<PAGE>
T. Rowe Price
TAX-EXEMPT MONEY FUND
August 31, 1994
Sector Diversification
<TABLE>
<CAPTION>
Percent of Percent of
Net Assets Net Assets
------------ ------------
<S> <C> <C> <C>
Hospital Revenue 29% Housing Finance Revenue 4%
Educational Revenue 18 Water & Sewer Revenue 4
General Obligation - Local 13 Electric Revenue 3
Industrial & Pollution Dedicated Tax Revenue 2
Control Revenue 9 Pooled Loan Revenue 2
General Obligation - State 6 Miscellaneous Revenue 2
Pre-Refunded Bonds 5 Lease Revenue 2
Nuclear Revenue 4 Other Assets Less Liabilities (3)
</TABLE>
Statement of Net Assets / August 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Amounts in Thousands
----------------------------
Face Amount Value
----------- ----------
<S> <C> <C>
ARIZONA -- 2.2%
Phoenix, GO, VRDN (Currently 3.15%)........................................ $ 2,800 $ 2,800
Salt River Project, Agricultural Improvement & Power Dist., TECP,
2.85 - 3.20%, 9/2 - 9/27/94.................................... 14,000 14,000
- ---------------------------------------------------------------------------------------------------------------------------
ARKANSAS -- 1.9%
Arkansas Dev. Fin. Auth., Sisters of Mercy,
VRDN (Currently 3.15%)......................................... 14,000 14,000
- ---------------------------------------------------------------------------------------------------------------------------
CALIFORNIA -- 6.5%
Alameda County, TRAN, 4.75%, 8/11/95....................................... 5,000 5,006
California, GO, (AMBAC Insured), 5.00%, 8/1/95............................. 4,300 4,329
GO, RAW, 3.75%, 12/21/94........................................... 5,000 5,005
Contra Costa County, TRAN, 4.25%, 7/7/95................................... 3,600 3,590
Los Angeles County, Local Ed. Agencies, TRAN, 4.50%, 7/6/95................ 5,000 5,015
Oakland, COP, VRDN (Currently 3.40%)....................................... 7,500 7,500
San Diego County Regional Transportation Commission,
(FGIC Insured), VRDN (Currently 2.85%)......................... 14,600 14,600
Solano County, TRAN, 3.25%, 11/1/94........................................ 4,000 3,999
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
T. Rowe Price Tax-Exempt Money Fund
Statement of Net Assets
<TABLE>
<CAPTION>
Amounts in Thousands
----------------------------
Face Amount Value
----------- ----------
<S> <C> <C>
COLORADO -- 0.8%
Colorado HFA, Kaiser Permanente, VRDN (Currently 3.15%).................... $ 4,000 $ 4,000
Denver IDR, W. W. Grainger, VRDN (Currently 3.25%)......................... 2,190 2,190
- ---------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA -- 1.1%
Dist. of Columbia, American Univ., VRDN (Currently 3.15%).................. 8,130 8,130
- ---------------------------------------------------------------------------------------------------------------------------
FLORIDA -- 6.6%
Fort Pierce Utilities Auth., 8.00%, 10/1/94 (Escrowed to Maturity)......... 1,000 1,004
Jacksonville Electric Auth., TECP, 2.95 - 3.50%, 9/9 - 1/12/95............. 22,700 22,696
Jacksonville HFA, Baptist Medical Center, (MBIA Insured),
VRDN (Currently 3.35%)......................................... 400 400
Orange County IDA, W. W. Grainger, VRDN (Currently 3.25%).................. 1,185 1,185
Orlando, Waste Water System, TECP, 3.20 - 3.35%, 9/26 - 10/21/94........... 18,000 17,998
Sunshine State Gov't. Fin. Commission, TECP, 3.05 - 3.25%,
9/7 - 10/11/94................................................. 6,200 6,200
- ---------------------------------------------------------------------------------------------------------------------------
GEORGIA -- 2.1%
Dekalb County Hosp. Auth., DeKalb Medical Center, VRDN (Currently 3.15%) .. 500 500
Fulton County Dev. Auth., National Red Cross, VRDN (Currently 3.15%)....... 550 550
Georgia, GO, 5.80%, 3/1/95................................................. 5,275 5,328
Georgia Tech Foundation Fac. Auth., Wardlaw Project,
VRDN (Currently 3.15%)......................................... 500 500
Municipal Electric Auth. of Georgia, 9.70%, 1/1/98 (Pre-refunded 1/1/95+).. 500 520
10.00%, 1/1/01 (Pre-refunded 1/1/95+).............................. 1,250 1,301
10.50%, 1/1/20 (Pre-refunded 1/1/95+).............................. 1,000 1,043
Private Colleges & Univ. Fac. Auth., Emory Univ., TECP, 3.20%, 9/21/94..... 6,000 6,000
- ---------------------------------------------------------------------------------------------------------------------------
HAWAII -- 2.4%
Hawaii Dept. of Budget & Fin., Queens Medical Center, (FGIC Insured),
VRDN (Currently 3.10%)......................................... 4,400 4,400
Honolulu City & County, GO, 10.00%, 11/1/99 (Pre-refunded 11/1/94+)........ 1,000 1,026
GO, TECP, 2.95 - 3.25%, 9/12 - 10/18/94............................ 12,650 12,650
- ---------------------------------------------------------------------------------------------------------------------------
IDAHO -- 0.5%
Idaho, GO, TAN, 4.50%, 6/29/95............................................. 3,500 3,512
- ---------------------------------------------------------------------------------------------------------------------------
ILLINOIS -- 9.8%
Chicago, GO, VRDN (Currently 3.05%)........................................ 5,300 5,300
Illinois Dev. Fin. Auth., Palos Community Hosp., VRDN (Currently 3.05%).... 23,500 23,500
Illinois EFA, Field Museum of Natural History, VRDN (Currently 2.70%)...... 2,000 2,000
Northwestern Univ., VRDN (Currently 3.625%)........................ 1,500 1,500
VRDN (Currently 3.10%)......................................... 11,586 11,586
VRDN (Currently 3.15%)......................................... 8,200 8,200
