PAGE 1
                            SCHEDULE 14A INFORMATION
 
                Proxy Statement Pursuant to Section 14(a) of the
                        Securities Exchange Act of 1934
                               (Amendment No. __)
 
Filed by the Registrant  [X]
Filed by a party other than the Registrant  [ ]
Check the appropriate box:
[ ]   Preliminary Proxy Statement
[X]   Definitive Proxy Statement
[ ]   Definitive Additional Materials
[ ]   Soliciting Material pursuant to Rule 14a-11(c) or Section Rule 14a-12
[ ]   Confidential, For Use of the Commission Only (as permitted by Rule
      14a-6(e)(2))
 
T. Rowe Price Corporate Income Fund, Inc. 033-62275/811-07353
   T. Rowe Price Fixed Income Series, Inc. 033-52749/811-07153
       T. Rowe Price Limited-Term Bond Portfolio
       T. Rowe Price Prime Reserve Portfolio
   T. Rowe Price GNMA Fund, Inc. 033-01041/811-4441
   T. Rowe Price High Yield Fund, Inc. 002-93707/811-4119
   T. Rowe Price New Income Fund, Inc. 002-48848/811-2396
   T. Rowe Price Prime Reserve Fund, Inc. 002-54926/811-2603
   T. Rowe Price Short-Term Bond Fund, Inc. 002-87568/811-3894
   T. Rowe Price Short-Term U.S. Government Fund, Inc.
      033-42206/811-6386
   T. Rowe Price State Tax-Free Income Trust 033-06533/811-4521
       Florida Insured Intermediate Tax-Free Fund
   T. Rowe Price Summit Funds, Inc. 033-50319/811-7093
       T. Rowe Price Summit Cash Reserves Fund
       T. Rowe Price Summit Limited-Term Bond Fund
       T. Rowe Price Summit GNMA Fund
   T. Rowe Price Tax-Exempt Money Fund, Inc. 002-67029/811-3055
   T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
      033-49117/811-7051
   T. Rowe Price U.S. Treasury Funds, Inc. 033-30531/811-5860
       U.S. Treasury Intermediate Fund
       U.S. Treasury Long-Term Fund
       U.S. Treasury Money Fund
       _________________________________________________________________
                (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
T. Rowe Price Corporate Income Fund, Inc. 033-62275/811-07353
   T. Rowe Price Fixed Income Series, Inc. 033-52749/811-07153
       T. Rowe Price Limited-Term Bond Portfolio
       T. Rowe Price Prime Reserve Portfolio
   T. Rowe Price GNMA Fund, Inc. 033-01041/811-4441
   T. Rowe Price High Yield Fund, Inc. 002-93707/811-4119
   T. Rowe Price New Income Fund, Inc. 002-48848/811-2396
   T. Rowe Price Prime Reserve Fund, Inc. 002-54926/811-2603
   T. Rowe Price Short-Term Bond Fund, Inc. 002-87568/811-3894
   T. Rowe Price Short-Term U.S. Government Fund, Inc.
      033-42206/811-6386
   T. Rowe Price State Tax-Free Income Trust 033-06533/811-4521
       Florida Insured Intermediate Tax-Free Fund
   T. Rowe Price Summit Funds, Inc. 033-50319/811-7093
       T. Rowe Price Summit Cash Reserves Fund
       T. Rowe Price Summit Limited-Term Bond Fund
       T. Rowe Price Summit GNMA Fund
   T. Rowe Price Tax-Exempt Money Fund, Inc. 002-67029/811-3055
   T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
      033-49117/811-7051
   T. Rowe Price U.S. Treasury Funds, Inc. 033-30531/811-5860
       U.S. Treasury Intermediate Fund
       U.S. Treasury Long-Term Fund
       U.S. Treasury Money Fund
       _________________________________________________________________
                   (NAME OF PERSON(S) FILING PROXY STATEMENT)
 
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                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
 
   
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Fixed Income Series, Inc.,
 consisting of its series:
 T. Rowe Price Limited-Term Bond Portfolio
 T. Rowe Price Prime Reserve Portfolio
T. Rowe Price GNMA Fund
T. Rowe Price High Yield Fund., Inc.
T. Rowe Price New Income Fund, Inc.
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe Price Short-Term U.S. Government Fund, Inc.
T. Rowe Price State Tax-Free Income Trust,
 consisting of one of its series:
 Florida Insured Intermediate Tax-Free Fund
T. Rowe Price Summit Funds, Inc.,
 consisting of its series:
 T. Rowe Price Summit Cash Reserves Fund
 T. Rowe Price Summit GNMA Fund
 T. Rowe Price Summit Limited-Term Bond Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc.,
 consisting of its series:
 U.S. Treasury Intermediate Fund
 U.S. Treasury Long-Term Fund
 U.S. Treasury Money Fund
 
(Collectively the "funds" and,
individually, a "fund")    
 
                                                       T. Rowe Price Funds
                                                       100 East Pratt Street
                                                       Baltimore, Maryland 21202
 
                                                       Patricia S. Butcher
                                                       Secretary
 
 
September 3, 1998
 
An annual meeting of shareholders of the funds, all Maryland corporations, with
the exception of T. Rowe Price GNMA Fund and Florida Insured Intermediate
Tax-Free Fund, which are Massachusetts business trusts, will be held on
Thursday, October 15, 1998, at 8:30 a.m., eastern time, in the offices of the
funds at 100 East Pratt Street, Baltimore, Maryland. The following matters will
be acted upon at that time:
 
1.  To elect seven trustees/directors to serve on the Board of each fund (except
 Florida Insured Intermediate Tax-Free Fund) until the next annual meeting, if
 any, or until their successors shall have been duly elected and qualified;
 
2.  To ratify or reject the selection of the firm of PricewaterhouseCoopers LLP
 as the independent accountants for each fund's current fiscal year;
 
   
3.  To approve or disapprove amending the investment objectives of Florida
 Insured Intermediate Tax-Free Fund and T. Rowe Price Tax-Free Insured
 Intermediate Bond Fund, Inc., to remove the requirement that each fund invest
 primarily (at least 65% of total assets) in insured bonds;
 
4.  To approve or disapprove amending the Articles of Incorporation of T. Rowe
 Price New Income Fund, Inc., and T. Rowe Price Tax-Exempt Money Fund, Inc., to
 authorize creating different series and classes and to conform the provisions
 describing series and classes to those standard for other T. Rowe Price funds;
 and    
 
5.  To transact such other business as may properly come before the meeting and
 any adjournments thereof.
 
The shareholders of each fund will vote only on those proposals that apply to
their fund(s). Only shareholders of record of common stock at the close of
business on August 14, 1998, are entitled to notice of, and to vote at, this
meeting or any adjournment thereof. THE BOARDS OF THE FUNDS RECOMMEND THAT YOU
VOTE IN FAVOR OF EACH PROPOSAL.
 
PATRICIA S. BUTCHER

    


                            YOUR VOTE IS IMPORTANT
- ------------------------------------------------------------------------------
    
 
SHAREHOLDERS ARE URGED TO DESIGNATE THEIR CHOICES ON EACH OF THE MATTERS TO BE
ACTED UPON BY USING ONE OF THE FOLLOWING THREE METHODS:
 
1. VOTE BY INTERNET.
 
 .    Read the proxy statement.
 
 .    Go to the proxy voting link (www.proxyweb.com)
 
 .    Enter the 14-digit control number found in the upper left corner
   of your proxy card.
 
 .    Follow the instructions using your proxy card as a guide.
 
2. VOTE BY TELEPHONE.
 
 .    Read the proxy statement.
 
 .    Call toll-free 1-888-221-0697
 
 .    Enter the 14-digit control number found in the upper left corner
   of your proxy card.
 
 .    Follow the recorded instructions using your proxy card as a guide.
 
3. VOTE BY MAIL.
 
 .    Date, sign, and return the enclosed proxy card in the envelope
   provided, which requires no postage if mailed in the United States.
 
YOUR PROMPT RESPONSE WILL HELP ASSURE A QUORUM AT THE MEETING AND AVOID THE
ADDITIONAL EXPENSE TO THE FUNDS OF FURTHER SOLICITATION.
 
 
- ------------------------------------------------------------------------------

     

                        T. ROWE PRICE FIXED INCOME FUNDS
 
 
               Annual Meeting of Shareholders -- October 15, 1998
 
 
                                PROXY STATEMENT
 
 
 
This document gives you information you need in order to vote on the matters
coming before the annual meeting and is furnished in connection with the
solicitation of proxies by the funds, all Maryland corporations, with the
exception of the T. Rowe Price GNMA Fund and the Florida Insured Intermediate
Tax-Free Fund, which are Massachusetts business trusts. If you have any
questions, please feel free to call us toll free, 1-800-231-8432.
 
 
Who is asking for my vote?
 
The Boards of the funds have asked that you vote on the matters listed in the
notice of annual meeting of shareholders. The votes will be formally counted at
the annual meeting on Thursday, October 15, 1998, and if the annual meeting is
adjourned, at any later meeting. You may vote in person at the annual meeting,
by Internet, by telephone, or by returning your completed proxy card in the
postage-paid envelope provided. Details can be found on the enclosed proxy
insert. Do not mail the proxy card if you are voting by Internet or telephone.
 
 
Who is eligible to vote?
 
Shareholders of record at the close of business on August 14, 1998, (the "RECORD
DATE") are notified of the meeting and are entitled to vote. The notice of
annual meeting, the proxy card, and the proxy statement were mailed to
shareholders of record on or about September 3, 1998.
 
Shareholders are entitled to one vote for each full share and a proportionate
vote for each fractional share of the fund(s) they held as of August 14, 1998.
Under Maryland and Massachusetts law, shares owned by two or more persons
(whether as joint tenants, co-fiduciaries, or otherwise) will be voted as
follows, unless a written instrument or court order providing to the contrary
has been filed with the fund(s): (1) if only one votes, that vote will bind all;
(2) if more than one votes, the vote of the majority will bind all; and (3) if
more than one votes and the vote is evenly divided, the vote will be cast
proportionately.
 
What are shareholders being asked to vote on?
 
At a meeting held on July 22, 1998, the Boards of the funds, including the
independent directors and trustees, unanimously approved submitting the
following proposals:
 
   

PROPOSAL                                  FUNDS AFFECTED
- ------------------------------------------------------------------
                                       
 
1.  To elect seven directors/trustees     All funds except
 to the Board.                            Florida Insured
                                          Intermediate
                                          Tax-Free Fund
2.  To ratify the selection of the firm   All funds
 of PricewaterhouseCoopers LLP as
 independent accountants for each fund's
 current fiscal year.
3.  To approve the amendment of the       Florida Insured
 investment objectives of Florida         Intermediate Tax-Free
 Insured Intermediate Tax-Free Fund and   Fund and T. Rowe
 T. Rowe Price Tax-Free Insured           Price Tax-Free
 Intermediate Bond Fund, Inc., to remove  Insured Intermediate
 the requirement that each fund invest    Bond Fund, Inc., only
 primarily in insured bonds.
4.  To approve the amendment of the       T. Rowe Price New
 Articles of Incorporation of T. Rowe     Income Fund, Inc.,
 Price New Income Fund, Inc., and T.      and T. Rowe Price
 Rowe Price Tax-Exempt Money Fund, Inc.,  Tax-Exempt Money
 to authorize creating different series   Fund, Inc., only
 and classes and to conform the
 provisions describing series and
 classes to those standard
 for other T. Rowe Price funds.
5.  To transact such other business as    All funds
 may properly come before the meeting
 and any adjournments thereof.
- ------------------------------------------------------------------

     
 
 
 
   
How can I get more information about the funds?
 
A COPY OF EACH FUND'S MOST CURRENT ANNUAL AND SEMIANNUAL SHAREHOLDER REPORT WAS
MAILED TO ALL SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS FOR THE FUND'S
FISCAL PERIOD-END. IF YOU WOULD LIKE TO RECEIVE ADDITIONAL COPIES OF ANY REPORT,
PLEASE CONTACT T. ROWE PRICE    
BY CALLING 1-800-231-8432; WRITING TO 100 EAST PRATT STREET, BALTIMORE, MARYLAND
21202; OR VISITING OUR WEBSITE AT WWW.TROWEPRICE.COM. ALL COPIES ARE PROVIDED
FREE OF CHARGE.
 
 
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS AND TRUSTEES
 
 
ALL FUNDS (except Florida Insured Intermediate Tax-Free Fund)
 
 
Who are the nominees for director or trustee?
 
The Boards have proposed a slate of the seven persons listed in Table 1 for
election as director or trustee, each to hold office until the next annual
meeting (if any) or until his successor is duly elected and qualified. Each of
the nominees is a member of the present Board of Trustees/Directors of each fund
and has served in that capacity since originally elected.
 
A shareholder using the enclosed proxy card can vote for all or any of the
nominees or withhold his or her vote from all or any of such nominees. If the
proxy card is properly executed but unmarked, it will be voted for all of the
nominees. Each of the nominees has agreed to serve as a trustee or director if
elected; however, should any nominee become unable or unwilling to accept
nomination or election, the persons named in the proxy will exercise their
voting power in favor of such other person or persons as the Boards of the funds
may recommend. There are no family relationships among these nominees.
 
Shareholders are being asked to elect the Board of Trustees/Directors of their
respective fund(s) only.
    

