Semiannual Report - Financial Statements
T. Rowe Price
Tax-Exempt
Money Fund
August 31, 1999
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Portfolio Highlights
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SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
2/28/99 8/31/99
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Hospital Revenue 30% 33%
General Obligation - State 15 18
General Obligation - Local 19 14
Educational Revenue 11 10
Prerefunded Bonds 7 6
Industrial and Pollution Control Revenue 5 5
Nuclear Revenue 3 4
Dedicated Tax Revenue 2 3
Water and Sewer Revenue 1 2
Life Care/Nursing Home Revenue 1 2
Electric Revenue 2 2
All Other 4 3
Other Assets Less Liabilities -- -2
Total 100% 100%
T. Rowe Price Tax-Exempt Money Fund
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Unaudited
Financial Highlights For a share outstanding throughout each period
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Tax-Exempt shares
6 Months Year
Ended Ended
8/31/99 2/28/99 2/28/98 2/28/97 2/29/96 2/28/95
NET ASSET VALUE
Beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment
activities
Net investment
income 0.014 0.029 0.032 0 .030 0.033 0.026
Distributions
Net investment
income (0.014) (0.029) (0.032) (0.030) (0.033) (0.026)
NET ASSET VALUE
End of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $1.000 $ 1.000
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Ratios/Supplemental Data
Total
return(diamond) 1.38% 2.97% 3.24% 3.05% 3.38 2.63%
Ratio of total expenses
to average net assets 0.54%! 0.52% 0.52% 0.55% 0.56 0.58%
Ratio of net investment
income to average
net assets 2.72%! 2.93% 3.20% 3.00% 3.33 2.59%
Net assets,
end of period
(in thousands) $666,510 $710,569 $740,757 $678,135 $679,143 $687,022
(diamond) Total return reflects the rate that an investor would have
earned on an investment in the fund during each period, assuming
reinvestment of all distributions.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Tax-Exempt Money Fund
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Unaudited
Financial Highlights For a share outstanding throughout each period
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Tax-Exempt PLUS shares
6 Months 11/1/98
Ended Through
8/31/99 2/28/99
NET ASSET VALUE
Beginning of period $1.000 $1.000
Investment activities
Net investment income 0.013 0.007
Distributions
Net investment income (0.013) (0.007)
NET ASSET VALUE
End of period $1.000 $1.000
---------------------------
Ratios/Supplemental Data
Total return(diamond) 1.31% 0.74%
Ratio of total expenses
to average net assets 0.65%! 0.99%!
Ratio of net investment
income to average
net assets 2.62%! 2.01%!
Net assets, end of period (in thousands) $12,760 $4,208
(diamond) Total return reflects the rate that an investor would
have earned on an investment in the fund during the period,
assuming reinvestment of all distributions.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Tax-Exempt Money Fund
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Unaudited August 31, 1999
Statement of Net Assets Par Value
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In thousands
ALABAMA 3.1%
Birmingham, GO, VRDN (Currently 3.20%) $ 5,850 $ 5,850
Jefferson County, GO, VRDN (Currently 3.30%) 14,100 14,100
Univ. of Alabama, 6.90%, 10/1/99
(Escrowed to Maturity) 1,000 1,003
Total Alabama (Cost $20,953) 20,953
ALASKA 0.2%
Anchorage, GO, 6.40%, 7/1/00 (MBIA Insured) 500 511
Valdez Marine Terminal, Exxon Pipeline,
VRDN (Currently 2.70%) 500 500
Total Alaska (Cost $1,011) 1,011
ARIZONA 1.2%
Univ. of Arizona, Student Union Bookstore
3.55%, 3/8/00 (AMBAC Insured) 8,000 8,000
Total Arizona (Cost $8,000) 8,000
COLORADO 0.3%
Denver, IDR, W. W. Grainger, VRDN (Currently 3.40%) 2,190 2,190
Total Colorado (Cost $2,190) 2,190
DISTRICT OF COLUMBIA 0.7%
Dist. of Columbia, National Academy of Sciences, TECP
3.55%, 1/12/00 (AMBAC Insured) 4,000 4,000
Dist. of Columbia
American Univ., VRDN (Currently 3.30%) 1,000 1,000
Total District of Columbia (Cost $5,000) 5,000
FLORIDA 1.8%
Allegany Health System, St. Joseph's Hosp.,
7.375%, 12/1/99 1,000 1,030
Florida Dept. of Natural Resources
VRDN (Currently 3.34%) (FGIC Insured) 5,700 5,700
Hillsborough County IDA, PCR, Tampa Electric
VRDN (Currently 2.80%) 1,400 1,400
Jacksonville HFA, Genesis Rehabilitation Hosp.
VRDN (Currently 2.85%) 500 500
Manatee County, Public Utilities
6.00%, 10/1/99 (MBIA Insured) $ 1,100 $ 1,102
Orange County IDA, W. W. Grainger
VRDN (Currently 3.40%) 1,185 1,185
Tampa, Allegany Health
7.375%, 12/1/23 (FGIC Insured)
(Prerefunded 12/1/99!) 1,500 1,545
Total Florida (Cost $12,462) 12,462
GEORGIA 7.3%
Atlanta, Water and Sewer
VRDN (Currently 3.32%) (FGIC Insured) 3,995 3,995
Cobb County School Dist., GO, 3.50%, 12/31/99 3,700 3,705
Douglasville-Douglas Water and Sewer
6.875%, 6/1/09 (MBIA Insured)
(Prerefunded 6/1/00!) 1,000 1,044
Downtown Savannah Auth., GO, Public Ed.
VRDN (Currently 3.25%) 1,000 1,000
Fulton-DeKalb Private Hosp. Auth.
Children's Health, VRDN (Currently 3.25%) 1,000 1,000
Egleston Childrens Hosp., VRDN (Currently 3.25%) 17,400 17,400
Georgia, GO
VRDN (Currently 3.34%) 4,995 4,995
6.25%, 8/1/00 1,780 1,823
7.25%, 9/1/00 1,000 1,035
Georgia Municipal Gas Auth., VRDN (Currently 3.75%) 485 485
Gwinnett County Hosp. Auth.
VRDN (Currently 3.30%) (MBIA Insured) 1,000 1,000
Gwinnett County School Dist., GO
3.50%, 12/31/99 5,000 5,005
4.40%, 2/1/00 7,045 7,082
Total Georgia (Cost $49,569) 49,569
ILLINOIS 13.8%
Chicago, GO, VRDN (Currently 3.32%) (FGIC Insured) 2,495 2,495
Chicago Metropolitan Water Reclamation Dist., GO,
4.70%, 12/1/99 2,875 2 ,886
Chicago Water
5.00%, 11/1/99 (FGIC Insured) $ 2,200 $ 2,207
7.20%, 11/15/16 (FGIC Insured)
(Prerefunded 11/15/99!) 1,240 1,274
Cook County
GO
4.375%, 11/15/99 (MBIA Insured) 900 902
5.75%, 11/15/99 (MBIA Insured) 1,015 1,020
6.20%, 11/1/99 1,500 1,508
Illinois
GO
5.60%, 10/1/99 1,000 1,002
9.50%, 11/1/99 1,000 1,011
Illinois Dev. Fin. Auth., Palos Community Hosp.
VRDN (Currently 3.30%) 25,000 25,000
Illinois EFA, Northwestern Univ.,
VRDN (Currently 3.25%) 14,700 14,700
Illinois HFA
Advocate Health Care Network
VRDN (Currently 3.35%) 3,620 3,620
Little County of Mary Hosp.
VRDN (Currently 3.30%) (MBIA Insured) 12,795 12,795
Masonic Medical Center, 7.70%, 10/1/99
(Prerefunded 10/1/99) 1,000 1,023
Resurrection Health Care
VRDN (Currently 3.40%) (FSA Insured) 10,000 10,000
TECP, 3.50%, 11/24/99 10,000 10,000
Univ. of Chicago Hosp.
