- --------------------------------------------------------------------------------
T. Rowe Price
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SemiAnnual Report
Florida Insured Intermediate Tax-Free Fund
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August 31, 1997
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Report Highlights
================================================================================
Florida Insured Intermediate Tax-Free Fund
* The environment for bonds was generally favorable during the six months
ended August 31, 1997, as the Federal Reserve held the line after raising
rates in March.
* Florida's economy remained healthy, and the state's bonds received a
credit upgrade from Standard & Poor's.
* The fund provided a solid return for the period but did not exceed its
peer group average; income was unchanged.
* As the period advanced, we modified our initially cautious stance but,
with hindsight, could have been a bit more aggressive as rates fell.
* Despite strong economic growth, we believe the environment remains
favorable for fixed income investors due to low inflation and fiscal
restraint.
FELLOW SHAREHOLDERS
The municipal bond market and your fund provided solid returns during the
six months ended August 31 as intermediate- and long-term interest rates
declined on balance. Strong economic growth continued into the first quarter of
1997, and, in March, the Federal Reserve raised the federal funds rate a
quarter-point to 5.50%. With inflation remaining subdued, the Fed subsequently
left rates unchanged, creating a generally favorable environment for bonds.
<PAGE>
["Interest Rate Levels" a 3-line chart showing yields on the 30-year AAA
GO, 5-yr. AAA GO, and 1-yr. Moody's Investment Grade 1 Note from 8/31/96 to
8/31/97]
MARKET ENVIRONMENT
Interest rates fluctuated as the market wrestled with a conflicting
combination of strong economic growth and declining inflation. Both money market
and longer-term bond yields began rising before the March rate hike and
continued to rise for a short time afterward in anticipation of further
tightening. However, excellent news on inflation, progress on controlling the
federal budget deficit, and little evidence of wage pressures diminished fears
of further rate increases. Short-term taxable rates subsequently fell in
mid-April to their earlier levels. Taxable bond yields also began to fall in the
late spring after climbing to more than 7% in April. The 30-year Treasury bond
yield averaged just over 6.50% in July and August and 6.80% for the past six
months, almost identical to its average over the two preceding years.
Long-term municipal interest rates, including yields on Florida bonds,
followed a similar pattern, rising in March, peaking in April, then falling in
late June and July when preliminary data signaled a slowdown. Rates reversed in
August as stronger-than-expected economic data changed the outlook for the third
quarter. Municipal bonds outperformed Treasuries throughout most of the period
except for June, when the highest monthly supply in four years overwhelmed
demand. The yield on long-term AAA general obligation (GO) bonds began the
six-month period at 5.50% and ranged between 5.75% and 5.15% before settling at
5.35% at the end of August. Five-year AAA GO yields were 4.40% six months ago
and finished at 4.35%, while one-year notes ended higher at 3.85%, up from 3.70%
last February. Overall, both the municipal and Treasury yield curves flattened,
as short-term rates rose modestly in anticipation of further Fed tightening, and
long-term rates trended lower on positive inflation news.
Florida's strong economy continued to diversify, with substantial growth
in the service and trade sectors, especially the insurance, banking, and export
industries, and reduced dependence on agriculture and tourism. Nonfarm
employment grew by 3.5% from July '96 to July '97 compared with 2.2% nationally.
The state's financial position was also healthy, and revenue for this year was
better than expected-7.1% above prior-year levels. Based on the state's improved
financial performance, moderate debt levels, and continued economic expansion,
Standard & Poor's upgraded its credit rating last April from AA to AA+.
==============================
Florida's strong economy
continued to diversify, with
substantial growth in the
service and trade sectors . .
- ------------------------------
<PAGE>
In contrast to the state, the city of Miami continued to struggle, but
the state-appointed oversight board approved a five-year plan that is expected
to restore the city's fiscal health. In early September, Miami voters
overwhelmingly elected to remain independent and not become part of the
Metro-Dade county government. The past six months saw the largest municipal
default in Florida's history-bonds issued by the Okeelanta and Osceola Limited
Partnership through the Palm Beach County Solid Waste Industrial Development
Authority. Your fund invests primarily in the highest-rated, insured bonds and
did not own bonds of Miami or the partnership that defaulted.
PERFORMANCE AND STRATEGY REVIEW
Your fund's 6- and 12-month returns of 2.59% and 6.60%, respec-tively,
reflected $0.23 of income per share earned in each of the last two six-month
periods and also price appreciation, particularly in late 1996. Performance
compared favorably with the fund's peer group for the year ended August 31, as
shown in the table, but lagged for the more recent period due to our slightly
more conservative maturity posture.
