<PAGE>
--------------------------------------------------------------------------------
Fellow Shareholders
--------------------------------------------------------------------------------
The first half of 1995 was a nearly perfect environment for bonds and stocks:
falling interest rates, rising corporate earnings, a slowing yet fundamentally
sound economy, and relatively stable inflation. As a result, U.S. bond and stock
markets erased memories of their dismal performances in 1994.
The second quarter mirrored the first, with the unmanaged Standard & Poor's
500 Stock Index up 9.6%, bringing the six-month gain to a resounding 20.2%.
Based on the historical 10% return on stocks, the market has now provided two
years' worth of average gains in only six months. The rally was led by
technology stocks, with the financial sector also responding strongly to falling
interest rates. Large multinational companies, whose overseas earnings were
boosted by the generally weak dollar, were also big winners. Since the S&P 500
is dominated by large companies, it outperformed many other equity benchmarks
and stock mutual funds for both the quarter and the half. It was outpaced,
however, by the Nasdaq Composite Index, which is heavily weighted in technology
stocks.
The bond market also continued to soar, as increasing signs of a slowing
economy led to falling interest rates across all maturities. The benchmark 30-
year Treasury bond yield dropped 80 basis points during the quarter, finishing
at 6.6% (100 basis points is equal to one percentage point). As measured by the
Lehman Brothers Aggregate Bond Index, the bond market returned 6.1% in the
second quarter versus 5.0% in the previous period, for a six-month compound
return of 11.4%.
In early July, the Federal Reserve finally acknowledged what the bond
market had been signaling since late last year, that the slowing economy called
for lower interest rates. The Fed lowered the federal funds target by one-
quarter percentage point, to 5.75%, its first reduction in nearly three years.
--------------------------------------------------------------------------------
Interest Rate Levels
--------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
A three-line chart showing rates on the 30-year T-bond, the 5-year T-note,
and the 90-day T-bill from 12/31/94 through 6/30/95
Foreign stocks started to regain investor confidence, which was shaken by
last year's devaluation of the Mexican peso. Many of the larger foreign equity
markets recovered somewhat from the poor results of the first quarter to post
positive returns for the second quarter and the first half. Japan, whose economy
is treading water, was an exception. Latin American returns, which were
particularly hard hit by the peso debacle, were positive for the second quarter
but negative for the six months.
Foreign bond returns were generally more impressive than foreign stocks,
but lost momentum. The dollar, which was extremely weak earlier this year,
stabilized against most European and Asian currencies during the second quarter.
As a result, returns to U.S. investors were positive, but well below the
spectacular returns of the first quarter.
SPECTRUM GROWTH FUND
PERFORMANCE AND STRATEGY REVIEW
Spectrum Growth turned in strong results for the quarter and the first half, as
shown in the table on the next page. Returns trailed the broad market and our
peer group,
<PAGE>
however, due to our significant holdings of small-capitalization and foreign
stocks. While both enjoyed positive performance, they could not match large-
capitalization U.S. stocks and technology issues.
--------------------------------------------------------------------------------
Performance Comparison
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 6/30/95
3 Months 6 Months
---------------------
<S> <C> <C>
Spectrum Growth Fund 7.3% 14.2%
Lipper Growth &
Income Fund Index* 8.2 16.7
--------------------------------------------------------------------------------
</TABLE>
*Based on the 30 largest growth and income funds.
Overseas economies are now growing faster than the U.S., and we intend to
maintain a significant exposure to foreign equity markets. This is reflected in
our near maximum allocation to the International Stock Fund, which brings
Spectrum Growth's total foreign equity holdings to 29% of fund assets (see pie
chart).
On the U.S. front, we are tilting away from value stocks toward growth
stocks, whose consistent earnings gains typically become more enticing to
investors as the economy slows. In the latest quarter, we slightly increased our
holdings in the Growth Stock and New Horizons funds and trimmed our position in
the Growth & Income Fund, which is more value-oriented. Although our exposure to
small stocks fluctuated during the quarter, we retained enough to benefit from
their historically higher returns.
