<PAGE>
Semiannual Report
NEW AMERICA
GROWTH
FUND
-------------
JUNE 30, 1998
-------------
T. ROWE PRICE
<PAGE>
Report Highlights
- --------------------------------------------------------------------------------
New America Growth Fund
. Stocks surged in the first half as investors were buoyed by extremely
favorable economic conditions and shrugged off Asia's financial collapse.
. Following recent patterns, large-cap stocks led while small- and mid-cap
stocks lagged significantly.
. The fund performed well, keeping pace with the S&P 500 and exceeding its
Lipper peer group average for the six months; for the 12 months, it
surpassed both measures.
. All three major sectors of the portfolio contributed to the strong
returns--consumer services, financial services, and business services.
. We believe the fund's outlook is favorable, as our noncyclical service
businesses should be less affected than other types of companies by the
Asian situation and any slowdown in U.S. growth.
<PAGE>
Fellow Shareholders
Financial market conditions remained extremely favorable in the first half of
1998. Continued strong domestic economic growth, low inflation, and declining
long-term interest rates sent both the stock and bond markets to new highs.
Investors shrugged off both the growing problems in Asia and record high stock
valuations. The Standard & Poor's 500 Stock Index rose 17.71% in the six months,
all the more impressive after 1997's strong 33.36% advance. Following the
pattern of recent years, large-capitalization blue chips continued to lead the
market while small- and mid-cap issues lagged significantly.
- -----------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
Periods Ended 6/30/98 6 Months 12 Months
- --------------------------------------------------------------------------------
New America Growth Fund 17.27% 30.82%
................................................................................
S&P 500 17.71 30.16
................................................................................
Lipper Growth Funds Average 15.10 25.38
................................................................................
Against this backdrop of narrow market leadership, we are pleased to report that
the New America Growth Fund kept pace with the unmanaged S&P 500, rising 17.27%
for the six months and 30.82% for the 12-month period. The fund comfortably
outperformed the average growth fund in the Lipper universe for both periods.
New America's focus on high-growth, domestic service-based companies helped it
avoid being hurt by fallout from the economic crisis in Asia.
Market Environment
Investors continued to benefit from a nearly perfect economic and financial
climate. The U.S. economy is on its way to a record eighth consecutive year of
expansion, with growth in the first half of 1998 at or above the level forecast
by most economists. Corporate profits also remained surprisingly strong for this
late stage of the economic cycle, although signs of a slowdown are appearing.
Inflation remained low despite the robust economy and strong labor markets. A
surging dollar has forced U.S. companies to maintain stable product prices in
1
<PAGE>
order to remain competitive and has kept labor costs in check. Interest rates
declined modestly this year as well, despite the strong economy, as foreigners
sought dollar-denominated securities in response to the turmoil in Asia. In
addition, investors cheered the improved fiscal health of the U.S.; estimates of
the expected federal budget surplus, the first since 1969, increased as the year
unfolded.
. . . INVESTORS HAVE BEEN SEEKING COMPANIES WHOSE GROWTH PROSPECTS ARE
RELATIVELY IMMUNE TO FOREIGN ECONOMIC CONDITIONS.
The political environment in Washington remained favorable for investors. The
economy has swelled federal coffers, and antibusiness sentiment in Washington is
extremely low. Last year, Congress passed a bill cutting the capital gains tax
rate for the first time since 1981. Stock market supply and demand forces also
remained positive, with equity mutual fund inflows continuing at record levels.
Strong corporate earnings and high stock prices led to a record number of
mergers and a high level of stock repurchase activity. All in all, stock market
conditions were extraordinarily favorable.
The major uncertainty facing the market is whether the economic crisis in Asia
will seriously affect U.S. companies and overall domestic growth. An increasing
number of U.S. multinationals and major exporters to Asia have begun to be hurt.
Fortunately, our economy does not rely heavily on Asian demand, and, in the
short run, declining Asian currencies have forced U.S. companies to keep prices
down. At this point, we believe the U.S. economy will be able to weather the
problems in Asia without being significantly affected. The risk of a worsening
of the Asian crisis, however, will remain a wild card for the U.S. market in the
near term.