VRDN (Currently 3.25%) (MBIA Insured) 1,000 1,000
Niles Village, IDR, W. W. Grainger,
VRDN (Currently 3.40%) 1,000 1,000
Total Illinois (Cost $93,443) 93,443
INDIANA 0.9%
Gary, IDR, W. W. Grainger, VRDN (Currently 3.40%) 730 730
Indiana HFA, Charity Obligation Group
VRDN (Currently 3.20%) 500 500
Indianapolis Local Public Improvement Bond Bank
7.40%, 1/1/20 (Prerefunded 7/1/00!) 1,230 1,292
Petersburg Solid Waste, Ind. Power and Light
VRDN (Currently 3.30%) (AMBAC Insured) $ 3,800 $ 3,800
Total Indiana (Cost $6,322) 6,322
IOWA 3.0%
Iowa Fin. Auth., Iowa Health System
VRDN (Currently 3.25%) (AMBAC Insured) 17,300 17,300
Sheldon, Sioux Valley Hosp., VRDN (Currently 3.35%) 3,330 3,330
Total Iowa (Cost $20,630) 20,630
KANSAS 0.2%
Kansas DOT, 3.65%, 9/1/99 1,000 1,000
Wichita, GO, 6.30%, 9/1/00 475 487
Total Kansas (Cost $1,487) 1,487
KENTUCKY 3.0%
Kentucky, GO, TECP, 3.25%, 9/3/99 10,900 10,900
Kentucky Economic Dev. Fin. Auth.
Catholic Healthcare, VRDN (Currently 3.25%) 7,000 7,000
Health Alliance
VRDN (Currently 3.25%) (MBIA Insured) 1,160 1,160
Kentucky Turnpike Auth.
7.125%, 5/15/01 (Prerefunded 5/15/00!) 1,000 1,041
Total Kentucky (Cost $20,101) 20,101
LOUISIANA 3.1%
Louisiana, GO, 7.125%, 9/1/10 (Prerefunded 9/1/00!) 1,510 1,589
Louisiana Offshore Terminal Auth.,
VRDN (Currently 2.70%) 200 200
Louisiana PFA
Willis Knighton Medical Center
VRDN (Currently 3.40%) (AMBAC Insured) 11,500 11,500
New Orleans Aviation Board
VRDN (Currently 3.30%) (MBIA Insured) 1,800 1,800
Orleans Parish School Board, 8.40%, 2/1/00
(MBIA Insured) (Escrowed to Maturity) 1,230 1,256
Plaquemines Port, Harbor and Terminal, Chevron
3.50%, 9/1/99 $ 5,000 $ 4,974
Total Louisiana (Cost $21,319) 21,319
MARYLAND 13.3%
Baltimore County, GO, TECP, BAN,
3.30 - 3.45%, 10/7-11/9/99 12,000 12,000
Gaithersburg Economic Dev., Asbury Methodist
VRDN (Currently 3.30%) (MBIA Insured) 8,200 8,200
Howard County, Consolidated Public Improvement
GO, 4.00%, 2/15/00 1,300 1,305
6.90%, 5/15/05 (Prerefunded 5/15/00!) 2,180 2,236
Maryland DOT
3.875%, 6/15/00 1,000 1,004
6.50%, 11/1/99 8,820 8,870
6.60%, 11/1/00 (Prerefunded 11/1/99!) 2,500 2,533
Maryland HHEFA
Charlestown Community, VRDN (Currently 3.25%) 4,000 4,000
Johns Hopkins Hosp., VRDN (Currently 3.15%) 19,000 19,000
Johns Hopkins Univ., 6.20%, 7/1/00 10,255 10,255
Maryland Water Quality
6.50%, 9/1/99 1,110 1,110
7.25%, 9/1/11 (Prerefunded 9/1/00!) 1,245 1,312
Maryland-National Capital Park and Planning Commission, GO
Prince George's County, 5.50%, 1/15/00 1,000 1,009
Montgomery County, GO
6.80%, 11/1/05 (Prerefunded 11/1/99!) 1,500 1,539
6.875%, 10/1/99 1,500 1,505
Consolidated Public Improvement
6.80%, 11/1/08 (Prerefunded 11/1/99!) 2,400 2,462
7.00%, 4/1/07 (Prerefunded 4/1/00!) 2,000 2,083
Montgomery County Economic Dev. Auth.
Howard Hughes Medical Fac.
VRDN (Currently 3.25%) 1,000 1,000
Univ. of Maryland
Auxiliary Fac. and Tuition
6.40%, 4/1/04 (Prerefunded 4/1/00!) 1,145 1,188
7.00%, 10/1/05 (Prerefunded 10/1/99!) 1,500 1,514
7.20%, 10/1/09 (Prerefunded 10/1/99!) 1,400 1,433
Washington Suburban Sanitary Dist
6.625%, 12/1/01 (Prerefunded 12/1/99!) $ 2,000 $ 2,058
6.75%, 12/1/02 (Prerefunded 12/1/99!) 1,025 1,053
6.75%, 12/1/04 (Prerefunded 12/1/99!) 500 514
6.75%, 12/1/06 (Prerefunded 12/1/99!) 1,000 1,030
Total Maryland (Cost $90,213) 90,213
MASSACHUSETTS 1.4%
Massachusetts
GO
VRDN (Currently 3.20%) 4,000 4,000
VRDN (Currently 3.34%) 5,000 5,000
Massachusetts Water Resources Auth.
7.50%, 4/1/09 (Prerefunded 4/1/00!) 500 521
Total Massachusetts (Cost $9,521) 9,521
MINNESOTA 0.8%
Cottage Grove, PCR, Minnesota Mining and Mfg.
VRDN (Currently 3.51%) 500 500
Minnesota, GO, VRDN (Currently 3.34%) 2,700 2,700
Minnesota PFA, Water Pollution,
VRDN (Currently 3.34%) 2,300 2,300
Total Minnesota (Cost $5,500) 5,500
MISSISSIPPI 0.7%
Harrison County, PCR, E.I. Du Pont De Nemours
VRDN (Currently 2.75%) 800 800
Mississippi
GO
4.50%, 11/1/99 1,000 1,002
6.70%, 10/1/99 1,000 1,003
Rankin County, PCR, Siemens Energy and Automation
VRDN (Currently 3.30%) 1,600 1,600
Total Mississippi (Cost $4,405) 4,405
MISSOURI 0.4%
Missouri, GO, 6.40%, 9/1/99 $ 1,000 $ 1,000
Missouri HEFA
Sisters of Mercy Health Systems, 4.25%, 12/1/99 1,000 1,003
St. Anthony's Medical Center, VRDN (Currently 3.25%) 1,000 1,000
Total Missouri (Cost $3,003) 3,003
NEBRASKA 1.7%
Omaha Public Power Dist., Electric, 3.15%, 10/14/99 11,395 11,395
Total Nebraska (Cost $11,395) 11,395
NEVADA 1.8%
Clark County, GO, Las Vegas Convention and Visitors Auth.
5.40%, 7/1/00 (MBIA Insured) 2,000 2,028
Clark County School Dist., GO
VRDN (Currently 3.32%) (FGIC Insured) 7,995 7,995
Group #3, 7.65%, 5/1/10 (Prerefunded 5/1/00!) 2,000 2,092
Total Nevada (Cost $12,115) 12,115
NEW JERSEY 0.3%
New Jersey, GO, 6.25%, 9/15/99 585 586
New Jersey Transportation Trust Fund Auth.
