<PAGE>
- --------------------------------------------------------------------------------
Annual Report - Financial Statements
- --------------------------------------------------------------------------------
T. ROWE PRICE
PERSONAL STRATEGY
BALANCED FUND
------------
MAY 31, 1999
------------
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
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- --------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 $ 15.88 $ 14.07 $ 12.68 $ 11.15 $ 10.00
Investment activities
Net investment income 0.46 0.46* 0.42* 0.41* 0.33*
Net realized and
unrealized gain (loss) 0.81 2.15 1.69 1.56 1.08
Total from investment activities 1.27 2.61 2.11 1.97 1.41
Distributions
Net investment income (0.46) (0.45) (0.40) (0.37) (0.26)
Net realized gain (0.49) (0.35) (0.32) (0.07) --
Total distributions (0.95) (0.80) (0.72) (0.44) (0.26)
NET ASSET VALUE
End of period $ 16.20 $ 15.88 $ 14.07 $ 12.68 $ 11.15
--------------------------------------------------------------------------
Ratios/Supplemental Data
Total return . 8.37% 19.15%* 17.21%* 17.97%* 14.35%*
Ratio of total expenses to
average net assets 1.00% 1.05%* 1.05%* 1.05%* 1.05% *
Ratio of net investment
income to average
net assets 3.01% 3.09%* 3.20%* 3.44%* 3.74%+*
Portfolio turnover rate 34.3% 41.5% 54.0% 47.7% 25.8%+
Net assets, end of period
(in thousands) $ 529,691 $ 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, 1999
- ------------------------
PORTFOLIO OF INVESTMENTS Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS AND RIGHTS 59.4%
FINANCIAL 9.9%
Bank and Trust 5.0%
Abbey National (GBP) 44,000 $ 906
ABN Amro (EUR) 31,100 689
Australia & New Zealand Bank Group (AUD) 10,000 72
Australia & New Zealand Banking ADR 6,400 233
Banca Commerciale Italiana (EUR) 86,000 618
Banco de Bilbao Vizcaya ADR 39,600 577
Banco Frances del Rio de la Plata ADR 10,204 215
Bank of America 45,800 2,963
Bank of New York 28,900 1,033
Bank One 23,220 1,313
Bankgesellschaft Berlin (EUR) 14,000 203
Barclay's (GBP) 36,055 1,095
Charter One Financial 6,882 195
Chase Manhattan 20,700 1,501
Citizens Banking 6,800 202
Deutsche Bank (EUR) 12,680 661
Development Bank of Singapore (SGD) 12,100 125
Downey Financial 12,900 284
Dresdner Bank (EUR) 18,900 701
First Bell Bancorp 3,800 74
First Mariner Bancorp 1,500 17
First Security 3,900 74
Firstar 5,700 164
Frankfort First Bancorp 3,400 51
Glacier Bancorp 11,781 241
HSBC Holdings (GBP) 25,115 826
J. P. Morgan 6,630 924
KBC Bancassurance Holding (EUR) 6,900 419
KeyCorp 20,800 723
Marshall & Ilsley 1,300 91
Mediobanca (EUR) 43,200 491
Mellon Bank 49,000 1,749
Mercantile Bancorporation 3,200 187
3
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Overseas Chinese Bank (SGD) 12,000 $ 94
Societe Generale (EUR) 4,072 739
State Street 4,800 366
Summit Bancorp 6,200 254
Svenska Handelsbank (SEK) 11,000 397
UBS (CHF) 4,806 1,390
UST 5,000 120
Washington Mutual 26,105 997
Wells Fargo 47,000 1,880
WestAmerica 2,900 100
Westpac Bank (AUD) 40,000 274
26,228
Insurance 2.0%
ACE Limited 20,300 619
American General 8,000 578
American International Group 3,275 374
Brown and Brown 7,000 250
Fairfax Financial, Rights (144a) (CAD) * 1,400 374
Harleysville Group 6,000 116
Istituto Nazionale delle Assicurazioni (EUR) 168,300 393
Marsh & McLennan 10,000 728
PartnerRe Holdings 10,200 379
Royal & Sun (GBP) 79,000 646
Schweizerische Rueckversicherungs (CHF) 347 658
Selective Insurance 5,900 111
St. Paul 55,900 1,988
Sumitomo Marine & Fire Insurance (JPY) 117,000 763
Travelers Property Casualty (Class A) 41,300 1,631
UNUM 6,900 371
W. R. Berkley 5,700 145
XL Capital (Class A) 12,013 731
10,855
Financial Services 2.9%
American Express 15,900 1,927
Associates First Capital (Class A) 19,000 779
Assurances Generales de France (EUR) 4,100 203
AXA (EUR) 6,300 726
Capital One Financial 5,700 859
4
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Citigroup 46,199 $ 3,061
Delta Financial * 9,900 67
Fannie Mae 33,100 2,251
Financial Federal * 7,000 157
Freddie Mac 44,700 2,606
Goldman Sachs Group * 2,400 163
ING Groep (EUR) 14,784 790
ITLA Capital * 4,000 64
Morgan Stanley Dean Witter 5,400 521
Pearson (GBP) 35,200 678
Unidanmark (Class A) (DKK) 6,000 421
15,273
Total Financial 52,356
UTILITIES 4.1%
Telephone 2.7%
Aliant Communications 13,100 616
ALLTEL 11,300 810
AT&T 29,524 1,639
BellSouth 19,600 925
British Telecommunications ADR 4,600 773
Compania de Telecomunicaciones de Chile (Class A) ADR 4,350 95
Frontier 29,200 1,537
GTE 8,100 511
Hong Kong Telecommunications ADR 11,614 275
Nippon Telegraph & Telephone (JPY) 80 781
