Global Technology Fund Global Technology Fund I Class

Transcription

1 SEMIaNNual REPORT June 30, 2017 PRGTX PGTIX T. Rowe Price Global Technology Fund Global Technology Fund I Class The fund invests in foreign and U.S. companies that are primarily engaged in the technology sector.

2 HIGHLIGHTS Technology stocks recorded solid gains in the first half of 2017 and outpaced all other global market sectors. The Global Technology Fund performed better still and easily beat the returns of its peer group and benchmark in the period. Our focus on the best-positioned firms in rapidly growing markets helped our results, as did our willingness to move into and out of these companies as their valuations undershot or overshot our target. Valuations have grown a bit extended in some areas, leading us to expect muted returns in the second half of the year. The views and opinions in this report were current as of June 30, They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of the fund s future investment intent. The report is certified under the Sarbanes-Oxley Act, which requires mutual funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in all material respects. REPORTS ON THE WEB Sign up for our Program, and you can begin to receive updated fund reports and prospectuses online rather than through the mail. Log in to your account at troweprice.com for more information.

3 Manager s Letter Fellow Shareholders Global technology stocks picked up speed again in the first half of 2017 as many leading companies continued to record impressive gains in revenues and earnings. Technology stocks outpaced the broader market, and I am pleased to report that our fund did better still, handily surpassing the gains of its benchmark and peer group. As tech stocks have built on their impressive gains in recent years, however, compelling valuation opportunities have grown scarcer. In response, we have broadened our search somewhat, and we are confident that our ability to search globally will continue to serve our shareholders. PERFORMANCE COMPARISON The Global Technology Fund returned 28.14% in the six months ended June 30, The fund easily outpaced the MSCI All Country World Index Information Technology and the Lipper Global Science/ Performance Comparison Six-Month Period Ended 6/30/17 Total Return Global Technology Fund 28.14% Global Technology Fund I Class MSCI All Country World Index Information Technology Lipper Global Science/Technology Funds Index Technology Funds Index. (Performance for the I Class will vary due to its differing fee structure.) The fund continued to rank first among its peers over the longer-term time periods ended June 30, (Based on cumulative total return, Lipper ranked the Global Technology Fund 13 of 37, 1 of 36, 1 of 33, and 1 of 15 global science/technology funds for the 1-, 3-, 5-, and 10-year periods ended June 30, 2017, respectively. Past performance cannot guarantee future results.) 1

4 MARKET ENVIRONMENT Global markets recorded good gains in the first half of Better economic conditions in Europe helped boost sentiment, as did continued strong growth in China and other leading emerging markets. Hopes for an improved pace of growth in the U.S. probably also deserved some of the credit, although expectations moderated for new stimulus under the Trump administration as major initiatives such as health care reform remained gridlocked in Washington. The global monetary environment also proved supportive. The Federal Reserve raised interest rates two times in the period, but policymakers stressed that the pace of increases would remain gradual and subject to improved economic data. Meanwhile, the European Central Bank kept short-term rates near zero and continued its massive asset purchases in order to bring down Geographic Diversification Japan 1% Europe 6% Pacific ex Japan 18% Based on net assets as of 6/30/17. Other and Reserves 2% North America 73% long-term rates. The Bank of Japan took an even more forceful approach, continuing to adjust its asset purchases to anchor long-term rates at 0%. Corporate earnings growth also played a large role in driving the market s gains. In the U.S., the S&P 500 Index ended a streak of overall earnings declines and recorded a doubledigit earnings increase (on a year-over-year basis) in the first quarter for the first time since Stabilization in energy markets and continued demand from China helped boost results for many international companies. Global technology stocks outpaced the overall market. Within the MSCI technology benchmark, the small media segment performed best, but the heavily weighted Internet segment was also very strong, returning nearly 29%. IT services shares were laggards but still returned nearly 12%. The strong performance of technology stocks reflected the dominance of growth stocks over value shares in the period, marking a notable reversal to market dynamics in

