<PAGE>
T. Rowe Price
--------------------------------------------------------------------------------
Annual Report
Summit Income Funds
--------------------------------------------------------------------------------
October 31, 2000
================================================================================
REPORT HIGHLIGHTS
-----------------
SUMMIT INCOME FUNDS
-------------------
* Declining intermediate and long-term rates boosted bond results, and
rising short-term yields aided money-market funds.
* Low expenses and attractive market yields helped the Summit Cash
Reserves Fund raise its dividend.
* The Limited-Term Bond Fund posted good returns as it prepared to merge
into the Short-Term Bond Fund.
* Portfolio shifts helped the GNMA Fund post strong returns that
exceeded its Lipper group.
* We are optimistic about the economic environment, but we will continue
to be conservative with our portfolios.
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UPDATES AVAILABLE
-----------------
For updates on T. Rowe Price funds following the end of each calendar
quarter, please see our Web site at www.troweprice.com.
================================================================================
FELLOW SHAREHOLDERS
-------------------
The bond markets breathed a sigh of relief during the six months ended
October 31, 2000, as economic growth cooled and the Federal Reserve ceased
raising interest rates. The improved environment boosted the performance of the
Summit Limited-Term Bond Fund and the Summit GNMA Fund, while rising
money-market rates contributed to the Summit Cash Reserves Fund's solid showing.
================================================================================
MARKET ENVIRONMENT
------------------
U.S. bond markets have settled down considerably since the last shareholder
letter dated April 30. At that time, the Federal Reserve had been raising
short-term interest rates since early 1999, and bond investors had been torn
between the problem of higher rates and the danger of rising inflation
pressures. However, the Fed's last tightening occurred on May 16, when it raised
the federal funds rate target 50 basis points to 6.5% (100 basis points equal
one percent). The rate increases appeared to have the intended effect: GDP
growth slowed to 3.5%, and consumer demand cooled considerably. At the same
time, continued improvements in productivity helped to keep inflation at bay.
<PAGE>
--------------------------------------------------------------------------------
Current Coupon 5-Year Treasury 90-Day Treasury
GNMA Note Bill
-------------- --------------- ---------------
10/31/99 7.51 6.09 5.13
11/30/99 7.64 6.03 5.28
12/31/99 7.83 6.33 5.33
01/31/00 8.14 6.63 5.59
02/29/00 8.01 6.59 5.81
03/31/00 7.77 6.42 5.88
04/30/00 8.00 6.42 5.78
05/31/00 8.00 6.65 5.92
06/30/00 7.77 6.25 5.84
07/31/00 7.80 6.16 6.20
08/31/00 7.56 6.02 6.31
09/30/00 7.47 5.90 6.21
10/31/00 7.43 5.81 6.38
--------------------------------------------------------------------------------
Bond investors took advantage of this relatively calm period by picking up
their buying programs, which boosted bond prices and correspondingly pushed
yields down. After April 30, 2000, for example, five-year Treasury note yields
drifted down 61 basis points; current coupon GNMA yields fell off by a
comparable 57 basis points. Only money market yields continued to rise, much to
the delight of cash investors, who now earn more on 90-day Treasury bills than
they could on five-year Treasuries.
The federal budget surplus continued to increase, leading to a reduction in
the size and frequency of Treasury auctions. Together with the Treasury's
buyback program, which this year resulted in the government's repurchase of $30
billion worth of long-term issues, the supply of Treasuries has declined
noticeably. For that reason, Treasury securities have outperformed most other
bonds, as investors scurry to buy the issues they want for their portfolios. The
Treasury market as a whole has also behaved quite differently than other bond
markets, responding as much or more to supply-and-demand factors as to the
economy, inflation, and the Fed.
As concerns about a slowing in economic growth became more widespread,
corporate bonds, especially lower-quality issues, lagged noticeably. Yet
mortgage-backed securities, asset-backed securities, and high-quality corporates
produced solid results as equity investors in particular turned to the bond
market for diversification in a volatile stock market environment.
Mortgage securities were buffeted by an unexpected development. In March,
the Undersecretary of the Treasury, Gary Gensler, questioned whether the
government should continue to provide an implicit guarantee on securities issued
by the government-sponsored agencies Freddie Mac and Fannie Mae. Initially,
Gensler's concerns sent prices down and yields up sharply on the bonds issued by
these agencies. GNMA issues, which were not affected, outperformed significantly
for much of the period. However, there was a resolution in mid-October when
Fannie Mae and Freddie Mac agreed to better disclose their portfolios and the
levels of risk within them. This sparked a late rally among these agencies'
bonds, but year-to-date, GNMAs have still outperformed by a small amount.
<PAGE>
SUMMIT CASH RESERVES FUND
-------------------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 10/31/00 6 Months 12 Months
---------------------- -------- ---------
Cash Reserves Fund 3.14% 6.02%
Lipper Money Market
Funds Average 2.92 5.53
Compared with equities, cash investments have produced only modest returns
for the past several years. Howev er, the choppy equity market environment of
2000 so far is a good example of the way cash can help buffer a portfolio's
performance in years when other investments falter. Your fund's 3.14% six-month
and 6.02% 12-month results compared favorably with its Lipper peer group
benchmark and represented a marked improvement from the previous period. In
addition, dividends per share rose, and the seven-day compound dividend yield
rose to an attractive 6.46%. These results were bolstered by your fund's low
expenses compared with most competitors.
We were able to stay a step ahead of our competitors by taking advantage of
a rising yield environment. While the Fed was raising rates earlier in the year,
we kept average maturity short. For example, at the end of April 2000, maturity
stood at 46 days versus 51 days for the average money fund. This stance allowed
us to reinvest faster in higher-yielding instruments. Once the Fed ceased to
raise rates, however, we shifted into securities with slightly longer maturities
to lock in their higher yields. On October 31, maturity was 61 days versus 57
for the peer group.
We also changed the portfolio structure as the Fed backed off its
tightening program, so that a large chunk of assets are invested in securities
with three- to six-month maturities, rather than among issues with broadly
varying maturities. This is often called a "bullet" strategy, and it tends to
perform better when rates are flat or declining.
The portfolio's sector exposures changed from six months ago. For example,
fixed-rate securities have become a larger component of the fund because we
perceive floating-rate instruments to be relatively expensive, offering
unattractive yields. For similar reasons, our holdings in commercial paper
increased significantly during the period. The bulk of the increase went to the
asset-backed sector, where yields are attractive and credit quality remains
extremely high.
<PAGE>
SUMMIT LIMITED-TERM BOND
------------------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 10/31/00 6 Months 12 Months
---------------------- -------- ---------
Limited-Term Bond Fund 4.80% 6.31%
Merrill Lynch 1-5 Year
Corporate and Government
Bond Index 4.70 6.29
Lipper Short Intermediate
Investment-Grade Debt
Funds Average 4.34 5.69
At a special meeting on Wednesday, October 25, 2000, shareholders approved
a management proposal to merge the assets of this fund into the T. Rowe Price
Short-Term Bond Fund, which has a similar objective and strategy. Therefore,
this will be the last report for the Summit Limited-Term Bond Fund. We are
pleased to say that the fund finished with an attractive absolute and relative
six-month showing of 4.80%. Dividends per share also rose by a penny over the
previous six-month period.
Over the course of the past quarter, we significantly reduced U.S. Treasury
and agency obligations, which had excelled in the early months of the year, to
make room for better yielding mortgage-backed, asset-backed, and corporate
issues. We particularly increased holdings of high-quality mortgage-backed and
asset-backed securities, which provided solid returns. Additions in the
corporate bond sector were more modest and were chosen carefully, as we have
seen an erosion in credit quality as the economy has cooled. As of October 31,
the fund had no exposure to high-yield, noninvestment-grade securities, and its
average credit quality was AA.
SUMMIT GNMA FUND
----------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 10/31/00 6 Months 12 Months
---------------------- -------- ---------
GNMA Fund 5.76% 7.16%
Salomon GNMA Index 6.14 7.94
Lipper GNMA Funds Average 5.52 6.79
Easing interest rates helped your fund post a 5.76% return for the six
months, a significant improvement over the previous half-year period, when the
bond market environment was more problematic. Dividends per share were
unchanged, and the dividend yield remained relatively high within the peer
group, helped by the fund's low expenses. Performance fell somewhat behind the
Salomon GNMA Index, mostly because the benchmark includes only GNMA securities.
However, the fund surpassed the results for its Lipper peer group average over
both the 6- and 12-month periods.
<PAGE>
Buying a mortgage security almost always involves a trade-off between yield
and cash-flow stability. The higher the yield on the bond, the greater the risk
that falling interest rates could spark a wave of refinancing of the mortgages
on which the high-yielding bond is based. During May and June, when interest
rates were fairly stable, we focused on issues with relatively high coupons in
lieu of those with more stable cash flows. The strategy was beneficial as it
brought more income into the portfolio and did not introduce much volatility. As
rates started coming down in June, however, we took steps to reduce interest
rate sensitivity by purchasing mortgages with lower coupons that would be less
likely to refinance as rates rallied. This shift proved fortunate, as it
positioned the fund to benefit from the subsequent rally and should benefit
future performance if rates continue to fall, as we anticipate.
We rebuilt our stake in "structured" products N securities whose income
distributions and principal payments are structured somewhat differently from a
typical mortgage-backed bond. We had limited our holdings of these securities in
the previous period because, with interest rates rising and Treasuries rallying,
they had become illi-quid. Liquidity has improved, however. Because the rate
environment is still somewhat unpredictable, we selected structured products
that we felt would react less to rate changes and, therefore, add stability to
the portfolio. Total holdings in structured products stood at 12.7% of assets on
October 31, up from 10% six months earlier.
