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FUND PROFILE
December 1, 1998
T. Rowe Price Spectrum Income Fund
A broadly diversified fund composed of other T. Rowe Price funds investing
primarily in fixed income securities.
This profile summarizes key information about the fund that is included in the
fund's prospectus. The fund's prospectus includes additional information about
the fund, including a more detailed description of the risks associated with
investing in the fund that you may want to consider before you invest. You may
obtain the prospectus and other information about the fund at no cost by
calling 1-800-541-7885, or by visiting our Web site at www.troweprice.com.
1. What is the fund's objective?
The fund seeks a high level of current income consistent with moderate share
price fluctuation.
2. What is the fund's principal investment strategy?
The fund can diversify its assets widely among nine T. Rowe Price funds: five
domestic bond funds, two international bond funds, one money market fund, and
one income-oriented stock fund. Within the ranges shown in the next
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chart, managers decide how much of the fund's assets to allocate to each
underlying fund based on their view of the relative valuations of the
underlying funds and of the various markets in which they invest.
<TABLE>
<CAPTION>
Asset Allocation Ranges
Fund Percent of assets Fund Percent of assets
<S> <C> <C> <C>
Short-Term Bond 0-15% Summit Cash Reserves 0-25%
GNMA 5-20 New Income 15-30
International Bond 5-20 U.S. Treasury Long-Term 0-15
Equity Income 10-25 Emerging Markets Bond 0-10
High Yield 10-25
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</TABLE>
Further information about the fund's investments, including a review of
market conditions and fund strategies and their impact on performance, is
available in the annual and semiannual shareholder reports. To obtain free
copies of any of these documents, or for shareholder inquiries, call
1-800-541-7885.
3. What are the main risks of investing in the fund?
Because the fund invests in a broad array of investments, its overall
performance could be affected by downturns in many different markets. In
general, the share price of the fund will move in the opposite direction of
U.S. interest rates, so rising rates represent the most important source of
risk. There is also exposure to credit risk: corporate bond holdings in the
underlying funds may have their credit ratings downgraded or they may
default. Such events could reduce the fund's share price and income level.
The risk of default is more pronounced in the fund's high-yield ("junk")
corporate bond holdings. Foreign bond holdings expose the fund to risks of
international investing: for example, weakening foreign currencies versus the
U.S. dollar could reduce returns from bonds denominated in other currencies,
and emerging market bonds are subject to the special political and economic
risks of these newly industrialized countries. To the extent that Spectrum
Income has exposure to stocks, its share price could be lowered by stock
market declines.
As with any mutual fund, there can be no guarantee the fund will achieve its
objective.
o The fund's share price may decline, so when you sell your shares, you may
lose money. An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
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4. How can I tell if the fund is appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for the inherent risk of common stock investments. If you seek
high current income through very broad diversification, the fund may be an
appropriate investment. The fund should not represent your complete
investment program or be used for short-term trading purposes.
The fund can be used in both regular and tax-deferred accounts, such as IRAs.
5. How has the fund performed in the past?
The bar chart shows the fund's actual performance for each of the last seven
calendar years since its inception. This chart and the average annual total
return table indicate risk by illustrating how much returns can differ from
one year to the next. The fund's past performance is no guarantee of its
future returns.
<TABLE>
<CAPTION>
Calendar Year Total Returns
--------------------------------
<S> <C>
1991 19.64%
1992 7.84
1993 12.36
1994 -1.94
1995 19.41
1996 7.64
1997 12.18
--------------------------------
</TABLE>
The fund can also experience short-term performance swings. The best calendar
quarter return during the years depicted in the chart was 6.56% in the first
quarter of 1995, and the worst was -2.63% in the first quarter of 1994.
<TABLE>
<CAPTION>
Average Annual Total Returns
Periods ended September 30, 1998
Since inception
1 year 5 years (6/29/90)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Spectrum Income Fund 6.10% 8.26% 9.87%
Salomon Smith Barney Broad
Investment Grade Index 11.47 7.22 9.15
Lipper General Bond Funds Average 6.03 6.86 9.49
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</TABLE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
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The fund's 30-day standardized yield was 6.39% as of September 30, 1998.
6. What fees or expenses will I pay?
The fund is 100% no load. There are no fees or charges to buy or sell fund
shares, reinvest dividends, or exchange into other T. Rowe Price funds. There
are no 12b-1 fees.
While the fund itself imposes no fees or charges, it will indirectly bear its
pro-rata share of the expenses of the underlying funds. The following table
provides a range for the fund's average weighted expense ratio. A range is
given instead of a single number because the pro-rata share of expenses
fluctuates along with changes in the average assets in each of the underlying
funds.
