<PAGE>
- ------------------------------------
ANNUAL REPORT - FINANCIAL STATEMENTS
- ------------------------------------
T. ROWE PRICE
PERSONAL STRATEGY
GROWTH FUND
------------
MAY 31, 1998
------------
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
- --------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- -------------------------------------------------------------------------------
Year 7/29/94
Ended Through
5/31/98 5/31/97 5/31/96 5/31/95
NET ASSET VALUE
Beginning of period $ 15.20 $ 13.69 $ 11.44 $ 10.00
...................................................
Investment activities
Net investment income 0.29* 0.27* 0.30* 0.25*
Net realized and
unrealized gain (loss) 3.01 2.37 2.29 1.30
...................................................
Total from
investment activities 3.30 2.64 2.59 1.55
...................................................
Distributions
Net investment income (0.26) (0.24) (0.27) (0.11)
Net realized gain (0.19) (0.89) (0.07) -
...................................................
Total distributions (0.45) (1.13) (0.34) (0.11)
...................................................
NET ASSET VALUE
End of period $ 18.05 $ 15.20 $ 13.69 $ 11.44
---------------------------------------------------
Ratios/Supplemental Data
Total return # 22.02%* 19.89%* 22.83%* 15.65%*
...............................................................................
Ratio of expenses to
average net assets 1.10%* 1.10%* 1.10%* 1.10%+*
...............................................................................
Ratio of net investment
income to average
net assets 2.15%* 2.24%* 2.27%* 2.76%+*
...............................................................................
Portfolio turnover rate 33.3% 39.6% 39.5% 25.7%+
...............................................................................
Net assets, end of period
(in thousands) $147,347 $67,552 $ 24,954 $10,748
...............................................................................
# 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.
* Excludes expenses in excess of a 1.10% 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 GROWTH FUND
- --------------------------------------------------------------------------------
May 31, 1998
- ------------------------
PORTFOLIO OF INVESTMENTS Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Common Stocks 73.3%
FINANCIAL 14.6%
Bank and Trust 8.4%
Abbey National (GBP) 18,000 $ 321
...............................................................................
ABN Amro Holdings (NLG) 6,400 155
...............................................................................
Air Liquide (L) (FRF) 1,030 203
...............................................................................
Australia & New Zealand Banking ADR 3,600 127
...............................................................................
BANC ONE 19,430 1,071
...............................................................................
Banca Commerciale Italiana (ITL) 40,700 240
...............................................................................
Banco de Bilbao Vizcaya ADR 4,500 228
...............................................................................
Banco Frances del Rio ADR 2,300 52
...............................................................................
BankBoston 3,200 337
...............................................................................
Bankgesellschaft Berlin (DEM) 6,800 166
...............................................................................
Barclay's (GBP) 12,000 320
...............................................................................
Chase Manhattan 6,400 870
...............................................................................
Citicorp 3,300 492
...............................................................................
Deutsche Bank (DEM) 2,730 235
...............................................................................
Development Bank of Singapore (SGD) 3,300 20
...............................................................................
Dresdner Bank (DEM) 3,100 174
...............................................................................
First Union 7,500 415
...............................................................................
HSBC Holdings (GBP) 14,900 389
...............................................................................
J. P. Morgan 3,530 438
...............................................................................
KeyCorp 3,700 140
...............................................................................
Kredietbank (BEF) 320 224
...............................................................................
Mediobanca (ITL) 18,200 245
...............................................................................
Mellon Bank 11,500 776
...............................................................................
National City 4,900 332
...............................................................................
NationsBank 12,100 917
...............................................................................
Norwest 11,900 463
...............................................................................
Overseas Chinese Bank (SGD) 4,200 17
...............................................................................
RHB Sakura Merchant Bankers (MYR) 600 0
...............................................................................
Schweizerischer Bankverein (CHF) 1,360 491
...............................................................................
Societe Generale (FRF) 1,729 343
...............................................................................
Societe Generale de Belgique (BEF) 1,100 196
...............................................................................
Svenska Handelsbank (SEK) 6,000 253
...............................................................................
3
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- -------------------------------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
U.S. Bancorp 9,900 $ 387
...............................................................................
Union Bank of Switzerland (CHF) 150 252
...............................................................................
Washington Mutual 12,100 856
...............................................................................
Wells Fargo 600 217
...............................................................................
Westpac Bank (AUD) 9,000 60
...............................................................................
12,422
..............
Insurance 2.5%
ACE Limited 13,500 481
...............................................................................
American General 4,100 275
...............................................................................
American International Group 1,000 124
...............................................................................
EXEL 4,300 324
...............................................................................
Hartford Financial Services 800 88
...............................................................................
Mid Ocean Limited 3,300 251
...............................................................................
St. Paul Companies 12,400 550
...............................................................................
Sumitomo Marine & Fire Insurance (JPY) 33,000 183
...............................................................................
Travelers Property Casualty (Class A) 17,800 740
...............................................................................
UNUM 4,600 256
...............................................................................
Willis-Corroon ADR 25,800 334
...............................................................................
3,606
..............
Financial Services 3.7%
American Express 8,300 852
...............................................................................
Associates First Capital (Class A) 2,100 157
...............................................................................
AXA (FRF) 3,000 341
...............................................................................
Capital One Financial 2,500 250
...............................................................................
DCB Holdings (MYR) 12,000 7
...............................................................................
Fannie Mae 15,600 934
...............................................................................
Freddie Mac 14,400 655
...............................................................................
Household International 2,400 325
...............................................................................
ING Groep (NLG) 4,350 299
...............................................................................
Morgan Stanley Dean Witter Discover 2,900 226
...............................................................................
Pearson (GBP) 6,000 110
...............................................................................
SLM Holding 6,000 240
...............................................................................
Travelers Group 13,349 814
...............................................................................
Unidanmark (Class A) (DKK) 2,700 218
...............................................................................
5,428
..............
Total Financial 21,456
..............
