<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
Vigorous economic growth and Federal Reserve tightening dominated the fixed-
income markets in 1994. Real growth of 4% last year exceeded the historical
trend of approximately 2.5%. The target for the fed funds rate climbed with the
economy's strong pace, rising from 3% at the beginning of last year to 6% after
the most recent tightening on February 1, 1995. The Federal Reserve pursued its
monetary policy to slow economic growth to a level that will contain inflation.
Future Fed action will reflect its goal of preventing excessive inflation
without spurring significantly higher unemployment.
Rising yields characterized the tax-exempt market during most of 1994.
The yield on one-year AAA General Obligation (GO) bonds peaked in December at
4.9%, up from 3% at the end of February 1994. However, as the market
strengthened over the last several months, the one-year yield retreated to 4.4%
by the funds' fiscal year-end. The five-year AAA GO bond yield ended this
quarter at 5%, 70 basis points higher than a year ago but 50 basis points lower
than at the end of November (100 basis points equal one percent). On the long
end, the yield on 30-year AAA GO bonds was almost 6%, up from 5.6% a year
earlier but down from its November peak of 6.8%.
Yields declined after the Fed's sixth tightening of the year in
November. Anticipation of a slowing economy, good news on inflation, and
- --------------------------------------------------------------------------------
Municipal Bond and Note Yields
- --------------------------------------------------------------------------------
[CHART APPEARS HERE]
limited supply of tax-exempt bonds all contributed to the recent drop in yields.
Issuance fell to a four-year low last year and could be even lower in 1995.
TAX-EXEMPT MONEY FUND
Last year's rise in interest rates was bad news for bond investors but good
news for money market investors as current yields rose substantially during
the past 12 months. Your fund's seven-day compound yield stood at 3.57% at
the end of the fiscal year, compared with 2.21% a year ago.
During the past 12 months, the municipal short-term yield curve has
steepened substantially. For example, the difference in yield between an
overnight investment and a one-year security averaged 1.21 percentage points
over the past year, compared with an average difference of 0.48 of a percentage
point during the preceding 12-month period. The long end of the money market
curve followed the rate rise orchestrated by the Fed, while very short-term
yields stayed low, responding to light supply and strong investor demand in a
tightening environment.
Issuance of short-term securities fell to $34.1 billion from $45.4
billion during the fiscal year, the lowest level in five years, the result of
more long-term bonds being sold in 1992 and 1993 to lock in historically low
borrowing costs. At the moment, we see nothing on the horizon that will
increase short-term supply.
Your fund closed the fiscal year with a weighted average maturity of 44
days, modestly longer than our peer group average of 40 days, but significantly
shorter than the fund's 55-day average at the beginning of the year. We expect
the short-term market to remain sensitive to further rate hikes. However, the
light supply of new issues, low dealer inventories, and solid demand induce us
to keep maturities slightly longer than the average for our peer group to gain
extra yield.
Your fund's performance was in line with its peer group during the
past three months, and above the average for the entire fiscal year.
<PAGE>
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Exempt Money Fund 0.80% 2.63%
IBC/Donoghue Money Fund
Report Average* 0.80 2.56
- --------------------------------------------------------------------------------
</TABLE>
*Stockbroker and General Purpose Funds.
TAX-FREE SHORT-INTERMEDIATE FUND
In the past year we maintained a relatively short, defensive portfolio
duration, focusing on high-quality securities and avoiding bonds with low
coupons selling at deep discounts, which do not perform well when interest
rates are going up. Duration, which measures price sensitivity to changes in
interest rates, dipped as low as 2.2 years in mid-October, but lengthened to
2.5 by year-end.
We extended duration for several reasons. First, short-term yields
seemed to have overshot reasonable expectations of Fed tightening. Second,
although new issuance was low, secondary supply was high, providing more
investment choices. Third, we anticipated increasing demand for tax-free bonds
in January 1995 with coupon payments due and older bonds maturing.
Our investment strategy resulted in an increase in your fund's
annualized yield for the quarter to 4.5% from 4% a year ago. We intend to
proceed with caution in the months ahead, maintaining a neutral duration
combined with a defensive high credit quality and high coupon structure. Your
fund's objective is to provide a higher yield than money market funds offer,
with small share price fluctuation.
Our strategy served us well through 1994, allowing the fund to
significantly outperform the peer group average for both the quarter and the
fiscal year ended February 28.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Free Short-Intermediate
Fund 2.68% 2.91%
Lipper Short Municipal
Debt Fund Average 2.38 2.10
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE INSURED INTERMEDIATE BOND FUND
Our investment strategy for the fund was similar to that of the Short-
Intermediate Fund. Essentially, we maintained a short or defensive duration,
focused on securities with relatively high credit quality, and stayed away from
low coupon bonds selling at significant discounts, which decline in value more
than high coupon bonds when rates are rising.
When bonds looked particularly attractive in November, we extended
maturities to take advantage of low prices and high yields. We raised your
portfolio's duration to 5.4 years by the end of December, after it had fallen as
low as 4.9 years in mid-October.
