<PAGE>
Annual Report - Financial Statements
T. ROWE PRICE
PERSONAL STRATEGY
BALANCED FUND
MAY 31, 1998
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year 7/29/94
Ended Through
5/31/98 5/31/97 5/31/96 5/31/95
<S> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 14.07 $ 12.68 $ 11.15 $ 10.00
................................................................
Investment activities
Net investment income 0.46* 0.42* 0.41* 0.33*
Net realized and
unrealized gain (loss) 2.15 1.69 1.56 1.08
................................................................
Total from investment activities 2.61 2.11 1.97 1.41
................................................................
Distributions
Net investment income (0.45) (0.40) (0.37) (0.26)
Net realized gain (0.35) (0.32) (0.07) --
................................................................
Total distributions (0.80) (0.72) (0.44) (0.26)
................................................................
NET ASSET VALUE
End of period $ 15.88 $ 14.07 $ 12.68 $ 11.15
----------------------------------------------------------------
Ratios/Supplemental Data
Total return ** 19.15%* 17.21%* 17.97%* 14.35%*
....................................................................................................
Ratio of expenses to
average net assets 1.05%* 1.05%* 1.05%* 1.05%+*
....................................................................................................
Ratio of net investment
income to average
net assets 3.09%* 3.20%* 3.44%* 3.74%+*
....................................................................................................
Portfolio turnover rate 41.5% 54.0% 47.7% 25.8%+
....................................................................................................
Net assets, end of period
(in thousands) $ 328,356 $ 205,883 $ 116,826 $ 13,336
....................................................................................................
</TABLE>
** 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 1.05% 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, 1998
PORTFOLIO OF INVESTMENTS Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Common Stocks 57.6%
FINANCIAL 11.7%
Bank and Trust 6.9%
Abbey National (GBP) 44,000 $ 785
................................................................................
ABN Amro Holdings (NLG) 20,400 494
................................................................................
Air Liquide (L) (FRF) 2,040 402
................................................................................
BANC ONE 34,120 1,881
................................................................................
Banca Commerciale Italiana (ITL) 86,000 508
................................................................................
Banco de Bilbao Vizcaya ADR 13,200 670
................................................................................
Banco Frances del Rio ADR 7,704 175
................................................................................
BankBoston 5,800 611
................................................................................
Bankgesellschaft Berlin (DEM) 14,000 342
................................................................................
Barclay's (GBP) 23,255 621
................................................................................
Chase Manhattan 11,100 1,509
................................................................................
Citicorp 5,300 790
................................................................................
Deutsche Bank (DEM) 6,180 532
................................................................................
Development Bank of Singapore (SGD) 12,100 73
................................................................................
Dresdner Bank (DEM) 7,000 394
................................................................................
First Union 10,200 564
................................................................................
HSBC Holdings (GBP) 24,072 629
................................................................................
J. P. Morgan 5,930 736
................................................................................
KeyCorp 5,800 220
................................................................................
Kredietbank (BEF) 690 484
................................................................................
Mellon Bank 19,900 1,342
................................................................................
National City 8,300 562
................................................................................
NationsBank 20,500 1,553
................................................................................
Norwest 18,600 723
................................................................................
Overseas Chinese Bank (SGD) 12,000 48
................................................................................
RHB Sakura Merchant Bankers (MYR) 2,000 1
................................................................................
Schweizerischer Bankverein (CHF) 2,420 874
................................................................................
Societe Generale (FRF) 3,572 707
................................................................................
Societe Generale de Belgique (BEF) 2,300 410
................................................................................
Svenska Handelsbank (SEK) 11,000 463
................................................................................
U.S. Bancorp 16,500 646
................................................................................
Union Bank of Switzerland (CHF) 440 740
................................................................................
Washington Mutual 20,170 1,426
................................................................................
3
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Wells Fargo 900 $ 325
................................................................................
Westpac Bank (AUD) 40,000 264
................................................................................
22,504
............
Insurance 1.8%
ACE Limited 21,800 777
................................................................................
American General 7,100 477
................................................................................
American International Group 1,250 155
................................................................................
EXEL 7,300 549
................................................................................
Hartford Financial Services 1,300 143
................................................................................
Mid Ocean Limited 6,300 479
................................................................................
St. Paul Companies 21,400 950
................................................................................
Sumitomo Marine & Fire Insurance (JPY) 48,000 267
................................................................................
Travelers Property Casualty (Class A) 30,900 1,284
................................................................................
UNUM 6,400 356
................................................................................
Willis-Corroon ADR 46,100 596
................................................................................
6,033
............
Financial Services 3.0%
American Express 14,200 1,457
................................................................................
Associates First Capital (Class A) 3,900 292
................................................................................
AXA (FRF) 6,300 717
................................................................................
Capital One Financial 3,700 369
................................................................................
DCB Holdings (MYR) 40,000 22
................................................................................
Fannie Mae 25,800 1,545
................................................................................
Freddie Mac 24,400 1,110
................................................................................
Household International 3,900 528
................................................................................
ING Groep (NLG) 12,884 885
................................................................................
Morgan Stanley Dean Witter Discover 5,400 421
................................................................................
Pearson (GBP) 15,000 275
................................................................................
SLM Holding 10,400 415
................................................................................
Travelers Group 23,249 1,418
................................................................................
Unidanmark (Class A) (DKK) 6,000 485
................................................................................
9,939
............
Total Financial 38,476
............
UTILITIES 4.0%
Telephone Services 2.5%
ALLTEL 8,200 323
................................................................................
AT&T 27,850 1,695
................................................................................
4
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
BellSouth 9,000 $ 581
................................................................................
British Telecommunications ADR 4,600 480
................................................................................
Compania de Telecomunicaciones de Chile ADR 4,350 97
................................................................................
Frontier 27,000 822
................................................................................
Hong Kong Telecommunications ADR 8,314 151
................................................................................
Nippon Telephone & Telecom (JPY) 50 412
................................................................................
SBC Communications 43,200 1,679
................................................................................
