T. Rowe Price
Personal Strategy Balanced Portfolio
Annual Report
December 31, 1996
Dear Investor
After an exhilarating 1995, the stock market staged an impressive
encore last year, providing one of its best back-to-back advances
in history. Stocks shrugged off rising interest rates earlier in
1996 and a midyear correction to soar to record levels over the
last six months. Bonds experienced a seesaw year, with prices
dropping in the first half due to a surging economy and inflation
concerns but recovering over the last six months as the economy
cooled and inflation fears subsided. Your fund posted solid returns
for the 6- and 12-month periods ended December 31, 1996.
PERFORMANCE AND STRATEGY REVIEW
Performance Comparison
Periods Ended 12/31/96 6 Months 12 Months
_____________________________________________________________
Personal Strategy
Balanced Portfolio 9.67% 14.21%
Combined Index
Portfolio * 8.79 15.15
*An unmanaged portfolio composed of 60% stocks (S&P 500), 30% bonds
(Lehman Brothers Aggregate Bond Index), and 10% money markets
(90-day Treasury bills).
The rally in U.S. stocks helped the fund post solid returns and
outperform its benchmark for the 6-month period. For the 12-month
period, the fund trailed primarily because of an underweighting in
equities in the first half of the year and a fairly heavy exposure
to foreign stocks that lagged the S&P 500.
The objective of this fund is to provide the highest total return
consistent with an emphasis on both income and capital
appreciation. The typical asset mix is 60% stocks, 30% bonds, and
10% cash -with 10 percentage point variations permitted for each
asset class.
On December 31, your fund had 58% of its assets in stocks, 35% in
bonds, and 7% in cash reserves, a slightly higher bond component
and less cash than six months ago. In the bond area, we continued
to overweight investment-grade and high-yield bonds while trimming
foreign bonds. With stocks, we favored growth over
Chart 1 - Asset Allocation
value since growth stocks with their consistent earnings gains
usually fare better in a moderate to slowing economy. (The table
following this letter lists the fund's major holdings.) We
increased our exposure to foreign stocks during the past six months
because we believe they offer very good value at this time and
provide good diversification for the fund.
MARKET REVIEW
The fund's investment committee meets monthly to adjust the
weightings of stocks, bonds, and money market securities within the
specified ranges for each fund, based on market conditions and
economic fundamentals. The committee continued to maintain a slight
under-weighting in stocks and a relatively heavy exposure to bonds,
primarily because of full stock valuations.
On the heels of its 38% gain in 1995, the overall stock market (as
measured by the Standard & Poor's 500 Stock Index) posted a 23%
return in 1996. Market volatility picked up significantly last year
amid shifting signals on economic growth and inflation. The economy
soared to an annualized growth rate of 4.7% in the second calendar
quarter, fanning fears of inflation. In response, bond yields moved
up sharply, with the benchmark 30-year Treasury yield rising to a
high of just over 7% in July. However, with the economy slowing to
a 2% growth rate in the third quarter, rates fell back, with the
long bond yield finishing the year at 6.6%.
After enduring a modest correction in the summer as investors grew
concerned about high valuations and some earnings disappointments,
the stock market rallied strongly over the second half, buoyed by
moderate economic growth, subdued inflation, and strong cash flows
into equity mutual funds. Large-capitalization, blue chip
Chart 2 - Interest Rate Levels
companies overtook their smaller brethren over the last six months
and for the full year, as investors sought the relative safety and
liquidity of bigger companies. Natural resources companies also had
a good year as investors sought a hedge against the uncertain path
of inflation.
While slowing over the last six months, many foreign equity markets
posted decent gains for the year, though not quite as exuberant as
the U.S. market. Individual countries in Europe, Latin America, and
Asia surged to double-digit returns, but Japan was again
disappointing. As in the U.S., larger international companies
outperformed their smaller counterparts and companies based in
emerging markets.
After suffering losses in the first half due to rising interest
rates, the U.S. bond market recovered some lost ground over the
last six months but notched only modest returns for the year. The
Lehman Aggregate Bond Index of investment-grade bonds provided a
3.6% yearly return. High-yield bonds, which are sensitive to the
direction of the economy and the stock market as well as to
interest rates, were the best-performing sector. Since interest
rates ended the year higher than where they began, bond returns
came from income rather than capital appreciation. Hence,
higher-yielding corporate and mortgage-backed securities
outperformed Treasuries for the year.
Foreign investment-grade bonds performed somewhat better than their
U.S. counterparts, boosted by falling interest rates in many
countries, although returns to U.S. investors were dampened by a
strengthening dollar. However, the real story abroad was the bonds
of emerging market countries, which outpaced the returns of many
stock markets, finishing with full-year returns around 35%.
OUTLOOK
The conditions underlying the financial markets should stay
essentially the same in 1997: low unemployment, relatively benign
inflation, and moderate economic growth on the order of 2.3%. The
U.S. stock market could continue to advance, but most likely at a
slower pace than the past two years.
The domestic bond market should also provide moderate returns.
Until growth slows significantly or inflation picks up, we expect
long-term Treasury yields to fluctuate between 6% and 7%. In this
environment, bond returns will likely come mostly from income
rather than capital appreciation.