Federal Reserve Chairman Alan Greenspan has recently given the market
mixed signals on the direction of monetary policy. Signs that the economy could
be slowing from its strong pace prompted him to suggest that the Fed may have
finished tightening, at least for a while. However, he also warned that further
rate hikes could lie ahead if the weakness of the U.S. dollar leads to higher
inflation. Accordingly, we will continue to maintain a neutral duration and a
defensive posture with high credit quality and high coupons in the near term.
Our strategy resulted in a stronger performance than our peer group
average during the fiscal year. Fourth quarter performance was robust, although
slightly behind the average for similar funds.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Free Insured Intermediate
Bond Fund 5.47% 2.65%
Lipper Intermediate Municipal
Debt Fund Average 5.66 1.65
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE INCOME FUND
With last year's strong economy, the Federal Reserve's tightening, and poor
cash flow into municipal funds, we believed rates would likely rise, driving
bond prices down. In this environment, we managed your fund conservatively
for most of the last 12 months.
First and foremost, we attempted to dampen the fund's sensitivity to
changing interest rates
2
<PAGE>
by reducing the weighted average maturity and duration. Throughout most of
1993, we kept the fund's average maturity in the 18- to 20-year range and
effective duration to around eight years. During the first three quarters of
1994, the average maturity was less than 18 years and we attempted to keep
duration under 7.5 years. (Duration, a time-weighted measure of a bond's cash
flow expressed in years, shows a bond or bond fund's price sensitivity to a
change in interest rates.)
Second, we attempted to make the fund less sensitive to rising rates
by swapping lower coupon bonds for those with higher coupons. Low coupon
bonds selling at a discount usually decline in price more than high coupon
bonds when rates rise. Also, a change in the 1993 tax law subjected some
gains realized from sales of market discount bonds to ordinary income taxes,
rendering these securities less desirable to some investors. Finally, we
gradually increased the reserves portion of the portfolio from the beginning
of the year through October.
As rates rose steeply in the fall, and investors anticipated some
slowing in economic growth in 1995, we felt the fund would benefit from a
more aggressive strategy. Therefore, we extended average maturity closer to
18 years from 16.3 years in October, increased duration to 7.8 years from a
low of about 7 years, and reduced reserves to less than 5% of the portfolio
from more than 10%. We took these actions to allow the fund to perform in
line with the rally in municipal bonds. However, we did not see sufficient
evidence of a slowdown to warrant a fully aggressive strategy.
Last year saw major changes in interest rates, and the fund's
performance reflects this movement. While results were modest for the fiscal
year, we are pleased that your fund provided an excellent three-month return and
outperformed its peer group average during both reporting periods.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Free Income Fund 8.76% 1.90%
Lipper General Municipal
Debt Fund Average 8.60 0.64
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE HIGH YIELD FUND
The high yield sector of the municipal market was not immune to last year's
volatility. For the most part, we sought to maintain a neutral to somewhat
defensive stance for your fund versus the overall market. This meant keeping
duration in a range of 7.25 to 7.75 years, with cash levels averaging between
5% and 6%. We also maintained a weighted average maturity of 19 to 20 years,
down from 22 years during the strong markets of 1993.
Our aim was to provide a cushion against rising interest rates and to
maintain sufficient liquidity, balanced against our constant goal of generating
high yields. To meet the last objective, we kept a minimum of 82% of holdings in
maturities exceeding 10 years.
Although low issuance presented a challenge for all municipal investors,
reduced supply was even more pronounced in the high yield area. While credit
spreads widened in selected sectors, particularly health care, this was offset
at times by a limited supply of new high yield issues. Despite these challenges,
we were still able to select lower quality issues that brought value to the
fund. Overall credit quality was unchanged at BBB+.
Despite the market's volatility, your fund outperformed its peer group
for the fiscal year, and performed strongly in the quarter, although it lagged
the competition. The fund has exceeded the average performance of other tax-free
high yield funds for the past seven years, and for eight of its 10 complete
fiscal years since inception.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Free High Yield Fund 7.05% 1.26%
Lipper High Yield Municipal
Debt Fund Average 7.55 1.06
- --------------------------------------------------------------------------------
</TABLE>
OUTLOOK
The U.S. economy should continue to grow, although at a lower rate than in 1994.
To date, the Fed's actions appear to be starting to slow the pace of growth,
keeping inflation in check.
3
<PAGE>
However, in the near term, we do expect some acceleration in inflation based on
tight labor markets and relatively high capacity utilization. This may result in
somewhat higher interest rates over the next few months, but most likely lower
than the levels reached in the fall. Moreover, light new issuance combined with
continued strong demand for tax-exempt bonds could result in better overall
returns in the municipal bond market in 1995.
