SemiAnnual Report
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FUNDS.
U.S. Treasury Funds
November 30, 1994
USC
Fellow Shareholders
Over the past year, the Federal Reserve changed course from an easy monetary
policy to a progressive tightening as evidence mounted that the economic
expansion had gained momentum. Spurred by the lowest interest rates in a
generation, the economy has been expanding at roughly a 4% real rate since the
middle of last year. The civilian unemployment rate has dropped steadily and
is now well under 6%, and capacity utilization is near 85%. Concerned about
the inflationary impact of tight labor markets and capacity constraints, the
Fed raised the federal funds rate incrementally from 3% last year to 5.5% as
of November 30. The Fed's goal is to slow the economy's growth to its
long-term trend rate of about 2.5% and to deter inflation without raising
unemployment.
Interest rates have been climbing for more than a year in response to
the credit demands generated by a stronger economy. Money market rates began
to rise in February of this year when the Fed first lifted its objective for
the federal funds rate. Interest rates across the maturity spectrum are now
almost two to over three percentage points higher than a year ago, with the
largest increases in the two- to three-year range. In the last three months,
intermediate-term yields rose more than one percentage point,
Chart 1 - Interest Rate Levels
prompted by the Fed's mid-November increase in the funds rate and a stream of
robust economic data that fueled inflation fears.
Money Fund
Your Fund's profile has changed little since our report three months ago.
Reflecting our expectation that short-term interest rates would rise further,
we maintained a relatively short weighted average maturity (WAM) of 47 days. A
short WAM allows your Fund to take advantage of higher interest rates by
reinvesting proceeds from maturing instruments more quickly.
Reflecting the dramatic increase in money market rates, your Fund's
yield rose from 3.87% on August 31, 1994, to 4.72% on November 30, 1994.
Performance generally tracked our peer group average for both the three- and
six-month periods, as shown in the table below.
Performance Comparison
Periods Ended 11/30/94
3 Months 6 Months
__________________________
U.S. Treasury Money Fund 1.05% 1.95%
Donoghue's Average of All
U.S. Treasury Money Funds* 1.07 2.00
*A weighted average of 100% U.S. Treasury Funds and Treasury and Repo Funds.
Intermediate Fund
The Intermediate Fund's maturity posture changed little during the quarter.
Your Fund's duration, a measure of sensitivity to interest rate changes, also
remained the same.
During the first three months of our semi-annual reporting period, from
May to August, we had increased duration from 2.8 to 3.1 years, reflecting our
view then that short-intermediate yields were less likely to experience the
dramatic increases seen during the first six months of 1994. The interest rate
chart on page 1 shows that intermediate- and long-term rates, although
increasing over the past three months, indeed did not rise as much as earlier
in the year.
As a result of our strategy, which has increased dividend yield from
5.81% to 6.17% over the past six months, your Fund was more successful than
those in our Lipper category in negotiating the difficult bond market terrain.
The rising rate environment, however, continued to hold back the performance
of intermediate-term funds in general, as shown below. The Fund's income
offset declining bond prices for the six months, but not for the quarter.
Performance Comparison
Periods Ended 11/30/94
3 Months 6 Months
__________________________
U.S. Treasury
Intermediate Fund -1.44% 0.03%
Lipper Average of Intermediate
U.S. Treasury Funds -1.51 -0.21
Credit quality in the Fund remains high, as dictated by our investment
guidelines. The majority of Fund assets are invested in U.S. Treasuries, but
we also maintained our maximum allowable exposure (15%) to GNMA securities.
These high-quality, U.S. Government-backed mortgage issues provide more income
than Treasuries and boosted the Fund's total return.
Long-Term Fund
Your Fund's weighted average maturity (WAM) at quarter-end was modestly longer
than three months ago, but it remained near the middle of its 15- to 20-year
maturity range. By extending the Fund's WAM, we were able to pick up
additional yield and position the Fund to benefit if long-term interest rates
level off.
As in the Intermediate-Term Fund, we took advantage of the higher income
of GNMA securities. Consequently, our exposure to mortgages was maintained
near the 15% maximum allowed under investment guidelines. Homeowners are less
likely to refinance or prepay their mortgages when interest rates rise. Thus,
with less prepayment risk, GNMA securities should outperform Treasuries and
also maximize income in the Fund. We kept mortgage-backed holdings well
diversified, because the prices of some iso-lated securities may fluctuate in
response to uncertainties concerning the timing of cash flows to investors.
Rising rates over the past six months continued to dampen the
performance of long-term bond funds more than their shorter-term brethren.
Your Fund's income could not offset price declines. As shown in chart below,
returns slightly lagged those of the Lipper peer group average for the three
and six months ended November 30.
