ANNUAL REPORT
----------------------
New Era Fund
----------------------
FOR YIELD, PRICE, LAST TRANSACTION,
AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
----------------------
FOR ASSISTANCE WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
----------------------
T. ROWE PRICE
100 East Pratt Street
Baltimore, Maryland 21202
----------------------
This report is authorized for distribution only to shareholders and to
others who have received a copy of the prospectus of the T. Rowe Price
New Era Fund [Registration Mark.]
<PAGE>
- -------------------------------------------------------------------------------
Fellow Shareholders
- -------------------------------------------------------------------------------
Last year was a banner year for U.S. stocks. The unmanaged Standard &
Poor's 500 Stock Index reported its best annual gain since 1958 and its
third-best performance since World War II. Your fund registered strong gains for
the past six months and the year as a whole but underperformed the S&P 500
because almost all natural resource groups lagged the broad market advance.
However, the fund did generate greater returns than its peer group average. The
table below compares the performance of the fund with both the Lipper benchmark
and the S&P 500 for the 6- and 12-month periods ended December 31, 1995.
- -------------------------------------------------------------------------------
Performance Comparison
===============================================================================
Periods Ended 12/31/95
6 Months 12 Months
----------------------
New Era Fund 7.8% 20.8%
Lipper Natural Resources
Funds Average 7.5 18.8
S&P 500 14.5 37.6
===============================================================================
YEAR-END DISTRIBUTIONS
On December 26, 1995, your Board of Directors declared an income dividend
of $0.48 per share, a long-term capital gain of $0.72 per share, and a
short-term gain of $0.48 per share, each payable to shareholders of record on
that date. A confirmation statement or check was mailed to you in early January
and Form 1099-DIV reporting this information for 1995 tax purposes was mailed to
you later in the month.
ECONOMIC REVIEW
The economy grew at a moderate rate through most of 1995. Growth was
expected to slow in the fourth quarter and retail sales were sluggish during the
important holiday selling season. Many foreign economies also experienced only
modest growth.
The slow-growth environment proved beneficial for owners of financial
assets. The Federal Reserve reduced the key federal funds rate twice during the
year, encouraging stock and bond investors. Monetary policy is likely to remain
accommodative, which should be favorable for the financial markets.
<PAGE>
Inflationary trends were also favorable considering that the economy has
experienced a long expansion. Labor costs were contained and the overall rate of
inflation was moderate. However, there were some signs of concern in this area.
The costs for agricultural products increased sharply last year due to poor
harvests. Natural gas prices rose significantly when severely cold weather
increased demand early this winter, driving up energy costs. On the other hand,
industrial commodities were weak and commodity prices in general were contained.
Taken all together, inflation was not a threat but does bear watching at this
time.
PORTFOLIO AND PERFORMANCE REVIEW
Almost all of the natural resource groups underperformed the broad market
last year. The exception was energy services, which generated superior returns.
A number of smaller energy exploration and production stocks also performed
well. Rising natural gas prices helped increase demand for oil service stocks
and greatly benefited smaller domestic energy companies with a heavy focus on
natural gas.
The portfolio's worst-performing groups included some of the cyclical
industries that helped us in 1994, forest products among them. Merchandising
stocks were hurt by disappointing sales during the fourth quarter.
We were net purchasers of stocks during the second half of 1995. We reduced
our positions in some of the cyclical industries and added to our holdings in
many of the areas that had previously underperformed, including energy and
precious metals.
Several names appear in the portfolio for the first time. Among them is
CROSS TIMBERS OIL, a dynamic growth company engaged in the acquisition and
development of oil and gas properties. Also included are PETROLITE, a large
producer of oil field and other specialty chemicals; DAYTON MINING, a gold
mining company; FEDERAL REALTY INVESTMENT TRUST, a real estate investment trust
specializing in neighborhood and community shopping centers; and WEATHERFORD
ENTERRA, the largest oil field tool rental company formed by the merger of
Weatherford and Enterra.
OUTLOOK
Our outlook for the U.S. and other primary economies calls for moderate
economic growth in 1996. The debate over the budget in Washington, D.C. and the
gridlock resulting from the inability of the President and Congress to resolve
their differences is adding an element of uncertainty to the economic picture.
Elsewhere, other major countries such as Germany and Japan are currently
struggling to increase their rates of economic growth from sluggish levels.
