Annual Report

U.S. Bond Index Fund

October 31, 2001

T. Rowe Price


Report Highlights
--------------------------------------------------------------------------------

U.S. Bond Index Fund

o    Bonds were virtually the only bright spot for investors in the aftermath of
     the September 11 attacks.

o    The  Federal  Reserve's  relentless  easing of  monetary  policy  created a
     favorable bond environment.

o    The fund,  which seeks to replicate the  performance of the Lehman Brothers
     U.S.  Aggregate  Index,  returned  7.53% and 12.11% for the past six and 11
     months (since inception), respectively.

o    Led  by  Treasury  securities,  high-quality  bonds  posted  the  strongest
     returns.

o    Continued  economic  malaise and further Fed interest  rate cuts augur well
     for bond performance in the months ahead.

REPORTS ON THE WEB

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Fellow Shareholders

Strong bond market performance was about the only good news for investors in the
past six months, a period that will always be remembered for the shattering
events of September 11. The fragile U.S. economy and need for increased
liquidity following the terrorist attacks prompted the Federal Reserve to reduce
short-term interest rates five times during the period and again in early
November, bringing the federal funds target rate to a 40-year low of 2%.

30-Year        5-Year            2-Year            6-Month
               Treasury Bond     Treasury Note     Treasury Bill   Treasury Bill
11/30/00       5.66              5.52              5.71            6.18
               5.46              4.98              5.09            5.68
1/31           5.50              4.77              4.57            4.80
               5.31              4.65              4.39            4.67
               5.44              4.56              4.18            4.09
4/30           5.79              4.88              4.27            3.95
               5.75              4.91              4.18            3.56
               5.76              4.95              4.24            3.64
7/31           5.52              4.53              3.79            3.46
               5.37              4.38              3.63            3.29
               5.42              3.80              2.85            2.35
10/31/01       4.87              3.47              2.42            1.94

     In contrast to the steady decline in short-term  rates,  rates on long-term
     Treasury  bonds had  fluctuated in a narrow range for most of the year (see
     chart),  leading to an increasing  disparity  between  short- and long-term
     interest  rates-a  steepening  yield  curve.  At the very  end of  October,
     however,  the Treasury  shook up this pattern by announcing a suspension of
     30-year  Treasury bond issuance.  Investors  rushed to lock in the existing
     supply of bonds, pushing the long bond's yield below 5%-a level not reached
     since late 1998.

     Against  this  background  of falling  rates and a weak  economy,  the fund
     provided  strong  returns  that  modestly  trailed  the  benchmark.   These
     differences  between fund and index returns are due in part to expenses (30
     basis points on an annual basis), which the index lacks. In addition,  some
     differences  can  arise  from the  strategy  we use to try to  match  index
     results  (before fund expenses).  Because the index contains  approximately
     5,000  securities,  we  invest  in a  sample  of the  bonds  in the  index,
     attempting  to replicate the sectors it  represents  without  incurring the
     substantial expenses of owning all the bonds. Within each sector, we select
     bonds that we believe collectively represent the key characteristics of the
     index's  bonds,  such as interest rate  sensitivity,  credit  quality,  and
     diversification.

Performance Comparison
--------------------------------------------------------------------------------

                                                                      Since
                                                                  Inception
  Periods Ended 10/31/01                   6 Months                11/30/00
  ------------------------------------------------------------------------------

  U.S. Bond Index Fund                         7.53%                  12.11%
  Lehman Brothers
  U.S. Aggregate Index                         7.85                   12.72


PERFORMANCE REVIEW

     Virtually all sectors of the bond market represented in the index performed
     well during the past six months,  as falling  interest  rates  boosted bond
     prices.  However,  some did better than others, as shown in the next table.
     Treasury notes and bonds, the  third-largest  component of the index,  were
     the leaders for the period as the  deteriorating  economy  prompted nervous
     investors  to seek the  gilt-edged  credit  of  government  obligations.  A
     spillover of this effect also aided  high-quality  debt of other government
     agencies.  Investment-grade  corporate  bonds,  the index's  second-largest
     component,   were  close  behind  in   performance   among  major  sectors.
     (Commercial  mortgage-backed  securities  were very  strong  but are a tiny
     component of the index.) The flight to quality was evident in the corporate
     sector, where investors strongly favored the highest-rated  securities (AAA
     and AA). Bonds issued by financial  services  companies fared  particularly
     well as falling interest rates enhanced their earnings  prospects.  Utility
     bonds  rebounded  from  earlier  weakness  related to  California's  energy
     crisis.

Bond Market Returns
--------------------------------------------------------------------------------

6 Months Ended 10/31/01                                  Total Return
--------------------------------------------------------------------------------

U.S. Treasury Securities                                         9.35%

U.S. Government Agency Securities                                8.45

U.S. Corporate Investment-Grade Bond                             7.73

Asset-Backed Securities                                          7.73

Mortgage-Backed Securities                                       6.58

Commercial Mortgage-Backed Securitie                             9.03


Source: Lehman Brothers indexes


     The  largest  sector  in  the  index,   U.S.   government   mortgage-backed
     securities,  posted the weakest  (though  still  respectable)  results as a
     rising tide of homeowners  took  advantage of declining  rates to refinance
     their  mortgages.   The  resulting  increase  in  prepayments  of  existing
     mortgages  typically dims the appeal of mortgage-backed  securities for two
     reasons:  investors  may have  difficulty  replacing  the lost  income with
     securities  of  comparable  quality,  and they may suffer a capital loss if
     their securities had originally been purchased at a premium (price over par
     value).

Security Diversification
--------------------------------------------------------------------------------

     Percent of Net Assets

     U.S. Government Mortgage-Backed S                               33

     Corporate Notes and Bonds                                       28

     U.S. Treasury Obligations                                       25

     Other U.S. Government Agency Obli                               12

     Other                                                            2


PORTFOLIO HIGHLIGHTS

     Like the index,  the fund's mix of maturities was heavily  weighted  toward
     those under 10 years.  Two-thirds of all holdings matured in less than five
     years and 88%  within 10 years,  for a  weighted  average  maturity  of 6.1
     years. Since prices of long-term bonds fluctuate more sharply with interest
     rate changes than prices of short-term  bonds,  a fund's  average  maturity
     helps an investor gauge price risk.

     An even  better  measure of a bond's  potential  price risk is  "duration,"
     which takes into account the income  stream a bond  provides as well as the
     ultimate  maturity  date when it is  redeemed  for face  value.  The fund's
     average  duration  of 4.1  years was in line with that of the index and was
     shorter than six months ago due to rising mortgage prepayments.  A duration
     of 4.1  means  that  the  fund's  share  price  can  be  expected  to  rise
     approximately  4.1% for each one percentage  point drop in interest  rates,
     and vice versa.

