<PAGE>
Semiannual Report
New America
Growth
Fund
-------------
June 30, 1997
-------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
New America Growth Fund
. Stocks rose sharply in the second quarter to provide stellar returns for the
first half, with large-cap, blue chip stocks surpassing small- and mid-caps.
. The fund's six-month return was solid but did not keep pace with the broad
market and its Lipper peer group, since the portfolio contains small- and
mid-cap stocks.
. The top contributors included Franklin Resources, the mutual fund firm, and
three large retailers. The worst contributor was Boston Chicken.
. The fund's sector diversification was little changed over the six months;
business services remains the major focus, followed by consumer services.
. While it is difficult to see what might derail this stock market, we are
cautious in light of the current high valuations. The fund's service sector
holdings should do well in the moderate growth environment we anticipate.
<PAGE>
Fellow Shareholders
Continuing a powerful surge that began in December 1994, the stock market rose
to record highs in the first half of 1997. The rally was led by large-
capitalization, blue chip companies, while the performance of small- and mid-cap
growth stocks was much more modest.
Since your fund invests across the size spectrum, it significantly lagged the
large-cap Standard & Poor's 500 Stock Index over the last year. The fund also
trailed the Lipper peer group average, as its average market cap far exceeds
that of New America Growth. Nevertheless, it is worth noting that over the last
5- and 10-year periods, your fund has risen 149.68% and 318.22%, respectively,
ahead of the unmanaged S&P 500 and significantly better than the Lipper peer
group average./1/
<TABLE>
<CAPTION>
- ----------------------
Performance Comparison
- ------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
- ------------------------------------------------------
<S> <C> <C>
New America Growth Fund 8.55% 13.75%
......................................................
S&P 500 20.61 34.70
......................................................
Lipper Growth Funds Average 14.28 23.96
......................................................
</TABLE>
MARKET ENVIRONMENT
Stock market investors have been treated to exemplary returns as the backdrop
for the market has been the best in years. The economic expansion is in its
seventh year and, after growing a little too fast in the first quarter of 1997,
seems to have moderated its pace recently. Thus, we have an ideal environment
where the economy is growing fast enough to accommodate good corporate earnings
growth, yet slow enough to allay fears of an impending inflationary surge. The
U.S. inflation rate appears benign, actually declining slightly in spite of a
reasonably tight job market. In Washington, the politicians are still
squabbling, but there appears to be movement by both parties toward the middle
of the political spectrum, at least on economic issues. Both parties appear to
agree on some measure of capital gains tax reduction. Meanwhile, the federal
budget deficit has declined so fast that extrapolating budget surpluses in the
years ahead may no longer be a fantastic
/1/ For the 5- and 10-year periods, the S&P 500 returned 146.55% and 292.49%,
respectively, and the Lipper Growth Funds Average 121.62% and 243.77%. Please
see page 8 for additional performance information.
1
<PAGE>
notion. Globally, we are in the midst of a relatively peaceful period in which
capitalism and democracy are ascendent. Consumer confidence is at record highs,
and individual investors continue to pour money into equity mutual funds.
Despite vibrant demand for equity offerings, corporate stock buybacks and record
merger and acquisition activity are retiring stock as fast as it is issued.
SMALL- AND MID-CAP COMPANIES LAGGED THE RALLY BY A SIGNIFICANT MARGIN.
After the 69.2% cumulative gain of the S&P 500 in 1995 and 1996, its third-best
two-year return in six decades, many observers, ourselves included, believed the
market was due for a pause. While the market did correct almost 10% in March
and April, it rebounded quickly. Large-cap companies led the way, as investors
continued to be enamored with franchise brands like Coca-Cola, Procter & Gamble,
and GE. Small- and mid-cap companies lagged the rally by a significant margin.
Within these sectors, value stocks outperformed growth stocks by a considerable
margin.
PORTFOLIO REVIEW
Our objective is to invest in a diversified group of rapidly growing companies
primarily in the service sector of the economy. The fund's relative performance
is typically correlated strongly to investor perceptions of economic growth.
When the economy is perceived to be strong, the stocks of cyclical companies
sprint ahead, whereas in periods of economic weakness, investors tend to
gravitate toward companies with steadier growth rates, like the service
companies in which we invest. In the last year, however, we believe the
underperformance of the fund relative to the S&P 500 was attributable to two
major factors. First, the fund's many smaller and mid-cap companies did not
keep pace with their larger-company counterparts. Secondly, while the largest
growth stocks performed well, we had an anomalous situation where smaller and
mid-cap growth stocks significantly underperformed value stocks in their
respective categories.
