______________________
SEMIANNUAL REPORT
______________________
Science and Technology Fund
______________________
Report Highlights
- --------------------------------------------------------------------------------
* An unprecedented flow of money into equities continued to buoy the stock
market so far this year, although gains have been more modest than in 1995.
* Science and technology stocks cooled off from their robust pace of last
year, providing modest gains but trailing the overall stock market.
* Your fund returned 5.80% over the last six months, outpacing similar
funds but lagging the overall stock market. For the 12-month period, the fund
gained 25.30%, significantly better than similar funds and in line with the
overall stock market.
* We increased your fund's exposure to life sciences and health care, media
and telecommunications, and data services industries.
* In our view, the challenges of this year are likely to abate in 1997,
with potential turnarounds in personal computers, semiconductors, and wireless
communications industries.
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
After the sizzling results of 1995, the science and technology sector and
your fund cooled down in the first half of this year. The fund generated a
return of 5.80%, outpacing the 3.36% return provided by the Lipper Science &
Technology Fund Index but trailing the 10.10% return generated by the unmanaged
S&P 500. For the past 12 months, the fund performed in line with the broad
market and substantially exceeded its peer group index.
================================================================================
Performance Comparison
================================================================================
Periods Ended 6/30/96 6 Months 12 Months
Science & Technology Fund 5.80% 25.30%
S&P 500 10.10 26.00
Lipper Science & Technology
Fund Index 3.36 12.85
================================================================================
<PAGE>
Market Environment
- --------------------------------------------------------------------------------
The equity markets withstood the convergence of rising interest rates and
decelerating corporate profit growth to post modest gains in each of the first
two quarters of 1996. Year to date, the broad market as measured by the Standard
& Poor's 500 Stock Index has risen about 10%. While fundamentals and valuations
may have argued against such a rise, the unprecedented flow of money into the
equity markets buoyed stocks. Wall Street was quick to recognize this liquidity
and brought a record volume of initial public offerings to market.
The science and technology sector continued to face a challenging
environment. Personal computer growth remained positive but below the rates
anticipated at the beginning of the year. Microsoft's Windows 95 never spawned
the expected corporate upgrade cycle, and sales of consumer software into the
home market stagnated. The domestic wireless communications market remained
mired in the transition to next-generation digital technologies, putting
downward pressure on the growth and profitability of both equipment and service
providers, while the semiconductor and components industries were still awash in
the excess inventory built during the fall of 1995.
In the life sciences arena, business progressed steadily early in the year
but, as time passed, the specter of slowing earnings growth and a stronger U.S.
dollar began to weigh heavily on the stocks of medical device and pharmaceutical
companies.
The bright spots in the sector during the first half of the year were
concentrated in three areas: large multinational companies that dominate their
respective markets, companies that participate in the construction, development,
or application of the Internet, and newly public companies. Multinational
companies often fare better when business dynamics soften because they typically
sell diverse products directly to customers under recognized brand names.
Accordingly, companies such as Cisco Systems, Intel, Microsoft, and Oracle all
outpaced their smaller rivals, and investors tended to flock to the safer haven
they and similar companies provided. In contrast, Internet and newly public
companies continued to trade on concept with little attention paid to near-term
earnings power or valuations, largely because of their tremendous growth
potential and the lack of fundamental hurdles. Such a situation probably has
more to do with stock market cycles than with anything specific to the science
and technology sector.
- -----------------------------
Technology stocks have lagged
the overall market in 1996.
=============================
After many periods of significantly superior returns, science an d
technology stocks have now underperformed the broad market for the past several
quarters. Accordingly, while the broad market remains expensive by many
measures, the valuation premium associated with science and technology stocks
has moderated markedly. However, our near-term enthusiasm remains tempered by
the fact that we are entering the seasonally difficult period for technology
stocks, and also because most companies will face difficult earnings comparisons
into the December quarter.
<PAGE>
Investment Philosophy
- --------------------------------------------------------------------------------
Before discussing the portfolio, we would like to welcome the many new
shareholders to the fund and take a moment to review our portfolio management
methodology and investment philosophy. The salient characteristic of our
approach is intensive, timely, hands-on research in the areas of electronic
technology, life sciences and health care, and process technology. This involves
extensive company visits, customer and competitor interviews, attendance at
trade shows and industry symposiums, and detailed financial analysis. We focus
our internal resources on developing insights, relying on external resources
primarily for information. Given the inherent volatility of the fund's universe,
we maintain a modest cash position to permit opportunistic purchases.
