<PAGE>
- --------------------------------------------------------------------------------
Annual Report - Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price
Personal Strategy
Balanced Fund
- ------------
May 31, 1997
- ------------
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Year 7/29/94
Ended through
5/31/97 5/31/96 5/31/95
<S> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 12.68 $ 11.15 $ 10.00
...............................
Investment activities
Net investment income 0.42* 0.41* 0.33*
Net realized and
unrealized gain (loss) 1.69 1.56 1.08
...............................
Total from
investment activities 2.11 1.97 1.41
...............................
Distributions
Net investment income (0.40) (0.37) (0.26)
Net realized gain (0.32) (0.07) -
...............................
Total distributions (0.72) (0.44) (0.26)
...............................
NET ASSET VALUE
End of period $ 14.07 $ 12.68 $ 11.15
-------------------------------
Ratios/Supplemental Data
Total return 17.21%* 17.97%* 14.35%*
................................................................................
Ratio of expenses to
average net assets 1.05%* 1.05%* 1.05%+*
................................................................................
Ratio of net investment
income to average
net assets 3.20%* 3.44%* 3.74%+*
................................................................................
Portfolio turnover rate 54.0% 47.7% 25.8%+
................................................................................
Average commission rate paid $ 0.0369 $ 0.0398 -
................................................................................
Net assets, end of period
(in thousands) $205,883 $116,826 $ 13,336
................................................................................
</TABLE>
* Excludes expenses in excess of a 1.05% voluntary expense limitation in effect
through 5/31/98.
+ Annualized.
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
May 31, 1997
<TABLE>
<CAPTION>
- -----------------------
Statement of Net Assets Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Common Stocks 58.6%
FINANCIAL 11.9%
Bank and Trust 5.7%
Abbey National (GBP) 30,000 $ 433
................................................................................
ABN Amro Holdings (NLG) 20,400 377
................................................................................
Air Liquide (L) (FRF) 1,840 282
................................................................................
BANC ONE 7,200 311
................................................................................
Banca Commerciale Italiana (ITL) 86,000 169
................................................................................
Banco de Bilbao Vizcaya ADR 4,400 310
................................................................................
Banco Frances del Rio ADR 7,704 253
................................................................................
Bank Boston 3,000 219
................................................................................
Bankgesellschaft Berlin (DEM) 4,000 92
................................................................................
Barclay's (GBP) 23,255 452
................................................................................
Chase Manhattan 8,400 794
................................................................................
Citicorp 4,300 492
................................................................................
Deutsche Bank (DEM) 4,100 230
................................................................................
Development Bank of Singapore (SGD) 21,000 263
................................................................................
Dresdner Bank AG (DEM) 7,000 245
................................................................................
Great Western Financial 23,300 1,130
................................................................................
HSBC Holdings (GBP) 22,200 689
................................................................................
J. P. Morgan 3,230 347
................................................................................
KeyCorp 4,350 236
................................................................................
Kredietbank (BEF) 500 206
................................................................................
Mellon Bank 11,350 993
................................................................................
National City 6,800 350
................................................................................
NationsBank 5,300 312
................................................................................
Norwest 11,400 610
................................................................................
Overseas Chinese Bank (SGD) 20,000 249
................................................................................
Schweizerischer Bankverein (CHF) * 1,200 288
................................................................................
Societe Generale (FRF) 2,700 300
................................................................................
Societe Generale de Belgique (BEF) 1,900 175
................................................................................
Svenska Handelsbank (SEK) 8,000 217
................................................................................
Union Bank of Switzerland (CHF) 300 329
................................................................................
Wells Fargo 800 211
................................................................................
Westpac Bank (AUD) 40,000 217
................................................................................
$ 11,781
..............
</TABLE>
3
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Insurance 2.9%
ACE Limited 9,400 $ 602
................................................................................
American General 9,200 407
................................................................................
American International Group 2,800 379
................................................................................
CKAG Colonia Konzern (DEM) 2,000 193
................................................................................
EXEL 4,800 212
................................................................................
Mid Ocean Limited 7,900 358
................................................................................
St. Paul Companies 19,500 1,397
................................................................................
Travelers Property Casualty (Class A) 36,200 1,394
................................................................................
UNUM 7,000 554
................................................................................
Willis-Corroon ADR 47,500 534
................................................................................
6,030
..............
Financial Services 3.3%
American Express 12,200 848
................................................................................
AXA (FRF) 4,700 281
................................................................................
DCB Holdings (MYR) 40,000 129
................................................................................
Fannie Mae 17,700 772
................................................................................
Freddie Mac 21,700 716
................................................................................
Green Tree Financial 5,800 203
................................................................................
H&R Block 41,200 1,359
................................................................................
Hartford Life (Class A) * 1,600 54
................................................................................
Household International 2,400 236
................................................................................
ING Groep (NLG) 12,184 538
................................................................................
Mercury Finance 39,300 103
................................................................................
Money Store 11,100 285
................................................................................
Pearson (GBP) 15,000 177
................................................................................
Sallie Mae 3,550 432
................................................................................
Travelers Group 11,933 655
................................................................................
6,788
..............
Total Financial 24,599
..............
UTILITIES 4.4%
Telephone Services 2.8%
ALLTEL 6,700 220
................................................................................
AT&T 26,750 986
................................................................................
BellSouth 11,700 531
................................................................................
</TABLE>
4
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
British Telecommunications ADR 4,600 $ 338
................................................................................
Compania de Telecomunicaciones de Chile ADR 2,550 87
................................................................................
Frontier 33,900 623
................................................................................
Hong Kong Telecommunications ADR 8,314 188
................................................................................
SBC Communications 24,100 1,410
................................................................................
Sprint 1,500 73
................................................................................
Telecom Corp. of New Zealand ADR 6,000 230
................................................................................
Telecom Italia (ITL) 95,000 262
................................................................................
Telecom Italia Mobile (ITL) 80,000 235
................................................................................
Telefonica de Espana ADR 3,500 306
................................................................................
Telekom Malaysia (MYR) 17,000 126
................................................................................
Telmex ADR 2,400 106
................................................................................
5,721
..............
Electric Utilities 1.6%
Centerior Energy 26,700 287
................................................................................
Electrabel (BEF) 600 134
................................................................................
Empresa Nacional de Electricidad ADR 2,400 186
................................................................................
Empresa Nacional de Electricidad Chile ADR 3,000 68
................................................................................
Entergy 6,800 179
................................................................................
Hong Kong Electric (HKD) 57,000 205
................................................................................
Niagara Mohawk * 30,200 264
................................................................................
Ohio Edison 23,700 504
................................................................................
PECO Energy 18,400 350
................................................................................
Texas Utilities 4,000 138
................................................................................
Unicom 25,400 578
................................................................................
Veba (DEM) 7,400 418
................................................................................
3,311
..............
Total Utilities 9,032
..............
