Item 1. Report to Shareholders
T. Rowe Price New Era Fund
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December 31, 2003
Certified Annual Report
This report is certified under the Sarbanes-Oxley Act of 2002, which requires
that public companies, including mutual funds, affirm that the information
provided in their annual and semiannual shareholder reports fully and fairly
represents their financial position.
T. Rowe Price New Era Fund
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Certified Annual Report
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.
[Graphic Omitted]
NEW ERA FUND
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As of 12/31/03
Lipper Natural Resources Funds Index $24,170
New Era Fund $27,477
S&P 500 Stock Index $28,563
Lipper
S&P 500 Natural
Stock Resources New Era
Index Funds Index Fund
12/93 $10,000 $10,000 $10,000
12/94 10,132 9,711 10,517
12/95 13,940 12,036 12,701
12/96 17,140 15,511 15,780
12/97 22,859 17,797 17,511
12/98 29,392 13,682 15,781
12/99 35,576 18,269 19,130
12/00 32,337 23,608 23,026
12/01 28,493 20,637 22,024
12/02 22,196 19,146 20,628
12/03 28,563 24,170 27,477
Average Annual Compound Total Return
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Periods Ended 12/31/03 1 Year 5 Years 10 Years
New Era Fund 33.20% 11.73% 10.64%
S&P 500 Stock Index 28.68 -0.57 11.07
Lipper Natural Resources Funds Index 26.24 12.05 9.23
Returns do not reflect taxes that the shareholder may pay on fund distributions
or the redemption of fund shares. Past performance cannot guarantee future
results.
T. Rowe Price New Era Fund
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Certified Annual Report
Dear Shareholder,
We are pleased to report that your fund returned 33.20% during the 12 months
ended December 31, 2003. The fund outpaced the Lipper Natural Resources Funds
Index and the S&P 500 Stock Index, as you can see from the table on the previous
page. Renewed global economic growth and higher commodity prices, combined with
the fund's lower exposure to the weaker energy stocks, benefited results.
As you know, the fund's investment objective is to provide long-term capital
appreciation by investing primarily in the common stocks of companies that own
or develop natural resources and other basic commodities and in the stocks of
selected nonresource growth companies. The fund invests about two-thirds of its
assets in the common stocks of natural resource companies where earnings and
tangible assets could benefit from accelerating inflation.
[Graphic Omitted]
Major Index Returns
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Period Ended 12/31/03
12-Month Return
S&P 500 Stock Index 29%
S&P MidCap 400 Index 36%
Russell 2000 Index 47%
Nasdaq Composite 50%
The Major Index Returns chart shows how various domestic stock markets performed
over the past 12 months. As you can see, domestic stocks registered solid
returns, with the technology-heavy Nasdaq Composite and the small-cap Russell
2000 Index showing the best results. Mid-cap stocks also outperformed large-cap
stocks, as represented by the S&P 500 Stock Index.
The Top 5 Industries table shows how the fund's assets were allocated as of the
end of 2002 and 2003. The industry allocations were roughly the same as the
prior year, with petroleum exploration and production stocks down along with oil
and gas service stocks.
Top 5 Industries
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Percent of Net Assets
12/31/02 12/31/03
Integrated Petroleum - International 14.0% 13.2%
Oil and Gas Equipment and Services 14.2 11.9
Petroleum Exploration and Production 13.6 10.8
Diversified Metals 4.2 9.2
Integrated Petroleum - Domestic 9.6 8.9
For comparison purposes, we have restated the historical weightings to
incorporate changes made to the sector and industry classification system.
The Best and Worst Contributors table shows the top- and bottom-five
contributors to the fund's performance during the year. Metals companies Phelps
Dodge, Newmont Mining, and Norilsk Nickel were the top contributors, while steel
producer Corus Group was the worst detractor.
