Semiannual Report
Summit
Income
Funds
April 30, 2000
T. Rowe Price
Report Highlights
Summit Income Funds
o Rising interest rates challenged bonds, though money market issues and
long-term Treasuries performed well.
o Low expenses, as well as sector and maturity strategy, helped the Summit
Cash Reserves Fund increase its dividend.
o Reduced interest rate risk helped the Summit Limited-Term Bond Fund post
a positive return that exceeded its benchmark.
o A focus on liquidity and yield, as well as low expenses, helped the
Summit GNMA Fund post returns ahead of its Lipper group.
o In coming months, we will take a cautious view toward both interest rates
and credit quality.
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
Sharply rising interest rates and volatility in the equity markets heavily
influenced bond behavior during the six months ended April 30, 2000. Although
long-term Treasury bonds did better than expected, most fixed-income issues
struggled, leaving money market securities as the most stable performers. The
Summit Income Funds weathered the challenges relatively well, with the Summit
Cash Reserves Fund posting the best results.
MARKET ENVIRONMENT
The past six months have been a roller-coaster ride in the U.S. financial
markets. After a period of broad optimism, in the past three months
investors became concerned about economic overheating and began to seek out
safer investment options. Their concern was fueled by recent economic data.
First-quarter GDP growth, for example, steamed ahead at a 5.4% rate; at the
same time, consumer demand rose 7%, and business fixed investment rose 17%.
Signs of rising inflation began to creep into labor costs and basic goods.
The Fed clearly indicated that it viewed economic growth as unsustainable
and inflationary. Since beginning its tightening program a year ago, the
Fed has pushed the federal funds rate up 125 basis points to 6% on April 30
(100 basis points equal one percent). At the time of this writing, the Fed
raised this benchmark an additional 50 basis points.
Line Chart: Interest Rate Levels
Current Coupon GNMA 5-Year Treasury Note 90-Day Treasury Bill
4/30/99 6.68 5.15 4.51
7.05 5.51 4.65
7.27 5.76 4.77
7/99 7.61 5.75 4.71
7.77 5.71 4.97
7.48 5.81 4.88
10/99 7.51 6.09 5.13
7.64 6.03 5.28
7.83 6.33 5.33
1/00 8.14 6.63 5.59
8.01 6.59 5.81
7.77 6.42 5.88
4/30/00 8 6.42 5.78
For the most part, the bond market weakened in response to the Fed's
tightening program. As indicated in the chart, over the past year yields on
both the five-year Treasury note and 90-day Treasury bill soared by more
than a point and a quarter. GNMA yields rose even more, by 132 basis
points. Bond prices declined commensurately, but there was an anomaly in
the Treasury market. After the beginning of 2000, prices of long-term
Treasuries, which are normally very sensitive to rate increases, actually
rose.
The long-term Treasury rally was due partly to investor confidence in the
ability of the Fed to tame inflation, but also to supply-and-demand
dynamics. Flush with higher-than-expected tax receipts, the Treasury has
issued fewer long-term bonds and announced its intention to buy back
roughly $30 billion in longer-dated Treasuries early in 2000. This decline
in supply inspired some panic buying, as institutions that invest in
Treasuries rushed to stock up before the shortage became critical. It also
coincided with a sharp pullback in the equity markets, which drove many
stock investors to seek comfort in long-term Treasuries. Ultimately,
long-term Treasury rates fell even as shorter-term rates rose, and the
yield curve inverted.
Investment-grade corporate bonds produced modestly positive total returns
for the six-month period. Lower-quality bonds struggled, however, as rates
rose and stocks fell. Mortgage rates rose notably for the period as a
whole, but eased off after reaching two-year highs in February. One benefit
of the higher yields on corporate and mortgage-backed bonds is that they
now offer a significant advantage over similar-maturity Treasuries. Outside
of the Treasury and municipal bond markets, mortgages outperformed all
other fixed-income sectors.
Summit Cash Reserves Fund
Performance Comparison
--------------------------------------------------------------------------------
Periods Ended 4/30/00 6 Months 12 Months
Cash Reserves Fund 2.79% 5.26%
Lipper Money Market
Funds Average 2.54 4.82
In an environment where any fixed-income investment was fortunate to post
positive returns, money market results looked especially attractive. Your
fund finished the six months with a 2.79% gain, contributing to a 5.26%
advance for the year; both were well ahead of the Lipper Money Market Funds
Average. These results benefited greatly from an increase in dividends per
share, which rose $0.004 from the previous six-month period. Low fund
expenses also contributed to a superior dividend and strong competitive
yields.
The fund's weighted average maturity fluctuated considerably during the
past six months in response to conflicting pressures. In October 1999, it
stood at a fairly conservative 62 days as the Fed began to tighten monetary
policy. Our strategy shifted at year-end, however. The approach of Y2K
brought about a brief but sharp reduction in supply and a resulting dip in
short-term interest rates. To avoid excessive reinvestment at these lower
rates, we lengthened average maturity to 70 days by December 31. We
subsequently have brought maturity down, to 46 days by the end of April,
mostly by reinvesting proceeds from maturing securities into shorter
investments. This maturity level requires us to reinvest frequently, which
can help yield when interest rates are rising. The fund continued to
maintain a modest "barbell" in its maturity structure, dividing its
investments between attractively yielding one-year instruments and
one-month instruments whose yields are lower but rising rapidly.
The portfolio's sector makeup changed somewhat. Our stake in Yankee
CDs--certificates denominated in U.S. dollars but sold by foreign
banks--increased from 8% to 22% of assets. Some aggressive foreign banks
were offering Yankees at attractive rates compared with domestic CDs, and
we took advantage of the opportunity.
On the other hand, holdings in asset-backed securities declined. We
consciously raised our exposure to this sector to 26% by late last year
because we thought it would act as a hedge against any Y2K-related
concerns. As we entered the new millennium uneventfully, we trimmed this
sector to 21% to help improve overall diversification. Our stake in
floating-rate notes also declined in the new year after reaching a high
level late last year when a flood of supply made floater yields very
attractive. Indeed, we more than doubled our position to 32% in October
1999. More recently, floating-rate note issuance has subsided, minimizing
the yield advantage. Thus, as our positions have matured, we have
reinvested in other areas, bringing exposure down to 22% by the end of
April.
SUMMIT LIMITED-TERM BOND FUND
The Fed's aggressive rate hikes had a harsh effect on shorter-term
securities, making it difficult for your fund to make much headway.
Nonetheless, it posted a positive return of 1.44% for the six months and
stayed ahead of its Lipper group average. Twelve-month results of 1.87%
also outdistanced the Lipper benchmark. Dividends per share did not rise
but, due to the fund's relatively modest expenses, remained comparatively
high within its peer group. Income helped compensate for a modest decline
in share price from $4.48 to $4.41 during the six-month period.
Performance Comparison
--------------------------------------------------------------------------------
Periods Ended 4/30/00 6 Months 12 Months
--------------------------------------------------------------------------------
Limited-Term Bond Fund 1.44% 1.87%
Lipper Short Intermediate
Investment-Grade
Debt Funds Average 1.29 1.68
To defend against rising rates, we took steps to reduce the fund's interest
rate exposure. We shortened weighted average maturity from 3.7 years to 3.4
years, and effective duration (a measure of sensitivity to movements in
interest rates) fell correspondingly from 3.0 to 2.7 years. This effort
provided increased protection against principal loss.
Corporate bonds became a less attractive investment for us after October.
