Semiannual Report
Summit
Income
Funds
April 30, 1997
T. Rowe Price
Report Highlights
o The bond market was generally tepid over the last six months as
the economy showed surprising strength but inflation remained
subdued.
o The Summit Cash Reserves Fund outperformed its Lipper peer group during
the six-month period ended April 30 with a solid 2.55% return.
o Due to generally rising interest rates, the Summit Limited-Term Bond
Fund returned a modest 1.81% over the last six months, essentially
matching the average for similar funds.
o The Summit GNMA Fund was also hampered by rising rates, returning 1.83%
for the six-month period, lagging its peer group. However,
mortgage-backed securities did better than Treasuries.
o We cannot rule out further tightening by the Federal Reserve in coming
months but expect rates to remain within the range established over the
past year.
Fellow Shareholders
The bond market was lackluster over the last six months as the economy
developed considerable momentum. Seeking to preempt a rise in inflation, the
Federal Reserve raised the key federal funds target in March for the first
time in two years. Interest rates rose through most of the half-year,
although they retreated in April when no clear evidence of accelerating
inflation emerged.
MARKET ENVIRONMENT
The economy grew at a vigorous annualized rate of 5.6% in the first quarter
of 1997, roughly double its average pace during the current six-year
expansion. Consumers kept the cash registers ringing for such items as
automobiles, major appliances, and furniture. With jobs being created at a
rapid clip, the civilian unemployment rate dropped to 4.9% in April, its
lowest level in more than two decades. After repeated warnings that it could
not wait forever for the economy to slow on its own, the Federal Reserve
lifted the federal funds target by a quarter-point in March to 5.5%.
Chart 1 - Interest Rate Levels
The Fed's objective is to avoid a repetition of the late 1980s, when labor
markets became extremely tight, leading to rising wage inflation. The longer
the central bank can keep inflation around its trend rate so far this decade,
about 3%, the longer the economic expansion is expected to last. As shown in
the chart, interest rates generally rose over the last six months, with a
spike upward after the Fed tightening. However, rates fell back in April
after it became clear that inflation was not accelerating despite the robust
economy. In particular, the employment cost index, arguably the best measure
of total compensation because it includes both wages and benefits, continued
to rise at an acceptable level of just under 3%. In this environment, bonds
generally produced moderate returns.
Summit Cash Reserves Fund
Performance Comparison
Periods Ended 4/30/97 6 Months 12 Months
______________________________________________________
Cash Reserves Fund 2.55% 5.16%
Lipper Money Market
Funds Average 2.35 4.77
Since money market yields generally track the federal funds rate, they also
rose by about one-quarter of a point, approaching 5.5% late in the reporting
period. Yields on U.S. Treasury bills were somewhat lower, however, due to
the improving budget deficit and the federal government's seasonal use of tax
receipts to retire many of these securities. Your fund's 7-day yield also
increased, from 5.15% last October 31 to 5.35% as of April 30, as shown in
the table following this letter.
Your fund continued its strong relative performance, outperforming the Lipper
average for similar funds in both the 6- and 12-month periods ended April 30,
as shown in the table. As always, our generally lower-than-average expense
ratio was a factor in our outperformance. In addition, we tinkered with the
fund's average maturity, slightly lengthening it earlier in the six-month
period when the Fed was on hold, and shortening it in anticipation of the
rate hike in March. (When interest rates are stable or falling, we move
toward longer-maturity issues to delay the rollover of assets into
lower-yielding securities, thus enhancing the fund's yield. Conversely, when
rates are rising, we favor shorter-maturity issues to hasten the rollover of
assets into higher-yielding securities, again with the aim of enhancing
yield.) As of April 30, the fund's average maturity was 54 days, down from
61 last October.
We made only minor changes to sector diversification, increasing exposure to
negotiable certificates of deposit and bank notes to 37% of assets due to
ample supplies of attractively priced issues in that sector. (Sector
diversification is shown in the table following this letter.) Similarly, our
reduction in foreign and Canadian government issues was due to a lack of
compellingly priced issues. Despite the increased appeal of floating rate
instruments, which reset at higher rates when interest rates are rising, we
held our exposure steady at 11% of assets.
Due to a tight supply of these issues, the extra yield they offer over fixed
rate obligations was not enough to compensate for their added risk.
Further increases in short-term rates are likely this year as the Fed
attempts to slow growth, keep inflation at bay, and thus prolong the current
expansion. We will continue to maintain a defensive stance in this
environment with a bias toward a shorter average maturity. The market can
sometimes overreact to expectations about Fed policy, pushing interest rates
too high. We will remain alert for such developments and be prepared to take
advantage of any opportunities.
Summit Limited-Term Bond Fund
The fund performed on par with its competitor funds over the last six months,
posting a modest return as income was partially offset by falling bond
prices. Over the 12 months ended April 30, the fund produced a good absolute
return, roughly in line with its peer group, as shown in the table.
Performance Comparison
Periods Ended 4/30/97 6 Months 12 Months
______________________________________________________
Limited-Term Bond Fund 1.81% 5.82%
Lipper Short Intermediate
Investment-Grade
Debt Funds Average 1.79 5.94
At the time of our last report to you in October, we had allowed the fund's
effective duration to drop to 2.6 years, closer to the lower end of its
typical range of 2.5 to 3.0 years. (Duration is a more accurate measure than
maturity of a fund's price sensitivity to changes in interest rates.
Shortening duration cushions declines in the fund's share price when interest
rates rise.) Over the last six months, given the general rise in rates, we
held duration around 2.6 years.
We continued to rely on sizable allocations to corporate and government
mortgage-backed securities, which together account for more than 80% of fund
assets (including commercial paper and asset-backed securities; see table
following this letter). We trimmed mortgages after a rally in the first
quarter decreased their yield advantage compared with Treasury issues.
Nevertheless, they still represent 25% of fund assets, a slight overweighting
compared with our Lipper peer group.
Most of our remaining assets were spread among a wide selection of
high-quality corporate issues. Overall, our corporate exposure (including
asset-backed issues and commercial paper) increased to 58% of assets,
primarily due to our purchase of issues in the consumer products sector. Some
of these companies have strong cash flows and are in excellent financial
condition, but they experienced poor short-term earnings surprises that
temporarily drove their bond prices down to attractive levels. We pounced on
the opportunity to buy these bonds at appealing prices. Our cash position,
represented in the table as commercial paper, more than doubled to 8% due to
the likelihood of future increases in short-term rates.
