Semiannual Report
Florida
Intermediate
Tax-Free Fund
August 31, 2000
T. Rowe Price
REPORT HIGHLIGHTS
Florida Intermediate Tax-Free Fund
o Favorable supply-and-demand conditions helped intermediate-term municipal
bonds post solid returns for the six months ended August 31.
o Your fund's six-month performance slightly lagged the peer group average,
but its 12-month return surpassed the benchmark.
o We purchased some longer-term bonds early in the period, then took profits
and bought shorter-term securities in July and August as the bond market
rallied.
o Municipal bonds were undervalued at the start of the year but made up much
lost ground; the current economic environment favors a stable to improving
market barring a change in the inflation outlook.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
Fellow Shareholders
Municipal bonds turned in a strong performance for the six months ended August
31, largely due to favorable supply-and-demand factors in the market. Investors
were encouraged by aggressive action taken by the Federal Reserve in its effort
to curb above-average economic growth and stem inflation. As a result, your fund
provided good returns both in absolute terms and relative to its peers.
MARKET ENVIRONMENT
Municipal Bond Note Yields
--------------------------------------------------------------------------------
30-Year AAA 5-Year AAA 1-Year Moody's
General General Investment
Obligation Obligation Grade 1 Note
08/31/99 5.60 4.40 3.75
5.70 4.43 3.75
5.89 4.58 3.95
11/30 5.87 4.53 3.95
5.93 4.68 4.10
6.03 4.90 4.10
2/29 5.90 4.94 4.20
5.69 4.82 4.30
5.80 4.96 4.35
5/31 5.91 5.04 4.70
5.72 4.74 4.35
5.60 4.58 4.30
08/31/00 5.50 4.43 4.30
Fixed-income markets in 2000 have been largely influenced by the Federal
Reserve's tightening program, heightened volatility in the equity market,
and the government's buyback of U.S. Treasury bonds. Fed activity, which
includes federal funds rate increases totaling 75 basis points during the
past six months, finally seems to be exerting some weight on the resilient
U.S. economy. (One hundred basis points equal one percent.) The Fed's
expressed determination to slow economic growth and engineer a soft landing
has injected a note of sobriety into equity markets.
Long-term Treasury bonds, on the other hand, have returned about 15% so far
this year due to a scarcity premium for the bonds since the government
announced its buyback program, which led to investor fears of a dwindling
supply of long-term Treasuries. The Treasury yield curve has remained
inverted since January, with yields on short-term Treasuries higher than
long-term yields as Fed actions have put upward pressure on short-term
yields while long-term yields have come down.
Municipal bond yields have also fallen, aided by outsized demand for
tax-exempt securities. The supply of new issues, down 20% through August
versus the same period last year, has been capped by higher borrowing costs
than last year and lower borrowing needs of state and local governments.
Demand, particularly from buyers of individual bonds, has been quite strong
as attractive taxable-equivalent yields have enticed investors seeking to
reallocate their portfolios. High-yield bonds, however, have lagged the
general market as the yield differential between many lower- and
higher-quality bonds widened. This sector continues to feel pressure from
profitability problems experienced by health care providers and various
corporate issuers. The prospect of slower economic growth has also weighed
on the high-yield market.
Florida's economy appears to have avoided the braking effects of tighter
Fed monetary policy. In fact, the state has one of the fastest rates of
employment growth in the U.S. Much of the job growth continues to be in the
service sector, with construction and transportation close behind. Tourism
is still a crucial driver in the services sector, and summer bookings in
south Florida portend a record season.
Although bond issuance has decreased this year, state officials have
expressed concerns over the amount of outstanding debt, which now exceeds
$13 billion. Revenue growth has slowed from the previous year, but
collections are still slightly above projections. Much of the state's tax
revenue growth came from the sales tax.
One of the most noteworthy developments in Florida is the legislature's
decision to decrease the Intangible Personal Property Tax from two dollars
per thousand in 1999 to one dollar per thousand next year. In addition,
there are expectations that the current administration will repeal the tax
by the 2002 tax year. If it is eliminated, demand for Florida bonds could
decline, and they may underperform relative to other debt securities.
