<PAGE>
Semiannual Report
NEW AMERICA
GROWTH
FUND
JUNE 30, 2000
T. ROWE PRICE
<PAGE>
Report Highlights
--------------------------------------------------------------------------------
New America Growth Fund
. Amid unprecedented volatility, most major stock indexes declined in the first
half of 2000, but some formerly lagging sectors had better relative
performance.
. Results were roughly in line with the Standard & Poor's 500 Stock Index but
behind the Lipper Growth Funds Average for the six months.
. The fund's investment objective has been changed to allow greater investment
in a broad array of fast-growing sectors beyond our traditional service
company focus.
. We used the market decline to purchase shares of high-growth companies that
embody the new America in fields such as networking, e-commerce, and
biotechnology.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
<PAGE>
FELLOW SHAREHOLDERS
The stock market was extraordinarily volatile in the first half of 2000. In the
first quarter, momentum carried the hottest stocks and sectors of late 1999 to
stratospheric levels. But the onset of spring brought a correction in these
stocks, with the Nasdaq Composite falling 13% in the second quarter and a
popular Internet index falling nearly 25%. More reasonably priced stocks came to
the fore during the sell-off. However, technology stocks surged again at the end
of the period, recouping some of their losses. Most major indices ended the
first half lower, as did your fund.
The New America Growth Fund's 1.44% loss for the period was comparable to the
decline of the Standard & Poor's 500 Stock Index but trailed the 3.04% gain of
our Lipper peer group average, as shown in the table. Our six-month shortfall
against the Lipper category can be attributed to poor performance in the first
quarter, as technology stocks soared and the fund remained significantly
underweighted in the sector due to our objective as a services sector fund. For
the 12 months, the fund's underperformance again reflected our underweighting in
technology for most of the period. Effective May 1, the New America Growth Fund
revised its investment program, as approved by shareholders on April 19. The new
objective is to invest in sectors that we believe offer the most growth
potential in the years ahead rather than to focus primarily on service
companies. It is encouraging to note that during the second quarter, as we
realigned our portfolio, the fund began to perform more like a broad-based
growth fund and matched the return of the Lipper Growth Funds Average. While the
average growth fund declined in the second quarter, we expect that our new
emphasis on a variety of fast-growing sectors will improve absolute and relative
performance over the long run. Despite the fund's underperformance in the last
few years as the services sector lost ground to technology stocks, our
----------------------
PERFORMANCE COMPARISON
-------------------------------------------------------------
Periods Ended 6/30/00 6 Months 12 Months
-------------------------------------------------------------
New America Growth Fund -1.44% 0.18%
S&P 500 Stock Index -0.43 7.24
Lipper Growth Funds Average 3.04 19.61
1
<PAGE>
long-term record remains strong. For the 10-year period ended June 30, the New
America Growth Fund's average annual compound total return was 16.12%, compared
with 16.20% for the Lipper average and 17.80% for the S&P 500.
. . . A much broader group of sectors led the market in the second quarter.
In the last couple of reports we lamented that only a handful of stocks and
sectors were responsible for the vast majority of the market's gains. In the
first half, the market began to broaden in many respects. First, mid-cap stocks
outperformed large-cap stocks as the S&P MidCap Index rose nearly 9% and was the
bestperforming major index. Second, a much broader group of sectors led the
market in the second quarter. Whereas technology stocks led almost to the
exclusion of all else over the last several years, in the second quarter there
was strength in health care, business services, and even financial services.
This was reflected in your fund's better relative performance in the first half
compared with our performance over the past year. A continuation of this
broadening should be beneficial to the New America Growth Fund, as we continue
to invest in both large-and mid-cap stocks and in a broader set of industries
than most other growth funds, which focus primarily on technology.
Even with all the volatility of the first half, growth stocks still outperformed
value stocks in the period. The Russell 1000 Growth Index rose 4.23% while the
Russell 1000 Value Index fell 4.23%.