Quality Diversification
--------------------------------------------------------------------------------

     Percent of Net Assets

     AAA                                                             74

     AA                                                               5

     A                                                               13

     BBB                                                              8


     The fund's quality diversification, shown in the chart, mirrors that of the
     Lehman  index.  AAA  rated  bonds  composed  nearly  three-quarters  of the
     portfolio  at period end and  included  all  Treasury  and U.S.  government
     mortgage-backed  securities.  The  highest-rated  bonds  (AAA  and AA) have
     provided the strongest  returns  since the fund's  inception 11 months ago.
     Average credit quality remained unchanged from our last report at AAA-.


OUTLOOK

     In the  aftermath of September 11,  economic  growth is likely to slow even
     more than anticipated in the U.S. and globally.  In response, we expect the
     Federal  Reserve to  persevere  in  lowering  interest  rates to arrest the
     decline and spur a turnaround.  The combination of weak or no growth,  very
     low  inflation,  and  stimulative  Fed policy  should  extend  the  present
     favorable  environment  for  investment-grade  bonds into the months ahead.

     Respectfully submitted,


     Edmund M. Notzon III
     Chairman of the fund's Investment Advisory Committee
     November 19, 2001

     The  committee  chairman  has  day-to-day  responsibility  for managing the
     portfolio and works with committee  members in developing and executing the
     fund's investment program.


T. Rowe Price U.S. Bond Index Fund
--------------------------------------------------------------------------------

Portfolio Highlights
--------------------------------------------------------------------------------

KEY STATISTICS

                                            4/30/01                10/31/01


  Price Per Share                           $ 10.17                 $ 10.63

  Dividends Per Share
     For 6 months ***                          0.25                    0.30

     For 11 months                             --                      0.55

  30-Day Dividend Yield *                      5.82%                   5.48%

  30-Day Standardized Yield to                 5.61                    4.98

  Weighted Average Maturity (y                  7.4                     6.1

  Weighted Average Effective D                  4.7                     4.1

  Weighted Average Quality **                  AAA-                    AAA-

*       Dividends earned for the last 30 days of each period indicated are
        annualized and divided by the fund's net asset value per share at the
        end of the period.
**      Based on T. Rowe Price research.
***     For the period ending 4/30/01, the dividend is for 5 months, from the
        inception of the fund.


T. Rowe Price U.S. Bond Index Fund
--------------------------------------------------------------------------------

Performance Comparison
--------------------------------------------------------------------------------

     This chart shows the value of a hypothetical $10,000 investment in the fund
     over the past 10 fiscal year periods or since  inception (for funds lacking
     10-year records). The result is compared with benchmarks, which may include
     a  broad-based  market  index and a peer  group  average  or index.  Market
     indexes do not include  expenses,  which are deducted  from fund returns as
     well as mutual fund averages and indexes.

                                       Lehman Bros.                     UBX

     11/30/00                                 10000                   10000

     10/31/01                                 11272                   11211


Total Return
--------------------------------------------------------------------------------

                                              Since               Inception

     Period Ended 10/31/01                Inception                    Date
     ---------------------------------------------------------------------------

     U.S. Bond Index Fund                     12.11%               11/30/00


     Investment  return and principal value represent past  performance and will
     vary.  Shares  may be worth  more or less at  redemption  than at  original
     purchase. Returns do not reflect taxes that the shareholder may pay on fund
     distributions or the redemption of fund shares.



Financial Highlights             For a share outstanding throughout each period
--------------------------------------------------------------------------------

                                                               11/30/00
                                                                Through
                                                               10/31/01

  NET ASSET VALUE

  Beginning of period                                           $ 10.00

  Investment activities
     Net investment income (loss)                                  0.55

     Net realized and
     unrealized gain (loss)                                        0.63

     Total from
     investment activities                                         1.18

  Distributions
     Net investment income                                        (0.55)

  NET ASSET VALUE
  End of period                                                 $ 10.63
                                                                -------

  Ratios/Supplemental Data
  Total return(diamond)                                           12.11%

  Ratio of total expenses
  to average net assets                                          0.30%!

  Ratio of net investment
  income (loss) to average

  net assets                                                     5.74%!

  Portfolio turnover rate                                        83.9%!
  Net assets, end of period
  (in thousands)                                                $48,814


(diamond)   Total return reflects the rate that an investor would have earned
            on an investment in the fund during the period, assuming
            reinvestment of all distributions.
        !   Annualized (diamond) Total Dividends earned for the last 30 days of
            each period indicated are annualized and divided by the fund's net
            asset value per share at the end of the period.
        !   Based on T. Rowe Price research.
        *   For the period ending 4/30/01, the dividend is for 5 months, from
            the inception of the fund. The accompanying notes are an integral
            part of these financial statements.


T. Rowe Price U.S. Bond Index Fund
--------------------------------------------------------------------------------
                                                               October 31, 2001

Statement of Net Assets                                 Par/Shares        Value
--------------------------------------------------------------------------------
                                                              In thousands

  CORPORATE BONDS AND NOTES 25.7%

  Aerospace & Defense 0.5%

  Boeing Capital,
  Sr. Notes, 6.10%, 3/1/11                  $   100                 $   102

  Lockheed Martin,
  Sr. Notes, 8.50%, 12/1/29                     100                     122

                                                                        224

  Airlines 0.2%

  Continental Airlines,
  7.568%, 12/1/06                               100                      71

                                                                         71

  Automobiles and Related 1.9%

  DaimlerChrysler, Sr. Notes,
     7.25%, 1/18/06                             100                     103

  Ford Motor Credit Sr. Notes
     6.50%, 1/25/07                             300                     300

     7.20%, 6/15/07                             100                     103

  General Motors Sr. Notes
     7.00%, 6/15/03                             100                     104

     7.20%, 1/15/11                             100                     101


  General Motors Acceptance
  Corp., 6.75%, 1/15/06                         200                     205

                                                                        916

  Banking 3.3%

  Abbey National, MTN,
     6.69%, 10/17/05                            100                     107

  ABN Amro Bank, Sr. Sub.
     Notes, 7.125%, 6/18/07                     100                     111

  Banc One, Sr. Sub.
     Notes, 7.00%, 7/15/05                      100                     107

  Bank of America
     Sr. Notes, 7.875%, 5/1                     100                     111

     Sr. Sub. Notes, 7.40%,                     100                     110

  Capital One Bank, Sr.
     Notes, 6.875%, 2/1/06                      100                     100

  Citigroup, Sr. Sub.
     Notes, 7.25%, 10/1/10                      200                     222

  First Union, Sr.
     Notes, 7.55%, 8/18/05                      100                     110

  FleetBoston Financial, Sr.
     Notes, 7.25%, 9/15/05                      100                     109

  HSBC Holdings, Sr.  Sub.
     Notes, 7.50%, 7/15/09                      100                     111

  JP Morgan Chase, Sr.
     Notes, 5.75%, 2/25/04                      100                     105

  MBNA, Sr. Notes,
     6.50%, 6/20/06                             100                     102

  Mellon Financial, Sr.
     Notes, 5.75%, 11/15/03                     100                     105

