Annual Report
Summit
Income
Funds
October 31, 1999
T. Rowe Price
REPORT HIGHLIGHTS
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Summit Income Funds
o Interest rates rose during the six months ended October 31, 1999, aiding
money market results but hurting bonds.
o Summit Cash Reserves Fund achieved solid performance as low expenses helped
its yield exceed that of its peer group average.
o Income helped Summit Limited-Term Bond Fund exceed its peer group's average
returns despite weakness in some corporate holdings.
o Mortgage-backed securities struggled, leading to lackluster returns for the
Summit GNMA Fund.
o We are focusing on providing attractive yields while maintaining liquidity
in our portfolios as we approach year-end.
Fellow Shareholders
The U.S. economy continued its remarkable run of strong, steady growth
during the six and 12 months ended October 31, 1999, and signs of inflation
were modest. Nonetheless, the Federal Reserve raised the federal funds
target rate twice, and interest rates overall rose significantly. Money
market funds largely benefited, while bond funds posted comparatively weak
results. The performance of the Summit Funds reflected these trends.
MARKET ENVIRONMENT
There was little doubt during either the past six or 12 months that the
U.S. economy was on solid footing. Annual GDP data have painted an
attractive picture, with growth rates fluctuating between 3.5% and 4.5% for
nearly three years now. Moreover, the consumer and producer price indices
(CPI and PPI), the most commonly reported inflation figures, have generally
appeared subdued. During the past spring and summer, however, economic data
hinted at an increase in inflationary pressure. Persistently low
unemployment figures suggested uncomfortably tight labor markets, and the
prices of raw materials and intermediate goods (so-called "pipeline"
prices) showed signs of increasing. Although price increases for finished
goods and services remained in check, the engines of that
inflation-including strong consumer spending fueled by rising stock markets
and home prices, improved productivity, and faster information flow due to
the Internet-have remained in high gear.
Interest Rate Levels
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Current 5-Year 90-day
Coupon Treasury Treasury
GNMA Note Bill
10/31/98 6.25 4.22 4.21
6.25 4.62 4.58
6.26 4.59 4.55
1/99 6.22 4.56 4.47
6.70 5.11 4.65
6.65 5.12 4.47
4/99 6.68 5.15 4.51
7.05 5.51 4.65
7.27 5.76 4.77
7/99 7.61 5.75 4.71
7.77 5.71 4.97
7.48 5.81 4.88
10/31/99 7.51 6.09 5.13
The Fed had largely been staying on the sidelines, concerned that a U.S.
rate hike would put untenable pressure on fragile foreign economies in the
wake of the 1998 global currency and liquidity crisis. However, an
improving outlook overseas combined with evidence of inflationary pressure
prompted a change in direction. The Fed first adopted a tightening bias in
its monetary policy, then raised the federal funds target rate in June and
August, by a total of one-half a percentage point. After the conclusion of
the period, the Fed raised rates by another 0.25%. As of this writing, the
target rate has returned to its level of August 1998, just before the Fed
cut rates three-quarters of a percent to alleviate the global financial
crisis.
The market largely anticipated these moves, pushing rates on intermediate
and long bonds higher throughout the year. For example, five-year Treasury
note yields climbed 187 basis points to 6.09% by October 31 from one year
earlier (100 basis points equal one percentage point). Short-term rates did
not climb as rapidly for the year as a whole-the yield on 90-day Treasury
bills rose less than 100 basis points over the same period-but made up
ground on other segments of the bond market toward the end of the period.
Yields on money market funds benefited from the increase in short-term
rates.
Rates rose among mortgage-backed securities as well. Thirty-year mortgage
rates, for example, rose from 6.93% to 7.96% in the six months ended
October 31, and reached a two-year high of 8.15% in August. During that
time, the spread (difference) between mortgage and Treasury rates also
widened by 15 basis points. Current coupon GNMAs now yield 148 basis points
more than 10-year Treasuries, although they were yielding as much as 182
basis points more in August. This attractive yield advantage helped the
overall sector outperform intermediate and long Treasuries by a modest
degree.
The rising interest rate environment was not the only challenge the bond
markets faced. In the past several months, Wall Street broker-dealers have
cut back their bond market activities in advance of year-end by reducing
bond inventories and committing less capital to market-making (that is,
buying and selling existing issues for clients). As a result, liquidity
declined significantly after midyear and is likely to stay somewhat thin
through year-end. Reduced liquidity exaggerated volatility in the markets,
especially in response to negative surprises, and made it more difficult
for money managers to trade efficiently. The trend also created supply and
demand imbalances that hurt issues with relatively high yields, including
corporate and mortgage-backed bonds. However, mortgages improved after
August and now are among the more liquid bonds in the marketplace.
SUMMIT CASH RESERVES FUND
Performance Comparison
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Periods Ended 10/31/99 6 Months 12 Months
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Cash Reserves Fund 2.40% 4.87%
Lipper Money Market
Funds Average 2.21 4.41
Your fund posted good 6- and 12-month returns of 2.40% and 4.87%,
respectively. These results surpassed the 2.21% and 4.41% gains for the
Lipper Money Market Funds Average by a notable margin. The fund once again
benefited from a yield advantage over its average competitor, the result of
its low expenses as well as an investment focus on income. At 0.45% per
year, fund expenses are lower than 91% of the 294 funds in its Lipper
category.
Rising interest rates during the period prompted a modest shift in our
investment strategy. Earlier in the fiscal year, rates had been relatively
low and the fund's dividend yield had been slipping as a result. As we
noted in the last shareholder report, our strategy at the time was to
capture the higher yields at the longer end of the money market universe by
maintaining an average maturity 10 to 15 days longer than our average peer.
With rates rising, however, the dividend yield has been climbing during the
last six months. We therefore reduced the portfolio's weighted average
maturity from 74 days on April 30, 1999, to a more neutral 62 days on
October 31, 1999. As long as the Fed is likely to continue raising interest
rates, we will preserve an average maturity that is generally equal to or
shorter than the average money market fund.
We made only minor changes to the portfolio's sector positioning. The only
change of significance was to increase our stake in asset-backed
securities. We are attracted to these holdings because they are extremely
high-quality, liquid securities that are securely collateralized by
receivables or other assets. They add to the fund's diversification, and we
expect they will provide added protection and flexibility as we prepare to
pass through the year-end.
We increased fund exposure to floating rate notes from 15% of assets at the
end of April to 32% at the end of October. Issuance of these securities
increased dramatically during the middle of the year as they became a
popular form of Year 2000 financing. The increased supply forced issuers to
price their offerings somewhat more attractively than in the last couple of
years to attract buyers. Floating rate issues are designed so that their
coupons track rate changes relatively quickly-a benefit to shareholders
when rates are rising.
SUMMIT LIMITED-TERM BOND FUND
Performance Comparison
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Periods Ended 10/31/99 6 Months 12 Months
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Limited-Term Bond Fund 0.42% 1.06%
Lipper Short Intermediate
Investment-Grade
Debt Funds Average 0.38 1.44
Your fund's 0.42% six-month total return edged ahead of the 0.38% move for
the Lipper peer group average. Although the return was modest and
outperformance was slight, it represented a recovery from a somewhat weaker
relative result in the first half of the year, when above average interest
rate sensitivity caused the fund to lag its peers. Those results are
reflected in the 1.06% 12-month return, which stayed behind Lipper. Because
rising interest rates caused a decline in the fund's share price for both
periods, gains came entirely from income. Low expenses-the 0.55% expense
ratio is firmly in the least costly quartile of the 83-fund Lipper peer
group-once again helped the fund achieve a relatively generous income
stream.
