Item 1. Report to Shareholders
T. Rowe Price Spectrum Funds
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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
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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
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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
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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
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Certified Annual Report
Performance Comparison
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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
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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
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Periods Ended 12/31/03 1 Year 5 Years 10 Years
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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
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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
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Percent of Percent of
Net Assets Net Assets 2003
12/31/02 12/31/03 Returns
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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
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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
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Large-Cap Stocks 44% 47%
Mid-Cap Stocks 17 18
Small-Cap Stocks 10 6
Foreign Stocks 27 27
Other and Reserves 2 2
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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
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Certified Annual Report
Performance Comparison
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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
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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
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Periods Ended 12/31/03 1 Year 5 Years 10 Years
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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
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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
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Periods Ended 12/31/02 12/31/03
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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
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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 --
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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
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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
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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
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Since
Inception
Periods Ended 12/31/03 1 Year 5 Years 12/31/96
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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
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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
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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
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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
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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
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Certified Annual Report
Financial Highlights For a share outstanding throughout each period
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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
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Certified Annual Report
Financial Highlights For a share outstanding throughout each period
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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
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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
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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
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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
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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) $3,552,753
----------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Spectrum Income Fund
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Certified Annual Report December 31, 2003
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
($ 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