<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
TAX-FREE SHORT-INTERMEDIATE FUND
August 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sector Diversification
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Pre-refunded Bonds 41%
- --------------------------------------------------------------------------------
General Obligation - State 14
- --------------------------------------------------------------------------------
General Obligation - Local 10
- --------------------------------------------------------------------------------
Dedicated Tax Revenue 7
- --------------------------------------------------------------------------------
Educational Revenue 5
- --------------------------------------------------------------------------------
Hospital Revenue 4
- --------------------------------------------------------------------------------
Lease Revenue 3
- --------------------------------------------------------------------------------
Housing Finance Revenue 3
- --------------------------------------------------------------------------------
Industrial and Pollution
Control Revenue 2
- --------------------------------------------------------------------------------
Water and Sewer Revenue 2
- --------------------------------------------------------------------------------
Nuclear Revenue 2
- --------------------------------------------------------------------------------
Electric Revenue 2
- --------------------------------------------------------------------------------
Air and Sea Transportation
Revenue 2
- --------------------------------------------------------------------------------
Solid Waste Revenue 2
- --------------------------------------------------------------------------------
Miscellaneous Revenue 1
- --------------------------------------------------------------------------------
Escrowed to Maturity 1
- --------------------------------------------------------------------------------
Other Assets Less Liabilities -1
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price Tax-Free Short-Intermediate Fund/August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
(amounts in thousands)
<TABLE>
<CAPTION>
Amount Value
--------- ---------
<S> <C> <C>
ALABAMA -- 1.1%
Jefferson County, Capital Appreciation Warrants, GO, (MBIA Insured),
Zero Coupon, 4/1/98..................................................... $ 3,545 $ 3,179
Mobile, Capital Improvement Warrants, GO, (MBIA Insured),
4.75%, 8/15/96.......................................................... 1,715 1,728
- --------------------------------------------------------------------------------------------------------------------
ALASKA -- 1.8%
Anchorage, Electric Utility, (MBIA Insured), 7.625%, 12/1/15
(Pre-refunded 6/1/96+)..................................................... 7,770 8,132
- --------------------------------------------------------------------------------------------------------------------
ARIZONA -- 6.6%
Arizona, COP, (AMBAC Insured), 5.40%, 9/1/98..................................... 1,000 1,031
Arizona Transportation Board, 6.35%, 7/1/05 (Pre-refunded 7/1/01+)............... 6,400 7,075
6.50%, 7/1/11 (Pre-refunded 7/1/01+).................................... 2,375 2,642
Excise Tax, Maricopa County Regional Area Road Fund, TRAN,
7.30%, 7/1/98........................................................... 4,500 4,707
</TABLE>
TFS
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Value
--------- ---------
<S> <C> <C>
Maricopa County, Kyrene Elementary School Dist., GO, (FGIC Insured),
Zero Coupon, 1/1/96..................................................... $ 1,250 $ 1,234
Zero Coupon, 7/1/96..................................................... 1,500 1,452
Mesa Unified School Dist. No. 4, GO, (FGIC Insured),
Zero Coupon, 7/1/98..................................................... 2,675 2,374
Mesa, GO, (AMBAC Insured), 6.75%, 7/1/98......................................... 5,800 6,205
Phoenix, Street and Highway User, 7.30%, 7/1/98 (Escrowed to Maturity)........... 900 960
Tucson, 7.90%, 7/1/15 (Pre-refunded 7/1/96+)..................................... 2,000 2,104
- --------------------------------------------------------------------------------------------------------------------
CALIFORNIA -- 2.5%
California, GO, 5.75%, 4/25/96................................................... 5,000 5,060
California Housing Fin. Agency, 5.75%, 8/1/98.................................... 500 515
Los Angeles County Metropolitan Transportation Auth., Sales Tax,
6.90%, 7/1/21 (Pre-refunded 7/1/01+).................................... 5,000 5,700
- --------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA -- 0.2%
Metropolitan Washington D.C. Airports Auth.,
(FGIC Insured), 6.80%, 10/1/98 *........................................... 750 798
- --------------------------------------------------------------------------------------------------------------------
FLORIDA -- 2.9%
East County Water Control Dist., Lee County Drain, 14.00%, 11/1/00
(Pre-refunded 11/1/96+).................................................... 1,075 1,246
14.00%, 11/1/01 (Pre-refunded 11/1/96+)................................. 1,220 1,414
Florida Dept. of Natural Resources, (MBIA Insured), 5.75%, 7/1/96................ 2,400 2,435
Florida Municipal Power Agency, St. Lucie Project, 7.00%, 10/1/97
(Pre-refunded 10/1/96+).................................................... 1,000 1,054
Jacksonville, Excise Tax, (MBIA Insured), 6.90%, 10/1/98......................... 3,610 3,899
Jacksonville Electric Auth., 6.90%, 10/1/19 (Pre-refunded 4/1/97+)............... 3,000 3,178
- --------------------------------------------------------------------------------------------------------------------
GEORGIA -- 4.2%
Fulton County School Dist., 7.625%, 5/1/17 (Pre-refunded 5/1/97+)................ 9,400 10,218
Georgia, GO, 7.00%, 11/1/97...................................................... 1,000 1,066
Gwinnett County Water and Sewerage Auth., COP, GO, 8.05%, 8/1/98................. 1,000 1,104
Metropolitan Atlanta Rapid Transit Auth., Sales Tax, 5.90%, 7/1/99............... 1,850 1,944
Municipal Electric Auth. of Georgia, 7.20%, 1/1/97............................... 3,000 3,091
7.40%, 1/1/98........................................................... 1,500 1,546