Generally speaking, we believe that cost pressures may begin to threaten
corporate balance sheets because rapid economic growth in the absence of
inflation has resulted in higher production costs without the flexibility
to pass those costs through to consumers. We have already seen corporate
profit margins come under pressure, increasing the likelihood that credit
quality will erode. Corporate bonds-particularly lower-rated high-yield
issues-have already been hurt by deteriorating liquidity and declining
prices. Therefore, we reduced corporate holdings from 47% of assets to 41%
mainly by selling underperforming sectors, such as retail and consumer
products, but also by trimming industrials, utilities, and telecom where
risk appeared to have risen modestly. To keep the fund's yield competitive,
the proceeds of these sales were deployed into AAA rated asset-backed
securities, mortgage-backed securities, and Treasuries.
Pie Chart: Quality Diversification
--------------------------------------------------------------------------------
Summit Limited-Term Bond Fund
AAA AA A BBB BB
41 18 24 16 1
Based on net assets as of 4/30/00
Quality diversification reflected our preference for high quality. The
percentage of assets in AAA securities rose from 38% to 41% of assets,
while AA and A holdings both climbed. Our stake in BBB rated issues fell
from 21% to 16%-a positive considering the underperformance of these
issues. Average portfolio credit quality remained at a solid AA.
As inflation pressures have grown, we have increased our small but
strategic allocation to Treasury inflation-protected securities (TIPS) by
two percentage points. Our holdings now stand at 3% of assets. These
securities have a lower coupon than traditional Treasuries, but their
principal adjusts upward at the rate of inflation so that the securities
provide a stable real return. They act as a good inflation hedge for
short-term investors, and we expect that we will continue to use TIPS as
long as the threat of inflation lingers.
SUMMIT GNMA FUND
Performance Comparison
--------------------------------------------------------------------------------
Periods Ended 4/30/00 6 Months 12 Months
--------------------------------------------------------------------------------
GNMA Fund 1.33% 1.00%
Lipper GNMA Funds Average 1.15 0.97
Your fund struggled to adjust to continually rising interest rates, but
managed to post a respectable 1.33% gain. This helped it surpass its Lipper
peer group for both the past six and 12 months. Since the share price
declined by $0.19 during the six-month period, returns came entirely from a
healthy income level, aided by low expenses. The fund's 0.60% expense ratio
is in the lowest quartile of the 57 funds in its Lipper peer group.
During the period, concerns about the overheating economy along with
dwindling supply encouraged investors to buy Treasuries despite rising
rates. At the same time, many investors cut back on what they perceive as
riskier bond investments. Collectively, these securities are known as
"spread products" because they provide a yield bonus (often called a
spread) over government-backed Treasuries to compensate for their higher
risk potential. Although mortgages are generally high-quality investments
and are usually considered to carry only modest risk, they do offer a yield
spread and often underperform along with other spread products when
investors are especially risk conscious. For this reason, your fund
underperformed most Treasury investments.
However, the fund did well relative to its peer group. One key strategy
over the previous six months was to focus on issues that were attractively
priced relative to their risk level. For example, we built up our position
in comparatively high-yielding GNMA collateral holdings with 7.5% and 8%
coupons. We also sold older discount bonds (whose coupons are comparatively
low) in favor of more recently issued bonds with somewhat higher coupons.
These moves worked in our favor as higher coupons outperformed lower
coupons and more recent bonds outperformed older ones. Recently, we bought
a small amount of FNMA mortgages because we felt they were cheap compared
with GNMA mortgages, as well as some 15-year GNMA issues that appeared
underpriced. We eliminated all Treasuries during the course of the period:
this move has worked against us so far in 2000, but we expect that the
yield advantage mortgages now offer over Treasuries should help their
relative performance later in the year.
Liquidity was also an important aspect of our strategy. We have for many
quarters kept a stake in "structured" products-securities whose income
distributions and principal gains are structured somewhat differently from
a typical mortgage-backed bond. However, these products can become illiquid
and fall in price when investors are favoring Treasuries. We were able to
anticipate much of this problem. In December, when structured products were
outperforming, we sold many of our holdings at a high point, and ultimately
reduced our weighting in the area by five percentage points early in the
first quarter to 10% of assets. This improved our overall liquidity and
helped as structured products weakened during 2000.
Our duration had been neutral, compared with our average Lipper competitor,
from November through mid-January. At that time, we shortened to protect
against rising rates. Ultimately, this approach proved unhelpful, and so,
in early March, we returned to a neutral duration stance, which is where
the fund stands today. As always, the credit quality of the portfolio
remains high.
OUTLOOK
Compared with past efforts to tighten the money supply, the Fed has been
relatively easygoing about raising interest rates in recent months.
However, the soft-pedal approach has not yet curbed inflationary pressures,
and we expect the Fed to become more vigilant as 2000 wears on. After the
period ended, the Fed raised short-term rates another 50 basis points, and
more hikes are possible. Corporate profits are likely to be pinched as a
result. We therefore expect to take a cautious approach in all the Summit
Funds, limiting interest rate exposure where possible. We will also try to
strike a balance between maintaining high credit quality and seeking out
higher yields, which tend to hold up well when rates rise.
In the Summit Cash Reserves Fund, we expect to keep overall portfolio
maturity slightly shorter than the peer group average until it appears the
Fed has finished raising rates. A modest maturity will also be part of the
Summit Limited-Term Bond Fund's strategy, and we will be very selective
about corporate bonds as we wait to see how corporate America reacts to the
higher rate environment. In the Summit GNMA Fund, we will keep our focus on
liquidity and look for opportunities to increase overall value.
Respectfully submitted,
Edward A. Wiese
President
May 25, 2000
T. Rowe Price Summit Income Funds
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Portfolio Highlights
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KEY STATISTICS
10/31/99 4/30/00
Summit Cash Reserves Fund
--------------------------------------------------------------------------------
Price Per Share $1.00 $1.00
Dividends Per Share
For 6 months 0.024 0.028
For 12 months 0.048 0.051
Dividend Yield (7-Day Compound) * 5.24% 5.89%
Weighted Average Maturity (days) 62 46
Weighted Average Quality ** First Tier First Tier
Summit Limited-Term Bond Fund
--------------------------------------------------------------------------------
Price Per Share $4.48 $4.41
Dividends Per Share
For 6 months 0.13 0.13
For 12 months 0.26 0.26
Dividend Yield *
For 6 months 5.81% 6.15%
For 12 months 5.92 6.12
30-Day Standardized Yield 6.37 6.66
Weighted Average Maturity (years) 3.7 3.4
Weighted Average Effective Duration (years) 3.0 2.7
Weighted Average Quality *** AA AA
(continued on next page)
T. Rowe Price Summit Income Funds
--------------------------------------------------------------------------------
Portfolio Highlights
--------------------------------------------------------------------------------
KEY STATISTICS
10/31/99 4/30/00
Summit GNMA Fund
--------------------------------------------------------------------------------
Price Per Share $9.39 $9.20
Dividends Per Share
For 6 months 0.31 0.31
For 12 months 0.61 0.62
Dividend Yield *
For 6 months 6.62% 6.87%
For 12 months 6.75 6.93
30-Day Standardized Yield 6.42 6.67
Weighted Average Maturity (years) 9.1 8.7
Weighted Average Effective Duration (years) 5.0 4.7
Weighted Average Quality *** AAA AAA
* Dividends earned and reinvested for the periods indicated 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.
