<PAGE>
Annual Report
NEW ERA
FUND
-----------------
DECEMBER 31, 1997
-----------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
New Era Fund
. S&P 500 stocks registered their third consecutive year of returns over 20%;
however, it was a challenging climate for natural resources stocks as only
the energy service group did well.
. Turmoil in Asian markets slowed economic growth and put downward pressure on
commodity prices, keeping inflation low for an advanced stage of the economic
cycle.
. Your fund returned 0.86% and 10.96% for the 6 and 12 months ended December
31, 1997, respectively, well ahead of the Lipper average for similar funds
but trailing the broad market.
. The fund benefited from its energy holdings, but other natural resources
sectors in the portfolio were weak.
. We believe share prices largely reflect the bad news overseas and the
portfolio is well positioned to participate in a recovery in Asia.
<PAGE>
FELLOW SHAREHOLDERS
The market continued to defy many pundits in 1997 with its third consecutive
year of outstanding performance, the bulk of it occurring during the first seven
months. Your fund's diversification enabled it to significantly outperform its
Lipper peers. However, results trailed the S&P 500 as virtually all sectors in
which we invest, except for the energy service group, lagged the broad market
considerably.
- ----------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 12/31/97 6 Months 12 Months
-------------------------------------------------
<S> <C> <C>
New Era Fund 0.86% 10.96%
.................................................
S&P 500 10.58 33.36
.................................................
Lipper Natural Resources
Funds Average -3.84 0.09
.................................................
</TABLE>
Your fund trailed the unmanaged Standard & Poor's 500 Stock Index throughout the
year because of the relative weakness of most natural resources stocks in a low-
inflation environment. However, fund performance exceeded that of its peer
group, represented by the Lipper Natural Resources Funds Average, during both
the 6- and 12-month periods ended December 31, 1997. This favorable comparison
can be attributed to your fund's greater exposure to relatively strong energy
stocks and to industries outside the natural resources sectors.
YEAR-END DISTRIBUTIONS
On December 26, 1997, your Board of Directors declared an income dividend of
$0.37 per share, a long-term capital gain of $2.07 per share, and a short-term
capital gain of $0.47 per share, each paid on December 30, 1997, to shareholders
of record on December 26. You should have already received your check or
statement reflecting this activity, as well as Form 1099-DIV summarizing this
information for 1997 tax purposes.
1
<PAGE>
ECONOMIC REVIEW
The domestic economy grew at a surprisingly strong rate for this stage of an
economic expansion. Retail sales showed vigorous growth over last year, and
housing starts remained healthy. The major European economies recovered
modestly, driven primarily by the export sector, but adherence to the strict
requirements imposed for qualification in the European Monetary Union (EMU)
restrained growth and led to relatively high unemployment. The countries
included in the initial round will be picked in the first half of 1998, based on
the performance of their economies in 1997.
ENERGY, GOLD, INDUSTRIAL METALS, AND MOST COMMODITY PRICES DECLINED OVER THE
COURSE OF THE YEAR AS PRODUCTIVITY IMPROVED AND ASIAN ECONOMIES SLOWED.
The Asian economic miracle collapsed under the weight of severe currency and
liquidity crises. The Inter-national Monetary Fund (IMF) offered aid to
countries willing to adhere to fiscal and monetary restraint and implement
banking reforms. Political posturing in some countries could delay IMF efforts
to put the region back on the road to recovery, which may aggravate the negative
economic impact overseas and hurt the U.S. market.
The Federal Reserve raised the federal funds rate in the spring, but market
interest rates subsequently declined due to continuing low inflation and the
problems in Asia. The relatively high rate of growth in the economy, combined
with low unemployment, would normally cause the Fed to tighten further to slow
economic growth and restrain inflationary pressures. However, Asian currency
devaluations may hinder U.S. exports while making Asian goods more affordable in
this country. This could result in a slowdown in the rate of growth, as well as
price disinflation, thereby eliminating any need for the Fed to take action on
its own.