Performance Comparison
Periods Ended 11/30/94
3 Months 6 Months
__________________________
U.S. Treasury
Long-Term Fund -2.36% -1.24%
Lipper Average of General
U.S. Treasury Funds -2.22 -1.14
Outlook
The Federal Reserve will likely continue to raise its objective for the
federal funds rate until it sees that economic growth is slowing to its
historical trend. So far the main impact of higher interest rates has fallen
on residential and business construction activity, while the rest of the
economy has not been materially affected. In fact, real GDP growth in the
third quarter was revised upward from 3.4% to 3.9%.
Money market rates should climb in step with a higher funds rate, but we
expect bond yields to drift only slightly higher in the near term. Bond yields
have already risen nearly to the levels of the late 1980s-when the economy was
last at full employment-and may soon plateau. We are cautiously optimistic
that, with attractive income levels and less principal volatility in coming
months, bonds may provide better results in 1995.
Respectfully submitted,
George J. Collins
President
December 19, 1994
Financial Summary
Net Asset Value Dividend Per Share Dividend Yield*
Per Share 3 Months Ended 3 Months Ended
________________ ________________ ________________
8/31/94 11/30/94 8/31/94 11/30/94 8/31/94 11/30/94
U.S. Treasury
Money Fund $ 1.00 $ 1.00 $0.009 $0.010 3.87% 4.72%
U.S. Treasury
Intermediate Fund 5.11 4.96 0.08 0.07 5.89 6.17
U.S. Treasury
Long-Term Fund 9.75 9.35 0.17 0.17 7.03 7.27
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the average daily net asset values per share for the same
period. Money Fund yield is a seven-day compound.
Quality, Duration, and Maturity
Weighted Weighted
Weighted Average Average
Average Effective Maturity
Quality* Duration (years) (years)
_________________ _____________________ ________________
8/31/94 11/30/94 8/31/94 11/30/94 8/31/94 11/30/94
U.S. Treasury
Money Fund 1.0 1.0 - - 46** 47**
U.S. Treasury
Intermediate
Fund 1.0 1.0 3.1 3.1 3.8 3.9
U.S. Treasury
Long-Term Fund 1.0 1.0 7.9 7.7 16.8 17.3
* On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
** Maturity is in days.
Statement of Net Assets (Amounts in thousands)
T. Rowe Price U.S. Treasury Funds / November 30, 1994 (Unaudited)
Money Fund
Face Amount Value
__________ __________
U.S. Government Obligations - 107.3%
U.S. Treasury Bills, 4.72%, 12/1/94. . . . . . . $ 50,000 $ 49,994
4.55 - 5.175%, 12/22/94. . . . . . . . . . . . 226,081 224,452
5.03 - 5.20%, 1/26/95. . . . . . . . . . . . . 39,537 39,116
5.26 - 5.32%, 2/2/95 . . . . . . . . . . . . . 11,316 11,191
5.25 - 5.39%, 2/9/95 . . . . . . . . . . . . . 75,000 74,110
5.275%, 2/16/95. . . . . . . . . . . . . . . . 25,000 24,681
5.48%, 2/23/95 . . . . . . . . . . . . . . . . 25,000 24,669
5.53%, 3/2/95. . . . . . . . . . . . . . . . . 50,000 49,272
U.S. Treasury Notes, 4.625%, 12/31/94. . . . . . 105,000 104,919
5.50 - 11.25%, 2/15/95 . . . . . . . . . . . . 85,000 85,255
3.875%, 2/28/95. . . . . . . . . . . . . . . . 25,000 24,879
Total Investments in Securities - 107.3%
(Cost - $712,786) . . . . . . . . . . . . . . . 712,538
T. Rowe Price U.S. Treasury Funds / Statement of Net Assets
Money Fund
Payable for Investments
Purchased - (7.4)%. . . . . . . . . . . . . $ (49,301)
Other Assets Less Liabilities - 0.1% . . . . 741
__________
Net Assets Consisting of:
Accumulated net investment income
- net of distributions. . . . . . . . . . . $ 81
Accumulated realized gains/losses
- net of distributions. . . . . . . . . . . 3
Net unrealized loss. . . . . . . . . . . . . (248)
Paid-in-capital applicable to
664,219,862 shares of $0.01 par value
capital stock outstanding;
1,000,000,000 shares of the Corporation
authorized . . . . . . . . . . . . . . . . . 664,142
__________
Net Assets - 100.0%. . . . . . . . . . . . . $ 663,978
__________
__________
Net Asset Value Per Share. . . . . . . . . . $1.00
_____
_____
The accompanying notes are an integral part of these financial statements.