  PNC Bank, Sr. Sub.
     Notes, 7.875%, 4/15/05                     100                     110

                                                                      1,620

  Beverages 0.2%

  Anheuser-Busch, Sr.
     Notes, 7.55%, 10/1/30                  $   100                 $   118

                                                                        118

  Cable Operators 0.4%

  Clear Channel Communications,
     Sr. Notes, 7.25%, 9/15/03                  100                     104

  Comcast Cable Communications,
     Sr. Notes, 6.375%, 1/30/06                 100                     104

                                                                        208

  Canadian Government and Municipalities 1.2%

  Government of Canada, Sr.
     Notes, 6.75%, 8/28/06                      100                     112

  Hydro Quebec, Sr.
     Notes, 7.50%, 4/1/16                       100                     118

  Ontario Province of Canada,
     Sr. Notes, 6.00%, 2/21/06                  100                     107

  Province of Manitoba, Sr.
     Notes, 7.50%, 2/22/10                      100                     118


  Quebec Province of Canada,
     Sr. Notes, 7.50%, 9/15/29                  100                     119
                                                                        574

  Computer Service & Software 0.3%

  IBM, Sr. Notes,
     8.375%, 11/1/19                            100                     121

                                                                       121

  Diversified Chemicals 0.2%

  Du Pont, Sr. Notes,
     6.75%, 10/15/04                            100                     108

                                                                        108

  Drugs 0.5%

  American Home Products, Sr.
     Notes, 7.90%, 2/15/05                      100                     109

  Eli Lilly, Sr. Notes,
     7.125%, 6/1/25                             100                     111

                                                                        220
  Electric Utilities 3.5%

  Calpine, Sr. Notes,
     8.50%, 2/15/11                             200                     207

  Cleveland Electric Illuminating,
     1st Mortgage,
     7.88%, 11/1/17                             100                     104

  Consolidated Edison, Sr.
     Notes, 7.50%, 9/1/10                       100                     109

  Exelon, Sr. Notes,
     (144a), 6.95%, 6/15/11                     200                     209

  National Rural Utilities
     Cooperative Finance,
     6.00%, 5/15/06                             100                     105

  Niagara Mohawk Power, 1st Mortgage,
     8.00%, 6/1/04                              100                     108

  PPL Electric Utilities,
     6.25%, 8/15/09                             100                     104

  PPL Energy Supply, Sr.
     Notes, (144a),
     6.40%, 11/1/11                             100                      99

  Progress Energy, Sr.
     Notes, 7.10%, 3/1/11                       100                     108

  PSEG Power, Sr. Notes,
     (144a), 8.625%, 4/15/31                    200                     239

  Sempra Energy, Sr.
     Notes, 6.80%, 7/1/04                       100                     104

  Texas Utilities Electric,
     1st Mortgage,
     6.75%, 3/1/03                              100                     104

  Virginia Electric & Power, Sr.
     Notes, 5.75%, 3/31/06                      100                     104

                                                                      1,704

  Entertainment and Leisure 0.2%

     Viacom, Sr. Notes,
     7.70%, 7/30/10                         $   100                 $   111

                                                                        111

  Exploration and Production 0.2%

     Enron Oil & Gas, Sr.
     Notes, 6.00%, 12/15/08                     100                     100
                                                                        100

  Finance and Credit 1.3%

     CIT Group, Sr. Notes,
     7.375%, 3/15/03                            100                     105

  Countrywide Home Loan, Sr.
     Notes, 5.50%, 8/1/06                       100                     102

  General Electric Capital, Sr. Notes,
     7.25%, 5/3/04                              100                     111

  Heller Financial, Sr. Notes,
     7.875%, 5/15/03                            100                     107

  Household Finance, Sr. Notes,

  Norwest Financial, Sr. Notes,
     7.60%, 5/3/05                              100                     109

                                                                        645

  Food Processing 0.2%

  Unilever Capital, Sr. Notes,
     6.875%, 11/1/05                            100                     109

                                                                        109

  Food/Tobacco 0.2%

  Philip Morris, Sr. Notes,
     7.625%, 5/15/02                            100                     102

                                                                        102

  Foreign Government
  and Municipalities 1.4%

  European Investment Bank, Sr. Notes,
     4.75%, 4/26/04                             100                     104

  Intermediate American
  Development Bank, Sr. Notes
     7.375%, 1/15/10                            100                     116

  National Bank For
  Reconstruction & Development, Sr. Notes
     6.625%, 8/21/06                            100                     110

  Republic of Italy, Sr. Notes,
     7.25%, 2/7/05                              100                     110

  Republic of South Korea, Sr. Notes,
     8.875%, 4/15/08                            100                     117

  United Mexican States, Sr. Notes,
     9.875%, 2/1/10                             100                     111

                                                                        668

  Gas & Gas Transmission 0.2%

  Williams, Sr. Notes,
     7.625%, 7/15/19                            100                     102

                                                                        102

  Insurance 0.2%

  American General, Sr. Notes,
     7.50%, 8/11/10                             100                     112

                                                                        112


  Investment Dealers 0.9%

  Goldman Sachs, Sr. Notes,
     7.35%, 10/1/09                         $   100                 $   109

  Lehman Brothers, Sr. Sub. Notes,
     7.625%, 6/1/06                             100                     110

  Merrill Lynch, Sr. Notes,
     6.00%, 11/15/04                            100                     105

  Morgan Stanley Dean Witter, Sr. Notes,
     6.75%, 4/15/11                             100                     105

                                                                        429

  Long Distance 0.8%

  AT&T Liberty Media, Sr. Notes,
     6.00%, 3/15/09                             200                     194

  Sprint Capital
    Sr. Notes

     6.90%, 5/1/19                              100                      93

     7.125%, 1/30/06                            100                     105

                                                                        392

  Manufacturing 0.7%

  Dover, Sr. Notes,
     6.50%, 2/15/11                             100                     106

  Honeywell, Sr. Notes,
     6.875%, 10/3/05                            100                     106

  Tyco, Sr. Notes,
     6.25%, 6/15/03                             100                     104

                                                                        316

  Media and Communications 0.6%

  AOL Time Warner, Sr. Notes,
     7.625%, 4/15/31                            100                     105

  Cox Communications, Sr. Notes,
     7.75%, 11/1/10                             100                     110

  News America, Sr. Notes,
     7.25%, 5/18/18                             100                      94

                                                                        309

  Metals 0.2%

  Alcoa, Sr. Notes,
     7.375%, 8/1/10                             100                     112

                                                                        112

  Metals and Mining 0.2%

  Phelps Dodge, Sr. Notes,
     8.75%, 6/1/11                              100                      92

                                                                         92

  Paper and Paper Products 0.2%

  International Paper, Sr. Notes,
     8.00%, 7/8/03                              100                     106

                                                                        106

  Petroleum 1.1%

  Conoco, Sr. Notes,
     5.90%, 4/15/04                             100                     104

  Conoco Funding, Sr. Notes,
     6.35%, 10/15/11                            100                     102

