0000808303-01-500009.txt : 20011019
0000808303-01-500009.hdr.sgml : 20011019
ACCESSION NUMBER: 0000808303-01-500009
CONFORMED SUBMISSION TYPE: 497K3B
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20011015
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: PRICE T ROWE SPECTRUM FUND INC
CENTRAL INDEX KEY: 0000808303
STANDARD INDUSTRIAL CLASSIFICATION: []
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 497K3B
SEC ACT: 1933 Act
SEC FILE NUMBER: 033-10992
FILM NUMBER: 1758760
BUSINESS ADDRESS:
STREET 1: 100 E PRATT ST
CITY: BALTIMORE
STATE: MD
ZIP: 21202
BUSINESS PHONE: 4105472000
FORMER COMPANY:
FORMER CONFORMED NAME: PRICE T ROWE OMNI TRUST
DATE OF NAME CHANGE: 19870726
497K3B
1
spc-fundprofile.txt
SPECTRUM FUNDS, 10/1/01
October 1, 2001
FUND PROFILE
T. ROWE PRICE
Spectrum Funds
Three broadly diversified growth, income, and international funds that invest
in other T. Rowe Price funds.
TROWEPRICELOGO
This profile summarizes key information about the funds that is included in the
funds' prospectus. The funds' prospectus includes additional information about
the funds, including a more detailed description of the risks associated with
investing in each fund that you may want to consider before you invest. You may
obtain the prospectus and other information about the funds at no cost by
calling 1-800-638-5660, or by visiting our Web site at www.troweprice.com.
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FUND PROFILE
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What is each fund's objective?
Spectrum Income Fund seeks a high level of current income with moderate share
price fluctuation.
Spectrum Growth Fund seeks long-term capital appreciation and growth of
income, with current income a secondary objective.
Spectrum International Fund seeks long-term capital appreciation.
What is each fund's principal investment strategy?
Each fund can diversify its assets widely among a set of T. Rowe Price mutual
funds representing specific market segments. Each Spectrum Fund seeks to
maintain broad exposure to several markets in an attempt to reduce the impact
of markets that are declining and to benefit from good performance in
particular market segments.
Spectrum Income Fund may invest in domestic and international bond funds, a
money market fund, and an income-oriented stock fund.
Spectrum Growth Fund may invest in domestic and international equity funds
and a money market fund.
Spectrum International Fund may invest in developed and emerging market
equity funds, international bond funds, and a money market fund.
Within the ranges shown in the next table, managers decide how much of each
fund's assets to allocate to underlying fund investments based on their
outlook for, and on the relative valuations of, the underlying funds and the
various markets in which they invest.
Each fund may sell securities for a variety of reasons, such as to secure
gains, limit losses, or redeploy assets into more promising opportunities.
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FUND PROFILE
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Table 1 Asset Allocation Ranges for Underlying Funds
Spectrum Investment Spectrum Investment Spectrum Inve
Income Fund Range Growth Fund Range International Fund Rang
Emerging Europe &
Emerging Markets Bond 0-10% Blue Chip Growth 5-20% Mediterranean 0-15
Emerging Markets Bond 0-15
Equity Income 10-25 Equity Income 7.5-22.5
Emerging Markets Stock 0-20
GNMA 5-20 Growth & Income 7.5-22.5
High Yield 10-25 Growth Stock 5-20 European Stock 0-30
International Bond 5-20 International Stock 10-25 International Bond 0-20
New Income 15-30 Mid-Cap Value 0-15 International Discovery 0-20
Short-Term Bond 0-15 New Era 0-15 International Stock 35-65
Summit Cash Reserves 0-25 New Horizons 10-25 Japan 0-30
Summit Cash
U.S. Treasury Long-Term 0-15 Reserves 0-25 Latin America 0-15
New Asia 0-20
Summit Cash Reserves 0-25
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Further information about the funds' 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 these documents, call 1-800-638-5660.
What are the main risks of investing in the funds?
Each Spectrum Fund's broad diversification is designed to cushion severe
losses in any one investment sector and moderate the fund's overall price
swings. However, the funds' share prices will fluctuate as the prices of the
underlying funds rise or fall with changing market conditions. Spectrum
Income should experience lower price volatility than the equity-focused
funds, Spectrum Growth and Spectrum International. Each fund carries some
particular risk considerations:
Spectrum Income
This fund's share price will typically move in the opposite direction of U.S.
interest rates, so a rise in rates, or interest rate risk, represents 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. Credit risk for the fund increases to the extent it
invests in high-yield ("junk") bonds, primarily through the High Yield Fund.
