Item 1. Report to Shareholders
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
November 30, 2003
Certified Semiannual Report
This report is certified under the Sarbanes-Oxley Act of 2002, which requires
that public companies, including mutual funds, affirm that the information
provided in their annual and semiannual shareholder reports fully and fairly
represents their financial position.
T. Rowe Price Personal Strategy Balanced Fund
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Certified Semiannual Report (Unaudited)
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
6 Months Year
Ended Ended
11/30/03 5/31/03 5/31/02 5/31/01 5/31/00 5/31/99
NET ASSET
VALUE
Beginning of
period $ 14.74 $ 15.11 $ 15.73 $ 16.20 $ 16.20 $ 15.88
Investment
activities
Net
investment
income (loss) 0.14* 0.33* 0.38 0.48 0.50 0.46
Net realized
and unrealized
gain (loss) 1.20 (0.36) (0.60) 0.25 0.39 0.81
Total from
investment
activities 1.34 (0.03) (0.22) 0.73 0.89 1.27
Distributions
Net
investment
income (0.16) (0.34) (0.39) (0.49) (0.49) (0.46)
Net
realized
gain -- -- (0.01) (0.71) (0.40) (0.49)
Total
distributions (0.16) (0.34) (0.40) (1.20) (0.89) (0.95)
NET ASSET
VALUE
End of
period $ 15.92 $ 14.74 $ 15.11 $ 15.73 $ 16.20 $ 16.20
---------------------------------------------------------------
Ratios/
Supplemental
Data
Total return^ 9.16%* 0.01%* (1.32)% 4.60% 5.68% 8.37%
Ratio of
total
expenses to
average
net assets 0.87%*! 0.90%* 1.02% 1.02% 0.98% 1.00%
Ratio of
net investment
income (loss)
to average
net assets 1.87%*! 2.41%* 2.54% 3.00% 3.05% 3.01%
Portfolio
turnover rate 77.9%! 87.8% 97.2% 61.5% 48.2% 34.3%
Net assets,
end of
period
(in thousands) $797,988 $701,802 $693,599 $671,329 $611,856 $529,691
^ Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
* Excludes expenses in excess of a 0.90% contractual expense limitation in
effect through 9/30/04, and expenses permanently waived (0.03% of average
net assets) related to investments in T. Rowe Price mutual funds.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Personal Strategy Balanced Fund
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Certified Semiannual Report (Unaudited) November 30, 2003
Portfolio of Investments (ss.) Shares/Par Value
- --------------------------------------------------------------------------------
($ 000s)
COMMON STOCKS 65.9%
CONSUMER DISCRETIONARY 9.7%
Auto Components 0.2%
Autoliv (SEK) 22,500 754
Denso (JPY) 25,700 480
Keystone Automotive * 7,300 178
Koito Manufacturing (JPY) 39,000 233
Strattec Security * 2,200 131
1,776
Automobiles 1.1%
Ford Motor 222,300 2,934
Fuji Heavy Industries (JPY) 66,000 313
Harley-Davidson 35,300 1,665
Honda (JPY) 12,200 499
Peugeot (EUR) 9,940 468
Toyota Motor (JPY) 60,200 1,809
Volkswagen (EUR) 14,327 713
Winnebago 1,000 55
8,456
Distributors 0.0%
Cycle & Carriage (SGD) 13,755 48
48
Hotels, Restaurants & Leisure 1.2%
Applebee's 5,325 206
Carnival 38,100 1,341
CEC Entertainment * 4,000 201
Cheesecake Factory * 10,400 451
Chicago Pizza & Brewery * 2,700 38
Hilton Group (GBP) 119,952 437
International Game Technology 49,800 1,728
McDonald's 27,200 697
MGM Mirage * 9,400 352
Mitchells & Butler (GBP) * 98,070 394
Red Robin Gourmet Burgers * 3,000 81
Ruby Tuesday 15,600 454
Sonic * 10,600 327
Starbucks * 27,800 892
Starwood Hotels & Resorts Worldwide, REIT 47,800 1,648
Whitbread (GBP) 45,901 570
9,817
Household Durables 0.8%
Harman International 2,700 368
Jarden Corporation * 3,000 81
Newell Rubbermaid 83,100 1,900
Persimmon (GBP) 47,743 383
Pioneer (JPY) 26,900 688
SEB (EUR) 1,638 200
Sony (JPY) 16,600 576
Thomson (EUR) 49,536 1,050
Tupperware 85,800 1,322
6,568
Internet & Catalog Retail 0.1%
Alloy Online * 9,500 51
e-Bay * 15,900 888
939
Leisure Equipment & Products 0.4%
Brunswick 14,700 442
Eastman Kodak 78,400 1,910
MarineMax * 3,600 68
Polaris Industries 2,500 215
SCP Pool * 19,125 685
3,320
Media 3.5%
Aegis (GBP) 171,674 296
Astro All Asia, 144A (MYR) * 114,000 134
British Sky Broadcast (GBP) * 44,992 522
Clear Channel Communications 59,573 2,491
Comcast, Class A * 34,948 1,097
Comcast, Class A, Special * 68,500 2,065
Disney 145,400 3,357
EchoStar Communications, Class A * 48,000 1,655
Emmis Communications * 8,700 197
Entercom Communications * 3,200 148
Fuji Television Network (JPY) 63 311
Getty Images * 2,200 96
Liberty Media, Class A * 128,904 1,424
New York Times, Class A 65,200 2,993
News Corporation (AUD) 43,609 372
News Corporation ADR 8,000 274
Omnicom 13,900 1,107
Publicis (EUR) 12,745 403
Reader's Digest, Class A 65,500 937
Scholastic * 14,100 468
Scripps, Class A 14,300 1,316
Sinclair Broadcast Group, Class A * 3,800 44
Singapore Press (SGD) 17,200 195
Time Warner * 88,600 1,442
Univision Communications, Class A * 42,000 1,515
Viacom, Class B 72,943 2,868
Young Broadcasting, Class A * 6,400 127
27,854
Multiline Retail 0.7%
Debenhams (GBP) 30,554 247
Marui (JPY) 32,000 393
Neiman Marcus, Class A * 8,300 447
Nordstrom 61,600 2,125
Target 59,600 2,308
5,520
Specialty Retail 1.5%
AnnTaylor Stores * 15,300 608
Best Buy 24,150 1,497
Charles Vogele (CHF) * 4,892 298
Christopher & Banks 10,800 292
Dixons (GBP) 154,026 362
Esprit Holdings (HKD) 70,000 224
Home Depot 131,150 4,821
Kesa Electricals (GBP) 14,086 59
Linens 'n Things * 7,500 221
The Finish Line, Class A * 2,800 86
TJX 2,700 61
Too * 6,100 111
Toys "R" Us * 255,400 2,998
Ultimate Electronics * 4,700 39
Valora (CHF) 995 237
11,914
Textiles, Apparel, & Luxury Goods 0.2%
Adidas-Salomon (EUR) 3,044 314
Culp * 2,800 32
Dan River, Class A * 7,700 6
Sanyo Shokai (JPY) 32,000 207
Stride Rite 15,000 174
Unifi * 11,400 58
Yue Yuen Industrial (HKD) 184,000 512
1,303
Total Consumer Discretionary 77,515
CONSUMER STAPLES 5.3%
Beverages 0.8%
Allied Domecq (GBP) 72,978 516
Anheuser-Busch 12,000 622
Coca-Cola 42,700 1,986
Davide Campari (EUR) 6,311 277
Kirin Brewery (JPY) 68,000 543