Our investment philosophy can be summarized by these five investment
principles:
* Stay exposed to secular (longer-term) themes.
* Diversify exposure among the most attractive segments of the science and
technology sector.
* Concentrate holdings in companies that can sustain earnings momentum
beyond a single technology cycle.
* Invest at the leading edge.
* Avoid the valuation trap.
These principles have important ramifications for the longer-term profile
of your fund. First, our stock holdings will be concentrated in the secular
themes. While individual stock holdings will change frequently, the themes
should be more enduring. Second, in contrast to most technology-oriented sector
funds, our investments will be spread across a variety of areas within a broadly
defined science and technology sector. Third, the fund will not emphasize stocks
of companies selling commodity products in highly cyclical markets. Fourth, our
investments are likely to include newer, smaller companies. Finally, many of the
fund's holdings will carry above-market valuations.
By consistently applying these investment principles to the portfolio
management process, we hope to ensure that your fund remains exposed to the
best-positioned companies in the most rapidly growing areas of the science and
technology industry. Our investment approach is aggressive, and the potential
long-term rewards from an investment in this fund are likely to entail
considerable price fluctuations. However, we firmly believe that over time the
rewards will compensate for the risks. While the fund's scale and
diversification make it unlikely to be the top performer in any particular
quarter, we manage the fund to be in the hunt every year, with our primary
objective being to generate superior relative performance over a three- to
five-year horizon.
<PAGE>
Portfolio Review
- --------------------------------------------------------------------------------
The fund remains concentrated in the electronic technology segment, with
close to 60% of assets committed to this area. Stocks of software,
communications, and semiconductor companies continue to dominate our holdings.
Over the past several months, we enhanced the portfolio's diversification by
increasing our exposure to the life sciences and health care, media and
telecommunications services, and data services areas, which combined equal 30%
of fund assets. Believing that significant buying opportunities might occur
during the summer months, we increased our reserves to 11% as of June 30.
During the past six months, your fund's performance was affected positively
by our holdings in the networking, business software, and data services
segments. Oracle, the leading provider of client-server databases and
applications, and Internet-working vendors Cicso Systems, Cascade
Communications, and Shiva were key contributors, as shown in the table following
this letter. Other significant contributors to performance included enterprise
software vendor BMC Software, Intel, and credit card transaction processor First
Data.
[Pie chart Sector Diversification]
The fund's worst-performing investments spanned the realm of the science
and technology sector. Despite maintaining a relatively low exposure to
semiconductors and avoiding the commodity-oriented companies, most of our
semiconductor holdings, including significant positions in Maxim Integrated
Products, Altera, and Analog Devices, fell victim to the inventory imbalance
overhanging the industry. As this imbalance spilled over to the peripherals
industry, our positions in disk drive vendors Quantum and Seagate Technology
also suffered. Broderbund Software and Intuit were hurt by the deceleration in
sales of consumer software as well as by company-specific transitions. Other
negative contributors included Bay Networks, Mobile Telecommunication
Technologies, and Sybase. All three of these fumbled critical new product
releases and are struggling to rebuild momentum in their respective markets.
Needless to say, our indecisiveness in excising the portfolio of potential
problem investments is embarrassing and disappointing, and the events of the
past several months have rekindled a more aggressive spirit.
During the half we used the sharp declines in semiconductor stocks to
increase our positions in Maxim Integrated Products and Xilinx, and we
established initial positions in Linear Technology and Altera. While we expect
business to remain challenging for these companies into the fourth quarter, we
find the valuations and longer-term growth prospects of these companies too
attractive to ignore. Similarly, we used the weakness in stocks of health care
companies during the June quarter to initiate positions in Boston Scientific and
Stryker, two leading medical device companies. Finally, in an attempt to expand
the fund's exposure to wireless communications, we initiated positions in a host
of emerging wireless service providers, including Omnipoint and PanAmSat.
<PAGE>
Outlook
- --------------------------------------------------------------------------------
We continue to believe that 1996 is a transition year for the science and
technology sector. Technology transitions in the personal computer and wireless
communications industries, inventory overhangs in semiconductors and
peripherals, negative currency effects in the health care industry, and
difficult earnings comparisons across the sector will continue to hamper stocks
of these companies. Fortunately, we see most of these challenges abating in
1997.