After GNMAs performed so well in the early part of the period, we chose to
take a portion of our profits and reinvest in Fannie Mae and Freddie Mac
securities. Our position in these holdings rose from 2% of assets to 6% over the
six months, giving performance a modest boost in the latter part of the period.
Finally, we made a small move in anticipation of a legal change we expect
will affect our market in the near future. Until recently, the body of workplace
retirement laws called ERISA allowed pension funds to buy only a limited
selection of mortgage- and asset-backed securities and collateralized mortgage
obligations N specifically those with the lowest credit risk. However, on
November 13, 2000, the Bond Market Association granted ERISA eligibility to
investment-grade structured products. We purchased two such securities with AA
ratings that we felt offered attractive yields and appropriate interest rate
risk.
OUTLOOK
-------
Stable inflation and accelerating productivity have bought the Fed time to
see if its 1999-to-2000 tightening program will moderate economic growth while
maintaining full employment. Fortunately, noninflationary growth appears
sustainable: softening labor markets are slowing income growth; weaker income
growth is limiting demand; and more moderate demand is cooling production and
hiring plans. As a result, third-quarter GDP growth appears headed toward 3.5%,
lower than recent quarters.
For these reasons, we think that further Fed tightening is unlikely for
this year, and that bond rates will drift further downward. Still, the
environment for fixed-income investing remains unpredictable. Your funds will
continue to follow conservative investment strategies and maintain high credit
quality as long as uncertainties linger on the horizon.
Respectfully submitted,
/s/
Edward A. Wiese
President
November 24, 2000
================================================================================
<PAGE>
T. Rowe Price Summit Income Funds
---------------------------------
PORTFOLIO HIGHLIGHTS
--------------------
KEY STATISTICS
--------------
SUMMIT CASH RESERVES FUND 4/30/00 10/31/00
------------------------- ------- --------
Price Per Share $ 1.00 $ 1.00
--------------------------------------------------------------------------------
Dividends Per Share
For 6 months 0.028 0.031
-----------------------------------------------------------------------------
For 12 months 0.051 0.059
--------------------------------------------------------------------------------
Dividend Yield (7-Day Compound)* 5.89% 6.46%
--------------------------------------------------------------------------------
Weighted Average Maturity (days) 46 61
--------------------------------------------------------------------------------
Weighted Average Quality** First Tier First Tier
--------------------------------------------------------------------------------
SUMMIT LIMITED-TERM BOND FUND
-----------------------------
Price Per Share $ 4.41 $ 4.48
--------------------------------------------------------------------------------
Dividends Per Share
For 6 months 0.13 0.14
-----------------------------------------------------------------------------
For 12 months 0.26 0.27
--------------------------------------------------------------------------------
30-Day Dividend Yield * 6.20% 6.20%
--------------------------------------------------------------------------------
30-Day Standardized Yield to Maturity 6.66 6.52
--------------------------------------------------------------------------------
Weighted Average Maturity (years) 3.4 2.7
--------------------------------------------------------------------------------
Weighted Average Effective Duration (years) 2.7 2.2
--------------------------------------------------------------------------------
Weighted Average Quality *** AA AA
<PAGE>
SUMMIT GNMA FUND
----------------
Price Per Share $9.20 $9.41
--------------------------------------------------------------------------------
Dividends Per Share
For 6 months 0.31 0.31
-----------------------------------------------------------------------------
For 12 months 0.62 0.62
-----------------------------------------------------------------------------
30-Day Dividend Yield * 6.74% 6.63%
--------------------------------------------------------------------------------
30-Day Standardized Yield to Maturity 6.67 6.69
--------------------------------------------------------------------------------
Weighted Average Maturity (years) 8.7 8.1
--------------------------------------------------------------------------------
Weighted Average Effective Duration (years) 4.7 4.3
--------------------------------------------------------------------------------
Weighted Average Quality *** AAA AAA
--------------------------------------------------------------------------------
* Dividends earned for the last 30 days of each period indicated (7 days for
the money fund) are annualized and divided by the fund's net asset value
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.
================================================================================
SECTOR DIVERSIFICATION
----------------------
Percent of Percent of
Net Assets Net Assets
4/30/00 10/31/00
---------- ----------
SUMMIT CASH RESERVES FUND
-------------------------
U.S. Negotiable Bank Notes 4% -
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Certificates of Deposit 33 25%
--------------------------------------------------------------------------------
Domestic Negotiable CDs 6 2
-----------------------------------------------------------------------------
Eurodollar Negotiable CDs 5 10
-----------------------------------------------------------------------------
U.S. Dollar Denominated Foreign Negotiable CDs 22 13
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<PAGE>
Commercial Paper and Medium-Term Notes 61 75
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Asset-Backed 21 33
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Banking 12 18
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Insurance 4 2
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Metals and Mining - 3
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Finance and Credit 5 2
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All Other 19 17
-----------------------------------------------------------------------------
Funding Agreements 1 2
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Other Assets Less Liabilities 1 -2
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TOTAL 100% 100%
Fixed-Rate Obligations 78 88
--------------------------------------------------------------------------------
Floating-Rate Instruments 22 12
--------------------------------------------------------------------------------
SUMMIT LIMITED-TERM BOND FUND
-----------------------------
Corporate Bonds and Notes 41% 43%
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Banking and Finance 10 14
-----------------------------------------------------------------------------
Consumer Products and Services 8 9
-----------------------------------------------------------------------------
Industrial 7 7
-----------------------------------------------------------------------------
Utilities 7 5
-----------------------------------------------------------------------------
Media and Communications 3 5
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Transportation 4 2
-----------------------------------------------------------------------------
All Other 2 1
-----------------------------------------------------------------------------
Asset-Backed Securities 14 18
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Mortgage-Backed Securities 23 27
--------------------------------------------------------------------------------
U.S. Government Obligations 20 3
--------------------------------------------------------------------------------
U.S. Treasuries 12 3
-----------------------------------------------------------------------------
Government Agency Obligations 8 0
-----------------------------------------------------------------------------
Money Market Funds * 1 8
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Other Assets Less Liabilities 1 1
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TOTAL 100% 100%
<PAGE>
SUMMIT GNMA FUND
----------------
GNMA 97% 91%
--------------------------------------------------------------------------------
U.S. Government Agencies 2 7
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Agency-Backed STRIPS 1 1
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Asset-Backed Securities - 2
--------------------------------------------------------------------------------
Money Market Funds * 2 5
--------------------------------------------------------------------------------
Other Assets Less Liabilities -2 -6
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TOTAL 100% 100%
* See note at end of financial statements.
================================================================================
T. Rowe Price Summit Income Funds
---------------------------------
PERFORMANCE COMPARISON
----------------------
These charts show the value of a hypothetical $25,000 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 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.
--------------------------------------------------------------------------------
SUMMIT CASH RESERVES FUND
-------------------------
Lipper Money Market Summit Cash
Date Funds Average Reserves Fund
---- ------------------- -------------
10/29/1993 25,000 25,000
10/94 25,824 25,901
10/95 27,205 27,372
10/96 28,549 28,803
10/97 29,970 30,337
10/98 31,487 31,961
10/99 32,918 33,518
10/00 34,791 35,535
<PAGE>
SUMMIT LIMITED-TERM BOND FUND
-----------------------------
Merrill Lynch 1-5 Lipper Short Intermediate
Year Corporate and Investment-Grade Debt Summit Limited-
Date Government Bond Index Funds Average Term Bond Fund
---- --------------------- ------------------------- ---------------
10/29/1993 25,000 25,000 25,000
10/94 24,987 24,501 24,822
10/95 27,606 27,122 26,649
10/96 29,240 28,625 28,109
10/97 31,266 30,543 30,002
10/98 33,905 32,660 32,393
10/99 34,665 33,180 32,735
10/00 36,845 35,110 34,803
SUMMIT GNMA FUND
----------------
Salomon GNMA Lipper GNMA Summit GNMA
Date Index Funds Average Fund
---- ------------ ------------- -----------
10/29/1993 25,000 25,000 25,000
10/94 24,648 24,267 24,583
10/95 28,322 27,739 28,375
10/96 30,357 29,350 29,928
10/97 33,103 31,872 32,673
10/98 35,457 34,065 34,991
10/99 36,589 34,632 35,479
10/00 39,494 37,024 38,021
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.
Since Inception
Periods Ended 10/31/00 1 Year 3 Years 5 Years Inception Date
---------------------- ------ ------- ------- --------- ---------
Summit Cash Reserves Fund 6.02% 5.41% 5.36% 5.15% 10/29/93
Summit Limited-
Term Bond Fund 6.31 5.07 5.48 4.83 10/29/93
Summit GNMA Fund 7.16 5.18 6.03 6.17 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, as
their principal value will fluctuate. 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.
================================================================================
<PAGE>
T. Rowe Price Summit Cash Reserves Fund
---------------------------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------
Year
Ended
10/31/00 10/31/99 10/31/98 10/31/97 10/31/96
-------- -------- -------- -------- --------
NET ASSET VALUE
Beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment activities
Net investment income (loss) 0.059 0.048 0.052 0.052 0.051
Distributions
--------------------------------------------------------------------------------
Net investment income (0.059) (0.048) (0.052) (0.052) (0.051)
--------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------------------------------------------------------------------------------
Ratios/Supplemental Data
------------------------
Total return* 6.02% 4.87% 5.35% 5.33% 5.23%
--------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.45% 0.45% 0.45% 0.45% 0.45%
--------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 5.85% 4.78% 5.24% 5.18% 5.09%
--------------------------------------------------------------------------------
Net assets, end of period
(in millions) $ 2,544 $ 2,441 $ 1,885 $ 1,303 $ 742
--------------------------------------------------------------------------------
* 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.
