<PAGE>
Semiannual Report
SCIENCE &
TECHNOLOGY
FUND
-------------
JUNE 30, 1998
-------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
<PAGE>
Report Highlights
- --------------------------------------------------------------------------------
Science & Technology Fund
. The broad stock market produced another strong return during the first
half, led once again by brand-name, large-capitalization, blue chip
companies.
. Science and technology stocks posted attractive results, despite heightened
volatility.
. Your fund delivered a robust performance over the last six months, roughly
in line with its peer group but trailing it for the year.
. We kept the portfolio concentrated in electronic technology stocks but
expanded both the number of holdings and their market capitalizations.
. We believe circumstances are developing that will favor continued
appreciation in technology stock prices as we move into and through 1999.
<PAGE>
Fellow Shareholders
The stock market turned in another powerful performance during the first half of
1998. Technology stocks rallied strongly at the end of the second quarter,
enabling the fund to post results only slightly behind the broad market
averages. During the past 12 months, however, your fund lagged the S&P 500,
since technology shares were weak in 1997.
- ----------------------
Performance Comparison
- -----------------------------------------------------------------------
Periods Ended 6/30/98 6 Months 12 Months
- -----------------------------------------------------------------------
Science & Technology Fund 16.32% 15.36%
.......................................................................
S&P 500 17.71 30.16
.......................................................................
Lipper Science & Technology
Fund Index 17.46 18.73
.......................................................................
During the first half of the year, your fund returned 16.32%, compared with
17.46% for the Lipper Science & Technology Fund Index and 17.71% for the
unmanaged Standard & Poor's 500 Stock Index. For the past 12 months, the fund's
15.36% return trailed both the Lipper index of similar funds and the S&P 500.
Science and technology stocks were weaker overall than the broad market over the
year, while our exposure to some underperforming segments of the industry hurt
results slightly relative to the peer group.
We would like to remind shareholders once again that, while the fund may exhibit
short-term volatility, it has the potential for attractive long-term results.
For example, its average annual return for the 10 years ended June 30, 1998, is
22.67% compared with 19.69% for its peer group average and 18.56% for the S&P
500. (See page 9 for more performance information.)
MARKET ENVIRONMENT
The equity markets scaled a wall of worry during the first six months of the
year. Despite concern over decelerating corporate earnings growth, sporadic
fears about the near-term direction of interest rates, and spreading problems
from Asia, many global stock markets hit record high levels in the first half of
1998. Reaching ever-higher
1
<PAGE>
valuation levels, the S&P 500 bounded to its fourteenth consecutive quarter of
positive returns, with stocks of larger-capitalization, blue chip companies
continuing to outperform the rest of the market.
After a quick decline to start the year, technology stocks recovered sharply
through the end of March before moving sideways over the next few months.
Concern about the economic and currency crises in Asia; slowing growth in the
personal computer, semiconductor, and data networking industries; and the
financial drag of a stronger dollar quickly gave way to optimism regarding a
product cycle-led recovery in the second half of 1998. Performance within the
technology segment was heavily influenced by exposure to Asia and to the
inventory correction occurring in the personal computer supply chain.
Accordingly, stocks of semiconductor capital equipment, components, and
semiconductors fared the worst. In contrast, stocks of Internet-related
companies were, by far, the best-performing segment.
The PC industry remains in a product cycle lull due to the absence of
breakthrough operating system enhancements and novel applications. Without new
power-consuming software, upgrade cycles are lengthening and buyers are choosing
cheaper PCs. These trends are negatively affecting both unit growth and average
selling prices. Although pricing pressure is more intense across most segments
of the technology sector, average selling prices in the PC, data networking, and
semiconductor industries are declining at accelerating rates. The lack of new
product cycles, encroaching competition, and excess supply are all at work here.
