<PAGE>
April 1, 2000
FUND PROFILE
T. ROWE PRICE
Balanced Fund
A fund seeking capital growth and current income from stocks and bonds.
This profile summarizes key information about the fund that is included in the
fund's prospectus. The fund's prospectus includes additional information about
the fund, including a more detailed description of the risks associated with
investing in the fund that you may want to consider before you invest. You may
obtain the prospectus and other information about the fund at no cost by calling
1-800-638-5660, or by visiting our Web site at www.troweprice.com.
TROWEPRICELOGO
<PAGE>
<PAGE>
1
FUND PROFILE
- ---------------------------------------------------------
What is the fund's objective?
The fund seeks to provide capital growth, current income, and preservation of
capital through a portfolio of stocks and fixed income securities.
What is the fund's principal investment strategy?
The fund normally invests approximately 60% of total assets in common stocks
and 40% in fixed income securities. We will invest at least 25% of total
assets in senior fixed income securities.
When deciding upon allocations within these prescribed limits, the manager
may favor fixed income securities if the economy is expected to slow
sufficiently to hurt corporate profit growth. The opposite may be true when
strong economic growth is expected. And when selecting particular stocks to
purchase, the manager will examine relative values and prospects among
growth- and value-oriented stocks, domestic and international stocks, and
small- to large-cap stocks. This process draws heavily upon T. Rowe Price's
proprietary stock research expertise. While the fund maintains a
well-diversified portfolio, the manager may at a particular time shade stock
selection toward markets or market sectors that appear to offer attractive
value and appreciation potential. Much the same security selection process
applies to bonds. For example, when deciding on whether to adjust allocations
to high-yield (junk) bonds, the manager will weigh such factors as the
outlook for the economy and corporate earnings and the yield advantage
lower-rated bonds offer over investment-grade bonds.
We may also invest in other securities, including futures and options, in
keeping with the fund's objective.
Securities may be sold for a variety of reasons, such as to effect a change
in asset allocation, secure a gain, limit a loss, or redeploy assets into
more promising opportunities.
Further information about the fund's investments, including a review of
market conditions and fund strategies and their impact on performance, is
available in the annual and semiannual shareholder reports. To obtain free
copies of any of these documents, call 1-800-638-5660.
What are the main risks of investing in the fund?
The risks vary depending on the fund's mix of stocks, bonds, and money market
securities. The greater the percent of stocks, the greater the risk.
. Risks of stock investing Stock prices can fall because of weakness in the
broad market, a particular industry, or specific holdings. The market as a
whole can decline for many reasons, including adverse political or economic
developments here or abroad, changes in investor psychology, or heavy
institutional selling. The prospects for an industry or company may
deteriorate because of
<PAGE>
2
2
FUND PROFILE
- ---------------------------------------------------------
a variety of factors, including disappointing earnings or changes in the
competitive environment. In addition, our assessment of companies held in the
fund may prove incorrect, resulting in losses or poor performance even in a
rising market. Finally, the fund's investment approach could fall out of
favor with the investing public, resulting in lagging performance versus
other types of funds.
. Equity investors should have a long-term investment horizon and be willing
to wait out bear markets.
. Risks of bond investing Bonds are debt securities, meaning the issuer has a
contractual obligation to pay interest at a fixed rate on specified dates and
to repay the principal (face value) upon maturity. Bonds in the fund have two
main sources of risk. Interest rate risk is the decline in bond prices that
usually accompanies a rise in interest rates. Longer-maturity bonds typically
suffer greater declines than those with shorter maturities. Credit risk is
the chance that any fund holding could have its credit downgraded, or that a
bond issuer will default (fail to make timely payments of interest or
principal), potentially reducing the fund's income level and share price.
While the fund expects to invest primarily in investment-grade bonds, it may
also hold high-yield (junk) bonds, including those with the lowest rating.
Investment-grade bonds are those rated from the highest (AAA) to medium (BBB)
quality, and high-yield bonds are rated BB and lower. The latter are
speculative since their issuers are more vulnerable to financial setbacks and
recession than more creditworthy companies, but BBB rated bonds may have
speculative elements as well. High-yield bond issuers include small companies
lacking the history or capital to merit investment-grade status, former blue
chip companies downgraded because of financial problems, and firms with heavy
debt loads.
. Risks of foreign securities To the extent the fund invests in foreign
stocks and bonds, it is also subject to the special risks associated with
such investments whether denominated in U.S. dollars or foreign currencies.
These risks include potentially adverse political and economic developments
overseas, greater volatility, less liquidity, and the possibility that
foreign currencies will decline against the dollar, lowering the value of
securities denominated in those currencies.
. Derivatives risk To the extent the fund uses futures and options, it is
exposed to additional volatility and potential losses.
As with any mutual fund, there can be no guarantee the fund will achieve its
objective.
. The fund's share price may decline, so when you sell your shares, you may
lose money. An investment in the fund is not a deposit of a bank and is not
<PAGE>
3
FUND PROFILE
- ---------------------------------------------------------
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
How can I tell if the fund is appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for risk. Generally, the fund is intended for those seeking a
middle-of-the-road approach that emphasizes stocks for their higher capital
appreciation potential but retains a significant income component to temper
principal volatility.
