Annual Report
Short-Term U.S. Government Fund
May 31, 1996
T. Rowe Price
REPORT HIGHLIGHTS
o The bond market reversed course as the new year began; interest rates
rose and bond prices fell, with long-term bonds faring worse than
short-term.
o Stronger-than-expected economic growth, an uptick in inflation, and the
lack of progress toward federal deficit reduction triggered the
turnaround.
o The fund managed a small, positive return for the six-month period and
more solid results for 12 months.
o We took some defensive steps both before and after the sudden turnaround
in the market, particularly a reduction in our large commitment to U.S.
government mortgage-backed securities.
o The Federal Reserve may tighten in the coming months to head off a
buildup of inflationary pressures. This move may already be reflected in
the recent rise in short-term rates, which would suggest a calmer bond
market over the balance of the year.
Fellow Shareholders
In the fixed income market, the first half of 1996 was the reverse image of
the last half of 1995. Interest rates fell through the end of 1995 as the
Federal Reserve eased and the economy slowed. However, when growth and
inflation picked up in 1996, rates rose, ending the bond rally. Long-term bond
funds bore the brunt of the reversal, while most short-term bond funds,
including yours, eked out positive returns for the six-month period.
MARKET ENVIRONMENT
In the second half of 1995, the economy looked weak, progress in federal
deficit reduction seemed likely, the Federal Reserve was accommodative, and
interest rates declined across the board. In 1996, everything changed. Several
developments in particular caused mounting concern among bond investors: the
2.3% increase in real GDP in the first quarter versus only 0.5% in the fourth
quarter of 1995; significant increases in payroll employment in February and
March (220,000 per month during the first five months of 1996); and rising
prices led by oil and grains.
Chart 1 - Interest Rate Levels
Against this background, the rate on 30-year Treasury bonds increased about 75
basis points in the six months ending May 31, while the five-year Treasury
note yield rose 96 basis points. (One hundred basis points equal one percent.)
Although yields on very short-term maturities rose quite sharply in recent
months, they were slightly lower on balance at the end of the 12-month period
than at the beginning, as shown in the chart.
PERFORMANCE AND STRATEGY REVIEW
The decline in share price during the past six months was more than offset by
the fund's $0.14 per share income, providing a small but positive total return
for the period. Reflecting the favorable environment that prevailed in 1995,
the fund's 12-month return was 4.31%. Performance trailed our peer group
average largely because the fund's duration was slightly longer than the
average in our category. (Duration measures a bond fund's price sensitivity to
interest rate changes.)
PERFORMANCE COMPARISON
Periods Ended 5/31/96 6 Months 12 Months
Short-Term U.S. Government Fund 0.37% 4.31%
Lipper Average of Short-Term
U.S. Government Funds 1.01 4.51
With the economy apparently soft, we had positioned the fund to benefit from
the stable or declining rates we expected. However, as we had mentioned in the
previous report, this outlook was contingent on progress toward a balanced
budget agreement. Therefore, as progress unraveled, we took defensive steps,
primarily selling longer-duration securities, particularly U.S.
government-backed and government-sponsored mortgage-backed issues (Ginnie Maes
and Fannie Maes). While this was helpful, we might have pulled in our horns
further had we suspected that the employment data released in February and
March would be so strong.
Mortgage-backed securities remain the fund's major commitment because we like
their incremental income and short maturities. To adjust duration without
sacrificing income during recent months, we repurchased these securities in
the forward market - hence the minus 6% in the "Other Assets Less Liabilities"
line of the Sector Diversification table following this letter.
Other portfolio changes during the past six months included reinvesting the
proceeds of a maturing Fannie Mae debenture in very short-term obligations of
Freddie Mac. The increase in U.S. Treasury holdings from 19% to 23% reflected
interim cash movements and was not a strategic change.
OUTLOOK
The Federal Reserve could well tighten monetary policy later this year.
Consumer inflation has been running at about a 4% rate in 1996 mainly due to
an upsurge in energy prices, and the Fed does not want the strong economy to
cause persistently higher inflation.
It seems likely that the Fed's probable next move - an increase in the federal
funds rate - was anticipated in the recent rise in short-term rates. If so,
and if the economy does not accelerate further, we would expect short-term
rates to fluctuate in their current ranges over the coming months. This should
enable your fund to provide a return in line with its coupon for the balance
of the year. While the rise in rates could dampen economic activity, we do not
expect a marked slowdown that would bring rates lower and provide
opportunities for price appreciation.
In short, we hope the market will return to a more even keel, and we will make
every effort to maintain or increase the fund's income consistent with
minimizing price fluctuation.
