- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Annual Report
Florida Insured Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
February 28, 1998
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
FLORIDA INSURED INTERMEDIATE TAX-FREE FUND
* Municipal bonds and the fund provided solid returns for the six and 12
months ended February 28, 1998.
* Florida took steps to maintain its high credit rating by establishing a
Budget Stabilization Fund.
* The fund's 6- and 12-month returns of 4.01% and 6.71%, respectively, were a
bit lower than the Lipper peer group average due to our more conservative
strategy last spring.
* We made some duration adjustments during the year, shortening as rates rose
last spring, lengthening subsequently, and ending in a neutral posture.
* We expect slower economic growth and continued low inflation in 1998 which
should be favorable for municipal bonds.
FELLOW SHAREHOLDERS
The municipal bond market and your fund provided strong returns for the six
months ended February 28 as interest rates declined against a background of
subdued inflation. Because of their lower risk profiles, most fixed income
investments in the U.S. benefited from the jitters experienced by worldwide
stock markets in the wake of Southeast Asian currency and economic crises.
<PAGE>
MARKET ENVIRONMENT
During the six months ended February 28, 1998, municipal bond prices rose
and yields declined, with long-term AAA-rated bonds breaking below the 5% level.
Both the taxable and tax-free markets benefited from the positive influence of
continued low inflation. However, yields on tax-free securities fell less than
on comparable Treasury issues because of a sharp increase in supply as municipal
issuers took advantage of low borrowing costs. Municipal issuance increased by
20% in 1997, and supply in 1998 was the highest ever for the first two months.
As a result, Treasury securities outperformed municipals for the past six
months.
[Yield chart showing 30-year AAA GO, 5-year AAA GO, and 1-year MIG1 note
from 2/97 through 2/98]
Yields on long-term AAA municipal bonds fell about 27 basis points from the
end of August (100 basis points equal one percent). Intermediate yields fell in
tandem with long-term rates, but short-term rates fell less sharply. The yield
curve flattened throughout most of the past six months, except for the last two
weeks in February when long-term rates rose more than short-term rates. Florida
bonds generally followed national market trends.
The major influence on rates was, and continues to be, the lack of rising
inflationary pressures. At the end of 1997, consumer prices were rising at a
1.7% annual rate, the lowest since 1986. The economy grew at an impressive rate
of 3.8% in 1997, which led to improving credit quality in the municipal market.
With inflation low despite the robust economy, the Federal Reserve left
short-term interest rates unchanged after raising the federal funds rate in
March of 1997.
Florida's economy was strong in 1997, with employment growth of 3.6%
outstripping the 2.6% rate for the U.S. as a whole. The services sector powered
much of this growth. Personal income increased at a higher rate in Florida than
for the nation and should do so again in 1998. Although the influx of new
residents has slowed, the state is one of the fastest-growing in the U.S. - an
advantage that also brings budgetary pressures. Nevertheless, Florida is
aggressively addressing revenue and spending concerns. For example, to reduce
the state's reliance on sales taxes, which typically decline if the economy
weakens, the constitution was amended to establish a Budget Stabilization Fund
with mandated annual contributions from the state. Recognizing Florida's
financial strength, rating agencies have assigned AA or AA+ to the state's
general obligations. The major cloud in the state's credit picture is the City
of Miami, to which your fund has no exposure.
<PAGE>
PERFORMANCE AND STRATEGY REVIEW
================================================================================
Performance Comparison
================================================================================
Periods Ended 2/28/98 6 Months 12 Months
- --------------------------------------------------------------------------------
Florida Insured Intermediate
Tax-Free Fund 4.01% 6.71%
Lipper Florida Intermediate
Municipal Debt Funds Average 4.06 6.98
================================================================================
The fund provided a strong total return of 4.01% for the six-month period,
reflecting income of $0.23 per share and a $0.19 increase in share price. For
the fiscal year as a whole, the return of 6.71% was generated by income of $0.46
per share and $0.23 of price appreciation, virtually all of which occurred in
the past six months. Results for the second half were a few basis points below
our Lipper peer group average, but those for the 12 months lagged more. This was
primarily because the fund's posture in the spring of 1997, after the Federal
Reserve raised interest rates, was somewhat more conservative than that of the
average Florida bond fund. Since the fund's inception in March 1993, cumulative
performance has exceeded the Lipper average, as shown in the chart on page 7
depicting the growth of a $10,000 investment.