T. Rowe Price Summit Income Funds
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Portfolio Highlights
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SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
10/31/99 4/30/00
Summit Cash Reserves Fund
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U.S. Negotiable Bank Notes 9% 4%
Certificates of Deposit 26 33
Domestic Negotiable CDs 5 6
Eurodollar Negotiable CDs 13 5
U.S. Dollar Denominated Foreign Negotiable CDs 8 22
Commercial Paper and Medium-Term Notes 61 61
Asset-Backed 26 21
Banking 13 12
Finance and Credit 2 5
Insurance 4 4
Auto and Related 3 4
All Other 13 15
Foreign Government and Municipalities -- --
Funding Agreements 3 1
Other Assets Less Liabilities 1 1
--------------------------------------------------------------------------------
Total 100% 100%
Fixed-Rate Obligations 68 78
Floating-Rate Instruments 32 22
(continued on next page)
T. Rowe Price Summit Income Funds
--------------------------------------------------------------------------------
Portfolio Highlights
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
10/31/99 4/30/00
Summit Limited-Term Bond Fund
--------------------------------------------------------------------------------
Corporate Bonds and Notes 47% 41%
Banking and Finance 10 10
Consumer Products and Services 13 8
Utilities 8 7
Industrials 9 7
Transportation 2 4
Media and Communications 4 3
All Other 1 2
Asset-Backed Securities 12 14
Mortgage-Backed Securities 18 23
U.S. Government Obligations 18 20
U.S. Treasuries 10 12
Government Agency Obligations 8 8
Money Market Funds* 5 1
Other Assets Less Liabilities - 1
--------------------------------------------------------------------------------
Total 100% 100%
Summit GNMA Fund
--------------------------------------------------------------------------------
GNMA 92% 97%
U.S. Government Agencies 3 2
Agency-Backed STRIPS 1 1
Asset-Backed Securities 3 -
Money Market Funds* 3 2
Other Assets Less Liabilities -2 -2
--------------------------------------------------------------------------------
Total 100% 100%
*See note at end of financial statements.
T. Rowe Price Summit Income Funds
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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.
Line Chart: SUMMIT CASH RESERVES FUND
--------------------------------------------------------------------------------
Index SCR Fund SCR Fund Area
10/29/1993 25000 25000 25000
4/94 25335 25372 25372
4/95 26491 26617 26617
4/96 27873 28088 28088
4/97 29227 29538 29538
4/98 30712 31133 31133
4/99 32174 32731 32731
4/00 33767 34452 34452
Line Chart: SUMMIT LIMITED-TERM BOND FUND
--------------------------------------------------------------------------------
Merrill Lipper Summit Ltd line Summit Ltd area
10/29/93 25000 25000 25000 25000
4/94 24646 24249 24455 24455
4/95 26153 25599 25620 25620
4/96 28097 27467 27045 27045
4/97 29847 29150 28620 28620
4/98 32199 31403 30920 30920
4/99 34237 33025 32600 32600
4/00 35192 33592 33208 33208
T. Rowe Price Summit Income Funds
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Performance Comparison
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Line Chart: SUMMIT GNMA FUND
--------------------------------------------------------------------------------
Salomon Lipper Summit Line Summit Area
10/29/93 25000 25000 25000 25000
4/94 24463 24229 24629 24629
4/95 26496 25912 26425 26425
4/96 28840 27998 28502 28502
4/97 31166 29945 30474 30474
4/98 34237 32863 33722 33722
4/99 36358 34637 35594 35594
4/00 37208 35032 35950 35950
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 4/30/00 1 Year 3 Years 5 Years Inception Date
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Summit Cash Reserves Fund 5.26% 5.26% 5.30% 5.06% 10/29/93
Summit Limited-Term Bond 1.87 5.08 5.33 4.46 10/29/93
Summit GNMA Fund 1.00 5.66 6.35 5.75 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.
T. Rowe Price Summit Cash Reserves Fund
--------------------------------------------------------------------------------
Unaudited
Financial Highlights For a share outstanding throughout each period
--------------------------------------------------------------------------------
6 Months Year
Ended Ended
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of
period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Investment activities
Net investment
income (loss) 0.028 0.048 0.052 0.052 0.051 0.055
Distributions
Net investment
income (0.028) (0.048) (0.052) (0.052) (0.051) (0.055)
NET ASSET VALUE
End of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
-----------------------------------------------------------
Ratios/
Supplemental Data
Total return(diamond) 2.79% 4.87% 5.35% 5.33% 5.23% 5.68%
Ratio of total
expenses to average
net assets 0.45%! 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net
investment income
(loss) to average
net assets 5.53%! 4.78% 5.24% 5.18% 5.09% 5.55%
Net assets,
end of period
(in millions) $2,741 $2,441 $1,885 $1,303 $742 $433
(diamond) Total return reflects the rate that an investor would have
earned on an investment in the fund during each period, assuming
reinvestment of all distributions.
! Annualized The accompanying notes are an integral part of these
financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
--------------------------------------------------------------------------------
Unaudited
Financial Highlights For a share outstanding throughout each period
--------------------------------------------------------------------------------
6 Months Year
Ended Ended
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of
