Fund Profile
T. Rowe Price
Prime Reserve Fund
Important
Information
About This Fund
As of 12/31/96
This profile contains key information about the fund. If you would
like more information before you invest, please consult the fund's
prospectus. For details about the fund's holdings or recent
investment strategies, please review the fund's most recent annual
or semi-annual report. The prospectus and reports may be obtained
at no cost by calling 1-800-638-5660.
FUND PROFILE
1. What is the fund's goal?
The fund's principal goals are preservation of capital,
liquidity, and, consistent with these, the highest possible
current income. The fund is managed to maintain a constant share
price of $1.00, but the share price is not guaranteed, nor is
the fund insured by the U.S. government.
2. What is the fund's investment program?
The fund invests in high-quality, U.S. dollar-denominated money
market securities. The fund's average maturity will not exceed
90 days; its yield will fluctuate with changes in short-term
interest rates.
3. What is the fund's risk/reward potential?
Risk: The fund may not be able to maintain its constant share
price of $1.00. The fund's yield will vary; it is not fixed for
a specific period like the yield on a bank certificate of
deposit. This should be an advantage when interest rates are
rising but not when rates are falling.
Reward: Consistent with the fund's investment goals and program,
the fund managers seek securities that offer a yield advantage.
The fund's managers try to adjust the fund's average weighted
maturity as interest rates change to quickly reflect rising
interest rates or to delay the impact of falling rates.
4. How can I tell if the fund is
appropriate for me?
The fund's goals should match your own. If you have some money
for which safety and accessibility are more important than total
return, the fund should be an appropriate investment. Over time,
money market securities have provided lower returns than bonds
or stocks.
The fund is appropriate for both regular and tax-deferred
accounts, such as IRAs and Keoghs.
5. What fees or expenses will I pay?
The fund is 100% no load. There are no fees or charges to buy or
sell fund shares, reinvest dividends, or exchange into other T.
Rowe Price funds. There are no 12b-1 marketing fees.
The fund's annual expenses as a percentage of average net assets
are shown below. You pay these costs indirectly; they are
deducted from the fund's total assets before the daily share
price is calculated and before distributions are made.
Annual fund expenses as a
percentage of average net assets
Management fee 0.38%
Other expenses 0.28%
___________________________________________
Total fund expenses 0.66%
Sample expenses over time
1 year 3 years 5 years 10 years
_________________________________________________________
$7 $21 $37 $82
This example shows expenses on a $1,000 investment, assuming a 5%
annual return and expense ratios as shown to the left. This is an
illustration only; actual expenses and returns will vary.
6. How has the fund performed in the past, and what is its recent
yield?
The bar chart below shows the fund's actual performance for each
of the last 10 years through December 31, 1996. It indicates the
relative volatility of returns from one year to the next. For
the most recent performance and yield information, call
1-800-225-5132.
The table below shows the average annual compound total returns
for various periods, ending with the most recent calendar
quarter, and compares these with the fund's Lipper peer group
average. These average returns smooth out the actual
year-to-year returns.
Chart 1 - Calendar Year Total Returns
Seven-Day Annualized
Compound Yield
As of 12/31/96 4.91%
Average Annual Compound
Total Returns as of 12/31/96
Fund Lipper Average*
______________________________________________________
1 year 4.90% 4.80%
5 years 4.01% 3.96%
10 years 5.57% 5.52%
*Lipper Money Market Funds Average
These figures include reinvested dividends. Total return represents
past performance, which cannot guarantee future results.
7. Who manages the fund?
The fund is managed by T. Rowe Price Associates. Founded in
1937, T. Rowe Price and its affiliates manage about $97 billion
for approximately four million individual and institutional
investor accounts. The company offers a comprehensive range of
stock, bond, and money market mutual funds directly to the
investing public.
Edward A. Wiese has day-to-day responsibility for the fund and
has managed investments for T. Rowe Price since 1985.
8. How can I purchase shares?
Complete the New Account Form and mail it to us with your check.
If you want to open an account by bank wire or by exchanging
from another T. Rowe Price fund, please call 1-800-225-5132.
The minimum initial investment is $2,500 for regular accounts;
$1,000 for retirement plans and gifts or transfers to minors;
and $50 for automatic asset builder accounts.
9. How can I sell shares or close my account?
You may redeem or sell some or all of your fund shares on any
business day by writing a check against your account or by
writing or calling us. We also offer easy exchanges among our
family of domestic and international funds.
Restrictions may apply in special circumstances, and some
redemption requests need a signature guarantee.
10. When will I receive distributions?
The fund declares dividends daily and distributes them monthly;
they are taxable as ordinary income. Distributions are
reinvested automatically in additional shares unless you choose
another option, such as receiving a check.
11. What services are available?
A wide range, including but not limited to:
o free checkwriting;
o easy exchanges;
o timely fund reports and investment information;
o retirement plans for individuals and large and small
businesses \(e.g., IRA, SEP, Keogh, 401(k), 403(b), etc.);
o automated information and transaction services by telephone
or personal computer;
o electronic transfers between your fund and bank accounts;
o automatic investing and automatic exchange; and
o discount brokerage.
To Open an Account
Investor Services
1-800-638-5660
1-410-547-2308
For Existing Accounts
Shareholder Services
1-800-225-5132
1-410-625-6500
For Yields and Prices
Tele*Access(registered trademark)
1-800-638-2587
24 hours, 7 days
For Information via the Internet
http://www.troweprice.com
T. Rowe Price OnLine
Call us at 1-800-541-3036 for more information on this complete
financial management service.
T. Rowe Price
100 East Pratt Street
Baltimore, MD 21202
Invest With Confidence
T. Rowe Price
T. Rowe Price Investment Services, Inc., Distributor
PROF-PRF-TST 1/22/97
CHART 1 - Calendar Year Total Returns: the chart shows the fund's
actual performance in each of the calendar years since its
inception or for the last decade, whichever is applicable. The
chart is updated on an annual basis. In addition to showing actual
performance for any particular year, it also gives the investor a
visual of the fund's volatility of returns.
