<PAGE>
Annual Report
NEW ERA
FUND
December 31, 1996
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
-----------------------------------------------------------------------------
. The past year was another excellent period for stocks. The combined total
return of the S&P 500 for the past two years was the best in four decades.
. Rising oil prices and fears of higher inflation early in the year attracted
investors to the energy sector.
. The fund's returns for the 6- and 12-month periods were 12.70% and 24.25%,
respectively, better than the broad market because of exposure to energy
stocks. Performance trailed the natural resources benchmark because of
diversification beyond the strong energy sector.
. We increased fund exposure to international stocks since many markets opened
up to outside investment, offering new opportunities.
. Stocks of natural resources companies generally perform better toward the end
of an economic expansion, which could benefit shareholders.
<PAGE>
FELLOW SHAREHOLDERS
Nineteen ninety-six was another excellent year for common stocks. The combined
total return of the Standard & Poor's 500 Stock Index for the past two years was
one of the best in several decades. One of the market's strongest groups, energy
stocks, had sprung to life early in the year as rising oil prices combined with
strong economic growth and fears of higher inflation drove investors into the
sector.
<TABLE>
<CAPTION>
PERFORMANCE COMPARISON
----------------------------------------------------------
Periods Ended 12/31/96 6 Months 12 Months
----------------------------------------------------------
<S> <C> <C>
New Era Fund 12.70% 24.25%
..........................................................
S&P 500 11.68 22.96
..........................................................
Lipper Natural Resources
Funds Average 13.31 32.74
..........................................................
</TABLE>
Your fund outperformed the unmanaged S&P 500 during the last 6- and 12-month
periods, in large measure due to its exposure to the energy sector. However,
performance trailed the average return of Lipper natural resources funds because
of your fund's broader diversification. Many of the funds in our peer group were
more heavily concentrated in energy stocks, which outperformed several other
natural resource industries.
YEAR-END DISTRIBUTIONS
On December 26, 1996, your Board of Directors declared an income dividend of
$0.38 per share, a long-term capital gain of $1.40 per share, and a short-term
gain of $.31 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 1996 tax purposes was mailed to you
later in the month.
MARKET ENVIRONMENT
The economy grew moderately during the year with a brief acceleration in the
second quarter. The economic expansion will mark its sixth anniversary by March
assuming growth persists through the first quarter. Industrial production and
housing starts improved at a healthy rate over the prior year, while retail
sales remained lethargic. European
1
<PAGE>
economies were relatively stagnant as those countries continued to employ fiscal
and monetary restraint in order to meet the membership requirements of the
proposed European Monetary Union.
Interest rates once again proved a benign factor last year as the Federal
Reserve left the federal funds rate unaltered after January 1996. The economy
had begun to pick up sharply in the spring, raising concerns that a rate
increase would be required, but these proved to be transitory when growth slowed
in the ensuing quarters.
WE EXPECT ENERGY MARKETS TO REMAIN ATTRACTIVE...
The current rate of inflation at 3.3% is one of the lowest at this point in an
economic expansion since World War II. The rate of inflation picked up modestly
as the year progressed, in part because energy prices rose sharply. Natural gas
prices climbed late in the year because inventories were never fully rebuilt
from levels depleted by last year's cold winter. Rising oil prices reflected
stronger-than-anticipated demand and low inventory levels. Integrated oil
companies kept their refinery stocks low in expectation that the resumption of
Iraqi exports would precipitate lower prices, allowing the companies to
replenish inventories at a lower cost.
Other industrial commodity prices rose in the spring as the economy accelerated,
then declined over the course of the year as capacity proved adequate to meet
demand. Grain prices generally fell over the year as the combination of higher
plantings and accommodative weather allowed the rebuilding of stocks. Labor
costs have so far remained under control, and inflation remained in check at
year-end.
PORTFOLIO MANAGEMENT
The Standard & Poor's natural resources indices underperformed the broader
market, with the exceptions of the energy service, exploration and production,
and domestic integrated oil groups. The portfolio has had its highest weightings
in these sectors since 1981, but they still constituted only slightly more than
one-quarter of net assets on average during the year. Your fund managed to
outperform the broad market because of good stock selection in other natural
resources industries. We expect energy markets to remain an attractive
investment area in the year ahead, particularly stocks of companies currently
spending for profitable growth.
