<PAGE>
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T. Rowe Price
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Annual Report
Spectrum Funds
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December 31, 1999
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REPORT HIGHLIGHTS
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SPECTRUM FUNDS
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* U.S. stocks soared to new records in 1999 and most international markets
fared even better. Bonds were weak, however, with the exception of emerging
market bonds.
* Spectrum Growth posted strong returns of 11.07% and 21.20%, respectively,
for the 6- and 12-month periods ended December 31, exceeding both its
benchmarks.
* Spectrum Income struggled with rising interest rates and a declining euro.
Results were mixed versus its benchmarks.
* Spectrum International's outstanding gains of 30.36% and 39.49% for the 6-
and 12-month periods were on a par with its peer group average and well
ahead of its combined index benchmark.
* The fundamental backdrop for both stocks and bonds remains favorable, and
we believe the Spectrum Funds' diversified approach will benefit
shareholders.
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UPDATES AVAILABLE
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For updates on T. Rowe Price funds following the end of each calendar
quarter, please see our Web site at www.troweprice.com.
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FELLOW SHAREHOLDERS
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Stocks around the world capped the decade with another outstanding year in
1999, and most major U.S. averages closed at record highs. Foreign markets
outpaced the U.S. for the first time since 1994, rebounding with a vengeance
from the global crises of 1997-98. Good news for the world economy was bad news
for high-quality bonds, which endured their most difficult year in the past six.
High-yield bonds managed positive returns, while both emerging market bonds and
stocks surged.
YEAR-END DISTRIBUTIONS
- ----------------------
The Spectrum Funds' directors declared year-end distributions as follows:
Spectrum Growth had a year-end income dividend of $0.17 per share, a short-term
capital gain of $0.22 per share, and a long-term capital gain of $1.69 per
share. Spectrum Income had a long-term capital gain distribution of $0.11.
Spectrum International had a year-end dividend of $0.13 per share, a short-term
capital gain of $0.10, and a long-term capital gain of $0.87. These
distributions were paid on December 16 to shareholders of record on December 14.
You should already have received your check or statement reflecting them as well
as our Form 1099-DIV summarizing this information for 1999 tax purposes.
<PAGE>
MARKET ENVIRONMENT
- ------------------
Small-cap and international stocks -- both in developed and emerging
markets -- joined the party in 1999 and even surpassed the returns of the once
invincible S&P 500 Stock Index, as shown in the chart. As evidence of the global
economic recovery mounted, investor appetite for risk also grew: Asian stocks, e
merging market stocks and bonds, and tech and telecom shares everywhere were
"in"; U.S. Treasuries and even many classic consumer growth stocks were "out."
Though value-oriented stocks -- including high-dividend and natural resource
shares -- did well in the first half, they lagged again in the second half.
Japanese stocks snapped out of their decade-long funk, soaring 61.77%,
aided by a strong yen. (All foreign market returns are cited in U.S. dollars and
based on Morgan Stanley Capital International indices.) Corporate restructuring,
unexpectedly strong economic data, and the government's financial sector reforms
spurred foreign investors to reallocate capital back to a market they had
shunned for years. The All Countries Far East Free Ex-Japan Index gained 62.11%,
aided by government and corporate reforms (though still incomplete) and a
faster-than-expected recovery from the Asian economic crisis. Strong global
demand for exports, particularly technology components, helped the Pacific Rim
bounce back. Latin American markets surged 58.89%, shrugging off the devaluation
of the Brazilian real last January. European shares, by contrast, rose a
comparatively modest 16.23% for the year, weighed down by a tepid U.K. market
and a decline in the new common currency, the euro.
By midyear, the U.S. Federal Reserve had begun a consistent campaign to
tighten monetary policy, slow the domestic economy, and dampen inflationary
pressures. High-quality bonds, particularly U.S. Treasuries, paid the price. The
markets -- and the Fed -- grew increasingly concerned about potential
inflationary pressures, especially from a tight U.S. labor market. The yield on
the 30-year Treasury bond rose from about 5% in January to nearly 6.5% at the
end of the year, as shown the chart, producing negative total returns for most
high-quality bonds. High-yield bonds delivered modest gains, while emerging
market bonds rose strongly. Both of the latter instruments are comparatively
less sensitive to interest rate movements than investment-grade bonds and are
more tied to prospects for economic growth and the creditworthiness of their
issuers. Among high-quality bonds, mortgage-backed securities held their value
better than others, as rising interest rates reduced mortgage prepayments (which
occur when homeowners refinance at lower rates). High-quality bonds overseas
were also hurt by rising rates, and those denominated in the declining euro
fared even worse. Emerging market bonds, however, posted excellent returns as
confidence rose in the ability of borrowers to repay their debts and as
currencies in emerging markets stabilized.
SPECTRUM GROWTH FUND
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PERFORMANCE COMPARISON
----------------------
Periods Ended 12/31/99 6 Months 12 Months
---------------------- -------- ---------
Spectrum Growth Fund 11.07% 21.20%
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Lipper Multi-Cap
Core Fund Index 9.18 20.79
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S&P 500 Stock Index 7.71 21.04
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<PAGE>
Performance was strong over the 6- and 12-month periods ended December 31,
1999. The Spectrum Growth Fund's gains of 11.07% over the past six months and
21.20% for the year exceeded both benchmarks, as shown in the table. With this
report, we are introducing the fund's new Lipper category. Previously, Lipper
Inc. assigned a fund to a category based on its objective as outlined in its
prospectus. The new categories are based on the major characteristics of each
fund's actual portfolio holdings, such as market capitalization, price/earnings
ratios and other valuation measures, earnings growth rates, and so on. At
present, this change does not affect the other two Spectrum Funds.
For the first time since 1994, the fund's strategy of remaining diversified
with investments in both U.S. and foreign stocks, and in large-caps as well as
small-caps, boosted performance relative to the unmanaged S&P 500 Stock Index,
primarily a large-cap, domestic benchmark. Both the International Stock Fund and
the New Horizons Fund (which gives us exposure to small-cap growth stocks)
delivered outstanding full-year gains. In our view, this validates our thesis
for diversification: One never knows which sector or investment style is going
to perform best in any given year, but diversification can provide solid
long-term returns with reduced volatility. A corollary, however, is that some
portions of a diversified portfolio will lag the leaders each year. In 1999, the
fund's exposure to value stocks through the Equity Income, Growth & Income, and
Mid-Cap Value funds restrained returns.
The International Stock Fund provided our strongest returns for the year,
powered by its excellent second-half performance. Similarly, the New Horizons
Fund's outstanding yearly gain was largely driven by its extraordinary surge in
the fourth quarter. Steadier performance came from the Blue Chip Growth and
Growth Stock funds, and the performance of all four funds was driven by
technology and telecom holdings. (The Growth Stock Fund also has significant
foreign stock holdings.) While the Growth & Income, Equity Income, and New Era
funds provided our best performance in the first half, their returns were flat
to negative over the past six months. New Era's results still aided fund
performance over the full year, thanks to the strength of natural resource
stocks in the first half. The Mid-Cap Value Fund also declined in the second
half and provided only a modest return for the year.