5 PORTFOLIO REVIEW Software holdings represent a significant share of the portfolio and a large overweight relative to our MSCI benchmark as of June 30, 2017, 47% of the fund was invested in software versus roughly 19% for the index. While our overweight helped relative returns in the period, stock selection in software was an even more important factor. Two of our standout performers were Workday and Salesforce.com, both of which offer cloud-based enterprise software. Using a subscription-based model, the two firms continue to seize market share from competitors that provide systems that are installed on site, requiring expensive maintenance and upgrades. (Please refer to the fund s portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.) While cloud computing has been an investment theme in the fund for several years now, gaming software is a newer focus of ours. Revenues for video game makers are increasing as gamers get older and more affluent. Meanwhile, the transition to digital delivery of video games, along with the new market for digitally licensed content add-ons (such as expansion packs), is resulting in higher recurring revenues and profit margins. A new position in Activision Blizzard performed well on the back of the success of its Overwatch franchise, and we quickly harvested our gains and sold the position. We also took a new position in Nintendo (which we later eliminated) and added to our holding in Electronic Arts. We are modestly overweight in the Internet segment, but our stock selection here also helped our performance considerably. One of our top contributors was China s Alibaba Group Holding, a company that bears many similarities to Amazon.com. Like Amazon, Alibaba continues to see stellar growth in both its retail and Web-based computing businesses, and the firm is also developing a healthy advertising business. The world s leading Internet advertiser, Alphabet (the parent of Google), was another major contributor to results. Online travel agency Priceline and its Chinese counterpart Ctrip.com International also boosted returns as they continued to take share in the massive global hotel bookings market. We saw good results, as well, from our semiconductor holdings, where our allocation is more in line with the benchmark s. Semiconductor stocks tend to move cyclically, and the group benefited from renewed strength in the global economy. Broadcom, a maker of both analog and digital semiconductors, performed well after easily beating earnings estimates. Microchip Technology, which makes microcontrollers used 3

6 Industry Diversification Telecom Services 1% IT Services 4% Media 9% Semiconductors 14% Based on net assets as of 6/30/17. Other and Reserves 3% Software 47% Internet 22% in a range of devices, also performed well on the back of strong earnings and synergies resulting from its acquisition last year of rival Atmel. Microchip Technology should play a large role in the development of the Internet of things or the growing connectivity of devices such as household appliances and monitoring devices another newer focus of our strategy. We eliminated our position in Qualcomm, which specializes in chips for mobile devices. The stock fell sharply early in the year following disappointing earnings guidance and a lawsuit filed against the company by Apple (which we also eliminated from the portfolio). As shown in the Industry Diversification exhibit, we also have a decent allocation to the media segment. Our overweight in the group helped our results in the first half of the year, but we saw mixed results from our holdings. Netflix performed well, as it continued to score impressive subscriber gains, particularly in foreign markets, and the company has enjoyed good results from its slate of original programming. Conversely, European cable operator Liberty Global lagged after the company missed earnings estimates. We think the company will eventually be able to better leverage its high-speed data network, however. We should add a special word about Tesla, which was one of our top absolute contributors for the first half of the year. In our last letter, we described our on-again, off-again relationship with the electric carmaker, whose tremendous potential is sometimes exceeded by an even more stupendous valuation. Tesla stock shot up in the spring on signs of strong demand for its upcoming Model 3 sedan, and we eliminated our position on the back of the impressive rally. We may work our way back once sentiment swings again, which seems likely. Indeed, CEO Elon Musk recently caused a swoon in the stock when he told a gathering of the nation s governors, I ve gone on the record several times that the stock price is higher than we have the right to deserve and that s for sure true based on where we are today. 4

7 OUTLOOK At the start of 2017, fast-growing technology shares seemed poised for a rally given the need for stock prices to catch up to rapidly improving fundamentals. As we explained in our January letter, speculation that the policies of the incoming Trump administration would favor old economy industrial businesses the stocks at the expense of technology firms had weighed on sentiment toward the sector late in We thought of leading these worries would prove misguided, as the shape technology of the Trump agenda remained uncertain, and certain policies pushed by the new administration would companies have actually benefit technology firms considerably. Indeed, come roaring the stocks of leading technology companies have come roaring back as investors have focused less on back as investors the political environment and more on the impressive have focused less fundamentals of these firms. on the political While the gains have been gratifying, valuations across the sector have increased considerably, making environment it more difficult to find compelling new investment and more on opportunities. Given the current valuation challenges, we have recently increased our investment in some the impressive software positions that have lagged in the sector s strong fundamentals of advance. We are also lengthening our time horizon, paying particular attention to companies that could see these firms. accelerating earnings in 2018 and, more importantly, could carry that momentum forward throughout 2019 and In addition, we continue to employ a nimble approach in the portfolio, trading into and out of favored names as sentiment swings and we perceive that valuations undershoot or overshoot our long-term estimate of a company s earnings potential. Our sense that valuation opportunities are currently somewhat limited, together with the substantial flows into the fund in recent years, have led us to determine that it is in the best interest of our current shareholders to limit additional inflows. As a result, we will be closing the fund to new investors on September 29, 2017, as described in the supplement to this report. Our existing shareholders will be able to add to their investment, however, and we are confident that the fund will continue to offer them opportunities in the years ahead. We still see considerable long-term potential in the stocks of leading companies, and we remain impressed by the ability of innovative firms to fundamentally change existing industries or to even create new ones. 5

8 This letter marks my fifth anniversary as manager of the fund. I am gratified by the fund s success over this period, which owes much to the collective efforts of the firm s industry-specific analysts in Baltimore, London, Tokyo, Hong Kong, and elsewhere. I look forward to reporting to you on the results of our team s search for opportunities in six months. Respectfully submitted, Joshua K. Spencer President of the fund and chairman of its Investment Advisory Committee July 20, 2017 The committee chairman has day-to-day responsibility for managing the portfolio and works with committee members in developing and executing the fund s investment program. 6