Moreover, most of the major PC hardware original equipment manufacturers and
some of the larger telecommunications and data networking companies are
implementing policies to enhance
- ----------------------------
Electronic Technology Stocks
- ------------------------------------------------------------------
Technology Segment First Half 1998 Return
- ------------------------------------------------------------------
PC Software and Internet 74%
..................................................................
Telecommunications Equipment 29
..................................................................
Enterprise Software 25
..................................................................
Data Services 21
..................................................................
Enterprise Hardware 13
..................................................................
Data Networking 13
..................................................................
PC Hardware and Peripherals 6
..................................................................
Wireless Telecommunications Equipment 5
..................................................................
Technical Software 3
..................................................................
Semiconductors - 4
..................................................................
Connectors and Distributors - 5
..................................................................
Semiconductor Capital Equipment - 19
..................................................................
Source: Morgan Stanley.
2
<PAGE>
inventory turnover and improve their cash cycles. While these measures are
positive in the long run, they are depressing near-term revenue growth and
profit margins. Finally, the economic and currency crises in Asia should not be
underestimated. Asia (including Japan) accounts for approximately 20% to 25% of
worldwide technology consumption, including 25% of personal computer purchases,
30% of net cellular subscriber additions, and 40% of worldwide semiconductor
capital equipment demand. While it is difficult to assess the precise impact of
these crises, turmoil in this region is undoubtedly reducing the near-term
growth rate of worldwide technology spending and exacerbating the sector's
already fragile pricing environment.
INVESTMENT PHILOSOPHY
The salient characteristic of our approach is intensive, timely, hands-on
research in the areas of electronic technology, information services, life
sciences and health care, and media and telecommunications services. 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 investment
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 with sustainable business models.
. 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.
3
<PAGE>
- --------------------------------------------------------------------------------
. . . 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.
- --------------------------------------------------------------------------------
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 the vagaries of their markets.
Fifth, our core holdings will be in stocks of companies with, in our opinion,
extremely capable management. Finally, in addition to maintaining core positions
in established, leadership companies, our holdings will include investments
across an array of smaller, more volatile companies.
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 the generation of
consistent absolute and superior relative performance over a longer-term
horizon.
PORTFOLIO REVIEW
The fund remained concentrated in the electronic technology segment, with 75% of
assets committed to this area, as shown in the chart on the next page. Stocks of
software, communications, and semiconductor-related companies continued to
dominate our holdings in this segment. Shares of information services companies
represented 15% of total assets, with media and telecommunications services
composing most of the balance. At the end of the period,
4
<PAGE>
[PIE CHART APPEARS HERE]
- -----------------------
Sector Diversification
- -----------------------------------------------
Electronic Technology 75%
Information Serivces 15%
Media and Telecommunications Services 5%
Reserves and Other 5%
Based on net assets as of 6/30/98.
reserves and other stood at 5% of fund assets.
During the past six months, fund performance was helped most by our holdings in
the enterprise software, communications equipment, and electronic commerce
segments. In the strong enterprise software segment, Microsoft, systems
management utilities vendor BMC Software, and security software vendor Network
Associates were key contributors during the period. Ascend Communications and
Cisco Systems gained as investors sought companies poised to participate in the
construction of broadband data networks. America Online benefited from strong
subscriber growth, improving profitability, and investors' manic appetite for
Internet-related stocks.
While the fund suffered from exposure to the depressed cyclical semiconductor
and peripherals segments, most of the disappointments were due to
company-specific earnings shortfalls. First Data suffered from a series of
modest earnings disappointments due to softness in its core credit card
processing business, while Adaptec fell victim to the severe downturn in the
disk drive industry. Electronics for Imaging, Xilinx, Altera, Lam Research, and
KLA-Tencor all caught a bad case of Asian flu and hurt performance over the
12-month period. Security Dynamics Technologies spent a good deal of time
stumbling over a series of new product releases and acquisitions.
