ANNUAL REPORT
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T. Rowe Price Maryland Tax-Free Funds
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February 28, 1997
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Report Highlights
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* Interest rates ended the fiscal year slightly higher than a year ago,
resulting in moderate returns for municipal bond investors.
* Municipal bonds outperformed Treasuries during most of the year.
* For the 6- and 12-month periods ended February 28, the Maryland Short-Term
Tax-Free Bond Fund returned 2.40% and 3.26%, respectively, lagging its peer
group in both periods.
* The Maryland Tax-Free Bond Fund returned 4.66% and 5.12% for the 6- and
12-month periods, respectively, outperforming its peer group in both
periods.
* With the economy showing ongoing strength and the Federal Reserve
indicating a bias toward tighter monetary policy, our outlook is somewhat
cautious for the coming months.
<PAGE>
Fellow Shareholders
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The municipal bond market and your funds generated moderate returns during
the fiscal year ended February 28, 1997. Interest rates fluctuated during the
year and ended slightly higher than where they started at the end of last
February. The U.S. economy was characterized by modest wage inflation with low
unemployment, prompting the Federal Reserve to leave monetary policy unchanged
since January 1996.
MARKET ENVIRONMENT
Much of the movement in interest rates reflected the market's anticipation
of action or inaction by the Federal Reserve. The fiscal year began with
interest rates rising due to signs of stronger growth and the realization that
balanced budget legislation would not be passed in 1996. As market expectations
for a tightening in monetary policy grew throughout the first half, rates
continued to increase. The long-term Treasury bond yield remained in a trading
range between 6.75% and 7.20% during the third quarter. Intermediate and
long-term rates then reversed course and fell through November, as it became
evident that the economy was slowing in the third quarter and the Federal
Reserve was not going to raise rates. Another uptick in rates took place late in
1996 as investors once again perceived strength in the economy and anticipated
possible tightening by the Federal Reserve.
[edgar description: a 2-line chart showing yields on the Maryland Bond
Index and Maryland 3-year GO bonds from 2/29/96 through 2/28/97]
In the municipal market, rates came full circle over the year, rising about
45 basis points (100 basis points equal one percent) during the first six months
before settling slightly above year-ago levels. Long-term high-grade general
obligation bonds yielded 5.50% on February 28, 1997, versus 5.75% on August 31,
1996, and 5.45% a year ago. Five-year high-grade bonds were 20 basis points
higher in yield than in February 1996. One-year note rates traded within a
70-basispoint range during the year, ending at 3.70% compared with 3.25% a year
ago.
Municipals provided higher returns than long-term Treasuries throughout
most of the fiscal year, as concerns regarding tax reform and flat tax
legislation diminished. As a result, long-term municipal yields were 81% of the
yield on comparable Treasuries on February 28, a level that benefits investors
in brackets above 19%, whereas a year ago with the ratio at 87%, investors in
brackets upwards of 13% benefited from municipals.
In Maryland, new bond sales increased significantly over the tepid pace of
1995 as the economy gradually gained momentum. Issuance rose some 32%, reaching
the $3 billion level last seen in the early 1990s. However, issuance was nowhere
near the record levels of 1993, when extremely low interest rates unleashed a
flood of refundings. Longer-term Maryland bond yields remained in a trading
range of roughly 50 basis points during the year, fluctuating between 5.5% and
6%.
<PAGE>
Maryland's diversified economy and high wealth levels rank the state fifth
nationally in terms of per capita income. However, so far during this decade,
economic growth in the state has lagged the nation as a whole, hampered by
weakness in government, defense, and manufacturing. Nevertheless, Maryland has
managed its fiscal affairs well in this environment, encouraging Governor
Glendening to propose a tax cut to be phased in over three years. Prospects
appear good for some type of tax relief, but we do not believe the state will
take any action that would jeopardize its AAA debt ratings.
MARYLAND SHORT-TERM TAX-FREE BOND FUND
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Performance Comparison
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Periods Ended 2/28/97 6 Months 12 Months
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Maryland Short-Term
Tax-Free Bond Fund 2.40% 3.26%
Lipper Short Municipal
Debt Funds Average 2.63 3.84
================================================================================
At the beginning of the fiscal year, the fund's duration (a measure of a
fund's sensitivity to changes in interest rates) was aggressively positioned at
2.3 years, enabling the fund to significantly outperform its benchmark a year
earlier. However, an unexpectedly strong employment report in early March pushed
short-term rates abruptly higher. As a result, your fund's aggressive posture
hindered performance, which trailed the average for similar funds during the 6-
and 12-month periods ended February 28.
Returns were also restrained because of the fund's objective to provide
income exempt from Maryland taxes. The low supply of short-term Maryland bonds
led to lower yields compared with those of similar bonds in other states. This
further explains the fund's performance relative to the Lipper benchmark (shown
in the table), which consists of 28 national funds and two single-state funds:
the T. Rowe Price Maryland and Virginia Short-Term Tax-Free Bond Funds.
As economic strength accelerated into the summer, the Federal Reserve
adopted a bias toward tighter monetary policy, prompting us to shorten the
fund's duration toward a slightly defensive posture, where it remained at the
end of February.
Income is the second component of total return, along with capital
appreciation or depreciation, and many national funds benefited from narrowing
yield differences between higherand lower-quality securities. In this instance,
too, the situation in Maryland limited our opportunity to benefit from
tightening yield spreads. Nevertheless, we were able to increase your fund's
exposure to the higher-yielding revenue sectors, including leases and electric
utilities. We also anticipate increasing exposure to Puerto Rican bonds, which
are exempt from Maryland income taxes, since we believe an increasing supply of
new Puerto Rican issues should make their yields more attractive than those of
short-term Maryland bonds.
<PAGE>
MARYLAND TAX-FREE BOND FUND
================================================================================
Performance Comparison
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Periods Ended 2/28/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Maryland Tax-Free Bond Fund 4.66% 5.12%
Lipper Maryland Municipal
Debt Funds Average 4.34 4.32
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We are pleased to report that the fund outperformed its peer group in both
reporting periods, as shown in the table. In addition to the adjustments in
duration described below, performance was again boosted by the higher level of
income provided by our older bonds, some of which were purchased in the late
1980s, and by new issues carrying higher coupons.
Our strategy over the last six months and for the full year was relatively
simple: to maintain a high level of tax-free income while making modest
adjustments in duration to protect or enhance the share price. A duration of
seven years, for example, means the fund's share price would rise or fall 7% in
response to a one percentage point change in interest rates.
This was not a year when we wanted to make aggressive moves based on the
anticipated direction of rates. Rather, our strategy was to take advantage of
the higher and lower ends of the trading range to buy and sell bonds when we
felt it was appropriate, while keeping fund duration in a neutral area. After
extending duration slightly in the third quarter, we shortened it by the end of
February, reflecting our view that growing supply would lead to higher interest
rates down the road.
As the fund nears its 10th anniversary on March 31, 1997, we have been
taking steps to address the seasoned nature of the portfolio. Our oldest
holdings carry high coupons, helping to enhance the fund's income. However, as
their maturity dates move closer, these bonds exert a shortening effect on the
fund's overall maturity. To offset this phenomenon, we put cash to work in newly
issued bonds with maturities of 15 to 20 years.
