<PAGE>
Semiannual Report
Science &
Technology
Fund
---------------
June 30, 1997
---------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
1
<PAGE>
REPORT HIGHLIGHTS
------------------------------------------------------------------------------
Science & Technology Fund
. The stock market produced another strong return during the first half, led
again by large-cap, blue chip companies.
. Science and technology stocks were considerably more volatile than the overall
market and posted solid but less robust returns.
. Your fund's six-month return was positive but trailed its peers and the
overall market due to its style bias toward medium-cap companies and heavy
exposure to networking.
. The fund remained concentrated in electronic technology but took advantage of
weakness in several data services stocks to increase its exposure to this
segment.
. We are optimistic about the science and technology sector over the
intermediate term in view of strong upcoming PC product cycles, the
development of the Internet, the buildout of digital wireless communications
networks, the potential for electronic commerce, and the quest for cost-
effective health care.
<PAGE>
Fellow Shareholders
The equity markets languished through the early part of the period before
surging to record levels near the end of June. Despite fleeting concern over
decelerating corporate earnings growth and a quarter-point increase in the
federal funds rate in late March, the broad market, as represented by the
Standard & Poor's 500 Stock Index, bounded to its tenth consecutive quarter of
positive performance. Science and technology stocks, which had corrected more
sharply than the overall market, did not keep pace during the first half despite
their impressive second quarter rebound.
<TABLE>
<CAPTION>
- ------------------------
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
------------------------------------------------------------------------------
<S> <C> <C>
Science & Technology Fund 2.56% 10.72%
..............................................................................
S&P 500 20.61 34.70
..............................................................................
Lipper Science &
Technology Fund Index 6.85 20.34
..............................................................................
</TABLE>
During the first half of the year, your fund appreciated 2.6%, trailing the 6.9%
return posted by the Lipper index of similar funds and significantly lagging the
20.6% return provided by the unmanaged S&P 500. For the past 12 months, the
fund's 10.7% return similarly lagged both benchmarks. Absolute and relative
performance were hurt during both periods by our style bias toward stocks of
aggressively valued, medium-capitalization companies and our exposure to
networking companies.
As always, we remind shareholders that while the fund may be quite volatile over
the short run, it has the potential for superior capital appreciation over the
long haul. Our commitment to building long-term value is evidenced by the fund's
cumulative return of 238% for the five-year period ending June 30, 1997, an
annualized average return of 27.6%. (See page 11 for more performance
information.)
MARKET ENVIRONMENT
Although stock prices retreated during March and April, the S&P 500 corrected
less than 10%, continuing a pattern of muted downside volatility that extends
back to late 1990. Against the backdrop of such consistently positive market
returns, and with the most recent data
1
<PAGE>
suggesting the continuation of a slow-growth, benign interest rate environment,
investors continued to pour money into equity mutual funds. As shown in the
table, the market advance was again led by the stocks of brand-name, large-cap,
blue chip companies.
As usual, science and technology stocks were a more volatile microcosm of the
broader market. Stock prices vaulted out of the gate through the middle of
January but then entered a slide that would take the Pacific Stock Exchange High
Technology Index and the Morgan Stanley High Technology Index, two popular
technology stock indices, down 15% to 20% before bottoming in late April. In
addition to fears over rising interest rates and their impact on equity
valuations, concern over underlying personal computer industry growth and a
greater preponderance of first quarter earnings disappointments weighed heavily
on the sector.
<TABLE>
<CAPTION>
- ------------------
Market Performance
- ------------------------------------------------------------------
Major Stock Market Indices First Half 1997 Return
- ------------------------------------------------------------------
<S> <C>
S&P 500 Index 20.61%
..................................................................
Dow Jones Industrial Average 20.15
..................................................................
S&P Mid-Cap 12.99
..................................................................
Nasdaq Composite* 11.70
..................................................................
Russell 2000 10.20
..................................................................
