Item 1. Report to Shareholders T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- December 31, 2003 Certified Annual Report This report is certified under the Sarbanes-Oxley Act of 2002, which requires that public companies, including mutual funds, affirm that the information provided in their annual and semiannual shareholder reports fully and fairly represents their financial position. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Dear Shareholder, U.S. stocks rose in 2003--the first positive year for the S&P 500 Stock Index since 1999. Small-cap stocks strongly outpaced mid- and large-cap shares. U.S. bonds produced positive returns in 2003, but they were generally subdued relative to recent years. High-yield bonds surged, however, enjoying their best year in a decade. Non-U.S. stocks and bonds strongly outperformed their domestic counterparts, thanks in part to the U.S. dollar's protracted weakness versus major foreign currencies. Stocks and bonds in emerging markets produced superior returns. Economy and Interest Rates The U.S. economy improved dramatically in the last six months, growing at an annualized rate of 8.2% in the third quarter of 2003--the fastest rate of growth in two decades, and a considerable improvement over the sluggish pace of previous quarters. The manufacturing and service sectors are again expanding, productivity has continued to increase, and consumer spending remains buoyant, thanks partially to new tax cuts. Business confidence has also improved, as evidenced by increased spending on capital goods. Finally, the labor market has shown signs of rejuvenation. In recent months, weekly jobless claims have been declining, new jobs have been created, and the unemployment rate has fallen from a nine-year high of 6.3% in June to 5.7% in December. [Graphic Omitted] Interest Rate Levels - -------------------------------------------------------------------------------- Federal 10-Year 5-Year Funds Treasury Treasury Target Note Note Rate 12/31/02 3.81% 2.73% 1.25% 3.96 2.93 1.25 3.69 2.66 1.25 3/03 3.8 2.71 1.25 3.84 2.75 1.25 3.37 2.29 1.25 6/03 3.51 2.41 1 4.41 3.22 1 4.46 3.46 1 9/03 3.94 2.83 1 4.29 3.24 1 4.33 3.35 1 12/31/03 4.25 3.25 1 Money market yields, which generally track the federal funds target rate, fell to historic lows following the Federal Reserve's public acknowledgement of deflation concerns in May and a 25-basis-point reduction in the fed funds rate (from 1.25% to 1.00%) on June 25. Despite improving economic prospects, money market rates have remained very low because Fed officials have repeatedly stated that monetary policy can remain accommodative "for a considerable period" due to low inflation. Longer-term interest rates fell to 45-year lows in June, but they rebounded in the second half of 2003 because of the strengthening economy, heavy new supply of Treasury securities, and reduced demand for U.S. government bonds. Major Index Returns - -------------------------------------------------------------------------------- Period Ended 12/31/03 12-Month Return U.S. Stocks S&P 500 Stock Index 28.68% S&P MidCap 400 Index 35.62 Russell 2000 Index 47.25 U.S. Bonds Lehman Brothers U.S. Aggregate Index 4.10% CS First Boston High Yield Index 27.94 Non-U.S. Stocks MSCI EAFE Index 39.17% MSCI Emerging Markets Free Index 56.28 Non-U.S. Bonds J.P. Morgan Non-U.S. Dollar Government Bond Index 18.63% J.P. Morgan Emerging Markets Bond Index Plus 28.82 The Major Index Returns table shows how various domestic and international equity and fixed-income indexes performed over the fund's fiscal year. As you can see, in the U.S., small-cap stocks, as measured by the Russell 2000 Index, produced very strong returns in 2003. Among U.S. bonds, high-yield securities, as measured by the CS First Boston High Yield Index, fared better than high-quality bonds, as measured by the Lehman Brothers U.S. Aggregate Index. Non-U.S. stock and bond markets outperformed U.S. stocks and bonds, with securities in emerging markets generating superior returns. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Performance Comparison - -------------------------------------------------------------------------------- This chart shows the value of a hypothetical $10,000 investment in the 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. [Graphic Omitted] SPECTRUM GROWTH FUND - -------------------------------------------------------------------------------- As of 12/31/03 Spectrum Growth Fund $25,470 S&P 500 Stock Index $28,563 Lipper Multi-Cap Core Funds Index $25,318 Lipper Multi-Cap S&P 500 Core Spectrum Stock Funds Growth Index Index Fund 12/93 $ 10,000 $ 10,000 $ 10,000 12/94 10,132 9,907 10,140 12/95 13,940 13,098 13,178 12/96 17,140 15,780 15,883 12/97 22,859 19,926 18,646 12/98 29,392 23,650 21,187 12/99 35,576 28,561 25,678 12/00 32,337 27,608 25,651 12/01 28,493 24,637 23,693 12/02 22,196 19,281 18,994 12/03 28,563 25,318 25,470 Average Annual Compound Total Return - -------------------------------------------------------------------------------- Periods Ended 12/31/03 1 Year 5 Years 10 Years - -------------------------------------------------------------------------------- Spectrum Growth Fund 34.09% 3.75% 9.80% Lipper Multi-Cap Core Funds Index 31.31 1.37 9.73 S&P 500 Stock Index 28.68 -0.57 11.07 Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Spectrum Growth Fund We are pleased to report that your fund returned 34.09% in 2003. The fund surpassed its benchmarks, the Lipper Multi-Cap Core Funds Index and the S&P 500 Stock Index, as shown in the Performance Comparison chart on the preceding page, because of our exposure to international stocks, which outperformed domestic stocks. As you know, the fund seeks long-term capital appreciation and growth of income, with current income a secondary objective, by diversifying its assets widely among a set of T. Rowe Price domestic and international equity mutual funds representing specific market segments. The 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. Portfolio Holdings - -------------------------------------------------------------------------------- Percent of Percent of Net Assets Net Assets 2003 12/31/02 12/31/03 Returns - -------------------------------------------------------------------------------- New Horizons 20.0% 18.6% 49.31% International Stock 23.6 16.4 31.28 Equity Income 