Fortunately, central banks in the United States and other free market
countries have been easing monetary policy in an attempt to stimulate growth.
The current environment of stable to declining interest rates bodes well for
financial assets.
<PAGE>
The stock market is vulnerable to some correction after the powerful
advance of 1995. If the market does cool off to some extent, we believe the
areas subject to the greatest correction would be those that experienced the
sharpest advances last year -- financial and technology shares, and initial
public offerings paramount among them.
We expect natural resource stocks to do well in an environment of
continuing economic growth, particularly since these issues were not subjected
to the same speculation that affected other stocks last year. In our view, the
environment of moderate worldwide economic growth that we envision in the coming
year should be good for most natural resource companies.
Respectfully submitted,
[Signatura]
George A. Roche
President and Chairman of the
Investment Advisory Committee
January 19, 1996
- -------------------------------------------------------------------------------
A Word on Market Corrections
- -------------------------------------------------------------------------------
After the stock market's spectacular run in 1995, concerns about a
"correction" have intensified. Most market observers consider a correction to be
a short and sometimes steep decline following a period of rising prices.
Moderate corrections of around 10% have been quite common, occurring on average
about once every two years over the last half-century, according to Ned Davis
Research.
The market as measured by the Dow Jones Industrial Average has not
experienced a moderate correction since early 1994. Furthermore, the Dow last
hit a bear market bottom -- defined as a drop of at least 20% -- in October
1990. Therefore, it would not be surprising to see a modest pullback in 1996, on
the order of 5% to 10%. In fact, as we write, the market has gotten off to a
rocky start.
Corrections are not only common, but can be beneficial for long-term
investors, especially those who invest in regular amounts through dollar cost
averaging. In a correction, overall stock prices decline, often leading to more
attractive valuations and good buying opportunities. History has shown that
investors who continue to buy through a downturn fare quite well. In fact, the
Dow has proven resilient in the aftermath of past corrections of around 10%,
taking an average of just six months to recover its losses, according to Ned
Davis. (To realize the benefits of dollar cost averaging, you should be prepared
to continuously purchase securities over a period of time, in up and down
markets. This approach does not assure a gain nor protect you from a loss in
declining markets.)
<PAGE>
We raise the issue of a market correction not as a prediction, but as a
reminder that stock prices do not move in only one direction. If you are
satisfied that your investments are appropriate for your various objectives, we
recommend that you stay the course when a correction eventually occurs.
===============================================================================
Contributions to the Change in Net Asset Value Per Share
T. Rowe Price New Era Fund
===============================================================================
Six Months Ended December 31, 1995
- -------------------------------------
TEN BEST CONTRIBUTORS
- -------------------------------------
Cooper Cameron 21 cents
Mobil 15
Royal Dutch Petroleum 13
Halliburton 12
Kimberly-Clark 11
Eli Lilly 11
Pegasus Gold 10
Union Pacific 10
LONRHO 8
Schlumberger 8
-----
Total 119 cents
=====================================
- -------------------------------------
TEN WORST CONTRIBUTORS
- -------------------------------------
Wal-Mart -16 cents
Stillwater Mining -5
Niagara Mohawk -5
Jefferson Smurfit -4
Georgia-Pacific -3
Ashanti Goldfields -3
Toys "R" Us -3
Albany International -3
Petrie Stores -3
International Paper -3
Total -48 cents
=====================================
<PAGE>
Twelve Months Ended December 31, 1995
- -------------------------------------
TEN BEST CONTRIBUTORS
- -------------------------------------
Mobil 26 cents
Cooper Cameron 21
Schlumberger 21
Royal Dutch Petroleum 21
Union Pacific 18
Newmont Mining 17
Kimberly-Clark 16
Eli Lilly 15
Halliburton 14
DuPont 14
Total 183 cents
=====================================
- -------------------------------------
TEN WORST CONTRIBUTORS
- -------------------------------------
Pittston Minerals -8 cents
Jefferson Smurfit -4
Niagara Mohawk -4
