- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
SemiAnnual Report
Maryland Tax-Free Funds
- --------------------------------------------------------------------------------
August 31, 1997
- --------------------------------------------------------------------------------
Report Highlights
================================================================================
Maryland Tax-Free Funds
* Municipal bonds outperformed Treasuries during most of the past six months
as inflation remained subdued despite strong economic growth.
* Returns for the Maryland Short-Term Tax-Free Bond Fund and the Maryland
Tax-Free Bond Fund were attractive for the six-month period but trailed
their peer group averages.
* Income for both funds remained consistent with previous periods.
* We believe the environment is still favorable for fixed income investors
due to low inflation and fiscal restraint despite strong economic growth.
FELLOW SHAREHOLDERS
The municipal bond market and your funds generated attractive returns
during the six months ended August 31, 1997. Strong economic growth in the first
quarter of 1997 led the Federal Reserve to raise the federal funds target rate a
quarter-point to 5.50% in March because of concerns that inflation might
accelerate. However, despite continued robust growth, the Fed has left rates
unchanged since March as inflation remained subdued.
MARKET ENVIRONMENT
<PAGE>
Interest rates fluctuated as the market wrestled with a conflicting
combination of strong economic growth and declining inflation. Both money market
and longer-term bond yields began rising before the March rate hike and
continued to rise for a short time afterward in anticipation of further
tightening. However, excellent news on inflation, progress on controlling the
federal budget deficit, and little evidence of wage pressures diminished fears
of further rate increases. Short-term taxable rates subsequently fell in
mid-April to their earlier levels. Long-term taxable bond yields also began to
fall in the late spring after climbing to more than 7% in April. The 30-year
Treasury bond yield averaged just over 6.50% in July and August and 6.80% for
the past six months, almost identical to its average over the two preceding
years.
[yield chart showing the Maryland Bond Index and the Maryland 3-year
General Obligation Bond from 8/96 through 8/97. Associate with following
paragraph. Source: T. Rowe Price Associates ]
Municipal interest rates, in Maryland and across the nation, followed a
similar pattern: rising in March, peaking in April, then falling in late June
and July when preliminary data signaled a slowdown. Rates reversed in August as
stronger-than-expected economic data changed the outlook for the third quarter.
The yield of 15-year Maryland general obligation (GO) bonds ranged from 4.85% to
5.55% for the six months, finishing the period at 5.05%. Three-year Maryland GO
bond yields hit 4.55% at their high point and 4.10% at their lowest before
settling at 4.15% by August's end. Municipal bonds outperformed Treasuries
throughout most of the period except for June, when the highest monthly supply
in four years exceeded demand. Overall, both the municipal and Treasury yield
curves flattened as short-term rates rose modestly in anticipation of further
Fed tightening and long-term rates trended lower on positive inflation news.
Maryland has a diversified economy and high wealth levels, ranking seventh
among the states in terms of per capita personal income. During the 1990s,
though, the state's economic growth rate has lagged the nation's, reflecting
weakness in the government, defense, and manufacturing sectors. In 1996,
employment grew by 1.1%, compared with 2.0% for the U.S. overall.
==============================
based on a tradition of fiscal
responsibility, we do not
expect the State will
jeopardize its AAA debt rating
. . .
- ------------------------------
The state has managed its financial affairs well in this context, closing
fiscal 1996 with a 7.1% reserve position and expecting to increase it in fiscal
1997. The fiscal 1998 budget features the first phase of a 10% personal income
tax cut, spread over five years. The tax cut plan will be partially financed
with reserve fund draws; however, based on a tradition of fiscal responsibility,
we do not expect the state will jeopardize its AAA debt rating - the highest
that rating agencies such as Standard & Poor's or Moody's offer.
<PAGE>
In the local arena, four Maryland counties reduced their local income tax
rates, which piggyback on state rates, for tax year 1998. Allegany, Carroll, St.
Mary's, and Worcester Counties all incorporated tax cuts into their carefully
managed budgets, indicative of less fiscal pressure in what has been a
relatively positive economic environment.
Health care is an area worthy of note. Maryland hospitals have enjoyed
generally improving financial measures in recent years, as rates established
under the state's regulatory commission provided for substantial revenue growth.
This rate structure, however, resulted in state health-cost inflation that is
double the national rate. The regulatory commission has adopted a plan to adjust
hospitals' normal inflation-based rates downward, which could impair the
long-term financial strength of Maryland's hospitals.
MARYLAND SHORT-TERM TAX-FREE BOND FUND
The fund gained 1.75% over the last six months, roughly equal to the coupon
earned on a two-year AAA Maryland general obligation bond, and returned 4.20%
for the 12-month period. Its income during the year was consistent with year-ago
levels. The fund lagged the Lipper Short Municipal Debt Funds Average for the
period: a combination of a slightly defensive duration stance and the generally
below-average yields on short-term Maryland tax-free bonds limited its overall
performance potential, particularly compared with the funds that can invest
nationally in the Lipper average. Nonetheless, the fund met its objective of
providing higher federal and Maryland tax-exempt income than a tax-exempt money
market fund with relatively low price volatility.
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 8/31/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Maryland Short-Term
Tax-Free Bond Fund 1.75% 4.20%
Lipper Short Municipal
Debt Funds Average 2.02 4.70
- --------------------------------------------------------------------------------
We kept the fund's exposure to interest rate risk fairly conservative
throughout the period, maintaining duration close to 1.8 years. (Duration is a
measure of interest rate sensitivity. At 1.8 years, this fund would respond to a
one-percentage-point rise or fall in overall interest rates with a 1.8% decline
or rise in price, respectively.) As a result, we benefited only moderately from
an overall decline in interest rates, especially from May through July.
<PAGE>
A change in the maturity structure of the portfolio, however, helped keep
the fund's income level steady. Six months ago, the portfolio included a 19%
stake in bonds with maturities shorter than one year, and an 81% position in
bonds with one- to five-year maturities. As the period progressed, we shifted
away from this allocation to place a heavier emphasis on one- to five-year
bonds, targeting the highest yields currently available in this sector of the
market.
An increase in supply of short-term Maryland tax-exempt investments enabled
us to increase exposure to some less expensive market sectors. We were,
therefore, able to reduce our exposure to somewhat lower-yielding, prerefunded
bonds by 11 percentage points, to 33% of the overall portfolio, and increase the
allocation to general obligation, ground transportation, and life care bonds. We
doubled our exposure to BBB bonds to 9% by purchasing new issue,
investment-grade general obligation bonds of the Commonwealth of Puerto Rico
(these bonds are both federal and Maryland tax-free). The offering included a
large supply of short-maturity issues whose yields had been increased in an
effort to generate investor interest. The Puerto Rico bonds also gained in value
as their yields later fell relative to those on high-grade, AAA issues.
MARYLAND TAX-FREE BOND FUND
The fund gained 3.60% over the six-month period, and its dividends per
share remained stable. For the 12 months ended August 31, it gained a healthy
8.43%. The fund performed best against the Lipper Maryland Municipal Debt Funds
Average in its first fiscal quarter as rates rose, but lagged over the last
three months when rates fell. As a result, its six-month returns are below the
average, even though it outpaced its peer group for the full year.
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 8/31/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Maryland Tax-Free
Bond Fund 3.60% 8.43%
Lipper Maryland Municipal
Debt Funds Average 3.74 8.26
- --------------------------------------------------------------------------------
The fund's relative performance reflected a defensive interest rate
structure. The portfolio contains many older bonds with premium yields (by
today's standards) and prerefunded bonds with maturities less than five years.