13.6 15.5 25.78 Growth Stock 10.0 12.3 31.23 Blue Chip Growth 9.2 11.7 29.75 Mid-Cap Value 8.2 8.3 39.00 Growth & Income 12.9 7.9 28.22 Emerging Markets Stock 0.0 4.2 52.30 International Growth & Income 0.0 3.0 39.48 New Era 2.5 2.1 33.20 - -------------------------------------------------------------------------------- Total 100% 100% The Portfolio Holdings table shows how the fund's percentage allocations to the underlying funds have changed in 2003 due to market movements as well as changes from the Asset Allocation Committee. This table also highlights the total returns of those funds in 2003. As you can see, our allocations to the New Horizons, International Stock, Growth & Income, and New Era Funds decreased over the last year, while our exposure to Equity Income, Growth Stock, Blue Chip Growth, and Mid-Cap Value Funds increased. In addition, we began investing in Emerging Markets Stock and International Growth & Income in the latter part of the year. Security Diversification Percent of Percent of Net Assets Net Assets 12/31/02 12/31/03 - -------------------------------------------------------------------------------- Large-Cap Stocks 44% 47% Mid-Cap Stocks 17 18 Small-Cap Stocks 10 6 Foreign Stocks 27 27 Other and Reserves 2 2 - -------------------------------------------------------------------------------- Total 100% 100% The Security Diversification table shows how the fund's percentage allocations to small-cap, mid-cap, large-cap, and foreign stocks changed in 2003. As you can see, our allocations to large- and mid-cap stocks increased over the last 12 months, while our small-cap exposure declined and our foreign stock exposure remained steady. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Performance Comparison - -------------------------------------------------------------------------------- This chart shows the value of a hypothetical $10,000 investment in the 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. [Graphic Omitted] SPECTRUM INCOME FUND - -------------------------------------------------------------------------------- As of 12/31/03 Spectrum Income Fund $20,851 Lehman Brothers U.S. Aggregate Index $19,576 Lipper General Bond Funds Average $18,118 Lehman Lipper Brothers General U.S. Bond Spectrum Aggregate Funds Income Index Average Fund 12/93 $ 10,000 $ 10,000 $ 10,000 12/94 9,708 9,634 9,806 12/95 11,502 11,317 11,710 12/96 11,919 11,994 12,605 12/97 13,070 13,174 14,141 12/98 14,206 14,010 15,071 12/99 14,089 14,119 15,109 12/00 15,727 14,940 16,228 12/01 17,055 15,663 16,974 12/02 18,804 16,698 18,139 12/03 19,576 18,118 20,851 Average Annual Compound Total Return - -------------------------------------------------------------------------------- Periods Ended 12/31/03 1 Year 5 Years 10 Years - -------------------------------------------------------------------------------- Spectrum Income Fund 14.96% 6.71% 7.63% Lipper General Bond Funds Average 6.42 5.14 6.08 Lehman Brothers U.S. Aggregate Index 4.10 6.62 6.95 Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Spectrum Income Fund We are pleased to report that your fund returned 14.96% in 2003. The fund strongly surpassed its benchmarks, the Lipper General Bond Funds Average and the Lehman Brothers U.S. Aggregate Index, as shown in the Performance Comparison chart on the preceding page, because of our substantial allocations to high-yield bonds, non-U.S. dollar-denominated bonds, and dividend-paying stocks, all of which performed very well in 2003. As you know, the fund seeks a high level of current income with moderate share price fluctuation by diversifying its assets widely among a set of T. Rowe Price domestic and international fixed-income mutual funds and an income-oriented stock fund. The Spectrum Income 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. Portfolio Characteristics - -------------------------------------------------------------------------------- Periods Ended 12/31/02 12/31/03 - -------------------------------------------------------------------------------- Price Per Share $ 10.76 $ 11.77 30-Day Standardized Yield to Maturity 4.76% 3.92% Weighted Average Maturity (years) * 6.8 7.0 Weighted Average Effective Duration (years) * 4.1 4.3 Weighted Average Quality ** A+ A+ * Excludes Equity Income Fund. ** Based on T. Rowe Price research; excludes Equity Income Fund. Note: Yields will vary and are not guaranteed. As shown in the Portfolio Characteristics table, the fund's weighted average maturity rose from 6.8 years to 7.0 years during our fiscal year. The portfolio's 30-day standardized yield to maturity declined from 4.76% to 3.92%, but its weighted average quality remained at A+. Portfolio Holdings Percent of Percent of Net Assets Net Assets 2003 12/31/02 12/31/03 Returns - -------------------------------------------------------------------------------- New Income 25.3% 23.6% 5.62% High Yield 22.8 23.0 22.53 International Bond 18.4 16.7 18.77 Equity Income 13.3 15.6 25.78 GNMA 12.3 12.3 2.36 Short-Term Bond 0.0 3.1 3.72 Emerging Markets Bond 3.5 2.9 26.05 U.S. Treasury Long-Term 4.3 2.8 2.10 Summit Cash Reserves 0.0 0.0 0.77 Other Assets Less Liabilities 0.1 0.0 -- - -------------------------------------------------------------------------------- Total 100.0% 100.0% The Portfolio Holdings table shows how the fund's percentage allocations to the underlying funds have changed in 2003 due to market movements as well as changes from the Asset Allocation Committee. This table also highlights the total returns of those funds in 2003. As you can see, our allocations to the New Income, International Bond, Emerging Markets Bond, and U.S. Treasury Long-Term Funds decreased over the last year, while our exposure to the High Yield, Equity Income, and Short-Term Bond Funds increased. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Performance Comparison This chart shows the value of a hypothetical $10,000 investment in the 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. [Graphic Omitted] SPECTRUM INTERNATIONAL FUND - -------------------------------------------------------------------------------- As of 12/31/03 Spectrum International Fund $12,617 Combined Index Benchmark* $12,762 Lipper International Funds Average $12,927 Lipper Combined International Spectrum Index Funds International Benchmark* Average Fund 12/31/96 $ 10,000 $ 10,000 $ 10,000 12/97 10,157 10,725 10,242 12/98 12,229 12,083 11,499 12/99 15,114 16,654 16,041 12/00 13,175 14,203 13,681 12/01 10,610 11,457 10,985 12/02 9,309 9,873 9,160 12/03 12,762 12,927 12,617 *90% MSCI EAFE Index/10% J.P. Morgan Non-U.S. Dollar Government Bond Index Average Annual Compound Total Return - -------------------------------------------------------------------------------- Since Inception Periods Ended 12/31/03 1 Year 5 Years 12/31/96 - -------------------------------------------------------------------------------- Spectrum International Fund 37.73% 1.87% 3.38% Lipper International Funds Average 34.74 1.28 3.39 Combined Index Benchmark* 37.10 0.86 3.55 * 90% MSCI EAFE Index/10% J.P. Morgan Non-U.S. Dollar Government Bond Index Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Spectrum International Fund We are pleased to report that your fund returned 37.73% in 2003. The fund surpassed its benchmarks, the Lipper International Funds Average and the Combined Index Benchmark, as shown in the Performance Comparison chart on the preceding page, because of its exposure to emerging markets and its overweighting of Europe. As you know, the fund seeks long-term capital appreciation by diversifying its assets widely among a set of T. Rowe Price developed and emerging market equity mutual funds and international bond funds representing specific market segments. The 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. Portfolio Holdings Percent of Percent of Net Assets Net Assets 2003 12/31/02 12/31/03 Returns - -------------------------------------------------------------------------------- International Stock 47.7% 46.0% 31.28% European Stock 28.9 27.1 36.57 Emerging Markets Stock 6.1 7.1 52.30 Japan 5.1 6.5 44.14 New Asia 4.0 4.8 53.54 International Discovery 3.9 4.5 65.29 Emerging Europe & Mediterranean 2.1 2.2 69.22 Emerging Markets Bond 2.2 1.8 26.05 - -------------------------------------------------------------------------------- Total 100.0% 100.0% The Portfolio Holdings table shows how the fund's percentage allocations to the underlying funds have changed in 2003 due to market movements as well as changes from the Asset Allocation Committee. This table also highlights the total returns of those funds in 2003. As you can see, our allocations to the International Stock, European Stock, and Emerging Markets Bond Funds decreased over the last year, while our exposure to the Emerging Markets Stock, Japan, New Asia, International Discovery, and Emerging Europe & Mediterranean Funds increased. [Graphic Omitted] Geographic Diversification - -------------------------------------------------------------------------------- Europe 65% Japan 15% Pacific Rim 11% Other and Reserves 6% Latin America 3% Based on net assets as of 12/31/03. The Geographic Diversification pie chart shows how the fund's assets were diversified in different regions of the world as of December 31, 2003. As you can see, 65% of the fund's assets were invested in Europe, 15% in Japan, and 11% in the Pacific Rim. Lesser amounts were invested in other regions and reserves. Finally, I'm sure you are aware that mutual fund companies have recently come under scrutiny for their trading policies. The investigations have led to allegations that executives of several mutual fund companies permitted or engaged in improper mutual fund trading. In addition, certain intermediaries that process fund transactions are alleged to have assisted some investors in executing improper mutual fund trades. I want T. Rowe Price shareholders to know that we emphatically condemn the abuses that have been revealed or alleged against other firms in our industry. Our firm has not entered and will not enter into any agreements with any investors or intermediaries that authorize after-hours trading or excessive short-term trading in any of our funds. T. Rowe Price investors can be assured that our firm unequivocally opposes illegal or inappropriate trading of any nature and has policies and procedures in place designed to protect the best interests of our long-term shareholders. No T. Rowe Price executives or portfolio managers or investment personnel of the T. Rowe Price mutual funds have engaged in any inappropriate trading of T. Rowe Price mutual funds. You may find out more about our trading policies and the steps we take to protect your interests by visiting our Web site (troweprice.com). These policies are also spelled out in your funds' prospectus. Thank you for your continued support. Respectfully submitted, James S. Riepe Chairman January 19, 2004 T. Rowe Price Spectrum Growth Fund - -------------------------------------------------------------------------------- Certified Annual Report Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- Year Ended 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 NET ASSET VALUE Beginning of period $ 11.13 $ 14.07 $ 15.72 $ 17.71 $ 16.45 Investment activities Net investment income (loss) 0.09 0.09 0.16 0.13 0.15 Net realized and unrealized gain (loss) 3.70 (2.88) (1.37) (0.15) 3.19 Total from investment activities 3.79 (2.79) (1.21) (0.02) 3.34 Distributions Net investment income (0.10) (0.08) (0.16) (0.12) (0.17) Net realized gain (0.02) (0.07) (0.28) (1.85) (1.91) Total distributions (0.12) (0.15) (0.44) (1.97) (2.08) NET ASSET VALUE End of period $ 14.80 $ 11.13 $ 14.07 $ 15.72 $ 17.71 --------------------------------------------------------- Ratios/Supplemental Data Total return^ 34.09% (19.83)% (7.63)% (0.11)% 21.20% Ratio of total expenses to average net assets 0.00%* 0.00%* 0.00% 0.00% 0.00% Ratio of net investment income (loss) to average net assets 0.75% 0.68% 1.05% 0.70% 0.85% Portfolio turnover rate 2.3% 3.9% 6.1% 11.6% 20.3% Net assets, end of period (in millions) $ 2,236 $ 1,739 $ 2,373 $ 2,889 $ 3,031 ^ 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 4. The annualized weighted average expense ratio of the underlying funds was 0.88% for the year ended December 31, 2003 and the year ended December 31, 2002. The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Income Fund - -------------------------------------------------------------------------------- Certified Annual Report Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- Year Ended 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 NET ASSET VALUE Beginning of period $ 10.76 $ 10.60 $ 10.77 $ 10.71 $ 11.50 