OUTLOOK
While we remain cautious about the very near term, we believe circumstances are
aligning that could create an environment favoring continued appreciation in
technology stock prices as we move into and through 1999. The technology sector
underperformed the S&P 500 for the past three years as revenue growth and
earnings momentum slowed, but fundamentals in many of the more cyclical segments
of the
5
<PAGE>
technology sector may be bottoming. Comparisons with recent results in Japan and
the rest of Asia should improve, and we expect the inventory correction
afflicting the technology sector to play out at the end of 1998 or early 1999.
Finally, investor sentiment is becoming bearish while relative valuations are
increasingly attractive. Hence, looking toward 1999, we believe there is a good
chance that at least a few of the negative factors depressing the sector will be
reversed over the next few quarters, which could accelerate revenue and earnings
growth, improve sentiment, and expand sector valuations.
Respectfully submitted,
/s/ Charles A. Morris
Charles A. Morris
President and Chairman of the Investment Advisory Committee
JULY 24, 1998
6
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/98
------------------------------------------------------------------------------
Parametric Technology 3.6%
..............................................................................
Cisco Systems 3.5
..............................................................................
Network Associates 3.5
..............................................................................
QUALCOMM 3.2
..............................................................................
Microsoft 3.2
------------------------------------------------------------------------------
Sterling Commerce 3.2
..............................................................................
First Data 3.0
..............................................................................
Ascend Communications 3.0
..............................................................................
Synopsys 2.9
..............................................................................
Analog Devices 2.9
------------------------------------------------------------------------------
Maxim Integrated Products 2.8
..............................................................................
WorldCom 2.7
..............................................................................
Xilinx 2.4
..............................................................................
EMC 2.4
..............................................................................
Adobe Systems 2.2
------------------------------------------------------------------------------
Oracle 2.1
..............................................................................
BMC Software 2.0
..............................................................................
America Online 2.0
..............................................................................
ADC Telecommunications 1.9
..............................................................................
CIENA 1.8
------------------------------------------------------------------------------
Gartner Group 1.7
..............................................................................
Texas Instruments 1.5
..............................................................................
CBT 1.4
..............................................................................
Altera 1.3
..............................................................................
Solectron 1.2
------------------------------------------------------------------------------
Total 61.4%
7
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 6/30/98
Ten Best Contributors Ten Worst Contributors
- --------------------------------------------------------------------------------
America Online 53(cent) Adaptec ** -23(cent)
................................... .........................................
Ascend Communications 44 Cendant ** 17
................................... .........................................
Microsoft 44 Security Dynamics Technologies 16
................................... .........................................
Cisco Systems 43 Lam Research 14
................................... .........................................
EMC 38 Newbridge Networks ** 11
................................... .........................................
BMC Software 30 KLA-Tencor 11
................................... .........................................
Dell Computer 28 DSC Communications ** 9
................................... .........................................
Network Associates 25 Oracle * 9
................................... .........................................
Synopsys 20 Maxim Integrated Products 8
................................... .........................................
Nokia 20 Viasoft 8
- ----------------------------------- -----------------------------------------
Total 345(cent) Total -126(cent)
12 Months Ended 6/30/98
Ten Best Contributors Ten Worst Contributors
- --------------------------------------------------------------------------------
America Online 92(cent) First Data -42(cent)
................................... .........................................
Cisco Systems 59 Electronics for Imaging 37
................................... .........................................
BMC Software 52 Xilinx 30
................................... .........................................
Microsoft 46 Altera 28
................................... .........................................
PLATINUM technology 36 United States Surgical ** 26
................................... .........................................
EMC * 36 Adaptec ** 23
................................... .........................................
Ascend Communications * 29 Lam Research 23
................................... .........................................
Sterling Commerce 29 KLA-Tencor 23
................................... .........................................
Dell Computer * 28 Boston Scientific ** 18
................................... .........................................
