June 19, 2000
To the Board of Directors and Shareholders of
T. Rowe Price Short-Term Bond Fund, Inc.
In planning and performing our audit of the financial statements of
T. Rowe Price Short-Term Bond Fund, Inc. (hereafter referred to as
the "Fund") for the year ended May 31, 2000, we considered its
internal control, including control activities for safeguarding
securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, not to provide
assurance on internal control.
The management of the Fund is responsible for establishing
and maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally, controls
that are relevant to an audit pertain to the entity's objective
of preparing financial statements for external purposes that are
fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding
of assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or
fraud may occur and not be detected. Also, projection of any
evaluation of internal control to future periods is subject to
the risk that controls may become inadequate because of changes
in conditions or that the effectiveness of their design and
operation may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be material
weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a condition
in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level
the risk that misstatements caused by error or fraud in amounts
that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.
However, we noted no matters involving internal control and its
operation, including controls for safeguarding securities, that
we consider to be material weaknesses as
defined above as of May 31, 2000.
This report is intended solely for the information and use of
management, the Board of Directors of T. Rowe Price Short-Term
Bond Fund, Inc., and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other then these
specified parties.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Baltimore, Maryland