We further reduced exposure to the large-cap growth sector over the past
six months and invested the proceeds primarily in international stocks and, to a
lesser extent, in large-cap value stocks. The fund ended the year at its maximum
allocation to the International Stock Fund (25%), which was positive for
performance. Our shift towa rd large-cap value, begun in the first half,
initially looked well timed but crimped returns over the past six months and for
the year. Target allocations for the Blue Chip Growth and Growth Stock funds
were reduced to 9.5% and 10%, respectively, while targets for the Growth &
Income and Equity Income funds were raised to 14% each. (See table on page 13.)
As shown in the security diversification chart on this page, the fund is now
evenly split between large-cap domestic stocks on one hand and international and
small-cap stocks on the other.
<PAGE>
During the past six months, our target allocations to the New Horizons
(21%), Mid-Cap Value (4%), and New Era (2.5%) funds were unchanged. We believe
our shift toward value stocks will pay dividends because of the valuation
disparity between these stocks and the high-priced New Economy stocks that led
the averages last year. In a market where valuations are high from a historical
perspective, many value stocks are available at prices that would be considered
cheap in nearly any market environment. Increased global growth should benefit
value sectors, including commodity-related stocks. Small-cap stocks appear to be
rebounding from a period of extreme undervaluation relative to large caps
(though this has been led by technology and other growth sectors). We are
comfortable with our maximum exposure to foreign stocks, because we believe the
investment cycle is at an earlier stage in international markets. With all that
said, the backdrop for the U.S. market and its leading large-cap growth stocks
remains favorable, characterized by strong earnings growth, low inflation, and
rising productivity.
SPECTRUM INCOME FUND
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PERFORMANCE COMPARISON
----------------------
Periods Ended 12/31/99 6 Months 12 Months
---------------------- -------- ---------
Spectrum Income Fund 0.01% 0.26%
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Lipper General Bond
Funds Average 1.39 0.66
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Salomon Smith Barney Broad
Investment Grade Index 0.56 -0.83
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As mentioned, last year was the worst for bond investors since 1994, and
this is reflected in the performance table. The Spectrum Income Fund lagged its
Lipper peer group average and its unmanaged benchmark over the past six months,
though the fund outperformed the Salomon Smith Barney Broad Investment Grade
Index over the full year. The six-month result was affected by the poor
performance of the Equity Income Fund during that period and by our exposure to
the U.S. Treasury Long-Term Fund, which was hurt by rising interest rates. For
the year, our exposure to high-dividend stocks aided performance relative to the
Salomon index, but losses in long-term Treasuries and in the International Bond
Fund detracted from return. The Salomon index has no exposure to equities or to
international bonds denominated in foreign currencies. It's important to keep an
eye on the longer term during such challenging times for bond investors. Since
inception on June 29, 1990, Spectrum Income has provided an outstanding average
annual return of 8.90% with diminished volatility, aided by its diversification.
The Emerging Markets Bond Fund was our best performer in 1999, followed
distantly by the High Yield Fund and the Equity Income Fund. The International
Bond Fund and U.S. Treasury Long-Term Fund did the worst. The GNMA Fund provided
a fractionally positive result, while the New Income Fund declined modestly.
During the past six months, emerging market bonds led again, but Equity Income
was the worst performer, followed by the Treasury fund. The International Bond
Fund aided results against both benchmarks in the second half, and high-yield
bonds were again beneficial.
<PAGE>
During the summer, we upgraded the quality and liquidity of the fund as
concerns about possible disruption from the Y2K computer bug affected the bond
market. We shifted modestly from high-yield bonds and dividend stocks into the
GNMA and U.S. Treasury Long-Term funds. Recently, we began reversing this,
shifting assets incrementally into the High Yield Fund out of the New Income and
Equity Income funds. All in all, our target allocation to the High Yield Fund
ended the six-month period unchanged at 21% (see table on page 13). The tone and
liquidity of the high-yield market improved in recent months. Though the
valuations of the stocks in the Equity Income Fund's universe are attractive, we
felt it prudent to reduce exposure (to a target of 11%) given the extreme
movements in the stock market. The New Income Fund target was reduced to 27%,
still our largest position. The fund provides exposure to medium- quality
corporate bonds and mortgage- and asset-backed securities. All three sectors
offer good value, in our view. We increased our target allocation to the GNMA
Fund to 17%. The fund has been a steady performer for us, and the fundamentals
of the mortgage market are excellent, characterized by reduced prepayments
(which occur when homeowners refinance). However, the yield advantage of
mortgage-backed securities over Treasuries moved closer to fair value by
year-end after having been particularly attractive earlier.
In 1998, we increased exposure to the International Bond Fund and the
Emerging Markets Bond Fund. Since midyear, those allocations have remained
steady at 12.5% and 3.5%, respectively. We are still optimistic about the euro
and the evolving European bond market, though neither performed well last year.
Emerging market bonds aided results throughout the year, and continue to offer
compellingly high yields, especially in an atmosphere of improving global
growth.
SPECTRUM INTERNATIONAL FUND
- ---------------------------
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PERFORMANCE COMPARISON
----------------------
Periods Ended 12/31/99 6 Months 12 Months
---------------------- -------- ---------
Spectrum International Fund 30.36% 39.49%
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Lipper International
Funds Average 30.83 40.80
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Combined Index Benchmark * 20.31 23.58
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* 90% MSCI EAFE/10% J.P. Morgan Non-U.S.
Dollar Government Bond Index
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<PAGE>
The Spectrum International Fund's returns were exceptional in the second
half and for the full year, as shown in the table. Results were on a par with
the Lipper International Funds A verage and well ahead of our passive combined
index benchmark, which, unlike the Lipper category, has exposure to bonds. After
a difficult first two years since inception on December 31, 1996, the third year
proved the charm for your fund. Markets beaten down in 1997 and 1998 -- or, in
the case of Japan, in the 1990s generally -- roared back. Asian and emerging
markets were the strongest; returns in Europe were more modest. Our decision to
initiate a small position in the International Discovery Fund early this year
was timely, as the small- and mid-cap foreign stocks in the fund posted
triple-digit returns on the year. The Japan Fund also more than doubled, helped
by some of the same small-caps that boosted the International Discovery Fund.
The Emerging Markets Stock and Emerging Markets Bond funds were also strong
performers. Our largest holding, the International Stock Fund, delivered
outstanding -- but more modest -- gains, driven by a strong second half. The
European Stock Fund turned out to be the "laggard" of the group with a nearly
20% return, all of it coming in the second half.