Illinois HFA, Pooled Loan, VRDN (Currently 3.05%).......................... 1,700 1,700
Children's Memorial Hosp., VRDN (Currently 3.15%).................. 7,700 7,700
10.50%, 1/1/01 (Pre-refunded 1/1/95+).......................... 1,000 1,023
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Amounts in Thousands
----------------------------
Face Amount Value
----------- ----------
<S> <C> <C>
ILLINIOIS (cont'd)
Illinois HFA (cont'd)
Hosp. Equipment, VRDN (Currently 3.05%)............................ $ 3,400 $ 3,400
Resurrection Health Care Systems, VRDN (Currently 3.35%)........... 5,700 5,700
Illinois, GO, 9.00%, 1/1/02 (Pre-refunded 1/1/95+)......................... 1,030 1,069
Niles Village, IDR, W. W. Grainger, VRDN (Currently 3.25%)................. 1,000 1,000
- ---------------------------------------------------------------------------------------------------------------------------
INDIANA -- 2.9%
Gary, IDR, W. W. Grainger, VRDN (Currently 3.25%).......................... 730 730
Mount Vernon, PCR, General Electric, TECP, 3.00 - 3.30%, 9/12 - 11/10/94... 20,990 20,990
- ---------------------------------------------------------------------------------------------------------------------------
KENTUCKY -- 0.4%
Trimble County, PCR, Louisville Gas and Electric, TECP, 2.90%, 9/8/94...... 3,000 3,000
- ---------------------------------------------------------------------------------------------------------------------------
LOUISIANA -- 5.8%
Louisiana Offshore Terminal Auth., VRDN (Currently 3.15%).................. 1,600 1,600
Louisiana PFA, Willis Knighton Medical Center, (AMBAC Insured),
VRDN (Currently 3.00%)......................................... 14,300 14,300
Sisters of Charity of the Incarnate Word, TECP, 3.15%, 10/11/94.... 2,000 2,000
Louisiana GO, 9.30%, 1/1/99 (Pre-refunded 1/1/95+)......................... 1,000 1,038
New Orleans Exhibition Hall Auth., Special Tax, VRDN (Currently 3.10%)..... 2,500 2,500
Orleans Levee Dist., Levee Improvement, VRDN (Currently 3.95%)............. 4,420 4,420
Public Improvement, VRDN (Currently 3.95%)......................... 8,000 8,000
Parish of East Baton Rouge, Exxon, TECP, 3.15%, 10/12/94................... 10,000 9,999
- ---------------------------------------------------------------------------------------------------------------------------
MAINE -- 0.5%
Maine, TAN, 4.50%, 6/30/95................................................. 4,000 4,015
- ---------------------------------------------------------------------------------------------------------------------------
MARYLAND -- 4.9%
Baltimore County, Sheppard and Enoch Pratt Hosp. Fac.,
VRDN (Currently 3.00%)......................................... 7,500 7,500
Howard County, Consolidated Public Improvement, GO, BAN,
VRDN (Currently 2.95%)......................................... 1,000 1,000
Kent County, Washington College, 10.75%, 1/1/10 (Pre-refunded 1/1/95+)..... 600 632
Maryland HHEFA, Johns Hopkins Univ., 6.20%, 7/1/95......................... 10,080 10,160
Kennedy Kreiger Institute, VRDN (Currently 3.15%).................. 3,500 3,500
Loyola College, VRDN (Currently 2.80%)............................. 7,600 7,600
Montgomery County, GO, BAN, VRDN (Currently 2.95%)......................... 1,000 1,000
Washington Suburban Sanitary Dist., GO, BAN,
VRDN (Currently 2.95%)......................................... 5,000 5,000
- ---------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS -- 0.3%
Boston Water and Sewer Commission, 10.50%, 1/1/09
(Pre-refunded 1/1/95+)......................................... 2,250 2,346
- ---------------------------------------------------------------------------------------------------------------------------
MICHIGAN -- 2.2%
Detroit School District, State Aid Note, RAN, 5.00%, 5/1/95................ 9,500 9,563
Regents of the Univ. of Michigan Hosp., VRDN (Currently 2.90%)............. 6,500 6,500
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
T. Rowe Price Tax-Exempt Money Fund
Statement of Net Assets
<TABLE>
<CAPTION>
Amounts in Thousands
----------------------------
Face Amount Value
----------- ----------
<S> <C> <C>
MINNESOTA -- 5.1%
Cottage Grove, PCR, Minnesota Mining & Mfg., VRDN (Currently 3.32%)........ $ 2,000 $ 2,000
Rochester Health Care Fac., Mayo Foundation/Mayo Medical Center,
VRDN (Currently 2.95%)......................................... 12,400 12,400
TECP, 3.00 - 3.30%, 9/23 - 10/26/94............................ 11,135 11,134
Univ. of Minnesota, TECP, 2.85-3.30%, 9/9-10/11/94......................... 12,425 12,426
- ---------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI -- 0.3%
Mississippi, Institutions of Higher Learning, Historic Properties,
and Fairground Renovation, GO, 11.00%, 12/15/94.................... 735 751
Rankin County, PCR, Siemens Energy & Automation,
VRDN (Currently 3.15%)......................................... 1,600 1,600
- ---------------------------------------------------------------------------------------------------------------------------
MISSOURI -- 3.2%
Independence, Water Utility, TECP, 2.75 - 3.05%, 9/7 - 9/14/94............. 3,400 3,400
Missouri Environmental Improvement and Energy Resource Auth.,
Union Electric Company, TECP, 3.30%, 11/14/94.................. 2,000 2,000
Missouri HEFA, Sisters of Mercy Health, VRDN (Currently 3.15%)............. 6,200 6,200
St. Anthony's Medical Center, VRDN (Currently 3.20%)............... 12,700 12,700
- ---------------------------------------------------------------------------------------------------------------------------
NEW JERSEY -- 0.0%
New Jersey, GO, 9.00%, 10/1/99 (Pre-refunded 10/1/94+)..................... 200 205
- ---------------------------------------------------------------------------------------------------------------------------
