<PAGE>
--------------------------------------------------------------------------------
Semiannual Report
--------------------------------------------------------------------------------
SHORT-TERM
BOND FUND
-----------------
NOVEMBER 30, 2000
-----------------
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
---------------------------------------------------------------------------
Short-Term Bond Fund
. Declining interest rates boosted total returns for short-term bonds.
. The Short-Term Bond Fund posted very strong results that were superior to
its benchmarks.
. Your fund's assets grew as two other T. Rowe Price funds were merged into
it.
. We are cautiously optimistic about the economic environment, and we will
continue to be conservative with our portfolio.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
<PAGE>
FELLOW SHAREHOLDERS
The bond markets breathed a sigh of relief during the six months ended November
30, 2000, as economic growth cooled and the Federal Reserve ceased raising
interest rates. The improved environment boosted the performance of the
Short-Term Bond Fund.
MARKET ENVIRONMENT
U.S. bond markets have settled down considerably since the last
shareholder letter dated May 31. At that time, the Federal Reserve had
been raising short-term interest rates since June 1999, and bond
investors had been buffeted by higher rates and the danger of rising
inflation pressures. However, the Fed's last tightening occurred on
May 16, when it raised the federal funds target rate 50 basis points
to 6.5% (100 basis points equal one percentage point). The rate
increases appeared to have the intended effect: both GDP growth and
consumer demand cooled. At the same time, continued improvements in
productivity helped to keep inflation at bay.
Bond investors took advantage of this relatively calm period by
increasing their purchases. Equity investors also turned to the
relative safety of the bond market as stock volatility rose toward
year-end. These trends boosted bond prices and correspondingly pushed
yields down. Yields among many high-quality bonds--Treasuries in
particular--are now well below the federal funds target rate,
suggesting that investors expect a Fed easing early in 2001. Since May
31, 2000, for example, five-year Treasury note yields have fallen more
than a full percentage point, from 6.65% to 5.52%. Two-year Treasury
yields fell by a comparable amount, but remained higher than their
five-year counterparts.
INTEREST RATE LEVELS
[GRAPH]
[PLOT POINTS TO COME]
This unusual situation, where shorter-term bonds provide higher yields
than longer issues, owed largely to supply and demand. The
1
<PAGE>
rising federal budget surplus led to a further reduction in the size
and frequency of Treasury auctions. Together with a Treasury buyback
program, the supply of longer-term Treasuries declined noticeably.
Yields, therefore, fell more on longer-term securities than on the
shorter notes. In addition, Treasury securities outperformed most
other bonds. Throughout the year, Treasury bonds as a group behaved
quite differently from other types of bonds, responding as much or
more to these supply-and-demand factors as to the economy, inflation,
and the Fed.
Not every bond sector performed well, however. As concerns about
slowing economic growth became more widespread, corporate bonds
lagged, especially lower-quality issues. Although the fund retains a
modest exposure to BBB rated corporate bonds, careful security
selection allowed us to benefit from their higher yields while
avoiding those issues whose prices suffered as the result of earnings
disappointments or corporate restructuring. Furthermore, the fund's
concentration in high-quality mortgage-backed securities, asset-backed
securities, and higher-rated corporates produced solid results.
Agency-backed mortgage securities, while performing well, were
unsettled by an unexpected development. In March, Treasury Under-
secretary Gary Gensler questioned whether the government should
continue to provide an implicit guarantee on securities issued by the
government-sponsored agencies Freddie Mac and Fannie Mae. The issue
was more or less resolved in mid-October when Fannie Mae and Freddie
Mac agreed to change their disclosure standards, and these agencies'
bonds enjoyed a late rally. Despite the fund's relatively heavy
exposure to this sector, returns were largely unaffected by the
development.
PERFORMANCE AND STRATEGY REVIEW
The Short-Term Bond Fund finished with an attractive absolute and
relative six-month showing of 5.12%. That result contributed to a
strong 7.32% total return for the past 12-month period. Dividends per
share also rose by a penny over the previous six-month period.
At a special meeting on October 25, 2000, shareholders approved a
management proposal to merge the assets of two other T. Rowe Price
bond funds--the Summit Limited-Term Bond Fund and the Short-Term U.S.
Government Fund--into this fund. Therefore, this will be the first
report that shareholders of the Summit Limited-Term Bond
2
<PAGE>
PERFORMANCE COMPARISON
-------------------------------------------------------------
Periods Ended 11/30/00 6 Months 12 Months
-------------------------------------------------------------
Short-Term Bond Fund 5.12% 7.32%
-------------------------------------------------------------
Lehman Brothers 1-3 Year
U.S. Government/Credit Index 4.88 6.90
-------------------------------------------------------------
Lipper Short Investment-Grade
Debt Funds Average 4.56 6.35
-------------------------------------------------------------
Fund and the Short-Term U.S. Government Fund receive regarding the
newly combined entity. We welcome all new shareholders.
Over the course of the past six months, we modestly increased the
fund's maturity and duration (duration is a measure of interest rate
sensitivity; a two-year duration indicates that a security will rise
or fall by 2% with each one-percentage-point fall or rise,
respectively, in overall interest rates). We had taken a generally
cautious stance on the portfolio's interest rate sensitivity as the
Fed was raising rates, but as rates stabilized we adopted a
less-defensive posture.