Toys "R" Us -4
Petrie Stores -3
General Growth Properties -3
DeBartolo -2
Overseas Shipholding Group -1
Coltec Industries -1
Union Texas Petroleum -1
Total -31 cents
=====================================
<PAGE>
===============================================================
Performance Contributions
Twelve Months Ended December 31, 1995
===============================================================
Cents-Per-Share Percent of
Sector Contribution Net Assets
- --------------------- -------------- ------------
NATURAL RESOURCE-RELATED
Building and Real Estate -1 cents 3%
Forest Products 22 5
Integrated Petroleum 87 20
Petroleum Exploration
and Production 22 7
Miscellaneous Energy -5 1
Energy Services 83 13
Precious Metals 44 15
Diversified Metals 20 7
Chemicals 35 5
Diversified Resources 27 6
Total 334 82
CONSUMER AND SERVICE
Merchandising -2 4
Consumer Durables -1 --
Miscellaneous 35 5
Total 32 9
SCIENCE AND TECHNOLOGY 8 1
MISCELLANEOUS -- 1
Subtotal 374 93
RESERVES AND INCOME 44 7
- ---------------------------------------------------------------
Total Portfolio 418 cents 100%
===============================================================
<PAGE>
===============================================================
Twenty-Five Largest Holdings
December 31, 1995
===============================================================
Percent of
Company Net Assets
- ----------------------------------- ------------
Mobil 4.5%
Royal Dutch Petroleum 3.9
Newmont Mining 3.9
Wal-Mart 3.7
Atlantic Richfield 3.7
Schlumberger 3.4
Union Pacific 2.6
LONRHO 2.5
Barrick Gold 2.5
TVX Gold 2.3
DuPont 2.1
Cooper Cameron 1.9
Pegasus Gold 1.9
Rouse 1.8
Camco International 1.7
USX-Marathon 1.6
Halliburton 1.6
Bristol-Myers Squibb 1.6
Amerada Hess 1.6
Great Lakes Chemical 1.5
Burlington Northern Santa Fe 1.4
Nucor 1.4
Texaco 1.4
Helmerich & Payne 1.4
Murphy Oil 1.3
Total 57.2%
===============================================================
[Performance Comparison line graph for New Era Fund annual report
(December 31,1995).]
- ----------------------------------------------------
Average Annual Compound Total Return
Periods Ended December 31, 1995
1 Year 5 Years 10 Years
------- ------- --------
20.76% 11.40% 11.36%
====================================================
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>
===============================================================================
Investment Record
T. Rowe Price New Era Fund
===============================================================================
The table below shows the investment record of one share of the T. Rowe
Price New Era Fund, purchased at the initial price of $10.00, for the period
1/20/69 through 12/31/95. Over this time, stock prices in general have risen.
The results shown should not be considered as a representation of the income or
capital gain or loss which may be realized from an investment made in the fund
today.
- -------------------------------------------------------------------------------
Per Share Data
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
With Capital Gains and Income Dividends Annual
Taken in Cash Reinvested in Additional Shares Total Return
--------------------------------- ---------------------------------------
Year Net Capital Capital on Investment
Ended Asset Gain Income Gain Income Value of % Change
12/31 Value Distributions(1) Dividends Distributions Dividends Investment Fund S&P 500
----- ----- ---------------- --------- ------------- --------- ---------- ---- -------
1969(2) $9.73 -- -- -- -- $9.73 -2.7% -6.6%
1970 9.49 -- $0.16 -- $0.16 9.65 -0.8 3.9
1971 10.33 -- 0.16 -- 0.16 10.68 10.6 14.3
1972 12.27 -- 0.16 -- 0.17 12.87 20.6 19.0
1973 11.79 $0.14 0.10 $0.15 0.11 12.62 -1.9 -14.7
1974 8.47 0.11 0.18 0.11 0.20 9.30 -26.3 -26.5
1975 9.94 -- 0.29 -- 0.31 11.28 21.3 37.2
1976 11.74 -- 0.28 -- 0.32 13.69 21.4 23.9
1977 11.00 0.03 0.24 0.03 0.28 13.14 -4.0 -7.1
1978 11.66 0.25 0.32 0.30 0.38 14.71 12.0 6.6
1979 17.45 0.38 0.39 0.48 0.49 23.53 59.9 18.6
1980 25.27 0.36 0.47 0.49 0.63 35.77 52.0 32.4
1981 19.34 1.48 0.68 2.10 0.96 30.11 -15.8 -5.0
1982 15.53 3.05 0.86 4.75 1.34 30.86 2.5 21.6
1983 18.44 0.07 0.81 0.14 1.61 38.71 25.5 22.6
1984 17.13 1.29 0.61 2.71 1.28 40.01 3.3 6.2
1985 18.67 1.41 0.68 3.29 1.59 49.38 23.4 31.7
1986 17.76 3.25 0.50 9.08 1.32 57.27 16.0 18.7
1987 18.08 1.77 0.98 5.90 3.26 67.49 17.8 5.3
1988 18.79 0.61 0.53 2.28 1.98 74.41 10.3 16.5
1989 21.73 1.05 0.56 4.16 2.22 92.54 24.3 31.6
1990 18.48 0.71 0.62 3.02 2.64 84.43 -8.8 -3.1
1991 19.86 0.73 0.55 3.34 2.51 96.88 14.7 30.3
1992 18.88 0.94 0.45 4.59 2.20 98.89 2.1 7.6