2
<PAGE>
Precious metals stocks were a major disappointment as the price of gold rallied
briefly, then subsequently declined. Central banks and producers continued to
sell significant tonnage from inventories and future production, respectively,
overwhelming the strong demand from emerging nations. The decline in the prices
of precious metals stocks has led to merger and acquisition activity within the
group. Two of our holdings, Santa Fe Pacific Gold and Highlands Gold, were
caught up in this activity, and we increased our exposure to the more
attractively valued companies in the sector.
WE HAVE BEEN INCREASING OUR EXPOSURE TO FOREIGN EQUITIES GRADUALLY SINCE
MIDYEAR.
We initiated several new positions during the last six months, including ENI,
the newly privatized oil company of Italy. We also purchased Enserch
Exploration, an energy exploration and production company with a significant
presence in the Gulf of Mexico and East Texas; Steel Dynamics, a minimill steel
producer; and Battle Mountain Gold, a global gold producer with good exploration
prospects.
We have been increasing our exposure to foreign equities gradually since
midyear. A number of international markets opened up to outside investment to
attract capital, offering new opportunities to invest selectively in rewarding
companies. In addition, an increasing proportion of natural resources
development is taking place overseas, with the participation of local companies
and newly privatized government entities. We will continue to research these
situations with the same discipline we apply to our domestic investments,
seeking opportunities when they develop.
OUTLOOK
Our outlook for the U.S. economy calls for continued moderate growth and
relatively low inflation. A key variable in 1997 will be the scarcity of labor
measured by the unemployment rate. If scarcity becomes a factor, wage costs
could begin to rise sufficiently to spur inflation above our expectations.
Several foreign industrial economies are expected to show some modest
acceleration in economic growth, a welcome development since the U.S. has so far
provided most of the fuel for the global recovery of the '90s.
3
<PAGE>
Considering the duration of the U.S. expansion, we believe a modest increase in
interest rates is possible this year. However, we do not expect the Federal
Reserve to put the brakes on the expansion by raising the federal funds rate
significantly, unless inflation accelerates. Given the balance of power in
Washington between the Democratic White House and Republican Congress, further
fiscal restraint is likely, which should continue to provide a reasonably
benevolent environment for financial assets.
After successive years of strong equity performance, 1997 could prove somewhat
problematic because of the generally lofty valuation levels. We will focus our
attention on companies we believe can perform relatively well in the environment
we anticipate. Stocks of natural resources companies tend to receive good
support from the underlying value of their assets and generally perform better
toward the end of an economic expansion, which could benefit shareholders.
Respectfully submitted,
/s/ George A. Roche
George A. Roche
President and Chairman of the Investment Advisory Committee
January 27, 1997
- --------------------------------------------------------------------------------
MANAGEMENT CHANGE
This spring George A. Roche, who has been Chairman of the New Era Fund since
1988, will assume additional management responsibilities with T. Rowe Price
Associates. He will remain on the fund's Investment Advisory Committee. Mr.
Roche joined T. Rowe Price in 1968 and serves on both the Management and the
Executive Committees. Mr. Roche is also T. Rowe Price's Chief Financial Officer,
a member of the Board of Directors, and Vice President and Director of Rowe
Price-Fleming International.
Effective March 1, 1997, Charles M. Ober will assume the role of Chairman of New
Era Fund's Investment Advisory Committee with day-to-day responsibility for the
fund's management. Mr. Ober joined T. Rowe Price in 1980 and has been a member
of the New Era Fund's Investment Advisory Committee for more than 10 years; he
is currently its Executive Vice President. He is a Chartered Financial Analyst
with specialties in various natural resources areas.
