ANNUAL REPORT
______________________________
MARYLAND TAX-FREE
FUNDS
______________________________
FEBRUARY 28, 1995
T. Rowe Price
Invest With Confidence
FOR YIELD, PRICE, LAST TRANSACTION, AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
FOR ASSISTANCE WITH YOUR EXISTING FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. ROWE PRICE
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distri-bution only to shareholders and to
others who have received a copy of the prospectus of the T. Rowe Price New
Jersey Tax-Free Bond Fund.
1
<PAGE>
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FELLOW SHAREHOLDERS
- --------------------------------------------------------------------------------
Vigorous economic growth and Federal Reserve tightening dominated the fixed
income markets in 1994. Real growth of 4% last year exceeded the historical
trend of approximately 2.5%. The target for the fed funds rate climbed with the
economy's strong pace, rising from 3% at the beginning of last year to 6% on
February 1, 1995. The Federal Reserve pursued its monetary policy to slow
economic growth to a level that will contain inflation. Future Fed action will
reflect its goal of preventing excessive inflation without spurring
significantly higher unemployment.
Rising yields characterized the tax-exempt market during most of 1994. The
yield on one-year AAA General Obligation (GO) bonds peaked in December at 4.9%,
up from 3% at the end of February 1994. However, as the market strengthened over
the last several months, the one-year yield retreated to 4.4% by the funds'
fiscal year-end. The five-year AAA GO bond yield ended this quarter at 5%, 70
basis points higher than a year ago but 50 basis points lower than at the end of
November. On the long end, the yield on 30-year AAA GO bonds was almost 6%, up
from 5.6% a year earlier but down from its November peak of 6.8%.
Yields declined after the Fed's sixth tightening of the year in November.
Anticipation of a slowing economy, good news on inflation, and limited supply of
tax-exempt bonds all contributed to the recent drop in yields. Issuance fell to
a four-year low last year and was particularly light in the first two months of
1995.
[municipal bond and note yeild chart showing Maryland Bond Index and 3-yr
MD GO, Feb. 94 to Feb. 95]; Source: T. Rowe Price.
Maryland continues to recover from the last recession. Wage and salary
employment in the state is concentrated in services (32%), trade (24%), and
government (20%). Higher than average reliance on these sectors had been a
source of underlying stability and resilience.
Job growth in the state resumed in 1993, although at a slower pace than the
nation's. Nevertheless, the state unemployment rate of 5.4% is still below the
national average. Further reductions in federal civilian and defense contractor
employment could deter future employment growth, but the recovery has improved
Maryland's financial condition. The state and its localities continue to provide
investors with securities of high credit quality.
MARYLAND SHORT-TERM TAX-FREE BOND FUND
During most of last year, we maintained a relatively short, defensive
portfolio duration, focusing on high-quality securities, and avoiding bonds with
low coupons selling at deep discounts. Duration dipped as low as 1.83 years last
August, but we extended it to 2.23 years at the end of 1994.
We extended duration for several reasons. First, short-term yields seemed
to be overshooting reasonable expectations of future Fed tightening. Second,
although state new issuance was low, existing supply was high, creating buying
opportunities. Third, we anticipated increasing demand for tax-free bonds in
January 1995 with coupon payments due and older bonds maturing.
2
<PAGE>
Current supply of short-term securities remains light and demand should
increase significantly as we approach summer. A high percentage of Maryland's
bond issues have coupon payments and maturities due in July, which will generate
reinvestment activity. With such low supply, prices of short-ter m securities
could be pushed higher, driving down yields. We will therefore be structuring
your portfolio to avoid stiff competition for existing bonds.
Our investment strategy served shareholders well for most of the year,
allowing the fund to outperform its peer group average during the 12 months
ended February 28.
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
Periods Ended 2/28/95
3 Months 12 Months
---------------------
Maryland Short-Term Tax-Free Bond Fund 2.25% 2.64%
Lipper Short Municipal Debt Fund Average 2.38 2.10
================================================================================
MARYLAND TAX-FREE BOND FUND
Your fund started the fiscal year with a relatively short duration of 7.2
years. Over a quarter of our holdings had been prerefunded by issuers taking
advantage of low rates; proceeds from the sale of these bonds are escrowed in
U.S. Treasuries to their earliest call dates, in effect turning them into
high-quality intermediate-term bonds.
In addition, the longer maturities in the portfolio contained a high
percentage of bonds that had begun to trade to their call dates, rather than to
their maturities, when current market rates dropped below the coupons on the
bonds.
[bar graph showing Marland Bond Issues from Jan. 1994 through Feb. 1995];
Source: Securities Data Co.
We managed the portfolio's duration defensively, keeping it under 7.5 years
during the first three fiscal quarters, and also maintained liquidity with cash
levels of around 5%. However, toward year-end we started to change course,
lengthening the portfolio to take advantage of attractive longer-term yields as
well as new bond issuance, which jumped in October.
In January and February, combined new issuance plummeted to a total of $183
million from $1.18 billion in the first two months of 1994. The calendar of new
issues is growing for March and April, allowing us more latitude to implement
our overall strategy. In a difficult environment, your fund outperformed its
peer group for the fiscal year. Fourth quarter performance was strong, although
it lagged the competition.
3
<PAGE>
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 2/28/95
3 Months 12 Months
---------------------
Maryland Tax-Free Bond Fund 8.07% 1.43%
Lipper Maryland Municipal Debt Fund Average 9.14 0.29
================================================================================
OUTLOOK
The U.S. economy should continue to grow, although at a lower rate than in
1994. To date, the Fed's actions appear to be starting to slow the pace of
growth and keeping inflation in check. However, in the near term, we do expect
some acceleration in inflation based on tight labor markets and relatively high
capacity utilization. This may result in somewhat higher interest rates over the
next few months, but most likely lower than the levels reached in the fall.
Moreover, light new issuance combined with continued strong demand for
tax-exempt bonds could result in better overall returns in the municipal bond
market in 1995.
Respectfully submitted,
[signature]
Mary J. Miller
Chairman of the Investment
Advisory Committee
March 17, 1995
4
<PAGE>
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Statistical Highlights
- --------------------------------------------------------------------------------
Maryland Short-Term Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Key Statistics
Periods Ended
Dividend Yield* 2/28/95
- --------------------------- ---------------
3 Months 4.21%
12 Months 3.65
Dividend Per Share
- ---------------------------
3 Months $0.05
12 Months (1) 0.18
Change in Price Per Share
- ---------------------------
3 Months (From $4.98 to $5.04) $0.06
12 Months (From $5.09 to $5.04) -0.05
Weighted Average Quality** 1.9
Weighted Average Maturity 2.6 yrs.
Weighted Average Effective Duration 2.2 yrs.
- --------------------------------------------------------------------------------
* Dividends earned and reinvested for the periods indicated are annualized
and divided9 by the average daily net asset values per share for the same
period.
**On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
(1) Taxability of dividends. 100% and 98.6% of dividends are exempt from
federal and Maryland state income taxes, respectively.