</TABLE>
*Principal only
While fundamentals were indeed weakening, investor sentiment became overly
negative. This situation set the stage for a sharp recovery in the sector in
early May, during which science and technology stocks rose 15% to 20% in just
six trading days. This pace was more a function of the market chasing
performance, combined with limited liquidity, than it was of any material change
in sector fundamentals. Such activity serves as a reminder that volatility does,
in fact, work both ways and reinforces our position that participating in the
science and technology sector compels a longer-term investment horizon.
As the table on the next page details, performance within the electronic
technology segment, your fund's largest concentration, varied markedly by group,
with positive performance skewed toward stocks of more cyclical hardware and
component companies and weak results from software and networking companies.
Continued improvement in semiconductor orders and prospects for an eventual
recovery in wafer-fabrication facility construction drove the strong performance
of semiconductor capital equipment stocks. In contrast, concern over increased
competition among the established players, price/margin erosion, and several
unfavorably perceived merger
2
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------
Electronic Technology Stocks
- ---------------------------------------------------------------------------
Sector First Half 1997 Return
- ---------------------------------------------------------------------------
<S> <C>
Semiconductor Capital Equipment 37%
- ---------------------------------------------------------------------------
Enterprise Hardware 17
- ---------------------------------------------------------------------------
PC Software and Internet 15
- ---------------------------------------------------------------------------
Connectors/Distributors 12
- ---------------------------------------------------------------------------
Semiconductors 11
- ---------------------------------------------------------------------------
Wireless Telecommunications Equipment 7
- ---------------------------------------------------------------------------
PC Hardware and Peripherals 4
- ---------------------------------------------------------------------------
Telecommunications Equipment 2
- ---------------------------------------------------------------------------
Technical Software -1
- ---------------------------------------------------------------------------
Enterprise Software -5
- ---------------------------------------------------------------------------
Data Networking -8
- ---------------------------------------------------------------------------
</TABLE>
Source: Morgan Stanley
transactions led to significantly lower valuations in the enterprise software
and data networking segments. Decent, albeit slowing, personal computer industry
growth, coupled with steady infrastructure spending on the part of global
telecommunications carriers, created a positive environment for most other
segments within electronic technology.
Companies in the data services segment continued to benefit from the general
trend toward outsourcing, growing concern over preparing corporate and
government information technology systems for the year 2000 conversion, and
early market development of electronic commerce. Although these longer-term
opportunities supported investors' interest in this area, disappointments at
outsourcing industry leader Electronic Data Systems depressed valuations across
the group.
In the life sciences arena, scale and certainty were most desirable, as good
performance was concentrated in the stocks of major pharmaceutical and leading
medical device companies. Poor experiences during the approval process at the
Food and Drug Administration hurt the biotechnology segment.
Stocks of media and telecommunications services companies showed mixed results.
Their increasing focus on cash flow and successful partnership activity dueled
with expectations of slowing growth and worries over the competitive impact of
colliding telecommunications monopolies.
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.
3
<PAGE>
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, participation 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 usually maintain a modest cash
position to permit opportunistic purchases.
Our investment philosophy can be summarized by the following seven principles:
. Stay exposed to long-term, secular investment themes.
. Diversify exposure among the most attractive segments of the science and
technology sector.
. Seek investments in companies that possess significant intellectual
property.
. Concentrate holdings in companies whose business models can sustain
visible earnings momentum beyond a single technology cycle.
. Gravitate toward companies embarking on meaningful new product cycles.
. Emphasize companies whose management has both vision and a proven track
record.
. Keep the portfolio fresh.
These principles have important ramifications for 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 sector funds, our investments will be spread across
a variety of segments 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, we prefer companies whose destiny
remains more in their own control rather than in the vagaries of the markets in
which they participate. Fifth, our core holdings will be in stocks of companies
with, in our opinion, extremely capable management. Finally, our investments are
likely to include newer, smaller companies, many of which will carry above-
market valuations.