--------------------------------------------------------------------------------
Security Diversification
--------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Pie chart showing security diversification between domestic stocks,
international stocks, bonds, and money market instruments on 6/30/95.
Spectrum Growth participated in the technology rally through its 19% allocation
to New Horizons, which gained 24.1% in the first half due mostly to its
substantial holdings of technology stocks.
The fund's overall security diversification, as shown in the chart (lower
left), changed little from last quarter.
SPECTRUM INCOME FUND
PERFORMANCE AND STRATEGY REVIEW
Propelled by investments in the Equity Income and International Bond funds,
Spectrum Income provided excellent returns for the first half. Although the
dollar strengthened slightly against the yen and the deutschemark in the second
quarter, the International Bond Fund still returned 16.8% for the six months,
mostly due to currency translation in the first quarter. (When the dollar is
weak, returns on foreign investments receive a boost from the conversion into
dollars.)
The Equity Income Fund, while trailing the broader S&P 500 because of its
value approach and focus on high-dividend securities, participated strongly in
the stock and bond market rallies, returning 6.7% and 15.4% for the three- and
six-month periods, respectively. This fund continues to play a valuable role as
Spectrum Income's main vehicle for diversification away from strictly interest
rate-sensitive investments.
Spectrum Income outperformed its Lipper peer group average for the six-
month period, but lagged slightly behind in the latest quarter. Since the fund
is more broadly diversified than most income-oriented funds, with more
international exposure, it did not benefit quite as much from the quick and
steep descent of U.S. interest rates last quarter.
--------------------------------------------------------------------------------
Performance Comparison
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 6/30/95
3 Months 6 Months
---------------------
<S> <C> <C>
Spectrum Income Fund 4.75% 11.61%
Lipper Flexible Income
Funds Average* 5.36 10.30
--------------------------------------------------------------------------------
</TABLE>
* Based on income-oriented funds which invest in stocks and bonds.
2
<PAGE>
We made only slight changes to the fund's allocations during the quarter.
As the pie chart shows, half of the portfolio is invested in high-grade U.S.
bonds. While bonds are not likely to enjoy the torrid price appreciation of the
first quarter, they should still perform well, especially if the Fed continues
to lean toward ease. As shown in the allocation table following this letter, we
approached the limit in our exposure to the GNMA and New Income funds, at 16%
and 28% of assets, respectively. GNMAs continue to provide attractive income,
and mortgage prepayments, in our view, will not be nearly as high as some
suggest. We increased our emphasis on high-quality bonds since they tend to
outperform lower-quality bonds when the economy's pace cools.
--------------------------------------------------------------------------------
Security Diversification
--------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Pie chart showing security diversification among high-grade bonds, money
markets, high-yield bonds, international bonds, and stocks on 6/30/95.
We lowered our commitment to international bonds to 11% of the fund's
assets from 14% last quarter. While international bonds contributed nicely to
your fund's performance in the first half, we believe the dollar has bottomed
out and may rally in coming months. That would reduce the benefits of currency
translation, which was such a strong factor behind the solid returns of
international bonds in the first half.
OUTLOOK
The cut in the federal funds rate, together with a fundamentally sound economy,
should help allay fears of a near-term recession. The question now is the pace
of economic growth for the rest of the year and the Fed's future course on
monetary policy. Recent signals have been mixed: industrial production remains
weak, with several months of declines followed by a slight uptick in June. But
retail sales rose and unemployment dropped in June, indicating underlying
strength in the economy.
We believe the economy remains basically sound and will pick up later this
year, which is good news for stocks. A recovering economy could eliminate the
need for further rate cuts by the Fed and hurt the high-grade bond market.
However, stronger growth should be good for high-yield bonds, which represent
17% of Spectrum Income's portfolio.