Best and Worst Contributors
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12 Months Ended 12/31/03
Best Contributors
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Phelps Dodge
Newmont Mining
JSC MMC Norilsk Nickel *
Murphy Oil
Inco
Worst Contributors
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Corus Group **
Allegheny Technologies **
Great Lakes Chemical **
Cooper Cameron
Amerada Hess
* Position added
** Position eliminated
Finally, I'm sure you are aware that mutual fund companies have recently come
under scrutiny for their trading policies. The investigations have led to
allegations that executives of several mutual fund companies permitted or
engaged in improper mutual fund trading. In addition, certain intermediaries
that process fund transactions are alleged to have assisted some investors in
executing improper mutual fund trades. I want T. Rowe Price shareholders to know
that we emphatically condemn the abuses that have been revealed or alleged
against other firms in our industry. Our firm has not entered and will not
enter into any agreements with any investors or intermediaries that authorize
after-hours trading or excessive short-term trading in any of our funds. T. Rowe
Price investors can be assured that our firm unequivocally opposes illegal or
inappropriate trading of any nature and has policies and procedures in place
designed to protect the best interests of our long-term shareholders. No T. Rowe
Price executives or portfolio managers or investment personnel of the T. Rowe
Price mutual funds have engaged in any inappropriate trading of T. Rowe Price
mutual funds. You may find out more about our trading policies and the steps we
take to protect your interests by visiting our Web site (troweprice.com). These
policies are also spelled out in your fund's prospectus.
We thank you for your continued support.
Respectfully,
James S. Riepe
Chairman
January 20, 2004
T. Rowe Price New Era Fund
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Certified Annual Report
Financial Highlights For a share outstanding throughout each period
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Year
Ended
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
NET ASSET VALUE
Beginning of period $ 20.63 $ 22.24 $ 24.30 $ 21.80 $ 19.78
Investment activities
Net investment
income (loss) 0.25 0.23 0.27 0.31 0.30
Net realized and
unrealized gain (loss) 6.59 (1.64) (1.38) 3.99 3.84
Total from
investment activities 6.84 (1.41) (1.11) 4.30 4.14
Distributions
Net investment income (0.25) (0.20) (0.27) (0.29) (0.30)
Net realized gain - - (0.68) (1.51) (1.82)
Total distributions (0.25) (0.20) (0.95) (1.80) (2.12)
NET ASSET VALUE
End of period $ 27.22 $ 20.63 $ 22.24 $ 24.30 $ 21.80
----------------------------------------------------
Ratios/Supplemental Data
Total return^ 33.20% (6.34)% (4.35)% 20.37% 21.22%
Ratio of total expenses to
average net assets 0.72% 0.72% 0.72% 0.72% 0.74%
Ratio of net investment
income (loss) to
average net assets 1.13% 1.03% 1.11% 1.29% 1.29%
Portfolio turnover rate 17.7% 11.5% 17.9% 28.5% 32.5%
Net assets, end of period
(in millions) $ 1,332 $ 985 $ 1,070 $ 1,195 $ 1,082
^ 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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Certified Annual Report December 31, 2003
Portfolio of Investments (ss.) Shares/Par Value
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($ 000s)
COMMON STOCKS 95.2%
NATURAL RESOURCE-RELATED 92.8%
Agriculture 5.3%
Agrium 1,475,000 24,279
Delta Pine & Land 360,000 9,144
IMC Global 770,000 7,646
Potash Corp./Saskatchewan 340,000 29,403
70,472
Building & Real Estate 4.1%
AMB Property, REIT 250,000 8,220
Archstone-Smith Trust, REIT 220,000 6,156
Boston Properties, REIT 120,000 5,783
Camden Property Trust, REIT 150,000 6,645
Catellus Development 337,702 8,145
Duke Realty, REIT 250,000 7,750
Rouse, REIT 260,000 12,220
54,919
Chemicals 2.8%
Dow Chemical 420,000 17,459
DuPont 215,076 9,870
Hercules * 400,000 4,880
Pall 200,000 5,366
37,575
Diversified Metals 9.2%
Alcoa 431,600 16,401
Companhia Vale do Rio Doce ADR
(1 ADR represents 1 common share) 24,480 1,432
Companhia Vale do Rio Doce ADR
(1 ADR represents 1 preferred A share) 160,000 8,241
International Steel Group * 502,100 19,557
Noranda 430,800 6,833
Noranda (CAD) !! 340,500 5,414