As mentioned, foreign equities appear to offer better value than
their U.S. counterparts. Many foreign countries are in earlier
stages of economic recoveries and hold the potential for more
sustainable growth in corporate earnings. However, returns on
foreign bonds may be hampered by continued strength in the dollar
and the possibility that interest rates in many countries may not
fall further.
As always, the fund will remain diversified in an effort to capture
good long-term returns with less volatility than more concentrated
portfolios. Thanks to all our shareholders for your support.
Respectfully submitted,
Peter Van Dyke
President and
Chairman of the Investment Advisory Committee
January 22, 1997
Portfolio Highlights
Portfolio Overview
Percent of
Net Assets
12/31/96
__________________________________________________________
Money Market Securities 6.8%
__________________________________________________________
Commercial Paper 8.3
Other Assets Less Liabilities (1.5)
Bonds 35.3%
__________________________________________________________
U.S. Government Agencies 1.4
Corporate 20.2
Mortgage-Backed 11.8
Foreign Government Agencies 1.9
Stocks 57.9%
__________________________________________________________
10 Largest Holdings 7.5%
_______________________________________________________
AT&T 0.9
H&R Block 0.9
Travelers/Aetna Property Casualty 0.9
Corning 0.8
GE 0.8
Philip Morris 0.7
British Petroleum 0.7
Great Lakes Chemical 0.7
Pfizer 0.6
Kimberly-Clark 0.5
__________________________________________________________
T. Rowe Price Personal Strategy Balanced Portfolio
December 31, 1996
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment in
the fund over the past 10 fiscal year periods or since inception
(for funds lacking 10-year records). The result is compared with a
broad-based average or index. The index return does not reflect
expenses, which have been deducted from the fund's return.
Chart 3 - Personal Strategy Balanced Portfolio
Average Annual Compound Total Return
This table shows how the fund would have performed each year if its
actual (or cumulative) returns for the periods shown had been
earned at a constant rate.
Since Inception
Periods Ended 12/31/96 1 Year Inception Date
______________________________________________________________
Personal Strategy
Balanced Portfolio 14.21% 21.22% 12/30/94
Investment return and principal value represent past performance
and will vary. Shares may be worth more or less at redemption than
at original purchase.
Total returns do not include charges imposed by your insurance
company's separate account. If these were included, performance
would have been lower.
Financial Highlights
T. Rowe Price Personal Strategy Balanced Portfolio
For a share outstanding
throughout each period
________________________
Year 12/30/94
Ended to
12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 12.43 $ 10.00
Investment activities
Net investment income 0.41 0.42
Net realized and
unrealized gain (loss) 1.32 2.41
Total from
investment activities 1.73 2.83
Distributions
Net investment income (0.41) (0.40)
Net realized gain (0.31) -
Total distributions (0.72) (0.40)
NET ASSET VALUE
End of period $ 13.44 $ 12.43
________________________
Ratios/Supplemental Data
Total return 14.21% 28.66%
Ratio of expenses to
average net assets 0.90% 0.90%
Ratio of net investment
income to average
net assets 3.33% 3.69%
Portfolio turnover rate 51.7% 39.3%
Average commission rate paid $ 0.0433 -
Net assets, end of period
(in thousands) $ 33,263 $ 5,625
The accompanying notes are an integral part of these financial
statements.
Statement of Net Assets
T. Rowe Price Personal Strategy Balanced Portfolio
December 31, 1996
Shares/Par Value
____________________________________________________________
In
thousands
Common Stocks 57.9%
FINANCIAL 13.0%
Bank and Trust 5.3%
Abbey National (GBP) 4,500 $ 59
ABN Amro Holdings (NLG) 500 33
Air Liquide (L) (FRF) 220 34
BANC ONE 800 34
Banca Commerciale
Italiana (ITL) 10,000 18
Banco de Bilbao
Vizcaya ADR 600 32
Banco Frances del
Rio ADR 1,495 41
Bank of Boston 800 51
Barclay's (GBP) 4,000 69