The fund's top contributor for the 6- and 12-month periods ending June 30 was
Franklin Resources, the mutual fund firm, which benefited from an ebullient
stock market, good cash inflows, and a well-timed acquisition. Three retailers
were also among the top contributors for both periods: General Nutrition, the
nation's leading retailer of
2
<PAGE>
vitamin and other health-related products and a long-time fund holding, which
rebounded from a temporary sales slowdown in mid-1996; Cole National, a retailer
with interests in vision and gift stores, which acquired Pearle Vision Centers
in a transaction that should boost earnings; and Costco Companies, the leading
membership warehouse club, which has reported strong sales and earnings
increases.
Unfortunately, some of these contributions were offset by disappointments. The
fund's largest detractor in the first half was Boston Chicken, the restaurant
franchisor, whose stock fell over 50% when an unanticipated sales slowdown
precipitated a reevaluation by investors of what was, in hindsight, an overly
aggressive expansion plan and a problematic financial structure. The second-
worst stock was Mercury Finance, a leader in subprime used car lending. Along
with other investors, we were victimized by management fraud and manipulation of
financial statements, and we are seeking redress through legal action. For the
12-month period, the worst performer was Paging Network, the leading national
paging service provider, which experienced delays and higher-than-anticipated
costs on a new product launch.
The portfolio remains well diversified in the services sector with few major
changes since year-end, as shown in the table.
<TABLE>
<CAPTION>
- ----------------------
Sector Diversification
- ---------------------------------------------
12/31/96 6/30/97
- ---------------------------------------------
<S> <C> <C>
Financial Services 20% 20%
.............................................
Consumer Services 32 32
.............................................
Business Services 44 41
.............................................
Reserves 4 7
- ---------------------------------------------
Total 100% 100%
</TABLE>
Additions to the portfolio in the last several months include COREStaff and
Safeway. COREStaff is a leading provider of temporary help services, focusing
on the higher-margin, faster-growing professional services market, especially
information technology. The company is also participating in the rapid
consolidation of the staffing industry. In the last several years, new
management at Safeway, a supermarket chain, has transformed a mediocre company
into a well-operated, shareholder-oriented organization we believe can grow well
into the future.
We continue to seek companies with exceptional growth prospects in all economic
climates, and the portfolio's growth characteristics remain strong. Rather than
pay high dividends, most portfolio companies
3
<PAGE>
reinvest their earnings in their businesses to maintain or increase their
earnings growth. In fact, many pay no dividends at all in order to sustain
steady earnings increases of 20% or more annually. As shown in the table, the
prospective earnings growth rate of our portfolio companies is well above that
of the market as a whole, yet the fund's aggregate price/earnings ratio (P/E) is
only modestly higher.
<TABLE>
<CAPTION>
- -------------------------
Portfolio Characteristics
- --------------------------------------------------------------------------------
New America
As of 6/30/97 Growth Fund S&P 500
- --------------------------------------------------------------------------------
<S> <C> <C>
Earnings Growth Rate
Estimated Next 5 Years* 19.3% 12.4%
................................................................................
Profitability - Return on
Equity Latest 12 Months 15.2 20.5
................................................................................
Dividend Yield on Stocks 0.4 1.7
................................................................................
P/E Ratio (Based on Next 12
Months' Estimated Earnings) 19.7X 18.7X
................................................................................
</TABLE>
* Forecasts are based on T. Rowe Price research and are in no way indicative of
future investment returns.
OUTLOOK
As we mentioned, a combination of factors -- moderate domestic economic growth,
low inflation and interest rates, growing corporate earnings, rapidly declining
budget deficits, and a benign global political environment -- present a very
favorable backdrop for the stock market, in our opinion. It is difficult to
envisage a major stock market setback in this context. However, stock valuations
are high by historical standards using traditional benchmarks such as P/E and
price/book ratios, and dividend yields. The Leuthold Group reports that the 15-
year compound annual return for the S&P 500 as of June 30 was 18.8%, the best
such period ever recorded, far above the 10.7% 1926-to-date median.
Perhaps we have entered a "new era" of peace and prosperity. However, students
of the stock market know from experience that the most dangerous phrase in the
language is "this time it's different." After all, the stock market reflects
human emotion, which can vary greatly over long periods.
