0000950109-95-002860.txt : 19950802 0000950109-95-002860.hdr.sgml : 19950802 ACCESSION NUMBER: 0000950109-95-002860 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950801 SROS: NONE 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: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04998 FILM NUMBER: 95557863 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE OMNI TRUST DATE OF NAME CHANGE: 19870726 N-30D 1 SPECTRUM FUND -------------------------------------------------------------------------------- Fellow Shareholders -------------------------------------------------------------------------------- The first half of 1995 was a nearly perfect environment for bonds and stocks: falling interest rates, rising corporate earnings, a slowing yet fundamentally sound economy, and relatively stable inflation. As a result, U.S. bond and stock markets erased memories of their dismal performances in 1994. The second quarter mirrored the first, with the unmanaged Standard & Poor's 500 Stock Index up 9.6%, bringing the six-month gain to a resounding 20.2%. Based on the historical 10% return on stocks, the market has now provided two years' worth of average gains in only six months. The rally was led by technology stocks, with the financial sector also responding strongly to falling interest rates. Large multinational companies, whose overseas earnings were boosted by the generally weak dollar, were also big winners. Since the S&P 500 is dominated by large companies, it outperformed many other equity benchmarks and stock mutual funds for both the quarter and the half. It was outpaced, however, by the Nasdaq Composite Index, which is heavily weighted in technology stocks. The bond market also continued to soar, as increasing signs of a slowing economy led to falling interest rates across all maturities. The benchmark 30- year Treasury bond yield dropped 80 basis points during the quarter, finishing at 6.6% (100 basis points is equal to one percentage point). As measured by the Lehman Brothers Aggregate Bond Index, the bond market returned 6.1% in the second quarter versus 5.0% in the previous period, for a six-month compound return of 11.4%. In early July, the Federal Reserve finally acknowledged what the bond market had been signaling since late last year, that the slowing economy called for lower interest rates. The Fed lowered the federal funds target by one- quarter percentage point, to 5.75%, its first reduction in nearly three years. -------------------------------------------------------------------------------- Interest Rate Levels -------------------------------------------------------------------------------- [GRAPH APPEARS HERE] A three-line chart showing rates on the 30-year T-bond, the 5-year T-note, and the 90-day T-bill from 12/31/94 through 6/30/95 Foreign stocks started to regain investor confidence, which was shaken by last year's devaluation of the Mexican peso. Many of the larger foreign equity markets recovered somewhat from the poor results of the first quarter to post positive returns for the second quarter and the first half. Japan, whose economy is treading water, was an exception. Latin American returns, which were particularly hard hit by the peso debacle, were positive for the second quarter but negative for the six months. Foreign bond returns were generally more impressive than foreign stocks, but lost momentum. The dollar, which was extremely weak earlier this year, stabilized against most European and Asian currencies during the second quarter. As a result, returns to U.S. investors were positive, but well below the spectacular returns of the first quarter. SPECTRUM GROWTH FUND PERFORMANCE AND STRATEGY REVIEW Spectrum Growth turned in strong results for the quarter and the first half, as shown in the table on the next page. Returns trailed the broad market and our peer group, however, due to our significant holdings of small-capitalization and foreign stocks. While both enjoyed positive performance, they could not match large- capitalization U.S. stocks and technology issues. -------------------------------------------------------------------------------- Performance Comparison --------------------------------------------------------------------------------
Periods Ended 6/30/95 3 Months 6 Months --------------------- Spectrum Growth Fund 7.3% 14.2% Lipper Growth & Income Fund Index* 8.2 16.7 --------------------------------------------------------------------------------
*Based on the 30 largest growth and income funds. Overseas economies are now growing faster than the U.S., and we intend to maintain a significant exposure to foreign equity markets. This is reflected in our near maximum allocation to the International Stock Fund, which brings Spectrum Growth's total foreign equity holdings to 29% of fund assets (see pie chart). On the U.S. front, we are tilting away from value stocks toward growth stocks, whose consistent earnings gains typically become more enticing to investors as the economy slows. In the latest quarter, we slightly increased our holdings in the Growth Stock and New Horizons funds and trimmed our position in the Growth & Income Fund, which is more value-oriented. Although our exposure to small stocks fluctuated during the quarter, we retained enough to benefit from their historically higher returns. -------------------------------------------------------------------------------- Security