The personal computer segment should benefit from the volume availability
of Intel's PentiumPro microprocessor and from Microsoft's Windows NT operating
system. Communications companies should benefit from the continued development
of the Internet, the expansion of digital wireless networks, and the collision
of the telecommunications monopolies encouraged by the Telecommunications Reform
Act of 1996. Furthermore, 1997 will be a volume shipment year for
next-generation consumer game platforms and home personal computers with
multimedia extensions, giving a much needed lift to companies targeting the
consumer market. With semiconductor and components inventories in better balance
toward the end of the year, growth and pricing should improve.
Finally, currency effects could ease, eliminating a drag on the reported
growth rates for most multinational companies. Improving fundamentals, more
attractive valuations, and easier earnings comparisons should lead to smoother
sailing in 1997 for science and technology stocks. As always, we remain
committed to capitalizing on these opportunities on your behalf.
Respectfully submitted,
[signature]
Charles A. Morris
President and
Chairman of the Investment Advisory Committee
July 15, 1996
================================================================================
<PAGE>
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
- --------------------------------------------------------------------------------
Percent of
Net Assets
6/30/96
Intel 3.8%
Maxim Integrated Products 3.3
Xilinx 3.3
Cisco Systems 3.1
Analog Devices 3.1
Microsoft 2.9
BMC Software 2.9
3Com 2.8
First Data 2.7
Bay Networks 2.6
Vodafone 2.5
Intuit 2.4
ALZA 2.3
Informix 2.3
Oracle 2.3
Synopsys 2.0
AirTouch Communications 1.9
Adobe Systems 1.8
Omnipoint 1.7
Automatic Data Processing 1.6
Boston Scientific 1.5
Hewlett-Packard 1.5
Astra 1.5
PanAmSat 1.5
LM Ericsson 1.5
- --------------------------------------------------------------------------------
Total 58.8%
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
6 Months Ended June 30, 1996
Ten Best Contributors
BMC Software 56 cents
Cisco Systems 35
Cascade Communications 31
Shiva 26
Intel * 21
Xilinx 19
Sun Microsystems * 19
Oracle 19
PeopleSoft 19
Ascend Communications 16
- --------------------------------------------------------------------------------
Total 261 cents
<PAGE>
Ten Worst Contributors
Adobe Systems -48 cents
Maxim Integrated Products 38
Broderbund Software 36
Intuit 34
Bay Networks 27
Quantum * 18
Sybase 16
Mobile Telecommunication
Technologies 16
Cephalon ** 12
Seagate Technology ** 10
- --------------------------------------------------------------------------------
Total -255 cents
================================================================================
12 Months Ended June 30, 1996
Ten Best Contributors
Ascend Communications 102 cents
BMCSoftware 77
Cascade Communications 60
America Online 54
Shiva 42
Intuit 37
Xilinx 35
PeopleSoft 31
Cisco Systems * 31
Cadence Design Systems 30
- --------------------------------------------------------------------------------
Total 499 cents
Ten Worst Contributors
Hedging Position ** -43 cents
Broderbund Software 39
Mobile Telecommunication
Technologies 37
Adobe Systems 33
Silicon Graphics * 22
Quantum * 18
Electronic Arts ** 17
Sybase * 17
AirTouch Communications * 11
Silicon Valley Group ** 10
Total -247 cents
* Position added
** Position eliminated
================================================================================
<PAGE>
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.
(SEC Graph shown here)
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.
- --------------------------------------------------------------------------------
Since Inception
Periods Ended 6/30/96 1 Year 3 Years 5 Years Inception Date
Science & Technology Fund 25.30% 29.64% 29.12% 22.03% 9/30/87
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
- --------------------------------------------------------------------------------
<PAGE>
Unaudited
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share outstanding throughout each period
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
6/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
NET ASSET VALUE
Beginning of period $ 29.12 $ 21.64 $ 18.95 $ 17.33 $ 15.57 $ 10.05
Investment activities
Net investment income (0.05) (0.03) (0.09) (0.05)* (0.10)* (0.01)*
Net realized and
unrealized gain (loss) 1.74 12.05 3.08 4.18 2.98 6.01
Total from
investment activities 1.69 12.02 2.99 4.13 2.88 6.00
Distributions
Net realized gain --------- (4.54) (0.30) (2.51) (1.12) (0.48)
NET ASSET VALUE
End of period $ 30.81 $ 29.12 $ 21.64 $ 18.95 $ 17.33 $ 15.57
Ratios/Supplemental Data
Total return 5.80% 55.53% 15.79% 24.25%* 18.76%* 60.17%*
Ratio of expenses to
average net assets 0.98%+ 1.01% 1.11% 1.25%* 1.25%* 1.25%*
Ratio of net investment
income to average
net assets (0.36)%+ (0.15)% (0.58)% (0.68)%* (0.81)%* (0.07)%*
Portfolio turnover rate 142.8%+ 130.3% 113.30% 163.40% 144.3% 148.2%
Average commission
rate paid $ 0.0528 --- --- --- --- ---
Net assets, end of period
(in millions) $ 2,922 $ 2,285 $ 915 $ 501 $ 281 $ 166
<FN>
* Excludes expenses in excess of a 1.25% voluntary expense limitation
in effect through 12/31/93.