9 T. Rowe Price Global Technology Fund Supplement to Prospectus Dated May 1, 2017 In section 1, the information under Purchase and Sale of Fund Shares is supplemented as follows: Effective at the close of the New York Stock Exchange on Friday, September 29, 2017, the T. Rowe Price Global Technology Fund will be closed to new investors and new accounts, subject to certain exceptions. Investors who already hold shares of the fund at the close of business on Friday, September 29, 2017, will be permitted to continue to purchase additional shares. In section 3, the information under More Information About the Fund and Its Investment Risks is supplemented as follows: Subject to certain exceptions, the fund will be closed to new investors and will no longer accept new accounts, effective at the close of the New York Stock Exchange (normally 4 p.m. ET) on Friday, September 29, After September 29, 2017, purchases will be permitted for participants in an employer-sponsored retirement plan where the fund already serves as an investment option. Additional purchases will also be permitted for an investor who already holds fund shares in an account directly with T. Rowe Price; however, purchases will be limited to that account and the investor may not open another account in the fund. Additional purchases will generally be permitted if you already hold the fund through a financial intermediary; however, you should check with the financial intermediary to confirm your eligibility to continue purchasing shares of the fund. After September 29, 2017, new T. Rowe Price IRAs in the fund may be opened only through a direct rollover from an employer-sponsored retirement plan. If permitted by T. Rowe Price, the fund may also be purchased by new investors in intermediary wrap, asset allocation, and other advisory programs when the fund is an existing investment in the intermediary s program. Investors may convert from one share class of the fund to a different share class of the fund, provided the investor meets the eligibility criteria for the new share class. The fund s closure to new investor accounts will not restrict existing shareholders from redeeming shares of the fund. However, any shareholders who redeem all fund shares in their account after September 29, 2017, will not be permitted to reestablish the account and purchase shares until the fund is reopened to new investors. Transferring ownership to another party or changing an account registration may restrict the ability to purchase additional shares. The fund reserves the right, when in the judgment of T. Rowe Price it is not adverse to the fund s interests, to permit certain types of investors to open new accounts in the fund, to impose further restrictions, or to close the fund to any additional investments, all without prior notice. The date of this supplement is August 1, F /1/17

10 Risks of Investing in the Fund Funds that invest only in specific industries will experience greater volatility than funds investing in a broad range of industries. Technology stocks have historically experienced unusually wide price swings, both up and down. The potential for wide variation in performance reflects the special risks common to companies in the rapidly changing field of technology. For example, products or services that at first appear promising may not prove commercially successful and may become obsolete quickly. Earnings disappointments and intense competition for market share can result in sharp price declines. Glossary Lipper Global Science/Technology Funds Index: An index of returns of funds that invest in technology companies around the world for specified periods as tracked by Lipper Inc. MSCI All Country World Index Information Technology: An index that tracks information technology stocks in developed and emerging markets. S&P 500 Index: An unmanaged index that tracks the stocks of 500 primarily large-cap U.S. companies. Note: MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. 8

11 Portfolio Highlights TWENTY-FIVE LARGEST HOLDINGS Percent of Net Assets 6/30/17 Salesforce.com 14.4% Alphabet 8.5 Taiwan Semiconductor Manufacturing 4.8 Intuit 4.8 Electronic Arts 4.8 Liberty Global 4.7 Alibaba Group Holding 4.7 Workday 4.5 Ultimate Software Group 3.8 Microsoft 3.5 Netflix 3.2 Microchip Technology 2.9 Splunk 2.8 Amazon.com 2.8 Tencent Holdings 2.5 Ctrip.com International 2.5 Marvell Technology Group 2.5 Visa 2.2 Broadcom 1.8 Palo Alto Networks 1.4 Proofpoint 1.3 Microsemi 1.3 Ellie Mae 1.1 Amadeus IT 1.1 Priceline 1.0 Total 88.9% Note: The information shown does not reflect any exchange-traded funds (ETFs), cash reserves, or collateral for securities lending that may be held in the portfolio. 9

12 Portfolio Highlights MAJOR PORTFOLIO CHANGES Listed in descending order of size. Six Months Ended 6/30/17 Largest Purchases Salesforce.com Alphabet Electronic Arts Tencent Holdings Taiwan Semiconductor Manufacturing* Intuit* Microsoft* Ctrip.com International Netflix NetEase* Largest Sales Tesla** Alibaba Group Holding Salesforce.com Netflix Activision Blizzard*** ASML Holding** Crown Castle International** Amazon.com Broadcom Tencent Holdings 12 Months Ended 6/30/17 Largest Purchases Salesforce.com Alibaba Group Holding* Netflix* Electronic Arts* Alphabet Tesla** Ctrip.com International Tencent Holdings Amazon.com Taiwan Semiconductor Manufacturing* Largest Sales Tesla** NXP Semiconductors** Salesforce.com Alibaba Group Holding* Netflix* ASML Holding** Tencent Holdings Amazon.com Activision Blizzard** Workday * Position added. ** Position eliminated. ***Position added and eliminated. 10

