______________________
SEMIANNUAL REPORT
______________________
New Era Fund
______________________
Report Highlights
- --------------------------------------------------------------------------------
* The economy has been growing at a brisk pace, but inflation seems to be
under control so far.
* Your fund matched the gains of the overall market during the past six
months but lagged its Lipper benchmark since the fund is more diversified.
* Energy stocks generally outperformed most cyclical sectors. Oil prices
were firm while precious metals and many cyclical commodities were weak.
* We added energy-related shares to the portfolio, as well as stocks of
companies whose prices had fallen to attractive levels.
* Our economic outlook is generally favorable, although an overheating
economy could lead to higher inflation. Natural resource stocks should do well
in a moderately strong economy.
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
The stock market and the New Era Fund turned in strong performances for the
first six months of 1996. The economy has grown at a robust rate so far this
year, registering impressive gains in both industrial production and employment.
However, even with this strong growth, inflation still appears to be contained
within an acceptable range.
Your fund matched the gains of the unmanaged Standard & Poor's 500 Stock
Index over the past six months but lagged the average for natural resource funds
during the 6- and 12-month periods ended June 30, reflecting its wider
diversification. Many natural resource funds are heavily concentrated in
energy-related stocks, which outperformed several cyclical industries.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/96 6 Months 12 Months
New Era Fund 10.24% 18.81%
S&P 500 10.10 26.00
Lipper Natural Resources
Funds Average 17.09 25.26
================================================================================
<PAGE>
Market Environment
- --------------------------------------------------------------------------------
Fixed income investors have been nervous about the rapidly expanding
economy, pushing bond prices lower and longer-term interest rates higher since
the beginning of the year. Despite these concerns, the Federal Reserve had not
yet begun to tighten at midyear, although the markets appear to be anticipating
a move toward higher short-term rates in the months ahead.
Commodity markets were mixed in this environment. Grain prices have been
highly volatile, reflecting a continued uncertainty over harvests due to
changing weather patterns. The oil market remained reasonably firm despite the
United Nations permitting Iraq to sell some oil for humanitarian reasons.
Precious metals prices declined due to a lack of inflationary pressures on the
consumer level.
The prices of many cyclical commodities also remained relatively weak. The
copper market fell sharply because of the scandal at Sumitomo, where a copper
trader was accused of manipulating the price of the metal to artificially high
levels. When the issue came to light, the price fell precipitously. However,
despite this weakness, we believe most cyclical commodities should respond well
to the climate of overall economic growth.
Portfolio Management
- --------------------------------------------------------------------------------
We added to our holdings in a number of companies and industries during the
quarter. Volatility in the financial markets enabled us to purchase some stocks
at what we believe were attractive prices.
- -----------------------------
Volatility in
the financial
markets enabled
us to purchase
some stocks at
...Attractive
Prices
=============================
Among the largest purchases were Conrail, Reynolds Metals, and W illamette
Industries. Conrail is an eastern railroad system we owned in the past, Reynolds
Metals is a major aluminum producer with a new CEO, and Willamette is a large
diversified forest products company. All stand to benefit from a strengthening
economy.
We also bought shares of several energy companies during the period under
review, including TOTAL, a large diversified foreign oil concern; Rutherford
Moran Oil and Barrett Resources, energy exploration and production companies;
and We stern Atlas, an energy service company. We believe they are all well
positioned to participate in the potential growth of the energy industry.
<PAGE>
Outlook
- --------------------------------------------------------------------------------
Our economic outlook remains positive. Growth is expected to come in at a
4% annualized rate for the second quarter, while inflation seems to be under
control. Some foreign economies, which have lagged the U.S. during the current
cycle, have also shown signs of strengthening. This type of environment remains
favorable for the stock market, particularly the industries in which your fund
invests.
One major concern is that the Federal Reserve may decide to raise the
federal funds rate in the belief that the economy is in danger of overheating.
Rising yields in the bond market already reflect this apprehension. The Federal
Reserve's monetary policy in the months ahead may provide a clearer signal as to
whether or not a fear of accelerating inflation is justified.
In our view, natural resource companies should perform well at this stage
of the cycle, with the economy expanding at a moderately vigorous pace.