Chase Manhattan 1,980 177
Citicorp 800 82
Deutsche Bank (DEM) 600 28
Development Bank of
Singapore (SGD) 2,000 27
Dresdner Bank Ag (DEM) 1,000 30
HSBC Holdings (GBP) 5,400 121
J. P. Morgan 800 78
KeyCorp 1,400 71
Kredietbank (BEF) 100 33
Mellon Bank 2,220 158
National City 1,800 81
NationsBank 500 49
Northern Trust 1,000 36
Norwest 2,400 104
Overseas Chinese
Bank (SGD) 3,000 37
Schweizerischer
Bankgesellschaft (CHF) 70 61
Schweizerischer
Bankverein (CHF) 240 46
Societe Generale (FRF) 500 54
Societe Generale de
Belgique (BEF) 200 16
Svenska Handelsbank (SEK) 1,000 29
Wells Fargo 200 54
Westpac Bank (AUD) 4,000 23
1,766
Insurance 3.5%
ACE Limited 1,900 $ 114
American General 2,400 98
American International
Group 400 43
CKAG Colonia
Konzern (DEM) 300 25
Mid Ocean Limited 1,700 89
PMI Group 1,100 61
St. Paul Companies 2,400 141
Travelers/Aetna Property
Casualty
(Class A) 8,400 297
UNUM 1,470 106
W. R. Berkley 1,000 51
Willis-Corroon ADR 12,400 143
1,168
Financial Services 4.2%
Aames Financial 1,300 47
ADVANTA (Class B) 400 16
American Express 2,450 138
AXA (FRF) 800 51
DCB Holdings (MYR) 7,000 24
Fannie Mae 3,620 135
Freddie Mac 1,070 118
Green Tree Financial 800 31
H&R Block 10,500 304
Household International 400 37
ING Groep (NLG) 1,650 59
Mercury Finance 12,000 147
Money Store 1,900 53
Sallie Mae 1,130 105
Travelers Group 2,466 112
1,377
Total Financial 4,311
UTILITIES 5.0%
Telephone Services 2.9%
ALLTEL 1,200 38
AT&T 7,220 314
BellSouth 3,100 125
British Telecommunications
ADR 600 41
Compania de
Telecomunicaciones
de Chile ADR 100 $ 10
Frontier 5,000 113
Hong Kong
Telecommunications
ADR 1,100 18
SBC Communications 2,160 112
Telecom Corp. of New
Zealand ADR 400 32
Telecom Italia (ITL) 15,000 39
Telecom Italia Mobile (ITL) 15,000 38
Telefonica de Espana ADR 400 28
Telekom Malaysia (MYR) 2,000 18
Telmex ADR 1,000 33
959
Electric Utilities 2.1%
Centerior Energy 4,800 52
Electrabel (BEF) 100 24
Empresa Nacional de
Electricidad ADR 500 35
Empresa Nacional de
Electricidad
Chile ADR 500 8
Entergy 1,670 46
Hong Kong Electric (HKD) 6,000 20
Niagara Mohawk * 7,300 72
Ohio Edison 3,000 68
PECO Energy 5,000 126
Texas Utilities 1,040 42
Unicom 6,000 163
VEBA (DEM) 900 52
708
Total Utilities 1,667
CONSUMER NONDURABLES 11.0%
Cosmetics 0.4%
International Flavors &
Fragrances 1,900 85
Kao (JPY) 3,000 35
120
Beverages 0.4%
Coca-Cola 360 19
LVMH (FRF) 100 28
PepsiCo 3,400 $ 99
146
Food Processing 2.7%
Cadbury Schweppes ADR 500 17
CSM (NLG) 600 33
Danisco (DKK) 700 43
Eridania Beghin-Say (FRF) 400 64
General Mills 1,830 116
Heinz 3,100 111
Interstate Bakeries 1,300 64
McCormick 5,300 125
Nabisco Holdings (Class A) 1,300 51
Nestle (CHF) 60 64
Ralston Purina 1,180 87
Sara Lee 3,530 131
906
Hospital Supplies/Hospital Management 1.0%
Baxter International 1,060 44
Boston Scientific * 1,100 66
Columbia/HCA Healthcare 2,110 86
Medtronic 1,000 68
Millipore 300 12
Vencor * 1,700 54
330
Pharmaceuticals 3.4%
American Home Products 2,140 125
Amgen * 800 44
Astra (Class B) (SEK) 500 24
Bristol-Myers Squibb 490 53
Eli Lilly 900 66
Gehe (DEM) 500 32
Glaxo Wellcome ADR 1,000 32
Johnson & Johnson 1,880 94
Merck 1,000 79
Novartis (CHF) 26 30
Perrigo * 6,100 55
Pfizer 2,220 184
Pharmacia & Upjohn 617 24
Schering-Plough 1,100 71
SmithKline Beecham ADR 1,860 126
Takeda Chemical
Industries (JPY) 2,000 42
Warner-Lambert 600 45
1,126
Health Care Services 0.5%
Altana (DEM) 40 $ 31
Apria Healthcare * 1,300 25
PacifiCare Health Systems
(Class B) * 800 68
United HealthCare 1,000 45
169
Miscellaneous Consumer Products 2.6%
Benetton Group (ITL) 2,000 25
Bridgestone (JPY) 3,000 57
Colgate-Palmolive 820 76
CUC International * 2,400 57
Grand Metropolitan ADR 700 22
Jones Apparel Group * 1,400 53
Kuraray (JPY) 4,000 37
Lion Nathan (NZD) 8,000 19
Newell 1,500 47
Philip Morris 2,160 243
Procter & Gamble 800 86
Richfood Holdings 2,500 61
Tambrands 1,620 66
UST 730 24
873
Total Consumer Nondurables 3,670
CONSUMER SERVICES 5.7%
General Merchandisers 1.2%
Dayton Hudson 1,800 71
Marui (JPY) 2,000 36
Pinault Printemps (FRF) 100 40
Tesco (GBP) 5,053 31
TJX 1,300 61
Wal-Mart 3,500 80
Warnaco Group 2,500 74
393