The fund also benefited from our decision to reduce our International Bond
Fund allocation to zero in the first half. That fund was hurt by its exposure to
high-quality bonds and the euro. In the past six months, the fund's net
geographic diversification, shown in the nearby chart, was little changed,
although we made a few changes to our target allocations to the underlying
funds. These moves primarily had the effect of rebalancing the portfolio, as we
took profits from the Japan Fund and boosted our allocation to the European
Stock Fund. More significantly, we reduced net exposure to Latin America, from
9% six months ago to 6% on December 31. We did this by taking profits in the
Latin America Fund, where we reduced the target allocation to zero, and
directing the proceeds to Europe. The fund's net exposure to Europe rose one
percentage point. The fund's remaining exposure to Latin America comes from its
investments in the other underlying T. Rowe Price funds. The table on page 13
lists target allocations for each underlying fund. However, your fund's overall
geographic diversification also reflects the composition of the International
Stock Fund's portfolio, to which our target allocation is 50%. The International
Stock Fund is the core of your fund, and its emphasis is also on Europe. In our
view, Europe features the best combination of risk and reward in the world,
especially given the heady 1999 gains in other regions. Boosting the Spectrum
International Fund's exposure there while taking profits in Japan and Latin
America should help reduce volatility and give the fund a greater opportunity to
profit from an economic upturn in Europe as well as from corporate restructuring
and consolidation. European companies will continue to face pressure to remain
competitive and boost shareholder returns.
After a stunning year, we feel Japan's stock market may weaken. Performance
in Japan -- as elsewhere -- was led by a narrow group of high-priced technology
stocks. The massive inflow of foreign capital that propelled the market last
year is unlikely to recur. In addition, the strong yen will pressure exporters,
and corporate restructuring, while necessary, will reduce domestic demand and
increase unemployment in the short term. We expect economic recovery to continue
in the Far East ex-Japan and in Latin America and are hopeful that the steady
pace of restructuring and reform will continue in Asia. However, stocks in these
two regions rose stratospherically in the fourth quarter, and some retracement
in the short term would not be unexpected. In Latin America, opposition to
fiscal reforms poses a threat in Brazil, and Mexico's economy, though healthy,
remains tied to the U.S. We have grown more confident that Mexico's presidential
election in July will not disrupt the markets.
<PAGE>
OUTLOOK
- -------
With the U.S. economy powering ahead without any Y2K-related disruptions,
and the supply of available workers dwindling, a Fed rate hike in February seems
a foregone conclusion. Another is likely in March. However, the good news for
fixed income investors is that these moves are expected. Bond prices and yields
already seem to have anticipated a federal funds target rate at least half a
percentage point higher than its current 5.5% level. We do not expect inflation
or long-term interest rates to rise significan tly from current levels, and U.S.
economic growth should moderate eventually. The Fed is acting in a proactive
manner, which we view as positive for the markets long term. Though 2000 has
started out on a negative note, we expect it to be a more favorable year for
bond investors than 1999.
**********************************
. . . VALUE STOCKS IN THE
U.S. APPEAR PARTICULARLY
ATTRACTIVE . . .
**********************************
Overall valuations in the U.S. stock market are quite high, and the
technology sector, in particular, could be vulnerable to any bad news. However,
earnings growth continues to be strong at many high-quality companies. Outside
the New Economy stocks, more traditional growth stocks are trading at reasonable
prices. In addition, last year's market advance was so narrow that value stocks
in the U.S. appear particularly attractive at current levels.
Overseas, our outlook is tempered by the fact that the major foreign
economies only emerged from recession last year. Interest rates are expected to
rise from unusually low levels to ranges consistent with economic growth, rather
than recession, but inflation should remain under control. Although investors
have bid up the shares of some technology and telecom companies to excessive
levels, we are enthusiastic about the growth potential of well-managed New
Economy companies with strong franchises and business models. Last year's
progress in corporate restructuring and merger activity, along with government
reform, should enhance foreign companies' earnings potential, which should be
further boosted by stronger economic growth. Therefore, we remain optimistic
about international markets in 2000.
Respectfully submitted,
/s/
Edmund M. Notzon III
President and Chairman of the Investment Advisory Committee
January 14, 2000
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<PAGE>
T. ROWE PRICE SPECTRUM FUNDS
- ----------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
TEN LARGEST HOLDINGS
- --------------------
Percent of
(Of the combined underlying funds at 12/31/99) Net Assets
12/31/99
SPECTRUM GROWTH FUND
====================
Analog Devices 0.6%
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Nokia 0.5
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Sony 0.5
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Kyocera 0.5
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Mannesmann 0.5
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Murata Manufacturing 0.5
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National Westminster Bank 0.5
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Omnipoint 0.4
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Nippon Telegraph & Telephone 0.4
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Xilinx 0.4
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Total 4.8%
TEN LARGEST HOLDINGS
- --------------------
Percent of
(Of the combined underlying funds at 12/31/99) Net Assets
12/31/99
Spectrum International Fund
============================
Nokia 2.1%
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Mannesmann 1.9
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National Westminster Bank 1.9
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Telecom Italia Mobile 1.5
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Sony 1.4
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Shell Transport & Trading 1.3
- -------------------------------------------------------------------
Total Fina 1.3
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Cable & Wireless 1.3
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Kyocera 1.2
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INGGroep 1.2
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Total 15.1%
Note: Table excludes reserves.
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<PAGE>
T. ROWE PRICE SPECTRUM FUNDS
- ----------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
KEY STATISTICS
- --------------
6/30/99 12/31/99
------- --------
SPECTRUM INCOME FUND
====================
Price Per Share $ 11.17 $ 10.71
- ----------------------------------------------------------------------------
Capital Gain Distribution Per Share
- ----------------------------------------------------------------------------
Short-Term - -
- ----------------------------------------------------------------------------
Long-Term 0.02 0.11
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Dividends Per Share
- ----------------------------------------------------------------------------
For 6 months 0.34 0.35
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For 12 months 0.70 0.69
- ----------------------------------------------------------------------------
Dividend Yield *
- ----------------------------------------------------------------------------
For 6 months 6.27% 6.51%
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For 12 months 6.48 6.62
- ----------------------------------------------------------------------------
30-Day Standardized Yield 6.31% 6.69%
- ----------------------------------------------------------------------------
Weighted Average Maturity (years) ** 10.3 10.0
- ----------------------------------------------------------------------------
Weighted Average Effective Duration (years) ** 5.5 5.3
- ----------------------------------------------------------------------------
Weighted Average Quality *** A+ AA-
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* Dividends earned and reinvested for the periods indicated are annualized
and divided by the fund's net asset value per share at the end of the
period.