Strength in the major market indices masked the increasing underperformance of
all but a small number of large blue chips. Small- and mid-cap issues lagged by
wider and wider margins. In the first half, the 10 largest companies in the S&P
500 rose 25% on average while the 200 smallest rose just 6.5%. Valuation levels
of the large-cap market leaders have soared, creating a two-tier market
increasingly reminiscent of the "Nifty Fifty" growth stock market of the early
1970s. On a relative basis, small- and mid-cap stocks are now as cheap as at the
market's lows in 1990.
Growth stocks performed well through June, surpassing the value sector. These
stocks tend to do well when investors fear that a slowing economy will reduce
the growth rate of corporate profits. With many
2
<PAGE>
cyclical companies hurt by Asia, investors have been seeking companies whose
growth prospects are relatively immune to foreign economic conditions. This
trend has increased investor interest in the types of businesses New America
Growth Fund focuses on -- domestic, noncyclical, service-based companies.
Portfolio Review
All three major sectors of the portfolio contributed to the fund's strong first
half performance -- financial services, consumer services, and business
services. Media and communications companies were the best performers for the
period. We boosted holdings in this area over the past year, and they now
represent approximately 18% of assets. Our top three performers so far this year
all were in the media and communications area: Outdoor Systems, a leading
consolidator of the outdoor advertising market; AirTouch Communications, a top
domestic and international cellular telephone service provider; and Telecom
Liberty Media, the largest owner of cable TV networks. Other top performers
include mutual fund provider Franklin Resources, cruise ship operator Carnival,
and office supplies marketer Viking Office Products.
Energy service stocks were among the fund's few decliners in the first half as
investors worried that falling oil prices and oversupply might lead to lower
future drilling activity. However, the drop in Smith International and
Schlumberger was partially offset by takeover offers for our other two energy
service holdings, Camco International and Western Atlas. Our health care
services stocks including PhyCor and Concentra Managed Care also fell, as
investors became increasingly concerned about the profit outlook for managed
care companies.
Our largest decliner was Cendant, which fell nearly 40% in the first half.
Cendant was formed in December 1997 by the merger of CUC International and HFS,
both longtime fund holdings and major contributors to performance over the last
five years. In April, the company disclosed potential accounting irregularities
at its former CUC International unit, triggering a 45% drop in its stock the day
of the announcement. We had trimmed our Cendant holding somewhat before the
downturn and more in its aftermath. The stock declined further in July when the
company announced that last year's earnings
3
<PAGE>
- -----------------------
Sector Diversification
- --------------------------------------------------------------------------------
6/30/97 12/31/97 6/30/98
- --------------------------------------------------------------------------------
Financial Services 19.5% 18.6% 16.0%
................................................................................
Consumer Services 33.2 43.0 46.4
................................................................................
Business Services 40.0 32.9 33.4
................................................................................
Reserves 7.3 5.5 4.2
- --------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
overstatement was greater than initially thought. The company remains profitable
and generates substantial free cash flow. Its decline is overdone, in our
opinion, and we continue to hold Cendant shares.
Changes in sector weightings in the last six months were relatively modest. As
noted, we continued to boost our media and communications holdings in the
consumer services sector with the addition of Jacor Communications and
Chancellor Media, both large owners of radio stations. Western Wireless, a
growing cellular telephone service provider, was also added. We restructured our
financial service holdings in the first half, reducing our insurance positions
and adding several new names, including BANC ONE, Morgan Stanley Dean Witter
Discover, Travelers Group, and Associates First Capital.
Outlook
The U.S. economy remains healthy, with inflation and interest rate
levels supportive of continued strong financial markets. Corporate profit gains
also remain vibrant, but the rate of growth is slowing because of the maturing
economy, fallout from the strong U.S. dollar, and the effects of Asia's
difficulties. Stock market valuation levels are high by any measure but are
particularly extended for the short list of market-leading blue chips. Valuation
levels for most stocks are more reasonable, however, and can be justified as
long as interest rates and inflation remain low.
We believe the outlook for the New America Growth Fund is favorable. Our
portfolio of noncyclical domestic service businesses has minimal exposure to the
problems in Asia or to the effects of a continued strong U.S. dollar. Should
domestic economic growth taper off, our holdings in such areas as financial
services, media and entertainment, communications, and business services should
be less affected than stocks in other sectors. Our portfolio's valuation level
has not moved up as much as the overall market and remains reasonable if our
4
<PAGE>
forecast of close to 20% earnings growth for portfolio companies proves
accurate. We anticipate attractive long-term returns for the fund.
