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
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T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Maryland
Tax-Free Bond Funds.
T.Rowe Price
Invest With Confidence (registered trademark)
MDC
REPTMDC 2/29/96
Annual Report
T. Rowe Price
Maryland Tax-Free Funds
February 29, 1996
Fellow Shareholders
The fiscal year ended February 29, 1996, was a banner year for bonds and the
funds that invest in them. Prices rose and yields fell through much of the
year, generating good returns for investors in fixed income securities. We are
pleased to report that the Maryland Tax-Free Funds provided strong returns
that compared favorably with their peer group averages.
Market Environment
The economy slowed in 1995, and inflation remained moderate. After tightening
monetary policy in 1994 and early 1995, the Federal Reserve reversed course
when it became clear that the economy was running out of steam. Since July,
the Fed has lowered the key federal funds rate target three times, from 6% to
5.25% at the end of the fiscal year.
Against a background of slower growth, moderate inflation, and apparent
progress on reducing the federal budget deficit, bond yields tumbled. The
30-year Treasury yield, nearly 7.5% a year ago, fell briefly below 6% in late
December. At fiscal year-end, the long bond yield had edged back up to 6.5%,
as efforts to come up with deficit reduction legislation flagged in early
1996. Signs that stronger economic growth might resume in 1996 also
contributed to recent uneasiness in the bond market.
After moving only slightly lower during the first half of the fiscal
year ended February 29, long-term municipal yields fell further in the second
half. Thirty-year prime general obligation (GO) bonds yielded 5.95% on
February 28, 1995, and on August 31 were only 10 basis points lower (100 basis
points equal one percent). During the most recent six months, prices rose
further as yields dropped an additional 45 basis points to 5.4%.
Municipal bonds with short maturities followed a different pattern as
their yields fell more in the first half of the year than in the second. After
falling 70 basis points to 4.3% on August 31, the yield of five-year prime GO
bonds fell only
Chart 1: Interest Rate Levels
Source: T. Rowe Price
10 basis points more by February 29, 1996. The net result was a lower and
steeper yield curve that led to significant price appreciation from 1994's
lows.
In 1995, Maryland's economy continued to grow modestly, with jobs
increasing at a rate of 1.6%, somewhat slower than the 2.1% pace of 1994. The
state again lagged national growth rates-2.2% in 1995 and 2.9% in 1994-mostly
due to continued job cutbacks by the federal government.
Given the positive economic environment and the state's conservative
management approach, Maryland's financial condition remained sound. Revenue
collections closely tracked forecasts, helping Maryland maintain a
satisfactory cushion in its budget and the long-standing AAA rating on its GO
bonds. In another positive development, Baltimore and Howard counties earned
upgrades from AA to AAA status in early 1996.
Maryland Short-Term Tax-Free Bond Fund
After shortening the fund's weighted average maturity (WAM) to 2.7 years in
August when the economy showed signs of strength, we lengthened to three years
in December amid signs of a sluggish holiday buying season. (A shortening of
maturities cushions the fund's share price against rises in interest rates
that can accompany brisk economic growth. Conversely, longer maturities
enhance the fund's price appreciation when a slowdown in the economy leads to
lower interest rates.)
Our "bullet" structure, concentrating portfolio holdings around
three-year maturities rather than in one-and five-year bonds, increased the
fund's price appreciation as interest rates generally fell over the last six
months. In recent weeks, hopes for another cut in the federal funds rate were
dashed by the balanced-budget stalemate and signs that the economy was
slightly stronger than expected. We responded by lowering our average maturity
to 2.7 years at the end of February.
The fund maintained significant exposure, nearly half of net assets, to
prerefunded bonds, which will be paid off at their first call date or at
maturity with money escrowed in U.S. government securities. Prerefunded bonds
generally have higher yields than other AAA-rated debt and are in greater
supply due to issuer refinancings in the early 1990s.
These moves helped your fund exceed the Lipper average of similar funds
for both the 6- and 12-month periods ended February 29. (Lipper Analytical
Services eliminated the fund's former benchmark, the Lipper States Short
Municipal Debt Funds Average, replacing it with the one shown in the table,
which it considers more appropriate.)
Performance Comparison
Periods Ended 2/29/96
6 Months 12 Months
_________ _________
Maryland Short-Term
Tax-Free Bond Fund 2.65% 6.49%
Lipper Short Municipal
Debt Funds Average 2.48 6.00
Maryland Tax-Free Bond Fund
For most of the past year, we extended the fund's duration slightly to enhance
its share price in a falling rate environment. (Duration is a more accurate
measure than maturity of a fund's price sensitivity to changes in interest
rates.) Our strategy is affected by the fund's age and size, now almost 10
years old with $795 million in assets. We continue to hold bonds purchased in
the 1980s and early 1990s because they offer higher tax-free income than
comparable issues available today, helping the fund maintain a higher yield
than its competitors. On the other hand, since many of these bonds now have
maturities of less than 10 years, they tend to shorten the fund's duration and
are not as responsive to market rallies.
To complement the fund's mature holdings, we used new cash inflows to
buy lower-coupon, longer-term bonds, including noncallable issues. While they
offered lower yields than our older bonds, they provided greater price
appreciation as interest rates dropped last year.
We were able to execute this strategy despite the light supply of new
issues in Maryland, which fell 40% from 1994 levels, continuing its retreat
from the record issuance of 1993 (see chart below). This decline reflects
several factors: a drop in debt refunding activity following the sharp rise in
rates in 1994; a significant decline in health care borrowing as hospitals
focused on consolidation rather than new bricks and mortar; and a general
environment of fiscal conservatism as Maryland weathers slower growth and
local governments remain concerned about cutbacks in state and federal aid.
Chart 2:Maryland Bond Issues
Source: Securities Data Co.
From a credit standpoint, we continued to diversify the portfolio's
holdings and toward year-end found little reason to add lower-quality bonds
since they offered no compelling yield advantage over higher-quality issues.
The fund exceeded its Lipper peer group average by a small margin for
both the 6- and 12-month periods ending February 29, with our higher income
offsetting the effect of our relatively shorter duration.
Performance Comparison
Periods Ended 2/29/96
6 Months 12 Months
_________ _________
Maryland Tax-Free
Bond Fund 4.75% 10.00%
Lipper Maryland Municipal
Debt Fund Average 4.73 9.68
Outlook
The municipal market paid substantial attention to the topic of tax reform
last year. Concerns that proposed revisions to the tax code would be
detrimental to municipal bonds kept municipal securities from performing quite
as well as taxable alternatives. As we anticipated, these fears have lessened
somewhat as tax reform discussions have faded from prominence. Municipals have
already recaptured some of the ground lost to taxable bonds, which we
attribute to reduced worries about the impact of tax reform.
The unusually fierce weather this winter, as well as the partial
government shutdowns, tended to delay and distort many recent economic
statistics, but it looks as though the economy is on track for a year of
moderate growth. This should be enough to keep the unemployment rate in its
current zone without significantly exacerbating inflationary pressures. This
March the economic upturn completed its fifth year, making it one of the
longest peacetime expansions on record, but still without signs of an
impending recession.
Further easing by the Federal Reserve may be slow in coming, since the
Fed is concerned about the risk of fueling inflationary pressures when the
economy has only limited margins of excess capacity. The prospects for sharp
deficit reduction and the moderate inflation outlook that gave the bond market
confidence last year are not as compelling so far in 1996. Consequently, we
expect the bulk of returns this year to come from coupon income rather than
capital appreciation.
In Maryland, we expect continued modest growth since prospects for new
jobs remain limited. The construction industry offers the most hope, with the
building of two large football stadiums for National Football League teams and
possibly some gains in residential homebuilding sparked by lower mortgage
rates. The state should continue to offset this slow growth by maintaining its
conservative fiscal policies, providing the stability to support its high debt
ratings.