Specialty Merchandisers 1.6%
American Stores 900 37
Circuit City Stores 500 15
Eckerd * 507 16
Federated Department
Stores * 2,600 89
General Nutrition * 2,000 34
Home Depot 800 40
Kohl's * 1,300 $ 51
Revco * 2,300 85
Safeway * 1,900 81
Staples * 1,000 18
Tupperware 1,400 75
541
Entertainment and Leisure 2.1%
Boston Chicken * 1,000 36
Carnival (Class A) 1,700 56
Disney 1,270 88
Hutchison Whampoa (HKD) 13,000 102
ITT * 2,700 117
McDonald's 1,670 76
Outback Steakhouse * 700 19
Reader's Digest (Class B) 4,720 171
Sharp (JPY) 2,000 29
694
Media and Communications 0.8%
Catalina Marketing * 700 39
Elsevier (NLG) 2,000 34
R. R. Donnelly 2,500 78
Time Warner 1,200 45
Vodafone ADR 1,840 76
272
Total Consumer Services 1,900
CONSUMER CYCLICALS 3.5%
Automobiles and Related 0.7%
Cycle & Carriage (SGD) 4,000 49
Honda ADR 1,100 62
Lear * 500 17
Lucasvarity ADR * 2,484 95
223
Building and Real Estate 1.2%
Cheung Kong
Holdings (HKD) 12,000 107
City Developments (SGD) 5,000 45
DBS Land (SGD) 5,000 18
Federal Realty Investment
Trust, REIT 5,200 141
Simon DeBartolo Group
REIT 3,196 99
410
Miscellaneous Consumer Durables 1.6%
Corning 5,700 $ 264
Eastman Kodak 900 72
Masco 1,200 43
Oce Van Der Grinten
NV (NLG) 300 32
Ricoh (JPY) 4,000 46
Roussel UCLAF (FRF) 200 59
516
Total Consumer Cyclicals 1,149
TECHNOLOGY 3.7%
Electronic Components 0.5%
Intel 600 78
Linear Technology 500 22
Maxim Integrated Products * 1,100 48
Xilinx * 1,000 37
185
Electronic Systems 0.7%
ADT * 2,300 53
Hewlett-Packard 500 25
Honeywell 1,900 125
Nokia ADR 400 23
226
Information Processing 0.5%
Hitachi ADR 300 28
IBM 1,010 152
180
Office Automation 0.1%
Ceridian * 900 36
36
Specialized Computer 0.1%
Silicon Graphics * 1,000 26
26
Telecommunications Equipment 1.0%
3Com * 900 66
Cisco Systems * 1,100 70
LM Ericsson (Class B) ADR 2,300 69
MCI 1,400 46
Telecomunicacoes Brasileiras
ADR 700 54
World Com * 800 21
326
Aerospace and Defense 0.8%
AlliedSignal 2,020 $ 135
Boeing 650 69
Lockheed Martin 600 55
259
Total Technology 1,238
CAPITAL EQUIPMENT 3.0%
Electrical Equipment 2.1%
ABB AG (CHF) 50 62
Canon (JPY) 2,000 44
Emerson Electric 600 58
GE 2,580 255
Hubbell (Class B) 2,300 99
Matsushita Electric
Works (JPY) 3,000 26
Mitsubishi Electric (JPY) 5,000 30
Siemens (DEM) 500 24
Tomkins ADR 2,000 37
Tyco International 1,100 58
693
Machinery 0.9%
Danaher 2,000 93
Deere 580 23
GKN (GBP) 1,200 21
Man (DEM) 100 24
SIG Schweis (CHF) 20 51
Teleflex 1,800 94
306
Total Capital Equipment 999
BUSINESS SERVICES AND TRANSPORTATION 3.7%
Computer Service and Software 2.0%
Adobe Systems 700 26
Ascend Communications * 500 31
Automatic Data Processing 1,340 57
BMC Software * 2,400 100
Electronic Data Systems 900 39
First Data 2,434 89
Informix * 1,300 27
Medic Computer Systems * 900 36
Microsoft * 560 46
National Data 1,000 43
Oracle * 1,100 46
Reynolds & Reynolds 2,000 $ 52
SunGard Data Systems * 1,000 40
Synopsys * 600 28
660
Distribution Services 0.2%
Alco Standard 1,440 74
74
Environmental 0.1%
USA Waste Services * 1,300 41
41
Transportation Services 0.2%
Mitsubishi Heavy
Industries (JPY) 4,000 32
United Engineers
Berhad (MYR) 4,000 36
68
Miscellaneous Business Services 0.7%
BAA (GBP) 3,000 25
Corporate Express * 1,000 29
Sime Darby Berhad (MYR) 6,000 24
Wallace Computer Sevices 1,300 45
WMX Technologies 3,400 111
234
Airlines 0.3%
AMR * 620 55
Royal Dutch Airlines 900 25
Singapore Airlines (SGD) 3,000 27
107
Railroads 0.2%
Burlington Northern Santa Fe 600 52
52
Total Business Services and
Transportation 1,236
ENERGY 4.1%
Energy Services 1.3%
BJ Services * 1,000 51
Camco International 600 28
Cooper Cameron * 1,000 77
Elf Aquitaine ADR 400 18
Halliburton 1,600 96
Schlumberger 1,090 109
Total ADR 1,000 40
419
Integrated Petroleum - Domestic 1.5%
Atlantic Richfield 880 $ 116
British Petroleum ADR 1,720 243
Unocal 730 30
USX-Marathon 5,060 121
510
Integrated Petroleum -
International 1.3%
ENI S.P.A. ADR 1,000 52
Exxon 610 60
Mobil 1,180 144
Repsol ADR 900 34
Royal Dutch Petroleum ADR 300 51
Shell Transport &
Trading ADR 300 31
Texaco 470 46
418
Total Energy 1,347
PROCESS INDUSTRIES 3.8%
Diversified Chemicals 0.3%
DuPont 1,200 113