In addition, we significantly increased U.S. Treasury and agency
obligations, which excelled on a total return basis. We also raised
our stakes in mortgage- and asset-backed securities because their
yields are attractive and they pose little or no credit risk. To make
room for these holdings, we cut sharply back on very short-term
obligations, which we had used earlier in the year to cushion the blow
of rising interest rates.
Corporate bonds and notes remained a significant component of the
portfolio at 37% of assets. As mentioned earlier, we have been
cautious with our purchases in this sector because we have seen an
erosion in credit quality as the economy has cooled. As of
November 30, the fund had no exposure to high-yield, noninvestment-
grade securities, and its average credit quality moved up a notch from
AA to AA+.
OUTLOOK
Stable inflation and accelerating productivity have bought the Fed
time to see if its 1999-to-2000 tightening program will bring about
moderate economic growth while maintaining full employment.
Fortunately, noninflationary growth appears achievable: softening
labor markets are slowing income growth; weaker income growth is
limiting demand; and more moderate demand is cooling production and
hiring plans. As a result, third-quarter GDP has been much lower than
recent quarters.
3
<PAGE>
-----------------------
QUALITY DIVERSIFICATION
--------------------------------------------------------------------------------
[GRAPH]
BBB 11%
A 22%
AA 24%
AAA 43%
Based on T. Rowe Price research.
For these reasons, we think that bond rates will decline further, boosting bond
returns. Because higher oil prices, disappointing corporate earnings, and higher
interest rates increase the risk of an even more dramatic slowdown, we think
there is a good possibility that the Fed will lower rates in the coming three to
six months. Still, the environment for fixed-income investing remains
unpredictable. Your fund will continue to seek an attractive balance of yield
and capital preservation while maintaining high credit quality.
Respectfully submitted,
/s/ Edward A. Wiese
Edward A. Wiese
President and Chairman of the Investment Advisory Committee
December 14, 2000
4
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
--------------------
PORTFOLIO HIGHLIGHTS
--------------------------------------------------------------------------------
KEY STATISTICS
5/31/00 11/30/00
--------------------------------------------------------------------------------
Price Per Share $4.52 $4.61
--------------------------------------------------------------------------------
Dividends Per Share
--------------------------------------------------------------------------------
For 6 months 0.13 0.14
------------------------------------------------------------------------------
For 12 months 0.26 0.27
------------------------------------------------------------------------------
30-Day Dividend Yield * 6.24% 6.21%
--------------------------------------------------------------------------------
30-Day Standardized Yield to Maturity 6.73 6.27
--------------------------------------------------------------------------------
Weighted Average Maturity (years) 2.1 2.4
--------------------------------------------------------------------------------
Weighted Average Effective Duration (years) 1.8 2.0
--------------------------------------------------------------------------------
Weighted Average Quality ** AA AA+
--------------------------------------------------------------------------------
* Dividends earned for the last 30 days of each period indicated are
annualized and divided by the fund's net asset value per share at the end
of the period.
** Based on T. Rowe Price research.
5
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
--------------------
PORTFOLIO HIGHLIGHTS
--------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
5/31/00 11/30/00
--------------------------------------------------------------------------------
Corporate Bonds and Notes 39% 37%
Banking and Finance 10 9
Media and Communications 4 7
Utilities 8 7
Consumer Products and Services 6 6
Industrial 7 5
Transportation 3 2
All Other 1 1
Asset-Backed Securities 16 18
Mortgage-Backed Securities 22 27
U.S. Government Obligations 3 14
U.S. Treasuries 3 12
Government Agency Obligations -- 2
Short-Term Obligations 18 3
Other Assets Less Liabilities 2 1
--------------------------------------------------------------------------------
Total 100% 100%
6
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
----------------------
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.
SHORT-TERM BOND FUND
---------------------------------------------------------------------------
As of 11/30/00
[GRAPH]
Lehman Brothers 1-3 Year U.S.
Government/Credit Index Short-Term Bond Fund
Nov-90 10,000 10,000
Nov-91 11,147 11,006
Nov-92 11,922 11,716
Nov-93 12,651 12,528
Nov-94 12,748 12,289
Nov-95 14,065 13,289
Nov-96 14,898 13,930
Nov-97 15,789 14,679
Nov-98 16,936 15,655
Nov-99 17,520 16,010
Nov-00 18,729 17,183
------------------------------------
AVERAGE ANNUAL COMPOUND TOTAL RETURN
--------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Periods Ended 11/30/00 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Short-Term Bond Fund 7.32% 5.39% 5.27% 5.56%
--------------------------------------------------------------------------------
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
7
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
Unaudited
--------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
11/30/00 5/31/00 5/31/99 5/31/98 5/31/97 5/31/96
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 4.52 $ 4.63 $ 4.69 $ 4.65 $ 4.64 $ 4.72
Investment activities
Net investment
income (loss) 0.14* 0.26 0.26 0.27 0.27 0.29
Net realized and
unrealized gain (loss) 0.09 (0.11) (0.06) 0.04 0.01 (0.08)
Total from
investment activities 0.23 0.15 0.20 0.31 0.28 0.21
Distributions
Net investment income (0.14) (0.26) (0.26) (0.27) (0.26) (0.28)
Tax return of capital -- -- -- -- (0.01) (0.01)
Total distributions (0.14) (0.26) (0.26) (0.27) (0.27) (0.29)
NET ASSET VALUE
End of period $ 4.61 $ 4.52 $ 4.63 $ 4.69 $ 4.65 $ 4.64
===============================================================
Ratios/Supplemental Data
Total return++ 5.12%* 3.39% 4.23% 6.87% 6.28% 4.58%
Ratio of total expenses to
average net assets 0.64%+* 0.72% 0.73% 0.72% 0.74% 0.72%
Ratio of net investment
income (loss) to average
net assets 6.08%+* 5.74% 5.44% 5.82% 5.91% 6.15%
Portfolio turnover rate 47.8%+x 50.7% 51.6% 73.0% 103.9% 118.7%
Net assets, end of period
(in thousands) $472,195 $286,671 $324,098 $331,955 $373,284 $429,498
</TABLE>
++ 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.
