Item 1. Report to Shareholders
T. Rowe Price Personal Strategy Income 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 Income Fund
- --------------------------------------------------------------------------------
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 $ 12.83 $ 12.87 $ 13.14 $ 13.00 $ 13.35 $ 13.13
Investment activities
Net investment
income (loss) 0.15* 0.35* 0.43* 0.52* 0.54* 0.51*
Net realized
and unrealized
gain (loss) 0.69 (0.02) (0.26) 0.31 0.02 0.31
Total from
investment
activities 0.84 0.33 0.17 0.83 0.56 0.82
Distributions
Net investment
income (0.16) (0.37) (0.44) (0.53) (0.54) (0.50)
Net realized
gain -- -- -- (0.16) (0.37) (0.10)
Total
distributions (0.16) (0.37) (0.44) (0.69) (0.91) (0.60)
NET ASSET VALUE
End of
period $ 13.51 $ 12.83 $ 12.87 $ 13.14 $ 13.00 $ 13.35
-----------------------------------------------------------------
Ratios/Supplemental Data
Total return^ 6.61%* 2.80%* 1.40%* 6.54%* 4.39%* 6.43%*
Ratio of total
expenses to
average
net assets 0.75%*! 0.80%* 0.90%* 0.90%* 0.90%* 0.90%*
Ratio of net
investment
income (loss)
to average
net assets 2.26%*! 2.89%* 3.34%* 4.04%* 4.06%* 3.91%*
Portfolio
turnover
rate 109.6%! 108.5% 115.9% 79.8% 45.4% 48.9%
Net assets,
end of period
(in thousands) $331,877 $293,775 $270,372 $246,144 $198,885 $208,208
^ 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.
* See Note 4. Excludes expenses in excess of a 0.80% contractual expense
limitation in effect through 9/30/04 and expenses in excess of a 0.90%
contractual expense limitation in effect through 5/31/02, and expenses
permanently waived (0.05% 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 Income Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited) November 30, 2003
Statement of Net Assets Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Common Stocks 45.9%
CONSUMER DISCRETIONARY 6.8%
Auto Components 0.2%
Autoliv (SEK) 6,600 $ 221
Denso (JPY) 6,900 129
Keystone Automotive * 2,400 58
Koito Manufacturing (JPY) 12,000 72
Strattec Security * 500 30
510
Automobiles 0.7%
Ford Motor 64,500 851
Fuji Heavy Industries (JPY) 20,000 95
Harley-Davidson 10,400 490
Honda (JPY) 3,000 123
Peugeot (EUR) 2,591 122
Toyota Motor (JPY) 17,600 529
Volkswagen (EUR) 4,184 208
Winnebago 300 17
2,435
Distributors 0.0%
Cycle & Carriage (SGD) 8,753 31
31
Hotels, Restaurants & Leisure 0.9%
Applebee's 1,450 56
Carnival 11,300 398
CEC Entertainment * 1,300 65
Chicago Pizza & Brewery * 800 11
Hilton Group (GBP) 33,706 123
International Game Technology 14,900 517
McDonald's 7,800 200
MGM Mirage * 2,700 101
Mitchells & Butler (GBP) * 28,852 116
Red Robin Gourmet Burgers * 800 22
Ruby Tuesday 4,500 131
Sonic * 3,025 93
Starbucks * 6,800 218
Starwood Hotels & Resorts Worldwide 13,700 $ 472
The Cheesecake Factory 2,900 126
Whitbread (GBP) 13,696 170
2,819
Household Durables 0.6%
Harman International 800 109
Jarden Corporation * 900 24
Newell Rubbermaid 24,300 556
Persimmon (GBP) 9,894 79
Pioneer (JPY) 7,900 202
SEB (EUR) 424 52
Sony (JPY) 4,800 167
Thomson (EUR) 14,298 303
Tupperware 25,700 396
1,888
Internet & Catalog Retail 0.1%
Alloy Online * 2,900 16
e-Bay * 4,600 257
273
Leisure Equipment & Products 0.3%
Brunswick 4,200 126
Eastman Kodak 22,200 541
MarineMax * 1,000 19
Polaris Industries 800 69
SCP Pool * 5,612 201
956
Media 2.4%
Aegis (GBP) 51,972 89
Astro All Asia Networks, 144A (MYR) 33,500 39
British Sky Broadcast (GBP) * 13,199 153
Clear Channel Communications 17,100 715
Comcast, Class A * 9,511 298
Comcast, Class A, Special * 19,200 579
Disney 42,900 991
EchoStar Communications, Class A * 13,900 479
Emmis Communications * 2,000 45
Entercom Communications * 800 37
Fuji Television Network (JPY) 19 94
Getty Images * 600 $ 26
Liberty Media, Class A * 38,364 424
New York Times, Class A 19,000 872
News Corporation (AUD) 11,726 100
News Corporation ADR 2,600 89
Omnicom 3,800 303
Publicis (EUR) 4,043 128
Reader's Digest, Class A 18,900 270
Scholastic * 4,100 136
Scripps, Class A 3,600 331
Sinclair Broadcast Group, Class A * 1,100 13
Singapore Press (SGD) 6,000 68
Time Warner * 25,800 420
Univision Communications, Class A * 12,600 455
Viacom, Class B 21,028 827
Young Broadcasting, Class A * 1,500 30
8,011
Multiline Retail 0.5%
Debenhams (GBP) 7,848 63
Marui (JPY) 9,000 111
Neiman Marcus, Class A * 2,400 129
Nordstrom 18,000 621
Target 17,300 670
1,594
Specialty Retail 1.0%
AnnTaylor Stores * 4,400 175
Best Buy 6,950 431
Charles Vogele (CHF) * 1,309 80
Christopher & Banks 2,925 79
Dixons (GBP) 45,199 106
Esprit Holdings (HKD) 22,000 70
Home Depot 38,500 1,415
Kesa Electricals (GBP) 3,952 17
Linens 'n Things * 2,100 62
The Finish Line, Class A 1,000 30
TJX 800 18
Too * 1,800 33
Toys "R" Us * 74,500 875
Ultimate Electronics * 1,000 $ 8
Valora (CHF) 328 78
3,477
Textiles, Apparel, & Luxury Goods 0.1%