MARKET ENVIRONMENT
Early in the first half, it seemed as though the market's pattern of the past
few years would continue indefinitely - companies with high anticipated revenue
growth were rewarded with ever-higher valuations without much regard to
profitability. Leadership was narrow, with technology stocks significantly
outpacing the broader market. The tech-heavy Nasdaq Composite rose more than 12%
in the first quarter on top of its phenomenal rise in 1999. But with persistent
and increasingly aggressive rate hikes by the Federal Reserve, mounting
inflationary pressures, and unsustainably high valuations, the high-flying tech
stocks began to wobble before plummeting in April and May.
Contributing to the market's newfound sobriety was the collapse of several
high-profile dot-coms and growing evidence that without
2
<PAGE>
continued equity-market financing, many more would soon use up the capital
raised during the boom years. Internet stocks lost nearly a quarter of their
value in the second quarter. Many small- and mid- capitalization Internet stocks
fell 60% to 70% from their recent highs. Once the Internet stocks began to
unravel, investors also began to question valuations in other technology
sectors. Concern about the impact of weak markets on the earnings of major
investment banks hurt that group briefly, but heavy merger-and-acquisition
activity boosted the stocks of asset management companies. Late in the period,
initial signs of a slowdown in consumer spending helped cause more volatility in
the markets, as investors balanced the prospect of an end to Fed rate hikes with
the likelihood that earnings of economically sensitive companies - such as
retailers - would suffer.
While growth seems to be moderating due to the Fed's tighter monetary policy, we
do not appear to be headed for a recession. The economy continues to expand,
unemployment remains low, and consumer confidence is still at relatively high
levels. In fact, a mild slowdown might be a welcome relief, as it could ease
wage pressures and overall inflation, which are generally very negative for the
stock market.
PORTFOLIO REVIEW
Changes in sector weightings were significant over the last six months because
of the fund's new investment objective. The largest additions to the portfolio
were in technology and health care, while the fund's exposure to consumer
services, business services, and financial services declined materially. Two of
our important new holdings, JDS Uniphase and SDL, provide components for optical
networks. The optical group is one of the fastest-growing in the economy as
major communications companies are finding that increases in semiconductor
processing speeds are not enough to keep up with the world's insatiable demand
for bandwidth. (Bandwidth is a measure of data transmission capacity.) Optical
communications devices use light, rather than electrical impulses, to move voice
and data through a network. As many shareholders may remember from high school
physics, nothing is faster than light. Another significant new holding is Ariba,
a software company that is helping to change the way businesses communicate and
transact with each other. While the business-to-consumer sector received most of
the attention during the initial wave of Internet enthusiasm, the size of the
business-to-business market is many times larger in terms of the number of
transactions as well as the total value
3
<PAGE>
of the sales. Ariba has the opportunity to stand in the middle of a lot of
transactions and profit from both selling software to the exchange participants
and from transaction fees for value-added services. Health care companies added
in the period included pharmaceutical companies such as Pfizer, as well as
biotechnology companies such as MedImmune and Genentech.
Our biggest sale was U.S. Foodservice, a large distributor to the restaurant
industry that was acquired at a more than 40% premium by Dutch company Ahold. As
a result, U.S. Foodservice was also the second-best contributor to the fund for
the six-month period. Most of the other reductions in the portfolio were made to
fund the purchase of the names just mentioned, as well as other new holdings.
----------------------
SECTOR DIVERSIFICATION
-----------------------------------------------------------
6/30/99 12/31/99 6/30/00
-----------------------------------------------------------
Financial Services 14.5% 10.0% 8.6%
Consumer Services 27.8 24.0 14.3
Business Services 29.0 25.1 22.5
Health Care 2.7 2.0 7.0
Technology 1.2 4.1 21.1
Media Services 23.0 26.4 21.0
Reserves 1.8 8.4 5.5
Total 100% 100% 100%
Positive contributors to the portfolio came from each of our major sectors.