** Excludes Equity Income Fund.
*** Based on T. Rowe Price research; excludes Equity Income Fund.
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<PAGE>
T. ROWE PRICE SPECTRUM FUNDS
- ----------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
TARGET ALLOCATIONS FOR UNDERLYING FUNDS
- ---------------------------------------
TARGET ALLOCATIONS for Underlying funds
Minimum- Target at Target at
Maximum 6/30/99 12/31/99
------- ------- --------
SPECTRUM GROWTH FUND
====================
International Stock 10-25% 22.5% 25.0%
- -------------------------------------------------------------------
New Horizons 10-25 21.0 21.0
- -------------------------------------------------------------------
Growth & Income 7.5-22.5 13.5 14.0
- -------------------------------------------------------------------
Equity Income 7.5-22.5 13.5 14.0
- -------------------------------------------------------------------
Growth Stock 5-20 11.5 10.0
- -------------------------------------------------------------------
Blue Chip Growth 5-20 11.5 9.5
- -------------------------------------------------------------------
Mid-Cap Value 0-15 4.0 4.0
- -------------------------------------------------------------------
New Era 0-15 2.5 2.5
- -------------------------------------------------------------------
SPECTRUM INCOME FUND
====================
New Income 15-30 28.0 27.0
- -------------------------------------------------------------------
High Yield 10-25 21.0 21.0
- -------------------------------------------------------------------
GNMA 5-20 15.5 17.0
- -------------------------------------------------------------------
International Bond 5-20 12.5 12.5
- -------------------------------------------------------------------
Equity Income 10-25 12.0 11.0
- -------------------------------------------------------------------
U.S. Treasury Long-Term 0-15 7.5 8.0
- -------------------------------------------------------------------
Emerging Markets Bond 0-10 3.5 3.5
- -------------------------------------------------------------------
Short-Term Bond 0-15 0.0 0.0
- -------------------------------------------------------------------
Summit Cash Reserves 0-25 0.0 0.0
- -------------------------------------------------------------------
<PAGE>
SPECTRUM INTERNATIONAL FUND
============================
International Stock 35-65 50.0 50.0
- -------------------------------------------------------------------
European Stock 0-30 26.5 29.5
- -------------------------------------------------------------------
Japan 0-30 7.5 6.5
- -------------------------------------------------------------------
Emerging Markets Bond 0-15 5.0 5.0
- -------------------------------------------------------------------
Emerging Markets Stock 0-20 4.3 4.3
- -------------------------------------------------------------------
International Discovery 0-20 3.0 3.0
- -------------------------------------------------------------------
Latin America 0-15 2.0 0.0
- -------------------------------------------------------------------
New Asia 0-20 1.7 1.7
- -------------------------------------------------------------------
International Bond 0-20 0.0 0.0
- -------------------------------------------------------------------
Summit Cash Reserves 0-25 0.0 0.0
================================================================================
T. ROWE PRICE SPECTRUM FUNDS
- ----------------------------
PERFORMANCE COMPARISON
- ----------------------
These charts show the value of a hypothetical $10,000 investment in each
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.
*********************************************************************
SEC Chart for Spectrum Growth Fund
showing: Spectrum Growth Fund
$38,901; S&P 500 Stock Index
$51,680 and Lipper Multi-Cap Core
Fund Index $42,971
*********************************************************************
SEC Chart for Spectrum Income Fund
showing; Spectrum Income Fund
$22,485; Salomon Smith Barney Broad
Investment Grade Index $20,522;
Lipper General Bond Funds Average
$21,305
*********************************************************************
SEC Chart for Spectrum
International Fund showing;
Spectrum International Fund
$16,041; 90%MSCI EAFE/10% J.P.
Morgan Non-U.S. Dollar Government
Bond Index $15,114; Lipper
International Funds Average $16,756
*********************************************************************
<PAGE>
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- ------------------------------------
This table shows how each fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Since Inception
Periods Ended 12/31/99 1 Year 3 Years 5 Years Inception Date
- ---------------------- ------ ------- ------- --------- ----
Spectrum Growth Fund 21.20% 17.37% 20.42% 15.36% 6/29/90
- --------------------------------------------------------------------------------
Spectrum Income Fund 0.26 6.23 9.03 8.90 6/29/90
- --------------------------------------------------------------------------------
Spectrum International Fund 39.49 17.06 -- 17.06 12/31/96
- --------------------------------------------------------------------------------
Investment return represents past performance and will vary. Shares of the
bond funds may be worth more or less at redemption than at original purchase.
================================================================================
T. ROWE PRICE SPECTRUM GROWTH FUND
- --------------------------------- For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
Year
Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 16.45 $ 15.93 $ 15.13 $ 13.49 $ 11.13
- ------------------------------------------------------------------------------
Investment activities
Net investment income 0.15 0.19 0.20 0.20 0.21
Net realized and
unrealized gain (loss) 3.19 1.88 2.40 2.57 3.12
- ------------------------------------------------------------------------------
Total from
investment activities 3.34 2.07 2.60 2.77 3.33
- ------------------------------------------------------------------------------
Distributions
Net investment income (0.17) (0.18) (0.20) (0.20) (0.21)
Net realized gain (1.91) (1.37) (1.60) (0.93) (0.76)
- ------------------------------------------------------------------------------
Total distributions (2.08) (1.55) (1.80) (1.13) (0.97)
- ------------------------------------------------------------------------------
<PAGE>
NET ASSET VALUE
End of period $ 17.71 $ 16.45 $ 15.93 $ 15.13 $ 13.49
Ratios/Supplemental=Data======================================================
Total return** 21.20% 13.62% 17.40% 20.53% 29.96%
- ------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.00%* 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 0.85% 1.09% 1.26% 1.58% 1.81%
- ------------------------------------------------------------------------------
Portfolio turnover rate 20.3% 17.9% 20.4% 2.9% 7.4%
- ------------------------------------------------------------------------------
Net assets, end of period
(in millions) $ 3,031 $ 2,768 $ 2,605 $ 2,104 $ 1,358
- ------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
* See Note 3. The annualized weighted average expense ratio of the underlying
funds was 0.83% for the year ended December 31, 1999.
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE SPECTRUM INCOME FUND
- --------------------------------- For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
Year
Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
-------- -------- -------- -------- --------
NET ASSET VALUE
Beginning of period $ 11.50 $ 11.66 $ 11.20 $ 11.24 $ 10.11
- --------------------------------------------------------------------------------
Investment activities
Net investment income 0.67 0.72 0.71 0.71 0.72
Net realized and
unrealized gain (loss) (0.64) 0.02 0.61 0.11 1.16
- --------------------------------------------------------------------------------
Total from
investment activities 0.03 0.74 1.32 0.82 1.88
- --------------------------------------------------------------------------------
Distributions
Net investment income (0.69) (0.72) (0.71) (0.71) (0.72)
Net realized gain (0.13) (0.18) (0.15) (0.15) (0.03)
- --------------------------------------------------------------------------------
Total distributions (0.82) (0.90) (0.86) (0.86) (0.75)
- --------------------------------------------------------------------------------
<PAGE>
NET ASSET VALUE
End of period $ 10.71 $ 11.50 $ 11.66 $ 11.20 $ 11.24
Ratios/Supplemental=Data========================================================
Total return** 0.26% 6.57% 12.18% 7.64% 19.41%
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.00%* 0.00% 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 5.95% 6.22% 6.21% 6.46% 6.43%
- --------------------------------------------------------------------------------
Portfolio turnover rate 18.6% 12.8% 14.1% 17.6% 20.2%
- --------------------------------------------------------------------------------
Net assets, end of period
(in millions) $ 2,548 $ 2,574 $ 2,022 $ 1,356 $ 987
- --------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
* See Note 3. The annualized weighted average expense ratio of the underlying
funds was 0.77% for the year ended December 31, 1999.
