<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
Vigorous economic growth and Federal Reserve tightening dominated the fixed-
income markets in 1994. Real growth of 4% last year exceeded the historical
trend of approximately 2.5%. The target for the fed funds rate climbed with the
economy's strong pace, rising from 3% at the beginning of last year to 6% after
the most recent tightening on February 1, 1995. The Federal Reserve pursued its
monetary policy to slow economic growth to a level that will contain inflation.
Future Fed action will reflect its goal of preventing excessive inflation
without spurring significantly higher unemployment.
Rising yields characterized the tax-exempt market during most of 1994.
The yield on one-year AAA General Obligation (GO) bonds peaked in December at
4.9%, up from 3% at the end of February 1994. However, as the market
strengthened over the last several months, the one-year yield retreated to 4.4%
by the funds' fiscal year-end. The five-year AAA GO bond yield ended this
quarter at 5%, 70 basis points higher than a year ago but 50 basis points lower
than at the end of November (100 basis points equal one percent). On the long
end, the yield on 30-year AAA GO bonds was almost 6%, up from 5.6% a year
earlier but down from its November peak of 6.8%.
Yields declined after the Fed's sixth tightening of the year in
November. Anticipation of a slowing economy, good news on inflation, and
- --------------------------------------------------------------------------------
Municipal Bond and Note Yields
- --------------------------------------------------------------------------------
[CHART APPEARS HERE]
limited supply of tax-exempt bonds all contributed to the recent drop in yields.
Issuance fell to a four-year low last year and could be even lower in 1995.
TAX-EXEMPT MONEY FUND
Last year's rise in interest rates was bad news for bond investors but good
news for money market investors as current yields rose substantially during
the past 12 months. Your fund's seven-day compound yield stood at 3.57% at
the end of the fiscal year, compared with 2.21% a year ago.
During the past 12 months, the municipal short-term yield curve has
steepened substantially. For example, the difference in yield between an
overnight investment and a one-year security averaged 1.21 percentage points
over the past year, compared with an average difference of 0.48 of a percentage
point during the preceding 12-month period. The long end of the money market
curve followed the rate rise orchestrated by the Fed, while very short-term
yields stayed low, responding to light supply and strong investor demand in a
tightening environment.
Issuance of short-term securities fell to $34.1 billion from $45.4
billion during the fiscal year, the lowest level in five years, the result of
more long-term bonds being sold in 1992 and 1993 to lock in historically low
borrowing costs. At the moment, we see nothing on the horizon that will
increase short-term supply.
Your fund closed the fiscal year with a weighted average maturity of 44
days, modestly longer than our peer group average of 40 days, but significantly
shorter than the fund's 55-day average at the beginning of the year. We expect
the short-term market to remain sensitive to further rate hikes. However, the
light supply of new issues, low dealer inventories, and solid demand induce us
to keep maturities slightly longer than the average for our peer group to gain
extra yield.
Your fund's performance was in line with its peer group during the
past three months, and above the average for the entire fiscal year.
<PAGE>
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Exempt Money Fund 0.80% 2.63%
IBC/Donoghue Money Fund
Report Average* 0.80 2.56
- --------------------------------------------------------------------------------
</TABLE>
*Stockbroker and General Purpose Funds.
TAX-FREE SHORT-INTERMEDIATE FUND
In the past year we maintained a relatively short, defensive portfolio
duration, focusing on high-quality securities and avoiding bonds with low
coupons selling at deep discounts, which do not perform well when interest
rates are going up. Duration, which measures price sensitivity to changes in
interest rates, dipped as low as 2.2 years in mid-October, but lengthened to
2.5 by year-end.
We extended duration for several reasons. First, short-term yields
seemed to have overshot reasonable expectations of Fed tightening. Second,
although new issuance was low, secondary supply was high, providing more
investment choices. Third, we anticipated increasing demand for tax-free bonds
in January 1995 with coupon payments due and older bonds maturing.
Our investment strategy resulted in an increase in your fund's
annualized yield for the quarter to 4.5% from 4% a year ago. We intend to
proceed with caution in the months ahead, maintaining a neutral duration
combined with a defensive high credit quality and high coupon structure. Your
fund's objective is to provide a higher yield than money market funds offer,
with small share price fluctuation.
Our strategy served us well through 1994, allowing the fund to
significantly outperform the peer group average for both the quarter and the
fiscal year ended February 28.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Free Short-Intermediate
Fund 2.68% 2.91%
Lipper Short Municipal
Debt Fund Average 2.38 2.10
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE INSURED INTERMEDIATE BOND FUND
Our investment strategy for the fund was similar to that of the Short-
Intermediate Fund. Essentially, we maintained a short or defensive duration,
focused on securities with relatively high credit quality, and stayed away from
low coupon bonds selling at significant discounts, which decline in value more
than high coupon bonds when rates are rising.
When bonds looked particularly attractive in November, we extended
maturities to take advantage of low prices and high yields. We raised your
portfolio's duration to 5.4 years by the end of December, after it had fallen as
low as 4.9 years in mid-October.
Federal Reserve Chairman Alan Greenspan has recently given the market
mixed signals on the direction of monetary policy. Signs that the economy could
be slowing from its strong pace prompted him to suggest that the Fed may have
finished tightening, at least for a while. However, he also warned that further
rate hikes could lie ahead if the weakness of the U.S. dollar leads to higher
inflation. Accordingly, we will continue to maintain a neutral duration and a
defensive posture with high credit quality and high coupons in the near term.
Our strategy resulted in a stronger performance than our peer group
average during the fiscal year. Fourth quarter performance was robust, although
slightly behind the average for similar funds.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Free Insured Intermediate
Bond Fund 5.47% 2.65%
Lipper Intermediate Municipal
Debt Fund Average 5.66 1.65
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE INCOME FUND
With last year's strong economy, the Federal Reserve's tightening, and poor
cash flow into municipal funds, we believed rates would likely rise, driving
bond prices down. In this environment, we managed your fund conservatively
for most of the last 12 months.