Although a financial services company - asset manager Waddell & Reed Financial -
was the largest contributor to the fund for the first six months, business
services and health care were the top contributing sectors. In business
services, in addition to U.S. Foodservice, Paychex and Apollo Group were also
strong performers. Paychex is the leading payroll processor for small businesses
and one of the longest-held securities in the portfolio. Apollo Group is a
leading private education company that focuses on the working adult. In addition
to its traditional bricks-and-mortar business, Apollo Group is also one of the
largest companies participating in "distance education" through the Internet.
While existing holdings in business services were stalwarts during the first
half, we also added eight new pharmaceutical and biotechnology stocks during the
period, each of which aided results. The best performer in the first half was
the combination of Pfizer and Warner-Lambert, which merged to form the largest
and what we believe will be the world's fastest-growing pharmaceutical company.
The research and development performed by the new Pfizer will exceed $5 billion.
4
<PAGE>
The second-best contributor in the health care sector was Abgenix, a
biotechnology company that discovers and develops fully human antibodies through
its proprietary technology. Antibodies are proteins produced by the immune
system to protect the body from infection. Abgenix licenses this technology to
pharmaceutical companies who use it to develop new drugs.
Media services was the worst-performing sector, primarily due to weakness in
both broadcasting and wireless communications. Both groups are among the largest
weightings in the fund, and both have been stellar performers over the last few
years. Specifically, AT&T Liberty Media, which has appreciated several fold
since its inclusion in the fund, was weak during the period. Liberty Media, a
tracking stock of AT&T, is a portfolio of companies including those in cable,
interactive TV, and the Internet. In addition, AMFM, a large owner of radio
stations, was weak in the first half due to concern that a slowdown in dot-com
advertising would hurt the growth of the overall advertising market. AMFM will
soon merge with Clear Channel to create the largest out-of-home advertising
company with nearly 900 radio stations and 450,000 outdoor ad displays. The
consumer sector was also weak, because of rising rates and worries about the
slowing economy. Home Depot, the world's largest home improvement retailer, was
the worst performer during the first half.
Other positions initiated over the past six months include Nextel
Communications, Cisco Systems, and Macromedia. Nextel is a national wireless
telephone provider with a unique focus on the high-value business market. Nextel
also generates significant positive cash flow, unlike some of the other large
wireless players. Cisco, of course, is the leading global supplier of networking
solutions for the Internet and enterprise networks. It is the dominant player in
almost all of its markets and is making significant inroads selling its
equipment in the telecommunications marketplace as telecom networks evolved from
voice to data. Finally, Macromedia is a software company that allows Web
designers to develop rich media Web sites. As broadband Internet access
increases, companies will be looking to fill those pipes with a richer
experience than traditional static Web pages offer. Macromedia's Dreamweaver has
dominant market share and is becoming the de facto standard for Web developers.
Macromedia is not only growing rapidly but also generating strong earnings per
share and cash flow.
5
<PAGE>
OUTLOOK
...We have added some very exciting new companies with strong growth prospects.
Although it is certainly more fun to invest in a market where the sky's the
limit, we are encouraged by investors' newfound skepticism about Internet and
technology stock valuations. We have written in many reports that although
fundamentals appear very robust in many areas of technology, in the end stock
prices must be supported by future earnings and cash flows. Many stocks are
trading well above their intrinsic values. Though we have changed the fund's
investment objective, we remain adamant that we will not abandon our valuation
discipline. As such, your fund is still underweighted in technology compared
with all the major growth indexes even though our exposure has grown from 4% six
months ago to about 21% at this writing. By contrast, the S&P 500 technology
weighting is closer to 30%, and many growth indexes have weightings approaching
or exceeding 40%. As we said in our last letter, we will not chase performance,
but will look for opportune times to increase our technology weighting. The
volatility in the second quarter gave us our first opportunity.
The economy continues to look healthy, but there are signs that the Fed's
attempts to engineer a slowdown are beginning to succeed. Inflation is still in
check, but the increase in energy prices is having an impact and, with
unemployment still at 4%, there is some cause for concern about rising wages.