Because of the rising interest rate environment, we gradually reduced fund
duration during the six-month period from 3.2 years to 3.0 years. (Duration
is a measure of interest rate sensitivity where higher numbers reflect a
greater potential negative response to a rise in rates, and vice versa.)
The fund remains somewhat more rate sensitive than its average peer, but
longer durations are generally associated with better yields, and we feel
that this duration level reflects an appropriate balance between the costs
of rate sensitivity and the benefits of better yields. Although rates rose
sharply during the past six months, they have yet to show up as increases
in the fund's dividend payment. Dividend income tends to lag a rise in
market rates, and, assuming rates do not again fall sharply, we anticipate
higher distributions in the coming period.
As explained in the last report, we trimmed exposure to corporate bonds
from 56% to 44% earlier in the year. This move proved beneficial: corporate
securities (and lower-rated securities in particular) underperformed
throughout most of the summer because of poor market liquidity and the lack
of Wall Street sponsorship. During August and September we saw an
opportunity to take advantage of values created by the liquidity crunch and
began to rebuild our corporate position, raising it to 47% of assets. Among
the bonds we added were Johnson & Johnson, Wal-Mart, and US West. As a
result of these moves, holdings in Treasuries declined while, within the
corporate sector, consumer issues increased from 11% to 13% and the media
and telecom issues rose from 3% to 4%.
Quality diversification reflected our renewed interest in corporates. The
percentage of assets in AAA securities declined from 44% to 38% during the
period, while AA and A holdings both climbed. Nonetheless, average
portfolio credit quality did not change, remaining at a solid AA.
Quality Diversification pie
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Summit Limited-Term Bond Fund
AAA AA A BBB BB
38 16 23 21 2
Not all of the fund's investments worked out favorably. In particular, some
of our corporate holdings weakened as their issuers encountered problems.
In August, we purchased the debt of Rite-Aid, but the firm's surprise
downward earnings revisions and management upheaval disappointed investors,
drew SEC attention, and resulted in rating agency downgrades to below
investment grade. We continue to hold these bonds because we think the
market has become overly pessimistic in its evaluation. Rite-Aid has a
viable business as the nation's third-largest drug store chain, and new
management is taking aggressive action to restore the company's financial
health. Other holdings have come under pressure and may weigh down returns
in the coming months. These include Waste Management/USA Waste Services (at
1.25% of assets) and Raytheon (at 0.89% of assets), both of which
experienced earnings difficulties associated with recent merger activity.
Although these investments increased price volatility in recent months, we
are not giving up on them. They contribute significantly to an attractive
dividend yield that we believe will benefit shareholders over the long
term.
SUMMIT GNMA FUND
Performance Comparison
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Periods Ended 10/31/99 6 Months 12 Months
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GNMA Fund -0.32% 1.39%
Lipper GNMA Funds Average -0.18 1.48
A difficult market environment overall proved challenging to your fund
during the past six months. Our -0.32% total return for the period fell
slightly behind the -0.18% result of the Lipper GNMA Funds Average, and
accounted for a modestly lagging 12-month performance as well. Healthy
dividend distributions, aided by low expenses, helped compensate for a
$0.34 decline in the fund's share price between April 30 and October 31.
The fund's 0.60% expense ratio is in the lowest quartile of the 48 funds in
its Lipper peer group.
Your fund's returns reflected the continually rising interest rate
environment of the last six months. In addition, the mortgage market (along
with other relatively high-yielding investments) faced an additional
challenge of supply and demand. The liquidity crunch described in the
Market Environment section limited the number of buyers, especially in
August, when it temporarily appeared that no one was interested in buying
or holding these issues.
This was especially true of many of the kinds of "structured" products we
hold in the portfolio. While we have reduced our holdings in recent months,
we have for many quarters kept a stake in these securities, which include
collateralized mortgage obligations (CMOs), project loans, construction
loans, and jumbos, because they help protect performance against
fluctuating prepayments during unsettled interest rate environments.
(Prepayments can negatively affect total return when homeowners refinance
their high-rate mortgages, causing premium-priced mortgage-backed bonds to
be cashed out at par. In that case, the premium and the higher yield are
lost.) These holdings aided returns during the first half of the fiscal
year. However, even though the securities we held remained fundamentally
solid, they were hard hit and difficult to sell when liquidity disappeared
from the market and helped pull down our relative performance. Fortunately,
the liquidity crunch improved significantly as the period was coming to a
close. Still, although we continue to like structured products as an
investment tool, we took incremental steps to improve the portfolio's
liquidity by reducing our exposure where possible.
Rising rates and falling prepayments caused the fund's duration to climb
from 4.0 years to 5.0 years during the past six months, although it
remained neutral compared with our Lipper benchmark. Mortgage durations
typically go up when interest rates rise because the likelihood of
refinancing declines. As always, the credit quality of the portfolio
remained very high.
OUTLOOK
Interest rates could move higher in coming months because of persistent
strength in the domestic economy and economic recovery overseas. The Fed is
keeping a close eye on inflationary pressures, particularly in the labor
markets. However, the Fed is also interested in maintaining liquid and
orderly markets as we approach the end of the year and the transition to
2000, which could serve to moderate future rate increases. These
crosscurrents do not argue for an aggressive posture regarding interest
rates. At present, we are focusing on the higher yields available in the
marketplace and on maintaining liquidity and flexibility in our portfolios.
Respectfully submitted,
Edward A. Wiese
President
November 19, 1999
T. Rowe Price Summit Income Funds
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Portfolio Highlights
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KEY STATISTICS
4/30/99 10/31/99
Summit Cash Reserves Fund
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Price Per Share $ 1.00 $ 1.00
Dividends Per Share
For 6 months 0.024 0.024
For 12 months 0.050 0.048
Dividend Yield (7-Day Compound) * 4.70% 5.24%
Weighted Average Maturity (days) 74 62
Weighted Average Quality ** First Tier First Tier
Summit Limited-Term Bond Fund
Price Per Share $ 4.59 $ 4.48
Dividends Per Share
For 6 months 0.13 0.13
For 12 months 0.27 0.26
Dividend Yield *
For 6 months 5.71% 5.81%
For 12 months 5.91 5.92
30-Day Standardized Yield 5.53 6.37
Weighted Average Maturity (years) 3.9 3.7
Weighted Average Effective Duration (years) 3.2 3.0
Weighted Average Quality *** AA AA
(continued on next page)
T. Rowe Price Summit Income Funds
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Portfolio Highlights
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KEY STATISTICS
4/30/99 10/31/99
Summit GNMA Fund
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Price Per Share $ 9.73 $ 9.39
Dividends Per Share
For 6 months 0.31 0.31
For 12 months 0.63 0.61
Dividend Yield *
For 6 months 6.44% 6.62%
For 12 months 6.58 6.75
30-Day Standardized Yield 5.98 6.42
Weighted Average Maturity (years) 7.5 9.1
Weighted Average Effective Duration (years) 4.0 5.0
Weighted Average Quality *** AAA AAA
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the fund's net asset values per share at the end of the
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.