5
<PAGE>
Maryland Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Key Statistics
Periods Ended
Dividend Yield* 2/28/95
- --------------------------- ---------------
3 Months 6.01%
12 Months 5.89
Dividend Per Share
- ---------------------------
3 Months $0.14
12 Months(1) 0.56
Change in Price Per Share
- ---------------------------
3 Months (From $9.38 to $9.99) $0.61
12 Months (From $10.45 to $9.99) -0.46
Weighted Average Quality** 2.4
Weighted Average Maturity 16.7 yrs.
Weighted Average Effective Duration 7.0 yrs.
- --------------------------------------------------------------------------------
* 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.
**On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
(1) Taxability of dividends. 100% and 98.4% of dividends are exempt from
federal and Maryland state income taxes, respectively.
6
<PAGE>
- --------------------------------------------------------------------------------
Statistical Highlights
- --------------------------------------------------------------------------------
Maryland Short-Term Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Sector Diversification
Percent of Net Assets
---------------------
2/28/95
---------------------
Pre-refunded Bonds 35%
General Obligation-Local 20
Dedicated Tax Revenue 10
Solid Waste Revenue 6
Housing Finance Revenue 4
Educational Revenue 4
Hospital Revenue 4
Ground Transportation Revenue 3
Lease Revenue 3
Industrial and Pollution Control Revenue 3
Electric Revenue 2
Pooled Loan Revenue 1
Life Care/Nursing Home Revenue 1
Other Assets Less Liabilities 4
================================================================================
Maryland Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Sector Diversification
Percent of Net Assets
---------------------
2/28/95
---------------------
Pre-refunded Bonds 17%
Hospital Revenue 17
Housing Finance Revenue 15
General Obligation-Local 11
Lease Revenue 5
Water and Sewer Revenue 4
Educational Revenue 4
Solid Waste Revenue 3
Electric Revenue 3
Miscellaneous Revenue 3
Ground Transportation Revenue 3
Industrial and Pollution Control Revenue 3
Life Care/Nursing Home Revenue 3
Nuclear Revenue 2
Air and Sea Transportation Revenue 2
Pooled Loan Revenue 2
Dedicated Tax Revenue 2
Other Assets Less Liabilities 1
================================================================================
7
<PAGE>
[Fiscal-Year Performance Comparison line graphs for Marland Bond Funds
annual report (Feb. 28, 1995); Shows $10,000 investments in Maryland Short-Term
Tax-Free Bond Fund and Lehman 3-year Bond Index from 1992 to 1995; Second graph
shows $10,000 investments in Maryland Tax-Free Bond Fund and Lehman Municipal
Bond Index from 1987 to 1995.]
Fiscal-Year Performance
- --------------------------------------------------------------------------------
MARYLAND SHORT-TERM TAX-FREE BOND FUND
Periods ended February 28, 1995
Since Inception
1 Year (1/29/93)*
------- -------------
2.64% 3.76%
- --------------------------------------------------------------------------------
*Average Annual Compound Total Return
================================================================================
MARYLAND TAX-FREE BOND FUND
Periods ended February 28, 1995
Since Inception
1 Year 5 Years* (3/31/87)*
------- ------- -------------
1.43% 7.64% 6.46%
- --------------------------------------------------------------------------------
*Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
================================================================================
29
<PAGE>
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Investment Record
Per-Share Data
- --------------------------------------------------------------------------------
The following tables show the investment records of one share purchased at
the original offering prices of $10.00 for the T. Rowe Price Maryland Tax-Free
Bond Fund, and $5.00 for the T. Rowe Price Maryland Short-Term Tax-Free Bond
Fund. Over the time periods covered in each table, interest rates have been
volatile. The results shown should not be considered a representation of the
dividend income or capital gain or loss which may be realized from an investment
made in the funds today.
8
<PAGE>
<TABLE>
<CAPTION>
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Capital With With Dividends
Fiscal Net Asset Income Gain Dividends and Capital Total
Year Ended Value Dividends Distributions Reinvested Gains Reinvested Return
- ---------- --------- --------- --------------- ---------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C>
02/28/93(1) $5.07 $0.01 -- $5.08 $5.08 1.67%
1994 5.09 0.15 -- 5.26 5.26 3.49
1995 5.04 0.18 -- 5.40 5.40 2.64
- ------------------------------------------------------------------------------------------------------------------------------------
Total $0.34 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)From inception 1/29/93 to 2/28/93.
</FN>
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
T. Rowe Price Maryland Tax-Free Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Capital With With Dividends
Fiscal Net Asset Income Gain Dividends and Capital Total
Year Ended Value Dividends Distributions(2) Reinvested Gains Reinvested Return
- ---------- --------- --------- --------------- ---------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C>
2/29/88(1) $9.40 $0.51 -- $9.94 $9.94 -0.60%
1989 9.30 0.57 -- 10.46 10.46 5.24
1990 9.45 0.60 $0.03 11.32 11.35 8.54
1991 9.61 0.60 -- 12.27 12.30 8.37
1992 9.82 0.59 0.05 13.32 13.43 9.13
1993 10.50 0.57 0.05 15.07 15.27 13.75
1994 10.45 0.56 0.10 15.82 16.18 5.93
1995 9.99 0.56 0.02 16.01 16.41 1.43
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4.56 $0.25
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<FN>
(1)From inception 3/31/87 to 2/29/88.
(2)Includes short-term capital gains of $0.01 on 12/1/89, $0.02 on 12/11/91, $0.01
on 3/18/92, $0.01 on 12/11/92, and $0.03 on 12/10/93.