Chart 2 - Quality Diversification
The fund continued to maintain a high level of credit quality, with nearly
80% of assets invested in issues rated A or higher. At this juncture, given
the probability of higher short-term rates, we don't feel that the
incremental yield offered by lower quality issues justifies their additional
credit risk.
Summit GNMA Fund
Due to rising interest rates over the last six months, your fund produced a
weak return, slightly behind that of similar funds. For the 12-month period,
interest rates were volatile, although they ended up close to where they
began. The fund's share price hardly moved, dipping from $9.52 a year ago to
$9.49 on April 30. Therefore, the return came from income, as evidenced by
the proximity between the fund's 12-month total return (see page 5) and its
dividend yield for the same period (shown in the table after this letter).
Over the longer period, the fund posted a solid return, slightly ahead of its
peer group.
Mortgage-backed securities outperformed Treasuries for both reporting periods
because rising interest rates kept prepayment activity at historically low
levels. As you know, rising interest rates lead to price declines on both
types of bonds. However, rising rates can help the relative performance of
mortgage-backed securities because they often deter homeowners from prepaying
their mortgages. Prepayments lead to losses on mortgage securities that were
purchased at a premium because they are paid off at par value. Therefore,
mortgage-backed securities benefit from low levels of prepayments. The
generally rising interest rates of the past 12 months have returned
prepayment levels to the lows last experienced in 1994.
Performance Comparison
Periods Ended 4/30/97 6 Months 12 Months
______________________________________________________
GNMA Fund 1.83% 6.92%
Lipper GNMA
Funds Average 2.06 6.80
As usual, the bulk of the fund's assets were invested in a diversified
selection of GNMAs, keeping our exposure steady at 87% of assets. However,
as interest rates fluctuated, we attempted to add incremental income by
purchasing somewhat more esoteric mortgage and bond products. These included
project loans, putable Tennessee Valley Authority issues, and collateralized
mortgage obligations (CMOs).
Project loans are mortgages on commercial properties with clauses that
prevent prepayments for up to 10 years. These securities provide a more
stable stream of total returns consisting of the coupon plus scheduled
principal payments with no prepayment risk. The TVA issues offer potential
price appreciation if interest rates drop, but the downside risk is limited
because we can sell (put) them back to TVA at par value. Among our CMO
holdings is one boasting a healthy 11.5% coupon, but a final maturity of only
2.5 years, limiting its downside risk in the event of rising interest rates.
OUTLOOK
The economy is now in its seventh year of expansion, and while it has
exhibited few signs of inflationary pressure, surging growth prompted the
Federal Reserve to initiate a preemptive tightening in monetary policy. We
cannot rule out further tightening at this time, but the combination of a
balanced budget agreement, continued low inflation, and preliminary signs of
slowing growth lead us to believe that rates in the near term should remain
within the range established during the past year.
In this environment, we expect bond returns to come mostly from income rather
than from movements in prices. As always, thank you for your continued
confidence in the Summit Funds.
Respectfully submitted,
Peter Van Dyke
President
Summit Income Funds
May 19, 1997
T. Rowe Price Summit Income Funds
Portfolio Highlights
Key statistics
10/31/96 4/30/97
Summit Cash Reserves Fund
__________________________________________________________
Price Per Share $ 1.00 $ 1.00
Dividends Per Share
For 6 months .025 .025
For 12 months .051 .050
Dividend Yield (7-Day
Compound) * 5.15% 5.35%
Weighted Average Maturity
(days) 61 54
Weighted Average
Quality ** First Tier First Tier
Summit Limited-Term Bond Fund
Price Per Share $ 4.60 $ 4.54
Dividends Per Share
For 6 months 0.15 0.14
For 12 months 0.30 0.29
Dividend Yield *
For 6 months 6.46% 6.37%
For 12 months 6.60 6.51
Weighted Average
Maturity (years) 3.5 3.4
Weighted Average
Effective Duration (years) 2.6 2.6
Weighted Average Quality *** AA AA
(continued on next page)
T. Rowe Price Summit Income Funds
Portfolio Highlights
Key statistics
10/31/964/30/97
Summit GNMA Fund
__________________________________________________________
Price Per Share $ 9.65 $ 9.49
Dividends Per Share
For 6 months 0.33 0.33
For 12 months 0.67 0.67
Dividend Yield *
For 6 months 7.11% 7.14%
For 12 months 7.19 7.25
Weighted Average
Maturity (years) 8.9 9.6
Weighted Average Effective
Duration (years) 5.1 5.3
Weighted Average Quality *** AAA AAA
* Dividends earned and reinvested for the periods indicated are
annualized and divided by the average daily net asset values per
share for the same period.
** All securities purchased in the money fund are rated in the two
highest categories (tiers) as established by national rating agencies
or, if unrated, are deemed of comparable quality by T. Rowe Price.
*** Based on T. Rowe Price research.
Note: The Cash Reserves Fund seeks to maintain a stable share price of $1.00,
but this is not guaranteed. An investment in the fund is neither insured nor
guaranteed by the U.S. government.
Portfolio Highlights
Sector Diversification
Percent of Percent of
Net Assets Net Assets
10/31/96 4/30/97
Summit Cash Reserves Fund
_________________________________________________________
Commercial Paper 42% 44%
Negotiable CDs/BNs Foreign
and Domestic 33 37
Foreign and Canadian Government
and Municipalities 10 5
Other Short-Term Obligations 15 14
_________________________________________________________
Total 100% 100%
Fixed Rate Obligations 90 89
Floating Rate Instruments 10 11
Summit Limited-Term Bond Fund
_________________________________________________________
Mortgage-Backed Securities 32% 25%
U.S. Treasury Obligations 14 12
Banking 8 9
Commercial Paper 3 8
Finance and Credit 5 7
Industrial 6 7
Utilities 7 5
Consumer Products 1 5
Asset-Backed Securities 6 4
Transportation 3 4
Retail 2 3
U.S. Government Obligations 5 3
Media and Communications 2 2
All Other 7 4
Other Assets Less Liabilities -1 2
_________________________________________________________
Total 100% 100%
(continued on next page)
T. Rowe Price Summit Income Funds
Portfolio Highlights
Sector Diversification
Percent of Percent of
Net Assets Net Assets
10/31/96 4/30/97
Summit GNMA Fund
_________________________________________________________
GNMA 87% 87%
U.S. Government Agencies 13 20
Commercial Paper 3 3
Agency-Backed STRIPS 1 1
U.S. Treasury Obligations 5 -
Other Assets Less Liabilities -9 -11
_________________________________________________________
Total 100% 100%
Performance Comparison
These charts show the value of a hypothetical $10,000 investment in each fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
Chart 3 - SEC Graph - Summit Cash Reserves Fund
T. Rowe Price Summit Income Funds
Performance Comparison
Chart 4 - SEC Graph - Summit Limited-Term Bond Fund
Chart 5 - SECGraph - Summit GNMA Fund
Average Annual Compound Total Return
This table shows how each 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 Since Inception
4/30/97 1 Year 3 Years Inception Date
____________________________________________________________
Summit Cash
Reserves Fund 5.16% 5.20% 4.88% 10/29/93
Summit Limited-
Term Bond Fund 5.82 5.38 3.94 10/29/93
Summit GNMA Fund 6.92 7.36 5.82 10/29/93
Investment return and principal value represent past performance and will
vary. Shares of the bond funds may be worth more or less at redemption than
at original purchase. The money fund's $1.00 share price is not guaranteed.