==============================
. . . The overall credit
quality of the portfolio
improved slightly to AA.
- ------------------------------
Since Maryland issuers generally carry high credit ratings, there were few
opportunities to capture more income by purchasing lower-quality instruments. In
any event, at this point in the economic cycle, we believe the incremental yield
offered by these securities is not enough to justify the added risk. Hence, the
overall credit quality of the portfolio improved slightly to AA.
<PAGE>
OUTLOOK
The economy is in its sixth year of expansion, and while it has exhibited
few signs of inflationary pressure, the Federal Reserve remains on alert. Fed
chairman Alan Greenspan stated in recent testimony to the Senate Banking
Committee that the Fed cannot rule out a preemptive tightening in monetary
policy before signs of actual higher inflation become evident.
We expect economic growth and inflation to remain moderate throughout the
rest of 1997, with no evidence of recession visible to date. Consumer and
business sentiment remains high, inventories are not excessive, and availability
of credit is ample. The Federal Reserve, as indicated, could push the fed funds
rate higher to keep prices in check, but we believe any increase will be small
since short-term rates are well above the recent trend rate of inflation. This
was not the case in 1994, when the Fed was forced to move aggressively.
The supply of municipal bonds should increase over the near term, possibly
exerting some downward pressure on bond prices if demand does not increase
commensurately. Given our expectation that interest rates will move in a
relatively narrow channel, we would regard higher rates as an opportunity to
provide additional yield in the funds. Overall, however, we do not expect to see
a significant move in bond prices in the months ahead. As in the past year, the
returns from municipal securities should come primarily from income.
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
March 20, 1997
<PAGE>
================================================================================
Portfolio Highlights
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Key statistics
8/31/96 2/28/97
Maryland Short-Term Tax-Free Bond Fund
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Price Per Share ......................................... $ 5.09 $ 5.11
Dividends Per Share +
For 6 months ....................................... 0.10 0.10
For 12 months ...................................... 0.21 0.20
Dividend Yield *
For 6 months ....................................... 3.96% 4.04%
For 12 months ...................................... 4.08 4.04
Weighted Average Maturity (years) ....................... 2.0 2.1
Weighted Average Effective Duration (years) ............. 1.8 1.8
Weighted Average Quality ** ............................. AA+ AA+
Maryland Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Price Per Share ......................................... $ 10.16 $ 10.35
Dividends Per Share +
For 6 months ....................................... 0.28 0.28
For 12 months ...................................... 0.56 0.56
Dividend Yield *
For 6 months ....................................... 5.53% 5.53%
For 12 months ...................................... 5.59 5.61
Weighted Average Maturity (years) ....................... 16.4 15.7
Weighted Average Effective Duration (years) ............. 7.2 6.8
Weighted Average Quality ** ............................. AA- AA
- --------------------------------------------------------------------------------
+ Taxability of dividends: 100% of dividends were exempt from federal and
Maryland income taxes.
* 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>
================================================================================
Portfolio Highlights
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Sector Diversification
Percent of Percent of
Net Assets Net Assets
8/31/96 2/28/97
Maryland Short-Term Tax-Free Bond Fund
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Prerefunded Bonds ...................................... 44% 44%
General Obligation - Local ............................. 22 18
Dedicated Tax Revenue .................................. 8 8
Lease Revenue .......................................... 1 5
General Obligation - State ............................. 5 5
Solid Waste Revenue .................................... 5 4
Escrowed to Maturity ................................... 3 3
Industrial and Pollution Control Revenue ............... 3 3
Electric Revenue ....................................... -- 2
Hospital Revenue ....................................... 5 2
Educational Revenue .................................... 4 2
All Other .............................................. 2 3
Other Assets Less Liabilities .......................... -2 1
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Total .................................................. 100% 100%
Maryland Tax-Free Bond Fund
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Hospital Revenue ....................................... 17% 18%
Prerefunded Bonds ...................................... 17 17
Housing Finance Revenue ................................ 16 16
General Obligation - Local ............................. 12 10
Ground Transportation Revenue .......................... 1 5
General Obligation - State ............................. 3 5
Water and Sewer Revenue ................................ 5 5
Solid Waste Revenue .................................... 3 4
Miscellaneous Revenue .................................. 5 4
Educational Revenue .................................... 4 4
Lease Revenue .......................................... 5 4
Dedicated Tax Revenue .................................. 2 2
Life Care and Nursing Home Revenue ..................... 2 2
Air and Sea Transportation Revenue ..................... 2 2
Industrial and Pollution Control Revenue ............... 2 2
All Other .............................................. 3 4
Other Assets Less Liabilities .......................... 1 -4
- --------------------------------------------------------------------------------
Total .................................................. 100% 100%
================================================================================
<PAGE>
================================================================================
Performance Comparison
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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 Short-Term Tax-Free Bond Fund - SEC Graph: a line chart showing
the cumulative growth of $10,000 invested in the Maryland Short-Term Tax-Free
Bond Fund from inception compared with $10,000 invested ina broad based index or
average over the same period.]
[Maryland Tax-Free Bond Fund - SEC Graph: a line chart showing the
cumulative growth of $10,000 invested in the Maryland Tax-Free Bond Fund from
inception compared with $10,000 invested ina broad based index or average over
the same period.]
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 2/28/97 1 Year 3 Years 5 Years Inception Date
- --------------------------------------------------------------------------------
Maryland Short-Term
Tax-Free Bond Fund ............ 3.26% 4.12% -- 4.30% 1/29/93
Maryland Tax-Free Bond Fund ... 5.12 5.46 7.16% 6.67 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>
<TABLE>
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
====================================================================================================================================
For a share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
<CAPTION>
Year 1/29/93
Ended to
2/28/97 2/29/96 2/28/95 2/28/94 2/28/93
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ..................... $ 5.15 $ 5.04 $ 5.09 $ 5.07 $ 5.00
Investment activities
Net investment income ............. 0.20* 0.21* 0.18* 0.15* 0.01*
Net realized and
unrealized gain (loss) ............ (0.04) 0.11 (0.05) 0.02 0.07
Total from
investment activities ............. 0.16 0.32 0.13 0.17 0.08
Distributions
Net investment income ............. (0.20) (0.21) (0.18) (0.15) (0.01)
NET ASSET VALUE
End of period ........................... $ 5.11 $ 5.15 $ 5.04 $ 5.09 $ 5.07
Ratios/Supplemental Data
Total return ............................ 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%*+
Ratio of net investment
income to average
net assets .............................. 3.98%* 4.14%* 3.59%* 3.09%* 2.96%+*
Portfolio turnover rate ................. 21.4% 39.3% 105.3% 20.5% 96.9%+
Net assets, end of period
(in thousands) .......................... $ 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 2/28/97.