</FN>
====================================================================================================================================
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
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Statement of Net Assets
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund / February 28, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands, except capital stock information)
Face Amount Value
----------- -----------
<S> <C> <C>
MARYLAND -- 88.6%
Allegany County, PCR, Westvaco Corp., 5.20%, 1/1/98......................... $ 700 $ 702
Anne Arundel County, GO, Consolidated General Improvement, 6.00%, 8/1/96.... 3,370 3,433
Consolidated Water & Sewer, 6.00%, 3/1/10 (Pre-refunded 3/1/97**)......... 800 835
Baltimore City, GO, 9.00%, 10/15/96......................................... 650 691
(MBIA Insured), 8.90%, 10/15/99........................................... 650 752
Highway User, GO, RAN, 5.00%, 6/9/95...................................... 1,000 1,002
Parking System Fac., (FGIC Insured), 3.45%, 7/1/96........................ 1,710 1,669
Baltimore County, Metropolitan Dist., 6.80%, 4/1/01 (Pre-refunded 4/1/00**). 1,000 1,091
GO, 5.70%, 7/1/96....................................................... 1,900 1,927
Spring Hill Apartments, (GNMA Collateralized),VRDN (Currently 4.00%)...... 400 400
Charles County, Consolidated Public Improvement, GO, 6.20%, 6/1/01.......... 300 313
Maryland, GO, 6.70%, 5/15/01 (Pre-refunded 5/15/98**)....................... 500 531
Maryland CDA, Single Family, 3.40%, 3/30/95................................. 2,000 1,998
4.70%, 6/6/95........................................................... 1,000 1,001
Maryland DOT, 6.40%, 7/15/97................................................ 2,000 2,072
6.40%, 7/15/98.......................................................... 1,925 2,013
6.375%, 11/1/98......................................................... 1,625 1,705
6.50%, 7/15/02 (Pre-refunded 7/15/98**)................................. 1,000 1,063
Maryland Economic Dev. Corp., Roland Park Country School, 3.75%, 11/1/95.... 750 743
4.10%, 11/1/96.......................................................... 750 734
4.30%, 11/1/97.......................................................... 750 728
4.50%, 11/1/98.......................................................... 750 724
Maryland Environmental Service, Cecil County Landfill, 5.50%, 3/1/97........ 385 387
5.50%, 9/1/97........................................................... 395 398
Midshore Landfill, (AMBAC Insured), 5.20%, 9/1/96......................... 760 767
Maryland HHEFA, Anne Arundel Medical Center, (AMBAC Insured),
3.85%, 7/1/97........................................................... 940 912
Doctor's Community Hosp., 4.00%, 7/1/95................................... 130 130
4.25%, 7/1/96........................................................... 135 133
8.75%, 7/1/22 (Pre-refunded 7/1/00**)................................... 2,500 2,960
Francis Scott Key Medical Center, (FGIC Insured), 6.75%, 7/1/23
(Pre-refunded 7/1/00**)................................................. 2,000 2,188
Howard County General Hosp., 3.70%, 7/1/95................................ 510 508
Memorial Hosp. of Cumberland, 9.25%, 7/1/17 (Pre-refunded 7/1/97**)....... 3,000 3,348
Mercy Medical Center, 7.90%, 7/1/09 (Pre-refunded 7/1/99**)............... 150 169
Pooled Loan Program, VRDN (Currently 4.35%)............................... 1,000 1,000
Univ. of Maryland Medical System, 9.50%, 1/1/14 (Pre-refunded 7/22/96**).. 7,385 8,003
Maryland Transportation Auth., 6.00%, 7/1/97................................ 1,450 1,487
Montgomery County, Consolidated Public Improvement, GO, 5.25%, 10/1/97...... 885 898
Solid Waste System, 4.10%, 6/1/95......................................... 750 749
Western County Swim Fac., 7.375%, 10/1/09 (Pre-refunded 10/1/97**)........ 1,500 1,619
Northeast Maryland Waste Disposal Auth., Southwest Resource Recovery Fac.,
(MBIA Insured), 6.65%, 1/1/97............................................. 500 516
7.20%, 1/1/05........................................................... 2,000 2,238
10
<PAGE>
MARYLAND (cont'd)
Prince George's County, Collington Episcopal Life Care Community, Inc.,
4.25%, 4/1/96............................................................. 500 494
Consolidated Public Improvement, GO, 7.00%, 2/1/98........................ 1,500 1,579
Prince George's County (cont'd)
Dimensions Health Corp., 6.00%, 7/1/95.................................... 540 542
6.35%, 7/1/96........................................................... 625 636
Prince George's County IDA, Upper Marlboro Justice Center, (MBIA Insured),
3.90%, 6/30/96.......................................................... 250 247
Prince George's County, PCR, International Paper, 4.10%, 1/15/14............ 1,300 1,298
Washington Suburban Sanitary Dist., GO, 7.25%, 1/1/02 (Pre-refunded 1/1/97**) 1,000 1,063
7.25%, 1/1/04 (Pre-refunded 1/1/97**)................................... 1,360 1,445
8.00%, 1/1/00........................................................... 3,295 3,682
Wicomico County, Consolidated Public Improvement, GO, (FGIC Insured),
7.00%, 2/1/98........................................................... 750 792
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA-- 1.2%
Washington D.C. Metropolitan Transit Auth., (FGIC Insured), 3.65%, 7/1/96... 900 885
- ------------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO -- 6.6%
Puerto Rico Electric Power Auth., 4.70%, 7/1/96............................. 1,250 1,245
7.125%, 7/1/14 (Pre-refunded 7/1/99**).................................. 2,070 2,273
Puerto Rico Housing Bank & Fin. Agency, Loan Insurance Claims,
3.75%, 12/1/95.......................................................... 1,000 989
Puerto Rico Ind., Med., Higher Ed. & Environmental Pollution Control Fac.
Fin. Auth., Catholic Univ. of Puerto Rico, 4.10%, 12/1/96................. 210 205
4.40%, 12/1/97.......................................................... 215 208
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities-- 96.4% of Net Assets (Cost $71,682)........ 72,120
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities............................................... 2,688
-------
Net Assets Consist of: Value
-----------
Accumulated net realized gain/loss - net of distributions................... $(1,157)
Net unrealized gain (loss).................................................. 438
Paid-in-capital applicable to 14,843,081 no par value shares of
beneficial interest outstanding; unlimited number of shares authorized.. 75,527
-----------
NET ASSETS.................................................................. $74,808
=======
NET ASSET VALUE PER SHARE................................................... $5.04
=======
- ------------------------------------------------------------------------------------------------------------------------------------
11
<PAGE>
<FN>
** - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
CDA - Community Development Administration
DOT - Department of Transportation
FGIC - Financial Guaranty Insurance Company
GNMA - Government National Mortgage Association
GO - General Obligation
HHEFA - Health & Higher Educational Facility Authority
IDA - Industrial Development Authority
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
RAN - Revenue Anticipation Note
VRDN - Variable Rate Demand Note
</FN>
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Net Assets
T. Rowe Price Maryland Tax-Free Bond Fund / February 28, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands, except capital stock information)
Face Amount Value
----------- -----------
<S> <C> <C>
MARYLAND -- 95.7%
Allegany Co., PCR, Westvaco Corp., 6.20%, 1/1/08............................ $ 1,350 $ 1,373
Anne Arundel County, Annapolis Life Care, Ginger Cove Life Care
Community, 6.00%, 1/1/14................................................ 1,000 917
Baltimore Gas & Electric, TECP, 3.80 - 3.90%, 3/2 - 3/6/95*............... 2,000 2,000