Nucor 356,000 19,936
Rio Tinto (GBP) 800,000 22,035
Teck (CAD) 1,298,000 22,026
121,875
Diversified Resources 5.4%
Arch Coal 570,000 17,767
BHP Billiton (AUD) 1,154,000 10,592
Burlington Northern Santa Fe 200,000 6,470
Cleveland-Cliffs * 170,000 8,661
Massey 261,000 5,429
Peabody Energy 150,000 6,257
Penn Virginia 170,000 9,460
Waste Management 250,000 7,400
72,036
Forest Products 6.1%
Bowater 279,000 12,920
International Paper 205,000 8,838
Kimberly-Clark 130,000 7,682
MeadWestvaco 193,000 5,742
Packaging Corp of America 512,800 11,210
Potlatch 469,700 16,331
Smurfit-Stone Container * 689,465 12,803
Weyerhaeuser 92,000 5,888
81,414
Gas Transmission & Distribution 1.2%
OAO Gazprom ADR, 144A 638,000 16,428
16,428
Integrated Petroleum-Domestic 8.9%
Amerada Hess 386,000 20,524
ConocoPhillips 187,080 12,267
Kerr-McGee 170,000 7,903
Marathon Oil 700,000 23,163
Murphy Oil 540,000 35,267
Occidental Petroleum 100,000 4,224
Unocal 402,300 14,817
118,165
Integrated Petroleum-International 13.2%
BP ADR 575,000 28,376
ChevronTexaco 400,500 34,599
Exxon Mobil 1,020,000 41,820
Lukoil ADR 60,000 5,595
Royal Dutch Petroleum ADS 548,000 28,710
TotalFinaElf ADR 346,148 32,022
YUKOS ADR 95,270 4,002
175,124
Non-Ferrous Metals 4.2%
Inco * 538,000 21,423
JSC MMC Norilsk Nickel ADR 221,100 14,759
Phelps Dodge 251,100 19,106
55,288
Oil & Gas Drilling 4.1%
Diamond Offshore Drilling 550,000 11,281
GlobalSantaFe 160,000 3,973
Helmerich & Payne 40,000 1,117
Key Energy Services * 500,000 5,155
Nabors Industries * 150,000 6,225
Noble Drilling * 310,000 11,092
Transocean * 650,000 15,606
54,449
Oil & Gas Equipment & Services 11.6%
Baker Hughes 716,000 23,026
BJ Services * 588,400 21,124
Cooper Cameron * 354,800 16,534
FMC Technologies * 245,000 5,708
Halliburton 150,000 3,900
Hydril * 510,100 12,207
Schlumberger 515,000 28,181
Smith International * 522,000 21,673
Technip Coflexip ADR * 97,632 2,628
Tidewater 265,000 7,918
W-H Energy Services * 683,500 11,073
153,972
Petroleum Exploration & Production 10.6%
Anadarko Petroleum 300,000 15,303
BG Group (GBP) 2,300,000 11,773
Burlington Resources 200,000 11,076
Canadian Natural Resources (CAD) 140,000 7,062
Cimarex Energy * 21,258 567
Devon Energy 650,259 37,234
Encore Aquisition * 384,100 9,468
EOG Resources 350,000 16,159
Forest Oil * 65,000 1,857
Newfield Exploration * 50,000 2,227
Nexen 200,000 7,222
Noble Energy 70,000 3,110
Pioneer Natural Resources * 100,000 3,193
Westport Resources * 260,000 7,763
XTO Energy 266,666 7,547
141,561
Precious Metals 5.7%
Barrick Gold 542,033 12,309
Meridian Gold * 965,000 14,099
Newmont Mining 741,509 36,045
Placer Dome 776,950 13,915
76,368
Refining & Marketing 0.4%
Premcor * 220,000 5,720
5,720
Total Natural Resource-Related 1,235,366
CONSUMER & SERVICE 2.0%
Merchandising 2.0%
Wal-Mart 500,000 26,525
Total Consumer & Service 26,525
Total Miscellaneous Common Stocks 0.4% 5,938
Total Common Stocks (Cost $718,779) 1,267,829
CONVERTIBLE PREFERRED STOCKS 0.0%
Western Water, Series C *@ 2,259 13
Total Convertible Preferred Stocks (Cost $2,000) 13
CORPORATE BONDS 0.3%
Potlatch, 10.00%, 7/15/11 2,700,000 3,024
Total Corporate Bonds (Cost $2,700) 3,024
SHORT-TERM INVESTMENTS 4.6%
Money Market Funds 4.6%
T. Rowe Price Reserve Investment Fund, 1.13% # 61,560,616 61,561
Total Short-Term Investments (Cost $61,561) 61,561
Total Investments in Securities
100.1% of Net Assets (Cost $785,040) $1,332,427
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(ss.) Denominated in U.S. dollar unless otherwise noted
# Seven-day yield
* Non-income producing
!! Security contains restrictions as to public resale pursuant to the
Securities Act of 1933 and related rules--total of such securities at
period-end amounts to $5,414,000 and represents 0.4% of net assets
@ Security valued by the Fund's Board of Directors
144A Security was purchased pursuant to Rule 144A under the Securities Act
of 1933 and may be resold in transactions exempt from registration only
to qualified institutional buyers--total of such securities at
period-end amounts to $16,428,000 and represents 1.2% of net assets
ADR American Depository Receipts
ADS American Depository Shares
AUD Australian dollar
CAD Canadian dollar
GBP British pound
REIT Real Estate Investment Trust
The accompanying notes are an integral part of these financial statements.
