- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Annual Report
Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
February 28, 1999
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
* Municipal bonds fared well amid the sometimes turbulent financial market
conditions of the past year.
* Yields on tax-free bonds approached parity with yields on taxable bonds
before easing in recent months.
* The fund's 6- and 12-month returns exceeded those of its Lipper peer group
average, aided by portfolio management decisions and below-average
expenses.
* Florida's economy remained strong, fueled by rapid growth in employment and
personal income.
* We expect inflation to remain under control, which should be constructive
for the fixed income markets.
================================================================================
FELLOW SHAREHOLDERS
- --------------------------------------------------------------------------------
Municipal bonds and your fund provided good returns for the 6- and 12-month
periods ended February 28, 1999. The tax-exempt market avoided much of the
turmoil in other fixed income markets. Treasury yields plunged from August to
October in a massive flight to quality and then bounced back as the global
financial crisis eased and the U.S. economy remained remarkably strong. The fund
was able to outperform its benchmarks for both periods, a reflection of our
management decisions and below-average expenses.
================================================================================
<PAGE>
MARKET ENVIRONMENT
- --------------------------------------------------------------------------------
Major economic developments here and overseas during the fiscal year
affected the fixed income markets. In the first half, investors expected the
global turmoil to hurt the U.S. economy and began pushing interest rates lower.
Russia's debt default in August created havoc in many markets and caused a
global liquidity crisis that contributed to the flight to U.S. Treasuries.
Yields on 30-year Treasuries fell to a record low of 4.72% in October from 5.92%
last February. Municipal yields also fell, but the decline was more muted as
long-term rates dropped to 4.64% in October from 5.08% last February. As a
result, municipal yields approached parity with Treasury yields especially in
longer maturities, an unusual event in a year when major tax reform was not
under discussion. In response to the credit crunch, the Federal Reserve cut
interest rates three times last fall to cushion the domestic economy from
weakness abroad and restore investor confidence.
[Insert Municipal Bond and Note Yields chart, wrap text around. Edgar
description: Line graph showing 30-year AAA GO, 5-year AAA GO, and 1-year MIG1
note from 2/98 through 2/99; Source: T. Rowe Price Associates]
Yields reversed in December following signs of stronger-than-expected U.S.
growth and a sense that the liquidity crunch had abated. Early this year, news
of robust fourth quarter GDP growth (6.1%) helped fuel the rise in rates. As a
result, 30-year Treasury yields ended the period nearly a full percentage point
above their October lows. Municipal yields also rose but, again, not as much as
Treasury yields. Interest rates on most municipal securities ended the period
virtually unchanged except among short-term issues, as shown in the chart on
page 1.
The yield curve steepened as short-term and money market securities
followed the Fed's lead lower while heavy supply helped exert upward pressure on
long-term rates. For the calendar year, new bond issuance reached $284 billion
nationwide, up 29% from 1997, a level only surpassed in 1993.
Florida's strong expansion in recent years has been fueled by unprecedented
growth in population, which has increased 16% since 1990. While the rate
moderated somewhat in 1998, the state still ranks fourth nationally in
population growth. Broward County added the most residents in that time period,
while Sumter County experienced the highest rate of growth (51.7%). Florida's
population is projected to swell by 1.2 million between 2000 and 2005. Along
with this rapid population growth, Florida has also broadened and diversified
its economic base, as it continues its transformation to a service and trade
economy. In addition to its traditional strengths in processed agricultural
products, Florida has attracted an impressive array of other industries,
especially in the area of electronics.
==================================================
<PAGE>
RISK-ADJUSTED PERFORMANCE
- --------------------------------------------------
The Florida Intermediate Tax-Free Fund
received a high Morningstar Ratingtrademark for
its risk-adjusted performance, a measure of the
volatility experienced in earning a particular
return. As of February 28, 1999, the fund was
rated four stars overall. The fund was rated among
1,576 and 1,109 municipal income funds for the
three- and five-year periods ended February 28,
1999, respectively.* The top 10% of the funds in
each investment category receive five stars, the
next 22.5% receive four stars, and the next 35%
receive three stars. Of course, past performance
does not guarantee future results.
