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Previous: PRICE T ROWE EQUITY SERIES INC, N-30D, 2000-08-18 |
Next: PRICE T ROWE EQUITY SERIES INC, N-30D, 2000-08-18 |
Semiannual Report
June 30, 2000
Personal Strategy Balanced Portfolio
Invest With Confidence(registered trademark)
T. Rowe Price
This report is authorized for distribution only to those who have received a
copy of the portfolio's prospectus.
T. Rowe Price Investment Services, Inc.,
Distributor
Dear Investor
The Federal Reserve Board set the tone for stocks and bonds over the past
year. Concerned that a red-hot U.S. economy could spark accelerating
inflation, the Fed raised rates six times, driving bond prices lower and
yields higher. Stocks soared through much of the period, propelled by
investors' enthusiasm for technology, especially Internet-related companies.
Tech stocks corrected in March and April, however, as rising rates and
concerns about excessive valuations prompted investors to move from the
so-called New Economy stocks to companies with stronger fundamentals and real
earnings. Your portfolio's asset allocation strategy and broad diversification
helped it post a respectable return during this volatile period.
PERFORMANCE AND STRATEGY REVIEW
Performance Comparison
--------------------------------------------------------------------------------
Periods Ended 6/30/00 6 Months 12 Months
---------------------------------------------------------------------------
Personal Strategy
Balanced Portfolio 2.46% 5.52%
Combined Index Portfolio* 1.34 6.51
Merrill Lynch-Wilshire Capital
Market Index 0.36 8.08
* An unmanaged portfolio composed of 60% stocks (S&P 500), 30% bonds
(Lehman Brothers Aggregate Bond Index), and 10% money market
securities (90-day Treasury bills).
The objective of this fund is to provide the highest total return
consistent with an emphasis on both income and capital appreciation. The
typical asset mix is 60% stocks, 30% bonds, and 10% cash-with
10-percentage-point variations permitted for each asset class.
The portfolio topped its benchmarks for the six months ended June 30, but
trailed both the Combined Index Portfolio and the Merrill Lynch-Wilshire
Capital Market Index for the one-year period. Our small-cap allocation,
which is a blend of both growth and value, provided the major source of
returns for the fund over the past six months. We also benefited from our
allocation to large-cap growth stocks, although we remain under our neutral
weight in this sector. Our international holdings added to returns for the
year, although the weak euro held foreign stock returns somewhat in check
during the last six months. The euro rallied late in May, however, and a
larger-than-expected interest rate hike by the European Central Bank in
early June should further bolster the currency.
The fund's investment committee meets once a month to adjust the weightings
of stocks, bonds, and money market securities within the appropriate ranges
for the fund, based on market conditions and economic fundamentals. The
committee reduced the overall allocation to stocks by three percentage
points during the past six months and raised the bond exposure by the same
margin.
To protect against rising interest rates, we shortened the duration of the
bond portfolio by shifting a portion of our long-term bonds into
investment-grade bonds, such as corporate and mortgage-backed securities.
(Duration is a measure of a bond or bond fund's sensitivity to interest
rates. For example, a fund with a duration of five years would fall or rise
about 5% in price in response to a one-percentage-point rise or fall in
rates.) At the end of June, we remained overweighted in investment-grade
bonds, and also slightly overweighted in high-yield bonds (below investment
grade), which offered attractive yields and valuations. Our overweighting
in bonds, especially the investment-grade exposure, helped moderate
portfolio volatility during the period.
Asset Allocation
---------------------------------------------------------------------------
6/30/00
Stocks Bonds Money Markets
59 36 5
Last fall we shifted away from domestic stocks into international stocks
because we believed that foreign markets offered more attractive
valuations, and we continue to overweight international equities. Among
domestic stocks, our heavier allocation to small-caps contributed
significantly to fund results over the past year. During the past six
months, our large-cap growth holdings performed significantly better than
our large-cap value shares.
The fund benefited from strong returns by several of its top equity
holdings. American Home Products and Baker Hughes each returned close to
50% since the beginning of the year, while Corning returned in excess of
100%. American Home Products went from close to $40 per share at year-end
to almost $59 per share at the end of June. Earnings for AHP were bolstered
by sales of antidepressant Effexor and arthritis treatment Enbrel as well
as revenues from several recently launched medicines. The company also sold
its poorly performing agricultural unit earlier this year. Oil services and
products firm Baker Hughes rallied from $21 per share at the end of
December to over $30 at the end of June. The company is benefiting from a
resurgence in spending by oil and gas companies and a restructuring that
should improve its financial performance. Another top holding, Corning, has
seen strong demand for its optical fiber and cable businesses, as well as
its liquid crystal display (LCD) flat-panel glass, lead to increased
earnings expectations.
MARKET REVIEW
The Federal Reserve has raised short-term interest rates three times so far
in 2000-including a half-percentage-point hike in May-continuing the
tightening policy it began in June 1999. Although inflation itself remains
subdued, the Fed is concerned about the economy's above-trend growth rate
and low unemployment. By raising short-term rates, the Fed hopes to contain
these inflationary pressures by lowering the growth rate to a sustainable
level. The Fed may raise rates again, but the economy began to show signs
of slowing as the period ended.
Interest Rate Levels
---------------------------------------------------------------------------
30-Year 5-Year 90-Day
Treasury Bond Treasury Note Treasury Bill
6/30/99 6.03 5.76 4.77
6.05 5.75 4.71
5.93 5.71 4.97
9/99 6.09 5.81 4.88
6.30 6.09 5.13
6.22 6.03 5.28
12/99 6.46 6.33 5.33
6.57 6.63 5.59
6.13 6.59 5.81
3/00 5.94 6.42 5.88
5.95 6.42 5.78
6.14 6.65 5.92
6/30/00 5.94 6.25 5.84
The past few months have been marked by increased volatility in the equity
markets. Investors appeared to ignore the Fed's actions for much of the
past year, driving stocks to strong gains before stumbling in mid-March.
So-called New Economy stocks, especially those of Internet-related
companies, were the primary beneficiaries of investor enthusiasm, while Old
Economy blue chips languished. Because of their high valuations,
technology-related stocks took the biggest fall when the markets dropped.
After the March correction, investors appeared to become more focused on
company fundamentals, as the long-ignored large-cap value stocks rebounded.
June saw small-cap and technology stocks return to favor, as large-cap
value stocks gave back some of their gains.
Fixed-income investors had more to think about than short-term rate hikes.
Because of the growing federal surplus, the Treasury Department announced
plans to reduce government borrowing by cutting back on the sale of new
Treasuries and buying back some outstanding debt. Investors rushed to buy
long-term Treasuries, which drove prices higher and yields lower. The
result was an inverted yield curve, as short-term Treasury yields rose
above those on long-term Treasuries. Normally, long-term bonds offer higher
yields than shorter-term bonds to compensate for their higher risk. Holders
of long-term bonds, including your fund, benefited from the higher prices.
More recently we were encouraged as the corporate fixed-income markets
began to show signs of improving liquidity. This has helped tighten yield
spreads on lower-rated investment-grade corporate and high-yield bonds from
historically extreme levels in April and early May.