CONSUMER NONDURABLES 12.1%
Cosmetics 0.6%
Gillette 1,500 133
................................................................................
Intl Flavors & Fragrances 14,500 644
................................................................................
Kao (JPY) 32,000 434
................................................................................
1,211
..............
</TABLE>
5
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Beverages 0.6%
Coca-Cola 1,300 $ 89
................................................................................
LVMH (FRF) 800 194
................................................................................
PepsiCo 26,900 988
................................................................................
1,271
..............
Food Processing 2.4%
Cadbury Schweppes (GBP) 3,500 31
................................................................................
Cadbury Schweppes ADR 3,600 131
................................................................................
CPC International 7,100 611
................................................................................
CSM (NLG) 4,000 205
................................................................................
Danisco (DKK) 4,100 243
................................................................................
Eridania Beghin-Say (FRF) 2,000 280
................................................................................
General Mills 5,660 358
................................................................................
Heinz 11,700 503
................................................................................
Interstate Bakeries 3,500 188
................................................................................
McCormick 20,500 534
................................................................................
Nabisco Holdings (Class A) 5,300 210
................................................................................
Nestle (CHF) 400 497
................................................................................
Ralston Purina 6,100 520
................................................................................
Sara Lee 17,200 703
................................................................................
5,014
..............
Hospital Supplies/Hospital Management 0.9%
Baxter International 4,300 227
................................................................................
Boston Scientific * 5,300 283
................................................................................
Columbia/HCA Healthcare 11,650 427
................................................................................
HealthSouth * 11,200 256
................................................................................
Medtronic 4,300 318
................................................................................
Quest Diagnostics * 2,125 39
................................................................................
Vencor * 9,400 383
................................................................................
1,933
..............
Pharmaceuticals 3.6%
American Home Products 10,580 807
................................................................................
Amgen 2,800 187
................................................................................
Astra (SEK) 12,000 185
................................................................................
Bristol-Myers Squibb 2,600 191
................................................................................
Eli Lilly 4,864 452
................................................................................
Gehe (DEM) 3,100 219
................................................................................
Glaxo Wellcome ADR 6,800 274
................................................................................
</TABLE>
6
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Johnson & Johnson 10,100 $ 605
................................................................................
Merck 5,800 521
................................................................................
Novartis (CHF) 320 434
................................................................................
Pfizer 10,160 1,045
................................................................................
Pharmacia & Upjohn 14,660 508
................................................................................
Schering-Plough 4,800 436
................................................................................
SmithKline Beecham ADR 8,500 744
................................................................................
Takeda Chemical Industries (JPY) 17,000 431
................................................................................
Warner-Lambert 3,300 332
................................................................................
7,371
..............
Health Care Services 0.4%
Altana AG (DEM) 310 286
................................................................................
PacifiCare Health Systems (Class B) * 3,600 285
................................................................................
United HealthCare 3,900 220
................................................................................
791
..............
Miscellaneous Consumer Products 3.6%
Benetton Group (ITL) 14,000 196
................................................................................
Bridgestone (JPY) 24,000 542
................................................................................
Colgate-Palmolive 8,200 508
................................................................................
CUC International * 9,750 224
................................................................................
Grand Metropolitan ADR 6,800 254
................................................................................
Huhtamaki (FIM) 1,500 66
................................................................................
Jones Apparel Group * 4,400 206
................................................................................
Kuraray (JPY) 29,000 279
................................................................................
Lion Nathan (NZD) 74,000 194
................................................................................
Mattel 12,500 373
................................................................................
Newell 7,400 283
................................................................................
NIKE 800 46
................................................................................
Philip Morris 28,450 1,252
................................................................................
Procter & Gamble 3,300 455
................................................................................
Richfood Holdings 10,700 247
................................................................................
Service Corp. 9,800 345
................................................................................
Stanley Works 6,000 246
................................................................................
Tambrands 11,140 538
................................................................................
Unilever N.V. ADR 2,000 388
................................................................................
UST 27,500 784
................................................................................
7,426
..............
Total Consumer Nondurables 25,017
..............
</TABLE>
7
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
CONSUMER SERVICES 5.7%
General Merchandisers 1.2%
Carrefour (FRF) 200 $ 131
................................................................................
Dayton Hudson 6,600 318
................................................................................
Marui (JPY) 11,000 205
................................................................................
Pinault Printemps (FRF) 300 126
................................................................................
Tesco (GBP) 45,482 279
................................................................................
TJX 5,500 264
................................................................................
Wal-Mart 20,000 595
................................................................................
Warnaco Group (Class A) 16,400 537
................................................................................
2,455
..............
Specialty Merchandisers 1.7%
American Stores 5,100 232
................................................................................
Christian Dior (FRF) 1,700 266
................................................................................
Circuit City Stores 3,000 118
................................................................................
CVS * 5,835 279
................................................................................
Federated Department Stores * 8,800 326
................................................................................
General Nutrition * 13,300 308
................................................................................
Home Depot 5,400 340
................................................................................
Kohl's * 5,600 302
................................................................................
McKesson 500 38
................................................................................
Safeway * 9,600 432
................................................................................
The Gap 2,000 68
................................................................................
Toys "R" Us * 23,000 716
................................................................................
3,425
..............
Entertainment and Leisure 1.8%
Boston Chicken * 5,300 96
................................................................................
Carnival (Class A) 9,100 346
................................................................................
Disney 7,100 581
................................................................................
Hutchison Whampoa (HKD) 90,000 749
................................................................................
ITT * 9,100 543
................................................................................
McDonald's 7,800 392
................................................................................
Reader's Digest (Class B) 34,940 900
................................................................................
Sharp (JPY) 16,000 206
................................................................................
3,813
..............
Media and Communications 1.0%
Elsevier (NLG) 12,000 203
................................................................................
R. R. Donnelley 13,900 516
................................................................................
</TABLE>
8
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Time Warner 6,900 $ 321
................................................................................
Tribune 6,000 259
................................................................................
U S WEST Media * 17,600 350
................................................................................
Vodafone ADR 8,200 366
................................................................................
2,015
..............
Total Consumer Services 11,708
..............
CONSUMER CYCLICALS 3.2%
Automobiles and Related 0.7%
Cycle & Carriage (SGD) 22,000 223
................................................................................
Honda ADR 5,800 351
................................................................................
Lear * 3,100 118
................................................................................
Lucasvarity ADR * 9,280 298
................................................................................
SPX 5,700 340
................................................................................
1,330
..............
Building and Real Estate 0.9%
Cheung Kong Holdings (HKD) 67,000 685
................................................................................
City Developments (SGD) 15,000 140
................................................................................
DBS Land (SGD) * 20,000 70
................................................................................
Federal Realty Investment Trust, REIT 18,900 494
................................................................................
Patriot American Hospitality, REIT 4,400 95
................................................................................
Simon DeBartolo Group, REIT 12,372 374
................................................................................
1,858
..............