13 Performance and Expenses Growth of $10,000 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. GLOBAL TECHNOLOGY FUND $50,000 42,000 34,000 26,000 18,000 10,000 As of 6/30/17 Global Technology Fund $43,019 MSCI All Country World Index Information Technology $23,607 Lipper Global Science/Technology Funds Index $26,468 6/07 6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 Note: Performance for the I Class will vary due to its differing fee structure. See returns table below. Average Annual Compound Total Return Since Inception Periods Ended 6/30/17 1 Year 5 Years 10 Years Inception Date Global Technology Fund 39.22% 24.96% 15.71% Global Technology Fund I Class 25.11% 11/29/16 Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end performance, please visit our website (troweprice.com) or contact a T. Rowe Price representative at or, for I Class shares, 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. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. When assessing performance, investors should consider both short- and long-term returns. 11

14 Expense Ratio Global Technology Fund 0.90% Global Technology Fund I Class 0.77 The expense ratio shown is as of the fund s fiscal year ended 12/31/16. This number may vary from the expense ratio shown elsewhere in this report because it is based on a different time period and, if applicable, includes acquired fund fees and expenses but does not include fee or expense waivers. Fund Expense Example As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees or sales loads, and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period. Please note that the fund has two share classes: The original share class (Investor Class) charges no distribution and service (12b-1) fee, and the I Class shares are also available to institutionally oriented clients and impose no 12b-1 or administrative fee payment. Each share class is presented separately in the table. Actual Expenses The first line of the following table (Actual) provides information about actual account values and expenses based on the fund s actual returns. You may use the information on this line, together with your account balance, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number on the first line under the heading Expenses Paid During Period to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The information on the second line of the table (Hypothetical) is based on hypothetical account values and expenses derived from the fund s actual expense ratio and an assumed 5% per year rate of return before expenses (not the fund s actual return). You may compare the ongoing costs of investing in the fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. 12

15 Fund Expense Example (continued) Note: T. Rowe Price charges an annual account service fee of $20, generally for accounts with less than $10,000. The fee is waived for any investor whose T. Rowe Price mutual fund accounts total $50,000 or more; accounts electing to receive electronic delivery of account statements, transaction confirmations, prospectuses, and shareholder reports; or accounts of an investor who is a T. Rowe Price Personal Services or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $250,000). This fee is not included in the accompanying table. If you are subject to the fee, keep it in mind when you are estimating the ongoing expenses of investing in the fund and when comparing the expenses of this fund with other funds. You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs, such as redemption fees or sales loads. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. To the extent a fund charges transaction costs, however, the total cost of owning that fund is higher. Global Technology Fund Expenses Paid Beginning Ending During Period* Account Value Account Value 1/1/17 to 1/1/17 6/30/17 6/30/17 Investor Class Actual $1, $1, $5.03 Hypothetical (assumes 5% return before expenses) 1, , I Class Actual 1, , Hypothetical (assumes 5% return before expenses) 1, , * Expenses are equal to the fund s annualized expense ratio for the 6-month period, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (181), and divided by the days in the year (365) to reflect the half-year period. The annualized expense ratio of the Investor Class was 0.89%, and the I Class was 0.76%. 13

16 Unaudited Financial Highlights For a share outstanding throughout each period Investor Class 6 Months Ended 6/30/17 Year Ended 12/31/16 12/31/15 12/31/14 12/31/13 12/31/12 NET ASSET VALUE Beginning of period $ $ $ $ $ $ 8.95 Investment activities Net investment income (loss) (1) (0.02) (0.07) (0.06) (0.07) (2) (0.01) Net realized and unrealized gain / loss Total from investment activities Distributions Net investment income (0.01) Net realized gain (1.25) (1.36) (3.29) (1.36) (0.56) Total distributions (1.25) (1.36) (3.29) (1.37) (0.56) NET ASSET VALUE End of period $ $ $ $ $ $ Ratios/Supplemental Data Total return (3) 28.14% 6.64% 21.06% 23.99% 39.92% 19.24% Ratio of total expenses to average net assets 0.89% (4) 0.90% 0.91% 0.91% 0.95% 0.97% Ratio of net investment income (loss) to average net assets (0.27)% (4) (0.49)% (0.47)% (0.49)% 0.04% (0.09)% Portfolio turnover rate 98.6% 170.8% 219.4% 228.6% 93.2% 182.4% Net assets, end of period (in millions) $ 4,888 $ 3,153 $ 2,718 $ 1,626 $ 984 $ 697 (1) Per share amounts calculated using average shares outstanding method. (2) Amounts round to less than $0.01 per share. (3) 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. Total return is not annualized for periods less than one year. (4) Annualized The accompanying notes are an integral part of these financial statements. 14