Intermediate Fund
Face Amount Value
__________ __________
U.S. GOVERNMENT OBLIGATIONS - 86.0%
U.S. Treasury Bills,
5.065%, 12/22/94 . . . . . . . . . . . . . . . $ 3,300 $ 3,285
U.S. Treasury Notes,
5.125%, 3/31/98. . . . . . . . . . . . . . . . 11,100 10,267
5.375%, 5/31/98. . . . . . . . . . . . . . . . 2,000 1,858
5.50%, 7/31/97 - 4/15/00 . . . . . . . . . . . 5,395 5,026
5.625%, 8/31/97 - 1/31/98. . . . . . . . . . . 8,315 7,880
6.00%, 11/30 - 12/31/97. . . . . . . . . . . . 7,925 7,573
6.25%, 1/31/97 . . . . . . . . . . . . . . . . 9,775 9,541
6.375%, 6/30/97 - 1/15/00. . . . . . . . . . . 37,665 35,853
6.75%, 5/31/97 . . . . . . . . . . . . . . . . 5,300 5,203
6.875%, 3/31/97 - 8/31/99. . . . . . . . . . . 19,210 18,785
7.125%, 10/15/98 - 9/30/99 . . . . . . . . . . 10,920 10,698
7.50%, 10/31/99. . . . . . . . . . . . . . . . 500 494
7.875%, 8/15/01. . . . . . . . . . . . . . . . 7,850 7,870
8.25%, 7/15/98 . . . . . . . . . . . . . . . . 12,500 12,695
8.50%, 7/15/97 - 11/15/00. . . . . . . . . . . 2,100 2,147
8.75%, 10/15/97. . . . . . . . . . . . . . . . 2,716 2,792
_____________________________________________________________________________
Total U.S. Government Obligations
(Cost - $147,438) 141,967
Face Amount Value
__________ __________
U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES - 14.5%
Government National Mortgage Assn.,
I, 6.50%, 8/15 - 10/15/02. . . . . . . . . . . . $ 642 $ 586
7.00%, 7/15 - 9/15/16. . . . . . . . . . . . . 2,487 2,213
8.00%, 4/15 - 7/15/17. . . . . . . . . . . . . 1,961 1,920
8.50%, 8/15/04 - 4/15/23 . . . . . . . . . . . 2,460 2,460
9.50%, 2/1/13. . . . . . . . . . . . . . . . . 2,995 3,123
10.00%, 2/1/13 . . . . . . . . . . . . . . . . 333 356
10.50%, 2/15 - 11/15/14. . . . . . . . . . . . 508 550
11.00%, 12/15/09 - 12/15/19. . . . . . . . . . 2,613 2,879
11.50%, 3/15/10 - 11/15/18 . . . . . . . . . . 4,475 4,984
12.50%, 6/15/10 - 3/15/15. . . . . . . . . . . 393 448
II, 9.00%, 10/20/16. . . . . . . . . . . . . . . 17 17
10.50%, 12/20/15 - 2/20/16 . . . . . . . . . . 733 778
11.00%, 9/20/99. . . . . . . . . . . . . . . . 21 22
Midget, I, 9.00%, 9/15/01 - 2/15/06. . . . . . . 1,198 1,229
9.50%, 1/15/98 - 12/15/05. . . . . . . . . . . 1,169 1,220
10.00%, 11/15/00 - 9/15/05 . . . . . . . . . . 413 434
10.50%, 11/15/97 - 9/15/04 . . . . . . . . . . 124 132
11.00%, 8/15/00. . . . . . . . . . . . . . . . 70 76
11.50%, 4/15/98 - 7/15/00. . . . . . . . . . . 338 366
II, 11.50%, 12/20/98 - 10/20/00. . . . . . . . . 56 60
_____________________________________________________________________________
Total U.S. Government Mortgage-Backed
Securities (Cost - $24,289) 23,853
Total Investments in Securities
- 100.5% (Cost - $171,727) . . . . . . . . . . 165,820
Other Assets Less Liabilities
- (0.5)% . . . . . . . . . . . . . . . . . . . (828)
__________
Net Assets Consisting of:
Accumulated net investment income -
net of distributions. . . . . . . . . . . . . . 248
Accumulated realized gains/losses -
net of distributions. . . . . . . . . . . . . . (1,412)
Net unrealized loss. . . . . . . . . . . . . . . (5,907)
Paid-in-capital applicable to
33,282,442 shares of $0.01 par value
capital stock outstanding;
1,000,000,000 shares of the Corporation
authorized. . . . . . . . . . . . . . . . . . . 172,063
__________
Net Assets - 100.0%. . . . . . . . . . . . . . . $ 164,992
__________
__________
Net Asset Value Per Share. . . . . . . . . . . . $4.96
_____
_____
The accompanying notes are an integral part of these financial statements.