These bonds perform well when rates rise (and prices fall) but lag when the
market rallies around rate declines. The portfolio's duration was shortened
significantly in July as interest rates reached year-to-date lows and more bonds
began trading to their call dates (the dates at which the issuer has the option
to retire the bond and replace it with lower-yielding debt). Strong cash flows
from coupon payments also shortened the portfolio in July.
<PAGE>
In August, we were able to put some cash back to work, lengthening our
weighted average maturity and duration after climbing rates pushed market prices
down. This is the essence of our current strategy - to wait for periods of
oversupply or market weakness to buy longer-term bonds for the portfolio.
Light supply has given us fewer choices than we would like to extend
maturity and diversify our holdings. Compared with 1996, this year's new issue
volume is down 7% in the state with only moderate improvement in the
June-through-August period. While lower-quality bonds provided good performance
for the overall municipal market, there were few opportunities in Maryland to
take advantage of this development. Most issuers in the state either have high
credit ratings or come to market with bond insurance. The fund's average credit
quality was unchanged for the period at AA. Along the way, we increased our
exposure to general obligation tax-supported credits and lowered our exposure to
hospitals.
OUTLOOK
The municipal market is facing a pickup in supply in coming months, as
issuers line up to borrow over both the short and long term. Interest rates have
stayed within the narrow range established over the past two years, with
relatively low volatility, and remain attractive for issuers. At the same time,
we would expect demand for municipals to remain solid, since the Taxpayer Relief
Act of 1997 did not lower personal income tax rates and did maintain favorable
tax treatment for corporations that purchase municipals.
Given the high level of consumer and business confidence, we expect the
economy to continue to perform well, although not quite as well as in the first
half of the year. The Federal Reserve has expressed uncertainty about why
inflation has remained so low at this stage of the expansion, and it is
maintaining a bias toward tightening in an effort to keep inflation in check.
Until visible signs of accelerating inflation appear, there is little reason for
us to adopt a defensive posture in the funds. Despite above-trend economic
growth, the overall environment for fixed income investors is still favorable,
due to continuing low inflation and fiscal restraint.
Respectfully submitted,
/s/
Charles B. Hill
Chairman of the Investment Advisory Committee
Maryland Short-Term Tax-Free Bond Fund
/s/
Mary J. Miller
Chairman of the Investment Advisory Committee
Maryland Tax-Free Bond Fund
September 19, 1997
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
Key statistics
2/28/97 8/31/97
Maryland Short-Term Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Price Per Share ................................... $5.11 $ 5.10
Dividends Per Share
For 6 months .................................... 0.10 0.10
For 12 months ................................... 0.20 0.20
Dividend Yield *
For 6 months .................................... 4.04% 3.90%
For 12 months ................................... 4.04 4.01
Weighted Average Maturity (years) ................... 2.1 2.0
Weighted Average Effective Duration (years) ......... 1.8 1.8
Weighted Average Quality ** ......................... AA+ AA
Maryland Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Price Per Share $ ................................... 10.35 $10.44
Dividends Per Share
For 6 months .................................... 0.28 0.28
For 12 months ................................... 0.56 0.56
Dividend Yield *
For 6 months .................................... 5.53% 5.41%
For 12 months ................................... 5.61 5.55
Weighted Average Maturity (years) ................... 15.7 15.7
Weighted Average Effective Duration (years) ......... 6.8 6.7
Weighted Average Quality ** ......................... AA AA
* 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.
** Based on T. Rowe Price research.
================================================================================
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
2/28/97 8/31/97
Maryland Short-Term Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Prerefunded Bonds ...................................... 44% 33%
General Obligation - Local ............................. 18 18
General Obligation - State ............................. 5 13
Industrial and Pollution Control Revenue ............... 3 5
Ground Transportation Revenue .......................... -- 5
Lease Revenue .......................................... 5 4
Solid Waste Revenue .................................... 4 4
Educational Revenue .................................... 2 4
Life Care/Nursing Home Revenue ......................... -- 4
Escrowed to Maturity ................................... 3 3
Electric Revenue ....................................... 2 3
Hospital Revenue ....................................... 2 2
Dedicated Tax Revenue .................................. 8 2
All Other .............................................. 3 2
Other Assets Less Liabilities .......................... 1 -2
Total .................................................. 100% 100%
Maryland Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Prerefunded Bonds ...................................... 17% 17%
Housing Finance Revenue ................................ 16 16
Hospital Revenue ....................................... 18 16
General Obligation - Local ............................. 10 9
General Obligation - State ............................. 5 6
Ground Transportation Revenue .......................... 5 5
Solid Waste Revenue .................................... 4 5
Water and Sewer Revenue ................................ 5 4
Educational Revenue .................................... 4 4
Miscellaneous Revenue .................................. 4 4
Lease Revenue .......................................... 4 4
Dedicated Tax Revenue .................................. 2 2
Air and Sea Transportation Revenue ..................... 2 2
Industrial and Pollution Control Revenue ............... 2 2
All Other .............................................. 6 4
Other Assets Less Libilities ........................... -4 --
Total .................................................. 100% 100%
================================================================================
<PAGE>
================================================================================
T. Rowe Price Maryland Tax-Free Funds
- --------------------------------------------------------------------------------
Performance Comparison
These charts show the value of a hypothetical $10,000 investment in each
fund over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[Maryland Tax-Free Funds SEC chart shown here]
================================================================================
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how each fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
================================================================================
Since Inception
Periods Ended 8/31/97 1 Year 5 Years 10 Years Inception Date
- --------------------------------------------------------------------------------
Maryland Short-Term
Tax-Free Bond Fund 4.20% - - 4.21% 1/29/93
Maryland Tax-Free Bond Fund 8.43% 6.75% 7.63% - 3/31/87
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
================================================================================
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Unaudited
<TABLE>
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
<CAPTION>
6 Months Year 1/29/93
Ended Ended through
8/31/97 2/28/97 2/29/96 2/28/95 2/28/94 2/28/93
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ............. $ 5.11 $ 5.15 $ 5.04 $ 5.09 $ 5.07 $ 5.00
Investment activities
Net investment income ....... 0.10* 0.20* 0.21* 0.18* 0.15* 0.01*
Net realized and
unrealized gain (loss) ...... (0.01) (0.04) 0.11 (0.05) 0.02 0.07
Total from
investment activities ....... 0.09 0.16 0.32 0.13 0.17 0.08
Distributions
Net investment income ....... (0.10) (0.20) (0.21) (0.18) (0.15) (0.01)
NET ASSET VALUE
End of period ................... $ 5.10 $ 5.11 $ 5.15 $ 5.04 $ 5.09 $ 5.07
Ratios/Supplemental Data
Total return .................... 1.75%* 3.26%* 6.49%* 2.64%* 3.49%* 1.67%*
Ratio of expenses to
average net assets .............. 0.65%*+ 0.65%* 0.65%* 0.65%* 0.65%* 0.65%*+
Ratio of net investment
income to average
net assets ...................... 3.86%*+ 3.98%* 4.14%* 3.59%* 3.09%* 2.96%*+
Portfolio turnover rate ......... 68.7%+ 21.4% 39.3% 105.3% 20.5% 96.9%+
Net assets, end of period
(in thousands) .................. $ 103,981 $ 102,252 $ 85,784 $ 74,808 $ 76,049 $ 8,323
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Excludes expenses in excess of a 0.65% voluntary expense limitation in effect through 2/28/99.