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price Maryland Tax-Free Bond Fund
====================================================================================================================================
For a share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
<CAPTION>
Year
Ended
2/28/97 2/29/96 2/28/95 2/28/94 2/28/93
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ..................... $ 10.40 $ 9.99 $ 10.45 $ 10.50 $ 9.82
Investment activities
Net investment income ............. 0.56 0.57 0.56 0.56 0.57
Net realized and
unrealized gain (loss) ............ (0.05) 0.41 (0.44) 0.05 0.73
Total from
investment activities ............. 0.51 0.98 0.12 0.61 1.30
Distributions
Net investment income ............. (0.56) (0.57) (0.56) (0.56) (0.57)
Net realized gain ................. - - (0.02) (0.10) (0.05)
Total distributions ............... (0.56) (0.57) (0.58) (0.66) (0.62)
NET ASSET VALUE
End of period ........................... $ 10.35 $ 10.40 $ 9.99 $ 10.45 $ 10.50
Ratios/Supplemental Data
Total return ............................ 5.12% 10.00% 1.43% 5.93% 13.75%
Ratio of expenses to
average net assets ...................... 0.54% 0.54% 0.57% 0.57% 0.61%
Ratio of net investment
income to average
net assets .............................. 5.47% 5.53% 5.73% 5.31% 5.72%
Portfolio turnover rate ................. 26.2% 23.9% 28.9% 24.3% 23.3%
Net assets, end of period
(in thousands) .......................... $ 819,981 $ 798,589 $ 724,823 $ 821,402 $ 724,469
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
================================================================================
February 28, 1997
Statement of Net Assets
- --------------------------------------------------------------------------------
Par Value
In thousands
MARYLAND 92.2%
Allegany County, PCR, Westvaco Corp., 5.20%, 1/1/98 .......... $ 700 $ 708
Anne Arundel County, GO, 6.70%, 6/1/02
(Prerefunded 6/1/98) ............. 1,125 1,188
Consolidated Water and Sewer
6.00%, 3/1/10 (Prerefunded 3/1/97) ............. 800 816
Anne Arundel County, PCR, Baltimore Gas and Electric, TECP
3.40%, 3/3/97 ............ 1,020 1,020
Baltimore City
GO, 8.90%, 10/15/99 (MBIA Insured) ......... 650 727
Consolidated Public Improvement, GO
7.50%, 10/15/00 (FGIC Insured) ............ 500 554
9.00%, 10/15/98 (MBIA Insured)
(Escrowed to Maturity) ............ 3,300 3,569
Wastewater, 6.50%, 7/1/20 (MBIA Insured)
(Prerefunded 7/1/00) ............. 1,700 1,817
Baltimore County
Consolidated Public Improvement
6.90%, 4/1/06 (Prerefunded 4/1/00) ............. 1,000 1,096
Metropolitan Dist., GO
5.00%, 6/1/98 ............ 1,750 1,778
6.80%, 4/1/01 (Prerefunded 4/1/00) .......... 1,000 1,092
Baltimore County, PCR, Baltimore Gas and Electric, TECP
3.45%, 3/3/97 ............ 500 500
Charles County
GO, 5.00%, 2/1/99 ............ 1,000 1,021
GO, 6.375%, 12/1/03
(Prerefunded 12/1/99) ............. 1,580 1,704
County Commissioners, Fox Chase Apartments
7.25%, 10/1/01 ............ 435 435
County Commissioners, New Forest Apartments
7.25%, 11/1/01 ............ 865 866
Howard County
Consolidated Public Improvement, GO
5.00%, 2/15/98 ............ 1,100 1,115
5.00%, 2/15/01 ............ 810 831
<PAGE>
Maryland, GO
5.20%, 10/15/98 ............ $1,000 $1,023
6.50%, 3/1/99 ............ 1,000 1,051
6.70%, 7/15/99 ............ 500 531
6.70%, 5/15/01
(Prerefunded 5/15/98) ............. 2,000 2,091
8.20%, 3/1/98 ............ 1,000 1,045
State and Local Fac., 4.50%, 10/15/98 ........................ 1,000 1,013
Maryland DOT
5.00%, 12/1/98 ........... 1,000 1,020
6.375%, 11/1/98 ........... 1,875 1,953
6.40%, 7/15/97 ........... 2,525 2,551
6.40%, 7/15/98 ........... 1,925 1,992
6.50%, 7/15/01 (Prerefunded 7/15/98) ............ 1,200 1,260
6.50%, 7/15/02 (Prerefunded 7/15/98) ............ 1,000 1,052
6.60%, 11/15/97 ........... 500 510
6.70%, 11/15/99
(Prerefunded 11/15/98) ............ 2,000 2,112
6.70%, 8/15/05 (Prerefunded 8/15/99) ............ 1,000 1,081
6.80%, 11/15/02
(Prerefunded 11/15/98) ............ 2,000 2,129
6.80%, 11/1/05 (Prerefunded 11/1/99) 525 571
Maryland Economic Dev. Corp. .................................
Roland Park Country School
5.35%, 11/1/97 ............ 730 735
5.50%, 11/1/98 ............ 725 738
Maryland Energy Fin. Administration
Int'l. Paper, 4.10%, 9/1/10 * .............................. 1,900 1,901
Solid Waste Disposal, 5.10%, 12/1/99 * ..................... 450 457
Maryland Environmental Service
Cecil County Landfill
5.50%, 3/1/97 ............ 385 385
5.50%, 9/1/97 ............ 395 398
Maryland HHEFA
Doctor's Community Hosp ....................................
8.75%, 7/1/22 (Prerefunded 7/1/00) ............. 5,615 6,477
Francis Scott Key Medical Center
6.50%, 7/1/97 (FGIC Insured) ............ 100 101
Maryland HHEFA
Francis Scott Key Medical Center
6.75%, 7/1/23 (FGIC Insured) (Prerefunded 7/1/00) .......... $3,600 $3,937
Memorial Hosp. of Cumberland
9.25%, 7/1/17 (Prerefunded 7/1/97) ............. 3,000 3,117
Mercy Medical Center, 7.90%, 7/1/09 (Prerefunded 7/1/99) ... 150 165
North Arundel Hosp., 7.875%, 7/1/21
(BIGI Insured) (Prerefunded 7/1/98) ............. 1,250 1,341
<PAGE>
Maryland Industrial Dev. Fin. Auth ...........................
Holy Cross Health Systems, 5.00%, 12/1/981,460 ............. 1,488
Maryland Water Quality Fin. Administration
Revolving Loan Fund, 5.60%, 9/1/99 ......................... 500 519
Maryland-National Capital Park and Planning Commission
Prince George's County, GO
5.50%, 1/15/99 ............ 1,000 1,029
5.50%, 1/15/00 ............ 1,000 1,038
Montgomery County, GO, 6.10%, 4/1/99 ......................... 1,000 1,045
Consolidated Public Improvement
6.80%, 11/1/02 (Prerefunded 11/1/99) ............. 2,000 2,175
6.80%, 11/1/09 (Prerefunded 11/1/99) ............. 850 925
Montgomery County Revenue Auth ...............................
Western County Swim Fac ....................................
7.375%, 10/1/09 (Prerefunded 10/1/97) .............. 1,500 1,563
Northeast Maryland Waste Disposal Auth .......................
Southwest Resource Recovery Fac ............................