Respectfully submitted,
George A. Roche
[signature]
President and
Chairman of the Investment Advisory Committee
July 19, 1996
================================================================================
<PAGE>
Portfolio Highlights
- --------------------------------------------------------------------------------
PERFORMANCE CONTRIBUTIONS
6 Months Ended 6/30/96
================================================================================
Cents-Per-Share Percent of
Sector Contribution Net Assets
Natural Resource-Related
Building and Real Estate ........................ 15 cents 4%
Forest Products ................................. 7 8
Integrated Petroleum ............................ 24 16
Petroleum Exploration & Production .............. 37 8
Miscellaneous Energy ............................ -4 1
Energy Services ................................. 46 11
Precious Metals ................................. 38 14
Diversified Metals .............................. 8 6
Chemical ........................................ -1 6
Diversified Resources ........................... 5 7
Total .................................................... 175 81
Consumer and Service
Merchandising ................................... 10 3
Consumer Durables ............................... 1 0
Miscellaneous ................................... 19 5
Total .................................................... 30 8
Science and Technology ................................... 7 1
Miscellaneous ................................... 1 2
Subtotal ........................................ 213 92
Reserves and Income ...................................... 19 8
Total Portfolio .......................................... 232 cents 100%
- --------------------------------------------------------------------------------
<PAGE>
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
- --------------------------------------------------------------------------------
Percent of
Net Assets
6/30/96
Mobil ....................................................... 4.3%
Newmont Mining .............................................. 3.5
Wal-Mart .................................................... 3.2
Royal Dutch Petroleum ....................................... 3.2
LONRHO ...................................................... 2.4
Union Pacific ............................................... 2.3
Atlantic Richfield .......................................... 2.1
Cooper Cameron .............................................. 2.0
Schlumberger ................................................ 1.9
Rouse ....................................................... 1.9
Great Lakes Chemical ........................................ 1.9
TVX Gold .................................................... 1.7
Camco International ......................................... 1.7
British Petroleum ........................................... 1.6
Kimberly-Clark .............................................. 1.6
DuPont ...................................................... 1.6
Burlington Northern Santa Fe ................................ 1.6
James River ................................................. 1.5
Barrick Gold ................................................ 1.5
Georgia-Pacific ............................................. 1.5
USX-Marathon ................................................ 1.4
Bristol-Myers Squibb ........................................ 1.4
Cambior ..................................................... 1.3
FMC ......................................................... 1.3
Repsol ...................................................... 1.3
Total ....................................................... 49.7%
================================================================================
<PAGE>
Portfolio Highlights
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 6/30/96
Ten Best Contributors
- -----------------------------------------------
United Meridian 17 cents
Schlumberger 14
Wal-Mart 10
Rouse 10
Cooper Cameron 10
Newmont Mining 10
Camco International 8
Royal Dutch Petroleum 7
Helmerich & Payne 6
DuPont 6
Total 98 cents
Ten Worst Contributors
- -----------------------------------------------
Great Lakes Chemical -5 cents
Placer Dome 3
Centerior Energy 3
Pegasus Gold 3
Nucor 2
Pall 2
Niagara Mohawk 2
Coflexip 1
Rustenberg Platinum * 1
Conrail * 1
Total -23 cents
================================================================================
12 Months Ended 6/30/96
Ten Best Contributors
- -------------------------------------------------
Cooper Cameron 31 cents
Schlumberger 23
Royal Dutch Petroleum 20
United Meridian 18
Newmont Mining 16
Halliburton 16
Mobil 15
Eli Lilly 14
Camco International 14
Union Pacific 13
Total 180 cents
- -------------------------------------------------
<PAGE>
Ten Worst Contributors
Wal-Mart -6 cents
Niagara Mohawk 6
Rustenburg Platinum 5
Centerior Energy 5
Placer Dome 5
International Paper 4
Coflexip 3
Jefferson Smurfit 3
Georgia-Pacific 3
Geon 2
Total -42 cents
* Position added
================================================================================
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.