Diversification -------------------------------------------------------------------------------- [PIE CHART APPEARS HERE] Pie chart showing security diversification between domestic stocks, international stocks, bonds, and money market instruments on 6/30/95. Spectrum Growth participated in the technology rally through its 19% allocation to New Horizons, which gained 24.1% in the first half due mostly to its substantial holdings of technology stocks. The fund's overall security diversification, as shown in the chart (lower left), changed little from last quarter. SPECTRUM INCOME FUND PERFORMANCE AND STRATEGY REVIEW Propelled by investments in the Equity Income and International Bond funds, Spectrum Income provided excellent returns for the first half. Although the dollar strengthened slightly against the yen and the deutschemark in the second quarter, the International Bond Fund still returned 16.8% for the six months, mostly due to currency translation in the first quarter. (When the dollar is weak, returns on foreign investments receive a boost from the conversion into dollars.) The Equity Income Fund, while trailing the broader S&P 500 because of its value approach and focus on high-dividend securities, participated strongly in the stock and bond market rallies, returning 6.7% and 15.4% for the three- and six-month periods, respectively. This fund continues to play a valuable role as Spectrum Income's main vehicle for diversification away from strictly interest rate-sensitive investments. Spectrum Income outperformed its Lipper peer group average for the six- month period, but lagged slightly behind in the latest quarter. Since the fund is more broadly diversified than most income-oriented funds, with more international exposure, it did not benefit quite as much from the quick and steep descent of U.S. interest rates last quarter. -------------------------------------------------------------------------------- Performance Comparison --------------------------------------------------------------------------------
Periods Ended 6/30/95 3 Months 6 Months --------------------- Spectrum Income Fund 4.75% 11.61% Lipper Flexible Income Funds Average* 5.36 10.30 --------------------------------------------------------------------------------
* Based on income-oriented funds which invest in stocks and bonds. 2 We made only slight changes to the fund's allocations during the quarter. As the pie chart shows, half of the portfolio is invested in high-grade U.S. bonds. While bonds are not likely to enjoy the torrid price appreciation of the first quarter, they should still perform well, especially if the Fed continues to lean toward ease. As shown in the allocation table following this letter, we approached the limit in our exposure to the GNMA and New Income funds, at 16% and 28% of assets, respectively. GNMAs continue to provide attractive income, and mortgage prepayments, in our view, will not be nearly as high as some suggest. We increased our emphasis on high-quality bonds since they tend to outperform lower-quality bonds when the economy's pace cools. -------------------------------------------------------------------------------- Security Diversification -------------------------------------------------------------------------------- [PIE CHART APPEARS HERE] Pie chart showing security diversification among high-grade bonds, money markets, high-yield bonds, international bonds, and stocks on 6/30/95. We lowered our commitment to international bonds to 11% of the fund's assets from 14% last quarter. While international bonds contributed nicely to your fund's performance in the first half, we believe the dollar has bottomed out and may rally in coming months. That would reduce the benefits of currency translation, which was such a strong factor behind the solid returns of international bonds in the first half. OUTLOOK The cut in the federal funds rate, together with a fundamentally sound economy, should help allay fears of a near-term recession. The question now is the pace of economic growth for the rest of the year and the Fed's future course on monetary policy. Recent signals have been mixed: industrial production remains weak, with several months of declines followed by a slight uptick in June. But retail sales rose and unemployment dropped in June, indicating underlying strength in the economy. We believe the economy remains basically sound and will pick up later this year, which is good news for stocks. A recovering economy could eliminate the need for further rate cuts by the Fed and hurt the high-grade bond market. However, stronger growth should be good for high-yield bonds, which represent 17% of Spectrum Income's portfolio. Looking abroad, we expect foreign stocks to be bolstered by improving global economies, but foreign bond returns to U.S. investors may be more negatively affected by an improving dollar. The Spectrum Funds, with their exceptionally broad diversification, offer protection from these fluctuations because declines in any one sector can be balanced by investments in other, unrelated sectors. Such diversification offers the potential for attractive returns over the long haul with less short-term volatility than more narrowly focused funds. At the end of June, the Spectrum Funds celebrated their fifth birthday, growing to nearly $2 billion in total assets. Around two-thirds of that money has been invested through IRAs and other retirement plans. We thank you for your continued confidence. Respectfully submitted, /s/ Peter Van Dyke Peter Van Dyke President and Chairman of the Investment Advisory Committee July 19, 1995 3 -------------------------------------------------------------------------------- Spectrum Growth Fund -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Key Statistics --------------------------------------------------------------------------------