period $4.48 $4.69 $4.61 $4.60 $4.65 $4.64
Investment activities
Net investment
income (loss) 0.13 0.26 0.28 0.29 0.30 0.32
Net realized
and unrealized
gain (loss) (0.07) (0.21) 0.08 0.01 (0.05) 0.01
Total from
investment
activities 0.06 0.05 0.36 0.30 0.25 0.33
Distributions
Net investment
income (0.13) (0.26) (0.28) (0.28) (0.29) (0.31)
Tax return of
capital - - - (0.01) (0.01) (0.01)
Total
distributions (0.13) (0.26) (0.28) (0.29) (0.30) (0.32)
NET ASSET VALUE
End of period $4.41 $4.48 $4.69 $4.61 $4.60 $4.65
-----------------------------------------------------------
Ratios/
Supplemental Data
Total return(diamond) 1.44% 1.06% 7.97% 6.73% 5.48% 7.36%
Ratio of total
expenses to average
net assets 0.55%! 0.55% 0.55% 0.55% 0.55% 0.55%
Ratio of net
investment income
(loss) to average
net assets 6.03%! 5.65% 5.96% 6.28% 6.43% 6.85%
Portfolio turnover
rate 81.4%! 42.2% 52.0% 74.5% 116.1% 84.3%
Net assets,
end of period
(in thousands) $47,722 $52,992 $40,904 $ 29,620 $25,984 $27,004
(diamond) Total return reflects the rate that an investor would
have earned on an investment in the fund during each period,
assuming reinvestment of all distributions.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
--------------------------------------------------------------------------------
Unaudited
For a share outstanding throughout each period
Financial Highlights
6 Months Year
Ended Ended
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $9.39 $9.87 $9.83 $9.65 $9.81 $9.15
Investment activities
Net investment
income (loss) 0.31 0.61 0.64 0.67 0.67 0.70
Net realized
and unrealized
gain (loss) (0.19) (0.48) 0.04 0.18 (0.16) 0.66
Total from
investment
activities 0.12 0.13 0.68 0.85 0.51 1.36
Distributions
Net investment
income (0.31) (0.61) (0.64) (0.64) (0.62) (0.67)
Tax return
of capital - - - (0.03) (0.05) (0.03)
Total
distributions (0.31) (0.61) (0.64) (0.67) (0.67) (0.70)
NET ASSET VALUE
End of period $9.20 $9.39 $9.87 $9.83 $9.65 $9.81
-----------------------------------------------------------
Ratios/
Supplemental Data
Total return(diamond) 1.33% 1.39% 7.10% 9.17% 5.47% 15.43%
Ratio of total
expenses to average
net assets 0.60%! 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net
investment income
(loss) to average
net assets 6.74%! 6.41% 6.47% 6.91% 6.99% 7.40%
Portfolio
turnover rate 57.5%! 89.9% 83.8% 111.8% 136.1% 173.8%
Net assets,
end of period
(in thousands) $57,812 $63,843 $46,571 $29,530 $24,718 $22,777
(diamond) Total return reflects the rate that an investor
would have earned on an investment in the fund during each
period, assuming reinvestment of all distributions.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Cash Reserves Fund
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Unaudited April 30, 2000
Statement of Net Assets Par Value
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In thousands
BANK NOTES 3.8%
Comerica Bank, VR
6.08%, 5/15/00 $ 15,000 $ 14,998
6.153%, 5/1/00 8,000 7,999
Kansallis-Osake-Pankki, 6.375%, 8/15/00 10,000 10,013
Key Bank North America, VR, 6.07%, 5/26/00 15,000 14,999
National City Bank, VR, 6.203%, 5/30/00 25,000 24,992
U.S. Bank North America, VR, 6.08%, 5/17/00 25,000 24,996
Westpac Banking, VR, 6.168%, 5/4/00 5,000 4,999
Total Bank Notes (Cost $102,996) 102,996
CERTIFICATES OF DEPOSIT 33.0%
Allfirst Bank, 6.13%, 5/10/00 5,000 5,000
Banco Bilbao Vizcaya, 5.60%, 6/12/00 19,900 19,899
Bank of Scotland, 5.90%, 8/31/00 5,000 4,997
Bank of Austria
5.93%, 9/7/00 7,000 6,996
6.185%, 12/1/00 20,000 19,993
Bank of Nova Scotia, 6.22%, 12/4/00 10,000 9,995
Banque Paribas, 6.75%, 3/19/01 10,000 9,996
Bayerische Hypo-Und Vereinsbank, 6.10%, 5/18/00 26,500 26,500
Canadian Imperial Bank of Commerce
6.06%, 5/11/00 31,500 31,500
6.07%, 5/4/00 25,000 25,000
6.20%, 8/1/00 1,650 1,651
Chase Manhattan Bank (USA), 5.365%, 5/22/00 24,500 24,488
Commerzbank
5.90%, 8/9/00 11,000 10,997
(London), 6.05%, 6/16/00 25,000 25,000
Credit Agricole Indosuez, VR
6.12%, 5/8/00 10,000 9,997
6.123%, 5/1/00 20,000 19,991
Credit Communal De Belgique, VR, 6.101%, 5/30/00 20,000 19,997
Deutsche Bank, 6.19%, 12/1/00 10,000 9,996
Dresdner Bank, VR, 6.115%, 5/24/00 20,000 19,998
First National Bank of Maryland
VR
5.54%, 6/21/00 $ 8,100 $ 8,092
6.088%, 5/8/00 15,000 14,999
First Union National Bank, VR, 6.16%, 5/17/00 4,000 4,000
Halifax, 6.05%, 6/7/00 48,000 48,000
Huntington National Bank, 6.26%, 10/27/00 10,000 9,998
Landesbank Hessen-Thuringen, 6.02%, 6/1/00 23,000 23,000
Lloyds TSB Bank, 6.34%, 8/31/00 31,500 31,502
Merita Bank, 6.09%, 10/10/00 10,000 9,998
Natexis Banque, 6.06%, 5/8/00 30,000 30,000
Norddeutsche Landesbank Girozentrale, (London)
6.02%, 5/31/00 49,000 49,000
6.23%, 12/4/00 25,000 24,990
Northern Trust, 6.36%, 8/31/00 40,000 40,007
Rabobank, 6.06%, 5/26/00 44,500 44,501
Royal Bank of Scotland, 6.00%, 5/31/00 25,000 25,000
Skandinaviska Enskilda Banken, VR, 6.125%, 5/24/00 10,000 9,999
Societe Generale
VR
6.085%, 5/16/00 20,000 19,998
6.235%, 12/4/00 10,000 9,996
Toronto Dominion, 6.21%, 7/20/00 47,500 47,500
UBS
5.29%, 5/22/00 500 500
5.51%, 6/5/00 10,000 10,000
5.60%, 6/26/00 1,000 999
5.80%, 8/2/00 15,000 14,984
6.01%, 8/14/00 10,000 9,998
Unibank A/S, 5.92%, 8/7/00 10,000 9,999
Union Bank of California, VR, 6.133%, 5/1/00 15,000 15,000
Westdeutsche Landesbank
6.01%, 6/6/00 30,000 29,999
6.02%, 5/30/00 25,000 25,000
Wilmington Trust
6.09%, 6/9/00 14,500 14,501
6.23%, 10/23/00 20,000 19,994
Total Certificates of Deposit (Cost $903,545) 903,545
COMMERCIAL PAPER 43.6%
Albertsons, VR, 4(2), 6.11%, 5/15/00 $ 10,000 $ 9,999
Alpine Securitization, 4(2)
6.03%, 5/10/00 19,000 18,971