Looking abroad, we expect foreign stocks to be bolstered by improving
global economies, but foreign bond returns to U.S. investors may be more
negatively affected by an improving dollar. The Spectrum Funds, with their
exceptionally broad diversification, offer protection from these fluctuations
because declines in any one sector can be balanced by investments in other,
unrelated sectors. Such diversification offers the potential for attractive
returns over the long haul with less short-term volatility than more narrowly
focused funds.
At the end of June, the Spectrum Funds celebrated their fifth birthday,
growing to nearly $2 billion in total assets. Around two-thirds of that money
has been invested through IRAs and other retirement plans. We thank you for your
continued confidence.
Respectfully submitted,
/s/ Peter Van Dyke
Peter Van Dyke
President and Chairman of the
Investment Advisory Committee
July 19, 1995
3
<PAGE>
--------------------------------------------------------------------------------
Spectrum Growth Fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Key Statistics
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Change in Price Per Share Periods Ended 6/30/95
--------------------------------------------------------------------------------
<S> <C>
3 Months (From $11.85 to $12.71) $0.86
--------------------------------------------------------------------------------
6 Months (From $11.13 to $12.71) 1.58
--------------------------------------------------------------------------------
Total Net Assets $1,099.7 Million
--------------------------------------------------------------------------------
Average Annual Compound Total Return
--------------------------------------------------------------------------------
1 Year 20.04%
--------------------------------------------------------------------------------
5 Years 11.89
--------------------------------------------------------------------------------
</TABLE>
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
--------------------------------------------------------------------------------
Allocations
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Minimum-
Underlying Fund Maximum 6/30/95
--------------------------------------------------------------------------------
<S> <C> <C>
Prime Reserve 0 - 25% 0.0%
--------------------------------------------------------------------------------
Equity Income 5 - 20 11.0
--------------------------------------------------------------------------------
Growth & Income 5 - 20 13.0
--------------------------------------------------------------------------------
Growth Stock 15 - 30 23.0
--------------------------------------------------------------------------------
New Era 10 - 25 14.0
--------------------------------------------------------------------------------
International Stock 5 - 20 20.0
--------------------------------------------------------------------------------
New Horizons 10 - 25 19.0
--------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
Ten Largest Holdings
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
Total
Company Net Assets
--------------------------------------------------------------------------------
<S> <C>
Royal Dutch Petroleum 0.9%
--------------------------------------------------------------------------------
Atlantic Richfield 0.9
--------------------------------------------------------------------------------
Schlumberger 0.8
--------------------------------------------------------------------------------
Viacom 0.7
--------------------------------------------------------------------------------
GE 0.7
--------------------------------------------------------------------------------
Paychex 0.7
--------------------------------------------------------------------------------
Mobil 0.6
--------------------------------------------------------------------------------
CUC International 0.6
--------------------------------------------------------------------------------
Wal-Mart 0.6
--------------------------------------------------------------------------------
Freddie Mac 0.6
--------------------------------------------------------------------------------
Total 7.1%
--------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
Spectrum Income Fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Key Statistics
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dividend Yield* Periods Ended 6/30/95
--------------------------------------------------------------------------------
<S> <C>
3 Months 6.70%
--------------------------------------------------------------------------------
6 Months 6.92
--------------------------------------------------------------------------------
SEC 30-Day Yield 6.41
--------------------------------------------------------------------------------
Dividend Per Share
--------------------------------------------------------------------------------
3 Months $0.18
--------------------------------------------------------------------------------
6 Months 0.36
--------------------------------------------------------------------------------
Change in Price Per Share
--------------------------------------------------------------------------------
3 Months (From $10.56 to $10.88) $0.32
--------------------------------------------------------------------------------
6 Months (From $10.11 to $10.88) 0.77
--------------------------------------------------------------------------------
Weighted Average Quality** 2.4***
--------------------------------------------------------------------------------
Weighted Average Maturity 8.0 years***
--------------------------------------------------------------------------------
Total Net Assets $841.6 Million
Average Annual Compound Total Return
--------------------------------------------------------------------------------
1 Year 13.34%
5 Years 10.25
</TABLE>
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the average daily net asset values per share for the same
period.
