<PAGE>
Fellow Shareholders
By virtually every measure, the economy strengthened during the Funds' fiscal
year ended February 28, 1994. Gross domestic product grew at an annual rate of
nearly 1.5% for the first six months of calendar 1993, then surged at an annual
rate of more than 5% in the second half. Unemployment dropped steadily, capacity
utilization rose, and personal income gains were impressive. Based on stronger
spending by consumers on durable goods and housing, and by businesses on fixed
equipment, economic momentum seemed to carry over into early 1994 even though
the Arctic cold snap east of the Rockies and the earthquake in Los Angeles
tended to depress business activity.
The swing in the economy's thrust was reflected in the credit markets.
Perceived weakness in the economy through the autumn of 1993 and the Federal
Reserve's continued easy monetary policy encouraged a substantial decline in
note and bond yields. Between the end of February 1993 and mid-October, the
yield on the Treasury's benchmark 30-year bond dropped more than one full
percentage point, reaching a low of 5.78%. As it became increasingly apparent
that the economy was entering a phase of stronger growth, interest rates began
to rise--a trend that was accelerated by the Fed's announcement of a tightening
in early February. Despite reaching new lows last autumn, short- and
intermediate-term interest rates on taxable notes and bonds actually closed the
Funds' year-end 30 to 75 basis points higher than 12 months earlier, though
long-term Treasury bond yields closed a bit lower.
The tax-exempt sector experienced the same trend in yields. After declining
to 20-year lows in October, municipal yields closed the Funds' fiscal year
higher in every maturity range, with the most significant moves occurring during
the final quarter. From November 30 to February 28, short- and intermediate-term
rates rose about 30 basis points while long-term yields increased approximately
20 basis points.
The municipal market can be volatile during periods of uncertainty, and the
recent past was no exception. Unlike taxable markets, which include individuals,
foreign and domestic corporations, mutual funds, pension funds, and government
entities, the municipal market is now dominated by individual investors. As a
result, tax-exempt securities can be very sensitive to changes in supply and
demand, often becoming overbought or oversold. In September and October 1993,
for example, long-term yields dipped to low levels and prices rose as investors
rapidly increased their tax-free mutual fund holdings. Since October, the
pendulum has swung in the opposite direction, and cash flows into long-term bond
funds have abated. Municipal investors have drifted to the sidelines with a
wait-and-see attitude, and the reduced liquidity in the marketplace has sent
bond prices lower. As a result, our bond funds reflected share-price declines
for the quarter. Our money funds, of course, are managed to maintain a stable
$1.00 per share value.
[GRAPH APPEARS HERE]
Municipal Interest Rate Levels
A line graph compares the yields of the 30-year Prime General Obligation bond,
the five-year Prime General Obligation bond, and the six-month Moody's
Investment Grade 1 Note.
TAX-EXEMPT MONEY FUND
During the past three months, the short-term, tax-exempt money market managed to
post both its lowest and highest interest rates of the fiscal year. As the
quarter began, yields reached record lows amid concerns about massive
reinvestment of proceeds from maturing bonds and coupon payments made on January
1, 1994. By February, however, the focus turned to the Federal Reserve's efforts
to push short-term rates higher. As a result, yields on six-month and one-year
notes fluctuated 70 to 100 basis points in a very short time.
<PAGE>
Assets in the tax-exempt money fund industry expanded by 11% over the
fiscal year to a record $112.7 billion, indicating a strong desire among
investors for principal stability. Much of this cash flow was invested in the
one- to 30-day maturity area as portfolio managers sought to preserve
flexibility in a rising rate environment. This caused yields of very short
maturities to move lower, while maturities of 90 days or more moved higher in
tandem with the general direction of short-term rates.
We kept the Tax-Exempt Money Fund's weighted average maturity at more than
60 days during December and January, but shortened to 55 days by quarter-end.
For most of the Fund's fiscal year, our maturity target was equal to or longer
than the peer group average.
<TABLE>
<CAPTION>
Portfolio Characteristics
Periods Ended
2/28/93 11/30/93 2/28/94
------- -------- -------
<S> <C> <C> <C>
Weighted Avg. Quality* 2.0 1.9 2.0
Weighted Avg. Maturity (days) 55 61 55
</TABLE>
*On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest quality.
This more aggressive posture helped put the Fund's performance in the top
quartile of tax-exempt money funds for both the three and 12 months ended
February 28, 1994.
<TABLE>
<CAPTION>
Performance Comparison
Periods Ended 2/28/94
3 Mos. 12 Mos.
------ -------
<S> <C> <C>
Tax-Exempt Money Fund 0.53% 2.05%
Donoghue's Tax-Free
Money Fund Average* 0.45 1.91
</TABLE>
*Stockbroker and General Purpose Funds.
Over the next quarter, we expect gradually rising rates as the Federal
Reserve continues to move away from the stimulative stance it pursued during the
past five years. Accordingly, Fund shareholders should enjoy moderately higher
returns during the ensuing fiscal year. We expect to maintain your Fund's
weighted average maturity more or less in line with its peer group.
TAX-FREE SHORT-INTERMEDIATE FUND
The short-intermediate municipal market enjoyed a favorable balance of supply
and demand during the fiscal year ended February 28, 1994, as record new
issuance and a growing supply of intermediate, pre-refunded bonds met strong
investor demand. As investors sought out less aggressive, fixed-income
investments, the many new intermediate-term mutual funds were strong buyers in
this range.
Based on our early 1993 forecast for slow economic growth and tame
inflation, your Fund maintained a weighted average maturity of nearly 3.5 years
from March through October, a figure higher than its historical average. We
focused on three- to four-year maturities whose yields were at least a full
percentage point above money market instruments. We also emphasized market
sectors yielding more than usual due to excess supply. Heavy issuance in New
York, California, and Maryland, for example, made the bonds of those high-tax
states attractive relative to other states.
<TABLE>
<CAPTION>
Portfolio Characteristics
Periods Ended
2/28/93 11/30/93 2/28/94
------- -------- -------
<S> <C> <C> <C>
Weighted Avg. Quality* 2.3 2.3 2.2
Weighted Avg. Maturity (years) 3.4 3.4 3.1
Weighted Avg. Effective
Duration (years) 2.9 2.9 2.7
</TABLE>
*On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest quality.
As evidence of a stronger economy began to emerge in late 1993, we began
shortening the Fund's average maturity by selling more vol-atile bonds while at
the same time emphasizing higher-quality bonds. When the Fed tightened on
February 4, 1994, the weighted average maturity stood at 3.1 years and average
credit quality was AA. The sharp yield increase in February eliminated the price
gains made earlier in the past year and reduced the Fund's total return at year-
end. Even so, the Fund's performance slightly exceeded its peer group average
for both the quarter and the year.
<TABLE>
<CAPTION>
Performance Comparison
Periods Ended 2/28/94
3 Mos. 12 Mos.
------ -------
<S> <C> <C>
Tax-Free Short-Intermediate
Fund 0.61% 3.49%
Lipper Short Municipal
Debt Fund Average 0.59 3.31
</TABLE>
2
<PAGE>
Entering the Fund's new fiscal year, our focus is on improving yield where
possible and keeping price volatility moderate by maintaining a shorter
duration. At present, we think the two-year-maturity range, where prices already
reflect the impact of further tightening by the Fed, looks attractive. In
addition, new legislation subjecting certain discount bonds to ordinary income
taxes increases the appeal of high-coupon, premium bonds, which dovetails with
our more conservative strategy.
TAX-FREE INSURED INTERMEDIATE BOND FUND
The municipal market's record issuance in 1993 included 37% of insured bonds, a
sector that has grown steadily since 1990. Since over half of the supply was
used for advance refundings of older, higher-coupon bonds with call dates within
10 years, the result was a huge increase in the overall supply of intermediate
maturities, many of which were insured. This large issuance resulted in
attractive prices and yields on insured securities for most of 1993, but the
supply also made the sector more vulnerable to downward price pressure when
interest rates rose in February.