6.04%, 5/17/00 37,000 36,901
Anheuser Busch, 6.04%, 5/1/00 14,999 14,999
AON, 6.10%, 5/2 - 5/8/00 41,500 41,481
Asset Securitization Cooperative, 4(2)
6.03%, 5/23/00 19,000 18,930
6.05%, 5/4/00 46,500 46,477
AT&T, VR, 4(2), 6.24%, 7/13/00 30,000 29,998
AWB Finance Limited, 6.07%, 5/17/00 20,000 19,946
Bavaria TRR, 4(2), 6.05%, 5/23/00 20,200 20,125
CBA (Delaware) Finance, 5.75%, 5/22/00 10,000 9,966
Citicorp, 6.03%, 5/25/00 40,000 39,839
Coca-Cola, 4(2), 6.05%, 5/17/00 25,000 24,933
Corporate Asset Funding, 4(2), 6.02%, 5/1/00 16,264 16,264
Corporate Receivables
6.06%, 5/19/00 25,000 24,924
6.07%, 6/6/00 30,000 29,818
Delaware Funding, 4(2)
6.03%, 5/18/00 30,000 29,914
6.05%, 5/25/00 9,234 9,197
Deutsche Bank Financial, 6.02%, 5/16/00 17,515 17,471
Dover Corp., 4(2), 6.13%, 2/28/01 16,000 16,000
Enterprise Funding, 4(2)
6.04%, 5/16/00 1,509 1,505
6.07%, 5/23/00 8,800 8,768
Falcon Asset Securitization, 4(2), 6.03%, 5/24/00 20,666 20,586
Finova Capital, 6.10%, 5/2/00 20,000 19,997
France Telecom
6.02%, 5/18/00 25,000 24,929
6.04%, 5/25/00 12,000 11,952
GE Capital International Funding, 6.05%, 5/8/00 25,000 24,971
Golden Funding, 4(2)
6.06%, 5/2 - 5/19/00 22,033 22,015
6.07%, 5/12/00 1,425 1,422
Greenwich Funding, 4(2)
6.02%, 5/15/00 $ 15,000 $ 14,965
6.04%, 5/15 - 5/23/00 24,000 23,920
6.05%, 5/26/00 5,000 4,979
International Lease Finance, 6.13%, 5/3/00 20,000 20,000
Kitty Hawk Funding, 4(2), 6.06%, 5/22/00 30,000 29,894
Market Street Funding, 6.05%, 5/19/00 15,188 15,142
Merck and Company, 6.00%, 5/19/00 25,000 24,925
Metlife Funding, 6.00%, 5/3/00 33,848 33,837
Motiva Enterprises, 6.02%, 5/22/00 15,000 14,947
Park Avenue Receivables
6.04%, 5/22/00 25,000 24,912
6.06%, 5/3/00 47,000 46,984
6.07%, 5/23/00 25,000 24,907
Preferred Receivables Funding
6.04%, 5/17 - 5/30/00 54,000 53,801
R.R. Donnelly & Sons, 6.02%, 5/23/00 27,425 27,324
Sara Lee Corporation
6.08%, 5/8/00 18,500 18,500
6.10%, 5/23/00 16,400 16,400
Statoil, 6.00%, 5/2/00 40,000 39,993
Sysco, 4(2)
6.07%, 5/22/00 25,000 24,911
6.08%, 5/22/00 10,000 9,965
Three River Funding, 6.07%, 5/22/00 2,843 2,833
Trident Capital Finance, 4(2), 6.03%, 5/9/00 20,500 20,473
Tulip Funding, 6.04%, 5/18/00 19,500 19,444
Variable Funding Capital
6.03%, 5/5/00 30,000 29,980
6.05%, 5/4/00 9,000 8,995
Woolwich Building Society, 5.75%, 5/5/00 800 800
ZCM Matched Funding
6.02%, 5/17/00 25,000 24,933
6.06%, 5/18/00 5,000 4,986
Total Commercial Paper (Cost $1,195,048) 1,195,048
MEDIUM-TERM NOTES 17.4%
AT&T Capital, VR, 6.971%, 12/1/00 $ 30,000 $ 30,115
Abbey National Treasury Services, 5.92%, 8/7/00 20,000 19,998
Associates Manufactured Housing Pass Through Trust
VR, (144a), 6.36%, 5/15/00 13,970 13,970
Banc One, VR, 6.383%, 6/26/00 14,500 14,520
Bank of Scotland Treasury Services,
VR, 6.283%, 7/19/00 30,000 29,997
Bank One, VR, 6.416%, 1/16/01 8,500 8,507
Beta Finance
6.15%, 10/6/00 20,000 20,000
6.75%, 3/15/01 5,000 5,000
Caterpillar Financial Services
5.88%, 12/13/00 1,500 1,497
8.85%, 3/15/00 1,150 1,160
VR, 6.11%, 7/10/00 7,000 7,000
Chrysler Financial, 6.625%, 6/26/00 5,000 5,005
Ciesco VR, (144a)
6.11%, 5/16/00 30,000 29,997
6.15%, 8/17/00 15,000 14,999
Citicorp, VR, 6.165%, 5/10/00 5,000 5,000
Colgate Palmolive, VR, 5.998%, 5/8/00 10,000 9,997
DaimlerChrysler North America Holdings,
VR, 6.113%, 5/30/00 20,000 19,998
Diageo PLC, 6.24%, 6/5/00 10,000 9,996
Electronic Data Systems, 6.85%, 5/15/00 4,000 4,001
Ford Capital BV, 10.125%, 11/15/00 5,900 6,014
Ford Motor Credit, VR
6.058%, 5/18/00 10,000 9,997
6.27%, 10/2/00 10,000 9,996
General Electric Capital, VR, 6.101%, 6/1/00 10,000 9,999
General Motors Acceptance Corporation,
VR, 6.253%, 7/20/00 16,360 16,358
Goldman Sachs Group
6.11%, 5/17/00 10,000 10,000
(144a), 6.20%, 12/15/00 1,200 1,200
GTE, VR, 6.165%, 6/12/00 10,000 9,999
Heller Financial
6.42%, 8/25/00 3,400 3,402
6.435%, 8/8/00 1,900 1,901
Heller Financial
VR
6.35%, 7/3/00 $ 10,000 $ 10,000
6.38%, 7/3/00 10,000 10,003
Hydro Quebec, 9.23%, 12/4/00 1,500 1,524
IBM Corp., VR, 6.275%, 7/28/00 10,000 9,998
John Deere Capital Corp., 6.26%, 6/21/00 10,000 10,003
National Rural Utilities, VR, 6.133%, 5/2/00 10,000 10,000
Northern Rock, VR, (144a), 6.13%, 5/22/00 20,000 20,000
Nynex Capital Funding, 9.42%, 6/1/00 1,000 1,003
Paccar Financial, 5.65%, 2/15/00 5,000 4,997
R.R. Donnelley & Sons, 9.125%, 12/1/00 4,040 4,104
Rabobank Optional Redemption Trust,
VR, 6.13%, 5/17/00 2,563 2,563
Sigma Finance, (144a), 6.75%, 3/15/01 18,000 18,000
Strategic Money Market Trust 2000-B,
VR, 6.15%, 6/15/00 20,000 20,000
Toyota Motor Credit, VR, 6.20%, 7/12/00 25,000 24,986
Total Medium-Term Notes (Cost $476,804) 476,804
FUNDING AGREEMENTS 1.6%
Allstate Life Insurance, VR, 6.217%, 5/1/00 10,000 10,000
Peoples Benefit Life Insurance, VR
6.27%, 5/1/00 20,000 20,000
6.28%, 5/1/00 10,000 10,000
Protective Life Insurance, VR, 6.251%, 6/1/00 5,000 5,000
Total Funding Agreements (Cost $45,000) 45,000
Total Investments in Securities
99.4% of Net Assets (Cost $2,723,393) $2,723,393
Other Assets Less Liabilities 17,639
NET ASSETS $2,741,032
----------
Net Assets Consist of:
Accumulated net realized gain/loss - net of distributions $10
Paid-in-capital applicable to 2,741,021,845 shares of
$0.0001 par value capital stock outstanding;
4,000,000,000 shares of the Corporation authorized 2,741,022
NET ASSETS $2,741,032
----------
NET ASSET VALUE PER SHARE $1.00
----------
VR Variable Rate
4(2) Commercial paper sold within terms of a private placement
memorandum, exempt from registration under section 4.2 of the
Securities Act of 1933, as amended, and may be sold only to
dealers in that program or other "accredited investors."