17 Unaudited Financial Highlights For a share outstanding throughout each period I Class NET ASSET VALUE 6 Months Ended 6/30/17 11/29/16 (1) Through 12/31/16 Beginning of period $ $ Investment activities Net investment income (2) 0.01 (3) Net realized and unrealized gain / loss 3.71 (0.34) (4) Total from investment activities 3.72 (0.34) Distributions Net realized gain (1.25) NET ASSET VALUE End of period $ $ Ratios/Supplemental Data Total return (5) 28.12% (2.35)% Ratio of total expenses to average net assets 0.76% (6) 0.77% (6) Ratio of net investment income to average net assets 0.12% (6) 0.09% (6) Portfolio turnover rate 98.6% 170.8% Net assets, end of period (in thousands) $ 77,245 $ 16,871 (1) Inception date. (2) Per share amounts calculated using average shares outstanding method. (3) Amounts round to less than $0.01 per share. (4) The amount presented is inconsistent with the fund's aggregate gains and losses because of the timing of sales and redemptions of fund shares in relation to fluctuating market values for the investment portfolio. (5) 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. Total return is not annualized for periods less than one year. (6) Annualized The accompanying notes are an integral part of these financial statements. 15

18 Unaudited June 30, 2017 Portfolio of Investments Shares $ Value (Cost and value in $000s) COMMON STOCKS 97.6% BUSINESS SERVICES 0.5% Miscellaneous Business Services 0.5% Costar Group 91,800 24,198 Total Business Services 24,198 HARDWARE 0.7% Enterprise Hardware 0.7% Delta Electronics (TWD) 5,897,000 32,259 Total Hardware 32,259 INTERNET 22.1% Internet Media/ Advertising 11.0% Alphabet, Class C (1) 465, ,560 Tencent Holdings (HKD) 3,499, ,530 Internet Retail 7.5% 548,090 Alibaba Group Holding, ADR (1) 1,650, ,569 Amazon.com (1) 143, ,452 Flipkart Private Limited, Acquisition Date: 3/19/15 Cost $402 (1)(2)(3) 3, Internet Services 3.6% 371,332 Ctrip.com International, ADR (1) 2,322, ,091 Priceline (1) 27,810 52, ,110 Total Internet 1,096,532 IT SERVICES 3.8% IT Services 3.3% Amadeus IT, A Shares (EUR) 884,733 52,886 16

19 (Cost and value in $000s) Shares $ Value Visa, Class A 1,160, , ,708 Processors 0.5% Paylocity Holding (1) 558,200 25,219 25,219 Total IT Services 186,927 MEDIA 8.9% Cable/Satellite 4.7% Liberty Global, Series C (1) 7,468, , ,870 Gaming 1.0% NetEase, ADR 171,831 51,658 51,658 Media & Entertainment 3.2% Netflix (1) 1,067, , ,435 Total Media 443,963 SEMICONDUCTORS 13.7% Digital Semiconductors 12.0% Broadcom 383,000 89,258 Marvell Technology Group 7,557, ,843 Microchip Technology 1,890, ,938 Taiwan Semiconductor Manufacturing (TWD) 34,853, , ,162 Semiconductor Capital Equipment 1.7% KLA-Tencor 206,915 18,935 Microsemi (1) 1,349,300 63,147 82,082 Total Semiconductors 680,244 17

20 (Cost and value in $000s) SOFTWARE 46.6% Shares $ Value Applications Software 23.7% athenahealth (1) 97,000 13,633 Atlassian, Class A (1) 588,162 20,691 Salesforce.com (1) 8,283, ,394 Ultimate Software Group (1) 895, ,006 Workday (1) 2,290, ,162 Zendesk (1) 458,500 12,737 Consumer Software 9.5% 18 1,174,623 Electronic Arts (1) 2,235, ,356 Intuit 1,789, ,690 Enterprise Software 5.4% 474,046 Cloudera (1) 34, Cloudera, Lock-up Shares, Acquisition Date: 2/5/14 Cost: $999 (1)(2) 68,617 1,044 Coupa Software (1) 415,244 12,034 Ellie Mae (1) 487,015 53,528 Guidewire Software (1) 271,200 18,634 Splunk (1) 2,457, ,830 Tableau Software, Class A (1) 681,053 41,728 Infrastructure Software 3.6% 267,351 Microsoft 2,497, ,153 MuleSoft, Class A (1) 187,707 4,681 Internet & Security Software 1.3% 176,834 Proofpoint (1) 753,370 65,415 Software & Services 0.0% 65,415 Dropbox, Class B, Acquisition Date: 5/1/12, Cost: $233 (1)(2)(3) 25,