In the first half of the year, we adopted a slightly defensive posture that
caused us to lose some ground versus our peer group in the spring and summer of
1997 when interest rates declined on balance. Specifically, we trimmed the
fund's duration. (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 rate levels.) However, the bond market corrected in August
and September as interest rates moved higher. We took advantage of the resulting
lower prices to move to a neutral posture. In the fall, a combination of lower
Treasury yields and heavy municipal issuance improved the relative value of
municipal investments compared with taxable securities. We perceived the
increased value as an opportunity to become more aggressive and extend the
fund's duration. As the market rallied into January, we moved back to a more
neutral position , ending the fiscal year with a duration of 5.5 years. This
strategy brought the fund's performance close to the peer group average for the
second half.
==============================
In the fall . . . lower
Treasury yields and heavy
municipal issuance improved
the relative value of
municipal investments . . .
- ------------------------------
<PAGE>
Reflecting our ongoing search for ways to enhance your fund's yield, we
increased our holdings of hospital revenue bonds, which offer a yield advantage
over other types of bonds carrying similar insurance. Otherwise, there were no
major changes in the fund's sector diversification during the past six months,
as shown in the table following this letter. Since most of our holdings have
appreciated, we sought to minimize trading during the second half to avoid
creating capital gains that would be taxable to you when distributed. Your fund
had no taxable distributions during its fiscal year.
OUTLOOK
The problems in Asia could affect the U.S. economy and slice a bit off 1998
growth, but the so-called Asian flu does not appear serious enough to
precipitate a downturn while domestic consumer demand remains healthy. The
recent Congressional testimony of Federal Reserve officials suggests that the
Fed will leave monetary policy unchanged until it fully appraises the impact of
Asia's problems on the U.S. economy.
Municipal bonds produced good results over the last 12 months despite a
surge in new issuance. However, the municipal market has come under some
pressure from both heavy supply and the recent rise in Treasury yields. Compared
with Treasuries on an after-tax basis, municipals are very attractive, however,
and could entice investors looking to take advantage of their relative appeal.
We expect slower economic growth in 1998, continued low inflation, and stable
monetary policy, all of which should be favorable for the municipal bond market.
Respectfully submitted,
/s/
Charles B. Hill
Chairman of the Investment Advisory Committee
March 20, 1998
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
Key statistics
8/31/97 2/28/98
Price Per Share $ 10.56 $ 10.75
Dividends Per Share
For 6 months 0.23 0.23
For 12 months 0.46 0.46
Dividend Yield *
For 6 months 4.40% 4.38%
For 12 months 4.50 4.44
Weighted Average Maturity (years) 7.0 7.5
Weighted Average Effective Duration (years) 5.4 5.5
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.