Miscellaneous Consumer Durables 1.6%
Corning 27,500 1,385
................................................................................
Eastman Kodak 5,400 448
................................................................................
Masco 6,100 237
................................................................................
Oce Van Der Grinten NV (NLG) 1,800 235
................................................................................
Ricoh (JPY) 34,000 447
................................................................................
Whirlpool 12,000 598
................................................................................
3,350
..............
Total Consumer Cyclicals 6,538
..............
TECHNOLOGY 3.9%
Electronic Components 0.7%
Altera * 3,000 160
................................................................................
Intel 3,700 560
................................................................................
</TABLE>
9
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Linear Technology 3,400 $ 170
................................................................................
Maxim Integrated Products * 4,900 264
................................................................................
Motorola 3,000 199
................................................................................
Xilinx * 2,700 144
................................................................................
1,497
..............
Electronic Systems 0.6%
ADT * 12,800 373
................................................................................
Hewlett-Packard 3,200 165
................................................................................
Honeywell 7,150 520
................................................................................
Nokia ADR 3,100 204
................................................................................
1,262
..............
Information Processing 0.8%
COMPAQ Computer * 3,200 346
................................................................................
Dell Computer * 1,100 124
................................................................................
Hitachi ADR 2,900 315
................................................................................
IBM 9,060 784
................................................................................
1,569
..............
Telecommunications Equipment 1.1%
Cisco Systems * 6,900 466
................................................................................
LM Ericsson (Class B) ADR 11,200 400
................................................................................
Lucent Technologies 2,000 127
................................................................................
MCI 6,900 265
................................................................................
Telecomunicacoes Brasileiras ADR 5,600 769
................................................................................
Tellabs * 1,400 71
................................................................................
World Com 4,000 119
................................................................................
2,217
..............
Aerospace and Defense 0.7%
AlliedSignal 11,140 855
................................................................................
Boeing 3,200 337
................................................................................
Lockheed Martin 3,200 299
................................................................................
1,491
..............
Total Technology 8,036
..............
CAPITAL EQUIPMENT 2.7%
Electrical Equipment 1.8%
ABB AG (CHF) 200 274
................................................................................
Canon (JPY) 9,000 228
................................................................................
</TABLE>
10
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- -------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
Emerson Electric 3,400 $ 183
.......................................................
GE 21,600 1,304
.......................................................
Hubbell (Class B) 8,700 396
.......................................................
Matsushita Electric Works (JPY) 22,000 244
.......................................................
Mitsubishi Electric (JPY) 37,000 210
.......................................................
Siemens (DEM) 5,000 282
.......................................................
Tomkins ADR 9,000 163
.......................................................
Tyco International 5,100 324
.......................................................
3,608
.........
Machinery 0.9%
Danaher 9,800 475
.......................................................
GKN (GBP) 16,300 282
.......................................................
Man (DEM) 900 258
.......................................................
S I G Schweis (CHF) 80 240
.......................................................
Teleflex 9,200 567
.......................................................
Valmet (FIM) 6,000 108
.......................................................
1,930
.........
Total Capital Equipment 5,538
.........
BUSINESS SERVICES AND
TRANSPORTATION 5.0%
Computer Service and Software 2.2%
Ascend Communications * 3,200 179
.......................................................
Automatic Data Processing 9,000 442
.......................................................
BMC Software * 11,000 595
.......................................................
Electronic Data Systems 28,300 1,058
.......................................................
First Data 15,884 635
.......................................................
Microsoft * 3,100 384
.......................................................
National Data 5,900 259
.......................................................
Oracle * 6,225 291
.......................................................
Parametric Technology * 3,100 139
.......................................................
Reynolds & Reynolds 9,700 227
.......................................................
SunGard Data Systems * 6,300 269
.......................................................
Synopsys * 3,600 134
.......................................................
4,612
.........
Distribution Services 0.1%
Ikon Office Solutions 7,700 223
.......................................................
223
.......
</TABLE>
11
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------
In thousands
<S> <C> <C>
Environmental 0.1%
USA Waste Services * 5,600 $ 203
..............................................................
203
.........
Transportation Services 0.2%
Mitsubishi Heavy Industries (JPY) 31,000 223
..............................................................
United Engineers (MYR) 23,000 186
..............................................................
409
.........
Miscellaneous Business Services 0.9%
BAA (GBP) 24,800 215
..............................................................
Corporate Express * 10,950 152
..............................................................
Omnicom 1,600 93
..............................................................
Sime Darby (MYR) 48,000 157
..............................................................
Wallace Computer Services 4,900 137
..............................................................
Waste Management 36,260 1,151
..............................................................
1,905
.........
Airlines 1.3%
AMR * 4,240 421
..............................................................
Delta 18,400 1,725
..............................................................
KLM (NLG) 6,000 173
..............................................................
KLM Royal Dutch Airlines ADR 700 21
..............................................................
Singapore Airlines (SGD) 26,000 222
..............................................................
2,562
.........
Railroads 0.2%
Burlington Northern Santa Fe 3,500 291
..............................................................
291
.........
Total Business Services and Transportation 10,205
.........
ENERGY 3.6%
Energy Services 0.8%
BJ Services * 2,400 132
..............................................................
Camco International 3,000 154
..............................................................
Cooper Cameron * 3,500 286
..............................................................
ELF Aquitaine ADR 5,000 261
..............................................................
Halliburton 4,700 364
..............................................................
Schlumberger 2,930 349
..............................................................
Total ADR 3,000 137
..............................................................
1,683
.........
</TABLE>
12
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------
In thousands
<S> <C> <C>
Exploration & Production 0.1%
Santos (AUD) 49,000 $ 201
..............................................................
201
.........
Integrated Petroleum - Domestic 1.3%
Atlantic Richfield 5,200 757
..............................................................
British Petroleum ADR 8,040 1,165
..............................................................
Unocal 2,700 115
..............................................................
USX-Marathon 19,800 589
..............................................................
2,626
.........
Integrated Petroleum - International 1.4%
ENI S.P.A. ADR 5,000 254
..............................................................
Exxon 4,060 241
..............................................................
Mobil 5,900 825
..............................................................
Repsol ADR 5,200 219
..............................................................
Royal Dutch Petroleum ADR 2,500 488
..............................................................
Shell Transport & Trading ADR 2,800 334
..............................................................
Texaco 5,300 578
..............................................................
2,939
.........
Total Energy 7,449
.........
PROCESS INDUSTRIES 4.7%
Diversified Chemicals 1.3%
Dow Chemical 18,500 1,542
..............................................................
DuPont 5,500 599
..............................................................
Hercules 6,500 305
..............................................................
Monsanto 3,200 141
..............................................................
2,587
.........
Specialty Chemicals 2.2%
3M 2,800 257
..............................................................
A. Schulman 22,500 498
..............................................................
Akzo Nobel (NLG) 1,600 213
..............................................................