6.85%, 1/1/99 (MBIA Insured) ............. 3,425 3,592
Prince George's County, Equipment Acquistion Program, COP
5.00%, 10/15/00 (MBIA Insured) ............. 4,050 4,146
Prince George's County IDA, Upper Marlboro Justice Center
7.00%, 6/30/19 (MBIA Insured)
(Prerefunded 6/30/99) .............. 600 651
Saint Mary's County, GO, 7.00%, 3/1/98 (MBIA Insured) ........ 585 604
Univ. of Maryland, Tuition
7.00%, 10/1/05 (Prerefunded 10/1/99) ............. 500 545
Washington Suburban Sanitary Dist., GO
5.90%, 11/1/98 ............ 2,000 2,069
6.25%, 6/1/99 ............ 300 315
6.70%, 7/1/00 (Prerefunded 7/1/99) ............. 1,000 1,077
Washington Suburban Sanitary Dist., GO
7.00%, 12/1/99 (Prerefunded 12/1/98) ............. $1,250 $1,341
8.00%, 1/1/00 ............ 3,295 3,630
Wicomico County, Consolidated Public Improvement, GO
7.00%, 2/1/98 (FGIC Insured) ............ 750 773
Worcester County
Consolidated Public Improvement, GO
5.00%, 8/1/97 ........ 550 553
5.00%, 8/1/98 ........ 570 580
5.00%, 8/1/99 ........ 1,000 1,023
Total Maryland (Cost ...................................... $93,075)
94,255
<PAGE>
PUERTO RICO 6.4%
Puerto Rico Commonwealth Highway and Transportation Auth .
8.125%, 7/1/13 (Prerefunded 7/1/98) .......... 1,500 1,616
Puerto Rico Electric Power Auth ..........................
5.00%, 7/1/98 ........ 2,500 2,532
7.125%, 7/1/14 (Prerefunded 7/1/99) ......... 2,070 2,247
Puerto Rico Ind., Med., Higher Ed. and Environmental
Pollution Control Fac. Fin. Auth .......................
Catholic Univ. of Puerto Rico, 4.40%, 12/1/97 .......... 215 216
Total Puerto Rico (Cost .................................. $ 6,516)
6,611
Total Investments in Securities
98.6% of Net Assets (Cost $99,591) .............................. $ 100,866
Other Assets Less Liabilities ................................... 1,386
NET ASSETS ...................................................... $ 102,252
Net Assets Consist of:
Accumulated net investment income - net of distributions ........ $ 2
Accumulated net realized gain/loss - net of distributions ....... (820)
Net unrealized gain (loss) ...................................... 1,275
Paid-in-capital applicable to 19,994,606 no par value
shares of beneficial interest outstanding; unlimited
number of shares authorized ..................................... 101,795
NET ASSETS ...................................................... $ 102,252
NET ASSET VALUE PER SHARE ....................................... $ 5.11
* Interest subject to alternative minimum tax Used in determining portfolio
maturity
BIGI Bond Investors Guaranty Insurance
COP Certificates of Participation
DOT Department of Transportation
FGIC Financial Guaranty Insurance Company
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
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Maryland Tax-Free Bond Fund
================================================================================
February 28, 1997
Statement of Net Assets
- --------------------------------------------------------------------------------
Par Value
In thousands
MARYLAND 101.5%
Allegany Co., PCR, Westvaco Corp., 6.20%, 1/1/08 ........... $ 1,350 $ 1,457
Anne Arundel County, Economic Dev. .........................
Baltimore Gas and Electric, TECP
3.40%, 3/3/97 * ........... 200 200
Anne Arundel County, GO
5.00%, 9/1/14 .......... 2,000 1,917
5.00%, 9/1/15 .......... 2,330 2,217
5.00%, 9/1/16 .......... 2,325 2,195
Consolidated General Improvement
6.30%, 8/1/16 .......... 775 833
6.30%, 8/1/19 .......... 725 778
6.30%, 8/1/20 .......... 705 756
6.30%, 8/1/21 .......... 790 847
6.90%, 1/15/08 (Prerefunded 1/15/99) ........... 1,150 1,232
Consolidated Water and Sewer
6.30%, 8/1/22 .......... 450 477
6.30%, 8/1/24 .......... 720 764
7.20%, 4/15/13 (Prerefunded 4/15/00) ........... 625 689
7.20%, 4/15/14 (Prerefunded 4/15/00) ........... 625 689
Anne Arundel County, Port. Fac., Baltimore Gas and Electric
TECP, 3.40%, 3/3/97 .......... 2,000 2,000
Baltimore City
Board of Ed. Administration Headquarters, COP
7.25%, 4/1/16 (MBIA Insured) .......... 3,200 3,493
Consolidated Public Improvement, GO
Zero Coupon, 10/15/06 (FGIC Insured) .......... 3,100 1,930
Zero Coupon, 10/15/08 (FGIC Insured) .......... 3,800 2,081
Zero Coupon, 10/15/09 (FGIC Insured) .......... 4,600 2,350
Zero Coupon, 10/15/11 (FGIC Insured) .......... 7,500 3,340
7.50%, 10/15/09 (FGIC Insured) .......... 2,635 3,203
7.00%, 10/15/07 (MBIA Insured) .......... 500 586
7.00%, 10/15/08 (MBIA Insured) .......... 5,190 6,082
Wastewater
5.50%, 7/1/26 (FGIC Insured) .......... 4,500 4,397
5.60%, 7/1/13 (MBIA Insured) .......... 19,300 19,714
5.65%, 7/1/20 (MBIA Insured) .......... 2,000 2,015
Water, 6.00%, 7/1/15 (FGIC Insured) ...................... 6,250 6,690
<PAGE>
Baltimore City, Convention Center
6.00%, 9/1/17 (FGIC Insured) .......... $ 5,180 $ 5,338
Parking Fac., 6.00%, 7/1/18 (FGIC Insured)** ............. 29,040 30,624
Port Fac., E.I. DuPont - CONOCO
6.50%, 10/1/11 .......... 10,400 11,380
Rivoli Office Building Fac., COP
7.20%, 4/1/10 (MBIA Insured) .......... 1,950 2,126
7.20%, 4/1/10 (MBIA Insured)
(Prerefunded 4/1/00) ........... 1,300 1,435
7.25%, 4/1/16 (MBIA Insured) .......... 5,845 6,381
7.25%, 4/1/16 (MBIA Insured)
(Prerefunded 4/1/00) ........... 1,655 1,830
Tindeco Wharf Apartments, 6.60%, 12/20/24
(GNMA Guaranteed) .......... 1,000 1,049
Baltimore County
TECP, BAN, 3.30 - 3.40%, 3/3 - 3/6/97 .......... 5,000 5,000
TECP, GO, BAN, 3.25 - 3.30%, 3/5 - 3/6/97 ............ 5,000 5,000
Pension Funding, GO, 7.10%, 10/1/12
(Prerefunded 10/1/99) ........... 3,195 3,492
Baltimore County, North Brooke Apartments, 6.35%, 1/20/21
(GNMA Guaranteed) .......... 3,000 3,109
PCR, Baltimore Gas and Electric, TECP
3.45%, 3/3/97 .......... 2,000 2,000
Pickersgill Retirement Community, 7.70%, 1/1/21 .......... 3,550 3,735
Spring Hill Apartments, VRDN (Currently 3.40%)
(GNMA Guaranteed) .......... 6,800 6,800
Stella Maris, 7.50%, 3/1/21 .............................. 2,760 2,940
Bel Air, Parking, COP, 7.80%, 6/1/10 (CGIC Insured)
(Prerefunded 12/1/98) ........... 1,500 1,630
Calvert County, PCR, Baltimore Gas and Electric
5.55%, 7/15/14 .......... 5,635 5,610
Carroll County
Consolidated Public Improvement, GO
6.00%, 11/1/06 (Prerefunded 11/1/99) ........... 800 854
7.30%, 10/1/20 .......... 2,000 2,220
Carroll County, Copper Ridge, 7.75%, 1/1/183,000 ........... 3,182
Fairhaven, 7.75%, 1/1/11 ................................. 1,000 1,071
Charles County
County Commissioners, New Forest Apartments
6.10%, 11/1/28 (FHA Guaranteed) .......... $ 5,000 $ 4,999
Holly Station, 6.45%, 5/1/26 (FHA Guaranteed) ............ 1,780 1,846
<PAGE>
Damascus Gardens Dev. Corp. ................................
