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T. ROWE PRICE
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Tax-Free Funds, Inc.
Tax-Exempt Money Fund
Tax-Free Short-Intermediate Fund
Tax-Free Insured Intermediate Bond Fund
Tax-Free Income Fund
Tax-Free High Yield Fund
Supplement to prospectus dated July 1, 1998
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The first paragraph under Tax Information on page 18 of the prospectus states
in error that each fund's regular monthly dividends are expected to be exempt
from federal and state and local (if any) income taxes. The reference to
"state and local (if any) income taxes" was inserted in error. As noted
throughout the Fund, Market, and Risk Characteristics section (pp. 8-15), the
fund's regular dividends are expected to be exempt from federal income taxes
only. Effective July 17, 1998, the Tax Information paragraphs on page 18 of the
prospectus are revised as follows:
Tax Information
o You will be sent timely information for your tax filing needs.
Although the regular monthly income dividends you receive from each fund
are expected to be exempt from federal income taxes, you need to be aware of
the possible tax consequences when:
. You sell fund shares, including an exchange from one fund to another.
. The fund makes a distribution to your account.
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The date of this supplement is July 17, 1998.
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C03-041 7/17/98