================================================================================
<PAGE>
T. Rowe Price Summit Limited-Term Bond Fund
-------------------------------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------
Year
Ended
10/31/00 10/31/99 10/31/98 10/31/97 10/31/96
-------- -------- -------- -------- --------
NET ASSET VALUE
Beginning of period $ 4.48 $ 4.69 $ 4.61 $ 4.60 $ 4.65
-------------------------------------------------
Investment activities
Net investment income (loss) 0.27 0.26 0.28 0.29 0.30
Net realized and
unrealized gain (loss) - (0.21) 0.08 0.01 (0.05)
-------------------------------------------------
Total from
investment activities 0.27 0.05 0.36 0.30 0.25
-------------------------------------------------
Distributions
Net investment income (0.25) (0.26) (0.28) (0.28) (0.29)
Tax return of capital (0.02) - - (0.01) (0.01)
-------------------------------------------------
Total distributions (0.27) (0.26) (0.28) (0.29) (0.30)
-------------------------------------------------
NET ASSET VALUE
End of period $ 4.48 $ 4.48 $ 4.69 $ 4.61 $ 4.60
-------------------------------------------------
Ratios/Supplemental Data
------------------------
Total return* 6.31% 1.06% 7.97% 6.73% 5.48%
--------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.55% 0.55% 0.55% 0.55% 0.55%
--------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 6.12% 5.65% 5.96% 6.28% 6.43%
--------------------------------------------------------------------------------
Portfolio turnover rate 66.9% 42.2% 52.0% 74.5% 116.1%
--------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 35,381 $ 52,992 $ 40,904 $ 29,620 $ 25,984
--------------------------------------------------------------------------------
* 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.
================================================================================
<PAGE>
T. Rowe Price Summit GNMA Fund
------------------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------
Year
Ended
10/31/00 10/31/99 10/31/98 10/31/97 10/31/96
-------- -------- -------- -------- --------
NET ASSET VALUE
Beginning of period $ 9.39 $ 9.87 $ 9.83 $ 9.65 $ 9.81
-------------------------------------------------
Investment activities
Net investment income (loss) 0.62 0.61 0.64 0.67 0.67
Net realized and
unrealized gain (loss) 0.02 (0.48) 0.04 0.18 (0.16)
-------------------------------------------------
Total from
investment activities 0.64 0.13 0.68 0.85 0.51
-------------------------------------------------
Distributions
Net investment income (0.62) (0.61) (0.64) (0.64) (0.62)
Tax return of capital - - - (0.03) (0.05)
-------------------------------------------------
Total distributions (0.62) (0.61) (0.64) (0.67) (0.67)
-------------------------------------------------
NET ASSET VALUE
End of period $ 9.41 $ 9.39 $ 9.87 $ 9.83 $ 9.65
-------------------------------------------------
Ratios/Supplemental Data
------------------------
Total return* 7.16% 1.39% 7.10% 9.17% 5.47%
--------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
--------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 6.71% 6.41% 6.47% 6.91% 6.99%
--------------------------------------------------------------------------------
Portfolio turnover rate 72.7% 89.9% 83.8% 111.8% 136.1%
--------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 62,885 63,843 $ 46,571 $ 29,530 $ 24,718
--------------------------------------------------------------------------------
* 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.
================================================================================
<PAGE>
T. Rowe Price Summit Cash Reserves Fund
---------------------------------------
In thousands October 31, 2000
STATEMENT OF NET ASSETS Par Value
----------------------- -------- --------
CERTIFICATES OF DEPOSIT 25.0%
Abbey National Treasury Services (London)
6.61%, 12/27/00 $ 47,000 $ 47,000
--------------------------------------------------------------------------
7.33%, 5/16/01 22,000 22,001
--------------------------------------------------------------------------------
Allfirst Bank, VR, 6.61%, 11/10/00 5,000 5,000
--------------------------------------------------------------------------------
Banco Bilbao Vizcaya Argentaria, 6.68%, 1/22/01 25,000 24,999
--------------------------------------------------------------------------------
Bank Austria, 6.185%, 12/1/00 20,000 19,999
--------------------------------------------------------------------------------
Bank of Nova Scotia, 6.22%, 12/4/00 10,000 9,999
--------------------------------------------------------------------------------
Banque Nationale de Paris, 6.50%, 11/14/00 10,500 10,475
--------------------------------------------------------------------------------
Banque Paribas, 6.75%, 3/19/01 10,000 9,998
--------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (London)
6.58%, 12/29/00 50,000 50,000
--------------------------------------------------------------------------------
Bayerische Hypo-Und Vereinsbank (London)
6.70%, 1/8/01 25,000 25,000
--------------------------------------------------------------------------------
Credit Agricole Indosuez (London)
6.67%, 3/15/01 45,000 45,003
--------------------------------------------------------------------------
VR, 6.61%, 11/8/00 10,000 10,000
--------------------------------------------------------------------------------
Deutsche Bank, 6.19%, 12/1/00 10,000 10,000
--------------------------------------------------------------------------------
Halifax, 6.66%, 4/10/01 7,000 7,000
--------------------------------------------------------------------------------
Key Bank North America, VR, 6.924%, 1/16/01 10,000 10,006
--------------------------------------------------------------------------------
Landesbank Baden-Wuettemburg, 6.60%, 11/27/00 56,385 56,386
--------------------------------------------------------------------------------
Lloyds Bank, 6.66%, 3/19/01 8,000 8,000
--------------------------------------------------------------------------------
Mercantile Safe Deposit & Trust, 7.15%, 6/19/01 15,000 15,000
--------------------------------------------------------------------------------
Natexis Banque, 7.45%, 5/22/01 40,000 40,000
--------------------------------------------------------------------------------
National Bank of Canada, 6.68%, 4/6/01 34,000 34,001
--------------------------------------------------------------------------------
National Westminster Bank, 6.65%, 4/10/01 7,540 7,540
--------------------------------------------------------------------------------
<PAGE>
Norddeutsche Landesbank
6.23%, 12/4/00 25,000 24,999
--------------------------------------------------------------------------
7.30%, 5/11/01 10,000 10,000
--------------------------------------------------------------------------
7.42%, 6/4/01 25,000 25,000
--------------------------------------------------------------------------
Societe Generale
6.235%, 12/4/00 10,000 9,999
--------------------------------------------------------------------------
VR, 6.57%, 11/16/00 7,500 7,500
--------------------------------------------------------------------------------
Union Bank of California, VR, 6.619%, 11/1/00 15,000 15,000
--------------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale (London)
6.75%, 2/12/01 50,000 50,000
--------------------------------------------------------------------------------
Westpac Banking, 6.65%, 3/5/01 25,000 25,001
--------------------------------------------------------------------------------
Total Certificates of Deposit (Cost $634,906) 634,906
-----------
COMMERCIAL PAPER 61.7%
Alcoa, 4(2), 6.52%, 11/16/00 $ 50,000 $ 49,864
--------------------------------------------------------------------------------
Alpine Securitization, 4(2)
6.50%, 11/30/00 16,505 16,419
--------------------------------------------------------------------------
6.51%, 11/17/00 20,000 19,942
--------------------------------------------------------------------------------
AON, 6.54%, 11/17/00 12,352 12,316
--------------------------------------------------------------------------------
Asset Portfolio Funding, 4(2), 6.51%, 11/13/00 26,000 25,944
--------------------------------------------------------------------------------
Asset Securitization Cooperative, 4(2)
6.50%, 11/7/00 11,000 10,988
--------------------------------------------------------------------------
6.53%, 1/25/01 7,000 6,892
--------------------------------------------------------------------------
6.55%, 1/18/01 50,000 49,291
--------------------------------------------------------------------------------
AT&T, VR, 4(2), 6.819%, 1/16/01 10,000 10,000
--------------------------------------------------------------------------------
BASF Aktiengesellschaft, 4(2)
6.50%, 1/23/01 40,000 39,401
--------------------------------------------------------------------------
6.52%, 2/12/01 10,000 9,813
--------------------------------------------------------------------------------
Beta Finance, 4(2)
6.50%, 11/16/00 2,500 2,493
--------------------------------------------------------------------------
6.52%, 2/15-2/22/01 30,000 29,408
--------------------------------------------------------------------------------
<PAGE>
CBA (Delaware) Finance
6.505%, 2/22/01 50,000 48,979
--------------------------------------------------------------------------
6.54%, 1/16/01 2,100 2,071
--------------------------------------------------------------------------
6.60%, 12/27/00 8,000 7,918
--------------------------------------------------------------------------------
CC (USA), 6.52%, 2/22/01 32,000 31,345
--------------------------------------------------------------------------------
CDC Commercial Paper Corp., 4(2), 6.50%, 11/29/00 1,100 1,094
--------------------------------------------------------------------------------
Ciesco, 4(2), 6.50%, 11/1/00 - 2/9/01 62,780 61,919
--------------------------------------------------------------------------------
Citicorp, 6.50%, 11/22/00 20,000 19,924
--------------------------------------------------------------------------------
Coca Cola, 4(2), 6.50%, 11/30/00 10,000 9,948
--------------------------------------------------------------------------------
Corporate Asset Funding, 4(2)
6.50%, 11/2 - 11/14/00 82,740 82,628
--------------------------------------------------------------------------
6.53%, 1/16/01 15,000 14,793
--------------------------------------------------------------------------------
Corporate Receivables Corp., 4(2)
6.50%, 2/7 - 2/8/01 69,000 67,774
--------------------------------------------------------------------------
6.53%, 1/30/01 25,000 24,592
--------------------------------------------------------------------------------
DaimlerChrysler Holdings, 4(2), 6.51%, 12/15/00 17,508 17,369
--------------------------------------------------------------------------------
Delaware Funding, 4(2), 6.50%, 11/2 - 11/20/00 35,737 35,661
--------------------------------------------------------------------------------
Den Danske, 6.625%, 12/28/00 8,000 7,916
--------------------------------------------------------------------------------
Deutsche Bank Financial, 6.59%, 3/12/01 8,000 7,808
--------------------------------------------------------------------------------
Discover Card Master Trust, 4(2)
6.55%, 12/15/00 $ 6,149 $ 6,100
--------------------------------------------------------------------------
(144a), 6.55%, 12/7/00 10,000 9,934