NEW MEXICO -- 0.1%
New Mexico, 6.50%, 9/1/98 (Pre-refunded 9/1/94+)........................... 1,000 1,015
- ---------------------------------------------------------------------------------------------------------------------------
NEW YORK -- 2.7%
New York City, 10.75%, 11/15/99 (Pre-refunded 11/15/94+)................... 800 836
GO, RAN, 4.50%, 4/12/95........................................ 8,000 8,031
GO, TAN, 4.25%, 2/15/95........................................ 6,000 6,016
New York State Power Auth., 3.80%, 3/1/95.................................. 5,000 4,998
- ---------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA -- 4.4%
New Hanover County Industrial & Pollution Control Fin. Fac. PCR, Siemens
Energy & Automation, VRDN (Currently 3.15%)........................ 7,500 7,500
North Carolina Eastern Municipal Power Agency, 8.50%,
1/1/11 (Pre-refunded 1/1/95+).................................. 2,000 2,033
9.00%, 1/1/13 (Pre-refunded 1/1/95+)........................... 1,000 1,038
10.25%, 1/1/09 (Pre-refunded 1/1/95+).......................... 7,000 7,361
TECP, 3.00 - 3.20%, 9/22 - 10/11/94................................ 8,300 8,300
North Carolina Municipal Leasing Corp., Winston-Salem, COP, 3.40%, 12/1/94. 7,000 6,998
- ---------------------------------------------------------------------------------------------------------------------------
OHIO -- 0.3%
Cleveland-Cuyahoga County Port Auth., VRDN (Currently 3.20%)............... 2,000 2,000
- ---------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA -- 0.2%
Montgomery County IDA, W. W. Grainger, VRDN (Currently 3.25%).............. 1,230 1,230
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Amounts in Thousands
----------------------------
Face Amount Value
----------- ----------
<S> <C> <C>
RHODE ISLAND -- 1.0%
Rhode Island, GO, TAN, 4.25%, 6/30/95...................................... $ 7,100 $ 7,110
- ---------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA -- 1.4%
Piedmont Municipal Power Agency, 9.50%, 1/1/18 (Pre-refunded 1/1/95+)...... 1,000 1,049
11.00%, 1/1/14 (Pre-refunded 1/1/95+).......................... 1,825 1,924
(AMBAC Insured), 10.50%, 1/1/19 (Pre-refunded 1/1/95+)......... 1,000 1,052
Spartanburg County, Siemens Energy & Automation,
VRDN (Currently 3.15%)......................................... 6,400 6,400
- ---------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA -- 1.5%
South Dakota State HEFA, Sioux Valley Hosp., VRDN (Currently 3.45%)........ 11,500 11,500
- ---------------------------------------------------------------------------------------------------------------------------
TENNESSEE -- 2.5%
Knox County Health, Education & Housing Fac. Board, Mercy Health System,
(MBIA Insured), VRDN (Currently 3.10%)......................... 8,910 8,910
Memphis, GO, VRDN (Currently 3.20%)........................................ 10,000 10,000
- ---------------------------------------------------------------------------------------------------------------------------
TEXAS -- 19.5%
Brownsville Utility System, 10.625%, 9/1/09 (Pre-refunded 9/1/94+)......... 4,650 4,766
Dallas County Community College Dist., VRDN (Currently 3.25%).............. 21,600 21,600
Dallas/Fort Worth Regional Airport, TECP, 3.30%, 11/14/94.................. 1,300 1,300
Hale County Industrial Dev. Corp., PCR, 3.75%, 3/1/95...................... 5,000 4,998
Harris County, TAN, 4.00%, 2/28/95......................................... 16,200 16,227
Harris County Health Fac. Dev. Corp., Methodist Hosp.,
VRDN (Currently 3.15%)......................................... 8,400 8,400
Sisters of Charity of the Incarnate Word, TECP, 3.30%,
10/20 - 11/22/94............................................... 18,900 18,898
St. Luke's Episcopal Hosp., VRDN (Currently 3.15%)................. 6,900 6,900
Harris County IDC, Lubrizol Corp., VRDN (Currently 3.10%).................. 3,000 3,000
Texas A & M Univ., Permanent Univ. Fund, TECP, 2.75 - 3.30%,
9/8 - 11/21/94..................................................... 23,300 23,292
Texas PFA, GO, TECP, 2.60 - 3.05%, 9/7 - 12/1/94........................... 13,000 12,988
University of Texas Board of Regents, TECP, 2.90 - 3.30%, 9/1 - 10/17/94... 24,107 24,105
- ---------------------------------------------------------------------------------------------------------------------------
UTAH -- 2.8%
Alpine School Dist., GO, (AMBAC Insured), 5.00%, 3/15/95................... 2,365 2,381
Utah HFA, Single Family Mortgage, (CGIC Insured),
VRDN (Currently 3.10%)......................................... 18,500 18,500
- ---------------------------------------------------------------------------------------------------------------------------
VIRGINIA -- 6.0%
Fairfax County IDA, Fairfax Hosp. System, VRDN (Currently 3.00%)........... 5,600 5,600
Inova Health System, TECP, 2.55 - 3.30%, 10/3 - 11/18/94........... 14,200 14,193
Hampton Roads Sanitation Dist., 2.80%, 10/1/94............................. 6,090 6,087
Roanoke IDA, Roanoke Memorial Hosp., VRDN (Currently 3.15%)................ 4,900 4,900
Rockingham County PCR, Merck & Company, VRDN (Currently 3.40%)............. 2,400 2,400
Virginia HDA, 3.00%, 12/15/94.............................................. 12,000 11,974
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
T. Rowe Price Tax-Exempt Money Fund
Statement of Net Assets
<TABLE>
<CAPTION>
Amounts in Thousands
----------------------------
Face Amount Value
----------- ----------
<S> <C> <C>
WASHINGTON -- 1.0%
King County, GO, 4.00%, 1/1/95............................................. $ 2,735 $ 2,738
Municipality of Metropolitan Seattle, 7.00%, 1/1/16 (Pre-refunded 1/1/95+). 3,535 3,645