Table 1  Nominees to Each Fund's Board of
Trustees/Directors

                                                                              All Other Price
Name, Date of Birth, Address,              Fund Shares Beneficially           Funds' Shares
Position on Fund Board, and                Owned, Directly or Indirectly,     Owned Directly
Principal Occupations/a/                   as of 6/30/98 /b/                  as of 6/30/98
- -----------------------------------------------------------------------------------------------
                                                                     
 
- -----------------------------------------------------------------------------------------------
*William T. Reynolds, 5/26/48              Corporate                              1,268,590
                                           Income                   3,174
100 E. Pratt Street, Baltimore, MD 21202
                                           High Yield                 882
Chairman of the Board or Director/
Trustee of the Funds                       Prime Reserve              451
 
Managing Director and Director, T. Rowe    Short-Term Bond         11,122
Price; Director, T. Rowe Price Fixed
Income Division, TRP Finance, Inc.;        Summit Cash             517,902
Officer and/or Director/Trustee of the     Reserves
36 T. Rowe Price Fixed Income and                                     
Municipal Funds/Trusts; Officer of         Summit GNMA                681
Personal Strategy Funds and Tax-Efficient                           
Balanced Fund                              Summit Limited-Term      1,357
                                           Bond                    499,869
 
                                           Tax-Exempt Money        499,869
                                                                   
                                           U.S. Treasury Money      3,354
 
                                           Prime Reserve           13,616
                                           Portfolio
- -----------------------------------------------------------------------------------------------
*James S. Riepe, 6/25/43                   Corporate Income        10,731         1,369,836
                                                                   
100 E. Pratt Street, Baltimore, MD 21202   High Yield               2,982
                                                                    
Director/Trustee of the Funds              Summit Cash
                                           Reserves                3,483,879
Vice Chairman of the Board and Managing
Director, T. Rowe Price; Chairman of the   Summit GNMA              2,304
Board, T. Rowe Price Investment Services,
Inc., T. Rowe Price Services, Inc., T.     Summit Limited-Term      4,586
Rowe Price Trust Company, T. Rowe Price    Bond
Retirement Plan Services, Inc.; Director,                          
Rowe Price-Fleming International, Inc.,    Tax-Exempt Money        1,602,675
and General Re Corporation; Officer                                
and/or Director/ Trustee of the 86 T.      U.S. Treasury Money     11,339
Rowe Price Funds/ Trusts
                                           Prime Reserve           2,161,336
                                           Portfolio
- -----------------------------------------------------------------------------------------------
*M. David Testa, 4/22/44                   Corporate Income         5,189                181,191
                                                                    
100 E. Pratt Street, Baltimore, MD 21202   High Yield               1,442
                                                                    
Director/Trustee of the Funds              Summit Cash             1,416,730 
                                           Reserves                
Vice Chairman of the Board, Chief
Investment Officer, Managing Director, T.  Summit GNMA              1,114
Rowe Price; Chairman of the Board, Rowe
Price-Fleming International, Inc., Vice    Summit Limited-Term      2,218
President and Director, T. Rowe Price      Bond
Trust Company; Officer and/or                                      
Director/Trustee of 85 of the T. Rowe      Tax-Exempt Money        775,002
Price Funds/Trusts                                                  
                                           U.S. Treasury Money      5,483
 
                                           Prime Reserve Portfolio 22,262
- -----------------------------------------------------------------------------------------------
Calvin W. Burnett, Ph.D., 3/16/32          High Yield                 122               212
                                                                      
2500 West North Avenue,                    Prime Reserve            1,404
Baltimore, MD 21216
 
Director/Trustee of the Funds
 
President, Coppin State College;
Director, Maryland Chamber of Commerce,
Provident Bank of Maryland;
Director/Trustee of the 36 T. Rowe Price
Fixed Income Funds/Trusts
- -----------------------------------------------------------------------------------------------
Anthony W. Deering, 1/28/45                GNMA                       125            56,495
                                                                      
10275 Little Patuxent Parkway,             High Yield              16,870
Columbia, MD 21044                                                 
                                           New Income                 226
Director/Trustee of the Funds                                         
                                           Prime Reserve              982
Director, Chairman of the Board,                                      
President, and Chief Operating Officer,    Short-Term Bond            325
The Rouse Company, real estate                                        
developers, Columbia, Maryland; Advisory   Tax-Exempt Money         2,996
Director, Kleinwort, Benson (North                                  
America) Corporation, a registered         U.S. Treasury Money      1,164
broker-dealer; Director/ Trustee of the
49 T. Rowe Price Fixed Income and
International Funds/Trusts
- -----------------------------------------------------------------------------------------------
F. Pierce Linaweaver, 8/22/34              Prime Reserve            6,468             1,356
 
Green Spring Station, 2360 West Joppa
Road, Suite 224, Lutherville, MD 21093
 
Director/Trustee of the Funds
 
President, F. Pierce Linaweaver &
Associates, Inc., Consulting
Environmental & Civil Engineers;
Director: Daft-McCune-Walker, Inc;
formerly, formerly Executive Vice
President, EA Engineering, Science, and
Technology, Inc., and President,
EA Engineering, Inc., Baltimore,
Maryland; Director/Trustee of the 36
T. Rowe Price Fixed Income Funds/Trusts
- -----------------------------------------------------------------------------------------------
John G. Schreiber, 10/21/46                GNMA                                      93,287
                                                                   16,185
1115 East Illinois Road,                   High Yield
Lake Forest, IL 60045                                              21,524
                                           New Income
Director/Trustee of the Funds                                      17,382
                                           Prime Reserve
President, Schreiber Investments, Inc.,                            29,111
a real estate investment company;          Short-Term Bond
Director, JMB Realty Corporation,                                  29,297
AMLI Residential Properties Trust and      U.S. Treasury
Urban Shopping Centers, Inc.,              Long-Term               15,492
Host Marriott Corporation, Brickman
Holdings Corporation; Partner, Blackstone  U.S. Treasury           28,779
Real Estate Partners, L.P.;                Intermediate            
Director/Trustee of the 36 T. Rowe Price
Fixed Income Funds/Trusts                  U.S. Treasury Money     128,732
- -----------------------------------------------------------------------------------------------

 
* Nominees considered "interested persons" of T. Rowe Price.
 
/a/Except as otherwise noted, each individual has held the office indicated, or
 other offices in the same company, for the last five years.
 
/b/In addition to the shares owned beneficially and of record by each of the
 nominees, the amounts shown reflect the proportionate interests of Messrs.
 Reynolds, Riepe, and Testa in 2,277,475 shares of the funds which are owned by
 a wholly owned subsidiary of the funds' investment manager, T. Rowe Price, and
 also their proportionate interests in 158,838,851 shares of the funds owned by
 T. Rowe Price.
     
 
Table 2 sets forth the year each director/trustee was first elected to the fund.
 

Table 2  Year of Original Election to Each Fund's Board

T. Rowe Price
Fund            Burnett  Deering  Linaweaver  Schreiber  Reynolds  Riepe   Testa
- ---------------------------------------------------------------------------------
                                                     
 
- ---------------------------------------------------------------------------------
Corporate        1995     1995       1995       1995       1997    1995   1997
Income
- ---------------------------------------------------------------------------------
Fixed Income     1994     1994       1994       1994       1997    1994   1997
Series
- ---------------------------------------------------------------------------------
GNMA             1993     1985       1985       1992       1997    1985   1997
- ---------------------------------------------------------------------------------
High Yield       1993     1984       1984       1992       1997    1984   1997
- ---------------------------------------------------------------------------------
New Income       1993     1980       1983       1992       1997    1983   1997
- ---------------------------------------------------------------------------------
Prime Reserve    1993     1979       1980       1992       1995    1994   1997
- ---------------------------------------------------------------------------------
Short-Term       1993     1983       1983       1992       1997    1983   1997
Bond
- ---------------------------------------------------------------------------------
Short-Term       1993     1991       1991       1992       1997    1991   1997
U.S.
Government
- ---------------------------------------------------------------------------------
Summit Funds     1993     1993       1993       1993       1997    1993   1997
- ---------------------------------------------------------------------------------
Tax-Exempt       1993     1983       1983       1992       1991    1983   1997
Money
- ---------------------------------------------------------------------------------
Tax-Free         1993     1992       1992       1992       1994    1992   1997
Insured
Intermediate
Bond
- ---------------------------------------------------------------------------------
U.S. Treasury    1993     1989       1989       1992       1997    1989   1997
Funds
- ---------------------------------------------------------------------------------

 
 
Do the nominees have a stake in the funds?
 
The Boards of the funds believe it is important that each nominee for trustee
and director have an investment in the T. Rowe Price funds. The nominees
allocate their investments among the 86 T. Rowe Price funds based on their own
investment objectives. Table 1 lists each nominee's investment in the funds as
well as his total investment in all of the T. Rowe Price funds.
 
 
What are the primary responsibilities of each fund's Board members?
 
They are responsible for the general oversight of each fund's business and for
assuring that each fund is managed in the best interests of its shareholders.
The trustees/directors periodically review the
performance, expenses, and service providers of the funds based on reports
provided by T. Rowe Price personnel, auditors, and legal counsel.
 
 
How often does each fund's Board meet?
 
The Board of Trustees/Directors of the funds held five meetings during fiscal
year 1997, and each director/trustee standing for reelection attended 75% or
more of those meetings. The Boards of Trustees/ Directors have held three
meetings so far during fiscal year 1998, and each director/trustee standing for
reelection has attended all of the meetings with the exception of Mr. Deering,
who has attended one meeting. Each Board currently has three committees,
described in the following paragraphs.
 
The Executive Committee is authorized to assume all the powers of the Board to
manage each fund in the intervals between meetings of the Board, except the
powers prohibited by statute from being delegated. If all nominees are elected,
this committee will continue to consist of the interested trustees/directors of
each fund, Messrs. Reynolds, Riepe, and Testa. The committee does not normally
hold formal meetings.
 
The Nominating Committee, which functions only in an advisory capacity, is
responsible for reviewing and recommending to the full Board candidates for
election as independent directors or trustees to fill vacancies on each fund's
Board. The Nominating Committee will consider written recommendations from
shareholders for possible nominees. Shareholders should submit their
recommendations to the secretary of the funds. Members of the Nominating
Committee are Messrs. Burnett, Deering, Linaweaver, and Schreiber. They met
informally during the last fiscal year, but the committee as such held no formal
meetings.
 
The Joint Audit Committee includes at least one independent trustee/ director
representing each of the T. Rowe Price funds. Messrs. Schreiber and Linaweaver,
nominees of the funds, are members of the committee. The other members are
Donald W. Dick, Jr., and Hubert D. Vos, independent directors of other T. Rowe
Price funds. These directors also receive a fee of $1,000 for each committee
meeting attended. The Audit Committee holds two regular meetings during each
fiscal year, at which time it meets with the independent accountants of the T.
Rowe Price funds to review: (1) the services provided; (2) the findings of the
most recent audit; (3) management's response to the findings of the most recent
audit; (4) the scope of the audit to be performed; (5) the accountants' fees;
and (6) any accounting or other questions relating to particular areas of the T.
Rowe Price funds' operations or the operations of parties dealing with the T.
Rowe Price funds, as circumstances indicate. The Audit Committee met twice in
1997 and once so far in 1998. All members of the committee participated in the
meetings.
 
 
What are the directors/trustees paid for their services to the funds?
 
Messrs. Reynolds, Riepe, and Testa are employed by, and thus are considered
"interested persons" of, T. Rowe Price. Therefore, they are not entitled to
compensation or benefits from the funds for their service as trustees/directors
of the funds.
 
   
Messrs. Burnett, Deering, Linaweaver, and Schreiber are the independent, or
noninterested, trustees/directors of the funds. Their trustees'/directors' fees
are based on the following fee schedule applicable to all independent
directors/trustees of the T. Rowe Price funds: an annual retainer of $65,000 per
year for service on the Boards of the T. Rowe Price domestic funds, an
additional annual retainer of $15,000 for service on the boards of the T. Rowe
Price international funds, and a fee of $1,000 for each Audit Committee meeting
attended. The Price fund group included 86 funds at June 30, 1998. The
independent trustees/directors of the funds do not receive any pension or
retirement benefits from the funds or T. Rowe Price.
 
Table 3 provides the independent trustees'/directors' accrued compensation for
the most recently completed fiscal year of each fund and their total
compensation for the period January 1, 1997, through December 31, 1997. The fund
complex included 84 funds as of December 31, 1997. The fees are allocated to
each fund under a formula which includes a base fee and a fee based on the net
assets of each fund relative to the other funds.
 

Table 3  Compensation to Fund Trustees/Directors

Aggregate Compensation From T.                     Director/Trustee
Rowe Price Fund                 ---------------------------------------------------------
- --------------------------------Black /a/  Burnett     Deering    Linaweaver   Schreiber
                                ---------------------------------------------------------
                                                               
 
- -----------------------------------------------------------------------------------------
Corporate Income                 $ 1,474    $ 1,474   $   1,193     $ 1,474     $ 1,474
- -----------------------------------------------------------------------------------------
Fixed Income Series                1,037      1,037       1,006       1,037       1,037
- -----------------------------------------------------------------------------------------
GNMA                               2,752      2,752       1,694       2,752       2,752
- -----------------------------------------------------------------------------------------
High Yield                         3,630      3,630       2,037       3,630       3,630
- -----------------------------------------------------------------------------------------
New Income                         4,205      4,205       2,265       4,205       4,205
- -----------------------------------------------------------------------------------------
Prime Reserve                      8,713      8,713       4,057       8,713       8,713
- -----------------------------------------------------------------------------------------
Short-Term Bond                    1,611      1,611       1,240       1,611       1,611
- -----------------------------------------------------------------------------------------
Short-Term U.S. Government         1,340      1,340       1,140       1,340       1,340
- -----------------------------------------------------------------------------------------
Summit Funds                       5,016      5,016       3,768       5,016       5,016
- -----------------------------------------------------------------------------------------
Tax-Exempt Money                   2,973      2,973       1,763       2,973       2,973
- -----------------------------------------------------------------------------------------
Tax-Free Insured Intermediate      1,166      1,166       1,057       1,166       1,166
Bond
- -----------------------------------------------------------------------------------------
U.S. Treasury Intermediate      $  1,292      1,292       1,124       1,292       1,292
- -----------------------------------------------------------------------------------------
U.S. Treasury Long-Term            2,412      2,412       1,559       2,412       2,412
- -----------------------------------------------------------------------------------------
U.S. Treasury Money                1,383      1,383       1,157       1,383       1,383
- -----------------------------------------------------------------------------------------
Total Compensation From Funds    $65,000    $65,000   $81,000 /b/   $66,000     $65,500
and Fund Complex
- -----------------------------------------------------------------------------------------

 
/a/Mr. Black retired from his position with the funds on April 22, 1998.
 