- --------------------------------------------------------------------------------------------------------------------
IDAHO -- 0.4%
Idaho HFA, St. Lukes Regional Med. Center, VRDN (Currently 3.50%)................ 1,750 1,750
- --------------------------------------------------------------------------------------------------------------------
ILLINOIS -- 4.0%
Chicago Public Building Commission, Chicago Board of Ed.,
(FGIC Insured), 7.45%, 1/1/97.............................................. 1,200 1,255
7.50%, 1/1/98........................................................... 1,000 1,075
Du Page Water Commission, 6.80%, 5/1/07 (Pre-refunded 5/1/97+)................... 2,000 2,129
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Value
--------- ---------
<S> <C> <C>
Illinois, Sales Tax, 7.80%, 6/15/04 (Pre-refunded 6/15/97+)...................... $ 3,200 $ 3,471
7.60%, 6/15/08 (Pre-refunded 6/15/97+).................................. 2,050 2,217
Kane, Cook and DuPage County School Dist., GO,
(FGIC Insured), 9.00%, 1/1/98.............................................. 1,350 1,490
Metropolitan Pier and Exposition Auth., Dedicated State Sales Tax,
7.60%, 6/1/98........................................................... 1,500 1,571
Metropolitan Water Dist. of Greater Chicago, 7.50%, 1/1/98....................... 1,000 1,071
7.80%, 1/1/03 (Pre-refunded 1/1/98+).................................... 860 930
7.80%, 1/1/04 (Pre-refunded 1/1/98+).................................... 800 865
Southwestern Illinois Dev. Auth., Solid Waste Disposal,
Shell Oil Company, Wood River, VRDN (Currently 3.65%)*........................ 1,800 1,800
- --------------------------------------------------------------------------------------------------------------------
INDIANA -- 0.9%
Indiana HFFA, Methodist Hosp., 4.30%, 9/1/95..................................... 500 500
4.60%, 9/1/96........................................................... 545 548
Indiana Office Building Commission, Capital Complex, 8.40%, 7/1/03
(Pre-refunded 7/1/97+)..................................................... 2,570 2,819
- --------------------------------------------------------------------------------------------------------------------
KANSAS -- 0.2%
Butler County, Solid Waste Disposal Fac., TEXACO Refining,
VRDN (Currently 3.70%)*................................................. 1,000 1,000
- --------------------------------------------------------------------------------------------------------------------
KENTUCKY -- 1.0%
Kentucky Turnpike Auth., Economic Dev. Road Revitalization,
8.25%, 7/1/07 (Pre-refunded 7/1/97+).................................... 2,460 2,690
Owensboro Electric Light and Power System, (AMBAC Insured),
Zero Coupon, 1/1/96..................................................... 2,000 1,975
- --------------------------------------------------------------------------------------------------------------------
LOUISIANA -- 4.0%
East Baton Rouge Sewage Commission, 9.125%, 9/1/06
(Pre-refunded 9/1/97+)..................................................... 6,000 6,759
Louisiana, GO, (MBIA Insured), 8.00%, 5/1/98..................................... 2,000 2,189
Louisiana Offshore Terminal, 6.95%, 9/1/96....................................... 1,050 1,077
Louisiana PFA, Sisters of Mercy Health System, 7.25%, 6/1/98..................... 1,000 1,066
Student Loan, 6.10%, 9/1/00................................................... 1,425 1,490
Louisiana Recovery Dist., (AMBAC Insured), 7.375%, 7/1/96........................ 1,620 1,665
Plaquemines Parish, The British Petroleum Company, VRDN
(Currently 3.70%)*......................................................... 2,800 2,800
Saint Charles Parish, PCR, Shell Oil, VRDN (Currently 3.65%)*.................... 700 700
- --------------------------------------------------------------------------------------------------------------------
MARYLAND -- 8.8%
Baltimore City IDA, Days Inn, 12.625%, 12/1/04 (Pre-refunded 12/1/97+)........... 7,075 8,400
Maryland DOT, 6.50%, 11/1/99..................................................... 3,895 4,221
Maryland HHEFA, Francis Scott Key Medical Center, (FGIC Insured),
6.75%, 7/1/23 (Pre-refunded 7/1/00+).................................... 4,100 4,572
Howard County General Hosp., 8.25%, 7/1/18 (Pre-refunded 7/1/98+)............. 2,600 2,931
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Value
--------- ---------
<S> <C> <C>
Maryland HHEFA, Peninsula Regional Medical Center, 4.375%, 7/1/00................ $ 245 $ 239
4.50%, 7/1/01........................................................... 1,200 1,161
4.60%, 7/1/02........................................................... 1,175 1,124
4.70%, 7/1/03........................................................... 650 624
Univ. of Maryland Medical System, 9.50%, 1/1/14
(Pre-refunded 7/22/96+).................................................... 9,845 10,513
Montgomery County, Consolidated Public Improvement, GO,
6.80%, 11/1/00 (Pre-refunded 11/1/99+).................................. 3,315 3,686
Washington Suburban Sanitary Dist., GO, 7.25%, 1/1/02
(Pre-refunded 1/1/97+)..................................................... 2,000 2,123
- --------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS -- 4.6%
Massachusetts, GO, 5.50%, 7/1/00................................................. 12,865 13,429
7.25%, 7/1/05 (Pre-refunded 7/1/98+).................................... 2,175 2,385
7.625%, 6/1/08 (Pre-refunded 6/1/01+)................................... 4,000 4,675
- --------------------------------------------------------------------------------------------------------------------
MINNESOTA -- 0.5%
Minnesota PFA, Water Pollution Control, 5.70%, 3/1/99............................ 2,000 2,088
- --------------------------------------------------------------------------------------------------------------------
MISSISSIPPI -- 2.3%
Mississippi Higher Ed. Assistance Corp., Student Loan, 6.00%, 7/1/00............. 5,000 5,156
6.10%, 1/1/01........................................................... 5,000 5,174
- --------------------------------------------------------------------------------------------------------------------
MISSOURI -- 1.7%
Missouri Economic Dev., Export and Infrastructure Board, 6.75%, 9/1/96........... 835 839
Missouri HEFA, SSM Health Care, (MBIA Insured),