Both the housing and retail sectors have cooled off in recent months, and more
companies are announcing earnings disappointments. We will be watching closely
for clues as to whether a soft landing or a crash landing lies ahead for the
economy. Currently, the signs are encouraging.
The outlook for the New America Growth Fund remains bright. The fund still owns
a strong stable of service companies that generate high levels of recurring
revenues. Additionally, we have added some very exciting new companies with
strong growth prospects, as we detailed in this report. Over the next several
months, the fund will continue to take the shape of a more traditional growth
fund. Because of our earlier service-sector orientation, we historically lacked
exposure to sectors that make up more than 40% of the S&P 500 and more than 50%
of major growth indexes. These under-owned sectors were primarily in technology,
including software, hardware, semiconductors, and communications equipment, as
well as in health care, including
6
<PAGE>
pharmaceuticals, biotechnology, and medical products and devices. Although some
of these stocks bring more volatility individually, we believe the added
diversification through new industry sectors, combined with the additional
growth potential, will benefit shareholders in the long term.
Respectfully submitted,
Marc L. Baylin
Chairman of the Investment Advisory Committee
July 19, 2000
7
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
--------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/00
--------------------------------------------------------------------------------
Infinity Broadcasting 3.2%
AMFM 3.1
AT&T Liberty Media 2.9
Waddell & Reed Financial 2.4
Ceridian 2.3
--------------------------------------------------------------------------------
Morgan Stanley Dean Witter 2.3
Western Wireless 2.2
Catalina Marketing 2.2
Family Dollar Stores 2.1
Comcast 1.9
--------------------------------------------------------------------------------
Freddie Mac 1.9
Concord EFS 1.8
Affiliated Computer Services 1.8
Home Depot 1.8
WorldCom 1.8
--------------------------------------------------------------------------------
TJX 1.7
Pfizer 1.7
First Data 1.7
NOVA Corporation 1.6
Vodafone AirTouch 1.6
--------------------------------------------------------------------------------
Nextel Communications 1.5
Circuit City Stores 1.5
Viad 1.5
Ariba 1.5
Schlumberger 1.4
--------------------------------------------------------------------------------
Total 49.4%
Note: Table excludes reserves.
8
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 6/30/00
Ten Best Contributors
------------------------------------------
Waddell & Reed Financial ** 56(cent)
U.S. Foodservice ** 45
Paychex 28
Apollo Group 26
ADVO 26
SDL * 23
3Com ** 22
SunGard Data Systems 20
SFX Entertainment 19
Ariba * 19
------------------------------------------
Total 284(cent)
Ten Worst Contributors
------------------------------------------
Home Depot -37(cent)
Affiliated Computer Services 31
AT&T Liberty Media 25
Liberate Technologies * 24
AMFM 18
Charter Communications ** 18
Galileo International 18
Metamor Worldwide ** 17
Western Wireless 17
Microsoft 16
------------------------------------------
Total -221(cent)
12 Months Ended 6/30/00
Ten Best Contributors
------------------------------------------
VoiceStream Wireless 194(cent)
Western Wireless 83
AT&T Liberty Media 54
Waddell & Reed Financial ** 52
Outdoor Systems 49
Morgan Stanley Dean Witter 44
Paychex 39
AMFM 39
ADVO 32
U.S. Foodservice *** 31
------------------------------------------
Total 617(cent)
Ten Worst Contributors
------------------------------------------
Waste Management ** -93(cent)
Office Depot 70
Galileo International 70
Associated First Capital ** 53
Affiliated Computer Services 43
Sylvan Learning Systems ** 36
Freddie Mac 34
Kroger ** 33
Premier Parks ** 31
Republic Services 29
------------------------------------------
Total -492(cent)
* Position added
** Position eliminated
*** Position added and eliminated
9