Washington Health Care Fac., Fred Hutchinson Cancer,
VRDN (Currently 3.10%)............................................. 900 900
- ---------------------------------------------------------------------------------------------------------------------------
WISCONSIN -- 0.4%
Oak Creek, Wisconsin Electric Power Co., VRDN (Currently 3.10%)............ 2,900 2,900
===========================================================================================================================
Total Investments In Securities - 103.3% (Cost - $775,043)................. 774,857
===========================================================================================================================
Other Assets Less Liabilities - (3.3)% .................................... (24,735)
----------
Net Assets Consisting Of:
Accumulated net investment income - net of distributions................... 142
Accumulated realized gains/losses - net of distributions................... (263)
Net unrealized depreciation of investments................................. (186)
Paid-in-capital applicable to 750,505,058 shares of $0.01 par value capital
stock outstanding; 5,000,000,000 shares authorized................. 750,429
---------
Net Assets - 100.0%........................................................ $ 750,122
==========
Net Asset Value Per Share.................................................. $1.00
======
</TABLE>
+ - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
BAN - Bond Anticipation Note
CGIC - Capital Guaranty Insurance Corporation
COP - Certificates of Participation
EFA - Education Facility Authority
FGIC - Financial Guaranty Insurance Company
GO - General Obligation
HDA - Housing, Development Authority
HEFA - Health & Educational Facility Authority
HFA - Health Facility Authority
HHEFA - Health & Higher Educational
Facility Authority
IDA - Industrial Development Authority
IDC - Industrial Development Corporation
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance
Corporation
PCR - Pollution Control Revenue
PFA - Public Facility Authority
RAN - Revenue Anticipation Note
RAW - Revenue Anticipation Warrant
TAN - Tax Anticipation Note
TECP - Tax-Exempt Commercial Paper
TRAN - Tax Revenue Anticipation Note
VRDN - Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
T. Rowe Price Tax-Exempt Money Fund
Statement of Operations / Six Months Ended August 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Amounts in Thousands
------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest income............................................................... $10,796
Expenses
Investment management fees.................................................. $ 1,734
Shareholder servicing fees & expenses....................................... 373
Custodian and accounting fees & expenses.................................... 94
Legal & auditing fees....................................................... 27
Registration fees & expenses................................................ 25
Prospectus & shareholder reports............................................ 18
Directors' fees & expenses.................................................. 8
Proxy & annual meeting expenses............................................. 5
Miscellaneous............................................................... 9
--------
Total expenses.............................................................. 2,293
-------
Net investment income......................................................... 8,503
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
Net realized gain on securities............................................. 3
Change in net unrealized appreciation or depreciation....................... (70)
--------
Net loss on investments....................................................... (67)
-------
INCREASE IN NET ASSETS FROM OPERATIONS........................................ $ 8,436
=======
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
T. Rowe Price Tax-Exempt Money Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Amounts in Thousands
-----------------------------------------
Six Months Ended Year Ended
Aug. 31, 1994 Feb. 28, 1994
---------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income...................................... $ 8,503 $ 14,241
Net realized gain on investments........................... 3 1,171
Change in unrealized appreciation or depreciation
of investments............................................ (70) (713)
---------- ---------
Increase in net assets from operations..................... 8,436 14,699
---------- ---------
Distributions to shareholders
Net investment income...................................... (8,503) (14,241)
---------- ---------
Capital share transactions ($1.00 per share)
Proceeds from sales of shares ............................. 466,709 909,622
Distributions reinvested .................................. 7,895 13,181
Payment for shares redeemed................................ (457,315) (886,060)
---------- ---------
Increase in net assets from capital share transactions..... 17,289 36,743
---------- ---------
Total increase............................................... 17,222 37,201
NET ASSETS
Beginning of period........................................ 732,900 695,699
---------- ---------
End of period.............................................. $ 750,122 $ 732,900
========== =========
======================================================================================================================
</TABLE>
T. Rowe Price Tax-Exempt Money Fund
Notes to Financial Statements / August 31, 1994 (Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Tax-Exempt Money Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company.
