-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RiccgmxA1Jw7wB4mZ8uweVGi5ylm+w66vxUqRFfZhVHmPzc0GxZwu2a9Ku+7ZqXj UNvHoW1MpP3OykTK86yBUg== 0001002624-03-000003.txt : 20030818 0001002624-03-000003.hdr.sgml : 20030818 20030818161252 ACCESSION NUMBER: 0001002624-03-000003 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030818 EFFECTIVENESS DATE: 20030818 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE HEALTH SCIENCES FUND INC CENTRAL INDEX KEY: 0001002624 IRS NUMBER: 521952906 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-07381 FILM NUMBER: 03853318 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4106256877 MAIL ADDRESS: STREET 1: 100 EAST PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE HEALTH & LIFE SCIENCES FUND INC DATE OF NAME CHANGE: 19951023 N-CSRS 1 hsf.txt T. ROWE PRICE HEALTH SCIENCE FUND Item 1. Report to Shareholders T. Rowe Price Health Sciences Fund - -------------------------------------------------------------------------------- Certified Financials T. Rowe Price Health Sciences Fund - -------------------------------------------------------------------------------- Certified Financials (Unaudited) Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- 6 Months Year Ended Ended 6/30/03 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 NET ASSET VALUE Beginning of period $ 14.51 $ 20.08 $ 21.70 $ 15.93 $ 16.01 $ 13.66 Investment activities Net investment income (loss) (0.05) (0.11) (0.11) (0.03) (0.04) (0.04) Net realized and unrealized gain (loss) 3.47 (5.46) (1.20) 8.28 1.22 3.05 Total from investment activities 3.42 (5.57) (1.31) 8.25 1.18 3.01 Distributions Net realized gain -- -- (0.31) (2.48) (1.26) (0.66) NET ASSET VALUE End of period $ 17.93 $ 14.51 $ 20.08 $ 21.70 $ 15.93 $ 16.01 ----------------------------------------------------------------- Ratios/Supplemental Data Total return^ 23.57% (27.74)% (5.97)% 52.19% 7.97% 22.37% Ratio of total expenses to average net assets 1.05%! 1.04% 1.02% 0.98% 1.11% 1.16% Ratio of net investment income (loss) to average net assets (0.61)%! (0.64)% (0.60)% (0.22)% (0.25)% (0.25)% Portfolio turnover rate 47.1%! 62.7% 74.6% 110.6% 81.9% 85.7% Net assets, end of period (in thousands) $892,662 $677,956 $960,787 $971,867 $302,510 $316,573 ^ 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. ! Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price Health Sciences Fund - -------------------------------------------------------------------------------- Certified Financials (Unaudited) June 30, 2003 Statement of Net Assets Shares Value - -------------------------------------------------------------------------------- In thousands Common Stocks and Warrants 99.4% BIOTECHNOLOGY 40.3% International Biotechnology 0.4% Actelion (CHF) * 50,000 $ 3,337 3,337 Other Biotechnology 4.1% Alexion Pharmaceutical * 210,000 3,581 Amylin Pharmaceuticals * 220,000 4,816 Cubist Pharmaceuticals * 550,000 5,863 Esperion Therapeutics * 250,000 4,897 Exelixis * 825,000 5,725 Insmed, Warrants, 5/31/05 *+(misc. symbol) 250,048 0 Ligand Pharmaceuticals, Class B * 224,300 3,048 Myriad Genetics * 125,000 1,701 Nektar Therapeutics * 1,600 15 NeoRx * 250,000 847 Regeneron Pharmaceuticals * 145,000 2,284 Tularik * 80,000 795 Vicuron Pharmaceuticals * 175,000 2,482 ViroPharma * 200,000 520 XOMA * 55,900 298 36,872 U.S. Major - Biotechnology 35.8% Abgenix *!! 475,000 4,983 Alkermes * 1,075,000 11,556 Amgen *!! 650,000 43,186 Biogen *!! 75,000 2,850 Cephalon * 725,000 29,841 CV Therapeutics * 275,000 8,157 Genentech *!! 230,000 16,588 Gilead Sciences *!! 875,000 48,632 Human Genome Sciences * 375,000 4,770 IDEC Pharmaceuticals *!! 525,000 17,850 Imclone Systems *!! 423,000 13,375 Medicines Company *!! 675,000 13,291 MedImmune *!! 650,000 23,640 Millennium Pharmaceuticals * 425,000 6,685 Neurocrine Biosciences *!! 