Rural Cellular (Class A) * 10,200 166
SBC Communications 47,700 2,439
Telebras, Rights ADR 5,600 0
Telebras ADR 5,600 468
Telecom Corp. of New Zealand ADR 15,100 523
Telecom Italia (EUR) 62,775 646
Telecom Italia Mobile (EUR) * 87,300 513
Telefonica de Espana ADR 3,641 525
Telefonos de Mexico (Class L) ADR 8,900 711
Telekom Malaysia (MYR) 100 0
Western Wireless 6,800 166
14,119
5
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Electric Utilities 1.4%
Cleco 8,000 $ 265
Electrabel (EUR) 1,090 335
Empresa Nacional de Electricidad Chile ADR 3,657 40
Endesa ADR 14,500 313
FirstEnergy 39,317 1,251
GPU 11,000 479
Hong Kong Electric (HKD) 71,000 222
PECO Energy 15,500 759
Powergen (GBP) 29,300 317
Texas Utilities 28,800 1,296
Unicom 31,300 1,324
Veba (EUR) 12,080 689
7,290
Total Utilities 21,409
CONSUMER NONDURABLES 11.8%
Cosmetics 0.8%
Gillette 7,900 403
International Flavors & Fragrances 64,700 2,661
Kao (JPY) 40,000 1,098
4,162
Beverages 1.0%
Anheuser-Busch 26,200 1,915
Bass (GBP) 45,600 672
Coca-Cola 4,100 280
Diageo ADR 16,075 691
LVMH (EUR) 2,845 792
PepsiCo 21,800 781
5,131
Food Processing 1.9%
American Italian Pasta * 3,300 91
Associated British Foods (GBP) 46,300 353
Bestfoods 10,500 525
Cadbury Schweppes (GBP) 27,200 185
Cadbury Schweppes ADR 10,600 588
Campbell 19,000 838
6
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Carrefour (EUR) 3,600 $ 472
CSM (EUR) 4,800 242
Danisco (DKK) 4,800 230
Eridania Beghin-Say (EUR) 2,500 363
General Mills 19,560 1,572
Heinz 7,200 348
Imperial Sugar 19,100 116
McCormick 23,200 705
Nestle (CHF) 623 1,119
Ralston Purina 18,700 510
Sara Lee 36,900 886
Seneca Foods (Class A) * 3,200 46
Seneca Foods (Class B) * 3,100 44
The Cheesecake Factory * 200 5
Unilever N.V. 8,178 534
United Natural Foods * 9,200 248
10,020
Hospital Supplies/Hospital Management 0.5%
American Oncology Resources * 17,500 178
Baxter International 4,200 271
Boston Scientific 4,100 156
Guidant 1,300 65
Medtronic 500 35
Mentor 18,400 293
Pediatrix Medical Group * 1,600 36
Quorum Health Group * 11,100 139
Renal Care Group * 9,000 248
Smith & Nephew (GBP) 134,400 373
Terumo (JPY) 39,000 920
2,714
Pharmaceuticals 3.6%
American Home Products 42,160 2,429
Amgen * 4,200 266
AstraZeneca Group (SEK) 12,007 472
AstraZeneca Group ADR 16,400 646
Biogen * 5,200 567
Boron Lepore & Associates * 5,200 48
Bristol-Myers Squibb 30,800 2,114
7
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Eli Lilly 12,800 $ 914
Gehe (EUR) 15,400 758
Genentech * 3,900 341
Glaxo Wellcome ADR 12,200 686
Incyte Pharmaceuticals * 2,900 75
Johnson & Johnson 12,800 1,186
Merck 20,100 1,357
Novartis (CHF) 779 1,130
Pfizer 17,920 1,917
Pharmacia & Upjohn 11,960 663
Schering-Plough 19,300 870
Takeda Chemical (JPY) 25,000 1,111
Triangle Pharmaceuticals * 5,100 94
Warner-Lambert 21,400 1,327
18,971
Biotechnology 0.2%
Abegenix * 3,300 47
Alkermes * 5,500 135
Anesta * 1,300 23
Cell Genesys * 4,000 19
COR Therapeutics * 3,800 54
Coulter Pharmaceutical * 1,900 49
Gilead Sciences * 1,600 70
Inhale Therapeutic Systems * 8,200 217
Millennium Pharmaceuticals * 2,400 91
Neurocrine Biosciences * 8,000 44
Northfield Laboratories * 6,600 80
PharmaPrint * 10,100 77
Serologicals * 8,900 70
Zonagen * 2,900 31
1,007
Health Care Services 0.5%
Aetna 4,000 363
Altana AG (EUR) 3,100 181
AmeriPath * 14,300 130
CIGNA 4,400 410
IMS Health 3,900 96
Monarch Dental * 3,500 13
8
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Orthodontic Centers of America * 7,900 $ 95
ProMedCo * 12,100 50
SteriGenics International * 13,700 216
United HealthCare 22,100 1,287
2,841
Miscellaneous Consumer Products 3.3%
Benetton Group (EUR) 145,600 285
Bridgestone (JPY) 30,000 787
Coles Myer Limited (AUD) 46,400 243
Colgate-Palmolive 29,200 2,916
Cone Mills * 15,200 94
Culp 6,000 49
Dan River * 17,700 163
Hasbro 22,350 640
Huhtamaki (EUR) 3,000 108
Koninklijke Philips Electronics N.V., ADR 8,100 697
Kuraray (JPY) 64,000 697
Lion Nathan (NZD) 166,400 400
Mattel 85,240 2,253
Mitsui (JPY) 119,000 761
Newell Rubbermaid 7,500 304
NIKE (Class B) 6,200 378
Philip Morris 65,550 2,528
Procter & Gamble 8,400 784
Reebok * 4,500 89
Sola * 13,700 229
Stride Rite 3,500 36
Tomkins (GBP) 122,500 451
Tomkins ADR 2,393 36
Unifi * 66,700 1,101
US Can * 9,700 173
UST 34,500 1,052
WestPoint Stevens * 4,600 145
Yue Yuen Industrial (HKD) 127,000 285
17,684
Total Consumer Nondurables 62,530
9
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CONSUMER SERVICES 6.0%
General Merchandisers 1.0%
Bon-Ton Stores * 17,300 $ 110
Caseys General Stores 24,800 333
Columbia Sportswear * 9,100 134
Dayton Hudson 5,600 353
JUSCO (JPY) 18,000 341