Respectfully submitted,
Mary J. Miller
Chairman of the Investment Advisory Committee
March 15, 1996
Portfolio Highlights
Maryland Short-Term Tax-Free Bond Fund
Key Statistics
Periods Ended
Dividend Yield* 2/29/96
___________________________ _______________
6 Months 4.12%
12 Months 4.21
Dividend Per Share
___________________________
6 Months $0.10
12 Months** 0.21
Change in Price Per Share
___________________________
6 Months (From $5.12 to $5.15) $0.03
12 Months (From $5.04 to $5.15) 0.11
Weighted Average Quality*** 1.6
Weighted Average Maturity 2.7 years
Weighted Average Effective Duration 2.3 years
*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.
**Taxability of dividends: 100% and 99.2% of dividends were exempt from
federal and Maryland state income taxes, respectively.
***On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
Maryland Tax-Free Bond Fund
Key Statistics
Periods Ended
Dividend Yield* 2/29/96
___________________________ _______________
6 Months 5.50%
12 Months 5.66
Dividend Per Share
___________________________
6 Months $0.28
12 Months** 0.57
Change in Price Per Share
___________________________
6 Months (From $10.20 to $10.40) $0.20
12 Months (From $9.99 to $10.40) 0.41
Weighted Average Quality*** 2.3
Weighted Average Maturity 15.9 years
Weighted Average Effective Duration 7.2 years
*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.
**Taxability of dividends: 100% of dividends were exempt from federal and
Maryland state income taxes.
***On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
Maryland Short-Term Tax-Free Bond Fund
Sector Diversification
Percent of Net Assets
2/29/96
_________________
Prerefunded Bonds 47%
General Obligation -- Local 19
Dedicated Tax Revenue 8
General Obligation -- State 6
Solid Waste Revenue 5
Educational Revenue 4
Escrowed to Maturity 3
Hospital Revenue 3
Lease Revenue 1
Industrial and Pollution Control Revenue 1
Pooled Loan Revenue 1
Water and Sewer Revenue 1
Other Assets Less Liabilities 1
Maryland Tax-Free Bond Fund
Sector Diversification
Percent of Net Assets
2/29/96
_________________
Prerefunded Bonds 18%
Hospital Revenue 16
Housing Finance Revenue 15
General Obligation -- Local 10
General Obligation -- State 7
Educational Revenue 5
Lease Revenue 4
Water and Sewer Revenue 4
Miscellaneous Revenue 3
Solid Waste Revenue 3
Pooled Loan Revenue 2
Industrial and Pollution Control Revenue 2
Air and Sea Transportation Revenue 2
Dedicated Tax Revenue 2
Life Care/Nursing Home Revenue 2
Nuclear Revenue 2
Ground Transportation Revenue 1
Electric Revenue 1
Escrowed to Maturity 1
Chart 3: Performance Comparison
Chart 4: Performance Comparison
Average Annual Compound Total Return
Maryland Short-Term Tax-Free Bond Fund
Periods ended February 29, 1996
Since Inception
1 Year 3 Years (1/29/93)
_______ _______ _____________
6.49% 4.19% 4.64%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
Average Annual Compound Total Return
Maryland Tax-Free Bond Fund
Periods ended February 29, 1996
Since Inception
1 Year 5 Years (3/31/87)
_______ _______ _____________
10.00% 7.97% 6.85%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
Statement of Net Assets
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund / February 29, 1996
(amounts in thousands)
Amount Value
_________ _________
MARYLAND - 91.5%
Allegany County, PCR, Westvaco Corp.,
5.20%, 1/1/98. . . . . . . . . . . . . . . . . . . $ 700 $ 716
Anne Arundel County, GO,
6.70%, 6/1/02 (Prerefunded 6/1/98!). . . . . . . . 1,125 1,216
Consolidated Water and Sewer, GO, 6.00%, 3/1/10
(Prerefunded 3/1/97!). . . . . . . . . . . . . . 800 837
Baltimore City, GO, (MBIA Insured),
8.90%, 10/15/99. . . . . . . . . . . . . . . . . . 650 755
Consolidated Public Improvement, GO,
(FGIC Insured), 7.50%, 10/15/00. . . . . . . . . . 500 570
(MBIA Insured), 9.00%, 10/15/98. . . . . . . . . 2,500 2,823
Wastewater, (MBIA Insured), 6.50%, 7/1/20
(Prerefunded 7/1/00!). . . . . . . . . . . . . . 600 655
Baltimore County, Consolidated Public Improvement,
GO, 6.90%, 4/1/06 (Prerefunded 4/1/00!). . . . . . 1,000 1,119
Metropolitan Dist., 6.80%, 4/1/01
(Prerefunded 4/1/00!). . . . . . . . . . . . . . 1,000 1,115
Baltimore County, Sheppard and Enoch Pratt
Hosp. Fac., GO, VRDN (Currently 3.25%) . . . . . . 100 100
Spring Hill Apartments, (GNMA Collateralized),
VRDN (Currently 3.35%) . . . . . . . . . . . . . 400 400
Carroll County, Consolidated Public Improvement,
GO, 4.45%, 11/1/97 . . . . . . . . . . . . . . . . 1,000 1,014
Charles County, GO, 6.375%, 12/1/03. . . . . . . . 1,580 1,734
Harford County, Public Improvement,
GO, 5.10%, 9/1/97. . . . . . . . . . . . . . . . . 1,000 1,023
Maryland, GO, 8.20%, 3/1/97. . . . . . . . . . . . 1,000 1,048
5.20%, 10/15/98. . . . . . . . . . . . . . . . 1,000 1,038
6.50%, 3/1/99. . . . . . . . . . . . . . . . . 1,000 1,075
6.70%, 7/15/99 . . . . . . . . . . . . . . . . 500 544
6.70%, 5/15/01 (Prerefunded 5/15/98!). . . . . 2,000 2,142
State and Local Fac., GO, 4.50%, 10/15/98. . . . 1,000 1,021
Maryland DOT, 6.40%, 7/15/97 . . . . . . . . . . . 2,525 2,622
6.40%, 7/15/98 . . . . . . . . . . . . . . . . 1,925 2,040
6.375%, 11/1/98. . . . . . . . . . . . . . . . 1,875 1,998
6.50%, 7/15/01 . . . . . . . . . . . . . . . . 1,200 1,287
6.50%, 7/15/02 (Prerefunded 7/15/98!). . . . . 1,000 1,075
6.80%, 11/15/02 (Prerefunded 11/15/98!). . . . 2,000 2,181
6.70%, 8/15/05 (Prerefunded 8/15/99!). . . . . 1,000 1,102
6.80%, 11/1/05 (Prerefunded 11/1/99!). . . . . 525 583
Maryland Economic Dev. Corp.,
Roland Park Country School,
5.20%, 11/1/96 . . . . . . . . . . . . . . . . 735 735
5.35%, 11/1/97 . . . . . . . . . . . . . . . . 730 733