================================================================================
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
SECTOR Diversification
Percent of Percent of
Net Assets Net Assets
8/31/97 2/28/98
Dedicated Tax Revenue 20% 21%
General Obligation - Local 17 15
Hospital Revenue 5 9
Electric Revenue 9 8
Water and Sewer Revenue 10 8
Air and Sea Transportation Revenue 7 7
Ground Transportation Revenue 4 6
Prerefunded Bonds 6 5
Lease Revenue 6 5
Solid Waste Revenue 4 3
General Obligation - State 3 3
Life Care/Nursing Home Revenue 3 3
Housing Finance Revenue 3 2
Escrowed to Maturity - 2
Nuclear Revenue 2 2
Other Assets Less Liabilities 1 1
- --------------------------------------------------------------------------------
Total 100% 100%
================================================================================
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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 2/28/98 1 Year 3 Years Inception Date
- --------------------------------------------------------------------------------
Florida Insured Intermediate Tax-Free Fund 6.71% 6.62% 6.04% 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
================================================================================
For a share outstanding throughout each period
Financial Highlights
<CAPTION>
Year 3/31/93
Ended through
2/28/98 2/28/97 2/29/96 2/28/95 2/28/94
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ..................... $ 10.52 $ 10.61 $ 10.14 $ 10.30 $ 10.00
Investment activities
Net investment income ........... 0.46* 0.46* 0.47* 0.43* 0.37*
Net realized and
unrealized gain (loss) .......... 0.23 (0.07) 0.47 (0.14) 0.31
Total from
investment activities ........... 0.69 0.39 0.94 0.29 0.68
Distributions
Net investment income ........... (0.46) (0.46) (0.47) (0.43) (0.37)
Net realized gain ............... -- (0.02) -- (0.02) (0.01)
Total distributions ............. (0.46) (0.48) (0.47) (0.45) (0.38)
NET ASSET VALUE
End of period ........................... $ 10.75 $ 10.52 $ 10.61 $ 10.14 $ 10.30
Ratios/Supplemental Data
Total return ............................ 6.71%* 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 .............................. 4.35%* 4.39%* 4.47%* 4.38%* 3.57%*+
Portfolio turnover rate ................. 25.0% 75.8% 98.7% 140.5% 70.6%+
Net assets, end of period
(in thousands) .......................... $ 90,941 $ 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
================================================================================
February 28, 1998
================================================================================
Statement of Net Assets
- --------------------------------------------------------------------------------
Par Value
In thousands
FLORIDA 94.0%
Brevard County HFA, Holmes Regional Medical Center
5.20%, 10/1/05 (MBIA Insured) ............ $2,000 $2,121
Canaveral Port Auth., 5.75%, 6/1/16 (FGIC Insured) * ..... 1,000 1,062
Charlotte County, Utility
6.875%, 10/1/21 (FGIC Insured)
(Prerefunded 10/1/01+) ................... 2,000 2,225
Dade County
Aviation, 5.40%, 10/1/03 (MBIA Insured) * ........ 1,140 1,209
Resource Recovery Fac ............................
6.00%, 10/1/06 (AMBAC Insured) * ......... 2,500 2,778
Dade County School Dist., GO
5.50%, 8/1/04 (MBIA Insured) ............. 2,000 2,143
6.00%, 7/15/04 (MBIA Insured) ............ 3,545 3,894
Dade County Water and Sewer
5.375%, 10/1/16 (FGIC Insured) ........... 1,500 1,545
Duval County School Dist., GO
6.125%, 8/1/04 (AMBAC Insured) ........... 2,000 2,176
Florida Board of Ed., GO
Capital Outlay, VRDN (Currently 3.65%) ........... 200 200
Public Ed., 5.40%, 6/1/04 ........................ 2,075 2,212
Florida Dept. of Corrections
Okeechobee Correctional
5.70%, 3/1/01 (AMBAC Insured) ............ 1,355 1,421
5.80%, 3/1/02 (AMBAC Insured) ............ 1,005 1,070
Florida Division of Bond Fin .............................
Dept. of Environmental Preservation
5.50%, 7/1/07 (AMBAC Insured) ............ 2,000 2,159
6.00%, 7/1/05 (MBIA Insured) ............. 500 555
6.00%, 7/1/06 (MBIA Insured) ............. 4,350 4,867
Florida Housing Fin. Agency
Multi-Family Housing
5.80%, 2/1/08 ............................ 1,000 1,060
5.80%, 8/1/08 ............................ 1,000 1,063
Florida Municipal Power Agency
All-Requirements Power Supply
6.25%, 10/1/21 (AMBAC Insured)
(Prerefunded 10/1/02+) ................... 1,700 1,883
Florida Turnpike Auth ....................................