<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 benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
S&P 500 LIPPER Growth Funds Average New America Growth Fund
6/30/90 10,000 10,000 10,000
6/30/91 10,739 10,677 10,620
6/30/92 12,180 12,101 12,213
6/30/93 13,840 14,200 15,449
6/30/94 14,034 14,493 15,779
6/30/95 17,694 17,771 19,411
6/30/96 22,294 21,654 26,808
6/30/97 30,030 27,303 30,494
6/30/98 39,088 34,099 39,892
6/30/99 47,983 40,178 44,494
6/30/00 51,459 46,785 44,572
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 6/30/00 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
New America Growth Fund 0.18% 13.49% 18.09% 16.12%
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
10
<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
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 48.06 $ 47.79 $ 44.19 $ 38.37 $ 34.91 $ 25.42
Investment activities
Net investment
income (loss) (0.10) (0.20) (0.21) (0.13) (0.13) (0.12)
Net realized and
unrealized gain (loss) (0.59) 5.87 7.65 8.15 7.08 11.36
Total from
investment activities (0.69) 5.67 7.44 8.02 6.95 11.24
Distributions
Net realized gain - (5.40) (3.84) (2.20) (3.49) (1.75)
NET ASSET VALUE
End of period $ 47.37 $ 48.06 $ 47.79 $ 44.19 $ 38.37 $ 34.91
---------------------------------------------------------------------
Ratios/Supplemental Data
Total return. (1.44)% 12.76% 17.89% 21.10% 20.01% 44.31%
Ratio of total expenses to
average net assets 0.94%+ 0.94% 0.95% 0.96% 1.01% 1.07%
Ratio of net investment
income (loss) to average
net assets (0.42)%+ (0.43)% (0.49)% (0.34)% (0.39)% (0.46)%
Portfolio turnover rate 92.1%+ 39.7% 45.6% 43.2% 36.7% 56.2%
Net assets, end of period
(in millions) $ 1,834 $ 2,064 $ 2,064 $ 1,758 $ 1,440 $ 1,028
</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.
+ Annualized
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
Unaudited June 30, 2000
-----------------------
STATEMENT OF NET ASSETS Shares Value
--------------------------------------------------------------------------------
In thousands
COMMON STOCKS 94.5%
FINANCIAL 8.6%
Investment Services 6.4%
E*TRADE * 1,408,200 $ 23,191
Goldman Sachs Group 90,000 8,539
Morgan Stanley Dean Witter 500,000 41,625
Waddell & Reed Financial (Class B) 1,491,000 43,332
--------------
116,687
--------------
Other Financial Services 2.2%
Fannie Mae 125,000 6,524
Freddie Mac 850,000 34,425
--------------
40,949
--------------
Total Financial 157,636
--------------
CONSUMER SERVICES 14.4%
Retailing/General Merchandisers 3.9%
Costco Wholesale * 525,000 17,341
Family Dollar Stores 1,925,000 37,658
Safeway * 375,000 16,922
--------------
71,921
--------------
Entertainment and Leisure 0.7%
SFX Entertainment (Class A) * 300,000 13,594
--------------
13,594
--------------
Personal Services 2.2%
Apollo Group (Class A) * 750,000 20,976
Avis Group Holdings * 1,000,000 18,750
--------------
39,726
--------------
Restaurants 1.2%
Outback Steakhouse * 725,000 21,206
--------------
21,206
--------------
Retailing/Specialty Merchandisers 6.4%
Circuit City Stores 825,000 27,380
CVS 475,000 19,000
Home Depot 650,000 32,459
Office Depot * 1,000,000 6,250
12
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
TJX 1,687,400 $ 31,639
116,728
----------
Total Consumer Services 263,175
----------
BUSINESS SERVICES 21.9%
Computer Services 12.5%
Affiliated Computer Services (Class A) * 1,000,000 33,062
Ceridian * 1,750,000 42,109
Concord EFS * 1,300,000 33,800
First Data 625,000 31,016
Galileo International 700,000 14,613
NOVA * 1,070,100 29,896
Paychex 500,000 21,000
SunGard Data Systems * 750,000 23,250
228,746
----------
Energy Services 2.5%
Schlumberger 350,000 26,119
Smith International * 275,000 20,023
46,142
----------
Marketing Services 2.9%
ADVO * 300,000 12,600
Catalina Marketing * 400,000 40,800
53,400
----------
Other Business Services 4.0%
Republic Services (Class A) * 1,350,000 21,600
TMP Worldwide * 240,400 17,737
Viad 1,000,000 27,250
Viant * 250,000 7,414
74,001
----------
Total Business Services 402,289