Change in Price Per Share Periods Ended 6/30/95 -------------------------------------------------------------------------------- 3 Months (From $11.85 to $12.71) $0.86 -------------------------------------------------------------------------------- 6 Months (From $11.13 to $12.71) 1.58 -------------------------------------------------------------------------------- Total Net Assets $1,099.7 Million -------------------------------------------------------------------------------- Average Annual Compound Total Return -------------------------------------------------------------------------------- 1 Year 20.04% -------------------------------------------------------------------------------- 5 Years 11.89 --------------------------------------------------------------------------------
Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. -------------------------------------------------------------------------------- Allocations --------------------------------------------------------------------------------
Minimum- Underlying Fund Maximum 6/30/95 -------------------------------------------------------------------------------- Prime Reserve 0 - 25% 0.0% -------------------------------------------------------------------------------- Equity Income 5 - 20 11.0 -------------------------------------------------------------------------------- Growth & Income 5 - 20 13.0 -------------------------------------------------------------------------------- Growth Stock 15 - 30 23.0 -------------------------------------------------------------------------------- New Era 10 - 25 14.0 -------------------------------------------------------------------------------- International Stock 5 - 20 20.0 -------------------------------------------------------------------------------- New Horizons 10 - 25 19.0 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Ten Largest Holdings --------------------------------------------------------------------------------
Percent of Total Company Net Assets -------------------------------------------------------------------------------- Royal Dutch Petroleum 0.9% -------------------------------------------------------------------------------- Atlantic Richfield 0.9 -------------------------------------------------------------------------------- Schlumberger 0.8 -------------------------------------------------------------------------------- Viacom 0.7 -------------------------------------------------------------------------------- GE 0.7 -------------------------------------------------------------------------------- Paychex 0.7 -------------------------------------------------------------------------------- Mobil 0.6 -------------------------------------------------------------------------------- CUC International 0.6 -------------------------------------------------------------------------------- Wal-Mart 0.6 -------------------------------------------------------------------------------- Freddie Mac 0.6 -------------------------------------------------------------------------------- Total 7.1% --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Spectrum Income Fund -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Key Statistics --------------------------------------------------------------------------------
Dividend Yield* Periods Ended 6/30/95 -------------------------------------------------------------------------------- 3 Months 6.70% -------------------------------------------------------------------------------- 6 Months 6.92 -------------------------------------------------------------------------------- SEC 30-Day Yield 6.41 -------------------------------------------------------------------------------- Dividend Per Share -------------------------------------------------------------------------------- 3 Months $0.18 -------------------------------------------------------------------------------- 6 Months 0.36 -------------------------------------------------------------------------------- Change in Price Per Share -------------------------------------------------------------------------------- 3 Months (From $10.56 to $10.88) $0.32 -------------------------------------------------------------------------------- 6 Months (From $10.11 to $10.88) 0.77 -------------------------------------------------------------------------------- Weighted Average Quality** 2.4*** -------------------------------------------------------------------------------- Weighted Average Maturity 8.0 years*** -------------------------------------------------------------------------------- Total Net Assets $841.6 Million Average Annual Compound Total Return -------------------------------------------------------------------------------- 1 Year 13.34% 5 Years 10.25