T. Rowe Price Summit Income Funds
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Portfolio Highlights
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SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
4/30/99 10/31/99
Summit Cash Reserves Fund
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U.S. Negotiable Bank Notes 7% 9%
Certificates of Deposit 28 26
Domestic Negotiable CDs 4 5
Eurodollar Negotiable CDs 14 13
U.S. Dollar Denominated
Foreign Negotiable CD 10 8
Commercial Paper and Medium-Term Notes 59 61
Asset-Backed 19 26
Banking 13 13
Insurance 4 4
Auto and Related 1 3
Petroleum 4 2
All Other 18 13
Foreign Government and Municipalities 1 --
Funding Agreements 4 3
Other Assets Less Liabilities 1 1
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Total 100% 100%
Fixed Rate Obligations 85 68
Floating Rate Instruments 15 32
(continued on next page)
T. Rowe Price Summit Income Funds
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Portfolio Highlights
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SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
4/30/99 10/31/99
Summit Limited-Term Bond Fund
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Corporate Bonds and Notes 44% 47%
Consumer Products and Services 11 13
Banking and Finance 9 10
Industrial 9 9
Utilities 8 8
Media and Communications 3 4
All Other 4 3
Asset-Backed Securities 12 12
Mortgage-Backed Securities 17 18
U.S. Government Obligations 22 18
U.S. Treasuries 14 10
Government Agency Obligations 8 8
Money Market Funds* 5 5
Other Assets Less Liabilities -- --
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Total 100% 100%
Summit GNMA Fund
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GNMA 91% 92%
U.S. Government Agencies 8 3
Asset-Backed Securities 3 3
Agency-Backed STRIPS 1 1
Money Market Funds* 8 3
Other Assets Less Liabilities -11 -2
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Total 100% 100%
*See note at end of financial statements.
T. Rowe Price Summit Income Funds
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Performance Comparison
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These charts show the value of a hypothetical $25,000 investment in the
funds 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.
SEC charts - SUMMIT CASH RESERVES FUND
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Lipper
Money Market Summit Cash
Funds Average Reserves Fund
10/29/93 25.000 25.000
10/94 25.823 25.901
10/95 27.203 27.372
10/96 28.545 28.803
10/97 29.965 30.337
10/98 31.480 31.961
10/99 32.910 33.518
SEC charts - SUMMIT LIMITED-TERM BOND FUND
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Merrill Lynch Lipper Short
1-5 Year Intermediate
Corporate and Investment- Summit
Government Grade Debt Limited-Term
Bond Index Funds Average Bond Fund
10/29/93 25.000 25.000 25.000
10/94 24.987 24.485 24.822
10/95 27.606 27.109 26.649
10/96 29.240 28.613 28.109
10/97 31.266 30.531 30.002
10/98 33.905 32.639 32.393
10/99 34.665 33.153 32.735
SEC charts - SUMMIT GNMA FUND
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Lipper
Salomon GNMA Summit
GNMA Funds GNMA
Index Average Fund
10/29/93 25.000 25.000 25.000
10/94 24.648 24.250 24.583
10/95 28.322 27.715 28.375
10/96 30.357 29.321 29.928
10/97 33.103 31.831 32.673
10/98 35.457 34.036 34.991
10/99 36.589 34.597 35.479
Average Annual Compound Total Return
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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.
Since Inception
Periods Ended 10/31/99 1 Year 3 Years 5 Years Inception Date
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Summit Cash Reserves Fund 4.87% 5.18% 5.29% 5.00% 10/29/93
Summit Limited-Term Bond 1.06 5.21 5.69 4.59 10/29/93
Summit GNMA Fund 1.39 5.84 7.61 6.00 10/29/93
Investment return represents past performance and will vary. Shares of the
bond funds may be worth more or less at redemption than at original
purchase. Investments in the money fund are not insured or guaranteed by
the FDIC or any other government agency. Although it seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose money
by investing in the fund.
T. Rowe Price Summit Cash Reserves Fund
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Financial Highlights For a share outstanding throughout each period
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Year
Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment activities
Net investment income 0.048 0.052 0.052 0.051 0.055
Distributions
Net investment income (0.048) (0.052) (0.052) (0.051) (0.055)
NET ASSET VALUE
End of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) 4.87% 5.35% 5.33% 5.23% 5.68%
Ratio of total expenses
to average net assets 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment
income to average
net assets 4.78% 5.24% 5.18% 5.09% 5.55%
Net assets, end of period
(in millions) $ 2,441 $ 1,885 $ 1,303 $ 742 $ 433
(diamond) 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.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
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Financial Highlights For a share outstanding throughout each period
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Year
Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $ 4.69 $ 4.61 $ 4.60 $ 4.65 $ 4.64
Investment activities
Net investment income 0.26 0.28 0.29 0.30 0.32
Net realized and
unrealized gain (loss) (0.21) 0.08 0.01 (0.05) 0.01
Total from
investment activities 0.05 0.36 0.30 0.25 0.33
Distributions