4
<PAGE>
STICKING TO YOUR GAME PLAN
- --------------------------------------------------------------------------------
TIME REDUCES VOLATILITY OF MARKET RETURNS
- -----------------------------------------------------------------------------
(Annualized Returns for Best and Worst Period: Rolling Periods From 1950 to
1996*)
[An 8-BAR CHART SHOWING BEST AND WORST ANNUALIZED TOTAL RETURNS OF STOCKS FOR
VARIOUS ROLLING TIME PERIODS BETWEEN 1950 AND 1996]
*From 1950-1996, there were 47 one-year periods; 42 five-year periods;
37 ten year periods; and 27 twenty-year periods.
Source: T.Rowe Price Associates; data from Ibbotson Associates.
Chart is for illustrative purposes only and is not intended to represent
the past performance or future results of any specific securities.
In our report to you one year ago, we mentioned the possibility of a modest
decline in stock prices. In fact, from May to July 1996, the broad market (as
measured by the Standard & Poor's 500 Stock Index) fell around 7%. However, the
bull market resumed its charge to post a robust 23% gain for the year.
Some believe the market is poised for a significant downturn. We do not expect a
major drop in stock prices in 1997, although another modest pullback is
possible. On balance, we expect stocks to advance at a much slower pace.
How should you prepare for a potential market pullback? As always, our advice is
to diversify your investments and focus on the long term. If you've implemented
a sound investment strategy, stay the course. Stocks have historically overcome
periods of volatility to provide better returns than most other investments.
Market corrections can even have a silver lining because they result in good
buying opportunities.
Furthermore, the volatility of stock market returns has diminished significantly
over longer time frames. The chart shows the best and worst annualized returns
on stocks over various rolling time periods between 1950 and 1996. (For
instance, there were 37 rolling 10-year periods: 1950-1960, 1951-1961, etc.)
Investors who held stocks for only one year could have had as much as a 52.6%
gain, or as little as a 26.5% loss -- a spread of 79 percentage points. However,
investors who held stocks for 10-year periods or longer always overcame interim
volatility to post gains for the entire period.
In addition, a well-diversified portfolio can weather volatility better than a
more concentrated portfolio over the long term and particularly during market
corrections. For example, during last summer's correction, small-company stocks
fell nearly 16% while large-company issues dropped 7.3%. However, a portfolio
diversified among large U.S. companies (30% of assets), small U.S. companies
(15%), foreign companies (15%), intermediate-term Treasury bonds (30%), and
Treasury bills (10%) would have lost a smaller 5.2% of its value./1/
Above all, remember that investing is a long-distance race, not a sprint.
/1/ Ned Davis Research.
5
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/96
---------------------------------------------------------------------
Mobil 3.9%
.....................................................................
Newmont Mining 2.8
.....................................................................
Royal Dutch Petroleum 2.8
.....................................................................
Wal-Mart 2.6
.....................................................................
Cooper Cameron 2.6
---------------------------------------------------------------------
Repsol 2.1
.....................................................................
Camco International 2.0
.....................................................................
Rouse 2.0
.....................................................................
British Petroleum 1.9
.....................................................................
Atlantic Richfield 1.9
---------------------------------------------------------------------
Reynolds Metals 1.9
.....................................................................
Union Pacific 1.8
.....................................................................
Kimberly-Clark 1.8
.....................................................................
Petrolite 1.7
.....................................................................
DuPont 1.7
---------------------------------------------------------------------
James River 1.7
.....................................................................
LONRHO 1.6
.....................................................................
TVX Gold 1.6
.....................................................................
Burlington Northern Santa Fe 1.5
.....................................................................
USX-Marathon 1.5
---------------------------------------------------------------------
Cambior 1.4
.....................................................................
United Meridian 1.4
.....................................................................
Georgia-Pacific 1.3
.....................................................................
Murphy Oil 1.3
.....................................................................
Corning 1.3
---------------------------------------------------------------------
Total 48.1%
6
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 12/31/96
Ten Best Contributors
-----------------------------------------------------------------
Cooper Cameron 34(cent)
.................................................................
Camco International 15
.................................................................
Petrolite 14
.................................................................
British Petroleum 13
.................................................................
Conrail 13
.................................................................
United Meridian 13
.................................................................