It is worth noting that 1994 was tumultuous for fixed income
investors because of rising interest rates, widespread misuse of derivatives,
and a large municipal bankruptcy. We want to assure you that we will continue
to make investments that are appropriate for each fund's risk profile. In those
funds that can purchase derivatives, our exposure has been modest and has not
introduced undue risk for shareholders. In addition, our avoidance of the Orange
County crisis reinforces the value of thorough, independent credit research.
We appreciate the continued trust our shareholders have placed in us.
Respectfully submitted,
/s/ William T. Reynolds
William T. Reynolds
Director, Fixed Income Division
March 17, 1995
- --------------------------------------------------------------------------------
Financial Summary
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value Dividend Per Share/+/ Dividend Yield*
Per Share 3 Months Ended 3 Months Ended
------------------ ---------------------- --------------------
11/30/94 02/28/95 11/30/94 02/28/95 11/30/94 02/28/95
<S> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money $ 1.00 $ 1.00 $ 0.007 $ 0.008 3.12% 3.57%
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 5.17 5.25 0.06 0.06 4.28 4.52
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 9.93 10.35 0.12 0.12 4.68 4.86
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Income 8.63 9.25 0.13 0.13 6.02 6.01
- --------------------------------------------------------------------------------------------------------------------
Tax-Free High Yield 11.03 11.62 0.18 0.18 6.46 6.61
</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.
Money Fund reports seven-day compound yield.
+ Taxability of dividends. 100% of the dividends paid for the 12 months ended
2/28/95 were exempt from federal income tax.
- --------------------------------------------------------------------------------
Quality Diversification
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quality Ratings* Weighted Average Quality*
-------------------------------------- ---------------------------
1 2 3 4 5-10 11/30/94 02/28/95
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money 12% 86% 2% 0% 0% 1.9 1.9
- -----------------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 42 40 17 1 0 1.9 1.8
- -----------------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 34 57 9 0 0 2.0 1.8
- -----------------------------------------------------------------------------------------------------------------
Tax-Free Income 10 53 25 12 0 2.4 2.4
- -----------------------------------------------------------------------------------------------------------------
Tax-Free High Yield 4 19 17 36 24 3.6 3.6
</TABLE>
* On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
4
<PAGE>
- --------------------------------------------------------------------------------
Duration and Maturity
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Effective Duration (years) Maturity (years)
-------------------------- ---------------------
11/30/94 02/28/95 11/30/94 02/28/95
<S> <C> <C> <C> <C>
Tax-Exempt Money -- -- 43.0* 44.0*
- ---------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 2.5 2.5 3.1 3.1
- ---------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 5.5 5.1 7.4 7.0
- ---------------------------------------------------------------------------------------------------
Tax-Free Income 7.9 7.8 17.2 17.9
- ---------------------------------------------------------------------------------------------------
Tax-Free High Yield 7.7 7.3 19.0 19.9
</TABLE>
* Maturity is in days.
- --------------------------------------------------------------------------------
Fiscal-Year Performance
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
----------------------------------------------------------
1 Year 5 Years 10 Years Since Inception
<S> <C> <C> <C> <C> <C>
Tax-Exempt Money 2.63% 3.18% 4.06% 4.73% (4/81)
- ----------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 2.91 5.56 5.90 6.02 (12/83)
- ----------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 2.65 N/A N/A 6.69 (11/92)
- ----------------------------------------------------------------------------------------------------------
Tax-Free Income 1.90 8.08 8.59 7.18 (10/76)
- ----------------------------------------------------------------------------------------------------------
Tax-Free High Yield 1.26 8.16 -- 9.73 (3/85)
</TABLE>
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison --
Tax-Free Insured Intermediate Bond Fund
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
5
<PAGE>
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison -- Tax-Free Short-Intermediate Fund
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison -- Tax-Free Income Fund
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison -- Tax-Free High Yield Fund
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
6
<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., ET. 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, and 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 and Emerging Markets Bond 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.
7
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
T. Rowe Price
- -------------
TAX-FREE FUNDS
FEBRUARY 28, 1995
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 distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Tax-Free Funds.