The consumer price index rose only about 1.8% in 1997, extremely low for this
stage of an economic expansion. The unemployment rate stood at 4.7% at year-end,
a rate last seen in the early 1970s, but wage inflation has been generally
offset so far by improving productivity.
2
<PAGE>
Raw material inflation, measured by the producer price index, actually declined
1.2%, the first time this has happened since OPEC's loss of control over oil
prices in 1986, when the PPI fell 2.3%.
Energy, gold, industrial metals, and most commodity prices declined over the
course of the year as productivity improved and Asian economies slowed. While
Asia generally represents a relatively small proportion of overall demand for
these materials, the region accounts for a disproportionately larger share of
the annual growth in global demand. Moreover, the price of oil dropped as the
U.N. allowed Iraq to export a limited amount for humanitarian reasons and OPEC
raised export quotas at the end of the year.
During the year, gold fell nearly 22% to an 18-year low as central banks,
including those of Australia, the Netherlands, and Argentina, were major
sellers. The weakness in bullion was exacerbated by new Swiss and German central
bank policies, putting less emphasis on gold as a necessary reserve. The U.S.
dollar has now gained precedence over gold as a worldwide reserve asset.
PORTFOLIO MANAGEMENT
With the prices of most natural resources and industrial commodities declining
during the year, the investment environment for your fund was challenging at
best. In fact, only one of the resource-related groups in which we invest -- the
energy service industry -- performed better than the broad market. Our
relatively high weightings in better-performing energy shares, chemicals, and
real estate helped fund performance relative to our peers.
During the past year, the price of oil declined by about one-third, and the
domestic price of natural gas fell nearly 18% because of rising inventories and
a mild winter influenced by El Nino. Iraq continually disrupted the oil market
- -- one moment turning on the taps for export, and the next cutting off supplies
and interfering with U.N. weapons inspectors. OPEC raised production quotas late
in the year
3
<PAGE>
in the face of weakening demand from Asia, which (outside of Japan) represented
as much as 40% of incremental oil demand in recent years. However, we expect
energy markets to improve as demand growth from the Pacific Rim resumes a more
normal pace.
THE HEAD OF THE NEW EUROPEAN CENTRAL BANK, WHO WILL BE ELECTED IN MAY, IS
EXPECTED TO FORMULATE AN EMU POLICY FOR THE USE OF GOLD AS A RESERVE ASSET.
Our precious metals holdings suffered as the price of gold plunged, but our
emphasis on low-cost producers protected us to some degree. We also avoided the
Bre-X Minerals fraud and the resultant fallout for gold exploration companies,
which helped temper losses in this area. The head of the new European Central
Bank, who will be elected in May, is expected to formulate an EMU policy for the
use of gold as a reserve asset. The outcome will have a significant impact on
gold prices.
Over the past six months, we initiated several new positions in the portfolio.
We purchased Inco, a major producer of nickel with significant growth potential,
and PETROBRAS, the Brazilian oil company scheduled to be privatized during the
next few years. In coming months, Brazil will be opening its borders to
investment in exploration and production projects by Western oil companies,
which should benefit PETROBRAS. We added Noble Drilling, an oil service company
with an offshore drilling fleet positioned to participate in the growing trend
toward deepwater exploration and development. Camden Property Trust, an
apartment real estate investment trust that owns and manages properties
primarily in the southern U.S., was another position added during the second
half.
OUTLOOK
The domestic economy is likely to slow somewhat from the rapid pace of 1997, due
largely to a deteriorating trade balance with Asia. While wage inflation could
accelerate, pressure on the prices of raw materials is likely to continue,
resulting in moderate inflation overall. The European recovery is somewhat in
jeopardy, since export growth could slow because of declining Asian demand.
