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Previous: PRICE T ROWE EQUITY SERIES INC, N-30D, 1999-08-16 |
Next: PRICE T ROWE EQUITY SERIES INC, N-30D, 1999-08-16 |
T. Rowe Price
Personal Strategy Balanced Portfolio
Semiannual Report
June 30, 1999
Dear Investor
Stocks were strong but volatile during the past six months, as investor
sentiment shifted from the small group of large-cap growth stocks that had
been leading the market to a broader universe of cyclical, previously
out-of-favor stocks. Continued economic growth and good corporate earnings
powered results. High-quality bonds suffered as the torrid pace of the economy
drove interest rates higher, while lower-quality high-yield bonds fared
better.
PERFORMANCE AND STRATEGY REVIEW
Performance Comparison
---------------------------------------------------------------------------
Periods Ended 6/30/99 6 Months 12 Months
---------------------------------------------------------------------------
Personal Strategy
Balanced Portfolio 5.27% 9.54%
Combined Index Portfolio* 7.15 15.38
Merrill Lynch-Wilshire
Capital Market Index 7.74 14.35
* 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 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.
The fund posted steady returns of 5.27% and 9.54% for the 6- and 12-month
periods ended June 30, respectively. Although large-cap growth stocks drove
performance for most of the past year, large-cap value and small-cap stocks
took the lead over the last three months. International markets in general
lagged domestic stocks, and our exposure to foreign equities restrained
fund performance relative to both benchmarks. While Asian markets rebounded
strongly in the first half, European stocks were flat as the Economic and
Monetary Union (EMU) was hampered by sluggish growth and high unemployment.
The EMU's new currency, the euro, has also been weak versus the dollar
since its inception in January. High-yield bonds contributed positively to
performance following their recovery from last fall's financial crisis.
Investment-grade and long-term bonds, on the other hand, were weak because
of rising interest rates and held back fund results during the recent
six-month period.
Asset Allocation
---------------------------------------------------------------------------
6/30/99
Stocks Bonds Money Markets
60 36 4
On June 30 your fund had 60% of its assets in stocks, one percentage more
than at the end of December, 36% in bonds (down one percentage point), and
the remaining 4% in cash reserves. The fund's investment committee meets
once a month to adjust the weightings of stocks, bonds, and money market
securities based on the market conditions and economic fundamentals. The
committee adopted a neutral weighting in stocks. We took some profits in
large-cap growth stocks and increased the allocation to small-cap stocks.
We also shifted some assets from large-cap value into small-caps. At
current valuations, the growth potential of small-cap stocks seems
promising, although it may take some time before other investors recognize
their value. We also continued to favor international stocks over domestic
equities.
In the bond area, the committee lowered allocations to foreign bonds in
favor of investment-grade domestic corporate bonds because of their greater
liquidity and our expectations for a continuing strong dollar. While we
maintained a consistent exposure to high-yield bonds, we are concerned
about liquidity in this market and feel that many of our high-yield
holdings have reached fair valuations.
MARKET REVIEW
On June 30, the Federal Reserve tightened the federal funds rate a
quarter-point to 5% in a preemptive strike against potential inflation.
Rising rates in general over the past six months have created a difficult
environment for bonds, especially Treasuries and high-grade corporates. At
the end of June, interest rates on long-term Treasuries were well above the
level of a year ago, although the 90-day Treasury bill rate was actually
lower.
Interest Rate Levels
---------------------------------------------------------------------------
30-Year 5-Year 90-Day
Treasury Treasury Treasury
Bond Note Bill
6/98 5.65 5.50 5.06
5.73 5.51 5.07
5.42 5.07 5.03
9/98 5.00 4.24 4.38
5.12 4.22 4.21
5.21 4.62 4.58
12/98 5.12 4.59 4.55
5.12 4.56 4.47
5.49 5.11 4.65
3/99 5.63 5.12 4.47
5.58 5.15 4.51
5.80 5.51 4.65
6/99 6.03 5.76 4.77
The difference between the yields of high- and low-quality bonds had
widened last fall as the global crisis sent investors fleeing into the
safety of Treasuries. However, the yield difference narrowed significantly
during the past six months as the crisis passed, and investors were once
again emboldened to take on greater risk in return for higher yields.
The U.S. economy continued its trajectory of robust growth against the
backdrop of sluggishness in foreign markets. Both the domestic economy and
U.S. consumer have been serving as the growth engine for the world, and
recovery overseas remains fragile and dependent on U.S. policy. This
situation has triggered a few imbalances that we regard as potential risks.
Primary among them are a record current account deficit, a negative
personal savings rate, and job creation in excess of population growth.
These imbalances have led to a gnawing concern about possible higher
inflation and the prospect of further rate hikes by the Federal Reserve.
OUTLOOK
The Fed has indicated that it will take the necessary steps to fight
inflation, so we do not anticipate a serious acceleration in the rate of
inflation through the rest of the year. The big question for investors is
whether rising interest rates will derail the recent rally in cyclical and
value stocks-and perhaps the bull market as a whole. We continue to favor
smaller-cap stocks in our portfolio, since the valuations of large-cap
growth stocks in particular are still extended following their robust gains
of the past few years.
On the international front, economic growth remains sluggish-or minimal at
best in areas such as Japan and Russia. Europe in general is likely to
generate GDP growth in the neighborhood of 1.5% for 1999. Southeast Asia
appears to be recovering from its worst problems, and Latin America has so
far weathered the storm afflicting developing nations-although problems in
Argentina and Venezuela bear watching.
Overall, we anticipate moderating stock returns in the U.S., and continue
to believe that many foreign markets offer better value for U.S. investors.
We do not expect a sharp increase in global interest rates from current
levels, and we believe the dollar will remain strong against the euro,
which bodes well for investors in U.S. bonds. We expect the diversified
strategy offered by the fund to serve shareholders well over time.