BASF (DEM) 6,000 221
..............................................................
Bayer (DEM) 7,200 282
..............................................................
Great Lakes Chemical 32,640 1,595
..............................................................
Morton International 2,300 74
..............................................................
Pall 34,400 813
..............................................................
</TABLE>
13
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- -----------------------------------------------------------
Shares/Par Value
- -----------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
Sumitomo Chemical (JPY) 40,000 $ 165
..........................................................
Technip (FRF) 3,300 339
..........................................................
4,457
.........
Paper and Paper Products 0.8%
Dai Nippon Printing (JPY) 15,000 300
..........................................................
James River 13,900 489
..........................................................
Kimberly-Clark 17,200 862
..........................................................
1,651
.........
Forest Products 0.2%
Georgia-Pacific 2,000 177
..........................................................
International Paper 6,800 326
..........................................................
503
.........
Building and Construction 0.2%
Blue Circle Industries (GBP) 35,000 241
..........................................................
Holderbank Financiere Glarus AG (CHF) 200 175
..........................................................
416
.........
Total Process Industries 9,614
.........
BASIC MATERIALS 1.3%
Metals 0.8%
Alcoa 2,500 184
..........................................................
Nucor 5,000 295
..........................................................
Reynolds Metals 11,500 781
..........................................................
Rustenburg Platinum (ZAR) 18,000 295
..........................................................
1,555
.........
Mining 0.3%
CRA Limited (AUD) 12,000 197
..........................................................
LONRHO (GBP) 91,228 202
..........................................................
Newmont Mining 7,500 293
..........................................................
692
.........
Miscellaneous Materials 0.2%
Crown Cork & Seal 6,400 373
..........................................................
Malayan Cement (MYR) 73,750 123
..........................................................
496
.........
Total Basic Materials 2,743
.........
</TABLE>
14
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
MISCELLANEOUS 0.1%
Conglomerates 0.1%
Orkla (Class A) (NOK) 1,500 $ 131
................................................................................
Total Miscellaneous 131
.........
Total Common Stocks (Cost $102,019) 120,610
.........
Corporate Bonds 19.0%
Abbey National, Sub. Notes, 6.69%, 10/17/05 $ 976,000 945
................................................................................
Agricultural Minerals and Chemicals, Sr. Notes
10.75%, 9/30/03 250,000 267
................................................................................
Agrium, 7.00%, 2/1/04 300,000 296
................................................................................
Airplane Pass Through Trust, 10.875%, 3/15/19 350,000 390
................................................................................
Allied Waste North America, Sr. Sub. Notes, (144a)
10.25%, 12/1/06 350,000 374
................................................................................
AMC Entertainment, Sr. Sub. Notes, (144a)
9.50%, 3/15/09 350,000 356
................................................................................
American Airline, 9.71%, 1/2/07 42,674 47
................................................................................
American Express, 7.60%, 8/15/02 300,000 308
................................................................................
American Radio Systems, Sr. Sub. Notes, 9.00%, 2/1/06 25,000 26
................................................................................
American Safety Razor, Sr. Notes, 9.875%, 8/1/05 250,000 261
................................................................................
Amerigas Partners L.P., Sr. Notes, 10.125%, 4/15/07 200,000 210
................................................................................
Ametek, Sr. Notes, 9.75%, 3/15/04 20,000 22
................................................................................
AMR, Deb., 9.00%, 9/15/16 100,000 108
................................................................................
Associates Corporation, Sr. Notes, 5.25%, 3/30/00 700,000 674
................................................................................
B. F. Saul, REIT, Sr. Secured Notes, 11.625%, 4/1/02 150,000 160
................................................................................
Bank Nova Scotia, Sub. Notes, 6.25%, 9/15/08 37,000 34
................................................................................
BE Aerospace, Sr. Sub. Notes, 9.875%, 2/1/06 250,000 260
................................................................................
Bear Stearns, Sr. Notes, 8.25%, 2/1/02 150,000 157
................................................................................
Boise Cascade, Deb., 7.35%, 2/1/16 660,000 611
................................................................................
Celestica International, Gtd. Sr. Sub. Notes
10.50%, 12/31/06 250,000 269
................................................................................
Chancellor Radio Broadcasting, Sr. Sub. Notes
9.375%, 10/1/04 250,000 254
................................................................................
Chief Auto Parts, Sr. Notes, 10.50%, 5/15/05 200,000 202
................................................................................
Citicorp, Sub. Notes, 7.75%, 6/15/06 1,000,000 1,030
................................................................................
Coca-Cola Bottling SW, Sr. Sub. Notes, 9.00%, 11/15/03 150,000 155
................................................................................
</TABLE>
15
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Coinmach, Sr. Notes, 11.75%, 11/15/05 $ 250,000 $276
...............................................................................
Communications & Power Industries, Sr. Sub. Notes
12.00%, 8/1/05 250,000 274
...............................................................................
Consolidated Cigar, Sr. Sub. Notes, 10.50%, 3/1/03 250,000 264
...............................................................................
Container Corporation of America, Sr. Notes
9.75%, 4/1/03 250,000 262
...............................................................................
Continental Airlines, PTC, 6.94%, 10/15/13 686,275 665
...............................................................................
Courtyard by Marriott II, Sr. Secured Notes
10.75%, 2/1/08 100,000 108
...............................................................................
Cox Communications, Deb., 7.25%, 11/15/15 600,000 568
...............................................................................
Daimler-Benz Auto Grantor Trust, 3.90%, 10/15/98 2,855 3
...............................................................................
Dan River, Sr. Sub. Notes, 10.125%, 12/15/03 250,000 261
...............................................................................
Discover Card Master Trust I, 7.75%, 4/16/02 100,000 102
...............................................................................
Doane Products, Sr. Notes, 10.625%, 3/1/06 325,000 346
...............................................................................
Dominion Textile USA, Gtd. Sr. Notes, 9.25%, 4/1/06 250,000 259
...............................................................................
Dr. Pepper Bottling, Sr. Disc. Notes, STEP
Zero Coupon, 2/15/03 250,000 247
...............................................................................
Dual Drilling, Sr. Sub. Notes, 9.875%, 1/15/04 250,000 267
...............................................................................
Dyncorp, Sr. Sub. Notes, (144a), 9.50%, 3/1/07 350,000 350
...............................................................................
El Paso Electric, 1st Mtg. Notes, 8.90%, 2/1/06 250,000 264
...............................................................................
Eli Lilly & Company, 7.125%, 6/1/25 1,020,000 977
...............................................................................
Energy Corporation of America, Sr. Sub. Notes, (144a)
9.50%, 5/15/07 350,000 350
...............................................................................
Enhance Financial Services, Deb., 6.75%, 3/1/03 500,000 485
...............................................................................
Fairchild Semiconductor, Sr. Sub. Notes, (144a)
10.125%, 3/15/07 350,000 373
...............................................................................