* Dividends earned and reinvested for the periods indicated are annualized and divided by the average daily net asset values per share for the same period. ** On a scale of 1 to 10, with Grade 1 representing highest quality. *** Excludes the Equity Income Fund. Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. -------------------------------------------------------------------------------- Allocations --------------------------------------------------------------------------------
Minimum- Underlying Fund Maximum 6/30/95 -------------------------------------------------------------------------------- Prime Reserve 5 - 30% 5.0% -------------------------------------------------------------------------------- Short-Term Bond 0 - 15 4.5 -------------------------------------------------------------------------------- GNMA 5 - 20 16.0 -------------------------------------------------------------------------------- New Income 15 - 30 28.0 -------------------------------------------------------------------------------- High Yield 10 - 25 19.5 -------------------------------------------------------------------------------- International Bond 5 - 20 12.0 -------------------------------------------------------------------------------- Equity Income 10 - 25 15.0 --------------------------------------------------------------------------------
4 -------------------------------------------------------------------------------- Statement of Net Assets T. Rowe Price Spectrum Funds / June 30, 1995 (Unaudited) -------------------------------------------------------------------------------- (values in thousands)
-------------------------------------------------------------------------------- Growth Fund Investments -------------------------------------------------------------------------------- Value ---------- 11,687,384 shs. T. Rowe Price Growth Stock Fund....................................... $ 254,785 18,475,878 T. Rowe Price International Stock Fund................................. 216,722 11,664,871 T. Rowe Price New Horizons Fund....................................... 213,584 6,409,698 T. Rowe Price New Era Fund.................... 144,731 7,729,844 T. Rowe Price Growth & Income Fund................................ 135,968 7,205,044 T. Rowe Price Equity Income Fund....................................... 129,402 4,887,816 T. Rowe Price Prime Reserve Fund....................................... 4,888 -------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 100.0% OF NET ASSETS (COST $971,129).................................................. 1,100,080 -------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES.................................... (334) ---------- NET ASSETS CONSIST OF: Value -------- Accumulated net investment income - net of distributions............ $ 4,412 Accumulated realized gains/losses - net of distributions..................... 5,179 Net unrealized gain......................... 128,951 Paid-in-capital applicable to 86,521,351 shares of $0.01 par value capital stock outstand- ing; 1,000,000,000 shares of Spectrum authorized...................... 961,204 -------- NET ASSETS....................................................... $1,099,746 ========== NET ASSET VALUE PER SHARE........................................ $12.71 ====== --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Income Fund Investments -------------------------------------------------------------------------------- Value --------- 26,019,255 shs. T. Rowe Price New Income Fund......................................... $233,913 20,452,541 T. Rowe Price High Yield Fund......................................... 166,075 7,330,333 T. Rowe Price Equity Income Fund......................................... 131,653 12,718,750 T. Rowe Price GNMA Fund......................... 120,701 9,718,337 T. Rowe Price International Bond Fund.................................... 103,014 49,655,856 T. Rowe Price Prime Reserve Fund......................................... 49,656 9,433,679 T. Rowe Price Short-Term Bond Fund......................................... 44,527 -------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 100.9% OF NET ASSETS (COST $828,352).................................................... 849,539 -------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES...................................... (7,902) -------- NET ASSETS CONSIST OF: Value -------- Accumulated realized gains/losses - net of distributions...................... $ (2,130) Net unrealized gain.......................... 21,187 Paid-in-capital applicable to 77,348,234 shares of $0.01 par value capital stock outstand- ing; 1,000,000,000 shares of Spectrum authorized....................... 822,580 -------- NET ASSETS......................................................... $841,637 ======== NET ASSET VALUE PER SHARE.......................................... $10.88 ====== --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 5 -------------------------------------------------------------------------------- Statement of Operations -------------------------------------------------------------------------------- T. Rowe Price Spectrum Funds / Six Months Ended June 30, 1995 (Unaudited) (in thousands)