21 (Cost and value in $000s) Shares $ Value Systems Software 2.3% Palo Alto Networks (1) 527,101 70,532 Symantec 886,900 25,055 Twilio, Class A (1) 699,184 20,353 Technical Software 0.8% 115,940 Cadence Design Systems (1) 1,218,002 40,791 40,791 Total Software 2,315,210 TELECOM EQUIPMENT 0.6% Wireline Equipment 0.6% Hexagon, B Shares (SEK) 667,412 31,709 Total Telecom Equipment 31,709 TELECOM SERVICES 0.7% Rest of the World Telecom 0.7% Softbank (JPY) 437,900 35,597 Total Telecom Services 35,597 Total Common Stocks (Cost $4,270,873) 4,846,639 PREFERRED STOCKS 0.1% INTERNET 0.1% Internet Retail 0.1% Flipkart, Series A, Acquisition Date: 3/19/15 Cost $137 (1)(2)(3) 1, Flipkart, Series C, Acquisition Date: 3/19/15 Cost $242 (1)(2)(3) 2, Flipkart, Series E, Acquisition Date: 3/19/15 Cost $451 (1)(2)(3) 3,

22 (Cost and value in $000s) Shares $ Value Flipkart, Series G, Acquisition Date: 12/17/14 Cost $2,474 (1)(2)(3) 20,659 2,474 Total Internet 3,116 Total Preferred Stocks (Cost $3,304) 3,116 CONVERTIBLE PREFERRED STOCKS 0.2% INTERNET 0.1% Internet Services 0.1% Xiaoju Kuaizhi, Class A-17, Acquisition Date: 10/19/15 Cost $2,272 (1)(2)(3) 82,853 4,220 Total Internet 4,220 SOFTWARE 0.1% Applications Software 0.0% Plex Systems, Series B, Acquisition Date: 6/9/14 Cost $1,264 (1)(2)(3) 551,025 1,207 Enterprise Software 0.0% 1,207 Domo, Series D, Acquisition Date: 1/31/14, Cost: $929 (1)(2)(3) 224,843 1,895 Infrastructure Software 0.0% 1,895 MongoDB, Series F, Acquisition: 10/2/13, Cost $923 (1)(2)(3) 55, Software & Services 0.1% Dropbox, Series A, Acquisition Date: 5/1/12 Cost: $289 (1)(2)(3) 31, Dropbox, Series A-1, Acquisition Date: 5/1/12 Cost: $1,419 (1)(2)(3) 156,830 1,278 Evernote, Series 4, Acquisition Date: 5/2/12 Cost: $1,338 (1)(2)(3) 111,

23 (Cost and value in $000s) Shares $ Value Evernote, Series 5, Acquisition Date: 11/8/13 Cost: $866 (1)(2)(3) 66, ,683 Total Software 6,293 Total Convertible Preferred Stocks (Cost $9,301) 10,513 SHORT-TERM INVESTMENTS 3.5% Money Market Funds 3.5% T. Rowe Price Treasury Reserve Fund, 0.99% (4)(5) 174,440, ,440 Total Short-Term Investments (Cost $174,440) 174,440 Total Investments in Securities 101.4% of Net Assets (Cost $4,457,918) $ 5,034,708 Shares are denominated in U.S. dollars unless otherwise noted. (1) Non-income producing (2) Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at period-end amounts to $15,194 and represents 0.3% of net assets. (3) Level 3 in fair value hierarchy. See Note 2. (4) Seven-day yield (5) Affiliated Company ADR American Depository Receipts EUR Euro HKD Hong Kong Dollar JPY Japanese Yen SEK Swedish Krona TWD Taiwan Dollar 21

24 Affiliated Companies ($000s) 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, or a company which is under common ownership or control. The following securities were considered affiliated companies for all or some portion of the six months ended June 30, Purchase and sales cost and investment income reflect all activity for the period then ended. Purchase Cost Sales Cost Investment Income Value 6/30/17 Value 12/31/16 Affiliate T. Rowe Price Treasury Reserve Fund $ 1,112 $ 174,440 $ 20,197 Totals $ 1,112 $ 174,440 $ 20,197 Purchase and sale information not shown for cash management funds. Amounts reflected on the accompanying financial statements include the following amounts related to affiliated companies: Investment in securities, at cost $ 174,440 Dividend income 1,112 Interest income Investment income $ 1,112 Realized gain (loss) on securities $ Capital gain distributions from mutual funds $ The accompanying notes are an integral part of these financial statements. 22