1993 20.35 1.03 0.38 5.39 1.99 114.05 15.3 10.1
1994 20.15 0.87 0.38 4.88 2.13 119.95 5.2 1.3
1995 22.65 1.20 0.48 7.14 2.86 144.85 20.8 37.6
Total $20.73 $11.82 $64.33 $33.10
</TABLE>
- -------------------------------------------------------------------------------
(1) Includes short-term capital gains of $0.01 in 1978; $0.02 in 1979; $0.03 in
1980; $0.03 in 1981; $0.05 in 1982; $0.45 in 1984; $0.67 in 1985; $0.21 in 1987
$0.26 in 1989; $0.02 in 1990; $0.11 in 1993; $0.34 in 1994; and $0.48 in 1995.
(2) From inception 1/20/69 to 12/31/69.
<PAGE>
===============================================================================
Statement of Net Assets
T. Rowe Price New Era Fund / December 31, 1995
===============================================================================
(VALUES IN THOUSANDS)
- -------------------------------------------------------------------------------
Value
-----
Common Stocks & Warrants -- 92.8%
NATURAL RESOURCE-RELATED -- 81.7%
BUILDING AND REAL ESTATE -- 2.8%
605,000shs DeBartolo Reality, REIT ............... $7,865
173,500 Federal Realty Investment
Trust, REI ........................... 3,947
940,000 Rouse ................................. 19,152
30,964
FOREST PRODUCTS -- 4.5%
280,000 Albany International
(Class A) ............................ 5,075
139,600 Georgia-Pacific ....................... 9,580
370,000 International Paper ................... 14,014
535,000 *Jefferson ............................. 5,049
140,000 Kimberly-Clark ........................ 11,585
80,000 Mead .................................. 4,180
49,483
INTEGRATED PETROLEUM -- 19.8%
123,000 Amoco .................................. 8,841
360,000 Atlantic Richfield ..................... 39,870
120,000 British Petroleum ADR .................. 12,255
160,000 Chevron ................................ 8,400
440,000 Mobil .................................. 49,280
380,000 Repsol ADR ............................. 12,492
299,600 Royal Dutch Petroleum
ADR ................................... 42,281
190,000 Texaco ................................. 14,915
400,500 Ultramar ............................... 10,313
900,000 USX-Marathon ........................... 17,550
216,197
PETROLEUM EXPLORATION AND PRODUCTION -- 7.5%
320,000 Amerada Hess ........................... 16,960
300,000 Cross Timbers Oil ...................... 5,287
744,100 *Gulf Canada Resources ................. 3,069
129,400 Louisiana Land & Exploratio ............ 5,548
340,000 Murphy Oil ............................. 14,110
150,000 Noble Affiliates ....................... 4,481
300,000 *Oryx Energy ............................ 4,013
600,000 Union Texas Petroleum .................. 11,625
300,000 *United Meridian ........................ 5,213
181,000 Unocal ................................. 5,272
200,000 Vastar Resources ....................... 6,350
81,928
<PAGE>
Value
-----
MISCELLANEOUS ENERGY -- 1.2%
1,050,000shs Centerior Energy ....................... $9,319
450,000 Niagara Mohawk ......................... 4,331
13,650
ENERGY SERVICES -- 12.6%
80,000 *BJ Services ............................ 2,320
650,000 Camco International .................... 18,200
550,000 Coflexip ADR ........................... 10,381
591,600 *Cooper Camero .......................... 21,002
340,000 Halliburton ............................ 17,213
500,000 Helmerich & Payne ...................... 14,875
464,600 Petrolite .............................. 12,951
530,000 Schlumberger ........................... 36,702
143,650 *Weatherford Enterra .................... 4,148
137,792
PRECIOUS METALS -- 15.1%
423,300 Ashanti Goldfields
(144a) GDR ............................ 8,387
1,020,640 Barrick Gold ........................... 26,919
800,000 Cambior ................................ 8,700
1,125,000 *Dayton Mining .......................... 4,737
251,200 *Golden Star Resources .................. 1,287
130,250 Homestake Mining ....................... 2,035
861,000wts*#Loki Gold, 2/12/96 (CAD) ............... 1,333
930,000shs Newmont Minin .......................... 42,083
1,500,000 *Pegasus Gold ........................... 20,813
330,000 Placer Dome ............................ 7,961
850,000 Santa Fe Pacific Gold .................. 10,306
330,238 *#Stillwater Mining ...................... 5,531
3,450,000 *TVX Gold ............................... 24,581
164,673
DIVERSIFIED METALS -- 6.6%
120,000 Alcoa .................................. 6,345
145,000 *Alumax ................................. 4,441
100,000 Cyprus Amax Minerals ................... 2,612
370,000 Freeport-McMoRan Copper
& Gold (Class ......................... 10,360