----------
TECHNOLOGY SERVICES 20.4%
Software & Service 5.9%
BMC Software * 475,000 17,322
Intuit * 300,000 12,394
Liberate Technologies * 210,000 6,162
13
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
Macromedia * 224,000 $ 21,651
Microsoft * 130,000 10,396
Oracle * 150,000 12,605
Peregrine Systems * 475,000 16,536
VERITAS Software * 105,000 11,862
108,928
----------
Semiconductors 2.0%
Altera * 100,000 10,191
Analog Devices * 125,000 9,500
PMC-Sierra * 25,000 4,441
Texas Instruments 170,000 11,677
35,809
----------
E-Commerce 5.4%
America Online * 400,000 21,100
Ariba * 275,000 26,967
Commerce One 58,800 2,674
Digex * 175,000 11,894
e-bay * 80,000 4,342
Priceline.com * 180,000 6,829
Softbank (JPY) 27,000 3,664
Verisign * 75,000 13,226
Yahoo! * 75,000 9,293
99,989
----------
Computer 1.9%
Dell Computer * 275,000 13,570
Jabil Circuit * 220,000 10,917
Solectron * 240,000 10,050
34,537
----------
Communication Equipment 5.2%
Cisco Systems * 375,000 23,824
E-Tek Dynamics * 25,000 6,594
JDS Uniphase * 175,000 17,976
LM Ericsson (Class B) ADR 535,000 10,717
Nokia ADR 225,000 11,236
Nortel Networks 180,000 12,285
SDL * 45,000 12,835
95,467
----------
Total Technology Services 374,730
14
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
In thousands
HEALTH CARE 7.0%
Health Care Services 1.3%
Omnicare 1,750,000 $ 15,859
Wellpoint Health Networks * 100,000 7,244
23,103
----------
Pharmaceuticals 5.7%
Abegenix * 158,800 19,031
Genetech * 105,000 18,060
MedImmune * 210,000 15,534
Pfizer 646,250 31,020
Pharmacia 425,000 21,967
105,612
----------
Total Health Care 128,715
----------
MEDIA SERVICES 21.0%
Broadcasting 8.2%
AMFM * 825,000 56,925
Comcast (Class A Special) * 850,000 34,451
Infinity Broadcasting (Class A) * 1,600,000 58,300
149,676
----------
Telecom Services 9.0%
Nextel Communications * 460,000 28,132
NEXTLINK Communications * 330,000 12,509
Vodafone AirTouch ADR 700,000 29,006
VoiceStream Wireless * 200,000 23,263
Western Wireless * 750,000 40,852
WorldCom * 700,000 32,134
165,896
----------
Other Media Services 3.8%
American Tower Systems (Class A) * 75,000 3,127
AT&T Liberty Media Group * 2,200,000 53,350
Crown Castle International * 350,000 12,764
69,241
----------
Total Media Services 384,813
----------
Total Miscellaneous Common Stocks 1.2% 22,733
----------
Total Common Stocks (Cost $1,207,613) 1,734,091
----------
15
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE NEW AMERICA GROWTH FUND
-------------------------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
SHORT-TERM INVESTMENTS 5.8%
Money Market Funds 5.8%
Reserve Investment Fund, 6.68% # 105,616,341 $ 105,616
----------- -----------
Total Short-Term Investments (Cost $105,616) 105,616
-----------
Total Investments in Securities
100.3% of Net Assets (Cost $1,313,229) $ 1,839,707
Other Assets Less Liabilities (5,378)
-----------
NET ASSETS $ 1,834,329
-----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (3,877)
Accumulated net realized gain/loss - net of distributions 315,441
Net unrealized gain (loss) 526,478
Paid-in-capital applicable to 38,720,480 shares of no par
value capital stock outstanding; unlimited shares authorized 996,287
-----------
NET ASSETS $ 1,834,329
-----------
NET ASSET VALUE PER SHARE $ 47.37
-----------
</TABLE>
# Seven-day yield
* Non-income producing
ADR American Depository Receipt
JPY Japanese Yen
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH
--------------------------------------------------------------------------------
Unaudited
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Dividend $ 2,627
Interest 2,162
---------
Total income 4,789
---------
Expenses
Investment management 6,193
Shareholder servicing 2,286
Custody and accounting 82
Prospectus and shareholder reports 79
Registration 11
Legal and audit 10
Trustees 5
Miscellaneous 8
---------
Total expenses 8,674
Expenses paid indirectly (8)
---------
Net expenses 8,666
---------
Net investment income (loss) (3,877)
---------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 190,330