It is interesting to note that small- and mid-cap stocks often lead the market
in the latter stages of bull markets, yet this is not the case today. With blue
chip stocks trading at P/Es well above their growth rates, it is possible the
sector many consider the "safest" may actually be the riskiest.
4
<PAGE>
We remain optimistic about the long-term prospects for the portfolio's
companies. Their relatively noncyclical, service-oriented businesses appear to
be well positioned for the moderate economic growth environment we anticipate.
We believe your fund should be able to achieve 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
July 18, 1997
5
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percent of
Net Assets
6/30/97
- --------------------------------------------------------------------------------
<S> <C>
Franklin Resources 3.2%
................................................................................
CUC International 2.8
................................................................................
First Data 2.8
................................................................................
HFS 2.7
................................................................................
ACE Limited 2.4
- --------------------------------------------------------------------------------
General Nutrition 2.3
................................................................................
Cole National 2.3
................................................................................
Vencor 2.1
................................................................................
La Quinta Inns 2.0
................................................................................
UNUM 2.0
- --------------------------------------------------------------------------------
Comcast 2.0
................................................................................
Quorum Health Group 1.9
................................................................................
Service Corp. International 1.9
................................................................................
USA Waste Services 1.9
................................................................................
Cardinal Health 1.8
- --------------------------------------------------------------------------------
Catalina Marketing 1.8
................................................................................
Freddie Mac 1.8
................................................................................
Interim Services 1.7
................................................................................
AccuStaff 1.7
................................................................................
BISYS Group 1.6
- --------------------------------------------------------------------------------
Costco Companies 1.6
................................................................................
Smith International 1.6
................................................................................
Outback Steakhouse 1.6
................................................................................
Norwest 1.5
................................................................................
Carnival 1.5
- --------------------------------------------------------------------------------
Total 50.5%
</TABLE>
6
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- -------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
6 Months Ended 6/30/97
Ten Best Contributors Ten Worst Contributors
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Franklin Resources 50 cents Boston Chicken - 45 cents
....................................................... .......................................................
General Nutrition 43 Mercury Finance 39
....................................................... .......................................................
Cole National 38 Employee Solutions * 29
....................................................... .......................................................
ADT 31 Scholastic ** 29
....................................................... .......................................................
Vencor 23 Paging Network ** 23
....................................................... .......................................................
First Data 21 Ikon Office Solutions 20
....................................................... .......................................................
Costco Companies 20 Corporate Express 19
....................................................... .......................................................
ACE Limited 19 Republic Industries 15
....................................................... .......................................................
COREStaff * 19 Unisource Worldwide ** 8
....................................................... .......................................................
Smith International 17 PacifiCare Health Systems ** 7
- ------------------------------------------------------- -------------------------------------------------------
Total 281 cents Total - 234 cents
</TABLE>
<TABLE>
<CAPTION>
12 Months Ended 6/30/97
Ten Best Contributors Ten Worst Contributors
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Franklin Resources 61 cents Paging Network ** - 49 cents
....................................................... .......................................................
Cole National 53 United Healthcare ** 38
....................................................... .......................................................
ADT 50 Mercury Finance 38
....................................................... .......................................................
Revco ** 42 Corporate Express 37
....................................................... .......................................................
General Nutrition 41 Boston Chicken 35
....................................................... .......................................................
ACE Limited 41 Apria Healthcare 30
....................................................... .......................................................
Smith International 34 Employee Solutions * 29
....................................................... .......................................................
Costco Companies 33 HFS 25
....................................................... .......................................................
MGIC Investment 32 Scholastic ** 25
....................................................... .......................................................
Eckerd ** 29 Olsten ** 25
- ------------------------------------------------------- -------------------------------------------------------
Total 416 cents Total - 331 cents
</TABLE>
* Position added
** Position eliminated
7
<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
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
S&P 500 LIPPER GROWTH NEW AMERICA
INDEX FUNDS AVERAGE GROWTH FUND
------- ------------- -----------
<S> <C> <C> <C>
6/30/87 10,000 10,000 10,000
6/88 9,307 9,461 9,604
6/89 11,220 11,118 12,081
6/90 13,070 12,820 13,715
6/91 14,036 13,558 14,565
6/92 15,919 15,330 16,750
6/93 18,089 17,982 21,188
6/94 18,342 18,268 21,641
6/95 23,125 22,490 26,622
6/96 29,138 27,454 36,767
6/97 39,249 34,377 41,822
</TABLE>
- ------------------------------------
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>
<CAPTION>
Periods Ended 6/30/97 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New America Growth Fund 8.55% 24.56% 20.08% 15.38%
................................................................................