7.375%, 11/1/21 (FHA Guaranteed) .......... 3,902 3,912
Frederick City
General Improvement, GO
VRDN (Currently 3.55%) .......... 2,300 2,300
6.125%, 12/1/09 (FGIC Insured) .......... 1,840 1,963
Frederick County, GO, 7.20%, 4/1/05 (Prerefunded 4/1/99) ... 1,000 1,083
Gaithersburg Economic Auth., Asbury Methodist Home
7.85%, 1/1/20 (Prerefunded 1/1/00) ............ 6,500 7,220
Gaithersburg Hosp. Fac., Shady Grove Adventist Hosp ........
6.50%, 9/1/12 (FSA Insured) ........... 5,000 5,663
Howard County
Consolidated Public Improvement, GO
5.875%, 5/15/12 .......... 3,020 3,122
7.30%, 2/15/02 (Prerefunded 1/1/99) ........... 650 689
7.40%, 2/15/09 (Prerefunded 1/1/99) ........... 250 268
Metropolitan Dist., GO, 7.15%, 5/15/14
(Prerefunded 5/15/00) ........... 1,005 1,102
7.15%, 5/15/15 (Prerefunded 5/15/00) ........... 1,080 1,184
7.15%, 5/15/16 (Prerefunded 5/15/00) ........... 1,160 1,271
7.15%, 5/15/17 (Prerefunded 5/15/00) ........... 1,245 1,365
Special Fac., 6.00%, 2/15/21 ............................. 3,110 3,207
Laurel, GO
6.90%, 7/1/07 (MBIA Insured)
(Prerefunded 7/1/01) ........... 1,000 1,115
7.00%, 7/1/09 (MBIA Insured)
(Prerefunded 7/1/01) ........... 550 616
Maryland
GO, 7.00%, 10/15/03
(Prerefunded 10/15/00) ........... 2,000 2,204
GO, 7.10%, 10/15/04
(Prerefunded 10/15/00) ........... 3,000 3,328
Capital Improvement, GO, 5.20%, 4/15/06 .................. 3,180 3,271
St. Mary's County Building Commission, COP
7.625%, 12/1/03 (Prerefunded 6/1/98) ........... 1,500 1,600
Maryland
State and Local Fac. Loan, GO
4.70%, 2/15/10 .......... $ 3,500 $ 3,314
5.00%, 3/1/09** .......... 20,720 20,591
5.70%, 3/15/10 .......... 5,000 5,252
<PAGE>
Maryland CDA
Dept. of Housing and Community Dev. ......................
5.875%, 7/1/16 .......... 4,600 4,621
Infrastructure
8.375%, 6/1/08 .......... 775 828
8.50%, 6/1/18 .......... 1,350 1,447
Single Family
5.875%, 4/1/17 * ...... 1,835 1,850
5.95%, 4/1/16 ...... 1,000 1,009
6.00%, 4/1/17 ...... 2,500 2,530
6.45%, 4/1/14 ...... 1,000 1,039
6.75%, 4/1/10 * ...... 5,000 5,234
6.75%, 4/1/26 * ...... 3,995 4,163
6.80%, 4/1/22 * ...... 4,040 4,184
6.80%, 4/1/24 * ...... 2,720 2,817
6.85%, 4/1/11 ...... 4,895 5,122
7.00%, 4/1/14 ...... 2,720 2,889
7.05%, 4/1/17 ...... 4,750 5,034
7.25%, 4/1/11 ...... 2,000 2,114
7.25%, 4/1/19 ...... 7,500 7,890
7.25%, 4/1/19 * ...... 1,500 1,590
7.25%, 4/1/27 ...... 9,250 9,707
7.375%, 4/1/10 ...... 495 522
7.40%, 4/1/17 ...... 5,395 5,671
7.50%, 4/1/00 ...... 500 516
7.60%, 4/1/17 ...... 2,200 2,293
7.625%, 4/1/29 * ...... 1,815 1,887
7.875%, 4/1/07 ...... 300 309
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 5,983
Maryland Economic Dev. Corp., Gull Creek, Inc. .........
8.10%, 4/1/26 ...... 2,500 2,535
Maryland Energy Fin. Administration, Wheelabrator
6.30%, 12/1/10 * ...... $ 5,395 $ 5,637
Maryland HHEFA
Broadmead, 7.625%, 7/1/10 ............................ 1,345 1,413
Church Hosp., 8.00%, 7/1/09 .......................... 1,200 1,271
Doctor's Community Hosp ..............................
5.50%, 7/1/24 ...... 3,000 2,718
8.75%, 7/1/22 (Prerefunded 7/1/00) ....... 6,800 7,844
Francis Scott Key Medical Center
5.00%, 7/1/18 (FGIC Insured) ...... 4,880 4,478
5.00%, 7/1/23 (FGIC Insured) ...... 5,850 5,309
7.00%, 7/1/10 (FGIC Insured)
(Prerefunded 7/1/00) ....... 2,000 2,203
<PAGE>
Franklin Square Hosp .................................
7.50%, 7/1/19 (MBIA Insured) ...... 4,750 5,140
Frederick Memorial Hosp ..............................
5.00%, 7/1/23 (FGIC Insured) ...... 5,500 4,992
5.00%, 7/1/28 (FGIC Insured) ...... 4,750 4,266
Good Samaritan Hosp ..................................
5.60%, 7/1/06 ...... 1,545 1,603
5.60%, 7/1/07 ...... 1,875 1,936
5.75%, 7/1/13 ...... 4,000 4,141
7.40%, 7/1/09 (Prerefunded 7/1/99) ....... 1,000 1,092
7.50%, 7/1/21 (Prerefunded 7/1/99) ....... 4,000 4,376
Greater Baltimore Medical Center
VRDN (Currently 3.45%) ...... 2,000 2,000
5.00%, 7/1/19 (FGIC Insured) ...... 2,860 2,615
Helix Health System, VRDN (Currently 3.30%) .......... 2,900 2,900
Holy Cross Hosp ......................................