+ Annualized.
</FN>
</TABLE>
================================================================================
<PAGE>
Unaudited
June 30, 1996
- --------------------------------------------------------------------------------
Portfolio of Investments
================================================================================
Shares/Par Value
In thousands
- --------------------------------------------------------------------------------
Common Stocks 89.0%
ELECTRONIC TECHNOLOGY 58.5%
Business Software 19.1%
Adobe Systems .................................. 1,500,000 $ 53,531
BMC Software * ................................. 1,400,000 83,475
Cadence Design Systems * ....................... 1,000,000 33,750
EPIC * ............................... 500,000 12,875
Informix * ........................... 3,000,000 67,312
Microsoft * .......................... 700,000 84,044
Oracle Systems * ..................... 1,700,000 67,044
PeopleSoft * ......................... 400,000 28,450
PLATINUM technology * ................ 2,500,000 37,656
Sybase * ............................. 1,300,000 30,794
Synopsys * ........................... 1,500,000 59,813
558,744
Consumer Software 3.9%
Broderbund Software *+................ 1,250,000 40,469
Intuit * ............................. 1,500,000 70,500
Macromedia * ......................... 100,000 2,200
113,169
Semiconductor 15.9%
Actel * .............................. 750,000 13,828
Altera * ............................. 800,000 30,350
Analog Devices * ..................... 3,500,000 89,250
Intel ................................ 1,500,000 110,156
Linear Technology .................... 1,000,000 29,938
Maxim Integrated Products *+.......... 3,500,000 95,594
Xilinx * ............................. 3,000,000 95,062
464,178
<PAGE>
Networking 14.8%
3Com * ................................ 1,800,000 82,237
Ascend Communications * ............... 500,000 28,094
Bay Networks * ........................ 3,000,000 77,250
Cascade Communications * .............. 450,000 30,628
Cisco Systems * ....................... 1,600,000 90,700
FORE Systems * ........................ 400,000 14,425
LM Ericsson (Class B) ADR ............. 2,000,000 42,875
Nokia ADR ............................. 700,000 25,900
Shiva * ............................... 500,000 40,000
432,109
Hardware/Peripherals 4.8%
Hewlett-Packard ....................... 450,000 44,831
Quantum * ............................. 2,145,600 31,111
Silicon Graphics * .................... 1,000,000 24,000
Sun Microsystems * .................... 700,000 41,213
141,155
Total Electronic Technology
1,709,355
LIFE SCIENCES AND HEALTH CARE 10.8%
Pharmaceuticals 6.6%
ALZA (Class A) * ...................... 2,500,000 68,438
Amgen * ............................... 750,000 40,406
Astra (Class B) (SEK) ................. 1,000,000 43,655
SmithKline Beecham ADR ................ 742,900 40,395
192,894
Medical Devices 3.5%
Boston Scientific * ................... 1,000,000 45,000
Stryker ............................... 1,250,000 28,359
United States Surgical ................ 900,000 27,900
101,259
Health Care Services 0.7%
Medic Computer Systems * .............. 269,300 21,864
21,864
Total Life Sciences and Health Care
316,017
<PAGE>
DATA SERVICES 9.1%
Data Services 9.1%
America Online * ........................... 300,000 13,088
Automatic Data Processing ...................... 1,200,000 46,350
Bachman Information Systems * .................. 115,000 812
Bachman Information Systems, $3.28 warrants, 11/22/ 144,000 436
Ceridian * ..................................... 219,800 11,100