Rouse 10
.................................................................
Mobil 10
.................................................................
James River 10
.................................................................
Kimberly-Clark 9
-----------------------------------------------------------------
Total 141(cent)
Ten Worst Contributors
-----------------------------------------------------------------
LONRHO -16(cent)
.................................................................
Great Lakes Chemical 11
.................................................................
Newmont Mining 8
.................................................................
Wal-Mart 7
.................................................................
Pegasus Gold 7
.................................................................
Placer Dome 3
.................................................................
Rustenburg Platinum 3
.................................................................
Ashanti Goldfields 2
.................................................................
Northern Telecom 2
.................................................................
McDermott International 2
-----------------------------------------------------------------
Total -61(cent)
12 Months Ended 12/31/96
Ten Best Contributors
----------------------------------------------------------------
Cooper Cameron 44(cent)
................................................................
United Meridian 29
................................................................
Camco International 23
................................................................
Schlumberger 21
................................................................
Rouse 20
................................................................
Petrolite 18
................................................................
British Petroleum 15
................................................................
Royal Dutch Petroleum 15
................................................................
DuPont 14
................................................................
James River 13
----------------------------------------------------------------
Total 212(cent)
Ten Worst Constributors
----------------------------------------------------------------
Great Lakes Chemical -16(cent)
................................................................
LONRHO 12
................................................................
Pegasus Gold 9
................................................................
Placer Dome 6
................................................................
Rustenburg Platinum 4
................................................................
McDermott International 2
................................................................
Nucor 2
................................................................
Battle Mountain Gold 2
................................................................
Geon 1
................................................................
Pall 1
----------------------------------------------------------------
Total -55(cent)
7
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE CONTRIBUTIONS
12 Months Ended 12/31/96
Cents-Per-Share Percent of
Sector Contribution Net Assets
-------------------------------------------------------------------------------------
<S> <C> <C>
Natural Resource-Related
.....................................................................................
Building and Real Estate 38(cent) 4%
.....................................................................................
Forest Products 39 8
.....................................................................................
Integrated Petroleum-Domestic 40 6
.....................................................................................
Integrated Petroleum-International 63 14
.....................................................................................
Petroleum Exploration and Production 75 7
.....................................................................................
Miscellaneous Energy 4 1
.....................................................................................
Energy Services 144 12
.....................................................................................
Precious Metals 27 13
.....................................................................................
Diversified Metals -2 6
.....................................................................................
Chemicals -3 6
.....................................................................................
Diversified Resources 37 5
-------------------------------------------------------------------------------------
Total 462(cent) 82%
Consumer and Service
.....................................................................................
Merchandising 2 2
.....................................................................................
Consumer Durables 1 0
.....................................................................................
Miscellaneous 37 5
-------------------------------------------------------------------------------------
Total 40 7
Science and Technology 4 0
.....................................................................................
Miscellaneous 4 4
.....................................................................................
Subtotal 510 93
.....................................................................................
Reserves and Income 40 7
-------------------------------------------------------------------------------------
Total Portfolio 550(cent) 100%
</TABLE>
8
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or
index. The index return does not reflect expenses, which have been deducted
from the fund's return.
[LINE GRAPH APPEARS HERE]
NEW ERA FUND
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Lipper
Natural
Resources
S&P 500 Funds New Era
Index Average Fund
<S> <C> <C> <C>
12/31/8 10,000 10,000 10,000
12/31/8 10,510 11,190 11,783
12/31/8 12,256 11,691 13,000
12/31/8 16,139 15,661 16,157
12/31/9 15,638 14,445 14,742
12/31/9 20,402 14,585 16,915
12/31/9 21,957 14,604 17,266
12/31/9 24,170 17,725 19,913
12/31/9 24,489 17,344 20,943
12/31/9 33,489 20,705 25,291
12/31/9 41,428 26,920 31,424
</TABLE>
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
<TABLE>
<S> <C> <C> <C> <C>
Periods Ended 12/31/96 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------
New Era Fund 24.25% 16.42% 13.19% 12.13%
....................................................................................