Adidas-Salomon (EUR) 912 94
Culp * 800 9
Dan River, Class A * 700 1
Sanyo Shokai (JPY) 10,000 65
Stride Rite 4,300 50
Unifi * 3,400 17
Yue Yuen Industrial (HKD) 55,000 153
389
Total Consumer Discretionary 22,383
CONSUMER STAPLES 3.7%
Beverages 0.6%
Allied Domecq (GBP) 22,920 162
Anheuser-Busch 3,600 187
Coca-Cola 12,400 577
Davide Campari (EUR) 1,840 81
Kirin Brewery (JPY) 20,000 160
Lion Nathan (NZD) 34,000 142
Orkla, Series A (NOK) 3,159 70
PepsiCo 9,920 477
Remy Cointreau (EUR) 2,832 94
1,950
Food & Staples Retailing 1.2%
Carrefour (EUR) 1,984 107
Casey's General Stores 8,900 155
Casino Guichard-Perrachon (EUR) 1,411 132
Coles Myer (AUD) 19,309 104
CVS 37,200 1,394
Great Atlantic & Pacific Tea Company * 4,600 35
J Sainsbury (GBP) 55,466 287
METRO (EUR) 4,246 182
Performance Food Group * 2,900 114
Sysco 7,900 287
Wal-Mart 13,200 $ 734
Wal-Mart de Mexico (MXN) 87,300 252
Walgreen 2,500 92
Wild Oats Markets * 3,400 39
3,914
Food Products 0.9%
American Italian Pasta, Class A * 900 34
Associated British Foods (GBP) 14,327 140
Campbell Soup 22,900 587
CSM (EUR) 4,187 91
General Mills 17,520 789
International Multifoods * 500 9
Nestle (CHF) 1,241 289
Parmalat Finanz (EUR) 83,884 230
Seneca Foods, Class A * 300 6
Seneca Foods, Class B * 200 4
Unilever (GBP) 39,239 341
Unilever ADS 9,100 547
Yamazaki Baking (JPY) 6,000 46
3,113
Household Products 0.3%
Colgate-Palmolive 6,000 315
Kao (JPY) 5,000 102
Kimberly-Clark 7,700 418
Procter & Gamble 1,500 144
979
Personal Products 0.1%
Chattem * 1,000 16
Estee Lauder, Class A 3,200 122
Fancl (JPY) 1,200 31
Gillette 3,300 111
L'Oreal (EUR) 1,107 82
362
Tobacco 0.6%
Altria Group 29,150 1,516
UST 13,300 478
1,994
Total Consumer Staples 12,312
ENERGY 2.8%
Energy Equipment & Services 0.8%
Atwood Oceanics * 2,000 $ 51
Baker Hughes 30,400 877
BJ Services * 6,400 204
Cooper Cameron * 500 22
FMC Technologies * 5,900 126
Grant Prideco * 9,100 106
Hydril * 1,400 34
Key Energy Services * 2,100 19
Lone Star Technologies * 1,400 19
National Oilwell * 7,100 137
Schlumberger 10,700 502
Seacor Smit * 3,100 118
Smedvig, Series A (NOK) 2,340 16
Smith International * 8,500 319
W-H Energy Services * 2,000 30
2,580
Oil & Gas 2.0%
BP (GBP) 25,338 177
BP ADR 27,202 1,161
ChevronTexaco 7,149 537
Cia Espanola de Petroleos (EUR) 8,830 297
ENI (EUR) 15,750 269
ENI ADR 200 17
Exxon Mobil 22,430 811
Forest Oil * 3,450 86
Marathon Oil 25,700 761
Noble Energy 2,900 115
Norsk Hydro (NOK) 2,016 116
OMV (EUR) 100 14
Petrobras ADR 8,100 182
Shell Transport & Trading (GBP) 49,100 311
Shell Transport & Trading ADR 10,900 421
Statoil ASA (NOK) 24,655 246
Tom Brown 2,600 73
Tonen General Sekiyu (JPY) 6,000 49
Total, Series B (EUR) 3,138 $ 508
Ultra Petroleum * 2,000 38
Unocal 17,400 553
Woodside Petroleum (AUD) 9,485 94
6,836
Total Energy 9,416
FINANCIALS 10.2%
Capital Markets 1.9%
Bank of New York 8,100 249
Charles Schwab 21,500 249
Credit Suisse Group (CHF) 7,314 243
Deutsche Bank (EUR) 3,063 214
Franklin Resources 6,100 292
Goldman Sachs Group 4,800 461
Investor's Financial Services 2,600 96
Legg Mason 3,300 263
Macquarie Bank (AUD) 8,052 198
Mellon Financial 49,400 1,423
Merrill Lynch 12,300 698
Morgan Stanley 10,500 580
National Financial Partners * 1,200 30
Nomura Holdings (JPY) 9,000 143
Northern Trust 8,300 372
State Street 15,200 775
6,286
Commercial Banks 3.4%
77 Bank (JPY) 16,000 85
ABN Amro Holdings (EUR) 4,919 108
Alliance & Leicester (GBP) 19,393 295
Anglo Irish Bank, (Dublin Listing) (EUR) 22,429 304
Australia & New Zealand Banking (AUD) 32,114 391
Australia & New Zealand Banking ADR 1,000 61
Banca Intesa (EUR) 45,986 173
Banco BPI (EUR) 21,497 68
Banco Santander ADR 13,084 310
Banco Santander Central Hispano (EUR) 25,513 265
Bank of America 18,400 $ 1,388
Bank of Yokohama (JPY) 40,000 170
Bank One 14,900 646
Barclays (GBP) 71,579 632
BNL (EUR) * 54,073 127
BNP Paribas (EUR) 6,746 380
Boston Private Financial 1,900 49
Chittenden 6,000 205
Citizens Banking 4,600 145
DBS (SGD) 11,978 97
Dexia (EUR) 6,092 98
Glacier Bancorp 1,461 46
Grupo Financiero Banorte (MXN) 53,900 177
HBOS (GBP) 22,018 277
HSBC (GBP) 20,607 313
Jyske (DKK) * 2,382 113
National Australia Bank (AUD) 20,456 428
NORDEA (SEK) 54,391 360
Provident Bankshares 3,600 105
Royal Bank of Scotland (GBP) 16,337 457
SEB, Series A (SEK) 15,371 201
Southwest Bancorp 2,900 111
Sumitomo Mitsui Financial (JPY) 37 181
Svenska Handelsbanken, Series A (SEK) 13,039 241
U.S. Bancorp 40,800 1,131
UniCredito Italiano (EUR) 37,373 188
Valley National Bancorp 4,757 141
Wells Fargo 9,400 539
WestAmerica 3,500 185
11,191
Consumer Finance 0.5%
AIFUL (JPY) 1,850 111
American Express 26,500 1,211
MBNA 1,900 47
SLM Corporation 11,400 423
1,792
Diversified Financial Services 0.7%
Citigroup 45,690 2,149
ING Groep (EUR) 8,784 $ 188
2,337
Insurance 2.2%