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE SPECTRUM INTERNATIONAL FUND
- -----------------------------------------
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
Year 12/31/96
Ended Through
12/31/99 12/31/98 12/31/97
NET ASSET VALUE
Beginning of period $ 10.56 $ 9.74 $ 10.00
- ----------------------------------------------------------------------
Investment activities
Net investment income 0.12 0.21 0.15
Net realized and
unrealized gain (loss) 3.95 0.97 0.09#
- ----------------------------------------------------------------------
Total from investment activities 4.07 1.18 0.24
- ----------------------------------------------------------------------
Distributions
Net investment income (0.13) (0.21) (0.15)
Net realized gain (0.97) (0.15) (0.35)
- ----------------------------------------------------------------------
Total distributions (1.10) (0.36) (0.50)
- ----------------------------------------------------------------------
<PAGE>
NET ASSET VALUE
End of period $ 13.53 $ 10.56 $ 9.74
Ratios/Supplemental=Data==============================================
Total return** 39.49% 12.28% 2.42%
- ----------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.00%* 0.00% 0.00%
- ----------------------------------------------------------------------
Ratio of net investment income
to average net assets 1.14% 1.94% 2.23%
- ----------------------------------------------------------------------
Portfolio turnover rate 20.1% 31.7% 20.0%
- ----------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 82,846 $ 54,752 $ 51,050
- ----------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
* See Note 3. The annualized weighted average expense ratio of the underlying
funds was 0.89% for the year ended December 31, 1999.
# The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout
the period. This amount is inconsistent with the Fund's aggregate gains and
losses because of the timing of sales and redemptions of Fund shares in
relation to fluctuating market values for the investment portfolio.
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE SPECTRUM GROWTH FUND
- ---------------------------------- December 31, 1999
Percent of
Net Assets Shares Value
---------- ------ -----
STATEMENT OF NET ASSETS
- ----------------------- In thousands
T. Rowe Price International Stock Fund 25.2% 40,131,983 $ 763,712
- ---------------------------------------------------------------------------
T. Rowe Price New Horizons Fund 22.2 24,446,259 673,005
- ---------------------------------------------------------------------------
T. Rowe Price Equity Income Fund 13.9 16,931,472 420,070
- ---------------------------------------------------------------------------
T. Rowe Price Growth & Income Fund 13.2 16,334,982 399,227
- ---------------------------------------------------------------------------
T. Rowe Price Growth Stock Fund 10.0 9,139,821 304,082
- ---------------------------------------------------------------------------
T. Rowe Price Blue Chip Growth Fund 9.5 7,914,950 287,629
- ---------------------------------------------------------------------------
T. Rowe Price Mid-Cap Value Fund 3.7 8,440,322 112,847
- ---------------------------------------------------------------------------
T. Rowe Price New Era Fund 2.3 3,221,676 70,233
Total=Investments==========================================================
100.0% of Net Assets (Cost $2,217,044) $3,030,805
Other Assets Less Liabilities 145
NET ASSETS $3,030,950
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ (667)
Accumulated net realized gain/loss -
net of distributions 12,478
Net unrealized gain (loss) 813,761
Paid-in-capital applicable to 171,148,671
shares of $0.01 par value capital stock
outstanding; 1,000,000,000 shares of
the Corporation authorized 2,205,378
NET ASSETS $3,030,950
NET ASSET VALUE PER SHARE $ 17.71
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE SPECTRUM INCOME FUND
- ---------------------------------- December 31, 1999
Percent of
Net Assets Shares Value
---------- ------ -----
STATEMENT OF NET ASSETS
- ----------------------- In thousands
T. Rowe Price New Income Fund 26.9% 84,023,193 $ 685,629
- ---------------------------------------------------------------------------
T. Rowe Price High Yield Fund 20.9 67,157,379 533,229
- ---------------------------------------------------------------------------
T. Rowe Price GNMA Fund 16.9 47,781,315 429,554
- ---------------------------------------------------------------------------
T. Rowe Price International Bond Fund 12.3 34,297,050 314,161
- ---------------------------------------------------------------------------
T. Rowe Price Equity Income Fund 11.1 11,412,154 283,136
- ---------------------------------------------------------------------------
T. Rowe Price U.S. Treasury Long-Term Fund 7.6 18,852,337 192,671
- ---------------------------------------------------------------------------
T. Rowe Price Emerging Markets Bond Fund 3.8 9,599,223 97,048
Total=Investments==========================================================
99.5% of Net Assets (Cost $2,641,141) $2,535,428
Other Assets Less Liabilities 13,007
NET ASSETS $2,548,435
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ 62
Accumulated net realized gain/loss -
net of distributions (3,645)
Net unrealized gain (loss) (105,713)
Paid-in-capital applicable to 237,938,418
shares of $0.01 par value capital stock
outstanding; 1,000,000,000 shares of
the Corporation authorized 2,657,731
NET ASSETS $2,548,435
NET ASSET VALUE PER SHARE $ 10.71
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE SPECTRUM INTERNATIONAL FUND
- ----------------------------------------- December 31, 1999
Percent of
Net Assets Shares Value
---------- ------ -----
STATEMENT OF NET ASSETS
- ----------------------- In thousands
T. Rowe Price International Stock Fund 49.8% 2,168,193 $ 41,261
- ---------------------------------------------------------------------------
T. Rowe Price European Stock Fund 29.3 1,014,498 24,206
- ---------------------------------------------------------------------------
T. Rowe Price Japan Fund 6.5 338,998 5,407
- ---------------------------------------------------------------------------
T. Rowe Price Emerging Markets Bond Fund 4.8 393,849 3,982
- ---------------------------------------------------------------------------
T. Rowe Price Emerging Markets Stock Fund 4.6 245,036 3,803
- ---------------------------------------------------------------------------
T. Rowe Price International Discovery Fund 3.2 71,892 2,643
- ---------------------------------------------------------------------------
T. Rowe Price New Asia Fund 1.8 150,731 1,503
Total=Investments==========================================================
100.0% of Net Assets (Cost $65,588) $ 82,805
Other Assets Less Liabilities 41
NET ASSETS $ 82,846
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ (8)
Accumulated net realized gain/loss -
net of distributions 194
Net unrealized gain (loss) 17,217
Paid-in-capital applicable to 6,124,007
shares of $0.01 par value capital stock
outstanding; 1,000,000,000 shares of
the Corporation authorized 65,443
NET ASSETS $ 82,846
NET ASSET VALUE PER SHARE $ 13.53
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE SPECTRUM FUNDS
- ----------------------------
STATEMENT OF OPERATIONS
- -----------------------
In thousands
GROWTH INCOME INTERNATIONAL
FUND FUND FUND
------ ------ -------------
Year Year Year
Ended Ended Ended
12/31/99 12/31/99 12/31/99
-------- -------- --------
Investment Income
Income distributions from
underlying funds $ 23,136 $ 153,382 $ 681
- -----------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Sale of underlying funds 71,766 256 1,459
Capital gain distributions
from underlying funds 220,510 27,655 3,782
- -----------------------------------------------------------------------------
Net realized gain (loss) 292,276 27,911 5,241
Change in net unrealized gain or loss 227,805 (174,105) 16,447
- -----------------------------------------------------------------------------
Net realized and unrealized gain (loss) 520,081 (146,194) 21,688
- -----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 543,217 $ 7,188 $ 22,369
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE SPECTRUM GROWTH FUND
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
In thousands
Year
Ended
12/31/99 12/31/98
Increase (Decrease) in Net Assets
Operations
Investment income $ 23,136 $ 29,372
Net realized gain (loss) 292,276 219,345
Change in net unrealized gain or loss 227,805 89,469
- -----------------------------------------------------------------------------
Increase (decrease) in net assets from operations 543,217 338,186