Net investment income (0.26) (0.28) (0.28) (0.29) (0.31)
Tax return of capital -- -- (0.01) (0.01) (0.01)
Total distributions (0.26) (0.28) (0.29) (0.30) (0.32)
NET ASSET VALUE
End of period $ 4.48 $ 4.69 $ 4.61 $ 4.60 $ 4.65
-----------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) 1.06% 7.97% 6.73% 5.48% 7.36%
Ratio of total expenses
to average net assets 0.55% 0.55% 0.55% 0.55% 0.55%
Ratio of net investment
income to average
net assets 5.65% 5.96% 6.28% 6.43% 6.85%
Portfolio turnover rate 42.2% 52.0% 74.5% 116.1% 84.3%
Net assets, end of period
(in thousands) $ 52,992 $ 40,904 $ 29,620 $ 25,984 $ 27,004
(diamond) 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.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
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Financial Highlights
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For a share outstanding throughout each period
Year
Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $ 9.87 $ 9.83 $ 9.65 $ 9.81 $ 9.15
Investment activities
Net investment income 0.61 0.64 0.67 0.67 0.70
Net realized and
unrealized gain (loss) (0.48) 0.04 0.18 (0.16) 0.66
Total from
investment activities 0.13 0.68 0.85 0.51 1.36
Distributions
Net investment income (0.61) (0.64) (0.64) (0.62) (0.67)
Tax return of capital -- -- (0.03) (0.05) (0.03)
Total distributions (0.61) (0.64) (0.67) (0.67) (0.70)
NET ASSET VALUE
End of period $ 9.39 $ 9.87 $ 9.83 $ 9.65 $ 9.81
----------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) 1.39% 7.10% 9.17% 5.47% 15.43%
Ratio of total expenses
to average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment
income to average
net assets 6.41% 6.47% 6.91% 6.99% 7.40%
Portfolio turnover rate 89.9% 83.8% 111.8% 136.1% 173.8%
Net assets,
end of period
(in thousands) $ 63,843 $ 46,571 $ 29,530 $ 24,718 $ 22,777
(diamond) 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.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Cash Reserves Fund
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October 31, 1999
Statement of Net Assets Par Value
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In thousands
BANK NOTES 9.4%
Comerica Bank, VR
5.358%, 11/15/99 $ 15,000 $ 14,995
5.42%, 11/1/99 8,000 7,997
FCC National Bank
5.05%, 12/24/99 28,750 28,750
5.80%, 2/25/00 12,000 11,993
First Tennessee Bank, VR,
5.368%, 11/17/99 20,000 19,994
First Union National Bank,
VR, 5.498%, 11/23/99 20,000 20,000
Kansallis-Osake-Pankki,
6.375%, 8/15/00 10,000 10,034
Key Bank North America,
VR, 5.453%, 5/26/00 15,000 14,995
National City Bank,
VR, 5.429%, 9/29/00 25,000 24,982
Southtrust Bank,
VR, 5.43%, 10/4/00 15,000 14,990
U.S. Bank, VR,
5.358%, 11/17/99 25,000 24,990
Wachovia Bank
5.01%, 11/19/99 10,000 10,000
VR, 5.371%, 11/5/99 20,000 20,000
Westpac Banking, VR,
5.435%, 11/4/99 5,000 4,997
Total Bank Notes (Cost $228,717) 228,717
CERTIFICATES OF DEPOSIT 25.6%
ABBEY National
(London)
5.30%, 12/21/99 14,000 14,000
5.44%, 12/31/99 29,000 29,001
ABN AMRO
4.99%, 11/18/99 25,000 25,000
(London), 4.95%, 11/12/99 9,000 8,999
Banco Bilbao Vizcaya,
5.60%, 6/12/00 19,900 19,895
Bank of Austria,
5.01%, 12/22/99 10,000 10,000
Barclays Bank PLC
(London)
5.01%, 12/30/99 10,000 9,994
5.26%, 12/20/99 25,000 25,001
Bayerische Landesbank Girozentrale
(London) 4.96%, 11/17/99 9,000 9,000
Canadian Imperial Bank of Commerce,
5.27%, 3/3/00 500 498
Commerzbank
5.085%, 2/16/00 $ 500 $ 498
5.90%, 8/9/00 10,000 9,992
Credit Agricole Indosuez
VR
5.39%, 11/1/99 20,000 19,981
5.44%, 12/14/99 15,000 15,000
Credit Communal De Belgique, VR,
5.496%, 11/29/99 20,000 19,992
Dresdner Bank AG, VR,
5.379%, 11/23/99 20,000 19,994
First National Bank of Maryland, VR,
5.363%, 11/18/99 15,000 14,997
First Union National Bank, VR,
5.566%, 11/29/99 4,000 4,000
Fleet National Bank, VR,
5.374%, 11/8/99 15,000 14,999
Halifax
5.02%, 11/18/99 10,000 10,000
5.14%, 12/6/99 44,000 44,004
Huntington National Bank,
6.26%, 10/27/00 10,000 9,996
Internationale Nederlanden Bank, N.V.,
4.975%, 11/10/99 22,000 21,999
Lloyds Bank,
5.42%, 12/29/99 20,000 20,001
Merita Bank PLC
6.09%, 10/10/00 10,000 9,996
6.16%, 1/28/00 13,000 13,000
National Westminster Bank PLC,
5.29%, 12/27/99 9,900 9,900
Norddeutsche Landesbank
Girozentrale (London)
5.29%, 12/29/99 25,000 25,001
Skandinaviska Enskilda Banken, VR,
5.389%, 11/24/99 10,000 9,998
Societe Generale, VR,
5.363%, 11/16/99 20,000 19,994
Svenska Handelsbanken
5.28%, 3/3/00 500 498
5.30%, 12/30/99 10,000 10,000
UBS AG
5.29%, 5/22/00 500 497
5.51%, 6/5/00 10,000 9,998
6.01%, 8/14/00 10,000 9,996
Unibank A/S,
5.92%, 8/7/00 10,000 9,997
Union Bank of California,
5.05%, 12/13/99 23,700 23,700
Westdeutsche Landesbank
Girozentrale (London)
5.42%, 11/23/99 30,000 30,000
Wilmington Trust,
6.23%, 10/23/00 $ 20,000 $ 19,987
World Savings Bank,
5.33%, 11/24/99 45,303 45,303
Total Certificates of Deposit (Cost $624,706) 624,706
COMMERCIAL PAPER 43.7%
Albertsons, VR, 4(2),
5.386%, 11/16/99 10,000 9,997
Alliance & Leicester, 4(2),
4.91%, 11/19/99 4,000 3,990
Alpine Securitization Corp., 4(2)
5.37%, 11/10/99 15,942 15,920
6.07%, 1/25/00 4,000 3,943
6.10%, 1/31/00 25,600 25,205
American Express Credit,
5.16%, 12/23/99 1,350 1,340
American Home Products, 4(2),
5.75%, 3/31/00 10,000 9,759
American Petrofina Holding, 4(2),
5.33%, 11/16/99 25,000 24,944
AON
5.38%, 11/4/99 12,000 11,995
5.42%, 11/1/99 13,012 13,012
Asset Securitization Cooperative Corp., 4(2)
5.35%, 11/16/99 17,300 17,261
VR, 5.543%, 12/20/99 30,000 30,000
AT&T, VR, 4(2),
6.136%, 1/13/00 30,000 29,992
BBL North America, 4(2),
5.35%, 12/6/99 20,000 19,896