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Maryland Tax-Free Bond Fund
================================================================================
Unaudited
<TABLE>
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
6 Months Year
Ended Ended
8/31/97 2/28/97 2/29/96 2/28/95 2/28/94 2/28/93
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ............... $ 10.35 $ 10.40 $ 9.99 $ 10.45 $ 10.50 $ 9.82
Investment activities
Net investment income ......... 0.28 0.56 0.57 0.56 0.56 0.57
Net realized and
unrealized gain (loss) ........ 0.09 (0.05) 0.41 (0.44) 0.05 0.73
Total from
investment activities ......... 0.37 0.51 0.98 0.12 0.61 1.30
Distributions
Net investment income ......... (0.28) (0.56) (0.57) (0.56) (0.56) (0.57)
Net realized gain ............. -- -- -- (0.02) (0.10) (0.05)
Total distributions ........... (0.28) (0.56) (0.57) (0.58) (0.66) (0.62)
NET ASSET VALUE
End of period ..................... $ 10.44 $ 10.35 $ 10.40 $ 9.99 $ 10.45 $ 10.50
Ratios/Supplemental Data
Total return ...................... 3.60% 5.12% 10.00% 1.43% 5.93% 13.75%
Ratio of expenses to
average net assets ................ 0.52%+ 0.54% 0.54% 0.57% 0.57% 0.61%
Ratio of net investment
income to average
net assets ........................ 5.35%+ 5.47% 5.53% 5.73% 5.31% 5.72%
Portfolio turnover rate ........... 18.6%+ 26.2% 23.9% 28.9% 24.3% 23.3%
Net assets, end of period
(in thousands) .................... $ 857,320 $ 819,981 $ 798,589 $ 724,823 $ 821,402 $ 724,469
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
================================================================================
Unaudited August 31, 1997
================================================================================
Statement of Net Assets
Par Value
- --------------------------------------------------------------------------------
In thousands
MARYLAND 89.4%
Allegany County, PCR, Westvaco, 5.20%, 1/1/98 ................ 700 703
Anne Arundel County, GO, Water and Sewer, 4.75%, 9/1/01 ...... 1,030 1,047
Baltimore City, GO
Consolidated Public Improvement
5.125%, 10/15/99 (FGIC Insured) ...................... 1,025 1.048
7.50%, 10/15/00 (FGIC Insured) ....................... 500 548
8.90%, 10/15/99 (MBIA Insured) ....................... 650 713
9.00%, 10/15/98 (MBIA Insured)
(Escrowed to Maturity) ............................... 3,300 3,483
Baltimore County, GO
Consolidated Public Improvement
6.90%, 4/1/06 (Prerefunded 4/1/00+) .................. 1,000 1,084
Metropolitan Dist
6.80%, 4/1/01 (Prerefunded 4/1/00+) .................. 1,000 1,081
Baltimore County, Stella Maris
5.00%, 2/1/99 ........................................ 1,000 1,014
6.375%, 12/1/03
(Prerefunded 12/1/99+) ............................... 1,580 1,686
7.50%, 3/1/21 (Prerefunded 3/1/01+) .................. 1,000 1,120
Charles County
County Commissioners, Fox Chase Apartments
7.25%, 10/1/01 ....................................... 435 437
County Commissioners, New Forest Apartments
7.25%, 11/1/01 ....................................... 835 839
6.50%, 3/1/99 ........................................ 1,000 1,037
6.70%, 7/15/99 ....................................... 500 524
State and Local Fac., 4.75%, 8/1/00 ...................... 4,000 4,065
Maryland DOT
6.375%, 11/1/98 ...................................... 1,875 1,927
6.70%, 11/15/99
(Prerefunded 11/15/98+) .............................. 2,000 2,079
6.70%, 8/15/05
(Prerefunded 8/15/99+) ............................... 2,625 2,804
6.80%, 11/15/02
(Prerefunded 11/15/98+) .............................. 2,000 2,096
Maryland DOT
6.80%, 11/1/05
(Prerefunded 11/1/99+) ............................... 525 564
<PAGE>
Maryland Economic Dev. .......................................
Roland Park Country School
5.35%, 11/1/97 ....................................... 730 731
5.50%, 11/1/98 ....................................... 725 734
Maryland Energy Fin. Administration
Int'l. Paper, 4.10%, 9/1/10 * ............................ 1,900 1,903
Solid Waste Disposal, 5.10%, 12/1/99 * ................... 450 457
Maryland Environmental Service, Cecil County Landfill
5.50%, 9/1/97 ........................................ 395 395
Maryland HHEFA
Bradford Oaks Nursing and Rehabilitation Center
4.875%, 1/1/99 ....................................... 180 180
5.125%, 1/1/00 ....................................... 200 201
5.375%, 1/1/01 ....................................... 200 202
Doctor's Community Hosp
8.75%, 7/1/22 (Prerefunded 7/1/00+) .................. 5,615 6,383
Francis Scott Key Medical Center
6.75%, 7/1/23 (FGIC Insured)
(Prerefunded 7/1/00+) ................................ 4,790 5,194
Greater Baltimore Medical Center
6.75%, 7/1/19 (Prerefunded 7/1/01+) .................. 1,000 1,102
Howard County General Hosp., 4.55%, 7/1/98 ............... 200 201
Loyola College, 3.35%, 10/1/13 (MBIA Insured) ............ 1,400 1,400
Mercy Medical Center
7.90%, 7/1/09 (Prerefunded 7/1/99+) .................. 150 163
North Arundel Hosp., VRDN (Currently 3.40%) .............. 500 500
Stella Maris, 4.75%, 7/1/21 .............................. 3,000 3,043
Maryland Industrial Dev. Fin. Auth., Holy Cross Health
5.00%, 12/1/98 ....................................... 1,460 1,479
Maryland Transportation Auth
Transportation Fac
5.20%, 7/1/00 ........................................ 4,000 4,109
6.10%, 7/1/00 ........................................ 850 892
Maryland Water Quality Fin. Administration
Revolving Loan Fund, 5.60%, 9/1/99 ....................... 500 515
Maryland-National Capital Park and Planning Commission, GO
Prince George's County
5.50%, 1/15/99 ....................................... $1,000 $1,020
5.50%, 1/15/00 ....................................... 1,000 1,031
Montgomery County, GO
6.10%, 4/1/99 ........................................ 1,000 1,032
Consolidated Public Improvement
6.80%, 11/1/02 (Prerefunded 11/1/99+) ................ 2,000 2,149
6.80%, 11/1/09 (Prerefunded 11/1/99+) ................ 850 913
Northeast Maryland Waste Disposal Auth
Southwest Resource Recovery Fac
6.85%, 1/1/99 (MBIA Insured) ......................... 3,675 3,807
Prince George's County, Equipment Acquisition Program, COP
5.00%, 10/15/00 (MBIA Insured) ....................... 4,050 4,140
Prince George's County IDA, Upper Marlboro Justice Center
7.00%, 6/30/19 (MBIA Insured)
(Prerefunded 6/30/99+) ............................... 600 642
Prince George's County, PCR, Int'l. Paper, 4.05%, 1/15/14 .... 2,900 2,905
<PAGE>
Univ. of Maryland
Auxiliary Fac. and Tuition
7.00%, 10/1/99 ....................................... 1,000 1,059
7.00%, 10/1/05 (Prerefunded 10/1/99+) ................ 500 538
7.00%, 10/1/07 (Prerefunded 10/1/99+) ................ 225 242
Washington Suburban Sanitary Dist., GO
5.90%, 11/1/98 ................................ 2,000 2,046
6.00%, 6/1/99 ................................. 3,750 3,876
6.25%, 6/1/99 ................................. 300 311
6.70%, 7/1/00 (Prerefunded 7/1/99+) ........... 1,000 1,065
7.00%, 12/1/99 (Prerefunded 12/1/98+) ......... 1,250 1,320
8.00%, 1/1/00 ................................. 3,295 3,575
Worcester County, GO
Consolidated Public Improvement
5.00%, 8/1/98 ................................. 570 576
5.00%, 8/1/99 ................................. 1,000 1,019
Total Maryland (Cost $92,084) ......................... 92,949
PUERTO RICO 12.5%
Puerto Rico Commonwealth, GO, 5.50%, 7/1/99 ............ 5,000 5,114
Puerto Rico Electric Power Auth ........................