OUTLOOK
We anticipate stable inflation and moderating economic growth in the U.S.
and expect the global economic recovery to remain on track despite slower
U.S. growth. The combination of sound fiscal policy, reflected in the
current budget surplus, and effective monetary policy suggest a more
limited degree of upward pressure on interest rates. In our view, the most
likely outcome is for perhaps another quarter-point increase in short-term
rates by the end of August.
Increasing volatility in world equity markets and the rapid shifts in
market leadership-among sectors of the equity market and between stocks and
bonds-reinforce the importance of our broadly diversified approach.
Respectfully submitted,
Edmund M. Notzon III
Chairman of the Investment Advisory Committee
July 21, 2000
Portfolio Highlights
Portfolio Overview
--------------------------------------------------------------------------------
Percent of
Net Assets
6/30/00
--------------------------------------------------------------------------------
Reserves 5.3%
Money Market Funds 5.1
Other Assets Less Liabilities 0.2
Bonds 36.3%
Mortgage-Backed 15.8
Corporate 12.5
U.S. Government Agencies 8.0
Foreign Government Agencies --
Stocks 58.4%
10 Largest Holdings 7.3%
BP Amoco 1.2
American Home Products 1.1
Pfizer 0.9
Corning 0.7
Exxon Mobil 0.7
Disney 0.6
Eastman Kodak 0.6
Baker Hughes 0.5
USX-Marathon 0.5
R.R. Donnelley 0.5
Performance Comparison
--------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
Personal Strategy Balanced Portfolio
--------------------------------------------------------------------------------
As of 6/30/00
Personal Merrill
Strategy Combined Lynch-Wilshire
Balanced Index Capital
Portfolio Portfolio Market Index
12/30/94 10,000 10,000 10,000
6/95 11,587 11,573 11,561
6/96 13,399 13,573 13,494
6/97 16,103 16,738 16,337
6/98 19,056 20,358 20,012
6/99 20,874 23,488 22,883
6/00 22,026 25,018 24,732
Average Annual Compound Total Return
--------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Personal Strategy Balanced Portfolio
Periods Ended 6/30/00
Since Inception
1 Year 3 Years 5 Years Inception Date
--------------------------------------------------------------------------------
5.52% 11.00% 13.71% 15.45% 12/30/94
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Total returns do not include charges imposed by your insurance company's
separate account. If these were included, performance would have been lower.
Financial Highlights
T. Rowe Price Personal Strategy Balanced Portfolio
Unaudited
For a share outstanding throughout each period
-----------------------------------------------------------
6 Months Year 12/30/94
Ended Ended Through
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 16.00 $ 16.16 $ 15.13 $13.44$ 12.43 $ 10.00
Investment activities
Net investment
income (loss) 0.24 0.49 0.47 0.46 0.41 0.42
Net realized
and unrealized
gain (loss) 0.15 0.80 1.65 1.93 1.32 2.41
Total from
investment
activities 0.39 1.29 2.12 2.39 1.73 2.83
Distributions
Net investment income (0.23) (0.49) (0.48) (0.46) (0.41) (0.40)
Net realized gain (0.12) (0.96) (0.61) (0.24) (0.31) --
Total distributions (0.35) (1.45) (1.09) (0.70) (0.72) (0.40)
NET ASSET VALUE
End of period $ 16.04 $ 16.00 $ 16.16 $ 15.13 $ 13.44 $ 12.43
----------------------------------------------------------
Ratios/Supplemental Data
Total
return(diamond) 2.46% 8.41% 14.32% 18.04% 14.21% 28.66%
Ratio of total
expenses to
average net assets 0.90%! 0.90% 0.90% 0.90% 0.90% 0.90%
Ratio of net
investment income
loss) to average
net assets 3.12%! 3.03% 3.04% 3.37% 3.33% 3.69%
Portfolio
turnover rate 62.7%! 51.3% 47.6% 32.8% 51.7% 39.3%
Net assets,
end of period
(in thousands) $106,633 $ 85,259 $ 79,475 $ 63,005 $ 33,263 $ 5,625
(diamond) 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.
! Annualized
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
T. Rowe Price Personal Strategy Balanced Portfolio
June 30, 2000 Unaudited
Shares/Par Value
--------------------------------------------------------------------------------
In thousands
Common Stocks 58.4%
FINANCIAL 8.8%
Bank and Trust 4.0%
Abbey National (GBP) 9,800 $ 117
ABN Amro (EUR) 2,400 59
Allied Irish Banks (EUR) * 4,600 41
Australia & New Zealand
Banking Group (EUR) 4,000 31
Australia & New Zealand
Bankinging Group ADR 1,500 57
Banca Intesa (EUR) 20,400 91
Banca Popolare
di Milano (EUR) 1,000 7
Banco Bradesco ADR 3,000 26
Banco de Bilbao
Vizcaya Argentaria ADR 10,400 153
Banco Frances del Rio
de la Plata ADR 1,195 26
Bank of America 8,200 353
Bank of New York 4,500 209
Bank One 7,990 212
Bankgesellschaft Berlin (EUR) 2,400 35
Barclay's (GBP) 4,300 107
BNP Paribas (EUR) 700 67
Charter One Financial 862 20
Chase Manhattan 3,840 177
Chittenden 3,300 81
Citizens Banking 2,100 34
Commonwealth Bank
of Australia (AUD) 4,400 73
DBS Group Holdings (SGD) 5,489 71
Downey Financial 3,900 113
Dresdner Bank (EUR) 3,700 152
First Bell Bancorp 300 5
First Mariner Bancorp 400 2
First Security 600 8
Firstar 6,900 145
Frankfort First Bancorp 700 9
Fuji Bank (JPY) 13,000 99