4
<PAGE>
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 fastest-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 consistent absolute and
superior relative performance over a longer-term horizon. To this end, we are
proud to report that Lipper Analytical Services ranked the fund ninth out of
1,370 domestic equity funds based on total returns over the five-year period
ended June 30, 1997.*
PORTFOLIO REVIEW
The fund remains concentrated in the electronic technology segment, with close
to 65% of assets committed to this area, as represented by the blue sections of
the pie chart. Stocks of software, communications, and semiconductor-related
companies continue to dominate our holdings within this segment. During the
first six months of the year, we took advantage of weakness in the data services
segment to increase our exposure in this area to 21% of total assets by the end
of June. Life sciences and health care and media and telecommunications services
each represented slightly under 5% of assets. At the end of the period, reserves
were at 5% of fund assets.
During the past six months, your fund's best contributors were in the data
services, semiconductor, and enterprise software segments. America Online
benefited from strong subscriber growth, prospects for near-term profitability,
and investors' acknowledgment that the
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------
Sector Diversification
- ------------------------------------------------------------------------
<S> <C>
Networking 15%
Semiconductor-Related 23%
Data Services 21%
Life Sciences/Health Care 4%
Media/Telecommunications 5%
Hardware/Peripherals 2%
Business and Consumer Software 25%
Reserves 5%
</TABLE>
Based on net assets as of 6/30/97.
*For the one-year and since inception (9/87) periods, the fund ranked 3,562 out
of 4,366 funds and eighth out of 730, respectively.
5
<PAGE>
Internet is more an opportunity than a threat to its business. First Data, a
leading financial transaction processor, rose smartly after successfully
navigating a challenging first quarter and retaining several key customers. In
the semiconductor segment, our investments in Xilinx and Maxim Integrated
Products appreciated significantly as investors sought proprietary device
manufacturers with limited exposure to the volatile memory and personal computer
graphics markets. Despite mixed results in the enterprise software segment,
Microsoft, Oracle, and systems management utilities vendor BMC Software were all
key contributors. Dell Computer, a position we eliminated toward the end of
June, doubled during the first half of the year as above-market revenue growth
and expanding margins led to a meaningful earnings acceleration.
. . . INFORMATION ACCESS AND HIGHER-SPEED CONNECTIVITY ARE BECOMING THE CRITICAL
ELEMENTS IN BUILDING MODERN COMMUNICATIONS INFRASTRUCTURES. . .
The fund suffered materially from its exposure to the networking segment, which
included eight of our 10 worst performers. In general, fear of increased
competition and confusion over the industry's technological direction weighed
heavily on the segment, particularly in the data communications arena. 3Com came
under pressure from competitors' price cuts, sluggish sales of low-end products
through indirect distribution channels, and its merger with U.S. Robotics.
Ascend Communications suffered from concerns over product transitions in the
second quarter, as well as from the earnings dilution associated with its merger
with Cascade Communications. All the remaining underachievers during the first
half of 1997 missed their first calendar quarter financial targets. Despite the
horrid performance of networking companies, we continue to believe that
information access and higher-speed connectivity are becoming the critical
elements in building modern communications infrastructures and corporate
information technology architectures. Accordingly, while this segment may
continue to suffer from near-term competitive and technology transition issues,
our belief in the secular investment potential of these companies remains
steadfast.
OUTLOOK
We find several aspects of the current financial markets disturbing. First,
valuations for the broad market -- especially for blue chip companies -- are
aggressive, and we see Wall Street relying on relative valuation as a
6
<PAGE>
crutch to justify sometimes extreme absolute valuations. Fortunately, valuations
for most segments of the science and technology sector are comfortably within
the range of normalcy. Second, the momentum style of investing continues to
exacerbate and accelerate stock price movements in both directions, skewing
valuations and increasing sector volatility. Third, corporations are beginning
to abuse stock options as a form of employee motivation and compensation such
that this benefit has come to represent an entitlement rather than a leveraged
participation in the superior performance of the employer. This is especially
acute in Silicon Valley, and, as technology investors, we are becoming
increasingly sensitive to the degree of potential earnings per share dilution
built into these companies' compensation structures.
