<PAGE>
- --------------------------------------------------------------------------------
Annual Report - Financial Statements
- --------------------------------------------------------------------------------
T. ROWE PRICE
PERSONAL STRATEGY
GROWTH FUND
------------
May 31, 1999
------------
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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<TABLE>
<CAPTION>
- --------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Year 7/29/94
Ended Through
5/31/99 5/31/98 5/31/97 5/31/96 5/31/95
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 18.05 $ 15.20 $ 13.69 $ 11.44 $ 10.00
Investment activities
Net investment income 0.34* 0.29* 0.27* 0.30* 0.25*
Net realized and
unrealized gain (loss) 1.40 3.01 2.37 2.29 1.30
Total from
investment activities 1.74 3.30 2.64 2.59 1.55
Distributions
Net investment income (0.32) (0.26) (0.24) (0.27) (0.11)
Net realized gain (0.45) (0.19) (0.89) (0.07) --
Total distributions (0.77) (0.45) (1.13) (0.34) (0.11)
NET ASSET VALUE
End of period $ 19.02 $ 18.05 $ 15.20 $ 13.69 $ 11.44
------------------------------------------------------
Ratios/Supplemental Data
Total return. 10.01%* 22.02%* 19.89%* 22.83%* 15.65%*
Ratio of total expenses to
average net assets 1.10%* 1.10%* 1.10%* 1.10%* 1.10%*
Ratio of net investment
income to average
net assets 2.00%* 2.15%* 2.24%* 2.27%* 2.76%*
Portfolio turnover rate 36.1% 33.3% 39.6% 39.5% 25.7%
Net assets, end of period
(in thousands) $ 213,631 $ 147,347 $ 67,552 $ 24,954 $ 10,748
</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 1.10% voluntary expense limitation in effect
through 5/31/00.
+ Annualized
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
May 31, 1999
- ------------------------
Portfolio of Investments Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS AND RIGHTS 79.0%
FINANCIAL 13.0%
Bank and Trust 6.5%
Abbey National (GBP) 18,000 $ 371
ABN Amro (EUR) 17,500 388
Australia & New Zealand Bank Group (AUD) 6,000 44
Australia & New Zealand Banking ADR 3,600 131
Banca Commerciale Italiana (EUR) 40,700 292
Banco de Bilbao Vizcaya ADR 15,500 226
Banco Frances del Rio de la Plata ADR 6,000 126
Bank of America 24,500 1,585
Bank of New York 16,200 579
Bank One 12,530 709
Bankgesellschaft Berlin (EUR) 6,800 99
Barclay's (GBP) 19,200 583
Charter One Financial 3,668 104
Chase Manhattan 12,300 892
Citizens Banking 4,900 145
Deutsche Bank (EUR) 6,830 356
Development Bank of Singapore (SGD) 3,300 34
Downey Financial 6,900 152
Dresdner Bank (EUR) 10,000 371
First Bell Bancorp 2,200 43
First Mariner Bancorp 600 7
First Security 3,300 62
Firstar 3,100 89
Frankfort First Bancorp 1,100 16
Glacier Bancorp 7,447 152
HSBC Holdings (GBP) 15,167 499
J. P. Morgan 3,530 492
KBC Bancassurance Holding (EUR) 3,200 194
KeyCorp 11,000 382
Marshall & Ilsley 600 42
Mediobanca (EUR) 23,000 261
Mellon Bank 25,800 921
Mercantile Bancorporation 1,600 93
3
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Overseas Chinese Bank (SGD) 4,200 $ 33
Societe Generale (EUR) 2,129 387
State Street 2,700 206
Summit Bancorp 3,400 139
Svenska Handelsbank (SEK) 6,000 217
UBS (CHF) 2,214 640
UST 2,700 65
Washington Mutual 13,950 533
Wells Fargo 25,100 1,004
WestAmerica 1,500 52
Westpac Bank (AUD) 9,000 62
13,778
Insurance 2.7%
ACE Limited 13,200 403
American General 4,100 296
American International Group 1,150 131
Brown and Brown 3,700 132
Fairfax Financial, Rights (144a) (CAD) * 800 214
Harleysville Group 3,000 58
Istituto Nazionale delle Assicurazioni (EUR) 89,700 209
Marsh & McLennan 5,000 364
PartnerRe Holdings 5,100 190
Royal & Sun (GBP) 42,090 344
Schweizerische Rueckversicherungs (CHF) 185 351
Selective Insurance 2,700 51
St. Paul 31,000 1,102
Sumitomo Marine & Fire Insurance (JPY) 62,000 404
Travelers Property Casualty (Class A) 22,000 869
UNUM 3,700 199
W. R. Berkley 3,100 79
XL Capital (Class A) 6,770 412
5,808
Financial Services 3.8%
American Express 8,700 1,054
Associates First Capital (Class A) 9,800 402
Assurances Generales de France (EUR) 2,400 119
AXA (EUR) 3,300 380
Capital One Financial 3,000 452
4