* Excludes expenses in excess of a 0.55% voluntary expense limitation in
effect from 10/1/00 through 5/31/02.
+ Annualized
x Excludes the effect of the acquisition of Summit Limited-Term Bond and
Short-Term U.S. Government Funds' assets.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
Unaudited November 30, 2000
<TABLE>
<CAPTION>
-----------------------
STATEMENT OF NET ASSETS Par/Shares Value
-------------------------------------------------------------------------------------------
In thousands
CORPORATE BONDS AND NOTES 36.5%
<S> <C> <C>
Banking and Finance 9.3%
ABN AMRO Bank, Sr. Notes, 7.25%, 5/31/05 $ 340 $ 341
AIG Sunamerica Global Financing, Sr. Notes, (144a)
7.40%, 5/5/03 3,450 3,518
Associates Corp., MTN, 6.90%, 7/29/02 1,600 1,598
Banco Generale, Sr. Sub. Notes, (144a), 7.70%, 8/1/02 2,700 2,642
Bank One, Sr. Notes, 7.625%, 8/1/05 4,250 4,321
CIT Group, Sr. Notes, 5.50%, 2/15/04 3,450 3,253
First USA Bank, Sr. Notes, 7.00%, 8/20/01 65 65
General Electric Capital Corporation, MTN, 7.50%, 5/15/05 3,250 3,382
Heller Financial, Sr. Notes, 7.50%, 8/23/02 3,300 3,309
HSBC Finance Nederland, Sub. Notes, (144a)
7.40%, 4/15/03 160 161
Kansallis Osake Pankki, Sr. Notes, 10.00%, 5/1/02 325 337
Marsh and McLennan, Sr. Notes, 6.625%, 6/15/04 3,700 3,663
MBNA, Sub. Notes, 7.25%, 9/15/02 2,815 2,776
Merrill Lynch
Sr. Notes
7.00%, 3/15/06 225 224
8.00%, 2/1/02 1,220 1,234
Morgan Guaranty Trust, Sr. Sub. Notes, 7.375%, 2/1/02 4,115 4,131
Morgan Stanley Dean Witter, Sr. Notes, 7.75%, 6/15/05 3,400 3,487
Provident Bank, Sub. Notes, 7.125%, 3/15/03 1,725 1,676
Salomon Smith Barney Holdings, Sr. Notes
7.30%, 5/15/02 3,550 3,566
Union Planters, Sub. Notes, 6.25%, 11/1/03 160 151
------------
43,835
------------
Consumer Products and Services 5.5%
Beckman Instruments, Sr. Notes, 7.10%, 3/4/03 3,115 3,057
Federated Department Stores, Sr. Notes
8.125%, 10/15/02 1,750 1,752
Grand Metropolitan Investment, Zero Coupon, 1/6/04 3,675 2,990
Hewlett Packard, Sr. Notes, 7.15%, 6/15/05 3,450 3,504
Nabisco, Sr. Notes, 6.125%, 2/1/03 260 251
Sony, Sr. Notes, 6.125%, 3/4/03 4,400 4,371
Target, Sr. Notes, 7.50%, 2/15/05 4,500 4,614
</TABLE>
9
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
-------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Viacom, Sr. Notes, 6.75%, 1/15/03 $ 190 $ 189
Wal-Mart Stores
Sr. Notes
6.15%, 8/10/01 5,000 4,983
6.55%, 8/10/04 425 427
-----------
26,138
-----------
Energy 0.9%
PDV America, Sr. Notes, 7.875%, 8/1/03 1,605 1,564
YPF Sociedad Anonima, Sr. Notes, 7.25%, 3/15/03 2,590 2,519
-----------
4,083
-----------
Industrials 5.4%
Boeing Capital, Sr. Notes, 7.10%, 9/27/05 4,250 4,340
Caterpillar Financial Services, Sr. Notes, 6.875%, 8/1/04 3,500 3,481
DaimlerChrysler, Sr. Notes, 7.125%, 3/1/02 3,250 3,254
Eaton Offshore, Sr. Notes, 9.00%, 2/15/01 330 331
Ford Motor Credit, Sr. Notes, 7.50%, 3/15/05 1,725 1,735
General Motors Acceptance Corporation, Sr. Notes
7.50%, 7/15/05 3,400 3,447
Parker Hannifin, Sr. Notes, 5.65%, 9/15/03 250 243
Toyota Motor Credit, Sr. Notes, 5.625%, 11/13/03 3,250 3,171
United Technologies, Sr. Notes, 6.625%, 11/15/04 3,250 3,249
Waste Management, Sr. Notes, 6.625%, 7/15/02 2,660 2,590
