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FUND PROFILE
April 1, 1999
T. Rowe Price Prime Reserve Fund--PLUS ClassTax-Exempt Money Fund--PLUS Class
Money market funds seeking preservation of capital and liquidity, as well as
income. The PLUS class of shares offers unlimited no-minimum checkwriting and a
VISA/(R)/ Gold ATM & Check Card.
This profile summarizes key information about each fund that is included in
each fund's prospectus. The fund's prospectus includes additional information
about the fund, including a more detailed description of the risks associated
with investing in the fund that you may want to consider before you invest. You
may obtain the prospectus and other information about each fund at no cost by
calling 1-877-472-0994 or by visiting our Web site at www.troweprice.com.
A Word About the Funds' Names and Structures. The Prime Reserve Fund - PLUS
Class (Prime Reserve PLUS) and the Tax-Exempt Money Fund - PLUS Class
(Tax-Exempt Money PLUS) are share classes of the T. Rowe Price Prime Reserve
Fund and the T. Rowe Price Tax-Exempt Money Fund, respectively. The PLUS
classes are not separate mutual funds; they have the same portfolio as their
related funds but carry a different set of services (such as unlimited,
no-minimum checkwriting and a VISA Gold ATM & Check Card) and different
expenses, as discussed later in this profile.
1. What is each fund's objective?
Each fund's goals are preservation of capital, liquidity, and, consistent
with these, the highest possible current income. Tax-Exempt Money PLUS
additionally seeks to provide income exempt from federal income taxes.
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2. What is each fund's principal investment strategy?
Prime Reserve is managed to provide a stable share price of $1.00. The fund
invests in high-quality, U.S. dollar-denominated money market securities.
Tax-Exempt Money is also managed to provide a stable share price of $1.00,
and to provide income that is exempt from federal income taxes. The fund
invests in high-quality, municipal money market securities.
For both funds, average weighted maturity will not exceed 90 days, and yield
will fluctuate with changes in short-term interest rates. In selecting
securities, fund managers may examine the relationships among yields on
various types and maturities of money market securities in the context of
their outlook for interest rates. If rates are expected to fall, longer
maturities may be purchased, which typically have higher yields than shorter
maturities, to try to preserve the fund's income level. Conversely, shorter
maturities may be favored if rates are expected to rise.
Further information about each fund's investments, including a review of
market conditions and fund strategies and their impact on performance, is
available in the annual and semiannual shareholder reports. To obtain free
copies of any of these documents, call 1-887-472-0094.
3. What are the main risks of investing in the funds?
Since they are managed to maintain a $1.00 share price, money market funds
should have little risk of principal loss. However, there is no assurance the
funds will avoid principal losses in the rare event that particular holdings
default or interest rates rise sharply in an unusually short period. Because
they are exempt from federal income tax, municipal securities held by
Tax-Exempt Money are also subject to the risk that a significant decline in
tax rates, a restructuring of the tax system, or even serious discussion of
these topics in Congress, could cause their prices to fall. There is also
geographic risk since adverse developments in a particular state could result
in price declines.
The funds' yields will vary; they are 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. An investment in
the funds is not insured or guaranteed by the Federal Deposit Insurance
Corporation 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. Additionally, there is no guarantee
that the funds' returns will equal or exceed the rate of inflation.
As with any mutual fund, there can be no guarantee the funds will achieve
their objectives.
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4. How can I tell which fund is most appropriate for me?
Prime Reserve PLUS is a new class of shares of the Prime Reserve Fund, and
Tax-Exempt Money PLUS is a new class of shares of the Tax-Exempt Money Fund.
Like their related funds, these classes of shares are appropriate if you have
some money for which safety and accessibility are more important than total
return. Over time, money market securities have shown greater stability and
lower returns than bonds or stocks. Additionally, the higher your tax
bracket, the more likely that tax-exempt securities are appropriate.
Both Prime Reserve PLUS and Tax-Exempt Money PLUS offer services that include
unlimited, no-minimum checkwriting and a VISA Gold ATM & Check Card. The cost
of these services will raise the expense ratio of the PLUS classes above that
of a typical money fund that does not offer these expanded features.
5. How has each fund performed in the past?
Both Prime Reserve PLUS and Tax-Exempt Money PLUS began operations on October
31, 1998, and therefore have a limited performance history. As a point of
comparison, however, the following bar charts and tables show 10 calendar
years of returns for the Prime Reserve Fund and the Tax-Exempt Money Fund,
which have the same management programs and investment portfolios as Prime
Reserve PLUS and Tax-Exempt Money PLUS, respectively. (Note that prior to the
inception of the PLUS classes, neither related fund had any other share
classes.)
Because the PLUS classes have higher expenses than the Prime Reserve and
Tax-Exempt Money Funds, their performance, had they existed over this period,
would have been lower than what is shown. Nevertheless, the bar charts and
tables indicate risk by showing how much returns can differ over time. Of
course, past performance is no guarantee of future returns.
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<TABLE>
INSERT PRF BAR
CHART HERE
<CAPTION>
Calendar Year Total Returns
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<S> <C>
1989 8.90%
1990 7.73
1991 5.67
1992 3.34
1993 2.60
1994 3.74
1995 5.48
1996 4.90
1997 5.10
1998 5.13
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</TABLE>
<TABLE>
INSERT TEM BAR
CHART HERE
<CAPTION>
Calendar Year Total Returns
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<S> <C>
1989 5.93%
1990 5.38
1991 3.89
1992 2.53
1993 2.01
1994 2.46
1995 3.40
1996 3.05
1997 3.24
1998 3.08
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The related funds have also experienced short-term performance swings. The
Prime Reserve Fund's best calendar quarter return during the years depicted
in the chart was 2.30% in the second quarter of 1989, and the worst was 0.62%
in the second quarter of 1993. The Tax-Exempt Money Fund's best calendar
quarter return was 1.58% in the second quarter of 1989, and the worst was
0.45% in the first quarter of 1993.