</TABLE>
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
9
<PAGE>
T. ROWE PRICE NEW ERA FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year
Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 22.65 $ 20.15 $ 20.35 $ 18.88 $ 19.86
...........................................................
Investment activities
Net investment income 0.38 0.47 0.36 0.40 0.45
Net realized and
unrealized gain (loss) 5.12 3.71 0.69 2.48 (0.04)
...........................................................
Total from
investment activities 5.50 4.18 1.05 2.88 0.41
...........................................................
Distributions
Net investment income (0.38) (0.48) (0.38) (0.38) (0.45)
Net realized gain (1.71) (1.20) (0.87) (1.03) (0.94)
...........................................................
Total distributions (2.09) (1.68) (1.25) (1.41) (1.39)
...........................................................
NET ASSET VALUE
End of period $ 26.06 $ 22.65 $ 20.15 $ 20.35 $ 18.88
-----------------------------------------------------------
Ratios/Supplemental Data
Total return 24.25% 20.76% 5.17% 15.33% 2.08%
.................................................................................................
Ratio of expenses to
average net assets 0.76% 0.79% 0.80% 0.80% 0.81%
.................................................................................................
Ratio of net investment
income to average
net assets 1.53% 2.00% 1.87% 1.92% 2.22%
.................................................................................................
Portfolio turnover rate 28.6% 22.7% 24.7% 24.7% 16.9%
.................................................................................................
Average commission
rate paid $ 0.0542 - - - -
.................................................................................................
Net assets, end of period
(in millions) $ 1,468 $ 1,090 $ 979 $ 753 $ 700
..................................................................................................
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE NEW ERA FUND
- ----------------------------------------------------------------------------------------------------
December 31, 1996
STATEMENT OF NET ASSETS Shares/Par Value
- ----------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
COMMON STOCKS AND WARRANTS 92.3%
NATURAL RESOURCE-RELATED 81.0%
Building and Real Estate 3.7%
Federal Realty Investment Trust, REIT 230,000 $ 6,239
.............................................................................................
Homestead Village 23,065 415
.............................................................................................
Homestead Village, warrants, 10/29/97 * 15,474 126
.............................................................................................
Reckson Associates Realty, REIT 170,000 7,183
.............................................................................................
Rouse 940,000 29,845
.............................................................................................
Simon DeBartolo Group, REIT 321,400 9,963
.............................................................................................
53,771
.............
Forest Products 7.5%
Georgia-Pacific 269,600 19,411
.............................................................................................
International Paper 370,000 14,939
.............................................................................................
James River 550,000 18,219
.............................................................................................
Jefferson Smurfit * 760,000 12,208
.............................................................................................
Kimberly-Clark 270,000 25,717
.............................................................................................
Mead 80,000 4,650
.............................................................................................
Valmet ADR 210,000 7,298
.............................................................................................
Willamette Industries 110,700 7,707
.............................................................................................
110,149
.............
Integrated Petroleum - Domestic 6.3%
Amerada Hess 220,000 12,733
.............................................................................................
Atlantic Richfield 210,000 27,825
.............................................................................................
Murphy Oil 340,000 18,913
.............................................................................................
Phillips Petroleum 100,000 4,425
.............................................................................................
Unocal 181,000 7,353
.............................................................................................
USX-Marathon 900,000 21,487
.............................................................................................
92,736
.............
Integrated Petroleum - International 13.9%
British Petroleum ADR 200,000 28,275
.............................................................................................
Chevron 80,000 5,200
.............................................................................................
ENI S.P.A. ADR 290,000 14,971
.............................................................................................
Mobil 470,000 57,457
.............................................................................................
Repsol ADR 820,000 31,262
.............................................................................................
Royal Dutch Petroleum ADR 239,600 40,912
.............................................................................................
Texaco 160,000 15,700
.............................................................................................
TOTAL ADR 250,000 10,063
.............................................................................................
203,840
.............
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE NEW ERA FUND
- ----------------------------------------------------------------------------------------------------
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Petroleum Exploration and Production 6.5%
Alberta Energy 350,000 $ 8,400
.............................................................................................