First and foremost, we attempted to dampen the fund's sensitivity to
changing interest rates
2
<PAGE>
by reducing the weighted average maturity and duration. Throughout most of
1993, we kept the fund's average maturity in the 18- to 20-year range and
effective duration to around eight years. During the first three quarters of
1994, the average maturity was less than 18 years and we attempted to keep
duration under 7.5 years. (Duration, a time-weighted measure of a bond's cash
flow expressed in years, shows a bond or bond fund's price sensitivity to a
change in interest rates.)
Second, we attempted to make the fund less sensitive to rising rates
by swapping lower coupon bonds for those with higher coupons. Low coupon
bonds selling at a discount usually decline in price more than high coupon
bonds when rates rise. Also, a change in the 1993 tax law subjected some
gains realized from sales of market discount bonds to ordinary income taxes,
rendering these securities less desirable to some investors. Finally, we
gradually increased the reserves portion of the portfolio from the beginning
of the year through October.
As rates rose steeply in the fall, and investors anticipated some
slowing in economic growth in 1995, we felt the fund would benefit from a
more aggressive strategy. Therefore, we extended average maturity closer to
18 years from 16.3 years in October, increased duration to 7.8 years from a
low of about 7 years, and reduced reserves to less than 5% of the portfolio
from more than 10%. We took these actions to allow the fund to perform in
line with the rally in municipal bonds. However, we did not see sufficient
evidence of a slowdown to warrant a fully aggressive strategy.
Last year saw major changes in interest rates, and the fund's
performance reflects this movement. While results were modest for the fiscal
year, we are pleased that your fund provided an excellent three-month return and
outperformed its peer group average during both reporting periods.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Free Income Fund 8.76% 1.90%
Lipper General Municipal
Debt Fund Average 8.60 0.64
- --------------------------------------------------------------------------------
</TABLE>
TAX-FREE HIGH YIELD FUND
The high yield sector of the municipal market was not immune to last year's
volatility. For the most part, we sought to maintain a neutral to somewhat
defensive stance for your fund versus the overall market. This meant keeping
duration in a range of 7.25 to 7.75 years, with cash levels averaging between
5% and 6%. We also maintained a weighted average maturity of 19 to 20 years,
down from 22 years during the strong markets of 1993.
Our aim was to provide a cushion against rising interest rates and to
maintain sufficient liquidity, balanced against our constant goal of generating
high yields. To meet the last objective, we kept a minimum of 82% of holdings in
maturities exceeding 10 years.
Although low issuance presented a challenge for all municipal investors,
reduced supply was even more pronounced in the high yield area. While credit
spreads widened in selected sectors, particularly health care, this was offset
at times by a limited supply of new high yield issues. Despite these challenges,
we were still able to select lower quality issues that brought value to the
fund. Overall credit quality was unchanged at BBB+.
Despite the market's volatility, your fund outperformed its peer group
for the fiscal year, and performed strongly in the quarter, although it lagged
the competition. The fund has exceeded the average performance of other tax-free
high yield funds for the past seven years, and for eight of its 10 complete
fiscal years since inception.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
3 Mos. 12 Mos.
-------- ---------
<S> <C> <C>
Tax-Free High Yield Fund 7.05% 1.26%
Lipper High Yield Municipal
Debt Fund Average 7.55 1.06
- --------------------------------------------------------------------------------
</TABLE>
OUTLOOK
The U.S. economy should continue to grow, although at a lower rate than in 1994.
To date, the Fed's actions appear to be starting to slow the pace of growth,
keeping inflation in check.
3
<PAGE>
However, in the near term, we do expect some acceleration in inflation based on
tight labor markets and relatively high capacity utilization. This may result in
somewhat higher interest rates over the next few months, but most likely lower
than the levels reached in the fall. Moreover, light new issuance combined with
continued strong demand for tax-exempt bonds could result in better overall
returns in the municipal bond market in 1995.
It is worth noting that 1994 was tumultuous for fixed income
investors because of rising interest rates, widespread misuse of derivatives,
and a large municipal bankruptcy. We want to assure you that we will continue
to make investments that are appropriate for each fund's risk profile. In those
funds that can purchase derivatives, our exposure has been modest and has not
introduced undue risk for shareholders. In addition, our avoidance of the Orange
County crisis reinforces the value of thorough, independent credit research.
We appreciate the continued trust our shareholders have placed in us.
Respectfully submitted,
/s/ William T. Reynolds
William T. Reynolds
Director, Fixed Income Division
March 17, 1995
- --------------------------------------------------------------------------------
Financial Summary
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value Dividend Per Share/+/ Dividend Yield*
Per Share 3 Months Ended 3 Months Ended
------------------ ---------------------- --------------------
11/30/94 02/28/95 11/30/94 02/28/95 11/30/94 02/28/95
<S> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money $ 1.00 $ 1.00 $ 0.007 $ 0.008 3.12% 3.57%
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 5.17 5.25 0.06 0.06 4.28 4.52
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 9.93 10.35 0.12 0.12 4.68 4.86
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Income 8.63 9.25 0.13 0.13 6.02 6.01
- --------------------------------------------------------------------------------------------------------------------
Tax-Free High Yield 11.03 11.62 0.18 0.18 6.46 6.61
</TABLE>
* Dividends earned and reinvested for the periods indicated are annualized and
divided by the average daily net asset values per share for the same period.
Money Fund reports seven-day compound yield.
+ Taxability of dividends. 100% of the dividends paid for the 12 months ended
2/28/95 were exempt from federal income tax.
- --------------------------------------------------------------------------------
Quality Diversification
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quality Ratings* Weighted Average Quality*
-------------------------------------- ---------------------------
1 2 3 4 5-10 11/30/94 02/28/95
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money 12% 86% 2% 0% 0% 1.9 1.9
- -----------------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 42 40 17 1 0 1.9 1.8
- -----------------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 34 57 9 0 0 2.0 1.8
- -----------------------------------------------------------------------------------------------------------------
Tax-Free Income 10 53 25 12 0 2.4 2.4
- -----------------------------------------------------------------------------------------------------------------
Tax-Free High Yield 4 19 17 36 24 3.6 3.6
</TABLE>
* On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
4
<PAGE>
- --------------------------------------------------------------------------------
Duration and Maturity
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Effective Duration (years) Maturity (years)
-------------------------- ---------------------
11/30/94 02/28/95 11/30/94 02/28/95
<S> <C> <C> <C> <C>
Tax-Exempt Money -- -- 43.0* 44.0*
- ---------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 2.5 2.5 3.1 3.1
- ---------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 5.5 5.1 7.4 7.0
- ---------------------------------------------------------------------------------------------------
Tax-Free Income 7.9 7.8 17.2 17.9
- ---------------------------------------------------------------------------------------------------
Tax-Free High Yield 7.7 7.3 19.0 19.9
</TABLE>
* Maturity is in days.