-----------
25,841
-----------
Media and Communications 6.8%
360 Communications, Sr. Notes, 7.125%, 3/1/03 3,250 3,268
Deutsche Telekom International Finance, Sr. Notes
7.75%, 6/15/05 3,400 3,459
KPN, Sr. Notes, (144a), 7.50%, 10/1/05+ 4,400 4,314
Southwestern Bell Telephone, Sr. Notes, 6.375%, 4/1/01 2,000 1,997
Sprint Capital, Sr. Notes, 5.70%, 11/15/03 3,140 3,023
Telefonica Europe, Sr. Notes, 7.35%, 9/15/05 4,000 4,005
U.S. West Capital Funding, Sr. Notes, 6.875%, 8/15/01 3,250 3,241
Vodafone Airtouch, Sr. Notes, (144a), 7.625%, 2/15/05 4,450 4,542
Worldcom, Sr. Notes, 7.50%, 8/20/04 4,250 4,295
-----------
32,144
-----------
Transportation 2.0%
Amerco, Sr. Notes, 8.80%, 2/4/05 3,250 3,128
ERAC USA Finance, (144a), 6.375%, 5/15/03 2,175 2,126
</TABLE>
10
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
-------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
GATX Capital, 6.875%, 11/1/04 $ 1,725 $ 1,665
Norfolk Southern
Sr. Notes
6.95%, 5/1/02 2,250 2,249
7.875%, 2/15/04 125 128
-----------
9,296
-----------
Utilities 6.6%
Alabama Power, Sr. Notes, 5.49%, 11/1/05 4,250 4,019
CE Electric UK Funding, Sr. Notes, (144a), 6.853%, 12/30/04+ 2,370 2,303
National Rural Utilities, 5.00%, 10/1/02 4,450 4,331
Niagara Mohawk, Sr. Disc. Notes, 7.375%, 7/1/03 3,278 3,313
Pacific Gas & Electric, 1st Mtg. Bonds, 8.75%, 1/1/01 4,715 4,718
Potomac Capital Investment, MTN, (144a), 7.55%, 11/19/01 1,725 1,730
Public Service Electric & Gas, Mtg. Bonds, 8.875%, 6/1/03 4,590 4,694
Utilicorp United, Sr. Notes, 7.00%, 7/15/04 3,250 3,196
Williams, Sr. Notes, 6.125%, 2/15/12 2,740 2,709
-----------
31,013
-----------
Total Corporate Bonds and Notes (Cost $173,046) 172,350
-----------
ASSET-BACKED SECURITIES 17.5%
Advanta Equipment Receivables, 7.56%, 2/15/07 2,851 2,862
Banc One Auto Grantor Trust, 6.27%, 11/20/03 495 494
BMW Vehicle Owner Trust, 6.54%, 4/25/04 4,500 4,506
California Infrastructure
6.28%, 9/25/05 1,900 1,896
6.38%, 9/25/08 500 497
California Special Purpose Trust, 6.42%, 9/25/08 6,625 6,600
Case Equipment Loan Trust, 5.77%, 8/15/05 1,500 1,483
CIT RV Trust
6.09%, 2/15/12 4,250 4,220
6.35%, 4/15/11 1,500 1,495
Comed Transitional Funding Trust, 5.44%, 3/25/07 4,530 4,400
DaimlerChrysler Auto Trust, 6.66%, 1/8/05 4,400 4,423
Dayton Hudson Credit Card Master Trust, 5.90%, 5/25/06 3,200 3,151
Dealer Auto Receivables Trust, 7.07%, 5/17/04 4,550 4,591
Fingerhut Master Trust, 6.07%, 2/15/05 2,896 2,887
First USA Secured Note Trust, 6.50%, 1/18/06 450 441
</TABLE>
11
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
-------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Ford Credit Auto Owner Trust, 6.40%, 12/1/00 $ 1,300 $ 1,297
Harley Davidson Eaglemark, 5.94%, 2/15/04 600 596
Heller Equipment Asset Trust, 6.65%, 3/14/04 4,950 4,944
MBNA Master Credit Card Trust
7.45%, 4/16/07 1,725 1,724
7.57%, 12/15/00 3,000 3,030
7.90%, 7/16/07 250 254
MMCA Automobile Trust, 6.80%, 8/15/03 5,200 5,209
New Holland Equipment Receivables, (144a), 6.80%, 12/15/07+ 3,450 3,475
Nissan Auto Receivables Owner Trust
6.72%, 8/16/04 4,350 4,362
7.17%, 8/15/04 1,000 1,018
Peco Energy
5.63%, 3/1/05 2,920 2,883