T. Rowe Price U.S. Treasury Funds / Statement of Net Assets
Long-Term Fund
Face Amount Value
__________ __________
U.S. GOVERNMENT OBLIGATIONS - 88.6%
U.S. Treasury Bonds, 6.25%, 8/15/23. . . . . . . $ 2,000 $ 1,601
7.125%, 2/15/23. . . . . . . . . . . . . . . . 13,000 11,663
10.00%, 5/15/10. . . . . . . . . . . . . . . . 5,000 5,675
10.375%, 11/15/09. . . . . . . . . . . . . . . 5,000 5,784
11.25%, 2/15/15. . . . . . . . . . . . . . . . 5,000 6,548
11.75%, 11/15/14 . . . . . . . . . . . . . . . 4,000 5,253
12.00%, 8/15/13. . . . . . . . . . . . . . . . 6,000 7,912
U.S. Treasury Notes, 4.625%, 8/15/95 . . . . . . 4,385 4,324
6.75%, 6/30/99 . . . . . . . . . . . . . . . . 1,000 960
_____________________________________________________________________________
Total U.S. Government Obligations
(Cost - $50,889) 49,720
U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES - 14.4%
U.S. Government Guaranteed
Obligations - 13.7%
Government National Mortgage Assn., I,
8.00%, 10/15/16 - 3/15/17. . . . . . . . . . . 367 359
8.50%, 3/15/17 . . . . . . . . . . . . . . . . 875 877
9.00%, 7/15/16 - 5/15/21 . . . . . . . . . . . 1,526 1,550
9.50% 8/15/12 - 2/1/13 . . . . . . . . . . . . 840 876
10.00%, 2/1/13 . . . . . . . . . . . . . . . . 703 751
10.50%, 1/15/98 - 7/15/14. . . . . . . . . . . 659 713
11.00%, 12/15/09 - 12/15/15. . . . . . . . . . 389 429
11.50%, 10/15/10 - 8/15/15 . . . . . . . . . . 381 424
II, 11.50%, 1/20/14 - 6/20/15. . . . . . . . . . 125 136
Graduated Payment Mortgage, I, 9.25%,
12/15/16 . . . . . . . . . . . . . . . . . . . 648 645
9.50%, 9/15 - 10/15/09 . . . . . . . . . . . . 369 377
10.25%, 1/15 - 3/15/18 . . . . . . . . . . . . 319 334
11.00%, 8/15/10 - 9/15/13. . . . . . . . . . . 95 104
11.25%, 11/15/15 . . . . . . . . . . . . . . . 24 26
11.50%, 2/15 - 6/15/13 . . . . . . . . . . . . 63 69
7,670
Stripped Mortgage Securities - 0.7%
Government National Mortgage Assn.,
Interest Only, 8.00%, 6/16/23**. . . . . . . . 1,949 419
_____________________________________________________________________________
Total U.S. Government Mortgage-Backed
Securities (Cost - $8,129) 8,089
Total Investments in Securities - 103.0%
(Cost - $59,018) . . . . . . . . . . . . . . . $ 57,809
Other Assets Less Liabilities
- (3.0)% . . . . . . . . . . . . . . . . . . . (1,704)
_________
Net Assets Consisting of:
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . $ 10
Accumulated realized gains/losses -
net of distributions . . . . . . . . . . . . . (2,278)
Net unrealized loss. . . . . . . . . . . . . . . (1,209)
Paid-in-capital applicable to
6,000,133 shares of
$0.01 par value capital
stock outstanding; 1,000,000,000 shares
of the Corporation authorized. . . . . . . . . 59,582
__________
Net Assets - 100.0%. . . . . . . . . . . . . . . $ 56,105
_________
_________
Net Asset Value Per Share. . . . . . . . . . . . $9.35
_____
_____
** For Interest Only securities, face amount represents national principal,
on which the Fund receives interest.