Asia's recovery will depend on the willingness of nations in the region to
deregulate their financial institutions and markets, and to impose fiscal and
monetary discipline. Political resistance to making necessary changes is
widespread. A weak Japanese government has so far failed
4
<PAGE>
to reform its banking system, and the economy remains sluggish; Korea needs
to summon the political will to allow insolvent institutions to fail and to
come to terms with conditions imposed by the IMF; China has made some
progress in privatizing its inefficient state-owned institutions but has to
encourage more foreign capital to stimulate real economic growth. Unless
Asian markets recover rapidly, demand for most resources could grow at a
lower rate in 1998.
On a more positive note, we are hopeful that the worst is now behind us.
The stock prices of companies in which we invest already reflect much of
the turmoil of the past year. Any signs of progress in Asia are likely to
be greeted enthusiastically by investors, which could lead to a rebound in
the shares of natural resources companies as we move through 1998. We
believe the companies in the portfolio are positioned to benefit from a
turnaround in the problems overseas and the resumption of healthy global
economic growth.
Respectfully submitted,
/s/ Charles M. Ober
Charles M. Ober
President and Chairman of the Investment Advisory Committee
January 20, 1998
5
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percent of
Net Assets
12/31/97
--------------------------------------------------------------------------------
<S> <C>
Mobil 4.5%
................................................................................
Royal Dutch Petroleum 4.1
................................................................................
Wal-Mart 3.8
................................................................................
Newmont Mining 3.2
................................................................................
Atlantic Richfield 2.9
--------------------------------------------------------------------------------
McDermott International 2.3
................................................................................
British Petroleum 2.2
................................................................................
Camco International 2.2
................................................................................
DuPont 2.1
................................................................................
Burlington Northern Santa Fe 2.1
--------------------------------------------------------------------------------
USX-Marathon 2.0
................................................................................
Cooper Cameron 2.0
................................................................................
Reynolds Metals 1.9
................................................................................
Schlumberger 1.9
................................................................................
Rouse 1.8
--------------------------------------------------------------------------------
Coflexip 1.8
................................................................................
Halliburton 1.6
................................................................................
Fort James 1.5
................................................................................
Texaco 1.5
................................................................................
United Meridian 1.3
--------------------------------------------------------------------------------
Bristol-Myers Squibb 1.3
................................................................................
Union Pacific 1.3
................................................................................
Western Atlas 1.2
................................................................................
LONRHO 1.2
................................................................................
Great Lakes Chemical 1.2
--------------------------------------------------------------------------------
Total 52.9%
</TABLE>
6
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 12/31/97
<TABLE>
<CAPTION>
Ten Best Contributors Ten Worst Contributors
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Coflexip 25(cent) Newmont Mining -25(cent)
..................................... .........................................
Cooper Cameron 22 Cambior 14
..................................... .........................................
Wal-Mart 16 LONRHO 12
..................................... .........................................
McDermott International 12 Inco 10
..................................... .........................................
Schlumberger 11 Corning 10
..................................... .........................................
Halliburton 10 TVX Gold 10
..................................... .........................................
Atlantic Richfield 9 Reynolds Metals 10
..................................... .........................................
Camco International 8 Freeport-McMoRan Copper & Gold 9
..................................... .........................................
USX-Marathon 8 Rutherford-Moran Oil 6
..................................... .........................................
Tele-Communications 7 Union Pacific 6
- ------------------------------------- -----------------------------------------
Total 128(cent) Total -112(cent)
<CAPTION>
12 Months Ended 12/31/97
Ten Best Contributors Ten Worst Contributors
- ----------------------------------------------------------------------------------
Wal-Mart 46(cent) Newmont Mining -31(cent)
..................................... .........................................
Cooper Cameron 35 TVX Gold 23
..................................... .........................................
McDermott International 31 Cambior 22
..................................... .........................................
Coflexip 28 United Meridian 19
..................................... .........................................
Royal Dutch Petroleum 20 Placer Dome 14
..................................... .........................................
Schlumberger 19 LONRHO 12
..................................... .........................................
Halliburton 19 Inco 10
..................................... .........................................