PERFORMANCE AND STRATEGY REVIEW
Your fund posted a solid 4.87% return for the six-month period ended August
31, 2000, but slightly trailed the 4.90% gain for the Lipper Florida
Intermediate Municipal Debt Funds Average. Fund performance was driven
almost equally by income of $0.23 and a $0.26 per share increase in the
fund's net asset value (NAV). For the 12-month period ended August 31, the
fund returned 5.27% versus 4.88% for the benchmark, as can be seen in the
table at left. Results were derived primarily from income of $0.46, but a
$0.07 per share increase in the NAV helped the fund outpace the Lipper
average.
Performance Comparison
--------------------------------------------------------------------------------
Periods Ended 8/31/00 6 Months 12 Months
--------------------------------------------------------------------------------
Florida Intermediate
Tax-Free Fund 4.87% 5.27%
Lipper Florida Intermediate
Municipal Debt Funds Average 4.90 4.88
Although municipal bond yields have declined in recent months, investors in
high tax brackets will still find them attractive compared with after-tax
yields on taxable fixed-income securities. The fund's 12-month dividend
yield at the end of August was 4.48%; its taxable-equivalent yield for
investors in the 36% federal tax bracket was 7.00%.
Our strategy during the spring was to keep the portfolio's duration a
measure of interest rate sensitivity-close to 5.5 years, not far from where
it was at the end of February. (A fund with a duration of five years would
fall or rise about 5% in price in response to a one-percentage-point rise
or fall in interest rates.) At the beginning of the period, we sold some
two-year bonds in favor of issues maturing in seven to 12 years. We also
increased exposure to 15-year bonds, which had previously been hurt by
tighter monetary policy and, in our opinion, had more upside potential than
downside risk if the Fed continued to raise short-term rates.
The bond market improved dramatically during the summer as the economy
showed signs of slowing, and we began to believe that the Fed was less
likely to raise rates. In July and early August, we reduced the portfolio's
duration by locking in gains from some of our longer-term holdings and
shifting the assets into shorter-term securities. Unfortunately, our
repositioning was premature, and the fund did not fully benefit from the
August bond rally, which hurt its relative performance for the most recent
six-month period.
One of our objectives during the period was to raise the fund's dividend
yield by doing tax swaps, which involve selling bonds at a loss and buying
similar bonds to replace them. This strategy has two benefits: the
realization of losses and increased income distribution. By realizing
losses, we can offset future gains and minimize capital gain distributions.
Distributed income is based on the yield of a bond at the time of purchase.
By swapping a bond purchased in a lower-yielding environment and replacing
it with a bond reflecting higher yields, we can increase the amount of
income for shareholders.
The portfolio's overall credit quality remained high in the last six
months, and changes to our sector diversification were minimal. We trimmed
our exposure to hospitals, which have been under significant pressure due
to cuts in Medicare reimbursements for services, and increased holdings of
state-issued general obligations.
OUTLOOK
While higher oil prices have not yet caused significant deterioration in
the inflation outlook, they are acting like a tax on consumer activity.
Slower consumer demand growth and the resultant need of manufacturers to
reduce the pace of inventory accumulation will continue to restrain
production and hiring. Energy price pressures may persist, but other costs
should continue to ease as production growth moderates. As a result, it
appears increasingly likely that the Fed's tightening cycle may have ended
for the foreseeable future.
We began the year believing that the municipal market was substantially
undervalued after a particularly weak period in late 1999. Municipal bonds
have recovered much ground in 2000, and we expect the current mix of low
supply and strong demand to continue. The economic backdrop favors stable
to improving municipal bond prices barring a change in the outlook for
inflation. Florida's economy and credit ratings remain strong.
Respectfully submitted,
Charles B. Hill
Chairman of the Investment Advisory Committee
September 19, 2000
T. Rowe Price Florida Intermediate Tax-Free Fund
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Portfolio Highlights
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KEY STATISTICS
2/29/00 8/31/00
Price Per Share $ 10.24 $ 10.50
Dividends Per Share
For 6 months 0.23 0.23
For 12 months 0.46 0.46
Dividend Yield *
For 6 months 4.53% 4.44%
For 12 months 4.53 4.48
30-Day Standardized Yield 4.55 4.15
Weighted Average Maturity (years) 7.4 7.0
Weighted Average Effective Duration (years) 5.6 5.0
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
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Portfolio Highlights
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SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
2/29/00 8/31/00
--------------------------------------------------------------------------------
Dedicated Tax Revenue 26% 26%
General Obligation - Local 17 17
Electric Revenue 9 10
Hospital Revenue 9 8
Air and Sea Transportation Revenue 6 6
Ground Transportation Revenue 6 6
Water and Sewer Revenue 6 6
Solid Waste Revenue 6 5
General Obligation - State 1 4
Life Care/Nursing Home Revenue 3 3
Housing Finance Revenue 2 2
Prerefunded Bonds 4 2
Nuclear Revenue 3 2
All Other 1 2
Other Assets Less Liabilities 1 1
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Total 100% 100%
T. Rowe Price Florida Intermediate Tax-Free Fund
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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 benchmarks, which may include
a broad-based market index and a peer group average or index. Market
indexes do not include expenses, which are deducted from fund returns as
well as mutual fund averages and indexes.