7.125%, 7/1/10 (AMBAC Insured)
(Prerefunded 7/1/00) ....... 1,400 1,547
7.50%, 7/1/01 (AMBAC Insured)
(Prerefunded 7/1/00) ....... 1,655 1,848
Howard County General Hosp., 5.50%, 7/1/21 ........... 5,000 4,573
Johns Hopkins Health Systems, 5.25%, 7/1/17
(AMBAC Insured) ...... 1,745 1,673
Johns Hopkins Hosp ...................................
Zero Coupon, 7/1/19 ...... 9,460 2,641
Maryland HHEFA
Johns Hopkins Hosp ...................................
7.00%, 7/1/23 (Prerefunded 7/1/00) ....... $ 1,305 $ 1,437
TECP, 3.35%, 3/11/97 ...... 1,000 1,000
Johns Hopkins Medical Institute Parking Fac ..........
5.375%, 7/1/20 (AMBAC Insured) ...... 6,800 6,559
Johns Hopkins Univ ...................................
7.375%, 7/1/08 ...... 1,500 1,589
7.50%, 7/1/20 ...... 11,015 11,685
Kaiser Permanente, VRDN (Currently 3.30%)5,300 ....... 5,300
Kennedy Kreiger Institute
VRDN (Currently 3.35%) .......... 3,400 3,400
6.75%, 7/1/22 .......... 2,850 2,925
7.40%, 7/1/11 .......... 370 393
Loyola College
VRDN (Currently 3.30%) (MBIA Insured) .......... 500 500
5.375%, 10/1/26 (MBIA Insured) .......... 8,000 7,752
Maryland General Hosp ....................................
6.20%, 7/1/24 (MBIA Insured) .......... 4,000 4,187
<PAGE>
Mercy Medical Center
7.90%, 7/1/09 (Prerefunded 7/1/99) ........... 2,000 2,205
8.00%, 7/1/20 (Prerefunded 7/1/99) ........... 6,500 7,178
5.75%, 7/1/26 (FSA Insured) .......... 4,760 4,733
6.50%, 7/1/13 (FSA Insured) .......... 1,000 1,121
North Arundel Hosp., VRDN (Currently 3.30%) .............. 6,100 6,100
Peninsula Regional Medical Center
5.00%, 7/1/23 (MBIA Insured) .......... 11,035 10,015
Pooled Loan Program, VRDN (Currently 3.30%) .............. 8,500 8,500
Sinai Hosp ...............................................
5.25%, 7/1/19 (AMBAC Insured) .......... 3,070 2,889
7.30%, 7/1/05 (AMBAC Insured)
(Prerefunded 7/1/00) ........... 2,000 2,221
Suburban Hosp., 7.60%, 7/1/18
(Prerefunded 7/1/98) ........... 300 321
Union Hosp. of Cecil County, 6.625%, 7/1/12 .............. 1,545 1,589
Union Memorial Hosp ......................................
6.60%, 7/1/06 (MBIA Insured) .......... 500 546
6.75%, 7/1/11 (MBIA Insured) .......... 3,000 3,269
6.75%, 7/1/21 (MBIA Insured) .......... 7,895 8,604
Maryland HHEFA
Univ. of Maryland Medical System
5.00%, 7/1/20 (FGIC Insured) .......... $14,575 $13,301
7.00%, 7/1/17 (FGIC Insured)
(Prerefunded 7/1/01) ........... 7,770 8,685
7.00%, 7/1/22 (FGIC Insured) .......... 2,000 2,392
7.00%, 7/1/11 (MBIA Insured)
(Prerefunded 7/1/01) ........... 4,550 5,086
Maryland Ind. Dev. Fin. Auth ...............................
American Center for Physics Headquarters Fac .............
6.25%, 1/1/07 .......... 5,770 5,941
6.375%, 1/1/12 .......... 5,900 6,091
6.625%, 1/1/17 .......... 4,250 4,362
Associated Catholic Charities, 9.00%, 1/1/10 ............. 855 932
Bon Secours Health System, 5.929%, 8/26/22
(FSA Insured) .......... 10,000 10,445
Holy Cross Health Systems, 5.60%, 12/1/092,780 ........... 2,883
Maryland Local Gov't. Income Trust Capitalization Program
GO, COP
6.80%, 8/1/01 .......... 1,615 1,750
7.125%, 8/1/09 .......... 3,000 3,277
Maryland Stadium Auth ......................................
Baltimore Convention Center Expansion
5.875%, 12/15/10 (AMBAC Insured) .......... 1,500 1,571
5.875%, 12/15/11 (AMBAC Insured) .......... 2,025 2,112
<PAGE>
Sports Fac ...............................................
5.60%, 3/1/14 (AMBAC Insured) .......... 1,000 1,010
5.75%, 3/1/22 (AMBAC Insured) .......... 6,500 6,520
5.80%, 3/1/26 (AMBAC Insured) .......... 4,300 4,332
Maryland Transportation Auth ...............................
6.80%, 7/1/16 (Escrowed to Maturity) .......... 6,515 7,492
Zero Coupon, 7/1/07 (FGIC Insured) .......... 8,500 5,111
Zero Coupon, 7/1/08 (FGIC Insured) .......... 2,000 1,132
Zero Coupon, 7/1/09 (FGIC Insured) .......... 10,410 5,538
Baltimore-Washington Int'l. Airport
6.25%, 7/1/14 (FGIC Insured) * .......... 3,105 3,280
6.40%, 7/1/19 (FGIC Insured) * .......... 10,920 11,278
Maryland Water Quality Fin. Administration
Revolving Loan Fund
Zero Coupon, 9/1/02 .......... 1,185 923
Maryland Water Quality Fin. Administration
Zero Coupon, 9/1/07 .......... $ 1,125 $ 671
6.00%, 9/1/15 .......... 1,600 1,658
6.70%, 9/1/13 (Prerefunded 9/1/01) ........... 1,280 1,424
7.10%, 9/1/13 (Prerefunded 9/1/01) ........... 985 1,111
7.25%, 9/1/11 (Prerefunded 9/1/00) ........... 1,700 1,896
7.25%, 9/1/12 (Prerefunded 9/1/00) ........... 2,000 2,231
Maryland-National Capital Park and Planning Commission
Little Bennett Golf Fac., 8.25%, 10/1/11 ............... 2,270 2,473
Prince George's County, GO
5.375%, 1/15/16 ........ 1,300 1,283
5.375%, 1/15/17 ........ 2,300 2,270
6.90%, 7/1/05 (Prerefunded 7/1/00) ......... 1,400 1,539
6.90%, 7/1/06 (Prerefunded 7/1/00) ......... 1,350 1,485
6.90%, 7/1/07 (Prerefunded 7/1/00) ......... 1,400 1,539
6.90%, 7/1/08 (Prerefunded 7/1/00) ......... 1,400 1,540
6.90%, 7/1/09 (Prerefunded 7/1/00) ......... 1,400 1,540
Montgomery County
TECP, GO, BAN, 3.30%, 3/5/97 ..... 2,000 2,000
Consolidated Public Improvement, GO
5.50%, 4/1/16 ........ 3,000 3,015
6.125%, 10/1/13 ........ 2,500 2,665
6.125%, 10/1/14 ........ 3,150 3,346
6.80%, 11/1/09 (Prerefunded 11/1/99) ......... 1,145 1,246
7.10%, 10/1/09 (Prerefunded 10/1/00) ......... 1,000 1,113
7.10%, 10/1/10 (Prerefunded 10/1/00) ......... 1,840 2,047
7.25%, 10/1/08 (Prerefunded 10/1/98) ...... 500 536
Montgomery County, Golf Course System, 6.125%, 10/1/22 ... 2,260 2,249
<PAGE>
Montgomery County Housing Opportunities Commission
Multi-Family
6.25%, 7/1/25 ........ 5,500 5,613
7.50%, 7/1/24 ........ 3,000 3,139
Single Family
5.90%, 7/1/17 ........ 2,000 2,010
6.00%, 7/1/17 ........ 4,595 4,655
6.50%, 7/1/11 ........ 2,910 3,029
6.65%, 7/1/16 ........ 2,370 2,473
6.80%, 7/1/17 ........ 2,855 2,968
6.90%, 7/1/19 ........ 2,000 2,094
Montgomery County Housing Opportunities Commission
Single Family
7.50%, 7/1/17 ........ $ 1,815 $ 1,913
7.625%, 7/1/17 ........ 3,580 3,721
Montgomery County, PCR, Potomac Electric
5.375%, 2/15/24 ........ 4,560 4,385
Morgan State Univ., Academic Fees and Auxiliary Fac ......