Marui (JPY) 51,000 767
Pinault Printemps Redoute (EUR) 4,500 766
Saks * 20,900 577
Tesco (GBP) 236,646 690
Wal-Mart 23,800 1,015
Warnaco Group (Class A) 10,700 316
5,402
Specialty Merchandisers 2.2%
American Stores 43,700 1,442
Christian Dior (EUR) 2,200 312
CompuCom Systems * 24,700 99
CVS 19,470 896
Federated Department Stores * 900 49
Goody's Family Clothing * 11,300 124
Home Depot 13,800 785
Kroger * 21,300 1,247
Omron (JPY) 35,000 483
Performance Food Group * 3,500 84
Safeway * 26,800 1,246
St. John Knits 5,500 157
Toys "R" Us * 101,600 2,343
Tupperware 86,200 1,918
Urban Outfitters * 6,100 146
11,331
Entertainment and Leisure 1.1%
Carnival (Class A) 7,200 295
Disney 6,000 175
Hutchison Whampoa (HKD) 115,000 956
McDonald's 18,700 720
Media One * 13,200 975
Reader's Digest (Class A) 69,100 2,531
10
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Sharp (JPY) 16,000 $ 178
5,830
Media and Communications 1.7%
American Tower Systems (Class A) * 1,500 34
Asatsu (JPY) 14,000 353
CBS * 35,100 1,466
Clear Channel Communications * 11,473 758
Elsevier (EUR) 12,000 152
Emmis Broadcasting (Class A) * 4,200 196
Fox Entertainment Group (Class A) * 23,700 604
France Telecom ADR 7,600 585
Infinity Broadcasting (Class A) * 27,500 703
Pegasus Communications * 3,100 146
Publishing & Broadcasting (AUD) 36,900 232
R.R. Donnelley 19,500 707
Sinclair Broadcast Group (Class A) * 8,100 112
Time Warner 20,100 1,368
Tribune 7,300 576
Valassis Communications * 2,250 78
Vodafone ADR 4,600 880
Young Broadcasting (Class A) * 6,300 256
9,206
Restaurants 0.0%
Buca * 1,000 18
PJ America * 3,000 70
88
Total Consumer Services 31,857
EDUCATION 0.0%
Education 0.0%
ITT Educational Services * 8,200 195
Total Education 195
CONSUMER CYCLICALS 3.9%
Automobiles and Related 0.5%
A.O. Smith (Class B) 22,500 548
11
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Cycle & Carriage (SGD) 22,000 $ 123
DaimlerChrysler (EUR) 7,200 621
Honda ADR 9,400 772
Keystone Automotive * 4,800 77
Littelfuse * 6,700 134
SPX * 6,400 497
Strattec Security * 800 25
2,797
Building and Real Estate 2.1%
Accor (EUR) 2,300 564
Apartment Investment & Management, REIT 4,000 168
Arden Realty, REIT 10,100 258
Cheung Kong Holdings (HKD) 84,000 682
City Developments (SGD) 15,000 90
DBS Land (SGD) 20,000 36
EastGroup Properties, REIT 16,400 333
Federal Realty Investment Trust, REIT 75,800 1,753
First Washington Realty Trust, REIT 10,200 222
Glenborough Realty Trust, REIT 4,800 88
JP Realty, REIT 6,600 135
Parkway Properties, REIT 11,800 390
Reckson Associates Realty (Class B), REIT * 6,535 178
Reckson Associates Realty, REIT 75,500 1,954
Simon DeBartolo Group, REIT 39,172 1,146
Starwood Hotels & Resorts, REIT 82,700 2,708
Westfield Trust (AUD) 54,600 110
Woodhead Industries 16,400 207
11,022
Miscellaneous Consumer Durables 1.3%
CompX * 9,400 142
Corning 46,600 2,546
Eastman Kodak 30,900 2,090
Harman International 2,500 111
Juno Lighting 4,600 105
Masco 20,600 588
OCE (EUR) 7,200 198
Ricoh (JPY) 34,000 377
Sony (JPY) 9,000 846
7,003
Total Consumer Cyclicals 20,822
12
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
TECHNOLOGY 4.0%
Electronic Components 1.2%
Altera * 10,400 $ 362
American Superconductor * 1,900 24
Analogic 11,200 365
Benchmark Electronics * 2,700 81
Burr Brown * 7,000 224
EMC * 6,800 677
Exar * 3,800 80
Intel 27,200 1,474
Linear Technology 4,000 212
Maxim Integrated Products * 13,800 736
Methode Electronics (Class A) 16,700 306
Optek Technology * 11,300 285
Planar Systems * 9,600 77
PMC-Sierra * 4,600 223
SIPEX * 4,800 78
Texas Instruments 5,700 623
Xilinx * 10,500 466
6,293
Electronic Systems 0.6%
Applied Materials * 5,500 303
Applied Micro Circuits * 5,200 307
EMS Technologies * 7,600 103
Hewlett-Packard 12,700 1,198
Lifeline Systems * 6,500 121
Lo-Jack * 11,400 89
Nokia ADR 12,600 894
Solectron * 6,200 339
3,354
Information Processing 0.3%
Dell Computer * 12,600 434
Hitachi ADR 4,500 329
IBM 4,800 558
1,321
Office Automation 0.1%
Ceridian * 12,200 403
Technitrol 10,200 303
706
13
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Specialized Computer 0.1%
Sun Microsystems * 8,600 $ 514
514
Telecommunications 1.3%
AirTouch Communications * 8,500 854
Avant * 9,100 111
Cisco Systems * 9,475 1,032
Deutsche Telekom ADR 16,900 669
LM Ericsson (Class B) ADR 18,000 485
MCI WorldCom * 30,982 2,675
Premisys Communications * 5,400 47
Qwest Communications International * 8,800 375
Tellabs * 6,800 398
Voicestream Wireless * 6,800 183
West TeleServices * 4,500 34
6,863
Aerospace and Defense 0.4%
AlliedSignal 27,200 1,579
DONCASTERS ADR * 1,700 26
Raytheon (Class B) 4,600 313