Fairfax Financial Holdings, 8.25%, 10/1/15 250,000 253
...............................................................................
Falcon Drilling, Sr. Notes, 8.875%, 3/15/03 250,000 254
...............................................................................
First Federal Financial, 11.75%, 10/1/04 250,000 272
...............................................................................
First National Bank of Boston, Sub. Notes, 8.00%, 9/15/04 700,000 728
...............................................................................
First USA Bank, Sr. Notes, 5.85%, 2/22/01 500,000 482
...............................................................................
Fleet Norstar Group, Sub. Notes, 9.90%, 6/15/01 100,000 110
...............................................................................
Flores & Rucks, Sr. Sub. Notes, 9.75%, 10/1/06 250,000 262
...............................................................................
Florida Power, 1st Mtg. Notes, 6.125%, 3/1/03 210,000 202
...............................................................................
Foamex, Sr. Sub. Deb., 11.875%, 10/1/04 125,000 135
...............................................................................
Ford Motor Credit MTN
5.80%, 5/11/98 50,000 50
..........................................................................
7.60%, 3/29/00 50,000 51
...............................................................................
</TABLE>
16
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- ------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Frontiervision Operating Partners, Sr. Sub. Notes
11.00%, 10/15/06 $ 250,000 $ 259
..............................................................................
Fundy Cable, Sr. Secured 2nd Priority Notes
11.00%, 11/15/05 200,000 214
..............................................................................
Gaylord Container, Sr. Sub. Deb., 12.75%, 5/15/05 225,000 246
..............................................................................
General Electric Capital, 8.625%, 6/15/08 100,000 111
..............................................................................
Grand Casinos, 1st Mtg. Notes, 10.125%, 12/1/03 200,000 208
..............................................................................
Haynes International, Sr. Notes, 11.625%, 9/1/04 125,000 134
..............................................................................
Herff Jones, Sr. Sub. Notes, 11.00%, 8/15/05 250,000 267
..............................................................................
HMC Acquisition Properties, Sr. Notes, 9.00%, 12/15/07 50,000 51
..............................................................................
Host Marriott Travel Plazas, Sr. Notes, 9.50%, 5/15/05 250,000 261
..............................................................................
IBM, 6.375%, 11/1/97 1,000,000 1,002
..............................................................................
Imed, Sr. Sub. Notes, (144a), 9.75%, 12/1/06 250,000 254
..............................................................................
International Knife & Saw, Sr. Sub. Notes
11.375%, 11/15/06 250,000 264
..............................................................................
Intertek Finance, Sr. Sub. Notes, 10.25%, 11/1/06 350,000 364
..............................................................................
Jordan Industries, Sr. Notes, 10.375%, 8/1/03 250,000 251
..............................................................................
K & F Industries, Sr. Sub. Notes, 10.375%, 9/1/04 200,000 211
..............................................................................
Keebler, Sr. Sub. Notes, 10.75%, 7/1/06 250,000 277
..............................................................................
Kelley Oil & Gas, Sr. Sub. Notes, 10.375%, 10/15/06 100,000 104
..............................................................................
Lehman Brothers Holdings, 7.41%, 5/25/99 200,000 203
..............................................................................
Lenfest Communications, Sr. Notes, 8.375%, 11/1/05 30,000 29
..............................................................................
Long Island Lighting, Deb., 7.05%, 3/15/03 75,000 73
..............................................................................
Loomis, Fargo & Co., Sr. Sub. Notes, (144a)
10.00%, 1/15/04 350,000 361
..............................................................................
MAFCO, Sr. Sub. Notes, 11.875%, 11/15/02 100,000 108
..............................................................................
Marcus Cable, Sr. Sub. Gtd. Disc. Notes, STEP
Zero Coupon, 8/1/04 350,000 301
..............................................................................
Marriott International, 6.75%, 12/15/03 600,000 585
..............................................................................
Maxxam Group Holdings, Sr. Secured Notes
12.00%, 8/1/03 250,000 258
..............................................................................
Mettler Toledo, Gtd. Sr. Sub. Notes, 9.75%, 10/1/06 250,000 262
..............................................................................
Northrop Grumman, 7.00%, 3/1/06 200,000 194
..............................................................................
Old Dominion Electric Cooperative, 1st Mtg. Notes
7.27%, 12/1/97 34,000 34
..............................................................................
Owens & Minor, Sr. Sub. Notes, 10.875%, 6/1/06 150,000 163
..............................................................................
Owens-Illinois, Sr. Sub. Notes, 10.50%, 6/15/02 350,000 368
..............................................................................
</TABLE>
17
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------
In thousands
<S> <C> <C>
Paine Webber Group, 8.25%, 5/1/02 $500,000 $520
............................................................................
Paine Webber Group, MTN, Sr. Notes, 6.82%, 8/1/98 100,000 101
............................................................................
Pillowtex, Gtd. Sr. Sub. Notes, 10.00%, 11/15/06 250,000 264
............................................................................
Plastic Containers, Sr. Secured Notes, (144a)
10.00%, 12/15/06 390,000 406
............................................................................
Praxair, Deb., 8.70%, 7/15/22 700,000 731
............................................................................
Pride Petroleum Services, Sr. Notes, 9.375%, 5/1/07 350,000 365
............................................................................
Principal Mutual, (144a)
7.875%, 3/1/24 250,000 236
.......................................................................
8.00%, 3/1/44 100,000 98
............................................................................
Provident Capital Trust I, Gtd. Bonds, 8.60%, 12/1/26 500,000 486
............................................................................
Quest Diagnostic, Gtd. Sr. Sub. Notes, 10.75%, 12/15/06 350,000 373
............................................................................
Revlon Consumer Products, Sr. Sub. Notes
10.50%, 2/15/03 250,000 264
............................................................................
Rio Hotel & Casino, Sr. Sub. Notes
9.50%, 4/15/07 250,000 266
.......................................................................
10.625%, 7/15/05 100,000 102
............................................................................
Rogers Cablesystems, Sr. Secured 2nd Priority Notes
10.00%, 3/15/05 250,000 268
............................................................................
Rouse, 8.50%, 1/15/03 25,000 26
............................................................................
Rowan Companies, Sr. Notes, 11.875%, 12/1/01 150,000 160
............................................................................
Safelite Glass, Sr. Sub. Notes, (144a), 9.875%, 12/15/06 250,000 265
............................................................................
Sea Containers Ltd., Sr. Sub. Deb., 12.50%, 12/1/04 135,000 150
............................................................................
Sears Credit Account Master Trust, 8.10%, 6/15/04 100,000 103
............................................................................
Shawmut National, Sub. Notes, 7.20%, 4/15/03 25,000 25
............................................................................
Showboat, 1st Mtg. Bonds, 9.25%, 5/1/08 250,000 257
............................................................................
Silgan, Sr. Sub. Notes, 11.75%, 6/15/02 250,000 264
............................................................................