5.00%, 7/1/98 .................................. 2,500 2,521
7.125%, 7/1/14 (Prerefunded 7/1/99+) ........... 2,070 2,216
Puerto Rico Ind., Med., Higher Ed. and Environmental
Pollution Control Fac. Fin. Auth ...................
Catholic Univ. of Puerto Rico, 4.40%, 12/1/97 ...... 215 215
Puerto Rico Municipal Fin. Agency, GO
5.50%, 7/1/00 (FSA Insured) .................... 2,790 2,890
Total Puerto Rico (Cost $ 12,824) ..................... 12,956
Total Investments in Securities
101.9% of Net Assets (Cost $ 104,908) .................. $105,905
Other Assets Less Liabilities .......................... (1,924)
NET ASSETS ............................................. $ 103,981
Net Assets Consist of:
Accumulated net investment income -
net of distributions ................................... $ 2
Accumulated net realized gain/loss -
net of distributions ................................... (774)
Net unrealized gain (loss) ............................. 997
Paid-in-capital applicable to 20,377,644
no par value shares of beneficial
interest outstanding; unlimited number
of shares authorized ................................... 103,756
NET ASSETS ............................................. $ 103,981
NET ASSET VALUE PER SHARE .............................. $ 5.10
<PAGE>
* Interest subject to alternative minimum tax
+ Used in determining portfolio maturity
COP Certificates of Participation
DOT Department of Transportation
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance Corp.
GO General Obligation
HHEFA Health & Higher Educational Facility Authority
IDA Industrial Development Authority
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
VRDN Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Maryland Tax-Free Bond Fund
================================================================================
Unaudited August 31, 1997
================================================================================
Statement of Net Assets
Par Value
- --------------------------------------------------------------------------------
In thousands
MARYLAND 95.9%
Allegany Co., PCR, Westvaco, 6.20%, 1/1/08 ................. $ 1,350 $ 1,478
Anne Arundel County, GO
Consolidated General Improvement
6.30%, 8/1/16 ...................................... 775 851
6.30%, 8/1/19 ...................................... 725 794
6.30%, 8/1/20 ...................................... 705 773
6.30%, 8/1/21 ...................................... 790 866
6.90%, 1/15/08 (Prerefunded 1/15/99+) .............. 1,150 1,216
Consolidated Water and Sewer
6.30%, 8/1/22 ...................................... 450 490
6.30%, 8/1/24 ...................................... 720 783
7.20%, 4/15/13 (Prerefunded 4/15/00+) .............. 625 682
7.20%, 4/15/14 (Prerefunded 4/15/00+) .............. 625 682
Anne Arundel County, Port. Fac., Baltimore Gas and Electric
TECP, 3.55%, 9/2/97 .................................... 2,220 2,220
<PAGE>
Baltimore City, GO
Consolidated Public Improvement
Zero Coupon, 10/15/06
(FGIC Insured) ..................................... 3,100 1,984
Zero Coupon, 10/15/08
(FGIC Insured) ..................................... 3,800 2,132
Zero Coupon, 10/15/09
(FGIC Insured) ..................................... 4,600 2,409
Zero Coupon, 10/15/11
(FGIC Insured) ..................................... 7,500 3,422
7.00%, 10/15/07 (MBIA Insured) ..................... 500 589
7.00%, 10/15/08 (MBIA Insured) ..................... 5,190 6,151
7.50%, 10/15/09 (FGIC Insured) ..................... 2,635 3,258
Baltimore City
Board of Ed. Administration Headquarters, COP
7.25%, 4/1/16 (MBIA Insured) ....................... 3,200 3,468
Wastewater
5.50%, 7/1/26 (FGIC Insured) ....................... 1,150 1,148
5.60%, 7/1/13 (MBIA Insured) ....................... 19,300 20,231
5.65%, 7/1/20 (MBIA Insured) ....................... 2,000 2,070
Baltimore City
Water
5.80%, 7/1/15 (FGIC Insured) ....................... $ 3,350 $ 3,492
6.00%, 7/1/15 (FGIC Insured) ....................... 6,250 6,804
Convention Center, 6.00%, 9/1/17 (FGIC Insured) ........ 5,180 5,430
Emergency Telecom Fac., COP
5.00%, 10/1/17 (AMBAC Insured) ..................... 3,000 2,868
Parking Fac
5.90%, 7/1/12 (FGIC Insured) ....................... 1,195 1,297
6.00%, 7/1/14 (FGIC Insured) ....................... 5,155 5,626
6.00%, 7/1/15 (FGIC Insured) ....................... 5,460 5,943
6.00%, 7/1/16 (FGIC Insured) ....................... 5,785 6,285
6.00%, 7/1/17 (FGIC Insured) ....................... 6,135 6,666
6.00%, 7/1/18 (FGIC Insured) ....................... 6,505 7,066
Port. Fac., E.I. DuPont - Conoco, 6.50%, 10/1/11 ....... 10,400 11,303
Rivoli Office Building Fac., COP
7.20%, 4/1/10 (MBIA Insured)
(Prerefunded 4/1/00+) .............................. 3,250 3,529
7.25%, 4/1/16 (MBIA Insured)
(Prerefunded 4/1/00+) .............................. 7,500 8,142
Tindeco Wharf Apartments, 6.60%, 12/20/24
(GNMA Guaranteed) .................................. 1,000 1,056
Baltimore County, GO
Pension Funding
7.10%, 10/1/12 (Prerefunded 10/1/99+) .............. 3,195 3,445
Baltimore County
Golf Systems, VRDN (Currently 3.45%) ................... 1,000 1,000
North Brooke Apartments
6.35%, 1/20/21 (GNMA Guaranteed) ................... 3,000 3,151
Pickersgill Retirement Community
7.70%, 1/1/21 (Prerefunded 1/1/02+) ................ 3,550 4,047
Stella Maris, 7.50%, 3/1/21 (Prerefunded 3/1/01+) ...... 2,760 3,091
<PAGE>
Bel Air, Parking Fac., COP
7.80%, 6/1/10 (CGIC Insured)
(Prerefunded 12/1/98+) ............................. 1,500 1,599
Calvert County, PCR, Baltimore Gas and Electric
5.55%, 7/15/14 ..................................... 5,435 5,487
Carroll County, GO
Consolidated Public Improvement
6.00%, 11/1/06 (Prerefunded 11/1/99+) .............. 800 846
7.30%, 10/1/20 (Prerefunded 10/1/00+) .............. 2,000 2,211
County Commissioners, 5.625%, 10/1/20 .................. 1,900 1,941
Carroll County
Copper Ridge, 7.75%, 1/1/18 ............................ 3,000 3,218
Fairhaven, 7.75%, 1/1/11 ............................... 1,000 1,075
Charles County