GO, VRDN (Currently 3.24%) 1,495 1,495
Total New Jersey (Cost $2,081) 2,081
NEW YORK 1.3%
Long Island Power Auth., TECP, 3.25%, 9/7/99 3,000 3,000
Nassau County IDA, Cold Spring Harbor
VRDN (Currently 2.90%) 1,500 1,500
New York City Transitional Fin. Auth.
VRDN (Currently 2.70%) 4,350 4,350
Total New York (Cost $8,850) 8,850
NORTH CAROLINA 1.7%
Charlotte Mecklenburg Hosp. Auth.
North Carolina Health Care
VRDN (Currently 3.15%) $ 1,000 $ 1,000
VRDN (Currently 3.20%) 4,085 4,085
North Carolina, GO
VRDN (Currently 3.32%) 1,245 1,245
4.70%, 2/1/00 2,000 2,013
North Carolina EFA, Bowman Gray School of Medicine
VRDN (Currently 3.25%) 950 950
Raleigh, Equipment Acquisition Project, COP,
3.00%, 12/1/99 500 500
Winston Salem, GO, COP
VRDN (Currently 3.20%) 2,000 2,000
Total North Carolina (Cost $11,793) 11,793
OHIO 2.5%
Clermont County Hosp., Mercy Health System
VRDN (Currently 3.40%) 4,200 4,200
Columbus, GO, 8.125%, 5/1/00 1,000 1,030
Cuyahoga County Hosp., Univ. Hosp.
VRDN (Currently 3.30%) (AMBAC Insured) 10,000 10,000
Hamilton County Hosp. Fac., Health Alliance
VRDN (Currently 3.25%) (MBIA Insured) 2,000 2,000
Total Ohio (Cost $17,230) 17,230
OREGON 0.9%
Oregon, GO
5.90%, 2/1/00 500 505
Veterans' Welfare, VRDN (Currently 3.15%) 1,100 1,100
Oregon Housing and Community Services Department
Single Family Mortgage, 3.45%, 6/29/00 4,200 4,200
Total Oregon (Cost $5,805) 5,805
PENNSYLVANIA 3.9%
Doylestown Hosp. Auth.
VRDN (Currently 3.30%) (AMBAC Insured) 4,000 4,000
Lehigh County General Purpose Auth.,
Wiley House Kids Peace
8.75%, 11/1/99 (Prerefunded 11/1/99!) $ 3,500 $ 3,599
Montgomery County, IDA, W. W. Grainger
VRDN (Currently 3.40%) 1,230 1,230
Northampton County Higher Ed., Lafayette College
VRDN (Currently 3.35%) 6,300 6,300
Pennsylvania, GO
5.25%, 11/15/99 (AMBAC Insured) 900 904
6.00%, 9/15/99 1,500 1,502
Pennsylvania Turnpike Commission
7.25%, 12/1/17 (Prerefunded 12/1/99!) 1,000 1,030
7.50%, 12/1/19 (Prerefunded 12/1/99!) 500 515
Philadelphia HEFA, Jefferson Health,
3.25%, 3/30/00 3,950 3,950
Pittsburgh, Water & Sewer
7.40%, 9/1/99 (FGIC Insured)
(Escrowed to Maturity) 2,000 2,000
Pottsville Hosp. Auth., Charity Obligated Group
VRDN (Currently 3.20%) 1,300 1,300
Total Pennsylvania (Cost $26,330) 26,330
SOUTH CAROLINA 3.1%
Florence County, PCR, 7.60%, 3/1/14 (Prerefunded 3/1/00)
(AMBAC Insured) 2,000 2,063
South Carolina
GO
VRDN (Currently 3.32%) 3,495 3,495
6.20%, 2/1/00 2,875 2,911
Spartanburg County, Siemens Energy and Automation
VRDN (Currently 3.30%) 6,400 6,400
Western Carolina Regional Sewer, 6.75%, 3/1/10
(Prerefunded 3/1/00) 1,000 1,017
York County, PCR, Duke Power, TECP,
3.30%, 10/8/99 4,800 4,800
Total South Carolina (Cost $20,686) 20,686
SOUTH DAKOTA 2.2%
South Dakota HEFA
Sioux Valley Hosp.
VRDN (Currently 3.30%) $ 5,900 $ 5,900
VRDN (Currently 3.35%) 9,045 9,045
Total South Dakota (Cost $14,945) 14,945
TENNESSEE 1.7%
Knox County Health, Ed. and Housing Fac.
Catholic Healthcare
VRDN (Currently 3.25%) 7,600 7,600
Nashville and Davidson County
GO, 6.125%, 12/1/99 1,000 1,007
6.60%, 12/1/08 (Prerefunded 12/1/99!) 500 514
Vanderbilt Univ., 3.10%, 1/15/00 2,500 2,500
Total Tennessee (Cost $11,621) 11,621
TEXAS 11.8%
Austin Utility System, 11.00%,
11/15/04 (Prerefunded 11/15/99!) 1,080 1,097
Dallas County Community College Dist.
VRDN (Currently 3.30%) 14,800 14,800
Dallas Independent School Dist., 3.75%, 3/1/00
(Escrowed to Maturity) 1,200 1,204
Harris County
GO
VRDN (Currently 3.35%) 1,000 1,000
5.80%, 10/1/99 1,000 1,002
Harris County HFA
St. Luke's Episcopal Hosp. VRDN (Currently 3.10%) 6,900 6,900
Texas Childrens Hosp.
VRDN (Currently 3.30%) (MBIA Insured) 8,000 8,000
Hockley County IDC, PCR, Amoco Oil,
3.15%, 11/1/99 5,940 5,940
Houston, Water and Sewer Systems
5.90%, 12/1/99 (AMBAC Insured) 1,500 1,510
Midland, IDR, W. W. Grainger, VRDN
(Currently 3.40%) 775 775
Southwest Higher Ed. Auth., Southern Methodist Univ. Project
VRDN (Currently 3.25%) $ 9,200 $ 9,200
Texas
GO, TRAN, 4.50%, 8/31/00 19,000 19,146
8.30%, 12/1/16 (Prerefunded 12/1/99!) 1,000 1,012
Texas PFA, GO
4.40%, 10/1/99 3,400 3,404
8.00%, 10/1/99 3,930 3,946
Travis County HFA, Hosp. Charity Obligation Group
VRDN (Currently 3.20%) 1,000 1,000
Total Texas (Cost $79,936) 79,936
UTAH 3.9%
Intermountain Power Agency, 3.125%, 9/15/99 5,000 5,000
Utah
GO
VRDN (Currently 3.20%) 11,000 11,000
VRDN (Currently 3.30%) 7,500 7,500
Utah Board of Regents, Auxiliary and Campus Fac.
VRDN (Currently 3.25%) (AMBAC Insured) 2,800 2,800
Total Utah (Cost $26,300) 26,300
VERMONT 0.2%
Vermont, GO, 6.75%, 2/1/00 1,260 1,303
Total Vermont (Cost $1,303) 1,303
VIRGINIA 2.8%
Fairfax County
GO
VRDN (Currently 3.32%) 7,695 7,695
4.90%, 10/1/99 500 501
Roanoke IDA
Carilion Health
VRDN (Currently 2.95%) 900 900
VRDN (Currently 3.00%) 400 400
Roanoke Memorial Hosp.