--------------------------------------------------------------------------------
Dorada, 4(2), 6.60%, 1/12/01 13,000 12,828
--------------------------------------------------------------------------------
Dover, VR, 4(2), 6.70%, 11/28/00 16,000 16,000
--------------------------------------------------------------------------------
Enterprise Funding, 4(2)
6.53%, 1/26 - 1/31/01 6,347 6,246
--------------------------------------------------------------------------
6.55%, 1/17/01 878 866
--------------------------------------------------------------------------------
Falcon Asset Securitization, 4(2),
6.50%, 11/2 - 12/4/00 62,880 62,750
--------------------------------------------------------------------------------
GE Capital, 6.52%, 1/17 - 1/22/01 9,693 9,555
--------------------------------------------------------------------------------
<PAGE>
Golden Funding, 4(2)
6.51%, 11/20/00 12,300 12,258
--------------------------------------------------------------------------
6.53%, 11/20/00 9,927 9,893
--------------------------------------------------------------------------
6.57%, 1/30/01 3,498 3,440
--------------------------------------------------------------------------------
Greenwich Funding, 4(2)
6.50%, 11/15/00 4,000 3,990
--------------------------------------------------------------------------
6.53%, 1/26/01 5,000 4,922
--------------------------------------------------------------------------------
Honeywell International, 6.55%, 12/4/00 3,500 3,479
--------------------------------------------------------------------------------
Island Finance Puerto Rico
6.50%, 11/13-12/6/00 22,075 21,990
--------------------------------------------------------------------------
6.52%, 1/24/01 10,000 9,848
--------------------------------------------------------------------------------
KFW International, 6.50%, 2/8/01 12,325 12,105
--------------------------------------------------------------------------------
Kitty Hawk Funding, 4(2), 6.50%, 11/13-11/15/00 27,000 26,939
--------------------------------------------------------------------------------
Lloyds Bank, 6.60%, 12/6/00 8,500 8,445
--------------------------------------------------------------------------------
Market Street Funding, 6.55%, 1/16/01 8,000 7,889
--------------------------------------------------------------------------------
Massmutual Funding, 4(2), 6.53%, 1/25/01 19,000 18,707
--------------------------------------------------------------------------------
MBNA Master Credit Card Trust II, 4(2), 6.53%, 11/2/00 20,000 19,996
--------------------------------------------------------------------------------
Merita North America, 6.50%, 1/22/01 13,000 12,808
--------------------------------------------------------------------------------
National Rural Utilities Cooperative Finance,
6.38%, 6/11/01 4,000 3,843
--------------------------------------------------------------------------------
Nationwide Life Insurance, 4(2), 6.49%, 11/21/00 3,000 2,989
--------------------------------------------------------------------------------
Park Avenue Receivables, 4(2)
6.50%, 11/13/00 5,000 4,989
--------------------------------------------------------------------------
6.51%, 11/16 - 11/20/00 45,000 44,856
--------------------------------------------------------------------------------
Preferred Receivables Funding, 4(2)
6.50%, 11/14 - 11/27/00 58,871 58,669
--------------------------------------------------------------------------------
Principal Financial Services, 4(2), 6.50%, 11/7/00 22,080 22,056
--------------------------------------------------------------------------------
Repeat Offering Securitization, 4(2), 6.55%, 1/23/01 48,384 47,653
--------------------------------------------------------------------------------
<PAGE>
Rio Tinto (Commercial Paper) Ltd., 4(2)
6.50%, 11/9 - 11/21/00 $ 9,317 $ 9,299
--------------------------------------------------------------------------
6.51%, 11/1/00 14,119 14,119
--------------------------------------------------------------------------------
San Paolo IMI U.S. Financial
6.52%, 1/26/01 40,000 39,377
--------------------------------------------------------------------------
6.64%, 12/5/00 8,500 8,447
--------------------------------------------------------------------------------
Sand Dollar Funding, 4(2), 6.56%, 1/19/01 25,000 24,640
--------------------------------------------------------------------------------
Santander Finance (Delaware), 6.625%, 12/27/00 8,000 7,918
--------------------------------------------------------------------------------
Stanford Univ., 6.50%, 2/16 - 2/20/01 34,000 33,330
--------------------------------------------------------------------------------
Sysco, 4(2)
6.50%, 11/9/00 4,463 4,456
--------------------------------------------------------------------------
6.51%, 11/9/00 50,000 49,928
--------------------------------------------------------------------------------
Tasmanian Public Finance, 4(2), 6.50%, 11/3/00 30,000 29,989
--------------------------------------------------------------------------------
Three Rivers Funding, 4(2), 6.51%, 11/2/00 12,000 11,998
--------------------------------------------------------------------------------
Toronto-Dominion Holdings (USA)
6.60%, 12/6/00 - 3/12/01 16,500 16,253
--------------------------------------------------------------------------------
Tulip Funding, 4(2)
6.50%, 11/13/00 6,670 6,656
--------------------------------------------------------------------------
6.51%, 12/7/00 9,304 9,243
--------------------------------------------------------------------------
6.53%, 11/28-11/30/00 20,477 20,375
--------------------------------------------------------------------------------
Unilever Capital, (144a), 4(2), 6.683%, 12/7/00 + 15,000 15,000
--------------------------------------------------------------------------------
Variable Funding Capital, 4(2), 6.50%, 11/10/00 20,000 19,968
--------------------------------------------------------------------------------
Verizon Network Funding, 6.56%, 11/20/00 30,000 30,000
--------------------------------------------------------------------------------
Woolwich Building Society, 6.67%, 12/8/00 8,500 8,442
--------------------------------------------------------------------------------
Total Commercial Paper (Cost $1,569,991) 1,569,991
-----------
<PAGE>
MEDIUM-TERM NOTES 12.9%
AT&T Capital, VR, 7.503%, 12/1/00 30,000 30,016
--------------------------------------------------------------------------------
Banc One, VR, 6.795%, 12/26/00 14,500 14,508
--------------------------------------------------------------------------------
Bank of Scotland Treasury Services, VR, 6.77%, 1/19/01 30,000 29,999
--------------------------------------------------------------------------------
Bank One, VR, 6.869%, 1/16/01 8,500 8,502
--------------------------------------------------------------------------------
Bankboston, VR, 6.945%, 11/24/00 35,000 35,035
--------------------------------------------------------------------------------
Beta Finance
(144a), 6.52%, 11/20/00 5,000 4,983
--------------------------------------------------------------------------
6.75%, 3/15/01 5,000 5,000
--------------------------------------------------------------------------------
Caterpillar Financial Services
5.83%, 12/15/00 750 749
--------------------------------------------------------------------------
5.88%, 12/13/00 1,500 1,500
--------------------------------------------------------------------------------
CIT Group, VR, 6.604%, 12/6/00 $ 7,000 $ 6,998
--------------------------------------------------------------------------------
Diageo Capital, 6.24%, 12/4/00 10,000 9,999
--------------------------------------------------------------------------------
First Security Auto Owner Trust, 6.773%, 7/16/01 4,302 4,302
--------------------------------------------------------------------------------
Ford Capital BV, 10.125%, 11/15/00 6,150 6,158
--------------------------------------------------------------------------------
General Motors Acceptance Corporation, VR,
6.979%, 7/30/01 15,000 15,024
--------------------------------------------------------------------------------
Goldman Sachs Group
(144a), 6.20%, 12/15/00 1,200 1,200
--------------------------------------------------------------------------
VR, 6.62%, 11/20/00 10,000 10,000
--------------------------------------------------------------------------------
Household Finance
6.45%, 3/15/01 895 892
--------------------------------------------------------------------------
VR, 6.82%, 11/6/00 11,000 11,003
--------------------------------------------------------------------------------
Hydro Quebec, 9.23%, 12/4/00 1,500 1,504
--------------------------------------------------------------------------------
Merrill Lynch, VR, 6.824%, 11/7/00 8,600 8,604
--------------------------------------------------------------------------------
Northern Rock, VR, (144a), 6.62%, 4/20/01 20,000 20,000
--------------------------------------------------------------------------------
R.R. Donnelley & Sons, 9.125%, 12/1/00 4,040 4,049
--------------------------------------------------------------------------------
Rabobank Optional Redemption Trust
VR, 6.618%, 11/17/00 1,490 1,490
--------------------------------------------------------------------------------
<PAGE>
Sigma Finance, (144a)
VR, 6.61%, 11/15/00 + 20,000 19,998
--------------------------------------------------------------------------
6.75%, 3/15/01 18,000 18,000
--------------------------------------------------------------------------------
Strategic Money Market Trust, VR, (144a)
6.64%, 11/13/00 + 10,000 10,000
--------------------------------------------------------------------------
6.66%, 12/13/00 + 20,000 20,000
--------------------------------------------------------------------------------
Toyota Motor Credit, 6.722%, 1/12/01 25,000 24,996
--------------------------------------------------------------------------------
World Omni Auto Receivables Trust, 6.694%, 8/15/01 4,608 4,608
--------------------------------------------------------------------------------
Total Medium-Term Notes (Cost $329,117) 329,117
-----------
FUNDING AGREEMENTS 2.2%
Allstate Life Insurance, VR, 6.772%, 11/1/00 + 10,000 10,000
--------------------------------------------------------------------------------
Peoples Benefit Life Insurance, VR
6.76%, 11/1/00 + 20,000 20,000
--------------------------------------------------------------------------
6.77%, 11/1/00 + 10,000 10,000
--------------------------------------------------------------------------------
Protective Life Insurance, VR, 6.83%, 12/1/00 + 5,000 5,000
--------------------------------------------------------------------------------
Security Life of Denver, 6.67%, 11/30/00 + 10,000 10,000
--------------------------------------------------------------------------------
Total Funding Agreements (Cost $55,000) 55,000
-----------
TOTAL INVESTMENTS IN SECURITIES
101.8% of Net Assets (Cost $2,589,014) $ 2,589,014
Other Assets Less Liabilities (44,605)
-----------
NET ASSETS $ 2,544,409
----------- -----------
NET ASSETS CONSIST OF:
Accumulated net realized gain/loss - net of distributions $ (20)
Paid-in-capital applicable to 2,544,429,400 shares
of $0.0001 par value capital stock outstanding;
4,000,000,000 shares of the Corporation authorized 2,544,429
-----------
NET ASSETS $ 2,544,409
----------- -----------
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
4.7% of net assets.