T. Rowe Price
Invest With Confidence(R)
TFF
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
TAX-EXEMPT MONEY FUND
February 28, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Investment Record
- --------------------------------------------------------------------------------
The table below shows the investment record of one share of the T. Rowe Price
Tax-Exempt Money Fund, purchased at the original offering price of $1.00. Over
this time, interest rates have been volatile. The results shown should not be
considered a representation of the dividend income or capital gain or loss which
may be realized from an investment made in the Fund today.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Fiscal With With Dividends
Year Net Asset Income Dividends and Capital Gains Total
Ended Value Dividends Reinvested Reinvested Return
- ---------- --------- --------- ---------- ----------------- --------
<S> <C> <C> <C> <C> <C>
2/28/82/1/ $1.00 $0.07 $1.07 $1.07 6.89%
- ----------------------------------------------------------------------------------------------
1983 1.00 0.07 1.15 1.15 7.10
- ----------------------------------------------------------------------------------------------
1984 1.00 0.05 1.21 1.21 5.22
- ----------------------------------------------------------------------------------------------
1985 1.00 0.06 1.28 1.28 5.93
- ----------------------------------------------------------------------------------------------
1986 1.00 0.05 1.34 1.34 5.02
- ----------------------------------------------------------------------------------------------
1987 1.00 0.04 1.40 1.40 4.30
- ----------------------------------------------------------------------------------------------
1988 1.00 0.04 1.46 1.46 4.47
- ----------------------------------------------------------------------------------------------
1989 1.00 0.05 1.53 1.53 5.08
- ----------------------------------------------------------------------------------------------
1990 1.00 0.06 1.63 1.63 5.87
- ----------------------------------------------------------------------------------------------
1991 1.00 0.05 1.71 1.71 5.22
- ----------------------------------------------------------------------------------------------
1992 1.00 0.04 1.77 1.77 3.69
- ----------------------------------------------------------------------------------------------
1993 1.00 0.02 1.81 1.81 2.36
- ----------------------------------------------------------------------------------------------
1994 1.00 0.02 1.85 1.85 2.05
- ----------------------------------------------------------------------------------------------
1995 1.00 0.03 1.90 1.90 2.63
- ----------------------------------------------------------------------------------------------
TOTAL $0.65
- ----------------------------------------------------------------------------------------------
</TABLE>
/1/ From inception 4/8/81 to 2/28/82.
TEM
<PAGE>
- --------------------------------------------------------------------------------
Sector Diversification / February 28, 1995
T. Rowe Price Tax-Exempt Money Fund
- --------------------------------------------------------------------------------
Percent of
Net Assets
Hospital Revenue 30%
- --------------------------------------------------------------------------------
Educational Revenue 19
- --------------------------------------------------------------------------------
Industrial & Pollution
Control Revenue 12
- --------------------------------------------------------------------------------
General Obligation-Local 11
- --------------------------------------------------------------------------------
General Obligation-State 6
- --------------------------------------------------------------------------------
Nuclear Revenue 6
- --------------------------------------------------------------------------------
Electric Revenue 5
- --------------------------------------------------------------------------------
Percent of
Net Assets
Miscellaneous Revenue 3%
- --------------------------------------------------------------------------------
Pooled Loan Revenue 3
- --------------------------------------------------------------------------------
Water & Sewer Revenue 3
- --------------------------------------------------------------------------------
Housing Finance Revenue 2
- --------------------------------------------------------------------------------
Lease Revenue 2
- --------------------------------------------------------------------------------
Pre-refunded Bonds 1
- --------------------------------------------------------------------------------
Other Assets Less Liabilities -3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price Tax-Exempt Money Fund / February 28, 1995
- --------------------------------------------------------------------------------
(amounts in thousands, except capital stock information)
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
ALABAMA -- 0.1%
Birmingham, GO, VRDN (Currently 4.15%)........................................... $ 1,000 $ 1,000
- ---------------------------------------------------------------------------------------------------------------------
ALASKA -- 2.4%
Alaska HFC, VRDN (Currently 4.10%)............................................... 11,500 11,500
Valdez Marine Terminal, Exxon Pipeline Company, TECP, 4.15%, 3/30/95............. 5,000 5,000
- ---------------------------------------------------------------------------------------------------------------------
ARIZONA -- 2.8%
Phoenix, GO, VRDN (Currently 3.75%).............................................. 2,400 2,400
Salt River Project, Agricultural Improvement & Power Dist.,