* Morningstar proprietary ratings reflect
historical risk-adjusted performance as of 2/28/99
and may change monthly. Ratings are calculated
from the fund's 3- and 5-year average annual
returns in excess of 90-day Treasury bill returns
with appropriate fee adjustments and a risk factor
that reflects fund performance below 90-day
Treasury bill returns. The Florida Intermediate
Tax-Free Fund was rated 4 stars for the 5-year
period and 3 stars for the 3-year period.
- --------------------------------------------------
Nonagricultural employment growth was 4% in January, driven by g ains in
construction and services. This approximates the record growth rates of 1993-94.
State projections indicate an increase in nonagricultural employment of about
3.4% for this year as a whole. Tourism, one of the main drivers of the state's
economy, should continue growing in 1999. The state has also seen an influx of
wealthier residents and a growth in wealth levels among its own citizens,
although per capita income of $25,000 remains just below the national average.
Florida has managed its financial operations responsibly, maintaining high
credit ratings from each of the rating agencies. Fiscal year 1998 revenue growth
was almost 9% while expenditures increased at a slightly lower rate of 6%,
enabling reserves to grow significantly. These positive trends have continued
into the current year, as general revenue collections for January exceeded
estimates.
================================================================================
PERFORMANCE AND STRATEGY REVIEW
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 2/28/99 6 Months 12 Months
--------------------- -------- ---------
Florida Intermediate
Tax-Free Fund* 2.28% 5.37%
Lipper Florida Intermediate
Municipal Debt Funds Average 2.00 4.89
* Previously the Florida Insured
Intermediate Tax-Free Fund.
================================================================================
Your fund delivered good returns of 2.28% and 5.37% for the 6- and 12-month
periods, respectively, ended February 28. Both results exceeded those of our
peer group average. Returns on intermediate-term municipal bonds came mostly
from their coupon income, with a modest contribution from price appreciation.
The six-month results included income of 23 cents per share and appreciation of
2 cents per share. For the past 12 months, income was 46 cents per share and the
share price appreciated 11 cents, to $10.86. Dividends per share were unchanged
from our last report.
We kept duration slightly long because of the absence of any inflationary
pressures, the global demand for U.S. Treasury bonds as a result of the global
financial crisis, and the exceptional value offered in the municipal market due
to imbalances in supply and demand. (Duration is a measure of a bond fund's
sensitivity to interest rates. For example, a fund with a duration of six years
would fall or rise about 6% in price in response to a one-percentage-point rise
or fall in interest rates.) Our strategy was rewarded in the summer and fall
when interest rates declined sharply.
We maintained a long duration over the final three months of the period
even as Treasury yields rose from their October lows. Municipal yields had not
fallen commensurately with Treasury yields, and represented exceptional value.
Further, we anticipated a seasonal increase in demand for municipals in January
due to coupon reinvestment by mutual funds. Recently, relative yields have moved
closer to historical averages as municipals outperformed Treasuries. As a
result, we shortened duration modestly though we remain slightly long. We expect
to use any rise in yields to extend duration again because we believe the
low-inflation trend will remain intact.
In addition to our duration strategy, fund results were aided by our
lower-than-average expense ratio. The fund's ratio of 0.60% is nearly 30 basis
points (a basis point is one one-hundredth of a percentage point) lower than the
average of 15 Florida intermediate tax-exempt funds as tracked by Lipper, Inc.
The Lipper average expense ratio was 0.90% as of December 31, 1998.
<PAGE>
At the annual meeting in October, shareholders approved the trustees'
recommendation to remove the requirement that the fund invest primarily in
insured bonds. (The word "insured" has also been removed from the fund's name.)