CUC International * ............................ 800,000 28,400
First Data ..................................... 1,000,000 79,625
ITG *+.......................................... 1,000,000 14,000
National Data .................................. 850,000 29,112
SunGard Data Systems * ......................... 1,037,000 41,545
Total Data Services
264,468
MEDIA/TELECOMMUNICATIONS
SERVICES 9.4%
Media/Telecom Services 9.4%
AirTouch Communications * ...................... 2,000,000 56,500
Mobile Telecommunication Technologies * ........ 681,300 9,921
Omnipoint * .................................... 1,857,000 48,398
PanAmSat * ..................................... 1,500,000 43,313
Teleport Communications Group (Class A) * ...... 572,800 10,883
Vodafone ADR ................................... 2,000,000 73,750
World Com * .................................... 600,000 33,188
Total Media/Telecommunications Services
275,953
ENVIRONMENTAL SERVICES 0.0%
Process Services 0.0%
Canarc Resources (CAD) * ....................... 460,000 573
Total Environmental Services
573
Miscellaneous Common Stocks 1.2%
33,434
Total Common Stocks (Cost $2,243,604)
2,599,800
Short-Term Investments 10.5%
Federal Agencies 9.1%
Federal Home Loan Bank Discount Notes
5.23%, 7/3/96 $25,000,000 24,993
5.28%, 7/11 - 7/12/96 50,000,000 49,923
<PAGE>
Federal Home Loan Mortgage Discount Notes
5.20%, 7/15/96 25,000,000 24,949
5.25%, 7/1 - 7/2/96 50,000,000 49,996
5.27%, 7/22/96 20,000,000 19,939
5.29%, 7/31/96 20,000,000 19,912
5.52%, 7/1/96 32,043,000 32,043
Federal National Mortgage Assn. Discount Notes
5.18%, 7/8/96 $20,000,000 $ 19,980
5.27%, 7/22/96 25,000,000 24,923
266,658
U.S. Government Obligations 1.4%
United States Treasury Bills
4.715%, 8/8/96 20,000,000 19,900
5.065%, 9/19/96 20,899,000 20,664
40,564
Total Short-Term Investments (Cost $307,222)
307,222
Total Investments in Securities
99.5% of Net Assets (Cost $2,550,826) ....................... $ 2,907,022
Other Assets Less Liabilities ............................... 15,040
NET ASSETS .................................................. $ 2,922,062
================================================================================
+ Affiliated company
* Non-income producing
CAD Canadian dollar
SEK Swedish krona
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
Unaudited
June 30, 1996
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
In thousands
- --------------------------------------------------------------------------------
Assets
Investments in securities, at value
Affiliated companies (cost $159,270) ..................... $ 150,063
Other companies (cost $2,391,556) ........................ 2,756,959
Total investments in securities .......................... 2,907,022
Other assets .................................................. 83,884
Total assets .................................................. 2,990,906
Liabilities
Total liabilities ............................................. 68,844
NET ASSETS .................................................... $ 2,922,062
Net Assets Consist of:
Accumulated net investment income - net of distributions ...... $ (4,749)
Accumulated net realized gain/loss - net of distributions ..... 334,341
Net unrealized gain (loss) .................................... 356,196
Paid-in-capital applicable to 94,845,593 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized ............................... 2,236,274
NET ASSETS .................................................... $ 2,922,062
NET ASSET VALUE PER SHARE ..................................... $ 30.81
The accompanying notes are an integral part of these financial statements.