Six Flags Theme Parks, Sr. Sub. Disc. Notes, STEP
Zero Coupon, 6/15/05 250,000 255
............................................................................
Speedy Muffler King, Sr. Notes, 10.875%, 10/1/06 100,000 105
............................................................................
Sprint Spectrum, Sr. Notes, 11.00%, 8/15/06 350,000 387
............................................................................
Standard Credit Card Master Trust, 5.50%, 2/7/00 100,000 99
............................................................................
Synthetic Industries, Sr. Sub. Notes, (144a)
9.25%, 2/15/07 350,000 360
............................................................................
Tele-Communications, Sr. Notes, 8.25%, 1/15/03 600,000 613
............................................................................
Tele-Communications, Deb., 8.75%, 2/15/23 500,000 485
............................................................................
Teleport Communications, Sr. Notes, 9.875%, 7/1/06 200,000 212
............................................................................
Tenet Healthcare, Sr. Sub. Notes, 8.625%, 1/15/07 250,000 253
............................................................................
Tenneco, 8.20%, 11/15/99 25,000 26
............................................................................
</TABLE>
18
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- ----------------------------------------------------------------------------
In thousands
<S> <C> <C>
Texas Bottling Group, Sr. Sub.
Notes, 9.00%, 11/15/03 $ 100,000 $ 103
............................................................................
Texas Utilities, 1st Mtg. Bonds
7.375%, 10/1/25 315,000 293
.......................................................................
7.875%, 4/1/24 30,000 29
............................................................................
Texas Utilities, 1st Mtg.
Notes, 8.00%, 6/1/02 100,000 104
............................................................................
Texas-New Mexico Power,
Deb., 12.50%, 1/15/99 120,000 129
............................................................................
Time Warner Entertainment,
Deb., 8.375%, 3/15/23 1,000,000 1,008
............................................................................
TLC Beatrice International Holdings, Sr.
Secured Notes 11.50%, 10/1/05 350,000 389
............................................................................
Tokheim, Sr. Sub. Notes,
11.50%, 8/1/06 50,000 54
............................................................................
Trump Atlantic City Associates,
1st Mtg. Notes 11.25%, 5/1/06 250,000 245
............................................................................
Union Planters Capital
Trust, Gtd. Bonds, 8.20%, 12/15/26 225,000 216
............................................................................
United Air Lines, 9.20%,
3/22/08 223,312 237
............................................................................
United Artists Theatre
Circuit, PTC, 9.30%, 7/1/15 245,785 237
............................................................................
US Can, Sr. Gtd. Notes,
10.125%, 10/15/06 250,000 264
............................................................................
USF&G Capital II, Gtd.
Notes, 8.47%, 1/10/27 1,000,000 989
............................................................................
USG, Sr. Notes, 8.50%, 8/1/05 250,000 256
............................................................................
Wal-Mart Stores, Deb.,
7.25%, 6/1/13 1,010,000 1,001
............................................................................
Westamerica Banc, Sub.
Notes, (144a) 6.99%, 9/30/03 250,000 243
............................................................................
Westinghouse Electric,
Deb., 8.875%, 6/1/01 100,000 104
............................................................................
Windy Hill Pet Food, Sr. Sub. Notes, (144a)
9.75%, 5/15/07 350,000 353
............................................................................
Total Corporate Bonds (Cost $ 38,945) 39,112
<CAPTION>
Foreign Government Obligations/
Agencies 3.4%
<S> <C> <C> <C> <C>
Commonwealth of Australia
9.50%, 8/15/03 AUD 10,000 9
............................................................................
European Investment Bank
3.00%, 9/20/06 JPY 87,000,000 768
.......................................................................
4.625%, 2/26/03 JPY 173,000,000 1,673
............................................................................
Federal Republic of Germany
6.00%, 7/4/07 DEM 715,000 419
.......................................................................
6.50%, 7/15/03 DEM 80,000 49
.......................................................................
8.375%, 5/21/01 DEM 1,400,000 932
.......................................................................
8.50%, 8/21/00 DEM 65,000 43
............................................................................
</TABLE>
19
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------
In thousands
<S> <C> <C> <C>
Government of Canada
6 50%, 6/1/04 CAD 9,000 $ 7
....................................................................
8.50%, 4/1/02 CAD 645,000 517
....................................................................
9.75%, 6/1/21 CAD 30,000 28
.........................................................................
Government of France
5.50%, 4/25/07 FRF 2,480,000 418
....................................................................
8.25%, 2/27/04 FRF 324,000 65
....................................................................
8.50%, 11/25/02 FRF 4,766,000 960
.........................................................................
Government of Japan,
4.50%, 6/20/03 + JPY 15,700,000 150
.........................................................................
Int'l Bank for Reconstruction
& Development 6.75%,
3/15/00 JPY 2,000,000 20
.........................................................................
Kingdom of Belgium, 7.25%,
4/29/04 BEF 750,000 23
.........................................................................
Kingdom of Denmark, 7.00%,
12/15/04 DKK 55,000 9
.........................................................................
Kingdom of Spain, 8.00%,
5/30/04 ESP 100,000 1
.........................................................................
Kingdom of Sweden, 6.00%,
2/9/05 SEK 100,000 12
.........................................................................
Republic of Italy, 8.50%,
8/1/04 ITL 100,000,000 63
.........................................................................
United Kingdom Treasury Notes
7.50%, 12/7/06 GBP 140,000 234
....................................................................
8.00%, 6/10/03 GBP 303,000 515
....................................................................
8.50%, 12/7/05 GBP 10,000 18
....................................................................
9.00%, 3/3/00 GBP 24,000 41
.........................................................................
Total Foreign Government Obligations/Agencies (Cost $7,126) 6,974
............
<CAPTION>
U.S. Government Mortgage-Backed
Securities 12.5%
<S> <C> <C>
Federal Home Loan Mortgage Corp.
6.00%, 4/1/24 - 11/1/25 $ 248,090 230
...................................................................
6.50%, 10/1 - 12/1/08 302,432 297
...................................................................
7.00%, 10/1/08 - 10/1/25 131,683 129
...................................................................
8.00%, 1/1/25 187,910 192
...................................................................
9.00%, 11/1/04 25,663 27
.........................................................................
Federal National Mortgage Assn.
6.00%, 9/1/08 76,845 74
...................................................................
6.50%, 3/1/09 - 8/1/23 234,559 228
...................................................................
7.00%, 8/1/23 - 1/1/26 716,221 700
...................................................................
7.50%, 11/1/07 122,886 125
...................................................................
8.00%, 5/1/07 - 6/1/10 150,001 154
...................................................................
</TABLE>
20
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
8.50%, 8/1/06 - 11/1/21 $ 114,781 $ 119
...........................................................................
9.00%, 5/1/01 44,258 46
...........................................................................
REMIC, 8.00%, 2/25/07 100,000 103
................................................................................