VRDN (Currently 3.00%) 6,700 6,700
Rockingham County IDA, Merck,
VRDN (Currently 3.55%) $ 2,400 $ 2,400
Virginia Beach, GO, 5.20%, 9/1/99 500 500
Total Virginia (Cost $19,096) 19,096
WASHINGTON 4.3%
King County
GO
VRDN (Currently 3.32%) 1,100 1,100
4.20%, 6/1/00 500 502
4.60%, 12/1/99 1,000 1,004
Washington, GO
VRDN (Currently 3.25%) 10,000 10,000
6.00%, 9/1/99 (Escrowed to Maturity) 645 645
6.10%, 9/1/00 (Escrowed to Maturity) 1,905 1,950
6.70%, 10/1/99 3,000 3,008
Motor Vehicle Fuel, 6.50%, 7/1/00 835 854
Washington HFA, Fred Hutchinson Cancer Research Center
VRDN (Currently 3.10%) 2,900 2,900
Washington Public Power Supply
3.00%, 10/6/99 7,000 7,000
5.10%, 7/1/00 (MBIA Insured) 500 505
Total Washington (Cost $29,468) 29,468
WISCONSIN 2.1%
Milwaukee, GO
3.75%, 12/15/99 1,565 1,568
6.25%, 12/1/99 900 907
Wisconsin, GO
4.25%, 11/1/99 11,000 11,019
4.80%, 11/1/99 1,000 1,003
Total Wisconsin (Cost $14,497) 14,497
WYOMING 0.7%
Carbon County IDR, BP Amoco, 3.15%, 11/1/99 4,800 4,800
Total Wyoming (Cost $4,800) 4,800
Total Investments in Securities
102.1% of Net Assets (Cost $693,380) $693,380
Other Assets Less Liabilities (14,110)
NET ASSETS $679,270
Net Assets Consist of:
Accumulated net investment income - net of distributions $151
Accumulated net realized gain/loss - net of distributions 22
Paid-in-capital applicable to $0.01 par value capital stock
outstanding; 5,000,000,000 shares authorized 679,097
NET ASSETS $679,270
NET ASSET VALUE PER SHARE
Tax-Exempt Shares
($666,509,993/666,540,010 shares outstanding) $1.00
Tax-Exempt PLUS Shares
($12,759,792/12,759,711 shares outstanding) $1.00
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
BAN Bond Anticipation Note
COP Certificates of Participation
DOT Department of Transportation
EFA Educational Facility Authority
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance Corp.
GO General Obligation
HEFA Health & Educational Facility Authority
HFA Health Facility Authority
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
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.
T. Rowe Price Tax-Exempt Money Fund
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Unaudited
Statement of Operations
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In thousands
6 Months
Ended
8/31/99
Investment Income
Interest income $ 10,842
Expenses
Investment management 1,399
Shareholder servicing
Tax-Exempt shares 209
Tax-Exempt PLUS shares 35
Custody and accounting 79
Prospectus and shareholder reports 23
Legal and audit 11
Registration 5
Directors 4
Miscellaneous 21
Total expenses 1,786
Net investment income 9,056
Realized Gain (Loss)
Net realized gain (loss) on securities 2
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 9,058
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price Tax-Exempt Money Fund
- --------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
8/31/99 2/28/99
Increase (Decrease) in Net Assets
Operations
Net investment income $ 9,056 $ 22,091
Net realized gain (loss) 2 20
Increase (decrease) in net
assets from operations 9,058 22,111
Distributions to shareholders
Net investment income
Tax-Exempt Money shares (8,915) (22,083)
Tax-Exempt Money PLUS shares (141) (8)
Decrease in net assets from distributions (9,056) (22,091)
Capital share transactions*
Shares sold
Tax-Exempt Money shares 308,922 684,304
Tax-Exempt Money PLUS shares 22,243 5,383
Increase in net assets from shares sold 331,165 689,687
Distributions reinvested
Tax-Exempt Money shares 8,519 20,754
Tax-Exempt Money PLUS shares 141 8
Increase in net assets from
distributions reinvested 8,660 20,762
Shares redeemed
Tax-Exempt Money shares (361,502) (735,267)
Tax-Exempt Money PLUS shares (13,832) (1,182)
Decrease in net assets from shares redeemed (375,334) (736,449)
Increase (decrease) in net assets from
capital share transactions (35,509) (26,000)
Net Assets
Increase (decrease) during period (35,507) (25,980)
Beginning of period 714,777 740,757
End of period $ 679,270 $ 714,777
--------------------------
* Capital share transactions at net asset value of $1.00 per share.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Tax-Exempt Money Fund
- --------------------------------------------------------------------------------
Unaudited August 31, 1999
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Tax-Exempt Money Fund, Inc. (the fund) is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on April 8, 1981. Its goals are
preservation of capital, liquidity, and, consistent with these, the highest
current income exempt from federal income taxes. The fund offers two
classes of shares, Tax-Exempt and Tax-Exempt PLUS. Tax-Exempt PLUS was
first offered on November 1, 1998, and provides expanded shareholder
services, the cost of which is borne by the PLUS shareholders. Each class
has exclusive voting rights on matters related solely to that class,
separate voting rights on matters which relate to both classes, and, in all
other respects, the same rights and obligations as the other class.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Securities are valued at amortized cost. Assets and liabilities
for which such valuation procedures are deemed not to reflect fair value
are stated at fair value as determined in good faith by or under the
supervision of the officers of the fund, as authorized by the Board of
Directors.
Premiums and Discounts Premiums and original issue discounts on municipal
securities are amortized for both financial reporting and tax purposes.
Market discounts are recognized upon disposition of the security as gain or
loss for financial reporting purposes and as ordinary income for tax
purposes.
Class Accounting Shareholder servicing expenses are charged directly to
the class to which they relate. Expenses common to both classes, investment
income, and realized gains and losses are allocated to the classes based
upon the relative daily net assets of each class. Income distributions are
declared by each class on a daily basis, and paid monthly. Capital gain
distributions, if any, are declared by the fund on an annual basis.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Distributions to shareholders
are recorded by the fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with
generally accepted accounting principles. Credits earned on daily
uninvested cash balances at the custodian are used to reduce the fund's
custody charges.
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.
At August 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$693,380,000.
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 $239,000 was payable at August 31, 1999. 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 0.30% for assets in
excess of $80 billion. At August 31, 1999, and for the six months then
ended, the effective annual group fee rate was 0.32%. The fund pays a
pro-rata share of the group fee based on the ratio of its net assets to
those of the group.
The manager has agreed to bear any expenses through April 30, 2000, which
would cause Tax-Exempt PLUS' ratio of total expenses to average net assets
to exceed 1.00%. Thereafter, through April 30, 2001, Tax-Exempt PLUS is
required to reimburse the manager for these expenses, provided that its
average net assets have grown or expenses have declined sufficiently to
allow reimbursement without causing its ratio of total expenses to average
net assets to exceed 1.00%.
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.
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
$204,000 for the six months ended August 31, 1999, of which $31,000 was
payable at period-end.
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(registered trademark) and
the T. Rowe Price Web site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over full-service commission rates.**
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a January 1999 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending
on size of order.
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Intermediate Tax-Free**
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond***
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Bond
International Bond
MONEY MARKET FUNDS!
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors. ** Formerly named Florida Insured Intermediate
Tax-Free. *** Formerly named Tax-Free Insured Intermediate Bond.
! Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
funds.
Please call for a prospectus. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
T. Rowe Price Retirement Plans and Resources
- --------------------------------------------------------------------------------
Retirement Plans and Resources
We recognize that saving for retirement is the number one investment goal
for most Americans. We can help you meet your retirement needs, whether you
are starting an IRA or designing a retirement program for your employees.
T. Rowe Price offers an assortment of retirement plans for individuals, the
self-employed, small businesses, corporations, and nonprofit organizations.
We provide recordkeeping, communications, and investment management
services, as well as a variety of educational materials, self-help planning
guides, and software tools to help you choose and implement a retirement
plan appropriate for you. For information or to request literature, call us
at 1-800-638-5660.