Foreign currency transactions (148)
---------
Net realized gain (loss) 190,182
---------
Change in net unrealized gain or loss
Securities (220,490)
Other assets and liabilities denominated
in foreign currency 1
---------
Change in net unrealized gain or loss (220,489)
---------
Net realized and unrealized gain (loss) (30,307)
---------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ (34,184)
---------
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH
--------------------------------------------------------------------------------
Unaudited
<TABLE>
<CAPTION>
---------------------------------
STATEMENT OF CHANGES IN NET ASSET
---------------------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/00 12/31/99
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (3,877) $ (8,692)
Net realized gain (loss) 190,182 306,896
Change in net unrealized gain or loss (220,489) (58,606)
-------------------------------
Increase (decrease) in net assets from operations (34,184) 239,598
-------------------------------
Distributions to shareholders
Net realized gain - (210,030)
-------------------------------
Capital share transactions *
Shares sold 162,641 343,462
Distributions reinvested 204,229
Shares redeemed (357,638) (578,197)
-------------------------------
Increase (decrease) in net assets from capital
share transactions (194,997) (30,506)
-------------------------------
Net Assets
Increase (decrease) during period (229,181) (938)
Beginning of period 2,063,510 2,064,448
-------------------------------
End of period $ 1,834,329 $ 2,063,510
-------------------------------
*Share information
Shares sold 3,499 7,061
Distributions reinvested - 4,585
Shares redeemed (7,716) (11,908)
-------------------------------
Increase (decrease) in shares outstanding (4,217) (262)
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
Unaudited June 30, 2000
-----------------------------
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. The fund seeks to
achieve long-term growth of capital by investing primarily in the common stocks
of companies operating in sectors T. Rowe Price believes will be the fastest
growing in the United States.
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 Trustees, 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 Trustees.
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.
19
<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. Expenses paid indirectly reflect credits earned
on daily uninvested cash balances at the custodian and are used to reduce the
fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $829,432,000 and $954,575,000, respectively, for the six months ended
June 30, 2000.
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, 2000, the cost of investments for federal income tax purposes was
substantially the same as for financial reporting and totaled $1,313,229,000.
Net unrealized gain aggregated $526,478,000 at period-end, of which $609,031,000
related to appreciated investments and $82,553,000 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 $1,016,000 was payable at June 30, 2000. 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 0.295% for assets in excess of $120 billion. At
20
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
June 30, 2000, 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 $1,832,000 for the six months
ended June 30, 2000, of which $378,000 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, 2000, totaled
$2,162,000 and are reflected as interest income in the accompanying Statement of
Operations.
21
<PAGE>
T. ROWE PRICE NEW AMERICA GROWTH FUND
--------------------------------------------------------------------------------
ANNUAL MEETING RESULTS
The T. Rowe Price New America Growth Fund held an annual meeting on April 19,
2000, to elect trustees to the fund, to ratify the Board of Directors' selection
of PricewaterhouseCoopers L.L.P. as the fund's independent accountants, and to
approve a change in the fund's investment objective.