Glacier Bancorp 1,666 22
HSBC Holdings (GBP) 13,239 152
Industrial Bank of Japan (JPY) 13,000 99
KBC Bancassurance
Holding (EUR) 1,000 44
Marshall & Ilsley 100 $ 4
Mellon Financial 11,480 418
Overseas Chinese Bank (SGD) 8,250 57
Societe Generale (EUR) 380 23
Southwest Bancorporation * 3,500 73
State Street 1,800 191
Sumitomo Bank (JPY) 9,000 110
Summit Bancorp 700 17
Svenska Handelsbanken
(Series A) (SEK) 4,300 63
Unicredito (EUR) 19,300 92
Washington Mutual 4,585 132
Wells Fargo 4,600 178
WestAmerica 2,000 52
4,307
Insurance 2.2%
ACE Limited 4,500 126
Aegon (EUR) 1,200 43
Allied Zurich (GBP) 10,900 128
American General 2,900 177
American International Group 718 84
AMP Limited (AUD) 2,900 29
Brown and Brown 1,600 83
Harleysville Group 900 15
Istituto Nazionale delle
Assicurazioni (EUR) 15,100 37
London Pacific Group ADR 2,400 31
Marsh & McLennan 1,600 167
PartnerRe Holdings 1,600 57
Schweizerische
Rueckversicherungs (CHF) 48 98
Selective Insurance 700 13
St. Paul Companies 8,900 304
Sumitomo Marine &
Fire Insurance (JPY) 22,000 128
UNUMProvident 18,900 379
W. R. Berkley 1,000 19
XL Capital (Class A) 7,500 406
2,324
Financial Services 2.6%
American Express 6,450 336
Amvescap (GBP) 4,700 74
Associates First Capital (Class A) 2,000 45
AXA (EUR) 600 95
Capital One Financial 3,300 147
Charles Schwab 750 25
Citigroup 9,048 $ 545
Delta Financial * 1,800 3
Fannie Mae 9,520 497
Financial Federal * 1,200 21
Freddie Mac 8,380 339
Goldman Sachs Group 200 19
Grupo Financiero
Banamex (MXN) * 10,200 43
ING Groep (EUR) 1,850 125
ITLA Capital * 900 13
Morgan Stanley Dean Witter 2,000 166
Nomura Securities (JPY) 4,000 98
Pearson (GBP) 2,800 88
Providian Financial 700 63
2,742
Total Financial 9,373
UTILITIES 3.8%
Telephone 2.6%
AT&T 4,779 151
AT&T Liberty Media Group 3,200 78
BellSouth 4,200 179
British Telecommunications ADR 800 106
Cable & Wireless ADR 2,500 54
Compania de Telecomunicaciones
de Chile (Class A) ADR 1,625 29
GTE 200 12
KPN (EUR) 1,400 63
Nextel Communications * 2,800 171
NEXTLINK Communications * 1,200 45
Nippon Telegraph &
Telephone (JPY) 18 239
Portugal Telecom (EUR) 1,600 18
Rural Cellular (Class A) * 300 23
SBC Communications 3,520 152
Sprint 5,800 296
Swisscom (CHF) 142 49
Tele Danmark A/S (DKK) 100 7
Telebras ADR 1,200 117
Telecom Corp. of
New Zealand ADR 1,000 28
Telecom Corp. of
New Zealand (NZD) 5,000 17
Telecom Italia (EUR) 7,530 104
Telecom Italia Mobile (EUR) 13,800 $ 141
Telefonica de Espana ADR 1,619 104
Telefonos de Mexico
(Class L) ADR 3,300 189
Vodafone AirTouch ADR 10,000 414
Western Wireless * 500 27
2,813
Electric Utilities 1.0%
Cleco 2,800 94
E.On (EUR) 1,710 83
Electrabel (EUR) 100 25
Empresa Nacional de
Electricidad Chile ADR * 2,030 23
Enersis ADR * 500 10
FirstEnergy 6,392 149
GPU 1,900 51
Hong Kong Electric (HKD) 15,000 48
Iberdrola (EUR) 7,300 94
National Grid (GBP) 3,400 27
PECO Energy 2,300 93
Powergen (GBP) 4,100 34
TXU 4,340 128
Unicom 5,000 193
Unisource Energy 800 12
1,064
Water Utilities 0.2%
Suez Lyonnaise des Eaux (EUR) 900 157
United Water Resources 400 14
171
Total Utilities 4,048
CONSUMER NONDURABLES 10.6%
Cosmetics 0.5%
Chattem * 1,300 18
International Flavors &
Fragrances 14,800 447
Kao (JPY) 4,000 122
587
Beverages 0.7%
Anheuser-Busch 4,300 321
Coca-Cola 1,400 80
Compania Cervecerias
Unidas ADR 800 18
Diageo ADR 1,623 58
Fomennto Economico Mexico
UBD (Represents 1 Class B
and 4 Series D shares)
(MXN) * 4,100 $ 18
LVMH Moet Hennessy (EUR) 163 67
PepsiCo 4,360 194
756
Food Processing 1.5%
American Italian Pasta * 1,200 25
Associated British Foods (GBP) 10,400 71
Cadbury Schweppes (GBP) 1,800 12
Cadbury Schweppes ADR 800 47
Campbell 9,000 262
Carrefour (EUR) 2,320 159
Danisco (DKK) 200 7
Eridania Beghin-Say (EUR) 330 32
General Mills 8,860 339
International Multifoods 4,200 73
Nestle (CHF) 61 122
Quaker Oats 400 30
Ralston Purina 9,740 194
Sara Lee 4,860 94
Seneca Foods (Class A) * 700 8
Seneca Foods (Class B) * 300 4
Unilever 1,585 68
1,547
Hospital Supplies/Hospital Management 0.6%
Airgas 2,700 15
Baxter International 2,200 155
Cephalon * 600 37
Lincare * 2,000 49
Medtronic 500 25
Mentor 3,500 95
Molecular Devices * 600 42
Quorum Health Group * 600 6
Renal Care Group * 1,850 45
Smith & Nephew (GBP) 19,200 69
Steris * 2,400 21
Terumo (JPY) 4,000 135
694
Pharmaceuticals 4.3%
American Home Products 9,080 1,121
Amgen * 1,400 98
AstraZeneca Group (GBP) 2,400 112
AstraZeneca Group (SEK) 1,790 83
AstraZeneca Group ADR 2,600 121
Aurora Biosciences * 500 $ 34
Boron Lepore & Associates * 400 4
Bristol-Myers Squibb 1,300 76
Daiichi Pharmaceutical (JPY) 2,000 51
Eli Lilly 1,800 180
Genetech * 1,000 172
Glaxo Wellcome ADR 3,000 173
Imclone Systems * 100 8
Immunomedics * 100 2
Incyte Genomics * 200 16
Johnson & Johnson 380 39
MedImmune * 1,400 104
Merck 1,700 130
Novartis (CHF) 220 349
Noven Pharmaceuticals * 300 9
NPS Pharmaceuticals * 500 13
Pfizer 19,695 945
Pharmacia 5,018 259
Schering-Plough 3,400 172
Takeda Chemical Industries (JPY) 4,000 262
Triangle Pharmaceuticals * 1,600 15
4,548
Health Care Services 0.5%
AmeriPath * 3,000 26
CIGNA 1,500 140