</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.
8
<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
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 38.37 $ 34.91 $ 25.42 $ 28.04 $ 24.86 $ 22.79
......................................................................
Investment activities
Net investment income (0.07) (0.13) (0.12) (0.07) (0.08) (0.04)
Net realized and
unrealized gain (loss) 3.35 7.08 11.36 (2.02) 4.39 2.29
......................................................................
Total from
investment activities 3.28 6.95 11.24 (2.09) 4.31 2.25
......................................................................
Distributions
Net realized gain - (3.49) (1.75) (0.53) (1.13) (0.18)
......................................................................
NET ASSET VALUE
End of period $ 41.65 $ 38.37 $ 34.91 $ 25.42 $ 28.04 $ 24.86
----------------------------------------------------------------------
Ratios/Supplemental Data
Total return 8.55% 20.01% 44.31% (7.43)% 17.44% 9.89%
...................................................................................................
Ratio of expenses to
average net assets 0.98%+ 1.01% 1.07% 1.14% 1.23% 1.25%
...................................................................................................
Ratio of net investment
income to average
net assets (0.35)%+ (0.39)% (0.46)% (0.27)% (0.39)% (0.44)%
...................................................................................................
Portfolio turnover rate 49.5%+ 36.7% 56.2% 31.0% 43.7% 26.4%
...................................................................................................
Average commission
rate paid $ 0.0469 $ 0.0545 - - - -
...................................................................................................
Net assets, end of period
(in millions) $ 1,554 $ 1,440 $ 1,028 $ 646 $ 619 $ 480
...................................................................................................
</TABLE>
+ Annualized.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1997
<TABLE>
<CAPTION>
- -----------------------
Statement of Net Assets Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Common Stocks 92.7%
FINANCIAL SERVICES 19.4%
Bank and Trust 1.5%
Norwest 425,000 $ 23,906
................................................................................
23,906
............
Insurance 6.7%
ACE Limited 500,000 36,938
................................................................................
MGIC Investment 400,000 19,175
................................................................................
PMI Group 275,000 17,153
................................................................................
UNUM 750,000 31,500
................................................................................
104,766
............
Investment Services 3.2%
Franklin Resources 675,000 48,980
................................................................................
48,980
............
Other Financial Services 8.0%
Fairfax Financial (144a) (CAD) * 56,000 16,221
................................................................................
Fannie Mae 400,000 17,450
................................................................................
Freddie Mac 800,000 27,500
................................................................................
Green Tree Financial 650,000 23,156
................................................................................
Household International 200,000 23,487
................................................................................
Mercury Finance 1,000,000 2,438
................................................................................
Money Store 475,000 13,582
................................................................................
123,834
............
Total Financial Services 301,486
............
CONSUMER SERVICES 31.9%
Retailing/General Merchandisers 2.8%
Costco Companies * 750,000 24,680
................................................................................
Safeway * 400,000 18,450
................................................................................
43,130
............
Retailing/Specialty Merchandisers 10.8%
AutoZone * 704,900 16,609
................................................................................
Circuit City Stores 500,000 17,781
................................................................................
Cole National (Class A) + * 800,000 35,200
................................................................................
General Nutrition * 1,300,000 36,319
................................................................................
Home Depot 300,000 20,681
................................................................................
</TABLE>
10
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Kohl's * 300,000 $ 15,881
................................................................................
PETsMART * 1,300,000 14,910
................................................................................
Tommy Hilfiger * 267,800 10,762
................................................................................
168,143
............
Entertainment and Leisure 5.6%
Carnival ADR (Class A) 575,000 23,719
................................................................................
Disney 275,000 22,069
................................................................................
Extended Stay America * 670,000 9,987
................................................................................
La Quinta Inns 1,450,000 31,718
................................................................................
87,493
............
Media/Communication Services 5.7%
AirTouch Communications * 850,000 23,269
................................................................................
Comcast (Class A Special) 1,450,000 30,948
................................................................................
Outdoor Systems * 461,900 17,610
................................................................................
Tribune 337,500 16,221
................................................................................
88,048
............
Restaurants/Food Distribution 2.3%
Boston Chicken * 763,400 10,664
................................................................................