5.50%, 7/1/03 (AMBAC Insured) ............ $ 2,000 $ 2,134
5.50%, 7/1/05 (AMBAC Insured) ............ 1,000 1,079
Gainesville, Utilities System, 6.40%, 10/1/05 ............ 1,500 1,658
<PAGE>
Hillsborough County
Environmentally Sensitive
Lands Acquisition and Protection
6.20%, 7/1/05 (AMBAC Insured) ............ 1,485 1,624
Improvement Program
6.00%, 8/1/04 (FGIC Insured) ............. 1,895 2,083
Hillsborough County IDA, PCR, Tampa Electric
VRDN (Currently 3.65%) ................... 900 900
Hillsborough County Port Dist., Tampa Port Auth ..........
6.50%, 6/1/04 (FSA Insured) * ............ 2,000 2,240
Hillsborough County School Dist ..........................
GO, 7.00%, 8/15/05 (MBIA Insured) ................ 3,700 4,340
Sales Tax, 5.00%, 10/1/98 (AMBAC Insured) ........ 1,000 1,008
Indian Trace Community Dev. Dist .........................
Water Management
5.50%, 5/1/06 (MBIA Insured) ............. 1,215 1,315
5.50%, 5/1/07 (MBIA Insured) ............. 550 597
Jacksonville, Water and Sewer
6.00%, 10/1/04 (MBIA Insured)
(Escrowed to Maturity) ................... 1,845 2,033
Jacksonville Beach Utilities
6.75%, 10/1/20 (MBIA Insured)
(Prerefunded 10/1/01+) ................... 500 554
Jacksonville HFA
Charity Obligation Group
5.00%, 8/15/11 (MBIA Insured) ............ 750 766
Genesis Rehabilitation Hosp ......................
VRDN (Currently 3.70%) ................... 600 600
Lakeland Electric and Water
5.625%, 10/1/05 .......................... 2,100 2,286
6.50%, 10/1/04 (FGIC Insured) ............ 3,755 4,248
Lee County School Board, COP
6.30%, 8/1/01 (FSA Insured) .............. 2,000 2,147
Manatee County, Public Utilities
6.75%, 10/1/05 (MBIA Insured) ............ $ 2,000 $ 2,321
Orange County, Public Service Tax
5.60%, 10/1/07 (FGIC Insured) ............ 500 547
Orlando and Orange County
Expressway Auth ..................................
6.50%, 7/1/10 (FGIC Insured) ............. 1,000 1,181
6.50%, 7/1/11 (FGIC Insured) ............. 1,000 1,186
Osceola County HFA
Evangelical Lutheran Good Samaritan Society
5.50%, 5/1/03 (AMBAC Insured) ............ 660 702
5.50%, 5/1/04 (AMBAC Insured) ............ 700 749
5.50%, 5/1/05 (AMBAC Insured) ............ 735 791
Palm Beach County
Airport, 7.50%, 10/1/00 (MBIA Insured) ........... 1,855 2,017
GO, 6.875%, 12/1/03 .............................. 325 372
Pinellas County Water Auth ...............................
5.50%, 10/1/04 (AMBAC Insured) ........... 2,500 2,687
<PAGE>
Reedy Creek Improvement Dist., GO
6.375%, 6/1/05 (MBIA Insured) ............ 500 537
Saint Lucie County, PCR, Florida Power and Light
VRDN (Currently 3.55%) ................... 100 100
Sarasota County, Utilities
5.70%, 10/1/01 (FGIC Insured) ............ 500 528
Tampa Health Systems, Catholic Health East
5.25%, 11/15/11 (MBIA Insured) ........... 3,000 3,133
Venice, Bon Secours Health Systems
5.40%, 8/15/08 (MBIA Insured) ............ 1,290 1,392
Total Florida (Cost $81,666) ............................. 85,498
GUAM 2.4%
Guam Gov't. Infrastructure
5.50%, 11/1/05 (AMBAC Insured) ........... 2,000 2,169
Total Guam (Cost $2,138) ................................. 2,169
PUERTO RICO 2.2%
Puerto Rico Commonwealth Infrastructure Fin. Auth.