T. Rowe Price New Era Fund
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Certified Annual Report December 31, 2003
Statement of Assets and Liabilities
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($ 000s)
Assets
Investments in securities, at value (cost $785,040) $ 1,332,427
Other assets 7,559
Total assets 1,339,986
Liabilities
Total liabilities 8,277
NET ASSETS $ 1,331,709
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Net Assets Consist of:
Undistributed net investment income (loss) $ 33
Undistributed net realized gain (loss) 408
Net unrealized gain (loss) 547,390
Paid-in-capital applicable to 48,932,088 shares of
$1.00 par value capital stock outstanding;
200,000,000 shares authorized 783,878
NET ASSETS $ 1,331,709
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NET ASSET VALUE PER SHARE $ 27.22
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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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Certified Annual Report
Statement of Operations
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($ 000s)
Year
Ended
12/31/03
Investment Income (Loss)
Income
Dividend $ 19,092
Interest 323
Total income 19,415
Expenses
Investment management 5,957
Shareholder servicing 1,278
Custody and accounting 137
Prospectus and shareholder reports 72
Registration 53
Legal and audit 21
Directors 9
Miscellaneous 8
Total expenses 7,535
Net investment income (loss) 11,880
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 460
Foreign currency transactions (76)
Net realized gain (loss) 384
Change in net unrealized gain (loss)
Securities 309,206
Other assets and liabilities
denominated in foreign currencies 3
Change in net unrealized gain (loss) 309,209
Net realized and unrealized gain (loss) 309,593
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 321,473
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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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Certified Annual Report
Statement of Changes in Net Assets
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($ 000s)
Year
Ended
12/31/03 12/31/02
Increase (Decrease) in Net Assets
Operations
Net investment income $ 11,880 $ 10,795
Net realized gain (loss) 384 5,000
Change in net unrealized gain or loss 309,209 (85,032)
Increase (decrease) in net
assets from operations 321,473 (69,237)
Distributions to shareholders
Net investment income (12,004) (9,483)
Capital share transactions *
Shares sold 172,737 148,715
Distributions reinvested 10,649 8,330
Shares redeemed (145,911) (163,797)
Increase (decrease) in
net assets from capital
share transactions 37,475 (6,752)
Net Assets
Increase (decrease) during period 346,944 (85,472)
Beginning of period 984,765 1,070,237
End of period $ 1,331,709 $ 984,765
---------------------------
*Share information
Shares sold 7,337 6,726
Distributions reinvested 407 405
Shares redeemed (6,546) (7,521)
Increase (decrease) in shares outstanding 1,198 (390)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price New Era Fund
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Certified Annual Report December 31, 2003
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 (the 1940 Act) as a diversified, open-end
management investment company and commenced operations on January 20, 1969.
The fund seeks to provide long-term capital growth primarily through the
common stocks of companies that own or develop natural resources and other
basic commodities, and also through the stocks of selected non-resource
growth companies.
The accompanying financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America,
which require the use of estimates made by fund management.
Valuation
The fund values its investments and computes its net asset value per share
at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET,
each day that the NYSE is open for business. Equity securities listed or
regularly traded on a securities exchange or in the over-the-counter market
are valued at the last quoted sale price, or official closing price for
certain markets, at the time the valuations are made. A security that 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 are valued at the mean of the
latest bid and ask prices for domestic securities and the last quoted sale
price for international securities.