The results of voting were as follows (by number of shares):
For nominees
to the Board of Trustees
for the New America Growth Fund:
John H. Laporte
Affirmative: 25,049,506.247
Withhold: 249,178.312
Total: 25,298,684.559
James S. Riepe
Affirmative: 25,046,794.254
Withhold: 251,890.305
Total: 25,298,684.559
M. David Testa
Affirmative: 25,045,866.625
Withhold: 252,817.934
Total: 25,298,684.559
Donald W. Dick, Jr.
Affirmative: 25,039,819.688
Withhold: 258,864.871
Total: 25,298,684.559
David K. Fagin
Affirmative: 24,942,926.579
Withhold: 355,757.980
Total: 25,298,684.559
Hanne M. Merriman
Affirmative: 25,032,577.248
Withhold: 266,107.311
Total: 25,298,684.559
Hubert D. Vos
Affirmative: 24,928,868.391
Withhold: 369,816.168
Total: 25,298,684.559
Paul M. Wythes
Affirmative: 25,034,581.508
Withhold: 264,103.051
Total: 25,298,684.559
For PricewaterhouseCoopers LLP.
as independent accountants:
Affirmative: 24,894,081.495
Against: 225,197.890
Abstain: 179,405.174
Total: 25,298,684.559
For a change in the fund's
investment objective:
Affirmative: 23,864,163.626
Against: 263,367.042
Abstain: 294,871.891
Broker Non-votes: 876,282.000
Total: 25,298,684.559
22
<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 the T. Rowe Price Web
site on the Internet. Address: www.troweprice.com
Brokerage services*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over full-service 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.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services,
Inc., Member NASD/SIPC.
** Based on a July 2000 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary depending on size of
order.
23
<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 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
Tax-Efficient Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery*
International Growth & Income
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 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 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
* Closed to new investors.
+ Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the funds.
Please call for a prospectus, which contains complete information,
including fees and expenses. 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.
24
<PAGE>
T. ROWE PRICE ADVISORY SERVICES AND RETIREMENT RESOURCES
--------------------------------------------------------------------------------
ADVISORY SERVICES, RETIREMENT RESOURCES
T. Rowe Price is your full-service retirement specialist. We have developed
unique advisory services that can help you meet the most difficult retirement
challenges. Our broad array of retirement plans is suitable for individuals, the
self-employed, small businesses, corporations, and nonprofit organizations. We
also provide recordkeeping, communications, and investment management services,
and our educational materials, self-help planning guides, and software tools are
recognized as among the industry's best. For information or to request
literature, call us at 1-800-638-5660, or visit our Web site at
www.troweprice.com.
Advisory Services
T. Rowe Price Retirement Income Manager(SM) helps retirees or those within two
years of retirement determine how much income they can take in retirement. The
program uses extensive statistical analysis and the input of financial planning
professionals to suggest an income plan that best meets your objectives.
T. Rowe Price Rollover Investment Service offers asset allocation advice to
those planning a major change in their qualified retirement plans, such as a
401(k) rollover from a previous employer or an IRA transfer.
Retirement Resources at T. Rowe price
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning
Analyzer(TM) CD-ROM or diskette $19.95.
To order, please call 1-800-541-5760.
Also available on the Internet for $9.95.
T. Rowe Price Variable Annuity Analyzer(TM)
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. Rowe Price Immediate Variable
Annuity (Income Account)
Investment Kits
We will be happy to send you one of our easy-to-follow investment kits when you
are ready to invest in any T. Rowe Price retirement vehicle, including IRAs,
qualified plans, small-business plans, or our no-load variable
annuities.
25
<PAGE>
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears on your retirement account statement.
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 appropriate
to the fund or funds covered in this report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site.
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
[LOGO OF T.ROWE PRICE]
T. Rowe Price Investment Services, Inc., Distributor. F60-051 6/30/00