================================================================================
Performance Comparison
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Periods Ended 8/31/97 6 Months 12 Months
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Florida Insured
Intermediate Tax-Free Fund 2.59% 6.60%
Lipper Florida Intermediate
Municipal Debt Funds Average 2.82 6.47
================================================================================
We held the fund's duration in a neutral to slightly defensive range
between 5.3 and 5.6 years throughout the period. (Duration measures a fund's
sensitivity to interest rate changes. For instance, a duration of five years
tells you that the fund's price would fall or rise about 5% in response to a
one-percentage-point increase or decrease in interest levels.) Early in the
period, we reduced our interest rate exposure by trimming duration from 5.6
years to 5.3 years, because we believed the potential for higher interest rates
was increasing. This moderate shortening helped the fund's performance through
the spring as rates rose but proved to be too conservative over the balance of
the period.
<PAGE>
The allocation of assets along the yield curve proved significant to the
performance of intermediate bond funds. Early in the period, intermediate yields
rose more than longer-term yields. This flattening of the yield curve was in
response to the strong economy and tighter monetary policy adopted by the Fed in
March. As the economy slowed in the succeeding weeks, intermediate yields fell
more than long-term yields, causing the yield curve to steepen. Therefore, an
overweighting in the intermediate sector early in the period would have
detracted from performance, while an overweighting in the second half of the
period would have enhanced performance. As the fund's fiscal year got under way,
exposure to the intermediate sector was a relatively low 64% of assets. We
maintained this allocation as we moved into May, atwhich time we increased it to
70% by reducing cash and 20-year bonds. With hindsight, a larger increase would
have been beneficial.
Our sector allocations did not change much. The largest increase was in
local GO bonds, up seven percentage points to 17%, and the largest decrease was
a reduction in airport revenue bonds, down four percentage points to 7%. These
changes were not prompted by credit considerations but rather by our wish to
increase exposure to noncallable bonds.
==============================
Our largest credit exposure
continues to be to the
state . . .
- ------------------------------
Our largest credit exposure continues to be to the state either through
direct GOs or indirectly through bonds backed by appropriations made by the
legislature. The state's credit quality has steadily risen this year as the
strong economy pushed sales and corporate income taxes above projections. As
mentioned, the state's credit rating was raised. Rapid growth, however, does
have its problems. The state and local governments face continuing challenges of
meeting burgeoning financial requirements for education, the elderly, and other
growth-related needs.
OUTLOOK
The national municipal market is facing a pickup in supply in coming
months, as issuers line up to borrow over both the short and long term. Interest
rates have stayed within the narrow range established over the past two years,
with relatively low volatility, and remain attractive for issuers. At the same
time, we would expect demand for municipals to remain solid, since the Taxpayer
Relief Act of 1997 did not lower personal income tax rates and did maintain
favorable tax treatment for corporations that purchase municipals.
<PAGE>
Given the high level of consumer and business confidence, we expect the
economy to continue to perform well, although not quite as strongly as in the
first half of the year. The Federal Reserve has expressed uncertainty about why
inflation has remained so low at this stage of the expansion and is maintaining
a bias toward tightening to keep inflation in check. Until visible signs of
rising inflation appear, there is little reason for us to adopt a defensive
posture in the fund. We believe the overall environment for fixed income
securities remains favorable.
Respectfully submitted,
/s/
Charles B. Hill
Chairman of the Investment Advisory Committee
September 22, 1997
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Portfolio Highlights
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Key statistics
2/28/97 8/31/97
- --------------------------------------------------------------------------------
Price Per Share ...................................... $10.52 $10.56
Dividends Per Share
For 6 months ..................................... 0.23 0.23
For 12 months .................................... 0.46 0.46
Dividend Yield *
For 6 months ..................................... 4.50% 4.40%
For 12 months .................................... 4.48 4.50
Weighted Average Maturity (years) .................... 8.2 7.0
Weighted Average Effective Duration (years) .......... 5.6 5.4
Weighted Average Quality ** .......................... AA AA
* 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.
