<PAGE>
Annual Report
SCIENCE &
TECHNOLOGY
FUND
-----------------
DECEMBER 31, 1999
-----------------
[LOGO OF T. ROWE PRICE]
<PAGE>
REPORT HIGHLIGHTS
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Science & Technology Fund
. Technology stocks and the fund enjoyed another robust year, posting
triple-digit returns for the 12 months ended December 31, 1999.
. Fund results for the 6- and 12-month periods far outpaced the S&P 500 but
lagged the Lipper Science & Technology Fund Index because we implemented a
more conservative fund profile during the fourth quarter.
. Our electronic commerce, semiconductor, and communications stocks were
particularly strong.
. After the strong gains of last year, we would not be surprised to see a
meaningful correction in technology stocks.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
<PAGE>
FELLOW SHAREHOLDERS
Technology stocks and your fund enjoyed an extraordinary year, appreciating
significantly during each quarter and generating triple-digit returns for all of
1999. While many segments of the market struggled, technology stock performance
was widespread, with particular strength in the electronic commerce,
semiconductor, and communications areas.
Your fund produced another year of outstanding returns, rising 101% for all of
1999 and nearly 54% for the past six months. Results easily surpassed those of
the unmanaged Standard & Poor's 500 Stock Index for both periods but lagged the
Lipper Science & Technology Fund Index. The shortfall versus the Lipper index
was due to our comparatively conservative fund profile versus competitive funds,
which impaired relative returns during the fourth quarter and the year. However,
the fund surpassed both the S&P 500 and Lipper in each of the first three
quarters of the year. Considering the disparity in performance between
technology and other segments of the stock market, investors may want to review
their current asset allocation to make sure their exposure to technology stocks
is consistent with their long-term objectives.
- ----------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
Periods Ended 12/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Science & Technology Fund 53.64% 100.99%
S&P 500 7.71 21.04
Lipper Science & Technology
Fund Index 67.98 113.92
CAPITAL GAIN DISTRIBUTION
Your fund's Board of Directors declared a total capital gain distribution of
$10.72 per share for 1999, of which $7.40 was long term and $3.32 was short
term. The distribution was paid on December 16, 1999, to shareholders of record
on December 14. Your check or statement confirming the distribution was mailed
in early January, and Form 1099-DIV, with complete tax information, was mailed
toward month-end.
1
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MARKET ENVIRONMENT
Fundamentals across the technology landscape improved throughout the year.
Semiconductor demand rose to a level where it absorbed existing supply,
accelerating revenue growth, stemming price erosion, and increasing margins for
most participants. Corporations around the world adopted and implemented
Internet-centric computing architectures, while communications carriers advanced
the build out of their Internet infrastructures. Demand for digital wireless
services remained extremely robust, driving global penetration levels higher and
increasing demand for associated equipment. E-commerce went mainstream, forcing
companies of all vocations and in all regions of the world to determine how to
best leverage the Internet to expand revenues and streamline operations. Even
the maturing PC industry stood poised to benefit from the symbiotic effect of
more functional operating systems available on more powerful processors. These
forces combined to accelerate revenue growth, expand profit margins, and enhance
cash flow in almost every segment of the science and technology sector.
- -----------------------
MARKET RETURNS WITH AND
WITHOUT TECHNOLOGY
- --------------------------------------------------------------------------------
1999 Return
Excluding
Index 1999 Return Technology
- --------------------------------------------------------------------------------
S&P 500 21.04% 7.10%
Nasdaq 85.59 7.14
Wilshire 5000 23.56 7.77
Source: T. Rowe Price Associates, Inc.
Such strong sector fundamentals -- especially against the backdrop of rising
interest rates and deteriorating growth and profit dynamics in most other parts
of the economy -- made science and technology stocks the place to be in 1999.
Quite frankly, it was almost the only place to be. As the table above
illustrates, if one excluded technology, most of the major market indices
provided only modest returns.