** On a scale of 1 to 10, with Grade 1 representing highest quality.
*** Excludes the Equity Income Fund.
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
--------------------------------------------------------------------------------
Allocations
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Minimum-
Underlying Fund Maximum 6/30/95
--------------------------------------------------------------------------------
<S> <C> <C>
Prime Reserve 5 - 30% 5.0%
--------------------------------------------------------------------------------
Short-Term Bond 0 - 15 4.5
--------------------------------------------------------------------------------
GNMA 5 - 20 16.0
--------------------------------------------------------------------------------
New Income 15 - 30 28.0
--------------------------------------------------------------------------------
High Yield 10 - 25 19.5
--------------------------------------------------------------------------------
International Bond 5 - 20 12.0
--------------------------------------------------------------------------------
Equity Income 10 - 25 15.0
--------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
--------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price Spectrum Funds / June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
(values in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Growth Fund Investments
--------------------------------------------------------------------------------
Value
----------
<C> <S> <C>
11,687,384 shs. T. Rowe Price Growth Stock
Fund....................................... $ 254,785
18,475,878 T. Rowe Price International
Stock Fund................................. 216,722
11,664,871 T. Rowe Price New Horizons
Fund....................................... 213,584
6,409,698 T. Rowe Price New Era Fund.................... 144,731
7,729,844 T. Rowe Price Growth &
Income Fund................................ 135,968
7,205,044 T. Rowe Price Equity Income
Fund....................................... 129,402
4,887,816 T. Rowe Price Prime Reserve
Fund....................................... 4,888
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0% OF NET ASSETS
(COST $971,129).................................................. 1,100,080
--------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES.................................... (334)
----------
NET ASSETS CONSIST OF: Value
--------
Accumulated net investment
income - net of distributions............ $ 4,412
Accumulated realized gains/losses -
net of distributions..................... 5,179
Net unrealized gain......................... 128,951
Paid-in-capital applicable to
86,521,351 shares of $0.01
par value capital stock outstand-
ing; 1,000,000,000 shares of
Spectrum authorized...................... 961,204
--------
NET ASSETS....................................................... $1,099,746
==========
NET ASSET VALUE PER SHARE........................................ $12.71
======
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Income Fund Investments
--------------------------------------------------------------------------------
Value
---------
<C> <S> <C>
26,019,255 shs. T. Rowe Price New Income
Fund......................................... $233,913
20,452,541 T. Rowe Price High Yield
Fund......................................... 166,075
7,330,333 T. Rowe Price Equity Income
Fund......................................... 131,653
12,718,750 T. Rowe Price GNMA Fund......................... 120,701
9,718,337 T. Rowe Price International
Bond Fund.................................... 103,014
49,655,856 T. Rowe Price Prime Reserve
Fund......................................... 49,656
9,433,679 T. Rowe Price Short-Term Bond
Fund......................................... 44,527
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.9% OF NET ASSETS
(COST $828,352).................................................... 849,539
--------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES...................................... (7,902)
--------
NET ASSETS CONSIST OF: Value
--------
Accumulated realized gains/losses -
net of distributions...................... $ (2,130)
Net unrealized gain.......................... 21,187
Paid-in-capital applicable to
77,348,234 shares of $0.01
par value capital stock outstand-
ing; 1,000,000,000 shares of
Spectrum authorized....................... 822,580
--------
NET ASSETS......................................................... $841,637
========
NET ASSET VALUE PER SHARE.......................................... $10.88
======
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations
--------------------------------------------------------------------------------
T. Rowe Price Spectrum Funds / Six Months Ended June 30, 1995 (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Growth Income