Respectfully submitted,
John H. Laporte
President and Chairman of the Investment Advisory Committee
Brian W.H. Berghuis
Executive Vice President
July 23, 1998
5
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/98
- --------------------------------------------------------------------------------
USA Waste Services 2.7%
................................................................................
AirTouch Communications 2.6
................................................................................
Franklin Resources 2.6
................................................................................
Outdoor Systems 2.1
................................................................................
Viking Office Products 2.0
- --------------------------------------------------------------------------------
Service Corp. International 2.0
................................................................................
Cardinal Health 2.0
................................................................................
General Nutrition 1.9
................................................................................
Carnival 1.9
................................................................................
Comcast 1.9
- --------------------------------------------------------------------------------
Telecom Liberty Media 1.8
................................................................................
Freddie Mac 1.8
................................................................................
Interim Services 1.8
................................................................................
Metamor Worldwide 1.8
................................................................................
Cendant 1.8
- --------------------------------------------------------------------------------
The CIT Group 1.8
................................................................................
WorldCom 1.7
................................................................................
AutoZone 1.7
................................................................................
Costco Companies 1.7
................................................................................
Home Depot 1.6
- --------------------------------------------------------------------------------
Circuit City Stores 1.6
................................................................................
Outback Steakhouse 1.6
................................................................................
Quorum Health Group 1.6
................................................................................
Galileo International 1.6
................................................................................
First Data 1.6
- --------------------------------------------------------------------------------
Total 47.2%
6
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 6/30/98
Ten Best Contributors Ten Worst Contributor
- --------------------------------------------------------------------------------
Outdoor Systems 43(cent) Cendant - 94(cent)
................................................................................
AirTouch Communications 41 Smith International 23
................................................................................
Telecom Liberty Media 39 PhyCor 22
................................................................................
Franklin Resources 35 Avis Rent A Car * 10
................................................................................
Carnival 33 Ikon Office Solutions ** 9
................................................................................
Galileo International 32 Concentra Managed Care * 9
................................................................................
Viking Office Products 32 UNUM ** 9
................................................................................
USAWaste Services 30 MGIC Investment 6
................................................................................
WorldCom 29 General Nutrition 6
................................................................................
Fairfax Financial 29 Schlumberger 6
- --------------------------------------------------------------------------------
Total 343(cent) Total 194(cent)
12 Months Ended 6/30/98
Ten Best Contributors Ten Worst Contributors
- --------------------------------------------------------------------------------
AirTouch Communications 73(cent) Vencor ** - 36(cent)
................................................................................
Outdoor Systems 67 PhyCor 31
................................................................................
Comcast 65 First Data 28
................................................................................
Franklin Resources 62 Smith International 21
................................................................................
Carnival 54 Cendant 15
................................................................................
Costco Companies 49 Green Tree Financial ** 12
................................................................................
Cardinal Health 47 Extended Stay America 12
................................................................................
Telecom Liberty Media * 43 Money Store ** 11
................................................................................
Home Depot 42 Avis Rent A Car * 10
................................................................................
ACE Limited 38 Cole National 10
- --------------------------------------------------------------------------------
Total 540(cent) Total - 186(cent)
* 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
- --------------------------------------------------------------------------------
Index#1 Index#2 Fund-Line
6/88 10,000 10,000 10,000
6/89 12,055 11,728 12,580
6/90 14,042 13,541 14,281
6/91 15,081 14,385 15,166
6/92 17,104 16,309 17,441
6/93 19,435 19,090 22,062
6/94 19,707 19,356 22,534
6/95 24,846 23,835 27,720
6/96 31,306 29,065 38,284
6/97 42,170 36,553 43,547
6/98 54,889 46,050 59,969
- -------------------------------------
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.
Periods Ended 6/30/98 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
New America Growth Fund 30.82% 27.14% 20.89% 19.00%
................................................................................
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
- --------------------------------------------------------------------------------
- --------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 MONTHS YEAR
ENDED ENDED
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 44.19 $ 38.37 $ 34.91 $ 25.42 $ 28.04 $ 24.86
.........................................................................................
Investment activities
Net investment income (0.12) (0.13) (0.13) (0.12) (0.07) (0.08)
..........................................................................................