25 Unaudited June 30, 2017 Statement of Assets and Liabilities ($000s, except shares and per share amounts) Assets Investments in securities, at value (cost $4,457,918) $ 5,034,708 Receivable for shares sold 19,852 Dividends receivable 6,870 Foreign currency (cost $1,366) 1,366 Other assets 196 Total assets 5,062,992 Liabilities Payable for investment securities purchased 88,156 Payable for shares redeemed 5,646 Investment management fees payable 3,518 Due to affiliates 153 Payable to directors 3 Other liabilities 10 Total liabilities 97,486 NET ASSETS $ 4,965,506 Net Assets Consist of: Accumulated net investment loss $ (5,416) Accumulated undistributed net realized gain 514,456 Net unrealized gain 576,767 Paid-in capital applicable to 293,151,860 shares of $ par value capital stock outstanding; 1,000,000,000 shares authorized 3,879,699 NET ASSETS $ 4,965,506 NET ASSET VALUE PER SHARE Investor Class ($4,888,261,386/ 288,595,285 shares outstanding) $ I Class ($77,245,006/ 4,556, 575 shares outstanding) $ The accompanying notes are an integral part of these financial statements. 23

26 Unaudited Statement of Operations ($000s) 6 Months Ended 6/30/17 Investment Income (Loss) Dividend income (net of foreign taxes of $1,985) $ 12,894 Expenses Investment management 15,169 Shareholder servicing Investor Class $ 2,662 I Class 1 2,663 Prospectus and shareholder reports Investor Class 88 Custody and accounting 127 Registration 185 Legal and audit 22 Directors 7 Miscellaneous 49 Total expenses 18,310 Net investment loss (5,416) Realized and Unrealized Gain / Loss Net realized gain (loss) Securities 497,424 Foreign currency transactions (477) Net realized gain 496,947 Change in net unrealized gain / loss Securities 448,594 Other assets and liabilities denominated in foreign currencies (20) Change in net unrealized gain / loss 448,574 Net realized and unrealized gain / loss 945,521 INCREASE IN NET ASSETS FROM OPERATIONS $ 940,105 The accompanying notes are an integral part of these financial statements. 24

27 Unaudited Statement of Changes in Net Assets ($000s) Increase (Decrease) in Net Assets 6 Months Ended 6/30/17 Year Ended 12/31/16 Operations Net investment loss $ (5,416) $ (14,037) Net realized gain 496, ,913 Change in net unrealized gain / loss 448,574 14,011 Increase in net assets from operations 940, ,887 Distributions to shareholders Net realized gain Investor Class (274,996) I Class (712) Decrease in net assets from distributions (275,708) Capital share transactions* Shares sold Investor Class 1,277,468 1,358,857 I Class 56,666 17,899 Distributions reinvested Investor Class 254,247 I Class 3 Shares redeemed Investor Class (475,880) (1,081,684) I Class (2,706) (77) Increase in net assets from capital share transactions 855, ,245 Net Assets Increase during period 1,795, ,424 Beginning of period 3,169,853 2,718,429 End of period $ 4,965,506 $ 3,169,853 25

28 Unaudited Statement of Changes in Net Assets ($000s) 6 Months Ended 6/30/17 Year Ended 12/31/16 Undistributed (accumulated) net investment income (loss) (5,416) *Share information Shares sold Investor Class 80, ,899 I Class 3,445 1,281 Distributions reinvested Investor Class 19,087 Shares redeemed Investor Class (30,263) (82,079) I Class (164) (5) Increase in shares outstanding 53,421 39,183 The accompanying notes are an integral part of these financial statements. 26

29 Unaudited June 30, 2017 Notes to Financial Statements T. Rowe Price Global Technology Fund, Inc. (the fund), is registered under the Investment Company Act of 1940 (the 1940 Act) as a diversified, openend management investment company. The fund seeks to provide long-term capital growth. The fund has two classes of shares: the Global Technology Fund (Investor Class) and the Global Technology Fund I Class (I Class). I Class shares generally are available only to investors meeting a $1,000,000 minimum investment or certain other criteria. Each class has exclusive voting rights on matters related solely to that class; separate voting rights on matters that relate to both classes; and, in all other respects, the same rights and obligations as the other class. Note 1 - Significant Accounting Policies Basis of Preparation The fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 (ASC 946). The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), including, but not limited to, ASC 946. GAAP requires the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Income tax-related interest and penalties, if incurred, would be recorded as income tax expense. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Income distributions are declared by each class annually. Distributions to shareholders are recorded on the ex-dividend date. A capital gain distribution may also be declared and paid by the fund annually. 27

30 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 asked 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 security gains and losses. Class Accounting Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to both classes, investment income, and realized and unrealized gains and losses are allocated to the classes based upon the relative daily net assets of each class. Rebates Subject to best execution, the fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the fund in cash. Commission rebates are reflected as realized gain on securities in the accompanying financial statements and totaled $68,000 for the six months ended June 30, New Accounting Guidance In October 2016, the Securities and Exchange Commission (SEC) issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements related to periods ending on or after August 1, 2017; adoption will have no effect on the fund s net assets or results of operations. Note 2 - VALUATION The fund s financial instruments are valued and each class s net asset value (NAV) per share is computed at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day the NYSE is open for business. However, the NAV per share may be calculated at a time other than the normal close of the NYSE if trading on the NYSE is restricted, if the NYSE closes earlier, or as may be permitted by the SEC. 28