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
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<S> <C>
Range of average weighted expense ratio as of 0.74% to 0.81%
12/31/97
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</TABLE>
Example. The following table gives you a rough idea of how expense ratios
may translate into dollars and helps you to compare the cost of investing in
this fund with the cost of investing in other funds. Although your actual
costs may be higher or lower, the table uses the midpoint of the expense
range to show how much you would pay if operating expenses remain the same,
you invest $10,000, you earn a 5% annual return, and you hold the investment
for the following periods:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 year 3 years 5 years 10 years
$80 $250 $430 $970
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</TABLE>
7. Who manages the fund?
The fund is managed by T. Rowe Price Associates. Founded in 1937, T. Rowe
Price and its affiliates manage investments for individual and institutional
accounts. The company offers a comprehensive array of stock, bond, and money
market funds directly to the investing public.
Edmund M. Notzon III manages the fund day-to-day and is chairman of its
Investment Advisory Committee. He has been managing investments for T. Rowe
Price since 1989.
8. How can I purchase shares?
Fill out and return a New Account Form in the postpaid envelope, along with
your check. The minimum initial purchase is $2,500 ($1,000 for IRAs and gifts
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or transfers to minors) or $50 if investing through Automatic Asset Builder.
The minimum subsequent investment is $100 ($50 for IRAs, gifts or transfers
to minors, or Automatic Asset Builder). You can also open an account by bank
wire, by exchanging from another T. Rowe Price fund, or by transferring
assets from another financial institution. Employer-sponsored retirement
plans have separate requirements; see your plan administrator.
9. How can I sell shares?
You may redeem or sell any portion of your regular or IRA account on any
business day. Simply write to us or call. You can also access your account at
any time via Tele*Access /(R)/ or our Web site. We offer free exchange among
our entire family of domestic and international funds. Restrictions may apply
in special circumstances, and some redemption requests need a signature
guarantee. A $5 fee is charged for wire redemptions under $5,000.
Employer-sponsored retirement plans have separate procedures or restrictions;
see your plan administrator.
10. When will I receive income and capital gain distributions?
The fund distributes income monthly and net capital gains, if any, at
year-end. For regular accounts, income and short-term gains are taxable at
ordinary income rates, and long-term gains are taxable at the capital gains
rate. Distributions are reinvested automatically in additional shares unless
you choose another option, such as receiving a check. Distributions paid to
IRAs and employer-sponsored retirement plans are automatically reinvested.
11. What services are available?
A wide range, including but not limited to:
. retirement plans for individuals and large and small businesses;
. automated information and transaction services by telephone or computer;
. electronic transfers between fund and bank accounts;
. automatic investing and automatic exchange;
. discount brokerage.
To Open an Account
Investor Services
1-800-541-7885
For Fund Information and Account Transactions on the Internet
www.troweprice.com
T. Rowe Price 100 East Pratt Street Baltimore, MD 21202
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T. Rowe Price Investment Services, Inc., Distributor
LOGO
NEW ACCOUNT FORM (LOGO)
You may purchase shares of a T. Rowe Price fund after
reviewing the information in the profile or after requesting
and reviewing the fund's prospectus (and other information).
Please note: an IRA will not be established using this form.
If you want to open an IRA, call 1-800-638-5660 to request
an IRA New Account Form.
Mail this form to: T. Rowe Price
P.O. Box 17300, Baltimore, MD 21298-9353
For help with this form, call toll free 1-800-638-5660.
Please do not remove the mailing label from this form.
1 PROVIDE YOUR TAX IDENTIFICATION NUMBER
Owner's or Minor's Social Security or Tax ID Number
(Use Minor's Social Security Number for Custodial Account)
_ _ _ _ _ _ _ _ _
Joint Owner's or Custodian's Social Security or Tax ID Number
_ _ _ _ _ _ _ _ _
2 DESIGNATE TYPE OF ACCOUNT AND OWNER NAME(S)
Please print in CAPITAL LETTERS. Choose one:
__ Individual or Joint Account.*
*Joint tenancy with right of survivorship unless you instruct otherwise.
Owner's Name (First, Middle Initial, Last)
________________________________
Title: Mr. Ms. Mrs. Dr.
Joint Owner's Name (First, Middle Initial, Last)
________________________________
Title: Mr. Ms. Mrs. Dr.
__ Custodial Account.
Uniform Gift or Transfer to Minors Act (UGMA or UTMA)
Custodian's Name (First, Middle Initial, Last)
________________________________
Minor's Name (First, Middle Initial, Last)
________________________________
State of Residence (Minor's or Custodian's)
________________________________
__ Trust, Corporation, Business, or Other Entity Account.*
*Please attach the first and last pages of the trust agreement or a copy
of
the corporate resolution.