144a Security was purchased pursuant to Rule 144a under the
Securities Act of 1933 and may not be resold subject to that
rule except to qualified institutional buyers- total of such
securities at period-end amounts to 3.6% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
--------------------------------------------------------------------------------
Unaudited April 30, 2000
Statement of Net Assets Par/Shares Value
--------------------------------------------------------------------------------
In thousands
CORPORATE BONDS AND NOTES 40.7%
Banking and Finance 10.5%
ABN AMRO Bank (Chicago), N.V., Gtd. Sub. Notes
7.25%, 5/31/05 $ 340 $ 328
AIG Sunamerica Global Financing, Sr. Notes
(144a), 7.40%, 5/5/03 450 450
Banco Generale, Sr. Sub. Notes, (144a), 7.70%, 8/1/02 250 241
CIT Group, 5.50%, 2/15/04 450 414
Finova Capital, MTN, 5.98%, 2/27/01 65 63
First USA Bank, 7.00%, 8/20/01 65 65
General Electric Capital, MTN, 6.15%, 11/5/01 285 281
HSBC Finance Nederland, Sub. Gtd. Notes,
(144a), 7.40%, 4/15/03 160 158
Intermediate American Development Bank,
6.375%, 10/22/07 175 166
Kansallis-Osake-Pankki (New York),
Sub. Notes, 10.00%, 5/1/02 325 339
Marsh & McLennan, Sr. Notes, 6.625%, 6/15/04 450 430
MBNA, Sub. Notes, 7.25%, 9/15/02 165 162
Mercantile Safe Deposit & Trust, 6.53%, 7/3/00 300 300
Merrill Lynch
6.81%, 6/13/02 225 222
7.00%, 3/15/06 225 216
Morgan Guaranty Trust, Sub. Notes, 7.375%, 2/1/02 115 115
Potomac Capital Investment, MTN,
(144a), 7.55%, 11/19/01 225 224
Provident Bank, Sub. Notes, 7.125%, 3/15/03 225 217
Republic of New York, 8.875%, 2/15/01 160 162
Salomon Smith Barney, 7.30%, 5/15/02 300 299
Union Planters, Sub. Notes, 6.25%, 11/1/03 160 151
5,003
Consumer Products and Services 8.4%
Beckman Instruments, Sr. Notes, 7.10%, 3/4/03 315 300
Coca-Cola Femsa, 8.95%, 11/1/06 180 180
Comcast Cable Communications, 6.20%, 11/15/08 360 316
Federated Department Stores, Sr. Notes,
8.125%, 10/15/02 450 452
Grand Metropolitan Investment, Zero Coupon, 1/6/04 675 511
Johnson & Johnson, 6.625%, 9/1/09 380 363
Nabisco, 6.125%, 2/1/33 260 239
PepsiCo, MTN, 5.75%, 1/2/03 250 240
Sony, 6.125%, 3/4/03 375 364
Viacom, 6.75%, 1/15/03 190 185
Wal-Mart Stores, 6.55%, 8/10/04 $ 675 $ 656
Watson Pharmaceuticals, 7.125%, 5/15/08 240 211
4,017
Energy 0.8%
PDV America, Sr. Notes, 7.875%, 8/1/03 205 191
YPF Sociedad Anonima, 7.25%, 3/15/03 190 183
374
Industrials 6.7%
Caterpillar Financial Services, 6.875%, 8/1/04 450 435
DaimlerChrysler, 7.125%, 3/1/02 450 447
Eaton Offshore, Gtd. Notes, 9.00%, 2/15/01 330 335
Ford Motor Credit, 7.50%, 3/15/05 225 222
Lockheed Martin, 6.75%, 3/15/03 205 197
Parker Hannifin, MTN, 5.65%, 9/15/03 450 423
Toyota Motor Credit, 5.625%, 11/13/03 450 426
United Technologies, 6.625%, 11/15/04 450 434
Waste Management, 6.625%, 7/15/02 310 288
3,207
Media and Communications 3.4%
360 Communications, Sr. Notes, 7.125%, 3/1/03 450 444
Sprint Capital, 5.70%, 11/15/03 340 320
US West Capital Funding, 6.875%, 8/15/01 450 447
Vodafone Airtouch, (144a), 7.625%, 2/15/05 390 388
1,599
Transportation 4.1%
Amerco, Sr. Notes, 8.80%, 2/4/05 450 427
Delta Air Lines
7.90%, 12/15/09 270 252
ETC, 9.60%, 5/26 - 6/1/00 172 172
ERAC USA Finance, (144a), 6.375%, 5/15/03 175 165
Gatx Capital, 6.875%, 11/1/04 225 211
Norfolk Southern
6.95%, 5/1/02 450 443
7.875%, 2/15/04 125 124
Northwest Airlines, 8.375%, 3/15/04 190 170
1,964
Utilities 6.8%
CE Electric UK Funding, Sr. Notes, (144a),
6.853%, 12/30/04 270 260
Cleveland Electric, 7.19%, 7/1/00 190 190
Entergy Mississippi, 6.45%, 4/1/08 $ 345 $ 322
National Rural Utilities Cooperative Finance,
5.00%, 10/1/02 450 426
Niagara Mohawk Power
Sr. Disc. Notes, 7.375%, 7/1/03 253 248
Sr. Notes, 7.25%, 10/1/02 255 251
Pacific Gas & Electric, 1st Mtg. Bonds,
8.75%, 1/1/01 215 217
Public Service Electric & Gas, 1st Mtg. Bonds,
8.875%, 6/1/03 240 241
Texas NM Power
1st Mtg. Notes, 9.25%, 9/15/00 200 201
Secured Deb., 10.75%, 9/15/03 225 226
Utilicorp United, Sr. Notes, 7.00%, 7/15/04 450 427
Williams Companies, 6.125%, 2/15/12 240 232
3,241
Total Corporate Bonds and Notes (Cost $20,119) 19,405
U.S. GOVERNMENT OBLIGATIONS/
AGENCIES 20.3%
U.S. Government Agency Obligations 7.9%
Federal Home Loan Banks, 5.125%, 9/15/03 2,750 2,580
Federal National Mortgage Assn.
4.625%, 10/15/01 475 460
6.375%, 6/15/09 292 273
7.65%, 10/6/06 280 275
U.S. Department Housing & Urban Development,
6.49%, 8/1/07 200 195
3,783
U.S. Treasury Obligations 12.4%
U.S. Treasury Inflation-Indexed Notes,
3.625%, 7/15/02 1,404 1,400
U.S. Treasury Notes
4.25%, 11/15/03 3,345 3,103
7.25%, 5/15/04 1,400 1,431
5,934
Total U.S. Government Obligations/Agencies (Cost $9,958) 9,717
U.S. GOVERNMENT MORTGAGE-
BACKED SECURITIES 16.8%
U.S. Government Agency Obligations 12.9%
Federal Home Loan Mortgage
6.00%, 2/15/08 - 5/15/16 2,207 2,155
Federal Home Loan Mortgage
6.40%, 1/15/08 $ 450 $ 440
10.75%, 12/1/09 76 81
7-Year Balloon, 6.50%, 5/1/05 124 122
CMO
5.75%, 6/15/10 859 842
6.92%, 1/25/12 3 3
REMIC
6.00%, 8/15/06 - 1/15/08 834 810
6.50%, 4/15/21 450 437
Federal National Mortgage Assn.
6.00%, 11/1/13 347 327
7.00%, 4/1/09 204 201
9.00%, 5/1/05 115 117
REMIC, 9.00%, 1/25/08 614 626
6,161
U.S. Government Guaranteed Obligations 3.9%
Government National Mortgage Assn.
