Fund Profile

T. Rowe Price
New Income 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 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 seeks the highest level of income over time
   consistent with the preservation of capital.

2. What is the fund's investment program?

   The fund invests mainly in investment-grade debt securities,
   including but not limited to U.S. government and agency
   obligations, mortgage-backed securities, and corporate bonds.
   There are no maturity restrictions on securities the fund
   buys, but the fund's dollar-weighted average maturity is
   expected to be between four and 15 years.

3. What is the fund's risk/reward potential?

   Risk:  The major influence on share price is changing interest
   rates: when rates rise, bond prices fall, and vice versa.
   Credit quality risk, which is the chance that a bond will be
   downgraded by credit rating agencies or will go into default,
   is a second source of risk. The fund's price and yield will
   fluctuate, and you may lose money when you sell shares.

   Reward:  The fund's income level should generally be above
   that of a money market or short-term bond fund and below that
   of a long-term bond fund. The manager seeks to adjust the
   fund's average weighted maturity to increase total returns
   when rates fall and to minimize the negative effects of rising
   rates.

4. How can I tell if the fund is appropriate for me?

   The fund's goals should match your own. If you seek an
   attractive level of income and are comfortable accepting
   principal risk, the fund may be appropriate. You should be
   willing to ride out inevitable market downturns, which may
   last for extended periods.

   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               0.48%
                 
                 Other expenses               0.27%
                 __________________________________

                 Total fund expenses          0.75%

                       Sample Expenses Over Time

              1 year        3 years        5 years    10 years 
                                              
                $8            $24            $41         $94

This example shows expenses on a $1,000 investment, assuming a 5%
annual return and expense ratio 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 shows the fund's actual performance for each of
   the last 10 years ended December 31, 1996. This chart
   indicates the relative volatility of returns from one year to
   the next. The table next to the bar chart shows the average
   annual compound returns for various periods ending with the
   most recent calendar quarter. These average returns smooth out
   the actual year-to-year returns.

Chart 1 - Calendar Year Total Returns

For the most recent performance and yield information, call
1-800-225-5132.

These figures include changes in principal value, reinvested
dividends, and capital gain distributions. Total return
represents past performance. Investment return and principal
value will vary, and shares may be worth more or less at
redemption than at original purchase.

30-Day Annualized 
Compound Yield
As of 12/31/96 6.75%

                       Average Annual Compound 
                     Total Returns as of 12/31/96

                                   Fund     Lipper Average*
              ______________________________________________

              1 year               2.38%         2.49%

              5 years              6.39%         6.76%

              10 years             7.75%         8.09%

*Lipper Average of Corporate Bond Funds A-Rated

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 $93 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.

   Charles P. Smith has day-to-day responsibility for the fund
   and has managed investments for T. Rowe Price since 1975.

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 any portion of your account on any
   business day. Just write to us or call. 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 distributes income monthly and net capital gains, if
   any, at year-end. Income and any other short-term gains are
   taxable at ordinary income rates, and any long-term gains are
   taxable at the current capital gains rate. 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

PROF-NIF-TST  1/22/97
T. Rowe Price Investment Services, Inc., Distributor

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.