  Occidental Petroleum, Sr. Notes,
     8.45%, 2/15/29                             100                     114

  Pemex Finance,
     9.14%, 8/15/04                             100                     107

  Petrobras, Sr. Notes, (144a)
     9.875%, 5/9/08                             100                     105

                                                                        532

  Railroads 0.5%

  CSX, Sr. Notes,
     7.25%, 5/1/04                          $   100                 $   108

  Norfolk Southern, Sr. Notes,
     8.375%, 5/15/05                            100                     110

                                                                        218

  Real Estate 0.2%

  Simon Property, Sr. Notes,
     7.375%, 1/20/06                            100                     105

                                                                        105

  Retail 0.6%

  Federated Department Stores, Sr. Notes,
     6.30%, 4/1/09                              100                      97

  Sears Roebuck Acceptance Corp., Sr. Notes,
     7.00%, 2/1/11                              100                     103

  Wal-Mart, Sr. Notes,
     6.875%, 8/10/09                            100                     111

                                                                        311

  Savings and Loan 0.2%

  Washington Mutual, Sr. Sub. Notes,
     8.25%, 4/1/10                              100                     114

                                                                        114

  Supermarkets 0.9%

  Delhaize America, Sr. Notes, (144a),
     8.125, 4/15/11                             300                     337

  Kroger, Sr. Notes,
     7.625%, 9/15/06                            100                     111

                                                                        448

  Telephones 1.7%

  Bellsouth, Sr. Notes,
     5.00%, 10/15/06                            100                     101

  Bellsouth Capital Funding, Sr. Notes,
     7.875%, 2/15/30                            100                     115

  Deutsche Telekom, Sr. Notes,
     8.00%, 6/15/10                             100                     111

  France Telecom, Sr. Notes, (144a),
     7.20%, 3/1/06                              100                     107

  Royal KPN, Sr. Notes,
     8.375%, 10/1/30                            100                      77

  SBC Communications, Sr. Notes,
     5.75%, 5/2/06                              100                     105

  U.S. West Communications, Sr. Notes,
     7.20%, 11/1/04                             100                     104

  Verizon Global Funding, Sr. Notes,
     7.25%, 12/1/10                             100                     109

                                                                        829

  Retail - General Department 0.2%

  May Department Stores, Sr. Notes,
     7.15%, 8/15/04                             100                     107

                                                                        107

  Wireline Communications 0.6%

  Telefonica Europe, Sr. Notes,
     7.35%, 9/15/05                             100                     107


  Worldcom
  Sr. Notes
     7.50%, 5/15/11                         $   100                 $   103

     8.25%, 5/15/31                             100                     102



  Total Corporate Bonds
  and Notes (Cost $12,100)                                           12,565


  ASSET-BACKED SECURITIES 1.7%

  Auto-Backed 0.2%

  BMW Vehicle Owner Trust,
     6.54%, 4/25/04                             100                     103

                                                                        103

  Credit Card-Backed 1.5%

  American Express,
     7.20%, 9/17/07                             100                     111

  Chemical Master Credit Card Trust,
     5.98%, 9/15/08                             100                     107

  Citibank Credit Card Master Trust,
     6.05%, 1/15/10                             100                     107

  MBNA Credit Card Master Trust,
     5.75%, 10/15/08                            100                     106

  MBNA Master Credit Card Trust II,
     6.55%, 1/15/07                             160                     173

  Sears Credit Account Master Trust,
     5.25%, 10/16/08                            100                     104

                                                                        708

  Total Asset-Backed
  Securities (Cost $773)                                                811


  NON-U.S. GOVERNMENT MORTGAGE-BACKED


  SECURITIES 1.1%

  Commercial Mortgage-Backed 1.1%

  GE Capital Commercial Mortgage, CMO

     6.079%, 10/15/10                            98                     103

     6.531%, 3/15/11                            150                     160

  JP Morgan Chase, CMO

     6.26%, 3/15/33                             125                     131

     7.371%, 8/15/32                            125                     138

  Total Non-U.S. Government
  Mortgage-Backed
  Securities (Cost $503)                                                532


  U.S. GOVERNMENT
  MORTGAGE-BACKED

  SECURITIES 33.2%

  U.S. Government Agency Obligations 22.5%

  Federal Home Loan Mortgage

     6.00%, 12/1/13                         $   384                 $   397

     6.50%, 4/1/16 - 7/1/31                   1,674                   1,729

     7.50%, 4/1/15                              130                     137

     TBA, 5.50%, 12/1/31                        448                     445

  Federal National
  Mortgage Assn.

     5.50%, 5/1/14 - 5/1/16                     294                     298

     6.00%, 7/1/29 - 3/1/31                     343                     348

     6.50%, 4/1/15 - 8/1/31                   3,395                   3,496

     7.00%, 2/1/24 - 7/1/31                   1,566                   1,633

     7.50%, 10/1/25 - 4/1/31                  1,851                   1,940

     8.00%, 3/1/31                              347                     366

     TBA, 6.00%, 1/1/16                         200                     205

                                                                     10,994

  U.S. Government Guaranteed
  Obligations 10.7%

  Government National
  Mortgage Assn.

    I                                            x                       x
     5.50%, 7/15/14                              93                      95

     6.00%, 12/15/28                            429                     436

     6.50%, 5/15/16 - 3/15/31                   916                     954

     7.00%, 3/15/13 - 12/15/28                  684                     722

     7.50%, 11/15/12 - 9/15/29                1,875                   1,985

     8.00%, 10/15/23 - 1/15/26                  600                     640

    II

     6.00%, 3/20/31                             398                     403

                                                                      5,235

  Total U.S. Government Mortgage-Backed
  Securities (Cost $15,714)                                          16,229

  U.S. GOVERNMENT OBLIGATIONS/
  AGENCIES 37.4%

  U.S. Government Agency Obligations 12.6%

  Federal Home Loan Mortgage

     5.125%, 2/26/02                            200                     202

     5.25%, 2/15/04                             800                     841

  Federal Home Loan Mortgage

     6.00%, 6/15/11                             300                     325

     6.25%, 7/15/04                         $   250                 $   270

     6.375%, 11/15/02                           450                     469

     6.875%, 7/18/02 - 9/15/10                  300                     333

     7.00%, 7/15/05                           1,170                   1,304

  Federal National Mortgage Assn.