4
<PAGE>
T. Rowe Price Personal Strategy Growth Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
UTILITIES 4.8%
Telephone Services 2.8%
ALLTEL 3,400 $ 134
................................................................................
AT&T 15,650 953
................................................................................
BellSouth 5,200 335
................................................................................
British Telecommunications ADR 1,900 198
................................................................................
Compania de Telecomunicaciones de Chile ADR 4,050 90
................................................................................
Frontier 15,500 472
................................................................................
Hong Kong Telecommunications ADR 2,232 41
................................................................................
Nippon Telephone & Telecom (JPY) 29 239
................................................................................
SBC Communications 24,900 968
................................................................................
Telecom Corp. of New Zealand ADR 1,600 58
................................................................................
Telecom Italia (ITL) 19,440 147
................................................................................
Telecom Italia Mobile (ITL) 15,000 89
................................................................................
Telefonica de Espana ADR 1,600 215
................................................................................
Telefonos de Mexico (Class L) ADR 3,000 142
................................................................................
Telekom Malaysia (MYR) 7,500 17
................................................................................
4,098
...............
Electric Utilities 2.0%
Electrabel (BEF) 740 185
................................................................................
Empresa Nacional de Electricidad Chile ADR 5,600 87
................................................................................
Endesa ADR 4,000 96
................................................................................
FirstEnergy 21,737 645
................................................................................
Hong Kong Electric (HKD) 42,000 123
................................................................................
PECO Energy 8,300 235
................................................................................
Texas Utilities 16,000 632
................................................................................
Unicom 16,600 571
................................................................................
Veba (DEM) 5,620 369
................................................................................
2,943
...............
Total Utilities 7,041
...............
CONSUMER NONDURABLES 14.8%
Cosmetics 0.8%
Gillette 1,300 152
................................................................................
International Flavors & Fragrances 14,300 686
................................................................................
Kao (JPY) 23,000 344
................................................................................
1,182
...............
5
<PAGE>
T. Rowe Price Personal Strategy Growth Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Beverages 0.9%
Anheuser-Busch 14,300 $ 657
................................................................................
Diageo ADR 2,419 109
................................................................................
LVMH (FRF) 985 207
................................................................................
PepsiCo 8,400 343
................................................................................
1,316
...............
Food Processing 3.1%
Bestfoods 6,200 350
................................................................................
Cadbury Schweppes (GBP) 900 14
................................................................................
Cadbury Schweppes ADR 2,000 123
................................................................................
CSM (NLG) 3,500 188
................................................................................
Danisco (DKK) 3,100 193
................................................................................
Dean Foods 1,500 74
................................................................................
Eridania Beghin-Say (FRF) 1,200 263
................................................................................
General Mills 7,560 516
................................................................................
Heinz 3,400 180
................................................................................
Hershey Foods 2,400 166
................................................................................
Interstate Bakeries 2,500 81
................................................................................
McCormick 12,400 413
................................................................................
Nestle (CHF) 275 589
................................................................................
Ralston Purina 5,300 590
................................................................................
Sara Lee 14,200 836
................................................................................
4,576
...............
Hospital Supplies/Hospital Management 1.1%
Abbott Laboratories 2,800 208
................................................................................
Arterial Vascular Engineering * 2,100 65
................................................................................
Boston Scientific * 900 57
................................................................................
HealthSouth * 14,200 403
................................................................................
Medtronic 2,500 139
................................................................................
Smith & Nephew (GBP) 22,000 63
................................................................................
Tenet Healthcare * 6,800 238
................................................................................
Terumo (JPY) 8,000 121
................................................................................
United States Surgical * 8,400 334
................................................................................
1,628
...............
Pharmaceuticals 4.4%
American Home Products 22,160 1,071
................................................................................
Astra (Class B) (SEK) 4,267 83
................................................................................
Biogen * 5,200 229
................................................................................
6
<PAGE>
T. Rowe Price Personal Strategy Growth Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Bristol-Myers Squibb 7,900 $ 849
................................................................................
Eli Lilly 2,500 154
................................................................................
Gehe (DEM) 2,000 107
................................................................................
Glaxo Wellcome ADR 2,900 156
................................................................................
Johnson & Johnson 5,500 380
................................................................................
Merck 4,400 515
................................................................................
Novartis (CHF) 220 372
................................................................................
Pfizer 8,620 904
................................................................................
Pharmacia & Upjohn 6,360 281
................................................................................
Schering-Plough 4,300 360
................................................................................
Steris * 1,800 112
................................................................................
Takeda Chemical Industries (JPY) 11,000 284
................................................................................
Warner-Lambert 10,200 651
................................................................................
6,508
...............
Biotechnology 0.1%
Guidant 1,900 122
................................................................................
122
...............
Health Care Services 0.4%
Altana AG (DEM) 1,200 94
................................................................................
United HealthCare 7,500 480
................................................................................
574
...............
Miscellaneous Consumer Products 4.0%
Benetton Group (ITL) 6,500 142
................................................................................
Bridgestone (JPY) 7,000 160
................................................................................
Colgate-Palmolive 10,700 931
................................................................................
Hasbro 8,300 318
................................................................................
Kuraray (JPY) 12,000 100
................................................................................
Lion Nathan (NZD) 71,500 176
................................................................................
Mattel 4,500 171
................................................................................
Newell 5,900 285
................................................................................
Philip Morris 36,250 1,355
................................................................................
Procter & Gamble 2,500 210
................................................................................
Service Corp. International 7,200 294
................................................................................
Stanley Works 2,800 133
................................................................................
Tomkins ADR 8,700 202
................................................................................
Unifi 9,200 358
................................................................................
Unilever N.V. ADR 6,200 489
................................................................................
7
<PAGE>
T. Rowe Price Personal Strategy Growth Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
UST 17,700 $ 471
................................................................................
Yue Yuen Industrial (HKD) 42,000 75
................................................................................
5,870
...............
Total Consumer Nondurables 21,776
...............