If you are investing for principal safety and liquidity, you should consider
a money market fund.
The fund can be used in both regular and tax-deferred accounts, such as IRAs.
How has the fund performed in the past?
The bar chart and the average annual total return table indicate risk by
illustrating how much returns can differ from one year to the next. The
fund's past performance is no guarantee of its future returns.
The fund can also experience short-term performance swings, as shown by the
best and worst calendar quarter returns during the years depicted in the
chart.
LOGO
<TABLE>
<CAPTION>
Calendar Year Total Returns
"90" "91" "92" "93" "94" "95" "96" "97" "98" "99"
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.21 21.98 7.71 13.35 -2.05 24.88 14.57 18.97 15.97 10.26
----------------------------------------------------------------------
</TABLE>
Quarter ended Total return
<PAGE>
4
4
FUND PROFILE
- ---------------------------------------------------------
Best quarter 12/31/98 12.22%
Worst quarter 9/30/98 -6.51%
<PAGE>
5
FUND PROFILE
- ---------------------------------------------------------
<TABLE>
Table 1 Average Annual Total Returns
<CAPTION>
Periods ended 3/31/00
1 year 5 years 10 years/a/
------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Fund 10.92% 15.98% 13.48%
Merrill Lynch-Wilshire Capital
Markets 17.12 18.91 14.59
Combined Index Portfolio (60% Stocks
and 40% Corporate and Government
Bonds)/b/ 11.55 18.84 14.61
Lipper Balanced Fund Index 10.45 15.65 12.86
------------------------------------------------------------------------------
</TABLE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
/a/
Performance prior to September 1, 1992, reflects managers other than T. Rowe
Price.
/b/
The securities indexes used as comparisons for the stock and bond portions of
the fund are the S&P 500 and Lehman Aggregate Index, respectively.
What fees or expenses will I pay?
The fund is 100% no load. There are no fees or charges to buy or sell fund
shares, reinvest dividends, or exchange into other T. Rowe Price funds. There
are no 12b-1 fees.
<TABLE>
Table 2 Fees and Expenses of the Fund
<CAPTION>
Annual fund operating expenses
(expenses that are deducted from fund assets)
-------------------------------------------------------------------------------------
<S> <C>
Management fee 0.47%/ // /
Other expenses 0.31%
Total annual fund operating 0.78%/ // /
expenses
-------------------------------------------------------------------------------------
</TABLE>
Example. The following table gives you a rough idea of how expense ratios
may translate into dollars and helps you to compare the cost of investing in
this fund with that of other funds. Although your actual costs may be higher
or lower, the table shows how much you would pay if operating expenses remain
the same, you invest $10,000, you earn a 5% annual return, and you hold the
investment for the following periods:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
----------------------------------------------------
<S> <C> <C> <C>
$80 $249 $433 $966
----------------------------------------------------
</TABLE>
Who manages the fund?
The fund is managed by T. Rowe Price Associates, Inc. Founded in 1937, T.
Rowe Price and its affiliates manage investments for individual and
institutional accounts. The company offers a comprehensive array of stock,
bond, and money market funds directly to the investing public.
<PAGE>
FUND PROFILE
- ---------------------------------------------------------
Richard T. Whitney manages the fund day-to-day and has been chairman of its
Investment Advisory Committee since 1994. He joined T. Rowe Price in 1985 and
has been managing investments since 1986.
Note: The following questions and answers about buying and selling shares and
services do not apply to employer-sponsored retirement plans. If you are a
participant in one of these plans, please call your plan's toll-free number for
additional information.
How can I purchase shares?
Fill out the New Account Form and return it with your check in the postpaid
envelope. The minimum initial purchase is $2,500 ($1,000 for IRAs and gifts
or transfers to minors). The minimum subsequent investment is $100 ($50 for
IRAs, gifts or transfers to minors, or Automatic Asset Builder). You can also
open an account by bank wire, by exchanging from another T. Rowe Price fund,
or by transferring assets from another financial institution.
How can I sell shares?
You may redeem or sell any portion of your account on any business day.
Simply write to us or call. You can also access your account at any time via
Tele*Access /(R)/ or our Web site. We offer convenient exchange among our
entire family of domestic and international funds. Restrictions may apply in
special circumstances, and some redemption requests need a signature
guarantee. A $5 fee is charged for wire redemptions under $5,000.
When will I receive income and capital gain distributions?
The fund distributes income quarterly and net capital gains, if any, at
year-end. For regular accounts, income and short-term gains are taxable at
ordinary income rates, and long-term gains are taxable at the capital gains
rate. Distributions are reinvested automatically in additional shares unless
you choose another option, such as receiving a check. Distributions paid to
IRAs and employer-sponsored retirement plans are automatically reinvested.
What services are available?
A wide range, including but not limited to:
. retirement plans for individuals and large and small businesses;
. automated information and transaction services by telephone or computer;
. electronic transfers between fund and bank accounts;
. automatic investing and automatic exchange;
. brokerage services; and
. asset manager accounts.
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
www.troweprice.com
LOGO
RPS F68-035
T. Rowe Price Investment Services, Inc., Distributor
<PAGE>