IRAs AND QUALIFIED PLANS
Traditional IRA
Roth IRA
Rollover IRA
SEP-IRA
SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase Pension and Profit Sharing Plans)
401(k)
403(b)
457 Deferred Compensation
RETIREMENT RESOURCES AT T. ROWE PRICE
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Investment Kits
The IRA Investing Kit
Roth IRA Conversion Kit
Rollover IRA Kit
The T. Rowe Price SIMPLE IRA Plan Kit
The T. Rowe Price SEP-IRA Plan
The Simplified Keogh Plan(registered trademark) From T. Rowe Price
The T. Rowe Price 401(k) Century Plan(registered trademark)
(for small businesses)
Money Purchase Pension/Profit Sharing Plan Kit
Investing for Retirement in Your 403(b) Account
The T. Rowe Price No-Load Variable Annuity Information Kit
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning AnalyzerTM CD-ROM or diskette $19.95. To
order, please call 1-800-541-5760. Also available on the Internet for
$9.95.
T. Rowe Price Variable Annuity AnalyzerTM CD-ROM or diskette, free. To
order, please call 1-800-469-5304.
Many of these resources are also available for viewing or ordering on the
Internet at www.troweprice.com.
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
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 appropriate
to the fund or funds covered in this
report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
Invest With
Confidence(registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. F52-051 8/31/99
Semiannual Report
Tax-Free Funds
August 31, 1999
T. Rowe Price
Report Highlights
- --------------------------------------------------------------------------------
Tax-Free Funds
o Strong U.S. economic growth and rising interest rates hurt the bond
market over the past six months.
o All funds posted negative returns over the difficult six-month period,
except for the Tax-Exempt Money Fund and PLUS Class shares, which benefited
from higher short-term rates.
o A common goal across the funds was to improve the dividend yield as rates
rose.
o While rates could trend higher, |municipal bonds continue to offer
attractive after-tax yields at current levels.
UPDATES AVAILABLE
For updates on the fund following the end of each calendar quarter, please see
our Web site www.troweprice.com.
Fellow Shareholders
The U.S. economy's above-average growth during the six months ended August
31 was good for consumers but not so good for bond investors. Interest
rates rose throughout the period as investors worried about a buildup in
inflationary pressures and the possibility-which became an actuality-of
monetary tightening by the Federal Reserve. As a result, declines in
taxable and municipal bond prices led to meager or negative returns on most
longer-term bond funds for the period. The tax-free bond funds were not
immune to this trend.
MARKET ENVIRONMENT
For Municipal Bond and Notes Yields
- --------------------------------------------------------------------------------
30-Year AAA 5-Year AAA 1-Year Moody's
General Obligations General Obligations Investment Grade 1 Note
8/98 4.93 3.85 3.5
4.82 3.7 3.3
4.92 3.7 2.95
11/98 4.89 3.75 3.05
4.94 3.75 3.05
4.87 3.65 2.95
2/99 4.99 3.78 3
5.04 3.83 3.15
5.08 3.85 3.2
5/99 5.16 4 3.2
5.33 4.33 3.5
5.41 4.3 3.55
8/99 5.6 4.4 3.75
Source: T. Rowe Price Associates.
The U. S. economy continued its robust growth, driven by exuberant consumer
spending. Although broad measures of inflation did not rise appreciably,
tight labor markets, low unemployment, and a rebound in energy prices
raised fears of a buildup in inflationary pressures. The fixed income
markets reacted nervously to these developments as well as to the increased
likelihood of action by the Federal Reserve. Indeed, as summer approached,
Fed Chairman Alan Greenspan served clear warning that the central bank
would act to preempt a rise in inflation. Actions soon followed words as
the Fed raised key short-term interest rates on June 30 and again on August
24, pushing the federal funds target rate up a total of 50 basis points
(one-half of a percentage point) to 5.25%. With these moves the Fed
effectively rescinded two of its three rate reductions last fall, when it
had moved swiftly to ease a global financial crisis. Signs of recovery in
many Asian and Latin American nations most affected by that crisis helped
push the U.S. dollar lower and interest rates higher.
Market Changes Spell Higher Tax-Free Yields
- --------------------------------------------------------------------------------
Structural changes are taking place in the fixed income markets resulting
in higher tax-free yields for investors.
The chart below tracks the yield on 30-year, AAA general obligation
municipal bonds as a percentage of long-term Treasury bond yields since
1981. Historically, the yield on these municipal bonds has averaged about
85% of the Treasury yield. This discount reflected both the tax benefit of
municipals and uncertainty about future tax laws. Investors in the 31%
federal tax bracket, for example, keep only 69% of their income from
taxable bonds. Therefore, they would logically be attracted to high-quality
municipal bonds offering 85% or more of the prevailing Treasury yield.
The sharp spike in municipal yields in 1986 reflects the tax reform debate,
which posed a threat to municipal bonds' federal tax exemption.
Accordingly, municipal bond yields reached parity with Treasury yields.
However, when the Tax Reform Act of 1986 left the tax benefit intact,
municipal bond prices rose sharply until yields had fallen to more normal
levels.
Recently, different forces have been at work that go beyond the impact of
1998's global financial crisis. At that time, shaky world markets prompted
foreign investors (who have no need for U.S. tax-exempt bonds) to buy
Treasuries, and Treasury yields plunged to near parity with municipals.
Since then, Treasury yields have returned to pre-crisis levels, but
municipal yields are again unusually high at about 94% of Treasury yields.
According to Mary Miller, director of the T. Rowe Price municipal bond
department, the current relationship is "illogical from a tax standpoint"
but unlikely to change soon.
For one thing, the supply of Treasury debt is shrinking due to the federal
budget surplus, while outstanding municipal supply continues to grow. In
addition, the supply of taxable bonds outside of Treasuries-including
corporate, asset-backed and mortgage-backed bonds-has also risen, and this
has created more competition in the market. As a result, even as tax-exempt
yields have risen in relation to Treasury yields over the past two years,
they have fallen in relation to the yields on other high-quality taxable
bonds.
Over time, income makes up the vast majority of a bond investor's total
return. Therefore, these developments have given investors the opportunity
to earn higher-than-expected tax-free income with little or no sacrifice of
credit quality.