Orthodontic Centers of America * 900 21
Packard BioScience * 600 10
UnitedHealth Group 3,100 266
Wellpoint Health Networks * 1,400 102
565
Biotechnology 0.3%
Abegenix 200 24
Alkermes * 800 38
Anesta * 1,000 25
COR Therapeutics * 400 34
Cubist Pharmaceuticals * 300 15
Gilead Sciences * 100 7
Inhale Therapeutic Systems * 1,000 101
Neurocrine Biosciences * 300 11
Serologicals * 1,600 8
Viropharma * 600 9
272
Miscellaneous Consumer Products 2.2%
Bridgestone (JPY) 1,000 21
Colgate-Palmolive 7,680 $ 460
Cone Mills * 2,900 18
Culp 900 5
Dan River * 3,200 15
Electrolux (Class B) (SEK) 1,300 20
Energizer Holdings * 3,246 59
Harcourt General 5,700 310
Kuraray (JPY) 2,000 23
Lion Nathan (NZD) 26,300 59
Mattel 16,800 221
Mitsui (JPY) 12,000 92
Philip Morris 14,980 398
Philips Electronics 3,120 148
Polymer Group 1,100 10
Quicksilver * 1,000 16
Reebok * 1,300 21
Sola * 2,800 14
Stride Rite 3,000 18
Tomkins (GBP) 17,500 57
Unifi * 2,600 32
US Can * 4,100 71
UST 11,030 162
WestPoint Stevens 1,300 14
Yue Yuen Industrial (HKD) 25,000 55
2,319
Total Consumer Nondurables 11,288
CONSUMER SERVICES 6.0%
Restaurants 0.1%
Applebee's 700 21
Buca * 3,000 47
PJ America * 1,100 11
Ruby Tuesday 2,400 30
Uno Restaurant 1,400 15
124
General Merchandisers 0.7%
Bon-Ton Stores * 2,400 5
Casey's General Stores 5,900 61
Columbia Sportswear * 1,500 40
JUSCO (JPY) 4,000 76
Marui (JPY) 4,000 77
Neiman Marcus Group * 2,200 66
Target 1,500 87
Tesco (GBP) 37,459 117
Wal-Mart 4,400 254
783
Specialty Merchandisers 2.0%
Circuit City Stores 200 $ 7
CompuCom Systems * 4,500 8
CVS 3,228 129
Home Depot 3,900 195
Kroger * 5,500 121
Lowes 1,700 70
Nordstrom 11,700 282
O' Charley's * 2,600 35
Omron (JPY) 7,000 190
Priceline.com * 800 30
PurchasePro.com * 500 21
Safeway * 5,500 248
The Gap 100 3
Toys "R" Us * 28,100 409
Tupperware 15,200 334
Urban Outfitters * 1,100 10
Wild Oats Markets * 1,200 15
2,107
Entertainment and Leisure 1.4%
Disney 17,200 668
Houghton Mifflin 300 14
Hutchison Whampoa (HKD) 17,600 221
McDonald's 1,240 41
Papa John's * 1,600 39
Reader's Digest (Class A) 10,600 421
Sharp (JPY) 4,000 71
Sonic * 700 21
1,496
Media and Communications 1.7%
American Tower
Systems (Class A) * 200 8
Asatsu (JPY) 3,000 123
Classic Communications * 1,000 9
Clear Channel Communications * 2,201 165
Comcast (Class A Special) * 1,200 49
Elsevier (EUR) 1,700 21
Emmis Broadcasting (Class A) * 1,600 66
Granada Group (GBP) 2,500 25
Infinity Broadcasting (Class A) * 3,000 109
Mediaset (EUR) 3,400 52
News Corporation 1,300 71
Pegasus Communications * 800 39
Publishing & Broadcasting (EUR) 7,000 54
R.R. Donnelley 24,700 557
Sinclair Broadcast Group
(Class A) * 4,000 44
Time Warner 400 $ 31
Viacom (Class B) * 4,874 332
Young Broadcasting (Class A) * 900 23
1,778
Printing and Publishing 0.1%
Reed International (GBP) 10,500 91
91
Total Consumer Services 6,379
CONSUMER CYCLICALS 3.4%
Automobiles and Related 0.6%
A.O. Smith (Class B) 3,950 83
Cycle & Carriage (SGD) 4,000 9
DaimlerChrysler (EUR) 1,000 52
Fiat (EUR) 1,100 28
Honda ADR 800 55
Keystone Automotive * 1,500 10
Littelfuse * 2,500 124
Strattec Security * 600 20
Textron 4,300 234
Volkswagen (EUR) 1,400 53
Volvo (Class B) (SEK) 400 9
677
Building and Real Estate 1.8%
Apartment Investment &
Management, REIT 700 30
Arden Realty, REIT 2,300 54
Cemex (Represents 2 Class A
and 1 Class B
shares) (MXN) 7,116 33
Cheung Kong Holdings (HKD) 9,000 99
City Developments (SGD) 5,000 19
DBS Land (SGD) 7,000 9
EastGroup Properties, REIT 2,700 57
Federal Realty Investment
Trust, REIT 14,700 294
First Washington Realty
Trust, REIT 1,100 24
Glenborough Realty Trust, REIT 1,900 33
JP Realty, REIT 2,100 37
Parkway Properties, REIT 2,600 79
Reckson Associates Realty
(Class B), REIT 926 24
Reckson Associates Realty, REIT 14,300 340
RMC (GBP) 2,200 29
Simon Property Group, REIT 11,696 260
Singapore Land (SGD) 5,000 $ 11
Slough Estates (GBP) 8,000 44
Starwood Hotels & Resorts
Worldwide, REIT 11,700 381
Westfield Trust (EUR) 24,500 47
Woodhead Industries 2,000 37
1,941
Miscellaneous Consumer Durables 1.0%
CompX 1,400 28
Eastman Kodak 10,300 613
Harman International 1,100 67
Intranet Solutions * 1,000 38
Masco 200 4
OCE (EUR) 300 5
Ricoh (JPY) 5,000 106
Sony (JPY) 2,000 187
1,048
Total Consumer Cyclicals 3,666
TECHNOLOGY 7.6%
Electronic Components 2.3%
Altera * 2,100 214
American Superconductor * 700 34
Analog Devices * 1,000 76
Analogic 1,500 60
ASM Lithography (EUR) * 300 13
Benchmark Electronics * 1,700 62
Burr Brown * 1,600 139
EMC * 600 46
Epcos (EUR) * 100 10
Exar * 550 48
Flextronics International * 2,500 172
Intel 3,700 495
Manufacturers Services Limited * 800 16
Maxim Integrated Products * 2,900 197
Methode Electronics (Class A) 2,300 89
PMC-Sierra * 400 71
QuickLogic * 600 13
Rohm (JPY) 500 146
SDL * 400 114
SIPEX * 1,200 33
Spirent (GBP) 8,400 53
Texas Instruments 3,300 227
Xilinx * 1,600 132
2,460
Electronic Systems 1.4%
Agilent Technologies 610 $ 45
Applied Materials * 2,300 208
Applied Micro Circuits * 200 20
Armor Holdings * 3,200 42
Hewlett-Packard 1,600 200
Lifeline Systems * 1,600 22