6.05%, 7/1/15 (MBIA Insured) ......... 1,050 1,131
Northeast Maryland Waste Disposal Auth ...................
Montgomery County Resources
6.30%, 7/1/16 (MBIA Insured) * ........ 12,085 12,609
Southwest Resource Recovery Fac ........................
6.00%, 7/1/08 * ........ 10,000 10,306
6.20%, 7/1/10 * ........ 7,000 7,168
Prince George's County
Collington Episcopal Life Care Community
5.625%, 4/1/09 ........ 1,500 1,469
Dimensions Health Corp. ................................
5.375%, 7/1/14 ........ 5,685 5,410
7.00%, 7/1/01 ........ 2,450 2,658
7.00%, 7/1/22 (Prerefunded 7/1/02) ......... 2,660 3,015
7.20%, 7/1/06 ........ 420 473
7.20%, 7/1/06 (Prerefunded 7/1/02) ......... 1,985 2,267
PCR, Potomac Electric, 6.375%, 1/15/23 ................. 5,000 5,292
Riverview Terrace Apts., 6.70%, 6/20/20
(GNMA Guaranteed) ........ 1,500 1,586
Prince George's County, Solid Waste Management System
6.90%, 6/30/05 (Prerefunded 6/30/00) ......... 1,500 1,651
6.90%, 6/30/06 (Prerefunded 6/30/00) ......... 1,000 1,101
7.00%, 6/30/07 (Prerefunded 6/30/00) ......... 1,120 1,236
7.00%, 6/30/09 (Prerefunded 6/30/00) ......... 1,255 1,385
<PAGE>
Prince George's County Housing Auth ......................
New Keystone, 6.80%, 7/1/25 (MBIA Insured) ............. 2,600 2,709
Stevenson Apartments, 6.35%, 7/20/20
(GNMA Guaranteed) ........ 2,200 2,249
Prince George's County IDA
Gabriel DuVall Law Building, 8.00%, 9/1/07 ............. 1,185 1,227
Upper Marlboro Justice Center
5.25%, 6/30/19 (MBIA Insured) ........ 1,500 1,406
Univ. of Maryland
Auxiliary Fac. and Tuition
5.75%, 4/1/17 .... $ 4,750 $ 4,831
6.375%, 4/1/09 .... 2,100 2,306
6.50%, 4/1/12 .... 440 484
7.20%, 10/1/09 (Prerefunded 10/1/99) ..... 1,400 1,534
Equipment Loan Program
VRDN (Currently 3.20%) .... 2,200 2,200
Tuition, 7.00%, 10/1/05 (Prerefunded 10/1/99) ...... 2,000 2,181
Washington County Public Fac., GO
6.70%, 12/1/05 (Prerefunded 12/1/98) ..... 1,115 1,191
Washington County Sanitary Dist., GO
6.875%, 2/1/10 (Prerefunded 2/1/00) ..... 3,500 3,812
7.00%, 2/1/15 (Prerefunded 2/1/00) ..... 2,000 2,185
Washington Suburban Sanitary Dist., GO
6.20%, 6/1/11 .... 2,400 2,552
6.20%, 6/1/12 .... 1,500 1,594
6.40%, 1/1/15 .... 2,270 2,446
6.625%, 6/1/18
(Prerefunded 6/1/04) ..... 3,665 4,111
6.90%, 6/1/08
(Prerefunded 6/1/00) ..... 1,500 1,647
6.90%, 6/1/09
(Prerefunded 6/1/00) ..... 2,300 2,525
7.40%, 7/1/07
(Prerefunded 7/1/98) ..... 700 747
BAN, 3.25%, 3/5/97 ................................. 2,100 2,100
Worcester County Sanitary Dist .......................
6.50%, 8/15/12 .... 735 794
6.50%, 8/15/12 (Prerefunded 8/15/02) ..... 1,265 1,407
Total Maryland (Cost ................................. $786,184)
831,943
PUERTO RICO 2.7%
Puerto Rico Commonwealth, GO
6.25%, 7/1/11 (MBIA Insured) ........ 2,000 2,225
6.25%, 7/1/12 (MBIA Insured) ........ 1,750 1,949
Puerto Rico Electric Power Auth ..........................
7.00%, 7/1/11 (Prerefunded 7/1/01) ......... $ 1,200 $ 1,349
Puerto Rico Highway and Transportation Auth ..............