Edmund M. Notzon III
Chairman of the Investment Advisory Committee
July 23, 1999
Portfolio Highlights
Portfolio Overview
- --------------------------------------------------------------------------------
Percent of
Net Assets
6/30/99
- --------------------------------------------------------------------------------
Reserves 4.4%
- --------------------------------------------------------------------------------
Money Market Funds 3.0
Other Assets Less Liabilities 1.4
Bonds 35.6%
- --------------------------------------------------------------------------------
U.S. Government Agencies 9.1
Corporate 15.5
Mortgage-Backed 11.0
Stocks 60.0%
- --------------------------------------------------------------------------------
10 Largest Holdings 6.1%
------------------------------------------------------------------------------
BP Amoco 1.0
Bank of America 0.6
GE 0.6
Corning 0.6
Mobil 0.6
Citigroup 0.6
Browning-Ferris 0.6
Tyco International 0.5
Microsoft 0.5
International Flavors & Fragrances 0.5
- --------------------------------------------------------------------------------
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. An index
return does not reflect expenses, which have been deducted from the fund's
return.
Personal Strategy Balanced Portfolio
- --------------------------------------------------------------------------------
As of 6/30/99
Merrill
Personal Lynch-
Strategy Combined Wilshire
Balanced Index Capital
Portfolio Portfolio* Market Index
12/30/94 10,000 10,000 10,000
6/95 11,587 11,573 11,561
6/96 13,399 13,179 13,494
6/97 16,103 16,738 16,337
6/98 19,056 20,358 20,012
6/99 20,874 23,488 22,883
* 60% S&P 500, 30% Lehman Brothers Aggregate Bond Index,10% 90-day Treasury
bills.
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.
Personal Strategy Balanced Portfolio
Periods Ended 6/30/99
Since Inception
1 Year 3 Years Inception Date
- --------------------------------------------------------------------------------
9.54% 15.93% 17.78% 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
(Unaudited)
For a share outstanding throughout each period
-------------------------------------------------------
6 Months Year 12/30/94
Ended Ended Through
6/30/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 16.16 $ 15.13 $ 13.44 $ 12.43 $ 10.00
Investment activities
Net investment income 0.25 0.47 0.46 0.41 0.42
Net realized and
unrealized gain (loss) 0.58 1.65 1.93 1.32 2.41
Total from
investment activities 0.83 2.12 2.39 1.73 2.83
Distributions
Net investment income (0.24) (0.48) (0.46) (0.41) (0.40)
Net realized gain (0.36) (0.61) (0.24) (0.31) --
Total distributions (0.60) (1.09) (0.70) (0.72) (0.40)
NET ASSET VALUE
End of period $ 16.39 $ 16.16 $ 15.13 $ 13.44 $ 12.43
----------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) 5.27% 14.32% 18.04% 14.21% 28.66%
Ratio of total expenses to
average net assets 0.90%! 0.90% 0.90% 0.90% 0.90%
Ratio of net investment
income to average
net assets 3.12%! 3.04% 3.37% 3.33% 3.69%
Portfolio turnover rate 71.7%! 47.6% 32.8% 51.7% 39.3%
Net assets, end of period
(in thousands) $ 84,704 $ 79,475 $ 63,005 $ 33,263 5,625
(diamond) Total return reflects the rate that an investor would have earned
on an investment in the fund during each period, assuming
reinvestment of all distributions.
! Annualized
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
T. Rowe Price Personal Strategy Balanced Portfolio
June 30, 1999 (Unaudited)
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS AND WARRANTS 60.0%
FINANCIAL 9.9%
Bank and Trust 5.1%
Abbey National (GBP) 7,300 $ 137
ABN Amro (EUR) 4,000 87
Australia & New Zealand
Banking ADR 1,500 56
Banca Commerciale
Italiana (EUR) 18,100 132
Banco de Bilbao
Vizcaya ADR 7,200 105
Banco Frances del Rio
de la Plata ADR 2,995 57
Bank of America 7,000 513
Bank of New York 4,600 169
Bank One 3,450 205
Bankgesellschaft
Berlin (EUR) * 3,000 41
Barclay's (GBP) 5,600 163
Charter One Financial 1,107 31
Chase Manhattan 3,260 282
Citizens Banking 1,500 45
Deutsche Bank (EUR) 1,840 112
Downey Financial 2,300 50
Dresdner Bank (EUR) * 2,500 98
First Bell Bancorp 700 13
First Mariner Bancorp 400 4
First Security 1,000 27
Firstar 900 25
Frankfort First Bancorp 700 10
Glacier Bancorp * 1,815 43
HSBC Holdings (GBP) 5,413 192
J. P. Morgan 1,000 141
KBC Bancassurance
Holding (EUR) 1,500 89
Marshall & Ilsley 200 13
Mediobanca (EUR) 8,200 86
Mellon Bank 7,080 258
Mercantile Bancorporation 300 17
Societe Generale (EUR) 813 143
State Street 600 51
Summit Bancorp 1,000 42
Svenska Handelsbanken (SEK) * 6,000 $ 72