For Municipal/Treasury Yield Ratio
- --------------------------------------------------------------------------------
Treasury Ratio Treasury Average
79 84.5
78.4 84.5
'81 83.2 84.5
81.6 84.5
86.6 84.5
86.3 84.5
93.3 84.5
88.4 84.5
87.6 84.5
89.2 84.5
88.3 84.5
86.3 84.5
86.6 84.5
84.8 84.5
'82 82.1 84.5
85.5 84.5
86.3 84.5
91.9 84.5
86.5 84.5
84.1 84.5
81.9 84.5
83.7 84.5
81.4 84.5
84.9 84.5
81.9 84.5
78.8 84.5
'83 78.4 84.5
80.1 84.5
79.7 84.5
81 84.5
78.7 84.5
78.3 84.5
77.6 84.5
76.1 84.5
75.5 84.5
76.5 84.5
76.3 84.5
75.9 84.5
'84 77.6 84.5
80.4 84.5
85.1 84.5
84 84.5
83.7 84.5
79.3 84.5
79.2 84.5
80.4 84.5
79.4 84.5
80.1 84.5
80.4 84.5
82.5 84.5
'85 84.5 84.5
87.2 84.5
83.7 84.5
83.4 84.5
88 84.5
81 84.5
81.5 84.5
89.4 84.5
93.1 84.5
97.3 84.5
100.9 84.5
97 84.5
'86 93.1 84.5
89.5 84.5
87.3 84.5
87.8 84.5
87.6 84.5
85.6 84.5
86.4 84.5
86.1 84.5
90.8 84.5
89.2 84.5
90 84.5
85.5 84.5
'87 83.6 84.5
86.3 84.5
89.2 84.5
86.3 84.5
84.6 84.5
86.2 84.5
88.3 84.5
88.1 84.5
83.4 84.5
83.7 84.5
85.9 84.5
82.5 84.5
'88 81.7 84.5
83 84.5
81.9 84.5
82.2 84.5
82.3 84.5
79.9 84.5
81.2 84.5
83.1 84.5
81.3 84.5
81.4 84.5
85.3 84.5
85.9 84.5
'89 85.4 84.5
87.4 84.5
90.4 84.5
87.5 84.5
85.9 84.5
83.5 84.5
82 84.5
83 84.5
81.8 84.5
81.6 84.5
84.5 84.5
82.7 84.5
'90 80.7 84.5
81 84.5
80.9 84.5
82.2 84.5
85 84.5
83.5 84.5
83.7 84.5
84.3 84.5
83.2 84.5
82.3 84.5
82.7 84.5
82.2 84.5
'91 83.2 84.5
84.6 84.5
82.9 84.5
83.2 84.5
86.6 84.5
84.5 84.5
83.5 84.5
82.9 84.5
80.9 84.5
81.7 84.5
80.4 84.5
79.1 84.5
'92 82.4 84.5
84 84.5
84.7 84.5
81.7 84.5
82.5 84.5
83.4 84.5
79.8 84.5
83.8 84.5
81.5 84.5
81.7 84.5
81.7 84.5
83.8 84.5
'93 87 84.5
86.3 84.5
87.1 84.5
85.7 84.5
82 84.5
83.4 84.5
84.1 84.5
86.8 84.5
84.1 84.5
81.5 84.5
82.8 84.5
81.9 84.5
'94 81.9 84.5
81.3 84.5
81.7 84.5
84.4 84.5
83.8 84.5
80.5 84.5
80.0 84.5
80.1 84.5
81.8 84.5
84.8 84.5
89.1 84.5
86 84.5
'95 87.9 84.5
89.5 84.5
88.5 84.5
87.2 84.5
87.5 84.5
87.1 84.5
84.4 84.5
85.6 84.5
84.1 84.5
84.4 84.5
83.4 84.5
81.8 84.5
'96 80.9 84.5
80.1 84.5
82.8 84.5
84.2 84.5
82.2 84.5
81.8 84.5
80.9 84.5
81 84.5
80.7 84.5
79.6 84.5
80.4 84.5
81.8 84.5
'97 81 84.5
82 84.5
85 84.5
85.7 84.5
84.8 84.5
86.2 84.5
85.8 84.5
86.5 84.5
87.4 84.5
87.1 84.5
89.7 84.5
89.2 84.5
'98 93.8 84.5
97.3 84.5
95.6 84.5
96.3 84.5
97.4 84.5
95.5 84.5
89.5 84.5
89.7 84.5
89.8 84.5
88.5 84.5
89.2 84.5
88.5 84.5
8/99 92.3 84.5
Source: Municipal Market Data
Interest rates rose across all maturities, with the bellwether 30-year
Treasury bond rising from near 5% at the beginning of the year to over 6%
for the first time since mid-1998. Short-term yields rose a bit more than
intermediate and long-term bond yields over the period, creating a flatter
yield curve-a typical occurrence when the Fed is actively raising
short-term rates. Municipal market interest rates also rose throughout the
period, as shown in the chart on page 1, but not as much as those on
taxable bonds. Municipals were helped by strong seasonal demand in July
through the reinvestment of proceeds from maturing bonds and other
cashflows. Thus, for much of the past six months, overall returns on
municipals compared favorably with their taxable counterparts, although
both were modest at best.
In August, however, this trend reversed. A heavy supply of corporate bonds
in the market pushed up their yields and attracted "crossover"
institutional buyers-those who buy either corporate or municipal bonds
depending on their after-tax yields. The drop in demand for municipals from
these institutional investors (some of whom also sold municipals from their
portfolios), combined with a reluctance by dealers to add to their bond
inventories, created a weak market tone. Municipal yields rose to their
highest level of the past year. After outperforming taxable bonds through
July, municipals lost ground in August, and their performance fell more in
line with taxable securities for the entire six-month period.
TAX-EXEMPT MONEY FUND AND PLUS SHARES
Performance Comparison
- --------------------------------------------------------------------------------
Since Inception*
Periods Ended 8/31/99 6 Months 12 Months (PLUS Shares)
- --------------------------------------------------------------------------------
Tax-Exempt Money Fund 1.38% 2.78% -
Tax-Exempt Money Fund
PLUS Shares 1.31 - 2.06%
Lipper Tax-Exempt Money
Market Funds Average 1.29 2.63 2.14
*11/1/98
Tax-Exempt Money Fund PLUS Shares
- --------------------------------------------------------------------------------
Starting November 1, 1998, we created a new class of shares called The
Tax-Exempt Money - PLUS Class. The share class is offered as part of our new
Asset Manager Account, which incorporates a number of additional services, such
as unlimited checkwriting and a debit card. Both the Tax-Exempt Money Fund and
Tax-Exempt Money - PLUS are based on the same portfolio, and as such will be
reported on together in future annual and semiannual reports. However,
performance will differ because the classes of shares have different expense
ratios. Tax-Exempt Money - PLUS will have no impact on the expenses, share
price, or yield of the original Tax-Exempt Money Fund.
Note: To request a prospectus for any T. Rowe Price fund, please call
1-800-638-5660. Read the prospectus carefully before investing.
The Tax-Exempt Money Fund's results were comfortably ahead of its Lipper
peer group average for both the 6- and 12-month periods ended August 31,
1999. The six-month return for the Tax-Exempt Money Fund PLUS shares was
slightly ahead of the Lipper average, but its return since inception on
November 1, 1998, trailed Lipper by eight basis points, a reflection of the
PLUS shares' higher expenses that accompany their additional services.
During the past six months, short-term tax-exempt yields moved higher as
the Federal Reserve lifted the federal funds rate twice, as mentioned. On
August 31 yields in the 30- to 90-day range were 50 basis points higher
than six months earlier while 6- and 12-month rates were up 75 basis
points. Additionally, later in the reporting period the short-term
tax-exempt yield curve grew noticeably steeper as one-year securities
yielded 65 basis points more than one- to seven-day maturities. This
contrasted with a difference of 15 basis points on February 28.
We took advantage of these changes by maintaining a longer-than-average
weighted average maturity (WAM) throughout the period. On February 28, the
WAM was 53 days compared with 42 days for the peer group average. From
March through May, we recognized opportunity in the slope of the yield
curve and extended maturity as much as 25 to 28 days beyond that of our
competitors. As we approached summer, we allowed our average maturity to
drift down closer to the average. This more neutral posture coincided well
with the beginning of the seasonal increase in new note issuance and the
Fed's tighter monetary stance. Now that the Fed has raised rates twice, we
intend to modestly lengthen our weighted average maturity, although not as
much as earlier in the year. On August 31, the WAM was 54 days, four days
longer than the peer group average.
Growth in money market fund assets slowed markedly so far in 1999.
Tax-exempt funds, which total $192.8 billion, increased by only 2.7%, the
lowest rate of increase in six years. However, this slow growth in demand
has been well balanced by manageable supply. While tax-exempt industry
assets were up approximately $5 billion, supply of new issues for the year
is higher by only $1.7 billion.
TAX-FREE SHORT-INTERMEDIATE FUND
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 8/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Tax-Free Short-Intermediate Fund -0.07% 2.32%
Lipper Short-Intermediate
Municipal Debt Funds Average -0.55 1.52
During the past six months, against a backdrop of rising interest rates,
dividend income largely offset the drop in the fund's net asset value,
resulting in only a small loss for the period. For the 12 months ended
August 31, the fund posted a respectable gain in a difficult environment.
Performance in both periods surpassed the average for the fund's Lipper
peer group, a result of the fund's low expenses, our duration strategy, and
credit research. (Duration is a measure of a bond fund's sensitivity to
interest rates. For example, a fund with a duration of three years would
fall or rise about 3% in price in response to a one-percentage-point rise
or fall in interest rates.)