VRDN (Currently 3.50%).................................................. 4,000 4,000
Missouri Higher Ed. Loan Auth., Student Loan, 5.375%, 2/15/99.................... 2,600 2,645
- --------------------------------------------------------------------------------------------------------------------
MONTANA -- 0.6%
Montana Higher Ed. Student Assistance Corp., Student Loan,
4.00%, 12/1/95*......................................................... 2,500 2,501
- --------------------------------------------------------------------------------------------------------------------
NEW JERSEY -- 1.3%
New Jersey Transportation Trust Fund Auth., 5.40%, 6/15/97....................... 2,000 2,051
5.00%, 6/15/99.......................................................... 3,500 3,592
- --------------------------------------------------------------------------------------------------------------------
NEW MEXICO -- 1.3%
Farmington, San Juan Unit Project, 13.625%, 7/1/01
(Pre-refunded 7/1/96+)..................................................... 2,000 2,158
Gallup, PCR, Plains Electric Generation and Transmission Coop.,
(MBIA Insured), 5.50%, 8/15/98............................................. 1,390 1,436
New Mexico, Severance Tax, 5.30%, 7/1/97......................................... 800 816
New Mexico Mortgage Fin. Auth., 5.90%, 1/1/99.................................... 1,470 1,517
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Value
--------- ---------
<S> <C> <C>
NEW YORK -- 10.8%
Dormitory Auth. of the State of New York, City Univ., 9.25%, 7/1/00.............. $ 5,180 $ 6,083
Metropolitan Transportation Auth., Service Contract, Transport Fac.,
7.125%, 7/1/15 (Pre-refunded 7/1/01+)................................... 3,500 4,028
7.50%, 7/1/16 (Pre-refunded 7/1/00+).................................... 8,480 9,760
Nassau County, GO, (FGIC Insured), 6.30%, 11/1/02................................ 3,295 3,612
6.30%, 11/1/03.......................................................... 2,800 3,081
New York City, GO, 5.70%, 8/15/02................................................ 5,310 5,331
New York State Local Gov't. Assistance Corp., 7.50%, 4/1/20
(Pre-refunded 4/1/01+)..................................................... 5,000 5,822
New York State Thruway Auth., Highway and Bridge Trust,
(AMBAC Insured), 6.00%, 4/1/00............................................. 1,000 1,066
New York State Urban Dev. Corp., COP, 7.75%, 1/1/14
(Pre-refunded 1/1/00+)..................................................... 4,000 4,593
Port Auth. of New York and New Jersey, 4.90%, 9/1/97*............................ 5,000 5,003
- --------------------------------------------------------------------------------------------------------------------
OHIO -- 1.8%
Butler County Hosp. Fac., Middletown Regional Hosp., (FGIC Insured),
6.00%, 11/15/97......................................................... 1,260 1,307
Clermont County, Hospital Fac., (AMBAC Insured), 7.50%, 9/1/19
(Pre-refunded 9/1/99+)..................................................... 5,040 5,714
Erie County, Firelands Community Hosp., 8.875%, 1/1/15
(Pre-refunded 1/1/97+)..................................................... 1,060 1,137
- --------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA -- 3.1%
Coatesville Area School Dist., (AMBAC Insured), 6.70%, 1/15/12
(Pre-refunded 3/1/01+)..................................................... 5,200 5,741
New Castle Area Hosp. Auth., St. Frances Hosp.,
Zero Coupon, 11/15/97................................................... 2,535 2,299
Pennsylvania IDA, (AMBAC Insured), 6.00%, 1/1/99................................. 3,000 3,152
Pittsburgh, Water and Sewer Systems, (FGIC Insured), 6.50%, 9/1/14
(Pre-refunded 9/1/01+)..................................................... 2,500 2,793
- --------------------------------------------------------------------------------------------------------------------
PUERTO RICO -- 2.1%
Puerto Rico Commonwealth, GO, (MBIA Insured), 5.50%, 7/1/01...................... 9,000 9,466
- --------------------------------------------------------------------------------------------------------------------
RHODE ISLAND -- 0.5%
Rhode Island Student Loan, 6.20%, 12/1/98........................................ 2,000 2,079
- --------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA -- 3.9%
Charleston Waterworks and Sewer System, 7.75%, 1/1/18
(Pre-refunded 1/1/98+)..................................................... 1,440 1,581
Piedmont Municipal Power Agency, (AMBAC Insured), 7.50%, 1/1/07
(Pre-refunded 1/1/98+)..................................................... 2,335 2,552
South Carolina, Capital Improvement, GO, 5.70%, 2/1/98........................... 2,400 2,460
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Value
--------- ---------
<S> <C> <C>
South Carolina Public Service Auth., (AMBAC Insured), 6.25%, 1/1/00**............ $ 3,000 $ 3,189
6.25%, 1/1/01**......................................................... 2,000 2,142
Santee Cooper, (AMBAC Insured), 6.50%, 7/1/24
(Pre-refunded 7/01/02+).................................................... 5,000 5,615
- --------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA -- 0.5%
South Dakota HDA, Homeownership Mortgage, 6.50%, 5/1/96.......................... 2,005 2,038
7.10%, 5/1/96........................................................... 390 398
- --------------------------------------------------------------------------------------------------------------------
TENNESSEE -- 2.8%
Shelby County Health Ed. and Housing Fac.,
Le Bonheur Children's Medical Center, 9.625%, 7/1/15
(Pre-refunded 7/1/97+)..................................................... 2,400 2,645
Tennessee, GO, BAN, VRDN (Currently 3.60%)....................................... 10,000 10,000
- --------------------------------------------------------------------------------------------------------------------
TEXAS -- 9.4%
Anderson County, Coffield State Prison, (AMBAC Insured),
6.50%, 3/15/98.......................................................... 2,000 2,109
Dallas, Water and Sewer, 9.50%, 4/1/97........................................... 1,515 1,639
Dallas-Fort Worth Regional Airport, 5.50%, 11/1/98............................... 2,000 2,065
Goose Creek Consolidated Independent School Dist., GO,