Allianz (EUR) 1,735 195
Ambac 800 55
American International Group 23,917 1,386
Aviva (GBP) 18,112 144
AXA Asia Pacific (AUD) 76,310 144
Brown and Brown 2,700 85
CNP Assurances (EUR) 4,469 207
Hannover Reckversicherungs (EUR) 2,133 69
Harleysville Group 1,600 31
Hartford Financial Services Group 8,700 478
Horace Mann Educators 7,600 103
Markel * 400 103
Marsh & McLennan 12,300 547
Mitsui Sumitomo Insurance (JPY) 30,000 224
Ohio Casualty * 7,600 129
PartnerRe 2,700 150
PICC Property & Casualty, 144A (HKD) * 8,000 3
Prudential (GBP) 17,075 131
QBE Insurance (AUD) 27,501 203
RAS (EUR) 11,513 185
SAFECO 22,700 850
Selective Insurance 2,800 91
St. Paul Companies 10,500 390
Travelers Property Casualty, Class A 23,136 361
Triad Guaranty * 1,000 47
UnumProvident 23,100 345
W. R. Berkley 3,125 107
XL Capital, Class A 6,800 511
7,274
Real Estate 1.0%
Arden Realty, REIT 2,500 73
Corio (EUR) 2,740 98
EastGroup Properties, REIT 2,900 90
Essex Property Trust, REIT 200 13
Federal Realty Investment Trust, REIT 15,000 590
Gables Residential Trust, REIT 2,700 $ 87
General Property Trust (AUD) 95,355 201
Glenborough Realty Trust, REIT 3,300 65
Goldcrest (JPY) 1,200 49
LaSalle Hotel Properties, REIT 1,700 31
Manufactured Home Communities, REIT 1,000 39
Mitsui Fudosan (JPY) 9,000 78
Parkway Properties, REIT 2,200 95
Reckson Associates Realty, REIT 17,971 431
Simon Property Group, REIT 14,468 686
Stockland (AUD) 16,113 60
Sun Hung Kai Properties (HKD) 22,000 177
Washington, REIT 3,400 104
Wereldhave (EUR) 1,314 93
Westfield Trust (AUD) 60,544 150
3,210
Thrifts & Mortgage Finance 0.5%
Bradford & Bingley (GBP) 36,483 192
Fannie Mae 18,800 1,316
Frankfort First 300 6
Freddie Mac 2,300 125
1,639
Total Financials 33,729
HEALTH CARE 4.8%
Biotechnology 0.6%
Abgenix * 100 1
Alexion Pharmaceutical * 400 7
Alkermes * 3,000 39
Amgen * 11,600 667
Amylin Pharmaceuticals * 1,600 42
Celltech (GBP) * 13,641 83
Cephalon * 1,281 60
CSL (AUD) 2,632 31
Cubist Pharmaceuticals * 1,500 19
CV Therapeutics * 200 4
deCODE GENETICS * 200 2
Exelixis * 2,500 $ 17
Genentech * 1,800 152
Gilead Sciences * 7,200 422
Incyte * 600 4
MedImmune * 3,100 74
Myriad Genetics * 1,800 21
Neurocrine Biosciences * 1,600 84
NPS Pharmaceuticals * 1,000 30
ONYX Pharmaceuticals * 200 6
OSI Pharmaceuticals * 400 12
Regeneron Pharmaceuticals * 400 5
Trimeris * 1,000 23
Tularik * 1,100 16
Vertex Pharmaceuticals * 3,396 30
ViroPharma * 400 1
1,852
Health Care Equipment & Supplies 0.5%
Analogic 1,200 50
Baxter International 19,000 529
Boston Scientific * 8,000 287
DJ Orthopedics * 800 21
Edwards Lifesciences * 2,100 63
Elekta (SEK) * 4,278 80
EPIX Medical * 700 13
Matthews International, Class A 4,800 137
Medtronic 7,000 316
Nektar Therapeutics * 1,000 13
Olympus Optical (JPY) 1,000 21
Steris * 3,500 81
Stryker 1,800 146
Thoratec * 400 6
Wilson Greatbatch Technologies * 1,900 80
1,843
Health Care Providers & Services 1.1%
Alliance UniChem (GBP) 15,295 132
AmerisourceBergen 500 32
Anthem * 1,000 72
Cardinal Health 2,350 144
Celesio (EUR) 2,818 $ 128
Cross Country Healthcare * 700 11
Henry Schein * 2,800 188
Hooper Holmes 6,800 42
Lifeline Systems * 1,100 39
LifePoint Hospitals * 300 9
Medco * 4,921 179
Mid Atlantic Medical Services * 2,400 147
Renal Care Group * 1,050 42
Sunrise Senior Living * 600 21
Suzuken (JPY) 1,600 43
UnitedHealth Group 30,500 1,644
WellChoice * 1,500 51
WellPoint Health Networks * 7,100 664
3,588
Pharmaceuticals 2.6%
Abbott Laboratories 10,800 477
AstraZeneca (GBP) 1,866 85
AstraZeneca ADR 6,900 317
Atherogenics * 600 9
Aventis (EUR) 2,761 159
Eisai (JPY) 3,000 76
Eli Lilly 5,100 350
Eon Labs * 800 42
Forest Laboratories * 7,400 404
Galen Holdings (GBP) 11,512 145
GlaxoSmithKline (GBP) 14,244 322
GlaxoSmithKline ADR 900 41
Hisamitsu Pharmaceutical (JPY) 6,000 69
Johnson & Johnson 13,800 680
Medicines Company * 1,100 30
Merck 14,500 589
Novartis (CHF) 10,991 465
Noven Pharmaceuticals * 3,500 48
Novo Nordisk (DKK) 1,371 53
Pfizer 57,416 1,926
Sanofi-Synthelabo (EUR) 5,037 341
Schering-Plough 45,000 722
Schwarz Pharma AG (EUR) 7,508 $ 157
Takeda Chemical Industries (JPY) 4,000 153
Teva Pharmaceutical ADR 500 30
Wyeth 26,160 1,031
8,721
Total Health Care 16,004
INDUSTRIALS & BUSINESS SERVICES 5.2%
Aerospace & Defense 0.2%
Armor Holdings * 5,700 138
European Aeronautic Defense & Space (EUR) 7,158 156
General Dynamics 1,800 146
Lockheed Martin 2,300 106
Mercury Computer Systems * 2,100 50
596
Air Freight & Logistics 0.2%
EGL * 400 8
Expeditors International of Washington 1,000 39
Forward Air * 2,400 68
Pacer International * 2,900 61
Ryder System 2,600 81
UPS, Class B 4,400 320
UTi Worldwide 2,600 87
664
Airlines 0.0%
Frontier Airlines * 2,500 40
Midwest Express Holdings * 2,100 9
49
Building Products 0.1%
Central Glass (JPY) 10,000 60
Pilkington (GBP) 82,571 127