While the duration at the end of August was unchanged at 3.0 years from six
months earlier, it varied between 2.8 and 3.2 years in the interim. As
rates moved higher, we initially extended duration in May in anticipation
of a slowdown in second quarter growth. When the slowdown failed to
materialize, we moved back to a neutral position then shortened again as
prices rose in July. Heavy Treasury, corporate, and municipal issuance in
August caused intermediate and long-term tax-exempt rates to rise to their
highest levels of the year-levels not seen since 1997. Recently, we have
begun to extend duration because of the higher rates, good valuations (see
story on page 2), investor demand, and the prospects for lower issuance
through the rest of 1999.
Our sector diversification experienced some changes primarily due to our
efforts to extend duration rather than to any shift in opinion about the
credit quality or relative value of individual securities. Our allocation
to shorter prerefunded securities declined while exposure to longer
maturities, including nuclear revenue and state general obligation bonds,
increased. These sector adjustments resulted in a moderate decline in the
fund's overall credit quality from AA to AA-, based on our in-house
research.
TAX-FREE INTERMEDIATE BOND FUND
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 8/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Tax-Free Intermediate Bond Fund -1.85% 0.36%
Lipper Intermediate
Municipal Debt Funds Average -1.87 0.25
Your fund suffered along with other intermediate- and longer-term bond
funds during the six months ended August 31 and provided a negative return
that was slightly ahead of the Lipper average for similar funds. For the
12-month period, the fund posted a small gain that again surpassed the
competitor average as dividend income of $0.48 overcame the drop in net
asset value. Our relatively favorable results were largely due to the
fund's low expenses and our management of duration. (See Tax-Free
Short-Intermediate Fund report for an explanation of the effect duration
has on bond fund prices when interest rates rise or fall.)
At the end of August, the portfolio's duration was 5.1 years, down from 5.4
years six months earlier. At different times during the course of the
reporting period, we lengthened or shortened when we thought it appropriate
to take advantage of fluctuations in the market. Our focus in a period of
generally rising rates was to improve the fund's dividend yield and to make
opportunistic purchases of attractively valued bonds that would serve as
core holdings. The fund's overall credit rating remained stable at AA,
based on our in-house rating system, and higher using the ratings from
national rating agencies.
We also made some changes in our allocation to various sectors. Primary
among them were sharp increases in state general obligation and dedicated
tax revenue bonds, which we believe will perform better than other types of
securities in the current economic environment. We also have recently begun
to reduce the fund's allocation to hospital securities because of cutbacks
in Medicare reimbursement payments, which could adversely affect the
sector.
TAX-FREE INCOME FUND
In a difficult environment for bonds, the fund's returns were negative for
the 6- and 12-month periods. However, they were better than the average
returns for our competition due to the fund's below-average expenses and
our investment strategy. Dividend income, which was steady in both periods,
partly offset the decline in net asset value.
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 8/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Tax-Free Income Fund -2.99% -1.14%
Lipper General Municipal
Debt Funds Average -3.34 -1.63
Our portfolio management strategy changed as the market reversed course
from the bond market rally that occurred in the second half of 1998. For
most of the past six months, we targeted a neutral duration of 7.5 years
after pursuing a more aggressive posture in the prior six months. (Duration
is a better measure of sensitivity to interest rate movements than the
average maturity of the portfolio.) We accomplished this by raising cash
reserves modestly from 1% to 2% of assets last year to between 3% and 4%
this year. We also sold some of our lower-coupon, longer-maturity bonds to
buy others with more defensive characteristics, such as higher coupons and
shorter durations.
In August, when long-term municipal rates rose to their highest level of
the past 12 months, a number of bonds in the portfolio that had been
trading to their shorter call dates began trading to maturity. As a result,
fund duration extended almost half a year to just under eight years. At the
same time, the fund's weighted average maturity was at its shortest point
of the last 10 years. With rates at their current levels, we expect to see
little further extension of duration in the portfolio and will continue to
target a neutral posture. During the summer, we sold bonds with losses and
reinvested the proceeds in new bonds with higher yields. This action helps
lift the portfolio's dividend yield to shareholders and allows us to use a
capital loss to offset any recognized capital gains.
One reason why we did not become more defensive in our investment posture
is the attractiveness of municipal bonds relative to taxable alternatives.
For the past year, long-term AAA rated municipal bond yields have ranged
between 87% and 98% of comparable Treasury yields, well above the long-term
average of 85%. At times both lower-rated and insured bonds have yielded
much more than Treasuries. While this appears to be a reaction to current
supply-and-demand factors (see story on page 2), it gave us reason to be
more optimistic about the municipal market.
Our credit exposure is little changed from six months ago except for a
reduction in the hospital sector from 15% to 12% of assets, a reflection of
its poor financial performance. We increased our holdings of state general
obligation debt from 5% to 7% in recognition of the benefits of enhanced
tax revenues due to the strong economy. Overall, the fund's average credit
quality was AA- at the end of August, based on T. Rowe Price research, and
slightly higher based on national agency ratings.
TAX-FREE HIGH YIELD FUND
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 8/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Tax-Free High Yield Fund -2.71% -1.18%
Lipper High Yield Municipal
Debt Funds Average -1.95 -0.49
Against a backdrop of sharply rising interest rates during the past six
months, municipal tax-exempt bonds fared poorly along with other fixed
income securities. Your fund posted negative returns for the 6- and
12-month periods ended August 31 and trailed the average returns for the
Lipper universe of competing funds.
Factors that contributed to the fund's relatively weak results included our
longer duration and our exposure to high-quality bonds, which were more
adversely affected by rising rates than lower-rated securities. Low-quality
securities turned in a better performance because of their higher coupon
and shorter call date structure; as the economy showed continued strength,
so did the financial prospects of many high-yield bonds. Since we are
somewhat underweighted in them, our relative performance suffered.
At the end of August, the fund's duration stood at 8.2 years up from 7.6
years at the end of February. Much of this extension occurred late in the
period as our holdings with shorter call dates began trading to their final
maturity. The biggest changes occurred within the BBB and lower segment of
the portfolio as we have added holdings and extended our duration within
them. In our effort to take advantage of the recent upturn in yields, we
increased below-investment-grade issues to 25% of the fund, up from 22% six
months ago. Yields on new low-quality issues range between 6.5% and 7.5%,
levels we find attractive for long-term investments. The fund's weighted
average quality was A-, based on our in-house rating system.
For Quality Diversification
- --------------------------------------------------------------------------------
Tax-Free High-Yield Fund
AAA AA A BBB BB and below
5 24 19 27 25
Based on net assets of 8/31/99
We added to positions in sectors of the market that have declined and now
offer attractive yields, including corporate-backed municipals. This
strategy should enable us to increase the fund's average coupon and
dividend yield. We have continued to add to our holdings in long-term
healthcare while reducing exposure to uninsured hospitals, which is
currently at its lowest level of portfolio assets in several years. (The
increase in these bonds shown in the Sector Diversification table after
this letter reflects additions in very high-quality money market holdings
for liquidity purposes.)
OUTLOOK
Interest rates could move higher in coming months because of persistent
strength in the domestic economy and recovery overseas. The Fed is keeping
a close eye on inflationary pressures, particularly in the labor markets,
and could tighten another 25 basis points if it intends to move the federal
funds rate back to its level of a year ago. However, the Fed is also
interested in maintaining a liquid and orderly market as we approach the
end of the year and the transition to 2000, which could serve to moderate
future rate increases. At the same time, it is important to recognize that
the increase in rates so far this year could be enough to slow certain
sectors of the economy. At present, we are focusing on the higher yields
available in the marketplace and on the current appeal of tax-free
municipal bonds relative to taxable securities.