Net realized and
unrealized gain (loss) 7.75 8.15 7.08 11.36 (2.02) 4.39
..........................................................................................
Total from
investment activities 7.63 8.02 6.95 11.24 (2.09) 4.31
..........................................................................................
Distributions
Net realized gain - (2.20) (3.49) (1.75) (0.53) (1.13)
..........................................................................................
NET ASSET VALUE
End of period $ 51.82 $ 44.19 $ 38.37 $ 34.91 $ 25.42 $ 28.04
- ------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C> <C>
Total return-> 17.27% 21.10% 20.01% 44.31% (7.43)% 17.44%
..........................................................................................
Ratio of expenses to
average net assets 0.95%a 0.96% 1.01% 1.07% 1.14% 1.23%
..........................................................................................
Ratio of net investment
income to average
net assets (0.49)%a (0.34)% (0.39)% (0.46)% (0.27)% (0.39)%
..........................................................................................
Portfolio turnover rate 23.3% 43.2% 36.7% 56.2% 31.0% 43.7%
..........................................................................................
Net assets, end of period
(in millions) $ 2,110 $ 1,758 $ 1,440 $ 1,028 $ 646 $ 619
..........................................................................................
</TABLE>
- ->Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
a Annualized.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
- -------------------------
STATEMENT OF NET ASSETS Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS 95.8%
FINANCIAL SERVICES 15.8%
Bank and Trust 2.3%
BANC ONE 363,000 $ 20,260
................................................................................
Norwest 800,000 29,900
................................................................................
50,160
......
Insurance 3.0%
ACE Limited 525,000 20,475
................................................................................
Fairfax Financial (CAD) * 68,800 26,837
................................................................................
MGIC Investment 275,000 15,692
................................................................................
63,004
......
Investment Services 4.5%
Franklin Resources 1,000,000 54,000
................................................................................
Morgan Stanley Dean Witter Discover 225,000 20,559
................................................................................
Travelers Group 330,000 20,006
................................................................................
94,565
......
Other Financial Services 6.0%
Associates First Capital (Class A) 335,000 25,753
................................................................................
The CIT Group (Class A) 1,000,000 37,500
................................................................................
Fannie Mae 400,000 24,300
................................................................................
Freddie Mac 825,000 38,827
................................................................................
126,380
.......
Total Financial Services 334,109
.......
CONSUMER SERVICES 46.4%
Retailing/General Merchandisers 5.8%
Costco Companies * 565,000 35,648
................................................................................
Fred Meyer * 700,000 29,750
................................................................................
Kohl's * 450,000 23,344
................................................................................
Safeway * 800,000 32,550
................................................................................
121,292
.......
Retailing/Specialty Merchandisers 9.2%
AutoZone * 1,125,000 35,929
................................................................................
Circuit City Stores 735,000 34,453
................................................................................
Cole National (Class A) * a 775,000 31,000
................................................................................
General Nutrition * 1,300,000 40,544
................................................................................
10
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Home Depot 415,000 $ 34,471
................................................................................
Republic Industries * 513,000 12,825
................................................................................
Republic Industries * c 224,000 5,600
................................................................................
194,822
........
Entertainment and Leisure 6.5%
Carnival (Class A) 1,000,000 39,625
................................................................................
Disney 265,000 27,842
................................................................................
Extended Stay America * 630,000 7,087
................................................................................
Extended Stay America * c 670,000 7,537
................................................................................
Hilton 700,000 19,950
................................................................................
Mirage Resorts * 325,000 6,927
................................................................................
Premier Parks * 424,000 28,249
................................................................................
137,217
........
Media/Communication Services 18.5%
AirTouch Communications * 950,000 55,516
................................................................................
Chancellor Media * 557,300 27,673
................................................................................
Comcast (Class A Special) 975,000 39,579
................................................................................
Jacor Communications * 500,000 29,531
................................................................................
MCI 365,000 21,204
................................................................................
Outdoor Systems * 1,575,000 44,100
................................................................................
Paging Network * 1,700,000 23,747
................................................................................
Sinclair Broadcast Group (Class A) 950,000 27,253
................................................................................
Telecom Liberty Media (Series A) * 1,000,000 38,844
................................................................................
Tribune 350,000 24,084
................................................................................
Western Wireless * 1,125,000 22,395
................................................................................