Lion Nathan (NZD) 104,400 437
Orkla, Series A (NOK) 9,539 212
PepsiCo 35,410 1,704
Remy Cointreau (EUR) 10,336 344
6,641
Food & Staples Retailing 1.7%
Carrefour (EUR) 6,669 360
Casey's General Stores 30,200 528
Casino Guichard-Perrachon (EUR) 3,895 363
Coles Myer (AUD) 67,022 361
CVS 127,500 4,776
Great Atlantic & Pacific Tea Company * 15,100 115
J Sainsbury (GBP) 202,272 1,046
METRO (EUR) 15,559 667
Performance Food Group * 10,000 393
Sysco 33,200 1,206
Wal-Mart 46,400 2,582
Wal-Mart de Mexico (MXN) 309,700 895
Walgreen 8,100 298
Wild Oats Markets * 11,100 126
13,716
Food Products 1.3%
American Italian Pasta, Class A * 3,100 118
Associated British Foods (GBP) 47,245 462
Campbell Soup 73,500 1,882
CSM (EUR) 13,239 288
General Mills 60,520 2,724
International Multifoods * 1,600 29
Nestle (CHF) 4,048 942
Parmalat Finanz (EUR) 300,275 825
Seneca Foods, Class A * 3,000 60
Seneca Foods, Class B * 600 12
Unilever (GBP) 136,880 1,190
Unilever ADS 32,700 1,965
Yamazaki Baking (JPY) 19,000 146
10,643
Household Products 0.4%
Colgate-Palmolive 19,900 1,045
Kao (JPY) 14,600 298
Kimberly-Clark 25,500 1,383
Procter & Gamble 3,600 346
3,072
Personal Products 0.2%
Chattem * 3,400 54
Estee Lauder, Class A 10,100 384
Fancl (JPY) 4,200 109
Gillette 11,500 388
L'Oreal (EUR) 3,246 241
1,176
Tobacco 0.9%
Altria Group 99,250 5,161
UST 45,000 1,619
6,780
Total Consumer Staples 42,028
ENERGY 4.1%
Energy Equipment & Services 1.1%
Atwood Oceanics * 7,200 185
Baker Hughes 108,100 3,120
BJ Services * 21,500 686
Cooper Cameron * 1,100 48
FMC Technologies * 20,100 428
Grant Prideco * 28,400 331
Hydril * 4,000 95
Key Energy Services * 6,900 63
Lone Star Technologies * 3,900 54
National Oilwell * 24,700 475
Schlumberger 36,000 1,689
Seacor Smit * 10,700 408
Smedvig, Series A (NOK) 9,452 64
Smith International * 31,500 1,182
W-H Energy Services * 5,900 88
8,916
Oil & Gas 3.0%
BP (GBP) 81,545 570
BP ADR 95,696 4,085
ChevronTexaco 25,050 1,881
Cia Espanola de Petroleos (EUR) 31,085 1,044
ENI (EUR) 53,577 914
ENI ADR 1,000 85
Exxon Mobil 72,982 2,640
Forest Oil * 12,250 307
Marathon Oil 87,300 2,585
Noble Energy 10,400 412
Norsk Hydro (NOK) 7,149 410
OMV (EUR) 300 43
Petrobras ADR 28,200 635
Shell Transport & Trading (GBP) 163,200 1,034
Shell Transport & Trading ADR 39,300 1,519
Statoil ASA (NOK) 85,790 856
Tom Brown * 9,200 257
Tonen General Sekiyu (JPY) 23,000 187
Total, Series B (EUR) 11,329 1,832
Ultra Petroleum * 7,900 151
Unocal 59,200 1,881
Woodside Petroleum (AUD) 36,227 361
23,689
Total Energy 32,605
FINANCIALS 14.6%
Capital Markets 2.7%
Bank of New York 27,300 837
Charles Schwab 71,350 828
Credit Suisse Group (CHF) 24,886 827
Deutsche Bank (EUR) 9,876 689
Franklin Resources 21,300 1,019
Goldman Sachs Group 17,700 1,700
Investor's Financial Services 8,900 328
Legg Mason 11,500 917
Macquarie Bank (AUD) 26,447 651
Mellon Financial 170,200 4,902
Merrill Lynch 42,300 2,400
Morgan Stanley 36,300 2,007
National Financial Partners * 3,900 99
Nomura Holdings (JPY) 29,000 461
Northern Trust 30,300 1,359
State Street 54,400 2,772
21,796
Commercial Banks 4.9%
77 Bank (JPY) 62,000 328
ABN Amro Holdings (EUR) 17,417 384
Alliance & Leicester (GBP) 65,364 993
Anglo Irish Bank, (Dublin Listing) (EUR) 74,768 1,014
Australia & New Zealand Banking (AUD) 125,619 1,530
Banca Intesa (EUR) 175,093 660
Banco BPI (EUR) 78,466 249
Banco Santander ADR 45,213 1,072
Banco Santander Central Hispano (EUR) 95,951 998
Bank of America 62,400 4,707
Bank of Yokohama (JPY) 125,800 533
Bank One 51,100 2,216
Barclays (GBP) 249,280 2,200
BNL (EUR) * 183,905 431
BNP Paribas (EUR) 24,411 1,376
Boston Private Financial 6,200 161
Chittenden 21,275 726
Citizens Banking 15,300 482
DBS (SGD) 44,028 358
Dexia (EUR) 22,665 364
Glacier Bancorp 5,337 169
Grupo Financiero Banorte (MXN) 183,400 603
HBOS (GBP) 85,936 1,080
HSBC (GBP) 68,330 1,037
Jyske (DKK) * 7,840 373
National Australia Bank (AUD) 71,739 1,502
NORDEA (SEK) 182,719 1,211
Provident Bankshares 10,700 311
Royal Bank of Scotland (GBP) 58,208 1,627
SEB, Series A (SEK) 53,654 700
Southwest Bancorp 9,800 375
Sumitomo Mitsui Financial (JPY) 121 591
Svenska Handelsbanken, Series A (SEK) 45,903 848
U.S. Bancorp 142,900 3,960
UniCredito Italiano (EUR) 125,983 633
Valley National Bancorp 16,701 496
Wells Fargo 34,500 1,978
WestAmerica 11,400 602
38,878
Consumer Finance 0.8%
AIFUL (JPY) 5,700 341
American Express 90,100 4,118
MBNA 6,800 167
SLM Corporation 38,700 1,437
6,063
Diversified Financial Services 1.0%
Citigroup 158,577 7,459
ING Groep (EUR) 29,506 633
8,092
Insurance 3.1%
Allianz (EUR) 6,248 704
Ambac 2,700 186
American International Group 83,022 4,811
Aviva (GBP) 64,090 511
AXA Asia Pacific (AUD) 246,788 465
Brown and Brown 9,200 289
CNP Assurances (EUR) 15,980 740
Hannover Reckversicherungs (EUR) 7,965 257
Harleysville Group 4,900 96
Hartford Financial Services Group 29,800 1,639
Horace Mann Educators 24,200 327
Markel * 1,300 334
Marsh & McLennan 43,300 1,924
Mitsui Sumitomo Insurance (JPY) 101,000 754
Ohio Casualty * 26,300 447
PartnerRe 9,300 518
PICC Property & Casualty, 144A (HKD) * 28,000 10
Prudential (GBP) 61,627 474
QBE Insurance (AUD) 91,226 673
RAS (EUR) 37,978 612
SAFECO 76,400 2,860
Selective Insurance 11,000 357
St. Paul Companies 36,900 1,369
Travelers Property Casualty, Class A 77,775 1,213
Triad Guaranty * 3,800 177
UnumProvident 76,300 1,139
W. R. Berkley 10,700 365
XL Capital, Class A 22,400 1,685
24,936
Real Estate 1.4%
Arden Realty, REIT 8,700 254
Corio (EUR) 10,356 369
EastGroup Properties, REIT 9,900 308
Essex Property Trust, REIT 700 45
Federal Realty Investment Trust, REIT 49,800 1,958
Gables Residential Trust, REIT 10,000 323
General Property Trust (AUD) 340,494 718
Glenborough Realty Trust, REIT 10,400 204
Goldcrest (JPY) 4,700 192
LaSalle Hotel Properties, REIT 5,200 95
Manufactured Home Communities, REIT 3,200 124
Mitsui Fudosan (JPY) 32,000 279