5.00%, 7/1/12 (AMBAC Insured) ............ $2,000 $2,036
Total Puerto Rico (Cost $1,984) .......................... 2,036
Total Investments in Securities
98.6% of Net Assets (Cost $85,788) ....................... $89,703
Other Assets Less Liabilities ............................ 1,238
NET ASSETS ............................................... $90,941
Net Assets Consist of:
Accumulated net realized gain/loss -
net of distributions ..................................... $ (395)
Net unrealized gain (loss) ............................... 3,915
Paid-in-capital applicable to 8,462,796
no par value shares of beneficial interest
outstanding; unlimited number of shares authorized ....... 87,421
NET ASSETS ............................................... $90,941
NET ASSET VALUE PER SHARE ................................ $10.75
* 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
IDA Industrial Development Authority
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
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
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
Year
Ended
2/28/98
Investment Income
Interest income ................................................. $ 4,074
Expenses
Investment management ................................... 303
Custody and accounting .................................. 90
Shareholder servicing ................................... 57
Prospectus and shareholder reports ...................... 14
Registration ............................................ 12
Legal and audit ......................................... 8
Trustees ................................................ 6
Miscellaneous ........................................... 4
Total expenses .......................................... 494
Net investment income ........................................... 3,580
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities .............................................. 61
Futures ................................................. (55)
Net realized gain (loss) ................................ 6
Change in net unrealized gain or loss on securities ............. 1,792
Net realized and unrealized gain (loss) ......................... 1,798
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS .......................................... $ 5,378
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Statement of Changes in Net Assets
In thousands
<CAPTION>
Year
Ended
2/28/98 2/28/97
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income ........................................................ $ 3,580 $ 3,056
Net realized gain (loss) ..................................................... 6 (350)
Change in net unrealized gain or loss ........................................ 1,792 (64)
Increase (decrease) in net assets from operations ............................ 5,378 2,642
Distributions to shareholders
Net investment income ........................................................ (3,580) (3,056)
Net realized gain ............................................................ -- (123)
Decrease in net assets from distributions .................................... (3,580) (3,179)
Capital share transactions*
Shares sold .................................................................. 38,694 41,212
Distributions reinvested ..................................................... 2,480 2,144
Shares redeemed .............................................................. (30,814) (31,296)
Increase (decrease) in net assets from capital
share transactions ........................................................... 10,360 12,060
Net Assets
Increase (decrease) during period .................................................... 12,158 11,523
Beginning of period .................................................................. 78,783 67,260
End of period ........................................................................ $ 90,941 $ 78,783
*Share information
Shares sold .................................................................. 3,637 3,942
Distributions reinvested ..................................................... 234 206
Shares redeemed .............................................................. (2,898) (2,997)
Increase (decrease) in shares outstanding .................................... 973 1,151
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
February 28, 1998
================================================================================
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
VALUATION 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 $31,812,000 and $19,645,000, respectively, for the year
ended February 28, 1998.
<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 $306,000 which expires in 2005. Capital loss
carryforwards utilized in fiscal 1998 amounted to $49,000. The fund intends to
retain gains realized in future periods that may be offset by available capital
loss carryforwards.
At February 28, 1998, the aggregate cost of investments for federal
income tax and financial reporting purposes was $85,788,000, and net unrealized
gain aggregated $3,915,000, of which $3,917,000 related to appreciated
investments and $2,000 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 February 28, 1998. 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
February 28, 1998, and for the year then ended, the effective annual group fee
rate was 0.32%. The fund pays a pro-rata share of the group fee based on the
ratio of its net assets to those of the group.
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,
$6,000 of management fees were not accrued by the fund for the year ended
February 28, 1998. 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 $109,000 for the year
ended February 28, 1998, of which $9,000 was payable at period-end.
<PAGE>
================================================================================
Tax Information (Unaudited) for the Tax Year Ended 2/28/98
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue
Code. The amounts shown may differ from those elsewhere in this report because
of differences between tax and financial reporting requirements.
The fund's dividend income included $3,541,000 which qualified as
exempt-interest dividends.