113
Specialty Chemicals 2.0%
3M 770 64
A. Schulman 4,200 103
AKZO Nobel (NLG) 400 55
BASF (DEM) 2,200 85
Bayer (DEM) 800 33
Great Lakes Chemical 4,650 217
Pall 1,000 25
Petrolite 300 14
Sumitomo Chemical (JPY) 7,000 28
Technip (FRF) 500 47
671
Paper and Paper Products 1.4%
Dai Nippon Printing (JPY) 3,000 53
International Paper 1,800 73
James River 3,600 119
Kimberly-Clark 1,900 181
Willamette Industries 400 28
454
Forest Products 0.1%
Georgia-Pacific 470 34
34
Total Process Industries 1,272
BASIC MATERIALS 1.3%
Metals 0.7%
Alcoa 680 $ 43
Nucor 1,600 82
Reynolds Metals 2,000 113
238
Mining 0.2%
CRA Limited (AUD) 2,000 31
LONRHO (GBP) 8,000 17
Newmont Mining 300 14
62
Miscellaneous Materials 0.4%
Crown Cork & Seal 1,700 92
Malayan Cement (MYR) 10,000 23
115
Total Basic Materials 415
MISCELLANEOUS 0.1%
Conglomerates 0.1%
ORKLA (NOK) 500 35
Total Miscellaneous 35
Total Common Stocks (Cost $17,307) 19,239
Corporate Bonds 20.2%
Aames Financial, Sr. Notes
9.125%, 11/1/03 $ 50,000 51
Agricultural Minerals and
Chemicals, Sr. Notes
10.75%, 9/30/03 50,000 54
Allied Waste North America
Sr. Sub. Notes
(144a), 10.25%
12/1/06 50,000 53
American Safety Razor
Sr. Notes
9.875%, 8/1/05 25,000 27
B.F. Saul REIT
Sr. Secured Notes
11.625%, 4/1/02 110,000 119
BE Aerospace, Sr. Sub. Notes
9.875%, 2/1/06 50,000 53
Boeing Company, Notes
6.35%, 6/15/03 30,000 30
Boise Cascade, Deb.
7.35%, 2/1/16 $ 210,000 $ 200
Building Material Corporation
America, Sr. Notes
STEP, Zero Coupon
7/1/04 50,000 43
Celestica International
Gtd. Sr. Sub. Notes
(144a), 10.50%
12/31/06 50,000 53
Celulosa Arauco y
Constitucion, Notes
7.00%, 12/15/07 300,000 288
Chancellor Broadcasting
Sr. Sub. Notes
9.375%, 10/1/04 50,000 51
Citicorp, Sub. Notes
7.75%, 6/15/06 50,000 52
Coca-Cola Bottling Group
Sr. Sub. Notes
9.00%, 11/15/03 50,000 51
Coin Machine, Sr. Notes
11.75%, 11/15/05 50,000 54
Communications & Power
Industries
Sr. Sub. Notes
12.00%, 8/1/05 50,000 56
Commonwealth Edison
1st Mtg. Bonds
6.40%, 10/15/05 75,000 70
Consolidated Cigar
Sr. Sub. Notes
10.50%, 3/1/03 25,000 26
Continental Airlines, PTC
6.94%, 10/15/13 200,000 199
Cyprus Minerals Company
Notes
6.625%, 10/15/05 100,000 96
Dade International
Sr. Sub. Notes
11.125%, 5/1/06 50,000 54
Delta, MTN
8.625%, 6/15/04 60,000 64
Doane Products, Sr. Notes
10.625%, 3/1/06 50,000 53
Dominion Textile USA
Gtd. Sr. Notes
9.25%, 4/1/06 $ 50,000 $ 51
Dr Pepper Bottling, STEP
Zero Coupon
2/15/03 50,000 47
Dual Drilling, Sr. Sub. Notes
9.875%, 1/15/04 50,000 54
El Paso Electric
1st Mtg. Notes
8.90%, 2/1/06 25,000 26
Enhance Financial Services
Group, Deb.
6.75%, 3/1/03 200,000 197
Fairfax Financial Holdings
Limited, Notes
8.25%, 10/1/15 250,000 260
Ferrellgas, Sr. Notes
10.00%, 8/1/01 50,000 52
First Federal Financial, Notes
11.75%, 10/1/04 50,000 54
First USA Bank, Sr. Notes
5.85%, 2/22/01 200,000 192
Frontier Vision, Sr. Sub. Notes
11.00%, 10/15/06 50,000 50
Fundy Cable, Sr. Secured 2nd
Priority Notes
11.00%, 11/15/05 50,000 53
Gaylord Container
Sr. Sub. Deb., STEP
12.75%, 5/15/05 50,000 55
GMAC, Notes
7.125%, 6/1/99 25,000 25
Grand Metropolitan
Investment
9.00%, 8/15/11 200,000 238
Grand Union, Sr. Notes
12.00%, 9/1/04 50,000 53
Hawk, Sr. Notes, (144a)
10.25%, 12/1/03 50,000 51
Hayes Wheels, Sr. Sub. Notes
11.00%, 7/15/06 50,000 55
Haynes International
Sr. Notes
11.625%, 9/1/04 50,000 53
Herff Jones, Sr. Sub. Notes
11.00%, 8/15/05 $ 25,000 $ 27
HMC Acquisition Properties
Sr. Notes
9.00%, 12/15/07 25,000 25
Host Marriott Travel
Sr. Notes
9.50%, 5/15/05 50,000 52
Imed, Sr. Sub. Notes (144a)
9.75%, 12/1/06 50,000 51
Intertek Finance
Sr. Sub. Notes
(144a), 10.25%
11/1/06 50,000 52
Jordan Industries, Sr. Notes
10.375%, 8/1/03 50,000 49
K & F Industries
Sr. Sub. Notes
10.375%, 9/1/04 50,000 53
Keebler, Sr. Sub. Notes
10.75%, 7/1/06 50,000 54
Kelley Oil & Gas
Sr. Sub. Notes
(144a), 10.375%
10/15/06 50,000 52
Lenfest Communications
Sr. Notes
8.375%, 11/1/05 20,000 19
Loehmann Holdings
Sr. Notes
11.875%, 5/15/03 50,000 54
Lucent Technologies, Notes
7.25%, 7/15/06 200,000 205
MAXXAM Group
Sr. Secured Notes
11.25%, 8/1/03 50,000 51
May Department Stores, Deb.