T. Rowe Price Summit Cash Reserves Fund
Unaudited
For a share outstanding throughout each period
Financial Highlights
6 Months Year 10/29/93
Ended Ended to
4/30/97 10/31/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of
period $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment
activities
Net investment
income 0.025 0.051 0.055 0.035
Distributions
Net investment
income (0.025) (0.051) (0.055) (0.035)
NET ASSET VALUE
End of period $ 1.000 $ 1.000 $ 1.000 $ 1.000
_________________________________________
Ratios/Supplemental Data
Total return 2.55% 5.23% 5.68% 3.60%
Ratio of expenses
to average net
assets 0.45%! 0.45% 0.45% 0.45%!
Ratio of net
investment
income to
average net
assets 5.11%! 5.09% 5.55% 4.03%!
Net assets, end
of period(in
thousands) $ 1,054,444 $ 741,561 $ 433,464 $ 186,523
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
Unaudited
Financial Highlights
For a share outstanding throughout each period
6 Months Year 10/29/93
Ended Ended to
4/30/97 10/31/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of
period $ 4.60 $ 4.65 $ 4.64 $ 5.00
Investment
activities
Net investment
income 0.14 0.30 0.32 0.33
Net realized and
unrealized
gain (loss) (0.06) (0.05) 0.01 (0.36)
Total from
investment
activities 0.08 0.25 0.33 (0.03)
Distributions
Net investment
income (0.14) (0.29) (0.31) (0.33)
Tax return of
capital - (0.01) (0.01) -
Total
distributions (0.14) (0.30) (0.32) (0.33)
NET ASSET VALUE
End of period $ 4.54 $ 4.60 $ 4.65 $ 4.64
______________________________________
Ratios/Supplemental Data
Total return 1.81% 5.48% 7.36% (0.71)%
Ratio of expenses
to average net
assets 0.55%! 0.55% 0.55% 0.55%!
Ratio of net
investment
income to average
net assets 6.30%! 6.43% 6.85% 6.98%!
Portfolio turnover
rate 81.0%! 116.1% 84.3% 296.0%!
Net assets, end of
period(in
thousands) $ 26,405 $ 25,984 $ 27,004 $ 21,116
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
Unaudited
For a share outstanding throughout each period
Financial Highlights
6 Months Year 10/29/93
Ended Ended to
4/30/97 10/31/96 10/31/9510/31/94
NET ASSET VALUE
Beginning of
period $ 9.65 $ 9.81 $ 9.15 $ 10.00
Investment
activities
Net investment
income 0.33 0.67 0.70 0.69
Net realized and
unrealized
gain (loss) (0.16) (0.16) 0.66 (0.85)
Total from
investment
activities 0.17 0.51 1.36 (0.16)
Distributions
Net investment
income (0.33) (0.62) (0.67) (0.69)
Tax return of
capital - (0.05) (0.03) -
Total
distributions (0.33) (0.67) (0.70) (0.69)
NET ASSET VALUE
End of period $ 9.49 $ 9.65 $ 9.81 $ 9.15
Ratios/Supplemental Data
Total return 1.83% 5.47% 15.43% (1.67)%
Ratio of expenses
to average net
assets 0.60%! 0.60% 0.60% 0.60%!
Ratio of net
investment
income to
average net
assets 7.06%! 6.99% 7.40% 7.31%!
Portfolio turnover
rate 125.5%! 136.1% 173.8% 61.5%!