- -----------------------------------------------------------------------------
Distributions to shareholders
Investment income (26,073) (27,938)
Net realized gain (293,035) (212,530)
- -----------------------------------------------------------------------------
Decrease in net assets from distributions (319,108) (240,468)
- -----------------------------------------------------------------------------
Capital share transactions *
Shares sold 398,895 527,058
Distributions reinvested 310,958 236,644
Shares redeemed (671,253) (698,444)
- -----------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 38,600 65,258
- -----------------------------------------------------------------------------
<PAGE>
Net Assets
Increase (decrease) during period 262,709 162,976
Beginning of period 2,768,241 2,605,265
- -----------------------------------------------------------------------------
End of period $3,030,950 $ 2,768,241
=============================================================================
*Share information
Shares sold 23,383 31,506
Distributions reinvested 18,800 15,317
Shares redeemed (39,287) (42,158)
- -----------------------------------------------------------------------------
Increase (decrease) in shares outstanding 2,896 4,665
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE SPECTRUM INCOME FUND
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
In thousands
Year
Ended
12/31/99 12/31/98
Increase (Decrease) in Net Assets
Operations
Investment income $ 153,382 $ 147,637
Net realized gain (loss) 27,911 42,031
Change in net unrealized gain or loss (174,105) (41,478)
- -----------------------------------------------------------------------------
Increase (decrease) in net assets from operations 7,188 148,190
- -----------------------------------------------------------------------------
Distributions to shareholders
Investment income (158,379) (147,637)
Net realized gain (30,463) (39,203)
- -----------------------------------------------------------------------------
Decrease in net assets from distributions (188,842) (186,840)
- -----------------------------------------------------------------------------
Capital share transactions *
Shares sold 793,286 1,082,811
Distributions reinvested 175,415 173,901
Shares redeemed (812,665) (666,236)
- -----------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 156,036 590,476
- -----------------------------------------------------------------------------
Net Assets
Increase (decrease) during period (25,618) 551,826
Beginning of period 2,574,053 2,022,227
- -----------------------------------------------------------------------------
End of period $2,548,435 $ 2,574,053
=============================================================================
*Share information
Shares sold 71,118 92,606
Distributions reinvested 15,876 14,979
Shares redeemed (72,904) (57,176)
- -----------------------------------------------------------------------------
Increase (decrease) in shares outstanding 14,090 50,409
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE SPECTRUM INTERNATIONAL FUND
- -----------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
In thousands
Year
Ended
12/31/99 12/31/98
Increase (Decrease) in Net Assets
Operations
Investment income $ 681 $ 1,051
Net realized gain (loss) 5,241 861
Change in net unrealized gain or loss 16,447 4,039
- --------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 22,369 5,951
- --------------------------------------------------------------------------------
Distributions to shareholders
Investment income (718) (1,055)
Net realized gain (5,358) (753)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (6,076) (1,808)
- --------------------------------------------------------------------------------
Capital share transactions *
Shares sold 20,507 21,074
Distributions reinvested 5,761 1,740
Shares redeemed (14,467) (23,255)
- --------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 11,801 (441)
- --------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period 28,094 3,702
Beginning of period 54,752 51,050
- --------------------------------------------------------------------------------
End of period $ 82,846 $ 54,752
================================================================================
*Share information
Shares sold 1,754 2,025
Distributions reinvested 465 172
Shares redeemed (1,280) (2,255)
- --------------------------------------------------------------------------------
Increase (decrease) in shares outstanding 939 (58)
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE SPECTRUM FUNDS
- ---------------------------- December 31, 1999
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
T. Rowe Price Spectrum Funds, Inc. (the corporation) is registered under
the Investment Company Act of 1940 (the Act) as a nondiversified, open-end
management investment company. Spectrum Growth Fund, Spectrum Income Fund, and
Spectrum International Fund (collectively, the Spectrum Funds), are the three
portfolios established by the corporation. Operations commenced on June 29, 1990
for Spectrum Growth and Spectrum Income Funds, and on December 31, 1996 for
Spectrum International Fund.
<PAGE>
Each Spectrum Fund diversifies its assets within set limits among specific
underlying T. Rowe Price funds (underlying funds). Spectrum Growth Fund
principally seeks long-term capital appreciation and growth of income by
allocating its assets to underlying funds that invest primarily in stocks.
Spectrum Income Fund strives to provide a high level of current income with
moderate share price fluctuation, by investing in underlying funds that invest
primarily in fixed income securities. The objective of Spectrum International
Fund is to provide long-term capital appreciation through allocations to
underlying funds that invest primarily in international stocks and, to a lesser
degree, international bonds.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
Basis of Preparation The financial statements are prepared in accordance
with generally accepted accounting principles for the investment company
industry, which may require the use of estimates by fund management.
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.
Assets 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.
Distributions Income and capital gain distributions from the underlying
funds and distributions to the Spectrum Funds' shareholders are recorded on the
ex-dividend date.
Income and capital gain distributions to the Spectrum Funds' shareholders
are determined in accordance with federal income tax regulations, which may
differ from generally accepted accounting principles. Accordingly, for the year
ended December 31, 1999, Spectrum Income Fund's undistributed net investment
income was increased by $4,948,000 and undistributed net realized gain was
decreased by $4,948,000, in order for the fund's capital accounts and
distributions to shareholders to reflect the tax character of certain
transactions. Such reclassification had no effect on results of operation or net
assets.
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.
Other Income is recorded on the accrual basis. Purchases and sales of the
underlying funds are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis.
NOTE 2 - INVESTMENTS IN UNDERLYING FUNDS
- ----------------------------------------
Purchases and sales of the underlying funds for the year ended December 31,
1999 were as follows:
<PAGE>
********************************************************************************
GROWTH INCOME INTERNATIONAL
FUND FUND FUND
------ ------ -------------
Purchases $ 561,482,000 $ 615,458,000 $ 22,486,000
Sales 605,822,000 479,847,000 12,217,000
********************************************************************************
At December 31, 1999, the net unrealized gain (loss) on investments in the
underlying funds for both federal income tax and financial reporting purposes
were as follows:
********************************************************************************
GROWTH INCOME INTERNATIONAL
FUND FUND FUND
------ ------ -------------
Appreciated investments $ 818,688,000 $ 49,706,000 $ 17,522,000
Depreciated investments (4,927,000) (155,419,000) (305,000)
Net unrealized gain (loss) $ 813,761,000 $(105,713,000) $ 17,217,000
********************************************************************************
NOTE 3 - RELATED PARTIES
- ------------------------
T. Rowe Price Associates, Inc. (T. Rowe Price) is the investment manager
for Spectrum Growth and Spectrum Income Funds, and also serves as manager for
the domestic underlying funds. Rowe Price-Fleming International, Inc.