** Based on T. Rowe Price research.
================================================================================
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
Sector Diversification
Percent of Percent of
Net Assets Net Assets
2/28/97 8/31/97
- --------------------------------------------------------------------------------
Dedicated Tax Revenue ................................ 20% 20
General Obligation - Local ........................... 10 17
Water and Sewer Revenue .............................. 9 10
Electric Revenue ..................................... 8 9
Air and Sea Transportation Revenue ................... 11 7
Prerefunded Bonds .................................... 8 6
Lease Revenue ........................................ 6 6
Hospital Revenue ..................................... 4 5
Ground Transportation Revenue ........................ 4 4
Solid Waste Revenue .................................. 3 4
Life Care/Nursing Home ............................... 3 3
General Obligation - State ........................... 3 3
Housing Finance Revenue .............................. 3 3
Nuclear Revenue ...................................... 4 2
Other Assets Less Liabilities ........................ 4 1
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Total ................................................ 100% 100%
================================================================================
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-free Fund
================================================================================
Performance Comparison
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This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[Florida Insured Intermediate Tax-Free Fund SEC chart shown here]
================================================================================
Average Annual Compound Total Return
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This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
================================================================================
Since Inception
Periods Ended 8/31/97 1 Year 3 Years Inception Date
- --------------------------------------------------------------------------------
Florida Insured Intermediate Tax-Free Fund 6.60% 6.11% 5.79% 3/31/93
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
<TABLE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
====================================================================================================================================
Unaudited
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
6 Months Year 3/31/93
Ended Ended through
8/31/97 2/28/97 2/29/96 2/28/95 2/28/94
NET ASSET VALUE
Beginning of period ............... $ 10.52 $ 10.61 $ 10.14 $ 10.30 $ 10.00
Investment activities
Net investment income ......... 0.23* 0.46* 0.47* 0.43* 0.37*
Net realized and
unrealized gain (loss) ........ 0.04 (0.07) 0.47 (0.14) 0.31
Total from
investment activities ......... 0.27 0.39 0.94 0.29 0.68
Distributions
Net investment income ......... (0.23) (0.46) (0.47) (0.43) (0.37)
Net realized gain ............. -- (0.02) -- (0.02) (0.01)
Total distributions ........... (0.23) (0.48) (0.47) (0.45) (0.38)
NET ASSET VALUE
End of period ..................... $ 10.56 $ 10.52 $ 10.61 $ 10.14 $ 10.30
Ratios/Supplemental Data
Total return ...................... 2.59%* 3.81%* 9.41%* 3.01%* 6.84%*
Ratio of expenses to
average net assets ................ 0.60%*+ 0.60%* 0.60%* 0.60%* 0.60%*+
Ratio of net investment
income to average
net assets ........................ 4.36%*+ 4.39%* 4.47%* 4.38%* 3.57%*+
Portfolio turnover rate ........... 26.8%+ 75.8% 98.7% 140.5% 70.6%+
Net assets, end of period
(in thousands) .................... $ 78,356 $ 78,783 $ 67,260 $ 51,922 $ 37,868
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Excludes expenses in excess of a 0.60% voluntary expense limitation in effect through 2/28/99.
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Unaudited August 31, 1997
================================================================================
Statement of Net Assets
Par Value
- --------------------------------------------------------------------------------
In thousands
FLORIDA 98.3%
Brevard County HFA, Holmes Regional Medical Center
5.20%, 10/1/05 (MBIA Insured) ....................... $ 2,000 $2,067
Charlotte County, Utility
6.875%, 10/1/21 (FGIC Insured)
(Prerefunded 10/1/01+) .............................. 2,000 2,226
Dade County
Aviation, 5.40%, 10/1/03 (MBIA Insured) * ............... 1,140 1,188
Resource Recovery Fac
6.00%, 10/1/06 (AMBAC Insured) * .................... 2,500 2,709
Water and Sewer
VRDN (Currently 3.25%) (FGIC Insured) ............... 400 400
Dade County School Dist., GO