Fund Fund
-------- -------
<S> <C> <C>
INVESTMENT INCOME
Income distributions from Underlying Funds........................ $ 4,412 $26,286
-------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Sale of Underlying Funds....................................... (977) (2,309)
Capital gain distributions from Underlying Funds............... 2,081 945
-------- -------
Net realized gain (loss)....................................... 1,104 (1,364)
Change in net unrealized gain or loss............................. 127,414 59,521
-------- -------
Net realized and unrealized gain (loss)........................... 128,518 58,157
-------- -------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................. $132,930 $84,443
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
--------------------------------------------------------------------------------
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
T. Rowe Price Spectrum Funds (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Growth Fund Income Fund
---------------------------------- --------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
June 30, 1995 Dec. 31, 1994 June 30, 1995 Dec. 31, 1994
---------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Income distributions.................................. $ 4,412 $ 12,230 $ 26,286 $ 39,951
Net realized gain (loss).............................. 1,104 57,788 (1,364) 7,288
Change in net unrealized gain or loss................. 127,414 (59,702) 59,521 (59,602)
---------- -------- -------- --------
Increase (decrease) in net assets from operations..... 132,930 10,316 84,443 (12,363)
---------- -------- -------- --------
Distributions to shareholders
Net investment income................................. -- (12,230) (26,286) (39,951)
Net realized gain..................................... -- (53,228) (2,082) (6,247)
---------- -------- -------- --------
Decrease in net assets from distributions............. -- (65,458) (28,368) (46,198)
---------- -------- -------- --------
Capital share transactions*
Shares sold........................................... 174,873 412,180 215,169 268,102
Distributions reinvested.............................. -- 62,074 25,285 40,313
Shares redeemed....................................... (87,423) (124,622) (79,832) (212,845)
---------- -------- -------- --------
Increase (decrease) in net assets from
capital share transactions......................... 87,450 349,632 160,622 95,570
---------- -------- -------- --------
Increase (decrease) in net assets........................ 220,380 294,490 216,697 37,009
NET ASSETS
Beginning of period................................... 879,366 584,876 624,940 587,931
---------- -------- -------- --------
End of period......................................... $1,099,746 $879,366 $841,637 $624,940
========== ======== ======== ========
---------------------------------------------------------------------------------------------------------------------------------
*Capital share transactions (number of shares)
Shares sold........................................... 14,965 34,623 20,710 25,117
Distributions reinvested.............................. -- 5,613 2,387 3,858
Shares redeemed....................................... (7,434) (10,518) (7,556) (20,072)
---------- -------- -------- --------
Increase (decrease) in shares outstanding............. 7,531 29,718 15,541 8,903
---------- -------- -------- --------
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements
--------------------------------------------------------------------------------
T. Rowe Price Spectrum Funds / June 30, 1995 (Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Spectrum Fund, Inc. (Spectrum) is registered under the Investment
Company Act of 1940. Spectrum Growth Fund (the Growth Fund) and Spectrum Income
Fund (the Income Fund), non-diversified, open-end management investment
companies, are the two portfolios established by Spectrum.
The Growth Fund and Income Fund invest in other mutual funds (the
Underlying Funds) sponsored and managed by T. Rowe Price Associates, Inc.
A) Security valuation - Investments in the Underlying Funds are valued at the
closing net asset value per share of each Underlying Fund on the day of
valuation.
B) Other - Income is recorded on the accrual basis. Distributions from the
Underlying Funds and distributions to Spectrum's shareholders are recorded on
the ex-dividend date. Purchases and sales of the Underlying Funds are accounted
for on the trade date. Realized gains and losses are reported on an identified
cost basis. Capital gain distributions are determined in accordance with federal
income tax regulations which may differ from generally accepted accounting
principles.