Consolidated General Improvement, GO, 6.90%, 1/15/08...................... 1,150 1,230
6.30%, 8/1/16....................................................... 775 792
6.30%, 8/1/19....................................................... 725 737
6.30%, 8/1/20....................................................... 705 716
6.30%, 8/1/21....................................................... 790 802
Consolidated Water & Sewer, GO, 7.20%, 4/15/13
(Pre-refunded 4/15/00**)................................................ 625 693
6.00%, 7/15/13...................................................... 690 698
7.20%, 4/15/14 (Pre-refunded 4/15/00**)............................. 625 693
6.00%, 7/15/14...................................................... 690 695
6.00%, 7/15/15...................................................... 690 695
6.00%, 7/15/16...................................................... 690 694
6.30%, 8/1/22....................................................... 450 457
6.30%, 8/1/24....................................................... 720 730
Port Fac., Baltimore Gas & Electric, TECP, 3.75%, 3/2/95.................. 2,300 2,300
Anne Arundel County, PCR, Baltimore Gas & Electric, 6.00%, 4/1/24........... 10,710 10,528
Baltimore City, Board of Ed. Administration Headquarters, COP,
(MBIA Insured), 7.25%, 4/1/16........................................... 3,200 3,448
Consolidated Public Improvement, GO, (FGIC Insured), 6.40%, 10/15/08
(Pre-refunded 10/15/02**)............................................... 1,440 1,546
7.50%, 10/15/09..................................................... 2,635 3,116
(MBIA Insured), 9.00%, 10/15/98......................................... 2,500 2,831
7.00%, 10/15/07..................................................... 500 567
7.00%, 10/15/08..................................................... 5,190 5,876
Convention Center, (FGIC Insured), 6.00%, 9/1/17.......................... 5,535 5,547
Port Fac. (E.I. DuPont - CONOCO), 6.50%, 12/1/10.......................... 1,700 1,767
6.50%, 10/1/11...................................................... 4,050 4,177
6.50%, 10/1/11...................................................... 7,350 7,580
Rivoli Office Building Fac., COP, (MBIA Insured), 7.20%, 4/1/10........... 1,950 2,101
7.20%, 4/1/10 (Pre-refunded 4/1/00**)............................... 1,300 1,441
7.25%, 4/1/16....................................................... 5,845 6,298
7.25%, 4/1/16 (Pre-refunded 4/1/00**)............................... 1,655 1,838
Tindeco Wharf Apartments, (GNMA Collateralized), 6.60%, 12/20/24.......... 1,000 1,010
Wastewater, (MBIA Insured), 5.60%, 7/1/13................................. 2,100 1,996
5.60%, 7/1/13....................................................... 7,200 6,844
Water Projects, (FGIC Insured), 6.00%, 7/1/15............................. 6,250 6,330
Baltimore City IDA, Capital Acquisition Program, VRDN (Currently 4.10%)..... 900 900
Baltimore County, 7.10%, 10/1/12 (Pre-refunded 10/1/99**)................... 3,195 3,511
5.375%, 7/1/13...................................................... 1,615 1,475
Liberty Crossings, (GNMA Collateralized), 6.00%, 8/20/20.................. 1,250 1,204
Pickersgill Retirement Community, 7.70%, 1/1/21........................... 3,550 3,716
13
<PAGE>
Baltimore County (cont'd)
Spring Hill Apartments, (GNMA Collateralized),
VRDN (Currently 4.00%).............................................. 2,475 2,475
Stella Maris, 7.50%, 3/1/21............................................... 2,760 2,843
Baltimore County, Consolidated Public Improvement, Pension Funding, GO,
6.70%, 7/1/09....................................................... 500 528
6.70%, 7/1/11....................................................... 7,500 7,889
Public Safety Headquarters, COP, 6.90%, 12/1/99........................... 1,000 1,053
Baltimore County, PCR, Bethlehem Steel, 7.55%, 6/1/17....................... 3,000 3,043
Bel Air, Parking Revenue, COP, (CGIC Insured), 7.80%, 6/1/10
(Pre-refunded 12/1/98**).................................................. 1,500 1,671
Calvert County, Calvert Memorial Hosp. Fac., 5.25%, 12/1/97................. 530 525
5.50%, 12/1/98...................................................... 555 551
5.70%, 12/1/99...................................................... 400 398
Calvert County, PCR, Baltimore Gas & Electric, 5.55%, 7/15/14............... 3,000 2,806
Carroll County, Consolidated Public Improvement, GO, 6.00%, 11/1/06
(Pre-refunded 11/1/99**).................................................. 800 846
7.30%, 10/1/20...................................................... 2,000 2,177
Copper Ridge, 7.75%, 1/1/18............................................... 3,000 3,136
Fairhaven, 7.75%, 1/1/11.................................................. 1,000 1,059
Damascus Gardens Dev. Corp., Multi Family, (FHA Guaranteed),
7.375%, 11/1/21..................................................... 3,995 4,026
Frederick, General Improvement, GO, (FGIC Insured), 6.125%, 12/1/09......... 1,840 1,903
Frederick County, GO, 7.20%, 4/1/05 (Pre-refunded 4/1/99**)................. 1,000 1,097
Gaithersburg, Asbury Methodist Home, 7.85%, 1/1/20 (Pre-refunded 1/1/00**).. 6,500 7,360
Howard County, Consolidated Public Improvement, GO, 7.30%, 2/15/02
(Pre-refunded 1/1/99**)................................................... 650 702
6.90%, 5/15/06 (Pre-refunded 5/15/00**)............................. 1,700 1,839
7.30%, 2/15/08 (Pre-refunded 1/1/99**).............................. 1,000 1,080
7.00%, 5/15/08 (Pre-refunded 5/15/00**)............................. 1,000 1,086
7.40%, 2/15/09 (Pre-refunded 1/1/99**).............................. 250 273
7.00%, 5/15/10 (Pre-refunded 5/15/00**)............................. 2,000 2,172
5.875%, 5/15/11..................................................... 2,000 2,012
5.875%, 5/15/12..................................................... 3,020 3,038
Metropolitan Dist., GO, 7.15%, 5/15/14 (Pre-refunded 5/15/00**)........... 1,005 1,106
7.15%, 5/15/15 (Pre-refunded 5/15/00**)............................. 1,080 1,188
7.15%, 5/15/16 (Pre-refunded 5/15/00**)............................. 1,160 1,276
7.15%, 5/15/17 (Pre-refunded 5/15/00**)............................. 1,245 1,370
6.00%, 8/15/19...................................................... 1,715 1,717
Kent County, Washington College, 7.60%, 7/1/09.............................. 1,000 1,067
Laurel, GO, (MBIA Insured), 6.90%, 7/1/07................................... 1,000 1,092
7.00%, 7/1/09....................................................... 550 600
Maryland, GO, 7.00%, 10/15/03 (Pre-refunded 10/15/00**)..................... 2,000 2,199
7.10%, 10/15/04 (Pre-refunded 10/15/00**)........................... 3,000 3,324
St. Mary's County Building Commission, COP, 7.625%, 12/1/03............... 1,500 1,647
14
<PAGE>
MARYLAND (cont'd)
Maryland CDA, Infrastructure, 8.375%, 6/1/08................................ 775 859
8.50%, 6/1/18....................................................... 1,350 1,488
Single Family, 7.50%, 4/1/00.............................................. 500 525
7.875%, 4/1/07...................................................... 300 312
6.75%, 4/1/10*...................................................... 5,000 5,182
7.375%, 4/1/10...................................................... 495 524
6.85%, 4/1/11....................................................... 4,980 5,154
7.25%, 4/1/11*...................................................... 2,000 2,121
6.45%, 4/1/14....................................................... 1,000 1,017
7.00%, 4/1/14....................................................... 2,760 2,906
5.875%, 4/1/17*..................................................... 1,995 2,015
7.05%, 4/1/17....................................................... 4,750 4,988
7.40%, 4/1/17....................................................... 5,395 5,663
7.60%, 4/1/17....................................................... 2,200 2,345