A) Security valuation - Securities with more than 60 days remaining to
maturity 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. Securities 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 - Premiums on municipal securities are amortized
for both financial and tax reporting purposes. Discounts, other than
original issue, are not amortized for financial 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
8
<PAGE>
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 - 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 income. The Fund has unused realized capital loss carryforwards for
federal income tax purposes of $266,000 at February 28, 1994, which expire in
1998. Capital loss carryforwards utilized in the fiscal year ended February
28, 1994 amounted to $1,171,000. The Fund intends to retain gains realized
in future periods that may be offset by available capital loss carryforwards.
At August 31, 1994, the aggregate cost of investments for federal
income tax and financial reporting purposes was $775,043,000 and net
unrealized depreciation aggregated $186,000, of which $54,000 related to
appreciated investments and $240,000 to depreciated investments.
NOTE 3 - 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, computed daily and paid monthly, consisting 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 0.31% for assets in
excess of $34 billion. The effective annual Group Fee rate at August 31,
1994, and for the six months then ended was 0.34%. The Fund pays a pro rata
portion of the Group Fee based on the ratio of the Fund's net assets to those
of the Group.
T. Rowe Price Services, Inc. (TRPS) is a wholly owned subsidiary of the
Manager. TRPS provides transfer and dividend disbursing agent functions and
shareholder services for all accounts. The Manager, under a separate agreement,
calculates the daily share price and maintains the financial records of the
Fund. For the six months ended August 31, 1994, the Fund incurred fees totalling
approximately $330,000 for these services provided by related parties. At August
31, 1994, investment management and service fees payable were $370,000.
9
<PAGE>
T. Rowe Price Tax-Exempt Money Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
---------------------------------------------------------------------
Six Months Year Ended
Ended ----------------------------------------------------------
Aug. 31, Feb. 28, Feb. 28, Feb. 29, Feb. 28, Feb. 28,
1994 1994 1993 1992 1991 1990
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- ----------
Investment Activities
Net investment income................. 0.011 0.020 0.023 0.036 0.051 0.057
Distributions
Net investment income................. (0.011) (0.020) (0.023) (0.036) (0.051) (0.057)
-------- -------- -------- -------- -------- ----------
NET ASSET VALUE, END OF PERIOD............ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ==========
======================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Total Return.............................. 1.10% 2.05% 2.36% 3.69% 5.22% 5.87%
Ratio of Expenses to Average Net Assets... 0.59%+ 0.59% 0.60% 0.61% 0.60% 0.60%
Ratio of Net Investment Income
to Average Net Assets................. 2.19%+ 2.04% 2.35% 3.65% 5.12% 5.75%
Net Assets, End of Period (in thousands).. $750,122 $732,900 $695,699 $801,846 $977,638 $1,064,141
======================================================================================================================
</TABLE>
+ Annualized.
10
<PAGE>
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--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m., E.T. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
IN PERSON--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While
there, you can drop off applications or obtain prospectuses and other
literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access/(R)/ (1-800-638-2587) provides information such as
account balance, date and amount of your last transaction, latest dividend
payment, and fund prices and yields. Additionally, you have the ability to
request prospectuses, statements, account and tax forms; reorder checks; and
initiate purchase, redemption, and exchange orders for identically registered
accounts.
PC*Access/(R)/ provides the same information as Tele*Access, but on
a personal computer via dial-up modem.
ACCOUNT SERVICES
Checking--Write checks for $500 or more on any money market and bond
fund accounts (except the High Yield Fund).
Automatic Investing--Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
INVESTMENT INFORMATION
Combined Statement--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides
total portfolio value, and lists your investments by type -- stock, bond, and
money market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports--Portfolio managers review the
performance of the funds in plain language and discuss T. Rowe Price's
economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant
articles on market trends, personal financial planning, and T. Rowe Price's
economic perspective.
Insights--A library of information that includes reports on mutual
fund tax issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix
Worksheet, College Planning Kit, Retirees Financial Guide, Retirement
Planning Kit (also available on disk for PC use), and Guide to Risk-Adjusted
Performance can help you determine and reach your investment goals.
DISCOUNT BROKERAGE
You can trade stocks, bonds, options, precious metals, and other securities
at a substantial savings over regular commission rates. Call a shareholder
service representative for more information.
11
<PAGE>
T. Rowe Price No-Load Mutual Funds
STABILITY
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money
Market
Tax-Exempt Money
CONSERVATIVE INCOME
Adjustable Rate
U.S. Government
Short-Term Bond
Short-Term Global Income
Summit Limited-Term Bond
U.S. Treasury Intermediate
Florida Insured Intermediate
Tax-Free
Maryland Short-Term
Tax-Free Bond
Summit Municipal
Intermediate
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
INCOME
Global Government Bond
GNMA
New Income
Spectrum Income
Summit GNMA
U.S. Treasury Long-Term
California Tax-Free Bond
Georgia Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Tax-Free Income
Virginia Tax-Free Bond
AGGRESSIVE INCOME
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Equity Index
Growth & Income
Spectrum Growth
Value
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
International Discovery
Latin America
New America Growth
New Asia
New Horizons
OTC
Science & Technology
PERSONAL STRATEGY FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Call if you want to know about any T. Rowe Price Fund. We'll send you a
prospectus with more complete information, including management fees and other
expenses. Read it carefully before you invest or send money.