(SEC GRAPH shown here)
Average Annual Compound Total Return
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Periods Ended 6/30/96 1 Year 3 Years 5 Years 10 Years
New Era Fund 18.81% 14.35% 11.53% 11.02%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
<TABLE>
Unaudited
For a share outstanding throughout each period
Financial Highlights
================================================================================
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
6/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
NET ASSET VALUE
Beginning of period ........ $ 22.65 $20.15 $ 20.35 $ 18.88 $ 19.86 $ 18.48
Investment activities
Net investment income 0.20 0.47 0.36 0.40 0.45 0.54
Net realized and
unrealized gain (loss) 2.12 3.71 0.69 2.48 (0.04) 2.12
Total from
investment activities 2.32 4.18 1.05 2.88 0.41 2.66
Distributions
Net investment income -- (0.48) (0.38) (0.38) (0.45) (0.55)
Net realized gain .... -- (1.20) (0.87) (1.03) (0.94) (0.73)
Total distributions .. -- (1.68) (1.25) (1.41) (1.39) (1.28)
NET ASSET VALUE
End of period .............. $ 24.97 $ 22.65 $ 20.15 $ 20.35 $ 18.88 $ 19.86
Ratios/Supplemental Data
Total return ................. 10.24% 20.76% 5.17% 15.33% 2.08% 14.74%
Ratio of expenses to
average net assets ........... 0.76% 0.79% 0.80% 0.80% 0.81% 0.85%
Ratio of net investment
income to average
net assets ................... 1.58% 2.00% 1.87% 1.92% 2.22% 2.56%
Portfolio turnover rate ...... 29.2% 22.7% 24.7% 24.7% 16.9% 9.0%
Average commission
rate paid .................. $ 0.0480 -- -- -- -- --
Net assets, end of period
(in millions) ...............$ 1,297 $ 1,090 $ 979 $ 753 $ 700 $ 757
<FN>
+ Annualized.
</FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
================================================================================
Unaudited
June 30, 1996
Statement of Net Assets
Shares/Par Value
In thousands
Common Stocks 91.3%
NATURAL RESOURCE-RELATED 80.4%
Building and Real Estate 3.6%
Cali Realty, REIT ......................... 70,000 $ 1,697
DeBartolo Realty, REIT .................... 605,000 9,756
Federal Realty Investment Trust, REIT ..... 230,000 5,175
Reckson Associates Realty, REIT ........... 170,000 5,610
Rouse ..................................... 940,000 24,322
46,560
Forest Products 7.5%
Albany International (Class A) ............ 117,400 2,656
Georgia-Pacific ........................... 269,600 19,142
International Paper ....................... 370,000 13,644
James River ............................... 550,000 14,506
Jefferson Smurfit * ....................... 760,000 8,360
Kimberly-Clark ............................ 270,000 20,857
Mead ...................................... 80,000 4,150
Valmet ADR ................................ 210,000 6,930
Willamette Industries ..................... 110,700 6,573
96,818
Integrated Petroleum 16.6%
Atlantic Richfield ........................ 230,000 27,255
British Petroleum ADR ..................... 200,000 21,375
Chevron ................................... 80,000 4,720
Mobil ..................................... 500,000 56,062
Repsol ADR ................................ 470,000 16,333
Royal Dutch Petroleum ADR ................. 269,600 41,451
Texaco .................................... 190,000 15,936
Total ADR ................................. 250,000 9,281
Ultramar .................................. 166,900 4,840
USX-Marathon .............................. 900,000 18,113
215,366
<PAGE>
Petroleum Exploration and Production 8.2%
Amerada Hess .............................. 220,000 11,798
Barrett Resources * ....................... 204,550 6,085
Cross Timbers Oil ......................... 250,000 6,188
Gulf Canada Resources * ................... 475,600 $ 2,437
Louisiana Land & Exploration .............. 79,400 4,575
Murphy Oil ................................ 340,000 15,427
Noble Affiliates .......................... 150,000 5,663
Oryx Energy * ............................. 100,000 1,625
Rutherford-Moran Oil * .................... 400,000 9,750
Union Texas Petroleum ..................... 700,000 13,650
United Meridian * ......................... 450,000 16,200
Unocal .................................... 181,000 6,109
Vastar Resources .......................... 200,000 7,475
106,982
Miscellaneous Energy 0.9%
Centerior Energy ............................ 1,050,000 7,744
Niagara Mohawk .............................. 450,000 3,487
11,231
Energy Services 10.7%
BJ Services * ............................... 180,000 6,323
Camco International ......................... 650,000 22,019
Coflexip ADR * .............................. 550,000 9,625
Cooper Cameron * ............................ 591,600 25,882
Halliburton ................................. 290,000 16,095
Helmerich & Payne ........................... 265,000 9,706
Petrolite ................................... 464,600 14,751
Schlumberger ................................ 290,000 24,432