/b/Mr. Deering also receives compensation for his service as a director of the
 international funds.    
 
 
What vote is required to elect the trustees/directors?
 
For all funds other than the Fixed Income Series, the Summit Funds, and the U.S.
Treasury Funds, each fund votes separately and a plurality of the votes of each
fund cast at the meeting is sufficient to approve the election of a
trustee/director of that fund. For the Fixed Income Series, the Summit Funds,
and the U.S. Treasury Funds (each a "corporation"), each corporation votes
separately but all funds of each corporation vote together. A plurality of the
combined votes cast at the meeting by the shareholders of all funds of each
corporation is sufficient to approve the election of a director of that
corporation. THE BOARD OF TRUSTEES/DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR ALL OF THE PROPOSED NOMINEES.
 
 
PROPOSAL NO. 2 -- SELECTION OF INDEPENDENT ACCOUNTANTS
 
 
All Funds
 
The selection by the Board of Trustees/Directors of the firm of
PricewaterhouseCoopers LLP as the independent accountants for the funds for
their current fiscal year is to be submitted for ratification or rejection by
the shareholders at the annual meeting. The firm of PricewaterhouseCoopers LLP
has served each fund as independent accountants since its inception. The
independent accountants have advised the funds that they have no direct or
material indirect financial interest in the funds. Representatives of the firm
of PricewaterhouseCoopers LLP are expected to be present at
the annual meeting and will be available to make a statement, if they desire to
do so, and to respond to appropriate questions which the shareholders may wish
to address to them. Table 4 lists the various fiscal year-ends for the funds.
 

Table 4  Fiscal Year-Ends

T. Rowe Price Fund                     Fiscal Year-End
- ----------------------------------------------------------
                                    
 
- ----------------------------------------------------------
Corporate Income                       May 31, 1999
- ----------------------------------------------------------
Fixed Income Series                    December 31, 1998
- ----------------------------------------------------------
Florida Insured Intermediate Tax-Free  February 28, 1999
- ----------------------------------------------------------
GNMA                                   May 31, 1999
- ----------------------------------------------------------
High Yield                             May 31, 1999
- ----------------------------------------------------------
New Income                             May 31, 1999
- ----------------------------------------------------------
Prime Reserve                          May 31, 1999
- ----------------------------------------------------------
Short-Term Bond                        May 31, 1999
- ----------------------------------------------------------
Short-Term U.S. Government             May 31, 1999
- ----------------------------------------------------------
Summit Funds                           October 31, 1998
- ----------------------------------------------------------
Tax-Exempt Money                       February 28, 1999
- ----------------------------------------------------------
Tax-Free Insured Intermediate Bond     February 28, 1999
- ----------------------------------------------------------
U.S. Treasury Funds                    May 31, 1999
- ----------------------------------------------------------

 
 
What vote is required to ratify the funds' independent accountants?
 
Each fund votes separately. Approval of the proposal requires an affirmative
vote by a majority of the shares cast at the meeting of each fund in person or
by proxy. THE BOARD OF TRUSTEES/DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE PROPOSAL.
 
   
PROPOSAL NO. 3 -- AMENDMENT OF THE INVESTMENT OBJECTIVES OF FLORIDA INSURED
INTERMEDIATE TAX-FREE FUND AND T. ROWE PRICE INSURED INTERMEDIATE BOND FUND,
INC.
 
The directors/trustees of the Tax-Free Insured Intermediate Bond and Florida
Insured Intermediate Funds recommend changing each fund's investment objective
to remove the requirement that each fund seek to minimize credit risk by
investing primarily in insured bonds. Additionally, the Florida Insured
Intermediate Tax-Free Fund's objective would be revised to make it clear that
the fund seeks to achieve its goal in a manner consistent with moderate price
fluctuation.
 
Today, about 50% of new municipal bonds coming to market carry bond insurance
compared with about 30% earlier in the decade when your funds began. As a
result, even if the proposed change is approved, the funds are likely to
continue holding a large number of insured bonds. The Board of
Directors/Trustees believes you will be better served over time if your fund
managers have more flexibility in selecting bonds for the portfolios while
seeking to still maintain high overall credit quality for the portfolios.
 
As you no doubt know, diversification of assets typically reduces the volatility
of a portfolio while increasing opportunities to enhance returns. Volatility is
reduced because different types of bonds may respond differently to changes in
interest rates and economic conditions, smoothing out the impact of such changes
on a portfolio. Therefore, greater diversification in credit quality could
reduce the portfolios' overall risk and may increase their long-term return
potential.
 
A portfolio consisting primarily of insured bonds inhibits a manager's ability
to capitalize on such opportunities for two main reasons. First, prices of
insured bonds are affected mainly by interest rate changes, thereby increasing
the portfolio's overall volatility. And second, by essentially eliminating
differences in credit quality, insurance limits the ability of our managers to
take full advantage of T. Rowe Price's extensive research resources -- for
example, identifying bonds whose credit ratings seem likely to improve or that
seem temporarily mispriced by the market.
 
Of course, it is always possible that a fund consisting primarily of insured
bonds would have reduced volatility or experience fewer credit problems. The
current and proposed investment objectives of each fund are set forth below:
 
FLORIDA INSURED INTERMEDIATE TAX-FREE FUND
 
 . CURRENT OBJECTIVE:  To provide a high level of income exempt from federal
   income taxes while minimizing credit risk by investing primarily in insured
   Florida municipal bonds.
 
 . PROPOSED OBJECTIVE:  To provide a high level of income exempt from federal
   income taxes consistent with moderate price fluctuation by investing
   primarily in Florida municipal bonds.
 
TAX-FREE INSURED INTERMEDIATE BOND FUND
 
 . CURRENT OBJECTIVE:  A high level of income exempt from federal income taxes
   consistent with moderate price fluctuation while minimizing credit risk by
   investing primarily in insured municipal securities.
 
 . PROPOSED OBJECTIVE:  A high level of income exempt from federal income taxes
   consistent with moderate price fluctuation by investing primarily in
   municipal securities.
 
If you approve this change in the funds' investment objectives, the Board of
Directors/Trustees will remove the reference to insurance in their names to
reflect their broader diversification. Their names would be the Tax-Free
Intermediate Bond Fund and the Florida Intermediate Tax-Free Fund.
 
 
What vote is required to approve this amendment to each fund's investment
objective?
 
Proposal No. 3 requires the affirmative vote of the lesser of (a) 67% of the
shares present at the meeting of the fund in person or by proxy or (b) a
majority of the fund's outstanding shares. THE BOARD OF DIRECTORS/ TRUSTEES OF
EACH FUND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL.
 
 
PROPOSAL NO. 4 -- AMENDMENT OF ARTICLES OF INCORPORATION TO AUTHORIZE CREATION
OF SERIES AND CLASSES AND TO CONFORM THE PROVISIONS DESCRIBING SERIES AND
CLASSES TO THOSE STANDARD FOR OTHER T. ROWE PRICE FUNDS
 
 
T. Rowe Price New Income Fund, Inc. T. Rowe Price Tax-Exempt Money Fund, Inc.
 
The Articles of Incorporation of the two funds listed above do not authorize
their Boards to divide fund shares into series or classes. This proposal asks
shareholders to approve or disapprove amending the Articles of Incorporation for
each fund to permit the use of series or classes. The change would bring these
charters in line with similar provisions in the charters of other T. Rowe Price
funds.
 
These amendments would authorize each fund's Board to create separate series of
shares. Each series would be its own "fund" and would represent an exclusive
interest in a separate portfolio of securities. The amendments would also
authorize each fund's Board of Directors to subdivide the shares (or any series
if the common stock is divided into series) into classes with identical voting,
dividend, and liquidation rights. Under the proposed amendments, shares of the
classes could be subject to differing front-end loads, contingent deferred sales
loads, expenses (including distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement),
conversion rights, and class voting rights, to the extent permitted by Maryland
law, the Investment Company Act of 1940, and the rules and regulations of the
National Association of Securities Dealers, Inc. The proposed changes, if
adopted, will have no effect on existing fund shareholders.

These amendments, if approved, would give the funds additional flexibility in
two areas:
 
 . LEVELS OF SERVICE.  The ability to create classes of shares would enable us
   to customize service levels for shareholders while allocating expenses
   associated with those services to those who elect to use them. For example, a
   separate class of Tax-Exempt Money Fund shares could be used as part of a
   cash management-type account offering a debit card and unlimited
   checkwriting. Investors desiring this type of account would purchase shares
   in the new class, which, in turn, would bear the expense of the services.
 
 . DISTRIBUTION OF SHARES.  The various fee structures that can be used for
   different classes of shares could allow investors to choose the purchasing
   method best suited to their situation and, thus, attract shareholders to the
   fund. Generally, higher asset totals increase investment flexibility and can
   decrease some expenses due to economies of scale.
 
In addition, the potential to create share classes could help the funds
competitively, since many of their peers have or are seeking similar
authorization. For your reference, complete versions of the proposed Articles of
Amendment for the funds are contained in Exhibits I and II.
 
We want to emphasize that neither fund's Board has any current intention of
imposing sales loads or distribution expenses, and that any such action would
require advance notice to shareholders and, in certain instances, shareholder
approval.    
 
 
What vote is required to approve this amendment to the funds' Articles of
Incorporation?
 
Proposal No. 4 requires the affirmative vote of a majority of each fund's
outstanding shares. THE BOARD OF DIRECTORS OF EACH FUND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE PROPOSAL.
 
 
FURTHER INFORMATION ABOUT VOTING AND THE SHAREHOLDER MEETING
 
 
What is the required quorum?
 
To hold the meeting, a majority of each fund's shares entitled to be voted must
have been received by proxy or be present at the meeting. In the event that a
quorum is present but sufficient votes in favor of one or more of the proposals
are not received by the meeting date, the persons named as proxies may propose
one or more adjournments to permit further solicitation of proxies. Any such
adjournment
will require the affirmative vote of a majority of the shares present in person
or by proxy at the meeting to be adjourned. The persons named as proxies will
vote in favor of such adjournment if they determine that additional solicitation
is reasonable and in the interests of the fund's shareholders.
 
 
How are the votes counted?
 
The individuals named as proxies (or their substitutes) on the enclosed proxy
card (or cards, if you have multiple funds or accounts) will vote according to
your directions if your proxy is received properly executed, or in accordance
with your instructions given when voting by telephone or Internet. You may
direct the proxy holders to vote your shares on a proposal by checking the
appropriate box "FOR" or "AGAINST," or instruct them not to vote those shares on
the proposal by checking the "ABSTAIN" box. Alternatively, you may simply sign,
date, and return your proxy card(s) with no specific instructions as to the
proposals. IF YOU PROPERLY EXECUTE YOUR PROXY CARD AND GIVE NO VOTING
INSTRUCTIONS WITH RESPECT TO A PROPOSAL, YOUR SHARES WILL BE VOTED FOR THE
PROPOSAL.
 
   
Abstentions and "broker non-votes" (as defined below) are counted for purposes
of determining whether a quorum is present for purposes of convening the
meeting. "Broker non-votes" are shares held by a broker or nominee for which an
executed proxy is received by the fund but are not voted as to one or more
proposals because instructions have not been received from the beneficial owners
or persons entitled to vote, and the broker or nominee does not have
discretionary voting power. If a proposal must be approved by a percentage of
votes cast on the proposal (proposals 1 and 2), abstentions and broker non-votes
will not be counted as "votes cast" on the proposal and will have no effect on
the result of the vote. If the proposal must be approved by a percentage of
voting securities present at the meeting or a majority of the fund's outstanding
shares (proposals 3 and 4), abstentions and broker non-votes will be considered
to be voting securities that are present and will have the effect of being
counted as votes against the proposal.    
 
 
Can additional matters be acted upon at the annual meeting?
 
The management of the funds knows of no other business which may come before the
meeting. However, if any additional matters are properly presented at the
meeting, it is intended that the persons named in the enclosed proxy, or their
substitutes, will vote on such matters in accordance with their judgment.
 
 
How can proxies be recorded?
 
   
You may record your votes on the proxy card enclosed with this statement and
mail it in the prepaid envelope provided to Management Information Services
Corp., who the funds have retained
to tabulate the votes. In addition, the funds have arranged to have votes
recorded through the Internet or by telephone. The telephone and Internet voting
procedures are designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded.
 
How can proxies be solicited, and who pays for the costs involved?
 
Directors, officers, or employees of the funds or of its investment manager, T.
Rowe Price, may solicit proxies by mail, in person, or by telephone. In the
event that votes are solicited by telephone, shareholders would be called at the
telephone number T. Rowe Price has in its records for their accounts, and would
be asked for their Social Security number or other identifying information. The
shareholders would then be given an opportunity to authorize proxies to vote
their shares at the meeting in accordance with their instructions. To ensure
that shareholders' instructions have been recorded correctly, confirmation of
the instructions is also mailed. A special toll-free number will be available in
case the information contained in the confirmation is incorrect.
 
The costs of the meeting, including the solicitation of proxies, will be paid by
the funds. To ensure that sufficient shares of common stock are represented at
the meeting to permit approval of the proposals outlined in the proxy statement,
the funds may retain the services of a proxy solicitor to assist them in
soliciting proxies for a fee plus reimbursement of out-of-pocket expenses.
Securities brokers, custodians, fiduciaries, and other persons holding shares as
nominees will be reimbursed, upon request, for their reasonable expenses in
sending solicitation materials to the principals of the accounts.
 
The approximate date on which this proxy statement and proxy card are first
being mailed to shareholders is September 3, 1998.
 
Can I change my vote after I mail my proxy?
 
Any proxy, including those given via the Internet or by telephone, may be
revoked at any time before it is voted by filing a written notice of revocation
with the funds, by delivering a properly executed proxy bearing a later date, or
by attending the meeting and voting in person.
 
 
Are the funds required to hold annual meetings?
 