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<TABLE>
Average Annual Total Returns
<CAPTION>
Periods ended June 30, 1999
1 year 5 years 10 years
<S> <C> <C> <C> <S>
Prime Reserve Fund 4.76% 5.01% 5.00%
Lipper Money Market Funds Average 4.51 4.90 4.98
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Tax-Exempt Money Fund 2.83 3.10 3.31
Lipper Tax-Exempt Money Market
Funds Average 2.68 3.00 2.94
Lipper Tax-Exempt Money Market 2.81 3.12 3.41
Funds Index
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These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
6. What fees or expenses will I pay?
The funds are 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 fees.
The PLUS classes charge you for use of your VISA Gold ATM & Check Card. You
will be charged $1 for each automated teller machine (ATM) withdrawal using
the card; this fee is waived for the first two such transactions in each
month. This fee does not include any third-party fees charged at the ATM
machine.
The numbers in the next table provide an estimate of how much it will cost to
operate the PLUS classes for a year.
<TABLE>
Fees and Expenses of the Funds
<CAPTION>
Annual fund operating expenses
(expenses that are deducted from fund assets)
Total annual
Management Other fund operating Fee waiver Net
fee expenses expenses reimbursement expenses
<S> <C> <C> <C> <C> <C> <S>
Prime Reserve PLUS 0.37% 0.64% 1.01%/a/ 0.01% 1.00%
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Tax-Exempt Money PLUS 0.42 0.72 1.14/a/ 0.14 1.00
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/a/
To limit the fund's expenses during its initial period of operations, T. Rowe
Price agreed to bear any expenses through April 30, 1999, to the extent such
expenses would cause the ratio of expenses to average net assets to exceed
1.00%. Effective May 1, 1999, T. Rowe Price agreed to extend this expense
limitation for a period of one year through April 30, 2000. Fees waived or
expenses paid or assumed under these agreements are subject to reimbursement
to T. Rowe Price by the fund whenever the fund's expense ratio is below
1.00%; however, no reimbursement will be made after April 30, 2000 (for the
first agreement), or April 30, 2002 (for the second agreement), or if it
would result in the expense ratio exceeding 1.00%. Any amounts reimbursed
will have the effect of increasing fees otherwise paid by the fund.
Example. The following table gives you a rough idea of how expense ratios
may translate into dollars and helps you to compare the cost of investing in
these
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funds with that of other funds. Although your actual costs may be higher or
lower, the table shows how much you would pay if operating expenses remain
the same, the expense limitations currently in place are not renewed, you
invest $10,000, you earn a 5% annual return, and you hold the investment for
the following periods:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
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<S> <C> <C> <C> <C> <C>
Prime Reserve PLUS $102 $320 $556 $1,235
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Tax-Exempt Money PLUS 102 354 601 1,367
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7. Who manages the funds?
Each fund is managed by T. Rowe Price Associates, Inc. Founded in 1937, T.
Rowe Price and its affiliates manage investments for individual and
institutional accounts. The company offers a comprehensive array of stock,
bond, and money market funds directly to the investing public.
Edward A. Wiese manages Prime Reserve day-to-day and has been chairman of the
fund's Investment Advisory Committee since its inception. He joined T. Rowe
Price in 1984 and has been managing investments since 1985.
Patrice Berchtenbreiter Ely manages Tax-Exempt Money day-to-day and has been
chairman of the fund's Investment Advisory Committee since its inception. She
joined T. Rowe Price in 1972 and has been managing investments since 1987.
8. How can I purchase shares?
Fill out and return a New Account Form in the postpaid envelope, along with
your check. The minimum initial purchase is $2,500. There is no subsequent
purchase minimum. You can also open an account by bank wire or by
transferring assets from another financial institution.
9. How can I sell shares?
You may redeem or sell any portion of your account on any business day.
Simply write to us or call. You can also access your account at any time via
our automated voice response unit or our Web site. We offer exchange among
our entire family of domestic and international funds. Restrictions may apply
in special circumstances, and some redemption requests need a signature
guarantee. A $5 fee is charged for wire redemptions under $5,000.
10. When will I receive income and capital gain distributions?
Each fund distributes income monthly; normally there are no capital gain
distributions for money market funds. For Prime Reserve PLUS, income
dividends are taxable at ordinary income rates. For Tax-Exempt Money PLUS,
income dividends are ordinarily exempt from federal taxes. For both funds,
any capital gain distributions are taxable. Distributions are reinvested
automatically in additional shares unless you choose another option, such as
receiving a check.
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11. What services are available?
Prime Reserve PLUS and Tax-Exempt Money PLUS offer features not normally
available from other mutual funds. Subject to T. Rowe Price approval, which
may include a credit review, you may access your account as follows:
Checkwriting You can write an unlimited number of checks against your account
to meet personal expenses. There is no minimum amount requirement for the
checks you write.
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VISA Gold ATM & Check Card You may use your ATM & Check Card to purchase
merchandise or services at participating establishments or to obtain cash
advances from any participating bank. You may also obtain cash using your
card and personal identification number (PIN) from ATMs displaying the VISA
or Plus System/(R)/ name and logo. Use of your card results in an immediate
reduction of your available balance.