Respectfully submitted,
Peter Van Dyke
President and
Chairman of the Investment Advisory Committee
June 20, 1996
T. Rowe Price Short-Term U.S. Government Fund
PORTFOLIO HIGHLIGHTS
KEY STATISTICS
11/30/95 5/31/96
_____________________________________________________________________________
Price Per Share $ 4.71 $ 4.59
Dividends Per Share
For 6 months 0.14 0.14
For 12 months 0.28 0.28
Dividend Yield *
For 6 months 6.09% 5.88%
For 12 months 6.18 6.07
Weighted Average Maturity (years) 2.8 2.8
Weighted Average Effective
Duration (years) 2.6 2.6
Weighted Average Quality ** AAA- AAA-
* 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.
** Based on T. Rowe Price research.
PORTFOLIO HIGHLIGHTS
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
11/30/95 5/31/96
_____________________________________________________________________________
U.S. Government Mortgage-Backed
Securities 40% 34%
U.S. Treasury Obligations 19 23
Corporate Bonds and Notes 20 22
Federal National Mortgage Association
(Fannie Mae) Debentures 20 16
Home Equity Loan-Backed Securities 4 4
Federal Home Loan Mortgage
(Freddie Mac) Securities 1 4
Non-Government Agency Adjustable
Rate Mortgages 4 3
Other Assets Less Liabilities - 8 - 6
_____________________________________________________________________________
Total 100% 100%
T. Rowe Price Short-Term U.S. Government Fund
PERFORMANCE COMPARISON
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
Note: The fund's investment program was broadened on April 1, 1995, to focus
on a variety of short-term U.S. government securities rather than primarily on
adjustable rate mortgages. Since the fund's average maturity and duration are
now longer than before April 1995, we show both six-month and two-year
benchmarks.
Chart 2 - Short-Term U.S. Government Fund
AVERAGE ANNUAL COMPOUND TOTAL RETURN
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Since Inception
Periods Ended 5/31/96 1 Year 3 Years Inception Date
_____________________________________________________________________________
Short-Term
U.S. Government Fund 4.31% 3.91% 3.95% 9/30/91
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price Short-Term U.S. Government Fund
FINANCIAL HIGHLIGHTSFor a share outstanding throughout each period
Year 3 Months# Year 9/30/91
Ended Ended Ended to
5/31/96 5/31/95 5/31/94 2/28/94 2/28/93 2/29/92
_____________________________________________________________________________
NET ASSET VALUE
Beginning of
period $ 4.67 $ 4.65 $ 4.75 $ 4.83 $ 4.97 $ 5.00
Investment activities
Net invest-
ment income 0.28* 0.26* 0.06* 0.23* 0.29* 0.16*
Net realized and
unrealized
gain (loss) (0.08) 0.01 (0.11) (0.08) (0.13) (0.03)
Total from
investment
activities 0.20 0.27 (0.05) 0.15 0.16 0.13
Distributions
Net invest-
ment income (0.27) (0.24) (0.05) (0.17) (0.28) (0.16)
Tax return of
capital (0.01) (0.01) - (0.06) (0.02) -
Total dis-
tributions (0.28) (0.25) (0.05) (0.23) (0.30) (0.16)
NET ASSET VALUE
End of period $ 4.59 $ 4.67 $ 4.65 $ 4.75 $ 4.83 $ 4.97
Ratios/Supplemental Data
Total return 4.31%* 6.14%*(0.97)%* 3.11%* 3.33%* 2.58%*
Ratio of expenses
to average
net assets 0.70%* 0.59%* 0.50%!* 0.40%* 0.25%* 0.00%!*
Ratio of net
investment income
to average
net assets 5.93%* 5.48%* 4.69%!* 4.78%* 5.96%* 7.45%!*
Portfolio turn-
over rate 152.8% 100.0% 27.6%! 70.4% 110.8% 98.4%!
Net assets,
end of
period (in
thousands) $98,529 $112,387 $187,517 $225,154 $476,448 $342,939
*The manager agreed to bear all expenses of the fund through June 30, 1992.
Excludes expenses in excess of a 0.20% voluntary expense limitation in
effect July 1, 1992 through July 31, 1992, a 0.30% voluntary expense
limitation in effect August 1, 1992 through August 31, 1992, a 0.40%
voluntary expense limitation in effect September 1, 1992 through February
28, 1994, a 0.50% voluntary expense limitation in effect March 1, 1994
through August 31, 1994, a 0.60% voluntary expense limitation in effect
September 1, 1994 through February 28, 1995, and a 0.70% voluntary expense
limitation in effect March 1, 1995 through May 31, 1996.
!Annualized.