5.50%, 11/1/98 . . . . . . . . . . . . . . . . 725 730
Maryland Environmental Service,
Cecil County Landfill, 5.50%, 3/1/97 . . . . . . . 385 391
5.50%, 9/1/97. . . . . . . . . . . . . . . . . 395 403
Midshore Landfill, (AMBAC Insured),
5.20%, 9/1/96. . . . . . . . . . . . . . . . . . 760 767
Maryland HHEFA, Anne Arundel Medical Center,
(AMBAC Insured), 3.85%, 7/1/97 . . . . . . . . . . 940 943
Doctor's Community Hosp., 4.25%, 7/1/96. . . . . 135 135
8.75%, 7/1/22 (Prerefunded 7/1/00!). . . . . . 3,965 4,745
Francis Scott Key Medical Center, (FGIC Insured),
6.75%, 7/1/23(Prerefunded 7/1/00!) . . . . . . . 3,600 4,025
Greater Baltimore Medical Center,
6.75%, 7/1/11. . . . . . . . . . . . . . . . . 500 567
VRDN (Currently 3.35%) . . . . . . . . . . . . 100 100
Johns Hopkins Hosp., 7.00%, 7/1/23
(Prerefunded 7/1/00!). . . . . . . . . . . . . . $ 510 $ 575
Kaiser Permanente, VRDN (Currently 3.25%). . . . 600 600
Memorial Hosp. of Cumberland, 9.25%, 7/1/17
(Prerefunded 7/1/97!). . . . . . . . . . . . . . 3,000 3,279
Mercy Medical Center, 7.90%, 7/1/09
(Prerefunded 7/1/99!). . . . . . . . . . . . . . 150 170
North Arundel Hosp., (BIGI Insured),
7.875%, 7/1/21 . . . . . . . . . . . . . . . . . 1,250 1,386
Pooled Loan Program,
VRDN (Currently 3.25%) . . . . . . . . . . . . . 600 600
Maryland Water Quality Fin. Administration,
Revolving Loan Fund, 5.60%, 9/1/99 . . . . . . . . 500 526
Montgomery County, Consolidated Public Improvement,
GO, 6.30%, 4/1/97. . . . . . . . . . . . . . . 900 929
5.25%, 10/1/97 . . . . . . . . . . . . . . . . 885 909
6.80%, 11/1/02 (Prerefunded 11/1/99!). . . . . 2,000 2,220
Western County Swim Fac., 7.375%, 10/1/09
(Prerefunded 10/1/97!) . . . . . . . . . . . . . 1,500 1,614
Northeast Maryland Waste Disposal Auth.,
Southwest Resource Recovery Fac.,
(MBIA Insured), 6.85%, 1/1/99. . . . . . . . . . . 3,425 3,675
Prince George's County, Consolidated Public
Improvement, GO, 7.20%, 2/1/06
(Prerefunded 2/1/99!). . . . . . . . . . . . . 600 658
7.00%, 2/1/98. . . . . . . . . . . . . . . . . 1,500 1,588
Prince George's County, Dimensions Health Corp.,
6.35%, 7/1/96. . . . . . . . . . . . . . . . . . . 625 631
Saint Mary's County, GO, (MBIA Insured),
7.00%, 3/1/97. . . . . . . . . . . . . . . . . 560 580
7.00%, 3/1/98. . . . . . . . . . . . . . . . . 585 621
Univ. of Maryland, 7.00%, 10/1/05
(Prerefunded 10/1/99!) . . . . . . . . . . . . . . 500 557
VRDN (Currently 3.15%) . . . . . . . . . . . . 800 800
Washington Suburban Sanitary Dist.,
GO, 5.50%, 6/1/97. . . . . . . . . . . . . . . . . 1,000 1,025
7.25%, 6/1/97. . . . . . . . . . . . . . . . . 750 785
5.90%, 11/1/98 . . . . . . . . . . . . . . . . 2,000 2,110
8.00%, 1/1/00. . . . . . . . . . . . . . . . . 3,295 3,749
Wicomico County, Consolidated Public Improvement,
GO, (FGIC Insured), 7.00%, 2/1/98. . . . . . . . . 750 795
PUERTO RICO - 7.1%
Puerto Rico Commonwealth, Highway and
Transportation Auth., 8.125%, 7/1/13
(Prerefunded 7/1/98!). . . . . . . . . . . . . . . 3,000 3,348
Puerto Rico Electric Power Auth., 7.125%, 7/1/14
(Prerefunded 7/1/99!). . . . . . . . . . . . . . . 2,070 2,299
Puerto Rico Ind., Med., Higher Ed. and
Environmental Pollution Control Fac. Fin. Auth.,
Catholic Univ. of Puerto Rico, 4.10%, 12/1/96. . . 210 211
4.40%, 12/1/97 . . . . . . . . . . . . . . . . 215 217
Total Investments in Securities -
98.6% of Net Assets (Cost $82,723) . . . . . . . . $ 84,564
Other Assets Less Liabilities . . . . . . . . . . 1,220
__________
Net Assets Consist of: Value
__________
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . . . $ 1
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . . . . . (872)
Net unrealized gain (loss) . . . . . . . . . . . . 1,841
Paid-in-capital applicable to 16,667,336
no par value shares of beneficial interest
outstanding; unlimited number of
shares authorized. . . . . . . . . . . . . . . . . 84,814
__________
NET ASSETS . . . . . . . . . . . . . . . . . . . . $ 85,784
__________
__________
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . $ 5.15
______
______
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
BIGI Bond Investors Guaranty Insurance
DOT Department of Transportation
FGIC Financial Guaranty Insurance Company
GNMA Government National Mortgage
GO General Obligation
HHEFA Health & Higher Educational Facility Authority
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
VRDN Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
T. Rowe Price Maryland Tax-Free Bond Fund / February 29, 1996
(amounts in thousands)
Amount Value
_________ _________
MARYLAND - 93.7%
Allegany Co., PCR, Westvaco Corp., 6.20%, 1/1/08 . $ 1,350 $ 1,455
Anne Arundel County, GO,
Consolidated General Improvement,
6.90%, 1/15/08 (Prerefunded 1/15/99!). . . . . 1,150 1,260
6.30%, 8/1/16. . . . . . . . . . . . . . . . . 775 834
6.30%, 8/1/19. . . . . . . . . . . . . . . . . 725 777
6.30%, 8/1/20. . . . . . . . . . . . . . . . . 705 756
6.30%, 8/1/21. . . . . . . . . . . . . . . . . 790 847
Consolidated Water and Sewer, 7.20%,
4/15/13 (Prerefunded 4/15/00!) . . . . . . . . . 625 706
5.00%, 9/1/13. . . . . . . . . . . . . . . . . 2,330 2,250
7.20%, 4/15/14 (Prerefunded 4/15/00!). . . . . 625 706
5.00%, 9/1/14. . . . . . . . . . . . . . . . . 2,330 2,235
5.00%, 9/1/15. . . . . . . . . . . . . . . . . 2,330 2,219
5.00%, 9/1/16. . . . . . . . . . . . . . . . . 2,325 2,211
6.30%, 8/1/22. . . . . . . . . . . . . . . . . 450 482
6.30%, 8/1/24. . . . . . . . . . . . . . . . . 720 772
Anne Arundel County, PCR, Baltimore Gas and
Electric, 6.00%, 4/1/24. . . . . . . . . . . . . . 6,085 6,303
TECP, 3.35%, 4/11/96 * . . . . . . . . . . . . 1,000 1,000
Baltimore City, Board of Ed.