UBS (CHF) 920 275
UST 1,300 39
Washington Mutual 3,785 134
Wells Fargo 6,900 295
WestAmerica 500 18
Westpac Bank (AUD) 4,000 26
4,296
Insurance 1.9%
ACE Limited 3,100 88
American General 1,100 83
American International
Group 575 67
Brown and Brown 1,200 46
Fairfax Financial (CAD) * 300 80
Harleysville Group 900 18
Istituto Nazionale delle
Assicurazioni (EUR) * 32,000 74
Marsh & McLennan 1,600 121
PartnerRe Holdings 1,600 60
Royal&Sun Alliance (GBP) 12,363 110
Schweizerische
Rueckversicherungs (CHF) 63 120
Selective Insurance 700 13
St. Paul Companies 8,300 264
Sumitomo Marine &
Fire Insurance (JPY) 18,000 109
Travelers Property
Casualty (Class A) 6,000 235
UNUM 1,040 57
W. R. Berkley 900 23
XL Capital (Class A) 1,721 97
1,665
Financial Services 2.9%
American Express 2,550 332
Associates First Capital
(Class A) 3,000 133
AXA (EUR) 1,300 159
Capital One Financial 2,400 134
Citigroup 10,048 477
Delta Financial * 1,800 11
Fannie Mae 4,820 330
Financial Federal * 1,700 37
Freddie Mac 6,580 $ 382
Goldman Sachs Group * 400 29
ING Groep (EUR) 2,050 111
ITLA Capital * 500 8
Morgan Stanley Dean Witter * 800 82
Pearson (GBP) 6,000 122
TD Waterhouse Group * 400 10
Unidanmark (Class A) (DKK) 1,300 86
2,443
Total Financial 8,404
UTILITIES 3.9%
Telephone Services 2.5%
Aliant Communications 2,900 134
ALLTEL 1,300 93
AT&T 4,379 244
BellSouth 3,200 150
British Telecommunications ADR 900 154
Compania de Telecomunicaciones
de Chile (Class A) ADR 1,525 38
GTE 800 61
Hong Kong Telecommunications
ADR 2,500 67
Nippon Telegraph &
Telephone (JPY) 13 152
Rural Cellular (Class A) * 1,500 30
SBC Communications 5,220 303
Sprint 600 32
Telebras ADR 1,000 0
Telebras ADR 1,000 90
Telecom Corp. of
New Zealand ADR 1,700 59
Telecom Italia (EUR) 14,330 149
Telecom Italia
Mobile (EUR) * 17,400 104
Telefonica de Espana ADR * 832 122
Telefonos de Mexico
(Class L) ADR 1,400 113
Western Wireless 1,100 30
2,125
Electric Utilities 1.4%
Cleco * 1,300 39
Electrabel (EUR) 210 68
Empresa Nacional de Electricidad
Chile ADR 1,330 $ 16
Endesa ADR 3,200 68
FirstEnergy 5,892 183
GPU 1,700 72
Hong Kong Electric (HKD) 15,000 48
PECO Energy 2,400 101
Powergen (GBP) * 4,600 49
Texas Utilities 4,540 187
Unicom 4,700 181
Veba (EUR) 2,310 136
1,148
Total Utilities 3,273
CONSUMER NONDURABLES 12.0%
Cosmetics 0.8%
Gillette 1,000 41
International Flavors &
Fragrances 9,500 421
Kao (JPY) 8,000 225
687
Beverages 1.0%
Anheuser-Busch 3,900 277
Bass (GBP) * 7,100 103
Coca-Cola 400 25
Diageo ADR 2,523 108
LVMH (EUR) * 645 189
LVMH, Warrants, 9/21/99 (EUR) * 645 19
PepsiCo 3,560 138
859
Food Processing 1.9%
American Italian Pasta * 600 18
Associated British
Foods Plc (GBP) * 7,200 48
Cadbury Schweppes (GBP) * 1,800 11
Cadbury Schweppes ADR 3,600 96
Campbell 2,700 125
Carrefour (EUR) * 480 71
CSM (EUR) 1,500 75
Danisco (DKK) * 1,300 59
Eridania Beghin-Say (EUR) 530 76
General Mills 2,830 227
Heinz 1,200 60
Imperial Sugar 3,000 21
International Multifoods 1,100 $ 25
McCormick 3,400 107
Nestle (CHF) 125 225
Ralston Purina 2,440 74
Sara Lee 4,260 97
Seneca Foods (Class A) * 400 5
Seneca Foods (Class B) * 500 7
Unilever NV 1,785 125
United Natural Foods * 1,900 47
1,599
Hospital Supplies/Hospital Management 0.6%
Baxter International 700 42
Boston Scientific * 2,000 88
Medtronic 100 8
Mentor 3,100 58
Pediatrix Medical Group * 400 8
Quorum Health Group * 1,900 24
Renal Care Group * 1,650 43
Smith & Nephew (GBP) 21,000 64
Steris * 1,300 25
Terumo (JPY) 5,000 111
Wellpoint Health Networks * 600 51
522
Pharmaceuticals 3.5%
American Home Products 5,980 344
Amgen * 600 36
AstraZeneca (SEK) 2,690 105
AstraZeneca ADR 2,600 102
Biogen * 1,400 90
Boron Lepore & Associates * 300 3
Bristol-Myers Squibb 4,500 317
Eli Lilly 1,800 129
Gehe (EUR) 2,400 110
Glaxo Wellcome ADR 2,000 113
Incyte Pharmaceuticals * 600 16
Johnson & Johnson 1,880 184
Merck 3,000 222
Novartis (CHF) 142 207
Pfizer 2,740 301
Pharmacia & Upjohn 1,717 98
Schering-Plough 3,200 170
Takeda Chemical (JPY) 4,000 185
Triangle Pharmaceuticals * 1,300 23
Warner-Lambert 3,300 229
2,984
Health Care Services 0.7%
Aetna 800 $ 72
Altana AG (EUR) 600 34
AmeriPath * 2,200 19
CIGNA 500 44
IMS Health 1,000 31
Monarch Dental * 900 3
Orthodontic Centers
of America * 900 13
ProMedCo * 2,200 8
SteriGenics International * 2,600 69
United HealthCare 3,500 219
US Oncology * 2,800 34
546
Biotechnology 0.2%
Abegenix * 600 12
Alkermes * 1,000 23
Anesta * 200 4
COR Therapeutics * 400 6
Coulter Pharmaceutical * 400 9
Gilead Sciences * 200 10
Inhale Therapeutic
Systems * 1,500 36
Millennium
Pharmaceuticals * 300 11