12
<PAGE>
Fellow Shareholders
Solid economic growth continued through the summer despite increases in
interest rates during late winter and spring. Real GDP increased 3.8% in the
second quarter, and payroll employment gains averaged 270,000 per month in
the three months ended August 31. The civilian unemployment rate remained
around 6.1% while the capacity utilization rate stayed at about 84% -- both
measures indicating little slack left in the economy. The Federal Reserve
paused to reassess the health of the economy in July, but continued to
increase rates in August when the strength of the economy became clearer. In
addition, fears of a pickup in inflation became evident.
Short-term interest rates continued to rise during the three months
ended August 31 because of these concerns and the Fed's fifth tightening
move, which raised its target for the federal funds rate another 50 basis
points to 4.75%. Intermediate-term interest rates did not rise as much as
short-term rates, while the yield on the benchmark 30-year Treasury bond was
essentially unchanged during the period. This contrasts with the preceding
quarter, when note and bond yields rose between 75 and 125 basis points in
response to earlier Fed moves.
In the tax-exempt market, short-term yields also rose while
intermediate- and long-term yields were mostly flat. The yield on six-month
notes closed the quarter at 3.65%, 40 basis points higher than at the end of
the May 31 quarter. Intermediate-term bonds with five-year maturities
actually rose slightly in price with yields declining five basis points to
4.75%, while the yield on AAA 30-year General Obligation bonds was up five
basis points to 6.1% during the period. This yield continued to average about
82% of the yield on long-term Treasury bonds, indicating that long-term
municipal bonds would benefit investors in income tax brackets over 18%.
Municipal Bond and Note Yields
[ARTWORK APPEARS HERE]
The disproportionate rise in short-term rates relative to longer-term
rates has led to a "flattening" of the yield curve typical of an economic
expansion. Notwithstanding the sharp rise in long-term rates earlier this
year, bond yields ordinarily do not fluctuate as much as money market yields
over the business cycle since bonds, with their long-term horizons, are less
susceptible to cyclical pressures. As a result, the "slope" of the yield
curve usually flattens in times of prosperity and steepens when the economy
is slowing down.
SUMMARY AND OUTLOOK
We expect the general rise in interest rates to lead to slower economic
growth during the second half of the year--but not to a decisive slowdown.
The Federal Reserve is likely to lift its target for the fed funds rate even
further to ensure that the economy does not continue growing at above-average
rates, spurring inflationary pressures. Further tightening moves will surely
lead to higher yields on money market securities, but the outlook for
intermediate- and long-term interest rates is more complex. To the extent
that economic growth slows, the 200-basis-point increase in long-term rates
over year-ago levels may be enough of a cushion against moderately higher
inflation. If economic growth is above average or if inflation gains
<PAGE>
momentum, however, we would expect intermediate- and long-term rates to trend
higher.
We are a bit more optimistic about the tax-exempt market than the
taxable market since demand for tax-free income remains strong. In addition,
the supply of new issues is down from levels of the past two years--a
situation that we expect to continue for the balance of the year. This
combination of strong demand and reduced supply should help tax-free bonds
outperform their taxable equivalents.
We appreciate the continued confidence that all of our shareholders
have placed in us.
Respectfully submitted,
/s/ William T. Reynolds
William T. Reynolds
Director
Fixed-Income Division
September 23, 1994
A Word About Derivatives
As you are probably aware, derivatives are securities whose returns are
determined by an underlying index, asset, or security. Some derivatives can
be extremely risky and others conservative, actually serving to reduce risk.
We have historically been cautious regarding the use of these instruments.
Over the past quarter, derivative usage other than for hedging principal
volatility represented less than 3% of any municipal bond fund's assets.
While our past use of derivatives has not been significant, we feel
that there are times when certain types of derivatives are appropriate. We
want to assure you that, as with any investment of your money, we will employ
a prudent and professional approach in the use of derivatives.
TAX-EXEMPT MONEY FUND
We began the quarter with expectations that tax-exempt short-term interest
rates would rise sharply because of both fundamental and technical factors.
Our fundamental outlook was validated by the Fed's mid-August tightening
move, but the market's reaction to the heavy seasonal slate of new offerings
was different from past experience. Typically, municipal note yields rise in
late July and August as supply outstrips demand and yields become attractive
relative to taxable securities until the new supply is absorbed.
This year, the move to higher yields from technical considerations
was muted for several reasons, including: an overall reduction in seasonal
borrowings from previous years; an extension in maturities past money market
range; and the restructuring of newly issued notes into variable rate
securities. While these factors alleviated supply pressures, on the demand
side money fund assets were firm throughout the quarter, and the short-term
market received support from long-term investors who held higher-than-normal
cash positions against rising interest rates.
Even though yields on short-term tax-exempt securities remained less
attractive than in the past compared with taxable equivalents, we extended
our weighted average maturity late in the quarter as it became apparent that
we might not see the previously favorable relationships. Our note purchases
were concentrated in the four- to nine-month maturity range. This maturity
range offers higher yields than shorter-term securities while preserving our
flexibility to take advantage of rising rates. Your Fund turned in favorable
performances for the three- and six-month periods, as is shown below.
Performance Comparison
<TABLE>
<CAPTION>
Periods Ended 8/31/94
3 Months 6 Months
--------- ---------
<S> <C> <C>
Tax-Exempt Money Fund 0.58% 1.10%
Donoghue's Tax-Free
Money Fund Average* 0.55 1.06
=========================================================
</TABLE>
*Stockbroker and General Purpose Funds.