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Citigroup 24,899 $ 1,650
Delta Financial * 5,200 35
Fannie Mae 17,100 1,163
Financial Federal * 3,400 76
Freddie Mac 23,900 1,394
Goldman Sachs Group * 1,300 88
ING Groep (EUR) 8,350 446
ITLA Capital * 1,100 18
Morgan Stanley Dean Witter 2,900 280
Pearson (GBP) 18,700 360
Unidanmark (Class A) (DKK) 2,700 189
8,106
Total Financial 27,692
UTILITIES 5.3%
Telephone 3.5%
Aliant Communications 6,500 306
ALLTEL 6,100 437
AT&T 15,974 887
BellSouth 10,400 491
British Telecommunications ADR 2,300 386
Compania de Telecomunicaciones de Chile
(Class A) ADR 4,050 88
Frontier 15,500 816
GTE 3,900 246
Hong Kong Telecommunications ADR 6,432 152
Nippon Telegraph & Telephone (JPY) 42 410
Rural Cellular (Class A) * 5,100 83
SBC Communications 25,200 1,288
Telebras ADR 2,700 226
Telebras, Rights ADR * 2,700 0
Telecom Corp. of New Zealand ADR 8,600 298
Telecom Italia (EUR) 31,440 324
Telecom Italia Mobile (EUR) * 46,500 273
Telefonica de Espana ADR 2,288 330
Telefonos de Mexico (Class L) ADR 5,200 416
Western Wireless 3,600 88
7,545
5
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Electric Utilities 1.8%
Cleco 4,300 $ 142
Electrabel (EUR) 740 227
Empresa Nacional de Electricidad Chile ADR 3,724 41
Endesa ADR 8,500 183
FirstEnergy 21,737 692
GPU 5,800 253
Hong Kong Electric (HKD) 42,000 132
PECO Energy 8,300 406
Texas Utilities 16,000 720
Unicom 16,600 702
Veba (EUR) 6,420 366
3,864
Total Utilities 11,409
CONSUMER NONDURABLES 15.6%
Cosmetics 1.0%
Gillette 4,200 214
International Flavors & Fragrances 34,300 1,410
Kao (JPY) 23,000 632
2,256
Beverages 1.3%
Anheuser-Busch 14,300 1,045
Bass (GBP) 24,300 358
Coca-Cola 2,200 150
Diageo ADR 8,419 362
LVMH (EUR) 1,655 461
PepsiCo 12,200 437
2,813
Food Processing 2.5%
American Italian Pasta * 2,000 55
Associated British Foods (GBP) 24,700 188
Bestfoods 6,200 310
Cadbury Schweppes (GBP) 14,400 98
Cadbury Schweppes ADR 5,600 310
Campbell 10,000 441
Carrefour (EUR) 1,800 236
6
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CSM (EUR) 3,500 $ 177
Danisco (DKK) 3,100 149
Eridania Beghin-Say (EUR) 1,500 218
General Mills 10,560 849
Heinz 3,400 164
Imperial Sugar 9,000 54
McCormick 12,400 377
Nestle (CHF) 333 598
Ralston Purina 9,900 270
Sara Lee 19,700 473
Seneca Foods (Class A) * 1,400 20
Seneca Foods (Class B) * 1,300 19
The Cheesecake Factory * 100 3
Unilever N V 4,539 296
United Natural Foods * 5,000 135
5,440
Hospital Supplies/Hospital Management 0.7%
American Oncology Resources * 10,800 110
Baxter International 2,200 142
Boston Scientific 2,200 83
Guidant 700 35
Medtronic 300 21
Mentor 9,900 158
Pediatrix Medical Group * 1,100 25
Quorum Health Group * 5,900 74
Renal Care Group * 4,850 134
Smith & Nephew (GBP) 71,600 199
Terumo (JPY) 18,000 424
1,405
Pharmaceuticals 4.7%
American Home Products 22,860 1,317
Amgen * 2,200 139
AstraZeneca Group (SEK) 6,995 275
AstraZeneca Group ADR 8,700 343
Biogen * 2,700 294
Boron Lepore & Associates * 1,200 11
Bristol-Myers Squibb 16,300 1,119
Eli Lilly 6,400 457
7
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Gehe (EUR) 8,200 $ 403
Genentech 2,100 184
Glaxo Wellcome ADR 6,500 366
Incyte Pharmaceuticals * 900 23
Johnson & Johnson 6,900 639
Merck 10,800 729
Novartis (CHF) 415 602
Pfizer 9,920 1,061
Pharmacia & Upjohn 6,360 353
Schering-Plough 10,400 469
Takeda Chemical (JPY) 11,000 489
Triangle Pharmaceuticals * 3,400 63
Warner-Lambert 10,700 663
9,999
Biotechnology 0.3%
Abegenix * 2,200 32
Alkermes * 2,900 71
Anesta * 700 12
Cell Genesys * 2,300 11
COR Therapeutics * 2,600 37
Coulter Pharmaceutical * 1,100 29
Gilead Sciences * 900 39
Inhale Therapeutic Systems * 4,400 116
Millennium Pharmaceuticals * 1,200 45
Neurocrine Biosciences * 3,600 20
Northfield Laboratories * 3,800 46
PharmaPrint * 5,700 44
Serologicals * 4,700 37
Zonagen * 1,400 15
554
Health Care Services 0.7%
Aetna 2,200 200
Altana AG (EUR) 1,200 70
AmeriPath * 7,400 67
CIGNA 2,400 224
Monarch Dental * 1,700 6
Orthodontic Centers of America * 3,500 42
8
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
ProMedCo * 5,800 $ 24