Weatherford Enterra * ....................... 143,650 4,310
Western Atlas * ............................. 105,000 6,116
139,259
<PAGE>
Precious Metals 14.0%
Amplats (ZAR) * ............................. 248,000 1,545
Ashanti Goldfields ADR ...................... 223,300 4,410
Barrick Gold ................................ 720,640 19,547
Cambior ..................................... 1,286,000 17,200
Dayton Mining * ............................. 1,050,000 6,300
Dayton Mining, warrants, 7/31/97 * .......... 112,500 99
Golden Star Resources * ..................... 251,200 3,642
Homestake Mining ............................ 130,250 2,231
Newmont Mining .............................. 930,000 45,919
Pegasus Gold * .............................. 1,200,000 14,700
Placer Dome ................................. 660,000 $ 15,758
Rustenberg Platinum (ZAR) ................... 180,100 2,806
Rustenburg Platinum ADR ..................... 406,193 6,398
Santa Fe Pacific Gold ....................... 850,000 12,006
Stillwater Mining * # ....................... 330,238 7,122
TVX Gold * .................................. 3,050,000 22,112
181,795
Diversified Metals 6.3%
Alcoa ....................................... 120,000 6,885
Freeport-McMoRan Copper & Gold (Class A) .... 370,000 11,054
JCI (ZAR) ................................... 635,050 6,229
LONRHO (GBP) ................................ 10,737,090 30,849
Nucor ....................................... 290,000 14,681
Reynolds Metals ............................. 225,000 11,728
81,426
Chemicals 5.8%
DuPont ...................................... 260,000 20,573
FMC * ....................................... 260,800 17,017
Geon ........................................ 175,000 3,938
Great Lakes Chemical ........................ 390,000 24,277
Pall ........................................ 400,000 9,650
75,455
Diversified Resources 6.8%
Burlington Northern Santa Fe ............. 250,000 20,219
Canadian National Railway ................ 139,200 2,558
Conrail .................................. 220,000 14,603
Dundee Bancorp (Class A) * ............... 255,000 3,128
GATX ..................................... 100,000 4,825
Overseas Shipholding Group ............... 200,000 3,625
Pennzoil ................................. 80,000 3,700
Pittston Minerals ........................ 371,300 4,873
Union Pacific ............................ 430,000 30,046
87,577
Total Natural Resource-Related
<PAGE>
1,042,469
CONSUMER AND SERVICE 8.6%
Merchandising 3.3%
Petrie Stores Liquidation Trust .......... 400,000 $ 1,125
Wal-Mart ................................. 1,650,000 41,869
42,994
Consumer Durables 0.1%
Coltec Industries * ...................... 120,000 1,710
1,710
Miscellaneous 5.2%
Bristol-Myers Squibb ..................... 200,000 18,000
Corning .................................. 400,000 15,350
Eli Lilly ................................ 200,000 13,000
Gannett .................................. 150,000 10,612
GE ....................................... 80,000 6,920
Reuters ADR .............................. 50,000 3,622
67,504
Total Consumer and Service
112,208
SCIENCE AND TECHNOLOGY 0.8%
Northern Telecom ......................... 180,000 9,788
Total Science and Technology
9,788
Miscellaneous Common Stocks 1.5%
20,153
Total Common Stocks (Cost $ 821,652)
1,184,618
Convertible Preferred Stocks 0.4%
James River, Series P .................... 200,000 5,050
Total Convertible Preferred Stocks (Cost $ 3,450)
5,050
<PAGE>
Short-Term Investments 8.2%
Certificates of Deposit 0.8%
Commerzbank, 5.31%, 7/1/96 ............... $10,000,000 10,000
10,000
Commercial Paper 7.4%
American Home Products, 4(2),
5.31%, 8/2/96 $10,000,000 $ 9,953
Asset Securitization Cooperative,
4(2), 5.40%, 7/25/96 10,000,000 9,964
Ciesco, 5.40%, 7/18/96 9,397,000 9,373
France Telecom, 5.27%, 7/10/96 10,000,000 9,987
Investments in Commercial Paper through a joint
account, 5.49% - 5.68%, 7/1/96 7,117,224 7,117
Korea Development Bank, 5.30%, 8/28/96 10,000,000 9,915
Province of Quebec, 5.30%, 7/12/96 10,000,000 9,984
Rockwell International, 5.40%, 7/2/96 10,000,000 9,998
RTZ America, 4(2), 5.35%, 7/16/96 10,000,000 9,978
Siemens, 5.35%, 8/6/96 10,000,000 9,946
96,215
Total Short-Term Investments (Cost $106,215) 106,215
Total Investments in Securities
99.9% of Net Assets (Cost $931,317) $ 1,295,883
Other Assets Less Liabilities 1,022
NET ASSETS $ 1,296,905
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 9,680
Accumulated net realized gain/loss - net of distributions 51,110
Net unrealized gain (loss) 364,566
Paid-in-capital applicable to 51,939,638 shares of $1.00 par
value capital stock outstanding; 200,000,000 shares authorized 871,549
NET ASSETS $1,296,905
NET ASSET VALUE PER SHARE $ 24.97
* Non-income producing
# Securities contain some restrictions as to public resale--total of
such securities at year-end amounts to 0.55% of net assets.