Beta Finance Inc., 4(2),
5.78%, 3/20/00 5,000 4,888
Cades, 4.80%, 12/23/99 8,800 8,739
CBA Delaware Finance,
4.93%, 11/10/99 8,000 7,990
Coca Cola, 4(2),
5.33%, 11/9/99 20,000 19,976
Corporate Asset Funding, VR, 4(2),
5.421%, 11/5/99 20,000 20,000
Corporate Receivables Corp., VR, 4(2),
5.426%, 11/15/99 30,000 30,000
Credit Suisse First Boston, 4(2)
4.895%, 11/17/99 10,700 10,677
5.407%, 11/22/99 21,000 21,000
Delaware Funding, 4(2)
5.38%, 12/13/99 5,000 4,968
5.88%, 1/20/00 16,325 16,112
Den Danske Corp.,
5.12%, 12/23/99 10,000 9,926
Dexia CLF Finance, 4(2)
5.35%, 12/15/99 15,000 14,902
5.40%, 12/23/99 2,000 1,984
Enterprise Funding Corp., 4(2)
5.38%, 11/22 - 12/3/99 $ 17,591 $ 17,530
Falcon Asset Securitization, 4(2)
5.38%, 11/8 - 11/12/99 15,685 15,665
5.40%, 11/16 - 11/22/99 53,500 53,354
6.15%, 1/13/00 15,900 15,702
FCAR Owner Trust,
5.35%, 12/23/99 3,973 3,942
Finova Capital, VR,
5.503%, 11/15/99 10,000 10,000
Generale Funding, LLC, 4(2),
5.145%, 12/27/99 10,000 9,920
Golden Funding Corp., 4(2)
5.40%, 11/19/99 - 3/3/00 19,500 19,448
5.83%, 3/3/00 10,000 9,800
6.04%, 3/27/00 5,544 5,407
Greenwich Funding Corp., 4(2),
5.36%, 11/10/99 15,940 15,919
HVB Finance Delaware,
6.20%, 1/3/00 3,509 3,471
Kitty Hawk Funding Corp., 4(2)
5.77%, 3/20/00 10,000 9,775
5.89%, 1/21/00 1,078 1,064
Knight-Ridder,
5.82%, 2/18/00 9,900 9,726
LG&E Capital Corp., 4(2)
5.75%, 2/29 - 3/30/00 33,500 32,817
Market Street Funding, 4(2),
5.36%, 11/17/99 26,400 26,337
Marsh USA, 4(2)
5.53%, 2/25/00 11,800 11,590
5.75%, 3/24/00 15,000 14,655
Morgan Stanley Dean Witter,
5.93%, 2/3/00 20,000 19,690
Panasonic Finance, 4(2),
5.40%, 11/4/99 300 300
Park Avenue Receivables Corp., 4(2)
5.38%, 11/10 - 11/19/99 40,600 40,510
5.39%, 11/17/99 1,991 1,986
VR
5.458%, 11/15/99 20,000 20,000
5.56%, 11/22/99 24,750 24,750
Petrofina (Delaware),
5.28%, 11/29/99 4,649 4,630
Preferred Receivables Funding Corp., 4(2)
5.38%, 11/5/99 49,815 49,785
6.02%, 1/31/00 10,000 9,848
Principal Financial Services, 4(2),
5.33%, 11/30/99 $ 7,705 $ 7,672
Repeat Offering Securitisation Entity
6.10%, 1/21/00 3,551 3,502
6.11%, 1/21/00 16,884 16,652
6.14%, 1/24/00 19,750 19,467
4(2), 5.40%, 11/29/99 3,000 2,988
Safeco Credit
5.40%, 11/17/99 8,600 8,580
5.43%, 12/13/99 8,000 7,949
5.85%, 3/21/00 15,000 14,656
Sand Dollar Funding, 4(2)
5.35%, 11/22/99 4,845 4,830
5.37%, 12/1/99 24,500 24,390
Santander Finance (Delaware)
5.38%, 11/1/99 16,708 16,708
5.40%, 11/1/99 1,880 1,880
Societe Generale, North America,
4.94%, 11/23/99 9,000 8,973
UBS Finance (Delaware),
4.89%, 12/13/99 29,500 29,332
Unifunding, 5.75%, 3/17/00 10,000 9,781
Wal-Mart Stores, 4(2),
5.28%, 12/2/99 500 498
Westpac Capital Corp.,
5.12%, 12/22/99 14,800 14,693
Wisconsin Electric Power,
5.32%, 11/2/99 1,700 1,700
Yale University,
5.35%, 11/2/99 25,350 25,346
Total Commercial Paper (Cost $1,065,634) 1,065,634
MEDIUM-TERM NOTES 18.0%
Abbey National Treasury Services,
5.92%, 8/7/00 20,000 19,994
Associates Manufactured
Housing Pass-Through Trust
VR, (144a), 5.636%, 11/15/99 14,759 14,759
Bear Stearns Companies, VR,
5.519%, 11/10/99 10,000 10,003
Beta Finance, Inc.
6.15%, 10/6/00 20,000 20,000
VR, (144a), 5.398%, 11/17/99 10,000 10,000
Caterpillar Financial Services
8.85%, 8/23/00 1,150 1,176
VR, 5.481%, 11/22/99 7,000 7,000
Chase Manhattan Corp.,
7.75%, 11/1/99 3,380 3,380
Chrysler Financial,
6.625%, 6/26/00 $ 5,000 $ 5,022
Ciesco, VR, (144a)
5.388%, 11/16/99 30,000 29,992
5.428%, 11/17/99 15,000 14,996
Citicorp, VR,
5.435%, 8/10/00 5,000 4,999
Colgate Palmolive, VR,
5.27%, 11/8/99 10,000 9,992
Countrywide Home Loans
8.43%, 11/16/99 2,500 2,503
VR, 5.559%, 12/30/99 10,000 10,000
DaimlerChrysler North America, VR,
5.31%, 11/1/99 20,000 19,991
Dean Witter Discover, VR,
5.878%, 12/1/99 3,000 3,003
Electronic Data Systems,
6.85%, 5/15/00 4,000 4,016
First Chicago NBD Corp., VR,
5.60%, 11/10/99 13,000 13,007
First Security Auto Owner Trust,
5.015%, 11/14/99 1,031 1,031
Ford Capital BV,
10.125%, 11/15/00 5,900 6,119
Ford Motor Credit, VR
5.435%, 11/18/99 10,000 9,992
5.499%, 10/2/00 10,000 9,991
General Electric Capital, VR,
5.503%, 12/1/99 10,000 9,996
General Motors Acceptance, VR,
6.158%, 1/20/00 16,360 16,355
Goldman Sachs Group, VR
5.407%, 11/8/99 10,000 10,000
5.409%, 11/9 - 11/12/99 15,000 15,000
GTE, 5.546%, 12/13/99 10,000 9,996
Heller Financial
6.42%, 8/25/00 3,400 3,405
6.435%, 8/8/00 1,900 1,903
VR
5.663%, 12/20/99 7,000 7,000
5.837%, 1/3/00 10,000 10,010
6.466%, 1/13/00 4,000 4,002
IBM, VR, 6.104%, 1/28/00 10,000 9,993
IBM Credit, VR, 5.313%, 11/2/99 5,000 5,000
John Deere Owner Trust,
4.999%, 6/19/00 5,689 5,689
LINCS, Series 1992-2, VR, (144a),
5.426%, 11/18/99 30,000 30,000
National Rural Utilities Finance., VR,
5.40%, 11/2/99 10,000 10,000
Nynex Capital Funding,
9.42%, 6/1/00 1,000 1,022
Paccar Financial,
5.65%, 8/15/00 $ 5,000 $ 4,991
Prudential Funding,
6.84%, 12/30/99 9,800 9,824
Rabobank, Optional Redemption Trust, VR,
5.408%, 11/17/99 3,830 3,830
Strategic Money Market Trust, 1999-B, VR,
5.57%, 12/15/99 20,000 20,000
Wells Fargo & Company,
5.225%, 4/10/00 20,000 19,997
Total Medium-Term Notes (Cost $438,979) 438,979
FUNDING AGREEMENTS 2.5%
Allstate Life Insurance, VR,
5.531%, 11/1/99! 10,000 10,000
Peoples Benefit Life Insurance, VR
5.54%, 11/1/99! 20,000 20,000
5.55%, 11/1/99! 10,000 10,000
Protective Life Insurance, VR,
5.703%, 12/1/99! 12,000 12,000
Security Life of Denver,
5.52%, 11/1/99! 10,000 10,000
Total Funding Agreements (Cost $62,000) 62,000
Total Investments in Securities