Trex * 300 11
198
Commercial Services & Supplies 1.5%
Apollo Group, Class A * 8,900 614
Buhrmann (EUR) 5,238 40
Cendant * 12,400 275
Central Parking 5,300 $ 74
ChoicePoint * 3,400 130
CompX International 1,400 9
Consolidated Graphics * 2,900 87
Davis Service Group (GBP) 25,621 158
Education Management * 300 20
Electro Rent * 2,000 28
First Advantage, Class A * 500 10
G&K Services, Class A 2,300 83
H&R Block 9,000 489
Herman Miller 4,500 117
Ionics * 3,600 116
KForce.com * 2,200 18
Layne Christensen * 500 5
LECG * 400 9
New England Business Service 3,200 96
R.R. Donnelley 33,100 929
Resources Connection * 3,800 104
SOURCECORP * 2,100 51
Spherion * 1,300 12
Tetra Tech * 5,676 145
United Stationers * 1,500 60
Waste Management 43,706 1,285
Waterlink * 2,600 0
West Corporation * 1,000 24
4,988
Construction & Engineering 0.1%
Acciona (EUR) 2,992 169
Balfour Beatty (GBP) 10,158 38
Eiffage (EUR) 545 59
Insituform Technologies, Class A * 2,700 41
JGC (JPY) 10,000 79
386
Electrical Equipment 0.2%
A.O. Smith 5,750 202
American Superconductor * 800 9
Artesyn Technologies * 4,100 32
Belden 6,400 126
Draka (EUR) * 1,889 $ 34
LSI Industries 2,312 29
PECO II * 1,100 1
Sumitomo Electric Industries (JPY) 11,000 90
Woodward Governor 400 20
543
Industrial Conglomerates 1.3%
3M 8,700 688
DCC (EUR) 8,270 109
General Electric 30,700 880
Hutchison Whampoa (HKD) 45,300 331
Sembcorp (SGD) 242,000 180
Siemens (EUR) 4,760 347
Tyco International 85,094 1,953
4,488
Machinery 1.0%
Actuant, Class A * 3,060 95
Cuno * 500 21
Danaher 11,100 923
Deere 13,800 845
Fanuc (JPY) 3,100 182
Graco 2,400 93
Harsco 4,100 163
IDEX 500 20
Illinois Tool Works 500 39
Joy Global * 1,100 23
Lindsay Manufacturing 2,800 68
Mitsubishi Heavy Industries (JPY) 51,000 136
Pall 15,500 397
Reliance Steel & Aluminum 700 21
Saurer (CHF) * 895 40
Singulus Technology (EUR) * 2,956 63
SKF, Series B (SEK) 3,465 127
3,256
Marine 0.0%
International Shipholding * 900 12
12
Road & Rail 0.5%
Arriva (GBP) 22,655 $ 150
Burlington Northern Santa Fe 15,200 452
Heartland Express 906 22
Knight Transportation * 4,000 97
Nippon Express (JPY) 20,000 87
Norfolk Southern 32,300 692
Overnite * 500 11
1,511
Trading Companies & Distributors 0.1%
Mitsubishi (JPY) 18,000 165
Sumitomo (JPY) 18,000 112
277
Transportation Infrastructure 0.0%
Kamigumi (JPY) 17,000 110
Macquarie Infrastructure Group (AUD) 21,743 51
161
Total Industrials & Business Services 17,129
INFORMATION TECHNOLOGY 5.9%
Communications Equipment 1.4%
Black Box 2,600 114
Cisco Systems * 53,500 1,212
Corning * 132,200 1,515
Emulex * 1,200 35
Lucent Technologies * 234,200 749
Nokia (EUR) 5,610 101
Nokia ADR 24,400 439
Packeteer * 1,700 32
QLogic * 3,200 182
QUALCOMM 2,600 116
Riverstone Networks * 7,200 8
Sagem (EUR) 1,187 133
Stratos International * 169 1
Tekelec * 1,300 22
4,659
Computer & Peripherals 0.4%
Creative Technology (SGD) 4,050 $ 43
Dell * 21,000 724
EMC * 800 11
IBM 800 72
Lexmark International * 3,300 255
Mitsumi Electric (JPY) 6,100 59
NEC Electronics, 144A (JPY) * 900 63
Synaptics * 1,900 26
1,253
Electronic Equipment & Instruments 0.3%
Hosiden (JPY) 6,000 70
KEMET * 6,800 90
Kyocera (JPY) 1,000 61
Littelfuse * 3,800 113
Methode Electronics, Class A 4,300 55
Newport * 2,400 41
Paxar * 6,500 85
Plexus * 6,700 119
Shimadzu (JPY) 31,000 118
TDK (JPY) 1,900 124
Technitrol * 2,200 52
Woodhead Industries 3,100 53
981
Internet Software & Services 0.3%
InterActiveCorp * 13,200 434
Internet Security Systems * 3,100 52
MatrixOne * 5,800 34
Netegrity * 2,500 31
Sonicwall * 100 1
Webex Communications * 300 6
Websense * 1,400 38
Yahoo! * 8,000 344
940
IT Services 0.9%
Accenture, Class A * 11,200 279
Affiliated Computer Services, Class A * 7,400 371
BISYS Group 3,700 55
CACI International, Class A * 2,700 $ 134
First Data 20,836 789
Fiserv * 8,200 308
Global Payments 2,700 123
Indra Sistemas (EUR) 11,556 139
Iron Mountain * 5,300 195
ITOCHU (JPY) 4,700 133
Logica (GBP) 18,921 90
Maximus * 3,600 136
MPS Group * 9,400 87
Paychex 5,100 196
SunGard Data Systems * 4,600 124
Thiel Logistik (EUR) * 3,592 16
3,175
Office Electronics 0.1%
Canon (JPY) 5,000 231
Konica Minolta Holdings (JPY) 5,000 59
Neopost (EUR) 1,529 77
367
Semiconductor & Semiconductor Equipment 1.2%
AMIS Holdings * 1,200 22
Analog Devices 11,900 592
Applied Materials * 17,900 435
ASML Holding * 5,500 103
ATMI * 3,700 85
Cabot Microelectronics * 1,800 96
Entegris * 5,500 71
Exar * 4,000 77
Intel 16,600 555
Jenoptik (EUR) 7,208 78
Lattice Semiconductor * 600 6
Maxim Integrated Products 14,100 734
Microchip Technology 5,400 186
Microsemi * 500 12
MKS Instruments * 4,900 136
Mykrolis * 5,600 89
Rohm (JPY) 500 58
Semtech * 5,500 134
Sigmatel * 400 $ 11
Tessera Technologies * 1,300 24
Texas Instruments 11,800 351
Xilinx * 6,000 225
4,080
Software 1.3%
Actuate * 2,200 7