<TABLE>
<CAPTION>
Portfolio Characteristics
Periods Ended
2/28/93 11/30/93 2/28/94
------- -------- -------
<S> <C> <C> <C>
Weighted Avg. Quality* 2.1 2.1 2.1
Weighted Avg. Maturity (years) 8.0 7.9 7.9
Weighted Avg. Effective
Duration (years) 5.3 5.8 5.8
</TABLE>
*On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest quality.
We postured the portfolio aggressively for the first six months of the
fiscal year, then started reducing our risk profile in September. Based on our
outlook in early 1993 for slow economic growth and low inflation, we had
maintained the Fund's average maturity at around nine years, near the long end
of its five- to 10-year maturity range as outlined in the prospectus. When signs
of the improving economy began to emerge, we reacted by shortening the weighted
average maturity to approximately 7.5 years and by purchasing bonds less
sensitive to price fluctuations, such as those with higher coupons. We also
sought to take advantage of the excessive supply of bonds issued in high-tax
states and in those with heavy demand for municipal bonds. Typically, bonds
issued by states such as New York, Virginia, Maryland, and Florida trade at
higher prices than those issued by other states. As issuance slows in 1994, we
anticipate that increased demand for these bonds will cause their values to
improve relative to the rest of the market.
Our efforts throughout the year paid off with top quartile performance for
the 12-month period ended February 28, even though the Fund slightly
underperformed its peer group average for the quarter.
<TABLE>
<CAPTION>
Performance Comparison
Periods Ended 2/28/94
3 Mos. 12 Mos.
------ -------
<S> <C> <C>
Tax-Free Insured Intermediate
Bond Fund 0.49% 5.49%
Lipper Intermediate Municipal
Debt Fund Average 0.54 4.76
</TABLE>
Keeping with our outlook for gradually rising interest rates, we are
continuing to shorten the portfolio's duration. By purchasing bonds in the six-
to seven-year range, we expect to deliver 80% of the yield of a 30-year bond,
with significantly less price fluctuation.
TAX-FREE INCOME FUND
As highlighted in our general overview, the long end of the bond market had
quite a ride over the last 12 months. Our investment strategy during this
turbulent period was marked by two distinct phases. In the spring and summer, we
were aggressive, extending the Fund's average maturity and duration so that
long-term bonds represented 85% to 90% of assets. As autumn began, however,
interest rates dropped to 20-year lows and the economy was showing signs of
accelerating. We concluded that an aggressive Fund posture was no longer
warranted under such conditions and reduced our risk profile by shortening the
portfolio's duration and weighted average maturity. For example, the Fund's
duration during the summer months was eight years or longer and the weighted
average maturity was in the 19 1/2- to 20-year range. From September through
mid-December, however, duration averaged 7 1/2
3
<PAGE>
years and the weighted average maturity was reduced to 18 1/2 years.
<TABLE>
<CAPTION>
Portfolio Characteristics
Periods Ended
2/28/93 11/30/93 2/28/94
------- -------- -------
<S> <C> <C> <C>
Weighted Avg. Quality* 2.5 2.4 2.4
Weighted Avg. Maturity (years) 20.0 18.5 18.0
Weighted Avg. Effective
Duration (years) 7.3 7.6 7.7
</TABLE>
*On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest quality.
During the last three months, we continued in a cautious direction as the
strength in the economy became more apparent and after the Federal Reserve
announced in February its first tightening move in five years. We maintained the
high credit quality of the portfolio throughout the fiscal year, believing that
the yield on lower-quality holdings did not adequately compensate for the
additional risks.
The Fund's performance exceeded its peer group average for the three and 12
months ended February 28, 1994. The narrow margin in the final quarter reflected
our more cautious stance; the Fund's investment posture was in line with that of
the average municipal bond fund. In essence, our earlier aggressiveness enabled
the Fund to outperform its peer group as interest rates declined, while our
neutral posture over the last half of the year resulted in average performance
when rates rose.
<TABLE>
<CAPTION>
Performance Comparison
Periods Ended 2/28/94
3 Mos. 12 Mos.
------ -------
<S> <C> <C>
Tax-Free Income Fund 0.47% 5.50%
Lipper General Municipal
Debt Fund Average 0.45 5.24
</TABLE>
TAX-FREE HIGH YIELD FUND
On balance, the Fund's fiscal year was a good one for the high-yield sector of
the municipal bond market though it was subject to the same price volatility
that characterized the entire market for much of the year. Our investment
strategy, while influenced by the same factors that affected our management of
other long-term funds, did not display as significant a shift in investment
posture as those funds, reflecting the strong income orientation of the Tax-Free
High Yield Fund. We did extend the Fund's weighted average maturity to
approximately 21 years and effective duration to 7.4 years based on our outlook
for declining interest rates during the first half of the year. Long-term bonds
during this period represented 88% to 90% of net assets. Beginning in the fall,
we shifted the portfolio to a more neutral stance versus its peer group and
generally held that position into February. Recently, average maturity and
effective duration were extended as we were able to add positions at what we
felt were very attractive levels.
Demand was consistently strong last year for the medium- and lower-quality
bonds that your Fund usually holds. Yield spreads between low- and high-quality
bonds, narrow for the most of the year, widened somewhat during the last quarter
as interest rates rose and issuance increased. During this time, we increased
the Fund's exposure to lower-quality bonds. By year-end, 26% of Fund assets were
invested in below-investment-grade credits (i.e., bonds rated below the BBB
category), up from 22% at the start of the year.
<TABLE>
<CAPTION>
Portfolio Characteristics
Periods Ended
2/28/93 11/30/93 2/28/94
------- -------- -------
<S> <C> <C> <C>
Weighted Avg. Quality* 3.7 3.7 3.8
Weighted Avg. Maturity (years) 21.9 20.9 21.3
Weighted Avg. Effective
Duration (years) 6.7 7.2 7.4
</TABLE>
*On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest quality.
Your Fund extended its record of favorable performance, finishing in the
top quartile for the 12 months ended February 28, 1994, and exceeding the peer
group average for the last quarter. Over an even longer time horizon, the Fund's
performance has exceeded its peer group average for each of the past six years.
<TABLE>
<CAPTION>
Performance Comparison
Periods Ended 2/28/94
3 Mos. 12 Mos.
------ -------
<S> <C> <C>
Tax-Free High Yield Fund 1.04% 7.49%
Lipper High Yield Municipal
Debt Fund Average 0.84 6.15
</TABLE>
4
<PAGE>
CAPITAL GAIN DISTRIBUTIONS
While the Funds' primary objective is to earn a high level of tax-exempt income
consistent with each portfolio's composition and risk profile, capital gains
will arise in the course of managing the portfolios. A dividend consisting of a
fund's undistributed net gains as of October 31 must be declared by the end of
each calendar year, and a second distribution is required if the fund has
undistributed net gains as of the close of its fiscal year. Accordingly, three
of the municipal bond funds declared capital gain distributions (shown below),
payable March 31 to shareholders of record March 28. Your check or statement
reflecting these distributions was mailed separately. These distributions are
taxable to you for 1994 and will be reported on Form 1099-DIV mailed in January
1995.