8.30%, 7/15/26 500,000 523
Mettler Toledo, Gtd. Sr. Sub.
Notes
9.75%, 10/1/06 50,000 53
Northrop-Grumman, Deb.
7.00%, 3/1/06 200,000 197
Ocwen Financial, Notes
11.875%, 10/1/03 50,000 55
Outdoor Systems
Sr. Sub. Notes
9.375%, 10/15/06 $ 50,000 $ 52
Owens & Minor
Sr. Sub. Notes
10.875%, 6/1/06 50,000 54
Owens-Illinois, Sr. Deb.
11.00%, 12/1/03 50,000 56
Pennsylvania Power and Light
1st Mtg. Notes
6.50%, 4/1/05 50,000 48
Petroleum Heat & Power
Sub. Notes
10.125%, 4/1/03 40,000 39
Plastic Containers (144a), Sr. Notes
10.00%, 12/15/06 50,000 52
Portola Packaging, Sr. Notes
10.75%, 10/1/05 50,000 52
Public Service Electric & Gas
7.00%, 9/1/24 200,000 185
8.875%, 6/1/03 100,000 109
Quorum Health Group
Sr. Sub. Notes
11.875%, 12/15/02 10,000 11
Revlon Worldwide
Sr. Secured Disc.
Notes, Zero Coupon
3/15/98 50,000 43
Rowan Companies, Sr. Notes
11.875%, 12/1/01 25,000 27
Safelite Glass (144a), Sr. Sub. Notes
9.875%, 12/15/06 25,000 26
Safeway, Sr. Sub. Deb.
9.875%, 3/15/07 10,000 12
Scotland International Finance
Gtd. Sub. Notes
(144a), 6.50%
2/15/11 100,000 92
Silgan, Sr. Sub. Notes
11.75%, 6/15/02 50,000 53
Six Flags Theme Parks
Sr. Sub. Notes
STEP, Zero Coupon
6/15/05 50,000 47
Speedy Muffler King
Sr. Notes
10.875%, 10/1/06 $ 50,000 $ 53
Synthetic Industries
Sr. Sub. Deb.
12.75%, 12/1/02 25,000 28
TeleCommunications
Sr. Notes
8.75%, 2/15/23 100,000 94
Teleport Communications
Group, Sr. Notes
9.875%, 7/1/06 50,000 53
Texas Utilities Electric
1st Mtg. Bonds
7.875%, 4/1/24 100,000 99
Time Warner Entertainment
Deb.
8.375%, 3/15/23 75,000 76
TLC Beatrice International
Holdings, Sr. Notes
11.50%, 10/1/05 50,000 53
Tokheim, Sr. Sub. Notes
(144a), 11.50%
8/1/06 25,000 26
Tracor, Sr. Sub. Notes
10.875%, 8/15/01 50,000 53
Trump Atlantic City
1st Mtg. Notes
11.25%, 5/1/06 50,000 50
UNC, Sr. Sub. Notes
11.00%, 6/1/06 50,000 53
United Artists, PTC (144a)
9.30%, 7/1/15 49,588 46
Wal-Mart, Deb.
7.25%, 6/1/13 150,000 153
Total Corporate Bonds (Cost $6,616) 6,730
FOREIGN GOVERNMENT OBLIGATIONS/AGENCIES 1.9%
Canadian Government Bonds
8.50%, 4/1/02 CAD 47,000 39
European Investor Bank
4.625%, 2/26/03 JPY 20,000,000 197
French Government Bonds
8.50%, 11/25/02 FRF 492,000 112
German Federal Government
Bonds
6.50%, 7/15/03 DEM 50,000 $ 35
8.375%, 5/21/01 DEM 145,000 108
Italian Government Bonds
8.50%, 8/1/04 ITL 40,000,000 28
Japanese Government Bonds
4.50%, 6/20/03 # JPY 4,000,000 39
United Kingdom Treasury
Notes
8.00%, 6/10/03 GBP 31,000 55
United Kingdom Treasury
Notes
8.50%, 12/7/05 GBP 10,000 18
Total Foreign Government Obligations/
Agencies (Cost $614) 631
U.S. Government Mortgage-Backed Securities 11.8%
Federal National Mortgage Assn.
6.50%, 1/1/26 $ 298,211 285
Government National Mortgage Assn.