Name of Trust, Corporation, or Other Entity
_________________________________________________________
Trustee Names or Type of Entity
________________________________________________________
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Name of Trust Beneficiary (Optional) Date of Trust Agreement
________________ __-__-__
month day year
__ Check this box if your organization is incorporated or tax-exempt under
Section 501(a) of the Internal Revenue Code, a qualified retirement plan
under Section 401(a), or a custodial account under Section 403(b)(7),
and
you DO NOT want us to file information returns on your behalf.
3 PROVIDE YOUR ADDRESS
Street Address or P.O. Box
__________________________________________________
__________________________________________________
City State
____________________ __
ZIP Code
_ _ _ _ _ - _ _ _ _
4 PROVIDE OTHER ACCOUNT DATA
Daytime Phone Ext.
_ _ _ _ _ _ - _ _ _ _ _ _ _ _
Evening Phone Ext.
_ _ _ _ _ _ - _ _ _ _ _ _ _ _
Date of Birth (Owner/Minor)
Date of Birth (Joint Owner/Custodian)
_ _ - _ _ - _ _ _ _ - _ _ - _ _
month day year month day year
__ U.S. Citizen __ Resident Alien
__ Nonresident Alien. My permanent foreign address for tax purposes is:
_____________________________________
_____________________________________
Owner's Occupation / Employer Name (Optional)
_____________________________________
Employer Address (Optional)
__________________________________________________________________________
5 SELECT YOUR FUND(S)
Please print the fund name(s) exactly as listed inside the Investment Kit you
received with this form. Fill in the amount of your investment for each fund.
The minimum initial investment is $2,500 per fund ($1,000 for UGMAs/UTMAs)
but is waived if you use Automatic Asset Builder (see Sections 6 and 7E).
Fund Name Amount
__________________________________ $________
Fund Name Amount
__________________________________ $________
Fund Name Amount
__________________________________ $________
Fund Name Amount
<PAGE>
__________________________________ $________
Total Investment$________
6 CHOOSE YOUR INVESTMENT METHOD
A. __ By check.
Make payable to T. Rowe Price Funds. (Otherwise it may be returned.)
B. __ By Automatic Asset Builder.
See Section 7E for instructions.
C. __ By wire.
Please call 1-800-225-5132 for the following information and wiring
instructions:
Account Number
_ _ _ _ _ _ _ _ _ _ - _
Date of Wire
_ _ - _ _ - _ _
month day year
(over, please)
7 SELECT YOUR ACCOUNT SERVICE OPTIONS
A. TO RECEIVE YOUR DISTRIBUTIONS
Your dividends and capital gains will be reinvested unless you indicate
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otherwise.
__ Pay dividends and capital gains to me by check.
__ Transfer dividends and capital gains to my bank account.
(Please complete Section 7C if you elect this option.)
__ Pay dividends to me by check and reinvest capital gains.
B. TO EXCHANGE AND REDEEM FUND SHARES
You can use the telephone or your personal computer to check your account
balance, redeem shares, or make exchanges among any identically registered
accounts unless you check the boxes below.
------
__ I do NOT want telephone/computer exchange.
__ I do NOT want telephone/computer redemption.
C. TO MAKE TRANSFERS BETWEEN YOUR BANK AND T. ROWE PRICE
This service makes purchasing or redeeming fund shares even more convenient.
Simply call a T. Rowe Price representative or Tele*Access (R) and your
transaction
will be processed by electronically moving money between your bank
account and your mutual fund accounts.
Transfers occur only when you initiate them ($100 minimum) and are made
through the Automated Clearing House (ACH) network or by wire.* This service
becomes available approximately 20 days after your application is
processed. Since you initiate transfers by phone or computer, be sure that
you did not decline the phone/computer redemption service above.
__ Check this box to set up this service. YOU MUST ALSO ATTACH A BLANK,
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VOIDED CHECK (other than your investment check) from your bank
account to this form.
Any co-owner of your bank account who is not a co-owner of
---
your mutual fund account must sign below.
X___________________________________________
Bank Account Co-owner's Signature
*There is a $5 fee for wire redemptions under $5,000 but no fee for ACH
transactions.
ATTACH VOIDED CHECK HERE
D. TO SET UP CHECKWRITING
You can write checks for $500 or more on all T. Rowe Price money market and
bond fund accounts (except the High Yield and Emerging Markets Bond funds).
Those authorized to write checks should read the checking agreement and sign
below.