- --------------------------------------------------------------------------------
Fiscal-Year Performance
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 2/28/95
----------------------------------------------------------
1 Year 5 Years 10 Years Since Inception
<S> <C> <C> <C> <C> <C>
Tax-Exempt Money 2.63% 3.18% 4.06% 4.73% (4/81)
- ----------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate 2.91 5.56 5.90 6.02 (12/83)
- ----------------------------------------------------------------------------------------------------------
Tax-Free Insured Intermediate Bond 2.65 N/A N/A 6.69 (11/92)
- ----------------------------------------------------------------------------------------------------------
Tax-Free Income 1.90 8.08 8.59 7.18 (10/76)
- ----------------------------------------------------------------------------------------------------------
Tax-Free High Yield 1.26 8.16 -- 9.73 (3/85)
</TABLE>
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison --
Tax-Free Insured Intermediate Bond Fund
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
5
<PAGE>
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison -- Tax-Free Short-Intermediate Fund
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison -- Tax-Free Income Fund
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison -- Tax-Free High Yield Fund
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
6
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Services
- --------------------------------------------------------------------------------
To help shareholders monitor their current investments and make decisions
that accurately reflect their financial goals, T. Rowe Price offers a wide
variety of information and services--at no extra cost.
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m., ET. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
IN PERSON--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access/(R)/ (1-800-638-2587) provides information such as account
balance, date and amount of your last transaction, latest dividend payment, and
fund prices and yields. Additionally, you have the ability to request
prospectuses, statements, and account and tax forms; reorder checks; and
initiate purchase, redemption, and exchange orders for identically registered
accounts.
PC*Access/(R)/ provides the same information as Tele*Access, but on a
personal computer via dial-up modem.
ACCOUNT SERVICES
Checking--Write checks for $500 or more on any money market and bond
fund accounts (except the High Yield Fund and Emerging Markets Bond Fund).
Automatic Investing--Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
INVESTMENT INFORMATION
Combined Statement--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides total
portfolio value, and lists your investments by type--stock, bond, and money
market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports--Portfolio managers review the performance
of the funds in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights--A library of information that includes reports on mutual fund
tax issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can help
you determine and reach your investment goals.
DISCOUNT BROKERAGE
You can trade stocks, bonds, options, precious metals, and other securities at a
substantial savings over regular commission rates. Call a shareholder service
representative for more information.
7
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
T. Rowe Price
- -------------
TAX-FREE FUNDS
FEBRUARY 28, 1995
FOR YIELD, PRICE, LAST TRANSACTION,
AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
FOR ASSISTANCE WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. ROWE PRICE
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Tax-Free Funds.
T. Rowe Price
Invest With Confidence(R)
TFF
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
TAX-FREE SHORT-INTERMEDIATE FUND
February 28, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------
1995 5.25 0.22 9.58 9.62 2.91
- ----------------------------------------------------------------------------------------------------------
TOTAL $3.09 $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.
TFS
<PAGE>
- --------------------------------------------------------------------------------
Sector Diversification / February 28, 1995
T. Rowe Price Tax-Free Short-Intermediate Fund
- --------------------------------------------------------------------------------
Percent of
Net Assets
----------
Pre-refunded Bonds 42%
- --------------------------------------------------------------------------------
General Obligation-Local 12
- --------------------------------------------------------------------------------
General Obligation-State 8
- --------------------------------------------------------------------------------
Dedicated Tax Revenue 6
- --------------------------------------------------------------------------------
Educational Revenue 6
- --------------------------------------------------------------------------------
Housing Finance Revenue 5
- --------------------------------------------------------------------------------
Electric Revenue 4
- --------------------------------------------------------------------------------
Hospital Revenue 4
- --------------------------------------------------------------------------------
Nuclear Revenue 3
- --------------------------------------------------------------------------------
Percent of
Net Assets
----------
Lease Revenue 2%
- --------------------------------------------------------------------------------
Pooled Loan Revenue 2
- --------------------------------------------------------------------------------
Water & Sewer Revenue 2
- --------------------------------------------------------------------------------
Air & Sea Transportation Revenue 2
- --------------------------------------------------------------------------------
Solid Waste Revenue 1
- --------------------------------------------------------------------------------
Industrial & Pollution Control Revenue 1
- --------------------------------------------------------------------------------
Escrowed to Maturity 1
- --------------------------------------------------------------------------------
Miscellaneous Revenue 1
- --------------------------------------------------------------------------------
Other Assets Less Liabilities -2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price Tax-Free Short-Intermediate Fund / February 28, 1995
- --------------------------------------------------------------------------------
(amounts in thousands, except capital stock information)
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
ALABAMA -- 1.0%
Jefferson County, Capital Appreciation Warrants, GO, (MBIA Insured),
Zero Coupon, 4/1/98..................................................... $ 3,545 $ 3,026
Mobile, Capital Improvement Warrants, GO, (MBIA Insured),
4.75%, 8/15/96.......................................................... 1,715 1,715
- --------------------------------------------------------------------------------------------------------------------
ALASKA -- 2.6%
Anchorage, Electric Utility, (MBIA Insured), 7.625%, 12/1/15
