NOTES TO FINANCIAL STATEMENTS
LEGG MASON TAX-FREE INCOME FUND
MARYLAND TAX-FREE INCOME TRUST
(Amounts in Thousands)
1. SIGNIFICANT ACCOUNTING POLICIES:
The Legg Mason Tax-Free Income Fund ("Trust"), consisting of the Maryland Tax-Free Income Trust ("Fund"),
the Pennsylvania Tax-Free Income Trust ("Pennsylvania Fund") and the Tax-Free Intermediate-Term Income
Trust ("Intermediate Fund"), is registered under the Investment Company Act of 1940, as amended, as an open-
end management investment company. All series of the Trust are non-diversified. The financial statements of the
Pennsylvania Fund and the Intermediate Fund are included in separate reports to shareholders.
Portfolio securities are valued based upon market quotations. When market quotations are not readily available,
securities are valued based on prices received from recognized broker-dealers in the same or similar securities.
The amortized cost method of valuation, which approximates market, is used for debt obligations with 60 days or
less remaining to maturity.
Dividends and Distributions to Shareholders
Dividends are declared daily and paid monthly. Net capital gain distributions are declared and paid after the end
of the tax year in which the gain is realized. Dividends payable are recorded on the dividend record date. At
March 31, 1996, dividends payable of $329 were accrued. Net income for dividend purposes consists of
interest accrued and accrued expenses. Bond premium is amortized for financial reporting and tax purposes.
Bond discount, other than original issue, is not amortized. Security Transactions
Security transactions are recorded on the trade date. Realized gains and losses from security transactions are
reported on an identified cost basis. At March 31, 1996, $1,835 was receivable for securities sold but not yet
delivered and $1,831 was payable for securities purchased but not yet received.
All repurchase agreements are fully collateralized by obligations issu