350,000 $ 17,479 NPS Pharmaceuticals * 494,500 12,036 OSI Pharmaceuticals * 190,000 6,120 Protein Design Labs * 150,000 2,097 Transkaryotic Therapies * 300,000 3,462 Trimeris *!! 625,000 28,550 Vertex Pharmaceuticals * 310,000 4,526 319,674 Total Biotechnology 359,883 LIFE SCIENCES 1.4% Life Sciences 1.4% Invitrogen * 75,000 2,878 Symyx Technologies * 400,000 6,528 Waters Corporation *!! 100,000 2,913 Total Life Sciences 12,319 PHARMACEUTICALS 24.8% International Pharmaceuticals 1.1% Fujisawa Pharmaceutical (JPY) 150,000 2,816 Sanofi-Synthelabo (EUR) 125,000 7,333 10,149 U.S. Major- Pharmaceutical 23.7% Abbott Laboratories !! 450,000 19,692 Allergan !! 225,000 17,347 AstraZeneca ADR 140,000 5,708 Barr Laboratories * 135,000 8,842 Biovail *!! 315,000 14,824 Eli Lilly !! 200,000 13,794 Forest Labs *!! 400,000 21,900 Indevus Pharmaceuticals * 450,000 2,808 IVAX * 50,000 893 Johnson & Johnson 190,000 9,823 Noven Pharmaceuticals * 300,000 3,072 Pfizer 1,200,000 40,980 Salix Pharmaceuticals * 500,000 5,245 Schering-Plough 255,000 4,743 Teva Pharmaceutical ADR !! 290,000 16,510 Wyeth !! 550,000 $ 25,052 211,233 Total Pharmaceuticals 221,382 PRODUCTS & DEVICES 7.3% Implants 7.3% Advanced Neuromodulation Systems * 125,000 6,471 Aspect Medical Systems * 425,000 3,137 Baxter International 50,000 1,300 Biomet 90,000 2,579 Boston Scientific * 375,000 22,912 C. R. Bard 105,000 7,488 CTI Molecular Imaging * 25,000 473 EPIX Medical * 276,200 3,908 Fischer Imaging *! 590,000 2,915 Guidant !! 25,000 1,110 Medtronic 50,000 2,399 St. Jude Medical * 115,000 6,612 Stryker 50,000 3,468 Total Products & Devices 64,772 SERVICES 21.6% Distribution 5.5% AmerisourceBergen !! 80,000 5,548 Cardinal Health !! 195,000 12,538 Omnicare !! 925,000 31,256 49,342 Other Services 1.3% Laboratory Corporation of America * 375,000 11,306 11,306 Payors 13.1% Anthem *!! 610,000 47,061 UnitedHealth Group 955,000 47,989 Wellpoint Health Networks * 255,000 21,497 116,547 Providers 1.7% Davita * 125,000 3,348 HCA 200,000 6,408 Triad Hospitals * 225,000 $ 5,584 15,340 Total Services 192,535 Total Miscellaneous Common Stocks 4.0% 36,060 Total Common Stocks and Warrants (Cost $745,864) 886,951 Preferred Stocks 0.2% Advanced Medicine, Series D *+(misc. symbol) 264,454 2,380 Total Preferred Stocks (Cost $2,380) 2,380 Convertible Preferred Stocks 0.2% Control Delivery Systems, 8.00%, Series A *+(misc. symbol) 37,216 1,500 Total Convertible Preferred Stocks (Cost $2,000) 1,500 Options Written (1.8%) Abbott Labs, Call, 11/22/2003 @ $47.50 * (75,000) (80) Abgenix, Call, 7/19/2003 @ $12.50 * (50,000) (9) Allergan Call, 7/19/2003 @ $80.00 * (50,000) (50) Put, 10/18/2003 @ $85.00 * (25,000) (58) AmerisourceBergen Call 8/16/2003 @ $55.00 * (25,000) (366) 8/16/2003 @ $60.00 * (55,000) (547) Amgen Call 10/18/2003 @ $65.00 * (125,000) (600) 7/19/2003 @ $60.00 * (200,000) (1,231) 7/19/2003 @ $65.00 * (150,000) (304) Put 7/19/2003 @ $60.00 * (25,000) (6) 7/19/2003 @ $65.00 * (50,000) (52) Amylin Pharmaceuticals, Put, 10/18/2003 @ $25.00 * (40,000) (192) Anthem Call, 9/20/2003 @ $70.00 * (15,000) (135) Put, 9/20/2003 @ $70.00 * (10,000) (15) Baxter International, Put, 1/17/2004 @ $25.00 * (50,000) (106) Biogen Call, 10/18/2003 @ $40.00 * (75,000) $ (210) Put, 10/18/2003 @ $40.00 * (25,000) (116) Biovail, Call, 7/19/2003 @ $50.00 * (50,000) (34) Boston Scientific Put 11/22/2003 @ $65.00 * (50,000) (382) 8/16/2003 @ $65.00 * (25,000) (135) Bristol-Myers Squibb Put 1/17/2004 @ $25.00 * (40,000) (60) 1/17/2004 @ $27.50 * (10,000) (27) 1/17/2004 @ $30.00 * (85,000) (374) Cardinal Health Call 8/16/2003 @ $65.00 * (25,000) (70) 9/20/2003 @ $60.00 * (30,000) (197) 9/20/2003 @ $70.00 * (75,000) (110) Cephalon Put 1/17/2004 @ $40.00 * (25,000) (136) 11/22/2003 @ $40.00 * (25,000) (113) Eli Lilly Call 10/18/2003 @ $75.00 * (25,000) (44) 