TECP, 4.00 - 4.25%, 4/3 - 7/21/95........................................ 16,712 16,708
- ---------------------------------------------------------------------------------------------------------------------
ARKANSAS -- 2.3%
Arkansas Dev. Fin. Auth., Sisters of Mercy, VRDN (Currently 4.05%)............... 15,500 15,500
- ---------------------------------------------------------------------------------------------------------------------
CALIFORNIA -- 3.6%
Alameda County, GO, TRAN, 4.75%, 8/11/95......................................... 5,000 4,987
California, GO, (AMBAC Insured), 5.00%, 8/1/95................................... 4,300 4,306
Contra Costa County, GO, TRAN, 4.25%, 7/7/95..................................... 3,600 3,583
Los Angeles County, Local Ed. Agencies, TRAN, 4.50%, 7/6/95...................... 5,000 4,990
Oakland, COP, VRDN (Currently 4.40%)............................................. 6,800 6,800
- ---------------------------------------------------------------------------------------------------------------------
COLORADO -- 1.6%
Colorado HFA, Kaiser Permanente, VRDN (Currently 4.00%).......................... 9,100 9,100
Denver IDR, W. W. Grainger, VRDN (Currently 4.15%)............................... 2,190 2,190
- ---------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA -- 2.0%
Dist. of Columbia, American Univ., VRDN (Currently 4.15%)........................ 13,530 13,530
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
FLORIDA -- 7.4%
Jacksonville Electric Auth., TECP, 3.75 - 4.30%, 3/6 - 7/20/95................... $ 20,500 $ 20,496
Orange County IDA, W. W. Grainger, VRDN (Currently 4.15%)........................ 1,185 1,185
Orlando, Waste Water System, TECP, 4.05 - 4.10%, 3/1 - 3/7/95.................... 8,500 8,500
Sarasota County HFA, Venice Hosp., VRDN (Currently 3.90%)........................ 6,810 6,810
Sunshine State Gov't. Finance Commission,
TECP, 4.05 - 4.20%, 3/14 - 5/11/95....................................... 13,800 13,800
- ---------------------------------------------------------------------------------------------------------------------
GEORGIA -- 2.4%
Burke County Dev. Auth. PCR, Oglethorpe Power, (FGIC Insured),
VRDN (Currently 3.90%)................................................... 8,000 8,000
Dekalb County Hosp. Auth., Dekalb Medical Center, RAN,
VRDN (Currently 4.05%)................................................... 450 450
Fulton County Dev. Auth., National Red Cross, VRDN (Currently 4.05%)............. 550 550
Georgia, GO, 5.80%, 3/1/95....................................................... 5,275 5,275
Georgia Tech Foundation Fac. Auth., Wardlaw Project,
VRDN (Currently 4.00%)................................................... 2,200 2,200
- ---------------------------------------------------------------------------------------------------------------------
HAWAII -- 0.4%
Hawaii Dept. of Budget & Fin., Queens Medical Center, (FGIC Insured),
VRDN (Currently 4.10%)................................................... 2,000 2,000
Honolulu City & County, GO, TECP, 3.75%, 3/7/95.................................. 1,000 1,000
- ---------------------------------------------------------------------------------------------------------------------
IDAHO -- 0.5%
Idaho, GO, TAN, 4.50%, 6/29/95................................................... 3,500 3,500
- ---------------------------------------------------------------------------------------------------------------------
ILLINOIS -- 11.2%
Chicago, GO, VRDN (Currently 3.95%).............................................. 5,300 5,300
4.60%, 10/31/95.......................................................... 3,300 3,300
Illinois Dev. Fin. Auth., Palos Community Hosp., VRDN (Currently 4.00%).......... 24,000 24,000
Illinois EFA, Field Museum of Natural History, VRDN (Currently 4.15%)............ 2,000 2,000
Northwestern Univ., VRDN (Currently 4.10%)............................... 11,586 11,586
VRDN (Currently 4.15%)................................................... 9,700 9,700
VRDN (Currently 4.50%)................................................... 1,500 1,500
Illinois HFA, Children's Memorial Hosp., VRDN (Currently 4.15%).................. 8,600 8,600
Univ. of Chicago Hosp., (MBIA Insured), VRDN (Currently 4.00%)........... 9,600 9,600
Niles Village, IDR, W. W. Grainger, VRDN (Currently 4.15%)....................... 1,000 1,000
- ---------------------------------------------------------------------------------------------------------------------
INDIANA -- 1.9%
Gary, IDR, W. W. Grainger, VRDN (Currently 4.15%)................................ 730 730
Mount Vernon, PCR, General Electric, TECP, 4.05 - 4.10%, 3/29 - 5/4/95........... 11,990 11,988
- ---------------------------------------------------------------------------------------------------------------------
KENTUCKY -- 2.3%
Jefferson County, PCR, Louisville Gas & Electric,
TECP, 4.25 - 4.30%, 5/11 - 6/6/95........................................ 6,685 6,684
Kentucky Turnpike Auth., Toll Road, 13.375%, 7/1/10 (Pre-refunded 8/15/95+)...... 1,170 1,229
Trimble County, PCR, Louisville Gas & Electric,
TECP, 4.20 - 4.30%, 5/15 - 6/8/95........................................ 8,000 7,999
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Exempt Money Fund / Statement of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- ---------
<S> <C> <C>
LOUISIANA -- 7.3%
East Baton Rouge Parish, Exxon, TECP, 3.95 - 4.05%, 3/6 - 4/11/95................ $ 12,000 $ 11,990
Louisiana, 9.30%, 5/1/98 (Pre-refunded 5/1/95+).................................. 4,000 4,113