The fund will continue to invest 95% of its assets in securities rated AAA or AA
at the time of purchase by at least one national rating organization such as
Standard & Poor's or Moody's Investor Service, Inc. Up to 5% may be rated A at
the time of purchase. We believe this will allow more prudent diversification
among a variety of high-quality issuers. Our strategy is to reduce exposure to
insured bonds over time in a manner that does not reduce income or result in
large realized capital gains. Over the last six months, new cash flow has gone
to both insured and uninsured bonds; however, the uninsured exposure has
increased roughly five percentage points since our last letter. The fund's
weighted average credit quality remained unchanged at a very high AA.
================================================================================
OUTLOOK
- --------------------------------------------------------------------------------
As noted above, Florida enjoys a robust economy, state coffers are full,
and the government has displayed impressive fiscal discipline. Continued success
will depend on future economic growth and on the efforts of newly elected
Governor Jeb Bush, whose $46.8 billion budget includes a 6% education funding
increase and $1.24 billion tax cut, the largest in state history.
Looking nationally, we believe the forces supporting low inflation will
remain intact for the foreseeable future. Despite the economy's strong momentum,
we expect a decline in growth toward a more modest and sustainable level later
this year. The Federal Reserve appears to have adopted a neutral monetary bias
in the belief that the economy contains an equal measure of upside and downside
risks.
So far this year, decreasing municipal issuance, strong demand, and
better-than-expected economic growth have helped tax-exempt bonds outperform
Treasuries, where yields have continued to rise from last year's lows. As a
result, municipal yields are no longer near parity with taxable yields. Overall,
however, the taxable-equivalent yields available on tax-free bonds are still
very appealing, and we are optimistic about the outlook for municipal bonds
through the rest of the year.
Respectfully submitted,
/s/
Charles B. Hill
Chairman of the Investment Advisory Committee
March 19, 1999
<PAGE>
================================================================================
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
Portfolio Highlights
Key statistics
8/31/98 2/28/99
------- -------
Price Per Share $10.84 $10.86
Dividends Per Share
For 6 months 0.23 0.23
For 12 months 0.46 0.46
Dividend Yield *
For 6 months 4.32% 4.23%
For 12 months 4.40 4.29
30-Day Standardized Yield 3.74 3.42
Weighted Average Maturity (years) 8.2 8.1
Weighted Average Effective Duration (years) 5.7 5.5
Weighted Average Quality ** AA AA
- --------------------------------------------------------------------------------
* Dividends earned and reinvested for the periods indicated are
annualized and divided by the fund's net asset value at the end
of the period.
** Based on T. Rowe Price research.
================================================================================
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
Portfolio Highlights
SECTOR Diversification
Percent of Percent of
Net Assets Net Assets
8/31/98 2/28/99
------- -------
Dedicated Tax Revenue 19% 16%
General Obligation N Local 16 14
Water and Sewer Revenue 11 13
Hospital Revenue 9 11
Air and Sea Transportation Revenue 10 9
Electric Revenue 9 8
Nuclear Revenue 2 7
Solid Waste Revenue 5 4
General Obligation N State - 4
Ground Transportation Revenue 4 3
Lease Revenue 4 3
Life Care/Nursing Home Revenue 3 2
Housing Finance Revenue 2 2
Escrowed to Maturity 2 2
Prerefunded Bonds 2 2
Other Assets Less Liabilities 2 -
Total 100% 100%
<PAGE>
================================================================================
T. Rowe Price Florida 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.
[SEC Chart for Florida Intermediate Tax-Free Fund 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 2/28/99 1 Year 3 Years 5 Years Inception Date
- --------------------- ------ ------- ------- --------- ----
Florida Intermediate
Tax-Free Fund 5.37% 5.29% 5.64% 5.92% 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.