7/19/2003 @ $55.00 * (50,400) (708) 7/19/2003 @ $60.00 * (25,000) (229) 7/19/2003 @ $65.00 * (50,000) (222) 7/19/2003 @ $70.00 * (25,000) (27) Forest Laboratories Call 11/22/2003 @ $55.00 * (50,000) (240) 11/22/2003 @ $60.00 * (25,000) (64) 8/16/2003 @ $57.50 * (25,000) (39) 8/16/2003 @ $60.00 * (25,000) (21) Put 11/22/2003 @ $50.00 * (10,000) (29) 8/16/2003 @ $50.00 * (10,000) (12) Genentech Call 7/19/2003 @ $75.00 * (25,000) $ (44) 7/19/2003 @ $80.00 * (100,000) (57) Put 1/17/2004 @ $55.00 * (100,000) (262) 1/17/2004 @ $60.00 * (50,000) (193) 1/17/2004 @ $65.00 * (50,000) (275) 7/19/2003 @ $70.00 * (15,000) (30) Gilead Sciences Call 7/19/2003 @ $55.00 * (25,000) (61) 7/19/2003 @ $60.00 * (25,000) (14) 8/16/2003 @ $45.00 * (50,000) (575) Put 7/19/2003 @ $50.00 * (10,000) (6) 8/16/2003 @ $50.00 * (20,000) (34) Guidant Put 1/17/2004 @ $40.00 * (25,000) (65) 1/17/2004 @ $45.00 * (60,000) (282) Call 11/22/2003 @ $35.00 * (25,000) (46) 8/16/2003 @ $35.00 * (50,000) (42) IDEC Pharmaceuticals Call 10/18/2003 @ $40.00 * (50,000) (69) 7/19/2003 @ $35.00 * (25,000) (29) 7/19/2003 @ $40.00 * (100,000) (32) 8/16/2003 @ $40.00 * (100,000) (70) Put 10/18/2003 @ $35.00 * (25,000) (92) 7/19/2003 @ $40.00 * (50,000) (320) Imclone Systems Put, 8/16/2003 @ $30.00 * (25,000) (65) Call, 8/16/2003 @ $22.50 * (25,000) (244) Invitrogen, Put, 11/22/2003 @ $40.00 * (25,000) (121) Medicines Company, Call, 7/19/2003 @ $20.00 * (50,000) (51) Medimmune Call 12/20/2003 @ $42.50 * (25,000) $ (42) 7/19/2003 @ $35.00 * (25,000) (54) 9/20/2003 @ $37.50 * (300,000) (682) 9/20/2003 @ $40.00 * (125,000) (159) Put 7/19/2003 @ $35.00 * (25,000) (21) 9/20/2003 @ $35.00 * (25,000) (57) Merck, Put, 1/17/2004 @ $55.00 * (15,000) (36) Millennium Pharmaceuticals, Put, 11/22/2003 @ $17.50 * (25,000) (95) Neurocrine Biosciences Call 11/22/2003 @ $60.00 * (25,000) (46) 8/16/2003 @ $50.00 * (75,000) (231) 8/16/2003 @ $60.00 * (25,000) (11) Put, 8/16/2003 @ $50.00 * (15,000) (43) Omnicare, Call, 9/20/2003 @ $35.00 * (50,000) (53) Teva Pharmaceutical, Call, 9/20/2003 @ $45.00 * (50,000) (620) Trimeris Call 10/18/2003 @ $50.00 * (100,000) (240) 10/18/2003 @ $55.00 * (80,000) (84) 7/19/2003 @ $45.00 * (30,000) (70) Universal Health Services, Put, 10/18/2003 @ $45.00 * (100,000) (625) Waters Corporation, Call, 8/16/2003 @ $25.00 * (50,000) (222) Wyeth Call 10/18/2003 @ $40.00 * (200,000) (1,330) 7/19/2003 @ $40.00 * (100,000) (555) Put, 10/18/2003 @ $45.00 * (25,000) (74) Total Options Written (Cost $(11,535)) (15,779) Short-Term Investments 2.6% Money Market Funds 2.6% T. Rowe Price Reserve Investment Fund, 1.16% # 22,800,818 22,801 Total Short-Term Investments (Cost $22,801) 22,801 Value - -------------------------------------------------------------------------------- In thousands Total Investments in Securities 100.6% of Net Assets (Cost $761,510) $ 897,853 Other Assets Less Liabilities (5,191) NET ASSETS $ 892,662 --------------- Net Assets Consist of: Undistributed net investment income (loss) $ (2,262) Undistributed net realized gain (loss) (125,178) Net unrealized gain (loss) 136,343 Paid-in-capital applicable to 49,778,831 shares of $0.0001 par value capital stock outstanding; 1,000,000,000 shares authorized 883,759 NET ASSETS $ 892,662 --------------- NET ASSET VALUE PER SHARE $ 17.93 --------------- # Seven-day yield * Non-income producing !! All or a portion of this security is pledged to cover written call options at June 30, 2003 ! Affiliated company - See Note 2. + Security contains restrictions as to public resale pursuant to the Securities Act of 1933 and related rules - total of such securities at period-end amounts to $3,880,000 and represents 0.4% of net assets (misc. symbol) Security valued by the Fund's Board of Directors ADR American Depository Receipts CHF Swiss franc EUR Euro JPY Japanese yen The