Neurocrine Biosciences * 1,300 7
Northfield Laboratories * 1,100 13
PharmaPrint * 1,700 9
Serologicals * 1,500 12
Zonagen * 500 5
157
Miscellaneous Consumer Products 3.3%
Benetton Group (EUR) 28,800 57
Bridgestone (JPY) 4,000 121
Coles Myer Limited (AUD) 7,300 42
Colgate-Palmolive 4,140 409
Cone Mills * 3,100 19
Culp 900 9
Dan River * 3,200 24
Hasbro 3,200 89
Huhtamaki (EUR) 600 22
Koninklijke Philips
Electronics 1,380 139
Kuraray (JPY) 10,000 120
Lion Nathan (NZD) 26,300 63
Mattel 13,460 356
Mitsui (JPY) * 19,000 $ 133
Newell Rubbermaid 700 33
NIKE (Class B) 1,300 82
Philip Morris 9,880 397
Procter & Gamble 900 80
Reebok * 700 13
Sola * 2,200 43
Stride Rite 1,200 12
Tomkins (GBP) 18,100 78
Tomkins ADR 521 10
Unifi * 10,200 217
US Can * 2,000 44
UST 4,730 138
WestPoint Stevens * 800 24
Yue Yuen Industrial (HKD) 25,000 58
2,832
Total Consumer Nondurables 10,186
CONSUMER SERVICES 6.1%
Restaurants 0.0%
Buca * 500 8
PJ America * 500 11
19
General Merchandisers 1.1%
Bon-Ton Stores * 2,400 16
Casey's General Stores 3,800 57
Columbia Sportswear * 1,400 21
Dayton Hudson 700 45
JUSCO (JPY) 4,000 73
Marui (JPY) 8,000 132
Pinault Printemps
Redoute (EUR) 1,000 172
Saks * 2,900 84
Tesco (GBP) 40,159 103
Wal-Mart 3,600 174
Warnaco Group (Class A) 900 24
901
Specialty Merchandisers 1.9%
Christian Dior (EUR) 400 65
CompuCom Systems * 4,700 19
CVS 3,128 159
Federated Department
Stores * 300 16
Goody's Family Clothing * 1,900 22
Home Depot 2,200 142
Kroger * 6,200 173
O'Charley's * 700 $ 11
Omron (JPY) 5,000 87
Performance Food Group * 800 22
Safeway * 4,300 213
St. John Knits 900 26
Toys "R" Us * 15,200 314
Tupperware 12,500 319
Urban Outfitters * 1,000 25
1,613
Entertainment and Leisure 1.1%
Carnival (Class A) 1,000 49
Disney 710 22
Hutchison Whampoa (HKD) 16,000 145
McDonald's 2,840 117
MediaOne Group * 2,100 156
Reader's Digest (Class A) 10,100 401
Sharp (JPY) 5,000 59
949
Media and Communications 2.0%
American Tower Systems
(Class A) * 400 10
Asatsu (JPY) 3,000 79
CBS * 5,000 217
Clear Channel
Communications 1,731 119
Elsevier (EUR) 4,000 46
Emmis Broadcasting
(Class A) * 600 30
Fox Entertainment
Group (Class A) * 3,700 100
France Telecom ADR 1,600 123
Infinity Broadcasting
(Class A) * 3,900 116
Pegasus Communications * 500 20
Publishing &
Broadcasting (AUD) 5,800 38
R.R. Donnelley 2,700 100
Sinclair Broadcast
Group (Class A) * 1,200 20
Time Warner 3,100 228
Tribune 1,100 96
Vodafone ADR 1,400 276
Young Broadcasting
(Class A) * 1,000 42
1,660
Total Consumer Services 5,142
CONSUMER CYCLICALS 3.9%
Automobiles and Related 0.6%
A.O. Smith (Class B) 4,050 $ 113
Cycle & Carriage (SGD) 4,000 23
DaimlerChrysler (EUR) 1,100 95
Honda ADR 1,500 130
Keystone Automotive * 600 10
Littelfuse * 1,000 19
SPX * 1,000 84
Strattec Security * 100 4
478
Building and Real Estate 1.9%
Accor (EUR) 400 100
Apartment Investment &
Management, REIT 700 30
Arden Realty, REIT 1,600 39
Cheung Kong
Holdings (HKD) 13,000 116
City Developments (SGD) 5,000 32
DBS Land (SGD) * 5,000 10
EastGroup Properties, REIT 2,100 42
Federal Realty Investment
Trust, REIT 11,400 262
First Washington Realty
Trust, REIT 1,600 37
Glenborough Realty
Trust, REIT 400 7
JP Realty, REIT 1,200 25
Parkway Properties, REIT 2,300 76
Reckson Associates
Realty (Class B), REIT 1,126 27
Reckson Associates
Realty, REIT * 10,900 256
Simon DeBartolo
Group, REIT 5,996 152
Starwood Hotels & Resorts, REIT 11,400 348
Westfield Trust (AUD) 8,800 18
Woodhead Industries 2,800 35
1,612
Miscellaneous Consumer Durables 1.4%
CompX * 1,400 25
Corning 7,100 498
Eastman Kodak 4,700 318
Harman International 400 18
Juno Lighting * 42 $ 1
Masco 2,800 81
OCE (EUR) 1,200 31
Ricoh (JPY) 7,000 96
Sony (JPY) 1,000 108
1,176
Total Consumer Cyclicals 3,266
TECHNOLOGY 4.5%
Electronic Components 1.4%
Altera * 1,400 52
American Superconductor * 600 9
Analogic 1,800 56
Benchmark Electronics * 700 25
Burr Brown * 1,100 41
EMC * 1,600 88
Exar * 600 15
Intel 3,900 232
Linear Technology 600 40
Maxim Integrated Products * 2,200 146
Methode Electronics
(Class A) 3,100 71
Motorola 700 66
Planar Systems * 2,100 16
PMC-Sierra * 800 47
SIPEX * 800 16
Texas Instruments 900 131
Xilinx * 1,600 92
1,143
Electronic Systems 0.8%
Applied Materials * 1,200 89
Applied Micro Circuits * 700 58
EMS Technologies * 1,500 21
Hewlett-Packard 2,000 201
Lifeline Systems * 1,000 19
Lo-Jack * 1,800 15
Nokia ADR 2,500 229
Solectron * 1,000 67
699
Information Processing 0.3%
Dell Computer * 2,200 81
Hitachi ADR 1,100 104
IBM 800 104
289
Office Automation 0.1%
Ceridian * 1,100 $ 36
Technitrol 1,700 55
91
Specialized Computer 0.1%