5.50%, 8/1/04 (MBIA Insured) ........................ 2,000 2,112
6.00%, 7/15/04 (MBIA Insured) ....................... 3,545 3,845
Duval County School Dist., GO
6.125%, 8/1/04 (AMBAC Insured) ...................... 2,000 2,170
Florida Board of Ed., GO, Public Ed., 5.40%, 6/1/04 ......... 2,075 2,176
Florida Division of Bond Fin
Dept. of Environmental Preservation
5.50%, 7/1/07 (AMBAC Insured) ....................... 2,000 2,105
6.00%, 7/1/05 (MBIA Insured) ........................ 500 544
6.00%, 7/1/06 (MBIA Insured) ........................ 4,350 4,755
Florida Housing Fin. Agency
Multi-Family Housing
5.80%, 2/1/08 ....................................... 1,000 1,045
5.80%, 8/1/08 ....................................... 1,000 1,047
Florida Municipal Power Agency
All - Requirements Power Supply
6.25%, 10/1/21 (AMBAC Insured)
(Prerefunded 10/1/02+) .............................. 1,700 1,870
Florida State Dept. of Corrections
Okeechobee Correctional
5.70%, 3/1/01 (AMBAC Insured) ....................... 1,355 1,416
5.80%, 3/1/02 (AMBAC Insured) ....................... 1,005 1,061
Florida Turnpike Auth
5.50%, 7/1/03 (AMBAC Insured) ....................... 2,000 2,106
5.50%, 7/1/05 (AMBAC Insured) ....................... 1,000 1,056
Gainesville, Utilities, 6.40%, 10/1/05 ...................... $ 1,500 $1,643
<PAGE>
Hillsborough County
Environmentally Sensitive
Lands Acquisition and Protection
6.20%, 7/1/05 (AMBAC Insured) ....................... 1,485 1,606
Improvement Program
6.00%, 8/1/04 (FGIC Insured) ........................ 1,895 2,057
Hillsborough County Port Dist., Tampa Port Auth
6.50%, 6/1/04 (FSA Insured) * ....................... 2,000 2,207
Hillsborough County School Board, Sales Tax
5.00%, 10/1/98 (AMBAC Insured) ...................... 2,000 2,024
Hillsborough County School Dist., GO
7.00%, 8/15/05 (MBIA Insured) ....................... 3,700 4,278
Indian Trace Community Dev. Dist
Basin 1 Water Management
5.50%, 5/1/06 (MBIA Insured) ........................ 1,215 1,285
5.50%, 5/1/07 (MBIA Insured) ........................ 550 582
Jacksonville, Water and Sewer, 6.00%, 10/1/04 (MBIA Insured) 1,845 2,003
Jacksonville Beach Utilities
6.75%, 10/1/20 (MBIA Insured)
(Prerefunded 10/1/01+) .............................. 500 554
Jacksonville Electric Auth., St. John's River, 6.00%, 10/1/04 2,000 2,173
Jacksonville HFA
Genesis Rehabilitation Hosp
VRDN (Currently 3.75%) .............................. 600 600
New Children's Hosp. at Baptist Medical Center
VRDN (Currently 3.90%) .............................. 200 200
Lakeland Electric and Water, 6.50%, 10/1/04 (FGIC Insured) .. 3,755 4,194
Lee County School Board, COP, 6.30%, 8/1/01 (FSA Insured) ... 2,000 2,142
Manatee County, Public Utilities
6.75%, 10/1/05 (MBIA Insured) ....................... 2,000 2,283
Orange County, Public Service Tax
5.60%, 10/1/07 (FGIC Insured) ....................... 500 535
Osceola County HFA
The Evangelical Lutheran Good Samaritan Society
5.50%, 5/1/03 (AMBAC Insured) ....................... 660 692
Osceola County HFA
The Evangelical Lutheran Good Samaritan Society
5.50%, 5/1/04 (AMBAC Insured) ....................... 700 735
5.50%, 5/1/05 (AMBAC Insured) ....................... 735 772
Palm Beach County, GO
6.875%, 12/1/03 ..................................... 325 368
Palm Beach County, Airport, 7.50%, 10/1/00 (MBIA Insured) ... 1,980 2,158
Pinellas County Water Auth
5.50%, 10/1/04 (AMBAC Insured) ...................... 2,500 2,642
Reedy Creek Improvement Dist., GO
5.125%, 10/1/19 ..................................... 1,000 963
6.375%, 6/1/05 (MBIA Insured) ....................... 500 534
Sarasota County, Utilities, 5.70%, 10/1/01 (FGIC Insured) ... 500 526
Venice, Bon Secours Health, 5.40%, 8/15/08 (MBIA Insured) ... 1,290 1,341
Total Florida (Cost $74,523) ................................ 76,995
<PAGE>
LOUISIANA 0.3%
East Baton Rouge Parish, Exxon, VRDN (Currently 3.70%) 250 250
Total Louisiana (Cos $ 250) 250
Total Investments in Securities
98.6% of Net Assets (Cost $ 74,773) $77,245
Other Assets Less Liabilities .................... 1,111
NET ASSETS ....................................... $ 78,356
Net Assets Consist of:
Accumulated net realized gain/loss -
net of distributions ............................. $ (400)
Net unrealized gain (loss) ....................... 2,472
Paid-in-capital applicable to 7,420,183
no par value shares of beneficial
interest outstanding; unlimited
number of shares authorized ...................... 76,284
NET ASSETS ....................................... $ 78,356
NET ASSET VALUE PER SHARE ........................ $ 10.56
* Interest subject to alternative minimum tax
+ Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
COP Certificates of Participation
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance Corp.