Net assets, end
of period(in
thousands) $ 26,249 $ 24,718 $ 22,777 $ 17,184
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Cash Reserves Fund
Unaudited
April 30, 1997
Statement of Net Assets
Par Value
In thousands
BANK NOTES 5.9%
Bank of America, 5.70%, 5/28/97 $ 2,750 $ 2,750
FCC National Bank
5.59%, 11/7/97 6,000 6,000
5.70%, 10/28/97 10,000 10,000
5.73%, 8/21/97 5,000 5,002
First America Bank of
Michigan, 6.15%, 3/27/98 4,900 4,895
Key Bank, VR, 5.608%, 5/21/97 10,000 9,997
MBNA America Bank N.A., 6.65%,
6/17/97 915 916
PNC Bank N.A., VR, 5.588%,
5/2/97 5,000 4,999
Southtrust Bank of Georgia,
VR, 5.628%, 5/22/97 8,000 8,000
Southtrust Bank of North
Carolina, VR, 5.688%, 5/12/97 2,000 2,000
Wachovia Bank, 6.65%, 9/5/97 7,200 7,227
Total Bank Notes (Cost $61,786) 61,786
BANKERS' ACCEPTANCES 0.1%
First Alabama Bank, 5.60%,
5/14/97 1,000 998
Total Bankers' Acceptances
(Cost $998) 998
CERTIFICATES OF DEPOSIT 30.7%
ABN AMRO
6.05%, 8/1/97 2,900 2,902
(London)
5.58%, 5/2/97 22,000 22,000
5.60%, 5/6/97 10,000 10,000
Banco Bilbao Vizcaya, (London),
5.61%, 6/16/97 13,000 13,000
Banco Santander, 5.61%, 5/8/97 10,000 10,000
Bank of Austria, 5.56%, 5/9/97 25,000 25,000
Bank of Brussels, 5.62%, 5/30/97 10,000 10,000
Bank of Nova Scotia, 5.55%,
5/9/97 7,000 7,000
Bank of Scotland, (London),
5.94%, 6/10/97 3,000 3,000
Banque Nationale de Paris,
(London), 5.60%, 12/18/97 10,000 9,989
Barclays Bank PLC
5.38%, 5/5/97 2,800 2,800
5.57%, 5/5/97 3,000 3,000
Bayerische Landesbank
Girozentrale, (London)
5.58%, 9/8/97 $ 5,000 $ 5,000
Bayerische Vereinsbank,
(London), 5.525%, 6/20/97 6,000 6,000
Caisse National de Credit
Agricole, (London)
5.51%, 8/11/97 10,000 10,000
Commerzbank
5.40%, 5/7/97 4,915 4,915
5.665%, 9/18/97 7,000 7,000
(London), 6.00%, 6/5/97 3,000 3,001
Creditanstalt Bankverien,
(London), 5.565%, 9/3/97 10,000 9,999
Credit Suisse, 6.25%, 4/10/98 10,000 10,000
Deutsche Bank AG
5.36%, 5/12/97 3,850 3,850
(London), 5.50%, 8/29/97 2,000 1,999
Dresdner Bank AG, (London),
5.58%, 5/7/97 10,000 10,000
Hessische Landesbank
6.05%, 6/13/97 4,000 4,002
6.13%, 4/7/98 4,900 4,895
Internationale Nederlanden
Bank, N.V., (London)
5.47%, 5/6/97 2,000 2,000
MBNA America Bank N.A.,
5.62%, 5/22/97 12,000 12,000
National Westminster Bank PLC,
5.66%, 2/11/98 23,900 23,862
Royal Bank of Canada, 5.95%,
3/24/98 5,000 4,995
Societe Generale
5.61%, 11/3/97 6,950 6,946
5.80%, 2/3/98 5,000 5,002
5.92%, 9/17/97 15,000 15,015
Svenska Handelsbank, 5.56%,
5/19/97 5,000 5,000
Toronto Dominion Bank, (London),
5.56%, 5/12/97 20,000 20,000
Union Bank of California, 5.62%,
5/30/97 15,000 15,000
Westpac Banking, 5.975%, 6/5/97 5,000 5,001
World Savings Bank, 5.34%,
5/21/97 9,925 9,925
Total Certificates of Deposit
(Cost $324,098) 324,098
COMMERCIAL PAPER 49.1%
Abbey National North America,
5.37%, 6/11/97 8,350 8,299
American Home Products, 4(2),
5.53%, 5/2/97 $ 1,000 $ 1,000
AON
5.56%, 5/29/97 2,474 2,463
5.60%, 5/20/97 350 349
Asset Securitization
Cooperative
4(2)
5.27%, 5/21/97 10,000 9,971
5.30%, 5/6/97 1,000 999
5.55%, 5/15 - 5/22/97 14,000 13,960
5.56%, 5/15/97 1,750 1,746
5.57%, 5/8/97 5,000 4,995
Associates Corporation of
North America, 5.60%, 6/9/97 10,000 9,939
Banc One, 4(2), 5.50%, 5/5/97 1,584 1,583
Bank of New York, 5.60%, 5/2/97 4,350 4,349
Banque Nationale de Paris,
5.47%, 9/29/97 3,100 3,025
Bell Atlantic Financial Services,
5.57%, 5/2/97 6,100 6,099
Beta Finance, 4(2), 5.30%,
5/7 - 5/13/97 3,900 3,894
Bex America Finance, 5.37%,
5/23/97 12,300 12,260
BMW U.S. Capital, 5.60%, 5/1/97 156 156
BT Securities
5.29%, 5/28/97 14,000 13,944
5.59%, 5/28/97 1,000 996
Caterpillar Financial Services
5.35%, 5/6/97 4,190 4,187
5.75%, 10/7/97 3,117 3,038
Cheltenham & Gloucester, 5.26%,
6/27/97 9,900 9,818
Chrysler Financial, 5.56%,
5/15/97 9,000 8,980
Ciesco
5.27%, 5/14/97 3,594 3,587
5.50%, 5/16/97 15,100 15,066
CIT Group Holdings, 5.52%,
5/22/97 1,800 1,794
Commonwealth Bank of Australia,
5.53%, 5/7/97 2,000 1,998
Corporate Asset Funding
4(2)
5.57%, 5/13/97 10,000 9,982
5.62%, 5/13/97 10,000 9,981
Countrywide Home Loans
5.35%, 5/12/97 $ 2,000 $ 1,996
5.54%, 5/22/97 1,900 1,894
5.55%, 5/12 - 5/23/97 9,000 8,978
Cregem North America
5.30%, 6/26/97 2,700 2,678
5.33%, 6/24/97 9,900 9,821
Daimler-Benz North America,
5.55%, 5/8/97 5,580 5,574
Delaware Funding
4(2)
5.36%, 5/8/97 25,000 24,974
5.50%, 5/5/97 6,000 5,996
Dover Funding, 4(2), 5.57%,
5/1/97 4,066 4,066
Falcon Asset Securitization
4(2)
5.34%, 5/16/97 3,300 3,293
5.57%, 5/27/97 4,185 4,168
FCAR Owner Trust, 5.57%, 5/22/97 30,000 29,902
Finova Capital, 5.64%, 6/2/97 10,000 9,950
General Motors Acceptance Corporation
5.52%, 5/6/97 2,900 2,898
5.55%, 5/7/97 2,100 2,098
ICI Wilmington
5.32%, 5/6/97 4,500 4,497
5.53%, 5/15/97 20,000 19,957