Mobil 18 Dayton Mining 9
..................................... .........................................
Bristol-Myers Squibb 16 Barrick Gold 8
..................................... .........................................
Camco International 16 Freeport-McMoRan Copper & Gold 8
- ------------------------------------- -----------------------------------------
Total 248(cent) Total -156(cent)
</TABLE>
7
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
PERFORMANCE CONTRIBUTIONS
6 Months Ended 12/31/97
<TABLE>
<CAPTION>
Cents-Per-Share Percent of
Sector Contribution Net Assets
- -------------------------------------------------------------------------------
<S> <C> <C>
Natural Resource-Related
...............................................................................
Building and Real Estate 15(cent) 7%
...............................................................................
Forest Products -10 5
...............................................................................
Integrated Petroleum-Domestic 22 7
...............................................................................
Integrated Petroleum-International 10 17
...............................................................................
Petroleum Exploration and Production -15 6
...............................................................................
Miscellaneous Energy 9 1
...............................................................................
Energy Services 102 15
...............................................................................
Precious Metals -85 9
...............................................................................
Diversified Metals -41 5
...............................................................................
Non-Ferrous Metals -11 1
...............................................................................
Refining and Marketing 2 1
...............................................................................
Chemicals -6 7
...............................................................................
Diversified Resources -1 6
- -------------------------------------------------------------------------------
Total -9(cent) 87%
Consumer and Services
...............................................................................
Merchandising 16(cent) 4%
...............................................................................
Miscellaneous 6 3
- -------------------------------------------------------------------------------
Total 22(cent) 7%
...............................................................................
Science and Technology -8 0
...............................................................................
Miscellaneous -6 2
- -------------------------------------------------------------------------------
Subtotal -1 96
...............................................................................
Reserves and Income 20 4
- -------------------------------------------------------------------------------
Total Portfolio 19(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.
NEW ERA FUND
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lipper
S&P 500 Natural Resources
Index Funds Average New Era Fund
------- ----------------- ------------
<S> <C> <C> <C>
12/87 $10,000 $10,000 $10,000
12/88 11,661 10,701 11,032
12/89 15,356 14,253 13,712
12/90 14,879 13,117 12,511
12/91 19,412 13,381 14,355
12/92 20,891 13,650 14,653
12/93 22,997 16,882 16,899
12/94 23,301 16,498 17,773
12/95 32,056 20,111 21,463
12/96 39,417 26,469 26,668
12/31/97 52,568 28,244 29,592
</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>
<CAPTION>
Periods Ended 12/31/97 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Era Fund 10.96% 18.52% 15.09% 11.46%
................................................................................
</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
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 26.06 $ 22.65 $ 20.15 $ 20.35 $ 18.88
......................................................
Investment activities
Net investment income 0.40 0.38 0.47 0.36 0.40
Net realized and
unrealized gain (loss) 2.40 5.12 3.71 0.69 2.48
......................................................
Total from
investment activities 2.80 5.50 4.18 1.05 2.88
......................................................
Distributions
Net investment income (0.37) (0.38) (0.48) (0.38) (0.38)
Net realized gain (2.54) (1.71) (1.20) (0.87) (1.03)
......................................................
Total distributions (2.91) (2.09) (1.68) (1.25) (1.41)
......................................................
NET ASSET VALUE
End of period $ 25.95 $ 26.06 $ 22.65 $ 20.15 $ 20.35
------------------------------------------------------
Ratios/Supplemental Data
Total return 10.96% 24.25% 20.76% 5.17% 15.33%
.......................................................................................
Ratio of expenses to
average net assets 0.74% 0.76% 0.79% 0.80% 0.80%
.......................................................................................
Ratio of net investment
income to average
net assets 1.33% 1.53% 2.00% 1.87% 1.92%
.......................................................................................
Portfolio turnover rate 27.5% 28.6% 22.7% 24.7% 24.7%
.......................................................................................