Zero Coupon, 2/15/98.................................................... 1,200 1,080
Zero Coupon, 2/15/99.................................................... 1,200 1,031
Harris County, Toll Road, (FGIC Insured), 6.625%, 8/15/11
(Pre-refunded 8/15/97+).................................................... 2,350 2,512
GO, 6.30%, 8/1/99.......................................................... 1,725 1,851
Harris County Health Fac. Dev. Corp., St. Luke's Episcopal Hosp.,
6.20%, 2/15/98.......................................................... 1,420 1,479
Hays Consolidated Independent School Dist., GO,
Zero Coupon, 2/15/98.................................................... 1,050 945
Houston Water and Sewer System, (FGIC Insured), 5.55%, 12/1/95................... 2,050 2,058
Lower Colorado River Auth., (MBIA Insured), 7.625%, 1/1/16
(Pre-refunded 1/1/98+)..................................................... 2,645 2,898
Lubbock, Waterworks System, GO, 8.75%, 2/15/97................................... 510 543
8.75%, 2/15/98.......................................................... 510 563
Plano Independent School Dist., GO, (FGIC Insured), 8.625%, 2/15/97.............. 2,100 2,238
Port of Houston Auth., Zero Coupon, 10/1/96...................................... 2,360 2,262
Zero Coupon, 10/1/97.................................................... 2,660 2,442
San Antonio, GO, 8.625%, 8/1/97.................................................. 1,200 1,299
Water Systems, (FGIC Insured), 6.30%, 5/15/04................................. 3,000 3,281
Texas, GO, TRAN, 4.75%, 8/30/96.................................................. 8,000 8,066
Texas Housing Agency, 6.15%, 3/1/97.............................................. 1,005 1,027
6.80%, 7/1/97........................................................... 150 155
6.25%, 3/1/98........................................................... 310 320
6.25%, 9/1/98........................................................... 260 269
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Value
--------- ---------
<S> <C> <C>
UTAH -- 3.5%
Intermountain Power Agency, Utah Power Supply, 8.50%, 7/1/07
(Pre-refunded 7/1/97+)..................................................... $ 3,610 $ 3,966
8.625%, 7/1/21 (Pre-refunded 7/1/97+)................................... 840 925
Salt Lake County, Solid Waste Disposal, Kennecott Utah Copper,
VRDN (Currently 3.85%)*................................................. 7,000 7,000
Univ. of Utah Board of Regents, Student Loan, (AMBAC Insured),
4.45%, 11/1/95.......................................................... 1,500 1,501
Univ. Hosp., 5.50%, 5/15/97................................................... 1,860 1,898
Utah Housing Fin. Agency, 6.00%, 1/1/99.......................................... 400 414
- --------------------------------------------------------------------------------------------------------------------
VIRGINIA -- 6.2%
Chesapeake, GO, 7.00%, 5/1/97.................................................... 1,850 1,940
Fairfax County, GO, 6.85%, 4/1/99 (Pre-refunded 4/1/97+)......................... 900 944
Sewer, (AMBAC Insured), 7.00%, 11/15/16
(Pre-refunded 11/15/99+)................................................... 1,700 1,904
Fairfax County Water Auth., 7.25%, 1/1/27 (Pre-refunded 1/1/00+)................. 3,250 3,656
Hampton Roads Sanitation Dist., 7.20%, 7/1/09 (Pre-refunded 7/1/99+)............. 1,800 2,014
Newport News, GO, 7.25%, 1/1/98.................................................. 1,300 1,388
Prince William County Water and Sewer, (FGIC Insured), 6.70%, 7/1/11
(Pre-refunded 7/1/01+)..................................................... 1,800 2,025
Virginia HDA, 9.875%, 9/1/95..................................................... 295 295
4.65%, 5/1/96*.......................................................... 1,500 1,507
5.75%, 1/1/99*.......................................................... 1,390 1,430
5.90%, 1/1/00*.......................................................... 1,865 1,919
Virginia Public Building Auth., 5.625%, 8/1/96................................... 2,170 2,201
5.625%, 8/1/97.......................................................... 2,295 2,365
Virginia Public School Auth., 5.60%, 1/1/99...................................... 4,000 4,167
- --------------------------------------------------------------------------------------------------------------------
WASHINGTON -- 4.2%
Tacoma Electric System, (AMBAC Insured), 8.00%, 1/1/08
(Pre-refunded 1/1/98+)..................................................... 1,440 1,589
Washington, GO, 3.35%, 10/1/95................................................... 4,245 4,242
3.70%, 8/1/96........................................................... 5,500 5,485
Washington HFA, Virginia Mason Medical Center, (MBIA Insured),
6.80%, 7/1/96........................................................... 1,000 1,023
7.20%, 7/1/98........................................................... 1,000 1,068
Washington Public Power Supply System, 3.50%, 7/1/96............................. 3,355 3,343
3.75%, 7/1/96........................................................... 2,000 1,997
- --------------------------------------------------------------------------------------------------------------------
WISCONSIN -- 1.2%
Wisconsin, GO, 6.90%, 5/1/99 (Pre-refunded 5/1/98+).............................. 5,000 5,350
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
---------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 100.9% OF NET ASSETS
(COST $443,061).................................................................. $ 452,424
- --------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES.................................................... (3,842)
---------
<CAPTION>
NET ASSETS CONSIST OF: Value
---------
<S> <C> <C>
Accumulated net investment income - net of distributions......................... $ 9
Accumulated net realized gain/loss - net of distributions........................ (3,221)
Net unrealized gain (loss)....................................................... 9,363
Paid-in-capital applicable to 84,115,401 shares of $0.01 par
value capital stock outstanding; 1,000,000,000 shares authorized.............. 442,431
---------
NET ASSETS....................................................................... $ 448,582