Debt securities are generally traded in the over-the-counter market.
Securities with original maturities of one year or more are valued at
prices furnished by dealers who make markets in such securities or by an
independent pricing service, which considers yield or price of bonds of
comparable quality, coupon, maturity, and type, as well as prices quoted by
dealers who make markets in such securities. Securities with original
maturities of less than one year are valued at amortized cost in local
currency, which approximates fair value when combined with accrued
interest.
Investments in mutual funds are valued at the mutual fund's closing net
asset value per share on the day of valuation.
Other investments and those 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 the T. Rowe Price Valuation Committee,
established by the fund's Board of Directors.
Most foreign markets close before the NYSE. Normally, developments that
could affect the values of securities that occur between the close of a
foreign market and the close of the NYSE will not be reflected in security
valuations used by the fund to compute its share price. However, if
developments are so significant that they will, in the judgment of the
fund, clearly and materially affect security values, such valuations may be
adjusted to reflect the estimated fair value of the securities as of the
close of the NYSE, as determined in good faith by the T. Rowe Price
Valuation Committee, established by the fund's Board of Directors.
Currency Translation
Assets, including investments, and liabilities denominated in foreign
currencies are translated into U.S. dollar values each day at the
prevailing exchange rate, using the mean of the bid and ask prices of such
currencies against U.S. dollars as quoted by a major bank. Purchases and
sales of securities, income, and expenses are translated into U.S. dollars
at the prevailing exchange rate on the date of the transaction. The effect
of changes in foreign currency exchange rates on realized and unrealized
security gains and losses is reflected as a component of security gains and
losses.
Rebates and Credits
Subject to best execution, the fund may direct certain security trades to
brokers who have agreed to rebate a portion of the related brokerage
commission to the fund in cash. Commission rebates are included in realized
gain on securities in the accompanying financial statements and totaled
$24,000 for the year ended December 31, 2003. Additionally, the fund earns
credits on temporarily uninvested cash balances at the custodian that
reduce the fund's custody charges. Custody expense in the accompanying
financial statements is presented before reduction for credits.
Investment Transactions, Investment Income, and Distributions
Income and expenses are recorded on the accrual basis. Premiums and
discounts on debt securities are amortized for financial reporting
purposes. Dividends received from mutual fund investments are reflected as
dividend income; capital gain distributions are reflected as realized
gain/loss. Dividend income and capital gain distributions are recorded on
the ex-dividend date. Investment transactions are accounted for on the
trade date. Realized gains and losses are reported
on the identified cost basis. Distributions to shareholders are recorded on
the ex-dividend date. Income distributions are declared and paid on an
annual basis. Capital gain distributions, if any, are typically declared
and paid on an annual basis.
Other
In the normal course of business, the fund enters into contracts that
provide general indemnifications. The fund's maximum exposure under these
arrangements is dependent on claims that may be made against the fund in
the future and, therefore, cannot be estimated; however, based on
experience, the risk of material loss from such claims is considered
remote.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Affiliated Companies
The fund may invest in certain securities that are considered affiliated
companies. As defined by the 1940 Act, an affiliated company is one in
which the fund owns 5% or more of the outstanding voting securities. At
December 31, 2003, the fund held no affiliated companies.
Other
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $180,687,000 and $186,417,000, respectively, for the
year ended December 31, 2003.
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 under Subchapter M of
the Internal Revenue Code and distribute to shareholders all of its taxable
income and gains. Federal income tax regulations differ from generally
accepted accounting principles; therefore, distributions determined in
accordance with tax regulations may differ significantly in amount or
character from net investment income and realized gains for financial
reporting purposes. Financial reporting records are adjusted for permanent
book/tax differences to reflect tax character. Financial records are not
adjusted for temporary differences.