I
6.00%
1/15/24 - 4/15/26 956,961 892
6.50%, 4/15/24 1,143,854 1,093
7.00%, 5/15/23 133,175 131
7.50%
5/15/24 - 11/15/25 481,771 484
8.00%
10/15/25 - 6/15/26 598,507 612
8.50%, 12/15/24 92,378 96
11.50%, 11/15/19 24,666 28
TBA, 6.50%, 12/15/26 300,000 288
Total U.S. Government Mortgage-
Backed Securities (Cost $3,880) 3,909
U.S. Government Obligations/Agencies 1.4%
Cooperative Utility Trust
PTC
9.50%, 2/15/17 100,000 108
Tennessee Valley Authority
7.25%, 7/15/43 $ 200,000 $ 194
8.25%, 4/15/42 160,000 175
Total U.S. Government
Obligations/
Agencies (Cost $465) 477
Short-Term Investments 8.3%
Commercial Paper 8.3%
Bank of America
5.30%, 2/5/97 700,000 697
Investments in Commercial
Paper through a
joint account
6.75 - 7.10%
1/2/97 1,372,066 1,372
Island Finance Puerto Rico
5.31%, 2/25/97 400,000 397
Korea Development Bank
5.33%, 2/27/97 200,000 198
New Center Asset Trust
5.60%, 2/12/97 100,000 99
Total Short-Term Investments
(Cost $2,763) 2,763
Total Investments in Securities
101.5% of Net Assets (Cost $31,645) $ 33,749
Other Assets Less Liabilities (486)
NET ASSETS $ 33,263
_________
Net Assets Consist of:
Accumulated net realized gain/
loss - net of distributions $ 63
Net unrealized gain (loss) 2,104
Paid-in-capital applicable to
2,474,689 shares of $0.0001
par value capital stock
outstanding; 1,000,000,000
shares of the corporation
authorized 31,096
NET ASSETS $ 33,263
_________
NET ASSET VALUE PER SHARE $ 13.44
_________
* Non-income producing
# Securities contain some restrictions as to public resale-total
of such securities at year-end amounts to 0.12% of net assets.
MTN Medium term note
PTC Pass-through Certificate
REIT Real Estate Investment Trust
STEP Stepped Coupon Bond
TBA To be announced security was purchased on a forward commitment
basis
144a Security was purchased pursuant to Rule 144a under the
Securities Act of 1933 and may not be resold subject to that
rule except to qualified institutional buyers - total of such
securities at year-end amounts to 1.53% of net assets.
AUD Australian dollar
BEF Belgian franc
CAD Canadian dollar
CHF Swiss franc
DEM German deutschemark
DKK Danish krone
FRF French franc
GBP British sterling
HKD Hong Kong dollar
ITL Italian lira
JPY Japanese yen
MYR Malaysian ringgit
NLG Dutch guilder
NOK Norwegian krone
NZD New Zealand dollar
SEK Swedish krona
SGD Singapore dollar
L Local registered shares
The accompanying notes are an integral part of these financial
statements.
Statement of Operations
T. Rowe Price Personal Strategy Balanced Portfolio
In thousands
Year
Ended
12/31/96
Investment Income
Income
Interest $ 551
Dividend 206
Total income 757
Expenses
Investment management and administrative 161
Net investment income 596
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on
Securities 676
Foreign currency transactions (5)
Net realized gain (loss) 671
Change in net unrealized gain or loss
on securities 1,592
Net realized and unrealized gain (loss) 2,263
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 2,859
____________
The accompanying notes are an integral part of these financial
statements.
Statement of Changes in Net Assets
T. Rowe Price Personal Strategy Balanced Portfolio
In thousands
Year 12/30/94
Ended to
12/31/96 12/31/95
Increase (Decrease) in Net Assets
Operations
Net investment income $ 596 $ 101
Net realized gain (loss) 671 74
Change in net unrealized gain
or loss 1,592 512
Increase (decrease) in net
assets from operations 2,859 687
Distributions to shareholders
Net investment income (679) (110)
Net realized gain (584) -
Decrease in net assets from
distributions (1,263) (110)
Capital share transactions*
Shares sold 29,528 5,161
Distributions reinvested 1,263 110
Shares redeemed (4,849) (239)
Increase (decrease) in net
assets from capital
share transactions 25,942 5,032
Net equalization 100 16
Net Assets
Increase (decrease) during period 27,638 5,625
Beginning of period 5,625 -
End of period $ 33,263 $ 5,625
______________________
*Share information
Shares sold 2,308 463
Distributions reinvested 96 9
Shares redeemed (382) (20)
Increase (decrease) in shares
outstanding 2,022 452
The accompanying notes are an integral part of these financial
statements.
Notes to Financial Statements
T. Rowe Price Personal Strategy Balanced Portfolio
December 31, 1996
Note 1 - Significant Accounting Policies
T. Rowe Price Equity Series, Inc., (the corporation) is registered
under the Investment Company Act of 1940. The Personal Strategy
Balanced Portfolio (the fund), a diversified, open-end management
investment company, is one of the portfolios established by the
corporation and commenced operations on December 30, 1994. The
shares of the fund are currently being offered only to separate
accounts of certain insurance companies as an investment medium for
both variable annuity contracts and variable life insurance
policies.