Barrett Resources * 204,550 8,719
.............................................................................................
Enserch Exploration * 300,000 3,525
.............................................................................................
Gulf Canada Resources * 175,600 1,295
.............................................................................................
Noble Affiliates 150,000 7,181
.............................................................................................
Oryx Energy * 100,000 2,475
.............................................................................................
Rutherford-Moran Oil * 400,000 11,100
.............................................................................................
Union Pacific Resources 364,186 10,652
.............................................................................................
Union Texas Petroleum 700,000 15,663
.............................................................................................
United Meridian * 400,000 20,700
.............................................................................................
Vastar Resources 150,000 5,700
.............................................................................................
95,410
.............
Miscellaneous Energy 1.1%
Centerior Energy 1,050,000 11,287
.............................................................................................
Niagara Mohawk * 450,000 4,444
.............................................................................................
15,731
.............
Energy Services 12.0%
BJ Services 150,000 7,650
.............................................................................................
Camco International 650,000 29,981
.............................................................................................
Coflexip ADR * 550,000 14,438
.............................................................................................
Cooper Cameron * 491,600 37,607
.............................................................................................
Halliburton 270,000 16,267
.............................................................................................
Helmerich & Payne 80,000 4,170
.............................................................................................
McDermott International 265,000 4,406
.............................................................................................
Petrolite 529,900 24,905
.............................................................................................
Schlumberger 175,000 17,478
.............................................................................................
Weatherford Enterra 209,500 6,285
.............................................................................................
Western Atlas 180,000 12,758
.............................................................................................
175,945
.............
Precious Metals 13.2%
Amplats (ZAR) * 248,000 1,471
.............................................................................................
Ashanti Goldfields ADR 173,300 2,145
.............................................................................................
Barrick Gold 620,640 17,843
.............................................................................................
Battle Mountain Gold 700,000 4,813
.............................................................................................
Cambior 1,436,000 21,002
.............................................................................................
Dayton Mining * 1,050,000 7,022
.............................................................................................
Dayton Mining, warrants, 7/31/97 (CAD) * 112,500 173
.............................................................................................
Delta Gold (AUD) * 4,321,906 8,107
.............................................................................................
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE NEW ERA FUND
- ----------------------------------------------------------------------------------------------------
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Golden Star Resources * 251,200 $ 3,266
.............................................................................................
Highlands Gold (AUD) * 968,811 570
.............................................................................................
Homestake Mining 130,250 1,856
.............................................................................................
Newmont Mining 930,000 41,617
.............................................................................................
Pegasus Gold * 559,600 4,232
.............................................................................................
Placer Dome 760,000 16,530
.............................................................................................
Prime Resources Group (CAD) 1,150,000 8,146
.............................................................................................
Rand Gold (ZAR) * 351,800 2,387
.............................................................................................
Rustenburg Platinum (ZAR) * 250,100 3,421
.............................................................................................
Rustenburg Platinum ADR 592,363 7,997
.............................................................................................
Santa Fe Pacific Gold 1,186,300 18,239
.............................................................................................
TVX Gold * 3,050,000 23,638
.............................................................................................
194,475
.............
Diversified Metals 6.3%
Alcoa 120,000 7,650
.............................................................................................
Freeport-McMoRan Copper & Gold (Class A) 370,000 10,406
.............................................................................................
LONRHO (GBP) * 11,237,090 24,064
.............................................................................................
Nucor 310,000 15,810
.............................................................................................
Reynolds Metals 485,000 27,342
.............................................................................................
Steel Dynamics * 367,000 6,950
.............................................................................................
92,222
.............
Chemicals 5.8%
DuPont 260,000 24,537
.............................................................................................
FMC * 260,800 18,289
.............................................................................................
Geon 175,000 3,434
.............................................................................................
Great Lakes Chemical 390,000 18,233
.............................................................................................
Lyondell Petrochemical 500,000 11,000
.............................................................................................
Pall 400,000 10,200
.............................................................................................
85,693
.............
Diversified Resources 4.7%
Burlington Northern Santa Fe 250,000 21,594
.............................................................................................