While the outstanding relative performance of technology stocks was impressive,
their absolute performance was nothing short of extraordinary. As the following
table illustrates, since their lows of October of 1998, technology stocks
(measured by the PSE Technology Index) enjoyed their most significant period of
appreciation without a correction of at least 15%. In fact, their 267% gain is
more than twice the previous record posted during the 1990-1992 recovery.
2
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- --------------------------------------------------------
RECOVERIES FOLLOWING SIGNIFICANT CORRECTIONS (1983-1999)
- --------------------------------------------------------------------------------
Period % Decline
- --------------------------------------------------------------------------------
Sept. '83 to July '84 -37%
Feb. '85 to Oct. '85 -27
Apr. '86 to Sept. '86 -19
Oct. '87 to Dec. '87 -43
July '88 to Nov. '88 -23
- --------------------------------------------------------------------------------
July '90 to Oct. '90 -35
Jan. '92 to Oct.'92 -24
Mar. '94 to Apr. '94 -16
Sept. '95 to Jan. '96 -15
May '96 to July '96 -25
- --------------------------------------------------------------------------------
Jan. '97 to Apr. '97 -15
Oct. '97 to Dec. '97 -22
July '98 to Oct. '98 -30
- --------------------------------------------------------------------------------
Period % Recovery
- --------------------------------------------------------------------------------
July '84 to Feb. '85 34%
Oct. '85 to Apr. '86 65
Sept. '86 to Oct. '87 65
Dec. '87 to July '88 36
Nov. '88 to July '90 43
- --------------------------------------------------------------------------------
Oct. '90 to Jan. '92 107
Oct. '92 to Mar. '94 67
Apr. '94 to Sept. '95 97
Jan. '96 to May '96 28
July '96 to Jan. '97 57
- --------------------------------------------------------------------------------
Apr. '97 to Oct. '97 51
Dec. '97 to July '98 39
Oct. '98 to Dec. '99 267
- --------------------------------------------------------------------------------
Source: T. Rowe Price Associates, Inc.
Perhaps the most remarkable aspect of the year for technology stocks was the
huge expansion in valuations. The charts on pages 4 and 5 illustrate historical
valuation parameters of a market-weighted universe of over 500 technology stocks
across three of the most common metrics: price-to-earnings ratio, price-to-sales
ratio, and price-to-EBITDA (a proxy for operating cash flow) ratio. The first
set of charts shows technology stock valuations over time; the second set of
charts shows historical technology stock valuations relative to the S&P 500. As
you can see by the upward sloping lines, technology stock valuations are at
record high levels, having increased markedly over the past two years on both an
absolute and relative basis.
While we do believe that the dynamic growth opportunities and increased investor
participation in the science and technology sector suggest that valuations are
likely to remain above historical averages, we caution that a correction of 25%-
35% would be required just to bring valuations in line with recently established
levels.
Thus, we find the environment for technology stocks in a rather precarious
situation. While fundamentals are extremely strong,
3
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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[NO PLOT POINTS AVAILABLE]
Source: StockVal.
4
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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[PLOT POINTS TO COME]
5
<PAGE>
the recovery has been extraordinary, valuations are at record levels, and
sentiment is ebullient. Should business conditions deteriorate --even
modestly and perhaps only temporarily -- the sector could experience a
turbulent and substantial correction.
PORTFOLIO REVIEW
The fund remains broadly diversified across the primary segments of the
technology sector. Stocks of software, communications, and semiconductor
companies each represented at least 20% of the portfolio, while hardware
and information services shares accounted for the balance of fund assets.
At the end of the period, reserves stood at 3%, and the fund's 25 largest
holdings composed just over 72% of portfolio assets.
During the past six months and year, fund performance was most positively
affected by our holdings in the electronic commerce, semiconductor, and
communications segments. Among the best performers for both periods were
Internet portal leader Yahoo! and Japanese Internet conglomerate Softbank,
which was up 1,144% from our original purchases last February. Among our
semiconductor holdings, mixed signal vendor Analog Devices was our best
overall contributor during the year, while leading programmable logic
provider Xilinx was a top contributor for both the 6- and 12-month periods.