Under Maryland and Massachusetts law, the funds are not required to hold annual
meetings. The Board of Trustees/Directors of each fund have determined that the
funds will take advantage of these Maryland and Massachusetts law provisions to
avoid the significant expense associated with holding annual meetings, including
legal, accounting, printing, and mailing fees incurred in preparing proxy
materials.    
 
Accordingly, no annual meetings shall be held in any year in which a meeting is
not otherwise required to be held by the 1940 Act unless the Boards determine
otherwise. However, special meetings will be held in accordance with applicable
law or when otherwise determined by each fund's Board.
 
   
If a shareholder wishes to present a proposal to be included in the proxy
statement for the next shareholder meeting, the proposal must be submitted in
writing and received by Patricia S. Butcher, Secretary of the Funds, T. Rowe
Price Associates, Inc., 100 East Pratt Street, Baltimore, Maryland 21202, within
a reasonable time before the funds begin to print and mail their proxy
materials.    
 
 
GENERAL INFORMATION ABOUT THE FUNDS
 
 
Who are the funds' executive officers?
 
   
Table 5 lists the executive officers of the funds (other than the nominees for
election as trustees/directors) and their positions with T. Rowe Price. Each
executive officer has been an officer of T. Rowe Price and the funds for at
least the last five years.
 


Table  5   Executive Officers of the Funds

Officer, Date of Birth         Position With Fund        Position With T. Rowe Price
- -----------------------------------------------------------------------------------------
                                                   
 
- -----------------------------------------------------------------------------------------
Corporate Income
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Peter Van Dyke, 11/29/38       President                 Managing Director
- -----------------------------------------------------------------------------------------
Robert M. Rubino, 8/2/53       Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------
Mark J. Vaselkiv, 7/22/58      Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------
Fixed Income Series
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Peter Van Dyke, 11/29/38       President                 Managing Director
- -----------------------------------------------------------------------------------------
Edward A. Wiese, 4/12/59       Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------
GNMA
 
- -----------------------------------------------------------------------------------------
Peter Van Dyke, 11/29/38       President                 Managing Director
- -----------------------------------------------------------------------------------------
High Yield
 
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Mark J. Vaselkiv, 7/22/58      President                 Vice President
- -----------------------------------------------------------------------------------------
New Income
 
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Peter Van Dyke, 11/29/38       President                 Managing Director
- -----------------------------------------------------------------------------------------
Robert M. Rubino, 8/2/53       Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------
Prime Reserve
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Edward A. Wiese, 4/12/59       President                 Vice President
- -----------------------------------------------------------------------------------------
Robert P. Campbell, 1/31/56    Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------
James M. McDonald, 9/29/49     Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------
Short-Term Bond
 
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Edward A. Wiese, 4/12/59       President                 Vice President
- -----------------------------------------------------------------------------------------
Short-Term U.S. Government
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Peter Van Dyke, 11/29/38       President                 Managing Director
- -----------------------------------------------------------------------------------------
Heather R. Landon, 7/8/54      Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------
State Tax-Free Income Trust
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Mary J. Miller, 7/19/55        President                 Managing Director
- -----------------------------------------------------------------------------------------
Summit Funds
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Peter Van Dyke, 11/29/38       President                 Managing Director
- -----------------------------------------------------------------------------------------
Edward A. Wiese, 4/12/59       Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------
Tax-Exempt Money
- -----------------------------------------------------------------------------------------
William T. Reynolds, 5/26/48   Chairman of the Board     Managing Director and Director
- -----------------------------------------------------------------------------------------
Patrice Berchtenbreiter Ely,   President                 Vice President
1/13/53
- -----------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond
- -----------------------------------------------------------------------------------------
Charles B. Hill, 9/22/61       President                 Vice President
- -----------------------------------------------------------------------------------------
Mary J. Miller, 7/19/55        Executive Vice President  Managing Director
- -----------------------------------------------------------------------------------------
U.S. Treasury Funds
- -----------------------------------------------------------------------------------------
Peter Van Dyke, 11/29/38       President                 Managing Director
- -----------------------------------------------------------------------------------------
Charles P. Smith, 12/4/43      Executive Vice President  Managing Director
- -----------------------------------------------------------------------------------------
Edward A. Wiese, 4/12/59       Executive Vice President  Vice President
- -----------------------------------------------------------------------------------------

 
    
 
Who is the investment adviser and principal underwriter to each fund?
 
T. Rowe Price serves as the investment adviser and principal underwriter to each
of the funds covered in this proxy statement. The funds have an underwriting
agreement with T. Rowe Price Investment Services, Inc. ("INVESTMENT SERVICES")
and a transfer agency agreement with T. Rowe Price Services, Inc. ("PRICE
SERVICES"). The address of T. Rowe Price and Investment Services is 100 East
Pratt Street, Baltimore, Maryland 21202, and the address of Price Services is
10090 Red Run Boulevard, Owings Mills, Maryland 21117. Each is a wholly owned
subsidiary of T. Rowe Price.
 
 
What is the share ownership of each fund?
 
   
Table 6 presents the shares of the capital stock of each fund outstanding as of
June 30, 1998.
 

Table 6  Outstanding Shares of Capital Stock

                                                        Outstanding Shares of
T. Rowe Price Fund                                          Capital Stock
- -------------------------------------------------------------------------------
                                                    
 
- -------------------------------------------------------------------------------
Corporate Income                                                4,585,815
- -------------------------------------------------------------------------------
Limited-Term Bond Portfolio                                     6,877,450
- -------------------------------------------------------------------------------
Prime Reserve Portfolio                                        15,069,637
- -------------------------------------------------------------------------------
GNMA                                                          118,753,006
- -------------------------------------------------------------------------------
High Yield                                                    197,005,028
- -------------------------------------------------------------------------------
New Income                                                    230,415,498
- -------------------------------------------------------------------------------
Prime Reserve                                               4,832,105,410
- -------------------------------------------------------------------------------
Short-Term Bond                                                69,055,367
- -------------------------------------------------------------------------------
Short-Term U.S. Government                                     23,719,645
- -------------------------------------------------------------------------------
State Tax-Free Income Trust - Florida Insured                   8,090,276
Intermediate
- -------------------------------------------------------------------------------
Summit Cash Reserves                                        1,511,352,459
- -------------------------------------------------------------------------------
Summit Limited-Term Bond                                        7,875,298
- -------------------------------------------------------------------------------
Summit GNMA                                                     4,205,282
- -------------------------------------------------------------------------------
Tax-Exempt Money                                              728,194,314
- -------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond                             10,092,020
- -------------------------------------------------------------------------------
U.S. Treasury Intermediate                                     38,562,915
- -------------------------------------------------------------------------------
U.S. Treasury Long-Term                                        24,423,089
- -------------------------------------------------------------------------------
U.S. Treasury Money                                           850,363,453
- -------------------------------------------------------------------------------

 
    
 
Who are the principal holders of each fund's shares?
 
Table 7 sets forth the persons owning more than 5% of each fund's outstanding
common stock as of June 30, 1998.
 

Table 7  Beneficial Ownership of Fund Shares

Fund Name                  Owner                                   % Ownership
- -------------------------------------------------------------------------------
                                                            
 
- -------------------------------------------------------------------------------
GNMA                       Yachtcrew & Co., c/o T. Rowe Price          39%
                           Assoc., 100 E. Pratt St., Baltimore,
                           MD 21202
- -------------------------------------------------------------------------------
High Yield Bond            Yachtcrew & Co., c/o T. Rowe Price           26
                           Assoc., 100 E. Pratt St., Baltimore,
                           MD 21202
- -------------------------------------------------------------------------------
Limited-Term Bond          Security Benefit Life Insurance Co.,         24
Portfolio                  Attn.: Mark Young, 700 SW Harrison
                           St., Topeka, KS 66636-0002
                           ----------------------------------------------------
                           United of Omaha-Series V, Attn.: John        65
                           Martin, Corp. General Ledger, Mutual
- ---------------------------of Omaha Plaza, Omaha, NE 68175
                           ----------------------------------------------------
New Income                 Yachtcrew & Co., c/o T. Rowe Price           34
                           Assoc., 100 E. Pratt St., Baltimore,
                           MD 21202
- -------------------------------------------------------------------------------
Prime Reserve Portfolio    Security Benefit Life Insurance Co.,         78
                           Attn.: Mark Young, 700 SW Harrison
                           St., Topeka, KS 66636-0002
                           ----------------------------------------------------
                           First Security Benefit Life & Annuity         6
                           Company of New York, Attn.: Mark
                           Young, 700 SW Harrison St., Topeka,
- ---------------------------KS 66636-0002
                           ----------------------------------------------------
U.S. Treasury              First American Trust Co., Managed             6
Intermediate               Omnibus, 421 N. Main St., Santa Ana,
                           CA 92701-4699
- -------------------------------------------------------------------------------
U.S. Treasury Long-Term    Yachtcrew & Co., c/o T. Rowe Price           60
                           Assoc., 100 E. Pratt St., Baltimore,
                           MD 21202
- -------------------------------------------------------------------------------

 
   
As of June 30, 1998, the executive officers and trustees/directors of each fund,
as a group, beneficially owned, directly or indirectly, 11,500,278 shares,
representing less than 1% of each fund's outstanding stock. More detailed
information on the share ownership of the fund's management is provided in Table
8.
 

Table 8  Security Ownership of Management

Name of Fund, Name of Beneficial Owner and    Amount and Nature of Beneficial
Position With Fund                           Ownership as of June 30, 1998/ a/
- -------------------------------------------------------------------------------
                                         
 
- -------------------------------------------------------------------------------
All Funds
- -------------------------------------------------------------------------------
Calvin W. Burnett - Trustee/Director                         1,526
- -------------------------------------------------------------------------------
Anthony W. Deering - Trustee/Director                       22,688
- -------------------------------------------------------------------------------
F. Pierce Linaweaver - Trustee/Director                      6,468
- -------------------------------------------------------------------------------
William T. Reynolds - Trustee/Director                   1,052,408
- -------------------------------------------------------------------------------
James S. Riepe - Trustee/Director                        7,279,832
- -------------------------------------------------------------------------------
John G. Schreiber - Trustee/Director                       286,502
- -------------------------------------------------------------------------------
M. David Testa - Trustee/Director                        2,229,440
- -------------------------------------------------------------------------------
Prime Reserve
- -------------------------------------------------------------------------------
Edward A. Wiese, President                                   4,472
- -------------------------------------------------------------------------------
Robert P. Campbell, Executive Vice                           2,931
President
- -------------------------------------------------------------------------------
James M. McDonald, Executive Vice                           26,905
President
- -------------------------------------------------------------------------------
Summit Funds
- -------------------------------------------------------------------------------
Peter Van Dyke, President                                  545,122
- -------------------------------------------------------------------------------
Tax-Exempt Money
- -------------------------------------------------------------------------------
Patrice L. Berchtenbreiter Ely, President                   41,984
- -------------------------------------------------------------------------------
Management as a Group                                   11,500,278
- -------------------------------------------------------------------------------

    
 
/a/   All securities listed represent ownership in shares of common stock.
 
 
INFORMATION ABOUT T. ROWE PRICE
 
 
Who are the directors of T. Rowe Price?
 
The funds' investment manager is T. Rowe Price, a Maryland corporation, 100 East
Pratt Street, Baltimore, Maryland 21202. The principal executive officer of T.
Rowe Price is George A. Roche who together with Messrs. Reynolds, Riepe, and
Testa, James E. Halbkat, Jr., Henry H. Hopkins, James A. C. Kennedy III, John H.
Laporte, Richard L. Menschel, Brian C. Rogers, John W. Rosenblum, Robert L.
Strickland, Philip C. Walsh, and Anne Marie Whittemore constitute its Board of
Directors.
 
The address of each of these persons, with the exception of Messrs. Halbkat,
Menschel, Rosenblum, Strickland, Walsh, and Mrs. Whittemore, is 100 East Pratt
Street, Baltimore, Maryland 21202, and, with the exception of Messrs. Halbkat,
Menschel, Rosenblum, Strickland, Walsh, and Mrs. Whittemore, all are employed by
T. Rowe Price.
 
Mr. Halbkat is President of U.S. Monitor Corporation, a provider of public
response systems. Mr. Halbkat's address is: P.O. Box 23109, Hilton Head Island,
South Carolina 29925.
 
Mr. Menschel is a limited partner of The Goldman Sachs Group, L.P. Mr.
Menschel's address is 85 Broad Street, 2nd Floor, New York, New York 10004.
 
Mr. Rosenblum is the Dean of the Jepson School of Leadership Studies at the
University of Richmond and a director of: Comdial Corporation, a manufacturer of
telephone systems for businesses; Cone Mills Corporation, a textiles producer;
and Providence Journal Company, a publisher of newspapers and owner of broadcast
television stations. Mr. Rosenblum's address is: University of Richmond,
Richmond, Virginia 23173.
 
Mr. Strickland retired as Chairman of Lowe's Companies, Inc., as of January 31,
1998. He is a director of Hannaford Bros., Co., a food retailer. Mr.
Strickland's address is 604 Two Piedmont Plaza Building, Winston-Salem, North
Carolina 27104.
 
Mr. Walsh is a Consultant to Cyprus Amax Minerals Company, Englewood, Colorado
and director of Piedmont Mining Company, Inc., in Charlotte, North Carolina. Mr.
Walsh's address is: Pleasant Valley, Peapack, New Jersey 07977.
 
Mrs. Whittemore is a partner of the law firm of McGuire, Woods, Battle & Boothe
and is a director of Owens & Minor, Inc.; USF&G Corporation; the James River
Corporation of Virginia; and Albemarle Corporation. Mrs. Whittemore's address is
One James Center, Richmond, Virginia 23219.
 
TRANSACTIONS IN T. ROWE PRICE STOCK
 
   
The following information pertains to transactions involving common stock of T.
Rowe Price, par value $0.20 per share ("STOCK"), during the period January 1,
1997, through December 31, 1997. On April 30, 1998, the company split the
shares 2-for-1. All share data in this section has been adjusted to reflect
this stock split. There were no transactions during the period by
any director/trustee or officer of the funds, or any director or officer of T.
Rowe Price which involved more than 1% of the outstanding stock of T. Rowe
Price. These transactions did not involve, and should not be mistaken for,
transactions in the stock of the funds.
 