FLORIDA INTERMEDIATE TAX-FREE FUND
---------------------------------------------------------------------------
As of 8/31/00
Lehman Lipper Florida
Florida Brothers Intermediate
Intermediate 7-Year GO Municipal
Tax-Free Municipal Debt Funds
Fund Bond Index Average
3/31/93 10.000 10.000 10.000
8/31/93 10.482 10.491 10.551
8/31/94 10.599 10.578 10.735
8/31/95 11.547 11.353 11.594
8/31/96 12.020 11.734 12.030
8/31/97 12.971 12.492 12.824
8/31/98 13.980 13.319 13.741
8/31/99 14.184 13.342 13.815
8/31/00 15.058 13.978 14.544
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 8/31/00 1 Year 3 Years 5 Years Inception Date
--------------------------------------------------------------------------------
Florida Intermediate
Tax-Free Fund 5.27% 4.28% 4.64% 5.18% 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
--------------------------------------------------------------------------------
Unaudited
Financial Highlights for a share outstanding throughout each period
6 Months Year
Ended Ended
8/31/00 2/29/00 2/28/99 2/28/98 2/28/97 2/29/96
NET ASSET VALUE
Beginning of period $ 10.24 $ 10.86 $ 10.75 $ 10.52 $ 10.61 $ 10.14
Investment activities
Net investment
income (loss) 0.23 0.46 0.46* 0.46* 0.46* 0.47*
Net realized and
unrealized gain (loss) 0.26 (0.60) 0.11 0.23 (0.07) 0.47
Total from
investment
activities 0.49 (0.14) 0.57 0.69 0.39 0.94
Distributions
Net investment
income (0.23) (0.46) (0.46) (0.46) (0.46) (0.47)
Net realized gain -- (0.02) -- -- (0.02) --
Total distributions (0.23) (0.48) (0.46) (0.46) (0.48) (0.47)
NET ASSET VALUE
End of period $ 10.50 $ 10.24 $ 10.86 $ 10.75 $ 10.52 $ 10.61
----------------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) 4.87% (1.32)% 5.37%* 6.71%* 3.81%* 9.41%*
Ratio of total expenses
to average net assets 0.60%! 0.60% 0.60%* 0.60%* 0.60%* 0.60%*
Ratio of net investment
income (loss) to average
net assets 4.48%! 4.35% 4.23%* 4.35%* 4.39%* 4.47%*
Portfolio
turnover rate 16.0%! 30.9% 26.9% 25.0% 75.8% 98.7%
Net assets,
end of period
(in thousands) $ 84,294 $ 84,116 $102,620 $ 90,941 $ 78,783 $ 67,260
(diamond) 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.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Florida Intermediate Tax-Free Fund
--------------------------------------------------------------------------------
Unaudited August 31, 2000
Statement of Net Assets Par Value
--------------------------------------------------------------------------------
In thousands
FLORIDA 93.8%
Alachua County HFA, Shands Teaching Hosp.
VRDN (Currently 4.25%) (MBIA Insured) $ 2,000 $ 2,000
Broward County Airport,
5.25%, 10/1/10 (MBIA Insured) *2,000 2,046
Dade County Aviation
5.40%, 10/1/03 (MBIA Insured) * 1,140 1,166
6.20%, 10/1/24 (MBIA Insured) * 50 52
Resource Recovery Fac.