#The fund's fiscal year-end was changed to May 31.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Short-Term U.S. Government Fund
May 31, 1996
Statement of Net Assets Par Value
In thousands
U.S. GOVERNMENT OBLIGATIONS 43.0%
U.S. Government Agency Obligations 19.8%
Federal Home Loan Mortgage
Deb., 6.23%, 9/25/98 $ 1,000 $ 993
Disc. Notes, 5.30%, 6/3/96 2,707 2,707
Federal National Mortgage Assn.
MTN
5.22%, 7/10/98 5,000 4,886
6.35%, 6/9/00 5,000 4,907
6.63%, 9/3/98 6,000 5,991
_____________________________________________________________________________
19,484
U.S. Treasury Obligations 23.2%
U.S. Treasury Notes
5.00%, 1/31/98 1,000 982
5.625%, 11/30/00 2,000 1,923
5.875%, 6/30/00 1,350 1,315
6.125%, 3/31/98 - 7/31/00 17,000 16,735
6.25%, 5/31/00 2,000 1,977
_____________________________________________________________________________
22,932
_____________________________________________________________________________
Total U.S. Government Obligations (Cost $42,977) 42,416
U.S. GOVERNMENT MORTGAGE-BACKED
SECURITIES 34.3%
U.S. Government Agency ARM 4.4%
Federal National Mortgage Assn.
6.22%, 3/1/18 39 39
6.225%, 10/1/17 - 7/1/27 845 838
6.234%, 5/1/24 138 137
6.248%, 3/1/20 172 170
6.25%, 11/1/17 62 61
6.272%, 3/1/19 19 18
6.283%, 12/1/16 - 5/1/31 842 834
6.309%, 1/1/19 833 822
6.329%, 12/1/17 - 11/1/20 625 620
6.375%, 8/1/17 - 7/1/18 373 369
6.817%, 10/1/14 11 11
6.857%, 11/1/21 219 221
6.875%, 5/1/17 $ 50 $ 50
7.45%, 1/1/16 107 108
7.725%, 8/1/21 32 33
_____________________________________________________________________________
4,331
U.S. Government Agency Asset-Backed 9.7%
Federal National Mortgage Assn., 8.00%, 4/25/259,500 9,595
_____________________________________________________________________________
9,595
U.S. Government Agency Obligations 15.5%
Federal Home Loan Mortgage
6.50%, 6/1/99 4,256 4,218
8.00%, 7/1/96 - 2/1/00 4,182 4,199
TBA, 6.00%, 4/1/99 7,000 6,823
_____________________________________________________________________________
15,240
U.S. Government Guaranteed Obligations 4.4%
Government National Mortgage Assn.
I, 11.50%, 3/15/10 - 12/15/15 2,211 2,488
Project Loan, 9.125%, 12/15/28 1,809 1,889
_____________________________________________________________________________
4,377
Stripped Mortgage Securities 0.3%
Federal National Mortgage Assn., Principal Only,
Zero Coupon, 9/25/23 258 256
_____________________________________________________________________________
256
_____________________________________________________________________________
Total U.S. Government Mortgage-Backed Securities
(Cost $34,163) 33,799
CORPORATE BONDS AND NOTES 21.6%
Finance and Credit 9.3%
Associates Corporation of North America, Sr. Notes,
8.80%, 8/1/98 3,000 3,126
Ciesco L.P., MTN, (144a), 7.38%, 4/19/00! 3,000 3,038
Norwest Financial, Sr. Notes, 6.23%, 9/1/98 3,000 2,976
_____________________________________________________________________________
9,140
Industrials 10.3%
DuPont (E. I.) De Nemours & Co., Deb.,
9.15%, 4/15/00 2,900 3,093
General Electric, Deb., 7.875%, 9/15/98 3,000 3,078
Pitney Bowes Credit, MTN, 5.84%, 6/9/98 2,000 1,975
Rockwell International, Notes, 7.625%, 2/17/982,000 2,036
_____________________________________________________________________________
10,182
Telephone 2.0%
BellSouth Telecom, Notes, 6.50%, 2/1/00 $ 2,000 $ 1,976
_____________________________________________________________________________
1,976
_____________________________________________________________________________
Total Corporate Bonds and Notes (Cost $21,508) 21,298
NON-GOVERNMENT ASSET-BACKED
SECURITIES 7.0%
Home Equity Loans-Backed 4.4%
HFC Home Equity Loan, 4.75%, 5/20/08 1,407 1,389
Vanderbilt Mortgage & Finance, 6.475%, 6/7/033,000 2,978
_____________________________________________________________________________
4,367
Non-Government Agency ARM 2.6%
Resolution Trust Corp., 8.099%, 12/25/20 526 530
Ryland Mercury Savings Trust, MPC,
6.673%, 5/20/18 672 666
Ryland Mortgage Securities, MPC,
7.772%, 5/25/17 436 413
Salomon Brothers Mortgage Securities, MPC,
6.875%, 8/25/18 933 896
_____________________________________________________________________________
2,505
_____________________________________________________________________________
Total Non-Government Asset-Backed Securities (Cost $7,049)6,872
Total Investments in Securities
105.9% of Net Assets (Cost $105,697) $ 104,385
Other Assets Less Liabilities (5,856)
NET ASSETS $ 98,529
Net Assets Consist of:
Accumulated net investment income - net of distributions$(486)
Accumulated net realized gain/loss - net of distributions(23,352)
Net unrealized gain (loss) (1,312)
Paid-in-capital applicable to 21,465,414 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized 123,679
NET ASSETS $ 98,529
NET ASSET VALUE PER SHARE $ 4.59
! Private Placement
ARM Adjustable Rate Mortgage
MPC Mortgage Pass-through Certificate
MTN Medium Term Note
TBA To Be Announced security was purchased on a forward commitment basis;
the aggregate liability for securities purchased under such
agreements totaled $6,872,000 at 5/31/96.