Telecom Corp. of New Zealand ADR 6,000 219
................................................................................
Telecom Italia (ITL) 52,775 399
................................................................................
Telecom Italia Mobile (ITL) 80,000 473
................................................................................
Telefonica de Espana ADR 3,500 471
................................................................................
Telefonos de Mexico (Class L) ADR 6,700 318
................................................................................
Telekom Malaysia (MYR) 25,500 58
................................................................................
8,178
...........
Electric Utilities 1.5%
Electrabel (BEF) 1,090 273
................................................................................
Empresa Nacional de Electricidad Chile ADR 5,500 86
................................................................................
Endesa ADR 9,600 230
................................................................................
FirstEnergy 37,217 1,105
................................................................................
Hong Kong Electric (HKD) 71,000 208
................................................................................
PECO Energy 13,400 379
................................................................................
Texas Utilities 25,600 1,011
................................................................................
Unicom 28,700 987
................................................................................
Veba (DEM) 9,780 642
................................................................................
4,921
...........
Total Utilities 13,099
...........
CONSUMER NONDURABLES 11.7%
Cosmetics 0.6%
Gillette 2,100 246
................................................................................
International Flavors & Fragrances 24,600 1,181
................................................................................
Kao (JPY) 40,000 598
................................................................................
2,025
...........
Beverages 0.7%
Anheuser-Busch 24,600 1,130
................................................................................
Diageo ADR 5,875 266
................................................................................
LVMH (FRF) 1,045 219
................................................................................
5
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
PepsiCo 14,800 $ 604
................................................................................
2,219
...........
Food Processing 2.4%
Bestfoods 10,400 587
................................................................................
Cadbury Schweppes (GBP) 3,500 54
................................................................................
Cadbury Schweppes ADR 3,600 220
................................................................................
CSM (NLG) 4,800 258
................................................................................
Danisco (DKK) 4,800 299
................................................................................
Dean Foods 2,800 138
................................................................................
Eridania Beghin-Say (FRF) 2,500 547
................................................................................
General Mills 12,960 885
................................................................................
Heinz 5,500 292
................................................................................
Hershey Foods 4,200 291
................................................................................
Interstate Bakeries 2,700 87
................................................................................
McCormick 21,500 717
................................................................................
Nestle (CHF) 525 1,124
................................................................................
Ralston Purina 9,300 1,035
................................................................................
Sara Lee 25,100 1,478
................................................................................
8,012
...........
Hospital Supplies/Hospital Management 1.0%
Abbott Laboratories 3,700 274
................................................................................
Arterial Vascular Engineering * 4,200 130
................................................................................
Boston Scientific * 1,800 115
................................................................................
HealthSouth * 22,400 636
................................................................................
Medtronic 3,700 206
................................................................................
Smith & Nephew (GBP) 56,000 161
................................................................................
Tenet Healthcare * 11,300 395
................................................................................
Terumo (JPY) 39,000 590
................................................................................
United States Surgical * 16,000 636
................................................................................
3,143
...........
Pharmaceuticals 3.4%
American Home Products 36,560 1,766
................................................................................
Astra (Class B) (SEK) 12,000 233
................................................................................
Biogen * 8,400 370
................................................................................
Bristol-Myers Squibb 12,400 1,333
................................................................................
Eli Lilly 4,300 264
................................................................................
Gehe (DEM) 3,100 166
................................................................................
Glaxo Wellcome ADR 6,800 367
................................................................................
6
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Johnson & Johnson 9,100 $ 628
................................................................................
Merck 7,600 890
................................................................................
Novartis (CHF) 470 796
................................................................................
Pfizer 15,020 1,574
................................................................................
Pharmacia & Upjohn 10,660 471
................................................................................
Schering-Plough 7,400 619
................................................................................
Takeda Chemical Industries (JPY) 21,000 543
................................................................................
Warner-Lambert 16,800 1,072
................................................................................
11,092
...........
Biotechnology 0.1%
Guidant 2,900 187
................................................................................
187
...........
Health Care Services 0.3%
Altana AG (DEM) 3,100 243
................................................................................
United HealthCare 11,500 736
................................................................................
979
...........
Miscellaneous Consumer Products 3.2%
Benetton Group (ITL) 14,560 318
................................................................................
Bridgestone (JPY) 24,000 548
................................................................................
Colgate-Palmolive 18,000 1,566
................................................................................
Hasbro 13,000 497
................................................................................
Huhtamaki (FIM) 1,500 83
................................................................................
Kuraray (JPY) 29,000 243
................................................................................
Lion Nathan (NZD) 166,400 410
................................................................................
Mattel 7,900 299
................................................................................
Newell 9,400 454
................................................................................
Philip Morris 59,150 2,211
................................................................................
Procter & Gamble 4,100 344
................................................................................
Service Corp. International 14,000 572
................................................................................
Stanley Works 5,100 242
................................................................................
Tomkins (GBP) 20,000 116
................................................................................
Tomkins ADR 11,100 257
................................................................................
Unifi 14,300 557
................................................................................
Unilever N.V. ADR 11,200 884
................................................................................
UST 30,400 809
................................................................................
Yue Yuen Industrial (HKD) 127,000 228
................................................................................
10,638
...........
Total Consumer Nondurables 38,295
...........
7
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CONSUMER SERVICES 6.4%
General Merchandisers 1.6%
Carrefour (FRF) 200 $ 122
................................................................................
Dayton Hudson 17,600 816
................................................................................
Fred Meyer * 14,400 619
................................................................................
JUSCO (JPY) 18,000 313
................................................................................
Marui (JPY) 14,000 215
................................................................................
Neiman-Marcus * 7,600 259
................................................................................
Pinault Printemps (FRF) 900 741
................................................................................
Tesco (GBP) 45,482 401
................................................................................
Wal-Mart 20,600 1,137
................................................................................
Warnaco Group (Class A) 16,900 697
................................................................................
5,320
...........
Specialty Merchandisers 2.0%
American Stores 41,100 1,025
................................................................................