<TABLE>
<CAPTION>
Short-Term Long-Term Total
---------- --------- -----
<S> <C> <C> <C>
Tax-Free Insured
Intermediate Bond $0.02 $0.01 $0.03
Tax-Free Income $0.01 $0.03 $0.04
Tax-Free High Yield -- $0.04 $0.04
</TABLE>
OUTLOOK
As the Funds enter a new fiscal year, the bond markets are cautious about a
robust economy as well as a vigilant Federal Reserve Board. Fed Chairman Alan
Greenspan clearly intends to contain inflation by raising short-term interest
rates as the economy approaches full labor and capital utilization over the next
year or two. The Fed's most recent hike was greeted more constructively by long-
term investors; in sharp contrast to the reaction in February, bond yields fell
on March 22, the day the Fed announced that the federal funds rate would be
increased another one-quarter of one percent. Inflation currently does not look
threatening and, if the Fed's strategy works, bond investors may be reassured by
the inflation-fighting stance. Still, commodity prices are moving up, labor
markets could start tightening later this year or early next, and the global
economy continues to strengthen, so the bond market's nervousness is
understandable. On balance, we expect modestly increasing yields though the
course may be choppy in 1994 as inflation expectations wax and wane.
Despite these strong economic fundamentals, the municipal market retains
certain advantages. First, as a result of the sharp sell-off experienced in
recent weeks, yields on securities in many maturities are at attractive levels
relative to comparable taxable issues, appealing to taxpayers in all but the
lowest tax brackets. Second, the projected 30% to 40% decline in new issuance in
1994 should bring supply and demand into better balance and support municipal
prices. Third, tax-advantaged investments and the value they offer should come
into the limelight as high income taxpayers prepare to file their first returns
at the new, higher tax rates.
We encourage all shareholders to make sure their current investments are
consistent with their personal financial objectives. If, as a result of your
review, you want additional information on the funds, our investor service
representatives will be happy to assist you. We look forward to the challenges
and opportunities that await us in the new fiscal year and appreciate your
continued confidence in us.
Respectfully submitted,
/s/ William T. Reynolds
William T. Reynolds
Assistant Director,
Fixed-Income Division
March 25, 1994
Duration as a Guide to Interest Rate Risk
Starting with this report, we've added a new measure to the statistical tables
that more accurately defines a fund's interest rate sensitivity. Unlike
maturity, which merely indicates when the bond repays principal, "duration"
incorporates the cash flows of all interest and principal payments over the life
of the bond to reflect the recovery of your original investment. Future payments
are discounted to reflect their present value. These payments are then
multiplied by the number of years over which they will be received to produce a
value that is expressed in years, i.e., the duration. Effective duration is an
even better measure of a bond's sensitivity to interest rate changes because it
takes into account call features and sinking fund payments which may shorten a
bond's life.
You can multiply the duration by the potential change in interest rates to
estimate the change in principal value. For example, a bond or bond fund with a
duration of five years would rise or fall roughly 5% in price if rates fell or
rose by one percentage point.
5
<PAGE>
<TABLE>
<CAPTION>
Financial Summary
Net Asset Value Dividend Per Share+ Dividend Yield*
Per Share 3 Months Ended 3 Months Ended
--------------------- --------------------- ---------------------
11/30/93 02/28/94 11/30/93 02/28/94 11/30/93 02/28/94
<S> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money $ 1.00 $ 1.00 $0.005 $0.005 2.15% 2.15%
Tax-Free Short-Intermediate 5.34 5.32 0.055 0.053 4.12 4.02
Tax-Free Insured Intermediate Bond 10.68 10.58 0.115 0.115 4.29 4.33
Tax-Free Income 9.92 9.66 0.134 0.131 5.35 5.42
Tax-Free High Yield 12.49 12.26 0.184 0.182 5.87 5.95
</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.
+ Taxability of dividends. 100% of the dividends paid for the 12 months ended
2/28/94 were exempt from federal income tax.
<TABLE>
<CAPTION>
Average Annual Compound Total Return
Periods Ended 12/31/93
----------------------------------------------------
1 Year 5 Years 10 Years Since Inception
<S> <C> <C> <C> <C> <C>
Tax-Exempt Money 2.01% 3.94% 4.45% 4.93% (4/81)
Tax-Free Short-Intermediate 6.32 6.63 6.55 6.49 (12/83)
Tax-Free Insured Intermediate Bond 12.66 - - 13.04 (11/92)
Tax-Free Income 12.77 9.85 9.51 7.66 (10/76)
Tax-Free High Yield 12.97 10.36 - 11.00 (3/85)
</TABLE>
[GRAPH APPEARS HERE]
Tax-Free Insured Intermediate Fund Performance Comparison
A line graph compares the 2/28/94 value of a hypothetical $10,000 investment
made in the Tax-Free Insured Intermediate Fund at its inception (11/30/92) and a
similar investment made concurrently in the Lehman 7-Year G.O. Bond Index. At
2/28/94, the Fund investment would have been worth $11,267 and the Lehman Index
investment would have been worth $10,995.
<TABLE>
<CAPTION>
Fiscal-Year Performance
Periods Ended 2/28/94
-------------------------------
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Short-Intermediate 3.49% 6.46% 6.39%
Insured Intermediate
Bond* 5.49 - -
Income 5.50 9.38 9.14
High Yield** 7.49 9.87 -
</TABLE>
* Since inception 11/92: 10.05%
** Since inception 3/85: 10.71%
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
6
<PAGE>
[GRAPH APPEARS HERE]
Tax-Free Short-Intermediate Fund Performance Comparison
A line graph compares the 2/28/94 value of a hypothetical $10,000 investment
made in the Tax-Free Short-Intermediate Fund at its inception (12/23/83) and a
similar investment made concurrently in the Lehman 3 Year Bond Index. At
2/28/94, the Fund investment would have been worth $17,243 and the Lehman Index
investment would have been worth $18,473.
[GRAPH APPEARS HERE]
Tax-Free Income Fund Performance Comparison
A line graph compares the 2/28/94 value of a hypothetical $10,000 investment
made ten years earlier in both the Tax-Free Income Fund and the Lehman Municipal
Bond Index. At 2/28/94, the Fund investment would have been worth $23,986, the
Lehman Index investment would have been worth $27,680.
[GRAPH APPEARS HERE]
Tax-Free High-Yield Fund Performance Comparison
A line graph compares the 2/28/94 value of a hypothetical $10,000 investment
made in the Tax-Free High-Yield Fund at its inception (3/1/85) and a similar
investment made concurrently in the Lehman Revenue Bond Index. At 2/28/94, the
Fund investment would have been worth $24,982 and the Lehman Index investment
would have been worth $26,711.
7
<PAGE>
ANNUAL REPORT
FOR YIELD, PRICE, LAST TRANSACTION, T. Rowe Price
AND CURRENT BALANCE, 24 HOURS, -------------
7 DAYS A WEEK, CALL: TAX-FREE FUNDS
1-800-638-2587 toll free
625-7676 Baltimore area
FEBRUARY 28, 1994
FOR ASSISTANCE WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. ROWE PRICE
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distri-
bution only to shareholders and to
others who have received a copy of
the prospectus of the T. Rowe Price
Tax-Free Funds.
T. Rowe Price
Invest With Confidence(R)
TFF
<PAGE>
T. Rowe Price
TAX-FREE SHORT-INTERMEDIATE FUND
February 28, 1994
Investment Record
The table below shows the investment record of one share of the T. Rowe Price
Tax-Free Short-Intermediate Fund, purchased at the original offering price of
$5.00. 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 Capital With With Dividends
Year Net Asset Income Gain Dividends and Capital Gains Total
Ended Value Dividends Distributions/2/ Reinvested Reinvested Return
------ --------- --------- ---------------- ---------- ----------------- ------
<S> <C> <C> <C> <C> <C> <C>
2/29/84/1/ $4.97 $0.06 $5.03 $5.03 0.64%
1985 5.02 0.32 5.42 5.42 7.70
1986 5.20 0.32 5.98 5.98 10.30
1987 5.33 0.29 6.48 6.48 8.41
1988 5.15 0.27 $0.02 6.60 6.62 2.25
1989 5.03 0.28 6.81 6.83 3.14
1990 5.09 0.30 7.31 7.34 7.36
1991 5.15 0.29 7.83 7.85 7.06
1992 5.22 0.28 8.37 8.40 6.94
1993 5.36 0.24 9.00 9.03 7.51
1994 5.32 0.22 9.31 9.34 3.49
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL $2.87 $0.02
===========================================================================================================================
</TABLE>
/1/ From inception 12/23/83 to 2/29/84.