Average commission
rate paid $ 0.0446 $ 0.0300 - - -
.......................................................................................
Net assets, end of period
(in millions) $ 1,493 $ 1,468 $ 1,090 $ 979 $ 753
.......................................................................................
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
- -----------------------
STATEMENT OF NET ASSETS Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS 95.1%
NATURAL RESOURCE-RELATED 86.0%
<S> <C> <C>
Building and Real Estate 6.9%
AMB Property, REIT 200,073 $ 5,027
................................................................................
Boston Properties, REIT 126,000 4,166
................................................................................
Camden Property Trust, REIT 198,100 6,141
................................................................................
Catellus Development * 357,000 7,140
................................................................................
Equity Office Properties, REIT 98,441 3,107
................................................................................
Federal Realty Investment Trust, REIT 230,000 5,923
................................................................................
Patriot American Hospitality, REIT 250,000 7,203
................................................................................
Reckson Associates Realty, REIT 340,000 8,628
................................................................................
Rouse 820,000 26,855
................................................................................
Security Capital Atlantic, REIT 209,000 4,415
................................................................................
SECURITY CAPITAL PACIFIC TRUST, REIT 69,600 1,688
................................................................................
Security Capital U.S. Realty (144a) * 100,000 1,420
................................................................................
Security Capital U.S. Realty (Class A) * 580,000 8,236
................................................................................
Simon DeBartolo Group, REIT 271,400 8,871
................................................................................
United Dominion Realty Trust, REIT 300,000 4,181
................................................................................
103,001
...............
Forest Products 4.5%
Fort James 584,120 22,343
................................................................................
Georgia-Pacific 139,600 8,481
................................................................................
International Paper 230,000 9,919
................................................................................
Jefferson Smurfit * 760,000 10,830
................................................................................
Kimberly-Clark 200,000 9,862
................................................................................
Mead 80,000 2,240
................................................................................
Willamette Industries 121,400 3,907
................................................................................
67,582
...............
Integrated Petroleum - Domestic 7.2%
Amerada Hess 250,000 13,719
................................................................................
Atlantic Richfield 540,000 43,267
................................................................................
Murphy Oil 230,000 12,463
................................................................................
Unocal 181,000 7,025
................................................................................
USX-Marathon 900,000 30,375
................................................................................
106,849
...............
</TABLE>
11
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Integrated Petroleum - International 17.0%
British Petroleum ADR 420,000 $ 33,469
................................................................................
Chevron 80,000 6,160
................................................................................
Elf Aquitaine ADR 100,000 5,862
................................................................................
ENI S.P.A. ADR 290,000 16,548
................................................................................
Mobil 940,000 67,856
................................................................................
PETROBRAS * 601,100 14,314
................................................................................
Repsol ADR 250,000 10,641
................................................................................
Royal Dutch Petroleum ADR 1,118,400 60,603
................................................................................
Texaco 400,000 21,750
................................................................................
TOTAL ADR 300,000 16,650
................................................................................
253,853
..............
Refining and Marketing 0.5%
Ashland 150,000 8,053
................................................................................
8,053
..............
Petroleum Exploration and Production 5.8%
Anderson Exploration (CAD) * 275,000 2,694
................................................................................
Barrett Resources * 234,550 7,095
................................................................................
Canadian Natural Resources (CAD) * 150,000 3,212
................................................................................
EEX * 1,000,000 9,062
................................................................................
Noble Affiliates 150,000 5,288
................................................................................
Northstar Energy (CAD) * 550,000 3,868
................................................................................
Ocean Energy * 50,000 2,466
................................................................................
Rutherford-Moran Oil * 633,200 11,398
................................................................................
Union Pacific Resources 254,186 6,164
................................................................................
Union Texas Petroleum 500,000 10,406
................................................................................
United Meridian * 716,000 20,137
................................................................................
Vastar Resources 150,000 5,363
................................................................................
87,153
..............