Parametric Technology 26 Security Dynamics Technologies 16
- ----------------------------------- -----------------------------------------
Total 433(cent) Total -266(cent)
* Position added
** Position eliminated
8
<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.
[LINE GRAPH APPEARS HERE]
Lipper Science
& Technology S&P 500 Science &
Fund Index Stock Index Technology Fund
6/30/88 10,000 10,000 10,000
6/89 11,031 12,055 11,660
6/90 13,083 14,042 16,348
6/91 12,978 15,081 16,830
6/92 14,789 17,104 19,800
6/93 19,895 19,435 27,721
6/94 19,688 19,707 28,672
6/95 30,236 24,846 48,203
6/96 34,270 31,306 60,399
6/98 41,179 42,170 66,876
6/97 48,890 54,889 77,150
- ------------------------------------
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.
Periods Ended 6/30/98 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Science & Technology Fund 15.36% 16.97% 22.72% 22.67%
................................................................................
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
9
<PAGE>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- --------------------------------------------------------------------------------
Unaudited
- --------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 27.26 $ 29.71 $ 29.12 $ 21.64 $ 18.95 $ 17.33
.........................................................................................
Investment activities
Net investment income (0.11) (0.12) (0.09) (0.03) (0.09) (0.05)*
.........................................................................................
Net realized and unrealized gain (loss) 4.56 0.54 4.28 12.05 3.08 4.18
.........................................................................................
Total from investment activities 4.45 0.42 4.19 12.02 2.99 4.13
.........................................................................................
Distributions
Net realized gain -- (2.87) (3.60) (4.54) (0.30) (2.51)
.........................................................................................
NET ASSET VALUE
End of period $ 31.71 $ 27.26 $ 29.71 $ 29.12 $ 21.64 $ 18.95
-----------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data
Total return. 16.32% 1.71% 14.23% 55.53% 15.79% 24.25%*
....................................................................................................................................
Ratio of expenses to average net assets 0.95%+ 0.94% 0.97% 1.01% 1.11% 1.25%*
....................................................................................................................................
Ratio of net investment income to
average net assets (0.70)%+ (0.44)% (0.33)% (0.15)% (0.58)% (0.68)%*
....................................................................................................................................
Portfolio turnover rate 55.5% 133.9% 125.6% 130.3% 113.3% 163.4%
....................................................................................................................................
Net assets, end of period
(in millions) $ 3,898 $ 3,538 $ 3,292 $ 2,285 $ 915 $ 501
....................................................................................................................................
</TABLE>
. 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
* 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.
10
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
- ------------------------
Portfolio of Investments Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Common Stocks 95.2%
ELECTRONIC TECHNOLOGY 74.9%
Enterprise Software 17.2%
BMC Software * 1,500,000 $ 77,953
................................................................................
CBT Group ADR * 1,025,000 55,094
................................................................................
Computer Associates 300,000 16,669
................................................................................
Great Plains Software * 200,000 6,762
................................................................................
HBO 500,000 17,641
................................................................................
Integrated Systems * 400,000 6,125
................................................................................
Legato Systems * 300,000 11,719
................................................................................
Microsoft * 1,150,000 124,667
................................................................................
Network Associates * 2,850,000 136,355
................................................................................
Oracle * 3,350,000 82,180
................................................................................
PeopleSoft * 400,000 18,787
................................................................................
PLATINUM technology * 750,000 21,445
................................................................................
SAP (DEM) * 30,000 20,378
................................................................................
Security Dynamics Technologies * 1,500,000 27,047
................................................................................
Transaction Systems Architects * 250,000 9,633
................................................................................
Vantive * 750,000 15,445
................................................................................
VERITAS Software * 300,000 12,403
................................................................................
Viasoft * 600,000 9,731
................................................................................
670,034
...........
Consumer and Technical Software 11.6%
Adobe Systems 2,000,000 85,000
................................................................................
Avant * 1,000,000 24,719
................................................................................