635,050 JCI (ZAR) .............................. 5,008
10,000,000 LONRHO (GBP) ........................... 27,333
270,000 Nucor .................................. 15,424
71,523
CHEMICALS -- 5.6%
330,000 DuPont ................................. 23,059
100,000 *FMC .................................... 6,762
175,000 Geon ................................... 4,266
230,000 Great Lakes Chemical ................... 16,560
400,000 Pall ................................... 10,750
61,397
<PAGE>
Value
-----
DIVERSIFIED RESOURCES -- 6.0%
200,000shs Burlington Northern
Santa Fe............................... $15,600
255,000 *Dundee Bancorp
(Class A) (CAD) ....................... 2,568
100,000 GATX ................................... 4,862
200,000 Overseas Shipholding
Group ................................. 3,800
80,000 Pennzoil ............................... 3,380
371,300 Pittston Minerals ...................... 5,152
430,000 Union Pacific .......................... 28,380
63,742
TOTAL NATURAL RESOURCE-RELATED 891,349
CONSUMER AND SERVICE -- 9.0%
MERCHANDISING -- 4.3%
400,000 Petrie Stores .......................... 1,100
240,000 *Toys "R" Us ............................ 5,220
1,800,000 Wal-Mart ............................... 40,275
46,595
CONSUMER DURABLES -- 0.1%
120,000 *Coltec Industries ...................... 1,395
MISCELLANEOUS -- 4.6%
200,000 Bristol-Myers Squibb .................... 17,175
200,000 Corning ................................. 6,400
200,000 Eli Lilly ............................... 11,250
150,000 Gannett ................................. 9,206
100,000 Reuters ADR ............................. 5,531
49,562
TOTAL CONSUMER AND SERVICE 97,552
SCIENCE AND TECHNOLOGY -- 0.7%
180,000 Northern Telecom ........................ 7,740
TOTAL SCIENCE AND TECHNOLOGY 7,740
MISCELLANEOUS COMMON STOCKS -- 1.4% 15,113
TOTAL COMMON STOCKS & WARRANTS
(COST $710,601) 1,011,754
<PAGE>
Value
-----
Convertible Preferred Stocks -- 0.4%
200,000 James River (Series P) .................. $4,675
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $3,450) 4,675
Short-Term Investments -- 7.0%
COMMERCIAL PAPER -- 7.0%
$5,000,000 Air Products & Chemicals,
5.40%, 4/26/96 .......................... 4,910
5,000,000 ANZ (Delaware),
5.668%, 2/9/96 .......................... 4,928
5,000,000 B.B.V. Finance (Delaware),
5.68%, 2/5/96 ........................... 4,952
5,000,000 Barnett Banks, 5.70%, 1/25/96 ............ 4,972
5,000,000 Bayer, 4(2), 5.52%, 2/28/96 .............. 4,953
5,000,000 Caisse des Depots et
Consignations,
5.76%, 1/17/96 .......................... 4,966
5,000,000 Cheltenham & Glouster,
5.58%, 2/8/96 ........................... 4,962
5,000,000 Countrywide Funding,
5.85%, 1/24/96 .......................... 4,967
5,000,000 International Nederland
Bank, 5.47%, 3/20/96 .................... 4,932
2,714,519 Investments in Commercial
Paper through a joint
account, 5.90 - 6.05%,
1/2/96 .................................. 2,713
5,000,000 National Australia Funding
(Delaware),
5.72%, 1/22/96 .......................... 4,934
5,000,000 New Center Asset Trust,
5.77%, 1/25/96 .......................... 4,965
5,000,000 SBNSW (Delaware),
5.77%, 1/10/96 .......................... 4,973
5,000,000 U.S. Bancorp,
5.55%, 2/23/96 .......................... 4,957
5,000,000 Vermont American,
4(2), 5.75%, 2/2/96 ..................... 4,964
5,000,000 Westpac Capital,
5.52%, 4/10/96 .......................... 4,908
TOTAL SHORT-TERM INVESTMENTS
(COST $76,956) 76,956
<PAGE>
Value
-----
TOTAL INVESTMENTS IN SECURITIES -- 100.2% OF
NET ASSETS (COST $791,007) $1,093,385
OTHER ASSETS LESS LIABILITIES ......................... (2,992)
----------
NET ASSETS CONSIST OF: Value
-------
Accumulated net realized
gain/loss - net of distributions .. $ 10,686
Net unrealized gain (loss) .......... 302,379
Paid-in-capital applicable to
48,130,865 shares of $1.00 par
value capital stock outstanding;
200,000,000 shares authorized ..... 777,328
-------
NET ASSETS ........................................... $1,090,393
==========
NET ASSET VALUE PER SHARE ............................ $22.65
======
* Non-income producing
# Securities contain some restrictions as to public resale --
total of such securities at year-end amounts to 0.63% 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."
144a Security was purchased pursuant to Rule 144a under the
Securities Act of 1933 and may not be resold subject
to that rule except to qualified institutional
buyers -- total of such securities at year-end amounts to
0.77% of net assets.
CAD Canadian dollar
GBP British sterling
ZAR South African Rand
The accompanying notes are an integral part of these financial statements.
