Annual Report
New Era
Fund
December 31, 1999
T. Rowe Price
Report Highlights
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New Era Fund
o Stocks concluded a fifth consecutive year of strong returns, and natural
resources stocks also turned in excellent results for the year.
o The fund slightly surpassed the S&P 500 for the year but trailed the Lipper
average because of fund exposure to precious metals and real estate.
o The Fed tightened monetary policy to head off potential inflation, but we
expect global economic strength to continue.
o We added several new positions in diverse industries during the second
half.
o We believe the fund is well positioned to benefit from higher commodities
prices and strong earnings recovery in our sectors.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
Fellow Shareholders
Stocks concluded another year of solid results, with the S&P 500 Index posting
its fifth consecutive return of more than 20%. Performance, however, was narrow
as half of the S&P 500 stocks were actually down for the year while 50% of the
index's gain came from only seven stocks. Natural resources stocks were strong
during the first half, enabling your fund to edge ahead of the S&P 500 for the
year.
Performance Comparison
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Periods Ended 12/31/99 6 Months 12 Months
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New Era Fund 0.62% 21.22%
S&P 500 7.71 21.04
Lipper Natural Resources
Funds Average 2.69 30.68
With the wind at its back for the first time in a while, your fund
delivered an annual return slightly ahead of the unmanaged Standard &
Poor's 500 Stock Index, as natural resources stocks were propelled by
global growth and inflationary trends. The fund trailed its peer group
average due to its diversification across industry sectors, and in
particular because of its exposure to precious metals and real estate,
which have yet to reflect the inflationary pressures. The fund lagged both
benchmarks over the second half. The strong recovery in the price of oil
led to a significant boost in energy stocks in the first half, but they
languished in the second half as investors were skeptical about OPEC's
ability to restrain production. Our energy holdings are particularly
sensitive to strength or weakness in oil prices, and concerns that higher
crude oil prices would be unsustainable in the second half also impaired
results relative to our competitors.
YEAR-END DISTRIBUTIONS
Your Board of Directors declared an income dividend of $0.30 per share, a
long-term capital gain of $1.38 per share, and a short-term gain of $0.44
per share, payable on December 16, 1999, to shareholders of record on
December 14. You should have received your check or confirmation reflecting
these payments, as well as Form 1099-DIV summarizing this information for
1999 tax purposes.
ECONOMIC REVIEW
The Fed lowered short-term rates in fall 1998 to offset the impact of weak
Asian economies on global trade and financial markets. This loosening in
monetary policy was highly successful, since it laid a foundation for
recovery in emerging markets and enabled them to regain their footing last
year. Renewed strength in Asia led to greater demand for most resources and
cyclical commodities, as these economies are highly dependent on the
processing and use of basic materials. Continued strong economic expansion
in the U.S., coupled with a vibrant recovery in Asia and moderate European
growth, has produced some anecdotal evidence of inflation. As emerging
markets picked up steam, the Federal Reserve reversed course and hiked
short-term rates three times in 1999 to slow the domestic economy and head
off the threat of higher inflation. At this time, we don't believe the
Fed's new policy is likely to upset the recovery overseas, which bodes well
for continuing strength in the natural resource markets.
Capped by a record holiday season, consumer spending should continue to
underpin the domestic economy. The rising stock market and higher home
prices have boosted the overall level of wealth, and along with it, the
level of consumer confidence. However, higher interest rates are likely to
stem the rise in home prices, and any sustained weakness in stocks could
eventually lead to a slowdown in consumer spending and, thus, the economy.
With the launch of the euro and the elimination of cross-border tariffs,
Europe entered an exciting new era of consolidation and restructuring, the
effect of which was felt by the fund with the acquisitions of Petrofina and
Elf Acquitaine by Total Fina. These changes are also expected to have a
positive impact on another holding, Norsk Hydro, as its management reacts
to the competitive pressures of the capital and energy markets.