In the communications arena, the fund enjoyed strong performance from data
communications giant Cisco Systems and wireless leader Nokia. Other
standout holdings included database leader Oracle, which finally combined
its strong competitive position with the promise of accelerating
profitability, and Intuit, which excelled in both the software and
electronic commerce sides of its business.
While the fund had its share of underachievers
- ----------------------
Sector DIVERSIFICATION
- --------------------------------------------------------------------------------
Reserves 3%
Hardware 14%
Software 26%
Information Services 15%
Semi-conductors 20%
Communications 22%
Based on net assets as of 12/31/99.
6
<PAGE>
due to earnings shortfalls or operational missteps, significant
disappointments were few and far between in a year of triple-digit gains.
Accordingly, the only standout detractor was Network Associates, which fell
victim to aggressive accounting and poor inventory management.
Significant purchases during the past six months included new positions in
Nortel Networks, Electronic Arts, and 3Com. Additionally, we added to
existing positions in America Online, MCI WorldCom, Microsoft, and Dell
Computer. Given its relatively inexpensive valuation, and also in
anticipation of a stronger PC cycle in 2000, we reinitiated a position in
Intel. In contrast, during the quarter we eliminated Adobe Systems,
Hewlett-Packard, Amazon.com, and
Sprint and took some profits in EMC and Oracle.
OUTLOOK
Considering the uninterrupted surge in technology stocks during the past 15
months, nearly universal optimism, and extreme valuations, we are concerned
that any erosion in near-term fundamentals could trigger a sizable
correction in the sector. With this in mind, we will continue to balance
our mandate to invest your money in the most promising investment
opportunities within the technology arena with a healthy respect for the
volatility and risk inherent in this sector. Accordingly, while remaining
essentially fully invested, we have attempted to dampen the risk profile of
the fund by concentrating our holdings in investments of leadership
technology companies with solid economic foundation. We will reposition the
fund more aggressively as the sector pulls back.
As always, we appreciate your continued support.
Respectfully submitted,
/s/ Charles A. Morris
Charles A. Morris
President and Chairman of the Investment Advisory Committee
January 21, 2000
7
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/99
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Oracle 4.3%
Yahoo! 4.2
Analog Devices 4.0
Cisco Systems 3.9
Microsoft 3.8
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Parametric Technology 3.3
Novell 3.3
MCI WorldCom 3.2
Vodafone AirTouch 3.2
Nokia 3.1
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Intuit 2.9
America Online 2.8
Xilinx 2.7
Solectron 2.7
Dell Computer 2.7
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SCI Systems 2.7
Sun Microsystems 2.4
3Com 2.3
Maxim Integrated Products 2.2
Synopsys 2.2
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BMC Software 2.1
Nortel Networks 2.1
Altera 2.0
First Data 2.0
Softbank 2.0
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Total 72.1%
Note: Table excludes reserves.
8
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 12/31/99
Ten Largest Purchases Ten Largest Sales
------------------------------------------------------------------------
Intel * Adobe Systems **
3Com * EMC
America Online Lucent Technologies
Nortel Networks * Hewlett-Packard **
Yahoo! Amazon.com **
MCI WorldCom America Online
Electronic Arts * Intel
Amazon.com Oracle
Microsoft Sprint **
Dell Computer Sun Microsystems
* Position added
** Position eliminated
9
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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- ----------------------
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 benchmarks, which may include
a broad-based market index and a peer group average or index. Market indexes
do not include expenses, which are deducted from fund returns as well as
mutual fund averages and indexes.