Sun Microsystems * 1,400 96
96
Telecommunications 1.4%
Avant * 1,400 18
Cisco Systems * 3,000 193
Deutsche Telekom ADR 2,600 110
Ditech Communications * 700 14
LM Ericsson (Class B) ADR 4,200 138
Lucent Technologies 2,310 156
MCI WorldCom * 4,685 403
Premisys Communications * 600 4
Qwest Communications
International * 300 10
Tellabs * 1,100 74
Voicestream Wireless * 1,100 31
West TeleServices * 500 5
1,156
Aerospace and Defense 0.4%
AlliedSignal 4,100 259
DONCASTERS ADR * 300 5
Raytheon (Class B) 500 35
Woodward Governor 800 21
320
Total Technology 3,794
EDUCATION 0.0%
ITT Educational Service * 1,500 39
Total Education 39
CAPITAL EQUIPMENT 2.3%
Capital Equipment 0.0%
Omniquip International 1,900 15
15
Electrical Equipment 1.7%
ABB AG (CHF) 810 76
Canon (JPY) 5,000 144
GE 4,460 504
Holophane * 1,900 73
LSI Industries 500 12
Matsushita Electric
Works (JPY) 5,000 48
Mitsubishi Electric (JPY) 8,000 $ 31
Siemens (EUR) 1,100 85
Tyco International 4,876 462
1,435
Machinery 0.6%
Danaher 3,200 186
GKN (GBP) 7,800 134
JLG Industries 2,600 53
NN Ball & Roller 2,500 14
S I G Schweis (CHF) 130 77
Toolex Alpha * 500 7
Valmet (EUR) * 2,000 22
493
Total Capital Equipment 1,943
BUSINESS SERVICES AND TRANSPORTATION 5.7%
Computer Service and Software 1.9%
America Online * 1,200 133
Analysts International 900 13
Automatic Data Processing 2,880 127
BISYS Group * 400 23
BMC Software * 3,200 173
Compuware * 2,500 79
Concur Technologies * 200 6
Electronic Arts * 200 11
First Data 2,634 129
Galileo International 1,800 96
Great Plains Software * 500 23
HCIA * 1,900 17
Microsoft * 4,740 427
Oracle * 1,100 41
Parametric Technology * 4,500 63
Peerless Systems * 1,700 18
Phoenix Technologies * 1,000 18
Progress Software * 600 17
PSINet * 500 22
SalesLoggix * 500 7
Saville Systems ADR * 2,500 36
Summit Design * 2,000 6
SunGard Data Systems 1,400 48
Synopsys * 200 11
Vantive * 600 7
Viasoft * 2,600 9
Visio * 1,300 49
WebTrends * 200 9
Wind River Systems * 1,250 20
Zebra Technologies
(Class A) * 200 $ 8
1,646
Distribution Services 0.4%
Aviation Sales * 900 36
Cardinal Health 1,085 70
Jack Henry & Associates 500 20
MSC * 1,100 11
Primesource 700 4
Richfood Holdings 4,000 70
SCP Pool * 500 13
SunSource 1,100 14
U.S. Foodservice * 2,142 91
Watsco (Class A) 2,300 38
Wilmar Industries * 1,000 13
380
Environmental 0.1%
CUNO * 1,400 27
IT Group * 800 13
Waterlink * 3,100 9
49
Transportation Services 0.5%
C.H. Robinson Worldwide 1,100 40
Coach USA * 2,900 122
Comfort Systems USA * 3,800 68
Eagle USA Air Freight * 1,100 46
Expeditors International
of Washington 1,200 33
Frozen Food Express 1,000 8
Heartland Express * 600 10
Hub Group (Class A) * 300 7
International Shipholding 500 7
Mitsubishi Heavy
Industries (JPY) 29,000 118
459
Miscellaneous Business Services 2.4%
Billing Information
Concepts * 2,100 23
British Airport
Authorities (GBP) 11,000 106
Browning-Ferris 10,900 469
Cendant * 1,500 31
Concord EFS * 900 38
CORT Business Services * 1,300 31
Electro Rent * 1,900 21
Equifax 400 $ 14
H&R Block 5,700 285
Insituform Technologies
(Class A) * 2,000 43
Iron Mountain * 1,100 32
Ivex Packaging * 700 15
Maximus * 600 17
McGrath Rent 1,300 26
Metamor Worldwide * 1,100 26
MPW Industrial Services
Group * 1,600 16
New England Business
Service 2,600 80
Omnicom 2,000 160
Paxar * 200 2
Renaissance Worldwide * 2,700 21
Romac International * 1,400 12
Shorewood Packaging * 4,700 87
Strayer Education 1,500 46
Tetra Tech * 2,812 47
Waste Management 7,622 410
2,058
Airlines 0.1%
KLM Royal Dutch Air ADR 1,500 43
Midwest Express Holdings * 200 7
50
Railroads 0.3%
Norfolk Southern 7,300 220
220
Total Business Services and Transportation 4,862
ENERGY 5.5%
Energy Services 1.5%
Baker Hughes 12,400 415
BG (GBP) * 9,100 56
Cooper Cameron * 300 11
Elf Aquitaine (EUR) 200 29
Elf Aquitaine ADR 1,100 81
Halliburton 2,000 90
Johnson Electric (HKD) 50,400 207
Smith International * 300 13
Tokyo Electric Power
(JPY) * 6,000 127
TOTAL ADR 1,700 109
United Utilities (GBP) * 9,500 117
Weatherford International 400 $ 15
1,270
Exploration and Production 0.5%
Key Energy * 2,700 10
National Oilwell * 900 13
Santos (AUD) 9,000 29
Unocal 8,430 334
386
Integrated Petroleum - Domestic 0.8%
Amerada Hess 300 18
Atlantic Richfield 3,060 256
Occidental Petroleum 4,600 97
USX-Marathon 9,560 311
682
Integrated Petroleum - International 2.7%
BP Amoco ADR 7,604 825
Chevron 1,000 95
ENI SPA ADR 1,800 108
Exxon 1,720 133
Mobil 4,960 491
Repsol ADR 5,100 104
Royal Dutch Petroleum ADR 3,100 187
Shell Transport &
Trading ADR 3,500 162
Texaco 2,840 177
2,282
Total Energy 4,620