Government National Mortgage Assn., I
6.50%, 12/15/23 - 4/15/26 4,750,575 4,510
...........................................................................
7.00%, 4/15/24 - 3/15/27 14,921,636 14,532
...........................................................................
7.50%, 2/15/16 - 6/15/26 3,148,158 3,156
...........................................................................
8.00%, 3/15/22 - 10/20/25 1,017,283 1,043
................................................................................
Government National Mortgage Assn. II, 8.00%, 10/20/25 133,421 135
................................................................................
Merrill Lynch Trust, CMO, 6.00%, 3/20/18 13,118 12
................................................................................
Total U.S. Government Mortgage-Backed Securities (Cost $25,857) 25,812
........
U.S. Government Obligations/
Agencies 3.0%
Government Trust Certificates, 9.25%, 11/15/01 58,648 62
................................................................................
Resolution Funding, 8.125%, 10/15/19 210,000 232
................................................................................
Tennessee Valley Authority
6.235%, 7/15/45 2,000,000 1,979
...........................................................................
6.875%, 12/15/43 3,340,000 2,974
...........................................................................
7.25%, 7/15/43 40,000 37
................................................................................
U.S. Treasury Bonds, 7.25%, 5/15/16 - 8/15/22 795,000 818
................................................................................
Total U.S. Government Obligations/Agencies (Cost $6,318) 6,102
.......
Short-Term Investments 1.5%
Commercial Paper 1.5%
Asset Securitization Cooperative, 4(2), 5.55%, 6/11/97 1,000,000 998
................................................................................
Falcon Asset Securitization, 4(2), 5.58%, 6/17/97 1,000,000 998
................................................................................
Investments in Commercial Paper through a Joint Account
5.60 - 5.69%, 6/2/97 231,011 231
................................................................................
Tasmanian Public Finance, 5.40%, 6/20/97 1,000,000 997
................................................................................
Total Short-Term Investments (Cost $3,224) 3,224
.......
</TABLE>
21
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
Total Investments in Securities
<S> <C>
98.0% of Net Assets (Cost $183,489) $ 201,834
Other Assets Less Liabilities 4,049
..........
NET ASSETS $ 205,883
----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 1,173
Accumulated net realized gain/loss - net of distributions 3,270
Net unrealized gain (loss) 18,339
Paid-in-capital applicable to 14,637,808 shares of $0.0001 par
value capital stock outstanding; 1,000,000,000 shares authorized 183,101
..........
NET ASSETS $ 205,883
----------
NET ASSET VALUE PER SHARE $ 14.07
</TABLE>
* Non-income producing
+ Securities contain some restrictions as to public resale--total of such
securities at year-end amounts to 0.07% of net assets.
CMO Collateralized Mortgage Obligation
MTN Medium term note
PTC Pass-through Certificate
REIT Real Estate Investment Trust
REMIC Real Estate Mortgage Investment Conduit
STEP Stepped Coupon Bond
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors."
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
1.9% of net assets.
AUD Australian dollar
BEF Belgian franc
CAD Canadian dollar
CHF Swiss franc
DEM German deutschemark
DKK Danish krone
ESP Spanish peseta
FIM Finnish mark
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
ZAR South African rand
L Local registered shares
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
- -----------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
Year
Ended
5/31/97
<S> <C>
Investment Income
Income
Interest $ 5,037
Dividend 1,969
Other 57
.........
Total income 7,063
.........
Expenses
Investment management 897
Shareholder servicing 569
Custody and accounting 154
Registration 74
Legal and audit 19
Prospectus and shareholder reports 16
Directors 6
Miscellaneous 10
.........
Total expenses 1,745
.........
Net investment income 5,318
.........
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 6,284
Futures 9
Foreign currency transactions (60)
.........
Net realized gain (loss) 6,233
.........
Change in net unrealized gain or loss
Securities 15,332
Futures (14)
Other assets and liabilities
denominated in foreign currencies 3
.........
Change in net unrealized gain or loss 15,321
.........
Net realized and unrealized gain (loss) 21,554
.........
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 26,872
.........
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
- ----------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
Year Year
Ended Ended
5/31/97 5/31/96
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 5,318 $ 1,324
Net realized gain (loss) 6,233 994
Change in net unrealized
gain or loss 15,321 1,856
..........................
Increase (decrease) in
net assets from operations 26,872 4,174
..........................
Distributions to shareholders
Net investment income (4,810) (722)
Net realized gain (3,853) (105)
..........................
Decrease in net assets
from distributions (8,663) (827)
..........................
Capital share transactions *
Shares sold 116,218 104,537
Distributions reinvested 7,930 802
Shares redeemed (53,473) (5,309)
..........................
Increase (decrease) in
net assets from capital
share transactions 70,675 100,030
..........................
Net equalization 173 113
..........................
Net Assets
Increase (decrease)
during period 89,057 103,490
..........................
Beginning of period 116,826 13,336
End of period $ 205,883 $ 116,826
..........................
*Share information
Shares sold 8,913 8,390
Distributions reinvested 607 66
Shares redeeemed (4,096) (438)
..........................
Increase (decrease)
in shares outstanding 5,424 8,018
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
T. Rowe Price Personal Strategy Funds
- --------------------------------------------------------------------------------
May 31, 1997
- -----------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Personal Strategy Funds, Inc. (the corporation) is registered
under the Investment Company Act of 1940. The Personal Strategy Income Fund (the
Income Fund), the Personal Strategy Balanced Fund (the Balanced Fund), and the
Personal Strategy Growth Fund (the Growth Fund), diversified, open-end
management investment companies, are three of the portfolios established by the
corporation and commenced operations on July 29, 1994.
Valuation Equity securities 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.
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 amortized cost which, when combined with
accrued interest, approximates fair value.
For purposes of determining each 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 that
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.
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T. Rowe Price Personal Strategy Funds
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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 each 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. Effective January 1, 1997, the Growth Fund
discontinued its practice of equalization. The results of operations and net
assets were not affected by this change. The Income and Balanced Funds follow
the practice of equalization, under which undistributed net investment income
per share is unaffected by fund shares sold or redeemed.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with their investment objectives, the funds engage in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of each fund are
described more fully in each fund's prospectus and Statement of Additional
Information.
Noninvestment-Grade Debt Securities At May 31, 1997, each fund held investments
in noninvestment-grade debt securities, commonly referred to as "high-yield" or
"junk" bonds. A real or perceived economic downturn or higher interest rates
could adversely affect the liquidity or value, or both, of such securities
because such events could lessen the ability of issuers to make principal and
interest payments.
Commercial Paper Joint Account Each 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 each fund's criteria as to
quality, yield, and liquidity.