Lo-Jack * 2,400 17
Nokia ADR 10,900 544
PE Biosystems 600 40
Solectron * 2,400 100
STMicroelectronics (EUR) 1,200 76
Waters * 1,700 212
1,526
Information Processing 0.5%
Adecco (CHF) 38 32
Cybersource * 300 4
Dell Computer * 4,800 237
F. Y. I. * 1,900 64
Hitachi ADR 1,300 188
Source Information Management * 1,600 24
549
Office Automation 0.1%
Technitrol 1,100 106
106
Specialized Computer 0.2%
Sun Microsystems * 1,300 118
Virata* 400 24
142
Telecommunications 3.0%
Aether Systems 100 21
Airgate PCS 300 16
Airnet Commerce 100 3
Alcatel (EUR) 1,820 119
Avant * 1,000 19
Cisco Systems * 7,700 489
Corning 2,800 756
Deutsche Telekom (EUR) 4,700 268
Ditech Communications * 500 47
France Telecom ADR 1,600 228
JDS Uniphase * 1,300 156
LM Ericsson (Class B) ADR 15,800 316
Marconi (GBP) 3,400 44
Nortel Networks 2,800 191
QUALCOMM * 200 12
Singapore Telecommunications
(SGD) 23,000 $ 34
Sonera Group (EUR) 1,600 73
Sprint PCS * 900 54
Tele Norte Leste
Participacoes ADR 105 2
Tele Sudeste Cellular ADR 180 8
Telecommunicacois
de Sao Paulo ADR 900 25
Tellabs * 100 7
Telstra (EUR) 11,000 45
Vyyo * 300 8
West TeleServices * 1,000 25
WorldCom * 5,277 242
3,208
Aerospace and Defense 0.1%
DONCASTERS ADR * 300 3
Harsco 1,500 38
United Technologies 1,300 77
Woodward Governor 600 17
135
Total Technology 8,126
EDUCATION 0.1%
Education 0.1%
ITT Educational Service * 900 16
Societe BIC (EUR) 1,300 63
Total Education 79
CAPITAL EQUIPMENT 1.7%
Electrical Equipment 1.4%
ABB (CHF) 310 37
Bang & Olufsen
(Class B) (DKK) * 700 24
Canon (JPY) 3,000 149
GE 8,100 429
Getronics (EUR) 900 14
hi/fn * 800 36
LSI Industries 1,700 26
Matsushita Electric
Industrial (JPY) 8,000 207
Mitsubishi Electric (JPY) 16,000 173
Tyco International 8,352 396
1,491
Machinery 0.3%
Danaher 2,100 $ 104
Deere 3,100 114
GKN (GBP) 2,200 28
Kennametal 1,200 26
NN 1,400 14
286
Total Capital Equipment 1,777
BUSINESS SERVICES AND TRANSPORTATION 5.6%
Computer Service and Software 2.9%
Actuate 400 21
America Online * 5,000 264
Analysts International 1,800 17
Ariba * 800 78
Automatic Data Processing 3,280 176
BISYS Group * 500 31
BMC Software * 2,200 80
Cambridge Technology Partners * 800 7
Computer Associates 1,600 82
Concord Communications * 600 25
Digital Impact * 700 10
Electronic Arts * 300 22
First Data 3,134 155
Fujitsu (JPY) 6,000 207
Great Plains Software * 500 10
iGATE Capital * 1,400 19
Interact Commerce * 800 9
Intuit * 500 21
Jack Henry & Associates 300 15
Keynote Systems * 1,500 105
Loislaw * 400 3
Macromedia * 100 10
Microsoft * 5,640 451
net.Genesis * 900 16
NetIQ * 700 42
Netsolve * 200 5
Oracle * 4,600 387
Peerless Systems * 1,500 3
Peregrine Systems * 200 7
Progress Software * 4,600 84
PSINet * 1,510 38
Quest Software * 200 11
SAP (EUR) 480 71
Sema (GBP) 1,400 20
Siebel Systems * 1,100 $ 180
Softbank (JPY) 300 41
Sonicwall * 100 9
SPSS * 1,100 32
SunGard Data Systems * 300 9
Synopsys * 100 3
USInternetworking * 800 16
Verisign * 215 38
VERITAS Software * 1,275 144
Verity * 300 11
Vitria Technology * 600 37
Websense * 200 5
WebTrends * 1,000 38
Yahoo! * 400 50
Zebra Technologies (Class A) * 500 22
3,137
Distribution Services 0.3%
Compass Group (GBP) 2,200 29
MSC * 1,400 30
Performance Food Group * 600 19
Primesource 1,400 7
SCP Pool * 3,200 75
SunSource * 2,000 10
TNT Post Group (EUR) 600 16
United Stationers * 2,000 65
Watsco (Class A) 2,500 31
282
Environmental 0.1%
CUNO * 1,700 39
IT Group * 1,800 9
Rentokil Group (GBP) 9,900 23
Waterlink * 1,300 3
74
Transportation Services 0.2%
Bergesen (Class A) (NOK) 1,700 35
C.H. Robinson Worldwide 1,100 54
Comfort Systems USA * 3,300 13
EGL * 1,150 35
Expeditors International
of Washington 1,100 52
Heartland Express * 200 3
Hub Group (Class A) * 300 5
International Shipholding 500 4
Mitsubishi Heavy
Industries (JPY) 4,000 18
Seacor Smit * 200 $ 8
227
Miscellaneous Business Services 1.5%
AnswerThink * 900 15
British Airport Authorities (GBP) 3,900 31
Consolidated Graphics * 700 7
Electro Rent * 2,600 31
G&K Services 1,000 25
H&R Block 11,500 372
Hays (GBP) 5,700 32
Herman Miller 400 10
Insituform Technologies
(Class A) * 2,600 71
Iron Mountain * 1,700 58
Ivex Packaging * 3,700 41
kforce.com * 1,300 9
Kuoni Reisen Holdings (CHF) 1 0
Maximus * 2,600 58
McGrath RentCorp 1,300 22
MPW Industrial Services
Group * 2,500 19
New England Business Service 3,200 52
Omnicom 1,400 125
Strayer Education 1,400 33
Tetra Tech * 2,512 58
Vedior (EUR) 1,200 15
Visual Networks * 400 11
Waste Management 25,222 479
1,574
Airlines 0.1%
Midwest Express Holdings * 1,700 37
Singapore Airlines (SGD) 8,000 79
116
Railroads 0.5%
Kansas City Southern Industries 1,500 133
Norfolk Southern 24,300 361
Railtrack Group (GBP) 2,000 31
525
Total Business Services and Transportation 5,935
ENERGY 5.2%
Energy Services 0.9%
Baker Hughes 18,300 586
Cooper Cameron * 300 20
Grant Prideco * 500 12
Johnson Electric (HKD) 23,400 222
Smith International * 400 $ 29
Tokyo Electric Power (JPY) 4,000 97
Weatherford International * 500 20
986
Exploration and Production 0.8%
Barrett Resources * 2,300 70
Chieftain International * 2,300 44