=========
NET ASSET VALUE PER SHARE........................................................ $5.33
=====
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* - Interest subject to alternative minimum tax
** - When-issued security
+ - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
BAN - Bond Anticipation Note
COP - Certificates of Participation
DOT - Department of Transportation
FGIC - Financial Guaranty Insurance Company
GO - General Obligation
HDA - Housing Development Authority
HEFA - Health and Educational Facility Authority
HFA - Health Facility Authority
HFFA - Health Facility Financing Authority
HHEFA - Health and Higher Educational Facility Authority
IDA - Industrial Development Authority
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
PFA - Public Facility Authority
TRAN - Tax Revenue Anticipation Note
VRDN - Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund/Six Months Ended August 31, 1995
(Unaudited)
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income.............................................. $ 11,350
--------
Expenses
Investment management........................................ 1,001
Shareholder servicing........................................ 168
Custody and accounting....................................... 83
Registration................................................. 12
Legal and audit.............................................. 12
Prospectus and shareholder reports........................... 10
Directors.................................................... 5
Miscellaneous................................................ 6
--------
Total expenses............................................... 1,297
--------
Net investment income........................................... 10,053
--------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities................................................... 2,110
Futures...................................................... (52)
--------
Net realized gain (loss)..................................... 2,058
--------
Change in net unrealized gain or loss on securities............. 5,403
--------
Net realized and unrealized gain (loss)......................... 7,461
--------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS............... $ 17,514
========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
Aug. 31, 1995 Feb. 28, 1995
---------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income................................................. $ 10,053 $ 20,503
Net realized gain (loss).............................................. 2,058 (3,632)
Change in net unrealized gain or loss................................. 5,403 (4,859)
--------- ---------
Increase (decrease) in net assets from operations..................... 17,514 12,012
--------- ---------
Distributions to shareholders
Net investment income................................................. (10,053) (20,503)
--------- ---------
Capital share transactions*
Shares sold........................................................... 42,732 147,931
Distributions reinvested.............................................. 7,932 16,060
Shares redeemed....................................................... (63,627) (242,144)
--------- ---------
Increase (decrease) in net assets from capital share transactions..... (12,963) (78,153)
--------- ---------
Increase (decrease) in net assets........................................ (5,502) (86,644)
NET ASSETS
Beginning of period...................................................... 454,084 540,728
--------- ---------
End of period............................................................ $ 448,582 $ 454,084
========= =========
- -------------------------------------------------------------------------------------------------------------------
* Share information
Shares sold........................................................... 8,074 28,235
Distributions reinvested.............................................. 1,497 3,070
Shares redeemed....................................................... (12,015) (46,303)
--------- ---------
Increase (decrease) in shares outstanding............................. (2,444) (14,998)
========= =========
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund / August 31, 1995 (Unaudited)
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) 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 of 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.
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 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.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on an identified cost basis. Distributions to shareholders are recorded
by the fund on the ex-dividend date. Income and capital gain distributions are
determined in accordance with federal income tax regulations and may differ from
those determined in accordance with generally accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $135,716,000 and $131,097,000, respectively, for the six months ended
August 31, 1995.
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 $2,682,000, $690,000 of which expire in 1996, $372,000 in
1998, and $1,620,000 in 2003. The fund intends to retain gains realized in
future periods that may be offset by available capital loss carryforwards.
At August 31, 1995, the aggregate cost of investments for federal income
tax and financial reporting purposes was $443,061,000 and net unrealized gain
aggregated $9,363,000, of which $9,559,000 related to appreciated investments
and $196,000 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,
of which $167,000 was payable at August 31, 1995. The fee is computed daily and
paid monthly, and consists of an Individual Fund Fee equal to 0.10% of average
daily net assets and a Group Fee. The Group Fee is based on the combined assets
of certain mutual funds sponsored by the Manager or Rowe-Price Fleming
11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
International, Inc. (the Group). The Group Fee rate ranges from 0.48% for the
first $1 billion of assets to 0.31% for assets in excess of $34 billion. At
August 31, 1995, and for the six months then ended, the effective annual Group
Fee rate was 0.34%. The fund pays a pro rata share of the Group Fee based on the
ratio of its net assets to those of the Group.