================================================================================
T. Rowe Price Florida Insured Intermediate Tax-Free Fund
================================================================================
Report of Independent Accountants
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
T. ROWE PRICE FLORIDA INSURED INTERMEDIATE TAX-FREE FUND
We have audited the accompanying statement of net assets of T. Rowe Price
Florida Insured Intermediate Tax-Free Fund (one of the portfolios comprising the
T. Rowe Price State Tax-Free Income Trust) as of February 28, 1998, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the periods then ended, and
financial highlights for the each of the four years in the period then ended and
the period March 31, 1993 (commencement of operations) to February 28, 1994.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
February 28, 1998, by correspondence with the custodian and the brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of T. Rowe Price Florida Insured Intermediate Tax-Free Fund as of
February 28, 1998, the results of its operations, the changes in its net assets,
and financial highlights for each of the respective periods stated in the first
paragraph, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
March 18, 1998
<PAGE>
T. Rowe Price Shareholder Services
================================================================================
INVESTMENT SERVICES AND INFORMATION
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE Shareholder service representatives are available from 8
a.m. to 10 p.m. ET Monday through Friday and from 8:30 a.m. to 5
p.m. ET on weekends. 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. You can also drop off applications or obtain
prospectuses and other literature at these centers.
AUTOMATED 24-HOUR SERVICES
TELE*ACCESS [Registration Mark] Call 1-800-638-2587 to obtain
information such as account balance, date and amount of your last
transaction, latest dividend payment, fund prices, and yields.
Additionally, you have the ability to request prospectuses,
statements, and account and tax forms; to reorder checks; and to
initiate purchase, redemption, and exchange orders for
identically registered accounts.
T.ROWE PRICE ONLINE Through a personal computer via dial-up
modem, you can replicate all the services available on
Tele*Access plus conduct transactions in your Discount Brokerage
and Variable Annuity accounts.
ACCOUNT SERVICES
CHECKING Write checks for $500 or more on any money market and
most bond fund accounts (except the High Yield and Emerging
Markets Bond Funds).
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 $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.
<PAGE>
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.
DISCOUNT BROKERAGE*
INVESTMENTS AVAILABLE You can trade stocks, bonds, options,
precious metals, and other securities at a savings over regular
commission rates.
TO OPEN AN ACCOUNT Call a shareholder service representative for
more information.
INVESTMENT INFORMATION
COMBINED STATEMENT A comprehensive overview of your T. Rowe Price
accounts is provided. The summary page gives you earnings by tax
category, provides total portfolio value, and lists your
investments by type-stock, bond, and money market. Detail pages
itemize account transactions by fund.
SHAREHOLDER REPORTS Portfolio managers review the performance of
the funds in plain language and discuss T. Rowe Price's economic
outlook.
T. ROWE PRICE REPORT This is a quarterly newsletter with relevant
articles on market trends, personal financial planning, and T.
Rowe Price's economic perspective.
PERFORMANCE UPDATE This quarterly report reviews recent market
develop- ments and provides comprehensive performance information
for every T. Rowe Price fund.
INSIGHTS This library of information includes reports on mutual
fund tax issues, investment strategies, and financial markets.
DETAILED INVESTMENT GUIDES Our widely acclaimed Asset Mix
Worksheet, College Planning Kit, Diversifying Overseas: A Guide
to International Investing, Retirees Financial Guide, and
Retirement Planning Kit (also available on disk for PC use) can
help you determine and reach your investment goals.
* A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
<PAGE>
T. Rowe Price Mutual Funds
================================================================================
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500*
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications**
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons***
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value***
Spectrum Growth
Total Equity Market Index
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
<PAGE>
BOND FUNDS
- --------------------------------------------------------------------------------
DOMESTIC TAXABLE
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
DOMESTIC TAX-FREE
California Tax-Free Bond
Florida Insured
Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
Emerging Markets Bond
Global Government Bond
International Bond
MONEY MARKET FUNDS+
- --------------------------------------------------------------------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
<PAGE>
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Formerly the Equity Index Fund.
** Formerly the closed-end New Age Media Fund. Converted to open-end status
on 7/28/97.
*** Closed to new investors.
+ Neither the funds nor their share prices are guaranteed or insured by the
U.S. government.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
<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. F91-050 2/28/98