CONSUMER SERVICES 8.0%
General Merchandisers 1.9%
Dayton Hudson 9,900 459
................................................................................
Fred Meyer * 8,100 348
................................................................................
JUSCO (JPY) 7,000 122
................................................................................
Marui (JPY) 10,000 154
................................................................................
Neiman-Marcus * 5,500 187
................................................................................
Pinault Printemps (FRF) 350 288
................................................................................
Tesco (GBP) 20,160 178
................................................................................
Wal-Mart 12,600 695
................................................................................
Warnaco Group (Class A) 9,100 375
................................................................................
2,806
...............
Specialty Merchandisers 2.4%
American Stores 24,000 598
................................................................................
Christian Dior (FRF) 700 97
................................................................................
CVS 6,106 429
................................................................................
Federated Department Stores * 2,500 129
................................................................................
General Nutrition * 5,300 167
................................................................................
Home Depot 4,450 350
................................................................................
Kohl's * 3,200 152
................................................................................
Omron (JPY) 7,000 106
................................................................................
Safeway * 15,200 554
................................................................................
Toys "R" Us * 10,400 276
................................................................................
Tupperware 25,700 694
................................................................................
3,552
...............
Entertainment and Leisure 1.7%
Carnival (Class A) ADR 6,400 433
................................................................................
Disney 4,300 486
................................................................................
Hilton 8,500 267
................................................................................
Hutchison Whampoa (HKD) 52,000 272
................................................................................
McDonald's 3,500 230
................................................................................
Reader's Digest (Class A) 22,200 633
................................................................................
8
<PAGE>
T. Rowe Price Personal Strategy Growth Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Reader's Digest (Class B) 3,940 $ 111
................................................................................
Sharp (JPY) 4,000 30
................................................................................
2,462
...............
Media and Communications 2.0%
Asatsu (JPY) 6,000 119
................................................................................
CBS 8,800 279
................................................................................
Elsevier (NLG) 8,000 125
................................................................................
France Telecom ADR * 6,500 366
................................................................................
R.R. Donnelley 11,900 535
................................................................................
Time Warner 5,400 420
................................................................................
Tribune 7,700 515
................................................................................
U S WEST Media * 5,900 219
................................................................................
Valassis Communications * 2,500 88
................................................................................
Vodafone ADR 2,900 319
................................................................................
2,985
...............
Total Consumer Services 11,805
...............
CONSUMER CYCLICALS 3.2%
Automobiles and Related 0.3%
Cycle & Carriage (SGD) 6,000 19
................................................................................
Federal-Mogul 2,600 154
................................................................................
Honda ADR 3,000 200
................................................................................
SPX * 1,800 124
................................................................................
497
...............
Building and Real Estate 1.8%
Cheung Kong Holdings (HKD) 29,000 157
................................................................................
City Developments (SGD) 5,000 18
................................................................................
Crescent Real Estate Equities, REIT 7,400 254
................................................................................
DBS Land (SGD) 15,000 17
................................................................................
Federal Realty Investment Trust, REIT 21,300 527
................................................................................
Simon DeBartolo Group, REIT 21,640 722
................................................................................
Starwood Hotels & Resorts, REIT 19,100 901
................................................................................
2,596
...............
Miscellaneous Consumer Durables 1.1%
Corning 20,800 820
................................................................................
Masco 6,400 360
................................................................................
OCE (NLG) 2,000 84
................................................................................
9
<PAGE>
T. Rowe Price Personal Strategy Growth Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Ricoh (JPY) 8,000 $ 86
................................................................................
Sony (JPY) 3,000 254
................................................................................
1,604
...............
Total Consumer Cyclicals 4,697
...............
TECHNOLOGY 3.7%
Electronic Components 0.6%
ASM Lithography * 2,100 80
................................................................................
EMC * 5,100 211
................................................................................
Intel 4,300 307
................................................................................
Linear Technology 2,600 182
................................................................................
Maxim Integrated Products * 4,900 164
................................................................................
Texas Instruments 400 21
................................................................................
965
...............
Electronic Systems 0.6%
Hewlett-Packard 4,700 292
................................................................................
Honeywell 2,400 201
................................................................................
Nokia ADR 7,400 481
................................................................................
974
...............
Information Processing 0.4%
COMPAQ Computer 4,500 123
................................................................................
Dell Computer * 2,000 165
................................................................................
Hitachi ADR 1,500 100
................................................................................
IBM 1,400 164
................................................................................
552
...............
Office Automation 0.1%
Xerox 900 92
................................................................................
92
...............
Specialized Computer 0.0%
Sun Microsystems * 900 36
................................................................................
36
...............
Telecommunications Equipment 1.3%
Cisco Systems * 4,700 355
................................................................................
LM Ericsson (Class B) ADR 5,000 140
................................................................................
Lucent Technologies 600 43
................................................................................
MCI 7,600 406
................................................................................
Telebras ADR 1,400 149
................................................................................
10
<PAGE>
T. Rowe Price Personal Strategy Growth Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Tellabs * 5,400 $ 371
................................................................................
WorldCom * 9,100 414
................................................................................
1,878
............
Aerospace and Defense 0.7%
AlliedSignal 15,800 675
................................................................................
Boeing 100 5
................................................................................
Raytheon (Class B) 5,700 312
................................................................................
992
............
Total Technology 5,489
............
CAPITAL EQUIPMENT 2.8%
Electrical Equipment 1.7%
ABB (CHF) 100 170
................................................................................
Canon (JPY) 6,000 143
................................................................................
GE 14,800 1,234
................................................................................
Matsushita Electric Works (JPY) 6,000 50
................................................................................
Mitsubishi Electric (JPY) 13,000 31
................................................................................
Siemens (DEM) 2,500 161
................................................................................
Tyco International 12,224 677
................................................................................
2,466
............
Machinery 1.1%
Cooper Industries 2,200 142
................................................................................
Danaher 9,500 687
................................................................................
GKN (GBP) 11,000 163
................................................................................
Man (DEM) 740 294
................................................................................