Adobe Systems 4,500 186
Autodesk 1,800 42
Catapult Communications * 1,500 23
Concord Communications * 900 20
FactSet Research Systems 2,900 120
FileNet * 3,400 89
Intuit * 10,100 508
Jack Henry & Associates 7,800 162
Kronos * 5,700 223
Magma Design Automation * 300 7
Mercury Interactive * 800 37
Microsoft 62,000 1,593
NEC Soft (JPY) 2,900 70
NetIQ * 2,260 27
Oracle * 800 10
Progress Software * 3,100 65
Quest Software * 1,700 25
Red Hat * 1,800 24
RSA Security * 800 12
SAP (EUR) 1,954 300
Siebel Systems * 8,900 117
SPSS * 2,000 39
Symantec * 6,400 210
Trend Micro (JPY) * 2,500 63
Verisity Ltd. * 1,300 17
VERITAS Software * 3,125 119
Verity * 2,800 40
Wind River Systems * 4,600 30
4,185
Total Information Technology 19,640
MATERIALS 3.4%
Chemicals 1.6%
Agrium 46,700 $ 762
Airgas 8,100 157
Arch Chemicals 4,400 101
BASF (EUR) 5,239 259
Degussa (EUR) 7,588 230
Dow Chemical 24,900 935
DuPont 15,102 626
Ferro 3,800 86
Great Lakes Chemical 12,840 292
Hercules * 32,700 328
IMC Global 8,100 59
International Flavors & Fragrances 14,600 474
Kaneka (JPY) 27,000 188
MacDermid 700 23
Material Sciences * 2,900 28
Minerals Technologies 3,200 171
Mitsubishi Gas Chemical (JPY) 21,000 63
Potash Corp./Saskatchewan 5,500 446
Scotts, Class A * 1,700 101
Symyx Technologies * 700 14
5,343
Construction Materials 0.3%
Aggregate Industries (GBP) 89,194 131
Boral (AUD) 83,138 301
Cemex (MXN) 37,171 188
Heidelberger Zement (EUR) 984 40
Italcementi (EUR) 5,067 63
RMC (GBP) 9,667 102
825
Containers & Packaging 0.0%
Constar International * 900 4
Smurfit-Stone Container * 900 15
Toyo Seikan Kaisha (JPY) 7,000 80
99
Metals & Mining 1.2%
Alcoa 21,820 $ 716
Anglo American (GBP) 6,151 130
Bluescope Steel (AUD) 79,381 287
Gerdau ADR 20,410 337
Gibraltar Steel 900 22
Lihir Gold (AUD) 39,140 45
Meridian Gold * 4,100 60
Nippon Steel (JPY) 106,000 203
NN, Inc. 700 8
Nucor 7,900 443
Phelps Dodge * 23,400 1,490
SSAB Svenskt Stal, Series A (SEK) 8,850 146
Steel Dynamics * 900 18
Voest-Alpine (EUR) 2,361 93
3,998
Paper & Forest Products 0.3%
Buckeye Technologies * 4,400 45
MeadWestvaco 17,100 437
Paperlinx (AUD) 34,095 112
Potlatch 100 3
Weyerhaeuser 6,900 393
990
Total Materials 11,255
TELECOMMUNICATION SERVICES 2.0%
Diversified Telecommunication Services 0.8%
AT&T 6,035 120
Cable & Wireless (GBP) 62,352 142
Carso Global Telecom (MXN) * 136,800 193
Commonwealth Telephone Enterprises * 1,000 38
Royal KPN (EUR) * 35,382 278
SBC Communications 13,700 319
Sprint 38,300 574
TDC A/S (DKK) 6,173 207
Tele2 AB, Series B (SEK) * 3,549 181
Telecom Italia (EUR) * 69,178 201
Telenor (NOK) 32,842 $ 198
Telmex ADR, Series L 5,600 185
2,636
Wireless Telecommunication Services 1.2%
America Movil ADR, Series L 8,300 213
China Unicom (HKD) 52,000 51
Debitel (EUR) 2,497 29
KDDI (JPY) 56 292
mm02 (GBP) * 208,314 270
Nextel Communications, Class A * 31,500 798
SK Telecom ADR 4,410 79
Smartone Telecommunications (HKD) 53,000 51
Spectrasite * 2,000 70
Telecom Italia Mobile (EUR) 58,482 301
Vodafone ADR 71,450 1,668
Western Wireless, Class A * 1,300 24
3,846
Total Telecommunication Services 6,482
UTILITIES 1.1%
Electric Utilities 0.8%
Cleco 2,900 52
E.On (EUR) 7,800 443
El Paso Electric * 2,300 29
Exelon 7,787 481
FirstEnergy 16,719 579
Hong Kong Electric (HKD) 20,000 80
Iberdrola (EUR) 14,697 254
MVV Energie (EUR) 1,122 21
Tohoku Electric Power (JPY) 10,900 173
Tokyo Electric Power (JPY) 5,100 106
TXU 24,200 536
Unisource Energy 900 22
2,776
Gas Utilities 0.2%
Australian Gas Light (AUD) 18,107 140
Centrica (GBP) 80,653 263
Tokyo Gas (JPY) 18,000 $ 62
465
Multi-Utilities & Unregulated Power 0.1%
Constellation Energy Group 11,400 429
429
Water Utilities 0.0%
Severn Trent (GBP) 9,151 114
114
Total Utilities 3,784
Total Common Stocks (Cost $125,502) 152,134
Preferred Stocks 0.1%
Fresenius (EUR) * 1,590 100
Hugo Boss (EUR) 4,557 85
Porsche (EUR) 323 167
Total Preferred Stocks (Cost $248) 352
Corporate Bonds 9.9%
Abbott Laboratories, 5.625%, 7/1/06 500,000 535
ABN Amro Bank, 7.125%, 6/18/07 165,000 185
AIG Sunamerica Global Financing XII,
144A, 5.30%, 5/30/07 300,000 319
Allstate Financial Global Funding,
144A, 5.25%, 2/1/07 165,000 175
American Electric Power, Series C,
5.375%, 3/15/10 125,000 130
AOL Time Warner, 7.625%, 4/15/31 180,000 203
Appalachian Power, Series E, 4.80%, 6/15/05 200,000 207
Asian Developement Bank, 6.25%, 6/15/11 (AUD) 810,000 587
AT&T Wireless Group, 8.75%, 3/1/31 145,000 170
AT&T Wireless Services, 7.875%, 3/1/11 140,000 158
AutoZone, 4.75%, 11/15/10 160,000 161
Baker Hughes, 6.875%, 1/15/29 250,000 281
Bank of America, 4.875%, 9/15/12 300,000 300
Bank One, 5.25%, 1/30/13 285,000 292
BB&T, 6.50%, 8/1/11 80,000 89
Bear Stearns, 4.00%, 1/31/08 280,000 283
BHP Finance, 4.80%, 4/15/13 170,000 169
Black Hills, 6.50%, 5/15/13 190,000 193