<PAGE>
===============================================================================
Statement of Operations
T. Rowe Price New Era Fund / Year Ended December 31, 1995
===============================================================================
(IN THOUSANDS)
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividend .................................................... $22,791
Interest .................................................... 6,656
--------
Total income ................................................ 29,447
--------
Expenses
Investment management ....................................... 6,218
Shareholder servicing ....................................... 1,666
Custody and accounting ...................................... 170
Prospectus and shareholder reports .......................... 123
Registration ................................................ 63
Legal and audit ............................................. 36
Directors ................................................... 25
Miscellaneous ............................................... 22
--------
Total expenses .............................................. 8,323
--------
Net investment income ......................................... 21,124
--------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities .................................................. 53,856
Foreign currency transactions ............................... (63)
--------
Net realized gain (loss) .................................... 53,793
Change in unrealized gain or loss on securities ............... 122,914
--------
Net realized and unrealized gain (loss) ....................... 176,707
--------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ............. $197,831
========
The accompanying notes are an integral part of these financial statements.
<PAGE>
===============================================================================
Statement of Changes in Net Assets
T. Rowe Price New Era Fund
===============================================================================
(IN THOUSANDS)
- -------------------------------------------------------------------------------
Year Ended December 31,
1995 1994
-------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income .............................. $21,124 $16,648
Net realized gain (loss) ........................... 53,793 43,842
Change in net unrealized gain or loss .............. 122,914 (22,054)
-------- --------
Increase (decrease) in net assets from operations .. 197,831 38,436
-------- --------
Distributions to shareholders
Net investment income .............................. (21,547) (17,469)
Net realized gain .................................. (53,877) (40,146)
-------- --------
Decrease in net assets from distributions .......... (75,424) (57,615)
-------- --------
Capital share transactions*
Shares sold ........................................ 179,604 353,442
Distributions reinvested ........................... 69,413 52,205
Shares redeemed .................................... (260,526) (159,505)
-------- --------
Increase (decrease) in net assets from capital
share transactions ............................... (11,509) 246,142
-------- --------
Increase (decrease) in net assets .................... 110,898 226,963
NET ASSETS
Beginning of period .................................. 979,495 752,532
-------- --------
End of period ........................................ $1,090,393 $979,495
======== ========
*Share information
Shares sold ........................................ 8,058 16,659
Distributions reinvested ........................... 3,072 2,596
Shares redeemed .................................... (11,618) (7,608)
-------- --------
Increase (decrease) in shares outstanding .......... (488) 11,647
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
===============================================================================
Notes To Financial Statements
T. Rowe Price New Era Fund / December 31, 1995
===============================================================================
- -------------------------------------------------------------------------------
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.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price at the time the valuations
are made. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. Listed securities that are not traded on a particular day and
securities that are regularly traded in the over-the-counter market are valued
at the mean of the latest bid and asked prices. 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.