(Pre-refunded 6/1/96+).................................................. 9,270 9,780
Valdez, PCR, Exxon Pipeline, VRDN (Currently 3.90%)............................. 2,200 2,200
- --------------------------------------------------------------------------------------------------------------------
ARIZONA -- 8.2%
Arizona, COP, (AMBAC Insured), 5.40%, 9/1/98.................................... 1,000 1,011
Arizona Transportation Board, 6.35%, 7/1/05 (Pre-refunded 7/1/01+).............. 6,400 6,876
Excise Tax, Maricopa County Regional Area Road Fund, TRAN,
7.30%, 7/1/98......................................................... 4,500 4,718
Maricopa County, Gilbert School Dist., GO, (FGIC Insured),
Zero Coupon, 7/1/95................................................... 4,000 3,941
Kyrene Elementary School Dist., GO, (FGIC Insured),
Zero Coupon, 7/1/95................................................... 1,500 1,478
Zero Coupon, 1/1/96................................................... 1,250 1,203
Zero Coupon, 7/1/96................................................... 1,500 1,404
Mesa Unified School Dist. No. 4, GO, (FGIC Insured),
Zero Coupon, 7/1/98................................................... 2,675 2,259
Unified School Dist., (FGIC Insured), 4.25%, 7/1/95..................... 3,000 2,999
Maricopa County, PCR, Arizona Public Service, VRDN (Currently 3.90%)............ 2,100 2,100
Mesa, GO, (AMBAC Insured), 6.75%, 7/1/98........................................ 5,800 6,114
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
ARIZONA (cont'd)
Phoenix, Street & Highway User, 7.30%, 7/1/98 (Escrowed to Maturity)............ $ 900 $ 964
Tucson, 7.90%, 7/1/15 (Pre-refunded 7/1/96+).................................... 2,000 2,122
- --------------------------------------------------------------------------------------------------------------------
CALIFORNIA -- 6.9%
California, GO, 5.75%, 4/25/96.................................................. 5,000 5,055
(AMBAC Insured), 6.50%, 3/1/02.......................................... 5,000 5,344
California Housing Fin. Agency, Multiple Unit Rental, 5.75%, 8/1/98............. 500 505
Los Angeles, Convention & Exhibition Center Auth., COP, 7.375%, 8/15/18
(Pre-refunded 8/15/99+)................................................. 3,000 3,324
Los Angeles County Metropolitan Transportation Auth., Sales Tax,
6.90%, 7/1/21 (Pre-refunded 7/1/01+)................................. 5,000 5,555
(FGIC Insured), 6.75%, 7/1/18 (Pre-refunded 7/1/01+).................... 3,075 3,392
Sacramento Municipal Utility Dist., (FGIC Insured), 5.70%, 7/1/98............... 2,500 2,558
San Bernardino, Capital Fac., COP, 7.00%, 8/1/28 (Pre-refunded 8/1/01+)......... 5,000 5,587
- --------------------------------------------------------------------------------------------------------------------
FLORIDA -- 6.1%
East County Water Control Dist., Lee County Drain, 14.00%, 11/1/00
(Pre-refunded 11/1/96+).............................................. 1,075 1,281
14.00%, 11/1/01 (Pre-refunded 11/1/96+)................................. 1,220 1,454
Florida Dept. of Natural Resources, (MBIA Insured), 5.75%, 7/1/96............... 2,400 2,436
Florida Municipal Power Agency, St. Lucie Project, 7.00%, 10/1/97
(Pre-refunded 10/1/96+)................................................. 1,000 1,056
Gainesville, Utilities Systems, 7.875%, 10/1/10 (Pre-refunded 10/1/97+)......... 3,525 3,855
Jacksonville, Excise Tax, (MBIA Insured), 6.90%, 10/1/98........................ 3,610 3,858
Jacksonville Electric Auth., 6.90%, 10/1/19 (Pre-refunded 4/1/97+).............. 5,000 5,284
St. John River Power Park, 3.75%, 10/1/96............................... 405 397
Orlando Utilities Commission, Water & Electric, 8.50%, 10/1/09
(Pre-refunded 10/1/95+)................................................. 5,000 5,213
Sunshine State Gov't. Finance Commission, TECP, 3.60%, 3/2/95................... 3,000 3,000
- --------------------------------------------------------------------------------------------------------------------
GEORGIA -- 3.8%
Fulton County School Dist., 7.625%, 5/1/17 (Pre-refunded 5/1/97+)............... 9,400 10,204
Georgia, GO, 7.00%, 11/1/97..................................................... 1,000 1,058
Gwinnett County Water & Sewerage Auth., COP, GO, 8.05%, 8/1/98.................. 1,000 1,092
Municipal Electric Auth. of Georgia, 7.20%, 1/1/97.............................. 3,000 3,113
7.40%, 1/1/98........................................................... 1,500 1,560
- --------------------------------------------------------------------------------------------------------------------
ILLINOIS -- 6.9%
Chicago Public Building Commission, Chicago Board of Ed., (FGIC Insured),
7.45%, 1/1/97 (Escrowed to Maturity).................................... 1,200 1,254
7.50%, 1/1/98 (Escrowed to Maturity).................................... 1,000 1,071
Cook County, GO, (FGIC Insured), 4.10%, 11/15/95................................ 1,250 1,246
Du Page Water Commission, 6.80%, 5/1/07 (Pre-refunded 5/1/97+).................. 3,000 3,180
Illinois, Sales Tax, 7.80%, 6/15/04 (Pre-refunded 6/15/97+)..................... 3,200 3,466
7.60%, 6/15/08 (Pre-refunded 6/15/97+).................................. 2,050 2,212
6.80%, 6/15/13 (Pre-refunded 6/15/00+).................................. 4,250 4,646
Illinois EFA, Field Museum of Natural History, VRDN (Currently 4.15%)........... 2,900 2,900
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund / Statement of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
ILLINOIS (cont'd)
Kane, Cook & DuPage County School Dist., GO, (FGIC Insured),
9.00%, 1/1/98........................................................... $ 1,350 $ 1,487
Metropolitan Pier & Exposition Auth., Dedicated State Tax, 7.60%, 6/1/98........ 1,500 1,578
(AMBAC Insured), Zero Coupon, 6/15/95................................... 2,285 2,255
Metropolitan Water Reclamation Dist. of Greater Chicago, 7.50%, 1/1/98.......... 1,000 1,062
7.80%, 1/1/03 (Pre-refunded 1/1/98+).................................... 860 926
7.80%, 1/1/04 (Pre-refunded 1/1/98+).................................... 800 862
Township High School Dist. No. 205, Cook County, GO, (FGIC Insured),
5.60%, 6/1/98........................................................... 3,000 3,069
- --------------------------------------------------------------------------------------------------------------------
INDIANA -- 0.9%
Indiana HFFA, Methodist Hosp., 4.30%, 9/1/95.................................... 500 499
4.60%, 9/1/96........................................................... 545 542
Indiana Office Building Commission, Capital Complex, 8.40%, 7/1/03
(Pre-refunded 7/1/97+).................................................. 2,570 2,821
- --------------------------------------------------------------------------------------------------------------------
KENTUCKY -- 1.1%
Kentucky Housing Corp., 3.65%, 7/1/96........................................... 510 499
Kentucky Turnpike Auth., Economic Dev. Road Revitalization, 8.25%, 7/1/07
(Pre-refunded 7/1/97+).................................................. 2,460 2,692