5.50%, 7/1/36 ........ 3,500 3,348
5.50%, 7/1/15 (FSA Insured) ........ 5,000 5,075
Puerto Rico Infrastructure Fin. Auth., 7.50%, 7/1/09 ..... 5,150 5,469
Puerto Rico Municipal Fin. Agency, GO
6.00%, 7/1/14 (FSA Insured) ........ 3,030 3,169
Total Puerto Rico (Cost .................................. $21,479)
22,584
<PAGE>
Total Investments in Securities
104.2% of Net Assets (Cost $807,663) ............................ $ 854,527
Other Assets Less Liabilities ................................... (34,546)
NET ASSETS ...................................................... $ 819,981
Net Assets Consist of:
Accumulated net investment income - net of distributions ........ $ 3
Accumulated net realized gain/loss - net of distributions ....... (3,600)
Net unrealized gain (loss) ...................................... 46,864
Paid-in-capital applicable to 79,253,427 no par value
shares of beneficial interest outstanding; unlimited
number of shares authorized ..................................... 776,714
NET ASSETS ...................................................... $ 819,981
NET ASSET VALUE PER SHARE ....................................... $ 10.35
* Interest subject to alternative minimum tax
** When-issued security 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
================================================================================
Statement of Operations
In thousands
Short-Term Bond Fund
Bond Fund
- --------------------------------------------------------------------------------
Year
Ended
2/28/97 2/28/97
- --------------------------------------------------------------------------------
Investment Income
Interest income $4,278 $47,498
Expenses
Investment management ........................ 378 3,398
Custody and accounting ....................... 99 171
Shareholder servicing ........................ 89 577
Legal and audit .............................. 10 11
Prospectus and shareholder reports ........... 9 54
Trustees ..................................... 6 11
Registration ................................. 5 5
Miscellaneous ................................ 5 13
Total expenses ............................... 601 4,240
Net investment income .............................. 3,677 43,258
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ................................... 60 951
Futures ...................................... (6) 221
Written options .............................. - 26
Net realized gain (loss) ..................... 54 1,198
Change in net unrealized gain or loss
Securities ................................... (566) (5,624)
Futures ...................................... - 138
Change in net unrealized gain or loss ........ (566) (5,486)
Net realized and unrealized gain (loss) ............ (512) (4,288)
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ............................. $ 3,165 $ 38,970
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price Maryland Tax-Free Funds
====================================================================================================================================
Statement of Changes in Net Assets
In thousands
<CAPTION>
Short-Term Bond Fund
Bond Fund
Year Year
Ended Ended
2/28/97 2/29/96 2/28/97 2/29/96
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income ........................ $ 3,677 $ 3,389 $ 43,258 $ 42,251
Net realized gain (loss) ..................... 54 286 1,198 4,930
Change in net unrealized
gain or loss ................................. (566) 1,403 (5,486) 25,591
Increase (decrease) in
net assets from operations ................... 3,165 5,078 38,970 72,772
Distributions to shareholders
Net investment income ........................ (3,677) (3,389) (43,258) (42,251)
Capital share transactions *
Shares sold .................................. 51,238 40,883 129,303 133,827
Distributions reinvested ..................... 3,177 2,841 31,917 31,291
Shares redeemed .............................. (37,435) (34,437) (135,540) (121,873)
Increase (decrease) in
net assets from capital
share transactions ........................... 16,980 9,287 25,680 43,245
Net Assets
Increase (decrease)
during period ...................................... 16,468 10,976 21,392 73,766
Beginning of period ................................ 85,784 74,808 798,589 724,823
End of period ...................................... $ 102,252 $ 85,784 $ 819,981 $ 798,589
*Share information
Shares sold .................................. 10,043 8,007 12,632 13,045
Distributions reinvested ..................... 623 556 3,113 3,049
Shares redeeemed ............................. (7,338) (6,739) (13,257) (11,885)
Increase (decrease)
in shares outstanding ........................ 3,328 1,824 2,488 4,209
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
================================================================================
February 28, 1997
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price State Tax-Free Income Trust (the trust) is registered under
the Investment Company Act of 1940. The Maryland Short-Term Tax-Free Bond Fund
(the Short-Term Bond Fund) and the Maryland Tax-Free Bond Fund (the Bond Fund),
nondiversified, open-e nd 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
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.
<PAGE>
Options
Call and put options on futures contracts give the holder the right to
purchase or sell, respectively, a particular futures contract at a specified
price on a certain date. Risks arise from possible illiquidity of the options
market and from movements in underlying futures prices. Transactions in options
written and related premiums received for the Bond Fund during the year ended
February 28, 1997, were as follows:
================================================================================
Number of
Contracts Premiums
- --------------------------------------------------------------------------------
Outstanding at beginning of period ............. - $-
Written ........................................ 25 31,000
Closed ......................................... (25) (31,000)
Outstanding at end of period ................... - $-
================================================================================
Other
Purchases and sales of portfolio securities, other than short-term
securities, for the year ended February 28, 1997, were as follows:
================================================================================
Short-Term Bond Fund
Bond Fund
- --------------------------------------------------------------------------------
Purchases ........................ $ 38,402,000 $244,071,000
Sales ............................ 19,081,000 201,023,000
- --------------------------------------------------------------------------------
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 expires in 2004. Capital loss carryforwards
utilized by the Short-Term Bond Fund in fiscal 1997 amounted to $67,000. The
Bond Fund has unused realized capital loss carryforwards for federal income tax
purposes of $2,760,000, which expires in 2003. Capital loss carryforwards
utilized by the Bond Fund in fiscal 1997 amounted to $1,428,000. 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 28, 1997. 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 $ 2,000
Undistributed net realized gain ................ (2,000) (13,000)
Paid-in-capital ................................ 1,000 11,000
================================================================================
<PAGE>
At February 28, 1997, the aggregate costs of investments for the Short-Term
Bond and Bond Funds for federal income tax and financial reporting purposes were
$99,591,000 and $807,663,000, respectively. Net unrealized gain (loss) on
investments was as follows:
================================================================================
Short-Term Bond Fund
Bond Fund
- --------------------------------------------------------------------------------
Appreciated investments ................. $ 1,275,000 $ 47,100,000
Depreciated investments ................. - (236,000)
Net unrealized gain (loss) .............. $ 1,275,000 $ 46,864,000
================================================================================
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 $33,000 and $268,000 were payable at February 28, 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, 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 0.305% for assets in excess of $50 billion. At
February 28, 1997, and for the year then ended, the effective annual group fee
rate was 0.33%. 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, $19,000 of management fees were not accrued by the
fund for the year ended February 28, 1997, and $33,000 remains unaccrued from
the prior period.
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 $134,000 and $508,000, respectively, for the year ended February
28, 1997, of which $13,000 and $50,000, respectively, were payable at
period-end.
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
================================================================================
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 28, 1997, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
February 28, 1997, by correspondence with the custodian. 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 28, 1997, the results of their operations, the
changes in their net assets, and financial highlights for each of the respective
periods stated in the first paragraph, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
March 19, 1997
<PAGE>
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.
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.
<PAGE>
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.
Detailed Investment Guides
Our widely acclaimed Asset Mix Worksheet, College Planning Kit, 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.
<PAGE>
T. Rowe Price Mutual Funds
================================================================================
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
OTC**
Science & Technology
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
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
<PAGE>
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
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
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.
** Effective May 1, 1997, the fund's name will change to Small-Cap Stock.
<PAGE>
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.
T. Rowe Price Discount Brokerage
================================================================================
Discount Brokerage
A Division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC
This low-cost service gives you the opportunity to easily consolidate all
your investments with one company. Through T. Rowe Price Discount Brokerage, you
can buy and sell individual securities N stocks, bonds, options, and others N at
considerable commission savings over full-service brokers. We also provide a
wide range of services, including:
Automated Telephone and Computer Services
You can enter trades, access quotes, and review account information 24
hours a day, seven days a week. Any trades executed through these programs save
you an additional 10% on commissions.*
Investor Information
A variety of informative reports, such as our Brokerage Insights series,
S&P Market Month newsletter, and select stock reports, can help you better
evaluate economic trends and investment opportunities.
Dividend Reinvestment Service
Virtually all stocks held in customer accounts are eligible for this
service, free of charge.
* Discount applies to our current commission schedule; subject to our $35
minimum commission.
<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
625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
http://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.
RPRTMDC 2/28/97