Administration Headquarters,
COP, (MBIA Insured), 7.25%, 4/1/16 . . . . . . . . 3,200 3,553
Consolidated Public Improvement, GO,
(FGIC Insured), Zero Coupon, 10/15/06. . . . . . . 3,100 1,798
Zero Coupon, 10/15/08. . . . . . . . . . . . . 3,800 1,932
Zero Coupon, 10/15/09. . . . . . . . . . . . . 4,600 2,158
7.50%, 10/15/09. . . . . . . . . . . . . . . . 2,635 3,298
(MBIA Insured), 7.00%, 10/15/07. . . . . . . . . 500 599
7.00%, 10/15/08. . . . . . . . . . . . . . . . 5,190 6,240
Convention Center, (FGIC Insured),
6.00%, 9/1/17. . . . . . . . . . . . . . . . . . 5,285 5,477
Economic Dev., Fells Point Associates,
(GNMA Collateralized),
5.75%, 4/20/31 . . . . . . . . . . . . . . . . . 1,600 1,593
Rivoli Office Building Fac., COP, (MBIA Insured),
7.20%, 4/1/10. . . . . . . . . . . . . . . . . 1,950 2,160
7.20%, 4/1/10 (Prerefunded 4/1/00!). . . . . . 1,300 1,469
7.25%, 4/1/16. . . . . . . . . . . . . . . . . 5,845 6,490
7.25%, 4/1/16 (Prerefunded 4/1/00!). . . . . . 1,655 1,873
Wastewater, (MBIA Insured), 5.60%, 7/1/13. . . . 14,300 14,601
Water Projects, (FGIC Insured), 6.00%, 7/1/15. . 6,250 6,681
Baltimore City, Port Fac., E.I. DuPont - CONOCO,
6.50%, 10/1/11 . . . . . . . . . . . . . . . . . . 10,400 11,382
Tindeco Wharf Apartments, (GNMA Collateralized),
6.60%, 12/20/24. . . . . . . . . . . . . . . . . 1,000 1,040
Baltimore County, GO, 5.00%, 8/1/07. . . . . . . . 3,150 3,202
Pension Funding, GO, 7.10%, 10/1/12
(Prerefunded 10/1/99!) . . . . . . . . . . . . . 3,195 3,573
Baltimore County, North Brooke Apartment,
(GNMA Guaranteed), 6.35%, 1/20/21. . . . . . . . . 2,000 2,067
PCR, Bethlehem Steel, 7.55%, 6/1/17. . . . . . . 3,300 3,468
Pickersgill Retirement Community,
7.70%, 1/1/21. . . . . . . . . . . . . . . . . . 3,550 3,737
Stella Maris, 7.50%, 3/1/21. . . . . . . . . . . 2,760 2,932
Bel Air, Parking, COP, (CGIC Insured),
7.80%, 6/1/10 (Prerefunded 12/1/98!) . . . . . . . 1,500 1,683
Calvert County, PCR, Baltimore Gas and Electric,
5.55%, 7/15/14 . . . . . . . . . . . . . . . . . . $ 7,300 $ 7,250
Carroll County, Consolidated Public Improvement, GO,
6.00%, 11/1/06 (Prerefunded 11/1/99!). . . . . 800 866
5.30%, 11/1/13 . . . . . . . . . . . . . . . . 2,210 2,193
7.30%, 10/1/20 . . . . . . . . . . . . . . . . 2,000 2,265
Copper Ridge, 7.75%, 1/1/18. . . . . . . . . . . 3,000 3,183
Fairhaven, 7.75%, 1/1/11 . . . . . . . . . . . . 1,000 1,074
Charles County, Holly Station, (FHA Guaranteed),
6.45%, 5/1/26. . . . . . . . . . . . . . . . . . . 1,780 1,827
Damascus Gardens Dev. Corp., Multi Family,
(FHA Guaranteed), 7.375%, 11/1/21. . . . . . . . . 3,950 3,961
Frederick, General Improvement, GO, VRDN
(Currently 3.40%). . . . . . . . . . . . . . . . . 2,500 2,500
(FGIC Insured), 6.125%, 12/1/09. . . . . . . . . . 1,840 1,989
Frederick County, GO, 7.20%, 4/1/05
(Prerefunded 4/1/99!). . . . . . . . . . . . . . . 1,000 1,108
Gaithersburg Economic Auth.,
Asbury Methodist Home, 5.75%, 1/1/11 . . . . . . . 1,000 989
7.85%, 1/1/20 (Prerefunded 1/1/00!). . . . . . 6,500 7,463
Gaithersburg Hosp. Fac.,
Shady Grove Adventist Hosp., (FSA Insured),
6.50%, 9/1/12. . . . . . . . . . . . . . . . . 5,000 5,677
Harford County, Consolidated Public Improvement,
GO, 5.00%, 3/1/13. . . . . . . . . . . . . . . . . 1,500 1,443
5.00%, 3/1/14. . . . . . . . . . . . . . . . . 1,500 1,433
5.00%, 3/1/15. . . . . . . . . . . . . . . . . 1,400 1,328
5.00%, 3/1/16. . . . . . . . . . . . . . . . . 1,400 1,325
Howard County, Consolidated Public Improvement, GO,
7.30%, 2/15/02 (Prerefunded 1/1/99!) . . . . . 650 707
7.30%, 2/15/08 (Prerefunded 1/1/99!) . . . . . 1,000 1,088
7.40%, 2/15/09 (Prerefunded 1/1/99!) . . . . . 250 275
7.00%, 5/15/10 (Prerefunded 5/15/00!). . . . . 2,000 2,216
5.875%, 5/15/12. . . . . . . . . . . . . . . . 3,020 3,136
Metropolitan Dist., GO, 7.15%, 5/15/14
(Prerefunded 5/15/00!) . . . . . . . . . . . . . 1,005 1,128
7.15%, 5/15/15 (Prerefunded 5/15/00!). . . . . 1,080 1,212
7.15%, 5/15/16 (Prerefunded 5/15/00!). . . . . 1,160 1,302
7.15%, 5/15/17 (Prerefunded 5/15/00!). . . . . 1,245 1,397
Special Fac., 6.00%, 2/15/21 . . . . . . . . . . 3,860 3,992
Laurel, GO, (MBIA Insured), 6.90%, 7/1/07. . . . . 1,000 1,121
7.00%, 7/1/09. . . . . . . . . . . . . . . . . 550 619
Maryland, GO, 7.00%, 10/15/03
(Prerefunded 10/15/00!). . . . . . . . . . . . . . 2,000 2,252
7.10%, 10/15/04 (Prerefunded 10/15/00!). . . . 3,000 3,403
5.00%, 10/15/07. . . . . . . . . . . . . . . . 3,620 3,677
5.00%, 10/15/09. . . . . . . . . . . . . . . . 10,000 9,980
St. Mary's County Building Commission, COP,
7.625%, 12/1/03 (Prerefunded 6/1/98!). . . . . 1,500 1,651
State and Local Fac. Loan, GO, 4.70%, 2/15/10. . 10,000 9,623
5.70%, 3/15/10 . . . . . . . . . . . . . . . . 7,500 7,946
Maryland CDA, Infrastructure, 8.375%, 6/1/08 . . . 775 854
8.50%, 6/1/18. . . . . . . . . . . . . . . . . 1,350 1,493
Single Family, 7.50%, 4/1/00 . . . . . . . . . . 500 522
7.875%, 4/1/07 . . . . . . . . . . . . . . . . 300 316
6.75%, 4/1/10 *. . . . . . . . . . . . . . . . 5,000 5,210
7.375%, 4/1/10 . . . . . . . . . . . . . . . . $ 495 $ 527
6.85%, 4/1/11. . . . . . . . . . . . . . . . . 4,980 5,244
7.25%, 4/1/11 *. . . . . . . . . . . . . . . . 2,000 2,132
6.45%, 4/1/14. . . . . . . . . . . . . . . . . 1,000 1,034
7.00%, 4/1/14. . . . . . . . . . . . . . . . . 2,760 2,943
5.875%, 4/1/17 * . . . . . . . . . . . . . . . 1,975 1,994
6.00%, 4/1/17. . . . . . . . . . . . . . . . . 2,500 2,520
7.05%, 4/1/17. . . . . . . . . . . . . . . . . 4,750 5,060
7.40%, 4/1/17. . . . . . . . . . . . . . . . . 5,395 5,750
7.60%, 4/1/17. . . . . . . . . . . . . . . . . 2,200 2,304
8.125%, 4/1/17 . . . . . . . . . . . . . . . . 1,455 1,497
8.00%, 4/1/18. . . . . . . . . . . . . . . . . 1,200 1,270
8.20%, 4/1/18. . . . . . . . . . . . . . . . . 1,150 1,205
7.25%, 4/1/19. . . . . . . . . . . . . . . . . 9,000 9,529
6.80%, 4/1/22 *. . . . . . . . . . . . . . . . 4,150 4,274
6.80%, 4/1/24 *. . . . . . . . . . . . . . . . 2,750 2,830
6.75%, 4/1/26 *. . . . . . . . . . . . . . . . 4,000 4,136
7.25%, 4/1/27. . . . . . . . . . . . . . . . . 9,250 9,745