GIVEN SUCH A DYNAMIC . . . OUTLOOK FOR THE SCIENCE AND TECHNOLOGY SECTOR, WE
BELIEVE OPPORTUNITIES FOR SIGNIFICANT WEALTH-BUILDING . . . REMAIN PLENTIFUL.
Notwithstanding our concerns, we remain enthusiastic about the intermediate-term
outlook for the science and technology sector. Toward the end of 1997 and
throughout 1998, the personal computer industry should benefit from the volume
availability of Intel's multimedia-enhanced Pentium II microprocessor and
Microsoft's next-generation consumer and corporate operating systems. The
convergence of these two critical product cycles could accelerate unit demand
for personal computers and related products and services as 1998 unfolds. In
addition, the semiconductor supply-demand situation should continue to improve,
foreshadowing steady unit growth and a more normal pricing environment.
Communications companies should benefit from the plethora of new applications
being spawned by the continued development of the Internet, the expansion of
digital wireless communications networks, and the collision of the
telecommunications monopolies encouraged by the Telecommunications Reform Act of
1996. Furthermore, electronic commerce and year 2000 conversions are the most
significant business drivers for data services companies since the trend toward
outsourcing began more than a decade ago, while the quest for cost-aware health
care remains a constant public policy objective. Finally, over the next several
quarters, economic conditions in key overseas markets may improve and the U.S.
dollar might weaken against major foreign currencies, eliminating two
significant drags on the reported financial results of both electronic
technology and life sciences companies.
7
<PAGE>
Given such a dynamic intermediate-term outlook for the science and technology
sector, we believe opportunities for significant wealth-building through
investment in these companies remain plentiful. Accordingly, we continue to
concentrate our assets in the stocks of established leadership companies that we
believe possess the brightest secular growth opportunities while
opportunistically building positions in the stocks of the most promising
emerging companies. By staying the course and depending upon the same process
and style that generated the strong returns enjoyed by shareholders over the
lifetime of the portfolio, we hope to extend the fund's successful longer-term
record.
Respectfully submitted,
/s/ Charles A. Morris
Charles A. Morris
President and Chairman of the Investment Advisory Committee
July 17, 1997
8
<PAGE>
T. Rowe Price Science & Technology Fund
- ------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percent of
Net Assets
6/30/97
- ----------------------------------------------------------------------------
<S> <C>
BMC Software 5.5%
............................................................................
3Com 5.1
............................................................................
Oracle 5.0
............................................................................
First Data 4.9
............................................................................
CUC International 4.0
- ----------------------------------------------------------------------------
Maxim Integrated Products 3.2
............................................................................
Xilinx 3.1
............................................................................
Parametric Technology 3.0
............................................................................
Analog Devices 3.0
............................................................................
Ascend Communications 2.8
- ----------------------------------------------------------------------------
Synopsys 2.6
............................................................................
Cisco Systems 2.4
............................................................................
America Online 2.3
............................................................................
Gartner Group 2.3
............................................................................
Microsoft 2.1
- ----------------------------------------------------------------------------
United States Surgical 2.1
............................................................................
Sterling Commerce 2.0
............................................................................
Intel 2.0
............................................................................
Linear Technology 2.0
............................................................................
AirTouch Communications 1.9
- ----------------------------------------------------------------------------
Altera 1.9
............................................................................
ADC Telecommunications 1.9
............................................................................
National Data 1.7
............................................................................
ASM Lithography 1.6
............................................................................