Owensboro Electric Light & Power System, (AMBAC Insured),
Zero Coupon, 1/1/96..................................................... 2,000 1,925
- --------------------------------------------------------------------------------------------------------------------
LOUISIANA -- 3.0%
East Baton Rouge Sewage Commission, 9.125%, 9/1/06
(Pre-refunded 9/1/97+).................................................. 6,000 6,777
Louisiana, GO, (MBIA Insured), 8.00%, 5/1/98.................................... 2,000 2,171
Louisiana PFA, Sisters of Mercy Health System, 7.25%, 6/1/98.................... 1,000 1,065
Student Loan, 6.10%, 9/1/00............................................. 1,425 1,458
Louisiana Recovery Dist., (AMBAC Insured), 7.375%, 7/1/96....................... 1,620 1,671
West Baton Rouge, Dow Chemical Company, VRDN (Currently 4.30%) *................ 600 600
- --------------------------------------------------------------------------------------------------------------------
MARYLAND -- 13.0%
Baltimore City IDA, Days Inn, 12.625%, 12/1/04 (Pre-refunded 12/1/97+).......... 7,075 8,488
Maryland DOT, 6.50%, 11/1/99.................................................... 3,895 4,127
Maryland HHEFA, Francis Scott Key Medical Center, (FGIC Insured),
6.75%, 7/1/23 (Pre-refunded 7/1/00+).................................... 4,100 4,485
Howard County General Hosp., 8.25%, 7/1/18 (Pre-refunded 7/1/98+).......... 2,600 2,909
Peninsula Regional Medical Center, 4.375%, 7/1/00.......................... 1,000 935
4.50%, 7/1/01........................................................... 1,200 1,115
4.60%, 7/1/02........................................................... 1,175 1,085
4.70%, 7/1/03........................................................... 1,250 1,148
Pooled Loan Program, VRDN (Currently 4.35%)................................ 6,500 6,500
Univ. of Maryland Medical System, 9.50%, 1/1/14 (Pre-refunded 7/22/96+).... 9,845 10,669
Maryland-National Capital Park & Planning Commission, Prince
George's County, GO, 6.90%, 7/1/03......................................... 1,000 1,089
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
MARYLAND (cont'd)
Montgomery County, Consolidated Public Improvement, GO, 6.80%, 11/1/00
(Pre-refunded 11/1/99+)................................................. $ 3,315 $ 3,608
Montgomery County Housing Opportunities Commission, Single Family,
4.35%, 10/25/95......................................................... 4,000 3,993
Northeast Maryland Waste Disposal Auth., Southwest Resource Recovery Fac.,
(MBIA Insured), 7.20%, 1/1/05........................................... 6,175 6,909
Washington Suburban Sanitary Dist., GO, 7.25%, 1/1/02 (Pre-refunded 1/1/97+).... 2,000 2,125
- --------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS -- 1.0%
Massachusetts, GO, 7.625%, 6/1/08 (Pre-refunded 6/1/01+)........................ 4,000 4,570
- --------------------------------------------------------------------------------------------------------------------
MINNESOTA -- 1.2%
Minnesota PFA, Water Pollution Control, 5.70%, 3/1/99........................... 2,000 2,045
Southern Minnesota Municipal Power Agency, 4.40%, 1/1/00........................ 3,500 3,296
- --------------------------------------------------------------------------------------------------------------------
MISSISSIPPI -- 2.2%
Mississippi Higher Ed. Assistance Corp., Student Loan, 6.00%, 7/1/00............ 5,000 5,088
6.10%, 1/1/01........................................................... 5,000 5,051
- --------------------------------------------------------------------------------------------------------------------
MISSOURI -- 0.8%
Missouri Economic Dev., Export & Infrastructure Board, 6.75%, 9/1/96............ 835 843
Missouri Higher Ed. Loan Auth., Student Loan, 5.375%, 2/15/99................... 2,600 2,593
- --------------------------------------------------------------------------------------------------------------------
MONTANA -- 0.5%
Montana Higher Ed. Student Assistance Corp., Student Loan, 4.00%, 12/1/95 *..... 2,500 2,490
- --------------------------------------------------------------------------------------------------------------------
NEW JERSEY -- 2.0%
New Jersey Housing & Mortgage Fin. Agency, 4.80%, 5/1/96........................ 3,530 3,522
New Jersey Sports & Exposition Auth., GO, 7.60%, 1/1/96......................... 3,500 3,581
New Jersey Transportation Trust Fund Auth., 5.40% 6/15/97....................... 2,000 2,024
- --------------------------------------------------------------------------------------------------------------------
NEW MEXICO -- 1.7%
Farmington, San Juan Unit Project, 13.625%, 7/1/01 (Pre-refunded 7/1/96+)....... 2,000 2,230
Gallup, PCR, Plains Electric Generation and Transmission Coop.,
(MBIA Insured), 5.50%, 8/15/98.......................................... 1,390 1,409
New Mexico, Severance Tax, 5.20%, 7/1/95........................................ 1,550 1,554
5.30%, 7/1/97........................................................... 800 806
New Mexico Mortgage Fin. Auth., 5.90%, 1/1/99................................... 1,540 1,564
- --------------------------------------------------------------------------------------------------------------------
NEW YORK -- 3.6%
Dormitory Auth. of the State of New York, City Univ., 8.125%, 7/1/17
(Pre-refunded 7/1/97+).................................................. 2,000 2,186
Nassau County, GO, (FGIC Insured), 6.30%, 11/1/00............................... 2,670 2,810
6.30%, 11/1/02.......................................................... 3,295 3,500
6.30%, 11/1/03.......................................................... 2,800 2,984
Port Auth. of New York & New Jersey, 4.90%, 9/1/97 *............................ 5,000 5,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund / Statement of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
NORTH CAROLINA -- 1.9%
Mecklenburg County, 6.20%, 4/1/08 (Pre-refunded 4/1/01+)........................ $ 3,000 $ 3,206
North Carolina Eastern Municipal Power Agency, 8.625%, 1/1/99
(Pre-refunded 1/1/96+).................................................. 5,000 5,260
- --------------------------------------------------------------------------------------------------------------------
OHIO -- 1.1%
Butler County Hosp. Fac., Middletown Regional Hosp., (FGIC Insured),
6.00%, 11/15/97......................................................... 1,260 1,292
Erie County, Firelands Community Hosp., 8.875%, 1/1/15
(Pre-refunded 1/1/97+).................................................. 1,060 1,147
Franklin County, American Chemical Society, 4.35%, 4/1/95....................... 2,750 2,749
- --------------------------------------------------------------------------------------------------------------------
OKLAHOMA -- 0.8%
Tulsa Public Fac. Auth., Capital Improvement, 4.05%, 5/1/95..................... 3,460 3,456
- --------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA -- 2.5%
New Castle Area Hosp. Auth., St. Frances Hosp., Zero Coupon, 11/15/97........... 2,535 2,196
Pennsylvania Higher Ed. Fac. Auth., Thomas Jefferson Univ., 5.75%, 8/15/98...... 3,380 3,463