Parkway Properties, REIT 7,800 335
Reckson Associates Realty, REIT 61,134 1,467
Simon Property Group, REIT 49,272 2,338
Stockland (AUD) 61,386 227
Sun Hung Kai Properties (HKD) 63,000 507
Washington, REIT 10,800 331
Wereldhave (EUR) 4,579 324
Westfield Trust (AUD) 197,714 491
10,889
Thrifts & Mortgage Finance 0.7%
Bradford & Bingley (GBP) 120,780 635
Fannie Mae 66,000 4,620
Frankfort First 600 12
Freddie Mac 8,100 441
5,708
Total Financials 116,362
HEALTH CARE 7.0%
Biotechnology 0.8%
Abgenix * 1,600 18
Alexion Pharmaceutical * 1,400 26
Alkermes * 10,600 139
Amgen * 40,500 2,329
Amylin Pharmaceuticals * 4,300 113
Celltech (GBP) * 46,483 281
Cephalon * 4,624 217
CSL (AUD) 10,255 120
Cubist Pharmaceuticals * 5,200 65
CV Therapeutics * 1,500 27
deCODE GENETICS * 4,300 36
Exelixis * 10,400 70
Genentech * 6,400 539
Gilead Sciences * 24,200 1,420
Incyte * 2,400 14
MedImmune * 10,800 257
Myriad Genetics * 5,900 70
Neurocrine Biosciences * 5,100 269
NPS Pharmaceuticals * 4,700 142
ONYX Pharmaceuticals * 800 23
OSI Pharmaceuticals * 1,700 51
Regeneron Pharmaceuticals * 1,600 21
Trimeris * 3,100 71
Tularik * 4,000 60
Vertex Pharmaceuticals * 11,636 102
ViroPharma * 1,400 4
6,484
Health Care Equipment & Supplies 0.8%
Analogic 3,900 164
Baxter International 65,200 1,814
Boston Scientific * 30,400 1,091
DJ Orthopedics * 3,200 83
Edwards Lifesciences * 7,600 229
Elekta, Series B (SEK) * 14,084 265
EPIX Medical * 2,500 45
Matthews International, Class A 16,700 475
Medtronic 26,300 1,189
Nektar Therapeutics * 2,200 29
Olympus Optical (JPY) 4,000 86
Steris * 12,400 287
Stryker 6,100 494
Thoratec * 1,300 18
Wilson Greatbatch Technologies * 6,200 260
6,529
Health Care Providers & Services 1.6%
Alliance UniChem (GBP) 50,351 436
AmerisourceBergen 1,900 120
Anthem * 3,600 260
Cardinal Health 8,150 498
Celesio (EUR) 7,774 354
Cross Country Healthcare * 2,500 37
Henry Schein * 9,500 639
Hooper Holmes 18,900 116
Lifeline Systems * 3,500 123
LifePoint Hospitals * 1,100 33
Medco * 19,802 721
Mid Atlantic Medical Services * 8,100 497
Renal Care Group * 3,100 125
Sunrise Senior Living * 2,400 83
Suzuken (JPY) 5,500 148
UnitedHealth Group 105,400 5,681
WellChoice * 5,200 177
WellPoint Health Networks * 24,800 2,319
12,367
Pharmaceuticals 3.8%
Abbott Laboratories 35,600 1,574
AstraZeneca (GBP) 5,522 251
AstraZeneca ADR 25,200 1,158
Atherogenics * 2,200 31
Aventis (EUR) 9,565 553
Eisai (JPY) 12,000 304
Eli Lilly 16,200 1,111
Eon Labs * 2,800 148
Forest Laboratories * 28,000 1,530
Galen Holdings (GBP) 39,980 503
GlaxoSmithKline (GBP) 50,672 1,144
GlaxoSmithKline ADR 3,300 151
Hisamitsu Pharmaceutical (JPY) 17,000 194
Johnson & Johnson 46,900 2,312
Medicines Company * 4,000 109
Merck 50,600 2,054
Novartis (CHF) 39,765 1,681
Noven Pharmaceuticals * 12,500 172
Novo Nordisk (DKK) 5,956 229
Pfizer 199,987 6,710
Sanofi-Synthelabo (EUR) 17,782 1,205
Schering-Plough 149,300 2,396
Schwarz Pharma AG (EUR) 26,116 547
Takeda Chemical Industries (JPY) 13,000 499
Teva Pharmaceutical ADR 1,900 114
Wyeth 89,860 3,540
30,220
Total Health Care 55,600
INDUSTRIALS & BUSINESS SERVICES 7.4%
Aerospace & Defense 0.3%
Armor Holdings * 16,700 405
European Aeronautic Defense & Space (EUR) 25,547 558
General Dynamics 7,600 614
Lockheed Martin 8,100 372
Mercury Computer Systems * 7,500 180
2,129
Air Freight & Logistics 0.3%
EGL * 1,600 29
Expeditors International of Washington 3,500 137
Forward Air * 8,200 233
Pacer International * 10,700 224
Ryder System 9,200 287
UPS, Class B 15,400 1,121
UTi Worldwide 8,900 298
2,329
Airlines 0.0%
Frontier Airlines * 9,000 146
Midwest Express Holdings * 7,100 29
175
Building Products 0.1%
Central Glass (JPY) 41,000 246
Pilkington (GBP) 281,380 434
Trex * 1,100 41
721
Commercial Services & Supplies 2.1%
Apollo Group, Class A * 30,700 2,119
Buhrmann (EUR) 21,001 160
Cendant * 38,900 862
Central Parking 16,700 233
ChoicePoint * 10,800 413
CompX International 4,800 30
Consolidated Graphics * 10,700 322
Davis Service Group (GBP) 95,562 589
Education Management * 1,000 68
Electro Rent * 6,200 86
First Advantage, Class A * 1,900 37
G&K Services, Class A 8,400 304
H&R Block 28,900 1,569
Herman Miller 16,600 432
Ionics * 12,300 395
KForce.com * 7,600 64
Layne Christensen * 6,000 62
LECG * 1,500 32
New England Business Service 10,900 327
R.R. Donnelley 113,800 3,193
Resources Connection * 13,400 367
SOURCECORP * 8,300 203
Spherion * 4,200 38
Tetra Tech * 18,520 472
United Stationers * 5,300 214
Waste Management 148,826 4,377
Waterlink * 11,900 1
West Corporation * 4,200 100
17,069
Construction & Engineering 0.2%
Acciona (EUR) 10,234 578
Balfour Beatty (GBP) 34,566 129
Eiffage (EUR) 2,012 218
Insituform Technologies, Class A * 9,600 144
JGC (JPY) 38,000 301
1,370
Electrical Equipment 0.2%
A.O. Smith 19,600 689
American Superconductor * 2,900 31
Artesyn Technologies * 12,900 102
Belden 21,100 416
Draka (EUR) * 6,913 125
LSI Industries 8,625 107
PECO II * 3,800 4
Sumitomo Electric Industries (JPY) 36,000 294
Woodward Governor 1,200 60
1,828
Industrial Conglomerates 2.0%
3M 31,600 2,498
DCC (EUR) 28,217 371
General Electric 105,100 3,013
Hutchison Whampoa (HKD) 161,500 1,180
Sembcorp (SGD) 867,000 644
Siemens (EUR) 17,450 1,274
Tyco International 299,142 6,865
15,845
Machinery 1.4%
Actuant, Class A * 11,040 343
Cuno * 1,600 68
Danaher 38,200 3,178
Deere 46,000 2,817
Fanuc (JPY) 10,100 594
Graco 8,200 316
Harsco 14,000 555
IDEX 3,100 122
Illinois Tool Works 1,900 148
Joy Global * 3,700 78
Lindsay Manufacturing 9,200 224
Mitsubishi Heavy Industries (JPY) 160,000 427
Pall 54,300 1,391
Reliance Steel & Aluminum 2,500 74
Saurer (CHF) * 3,493 156
Singulus Technology (EUR) * 11,175 239
SKF, Series B (SEK) 10,157 372
11,102
Marine 0.0%
International Shipholding * 3,500 47
47
Road & Rail 0.6%
Arriva (GBP) 66,013 437
Burlington Northern Santa Fe 52,300 1,557
Heartland Express 3,350 82
