The imbalance between the supply and demand for new knowledge is a very important feature with regard to science and engineering. Whereas the supply of new knowledge appears unlimited, the demand for new knowledge is much greater. In the years to come, more knowledge will be needed to cope with world problems. Knowledge is a most important resource along with the scientists and engineers who produce it. Many believe that increasing the supply of knowledge requires solving the problems of education and devoting the necessary resources to basic research. This publication contains seven chapters, a director's statement, highlights, awards, operational and organizational news, and a conclusion. The first chapter gives perspectives for the 1990s. Chapter 2, on human resources and education, outlines precollege education, undergraduate and graduate education, other activities, and public outreach. Chapter 3 explains disciplinary research in fields including the sciences, mathematics, and small businesses. Chapter 4 deals with basic research of centers and groups, and instrumentation. Included are three appendices including: (1) a list of National Science Foundation and National Science Board Members; (2) the patents and financial report; and (3) a list of advisory committees and chairpersons. (RT)