PROCESS INDUSTRIES 4.2%
Diversified Chemicals 1.0%
Dow Chemical 2,100 267
DuPont 3,400 232
Hercules 10,200 401
900
Specialty Chemicals 1.8%
3M 3,870 336
A. Schulman 500 8
Air Liquide (L) (EUR) 495 78
Akzo Nobel (EUR) 1,600 67
BASF AG (EUR) 3,050 135
Bayer (EUR) 2,930 122
Furon 1,700 32
Great Lakes Chemical 5,250 242
Hauser * 200 1
Imperial Chemical ADR 1,200 $ 48
Pall 8,600 191
Sumitomo Chemicals (JPY) 29,000 133
Technip (EUR) 1,210 136
1,529
Paper and Paper Products 0.8%
Dai Nippon Printing (JPY) 8,000 128
Fort James 5,800 220
Kimberly-Clark 5,100 291
Smurfit-Stone Container * 900 18
657
Forest Products 0.3%
International Paper 900 45
Weyerhaeuser 2,800 193
238
Building and Construction 0.3%
Blue Circle Industries (GBP) 12,143 81
Heidelberg Zement (EUR) 500 41
Holderbank Financiere
Glarus (CHF) 80 94
Layne Christensen * 2,100 14
Simpson Manufacturing * 300 14
Trex * 1,300 33
277
Total Process Industries 3,601
BASIC MATERIALS 1.3%
Metals 1.1%
AngloGold ADR 531 11
Cambior 3,700 12
Gibraltar Steel 600 15
Inco 11,300 203
Material Sciences * 2,700 41
Matthews International
(Class A) 2,500 74
Phelps Dodge 4,000 248
Reynolds Metals 6,100 360
964
Mining 0.1%
Battle Mountain Gold 4,500 11
Lihir Gold * 11,900 9
Lonrho Africa (GBP) 2,000 1
Rio Tinto (AUD) 4,200 69
TVX Gold * 4,700 5
95
Miscellaneous Materials 0.1%
Malayan Cement (MYR) 7,500 $ 4
Synthetic Industries * 1,000 30
34
Total Basic Materials 1,093
MISCELLANEOUS 0.1%
Conglomerates 0.1%
Berkshire Hathaway
(Class B) * 21 47
Orkla (Class A) (NOK) 3,600 56
103
Total Miscellaneous 103
MISCELLANEOUS FOREIGN 0.6%
Europe 0.4%
AXA Colonia
Konzern (EUR) 1,100 105
Man AG (EUR) * 3,100 106
Svenska Cellulosa (SEK) 4,000 104
315
Far East 0.1%
Nippon Express (JPY) 20,000 120
120
Other Foreign 0.1%
Bobst (CHF) 66 78
Pacific Dunlop (AUD) 13,900 20
98
Total Miscellaneous Foreign 533
Total Common Stocks and Warrants
(Cost $38,676) 50,859
CORPORATE BONDS 15.5%
Adelphia Communications
7.875%, 5/1/09 $ 75,000 70
9.875%, 3/1/05 75,000 78
Allied Holdings, Gtd.
Sr. Sub. Notes
8.625%, 10/1/07 75,000 71
American Builders &
Contractors Supply
Sr. Sub. Notes
10.625%, 5/15/07 $ 100,000 $ 94
American Radio Systems
Sr. Sub. Notes
9.00%, 2/1/06 100,000 106
American Standard
9.25%, 12/1/16 53,000 54
Amerigas Partners, Sr. Notes
10.125%, 4/15/07 50,000 51
Anchor Advanced, Sr. Notes
11.75%, 4/1/04 150,000 154
APCOA, Sr. Sub. Notes
9.25%, 3/15/08 100,000 90
Associated Materials, Sr. Sub. Notes
9.25%, 3/1/08 100,000 100
Aurora Foods, Sr. Sub. Notes
9.875%, 2/15/07 100,000 103
B&G Foods, Sr. Sub. Notes
9.625%, 8/1/07 100,000 95
Ballys Total Fitness
9.875%, 10/15/07 50,000 49
BWAY, Sr. Sub. Notes
10.25%, 4/15/07 100,000 104
Chancellor Media, Sr. Sub. Notes
9.00%, 10/1/08 150,000 152
Charter Communications, Sr. Notes
(144a), 8.25%, 4/1/07 150,000 143
Chattem, Sr. Sub. Notes
12.75%, 6/15/04 100,000 109
Cinemark USA, Sr. Sub. Notes
8.50%, 8/1/08 100,000 93
Coach USA, Gtd. Sr. Sub. Notes
9.375%, 7/1/07 100,000 104
Coinmach, Sr. Sub. Notes
11.75%, 11/15/05 50,000 55
Comcast Cable Communications
8.50%, 5/1/27 800,000 889
Communications & Power Industries
Sr. Sub. Notes,
12.00%, 8/1/05 100,000 103
Consolidated Container, (144a)
10.125%, 7/15/09 75,000 76
Container Corp of America, Sr. Notes
Sr. Notes, 9.75%, 4/1/03 $ 50,000 $ 53
Gtd., 10.75%, 5/1/02 25,000 26
Dan River, Sr. Sub. Notes
10.125%, 12/15/03 100,000 102
Delta Mills, Sr. Notes
9.625%, 9/1/07 75,000 71
Doane Pet Care, Sr. Sub. Notes
9.75%, 5/15/07 173,000 177
Dyersburg, Sr. Sub. Notes
9.75%, 9/1/07 50,000 21
Dyncorp, Sr. Sub. Notes
9.50%, 3/1/07 75,000 74
Energy Corporation of America
Sr. Sub. Notes
9.50%, 5/15/07 100,000 91
Fairchild Semiconductor
Sr. Sub. Notes
10.125%, 3/15/07 50,000 49
Fairfax Financial
8.25%, 10/1/15 800,000 790
Federal-Mogul, Sr. Notes
7.75%, 7/1/06 100,000 96
First Federal Financial
11.75%, 10/1/04 50,000 53
Frontiervision, Sr. Notes
11.00%, 10/15/06 100,000 109
Fundy Cable, Sr. Secured
2nd Priority Notes
11.00%, 11/15/05 50,000 55
Group Maintenance America
Sr. Sub. Notes, (144a)
9.75%, 1/15/09 75,000 74
Harrahs Entertainment
7.875%, 12/15/05 150,000 145
Hawk, Sr. Notes
10.25%, 12/1/03 100,000 103
Herff Jones, Sr. Sub. Notes
11.00%, 8/15/05 100,000 106
Hollinger International Publishing
Gtd. Notes
9.25%, 3/15/07 150,000 154
Holmes Products, Gtd. Notes
9.875%, 11/15/07 100,000 97
Host Marriott Travel, Sr. Notes
9.50%, 5/15/05 $ 150,000 $ 154
ICG Services, Sr. Disc. Notes
STEP, 0%, 9/15/05 75,000 65
Intermedia Communications
(144a), 9.50%, 3/1/09 100,000 97
International Home Foods, Gtd.