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price U.S. Treasury Funds / Six Months Ended November 30, 1994
(Unaudited)
Amounts in Thousands
_____________________________________
Money Intermediate Long-Term
Fund Fund Fund
_________ _________ _________
INVESTMENT INCOME
Interest income. . . . . . . . . . . . $ 14,745 $ 5,903 $2,124
________ ________ ________
Expenses
Investment management fees . . . . . 1,143 347 59
Shareholder servicing fees
& expenses. . . . . . . . . . . . 614 145 58
Custodian and accounting fees
& expenses. . . . . . . . . . . . 62 68 49
Registration fees & expenses . . . . 21 23 25
Prospectus & shareholder
reports . . . . . . . . . . . . . 19 8 5
Proxy & annual meeting
expenses. . . . . . . . . . . . . 15 5 3
Legal & auditing fees. . . . . . . . 9 6 6
Directors' fees & expenses . . . . . 8 4 3
Miscellaneous. . . . . . . . . . . . 7 4 6
_______ _________ ________
Total expenses . . . . . . . . . . . . 1,898 610 214
________ ________ ________
Net investment income. . . . . . . . . 12,847 5,293 1,910
________ ________ ________
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) . . . . . . . 3 (1,047) (1,715)
Change in net unrealized
gain or loss . . . . . . . . . . . . (39) (4,310) (911)
. . . . . . . . . . . . . . . . . . . ________ ________ ________
Net loss . . . . . . . . . . . . . . . (36) (5,357) (2,626)
________ ________ ________
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS. . . . . . . . . . . $ 12,811 $ (64) $ (716)
________ ________ ________
________ ________ ________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price U.S. Treasury Money Fund (Unaudited)
Amounts in Thousands
_________________________________________
Six Months Three Months
Ended Ended Year Ended
Nov. 30, 1994 May 31, 1994# Feb. 28, 1994
_____________ _____________ ____________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income. . . . . . $ 12,847 $ 4,754 $ 14,861
Net realized gain. . . . . . . . 3 2 24
Change in net unrealized
gain or loss . . . . . . . . . (39) 175 (532)
__________ __________ __________
Increase in net assets from
operations . . . . . . . . . . . 12,811 4,931 14,353
__________ __________ __________
Distributions to shareholders
Net investment income. . . . . . (12,847) (4,754) (14,861)
__________ __________ __________
Capital share transactions
($1.00 per share)
Sold. . . . . . . . . . . . . . 439,401 283,665 789,286
Distributions reinvested. . . . 11,740 4,306 13,619
Redeemed. . . . . . . . . . . . (441,964) (246,894) (794,967)
__________ __________ __________
Increase in net assets
from capital share
transactions. . . . . . . . . 9,177 41,077 7,938
__________ __________ __________
Total increase . . . . . . . . . . 9,141 41,254 7,430
NET ASSETS
Beginning of period. . . . . . . 654,837 613,583 606,153
__________ __________ __________
End of period. . . . . . . . . . $ 663,978 $654,837 $ 613,583
__________ __________ __________
__________ __________ __________
# The Fund's fiscal year-end was changed to May 31.
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price U.S. Treasury Intermediate Fund (Unaudited)
Amounts in Thousands
_________________________________________
Six Months Three Months
Ended Ended Year Ended
Nov. 30, 1994 May 31, 1994# Feb. 28, 1994
_____________ _____________ ____________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income. . . . . . $ 5,293 $ 2,543 $ 9,225
Net realized gain (loss) . . . . (1,047) 56 579
Change in net unrealized
gain or loss. . . . . . . . . (4,310) (6,123) (3,700)
________ ________ ________
Increase (decrease) in
net assets from
operations . . . . . . . . . . (64) (3,524) 6,104
________ ________ ________
Distributions to shareholders
Net investment income. . . . . . (5,293) (2,500) (9,030)
Net realized gain. . . . . . . . - (701) (495)
________ ________ ________
Decrease in net assets
from distributions
to shareholders. . . . . . . . (5,293) (3,201) (9,525)
________ ________ ________
Capital share transactions1
Sold . . . . . . . . . . . . . . . 26,188 30,910 81,914
Distributions reinvested . . . . 4,395 2,667 7,837
Redeemed . . . . . . . . . . . . (41,465) (21,574) (73,857)
________ ________ ________
Increase (decrease) in net
assets from capital
share transactions. . . . . . (10,882) 12,003 15,894
________ ________ ________
Total increase (decrease). . . . . (16,239) 5,278 12,473
NET ASSETS
Beginning of period. . . . . . . 181,231 175,953 163,480
________ ________ ________
End of period. . . . . . . . . . $164,992 $181,231 $175,953
________ ________ ________
________ ________ ________
1Share transactions
Sold . . . . . . . . . . . . . . 5,165 shs. 5,994 shs. 15,131 shs.
Distributions reinvested . . . . 869 517 1,448
Redeemed . . . . . . . . . . . . (8,194) (4,169) (13,645)
_________ ________ ________
Increase (decrease) in
shares outstanding . . . . . . (2,160) shs. 2,342 shs. 2,934 shs.