Boeing, 8.75%, 8/15/21 95,000 $ 120
Bottling Group, 4.625%, 11/15/12 180,000 178
British Telecommunications, VR,
8.375%, 12/15/10 170,000 204
Buckeye Partners, 144A, 6.75%, 8/15/33 90,000 93
Canadian National Railway, 4.40%, 3/15/13 155,000 148
Canadian Natural Resources, 7.20%, 1/15/32 275,000 312
Capital One Bank, 4.25%, 12/1/08 200,000 198
CE Electric UK Funding, 144A,
6.853%, 12/30/04 400,000 409
Celulosa Arauco Y Constitucion,
5.125%, 7/9/13 190,000 184
Chevron Phillips Chemical, 5.375%, 6/15/07 150,000 158
CIT Group
2.875%, 9/29/06 105,000 104
7.75%, 4/2/12 175,000 205
Citigroup, 5.625%, 8/27/12 285,000 299
Citizens Communications, 9.00%, 8/15/31 155,000 202
Clear Channel Communications,
4.625%, 1/15/08 155,000 159
Coca-Cola Enterprises, 6.125%, 8/15/11 180,000 198
Comcast, 5.85%, 1/15/10 400,000 423
ConocoPhillips, 5.90%, 10/15/32 170,000 170
Countrywide Home Loans, 5.50%, 2/1/07 145,000 154
Cox Communications, 7.875%, 8/15/09 195,000 229
DaimlerChrysler N.A. Holdings,
6.50%, 11/15/13 345,000 356
Delta Air Lines, ETC, 10.00%, 5/17/10 146,000 115
Deutsche Telekom, 5.25%, 7/22/13 170,000 169
Devon Financing, 6.875%, 9/30/11 155,000 174
Dow Chemical, 6.125%, 2/1/11 140,000 149
DPL, 8.25%, 3/1/07 90,000 99
Duke Capital, 7.50%, 10/1/09 190,000 214
Entergy Gulf States, 5.20%, 12/3/07 180,000 183
Falconbridge Limited, 7.35%, 6/5/12 210,000 236
Federal Republic of Germany,
5.00%, 5/20/05 (EUR) 2,390,000 2,961
First Union, 6.40%, 4/1/08 85,000 94
FirstEnergy, 5.50%, 11/15/06 195,000 203
Florida Power & Light, 5.95%, 10/1/33 150,000 152
Ford Motor Credit, 6.50%, 1/25/07 480,000 504
France Telecom, VR, STEP, 9.25%, 3/1/11 80,000 95
Franklin Resources, 3.70%, 4/15/08 65,000 65
Fred Meyer, 7.45%, 3/1/08 200,000 $ 227
Fund American Companies, 5.875%, 5/15/13 90,000 89
GE Capital
3.50%, 5/1/08 235,000 234
6.00%, 6/15/12 410,000 441
GMAC
5.85%, 1/14/09 330,000 343
8.375%, 7/15/33 245,000 266
Goldman Sachs Group
4.125%, 1/15/08 245,000 250
6.125%, 2/15/33 80,000 80
Government of Canada
3.50%, 6/1/04 (CAD) 1,895,000 1,467
5.25%, 6/1/12 (CAD) 1,855,000 1,477
HBOS, 144A, 6.00%, 11/1/33 195,000 191
Hearst-Argyle Television, 7.00%, 1/15/18 145,000 158
Hertz, 4.70%, 10/2/06 95,000 95
Highmark, 144A, 6.80%, 8/15/13 95,000 103
Household Finance
5.75%, 1/30/07 75,000 80
6.375%, 11/27/12 60,000 65
Hutchison Whampoa, 144A, 5.45%, 11/24/10 145,000 144
IBM, 4.25%, 9/15/09 215,000 218
INTELSAT, 144A, 5.25%, 11/1/08 85,000 87
Inter-American Development Bank,
5.00%, 11/15/06 (AUD) 1,300,000 916
International Lease Finance,
6.375%, 3/15/09 300,000 331
J.P. Morgan Chase, 5.75%, 1/2/13 205,000 215
John Deere Capital, 7.00%, 3/15/12 205,000 235
Kaneb Pipe Line Operating, 7.75%, 2/15/12 115,000 128
Kinder Morgan, 6.50%, 9/1/12 200,000 218
Lehman Brothers, 4.00%, 1/22/08 110,000 111
Liberty Media, VR, 2.64%, 12/17/03 95,000 96
Lowes, 6.50%, 3/15/29 155,000 166
Marsh & McLennan, 3.625%, 2/15/08 100,000 100
Masco, 5.875%, 7/15/12 265,000 282
McCormick, 6.40%, 2/1/06 325,000 350
MetLife, 6.125%, 12/1/11 240,000 259
Morgan Stanley, 3.625%, 4/1/08 125,000 $ 124
Motorola, 6.75%, 2/1/06 120,000 128
Nationwide Financial Services, 5.90%, 7/1/12 330,000 347
News America, 6.55%, 3/15/33 215,000 222
NLV Financial, 144A, 7.50%, 8/15/33 90,000 91
Noram Energy, 6.50%, 2/1/08 65,000 70
Northern Trust, 4.60%, 2/1/13 120,000 118
Occidental Petroleum, 4.25%, 3/15/10 80,000 80
Office Depot, 6.25%, 8/15/13 185,000 191
Ohio Edison, 144A, 4.00%, 5/1/08 200,000 196
Panhandle Eastern Pipe Line,
144A, 4.80%, 8/15/08 90,000 91
Pemex Project Funding Master Trust,
7.375%, 12/15/14 240,000 254
PHH Corporation, 7.125%, 3/1/13 155,000 173
Pinnacle West Capital, 6.40%, 4/1/06 170,000 182
Potomac Electric Power, 3.75%, 2/15/06 160,000 162
Praxair, 2.75%, 6/15/08 200,000 192
Principal Life, 144A, 5.125%, 10/15/13 210,000 209
Principal Mutual Life, 144A, 8.00%, 3/1/44 215,000 225
Prudential, 3.75%, 5/1/08 170,000 169
PSEG Power, 8.625%, 4/15/31 125,000 160
Public Service of New Mexico,
4.40%, 9/15/08 190,000 192
Republic of Chile, 5.50%, 1/15/13 175,000 180
Rouse, REIT, 8.43%, 4/27/05 400,000 427
SCA Coordination Center, 144A,
4.50%, 7/15/15 140,000 130
Sealed Air, 144A, 5.375%, 4/15/08 180,000 187
Security Benefit, 144A, 7.45%, 10/1/33 95,000 95
Sempra Energy, 6.00%, 2/1/13 190,000 199
SLM Corporation, 4.00%, 1/15/09 250,000 249
Sprint, 6.375%, 5/1/09 400,000 423
State Street, 7.65%, 6/15/10 190,000 226
Telecom Italia, Series C, 144A,
6.375%, 11/15/33 180,000 178
Telefonos De Mexico (Telmex), 144A,
4.50%, 11/19/08 110,000 110
Transocean Sedco Forex, 7.50%, 4/15/31 130,000 148
TXU Energy, 7.00%, 3/15/13 85,000 93
U.S. Bank NA, 2.85%, 11/15/06 200,000 199
Unilever, 5.90%, 11/15/32 190,000 189
Union Pacific, 6.50%, 4/15/12 210,000 232
Union Planters, 4.375%, 12/1/10 135,000 $ 133