Miscellaneous Energy 0.7%
FirstEnergy 191,250 5,546
................................................................................
Niagara Mohawk * 450,000 4,725
................................................................................
10,271
..............
Energy Services 14.9%
BJ Services * 75,000 5,395
................................................................................
Camco International 522,500 33,277
................................................................................
Coflexip ADR 475,000 26,585
................................................................................
Cooper Cameron * 481,800 29,390
................................................................................
Halliburton 470,000 24,411
................................................................................
</TABLE>
12
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
McDermott International 936,650 $ 34,305
................................................................................
Noble Drilling * 250,000 7,656
................................................................................
Santa Fe International 180,000 7,324
................................................................................
Schlumberger 350,000 28,175
................................................................................
Weatherford Enterra * 154,500 6,759
................................................................................
Western Atlas 250,000 18,500
................................................................................
221,777
...............
Precious Metals 9.3%
Anglo American Platinum ADR 496,744 6,458
................................................................................
Ashanti Goldfields 616,300 4,622
................................................................................
Barrick Gold 320,640 5,972
................................................................................
Battle Mountain Gold (Class A) 1,400,000 8,225
................................................................................
Cambior 1,536,000 9,024
................................................................................
Dayton Mining (CAD) * 1,050,000 2,035
................................................................................
Delta Gold (AUD) 5,500,000 5,793
................................................................................
Homestake Mining 660,250 5,860
................................................................................
Newmont Mining 1,610,359 47,304
................................................................................
Normandy Mining (AUD) 4,475,421 4,346
................................................................................
Placer Dome 1,215,000 15,415
................................................................................
Prime Resources Group (CAD) 1,337,000 9,108
................................................................................
TVX Gold * 4,257,200 14,368
................................................................................
138,530
...............
Non-Ferrous Metals 1.2%
Bougainville Copper (AUD) * 2,030,829 629
................................................................................
Inco 969,000 16,473
................................................................................
Pittston Minerals 116,300 872
................................................................................
17,974
...............
Diversified Metals 5.2%
Alcoa 120,000 8,445
................................................................................
AVMIN (ZAR) 1,397,000 1,679
................................................................................
Freeport-McMoRan Copper & Gold (Class A) 370,000 5,666
................................................................................
LONRHO (GBP) 11,737,090 18,121
................................................................................
Nucor 310,000 14,977
................................................................................
Reynolds Metals 485,000 29,100
................................................................................
77,988
...............
Chemicals 6.8%
DuPont 520,000 31,232
................................................................................
FMC * 220,800 14,863
................................................................................
</TABLE>
13
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Great Lakes Chemical 390,000 $ 17,501
................................................................................
Lyondell Petrochemical 575,700 15,256
................................................................................
Millennium Chemicals 250,000 5,891
................................................................................
Olin 100,000 4,687
................................................................................
Pall 400,000 8,275
................................................................................
Witco 80,000 3,265
................................................................................
100,970
...............
Diversified Resources 6.0%
Burlington Northern Santa Fe 330,000 30,670
................................................................................
Canadian National Railway 39,200 1,852
................................................................................
Energy Group ADR 87,500 3,905
................................................................................
GATX 100,000 7,256
................................................................................
Overseas Shipholding Group 200,000 4,363
................................................................................
Penn Virginia 364,000 10,738
................................................................................
Union Pacific 300,000 18,731
................................................................................
Western Water * 344,500 3,660
................................................................................
Wheelabrator Technologies 500,000 8,031
................................................................................
89,206
...............
Total Natural Resource-Related 1,283,207
...............
CONSUMER AND SERVICE 6.8%
Merchandising 3.9%
Petrie Stores Liquidation Trust * 400,000 1,222
................................................................................
Wal-Mart 1,450,000 57,184
................................................................................
58,406
...............
Miscellaneous 2.9%
Bristol-Myers Squibb 200,000 18,925
................................................................................
Corning 300,000 11,138
................................................................................
Gannett 60,000 3,709
................................................................................