During the period, certain employees exercised their options for a total of
3,653,090 shares of stock at an average price $27.96 per share. Pursuant to the
terms of T. Rowe Price's Employee Stock Purchase Plan, eligible employees of T.
Rowe Price and its subsidiaries purchased an aggregate (including dividends
reinvested) of 97,676.472 shares of stock at fair market value. Such shares were
purchased in the open market during this period for employees' accounts.
 
T. Rowe Price's Board of Directors has approved the repurchase of shares of its
stock in the open market. During 1997, T. Rowe Price purchased 460,000 shares of
stock under this plan, leaving 4,940,000 shares of stock authorized for future
repurchase at December 31, 1997.
 
During the period, T. Rowe Price issued 2,600,796 common stock options with an
average exercise price of $31.16 per share to certain employees and directors
under terms of the 1990, 1993, and 1996 Stock Incentive Plans and the 1995
Director Stock Option Plan.    
 
    
EXHIBIT I
 
                      T. ROWE PRICE NEW INCOME FUND, INC.
                      -----------------------------------
 
                             ARTICLES OF AMENDMENT
                             ---------------------
 
 
  T. Rowe Price New Income Fund, Inc., a Maryland corporation, having its
principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
 
  FIRST:  The Charter of the Corporation is hereby amended by deleting in its
  -----
entirety Articles FIFTH and SEVENTH of the Articles of Incorporation and
substituting in lieu thereof the following:
 
  FIFTH: (a) The total number of shares of stock of all classes and series which
the Corporation shall have the authority to issue is Three Hundred Million
(300,000,000) shares of capital stock of the par value of One Dollar ($1.00)
each, and of the aggregate par value of Three Hundred Million Dollars
($300,000,000). All of such shares are classified as "COMMON STOCK" of the "T.
ROWE PRICE NEW INCOME" series. The Board of Directors may classify and
reclassify any unissued shares of capital stock (whether or not such shares have
been previously classified or reclassified) by setting or changing in any one or
more respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such shares of stock.
 
  (b)
The following is a description of the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of the shares of Common Stock classified as
the "T. ROWE PRICE NEW INCOME" series and any additional series of Common Stock
of the Corporation (unless provided otherwise by the Board of Directors with
respect to any such additional series at the time it is established and
designated):
 
     (1)ASSETS BELONGING TO SERIES. All consideration received by the
        Corporation from the issue or sale of shares of a particular series,
        together with all assets in which such consideration is invested or
        reinvested, all income, earnings, profits and proceeds thereof,
        including any proceeds derived from the sale, exchange or liquidation of
        such assets, and any funds or payments derived from any investment or
        reinvestment of such proceeds in whatever form the same may be, shall
        irrevocably belong to that series for all purposes, subject only to the
        rights of creditors, and shall be so recorded upon the books of account
        of the Corporation. Such consideration, assets, income, earnings,
        profits and proceeds, together with any General Items allocated to that
        series as provided in the following sentence, are herein referred to
        collectively as "assets belonging to" that series. In the event that
        there are any assets, income, earnings, profits or proceeds which are
        not readily identifiable as belonging to any particular series
        (collectively, "GENERAL ITEMS"), such General Items shall be allocated
        by or under the supervision of the Board
        of Directors to and among any one or more of the series established and
        designated from time to time in such manner and on such basis as the
        Board of Directors, in its sole discretion, deems fair and equitable;
        and any General Items so allocated to a particular series shall belong
        to that series. Each such allocation by the Board of Directors shall be
        conclusive and binding for all purposes.
 
     (2)
        LIABILITIES OF SERIES. The assets belonging to each particular series
        shall be charged with the liabilities of the Corporation in respect of
        that series and all expenses, costs, charges and reserves attributable
        to that series, and any general liabilities, expenses, costs, charges or
        reserves of the Corporation which are not readily identifiable as
        pertaining to any particular series, shall be allocated and charged by
        or under the supervision of the Board of Directors to and among any one
        or more of the series established and designated from time to time in
        such manner and on such basis as the Board of Directors, in its sole
        discretion, deems fair and equitable. The liabilities, expenses, costs,
        charges and reserves allocated and so charged to a series are herein
        referred to collectively as "liabilities of" that series. Each
        allocation of liabilities, expenses, costs, charges and reserves by or
        under the supervision of the Board of Directors shall be conclusive and
        binding for all purposes.
 
     (3)
        DIVIDENDS AND DISTRIBUTIONS. Dividends and capital gains distributions
        on shares of a particular series may be paid with such frequency, in
        such form and in such amount as the Board of Directors may determine by
        resolution adopted from time to time, or pursuant to a standing
        resolution or resolutions adopted only once or with such frequency as
        the Board of Directors may determine, after providing for actual and
        accrued liabilities of that series. All dividends on shares of a
        particular series shall be paid only out of the income belonging to that
        series and all capital gains distributions on shares of a particular
        series shall be paid only out of the capital gains belonging to that
        series. All dividends and distributions on shares of a particular series
        shall be distributed pro rata to the holders of that series in
        proportion to the number of shares of that series held by such holders
        at the date and time of record established for the payment of such
        dividends or distributions, except that in connection with any dividend
        or distribution program or procedure, the Board of Directors may
        determine that no dividend or distribution shall be payable on shares as
        to which the shareholder's purchase order and/or payment have not been
        received by the time or times established by the Board of Directors
        under such program or procedure. Dividends and distributions may be paid
        in cash, property or additional shares of the same or another series, or
        a combination thereof, as determined by the Board of Directors or
        pursuant to any program that the Board of Directors may have in effect
        at the time for the election by shareholders of the form
        in which dividends or distributions are to be paid. Any such dividend or
        distribution paid in shares shall be paid at the current net asset value
        thereof.
 
     (4)
        VOTING. On each matter submitted to a vote of the shareholders, each
        holder of shares shall be entitled to one vote for each share standing
        in his name on the books of the Corporation, irrespective of the series
        thereof, and all shares of all series shall vote as a single class
        ("SINGLE CLASS VOTING"); provided, however, that (i) as to any matter
        with respect to which a separate vote of any series is required by the
        Investment Company Act or by the Maryland General Corporation Law, such
        requirement as to a separate vote by that series shall apply in lieu of
        Single Class Voting; (ii) in the event that the separate vote
        requirement referred to in (i) above applies with respect to one or more
        series, then, subject to (iii) below, the shares of all other series
        shall vote as a single class; and (iii) as to any matter which does not
        affect the interest of a particular series, including liquidation of
        another series as described in subsection (7) below, only the holders of
        shares of the one or more affected series shall be entitled to vote.
 
     (5)
        REDEMPTION BY SHAREHOLDERS. Each holder of shares of a particular series
        shall have the right at such times as may be permitted by the
        Corporation to require the Corporation to redeem all or any part of his
        shares of that series, at a redemption price per share equal to the net
        asset value per share of that series next determined after the shares
        are properly tendered for redemption, less such redemption fee or sales
        charge, if any, as may be established by the Board of Directors in its
        sole discretion and disclosed in the current Prospectus or Statement of
        Additional Information for the Corporation. Payment of the redemption
        price shall be in cash; provided, however, that if the Board of
        Directors determines, which determination shall be conclusive, that
        conditions exist which make payment wholly in cash unwise or
        undesirable, the Corporation may, to the extent and in the manner
        permitted by the Investment Company Act, make payment wholly or partly
        in securities or other assets belonging to the series of which the
        shares being redeemed are a part, at the value of such securities or
        assets used in such determination of net asset value. Notwithstanding
        the foregoing, the Corporation may postpone payment of the redemption
        price and may suspend the right of the holders of shares of any series
        to require the Corporation to redeem shares of that series during any
        period or at any time when and to the extent permissible under the
        Investment Company Act.
 
     (6)REDEMPTION BY CORPORATION. The Board of Directors may cause the
        Corporation to redeem at net asset value the shares of any series from a
        holder (i) if the Board of Directors of the Corporation determines in
        its sole discretion that failure to so redeem such shares may have
        materially adverse consequences
        to the holders of shares of the Corporation or any series, or (ii) upon
        such other conditions with respect to the maintenance of shareholder
        accounts of a minimum amount as may from time to time be established by
        the Board of Directors in its sole discretion and disclosed in the
        Prospectus or Statement of Additional Information for the Corporation.
 
     (7)
        LIQUIDATION. In the event of the liquidation of a particular series, the
        shareholders of the series that is being liquidated shall be entitled to
        receive, as a class, when and as declared by the Board of Directors, the
        excess of the assets belonging to that series over the liabilities of
        that series. The holders of shares of any particular series shall not be
        entitled thereby to any distribution upon liquidation of any other
        series. The assets so distributable to the shareholders of any
        particular series shall be distributed among such shareholders in
        proportion to the number of shares of that series held by them and
        recorded on the books of the Corporation. The liquidation of any
        particular series in which there are shares then outstanding may be
        authorized by vote of a majority of the Board of Directors then in
        office, subject to the approval of a majority of the outstanding voting
        securities of that series, as defined in the Investment Company Act, and
        without the vote of the holders of shares of any other series. The
        liquidation of a particular series may be accomplished, in whole or in
        part, by the transfer of assets of such series to another series or by
        the exchange of shares of such series for the shares of another series.
 
     (8)
        NET ASSET VALUE PER SHARE. The net asset value per share of any series
        shall be the quotient obtained by dividing the value of the net assets
        of that series (being the value of the assets belonging to that series
        less the liabilities of that series) by the total number of shares of
        that series outstanding, all as determined by or under the direction of
        the Board of Directors in accordance with generally accepted accounting
        principles and the Investment Company Act. Subject to the applicable
        provisions of the Investment Company Act, the Board of Directors, in its
        sole discretion, may prescribe and shall set forth in the By-Laws of the
        Corporation or in a duly adopted resolution of the Board of Directors
        such bases and times for determining the value of the assets belonging
        to, and the net asset value per share of outstanding shares of, each
        series, or the net income attributable to such shares, as the Board of
        Directors deems necessary or desirable. The Board of Directors shall
        have full discretion, to the extent not inconsistent with the Maryland
        General Corporation Law and the Investment Company Act, to determine
        which items shall be treated as income and which items as capital and
        whether any item of expense shall be charged to income or capital. Each
        such determination and allocation shall be conclusive and binding for
        all purposes.

        The Board of Directors may determine to maintain the net asset value per
        share of any series at a designated constant dollar amount and in
        connection therewith may adopt procedures not inconsistent with the
        Investment Company Act for the continuing declaration of income
        attributable to that series as dividends and for the handling of any
        losses attributable to that series. Such procedures may provide that in
        the event of any loss, each shareholder shall be deemed to have
        contributed to the capital of the Corporation attributable to that
        series his pro rata portion of the total number of shares required to be
        canceled in order to permit the net asset value per share of that series
        to be maintained, after reflecting such loss, at the designated constant
        dollar amount. Each shareholder of the Corporation shall be deemed to
        have agreed, by his investment in any series with respect to which the
        Board of Directors shall have adopted any such procedure, to make the
        contribution referred to in the preceding sentence in the event of any
        such loss.
 
     (9)CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
        requirements of the Investment Company Act, the Board of Directors shall
        have the authority to provide that holders of shares of any series shall
        have the right to convert or exchange said shares into shares of one or
        more other classes or series of shares in accordance with such
        requirements and procedures as may be established by the Board of
        Directors and as disclosed in the Corporation's current Prospectus or
        Statement of Additional Information.
 
  (c)
The shares of Common Stock of the Corporation, or of any series of Common Stock
of the Corporation to the extent such Common Stock is divided into series, may
be further subdivided into classes (which may, for convenience of reference, be
referred by a term other than "class"). Unless otherwise provided in the
Articles Supplementary establishing such classes, all such shares, or all shares
of a series of Common Stock in a series, shall have identical voting, dividend,
and liquidation rights. Shares of the classes shall also be subject to such
front-end sales loads, contingent deferred sales charges, expenses (including,
without limitation, distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement, plan or
other arrangement, however designated), conversion rights, and class voting
rights as shall be consistent with Maryland law, the Investment Company Act of
1940, and the rules and regulations of the National Association of Securities
Dealers and shall be contained in Articles Supplementary establishing such
classes.
 
  (d)For the purposes hereof and of any articles supplementary to the charter
providing for the classification or reclassification of any shares of capital
stock or of any other charter document of the Corporation (unless otherwise
provided in any such articles or document), any class or series of stock of the
Corporation shall be deemed to rank:
 
     (1)prior to another class or series either as to dividends or upon
        liquidation, if the holders of such class or series shall be entitled to
        the receipt of dividends or of amounts distributable on liquidation,
        dissolution or winding up, as the case may be, in preference or priority
        to holders of such other class or series;
 
     (2)
        on a parity with another class or series either as to dividends or upon
        liquidation, whether or not the dividend rates, dividend payment dates
        or redemption or liquidation price per share thereof be different from
        those of such others, if the holders of such class or series of stock
        shall be entitled to receipt of dividends or amounts distributable upon
        liquidation, dissolution or winding up, as the case may be, in
        proportion to their respective dividend rates or redemption or
        liquidation prices, without preference or priority over the holders of
        such other class or series; and
 
     (3)junior to another class or series either as to dividends or upon
        liquidation, if the rights of the holders of such class or series shall
        be subject or subordinate to the rights of the holders of such other
        class or series in respect of the receipt of dividends or the amounts
        distributable upon liquidation, dissolution or winding up, as the case
        may be.
 
  (e)
Unless otherwise prohibited by law, so long as the Corporation is registered as
an open-end management investment company under the Investment Company Act, the
Board of Directors shall have the power and authority, without the approval of
the holders of any outstanding shares, to increase or decrease the number of
shares of capital stock or the number of shares of capital stock of any class or
series that the Corporation has authority to issue.
 