In addition, the fund has entered into agreements with the Manager and a
wholly owned subsidiary of the Manager, pursuant to which the fund receives
certain other services. The Manager computes the daily share price and maintains
the financial records of the fund. T. Rowe Price Services, Inc. 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 $180,000 for the six
months ended August 31, 1995, of which $38,000 was payable at period-end.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund (Unaudited)
<TABLE>
<CAPTION>
For a share outstanding throughout each period
-----------------------------------------------------------------------------------------
Year Ended
Six Months ----------------------------------------------------------------------
Ended Feb. 28, Feb. 28, Feb. 28, Feb. 29, Feb. 28,
August 31, 1995 1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................. $5.25 $5.32 $5.36 $5.22 $5.15 $5.09
----- ----- ----- ----- ----- -----
Investment Activities
Net investment income................ 0.12 0.22 0.22 0.24 0.28 0.29
Net realized and unrealized
gain (loss)....................... 0.08 (0.07) (0.04) 0.14 0.07 0.06
----- ----- ----- ----- ----- -----
Total from Investment Activities..... 0.20 0.15 0.18 0.38 0.35 0.35
Distributions
Net investment income................ (0.12) (0.22) (0.22) (0.24) (0.28) (0.29)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD.......... $5.33 $5.25 $5.32 $5.36 $5.22 $5.15
===== ===== ===== ===== ===== =====
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return............................ 3.80% 2.91% 3.49% 7.51% 6.94% 7.06%
Ratio of Expenses to Average
Net Assets........................... 0.57%+ 0.59% 0.60% 0.63% 0.67% 0.74%
Ratio of Net Investment Income
to Average Net Assets................ 4.45%+ 4.19% 4.18% 4.61% 5.34% 5.67%
Portfolio Turnover Rate................. 61.4%+ 93.1% 51.1% 38.5% 81.3% 190.1%
Net Assets, End of Period
(in thousands)....................... $448,582 $454,084 $540,728 $454,162 $328,312 $232,923
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
12
<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
While stocks have captured most of the headlines so far this year, bonds also
delivered strong returns for investors. Bond prices rose and yields fell
sharply, although long-term tax-exempt issues trailed their taxable equivalents.
Despite the Federal Reserve's ease in July, municipal and taxable bonds gave
back some of their gains after revised economic data indicated the economy was
not slowing to the extent originally believed.
MARKET ENVIRONMENT
Municipals turned in their strongest performance this year in January and
February, when the yield on 30-year AAA general obligation bonds fell to 5.95%
from 6.65%. However, during the six months covered in this report, that yield
declined by only another 10 basis points to 5.85% compared with an 80-basis-
point drop in 30-year Treasury bonds.
The tax-exempt market's lagging performance relative to Treasuries can be
attributed largely to investor concerns about tax reform proposals in Washington
(see sidebar on page 4). One effect of this key issue was the divergence between
intermediate- and long-term tax-exempt bonds. During the six
- --------------------------------------------------------------------------------
Municipal Bond and Note Yield
- --------------------------------------------------------------------------------
[CHART APPEARS HERE]
months ended August 31, bonds maturing in 5 to 10 years provided higher total
returns than long-term bonds. The municipal yield curve steepened significantly
(short-term yields fell and long-term yields were steady), because investors
demonstrated their reluctance to assume the additional risk of buying bonds with
long maturities until tax uncertainties are cleared up.
TAX-EXEMPT MONEY FUND
Short-term municipal yields changed little during the quarter ended August 31,
despite the usual gyrations due to technical factors (large cash flows from July
1 coupon and maturity payments, and high seasonal note issuance). The money
market yield curve is currently rather flat, as the difference between the daily
and one-year security yields averaged a meager one-quarter percentage point
during the quarter. By comparison, the gap averaged nearly three-quarters of a
percentage point during the past 12 months.
Your fund began the quarter with a weighted average maturity 10 days longer
than its peer group average, a posture we believed was appropriate in view of
slower economic growth and the possibility of Fed easing. Early in the quarter,
we allowed maturities to shorten to take advantage of seasonal issuance, which
usually puts upward pressure on yields. Our maturity posture at quarter-end was
once again in neutral territory. We expect to remain neutral to slightly
aggressive going forward because we believe the Fed will maintain a stable
monetary policy near term, new short-term issuance will be lower, and money fund
assets will continue to grow about 10% this year.
Your fund's performance, as shown on the next page, was slightly ahead of
its peer group during the past three- and six-month periods ended August 31.
<PAGE>
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 8/31/95
---------------------
3 Months 6 Months
-------- --------
<S> <C> <C>
Tax-Exempt Money Fund 0.82% 1.73%
IBC/Donoghue Money Fund
Report Average* 0.80 1.70
- --------------------------------------------------------------------------------
*Stockbroker and General Purpose Funds
</TABLE>
TAX-FREE SHORT-INTERMEDIATE FUND
We began the six-month period ended August 31 with a neutral weighted average
maturity, a focus on one- to five-year maturities, and increasing exposure to
states with favorable supply and demand factors. Further along in the period,
evidence of economic slowing prompted us to extend maturities to capture higher
yields as rates fell. However, recent data showing strength in home and
automobile sales triggered a more cautious posture once again. We ended the
fund's most recent fiscal quarter with a weighted average maturity just under
three years, down from 3.42 years on May 31 and 3.15 years at the end of
February.
Our focus on one- to five-year maturities contributed significantly to
performance. Investor demand for these securities, triggered by tax reform
concerns, pushed prices higher and yields lower relative to long-term bonds.
Until there is a clear indication of what type of changes will be made in the
tax code, investors are still likely to position themselves cautiously in
shorter-term bonds.
Our strategy allowed the fund to outperform its peer group average during
both the quarter and the six months ended August 31.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 8/31/95
---------------------
3 Months 6 Months
-------- --------
<S> <C> <C>
Tax-Free Short-Intermediate
Fund 1.50% 3.80%
Lipper Short Municipal
Debt Fund Average 1.46 3.63
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE INSURED INTERMEDIATE BOND FUND
Our strategy here was similar to that of the Tax-Free Short-Intermediate Fund.