7.625%, 4/1/29 * . . . . . . . . . . . . . . . 1,890 1,978
Maryland DOT, 6.80%, 11/1/05
(Prerefunded 11/1/99!) . . . . . . . . . . . . . . 5,500 6,105
Maryland Environmental Service,
Cecil County Landfill, 5.25%, 3/1/96 . . . . . . . 365 365
5.25%, 9/1/96. . . . . . . . . . . . . . . . . 375 378
Maryland HHEFA, Broadmead, 7.625%, 7/1/10. . . . . 1,390 1,476
Church Hosp., 8.00%, 7/1/09. . . . . . . . . . . 1,200 1,303
Doctor's Community Hosp., 8.75%, 7/1/22
(Prerefunded 7/1/00!). . . . . . . . . . . . . . 6,800 8,137
5.50%, 7/1/24. . . . . . . . . . . . . . . . . 3,070 2,643
Francis Scott Key Medical Center, (FGIC Insured),
7.00%, 7/1/10 (Prerefunded 7/1/00!). . . . . . 2,000 2,256
5.00%, 7/1/18. . . . . . . . . . . . . . . . . 4,880 4,562
5.00%, 7/1/23. . . . . . . . . . . . . . . . . 2,850 2,646
Franklin Square Hosp., (MBIA Insured),
7.50%, 7/1/19. . . . . . . . . . . . . . . . . . 4,750 5,269
Frederick Memorial Hosp., (FGIC Insured),
5.00%, 7/1/23. . . . . . . . . . . . . . . . . . 5,500 5,106
Good Samaritan Hosp., 7.40%,
7/1/09 (Prerefunded 7/1/99!) . . . . . . . . . . 1,000 1,121
5.75%, 7/1/13. . . . . . . . . . . . . . . . . 4,000 4,039
7.50%, 7/1/21 (Prerefunded 7/1/99!). . . . . . 4,000 4,497
Greater Baltimore Medical Center, VRDN
(Currently 3.35%). . . . . . . . . . . . . . . . 2,000 2,000
(FGIC Insured), 5.00%, 7/1/19. . . . . . . . . 2,860 2,670
Helix Health System, VRDN (Currently 3.40%). . . 5,000 5,000
Holy Cross Hosp., (AMBAC Insured),
7.50%, 7/1/01. . . . . . . . . . . . . . . . . 1,655 1,861
7.125%, 7/1/10 . . . . . . . . . . . . . . . . 1,400 1,553
Howard County General Hosp., 5.50%, 7/1/21 . . . 5,000 4,508
Johns Hopkins Hosp., Zero Coupon, 7/1/19 . . . . 9,785 2,597
7.00%, 7/1/23 (Prerefunded 7/1/00!). . . . . . 1,305 1,472
Johns Hopkins Univ., 6.00%, 7/1/07 . . . . . . . 1,040 1,133
7.375%, 7/1/08 . . . . . . . . . . . . . . . . 1,500 1,629
7.50%, 7/1/20. . . . . . . . . . . . . . . . . 11,015 11,982
Kaiser Permanente, VRDN (Currently 3.25%). . . . 2,000 2,000
Kennedy Kreiger Institute, VRDN
(Currently 3.35%). . . . . . . . . . . . . . . . $ 2,000 $ 2,000
7.40%, 7/1/11. . . . . . . . . . . . . . . . . 370 392
6.75%, 7/1/22. . . . . . . . . . . . . . . . . 2,850 2,897
Loyola College, VRDN (Currently 3.65%) . . . . . 6,100 6,100
Mercy Medical Center,
7.90%, 7/1/09 (Prerefunded 7/1/99!). . . . . . 2,000 2,273
8.00%, 7/1/20 (Prerefunded 7/1/99!). . . . . . 6,500 7,407
Peninsula Regional Medical Center, (MBIA Insured),
5.00%, 7/1/23. . . . . . . . . . . . . . . . . . 11,035 10,244
Pooled Loan Program, VRDN (Currently 3.25%). . . 19,100 19,100
Sinai Hosp., (AMBAC Insured),
7.30%, 7/1/05 (Prerefunded 7/1/00!). . . . . . 2,000 2,279
5.25%, 7/1/19. . . . . . . . . . . . . . . . . 3,070 2,927
Suburban Hosp., 7.60%, 7/1/18
(Prerefunded 7/1/98!). . . . . . . . . . . . . . 300 331
(AMBAC Insured), 5.125%, 7/1/21. . . . . . . . 2,500 2,369
Union Hosp. of Cecil County, 6.625%, 7/1/12. . . 1,545 1,575
Union Memorial Hosp., (MBIA Insured),
6.60%, 7/1/06. . . . . . . . . . . . . . . . . . 500 553
6.75%, 7/1/11. . . . . . . . . . . . . . . . . 3,000 3,311
6.75%, 7/1/21. . . . . . . . . . . . . . . . . 7,865 8,689
Univ. of Maryland Medical System, (FGIC Insured),
5.00%, 7/1/20. . . . . . . . . . . . . . . . . 10,950 10,206
7.00%, 7/1/22. . . . . . . . . . . . . . . . . 2,000 2,427
(MBIA Insured), 7.00%, 7/1/11
(Prerefunded 7/1/01!). . . . . . . . . . . . . . 4,550 5,210
7.00%, 7/1/17 (Prerefunded 7/1/01!). . . . . . 7,770 8,897
Maryland Ind. Dev. Fin. Auth., American Center
for Physics Headquarters Fac.,
6.25%, 1/1/07. . . . . . . . . . . . . . . . . 5,770 5,923
6.375%, 1/1/12 . . . . . . . . . . . . . . . . 4,150 4,272
6.625%, 1/1/17 . . . . . . . . . . . . . . . . 4,250 4,348
Associated Catholic Charities, 9.00%, 1/1/10 . . . 930 1,033
Bon Secours Health System, (FSA Insured),
5.929%, 8/12/22. . . . . . . . . . . . . . . . . . 10,000 10,482
Maryland Local Gov't. Income Trust
Capitalization Program, GO, COP,
6.80%, 8/1/01. . . . . . . . . . . . . . . . . 1,615 1,796
7.125%, 8/1/09 . . . . . . . . . . . . . . . . 3,000 3,330
Maryland Stadium Auth.,
Baltimore Convention Center Expansion,
(AMBAC Insured), 5.875%, 12/15/10. . . . . . . . 2,500 2,629
5.875%, 12/15/11 . . . . . . . . . . . . . . . 3,825 3,991
5.875%, 12/15/13 . . . . . . . . . . . . . . . 4,225 4,377
Ocean City Convention Center,
5.20%, 12/15/09. . . . . . . . . . . . . . . . 1,050 1,058
5.30%, 12/15/10. . . . . . . . . . . . . . . . 1,100 1,108
5.375%, 12/15/11 . . . . . . . . . . . . . . . 1,165 1,176
Maryland Transportation Auth., 6.80%, 7/1/16
(Escrowed to Maturity) . . . . . . . . . . . . . . 5,545 6,465
(FGIC Insured), Zero Coupon, 7/1/07. . . . . . . 8,500 4,834
Zero Coupon, 7/1/08. . . . . . . . . . . . . . 2,000 1,068
Zero Coupon, 7/1/09. . . . . . . . . . . . . . 10,410 5,208
Baltimore-Washington Int'l. Airport, (FGIC Insured),
6.25%, 7/1/14 *. . . . . . . . . . . . . . . . . . 3,105 3,276
6.40%, 7/1/19 *. . . . . . . . . . . . . . . . 12,395 12,986
Maryland Water Quality Fin. Administration,
Revolving Loan Fund,
Zero Coupon, 9/1/02. . . . . . . . . . . . . . 1,185 876
Zero Coupon, 9/1/07. . . . . . . . . . . . . . 1,125 627
5.50%, 9/1/11. . . . . . . . . . . . . . . . . 1,670 1,696
7.25%, 9/1/11 (Prerefunded 9/1/00!). . . . . . 1,700 1,941
7.25%, 9/1/12 (Prerefunded 9/1/00!). . . . . . $ 2,000 $ 2,284
6.70%, 9/1/13 (Prerefunded 9/1/01!). . . . . . 1,280 1,451
7.10%, 9/1/13 (Prerefunded 9/1/01!). . . . . . 985 1,136
6.00%, 9/1/15. . . . . . . . . . . . . . . . . 1,600 1,661
Maryland-National Capital Park and Planning Commission,
Little Bennett Golf Fac., 8.25%, 10/1/11 . . . . . 2,350 2,582
Prince George's County, GO,
6.90%, 7/1/05 (Prerefunded 7/1/00!). . . . . . 1,400 1,574
5.00%, 7/1/06. . . . . . . . . . . . . . . . . 2,885 2,957
6.90%, 7/1/06 (Prerefunded 7/1/00!). . . . . . 1,350 1,517
5.00%, 7/1/07. . . . . . . . . . . . . . . . . 2,850 2,884
6.90%, 7/1/07 (Prerefunded 7/1/00!). . . . . . 1,400 1,574
6.90%, 7/1/08 (Prerefunded 7/1/00!). . . . . . 1,400 1,574