Knight Transportation * 13,500 327
Nippon Express (JPY) 68,000 295
Norfolk Southern 109,400 2,342
Overnite * 1,700 38
5,078
Trading Companies & Distributors 0.1%
Mitsubishi (JPY) 62,000 569
Sumitomo (JPY) 71,000 441
1,010
Transportation Infrastructure 0.1%
Kamigumi (JPY) 60,000 387
Macquarie Infrastructure Group (AUD) 73,995 175
562
Total Industrials & Business Services 59,265
INFORMATION TECHNOLOGY 8.6%
Communications Equipment 2.0%
Black Box 9,000 394
Cisco Systems * 184,200 4,174
Corning * 450,500 5,163
Emulex * 4,300 127
Lucent Technologies * 770,100 2,464
Nokia (EUR) 23,403 422
Nokia ADR 84,400 1,517
Packeteer * 5,300 101
QLogic * 11,100 631
QUALCOMM 9,200 410
Riverstone Networks * 18,800 21
Sagem (EUR) 4,914 548
Stratos International * 699 5
Tekelec * 4,800 80
16,057
Computer & Peripherals 0.6%
Creative Technology (SGD) 15,400 163
Dell * 72,800 2,512
EMC * 2,700 37
IBM 2,700 244
Lexmark International * 11,800 913
Mitsumi Electric (JPY) 22,300 215
NEC Electronics, 144A (JPY) * 2,900 201
Synaptics * 5,400 74
4,359
Electronic Equipment & Instruments 0.4%
Hosiden (JPY) 21,000 245
KEMET * 20,900 276
Kyocera (JPY) 4,000 244
Littelfuse * 13,300 396
Methode Electronics, Class A 14,400 185
Newport * 8,900 151
Paxar * 23,100 304
Plexus * 22,400 398
Shimadzu (JPY) 105,000 400
TDK (JPY) 6,700 435
Technitrol * 7,600 181
Woodhead Industries 10,300 175
3,390
Internet Software & Services 0.4%
InterActiveCorp * 46,200 1,518
Internet Security Systems * 10,600 180
MatrixOne * 21,200 126
Netegrity * 9,700 119
Sonicwall * 4,400 35
Webex Communications * 1,300 26
Websense * 5,300 143
Yahoo! * 30,000 1,289
3,436
IT Services 1.4%
Accenture, Class A * 38,900 969
Affiliated Computer Services, Class A * 25,600 1,284
BISYS Group * 12,600 188
CACl International, Class A * 9,100 453
First Data 72,168 2,732
Fiserv * 25,500 956
Global Payments 9,800 445
Indra Sistemas (EUR) 39,454 476
Iron Mountain * 18,124 667
ITOCHU (JPY) 16,000 453
Logica (GBP) 62,288 294
Maximus * 12,200 462
MPS Group * 32,900 303
Paychex 17,400 669
SunGard Data Systems * 17,000 459
Thiel Logistik (EUR) * 13,940 63
10,873
Office Electronics 0.2%
Canon (JPY) 20,000 924
Konica Minolta Holdings (JPY) 21,000 248
Neopost (EUR) 5,693 287
1,459
Semiconductor & Semiconductor Equipment 1.8%
AMIS Holdings * 4,000 74
Analog Devices 42,900 2,134
Applied Materials * 63,000 1,531
ASML Holding * 17,800 335
ATMI * 11,900 274
Cabot Microelectronics * 6,200 329
Entegris * 18,600 239
Exar * 13,200 256
Intel 59,500 1,989
Jenoptik (EUR) 26,327 284
Lattice Semiconductor * 2,100 20
Maxim Integrated Products 50,400 2,625
Microchip Technology 18,300 630
Microsemi * 1,700 41
MKS Instruments * 17,800 493
Mykrolis * 19,400 307
Rohm (JPY) 1,300 152
Semtech * 19,100 464
Sigmatel * 1,400 38
Tessera Technologies * 5,000 91
Texas Instruments 40,700 1,211
Xilinx * 20,800 782
14,299
Software 1.8%
Actuate * 8,300 26
Adobe Systems 17,700 731
Autodesk 6,400 149
Catapult Communications * 5,200 79
Concord Communications * 3,000 66
FactSet Research Systems 10,200 423
FileNet * 11,400 299
Intuit * 35,100 1,765
Jack Henry & Associates 26,700 553
Kronos * 18,750 734
Magma Design Automation * 1,100 26
Mercury Interactive * 3,200 150
Microsoft 218,900 5,626
NEC Soft (JPY) 10,000 242
NetIQ * 7,952 95
Oracle * 2,700 32
Progress Software * 10,900 228
Quest Software * 5,600 83
Red Hat * 6,300 84
RSA Security * 2,800 41
SAP (EUR) 7,350 1,130
Siebel Systems * 30,500 402
SPSS * 8,000 155
Symantec * 22,200 729
Trend Micro (JPY) * 7,500 190
Verisity Ltd. * 4,000 51
VERITAS Software * 10,850 413
Verity * 9,600 138
Wind River Systems * 11,600 75
14,715
Total Information Technology 68,588
MATERIALS 4.8%
Chemicals 2.3%
Agrium 159,000 2,593
Airgas 28,500 552
Arch Chemicals 14,800 339
BASF (EUR) 18,544 918
Degussa (EUR) 27,716 841
Dow Chemical 85,000 3,192
DuPont 52,473 2,176
Ferro 13,000 295
Great Lakes Chemical 43,740 993
Hercules * 107,400 1,078
IMC Global 28,800 210
International Flavors & Fragrances 49,200 1,598
Kaneka (JPY) 96,000 667
MacDermid 2,900 95
Material Sciences * 7,500 71
Minerals Technologies 11,500 615
Mitsubishi Gas Chemical (JPY) 71,000 212
Potash Corp./Saskatchewan 19,200 1,558
Scotts, Class A * 5,300 315
Symyx Technologies * 2,300 46
18,364
Construction Materials 0.4%
Aggregate Industries (GBP) 255,322 375
Boral (AUD) 291,004 1,053
Cemex (MXN) 126,183 639
Heidelberger Zement (EUR) 3,803 156
Italcementi (EUR) 18,961 234
RMC (GBP) 37,640 397
2,854
Containers & Packaging 0.0%
Constar International * 3,300 17
Smurfit-Stone Container * 1,900 31
Toyo Seikan Kaisha (JPY) 23,000 263
311
Metals & Mining 1.7%
Alcoa 73,716 2,419
Anglo American (GBP) 22,133 467
Bluescope Steel (AUD) 261,268 944
Gerdau ADR 67,340 1,110
Gibraltar Steel 3,500 85
Lihir Gold (AUD) 137,620 157
Meridian Gold * 14,100 208
Nippon Steel (JPY) 360,000 690
NN, Inc. 2,800 33
Nucor 27,200 1,526
Phelps Dodge * 80,000 5,094
SSAB Svenskt Stal, Series A (SEK) 32,719 540
Steel Dynamics * 3,500 70
Voest-Alpine (EUR) 8,049 318
13,661
Paper & Forest Products 0.4%
Buckeye Technologies * 21,900 224
MeadWestvaco 56,000 1,429
Paperlinx (AUD) 112,467 370
Potlatch 800 26
Weyerhaeuser 23,500 1,339
3,388
Total Materials 38,578
TELECOMMUNICATION SERVICES 2.8%
Diversified Telecommunication Services 1.1%
AT&T 19,564 388
Cable & Wireless (GBP) 206,242 471
Carso Global Telecom (MXN) * 485,800 686
Commonwealth Telephone Enterprises * 3,500 132
Royal KPN (EUR) * 118,079 927
SBC Communications 45,600 1,062
Sprint 130,100 1,950
TDC A/S (DKK) 21,378 717
Tele2 AB, Series B (SEK) * 13,595 694
Telecom Italia (EUR) * 243,990 707
Telenor (NOK) 112,345 677
Telmex ADR, Series L 18,800 622
9,033
Wireless Telecommunication Services 1.7%
America Movil ADR, Series L 25,900 664
China Unicom (HKD) 170,000 165
Debitel (EUR) 9,643 112
KDDI (JPY) 201 1,048
mm02 (GBP) * 709,210 919
Nextel Communications, Class A * 108,300 2,743
SK Telecom ADR 12,490 223