8.125%, 4/1/17...................................................... 1,755 1,850
8.00%, 4/1/18....................................................... 1,200 1,269
8.20%, 4/1/18....................................................... 1,150 1,221
7.25%, 4/1/19....................................................... 9,000 9,417
6.80%, 4/1/22*...................................................... 4,255 4,289
6.80%, 4/1/24*...................................................... 2,750 2,770
6.75%, 4/1/26*...................................................... 4,000 4,015
7.25%, 4/1/27....................................................... 9,630 10,053
7.625%, 4/1/29*..................................................... 1,975 2,065
Maryland DOT, 7.25%, 11/15/00 (Pre-refunded 11/15/96**)..................... 400 422
7.30%, 11/15/01 (Pre-refunded 11/15/96**)........................... 850 900
6.80%, 11/1/05 (Pre-refunded 11/1/99**)............................. 5,500 5,985
Maryland Environmental Service, Cecil County Landfill, 4.85%, 3/1/95........ 350 350
5.00%, 9/1/95....................................................... 355 355
5.25%, 3/1/96....................................................... 365 366
5.25%, 9/1/96....................................................... 375 377
Maryland HHEFA, Broadmead, 7.625%, 7/1/10................................... 1,390 1,445
Church Hosp., 8.00%, 7/1/09............................................... 1,200 1,318
Doctor's Community Hosp., 8.75%, 7/1/22 (Pre-refunded 7/1/00**)........... 6,800 8,051
5.50%, 7/1/24....................................................... 4,935 3,818
Edenwald, 6.00%, 1/1/10................................................... 4,000 3,728
Francis Scott Key Medical Center, (FGIC Insured), 7.00%, 7/1/10
(Pre-refunded 7/1/00**)................................................. 2,000 2,211
5.00%, 7/1/18....................................................... 3,230 2,794
5.00%, 7/1/23....................................................... 2,150 1,825
Franklin Square Hosp., (MBIA Insured), 7.50%, 7/1/19...................... 4,750 5,154
Frederick Memorial Hosp., (FGIC Insured), 5.00%, 7/1/23................... 5,500 4,669
Good Samaritan Hosp., 7.40%, 7/1/09 (Pre-refunded 7/1/99**)............... 1,000 1,108
5.75%, 7/1/13....................................................... 4,000 3,725
5.75%, 7/1/19....................................................... 4,370 3,972
7.50%, 7/1/21 (Pre-refunded 7/1/99**)............................... 4,000 4,447
15
<PAGE>
MARYLAND (cont'd)
Maryland HHEFA(cont'd)
Greater Baltimore Medical Center, (FGIC Insured), 5.00%, 7/1/13........... 4,000 3,546
5.00%, 7/1/19.......................................................... 12,060 10,374
Holy Cross Hosp., (AMBAC Insured), 7.50%, 7/1/01.......................... 1,655 1,880
7.125%, 7/1/10...................................................... 1,400 1,507
Howard County General Hosp., 5.50%, 7/1/21................................ 5,000 3,977
Johns Hopkins Hosp., Zero Coupon, 7/1/19.................................. 9,785 2,198
7.00%, 7/1/23 (Pre-refunded 7/1/00**)............................... 1,305 1,439
Johns Hopkins Univ., 7.375%, 7/1/08....................................... 1,500 1,610
7.50%, 7/1/20....................................................... 11,015 11,837
Kaiser Permanente, 9.125%, 7/1/15......................................... 1,550 1,601
Kennedy Kreiger Institute, VRDN (Currently 4.05%)......................... 2,700 2,700
7.40%, 7/1/11....................................................... 370 382
6.75%, 7/1/22....................................................... 2,850 2,753
Memorial Hosp. at Easton, (MBIA Insured), 6.50%, 7/1/15................... 1,000 1,020
Mercy Medical Center, 7.90%, 7/1/09 (Pre-refunded 7/1/99**)............... 2,000 2,254
8.00%, 7/1/20 (Pre-refunded 7/1/99**)............................... 6,500 7,351
(AMBAC Insured), 5.50%, 7/1/22.......................................... 1,900 1,743
Northwest Hosp. Center, (AMBAC Insured), 5.25%, 7/1/13.................... 9,750 8,922
Pooled Loan Program, VRDN (Currently 4.35%)............................... 400 400
VRDN (Currently 4.35%).............................................. 14,100 14,100
Sinai Hosp., (AMBAC Insured), 7.30%, 7/1/05 (Pre-refunded 7/1/00**)....... 2,000 2,234
Suburban Hosp., 7.60%, 7/1/18 (Pre-refunded 7/1/98**)..................... 300 330
Union Hosp. of Cecil County, 6.625%, 7/1/12............................... 1,545 1,474
6.70%, 7/1/22....................................................... 1,500 1,396
Union Memorial Hosp., (MBIA Insured), 6.60%, 7/1/06....................... 500 535
6.75%, 7/1/11....................................................... 750 798
6.75%, 7/1/11....................................................... 2,250 2,394
6.75%, 7/1/21....................................................... 3,000 3,138
6.75%, 7/1/21....................................................... 4,865 5,088
Univ. of Maryland Medical System, (FGIC Insured), 7.00%, 7/1/11
(Pre-refunded 7/1/01**)................................................. 4,550 5,056
5.375%, 7/1/13...................................................... 5,000 4,629
7.00%, 7/1/17 (Pre-refunded 7/1/01**)............................... 7,770 8,633
5.00%, 7/1/20....................................................... 6,500 5,561
7.00%, 7/1/22....................................................... 2,000 2,300
Maryland Ind. Dev. Fin. Auth., American Center for Physics Headquarters
Fac., 6.25%, 1/1/07....................................................... 5,770 5,755
6.375%, 1/1/12...................................................... 4,150 4,051
6.625%, 1/1/17...................................................... 4,250 4,184
Associated Catholic Charities, 9.00%, 1/1/10.............................. 980 1,075
Bon Secours Health System, Residual Interest Bond / Inverse Floater,
8/26/22 (Currently 5.929%).......................................... 10,000 9,761
Maryland Local Gov't. Income Trust Capitalization Program, GO, COP,
6.80%, 8/1/01....................................................... 1,615 1,750
7.125%, 8/1/09...................................................... 3,000 3,218
Maryland Stadium Auth., Convention Center Expansion, (AMBAC Insured),
5.875%, 12/15/10.................................................... 2,500 2,500
5.875%, 12/15/13.................................................... 4,225 4,180
5.875%, 12/15/14.................................................... 4,655 4,572
16
<PAGE>
MARYLAND (cont'd)
Maryland Transportation Auth., 6.50%, 7/1/06................................ 3,000 3,190
5.75%, 7/1/13....................................................... 1,500 1,446
6.80%, 7/1/16 (Escrowed to Maturity)................................ 2,645 2,940
(FGIC Insured), Zero Coupon, 7/1/07..................................... 8,500 4,330
Zero Coupon, 7/1/08................................................. 2,000 956
Zero Coupon, 7/1/09................................................. 10,410 4,662
5.75%, 7/1/15....................................................... 7,500 7,162
Baltimore-Washington Int'l. Airport, 6.40%, 7/1/19........................ 12,665 12,878
(FGIC Insured), 6.25%, 7/1/14*.......................................... 2,000 2,026
Maryland Water Quality Fin. Administration, Revolving Loan Fund,
Zero Coupon, 9/1/02................................................. 1,185 798
Zero Coupon, 9/1/07................................................. 1,125 563
7.25%, 9/1/11....................................................... 1,700 1,850
7.25%, 9/1/12....................................................... 2,000 2,176
6.70%, 9/1/13....................................................... 1,280 1,350
7.10%, 9/1/13....................................................... 985 1,065
Maryland-National Capital Park & Planning Commission,
Little Bennett Golf Fac., 8.25%, 10/1/11................................ 2,500 2,644
Prince George's County, GO, 6.90%, 7/1/05................................. 1,400 1,526