99.2% of Net Assets (Cost $2,420,036) $2,420,036
Other Assets Less Liabilities 20,565
NET ASSETS $2,440,601
----------
Net Assets Consist of:
Accumulated net realized gain/loss
- - net of distributions $ 36
Paid-in-capital applicable to 2,440,564,737
shares of $0.0001 par value capital stock
outstanding; 4,000,000,000 shares of the
Corporation authorized 2,440,565
NET ASSETS $2,440,601
----------
NET ASSET VALUE PER SHARE $ 1.00
----------
! Private Placement
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
4.09% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
- --------------------------------------------------------------------------------
October 31, 1999
Statement of Net Assets Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
CORPORATE BONDS AND NOTES 47.2%
Banking and Finance 9.5%
ABN AMRO Bank (Chicago), N.V.,
Gtd. Sub. Notes
7.25%, 5/31/05 $ 250 $ 249
Banco Generale, Sr. Sub. Notes, (144a),
7.70%, 8/1/02 300 293
Countrywide Home Loans, Sr. Sub Notes,
6.85%, 6/15/04 500 492
General Electric Capital, MTN,
6.15%, 11/5/01 350 348
HSBC Finance Nederland, Sub. Gtd. Notes,
(144a), 7.40%, 4/15/03 270 272
Kansallis-Osake-Pankki (New York),
Sub. Notes, 10.00%, 5/1/02 375 401
Marsh and McLennan, Sr. Notes,
6.625%, 6/15/04 500 493
MBNA, Sub. Notes,
7.25%, 9/15/02 200 199
Mercantile Safe Deposit & Trust,
6.53%, 7/3/00 300 300
Merrill Lynch,
6.81%, 6/13/02 500 501
Morgan Guaranty Trust, Sub. Notes,
7.375%, 2/1/02 250 253
Paine Webber Group,
7.875%, 2/15/03 500 508
Salomon Smith Barney,
7.30%, 5/15/02 300 303
Union Planters, Sub. Notes,
6.25%, 11/1/03 225 217
Westamerica Bank, Sub. Notes,
6.99%, 9/30/03 250 241
5,070
Building and Real Estate 1.1%
Rouse, 8.00%, 4/30/09 600 565
565
Consumer Products and Services 13.0%
Amvescap, Sr. Notes, (144a),
6.375%, 5/15/03 400 387
Beckman Instruments, Sr. Notes,
7.10%, 3/4/03 500 481
Coca-Cola Femsa,
8.95%, 11/1/06 275 267
Disney, 5.25%, 11/10/03 500 474
Federated Department Stores, Sr. Notes,
8.125%, 10/15/02 500 514
Grand Metropolitan Investment,
Zero Coupon, 1/6/04 750 564
Hospital Corporation of America,
Zero Coupon, 6/1/01 500 437
Johnson & Johnson,
6.625%, 9/1/09 425 420
Nabisco, 6.125%, 2/1/33 300 289
PepsiCo, MTN, 5.75%, 1/2/03 250 244
Philip Morris, 7.25%, 9/15/01 325 323
Rite Aid, (144a), 6.00%, 10/1/03 500 372
Seagram, 6.40%, 12/15/03 500 485
Sony, 6.125%, 3/4/03 375 368
Viacom, 6.75%, 1/15/03 250 247
Wal-Mart Stores, 6.55%, 8/10/04 750 749
Watson Pharmaceuticals,
7.125%, 5/15/08 $ 275 $ 259
6,880
Energy 0.8%
PDV America, Sr. Notes,
7.875%, 8/1/03 225 208
YPF Sociedad Anonima,
7.25%, 3/15/03 225 219
427
Industrials 9.0%
AlliedSignal, 5.75%, 3/15/01 350 346
Caterpillar Financial Services,
6.875%, 8/1/04 500 500
Delphi Auto Systems,
6.125%, 5/1/04 500 478
Eaton Offshore, Gtd. Notes,
9.00%, 2/15/01 400 413
Hertz, 7.00%, 7/1/04 450 447
Lockheed Martin, 6.75%, 3/15/03 475 464
Parker Hannifin, MTN 5.65%, 9/15/03 500 482
Raytheon, 5.70%, 11/1/03 500 472
Toyota Motor Credit, 5.625%, 11/13/03 500 479
USA Waste Services, Sr. Notes,
6.50%, 12/15/02 375 341
Waste Management, 6.625%, 7/15/02 350 324
4,746
Media and Communications 3.9%
360 Communications, Sr. Notes,
7.125%, 3/1/03 500 503
Comcast Cable Communications,
6.20%, 11/15/08 400 370
Sprint Capital, 5.70%, 11/15/03 375 360
US West Capital Funding, (144a),
6.875%, 8/15/01 500 500
Worldcom, Sr. Notes, 6.25%, 8/15/03 325 318
2,051
Transportation 2.4%
Delta Air Lines, ETC,
9.60%, 5/26 - 6/1/00 197 201
ERAC USA Finance, (144a)
6.375%, 5/15/03 375 362
Norfolk Southern,
6.95%, 5/1/02 500 500
Northwest Airlines,
8.375%, 3/15/04 250 238
1,301
Utilities 7.5%
CE Electric UK Funding,
Sr. Notes, (144a),
6.853%, 12/30/04 400 388
Cleveland Electric, 7.19%, 7/1/00 250 250
Entergy Mississippi, 6.45%, 4/1/08 375 358
National Rural Utilities,
Cooperative Finance,
5.00%, 10/1/02 500 479
Niagara Mohawk Power
Sr. Disc. Notes, 7.375%, 7/1/03 265 265
Sr. Notes, 7.25%, 10/1/02 284 284
Pacific Gas & Electric,
1st Mtg. Bonds,
8.75%, 1/1/01 $ 250 $ 256
Public Service Electric & Gas,
Mtg. Bonds,
8.875%, 6/1/03 325 333
Texas NM Power
1st Mtg. Notes, 9.25%, 9/15/00 200 204
Secured Deb., 10.75%, 9/15/03 225 229
United Illuminating,
6.25%, 12/15/02 190 185
Utilicorp United, Sr. Notes,
7.00%, 7/15/04 500 488
Williams Companies,
6.125%, 2/15/12 275 269
3,988
Total Corporate Bonds and Notes (Cost $25,838) 25,028
U.S. GOVERNMENT OBLIGATIONS/
AGENCIES 18.5%
U.S. Government Agency Obligations 8.3%
Federal Home Loan Banks,
5.125%, 9/15/03 3,000 2,870
Federal National Mortgage Assn.
4.625%, 10/15/01 550 536
6.375%, 6/15/09 292 285
7.65%, 10/6/06 500 500
U.S. Department of Housing and
Urban Development, 6.49%, 8/1/07 240 236
4,427
U.S. Treasury Obligations 10.2%
U.S. Treasury Inflation-Indexed Notes,
3.625%, 7/15/02 522 520
U.S. Treasury Notes
4.25%, 11/15/03 2,495 2,343
6.125%, 8/15/07 600 598
6.375%, 8/15/02 1,250 1,262
6.50%, 10/15/06 650 662
5,385
Total U.S. Government Obligations/Agencies
(Cost $10,090) 9,812
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 14.4%
U.S. Government Agency Obligations 11.9%
Federal Home Loan Mortgage
6.00%, 2/15/08 - 5/15/16 1,500 1,488
6.40%, 1/15/08 500 495
10.75%, 12/1/09 79 85
7 year balloon, 6.50%, 12/1/99 $ 97 $ 97
CMO, 6.92%, 1/25/12 68 68
REMIC
6.00%, 8/15/06 - 1/15/08 1,144 1,127
6.50%, 4/15/21 500 491
Federal National Mortgage Assn.
6.00%, 6/1/13 - 1/1/14 1,379 1,326
7.00%, 4/1/09 227 228
9.00%, 5/1/05 148 152
REMIC
7.50%, 8/25/05 12 12
9.00%, 1/25/08 682 714
6,283
U.S. Government Guaranteed Obligations 2.5%
Government National Mortgage Assn.