Growth Income Fund Fund -------- ------- INVESTMENT INCOME Income distributions from Underlying Funds........................ $ 4,412 $26,286 -------- ------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Sale of Underlying Funds....................................... (977) (2,309) Capital gain distributions from Underlying Funds............... 2,081 945 -------- ------- Net realized gain (loss)....................................... 1,104 (1,364) Change in net unrealized gain or loss............................. 127,414 59,521 -------- ------- Net realized and unrealized gain (loss)........................... 128,518 58,157 -------- ------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................. $132,930 $84,443 ======== =======
The accompanying notes are an integral part of these financial statements. 6 -------------------------------------------------------------------------------- Statement of Changes in Net Assets -------------------------------------------------------------------------------- T. Rowe Price Spectrum Funds (Unaudited) (in thousands)
Growth Fund Income Fund ---------------------------------- -------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended June 30, 1995 Dec. 31, 1994 June 30, 1995 Dec. 31, 1994 ---------------- ------------- ---------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM Operations Income distributions.................................. $ 4,412 $ 12,230 $ 26,286 $ 39,951 Net realized gain (loss).............................. 1,104 57,788 (1,364) 7,288 Change in net unrealized gain or loss................. 127,414 (59,702) 59,521 (59,602) ---------- -------- -------- -------- Increase (decrease) in net assets from operations..... 132,930 10,316 84,443 (12,363) ---------- -------- -------- -------- Distributions to shareholders Net investment income................................. -- (12,230) (26,286) (39,951) Net realized gain..................................... -- (53,228) (2,082) (6,247) ---------- -------- -------- -------- Decrease in net assets from distributions............. -- (65,458) (28,368) (46,198) ---------- -------- -------- -------- Capital share transactions* Shares sold........................................... 174,873 412,180 215,169 268,102 Distributions reinvested.............................. -- 62,074 25,285 40,313 Shares redeemed....................................... (87,423) (124,622) (79,832) (212,845) ---------- -------- -------- -------- Increase (decrease) in net assets from capital share transactions......................... 87,450 349,632 160,622 95,570 ---------- -------- -------- -------- Increase (decrease) in net assets........................ 220,380 294,490 216,697 37,009 NET ASSETS Beginning of period................................... 879,366 584,876 624,940 587,931 ---------- -------- -------- -------- End of period......................................... $1,099,746 $879,366 $841,637 $624,940 ========== ======== ======== ======== --------------------------------------------------------------------------------------------------------------------------------- *Capital share transactions (number of shares) Shares sold........................................... 14,965 34,623 20,710 25,117 Distributions reinvested.............................. -- 5,613 2,387 3,858 Shares redeemed....................................... (7,434) (10,518) (7,556) (20,072) ---------- -------- -------- -------- Increase (decrease) in shares outstanding............. 7,531 29,718 15,541 8,903 ---------- -------- -------- -------- ---------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 7 -------------------------------------------------------------------------------- Notes to Financial Statements -------------------------------------------------------------------------------- T. Rowe Price Spectrum Funds / June 30, 1995 (Unaudited) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES T. Rowe Price Spectrum Fund, Inc. (Spectrum) is registered under the Investment Company Act of 1940. Spectrum Growth Fund (the Growth Fund) and Spectrum Income Fund (the Income Fund), non-diversified, open-end management investment companies, are the two portfolios established by Spectrum. The Growth Fund and Income Fund invest in other mutual funds (the Underlying Funds) sponsored and managed by T. Rowe Price Associates, Inc. A) Security valuation - Investments in the Underlying Funds are valued at the closing net asset value per share of each Underlying Fund on the day of valuation. B) Other - Income is recorded on the accrual basis. Distributions from the Underlying Funds and distributions to Spectrum's shareholders are recorded on the ex-dividend date. Purchases and sales of the Underlying Funds are accounted for on the trade date. Realized gains and losses are reported on an identified cost basis. Capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. NOTE 2 - UNDERLYING FUND TRANSACTIONS Purchases and sales of the Underlying Funds for the six months ended June 30, 1995, were as follows:
Growth Income Fund Fund -------- -------- Amounts in Thousands ----------------------- Purchases $140,530 $220,605 Sales 42,218 49,485
NOTE 3 - FEDERAL INCOME TAXES No provision for federal income taxes is required since each Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. At June 30, 1995, the aggregate cost of the Underlying Funds held by the Growth Fund and Income Fund for federal income tax and financial reporting purposes was $971,129,000 and $828,352,000, respectively. Net unrealized gain or loss of the Underlying Funds was as follows:
Growth Income Fund Fund -------- -------- Amounts in Thousands -------------------- Appreciated Funds $128,951 $27,930 Depreciated Funds -- (6,743) -------- ------- Net Unrealized Gain or Loss $128,951 $21,187 ======== =======
NOTE 4 - INVESTMENT MANAGER The Growth Fund and Income Fund are managed by T. Rowe Price Associates, Inc. (the Manager). Each Fund operates at a zero expense ratio by virtue of a Special Servicing Agreement (the Agreement) between and among Spectrum, the Underlying Funds, the Manager and T. Rowe Price Services, Inc. The Agreement provides that each Underlying Fund will bear expenses associated with the operation of Spectrum in proportion to the average daily value of its shares owned by Spectrum. 8 -------------------------------------------------------------------------------- Financial Highlights -------------------------------------------------------------------------------- T. Rowe Price Spectrum Funds (Unaudited)
For a share outstanding throughout each period ----------------------------------------------------------------------------------- June 29, 1990 Six Months Year Ended December 31, (Commencement of Ended ------------------------------------------------- Operations) to June 30, 1995 1994 1993 1992 1991 Dec. 31, 1990 ----------------------------------------------------------------------------------- ---------------------------------------------- Spectrum Growth Fund ---------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD.................................. $11.13 $11.87 $10.54 $10.53 $ 8.52 $10.00 ------ ------ ------ ------ ------ ------ Investment Activities Income distributions received.............. 0.05 0.17 0.16 0.20 0.21 0.20 Net realized and unrealized gain (loss).... 1.53 (0.01) 2.05 0.56 2.33 (1.21) ------ ------ ------ ------ ------ ------ Total from Investment Activities........... 1.58 0.16 2.21 0.76 2.54 (1.01) ------ ------ ------ ------ ------ ------ Distributions Income..................................... -- (0.17) (0.16) (0.20) (0.21) (0.19) Net realized gain.......................... -- (0.73) (0.72) (0.55) (0.32) (0.28) ------ ------ ------ ------ ------ ------ Total Distributions........................ -- (0.90) (0.88) (0.75) (0.53) (0.47) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD................ $12.71 $11.13 $11.87 $10.54 $10.53 $ 8.52 ====== ====== ====== ====== ====== ====== ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Total Return.................................. 14.2% 1.40% 21.0% 7.2% 29.9% (10.1)% Ratio of Expenses to Average Net Assets....... 0.00%+ 0.00% 0.00% 0.00% 0.00% 0.00%+ Ratio of Net Investment Income to Average Net Assets......................... 0.89%+ 1.60% 1.57% 2.15% 2.77% 4.50%+ Portfolio Turnover Rate....................... 8.6%+ 20.7% 7.0% 7.9% 14.6% 33.4%+ Net Assets, End of Period (in thousands)...... $1,099,746 $879,366 $584,876 $355,134 $148,661 $35,387 ------------------------------------------------------------------------------------------------------------------------------------
+ Annualized. ------------------------------------------------------------------------------------------------------------------------------------ Spectrum Income Fund ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD.................................. $10.11 $11.11 $10.70 $10.73 $ 9.77 $10.00 ------ ------ ------ ------ ------ ------ Investment Activities Income distributions received.............. 0.36 0.69 0.69 0.76 0.82 0.44 Net realized and unrealized gain (loss).... 0.80 (0.90) 0.60 0.05 1.03 (0.18) ------ ------ ------ ------ ------ ------ Total from Investment Activities........... 1.16 (0.21) 1.29 0.81 1.85 0.26 ------ ------ ------ ------ ------ ------ Distributions Income..................................... (0.36) (0.69) (0.69) (0.76) (0.83) (0.44) Net realized gain.......................... (0.03) (0.10) (0.19) (0.08) (0.06) (0.05) ------ ------ ------ ------ ------ ------ Total Distributions........................ (0.39) (0.79) (0.88) (0.84) (0.89) (0.49) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD................ $10.88 $10.11 $11.11 $10.70 $10.73 $ 9.77 ====== ====== ====== ====== ====== ====== ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Total Return.................................. 11.6% (1.9)% 12.4% 7.8% 19.6% 2.7% Ratio of Expenses to Average Net Assets....... 0.00%+ 0.00% 0.00% 0.00% 0.00% 0.00%+ Ratio of Net Investment Income to Average Net Assets......................... 6.85%+ 6.48% 6.19% 7.10% 8.03% 9.58%+ Portfolio Turnover Rate....................... 12.9%+ 23.1% 14.4% 14.2% 18.8% 36.9%+ Net Assets, End of Period (in thousands)...... $841,637 $624,940 $587,931 $376,435 $147,859 $40,082 ------------------------------------------------------------------------------------------------------------------------------------