31 Fair Value The fund s financial instruments are reported at fair value, which GAAP defines as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The T. Rowe Price Valuation Committee (the Valuation Committee) is an internal committee that has been delegated certain responsibilities by the fund s Board of Directors (the Board) to ensure that financial instruments are appropriately priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight by the Board, the Valuation Committee develops and oversees pricing-related policies and procedures and approves all fair value determinations. Specifically, the Valuation Committee establishes procedures to value securities; determines pricing techniques, sources, and persons eligible to effect fair value pricing actions; oversees the selection, services, and performance of pricing vendors; oversees valuation-related business continuity practices; and provides guidance on internal controls and valuation-related matters. The Valuation Committee reports to the Board and has representation from legal, portfolio management and trading, operations, risk management, and the fund s treasurer. Various valuation techniques and inputs are used to determine the fair value of financial instruments. GAAP establishes the following fair value hierarchy that categorizes the inputs used to measure fair value: Level 1 quoted prices (unadjusted) in active markets for identical financial instruments that the fund can access at the reporting date Level 2 inputs other than Level 1 quoted prices that are observable, either directly or indirectly (including, but not limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and credit spreads) Level 3 unobservable inputs Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect the assumptions that market participants would use to price the financial instrument. Unobservable inputs are those for which market data are not available and are developed using the best information available about the assumptions that market participants would use to price the financial instrument. GAAP requires 29

32 valuation techniques to maximize the use of relevant observable inputs and minimize the use of unobservable inputs. When multiple inputs are used to derive fair value, the financial instrument is assigned to the level within the fair value hierarchy based on the lowest-level input that is significant to the fair value of the financial instrument. Input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level but rather the degree of judgment used in determining those values. Valuation Techniques Equity securities listed or regularly traded on a securities exchange or in the over-the-counter (OTC) market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made. OTC Bulletin Board securities are valued at the mean of the closing bid and asked prices. 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 closing bid and asked prices for domestic securities and the last quoted sale or closing price for international securities. For valuation purposes, the last quoted prices of non-u.s. equity securities may be adjusted to reflect the fair value of such securities at the close of the NYSE. If the fund determines that developments between the close of a foreign market and the close of the NYSE will affect the value of some or all of its portfolio securities, the fund will adjust the previous quoted prices to reflect what it believes to be the fair value of the securities as of the close of the NYSE. In deciding whether it is necessary to adjust quoted prices to reflect fair value, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with quoted prices and information to evaluate or adjust those prices. The fund cannot predict how often it will use quoted prices and how often it will determine it necessary to adjust those prices to reflect fair value. As a means of evaluating its security valuation process, the fund routinely compares quoted prices, the next day s opening prices in the same markets, and adjusted prices. 30

33 Actively traded equity securities listed on a domestic exchange generally are categorized in Level 1 of the fair value hierarchy. Non-U.S. equity securities generally are categorized in Level 2 of the fair value hierarchy despite the availability of quoted prices because, as described above, the fund evaluates and determines whether those quoted prices reflect fair value at the close of the NYSE or require adjustment. OTC Bulletin Board securities, certain preferred securities, and equity securities traded in inactive markets generally are categorized in Level 2 of the fair value hierarchy. Investments in mutual funds are valued at the mutual fund s closing NAV per share on the day of valuation and are categorized in Level 1 of the fair value hierarchy. Assets and liabilities other than financial instruments, including short-term receivables and payables, are carried at cost, or estimated realizable value, if less, which approximates fair value. Thinly traded financial instruments 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 the Valuation Committee. The objective of any fair value pricing determination is to arrive at a price that could reasonably be expected from a current sale. Financial instruments fair valued by the Valuation Committee are primarily private placements, restricted securities, warrants, rights, and other securities that are not publicly traded. Subject to oversight by the Board, the Valuation Committee regularly makes good faith judgments to establish and adjust the fair valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of an equity investment with limited market activity, such as a private placement or a thinly traded public company stock, the Valuation Committee considers a variety of factors, which may include, but are not limited to, the issuer s business prospects, its financial standing and performance, recent investment transactions in the issuer, new rounds of financing, negotiated transactions of significant size between other investors in the company, relevant market valuations of peer companies, strategic events affecting the company, market liquidity for the issuer, and general economic conditions and events. In consultation with the investment and pricing teams, the Valuation Committee will determine an appropriate valuation technique based on available information, which may include both observable and unobservable inputs. The Valuation Committee typically will 31