S&P 500 STOCK LIPPER SCIENCE & TECHNOLOGY SCIENCE & TECHNOLOGY
INDEX FUND INDEX FUND
12/89 10,000 10,000 10,000
12/90 9,690 9,277 9,867
12/91 12,642 13,451 15,803
12/92 13,605 14,767 18,767
12/93 14,976 17,993 23,318
12/94 15,174 19,675 26,999
12/95 20,876 27,261 41,992
12/96 25,669 31,873 47,967
12/97 34,233 34,371 48,787
12/98 44,017 50,504 69,451
12/99 53,278 108,038 139,589
- ------------------------------------
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 12/31/99 1 Year 3 Years 5 Years 10 Years
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Science & Technology Fund 100.99% 42.77% 38.90% 30.16%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
10
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<TABLE>
<CAPTION>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- -----------------------------------------------------------------------------------------
- --------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- -----------------------------------------------------------------------------------------
Year
Ended
<S> <C> <C> <C> <C> <C>
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 37.67 $ 27.26 $ 29.71 $ 29.12 $ 21.64
Investment activities
Net investment income (loss) (0.09) (0.18) (0.12) (0.09) (0.03)
Net realized and
unrealized gain (loss) 36.85 11.58 0.54 4.28 12.05
Total from
investment activities 36.76 11.40 0.42 4.19 12.02
Distributions
Net realized gain (10.72) (0.99) (2.87) (3.60) (4.54)
NET ASSET VALUE
End of period $ 63.71 $ 37.67 $ 27.26 $ 29.71 $ 29.12
--------------------------------------------------
Ratios/Supplemental Data
Total return 100.99% 42.35% 1.71% 14.23% 55.53%
Ratio of total expenses to
average net assets 0.87% 0.94% 0.94% 0.97% 1.01%
Ratio of net investment
income (loss) to average
net assets (0.26)% (0.61)% (0.44)% (0.33)% (0.15)%
Portfolio turnover rate 128.0% 108.9% 133.9% 125.6% 130.3%
Net assets, end of period
(in millions) $ 12,271 $ 4,696 $ 3,538 $ 3,292 $ 2,285
</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.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- --------------------------------------------------------------------------------------
December 31, 1999
- ------------------------
PORTFOLIO OF INVESTMENTS Shares Value
- --------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
COMMON STOCKS 96.9%
INFORMATION SERVICES 12.1%
E-Commerce 12.1%
America Online * 4,600,000 $ 347,013
E*TRADE * 5,000,000 130,781
First Data 5,000,000 246,563
Softbank (JPY) 250,000 239,307
Yahoo! * 1,200,000 519,262
----------------
Total Information Services 1,482,926
----------------
SEMICONDUCTORS 20.3%
Semiconductors and Components 16.0%
Altera * 5,000,000 247,812
Analog Devices * 5,250,000 488,250
Applied Micro Circuits * 400,000 50,950
Conexant Systems * 1,650,000 109,261
Intel 2,700,000 222,159
Maxim Integrated Products * 5,800,000 273,506
MIPS Technologies * 352,000 18,337
Texas Instruments 2,250,000 217,969
Xilinx * 7,400,000 336,469
----------------
1,964,713
----------------
Semiconductor Equipment 4.3%
Applied Materials * 1,700,000 215,316
ASM Lithography * 1,000,000 113,312
Cognex *+ 2,250,000 87,680
KLA-Tencor * 1,000,000 111,344
----------------
527,652
----------------
Total Semiconductors 2,492,365
----------------
COMMUNICATIONS 21.9%
Communication Equipment 12.3%
3Com * 6,000,000 281,812
Cisco Systems * 4,500,000 481,922
Lucent Technologies 1,500,000 112,219
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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Shares Value
- ----------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Nokia ADR 2,000,000 $ 380,000
Nortel Networks 2,500,000 252,500
1,508,453
Communication Services 9.6%
KPNQwest * 850,000 54,294
Mannesmann (EUR) * 400,000 96,726
MCI WorldCom * 7,500,000 397,734
NEXTLINK Communications * 750,000 62,273
PanAmSat * 1,000,000 59,219
PSINet * 1,750,000 108,226
Vodafone AirTouch ADR 8,000,000 396,000
1,174,472
Total Communications 2,682,925
HARDWARE 14.1%
Peripherals 2.0%
Electronics for Imaging * 2,000,000 117,250
EMC * 1,150,000 125,638
242,888
Systems 5.0%
Dell Computer * 6,500,000 331,297
Sun Microsystems * 3,750,000 290,273
621,570
Contract Manufacturing 7.1%
Flextronics International * 2,000,000 92,063
Sanmina * 1,200,000 119,550
SCI Systems *+ 4,000,000 328,750
Solectron * 3,500,000 332,937
873,300
Total Hardware 1,737,758
SOFTWARE 25.8%
Enterprise Software 15.8%
BMC Software * 3,250,000 259,695