S I G Schweis (CHF) * 120 114
................................................................................
Teleflex 7,000 283
................................................................................
Valmet (FIM) 2,000 35
................................................................................
1,718
............
Total Capital Equipment 4,184
............
BUSINESS SERVICES AND
TRANSPORTATION 5.9%
Computer Service and Software 2.2%
Automatic Data Processing 4,500 286
................................................................................
BMC Software * 10,000 460
................................................................................
Cadence Design Systems * 4,400 155
................................................................................
11
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
First Data 11,270 $ 375
................................................................................
Galileo International 6,800 268
................................................................................
Microsoft * 6,900 585
................................................................................
Network Associates * 4,600 282
................................................................................
Oracle * 9,700 229
................................................................................
Parametric Technology * 11,500 353
................................................................................
SunGard Data Systems * 6,500 222
................................................................................
3,215
..............
Distribution Services 0.1%
U.S. Foodservice * 5,085 168
................................................................................
168
..............
Environmental 0.3%
USA Waste Services * 9,900 467
................................................................................
467
..............
Transportation Services 0.0%
Mitsubishi Heavy Industries (JPY) 12,000 42
................................................................................
42
..............
Miscellaneous Business Services 2.0%
British Airport Authorities (GBP) 10,099 121
................................................................................
Browning-Ferris 20,000 711
................................................................................
Cendant * 9,650 209
................................................................................
H&R Block 20,900 920
................................................................................
Omnicom 8,100 379
................................................................................
Sime Darby (MYR) 19,000 15
................................................................................
Waste Management 16,060 522
................................................................................
2,877
..............
Airlines 0.6%
Delta 7,200 828
................................................................................
KLM (NLG) 2,000 79
................................................................................
Singapore Airlines (SGD) 3,000 17
................................................................................
924
..............
Railroads 0.7%
Burlington Northern Santa Fe 2,200 219
................................................................................
Norfolk Southern 25,700 805
................................................................................
1,024
..............
Total Business Services and Transportation 8,717
..............
12
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
ENERGY 5.5%
Energy Services 0.8%
Camco International 2,300 $ 160
................................................................................
Cooper Cameron * 3,300 196
................................................................................
Elf Aquitaine ADR 2,500 171
................................................................................
Halliburton 5,500 261
................................................................................
Johnson Electric Holdings (HKD) 42,000 163
................................................................................
TOTAL ADR 4,100 256
................................................................................
1,207
..............
Exploration and Production 0.0%
Santos (AUD) 18,000 59
................................................................................
59
..............
Integrated Petroleum - Domestic 2.0%
Atlantic Richfield 8,300 655
................................................................................
British Petroleum ADR 13,080 1,159
................................................................................
Occidental Petroleum 15,500 428
................................................................................
Unocal 5,500 196
................................................................................
USX-Marathon 14,600 511
................................................................................
2,949
..............
Integrated Petroleum - International 2.7%
Amoco 20,000 836
................................................................................
ENI S.P.A. ADR 2,500 177
................................................................................
Exxon 6,360 448
................................................................................
Mobil 16,400 1,279
................................................................................
Repsol ADR 3,400 186
................................................................................
Royal Dutch Petroleum ADR 4,000 224
................................................................................
Shell Transport & Trading ADR 5,600 249
................................................................................
Texaco 9,800 566
................................................................................
3,965
..............
Total Energy 8,180
..............
PROCESS INDUSTRIES 5.3%
Diversified Chemicals 1.5%
Dow Chemical 8,000 775
................................................................................
DuPont 9,500 731
................................................................................
Hercules 15,200 670
................................................................................
2,176
..............
13
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Specialty Chemicals 2.3%
3M 4,100 $ 380
................................................................................
A. Schulman 10,200 204
................................................................................
Akzo Nobel (NLG) 500 104
................................................................................
Akzo Nobel ADR 400 42
................................................................................
BASF AG (DEM) 7,350 341
................................................................................
Bayer (DEM) 7,000 335
................................................................................
Great Lakes Chemical 19,740 789
................................................................................
Octel * 3,910 85
................................................................................
Pall 31,100 616
................................................................................
Sumitomo Chemicals (JPY) 11,000 30
................................................................................
Technip (FRF) 2,925 419
................................................................................
3,345
..............
Paper and Paper Products 1.0%
Dai Nippon Printing (JPY) 4,000 66
................................................................................
Fort James 10,900 521
................................................................................
Kimberly-Clark 16,700 828
................................................................................
1,415
..............
Forest Products 0.3%
Georgia-Pacific 5,000 321
................................................................................
International Paper 3,100 143
................................................................................
464
..............
Building and Construction 0.2%
Blue Circle Industries (GBP) 24,286 156
................................................................................
Holderbank Financiere Glarus (CHF) 160 204
................................................................................
360
..............
Total Process Industries 7,760
..............
BASIC MATERIALS 0.9%
Metals 0.7%
Anglo American Platinum (ZAR) 9,000 109
................................................................................
Inco 20,000 287
................................................................................
Reynolds Metals 10,200 592
................................................................................
988
..............
Mining 0.2%
Lonrho (GBP) 10,725 52
................................................................................
Lonrho Africa (GBP) 10,425 13
................................................................................
14
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Newmont Mining 5,400 $ 135
................................................................................
Rio Tinto (AUD) 9,700 117
................................................................................
317
..............
Miscellaneous Materials 0.0%
Crown Cork & Seal 1,500 78
................................................................................
Malayan Cement (MYR) 33,750 15
................................................................................
93
..............
Total Basic Materials 1,398
..............
MISCELLANEOUS 3.4%
Conglomerates 0.1%
Orkla (NOK) 7,600 173
................................................................................
173
..............
Other Miscellaneous Common Stocks 3.3% 4,801
..............
Total Miscellaneous 4,974
..............
FOREIGN 0.4%
Europe 0.2%
AXA Colonia Konzern (DEM) 1,000 132
................................................................................
Svenska Cellulosa (SEK) 7,100 196
................................................................................