/2/ Includes short-term capital gain of $0.01 on 3/9/87.
<PAGE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Sector Diversification / February 28, 1994
<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Pre-Refunded Bonds 15%
General Obligation - Local 12
General Obligation - State 10
Educational Revenue 10
Dedicated Tax Revenue 10
Lease Revenue 7
Hospital Revenue 7
Electric Revenue 7
Housing Finance Revenue 6
Nuclear Revenue 4%
Air & Sea Transportation Revenue 4
Industrial & Pollution
Control Revenue 3
Water & Sewer Revenue 2
Escrowed to Maturity 1
Miscellaneous Revenue 1
Other Assets Less Liabilities 1
==========================================================
</TABLE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Portfolio of Investments / February 28, 1994
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
Face Amount Value
----------- --------
<S> <C> <C>
ALABAMA -- 2.3%
Alabama Municipal Electric Auth., (MBIA Insured), 4.10%, 9/1/97......................... $ 2,630 $ 2,640
Jefferson County, Capital Appreciation Warrants, GO, (MBIA Insured),
Zero Coupon, 4/1/98.................................................................... 3,545 2,948
Mobile, Capital Improvement Warrants, GO, (MBIA Insured), 4.75%, 2/15/96................ 1,650 1,677
4.75%, 8/15/96......................................................................... 1,715 1,750
4.95%, 2/15/97......................................................................... 1,755 1,795
4.95%, 8/15/97......................................................................... 1,700 1,745
- ---------------------------------------------------------------------------------------------------------------------------
ARIZONA -- 6.4%
Arizona, COP, (AMBAC Insured), 5.40%, 9/1/98............................................ 1,000 1,044
Arizona Transportation Board Excise Tax, Maricopa County
Regional Area Road Fund, TRAN, 7.30%, 7/1/98........................................... 4,500 4,906
Maricopa County, Gilbert School Dist., GO, (FGIC Insured),
Zero Coupon, 7/1/95.................................................................... 4,000 3,796
Kyrene Elementary School Dist., GO, (FGIC Insured),
Zero Coupon, 1/1/95.................................................................. 200 195
Zero Coupon, 7/1/95.................................................................. 1,500 1,424
Zero Coupon, 1/1/96.................................................................. 1,250 1,159
Zero Coupon, 7/1/96.................................................................. 1,500 1,363
Mesa School Dist., GO, (FGIC Insured), Zero Coupon, 7/1/98............................. 2,675 2,199
Deer Valley Unified School Dist., (FGIC Insured), 4.25%, 7/1/95........................ 3,000 3,038
Mesa, GO, (AMBAC Insured), 6.75%, 7/1/98................................................ 5,800 6,342
Phoenix, Street and Highway User, 7.30%, 7/1/98 (Pre-refunded 7/1/94+).................. 6,620 6,852
Tucson, Junior Lien Street and Highway User, (MBIA Insured), 4.60%, 7/1/99.............. 2,155 2,165
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
Face Amount Value
----------- --------
<S> <C> <C>
CALIFORNIA -- 8.0%
Alameda County Transportation Auth., Sales Tax, (FGIC Insured),
4.60%, 11/1/96......................................................................... $ 3,000 $ 3,068
4.75%, 5/1/97.......................................................................... 2,300 2,354
5.00%, 5/1/98.......................................................................... 1,000 1,029
California Housing Fin. Agency, 5.75%, 8/1/98........................................... 1,000 1,046
California Public Works Board, Dept. of Corrections, State Prisons,
(AMBAC Insured), 4.50%, 12/1/99........................................................ 4,250 4,250
Univ. of California, 4.75%, 6/1/01..................................................... 4,730 4,678
California State, GO 3.50%, 7/26/94..................................................... 5,000 5,014
11.00%, 9/1/95......................................................................... 10,000 11,119
Oakland, COP, VRDN (Currently 2.75%).................................................... 2,500 2,500
Port of Oakland, (MBIA Insured), 4.125%, 11/1/97........................................ 1,250 1,257
Sacramento Municipal Utility Dist., (FGIC Insured), 5.70%, 7/1/98....................... 2,500 2,642
Sacramento Regional County Sanitation Dist., GO, 5.25%, 2/1/98.......................... 2,200 2,213
Southern Public Power Auth., San Juan Power Project,
(MBIA Insured), 4.00%, 1/1/97.......................................................... 2,000 2,001
- ---------------------------------------------------------------------------------------------------------------------------
COLORADO -- 0.7%
Colorado Student Obligation Bond Auth., Student Loan Program,
5.70%, 9/1/94.......................................................................... 2,300 2,323
6.125%, 12/1/98........................................................................ 1,345 1,433
- ---------------------------------------------------------------------------------------------------------------------------
CONNECTICUT -- 2.2%
Connecticut, GO, 3.90%, 3/15/95......................................................... 1,285 1,298
Special Assessment Unemployment Compensation Advance Fund,
(AMBAC Insured), 3.60%, 5/15/95...................................................... 5,000 5,018
4.50%, 5/15/99....................................................................... 2,000 2,001
Connecticut HEFA, 3.80%, 5/15/95........................................................ 1,500 1,503
Connecticut Resources Recovery Auth., Mid-Connecticut System,
5.10%, 11/15/96........................................................................ 2,360 2,429
- ---------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA -- 0.4%
Washington Metropolitan Area Transit Auth., (FGIC Insured), 3.65%, 1/1/96............... 2,000 2,001
- ---------------------------------------------------------------------------------------------------------------------------
FLORIDA -- 6.5%
Dade County, Jackson Memorial Hosp., (MBIA Insured), 3.90%, 6/1/96...................... 2,000 2,007
4.10%, 6/1/97........................................................................ 2,845 2,855
South Miami Hosp., (BIGI Insured), 9.125%, 7/1/18 (Pre-refunded 7/1/96+)............... 2,800 3,179
East County Water Control Dist., Lee County Florida Drain, 14.00%, 11/1/00
(Pre-refunded 11/1/96+)................................................................ 1,075 1,395
14.00%, 11/1/01 (Pre-refunded 11/1/96+).............................................. 1,220 1,583
Florida Municipal Power Agency, St. Lucie Project, 7.00%, 10/1/97
(Pre-refunded 10/1/96+)................................................................ 1,000 1,096
Florida State, Board of Ed. (Public Ed. Capital Outlay), GO, 4.00%, 6/1/97.............. 2,450 2,457
</TABLE>
3
<PAGE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Portfolio of Investments
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
Face Amount Value
----------- --------
<S> <C> <C>
FLORIDA (cont'd)
Homestead, Special Insurance Assessment, Hurricane Andrew, (MBIA Insured),
4.20%, 3/1/96........................................................................ $ 4,000 $ 4,028
4.75%, 3/1/99........................................................................ 1,655 1,667
Jacksonville, Excise Tax, (MBIA Insured), 6.90%, 10/1/98................................ 3,610 4,000
Jacksonville Electric Auth., St. John River Power Park System, 3.75%, 10/1/96........... 10,000 10,017
Jacksonville HFA, Baptist Medical Center, (MBIA Insured),
VRDN (Currently 2.25%)................................................................. 1,000 1,000
- ---------------------------------------------------------------------------------------------------------------------------
GEORGIA -- 2.9%
Atlanta, Airport Fac., 9.00%, 1/1/98.................................................... 4,990 5,087
Cobb County, Water and Sewerage, 6.80%, 7/1/08 (Pre-refunded 7/1/96+)................... 3,175 3,443
Georgia, GO, 7.00%, 11/1/97............................................................. 1,000 1,102
Gwinnett County Water & Sewerage Auth., COP, GO, 8.05%, 8/1/98.......................... 1,000 1,146
Municipal Electric Auth. of Georgia, 7.20%, 1/1/97...................................... 3,000 3,233
7.40%, 1/1/98........................................................................ 1,500 1,612
- ---------------------------------------------------------------------------------------------------------------------------
HAWAII -- 0.9%
Hawaii, GO, 5.60%, 11/1/98.............................................................. 3,000 3,170