SteriGenics International * 7,300 115
United HealthCare 12,000 699
1,447
Miscellaneous Consumer Products 4.4%
Benetton Group (EUR) 65,000 127
Bridgestone (JPY) 16,000 420
Coles Myer Limited (AUD) 24,800 130
Colgate-Palmolive 15,800 1,578
Cone Mills * 11,600 72
Culp 2,700 22
Dan River * 10,200 94
Hasbro 10,750 308
Huhtamaki (EUR) 1,700 61
Koninklijke Philips Electronics, N.V. ADR 4,500 387
Kuraray (JPY) 34,000 370
Lion Nathan (NZD) 71,500 172
Mattel 47,320 1,251
Mitsui (JPY) 63,000 403
Newell Rubbermaid 4,000 162
NIKE (Class B) 3,800 231
Philip Morris 34,450 1,328
Procter & Gamble 4,500 420
Reebok * 2,400 48
Sola * 7,300 122
Stride Rite 2,700 28
Tomkins (GBP) 60,500 223
Tomkins ADR 1,538 23
Unifi * 36,400 601
US Can * 5,200 93
UST 17,700 540
WestPoint Stevens * 2,500 79
Yue Yuen Industrial (HKD) 42,000 94
9,387
Total Consumer Nondurables 33,301
9
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CONSUMER SERVICES 8.0%
Restaurants 0.0%
Buca * 1,100 $ 19
PJ America * 1,600 38
57
General Merchandisers 1.6%
Bon-Ton Stores * 8,600 55
Casey's General Stores 12,800 171
Columbia Sportswear * 5,600 82
Dayton Hudson 2,400 151
JUSCO (JPY) 11,000 208
Kroger * 11,100 650
Marui (JPY) 27,000 406
Pinault Printemps Redoute (EUR) 2,050 349
Saks * 11,100 307
Tesco (GBP) 126,080 368
Wal-Mart 13,600 580
Warnaco Group (Class A) 5,800 171
3,498
Specialty Merchandisers 2.6%
American Stores 24,000 792
Christian Dior (EUR) 1,300 184
CompuCom Systems * 14,400 58
CVS 11,912 548
Federated Department Stores * 500 27
Goody's Family Clothing * 6,000 66
Home Depot 6,900 392
Omron (JPY) 17,000 235
Performance Food Group * 1,900 45
Safeway * 14,500 674
St. John Knits 3,000 86
Toys "R" Us * 56,000 1,292
Tupperware 45,700 1,017
Urban Outfitters * 3,300 79
5,495
10
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Entertainment and Leisure 1.5%
Carnival (Class A) 3,900 $ 160
Disney 3,200 93
Hutchison Whampoa (HKD) 52,000 433
McDonald's 10,100 389
Reader's Digest (Class A) 36,600 1,340
Sharp (JPY) 13,000 144
US WEST Media * 7,000 517
3,076
Media and Communications 2.3%
American Tower Systems (Class A) * 900 20
Asatsu (JPY) 6,000 151
CBS * 18,100 756
Clear Channel Communications * 6,078 402
Elsevier (EUR) 8,000 101
Emmis Broadcasting (Class A) * 2,500 116
Fox Entertainment Group (Class A) * 12,600 321
France Telecom ADR 4,100 316
Infinity Broadcasting (Class A) * 13,300 340
Pegasus Communications * 1,600 76
Publishing & Broadcasting (AUD) 19,700 124
R.R. Donnelley 10,400 377
Sinclair Broadcast Group (Class A) * 4,800 66
Time Warner 11,200 762
Tribune 3,900 308
Valassis Communications 1,200 42
Vodafone ADR 2,400 459
Young Broadcasting (Class A) * 3,700 151
4,888
Total Consumer Services 17,014
CONSUMER CYCLICALS 5.2%
Health Care Services 0.0%
IMS Health 2,100 52
52
11
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Automobiles and Related 0.7%
A.O. Smith (Class B) 12,050 $ 294
Cycle & Carriage (SGD) 6,000 33
DaimlerChrysler (EUR) 3,900 337
Honda ADR 5,000 411
Keystone Automotive * 1,800 29
Littelfuse * 3,700 74
SPX * 3,400 264
Strattec Security * 400 12
1,454
Building and Real Estate 2.8%
Accor (EUR) 1,300 319
Apartment Investment & Management, REIT 2,400 101
Arden Realty, REIT 5,400 138
Cheung Kong Holdings (HKD) 48,000 390
City Developments (SGD) 5,000 30
DBS Land (SGD) 15,000 26
EastGroup Properties, REIT 8,900 181
Federal Realty Investment Trust, REIT 41,300 955
First Washington Realty Trust, REIT 5,000 109
Glenborough Realty Trust, REIT 2,200 40
JP Realty, REIT 3,700 75
Parkway Properties, REIT 6,500 215
Reckson, REIT 3,492 95
Reckson Associates Realty, REIT 40,000 1,035
Simon DeBartolo Group, REIT 21,640 633
Starwood Hotels & Resorts, REIT 43,600 1,428
Westfield Trust (AUD) 29,300 59
Woodhead Industries 7,200 91
5,920
Miscellaneous Consumer Durables 1.7%
CompX * 5,100 77
Corning 25,200 1,377
Eastman Kodak 17,200 1,163
Harman International 1,400 62
Juno Lighting 2,100 48
Masco 10,900 311
OCE (EUR) 2,000 55
12
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Ricoh (JPY) 18,000 $ 200
Sony (JPY) 5,000 470
3,763
Total Consumer Cyclicals 11,189