Outback Steakhouse * 1,000,000 24,156
................................................................................
34,820
............
Personal Services 4.7%
CUC International * 1,700,000 43,881
................................................................................
Service Corp. International 900,000 29,588
................................................................................
73,469
............
Total Consumer Services 495,103
............
BUSINESS SERVICES 40.9%
Health Care Services 6.4%
Apria Healthcare * 229,400 4,072
................................................................................
Columbia/HCA Healthcare 500,000 19,656
................................................................................
PhyCor * 375,000 12,902
................................................................................
Quorum Health Group * 850,000 30,281
................................................................................
Vencor * 778,000 32,871
................................................................................
99,782
............
Distribution Services 4.0%
Cardinal Health 500,000 28,625
................................................................................
Ikon Office Solutions 925,000 23,067
................................................................................
</TABLE>
11
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Patterson Dental * 309,200 $ 10,571
................................................................................
62,263
.............
Computer Services 6.6%
BISYS Group * 610,000 25,601
................................................................................
First Data 975,000 42,839
................................................................................
SABRE Group Holdings * 400,000 10,850
................................................................................
SunGard Data Systems * 500,000 23,250
................................................................................
102,540
.............
Environmental Services 3.0%
Republic Industries * 737,000 18,193
................................................................................
USA Waste Services * 750,000 28,969
................................................................................
47,162
.............
Energy Services 5.8%
BJ Services * 225,000 12,066
................................................................................
Camco International 350,000 19,162
................................................................................
Schlumberger 100,000 12,500
................................................................................
Smith International * 400,000 24,300
................................................................................
Western Atlas * 300,000 21,975
................................................................................
90,003
.............
Other Business Services 15.1%
AccuStaff * 1,100,000 26,056
................................................................................
ADT * 472,000 15,576
................................................................................
ADVO * 775,000 12,594
................................................................................
Catalina Marketing * 592,500 28,514
................................................................................
COREStaff * 871,100 23,574
................................................................................
Corporate Express * 1,600,700 23,060
................................................................................
Employee Solutions * 609,500 3,381
................................................................................
Global DirectMail * 550,400 14,345
................................................................................
HFS * 725,000 42,050
................................................................................
Interim Services * 600,000 26,700
................................................................................
Paychex 450,000 17,269
................................................................................
Sylvan Learning Systems * 31,400 1,065
................................................................................
234,184
.............
Total Business Services 635,934
.............
Miscellaneous Common Stocks 0.5% 7,854
.............
Total Common Stocks (Cost $933,144) 1,440,377
.............
</TABLE>
12
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Short-Term Investments 9.6%
Certificates of Deposit 0.6%
Caisse National de Credit Agricole, 5.63%,
8/11/97 $ 10,000,000 $ 10,000
................................................................................
10,000
.............
Commercial Paper 9.0%
Abbey National N.A., 5.55%, 8/12/97 10,000,000 9,935
................................................................................
Allied Signal, 4(2), 5.58%, 7/15/97 10,000,000 9,978
................................................................................
Asset Securitization Cooperative, 4(2),
5.53%, 7/21/97 10,000,000 9,969
................................................................................
BT Securities, 5.57%, 8/25/97 10,000,000 9,915
................................................................................
Countrywide Funding, 5.60%, 7/22/97 10,000,000 9,968
................................................................................
Finova Capital, 5.62%, 7/24/97 10,000,000 9,964
................................................................................
Halifax, 5.54%, 7/14/97 10,000,000 9,980
................................................................................
National Rural Utilities Cooperative Finance
5.55%, 9/8/97 10,000,000 9,894
................................................................................
Preferred Receivables Funding, 5.60%, 8/4/97 10,000,000 9,947
................................................................................
Repeat Offering Security Entity, 5.60%, 8/29/97 10,000,000 9,908
................................................................................
Statoil (Den Norske Stats Oljeselskap)
5.54 - 5.55%, 7/7 - 7/17/97 14,000,000 13,981
................................................................................
Investments in Commercial Paper through a
Joint Account 6.05 - 6.20%, 7/1/97 26,671,771 26,672
................................................................................
140,111
.............
Total Short-Term Investments (Cost $150,111) 150,111
.............
</TABLE>
13
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Total Investments in Securities
102.3% of Net Assets (Cost $1,083,255) $ 1,590,488
Other Assets Less Liabilities (36,451)
.............