GE 80,000 5,870
................................................................................
Tele-Communications (Class A) * 126,291 3,524
................................................................................
43,166
...............
Total Consumer and Service 101,572
...............
Miscellaneous Common Stocks 2.3% 34,438
...............
Total Common Stocks (Cost $967,190) 1,419,217
...............
</TABLE>
14
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS 0.5%
Cross Timbers Oil (Series A) 172,000 $ 6,278
................................................................................
Western Water (Series C) 2,030 1,519
................................................................................
Total Convertible Preferred Stocks (Cost $4,800) 7,797
...............
CONVERTIBLE BONDS 0.2%
Miscellaneous Convertible Bonds 2,081
...............
Total Convertible Bonds (Cost $2,169) 2,081
...............
SHORT-TERM INVESTMENTS 4.6%
Money Market Funds 3.9%
Reserve Investment Fund, 5.84% # 59,027,663 59,028
................................................................................
59,028
...............
Structured Investment Vehicle 0.7%
Short Term Card Account Trust, VR, (144a)
6.00%, 1/15/98 $ 10,000,000 10,000
................................................................................
10,000
...............
Total Short-Term Investments (Cost $69,028) 69,028
...............
</TABLE>
15
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
- --------------------------------------------------------------------------------
In thousands
<S> <C>
Total Investments in Securities
100.4% of Net Assets (Cost $1,043,187) $ 1,498,123
Other Assets Less Liabilities (5,461)
...............
NET ASSETS $ 1,492,662
---------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 1,806
Accumulated net realized gain/loss - net of distributions 34,624
Net unrealized gain (loss) 454,935
Paid-in-capital applicable to 57,510,763 shares of $1.00 par
value capital stock outstanding; 200,000,000 shares authorized 1,001,297
...............
NET ASSETS $ 1,492,662
---------------
NET ASSET VALUE PER SHARE $ 25.95
---------------
</TABLE>
* Non-income producing
# Seven-day yield
ADR American Depository Receipt
REIT Real Estate Investment Trust
VR Variable rate
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.
AUD Australian dollar
CAD Canadian dollar
GBP British sterling
ZAR South African rand
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
- -----------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
Year
Ended
12/31/97
- --------------------------------------------------------------------------------
<S> <C>
Investment Income
Income
Dividend $ 25,861
Interest 7,092
.............
Total income 32,953
.............
Expenses
Investment management 9,144
Shareholder servicing 2,201
Custody and accounting 159
Prospectus and shareholder reports 170
Registration 47
Legal and audit 16
Directors 13
Miscellaneous 19
.............
Total expenses 11,769
.............
Net investment income 21,184
.............
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 152,357
Foreign currency transactions (128)
.............
Net realized gain (loss) 152,229
.............
Change in net unrealized gain or loss
Securities (9,757)
Other assets and liabilities
denominated in foreign currencies 4
.............
Change in net unrealized gain or loss (9,753)
.............
Net realized and unrealized gain (loss) 142,476
.............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 163,660
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
Year
Ended
12/31/97 12/31/96
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 21,184 $ 19,867
Net realized gain (loss) 152,229 94,425
Change in net unrealized gain or loss (9,753) 162,309
..........................
Increase (decrease) in net assets from operations 163,660 276,601
..........................
Distributions to shareholders
Net investment income (19,378) (19,926)
Net realized gain (133,022) (89,635)
..........................
Decrease in net assets from distributions (152,400) (109,561)
..........................
Capital share transactions *
Shares sold 229,959 347,496
Distributions reinvested 138,855 100,862
Shares redeemed (355,150) (238,053)
..........................
Increase (decrease) in net assets from capital
share transactions 13,664 210,305
..........................
Net Assets
Increase (decrease) during period 24,924 377,345
Beginning of period 1,467,738 1,090,393
..........................
End of period $1,492,662 $ 1,467,738
--------------------------
* Share information
Shares sold 8,212 13,774
Distributions reinvested 5,456 3,855
Shares redeemed (12,472) (9,445)
..........................