Cross Timbers Oil 1,700 38
Forest Oil * 2,300 37
Key Energy * 4,500 43
National Oilwell * 1,200 39
Noble Affiliates 2,000 74
Pure Resources 14,630 485
Santos (EUR) 9,000 27
857
Integrated Petroleum - Domestic 0.7%
Amerada Hess 600 37
Conoco (Class B) 5,377 132
USX-Marathon 22,360 561
730
Integrated Petroleum - International 2.8%
BP Amoco ADR 22,038 1,247
Chevron 1,900 161
ENI SPA ADR 1,400 81
Exxon Mobil 9,007 707
Repsol ADR 1,600 32
Royal Dutch Petroleum 5,500 339
Shell Transport & Trading ADR 1,700 85
Texaco 2,540 135
TotalFinaElf ADR 1,596 123
TotalFinaElf (Class B) 385 59
2,969
Total Energy 5,542
PROCESS INDUSTRIES 3.0%
Diversified Chemicals 0.6%
Arch Chemicals 2,800 61
Cabot Microelectronics * 700 32
Dow Chemical 6,900 208
DuPont 1,884 83
Hercules 15,200 214
598
Specialty Chemicals 1.2%
3M 4,070 336
A. Schulman 1,100 13
Akzo Nobel (EUR) 400 17
BASF (EUR) 1,950 $ 78
Great Lakes Chemical 7,510 237
Hauser * 200 0
Imperial Chemical ADR 700 22
MacDermid 600 14
Norsk Hydro (NOK) 1,200 50
Pall 13,400 248
Sumitomo Chemicals (JPY) 40,000 241
1,256
Paper and Paper Products 0.9%
Buckeye Technologies * 700 16
Dai Nippon Printing (JPY) 5,000 88
Fort James 19,200 444
Jefferson Smurfit (EUR) 109 0
Kimberly-Clark 6,100 350
Kimberly-Clark de Mexico
(Class A) (MXN) 25,700 73
Smurfit-Stone Container * 700 9
980
Forest Products 0.2%
Weyerhaeuser 5,800 249
249
Building and Construction 0.1%
Heidelberg Zement (EUR) 200 12
Layne Christensen * 2,100 10
Simpson Manufacturing * 400 19
Trex * 300 15
U.S. Aggregates 1,700 31
87
Total Process Industries 3,170
BASIC MATERIALS 0.9%
Metals 0.8%
Alcoa 13,568 393
Gibraltar Steel 500 7
Material Sciences * 3,100 31
Matthews International (Class A) 3,400 99
Pechiney (EUR) 500 21
Phelps Dodge 7,500 279
830
Mining 0.1%
Battle Mountain Gold * 7,600 17
Lihir Gold * 29,900 12
Rio Tinto (EUR) 5,000 82
Rio Tinto (GBP) 1,400 23
Union Miniere (EUR) 800 29
163
Miscellaneous Materials 0.0%
Malayan Cement (MYR) 7,500 $ 3
3
Total Basic Materials 996
MISCELLANEOUS 0.0%
Conglomerates 0.0%
Orkla (Class A) (NOK) 714 14
Total Miscellaneous 14
FOREIGN 1.7%
Europe 1.4%
Aventis (EUR) 2,000 146
Bank of Scotland (GBP) 11,600 108
BG Group (GBP) 8,088 52
Cap Gemini (EUR) 200 35
Credit Suisse Group (CHF) 900 179
CSM (EUR) 800 16
Deutz (EUR) * 6,000 27
DnB Holding (NOK) 1,700 7
eircom (EUR) * 4,700 12
EM.TV &
Merchandising (EUR) * 300 18
Lafarge (EUR) 300 23
Merck Kgaa (EUR) 1,200 36
Metro (EUR) * 400 14
Munich Re (EUR) * 634 199
Nordic Baltic Holding (SEK) * 11,433 83
OMV (EUR) 50 4
Prosegur Seguridad (EUR) 2,100 25
Publicis (EUR) * 166 65
Radiometer (DKK) * 600 19
Rolls Royce (GBP) 17,000 61
Sandvik (SEK) 900 19
Securitas (Class B) (SEK) 1,100 23
SGL Carbon (EUR) * 200 13
Singapore Press (SGD) 4,000 63
Sommer Allibert (EUR) 3,000 93
Sulzer Winterthur (CHF) * 47 31
Svenska Cellulosa (SEK) 1,500 29
Swatch (CHF) 58 15
Thomson CSF (EUR) * 200 8
Unibail (EUR) 200 28
1,451
Far East 0.0%
Nippon Express (JPY) 10,000 61
61
Other Foreign 0.3%
Bouygues (EUR) 36 $ 24
Carso Global
Telecom (MXN) * 16,800 48
Pao de Acucar GDR 1,300 42
Siemens (EUR) 1,000 151
Unibanco GDR 700 20
Woolworths (AUD) 19,500 72
357
Total Foreign 1,869
Total Common Stocks (Cost $52,042) 62,262
Corporate Bonds 12.3%
Adelphia Communications
9.875%, 3/1/05 $ 75,000 73
Agrosy Gaming, 10.75%, 6/1/09 25,000 26
Allied Holdings
Gtd. Sr. Sub. Notes
8.625%, 10/1/07 75,000 66
American Builders &
Contractors Supply
Sr. Sub. Notes
10.625%, 5/15/07 100,000 82
American Standard
9.25%, 12/1/16 42,000 42
Amerigas Partners, Sr. Notes
10.125%, 4/15/07 50,000 50
Amkor Technology, Sr. Notes
9.25%, 5/1/06 75,000 74
Anteon, 12.00%, 5/15/09 50,000 46
Associated Materials
Sr. Sub. Notes
9.25%, 3/1/08 100,000 94
Avis Rent-A-Car
Sr. Sub. Notes
11.00%, 5/1/09 100,000 104
B&G Foods
Sr. Sub. Notes
9.625%, 8/1/07 100,000 70
Ballys Total Fitness
Sr. Sub. Notes
9.875%, 10/15/07 200,000 182
Bethlehem Steel
10.375%, 9/1/03 50,000 50
BG Transco Holdings
4.188%, 12/14/00 (GBP) $ 1,000 $ 1
7.00%, 12/16/24 (GBP) 1,000 1
7.273%, 12/14/00 (GBP) 1,000 2
BWAY, Sr. Sub. Notes
10.25%, 4/15/07 100,000 95
Chancellor Media
Sr. Sub. Notes
9.00%, 10/1/08 100,000 102
Charter Communication
Sr. Notes
8.25%, 4/1/07 150,000 133
Chattem, Sr. Sub. Notes
12.75%, 6/15/04 100,000 101
Cinemark USA, Sr. Sub. Notes
8.50%, 8/1/08 50,000 23
Coinmach, Sr. Sub. Notes
11.75%, 11/15/05 50,000 48
Comcast Cable
Communications
8.50%, 5/1/27 800,000 836
Communications & Power
Sr. Sub. Notes
12.00%, 8/1/05 100,000 75
Consolidated Container
Sr. Sub. Notes
10.125%, 7/15/09 75,000 74
Container Corp of America
Sr. Notes, 9.75%, 4/1/03 50,000 50
Gtd., 10.75%, 5/1/02 25,000 25
Dan River, Sr. Sub. Notes
10.125%, 12/15/03 100,000 97
Delta Mills, Sr. Notes
9.625%, 9/1/07 80,000 68
Deutsche Telekom
International
8.00%, 6/15/10 200,000 202
Doane Pet Care
Sr. Sub. Notes
9.75%, 5/15/07 103,000 88
Dobson Communications
Sr. Notes, (144a)
10.875%, 7/1/10 ^+ 75,000 76
Dyersburg, Sr. Sub. Notes
9.75%, 9/1/07 50,000 5
Dyncorp, Sr. Sub. Notes
9.50%, 3/1/07 $ 50,000 $ 40
Energy Corp. of America.