Consolidation in Europe is a continuation of the trend toward major global
enterprises becoming more integrated in markets around the world. The
fund's largest holding, Wal-Mart, aggressively entered Europe in the past
year through its acquisitions in Germany and the U.K.
Most resource and industrial commodities have recovered from the multiyear
lows recorded in 1998 and early 1999. The key to continued demand growth in
Asia is the degree of access regional countries and companies have to
global financial markets. If the availability of Western capital were
reduced because of higher rates and skittish banking institutions, emerging
market economies could suffer a relapse. Thus, actions by the Federal
Reserve are likely to take this potential outcome into account.
PORTFOLIO MANAGEMENT
Reserves and Other 8
Non-resources 7
Energy 50
Metals and Mining 8
Precious Metals 7
Forest Products 9
Diversified Resources 6
Building and Real Estate 5
Mergers and acquisitions in all industries and regions of the world
accelerated last year. In 1998 the headlines were dominated by news of
mergers in the oil industry, but this past year the metals companies were
actively putting together two- and three-way mergers. The copper industry
saw the acquisition of Cyprus Amax by Phelps Dodge, both of which were
portfolio holdings. Meanwhile, in the aluminum industry Alcoa made a bid
for Reynold Metals, another holding of the fund, and the merger awaits
regulatory approval. Alcan Aluminum pulled off a three-way merger with the
purchase of two of its European rivals. The consolidation of these two
industries should lead to more rational behavior by the remaining
participants. One noteworthy trend is the increasing failure rate of
earlier acquisitions, as aggressive accounting treatment is unmasked and
supposed synergies come to naught. One of the most difficult transitions a
company has to make is from a restructuring, asset disposition mode to a
growth strategy.
Energy stocks did well as the price of oil doubled in the first half, and
investors anticipated a strong earnings recovery for the industry. However,
as mentioned, the group struggled in the second half as skepticism over
OPEC's commitment to restraining production held sway. Consequently, most
energy stocks do not currently reflect the continuing high price of oil.
Energy service stocks rallied significantly, but capital spending by the
oil industry did not recover as quickly as the price of oil. Therefore,
earnings disappointments have temporarily led to some retrenchment in share
prices, and we took advantage of the opportunity to add to the energy
service component of the portfolio.
Gold enjoyed a brief rally when several major central banks agreed to limit
their bullion sale over the next five years and not to lend additional gold
reserves. This assurance temporarily calmed concerns about excess bank
inventory hitting the market and overwhelming demand. However, the rally
was short-lived as skepticism returned about the central banks' long-term
intentions. In addition, a few noteworthy producers were overly hedged and
almost failed during the spike in the price of gold, further disillusioning
investors. There had been some speculation that a short squeeze might
ensue, driving the price to higher levels, but it fizzled quickly.
Consequently, we reduced our precious metals allocation during the past six
months.
We did establish new positions in quite a few companies: Occidental
Petroleum, an international exploration and production company with
significant chemical operations; Allegheny Teledyne, a major producer of
stainless steel and a factor in the titanium market; Norsk Hydro, a
Norwegian conglomerate involved in energy, light metals, and fertilizer;
and Potlatch, a paper and wood products manufacturer with valuable timber
holdings. Other new purchases included Kinder Morgan, a newly formed
company consisting of the former KN Energy assets of natural gas pipelines
and liquids production facilities, and the refined products pipelines and
terminals of the KMI limited partnership; Franco-Nevada, the world's
largest public precious metals royalty holder; Newfield Exploration, a
successful Gulf of Mexico production and development company; and Forest
Oil, another independent producer with interests in the Gulf of Mexico and
Canada. We believe these new purchases position the portfolio well for
future growth.
OUTLOOK
The major concerns of 1999, other than a possible pickup in inflation, have
largely passed. Two costly burdens on the global economy-the $181 billion
IMF bailout of floundering economies and the $600 billion spent on computer
preparation for Y2K-are now history, thus freeing capital for more
productive uses in 2000. Strong domestic and European growth will likely be
sustained unless the Federal Reserve and European Central Bank take
excessive preemptive action through ever-higher costs of capital-something
we do not foresee. The other potential problem lies in lofty stock
valuations and the impact on wealth and consumer spending should stock
prices tumble.