     5.50%, 3/15/11                              50                      52

     5.75%, 4/15/03                             300                     314

     6.00%, 5/15/08 - 5/15/11                   950                   1,030

     6.25%, 5/15/29                             575                     619

     6.75%, 8/15/02                             200                     207

     7.25%, 1/15/10                             150                     175

                                                                      6,141

  U.S. Treasury Obligations 24.8%

  U.S. Treasury Bonds

     5.25%, 2/15/29                             860                     891

     5.375%, 2/15/31                            200                     215

     6.00%, 2/15/26                             800                     903

     6.25%, 8/15/23                             660                     762

     7.25%, 5/15/16                             200                     249

     9.875%, 11/15/15                           450                     681

  U.S. Treasury Notes

     4.25%, 11/15/03                          1,000                   1,035

     5.00%, 2/15/11                             200                     211

     5.50%, 2/15/08                             100                     109

     5.625%, 2/15/06                            460                     499

     5.75%, 10/31/02 - 8/15/10                2,360                   2,493

     5.875%, 11/15/04                           960                   1,040

     6.25%, 2/15/07                             700                     784

     6.375%, 1/31/02                            510                     515

     6.50%, 8/15/05 - 2/15/10                   660                     753

     6.625%, 5/15/07                            610                     696

     6.875%, 5/15/06                            260                     296

                                                                     12,132

  Total U.S. Government
  Obligations/Agencies
  (Cost $17,325)                                                     18,273



  Money Market Funds 1.8%

  T. Rowe Price Reserve
  Investment Fund, 3.07%                        854                     854


  Total Money
  Market Funds (Cost $854)                                              854

  Total Investments in Securities

  100.9% of Net Assets
  (Cost $47,269)                                                    $49,264

  Other Assets Less
  Liabilities                                                          (450)

  NET ASSETS                                                        $48,814
                                                                    -------

  Net Assets Consist of:

  Undistributed net
  investment income (loss)                                          $    12

  Undistributed net
  realized gain (loss)                                                   39

  Net unrealized
  gain (loss)                                                         1,995

  Paid-in-capital applicable
  to 4,592,001 shares
  of $0.0001 par
  value capital stock
  outstanding; 1,000,000,000
  shares authorized                                                 $46,768
                                                                    -------

  NET ASSETS                                                         48,814

  NET ASSET VALUE PER SHARE                                         $ 10.63
                                                                    -------


           #      Seven-day yield
         CMO      Collateralized Mortgage Obligation
         MTN      Medium Term Note
         144a     Security was purchased pursuant to Rule 144a under the
                  Securities Act of 1933 and may not be resold subject to that
                  rule except to qualified institutional buyers - total of such
                  securities at period-end amounts to 2.2% of net assets.


        The accompanying notes are an integral part of these financial
        statements.


T. Rowe Price U.S. Bond Index Fund
--------------------------------------------------------------------------------

Statement of Operations
--------------------------------------------------------------------------------
In thousands

                                                               11/30/00
                                                                Through
                                                               10/31/01

  Investment Income (Loss)

  Interest income                                                 1,713

  Expenses
     Investment management
     and administrative                                              83

  Net investment income (loss)                                    1,630

  Realized and Unrealized Gain (Loss)

  Net realized gain (loss) on securities                             42

  Change in net unrealized gain (loss)                            1,995

  Net realized and unrealized gain (loss)                         2,037


  INCREASE (DECREASE) IN NET

  ASSETS FROM OPERATIONS                                          3,667


The accompanying notes are an integral part of these financial statements.


T. Rowe Price U.S. Bond Index Fund
--------------------------------------------------------------------------------

Statement of Changes in Net Assets
--------------------------------------------------------------------------------
In thousands

                                                               11/30/00
                                                                Through
                                                               10/31/01

  Increase (Decrease) in Net Assets

  Operations
     Net investment income                                      $ 1,630

     Net realized gain (loss)                                        42

     Change in net unrealized
     gain (loss)                                                  1,995

     Increase (decrease) in net
     assets from operations                                       3,667

  Distributions to shareholders

     Net investment income                                       (1,630)

  Capital share transactions*

     Shares sold                                                 67,205

     Distributions reinvested                                     1,067

     Shares redeemed                                            (21,598)

     Redemption fees received                                         3

     Increase (decrease) in
     net assets from capital

     share transactions                                          46,677

     Net Assets

     Increase (decrease)
     during period                                               48,714

     Beginning of period                                            100

     End of period                                              $48,814
                                                                -------

     *Share information

     Shares sold                                                  6,595

     Distributions reinvested                                       103

     Shares redeemed                                             (2,116)


  Increase (decrease) in
  shares outstanding                                              4,582


The accompanying notes are an integral part of these financial statements.


T. Rowe Price U.S. Bond Index Fund
--------------------------------------------------------------------------------
                                                               October 31, 2001

Notes to Financial Statements
--------------------------------------------------------------------------------

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

     T. Rowe Price U.S. Bond Index Fund, Inc. (the fund) is registered under the
     Investment  Company  Act of  1940  as a  diversified,  open-end  management
     investment company and commenced  operations on November 30, 2000. The fund
     seeks to match the performance of the U.S. investment-grade bond market.

     The  accompanying  financial  statements  were prepared in accordance  with
     generally  accepted  accounting  principles,   which  require  the  use  of
     estimates made by fund management.

     Valuation  Debt  securities  are generally  traded in the  over-the-counter
     market.  Investments in domestic securities with original maturities of one
     year or more are stated at fair  value as  furnished  by  dealers  who make
     markets in such  securities or by an  independent  pricing  service,  which
     considers yield or price of bonds of comparable quality,  coupon, maturity,
     and type,  as well as prices  quoted by  dealers  who make  markets in such
     securities.

     Investments  in mutual  funds are valued at the closing net asset value per
     share of the mutual fund on the day of valuation.

     Assets  and  liabilities  for  which  the above  valuation  procedures  are
     inappropriate  or are deemed  not to reflect  fair value are stated at fair
     value  as  determined  in good  faith by or under  the  supervision  of the
     officers of the fund, as authorized by the Board of Directors.

     Premiums and  Discounts  Premiums and discounts on debt  securities,  other
     than  mortgage-backed  securities  (MBS),  are amortized for both financial
     reporting  and  tax  purposes.  Premiums  and  discounts  on  all  MBS  are
     recognized  upon  disposition  or  principal  repayment as gain or loss for
     financial reporting purposes.  For tax purposes,  premiums and discounts on
     MBS acquired on or before June 8, 1997, are recognized upon  disposition or
     principal  repayment as ordinary  income.  For MBS  acquired  after June 8,
     1997, premiums are recognized as gain or loss;  discounts are recognized as
     gain or loss, except to the extent of accrued market discount.

     In November,  2000, the American  Institute of Certified Public Accountants
     issued a revised Audit and Accounting  Guide-Audit if Investment  Companies
     (the guide),  which will be adopted by the fund as of November 1, 2001. The
     guide  requires  all  premiums  and  discounts  on  debt  securities  to be
     amortized, and gain/loss on paydowns of MBS to be accounted for as interest
     income.  Upon  adoption,  the fund  will  adjust  the cost of its MBS,  and
     corresponding unrealized gain/loss thereon, in the amount of the cumulative
     amortization  that  would have been  recognized  has  amortization  been in
     effect from  purchase date of each holding.  This  adjustment  will have no
     effect on the fund's net assets or result of operations.

     Redemption  Fees The fund assesses a 0.5% fee on redemptions of fund shares
     held less than 6 months.  Such fees are retained by the fund,  and have the
     primary effect of increasing paid-in-capital.