328
..............
Other Foreign 0.2%
Bobst (CHF) 144 272
................................................................................
272
..............
Total Foreign 600
..............
Total Common Stocks (Cost $88,237) 108,077
..............
Corporate Bonds 10.9%
AEI Holding, Sr. Notes (144a), 10.00%, 11/15/07 $ 100,000 100
................................................................................
Agricultural Minerals, Sr. Notes, 10.75%, 9/30/03 50,000 53
................................................................................
Agrium, 7.00%, 2/1/04 400,000 415
................................................................................
Ahmanson, H.F., Sub. Notes, 7.875%, 9/1/04 100,000 108
................................................................................
Airplane Pass Through Trust, 10.875%, 3/15/19 70,000 77
................................................................................
Allied Waste, Sr. Sub. Notes, 10.25%, 12/1/06 50,000 55
................................................................................
AMC Entertainment, Sr. Sub. Notes, 9.50%, 3/15/09 50,000 51
................................................................................
15
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
American Builders & Contractors Supply, Sr. Sub Notes
10.625%, 5/15/07 $50,000 $ 51
................................................................................
American Radio Systems, Sr. Sub. Notes, 9.00%, 2/1/06 25,000 27
................................................................................
American Safety Razor, Sr. Notes, 9.875%, 8/1/05 50,000 54
................................................................................
American Standard, 9.25%, 12/1/16 43,000 44
................................................................................
Amerigas Partners L.P., Sr. Notes, 10.125%, 4/15/07 50,000 53
................................................................................
Ametek, Sr. Notes, 9.75%, 3/15/04 10,000 11
................................................................................
APCOA, Sr. Sub. Notes (144a), 9.25%, 3/15/08 100,000 100
................................................................................
Archibald Candy, Sr. Secured Notes, 10.25%, 7/1/04 50,000 53
................................................................................
Associated Materials, 9.25%, 3/1/08 100,000 103
................................................................................
Associates, Sr. Notes, 5.25%, 3/30/00 15,000 15
................................................................................
Aurora Foods, Sr. Sub. Notes, 9.875%, 2/15/07 50,000 53
................................................................................
B&G Foods, Sr. Sub. Notes, 9.625%, 8/1/07 50,000 51
................................................................................
Ballys Health & Tennis, Sr. Sub. Notes, 9.875%, 10/15/07 100,000 104
................................................................................
Bank Nova Scotia, Sub. Notes, 6.25%, 9/15/08 15,000 15
................................................................................
Bay View Capital, Sub. Notes, 9.125%, 8/15/07 125,000 129
................................................................................
Boise Cascade, Deb., 7.35%, 2/1/16 330,000 333
................................................................................
BWAY, Sr. Sub. Notes, 10.25%, 4/15/07 100,000 109
................................................................................
Celestica International, Gtd. Sr. Sub. Notes
10.50%, 12/31/06 25,000 27
................................................................................
Coach USA, Gtd. Sr. Sub. Notes, 9.375%, 7/1/07 75,000 78
................................................................................
Coinmach, Sr. Sub. Notes, 11.75%, 11/15/05 50,000 56
................................................................................
Communications & Power Industries, Sr. Sub. Notes
12.00%, 8/1/05 50,000 56
................................................................................
Container Corporation of America, Gtd., 10.75%, 5/1/02 25,000 27
................................................................................
Continental Bank, Sub. Notes, 12.50%, 4/1/01 48,000 56
................................................................................
CSC Holdings, Sr. Notes, 7.875%, 12/15/07 100,000 103
................................................................................
Dan River, Sr. Sub. Notes, 10.125%, 12/15/03 50,000 53
................................................................................
Dayton Power & Light, 1st Mtg. Notes, 8.15%, 1/15/26 400,000 435
................................................................................
Delta Air Lines, MTN, 8.625%, 6/15/04 90,000 100
................................................................................
Delta Mills, Sr. Notes, 9.625%, 9/1/07 50,000 51
................................................................................
Doane Products, Sr. Notes, 10.625%, 3/1/06 50,000 54
................................................................................
Dyersburg, Sr. Sub. Notes, 9.75%, 9/1/07 100,000 103
................................................................................
Dyncorp, Sr. Sub. Notes, 9.50%, 3/1/07 50,000 51
................................................................................
Energy Corporation Of America, Sr. Sub. Notes
9.50%, 5/15/07 100,000 99
................................................................................
Enhance Financial Services, Deb., 6.75%, 3/1/03 300,000 305
................................................................................
16
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
EOP Operating, Sr. Notes (144a), 6.75%, 2/15/08 $ 400,000 $ 401
................................................................................
Fairchild Semiconductor, Sr. Sub. Notes, 10.125%,
3/15/07 50,000 52
................................................................................
Fairfax Financial Holdings, 8.25%, 10/1/15 250,000 278
................................................................................
Falcon Building Products, Gtd. Sr. Sub. Notes
9.50%, 6/15/07 50,000 51
................................................................................
First Federal Financial, 11.75%, 10/1/04 50,000 56
................................................................................
First USA Bank, Sr. Notes, 5.85%, 2/22/01 300,000 298
................................................................................
Flag Limited, Sr. Notes (144a), 8.25%, 1/30/08 50,000 51
................................................................................
Frontiervision, Sr. Sub. Notes, 11.00%, 10/15/06 50,000 55
................................................................................
Fundy Cable, Sr. Secured 2nd Priority Notes
11.00%, 11/15/05 50,000 55
................................................................................
Furon, Sr. Sub. Notes (144a), 8.125%, 3/1/08 100,000 99
................................................................................
Genesis Health Ventures, Sr. Sub. Notes, 9.25%, 10/1/06 100,000 100
................................................................................
Grand Casino, 1st Mtg. Notes, 10.125%, 12/1/03 50,000 54
................................................................................
Harcourt General, Deb., 7.20%, 8/1/27 2,000,000 2,011
................................................................................