Investors will be observing OPEC to see if it can effectively hold the line
on oil production, which should be the overriding influence on energy stock
prices. The oil industry will witness some major asset sales in the first
half of 2000, some mandated by regulators, as pending mergers are
completed. Some of this activity could undermine values in the oil patch as
sellers overwhelm the available capital of potential buyers, leading to low
transaction prices. As a result of underlying valuation concern,
independent producers have not participated in the recovery in oil prices
to the extent one might expect. Asset sales will also inhibit a rapid
upturn in capital spending by the industry and slow the recovery of energy
service companies. However, a sustained oil price above $20 per barrel,
which appears likely, will ultimately attract the investment capital
required to increase worldwide production enough to keep up with rising
demand over time.
Your fund should benefit from more synchronized global economic growth in
2000. The prices of cyclical and resource commodities have begun to
recover, yet prices remain well below the levels required to justify
investment in new capacity. Consequently, most of the industries
represented in the portfolio should enjoy a period of strong earnings
recovery from improved product pricing. Moreover, many natural resources
companies have now become more focused on financial discipline, which
should postpone the building of excess capacity and lengthen the duration
of the upward cycle.
Respectfully submitted,
Charles M. Ober
President and Chairman of the Investment Advisory Committee
January 21, 2000
T. Rowe Price New Era Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/99
Wal-Mart 6.1%
Exxon Mobil 4.7
Royal Dutch Petroleum 3.7
Newmont Mining 3.4
Schlumberger 2.8
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USX-Marathon 2.6
Fort James 2.6
Atlantic Richfield 2.6
Total Fina 2.2
Inco 1.8
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Amerada Hess 1.8
Rio Tinto 1.8
Halliburton 1.7
Chevron 1.7
Burlington Northern Santa Fe 1.7
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Murphy Oil 1.6
Kimberly-Clark 1.6
BJ Services 1.5
DuPont 1.5
Burlington Resources 1.5
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Reynolds Metals 1.3
Nucor 1.3
Smurfit-Stone Container 1.3
Coflexip 1.2
Occidental Petroleum 1.2
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Total 55.2%
Note: Table excludes reserves.
T. Rowe Price New Era Fund
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Portfolio Highlights
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MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 12/31/99
Ten Largest Purchases
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Occidental Petroleum *
Allegheny Teledyne *
Vastar Resources *
Norsk Hydro *
Bowater
Fort James
Champion International
Valero Energy
Enron Oil & Gas
Anadarko Petroleum
Ten Largest Sales
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Wal-Mart
Anglo American Platinum **
Champion International
Fluor **
Bowater **
Corning **
Atlantic Richfield
Reynolds Metals
Halliburton
Sprint **
* Position added
** Position eliminated
T. Rowe Price New Era Fund
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Performance Comparison
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This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with benchmarks, which may include
a broad-based market index and a peer group average or index. Market
indexes do not include expenses, which are deducted from fund returns as
well as mutual fund averages and indexes.