Respectfully submitted,
Mary J. Miller
Director
Municipal Bond Department
September 24, 1999
T. Rowe Price Tax-Free Funds
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
KEY STATISTICS
2/28/99 8/31/99
Tax-Exempt Money Fund
- --------------------------------------------------------------------------------
Price Per Share $1.00 $1.00
Dividends Per Share
For 6 months 0.014 0.014
For 12 months 0.029 0.027
Dividend Yield (7-Day Compound) * 2.54% 2.80%
Weighted Average Maturity (days) 53 54
Weighted Average Quality ** First Tier First Tier
Tax-Exempt Money Fund PLUS Shares
- --------------------------------------------------------------------------------
Price Per Share $ 1.00 $ 1.00
Dividends Per Share
For 6 months 0.007! 0.013
For 12 months -- --
Dividend Yield (7-Day Compound) * 2.07 2.67%
Weighted Average Maturity (days) 53 54
Weighted Average Quality ** First Tier First Tier
To request a prospectus for any T. Rowe Price fund, please call 1-800-638-5660.
Read the prospectus carefully before investing.
(continued on next page)
T. Rowe Price Tax-Free Funds
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
KEY STATISTICS
2/28/99 8/31/99
Tax-Free Short-Intermediate Fund
- --------------------------------------------------------------------------------
Price Per Share $ 5.39 $ 5.27
Dividends Per Share
For 6 months 0.11 0.11
For 12 months 0.22 0.21
Dividend Yield *
For 6 months 4.07% 4.03%
For 12 months 4.12 4.14
30-Day Standardized Yield 3.16 3.97
Weighted Average Maturity (years) 4.0 4.2
Weighted Average Effective Duration (years) 3.0 3.0
Weighted Average Quality *** AA AA-
Tax-Free Intermediate Bond Fund
- --------------------------------------------------------------------------------
Price Per Share $ 11.13 $ 10.65
Dividends Per Share
For 6 months 0.24 0.24
For 12 months 0.48 0.48
Dividend Yield *
For 6 months 4.39% 4.45%
For 12 months 4.42 4.56
30-Day Standardized Yield 3.36 4.16
Weighted Average Maturity (years) 8.5 7.3
Weighted Average Effective Duration (years) 5.4 5.1
Weighted Average Quality *** AA AA
(continued on next page)
T. Rowe Price Tax-Free Funds
- --------------------------------------------------------------------------------
Portfolio Highlights
KEY STATISTICS
2/28/99 8/31/99
Tax-Free Income Fund
- --------------------------------------------------------------------------------
Price Per Share $ 9.94 $ 9.39
Dividends Per Share
For 6 months 0.25 0.25
For 12 months 0.50 0.50
Dividend Yield *
For 6 months 5.13% 5.28%
For 12 months 5.19 5.42
30-Day Standardized Yield 4.11 4.81
Weighted Average Maturity (years) 16.1 15.5
Weighted Average Effective Duration (years) 7.3 7.7
Weighted Average Quality *** AA- AA-
Tax-Free High Yield Fund
- --------------------------------------------------------------------------------
Price Per Share $ 12.53 $ 11.87
Dividends Per Share
For 6 months 0.33 0.33
For 12 months 0.66 0.65
Dividend Yield *
For 6 months 5.34% 5.52%
For 12 months 5.45 5.65
30-Day Standardized Yield 4.46 5.10
Weighted Average Maturity (years) 19.3 18.4
Weighted Average Effective Duration (years) 7.6 8.2
Weighted Average Quality *** A- A-
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the fund's net asset value at the end of the period.
** All securities purchased in the money fund are rated in the two highest
categories (tiers) as established by national rating agencies or, if
unrated, are deemed of comparable quality by T. Rowe Price.
*** Based on T. Rowe Price research. ! Dividends for the period 11/1/98 to
2/28/99.
# Dividends for the period 11/1/98 to 2/28/98.
T. Rowe Price Tax-Free Funds
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
These charts show the value of a hypothetical $10,000 investment in the funds
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
For Performance Comparison
- --------------------------------------------------------------------------------
Tax-Exempt Money Fund
- --------------------------------------------------------------------------------
Lipper TEM
8/89 10000 10000
8/90 10557 10548
8/91 10911 11014
8/92 11254 11343
8/93 11487 11579
8/94 11719 11832
8/95 12096 12220
8/96 12472 12606
8/97 12851 13003
8/98 13245 13418
8/99 13596 13791
For Performance Comparison
- --------------------------------------------------------------------------------
Tax-Free Short-Intermediate Fund
- --------------------------------------------------------------------------------
Lehman Lipper TFS
8/89 10000 10000 10000
8/90 10659 10617 10642
8/91 11600 11525 11427
8/92 12619 12454 12237
8/93 13450 13398 13030
8/94 13798 13597 13313
8/95 14742 14434 14096
8/96 15321 14942 14637
8/97 16173 15766 15417
8/98 17105 16617 16281
8/99 17603 16935 16658
For Performance Comparison
- --------------------------------------------------------------------------------
Tax-Free Intermediate Bond Fund
- --------------------------------------------------------------------------------
Lehman Lipper TII
11/30/92 10000 10000 10000
8/93 10883 10909 11103
8/94 11037 11036 11308
8/95 12007 11843 12212
8/96 12475 12355 12696
8/97 13446 13271 13572
8/98 14471 14248 14599
8/99 14688 14303 14652
For Performance Comparison
- --------------------------------------------------------------------------------
Tax-Free Income Fund
- --------------------------------------------------------------------------------
Lehman Lipper TFI
8/89 10000 10000 10000
8/90 10642 10485 10530
8/91 11897 11726 11721
8/92 13225 13066 13087
8/93 14838 14680 14857
8/94 14859 14553 14739
8/95 16176 15655 15934
8/96 17024 16438 16802
8/97 18598 17947 18311
8/98 20207 19477 19934
8/99 20308 19190 19707
For Performance Comparison
- --------------------------------------------------------------------------------
Tax-Free High Yield Fund
- --------------------------------------------------------------------------------
Lehman Lipper TFH
8/89 10000 10000 10000
8/90 10659 10461 10699
8/91 11993 11474 11847
8/92 13409 12644 13203
8/93 15157 14056 14945
8/94 15134 14162 15059
8/95 16480 15264 16232
8/96 17442 16124 17179
8/97 19154 17718 18944
8/98 20856 19263 20624
8/99 20944 19180 20380
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how each fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Since Inception
Periods Ended 8/31/99 1 Year 5 Years 10 Years Inception Date
- --------------------------------------------------------------------------------
Tax-Exempt Money 2.78% 3.11% 3.27% -- 4/8/81
Tax-Exempt Money PLUS - - - 2.06% 11/1/98
Tax-Free Short-Intermediate 2.32 4.59 5.24 - 12/23/83
Tax-Free Intermediate Bond 0.36 5.32 - 5.82 11/30/92
Tax-Free Income -1.14 5.98 7.02 - 10/26/76
Tax-Free High Yield -1.18 6.24 7.38 - 3/1/85
Investment returns represent past performance and will vary. Shares of the bond
funds may be worth more or less at redemption than at original purchase.
Investments in the Money Fund and PLUS Class shares are not insured or
guaranteed by the FDIC or any other government agency. Although they seek to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund and PLUS Class shares.
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(registered trademark) and
the T. Rowe Price Web site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over full-service commission rates.**
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a January 1999 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending on
size of order.
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Intermediate Tax-Free**
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond***
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Bond
International Bond
MONEY MARKET FUNDS!
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors. ** Formerly named Florida Insured Intermediate
Tax-Free. *** Formerly named Tax-Free Insured Intermediate Bond.
! Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
funds.
Please call for a prospectus. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
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www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
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 appropriate
to the fund or funds covered in this
report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site
Baltimore Area
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T. Rowe Price Investment Services, Inc., Distributor. C03-051 8/31/99