================================================================================
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
For a share outstanding throughout each period
Financial Highlights
Year
Ended
2/28/99 2/28/98 2/28/97 2/29/96 2/28/95
------- ------- ------- ------- -------
NET ASSET VALUE
Beginning of period $ 10.75 $ 10.52 $ 10.61 $ 10.14 $ 10.30
- ------------------------------------------------------------------------------
Investment activities
Net investment income 0.46* 0.46* 0.46* 0.47* 0.43*
Net realized and
unrealized gain (loss) 0.11 0.23 (0.07) 0.47 (0.14)
- ------------------------------------------------------------------------------
Total from
investment activities 0.57 0.69 0.39 0.94 0.29
- ------------------------------------------------------------------------------
Distributions
Net investment income (0.46) (0.46) (0.46) (0.47) (0.43)
Net realized gain - - (0.02) - (0.02)
- ------------------------------------------------------------------------------
Total distributions (0.46) (0.46) (0.48) (0.47) (0.45)
- ------------------------------------------------------------------------------
<PAGE>
NET ASSET VALUE
==============================================================================
End of period $ 10.86 $ 10.75 $ 10.52 $ 10.61 $ 10.14
Ratios/Supplemental=Data======================================================
Total return** 5.37%* 6.71%* 3.81%* 9.41%* 3.01%*
- ------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.60%* 0.60%* 0.60%* 0.60%* 0.60%*
- ------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 4.23%* 4.35%* 4.39%* 4.47%* 4.38%*
- ------------------------------------------------------------------------------
Portfolio turnover rate 26.9% 25.0% 75.8% 98.7% 140.5%
- ------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 102,620 $ 90,941 $ 78,783 $ 67,260 $ 51,922
- ------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment of
all distributions
* Excludes expenses in excess of a 0.60% voluntary expense limitation in
effect through 2/28/99.
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
February 28, 1999
Statement of Net Assets
Par Value
In thousands
FLORIDA==93.8%
Brevard County HFA, Holmes Regional Medical Center
5.20%, 10/1/05 (MBIA Insured) $ 2,000 $ 2,144
- ------------------------------------------------------------------------------
Broward County Airport, 5.25%, 10/1/10 (MBIA Insured) * 2,000 2,124
- ------------------------------------------------------------------------------
Canaveral Port Auth., 5.75%, 6/1/16 (FGIC Insured) * 1,000 1,066
- ------------------------------------------------------------------------------
Dade County, GO, Public Improvement
7.40%, 6/1/03 (FSA Insured) 1,100 1,254
- ------------------------------------------------------------------------------
Dade County
Aviation, 5.40%, 10/1/03 (MBIA Insured) * 1,140 1,215
- ------------------------------------------------------------------------------
<PAGE>
Resource Recovery Fac.
6.00%, 10/1/06 (AMBAC Insured) * 2,500 2,793
- ------------------------------------------------------------------------------
Water and Sewer
VRDN (Currently 3.00%) (FGIC Insured) 1,000 1,000
- ------------------------------------------------------------------------------
5.375%, 10/1/16 (FGIC Insured) 1,500 1,570
- ------------------------------------------------------------------------------
5.50%, 8/1/04 (MBIA Insured) 2,000 2,162
- ------------------------------------------------------------------------------
6.00%, 7/15/04 (MBIA Insured) 3,545 3,914
- ------------------------------------------------------------------------------
Duval County School Dist., GO
6.125%, 8/1/04 (AMBAC Insured) 2,000 2,155
- ------------------------------------------------------------------------------
Florida Board of Ed., GO, 6.00%, 6/1/05 3,315 3,693
- ------------------------------------------------------------------------------
Florida Dept. of Corrections, Okeechobee Correctional
5.80%, 3/1/02 (AMBAC Insured) 1,005 1,067
- ------------------------------------------------------------------------------
Florida Division of Bond Fin.