(Price-Fleming) is the investment manager for Spectrum International Fund, and
also serves as manager for the international underlying funds. T. Rowe Price and
its wholly-owned subsidiaries provide transfer and dividend disbursing agent,
accounting, shareholder, administrative, marketing, and certain other services
to the Spectrum Funds. Certain officers and directors of the Spectrum Funds are
also officers and directors of T. Rowe Price, Price-Fleming, and the underlying
funds.
The Spectrum Funds pay no management fees; however, T. Rowe Price and
Price-Fleming receive management fees from managing the underlying funds. In
addition, expenses associated with the operation of the Spectrum Funds are borne
by each underlying fund in proportion to the average daily value of its shares
owned by the Spectrum Funds, pursuant to special servicing agreements between
and among the corporation, the underlying funds, T. Rowe Price, and, in the case
of Spectrum International, Rowe-Price Fleming. Therefore, the Spectrum Funds
each operate at a zero expense ratio, although the valuations of the underlying
funds reflect management fees and other expenses incurred by the underlying
funds.
The Spectrum Funds do not invest in the underlying funds for the purpose of
exercising management or control; however, investments by Spectrum within the
set limits may represent a significant portion of an underlying fund's net
assets. At December 31, 1999, Spectrum International held less than 25% of the
outstanding shares of any underlying fund; Spectrum Growth held approximately
53.3% of the outstanding shares of the T. Rowe Price Mid-Cap Value Fund and
Spectrum Income Fund held approximately 59.4% of the outstanding shares of the
T. Rowe Price U.S. Treasury Long-Term Fund, 56.1% of the T. Rowe Price Emerging
Markets Bond Fund, 40.3% of the T. Rowe Price International Bond Fund, 39.4% of
the T. Rowe Price GNMA Fund, 38.4% of the T. Rowe Price New Income Fund, and
32.0% of the T. Rowe Price High Yield Fund.
================================================================================
<PAGE>
T. ROWE PRICE SPECTRUM FUNDS
- ----------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------
TO THE BOARD OF DIRECTORS OF T. ROWE PRICE SPECTRUM FUNDS, INC. AND
SHAREHOLDERS OF SPECTRUM GROWTH FUND, SPECTRUM INCOME FUND
AND SPECTRUM INTERNATIONAL FUND
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Spectrum Growth Fund, Spectrum Income Fund and Spectrum International Fund
(comprising T. Rowe Price Spectrum Funds, Inc., hereafter referred to as the
"Funds") at December 31, 1999, and the results of each of their operations, the
changes in each of their net assets and the financial highlights for each of the
fiscal periods presented, in conformity with accounting principles generally
accepted in the United States. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the transfer agent, provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 20, 2000
================================================================================
T. ROWE PRICE SPECTRUM FUNDS
- ----------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 12/31/99
- -----------------------------------------------------------
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements. The fund's
distributions include capital gains amount as follows:
GROWTH INCOME INTERNATIONAL
FUND FUND FUND
------ ------ -------------
* Short-term gains $ 33,753,000 $ - $ 552,000
* Long-term 20% rate gains 259,282,000 30,463,000 4,806,000
For corporate shareholders, $9,503,000 of the Spectrum Growth Fund's and
$32,904,000 of the Spectrum Income Fund's distributed income and short-term
capital gains qualified for the dividends-received deduction.
================================================================================
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
- ----------------------------------
INVESTMENT SERVICES AND INFORMATION
-----------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE Shareholder service representatives are available from 8 a.m.
to 10 p.m. ET Monday through Friday and from 8:30 a.m. to 5 p.m. ET on
weekends. 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. You
can also drop off applications or obtain prospectuses and other
literature at these centers.
AUTOMATED 24-HOUR SERVICES
TELE*ACCESS (Registration Mark) Call 1-800-638-2587 to obtain
information such as account balance, date and amount of your last
transaction, latest dividend payment, fund prices, and yields.
Additionally, you have the ability to request prospectuses,
statements, and account and tax forms; to reorder checks; and to
initiate purchase, redemption, and exchange orders for identically
registered accounts.
INTERNET. T. ROWE PRICE WEB SITE: WWW.TROWEPRICE.COM All the
information and services available on Tele*Access are available on our
Web site, including transactions in your fund and brokerage accounts
(with preauthorized access).
ACCOUNT SERVICES
CHECKING Write checks for $500 or more on any money market and most
bond fund accounts (except the High Yield and Emerging Markets Bond
Funds).
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 another, such as from a money
fund into a stock fund. A $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.
BROKERAGE SERVICES*
INVESTMENTS AVAILABLE You can trade stocks, bonds, options, precious
metals, and other securities at a savings over full-service commission
rates.**
TO OPEN AN ACCOUNT Call a shareholder service representative for more
information.
<PAGE>
INVESTMENT INFORMATION
COMBINED STATEMENT A comprehensive overview of your T. Rowe Price
accounts is provided. The summary page gives you earnings by tax
category, provides total portfolio value, and lists your investments
by type. Detail pages itemize account transactions.
SHAREHOLDER REPORTS Portfolio managers review the performance of the
funds in plain language and discuss T. Rowe Price's economic outlook.
T. ROWE PRICE REPORT This is a quarterly newsletter with relevant
articles on market trends, personal financial planning, and T. Rowe
Price's economic perspective.
PERFORMANCE UPDATE This quarterly report reviews recent market
developments and provides comprehensive performance information for
every T. Rowe Price fund.
INSIGHTS These are reports on mutual fund tax issues, investment
strategies, investment fundamentals, and financial markets.
DETAILED INVESTMENT GUIDES Our Asset Mix Worksheet, College Planning
Kit, Diversifying Overseas: A Guide to International Investing,
Retirees Financial Guide, and Retirement Planning Kit (also available
on disk or CD-ROM for PC use) can help you determine and reach your
investment goals.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a September 1999 survey for representative-assisted
stock trades. Services vary by firm, and commissions may vary
depending on size of order.
================================================================================
T. Rowe Price Mutual Funds
- --------------------------
STOCK FUNDS
- -----------
DOMESTIC
- --------
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
<PAGE>
INTERNATIONAL/GLOBAL
- --------------------
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
- ----------
DOMESTIC TAXABLE
- ----------------
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
DOMESTIC TAX-FREE
- -----------------
California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
- --------------------
Emerging Markets Bond
Global Bond
International Bond
MONEY MARKET FUNDS
- ------------------
TAXABLE
- -------
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
<PAGE>
TAX-FREE
- --------
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- -------------------
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
- ---------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
funds.