2
<PAGE>
TAX-FREE SHORT-INTERMEDIATE FUND
Intermediate-term interest rates took a breather after a volatile first
quarter, moving in a narrow range and ending the quarter virtually unchanged.
The contraction in the number of new issues and steady demand for
intermediate-term bonds, which are more defensive than long-term bonds, lent
stability to this part of the market. Issuance of new debt is about 40% below
year-ago levels throughout the country, with certain regional exceptions, and
new issuance of intermediate-term bonds has been particularly light.
We used this stable environment to lower our effective duration and
weighted average maturity slightly to 2.4 and 2.9 years, respectively, from
their levels at the end of the previous fiscal quarter. The weighted average
quality of portfolio securities was virtually unchanged at the AA level. In
line with our defensive posture, we emphasized higher-coupon bonds with
shorter durations rather than bonds with lower coupons, and avoided the
potential tax problem posed by "market discount" bonds, which allows capital
gains to be taxed as ordinary income in certain instances.
With inflationary pressures likely to increase, we expect to keep the
Fund's duration at the short end of our neutral range. Your Fund performed in
line with the average for its peer group during the quarter and outperformed
for the longer period, as shown below.
Performance Comparison
<TABLE>
<CAPTION>
Periods Ended 8/31/94
3 Months 6 Months
---------- --------
<S> <C> <C>
Tax-Free Short-Intermediate
Fund 1.03% 0.90%
Lipper Short Municipal
Debt Fund Average 1.01 0.64
========================================================
</TABLE>
TAX-FREE INSURED INTERMEDIATE BOND FUND
A stable market environment during the quarter, strong demand for tax-free
income, and a reduction in the supply of new issues caused municipal bond
yields in the five- to 10-year range to decline by five basis points. AAA
General Obligation yields in this maturity range closed the quarter 70% to
73%, respectively, of the yields on similar Treasuries--versus 71% and 74% at
the end of May.
Portfolio duration was extended slightly from 5.3 years to 5.4 years
during the quarter. The weighted average maturity was also slightly longer at
7.2 years, compared with 7.0 years in May. We sold securities in the five- to
seven-year area and reinvested the proceeds in both cash and 10-year
securities. This type of maturity structure should set the stage for better
relative performance as the yield curve flattens. Your Fund also emphasized
high coupon bonds that cushion price declines when rates rise and eliminate
the "market discount" problem (which allows capital gains to be taxed as
income in some instances).
Over the past six months this Fund has performed well against its
peers with a somewhat defensive posture. At this point we see little reason
to change course, considering our expectation for higher interest rates. An
even more defensive posture could be warranted if the economy continues to
grow strongly.
Performance Comparison
<TABLE>
<CAPTION>
Periods Ended 8/31/94
3 Months 6 Months
--------- ---------
<S> <C> <C>
Tax-Free Insured Intermediate
Bond Fund 1.31% 0.36%
Lipper Intermediate Municipal
Debt Fund Average 1.37 -0.28
=========================================================
</TABLE>
3
<PAGE>
TAX-FREE INCOME FUND
During the last three- and six-month periods we managed the Fund less
aggressively than in prior years, believing that stronger economic growth and
the Federal Reserve's tightening would result in higher interest rates. The
Fund's duration, which measures sensitivity to changing rates, remained in
the 7.5- to 7.7-year range and reflects a neutral posture relative to the
market. The Fund's weighted average maturity of approximately 17 1/2 years is
down significantly from year-ago levels, and the Fund's portfolio contains
less volatile bonds than in the past.
Throughout the first eight months of the year, we have been buying
securities exhibiting relatively low volatility, whose expected returns are
generated primarily by income. Specifically, we have been concentrating on
bonds with higher coupons with maturities in the vicinity of 20 years. In
most instances we preferred high-quality bonds since the yields on
lower-quality securities are not high enough to compensate for the additional
risk.
We chose not to be fully defensive in the last quarter since rates
have already risen substantially and municipal bonds offered good value
compared with other fixed-income securities on an after-tax basis.
A major benefit of the rise in rates so far this year is an increase
in the Fund's dividend yield from 5.57% to 5.74%. Additionally, your Fund
outperformed its peer group in both the three- and six-month periods.
Performance Comparison
<TABLE>
<CAPTION>
Periods Ended 8/31/94
3 Months 6 Months
--------- ---------
<S> <C> <C>
Tax-Free Income Fund 1.45% -1.39%
Lipper General Municipal
Debt Fund Average 1.38 -1.83
=========================================================
</TABLE>
TAX-FREE HIGH YIELD FUND
The quarter ended August 31 was favorable for the Fund. We maintained a neutral
posture as our concern about rising interest rates was offset significantly by
favorable market conditions for municipal bonds. We currently define as neutral
a duration between 6.75 and 7.5 years and a weighted average maturity (WAM)
between 20 and 22 years. We maintained an effective duration of 7.5 and a WAM of
around 20 years. The percentage of securities with maturities of 10 years or
longer was unchanged at 85% from the previous quarter. The Fund's weighted
average credit quality held steady at BBB+, and exposure to below-investment-
grade securities was unchanged at 24% of net assets.
The relatively low level of new issues coming to market served as
support for tax-exempt bond prices, as previously discussed. Looking ahead to
the third fiscal quarter, we may adopt a slightly more defensive posture,
particularly if inflationary pressures show signs of building up. The Fund's
three- and six-month results compared favorably with peer group averages
shown below.