Louisiana PFA, Sisters of Charity of the Incarnate Word,
TECP, 4.25 - 4.50%, 5/24 - 7/25/95....................................... 8,400 8,387
Willis Knighton Medical Center, (AMBAC Insured),
VRDN (Currently 3.95%)................................................... 13,500 13,500
Orleans Levee Dist., Levee Improvement, VRDN (Currently 4.15%)................... 4,310 4,310
Public Improvement, VRDN (Currently 4.15%)................................... 7,950 7,950
- ---------------------------------------------------------------------------------------------------------------------
MAINE -- 1.0%
Maine, GO, BAN, 5.00%, 6/1/95.................................................... 5,000 5,008
TAN, 4.50%, 6/30/95...................................................... 2,000 2,001
- ---------------------------------------------------------------------------------------------------------------------
MARYLAND -- 8.2%
Baltimore City, Highway User, GO, RAN, 5.00%, 6/9/95............................. 5,000 5,009
Baltimore County, Sheppard and Enoch Pratt Hosp. Fac.,
VRDN (Currently 3.95%)....................................................... 7,500 7,500
Baltimore County Metropolitan Dist., GO, 6.375%, 4/1/95.......................... 1,000 1,002
Howard County, GO, BAN, TECP, 4.05 - 4.25%, 4/6 - 5/3/95......................... 10,800 10,798
Maryland HHEFA, Johns Hopkins Univ., 6.20%, 7/1/95............................... 10,080 10,138
9.00%, 7/1/05 (Pre-refunded 7/1/95+)...................................... 500 518
Kennedy Kreiger Institute, VRDN (Currently 4.05%)............................ 6,500 6,500
Loyola College, VRDN (Currently 3.70%)....................................... 7,500 7,500
Montgomery County Economic Dev., Howard Hughes Medical Fac.,
VRDN (Currently 4.00%)....................................................... 5,000 5,000
Washington Suburban Sanitary Dist., GO, BAN, VRDN (Currently 3.90%).............. 2,400 2,400
- ---------------------------------------------------------------------------------------------------------------------
MICHIGAN -- 1.7%
Detroit School Dist., State Aid Note, GO, RAN, 5.00%, 5/1/95..................... 11,600 11,613
- ---------------------------------------------------------------------------------------------------------------------
MINNESOTA -- 5.6%
Cottage Grove, PCR, Minnesota Mining & Mfg., VRDN (Currently 4.44%).............. 2,000 2,000
Rochester Health Care Fac., Mayo Foundation/Mayo Medical Center,
VRDN (Currently 4.20%)....................................................... 10,100 10,100
TECP, 4.05 - 4.20%, 4/11 - 5/17/95........................................... 13,900 13,900
Univ. of Minnesota, TECP, 4.05 - 4.30%, 4/6 - 7/19/95............................ 8,800 8,797
Univ. of Minnesota, 4.50%, 8/1/95................................................ 3,675 3,676
- ---------------------------------------------------------------------------------------------------------------------
MISSISSIPPI -- 1.0%
Jackson County, Chevron USA, VRDN (Currently 3.90%).............................. 2,900 2,900
Mississippi, GO, 10.00%, 12/1/95................................................. 2,000 2,078
Rankin County, PCR, Siemens Energy & Automation,
VRDN (Currently 4.05%)....................................................... 1,600 1,600
- ---------------------------------------------------------------------------------------------------------------------
MISSOURI -- 3.1%
Independence, Water Utility, TECP, 4.15%, 5/8/95................................. 4,000 3,999
Missouri Environmental Improvement & Energy Resources Auth.,
Union Electric, TECP, 4.25%, 5/30/95......................................... 4,145 4,146
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
MISSOURI (cont'd)
Missouri HEFA, Sisters of Mercy Health, VRDN (Currently 4.05%)................... $ 8,500 $ 8,500
St. Anthony's Medical Center, VRDN (Currently 4.05%)..................... 4,300 4,300
- ---------------------------------------------------------------------------------------------------------------------
NEW MEXICO -- 0.4%
Albuquerque, VRDN (Currently 4.10%).............................................. 3,000 3,000
- ---------------------------------------------------------------------------------------------------------------------
NEW YORK -- 2.9%
Great Neck Union Free School Dist., GO, TAN, 4.50%, 6/30/95...................... 1,000 1,001
New York City, GO, RAN, 4.50%, 4/12/95........................................... 7,000 7,001
New York State Power Auth., 3.80%, 3/1/95........................................ 5,000 5,000
4.40%, 9/1/95............................................................ 6,800 6,797
- ---------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA -- 0.1%
Univ. of North Carolina, Chapel Hill, 5.80%, 8/1/95.............................. 1,000 1,005
- ---------------------------------------------------------------------------------------------------------------------
OHIO -- 0.6%
Akron, Sanitary Sewer Systems, VRDN (Currently 4.10%)............................ 2,000 2,000
Cleveland - Cuyahoga County Port Auth., Rock & Roll Hall of Fame Museum,
VRDN (Currently 4.10%)................................................... 2,000 2,000
- ---------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA -- 0.2%
Montgomery County, IDR, W. W. Grainger, VRDN (Currently 4.15%)................... 1,230 1,230
- ---------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA -- 1.0%
Piedmont Municipal Power Agency, South Carolina Electric, 8.00%, 1/1/23
(Pre-refunded 1/1/96+)................................................... 500 521