Sr. Sub. Notes
9.50%, 5/15/07 100,000 64
Exodus Communications
Sr. Notes
10.75%, 12/15/09 75,000 72
Fairfax Financial
8.25%, 10/1/15 800,000 670
Flextronics International
Sr. Sub. Notes, (144a)
9.875%, 7/1/10 ^+ 75,000 76
Focal Communications, (144a)
11.875%, 1/15/10 100,000 100
Frontiervision, Sr. Notes
11.00%, 10/15/06 100,000 101
Global Crossing Holdings
Sr. Notes
9.50%, 11/15/09 100,000 96
Harrahs, 7.875%, 12/15/05 75,000 71
Hawk, Sr. Notes
10.25%, 12/1/03 75,000 73
Herff Jones, Sr. Sub. Notes
11.00%, 8/15/05 100,000 104
Hewlett Packard
7.15%, 6/15/05 200,000 200
Hollinger International
Publishing, Gtd. Notes
9.25%, 3/15/07 150,000 148
Intermedia Communications
of Florida, Sr. Disc. Notes
STEP, 0%, 7/15/07 100,000 79
International Cabletel,
Sr. Notes, STEP
0%, 2/1/06 150,000 138
International Game
Technology
8.375%, 5/15/09 150,000 144
International Home Foods
Gtd. Sr. Sub. Notes
10.375%, 11/1/06 50,000 54
International Wire
Sr. Sub. Notes
11.75%, 6/1/05 100,000 100
Intertek Finance
Sr. Sub. Notes
10.25%, 11/1/06 $ 50,000 $ 41
Isle of Capri Casinos
Sr. Sub. Notes
8.75%, 4/15/09 25,000 23
Jack in the Box
Sr. Secured Notes
9.75%, 11/1/03 30,000 30
Jitney-Jungle Stores
Sr. Sub. Notes
12.00%, 3/1/06 75,000 11
L3 Communications
Sr. Sub. Notes
10.375%, 5/1/07 50,000 51
Lear, 8.11%, 5/15/09 50,000 46
Lenfest Communications
Sr. Notes
8.375%, 11/1/05 20,000 20
Lennar, Sr. Notes, (144a)
9.95%, 5/1/10 50,000 49
LifePoint Hospitals
10.75%, 5/15/09 150,000 154
Lockheed Martin
8.20%, 12/1/09 400,000 404
Mastec, Sr. Sub. Notes
7.75%, 2/1/08 100,000 92
McLeod USA
Zero Coupon, 3/1/07 50,000 41
Mediacom, Sr. Notes
7.875%, 2/15/11 150,000 131
Metronet Communications
Sr. Disc. Notes, STEP
0%, 6/15/08 200,000 159
Mohegan Tribal Gaming
Sr. Notes
8.125%, 1/1/06 150,000 141
Morgan Stanley Dean Witter
7.75%, 6/15/05 200,000 201
Nextel Communications
Sr. Disc. Notes, STEP
0%, 10/31/07 225,000 168
Nextlink Communications
Sr. Disc. Notes, STEP
0%, 6/1/09 125,000 78
Norfolk Southern
8.625%, 5/15/10 $ 400,000 $ 417
Nortek, 9.875%, 3/1/04 50,000 48
Northern Trust
6.65%, 11/9/04 250,000 242
Northland Cable Television
Sr. Sub. Notes
10.25%, 11/15/07 100,000 83
NTL, Sr. Notes
Zero Coupon, 4/1/08 75,000 47
Ocean Energy, Sr. Sub. Notes
8.375%, 7/1/08 75,000 73
Orange, Sr. Notes
9.00%, 6/1/09 150,000 153
Orion Power Holdings
Sr. Notes, (144a)
12.00%, 5/1/10 75,000 79
Owens & Minor
Sr. Sub. Notes
10.875%, 6/1/06 25,000 26
Packaging Corp. of America
9.625%, 4/1/09 150,000 149
Paine Webber
Sr. Notes
6.55%, 4/15/08 400,000 357
9.625%, 10/15/05 75,000 72
Premier Parks, Sr. Disc. Notes
STEP, 0%, 4/1/08 100,000 68
Pride Petroleum Services
Sr. Notes
9.375%, 5/1/07 75,000 75
Principal Mutual, (144a)
8.00%, 3/1/44 800,000 706
PSINet, Sr. Notes
10.00%, 2/15/05 25,000 23
Quest Diagnostics
Gtd Sr. Sub. Notes
10.75%, 12/15/06 100,000 103
Qwest Communications
Sr. Disc. Notes
Zero Coupon, 10/15/07 100,000 81
Sr. Notes
7.50%, 11/1/08 25,000 24
R & B Falcon, Sr. Notes
6.95%, 4/15/08 200,000 172
Raytheon, 5.70%, 11/1/03 $ 200,000 $ 189
Riverwood International
Sr. Notes
10.25%, 4/1/06 150,000 144
Scotland International
Finance, Sub. Notes, (144a)
6.50%, 2/15/11 ^+ 100,000 91
Sinclair Broadcast Group
Sr. Sub. Notes
8.75%, 12/15/07 75,000 66
Six Flags Entertainment
Sr. Notes
8.875%, 4/1/06 75,000 72
Spanish Broadcasting
9.625%, 11/1/09 75,000 74
Speedway Motorsports
8.50%, 8/15/07 150,000 139
Sprint, 6.125%, 11/15/08 350,000 312
State Street, 7.65%, 6/15/10 135,000 135
Station Casinos
Sr. Sub. Notes
10.125%, 3/15/06 75,000 76
Triton PCS
Zero Coupon, 5/1/08 200,000 146
United International Holdings
Sr. Disc. Notes, STEP
10.75%, 2/15/08 100,000 69
Universal Compression
Sr. Disc. Notes, STEP
0%, 2/15/08 250,000 180
US Can, Sr. Gtd. Notes
10.125%, 10/15/06 50,000 51
Venture Holdings Trust
Sr. Sub. Notes
9.50%, 7/1/05 50,000 38
Voicestream Wireless
Sr. Notes
10.375%, 11/15/09 150,000 156
Westinghouse Air Brake
Sr. Notes
9.375%, 6/15/05 50,000 48
Westpoint Stevens
7.875%, 6/15/05 50,000 42
Williams Communications
Group, Sr. Notes
10.875%, 10/1/09 25,000 24
WorldCom, 7.75%, 4/1/07 $ 800,000 $ 800
Yankeenets Capital, (144a)
12.75%, 3/1/07 50,000 48
Total Corporate Bonds (Cost $14,323) 13,129
U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES 8.0%
Federal National Mortgage Assn.
6.50%, 1/1/26 166,285 158
Government National Mortgage Assn.