6.00% 10/1/06 (AMBAC Insured) * 2,500 2,665
Dade County School Dist., GO
5.50%, 8/1/04 (MBIA Insured) 2,000 2,077
6.00%, 7/15/04 (MBIA Insured) 3,545 3,737
Duval County School Dist., GO
6.125%, 8/1/04 (AMBAC Insured) 2,000 2,090
Florida Board of Ed., GO Lottery
5.50%, 7/1/12 (FGIC Insured) 2,500 2,629
5.50%, 7/1/16 (FGIC Insured) 1,000 1,022
Florida Dept. of Corrections,
Okeechobee Correctional
5.80%, 3/1/02 (AMBAC Insured) 1,005 1,026
Florida Dept. of Natural Resources
Dept. of Environmental Protection
6.00%, 7/1/08 (AMBAC Insured) 2,845 3,102
Dept. of Environmental Preservation
5.50%, 7/1/07 (FSA Insured) 1,000 1,055
5.50%, 7/1/09 (FSA Insured) 3,000 3,178
Florida Division of Bond Fin.
Dept. of Environmental Preservation
5.50%, 7/1/07 (AMBAC Insured) 2,000 2,095
6.00%, 7/1/05 (MBIA Insured) 500 533
6.00%, 7/1/06 (MBIA Insured) 4,350 4,674
Florida DOT, Turnpike Auth.,
5.25%, 7/1/11 (MBIA Insured) 1,9502 2,012
Florida Housing Fin. Agency
Multi-Family Housing
5.80%, 2/1/08 1,000 1,035
5.80%, 8/1/08 1,000 1,036
Florida Turnpike Auth.,
5.50%, 7/1/05 (AMBAC Insured) $ 1,000 $ 1,045
Gainesville Utilities System,
6.40%, 10/1/05 1,500 1,584
Hillsborough County
Environmentally Sensitive Lands Acquisition
6.20%, 7/1/05 (AMBAC Insured)
(Prerefunded 7/1/02!) 1,485 1,561
Improvement Program
6.00%, 8/1/04 (FGIC Insured) 1,895 1,999
Hillsborough County IDA, PCR, Tampa Electric
VRDN (Currently 4.25%) 300 300
Hillsborough County Port Dist., Tampa Port Auth.
6.50%, 6/1/04 (FSA Insured) * 2,000 2,124
Hillsborough County School Dist., GO
7.00%, 8/15/05 (MBIA Insured) 3,700 4,105
Indian Trace Community Dev. Dist. Water Management
5.50%, 5/1/06 (MBIA Insured) 1,215 1,273
5.50%, 5/1/07 (MBIA Insured) 550 578
Jacksonville HFA
Charity Obligation Group
5.00%, 8/15/11 (MBIA Insured) 750 752
Genesis Rehabilitation Hosp.
VRDN (Currently 4.30%) 1,300 1,300
Kissimmee Water and Sewer Systems
5.50%, 10/1/11 (FGIC Insured) 1,500 1,586
Lakeland Electric and Water
6.55%, 10/1/04 (FSA Insured) 2,755 2,967
Refunding Energy Systems,
6.55%, 10/1/07 (FSA Insured) 1,0951 1,222
Lee County IDA, Bonita Springs Utilities
5.80%, 11/1/11 (MBIA Insured) * 1,325 1,390
Manatee County, Public Utilities,
6.75%, 10/1/05 (MBIA Insured) 2,000 2,202
Orange County, Public Service Tax,
5.60%, 10/1/07 (FGIC Insured) 500 531
Orlando and Orange County Expressway
6.50%, 7/1/10 (FGIC Insured) 1,000 1,140
6.50%, 7/1/11 (FGIC Insured) 1,000 1,142
Osceola County HFA
Evangelical Lutheran Good Samaritan Society
5.50%, 5/1/03 (AMBAC Insured) $ 660 $ 676
5.50%, 5/1/04 (AMBAC Insured) 700 722
5.50%, 5/1/05 (AMBAC Insured) 735 762
Palm Beach County, GO, 6.875%, 12/1/03 325 349
Palm Beach County, 5.75%, 6/1/13 (FGIC Insured) 3,000 3,213
Pasco County, Solid Waste
Disposal and Resource Recovery
5.75%, 4/1/05 (AMBAC Insured) * 1,130 1,179
Reedy Creek Improvement Dist.
5.125%, 10/1/14 (MBIA Insured) 1,500 1,502
6.375%, 6/1/05 (MBIA Insured)
(Prerefunded 6/1/01!) 65 66
Reedy Creek Improvement Dist., GO
6.375%, 6/1/05 (MBIA Insured) 435 446
Venice, Bon Secours Health Systems
5.40%, 8/15/08 (MBIA Insured) 1,290 1,345
West Orange Healthcare Dist., 5.50%, 2/1/10 750 739
Total Florida (Cost $77,026) 79,030
PUERTO RICO 5.3%
Puerto Rico Ind. Tourist, Ed.,
Medical & Environmental Fac.