Boston Scientific 1.6
- ----------------------------------------------------------------------------
Total 70.0%
</TABLE>
9
<PAGE>
T. Rowe Price Science & Technology Fund
- ------------------------------------------------------------------------------
- ---------------------
PORTFOLIO HIGHLIGHTS
- ---------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
6 Months Ended 6/30/97
Ten Best Contributors
- ------------------------------------------------------------------------------
<S> <C>
America Online 52(cent)
..............................................................................
BMC Software 47
..............................................................................
Dell Computer ** 45
..............................................................................
Microsoft 38
..............................................................................
First Data 26
..............................................................................
Oracle 25
..............................................................................
Xilinx 25
..............................................................................
Maxim Integrated Products 25
..............................................................................
U.S. Robotics *** 19
..............................................................................
Gartner Group 14
- --------------------------------------------------------------------------------
Total 316(cent)
<CAPTION>
Ten Worst Contributors
- ------------------------------------------------------------------------------
3Com -73(cent)
..............................................................................
Cascade Communications 35
..............................................................................
FORE Systems ** 27
..............................................................................
Shiva ** 26
..............................................................................
Network General 25
..............................................................................
Ascend Communications 23
..............................................................................
Netscape Communications ** 18
..............................................................................
Glenayre Technologies 16
..............................................................................
Medic Computer Systems 16
..............................................................................
Pure Atria 15
- --------------------------------------------------------------------------------
Total -274(cent)
<CAPTION>
12 Months Ended 6/30/97
Ten Best Contributors
- ------------------------------------------------------------------------------
BMC Software 87(cent)
..............................................................................
Maxim Integrated Products 72
..............................................................................
Microsoft 67
..............................................................................
Intel 62
..............................................................................
America Online 60
..............................................................................
Dell Computer ** 46
..............................................................................
Xilinx 39
..............................................................................
Analog Devices 34
..............................................................................
Linear Technology 33
..............................................................................
Oracle 27
- --------------------------------------------------------------------------------
Total 527(cent)
<CAPTION>
Ten Worst Contributors
- ------------------------------------------------------------------------------
Glenayre Technologies * -57(cent)
..............................................................................
Shiva ** 48
..............................................................................
Cascade Communications 41
..............................................................................
Intuit ** 28
..............................................................................
FORE Systems ** 24
..............................................................................
Pure Atria * 18
..............................................................................
Omnipoint 16
..............................................................................
Network General * 15
..............................................................................
Netscape Communications ** 15
..............................................................................
Sybase ** 15
- --------------------------------------------------------------------------------
Total -277(cent)
</TABLE>
* Position added
** Position eliminated
*** Acquired by another company
10
<PAGE>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with a broad-based average or index. The index
return does not reflect expenses, which have been deducted from the fund's
return.
SCIENCE & TECHNOLOGY FUND
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lipper S&P 500 Science Science
<S> <C> <C> <C> <C>
9/30/87 10000.0 10000.0 10000.0 10000.0
6/88 8631.00 8732.00 9448.00 9448.00
6/89 9521.00 10526.0 11016.0 11016.0
6/90 11293.0 12262.0 15445.0 15445.0
6/91 11202.0 13169.0 15901.0 15901.0
6/92 12765.0 14935.0 18707.0 18707.0
6/93 17172.0 16970.0 26190.0 26190.0
6/94 16993.0 17208.0 27088.0 27088.0
6/95 26098.0 21696.0 45541.0 45541.0
6/96 29581.0 27337.0 57063.0 57063.0
6/97 35596.0 36823.0 63182.0 63182.0
</TABLE>
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
<TABLE>
<CAPTION>
Since Inception
Periods Ended 6/30/97 1 Year 3 Years 5 Years Inception Date
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Science & Technology Fund 10.72% 32.62% 27.56% 20.82% 9/30/87
..........................................................................................
</TABLE>
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
11
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Unaudited
- --------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 29.71 $ 29.12 $ 21.64 $ 18.95 $ 17.33 $ 15.57
...........................................................................