6.955%, 3/1/01 1,000 996
Prime Credit Card Master Trust, 6.75%, 11/15/05 2,000 2,010
Puget Sound Energy Conservation, 6.23%, 7/11/02 989 979
Ryland Mercury Savings Trust, 7.025%, 12/1/00 125 124
WFS Financial Owner Trust, 7.41%, 9/20/07 4,450 4,566
World Financial Network Credit Card Master Trust
6.95%, 12/15/00 1,500 1,504
-----------
Total Asset-Backed Securities (Cost $83,211) 82,917
-----------
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 23.4%
U.S. Government Agency Obligations 18.5%
Federal Home Loan Mortgage
6.50%, 9/1/02 1,940 1,939
7.00%, 8/1/01 448 449
9.00%, 5/1/02 - 7/1/02 4 4
10.00%, 1/1/01 - 6/1/05 105 107
10.75%, 12/1/09 71 74
5 Year Balloon
7.00%, 9/1/01 1,076 1,078
7 Year Balloon
6.50%, 8/1/03 - 5/1/05 1,285 1,286
</TABLE>
12
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
Par/Shares Value
--------------------------------------------------------------------------------
In thousands
Federal Home Loan Mortgage
REMIC, CMO
5.60%, 1/15/08 $ 2,000 $ 1,981
5.75%, 6/15/10 7,441 7,449
6.00%, 8/15/06 - 5/15/16 22,755 22,575
6.40%, 1/15/08 4,000 3,988
6.50%, 4/15/21 - 8/15/23 5,150 5,171
7.75%, 8/15/21 1,685 1,747
9.00%, 2/1/02 147 147
9.50%, 8/1/01 - 9/1/02 96 96
10.00%, 10/1/05 8 8
10.75%, 12/1/09 71 74
Federal National Mortgage Assn.
5.50%, 11/1/05 12 12
6.00%, 7/1/13 - 11/1/13 2,375 2,311
7.50%, 10/1/15 1,994 2,023
9.00%, 5/1/05 1,397 1,422
7 Year Balloon
7.00%, 6/1/03 - 9/1/03 2,814 2,828
7.50%, 8/1/01 87 87
ARM
6.375%, 8/1/17 42 41
6.706%, 11/1/20 - 5/1/31 218 215
6.734%, 3/1/19 6 7
6.744%, 3/1/20 62 61
6.75%, 11/1/17 - 7/1/18 164 161
6.759%, 12/1/16 - 1/1/19 1,023 985
6.761%, 5/1/24 80 78
6.798%, 5/1/17 - 8/1/20 239 234
7.109, 10/1/14 9 9
8.43%, 11/1/21 120 120
REMIC, CMO
6.00%, 10/18/14 - 11/18/17 10,884 10,789
6.10%, 8/25/21 971 961
7.00%, 8/25/20 - 4/18/22 6,529 6,532
9.00%, 1/25/08 5,977 6,267
Principal Only, 10/25/03 3,622 3,190
Principal Only, 10/25/21 926 893
-----------
87,399
-----------
13
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE SHORT-TERM BOND FUND
------------------------------------------------------------------------------------------------
Par/Shares Value
------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
U.S. Government Guaranteed Obligations 4.9%
Government National Mortgage Assn.
I
6.50%, 5/15/09 $ 2,929 $ 2,922
7.00%, 9/15/12 - 4/15/13 8,979 9,060
8.00%, 5/15/07 482 492
8.50%, 2/15/05 - 3/15/06 185 188
10.00%, 11/15/09 - 10/15/21 244 257
10.50%, 11/15/15 106 114
11.50%, 3/15/10 - 12/15/15 1,185 1,278
II, 10.00%, 10/20/20 51 53
GPM, I
8.50%, 1/15/06 30 31
9.50%, 8/15 - 10/15/09 5 5
11.00%, 8/15/10 51 54
11.25%, 6/15/13 - 10/15/15 182 196
11.75%, 8/15/13 - 10/15/15 522 569
13.00%, 9/15/11 6 7
GPM, II, 11.00%, 9/20/13 - 4/20/14 4 5
Midget, I
9.00%, 4/15/01 - 2/15/06 184 188
9.50%, 5/15/01 - 4/15/05 49 50
10.00%, 1/15/01 - 10/15/04 180 184
REMIC
6.00%, 10/16/25 5,000 4,909
9.00%, 7/20/23 2,260 2,378
22,940
------------
Total U.S. Government Mortgage-Backed Securities (Cost $110,275) 110,339
------------
U.S. GOVERNMENT OBLIGATIONS/
AGENCIES 14.4%
Federal Home Loan Mortgage, 5.50%, 5/15/02 3,000 2,971
Federal National Mortgage Assn.