WorldCom * 750,000 36,258
................................................................................
390,184
.......
Restaurants/Food Distribution 1.6%
Outback Steakhouse * 875,000 34,098
................................................................................
34,098
.......
Personal Services 4.8%
Avis Rent A Car * 825,000 20,419
................................................................................
Cendant * 1,800,000 37,575
................................................................................
Service Corp. International 1,000,000 42,875
................................................................................
100,869
.......
Total Consumer Services 978,482
.......
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
BUSINESS SERVICES 32.7%
Health Care Services 5.0%
Concentra Managed Care * 1,050,000 $27,267
................................................................................
PhyCor * 1,000,000 16,531
................................................................................
Quorum Health Group * 1,275,000 33,748
................................................................................
Total Renal Care Holdings * 800,000 27,600
................................................................................
105,146
...........
Distribution Services 3.1%
Cardinal Health 450,000 42,187
................................................................................
Corporate Express * 1,795,000 22,718
................................................................................
64,905
...........
Computer Services 9.1%
Acxiom * 1,200,000 30,038
................................................................................
Affiliated Computer Services (Class A) * 850,000 32,725
................................................................................
BISYS Group * 750,000 30,773
................................................................................
First Data 1,000,000 33,313
................................................................................
Galileo International 740,000 33,346
................................................................................
SunGard Data Systems * 866,200 33,240
................................................................................
193,435
...........
Environmental Services 2.7%
USA Waste Services * 1,150,000 56,781
................................................................................
56,781
...........
Other Business Services 9.7%
AccuStaff * 256,900 8,028
................................................................................
ADVO * 775,000 21,845
................................................................................
Catalina Marketing * 592,500 30,773
................................................................................
Interim Services * 1,200,000 38,550
................................................................................
Metamor Worldwide * 1,075,000 37,860
................................................................................
Paychex 600,000 24,394
................................................................................
Viking Office Products * 1,375,000 43,055
................................................................................
204,505
...........
Energy Services 3.1%
Camco International 300,000 23,363
................................................................................
Schlumberger 200,000 13,663
................................................................................
Smith International * 350,000 12,184
................................................................................
12
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Western Atlas 190,000 $ 16,126
.......................................................................................
65,336
............
Total Business Services 690,108
............
Miscellaneous Common Stocks 0.9% 18,701
............
Total Common Stocks (Cost $1,212,686) 2,021,400
............
Short-Term Investments 3.9%
Money Market Funds 3.9%
Reserve Investment Fund, 5.69% # 81,884,149 81,884
.......................................................................................
Total Short-Term Investments (Cost $81,884) 81,884
............
Total Investments in Securities
99.7% of Net Assets (Cost $1,294,570) $ 2,103,284
Other Assets Less Liabilities 6,607
............
NET ASSETS $ 2,109,891
------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (4,719)
Accumulated net realized gain/loss - net of distributions 183,074
Net unrealized gain (loss) 808,714
Paid-in-capital applicable to 40,719,131 shares of no par
value capital stock outstanding; unlimited number of shares
authorized 1,122,822
............
NET ASSETS $ 2,109,891
------------
NET ASSET VALUE PER SHARE $ 51.82
------------
</TABLE>
# Seven-day yield
+ Affiliated company
* Non-income producing
++ Securities contain some restrictions as to
public resaleutotal of such securities at
period-end amounts to 0.62% of net assets.
CAD Canadian dollar
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
Unaudited
- -----------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/98
Investment Income
Income
Dividend $ 2,790
Interest 1,671
..........
Total income 4,461
..........
Expenses
Investment management 6,480
Shareholder servicing 2,455
Prospectus and shareholder reports 91
Custody and accounting 83
Registration 51
Legal and audit 7
Directors 6
Miscellaneous 7
..........
Total expenses 9,180
..........
Net investment income (4,719)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 135,241
Change in net unrealized gain or loss on securities 172,965
..........
Net realized and unrealized gain (loss) 308,206
..........
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 303,487
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
Unaudited
- ----------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/98 12/31/97
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ (4,719) $ (5,243)
Net Realized gain (loss) 135,241 101,824
Change in net unrealized gain or loss 172,965 204,800
...........................
Increase (decrease) in net assets from operations 303,487 301,381
...........................
Distributions to shareholders
Net realized gain - (83,203)
...........................