Christian Dior (FRF) 1,700 235
................................................................................
CVS 10,635 747
................................................................................
Federated Department Stores * 5,000 259
................................................................................
General Nutrition * 9,100 287
................................................................................
Home Depot 7,100 558
................................................................................
Kohl's * 6,200 295
................................................................................
Omron (JPY) 35,000 528
................................................................................
Safeway * 26,200 955
................................................................................
Toys "R" Us * 17,900 474
................................................................................
Tupperware 44,200 1,193
................................................................................
6,556
...........
Entertainment and Leisure 1.2%
Carnival (Class A) ADR 10,000 678
................................................................................
Disney 6,700 758
................................................................................
Hilton 12,500 393
................................................................................
Hutchison Whampoa (HKD) 97,000 507
................................................................................
McDonald's 5,200 341
................................................................................
Reader's Digest (Class A) 35,600 1,015
................................................................................
Reader's Digest (Class B) 8,500 239
................................................................................
Sharp (JPY) 16,000 120
................................................................................
4,051
...........
8
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Media and Communications 1.6%
Asatsu (JPY) 14,000 $ 277
................................................................................
CBS 13,000 413
................................................................................
Elsevier (NLG) 12,000 187
................................................................................
France Telecom ADR * 13,500 760
................................................................................
R.R. Donnelley 21,700 976
................................................................................
Time Warner 9,400 731
................................................................................
Tribune 12,000 803
................................................................................
U S WEST Media * 8,600 319
................................................................................
Valassis Communications * 5,000 176
................................................................................
Vodafone ADR 5,600 615
................................................................................
5,257
...........
Total Consumer Services 21,184
...........
CONSUMER CYCLICALS 2.8%
Automobiles and Related 0.3%
Cycle & Carriage (SGD) 22,000 68
................................................................................
Federal-Mogul 4,000 237
................................................................................
Honda ADR 6,800 452
................................................................................
SPX * 3,200 221
................................................................................
978
...........
Building and Real Estate 1.6%
Cheung Kong Holdings (HKD) 67,000 362
................................................................................
City Developments (SGD) 15,000 54
................................................................................
Crescent Real Estate Equities, REIT 11,000 377
................................................................................
DBS Land (SGD) 20,000 22
................................................................................
Federal Realty Investment Trust, REIT 36,600 906
................................................................................
Reckson Associates Realty, REIT 33,100 823
................................................................................
Simon DeBartolo Group, REIT 36,572 1,221
................................................................................
Starwood Hotels & Resorts, REIT 31,000 1,463
................................................................................
5,228
...........
Miscellaneous Consumer Durables 0.9%
Corning 36,200 1,428
................................................................................
Masco 10,200 574
................................................................................
OCE (NLG) 7,200 303
................................................................................
Ricoh (JPY) 34,000 367
................................................................................
Sony (JPY) 5,000 422
................................................................................
3,094
...........
Total Consumer Cyclicals 9,300
...........
9
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
TECHNOLOGY 3.1%
Electronic Components 0.5%
ASM Lithography * 3,600 $ 138
................................................................................
EMC * 10,200 422
................................................................................
Intel 6,200 443
................................................................................
Linear Technology 4,300 301
................................................................................
Maxim Integrated Products * 8,200 274
................................................................................
1,578
...........
Electronic Systems 0.5%
Hewlett-Packard 8,100 503
................................................................................
Honeywell 4,100 344
................................................................................
Nokia ADR 12,000 780
................................................................................
1,627
...........
Information Processing 0.3%
COMPAQ Computer 9,900 270
................................................................................
Dell Computer * 3,500 288
................................................................................
Hitachi ADR 3,400 226
................................................................................
IBM 2,800 329
................................................................................
1,113
...........
Office Automation 0.0%
Xerox 1,600 165
................................................................................
165
...........
Specialized Computer 0.0%
Sun Microsystems * 1,800 72
................................................................................
72
...........
Telecommunications Equipment 1.3%
AirTouch Communications * 8,000 381
................................................................................
Cisco Systems * 8,050 608
................................................................................
LM Ericsson (Class B) ADR 18,000 502
................................................................................
Lucent Technologies 1,000 71
................................................................................
MCI 12,100 647
................................................................................
Telebras ADR 5,600 597
................................................................................
Tellabs * 8,500 584
................................................................................
WorldCom * 17,800 811
................................................................................
4,201
...........
10
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Aerospace and Defense 0.5%
AlliedSignal 26,200 $ 1,120
................................................................................
Boeing 300 14
................................................................................
Raytheon (Class B) 8,500 465
................................................................................
1,599
...........
Total Technology 10,355
...........
CAPITAL EQUIPMENT 2.3%
Electrical Equipment 1.3%
ABB (CHF) 200 339
................................................................................
Canon (JPY) 13,000 310
................................................................................
GE 24,800 2,068
................................................................................
Matsushita Electric Works (JPY) 22,000 184
................................................................................
Mitsubishi Electric (JPY) 37,000 87
................................................................................
Siemens (DEM) 5,200 336
................................................................................
Tyco International 19,522 1,081
................................................................................
4,405
...........
Machinery 1.0%
Cooper Industries 2,600 167
................................................................................
Danaher 14,400 1,041
................................................................................
GKN (GBP) 44,600 663
................................................................................
Man (DEM) 1,230 489
................................................................................
S I G Schweis (CHF) * 320 304
................................................................................
Teleflex 13,100 530
................................................................................
Valmet (FIM) 6,000 105
................................................................................
3,299
...........
Total Capital Equipment 7,704
...........
BUSINESS SERVICES AND
TRANSPORTATION 4.6%
Computer Service and Software 1.6%
Automatic Data Processing 8,900 566
................................................................................
BMC Software * 16,800 774
................................................................................
Cadence Design Systems * 7,100 250
................................................................................
First Data 17,684 588
................................................................................
Galileo International 9,600 378
................................................................................
Microsoft * 11,200 950
................................................................................