5.25%, 1/15/03 3,250 3,198
6.50%, 8/15/04 5,000 5,047
U.S. Treasury Bonds, 10.75%, 2/15/03 4,500 4,964
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
T. ROWE PRICE SHORT-TERM BOND FUND
---------------------------------------------------------------------------------------
Par/Shares Value
---------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
U.S. Treasury Inflation-Indexed Notes, 3.625%, 7/15/02 $ 14,775 $ 14,771
U.S. Treasury Notes
5.75%, 11/30/02 16,350 16,393
5.875%, 11/15/04 4,000 4,050
6.375%, 8/15/02 10,000 10,106
6.625%, 4/30/02 6,250 6,316
-----------
Total U.S. Government Obligations/Agencies (Cost $67,312) 67,816
-----------
NON-U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 4.1%
Advanta Mortgage Loan Trust
Interest Only, 5.00%, 12/25/00 ** 18,000 0
EQCC Home Equity Loan Trust, 6.159%, 4/15/08 4,345 4,270
GMAC Commercial Mortgage Securities, 6.15%, 11/15/07 4,745 4,641
Great Western Bank, ARM, 6.407%, 11/25/26 684 641
LB Commercial Conduit Mortgage Trust, 6.41%, 8/15/07 4,084 4,011
Prudential Securities Secured Financing, 6.074%, 1/15/08 1,067 1,038
Saxon Asset Securities Trust, 6.73%, 2/25/27 4,607 4,574
Total Non-U.S. Government Mortgage-Backed -----------
Securities (Cost $19,105) 19,175
-----------
MUNICIPAL BONDS 0.0%
University of Miami, 6.90%, 4/1/04 (MBIA Insured) 50 51
-----------
Total Municipal Bonds (Cost $50) 51
-----------
CERTIFICATES OF DEPOSIT 0.4%
National Westminster Bank, 7.26%, 5/9/01 1,000 1,002
Norddeutsche Landesbank Girozentrale, 7.30%, 5/11/01 1,000 1,002
-----------
Total Certificates of Deposit (Cost $2,000) 2,004
-----------
MONEY MARKET FUNDS 2.6%
Reserve Investment Fund, 6.70% # 12,505 12,505
-----------
Total Money Market Funds (Cost $12,505) 12,505
-----------
</TABLE>
15
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
-------------------------------------------------------------------------------
Value
-------------------------------------------------------------------------------
In thousands
Total Investments in Securities
98.9% of Net Assets (Cost $467,504) $ 467,157
Other Assets Less Liabilities 5,038
----------
NET ASSETS $ 472,195
==========
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (2,142)
Accumulated net realized gain/loss - net of distributions (54,771)
Net unrealized gain (loss) (347)
Paid-in-capital applicable to 102,404,524 shares of $0.01 par
value capital stock outstanding; 1,000,000,000 shares authorized 529,455
----------
NET ASSETS $ 472,195
==========
NET ASSET VALUE PER SHARE $ 4.61
==========
** For interest only securities, par amount represents notional principal on
which the fund receives interest.
+ Private Placement
# Seven-day yield
ARM Adjustable Rate Mortgage
CMO Collateralized Mortgage Obligation
GPM Graduated Payment Mortgage
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at period-end amounts to
5.25% of net assets.
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
Unaudited
-----------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
In thousands
6 Months
Ended
11/30/00
Investment Income (Loss)
Income
Interest $ 10,784
Security lending 3
---------
Total income 10,787
---------
Expenses
Investment management 614
Shareholder servicing 304
Custody and accounting 62
Prospectus and shareholder reports 22
Registration 17
Legal and audit 7
Directors 5
Miscellaneous 2
---------
Total expenses 1,033
Expenses paid indirectly (2)
---------
Net expenses 1,031
---------
Net investment income (loss) 9,756
---------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities (258)
Change in net unrealized gain or loss on securities 7,031
---------
Net realized and unrealized gain (loss) 6,773
---------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 16,529
=========
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
Unaudited
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
11/30/00 5/31/00
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 9,756 $ 17,478
Net realized gain (loss) (258) (4,753)
Change in net unrealized gain or loss 7,031 (2,829)
-----------------------
Increase (decrease) in net assets from operations 16,529 9,896
-----------------------
Distributions to shareholders
Net investment income (9,756) (17,478)
-----------------------
Capital share transactions *
Shares sold 72,331 115,130
Shares issued in connection with fund acquisition 156,600 --
Distributions reinvested 8,653 15,438
Shares redeemed (58,833) (160,413)
-----------------------
Increase (decrease) in net assets from capital
share transactions 178,751 (29,845)
-----------------------
Net Assets
Increase (decrease) during period 185,524 (37,427)
Beginning of period 286,671 324,098
-----------------------
End of period $ 472,195 $ 286,671
=======================
*Share information
Shares sold 15,829 25,226
Shares issued in connection with fund acquisition 34,118 --
Distributions reinvested 1,890 3,384
Shares redeemed (12,895) (35,143)
-----------------------
Increase (decrease) in shares outstanding 38,942 (6,533)
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
Unaudited November 30, 2000
-----------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Short-Term Bond Fund, Inc. (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on March 2, 1984. The fund
seeks a high level of income consistent with minimal fluctuation in
principal value and liquidity.
The accompanying financial statements were prepared in accordance with
generally accepted accounting principles, which require the use of
estimates made by fund management.
Valuation Debt securities are generally traded in the over-the-counter
market. Investments in securities with original maturities of one year or
more are stated at fair value as furnished by dealers who make markets in
such securities or by an independent pricing service, which considers yield
or price of bonds of comparable quality, coupon, maturity, and type, as
well as prices quoted by dealers who make markets in such securities.