Computer Associates 2,000,000 139,875
Microsoft * 4,000,000 466,875
Novell * 10,000,000 399,063
</TABLE>
13
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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Shares Value
- --------------------------------------------------------------------------------
In thousands
Oracle * 4,750,000 $ 532,148
VERITAS Software * 1,000,000 143,094
1,940,750
Consumer and Multi Media Software 4.3%
Electronic Arts * 2,000,000 168,125
Intuit * 6,000,000 359,437
527,562
Technical Software 5.7%
Avant * 1,500,000 22,547
Parametric Technology *+ 15,000,000 405,469
Synopsys *+ 4,000,000 266,375
694,391
Total Software 3,162,703
Total Miscellaneous Common Stocks 2.7% 332,372
Total Common Stocks (Cost $6,975,236) 11,891,049
SHORT-TERM INVESTMENTS 3.6%
Money Market Funds 3.6%
Government Reserve Investment Fund, 4.80% #+ 445,882,495 445,882
Total Short-Term Investments (Cost $445,882) 445,882
Total Investments in Securities
100.5% of Net Assets (Cost $7,421,118) $ 12,336,931
Other Assets Less Liabilities (66,299)
NET ASSETS $ 12,270,632
---------------
# Seven-day yield
+ Affiliated company
* Non-income producing
ADR American Depository Receipt
EUR Euro
JPY Japanese yen
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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December 31, 1999
- -----------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------------------------
In thousands
<S> <C>
Assets
Investments in securities, at value
Affiliated companies (cost $1,109,697) $ 1,534,156
Other companies (cost $6,311,421) 10,802,775
Total investments in securities 12,336,931
Other assets 31,317
Total assets 12,368,248
Liabilities
Total liabilities 97,616
NET ASSETS $ 12,270,632
Net Assets Consist of:
Accumulated net realized gain/loss - net of distributions $ 618,822
Net unrealized gain (loss) 4,915,813
Paid-in-capital applicable to 192,587,653 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized 6,735,997
NET ASSETS $ 12,270,632
NET ASSET VALUE PER SHARE $ 63.71
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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- -----------------------
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------------
In thousands
Year
Ended
12/31/99
<S> <C>
Investment Income (Loss)
Income
Interest (including $30,645 from affiliated companies) $ 34,697
Dividend 8,544
Total income 43,241
Expenses
Investment management 47,361
Shareholder servicing 12,440
Prospectus and shareholder reports 631
Registration 615
Custody and accounting 289
Legal and audit 22
Directors 20
Miscellaneous 41
Total expenses 61,419
Expenses paid indirectly (42)
Net expenses 61,377
Net investment income (loss) (18,136)
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 2,301,430
Foreign currency transactions (1,578)
Net realized gain (loss) 2,299,852
Change in net unrealized gain or loss
Securities 3,341,333
Other assets and liabilities
denominated in foreign currencies (1)
Change in net unrealized gain or loss 3,341,332
Net realized and unrealized gain (loss) 5,641,184
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 5,623,048
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
- -----------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------
In thousands
Year
Ended
12/31/99 12/31/98
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (18,136) $ (22,554)
Net realized gain (loss) 2,299,852 162,261
Change in net unrealized gain or loss 3,341,332 1,274,809
Increase (decrease) in net assets from operations 5,623,048 1,414,516
Distributions to shareholders
Net realized gain (1,713,649) (119,458)
Capital share transactions *
Shares sold 3,840,762 1,287,933
Distributions reinvested 1,676,543 116,409
Shares redeemed (1,851,625) (1,542,339)
Increase (decrease) in net assets from capital
share transactions 3,665,680 (137,997)
Net Assets
Increase (decrease) during period 7,575,079 1,157,061
Beginning of period 4,695,553 3,538,492
End of period $12,270,632 $ 4,695,553
---------------------------
* Share information
Shares sold 76,475 42,952
Distributions reinvested 29,465 3,545
Shares redeemed (37,992) (51,686)
Increase (decrease) in shares outstanding 67,948 (5,189)
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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December, 31, 1999
- -----------------------------
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.