We began the six-month period with a neutral duration, a focus on 5- to 10-year
maturities, and increasing exposure to states with favorable supply and demand
factors. As the economy slowed, we lengthened maturities and then shortened them
again in the second fiscal quarter when economic data suggested renewed
strength. Investors flocked to bonds with maturities shorter than seven years
because of uncertainty surrounding tax-reform discussions. As a result, your
fund's allocation to securities with two- to seven-year maturities helped
performance.
We have also increased our allocation to bonds issued by high-tax states,
such as New York and Maryland. The added tax advantages for local residents
should create stronger demand for these issues, propelling prices higher. We
anticipate that 1995 will see the lowest issuance of municipal bonds since 1990,
helping bonds from these areas outperform bonds issued by states with lower tax
rates.
This strategy resulted in a stronger performance than our peer group
average during the second quarter and the first half of your fund's fiscal year.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 8/31/95
---------------------
3 Months 6 Months
-------- --------
<S> <C> <C>
Tax-Free Insured
Intermediate Bond Fund 1.71% 5.59%
Lipper Intermediate Municipal
Debt Fund Average 1.55 5.05
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE INCOME FUND
Two opposing forces dominated the long end of the municipal market during the
past six months. On one hand, the slowing economy provided an environment for
declining yields and rising bond prices. On the other hand,
2
<PAGE>
concerns about tax reform suggested that long-term municipal bond yields might
not fall as much as their taxable counterparts.
Uncertainty surrounding the tax reform issue kept us from becoming overly
aggressive on the direction of tax-exempt yields. Throughout most of the first
two fiscal quarters, we maintained the fund's weighted average maturity at about
18 years, and the fund's duration, which measures sensitivity to changes in
interest rates, near 7.75 years.
We were more certain in our outlook on credit quality spreads. Believing
that medium-quality, higher-yielding bonds were undervalued, we took the
opportunity to add securities in this sector to the portfolio. Subsequently,
these bonds rose in price and their yields moved closer to those of higher-
quality bonds, aiding fund performance through both price appreciation and the
higher income we had captured.
By the end of June, the municipal bond market appeared to have overreacted
to talk of tax reform. Yields on long-term municipals approached 90% of the 30-
year Treasury bond yield, and we were able to buy long-term bonds with
attractive yields. Your fund's performance lagged modestly during the quarter
but performed in line with the average for similar funds during the first six
months of the fiscal year.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 8/31/95
---------------------
3 Months 6 Months
-------- --------
<S> <C> <C>
Tax-Free Income Fund 0.45% 4.62%
Lipper General Municipal Debt Fund Average 0.57 4.62
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE HIGH YIELD FUND
Your fund started the calendar year with a somewhat defensive maturity posture,
which served shareholders well throughout last year's difficult environment.
Going into the fiscal year last March, however, we began to make two adjustments
that worked out well through the quarter ended August 31. First, we shifted
toward a neutral to slightly aggressive position versus the competition. This
entailed keeping the fund's duration in a range of 7.3 to 7.6 years, reducing
cash levels to about 3%, and extending the weighted average maturity to just
beyond 20 years.
The second change was an increased weighting in below-investment-grade
holdings to 30% from 24% of net assets. Yield spreads between high- and lower-
quality bonds had increased significantly in 1994, which provided an opportunity
to bolster the fund's yield. We recently cut back our purchases in this sector
as yield spreads have narrowed once again. This shift in emphasis lowered your
fund's average credit quality only slightly, since a portion of these purchases
were funded by the sale of BBB-rated bonds.
These adjustments helped the fund outperform its peer group average over
the past three- and six-month periods. Going forward, however, we expect to
adopt a more cautious posture since bonds could well have registered most of the
gains we anticipate for 1995.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 8/31/95
---------------------
3 Months 6 Months
-------- --------
<S> <C> <C>
Tax-Free High Yield Fund 1.22% 5.37%
Lipper High Yield Municipal Debt Fund Average 1.05 4.89
- --------------------------------------------------------------------------------
</TABLE>
OUTLOOK
For the past three months, the 30-year Treasury bond yield has hovered in a
range between 6.5% and 7%. While recent economic growth has slowed significantly
from last year's rapid pace, it may not have slowed to the extent the Federal
Reserve believed when it loosened monetary policy in July. Second quarter GDP,
initially reported to have increased by a paltry 0.5% annualized rate, was
subsequently revised to 1.1%. Growth in the third and fourth quarters should be
closer to the long-term trend of 2.5%.
3
<PAGE>
- --------------------------------------------------------------------------------
Municipal Bonds Hindered by Tax Reform Proposals
- --------------------------------------------------------------------------------
In recent months, proposals for tax reform in Washington have trimmed returns on
municipal bonds. Most of these proposals are still in rudimentary form, but they
center on the possibility of a flat tax with a low income tax rate and the
elimination of taxes on the income from taxable securities. As a result,
investors demanded higher yields on long-term tax-exempt issues relative to
Treasuries to compensate for the risk that new legislation might reduce the tax
advantages of municipals. Tax-exempt securities with short maturities have
performed better, because they are less vulnerable to any changes in the tax
laws.
Tax reform discussions could continue to affect the municipal market
adversely, but we believe the likelihood of a genuine flat tax is slim. In our
experience, the market often overreacts to proposed changes in the tax code,
creating periods of market weakness we view as buying opportunities.
Accordingly, we have taken advantage of the demand for short-term tax-exempt
bonds and have purchased long-term bonds when their yields have approached those
of long-term Treasury bonds.