TECHNOLOGY 5.4%
Electronic Components 1.6%
Altera * 5,800 202
American Superconductor * 1,000 13
Analogic 6,000 195
Benchmark Electronics * 1,400 42
Burr Brown * 4,100 131
EMC * 3,700 369
Exar * 2,300 48
Intel 13,400 726
Linear Technology 2,200 116
Maxim Integrated Products * 7,600 405
Methode Electronics (Class A) 9,200 169
Optek Technology * 5,400 136
Planar Systems * 5,000 40
PMC-Sierra * 2,400 116
SIPEX * 1,900 31
Texas Instruments 3,300 361
Xilinx * 5,600 249
3,349
Electronic Systems 0.9%
Applied Materials * 3,000 165
Applied Micro Circuits * 2,800 165
EMS Technologies * 4,000 54
Hewlett-Packard 7,300 688
Lifeline Systems * 3,900 73
Lo-Jack * 5,000 39
Nokia ADR 7,300 518
Solectron * 3,500 192
1,894
13
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Information Processing 0.3%
Dell Computer * 7,000 $ 241
Hitachi ADR * 2,800 205
IBM 2,600 302
748
Office Automation 0.2%
Ceridian * 5,500 181
Technitrol 5,900 176
357
Specialized Computer 0.1%
Sun Microsystems * 4,600 275
275
Aerospace and Defense 0.5%
AlliedSignal 14,600 848
DONCASTERS ADR * 1,500 23
Raytheon (Class B) 1,800 123
Woodward Governor 2,100 52
1,046
Telecommunications 1.8%
AirTouch Communications * 5,200 523
Avant * 5,200 63
Cisco Systems * 5,050 550
Deutsche Telekom ADR 9,000 356
LM Ericsson (Class B) ADR 12,900 347
MCI WorldCom * 16,685 1,441
Premisys Communications * 3,200 28
Qwest Communications International * 4,800 205
Tellabs * 4,600 269
Voicestream Wireless * 3,600 97
West TeleServices * 2,600 20
3,899
Total Technology 11,568
EDUCATION 0.1%
ITT Educational Service * 4,400 105
Total Education 105
14
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CAPITAL EQUIPMENT 2.9%
Electrical Equipment 2.1%
ABB AG (CHF) * 209 $ 296
Canon (JPY) 15,000 378
GE 15,400 1,566
Holophane * 7,100 194
Matsushita Electric Works (JPY) 17,000 170
Mitsubishi Electric (JPY) 27,000 86
Siemens (EUR) 2,700 182
Tyco International 17,749 1,551
4,423
Capital Equipment 0.0%
Omniquip International 6,500 69
69
Machinery 0.8%
Danaher 13,000 786
GKN (GBP) 26,100 436
JLG Industries 9,000 174
NN Ball & Roller 5,800 33
S I G Schweis (CHF) 320 198
Toolex Alpha * 1,600 21
Valmet (EUR) 2,000 20
1,668
Total Capital Equipment 6,160
BUSINESS SERVICES AND
TRANSPORTATION 8.1%
Computer Service and Software 2.7%
America Online 4,200 501
Analysts International 3,600 57
Ascend Communications * 4,600 426
Automatic Data Processing 11,000 453
BISYS Group * 900 49
BMC Software * 11,500 568
Compuware * 9,000 279
Concur Technologies * 800 26
Electronic Arts * 800 39
First Data 10,070 453
15
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Galileo International 5,500 $ 247
Great Plains Software * 1,400 53
HCIA * 7,400 64
Microsoft * 17,000 1,372
Parametric Technology * 16,300 227
Peerless Systems * 3,900 36
Phoenix Technologies * 3,300 36
Portal Software * 400 20
Powergen (GBP) 15,600 169
PSINet * 1,100 49
Salesloggix * 800 9
Saville Systems ADR * 8,400 131
Summit Design * 6,000 16
SunGard Data Systems * 6,000 210
Synopsys * 200 9
Vantive * 2,500 27
Viasoft * 9,400 37
Visio * 4,800 157
Webtrends * 1,000 29
Wind River Systems * 3,950 83
Zebra Technologies (Class A) * 900 29
5,861
Distribution Services 0.6%
Aviation Sales * 3,100 119
Cardinal Health 3,992 241
Jack Henry & Associates 1,000 36
MSC * 4,700 89
Primesource 2,200 14
Richfood Holdings 12,600 162
SunSource 4,100 59
U.S. Foodservice * 8,185 364
Watsco (Class A) 7,500 145
Wilmar Industries * 1,700 19
1,248
Environmental 0.1%
CUNO * 4,100 76
IT Group * 2,800 47
16
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Rentokil Group (GBP) 7,000 $ 28
Waterlink * 7,800 32
183
Transportation Services 0.6%
C.H. Robinson Worldwide 3,600 116
Coach USA * 6,700 195
Comfort Systems USA * 11,700 184
Eagle USA Air Freight * 2,700 127
Expeditors International of Washington 1,800 100
Frozen Food Express 3,500 25
Heartland Express * 2,300 35
Hub Group (Class A) * 1,000 28
International Shipholding 2,800 39
Mitsubishi Heavy Industries (JPY) 97,000 379
1,228
Miscellaneous Business Services 3.2%
Billing Information Concepts * 6,800 85