AXENT Technologies * 275,000 8,413
................................................................................
Cadence Design Systems * 500,000 15,625
................................................................................
Caere * 300,000 3,994
................................................................................
Electronic Arts * 350,000 18,922
................................................................................
The Learning Company * 1,000,000 29,625
................................................................................
National Instruments * 250,000 8,945
................................................................................
Parametric Technology * 5,200,000 140,888
................................................................................
Peerless Systems * 50,000 1,044
................................................................................
Phoenix Technologies * 50,000 634
................................................................................
Synopsys * 2,500,000 114,453
................................................................................
452,262
...........
11
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Semiconductor 15.3%
Altera * 1,750,000 $ 51,680
................................................................................
Analog Devices * 4,550,000 111,759
................................................................................
Applied Micro Circuits * 400,000 10,388
................................................................................
Burr Brown * 700,000 14,809
................................................................................
Cognex * 450,000 8,395
................................................................................
Galileo Technology ADR * 350,000 4,769
................................................................................
Intel 250,000 18,523
................................................................................
Lattice Semiconductor * 400,000 11,363
................................................................................
Level One * 450,000 10,589
................................................................................
Linear Technology 600,000 36,188
................................................................................
Maxim Integrated Products * 3,450,000 109,430
................................................................................
Micrel * 300,000 9,844
................................................................................
Microchip Technology * 1,550,000 40,591
................................................................................
PMC-Sierra * 80,000 3,745
................................................................................
Texas Instruments 1,000,000 58,312
................................................................................
Xilinx * 2,800,000 95,287
................................................................................
595,672
...........
Semiconductor Equipment 3.1%
Applied Materials * 1,400,000 41,344
................................................................................
Brooks Automation * 275,000 3,592
................................................................................
KLA-Tencor * 1,550,000 42,964
................................................................................
Lam Research * 1,600,000 30,550
................................................................................
SpeedFam International * 200,000 3,687
................................................................................
122,137
...........
Communication Equipment 16.6%
ADC Telecommunications * 2,000,000 73,062
................................................................................
Advanced Fibre Communications * 850,000 34,053
................................................................................
Ascend Communications * 2,350,000 116,398
................................................................................
Ciena * 1,000,000 69,563
................................................................................
Cisco Systems * 1,500,000 138,141
................................................................................
Glenayre Technologies * 400,000 4,325
................................................................................
Lucent Technologies 225,000 18,717
................................................................................
Natural Microsystems * 200,000 3,219
................................................................................
Nokia ADR 350,000 25,397
................................................................................
Premisys Communications * 800,000 19,950
................................................................................
QUALCOMM * 2,250,000 126,492
................................................................................
Sawtek * 300,000 4,378
................................................................................
Tellabs * 200,000 14,319
................................................................................
648,014
...........
12
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Hardware/Peripherals 11.1%
Anixter International * 2,000,000 $ 38,125
................................................................................
Celestica 450,000 8,438
................................................................................
Dell Computer * 475,000 44,071
................................................................................
Electronics for Imaging * 2,150,000 45,284
................................................................................
EMC * 2,100,000 94,106
................................................................................
Hewlett-Packard 600,000 35,925
................................................................................
Marshall Industries * 250,000 6,813
................................................................................
Qlogic * 100,000 3,566
................................................................................
Sanmina * 500,000 21,609
................................................................................
SCI Systems * 700,000 26,337
................................................................................
Solectron * 1,150,000 48,372
................................................................................
Sun Microsystems * 800,000 34,775
................................................................................
Tech Data * 600,000 25,744
................................................................................
433,165
.............
Total Electronic Technology 2,921,284
.............
LIFE SCIENCES AND HEALTH CARE 0.1%
Health Care Services 0.1%
HCIA * 300,000 3,881
................................................................................
Total Life Sciences and Health Care 3,881
.............
