Annual Report
Georgia
Tax-Free
Bond Fund
February 28, 1998
T. Rowe Price
Report Highlights
Georgia Tax-Free Bond Fund
o The municipal bond market performed well during the six
months ended February 28, 1998, spurred by continued low
inflation and declining interest rates.
o Georgia's economy remained healthy, with employment and
income growth rates above the national average.
o The fund provided strong returns of 5.36% and 9.70% for
the 6- and 12-month periods, respectively, exceeding its
Lipper peer group average in both instances.
o Our strategy continued to emphasize noncallable
securities, which perform particularly well when rates
decline. We also took steps to help maintain the fund's
income.
o We believe bonds should continue to do well in the coming
months as long as inflation remains subdued.
Fellow Shareholders
The municipal bond market and your fund provided strong
returns for the six months ended February 28 as interest rates
declined against a background of subdued inflation. Because of
their lower risk profiles, most fixed income investments in
the U.S. benefited from the jitters experienced by worldwide
stock markets in the wake of Southeast Asian currency and
economic crises.
Market Environment
During the six months ended February 28, 1998, municipal bond
prices rose and yields declined, with long-term AAA-rated
bonds breaking through the 5% level. Both the taxable and
tax-free bond markets flourished in the positive environment
of continued low inflation. However, a sharp increase in
supply caused yields on tax-free securities to fall less than
on comparable Treasury issues. Municipal issuance increased by
20% in 1997, and supply for 1998 so far is the highest ever
for the first two months of the year. As a result, Treasury
securities outperformed municipals for the past six months.
Georgia Bond Yield Index
. . . . . Georgia Index
2/28/97 5.66
5.77
5.76
5/31 5.62
5.58
5.34
8/31 5.44
5.37
5.32
11/30 5.27
5.14
5.1
2/28/98 5.17
Yields on long-term AAA municipal bonds fell about 27 basis
points from the end of August (100 basis points equal one
percent). Intermediate yields fell in tandem with long-term
rates, but short-term rates fell less sharply. Yields on
long-term Georgia bonds followed national trends, as shown in
the chart.
The major influence on interest rates was, and continues to
be, the lack of rising inflationary pressures. In 1997,
consumer prices increased at an annual rate of 1.7%, the
lowest since 1986. Municipal bond yields were also pushed
lower by widespread improvements in credit quality ratings
that attested to the economy's strength; upgrades exceeded
downgrades by seven to one. Despite the economy's vigor, the
Federal Reserve left short-term interest rates unchanged after
raising the federal funds rate early last spring.
Georgia's economy continued to expand through 1997, with
employment growing a healthy 3.7% compared with 2.6% for the
U.S. as a whole. As in the previous year, the state's momentum
was fueled by the transportation and service sectors. Personal
income data for the fourth quarter placed Georgia among the
fastest-growing states, with a rate of increase almost 50%
above the national average. The state's strong income growth
is expected to continue through 1998.
Georgia continued to manage its finances responsibly and took
steps to address the revenue decline in fiscal 1998 that will
result from the elimination of sales tax on food. The state's
general obligations retained their AAA rating-one of only
eight states so rated by all three major rating agencies.
Performance Comparison
Periods Ended
2/28/98 6 Months 12 Months
______________________________________________________________
____
Georgia Tax-Free
Bond Fund 5.36% 9.70%
Lipper Georgia Municipal
Debt Funds Average 4.94 9.18
Performance and Strategy Review
Your fund provided robust returns of 5.36% and 9.70% for the
6- and 12-month periods, respectively, surpassing those of the
average Georgia bond fund, as shown in the table. This
represents the fifth consecutive year-every year since its
inception-in which the fund exceeded its peer group average.
Performance benefited significantly from holdings of
noncallable securities, which our strategy has consistently
emphasized over the past several years. Noncallable bonds
offer more predictable and better performance characteristics
than callable bonds, especially in a falling-rate environment
such as the past six months. To temper the potential price
volatility of these bonds, we focused on maturities of
approximately 15 years rather than 30 years. While this
resulted in a minor sacrifice of yield, the shorter maturities
will dampen the negative price effect of a potential rise in
interest rates. During the past six months, the fund's
weighted average maturity shortened materially from 16.5 years
to 15.2 years, as noted in the Key Statistics table on page 4.