Spartanburg County, Siemens Energy & Automation,
VRDN (Currently 4.05%)................................................... 6,400 6,400
- ---------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA -- 1.6%
South Dakota HEFA, Sioux Valley Hosp., VRDN (Currently 4.15%).................... 10,900 10,900
- ---------------------------------------------------------------------------------------------------------------------
TENNESSEE -- 4.5%
Knox County Health, Ed. & Housing Fac. Board, Mercy Health System,
(MBIA Insured), VRDN (Currently 4.00%)................................... 8,810 8,810
Memphis, GO, VRDN (Currently 4.05%).............................................. 9,000 9,000
Tennessee, GO, BAN, VRDN (Currently 3.75%)....................................... 13,000 13,000
- ---------------------------------------------------------------------------------------------------------------------
TEXAS -- 17.4%
Dallas County Community College Dist., VRDN (Currently 4.15%).................... 20,400 20,400
Dallas/Fort Worth Regional Airport, TECP, 4.10%, 4/10/95......................... 2,730 2,729
Hale County IDC, PCR, Amoco, TECP, 3.75%, 3/1/95................................. 5,000 5,000
Harris County, Toll Road, GO, VRDN (Currently 4.00%)............................. 3,000 3,000
Harris County Health Fac. Dev. Corp., Sisters of Charity of the Incarnate Word,
TECP, 4.00 - 4.20%, 4/13 - 5/31/95....................................... 15,200 15,195
Harris County IDC, Lubrizol Corp., VRDN (Currently 4.00%)........................ 4,100 4,100
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Exempt Money Fund / Statement of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- ---------
<S> <C> <C>
TEXAS (cont'd)
Hockley County IDC, Amoco, 4.75%, 9/1/95......................................... $ 15,000 $ 15,022
Midland, IDR, W. W. Grainger, VRDN (Currently 4.15%)............................. 775 775
San Antonio, Sewer, 8.75%, 5/1/05 (Pre-refunded 5/1/95+)......................... 2,000 2,055
8.00%, 5/1/10 (Pre-refunded 5/1/95+)..................................... 1,000 1,026
Texas A & M Univ., Permanent Univ. Fund, TECP, 3.90 - 4.25%, 4/7 - 5/11/95....... 15,000 14,996
Texas PFA, GO, TECP, 4.25 - 4.45%, 5/16 - 5/25/95................................ 14,900 14,905
Univ. of Texas Board of Regents, TECP, 3.75 - 4.30%, 3/8 - 5/16/95............... 20,107 20,107
- ---------------------------------------------------------------------------------------------------------------------
UTAH -- 0.3%
Alpine School Dist., Board of Ed., GO, (AMBAC Insured), 5.00%, 3/15/95........... 2,365 2,365
- ---------------------------------------------------------------------------------------------------------------------
VIRGINIA -- 3.9%
Fairfax County IDA, Fairfax Hosp. System, VRDN (Currently 4.05%)................. 1,400 1,400
Inova Health System, TECP, 4.00 - 4.50%, 3/8 - 7/25/95................... 18,700 18,700
Rockingham County IDA, Merck & Company, VRDN (Currently 4.25%)................... 2,400 2,400
Univ. of Virginia, VRDN (Currently 4.15%)........................................ 4,500 4,500
- ---------------------------------------------------------------------------------------------------------------------
WASHINGTON -- 0.1%
Washington HFA, Fred Hutchinson Cancer Research Center,
VRDN (Currently 3.80%)................................................... 760 760
- ---------------------------------------------------------------------------------------------------------------------
WISCONSIN -- 0.7%
Oak Creek, Wisconsin Electric Power Co., VRDN (Currently 4.05%).................. 2,900 2,900
Wisconsin, Operating Notes, GO, TAN, 4.50%, 6/15/95.............................. 2,000 2,001
- ---------------------------------------------------------------------------------------------------------------------
WYOMING -- 0.5%
Sublette County, PCR, Exxon, VRDN (Currently 3.90%).............................. 3,500 3,500
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Value
---------
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 103.0% OF NET ASSETS (COST $707,401).......... $707,310
- ---------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES.................................................... (20,288)
<CAPTION>
NET ASSETS CONSIST OF: Value
-------------
<C> <C>
Accumulated net investment income - net of distributions........................ $ 142
Accumulated net realized gain/loss - net of distributions....................... (245)
Net unrealized gain (loss)....................................................... (91)
Paid-in-capital applicable to 687,293,130 shares of $0.01 par
value capital stock outstanding; 5,000,000,000 shares authorized......... 687,216
------------
NET ASSETS....................................................................... $687,022
========
NET ASSET VALUE PER SHARE........................................................ $1.00
========
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
+ - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
BAN - Bond Anticipation Note
COP - Certificates of Participation
FGIC - Financial Guaranty Insurance Company
GO - General Obligation
HEFA - Health & Educational Facility Authority
HFA - Health Facility Authority
HFC - Housing Finance Corp.
HHEFA - Health & Higher Educational Facility Authority
IDA - Industrial Development Authority
IDC - Industrial Development Corp.
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
PFA - Public Facility Authority
RAN - Revenue Anticipation Note
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.