Sr. Sub. Notes
10.375%, 11/1/06 150,000 158
International Wire, Sr. Sub. Notes
11.75%, 6/1/05 25,000 26
(144a), 11.75%, 6/1/05 75,000 78
Intertek Finance, Sr. Sub. Notes
10.25%, 11/1/06 50,000 48
Iron Mountain, Sr. Sub. Notes
8.75%, 9/30/09 100,000 98
Isle of Capri Casinos, Sr. Sub. Notes
(144a), 8.75%, 4/15/09 150,000 141
Jitney-Jungle Stores, Sr. Sub. Notes
12.00%, 3/1/06 75,000 60
Keebler, Sr. Sub. Notes
10.75%, 7/1/06 150,000 164
Lenfest Communications, Sr. Notes
8.375%, 11/1/05 20,000 21
MCI WorldCom, 7.75%, 4/1/07 800,000 839
Mastec, Sr. Sub. Notes
7.75%, 2/1/08 100,000 94
Mohegan Tribal Gaming Authority
Sr. Notes, (144a)
8.125%, 1/1/06 150,000 147
Nextel Communications
Sr. Disc. Notes
STEP, 0%, 10/31/07 225,000 158
Nextlink Communications
Sr. Disc. Notes
STEP, 0%, 6/1/09 225,000 132
Niagara Mohawk, Sr. Notes
7.75%, 10/1/08 25,000 26
Northland Cable Television
Sr. Sub. Notes
10.25%, 11/15/07 100,000 104
NTL, Sr. Notes
Zero Coupon, 4/1/08 225,000 154
Owens & Minor, Sr. Sub. Notes
10.875%, 6/1/06 25,000 27
Owens Illinois, Sr. Notes
7.35%, 5/15/08 $ 800,000 $ 755
Packaging Corp. of America
Sr. Sub. Notes, (144a)
9.625%, 4/1/09 150,000 152
Paine Webber, Sr. Notes
6.55%, 4/15/08 800,000 754
Park Place Entertainment
Sr. Sub. Notes
7.875%, 12/15/05 100,000 95
Plastic Containers
Sr. Secured Notes
10.00%, 12/15/06 75,000 85
Premier Parks
Sr. Disc. Notes
STEP, 0%,4/1/08 100,000 66
Pride Petroleum Services
Sr. Notes
9.375%, 5/1/07 75,000 74
Principal Mutual, (144a)
8.00%, 3/1/44 800,000 782
Protection One Alarm
Sr. Sub. Notes, (144a)
8.125%, 1/15/09 50,000 46
Purina Mills, Sr. Sub. Notes
9.00%, 3/15/10 50,000 39
Quest Diagnostics
Gtd. Sr. Sub. Notes
10.75%, 12/15/06 100,000 113
Qwest Communications
Sr. Disc. Notes
Zero Coupon, 10/15/07 100,000 77
Sr. Notes, 7.50%, 11/1/08 25,000 25
R & B Falcon, Sr. Notes
6.95%, 4/15/08 800,000 632
Red Roof Inns, Sr. Notes
9.625%, 12/15/03 100,000 102
Scotland International Finance
Sub. Notes
6.50%, 2/15/11 100,000 93
Six Flags Entertainment, Sr. Notes
8.875%, 4/1/06 75,000 74
Smithfield Foods, Sr. Sub. Notes
7.625%, 2/15/08 50,000 45
Sprint, 6.125%, 11/15/08 350,000 327
Stena, Sr. Notes
10.50%, 12/15/05 $ 100,000 $ 100
Synthetic Industries, Sr. Sub. Notes
9.25%, 2/15/07 50,000 51
United International Holdings
Sr. Disc. Notes, STEP
10.75%, 2/15/08 100,000 67
US Can, Sr. Gtd. Notes
10.125%, 10/15/06 50,000 52
Venture Holdings Trust
Sr. Notes, (144a)
11.00%, 6/1/07 100,000 101
Viasystems, Sr. Sub. Notes
9.75%, 6/1/07 100,000 87
Westinghouse Air Brake
Sr. Notes, (144a)
9.375%, 6/15/05 50,000 51
Westpoint Stevens, Sr. Notes
7.875%, 6/15/08 150,000 145
Total Corporate Bonds (Cost $14,006) 13,170
U.S. GOVERNMENT MORTGAGE-
BACKED SECURITIES 11.0%
Federal National Mortgage Assn.
6.50%, 1/1/26 188,600 182
Government National Mortgage Assn.