County Commissioners, New Forest Apartments
6.10%, 11/1/28 (FHA Guaranteed) .................... 5,000 5,218
Holly Station, 6.45%, 5/1/26 (FHA Guaranteed) .......... 1,780 1,885
Damascus Gardens Dev., Multi Family
7.375%, 11/1/21 (FHA Guaranteed) ................... 3,877 3,887
Frederick City, GO
General Improvement
VRDN (Currently 3.60%) ............................. 1,100 1,100
6.125%, 12/1/09 (FGIC Insured) ..................... 1,840 1,972
Frederick County, GO, 7.20%, 4/1/05 (Prerefunded 4/1/99+) .. 1,000 1,067
Gaithersburg Economic Auth., Asbury Methodist Home
7.85%, 1/1/20 (Prerefunded 1/1/00+) ................ 6,500 7,116
Gaithersburg Hosp. Fac., Shady Grove Adventist Hosp
6.50%, 9/1/12 (FSA Insured) ........................ 5,000 5,745
Howard County, GO
Consolidated Public Improvement
5.60%, 2/15/12 ..................................... 1,570 1,615
5.60%, 2/15/13 ..................................... 2,300 2,359
5.875%, 5/15/12 .................................... 1,520 1,585
7.30%, 2/15/02 (Prerefunded 1/1/99+) ............... 650 678
7.40%, 2/15/09 (Prerefunded 1/1/99+) ............... 250 263
Metropolitan Dist
7.15%, 5/15/14 (Prerefunded 5/15/00+) .............. 1,005 1,088
7.15%, 5/15/15 (Prerefunded 5/15/00+) .............. 1,080 1,170
7.15%, 5/15/16 (Prerefunded 5/15/00+) .............. 1,160 1,256
7.15%, 5/15/17 (Prerefunded 5/15/00+) .............. 1,245 1,348
Howard County
Special Fac
6.00%, 2/15/21 ..................................... 3,110 3,274
Howard County
Special Fac
6.90%, 7/1/07 (MBIA Insured)
(Prerefunded 7/1/01+) .............................. $ 1,000 $ 1,107
7.00%, 7/1/09 (MBIA Insured)
(Prerefunded 7/1/01+) .............................. 550 611
<PAGE>
Maryland, GO
7.00%, 10/15/03
(Prerefunded 10/15/00+) ............................ 2,000 2,178
7.10%, 10/15/04
(Prerefunded 10/15/00+) ............................ 3,000 3,289
State and Local Fac
4.75%, 8/1/00 ...................................... 8,715 8,857
5.00%, 8/1/12 ...................................... 21,440 21,283
5.70%, 3/15/10 ..................................... 5,000 5,302
Maryland, St. Mary's County Building Commission, COP
7.625%, 12/1/03 (Prerefunded 6/1/98+) .............. 1,500 1,571
Maryland CDA
Infrastructure
8.375%, 6/1/08 ..................................... 775 815
8.50%, 6/1/18 ...................................... 1,350 1,423
Single Family
5.60%, 4/1/18 * .................................... 3,000 3,005
5.875%, 7/1/16 * ................................... 3,950 4,040
5.875%, 4/1/17 * ................................... 1,835 1,865
5.875%, 9/1/25 ..................................... 3,500 3,506
6.00%, 4/1/17 ...................................... 2,500 2,575
6.45%, 4/1/14 ...................................... 1,000 1,053
6.75%, 4/1/10 * .................................... 5,000 5,282
6.75%, 4/1/26 * .................................... 4,015 4,259
6.80%, 4/1/22 * .................................... 4,010 4,243
6.80%, 4/1/24 * .................................... 2,720 2,878
6.85%, 4/1/11 ...................................... 4,895 5,152
7.00%, 4/1/14 ...................................... 2,720 2,902
7.05%, 4/1/17 ...................................... 4,750 5,064
7.25%, 4/1/11 * .................................... 2,000 2,115
7.25%, 4/1/19 * .................................... 9,000 9,495
7.25%, 4/1/27 ...................................... 9,250 9,740
Maryland CDA
Single Family
7.375%, 4/1/10 ..................................... 495 521
7.40%, 4/1/17 ...................................... 5,395 5,644
7.50%, 4/1/00 ...................................... 500 516
7.60%, 4/1/17 ...................................... 2,200 2,299
7.625%, 4/1/29 * ................................... 1,815 1,886
7.875%, 4/1/07 ..................................... 300 308
8.00%, 4/1/18 ...................................... 1,200 1,218
8.20%, 4/1/18 ...................................... 1,150 1,168
Maryland DOT, 6.80%, 11/1/05 (Prerefunded 11/1/99+) ........ 5,500 5,908
Maryland Energy Fin. Administration
Wheelabrator Technologies, 6.30%, 12/1/10 * ............ 5,395 5,750
<PAGE>
Maryland HHEFA
Bradford Oaks Nursing and Rehabilitation Center
6.375%, 1/1/19 ..................................... 1,500 1,508
6.375%, 1/1/27 ..................................... 2,000 2,000
Broadmead, 7.625%, 7/1/10 .............................. 1,285 1,349
Church Hosp., 8.00%, 7/1/09 ............................ 1,200 1,257
Deaton Hosp., VRDN (Currently 3.45%) ................... 2,500 2,500
Doctor's Community Hosp
5.50%, 7/1/24 ...................................... 3,000 2,841
8.75%, 7/1/22 (Prerefunded 7/1/00+) ................ 6,800 7,730
Francis Scott Key Medical Center
5.00%, 7/1/18 (FGIC Insured) ....................... 4,880 4,614
5.00%, 7/1/23 (FGIC Insured) ....................... 5,650 5,277
7.00%, 7/1/10 (FGIC Insured)
(Prerefunded 7/1/00+) .............................. 2,000 2,182
Franklin Square Hosp
7.50%, 7/1/19 (MBIA Insured) ....................... 4,750 5,094
Frederick Memorial Hosp
5.00%, 7/1/23 (FGIC Insured) ....................... 5,500 5,137
5.00%, 7/1/28 (FGIC Insured) ....................... 3,750 3,478
Good Samaritan Hosp
5.60%, 7/1/06 ...................................... 1,545 1,619
5.60%, 7/1/07 ...................................... 1,875 1,966
5.75%, 7/1/13 ...................................... 4,000 4,196
7.40%, 7/1/09 (Prerefunded 7/1/99+) ................ 1,000 1,077
7.50%, 7/1/21 (Prerefunded 7/1/99+) ................ 4,000 4,316
Maryland HHEFA
Greater Baltimore Medical Center
5.00%, 7/1/19 (FGIC Insured) ....................... $ 2,860 $ 2,693
Helix Health, VRDN (Currently 3.40%) ................... 1,415 1,415
Holy Cross Hosp ........................................
7.125%, 7/1/10 (AMBAC Insured)
(Prerefunded 7/1/00+) .............................. 1,400 1,532
7.50%, 7/1/01 (AMBAC Insured)
(Prerefunded 7/1/00+) .............................. 1,655 1,828
Howard County General Hosp., 5.50%, 7/1/21 ............. 5,000 4,770
Johns Hopkins Hosp .....................................