Hospital de la Concepcion, 6.375%, 11/15/15 750 823
Puerto Rico Electric Power Auth.
5.25%, 7/1/14 (MBIA Insured) 2,000 2,057
Puerto Rico Municipal Fin. Agency, GO
5.875%, 8/1/14 (FSA Insured) 1,500 1,629
Total Puerto Rico (Cost $4,377) 4,509
Total Investments in Securities
99.1% of Net Assets (Cost $81,403) $ 83,539
Other Assets Less Liabilities 755
NET ASSETS $ 84,294
----------
Net Assets Consist of:
Accumulated net realized gain/loss
- net of distributions $ (1,307)
Net unrealized gain (loss) 2,136
Paid-in-capital applicable to 8,031,363 no
par value shares of beneficial interest
outstanding; unlimited number of shares
authorized 83,465
NET ASSETS $ 84,294
----------
NET ASSET VALUE PER SHARE $ 10.50
----------
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
DOT Department of Transportation
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
T. Rowe Price Florida Intermediate Tax-Free Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Operations
--------------------------------------------------------------------------------
In thousands
6 Months
Ended
8/31/00
Investment Income (Loss)
Interest income $ 2,121
Expenses
Investment management 153
Custody and accounting 44
Shareholder servicing 31
Prospectus and shareholder reports 9
Legal and audit 7
Registration 3
Trustees 3
Miscellaneous 2
Total expenses 252
Expenses paid indirectly (1)
Net expenses 251
Net investment income (loss) 1,870
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (203)
Futures (17)
Net realized gain (loss) (220)
Change in net unrealized gain or loss on securities 2,271
Net realized and unrealized gain (loss) 2,051
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 3,921
----------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Florida Intermediate Tax-Free Fund
--------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
8/31/00 2/29/00
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 1,870 $ 4,069
Net realized gain (loss) (220) (1,021)
Change in net unrealized gain or loss 2,271 (4,518)
Increase (decrease) in net
assets from operations 3,921 (1,470)
Distributions to shareholders
Net investment income (1,870) (4,069)
Net realized gain -- (189)
Decrease in net assets from distributions (1,870) (4,258)
Capital share transactions *
Shares sold 4,122 30,649
Distributions reinvested 1,263 3,020
Shares redeemed (7,258) (46,445)
Increase (decrease) in net assets
from capital share transactions (1,873) (12,776)
Net Assets
Increase (decrease) during period 178 (18,504)
Beginning of period 84,116 102,620
End of period $ 84,294 $ 84,116
-----------------------
*Share information
Shares sold 399 2,948
Distributions reinvested 122 289
Shares redeemed (705) (4,469)
Increase (decrease) in shares outstanding (184) (1,232)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Florida Intermediate Tax-Free Fund
--------------------------------------------------------------------------------
Unaudited August 31, 2000
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 fund seeks a high level of current income exempt from
federal income taxes consistent with moderate price fluctuation by
investing primarily in high-quality Florida municipal bonds.
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. Expenses paid indirectly reflect
credits earned on daily uninvested cash balances at the custodian and 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 $5,451,000 and $9,619,000 respectively, for the six
months ended August 31, 2000.
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. As of February 29, 2000, the fund had capital loss
carryforwards for federal income tax purposes of $871,000 all of which
expires in 2008. The fund intends to retain gains realized in future
periods that may be offset by available capital loss carryforwards.
At August 31, 2000, the cost of investments for federal income tax purposes
was substantially the same as financial reporting and totaled $81,403,000.
Net unrealized gain aggregated $2,136,000 at period-end, of which
$2,149,000 related to appreciated investments and $13,000 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 $26,000 was payable at August 31, 2000. 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
T. Rowe Price International, Inc. (the group). The group fee rate ranges
from 0.48% for the first $1 billion of assets to 0.295% for assets in
excess of $120 billion. At August 31, 2000, and for the six months 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.
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
$57,000 for the six months ended August 31, 2000, of which $11,000 was
payable at period-end.
T. Rowe Price Florida Intermediate Tax-Free Fund
--------------------------------------------------------------------------------
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
For the hearing impaired, call:
1-800-367-0763
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
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
appropriate to the fund or funds covered
in this report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site.
Baltimore Area
Downtown - new address
105 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Investment Services, Inc., Distributor. F91-051 8/31/00