6.90%, 7/1/06....................................................... 2,190 2,375
6.90%, 7/1/07....................................................... 1,400 1,510
6.90%, 7/1/08....................................................... 1,400 1,510
6.90%, 7/1/09....................................................... 1,400 1,506
Montgomery County, Consolidated Public Improvement, GO, 7.00%, 4/1/07
(Pre-refunded 4/1/00**)................................................... 2,000 2,199
7.25%, 10/1/08 (Pre-refunded 10/1/98**)............................. 500 547
7.10%, 10/1/09 (Pre-refunded 10/1/00**)............................. 1,000 1,111
6.80%, 11/1/09 (Pre-refunded 11/1/99**)............................. 1,145 1,246
7.10%, 10/1/10 (Pre-refunded 10/1/00**)............................. 1,840 2,045
6.125%, 10/1/13..................................................... 2,500 2,570
6.125%, 10/1/14..................................................... 3,150 3,227
Montgomery County Housing Opportunities Commission, Single Family,
6.50%, 7/1/11....................................................... 4,000 4,100
6.65%, 7/1/16....................................................... 2,370 2,406
6.80%, 7/1/17....................................................... 2,940 2,998
7.50%, 7/1/17....................................................... 1,850 1,958
7.625%, 7/1/17...................................................... 4,185 4,398
6.90%, 7/1/19....................................................... 2,000 2,075
7.50%, 7/1/24....................................................... 3,000 3,057
Montgomery County, PCR, Potomac Electric Power, 5.375%, 2/15/24............. 5,845 5,214
Morgan State Univ., Academic Fees & Auxiliary Fac., (MBIA Insured),
7.20%, 7/1/13 (Pre-refunded 7/1/00**)............................... 1,000 1,112
6.05%, 7/1/15....................................................... 1,020 1,039
Northeast Maryland Waste Disposal Auth., Southwest Resource Recovery Fac.,
5.90%, 7/1/05*...................................................... 1,750 1,709
6.00%, 7/1/06*...................................................... 2,200 2,159
6.00%, 7/1/08*...................................................... 10,000 9,687
6.30%, 7/1/16*...................................................... 11,050 10,709
17
<PAGE>
MARYLAND (cont'd)
Prince George's County, 6.70%, 6/20/20...................................... 1,500 1,540
Collington Episcopal Life Care Community, Inc., 5.625%, 4/1/09............ 3,750 3,345
Consolidated Public Improvement, GO, 7.20%, 2/1/05
(Pre-refunded 2/1/99**)................................................. 1,000 1,085
Dimensions Health Corp., 7.00%, 7/1/01.................................... 2,450 2,587
7.20%, 7/1/06....................................................... 420 452
7.20%, 7/1/06 (Pre-refunded 7/1/02**)............................... 1,985 2,247
5.375%, 7/1/14...................................................... 10,035 8,653
7.00%, 7/1/22 (Pre-refunded 7/1/02**)............................... 2,660 2,978
5.30%, 7/1/24....................................................... 2,035 1,658
Equipment Refinancing & Acquisition Program, COP, 6.70%, 7/15/96.......... 2,240 2,292
Real Estate Acquisition, (MBIA Insured), 6.00%, 9/15/14................... 1,800 1,812
Solid Waste Management System, 6.90%, 6/30/05 (Pre-refunded 6/30/00**).... 1,500 1,648
6.90%, 6/30/06 (Pre-refunded 6/30/00**)............................. 1,000 1,099
7.00%, 6/30/07 (Pre-refunded 6/30/00**)............................. 1,120 1,235
7.00%, 6/30/09 (Pre-refunded 6/30/00**)............................. 1,255 1,384
Stormwater Management, GO, 5.50%, 3/15/13................................. 2,285 2,175
Prince George's County Housing Auth., New Keystone, (MBIA Insured),
6.80%, 7/1/25....................................................... 2,600 2,689
Stevenson Apartments, 6.35%, 7/20/20...................................... 2,200 2,213
Prince George's County IDA, Gabriel DuVall Law Building, 8.00%, 9/1/07...... 1,185 1,278
Hyattsville Dist. Court Fac., 6.00%, 7/1/09............................... 1,935 1,989
Upper Marlboro Justice Center, (MBIA Insured), 5.25%, 6/30/19............. 1,500 1,343
Prince George's County, PCR, Potomac Electric, 6.375%, 1/15/23.............. 5,000 5,056
Univ. of Maryland, 7.00%, 10/1/98 .......................................... 2,000 2,131
7.00%, 10/1/05 (Pre-refunded 10/1/99**)............................. 2,000 2,190
6.375%, 4/1/09...................................................... 2,100 2,199
7.20%, 10/1/09 (Pre-refunded 10/1/99**)............................. 1,400 1,544
5.50%, 4/1/11....................................................... 5,025 4,843
6.30%, 2/1/12....................................................... 1,425 1,464
6.50%, 4/1/12....................................................... 440 464
Washington County Public Fac., GO, 6.50%, 12/1/01 (Pre-refunded 12/1/98**).. 550 589
6.70%, 12/1/04 (Pre-refunded 12/1/98**)............................. 1,040 1,120
6.70%, 12/1/05 (Pre-refunded 12/1/98**)............................. 1,115 1,201
Washington County Sanitary Dist., GO, 6.875%, 2/1/10 (Pre-refunded 2/1/00**) 3,500 3,824
7.00%, 2/1/15 (Pre-refunded 2/1/00**)............................... 2,000 2,195
Washington Suburban Sanitary Dist.,GO, 5.50%, 6/1/13........................ 1,450 1,376
Washington Suburban Sanitary Dist.,GO (cont'd)
7.40%, 7/1/07 (Pre-refunded 7/1/98**)............................... 700 765
6.90%, 6/1/08 (Pre-refunded 6/1/00**)............................... 1,500 1,647
6.90%, 6/1/09 (Pre-refunded 6/1/00**)............................... 2,300 2,525
6.20%, 6/1/11....................................................... 2,400 2,468
6.40%, 1/1/12....................................................... 2,205 2,289
5.50%, 6/1/12....................................................... 1,295 1,235
6.20%, 6/1/12....................................................... 1,500 1,538
5.50%, 6/1/13....................................................... 1,100 1,044
6.40%, 1/1/15....................................................... 2,270 2,342
6.625%, 6/1/18...................................................... 3,665 3,828
BAN, VRDN (Currently 3.90%)......................................... 1,000 1,000
Worcester County Sanitary Dist., 6.50%, 8/15/12............................. 2,000 2,093
- ------------------------------------------------------------------------------------------------------------------------------------
18
<PAGE>
PUERTO RICO-- 3.1%
Puerto Rico Electric Power Auth., 7.00%, 7/1/07............................. 10,000 10,508
7.00%, 7/1/11....................................................... 1,200 1,281
7.00%, 7/1/21....................................................... 1,895 2,012
Puerto Rico Infrastructure Fin. Auth., 7.50%, 7/1/09........................ 5,150 5,476
Puerto Rico Municipal Fin. Agency, 6.00%, 7/1/14............................ 3,030 3,072
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities-- 98.8% of Net Assets (Cost $689,608)....... 716,367
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities............................................... 8,456
--------
NET ASSETS CONSIST OF:
Value
---------
Accumulated net realized gain/loss - net of distributions................... $ (9,714)
Net unrealized gain (loss).................................................. 26,759
Paid-in-capital applicable to 72,555,901 no par value shares of
beneficial interest outstanding; unlimited number of shares authorized.... 707,778
---------
NET ASSETS.................................................................. $724,823
========
NET ASSET VALUE PER SHARE................................................... $ 9.99
========
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* - Interest subject to alternative minimum tax
** - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
BAN - Bond Anticipation Note
CDA - Community Development Administration
CGIC - Capital Guaranty Insurance Corp.