Securities with original maturities less than one year are stated at fair
value, which is determined by using a matrix system that establishes a
value for each security based on money market yields.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair
value as determined in good faith by or under the supervision of the
officers of the fund, as authorized by the Board of Directors.
Premiums and Discounts Premiums and discounts on debt securities, other
than mortgage-backed securities (MBS), are amortized for both financial
reporting and tax purposes. Premiums and discounts on all MBS are
recognized upon disposition or principal repayment as gain or loss for
financial reporting purposes. For tax purposes, premiums and discounts on
MBS acquired on or before June 8, 1997, are recognized upon disposition or
principal repayment as ordinary income. For MBS acquired after June 8,
1997, premiums are recognized as gain or loss; discounts are recognized as
gain or loss, except to the extent of accrued market discount.
In November, 2000, the American Institute of Certified Public Accountants
issued a revised Audit and Accounting Guide -- Audits of Investment
Companies (the guide), which will be adopted by the fund as of June 1,
2001. The guide
19
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
requires all premiums and discounts on debt securities to be amortized, and
gain/loss on paydowns of MBS to be accounted for as interest income. Upon
adoption, the fund will adjust the cost of its debt securities, and
corresponding unrealized gain/loss thereon, in the amount of the cumulative
amortization that would have been recognized had amortization been in
effect from the purchase date of each holding. This adjustment will have no
effect on the fund's net assets or results of operations.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Distributions to shareholders
are recorded by the fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax
regulations and may differ from net investment income and realized gains
determined in accordance with generally accepted accounting principles.
Expenses paid indirectly reflect credits earned on daily uninvested cash
balances at the custodian and are used to reduce the fund's custody
charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Securities Lending The fund lends its securities to approved brokers to
earn additional income. It receives as collateral cash and U.S. government
securities valued at 102%-105% of the value of the securities on loan. Cash
collateral is invested in a money market pooled account by the fund's
lending agent. Collateral is maintained over the life of the loan in an
amount not less than the value of loaned securities, as determined at the
close of fund business each day; any additional collateral required due to
changes in security values is delivered to the fund the next business day.
Although risk is mitigated by the collateral, the fund could experience a
delay in recovering its securities and a possible loss of income or value
if the borrower fails to return the securities. At November 30, 2000, the
value of loaned securities was $2,096,000; aggregate collateral consisted
of $2,178,000 in the securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
and U.S. Government securities, aggregated $82,459,000 and $40,771,000,
respectively,
20
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
for the six months ended November 30, 2000. Purchases and sales of U.S.
government securities aggregated $48,773,000 and $21,022,000,
respectively, for the six months ended November 30, 2000.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income. The fund had $35,370,000 of capital loss
carryforwards at May 31, 2000, and obtained an additional $2,820,000 from
the acquisition of T. Rowe Price Summit Limited-Term Bond Fund and
$7,884,000 from the acquisition of T. Rowe Price Short-Term U.S. Government
Fund. Of the total, $1,074,000 expires in 2001, $6,040,000 in 2002, and
$38,960,000 thereafter through 2008. The fund intends to retain gains
realized in future periods that may be offset by available capital loss
carryforwards.
At November 30, 2000, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$467,504,000. Net unrealized loss aggregated $347,000 at period-end, of
which $2,944,000 related to appreciated investments and $3,291,000 to
depreciated investments.
NOTE 4 - ACQUISITION
On November 1, 2000, the Short-Term Bond Fund acquired substantially all of
the assets of T. Rowe Price Summit Limited-Term Bond Fund and T. Rowe Price
Short-Term U.S. Government Fund (collectively, the acquired funds),
pursuant to the Agreement and Plan of Reorganization dated September 1,
2000, and approved by shareholders of the acquired funds on October 25,
2000. The acquisition was accomplished by a tax-free exchange of 7,708,209
shares of Short-Term Bond Fund (with a value of $35,381,000) for the
7,897,473 shares of T.Rowe Price Summit Limited-Term Bond Fund outstanding
at the merger date; an additional 26,409,509 shares of Short-Term Bond Fund
(with a value of $121,219,000) were exchanged for the 26,583,256 shares of
T. Rowe Price Short-Term U.S. Government Fund outstanding at that date. The
net assets of the acquired funds at the merger date, which collectively
included $16,037,000 of accumulated net realized loss, $1,028,000 of net
unrealized loss, and $650,000 of accumulated net operating loss, were
combined with those of Short-Term Bond Fund, resulting in aggregate net
assets of $460,097,000.
21
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
NOTE 5 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates). The investment management agreement between the fund and the
manager provides for an annual investment management fee, of which $136,000
was payable at November 30, 2000. The fee is computed daily and paid
monthly, and consists of an individual fund equal to 0.10% of average daily
net assets and a group fee. The group fee is based on the combined assets
of certain mutual funds sponsored by the manager or T. Rowe Price
International, Inc. (the group). The group fee rate ranges from 0.48% for
the first $1 billion of assets to 0.295% for assets in excess of $120
billion. At November 30, 2000, and for the six months then ended, the
effective annual group fee rate was 0.32%. The fund pays a pro-rata share
of the group fee based on the ratio of its net assets to those of the
group.
