Fund Profile
T. Rowe Price
Prime Reserve Fund
Important
Information
About This Fund
As of 12/31/97
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 semiannual report. The prospectus and reports
may be obtained at no cost by calling 1-800-638-5660.
Invest With Confidence
T. Rowe Price
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 0.37%
Other expenses 0.27%
______________________________
Total fund expenses 0.64%
Sample expenses over time
1 year 3 years 5 years 10 years
________________________________________________________
$6 $20 $35 $80
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, 1997. 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.
Calendar Year Total Returns
PRF
'88 7.16
'89 8.3
'90 7.73
'91 5.67
'92 3.34
'93 2.6
'94 3.74
'95 5.49
'96 4.9
'97 5.1
Seven-Day Annualized
Compound Yield
As of 12/31/97 5.42%
Average Annual Compound
Total Returns as of 12/31/97
Fund Lipper Average*
1 year 5.10% 4.90%
5 years 4.36% 4.31%
10 years 5.45% 5.40%
*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 over $120 billion for
approximately five 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
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
F44-042 12/31/97