COP - Certificate of Participation
DOT - Department of Transportation
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Authority
GNMA - Government National Mortgage Association
GO - General Obligation
HHEFA - Health & Higher Educational Facility Authority
IDA - Industrial Development Authority
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
TECP - Tax-Exempt Commercial Paper
VRDN - Variable Rate Demand Note
</FN>
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price Maryland Tax-Free Funds / Year Ended February 28, 1995
(in thousands)
Short-Term
Bond Fund Bond Fund
----------- -----------
INVESTMENT INCOME
Interest income................................ $ 3,321 $ 46,031
-------- --------
Expenses
Investment management........................ 242 3,243
Shareholder servicing........................ 104 576
Custody and accountin........................ 101 188
Registration................................. 24 18
Legal and audit.............................. 12 14
Prospectus and shareholder reports........... 8 40
Trustees..................................... 6 15
Proxy and annual meeting..................... 5 28
Miscellaneous................................ 7 15
-------- --------
Total expenses............................... 509 4,137
-------- --------
Net investment income.......................... 2,812 41,894
-------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities................................... (1,097) (8,537)
Futures...................................... (50) (162)
-------- --------
Net realized gain (loss)..................... (1,147) (8,699)
Change in net unrealized gain or
loss on securities........................... 359 (28,245)
-------- --------
Net realized and unrealized gain (loss)........ (788) (36,944)
-------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS.............................. $ 2,024 $ 4,950
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Maryland Tax-Free Funds
(in thousands)
Short-Term Bond Fund Bond Fund
Year Ended Year Ended
February 28, February 28,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income............................. $ 2,812 $ 1,421 $ 41,894 $ 41,700
Net realized gain (loss).......................... (1,147) (15) (8,699) 8,568
Change in net unrealized gain or loss............. 359 25 (28,245) (6,008)
-------- --------- --------- ---------
Increase (decrease) in net assets from operations. 2,024 1,431 4,950 44,260
-------- --------- --------- ---------
Distributions to shareholders
Net investment income............................. (2,812) (1,421) (41,894) (41,700)
Net realized gain................................. -- -- (1,541) (7,569)
-------- --------- --------- ---------
Decrease in net assets from distributions......... (2,812) (1,421) (43,435) (49,269)
-------- --------- --------- ---------
Capital share transactions*
Shares sold....................................... 57,415 100,506 146,960 279,096
Distributions reinvested.......................... 2,272 1,165 32,662 32,509
Shares redeemed................................... (60,140) (33,955) (237,716) (209,663)
-------- --------- --------- ---------
Increase (decrease) in net assets from capital
share transactions................................ (453) 67,716 (58,094) 101,942
-------- --------- --------- ---------
Increase (decrease) in net assets................... (1,241) 67,726 (96,579) 96,933
NET ASSETS
Beginning of period................................. 76,049 8,323 821,402 724,469
-------- --------- --------- ---------
End of period....................................... $74,808 $76,049 724,823 821,402
======== ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
*Share information
Shares sold....................................... 11,421 19,745 14,907 26,323
Distributions reinvested.......................... 452 229 3,322 3,069
Shares redeemed................................... (11,985) (6,659) (24,287) (19,789)
-------- --------- --------- ---------
Increase (decrease) in shares outstanding......... (112) 13,315 (6,058) 9,603
========= ========= ========= =========
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price Maryland Tax-Free Funds / February 28, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price State Tax-Free Income Trust (the Trust) is registered under
the Investment Company Act of 1940 as a non-diversified, open-end management
investment company. The Maryland Short-Term Tax-Free Bond Fund (the Short-Term
Bond Fund) and the Maryland Tax-Free Bond Fund (the Bond Fund) are two of the
portfolios established under the Trust.
A) Valuation - Debt securities are generally traded in the over-the-counter
market. Investments in securities with remaining maturities of one year or more
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. Securities with remaining
maturities less than one year are stated at fair value which is determined by
using a matrix system that establishes a value for each security based on money
market yields.
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.
B) Premiums and Discounts - Premiums and discounts on municipal securities
are accounted for in accordance with federal income tax regulations, which
require the amortization of all premiums and discounts except market discounts.
Market discounts are included in the gain or loss recorded on disposition of the
security for financial reporting purposes and ordinary income for tax purposes.
C) 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 an identified cost basis. Distributions to shareholders
are recorded by each 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, for the period ended February 28, 1995, were as follows:
Short-Term
Bond Fund Bond Fund
----------- ------------
Purchases $85,524,000 $203,069,000
Sales 76,753,000 279,314,000
22
<PAGE>
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since each fund intends
to continue to qualify as a regulated investment company and distribute all of
its income. The Short-Term Bond Fund has unused realized capital loss
carryforwards for federal income tax purposes of $421,000 which expire in 2003.
The Bond Fund has unused realized capital loss carryforwards for federal income
tax purposes of $6,172,000 which expire in 2003. Each fund intends to retain
gains realized in future periods that may be offset by available capital loss
carryforwards.
In order for the Bond Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $587,000 of
undistributed net realized gains were reclassified as a decrease to paid-in
- -capital during the period ended February 28, 1995. The results of operations
and net assets were not affected by the reclassifications.
At February 28, 1995, the aggregate cost of investments for the Short-Term
Bond and Bond Funds for federal income tax and financial reporting purposes was
$71,682,000 and $689,608,000, respectively. Net unrealized gain on investments
was as follows:
Short-Term
Bond Fund Bond Fund
----------- ------------
Appreciated Investments $681,000 $31,846,000
Depreciated Investments (243,000) (5,087,000)
----------- ------------
Net Unrealized Gain 438,000 26,759,000
=========== ============
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between each fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management fee,
of which $18,000 for the Short-Term Bond Fund and $241,000 for the Bond Fund was
payable at February 28, 1995. The fee is computed daily and paid monthly, and
consists of an Individual Fund Fee equal to 0.10% 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 0.31% for assets in excess of $34 billion. At February 28, 1995, and for the
period then ended, the effective annual Group Fee rate was 0.34%. Each fund pays
a pro rata share of the Group Fee based on the ratio of its net assets to those
of the Group.