Investment Activities
Net investment income (0.07) (0.09) (0.03) (0.09) (0.05)* (0.10)*
Net realized and
unrealized gain (loss) 0.83 4.28 12.05 3.08 4.18 2.98
...........................................................................
Total from
investment activities 0.76 4.19 12.02 2.99 4.13 2.88
...........................................................................
Distributions
Net realized gain - (3.60) (4.54) (0.30) (2.51) (1.12)
...........................................................................
NET ASSET VALUE
End of period $ 30.47 $ 29.71 $ 29.12 $ 21.64 $ 18.95 $ 17.33
---------------------------------------------------------------------------
Ratios/Supplemental Data
Total return 2.56% 14.23% 55.53% 15.79% 24.25%* 18.76%*
.............................................................................................................
Ratio of expenses to
average net assets 0.97%+ 0.97% 1.01% 1.11% 1.25%* 1.25%*
.............................................................................................................
Ratio of net investment
income to average
net assets (0.49)%+ (0.33)% (0.15)% (0.58)% (0.68)%* (0.81)%*
.............................................................................................................
Portfolio turnover rate 126.4%+ 125.6% 130.3% 113.3% 163.4% 144.3%
.............................................................................................................
Average commission
rate paid $ 0.0357 $ 0.0427 - - - -
.............................................................................................................
Net assets, end of period
(in millions) $ 3,555 $ 3,292 $ 2,285 $ 915 $ 501 $ 281
.............................................................................................................
</TABLE>
* Excludes expenses in excess of a 1.25% voluntary expense limitation in effect
through 12/31/93.
+ Annualized.
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1997
<TABLE>
<CAPTION>
- -----------------------
Statement of Net Assets Shares/Par Value
- ------------------------------------------------------------------------------
In thousands
<S> <C> <C>
COMMON STOCKS 95.1%
ELECTRONIC TECHNOLOGY 63.2%
Business Software 18.8%
BMC Software * 3,500,000 $ 194,031
..............................................................................
Citrix Systems * 300,000 13,172
..............................................................................
Cognos * 1,000,000 31,187
..............................................................................
McAfee Associates * 750,000 47,297
..............................................................................
Microsoft * 600,000 75,881
..............................................................................
Oracle * 3,500,000 176,203
..............................................................................
PLATINUM technology * 3,000,000 40,125
..............................................................................
Pure Atria * 1,231,200 17,468
..............................................................................
Remedy * 666,800 26,568
..............................................................................
Vantive +* 1,250,000 35,469
..............................................................................
VERITAS Software * 200,000 10,025
..............................................................................
667,426
...........
Consumer Multimedia and Technical 5.6%
Parametric Technology * 2,500,000 106,328
..............................................................................
Synopsys * 2,500,000 92,266
..............................................................................
198,594
...........
Semiconductor 17.5%
Altera * 1,350,000 68,217
..............................................................................
Analog Devices * 4,000,000 106,250
..............................................................................
Intel 500,000 70,797
..............................................................................
Linear Technology 1,350,000 69,736
..............................................................................
Maxim Integrated Products * 2,000,000 113,625
..............................................................................
Microchip Technology * 1,740,000 51,711
..............................................................................
Texas Instruments 400,000 33,625
..............................................................................
Xilinx * 2,250,000 110,320
..............................................................................
624,281
...........
Semiconductor Equipment 5.1%
Applied Materials * 350,000 24,773
..............................................................................
ASM Lithography * 1,000,000 58,406
..............................................................................
KLA Instruments * 800,000 39,025
..............................................................................
Lam Research * 1,000,000 37,094
..............................................................................
Novellus Systems * 250,000 21,563
..............................................................................
180,861
...........
</TABLE>
13
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Networking 15.0%
3Com * 4,000,000 $ 179,875
................................................................................
ADC Telecommunications * 2,000,000 66,875
................................................................................
Ascend Communications * 2,500,000 98,203
................................................................................