________ ________ ________
________ ________ ________
# The Fund's fiscal year-end was changed to May 31.
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price U.S. Treasury Long-Term Fund (Unaudited)
Amounts in Thousands
_________________________________________
Six Months Three Months
Ended Ended Year Ended
Nov. 30, 1994 May 31, 1994# Feb. 28, 1994
_____________ _____________ ____________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income. . . . . . $ 1,910 $ 928 $ 3,739
Net realized gain (loss) . . . . (1,715) (577) 1,368
Change in net unrealized
gain or loss. . . . . . . . . (911) (2,955) (1,562)
________ ________ ________
Increase (decrease) in net
assets from operations . . . . (716) (2,604) 3,545
________ ________ ________
Distributions to shareholders
Net investment income. . . . . . (1,910) (928) (3,739)
Net realized gain. . . . . . . . - (55) (1,532)
________ ________ ________
Decrease in net assets
from distributions
to shareholders . . . . . . . (1,910) (983) (5,271)
________ ________ ________
Capital share transactions1
Sold . . . . . . . . . . . . . . 17,979 9,837 30,146
Distributions reinvested . . . . 1,610 841 4,571
Redeemed . . . . . . . . . . . . (15,095) (9,486) (41,044)
________ ________ ________
Increase (decrease) in
net assets from capital
share transactions . . . . . 4,494 1,192 (6,327)
________ ________ ________
Total increase (decrease). . . . . 1,868 (2,395) (8,053)
NET ASSETS
Beginning of period. . . . . . . 54,237 56,632 64,685
________ ________ _________
End of period. . . . . . . . . . $ 56,105 $ 54,237 $ 56,632
________ ________ ________
________ ________ ________
1Share transactions
Sold . . . . . . . . . . . . . . 1,874 shs. 978 shs. 2,758 shs.
Distributions reinvested . . . . 168 85 420
Redeemed . . . . . . . . . . . . (1,571) (947) (3,758)
________ ________ ________
Increase (decrease) in
shares outstanding . . . . . . 471 shs. 116 shs. (580) shs.
________ ________ ________
________ ________ ________
# The Fund's fiscal year-end was changed to May 31.
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price U.S. Treasury Funds / November 30, 1994 (Unaudited)
Note 1 - Significant Accounting Policies
T. Rowe Price U.S. Treasury Funds, Inc. (the Corporation) is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The U.S. Treasury Money Fund (the Money Fund), the U.S.
Treasury Intermediate Fund (the Inter-mediate Fund) and the U.S. Treasury
Long-Term Fund (the Long-Term Fund), are the three portfolios established by
the Corporation.
A) Security valuation - Except for certain securities held by the Money Fund
with remaining maturities of 60 days or less, securities are valued based upon
market quotations. When market quotations are not readily available, these
securities are valued at a representative bid price or yield equivalent as
quoted by dealers who make markets in such securities. Securities held by the
Money Fund with remaining maturities of 60 days or less are valued at
amortized cost.
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.
B) Premiums and Discounts - Except for mortgage-backed securities, premiums
and discounts on debt securities are amortized for both financial and tax
reporting purposes.
C) 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 an 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
which may differ from generally accepted accounting principles.
Note 2 - Investment Transactions
As a part of its investment program, the Intermediate Fund engages in the
following investment activities, the nature, risks and objectives of which are
set forth more fully in the Fund's Prospectus and Statement of Additional
Information.
A) Securities Lending - To earn additional income, the Intermediate Fund lends
its securities to approved brokers. At November 30, 1994, the market value of
securities on loan to brokers for the Intermediate Fund was $54,015,000 for
which the Fund was fully collateralized by cash. Although the risk is
mitigated by the collateral, the Fund could experience a delay in recovering
its securities and possibly experience a capital loss if the borrower fails to
return them.
B) Other - Purchases and Sales of U.S. Government securities, other than
short-term, were as follows:
Six months ended November 30, 1994
_______________________________
Intermediate Long-Term
Fund Fund
___________ ___________
Purchases $53,119,000 $22,289,000
Sales 64,690,000 16,347,000
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since each Fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income. The Long-Term Fund has unused realized capital loss
carryforwards for federal income tax purposes of $530,000 at May 31, 1994,
which expire in 2002.
At November 30, 1994, the aggregate costs of investments for the Money,
Intermediate and Long-Term Funds for federal income tax and financial
reporting purposes were $712,786,000, $171,727,000, and $59,018,000,
respectively. Net unrealized losses were as follows:
Money Intermediate Long-Term
Fund Fund Fund
__________ __________ __________
Appreciated
Investments $ 18,000 $ 191,000 $ 180,000
Depreciated
Investments (266,000) (6,098,000) (1,389,000)
_________ ___________ ___________
Net Unrealized
Losses $(248,000) $(5,907,000) $(1,209,000)
_________ ___________ ___________
_________ ___________ ___________
Note 4 - Related Party Transactions
The investment management agreement between each Fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management
fee, computed daily and paid monthly, consisting of an Individual Fund Fee
equal to 0.05% of average daily net assets for the Intermediate and Long-Term
Funds and a Group Fee. The Money Fund does not have an Individual Fund Fee,
only a Group Fee. The Group Fee is based on the combined assets of certain
mutual funds sponsored by the Manager or Rowe Price-Fleming International,
Inc. (the Group). The Group Fee rate ranges from 0.48% for the first $1
billion of assets to 0.31% for assets in excess of $34 billion. The effective
annual Group Fee rate at November 30, 1994 and for the six months then ended
was 0.34%. Each Fund pays a pro rata portion of the Group Fee based on the
ratio of each Fund's net assets to those of the Group.