The fund is exposed to the risks of international investing to the extent it
invests overseas, primarily through the International Bond Fund. For example,
weakening foreign currencies versus the U.S. dollar would typically reduce
returns from bonds denominated in other curren-
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cies. In addition, emerging market bonds are subject to the special political
and economic risks of these newly industrialized countries. To the extent
that Spectrum Income invests in stocks through the Equity Income Fund, its
share price would be hurt by stock market declines.
Spectrum Growth
As with all equity funds, this fund's share price can fall because of
weakness in the broad market, a particular industry, or specific holdings.
The market as a whole can decline for many reasons, including adverse
political or economic developments here or abroad, changes in investor
psychology, or heavy institutional selling. The prospects for a particular
underlying fund or the industries or companies in which they invest may
deteriorate because of a variety of factors, including disappointing earnings
or changes in the competitive environment. In addition, our assessment of the
potential growth of underlying funds held by the fund may prove incorrect,
resulting in losses or poor performance even in a rising market.
In addition to the general stock market risks assumed by the funds held in
this portfolio, certain underlying holdings carry additional risks. The
fund's investments in small companies, primarily through the New Horizons
Fund, may experience greater price swings than its investments in funds
holding larger stocks. To the extent the fund invests in foreign securities,
primarily through the International Stock Fund, it is also subject to the
risk that it may lose value due to declining foreign currencies or adverse
political or economic events overseas.
. Equity investors should have a long-term investment horizon and be willing
to wait out bear markets.
Spectrum International
This fund is subject to the general stock and bond market risks noted
previously. Because it can only invest up to 35% of assets in foreign bond
funds, its performance will primarily be influenced by stock fund risks.
Funds that invest overseas generally carry more risk than funds that invest
strictly in U.S. assets. These risks include fluctuations in foreign exchange
rates that can significantly increase or decrease the dollar value of a
foreign investment, boosting or offsetting its local market return. For
example, weakening foreign currencies versus the U.S. dollar would typically
lower returns for U.S. investors. Investing in foreign markets may also
involve higher costs and lower liquidity. Government interference in capital
markets, such as capital or currency controls, nationalization of companies
or industries, expropriation of assets, or imposition of punitive taxes would
have an adverse effect on the fund.
To the extent that the fund has investments in emerging market countries,
primarily through the Emerging Markets Stock, Latin America, or New Asia
Funds, it will be more subject to abrupt and severe price declines. Many of
the economic
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FUND PROFILE
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and political structures of these countries do not compare favorably with the
U.S. in terms of wealth and stability, and their financial markets lack
liquidity. Therefore, investments in these countries are much riskier than
investments in mature markets.
As with any mutual fund, there can be no guarantee the funds will achieve
their objectives.
. Each fund's share price may decline, so when you sell your shares, you may
lose money. An investment in each 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.
How can I tell which fund is most appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for risk.
If you would like a one-stop approach to broad diversification and can accept
the possibility of moderate share price declines in an effort to achieve
relatively high income, Spectrum Income Fund could be an appropriate part of
your overall investment strategy.
If you would like a one-stop approach to broad diversification and can accept
the possibility of share price declines in an effort to achieve long-term
capital appreciation and some current income, Spectrum Growth Fund could be
an appropriate part of your overall investment strategy.
If you would like a one-stop approach to broad international diversification
and can accept the possibility of significant share price declines in an
effort to achieve long-term capital appreciation, Spectrum International Fund
could be an appropriate part of your overall investment strategy.
The fund or funds you select should not represent your complete investment
program or be used for short-term trading purposes.
Each fund can be used in both regular and tax-deferred accounts, such as
IRAs.
How has each fund performed in the past?
The bar charts showing calendar year returns and the average annual total
return table indicate risk by illustrating how much returns can differ from
one year to the next and over time. Fund past performance is no guarantee of
future returns.
The funds can also experience short-term performance swings, as shown by the
best and worst calendar quarter returns during the years depicted in the
charts.