Smartone Telecommunications (HKD) 175,000 170
Spectrasite * 7,000 246
Telecom Italia Mobile (EUR) 207,858 1,070
Vodafone ADR 252,650 5,899
Western Wireless, Class A * 4,600 86
13,345
Total Telecommunication Services 22,378
UTILITIES 1.6%
Electric Utilities 1.2%
Cleco 9,500 169
E.On (EUR) 25,655 1,456
El Paso Electric * 7,800 99
Exelon 26,650 1,648
FirstEnergy 57,156 1,980
Hong Kong Electric (HKD) 71,000 285
Iberdrola (EUR) 51,271 885
MVV Energie (EUR) 4,481 82
Tohoku Electric Power (JPY) 36,000 573
Tokyo Electric Power (JPY) 17,500 363
TXU 81,800 1,811
Unisource Energy 3,000 74
9,425
Gas Utilities 0.2%
Australian Gas Light (AUD) 57,296 445
Centrica (GBP) 268,201 874
Tokyo Gas (JPY) 69,000 236
1,555
Multi-Utilities & Unregulated Power 0.2%
Constellation Energy Group 37,700 1,419
1,419
Water Utilities 0.0%
Severn Trent (GBP) 34,982 435
435
Total Utilities 12,834
Total Common Stocks (Cost $424,448) 525,753
PREFERRED STOCKS 0.1%
Fresenius (EUR) * 5,408 340
Hugo Boss (EUR) 15,009 281
Porsche (EUR) 1,065 550
Total Preferred Stocks (Cost $823) 1,171
CORPORATE BONDS 6.9%
ABN Amro Bank, 7.125%, 6/18/07 300,000 337
AIG Sunamerica Global Financing XII,
144A, 5.30%, 5/30/07 575,000 611
Allstate Financial Global Funding,
144A, 5.25%, 2/1/07 285,000 302
American Electric Power, Series C,
5.375%, 3/15/10 215,000 223
AOL Time Warner, 7.625%, 4/15/31 325,000 367
Appalachian Power, Series E,
4.80%, 6/15/05 355,000 367
Asian Developement Bank,
6.25%, 6/15/11 (AUD) 1,515,000 1,098
AT&T Wireless Group,
8.75%, 3/1/31 245,000 287
AT&T Wireless Services,
7.875%, 3/1/11 245,000 277
Atlantic Richfield,
9.125%, 3/1/11 500,000 634
AutoZone, 4.75%, 11/15/10 275,000 276
Baker Hughes, 6.875%, 1/15/29 450,000 505
Bank of America, 4.875%, 9/15/12 530,000 531
Bank One, 5.25%, 1/30/13 550,000 563
BB&T, 6.50%, 8/1/11 145,000 162
Bear Stearns, 4.00%, 1/31/08 485,000 491
BHP Finance, 4.80%, 4/15/13 285,000 284
Black Hills, 6.50%, 5/15/13 320,000 324
Boeing, 8.75%, 8/15/21 165,000 209
Bottling Group, 4.625%, 11/15/12 325,000 321
British Telecommunications, VR,
8.375%, 12/15/10 295,000 354
Buckeye Partners, 144A, 6.75%, 8/15/33 155,000 160
Canadian National Railway, 4.40%, 3/15/13 270,000 258
Canadian Natural Resources,
7.20%, 1/15/32 560,000 636
Capital One Bank, 4.25%, 12/1/08 355,000 351
CE Electric UK Funding, 144A,
6.853%, 12/30/04 375,000 384
Celulosa Arauco Y Constitucion,
5.125%, 7/9/13 330,000 320
Chevron Phillips Chemical, 5.375%, 6/15/07 270,000 284
CIT Group
2.875%, 9/29/06 185,000 183
7.75%, 4/2/12 360,000 422
Citigroup, 5.625%, 8/27/12 490,000 515
Citizens Communications, 9.00%, 8/15/31 275,000 358
Clear Channel Communications,
4.625%, 1/15/08 280,000 287
Coca-Cola Enterprises, 6.125%, 8/15/11 320,000 351
Comcast, 5.85%, 1/15/10 705,000 746
ConocoPhillips, 5.90%, 10/15/32 300,000 299
Countrywide Home Loans, 5.50%, 2/1/07 260,000 277
Cox Communications, 7.875%, 8/15/09 300,000 352
DaimlerChrysler N.A. Holdings,
6.50%, 11/15/13 615,000 634
Deutsche Telekom, 5.25%, 7/22/13 300,000 298
Devon Financing, 6.875%, 9/30/11 280,000 314
Dow Chemical, 6.125%, 2/1/11 245,000 260
DPL, 8.25%, 3/1/07 155,000 170
Duke Capital, 7.50%, 10/1/09 340,000 384
Entergy Gulf States, 5.20%, 12/3/07 325,000 331
Falconbridge Limited, 7.35%, 6/5/12 375,000 421
Federal Republic of Germany,
5.00%, 5/20/05 (EUR) 1,805,000 2,236
First Union, 6.40%, 4/1/08 150,000 166
FirstEnergy, 5.50%, 11/15/06 340,000 353
Florida Power & Light,
5.95%, 10/1/33 250,000 253
Ford Motor Credit, 6.50%, 1/25/07 820,000 860
France Telecom, VR, 9.25%, 3/1/11 145,000 173
Franklin Resources, 3.70%, 4/15/08 110,000 109
Fred Meyer, 7.45%, 3/1/08 350,000 397
Fund American Companies,
5.875%, 5/15/13 150,000 149
GE Capital
3.50%, 5/1/08 410,000 408
6.00%, 6/15/12 740,000 796
GMAC
5.85%, 1/14/09 605,000 628
8.375%, 7/15/33 425,000 462
Goldman Sachs Group
4.125%, 1/15/08 435,000 444
6.125%, 2/15/33 140,000 139
Government of Canada
3.50%, 6/1/04 (CAD) 3,500,000 2,709
5.25%, 6/1/12 (CAD) 3,420,000 2,723
HBOS, 144A, 6.00%, 11/1/33 345,000 338
Hearst-Argyle Television, 7.00%, 1/15/18 255,000 279
Hertz, 4.70%, 10/2/06 165,000 164
Highmark, 144A, 6.80%, 8/15/13 165,000 178
Household Finance
5.75%, 1/30/07 135,000 145
6.375%, 11/27/12 105,000 114
Hutchison Whampoa, 144A, 5.45%, 11/24/10 250,000 248
IBM, 4.25%, 9/15/09 390,000 396
INTELSAT, 144A, 5.25%, 11/1/08 150,000 153
Inter-American Development Bank,
5.00%, 11/15/06 (AUD) 2,400,000 1,690
International Lease Finance,
6.375%, 3/15/09 650,000 717
J.P. Morgan Chase, 5.75%, 1/2/13 370,000 388
John Deere Capital, 7.00%, 3/15/12 370,000 425
Kaneb Pipe Line Operating, 7.75%, 2/15/12 190,000 211
Kinder Morgan, 6.50%, 9/1/12 365,000 398
Lehman Brothers, 4.00%, 1/22/08 215,000 218
Liberty Media, VR, 2.64%, 12/17/03 170,000 172
Lowes, 6.50%, 3/15/29 280,000 300
Marsh & McLennan, 3.625%, 2/15/08 180,000 179
Masco, 5.875%, 7/15/12 500,000 532
McCormick, 6.40%, 2/1/06 775,000 835
MetLife, 6.125%, 12/1/11 485,000 524
Morgan Stanley, 3.625%, 4/1/08 210,000 209
Motorola, 6.75%, 2/1/06 205,000 219
Nationwide Financial Services,
5.90%, 7/1/12 635,000 667
News America, 6.55%, 3/15/33 365,000 377
NLV Financial, 144A, 7.50%, 8/15/33 160,000 163
Noram Energy, 6.50%, 2/1/08 128,000 137
Northern Trust, 4.60%, 2/1/13 215,000 210
Occidental Petroleum, 4.25%, 3/15/10 145,000 144
Office Depot, 6.25%, 8/15/13 325,000 335
Ohio Edison, 144A, 4.00%, 5/1/08 355,000 349
Panhandle Eastern Pipe Line, 144A,
4.80%, 8/15/08 155,000 158
Pemex Project Funding Master Trust,
7.375%, 12/15/14 430,000 454
PHH Corporation, 7.125%, 3/1/13 270,000 301
Pinnacle West Capital, 6.40%, 4/1/06 300,000 320
Potomac Electric Power, 3.75%, 2/15/06 285,000 288
Praxair, 2.75%, 6/15/08 345,000 331
Principal Life, 144A, 5.125%, 10/15/13 375,000 374
Principal Mutual Life, 144A, 8.00%, 3/1/44 380,000 398
Prudential, 3.75%, 5/1/08 300,000 298