Distributions during the year ended December 31, 2003 totaled $12,004,000 and
were characterized as ordinary income for tax purposes. At December 31, 2003,
the tax-basis components of net assets were as follows:
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Unrealized appreciation $ 554,244,000
Unrealized depreciation (6,906,000)
Net unrealized appreciation (depreciation) 547,338,000
Undistributed ordinary income 33,000
Undistributed long-term capital gain 460,000
Paid-in capital 783,878,000
Net assets $ 1,331,709,000
----------------
For the year ended December 31, 2003, the fund recorded the following permanent
reclassifications to reflect tax character. Reclassifications to paid-in capital
relate primarily to a tax practice that treats a portion of the proceeds from
each redemption of capital shares as a distribution of taxable net investment
income and/or realized capital gain. Results of operations and net assets were
not affected by these reclassifications.
- --------------------------------------------------------------------------------
Undistributed net investment income $ (1,155,000)
Undistributed net realized gain 1,429,000
Paid-in capital (274,000)
At December 31, 2003, the cost of investments for federal income tax purposes
was $785,092,000.
NOTE 4 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides
for an annual investment management fee, which is computed daily and paid
monthly. The fee consists of an individual fund fee, equal to 0.25% of the
fund's average daily net assets, and the fund's pro-rata share of a group
fee. The group fee is calculated based on the combined net assets of
certain mutual
funds sponsored by Price Associates (the group) applied to a graduated fee
schedule, with rates ranging from 0.48% for the first $1 billion of assets
to 0.295% for assets in excess of $120 billion. The fund's portion of the
group fee is determined by the ratio of its average daily net assets to
those of the group. At December 31, 2003, the effective annual group fee
rate was 0.32%, and investment management fee payable totaled $606,000.
In addition, the fund has entered into service agreements with Price
Associates and two wholly owned subsidiaries of Price Associates
(collectively, Price). Price Associates computes the daily share price and
maintains the financial records of the fund. T. Rowe Price Services, Inc.,
provides shareholder and administrative services in its capacity as the
fund's transfer and dividend disbursing agent. T. Rowe Price Retirement
Plan Services, Inc., provides subaccounting and recordkeeping services for
certain retirement accounts invested in the fund. Expenses incurred
pursuant to these service agreements totaled $909,000 for the year ended
December 31, 2003, of which $84,000 was payable at period-end.
The fund is also one of several mutual funds sponsored by Price Associates
(underlying Price funds) in which the T. Rowe Price Spectrum Funds
(Spectrum Funds) have invested. The Spectrum Funds do not invest in the
underlying Price funds for the purpose of exercising management or control.
Pursuant to a special servicing agreement, expenses associated with the
operation of the Spectrum Funds are borne by each underlying Price fund to
the extent of estimated savings to it and in proportion to the average
daily value of its shares owned by the Spectrum Funds. Expenses allocated
under this agreement are reflected as shareholder servicing expense in the
accompanying financial statements. For the year ended December 31, 2003,
the fund was allocated $100,000 of Spectrum Funds' expenses, of which
$72,000 related to services provided by Price and $7,000 was payable at
period-end. At December 31, 2003, approximately 3.6% of the outstanding
shares of the fund were held by the Spectrum Funds.
The fund may invest in the T. Rowe Price Reserve Investment Fund and the T.
Rowe Price Government Reserve Investment Fund (collectively, the Reserve
Funds), open-end management investment companies managed by Price
Associates. The Reserve Funds are offered as cash management options only
to mutual funds, trusts, and other accounts managed by Price Associates
and/or its affiliates, and are not available to the public. The Reserve
Funds pay no investment management fees. During the year ended December 31,
2003, dividend income from the Reserve Funds totaled $380,000.
T. Rowe Price New Era Fund
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Certified Annual Report
Report of Independent Auditors
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To the Board of Directors and Shareholders of
T. Rowe Price New Era Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, 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, 2003, 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 of America.
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 of America, 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, 2003 by correspondence with
custodians, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 26, 2004
T. Rowe Price New Era Fund
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Certified Annual Report
Tax Information (Unaudited) for the Tax Year Ended 12/31/03
- --------------------------------------------------------------------------------
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.
For taxable non-corporate shareholders, $11,856,000 of the fund's income and
short-term capital gains represents qualified dividend income subject to the 15%
rate category.
For corporate shareholders, $9,578,000 of the fund's income and short-term
capital gains qualified for the dividends-received deduction.