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LOGO
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FUND PROFILE
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LOGO
Calendar Year Total Returns
Fund "91" "92" "93" "94" "95" "96" "97" "98" "99" "00"
-----------------------------------------------------------------------------------------------------
Spectrum
Income 19.64 7.84 12.36 -1.94 19.41 7.64 12.18 6.57 0.26 7.40
Spectrum
Growth 29.87 7.24 20.98 1.40 29.96 20.53 17.40 13.62 21.20 -0.11
Spectrum -- -- -- -- -- -- 2.42 12.28 39.49 -14.71
International
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Spectrum Income Quarter ended Total return
Best quarter 3/31/95 6.56%
Worst quarter 3/31/94 -2.63%
Spectrum Growth Quarter ended Total return
Best quarter 12/31/98 18.61%
Worst quarter 9/30/98 -13.44%
Spectrum International Quarter ended Total return
Best quarter 12/31/99 25.04%
Worst quarter 9/30/98 -13.71%
Table 2 Average Annual Total Returns
Periods ended 09/30/2001
Shorter of 10 years or
1 year 5 years since inception Inception date
------------------------
Spectrum Income Fund 6.05% 6.53% 7.83% 6/29/90
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Lehman Brothers U.S.
Aggregate Index 12.95 8.06 7.76
Lipper General Bond
Funds Average 6.57 6.27 7.64
Spectrum Growth Fund -23.37 6.52 10.97 6/29/90
S&P 500 Stock Index -26.62 10.22 12.70
Lipper Multi-Cap Core
Fund Index -27.25 7.95 11.20
Spectrum
International Fund -31.65 -- -0.22 12/31/96
Combined Index (90%
MSCI EAFE/ 10% J.P.
Morgan Non-U.S.
Dollar Government
Bond Index) -25.39 -- 0.05
Lipper International -30.93 -- 0.23
Funds Average
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FUND PROFILE
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These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
Lehman indices do not reflect the deduction of any fees or expenses.
What fees or expenses will I pay?
The funds are 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 funds themselves impose no fees or charges, they
will indirectly bear their pro-rata share of the expenses of the underlying
funds. The following table provides a range of average weighted expense
ratios for each fund. 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 3 Range of Average Weighted Expense Ratios as of
December 31, 2000
Spectrum Income Spectrum Growth Spectrum International
0.63% to 0.84% 0.70 % to 0.87% 0.75 % to 1.27%
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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
these funds with that of other mutual funds. Although your actual costs may
be higher or lower, the table uses the midpoints of the ranges to show the
expenses you would pay if operating expenses remain the same, you invest
$10,000, earn a 5% annual return, and hold the investment for the following
periods and then redeem:
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FUND PROFILE
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Fund 1 year 3 years 5 years 10 years
Spectrum Income $76 $237 $411 $918
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Spectrum Growth 81 252 439 978
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Spectrum International 103 322 558 1,236
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Who manages the funds?
Spectrum Income and Spectrum Growth Funds The funds are managed by T. Rowe
Price Associates, Inc. (T. Rowe Price). 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 manages the funds day to day and has been chairman of their
Investment Advisory Committee since 1998. He has been managing investments
since joining T. Rowe Price in 1989.
Spectrum International Fund T. Rowe Price International is responsible for
the selection and management of the fund's portfolio investments. The
company, a wholly owned subsidiary of T. Rowe Price Associates, is the
successor to Rowe Price-Fleming International ("Price-Fleming"), a joint
venture established in 1979 between T. Rowe Price Associates and Robert
Fleming Holdings ("Flemings"). In 2000, T. Rowe Price became the sole owner
of Rowe Price-Fleming and renamed the company T. Rowe Price International.
The U.S. office of T. Rowe Price International is located at 100 East Pratt
Street, Baltimore, Maryland 21202. Offices are also located in London, Tokyo,
Singapore, Hong Kong, Buenos Aires, and Paris.
John R. Ford manages the fund day to day and has been chairman of its
Investment Advisory Committee since 1996. He joined T. Rowe Price
International in 1982 and has been a portfolio manager since 1984.
To participants in employer-sponsored retirement plans: The following
questions and answers about buying and selling shares and services do not
apply to your plan. Please call your plan's toll-free number for additional
information. Also note that this profile may include funds not available
through your plan.
How can I purchase shares?
Fill out the New Account Form and return it with your check in the postpaid
envelope. The minimum initial purchase is $2,500 ($1,000 for IRAs and gifts
or transfers to minors). The minimum subsequent investment is $100 ($50 for
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FUND PROFILE
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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.
How can I sell shares?
You may redeem or sell any portion of your 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 convenient exchange among our
entire family of domestic and international funds. Restrictions may apply in
special circumstances, and some redemption requests need a signature
guarantee.
When will I receive income and capital gain distributions?
Spectrum Income distributes income monthly and net capital gains, if any, at
year-end. Spectrum Growth and Spectrum International distribute income 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.
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;
. brokerage services; and
. asset manager accounts.
FUND PROFILE
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T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
www.troweprice.com
LOGO
RPS C08-035
T. Rowe Price Investment Services, Inc., Distributor