================================================================================
- --------------------------------------------------------------------------------
<PAGE>
Unaudited
- --------------------------------------------------------------------------------
Statement of Operations
In thousands
- --------------------------------------------------------------------------------
6 Months
Ended
6/30/96
Investment Income
Income
Interest .......................................... $ 5,324
Dividend (net of foreign taxes of $ 277) .......... 2,950
Total income ...................................... 8,274
Expenses
Investment management ............................. 9,055
Shareholder servicing ............................. 3,357
Registration ...................................... 235
Prospectus and shareholder reports ................ 195
Custody and accounting ............................ 117
Directors ......................................... 18
Legal and audit ................................... 14
Miscellaneous ..................................... 32
Total expenses .................................... 13,023
Net investment income ................................... (4,749)
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ........................................ 228,753
Foreign currency transactions ..................... (185)
Net realized gain (loss) .......................... 228,568
Change in net unrealized gain or loss on securities (94,810)
Net realized and unrealized gain (loss) ................. 133,758
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS .................................. $ 129,009
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
Unaudited
Statement of Changes in Net Assets
In thousands
- --------------------------------------------------------------------------------
6 Months Year
Ended Ended
6/30/96 12/31/95
Increase (Decrease) in Net Assets
Operations
Net investment income ................ $ (4,749) $ (2,531)
Net realized gain (loss) ............. 228,568 389,644
Change in net unrealized
gain or loss ...................... (94,810) 293,586
Increase (decrease) in net
assets from operations ............ 129,009 680,699
Distributions to shareholders
Net realized gain ...................... -- (308,443)
Capital share transactions *
Shares sold ............................ 985,857 1,486,892
Distributions reinvested ............... -- 300,634
Shares redeemed ........................ (478,067) (789,571)
Increase (decrease) in net
assets from capital
share transactions ..................... 507,790 997,955
Net Assets
Increase (decrease) during period ............ 636,799 1,370,211
Beginning of period .......................... 2,285,263 915,052
End of period ................................ $ 2,922,062 $ 2,285,263
*Share information
Shares sold ............................ 32,265 53,440
Distributions reinvested ............... -- 10,317
Shares redeemed ........................ (15,903) (27,563)
Increase (decrease) in shares outstanding 16,362 36,194
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
Unaudited
June 30, 1996
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Science and Technology 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 September 30, 1987.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price at the time the valuations
are made. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. Listed securities that are not traded on a particular day and
securities that are regularly traded in the over-the-counter market are valued
at the mean of the latest bid and asked prices. Other equity securities are
valued at a price within the limits of the latest bid and asked prices deemed by
the Board of Directors, or by persons delegated by the Board, best to reflect
fair value.
Short-term debt securities are valued at their cost which, when combined
with accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors .
Affiliated Companies Investments in companies 5% or more of whose
outstanding voting securities are held by the fund are defined as "Affiliated
Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
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.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
<PAGE>
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $2,186,176,000 and $1,750,366,000, respectively, for the
six months ended June 30, 1996.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At June 30, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $2,550,826,000, and net unrealized gain
aggregated $356,196,000, of which $435,231,000 related to appreciated
investments and $79,035,000 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 $1,658,000 was payable at June 30, 1996. The fee is computed daily and
paid monthly, and consists of an individual fund fee equal to 0.35% of average
daily net assets and a group fee. The group fee is based on the combined assets
of certain mutual funds sponsored by the manager or Rowe Price-Fleming
International, Inc. (the group). The group fee rate ranges from 0.48% for the
first $1 billion of assets to 0.305% for assets in excess of $50 billion. At
June 30, 1996, and for the six months then ended, the effective annual group fee
rate was 0.33% and 0.34%, respectively. 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 $2,702,000 for the six months
ended June 30, 1996, of which $372,000 was payable at period-end.
================================================================================
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
To help shareholders monitor their current investments and make decisions
that accurately reflect their financial goals, T. Rowe Price offers a wide
variety of information and services -- at no extra cost.
<PAGE>
Knowledgeable Service Representatives
- -------------------------------------------
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. 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. 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 [Registration Mark] and
T.Rowe Price OnLine.
Discount Brokerage*
- -------------------------------------------
Individual Securities Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
Investment Information
- -------------------------------------------
Combined Statement An overview of your T. Rowe Price accounts. Shareholder
Reports Fund managers' reviews of their strategies and results.
The T. Rowe Price Report A 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, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit.
*T. Rowe Price Discount Brokerage is a division of T. Rowe Price Investment
Services, Inc. Member NASD/SIPC.
================================================================================
<PAGE>
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
Stock Funds
- -----------------------------
Domestic
=============================
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
OTC
Science & Technology
Small-Cap
Value*
Spectrum Growth Value
International/Global
============================
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
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
<PAGE>
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
Short-Term Global Income
Money Market
=============================
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
=============================
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
T. Rowe Price No-Load
Variable Annuity
=============================
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
New America Growth Portfolio
Personal Strategy Balanced
Portfolio
*Closed to new investors.
<PAGE>
================================================================================
For yield, price, last transaction,
and current balance, 24 hours,
7 days a week, call: 1-800-638-2587 toll free
For assistance with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500
Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution
only to shareholders and to others
who have received a copy of the prospectus of the
T. Rowe Price Science & Technology Fund.
T. Rowe Price Investment Services, Inc., Distributor
RPRTSTF 6/30/96
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