Under the terms of the investment management agreement effective October 1,
2000, the manager is required to bear any expenses through May 31, 2002,
which would cause the fund's ratio of total expenses to average net assets
to exceed 0.55%. Thereafter, through May 31, 2004, the fund is required to
reimburse the manager for these expenses, provided that average net assets
have grown or expenses have declined sufficiently to allow reimbursement
without causing the fund's ratio of total expenses to average net assets to
exceed 0.55%. Pursuant to this agreement, $53,000 of management fees were
not accrued by the fund for the six months ended November 30, 2000. At
November 30, 2000, unaccrued fees in the amount of $53,000 remain subject
to reimbursement by the fund through May 31, 2004.
In addition, the fund has entered into agreements with Price Associates and
two wholly owned subsidiaries of Price Associates, pursuant to which the
fund receives certain other services. Price Associates computes the daily
share price and maintains the financial records of the fund. T. Rowe Price
Services, Inc. is the fund's transfer and dividend disbursing agent and
provides shareholder and administrative services to the fund. T. Rowe Price
Retirement Plan Services, Inc. provides subaccounting and recordkeeping
services for certain retirement accounts invested in the fund. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $304,000 for the six months ended November 30, 2000, of which
$46,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds
(Spectrum) may invest. Spectrum does not invest in the underlying funds for
the purpose of exercising management or control. Expenses associated with
the operation of
22
<PAGE>
T. ROWE PRICE SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
Spectrum are borne by each underlying fund to the extent of estimated
savings to it and in proportion to the average daily value of its shares
owned by Spectrum, pursuant to special servicing agreements between and
among Spectrum, the underlying funds, Price Associates, and, in the case of
T. Rowe Price Spectrum International, T. Rowe Price International. Spectrum
Income Fund held approximately 2.5% of the outstanding shares of the
Short-Term Bond Fund at November 30, 2000. For the six months then ended,
the fund was allocated $4,000 of Spectrum expenses, $2,000 of which was
payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by Price Associates. The Reserve Funds are
offered as cash management options only to mutual funds and other accounts
managed by Price Associates or T. Rowe Price International, and are not
available to the public. The Reserve Funds pay no investment management
fees. Distributions from the Reserve Funds to the fund for the six months
ended November 30, 2000, totaled $1,315,000 and are reflected as interest
income in the accompanying Statement of Operations.
--------------------------------------------------------------------------------
SPECIAL MEETING RESULTS
--------------------------------------------------------------------------------
The T. Rowe Price Short-Term U.S. Government Fund held a special meeting of
shareholders on October 25, 2000, to approve an agreement and plan of
reorganization providing for the transfer of substantially all the assets
of the fund to the T. Rowe Price Short-Term Bond Fund in exchange for
shares of the Short-Term Bond Fund, and the distribution of the Short-Term
Bond Fund shares to the shareholders of the Short-Term U.S. Government Fund
upon liquidation of the fund.
The results of voting were as follows (by number of shares):
To approve the Agreement and Plan of
Reorganization:
Affirmative: 16,591,524.406
Against: 754,048.604
Abstain: 558,106.051
Total: 17,903,679.061
23
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
--------------------------------------------------------------------------------
INVESTMENT SERVICES AND INFORMATION
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to
10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed-income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your
distributions.
Automated 24-Hour Services Including Tele*Access(R) and the T. Rowe
Price Web site on the Internet. Address: www.troweprice.com.
BROKERAGE SERVICES*
Individual Investments Stocks, bonds, options, precious metals, and
other securities at a savings over full-service commission rates.**
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and
results.
T. Rowe Price Report Quarterly investment newsletter discussing
markets and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International Investing, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning
Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a July 2000 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending
on size of order.
24
<PAGE>
T. ROWE PRICE MUTUAL FUNDS
--------------------------------------------------------------------------------
STOCK FUNDS
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Developing Technologies
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
BOND FUNDS
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Spectrum Income
Summit GNMA
U.S. Bond Index
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Tax-Free Bond
MONEY MARKET FUNDS+
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
INTERNATIONAL/GLOBAL
FUNDS
Stock
Emerging Europe &
Mediterranean
Emerging Markets Stock
European Stock
Global Stock
Global Technology
International Discovery*
International Equity Index
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
Bond
Emerging Markets Bond
International Bond
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced
Portfolio
Prime Reserve Portfolio
* Closed to new investors.
+ Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the funds.
Please call for a prospectus, which contains complete information, including
fees and expenses. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
25
<PAGE>
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account or obtain information, call:
1-800-638-5660
For the hearing impaired, call: 1-800-367-0763
Internet address:
www.troweprice.com
Plan Account Lines for retirement plan participants: The appropriate 800 number
appears on your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus appropriate to the fund or funds
covered in this report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site at
www.troweprice.com/investorcenters
Baltimore Area
Downtown - new address
105 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
2260 Briargate Parkway
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
San Francisco Area
1990 North California Boulevard
Suite 100
Walnut Creek
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
[LOGO OF T. ROWE PRICE]
T. Rowe Price Investment Services, Inc., Distributor. F55-051 11/30/00