Capital share transactions *
Shares Sold 321,500 407,110
Distributions reinvested - 81,127
Shares redeemed (272,981) (388,719)
...........................
Increase (decrease) in net assets from capital
share transactions 48,519 99,518
...........................
Net Assets
Increase (decrease) during period 352,006 317,696
Beginning of period 1,757,885 1,440,189
...........................
End of period $ 2,109,891 $ 1,757,885
---------------------------
* Share information
Shares sold 6,605 9,833
Distributions reinvested - 1,898
Shares redeemed (5,662) (9,494)
...........................
Increase (decrease) in shares outstanding 943 2,237
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
- -----------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price New America Growth Fund, Inc. (the fund) is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on September 30, 1985.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
VALUATION Equity securities listed or regularly traded on a securities
exchange 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. Other
equity securities are valued at a price within the limits of the latest bid
and asked prices deemed by the Board of Directors, or by persons delegated
by the Board, best to reflect fair value.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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 Directors.
AFFILIATED COMPANIES As defined by the Investment Company Act of 1940, an
affiliated company is one in which the fund owns at least 5% of the
outstanding voting securities.
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
16
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
- --------------------------------------------------------------------------------
changes in foreign exchange rates on realized and unrealized security gains
and losses is reflected as a component of such gains and losses.
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
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $491,721,000 and $439,924,000, respectively, for the
six months ended June 30, 1998.
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, 1998, the aggregate cost of investments for federal income tax
and financial reporting purposes was $1,294,570,000, and net unrealized
gain aggregated $808,714,000, of which $844,028,000 related to appreciated
investments and $35,314,000 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 $1,105,000 was payable at June 30, 1998. The fee is computed
daily and paid monthly, and consists of an individual fund fee equal to
0.35% of average daily net assets and a group fee. The group fee is based
on the combined assets of certain mutual funds sponsored by the manager or
Rowe Price-Fleming International, Inc. (the group). The group fee rate
ranges from 0.48% for the first $1 billion of assets to 0.30% for assets in
excess of $80 billion.
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T. ROWE PRICE NEW AMERICA GROWTH FUND
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At June 30, 1998, and for the six months then ended, the effective annual
group fee rate was 0.32%. 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 $2,112,000 for the six months ended June 30, 1998, of which
$393,000 was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available
to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the six months ended
June 30, 1998, totaled $1,671,000 and are reflected as interest income in
the accompanying Statement of Operations.
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T. ROWE PRICE SHAREHOLDER SERVICES
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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 the T.
Rowe Price Web site on the Internet. Address: www.troweprice.com
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 all your accounts with T. Rowe
Price.
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.
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<PAGE>
T. ROWE PRICE MUTUAL FUNDS
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STOCK FUNDS
................................................................................
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500*
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications**
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons***
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value***
Spectrum Growth
Total Equity Market Index
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 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
*Formerly named Equity Index.
**Formerly the closed-end New Age Media Fund. Converted to open-end status on
7/28/97.
***Closed to new investors.
+Formerly named Global Government Bond.
++Neither the funds nor their share prices are insured or guaranteed by the
U.S. government.
Please call for a prospectus. Read it carefully before investing.
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.
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T. ROWE PRICE DISCOUNT BROKERAGE
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DISCOUNT BROKERAGE
A Division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC
This low-cost service gives you the opportunity to easily consolidate all
your investments with one company. Through T. Rowe Price Discount
Brokerage, you can buy and sell individual securities--stocks, bonds,
options, and others--as well as mutual funds at considerable commission
savings over full-service brokers.* We also provide a wide range of
services, including:
Automated Telephone and Internet Services You can enter trades, access
quotes, and review account information 24 hours a day, seven days a week.
Any trades executed through these programs provide additional savings on
commissions.**
Investor Information A variety of informative reports, such as our
Brokerage Insights series, S&P Market Month newsletter, and select stock
reports, can help you better evaluate economic trends and investment
opportunities.
Dividend Reinvestment Service Virtually all stocks held in customer
accounts are eligible for this service, free of charge.
* Based on an April 1998 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary by size
of order.
**Discount applies to our current commission schedule. All trades
subject to a $35 minimum commission except equity trades placed
through Internet-Trader, which are subject to a $29.95 minimum
commission.
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. F60-051 6/30/98