NEW ERA FUND
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Lipper Natural
S&P 500 Resources New Era
Index Funds Average Fund
12/31/89 10,000 10,000 10,000
12/90 9,690 9,221 9,124
12/91 12,642 9,426 10,469
12/92 13,605 9,497 10,686
12/93 14,976 11,776 12,325
12/94 15,174 11,501 12,962
12/95 20,876 13,738 15,653
12/96 25,669 17,708 19,449
12/97 34,233 19,104 21,581
12/98 44,017 14,756 19,449
12/99 53,278 19,535 23,577
Average Annual Compound Total Return
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This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Periods Ended 12/31/99 1 Year 3 Years 5 Years 10 Years
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New Era Fund 21.22% 6.63% 12.71% 8.96%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price New Era Fund
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Financial Highlights For a share outstanding throughout each period
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Year
Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 19.78 $ 25.95 $ 26.06 $ 22.65 $ 20.15
Investment activities
Net investment
income (loss) 0.30 0.37 0.40 0.38 0.47
Net realized and
unrealized gain (loss) 3.84 (2.97) 2.40 5.12 3.71
Total from
investment activities 4.14 (2.60) 2.80 5.50 4.18
Distributions
Net investment income (0.30) (0.40) (0.37) (0.38) (0.48)
Net realized gain (1.82) (3.17) (2.54) (1.71) (1.20)
Total distributions (2.12) (3.57) (2.91) (2.09) (1.68)
NET ASSET VALUE
End of period $ 21.80 $ 19.78 $ 25.95 $ 26.06 $ 22.65
Ratios/Supplemental Data
Total return (diamond) 21.22% (9.88)% 10.96% 24.25% 20.76%
Ratio of total expenses
to average net assets 0.74% 0.75% 0.74% 0.76% 0.79%
Ratio of net investment
income (loss) to
average net assets 1.29% 1.27% 1.33% 1.53% 2.00%
Portfolio turnover rate 32.5% 23.1% 27.5% 28.6% 22.7%
Net assets, end of period
(in millions) $ 1,082 $ 999 $ 1,493 $ 1,468 $ 1,090
(diamond) Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment
of all distributions.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price New Era Fund
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December 31, 1999
Statement of Net Assets Shares/Par Value
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In thousands
Common Stocks 96.8%
NATURAL RESOURCE-RELATED 86.6%
Building and Real Estate 4.5%
Archstone Communities
Trust, REIT 259,000 $ 5,310
Boston Properties, REIT 50,000 1,556
Camden Property Trust, REIT 178,100 4,875
Catellus Development * 395,000 5,061
Equity Office Properties, REIT 88,441 2,178
Federal Realty Investment
Trust, REIT 230,000 4,327
Reckson Associates Realty, REIT 340,000 6,970
Rouse 560,000 11,900
Simon DeBartolo Group, REIT 271,400 6,225
48,402
Forest Products 9.1%
Champion International 140,000 8,671
Consolidated Papers 200,000 6,363
Domtar 75,000 881
Fort James 1,024,120 28,035
International Paper 140,000 7,901
Kimberly-Clark 260,000 16,965
Plum Creek Timber 150,000 3,750
Potlatch 118,000 5,266
Smurfit-Stone Container * 556,000 13,605
Weyerhaeuser 91,000 6,535
97,972
Integrated Petroleum - Domestic 12.1%
Amerada Hess 340,000 19,295
Atlantic Richfield 320,000 27,680
Conoco (Class B) 368,525 9,167
Kerr-McGee 80,000 4,960
Murphy Oil 300,000 17,212
Occidental Petroleum 600,000 12,975
Unocal 350,000 11,747
USX-Marathon 1,140,000 28,144
131,180
Integrated Petroleum - International 13.5%
Chevron 210,000 $ 18,191
Exxon Mobil 636,280 51,260
Norsk Hydro 200,000 8,550
Royal Dutch Petroleum ADR 668,400 40,397
Texaco 70,000 3,802
Total Fina ADR 346,148 23,971
146,171
Refining & Marketing 0.6%
Valero Energy 300,000 5,962