11
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Network Associates * 7,700 $ 472
................................................................................
Oracle * 14,200 335
................................................................................
Parametric Technology * 21,300 653
................................................................................
SunGard Data Systems * 10,200 348
................................................................................
5,314
...........
Distribution Services 0.1%
U.S. Foodservice * 8,845 293
................................................................................
293
...........
Environmental 0.2%
USA Waste Services * 16,500 779
................................................................................
779
...........
Transportation Services 0.0%
Mitsubishi Heavy Industries (JPY) 31,000 108
................................................................................
108
...........
Miscellaneous Business Services 1.5%
British Airport Authorities (GBP) 25,047 299
................................................................................
Browning-Ferris 34,400 1,223
................................................................................
Cendant * 16,450 357
................................................................................
H&R Block 36,400 1,602
................................................................................
Omnicom 11,700 548
................................................................................
Sime Darby (MYR) 48,000 38
................................................................................
Waste Management 27,760 902
................................................................................
4,969
...........
Airlines 0.6%
Delta 12,500 1,438
................................................................................
KLM (NLG) 6,000 237
................................................................................
KLM Royal Dutch Air ADR 700 27
................................................................................
Singapore Airlines (SGD) 13,000 72
................................................................................
1,774
...........
Railroads 0.6%
Burlington Northern Santa Fe 3,900 388
................................................................................
Norfolk Southern 45,200 1,415
................................................................................
1,803
...........
Total Business Services and Transportation 15,040
...........
ENERGY 4.5%
Energy Services 0.7%
Camco International 4,300 300
................................................................................
12
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Cooper Cameron * 5,300 $ 315
................................................................................
Elf Aquitaine ADR 5,000 343
................................................................................
Halliburton 8,500 403
................................................................................
Johnson Electric Holdings (HKD) 123,600 478
................................................................................
TOTAL ADR 6,300 393
................................................................................
2,232
...........
Exploration & Production 0.1%
Santos (AUD) 49,000 161
................................................................................
161
...........
Integrated Petroleum - Domestic 1.6%
Atlantic Richfield 14,900 1,176
................................................................................
British Petroleum ADR 23,280 2,063
................................................................................
Occidental Petroleum 26,900 743
................................................................................
Unocal 9,600 342
................................................................................
USX-Marathon 24,400 854
................................................................................
5,178
...........
Integrated Petroleum - International 2.1%
Amoco 34,300 1,434
................................................................................
ENI S.P.A. ADR 5,200 367
................................................................................
Exxon 10,660 751
................................................................................
Mobil 28,400 2,215
................................................................................
Repsol ADR 6,100 334
................................................................................
Royal Dutch Petroleum ADR 10,000 561
................................................................................
Shell Transport & Trading ADR 9,500 422
................................................................................
Texaco 16,800 970
................................................................................
7,054
...........
Total Energy 14,625
...........
PROCESS INDUSTRIES 4.2%
Diversified Chemicals 1.1%
Dow Chemical 13,900 1,347
................................................................................
DuPont 17,600 1,355
................................................................................
Hercules 23,000 1,013
................................................................................
3,715
...........
Specialty Chemicals 1.8%
3M 7,000 648
................................................................................
A. Schulman 17,700 354
................................................................................
13
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Akzo Nobel (NLG) 1,600 $ 334
................................................................................
BASF AG (DEM) 12,180 565
................................................................................
Bayer (DEM) 11,660 557
................................................................................
Great Lakes Chemical 34,740 1,390
................................................................................
Octel * 7,385 161
................................................................................
Pall 54,200 1,074
................................................................................
Sumitomo Chemicals (JPY) 40,000 108
................................................................................
Technip (FRF) 5,000 717
................................................................................
5,908
...........
Paper and Paper Products 0.8%
Dai Nippon Printing (JPY) 15,000 247
................................................................................
Fort James 19,500 932
................................................................................
Kimberly-Clark 29,500 1,462
................................................................................
2,641
...........
Forest Products 0.3%
Georgia-Pacific 8,300 533
................................................................................
International Paper 5,200 239
................................................................................
772
...........
Building and Construction 0.2%
Blue Circle Industries (GBP) 35,418 227
................................................................................
Holderbank Financiere Glarus (CHF) 350 448
................................................................................
675
...........
Total Process Industries 13,711
...........
BASIC MATERIALS 0.8%
Metals 0.5%
Anglo American Platinum (ZAR) 18,000 218
................................................................................
Inco 31,100 447
................................................................................
Reynolds Metals 17,800 1,033
................................................................................
1,698
...........
Mining 0.2%
Lonrho (GBP) 22,807 112
................................................................................
Lonrho Africa (GBP) 22,307 27
................................................................................
Newmont Mining 9,400 234
................................................................................
Rio Tinto (AUD) 19,500 235
................................................................................
608
...........
14
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Miscellaneous Materials 0.1%
Crown Cork & Seal 2,900 $ 150
................................................................................
Malayan Cement (MYR) 73,750 33
................................................................................
183
...........
Total Basic Materials 2,489
...........
MISCELLANEOUS 1.2%
Conglomerates 0.1%
Orkla (NOK) 17,200 392
................................................................................
392
...........
Other Miscellaneous Common Stocks 1.1%
SPDR Trust 11,500 1,256
................................................................................
Other Miscellaneous Common Stocks 2,221
................................................................................
3,477
...........
Total Miscellaneous 3,869
...........
FOREIGN 0.3%
Europe 0.2%
AXA Colonia Konzern (DEM) 2,000 264
................................................................................
Svenska Cellulosa (SEK) 6,700 185
................................................................................
449
...........
Foreign 0.1%
Bobst (CHF) 236 446
................................................................................
446
...........
Total Foreign 895
...........
Total Common Stocks (Cost $148,635) 189,042
...........
Corporate Bonds 18.4%
Abbey National, Sub. Notes, 6.69%, 10/17/05 $ 976,000 999
................................................................................