Woodward Governor 5,400 135
2,053
Total Technology 21,104
CAPITAL EQUIPMENT 2.2%
Electrical Equipment 1.6%
ABB AG (CHF) * 392 555
Canon (JPY) 29,000 732
GE 28,800 2,929
Holophane * 12,500 342
Matsushita Electric Works (JPY) 31,000 310
Mitsubishi Electric (JPY) 51,000 162
Siemens (EUR) 5,200 350
Tyco International 33,121 2,894
8,274
Capital Equipment 0.0%
Omniquip International 12,200 130
130
14
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Machinery 0.6%
Danaher 24,200 $ 1,463
GKN (GBP) 48,500 810
JLG Industries 16,700 322
NN Ball & Roller 12,200 69
S I G Schweis (CHF) 620 384
Toolex Alpha * 2,700 36
Valmet (EUR) 6,000 61
3,145
Total Capital Equipment 11,549
BUSINESS SERVICES AND
TRANSPORTATION 6.0%
Computer Service and Software 2.0%
America Online * 7,900 943
Analysts International 6,500 104
Ascend Communications * 8,800 815
Automatic Data Processing 18,700 770
BISYS Group * 2,100 115
BMC Software * 20,900 1,033
Compuware * 16,800 521
Concur Technologies * 1,000 32
Electronic Arts * 1,700 83
First Data 19,484 876
Galileo International 11,000 495
Great Plains Software * 3,300 124
HCIA * 8,600 74
Microsoft * 31,600 2,551
Parametric Technology * 30,200 420
Peerless Systems * 12,100 111
Phoenix Technologies * 5,700 62
Portal Software * 700 34
PSINet * 2,200 98
Salesloggix * 1,400 16
Saville Systems ADR * 14,300 224
Summit Design * 6,300 17
SunGard Data Systems * 10,000 350
15
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Synopsys * 1,400 $ 62
Vantive * 1,800 20
Viasoft * 14,100 55
Visio * 9,100 298
Webtrends * 1,300 37
Wind River Systems * 7,500 158
Zebra Technologies (Class A) * 1,700 54
10,552
Distribution Services 0.4%
Aviation Sales * 5,800 223
Cardinal Health 7,642 461
Jack Henry & Associates 2,600 93
MSC * 7,300 138
Primesource 3,800 25
Richfood Holdings 24,900 319
SunSource 6,100 87
U.S. Foodservice * 15,745 701
Watsco (Class A) 14,100 272
Wilmar Industries * 3,100 35
2,354
Environmental 0.1%
CUNO * 7,500 138
IT Group * 6,300 106
Rentokil Group (GBP) 12,900 53
Waterlink * 20,000 81
378
Transportation Services 0.4%
C.H. Robinson Worldwide 5,900 190
Coach USA * 13,500 393
Comfort Systems USA * 20,300 320
Eagle USA Air Freight * 5,400 255
Expeditors International of Washington 3,700 205
Frozen Food Express 7,500 52
Heartland Express * 3,700 57
Hub Group (Class A) * 1,500 42
International Shipholding 3,700 52
Mitsubishi Heavy Industries (JPY) 183,000 715
2,281
16
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Miscellaneous Business Services 2.4%
Billing Information Concepts * 11,400 $ 143
British Airport Authorities (GBP) 70,047 749
Browning-Ferris 72,800 3,021
Cendant * 9,850 182
CORT Business Services * 8,800 213
Electro Rent * 13,200 166
Equifax 2,700 97
H&R Block 38,700 1,865
Insituform Technologies (Class A) * 12,000 200
Iron Mountain * 6,150 170
Maximus * 4,100 122
McGrath RentCorp 6,700 126
Metamor Worldwide * 6,100 167
MPW Industrial Services Group * 6,800 68
New England Business Service 16,000 435
Omnicom 13,000 910
Paxar * 6,200 56
Renaissance Worldwide * 17,000 122
Romac International * 10,800 156
Shorewood Packaging * 26,000 445
Strayer Education 8,700 255
Superior Services * 2,500 54
Tetra Tech * 14,925 317
Waste Management 48,926 2,587
Airlines 0.4%
Delta 26,600 1,526
KLM (EUR) 6,000 174
KLM Royal Dutch Air ADR 700 21
Midwest Express Holdings * 1,300 39
Singapore Airlines (SGD) 13,000 116
1,876
Railroads 0.3%
Norfolk Southern 51,000 1,670
1,670
Total Business Services and Transportation 31,737
17
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
ENERGY 5.4%
Energy Services 1.3%
Baker Hughes 81,800 $ 2,546
BG (GBP) 58,300 321
Cooper Cameron * 1,400 51
Elf Aquitaine (EUR) 2,600 376
Elf Aquitaine ADR 5,000 355
Halliburton 13,000 538
Johnson Electric (HKD) 247,200 912
Smith International * 2,800 121
Tokyo Electric Power (JPY) 36,000 785
TOTAL ADR * 6,300 383
United Utilities (GBP) 60,600 730
Weatherford International 3,200 105
7,223
Exploration & Production 0.5%
Key Energy * 9,100 29
Santos (AUD) 49,000 152
Unocal 57,800 2,297
2,478
Integrated Petroleum - Domestic 0.8%
Amerada Hess 2,000 120
Atlantic Richfield 21,100 1,766
Occidental Petroleum 29,900 632
USX-Marathon 60,300 1,805
4,323
Integrated Petroleum - International 2.8%
BP Amoco ADR 52,054 5,576
Chevron 6,300 584
ENI SPA ADR 7,900 497
Exxon 11,960 956
Mobil 32,900 3,331
Repsol ADR 22,500 405
Royal Dutch Petroleum ADR 23,800 1,346
Shell Transport & Trading ADR 21,600 953
Texaco 17,300 1,133
14,781
Total Energy 28,805
18
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
PROCESS INDUSTRIES 4.2%
Diversified Chemicals 1.1%