5,962
Petroleum Exploration and Production 10.2%
Anadarko Petroleum 340,000 11,602
Anderson Exploration (CAD) * 150,000 1,793
Barrett Resources * 190,000 5,593
Burlington Resources 480,000 15,870
Canadian Natural Resources (CAD) * 90,000 2,198
Canadian Occidental
Petroleum Limited 200,000 3,950
Devon Energy 154,550 5,081
EEX 553,333 1,625
Eog Resources 300,000 5,269
Forest Oil * 200,000 2,637
Mitchell Energy & Development
(Class B) 430,000 9,272
Newfield Exploration Company * 100,000 2,675
Noble Affiliates 150,000 3,216
Ocean Energy * 1,247,800 9,670
Pogo Producing 200,000 4,100
Santa Fe Snyder * 928,600 7,429
Union Pacific Resources 654,186 8,341
Vastar Resources 175,000 10,325
110,646
Miscellaneous Energy 0.6%
Niagara Mohawk 490,000 6,829
6,829
Energy Services 11.0%
Baker Hughes 566,000 11,921
BJ Services * 400,000 16,725
Coflexip ADR 350,000 13,213
Cooper Cameron * 241,800 $ 11,833
Halliburton 470,000 18,917
Key Energy * 2,000,000 10,375
McDermott International 611,650 5,543
Schlumberger 540,000 30,375
118,902
Precious Metals 6.8%
Barrick Gold 420,640 7,440
Battle Mountain Gold * 1,630,000 3,362
Franco Nevada Mining Limited (CAD) 175,000 2,686
Homestake Mining 1,502,630 11,739
Newmont Mining 1,490,359 36,514
Placer Dome 1,056,950 11,362
73,103
Non-ferrous Metals 2.4%
Bougainville Copper (EUR) * 2,030,829 233
Inco * 740,000 17,390
Phelps Dodge 121,000 8,122
25,745
Diversified Metals 5.3%
Allegheny Technologies 492,000 11,039
Nucor 250,000 13,703
Reynolds Metals 180,000 13,793
Rio Tinto (GBP) 800,000 19,203
57,738
Chemicals 4.7%
DuPont 245,076 16,144
Great Lakes Chemical 230,000 8,783
Hercules 290,000 8,084
Pall 300,000 6,469
W. R. Grace * 800,000 11,100
50,580
Diversified Resources 4.6%
Azurix * 500,000 4,469
Burlington Northern Santa Fe 750,000 18,187
IMC Global 549,000 8,990
Norfolk Southern 460,000 9,430
Overseas Shipholding Group 200,000 2,963
Penn Virginia 361,800 6,060
50,099
Gas and Gas Transmission 1.2%
El Paso Energy 250,000 $ 9,703
Kinder Morgan 185,000 3,735
13,438
Total Natural Resource-Related 936,767
CONSUMER AND SERVICE 6.7%
Merchandising 6.1%
Wal-Mart 960,000 66,360
66,360
Miscellaneous 0.6%
Bristol-Myers Squibb 100,000 6,419
6,419
Total Consumer and Service 72,779
Total Miscellaneous Common Stock 3 5% 38,395
Total Common Stocks (Cost $757,557) 1,047,941
Convertible Preferred Stocks 0.0%
Western Water (Series C) 2,259 161
Total Convertible Preferred Stocks (Cost $2,000) 161
Convertible Bonds 0.2%
Inco, Deb. Notes, 5.75%, 7/1/04 $2,000,000 1,918
Total Convertible Bonds (Cost $1,817) 1,918
Short-Term Investments 3.2%
Money Market Funds 3.2%
Reserve Investment Fund, 6.16% # 34,068,886 34,069
Total Short-Term Investments (Cost $34,069) 34,069
Total Investments in Securities
100.2% of Net Assets (Cost $795,443) $1,084,089
Other Assets Less Liabilities (1,834)
NET ASSETS $1,082,255
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Net Assets Consist of:
Accumulated net investment income
- - net of distributions $ 247
Accumulated net realized gain/loss
- - net of distributions 16,876
Net unrealized gain (loss) 288,646
Paid-in-capital applicable to 49,655,971
shares of $1.00 par value capital stock
outstanding; 200,000,000 shares authorized 776,486
NET ASSETS $1,082,255
----------
NET ASSET VALUE PER SHARE $ 21.80
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# Seven-day yield
* Non-income producing
ADR American Depository Receipt
REIT Real Estate Investment Trust
CAD Canadian dollar
EUR Euro
GBP British sterling
The accompanying notes are an integral part of these financial statements.