     Other Income and expenses  are  recorded on the accrual  basis.  Investment
     transactions are accounted for on the trade date. Realized gains and losses
     are reported on the identified  cost basis.  Distributions  to shareholders
     are recorded by the fund on the ex-dividend  date.  Income and capital gain
     distributions   are  determined  in  accordance  with  federal  income  tax
     regulations  and may differ from net  investment  income and realized gains
     determined in accordance with generally accepted accounting principles.


NOTE 2 - INVESTMENT TRANSACTIONS

     Purchases and sales of portfolio securities, other than short-term and U.S.
     government securities, aggregated $15,760,000 and $2,468,000, respectively,
     for the  period  ended  October  31,  2001.  Purchases  and  sales  of U.S.
     government securities aggregated $54,420,000 and $21,250,000, respectively,
     for the period ended October 31, 2001.


NOTE 3 - FEDERAL INCOME TAXES

     No provision for federal income taxes is required since the fund intends to
     qualify as a regulated investment company and distribute all of its taxable
     income.

     In order for the fund's capital accounts and  distributions to shareholders
     to  reflect  the tax  character  of  certain  transactions,  the  following
     reclassification  were made during the period ended  October 31, 2001.  The
     reclassifications  relate primarily to a tax practice that treats a portion
     of the proceeds from each redemption of capital shares as a distribution of
     taxable net investment  income and/or realized capital gain. The results of
     operations and net assets were not affected by the increases/(decreases) to
     these accounts.

     ---------------------------------------------------------------------------
     Undistributed net investment inco                           12,000

     Undistributed net realized gain                             (3,000)

     Paid-in-capital                                             (9,000)

     At  October  31,  2001,  the cost of  investments  for  federal  income tax
     purposes was substantially the same as for financial  reporting and totaled
     $47,269,000.  Net unrealized gain  aggregated  $1,995,000 at period end, of
     which  $2,043,000  related  to  appreciated   investments  and  $48,000  to
     depreciated investments.


NOTE 4 - RELATED PARTY TRANSACTIONS

     The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
     Associates),  a  wholly  owned  subsidiary  of T.  Rowe  Price  Group.  The
     investment management and administrative agreement between the fund and the
     manager  provides  for an  all-inclusive  annual fee, of which  $71,000 was
     payable at October 31, 2001. The fee,  computed daily and paid monthly,  is
     equal to 0.30% of the  fund's  average  daily  net  assets.  The  agreement
     provides  that  investment  management,   shareholder  servicing,  transfer
     agency,  accounting,  and custody  services are  provided to the fund,  and
     interest,  taxes, brokerage commissions,  directors' fees and expenses, and
     extraordinary expenses are paid directly by the fund.

     The fund may invest in the T. Rowe  Price  Reserve  Investment  Fund and T.
     Rowe Price Government  Reserve Investment Fund  (collectively,  the Reserve
     Funds),   open-end  management   investment   companies  managed  by  Price
     Associates.  The Reserve Funds are offered as cash management  options only
     to mutual funds and other accounts managed by Price  Associates  and/or its
     affiliates,  and are not available to the public.  The Reserve Funds pay no
     investment  management  fees.  Distributions  from the Reserve Funds to the
     fund for the  period  ended  October  31,  2001,  totaled  $44,000  and are
     reflected as interest income in the accompanying Statement of Operations.


T. Rowe Price U.S. Bond Index Fund
--------------------------------------------------------------------------------

Report of Independent Accountants
--------------------------------------------------------------------------------

To the Board of Directors and Shareholders of
T. Rowe Price U.S. Bond Index Fund, Inc.

     In our opinion,  the  accompanying  statement of net assets and the related
     statements  of  operations  and of changes in net assets and the  financial
     highlights present fairly, in all material respects, the financial position
     of T. Rowe Price U.S.  Bond Index Fund,  Inc.  (the  "Fund") at October 31,
     2001, and the results of its operations,  the changes in its net assets and
     the financial  highlights  for the fiscal period  presented,  in conformity
     with  accounting  principles  generally  accepted  in the United  States of
     America.  These financial  statements and financial  highlights  (hereafter
     referred to as "financial statements") are the responsibility of the Fund's
     management;  our responsibility is to express an opinion on these financial
     statements  based on our audit.  We conducted our audit of these  financial
     statements in accordance with auditing standards  generally accepted in the
     United States of America,  which require that we plan and perform the audit
     to obtain reasonable  assurance about whether the financial  statements are
     free of  material  misstatement.  An audit  includes  examining,  on a test
     basis,  evidence  supporting  the amounts and  disclosures in the financial
     statements,  assessing  the  accounting  principles  used  and  significant
     estimates  made  by  management,   and  evaluating  the  overall  financial
     statement   presentation.   We  believe  that  our  audit,  which  included
     confirmation of securities at October 31, 2001 by  correspondence  with the
     custodian and broker, provides a reasonable basis for our opinion.


     PricewaterhouseCoopers LLP
     Baltimore, Maryland
     November 19, 2001


T. Rowe Price U.S. Bond Index Fund
--------------------------------------------------------------------------------

Annual Meeting Results
--------------------------------------------------------------------------------

     The T. Rowe  Price U.S.  Bond Index Fund held an annual  meeting on October
     23, 2001, to elect an expanded slate of directors to increase the number of
     independent  directors  serving  the fund.  The  results of voting  were as
     follows (by number of shares):

     M. David Testa
     Affirmative:            3,503,013.327
     Withhold:                  13,803.933
     Total:                  3,516,817.260

     William T. Reynolds
     Affirmative:            3,503,013.327
     Withhold:                  13,803.933
     Total:                  3,516,817.260

     Calvin W. Burnett
     Affirmative:            3,503,013.327
     Withhold:                  13,803.933
     Total:                  3,516,817.260

     Anthony W. Deering
     Affirmative:            3,503,013.327
     Withhold:                  13,803.933
     Total:                  3,516,817.260

     Donald W. Dick, Jr.
     Affirmative:            3,501,290.327
     Withhold:                  15,526.933
     Total:                  3,516,817.260

     David K. Fagin
     Affirmative:            3,501,290.327
     Withhold:                  15,526.933
     Total:                  3,516,817.260

     F. Pierce Linaweaver
     Affirmative:            3,503,013.327
     Withhold:                  13,803.933
     Total:                  3,516,817.260
     Hanne M. Merriman

     Affirmative:            3,501,290.327
     Withhold:                  15,526.933
     Total:                  3,516,817.260

     John G. Schreiber
     Affirmative:            3,501,290.327
     Withhold:                  15,526.933
     Total:                  3,516,817.260

     Hubert D. Vos
     Affirmative:            3,503,013.327
     Withhold:                  13,803.933
     Total:                  3,516,817.260

     Paul M. Wythes
     Affirmative:            3,503,013.327
     Withhold:                  13,803.933
     Total:                  3,516,817.260

     James S. Riepe
     Affirmative:            3,501,290.327
     Withhold:                  15,526.933
     Total:                  3,516,817.260


T. Rowe Price Shareholder Services
--------------------------------------------------------------------------------

     Investment Services and Information

     KNOWLEDGEABLE SERVICE REPRESENTATIVES

          By Phone Shareholder service representatives are available from 7 a.m.
          to midnight ET Monday  through  Friday and from 8:30 a.m. to 5 p.m. ET
          on  weekends.   Call   1-800-225-5132   to  speak   directly   with  a
          representative who will be able to assist you with your accounts.