Securities Lending Each fund lends its securities to approved brokers to earn
additional income and takes cash and U.S. Treasury securities as collateral to
26
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T. Rowe Price Personal Strategy Funds
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secure the loans. Collateral is maintained at not less than 100% of the value of
loaned securities. At May 31, 1997, the value of securities on loan by the
Income Fund was $3,965,000, by the Balanced Fund was $12,028,000, and by the
Growth Fund was $4,561,000. Although the risk is mitigated by the collateral,
each fund could experience a delay in recovering its securities and a possible
loss of income or value if the borrower fails to return them.
Other Purchases and sales of portfolio securities, other than short-term
securities, for the year ended May 31, 1997, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Income Fund Balanced Fund Growth Fund
<S> <C> <C> <C>
U.S. government securities
Purchases $ 2,043,000 $11,426,000 $ 2,816,000
Sales 457,000 985,000 91,000
Other securities
Purchases 23,602,000 140,518,000 48,060,000
Sales 13,162,000 84,327,000 16,317,000
</TABLE>
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since each fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
In order for each 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 May 31, 1997. The results of
operations and net assets were not affected by the reclassifications.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Income Fund Balanced Fund Growth Fund
<S> <C> <C> <C>
Undistributed net investment income $ (18,000) $ (165,000) $ 8,000
Paid-in-capital 18,000 165,000 (8,000)
</TABLE>
27
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T. Rowe Price Personal Strategy Funds
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At May 31, 1997, the aggregate costs of investments for the Income, Balanced,
and Growth Funds for federal income tax and financial reporting purposes were
$40,289,000, $183,489,000, and $59,107,000, respectively. Net unrealized gain
(loss) on investments was as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Income Fund Balanced Fund Growth Fund
<S> <C> <C> <C>
Appreciated investments $ 4,036,000 $ 21,860,000 $ 9,278,000
Depreciated investments (533,000) (3,515,000) (1,082,000)
............................................
Net unrealized gain (loss) $ 3,503,000 $ 18,345,000 $ 8,196,000
--------------------------------------------
</TABLE>
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between each fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment management fee,
of which $7,000, $96,000, and $20,000 were payable at May 31, 1997 by the
Income, Balanced, and Growth Funds, respectively. The fee is computed daily and
paid monthly, and consists of an individual fund fee equal to 0.15% of average
daily net assets for the Income Fund, 0.25% of average daily net assets for the
Balanced Fund, and 0.30% of average daily net assets for the Growth Fund, and a
group fee. The group fee is based on the combined assets of certain mutual funds
sponsored by the manager or Rowe Price-Fleming International, Inc. (the group).
The group fee rate ranges from 0.48% for the first $1 billion of assets to 0.30%
for assets in excess of $80 billion. At May 31, 1997, and for the year then
ended, the effective annual group fee rate was 0.33%. Each fund pays a pro-rata
share of the group fee based on the ratio of its net assets to those of the
group.
Under the terms of the investment management agreement, the manager is required
to bear any expenses through May 31, 1998, which would cause each fund's ratio
of expenses to average net assets to exceed 0.95% for the Income Fund, 1.05% for
the Balanced Fund, and 1.10% for the Growth Fund. Thereafter, through May 31,
2000, each fund is required to reimburse the manager for these expenses,
provided that average net assets have grown or expenses have declined
sufficiently to allow reimbursement without causing the fund's ratio of expenses
to average net assets to exceed 0.95%, 1.05%, and 1.10%, respectively. Pursuant
to this agreement, $141,000, $62,000, and $177,000 of management fees were not
accrued by the Income, Balanced, and Growth Funds, respectively for the year
ended May 31, 1997. Pursuant to a previous agreement, $285,000, $191,000, and
$325,000 of fees and expenses remain
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T. Rowe Price Personal Strategy Funds
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subject to reimbursement through May 31, 1998 for the Income, Balanced, and
Growth Funds, respectively.
In addition, each fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which each fund receives
certain other services. The manager computes the daily share price and maintains
the financial records of each fund. T. Rowe Price Services, Inc., is each fund's
transfer and dividend disbursing agent and provides shareholder and
administrative services to the funds. T. Rowe Price Retirement Plan Services,
Inc., provides subaccounting and recordkeeping services for certain retirement
accounts invested in each fund. The Income, Balanced, and Growth Funds incurred
expenses pursuant to these related party agreements totaling approximately
$157,000, $578,000, and $211,000, respectively, for the year ended May 31, 1997,
of which $15,000, $52,000, and $21,000, respectively, were payable at period-
end.
During the year ended May 31, 1997, the Income, Balanced, and Growth Funds, in
the ordinary course of business, placed security purchase and sale orders
aggregating $478,000, $3,611,000, and $1,474,000, respectively, with certain
affiliates of the manager and paid commissions of $3,000, $20,000, and $9,000,
respectively related thereto.
29
<PAGE>
T. Rowe Price Personal Strategy Funds
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- ---------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of T. Rowe Price Personal Strategy Funds, Inc.
We have audited the accompanying statement of net assets of T. Rowe Price
Personal Strategy Income Fund, T. Rowe Price Personal Strategy Balanced Fund and
T. Rowe Price Personal Strategy Growth Fund (collectively the "Funds") as of May
31, 1997, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of May
31, 1997, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights, referred to
above present fairly, in all material respects, the financial position of T.Rowe
Price Personal Strategy Income Fund, T. Rowe Price Personal Strategy Balanced
Fund and T. Rowe Price Personal Strategy Growth Fund as of May 31, 1997, the
results of their operations, the changes in their net assets and financial
highlights for each of the respective periods stated in the first paragraph, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 18, 1997
30
<PAGE>
T. Rowe Price Shareholder Services
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Investment Services And Information
Knowledgeable Service Representatives
By Phone 1-800-225-5132 Available Monday through Friday from
8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
Account Services
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(R) and T. Rowe Price
OnLine.
Discount Brokerage*
Individual Investments Stocks, bonds, options, precious metals,
and other securities at a savings over regular commission rates.
Investment Information
Combined Statement Overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and
results.
T. Rowe Price Report Quarterly investment newsletter discussing
markets and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International Investing, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit.
*A division of T. Rowe Price Investment Services, Inc. Member
NASD/SIPC.
31
<PAGE>
For yield, price, last transaction, Investor Centers:
current balance, or to conduct 101 East Lombard St.
transactions, 24 hours, 7 days Baltimore, MD 21202
a week, call Tele*Access(R):
1-800-638-2587 toll free T. Rowe Price
Financial Center
For assistance 10090 Red Run Blvd.
with your existing Owings Mills, MD 21117
fund account, call:
Shareholder Service Center Farragut Square
1-800-225-5132 toll free 900 17th Street, N.W.
410-625-6500 Baltimore area Washington, D.C. 20006
To open a Discount Brokerage ARCO Tower
account or obtain information, 31st Floor
call: 1-800-638-5660 toll free 515 South Flower St.
Los Angeles, CA 90071
Internet address:
www.troweprice.com 4200 West Cypress St.
10th Floor
T. Rowe Price Associates Tampa, FL 33607
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price Personal Strategy Funds.
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor.