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Summit Limited-Term Bond Fund
------------------------------------------- October 31, 2000
STATEMENT OF NET ASSETS
----------------------- Par/Shares Value
In thousands
CORPORATE BONDS AND NOTES 42.8%
Banking and Finance 13.7%
ABN AMRO Bank (Chicago), N.V.
Sr. Sub. Notes, 7.25%, 5/31/05 $ 340 $ 340
--------------------------------------------------------------------------------
AIG Sunamerica Global Financing
Sr. Notes, (144a), 7.40%, 5/5/03 450 457
--------------------------------------------------------------------------------
Banco Generale, Sr. Notes, (144a), 7.70%, 8/1/02 250 243
--------------------------------------------------------------------------------
CIT Group, Sr. Notes, 5.50%, 2/15/04 450 422
--------------------------------------------------------------------------------
First USA Bank, Sr. Notes, 7.00%, 8/20/01 65 65
--------------------------------------------------------------------------------
General Electric Capital, MTN, 7.50%, 5/15/05 250 257
--------------------------------------------------------------------------------
Heller Financial, Sr. Notes, 7.50%, 8/23/02 300 300
--------------------------------------------------------------------------------
HSBC Finance Nederland
Sr. Sub. Notes, (144a), 7.40%, 4/15/03 160 161
--------------------------------------------------------------------------------
Kansallis-Osake-Pankki (New York)
Sr. Notes, 10.00%, 5/1/02 325 337
--------------------------------------------------------------------------------
Marsh & McLennan, Sr. Notes, 6.625%, 6/15/04 450 443
--------------------------------------------------------------------------------
MBNA, Sub. Notes, 7.25%, 9/15/02 165 164
--------------------------------------------------------------------------------
Merrill Lynch, Sr. Notes, 7.00%, 3/15/06 225 223
--------------------------------------------------------------------------------
Morgan Guaranty Trust, Sr. Sub. Notes, 7.375%, 2/1/02 115 115
--------------------------------------------------------------------------------
Morgan Stanley Dean Witter, Sr. Notes, 7.75%, 6/15/05 400 408
--------------------------------------------------------------------------------
Potomac Capital Investment, MTN, (144a), 7.55%, 11/19/01 225 225
--------------------------------------------------------------------------------
Provident Bank, Sr. Sub. Notes, 7.125%, 3/15/03 225 221
--------------------------------------------------------------------------------
Salomon Smith Barney, Sr. Notes, 7.30%, 5/15/02 300 301
--------------------------------------------------------------------------------
Union Planters, Sr. Sub. Notes, 6.25%, 11/1/03 160 152
--------------------------------------------------------------------------------
4,834
--------------------------------------------------------------------------------
<PAGE>
Consumer Products and Services 8.5%
Beckman Instruments, Sr. Notes, 7.10%, 3/4/03 315 307
--------------------------------------------------------------------------------
Federated Department Stores, Sr. Notes, 8.125%, 10/15/02 250 250
--------------------------------------------------------------------------------
GATX Capital, Sr. Notes, 6.875%, 11/1/04 225 216
--------------------------------------------------------------------------------
Grand Metropolitan Investment
Sr. Notes, Zero Coupon, 1/6/04 675 542
--------------------------------------------------------------------------------
Hewlett Packard, Sr. Notes, 7.15%, 6/15/05 450 451
--------------------------------------------------------------------------------
Nabisco, Sr. Notes, 6.125%, 2/1/33 260 249
--------------------------------------------------------------------------------
Sony, Sr. Notes, 6.125%, 3/4/03 375 370
--------------------------------------------------------------------------------
Viacom, Sr. Notes, 6.75%, 1/15/03 $ 190 $ 189
--------------------------------------------------------------------------------
Wal-Mart Stores, Sr. Notes, 6.55%, 8/10/04 425 422
--------------------------------------------------------------------------------
2,996
--------------------------------------------------------------------------------
Energy 1.1%
PDV America, Sr. Notes, 7.875%, 8/1/03 205 198
--------------------------------------------------------------------------------
YPF Sociedad Anonima, Sr. Notes, 7.25%, 3/15/03 190 184
--------------------------------------------------------------------------------
382
--------------------------------------------------------------------------------
Industrials 7.0%
Caterpillar Financial Services, Sr. Notes, 6.875%, 8/1/04 250 246
--------------------------------------------------------------------------------
DaimlerChrysler, Sr. Notes, 7.125%, 3/1/02 250 250
--------------------------------------------------------------------------------
Eaton Offshore, Sr. Notes, 9.00%, 2/15/01 330 332
--------------------------------------------------------------------------------
Ford Motor Credit, Sr. Notes, 7.50%, 3/15/05 225 226
--------------------------------------------------------------------------------
Hertz, Sr. Notes, 8.25%, 6/1/05 400 409
--------------------------------------------------------------------------------
Parker-Hannifin, MTN, 5.65%, 9/15/03 250 241
--------------------------------------------------------------------------------
Toyota Motor Credit, Sr. Notes, 5.625%, 11/13/03 250 242
--------------------------------------------------------------------------------
United Technologies, Sr. Notes, 6.625%, 11/15/04 250 247
--------------------------------------------------------------------------------
Waste Management, Sr. Notes, 6.625%, 7/15/02 310 300
--------------------------------------------------------------------------------
2,493
--------------------------------------------------------------------------------
<PAGE>
Media and Communications 3.8%
360 Communications, Sr. Notes, 7.125%, 3/1/03 250 250
--------------------------------------------------------------------------------
KPN, Sr. Notes, (144a), 7.50%, 10/1/05+ 120 119
--------------------------------------------------------------------------------
Sprint Capital, Sr. Notes, 5.70%, 11/15/03 340 326
--------------------------------------------------------------------------------
U.S. West Capital Funding, Sr. Notes, 6.875%, 8/15/01 250 249
--------------------------------------------------------------------------------
Vodafone Group, Sr. Notes, (144a), 7.625%, 2/15/05 390 396
--------------------------------------------------------------------------------
1,340
--------------------------------------------------------------------------------
Telephone 1.1%
Deutsche Telekom International Finance
Sr. Notes, 7.75%, 6/15/05 400 408
--------------------------------------------------------------------------------
408
--------------------------------------------------------------------------------
Transportation 2.2%
Amerco, Sr. Notes, 8.80%, 2/4/05 250 240
--------------------------------------------------------------------------------
ERAC USA Finance, Sr. Notes, (144a), 6.375%, 5/15/03 175 170
--------------------------------------------------------------------------------
Norfolk Southern, Sr. Notes
6.95%, 5/1/02 250 249
--------------------------------------------------------------------------------
7.875%, 2/15/04 125 127
--------------------------------------------------------------------------------
786
--------------------------------------------------------------------------------
Utilities 5.4%
CE Electric UK Funding, Sr. Notes, (144a), 6.853%, 12/30/04 + $ 270 $ 265
--------------------------------------------------------------------------------
National Rural Utilities, 5.00%, 10/1/02 450 438
--------------------------------------------------------------------------------
Niagara Mohawk Power, Sr. Disc. Notes, 7.375%, 7/1/03 253 254
--------------------------------------------------------------------------------
Pacific Gas & Electric, 1st Mtg. Bonds, 8.75%, 1/1/01 215 215
--------------------------------------------------------------------------------
Public Service Electric & Gas, 1st Mtg. Bonds, 8.875%, 6/1/03 240 244
--------------------------------------------------------------------------------
Utilicorp United, Sr. Notes, 7.00%, 7/15/04 250 245
--------------------------------------------------------------------------------
Williams Companies, Sr. Notes, 6.125%, 2/15/12 240 236
--------------------------------------------------------------------------------
1,897
--------------------------------------------------------------------------------
Total Corporate Bonds and Notes (Cost $15,302) 15,136
--------------------------------------------------------------------------------
<PAGE>
U.S. GOVERNMENT OBLIGATIONS/
AGENCIES 2.5%
U.S. Treasury Obligations 2.5%
U.S. Treasury Inflation-Indexed Notes, 3.625%, 7/15/02 890 891
--------------------------------------------------------------------------------
Total U.S. Government Obligations/Agencies (Cost $888) 891
--------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-Backed
SECURITIES 22.5%
U.S. Government Agency Obligations 14.7%
Federal Home Loan Mortgage
6.00%, 8/15/06-5/15/16 2,233 2,209
--------------------------------------------------------------------------------
6.50%, 5/1/05-8/15/23 873 864
--------------------------------------------------------------------------------
10.75%, 12/1/09 72 76
--------------------------------------------------------------------------------
CMO, 5.75%, 6/15/10 769 765
--------------------------------------------------------------------------------
Federal National Mortgage Assn.