  (f)
The Corporation may issue and sell fractions of shares of capital stock having
pro rata all the rights of full shares, including, without limitation, the right
to vote and to receive dividends, and wherever the words "share" or "shares" are
used in the charter or By-Laws of the Corporation, they shall be deemed to
include fractions of shares, where the context does not clearly indicate that
only full shares are intended.
 
  (g)
The Corporation shall not be obligated to issue certificates representing shares
of any class or series of capital stock. At the time of issue or transfer of
shares without certificates, the Corporation shall provide the shareholder with
such information as may be required under the Maryland General Corporation Law.
 
  SEVENTH: (a) The following provisions are hereby adopted for the purpose of
defining, limiting, and regulating the powers of the Corporation and of the
directors and shareholders:
 
     (1)
        The Board of Directors is hereby empowered to authorize the issuance
        from time to time of shares of its stock of any class or series, whether
        now or hereafter authorized, or securities convertible into shares of
        its stock of any class or series, whether
        now or hereafter authorized, for such consideration as may be deemed
        advisable by the Board of Directors and without any action by the
        shareholders.
 
     (2)
        No holder of any stock or any other securities of the Corporation,
        whether now or hereafter authorized, shall have any preemptive right to
        subscribe for or purchase any stock or any other securities of the
        Corporation other than such, if any, as the Board of Directors, in its
        sole discretion, may determine and at such price or prices and upon such
        other terms as the Board of Directors, in its sole discretion, may fix;
        and any stock or other securities which the Board of Directors may
        determine to offer for subscription may, as the Board of Directors in
        its sole discretion shall determine, be offered to the holders of any
        class, series or type of stock or other securities at the time
        outstanding to the exclusion of the holders of any or all other classes,
        series or types of stock or other securities at the time outstanding.
 
     (3)The Board of Directors of the Corporation shall, consistent with
        applicable law, have power in its sole discretion to determine from time
        to time in accordance with sound accounting practice or other reasonable
        valuation methods what constitutes annual or other net profits,
        earnings, surplus, or net assets in excess of capital; to determine that
        retained earnings or surplus shall remain in the hands of the
        Corporation; to set apart out of any funds of the Corporation such
        reserve or reserves in such amount or amounts and for such proper
        purpose or purposes as it shall determine and to abolish any such
        reserve or any part thereof; to distribute and pay distributions or
        dividends in stock, cash or other securities or property, out of surplus
        or any other funds or amounts legally available therefor, at such times
        and to the shareholders of record on such dates as it may, from time to
        time, determine; and to determine whether and to what extent and at what
        times and places and under what conditions and regulations the books,
        accounts and documents of the Corporation, or any of them, shall be open
        to the inspection of shareholders, except as otherwise provided by
        statute or by the By-Laws, and, except as so provided, no shareholder
        shall have any right to inspect any book, account or document of the
        Corporation unless authorized so to do by resolution of the Board of
        Directors.
 
     (4)
        Notwithstanding any provision of law requiring the authorization of any
        action by a greater proportion than a majority of the total number of
        shares of all classes and series of capital stock or of the total number
        of shares of any class or series of capital stock entitled to vote as a
        separate class, such action shall be valid and effective if authorized
        by the affirmative vote of the holders of a majority of the total number
        of shares of all classes and series outstanding and entitled to vote
        thereon, or of the class or series entitled to vote thereon as a
        separate class, as the case may be, except as otherwise provided in the
        charter of the Corporation.
 
     (5)The Corporation reserves the right from time to time to make any
        amendments of its charter which may now or hereafter be authorized by
        law, including any amendments changing the terms or contract rights, as
        expressly set forth in its charter, of any of its outstanding stock by
        classification, reclassification or otherwise.
 
  (b)
The enumeration and definition of particular powers of the Board of Directors
included in the foregoing shall in no way be limited or restricted by reference
to or inference from the terms of any other clause of this or any other Article
of the charter of the Corporation, or construed as or deemed by inference or
otherwise in any manner to exclude or limit any powers conferred upon the Board
of Directors under the General Laws of the State of Maryland now or hereafter in
force.
 
  SECOND:  The amendment does not change the outstanding capital stock of the
  ------
Corporation or the aggregate par value thereof.
 
  THIRD:  The Board of Directors of the Corporation declared these Articles to
  -----
be advisable and adopted them at a meeting of the Board of Directors held on
July 22, 1998. The Board of Directors then recommended that these Amendments to
the Articles be submitted to the stockholders for approval.
 
  FOURTH: At a meeting of the stockholders held on October 15, 1998, the
  ------
Corporation's Common Stock, the only class of capital stock of the Corporation
entitled to vote, adopted and approved these Articles of Amendment.
 
  FIFTH: The foregoing amendment shall be effective as of 12:01 a.m. on October
  ------
__, 1998.
 
 
 
  IN WITNESS WHEREOF, T. ROWE PRICE NEW INCOME FUND, INC., has caused these
Articles of Amendment to be signed in its name and on its behalf by its Vice
President, and witnessed by its Secretary, on October __, 1998, and its Vice
President acknowledges under penalties of perjury that these Articles of
Amendment are the corporate act of the Corporation and that to the best of his
knowledge, information, and belief, these matters and facts set forth herein
with respect to the authorization and approval thereof, are true in all material
respects.
 
 
                               T. ROWE PRICE NEW INCOME FUND, INC.
 
 
 
                             By: ___________________________
 
                                 Henry H. Hopkins, Vice President
 
 
 
ATTEST:
 
 
 
________________________
 
Patricia S. Butcher, Secretary
 
 
EXHIBIT II
 
                   T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
                   -----------------------------------------
 
                             ARTICLES OF AMENDMENT
                             ---------------------
 
 
  T. Rowe Price Tax-Exempt Money Fund, Inc., a Maryland corporation, having its
principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
 
  FIRST:  The Charter of the Corporation is hereby amended by deleting in its
  -----
entirety Articles FIFTH and SEVENTH of the Articles of Incorporation and
substituting in lieu thereof the following:
 
  FIFTH: (a) The total number of shares of stock of all classes and series which
the Corporation shall have the authority to issue is Five Billion
(5,000,000,000) shares of capital stock of the par value of One Cent ($0.01) per
share, and of the aggregate par value of Fifty Million Dollars ($50,000,000).
All of such shares are classified as "COMMON STOCK" of the "T. ROWE PRICE
TAX-EXEMPT MONEY" series. The Board of Directors may classify and reclassify any
unissued shares of capital stock (whether or not such shares have been
previously classified or reclassified) by setting or changing in any one or more
respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such shares of stock.
 
  (b)
The following is a description of the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of the shares of Common Stock classified as
the "T. ROWE PRICE TAX-EXEMPT MONEY" series and any additional series of Common
Stock of the Corporation (unless provided otherwise by the Board of Directors
with respect to any such additional series at the time it is established and
designated):
 
     (1)ASSETS BELONGING TO SERIES. All consideration received by the
        Corporation from the issue or sale of shares of a particular series,
        together with all assets in which such consideration is invested or
        reinvested, all income, earnings, profits and proceeds thereof,
        including any proceeds derived from the sale, exchange or liquidation of
        such assets, and any funds or payments derived from any investment or
        reinvestment of such proceeds in whatever form the same may be, shall
        irrevocably belong to that series for all purposes, subject only to the
        rights of creditors, and shall be so recorded upon the books of account
        of the Corporation. Such consideration, assets, income, earnings,
        profits and proceeds, together with any General Items allocated to that
        series as provided in the following sentence, are herein referred to
        collectively as "assets belonging to" that series. In the event that
        there are any assets, income, earnings, profits or proceeds which are
        not readily identifiable as belonging to any particular series
        (collectively, "GENERAL ITEMS"), such General Items shall be allocated
        by or under the supervision of the Board
        of Directors to and among any one or more of the series established and
        designated from time to time in such manner and on such basis as the
        Board of Directors, in its sole discretion, deems fair and equitable;
        and any General Items so allocated to a particular series shall belong
        to that series. Each such allocation by the Board of Directors shall be
        conclusive and binding for all purposes.
 
     (2)
        LIABILITIES OF SERIES. The assets belonging to each particular series
        shall be charged with the liabilities of the Corporation in respect of
        that series and all expenses, costs, charges and reserves attributable
        to that series, and any general liabilities, expenses, costs, charges or
        reserves of the Corporation which are not readily identifiable as
        pertaining to any particular series, shall be allocated and charged by
        or under the supervision of the Board of Directors to and among any one
        or more of the series established and designated from time to time in
        such manner and on such basis as the Board of Directors, in its sole
        discretion, deems fair and equitable. The liabilities, expenses, costs,
        charges and reserves allocated and so charged to a series are herein
        referred to collectively as "liabilities of" that series. Each
        allocation of liabilities, expenses, costs, charges and reserves by or
        under the supervision of the Board of Directors shall be conclusive and
        binding for all purposes.
 
     (3)
        DIVIDENDS AND DISTRIBUTIONS. Dividends and capital gains distributions
        on shares of a particular series may be paid with such frequency, in
        such form and in such amount as the Board of Directors may determine by
        resolution adopted from time to time, or pursuant to a standing
        resolution or resolutions adopted only once or with such frequency as
        the Board of Directors may determine, after providing for actual and
        accrued liabilities of that series. All dividends on shares of a
        particular series shall be paid only out of the income belonging to that
        series and all capital gains distributions on shares of a particular
        series shall be paid only out of the capital gains belonging to that
        series. All dividends and distributions on shares of a particular series
        shall be distributed pro rata to the holders of that series in
        proportion to the number of shares of that series held by such holders
        at the date and time of record established for the payment of such
        dividends or distributions, except that in connection with any dividend
        or distribution program or procedure, the Board of Directors may
        determine that no dividend or distribution shall be payable on shares as
        to which the shareholder's purchase order and/or payment have not been
        received by the time or times established by the Board of Directors
        under such program or procedure. Dividends and distributions may be paid
        in cash, property or additional shares of the same or another series, or
        a combination thereof, as determined by the Board of Directors or
        pursuant to any program that the Board of Directors may have in effect
        at the time for the election by shareholders of the form
        in which dividends or distributions are to be paid. Any such dividend or
        distribution paid in shares shall be paid at the current net asset value
        thereof.
 
     (4)
        VOTING. On each matter submitted to a vote of the shareholders, each
        holder of shares shall be entitled to one vote for each share standing
        in his name on the books of the Corporation, irrespective of the series
        thereof, and all shares of all series shall vote as a single class
        ("SINGLE CLASS VOTING"); provided, however, that (i) as to any matter
        with respect to which a separate vote of any series is required by the
        Investment Company Act or by the Maryland General Corporation Law, such
        requirement as to a separate vote by that series shall apply in lieu of
        Single Class Voting; (ii) in the event that the separate vote
        requirement referred to in (i) above applies with respect to one or more
        series, then, subject to (iii) below, the shares of all other series
        shall vote as a single class; and (iii) as to any matter which does not
        affect the interest of a particular series, including liquidation of
        another series as described in subsection (7) below, only the holders of
        shares of the one or more affected series shall be entitled to vote.
 
     (5)
        REDEMPTION BY SHAREHOLDERS. Each holder of shares of a particular series
        shall have the right at such times as may be permitted by the
        Corporation to require the Corporation to redeem all or any part of his
        shares of that series, at a redemption price per share equal to the net
        asset value per share of that series next determined after the shares
        are properly tendered for redemption, less such redemption fee or sales
        charge, if any, as may be established by the Board of Directors in its
        sole discretion and disclosed in the current Prospectus or Statement of
        Additional Information for the Corporation. Payment of the redemption
        price shall be in cash; provided, however, that if the Board of
        Directors determines, which determination shall be conclusive, that
        conditions exist which make payment wholly in cash unwise or
        undesirable, the Corporation may, to the extent and in the manner
        permitted by the Investment Company Act, make payment wholly or partly
        in securities or other assets belonging to the series of which the
        shares being redeemed are a part, at the value of such securities or
        assets used in such determination of net asset value. Notwithstanding
        the foregoing, the Corporation may postpone payment of the redemption
        price and may suspend the right of the holders of shares of any series
        to require the Corporation to redeem shares of that series during any
        period or at any time when and to the extent permissible under the
        Investment Company Act.
 
     (6)REDEMPTION BY CORPORATION. The Board of Directors may cause the
        Corporation to redeem at net asset value the shares of any series from a
        holder (i) if the Board of Directors of the Corporation determines in
        its sole discretion that failure to so redeem such shares may have
        materially adverse consequences
        to the holders of shares of the Corporation or any series, or (ii) upon
        such other conditions with respect to the maintenance of shareholder
        accounts of a minimum amount as may from time to time be established by
        the Board of Directors in its sole discretion and disclosed in the
        Prospectus or Statement of Additional Information for the Corporation.
 
     (7)
        LIQUIDATION. In the event of the liquidation of a particular series, the
        shareholders of the series that is being liquidated shall be entitled to
        receive, as a class, when and as declared by the Board of Directors, the
        excess of the assets belonging to that series over the liabilities of
        that series. The holders of shares of any particular series shall not be
        entitled thereby to any distribution upon liquidation of any other
        series. The assets so distributable to the shareholders of any
        particular series shall be distributed among such shareholders in
        proportion to the number of shares of that series held by them and
        recorded on the books of the Corporation. The liquidation of any
        particular series in which there are shares then outstanding may be
        authorized by vote of a majority of the Board of Directors then in
        office, subject to the approval of a majority of the outstanding voting
        securities of that series, as defined in the Investment Company Act, and
        without the vote of the holders of shares of any other series. The
        liquidation of a particular series may be accomplished, in whole or in
        part, by the transfer of assets of such series to another series or by
        the exchange of shares of such series for the shares of another series.
 