Dept. of Environmental Preservation
5.50%, 7/1/07 (AMBAC Insured) 2,000 2,167
- ------------------------------------------------------------------------------
6.00%, 7/1/05 (MBIA Insured) 500 557
- ------------------------------------------------------------------------------
6.00%, 7/1/06 (MBIA Insured) 4,350 4,884
- ------------------------------------------------------------------------------
Florida Housing Fin. Agency
Multi-Family Housing
5.80%, 2/1/08 1,000 1,076
- ------------------------------------------------------------------------------
5.80%, 8/1/08 1,000 1,079
- ------------------------------------------------------------------------------
Florida Municipal Power Agency
All - Requirements Power Supply
6.25%, 10/1/21 (AMBAC Insured)
(Prerefunded 10/1/02+) 1,700 1,881
- ------------------------------------------------------------------------------
Florida Turnpike Auth., 5.50%, 7/1/05 (AMBAC Insured) 1,000 1,089
- ------------------------------------------------------------------------------
Gainesville, Utilities, 6.40%, 10/1/05 1,500 1,655
- ------------------------------------------------------------------------------
Hillsborough County
Environmentally Sensitive
Lands Acquisition and Protection
6.20%, 7/1/05 (AMBAC Insured) $ 1,485 $ 1,632
- ------------------------------------------------------------------------------
Improvement Program
6.00%, 8/1/04 (FGIC Insured) 1,895 2,094
- ------------------------------------------------------------------------------
<PAGE>
Hillsborough County IDA, PCR, Tampa Electric
VRDN (Currently 3.20%) 200 200
- ------------------------------------------------------------------------------
Hillsborough County Port Dist., Tampa Port Auth.
6.50%, 6/1/04 (FSA Insured) * 2,000 2,233
- ------------------------------------------------------------------------------
Hillsborough County School Dist., GO
7.00%, 8/15/05 (MBIA Insured) 3,700 4,332
- ------------------------------------------------------------------------------
Indian Trace Community Dev. Dist.
Water Management
5.50%, 5/1/06 (MBIA Insured) 1,215 1,324
- ------------------------------------------------------------------------------
5.50%, 5/1/07 (MBIA Insured) 550 599
- ------------------------------------------------------------------------------
Jacksonville, Water and Sewer
6.00%, 10/1/04 (MBIA Insured)
(Escrowed to Maturity) 1,845 2,049
- ------------------------------------------------------------------------------
Jacksonville Electric Auth., St. John River, 5.00%, 10/1/09 2,000 2,069
- ------------------------------------------------------------------------------
Jacksonville HFA
Charity Obligation Group
5.00%, 8/15/11 (MBIA Insured) 750 780
- ------------------------------------------------------------------------------
Genesis Rehabilitation Hosp.
VRDN (Currently 3.20%) 600 600
- ------------------------------------------------------------------------------
Jacksonville PCR, Florida Power and Light
VRDN (Currently 3.15%) 2,300 2,300
- ------------------------------------------------------------------------------
Lakeland Electric and Water, 6.50%, 10/1/04 (FGIC Insured) 3,755 4,248
- ------------------------------------------------------------------------------
Lee County IDA, Bonita Springs Utilities
5.80%, 11/1/11 (MBIA Insured) * 1,325 1,452
- ------------------------------------------------------------------------------
Lee County School Board, COP, 6.30%, 8/1/01 (FSA Insured) 2,000 2,132
- ------------------------------------------------------------------------------
Manatee County, Public Utilities
6.75%, 10/1/05 (MBIA Insured) 2,000 2,322
- ------------------------------------------------------------------------------
Martin County Solid Waste Disposal
Florida Power and Light Project
VRDN (Currently 3.35%) * 250 250
- ------------------------------------------------------------------------------
Miami Dade County, 5.25%, 10/1/15 * 2,045 2,097
- ------------------------------------------------------------------------------
Orange County, Public Service Tax
5.60%, 10/1/07 (FGIC Insured) $ 500 $ 550
- ------------------------------------------------------------------------------
<PAGE>
Orange County HFA, Orlando Regional Healthcare
6.25%, 10/1/18 (MBIA Insured) 1,870 2,173
- ------------------------------------------------------------------------------
Orlando and Orange County
Expressway Auth.