PSEG Power, 8.625%, 4/15/31 220,000 282
Public Service of New Mexico,
4.40%, 9/15/08 325,000 328
Republic of Chile, 5.50%, 1/15/13 315,000 323
Rouse, REIT, 8.43%, 4/27/05 800,000 855
SCA Coordination Center, 144A,
4.50%, 7/15/15 245,000 228
Sealed Air, 144A, 5.375%, 4/15/08 315,000 328
Security Benefit, 144A, 7.45%, 10/1/33 165,000 164
Sempra Energy, 6.00%, 2/1/13 340,000 356
SLM Corporation, 4.00%, 1/15/09 435,000 433
Sprint, 6.375%, 5/1/09 710,000 752
State Street, 7.65%, 6/15/10 400,000 476
Telecom Italia, Series C, 144A,
6.375%, 11/15/33 320,000 317
Telefonos de Mexico (Telmex), 144A,
4.50%, 11/19/08 190,000 190
Transocean Sedco Forex, 7.50%, 4/15/31 230,000 262
TXU Energy, 7.00%, 3/15/13 145,000 159
U.S. Bank NA, 2.85%, 11/15/06 355,000 354
Unilever, 5.90%, 11/15/32 340,000 339
Union Pacific, 6.50%, 4/15/12 380,000 420
Union Planters, 4.375%, 12/1/10 240,000 236
United Air Lines, ETC, 9.20%, 3/22/08 * 169,007 51
United Mexican States, 6.375%, 1/16/13 390,000 401
Univision Communications, 2.875%, 10/15/06 190,000 188
UST, 6.625%, 7/15/12 470,000 517
Verizon Florida, 6.125%, 1/15/13 230,000 244
Verizon Global Funding, 7.75%, 12/1/30 320,000 368
Verizon Virginia, 4.625%, 3/15/13 210,000 201
Viacom, 5.625%, 8/15/12 220,000 232
Washington Mutual, 2.40%, 11/3/05 355,000 354
Weyerhaeuser, 6.75%, 3/15/12 370,000 399
WPD Holdings, 144A, 6.875%, 12/15/07 215,000 221
XL Capital Finance, 6.50%, 1/15/12 460,000 499
Total Corporate Bonds (Cost $52,503) 55,336
ASSET-BACKED SECURITIES 1.5%
Capital Auto Receivables Asset Trust,
Series 2002-2, Class CERT, 4.18%, 10/15/07 748,483 763
Chase Manhattan Auto Owner Trust
Series 2001-B, Class CTFS, 3.75%, 5/15/08 298,540 303
Series 2003-A, Class A4, 2.06%, 12/15/09 610,000 595
CIT RV Trust, Series 1998-A, Class A4,
6.09%, 2/15/12 898,376 912
Citibank Credit Card Issuance Trust
Series 2001-C1, Class C1, VR,
2.23%, 1/15/10 460,000 463
Series 2002-C1, Class C1, VR,
2.16%, 2/9/09 875,000 878
Series 2000-C1, Class C1,
7.45%, 9/15/07 800,000 861
Harley-Davidson Motorcycle Trust
Series 2003-2, Class 2B, 144A,
1.89%, 2/15/11 524,114 519
Series 2003-3, Class B,
2.28%, 5/15/11 592,611 592
Hyundai Auto Receivables Trust
Series 2003 A, Class A4,
3.02%, 10/15/10 360,000 357
Series 2003 A, Class D,
4.06%, 10/15/10 160,000 159
MBNA Credit Card Master Note Trust,
Series 2001-C2, Class C2, 144A, VR, 2.27%,
12/15/10 810,000 821
MBNA Master Credit Card Trust,
Series 2000-D, Class C,
144A, VR, 8.40%, 9/15/09 850,000 965
Reliant Energy Transition Bond,
Series 2001-1, Class A4,
5.63%, 9/15/15 775,000 821
TRAINS, Series 10-2002, Class 3C7, 144A,
6.961%, 1/15/12 2,014,800 2,280
World Financial Network, Series 2003-A,
Class A2, VR
1.49%, 12/17/03 800,000 800
Total Asset-Backed Securities (Cost $11,910) 12,089
NON-U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES 1.6%
Banc of America, Series 2003-1, Class A2,
CMO, 4.648%, 9/11/36 700,000 689
BankBoston Home Equity Loan Trust,
Series 1998-1, Class A6, 6.35%, 2/25/13 1,090,369 1,130
Chase Funding Mortgage Loan
Series 2003-3, Class 1M1,
4.537%, 9/25/32 300,000 282
Series 2002-1, Class 1A3,
5.039%, 12/25/23 1,100,000 1,116
Series 2002-2, Class 1M1,
5.599%, 9/25/31 150,000 154
Countrywide Asset-Backed Certificates,
Series 2003-5, Class AF-3, 3.613%, 4/25/30 620,000 621
DLJ Commercial Mortgage, Series 1999-CG2,
Class A1B, CMO, 7.30%, 6/10/32 150,000 173
GE Capital, Series 2001-1, Class A2,
CMO, 6.531%, 5/15/33 815,000 912
GMAC Commercial Mortgage, Series 2001-C2,
Class A2, CMO, 6.70%, 4/15/34 1,125,000 1,260
J.P. Morgan Chase
Series 1999-C7, Class A2, CMO,
6.507%, 10/15/35 325,000 358
Series 1999-PLS1, Class A2, CMO,
VR, 7.33%, 2/15/32 1,210,000 1,372
Series 2001-CIB2, Class A2, CMO,
6.244%, 4/15/35 750,000 821
Series 2001-CIBC, Class A3, CMO,
6.26%, 3/15/33 1,400,000 1,533
Salomon Brothers Mortgage Securities VII,
Series 2001-C1, Class A2, CMO,
6.226%, 12/18/35 1,025,000 1,116
Summit Mortgage Trust, Series 2002,
Class A2, CMO, 144A, VR, 6.259%, 12/1/03 775,000 777
Total Non-U.S. Government Mortgage-Backed
Securities (Cost $12,146) 12,314
U.S. GOVERNMENT & AGENCY MORTGAGE-BACKED SECURITIES 6.5%
U.S. Government Agency Obligations (misc. symbol1) 5.3%
Federal Home Loan Mortgage
5.00%, 12/1/08 - 11/1/33 3,791,630 3,802
6.00%, 4/1/24 - 11/1/25 37,511 39
6.50%, 10/1 - 12/1/08 36,801 38
7.00%, 10/1/08 - 6/1/32 1,024,347 1,082
9.00%, 11/1/04 760 1
ARM, 4.641%, 12/1/03 448,076 452
CMO
4.50%, 3/15/16 1,950,000 1,958
5.50%, 4/15/28 1,625,000 1,658
6.50%, 3/15/11 3,271,000 3,469
IO
4.50%, 6/15/11 - 4/15/18 2,433,322 286
TBA, 6.00%, 1/1/34 4,475,000 4,583
Federal National Mortgage Assn.
4.50%, 11/1/33 2,650,000 2,516
5.50%, 1/1/17 - 11/1/33 4,960,886 5,102
6.00%, 10/1/13 - 2/1/33 652,451 680
6.50%, 8/1/08 - 12/1/32 2,043,697 2,142
7.00%, 2/1/30 - 4/1/32 438,555 464
8.00%, 5/1/07 - 6/1/10 11,645 12
8.50%, 8/1/06 - 11/1/21 6,220 7
CMO
2.91%, 11/25/33 475,000 468
5.00%, 3/25/15 1,175,000 1,201
5.50%, 7/25/28 1,850,000 1,895
7.25%, 5/25/20 583,528 619
IO
5.50%, 11/25/28 552,923 65
6.50%, 2/1/32 399,385 71
TBA
4.50%, 1/1/18 4,575,000 4,546
5.50%, 1/1/32 775,000 780
6.00%, 1/1/33 4,065,000 4,178
42,114
U.S. Government Obligations 1.2%
Government National Mortgage Assn.
4.00%, 10/15/18 4,674,996 4,538
5.00%, 9/20/33 423,046 415
6.00%, 5/15/17 - 3/20/33 152,823 158
6.50%, 1/15/26 - 2/15/29 579,803 615
7.00%, 3/15/13 - 9/20/27 643,315 689
7.50%, 2/15/16 - 1/15/30 261,530 282
8.00%, 3/15/22 - 10/20/25 176,968 193
TBA
5.50%, 1/1/32 2,900,000 2,926
6.00%, 1/1/33 231,000 239
10,055
Total U.S. Government & Agency
Mortgage-Backed Securities (Cost $51,822) 52,169
U.S. GOVERNMENT & AGENCY OBLIGATIONS (EXCLUDING MORTGAGE-BACKED) 7.3%
U.S. Government Agency Obligations (misc. symbol1) 1.7%
Federal Home Loan Bank, 5.75%, 5/15/12 1,500,000 1,623
Federal Home Loan Mortgage, 4.625%,
2/15/07 (EUR) 5,870,000 7,267
Federal National Mortgage Assn.