Please call for a prospectus. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by SECURITY
BENEFIT LIFE INSURANCE COMPANY. In New York, it [#FSB201(11-96)] is issued by
FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
================================================================================
<PAGE>
T. ROWE PRICE ADVISORY SERVICES AND RETIREMENT RESOURCES
- --------------------------------------------------------
ADVISORY SERVICES,RETIREMENT RESOURCES
--------------------------------------
T. Rowe Price is your full-service retirement specialist.
We have developed unique advisory services that can help
you meet the most difficult retirement challenges. Our
broad array of retirement plans is suitable for
individuals, the self-employed, small businesses,
corporations, and nonprofit organizations. We also provide
recordkeeping, communications, and investment management
services, and our educational materials, self-help
planning guides, and software tools are recognized as
among the industry's best. For information or to request
literature, call us at 1-800-638-5660, or visit our Web
site at WWW.TROWEPRICE.COM.
ADVISORY SERVICES
-----------------
T. ROWE PRICE RETIREMENT INCOME MANAGER [SM] helps
retirees or those within two years of retirement determine
how much income they can take in retirement. The program
uses extensive statistical analysis and the input of
financial planning professionals to suggest an income plan
that best meets your objectives.
T. ROWE PRICE ROLLOVER INVESTMENT SERVICE offers asset
allocation advice to those planning a major change in
their qualified retirement plans, such as a 401(k)
rollover from a previous employer or an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
-------------------------------------
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
PLANNING AND INFORMATIONAL GUIDES
---------------------------------
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
INSIGHTS REPORTS
----------------
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
<PAGE>
SOFTWARE PACKAGES
-----------------
T. Rowe Price Retirement Planning
AnalyzerTM CD-ROM or diskette $19.95.
To order, please call
1-800-541-5760. Also available
on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. ROWE PRICE IMMEDIATE VARIABLE ANNUITY (INCOME ACCOUNT)
INVESTMENT KITS
---------------
We will be happy to send you one of our easy-to-follow
investment kits when you are ready to invest in any T.
Rowe Price retirement vehicle, including IRAs, qualified
plans, small-business plans, or our no-load variable
annuities.
================================================================================
T. ROWE PRICE INSIGHTS REPORTS
- ------------------------------
THE FUNDAMENTALS OF INVESTING
-----------------------------
Whether you are unsure how to get started or are saving for a specific
goal, such as retirement or college, the T. Rowe Price Insights series
can help you make informed investment decisions. These reports,
written in plain English about fundamental investment topics, can be
useful at every stage of your investment journey. They cover a range
of topics, from the basic, such as getting started with mutual funds,
to the more advanced, such as managing risk through diversification or
buying individual securities through a broker. To request one or more
Insights, call us at 1-800-638-5660.
INSIGHTS REPORTS
----------------
GENERAL INFORMATION
The ABCs of Giving
Back to Basics: The ABCs of Investing
The Challenge of Preparing for Retirement
Financial Planning After Retirement
Getting Started: Investing With Mutual Funds
The Roth IRA: A Review
Tax Information for Mutual Fund Investors
<PAGE>
INVESTMENT STRATEGIES
---------------------
Conservative Stock Investing
Dollar Cost Averaging
Equity Index Investing
Growth Stock Investing
Investing for Higher Yield
Managing Risk Through Diversification
The Power of Compounding
Value Investing
TYPES OF SECURITIES
-------------------
The Basics of International Stock Investing
The Basics of Tax-Free Investing
The Fundamentals of Fixed Income Investing
Global Bond Investing
Investing in Common Stocks
Investing in Emerging Growth Stocks
Investing in Financial Services Stocks
Investing in Health Care Stocks
Investing in High-Yield Municipal Bonds
Investing in Money Market Securities
Investing in Mortgage-Backed Securities
Investing in Natural Resource Stocks
Investing in Science and Technology Stocks
Investing in Small-Company Stocks
Understanding Derivatives
Understanding High-Yield "Junk" Bonds
BROKERAGE INSIGHTS
------------------
Combining Individual Securities With Mutual Funds
Getting Started: An Introduction to Individual Securities
What You Should Know About Bonds
What You Should Know About Margin and Short-Selling
What You Should Know About Options
What You Should Know About Stocks
T. Rowe Price Insights are also available for reading or downloading
on the Internet at WWW.TROWEPRICE.COM.
================================================================================
T. ROWE PRICE BROKERAGE
- -----------------------
BROKERAGE SERVICES
------------------
T. ROWE PRICE BROKERAGE IS A DIVISION OF T. ROWE PRICE INVESTMENT
SERVICES, INC., MEMBER NASD/SIPC.
T. Rowe Price Brokerage provides high-quality services and financial
tools you can use to manage your investments effectively and
conveniently. We also offer significant commission savings over
full-service brokerages on a wide range of individual securities and
other investments.*
<PAGE>
INTERNET AND AUTOMATED SERVICES You can enter trades, access
quotes, and review account information 24 hours a day, seven days
a week, by telephone or computer. We offer a flat-rate commission
of $24.95 on stock trades placed through our Internet-Trader
service.**
RESEARCH SERVICES To help you make informed investment decisions,
we offer access to several sources of data. You can research your
investments using our Online Research & News Service, provided by
Thomson Investors Network, which includes company profiles,
intra-day and 12-month interactive charting, and analysts'
ratings and earnings estimates. Using our Research On Call
service, you can request reports from Standard & Poor's,
Vicker's, Lipper, and other well-known research providers to be
delivered by fax or by mail.
DIVIDEND REINVESTMENT SERVICE This service helps keep more of
your money working for you. Cash dividends (of $10 or greater)
from your eligible securities will be invested automatically in
additional shares of the same company, free of charge. Most
stocks listed on national securities exchanges or Nasdaq are
eligible for this service.
* Based on a September 1999 survey for representative-assisted
stock trades. Services vary by firm, and commissions may
vary depending on size of order.
** $24.95 per trade for up to 1,000 shares plus an additional
$.02 for each share over 1,000 shares. Visit our Web site
for a complete commission schedule or call for rates on
representative-assisted and other non-Internet trades.
================================================================================
FOR FUND AND ACCOUNT INFORMATION
OR TO CONDUCT TRANSACTIONS,
24 HOURS, 7 DAYS A WEEK
By touch-tone telephone
TELE*ACCESS 1-800-638-2587
By Account Access on the Internet
WWW.TROWEPRICE.COM/ACCESS
FOR ASSISTANCE
WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132
TO OPEN A BROKERAGE ACCOUNT
OR OBTAIN INFORMATION, CALL:
1-800-638-5660
INTERNET ADDRESS:
www.troweprice.com
PLAN ACCOUNT LINES FOR RETIREMENT
PLAN PARTICIPANTS:
The appropriate 800 number appears on
your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
<PAGE>
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus appropriate
to the fund or funds covered in this
report.
WALK-IN INVESTOR CENTERS:
For directions, call 1-800-225-5132
or visit our Web site
BALTIMORE AREA
DOWNTOWN
101 East Lombard Street
OWINGS MILLS
Three Financial Center
4515 Painters Mill Road
BOSTON AREA
386 Washington Street
Wellesley
COLORADO SPRINGS
4410 ArrowsWest Drive
LOS ANGELES AREA
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
TAMPA
4200 West Cypress Street
10th Floor
WASHINGTON, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Investment Services, Inc., Distributor. C08-050 12/31/99