Canadian National Railway 139,200 5,289
.............................................................................................
Dundee Bancorp (Class A) (CAD) * 255,000 4,702
.............................................................................................
GATX 100,000 4,850
.............................................................................................
Overseas Shipholding Group 200,000 3,400
.............................................................................................
Pittston Minerals 176,300 2,711
.............................................................................................
Union Pacific 430,000 25,854
.............................................................................................
68,400
.............
Total Natural Resource-Related 1,188,372
.............
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE NEW ERA FUND
- ----------------------------------------------------------------------------------------------------
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
CONSUMER AND SERVICE 7.4%
Merchandising 2.6%
Petrie Stores Liquidation Trust 400,000 $ 1,075
.............................................................................................
Wal-Mart 1,650,000 37,744
.............................................................................................
38,819
.............
Miscellaneous Consumer and Service 4.8%
Bristol-Myers Squibb 150,000 16,313
.............................................................................................
Corning 400,000 18,500
.............................................................................................
Eli Lilly 70,000 5,110
.............................................................................................
Gannett 150,000 11,231
.............................................................................................
GE 80,000 7,910
.............................................................................................
Reuters ADR 50,000 3,831
.............................................................................................
Warner-Lambert 100,000 7,500
.............................................................................................
70,395
.............
Total Consumer and Service 109,214
.............
Miscellaneous Common Stocks 3.9% 57,467
.............
Total Common Stocks and Warrants (Cost $895,613) 1,355,053
.............
CONVERTIBLE PREFERRED STOCKS 0.8%
Cross Timbers Oil 172,000 5,203
.............................................................................................
James River, Series P 200,000 6,300
.............................................................................................
Total Convertible Preferred Stocks (Cost $6,250) 11,503
.............
SHORT-TERM INVESTMENTS 6.8%
Certificates of Deposit 1.3%
Bayerische Hypotheken und Wechsel, (London)
5.62%, 2/27/97 $ 10,000,000 10,000
.............................................................................................
National Westminster Bank, 5.41%, 2/10/97 10,000,000 10,000
.............................................................................................
20,000
.............
Commercial Paper 5.5%
Asset Securitization Cooperative, 4(2), 5.32 - 5.55%
1/29/97 - 2/6/97 15,000,000 14,931
.............................................................................................
Beta Finance, 4(2), 5.30%, 2/25/97 10,000,000 9,919
.............................................................................................
Cregem North America, 5.44%, 1/3/97 10,000,000 9,997
.............................................................................................
Investments in Commercial Paper through a joint account
6.75 - 7.10%, 1/2/97 7,419,213 7,418
.............................................................................................
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE NEW ERA FUND
- ----------------------------------------------------------------------------------------------------
Shares/Par Value
- ----------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Island Finance Puerto Rico, 5.31%, 2/24/97 $ 10,000,000 $ 9,920
.............................................................................................
Preferred Receivables Funding, 5.95%, 1/9/97 8,125,000 8,114
.............................................................................................
Sandoz, 5.30%, 1/29/97 10,000,000 9,959
.............................................................................................
Unifunding, 5.44%, 1/6/97 10,000,000 9,993
.............................................................................................
80,251
.............
Total Short-Term Investments (Cost $100,251) 100,251
.............
Total Investments in Securities
99.9% of Net Assets (Cost $1,002,114) $ 1,466,807
Other Assets Less Liabilities 931
.............
NET ASSETS $ 1,467,738
-------------
Net Assets Consist of:
Accumulated net realized gain/loss - net of distributions $ 15,417
Net unrealized gain (loss) 464,688
Paid-in-capital applicable to 56,314,743 shares of $1.00 par
value capital stock outstanding; 200,000,000 shares authorized 987,633
.............
NET ASSETS $ 1,467,738
-------------
NET ASSET VALUE PER SHARE $ 26.06
-------------
</TABLE>
* Non-income producing
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."
AUD Australian dollar
CAD Canadian dollar
GBP British sterling
ZAR South African rand
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE NEW ERA FUND
- ---------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ---------------------------------------------------------------------------------------------
In thousands
<S> <C>
Year
Ended
12/31/96
Investment Income
Income
Dividend $ 23,420
Interest 6,389
...............