6.50%, 7/1/10 (FGIC Insured) 1,000 1,193
- ------------------------------------------------------------------------------
6.50%, 7/1/11 (FGIC Insured) 1,000 1,196
- ------------------------------------------------------------------------------
Orlando Utilities Commission, 6.00%, 10/1/10 2,500 2,892
- ------------------------------------------------------------------------------
Osceola County HFA
Evangelical Lutheran Good Samaritan Society
5.50%, 5/1/03 (AMBAC Insured) 660 704
- ------------------------------------------------------------------------------
5.50%, 5/1/04 (AMBAC Insured) 700 754
- ------------------------------------------------------------------------------
5.50%, 5/1/05 (AMBAC Insured) 735 797
- ------------------------------------------------------------------------------
Palm Beach County, GO, 6.875%, 12/1/03 325 369
- ------------------------------------------------------------------------------
Palm Beach County Health Fac., Hosp. Improvement
5.00%, 12/1/13 1,200 1,212
- ------------------------------------------------------------------------------
Pasco County, Solid Waste Disposal and Resource Recovery
5.75%, 4/1/05 (AMBAC Insured) * 1,130 1,230
- ------------------------------------------------------------------------------
Pinellas County Water Auth.
5.50%, 10/1/04 (AMBAC Insured) 2,500 2,711
- ------------------------------------------------------------------------------
Reedy Creek Improvement Dist.
6.375%, 6/1/05 (MBIA Insured)
(Prerefunded 6/1/01+) 65 70
- ------------------------------------------------------------------------------
Reedy Creek Improvement Dist., GO
6.375%, 6/1/05 (MBIA Insured) 435 465
- ------------------------------------------------------------------------------
Tampa Health Systems, Catholic Health East
5.25%, 11/15/11 (MBIA Insured) 3,000 3,189
- ------------------------------------------------------------------------------
Tampa Bay Water, 5.125%, 10/1/11 (FGIC Insured) 2,000 2,119
- ------------------------------------------------------------------------------
Venice, Bon Secours Health Systems
5.40%, 8/15/08 (MBIA Insured) 1,290 1,405
- ------------------------------------------------------------------------------
Total Florida (Cost $92,141) 96,287
- ------------------------------------------------------------------------------
<PAGE>
GUAM==2.2%====================================================================
Guam Gov't Infrastructure, 5.50%, 11/1/05 (AMBAC Insured) 2,000 2,189
- ------------------------------------------------------------------------------
Total Guam (Cost $2,122) 2,189
- ------------------------------------------------------------------------------
PUERTO=RICO==4.1%=============================================================
Puerto Rico Commonwealth Infrastructure Fin. Auth.
5.00%, 7/1/12 (AMBAC Insured) $ 2,000 $ 2,093
- ------------------------------------------------------------------------------
Puerto Rico Electric Power Auth.