TECP, 3.85%, 9/9/97 ................................ 866 866
Zero Coupon, 7/1/19 ................................ 9,460 2,826
7.00%, 7/1/23 (Prerefunded 7/1/00+) ................ 1,305 1,424
Johns Hopkins Medical Institute Parking Fac ............
5.375%, 7/1/20 (AMBAC Insured) ..................... 5,550 5,460
Johns Hopkins Univ .....................................
7.375%, 7/1/08 ..................................... 1,500 1,569
7.50%, 7/1/20 ...................................... 11,015 11,534
Kennedy Kreiger Institute
6.75%, 7/1/22 ...................................... 2,850 2,990
7.40%, 7/1/11 ...................................... 370 397
Loyola College, 5.375%, 10/1/26 (MBIA Insured) ......... 7,500 7,418
Maryland General Hosp ..................................
6.20%, 7/1/24 (MBIA Insured) ....................... 4,000 4,254
<PAGE>
Mercy Medical Center
5.75%, 7/1/26 (FSA Insured) ........................ 3,760 3,836
6.50%, 7/1/13 (FSA Insured) ........................ 2,155 2,457
7.90%, 7/1/09 (Prerefunded 7/1/99+) ................ 2,000 2,172
8.00%, 7/1/20 (Prerefunded 7/1/99+) ................ 6,500 7,071
North Arundel Hosp., VRDN (Currently 3.40%) ............ 5,100 5,100
Peninsula Regional Medical Center
5.00%, 7/1/23 (MBIA Insured) ....................... 10,785 10,073
Sinai Hosp .............................................
5.25%, 7/1/19 (AMBAC Insured) ...................... 3,070 2,958
7.30%, 7/1/05 (AMBAC Insured)
(Prerefunded 7/1/00+) .............................. 2,000 2,198
Suburban Hosp., 7.60%, 7/1/18
(Prerefunded 7/1/98+) .............................. 300 315
Maryland HHEFA
Union Hosp. of Cecil County, 6.625%, 7/1/12 $ .......... 1,545 $ 1,627
Union Memorial Hosp ....................................
6.60%, 7/1/06 (MBIA Insured) ....................... 500 543
6.75%, 7/1/11 (MBIA Insured) ....................... 3,000 3,273
6.75%, 7/1/21 (MBIA Insured) ....................... 7,895 8,612
Univ. of Maryland Medical System
5.00%, 7/1/20 (FGIC Insured) ....................... 5,875 5,510
7.00%, 7/1/11 (MBIA Insured)
(Prerefunded 7/1/01+) .............................. 4,550 5,052
7.00%, 7/1/17 (FGIC Insured)
(Prerefunded 7/1/01+) .............................. 7,770 8,628
7.00%, 7/1/22 (FGIC Insured) ....................... 2,000 2,434
Maryland Ind. Dev. Fin. Auth ...............................
American Center for Physics Headquarters Fac ...........
6.25%, 1/1/07 ...................................... 5,770 6,094
6.375%, 1/1/12 ..................................... 5,900 6,261
6.625%, 1/1/17 ..................................... 4,250 4,557
Associated Catholic Charities, 9.00%, 1/1/10 ........... 855 928
Bon Secours Health
5.929%, 8/26/22 (FSA Insured) ...................... 15,000 15,913
Holy Cross Health, 5.60%, 12/1/09 ...................... 2,780 2,925
Maryland Local Gov't. Income Trust
Capitalization Program GO, COP
6.80%, 8/1/01 ...................................... 1,615 1,726
7.125%, 8/1/09 ..................................... 3,000 3,276
Maryland Stadium Auth ......................................
Baltimore Convention Center Expansion
5.875%, 12/15/11 (AMBAC Insured) ................... 2,025 2,138
Sports Fac .............................................
5.60%, 3/1/14 (AMBAC Insured) ...................... 1,000 1,023
5.75%, 3/1/22 (AMBAC Insured) ...................... 6,500 6,682
5.80%, 3/1/26 (AMBAC Insured) ...................... 3,800 3,920
<PAGE>
Maryland Transportation Auth ...............................
Zero Coupon, 7/1/07 (FGIC Insured) ................. 8,500 5,284
Zero Coupon, 7/1/08 (FGIC Insured) ................. 2,000 1,172
Zero Coupon, 7/1/09 (FGIC Insured) ................. 10,410 5,742
6.80%, 7/1/16 (Escrowed to Maturity) ............... 7,120 8,150
Baltimore-Washington Int'l. Airport
6.25%, 7/1/14 (FGIC Insured) * ..................... 3,105 3,306
Maryland Transportation Auth ...............................
Baltimore-Washington Int'l. Airport
6.40%, 7/1/19 (FGIC Insured) * ..................... $ 9,170 $ 9,528
Maryland Water Quality Fin. Administration
Revolving Loan Fund
Zero Coupon, 9/1/02 ................................ 1,185 944
Zero Coupon, 9/1/07 ................................ 1,125 691
6.00%, 9/1/15 ...................................... 1,600 1,675
6.70%, 9/1/13 (Prerefunded 9/1/01+) ................ 1,280 1,412
7.10%, 9/1/13 (Prerefunded 9/1/01+) ................ 985 1,101
7.25%, 9/1/11 (Prerefunded 9/1/00+) ................ 1,700 1,873
7.25%, 9/1/12 (Prerefunded 9/1/00+) ................ 2,000 2,204
Maryland-National Capital Park and Planning Commission, GO
Prince George's County
5.375%, 1/15/14 .................................... 2,100 2,124
5.375%, 1/15/16 .................................... 1,300 1,304
5.375%, 1/15/17 .................................... 1,200 1,202
6.90%, 7/1/05 (Prerefunded 7/1/00+) ................ 1,400 1,523
6.90%, 7/1/06 (Prerefunded 7/1/00+) ................ 1,350 1,469
6.90%, 7/1/07 (Prerefunded 7/1/00+) ................ 1,400 1,523
6.90%, 7/1/08 (Prerefunded 7/1/00+) ................ 1,400 1,523
6.90%, 7/1/09 (Prerefunded 7/1/00+) ................ 1,400 1,523
BAN, VRDN (Currently 3.75%) ........................ 5,000 5,000
Maryland-National Capital Park and Planning Commission
Little Bennett Golf Fac., 8.25%, 10/1/11 ............... 2,270 2,492
Montgomery County, GO
Consolidated Public Improvement
5.375%, 5/1/09 ..................................... 2,850 2,969
5.375%, 5/1/16 ..................................... 5,750 5,782
5.375%, 5/1/17 ..................................... 5,750 5,746
6.125%, 10/1/13 .................................... 2,500 2,700
6.125%, 10/1/14 .................................... 3,150 3,392
6.80%, 11/1/09 (Prerefunded 11/1/99+) .............. 1,145 1,230
7.10%, 10/1/09 (Prerefunded 10/1/00+) .............. 1,000 1,100
7.10%, 10/1/10 (Prerefunded 10/1/00+) .............. 1,840 2,023
7.25%, 10/1/08 (Prerefunded 10/1/98+) .............. 500 527
Montgomery County, Golf Course, 6.125%, 10/1/22 ............ 2,260 2,331
Montgomery County Economic Dev. Auth .......................
Howard Hughes Medical Fac ..............................