HMC Acquisition Properties, Sr. Notes, 9.00%, 12/15/07 50,000 54
................................................................................
Holmes Products, Gtd. Notes, 9.875%, 11/15/07 100,000 102
................................................................................
Host Marriott Travel, Sr. Notes, 9.50%, 5/15/05 50,000 53
................................................................................
International Wire, Sr. Sub. Notes, 11.75%, 6/1/05 50,000 55
................................................................................
Intertek Finance, Sr. Sub. Notes, 10.25%, 11/1/06 50,000 53
................................................................................
Iron Mountain, Sr. Sub. Notes, 8.75%, 9/30/09 50,000 51
................................................................................
ISP Holdings, Sr. Notes, 9.75%, 2/15/02 50,000 53
................................................................................
Jersey Central Power & Light, 1st Mtg. Notes
7.125%, 10/1/04 150,000 153
................................................................................
Keebler, Sr. Sub. Notes, 10.75%, 7/1/06 50,000 57
................................................................................
Lockheed Martin, Gtd. Notes, 6.55%, 5/15/99 200,000 201
................................................................................
Marcus Cable, Gtd. Sr. Disc. Notes, STEP, 0%, 8/1/04 50,000 48
................................................................................
Mastec, Sr. Sub. Notes (144a), 7.75%, 2/1/08 50,000 48
................................................................................
Maxxam Group Holdings, Sr. Secured Notes
12.00%, 8/1/03 50,000 54
................................................................................
Mrs. Fields Original, Gtd. Sr. Notes
(144a), 10.125%, 12/1/04 50,000 49
................................................................................
Nextel Communications, Sr. Disc. Notes
STEP, 0%, 10/31/07 150,000 97
................................................................................
Northland Cable Television, Sr. Sub. Notes
10.25%, 11/15/07 50,000 53
................................................................................
Northrop Grumman, 7.00%, 3/1/06 100,000 103
................................................................................
17
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Ocwen Financial, Sr. Notes, 11.875%, 10/1/03 $ 50,000 $ 57
................................................................................
Owens & Minor, Sr. Sub. Notes, 10.875%, 6/1/06 50,000 56
................................................................................
Pacific Mutual Life (144a), 7.90%, 12/30/23 1,030,000 1,159
................................................................................
Paine Webber Group, 8.25%, 5/1/02 100,000 107
................................................................................
Plastic Containers, Sr. Secured Notes, 10.00%, 12/15/06 50,000 54
................................................................................
Pride Petroleum Services, Sr. Notes, 9.375%, 5/1/07 50,000 54
................................................................................
Principal Mutual (144a), 8.00%, 3/1/44 190,000 207
................................................................................
Quest Diagnostics, Gtd. Sr. Sub. Notes, 10.75%, 12/15/06 50,000 56
................................................................................
Rio Hotel & Casino, Gtd. Sr. Sub. Notes, 9.50%, 4/15/07 50,000 53
................................................................................
Rogers Cablesystems, Sr. Sec. 2nd Priority Notes
10.00%, 3/15/05 50,000 55
................................................................................
Rouse, 8.50%, 1/15/03 15,000 16
................................................................................
Safelite Glass, Sr. Sub. Notes (144a), 9.875%, 12/15/06 50,000 53
................................................................................
Scotland International Finance, Sub. Notes
(144a), 6.50%, 2/15/11 100,000 100
................................................................................
Shawmut National, Sub. Notes, 7.20%, 4/15/03 15,000 16
................................................................................
Silgan Holdings, Sr. Sub. Deb., 9.00%, 6/1/09 40,000 42
................................................................................
Sinclair Broadcast Group, Sr. Sub. Notes, 8.75%, 12/15/07 50,000 51
................................................................................
Six Flags Theme Parks, Sr. Sub. Disc. Notes
STEP, 0%, 6/15/05 100,000 113
................................................................................
Smithfield Foods, Sr. Sub. Notes (144a), 7.625%, 2/15/08 50,000 50
................................................................................
Southern Foods Group, Sr. Sub. Notes
(144a), 9.875%, 9/1/07 50,000 52
................................................................................
Sovereign Specialty Chemicals, Sr. Sub. Notes
(144a), 9.50%, 8/1/07 50,000 52
................................................................................
Specialty Retailers, Sr. Notes, 8.50%, 7/15/05 50,000 52
................................................................................
Sprint Spectrum, Sr. Notes, 11.00%, 8/15/06 100,000 115
................................................................................
Stellex Industries, Sr. Sub. Notes, 9.50%, 11/1/07 50,000 50
................................................................................
Synthetic Industries, Sr. Sub. Notes, 9.25%, 2/15/07 50,000 52
................................................................................
Tele-Communications, Deb., 8.75%, 2/15/23 200,000 214
................................................................................
Tenet Healthcare, Sr. Sub. Notes, 8.625%, 1/15/07 50,000 51
................................................................................
Tenneco, 8.20%, 11/15/99 15,000 15
................................................................................
Texas Utilities, 1st Mtg. Bonds
7.375%, 10/1/25 500,000 511
7.875%, 4/1/24 100,000 107
................................................................................
Texas-New Mexico Power, Deb., 12.50%, 1/15/99 50,000 52
................................................................................
US Can, Sr. Gtd. Notes, 10.125%, 10/15/06 50,000 53
................................................................................
USF&G Capital II, Gtd. Notes, 8.47%, 1/10/27 500,000 556
................................................................................
Vesta Insurance Group, Deb., 8.75%, 7/15/25 1,000,000 1,189
................................................................................
18
<PAGE>
T. Rowe Price Personal Strategy Growth Fund
- -------------------------------------------------------------------------------
Shares/Par Value
- -------------------------------------------------------------------------------
In thousands
Viasystems, Sr. Sub. Notes, 9.75%, 6/1/07 $ 50,000 $ 52
...............................................................................
Wal-Mart, Deb., 7.25%, 6/1/13 280,000 307
...............................................................................
Windy Hill Pet Food, Sr. Sub. Notes, 9.75%, 5/15/07 50,000 54
...............................................................................