I
7.00%, 9/15/12 875 859
8.00%, 5/15/07 583 586
10.00%, 11/15/09 - 10/15/21 266 285
II, 10.00%, 10/20/20 60 64
Midget, I
9.00%, 4/15 - 12/15/01 15 15
10.00%, 8/15/00 - 4/15/01 37 37
10.50%, 8/15/00 - 2/15/01 17 17
1,863
Total U.S. Government Mortgage-Backed
Securities (Cost $8,215) 8,024
ASSET-BACKED SECURITIES 14.3%
Advanta Equipment Receivables, 7.56%, 2/15/07 340 339
Banc One Auto Grantor Trust, 6.27%, 11/20/03 42 42
BMW Vehicle Owner Trust, 6.54%, 4/25/04 450 444
California Infrastructure & Economic
6.38%, 9/25/08 500 476
6.42%, 9/25/08 400 382
Comed Transitional Funding Trust, 5.44%, 3/25/07 530 486
Dayton Hudson Credit Card Master Trust,
5.90%, 5/25/06 $ 450 $ 434
Fingerhut Master Trust, 6.07%, 2/15/05 320 318
First USA Secured Notes Trust, 6.50%, 1/18/06 450 433
Harley Davidson Eaglemark
5.94%, 2/15/04 113 112
6.35%, 10/15/02 ! 29 29
Heller Equipment Asset Trust, 6.65%, 3/14/04 450 445
MBNA Asset Backed Note Trust, 7.90%, 7/16/07 450 452
MBNA Credit Card Trust, 7.45%, 4/16/07 225 222
MMCA Auto Owner Trust, 6.80%, 8/15/03 450 448
Neiman Marcus Credit Master Trust, 7.60%, 6/15/03 150 150
New Holland Equipment Receivables, 6.80%, 12/15/07 ! 450 444
Onyx Acceptance Owner Trust, 5.83%, 3/15/04 450 438
Peco Energy Transport Trust, 5.63%, 3/1/05 270 260
WFS Financial Owner Trust, 7.41%, 9/20/07 450 447
Total Asset-Backed Securities (Cost $6,961) 6,801
NON-U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 5.5%
EQCC Home Equity Loan Trust, 6.159%, 4/15/08 325 309
GMAC Commercial Mortgage Securities, 6.15%, 5/15/35 408 388
LB Commercial Conduit Mortgage Trust, 6.41%, 8/15/07 522 500
Prudential Securities, 6.074%, 1/15/08 579 545
Residential Accredit Loans, 7.25%, 11/25/27 435 414
Saxon Asset Securities Trust, 6.73%, 2/25/27 500 482
Total Non-U.S. Government Mortgage-Backed
Securities (Cost $2,750) 2,638
MUNICIPAL BONDS 0.1%
Taxable Municipal 0.1%
University of Miami, 6.90%, 4/1/04 (MBIA Insured) 50 49
Total Municipal Bonds (Cost $50) 49
MONEY MARKET FUNDS 1.3%
Reserve Investment Fund, 6.18% # 630 630
Total Money Market Funds (Cost $630) 630
Total Investments in Securities
99.0% of Net Assets (Cost $48,683) $47,264
Other Assets Less Liabilities 458
NET ASSETS $47,722
----------
Net Assets Consist of:
Accumulated net investment income
- net of distributions $(193)
Accumulated net realized gain/loss - net of distributions (2,302)
Net unrealized gain (loss) (1,419)
Paid-in-capital applicable to 10,826,547 shares
of $0.0001 par value capital stock outstanding;
4,000,000,000 shares of the Corporation authorized 51,636
NET ASSETS $47,722
----------
NET ASSET VALUE PER SHARE $4.41
----------
! Private Placement
# Seven-day yield
CMO Collateralized Mortgage Obligation
ETC Equipment Trust Certificate
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 4.0% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
--------------------------------------------------------------------------------
Unaudited April 30, 2000
Statement of Net Assets Par/Shares Value
--------------------------------------------------------------------------------
In thousands
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 100.3%
U.S. Government Guaranteed Obligations 97.5%
Government National Mortgage Assn.
I
6.00%, 4/15/28 - 5/15/29 $ 4,000 $ 3,643
6.50%, 9/15/25 - 8/15/29 11,669 10,952
7.00%, 4/15/24 - 10/15/29 10,291 9,929
7.50%, 7/15/23 - 2/15/30 11,833 11,654
8.00%, 4/15/17 - 3/15/30 5,327 5,358
8.50%, 6/15/16 - 3/15/27 1,287 1,316
9.00%, 8/15/08 - 8/15/21 636 661
9.50%, 6/15/09 - 7/15/20 190 198
10.00%, 12/15/17 - 3/15/26 1,056 1,132
10.50%, 7/15/15 - 11/15/19 416 454
11.00%, 12/15/09 - 12/15/15 57 62
11.50%, 7/15 - 12/15/15 19 21
II
6.50%, 11/20/28 905 845
8.00%, 5/20 - 6/20/29 762 762
8.50%, 6/20/29 188 191
9.00%, 5/20/22 - 3/20/25 140 145
9.50%, 2/20/17 - 12/20/20 102 107
10.00%, 1/20/14 - 3/20/21 98 104
11.00%, 9/20/17 13 14
Construction Loan, I, 6.75%, 7/15/00 - 5/1/29 1,136 1,042
CMO, I, 7.00%, 5/16/24 3,000 2,870
GPM, I
9.25%, 7/15/16 - 7/15/17 8 9
9.50%, 7/15/09 30 32
10.00%, 8/15/13 2 2
Project Loan, I
6.70%, 4/15/34 466 431
7.37%, 8/15/33 396 384
8.00%, 11/15/17 382 387
Principal Only, Zero Coupon, 3/16/28 422 283
Government National Mortgage Assn.
REMIC, 7.00%, 5/16/24 $ 3,000 $ 2,870
TBA, I, 7.50%, 5/15/12 503 508
56,366
U.S. Government Agency Obligations 2.8%
Federal Home Loan Mortgage, REMIC, 5.85%, 11/15/17 14 14
Federal National Mortgage Assn.
6.50%, 1/1/26 - 1/1/30 1,285 1,201
CMO, Interest Only, 8.50%, 4/1/22** 248 44
REMIC, 5.00%, 8/25/22 16 15
Principal Only, Zero Coupon, 10/25/21 392 366
1,640
Total U.S. Government Mortgage-Backed
Securities (Cost $59,973) 58,006
ASSET-BACKED SECURITIES 0.0%
Home Equity Loans-Backed 0.0%
Prudential Home Mortgage Securities, 6.00%, 10/25/07 2 2
Total Asset-Backed Securities (Cost $2) 2
MONEY MARKET FUNDS 1.8%
Reserve Investment Fund, 6.18% # 1,034 1,034
Total Money Market Funds (Cost $ 1,034) 1,034
Total Investments in Securities
102.1% of Net Assets (Cost $61,009) $59,042
Other Assets Less Liabilities (1,230)
NET ASSETS $57,812
----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $(244)
Accumulated net realized gain/loss - net of distributions (1,405)
Net unrealized gain (loss) (1,967)
Paid-in-capital applicable to 6,281,453 shares of $0.0001 par
value capital stock outstanding; 4,000,000,000 shares of the
Corporation authorized 61,428
NET ASSETS $57,812
----------
NET ASSET VALUE PER SHARE $9.20
----------
** For Interest-Only securities, par amount represents notional
principal, on which the fund receives interest.