Pennsylvania IDA, Economic Dev., (AMBAC Insured), 6.00%, 1/1/99................. 3,000 3,094
Pittsburgh, Water & Sewer Systems, (FGIC Insured), 6.50%, 9/1/14
(Pre-refunded 9/1/01+).................................................. 2,500 2,723
- --------------------------------------------------------------------------------------------------------------------
RHODE ISLAND -- 0.5%
Rhode Island Student Loan, 6.20%, 12/1/98....................................... 2,000 2,037
- --------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA -- 4.1%
Charleston Waterworks & Sewer System, 7.75%, 1/1/18
(Pre-refunded 1/1/98+).................................................. 1,440 1,574
Piedmont Municipal Power Agency, (AMBAC Insured), 7.50%, 1/1/07
(Pre-refunded 1/1/98+).................................................. 2,335 2,537
South Carolina, Capital Improvement, GO, 5.70%, 2/1/98.......................... 2,400 2,458
South Carolina Public Service Auth., (AMBAC Insured), 6.25%, 1/1/00**........... 3,000 3,068
6.25%, 1/1/01**..................................................... 2,000 2,053
Electric System Expansion, 7.875%, 7/1/21 (Pre-refunded 1/1/96+)........ 1,590 1,663
Santee Cooper, (AMBAC Insured), 6.50%, 7/1/24 (Pre-refunded 7/01/02+)... 5,000 5,454
- --------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA -- 0.5%
South Dakota HDA, Homeownership Mortgage, 6.50%, 5/1/96......................... 2,005 2,031
7.10%, 5/1/96........................................................... 390 395
- --------------------------------------------------------------------------------------------------------------------
TENNESSEE -- 0.6%
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 2,652
- --------------------------------------------------------------------------------------------------------------------
TEXAS -- 8.7%
Anderson County, Coffield State Prison, (AMBAC Insured), 6.50%, 3/15/98......... 2,000 2,086
Arlington, GO, 6.70%, 5/1/95.................................................... 1,000 1,004
Dallas, Water and Sewer, 9.50%, 4/1/97.......................................... 1,515 1,649
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
TEXAS (cont'd)
Dallas Independent School Dist., 8.00%, 8/15/97 (Pre-refunded 8/15/95+)......... $ 3,700 $ 3,760
Dallas-Fort Worth Regional Airport, 5.50%, 11/1/98.............................. 2,000 2,025
Goose Creek Consolidated Independent School Dist., GO,
Zero Coupon, 2/15/98.................................................... 1,200 1,031
Zero Coupon, 2/15/99.................................................... 1,200 974
Harris County, Toll Road, (FGIC Insured), 6.625%, 8/15/11
(Pre-refunded 8/15/97+)................................................. 2,350 2,496
Harris County Health Fac. Dev. Corp., St. Luke's Episcopal Hosp.,
6.20%, 2/15/98.......................................................... 1,420 1,470
Hays Consolidated Independent School Dist., GO, Zero Coupon, 2/15/98............ 1,050 902
Houston Water & Sewer System, (FGIC Insured), 5.55%, 12/1/95.................... 2,050 2,065
Lower Colorado River Auth., (MBIA Insured), 7.625%, 1/1/16
(Pre-refunded 1/1/98+).................................................. 2,645 2,883
Lubbock, Waterworks System, GO, 8.75%, 2/15/97.................................. 510 546
8.75%, 2/15/98.......................................................... 510 561
Plano Independent School Dist., GO, (FGIC Insured), 8.625%, 2/15/97............. 2,100 2,252
Port of Houston Auth., Capital Appreciation, Zero Coupon, 10/1/96............... 2,360 2,185
Zero Coupon, 10/1/97.................................................... 2,660 2,337
San Antonio, GO, 8.625%, 8/1/97................................................. 1,200 1,300
Electric & Gas, 9.00%, 2/1/14 (Pre-refunded 2/1/96+).................... 3,000 3,161
Water Systems, (FGIC Insured), 6.30%, 5/15/04........................... 3,000 3,194
Texas Housing Agency, 6.15%, 3/1/97............................................. 1,005 1,019
6.80%, 7/1/97........................................................... 150 153
6.25%, 3/1/98........................................................... 310 316
6.25%, 9/1/98........................................................... 260 264
- --------------------------------------------------------------------------------------------------------------------
UTAH -- 5.0%
Intermountain Power Agency, Utah Power Supply, 9.00%, 7/1/95.................... 1,500 1,522
8.50%, 7/1/07 (Pre-refunded 7/1/97+).................................... 3,610 3,967
10.375%, 7/1/16......................................................... 3,795 3,959
8.625%, 7/1/21 (Pre-refunded 7/1/97+)................................... 840 925
Univ. of Utah Board of Regents, Student Loan, (AMBAC Insured),
4.45%, 11/1/95...................................................... 1,500 1,497
Univ. Hosp., 5.50%, 5/15/97............................................. 1,860 1,879
Utah, GO, 6.40%, 7/1/95......................................................... 6,000 6,041
Utah Housing Fin. Agency, 6.00%, 1/1/99......................................... 430 438
VRDN (Currently 4.20%).................................................. 2,435 2,435
- --------------------------------------------------------------------------------------------------------------------
VIRGINIA -- 3.9%
Chesapeake, GO, 7.00%, 5/1/97................................................... 1,850 1,936
Fairfax County, GO, 6.85%, 4/1/99 (Pre-refunded 4/1/97+)........................ 900 942
Fairfax County Water Auth., 7.25%, 1/1/27 (Pre-refunded 1/1/00+)................ 3,250 3,600
Newport News, GO, 7.25%, 1/1/98................................................. 1,300 1,377
Virginia HDA, 9.875%, 9/1/95.................................................... 295 303
4.65%, 5/1/96 *......................................................... 1,500 1,492
5.75%, 1/1/99 *......................................................... 1,390 1,404
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund / Statement of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Amount Value
----------- --------
<S> <C> <C>
VIRGINIA (cont'd)
Virginia HDA (cont'd)
5.90%, 1/1/00 *......................................................... $ 1,865 $ 1,891
Virginia Public Building Auth., 5.625%, 8/1/96.................................. 2,170 2,200
5.625%, 8/1/97.......................................................... 2,295 2,341
- --------------------------------------------------------------------------------------------------------------------
WASHINGTON -- 4.5%
Tacoma Electric System, (AMBAC Insured), 8.00%, 1/1/08
(Pre-refunded 1/1/98+).................................................. 1,440 1,584
Washington, GO, 3.35%, 10/1/95.................................................. 4,245 4,212
3.70%, 8/1/96........................................................... 5,500 5,395
Washington HFA, Fred Hutchinson Cancer Research Center,
VRDN (Currently 3.80%).................................................. 2,000 2,000
Virginia Mason Medical Center, (MBIA Insured), 6.80%, 7/1/96............... 1,000 1,025