5.25%, 1/15/03 250 244
--------------------------------------------------------------------------------
6.00%, 11/1/13 328 316
--------------------------------------------------------------------------------
9.00%, 5/1/05 93 94
--------------------------------------------------------------------------------
REMIC, 9.00%, 1/25/08 614 644
--------------------------------------------------------------------------------
5,212
--------------------------------------------------------------------------------
U.S. Government Guaranteed Obligations 7.8%
Government National Mortgage Assn.
I
7.00%, 9/15/12 - 4/15/13 $ 1,936 $ 1,936
--------------------------------------------------------------------------------
8.00%, 5/15/07 493 497
--------------------------------------------------------------------------------
10.00%, 11/15/09 - 10/15/21 245 258
--------------------------------------------------------------------------------
II, 10.00%, 10/20/20 51 53
--------------------------------------------------------------------------------
Midget, I
9.00%, 4/15 - 12/15/01 10 10
--------------------------------------------------------------------------------
10.00%, 1/15 - 4/15/01 4 4
--------------------------------------------------------------------------------
10.50%, 1/15 - 2/15/01 1 1
--------------------------------------------------------------------------------
2,759
--------------------------------------------------------------------------------
Total U.S. Government Mortgage-Backed Securities (Cost $7,997) 7,971
--------------------------------------------------------------------------------
<PAGE>
ASSET-BACKED SECURITIES 17.9%
Advanta Equipment Receivables, 7.56%, 2/15/07 320 320
--------------------------------------------------------------------------------
Banc One Auto Grantor Trust, 6.27%, 11/20/03 27 26
--------------------------------------------------------------------------------
BMW Vehicle Owner Trust, 6.54%, 4/25/04 250 249
--------------------------------------------------------------------------------
California Infrastructure
6.38%, 9/25/08 500 490
--------------------------------------------------------------------------------
6.42%, 9/25/08 400 393
--------------------------------------------------------------------------------
Comed Transitional Funding Trust, 5.44%, 3/25/07 530 508
--------------------------------------------------------------------------------
DaimlerChrysler Auto Trust, Sr. Notes, 6.66%, 1/8/05 400 401
--------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust, 5.90%, 5/25/06 200 195
--------------------------------------------------------------------------------
Dealer Auto Receivables Trust, 7.07%, 5/17/04 400 402
--------------------------------------------------------------------------------
Fingerhut Master Trust, 6.07%, 2/15/05 277 276
--------------------------------------------------------------------------------
First USA Credit Card Master Trust, 6.50%, 1/18/06 + 450 440
--------------------------------------------------------------------------------
Harley Davidson Eaglemark, 5.94%, 2/15/04 83 83
--------------------------------------------------------------------------------
Heller Equipment Asset Trust, 6.65%, 3/14/04 450 448
--------------------------------------------------------------------------------
MBNA Master Credit Card Trust
7.45%, 4/16/07 + 225 225
--------------------------------------------------------------------------------
7.90%, 7/16/07 + 250 254
--------------------------------------------------------------------------------
MMCA Automobile Trust, 6.80%, 8/15/03 450 450
--------------------------------------------------------------------------------
New Holland Equipment Receivables, (144a)
6.80%, 12/15/07 + $ 450 $ 451
--------------------------------------------------------------------------------
Peco Energy Transition Trust, 5.63%, 3/1/05 270 265
--------------------------------------------------------------------------------
WFS Financial Owner Trust, 7.41%, 9/20/07 450 457
--------------------------------------------------------------------------------
Total Asset-Backed Securities (Cost $6,378) 6,333
--------------------------------------------------------------------------------
<PAGE>
NON-U.S. GOVERNMENT MORTGAGE-backed
SECURITIES 4.8%
EQCC Home Equity Loan Trust, 6.159%, 4/15/08 325 317
--------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, 6.15%, 11/15/07 394 386
--------------------------------------------------------------------------------
LB Commercial Conduit Mortgage Trust, 6.41%, 8/15/07 511 501
--------------------------------------------------------------------------------
Saxon Asset Securities Trust, 6.73%, 2/25/27 500 491
--------------------------------------------------------------------------------
Total Non-U.S. Government Mortgage-Backed Securities (Cost $1, 1,695
--------------------------------------------------------------------------------
MUNICIPAL BONDS 0.2%
University of Miami, 6.90%, 4/1/04 (MBIA Insured) 50 50
--------------------------------------------------------------------------------
Total Municipal Bonds (Cost $50) 50
--------------------------------------------------------------------------------
Money Market Funds 7.9%
Reserve Investment Fund, 6.68% # 2,801 2,801
--------------------------------------------------------------------------------
Total Money Market Funds (Cost $2,801) 2,801
Total Investments in Securities
--------------------------------------------------------------------------------
98.6% of Net Assets (Cost $35,115) $ 34,877
Other Assets Less Liabilities 504
NET ASSETS $ 35,381
Net Assets Consist of:
Accumulated net realized gain/loss - net of distributions $ (2,819)
Net unrealized gain (loss) (238)
Paid-in-capital applicable to 7,897,473 shares
of $0.0001 par value capital stock outstanding;
4,000,000,000 shares of the Corporation authorized 38,438
--------------------------------------------------------------------------------
NET ASSETS $ 35,381
NET ASSET VALUE PER SHARE $ 4.48
+ Private Placement
# Seven-day yield
CMO Collateralized Mortgage Obligation
GO General Obligation
MBIA Municipal Bond Investors Assurance Corp.
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 7.03% of net assets.
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Summit GNMA Fund
------------------------------ October 31, 2000
STATEMENT OF NET ASSETS
----------------------- Par/Shares Value
In thousands
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 98.9%
U.S. Government Guaranteed Obligations 91.8%
Government National Mortgage Assn.
I
5.00%, 8/16/28 $ 700 $ 631
--------------------------------------------------------------------------------
6.00%, 4/15/28 - 5/15/29 3,919 3,693
--------------------------------------------------------------------------------
6.50%, 9/15/25 - 8/15/29 9,196 8,886
--------------------------------------------------------------------------------
7.00%, 4/15/24 - 1/15/30 10,619 10,475
--------------------------------------------------------------------------------
7.50%, 9/15/12 - 12/15/29 11,510 11,583
--------------------------------------------------------------------------------
8.00%, 4/15/17 - 6/15/30 6,078 6,183
--------------------------------------------------------------------------------
8.50%, 6/15/16 - 3/15/27 1,218 1,254
--------------------------------------------------------------------------------
9.00%, 8/15/08 - 8/15/21 552 576
--------------------------------------------------------------------------------
9.50%, 6/15/09 - 7/15/20 176 184
--------------------------------------------------------------------------------
10.00%, 12/15/17 - 3/15/26 945 992
--------------------------------------------------------------------------------
10.50%, 7/15/15 - 11/15/19 384 412
--------------------------------------------------------------------------------
11.00%, 12/15/09 - 12/15/15 52 56
--------------------------------------------------------------------------------
11.50%, 12/15/15 18 20
--------------------------------------------------------------------------------
II
6.50%, 11/20/28 - 11/20/30 3,463 3,298
--------------------------------------------------------------------------------
7.00%, 10/20/30 1,200 1,179
--------------------------------------------------------------------------------
8.00%, 5/20 - 6/20/29 689 698
--------------------------------------------------------------------------------
8.50%, 6/20/29 140 143
--------------------------------------------------------------------------------
9.00%, 5/20/22 - 3/20/25 130 133
--------------------------------------------------------------------------------
9.50%, 2/20/17 - 12/20/20 98 102
--------------------------------------------------------------------------------
10.00%, 1/20/14 - 3/20/21 93 97
--------------------------------------------------------------------------------
11.00%, 9/20/17 11 12
--------------------------------------------------------------------------------
Construction Loan, I
6.75%, 11/15/01 532 496
--------------------------------------------------------------------------------
Outstanding commitment, expires 1/1/39 * 4 3
--------------------------------------------------------------------------------
<PAGE>
GPM, I
9.25%, 7/15/17 6 6
--------------------------------------------------------------------------------
9.50%, 7/15/09 29 30
--------------------------------------------------------------------------------
Principal Only, I, 3/16/28 393 276
--------------------------------------------------------------------------------
Project Loan, I, 7.37%, 8/15/33 395 392
--------------------------------------------------------------------------------
REMIC
6.50%, 9/20/28 500 475
--------------------------------------------------------------------------------
7.00%, 5/16/24 3,000 2,981
--------------------------------------------------------------------------------
TBA, I
7.00%, 1/15/30 $ 1,500 $ 1,479
--------------------------------------------------------------------------------
7.50%, 1/15/30 1,000 1,004
--------------------------------------------------------------------------------
57,749
--------------------------------------------------------------------------------
U.S. Government Agency Obligations 7.1%
Federal Home Loan Mortgage
TBA, 7.00%, 1/1/30 1,275 1,250
--------------------------------------------------------------------------------
Federal National Mortgage Assn.