5.25%, 7/1/14 (MBIA Insured) 2,000 2,110
- ------------------------------------------------------------------------------
Total Puerto Rico (Cost $4,033) 4,203
- ------------------------------------------------------------------------------
=Total=Investments=in=Securities
100.1% of Net Assets (Cost $98,296) $ 102,679
Other Assets Less Liabilities (59)
NET ASSETS $ 102,620
Net Assets Consist of:
Accumulated net realized gain/loss - net of distributions $ 97
Net unrealized gain (loss) 4,383
Paid-in-capital applicable to 9,447,218
no par value shares of beneficial interest outstanding;
unlimited number of shares authorized 98,140
NET ASSETS $ 102,620
NET ASSET VALUE PER SHARE $ 10.86
* 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 Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
Statement of Operations
In thousands Year
Ended
2/28/99
==Investment=Income================================================
Interest income $ 4,462
Expenses
Investment management 343
Custody and accounting 96
Shareholder servicing 66
Prospectus and shareholder reports 18
Legal and audit 12
Registration 8
Trustees 6
Proxy and annual meeting 3
Miscellaneous 3
- -------------------------------------------------------------------
Total expenses 555
- -------------------------------------------------------------------
Net investment income 3,907
- -------------------------------------------------------------------
==Realized=and=Unrealized=Gain=(Loss)==============================
Net realized gain (loss)
Securities 500
Futures (8)
Net realized gain (loss) 492
Change in net unrealized gain or loss on securities 468
Net realized and unrealized gain (loss) 960
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 4,867
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
In thousands
Year
Ended
2/28/99 2/28/98
==Increase=(Decrease)=in=Net=Assets============================================
Operations
Net investment income $ 3,907 $ 3,580
Net realized gain (loss) 492 6
Change in net unrealized gain or loss 468 1,792
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 4,867 5,378
- -------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (3,907) (3,580)
- -------------------------------------------------------------------------------
Capital share transactions *
Shares sold 39,525 38,694
Distributions reinvested 2,822 2,480
Shares redeemed (31,628) (30,814)
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 10,719 10,360
==Net=Assets===================================================================
Increase (decrease) during period 11,679 12,158
Beginning of period 90,941 78,783
End of period $ 102,620 $ 90,941
*Share information
Shares sold 3,646 3,637
Distributions reinvested 261 234
Shares redeemed (2,923) (2,898)
- -------------------------------------------------------------------------------
Increase (decrease) in shares outstanding 984 973
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
February 28, 1999
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 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. Credits earned on daily, uninvested cash balances at the
custodian are used to reduce the fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $34,226,000 and $24,331,000, respectively, for the year
ended February 28, 1999.
<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. Capital loss carryforwards utilized in fiscal 1999 amounted to $306,000.
At February 28, 1999, the cost of investments for federal income tax
purposes was substantially the same as financial reporting and totaled
$98,296,000. Net unrealized gain aggregated $4,383,000 at period-end, of which
$4,408,000 related to appreciated investments and $25,000 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 $29,000 was payable at February 28, 1999. 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, 1999, 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 was
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,
$1,000 of management fees were not accrued by the fund for the year ended
February 28, 1999. Additionally, $5,000 of unaccrued management fees related to
a prior period are subject to reimbursement through February 28, 2001.
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 $121,000 for the year
ended February 28, 1999, of which $10,000 was payable at period-end.
<PAGE>
================================================================================
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
Report of Independent Accountants
To the Board of Trustees of T. Rowe Price State Tax-Free Income Trust
and Shareholders of Florida Intermediate Tax-Free Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Florida Intermediate Tax-Free Fund (one of the portfolios comprising T. Rowe
Price State Tax-Free Income Trust, hereafter referred to as "the Fund") at
February 28, 1999, and the results of its operations, the changes in its net
assets and the financial highlights for each of the fiscal periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (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, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
March 17, 1999
================================================================================
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
Tax Information (Unaudited) for the Tax Year Ended 2/28/99
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 $3,863,000 which qualified as
exempt-interest dividends.
================================================================================
<PAGE>
T. Rowe Price Florida Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
Annual Meeting Results
The Florida Intermediate Tax-Free Fund held an annual meeting on October
15, 1998, to ratify the Board of Trustees' selection of PricewaterhouseCoopers
LLP as the fund's independent accountants and to amend the fund's objective.
The results of voting were as follows (by number of shares):
================================================================================
For PricewaterhouseCoopers LLP as independent accountants for the Florida
Intermediate Tax-Free Fund:
In favor: 4,899,674.126
Against: 43,659.251
Abstained: 140,152.181
To amend the investment objective to remove the requirement that the fund be
invested primarily (at least 65% of total assets) in insured bonds:
In favor: 3,935,800.996
Against: 858,951.390
Abstained: 152,641.172
Broker Non-Votes: 136,092.000
================================================================================
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
<PAGE>
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 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 Small-Cap Value 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
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor. F91-050 2/28/99