     (8)
        NET ASSET VALUE PER SHARE. The net asset value per share of any series
        shall be the quotient obtained by dividing the value of the net assets
        of that series (being the value of the assets belonging to that series
        less the liabilities of that series) by the total number of shares of
        that series outstanding, all as determined by or under the direction of
        the Board of Directors in accordance with generally accepted accounting
        principles and the Investment Company Act. Subject to the applicable
        provisions of the Investment Company Act, the Board of Directors, in its
        sole discretion, may prescribe and shall set forth in the By-Laws of the
        Corporation or in a duly adopted resolution of the Board of Directors
        such bases and times for determining the value of the assets belonging
        to, and the net asset value per share of outstanding shares of, each
        series, or the net income attributable to such shares, as the Board of
        Directors deems necessary or desirable. The Board of Directors shall
        have full discretion, to the extent not inconsistent with the Maryland
        General Corporation Law and the Investment Company Act, to determine
        which items shall be treated as income and which items as capital and
        whether any item of expense shall be charged to income or capital. Each
        such determination and allocation shall be conclusive and binding for
        all purposes.
 
        The Board of Directors may determine to maintain the net asset value per
        share of any series at a designated constant dollar amount and in
        connection therewith may adopt procedures not inconsistent with the
        Investment Company Act for the continuing declaration of income
        attributable to that series as dividends and for the handling of any
        losses attributable to that series. Such procedures may provide that in
        the event of any loss, each shareholder shall be deemed to have
        contributed to the capital of the Corporation attributable to that
        series his pro rata portion of the total number of shares required to be
        canceled in order to permit the net asset value per share of that series
        to be maintained, after reflecting such loss, at the designated constant
        dollar amount. Each shareholder of the Corporation shall be deemed to
        have agreed, by his investment in any series with respect to which the
        Board of Directors shall have adopted any such procedure, to make the
        contribution referred to in the preceding sentence in the event of any
        such loss.
 
     (9)CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the
        requirements of the Investment Company Act, the Board of Directors shall
        have the authority to provide that holders of shares of any series shall
        have the right to convert or exchange said shares into shares of one or
        more other classes or series of shares in accordance with such
        requirements and procedures as may be established by the Board of
        Directors and as disclosed in the Corporation's current Prospectus or
        Statement of Additional Information.
 
  (c)
The shares of Common Stock of the Corporation, or of any series of Common Stock
of the Corporation to the extent such Common Stock is divided into series, may
be further subdivided into classes (which may, for convenience of reference, be
referred by a term other than "class"). Unless otherwise provided in the
Articles Supplementary establishing such classes, all such shares, or all shares
of a series of Common Stock in a series, shall have identical voting, dividend,
and liquidation rights. Shares of the classes shall also be subject to such
front-end sales loads, contingent deferred sales charges, expenses (including,
without limitation, distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement, plan or
other arrangement, however designated), conversion rights, and class voting
rights as shall be consistent with Maryland law, the Investment Company Act of
1940, and the rules and regulations of the National Association of Securities
Dealers and shall be contained in Articles Supplementary establishing such
classes.
 
  (d)For the purposes hereof and of any articles supplementary to the charter
providing for the classification or reclassification of any shares of capital
stock or of any other charter document of the Corporation (unless otherwise
provided in any such articles or document), any class or series of stock of the
Corporation shall be deemed to rank:
 
     (1)prior to another class or series either as to dividends or upon
        liquidation, if the holders of such class or series shall be entitled to
        the receipt of dividends or of amounts distributable on liquidation,
        dissolution or winding up, as the case may be, in preference or priority
        to holders of such other class or series;
 
     (2)
        on a parity with another class or series either as to dividends or upon
        liquidation, whether or not the dividend rates, dividend payment dates
        or redemption or liquidation price per share thereof be different from
        those of such others, if the holders of such class or series of stock
        shall be entitled to receipt of dividends or amounts distributable upon
        liquidation, dissolution or winding up, as the case may be, in
        proportion to their respective dividend rates or redemption or
        liquidation prices, without preference or priority over the holders of
        such other class or series; and
 
     (3)junior to another class or series either as to dividends or upon
        liquidation, if the rights of the holders of such class or series shall
        be subject or subordinate to the rights of the holders of such other
        class or series in respect of the receipt of dividends or the amounts
        distributable upon liquidation, dissolution or winding up, as the case
        may be.
 
  (e)
Unless otherwise prohibited by law, so long as the Corporation is registered as
an open-end management investment company under the Investment Company Act, the
Board of Directors shall have the power and authority, without the approval of
the holders of any outstanding shares, to increase or decrease the number of
shares of capital stock or the number of shares of capital stock of any class or
series that the Corporation has authority to issue.
 
  (f)
The Corporation may issue and sell fractions of shares of capital stock having
pro rata all the rights of full shares, including, without limitation, the right
to vote and to receive dividends, and wherever the words "share" or "shares" are
used in the charter or By-Laws of the Corporation, they shall be deemed to
include fractions of shares, where the context does not clearly indicate that
only full shares are intended.
 
  (g)
The Corporation shall not be obligated to issue certificates representing shares
of any class or series of capital stock. At the time of issue or transfer of
shares without certificates, the Corporation shall provide the shareholder with
such information as may be required under the Maryland General Corporation Law.
 
  SEVENTH: (a) The following provisions are hereby adopted for the purpose of
defining, limiting, and regulating the powers of the Corporation and of the
directors and shareholders:
 
     (1)
        The Board of Directors is hereby empowered to authorize the issuance
        from time to time of shares of its stock of any class or series, whether
        now or hereafter authorized, or securities convertible into shares of
        its stock of any class or series, whether
        now or hereafter authorized, for such consideration as may be deemed
        advisable by the Board of Directors and without any action by the
        shareholders.
 
     (2)
        No holder of any stock or any other securities of the Corporation,
        whether now or hereafter authorized, shall have any preemptive right to
        subscribe for or purchase any stock or any other securities of the
        Corporation other than such, if any, as the Board of Directors, in its
        sole discretion, may determine and at such price or prices and upon such
        other terms as the Board of Directors, in its sole discretion, may fix;
        and any stock or other securities which the Board of Directors may
        determine to offer for subscription may, as the Board of Directors in
        its sole discretion shall determine, be offered to the holders of any
        class, series or type of stock or other securities at the time
        outstanding to the exclusion of the holders of any or all other classes,
        series or types of stock or other securities at the time outstanding.
 
     (3)The Board of Directors of the Corporation shall, consistent with
        applicable law, have power in its sole discretion to determine from time
        to time in accordance with sound accounting practice or other reasonable
        valuation methods what constitutes annual or other net profits,
        earnings, surplus, or net assets in excess of capital; to determine that
        retained earnings or surplus shall remain in the hands of the
        Corporation; to set apart out of any funds of the Corporation such
        reserve or reserves in such amount or amounts and for such proper
        purpose or purposes as it shall determine and to abolish any such
        reserve or any part thereof; to distribute and pay distributions or
        dividends in stock, cash or other securities or property, out of surplus
        or any other funds or amounts legally available therefor, at such times
        and to the shareholders of record on such dates as it may, from time to
        time, determine; and to determine whether and to what extent and at what
        times and places and under what conditions and regulations the books,
        accounts and documents of the Corporation, or any of them, shall be open
        to the inspection of shareholders, except as otherwise provided by
        statute or by the By-Laws, and, except as so provided, no shareholder
        shall have any right to inspect any book, account or document of the
        Corporation unless authorized so to do by resolution of the Board of
        Directors.
 
     (4)
        Notwithstanding any provision of law requiring the authorization of any
        action by a greater proportion than a majority of the total number of
        shares of all classes and series of capital stock or of the total number
        of shares of any class or series of capital stock entitled to vote as a
        separate class, such action shall be valid and effective if authorized
        by the affirmative vote of the holders of a majority of the total number
        of shares of all classes and series outstanding and entitled to vote
        thereon, or of the class or series entitled to vote thereon as a
        separate class, as the case may be, except as otherwise provided in the
        charter of the Corporation.
 
     (5)The Corporation reserves the right from time to time to make any
        amendments of its charter which may now or hereafter be authorized by
        law, including any amendments changing the terms or contract rights, as
        expressly set forth in its charter, of any of its outstanding stock by
        classification, reclassification or otherwise.
 
  (b)
The enumeration and definition of particular powers of the Board of Directors
included in the foregoing shall in no way be limited or restricted by reference
to or inference from the terms of any other clause of this or any other Article
of the charter of the Corporation, or construed as or deemed by inference or
otherwise in any manner to exclude or limit any powers conferred upon the Board
of Directors under the General Laws of the State of Maryland now or hereafter in
force.
 
  SECOND:  The amendment does not change the outstanding capital stock of the
  ------
Corporation or the aggregate par value thereof.
 
  THIRD:  The Board of Directors of the Corporation declared these Articles to
  -----
be advisable and adopted them at a meeting of the Board of Directors held on
July 22, 1998. The Board of Directors then recommended that these Amendments to
the Articles be submitted to the stockholders for approval.
 
  FOURTH: At a meeting of the stockholders held on October 15, 1998, the
  ------
Corporation's Common Stock, the only class of capital stock of the Corporation
entitled to vote, adopted and approved these Articles of Amendment.
 
  FIFTH: The foregoing amendment shall be effective as of 12:01 a.m. on October
  ------
__, 1998.
 
 
 
  IN WITNESS WHEREOF, T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC., has caused
these Articles of Amendment to be signed in its name and on its behalf by its
Vice President, and witnessed by its Secretary, on October __, 1998, and its
Vice President acknowledges under penalties of perjury that these Articles of
Amendment are the corporate act of the Corporation and that to the best of his
knowledge, information, and belief, these matters and facts set forth herein
with respect to the authorization and approval thereof, are true in all material
respects.
 
 
 
                      T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC.
 
 
 
                 By: ___________________________
 
                       Henry H. Hopkins, Vice President
 
 
 
ATTEST:
 
 
 
________________________
 
Patricia S. Butcher, Secretary
     


 


 
   
Proxy Information
 
This proxy material concerns the following T. Rowe Price Funds
 
Florida Insured Intermediate Tax-Free Fund
Tax-Free Insured Intermediate Bond Fund
 
    
 
 
Dear Shareholder:
 
We cordially invite you to attend the Annual Meeting of Shareholders of the T.
Rowe Price Fixed Income Funds on Thursday, October 15, 1998. Several important
issues affecting your funds will be on the agenda, and we ask you to read the
enclosed information carefully and register your vote.
 
   
The directors and management of the Tax-Free Insured Intermediate Bond and
Florida Insured Intermediate Tax-Free Funds recommend a change in each fund's
investment objective, specifically, removing the requirement that each fund seek
to minimize credit risk by investing primarily (at least 65% of assets) in
insured bonds.
 
About 50% of new municipal bonds coming to market today carry bond insurance,
compared with about 30% earlier in the decade when your funds began. As a
result, even if the proposed change is approved, the funds are likely to
continue holding a large number of insured bonds. Nevertheless, we believe you
will be better served over time if your fund managers have more flexibility in
selecting bonds, while seeking to still maintain high overall credit quality,
for the following reasons:
 
 . REDUCED VOLATILITY.  As you no doubt know, diversification of assets
   typically reduces the volatility of a portfolio while increasing
   opportunities to enhance returns. Volatility is reduced because different
   types of bonds may respond differently to changes in interest rates and
   economic conditions, smoothing out the impact of such changes on a portfolio.
   Therefore, greater diversification in credit quality could reduce the
   portfolios' overall risk and may increase their long-term return potential.
 
 . INCREASED OPPORTUNITIES.  A portfolio consisting primarily of insured bonds
   inhibits a manager's ability to capitalize on diversification opportunities
   for two main reasons. First, insured bonds are generally more sensitive than
   uninsured bonds to interest rate changes, thereby increasing the portfolio's
   overall volatility. Second, by essentially eliminating differences in credit
   quality, insurance limits our efforts to take full advantage of T. Rowe
   Price's extensive research resources -- for example, identifying bonds whose
   credit ratings are likely to improve or that seem undervalued by the market.
 
If you approve this change in the funds' investment programs, the directors will
remove the reference to insurance in their names to reflect their broader
diversification. Their names would become the Tax-Free Intermediate Bond Fund
and the Florida Intermediate Tax-Free Fund.
 
Shareholders of both funds will also be voting on the selection of independent
accountants, and shareholders of the Tax-Free Insured Intermediate Bond Fund
will be voting on the election of directors. Your vote is important on all
proposals, which are explained in detail in the following pages.
 
Instructions on how to vote by mail, by telephone, or through the Internet are
contained on the enclosed card. If you have any questions, please call us at
1-800-225-5132. YOUR VOTE IS EXTREMELY IMPORTANT.    
 
Sincerely,
 
/s/James S. Riepe 
James S. Riepe
 
   
Vice Chairman of the Board
T. Rowe Price Associates, Inc.    
 
 
 
   
Invest With Confidence
T. Rowe Price
Ram Logo
    
 
 
 

 
   
Proxy Information
 
This proxy material concerns the following T. Rowe Price Funds
 
Corporate Income Fund
GNMA Fund
High Yield Fund
New Income Fund
Prime Reserve Fund
Short-Term Bond Fund
Short-Term U.S. Government Fund
Summit Cash Reserves Fund
Summit GNMA Fund
Summit Limited-Term Bond Fund
Tax-Exempt Money Fund
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
Limited-Term Bond Portfolio
Prime Reserve Portfolio    
 
Dear Shareholder:
 
   
You are cordially invited to attend the Annual Meeting of Shareholders of the T.
Rowe Price Fixed Income Funds on Thursday, October 15, 1998. Several important
issues affecting your funds will be on the agenda, and we ask you to read the
enclosed information carefully and register your vote.
 
The funds are holding shareholder meetings in 1998 to elect directors and
trustees, and to ratify the selection of independent accountants. In addition,
the directors of the New Income and Tax-Exempt Money Funds recommend conforming
their charters to those of other T. Rowe Price funds by changing their charters
to permit the creation of series and classes of shares for those funds. These
provisions would enable us to provide additional services for investors who want
them, and to allocate expenses accordingly.
 