Increase (decrease) in shares outstanding 1,196 8,184
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
December 31, 1997
- -----------------------------
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.
The accompanying financial statements are prepared in accordance with generally
accepted accounting principles for the investment company industry; these
principles may require the use of estimates by fund management.
Valuation Equity securities listed or regularly traded on a securities exchange
are valued at the last quoted sales price on the day the valuations are made. A
security which is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for such security.
Listed securities not traded on a particular day and securities regularly traded
in the over-the-counter market are valued at the mean of the latest bid and
asked prices. Other equity securities are valued at a price within the limits of
the latest bid and asked prices deemed by the Board of Directors, or by persons
delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service. Short-
term debt securities are valued at amortized cost which, when combined with
accrued interest, approximates fair value.
Investments in mutual funds are valued at the closing net asset value per share
of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
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
19
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
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
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $399,828,000 and $478,696,000, respectively, for the year ended
December 31, 1997.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At December 31, 1997, the aggregate cost of investments for federal income tax
and financial reporting purposes was $1,043,187,000, and net unrealized gain
aggregated $454,936,000, of which $542,335,000 related to appreciated
investments and $87,399,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment management fee,
of which $736,000 was payable at December 31, 1997. The fee is computed daily
and paid monthly, and consists of an individual fund fee equal to
20
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
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 0.30% for assets in excess of $80 billion.
The effective annual group fee was 0.32% at December 31, 1997, and 0.33% for the
year then ended. 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. The fund incurred expenses pursuant to these
related party agreements totaling approximately $1,270,000 for the year ended
December 31, 1997, of which $131,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual funds
(underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum) may
invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum Growth Fund held
approximately 13.7% of the outstanding shares of the New Era Fund at December
31, 1997. For the year then ended, the fund was allocated $692,000 of Spectrum
expenses, $77,000 of which was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve Funds
are offered as cash management options only to mutual funds and other accounts
managed by T. Rowe Price and its affiliates and are not available to the public.
The Reserve Funds pay no investment management fees. Distributions from the
Reserve Funds to the fund for the year ended December 31, 1997,
21
<PAGE>
T. ROWE PRICE NEW ERA FUND
- --------------------------------------------------------------------------------
totaled $1,560,000 and are reflected as interest income in the accompanying
Statement of Operations.
During the year ended December 31, 1997, the fund, in the ordinary course of
business, placed security purchase and sale orders aggregating $1,203,000 with
certain affiliates of the manager and paid commissions of $2,000 related
thereto.
- -----------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 12/31/97
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
. $24,614,000 from short term capital gains, and
. $108,408,000 From long term capital gains; of which $35,753,000 was subject
to the 20% rate gains category.
For corporate shareholders, 37% of the fund's distributed income and short-term
capital gains qualified for the dividends-received deduction.
- --------------------------------------------------------------------------------
22
<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, 1997, 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, 1997 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 21, 1998
23
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
INVESTMENT SERVICES AND INFORMATION
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from
8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(R) and T. Rowe Price OnLine.
DISCOUNT BROKERAGE*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
INVESTMENT INFORMATION
Combined Statement Overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
24
<PAGE>
T. ROWE PRICE MUTUAL FUNDS
- --------------------------------------------------------------------------------
STOCK FUNDS
..........................
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications*
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons**
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value**
Spectrum Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
..........................
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Insured
Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal
Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Government Bond
International Bond
MONEY MARKET FUNDS
..........................
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
..........................
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
..........................
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced
Portfolio Prime Reserve Portfolio
*Formerly the closed-end New Age Media Fund. Converted to open-end status on
7/28/97.
**Closed to new investors.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
25
<PAGE>
For yield, price, last transaction, current balance, or to conduct transactions,
24 hours, 7 days a week, call Tele*Access(R): 1-800-638-2587 toll free
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price New 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.