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to
qualified institutional buyers - total of such securities at year-end
amounts to 3.1% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Short-Term U.S. Government Fund
STATEMENT OF OPERATIONS
In thousands
Year
Ended
5/31/96
_____________________________________________________________________________
Investment Income
Interest income $ 7,040
Expenses
Investment management 281
Shareholder servicing 179
Custody and accounting 163
Legal and audit 34
Prospectus and shareholder reports 34
Registration 31
Directors 6
Miscellaneous 15
Total expenses 743
Net investment income 6,297
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 415
Change in net unrealized gain or loss on securities (2,154)
Net realized and unrealized gain (loss) (1,739)
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 4,558
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Short-Term U.S. Government Fund
STATEMENT OF CHANGES IN NET ASSETS
In thousands
Year Year
Ended Ended
5/31/96 5/31/95
_____________________________________________________________________________
Increase (Decrease) in Net Assets
Operations
Net investment income $ 6,297 $ 7,577
Net realized gain (loss) 415 (5,753)
Change in net unrealized gain or loss (2,154) 4,952
Increase (decrease) in net assets
from operations 4,558 6,776
Distributions to shareholders
Net investment income (5,995) (7,212)
Tax return of capital (304) (326)
Decrease in net assets from distributions(6,299) (7,538)
Capital share transactions*
Shares sold 19,825 21,194
Distributions reinvested 5,139 6,030
Shares redeemed (37,081) (101,592)
Increase (decrease) in net assets
from capital share transactions (12,117) (74,368)
Net Assets
Increase (decrease) during period (13,858) (75,130)
Beginning of period 112,387 187,517
End of period $ 98,529 $112,387
*Share information
Shares sold 4,245 4,608
Distributions reinvested 1,101 1,314
Shares redeemed (7,939) (22,159)
Increase (decrease) in shares outstanding(2,593)(16,237)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Short-Term U.S. Government Fund
May 31, 1996
NOTES TO FINANCIAL STATEMENTS
Note 1 - Significant Accounting Policies
T. Rowe Price Short-Term U.S. Government Fund, Inc., (the fund) is registered
under the Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on September 30, 1991.
Valuation Debt securities are generally traded in the over-the-counter
market. Investments in securities originally issued with maturities of one
year or more are stated at fair value as furnished by dealers who make markets
in such securities or by an independent pricing service, which considers yield
or price of bonds of comparable quality, coupon, maturity, and type, as well
as prices quoted by dealers who make markets in such securities. Securities
with original maturities of less than one year are stated at fair value, which
is determined by using a matrix system that establishes a value for each
security based on money market yields.
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.
Premiums and Discounts Premiums and discounts on debt securities, other than
mortgage-backed securities, are amortized for both financial reporting and tax
purposes. Premiums and discounts on mortgage-backed securities are recognized
upon principal repayment as gain or loss for financial reporting purposes and
as ordinary income for tax purposes.
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 the 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
and may differ from those determined in accordance with generally accepted
accounting principles.
Note 2 - Investment Transactions
Purchases and sales of portfolio securities, other than short-term and U.S.
government securities, aggregated $22,671,000 and $3,601,000, respectively,
for the year ended May 31, 1996. Purchases and sales of U.S. government
securities aggregated $142,140,000 and $173,847,000, respectively, for the
year ended May 31, 1996.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income. The fund has unused realized capital loss carryforwards
for federal income tax purposes of $23,349,000, of which $12,778,000 expires
in 2000, $5,229,000 in 2001, and $5,342,000 thereafter through 2004. The fund
intends to retain gains realized in future periods that may be offset by
available capital loss carryforwards.