Long-Term Fund:
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through February 28, 1995, which would cause the
Fund's ratio of expenses to average net assets to exceed 0.80%. There-after,
the Fund is required to reimburse the Manager for these expenses, provided
average net assets have grown or expenses have declined sufficiently so as not
to cause the Fund's ratio of expenses to average net assets to exceed 0.80% in
any month, and that no such reimbursement shall be made to the Manager after
February 28, 1997. Pursuant to this agreement, $47,000 of management fees were
not accrued for the Long-Term Fund for the six months ended November 30, 1994.
Additionally, $392,000 of unaccrued fees from the prior period for the
Long-Term Fund are subject to reimbursement through February 28, 1995.
All Funds:
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc. (RPS)
are wholly owned subsidiaries of the Manager. TRPS provides transfer and
dividend disbursing agent functions and shareholder services for all accounts.
RPS provides subaccounting and recordkeeping services for certain retirement
accounts invested in the Funds. The Manager, under a separate agreement,
calculates the daily share price and maintains the financial records of the
Funds. For the six months ended November 30, 1994, the Money, Intermediate and
Long-Term Funds incurred fees totalling approximately $559,000, $152,000 and
$84,000, respectively, for these services provided by related parties. At
November 30, 1994, investment management and service fees payable were
$267,000, $82,000 and $27,000, respectively.
<TABLE>
<CAPTION>
Financial Highlights
T. Rowe Price U.S. Treasury Funds (Unaudited)
Money Fund
For a share outstanding throughout each period
_______________________________________________________________________
Six Three
Months Months Year Ended
Ended Ended ___________________________________________________
Nov. 30, May 31, Feb. 28, Feb. 28, Feb. 29, Feb. 28, Feb. 28,
1994 1994# 1994 1993 1992 1991 1990
_______ _______ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . . . . . $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Investment Activities
Net investment income. . . . . . 0.019 0.007 0.025 0.029 0.049 0.070 0.080
Distributions
Net investment income. . . . . . (0.019) (0.007) (0.025) (0.029) (0.049) (0.070) (0.080)
______ ______ ______ ______ ______ ______ ______
NET ASSET VALUE,
END OF PERIOD. . . . . . . . . . $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
______ ______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . . . 1.95% 0.73% 2.51% 2.97% 5.06% 7.19% 8.26%
Ratio of Expenses to Average
Net Assets . . . . . . . . . . . 0.57%! 0.57%! 0.64% 0.65% 0.68% 0.75% 0.85%
Ratio of Net Investment Income
to Average Net Assets. . . . . . 3.86%! 2.87%! 2.48% 2.92% 4.93% 6.91% 7.95%
Net Assets,
End of Period
(in thousands) . . . . . . . . .$663,978 $654,837 $613,583 $606,153 $562,664 $578,362 $361,013
<FN>
! Annualized.
# The Fund's fiscal year-end was changed to May 31.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
T. Rowe Price U.S. Treasury Funds (Unaudited)
Intermediate Fund
For a share outstanding throughout each period
______________________________________________________________________
Six Three Sept. 29, 1989
Months Months Year Ended (Commencement
Ended Ended ____________________________________ of Operations) to
Nov. 30, May 31, Feb. 28, Feb. 28, Feb. 29, Feb. 28, Feb. 28,
1994 1994# 1994 1993 1992 1991 1990
_______ _______ _______ _______ _______ _______ _____________
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . . $ 5.11 $ 5.32 $ 5.42 $ 5.28 $ 5.10 $ 4.98 $ 5.00
______ ______ ______ ______ ______ ______ ______
Investment Activities
Net investment
income. . . . . . . . . . 0.15 0.08 0.29 0.32 0.36* 0.40* 0.17*
Net realized and unrealized
gain (loss). . . . . . . . (0.15) (0.19) (0.09) 0.27 0.21 0.12 (0.02)
______ ______ ______ ______ ______ ______ ______
Total from Investment
Activities . . . . . . . . - (0.11) 0.20 0.59 0.57 0.52 0.15
______ ______ ______ ______ ______ ______ ______
Distributions
Net investment income. . . . (0.15) (0.08) (0.29) (0.32) (0.36) (0.40) (0.17)
Net realized gain. . . . . . - (0.02) (0.01) (0.13) (0.03) - -
______ ______ ______ ______ ______ ______ ______
Total Distributions. . . . . (0.15) (0.10) (0.30) (0.45) (0.39) (0.40) (0.17)
______ ______ ______ ______ ______ ______ ______
NET ASSET VALUE,
END OF PERIOD. . . . . . . . $ 4.96 $ 5.11 $ 5.32 $ 5.42 $ 5.28 $ 5.10 $ 4.98
______ ______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . 0.03% (2.16)% 3.80% 11.77% 11.54% 10.92% 2.97%
Ratio of Expenses to Average
Net Assets . . . . . . . . . 0.69%! 0.70%! 0.79% 0.80% 0.80%* 0.80%* 0.80%!*
Ratio of Net Investment
Income to Average
Net Assets . . . . . . . . 5.99%! 5.78%! 5.41% 5.98% 6.80% 7.71% 8.13%!