Currency Translation Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated
into U.S. dollars at the prevailing exchange rate on the dates of such
transactions. The effect of changes in foreign exchange rates on realized
and unrealized security gains and losses is reflected as a component of
such gains and losses.
18
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Dividend income and
distributions to shareholders are recorded by the fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those determined in
accordance with generally accepted accounting principles. Expenses paid
indirectly reflect credits earned on daily uninvested cash balances at the
custodian and are used to reduce the fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $9,974,718,000 and $8,324,056,000, respectively, for
the year ended December 31, 1999.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
In order for the fund's capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, the following
reclassifications were made during the year ended December 31, 1999. The
results of operations and net assets were not affected by the
increases/(decreases) to these accounts.
---------------------------------------------------------------------------
Undistributed net investment income $ 18,136,000
Undistributed net realized gain (18,136,000)
At December 31, 1999, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$7,421,118,000. Net unrealized gain aggregated $4,915,813,000 at
period-end, of which $4,962,494,000 related to appreciated investments and
$46,681,000 to depreciated investments.
19
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T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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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 $6,363,000 was payable at December 31, 1999. The fee is
computed daily and paid monthly, and consists of an individual fund fee
equal to 0.35% 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 0.295% for
assets in excess of $120 billion. At December 31, 1999, and for the year
then ended, the effective annual group fee rate was 0.32%. The fund pays a
pro-rata share of the group fee based on the ratio of its net assets to
those of the group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services,
Inc. is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price
Retirement Plan Services, Inc. provides subaccounting and recordkeeping
services for certain retirement accounts invested in the fund. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $10,004,000 for the year ended December 31, 1999, of which
$942,000 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 year ended
December 31, 1999, totaled $30,645,000 and are reflected as interest income
in the accompanying Statement of Operations.
20
<PAGE>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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- ---------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of T. Rowe Price Science & Technology
Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of T. Rowe
Price Science & Technology Fund, Inc. (the "Fund") at December 31, 1999,
and the results of its operations, the changes in its net assets and the
financial highlights for each of the fiscal periods presented, in
conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1999 by correspondence with
custodians, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 20, 2000
21
<PAGE>
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND
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December 31, 1999
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 12/31/99
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
. $530,721,000 from short-term capital gains,
. $1,182,928,000 from long-term capital gains, subject to the 20% rate
gains category,
For corporate shareholders, $1,093,000 of the fund's distributed income and
short-term capital gains qualified for the dividends-received deduction.
- --------------------------------------------------------------------------------
22
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
INVESTMENT SERVICES AND INFORMATION
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to
10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your
distributions.
Automated 24-Hour Services Including Tele*Access(R) and the T. Rowe
Price Web site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
Individual Investments Stocks, bonds, options, precious metals, and
other securities at a savings over full-service commission rates. **
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and
results.
T. Rowe Price Report Quarterly investment newsletter discussing
markets and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International Investing, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning
Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a September 1999 survey for representative-assisted
stock trades. Services vary by firm, and commissions may vary
depending on size of order.
