N-CSRS 1 psi.txt T. ROWE PRICE PERSONAL STRATEGY INCOME FUND 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 -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- 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 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 -------------------------------------------------------------------------------- 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