NET ASSETS $ 1,554,037
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (2,542)
Accumulated net realized gain/loss - net of distributions 76,699
Net unrealized gain (loss) 507,233
Paid-in-capital applicable to 37,308,379 shares of no par
value capital stock outstanding; unlimited number of shares
authorized 972,647
.............
NET ASSETS $ 1,554,037
-------------
NET ASSET VALUE PER SHARE $ 41.65
-------------
</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."
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at period-end amounts to
1.04% of net assets.
CAD Canadian dollar
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
Unaudited
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months
Ended
6/30/97
<S> <C>
Investment Income
Income
Dividend $ 2,677
Interest 1,839
.............
Total income 4,516
.............
Expenses
Investment management 4,869
Shareholder servicing 1,989
Prospectus and shareholder reports 63
Custody and accounting 61
Registration 57
Trustees 7
Legal and audit 6
Miscellaneous 6
.............
Total expenses 7,058
.............
Net investment income (2,542)
.............
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 47,592
Change in net unrealized gain or loss on securities 76,284
.............
Net realized and unrealized gain (loss) 123,876
.............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 121,334
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/97 12/31/96
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ (2,542) $ (4,941)
Net realized gain (loss) 47,592 148,351
Change in net unrealized gain or loss 76,284 76,091
..............................
Increase (decrease) in net assets from
operations 121,334 219,501
..............................
Distributions to shareholders
Net realized gain - (120,154)
..............................
Capital share transactions*
Shares sold 201,231 536,293
Distributions reinvested - 117,263
Shares redeemed (208,717) (340,924)
..............................
Increase (decrease) in net assets from capital
share transactions (7,486) 312,632
..............................
Net Assets
Increase (decrease) during period 113,848 411,979
Beginning of period 1,440,189 1,028,210
..............................
End of period $ 1,554,037 $ 1,440,189
------------------------------
*Share information
Shares sold 5,228 13,831
Distributions reinvested - 3,087
Shares redeemed (5,459) (8,836)
..............................
Increase (decrease) in shares outstanding (231) 8,082
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1997
- -----------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 and commenced operations on September 30, 1985.
Valuation Equity securities are valued at the last quoted sales price on the
day the valuations are made. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Listed securities not traded on a particular
day and securities 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 amortized cost which, when combined
with accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
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.
Currency Translation Assets and liabilities are translated into U.S. dollars at
the prevailing exchange rate at the end of the reporting period. Purchases and
sales of securities and income and expenses are translated into U.S. dollars at
the prevailing exchange rate on the dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized security gains and
losses is reflected as a component of such gains and losses.
Premiums and Discounts Premiums and discounts on debt securities are amortized
for both financial reporting and tax purposes.
17
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
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
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 $341,474,000 and $405,718,000, respectively, for the six
months ended June 30, 1997.
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, 1997, the aggregate cost of investments for federal income tax and
financial reporting purposes was $1,083,255,000, and net unrealized gain
aggregated $507,233,000, of which $553,913,000 related to appreciated
investments and $46,680,000 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 $848,000 was payable at June 30, 1997. The fee is computed daily and
paid monthly, and consists of an individual fund fee equal to 0.35%
18
<PAGE>
T. Rowe Price New America Growth Fund
- --------------------------------------------------------------------------------
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 0.30% for assets in excess of $80 billion.
At June 30, 1997, and for the six months then ended, the effective annual group
fee rate was 0.33%. 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 $1,733,000 for the six months
ended June 30, 1997, of which $317,000 was payable at period-end.
19
<PAGE>
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 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.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access/(R)/ and
T. Rowe Price OnLine.
DISCOUNT BROKERAGE*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
INVESTMENT INFORMATION
Combined Statement Overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
20
<PAGE>
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
.............................
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
.............................
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Insured
Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Government Bond
International Bond
MONEY MARKET FUNDS
.............................
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
.............................
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
.............................
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
*Closed to new investors.
**Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY.
T. Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
21
<PAGE>
For yield, price, last transaction, current balance, or to conduct transactions,
24 hours, 7 days a week, call Tele*Access(R): 1-800-638-2587 toll free
For assistance with your existing fund account, call: Shareholder Service Center
1-800-225-5132 toll free 410-625-6500 Baltimore area
To open a Discount Brokerage account or obtain information, call: 1-800-638-5660
toll free
Internet address: www.troweprice.com
T. Rowe Price Associates
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).
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor.