INFORMATION SERVICES 15.5%
Data Services 8.7%
Affiliated Computer Services (Class A) * 400,000 15,400
................................................................................
Atlantic Data Services * 100,000 1,925
................................................................................
Automatic Data Processing 400,000 29,150
................................................................................
BISYS Group * 350,000 14,361
................................................................................
Checkfree Holdings * 500,000 14,734
................................................................................
First Data 3,500,000 116,594
................................................................................
Gartner Group (Class A) * 1,950,000 68,189
................................................................................
National Data 650,000 28,438
................................................................................
Renaissance Worldwide * 200,000 4,356
................................................................................
SunGard Data Systems * 750,000 28,781
................................................................................
Technology Solutions * 400,000 12,688
................................................................................
Transaction Network Services * 250,000 5,289
................................................................................
339,905
.............
13
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
E-Commerce 6.8%
America Online 725,000 $ 76,850
................................................................................
Concentric Network * 100,000 3,028
................................................................................
E*TRADE * 1,750,000 40,086
................................................................................
Envoy * 200,000 9,506
................................................................................
N2K * 200,000 3,931
................................................................................
PSINet * 400,000 5,175
................................................................................
Sterling Commerce * 2,550,000 123,675
................................................................................
262,251
.............
Total Information Services 602,156
.............
MEDIA/TELECOMMUNICATIONS
SERVICES 4.7%
Media/Telecom Services 4.7%
AirTouch Communications * 300,000 17,531
................................................................................
Paging Network * 1,350,000 18,858
................................................................................
PanAmSat * 400,000 22,775
................................................................................
Vodafone ADR 150,000 18,910
................................................................................
WorldCom * 2,200,000 106,356
................................................................................
Total Media/Telecommunications Services 184,430
.............
Total Common Stocks (Cost $3,017,532) 3,711,751
.............
Short-Term Investments 6.8%
Money Market Funds 6.8%
Government Reserve Investment Fund, 5.48% + # 265,013,074 265,013
................................................................................
Total Short-Term Investments (Cost $265,013) 265,013
.............
14
<PAGE>
T. Rowe Price Science & Technology Fund
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
IN THOUSANDS
Total Investments in Securities
102.0% of Net Assets (Cost $3,282,545) $ 3,976,764
Other Assets Less Liabilities (78,289)
....................
NET ASSETS $ 3,898,475
--------------------
+ Affiliated company
* Non-income producing
# Seven-day yield
ADR American Depository Receipt
DEM German deutschemark
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- ------------------------------------------------------------------------------
Unaudited June 30, 1998
- ------------------------------------
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $265,013) $ 265,013
Other companies (cost $3,017,532) 3,711,751
------------
Total investments in securities 3,976,764
Other assets 10,016
------------
Total assets 3,986,780
------------
Liabilities
Total liabilities 88,305
------------
NET ASSETS $ 3,898,475
------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (12,962)
Accumulated net realized gain/loss - net of distributions 183,776
Net unrealized gain (loss) 694,219
Paid-in-capital applicable to 122,939,009 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized 3,033,442
NET ASSETS $ 3,898,475
------------
NET ASSET VALUE PER SHARE $ 31.71
------------
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- -----------------------------------------------------------------------------
Unaudited
- -------------------------
Statement of Operations
- -----------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/98
Investment Income
Income
Interest $ 3,261
Dividend (net of foreign taxes of $ 97) 1,483
----------
Total income 4,744
----------
Expenses
Investment management 12,514
Shareholder servicing 4,693
Prospectus and shareholder reports 243
Registration 115
Custody and accounting 99
Legal and audit 15
Directors 8
Miscellaneous 19
----------
Total expenses 17,706
----------
Net investment income (12,962)
----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss)
Securities 175,722
Foreign currency transactions 32
----------
Net realized gain (loss) 175,754
----------
Change in net unrealized gain or loss on securities 394,547
----------
Net realized and unrealized gain (loss) 570,301
----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 557,339
----------
The accompanying notes are an integral part of these financial statements.