AEI Holding, Sr. Notes (144a), 10.00%, 11/15/07 275,000 276
................................................................................
Agricultural Minerals, Sr. Notes, 10.75%, 9/30/03 250,000 266
................................................................................
Agrium, 7.00%, 2/1/04 300,000 311
................................................................................
Ahmanson, H.F., Sub. Notes, 7.875%, 9/1/04 500,000 541
................................................................................
Airplane Pass Through Trust, 10.875%, 3/15/19 500,000 551
................................................................................
Allied Waste, Sr. Sub. Notes, 10.25%, 12/1/06 250,000 276
................................................................................
AMC Entertainment, Sr. Sub. Notes, 9.50%, 3/15/09 350,000 359
................................................................................
15
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
American Airlines, 9.71%, 1/2/07 $ 40,552 $ 47
................................................................................
American Builders & Contractors Supply, Sr. Sub. Notes
10.625%, 5/15/07 350,000 358
................................................................................
American Express, 7.60%, 8/15/02 300,000 314
................................................................................
American Radio Systems, Sr. Sub. Notes, 9.00%, 2/1/06 25,000 27
................................................................................
American Safety Razor, Sr. Notes, 9.875%, 8/1/05 500,000 538
................................................................................
Amerigas Partners L.P., Sr. Notes, 10.125%, 4/15/07 200,000 214
................................................................................
Ameriserve Food Distribution, Sr. Sub. Notes
10.125%, 7/15/07 250,000 265
................................................................................
Ametek, Sr. Notes, 9.75%, 3/15/04 20,000 22
................................................................................
AMR, Deb., 9.00%, 9/15/16 100,000 119
................................................................................
Archibald Candy, Sr. Secured Notes, 10.25%, 7/1/04 275,000 293
................................................................................
Associated Materials, 9.25%, 3/1/08 500,000 514
................................................................................
Associates, Sr. Notes, 5.25%, 3/30/00 700,000 692
................................................................................
Bank Nova Scotia, Sub. Notes, 6.25%, 9/15/08 152,000 151
................................................................................
Bay View Capital, Sub. Notes, 9.125%, 8/15/07 275,000 283
................................................................................
Bear Stearns, Sr. Notes, 8.25%, 2/1/02 150,000 160
................................................................................
Boise Cascade, Deb., 7.35%, 2/1/16 660,000 666
................................................................................
Celestica International, Gtd. Sr. Sub. Notes
10.50%, 12/31/06 350,000 384
................................................................................
Citicorp, Sub. Notes, 7.75%, 6/15/06 1,300,000 1,414
................................................................................
Coach USA, Gtd. Sr. Sub. Notes, 9.375%, 7/1/07 375,000 392
................................................................................
Coca-Cola Bottling Group, Sr. Sub. Notes
9.00%, 11/15/03 150,000 158
................................................................................
Coinmach, Sr. Sub. Notes, 11.75%, 11/15/05 500,000 556
................................................................................
Comcast Cable Communications, 8.875%, 5/1/17 500,000 595
................................................................................
Communications & Power Industries, Sr. Sub. Notes
12.00%, 8/1/05 500,000 560
................................................................................
Container Corporation of America, Sr. Notes
9.75%, 4/1/03 250,000 269
................................................................................
Continental Airlines, 6.94%, 10/15/13 672,767 695
................................................................................
Courtyard by Marriott II, Sr. Secured Notes
10.75%, 2/1/08 100,000 110
................................................................................
Cox Communications, Deb., 7.25%, 11/15/15 600,000 635
................................................................................
Dan River, Sr. Sub. Notes, 10.125%, 12/15/03 500,000 534
................................................................................
Dayton Power & Light, 1st Mtg. Notes, 8.15%, 1/15/26 800,000 870
................................................................................
Delta Mills, Sr. Notes, 9.625%, 9/1/07 250,000 256
................................................................................
Discover Card Master Trust I, 7.75%, 4/16/02 100,000 102
................................................................................
16
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Doane Products, Sr. Notes, 10.625%, 3/1/06 $ 415,000 $ 450
................................................................................
Dyersburg, Sr. Sub. Notes, 9.75%, 9/1/07 500,000 516
................................................................................
Dyncorp, Sr. Sub. Notes, 9.50%, 3/1/07 350,000 359
................................................................................
Eli Lilly, 7.125%, 6/1/25 1,120,000 1,217
................................................................................
Energy Corporation of America, Sr. Sub. Notes
9.50%, 5/15/07 500,000 494
................................................................................
Enhance Financial Services, Deb., 6.75%, 3/1/03 500,000 509
................................................................................
EOP Operating, Sr. Notes (144a), 6.75%, 2/15/08 1,100,000 1,102
................................................................................
Fairchild Semiconductor, Sr. Sub. Notes
10.125%, 3/15/07 500,000 518
................................................................................
Fairfax Financial Holdings, 8.25%, 10/1/15 500,000 556
................................................................................
Falcon Building Products, Gtd. Sr. Sub. Notes
9.50%, 6/15/07 100,000 102
................................................................................
First Federal Financial, 11.75%, 10/1/04 250,000 281
................................................................................
First National Bank of Boston, Sub. Notes,
8.00%, 9/15/04 700,000 758
................................................................................
First USA Bank, Sr. Notes, 5.85%, 2/22/01 500,000 497
................................................................................
Fleet Norstar Group, Sub. Notes, 9.90%, 6/15/01 100,000 110
................................................................................
Flores & Rucks, Sr. Sub. Notes, 9.75%, 10/1/06 250,000 274
................................................................................
Florida Power, 1st Mtg. Notes, 6.125%, 3/1/03 210,000 211
................................................................................
Ford Motor Credit, MTN, 7.60%, 3/29/00 50,000 51
................................................................................
Frontiervision, Sr. Sub. Notes, 11.00%, 10/15/06 250,000 278
................................................................................
Fundy Cable, Sr. Secured 2nd Priority Notes
11.00%, 11/15/05 500,000 550
................................................................................