British Airport Authorities (GBP) 37,299 399
Browning-Ferris 40,000 1,660
Cendant * 5,350 99
CORT Business Services * 4,800 116
Electro Rent * 6,700 84
Equifax 1,500 54
H&R Block 21,000 1,012
Insituform Technologies (Class A) * 6,200 103
Iron Mountain * 3,400 94
Maximus * 2,100 62
McGrath RentCorp 3,800 72
Metamor Worldwide * 3,900 107
MPW Industrial Services Group * 3,300 33
New England Business Service 8,600 234
Omnicom 6,900 483
Paxar * 5,000 45
Renaissance Worldwide * 8,600 62
Romac International * 5,400 78
Shorewood Packaging * 14,000 240
Strayer Education 5,100 149
Superior Services * 1,800 39
17
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Tetra Tech * 8,250 $ 175
Waste Management 26,443 1,398
6,883
Airlines 0.5%
Delta 14,400 826
KLM (EUR) 3,900 113
Midwest Express Holdings * 500 15
Singapore Airlines (SGD) 3,000 27
981
Railroads 0.4%
Norfolk Southern 27,000 884
884
Total Business Services and Transportation 17,268
ENERGY 7.2%
Energy Services 1.8%
Baker Hughes 45,000 1,401
BG (GBP) 31,100 171
Cooper Cameron * 900 32
Elf Aquitaine (EUR) 1,400 203
Elf Aquitaine ADR 2,500 177
Halliburton 7,700 319
Johnson Electric (HKD) 84,000 310
Key Energy * 4,900 16
Smith International * 1,400 60
Tokyo Electric Power (JPY) * 19,000 414
TOTAL ADR * 4,100 249
United Utilities (GBP) 32,300 389
Weatherford International 1,900 63
3,804
Exploration and Production 0.6%
Santos (AUD) 22,600 70
Unocal 30,500 1,213
1,283
Integrated Petroleum - Domestic 1.1%
Amerada Hess 1,100 66
Atlantic Richfield 11,200 937
18
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Occidental Petroleum 15,500 $ 328
USX-Marathon 33,700 1,009
2,340
Integrated Petroleum - International 3.7%
BP Amoco ADR 27,513 2,947
Chevron 3,400 315
ENI SPA ADR 4,600 289
Exxon 6,360 508
Mobil 17,700 1,792
Repsol ADR 13,200 238
Royal Dutch Petroleum ADR 13,400 758
Shell Transport & Trading ADR 11,600 512
Texaco 9,800 642
8,001
Total Energy 15,428
PROCESS INDUSTRIES 5.7%
Diversified Chemicals 1.4%
Dow Chemical 8,000 972
DuPont 12,100 792
Hercules 37,000 1,293
3,057
Specialty Chemicals 2.2%
3M 14,100 1,209
A. Schulman 1,900 32
Air Liquide (L) (EUR) 1,158 174
Akzo Nobel (EUR) 4,900 203
Akzo Nobel ADR 800 33
BASF AG (EUR) 7,350 286
Bayer (EUR) 7,000 272
Furon 4,400 80
Great Lakes Chemical 19,940 901
Hauser * 8,000 20
Imperial Chemical ADR 4,200 185
Pall 31,100 624
Sumitomo Chemicals (JPY) 100,000 422
Technip (EUR) 2,925 317
4,758
19
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Paper and Paper Products 1.1%
Dai Nippon Printing (JPY) 28,000 $ 420
Fort James 21,200 776
Kimberly-Clark 18,900 1,109
Smurfit-Stone Container * 3,100 67
2,372
Forest Products 0.6%
Georgia-Pacific 5,000 432
International Paper 3,100 155
Weyerhaeuser 10,000 621
1,208
Building and Construction 0.4%
Blue Circle Industries (GBP) 27,886 179
Heidelberg Zement (EUR) 1,900 153
Holderbank Financiere Glarus (CHF) 186 221
J. Ray Mcdermott * 900 32
Layne Christensen * 6,500 43
Simpson Manufacturing * 900 40
Trex * 4,500 99
767
Total Process Industries 12,162
BASIC MATERIALS 1.6%
Metals 1.5%
Anglo American Platinum (ZAR) 9,000 165
AngloGold ADR 1,795 36
Cambior 12,400 41
Gibraltar Steel 2,100 46
Inco 40,000 570
Material Sciences * 2,900 32
Matthews International (Class A) 8,200 239
Phelps Dodge 15,000 777
Reynolds Metals 22,200 1,181
3,087
Mining 0.1%
Battle Mountain Gold 22,200 54
Lonrho Africa (GBP) 4,725 4
20
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Rio Tinto (AUD) 9,700 $ 136
TVX Gold * 14,300 15
209
Miscellaneous Materials 0.0%
Malayan Cement (MYR) 20,250 12
Synthetic Industries * 2,300 52
64
Total Basic Materials 3,360
MISCELLANEOUS 0.2%
Conglomerates 0.1%
Berkshire Hathaway (Class B) * 63 146
Orkla (Class A) (NOK) 7,600 119
265
Other Miscellaneous Common Stocks 0.1%
Schneider (EUR) * 2,300 137
SCP Pool * 100 2
Other Miscellaneous Common Stocks 70
209
Total Miscellaneous 474
FOREIGN 0.7%
Europe 0.4%
AXA Colonia Konzern (EUR) 3,900 366
Man Ag (EUR) 7,400 217
Rhone Poulenc (EUR) 3,100 147
Svenska Cellulosa (SEK) 7,100 165
895
Far East 0.2%
Nippon Express (JPY) 70,000 399
399
Other Foreign 0.1%