23
<PAGE>
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through February 28, 1995, which would cause the
Short-Term Bond Fund's ratio of expenses to average net assets to exceed 0.65%.
Thereafter through February 28, 1997, the Short-Term Bond 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 Short-Term Bond Fund's ratio of expenses to average net assets to
exceed 0.65%. Pursuant to this agreement, $106,000 of management fees were not
accrued by the Short-Term Bond Fund for the period ended February 28, 1995.
Additionally, $157,000 of unaccrued fees and other expenses for the Short-Term
Bond Fund from the prior periods are subject to reimbursement through February
28, 1997.
In addition, each fund has entered into agreements with the Manager and a
wholly-owned subsidiary of the Manager, pursuant to which each fund receives
certain other services. The Manager computes the daily share price and maintains
the financial records of each fund. T. Rowe Price Services, Inc. (TRPS) is each
fund's transfer and dividend disbursing agent and provides shareholder and
administrative services to each fund. The Short-Term Bond and Bond Funds
incurred expenses pursuant to these related par ty agreements totaling
approximately $143,000 and $508,000, respectively, for the period ended February
28, 1995, of which $14,000 and $57,000, respectively, were payable at period
end.
24
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
For a share outstanding throughout each period
-----------------------------------------------------------
Jan. 29, 1993
Year Ended (Commencement
of Operations) to
Feb. 28, Feb. 28, Feb. 28,
1995 1994 1993
----------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............... $5.09 $5.07 $5.00
------ ------ ------
Investment Activities
Net investment income............................ 0.18* 0.15* 0.01*
Net realized and unrealized gain (loss).......... (0.05) 0.02 0.07
------ ------ ------
Total from Investment Activities................... 0.13 0.17 0.08
------ ------ ------
Distributions
Net investment income............................ (0.18) (0.15) (0.01)
------ ------ ------
NET ASSET VALUE, END OF PERIOD..................... $5.04 $5.09 $5.07
====== ====== ======
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return....................................... 2.64% 3.49% 1.67%
Ratio of Expenses to Average Net Assets............ 0.65%* 0.65%* 0.65%*(1)
Ratio of Net Investment Income
to Average Net Assets............................ 3.59% 3.09% 2.96%(1)
Portfolio Turnover Rate............................ 105.3% 20.5% 96.9%(1)
Net Assets, End of Period (in thousands)........... $74,808 $76,049 $8,323
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*Excludes expenses in excess of a 0.65% voluntary expense limitation in
effect through February 28, 1995.
(1)Annualized.
</FN>
====================================================================================================================================
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Maryland Tax-Free Bond Fund
For a share outstanding throughout each period
----------------------------------------------------------------------
Year Ended
Feb. 28, Feb. 28, Feb. 28, Feb. 29, Feb. 28,
1995 1994 1993 1992 1991
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............... $10.45 $10.50 $9.82 $9.61 $9.45
------ ------ ------ ------ ------
Investment Activities
Net investment income............................ 0.56 0.56 0.57 0.59 0.60
Net realized and unrealized gain (loss).......... (0.44) 0.05 0.73 0.26 0.16
------ ------ ------ ------ ------
Total from Investment Activities................... 0.12 0.61 1.30 0.85 0.76
------ ------ ------ ------ ------
Distributions
Net investment income............................ (0.56) (0.56) (0.57) (0.59) (0.60)
Net realized gain................................ (0.02) (0.10) (0.05) (0.05) --
------ ------ ------ ------ ------
Total Distributions................................ (0.58) (0.66) (0.62) (0.64) (0.60)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD..................... $ 9.99 $10.45 $10.50 $ 9.82 $9.61
====== ====== ====== ====== ======
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return....................................... 1.43% 5.93% 13.75% 9.13% 8.37%
Ratio of Expenses to Average Net Assets............ 0.57% 0.57% 0.61% 0.64% 0.68%
Ratio of Net Investment Income
to Average Net Assets............................ 5.73% 5.31% 5.72% 6.04% 6.38%
Portfolio Turnover Rate............................ 28.9% 24.3% 23.3% 21.9% 52.2%
Net Assets, End of Period (in thousands)........... $724,823 $821,402 $724,469 $475,188 $300,974
====================================================================================================================================
</TABLE>
26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
T. Rowe Price Maryland Tax-Free Funds
We have audited the accompanying statement of net assets of T. Rowe Price
Maryland Tax-Free Bond Fund and T. Rowe Price Maryland Short-Term Tax-Free Bond
Fund (two of the portfolios comprising the T. Rowe Price State Tax-Free Income
Trust) as of February 28, 1995, and the related statement of operations for the
year then ended, the statement of changes in net assets, and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Funds' 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, 1995, by correspondence with the custodian and 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 Maryland Tax-Free Bond Fund and T. Rowe Price Maryland Short-Term
Tax-Free Bond Fund as of February 28, 1995, the results of their operations, the
changes in their net assets, and financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
March 17, 1995
27
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Services
- --------------------------------------------------------------------------------
To help shareholders monitor their current investments and make decisions
that accu- rately reflect their financial goals, T. Rowe Price offers a wide
variety of information and services--at no extra cost.
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE--Shareholder service representatives are available from 8:00 a.m.
to 10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m ET. 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. While there,
you can drop off applications or obtain prospectuses and other literature.
AUTOMATED 24-HOUR SERVICES
TELE*ACCESSRegistration Mark (1-800-638-2587) provides information such as
account balance, date and amount of your last transaction, latest dividend
payment, and fund prices and yields. Additionally, you have the ability to
request prospectuses, statements, account and tax forms, reorder checks, and
initiate purchase, redemption, and exchange orders for identically registered
accounts.
PC*ACCESSRegistration Mark provides the same information as Tele*Acces s,
but on a personal computer via dial-up modem. ACCOUNT SERVICES
CHECKING--Write checks for $500 or more on any money market and most bond
fund accounts.
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 low, $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. 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.
INVESTMENT INFORMATION
COMBINED STATEMENT--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your 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.
QUARTERLY SHAREHOLDER REPORTS--Portfolio managers review the performance of
the funds in plain language and discuss T. Rowe Price's economic outlook.
28
<PAGE>
THE T. ROWE PRICE REPORT--A quarterly newsletter with relevant articles on
market trends, personal financial planning, and T. Rowe Price's economic
perspective.
INSIGHTS--A library of information that includes reports on mutual fund tax
issues, investment strategies, and financial markets.
DETAILED INVESTMENT GUIDES--Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can help
you determine and reach your investment goals.
DISCOUNT BROKERAGE
You can trade stocks, bonds, options, precious metals, and other securities
at a substantial savings over regular commission rates. Call a shareholder
service representative for more information.