          In Person  Visit one of our investor  center  locations to meet with a
          representative who will be able to assist you with your accounts.  You
          can also  drop off  applications  or  obtain  prospectuses  and  other
          literature at these centers.

     AUTOMATED 24-HOUR SERVICES

          Tele*Access(registered   trademark)  Call   1-800-638-2587  to  obtain
          information  such as  account  balance,  date and  amount of your last
          transaction,   latest  dividend  payment,  fund  prices,  and  yields.
          Additionally,   you  have  the   ability  to   request   prospectuses,
          statements,  and  account  and tax forms;  to reorder  checks;  and to
          initiate  purchase,  redemption,  and exchange  orders for identically
          registered accounts.

          Internet.  T.  Rowe  Price  Web  site:   www.troweprice.com   All  the
          information and services available on Tele*Access are available on our
          Web site,  including  transactions in your fund and brokerage accounts
          (with preauthorized access).

     ACCOUNT SERVICES

          Checking  Write  checks for $500 or more on any money  market and most
          bond fund  accounts  (except the High  Yield,  U.S.  Bond  Index,  and
          Emerging Markets Bond Funds).

          Automatic Investing Build your account over time by investing directly
          from your bank  account or  paycheck  with  Automatic  Asset  Builder.
          Additionally,  Automatic  Exchange  enables  you to set up  systematic
          investments  from one fund account into another,  such as from a money
          fund into a stock fund. A $50 minimum makes it easy to get started.

          Automatic  Withdrawal  If you need money  from your fund  account on a
          regular basis,  you can establish  scheduled,  automatic  redemptions.
          Dividend and Capital  Gains  Payment  Options  Reinvest all or some of
          your  distributions,  or  take  them in  cash.  We  give  you  maximum
          flexibility and convenience.

     BROKERAGE  SERVICES*

          Investments Available You can trade stocks,  bonds, options,  precious
          metals, and other securities at a savings over full-service commission
          rates.  To Open an Account Call a shareholder  service  representative
          for more information.

     INVESTMENT INFORMATION

          Combined  Statement  A  comprehensive  overview  of your T. Rowe Price
          accounts  is  provided.  The  summary  page gives you  earnings by tax
          category,  provides total portfolio  value, and lists your investments
          by type. Detail pages itemize account transactions.

          Shareholder  Reports Portfolio  managers review the performance of the
          funds in plain language and discuss T. Rowe Price's economic  outlook.
          T. Rowe Price  Report This is a  quarterly  newsletter  with  relevant
          articles on market trends,  personal financial  planning,  and T. Rowe
          Price's economic perspective. Performance Update This quarterly report
          reviews  recent  market  develop-  ments  and  provides  comprehensive
          performance information for the T. Rowe Price fund family.

          Insights  These are  reports  on mutual  fund tax  issues,  investment
          strategies,  investment fundamentals,  and financial markets. Detailed
          Investment Guides Our Asset Mix Worksheet,  Diversifying  Overseas:  A
          Guide to  International  Investing,  Retirement  Readiness  Guide, and
          Retirement  Planning  Kit  can  help  you  determine  and  reach  your
          investment goals.

          *     T. Rowe Price Brokerage is a division of T. Rowe Price
                Investment Services, Inc., Member NASD/SIPC.



T. Rowe Price Mutual Funds
--------------------------------------------------------------------------------

STOCK FUNDS

Domestic

Blue Chip Growth
Capital Appreciation
Capital Opportunity
Developing Technologies
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Tax-Efficient Multi-Cap Growth
Total Equity Market Index
Value

BLENDED ASSET FUNDS

Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced

BOND FUNDS

Domestic Taxable

Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Spectrum Income
Summit GNMA
U.S. Bond Index
U.S. Treasury Intermediate
U.S. Treasury Long-Term

Domestic Tax-Free

California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
  Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Tax-Free Bond

MONEY MARKET FUNDS!

Taxable

Prime Reserve
Summit Cash Reserves
U.S. Treasury Money

Tax-Free

California Tax-Free Money
Maryland Tax-Free Money
New York Tax-Free Money

INTERNATIONAL/GLOBAL FUNDS

Stock

Emerging Europe & Mediterranean
Emerging Markets Stock
European Stock
Global Stock
Global Technology
International Discovery*
International Equity Index
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International

Bond

Emerging Markets Bond
International Bond

T. ROWE PRICE NO-LOAD VARIABLE ANNUITIES

Blue Chip Growth Portfolio
Equity Income Portfolio
Equity Index 500 Portfolio
Health Sciences Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio

Money Funds (cont.)
Summit Municipal
Money Market
Tax-Exempt Money


* Closed to new investors.
! Investments in the funds are not insured or guaranteed by the FDIC or any
  other government agency. Although the funds seek to preserve the value of
  your investment at $1.00 per share, it is possible to lose money by investing
  in the funds.
Please call for a prospectus, which contains complete information, including
risks, fees, and expenses. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity (Form V6021) and the T. Rowe Price
No-Load Immediate Variable Annuity (Form V6027) are issued by Security Benefit
Life Insurance Company. In New York, the T. Rowe Price No-Load Variable Annuity
is issued by First Security Benefit Life Insurance Company of New York, White
Plains, NY [FSB201 (11-96)]. These Variable Annuity contracts have limitations.
The T. Rowe Price No-Load Immediate Variable Annuity may not be available in
all states.
The T. Rowe Price No-Load Variable Annuity and the T. Rowe Price No-Load
Immediate Variable Annuity are distributed by T. Rowe Price Investment
Services, Inc., T. Rowe Price Insurance Agency, Inc., and T. Rowe Price
Insurance Agency of Texas, Inc. The underlying portfolios are managed by
T. Rowe Price (T. Rowe Price International for the International Stock
Portfolio). The Security Benefit Group of companies and the T. Rowe Price
companies are not affiliated.


T. Rowe Price Advisory Services and Retirement Resources
--------------------------------------------------------------------------------

     Advisory Services, Retirement Resources

          T. Rowe Price has developed  unique  advisory  services and retirement
          resources that can help you meet the most difficult personal financial
          challenges.  Our  broad  array of  retirement  plans is  suitable  for
          individuals, the self-employed,  small businesses,  corporations,  and
          nonprofit    organizations.    We    also    provide    recordkeeping,
          communications,   and   investment   management   services,   and  our
          educational  materials and self-help planning guides are recognized as
          among the industry's  best. For information or to request  literature,
          call   us   at   1-800-638-5660,    or   visit   our   Web   site   at
          www.troweprice.com.