3.25%, 8/15/08 330,000 325
5.125%, 1/2/14 310,000 309
6.00%, 5/15/11 1,685,000 1,853
7.125%, 1/15/30 1,270,000 1,512
Resolution Funding, 8.125%, 10/15/19 210,000 275
13,164
U.S. Treasury Obligations 5.6%
U.S. Treasury Bonds
5.375%, 2/15/31 505,000 523
6.00%, 2/15/26 115,000 126
6.125%, 11/15/27 4,000,000 4,473
6.25%, 8/15/23 - 5/15/30 2,925,000 3,336
6.375%, 8/15/27 965,000 1,111
7.50%, 11/15/16 2,160,000 2,731
U.S. Treasury Inflation-Indexed Notes,
1.875%, 7/15/13 2,505,453 2,477
U.S. Treasury Notes
2.125%, 8/31/04 4,380,000 4,409
3.25%, 5/31/04 - 8/15/08 6,895,000 6,955
3.50%, 11/15/06 9,540,000 9,807
3.875%, 2/15/13 715,000 695
4.25%, 8/15 - 11/15/13 1,515,000 1,508
4.75%, 11/15/08 1,795,000 1,911
5.00%, 8/15/11 ++ 70,000 74
5.875%, 11/15/04 425,000 443
6.50%, 8/15/05 ++ 4,025,000 4,340
44,919
Total U.S. Government & Agency Obligations
(Excluding Mortgage-Backed)
(Cost $54,957) 58,083
MUNICIPAL BONDS 0.0%
Oregon, GO, 5.892%, 6/1/27 130,000 132
Total Municipal Bonds (Cost $130) 132
DOMESTIC BOND MUTUAL FUNDS 6.7%
T. Rowe Price Institutional High Yield Fund,
8.29% p! 4,948,181 53,292
Total Domestic Bond Mutual Funds (Cost $51,896) 53,292
SHORT-TERM INVESTMENTS 5.7%
Money Market Fund 5.7%
T. Rowe Price Reserve Investment Fund,
1.12% # 45,496,934 45,497
Total Short-Term Investments (Cost $45,497) 45,497
SECURITIES LENDING COLLATERAL 9.8%
Money Market Pooled Account 1.6%
Investment in money market pooled account
managed by JPMorgan Chase Bank, London 12,461,880 12,462
12,462
Money Market Pooled Trust 8.2%
State Street Bank and Trust Company of
New Hampshire N.A. Securities Lending
Quality Trust units 65,398,821 65,399
65,399
Total Securities Lending Collateral
(Cost $77,861) 77,861
Total Investments in Securities
112.0% of Net Assets (Cost $783,993) $893,697
--------
Futures Contracts
($ 000s)
Contract Unrealized
Expiration Value Gain (Loss)
---------- -------- -----------
Short, 119 U.S. Treasury
5 year contracts, $115 par
of U.S. Treasury Notes
pledged as initial margin 12/03 $(13,287) $ (289)
Short, 65 U.S. Treasury
10 year contracts, $95 par
of U.S. Treasury Notes
pledged as initial margin 12/03 7,306 (87)
Long, 6 U.S. Treasury Bond
contracts, $10 par of
U.S. Treasury Notes
pledged as initial margin 12/03 656 27
Net payments (receipts)
of variation margin to date 442
Variation margin receivable
(payable) on open futures
contracts 93
(ss.) Denominated in USD unless otherwise noted
# Seven-day yield
* Non-income producing
(misc. symbol1) The issuer is a publicly-traded company that operates
under a congressional charter; its securities are
neither issued nor guaranteed by the U.S. government.
++ All or a portion of this security is pledged to cover
margin requirements on futures contracts at
November 30, 2003 .
! Affiliated company-See Note 2.
p SEC yield
144A Security was purchased pursuant to Rule 144A under the
Securities Act of 1933 and may be resold in
transactions exempt from registration only to qualified
institutional buyers-total of such securities at
period-end amounts to $10,971,000 and represents 1.4%
of net assets.
ADR American Depository Receipts
ADS American Depository Shares
ARM Adjustable Rate Mortgage
AUD Australian dollar
CAD Canadian dollar
CHF Swiss franc
CMO Collateralized Mortgage Obligation
DKK Danish krone
ETC Equipment Trust Certificate
EUR Euro
GBP British pound
GO General Obligation
HKD Hong Kong dollar
IO Interest Only security for which the fund receives
interest on notional principal (par)
JPY Japanese yen
MXN Mexican peso
MYR Malaysian ringgit
NOK Norwegian krone
NZD New Zealand dollar
REIT Real Estate Investment Trust
SEK Swedish krona
SGD Singapore dollar
TBA To Be Announced security was purchased on a forward
commitment basis
VR Variable Rate
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited) November 30, 2003
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $51,896) $ 53,292
Other companies (cost $ 732,097) 840,405
Total investments in securities 893,697
Other assets 17,704
Total assets 911,401
Liabilities
Obligation to return securities lending
collateral 77,861
Other liabilities 35,552
Total liabilities 113,413
NET ASSETS $ 797,988
--------------------
Net Assets Consist of:
Undistributed net investment income (loss) $ 2,434
Undistributed net realized gain (loss) (47,078)
Net unrealized gain (loss) 109,393
Paid-in-capital applicable to 50,110,958 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares of the Corporation authorized 733,239
NET ASSETS $ 797,988
--------------------
NET ASSET VALUE PER SHARE $ 15.92
--------------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
11/30/03
Investment Income (Loss)
Income
Dividend $ 6,647
Interest 3,470
Securities lending 153
Total income 10,270
Expenses
Investment management 2,005
Shareholder servicing 1,279
Custody and accounting 139
Prospectus and shareholder reports 50
Registration 42
Legal and audit 8
Directors 4
Miscellaneous 3
Reductions/repayments pursuant to expense limitation
Investment management fees (waived) repaid (286)
Total expenses 3,244
Expenses paid indirectly (3)
Net expenses 3,241
Net investment income (loss) 7,029
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (4,012)
Futures 985
Foreign currency transactions (99)
Net realized gain (loss) (3,126)
Change in net unrealized gain (loss)
Securities 62,599
Futures (306)
Other assets and liabilities
denominated in foreign currencies (15)
Change in net unrealized gain (loss) 62,278
Net realized and unrealized gain (loss) 59,152
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 66,181
--------------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
11/30/03 5/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 7,029 $ 15,400
Net realized gain (loss) (3,126) (27,906)
Change in net unrealized
gain (loss) 62,278 12,239
Increase (decrease) in net assets
from operations 66,181 (267)
Distributions to shareholders
Net investment income (7,771) (15,865)
Capital share transactions *
Shares sold 101,780 200,092
Distributions reinvested 7,740 15,791
Shares redeemed (71,744) (191,548)
Increase (decrease) in net assets from capital
share transactions 37,776 24,335
Net Assets
Increase (decrease) during period 96,186 8,203
Beginning of period 701,802 693,599
End of period $ 797,988 $ 701,802
------------------------------------
*Share information
Shares sold 6,681 14,666
Distributions reinvested 517 1,160
Shares redeemed (4,699) (14,119)
Increase (decrease) in shares outstanding 2,499 1,707
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited) November 30, 2003
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 1940 Act). The Personal Strategy
Balanced Fund (the fund), a diversified, open-end management investment company,
is one portfolio established by the corporation and commenced operations on July
29, 1994. The fund seeks the highest total return over time consistent with an
emphasis on both capital growth and income. The fund pursues this objective by
investing in a diversified portfolio typically consisting of about 60% stocks,
30% bonds, and 10% money market securities.
The accompanying financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, which
require the use of estimates made by fund management.
Valuation
The fund values its investments and computes its net asset value per share at
the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day
that the NYSE is open for business. Equity securities listed or regularly traded
on a securities exchange or in the over-the-counter market are valued at the
last quoted sale price, or official closing price for certain markets, at the
time the valuations are made. A security that 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 are valued at the mean of the latest bid and ask prices for domestic
securities and the last quoted sale price for international securities.
Debt securities are generally traded in the over-the-counter market. Securities
with original maturities of one year or more are valued at prices furnished by
dealers who make markets in such securities or by an independent pricing
service, which considers yield or price of bonds of comparable quality, coupon,
maturity, and type, as well as prices quoted by dealers who make markets in such
securities. Securities with original maturities of less than one year are valued
at amortized cost in local currency, which approximates fair value when combined
with accrued interest.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share on the day of valuation. Financial futures contracts are valued
at closing settlement prices.
Other investments and those 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 the T. Rowe Price Valuation Committee,
established by the fund's Board of Directors.
Most foreign markets close before the NYSE. Normally, developments that could
affect the values of securities that occur between the close of a foreign market
and the close of the NYSE will not be reflected in security valuations used by
the fund to compute its share price. However, if developments are so significant
that they will, in the judgment of the fund, clearly and materially affect
security values, such valuations may be adjusted to reflect the estimated fair
value of the securities as of the close of the NYSE, as determined in good faith
by the T. Rowe Price Valuation Committee, established by the fund's Board of
Directors.
Currency Translation
Assets, including investments, and liabilities denominated in foreign currencies
are translated into U.S. dollar values each day at the prevailing exchange rate,
using the mean of the bid and ask prices of such currencies against U.S. dollars
as quoted by a major bank. Purchases and sales of securities, income, and
expenses are translated into U.S. dollars at the prevailing exchange rate on the
date of the transaction. The effect of changes in foreign currency exchange
rates on realized and unrealized security gains and losses is reflected as a
component of security gains and losses.
Expenses Paid Indirectly
Certain security trades are directed to brokers who have agreed to rebate a
portion of the related commission to the fund to pay fund expenses.
Additionally, credits earned on temporarily uninvested cash balances at the
custodian are used to reduce the fund's custody charges. Total expenses in the
accompanying statement of operations are presented before reduction for rebates
and credits, which totaled $3,000 and $0, respectively, for the six months ended
November 30, 2003.