- --------------------------------------------------------------------------------
Until the economy shows clearer signs of veering from moderate to either
slower or more rapid growth, long bond yields are likely to remain close to
current levels. Despite the emerging picture of a rebound in growth, the
combination of benign inflation and the growing sense of fiscal responsibility
in Washington may reassure the bond market.
The municipal market is also likely to trade in its range of the past six
months, with long-term rates fluctuating between 5.5% and 6.0%. Unless tax
reform proposals disappear altogether, we do not expect municipal bonds to
outperform Treasuries, and investors may continue to prefer tax-exempt bonds
with short maturities. Overall, we anticipate that economic developments will
have a greater impact than tax reform proposals on the municipal market.
Respectfully submitted,
/s/ William T. Reynolds
William T. Reynolds
Director
Fixed Income Division
September 20, 1995
4
<PAGE>
- --------------------------------------------------------------------------------
Financial Summary
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEC
Net Asset Value Dividend Per Share Dividend Yield* 30-Day
Per Share 3 Months Ended 3 Months Ended Yield
5/31/95 8/31/95 5/31/95 8/31/95 5/31/95 8/31/95 8/31/95
------------------- ------------------- -------------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money $ 1.00 $ 1.00 $ 0.009 $ 0.008 3.56% 3.26% --
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 5.31 5.33 0.06 0.06 4.44 4.43 3.92%
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 10.62 10.68 0.12 0.12 4.66 4.54 4.33
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Free Income 9.50 9.41 0.13 0.13 5.60 5.58 5.35
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Free High Yield 11.91 11.87 0.18 0.18 6.25 6.17 5.88
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Dividends earned and reinvested for the periods indicated are annualized and
divided by the average daily net asset values per share for the same period.
Money Fund reports seven-day compound yield.
- --------------------------------------------------------------------------------
Quality Diversification
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quality Ratings* Weighted Average Quality*
----------------------------------------- -------------------------
1 2 3 4 5-10 5/31/95 8/31/95
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money 14% 86% -- -- -- 1.9 1.9
- -----------------------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 42 36 18% 4% -- 1.8 1.8
- -----------------------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 30 60 10 -- -- 1.9 1.8
- -----------------------------------------------------------------------------------------------------------------------
Tax-Free Income 11 51 25 10 3% 2.4 2.4
- -----------------------------------------------------------------------------------------------------------------------
Tax-Free High Yield 4 17 18 32 29 3.6 3.7
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
5
<PAGE>
- --------------------------------------------------------------------------------
Duration and Maturity
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Effective Duration (years) Maturity (years)
-------------------------- ---------------------
5/31/95 8/31/95 5/31/95 8/31/95
<S> <C> <C> <C> <C>
Tax-Exempt Money -- -- 49* 55*
- -----------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 2.7 2.5 3.4 3.0
- -----------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 5.6 5.4 7.6 7.2
- -----------------------------------------------------------------------------------------------
Tax-Free Income 7.6 7.8 18.0 18.1
- -----------------------------------------------------------------------------------------------
Tax-Free High Yield 7.2 7.3 20.1 20.1
- -----------------------------------------------------------------------------------------------
</TABLE>
* Maturity is in days.
- --------------------------------------------------------------------------------
Average Annual Compound Total Return - Calendar Year
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 6/30/95
-----------------------------------------------------------
1 Year 5 Years 10 Years Since Inception
<S> <C> <C> <C> <C> <C>
Tax-Exempt Money 3.14% 3.06% 4.01% 4.70% (4/81)
- --------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 5.85 5.76 5.77 6.09 (12/83)
- --------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 7.72 -- -- 7.27 (11/92)
- --------------------------------------------------------------------------------------------------------
Tax-Free Income 8.66 8.18 8.16 7.20 (10/76)
- --------------------------------------------------------------------------------------------------------
Tax-Free High Yield 8.04 8.40 9.50 9.77 (3/85)
- --------------------------------------------------------------------------------------------------------
</TABLE>
Investment 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>
- --------------------------------------------------------------------------------
Shareholder Services
- --------------------------------------------------------------------------------
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information and services--at no extra cost.
Knowledgeable Service Representatives
By Phone--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m ET. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
Automated 24-Hour Services
Tele*Access(R)(1-800-638-2587) provides information such as account
balance, date and amount of your last transaction, latest dividend payment, and
fund prices and yields. Additionally, you have the ability to request
prospectuses, statements, account and tax forms; reorder checks; and initiate
purchase, redemption, and exchange orders for identically registered accounts.
PC*Access(R) provides the same information as Tele*Access, but on a
personal computer via dial-up modem.
Account Services
Checking--Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield Fund and Emerging Markets Bond Fund).
Automatic Investing--Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a Stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a regular
basis, you can establish scheduled automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
Investment Information
Combined Statement--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides total
portfolio value, and lists your investments by type--stock, bond, and money
market. Detail pages itemize account transactions by fund.
Shareholder Reports--Portfolio managers review the performance of the funds
in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant articles on
market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights--A library of information that includes reports on mutual fund tax
issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can help
you determine and reach your investment goals.
Discount Brokerage
You can trade stocks, bonds, options, precious metals, and other securities at a
substantial savings over regular commission rates. Call a shareholder service
representative for more information.
7
<PAGE>
- --------------------------------------------
- --------------------------------------------
FOR YIELD, PRICE, LAST TRANSACTION,
AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
FOR ASSISTANCE WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. ROWE PRICE
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Tax-Free Funds.
Invest With Confidence/(R)/ [LOGO APPEARS HERE]
T. Rowe Price
TFF
- ------------------------------------
SEMIANNUAL REPORT
- ------------------------------------
T. Rowe Price
-------------
TAX-FREE FUNDS
AUGUST 31, 1995
[LOGO APPEARS HERE]