# Seven-day yield
CMO Collateralized Mortgage Obligation
GPM Graduated Payment Mortgage
REMIC Real Estate Mortgage Investment Conduit
TBA To be announced security was purchased on a forward commitment
basis.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Income Funds
--------------------------------------------------------------------------------
Unaudited
Statement of Operations
--------------------------------------------------------------------------------
In thousands Cash Reserves Limited-Term GNMA
Fund Bond Fund Fund
6 Months 6 Months 6 Months
Ended Ended Ended
4/30/00 4/30/00 4/30/00
Investment Income (Loss)
Interest income $ 78,025 $ 1,609 $ 2,172
Expenses
Investment management
and administrative 5,858 134 177
Net investment income (loss) 72,167 1,475 1,995
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities (26) (797) (901)
Change in net unrealized gain or loss
on securities -- 27 (332)
Net realized and unrealized gain (loss) (26) (770) (1,233)
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 72,141 $ 705 $ 762
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Cash Reserves Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 72,167 $ 103,946
Net realized gain (loss) (26) (4)
Increase (decrease) in net assets from operations 72,14 103,942
Distributions to shareholders
Net investment income (72,167) (103,946)
Capital share transactions *
Shares sold 2,401,146 3,301,638
Distributions reinvested 69,053 99,573
Shares redeemed (2,169,742) (2,845,153)
Increase (decrease) in net assets from capital
share transactions 300,457 556,058
Net Assets
Increase (decrease) during period 300,431 556,054
Beginning of period 2,440,601 1,884,547
End of period $2,741,032 $2,440,601
------------------------
*Share information
Shares sold 2,401,146 3,301,638
Distributions reinvested 69,053 99,573
Shares redeemed (2,169,742) (2,845,153)
Increase (decrease) in shares outstanding 300,457 556,058
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Limited-Term Bond Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
4/30/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 1,475 $ 2,921
Net realized gain (loss) (797) (144)
Change in net unrealized gain or loss 27 (2,174)
Increase (decrease) in net assets from operations 705 603
Distributions to shareholders
Net investment income (1,475) (2,921)
Capital share transactions *
Shares sold 7,572 28,634
Distributions reinvested 1,001 2,063
Shares redeemed (13,073) (16,291)
Increase (decrease) in net assets from capital
share transactions (4,500) 14,406
Net Assets
Increase (decrease) during period (5,270) 12,088
Beginning of period 52,992 40,904
End of period $ 47,722 $ 52,992
------------------------
*Share information
Shares sold 1,708 6,229
Distributions reinvested 226 453
Shares redeemed (2,946) (3,572)
Increase (decrease) in shares outstanding (1,012) 3,110
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit GNMA Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
4/30/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 1,995 $ 3,658
Net realized gain (loss) (901) (56)
Change in net unrealized gain or loss (332) (2,837)
Increase (decrease) in net assets from operations 762 765
Distributions to shareholders
Net investment income (1,995) (3,658)
Capital share transactions *
Shares sold 10,433 35,537
Distributions reinvested 1,335 2,630
Shares redeemed (16,566) (18,002)
Increase (decrease) in net assets from capital
share transactions (4,798) 20,165
Net Assets
Increase (decrease) during period (6,031) 17,272
Beginning of period 63,843 46,571
End of period $ 57,812 $ 63,843
------------------------
*Share information
Shares sold 1,128 3,684
Distributions reinvested 145 274
Shares redeemed (1,794) (1,874)
Increase (decrease) in shares outstanding (521) 2,084
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Income Funds
--------------------------------------------------------------------------------
Unaudited April 30, 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. The Summit Cash Reserves Fund
(the Cash Reserves Fund), the Summit Limited-Term Bond Fund (the
Limited-Term Bond Fund), and the Summit GNMA Fund (the GNMA Fund),
diversified, open-end management investment companies, are the three
portfolios established by the corporation and commenced operations on
October 29, 1993. The Cash Reserves Fund seeks preservation of capital and
liquidity and, consistent with these, the highest possible current income
by investing in high-quality, U.S. dollar-denominated money market
securities of U.S. and foreign issuers. The Limited-Term Bond Fund seeks a
high level of income consistent with moderate fluctuations in principal
value by investing primarily in short- and intermediate-term bonds. The
GNMA Fund seeks a high level of income and maximum credit protection by
investing primarily in GNMA securities backed by the full faith and credit
of the U.S. government.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Debt securities are generally traded in the over-the-counter
market. Except for securities held by the Cash Reserves Fund, investments
in securities with original maturities of one year or more are stated at
fair value as furnished by dealers who make markets in such securities or
by an independent pricing service, which considers yield or price of bonds
of comparable quality, coupon, maturity, and type, as well as prices quoted
by dealers who make markets in such securities. Securities with original
maturities of less than one year are stated at fair value, which is
determined by using a matrix system that establishes a value for each
security based on money market yields. Securities held by the Cash Reserves
Fund are valued at amortized cost.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair
value as determined in good faith by or under the supervision of the
officers of that fund, as authorized by the Board of Directors.
Premiums and Discounts Premiums and discounts on debt securities, other
than mortgage-backed securities (MBS), are amortized for both financial
reporting and tax purposes. Premiums and discounts on all MBS are
recognized upon disposition or principal repayment as gain or loss for
financial reporting purposes. For tax purposes, premiums and discounts on
MBS acquired on or before June 8, 1997, are recognized upon disposition or
principal repayment as ordinary income. For MBS acquired after June 8,
1997, premiums are recognized as gain or loss; discounts are recognized as
gain or loss, except to the extent of accrued market discount.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Distributions to shareholders
are recorded by each fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with
generally accepted accounting principles.
Note 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, for the six months ended April 30, 2000, were as follows:
--------------------------------------------------------------------------------
Limited-Term
Bond Fund GNMA Fund
U.S. government securities
Purchases $9,041,000 $17,170,000
Sales 9,421,000 21,410,000
Other securities
Purchases 10,448,000 --
Sales 13,155,000 9,000
Note 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since each fund intends
to continue to qualify as a regulated investment company and distribute all
of its taxable income. As of October 31, 1999, the Cash Reserves Fund had
capital loss carryforwards for federal income tax purposes of $4,000, all
of which expires in 2007; the Limited-Term Bond Fund had capital loss
carryforwards for federal income tax purposes of $1,484,000, of which
$808,000 expires in 2002, $354,000 in 2003, and $322,000 thereafter through
2007; the GNMA Fund had capital loss carryforwards for federal income tax
purposes of $405,000, of which $131,000 expires in 2003, $142,000 in 2004,
and $132,000 in 2005. Each fund intends to retain gains realized in future
periods that may be offset by available capital loss carryforwards.
At April 30, 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
$2,723,393,000 $,48,683,000, and $61,009,000, 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 $ 16,000 $ 79,000
Depreciated investments (1,435,000) (2,046,000)
Net unrealized gain (loss) $(1,419,000) $(1,967,000)
--------------------------
Note 4 - RELATED PARTY TRANSACTIONS
The investment management and administrative agreement between each fund
and T. Rowe Price Associates, Inc. (the manager) provides for an
all-inclusive annual fee, of which $1,074,000, $38,000, and $48,000 were
payable at April 30, 2000, by the Cash Reserves, Limited-Term Bond, and
GNMA Funds, respectively. The fee, computed daily and paid monthly, is
equal to 0.45% of average daily net assets for the Cash Reserves Fund,
0.55% of average daily net assets for the Limited-Term Bond Fund, and 0.60%
of average daily net assets for the GNMA Fund. Pursuant to the agreement,
investment management, shareholder servicing, transfer agency, accounting,
and custody services are provided to each fund, and interest, taxes,
brokerage commissions, and extraordinary expenses are paid directly by each
fund.
Additionally, the Cash Reserves Fund is one of several T. Rowe
Price-sponsored mutual funds (underlying funds) in which the T. Rowe Price
Spectrum Funds (Spectrum) may invest. Spectrum does not invest in the
underlying funds for the purpose of exercising management or control.
Expenses associated with the operation of Spectrum are borne by each
underlying fund to the extent of estimated savings to it and in proportion
to the average daily value of its shares owned by Spectrum, pursuant to
special servicing agreements between and among Spectrum, the underlying
funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum Income Fund held
approximately 0.4% of the outstanding shares of the fund at April 30, 2000.
For the six months then ended, the Cash Reserves Fund was allocated $2,000
of Spectrum expenses.
The Limited-Term Bond and GNMA Funds may invest in the Reserve Investment
Fund and Government Reserve Investment Fund (collectively, the Reserve
Funds), open-end management investment companies managed by T. Rowe Price
Associates, Inc. The Reserve Funds are offered as cash management options
only to mutual funds and other accounts managed by T. Rowe Price and its
affiliates and are not available to the public. The Reserve Funds pay no
investment management fees. Distributions from the Reserve Funds to the
Limited-Term Bond and the GNMA Funds for the six months ended April 30,
2000, totaled $28,000 and $40,000, respectively, and are reflected as
interest income in the accompanying Statement of Operations.
T. Rowe Price Shareholder Services
--------------------------------------------------------------------------------
Investment Services And Information
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(registered trademark) and
the T. Rowe Price Web site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over full-service commission rates.**
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a September 1999 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending on
size of order.
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus appropriate
to the fund or funds covered in this
report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
Invest With Confidence(registered trademark)
T. Rowe Price
T. Rowe Price Investment Services, Inc., Distributor. C10-051 4/30/00