I
8.00%, 5/15/07 752 772
10.00%, 11/15/09 - 10/15/21 293 320
II, 10.00%, 10/20/20 74 81
Midget, I
9.00%, 4/15 - 12/15/01 22 23
10.00%, 1/15/00 - 4/15/01 91 91
10.50%, 1/15/00 - 2/15/01 46 46
1,333
Total U.S. Government Mortgage-Backed
Securities (Cost $7,782) 7,616
ASSET-BACKED SECURITIES 11.7%
Banc One Auto Grantor Trust,
6.27%, 11/20/03 84 85
BMW Vehicle Owner Trust,
6.54%, 4/25/04 500 499
California Infrastructure & Economic
6.25%, 6/25/04 175 174
6.38%, 9/25/08 600 587
6.42%, 9/25/08 450 442
Comed Transitional Funding Trust,
5.44%, 3/25/07 650 613
Fingerhut Master Trust,
6.07%, 2/15/05 375 374
First Security Auto Owner Trust,
6.20%, 10/15/06 500 494
First USA Secured Notes Trust,
6.50%, 1/18/06 500 489
Harley Davidson Eaglemark
5.94%, 2/15/04 $ 125 $ 124
(144a), 6.35%, 10/15/02 52 52
MMCA Auto Owner Trust,
6.80%, 8/15/03 500 501
Neiman Marcus Credit Master Trust,
7.60%, 6/15/03 500 504
Onyx Acceptance Owner Trust,
5.83%, 3/15/04 500 492
Peco Energy Transport Trust,
5.63%, 3/1/05 300 292
Residential Accredit Loans,
7.25%, 11/25/27 490 480
Total Asset-Backed Securities (Cost $6,337) 6,202
NON-U.S. GOVERNMENT MORTGAGE-
BACKED SECURITIES 3.2%
GMAC Commercial Mortgage Security Trust,
6.15%, 5/15/35 468 451
LB Commercial Conduit Mortgage Trust,
6.41%, 8/15/07 592 574
Prudential Securities,
6.074%, 1/15/08 725 696
Total Non-U.S. Government Mortgage-Backed
Securities (Cost $1,778) 1,721
MUNICIPAL BONDS 0.2%
Taxable Municipal 0.2%
University of Miami, GO,
6.90%, 4/1/04 85 85
Total Municipal Bonds (Cost $85) 85
COMMON STOCKS 0.0%
Consumer Products and Services 0.0%
Capital Gaming International (16 shares) 0
Total Common Stocks (Cost $0) 0
MONEY MARKET FUNDS 5.1%
Reserve Investment Fund, 5.51% # 2,685 2,685
Total Money Market Funds (Cost $2,685) 2,685
Total Investments in Securities
100.3% of Net Assets (Cost $54,595) $ 53,149
Other Assets Less Liabilities (157)
NET ASSETS $ 52,992
----------
Accumulated net investment income
- - net of distributions $ (193)
Accumulated net realized gain/loss
- - net of distributions (1,505)
Net unrealized gain (loss) (1,446)
Paid-in-capital applicable to 11,839,296
shares of $0.0001 par value capital stock
outstanding; 4,000,000,000 shares of the
Corporation authorized 56,136
NET ASSETS $ 52,992
----------
NET ASSET VALUE PER SHARE $ 4.48
----------
# Seven-day yield
CMO Collateralized Mortgage Obligation
ETC Equipment Trust Certificate
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
4.96% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
- --------------------------------------------------------------------------------
October 31, 1999
Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
Portfolio of Investments
U.S. GOVERNMENT MORTGAGE-
BACKED SECURITIES 96.0%
U.S. Government Guaranteed Obligations 92.4%
Government National Mortgage Assn.
I
6.00%, 4/15/28 - 5/15/29 $ 4,234 $ 3,930
6.50%, 1/15/24 - 8/15/29 10,390 9,947
7.00%, 4/15/24 - 10/15/29 12,916 12,681
7.50%, 6/15/23 - 7/15/29 11,268 11,318
8.00%, 4/15/17 - 3/15/29 5,644 5,784
8.50%, 6/15/16 - 3/15/27 1,386 1,447
9.00%, 8/15/08 - 8/15/21 697 738
9.50%, 6/15/09 - 7/15/20 238 256
10.00%, 12/15/17 - 3/15/26 1,213 1,326
10.50%, 7/15/15 - 11/15/19 474 526
11.00%, 12/15/09 - 12/15/15 68 75
11.50%, 7/15 - 12/15/15 19 21
II
6.50%, 11/20/28 936 895
8.00%, 5/20 - 6/20/29 1,214 1,243
8.50%, 6/20/29 419 437
9.00%, 5/20/22 - 3/20/25 168 177
9.50%, 2/20/17 - 12/20/20 110 118
10.00%, 1/20/14 - 3/20/21 106 116
11.00%, 9/20/17 14 16
Construction Loan, I
6.67%, 2/15/01 612 568
6.75%, 7/15/00 - 5/1/29 1,136 1,058
7.00%, 4/15/00 931 890
GPM, I
9.25%, 7/15/16 - 7/15/17 9 9
9.50%, 7/15/09 32 34
10.00%, 8/15/13 2 2
Project Loan, I
6.50%, 3/15/34 344 316
6.70%, 4/15/34 467 439
7.05%, 11/15/38 499 479
7.37%, 8/15/33 397 391
8.00%, 11/15/17 386 398
REMIC, 7.00%, 5/16/24 $ 3,000 $ 2,933
Principal Only, I,
Zero Coupon, 3/16/28 451 313
TBA, I
6.67%, 6/15/38 58 54
7.00%, 12/15/99 52 49
58,984
U.S. Government Agency Obligations 3.6%
Federal Home Loan Mortgage
REMIC
5.85%, 11/15/17 52 52
6.50%, 8/15/25 1,500 1,422
Federal National Mortgage Assn.