Bobst (CHF) 144 177
Pacific Dunlop (AUD) 48,500 87
264
Total Foreign 1,558
Total Common Stocks (Cost $135,762) 168,688
21
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CORPORATE BONDS 9.7%
Adelphia Communications
7.875%, 5/1/09 $ 25,000 $ 23
9.875%, 3/1/05 175,000 184
Allied Holdings, Gtd. Sr. Sub. Notes, 8.625%, 10/1/07 100,000 95
American Builders & Contractors Supply, Sr. Sub. Notes
10.625%, 5/15/07 100,000 94
American Radio Systems, Sr. Sub. Notes, 9.00%, 2/1/06 25,000 27
American Safety Razor, Sr. Notes, 9.875%, 8/1/05 200,000 202
American Standard, 9.25%, 12/1/16 36,000 37
Amerigas Partners, Sr. Notes, 10.125%, 4/15/07 50,000 52
Anchor Advanced, Sr. Notes, 11.75%, 4/1/04 200,000 205
APCOA, Sr. Sub. Notes, 9.25%, 3/15/08 100,000 92
Associated Materials, Sr. Sub. Notes, 9.25%, 3/1/08 100,000 102
Aurora Foods, Sr. Sub. Notes, 9.875%, 2/15/07 50,000 52
B&G Foods, Sr. Sub. Notes, 9.625%, 8/1/07 100,000 98
Bally Total Fitness, Sr. Sub. Notes, 9.875%, 10/15/07 75,000 73
Building Materials, Sr. Notes, 7.75%, 7/15/05 200,000 189
BWAY, Sr. Sub. Notes, 10.25%, 4/15/07 100,000 103
Chancellor Media, Sr. Sub. Notes
8.00%, 11/1/08 50,000 50
8.125%, 12/15/07 50,000 49
9.00%, 10/1/08 100,000 103
Charter Communications, Sr. Notes, (144a),
8.25%, 4/1/07 200,000 195
Chattem, Sr. Sub. Notes, 12.75%, 6/15/04 100,000 109
Cinemark USA, Sr. Sub. Notes, 8.50%, 8/1/08 100,000 97
Coach USA, Gtd. Sr. Sub. Notes, 9.375%, 7/1/07 75,000 76
Coinmach, Sr. Sub. Notes, 11.75%, 11/15/05 50,000 55
Comcast Cable Communications, 8.50%, 5/1/27 1,550,000 1,759
Communications & Power Industries, Sr. Sub. Notes
12.00%, 8/1/05 100,000 103
Container Corp of America, Gtd., 10.75%, 5/1/02 25,000 26
Courtyard by Marriott II, Sr. Secured Notes
10.75%, 2/1/08 100,000 103
CSC Holdings, Sr. Notes, 7.875%, 12/15/07 100,000 102
Dan River, Sr. Sub. Notes, 10.125%, 12/15/03 50,000 51
Delta Mills, Sr. Notes, 9.625%, 9/1/07 50,000 51
22
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Doane Pet Care, Sr. Sub. Notes, 9.75%, 5/15/07 $ 87,000 $ 89
Dyersburg, Sr. Sub. Notes, 9.75%, 9/1/07 50,000 25
Dyncorp, Sr. Sub. Notes, 9.50%, 3/1/07 50,000 50
Energy Corporation of America, Sr. Sub. Notes
9.50%, 5/15/07 100,000 93
Eye Care Centers of America, 9.125%, 5/1/08 100,000 87
Fairchild Semiconductor, Sr. Sub. Notes,
10.125%, 3/15/07 25,000 25
Fairfax Financial, 8.25%, 10/1/15 1,550,000 1,552
Federal-Mogul, Sr. Notes, 7.75%, 7/1/06 100,000 97
First Federal Financial, 11.75%, 10/1/04 50,000 52
Frontiervision, Sr. Notes, 11.00%, 10/15/06 100,000 111
Group Maintenance America, Sr. Sub. Notes, (144a)
9.75%, 1/15/09 100,000 101
Harrahs Operating, 7.875%, 12/15/05 200,000 196
Hawk, Sr. Notes, 10.25%, 12/1/03 200,000 206
Hollinger International Publishing, Gtd. Notes
9.25%, 3/15/07 200,000 207
Holmes Products, Gtd. Notes, 9.875%, 11/15/07 100,000 98
Host Marriott Travel, Sr. Notes, 9.50%, 5/15/05 200,000 208
ICG Services, Sr. Disc. Notes, STEP, 0%, 9/15/05 100,000 90
Intermedia Communications, Sr. Notes,
(144a), 9.50%, 3/1/09 100,000 98
International Home Foods, Gtd. Sr. Sub. Notes
10.375%, 11/1/06 200,000 213
International Wire, Sr. Sub. Notes, 11.75%, 6/1/05 100,000 104
Intertek Finance, Sr. Sub. Notes, 10.25%, 11/1/06 50,000 49
Iron Mountain, Sr. Sub. Notes, 8.75%, 9/30/09 50,000 50
Isle of Capri Casinos, Sr. Sub. Notes,
(144a), 8.75%, 4/15/09 150,000 141
ISP Holdings, Sr. Notes, 9.75%, 2/15/02 50,000 51
Jitney-Jungle Stores, Sr. Sub. Notes, 12.00%, 3/1/06 100,000 100
Keebler, Sr. Sub. Notes, 10.75%, 7/1/06 200,000 220
Mastec, Sr. Sub. Notes, 7.75%, 2/1/08 75,000 72
MCI Worldcom, 7.75%, 4/1/07 1,550,000 1,640
Metromedia Fiber, Sr. Notes, (144a), 10.00%,
11/15/08 100,000 103
Microcell Telecommunications, Sr. Disc. Notes
STEP, 0%, 6/1/06 125,000 99
Mohegan Tribal Gaming, Sr. Notes, (144a),
8.125%, 1/1/06 175,000 173
Nextel Communications, Sr. Disc. Notes
STEP, 0%, 10/31/07 275,000 186
23
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Nextlink Communications, Sr. Disc. Notes
STEP, 0%, 6/1/09 $ 300,000 $ 166
Niagara Mohawk, Sr. Notes, 7.75%, 10/1/08 25,000 26