VRDN (Currently 3.35%) ............................. 500 500
<PAGE>
Montgomery County Housing Opportunities Commission
Multi-Family
6.25%, 7/1/25 ...................................... $ 5,500 $ 5,729
7.50%, 7/1/24 ...................................... 3,000 3,176
Single Family
5.75%, 7/1/13 ...................................... 2,000 2,045
5.80%, 7/1/17 ...................................... 1,000 1,022
5.90%, 7/1/17 ...................................... 2,000 2,050
6.00%, 7/1/17 ...................................... 4,595 4,746
6.50%, 7/1/11 ...................................... 2,880 3,024
6.65%, 7/1/16 ...................................... 2,320 2,445
6.80%, 7/1/17 ...................................... 2,855 2,987
6.90%, 7/1/19 ...................................... 2,000 2,097
7.50%, 7/1/17 ...................................... 1,790 1,887
7.625%, 7/1/17 ..................................... 3,580 3,699
Montgomery County, PCR, Potomac Electric, 5.375%, 2/15/24 .. 4,560 4,508
Morgan State Univ., Academic Fees and Auxiliary Fac ........
6.05%, 7/1/15 (MBIA Insured) ....................... 1,050 1,149
Northeast Maryland Waste Disposal Auth .....................
Montgomery County Resources
6.00%, 7/1/08 * .................................... 10,000 10,630
6.20%, 7/1/10 * .................................... 7,750 8,146
6.30%, 7/1/16 (MBIA Insured) * ..................... 13,335 14,128
Prince George's County
Dimensions Health
5.375%, 7/1/14 ..................................... 2,685 2,632
7.00%, 7/1/01 ...................................... 2,450 2,653
7.00%, 7/1/22 (Prerefunded 7/1/02+) ................ 2,660 2,995
7.20%, 7/1/06 (Prerefunded 7/1/02+) ................ 2,405 2,728
PCR, Potomac Electric, 6.375%, 1/15/23 ................. 5,000 5,306
Solid Waste Management
6.90%, 6/30/05 (Prerefunded 6/30/00+) .............. 1,500 1,633
6.90%, 6/30/06 (Prerefunded 6/30/00+) .............. 1,000 1,088
7.00%, 6/30/07 (Prerefunded 6/30/00+) .............. 1,120 1,222
7.00%, 6/30/09 (Prerefunded 6/30/00+) .............. 1,255 1,369
Prince George's County Housing Auth ........................
New Keystone, 6.80%, 7/1/25 (MBIA Insured) ............. 2,600 2,759
Riverview Terrace Apartments, 6.70%, 6/20/20
(GNMA Guaranteed) * ................................ 1,500 1,613
Prince George's County Housing Auth ........................
Single Family, 5.75%, 8/1/30
(GNMA Guaranteed) * $ .............................. 2,000 $ 1,979
Stevenson Apartments, 6.35%, 7/20/20
(GNMA Guaranteed) .................................. 2,200 2,292
Prince George's County IDA
Gabriel DuVall Law Building, 8.00%, 9/1/07 ............. 1,185 1,228
Upper Marlboro Justice Center
5.25%, 6/30/19 (MBIA Insured) ...................... 1,500 1,447
<PAGE>
Univ. of Maryland
Auxiliary Fac. and Tuition
5.125%, 4/1/18 ..................................... 3,100 3,009
5.60%, 4/1/11 ...................................... 3,155 3,279
5.75%, 4/1/17 ...................................... 4,500 4,673
6.375%, 4/1/09 ..................................... 2,100 2,327
6.50%, 4/1/12 ...................................... 440 488
7.00%, 10/1/05 (Prerefunded 10/1/99+) .............. 2,000 2,153
7.20%, 10/1/09 (Prerefunded 10/1/99+) .............. 1,400 1,512
Washington County Public Fac., GO
6.70%, 12/1/05 (Prerefunded 12/1/98+) .............. 1,115 1,173
Washington County Sanitary Dist., GO
6.875%, 2/1/10 (Prerefunded 2/1/00+) ............... 3,500 3,776
7.00%, 2/1/15 (Prerefunded 2/1/00+) ................ 2,000 2,163
Washington Suburban Sanitary Dist., GO
6.20%, 6/1/11 ...................................... 2,400 2,579
6.20%, 6/1/12 ...................................... 1,500 1,615
6.40%, 1/1/15 ...................................... 2,270 2,465
6.625%, 6/1/18 (Prerefunded 6/1/04+) ............... 3,665 4,087
6.90%, 6/1/08 (Prerefunded 6/1/00+) ................ 1,500 1,630
6.90%, 6/1/09 (Prerefunded 6/1/00+) ................ 2,300 2,499
7.40%, 7/1/07 (Prerefunded 7/1/98+) ................ 700 734
Worcester County Sanitary Dist., 6.50%, 8/15/12
(Prerefunded 8/15/02+) ............................. 2,000 2,201
Total Maryland (Cost $769,789) 822,028
PUERTO RICO 3.6%
Puerto Rico Commonwealth, GO
6.25%, 7/1/11 (MBIA Insured) ....................... 2,000 2,254
Puerto Rico Commonwealth, GO
6.25%, 7/1/12 (MBIA Insured) ....................... $ 1,750 $ 1,973
Puerto Rico Electric Power Auth ............................
7.00%, 7/1/11 (Prerefunded 7/1/01+) ................ 1,200 1,339
Puerto Rico Highway and Transportation Auth ................
5.50%, 7/1/15 (FSA Insured) ........................ 5,000 5,184
5.50%, 7/1/36 ...................................... 3,500 3,461
Puerto Rico Infrastructure Fin. Auth., 7.50%, 7/1/09 ....... 5,150 5,404
Puerto Rico Municipal Fin. Agency, GO
5.50%, 7/1/17 (FSA Insured) ........................ 3,100 3,140
6.00%, 7/1/12 (FSA Insured) ........................ 5,000 5,481
6.00%, 7/1/14 (FSA Insured) ........................ 3,030 3,193
Total Puerto Rico (Cost .................................... $ 29,832) 31,429
Total Investments in Securities
99.5% of Net Assets (Cost .................................. $ 799,621) $853,457
Other Assets Less Liabilities .............................. 3,863
NET ASSETS ................................................. $ 857,320
Net Assets Consist of:
Accumulated net investment income -
net of distributions ....................................... $ 3
Accumulated net realized gain/loss -
net of distributions ....................................... (2,920)
<PAGE>
Net unrealized gain (loss) ................................. 53,836
Paid-in-capital applicable to 82,113,182
no par value shares of beneficial
interest outstanding; unlimited number
of shares authorized ....................................... 806,401
NET ASSETS ................................................. $ 857,320
NET ASSET VALUE PER SHARE .................................. $ 10.44
* 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 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 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
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
================================================================================
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
Short-Term
Bond Fund Bond Fund
6 Months 6 Months
Ended Ended
8/31/97 8/31/97
Investment Income
Interest income ......................................... $ 2,386 $24,571
Expenses
Investment management ............................... 238 1,784
Shareholder servicing ............................... 45 272
Custody and accounting .............................. 45 72
Legal and audit ..................................... 4 3
Prospectus and shareholder reports .................. 3 21
Trustees ............................................ 3 6
Registration ........................................ 3 2
Miscellaneous ....................................... 3 5
Total expenses ...................................... 344 2,165
Net investment income ................................... 2,042 22,406
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities .......................................... 150 522
Futures ............................................. (104) 158
Net realized gain (loss) ............................ 46 680
Change in net unrealized gain or loss on securities ..... (278) 6,972
Net realized and unrealized gain (loss) ................. (232) 7,652
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS .................................. $ 1,810 $30,058
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
================================================================================
Unaudited
<TABLE>
====================================================================================================================================
Statement of Changes in Net Assets
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In thousands
<CAPTION>
Short-Term
Bond Fund Bond Fund
-------------------------- ---------------------------
6 Months Year 6 Months Year
Ended Ended Ended Ended
8/31/97 2/28/97 8/31/97 2/28/97
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income .................... $ 2,042 $ 3,677 $ 22,406 $ 43,258
Net realized gain (loss) ................. 46 54 680 1,198
Change in net unrealized
gain or loss ............................. (278) (566) 6,972 (5,486)
Increase (decrease) in
net assets from operations ............... 1,810 3,165 30,058 38,970
Distributions to shareholders
Net investment income .................... (2,042) (3,677) (22,406) (43,258)
Capital share transactions *
Shares sold .............................. 22,053 51,238 83,538 129,303
Distributions reinvested ................. 1,757 3,177 16,231 31,917
Shares redeemed .......................... (21,849) (37,435) (70,082) (135,540)
Increase (decrease) in
net assets from capital
share transactions ....................... 1,961 16,980 29,687 25,680
Net Assets
Increase (decrease)
during period ................................ 1,729 16,468 37,339 21,392
Beginning of period .......................... 102,252 85,784 819,981 798,589
End of period ................................ $ 103,981 $ 102,252 $ 857,320 $ 819,981
*Share information
Shares sold .............................. 4,328 10,043 8,075 12,632
Distributions reinvested ................. 345 623 1,567 3,113
Shares redeemed .......................... (4,290) (7,338) (6,782) (13,257)
Increase (decrease)
in shares outstanding .................... 383 3,328 2,860 2,488
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</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
================================================================================
Unaudited August 31, 1997
================================================================================
NOTES TO FINANCIAL STATEMENTS
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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 and commenced operations on January 29,
1993, and March 31, 1987, respectively.