Furon, Sr. Sub. Notes (144a), 8.125%, 3/1/08 500,000 495
................................................................................
General Electric Capital, 8.625%, 6/15/08 100,000 118
................................................................................
Grand Casino, 1st Mtg. Notes, 10.125%, 12/1/03 500,000 540
................................................................................
Harcourt General, Deb., 7.20%, 8/1/27 2,000,000 2,011
................................................................................
Herff Jones, Sr. Sub. Notes, 11.00%, 8/15/05 500,000 547
................................................................................
HMC Acquisition Properties, Sr. Notes,
9.00%, 12/15/07 50,000 54
................................................................................
Host Marriott Travel, Sr. Notes, 9.50%, 5/15/05 250,000 264
................................................................................
IMC Home Equity Loan Trust, 6.40%, 6/1/28 867,000 867
................................................................................
International Wire, Sr. Sub. Notes, 11.75%, 6/1/05 350,000 385
................................................................................
Intertek Finance, Sr. Sub. Notes, 10.25%, 11/1/06 350,000 371
................................................................................
Iron Mountain, Sr. Sub. Notes, 8.75%, 9/30/09 500,000 511
................................................................................
Keebler, Sr. Sub. Notes, 10.75%, 7/1/06 500,000 569
................................................................................
Lehman Brothers Holdings, 7.41%, 5/25/99 200,000 203
................................................................................
Lenfest Communications, Sr. Notes, 8.375%, 11/1/05 30,000 31
................................................................................
Long Island Lighting, Deb., 7.05%, 3/15/03 75,000 76
................................................................................
17
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Loomis Fargo & Company, Sr. Sub. Notes
10.00%, 1/15/04 $ 250,000 $ 253
................................................................................
Marcus Cable, Gtd. Sr. Disc. Notes, STEP,
0%, 8/1/04 350,000 336
................................................................................
Maxxam Group Holdings, Sr. Secured Notes
12.00%, 8/1/03 250,000 271
................................................................................
Nextel Communications, Sr. Disc. Notes
STEP, 0%, 10/31/07 800,000 516
................................................................................
Northland Cable Television, Sr. Sub. Notes
10.25%, 11/15/07 250,000 264
................................................................................
Northrop Grumman, 7.00%, 3/1/06 630,000 650
................................................................................
Ocwen Financial, Sr. Notes, 11.875%, 10/1/03 200,000 228
................................................................................
Owens & Minor, Sr. Sub. Notes, 10.875%, 6/1/06 150,000 167
................................................................................
Paine Webber Group, 8.25%, 5/1/02 500,000 533
................................................................................
Plastic Containers, Sr. Secured Notes,
10.00%, 12/15/06 540,000 586
................................................................................
Praxair, Deb., 8.70%, 7/15/22 700,000 764
................................................................................
Pride Petroleum Services, Sr. Notes, 9.375%, 5/1/07 350,000 375
................................................................................
Principal Mutual (144a)
7.875%, 3/1/24 250,000 265
..............................................................................
8.00%, 3/1/44 100,000 109
..............................................................................
Public Service Electric & Gas, 1st Ref. Mtg. Notes
7.00%, 9/1/24 300,000 299
................................................................................
Quest Diagnostics, Gtd. Sr. Sub. Notes,
10.75%, 12/15/06 475,000 532
................................................................................
Rio Hotel & Casino, Sr. Sub. Notes
9.50%, 4/15/07 100,000 107
..............................................................................
10.625%, 7/15/05 250,000 270
..............................................................................
Rite Aid, 7.125%, 1/15/07 500,000 520
................................................................................
Rogers Cablesystems, Sr. Sec. 2nd Priority Notes
10.00%, 3/15/05 250,000 276
................................................................................
Rouse, 8.50%, 1/15/03 25,000 27
................................................................................
Safelite Glass, Sr. Sub. Notes (144a),
9.875%, 12/15/06 250,000 265
................................................................................
Sea Containers Ltd., Sr. Sub. Deb., 12.50%, 12/1/04 135,000 151
................................................................................
Shawmut National, Sub. Notes, 7.20%, 4/15/03 25,000 26
................................................................................
Showboat, 1st Mtg. Bonds, 9.25%, 5/1/08 250,000 270
................................................................................
Six Flags Theme Parks, Sr. Sub. Disc. Notes
STEP, 0%, 6/15/05 500,000 564
................................................................................
Smithfield Foods, Sr. Sub. Notes (144a),
7.625%, 2/15/08 50,000 50
................................................................................
Specialty Retailers, Sr. Notes, 8.50%, 7/15/05 100,000 103
................................................................................
Sprint Spectrum, Sr. Notes, 11.00%, 8/15/06 500,000 576
................................................................................
18
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Standard Credit Card Master Trust, 5.50%, 2/7/00 $ 100,000 $ 100
................................................................................
Synthetic Industries, Sr. Sub. Notes, 9.25%, 2/15/07 350,000 364
................................................................................
TCI Communications, Deb. Notes, 8.75%, 8/1/15 540,000 634
................................................................................
Tele-Communications, Sr. Notes, 8.25%, 1/15/03 600,000 645
................................................................................
Tele-Communications, Deb., 8.75%, 2/15/23 500,000 535
................................................................................
Tenet Healthcare, Sr. Sub. Notes, 8.625%, 1/15/07 250,000 256
................................................................................
Tenneco, 8.20%, 11/15/99 25,000 26
................................................................................
Texas Bottling Group, Sr. Sub. Notes, 9.00%, 11/15/03 100,000 106
................................................................................
Texas Utilities, 1st Mtg. Bonds
7.375%, 10/1/25 1,000,000 1,023
..............................................................................
7.875%, 4/1/24 30,000 32
..............................................................................
Texas Utilities, 1st Mtg. Notes, 8.00%, 6/1/02 100,000 106
................................................................................
Texas-New Mexico Power, Deb., 12.50%, 1/15/99 120,000 124
................................................................................
Time Warner Entertainment, Deb., 8.375%, 3/15/23 1,200,000 1,395
................................................................................