Information on Proxy Voting
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price New Era Fund
uses to determine how to vote proxies relating to portfolio securities is
available, without charge, upon request by calling 1-800-225-5132. It also
appears in the fund's Statement of Additional Information (Form 485B), which can
be found on the SEC's Web site, www.sec.gov.
T. Rowe Price New Era Fund
- --------------------------------------------------------------------------------
Certified Annual Report
About the Fund's Directors and Officers
- --------------------------------------------------------------------------------
Your fund is governed by a Board of Directors that meets regularly to review
investments, performance, expenses, and other business matters, and is
responsible for protecting the interests of shareholders. The majority of the
fund's directors are independent of T. Rowe Price Associates, Inc. (T. Rowe
Price); "inside" directors are officers of T. Rowe Price. The Board of Directors
elects the fund's officers, who are listed in the final table. The business
address of each director and officer is 100 East Pratt Street, Baltimore, MD
21202. The Statement of Additional Information includes additional information
about the fund directors and is available without charge by calling a T. Rowe
Price representative at 1-800-225-5132.
Independent Directors
Name
(Date of Birth) Principal Occupation(s) During Past 5 Years and
Year Elected* Directorships of Other Public Companies
Anthony W. Deering Director, Chairman of the Board, President, and
(1/28/45) Chief Executive Officer, The Rouse Company, real
2001 estate developers; Director, Mercantile Bank
(4/03 to present)
Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an
(1/27/43) acquisition and management advisory firm
1994
David K. Fagin Director, Golden Star Resources Ltd., Canyon
(4/9/38) Resources Corp. (5/00 to present), and Pacific
1988 Rim Mining Corp. (2/02 to present); Chairman and
President, Nye Corp.
Karen N. Horn Managing Director and President, Global Private
(9/21/43) Client Services, Marsh Inc.; Managing Director
2003 and Head of International Private Banking,
Bankers Trust; Director, Eli Lilly and Company
F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates,
(8/22/34) Inc., consulting environmental and civil engineers
2001
John G. Schreiber Owner/President, Centaur Capital Partners, Inc.,
(10/21/46) a real estate investment company; Senior Advisor
2001 and Partner, Blackstone Real Estate Advisors,
L.P.; Director, AMLI Residential Properties Trust,
Host Marriott Corp., and The Rouse Company
Hubert D. Vos** Owner/President, Stonington Capital Corp., a
(8/2/33) private investment company
1979
Paul M. Wythes** Founding Partner, Sutter Hill Ventures, a venture
(6/23/33) capital limited partnership, providing equity
1994 capital to young high-technology companies
throughout the United States; Director,
Teltone Corp.
* Each independent director oversees 107 T. Rowe Price portfolios and serves
until retirement, resignation, or election of a successor.
** Retired from Board of Directors effective December 31, 2003.
Inside Directors
Name
(Date of Birth)
Year Elected*
[Number of T. Rowe Price Principal Occupation(s) During Past 5 Years and
Portfolios Overseen] Directorships of Other Public Companies
James A.C. Kennedy, CFA Director and Vice President, T. Rowe Price
(8/15/53) and T. Rowe Price Group, Inc.
1997
[39]
James S. Riepe Director and Vice President, T. Rowe Price; Vice
(6/25/43) Chairman of the Board, Director, and Vice
1994 President, T. Rowe Price Group, Inc.; Chairman
[107] of the Board and Director, T. Rowe Price
Global Asset Management Limited, T. Rowe Price
Global Investment Services Limited, T. Rowe Price
Investment Services, Inc., T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe
Price Services, Inc.; Chairman of the Board,
Director, President, and Trust Officer, T. Rowe
Price Trust Company; Director, T. Rowe Price
International, Inc.; Chairman of the Board,
New Era Fund
M. David Testa, CFA, CIC Chief Investment Officer, Director, and Vice
(4/22/44) President, T. Rowe Price; Vice Chairman of the
1997 Board, Chief Investment Officer, Director, and
[107] Vice President, T. Rowe Price Group, Inc.;
Chairman of the Board and Director, T. Rowe Price
International, Inc.; Director, T. Rowe Price
Global Asset Management Limited and T. Rowe Price
Global Investment Services Limited; Director and
Vice President, T. Rowe Price Trust Company
* Each inside director serves until retirement, resignation, or election of a
successor.