For example: A new class of shares in Tax-Exempt Money Fund could allow the fund
to offer cash management services, including a debit card and checkwriting
privileges, with additional expenses paid by shareholders who use those services
rather than by existing shareholders.
 
Your fund's managers and directors believe you will be better served over time
by voting for these amendments. Since most of the proposals are common to all of
the funds, we have combined our discussion into a single proxy statement to
reduce fund expenses. If you own more than one fund, the combined proxy will
also save you the time of reading more than one document. Please note, however,
that if you own more than one fund, you must vote on a separate card for each
fund.
 
We realize that it may be difficult for you to attend the meeting and vote your
shares in person. HOWEVER, WE DO NEED YOUR VOTE. YOU CAN VOTE BY MAIL,
TELEPHONE, OR THROUGH THE INTERNET, AS EXPLAINED ON THE ENCLOSED PROXY CARD. By
voting promptly, you help the funds avoid the expense of additional mailings. If
you later decide to attend the meeting, you may revoke your proxy and vote your
shares in person if you wish.
 
If you would like additional information concerning the matters proposed for
action at the meeting, please call us at 1-800-225-5132. Remember, this is your
opportunity to voice your opinion on matters affecting the funds. YOUR
PARTICIPATION IS EXTREMELY IMPORTANT.    
 
Sincerely,
 
/s/James S. Riepe 
James S. Riepe
 
   
Vice Chairman of the Board
T. Rowe Price Associates, Inc.    
 
   
Invest With Confidence
T. Rowe Price
Ram Logo    
 

   
Proxy Information
 
This proxy material concerns the following T. Rowe Price Portfolios
 
Limited-Term Bond Portfolio
Prime Reserve Portfolio
 
Dear T. Rowe Price No-Load Variable Annuity Contract Holder:
 
You are cordially invited to attend the Annual Meeting of Shareholders of the T.
Rowe Price Fixed Income Funds on Thursday, October 15, 1998. Several important
issues affecting your funds will be on the agenda, and we ask you to read the
enclosed information carefully and register your vote.
 
The T. Rowe Price Limited-Term Bond Portfolio and T. Rowe Price Prime Reserve
Portfolio are holding shareholder meetings to elect directors and to ratify the
selection of independent accountants. As a contract holder of the T. Rowe Price
No-Load Variable Annuity, you are entitled to vote on matters affecting your
investment in the portfolios.
 
The proposals for you to vote on are the same as for many of the T. Rowe Price
mutual funds, so we have combined our discussion into a single proxy statement
to reduce fund expenses. If you own more than one fund or portfolio, the
combined proxy will also save you the time of reading more than one document.
Please note, however, that if you own more than one fund, you must vote on a
separate card for each fund.
 
We realize that it may be difficult for you to attend the meeting and vote your
shares in person. HOWEVER, WE DO NEED YOUR VOTE. By voting promptly, you help
the portfolios avoid the expense of additional mailings. If you later decide to
attend the meeting, you may revoke your proxy and vote your shares in person if
you wish.
 
If you would like additional information concerning the matters proposed for
action at the meeting, please call 1-800-469-5304. Remember, this is your
opportunity to voice your opinion on matters affecting the portfolios.  YOUR
PARTICIPATION IS EXTREMELY IMPORTANT.
 
Sincerely,
 
/s/James S. Riepe 
James S. Riepe
 
Vice Chairman of the Board
T. Rowe Price Associates, Inc.
 
Invest With Confidence
T. Rowe Price
Ram Logo    
 


 


 
 
VOTE BY TOUCH-TONE PHONE, THE INTERNET, OR BY MAIL   Invest With Confidence
- --------------------------------------------------   T. Rowe Price
                                                     Ram Logo
 
CALL TOLL-FREE: 1-888-221-0697 OR BY ACCESSING WWW.PROXYWEB.COM
 
   
***CONTROL NUMBER: 999 999 999 999 99***
 
SEE THE ENCLOSED INSERT FOR FURTHER INSTRUCTIONS ON VOTING BY PHONE OR INTERNET
    
 
              Please fold and detach card at perforation before mailing
 
- --------------------------------------------------------------------------------
 
   
FUND NAME ("Fund")          MEETING TIME:  8:30 A.M. EASTERN TIME THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS/TRUSTEES
 
By my signature below, I appoint James S. Riepe and Patricia S. Butcher as
proxies to vote all Fund shares that I am entitled to vote at the Annual Meeting
of Shareholders to be held on October 15, 1998, at 8:30 a.m., ET at the offices
of the Fund, 100 East Pratt Street, Baltimore, Maryland 21202, and at any
adjournments of the meeting. Mr. Riepe or Ms. Butcher may vote my shares, and
they may appoint substitutes to vote my shares on their behalf. I instruct Mr.
Riepe and Ms. Butcher to vote this proxy as specified on the reverse side, and I
revoke any previous proxies that I have executed. I acknowledge receipt of the
Fund's Notice of Annual Meeting of Shareholders and proxy statement.    
 
 
 
                                               PLEASE SIGN, DATE, AND RETURN
                                               PROMPTLY IN ENCLOSED ENVELOPE 
                                               IF YOU ARE NOT VOTING BY PHONE
                                               OR INTERNET.
 
                                               Date_____________________
 
 
 
   
                                               NOTE:  Please sign exactly as
                                               name appears on this proxy.
                                               Joint owners should each sign
                                               personally. Directors and
                                               other fiduciaries should
                                               indicate the capacity in which
                                               they sign, and where more than
                                               one name appears, a majority
                                               must sign. If a corporation,
                                               this signature should be that
                                               of an authorized officer who
                                               should state his or her title.
                                        _______________________________________
    
 
             CONTINUED ON REVERSE SIDE        Signature(s) (and Title(s),
                                                  if applicable)
 
 

 
 
Please refer to the Proxy Statement discussion of these proposals. 
THE PROXY WILL BE VOTED FOR THE PROPOSALS IF YOU DO NOT SPECIFY OTHERWISE. 
Your appointed attorneys will vote any other matters that arise at the meeting 
in accordance with their best judgement. 
THE BOARD OF DIRECTORS/TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
 
           Please fold and detach card at perforation before mailing.
 
- ------------------------------------------------------------------------------
 
             Please vote by checking the appropriate box(es) below.
   


                                                                                 
                                                                      FOR ALL    WITHHOLD
                                                                      NOMINEES   AUTHORITY   FOR ALL EXCEPT
 
1.   To elect the directors/trustees listed below.                      /  /        /  /          /  /
     Calvin W. Burnett (01)   Anthony W. Deering (02)
     F. Pierce Linaweaver (03)  William T. Reynolds (04)
     James S. Riepe (05) John G. Schreiber (06) M. David Testa (07)
     INSTRUCTION:
     TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
     NOMINEE, WRITE THE NOMINEE'S NAME
     ON THE SPACE PROVIDED BELOW.
     ___________________________________________________________
                                                                        FOR       AGAINST       ABSTAIN
 
2.   To ratify the appointment of PricewaterhouseCoopers LLP, as        /  /        /  /          /  /
     independent accountants of the Fund
     for the current fiscal year.

3.   FLORIDA INSURED INTERMEDIATE TAX-FREE                              /  /        /  /          /  /
     FUND AND T. ROWE PRICE TAX-FREE INSURED 
     INTERMEDIATE BOND FUND, INC.
     SHAREHOLDERS ONLY.
     To amend the investment objectives of each Fund to
     remove the requirement that each Fund's total assets be
     invested primarily in insured bonds.

4.   T. ROWE PRICE NEW INCOME                                           /  /        /  /          /  /
     FUND, INC. AND T. ROWE PRICE TAX-
     EXEMPT MONEY FUND, INC.
     SHAREHOLDERS ONLY.
     To amend each Fund's Articles of Incorporation to authorize creating
     different classes and series and to conform the provisions
     describing classes and series to those standard for other
     T. Rowe Price funds.

    
                            PLEASE SIGN ON REVERSE SIDE 
 


 


 
Voting Your Proxy: It's Easier Than Ever
 
The enclosed proxy discusses matters affecting your T. Rowe Price fund. IT'S
IMPORTANT TO VOTE on these issues, and voting promptly can save money for your
fund by making a second mailing unnecessary.
 
   
In addition to the option of mailing the proxy card back to us, we can now offer
you TWO OTHER WAYS TO VOTE - by touch-tone telephone and by computer via the
Internet. Using either SAVES TIME for you and HELPS REDUCE YOUR FUND'S EXPENSES.
    
 
   
So after you've read the proxy information about your fund, but BEFORE you sign,
seal, and mail the proxy card, consider voting either by telephone or by
computer via the Internet.    
 
   
Graphic of telephone    
 
   
By touch-tone telephone:    
 . have the proxy card handy
 . call 1-888-221-0697 toll free
   
 . enter the 14-digit control number found in the upper left corner of your proxy
card    
 . follow the simple recorded instructions
 
   
Graphic of computer screen
By COMPUTER via the Internet:    
 . have the proxy card handy
 . go to the Website WWW.PROXYWEB.COM
 . enter the 14-digit control number found in the upper left corner of your proxy
card
 . follow the instructions on the screen
 
If you vote by computer or telephone, you do not need to mail the proxy card.
 
Thank you.
 
T. Rowe Price
Ram logo
T. Rowe Price Investment Services, Inc., Distributor.


 


 
 
                        MANAGEMENT INFORMATION SERVICES
                      PROPOSED SCRIPT FOR TELEPHONE VOTING
                      T. ROWE PRICE - OCTOBER 15 MEETINGS
 
OPENING
 
WHEN CONNECTED TO THE TOLL-FREE NUMBER, SHAREHOLDER WILL HEAR:
 
"Welcome.  Please enter the control number located beneath the toll-free
telephone number on the upper portion of your proxy card."
 
WHEN SHAREHOLDER ENTERS THE CONTROL NUMBER, HE/SHE WILL HEAR:
 
"Please enter the last four digits of your tax ID number."
 
WHEN SHAREHOLDER ENTERS THE LAST FOUR DIGITS OF HIS/HER TAX ID NUMBER, HE/SHE
WILL HEAR:
 
"To vote as your T. Rowe Price Fund's Board recommends on all proposals, press 1
now.  To vote on each proposal separately, press 0 now."
 
 
OPTION 1: VOTING ALL PROPOSALS AS MANAGEMENT RECOMMENDS
 
IF SHAREHOLDER ELECTS TO VOTE AS MANAGEMENT RECOMMENDS ON ALL PROPOSALS, HE/SHE
WILL HEAR:
 
"You have voted as the Board recommended.  If this is correct, press 1.  If
incorrect, press 0."
 
IF SHAREHOLDER PRESSES 1, HE/SHE WILL HEAR:
 
"If you have received more than one proxy card, you must vote each card
separately.  If you would like to vote another proxy, press 1 now.  To end this
call, press 0 now."
 
IF SHAREHOLDER PRESSES 0 TO INDICATE AN INCORRECT VOTE, HE/SHE WILL HEAR:
 
"Your votes have been canceled.  If you would like to vote another proxy, press
1 now.  To end this call, press 0 now."
 
IF SHAREHOLDER ELECTS TO VOTE ANOTHER PROXY, HE/SHE IS RETURNED TO THE "PLEASE
ENTER THE CONTROL NUMBER" SPEECH (ABOVE). IF SHAREHOLDER ELECTS TO END THE CALL,
HE/SHE WILL HEAR:
 
"Thank you for voting."
 
CALL IS TERMINATED.
 
 
 
 
 
OPTION 2: VOTING EACH PROPOSAL SEPARATELY
 
IF SHAREHOLDER ELECTS TO VOTE ON EACH PROPOSAL SEPARATELY, HE/SHE WILL HEAR:
 
"Proposal 1: To vote FOR all nominees, press 1.  To WITHHOLD from all nominees,
press 9.  To WITHHOLD from an individual nominee, press 0. Make your selection
now."
 
IF THE SHAREHOLDER VOTES FOR ALL NOMINEES OR WITHHOLDS FROM ALL NOMINEES, THE
SCRIPT MOVES TO PROPOSAL 2.  IF THE SHAREHOLDER ELECTS TO WITHHOLD FROM A 
SPECIFIC NOMINEE, HE/SHE WILL HEAR:
 
"Enter the two digit number that appears next to the nominee you DO NOT wish to
vote for."
 
AND THEN,
 
"Press 1 to withhold from another nominee or Press 0 if you have completed
voting for Directors."
 
WHEN THE SHAREHOLDER HAS FINISHED VOTING FOR DIRECTORS, HE/SHE WILL HEAR:
 
"Proposal 2:    To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0."
 
THIS WILL BE FOLLOWED IN THE SAME MANNER FOR PROPOSALS 3 AND 4.  NOTE:  IF THE
SHAREHOLDER IS IN A FUND TO WHICH EITHER OR BOTH PROPOSALS DO NOT APPLY, HE/SHE
WILL HEAR:
 
"Not applicable. Your fund is not seeking a vote for this proposal."
 
WHEN THE SHAREHOLDER HAS FINISHED VOTING, HE/SHE WILL HEAR:
 
"Your votes have been cast as follows:  Proposal 1:  (VOTE IS GIVEN), Proposal 2
(VOTE IS GIVEN) Proposal 3 (VOTE IS GIVEN ONLY IF PROPOSAL APPLIES TO THE FUND),
Proposal 4 (VOTE IS GIVEN ONLY IF PROPOSAL APPLIES TO THE FUND).  If this is
correct, press 1.  If incorrect, press 0."
 
IF THE SHAREHOLDER INDICATES THAT VOTE IS CORRECT, HE/SHE IS GIVEN THE
OPPORTUNITY TO VOTE ANOTHER PROXY OR TERMINATE THE CALL.  IF SHAREHOLDER DESIRES
TO VOTE ANOTHER PROXY, HE/SHE IS RETURNED TO THE "PLEASE ENTER THE CONTROL
NUMBER" SPEECH (ABOVE). IF SHAREHOLDER ELECTS TO END THE CALL, HE/SHE WILL HEAR:
 
"Thank you for voting."
 
CALL IS TERMINATED.