accompanying notes are an integral part of these financial statements. T. Rowe Price Health Sciences Fund - -------------------------------------------------------------------------------- Certified Financials (Unaudited) Statement of Operations - -------------------------------------------------------------------------------- In thousands 6 Months Ended 6/30/03 Investment Income (Loss) Income Dividend $ 1,429 Income distributions from mutual funds 128 Total income 1,557 Expenses Investment management 2,464 Shareholder servicing 1,180 Custody and accounting 96 Prospectus and shareholder reports 85 Registration 9 Legal and audit 8 Directors 6 Total expenses 3,848 Expenses paid indirectly (29) Net expenses 3,819 Net investment income (loss) (2,262) Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities (36,506) Written options 1,720 Foreign currency transactions (29) Net realized gain (loss) (34,815) Change in net unrealized gain (loss) Securities 203,200 Written options (3,867) Other assets and liabilities denominated in foreign currencies (1) Change in net unrealized gain (loss) 199,332 Net realized and unrealized gain (loss) 164,517 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 162,255 ---------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Health Sciences Fund - -------------------------------------------------------------------------------- Certified Financials (Unaudited) Statement of Changes in Net Assets - -------------------------------------------------------------------------------- In thousands 6 Months Year Ended Ended 6/30/03 12/31/02 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ (2,262) $ (5,066) Net realized gain (loss) (34,815) (79,012) Change in net unrealized gain (loss) 199,332 (189,723) Increase (decrease) in net assets from operations 162,255 (273,801) Capital share transactions * Shares sold 115,354 222,520 Shares redeemed (62,903) (231,550) Increase (decrease) in net assets from capital share transactions 52,451 (9,030) Net Assets Increase (decrease) during period 214,706 (282,831) Beginning of period 677,956 960,787 End of period $ 892,662 $ 677,956 ------------------------------------- *Share information Shares sold 7,120 13,063 Shares redeemed (4,064) (14,185) Increase (decrease) in shares outstanding 3,056 (1,122) The accompanying notes are an integral part of these financial statements. T. Rowe Price Health Sciences Fund - -------------------------------------------------------------------------------- Certified Financials (Unaudited) June 30, 2003 Notes to Financial Statements - -------------------------------------------------------------------------------- NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES T. Rowe Price Health Sciences Fund, Inc. (the fund) is registered under the Investment Company Act of 1940 (the 1940 Act) as a diversified, open-end management investment company and commenced operations on December 29, 1995. The fund seeks long-term capital appreciation. The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. Valuation Investments are valued at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price, or official closing price for certain markets, at the time the valuations are made. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and ask prices for domestic securities and the last quoted sale price for international securities. Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Purchased and written options are valued at the mean of the closing bid and ask prices. Other investments and those for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by or under the supervision of the officers of the fund, as authorized by the Board of Directors. Most foreign markets close before the NYSE. Developments that could affect the values of securities that occur between the close of a foreign market and the close of the NYSE normally will not be reflected in security valuations. However, if such developments are so significant that they will, in the judgment of the officers of the fund, clearly and materially affect the value of securities, the previous closing prices may be adjusted to reflect the fair value of the securities as of the close of the NYSE, as determined in good faith by or under the supervision of the officers of the fund, as authorized by the Board of Directors. Currency Translation Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and ask prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of such gains and losses. Expenses Paid Indirectly Certain security trades are directed to brokers who have agreed to rebate a portion of the related commission to the fund to pay fund expenses. Additionally, credits earned on temporarily uninvested cash balances at the custodian are used to reduce the fund's custody charges. Total expenses in the accompanying statement of operations are presented before reduction for rebates and credits, which totaled $29,000 and $0, respectively, for the six months ended June 30, 2003. 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. NOTE 2 - INVESTMENT TRANSACTIONS Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks or enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund's prospectus and Statement of Additional Information. Options Call and put options give the holder the right to purchase or sell, respectively, a security at a specified price on a certain date. Risks arise from possible illiquidity of the options market and from movements in security values. Options are reflected in the accompanying Statement of Net Assets at market value. Transactions in options written and related premiums received during the six months ended June 30, 2003, were as follows: - -------------------------------------------------------------------------------- Number of Contracts Premiums Outstanding at beginning of period 30,000 $ 5,107,000 Written 116,000 26,419,000 Exercised -- (41,000) Expired (14,000) (1,424,000) Closed (88,000) (18,526,000) Outstanding at end of period 44,000 $ 11,535,000 Affiliated Companies The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities. At June 30, 2003, the value of affiliated companies totaled $2,915,000, representing 0.3% of the value of the fund's investments in securities. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $220,588,000 and $174,032,000, respectively, for the six months ended June 30, 2003. NOTE 3 - FEDERAL INCOME TAXES No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Temporary differences are not adjusted. The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax-basis balances have not been determined as of June 30, 2003. For tax purposes, the fund has elected to treat net capital losses realized between November 1 and December 31 of each year as occurring on the first day of the following tax year; consequently, $14,759,000 of realized losses recognized for financial reporting purposes in the year ended December 31, 2002 were recognized for tax purposes on January 1, 2003. Further, the fund intends to retain realized gains to the extent of available capital loss carryforwards. As of December 31, 2002, the fund had $75,224,000 of unused capital loss carryforwards, of which $9,998,000 expire in 2009, and $65,226,000 expire in 2010. At June 30, 2003, the cost of investments for federal income tax purposes was $761,510,000. Net unrealized gain aggregated $136,343,000 at period-end, of which $209,411,000 related to appreciated investments and $73,068,000 related to depreciated investments. NOTE 4 - RELATED PARTY TRANSACTIONS The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The investment management agreement between the fund and the manager provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.35% of the fund's average daily net assets, and the fund's pro-rata share of a group fee. The group fee is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120 billion. The fund's portion of the group fee is determined by the ratio of its net assets to those of the group. At June 30, 2003, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $489,000. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc. provides shareholder and administrative services in its capacity as the fund's transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. Expenses incurred pursuant to these service agreements totaled $841,000 for the six months ended June 30, 2003, of which $170,000 was payable at period-end. Additionally, the fund is one of several mutual funds in which certain college savings plans managed by Price Associates may invest. As approved by the fund's Board of Directors, shareholder servicing costs associated with each college savings plan are borne by the fund in proportion to the average daily value of its shares owned by the college savings plan. For the six months ended June 30, 2003, the fund was charged $19,000 for shareholder servicing costs related to the college savings plans, of which $15,000 was for services provided by Price and $5,000 was payable at period-end. At June 30, 2003, approximately 0.7% of the outstanding shares of the fund were held by college savings plans. The fund may invest in the T. Rowe Price Reserve Investment Fund and T. Rowe Price Government Reserve Investment Fund (collectively, the Reserve Funds), open-end management investment companies managed by Price Associates. The Reserve Funds are offered as cash management options only to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available to the public. The Reserve Funds pay no investment management fees. Distributions from the Reserve Funds to the fund for the six months ended June 30, 2003, totaled $128,000. Item 2. Code of Ethics. Not required at this time. Item 3. Audit Committee Financial Expert. Not required at this time. Item 4. Principal Accountant Fees and Services. Not required at this time. Item 5. Audit Committee of Listed Registrants. Not required at this time. Item 6. [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. [Reserved] Item 9. Controls and Procedures (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a)(1) Not required at this time. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price Health Sciences Fund, Inc. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date August 13, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date August 13, 2003 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date August 12, 2003 EX-99.CERT 2 ex-99cert.txt 302 CERTIFICATIONS Item 10(a)(2). CERTIFICATIONS I, James S. Riepe, certify that: 1. I have reviewed this report on Form N-CSR of T. Rowe Price Health Sciences Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 13, 2003 /s/ James S. Riepe James S. Riepe Principal Executive Officer CERTIFICATIONS I, Joseph A. Carrier, certify that: 1. I have reviewed this report on Form N-CSR of T. Rowe Price Health Sciences Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 12, 2003 /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer EX-99.906 4 ex-99_906cert.txt 906 CERTIFICATIONS Item 10(b). CERTIFICATION UNDER SECTION 906 OF SARBANES-OXLEY ACT OF 2002 Name of Issuer: T. Rowe Price Health Sciences Fund In connection with the Report on Form N-CSR for the above named issuer, the undersigned hereby certifies, to the best of his knowledge, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: August 13, 2003 /s/ James S. Riepe James S. Riepe Principal Executive Officer Date: August 12, 2003 /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----