     ADVISORY SERVICES*

          T. Rowe  Price(registered  trademark)  Retirement Income Manager helps
          retirees or those within two years of  retirement  determine  how much
          income  they  can  take in  retirement.  The  program  uses  extensive
          statistical analysis and the input of financial planning professionals
          to suggest an income plan that best meets your objectives.

          Investment  CheckupSM  offers a second opinion on your  portfolio.  We
          analyze your investments using proprietary  software and provide asset
          allocation suggestions based on your personal profile.

          T. Rowe Price  Rollover  Investment  Service  offers asset  allocation
          advice to those planning a major change in their qualified  retirement
          plans,  such as a 401(k)  rollover from a previous  employer or an IRA
          transfer.

          RETIREMENT INFORMATION

          Planning and Informational Guides

          Minimum Required Distributions Guide

          Retirement Planning Kit

          Retirement Readiness Guide

          Tax Considerations for Investors


          Insights Reports

          The Challenge of Preparing for Retirement

          Financial Planning After Retirement

          The Roth IRA: A Review

          *These are services of T. Rowe Price Advisory Services, Inc., a
          federally registered investment adviser. There are fees associated
          with these services.


T. Rowe Price Insights Reports
--------------------------------------------------------------------------------

     The Fundamentals of Investing

          Whether you are unsure how to get started or are saving for a specific
          goal, such as retirement or college, the T. Rowe Price Insights series
          can  help you  make  informed  investment  decisions.  These  reports,
          written in plain English about fundamental  investment  topics, can be
          useful at every stage of your investment  journey.  They cover a range
          of topics,  from the basic, such as getting started with mutual funds,
          to the more advanced, such as managing risk through diversification or
          buying individual  securities through a broker. To request one or more
          Insights,  call us at 1-800-638-5660.  T. Rowe Price Insights are also
          available   for   reading   or   downloading   on  the   Internet   at
          www.troweprice.com.


          INSIGHTS REPORTS

          General Information

          The ABCs of Giving
          Back to Basics: The ABCs of Investing
          The Challenge of  Preparing  for
          Retirement  Financial  Planning  After
                Retirement
          Getting  Started:  Investing  With Mutual
                Funds
          The Roth IRA: A Review
          Tax Information for Mutual Fund
                Investors

          Investment Strategies

          Conservative  Stock  Investing
          Dollar  Cost  Averaging
          Equity  Index Investing
          Growth Stock Investing
          Investing for Higher Yield
          Managing Risk Through Diversification
          The Power of Compounding
          Value Investing

          Types of Securities

          The Basics of International Stock
                Investing
          The Basics of Tax-Free Investing
          The Fundamentals of Fixed-Income
                Investing
          Global Bond Investing
          Investing in Common Stocks
          Investing in Emerging Growth Stocks
          Investing in Financial Services Stocks
          Investing in Health Care Stocks
          Investing in High-Yield Municipal
                Bonds
          Investing in Industry-Focused Stock
                Funds
          Investing in Money Market Securities
          Investing in Mortgage-Backed Securities
          Investing in Natural Resource Stocks
          Investing in Science and Technology
                Stocks
          Investing in Small-Company Stocks
          Understanding Derivatives
          Understanding High-Yield "Junk"
                Bonds

          Brokerage Insights

          Combining Individual Securities With
                Mutual Funds
          Getting Started: An Introduction to
                 Individual Securities
          What You Should Know About Bonds
          What You Should Know About Margin
                and Short-Selling
          What You Should Know About Options
          What You Should Know About Stocks


T. Rowe Price Brokerage
--------------------------------------------------------------------------------

     Brokerage Services

     T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services,
     Inc., Member NASD/SIPC.

     T. Rowe Price Brokerage provides  high-quality services and financial tools
     you can use to manage your  investments  effectively and  conveniently.  We
     also offer commission  savings over full-service  brokerages on a number of
     transactions.

          Internet and Automated  Services You can enter trades,  access quotes,
          and review  account  information 24 hours a day, seven days a week, by
          telephone or computer.  We offer a flat-rate  commission  of $19.95 on
          stock  trades  placed  through  our  online  Account  Access-Brokerage
          service.*

          Research Services To help you make informed investment  decisions,  we
          offer access to research.  You can research your investments using our
          Online Research & News Service, provided by Thomson Investors Network,
          which includes  company  profiles,  intraday and 12-month  interactive
          charting, and analysts' ratings and earnings estimates.

          Dividend  Reinvestment  Service This  service  helps keep more of your
          money working for you. Cash  dividends  from your eligible  securities
          will be  invested  automatically  in  additional  shares  of the  same
          company,  free of charge.  Most stocks  listed on national  securities
          exchanges or Nasdaq are eligible for this service.



         * $19.95 per trade for up to 1,000 shares plus an additional $.02 for
           each share over 1,000 shares. Visit our Web site for a complete
           commission schedule or call for rates on representative-assisted and
           other non-Internet trades.


        For fund and account information
        or to conduct transactions,
        24 hours, 7 days a week
        By touch-tone telephone
        Tele*Access(registered trademark)  1-800-638-2587
        By Account Access on the Internet
        www.troweprice.com/access

        For assistance with your existing
        fund account, call:
        Shareholder Service Center
        1-800-225-5132

        To open a brokerage account
        or obtain information, call:
        1-800-638-5660

        For the hearing impaired, call:
        1-800-367-0763

        Internet address:
        www.troweprice.com

        Plan Account Lines for retirement
        plan participants:
        The appropriate 800 number appears
        on your retirement account statement.

        T. Rowe Price Associates
        100 East Pratt Street
        Baltimore, Maryland  21202

        This report is authorized for distribution
        only to shareholders and to others who
        have received a copy of the prospectus
        appropriate to the fund or funds covered
        in this report.

        Investor Centers:
        For directions, call 1-800-225-5132
        or visit our Web site at www.troweprice.com/investorcenters

        Baltimore Area
        Downtown
        105 East Lombard Street

        Owings Mills
        Three Financial Center
        4515 Painters Mill Road

        Boston Area
        386 Washington Street
        Wellesley

        Chicago Area
        1900 Spring Road, Suite 104
        Oak Brook

        Colorado Springs
        2260 Briargate Parkway

        Los Angeles Area
        Warner Center
        21800 Oxnard Street, Suite 270
        Woodland Hills

        New Jersey/New York Area
        51 JFK Parkway, 1st Floor
        Short Hills, New Jersey

        San Francisco Area
        1990 North California Boulevard, Suite 100
        Walnut Creek

        Tampa
        4200 West Cypress Street
        10th Floor

        Washington, D.C., Area
        Downtown
        900 17th Street N.W.
        Farragut Square

        Tysons Corner
        1600 Tysons Boulevard
        Suite 150

T. Rowe Price Invest with Confidence (registered trademark)
T. Rowe Price Investment Services, Inc., Distributor.       F134-050D  10/31/01