REIT Real Estate Investment Trust
4(2) Commercial paper sold within terms of a
private placement memorandum, exempt from registration under
section 4.2 of the Securities Act of 1933, as amended, and may
be sold only to dealers
in that program or other "accredited investors."
GBP British sterling
ZAR South African rand
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
Unaudited
Statement of Operations
In thousands
- --------------------------------------------------------------------------------
6 Months
Ended
6/30/96
Investment Income
Income
Dividend .......................................... $ 10,784
Interest .......................................... 3,564
Total income ...................................... 14,348
Expenses
Investment management ............................. 3,574
Shareholder servicing ............................. 907
Custody and accounting ............................ 92
Prospectus and shareholder reports ................ 32
Registration ...................................... 24
Legal and audit ................................... 14
Directors ......................................... 12
Miscellaneous ..................................... 13
Total expenses .................................... 4,668
Net investment income ................................... 9,680
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on
Securities ........................................ 40,430
Foreign currency transactions ..................... (6)
Net realized gain (loss) .......................... 40,424
Change in net unrealized gain or loss on securities 62,187
Net realized and unrealized gain (loss) ................. 102,611
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS .................................. $ 112,291
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
Unaudited
Statement of Changes in Net Assets
In thousands
- --------------------------------------------------------------------------------
6 Months Year
Ended Ended
6/30/96 12/31/95
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations
Net investment income ........................... $ 9,680 $ 21,124
Net realized gain (loss) ........................ 40,424 53,793
Change in net unrealized gain or loss ........... 62,187 122,914
Increase (decrease) in net assets from operations 112,291 197,831
Distributions to shareholders
Net investment income ........................... -- (21,548)
Net realized gain ............................... -- (53,876)
Decrease in net assets from distributions ....... -- (75,424)
Capital share transactions *
Shares sold ..................................... 210,753 179,604
Distributions reinvested ........................ -- 69,413
Shares redeemed ................................. (116,532) (260,526)
Increase (decrease) in net assets from capital
share transactions .......................... 94,221 (11,509)
Net Assets
Increase (decrease) during period ............ 206,512 110,898
Beginning of period ........................... 1,090,393 979,495
End of period ................................. $ 1,296,905 $ 1,090,393
*Share information
Shares sold ............................. 8,551 8,058
Distributions reinvested ................ -- 3,072
Shares redeemed ......................... (4,742) (11,618)
Increase (decrease) in shares outstanding 3,809 (488)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
Unaudited
June 30, 1996
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price New Era 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 January 20, 1969.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price at the time the valuations
are made. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. Listed securities that are not traded on a particular day and
securities that are regularly traded in the over-the-counter market are valued
at the mean of the latest bid and asked prices. Other equity securities are
valued at a price within the limits of the latest bid and asked prices deemed by
the Board of Directors, or by persons delegated by the Board, best to reflect
fair value.
Short-term debt securities are valued at their cost which, when combined
with accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
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.
<PAGE>
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Commercial Paper Joint Account The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $232,897,000 and $161,176,000, respectively, for the six
months ended June 30, 1996.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At June 30, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $931,317,000, and net unrealized gain
aggregated $364,566,000, of which $383,903,000 related to appreciated
investments and $19,337,000 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 $622,000 was payable at June 30, 1996. The fee is computed daily and
paid monthly, and consists of an individual fund fee equal to 0.25% of average
daily net assets and a group fee. The group fee is based on the combined assets
of certain mutual funds sponsored by the manager or Rowe Price-Fleming
International, Inc. (the group). The group fee rate ranges from 0.48% for the
first $1 billion of assets to 0.305% for assets in excess of $50 billion. At
June 30, 1996, and for the six months then ended, the effective annual group fee
rate was 0.33% and 0.34%, respectively. The fund pays a pro rata share of the
group fee based on the ratio of its net assets to those of the group.