Honolulu City & County, GO, 4.60%, 10/1/99.............................................. 2,000 2,015
- ---------------------------------------------------------------------------------------------------------------------------
ILLINOIS -- 3.0%
Chicago Public Building Commission, Chicago Board of Ed., (FGIC Insured),
7.45%, 1/1/97 (Escrowed to Maturity)................................................... 1,200 1,310
7.50%, 1/1/98 (Escrowed to Maturity)................................................... 1,000 1,116
Cook County, GO, (FGIC Insured), 4.10%, 11/15/95........................................ 1,250 1,266
Township High School Dist., GO, (FGIC Insured), 4.10%, 12/1/96......................... 1,125 1,131
5.60%, 6/1/98.......................................................................... 3,000 3,146
Du Page & Will Counties, Community School Dist., GO, (FGIC Insured),
4.80%, 12/30/99........................................................................ 2,000 2,022
Kane, Cook & DuPage County School Dist., GO, (FGIC Insured), 9.00%, 1/1/98.............. 1,350 1,565
Metropolitan Pier and Exposition Auth., Dedicated State Tax, 7.60%, 6/1/98.............. 1,500 1,652
McCormick Place Expansion, (AMBAC Insured), Zero Coupon, 6/15/95....................... 2,285 2,167
Metropolitan Water Reclamation Dist. of Greater Chicago, Cook County,
7.50%, 1/1/98.......................................................................... 1,000 1,109
- ---------------------------------------------------------------------------------------------------------------------------
INDIANA -- 1.1%
Indiana HFFA, Methodist Hosp., 4.00%, 9/1/94............................................ 500 503
4.30%, 9/1/95.......................................................................... 500 506
4.60%, 9/1/96.......................................................................... 545 557
Trustees of Indiana Univ., 9.40%, 8/1/05 (Pre-refunded 8/1/95+)......................... 4,000 4,361
- ---------------------------------------------------------------------------------------------------------------------------
IOWA -- 0.3%
Muscatine, Electric, (AMBAC Insured), 4.80%, 1/1/97..................................... 1,700 1,733
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
Face Amount Value
----------- --------
<S> <C> <C>
KANSAS -- 0.4%
Kansas City Utility System, (AMBAC Insured), 4.45%, 9/1/94.............................. $ 2,000 $ 2,016
- ---------------------------------------------------------------------------------------------------------------------------
KENTUCKY -- 3.8%
Kentucky Housing Corp., 3.65%, 7/1/96................................................... 2,000 1,990
Kentucky Pollution Abatement and Water Resources Fin. Auth., Toyota Motor
Manufacturing, U.S.A., Inc., VRDN (Currently 2.65%).................................... 5,500 5,500
Kentucky Turnpike Auth., Economic Dev. Road Revitalization, (AMBAC
Insured), 4.80%, 7/1/99................................................................ 3,000 3,036
4.00%, 7/1/96.......................................................................... 2,000 2,011
Louisville & Jefferson County Regional Airport Auth., Airport Systems, (MBIA
Insured), 4.50%, 7/1/99 *.............................................................. 4,880 4,839
Owensboro Electric Light and Power System, (AMBAC Insured),
Zero Coupon, 1/1/96.................................................................... 2,000 1,855
Zero Coupon, 1/1/98.................................................................... 1,500 1,261
- ---------------------------------------------------------------------------------------------------------------------------
LOUISIANA -- 4.4%
Louisiana, GO, (MBIA Insured), 8.00%, 5/1/98............................................ 2,000 2,274
Louisiana Housing Fin. Agency, Zero Coupon, 3/1/95...................................... 5,000 4,752
Louisiana Offshore Terminal Auth., Deepwater Port, 6.75%, 9/1/94........................ 2,000 2,030
4.60%, 9/1/95.......................................................................... 5,890 5,984
Louisiana PFA, 6.10%, 9/1/00............................................................ 2,500 2,650
Sisters of Mercy Health System, 7.25%, 6/1/98.......................................... 1,000 1,117
Louisiana Recovery Dist., (AMBAC Insured), 7.375%, 7/1/96............................... 1,620 1,721
Sales Tax Revenue, (MBIA Insured), 5.70%, 7/1/98....................................... 3,000 3,146
- ---------------------------------------------------------------------------------------------------------------------------
MAINE -- 0.7%
Maine Housing Auth., 4.40%, 5/15/94 *................................................... 4,000 4,008
- ---------------------------------------------------------------------------------------------------------------------------
MARYLAND -- 4.0%
Baltimore County Metropolitan Dist., GO, 4.25%, 8/1/99.................................. 3,000 2,988
Baltimore IDA, Days Inn Project, 12.625%, 12/1/04 (Pre-refunded 12/1/97+)............... 7,315 9,353
Howard County, Metropolitan Dist. Project, GO, 4.50%, 8/15/99........................... 1,245 1,251
Maryland HHEFA, Peninsula Regional Medical Center, 4.375%, 7/1/00....................... 1,000 988
4.50%, 7/1/01.......................................................................... 1,200 1,186
4.60%, 7/1/02.......................................................................... 1,175 1,161
4.70%, 7/1/03.......................................................................... 1,250 1,235
Maryland State, GO, 3.50%, 8/1/96....................................................... 1,000 999
Montgomery County, Consolidated Public Improvement, GO, 4.50%, 10/1/02.................. 2,440 2,416
- ---------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS -- 3.4%
Commonwealth of Massachusetts, GO, 3.50%, 10/1/95....................................... 6,855 6,874
Massachusetts, Port Auth., 9.375%, 7/1/15 (Pre-refunded 7/1/95+)........................ 5,745 6,298
Massachusetts Housing Fin. Auth., 4.40%, 4/1/96......................................... 2,000 2,018
4.80%, 10/1/98......................................................................... 3,000 3,049
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Portfolio of Investments
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
Face Amount Value
----------- --------
<S> <C> <C>
MINNESOTA -- 1.0%
Minnesota PFA, Water Pollution Control, 5.70%, 3/1/99................................... $ 2,000 $ 2,099
Southern Municipal Power Agency, 4.40%, 1/1/00.......................................... 3,500 3,455
- ---------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI -- 1.9%
Mississippi HFC, 9.50%, 3/15/94......................................................... 115 115
Mississippi Higher Ed. Assistance Corp., Student Loan, 6.00%, 7/1/00.................... 5,000 5,224
6.10%, 1/1/01.......................................................................... 5,000 5,224
- ---------------------------------------------------------------------------------------------------------------------------
MISSOURI -- 1.6%
Kansas City School District Building, Elementary School Project, (FGIC
Insured), 3.45%, 2/1/96................................................................ 1,300 1,292
Missouri Economic Dev., Export & Infrastructure Board, 6.75%, 9/1/96.................... 835 848
Missouri Higher Ed. Loan Auth., Student Loan (Pattonville R-3 School Dist.),
5.375%, 2/15/99........................................................................ 3,000 3,091
Missouri State, Board of Public Buildings (State Office Building), 8.50%, 8/1/06
(Pre-refunded 8/1/95+)................................................................. 3,000 3,264
- ---------------------------------------------------------------------------------------------------------------------------
MONTANA -- 0.5%
Montana Higher Ed. Student Assistance Corp., Student Loan, 4.00%, 12/1/95 *............. 2,500 2,516
- ---------------------------------------------------------------------------------------------------------------------------
NEVADA -- 0.3%
Clark County, Transportation Improvement, GO, (AMBAC Insured),
5.50%, 6/1/98......................................................................... 1,335 1,395
- ---------------------------------------------------------------------------------------------------------------------------
NEW JERSEY -- 2.2%
New Jersey Housing and Mortgage Fin. Agency, 4.80%, 5/1/96.............................. 3,530 3,580
New Jersey Sports & Exposition Auth., GO, 7.60%, 1/1/96................................. 3,500 3,735
New Jersey Transportation Trust Fund Auth., 5.40%, 6/15/97.............................. 4,315 4,481
- ---------------------------------------------------------------------------------------------------------------------------