Indosuez North America,
5.35%, 5/6/97 4,400 4,397
International Lease Finance,
5.33%, 5/28/97 4,025 4,009
Island Finance of Puerto Rico,
5.34%, 5/14/97 1,000 998
John Hancock Capital, 4(2),
5.52%, 5/21/97 2,320 2,313
KFW International, 5.55%,
5/28/97 7,800 7,767
Kingdom of Sweden, 5.33%, 5/30/97 4,000 3,983
Market Street Funding
5.55%, 5/12/97 3,000 2,995
5.58%, 5/21/97 14,166 14,122
Merrill Lynch, 5.63%, 6/26/97 $ 10,000 $ 9,912
Metropolitan Life Funding,
5.50%, 5/9/97 2,345 2,342
Nordbanken North America
5.38%, 5/15/97 5,000 4,989
5.62%, 5/7/97 10,000 9,991
Paccar Financial, 5.50%, 5/12/97 3,125 3,120
Preferred Receivables Funding
5.50%, 5/5/97 23,725 23,710
5.60%, 6/3/97 10,000 9,949
Repeat Offering Security, 5.58%,
5/29/97 250 249
RTZ America
5.28%, 5/13/97 2,400 2,396
5.35%, 5/13/97 2,000 1,996
5.60%, 5/28/97 10,355 10,312
Tasmanian Public Finance
5.27%, 6/13/97 2,000 1,987
5.40%, 6/20/97 13,000 12,903
Total S.A., 5.53%, 5/27/97 20,000 19,920
Transamerica Finance
5.50%, 5/5/97 1,000 1,000
5.57%, 5/5/97 6,100 6,096
Vermont American, 4(2), 5.50%,
5/7/97 2,294 2,292
Westdeutsche Landesbank, 5.60%,
5/1/97 25,000 25,000
Yorkshire Building Society,
5.32%, 5/12/97 18,000 17,971
Total Commercial Paper (Cost
$517,917) 517,917
MEDIUM-TERM NOTES 13.9%
American General Finance
6.70%, 6/16/97 1,300 1,302
9.87%, 11/10/97 1,750 1,787
AVCO Financial Services,
5.875%, 10/15/97 2,000 2,001
Bear Stearns, VR, 5.738%,
5/29/97 5,000 5,000
Caterpillar Financial Services,
VR, 5.70%, 6/20/97 2,125 2,125
Daimler-Benz North America,
7.155%, 8/15/97 10,000 10,035
Ford Motor Credit
7.125%, 12/1/97 $ 6,850 $ 6,904
8.00%, 12/1/97 1,500 1,519
VR, 5.763%, 5/5/97 1,000 1,001
General Motors Acceptance
Corporation
7.85%, 11/17/97 1,050 1,062
8.375%, 5/1/97 4,000 4,000
Goldman Sachs Group
VR
5.606%, 5/19/97 8,000 8,000
5.616%, 5/16 - 5/20/97 10,000 10,000
Great Western Bank, 9.50%,
7/1/97 4,950 4,977
Household Finance, VR, 5.713%,
5/12/97 2,150 2,151
Hydro Quebec, 7.12%, 12/19/97 1,000 1,007
International Lease Finance,
8.05%, 2/3/98 7,500 7,617
Mellon Financial, 6.50%, 12/1/97 1,600 1,607
National Rural Utility, 9.63%,
5/19/97 4,000 4,008
Nationsbank, 6.625%, 1/15/98 1,500 1,509
Norwest Financial
6.50%, 11/15/97 4,000 4,016
7.70%, 11/15/97 1,270 1,283
PHH, VR, 5.617%, 5/8/97 10,000 9,999
Short Term Card Account Trust,
VR, (144a)
5.708%, 5/15/97 17,900 17,900
SMM Trust
VR, (144a)
5.688%, 5/27/97 24,000 24,000
5.738%, 5/27/97 5,000 5,000
Tiers Trust, VR, (144a), 5.718%,
5/15/97 7,000 7,000
Total Medium-Term Notes (Cost
$146,810) 146,810
Total Investments in Securities
99.7% of Net Assets (Cost
$1,051,609) $ 1,051,609
Other Assets Less Liabilities 2,835
NET ASSETS $ 1,054,444
____________
Net Assets Consist of:
Accumulated net realized gain/
loss - net of distributions $ 8
Paid-in-capital applicable to
1,054,436,286 shares
of $0.0001 par value capital
stock outstanding;
1,000,000,000 shares of the
Corporation authorized 1,054,436
NET ASSETS $ 1,054,444
____________
NET ASSET VALUE PER SHARE $ 1.00
____________
VR Variable Rate
4(2) Commercial Paper sold within terms of a private placement
memorandum, exempt from registration under section 4.2 of the
Securities Act of 1933, as amended, and may be sold only to dealers
in that program or other "accredited investors".
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 5.1% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
Unaudited April 30, 1997
Statement of Net Assets
Par/Shares Value
In thousands
CORPORATE BONDS AND NOTES 46.1%
Banking 9.4%
ABN AMRO Bank (Chicago),
N.V., Gtd. Sub. Notes
7.25%, 5/31/05 $ 250 $ 251
Banco Latinoamericano, (144a),
6.97%, 10/16/00 250 249
Chase Manhattan, Sub. Notes,
8.00%, 4/15/02 265 263
First National Bank of
Commerce (New Orleans),
Sr. Notes
6.50%, 1/14/00 300 298
Firstar, Sub. Notes, 7.15%,
9/1/00 135 136
Hartford National, Sub. Cap.
Notes, 9.85%, 6/1/99 50 53
Kansallis Osake Pankki
(New York), Sub. Notes
10.00%, 5/1/02 250 279
MBNA, Sr. Notes, 7.49%, 9/14/99 250 254
Morgan Guaranty Trust, Sub.
Notes, 7.375%, 2/1/02 250 254
Union Planters, Sub. Notes,
6.25%, 11/1/03 225 213
Westamerica Bank, Sub. Cap.
Notes, 6.99%, 9/30/03 250 239
2,489
Consumer Products 4.6%
Coca Cola Femsa, 8.95%, 11/1/06 275 267
Grand Metropolitan Investment,
Gtd. Notes, 6.50%, 9/15/99 250 249
Philip Morris, 7.25%, 9/15/01 300 300
RJR Nabisco, 8.625%, 12/1/02 250 249
TeleCommunications, Sr. Notes,
9.25%, 4/15/02 125 133
1,198
Consumer Services 1.0%
Tenet Healthcare, Sr. Sub. Notes,
8.625%, 1/15/07 275 274
274
Finance and Credit 7.3%
Advanta, MTN, 7.07%, 9/2/97 100 100
Aristar, Sr. Notes, 7.875%,
2/15/99 225 230
Ciesco, MTN, 7.38%, 4/19/00 250 256
Heller Financial, 7.875%, 11/1/99 220 226
HSBC Finance Nederland, Gtd.