+ Annualized. 9 -------------------------------------------------------------------------------- Shareholder Services -------------------------------------------------------------------------------- To help shareholder monitor their current investments and make decisions that accurately reflect their financial goals, T. Rowe Price offers a wide variety of information and services--at no extra cost. Knowledgeable Service Representatives By Phone--Shareholder service representatives are available from 8:00 a.m. to 10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m ET. Call 1-800-225-5132 to speak directly with a representative who will be able to assist you with your accounts. In Person--Visit one of our investor center locations to meet with a representative who will be able to assist you with your accounts. While there, you can drop off applications or obtain prospectuses and other literature. Automated 24-Hour Services Tele*Access(R)(1-800-638-2587) provides information such as account balance, date and amount of your last transaction, latest dividend payment, and fund prices and yields. Additionally, you have the ability to request prospectuses, statements, account and tax forms; reorder checks; and initiate purchase, redemption, and exchange orders for identically registered accounts. PC*Access(R) provides the same information as Tele*Access, but on a personal computer via dial-up modem. Account Services Checking--Write checks for $500 or more on any money market and most bond fund accounts (except the High Yield Fund and Emerging Markets Bond Fund). Automatic Investing--Build your account over time by investing directly from your bank account or paycheck with Automatic Asset Builder. Additionally, Automatic Exchange enables you to set up systematic investments from one fund account into a Stock fund. A low, $50 minimum makes it easy to get started. Automatic Withdrawal--If you need money from your fund account on a regular basis, you can establish scheduled automatic redemptions. Dividend and Capital Gains Payment Options--Reinvest all or some of your distributions, or take them in cash. We give you maximum flexibility and convenience. Investment Information Combined Statement--A comprehensive overview of your T. Rowe Price accounts. The summary page gives your earnings by tax category, provides total portfolio value, and lists your investments by type--stock, bond, and money market. Detail pages itemize account transactions by fund. Quarterly Shareholder Reports--Portfolio managers review the performance of the funds in plain language and discuss T. Rowe Price's economic outlook. The T. Rowe Price Report--A quarterly newsletter with relevant articles on market trends, personal financial planning, and T. Rowe Price's economic perspective. Insights--A library of information that includes reports on mutual fund tax issues, investment strategies, and financial markets. Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet, College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also available on disk for PC use), and Guide to Risk-Adjusted Performance can help you determine and reach your investment goals. Discount Brokerage You can trade stocks, bonds, options, precious metals, and other securities at a substantial savings over regular commission rates. Call a shareholder service representative for more information. 10 -------------------------------------------------------------------------------- T. Rowe Price No-Load Mutual Funds -------------------------------------------------------------------------------- STABILITY Prime Reserve Summit Cash Reserves U.S. Treasury Money California Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money CONSERVATIVE INCOME Short-Term Bond Short-Term Global Income Short-Term U.S. Government Summit Limited-Term Bond U.S. Treasury intermediate Florida Insured Intermediate Tax-Free Maryland Short-Term Tax-Free Bond Summit Municipal Intermediate Tax-Free Insured Intermediate Bond Tax-Free Short-Intermediate Virginal Short-Term Tax-Free Bond INCOME Global Government Bond GNMA New Income Spectrum Income Summit GNMA U.S. Treasury Long-Term California Tax-Free Bond Georgia Tax-Free Bond Maryland Tax-Free Bond New Jersey Tax-Free Bond New York Tax-Free Bond Summit Municipal Income Tax-Free Income Virginia Tax-Free Bond AGGRESSIVE INCOME Emerging Markets Bond High Yield International Bond Tax-Free High Yield CONSERVATIVE GROWTH Balanced Capital Appreciation Dividend Growth Equity Income Equity Index Growth & Income Spectrum Growth Value GROWTH Blue Chip Growth European Stock Growth Stock International Stock Japan Mid-Cap Growth New Era Small-Cap Value AGGRESSIVE GROWTH Capital Opportunity Emerging Markets Stock International Discovery Latin America New American Growth New Asia New Horizons OTC Science & Technology PERSONAL STRATEGY FUNDS Personal Strategy Income Personal Strategy Balanced Personal Strategy Growth Call if you want to know about any T. Rowe Price fund. We'll send you a prospectus with more complete information, including management fees and other expenses. Read it carefully before you invest or send money. T. Rowe Price Investment Services, Inc., Distributor. 11 -------------------------------------------------------------------------------- SEMIANNUAL REPORT -------------------------------------------------------------------------------- T.Rowe Price ------------ SPECTRUM FUNDS JUNE 30, 1995 [LOGO OF T. ROWE PRICE APPEARS HERE] FOR YIELD, PRICE, LAST TRANSACTION, AND CURRENT BALANCE, 24 HOURS, 7 DAYS A WEEK, CALL: 1-800-638-2587 toll free 625-7676 Baltimore area FOR ASSISTANCE WITH YOUR EXISTING FUND ACCOUNT, CALL: Shareholder Service Center 1-800-225-5132 toll free 625-6500 Baltimore area T. ROWE PRICE 100 East Pratt Street Baltimore, Maryland 21202 This report is authorized for distribution only to shareholders and to others who have received a copy of the prospectus of the T. Rowe Price Spectrum Funds. T.Rowe Price Invest With Confidence/(R)/ SPC