6.50%, 7/1/29 - 2/1/30 1,467 1,410
--------------------------------------------------------------------------------
7.50%, 9/1/30 1,490 1,487
--------------------------------------------------------------------------------
CMO, Interest Only, 8.50%, 4/1/22 ** 229 60
--------------------------------------------------------------------------------
REMIC, 5.00%, 8/25/22 14 14
--------------------------------------------------------------------------------
Principal Only, 10/25/21 271 259
--------------------------------------------------------------------------------
4,480
--------------------------------------------------------------------------------
Total U.S. Government Mortgage-Backed Securities (Cost $62, 62,229
--------------------------------------------------------------------------------
NON-GOVERNMENT MORTGAGE-BACKED
SECURITIES 1.1%
JP Morgan Commercial Mortgage Finance
7.41%, 8/15/32 700 707
--------------------------------------------------------------------------------
Total Non-Government Mortgage-Backed Securities (Cost $703) 707
--------------------------------------------------------------------------------
<PAGE>
ASSET-BACKED SECURITIES 0.6%
Securitized Asset Sales, 7.41%, 9/25/24 375 369
--------------------------------------------------------------------------------
Total Asset-Backed Securities (Cost $369) 369
--------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS 0.1%
U.S. Treasury Obligations 0.1%
U.S. Treasury Bills, 6.05%, 1/11/01 50 49
--------------------------------------------------------------------------------
Total U.S. Government Obligations (Cost $49) 49
--------------------------------------------------------------------------------
MONEY MARKET FUNDS 4.7%
Reserve Investment Fund, 6.68% # 2,964 2,964
--------------------------------------------------------------------------------
Total Money Market Funds (Cost $2,964) 2,964
Total Investments in Securities
--------------------------------------------------------------------------------
105.4% of Net Assets (Cost $66,878) $ 66,318
Futures Contracts
In thousands
Contract Unrealized
Expiration Value Gain (Loss)
__________ ________ ___________
Long, 15 5-year U.S.Treasury Note,
$15,000 Par of U.S.Treasury Bills
pledged as initial margin 12/00 $ 1,510 $ (16)
Net payments (receipts) of variation
margin to date 15
--------------------------------------------------------------------------------
Variation margin receivable
(payable) on open futures contracts (1)
Other Assets Less Liabilities (3,432)
Including $6,275,000 payable for investment securities purchased
NET ASSETS $ 62,885
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (333)
Accumulated net realized gain/loss - net of distributions (1,379)
Net unrealized gain (loss) (576)
Paid-in-capital applicable to 6,683,449 shares of $0.0001 par
value capital stock outstanding; 4,000,000,000 shares of the
Corporation authorized 65,173
NET ASSETS $ 62,885
NET ASSET VALUE PER SHARE $ 9.41
* A liability to fund the outstanding commitment has been recognized.
** 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.
================================================================================
<PAGE>
T. Rowe Price Summit Income Funds
---------------------------------
STATEMENT OF OPERATIONS
---------------------- Cash Reserves Limited-Term GNMA
Fund Bond Fund Fund
In thousands
Year Year Year
Ended Ended Ended
10/31/00 10/31/00 10/31/00
Investment Income (Loss)
Interest income $ 162,748 $ 2,969 $ 4,339
Expenses
Investment management and administrative 11,611 244 356
--------------------------------------------------------------------------------
Net investment income (loss) 151,137 2,725 3,983
--------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities (56) (1,358) (996)
--------------------------------------------------------------------------------
Change in net unrealized gain or loss
Securities - 1,208 1,075
Futures - - (16)
--------------------------------------------------------------------------------
Change in net unrealized gain or loss - 1,208 1,059
--------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (56) (150) 63
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 151,081 $ 2,575 $ 4,046
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Summit Cash Reserves Fund
---------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------- In thousands
Year
Ended
10/31/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 151,137 $ 103,946
Net realized gain (loss) (56) (4)
--------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 151,081 103,942
--------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (151,137) (103,946)
--------------------------------------------------------------------------------
Capital share transactions *
Shares sold 3,992,677 3,301,638
Distributions reinvested 144,782 99,573
Shares redeemed (4,033,595) (2,845,153)
--------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 103,864 556,058
--------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period 103,808 556,054
Beginning of period 2,440,601 1,884,547
--------------------------------------------------------------------------------
End of period $ 2,544,409 $ 2,440,601
*Share information
Shares sold 3,992,677 3,301,638
Distributions reinvested 144,782 99,573
Shares redeemed (4,033,595) (2,845,153)
--------------------------------------------------------------------------------
Increase (decrease) in shares outstanding 103,864 556,058
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Summit Limited-Term Bond Fund
-------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------- In thousands
Year
Ended
10/31/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 2,725 $ 2,921
Net realized gain (loss) (1,358) (144)
Change in net unrealized gain or loss 1,208 (2,174)
--------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 2,575 603
--------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (2,488) (2,921)
Tax return of capital (237) -
--------------------------------------------------------------------------------
Decrease in net assets from distributions (2,725) (2,921)
--------------------------------------------------------------------------------
Capital share transactions *
Shares sold 10,964 28,634
Distributions reinvested 2,007 2,063
Shares redeemed (30,432) (16,291)
--------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions (17,461) 14,406
--------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period (17,611) 12,088
Beginning of period 52,992 40,904
--------------------------------------------------------------------------------
End of period $ 35,381 $ 52,992
*Share information
Shares sold 2,476 6,229
Distributions reinvested 452 453
Shares redeemed (6,870) (3,572)
--------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (3,942) 3,110
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Summit GNMA Fund
------------------------------
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------- In thousands
Year
Ended
10/31/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 3,983 $ 3,658
Net realized gain (loss) (996) (56)
Change in net unrealized gain or loss 1,059 (2,837)
-------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 4,046 765
-------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (3,983) (3,658)
-------------------------------------------------------------------------------
Capital share transactions *
Shares sold 20,931 35,537
Distributions reinvested 2,748 2,630
Shares redeemed (24,700) (18,002)
-------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions (1,021) 20,165
-------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period (958) 17,272
Beginning of period 63,843 46,571
-------------------------------------------------------------------------------
End of period $ 62,885 $ 63,843
===============================================================================
*Share information
Shares sold 2,254 3,684
Distributions reinvested 296 274
Shares redeemed (2,669) (1,874)
-------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (119) 2,084
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Summit Income Funds
--------------------------------- October 31, 2000
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 as a diversified, open-end management
investment company. 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), are three portfolios established by the corporation and
commenced operations on October 29, 1993. The Cash Reserves Fund seeks
preservation of capital and liquidity and, consistent with these, the highest
possible current income. The Limited-Term Bond Fund seeks a high level of income
consistent with moderate fluctuations in principal value. The GNMA Fund seeks a
high level of income and maximum credit protection by investing at least 65% of
total assets in GNMA securities backed by the full faith and credit of the U.S.
government.
The accompanying financial statements were prepared in accordance with
generally accepted accounting principles, which require the use of estimates
made by fund management.
Valuation Debt securities are generally traded in the over-the-counter
market. 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 held by the Limited-Term Bond and GNMA Funds with
original maturities less than one year are stated at fair value, which is
determined by using a matrix system that establishes a value for each security
based on money market yields. 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. Financial futures contracts
are valued at closing settlement prices.
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.
<PAGE>
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 net investment income and realized gains determined in
accordance with generally accepted accounting principles. Payments ("variation
margin") made or received by the fund to settle the daily fluctuations in the
value of futures contracts are recorded as unrealized gains or losses until the
contracts are closed. Unrealized gains and losses on futures contracts are
included in Change in net unrealized gain or loss in the accompanying financial
statements.
NOTE 2 - INVESTMENT TRANSACTIONS
--------------------------------
Consistent with their investment objectives, the funds engage in the
following practices to manage exposure to certain risks or enhance performance.
The investment objective, policies, program, and risk factors of each fund are
described more fully in each fund's prospectus and Statement of Additional
Information.
At October 31, 2000, the GNMAFund was a party to futures contracts, which
provide for the future sale by one party and purchase by another of a specified
amount of a specific financial instrument at an agreed upon price, date, time
and place. Risks arise from possible illiquidity of the futures market and from
movements in security values.
Purchases and sales of portfolio securities, other than short-term
securities, for the year ended October 31, 2000, were as follows:
Limited-Term
Bond Fund GNMA Fund
--------- ---------
U.S. government securities
Purchases $ 14,579,000 $ 42,551,000
Sales 23,870,000 43,891,000
Other securities
Purchases $ 14,226,000 $ 1,072,000
Sales 21,121,000 10,000
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 income. As of October 31, 2000, the Cash Reserves Fund has $60,000 of
capital loss carryforwards, of which $4,000 expires in 2007, and $56,000 expires
in 2008. As of October 31, 2000, the Limited-Term Bond Fund has $2,819,000 of
capital loss carryforwards, of which $808,000 expires in 2002, and $354,000
expires in 2003, and $1,657,000 thereafter through 2008. As of October 31, 2000,
the GNMA Fund has $1,395,000 of capital loss carryforwards, of which $131,000
expires in 2003, $142,000 expires in 2004, and $1,122,000 thereafter through
2008. Each fund intends to retain gains realized in future periods that may be
offset by available capital loss carryforwards.
<PAGE>
In order for the funds' capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, the following
reclassifications were made during the year ended October 31, 2000. The results
of operations and net assets were not affected by the increases/(decreases) to
these accounts.
Limited-Term
Bond Fund GNMA Fund
--------- ---------
Undistributed net investment income $ (44,000) $ (89,000)
Undistributed net realized gain 44,000 121,000
Paid-in-capital - (32,000)
At October 31, 2000, 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 $2,589,014,000,
$35,115,000, and $66,878,000, 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
Bond Fund GNMA Fund
--------- ---------
Appreciated investments $ 141,000 $ 449,000
Depreciated investments (379,000) (1,009,000)
Net unrealized gain (loss) $ (238,000) $ (560,000)
NOTE 4 - RELATED PARTY TRANSACTIONS
-----------------------------------
Each fund is managed by T. Rowe Price Associates, Inc. (the manager or
Price Associates). The investment management and administrative agreement
between each fund and the manager provides for an all-inclusive annual fee, of
which $781,000 and $16,000 were payable at October 31, 2000 by the Cash Reserves
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, Price Associates, and, in the case of
<PAGE>
T. Rowe Price Spectrum International, T. Rowe Price International. At
October 31, 2000, no Spectrum Fund held outstanding shares of the Cash Reserves
Fund. For the year then ended, the Cash Reserves Fund was allocated $7,000 of
Spectrum expenses. The fund may invest in the Reserve Investment Fund and
Government Reserve Investment Fund (collectively, the Reserve Funds), open-end
management investment companies managed by Price Associates. The Reserve Funds
are offered as cash management options only to mutual funds and other accounts
managed by Price Associates or T. Rowe Price International, and are not
available to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the Limited-Term Bond and the GNMAFunds
for the year ended October 31, 2000, totaled $54,000 and $82,000, respectively,
and are reflected as interest income in the accompanying Statement of
Operations.