Investment activities Net investment income (loss) 0.51 0.55 0.63 0.62 0.67 Net realized and unrealized gain (loss) 1.06 0.16 (0.15) 0.14 (0.64) Total from investment activities 1.57 0.71 0.48 0.76 0.03 Distributions Net investment income (0.50) (0.55) (0.55) (0.70) (0.69) Net realized gain (0.06) -- (0.02) -- (0.13) Tax return of capital -- -- (0.08) -- -- Total distributions (0.56) (0.55) (0.65) (0.70) (0.82) NET ASSET VALUE End of period $ 11.77 $ 10.76 $ 10.60 $ 10.77 $ 10.71 --------------------------------------------------------- Ratios/Supplemental Data Total return^ 14.96% 6.86% 4.59% 7.40% 0.26% Ratio of total expenses to average net assets 0.00%* 0.00%* 0.00% 0.00% 0.00% Ratio of net investment income (loss) to average net assets 4.47% 5.17% 5.91% 6.03% 5.95% Portfolio turnover rate 4.0% 14.1% 22.7% 19.3% 18.6% Net assets, end of period (in millions) $ 3,552 $ 2,713 $ 2,465 $ 2,471 $ 2,548 ^ 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 4. The annualized weighted average expense ratio of the underlying funds was 0.78% for the year ended December 31, 2003 and 0.80% for the year ended December 31, 2002. The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum International Fund - -------------------------------------------------------------------------------- Certified Annual Report Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- Year Ended 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 NET ASSET VALUE Beginning of period $ 6.40 $ 7.76 $ 10.08 $ 13.53 $ 10.56 Investment activities Net investment income (loss) 0.09 0.07 0.18 0.12 0.12 Net realized and unrealized gain (loss) 2.32 (1.36) (2.17) (2.10) 3.95 Total from investment activities 2.41 (1.29) (1.99) (1.98) 4.07 Distributions Net investment income (0.10) (0.07) (0.18) (0.12) (0.13) Net realized gain (0.01) -- (0.15) (1.35) (0.97) Total distributions (0.11) (0.07) (0.33) (1.47) (1.10) NET ASSET VALUE End of period $ 8.70 $ 6.40 $ 7.76 $ 10.08 $ 13.53 --------------------------------------------------------- Ratios/Supplemental Data Total return^ 37.73% (16.61)% (19.71)% (14.71)% 39.49% Ratio of total expenses to average net assets 0.00%* 0.00%* 0.00% 0.00% 0.00% Ratio of net investment income (loss) to average net assets 1.36% 1.01% 2.06% 0.94% 1.14% Portfolio turnover rate 47.1% 94.4% 30.6% 42.5% 20.1% Net assets, end of period (in thousands) $ 79,477 $ 52,652 $ 64,153 $ 81,843 $ 82,846 ^ 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 4. The annualized weighted average expense ratio of the underlying funds was 1.10% for the year ended December 31, 2003 and 1.12% for the year ended December 31, 2002. The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Growth Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Percent of Portfolio of Investments Net Assets Shares Value - -------------------------------------------------------------------------------- ($ 000s) T. Rowe Price New Horizons Fund* 18.6% 16,774,453 416,006 T. Rowe Price International Stock Fund 16.4 31,992,981 367,599 T. Rowe Price Equity Income Fund 15.5 14,332,045 346,262 T. Rowe Price Growth Stock Fund 12.3 11,261,238 273,986 T. Rowe Price Blue Chip Growth Fund 11.7 9,205,754 261,904 T. Rowe Price Mid-Cap Value Fund 8.3 9,121,621 185,534 T. Rowe Price Growth & Income Fund 7.9 8,077,382 175,441 T. Rowe Price Emerging Markets Stock Fund 4.2 6,043,273 93,489 T. Rowe Price International Growth & Income Fund 3.0 6,600,551 67,854 T. Rowe Price New Era Fund 2.1 1,741,071 47,392 Total Investments in Securities 100.0% of Net Assets (Cost $1,802,818) $ 2,235,467 --------------- * Non-income producing The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Growth Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Statement of Assets and Liabilities - -------------------------------------------------------------------------------- ($ 000s) Assets Investments in securities, at value (cost $1,802,818) $ 2,235,467 Other assets 3,095 Total assets 2,238,562 Liabilities Total liabilities 3,052 NET ASSETS $ 2,235,510 -------------------- Net Assets Consist of: Undistributed net investment income (loss) $ 374 Undistributed net realized gain (loss) (145,331) Net unrealized gain (loss) 432,649 Paid-in-capital applicable to 151,031,080 shares of $0.01 par value capital stock outstanding; 1,000,000,000 shares of the Corporation authorized 1,947,818 NET ASSETS $ 2,235,510 -------------------- NET ASSET VALUE PER SHARE $ 14.80 -------------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Income Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Percent of Portfolio of Investments Net Assets Shares Value - -------------------------------------------------------------------------------- ($ 000s) T. Rowe Price New Income Fund 23.6% 92,616,245 838,177 T. Rowe Price High Yield Fund 23.0 115,722,538 817,001 T. Rowe Price International Bond Fund 16.7 58,037,979 594,889 T. Rowe Price Equity Income Fund 15.6 22,968,057 554,908 T. Rowe Price GNMA Fund 12.3 44,861,935 436,507 T. Rowe Price Short-Term Bond Fund 3.1 22,787,297 109,835 T. Rowe Price Emerging Markets Bond Fund 2.9 8,258,539 101,580 T. Rowe Price U.S. Treasury Long-Term Fund 2.8 8,505,607 99,856 Total Investments in Securities 100.0% of Net Assets (Cost $3,354,545) $3,552,753 ---------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Income Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Statement of Assets and Liabilities - -------------------------------------------------------------------------------- ($ 000s) Assets Investments in securities, at value (cost $3,354,545) $ 3,552,753 Other assets 13,942 Total assets 3,566,695 Liabilities Total liabilities 14,688 NET ASSETS $ 3,552,007 -------------------- Net Assets Consist of: Undistributed net realized gain (loss) $ 4,236 Net unrealized gain (loss) 198,208 Paid-in-capital applicable to 301,880,073 shares of $0.01 par value capital stock outstanding; 1,000,000,000 shares of the Corporation authorized 3,349,563 NET ASSETS $ 3,552,007 -------------------- NET ASSET VALUE PER SHARE $ 11.77 -------------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum International Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Percent of Portfolio of Investments Net Assets Shares Value - -------------------------------------------------------------------------------- ($ 000s) T. Rowe Price International Stock Fund 46.0% 3,181,742 