United Mexican States, 6.375%, 1/16/13 215,000 221
Univision Communications, 2.875%, 10/15/06 110,000 109
UST, 6.625%, 7/15/12 260,000 286
Verizon Florida, 6.125%, 1/15/13 125,000 133
Verizon Global Funding, 7.75%, 12/1/30 175,000 201
Verizon Virginia, 4.625%, 3/15/13 120,000 115
Viacom, 5.625%, 8/15/12 120,000 127
Washington Mutual, 2.40%, 11/3/05 200,000 199
Weyerhaeuser, 6.75%, 3/15/12 210,000 226
WPD Holdings, 144A, 6.875%, 12/15/07 120,000 123
XL Capital Finance, 6.50%, 1/15/12 255,000 277
Total Corporate Bonds (Cost $30,867) 32,766
ASSET-BACKED SECURITIES 1.8%
Capital Auto Receivables Asset Trust, Series 2002-2
Class CERT, 4.18%, 10/15/07 388,635 396
Chase Manhattan Auto Owner Trust
Series 2001-B, Class CTFS, 3.75%, 5/15/08 142,576 145
Series 2003-A, Class A4, 2.06%, 12/15/09 350,000 341
CIT RV Trust, Series 1998-A, Class A4,
6.09%, 2/15/12 348,039 353
Citibank Credit Card Issuance Trust
Series 2001-C1, Class C1, VR, 2.23%, 1/15/10 260,000 261
Series 2002-C1, Class C1, VR, 2.16%, 2/9/09 550,000 552
Series 2000-C1, Class C1, 7.45%, 9/15/07 400,000 431
Harley-Davidson Motorcycle Trust
Series 2003-2, Class 2B, 144A, 1.89%, 2/15/11 272,539 270
Series 2003-3, Class B, 2.28%, 5/15/11 319,098 319
Hyundai Auto Receivables Trust
Series 2003 A, Class A4, 3.02%, 10/15/10 200,000 199
Series 2003 A, Class D, 4.06%, 10/15/10 90,000 89
MBNA Credit Card Master Trust
Series 2001-2, Class C, 144A, VR, 2.27% 475,000 482
MBNA Master Credit Card Trust II
Series 2000-D, Class C, 144A, 8.40%, 9/15/09 450,000 511
Reliant Energy Transition Bond
Series 2001-1, Class A4, 5.63%, 9/15/15 375,000 $ 397
TRAINS, Series 10-2002, Class 3C7
Principal Only, 144A, 6.961%, 1/15/12 700,800 793
World Financial Network
Series 2003-A, Class A2, VR, 1.49%, 12/15/03 475,000 475
Total Asset-Backed Securities (Cost $5,934) 6,014
NON-U.S. Government Mortgage-
Backed Securities 2.1%
Banc of America, Series 2003-1
Class A2, CMO, 4.648%, 9/11/36 400,000 394
BankBoston Home Equity Loan Trust, Series 1998-1
Class A6, 6.35%, 2/25/13 529,150 548
Chase Funding Mortgage Loan
Series 2003-3, Class 1M1, 4.537%, 9/25/32 175,000 165
Series 2002-1, Class 1A3, 5.039%, 12/25/23 575,000 583
Series 2002-2, Class 1M1, 5.599%, 9/25/31 80,000 82
Countrywide Asset-Backed Certificates,
Series 2003-5
Class AF-3, 3.613%, 4/25/30 350,000 351
DLJ Commercial Mortgage, Series 1999-CG2
Class A1B, CMO, 7.30%, 6/10/32 350,000 403
GE Capital, Series 2001-1, Class A2,
CMO, 6.531%, 5/15/33 460,000 515
GMAC Commercial Mortgage, Series 2001-C2
Class A2, CMO, 6.70%, 4/15/34 375,000 420
J.P. Morgan Chase
Series 1999-C7, Class A2
CMO, 6.507%, 10/15/35 175,000 193
Series 1999-PLS1, Class A2
CMO, VR, 7.33%, 2/15/32 720,000 816
Series 2001-CIB2, Class A2
CMO, 6.244%, 4/15/35 350,000 383
Series 2001-CIBC, Class A3
CMO, 6.26%, 3/15/33 775,000 849
Morgan Stanley, Series 2002, Class A2,
CMO, 5.98%, 1/15/39 350,000 379
Salomon Brothers Mortgage Securities VII,
Series 2001-C1
Class A2, CMO, 6.226%, 12/18/35 475,000 517
Summit Mortgage Trust, Series 2002, Class A2
CMO, 144A, VR, 6.259%, 12/1/03 400,000 $ 401
Total Non-U.S. Government Mortgage-Backed
Securities (Cost $6,911) 6,999
U.S. Government & Agency
Mortgage-Backed Securities 8.8%
U.S. Government Agency Obligations 7.1% (misc. symbol1)
Federal Home Loan Mortgage
5.00%, 12/1/08 - 11/1/33 4,824,426 4,848
6.00%, 12/1/17 734,050 767
7.00%, 11/1/30 - 6/1/32 543,964 574
ARM, 4.641%, 12/1/03 252,437 255
CMO
4.50%, 3/15/16 1,125,000 1,130
5.50%, 4/15/28 950,000 969
CMO, IO
4.50%, 6/15/11 - 4/15/18 1,411,836 166
TBA, 6.00%, 1/1/34 4,075,000 4,173
Federal National Mortgage Assn.
4.50%, 11/1/33 510,000 484
5.50%, 12/1/16 - 11/1/33 3,473,495 3,562
6.00%, 10/1/13 - 2/1/33 279,680 292
6.50%, 12/1/10 - 12/1/32 976,181 1,025
7.00%, 1/1/31 - 7/1/32 314,144 332
CMO
2.91%, 11/25/33 275,000 271
5.00%, 3/25/15 675,000 690
5.50%, 7/25/28 975,000 998
CMO, IO
5.50%, 11/25/28 312,521 37
6.50%, 2/1/32 191,782 34
TBA
4.50%, 1/1/18 900,000 894
5.50%, 1/1/32 86,000 87
6.00%, 1/1/33 1,770,000 1,819
23,407
U.S. Government Obligations 1.7%
Government National Mortgage Assn.
4.00%, 9/15 - 10/15/18 949,999 $ 922
5.00%, 9/20/33 970,517 953
6.00%, 5/15/26 70,095 73
6.50%, 2/15/28 - 9/20/32 1,080,809 1,140
7.00%, 3/15/13 - 7/20/27 485,919 519
7.50%, 9/15/22 - 6/15/32 152,700 164
8.00%, 1/15/22 - 10/20/25 85,204 93
8.50%, 9/15/24 15,708 17
10.50%, 2/15/13 860 1
TBA
5.50%, 1/1/32 1,400,000 1,413
6.00%, 1/1/33 475,000 490
5,785
Total U.S. Government & Agency
Mortgage-Backed Securities
(Cost $29,107) 29,192
U.S. Government & Agency
Obligations (Excluding
Mortgage-Backed) 10.1%
U.S. Government Agency Obligations 2.1% (misc. symbol1)
Federal Home Loan Bank, 5.75%, 5/15/12 875,000 947
Federal Home Loan Mortgage, 4.625%,
2/15/07 (EUR) 2,850,000 3,528
Federal National Mortgage Assn.