Officers
Name (Date of Birth)
Title and Fund(s) Served Principal Occupation(s)
Stephen V. Booth (6/21/61) Vice President, T. Rowe Price, T. Rowe
Vice President, New Era Fund Price Group, Inc., and T. Rowe Price
Trust Company
Joseph A. Carrier (12/30/60) Vice President, T. Rowe Price, T. Rowe
Treasurer, New Era Fund Price Group, Inc., and T. Rowe Price
Investment Services, Inc.
Roger L. Fiery III, CPA (2/10/59) Vice President, T. Rowe Price, T. Rowe
Vice President, New Era Fund Price Group, Inc., T. Rowe Price
International, Inc., and T. Rowe Price
Trust Company
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Officers (continued)
Name (Date of Birth)
Title and Fund(s) Served Principal Occupation(s)
Henry H. Hopkins (12/23/42) Director and Vice President, T. Rowe
Vice President, New Era Fund Price Group, Inc., T. Rowe Price
Investment Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price
Trust Company; Vice President, T. Rowe
Price, T. Rowe Price International,
Inc., and T. Rowe Price Retirement
Plan Services, Inc.
Lewis M. Johnson (9/20/69) Vice President, T. Rowe Price and
Vice President, New Era Fund T. Rowe Price Group, Inc.
Susan J. Klein (4/18/50) Vice President, T. Rowe Price
Vice President, New Era Fund
David M. Lee, CFA (11/13/62) Vice President, T. Rowe Price and
Vice President, New Era Fund T. Rowe Price Group, Inc.
John D. Linehan, CFA (1/21/65) Vice President, T. Rowe Price, T. Rowe
Vice President, New Era Fund Price Group, Inc., and T. Rowe Price
International, Inc.
Patricia B. Lippert (1/12/53) Assistant Vice President, T. Rowe Price
Secretary, New Era Fund and T. Rowe Price Investment
Services, Inc.
Charles M. Ober, CFA (4/20/50) Vice President, T. Rowe Price and
President, New Era Fund T. Rowe Price Group, Inc.
Timothy E. Parker (11/9/74) Vice President, T. Rowe Price; formerly
Vice President, New Era Fund Financial Analyst, Robert W. Baird &
Co., Inc. (to 1999); student, Darden
Graduate School, University of Virginia
(to 2001)
David J. Wallack (7/2/60) Vice President, T. Rowe Price and
Vice President, New Era Fund T. Rowe Price Group, Inc.
Julie L. Waples (5/12/70) Vice President, T. Rowe Price
Vice President, New Era Fund
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Item 2. Code of Ethics.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. A copy of this code of
ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were
approved or waivers were granted to this code of ethics during the period
covered by this report.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors/Trustees has determined that Mr. David K.
Fagin qualifies as an audit committee financial expert, as defined in Item 3 of
Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form
N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
2003 2002
Audit Fees $10,044 $9,808
Audit-Related Fees 574 --
Tax Fees 2,608 2,375
All Other Fees 124 159
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, specifically the issuance of a report on internal
controls. Tax fees include amounts related to tax compliance, tax planning, and
tax advice. Other fees include the registrant's pro-rata share of amounts for
agreed-upon procedures in conjunction with service contract approvals by the
registrant's Board of Directors/Trustees.
(e)(1) The registrant's audit committee has adopted a policy whereby audit and
non-audit services performed by the registrant's principal accountant for the
registrant, its investment adviser, and any entity controlling, controlled by,
or under common control with the investment adviser that provides ongoing
services to the registrant require pre-approval in advance at regularly
scheduled audit committee meetings. If such a service is required between
regularly scheduled audit committee meetings, pre-approval may be authorized by
one audit committee member with ratification at the next scheduled audit
committee meeting. Waiver of pre-approval for audit or non-audit services
requiring fees of a de minimis amount is not permitted.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $719,000 and $671,000, respectively, and
were less than the aggregate fees billed for those same periods by the
registrant's principal accountant for audit services rendered to the T. Rowe
Price Funds.
(h) All non-audit services rendered in (g) above were pre-approved by the
registrant's audit committee. Accordingly, these services were considered by the
registrant's audit committee in maintaining the principal accountant's
independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is
attached.
(a)(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price New Era Fund, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date February 13, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date February 13, 2004
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date February 13, 2004