T. Rowe Price New Era Fund
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Statement of Operations
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In thousands
Year
Ended
12/31/99
Investment Income (Loss)
Income
Dividend $ 19,008
Interest 2,803
Total income 21,811
Expenses
Investment management 6,131
Shareholder servicing 1,440
Custody and accounting 150
Prospectus and shareholder reports 123
Registration 43
Legal and audit 13
Directors 9
Miscellaneous 7
Total expenses 7,916
Expenses paid indirectly (8)
Net expenses 7,908
Net investment income (loss) 13,903
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 74,617
Foreign currency transactions (121)
Net realized gain (loss) 74,496
Change in net unrealized gain or loss
Securities 110,198
Other assets and liabilities
denominated in foreign currencies (1)
Change in unrealized gain or loss 110,197
Net realized and unrealized gain (loss) 184,693
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 198,596
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price New Era Fund
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Statement of Changes in Net Assets
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In thousands
Year
Ended
12/31/99 12/31/98
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 13,903 $ 15,972
Net realized gain (loss) 74,496 131,148
Change in net unrealized gain or loss 110,197 (276,486)
Increase (decrease) in net
assets from operations 198,596 (129,366)
Distributions to shareholders
Net investment income (13,817) (17,617)
Net realized gain (83,827) (139,565)
Decrease in net assets from distributions (97,644) (157,182)
Capital share transactions*
Shares sold 177,085 141,620
Distributions reinvested 86,942 139,441
Shares redeemed (281,288) (488,611)
Increase (decrease) in net assets from
capital share transactions (17,261) (207,550)
Net Assets
Increase (decrease) during period 83,691 (494,098)
Beginning of period 998,564 1,492,662
End of period $1,082,255 $ 998,564
*Share information
Shares sold 7,815 5,613
Distributions reinvested 4,097 7,121
Shares redeemed (12,748) (19,753)
Increase (decrease) in shares outstanding (836) (7,019)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price New Era Fund
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December 31, 1999
Notes to Financial Statements
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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.
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 reported on the identified cost basis. Dividend income and
distributions to shareholders are recorded by the fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those determined in
accordance with generally accepted accounting principles. Expenses paid
indirectly reflect credits earned on daily uninvested cash balances at the
custodian and are used to reduce the fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $330,815,000 and $443,705,000, respectively, for the
year ended December 31, 1999.
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, 1999, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$795,443,000. Net unrealized gain aggregated $288,646,000 at period-end, of
which $373,584,000 related to appreciated investments and $84,938,000 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 $512,000 was payable at December 31, 1999. 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 0.295% for
assets in excess of $120 billion. At December 31, 1999, and for the year
then ended, the effective annual group fee rate was 0.32%. The fund pays a
pro-rata share of the group fee based on the ratio of its net assets to
those of the group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services,
Inc. is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price
Retirement Plan Services, Inc. provides subaccounting and recordkeeping
services for certain retirement accounts invested in the fund. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $1,091,000 for the year ended December 31, 1999, of which
$110,000 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 6.5% of the
outstanding shares of the fund at December 31, 1999. For the year then
ended, the fund was allocated $173,000 of Spectrum expenses, $15,000 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, 1999, totaled $2,557,000 and are reflected as interest income
in the accompanying Statement of Operations.
T. Rowe Price New Era Fund
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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, 1999, 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 accounting principles generally accepted in the United
States. 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 auditing standards generally accepted in the
United States, 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, 1999 by correspondence with
custodians, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 20, 2000
T. Rowe Price New Era Fund
- --------------------------------------------------------------------------------
Tax Information (Unaudited) for the Tax Year Ended 12/31/99
- --------------------------------------------------------------------------------
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:
o $20,266,000 from short-term capital gains,
o $63,561,000 from long-term capital gains, subject to the 20% rate gains
category.
For corporate shareholders, $11,899,000 of the fund's distributed income and
short-term capital gains qualified for the dividends-received deduction.
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus appropriate
to the fund or funds covered in this
report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price, Invest with Confidence (registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. F41-050 12/31/99