NEW MEXICO -- 3.4%
Albuquerque, Hosp. System (Presbyterian Healthcare Services),
(MBIA Insured), 5.40%, 8/1/98.......................................................... 2,985 3,117
Albuquerque IDR, Ethicon Inc., 4.00%, 10/1/94........................................... 1,600 1,610
Farmington, San Juan Unit Project, 13.625%, 7/1/01 (Pre-refunded 7/1/96+)............... 2,000 2,434
Gallup PCR, Plains Electric Generation and Transmission Coop.,
(MBIA Insured), 5.50%, 8/15/98......................................................... 1,640 1,713
New Mexico, Severance Tax, 5.20%, 7/1/95................................................ 1,550 1,587
5.30%, 7/1/97.......................................................................... 1,000 1,037
New Mexico Ed. Assistance Foundation, Student Loan, 4.40%, 12/1/97...................... 1,500 1,507
4.90%, 12/1/01 *....................................................................... 3,500 3,469
New Mexico Mortgage Fin. Auth., 5.90%, 1/1/99........................................... 1,755 1,826
- ---------------------------------------------------------------------------------------------------------------------------
NEW YORK -- 1.2%
Dormitory Auth. of the State of New York, New York Univ., (MBIA Insured),
3.80%, 7/1/97.......................................................................... 5,000 4,978
New York State Local Gov't. Assistance Corp., 4.50%, 4/1/96............................. 1,325 1,341
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
Face Amount Value
----------- --------
<S> <C> <C>
NORTH CAROLINA -- 2.4%
North Carolina Eastern Municipal Power Agency, (FGIC Insured),
7.75%, 1/1/15 (Pre-refunded 1/1/96+)................................................. $ 5,000 $ 5,490
Catawba Electric, (MBIA Insured), 3.75%, 1/1/96........................................ 3,900 3,892
(FGIC Insured), 5.10%, 1/1/99........................................................ 3,500 3,587
- ---------------------------------------------------------------------------------------------------------------------------
OHIO -- 2.9%
Butler County Hosp. Fac., Middletown Regional Hosp., (FGIC Insured),
6.00%, 11/15/97........................................................................ 1,260 1,345
Franklin County, American Chemical Society, 3.60%, 4/1/94............................... 1,250 1,251
4.35%, 4/1/95.......................................................................... 2,750 2,743
Ohio State, Public Fac. Commission, (AMBAC Insured), 4.25%, 12/1/95..................... 10,000 10,183
- ---------------------------------------------------------------------------------------------------------------------------
OKLAHOMA -- 0.6%
Tulsa Public Fac. Auth., Capital Improvement, 4.05%, 5/1/95............................. 3,460 3,486
- ---------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA -- 3.4%
New Castle Area Hosp. Auth., St. Frances Hosp., Zero Coupon, 11/15/97................... 2,535 2,121
Pennsylvania Higher Ed. Fac. Auth., Thomas Jefferson Univ., 5.75%, 8/15/98.............. 3,380 3,569
Pennsylvania Housing Fin. Agency, Rental Housing Refunding,
(FNMA Insured), 5.00%, 7/1/98.......................................................... 1,250 1,279
Pennsylvania Intergovernmental Cooperation Auth., Special Tax Revenue,
(FGIC Insured), 5.60%, 6/15/98......................................................... 5,000 5,214
Pennsylvania State, GO, 5.50%, 10/15/98................................................. 3,000 3,037
Philadelphia, Water & Sewer, 8.40%, 10/1/96 (Pre-refunded 10/1/95+)..................... 1,255 1,369
8.55%, 10/1/97 (Pre-refunded 10/1/95+)................................................. 1,500 1,640
- ---------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND -- 0.4%
Rhode Island Student Loan, 6.20%, 12/1/98............................................... 2,000 2,124
- ---------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA -- 2.7%
Charleston County School Dist. Dev. Corp., Central Administrative Building,
COP, 5.00%, 2/1/99..................................................................... 2,500 2,534
Greenville Hosp. Systems, 4.80%, 5/1/99................................................. 2,000 2,033
5.00%, 5/1/00.......................................................................... 1,000 1,024
Piedmont Municipal Power Agency, 9.70%, 1/1/24 (Pre-refunded 1/1/96+)................... 5,700 6,455
South Carolina, Capital Improvement, GO, 5.70%, 2/1/98.................................. 2,400 2,467
- ---------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA -- 0.5%
South Dakota HDA, Homeownership Mortgage, 6.50%, 5/1/96................................. 2,005 2,085
7.10%, 5/1/96.......................................................................... 390 406
- ---------------------------------------------------------------------------------------------------------------------------
TENNESSEE -- 1.3%
Chattanooga-Hamilton County Hosp. Auth., Erlanger Medical Center,
(FSA Insured), 4.75%, 10/1/99.......................................................... 5,000 5,041
Memphis-Shelby County Airport Auth., (MBIA Insured), 4.40%, 9/1/98...................... 2,250 2,257
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Portfolio of Investments
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
Face Amount Value
----------- --------
<S> <C> <C>
TEXAS -- 9.2%
Anderson County, Coffield State Prison, GO, (AMBAC Insured), 6.50%, 3/15/98............. $ 2,000 $ 2,157
Arlington, GO, 6.70%, 5/1/95............................................................ 1,000 1,039
Austin Utility Systems, 4.30%, 5/15/97.................................................. 4,700 4,718
Brazos Higher Ed. Auth., 4.75%, 6/1/97 *................................................ 3,500 3,552
Dallas, Water and Sewer, 9.50%, 4/1/97.................................................. 1,515 1,745
Dallas Independent School Dist., 8.70%, 8/1/95 (Escrowed to Maturity)................... 5,000 5,355
8.00%, 8/15/97 (Pre-refunded 8/15/95+)................................................. 3,700 3,933
Dallas-Fort Worth Regional Airport, 5.50%, 11/1/98...................................... 2,000 2,084
(MBIA Insured), 3.75%, 11/1/96......................................................... 2,000 1,997
Goose Creek Consolidated Independent School Dist., GO,
Zero Coupon, 2/15/98................................................................... 1,200 1,004
Zero Coupon, 2/15/99................................................................... 1,200 950
Harris County Health Fac. Dev. Corp., St. Luke's Episcopal Hosp.,
6.20%, 2/15/98......................................................................... 1,420 1,529
Hays Consolidated Independent School Dist., Hays, Travis & Caldwell
Counties, GO, Zero Coupon, 2/15/98..................................................... 1,050 878
Houston, Water and Sewer, (FGIC Insured), 5.55%, 12/1/95................................ 2,050 2,123
Lubbock, Waterworks System, GO, 8.75%, 2/15/97.......................................... 510 575
8.75%, 2/15/98......................................................................... 510 590
Plano Independent School Dist., GO, (FGIC Insured), 8.625%, 2/15/97..................... 2,100 2,369
Port of Houston Auth., Harris County Capital Appreciation,
Zero Coupon, 10/1/96................................................................... 2,360 2,122
Zero Coupon, 10/1/97................................................................... 2,660 2,279
San Antonio, Bexar County, GO, 8.625%, 8/1/97........................................... 1,200 1,371
Water System, GO, (FGIC Insured), 5.60%, 5/15/98....................................... 5,000 5,242
Texas Housing Agency, 6.15%, 3/1/97..................................................... 1,060 1,107
6.80%, 7/1/97.......................................................................... 150 158
6.25%, 3/1/98.......................................................................... 330 347
6.25%, 9/1/98.......................................................................... 275 289
- ---------------------------------------------------------------------------------------------------------------------------
UTAH -- 2.3%
Board of Regents of the Univ. of Utah, Univ. Hosp., 5.50%, 5/15/97...................... 1,860 1,930
Intermountain Power Agency, Utah Power Supply, 9.00%, 7/1/95............................ 1,500 1,607
3.90%, 7/1/96.......................................................................... 1,500 1,504
7.75%, 7/1/17 (Pre-refunded 7/1/96+)................................................... 3,000 3,315
Utah Housing Fin. Agency, 6.00%, 1/1/99................................................. 645 673
Utah State Board of Regents, Student Loan, 4.45%, 11/1/95............................... 1,500 1,531