Dow Chemical 14,600 $ 1,774
DuPont 21,500 1,407
Hercules 69,800 2,438
5,619
Specialty Chemicals 1.6%
3M 25,500 2,187
A. Schulman 3,700 62
Air Liquide (L) (EUR) 2,295 346
Akzo Nobel (EUR) 8,300 344
BASF AG (EUR) 12,180 474
Bayer (EUR) 11,660 453
Furon 8,100 148
Great Lakes Chemical 37,440 1,692
Hauser * 21,100 52
Imperial Chemical ADR 7,900 347
Pall 55,400 1,111
Sumitomo Chemicals (JPY) 189,000 797
Technip (EUR) 5,000 542
8,555
Paper and Paper Products 0.8%
Dai Nippon Printing (JPY) 53,000 795
Fort James 37,900 1,388
Kimberly-Clark 32,800 1,925
Smurfit-Stone Container * 5,900 127
4,235
Forest Products 0.4%
Georgia-Pacific 9,500 821
International Paper 6,700 335
Weyerhaeuser 19,200 1,192
2,348
Building and Construction 0.3%
Blue Circle Industries (GBP) 52,418 336
Heidelberg Zement (EUR) 4,100 331
Holderbank Financiere Glarus (CHF) 350 416
J. Ray Mcdermott * 1,600 57
19
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Layne Christensen * 11,700 $ 78
Simpson Manufacturing * 2,000 89
Trex * 8,500 186
1,493
Total Process Industries 22,250
BASIC MATERIALS 1.2%
Metals 1.1%
Anglo American Platinum (ZAR) 18,000 331
AngloGold ADR 3,111 63
Cambior 23,300 77
Gibraltar Steel 3,500 76
Inco 75,500 1,076
Material Sciences * 5,300 59
Matthews International (Class A) 15,300 446
Phelps Dodge 27,800 1,440
Reynolds Metals 40,600 2,159
5,727
Mining 0.1%
Battle Mountain Gold 41,200 100
Lonrho Africa (GBP) 10,107 7
Rio Tinto (AUD) 19,500 274
TVX Gold * 27,800 30
411
Miscellaneous Materials 0.0%
Malayan Cement (MYR) 44,150 26
Synthetic Industries * 5,500 124
150
Total Basic Materials 6,288
MISCELLANEOUS 0.2%
Conglomerates 0.1%
Berkshire Hathaway (Class B) * 115 267
Orkla (Class A) (NOK) 17,200 270
537
20
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Other Miscellaneous Common Stocks 0.1%
Schneider (EUR) * 4,000 $ 237
SCP Pool * 200 4
Other Miscellaneous Common Stocks 131
372
Total Miscellaneous 909
FOREIGN 0.5%
Europe 0.3%
AXA Colonia Konzern (EUR) 7,300 685
Man AG (EUR) 12,300 360
Rhone Poulenc (EUR) 5,200 247
Svenska Cellulosa (SEK) 6,700 156
1,448
Far East 0.1%
Nippon Express (JPY) 131,000 748
748
Other Foreign 0.1%
Bobst (CHF) 236 290
Pacific Dunlop (AUD) 90,900 162
452
Total Foreign 2,648
Total Common Stocks (Cost $249,288) 314,459
CORPORATE BONDS 15.0%
Adelphia Communications
7.875%, 5/1/09 $ 575,000 545
9.875%, 3/1/05 425,000 446
Allied Holdings, Gtd. Sr. Sub. Notes,
8.625%, 10/1/07 500,000 475
American Airlines, 9.71%, 1/2/07 36,519 40
American Builders & Contractors Supply, Sr. Sub. Notes
10.625%, 5/15/07 500,000 470
American Express, 7.60%, 8/15/02 300,000 310
American Pacific, Sr. Notes, 9.25%, 3/1/05 500,000 515
American Radio Systems, Sr. Sub. Notes,
9.00%, 2/1/06 25,000 27
American Safety Razor, Sr. Notes, 9.875%, 8/1/05 800,000 808
21
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Amerigas Partners, Sr. Notes, 10.125%, 4/15/07 $ 200,000 $ 207
AMR, Deb., 9.00%, 9/15/16 100,000 112
Anchor Advanced, Sr. Notes, 11.75%, 4/1/04 1,000,000 1,025
Associated Materials, Sr. Sub. Notes, 9.25%, 3/1/08 500,000 510
B&G Foods, Sr. Sub. Notes, 9.625%, 8/1/07 500,000 490
Building Materials, Sr. Notes, 7.75%, 7/15/05 1,000,000 947
BWAY, Sr. Sub. Notes, 10.25%, 4/15/07 500,000 517
Capital One Master Trust, 6.356%, 6/15/11 236,000 228
Chancellor Media, Sr. Sub. Notes, 9.00%, 10/1/08 1,000,000 1,035
Charter Communications, Sr. Notes,
(144a), 8.25%, 4/1/07 1,000,000 975
Cinemark USA, Sr. Sub. Notes, 8.50%, 8/1/08 500,000 485
Coach USA, Gtd. Sr. Sub. Notes, 9.375%, 7/1/07 375,000 381
Coinmach, Sr. Sub. Notes, 11.75%, 11/15/05 500,000 550
Comcast Cable Communications, 8.50%, 5/1/27 3,550,000 4,029
Communications & Power Industries, Sr. Sub. Notes
12.00%, 8/1/05 500,000 514
Container Corp of America, Sr. Notes, 9.75%, 4/1/03 250,000 262
Courtyard by Marriott II, Sr. Secured Notes
10.75%, 2/1/08 100,000 103
Cox Communications, Deb., 7.25%, 11/15/15 600,000 596
Dan River, Sr. Sub. Notes, 10.125%, 12/15/03 500,000 510
Delta Mills, Sr. Notes, 9.625%, 9/1/07 250,000 256
Discover Card Master Trust I, 7.75%, 4/16/02 100,000 101
Doane Pet Care, Sr. Sub. Notes, 9.75%, 5/15/07 804,000 824
Dyersburg, Sr. Sub. Notes, 9.75%, 9/1/07 250,000 123
Dyncorp, Sr. Sub. Notes, 9.50%, 3/1/07 350,000 350
Energy Corporation of America, Sr. Sub. Notes
9.50%, 5/15/07 500,000 465
Fairchild Semiconductor, Sr. Sub. Notes
10.125%, 3/15/07 250,000 250
Fairfax Financial, 8.25%, 10/1/15 3,550,000 3,554
Federal-Mogul, Sr. Notes, 7.75%, 7/1/06 350,000 339
First Federal Financial, 11.75%, 10/1/04 250,000 263
Flores & Rucks, Sr. Sub. Notes, 9.75%, 10/1/06 250,000 261