6.90%, 7/1/09 (Prerefunded 7/1/00!). . . . . . 1,400 1,574
Montgomery County, Consolidated Public
Improvement, GO,
7.25%, 10/1/08 (Prerefunded 10/1/98!). . . . . 500 551
7.10%, 10/1/09 (Prerefunded 10/1/00!). . . . . 1,000 1,138
6.80%, 11/1/09 (Prerefunded 11/1/99!). . . . . 1,145 1,271
7.10%, 10/1/10 (Prerefunded 10/1/00!). . . . . 1,840 2,093
6.125%, 10/1/13. . . . . . . . . . . . . . . . 2,500 2,682
6.125%, 10/1/14. . . . . . . . . . . . . . . . 3,150 3,366
Montgomery County Housing Opportunities
Commission, Single Family,
6.50%, 7/1/11. . . . . . . . . . . . . . . . . 4,000 4,174
6.65%, 7/1/16. . . . . . . . . . . . . . . . . 2,370 2,470
6.80%, 7/1/17. . . . . . . . . . . . . . . . . 2,910 3,032
7.50%, 7/1/17. . . . . . . . . . . . . . . . . 1,815 1,931
7.625%, 7/1/17 . . . . . . . . . . . . . . . . 4,185 4,408
6.90%, 7/1/19. . . . . . . . . . . . . . . . . 2,000 2,112
7.50%, 7/1/24. . . . . . . . . . . . . . . . . 3,000 3,140
6.25%, 7/1/25. . . . . . . . . . . . . . . . . 5,500 5,589
Montgomery County, PCR, Potomac Electric Power,
5.375%, 2/15/24. . . . . . . . . . . . . . . . . . 5,410 5,231
Morgan State Univ., Academic Fees and
Auxiliary Fac., (MBIA Insured),
7.20%, 7/1/13 (Prerefunded 7/1/00!). . . . . . 1,000 1,136
6.05%, 7/1/15. . . . . . . . . . . . . . . . . 1,020 1,098
Northeast Maryland Waste Disposal Auth.,
Southwest Resource Recovery Fac.,
6.00%, 7/1/06 *. . . . . . . . . . . . . . . . 2,200 2,334
6.00%, 7/1/08 *. . . . . . . . . . . . . . . . 10,000 10,507
6.20%, 7/1/10. . . . . . . . . . . . . . . . . 2,275 2,371
6.30%, 7/1/16 *. . . . . . . . . . . . . . . . 10,050 10,474
Prince George's County, Consolidated Public
Improvement, GO,
7.20%, 2/1/05 (Prerefunded 2/1/99!). . . . . . 1,000 1,096
(MBIA Insured), 5.25%, 1/1/14. . . . . . . . . . 2,000 1,968
7.20%, 7/1/06. . . . . . . . . . . . . . . . . 420 467
7.20%, 7/1/06 (Prerefunded 7/1/02!). . . . . . 1,985 2,323
5.375%, 7/1/14 . . . . . . . . . . . . . . . . 10,435 9,915
7.00%, 7/1/22 (Prerefunded 7/1/02!). . . . . . 2,660 3,084
5.30%, 7/1/24. . . . . . . . . . . . . . . . . 3,685 3,387
Equipment Refinancing & Acquisition Program,
COP, 6.70%, 7/15/96. . . . . . . . . . . . . . . . 1,160 1,169
Solid Waste Management System, 6.90%, 6/30/05
(Prerefunded 6/30/00!) . . . . . . . . . . . . . $ 1,500 $ 1,686
6.90%, 6/30/06 (Prerefunded 6/30/00!). . . . . 1,000 1,124
7.00%, 6/30/07 (Prerefunded 6/30/00!). . . . . 1,120 1,263
7.00%, 6/30/09 (Prerefunded 6/30/00!). . . . . 1,255 1,415
Prince George's County, Collington Episcopal
Life Care Community, Inc.,
5.625%, 4/1/09 . . . . . . . . . . . . . . . . 1,500 1,463
Dimensions Health Corp., 7.00%, 7/1/01 . . . . . . 2,450 2,696
PCR, Potomac Electric, 6.375%, 1/15/23 . . . . . 5,000 5,331
Prince George's County Housing Auth.,
New Keystone, (MBIA Insured),
6.80%, 7/1/25. . . . . . . . . . . . . . . . . 2,600 2,732
Riverview Terrace, (GNMA Guaranteed),
6.70%, 6/20/20 * . . . . . . . . . . . . . . . . 1,500 1,591
Stevenson Apartments, 6.35%, 7/20/20 . . . . . . 2,200 2,265
Prince George's County IDA, Gabriel DuVall
Law Building, 8.00%, 9/1/07. . . . . . . . . . . . 1,185 1,261
Upper Marlboro Justice Center, (MBIA Insured),
5.25%, 6/30/19 . . . . . . . . . . . . . . . . . 1,500 1,430
Univ. of Maryland, VRDN (Currently 3.15%). . . . . 1,000 1,000
7.00%, 10/1/05 (Prerefunded 10/1/99!). . . . . 2,000 2,230
6.375%, 4/1/09 . . . . . . . . . . . . . . . . 2,100 2,297
7.20%, 10/1/09 (Prerefunded 10/1/99!). . . . . 1,400 1,570
5.50%, 4/1/12. . . . . . . . . . . . . . . . . 1,000 1,011
6.50%, 4/1/12. . . . . . . . . . . . . . . . . 440 479
5.60%, 4/1/16. . . . . . . . . . . . . . . . . 2,000 2,020
Washington County Public Fac., GO,
6.70%, 12/1/04 (Prerefunded 12/1/98!). . . . . 1,040 1,137
6.70%, 12/1/05 (Prerefunded 12/1/98!). . . . . 1,115 1,219
Washington County Sanitary Dist., GO,
6.875%, 2/1/10 (Prerefunded 2/1/00!) . . . . . 3,500 3,899
7.00%, 2/1/15 (Prerefunded 2/1/00!). . . . . . 2,000 2,237
Washington Suburban Sanitary Dist., GO,
7.40%, 7/1/07 (Prerefunded 7/1/98!). . . . . . 700 769
6.90%, 6/1/08 (Prerefunded 6/1/00!). . . . . . 1,500 1,683
6.90%, 6/1/09 (Prerefunded 6/1/00!). . . . . . 2,300 2,581
6.20%, 6/1/11. . . . . . . . . . . . . . . . . 2,400 2,583
6.20%, 6/1/12. . . . . . . . . . . . . . . . . 1,500 1,610
5.50%, 6/1/13. . . . . . . . . . . . . . . . . 1,000 1,013
6.40%, 1/1/15. . . . . . . . . . . . . . . . . 2,270 2,453
6.625%, 6/1/18 . . . . . . . . . . . . . . . . 3,665 4,032
Worcester County Sanitary Dist.,
6.50%, 8/15/12 . . . . . . . . . . . . . . . . . . 2,000 2,186
PUERTO RICO - 6.0%
Puerto Rico Commonwealth, GO, (MBIA Insured),
5.50%, 7/1/06. . . . . . . . . . . . . . . . . 2,180 2,323
6.50%, 7/1/07. . . . . . . . . . . . . . . . . 2,000 2,296
5.50%, 7/1/08. . . . . . . . . . . . . . . . . 1,240 1,311
6.25%, 7/1/11. . . . . . . . . . . . . . . . . 2,000 2,236
6.25%, 7/1/12. . . . . . . . . . . . . . . . . 1,750 1,957
5.65%, 7/1/15. . . . . . . . . . . . . . . . . 1,500 1,561
5.375%, 7/1/22 . . . . . . . . . . . . . . . . 7,475 7,305
Puerto Rico Commonwealth Highway and
Transportation Auth.,
(FSA Insured), 5.50%, 7/1/15 . . . . . . . . . . . $ 5,000 $ 5,114
Puerto Rico Electric Power Auth.,
7.00%, 7/1/07 (Prerefunded 7/1/99!). . . . . . 2,530 2,796
7.00%, 7/1/11 (Prerefunded 7/1/01!). . . . . . 1,200 1,375
7.00%, 7/1/21 (Prerefunded 7/1/01!). . . . . . 1,895 2,178
Puerto Rico Infrastructure Fin. Auth.,
7.50%, 7/1/09. . . . . . . . . . . . . . . . . . . 5,150 5,614
Puerto Rico Municipal Fin. Agency,
(FSA Insured), 6.00%, 7/1/14 . . . . . . . . . . . 3,030 3,185
Puerto Rico Sewer Auth., Aquaduct and Sewer, GO,
6.00%, 7/1/09. . . . . . . . . . . . . . . . . . . 1,500 1,591
Univ. of Puerto Rico, (MBIA Insured),
5.25%, 6/1/25. . . . . . . . . . . . . . . . . . . 7,325 7,039
Total Investments in Securities -
99.7% of Net Assets (Cost $743,725). . . . . . . . 796,212
Futures Contracts
Contract Unrealized
Expiration Value Gain (Loss)
_________ _________ __________
Long, 200 U.S. Treasury
thirty-year contracts,
$1,683,000 of Municipal
Bonds pledged as