NOTE 2 - UNDERLYING FUND TRANSACTIONS
Purchases and sales of the Underlying Funds for the six months ended June 30,
1995, were as follows:
<TABLE>
<CAPTION>
Growth Income
Fund Fund
-------- --------
Amounts in Thousands
-----------------------
<S> <C> <C>
Purchases $140,530 $220,605
Sales 42,218 49,485
</TABLE>
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since each Fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At June 30, 1995, the aggregate cost of the Underlying Funds held by the
Growth Fund and Income Fund for federal income tax and financial reporting
purposes was $971,129,000 and $828,352,000, respectively. Net unrealized gain or
loss of the Underlying Funds was as follows:
<TABLE>
<CAPTION>
Growth Income
Fund Fund
-------- --------
Amounts in Thousands
--------------------
<S> <C> <C>
Appreciated Funds $128,951 $27,930
Depreciated Funds -- (6,743)
-------- -------
Net Unrealized Gain or Loss $128,951 $21,187
======== =======
</TABLE>
NOTE 4 - INVESTMENT MANAGER
The Growth Fund and Income Fund are managed by T. Rowe Price Associates, Inc.
(the Manager). Each Fund operates at a zero expense ratio by virtue of a Special
Servicing Agreement (the Agreement) between and among Spectrum, the Underlying
Funds, the Manager and T. Rowe Price Services, Inc. The Agreement provides that
each Underlying Fund will bear expenses associated with the operation of
Spectrum in proportion to the average daily value of its shares owned by
Spectrum.
8
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
T. Rowe Price Spectrum Funds (Unaudited)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
-----------------------------------------------------------------------------------
June 29, 1990
Six Months Year Ended December 31, (Commencement of
Ended ------------------------------------------------- Operations) to
June 30, 1995 1994 1993 1992 1991 Dec. 31, 1990
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------
Spectrum Growth Fund
----------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD.................................. $11.13 $11.87 $10.54 $10.53 $ 8.52 $10.00
------ ------ ------ ------ ------ ------
Investment Activities
Income distributions received.............. 0.05 0.17 0.16 0.20 0.21 0.20
Net realized and unrealized gain (loss).... 1.53 (0.01) 2.05 0.56 2.33 (1.21)
------ ------ ------ ------ ------ ------
Total from Investment Activities........... 1.58 0.16 2.21 0.76 2.54 (1.01)
------ ------ ------ ------ ------ ------
Distributions
Income..................................... -- (0.17) (0.16) (0.20) (0.21) (0.19)
Net realized gain.......................... -- (0.73) (0.72) (0.55) (0.32) (0.28)
------ ------ ------ ------ ------ ------
Total Distributions........................ -- (0.90) (0.88) (0.75) (0.53) (0.47)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD................ $12.71 $11.13 $11.87 $10.54 $10.53 $ 8.52
====== ====== ====== ====== ====== ======
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return.................................. 14.2% 1.40% 21.0% 7.2% 29.9% (10.1)%
Ratio of Expenses to Average Net Assets....... 0.00%+ 0.00% 0.00% 0.00% 0.00% 0.00%+
Ratio of Net Investment Income to
Average Net Assets......................... 0.89%+ 1.60% 1.57% 2.15% 2.77% 4.50%+
Portfolio Turnover Rate....................... 8.6%+ 20.7% 7.0% 7.9% 14.6% 33.4%+
Net Assets, End of Period (in thousands)...... $1,099,746 $879,366 $584,876 $355,134 $148,661 $35,387
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
Spectrum Income Fund
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD.................................. $10.11 $11.11 $10.70 $10.73 $ 9.77 $10.00
------ ------ ------ ------ ------ ------
Investment Activities
Income distributions received.............. 0.36 0.69 0.69 0.76 0.82 0.44
Net realized and unrealized gain (loss).... 0.80 (0.90) 0.60 0.05 1.03 (0.18)
------ ------ ------ ------ ------ ------
Total from Investment Activities........... 1.16 (0.21) 1.29 0.81 1.85 0.26
------ ------ ------ ------ ------ ------
Distributions
Income..................................... (0.36) (0.69) (0.69) (0.76) (0.83) (0.44)
Net realized gain.......................... (0.03) (0.10) (0.19) (0.08) (0.06) (0.05)
------ ------ ------ ------ ------ ------
Total Distributions........................ (0.39) (0.79) (0.88) (0.84) (0.89) (0.49)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD................ $10.88 $10.11 $11.11 $10.70 $10.73 $ 9.77
====== ====== ====== ====== ====== ======
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return.................................. 11.6% (1.9)% 12.4% 7.8% 19.6% 2.7%
Ratio of Expenses to Average Net Assets....... 0.00%+ 0.00% 0.00% 0.00% 0.00% 0.00%+
Ratio of Net Investment Income to
Average Net Assets......................... 6.85%+ 6.48% 6.19% 7.10% 8.03% 9.58%+
Portfolio Turnover Rate....................... 12.9%+ 23.1% 14.4% 14.2% 18.8% 36.9%+
Net Assets, End of Period (in thousands)...... $841,637 $624,940 $587,931 $376,435 $147,859 $40,082
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
9
<PAGE>
--------------------------------------------------------------------------------
Shareholder Services
--------------------------------------------------------------------------------
To help shareholder monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information and services--at no extra cost.
