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October 1, 2000
FUND PROFILE
T. ROWE PRICE
U.S. Treasury Intermediate Fund
A bond fund seeking the income potential and credit safety of securities issued
by the U.S. government and its agencies.
This profile summarizes key information about the fund that is included in the
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 the fund at no cost by calling
1-800-638-5660, or by visiting our Web site at www.troweprice.com.
TROWEPRICELOGO
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FUND PROFILE
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What is the fund's objective?
The fund seeks a high level of income consistent with maximum credit
protection and moderate fluctuation in principal.
What is the fund's principal investment strategy?
The fund invests at least 85% of its total assets in U.S. Treasury
securities, which are backed by the full faith and credit of the federal
government. The remainder is invested in other securities backed by the full
faith and credit of the U.S. government. The portfolio's weighted average
maturity is expected to range between three and seven years. No security will
have a remaining effective maturity of more than 10 years from the time of
purchase.
In addition to Treasury securities, the fund's other investments will either
be (1) backed by the full faith and credit of the U.S. government (such as
GNMA mortgage securities); (2) futures and repurchase agreements
collateralized by such investments; or (3) shares of a T. Rowe Price internal
money market fund that invests exclusively in securities backed by the full
faith and credit of the U.S. government.
The fund may sell holdings for a variety of reasons, such as to adjust the
portfolio's average maturity or quality, or to shift assets into
higher-yielding securities.
Further information about the 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 either of these documents, call 1-800-638-5660.
What are the main risks of investing in the fund?
The fund should have minimal credit risk because it invests only in
securities backed by the federal government and other investments involving
such securities. The primary source of risk for this fund is the possibility
of rising interest rates, which generally cause bond prices and the fund's
share price to fall. The longer the fund's maturity, the greater the price
decline when rates rise and the greater the price increase when rates fall.
As with any mutual fund, there can be no guarantee the fund will achieve its
objective.
. The bond fund's share price will fluctuate as interest rates change, so when
you sell your shares, you may lose money.
How can I tell if the fund is appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for risk. The fund may be appropriate if you seek an
attractive level of income and are willing to accept the risk of a loss of
principal when interest rates rise.
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FUND PROFILE
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The fund can be used in both regular and tax-deferred accounts, such as IRAs.
. The fund should not represent your complete investment program or be used
for short-term trading purposes.
How has the fund performed in the past?
The bar chart showing calendar year returns and the average annual total
return table indicate risk by illustrating how much returns can differ from
one year to the next and over time. Fund past performance is no guarantee of
future returns.
The fund can also experience short-term performance swings, as shown by the
best and worst calendar quarter returns during the years depicted in the
chart.
LOGO
<TABLE>
<CAPTION>
Calendar Year Total Returns
"90" "91" "92" "93" "94" "95" "96" "97" "98"
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
8.96 14.80 6.27 7.99 -2.25 15.89 2.37 8.17 10.18
-------------------------------------------------------------------
</TABLE>
Quarter ended Total return
Best quarter 9/30/98 6.82%
Worst quarter 3/31/92 -2.14%
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FUND PROFILE
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<TABLE>
Table 1 Average Annual Total Returns
<CAPTION>
Periods ended 09/30/2000
1 year 5 years 10 years
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<S> <C> <C> <C> <S>
U.S. Treasury Intermediate Fund 5.84% 5.52% 6.94%
Salomon Smith Barney 1-7 Year
Treasury Index 6.02 6.20 7.13
Lipper Intermediate U.S. Treasury 6.04 5.74 6.92
Funds Average
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</TABLE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
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 fees. Redemption proceeds of less than $5,000 sent by wire are
subject to a $5 fee paid to the fund.
<TABLE>
Table 2 Fees and Expenses of the Fund
<CAPTION>
Annual fund operating expenses
(expenses that are deducted from fund assets)
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<S> <C>
Management fee 0.37%/ // /
Other expenses 0.27%
Total annual fund operating 0.64%/ // /
expenses
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</TABLE>
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
this fund with that of other mutual funds. Although your actual costs may be
higher or lower, the table shows how much you would pay if operating expenses
remain the same, you invest $10,000, earn a 5% annual return, and hold the
investment for the following periods and then redeem:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
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<S> <C> <C> <C>
$65 $205 $357 $798
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</TABLE>
Who manages the fund?
The 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.
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FUND PROFILE
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Cheryl A. Mickel manages the fund day-to-day and has been chairman of its
Investment Advisory Committee since 1998. She joined T. Rowe Price in 1989
and has been managing investments since April 1997. From 1992 to 1997, she
was a trader on the corporate high-grade trading desk.
Note: The following questions and answers about buying and selling shares and
services do not apply to employer-sponsored retirement plans. If you are a
participant in one of these plans, please call your plan's toll-free number for
additional information.
How can I purchase shares?
Fill out the New Account Form and return it with your check in the postpaid
envelope. The minimum initial purchase is $2,500 ($1,000 for IRAs and gifts
or transfers to minors). The minimum subsequent investment is $100 ($50 for
IRAs, gifts or transfers to minors, or Automatic Asset Builder). You can also
open an account by bank wire, by exchanging from another T. Rowe Price fund,
or by transferring assets from another financial institution.
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
Tele*Access /(R)/ or our Web site. We offer convenient exchange among our
entire family of domestic and international funds. Restrictions may apply in
special circumstances, and some redemption requests need a signature
guarantee.
When will I receive income and capital gain distributions?
The fund distributes income monthly and net capital gains, if any, at
year-end. For regular accounts, income and short-term gains are taxable at
ordinary income rates, and long-term gains are taxable at the capital gains
rate. Distributions are reinvested automatically in additional shares unless
you choose another option, such as receiving a check. Distributions paid to
IRAs and employer-sponsored retirement plans are automatically reinvested.
What services are available?
A wide range, including but not limited to:
. retirement plans for individuals and large and small businesses;
. automated information and transaction services by telephone or computer;
. electronic transfers between fund and bank accounts;
. automatic investing and automatic exchange;
. brokerage services; and
. asset manager accounts.
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FUND PROFILE
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T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
www.troweprice.com
LOGO
RPS F66-035
T. Rowe Price Investment Services, Inc., Distributor
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