36,558 T. Rowe Price European Stock Fund 27.1 1,244,865 21,586 T. Rowe Price Emerging Markets Stock Fund 7.1 362,570 5,609 T. Rowe Price Japan Fund * 6.5 708,735 5,131 T. Rowe Price New Asia Fund 4.8 447,950 3,812 T. Rowe Price International Discovery Fund 4.5 136,731 3,610 T. Rowe Price Emerging Europe & Mediterranean Fund 2.2 142,228 1,740 T. Rowe Price Emerging Markets Bond Fund 1.8 116,187 1,429 Total Investments in Securities 100.0% of Net Assets (Cost $91,266) $79,475 ------- * Non-income producing The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum International Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Statement of Assets and Liabilities - -------------------------------------------------------------------------------- ($ 000s) Assets Investments in securities, at value (cost $91,266) $ 79,475 Other assets 105 Total assets 79,580 Liabilities Total liabilities 103 NET ASSETS $ 79,477 -------------------- Net Assets Consist of: Undistributed net realized gain (loss) $ (4,833) Net unrealized gain (loss) (11,791) Paid-in-capital applicable to 9,137,094 shares of $0.01 par value capital stock outstanding; 1,000,000,000 shares of the Corporation authorized 96,101 NET ASSETS $ 79,477 -------------------- NET ASSET VALUE PER SHARE $ 8.70 -------------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Statement of Operations - -------------------------------------------------------------------------------- ($ 000s) Growth Income International Fund Fund Fund Year Year Year Ended Ended Ended 12/31/03 12/31/03 12/31/03 Investment Income Income distributions from underlying funds $14,294 $139,767 $820 Realized and Unrealized Gain (Loss) Net realized gain (loss) Sale of underlying funds (95,673) (1,080) (1,423) Capital gain distributions from underlying funds 8,029 36,309 130 Net realized gain (loss) (87,644) 35,229 (1,293) Change in net unrealized gain (loss) 652,263 262,849 21,510 Net realized and unrealized gain (loss) 564,619 298,078 20,217 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $578,913 $437,845 $21,037 --------------------------------------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Growth Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Changes in Net Assets - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 12/31/02 Increase (Decrease) in Net Assets Operations Net investment income $ 14,294 $ 13,695 Net realized gain (loss) (87,644) (54,142) Change in net unrealized gain (loss) 652,263 (416,799) Increase (decrease) in net assets from operations 578,913 (457,246) Distributions to shareholders Net investment income (15,230) (12,385) Net realized gain (3,047) (10,837) Decrease in net assets from distributions (18,277) (23,222) Capital share transactions * Shares sold 233,024 219,126 Distributions reinvested 17,823 22,708 Shares redeemed (314,892) (395,484) Increase (decrease) in net assets from capital share transactions (64,045) (153,650) Net Assets Increase (decrease) during period 496,591 (634,118) Beginning of period 1,738,919 2,373,037 End of period $ 2,235,510 $ 1,738,919 ------------------------------------- *Share information Shares sold 18,699 17,322 Distributions reinvested 1,252 2,040 Shares redeemed (25,226) (31,754) Increase (decrease) in shares outstanding (5,275) (12,392) The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Income Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Changes in Net Assets - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 12/31/02 Increase (Decrease) in Net Assets Operations Net investment income $ 139,767 $ 134,384 Net realized gain (loss) 35,229 (1,451) Change in net unrealized gain (loss) 262,849 43,007 Increase (decrease) in net assets from operations 437,845 175,940 Distributions to shareholders Net investment income (139,767) (134,384) Net realized gain (17,825) -- Decrease in net assets from distributions (157,592) (134,384) Capital share transactions * Shares sold 1,071,950 764,670 Distributions reinvested 147,592 124,519 Shares redeemed (660,550) (682,723) Increase (decrease) in net assets from capital share transactions 558,992 206,466 Net Assets Increase (decrease) during period 839,245 248,022 Beginning of period 2,712,762 2,464,740 End of period $ 3,552,007 $ 2,712,762 ------------------------------------- *Share information Shares sold 95,505 72,313 Distributions reinvested 13,042 11,751 Shares redeemed (58,719) (64,526) Increase (decrease) in shares outstanding 49,828 19,538 The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum International Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Changes in Net Assets - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 12/31/02 Increase (Decrease) in Net Assets Operations Net investment income $ 820 $ 594 Net realized gain (loss) (1,293) (2,018) Change in net unrealized gain (loss) 21,510 (8,407) Increase (decrease) in net assets from operations 21,037 (9,831) Distributions to shareholders Net investment income (893) (568) Net realized gain (89) -- Decrease in net assets from distributions (982) (568) Capital share transactions * Shares sold 58,336 89,618 Distributions reinvested 939 547 Shares redeemed (52,505) (91,267) Increase (decrease) in net assets from capital share transactions 6,770 (1,102) Net Assets Increase (decrease) during period 26,825 (11,501) Beginning of period 52,652 64,153 End of period $ 79,477 $ 52,652 ------------------------------------- *Share information Shares sold 8,494 12,385 Distributions reinvested 113 87 Shares redeemed (7,692) (12,522) Increase (decrease) in shares outstanding 915 (50) The accompanying notes are an integral part of these financial statements. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Notes to Financial Statements - -------------------------------------------------------------------------------- T. Rowe Price Spectrum Fund, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as a nondiversified, open-end management investment company. Spectrum Growth Fund, Spectrum Income Fund, and Spectrum International Fund (collectively, the Spectrum Funds) are three portfolios established by the corporation. Spectrum Growth and Spectrum Income commenced operations on June 29, 1990, and Spectrum International commenced operations on December 31, 1996. Each Spectrum Fund diversifies its assets within set limits among specific underlying T. Rowe Price funds (underlying Price funds). Spectrum Growth seeks long-term capital appreciation and growth of income, with current income a secondary objective. Spectrum Income seeks a high level of current income with moderate share price fluctuation. Spectrum International seeks long-term capital appreciation. NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. Valuation Each fund values its investments and computes its net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Investments in the underlying Price funds are valued at their closing net asset value per share on the day of valuation. Investments for which these valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the T. Rowe Price Valuation Committee, established by the funds' Board of Directors. Other Income is recorded on the accrual basis. Income and capital gain distributions from the underlying Price funds and distributions to the Spectrum Funds' shareholders are recorded on the ex-dividend date. Purchases and sales of the underlying Price funds are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. In the normal course of business, the fund enters into contracts that provide general indemnifications. Each fund's maximum exposure under these arrangements is dependent on claims that may be made against each fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote. NOTE 2 - INVESTMENTS IN UNDERLYING PRICE FUNDS Purchases and sales of the underlying Price funds for the year ended December 31, 2003 were as follows: - -------------------------------------------------------------------------------- Spectrum Spectrum Spectrum Growth Income International Purchases $44,052,000 $532,727,000 $34,151,000 Sales 118,183,000 124,098,000 28,359,000 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 to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. Distributions during the year ended December 31, 2003 were characterized as follows for tax purposes: - -------------------------------------------------------------------------------- Spectrum Spectrum Spectrum Growth Income International Ordinary income $18,277,000 $154,621,000 $982,000 Long-term capital gain -- 2,971,000 -- Total distributions $18,277,000 $157,592,000 $ 982,000 -------------------------------------------------- At December 31, 2003, the tax-basis components of net assets were as follows: - -------------------------------------------------------------------------------- Spectrum Spectrum Spectrum Growth Income International Unrealized appreciation $439,838,000 $250,652,000 $1,773,000 Unrealized depreciation (13,511,000) (52,444,000) (13,564,000) Net unrealized appreciation (depreciation) 426,327,000 198,208,000 (11,791,000) Undistributed ordinary income 519,000 4,236,000 10,000 Capital loss carryforwards (139,154,000) -- (4,843,000) Paid-in capital 1,947,818,000 3,349,563,000 96,101,000 Net assets $2,235,510,000 $3,552,007,000 $79,477,000 ----------------------------------------------------- Pursuant to federal income tax regulations applicable to investment companies, Spectrum Growth has elected to treat net capital losses realized between November 1 and December 31 of each year as occurring on the first day of the following tax year. Consequently, $6,322,000 of realized losses reflected in the Spectrum Growth's accompanying financial statements will not be recognized for tax purposes until 2004. Each fund intends to retain realized gains to the extent of available capital loss carryforwards for federal income tax purposes. In 2003, Spectrum Growth utilized no capital loss carryforwards and, as of December 31, 2003, had $48,512,000 of capital loss carryforwards that expire in 2010 and $90,642,000 that expire in 2011. In 2003, Spectrum Income utilized $448,000 of capital loss carryforwards and, as of December 31, 2003, had no capital loss carryforwards. As of December 31, 2003, Spectrum Income had $1,122,000 in capital loss carryforwards that expire in 2009, $1,841,000 that expire in 2010, and $1,880,000 that expire in 2011. For the year ended December 31, 2003, Spectrum Income and Spectrum International recorded the following permanent reclassifications to reflect tax character. Reclassifications between income and gain relate primarily to the character of distributions from the underlying funds for Spectrum Income and Spectrum International. Results of operations and net assets were not affected by these reclassifications. - -------------------------------------------------------------------------------- Spectrum Spectrum Income International Undistributed net investment income $ 11,365,000 $ 41,000 Undistributed net realized gain (11,365,000) (41,000) At December 31, 2003, the cost of investments for federal income tax purposes was $1,809,140,000 for Spectrum Growth, $3,354,545,000 for Spectrum Income, and $91,266,000 for Spectrum International. NOTE 4 - RELATED PARTIES T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc., is the investment manager for Spectrum Growth and Spectrum Income, and also serves as manager for the domestic underlying Price funds. T. Rowe Price International, Inc. (Price International), a wholly owned subsidiary of Price Associates, is the investment manager for Spectrum International and also serves as manager for the international underlying Price funds. Pursuant to various service agreements, Price Associates and its wholly owned subsidiaries provide shareholder servicing and administrative, transfer and dividend disbursing, accounting, marketing, and certain other services to the Spectrum Funds. Certain officers and directors of the Spectrum Funds are also officers and directors of Price Associates and its subsidiaries, and the underlying Price funds. The Spectrum Funds pay no management fees; however, Price Associates and Price International receive management fees from the underlying Price funds. The Spectrum Funds recognize no expenses, pursuant to the investment management and special servicing agreements between and among the corporation, the underlying Price funds, Price Associates, and, in the case of Spectrum International, Price International. Pursuant to these agreements, expenses associated with the operation of the Spectrum Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum Funds. Therefore, each Spectrum Fund operates at a zero expense ratio. However, each Spectrum Fund indirectly bears its