Cascade Communications * 1,000,000 27,594
................................................................................
Cisco Systems * 1,250,000 83,945
................................................................................
Glenayre Technologies * 750,000 12,305
................................................................................
Network General * 1,500,000 22,265
................................................................................
Security Dynamics Technologies * 1,141,600 42,025
................................................................................
533,087
.............
Hardware/Peripherals 1.2%
Adaptec * 1,200,000 41,700
................................................................................
41,700
.............
Total Electronic Technology 2,245,949
.............
LIFE SCIENCES AND HEALTH CARE 4.3%
Medical Devices 3.7%
Boston Scientific * 900,000 55,294
................................................................................
United States Surgical 2,000,000 74,500
................................................................................
129,794
.............
Health Care Services 0.6%
Medic Computer Systems * 1,000,000 22,281
................................................................................
22,281
.............
Total Life Sciences and Health Care 152,075
.............
INFORMATION SERVICES 21.0%
Data Services 21.0%
America Online * 1,500,000 83,437
................................................................................
Anixter International * 2,000,000 34,375
................................................................................
CBT ADR * 250,000 15,703
................................................................................
Checkfree * 149,700 2,634
................................................................................
CUC International * 5,500,000 141,969
................................................................................
Electronic Data Systems 800,000 32,800
................................................................................
First Data 4,000,000 175,750
................................................................................
Gartner Group (Class A) * 2,250,000 80,789
................................................................................
National Data + 1,406,100 60,902
................................................................................
Premenos Technology * 125,000 1,078
................................................................................
</TABLE>
14
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Sterling Commerce * 2,200,000 $ 72,325
................................................................................
SunGard Data Systems * 1,000,000 46,500
................................................................................
Total Information Services 748,262
.............
MEDIA/TELECOMMUNICATIONS
SERVICES 4.8%
Media/Telecommunications Services 4.8%
AirTouch Communications * 2,500,000 68,438
................................................................................
Omnipoint * 1,000,000 16,594
................................................................................
Vodafone ADR 800,000 38,750
................................................................................
World Com 1,500,000 47,953
................................................................................
Total Media/Telecommunications Services 171,735
.............
Total Miscellaneous Common Stocks 1.8% 62,314
.............
Total Common Stocks (Cost $2,731,372) 3,380,335
.............
Short-Term Investments 8.9%
Federal Farm Credit Bank Consolidated
Discount Note 5.40%, 7/21/97 $ 50,000,000 49,850
................................................................................
Federal Home Loan Bank Consolidated
Discount Note 5.41%, 7/23/97 50,000,000 49,835
................................................................................
Federal Home Loan Mortgage,
5.42 - 5.44%, 7/2 - 7/14/97 150,000,000 149,879
................................................................................
Federal National Mortgage Association
Discount Notes 5.43%, 7/7/97 50,000,000 49,955
................................................................................
Investments in Repurchase Agreements through
a Joint Account
Dated 6/30/97, 5.80%
Delivery Value $19,281,000 on 7/1/97 (S) 19,281,289 19,281
................................................................................
Total Short-Term Investments (Cost $318,800) 318,800
.............
</TABLE>
15
<PAGE>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
- --------------------------------------------------------------------------------
In thousands
<S> <C>
Total Investments in Securities
104.0% of Net Assets (Cost $3,050,172) $ 3,699,135
Other Assets Less Liabilities (143,812)
.............
NET ASSETS $ 3,555,323
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (8,089)
Accumulated net realized gain/loss - net of distributions 24,427
Net unrealized gain (loss) 648,963
Paid-in-capital applicable to 116,693,586 shares of $0.01 par
value capital stock outstanding; 1,000,000,000 shares authorized 2,890,022
.............
NET ASSETS $ 3,555,323
-------------
NET ASSET VALUE PER SHARE $ 30.47
-------------
</TABLE>
+ Affiliated company
* Non-income producing
(S) Fully collateralized by U.S. government securities
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Unaudited
- ------------------------
Statements of Operations
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months
Ended
6/30/97
<S> <C>
Investment Income
Income
Interest $ 6,294
Dividend 1,461
.............