17
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- -------------------------------------------------------------------------------
Unaudited
- -------------------------------------
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/98 12/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ (12,962) $ (15,713)
Net realized gain (loss) 175,754 330,756
Change in net unrealized gain or loss 394,547 (255,527)
--------------------------
Increase (decrease) in net assets from operations 557,339 59,516
--------------------------
Distributions to shareholders
Net realized gain - (336,840)
--------------------------
Capital share transactions *
Shares sold 611,854 1,479,695
Distributions reinvested - 327,230
Shares redeemed (809,210) (1,282,906)
--------------------------
Increase (decrease) in net assets from capital
share transactions (197,356) 524,019
--------------------------
Net Assets
Increase (decrease) during period 359,983 246,695
Beginning of period 3,538,492 3,291,797
--------------------------
End of period $ 3,898,475 $ 3,538,492
--------------------------
* Share information
Shares sold 20,394 48,829
Distributions reinvested - 12,371
Shares redeemed (27,284) (42,170)
--------------------------
Increase (decrease) in shares outstanding (6,890) 19,030
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
T. Rowe Price Science & Technology Fund
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Unaudited June 30, 1998
- -------------------------------
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Listed securities not traded on a
particular day and securities regularly traded in the over-the-counter
market are valued at the mean of the latest bid and asked prices. Other
equity securities are valued at a price within the limits of the latest bid
and asked prices deemed by the Board of Directors, or by persons delegated
by the Board, best to reflect fair value.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of
such currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair
value as determined in good faith by or under the supervision of the
officers of the fund, as authorized by the Board of Directors.
Affiliated Companies As defined by the Investment Company Act of 1940, an
affiliated company is one in which the fund owns at least 5% of the
outstanding voting securities.
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
19
<PAGE>
T. Rowe Price Science & Technology Fund
- -------------------------------------------------------------------------------
capital gain distributions are determined in accordance with federal income
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $2,018,649,000 and $2,159,943,000, respectively, for
the six months ended June 30, 1998.
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, 1998, the aggregate cost of investments for federal income tax
and financial reporting purposes was $3,282,545,000, and net unrealized
gain aggregated $694,219,000, of which $837,248,000 related to appreciated
investments and $143,029,000 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 $2,052,000 was payable at June 30, 1998. 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 0.30% for assets in
excess of $80 billion. At June 30, 1998, and for the six months then ended,
the effective annual group fee rate was 0.32%. The fund pays a pro-rata
share of the group fee based on the ratio of its net assets to those of the
group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share price
and main
20
<PAGE>
T. Rowe Price Science & Technology Fund
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tains 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
$3,749,000 for the six months ended June 30, 1998, of which $775,000 was
payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available
to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the six months ended
June 30, 1998, totaled $3,259,000 and are reflected as interest income in
the accompanying Statement of Operations.
21
<PAGE>
For yield, price, last transaction, Investor Centers:
current balance, or to conduct 101 East Lombard St.
transactions, 24 hours, Baltimore, MD 21202
7 days a week, call Tele*Access(R):
1-800-638-2587 toll free T. Rowe Price
Financial Center
10090 Red Run Blvd.
For assistance Owings Mills, MD 21117
with your existing
fund account, call:
Shareholder Service Center Farragut Square
1-800-225-5132 toll free 900 17th Street, N.W.
410-625-6500 Baltimore area Washington, D.C. 20006
To open a Discount Brokerage ARCO Tower
account or obtain information, 31st Floor
call: 1-800-638-5660 toll free 515 South Flower St.
Los Angeles, CA 90071
Internet address: 4200 West Cypres St.
www.troweprice.com 10th Floor
Tampa, FL 33607
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.
[LOGO OF T.ROWE PRICE INVESTMENT SERVICES, INC., APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor. F61-051 6/30/98