proportionate share of the management fees and operating costs of the underlying Price funds in which it invests. The Spectrum Funds do not invest in the underlying Price funds for the purpose of exercising management or control; however, investments by the Spectrum Funds may represent a significant portion of an underlying Price fund's net assets. At December 31, 2003, Spectrum International Fund held less than 25% of the outstanding shares of any underlying Price fund; Spectrum Growth Fund held approximately 43.5% of the outstanding shares of the International Growth & Income Fund, and Spectrum Income Fund held approximately 43.9% of the outstanding shares of the International Bond Fund, 40.3% of the Emerging Markets Bond Fund, 36.5% of the New Income Fund, 33.1% of the GNMA Fund, and 40.7% of the U.S. Treasury Long-Term Fund. Additionally, Spectrum Income is one of several mutual funds in which certain college savings plans managed by Price Associates may invest. Shareholder servicing costs associated with each college savings plan are allocated to Spectrum Income in proportion to the average daily value of its shares owned by the college savings plan and, in turn, are borne by the underlying Price funds in accordance with the terms of the investment management and special servicing agreements. At December 31, 2003, approximately 7.2% of the outstanding shares of Spectrum Income were held by the college savings plans. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Report of Independent Auditors - -------------------------------------------------------------------------------- To the Board of Directors of T. Rowe Price Spectrum Fund, Inc. and Shareholders of Spectrum Growth Fund, Spectrum Income Fund and Spectrum International Fund In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, 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 Fund, Inc., hereafter referred to as the "Funds") at December 31, 2003, 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 of America. 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 of America, 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, 2003 by correspondence with the transfer agent, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland January 26, 2004 T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Tax Information (Unaudited) for the Tax Year Ended 12/31/03 - -------------------------------------------------------------------------------- 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 funds' distributions included capital gain amounts as follows: Spectrum Spectrum Spectrum International Growth Fund Income Fund Fund Short-term gains $3,046,000 $25,319,000 $131,000 Total long-term gains 20% rate gains -- $3,872,000 -- For taxable non-corporate shareholders, income and short-term capital gains represent qualified dividend income subject to the 15% rate category as follows: Spectrum Spectrum Spectrum International Growth Fund Income Fund Fund $16,764,000 $11,656,000 $863,000 For corporate shareholders, income and short-term capital gains qualified for the dividends-received deduction as follows: Spectrum Spectrum Spectrum International Growth Fund Income Fund Fund $10,741,000 $11,961,000 -- Information on Proxy Voting - -------------------------------------------------------------------------------- A description of the policies and procedures that the T. Rowe Price Spectrum Funds use to determine how to vote proxies relating to portfolio securities is available, without charge, upon request by calling 1-800-225-5132. It also appears in the funds' Statement of Additional Information (Form 485B), which can be found on the SEC's Web site, www.sec.gov. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report About the Funds' Directors and Officers - -------------------------------------------------------------------------------- Your funds are governed by a Board of Directors that meets regularly to review investments, performance, expenses, and other business matters, and is responsible for protecting the interests of shareholders. The majority of the funds' directors are independent of T. Rowe Price Associates, Inc. (T. Rowe Price); "inside" directors are officers of T. Rowe Price. The Board of Directors elects the funds' officers, who are listed in the final table. The business address of each director and officer is 100 East Pratt Street, Baltimore, MD 21202. The Statement of Additional Information includes additional information about the funds' directors and is available without charge by calling a T. Rowe Price representative at 1-800-225-5132. Independent Directors Name (Date of Birth) Year Elected* Principal Occupation(s) During Past 5 Years and Directorships of Other Public Companies Anthony W. Deering (1/28/45) 2001 Director, Chairman of the Board, President, and Chief Executive Officer, The Rouse Company, real estate developers; Director, Mercantile Bank (4/03 to present) Donald W. Dick, Jr. (1/27/43) 1999 Principal, EuroCapital Advisors, LLC, an acquisition and management advisory firm David K. Fagin (4/9/38) 1999 Director, Golden Star Resources Ltd., Canyon Resources Corp. (5/00 to present), and Pacific Rim Mining Corp. (2/02 to present); Chairman and President, Nye Corp. Karen N. Horn (9/21/43) 2003 Managing Director and President, Global Private Client Services, Marsh Inc.; Managing Director and Head of International Private Banking, Bankers Trust; Director, Eli Lilly and Company F. Pierce Linaweaver (8/22/34) 2001 President, F. Pierce Linaweaver & Associates, Inc., consulting environmental and civil engineers John G. Schreiber (10/21/46) 2001 Owner/President, Centaur Capital Partners, Inc., a real estate investment company; Senior Advisor and Partner, Blackstone Real Estate Advisors, L.P.; Director, AMLI Residential Properties Trust, Host Marriott Corp., and The Rouse Company Hubert D. Vos** (8/2/33) 1999 Owner/President, Stonington Capital Corp., a private investment company Paul M. Wythes** (6/23/33) 1999 Founding Partner, Sutter Hill Ventures, a venture capital limited partnership, providing equity capital to young high-technology companies throughout the United States; Director, Teltone Corp. * Each independent director oversees 107 T. Rowe Price portfolios and serves until retirement, resignation, or election of a successor. ** Retired from Board of Directors effective December 31, 2003. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Inside Directors Name (Date of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] Principal Occupation(s) During Past 5 Years and Directorships of Other Public Companies James A.C. Kennedy, CFA (8/15/53) 2001 [39] Director and Vice President, T. Rowe Price and T. Rowe Price Group, Inc. James S. Riepe (6/25/43) 1990 [107] Director and Vice President, T. Rowe Price; Vice Chairman of the Board, Director, and Vice President, T. Rowe Price Group, Inc.; Chairman of the Board and Director, T. Rowe Price Global Asset Management Limited, T. Rowe Price Global Investment Services Limited, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Director, President, and Trust Officer, T. Rowe Price Trust Company; Director, T. Rowe Price International, Inc.; Chairman of the Board, Spectrum Funds M. David Testa, CFA, CIC (4/22/44) 1999 [107] Chief Investment Officer, Director, and Vice President, T. Rowe Price; Vice Chairman of the Board, Chief Investment Officer, Director, and Vice President, T. Rowe Price Group, Inc.; Chairman of the Board and Director, T. Rowe Price International, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited; Director and Vice President, T. Rowe Price Trust Company; Vice President, Spectrum Funds * Each inside director serves until retirement, resignation, or election of a successor. Officers Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Stephen W. Boesel (12/28/44) Executive Vice President, Spectrum Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Stephen V. Booth (6/21/61) Vice President, Spectrum Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Joseph A. Carrier (12/30/60) Treasurer, Spectrum Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Investment Services, Inc. Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. T. Rowe Price Spectrum Funds - -------------------------------------------------------------------------------- Certified Annual Report Officers (continued) Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Roger L. Fiery III, CPA (2/10/59) Vice President, Spectrum Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company John R. Ford, CFA (11/25/57) Vice President, Spectrum Funds Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Director, Chief Investment Officer, and Vice President, T. Rowe Price International, Inc. Gregory S. Golczewski (1/15/66) Vice President, Spectrum Funds Vice President, T. Rowe Price Henry H. Hopkins (12/23/42) Vice President, Spectrum Funds Director and Vice President, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; Vice President, T. Rowe Price, T. Rowe Price International, Inc., and T. Rowe Price Retirement Plan Services, Inc. John H. Laporte, CFA (7/26/45) Vice President, Spectrum Funds Vice President, T. Rowe Price; Vice President and Director, T. Rowe Price Group, Inc. Patricia B. Lippert (1/12/53) Secretary, Spectrum Funds Assistant Vice President, T. Rowe Price and T. Rowe Price Investment Services, Inc. George A. Murnaghan (5/1/56) Vice President, Spectrum Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company Edmund M. Notzon III, PhD, CFA (10/1/45) President, Spectrum Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company William T. Reynolds, CFA, CIC (5/26/48) Vice President, Spectrum Funds Director and Vice President, T. Rowe Price and T. Rowe Price Group, Inc. Brian C. Rogers, CFA, CIC (6/27/55) Vice President, Spectrum Funds Director and Vice President, T. Rowe Price Group, Inc.; Vice President, T. Rowe Price and T. Rowe Price Trust Company David J.L. Warren (4/14/57) Vice President, Spectrum Funds Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Chief Executive Officer, Director, and President, T. Rowe Price International, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. Item 2. Code of Ethics. As of the end of the period covered by this report, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report. Item 3. Audit Committee Financial Expert. The registrant's Board of Directors/Trustees has determined that Mr. David K. Fagin qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a) - (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant's principal accountant were as follows: 2003 2002 Audit Fees $17,539 $15,689 Audit-Related Fees 1,050 -- Tax Fees 4,555 3,799 All Other Fees 371 522 Audit fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant's financial statements, specifically the issuance of a report on internal controls. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other fees include the registrant's pro-rata share of amounts for agreed-upon procedures in conjunction with service contract approvals by the registrant's Board of Directors/Trustees. (e)(1) The registrant's audit committee has adopted a policy whereby audit and non-audit services performed by the registrant's principal accountant for the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant require pre-approval in advance at regularly scheduled audit committee meetings. If such a service is required between regularly scheduled audit committee meetings, pre-approval may be authorized by one audit committee member with ratification at the next scheduled audit committee meeting. Waiver of pre-approval for audit or non-audit services requiring fees of a de minimis amount is not permitted. (2) No services included in (b) - (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not applicable. (g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant's principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $719,000 and $671,000, respectively, and were less than the aggregate fees billed for those same periods by the registrant's principal accountant for audit services rendered to the T. Rowe Price Funds. (h) All non-audit services rendered in (g) above were pre-approved by the registrant's audit committee. Accordingly, these services were considered by the registrant's audit committee in maintaining the principal accountant's independence. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is attached. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price Spectrum Fund, Inc. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date February 13, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date February 13, 2004 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date February 13, 2004