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. Premiums and discounts on municipal and debt
securities are amortized for financial reporting purposes. Dividend income and
distributions to shareholders are recorded by the fund on the ex-dividend date.
Dividends from mutual fund investments are reflected as dividend income; capital
gain distributions from mutual fund investments are reflected as realized
gain/loss. Payments ("variation margin") made or received by the fund to settle
the daily fluctuations in the value of futures contracts are recorded as
unrealized gains or
losses until the contracts are closed. Unrealized gains and losses on futures
contracts are included in Other assets and Other liabilities, respectively, and
in Change in net unrealized gain or loss in the accompanying financial
statements. In the normal course of business, the fund enters into contracts
that provide general indemnifications. The fund's maximum exposure under these
arrangements is dependent on claims that may be made against the fund in the
future and, therefore, cannot be estimated; however, based on experience, the
risk of material loss from such claims is considered remote.
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.
Forward Currency Exchange Contracts
During the six months ended November 30, 2003, the fund was a party to forward
currency exchange contracts under which it is obligated to exchange currencies
at specified future dates and exchange rates. Risks arise from the possible
inability of counterparties to meet the terms of their agreements and from
movements in currency values.
Futures Contracts
During the six months ended November 30, 2003, the fund was a party to futures
contracts, which provide for the future sale by one party and purchase by
another of a specified amount of a specific financial instrument at an agreed
upon price, date, time, and place. Risks arise from possible illiquidity of the
futures market and from movements in security values and/or interest rates.
Securities Lending
The fund lends its securities to approved brokers to earn additional income. It
receives as collateral cash and U.S. government securities valued at 102% to
105% of the value of the securities on loan. Cash collateral is invested in a
money market pooled account managed by the fund's lending agent in accordance
with investment guidelines approved by fund management. Collateral is maintained
over the life of the loan in an amount not less than the value of loaned
securities, as determined at the close of fund business each day; any additional
collateral required due to changes in security values is delivered to the fund
the next business day. Although risk is mitigated by the collateral, the fund
could experience a delay in recovering its securities and a possible loss of
income or value if the borrower fails to return the securities.
Securities lending revenue recognized by the fund consists of earnings on
invested collateral and borrowing fees, net of any rebates to the borrower and
compensation to the lending agent. At November 30, 2003, the value of loaned
securities was $80,044,000; aggregate collateral consisted of $77,861,000 in the
money market pooled account and U.S. government securities valued at $4,695,000.
Affiliated Companies
The fund may invest in certain securities that are considered affiliated
companies. As defined by the 1940 Act, an affiliated company is one in which the
fund owns 5% or more of the outstanding voting securities. At November 30, 2003,
the value of affiliated companies totaled $53,292,000, representing 6% of the
value of the fund's investments in securities. For the six months then ended,
$2,145,000 (33%) of dividend income reflected in the accompanying financial
statements resulted from the fund's transactions with affiliated companies.
Other
Purchases and sales of portfolio securities, other than short-term and U.S.
government securities, aggregated $106,944,000 and $86,479,000, respectively,
for the six months ended November 30, 2003. Purchases and sales of U.S.
government securities aggregated $212,434,000 and $194,139,000, respectively,
for the six months ended November 30, 2003.
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 under Subchapter M of the
Internal Revenue Code and distribute to shareholders all of its taxable income
and gains. Federal income tax regulations differ from generally accepted
accounting principles; therefore, distributions determined in accordance with
tax regulations may differ in amount or character from net investment income and
realized gains for financial reporting purposes. Financial reporting records are
adjusted for permanent book/tax differences to reflect tax character. Financial
records are not adjusted for temporary differences. The amount and character of
tax-basis distributions and composition of net assets are finalized at fiscal
year-end; accordingly, tax-basis balances have not been determined as of
November 30, 2003.
For tax purposes, the fund has elected to treat net capital losses realized
between November 1 and May 31 of each year as occurring on the first day of the
following tax year; consequently, $16,472,000 of realized losses recognized for
financial reporting purposes in the year ended May 31, 2003 were recognized for
tax purposes on June 1, 2003. Further, the fund intends to retain realized gains
to the extent of available capital loss carryforwards. As of May 31, 2003, the
fund had $25,792,000 of unused capital loss carryforwards, of which $2,633,000
expire in 2010, and $23,159,000 expire in 2011.
At November 30, 2003, the cost of investments for federal income tax purposes
was $783,993,000. Net unrealized gain aggregated $109,393,000 at period-end, of
which $123,328,000 related to appreciated investments and $13,935,000 related to
depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides for an
annual investment management fee, which is computed daily and paid monthly. The
fee consists of an individual fund fee, equal to 0.25% of the fund's average
daily net assets, and the fund's pro-rata share of a group fee. The group fee is
calculated based on the combined net assets of certain mutual funds sponsored by
Price Associates (the group) applied to a graduated fee schedule, with rates
ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in
excess of $120 billion. The fund's portion of the group fee is determined by the
ratio of its average daily net assets to those of the group. At November 30,
2003, the effective annual group fee rate was 0.32%, and investment management
fee payable totaled $306,000.
The fund is also subject to a contractual expense limitation through September
30, 2004. During the limitation period, the manager is required to waive its
management fee and reimburse the fund for any expenses, excluding interest,
taxes, brokerage commissions, and extraordinary expenses, that would otherwise
cause the fund's ratio of total expenses to average net assets (expense ratio)
to exceed its expense limitation of 0.90%. Through September 30, 2006, the fund
is required to repay the manager for expenses previously reimbursed and
management fees waived to the extent its net assets have grown or expenses have
declined sufficiently to allow repayment without causing the fund's expense
ratio to exceed its expense limitation. At November 30, 2003, management fees
waived remain subject to repayment by the fund in the amount of $855,000 through
September 30, 2006.
In addition, the fund has entered into service agreements with Price
Associates and two wholly owned subsidiaries of Price Associates
(collectively, Price). Price Associates computes the daily share price and
maintains the financial records of the fund. T. Rowe Price Services, Inc.,
provides shareholder and administrative services in its capacity as the fund's
transfer and dividend disbursing agent. T. Rowe Price Retirement Plan
Services, Inc., provides subaccounting and recordkeeping services for certain
retirement accounts invested in the fund. Expenses incurred pursuant to these
service agreements totaled $1,091,000 for the six months ended November 30,
2003, of which $199,000 was payable at period-end.
The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe
Price Government Reserve Investment Fund (collectively, the Reserve Funds),
open-end management investment companies managed by Price Associates. The
Reserve Funds are offered as cash management options only to mutual funds,
trusts, and other accounts managed by Price Associates and/or its affiliates,
and are not available to the public. The Reserve Funds pay no investment
management fees. During the six months ended November 30, 2003, dividend income
from the Reserve Funds totaled $282,000.
The fund may invest in the T. Rowe Price Institutional High Yield Fund, Inc.
(High Yield Fund), an open-end management investment company managed by Price
Associates, as a means of gaining efficient and cost-effective exposure to the
high-yield bond markets. The High Yield Fund pays an annual all-inclusive
management and administrative fee to Price Associates equal to 0.50% of average
daily net assets. Because the Personal Strategy Balanced Fund indirectly bears
its proportionate share of this fee, Price Associates has agreed to permanently
reduce the investment management fee charged to the fund by the amount of
expense incurred by the High Yield Fund as a result of the fund's investment
therein. Pursuant to this agreement, the fund's management fee was reduced by
$127,000 during the six months ended November 30, 2003. At November 30, 2003,
the fund held approximately 7.9% of the High Yield Fund's outstanding shares
and, during the six months then ended, recorded dividend income from the High
Yield Fund in the amount of $2,145,000.
T. Rowe Price Personal Strategy Balanced Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report
Information on Proxy Voting
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price Personal
Strategy Balanced Fund uses to determine how to vote proxies relating to
portfolio securities is available, without charge, upon request by calling
1-800-225-5132. It also appears in the fund's Statement of Additional
Information (Form 485B), which can be found on the SEC's Web site, www.sec.gov.
Item 2. Code of Ethics.
The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR,
applicable to its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. A copy of this code of ethics will be filed as a required exhibit to
the registrant's annual Form N-CSR. No substantive amendments were approved or
waivers were granted to this code of ethics during the registrant's most recent
fiscal half-year.
Item 3. Audit Committee Financial Expert.
Not effective until registrant's next annual Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Not effective until registrant's next annual Form N-CSR.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR will be
filed with the registrant's annual Form N-CSR.
(a)(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price Personal Strategy Funds, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date January 16, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date January 16, 2004
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date January 16, 2004