I
6.00%,
12/15/23 - 4/15/26 1,884,912 1,770
6.50%,
4/15/24 - 5/15/29 5,154,277 4,965
7.00%,
5/15/23 - 5/15/29 1,801,996 1,781
7.50%,
5/15/24 - 11/15/25 256,169 259
8.00%,
10/15/25 - 6/15/26 313,581 323
8.50%, 12/15/24 20,438 21
11.50%, 11/15/19 22,663 26
Total U.S. Government Mortgage-
Backed Securities (Cost $9,478) 9,327
U.S. GOVERNMENT OBLIGATIONS/AGENCIES 9.1%
Federal Home Loan Mortgage
5.95%, 1/19/06 $1,000,000 $ 982
Tennessee Valley Authority
5.88%, 4/1/36 600,000 583
6.235%, 7/15/45 1,000,000 998
U.S. Treasury Bonds
6.75%, 8/15/26 2,900,000 3,099
U.S. Treasury Notes
4.25%, 11/15/03 2,150,000 2,029
Total U.S. Government
Obligations/Agencies (Cost $7,775) 7,691
SHORT-TERM INVESTMENTS 3.0%
Certificates of Deposit 0.0%
Chase Manhattan Bank, N.A., fixed deposit
2.00%, 7/9/99 (MYR) 36,045 9
9
Money Market Funds 3.0%
Reserve Investment Fund
5.05% # 2,490,568 2,491
2,491
Total Short-Term Investments
(Cost $2,499) 2,500
Total Investments in Securities
98.6% of Net Assets (Cost $72,434) $ 83,547
Other Assets Less Liabilities 1,157
NET ASSETS $ 84,704
----------
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ 33
Accumulated net realized gain/loss -
net of distributions 2,136
Net unrealized gain (loss) 11,113
Paid-in-capital applicable to 5,167,972
shares of $0.0001 par value capital stock
outstanding; 1,000,000,000 shares of the
Corporation authorized 71,422
NET ASSETS $ 84,704
----------
NET ASSET VALUE PER SHARE $ 16.39
----------
# Seven-day yield
* Non-income producing
ADR American Depository Receipt
REIT Real Estate Investment Trust
STEP Stepped coupon note for which the interest rate will adjust on
specified future date(s)
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 period-end
amounts to 2.2% of net assets.
AUD Australian dollar
CAD Canadian dollar
CHF Swiss franc
DKK Danish krone
EUR Euro
GBP British sterling
HKD Hong Kong dollar
JPY Japanese yen
L Local currency
MYR Malaysian ringgit
NOK Norwegian krone
NZD New Zealand dollar
SEK Swedish krona
SGD Singapore dollar
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Personal Strategy Balanced Portfolio
(Unaudited)
In thousands
6 Months
Ended
6/30/99
Investment Income
Income
Interest $ 1,132
Dividend (net of foreign taxes of $32) 495
Total income 1,627
Expenses
Investment management and administrative 364
Net investment income 1,263
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 2,228
Foreign currency transactions (33)
Net realized gain (loss) 2,195
Change in net unrealized gain or loss
Securities 814
Assets and liabilities dominated in foreign currencies (3)
Change in net unrealized gain or loss 811
Net realized and unrealized gain (loss) 3,006
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 4,269
---------
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Personal Strategy Balanced Portfolio
(Unaudited)
In thousands
6 Months Year
Ended Ended
6/30/99 12/31/98
Increase (Decrease) in Net Assets
Operations
Net investment income $ 1,263 $ 2,243
Net realized gain (loss) 2,195 4,447
Change in net unrealized
gain or loss 811 2,855
Increase (decrease) in
net assets from operations 4,269 9,545
Distributions to shareholders
Net investment income (1,217) (2,267)
Net realized gain (1,800) (2,857)
Decrease in net assets
from distributions (3,017) (5,124)
Capital share transactions*
Shares sold 7,427 23,134
Distributions reinvested 3,017 5,124
Shares redeemed (6,467) (16,209)
Increase (decrease) in
net assets from capital
share transactions 3,977 12,049
Net Assets
Increase (decrease) during period 5,229 16,470
Beginning of period 79,475 63,005
End of period $ 84,704 $ 79,475
---------------------------------
*Share information
Shares sold 461 1,450
Distributions reinvested 189 323
Shares redeemed (400) (1,018)
Increase (decrease)
in shares outstanding 250 755
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Personal Strategy Balanced Portfolio
June 30, 1999 (Unaudited)
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day 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.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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 (MBS), are amortized for both financial
reporting and tax purposes. Premiums and discounts on all MBS are
recognized upon disposition or principal repayment as gain or loss for
financial reporting purposes. For tax purposes, premiums and discounts on
MBS acquired on or before June 8, 1997, are recognized upon disposition or
principal repayment as ordinary income. For MBS acquired after June 8,
1997, premiums are recognized as gain or loss, discounts are recognized as
gain or loss, except to the extent of accrued market discount.
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.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term and U.S.
government securities, aggregated $15,144,000 and $16,974,000,
respectively, for the six months ended June 30, 1999. Purchases and sales
of U.S. government securities aggregated $14,446,000 and $10,632,000,
respectively, for the six months ended June 30, 1999.
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.
T. Rowe Price Personal Strategy Balanced Portfolio
At June 30, 1999, the cost of investments for federal income tax purposes was
substantially the same as for financial reporting and totaled $72,434,000. Net
unrealized gain aggregated $11,113,000 at period-end, of which $13,419,000
related to appreciated investments and $2,306,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an all-inclusive fee, of which
$42,000 was payable at June 30, 1999. The fee is computed daily and paid
monthly, and 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.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available
to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the six months ended
June 30, 1999, totaled $127,000 and are reflected as interest income in the
accompanying Statement of Operations.
Invest With Confidence(registered trademark)
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for dis-
tribution only to those who have
received a copy of the portfolio's
prospectus.
T. Rowe Price Investment Services, Inc., Distributor
TRP655 (6/99)
K15-058 6/30/99
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