<PAGE>
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. (TRPS) 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. Additionally, the fund is one of several T. Rowe
Price mutual funds (the underlying funds) in which the T. Rowe Price Spectrum
Growth Fund invests. In accordance with an agreement among Spectrum, the
under-lying funds, the manager, and TRPS, expenses from the operation of
Spectrum are borne by the underlying funds based on each underlying fund's
proportionate share of assets owned by Spectrum. The fund incurred expenses
pursuant to these related party agreements totaling approximately $818,000 for
the six months ended June 30, 1996, of which $113,000 was payable at period-end.
================================================================================
T. Rowe Price Shareholder Services
To help shareholders monitor their current investments and make decisions
that accurately reflect their financial goals, T. Rowe Price offers a wide
variety of information and services -- at no extra cost.
Knowledgeable Service Representatives
By Phone Shareholder service representatives are available Monday through
Friday from 8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person Visit one of our Investor Center locations to meet with a
representative who will be able to assist you with your accounts. You can also
drop off applications or obtain prospectuses and other literature.
Automated 24-Hour Services
Tele*Access [Registration Mark] Call 1-800-638-2587 to obtain information
such as account balance, date and amount of your last transaction, latest
dividend payment, and fund prices and yields. Additionally, you can request
prospectuses, statements, new account and tax forms; reorder checks; and
initiate purchase, redemption, and exchange orders for identically registered
accounts.
T. Rowe Price OnLine Through a personal computer via dial-up modem, you can
replicate all the services available on Tele*Access.
<PAGE>
Account Services
Checking Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield and Emerging Markets Bond Funds).
Automatic Investing Build your account over time by investing directly from
your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to move investments systematically from one fund
account to another, such as from a money fund to a stock fund. A low $50 minimum
makes it easy to get started.
Automatic Withdrawal If you need money from your fund account on a regular
basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
Discount Brokerage*
Investments Available You can trade stocks, bonds, options, precious
metals, and other securities at a savings over regular commission rates.
To Open an Account Call a shareholder service representative at
1-800-225-5132.
Investment Information
Combined Statement A comprehensive overview of your T. Rowe Price accounts
is provided. The summary page gives you earnings by tax category, provides total
portfolio value, and lists your investments by type -- stock, bond, and money
market. Detail pages itemize account transactions by fund.
Shareholder Reports Portfolio managers review the performance of the funds
in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report This is a quarterly newsletter with relevant
articles on market trends, personal financial planning, and T. Rowe Price's
economic perspective.
Performance Update This quarterly report reviews recent market developments
and provides comprehensive performance information for each T. Rowe Price fund.
Insights This library of information includes reports on mutual fund tax
issues, investment strategies, and financial markets.
<PAGE>
Detailed Investment Guides Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Personal Strategy Planner, Retirees Financial Guide, and
Retirement Planning Kit (also available on disk for PC use) help you determine
and reach your investment goals.
*T. Rowe Price Discount Brokerage is a division of T. Rowe Price Investment
Services, Inc. Member NASD/SIPC.
================================================================================
<PAGE>
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
Stock Funds
- -----------------------------
Domestic
=============================
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
OTC
Science & Technology
Small-Cap
Value*
Spectrum Growth Value
International/Global
============================
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
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
<PAGE>
Domestic Tax-Free
=============================
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
International/Global
=============================
Emerging Markets Bond
Global Government Bond
International Bond
Short-Term Global Income
Money Market
=============================
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
=============================
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
T. Rowe Price No-Load
Variable Annuity
=============================
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
New America Growth Portfolio
Personal Strategy Balanced
Portfolio
*Closed to new investors.
<PAGE>
================================================================================
For yield, price, last transaction, and current balance, 24 hours, 7 days a
week, call: 1-800-638-2587 toll free For assistance with your existing fund
account, call: Shareholder Service Center 1-800-225-5132 toll free T. Rowe Price
100 East Pratt Street Baltimore, Maryland 21202 This report is authorized for
distribution only to shareholders and to others who have received a copy of the
prospectus of the T. Rowe Price New Era Fund [Registration Mark.]
T. Rowe Price Investment Services, Inc., Distributor
RPRTNEF 6/30/96
================================================================================