Valuation Equity securities listed or regularly traded on a
securities exchange are valued at the last quoted sales price at
the time the valuations are made. A security which is listed or
traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market for such security.
Listed securities not traded on a particular day and securities
regularly traded in the over-the-counter market are valued at the
mean of the latest bid and asked prices. Other equity securities
are valued at a price within the limits of the latest bid and asked
prices deemed by the Board of Directors, or by persons delegated by
the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market
and are valued at a price deemed best to reflect fair value as
quoted by dealers who make markets in these securities or by an
independent pricing service. Short-term debt securities are valued
at their amortized cost which, when combined with accrued interest,
approximates fair value.
For purposes of determining the fund's net asset value per share,
the U.S. dollar value of all assets and liabilities initially
expressed in foreign currencies is determined by using the mean of
the bid and offer prices of such currencies against U.S. dollars
quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at
fair value as determined in good faith by or under the supervision
of the officers of the fund, as authorized by the Board of
Directors.
Currency Translation Assets and liabilities are translated into
U.S. dollars at the prevailing exchange rate at the end of the
reporting period. Purchases and sales of securities and income and
expenses are translated into U.S. dollars at the prevailing
exchange rate on the dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains
and losses.
Premiums and Discounts Premiums and discounts on debt securities,
other than mortgage-backed securities, are amortized for both
financial reporting and tax purposes. Premiums and discounts on
mortgage-backed securities are recognized upon principal repayment
as gain or loss for financial reporting purposes and as ordinary
income for tax purposes.
Other Income and expenses are recorded on the accrual basis.
Investment transactions are accounted for on the trade date.
Realized gains and losses are reported on the identified cost
basis. Dividend income and distributions to shareholders are
recorded by the fund on the ex-dividend date. Income and capital
gain distributions are determined in accordance with federal income
tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. The fund follows the
practice of equalization under which undistributed net investment
income per share is unaffected by fund shares sold or redeemed.
Note 2 - Investment Transactions
Commercial Paper Joint Account The fund, and other affiliated
funds, may transfer uninvested cash into a commercial paper joint
account, the daily aggregate balance of which is invested in
high-grade commercial paper. All securities purchased by the joint
account satisfy the fund's criteria as to quality, yield, and
liquidity.
Other Purchases and sales of portfolio securities, other than
short-term securities, aggregated $32,416,000 and $8,656,000,
respectively, for the year ended December 31, 1996.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the fund
intends to continue to qualify as a regulated investment company
and distribute all of its taxable income.
In order for the fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions,
the following reclassifications were made during the year ended
December 31, 1996. The results of operations and net assets were
not affected by the reclassifications.
____________________________________________________________
Undistributed net investment income $ (17,000)
Undistributed net realized gain (89,000)
Paid-in-capital 106,000
At December 31, 1996, the aggregate cost of investments for federal
income tax and financial reporting purposes was $31,644,000, and
net unrealized gain aggregated $2,104,000, of which $2,417,000
related to appreciated investments and $313,000 to depreciated
investments.
Note 4 - Related Party Transactions
The investment management and administrative agreement between the
fund and T. Rowe Price Associates, Inc. (the manager) provides for
an all-inclusive annual fee, of which $9,000 was payable at
December 31, 1996. The fee, computed daily and paid monthly, is
equal to 0.90% of the fund's average daily net assets. Pursuant to
the agreement, investment management, shareholder servicing,
transfer agency, accounting, and custody services are provided to
the fund, and interest, taxes, brokerage commissions, and
extraordinary expenses are paid directly by the fund.
During the year ended December 31, 1996, the fund, in the ordinary
course of business, paid commissions of $6,000 to, and placed
security purchase and sale orders aggregating $1,002,000 with,
certain affiliates of the manager in connection with the execution
of various portfolio transactions.
Report of Independent Accountants
To the Board of Directors of T. Rowe Price Equity Series, Inc.
and Shareholders of the Personal Strategy Balanced Portfolio
In our opinion, the accompanying statement of net assets and the
related statements of operations and of changes in net assets and
the financial highlights present fairly, in all material respects,
the financial position of the Personal Strategy Balanced Portfolio
(one of the portfolios constituting T. Rowe Price Equity Series,
Inc., hereafter referred to as the "Fund") at December 31, 1996,
the results of its operations for the year then ended, and the
changes in its net assets and the financial highlights for the year
then ended and for the period December 30, 1994 (commencement of
operations) through December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31,
1996, by correspondence with custodians and brokers and, where
appropriate, the application of alternative auditing procedures for
unsettled security transactions, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 20, 1997
Invest With Confidence(registered trademark)
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to contractholders
and to others who have received a copy of the portfolio's
prospectus.
T. Rowe Price Investment Services, Inc., Distributor
TRP655 (3/97)
RPRTPSP 12/31/96
Chart 1 - Asset Allocation - Asset allocation pie chart showing
stocks 58%, bonds 35%, and money markets 7%.
Chart 2 - Interest Rate Levels - Interest Rate Levels chart showing
yields on 30-year, 5-year, and 1-year Treasuries from 12/31/95 to
12/31/96.
Chart 3 - Personal Strategy Balanced Portfolio - Performance
Comparison showing the cumulative growth of $10,000 invested in the
Personal Strategy Balance Portfolio from inception compared with
$10,000 invested in a broad-based index or average over the same
period.
