T. Rowe Price
Supplement to Statement of Additional Information
for the Taxable Fixed Income Funds dated October 1, 1997
The following sentence will be added under Investment Restrictions:
Calculation of the Fund's total assets for compliance with any of the
following fundamental or operating policies or any other investment
restrictions set forth in the Fund's prospectus or Statement of Additional
Information will not include cash collateral held in connection with
securities lending activities.
The date of the above supplement is January 14, 1998.
The following paragraph will be added under Portfolio Management Practices:
Money Market Reserves
It is expected that the Funds will invest their cash reserves primarily in
one or more money market funds established for the exclusive use of the T.
Rowe Price family of mutual funds and other clients of T. Rowe Price and
Price-Fleming. Currently, two such money market funds are in operation--
Reserve Investment Fund ("RIF") and Government Reserve Investment Fund
("GRF"), each a series of the Reserve Investment Funds, Inc. Additional series
may be created in the future. These funds were created and operate under an
Exemptive Order issued by the Securities and Exchange Commission (Investment
Company Act Release No. IC-22770, July 29, 1997).
Both funds must comply with the requirements of Rule 2a-7 under the
Investment Company Act of 1940 governing money market funds. The RIF
invests at least 95% of its total assets in prime money market instruments
receiving the highest credit rating. The GRF invests primarily in a portfolio
of U.S. government-backed securities, primarily U.S. Treasuries, and repurchase
agreements thereon.
The RIF and GRF provide a very efficient means of managing the cash
reserves of the Funds. While neither RIF or GRF pay an advisory fee to the
Investment Manager, they will incur other expenses. However, the RIF and GRF are
expected by T. Rowe Price to operate at very low expense ratios. The Funds
will only invest in RIF or GRF to the extent it is consistent with each
Fund's objective and program.
Neither fund is insured or guaranteed by the U.S. government, and there is
no assurance they will maintain a stable net asset value of $1.00 per share.
The date of the above supplement is October 3, 1997.
C22-045 1/14/98