initial margin 6/96 $ 22,863 $ (137)
Net payments (receipts)
of variation margin to date. . . . . . . . . . . . 150
_________
Variation margin receivable (payable) on open
future contracts . . . . . . . . . . . . . . . . . 13
Other Assets Less Liabilities . . . . . . . . . . 2,364
__________
Net Assets Consist of: Value
__________
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . . . $ 1
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . . . . . (4,785)
Net unrealized gain (loss) . . . . . . . . . . . . 52,350
Paid-in-capital applicable to 76,765,372 no par value
shares of beneficial interest outstanding;
unlimited number of shares authorized. . . . . . . 751,023
__________
NET ASSETS . . . . . . . . . . . . . . . . . . . . $798,589
__________
__________
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . $10.40
__________
__________
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
CDA Community Development Administration
CGIC Capital Guaranty Insurance Corp.
COP Certificates of Participation
DOT Department of Transportation
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Authority
FSA Financial Security Assurance Corp.
GNMA Government National Mortgage
GO General Obligation
HHEFA Health & Higher Educational Facility Authority
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
TECP Tax-Exempt Commercial Paper
VRDN Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Maryland Tax-Free Funds / Year Ended February 29, 1996
(in thousands)
Short-Term
Bond Fund Bond Fund
___________ ___________
INVESTMENT INCOME
Interest income. . . . . . . . . . . . . . . $ 3,921 $ 46,371
___________ ___________
Expenses
Investment management. . . . . . . . . . . 326 3,352
Custodian and accounting . . . . . . . . . 99 162
Shareholder servicing. . . . . . . . . . . 80 517
Legal and audit. . . . . . . . . . . . . . 13 13
Trustees . . . . . . . . . . . . . . . . . 6 12
Prospectus and shareholder reports . . . . 5 50
Miscellaneous. . . . . . . . . . . . . . . 3 14
___________ ___________
Total expenses . . . . . . . . . . . . . . 532 4,120
___________ ___________
Net investment income. . . . . . . . . . . . 3,389 42,251
___________ ___________
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities . . . . . . . . . . . . . . . . 286 5,846
Futures. . . . . . . . . . . . . . . . . . - (916)
___________ ___________
Net realized gain (loss) . . . . . . . . . 286 4,930
___________ ___________
Change in net unrealized gain or loss on:
Securities . . . . . . . . . . . . . . . . 1,403 25,728
Futures. . . . . . . . . . . . . . . . . . - (137)
___________ ___________
Change in net unrealized
gain or loss on securities . . . . . . . . 1,403 25,591
___________ ___________
Net realized and unrealized gain (loss). . . 1,689 30,521
___________ ___________
INCREASE (DECREASE) IN
NET ASSETS FROM OPERATIONS . . . . . . . . . $ 5,078 $ 72,772
___________ ___________
___________ ___________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Maryland Tax-Free Funds
(in thousands)
Short-Term Bond Fund Bond Fund
______________________ ____________________
Year Year Year Year
Ended Feb. Ended Feb. Ended Feb. Ended Feb.
29, 1996 28, 1995 29, 1996 28, 1995
___________ ___________ ___________ ___________
INCREASE (DECREASE) IN
NET ASSETS FROM
Operations
Net investment
income. . . . . . . . . . $ 3,389 $ 2,812 $ 42,251 $ 41,894
Net realized gain
(loss). . . . . . . . . . 286 (1,147) 4,930 (8,699)
Change in net unrealized
gain or loss. . . . . . . 1,403 359 25,591 (28,245)
__________ __________ __________ __________
Increase (decrease) in
net assets
from operations . . . . . 5,078 2,024 72,772 4,950
__________ __________ __________ __________
Distributions to shareholders
Net investment
income. . . . . . . . . . (3,389) (2,812) (42,251) (41,894)
Net realized gain . . . . - - - (1,541)
__________ __________ __________ __________
Decrease in net assets from
distributions . . . . . . (3,389) (2,812) (42,251) (43,435)
__________ __________ __________ __________
Capital share transactions*
Shares sold . . . . . . . 40,883 57,415 133,827 146,960
Distributions reinvested. 2,841 2,272 31,291 32,662
Shares redeemed . . . . . (34,437) (60,140) (121,873) (237,716)
__________ __________ __________ __________
Increase (decrease) in
net assets from capital
share transactions. . . . 9,287 (453) 43,245 (58,094)
__________ __________ __________ __________
Increase (decrease) in
net assets . . . . . . . . 10,976 (1,241) 73,766 (96,579)
NET ASSETS
Beginning of period. . . . 74,808 76,049 724,823 821,402
__________ __________ __________ __________
End of period. . . . . . . $ 85,784 $ 74,808 $798,589 $724,823
__________ __________ __________ __________
__________ __________ __________ __________
*Share information
Shares sold . . . . . . . 8,007 11,421 13,045 14,907
Distributions reinvested. 556 452 3,049 3,322
Shares redeemed . . . . . (6,739) (11,985) (11,885) (24,287)
__________ __________ __________ __________
Increase (decrease) in shares
outstanding . . . . . . . 1,824 (112) 4,209 (6,058)
__________ __________ __________ __________
__________ __________ __________ __________
The accompanying notes are an integral part of these financial statements.
Notes To Financial Statements
T. Rowe Price Maryland Tax-Free Funds / February 29, 1996
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 Maryland Short-Term Tax-Free Bond Fund
(the Short-Term Bond Fund) and the Maryland Tax-Free Bond Fund (the Bond
Fund), nondiversified, open-end management investment companies, are two of
the portfolios established by the Trust.
A) Valuation - Debt securities are generally traded in the over-the-counter
market. Investments in securities originally issued with 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 maturities when issued of 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. Financial futures contracts are valued
at closing settlement prices.
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
each fund, as authorized by the Board of Trustees.
B) 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.