I
6.00%
4/15/26 - 12/15/28 593,576 548
6.50%
3/15/26 - 5/15/29 4,746,179 4,505
7.00%
12/15/27 - 5/15/29 2,034,495 1,980
7.50%
5/15/24 - 12/15/29 311,515 310
8.00%
10/15/25 - 6/15/26 253,309 256
8.50%, 12/15/24 20,006 20
11.50%, 11/15/19 16,923 18
II
7.00%, 9/20/27 - 4/20/30 806,000 781
Total U.S. Government Mortgage-
Backed Securities (Cost $8,808) 8,576
U.S. GOVERNMENT OBLIGATIONS/AGENCIES 16.0%
Federal Home Loan Mortgage
5.95%, 1/19/06 750,000 711
6.625%, 9/15/09 200,000 193
Tennessee Valley Authority
5.88%, 4/1/36 $ 600,000 $ 571
6.235%, 7/15/45 1,000,000 994
U.S. Treasury Bonds
6.75%, 8/15/26 3,900,000 4,190
U.S. Treasury Inflation-Indexed Notes
3.625%, 7/15/02 1,068,953 1,061
U.S. Treasury Notes
4.25%, 11/15/03 5,450,000 5,116
5.50%, 7/31/01 3,025,000 2,995
6.125%, 8/15/07 1,165,000 1,158
Total U.S. Government
Obligations/Agencies (Cost $16,932) 16,989
SHORT-TERM INVESTMENTS 5.1%
Money Market Funds 5.1%
Reserve Investment Fund
6.68% # 5,422,463 5,422
Total Short-Term Investments
(Cost $5,423) 5,422
Total Investments in Securities
99.8% of Net Assets (Cost $97,528) $ 106,378
Other Assets Less Liabilities 255
NET ASSETS $ 106,633
----------
The accompanying notes are an integral part of these financial statements.
Net Assets Consist of:
Accumulated net investment
income - net of distributions $ 66
Accumulated net realized gain/loss -
net of distributions 2,967
Net unrealized gain (loss) 8,850
Paid-in-capital applicable to 6,646,261
shares of $0.0001 par
value capital stock outstanding;
1,000,000,000 shares of the
Corporation authorized 94,750
NET ASSETS $ 106,633
----------
NET ASSET VALUE PER SHARE $ 16.04
----------
# Seven-day yield
* Non-income producing
+ Securities contain some restrictions as to resale - total of such
securities at period-end amounts to 0.2% of net assets.
^ Private placement
ADR American Depository Receipt
GDR Global Depository Receipt
REIT Real Estate Investment Trust
STEP Stepped coupon note for which the interest rate will adjust on specified
future date(s)
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period-end amounts to
1.1% of net assets.
AUD Australian dollar
CHF Swiss franc
DKK Danish krone
EUR Euro
GBP British sterling
HKD Hong Kong dollar
JPY Japanese yen
MXN Mexican peso
MYR Malaysian ringgit
NOK Norwegian krone
NZD New Zealand dollar
SEK Swedish krona
SGD Singapore dollar
Statement of Operations
T. Rowe Price Personal Strategy Balanced Portfolio
In thousands
Unaudited
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Interest $ 1,491
Dividend 531
Total income 2,022
Expenses
Investment management and administrative 453
Net investment income (loss) 1,569
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 3,072
Foreign currency transactions (3)
Net realized gain (loss) 3,069
Change in net unrealized gain or loss on securities (1,840)
Net realized and unrealized gain (loss) 1,229
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 2,798
----------
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Personal Strategy Balanced Portfolio
In thousands
Unaudited
6 Months Year
Ended Ended
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment
income (loss) $ 1,569 $ 2,501
Net realized gain (loss) 3,069 3,815
Change in net unrealized
gain or loss (1,840) 388
Increase (decrease) in net
assets from operations 2,798 6,704
Distributions to shareholders
Net investment income (1,494) (2,497)
Net realized gain (766) (4,892)
Decrease in net assets
from distributions (2,260) (7,389)
Capital share transactions *
Shares sold 27,659 15,535
Distributions reinvested 2,259 7,389
Shares redeemed (9,082) (16,455)
Increase (decrease) in net
assets from capital
share transactions 20,836 6,469
Net Assets
Increase (decrease)
during period 21,374 5,784
Beginning of period 85,259 79,475
End of period $ 106,633 $ 85,259
-----------------------
*Share information
Shares sold 1,750 963
Distributions reinvested 142 470
Shares redeemed (576) (1,021)
Increase (decrease) in
shares outstanding 1,316 412
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Personal Strategy Balanced Portfolio
June 30, 2000 Unaudited
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Equity Series, Inc. (the corporation) is registered under the
Investment Company Act of 1940. The Personal Strategy Balanced Portfolio
(the fund), a diversified, open-end management investment company, is one
of the portfolios established by the corporation and commenced operations
on December 30, 1994. The fund seeks the highest total return over time
consistent with an emphasis on both capital appreciation and income by
investing in a diversified portfolio typically consisting of about 60%
stocks, 30% bonds, and 10% money market securities. The shares of the fund
are currently being offered only to separate accounts of certain insurance
companies as an investment medium for both variable annuity contracts and
variable life insurance policies. The accompanying financial statements are
prepared in accordance with generally accepted accounting principles for
the investment company industry; these principles may require the use of
estimates by fund management.
Valuation - Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Listed securities not traded on a
particular day and securities regularly traded in the over-the-counter
market are valued at the mean of the latest bid and asked prices. Other
equity securities are valued at a price within the limits of the latest bid
and asked prices deemed by the Board of Directors, or by persons delegated
by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers
who make markets in these securities or by an independent pricing service.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of
such currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair
value as determined in good faith by or under the supervision of the
officers of the fund, as authorized by the Board of Directors.
Currency Translation - Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated
into U.S. dollars at the prevailing exchange rate on the dates of such
transactions. The effect of changes in foreign exchange rates on realized
and unrealized security gains and losses is reflected as a component of
such gains and losses.
Premiums and Discounts - Premiums and discounts on debt securities, other
than mortgage-backed securities (MBS), are amortized for both financial
reporting and tax purposes. Premiums and discounts on all MBS are
recognized upon disposition or principal repayment as gain or loss for
financial reporting purposes. For tax purposes, premiums and discounts on
MBS acquired on or before June 8, 1997, are recognized upon disposition or
principal repayment as ordinary income. For MBS acquired after June 8,
1997, premiums are recognized as gain or loss; discounts are recognized as
gain or loss, except to the extent of accrued market discount.
Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Dividend income and
distributions to shareholders are recorded by the fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those determined in
accordance with generally accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term and U.S.
government securities, aggregated $35,457,000 and $24,511,000,
respectively, for the six months ended June 30, 2000. Purchases and sales
of U.S. government securities aggregated $12,481,000 and $4,965,000,
respectively, for the six months ended June 30, 2000.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
At June 30, 2000, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$97,528,000. Net unrealized gain aggregated $8,850,000 at period-end, of
which $14,452,000 related to appreciated investments and $5,602,000 to
depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management and administrative agreement between the fund and
T. Rowe Price Associates, Inc. (the manager) provides for an all-inclusive
annual fee, of which $66,000 was payable at June 30, 2000. The fee,
computed daily and paid monthly, is equal to 0.90% of the fund's average
daily net assets. Pursuant to the agreement, investment management,
shareholder servicing, transfer agency, accounting, and custody services
are provided to the fund, and interest, taxes, brokerage commissions, and
extraordinary expenses are paid directly by the fund.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available
to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the six months ended
June 30, 2000, totaled $177,000 and are reflected as interest income in the
accompanying Statement of Operations.
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