Sub. Notes, (144a)
7.40%, 4/15/03 270 272
Providian, MTN, 6.92%, 5/16/00 300 301
Sunamerica, Sr. Notes, 9.00%,
1/15/99 $ 250 $ 259
USF&G, 7.00%, 5/15/98 275 277
1,921
Industrials 7.0%
Black & Decker, 5.813%, 12/20/01 450 459
Ford Motor Credit, MTN, 8.21%,
3/16/99 250 257
Freeport McMoRan, Sr. Notes,
7.00%, 2/15/08 250 239
General Motors Acceptance
Corporation, MTN
6.625%, 4/24/00 300 299
Lockheed, Deb., 9.375%, 10/15/99 85 90
Lockheed Martin, 6.55%, 5/15/99 215 214
Tenneco, 8.20%, 11/15/99 270 279
1,837
Insurance 0.7%
Chubb, Deb., 8.75%, 11/15/99 187 193
193
Investment Dealers 1.0%
Lehman Brothers, 6.75%, 5/24/99 250 250
250
Media and Communications 1.9%
Lucent Technologies, 6.90%,
7/15/01 250 250
NWCG Holdings, Sr. Secured
Disc. Notes
Zero Coupon, 6/15/99 300 259
509
Petroleum 1.3%
Occidental Petroleum, MTN,
5.90%, 11/9/98 125 124
PDV America, Sr. Notes, 7.25%,
8/1/98 225 225
349
Retail 2.9%
Dayton Hudson, 9.40%, 2/15/01 275 295
Rite Aid, 6.70%, 12/15/01 200 197
Sears Roebuck & Co., MTN, 8.23%,
5/4/99 275 283
775
Transportation 3.8%
Burlington Northern, 7.40%,
5/15/99 150 152
Delta Air Lines, Deb., 9.60%,
5/26 - 6/1/00 197 209
Federal Express, 6.25%, 4/15/98 $ 250 $ 250
Qantas Airways Ltd., Sr. Notes,
7.50%, 6/30/03 150 152
Union Pacific, 7.00%, 6/15/00 250 250
1,013
Utilities 5.2%
Consumers Energy, 1st Ref. Mtg.
Bonds, 6.875%, 5/1/98 152 152
Midamerican Energy, Sr. Notes,
6.50%, 12/15/01 250 245
Orange & Rockland Utilities,
Deb., 6.14%, 3/1/00 250 245
Pacific Gas & Electric, 1st Mtg.
Bonds, 8.75%, 1/1/01 250 265
Progress Capital Holdings, MTN,
(144a), 6.88%, 8/1/01 250 248
System Energy Resources, 1st Mtg.
Notes, 7.625%, 4/1/99 215 217
1,372
Total Corporate Bonds and Notes
(Cost $12,303) 12,180
WARRANTS 0.0%
President Casinos, (144a),
9/30/99 *!# 1 0
Total Warrants (Cost $3) 0
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 24.6%
U.S. Government Agency Obligations 16.9%
Federal Home Loan Mortgage
10.75%, 12/1/09 147 161
5 year balloon
5.00%, 6/1/99 267 263
6.00%, 4/1/99 361 360
7 year balloon
6.50%, 12/1/99 537 536
7.00%, 5/1/99 440 442
REMIC
6.75%, 10/15/03 500 497
6.80%, 4/15/18 300 300
7.00%, 3/15/08 330 331
7.45%, 10/15/15 88 88
7.50%, 9/15/06 459 466
Federal National Mortgage Assn.
7.00%, 4/1/09 $ 406 $ 405
REMIC
6.50%, 5/25/04 400 400
7.50%, 8/25/05 209 209
4,458
U.S. Government Guaranteed
Obligations 7.7%
Government National Mortgage Assn.
I, 10.00%, 11/15/09 - 10/15/21 774 850
II, 10.00%, 10/20/20 183 200
Midget, I
9.00%, 4/15 - 12/15/01 66 69
9.50%, 3/15/98 7 7
10.00%, 8/15/98 - 4/15/01 486 509
10.50%, 2/15/98 - 2/15/01 385 403
2,038
Total U.S. Government Mortgage-
Backed Securities (Cost $6,489) 6,496
U.S. GOVERNMENT OBLIGATIONS 14.6%
U.S. Government Agency Obligations 2.7%
Federal Home Loan Mortgage, 6.725%,
8/15/00 225 224
Federal National Mortgage Assn.,
7.65%, 10/6/06 500 498
722
U.S. Treasury Obligations 11.9%
U.S. Treasury Notes
6.375%, 8/15/02 750 744
6.50%, 8/31/01 - 10/15/06 900 890
6.625%, 6/30/01 1,500 1,504
3,138
Total U.S. Government Obligations
(Cost $3,873) 3,860
ASSET-BACKED SECURITIES 4.4%
Auto-Backed 0.1%
USAA Auto Loan Grantor Trust,
5.00%, 11/15/99 23 23
23
Credit Card-Backed 2.9%
American Express Master Trust,
7.15%, 8/15/99 $ 250 $ 253
Discover Credit Card, 7.85%,
11/21/00 250 254
Signet Credit Card Master
Trust, 5.20%, 2/15/02 250 246
753
Home Equity Loans-Backed 0.9%
Access Financial Mortgage Loan
Trust, 6.90%, 5/18/11 250 250
250
Receivables-Backed 0.5%
Harley Davidson Eaglemark, (144a),
6.35%, 10/15/02 125 124
124
Whole Loans-Backed 0.0%
Bear Stearns, CMO, 9.00%, 6/1/17 2 2
2
Total Asset-Backed
Securities (Cost $1,163) 1,152
MUNICIPAL BONDS 0.3%
Taxable Municipal 0.3%
University of Miami, GO, 6.90%,
4/1/04 85 83
Total Municipal Bonds (Cost
$85) 83
COMMERCIAL PAPER 7.8%
Bex America Finance, 5.54%,
5/27/97 1,000 996
Investments in Commercial Paper
through a Joint Account
5.60%, 5/1/97 1,064 1,064
Total Commercial Paper (Cost
$2,060) 2,060
Total Investments in Securities
97.8% of Net Assets (Cost
$25,976) $ 25,831
Other Assets Less Liabilities 574
NET ASSETS $ 26,405
________
Net Assets Consist of:
Accumulated net investment
income - net of distributions $ (134)
Accumulated net realized
gain/loss - net of distributions (1,632)
Net unrealized gain (loss) (145)
Paid-in-capital applicable to
5,816,858 shares of $0.0001
par value capital stock
outstanding; 1,000,000,000
shares of the Corporation
authorized 28,316
NET ASSETS $ 26,405
________
NET ASSET VALUE PER SHARE $ 4.54
________
! Private Placement
* Non-income producing
# Securities contain some restrictions as to public resale.
CMO Collateralized Mortgage Obligation
GO General Obligation
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 3.4% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
Unaudited
April 30, 1997
Statement of Net Assets
Par Value
In thousands
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 104.0%
U.S. Government Guaranteed
Obligations 91.9%
Government National Mortgage Assn.