NOTE 5 - SUBSEQUENT EVENT
-------------------------
On November 1, 2000, the T. Rowe Price Short-Term Bond Fund (the Short-Term
Bond Fund) acquired substantially all the assets of the Limited-Term Bond Fund,
pursuant to the Agreement and Plan of Reorganization dated September 1, 2000,
and approved by Limited-Term Bond Fund shareholders on October 25, 2000. The
acquisition was accomplished by a tax-free exchange of 7,708,209 shares of the
Short-Term Bond Fund, having a value of $35,381,000, for the 7,897,473 shares of
the Limited-Term Bond Fund outstanding at the merger date. The Limited-Term Bond
Fund's net assets at that date, which included $238,000 of unrealized
depreciation, were combined with those of the Short-Term Bond Fund. In a related
merger on the same date, the Short-Term Bond Fund also acquired the assets of
the T. Rowe Price Short-Term U.S. Government Fund, having a value of
$121,220,000. Immediately after the mergers, the net assets of the Short-Term
Bond Fund totaled $460,097,000.
================================================================================
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 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, 2000, 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 accounting principles generally
accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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, 2000 by correspondence with the custodian and broker, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 17, 2000
================================================================================
<PAGE>
T. Rowe Price Summit Limited-Term Bond Fund
-------------------------------------------
ANNUAL MEETING RESULTS
The T. Rowe Price Summit Limited-Term Bond Fund held a special meeting on
October 25, 2000, to approve an agreement and plan of reorganization for the
fund. The plan provided for the transfer of fund assets to the T. Rowe Price
Short-Term Bond Fund in exchange for shares of the Short-Term Bond Fund, and
distribution of Short-Term Bond Fund shares to the shareholders of the Summit
Limited-Term Bond Fund in a liquidation of the Summit fund.
The results of voting were as follows (by number of shares):
Affirmative: 5,009,235.123
Against: 333,150.754
Abstain: 19,938.799
Total: 5,362,324.676
================================================================================
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 8:30a.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[Reg Mark]
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. **
<PAGE>
INVESTMENT INFORMATION
----------------------
COMBINED STATEMENT Overview of all your accounts with
T. Rowe Price.
SHAREHOLDER REPORTS Fund managers' reviews of their strategies
and results.
T. ROWE PRICE REPORT Quarterly investment newsletter discussing
markets and financial strategies.
PERFORMANCE UPDATE Quarterly review of all T. Rowe Price fund
results.
INSIGHTS Educational reports on investment strategies and
financial markets.
INVESTMENT GUIDES Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International Investing,
Personal Strategy Planner, Retirees Financial Guide, and
Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price
Investment Services, Inc., Member NASD/SIPC.
** Based on a July 2000 survey for representative-assisted
stock trades. Services vary by firm, and commissions may
vary depending on size of order.
================================================================================
T. Rowe Price Mutual Funds
--------------------------
STOCK FUNDS
-----------
DOMESTIC
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Developing Technologies
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
<PAGE>
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
INTERNATIONAL/GLOBAL
Emerging Europe & Mediterranean
Emerging Markets Stock
European Stock
Global Stock
Global Technology
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
Spectrum Income
Summit GNMA
U.S. Treasury Intermediate
U.S. Treasury Long-Term
DOMESTIC TAX-FREE
California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Tax-Free Bond
<PAGE>
INTERNATIONAL/GLOBAL
Emerging Markets 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, which contains complete information,
including fees and expenses. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by SECURITY
BENEFIT LIFE INSURANCE COMPANY. In New York, it [#FSB201(11-96)] is issued by
FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY OF NEW YORK, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
================================================================================
<PAGE>
T. Rowe Price Advisory Services and Retirement Resources
--------------------------------------------------------
ADVISORY SERVICES, RETIREMENT RESOURCES
--------------------------------------------------------------------------------
T. Rowe Price is your full-service retirement
specialist. We have developed unique advisory
services that can help you meet the most difficult
retirement challenges. Our broad array of
retirement plans is suitable for individuals, the
self-employed, small businesses, corporations, and
nonprofit organizations. We also provide
recordkeeping, communications, and investment
management services, and our educational
materials, self-help planning guides, and software
tools are recognized as among the industry's best.
For information or to request literature, call us
at 1-800-638-5660, or visit our Web site at
WWW.TROWEPRICE.COM.
--------------------------------------------------------------------------------
ADVISORY SERVICES
T. ROWE PRICE RETIREMENT INCOME MANAGER SM helps
retirees or those within two years of retirement
determine how much income they can take in
retirement. The program uses extensive statistical
analysis and the input of financial planning
professionals to suggest an income plan that best
meets your objectives.
T. ROWE PRICE ROLLOVER INVESTMENT SERVICE offers
asset allocation advice to those planning a major
change in their qualified retirement plans, such
as a 401(k) rollover from a previous employer or
an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
--------------------------------------------------------------------------------
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Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
PLANNING AND INFORMATIONAL GUIDES
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
<PAGE>
INSIGHTS REPORTS
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
SOFTWARE PACKAGES
T. Rowe Price Retirement Planning
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To order, please call 1-800-541-5760.
Also available on the Internet for $9.95.
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CD-ROM or diskette, free. To
order, please call 1-800-469-5304.
T. ROWE PRICE IMMEDIATE VARIABLE ANNUITY (INCOME ACCOUNT)
INVESTMENT KITS
We will be happy to send you one of our
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to invest in any T. Rowe Price retirement vehicle,
including IRAs, qualified plans, small-business
plans, or our no-load variable annuities.
================================================================================
T. Rowe Price Insights Reports
------------------------------
THE FUNDAMENTALS OF INVESTING
--------------------------------------------------------------------------------
Whether you are unsure how to get started or are
saving for a specific goal, such as retirement or college, the
T. Rowe Price Insights series can help you make informed
investment decisions. These reports, written in plain English
about fundamental investment topics, can be useful at every
stage of your investment journey. They cover a range of topics,
from the basic, such as getting started with mutual funds, to
the more advanced, such as managing risk through diversification
or buying individual securities through a broker. To request one
or more Insights, call us at 1-800-638-5660.
<PAGE>
INSIGHTS REPORTS
--------------------------------------------------------------------------------
GENERAL INFORMATION
The ABCs of Giving
Back to Basics: The ABCs of Investing
The Challenge of Preparing for Retirement
Financial Planning After Retirement
Getting Started: Investing With Mutual Funds
The Roth IRA: A Review
Tax Information for Mutual Fund Investors
INVESTMENT STRATEGIES
Conservative Stock Investing
Dollar Cost Averaging
Equity Index Investing
Growth Stock Investing
Investing for Higher Yield
Managing Risk Through Diversification
The Power of Compounding
Value Investing
TYPES OF SECURITIES
The Basics of International Stock
Investing The Basics of Tax-Free
Investing The Fundamentals of Fixed-Income
Investing Global Bond Investing
Investing in Common Stocks
Investing in Emerging Growth Stocks
Investing in Financial Services Stocks
Investing in Health Care Stocks
Investing in High-Yield Municipal Bonds
Investing in Money Market Securities
Investing in Mortgage-Backed Securities
Investing in Natural Resource Stocks
Investing in Science and Technology Stocks
Investing in Small-Company Stocks
Understanding Derivatives
Understanding High-Yield "Junk" Bonds
BROKERAGE INSIGHTS
Combining Individual Securities With Mutual Funds
Getting Started: An Introduction to Individual Securities
What You Should Know About Bonds
What You Should Know About Margin and Short-Selling
What You Should Know About Options
What You Should Know About Stocks
T. Rowe Price Insights are also available for reading or downloading on the
Internet at www.troweprice.com.
INSIGHTS REPORTS
================================================================================
<PAGE>
T. Rowe Price Brokerage
-----------------------
BROKERAGE SERVICES
------------------
T. Rowe Price Brokerage is a division of T. Rowe Price
Investment Services, Inc., Member NASD/SIPC.
T. Rowe Price Brokerage provides high-quality services and
financial tools you can use to manage your investments
effectively and conveniently. We also offer commission savings
over full-service brokerages on a number of transactions.*
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DIVIDEND REINVESTMENT SERVICE This service helps
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(of $10 or greater) from your eligible securities will
be invested automatically in additional shares of the
same company, free of charge. Most stocks listed on
national securities exchanges or Nasdaq are eligible
for this service.
* Based on a July 2000 survey for
representative-assisted stock
trades. Services vary by firm, and
commissions may vary depending on
size of order.
** $19.95 per trade for up to 1,000
shares plus an additional $.02 for
each share over 1,000 shares. Visit
our Web site for a complete
commission schedule or call for
rates on representative-assisted
and other non-Internet trades.
================================================================================
<PAGE>
FOR FUND AND ACCOUNT INFORMATION
OR TO CONDUCT TRANSACTIONS,
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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 - new address
105 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
BOSTON AREA
386 Washington Street
Wellesley
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COLORADO SPRINGS
2260 Briargate Parkway
LOS ANGELES AREA
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
SAN FRANCISCO AREA
1990 North California Boulevard
Suite 100
Walnut Creek
TAMPA
4200 West Cypress Street
10th Floor
WASHINGTON, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Investment Services, Inc., Distributor. C10-050 10/31/00