6.50%, 1/1/26 297 285
CMO, Interest Only, 8.50%, 4/1/22 ** 284 52
REMIC, 5.00%, 8/25/22 16 15
Principal Only, Zero Coupon, 10/25/21 515 481
2,307
Total U.S. Government Mortgage-Backed
Securities (Cost $62,741) 61,291
U.S. GOVERNMENT OBLIGATIONS 0.5%
U.S. Treasury Obligations 0.5%
U.S. Treasury Bond Strip,
Zero Coupon, 2/15/16 1,000 345
Total U.S. Government Obligations (Cost $383) 345
ASSET-BACKED SECURITIES 2.9%
Whole Loans-Backed 2.9%
GE Capital Mortgage Services,
6.75%, 8/25/28 1,977 1,827
Prudential Home Mortgage Securities,
6.00%, 10/25/07 5 5
Total Asset-Backed Securities (Cost $1,979) 1,832
MONEY MARKET FUNDS 3.0%
Reserve Investment Fund, 5.51% # 1,934 1,934
Total Money Market Funds (Cost $1,934) 1,934
Total Investments in Securities
102.4% of Net Assets (Cost $67,037) $ 65,402
Other Assets Less Liabilities (1,559)
NET ASSETS $ 63,843
----------
** For Interest Only securities, par amount represents notional principal,
on which the fund receives interest
# Seven-day yield
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 accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
- --------------------------------------------------------------------------------
October 31, 1999
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities,
at value (cost $67,037) $ 65,402
Receivable for investment
securities sold 4,939
Other assets 703
Total assets 71,044
Liabilities
Payable for investment securities purchased 6,972
Other liabilities 229
Total liabilities 7,201
NET ASSETS $ 63,843
----------
Net Assets Consist of:
Accumulated net investment income
- net of distributions $ (244)
Accumulated net realized gain/loss
- net of distributions (504)
Net unrealized gain (loss) (1,635)
Paid-in-capital applicable to 6,801,927
shares of $0.0001 par value capital stock
outstanding; 4,000,000,000 shares of the
Corporation authorized 66,226
NET ASSETS $ 63,843
----------
NET ASSET VALUE PER SHARE $ 9.39
----------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Income Funds
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands Cash Reserves Limited-Term GNMA
Fund Bond Fund Fund
Year Year Year
Ended Ended Ended
10/31/99 10/31/99 10/31/99
Investment Income
Income
Interest income $ 113,702 $ 3,205 $ 4,000
Expenses
Investment management and
administrative 9,756 284 342
Net investment income 103,946 2,921 3,658
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
on securities (4) (144) (56)
Change in net unrealized
gain or loss on securities -- (2,174) (2,837)
Net realized and unrealized
gain (loss) (4) (2,318) (2,893)
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 103,942 $ 603 $ 765
--------- --------- ---------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Cash Reserves Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/99 10/31/98
Increase (Decrease) in Net Assets
Operations
Net investment income $ 103,946 $ 79,152
Net realized gain (loss) (4) 27
Increase (decrease) in net
assets from operations 103,942 79,179
Distributions to shareholders
Net investment income (103,946) (79,152)
Capital share transactions *
Shares sold 3,301,638 2,913,215
Distributions reinvested 99,573 75,564
Shares redeemed (2,845,153) (2,407,379)
Increase (decrease) in net
assets from capital
share transactions 556,058 581,400
Net Assets
Increase (decrease) during period 556,054 581,427
Beginning of period 1,884,547 1,303,120
End of period $2,440,601 $1,884,547
---------- ----------
*Share information
Shares sold 3,301,638 2,913,215
Distributions reinvested 99,573 75,564
Shares redeemed (2,845,153) (2,407,379)
Increase (decrease) in
shares outstanding 556,058 581,400
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/99 10/31/98
Increase (Decrease) in Net Assets
Operations
Net investment income $ 2,921 $ 2,064
Net realized gain (loss) (144) 159
Change in net unrealized
gain or loss (2,174) 485
Increase (decrease) in net
assets from operations 603 2,708
Distributions to shareholders
Net investment income (2,921) (2,064)
Capital share transactions *
Shares sold 28,634 20,167
Distributions reinvested 2,063 1,635
Shares redeemed (16,291) (11,162)
Increase (decrease) in net
assets from capital
share transactions 14,406 10,640
Net Assets
Increase (decrease) during period 12,088 11,284
Beginning of period 40,904 29,620
End of period $ 52,992 $ 40,904
--------- ---------
*Share information
Shares sold 6,229 4,358
Distributions reinvested 453 353
Shares redeemed (3,572) (2,411)
Increase (decrease) in
shares outstanding 3,110 2,300
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/99 10/31/98
Increase (Decrease) in Net Assets
Operations
Net investment income $ 3,658 $ 2,499
Net realized gain (loss) (56) (115)
Change in net unrealized
gain or loss (2,837) 200
Increase (decrease) in net
assets from operations 765 2,584
Distributions to shareholders
Net investment income (3,658) (2,499)
Capital share transactions *
Shares sold 35,537 28,082
Distributions reinvested 2,630 1,904
Shares redeemed (18,002) (13,030)
Increase (decrease) in net
assets from capital
share transactions 20,165 16,956
Net Assets
Increase (decrease) during period 17,272 17,041
Beginning of period 46,571 29,530
End of period $ 63,843 $ 46,571
--------- ---------
*Share information
Shares sold 3,684 2,838
Distributions reinvested 274 193
Shares redeemed (1,874) (1,317)
Increase (decrease) in
shares outstanding 2,084 1,714
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Income Funds
- --------------------------------------------------------------------------------
October 31, 1999
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Debt securities are generally traded in the over-the-counter
market. Except for securities held by the Cash Reserves Fund, 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 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.
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 that 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.
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
Purchases and sales of portfolio securities, other than short-term
securities, for the year ended October 31, 1999, were as follows:
---------------------------------------------------------------------------
Limited-Term GNMA Fund
Bond Fund
U.S. government securities
Purchases $15,852,000 $71,446,000
Sales 9,663,000 51,826,000
Other securities
Purchases 18,300,000 -
Sales 10,798,000 84,000
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 Cash Reserves Fund had capital loss
carryforwards for federal income tax purposes of $4,000, all of which
expires in 2007. The Limited-Term Bond Fund had capital loss carryforwards
for federal income tax purposes of $1,484,000, of which $808,000 expires in
2002, $354,000 in 2003, and $322,000 thereafter through 2007. The GNMA Fund
had capital loss carryforwards for federal income tax purposes of $405,000,
of which $131,000 expires in 2003, $142,000 in 2004, and $132,000 in 2005.
Each fund intends to retain gains realized in future periods that may be
offset by available capital loss carryforwards.
At October 31, 1999, the costs of investments for the Cash Reserves,
Limited-Term Bond, and GNMA Funds for federal income tax purposes were
substantially the same as for financial reporting and totaled
$2,420,036,000, $54,595,000, and $67,037,000, 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 Fund
Bond Fund
Appreciated investments $34,000 $161,000
Depreciated investments (1,480,000) (1,796,000)
Net unrealized gain (loss) $(1,446,000) $(1,635,000)
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 $1,076,000, $18,000, and $53,000 were
payable at October 31, 1999 by the Cash Reserves, Limited-Term Bond, and
GNMA Funds, respectively. 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.
Additionally, the Cash Reserves 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 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, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. At October 31, 1999, no
Spectrum Funds held outstanding shares of the Cash Reserves Fund. For the
year then ended, the Cash Reserves Fund was allocated $13,000 of Spectrum
expenses.
The Limited-Term Bond and GNMA Funds may invest in the Reserve Investment
Fund and Government Reserve Investment Fund (collectively, the Reserve
Funds), open-end management investment companies managed by T. Rowe Price
Associates, Inc. The Reserve Funds are offered as cash management options
only to mutual funds and other accounts managed by T. Rowe Price and its
affiliates and are not available to the public. The Reserve Funds pay no
investment management fees. Distributions from the Reserve Funds to the
Limited-Term Bond and the GNMA Funds for the year ended October 31, 1999,
totaled $162,000 and $148,000, respectively, and are reflected as interest
income in the accompanying Statement of Operations.
T. Rowe Price Summit Income Funds
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of T. Rowe Price Summit Funds, Inc.
and Shareholders of Summit Cash Reserves Fund,
Summit Limited-Term Bond Fund and Summit GNMA Fund
In our opinion, the accompanying statements of net assets (Summit Cash
Reserves Fund and Summit Limited-Term Bond Fund) and the statement of
assets and liabilities, including the portfolio of investments (Summit GNMA
Fund), and the related statements of operations and of changes in net
assets and the financial highlights present fairly, in all material
respects, the financial position of Summit Cash Reserves Fund, Summit
Limited-Term Bond Fund and Summit GNMA Fund (comprising T. Rowe Price
Summit Funds, Inc., hereafter referred to as the "Funds") at October 31,
1999, and the results of each of their operations, the changes in each of
their net assets and the financial highlights for each of the fiscal
periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at October 31,
1999 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 17, 1999
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(registered trademark) 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 September 1999 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary depending on size of order.
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
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
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
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 Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Bond
International 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
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
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. 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.
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
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
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
. Rowe Price, Invest With Confidence (registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. C10-050 10/31/99