23
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE MUTUAL FUNDS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STOCK FUNDS BOND FUNDS MONEY MARKET FUNDS+
Domestic Domestic Taxable Taxable
Blue Chip Growth Corporate Income Prime Reserve
Capital Appreciation GNMA Summit Cash Reserves
Capital Opportunity High Yield U.S. Treasury Money
Diversified Small-Cap Growth New Income
Dividend Growth Short-Term Bond Tax-Free
Equity Income Short-Term U.S. Government California Tax-Free Money
Equity Index 500 Spectrum Income New York Tax-Free Money
Extended Equity Market Index Summit GNMA Summit Municipal
Financial Services Summit Limited-Term Bond Money Market
Growth & Income U.S. Treasury Intermediate Tax-Exempt Money
Growth Stock U.S. Treasury Long-Term
Health Sciences BLENDED ASSET FUNDS
Media & Telecommunications Domestic Tax-Free
Mid-Cap Growth California Tax-Free Bond Balanced
Mid-Cap Value Florida Intermediate Tax-Free Personal Strategy Balanced
New America Growth Georgia Tax-Free Bond Personal Strategy Growth
New Era Maryland Short-Term Personal Strategy Income
New Horizons* Tax-Free Bond Tax-Efficient Balanced
Real Estate Maryland Tax-Free Bond
Science & Technology New Jersey Tax-Free Bond T. ROWE PRICE NO-LOAD
Small-Cap Stock New York Tax-Free Bond VARIABLE ANNUITY
Small-Cap Value Summit Municipal Income
Spectrum Growth Summit Municipal Intermediate Equity Income Portfolio
Tax-Efficient Growth Tax-Free High Yield International Stock Portfolio
Total Equity Market Index Tax-Free Income Limited-Term Bond Portfolio
Value Tax-Free Intermediate Bond Mid-Cap Growth Portfolio
Tax-Free Short-Intermediate New America Growth Portfolio
International/Global Virginia Short-Term Personal Strategy Balanced
Emerging Markets Stock Tax-Free Bond Portfolio
European Stock Virginia Tax-Free Bond Prime Reserve Portfolio
Global Stock
International Discovery International/Global
International Growth & Income Emerging Markets Bond
International Stock Global Bond
Japan International Bond
Latin America
New Asia
Spectrum International
</TABLE>
* Closed to new investors.
+ Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the funds.
Please call for a prospectus. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY.
T. Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
24
<PAGE>
T. ROWE PRICE ADVISORY SERVICES AND RETIREMENT RESOURCES
- --------------------------------------------------------------------------------
ADVISORY SERVICES,RETIREMENT RESOURCES
T. Rowe Price is your full-service retirement specialist. We have
developed unique advisory services that can help you meet the most
difficult retirement challenges. Our broad array of retirement plans
is suitable for individuals, the self-employed, small businesses,
corporations, and nonprofit organizations. We also provide
recordkeeping, communications, and investment management services, and
our educational materials, self-help planning guides, and software
tools are recognized as among the industry's best. For information or
to request literature, call us at 1-800-638-5660, or visit our Web
site at www.troweprice.com.
ADVISORY SERVICES
T. Rowe Price Retirement Income ManagerSM helps retirees or those
within two years of retirement determine how much income they can take
in retirement. The program uses extensive statistical analysis and the
input of financial planning professionals to suggest an income plan
that best meets your objectives.
T. Rowe Price Rollover Investment Service offers asset allocation
advice to those planning a major change in their qualified retirement
plans, such as a 401(k) rollover from a previous employer or an IRA
transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning
AnalyzerTM CD-ROM or diskette $19.95.
To order, please call
1-800-541-5760. Also available
on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. Rowe Price Immediate Variable
Annuity (Income Account)
Investment Kits
We will be happy to send you one of our easy-to-follow investment kits
when you are ready to invest in any T. Rowe Price retirement vehicle,
including IRAs, quali-fied plans, small-business plans, or our no-load
variable annuities.
25
<PAGE>
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus appropriate to the fund or funds
covered in this report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
Invest With Confidence (R)
T. Rowe Price Investment Services, Inc., Distributor.