Frontiervision, Sr. Notes, 11.00%, 10/15/06 500,000 554
Fundy Cable, Sr. Secured 2nd Priority Notes
11.00%, 11/15/05 300,000 329
22
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Group Maintenance America, Sr. Sub. Notes, (144a)
9.75%, 1/15/09 $ 500,000 $ 505
Harrahs Operating, 7.875%, 12/15/05 1,000,000 980
Hawk, Sr. Notes, 10.25%, 12/1/03 1,000,000 1,030
Herff Jones, Sr. Sub. Notes, 11.00%, 8/15/05 500,000 539
Hollinger International Publishing, Gtd. Notes
9.25%, 3/15/07 1,000,000 1,035
Holmes Products, Gtd. Notes, 9.875%, 11/15/07 250,000 246
Host Marriott Travel, Sr. Notes, 9.50%, 5/15/05 1,000,000 1,040
ICG Services, Sr. Disc. Notes, STEP, 0%, 9/15/05 500,000 448
IMC Home Equity Loan Trust, Zero Coupon, 4/20/26 867,000 838
Intermedia Communications, Sr. Notes, (144a)
9.50%, 3/1/09 500,000 490
International Home Foods, Gtd. Sr. Sub. Notes
10.375%, 11/1/06 1,000,000 1,065
International Wire, Sr. Sub. Notes, 11.75%, 6/1/05 500,000 520
Intertek Finance, Sr. Sub. Notes, 10.25%, 11/1/06 350,000 340
Iron Mountain, Sr. Sub. Notes, 8.75%, 9/30/09 500,000 501
Isle of Capri Casinos, Sr. Sub. Notes, (144a)
8.75%, 4/15/09 750,000 705
Jitney-Jungle Stores, Sr. Sub. Notes,
12.00%, 3/1/06 500,000 500
Keebler, Sr. Sub. Notes, 10.75%, 7/1/06 1,000,000 1,102
Lenfest Communications, Sr. Notes, 8.375%, 11/1/05 30,000 32
Mastec, Sr. Sub. Notes, 7.75%, 2/1/08 250,000 240
MCI WorldCom, 7.75%, 4/1/07 3,550,000 3,756
Metromedia Fiber, Sr. Notes, (144a),
10.00%, 11/15/08 500,000 517
Microcell Telecommunications, Sr. Disc. Notes
STEP, 0%, 6/1/06 675,000 533
Mohegan Tribal Gaming, Sr. Notes, (144a),
8.125%, 1/1/06 850,000 839
Nextel Communications, Sr. Disc. Notes
STEP, 0%, 10/31/07 1,400,000 945
Nextlink Communications, Sr. Disc. Notes
STEP, 0%, 6/1/09 1,500,000 829
Niagara Mohawk, Sr. Notes, 7.75%, 10/1/08 75,000 77
Northland Cable Television, Sr. Sub. Notes
10.25%, 11/15/07 250,000 264
Owens & Minor, Sr. Sub. Notes, 10.875%, 6/1/06 150,000 159
Owens Illinois, Sr. Notes, 7.35%, 5/15/08 3,550,000 3,421
23
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
P&L Coal, 8.875%, 5/15/08 $ 1,000,000 $ 1,007
Packaging Corp. of America, Sr. Sub. Notes, (144a)
9.625%, 4/1/09 1,000,000 1,017
Paine Webber, Sr. Notes, 6.55%, 4/15/08 3,550,000 3,395
Paragon Corporate Holdings, Sr. Notes,
9.625%, 4/1/08 250,000 143
Park Place Entertainment, Sr. Sub. Notes
7.875%, 12/15/05 1,000,000 960
Plastic Containers, Sr. Secured Notes,
10.00%, 12/15/06 540,000 611
Premier Parks, Sr. Disc. Notes, STEP, 0%, 4/1/08 500,000 343
Price Communications Wireless, 9.125%, 12/15/06 500,000 520
Pride Petroleum Services, Sr. Notes,
9.375%, 5/1/07 350,000 345
Principal Mutual, (144a)
7.875%, 3/1/24 250,000 263
8.00%, 3/1/44 3,550,000 3,391
Protection One, Sr. Sub. Notes, (144a),
8.125%, 1/15/09 250,000 238
Purina Mills, Sr. Sub. Notes, 9.00%, 3/15/10 300,000 237
Quest Diagnostics, Gtd. Sr. Sub. Notes
10.75%, 12/15/06 475,000 549
Qwest Communications
Sr. Disc. Notes, STEP, 0%, 10/15/07 500,000 390
Sr. Notes, 7.50%, 11/1/08 125,000 125
R & B Falcon, Sr. Notes, 6.95%, 4/15/08 3,550,000 2,716
Red Roof Inns, Sr. Notes, 9.625%, 12/15/03 1,000,000 1,010
Repap New Brunswick, Sr. Secured 1st Priority Notes
9.00%, 6/1/04 25,000 23
(144a), 11.50%, 6/1/04 275,000 278
Rogers Cablesystems, Sr. Sec. 2nd Priority Notes
10.00%, 3/15/05 250,000 275
Safelite Glass, Sr. Sub. Notes, 9.875%, 12/15/06 200,000 186
Shoppers Food Warehouse, Sr. Notes,
9.75%, 6/15/04 1,000,000 1,025
Six Flags Entertainment, Sr. Notes,
8.875%, 4/1/06 350,000 353
Six Flags Theme Parks, Sr. Sub. Disc. Notes, STEP
12.25%, 6/15/05 500,000 559
Smithfield Foods, Sr. Sub. Notes,
7.625%, 2/15/08 500,000 462
Sprint, 6.125%, 11/15/08 1,700,000 1,604
Stena, Sr. Notes, 10.50%, 12/15/05 500,000 496
Synthetic Industries, Sr. Sub. Notes,
9.25%, 2/15/07 350,000 359
24
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Union Planters Trust Capital, Gtd. Bonds,
8.20%, 12/15/26 $3,550,000 $ 3,556
United Air Lines, ETC, 9.20%, 3/22/08 206,846 225
United International Holdings, Sr. Disc. Notes
STEP, 0%, 2/15/08 650,000 427
US Can, Sr. Gtd. Notes, 10.125%, 10/15/06 250,000 263
Venture Holdings Trust, (144a), 11.00%, 6/1/07 1,000,000 1,015
Verio, Sr. Notes, 10.375%, 4/1/05 225,000 230
Viasystems, Sr. Sub. Notes, 9.75%, 6/1/07 500,000 437
Westamerica Bank, Sub. Notes, 6.99%, 9/30/03 250,000 244
Westinghouse Air Brake, Sr. Notes, (144a)
9.375%, 6/15/05 1,000,000 1,015
Westpoint Stevens, Sr. Notes, 7.875%, 6/15/08 1,000,000 990
Total Corporate Bonds (Cost $83,570) 79,559
U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES 10.4%
Federal Home Loan Mortgage Corp.