Worldcom, 7.75%, 4/1/07 160,000 173
...............................................................................
Miscellaneous Corporate Bonds 1,347
...............................................................................
Total Corporate Bonds (Cost $15,540) 16,016
.........
FOREIGN GOVERNMENT OBLIGATIONS/
AGENCIES 0.8%
European Investment Bank
3.00%, 9/20/06 JPY 34,000,000 276
......................................................................
4.625%, 2/26/03 JPY 10,000,000 84
...............................................................................
Federal Republic of Germany
6.00%, 7/4/07 DEM 280,000 170
......................................................................
6.50%, 7/15/03 DEM 30,000 18
......................................................................
8.375%, 5/21/01 DEM 80,000 50
......................................................................
8.50%, 8/21/00 DEM 23,000 14
...............................................................................
Government of Canada
6.50%, 6/1/04 CAD 3,000 2
......................................................................
8.50%, 4/1/02 CAD 111,000 85
......................................................................
9.75%, 6/1/21 CAD 5,000 5
...............................................................................
Government of France
5.50%, 4/25/07 FRF 972,000 170
......................................................................
8.25%, 2/27/04 FRF 142,000 28
......................................................................
8.50%, 11/25/02 FRF 264,000 51
...............................................................................
Government of Japan++
4.50%, 6/20/03 JPY 8,400,000 71
...............................................................................
Int'l Bank for Reconstruction & Development
6.75%, 3/15/00 JPY 1,000,000 8
...............................................................................
Kingdom of Belgium
7.25%, 4/29/04 BEF 300,000 9
...............................................................................
Kingdom of Spain
8.00%, 5/30/04 ESP 1,500,000 12
...............................................................................
Kingdom of Sweden
6.00%, 2/9/05 SEK 100,000 14
...............................................................................
Republic of Italy
8.50%, 8/1/04 ITL 45,000,000 30
...............................................................................
19
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- ---------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C> <C>
United Kingdom Treasury Notes
7.50%, 12/7/06 GBP 55,000 $ 100
..........................................................................................
8.00%, 6/10/03 GBP 17,000 31
..........................................................................................
9.00%, 3/3/00 GBP 8,000 14
.................................................................................................
Total Foreign Government Obligations/Agencies (Cost $1,282) 1,242
..........
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 9.1%
Federal Home Loan Mortgage Corp.
5.75%, 4/15/08 $8,000,000 7,910
.................................................................................................
Federal National Mortgage Assn.
6.50%, 1/1/26 171,029 170
.................................................................................................
Government National Mortgage Assn., I
6.00%, 12/15/23 - 5/15/26 671,508 657
..........................................................................................
6.50%, 12/15/23 - 3/15/26 506,048 505
..........................................................................................
7.00%, 8/15/23 - 2/15/27 1,386,796 1,409
..........................................................................................
7.50%, 10/15/22 - 1/15/26 440,978 455
..........................................................................................
8.00%, 1/15/22 - 9/15/24 285,707 298
.................................................................................................
Government National Mortgage Assn., II
7.00%, 2/20/28 1,956,336 1,976
..........................................................................................
8.00%, 10/20/25 33,109 34
..........................................................................................
Total U.S. Government Mortgage-Backed Securities (Cost $13,260) 13,414
..........
U.S. GOVERNMENT OBLIGATIONS/
AGENCIES 3.4%
Tennessee Valley Authority
5.88%, 4/1/36 2,095,000 2,181
..........................................................................................
6.235%, 7/15/45 500,000 522
.................................................................................................
U.S. Treasury Bonds
6.75%, 8/15/26 2,030,000 2,267
.................................................................................................
Total U.S. Government Obligations/Agencies (Cost $ 4,647) 4,970
..........
SHORT-TERM INVESTMENTS 3.5%
Money Market Funds 3.5%
Reserve Investment Fund, 5.67% # 5,173,694 5,174
.................................................................................................
Total Short-Term Investments (Cost $5,174) 5,174
..........
</TABLE>
20
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
101.0% of Net Assets (Cost $128,140) $ 148,893
Other Assets Less Liabilities (1,546)
...............
NET ASSETS $ 147,347
---------------
# Seven-day yield
* Non-income producing
a Securities contain some restrictions as to public resale-total of such
securities at year-end amounts to 0.05% of net assets.
ADR American Depository Receipt
MTN Medium-Term Note
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
year-end amounts to 1.71% 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.
21
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
May 31, 1998
- ------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $128,140) $ 148,893
Securities Lending Collateral Pool 10,097
Other assets 1,297
.............
Total assets 160,287
.............
Liabilities
Securities Lending Collateral 10,097
Other liabilities 2,843
.............
Total liabilities 12,940
.............
NET ASSETS $ 147,347
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 1,079
Accumulated net realized gain/loss - net of distributions 2,838
Net unrealized gain (loss) 20,749
Paid-in-capital applicable to 8,163,034 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 122,681
.............
NET ASSETS $ 147,347
-------------
NET ASSET VALUE PER SHARE $ 18.05
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------------------------
<S> <C>
In thousands Year
Ended
5/31/98
Investment Income
Income
Interest $ 1,890
Dividend 1,370
.................
Total income 3,260
.................
Expenses
Investment management 514
Shareholder servicing 335
Custody and accounting 127
Prospectus and shareholder reports 49
Registration 48
Legal and audit 13
Directors 6
Miscellaneous 13
.................
Total expenses 1,105
.................
Net investment income 2,155
.................
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 3,649
Foreign currency transactions (6)
.................
Net realized gain (loss) 3,643
.................
Change in net unrealized gain or loss
Securities 12,557
Other assets and liabilities
denominated in foreign currencies (3)
.................
Change in net unrealized gain or loss 12,554
.................
Net realized and unrealized gain (loss) 16,197
.................
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 18,352
-----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
In thousands
Year
Ended
5/31/98 5/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ 2,155 $ 960
Net realized gain (loss) 3,643 2,083
Change in net unrealized gain or loss 12,554 5,188
........................................