GO General Obligation
HFA Health Facility Authority
MBIA Municipal Bond Investors Assurance Corp.
VRDN Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
8/31/97
Investment Income
Interest income ................................................. $ 1,994
Expenses
Investment management ....................................... 140
Custody and accounting ...................................... 45
Shareholder servicing ....................................... 35
Prospectus and shareholder reports .......................... 8
Legal and audit ............................................. 4
Registration ................................................ 4
Trustees .................................................... 3
Miscellaneous ............................................... 2
Total expenses .............................................. 241
Net investment income ........................................... 1,753
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities .................................................. 21
Futures ..................................................... (20)
Net realized gain (loss) .................................... 1
Change in net unrealized gain or loss on securities ............. 349
Net realized and unrealized gain (loss) ......................... 350
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATION ........................................... $ 2,103
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
8/31/97 2/28/97
Increase (Decrease) in Net Assets
Operations
Net investment income .............................. $ 1,753 $ 3,056
Net realized gain (loss) ........................... 1 (350)
Change in net unrealized gain or loss .............. 349 (64)
Increase (decrease) in net assets from operations .. 2,103 2,642
Distributions to shareholders
Net investment income .............................. (1,753) (3,056)
Net realized gain .................................. -- (123)
Decrease in net assets from distributions .......... (1,753) (3,179)
Capital share transactions *
Shares sold ........................................ 11,927 41,212
Distributions reinvested ........................... 1,184 2,144
Shares redeemed .................................... (13,888) (31,296)
Increase (decrease) in net assets from capital
share transactions ................................. (777) 12,060
Net Assets
Increase (decrease) during period ...................... (427) 11,523
Beginning of period .................................... 78,783 67,260
End of period .......................................... $ 78,356 $ 78,783
*Share information
Shares sold ........................................ 1,138 3,942
Distributions reinvested ........................... 113 206
Shares redeemed .................................... (1,321) (2,997)
Increase (decrease) in shares outstanding .......... (70) 1,151
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Unaudited August 31, 1997
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price State Tax-Free Income Trust (the trust) is registered under
the Investment Company Act of 1940. The Florida Insured Intermediate Tax-Free
Fund (the fund), a nondiversified, open-end management investment company, is
one of the portfolios established by the trust and commenced operations on March
31, 1993.
VALUATION Debt securities are generally traded in the over-the-counter
market. Investments in securities 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.
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 Trustees.
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.
OTHER Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Distributions to shareholders are
recorded by the fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax regulations
and may differ from those determined in accordance with generally accepted
accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $11,352,000 and $10,006,000, respectively, for the six
months ended August 31, 1997.
<PAGE>
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 $355,000, which expires in 2005. The fund intends to
retain gains realized in future periods that may be offset by available capital
loss carryforwards.
At August 31, 1997, the aggregate cost of investments for federal income
tax and financial reporting purposes was $74,773,000, and net unrealized gain
aggregated $2,472,000, of which $2,473,000 related to appreciated investments
and $1,000 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 $25,000 was payable at August 31, 1997. The fee is computed daily and
paid monthly, and consists of an individual fund fee equal to 0.05% of average
daily net assets and a group fee. The group fee is based on the combined assets
of certain mutual funds sponsored by the manager or Rowe Price-Fleming
International, Inc. (the group). The group fee rate ranges from 0.48% for the
first $1 billion of assets to 0.30% for assets in excess of $80 billion. At
August 31, 1997, and for the six months then ended, the effective annual group
fee rates were 0.32% and 0.33%, respectively. The fund pays a pro-rata share of
the group fee based on the ratio of its net assets to those of the group.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through February 28, 1999, which would cause the
fund's ratio of expenses to average net assets to exceed 0.60%. Thereafter,
through February 28, 2001, the fund is required to reimburse the manager for
these expenses, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the fund's ratio of
expenses to average net assets to exceed 0.60%. Pursuant to this agreement,
$11,000 of management fees were not accrued by the fund for the six months ended
August 31, 1997. Additionally, $123,000 of unaccrued management fees related to
a previous expense limitation are subject to reimbursement through February 28,
1999.
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 $59,000 for the six months
ended August 31, 1997, of which $11,000 was payable at period-end.
<PAGE>
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access [Registration Mark]:
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price Florida Insured
Intermediate Tax-Free Fund.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor. F91-051 8/31/97