6.00%, 2/15/11 - 11/1/25 6,437,935 6,220
6.50%, 10/1/08 - 3/15/11 3,461,457 3,449
7.00%, 10/1/08 - 10/1/25 83,883 84
8.00%, 1/1/25 70,215 73
9.00%, 11/1/04 14,754 15
Federal National Mortgage Assn.
Zero Coupon, 9/25/23 1,242,652 1,226
6.00%, 9/1/08 66,186 65
6.50%, 3/1/09 - 8/1/23 167,001 165
7.00%, 4/18/22 - 1/1/26 3,195,517 3,215
7.50%, 11/1/07 78,307 80
8.00%, 5/1/07 - 6/1/10 68,455 71
8.50%, 8/1/06 - 11/1/21 39,280 41
9.00%, 5/1/01 15,886 16
REMIC, 8.00%, 2/25/07 81,279 83
Government National Mortgage Assn., I
6.00%, 5/15/17 - 12/15/23 2,567,188 2,446
6.50%, 12/15/23 - 2/15/29 8,464,844 8,270
7.00%, 4/15/24 - 1/15/29 24,056,031 24,112
25
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Government National Mortgage Assn., I
7.50%, 2/15/16 - 1/15/29 $ 4,834,096 $ 4,953
8.00%, 3/15/22 - 8/15/24 553,097 576
Government National Mortgage Assn., II
8.00%, 10/20/25 61,146 64
Total U.S. Government Mortgage-Backed
Securities (Cost $55,503) 55,224
U.S. GOVERNMENT OBLIGATIONS/AGENCIES 13.1%
Federal Farm Credit
5.25%, 5/1/02 8,500,000 8,368
Federal Home Loan Bank
4.96%, 10/7/05 4,100,000 3,839
6.29%, 6/9/05 600,000 602
Federal Home Loan Mortgage
5.95%, 1/19/06 5,900,000 5,816
Federal National Mortgage Assn., REMIC
7.25%, 5/25/20 3,395,828 3,453
Government Trust Certificates
9.25%, 11/15/01 32,880 35
Resolution Funding
8.125%, 10/15/19 210,000 254
Tennessee Valley Authority
5.88%, 4/1/36 2,000,000 1,983
6.235%, 7/15/45 2,000,000 2,017
U.S. Treasury Notes
4.75%, 11/15/08 20,000,000 18,614
4.875%, 3/31/01 3,000,000 2,973
U.S. Treasury Bonds
6.125%, 11/15/27 4,000,000 4,043
6.75%, 8/15/26 16,050,000 17,475
Total U.S. Government Obligations/Agencies (Cost $71,083) 69,472
SHORT-TERM INVESTMENTS 2.8%
Certificates of Deposit 0.0%
Chase Manhattan Bank, N.A., fixed deposit
2.00%, 6/9/99 (MYR) 272,726 67
67
26
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
In thousands
Money Market Funds 2.8%
Reserve Investment Fund, 4.96% # 14,676,348 $ 14,676
14,676
Total Short-Term Investments (Cost $14,740) 14,743
Total Investments in Securities
100.7% of Net Assets (Cost $474,184) $ 533,457
Other Assets Less Liabilities (3,766)
NET ASSETS $ 529,691
----------
# Seven-day yield
* Non-income producing
ADR American Depository Receipt
ETC Equipment Trust Certificate
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).
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at period-end amounts to
2.2% of net assets.