Portfolio Turnover
Rate . . . . . . . . . . . . 61.0%! 45.5%! 20.2% 22.8% 91.4% 174.8% 194.6%!
Net Assets, End
of Period
(in thousands). . . . . . .$164,992 $181,231 $175,953 $163,480 $123,807 $68,341 $10,917
<FN>
! Annualized.
# The Fund's fiscal year-end was changed to May 31.
* Excludes expenses in excess of a 0.80% voluntary expense limitation in effect through February 28, 1995.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
T. Rowe Price U.S. Treasury Funds (Unaudited)
Long-Term Fund
For a share outstanding throughout each period
______________________________________________________________________
Six Three Sept. 29, 1989
Months Months Year Ended (Commencement
Ended Ended ____________________________________ of Operations) to
Nov. 30, May 31, Feb. 28, Feb. 28, Feb. 29, Feb. 28, Feb. 28,
1994 1994# 1994 1993 1992 1991 1990
_______ _______ _______ _______ _______ _______ _____________
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD . . . . . . . . . $ 9.81 $10.46 $10.79 $10.39 $10.03 $ 9.79 $10.00
______ ______ ______ ______ ______ ______ ______
Investment Activities
Net investment
income . . . . . . . . . 0.34* 0.17* 0.68* 0.70* 0.78* 0.80* 0.35*
Net realized and
unrealized gain
(loss) . . . . . . . . . (0.46) (0.64) (0.04) 0.68 0.36 0.24 (0.21)
______ ______ ______ ______ ______ ______ ______
Total from Investment
Activities . . . . . . . (0.12) (0.47) 0.64 1.38 1.14 1.04 0.14
______ ______ ______ ______ ______ ______ ______
Distributions
Net investment
income . . . . . . . . . (0.34) (0.17) (0.68) (0.70) (0.78) (0.80) (0.35)
Net realized gain. . . . . - (0.01) (0.29) (0.28) - - -
______ ______ ______ ______ ______ ______ ______
Total Distributions. . . . (0.34) (0.18) (0.97) (0.98) (0.78) (0.80) (0.35)
______ ______ ______ ______ ______ ______ ______
NET ASSET VALUE,
END OF PERIOD. . . . . . . $ 9.35 $ 9.81 $10.46 $10.79 $10.39 $10.03 $ 9.79
______ ______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . (1.24)% (4.50)% 5.89% 14.11% 11.86% 11.21% 1.28%
Ratio of Expenses to
Average Net Assets. . . . . 0.80%!* 0.80%!* 0.80%* 0.80%* 0.80%* 0.80%* 0.80%!*
Ratio of Net Investment
Income to Average
Net Assets. . . . . . . . 7.11%! 6.75%! 6.17% 6.75% 7.66% 8.01% 8.23%!
Portfolio Turnover
Rate. . . . . . . . . . . 63.5%! 246.9%! 59.4% 165.4% 162.4% 158.5% 316.1%!
Net Assets, End
of Period
(in thousands). . . . . . $56,105 $54,237 $56,632 $64,685 $52,926 $43,260 $11,204
<FN>
! Annualized.
# The Fund's fiscal year-end was changed to May 31.
* Excludes expenses in excess of a 0.80% voluntary expense limitation in effect through February 28, 1995.
</FN>
</TABLE>
Chart 1 - Interest Rate Levels
A line graph compares the yields of the 30-Year Treasury Bond, the Five-Year
Treasury Note, the 90-Day Treasury Bill, and the Federal Funds Rate from
11/30/93 to 11/30/94.