By signing this form, I agree to all of State Street Bank's checking account
rules, and to any conditions and limitations on redeeming checks from the
T. Rowe Price Funds. I also agree that:
(1) This form applies to any other identically registered T. Rowe Price
fund checking account I establish later;
(2) If I am subject to IRS backup withholding, I may write checks only on
money fund accounts;
(3) State Street Bank and the Fund reserve the right to change, revoke, or
close any checking account;
(4) The signatures are authentic, and, for organizations, I have submitted
an original or certified resolution authorizing the individuals with legal
capacity to sign and act on behalf of the organization.
(Do not detach this section from the rest of the form.)
_____________________________________________________
Fund Name Fund Name
_____________________________________________________
Print Name of Owner, Custodian, or Trustee
X___________________________________________________
Signature Date
_____________________________________________________
Print Name of Joint Owner, Co-trustee, Corporate Officer, etc.
X___________________________________________________
Signature Date
How many signatures do you require on checks?
__ Only one owner __ All owners
G00-008 6/30/98
E. TO SET UP AUTOMATIC ASSET BUILDER
This service allows you to automatically invest in your fund account through
your
<PAGE>
bank account and/or payroll deduction each month (minimum $50 per fund).
___ Check this box to invest from your bank account.
Be sure to complete Section 7C and fill in the information below.
Fund Name
__________________________________________________________________________
Amount Day of Month You Would Like to Invest
__________________________________ ____
Fund Name
__________________________________________________________________________
Amount Day of Month You Would Like to Invest
_____________________ ___
Fund Name
__________________________________________________________________________
Amount Day of Month You Would Like to Invest
_____________________ ___
Fund Name
__________________________________________________________________________
Amount Day of Month You Would Like to Invest
_____________________ ___
____ Check this box to invest through payroll deduction.
T. Rowe Price will mail you instructions for this service.
8 SIGN YOUR NEW ACCOUNT FORM
By signing this form, I certify that:
- - I agree to be bound by the terms of the prospectus for each fund in which
I am investing. If I am purchasing shares after reviewing a fund profile, I
understand that I will receive the prospectus after I purchase shares in the
fund. I have the authority and legal capacity to purchase mutual fund shares,
am of legal age in my state, and believe each investment is suitable for me.
- - I authorize T. Rowe Price, the Funds, their affiliates and agents to act on
any
instructions believed to be genuine for any service authorized on this form,
including telephone/computer services. The Funds use reasonable procedures
(including shareholder identity verification) to confirm that instructions
given by telephone/computer are genuine, and the Funds are not liable for
acting on these instructions. (If these procedures are not followed, it is the
opinion of certain regulatory agencies that the Funds may be liable for any
loss that may result from acting on instructions given.) I understand that
anyone who can properly identify my account(s) can make phone/computer
transactions on my behalf.
- - The Funds can redeem shares from my account(s) to reimburse a fund for
any loss due to nonpayment or other indebtedness.
- - By selecting the electronic transfer service in Section 7C, I hereby authorize
T. Rowe Price to initiate credit and debit entries to my (our) account at the
<PAGE>
Financial Institution indicated and for the Financial Institution to credit or
debit the same to such account through the Automated Clearing House
(ACH) system, subject to the rules of the Financial Institution, ACH, and the
Fund. T. Rowe Price may correct any transaction error with a debit or credit
to my Financial Institution account and/or Fund account. THIS AUTHORIZA-
tion, including any credit or debit entries initiated thereunder, is in full
force and effect until I notify T. Rowe Price of its revocation by telephone
or in writing and T. Rowe Price has had sufficient time to act on it.
- - Under penalties of perjury, the tax identification number(s) shown on
this form is correct. If I fail to give the correct number or fail to sign this
form, T. Rowe Price may reject, restrict, or redeem my investment. I may
also be subject to IRS backup withholding (currently 31%) on all
distributions and redemptions, and I may be subject to a $50 IRS penalty.
- - Under penalties of perjury, I am NOT subject to IRS backup withholding
because 1) I have not been notified, or 2) notification has been revoked
(cross out "NOT" if you are currently subject to withholding), or 3) I have
indicated in Section 4 that I am a nonresident alien and certify that for
dividends I am not a U.S. citizen or resident (or I am filing for a foreign
corporation, partnership, estate, or trust).
- - For clarification on any of these certification issues, please contact us for
assistance.
- - The IRS does not require your consent to any provision of this document
other than the certifications required to avoid backup withholding.
PLEASE SIGN HERE
X__________________________________________________
Signature of Owner, Custodian, or Trustee Date
X__________________________________________________
Signature of Joint Owner, Co-trustee, Corporate Officer, etc. Date
Thank you for your investment. You will receive a confirmation shortly.
8
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