AUD Australian dollar
CAD Canadian dollar
CHF Swiss franc
DKK Danish krone
EUR 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
L Local registered shares
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
May 31, 1999
- -----------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $474,184) $ 533,457
Securities lending collateral 50,144
Other assets 7,654
Total assets 591,255
Liabilities
Obligation to return securities lending collateral 50,144
Other liabilities 11,420
Total liabilities 61,564
NET ASSETS $ 529,691
-----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 2,808
Accumulated net realized gain/loss - net of distributions 6,938
Net unrealized gain (loss) 59,271
Paid-in-capital applicable to 32,695,216 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 460,674
NET ASSETS $ 529,691
-----------
NET ASSET VALUE PER SHARE $ 16.20
-----------
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
- -----------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
5/31/99
Investment Income
Income
Interest $ 12,616
Dividend 4,372
Total income 16,988
Expenses
Investment management 2,479
Shareholder servicing 1,387
Custody and accounting 173
Registration 82
Prospectus and shareholder reports 67
Legal and audit 12
Directors 7
Miscellaneous 14
Total expenses 4,221
Expenses paid indirectly (5)
Net expenses 4,216
Net investment income 12,772
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 9,311
Foreign currency transactions (98)
Net realized gain (loss) 9,213
Change in net unrealized gain or loss
Securities 14,547
Other assets and liabilities
denominated in foreign currencies 20
Change in net unrealized gain or loss 14,567
Net realized and unrealized gain (loss) 23,780
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 36,552
----------
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED 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 $ 12,772 $ 8,667
Net realized gain (loss) 9,213 12,398
Change in net unrealized gain or loss 14,567 26,365
Increase (decrease) in net assets from operations 36,552 47,430
Distributions to shareholders
Net investment income (11,763) (8,060)
Net realized gain (12,214) (5,729)
Decrease in net assets from distributions (23,977) (13,789)
Capital share transactions*
Shares sold 285,469 141,418
Distributions reinvested 23,845 13,698
Shares redeemed (120,554) (66,284)
Increase (decrease) in net assets from capital
share transactions 188,760 88,832
Net Assets
Increase (decrease) during period 201,335 122,473
Beginning of period 328,356 205,883
End of period $ 529,691 $ 328,356
----------------------
*Share information
Shares sold 18,147 9,497
Distributions reinvested 1,530 933
Shares redeemed (7,655) (4,395)
Increase (decrease) in shares outstanding 12,022 6,035
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED 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 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
31
<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 (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
32
<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
- --------------------------------------------------------------------------------
borrower fails to return them. At May 31, 1999, the value of loaned
securities was $48,589,000; aggregate collateral consisted of $50,144,000
in the securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
and U.S. government securities, aggregated $225,974,000 and $116,005,000,
respectively, for the year ended May 31, 1999. Purchases and sales of U.S.
government securities aggregated $91,841,000 and $21,921,000, 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 $ 11,000
Paid in-capital (11,000)
At May 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$474,184,000. Net unrealized gain aggregated $59,273,000 at period-end, of
which $74,083,000 related to appreciated investments and $14,810,000 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 $259,000 was payable at May 31, 1999. The fee is computed
daily and paid monthly, and consists of an individual fund fee equal to
0.25% 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%
33
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T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
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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 was
required to bear any expenses through May 31, 1998, which would cause the
fund's ratio of total 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 total expenses to average net assets to exceed 1.05%.
Pursuant to this agreement, $62,000 of unaccrued 1997 fees were repaid
during the year ended May 31, 1999.
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 $1,297,000 for the year ended May 31, 1999, of which $139,000
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 $1,116,000 and are reflected as interest income in the
accompanying Statement of Operations.
34
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T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
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- ---------------------------------
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 Balanced 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 Balanced 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 and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
June 17, 1999
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<PAGE>
T. ROWE PRICE PERSONAL STRATEGY BALANCED FUND
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- -----------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 05/31/99
- --------------------------------------------------------------------------------
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:
. $1,496,000 from short-term capital gains,
. $10,718,000 from long-term capital gains, subject to the 20% rate
gains category.
For corporate shareholders, $2,572,000 of the fund's distributed income and
short-term capital gains qualified for the dividends-received deduction.
36
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
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INVESTMENT SERVICES AND INFORMATION
Knowledgeable Service Representatives
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to
10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
Account Services
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your
distributions.
Automated 24-Hour Services Including Tele*Access and the T. Rowe Price
Web site on the Internet. Address: www.troweprice.com
Brokerage Services*
Individual Investments Stocks, bonds, options, precious metals, and
other securities at a savings over full-service commission rates.**
Investment Information
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and
results.
T. Rowe Price Report Quarterly investment newsletter discussing
markets and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International Investing, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning
Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a January 1999 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending
on size of order.
37
<PAGE>
T. ROWE PRICE MUTUAL FUNDS
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Stock Funds
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
Bond Funds
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Intermediate Tax-Free**
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond***
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Bond
International Bond
Money Market Funds+
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
Blended Asset Funds
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. Rowe Price No-Load
Variable Annuity
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced
Portfolio
Prime Reserve Portfolio
* Closed to new investors. ** Formerly named Florida Insured Intermediate
Tax-Free. *** Formerly named Tax-Free Insured Intermediate Bond.
+ Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
funds.
Please call for a prospectus. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
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T. ROWE PRICE RETIREMENT PLANS AND RESOURCES
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RETIREMENT PLANS AND RESOURCES
We recognize that saving for retirement is the number one investment
goal for most Americans. We can help you meet your retirement needs,
whether you are starting an IRA or designing a retirement program for
your employees. T. Rowe Price offers an assortment of retirement plans
for individuals, the self-employed, small businesses, corporations,
and nonprofit organizations. We provide recordkeeping, communications,
and investment management services, as well as a variety of
educational materials, self-help planning guides, and software tools
to help you choose and implement a retirement plan appropriate for
you. For information or to request literature, call us at
1-800-638-5660.
IRAs AND QUALIFIED PLANS
Traditional IRA
Roth IRA
Rollover IRA
SEP-IRA
SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k)
403(b)
457 Deferred Compensation
RETIREMENT RESOURCES AT T. ROWE PRICE
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Investment Kits
The IRA Investing Kit
Roth IRA Conversion Kit
Rollover IRA Kit
The T. Rowe Price SIMPLE IRA Plan Kit
The T. Rowe Price SEP-IRA Plan
The Simplified Keogh Plan(R) From T. Rowe Price
The T. Rowe Price 401(k) Century Plan(R) (for small businesses)
Money Purchase Pension/Profit Sharing Plan Kit
Investing for Retirement in Your 403(b) Account
The T. Rowe Price No-Load Variable Annuity Information Kit
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning Analyzer(TM) CD-ROM or diskette
$19.95. To order, please call 1-800-541-5760. Also available on the
Internet for $9.95.
T. Rowe Price Variable Annuity Analyzer(TM) CD-ROM or diskette, free.
To order, please call 1-800-469-5304.
Many of these resources are also available for viewing or ordering on the
Internet at www.troweprice.com.
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<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. C11-055 5/31/99