B) 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.
C) Other - Income and expenses are recorded on the
accrual basis. Investment transactions are accounted for on the trade date.
Realized gains and losses are reported on the identified cost basis. Dividend
income and distributions to shareholders are recorded by the fund on the
ex-dividend date. Income and capital gain distributions are determined in
accordance with federal income tax regulations and may differ from those
determined in accordance with generally accepted accounting principles.
<PAGE>
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NOTE 2 - INVESTMENT TRANSACTIONS
- -------------------------------------------------------------------------------
A) Commercial Paper Joint Account - The fund, and other affiliated funds,
may transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
B) Other - Purchases and sales of portfolio securities, other than
short-term securities, aggregated $213,034,000 and $234,196,000, respectively,
for the year ended December 31, 1995.
- -------------------------------------------------------------------------------
NOTE 3 - FEDERAL INCOME TAXES
- -------------------------------------------------------------------------------
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
In order for the fund's capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, $424,000 of undistributed
net investment income was reclassified as a decrease to undistributed net
realized gains during the year ended December 31, 1995. The results of
operations and net assets were not affected by the reclassification.
At December 31, 1995, the aggregate cost of investments for federal
income tax and financial reporting purposes was $791,007,000 and net unrealized
gain aggregated $302,378,000, of which $321,085,000 related to appreciated
investments and $18,707,000 to depreciated investments.
<PAGE>
- -------------------------------------------------------------------------------
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 $533,000 was payable at December 31, 1995. 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 0.31% for assets in excess of $34 billion. At
December 31, 1995, and for the year then ended, the effective annual Group Fee
rate was 0.34%. The fund pays a pro rata share of the Group Fee based on the
ratio of its net assets to those of the Group.
In addition, the fund has entered into agreements with the Manager and two
wholly owned subsidiaries of the Manager, pursuant to which the fund receives
certain other services. The Manager computes the daily share price and maintains
the financial records of the fund. T. Rowe Price Services, Inc. (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 (Spectrum) invests. In accordance with an Agreement among Spectrum,
the Underlying 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 $1,481,000 for
the year ended December 31, 1995, of which $241,000 was payable at period-end.
<PAGE>
===============================================================================
Financial Highlights
T. Rowe Price New Era Fund
===============================================================================
<TABLE>
<S> <C> <C> <C> <C> <C>
For a share outstanding throughout each period
---------------------------------------------------
Year Ended December 31,
---------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ........... $20.15 $20.35 $18.88 $19.86 $18.48
------ ------ ------ ------ ------
Investment activities
Net investment income ........................ 0.47 0.36 0.40 0.45 0.54
Net realized and unrealized gain (loss) ...... 3.71 0.69 2.48 (0.04) 2.12
------ ------ ------ ------ ------
Total from investment activities ............. 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 ................. $22.65 $20.15 $20.35 $18.88 $19.86
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
Total return ................................... 20.8% 5.2% 15.3% 2.1% 14.7%
Ratio of expenses to average net assets ........ 0.79% 0.80% 0.80% 0.81% 0.85%
Ratio of net investment income to average
net assets ................................... 2.00% 1.87% 1.92% 2.22% 2.56%
Portfolio turnover rate ........................ 22.7% 24.7% 24.7% 16.9% 9.0%
Net assets, end of period (in thousands) ....... $1,090,393 $979,495 $752,532 $699,599 $756,817
</TABLE>
<PAGE>
================================================================================
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
T. Rowe Price New Era Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
T. Rowe Price New Era Fund, Inc. (the "Fund") at December 31, 1995, and the
results of its operations, the changes in its net assets and the financial
highlights for each of the fiscal periods presented, in conformity with
generally accepted accounting principles. These financial stat ements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1995 by
correspondence with custodians and brokers, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 18, 1996