In order for the fund's capital accounts and distributions to shareholders to
reflect the tax character of certain transactions, the following
reclassifications were made during the year ended May 31, 1996. The results of
operations and net assets were not affected by the reclassifications.
Undistributed net investment income $(200,000)
Undistributed net realized gain 212,000
Paid-in-capital (12,000)
At May 31, 1996, the aggregate cost of investments for federal income tax and
financial reporting purposes was $105,697,000, and net unrealized loss
aggregated $1,312,000, of which $39,000 related to appreciated investments and
$1,351,000 to depreciated investments.
Note 4 - Related Party Transactions
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment management
fee, of which $23,000 was payable at May 31, 1996. The fee is computed daily
and paid monthly, and consists of an individual fund fee equal to 0.10% of
average daily net assets and 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 0.305% for assets in excess of $50
billion. At May 31, 1996, and for the year then ended, the effective annual
group fee rate was 0.33% and 0.34%, respectively. The fund pays a pro rata
share of the group fee based on the ratio of its net assets to those of the
group.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through May 31, 1996, which would cause the
fund's ratio of expenses to average net assets to exceed 0.70%. Thereafter,
through May 31, 1998, the fund is required to reimburse the manager for these
expenses, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the fund's ratio
of expenses to average net assets to exceed 0.70%. Pursuant to this agreement,
$183,000 of management fees were not accrued by the fund for the year ended
May 31, 1996. In addition, $596,000 of unaccrued fees from prior periods
remain subject to reimbursement through May 31, 1998.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund receives
certain other services. The manager computes the daily share price and
maintains the financial records of the fund. T. Rowe Price Services, Inc., is
the fund's transfer and dividend disbursing agent and provides shareholder and
administrative services to the fund. T. Rowe Price Retirement Plan Services,
Inc., provides subaccounting and recordkeeping services for certain retirement
accounts invested in the fund. The fund incurred expenses pursuant to these
related party agreements totaling approximately $251,000 for the year ended
May 31, 1996, of which $24,000 was payable at period-end.
During fiscal year 1996, Price Waterhouse LLP succeeded Coopers & Lybrand
L.L.P. as independent accountants for the Short-Term U.S. Government Fund, a
decision that was approved by the fund's Board of Directors. During the last
two fiscal years, the fund has received unqualified opinions and has had no
disagreements with Coopers & Lybrand L.L.P. or reportable events that caused
the change.
T. Rowe Price Short-Term U.S. Government Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
T. Rowe Price Short-Term U.S. Government Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
T. Rowe Price Short-Term U.S. Government Fund, Inc. (the "Fund") at May 31,
1996, and the results of its operations, the changes in its net assets, and
the financial highlights for the year ended May 31, 1996, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit, which included confirmation of securities at May 31, 1996 by
correspondence with the custodian and brokers and, where appropriate, the
application of alternative auditing procedures for unsettled security
transactions, provides a reasonable basis for the opinion expressed above. The
financial statements of the Fund for the fiscal periods presented prior to the
year ended May 31, 1996 were audited by other independent accountants whose
report dated June 19, 1995 expressed an unqualified opinion on those
statements.
PRICE WATERHOUSE LLP
Baltimore, Maryland
June 19, 1996
T. ROWE PRICE SHAREHOLDER SERVICES
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety
of information and services - at no extra cost.
Knowledgeable Service Representatives
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. and weekends from 8:30 a.m. to 5 p.m.
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Investment Information
Combined Statement An overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and results.
The T. Rowe Price Report A quarterly investment newsletter discussing markets
and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
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For yield, price, last transaction, and current balance, 24 hours, 7 days a
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1-800-638-2587 toll free
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T. Rowe Price
100 East Pratt Street
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This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Short-Term
U.S. Government Fund.
Invest With Confidence(registered trademark)
T. Rowe Price
T. Rowe Price Investment Services, Inc., DistributorRPRTUSG 5/31/96
Chart 1 - Interest Rate Levels - A 3-line chart showing yields on the 5-yr.
Treas. note, the 2-yr. Treas. note, and the 1-yr. Treas. bill from 5/31/95 to
5/31/96.
Chart 2 - Short-Term U.S. Government Fund - A line chart showing the
cumulative growth of $10,000 invested in the Short-Term U.S. Government Fund
from inception compared with $10,000 invested in a broad-based index over the
same period.