4.50%, 5/1/98.......................................................................... 2,250 2,256
- ---------------------------------------------------------------------------------------------------------------------------
VIRGINIA -- 2.0%
Virginia Ed. Loan Auth., Student Loan Program, 4.30%, 9/1/94............................ 1,700 1,705
4.10%, 3/1/96.......................................................................... 4,335 4,364
5.40%, 9/1/98.......................................................................... 1,205 1,261
Virginia HDA, 9.875%, 9/1/95............................................................ 3,195 3,272
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Amounts in Thousands
---------------------------
Face Amount Value
----------- --------
<S> <C> <C>
WASHINGTON -- 5.4%
King and Snohomish Counties, North Shore School Dist., GO, (FGIC Insured),
5.35%, 12/1/97......................................................................... $ 2,575 $ 2,687
Seattle Municipal Light & Power, 4.10%, 5/1/97.......................................... 3,000 3,009
Washington, GO, 3.35%, 10/1/95.......................................................... 4,245 4,257
3.70%, 8/1/96.......................................................................... 5,500 5,502
5.10%, 9/1/98.......................................................................... 3,050 3,157
Washington Health Care Fac. Auth., Franciscan Health System,
St. Joseph's Hosp. & Health Center, (MBIA Insured), 4.15%, 1/1/97...................... 1,560 1,564
The Children's Hosp. and Medical Center, (FGIC Insured), 5.55%, 10/1/98................ 1,325 1,388
Virginia Mason Medical Center, (MBIA Insured), 6.80%, 7/1/96........................... 1,000 1,064
7.20%, 7/1/98........................................................................ 1,000 1,101
Washington Public Power Supply System, 3.50%, 7/1/96.................................... 3,355 3,321
3.75%, 7/1/96.......................................................................... 2,000 1,991
- ---------------------------------------------------------------------------------------------------------------------------
WISCONSIN -- 0.6%
Wisconsin HFA, Childrens Hosp., 9.375%, 8/1/15 (Pre-refunded 8/1/95+)................... 3,000 3,298
- ---------------------------------------------------------------------------------------------------------------------------
MULTI-STATE -- 2.0%
IVRC Trust, Tax-Exempt Inverse Floating Rate Certificate, RIB, 144a,
1/1/13 (Currently 16.393%) (Pre-refunded 9/15/97+)..................................... 8,000 10,900
===========================================================================================================================
TOTAL INVESTMENTS IN SECURITIES -- 99.2% OF NET ASSETS (COST $527,378).................. $536,197
===========================================================================================================================
</TABLE>
144a -- Security was purchased pursuant to Rule 144a under the Securities
Act of 1933 and may not be resold subject to that rule except to the
qualified institutional buyers.
* -- Interest subject to alternative minimum tax
+ -- Used in determining portfolio maturity
AMBAC -- American Municipal Bond Assurance Corporation
COP -- Certificates of Participation
BIGI -- Bond Investors Guaranty Insurance
FGIC -- Financial Guaranty Insurance Company
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Advisor
GO -- General Obligation
HDA -- Housing Development Authority
HEFA -- Health & Educational Facility Authority
HFA -- Health Facility Authority
HFC -- Housing Finance Corporation
HFFA -- Health Facility Finance Authority
HHEFA -- Health & Higher Educational Facility Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
IVRC -- Inverse Variable Rate Certificates
MBIA -- Municipal Bond Insurance Association
PCR -- Pollution Control Revenue
PFA -- Public Facility Authority
RIB -- Residual Interest Bond
TRAN -- Tax Revenue Anticipation Note
VRDN -- Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Statement of Assets and Liabilities / February 28, 1994
<TABLE>
<CAPTION>
Amounts in Thousands
------------------------
<S> <C>
ASSETS
Investments in securities at value (Cost - $527,378)....................... $536,197
Receivable for investment securities sold.................................. 23,519
Other assets............................................................... 9,163
--------
Total assets............................................................. $568,879
--------
LIABILITIES
Payable for investment securities purchased................................ 25,558
Other liabilities.......................................................... 2,593
--------
Total liabilities........................................................ 28,151
--------
NET ASSETS CONSISTING OF:
Accumulated net investment income - net of distributions................... 8
Accumulated realized gains/losses - net of distributions................... (1,642)
Unrealized appreciation of investments..................................... 8,819
Paid-in-capital applicable to 101,557,555 shares of $0.01 par value
capital stock outstanding; 1,000,000,000 shares authorized............... 533,543
--------
NET ASSETS................................................................. $540,728
========
NET ASSET VALUE PER SHARE.................................................. $5.32
=====
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Statement of Operations / Year Ended February 28, 1994
<TABLE>
<CAPTION>
Amounts in Thousands
------------------------
<S> <C>
INVESTMENT INCOME
Interest income............................................................ $ 24,085
Expenses
Investment management fees............................................... $ 2,256
Shareholder servicing fees & expenses.................................... 403
Custodian and accounting fees & expenses................................. 192
Registration fees & expenses............................................. 60
Prospectus & shareholder reports......................................... 39
Legal & auditing fees.................................................... 35
Directors' fees & expenses............................................... 13
Miscellaneous expenses................................................... 14
--------
Total expenses........................................................... 3,012
--------
Net investment income...................................................... 21,073
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
Securities............................................................... 3,614
Futures.................................................................. (89)
--------
Net realized gain.......................................................... 3,525
Change in unrealized appreciation or depreciation.......................... (7,342)
--------
Net loss on investments.................................................... (3,817)
--------
INCREASE IN NET ASSETS FROM OPERATIONS..................................... $ 17,256
========
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Amounts in Thousands
-------------------------------------------
Year Ended Year Ended
Feb. 28, 1994 Feb. 28, 1993
--------------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income....................................... $ 21,073 $ 17,816
Net realized gain on investments............................ 3,525 330
Change in unrealized appreciation or depreciation
of investments............................................ (7,342) 11,292
--------- ---------
Increase in net assets from operations...................... 17,256 29,438
--------- ---------
Distributions to shareholders
Net investment income....................................... (21,073) (17,816)
--------- ---------
Capital share transactions
Sold 55,259 and 50,197 shares............................... 295,712 264,143
Distributions reinvested of 3,098 and 2,691 shares.......... 16,568 14,163
Redeemed 41,461 and 31,177 shares........................... (221,897) (164,078)
--------- ---------
Increase in net assets from capital share transactions........ 90,383 114,228
--------- ---------
Total increase................................................ 86,566 125,850
NET ASSETS
Beginning of year........................................... 454,162 328,312
--------- ---------
End of year................................................. $ 540,728 $ 454,162
========= =========
=================================================================================================================
</TABLE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Notes to Financial Statements / February 28, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Tax-Free Short-Intermediate Fund (the Fund) is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company.