Performance Comparison
<TABLE>
<CAPTION>
Periods Ended 8/31/94
3 Months 6 Months
--------- ----------
<S> <C> <C>
Tax-Free High Yield Fund 1.73% -1.01%
Lipper High Yield Municipal
Debt Fund Average 1.58 -1.47
=========================================================
</TABLE>
4
<PAGE>
Financial Summary
<TABLE>
<CAPTION>
Net Asset Value Dividend Per Share Dividend Yield*
Per Share 3 Months Ended 3 Months Ended
------------------ ------------------ -------------------
05/31/94 08/31/94 05/31/94 08/31/94 05/31/94 08/31/94
<C> <C> <C> <C> <C> <C>
Tax-Exempt Money $ 1.00 $ 1.00 $ 0.005 $ 0.006 2.38% 2.66%
Tax-Free Short-Intermediate 5.26 5.26 0.053 0.054 4.00 4.08
Tax-Free Insured Intermediate Bond 10.34 10.36 0.111 0.114 4.28 4.41
Tax-Free Income 9.22 9.22 0.129 0.133 5.57 5.74
Tax-Free High Yield 11.71 11.73 0.180 0.181 6.07 6.18
</TABLE>
* 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;
the Tax-Exempt Money Fund reports a 7-day compound yield.
Quality Diversification
<TABLE>
<CAPTION>
Weighted Average
Quality Ratings* Quality*
---------------------------------------------- ---------------------
1 2 3 4 5-10 05/31/94 08/31/94
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money 13% 85% 2% 0% 0% 1.9 1.9
Tax-Free Short-Intermediate 22 54 22 2 - 2.1 2.1
Tax-Free Insured Intermediate Bond 14 74 12 - - 1.9 2.0
Tax-Free Income 10 52 26 11 1 2.4 2.4
Tax-Free High Yield 5 18 16 36 25 3.6 3.6
</TABLE>
* On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
5
Duration and Maturity
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Effective Duration (years) Maturity (years)
-------------------------- ------------------
05/31/94 08/31/94 05/31/94 08/31/94
<S> <C> <C> <C> <C>
Tax-Exempt Money - - 49* 58*
Tax-Free Short-Intermediate 2.6 2.4 3.1 2.9
Tax-Free Insured Intermediate Bond 5.3 5.4 7.0 7.2
Tax-Free Income 7.6 7.7 17.6 17.8
Tax-Free High Yield 7.3 7.5 19.6 20.6
</TABLE>
* Maturity is in days.
5
<PAGE>
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--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m., E.T. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
IN PERSON--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access/(R)/ (1-800-638-2587) provides information such as account
balance, date and amount of your last transaction, latest dividend payment, and
fund prices and yields. Additionally, you have the ability to request
prospectuses, statements, account and tax forms; reorder checks; and initiate
purchase, redemption, and exchange orders for identically registered accounts.
PC*Access/(R)/ provides the same information as Tele*Access, but on a
personal computer via dial-up modem.
ACCOUNT SERVICES
Checking--Write checks for $500 or more on any money market and bond
fund accounts (except the High Yield Fund).
Automatic Investing--Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
INVESTMENT INFORMATION
Combined Statement--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides total
portfolio value, and lists your investments by type -- stock, bond, and money
market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports--Portfolio managers review the performance
of the funds in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights--A library of information that includes reports on mutual fund
tax issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can help
you determine and reach your investment goals.
DISCOUNT BROKERAGE
You can trade stocks, bonds, options, precious metals, and other securities
at a substantial savings over regular commission rates. Call a shareholder
service representative for more information.
6
<PAGE>
T. Rowe Price No-Load Mutual Funds
STABILITY
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money
Market
Tax-Exempt Money
CONSERVATIVE INCOME
Adjustable Rate
U.S. Government
Short-Term Bond
Short-Term Global Income
Summit Limited-Term Bond
U.S. Treasury Intermediate
Florida Insured Intermediate
Tax-Free
Maryland Short-Term
Tax-Free Bond
Summit Municipal
Intermediate
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
INCOME
Global Government Bond
GNMA
New Income
Spectrum Income
Summit GNMA
U.S. Treasury Long-Term
California Tax-Free Bond
Georgia Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Tax-Free Income
Virginia Tax-Free Bond
AGGRESSIVE INCOME
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Equity Index
Growth & Income
Spectrum Growth
Value
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
International Discovery
Latin America
New America Growth
New Asia
New Horizons
OTC
Science & Technology
PERSONAL STRATEGY FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Call if you want to know about any T. Rowe Price Fund. We'll send you a
prospectus with more complete information, including management fees and other
expenses. Read it carefully before you invest or send money.
7
<PAGE>
SemiAnnual Report
T. Rowe Price
- -------------
Tax-Free Funds
August 31, 1994
[LOGO OF RAM APPEARS HERE]
For yield, price, last transaction
and current balance, 24 hours,
7 days a week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distri-
bution only to shareholders and to
others who have received a copy of
the prospectus of the T. Rowe Price
Tax-Free Funds.
[LOGO OF T. ROWE PRICE APPEARS HERE]
<PAGE>
Chart for Tax-Free Funds semiannual report (Aug. 31, 1994)
Chart 1. Municipal bond and note yields. Line graphs of 30-year AAA GO bonds,
5-year AAA GO, and 6-month Moody's Investment Grade 1 Note, showing yields from
8/31/93 through 8/31/94.