Increase (decrease) in net assets from operations 18,352 8,231
........................................
Distributions to shareholders
Net investment income (1,529) (656)
Net realized gain (1,117) (2,434)
........................................
Decrease in net assets from distributions (2,646) (3,090)
........................................
Capital share transactions *
Shares sold 87,647 43,489
Distributions reinvested 2,621 3,043
Shares redeemed (26,179) (9,075)
........................................
Increase (decrease) in net assets from capital
share transactions 64,089 37,457
........................................
Net Assets
Increase (decrease) during period 79,795 42,598
Beginning of period 67,552 24,954
........................................
End of period $ 147,347 $ 67,552
........................................
*Share information
Shares sold 5,091 3,043
Distributions reinvested 160 215
Shares redeemed (1,534) (635)
........................................
Increase (decrease) in shares outstanding 3,717 2,623
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
May 31, 1998
- -----------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
T. Rowe Price Personal Strategy Funds, Inc. (the corporation) is registered
under the Investment Company Act of 1940. The Personal Strategy Growth Fund
(the fund), a diversified, open-end management investment company, is one
of the portfolios established by the corporation and commenced operations
on July 29, 1994.
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
25
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- -------------------------------------------------------------------------------
changes in foreign exchange rates on realized and unrealized security gains
and losses is reflected as a component of such gains and losses.
Premiums and Discounts Premiums and discounts on debt securities, other
than mortgage-backed securities, are amortized for both financial reporting
and tax purposes. Premiums and discounts on mortgage-backed securities are
recognized upon principal repayment as gain or loss on securities.
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
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Securities Lending The fund lends its securities to approved brokers to
earn additional income and receives cash and U.S. Treasury securities as
collateral against the loans. Cash collateral received is invested in a
money market pooled account by the fund's lending agent. Collateral is
maintained over the life of the loan in an amount not less than 100% of the
value of loaned securities. Although risk is mitigated by the collateral,
the fund could experience a delay in recovering its securities and a
possible loss of income or value if the borrower fails to return them. At
May 31, 1998, the value of loaned securities was $9,716,000; aggregate
collateral consisted of $10,097,000 in the securities lending collateral
pool.
Other Purchases and sales of portfolio securities, other than short-term
and U.S. government securities, aggregated $71,161,000 and $23,126,000,
respectively, for the year ended May 31, 1998. Purchases and sales of U.S.
government securities aggregated $22,672,000 and $9,128,000, respectively,
for the year ended May 31, 1998.
26
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- -------------------------------------------------------------------------------
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
In order for the fund's capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, the following
reclassifications were made during the year ended May 31, 1998. The results
of operations and net assets were not affected by the increases/(decreases)
to these accounts.
- -------------------------------------------------------------------------------
Undistributed net investment income $ 9,000
Paid-in-capital (9,000)
At May 31, 1998, the aggregate cost of investments for federal income tax
and financial reporting purposes was $128,140,000, and net unrealized gain
aggregated $20,753,000, of which $23,202,000 related to appreciated
investments and $2,449,000 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 annual investment management
fee, of which $67,000 was payable at May 31, 1998. The fee is computed
daily and paid monthly, and consists of an individual fund fee equal to
0.30% of average daily net assets 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, 1998, and for the year then ended, the
effective annual group fee rate was 0.32%. The 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 the
fund's ratio of expenses to average net assets to exceed 1.10%. Thereafter,
through May 31, 2000, the 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
27
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- -------------------------------------------------------------------------------
expenses to average net assets to exceed 1.10%. Pursuant to this agreement,
$110,000 of management fees were not accrued by the fund for the year ended
May 31, 1998, and $177,000 of unaccrued 1997 fees remain subject to
reimbursement through May 31, 2000.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services,
Inc., is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price
Retirement Plan Services, Inc., provides subaccounting and recordkeeping
services for certain retirement accounts invested in the fund. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $358,000 for the year ended May 31, 1998, of which $34,000
was payable at period-end.
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 year ended May 31,
1998, totaled $201,000 and are reflected as interest income in the
accompanying Statement of Operations.
During the year ended May 31, 1998, the fund, in the ordinary course of
business, placed security purchase and sale orders aggregating $1,051,000
with certain affiliates of the manager and paid commissions of $3,000
related thereto.
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T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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REPORT OF INDEPENDENT ACCOUNTANTS
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To the Shareholders and Board of Directors of
T. Rowe Price Personal Strategy Funds, Inc.
We have audited the accompanying statement of assets and liabilities of T.
Rowe Price Personal Strategy Growth Fund (the "Fund") as of May 31, 1998,
and the related statement of operations for the year then ended, statement
of changes in net assets for each of the two years in the period then
ended, and financial highlights for each of the three years in the period
then ended, and for the period July 29, 1994 (commencement of operations)
through May 31, 1995. These financial statements and financial highlights
are the responsibility of the Fund's 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, 1998, by correspondence with the custodian
and the brokers. 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 Growth Fund as of May 31, 1998, the
results of its operations, the changes in its net assets, and financial
highlights for each of the periods stated in the first paragraph, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 17, 1998
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T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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TAX INFORMATION FOR THE TAX YEAR ENDED 5/31/98
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We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
. $294,000 from short-term capital gains,
. $823,000 from long-term capital gains; of which $516,000 was
subject to the 20% rate gains category and $307,000 to the 28% rate
gains category.
For corporate shareholders, $921,000 of the funds distributed income and
short-term capital gains qualified for the dividends-received deduction.
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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 the T. Rowe Price
Web site on the Internet. Address: www.troweprice.com
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 all your accounts with T. Rowe Price.
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.
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For yield, price, last transaction, current balance, or to conduct transactions,
24 hours, 7 days a week, call Tele*Access(R): 1-800-638-2587 toll free
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
www.troweprice.com
T. Rowe Price Associates
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.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T.ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor. C11-056 5/31/98