Union Planters Trust Capital, Gtd. Bonds,
8.20%, 12/15/26 1,225,000 1,302
................................................................................
United Air Lines, 9.20%, 3/22/08 215,472 246
................................................................................
US Can, Sr. Gtd. Notes, 10.125%, 10/15/06 250,000 263
................................................................................
USF&G Capital II, Gtd. Notes,
8.47%, 1/10/27 1,000,000 1,113
................................................................................
Vesta Insurance Group, Deb., 8.75%, 7/15/25 1,000,000 1,189
................................................................................
Viasystems, Sr. Sub. Notes, 9.75%, 6/1/07 500,000 521
................................................................................
Wal-Mart, Deb., 7.25%, 6/1/13 1,310,000 1,436
................................................................................
Westamerica Bank, Sub. Notes, 6.99%, 9/30/03 250,000 251
................................................................................
Windy Hill Pet Food, Sr. Sub. Notes, 9.75%, 5/15/07 500,000 540
................................................................................
Worldcom, 7.75%, 4/1/07 430,000 464
................................................................................
YPF Sociedad Anonima, 7.75%, 8/27/07 145,000 149
................................................................................
Miscellaneous Corporate Bonds 6,591
................................................................................
Total Corporate Bonds (Cost $58,332) 60,411
...........
Foreign Government Obligations/
Agencies 2.0%
Commonwealth of Australia
9.50%, 8/15/03 AUD 10,000 7
................................................................................
European Investment Bank
3.00%, 9/20/06 JPY 87,000,000 706
..............................................................................
4.625%, 2/26/03 JPY 173,000,000 1,463
................................................................................
Federal Republic of Germany
6.00%, 7/4/07 DEM 715,000 433
................................................................................
19
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Federal Republic of Germany
6.50%, 7/15/03 DEM 80,000 $ 49
..............................................................................
8.375%, 5/21/01 DEM 1,400,000 873
..............................................................................
8.50%, 8/21/00 DEM 65,000 40
................................................................................
Government of Canada
6.50%, 6/1/04 CAD 9,000 7
..............................................................................
8.50%, 4/1/02 CAD 645,000 493
..............................................................................
9.75%, 6/1/21 CAD 30,000 31
................................................................................
Government of France
5.50%, 4/25/07 FRF 2,480,000 433
..............................................................................
8.25%, 2/27/04 FRF 324,000 64
..............................................................................
8.50%, 11/25/02 FRF 4,766,000 926
................................................................................
Government of Japan++
4.50%, 6/20/03 JPY 15,700,000 132
................................................................................
Int'l Bank for Reconstruction & Development
6.75%, 3/15/00 JPY 2,000,000 16
................................................................................
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 13
................................................................................
Republic of Italy
8.50%, 8/1/04 ITL 100,000,000 68
................................................................................
United Kingdom Treasury Notes
7.50%, 12/7/06 GBP 140,000 255
..............................................................................
8.00%, 6/10/03 GBP 303,000 548
..............................................................................
8.50%, 12/7/05 GBP 10,000 19
..............................................................................
9.00%, 3/3/00 GBP 24,000 41
................................................................................
Total Foreign Government Obligations/Agencies (Cost $7,065) 6,650
...........
U.S. Government Mortgage-Backed
Securities 11.5%
Federal Home Loan Mortgage Corp.
5.75%, 4/15/08 $ 2,000,000 1,978
..............................................................................
6.00%, 4/1/24 - 11/1/25 231,956 226
..............................................................................
20
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
in thousands
Federal Home Loan Mortgage Corp.
6.50%, 10/1/08 - 3/15/11 $ 3,523,872 $ 3,583
............................................................................
7.00%, 10/1/08 - 10/1/25 111,442 113
............................................................................
8.00%, 1/1/25 132,247 137
............................................................................
9.00%, 11/1/04 20,094 21
..............................................................................
Federal National Mortgage Assn
6.00%, 9/1/08 71,744 71
............................................................................
6.50%, 3/1/09 - 8/1/23 204,969 206
............................................................................
7.00%, 8/1/23 - 1/1/26 612,648 622
............................................................................
7.50%, 11/1/07 106,079 109
............................................................................
8.00%, 5/1/07 - 6/1/10 112,758 117
............................................................................
8.50%, 8/1/06 - 11/1/21 61,387 64
............................................................................
9.00%, 5/1/01 27,214 28
............................................................................
REMIC, 8.00%, 2/25/07 100,000 104
..............................................................................
Government National Mortgage Assn., I
6.00%, 5/15/17 - 12/15/23 2,872,906 2,821
............................................................................
6.50%, 12/15/23 - 4/15/27 6,456,480 6,437
............................................................................
7.00%, 4/15/24 - 2/15/28 9,346,420 9,498
............................................................................
7.50%, 2/15/16 - 6/15/26 2,620,444 2,713
............................................................................
8.00%, 3/15/22 - 10/20/25 903,757 838
............................................................................
TBA, 7.00%, 2/15/28 4,935,022 5,009
..............................................................................
Government National Mortgage Assn., II
7.00%, 9/20/27 2,914,317 2,943
............................................................................
8.00%, 10/20/25 99,328 103
..............................................................................
Merrill Lynch Trust
6.00%, 3/20/18 10,372 10
..............................................................................
Total U.S. Government Mortgage-Backed Securities
(Cost $36,803) 37,751
........
U.S. GOVERNMENT OBLIGATIONS/Agencies 6.4%
Government Trust Certificates
9.25%, 11/15/01 45,764 49
..............................................................................
Resolution Funding
8.125%, 10/15/19 210,000 263
..............................................................................
Tennessee Valley Authority
5.88%, 4/1/36 2,000,000 2,082
............................................................................
6.235%, 7/15/45 2,000,000 2,088
............................................................................
21
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
In thousands
Tennessee Valley Authority
6.875%, 12/15/43 $ 3,340,000 $ 3,415
..............................................................................