Knowledgeable Service Representatives
By Phone--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m ET. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
Automated 24-Hour Services
Tele*Access(R)(1-800-638-2587) provides information such as account
balance, date and amount of your last transaction, latest dividend payment, and
fund prices and yields. Additionally, you have the ability to request
prospectuses, statements, account and tax forms; reorder checks; and initiate
purchase, redemption, and exchange orders for identically registered accounts.
PC*Access(R) provides the same information as Tele*Access, but on a personal
computer via dial-up modem.
Account Services
Checking--Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield Fund and Emerging Markets Bond Fund).
Automatic Investing--Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into a Stock fund. A low, $50 minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a regular
basis, you can establish scheduled automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
Investment Information
Combined Statement--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides total
portfolio value, and lists your investments by type--stock, bond, and money
market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports--Portfolio managers review the performance of
the funds in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant articles on
market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights--A library of information that includes reports on mutual fund tax
issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can help
you determine and reach your investment goals.
Discount Brokerage
You can trade stocks, bonds, options, precious metals, and other securities at a
substantial savings over regular commission rates. Call a shareholder service
representative for more information.
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T. Rowe Price No-Load Mutual Funds
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STABILITY
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
CONSERVATIVE INCOME
Short-Term Bond
Short-Term Global Income
Short-Term U.S. Government
Summit Limited-Term Bond
U.S. Treasury intermediate
Florida Insured Intermediate Tax-Free
Maryland Short-Term Tax-Free Bond
Summit Municipal Intermediate
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginal Short-Term Tax-Free Bond
INCOME
Global Government Bond
GNMA
New Income
Spectrum Income
Summit GNMA
U.S. Treasury Long-Term
California Tax-Free Bond
Georgia Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Tax-Free Income
Virginia Tax-Free Bond
AGGRESSIVE INCOME
Emerging Markets Bond
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Equity Index
Growth & Income
Spectrum Growth
Value
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
Capital Opportunity
Emerging Markets Stock
International Discovery
Latin America
New American Growth
New Asia
New Horizons
OTC
Science & Technology
PERSONAL STRATEGY FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Call if you want to know about any T. Rowe Price fund. We'll send you a
prospectus with more complete information, including management fees and other
expenses. Read it carefully before you invest or send money. T. Rowe Price
Investment Services, Inc., Distributor.
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SEMIANNUAL REPORT
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T.Rowe Price
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SPECTRUM FUNDS
JUNE 30, 1995
[LOGO OF T. ROWE PRICE APPEARS HERE]
FOR YIELD, PRICE, LAST TRANSACTION, AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
FOR ASSISTANCE WITH YOUR EXISTING FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. ROWE PRICE
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Spectrum Funds.
T.Rowe Price
Invest With Confidence/(R)/
SPC
