
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.
8
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price New America Growth Fund / Year Ended December 31, 1995
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividend......................................................... $ 3,126
Interest......................................................... 1,824
--------
Total income..................................................... 4,950
--------
Expenses
Investment management............................................ 5,554
Shareholder servicing............................................ 2,566
Custody and accounting........................................... 155
Prospectus and shareholder reports............................... 151
Registration..................................................... 104
Legal and audit.................................................. 32
Directors........................................................ 21
Miscellaneous.................................................... 38
--------
Total expenses................................................... 8,621
--------
Net investment income............................................... (3,671)
--------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on securities.............................. 58,011
Change in net unrealized gain or loss on securities................. 236,779
--------
Net realized and unrealized gain (loss)............................. 294,790
--------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................... $291,119
========
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price New America Growth Fund
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
---------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income..................................................... $ (3,671) $ (1,681)
Net realized gain (loss).................................................. 58,011 13,346
Change in net unrealized gain or loss..................................... 236,779 (61,025)
---------- ---------
Increase (decrease) in net assets from operations......................... 291,119 (49,360)
---------- ---------
Distributions to shareholders
Net realized gain......................................................... (49,223) (13,216)
---------- ---------
Capital share transactions*
Shares sold............................................................... 267,361 232,076
Distributions reinvested.................................................. 48,036 12,762
Shares redeemed........................................................... (175,229) (155,234)
---------- ---------
Increase (decrease) in net assets from capital share transactions......... 140,168 89,604
---------- ---------
Increase (decrease) in net assets............................................ 382,064 27,028
NET ASSETS
Beginning of period.......................................................... 646,146 619,118
---------- ---------
End of period................................................................ $1,028,210 $ 646,146
========== =========
- ----------------------------------------------------------------------------------------------------------
* Share information
Shares sold............................................................... 8,445 8,663
Distributions reinvested.................................................. 1,396 508
Shares redeemed........................................................... (5,804) (5,834)
---------- ---------
Increase (decrease) in capital shares outstanding......................... 4,037 3,337
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price New America Growth Fund / December 31, 1995
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 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.
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) 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.
C) 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.
NOTE 2 - INVESTMENT TRANSACTIONS
A) 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.
B) Other - Purchases and sales of portfolio securities, other than short-term,
aggregated $529,535,000 and $437,241,000, respectively, for the year ended
December 31, 1995.
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.
In order for the fund's capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, $3,671,000 of
undistributed net investment income was reclassified as a decrease to
undistributed net realized gains during the year ended December 31, 1995. The
results of operations and net assets were not affected by the reclassifications.
At December 31, 1995, the aggregate cost of investments for federal income
tax and financial reporting purposes was $672,870,000 and net unrealized gain
aggregated $354,858,000, of which $357,368,000 related to appreciated
investments and $2,510,000 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 $586,000 was payable at December 31, 1995. The fee is computed daily
and paid monthly,
11
<PAGE>
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- --------------------------------------------------------------------------------
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 0.31% for assets in excess of $34 billion. At December 31, 1995, and
for the year then ended, the effective annual Group Fee rate was 0.34%. The fund
pays a pro rata share of the Group Fee based on the ratio of its net assets to
those of the Group.
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 $2,289,000 for the year ended
December 31, 1995, of which $241,000 was payable at period end.
12
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Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price New America Growth Fund
<TABLE>
<CAPTION>
For a share outstanding throughout each period
--------------------------------------------------------------
Year Ended December 31,
1995 1994 1993 1992 1991
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $25.42 $28.04 $24.86 $22.79 $14.66
------ ------ ------ ------ ------
Investment activities
Net investment income.......................... (0.12) (0.07) (0.08) (0.04) (0.02)
Net realized and unrealized gain (loss)........ 11.36 (2.02) 4.39 2.29 9.02
------ ------ ------ ------ ------
Total from investment activities............... 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.................... $34.91 $25.42 $28.04 $24.86 $22.79
====== ====== ====== ====== ======
- -----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total return...................................... 44.3% (7.4)% 17.4% 9.9% 61.9%
Ratio of expenses to average net assets........... 1.07% 1.14% 1.23% 1.25% 1.25%
Ratio of net investment income to
average net assets............................. (0.46)% (0.27)% (0.39)% (0.44)% (0.12)%
Portfolio turnover rate........................... 56.2% 31.0% 43.7% 26.4% 42.3%
Net assets, end of period (in thousands).......... $1,028,210 $646,146 $619,118 $480,229 $231,729
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
13
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Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders 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 financial
highlights present fairly, in all material respects, the financial position of
T. Rowe Price New America Growth Fund (the "Fund") at December 31, 1995, and the
results of its operations, the changes in its net assets and the financial
highlights for each of the fiscal periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (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, 1995 by
correspondence with custodians and brokers, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 18, 1996
14
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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.
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 8:30 a.m. to 5:00 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. While there,
you can drop off applications or obtain prospectuses and other literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access(R) (1-800-638-2587) provides information such as account
balance, date and amount of your last transaction, latest dividend payment, and
fund prices and yields. Additionally, you have the ability to request
prospectuses, statements, account and tax forms; reorder checks; and initiate
purchase, redemption, and exchange orders for identically registered accounts.
PC*Access(R) provides the same information as Tele*Access, but on a
personal computer via dial-up modem.
ACCOUNT SERVICES
Checking--Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield Fund and Emerging Markets Bond Fund).
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 set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. 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
distributions, 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.
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.
Performance Update--A quarterly report reviewing recent market developments
and providing comprehensive performance information for every T. Rowe Price
fund.
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
You can trade stocks, bonds, options, precious metals, and other securities at a
substantial savings over regular commission rates. Call a shareholder service
representative for more information.
15
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ANNUAL REPORT
- --------------------------------------------------------------------------------
T. Rowe Price
- -------------
NEW AMERICA GROWTH
FUND
DECEMBER 31, 1995
[LOGO APPEARS HERE]
FOR YIELD, PRICE, LAST TRANSACTION,
AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
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)/.
Invest With Confidence/(R)/ [LOGO APPEARS HERE]
T. Rowe Price
NAG