Northland Cable Television, Sr. Sub. Notes,
10.25%, 11/15/07 50,000 53
Owens & Minor, Sr. Sub. Notes, 10.875%, 6/1/06 50,000 53
Owens Illinois, Sr. Notes, 7.35%, 5/15/08 1,550,000 1,494
Packaging Corp. of America, Sr. Sub. Notes, (144a)
9.625%, 4/1/09 200,000 203
Paine Webber, Sr. Notes, 6.55%, 4/15/08 1,550,000 1,483
Paragon Corporate Holdings, Sr. Notes,
9.625%, 4/1/08 50,000 29
Park Place Entertainment, Sr. Sub. Notes,
7.875%, 12/15/05 200,000 192
Plastic Containers, Sr. Secured Notes,
10.00%, 12/15/06 50,000 57
Premier Parks, Sr. Disc. Notes, STEP, 0%, 4/1/08 100,000 68
Price Communications Wireless, 9.125%, 12/15/06 100,000 104
Pride Petroleum Services, Sr. Notes,
9.375%, 5/1/07 50,000 49
Principal Mutual Life, (144a), 8.00%, 3/1/44 1,550,000 1,481
Protection One, Sr. Sub. Notes, (144a),
8.125%, 1/15/09 50,000 48
Purina Mills, Sr. Sub. Notes, 9.00%, 3/15/10 50,000 40
Quest Diagnostics, Gtd. Sr. Sub. Notes,
10.75%, 12/15/06 50,000 58
Qwest Communications
Sr. Disc. Notes, STEP, 0%, 10/15/07 100,000 78
Sr. Notes, 7.50%, 11/1/08 25,000 25
R & B Falcon, Sr. Notes, 6.95%, 4/15/08 1,550,000 1,186
Red Roof Inns, Sr. Notes, 9.625%, 12/15/03 200,000 202
Repap New Brunswick, Sr. Secured 1st Priority Notes
9.00%, 6/1/04 25,000 23
(144a), 11.50%, 6/1/04 75,000 76
Rogers Cablesystems, Sr. Sec. 2nd Priority Notes
10.00%, 3/15/05 50,000 55
Scotland International Finance, Sub. Notes
(144a), 6.50%, 2/15/11 100,000 96
Silgan Holdings, Sr. Sub. Deb., 9.00%, 6/1/09 40,000 40
Six Flags Entertainment, Sr. Notes, 8.875%, 4/1/06 100,000 101
Six Flags Theme Parks, Sr. Sub. Disc. Notes,
STEP, 12.25%, 6/15/05 100,000 112
Smithfield Foods, Sr. Sub. Notes, 7.625%, 2/15/08 100,000 92
Southern Foods, Sr. Sub. Notes, 9.875%, 9/1/07 50,000 52
Sovereign Speciality, Sr. Sub. Notes, 9.50%, 8/1/07 50,000 51
24
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Sprint, 6.125%, 11/15/08 $ 750,000 $ 708
Stena, Sr. Notes, 10.50%, 12/15/05 100,000 99
Synthetic Industries, Sr. Sub. Notes,
9.25%, 2/15/07 50,000 51
Tenet Healthcare, Sr. Notes, 8.00%, 1/15/05 150,000 147
United International Holdings, Sr. Disc. Notes
STEP, 0%, 2/15/08 125,000 82
US Can, Sr. Gtd. Notes, 10.125%, 10/15/06 50,000 52
Venture Holdings Trust, (144a), 11.00%, 6/1/07 125,000 127
Viasystems, Sr. Sub. Notes, 9.75%, 6/1/07 100,000 87
Westinghouse Air Brake, Sr. Notes, (144a),
9.375%, 6/15/05 200,000 203
Westpoint Stevens, Sr. Notes, 7.875%, 6/15/08 200,000 198
Total Corporate Bonds (Cost $22,084) 20,690
U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES 6.9%
Federal Home Loan Mortgage
6.00%, 2/15/11 5,100,753 4,930
6.25%, 12/15/22 3,261,092 3,208
Federal National Mortgage Assn.
6.50%, 1/1/26 128,294 125
Government National Mortgage Assn.
6.00%, 12/15/23 - 5/15/26 612,093 582
6.50%, 12/15/23 - 1/15/29 2,444,336 2,388
7.00%, 8/15/23 - 11/20/28 2,967,541 2,975
7.50%, 10/15/22 - 1/15/26 316,214 324
8.00%, 1/15/22 - 10/20/25 231,908 241
Total U.S. Government Mortgage-Backed Securities (Cost $15,149) 14,773
U.S. GOVERNMENT OBLIGATIONS/AGENCIES 4.9%
Tennessee Valley Authority
5.88%, 4/1/36 2,095,000 2,077
6.235%, 7/15/45 500,000 504
U.S. Treasury Notes
4.625%, 12/31/00 475,000 470
4.875%, 3/31/01 3,900,000 3,864
25
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
U.S. Treasury Bonds
6.75%, 8/15/26 $ 3,330,000 $ 3,626
Total U.S. Government Obligations/Agencies (Cost $10,489) 10,541
SHORT-TERM INVESTMENTS 0.0%
Certificates of Deposit 0.0%
Chase Manhattan Bank, N.A., fixed deposit,
2.00%, 6/9/99 (MYR) 92,514 23
23
Money Market Funds 0.0%
Reserve Investment Fund, 4.96% # 11,420 11
11
Total Short-Term Investments (Cost $33) 34
Total Investments in Securities
100.5% of Net Assets (Cost $183,517) $ 214,726
Other Assets Less Liabilities (1,095)
NET ASSETS $ 213,631
----------
* Non-income producing
# Seven day yield
ADR American Depository Receipt
L Local registered shares
REIT Real Estate Investment Trust
STEP Stepped coupon note for which the interest rate will adjust on specified
future date(s).
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period-end-amounts to
1.5% of net assets.