7.20%, 7/1/98........................................................... 1,000 1,063
Washington Public Power Supply System, 3.50%, 7/1/96............................ 3,355 3,261
3.75%, 7/1/96........................................................... 2,000 1,954
- --------------------------------------------------------------------------------------------------------------------
WISCONSIN -- 1.2%
Wisconsin, GO, 6.90%, 5/1/99 (Pre-refunded 5/1/98+)............................. 5,000 5,290
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 101.8% OF NET ASSETS (COST -- $458,470)..... 462,430
- --------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES ................................................. (8,346)
--------
NET ASSETS CONSIST OF: Value
--------
Accumulated net investment income - net of distributions........................ $ 9
Accumulated net realized gain/loss - net of distributions....................... (5,279)
Net unrealized gain (loss)...................................................... 3,960
Paid-in-capital applicable to 86,559,263 shares of $0.01 par value capital
stock outstanding; 1,000,000,000 shares authorized...................... 455,394
--------
NET ASSETS...................................................................... $454,084
========
NET ASSET VALUE PER SHARE....................................................... $5.25
=====
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* - Interest subject to alternative minimum tax
** - When-issued security
+ - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
COP - Certificates of Participation
DOT - Department of Transportation
EFA - Educational Facility Authority
FGIC - Financial Guaranty Insurance Company
GO - General Obligation
HDA - Housing Development Authority
HFA - Health Facility Authority
HFFA - Health Facility Financing Authority
HHEFA - Health & Higher Educational Facility Authority
IDA - Industrial Development Authority
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
PFA - Public Facility Authority
TECP - Tax-Exempt Commercial Paper
TRAN - Tax Revenue Anticipation Note
VRDN - Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund / Year Ended February 28, 1995
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income................................................................. $23,370
-------
Expenses
Investment management......................................................... 2,171
Shareholder servicing ........................................................ 356
Custody and accounting........................................................ 172
Registration.................................................................. 52
Prospectus and shareholder reports............................................ 41
Legal and audit............................................................... 35
Proxy and annual meeting...................................................... 16
Directors..................................................................... 12
Miscellaneous................................................................. 12
-------
Total expenses................................................................ 2,867
-------
Net investment income........................................................... 20,503
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities.................................................................... (3,583)
Futures....................................................................... (49)
-------
Net realized gain (loss)...................................................... (3,632)
Change in unrealized gain or loss on securities................................. (4,859)
-------
Net realized and unrealized gain (loss)......................................... (8,491)
-------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS............................... $12,012
=======
- -----------------------------------------------------------------------------------------------
</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
(in thousands)
<TABLE>
<CAPTION>
Year Ended February 28,
1995 1994
--------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income................................................ $ 20,503 $ 21,073
Net realized gain (loss)............................................. (3,632) 3,525
Change in net unrealized gain or loss................................ (4,859) (7,342)
--------- ---------
Increase (decrease) in net assets from operations.................... 12,012 17,256
--------- ---------
Distributions to shareholders
Net investment income................................................ (20,503) (21,073)
--------- ---------
Capital share transactions*
Shares sold.......................................................... 147,931 295,712
Distributions reinvested............................................. 16,060 16,568
Shares redeemed...................................................... (242,144) (221,897)
--------- ---------
Increase (decrease) in net assets from capital share transactions.... (78,153) 90,383
--------- ---------
Increase (decrease) in net assets ..................................... (86,644) 86,566
--------- ---------
NET ASSETS
Beginning of period.................................................. 540,728 454,162
--------- ---------
End of period........................................................ $ 454,084 $ 540,728
========= =========
- ------------------------------------------------------------------------------------------------------------
*Share information
Shares sold.......................................................... 28,235 55,259
Distributions reinvested............................................. 3,070 3,098
Shares redeemed...................................................... (46,303) (41,461)
--------- ---------
Increase (decrease) in shares outstanding.......................... (14,998) 16,896
========= =========
- ------------------------------------------------------------------------------------------------------------
</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 / February 28, 1995
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 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 discounts on municipal securities
are accounted for in accordance with federal income tax regulations, which
require the amortization of all premiums and discounts except market
discounts. Market discounts are included in the gain or loss recorded on
disposition of the security for financial reporting purposes and ordinary
income for tax purposes.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Distributions to shareholders are
recorded by the fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $426,672,000 and $479,315,000, respectively, for the period ended
February 28, 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.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $1,000 of
undistributed net investment income and $5,000 of undistributed net realized
gains were reclassified as a $4,000 increase to paid-in-capital during the
period ended February 28, 1995. The results of operations and net assets were
not affected by the reclassifications.