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 the identified cost basis. 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. Payments ( "variation margin") made or received by each
fund to settle the daily fluctuations in the value of futures contracts are
recorded as unrealized gain or loss until the contracts are closed. Unrealized
gains and losses on futures contracts are included in Change in net unrealized
gain or loss in the accompanying financial statements.
Note 2 - Investment Transactions
Consistent with their investment objectives, the funds engage in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of each fund are
described more fully in each fund's prospectus and Statement of Additional
Information.
A) Futures Contracts - At February 29, 1996, the Bond Fund was a party to
futures contracts, which provide for the future sale by one party and purchase
by another of a specified amount of a specific financial instrument at an
agreed upon price, date, time, and place. Risks arise from possible
illiquidity of the futures market and from movements in security values.
B) Other - Purchases and sales of portfolio securities, other than short-term
securities, for the year ended February 29, 1996, were as follows:
Short-Term
Bond Fund Bond Fund
_____________ ____________
Purchases $50,031,000 $205,807,000
Sales 30,997,000 175,538,000
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 $874,000, of which $421,000
expire in 2003, and $453,000 expire in 2004. The Bond Fund has unused realized
capital loss carryforwards for federal income tax purposes of $4,188,000,
which expires in 2003. Capital loss carryforwards utilized in fiscal 1996
amounted to $1,984,000. Each fund intends to retain gains realized in future
periods that may be offset by available capital loss carryforwards.
In order for each fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, the
following reclassifications were made during the year ended February 29, 1996.
The results of operations and net assets were not affected by the
reclassifications.
Short-Term
Bond Fund Bond Fund
____________ ____________
Undistributed Net
Investment Income $1,000 $1,000
Undistributed Net
Realized Gain (1,000) (1,000)
________ __________
Paid-in-Capital $- $-
________ __________
________ __________
At February 29, 1996, the aggregate cost of investments for the
Short-Term Bond and Bond funds for federal income tax and financial reporting
purposes was $82,723,000 and $743,725,000, respectively. Net unrealized gain
(loss) on investments was as follows:
Short-Term
Bond Fund Bond Fund
____________ ____________
Appreciated
Investments $1,841,000 $52,850,000
Depreciated
Investments - (363,000)
_________ __________
Net Unrealized
Gain (Loss) $1,841,000 $52,487,000
_________ __________
_________ __________
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 $25,000 and $276,000 was payable at February 29, 1996 by the
Short-Term Bond Fund and Bond Fund, respectively. 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 29, 1996, and for the year then ended, the effective
annual Group Fee rate was 0.33% and 0.34%, respectively. Each fund pays a pro
rata share of the Group Fee based on the ratio of its net assets to those of
the Group.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through February 28, 1997, which would cause the
Short-Term Bond Fund's ratio of expenses to average net assets to exceed
0.65%. Thereafter through February 28, 1999, 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 fund's ratio of expenses to average net
assets to exceed 0.65%. Pursuant to this agreement, $33,000 of management fees
were not accrued by the Short-Term Bond Fund for the year ended February 29,
1996. Additionally, $262,000 of unaccrued fees and expenses related to a
previous expense limitation 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., is
each fund's transfer and dividend disbursing agent and provides shareholder
and administrative services to the funds. The Short-Term Bond and Bond funds
incurred expenses pursuant to these related party agreements totaling
approximately $128,000 and $504,000, respectively, for the year ended February
29, 1996, of which $13,000 and $51,000, respectively, were payable at
period-end.
Financial Highlights
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
For a share outstanding throughout each period
_________________________________________________
Year Ended January 29, 1993!
_______________________________
Feb. 29, Feb. 28, Feb. 28, to
1996 1995 1994 Feb. 28, 1993
NET ASSET VALUE, BEGINNING
OF PERIOD. . . . . . . . . . . .$5.04 $5.09 $5.07 $5.00
_____ _____ _____ _____
Investment activities
Net investment income . . . . . 0.21* 0.18* 0.15* 0.01*
Net realized and unrealized
gain (loss) . . . . . . . . . . 0.11 (0.05) 0.02 0.07
_____ _____ _____ _____
Total from investment
activities. . . . . . . . . . . 0.32 0.13 0.17 0.08
_____ _____ _____ _____
Distributions
Net investment income . . . . .(0.21) (0.18) (0.15) (0.01)
_____ _____ _____ _____
NET ASSET VALUE, END OF PERIOD .$5.15 $5.04 $5.09 $5.07
_____ _____ _____ _____
_____ _____ _____ _____
RATIOS/SUPPLEMENTAL DATA
Total return . . . . . . . . . .6.49% 2.64% 3.49% 1.67%
Ratio of expenses to
average net assets . . . . . . .0.65%* 0.65%* 0.65%* 0.65%!*
Ratio of net investment income
to average net assets. . . . . .4.14% 3.59% 3.09% 2.96%!
Portfolio turnover rate. . . . .39.3% 105.3% 20.5% 96.9%!
Net assets, end of period
(in thousands) . . . . . . . . .$85,784 $74,808 $76,049 $8,323
! Annualized.
* Excludes expenses in excess of a 0.65% voluntary expense limitation in
effect through February 28, 1997.
! Commencement of operations.
Financial Highlights
T. Rowe Price Maryland Tax-Free Bond Fund
For a share outstanding throughout each period
______________________________________________
Year Ended
______________________________________________
Feb. 29, Feb. 28, Feb. 28, Feb. 28,Feb. 29,
1996 1995 1994 1993 1992
__________________________________________
NET ASSET VALUE, BEGINNING
OF PERIOD. . . . . . . . . . $ 9.99 $10.45 $10.50 $ 9.82 $ 9.61
______ ______ ______ ______ ______
Investment activities
Net investment income. . . 0.57 0.56 0.56 0.57 0.59
Net realized and
unrealized
gain (loss). . . . . . . . 0.41 (0.44) 0.05 0.73 0.26
______ ______ ______ ______ ______
Total from investment
activities . . . . . . . . 0.98 0.12 0.61 1.30 0.85
______ ______ ______ ______ ______
Distributions
Net investment income. . . (0.57) (0.56) (0.56) (0.57) (0.59)
Net realized gain. . . . . - (0.02) (0.10) (0.05) (0.05)
______ ______ ______ ______ ______
Total distributions. . . . (0.57) (0.58) (0.66) (0.62) (0.64)
______ ______ ______ ______ ______
NET ASSET VALUE,
END OF PERIOD. . . . . . . . $10.40 $9.99 $10.45 $10.50 $9.82
______ ______ ______ ______ ______
______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total return . . . . . . . . 10.00% 1.43% 5.93% 13.75% 9.13%
Ratio of expenses to
average net assets . . . . . 0.54% 0.57% 0.57% 0.61% 0.64%
Ratio of net investment
income to average
net assets . . . . . . . . . 5.53% 5.73% 5.31% 5.72% 6.04%
Portfolio turnover rate. . . 23.9% 28.9% 24.3% 23.3% 21.9%
Net assets, end of period
(in thousands) . . . . . .$798,589 $724,823 $821,402 $724,469 $475,188
Report of Independent Accountants
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 Short-Term Tax-Free Bond Fund and T. Rowe Price Maryland Tax-Free
Bond Fund (two of the portfolios comprising the T. Rowe Price State Tax-Free
Income Trust) as of February 29, 1996, 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 29, 1996, 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 Short-Term Tax-Free Bond Fund and T. Rowe Price Maryland
Tax-Free Bond Fund as of February 29, 1996, 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 19, 1996
Chart 1: A 2-line chart showing yields on the Maryland Bond Index and the
3-year Maryland General Obligation bond from 2/95 through 2/96.
Chart 2: A chart consisting of 7 bars showing issuance of new municipal bonds
in Maryland from 1989 through 1995.
Chart 3: Performance chart showing growth of $10,000 in Maryland Short-Term
Tax-Free Bond Fund versus benchmarks from 1/93 through 2/96.
Chart 4: Performance chart showing growth of $10,000 in Maryland Tax-Free Bond
Fund versus benchmarks from 3/87 through 2/96.