Total income 29,809
...............
Expenses
Investment management 7,559
Shareholder servicing 2,020
Custody and accounting 184
Prospectus and shareholder reports 75
Registration 47
Legal and audit 20
Directors 19
Miscellaneous 18
...............
Total expenses 9,942
...............
Net investment income 19,867
...............
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on
Securities 94,507
Foreign currency transactions (82)
...............
Net realized gain (loss) 94,425
...............
Change in net unrealized gain or loss on
Securities 162,315
Other assets and liabilities
denominated in foreign currencies (6)
...............
Change in net unrealized gain or loss 162,309
...............
Net realized and unrealized gain (loss) 256,734
...............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 276,601
---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE NEW ERA FUND
- ---------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------
In thousands
Year
Ended
12/31/96 12/31/95
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 19,867 $ 21,124
Net realized gain (loss) 94,425 53,793
Change in net unrealized gain or loss 162,309 122,914
...............................
Increase (decrease) in net assets from operations 276,601 197,831
...............................
Distributions to shareholders
Net investment income (19,926) (21,548)
Net realized gain (89,635) (53,876)
...............................
Decrease in net assets from distributions (109,561) (75,424)
...............................
Capital share transactions*
Shares sold 347,496 179,604
Distributions reinvested 100,862 69,413
Shares redeemed (238,053) (260,526)
...............................
Increase (decrease) in net assets from capital
share transactions 210,305 (11,509)
...............................
Net Assets
Increase (decrease) during period 377,345 110,898
Beginning of period 1,090,393 979,495
...............................
End of period $ 1,467,738 $ 1,090,393
-------------------------------
* Share information
Shares sold 13,774 8,058
Distributions reinvested 3,855 3,072
Shares redeemed (9,445) (11,618)
...............................
Increase (decrease) in shares outstanding 8,184 (488)
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
T. ROWE PRICE NEW ERA FUND
- -------------------------------------------------------------------------------
December 31, 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 not traded on a particular day and securities regularly traded
in the over-the-counter market are valued at the mean of the latest bid and
asked prices. Other equity securities are valued at a price within the limits of
the latest bid and asked prices deemed by the Board of Directors, or by persons
delegated by the Board, best to reflect fair value.
Short-term debt securities are valued at their amortized cost which, when
combined with accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of 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.
Premiums and Discounts Premiums and discounts on debt securities are amortized
for both financial reporting and tax purposes.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
18
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
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 and
U.S. government securities, aggregated $430,724,000 and $336,716,000,
respectively, for the year ended December 31, 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.
In order for the fund's capital accounts and distributions to shareholders to
reflect the tax character of certain transactions, the following
reclassifications were made during the year ended December 31, 1996. The results
of operations and net assets were not affected by the reclassifications.
- ------------------------------------------------------------------------
Undistributed net investment income $ 59,000
Undistributed net realized gain (59,000)
At December 31, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $1,002,114,000 and net unrealized gain
aggregated $464,693,000, of which $492,368,000 related to appreciated
investments and $27,675,000 to depreciated investments.
19
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
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 $716,000 was payable at December 31, 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
December 31, 1996, and for the year then ended, the effective annual group fee
rate was 0.33%. The fund pays a pro-rata share of the group fee based on the
ratio of its net assets to those of the group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund receives
certain other services. The manager computes the daily share price and maintains
the financial records of the fund. T. Rowe Price Services, Inc. (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 $1,777,000 for
the year ended December 31, 1996, of which $205,000 was payable at period-end.
20
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
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, 1996, 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 statements 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, 1996 by
correspondence with custodians and, where appropriate, the application of
alternative auditing procedures for unsettled security transactions, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 20, 1997
21
<PAGE>
For yield, price, last transaction, current balance or to conduct transactions,
24 hours, 7 days a week, call Tele*Access(R): 1-800-638-2587 toll free
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
http://www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price New Era Fund(R).
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor RPRTNEF 12/31/96