I
6.50%, 3/15 - 5/15/26 $ 2,007 $ 1,894
7.00%, 4/15/24 - 12/15/25 918 894
7.50%, 6/15/22 - 5/15/24 2,147 2,144
8.00%, 4/15/17 - 3/15/25 2,340 2,398
8.50%, 6/15/16 - 12/15/24 2,419 2,525
9.00%, 8/15/08 - 8/15/21 756 804
9.50%, 6/15/09 - 7/15/20 682 735
10.00%, 3/15/18 76 83
10.50%, 9/15/13 - 12/15/19 1,003 1,111
11.00%, 12/15/09 - 7/15/19 178 200
11.50%, 6/15 - 12/15/15 51 59
II
9.00%, 5/20/22 - 3/20/25 598 627
9.50%, 2/20/17 - 12/20/20 265 284
10.00%, 1/20/14 - 3/20/21 214 233
11.00%, 9/20/17 40 45
GPM, I
9.25%, 7/15/16 - 7/15/17 24 25
9.50%, 7/15/09 65 70
10.00%, 8/15/13 4 4
Project Loan, I, 8.50%,
1/15/27 199 206
REMIC
6.50%, 10/16/24 3,000 2,682
7.00%, 5/16/24 3,000 2,791
TBA, I
8.00%, 7/15/20 2,000 2,029
Project Loan, 7.65%,
6/15/32 535 537
Project Loan, 7.875%,
5/15/27 461 457
U.S. Department of Veteran
Affairs, REMIC, 6.75%, 8/15/20 1,354 1,270
24,107
U.S. Government Agency Obligations 11.2%
Federal Home Loan Mortgage
5.00%, 7/15/05 $ 46 $ 45
5.85%, 11/15/17 284 282
7.50%, 12/15/19 500 505
Federal National Mortgage Assn.
5.00%, 8/25/22 16 15
6.50%, 1/1/26 483 456
CMO, VR, 11.494%, 6/25/99 686 732
REMIC
5.00%, 11/25/20 1,000 882
8.00%, 1/25/21 22 22
2,939
Stripped Mortgage Securities 0.9%
Federal National Mortgage Assn.
CMO, Interest Only, 8.50%,
4/1/22** 679 220
REMIC, Principal Only, Zero
Coupon, 9/25/98 19 18
238
Total U.S. Government Mortgage-
Backed Securities (Cost $27,323) 27,284
U.S. GOVERNMENT OBLIGATIONS 3.8%
U.S. Government Agency Obligations 3.8%
Tennessee Valley Authority
5.98%, 4/1/36 500 501
6.235%, 7/15/45 500 493
Total U.S. Government Obligations
(Cost $1,008) 994
ASSET-BACKED SECURITIES 0.2%
Home Equity Loans-Backed 0.2%
Prudential Home Mortgage
Securities, 6.00%, 10/25/07 60 59
Total Asset-Backed Securities
(Cost $60) 59
COMMERCIAL PAPER 2.7%
Investments in Commercial Paper
through a Joint Account
5.60%, 5/1/97 714 714
Total Commercial Paper (Cost $714) 714
Total Investments in Securities
110.7% of Net Assets
(Cost $29,105) $ 29,051
Other Assets Less Liabilities (2,802)
NET ASSETS $ 26,249
_______
Net Assets Consist of:
Accumulated net investment
income - net of distributions $ (143)
Accumulated net realized gain/
loss - net of distributions (480)
Net unrealized gain (loss) (54)
Paid-in-capital applicable to
2,765,317 shares of $0.0001
par value capital stock
outstanding;1,000,000,000
shares of the Corporation
authorized 26,926
NET ASSETS $ 26,249
________
NET ASSET VALUE PER SHARE $ 9.49
________
** For Interest Only securities, amount represents notional principal,
on which the fund receives interest
CMO Collateralized Mortgage Obligation
GPM Graduated Payment Mortgage
REMIC Real Estate Mortgage Investment Conduit
TBA To be announced security was purchased on a forward commitment
basis; the aggregate liability for securities purchased under such
agreements totaled 3,025,000 at 4/30/97.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Cash Reserves Fund
Unaudited
Statement of Operations
In thousands
Cash Reserves Limited-Term GNMA
Fund Bond Fund Fund
6 Months 6 Months 6 Months
Ended Ended Ended
4/30/97 4/30/97 4/30/97
Investment Income
Income
Interest income $ 25,373 $ 921 $ 966
Expenses
Investment
management and
administrative 2,058 74 76
Net investment
income 23,315 847 890
Realized and
Unrealized Gain
(Loss)
Net realized gain
(loss) on
securities (3) (106) (150)
Change in net
unrealized gain
or loss on
securities - (255) (267)
Net realized and
unrealized gain
(loss) (3) (361) (417)
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS $ 23,312 $ 486 $ 473
___________________________________
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Cash Reserves Fund
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/97 10/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income $ 23,315 $ 30,193
Net realized gain (loss) (3) 6
Change in net unrealized
gain or loss - 61
Increase (decrease) in
net assets from
operations 23,312 30,260
Distributions to shareholders
Net investment income (23,315) (30,193)
Capital share transactions*
Shares sold 1,036,444 1,150,499
Distributions reinvested 22,123 28,318
Shares redeemed (745,681) (870,787)
Increase (decrease) in net
assets from capital
share transactions 312,886 308,030
Net Assets
Increase (decrease) during period 312,883 308,097
Beginning of period 741,561 433,464
End of period $ 1,054,444 $ 741,561
_______________________
*Share information
Shares sold 1,036,444 1,150,499
Distributions reinvested 22,123 28,318
Shares redeemed (745,681) (870,787)
Increase (decrease) in
shares outstanding 312,886 308,030
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/97 10/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income $ 847 $ 1,685
Net realized gain (loss) (106) (235)
Change in net unrealized
gain or loss (255) (88)
Increase (decrease) in net
assets from operations 486 1,362
Distributions to shareholders
Net investment income (847) (1,601)
Tax return of capital - (84)
Decrease in net assets
from distributions (847) (1,685)
Capital share transactions*
Shares sold 7,167 14,004
Distributions reinvested 652 1,266
Shares redeemed (7,037) (15,967)
Increase (decrease) in net
assets from capital
share transactions 782 (697)
Net Assets
Increase (decrease) during
period 421 (1,020)
Beginning of period 25,984 27,004
End of period $ 26,405 $ 25,984
_______________________
*Share information
Shares sold 1,566 3,032
Distributions reinvested 143 275
Shares redeemed (1,543) (3,458)
Increase (decrease) in
shares outstanding 166 (151)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/97 10/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income $ 890 $ 1,611
Net realized gain (loss) (150) (274)
Change in net unrealized
gain or loss (267) (68)
Increase (decrease) in net
assets from operations 473 1,269
Distributions to shareholders
Net investment income (890) (1,495)
Tax return of capital - (116)
Decrease in net assets from