At February 28, 1995, the aggregate cost of investments for federal
income tax and financial reporting purposes was $458,470,000 and net unrealized
gain aggregated $3,960,000, of which $5,338,000 related to appreciated
investments and $1,378,000 to de preciated 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 $153,000 was payable at February 28, 1995. The fee is computed
daily and paid monthly, and
11
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Cont'd)
- --------------------------------------------------------------------------------
consists of an Individual Fund Fee equal to 0.10% of average daily net assets
and a Group Fee. The Group Fee is based on the combined assets of certain mutual
funds sponsored by the Manager or Rowe-Price Fleming International, Inc. (the
Group). The Group Fee rate ranges from 0.48% for the first $1 billion of assets
to 0.31% for assets in excess of $34 billion. At February 28, 1995, and for the
period then ended, the effective annual Group Fee rate was 0.34%. The fund pays
a pro rata share of the Group Fee based on the ratio of its net assets to those
of the Group.
In addition, the fund has entered into agreements with the Manager
and a wholly-owned subsidiary of the Manager, pursuant to which the fund
receives certain other services. The Manager computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services, Inc.
(TRPS) is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. The fund incurred
expenses pursuant to these related party agreements totaling approximately
$355,000 for the period ended February 28, 1995, of which $35,000 was payable
at period end.
12
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price Tax-Free Short-Intermediate Fund
<TABLE>
<CAPTION>
For a share outstanding throughout each period
----------------------------------------------------------------------
Year Ended
Feb. 28, Feb. 28, Feb. 28, Feb. 29, Feb. 28,
1995 1994 1993 1992 1991
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $5.32 $5.36 $5.22 $5.15 $5.09
----- ----- ----- ----- -----
Investment Activities
Net investment income........................ 0.22 0.22 0.24 0.28 0.29
Net realized and unrealized gain (loss)...... (0.07) (0.04) 0.14 0.07 0.06
----- ----- ----- ----- -----
Total from Investment Activities............. 0.15 0.18 0.38 0.35 0.35
----- ----- ----- ----- -----
Distributions
Net investment income........................ (0.22) (0.22) (0.24) (0.28) (0.29)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD................... $5.25 $5.32 $5.36 $5.22 $5.15
===== ===== ===== ===== =====
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return..................................... 2.91% 3.49% 7.51% 6.94% 7.06%
Ratio of Expenses to Average Net Assets.......... 0.59% 0.60% 0.63% 0.67% 0.74%
Ratio of Net Investment Income
to Average Net Assets........................ 4.19% 4.18% 4.61% 5.34% 5.67%
Portfolio Turnover Rate.......................... 93.1% 51.1% 38.5% 81.3% 190.1%
Net Assets, End of Period (in thousands)......... $454,084 $540,728 $454,162 $328,312 $232,923
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
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Report of Independent Accountants
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To the Shareholders and Board of Directors of
T. Rowe Price Tax-Free Short-Intermediate Fund, Inc.
In our opinion, the accompanying statement of net assets 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, 1995, 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, 1995 by correspondence with the custodian 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 LLP
Baltimore, Maryland
March 17, 1995
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Shareholder Services
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To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information and services--at no extra cost.
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE--Shareholder Service Representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m., E.T. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
IN PERSON--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access/(R)/ (1-800-638-2587) provides information such as account
balance, date and amount of your last transaction, latest dividend payment, and
fund prices and yields. Additionally, you have the ability to request
prospectuses, statements, account and tax forms, reorder checks, and initiate
purchase, redemption, and exchange orders for identically registered accounts.
PC*Access/(R)/ provides the same information as Tele*Access, but on a
personal computer via dial-up modem.
ACCOUNT SERVICES
Checking--Write checks for $500 or more on any money market and most
bond fund accounts.
Automatic Investing--Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of
your distributions, or take them in cash. We give you maximum flexibility and
convenience.
INVESTMENT INFORMATION
Combined Statement--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides total
portfolio value, and lists your investments by type--stock, bond, and money
market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports--Portfolio managers review the performance
of the funds in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights--A library of information that includes reports on mutual fund
tax issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can help
you determine and reach your investment goals.
DISCOUNT BROKERAGE
You can trade stocks, bonds, options, precious metals, and other securities at a
substantial savings over regular commission rates. Call a shareholder service
representative for more information.
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T. Rowe Price No-Load Mutual Funds
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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
Virginia Short-Term
Tax-Free Bond
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
Emerging Markets Bond
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Equity Index
Growth & Income
Spectrum Growth
Value
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
Capital Opportunity
Emerging Markets Stock
International Discovery
Latin America
New America Growth
New Asia
New Horizons
OTC
Science & Technology
PERSONAL STRATEGY FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Call if you want to know about any T. Rowe Price fund. We'll send you a
prospectus with more complete information, including management fees and other
expenses. Read it carefully before you invest or send money.
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