7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price Tax Exempt Money Fund / Year Ended February 28, 1995
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income............................................................... $23,879
-------
Expenses
Investment management....................................................... 3,346
Shareholder servicing....................................................... 619
Custody and accounting...................................................... 188
Prospectus and shareholder reports.......................................... 68
Registration................................................................ 55
Legal and audit............................................................. 43
Directors................................................................... 16
Proxy and annual meeting.................................................... 15
Miscellaneous............................................................... 16
-------
Total expenses.............................................................. 4,366
-------
Net investment income......................................................... 19,513
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on securities........................................ 22
Change in net unrealized gain or loss on securities........................... 24
-------
Net realized and unrealized gain (loss)....................................... 46
-------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS............................. $19,559
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price Tax Exempt Money Fund
(in thousands)
<TABLE>
<CAPTION>
Year Ended February 28,
1995 1994
---------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income........................................ $ 19,513 $ 14,241
Net realized gain (loss)..................................... 22 1,171
Change in net unrealized gain or loss........................ 24 (713)
---------- ----------
Increase (decrease) in net assets from operations............ 19,559 14,699
---------- ----------
Distributions to shareholders
Net investment income........................................ (19,513) (14,241)
---------- ----------
Capital share transactions*
Shares sold.................................................. 852,803 909,622
Distributions reinvested..................................... 18,088 13,181
Shares redeemed.............................................. (916,815) (886,060)
---------- ----------
Increase (decrease) in net assets from capital
share transactions......................................... (45,924) 36,743
---------- ----------
Increase (decrease) in net assets.............................. (45,878) 37,201
NET ASSETS
Beginning of period............................................ 732,900 695,699
---------- ----------
End of period.................................................. $ 687,022 $ 732,900
========== ==========
- --------------------------------------------------------------------------------------------------------
*Share information
Shares sold.................................................. 852,803 909,622
Distributions reinvested..................................... 18,088 13,181
Shares redeemed.............................................. (916,815) (886,060)
---------- ----------
Increase (decrease) in shares outstanding.................... (45,924) 36,743
========== ==========
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price Tax Exempt Money Fund / February 28, 1995
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) Valuation - Debt securities are generally traded in the over-the-counter
market. Investments in 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
9
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Cont'd)
- --------------------------------------------------------------------------------
T. Rowe Price Tax Exempt Money Fund / February 28, 1995
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 and discounts on municipal securities
are accounted for in accordance with federal income tax regulations, which
require the amortization of all premiums and discounts except market
discounts. Market discounts are included in the gain or loss recorded on
disposition of the security for financial reporting purposes and ordinary
income for tax purposes.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Distributions to shareholders are
recorded by the fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with 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 $244,000 which expire in 1998. Capital loss
carryforwards utilized in the period ended February 28, 1995 amounted to
$22,000. The fund intends to retain gains realized in future periods that
may be offset by available capital loss carryforwards.
At February 28, 1995, the aggregate cost of investments for federal
income tax and financial reporting purposes was $707,401,000 and net
unrealized loss aggregated $91,000, of which $64,000 related to appreciated
investments and $155,000 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, of which $236,000 was payable at February 28, 1995. 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 0.31% for assets in
excess of $34 billion. At February 28, 1995, and for the period then ended,
the effective annual Group Fee rate was 0.34%. The fund pays a pro rata
share of the Group Fee based on the ratio of its net assets to those of the
Group.
In addition, the fund has entered into agreements with the Manager
and a wholly-owned subsidiary 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.
(TRPS) is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. The fund incurred
expenses pursuant to these related party agreements totaling approximately
$573,000 for the period ended February 28, 1995, of which $52,000 was payable
at period end.
10
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price Tax Exempt Money Fund
<TABLE>
<CAPTION>
For a share outstanding throughout each period
-----------------------------------------------------------------------
Year Ended
Feb. 28, Feb. 28, Feb. 28, Feb. 29, Feb. 28,
1995 1994 1993 1992 1991
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Investment Activities
Net investment income........................... 0.026 0.020 0.023 0.036 0.051
Distributions
Net investment income........................... (0.026) (0.020) (0.023) (0.036) (0.051)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return...................................... 2.63% 2.05% 2.36% 3.69% 5.22%
Ratio of Expenses to Average Net Assets........... 0.58% 0.59% 0.60% 0.61% 0.60%
Ratio of Net Investment Income
to Average Net Assets........................... 2.59% 2.04% 2.35% 3.65% 5.12%
Net Assets, End of Period (in thousands).......... $687,022 $732,900 $695,699 $801,846 $977,638
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of T. Rowe Price Tax-Exempt Money Fund, Inc.
We have audited the accompanying statement of net assets of T. Rowe
Price Tax-Exempt Money Fund, Inc. as of February 28, 1995, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of investments owned as of February 28, 1995, by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of T. Rowe Price Tax-Exempt Money Fund, Inc. as of February 28,
1995, the results of its operations, the changes in its net assets, and
financial highlights for each of the respective periods stated in the first
paragraph, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
March 17, 1995
12