Total income 7,755
.............
Expenses
Investment management 11,091
Shareholder servicing 4,087
Prospectus and shareholder reports 329
Registration 184
Custody and accounting 118
Legal and audit 11
Directors 11
Miscellaneous 13
.............
Total expenses 15,844
.............
Net investment income (8,089)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 10,321
Change in net unrealized gain or loss on securities 93,764
.............
Net realized and unrealized gain (loss) 104,085
.............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 95,996
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Unaudited
- ----------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/97 12/31/96
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ (8,089) $ (9,674)
Net realized gain (loss) 10,321 274,169
Change in net unrealized gain or loss 93,764 104,193
..............................
Increase (decrease) in net assets from
operations 95,996 368,688
..............................
Distributions to shareholders
Net realized gain -- (356,162)
..............................
Capital share transactions*
Shares sold 807,305 1,604,115
Distributions reinvested -- 346,237
Shares redeemed (639,775) (956,344)
..............................
Increase (decrease) in net assets from capital
share transactions 167,530 994,008
..............................
Net Assets
Increase (decrease) during period 263,526 1,006,534
Beginning of period 3,291,797 2,285,263
..............................
End of period $ 3,555,323 $ 3,291,797
------------------------------
*Share information
Shares sold 28,356 51,910
Distributions reinvested -- 11,502
Shares redeemed (22,461) (31,097)
..............................
Increase (decrease) in shares outstanding 5,895 32,315
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1997
- -----------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Science & Technology, 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 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.
Short-term debt securities are valued at their amortized cost which, when
combined with accrued interest, approximates fair value.
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.
Premiums and Discounts Premiums and discounts on debt securities are amortized
for both financial reporting and tax purposes.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
19
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Repurchase Agreements The fund, and other affiliated funds, may transfer
uninvested cash into a joint account, the daily aggregate balance of which is
invested in one or more overnight repurchase agreements. All repurchase
agreements purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity and are fully collaterallized by U.S. government
securities. Collateral is in the possession of the fund's custodian and is
evaluated daily to ensure that its market value exceeds the delivery value of
the repurchase agreements at maturity. Although risk is mitigated by the
collateral, the fund could experience a delay in recovering its value and a
possible loss of income or value if the counterparty fails to perform in
accordance with the terms of the agreement.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $2,008,028,000 and $1,957,614,000, respectively, for the
six months ended June 30, 1997.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
At June 30, 1997, the aggregate cost of investments for federal income tax and
financial reporting purposes was $3,050,172,000, and net unrealized gain
aggregated $648,963,000, of which $728,515,000 related to appreciated
investments and $79,552,000 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 $1,967,000 was payable at June 30, 1997. 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-
20
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Fleming International, Inc. (the group). The group fee rate ranges from 0.48%
for the first $1 billion of assets to 0.30% for assets in excess of $80
billion. At June 30, 1997, and for the six months then ended, the effective
annual group fee rate was 0.33%. The fund pays a pro-rata share of the group
fee based on the ratio of its net assets to those of the group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund receives
certain other services. The manager computes the daily share price and
maintains the financial records of the fund. T. Rowe Price Services, Inc., 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 $3,349,000 for the six months
ended June 30, 1997, of which $658,000 was payable at period-end.
21
<PAGE>
For yield, price, last transaction, current balance, or to conduct transactions,
24 hours, 7 days a week, call Tele*Access(R): 1-800-638-2587 toll free
For assistance with your existing fund account, call: Shareholder Service Center
1-800-225-5132 toll free 410-625-6500 Baltimore area
To open a Discount Brokerage account or obtain information, call: 1-800-638-5660
toll free
Internet address: www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Science &
Technology Fund.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor.