U.S. Treasury Bonds
6.75%, 8/15/26 11,800,000 13,181
..............................................................................
Total U.S. Government Obligations/Agencies (Cost $19,371) 21,078
........
SHORT-TERM INVESTMENTS 3.7%
Money Market Funds 3.7%
Reserve Investment Fund, 5.67%# 12,124,036 12,124
..............................................................................
Total Short-Term Investments (Cost $12,124) 12,124
........
Total Investments in Securities
99.6% of Net Assets (Cost $282,330) $ 327,056
Other Assets Less Liabilities 1,300
........
NET ASSETS $ 328,356
........
# Seven-day yield
* Non-income producing
++ Securities contain some restrictions as to public resale--total of such
securities at year-end amounts to 0.04% of net assets.
ADR American Depository Receipt
MTN Medium Term Note
REIT Real Estate Investment Trust
REMIC Real Estate Mortgage Investment Conduit
STEP Stepped coupon note for which the interest rate will adjust on
specified future date(s)
TBA To be announced security was purchased on a forward commitment basis
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at year-end amounts to
0.78% 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
- --------------------------------------------------------------------------------
May 31, 1998
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $282,330) $ 327,056
Securities Lending Collateral Pool 23,498
Other assets 5,464
............
Total assets 356,018
............
Liabilities
Securities Lending Collateral 23,498
Other liabilities 4,164
............
Total liabilities 27,662
............
NET ASSETS $ 328,356
............
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 1,788
Accumulated net realized gain/loss - net of distributions 9,939
Net unrealized gain (loss) 44,704
Paid-in-capital applicable to 20,672,584 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 271,925
............
NET ASSETS $ 328,356
............
NET ASSET VALUE PER SHARE $ 15.88
............
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
5/31/98
Investment Income
Income
Interest $ 8,633
Dividend 2,978
............
Total income 11,611
............
Expenses
Investment management 1,685
Shareholder servicing 854
Custody and accounting 145
Registration 65
Prospectus and shareholder reports 63
Legal and audit 14
Directors 7
Miscellaneous 13
Reimbursed to manager 98
............
Total expenses 2,944
............
Net investment income 8,667
............
Realized and unrealized gain (loss)
Net realized gain (loss)
Securities 12,425
Foreign currency transactions (27)
............
Net realized gain (loss) 12,398
............
Change in net unrealized gain or loss
Securities 26,381
Other assets and liabilities denominated in foreign currencies (16)
............
Change in net unrealized gain or loss 26,365
............
Net realized and unrealized gain (loss) 38,763
............
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 47,430
------------
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
5/31/98 5/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ 8,667 $ 5,318
Net realized gain (loss) 12,398 6,233
Change in net unrealized gain or loss 26,365 15,321
.........................
Increase (decrease) in net assets from operations 47,430 26,872
.........................
Distributions to shareholders
Net investment income (8,060) (4,810)
Net realized gain (5,729) (3,853)
.........................
Decrease in net assets from distributions (13,789) (8,663)
.........................
Capital share transactions*
Shares sold 141,418 116,218
Distributions reinvested 13,698 7,930
Shares redeemed (66,284) (53,473)
.........................
Increase (decrease) in net assets from capital
share transactions 88,832 70,675
.........................
Net equalization -- 173
.........................
Net Assets
Increase (decrease) during period 122,473 89,057
Beginning of period 205,883 116,826
.........................
End of period $ 328,356 $ 205,883
-------------------------
*Share information
Shares sold 9,497 8,913
Distributions reinvested 933 607
Shares redeemed (4,395) (4,096)
.........................
Increase (decrease) in shares outstanding 6,035 5,424
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
May 31, 1998
- --------------------------------------------------------------------------------
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 Balanced 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
26
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
of securities and income and expenses are translated into U.S. dollars
at the prevailing exchange rate on the dates of such transactions. The
effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and
losses.
Premiums and Discounts Premiums and discounts on debt securities, other
than mortgage-backed securities, are amortized for both financial
reporting and tax purposes. Premiums and discounts on mortgage-backed
securities are recognized upon principal repayment as gain or loss 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.
Effective June 1, 1997, the fund discontinued its practice of
equalization. The results of operations and net assets were not affected
by this change.
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
$22,655,000; aggregate collateral consisted of $23,498,000 in the
securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
and U.S. government securities, aggregated $130,337,000 and $76,065,000,
respectively,
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T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
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for the year ended May 31, 1998. Purchases and sales of U.S. government
securities aggregated $60,277,000 and $36,667,000, respectively, for the
year ended May 31, 1998.
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 $ 8,000
Paid-in-capital (8,000)
At May 31, 1998, the aggregate cost of investments for federal income
tax and financial reporting purposes was $282,330,000, and net
unrealized gain aggregated $44,726,000, of which $50,510,000 related to
appreciated investments and $5,784,000 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 $177,000 was payable at May 31, 1998. The fee
is computed daily and paid monthly, and consists of an individual fund
fee equal to 0.25% 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
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T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
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fund's ratio of expenses to average net assets to exceed 1.05%.
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 expenses to average net assets to exceed
1.05%. Pursuant to this and a previous agreement, $178,000 of unaccrued
1995-1997 fees and expenses were repaid during the year ended May 31,
1998, and $62,000 remains 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 $817,000 for the year ended May 31,
1998, of which $75,000 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 $275,000 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
$3,422,000 with certain affiliates of the manager and paid commissions
of $11,000 related thereto.
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T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
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TAX INFORMATION FOR THE TAX YEAR ENDED 05/31/98
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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:
. $1,448,000 from short-term capital gains,
. $4,281,000 from long-term capital gains; of which $1,603,000 was subject to
the 20% rate gains category and $2,678,000 to the 28% rate gains category.
For corporate shareholders, $1,949,000 of the fund's distributed income and
short-term capital gains qualified for the dividends-received deduction.
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T. ROWE PRICE PERSONAL STRATEGY BALANCED 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 Balanced 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 Balanced 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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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. C11-055 5/31/98