VALUATION Debt securities are generally traded in the over-the-counter
market. Investments in securities are stated at fair value as furnished by
dealers who make markets in such securities or by an independent pricing
service, which considers yield or price of bonds of comparable quality, coupon,
maturity, and type, as well as prices quoted by dealers who make markets in such
securities.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of that
fund, as authorized by the Board of Trustees.
PREMIUMS AND DISCOUNTS Premiums and original issue discounts on municipal
securities are amortized for both financial reporting and tax purposes. Market
discounts are recognized upon disposition of the security as gain or loss for
financial reporting purposes and as ordinary income for tax purposes.
OTHER Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Distributions to shareholders are
recorded by 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 six months ended August 31, 1997, were as follows:
<PAGE>
================================================================================
Short-Term
Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Purchases $40,803,000 $104,377,000
Sales 35,276,000 74,013,000
================================================================================
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 $807,000, of which $354,000
expires in 2003 and $453,000 in 2004. The Bond Fund has unused realized capital
loss carryforwards for federal income tax purposes of $2,760,000, which expires
in 2003. Each fund intends to retain gains realized in future periods that may
be offset by available capital loss carryforwards.
At August 31, 1997, the aggregate costs of investments for the Short-Term
Bond and Bond Funds for federal income tax and financial reporting purposes were
$104,908,000 and $799,621,000, respectively. Net unrealized gain (loss) on
investments was as follows:
================================================================================
Short-Term
Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Appreciated investments $1,009,000 $4,339,000
Depreciated investments (12,000) (503,000)
Net unrealized gain (loss) $ 997,000 $53,836,000
================================================================================
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 $40,000 and $308,000 were payable at August 31, 1997 by the Short-Term
Bond and Bond Funds, 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 for the Short-Term Bond and Bond Funds, and a group fee. The group fee is
based on the combined assets of certain mutual funds sponsored by the manager or
Rowe Price-Fleming International, Inc. (the group). The group fee rate ranges
from 0.48% for the first $1 billion of assets to 0.30% for assets in excess of
$80 billion. At August 31, 1997, and for the six months then ended, the
effective annual group fee rates were 0.32% and 0.33%, 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.
<PAGE>
Under the terms of the investment management agreement, the manager is
required to bear any expenses through February 28, 1999, which would cause the
Short-Term Bond Fund's ratio of expenses to average net assets to exceed 0.65%.
Thereafter, through February 28, 2001, 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 and a previous agreement, $12,000 of unaccrued 1995-1997 fees
were repaid during the six months ended August 31, 1997. Additionally, $40,000
of unaccrued management fees related to a previous expense limitation are
subject to reimbursement through February 28, 1999.
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 $68,000 and $253,000, respectively, for the six months ended
August 31, 1997, of which $13,000 and $49,000, respectively, were payable at
period-end.
================================================================================
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
- --------------------------------------------------------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE Shareholder service representatives are available from 8 a.m. to
10 p.m. ET Monday through Friday and from 8:30 a.m. to 5 p.m. ET on weekends.
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. You can also
drop off applications or obtain prospectuses and other literature at these
centers.
AUTOMATED 24-HOUR SERVICES
TELE*ACCESS [REGISTRATION MARK] Call 1-800-638-2587 to obtain information
such as account balance, date and amount of your last transaction, latest
dividend payment, fund prices, and yields. Additionally, you have the ability to
request prospectuses, statements, and account and tax forms; to reorder checks;
and to initiate purchase, redemption, and exchange orders for identically
registered accounts.
<PAGE>
T.ROWE PRICE ONLINE Through a personal computer via dial-up modem, you can
replicate all the services available on Tele*Access plus conduct transactions in
your Discount Brokerage and Variable Annuity accounts.
Account Services
CHECKING Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield and Emerging Markets Bond Funds).
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 $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.
DISCOUNT BROKERAGE*
INVESTMENTS AVAILABLE You can trade stocks, bonds, options, precious
metals, and other securities at a savings over regular commission rates.
TO OPEN AN ACCOUNT Call a shareholder service representative for more
information.
INVESTMENT INFORMATION
COMBINED STATEMENT A comprehensive overview of your T. Rowe Price accounts
is provided. The summary page gives you earnings by tax category, provides total
portfolio value, and lists your investments by typeNstock, bond, and money
market. Detail pages itemize account transactions by fund.
SHAREHOLDER REPORTS Portfolio managers review the performance of the funds
in plain language and discuss T. Rowe Price's economic outlook.
T. ROWE PRICE REPORT This is a quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
PERFORMANCE UPDATE This quarterly report reviews recent market developments
and provides comprehensive performance information for every T. Rowe Price fund.
INSIGHTS This library of information includes reports on mutual fund tax
issues, investment strategies, and financial markets.
<PAGE>
DETAILED INVESTMENT GUIDES Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Diversifying Overseas: A Guide to International Investing,
Retirees Financial Guide, and Retirement Planning Kit (also available on disk
for PC use) can help you determine and reach your investment goals.
* A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
T. Rowe Price Mutual Funds
================================================================================
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
<PAGE>
BOND FUNDS
- --------------------------------------------------------------------------------
DOMESTIC TAXABLE
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
DOMESTIC TAX-FREE
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
Global Government Bond
Emerging Markets Bond
International Bond
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
<PAGE>
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Balanced
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
** Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
<PAGE>
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access [Registration Mark]
: 1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price Maryland Tax-Free Funds.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor. C12-051 8/31/97