distributions (890) (1,611)
Capital share transactions*
Shares sold 7,398 11,792
Distributions reinvested 637 1,130
Shares redeemed (6,087) (10,639)
Increase (decrease) in net
assets from capital
share transactions 1,948 2,283
Net Assets
Increase (decrease) during period 1,531 1,941
Beginning of period 24,718 22,777
End of period $ 26,249 $ 24,718
____________________
*Share information
Shares sold 772 1,218
Distributions reinvested 67 117
Shares redeemed (636) (1,094)
Increase (decrease) in
shares outstanding 203 241
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Income Funds
Unaudited April 30, 1997
Notes to Financial Statements
Note 1 - Significant Accounting Policies
T. Rowe Price Summit Income Funds, Inc. (the corporation) is registered under
the Investment Company Act of 1940. The Summit Cash Reserves Fund (the Cash
Reserves Fund), the Summit Limited-Term Bond Fund (the Limited-Term Bond
Fund), and the Summit GNMA Fund (the GNMA Fund), diversified, open-end
management investment companies, are the three portfolios established by the
corporation and commenced operations on October 29, 1993.
Valuation Debt securities are generally traded in the over-the-counter
market. Except for securities held by the Cash Reserves Fund, investments in
securities originally issued with 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 held by the bond
funds with original maturities of 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. Securities held by the Cash
Reserves Fund are valued at amortized cost.
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 that fund, as authorized by the Board of Directors.
Premiums and Discounts Premiums and discounts on debt securities, other than
mortgage-backed securities, are amortized for both financial reporting and
tax purposes. Premiums and discounts on mortgage-backed securities are
recognized upon principal repayment as gain or loss for financial reporting
purposes and as ordinary income for tax purposes.
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 each fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
Note 2 - Investment Transactions
Commercial Paper Joint Account
The Limited-Term Bond Fund, the GNMA Fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy each fund's criteria as to
quality, yield, and liquidity.
Other Purchases and sales of portfolio securities, other than short-term
securities, for the six months ended April 30, 1997, were as follows:
Limited-Term GNMA
Bond Fund Fund
U.S. government securities
Purchases $ 4,285,000 $ 19,484,000
Sales 6,688,000 16,936,000
Other securities
Purchases 6,084,000 -
Sales 4,636,000 8,000
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 all of
its taxable income. The Limited-Term Bond Fund has unused realized capital
loss carryforwards for federal income tax purposes of $1,527,000, of which
$1,016,000 expires in 2002, $354,000 in 2003, and $157,000 in 2004. The GNMA
Fund has unused realized capital loss carryforwards for federal income tax
purposes of $330,000, of which $187,000 expires in 2003, and $143,000 in
2004. Each fund intends to retain gains realized in future periods that may
be offset by available capital loss carryforwards.
At April 30, 1997, the aggregate costs of investments for the Cash Reserves,
Limited-Term Bond, and GNMA Funds for federal income tax and financial
reporting purposes were $1,051,609,000, $25,976,000, and $29,105,000,
respectively. For the Cash Reserves Fund, amortized cost is equivalent to
value; and for the Limited-Term Bond and GNMA Funds, net unrealized gain
(loss) on investments was as follows:
Limited-Term GNMA
Bond Fund Fund
Appreciated investments $ 57,000 $ 370,000
Depreciated investments (202,000) (424,000)
Net unrealized gain (loss) $ (145,000) $ (54,000)
Note 4 - Related Party Transactions
The investment management and administrative agreement between each fund and
T. Rowe Price Associates, Inc. (the manager) provides for an all-inclusive
annual fee, of which $306,000 was payable at April 30, 1997 by the Cash
Reserves Fund. The fee, computed daily and paid monthly, is equal to 0.45%
of average daily net assets for the Cash Reserves Fund, 0.55% of average
daily net assets for the Limited-Term Bond Fund, and 0.60% of average daily
net assets for the GNMA Fund. Pursuant to the agreement, investment
management, shareholder servicing, transfer agency, accounting, and custody
services are provided to each fund, and interest, taxes, brokerage
commissions, and extraordinary expenses are paid directly by each fund.
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(registered trademark):
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
www.troweprice.com
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 of the
T. Rowe Price Summit Income Funds.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
Invest With Confidence(registered trademark)
T. Rowe Price
T. Rowe Price Investment Services, Inc., Distributor.
C10-051 04/30/97
Chart 1 - Interest Rate Levels - A 3-line chart showing interest rates on the
current coupon GNMA, 5-year Treasury note, and 90-day Treasury bill from
4/30/96 to 4/30/97
Chart 2 - Quality Diversification - A pie chart showing diversification of
assets by credit quality as of 4/30/97.
Chart 3 - SEC Graph: a line chart showing the cumulative growth of $10,000
invested in the Summit Cash Reserves Fund from inception compared with
$10,000 invested in a broad-based index or average over the same period.
Chart 4 - SEC Graph: a line chart showing the cumulative growth of $10,000
invested in the Summit Limited-Term Bond Fund from inception compared with
$10,000 invested in a broad-based index or average over the same period.
Chart 5 - SECGraph: a line chart showing the cumulative growth of $10,000
invested in the Summit GNMA Fund from inception compared with $10,000
invested in a broad-based index or average over the same period.