AUD Australian dollar
CAD Canadian dollar
CHF Swiss franc
DKK Danish krone
EUR European currency unit
GBP British sterling
HKD Hong Kong dollar
JPY Japanese yen
MYR Malaysian ringgit
NOK Norwegian krone
NZD New Zealand dollar
SEK Swedish krona
SGD Singapore dollar
ZAR South African rand
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
May 31, 1999
- -----------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $183,517) $ 214,726
Securities lending collateral 17,628
Other assets 3,638
Total assets 235,992
Liabilities
Obligation to return securities lending collateral 17,628
Other liabilities 4,733
Total liabilities 22,361
NET ASSETS $ 213,631
--------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 1,681
Accumulated net realized gain/loss - net of distributions 2,470
Net unrealized gain (loss) 31,207
Paid-in-capital applicable to 11,229,027 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 178,273
NET ASSETS $ 213,631
--------------
NET ASSET VALUE PER SHARE $ 19.02
--------------
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
- -----------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
Year
Ended
5/31/99
Investment Income
Income
Interest $ 3,086
Dividend 2,345
Total income 5,431
Expenses
Investment management 1,010
Shareholder servicing 636
Custody and accounting 147
Prospectus and shareholder reports 60
Registration 43
Legal and audit 12
Directors 6
Miscellaneous 13
Total expenses 1,927
Expenses paid indirectly (1)
Net expenses 1,926
Net investment income 3,505
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 3,746
Foreign currency transactions (18)
Net realized gain (loss) 3,728
Change in net unrealized gain or loss
Securities 10,456
Other assets and liabilities
denominated in foreign currencies 2
Change in net unrealized gain or loss 10,458
Net realized and unrealized gain (loss) 14,186
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 17,691
---------------
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
- ----------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
Year
Ended
5/31/99 5/31/98
Increase (Decrease) in Net Assets
Operations
Net investment income $ 3,505 $ 2,155
Net realized gain (loss) 3,728 3,643
Change in net unrealized gain or loss 10,458 12,554
Increase (decrease) in net assets from operations 17,691 18,352
Distributions to shareholders
Net investment income (2,912) (1,529)
Net realized gain (4,096) (1,117)
Decrease in net assets from distributions (7,008) (2,646)
Capital share transactions *
Shares sold 107,693 87,647
Distributions reinvested 6,960 2,621
Shares redeemed (59,052) (26,179)
Increase (decrease) in net assets from capital
share transactions 55,601 64,089
Net Assets
Increase (decrease) during period 66,284 79,795
Beginning of period 147,347 67,552
End of period $ 213,631 $ 147,347
----------------------
* Share information
Shares sold 5,921 5,091
Distributions reinvested 398 160
Shares redeemed (3,253) (1,534)
Increase (decrease) in shares outstanding 3,066 3,717
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
May 31, 1999
- -----------------------------
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
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
30
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH 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 (MBS), are amortized for both financial
reporting and tax purposes. Premiums and discounts on all MBS are
recognized upon disposition or principal repayment as gain or loss for
financial reporting purposes. For tax purposes, premiums and discounts on
MBS acquired on or before June 8, 1997, are recognized upon disposition or
principal repayment as ordinary income. For MBS acquired after June 8,
1997, premiums are recognized as gain or loss; discounts are recognized as
gain or loss, except to the extent of accrued market discount.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and
losses are reported on the identified cost basis. Dividend income and
distributions to shareholders are recorded by the fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those determined
in accordance with generally accepted accounting principles. Expenses paid
indirectly reflect credits earned on daily, uninvested cash balances at
the custodian, used to reduce the fund's custody charges.
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. government 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
31
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
borrower fails to return them. At May 31, 1999, the value of loaned
securities was $17,051,000; aggregate collateral consisted of $17,628,000
in the securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
and U.S. government securities, aggregated $97,720,000 and $48,496,000,
respectively, for the year ended May 31, 1999. Purchases and sales of U.S.
government securities aggregated $20,685,000 and $13,076,000,
respectively, for the year ended May 31, 1999.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends
to continue to qualify as a regulated investment company and distribute
all of its taxable income.
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, 1999. The
results of operations and net assets were not affected by the
increases/(decreases) to these accounts.
- --------------------------------------------------------------------------------
Undistributed net investment income $ 9000
Paid-in-capital (9000)
At May 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$183,517,000. Net unrealized gain aggregated $31,209,000 at period-end, of
which $37,116,000 related to appreciated investments and $5,907,000 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 $99,000 was payable at May 31, 1999. 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
32
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
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, 1999, 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, 2000, which would cause the
fund's ratio of total expenses to average net assets to exceed 1.10%.
Thereafter, through May 31, 2002, 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 total expenses to average net assets to exceed 1.10%.
Pursuant to this agreement, $77,000 of management fees were not accrued by
the fund for the year ended May 31, 1999. Additionally, $287,000 of
unaccrued management fees related to a previous expense limitation are
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. (TRPS) 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 $623,000 for the year ended May 31,
1999, of which $61,000 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, 1999, totaled $325,000 and are reflected as interest income in the
accompanying Statement of Operations.
33
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
- --------------------------------------------------------------------------------
- ---------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of T. Rowe Price Personal Strategy Funds, Inc. and
Shareholders of T. Rowe Price Personal Strategy Growth Fund
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of T.
Rowe Price Personal Strategy Growth Fund (one of the portfolios comprising
T. Rowe Price Personal Strategy Funds, Inc., hereafter referred to as the
"Fund") at May 31, 1999, and the results of its operations, the changes in
its net assets and the financial highlights for each of the fiscal periods
presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at May 31, 1999
by correspondence with custodians, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
June 17, 1999
34
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T. ROWE PRICE PERSONAL STRATEGY GROWTH FUND
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TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 5/31/99
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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:
. $728,000 from short-term capital gains,
. $3,368,000 from long-term capital gains, subject to the 20% rate
gains category.
For corporate shareholders, $1,400,000 of the fund's distributed income and
short-term capital gains qualified for the dividends-received deduction.
35
<PAGE>
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 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 appropriate to the fund or funds
covered in this report.
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
4200 West Cypress St.
10th Floor
Tampa, FL 33607
4410 ArrowsWest Drive
Colorado Springs, CO 80907
Warner Center Plaza 5
Mezzanine Level
21800 Oxnard Street, Suite 270
Woodland Hills, CA 91367
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor. C11-056 5/31/99