3.25%, 8/15/08 940,000 925
5.125%, 1/2/14 175,000 175
5.75%, 2/15/08 210,000 229
6.00%, 5/15/11 945,000 1,039
7.125%, 1/15/30 65,000 77
6,920
U.S. Treasury Obligations 8.0%
U.S. Treasury Bonds
5.375%, 2/15/31 30,000 31
6.00%, 2/15/26 60,000 66
6.25%, 8/15/23 - 5/15/30 2,265,000 2,583
6.375%, 8/15/27 2,575,000 2,966
7.50%, 11/15/16 630,000 796
U.S. Treasury Inflation-Indexed Notes,
1.875%, 7/15/13 1,431,826 1,416
U.S. Treasury Notes
3.25%, 12/31/03 - 8/15/08 6,850,000 $ 6,922
3.50%, 11/15/06 3,635,000 3,737
3.875%, 2/15/13 85,000 83
4.25%, 8/15 - 11/15/13 270,000 268
4.75%, 11/15/08 530,000 564
5.875%, 11/15/04 ++ 2,410,000 2,512
6.50%, 8/15/05 4,190,000 4,518
26,462
Total U.S. Government & Agency Obligations
(Excluding Mortgaged-Backed) (Cost $31,888) 33,382
Municipal Bonds 0.0%
Oregon, GO, 5.892%, 6/1/27 75,000 76
Total Municipal Bonds (Cost $75) 76
Domestic Bond Mutual Funds 9.2%
T. Rowe Price Institutional
High Yield Fund, 8.29% p 2,853,675 30,734
Total Domestic Bond Mutual
Funds (Cost $29,928) 30,734
Short-Term Investments 14.7%
Money Market Fund 14.7%
T. Rowe Price Reserve
Investment Fund, 1.12% # 48,714,374 48,714
Total Short-Term Investments
(Cost $48,714) 48,714
Securities Lending Collateral 10.3%
Money Market Pooled Account 0.8%
Investment in money market pooled
account managed by
JP Morgan Chase Bank, London 2,585,091 2,585
Money Market Trust 9.5%
State Street Bank and Trust Company of
New Hampshire N.A.
Securities Lending Quality Trust units 31,730,371 31,731
Total Securities Lending Collateral
(Cost $34,316) 34,316
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
112.9% of Net Assets (Cost $343,490) $ 374,679
Futures Contracts
Contract Unrealized
Expiration Value Gain (Loss)
---------- --------- -----------
In thousands
Long, 5 U.S. Treasury
Bond Futures contracts,
$8,000 par of U.S.
Treasury Notes
pledged as initial
margin 12/03 $ 546 $ 22
Short, 37 U.S.
Treasury 5 year
contracts, $50,500
par of U.S. Treasury
Notes pledged as
initial margin 12/03 (4,159) (93)
Short, 18 U.S. Treasury
10 year contracts,
$16,500 par of U.S.
Treasury Notes
pledged as
initial margin 12/03 (2,010) (43)
Net payments (receipts)
of variation margin to
date 142
Variation margin receivable (payable)
on open futures contracts 28
Other Assets Less Liabilities
Including $34,316 obligation to return
securities lending collateral (42,830)
NET ASSETS $ 331,877
---------------
Value
- --------------------------------------------------------------------------------
In thousands
Net Assets Consist of:
Undistributed net investment income (loss) $ 1,168
Undistributed net realized gain (loss) (11,694)
Net unrealized gain (loss) 31,093
Paid-in-capital applicable
to 24,564,059 shares of
$0.0001 par value capital
stock outstanding;
1,000,000,000 shares
of the Corporation
authorized 311,310
NET ASSETS $ 331,877
---------------
NET ASSET VALUE PER SHARE $ 13.51
---------------
ss. Denominated in USD unless otherwise noted
# Seven-day yield
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.
* Non-income producing
++ All or a portion of this security is pledged to cover margin
requirements on futures contracts at November 30, 2003
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 $5,718,000 and represents 1.7% of net assets
p SEC yield
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
STEP Stepped coupon bond for which the coupon rate of interest will adjust
on specified future date(s)
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 Income Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
11/30/03
Investment Income (Loss)
Income
Dividend $ 2,759
Interest 1,913
Securities lending 54
Total income 4,726
Expenses
Investment management 660
Shareholder servicing 503
Custody and accounting 119
Registration 43
Prospectus and shareholder reports 32
Legal and audit 7
Directors 3
Miscellaneous 3
Reductions/repayments pursuant to expense limitation
Investment management fees (waived) repaid (192)
Total expenses 1,178
Expenses paid indirectly (1)
Net expenses 1,177
Net investment income (loss) 3,549
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (1,110)
Futures 360
Foreign currency transactions (41)
Net realized gain (loss) (791)
Change in net unrealized gain (loss)
Securities 17,492
Futures (108)
Other assets and liabilities
denominated in foreign currencies (5)
Change in net unrealized gain (loss) 17,379
Net realized and unrealized gain (loss) 16,588
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 20,137
--------------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Personal Strategy Income Fund
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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) $ 3,549 $ 7,580
Net realized gain (loss) (791) (6,268)
Change in net unrealized gain (loss) 17,379 7,202
Increase (decrease) in net
assets from operations 20,137 8,514
Distributions to shareholders
Net investment income (3,777) (7,979)
Capital share transactions *
Shares sold 52,858 83,050
Distributions reinvested 3,730 7,874
Shares redeemed (34,846) (68,056)
Increase (decrease) in net assets
from capital share transactions 21,742 22,868
Net Assets
Increase (decrease) during period 38,102 23,403
Beginning of period 293,775 270,372
End of period $ 331,877 $ 293,775
-------------------------------------
*Share information
Shares sold 4,041 6,888
Distributions reinvested 288 656
Shares redeemed (2,659) (5,663)
Increase (decrease) in shares outstanding 1,670 1,881
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Personal Strategy Income Fund
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Certified Semiannual Report (Unaudited) November 30, 2003
Notes to Financial Statements
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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
Income 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 a
primary emphasis on income and a secondary emphasis on capital growth. The fund
pursues this objective by investing in a diversified portfolio typically
consisting of about 40% stocks, 40% bonds, and 20% 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 $1,000 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 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.
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.
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
money market pooled accounts managed by the fund's lending agents 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 $36,844,000; aggregate collateral consisted of $34,316,000 in the
money market pooled accounts and U.S. government securities valued at
$3,757,000.
Other
Purchases and sales of portfolio securities, other than short-term and U.S.
government securities, aggregated $41,251,000 and $32,018,000, respectively, for
the six months ended November 30, 2003. Purchases and sales of U.S. government
securities aggregated $126,775,000 and $119,037,000, 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, $2,703,000 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 $7,646,000 of unused capital loss carryforwards, of which $1,463,000
expire in 2009, $3,127,000 expire in 2010, and $3,056,000 expire in 2011.
At November 30, 2003, the cost of investments for federal income tax purposes
was $343,490,000. Net unrealized gain aggregated $31,093,000 at period-end, of
which $35,625,000 related to appreciated investments and $4,532,000 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 0.15% 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 $75,000.
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 0.80%. 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 following amounts:
$225,000 through May 31, 2004, and $681,000 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 $455,000 for the six months ended November 30,
2003, of which $85,000 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 $287,000.
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 Income 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
$73,000 during the six months ended November 30, 2003. At November 30, 2003,
the fund held approximately 4.5% 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 $1,231,000.
T. Rowe Price Personal Strategy Income Fund
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Certified Semiannual Report
Information on Proxy Voting
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price Personal
Strategy Income 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 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