A) Security valuation - Debt securities are generally traded in the over-the-
counter market. Investments in securities with remaining maturities of one year
or more are stated at fair value as furnished by dealers who make markets in
such securities or by an independent pricing service, which considers yield or
price of bonds of comparable quality, coupon, maturity, and type, as well as
prices quoted by dealers who make markets in such securities. Securities with
remaining maturities less than one year are stated at fair value which is
determined by using a matrix system that establishes a value for each security
based on money market yields. Financial futures contracts are valued at closing
settlement prices.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by, or under the supervision of, the officers of the
Fund, as authorized by the Board of Directors.
B) Premiums and Discounts - Premiums on municipal securities are amortized for
both financial and tax reporting purposes.
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<PAGE>
Discounts, other than original issue, are not amortized for financial reporting
purposes.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on an identified cost basis. Distributions to shareholders are
recorded by the Fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. Payments
("variation margin") made or received by the Fund, dependent on the daily
fluctuations in the value of the futures contracts, are recorded as unrealized
gains or losses until the contracts are closed.
D) Accounting Change - Effective as of the beginning of the year, the Fund
adopted a recently issued accounting standard related to shareholder
distributions. This change resulted in a reclassification to paid-in-capital of
permanent differences between tax and financial reporting of net investment
income and net realized gains/losses. The cumulative effect of this change as
of February 28, 1993, increased Accumulated net investment income - net of
distributions by $8,000, increased Accumulated net realized gains/losses - net
of distributions by $368,000 and decreased Paid-in-capital by $376,000. The
results of operations, shareholder distributions and net assets were not
affected by this change.
NOTE 2 - PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $376,435,000 and $249,301,000, respectively, for the year ended
February 28, 1994.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the Fund intends to
continue to qualify as a regulated investment company and distribute all of its
income. The Fund has unused realized capital loss carryforwards for federal
income tax purposes of $1,062,000 at February 28, 1994, which expire in 1996
through 1998.
At February 28, 1994, the aggregate cost of investments for federal income
tax and financial reporting purposes was $527,378,000 and net unrealized
appreciation aggregated $8,819,000, of which $9,378,000 related to appreciated
investments and $559,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the Fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management fee,
computed daily and paid monthly, consisting of an Individual Fund Fee equal to
0.10% of average daily net assets and a Group Fee. The Group Fee is based on
the combined assets of certain mutual funds sponsored by the Manager or Rowe
Price-Fleming International, Inc. (the Group). The Group Fee rate ranges from
0.48% for the first $1 billion of assets to 0.31% for assets in excess of $34
billion. The effective annual Group Fee rate at February 28, 1994, was 0.34%,
and for the year then ended was 0.35%. The Fund pays a pro rata portion of the
Group Fee based on the ratio of the Fund's net assets to those of the Group.
T. Rowe Price Services, Inc. (TRPS) is a wholly owned subsidiary of the
Manager. TRPS provides transfer and dividend disbursing agent functions and
shareholder services for all accounts. The Manager, under a separate agreement,
calculates the daily share price and maintains the financial records of the
Fund. For the year ended February 28, 1994, the Fund incurred fees totalling
approximately $393,000 for these services provided by related parties. At
February 28, 1994, investment management and service fees payable were $223,000.
13
<PAGE>
T. Rowe Price Tax-Free Short-Intermediate Fund
Financial Highlights
<TABLE>
<CAPTION>
For a share outstanding throughout each year ended
------------------------------------------------------------------------------
Feb. 28, Feb. 28, Feb. 29, Feb. 28, Feb. 28,
1994 1993 1992 1991 1990
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR............... $ 5.36 $ 5.22 $ 5.15 $ 5.09 $ 5.03
-------- -------- -------- -------- --------
Investment Activities
Net investment income.......................... 0.22 0.24 0.28 0.29 0.30
Net realized and unrealized gain (loss)........ (0.04) 0.14 0.07 0.06 0.06
-------- -------- -------- -------- --------
Total from Investment Activities................. 0.18 0.38 0.35 0.35 0.36
Distributions
Net investment income.......................... (0.22) (0.24) (0.28) (0.29) (0.30)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR..................... $ 5.32 $ 5.36 $ 5.22 $ 5.15 $ 5.09
======== ======== ======== ======== ========
===================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Total Return..................................... 3.49% 7.51% 6.94% 7.06% 7.36%
Ratio of Expenses to Average Net Assets.......... 0.60% 0.63% 0.67% 0.74% 0.75%
Ratio of Net Investment Income
to Average Net Assets.......................... 4.18% 4.61% 5.34% 5.67% 5.93%
Portfolio Turnover Rate.......................... 51.1% 38.5% 81.3% 190.1% 190.8%
Net Assets, End of Year (in thousands)........... $540,728 $454,162 $328,312 $232,923 $223,180
Number of Shareholder Accounts,
End of Year.................................... 13,000 11,000 9,000 7,000 8,000
===================================================================================================================================
</TABLE>
14
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors of
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the selected per share data and information (which
appears under the heading "Financial Highlights") present fairly, in all
material respects, the financial position of T. Rowe Price Tax-Free Short-
Intermediate Fund, Inc. at February 28, 1994, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the selected per share data and information for each
of the five years in the period then ended, in conformity with generally
accepted accounting principles. These financial statements and selected per
share data and information (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at February 28, 1994 by
correspondence with custodians and brokers and, where appropriate, the
application of alternative auditing procedures for unsettled security
transactions, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Baltimore, Maryland
March 17, 1994
15
<PAGE>
Officers and Directors
George J. Collins, Chairman
Mary J. Miller, President/Director
Calvin W. Burnett, Director
Anthony W. Deering, Director
F. Pierce Linaweaver, Director
James S. Riepe, Vice President/Director
John Sagan, Director
John G. Schreiber, Director
Janet G. Albright, Vice President
Patrice L. Berchtenbreiter, Vice President
Michael P. Buckley, Vice President
Patricia S. Deford, Vice President
Charles B. Hill, Vice President
Charles O. Holland, Vice President
Henry H. Hopkins, Vice President
William T. Reynolds, Vice President
Alan P. Richman, Vice President
C. Stephen Wolfe II, Vice President
Lenora V. Hornung, Secretary
Carmen F. Deyesu, Treasurer
David S. Middleton, Controller
T. Rowe Price No-Load Mutual Funds
STABILITY
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
CONSERVATIVE INCOME
Adjustable Rate
U.S. Government
Short-Term Bond
Short-Term Global Income
Summit Limited-Term Bond
U.S. Treasury Intermediate
Florida Insured
Intermediate Tax-Free
Maryland Short-Term
Tax-Free Bond
Summit Municipal
Intermediate
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
INCOME
Global Government Bond
GNMA
New Income
Spectrum Income
Summit GNMA
U.S. Treasury Long-Term
California Tax-Free Bond
Georgia Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Tax-Free Income
Virginia Tax-Free Bond
AGGRESSIVE INCOME
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Growth & Income
Spectrum Growth
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
International Discovery
Latin America
New America Growth
New Asia
New Horizons
OTC
Science & Technology
Call if you want to know about any T. Rowe Price fund. We'll send you a
prospectus with more complete information, including management fees and other
expenses. Read it carefully before you invest or send money.
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