The strength of the national and local economies continues to
bolster the credit quality of municipal issuers around the
state. While this is a positive credit development for our
current holdings, the increase in quality puts downward
pressure on yields in the Georgia market and, therefore, on
income to our shareholders. We have offset this somewhat by
selectively adding lower-quality, higher-yielding issues that
we believe represent improving credit situations. In
particular, we increased our position in Delta Airlines and
added two health care-related holdings. (The fund's overall
sector diversification is shown following this letter,
together with a complete portfolio list.)
We also helped maintain the fund's income level by increasing
our weighting in Puerto Rican debt. (Income from Puerto Rican
municipals is tax-exempt in Georgia.) A temporary increase in
the supply of these securities caused their yields to rise,
and we were able to take advantage of that development for the
fund.
Outlook
As we weigh the prospects for 1998, our outlook remains
positive. We believe the U.S. economy will not be derailed by
events in Asia but could see its growth rate reduced by a
slowdown in that region. Recent Congressional testimony of
Federal Reserve officials suggests that the Fed will leave
monetary policy unchanged until it fully appraises the impact
of Asia's problems on the U.S. economy. Therefore, we see
little likelihood of a near-term tightening by the Fed, which
bodes well for bonds.
Although municipal bonds have come under some pressure
recently from both heavy supply and the rise in Treasury
yields, they produced good results over the past 12 months.
Compared with Treasuries on an after-tax basis, yields on
municipals remain attractive and could entice investors
looking to take advantage of their relative appeal. We expect
municipal bonds, including Georgia securities, to continue to
do well in 1998 as long as inflation remains benign.
We will be closely monitoring developments in the national
economy and their impact on the Georgia municipal market. As
always, we will focus on continuing to provide the highest
tax-exempt income consistent with prudent management of
interest rate and credit risk.
Respectfully submitted,
Hugh D. McGuirk
Chairman of the Investment Advisory Committee
March 20, 1998
T. Rowe Price Georgia Tax-Free Bond Fund
Portfolio Highlights
Key statistics
8/31/97 2/28/98
______________________________________________________________
_
Price Per Share $ 10.61 $ 10.92
Dividends Per Share
For 6 months 0.25 0.25
For 12 months 0.51 0.51
Dividend Yield *
For 6 months 4.89% 4.79%
For 12 months 5.03 4.90
Weighted Average
Maturity (years) 16.5 15.2
Weighted Average Effective
Duration (years) 8.0 7.5
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.
T. Rowe Price Georgia Tax-Free Bond Fund
Portfolio Highlights
Sector Diversification
Percent of Percent of
Net Assets Net Assets
8/31/97 2/28/98
_________________________________________________________________
General Obligation - Local 14% 14%
Water and Sewer Revenue 14 13
Nuclear Revenue 12 13
Prerefunded Bonds 8 12
Housing Finance Revenue 10 9
Dedicated Tax Revenue 10 9
General Obligation - State 6 8
Hospital Revenue 3 7
Industrial and Pollution
Control Revenue 5 5
Escrowed to Maturity 5 5
Life Care/Nursing Home Revenue 1 2
Air and Sea Transportation Revenue 1 2
Miscellaneous Revenue 2 2
All Other 8 2
Other Assets Less Liabilities 1 -3
_________________________________________________________________
Total 100% 100%
T. Rowe Price Georgia Tax-Free Bond Fund
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment in the
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.
Georgia Tax-Free Bond Fund
As of 2/28/98
. . . . . . . . . . . . .Lipper Georgia
Lehman Municipal Debt Funds Georgia Tax-Free
Bond Index Average Bond Fund
3/31/93 $ 10,000 $10,000 $10,000
2/94 10,666 10,727 10,845
2/95 10,867 10,824 10,999
2/96 12,068 11,896 12,167
2/97 12,732 12,468 12,793
2/98 13,896 13,598 14,034
Average Annual Compound Total Return
This table shows how the 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 2/28/98 1 Year3 Years Inception Date
_____________________________________________________________________
Georgia Tax-Free
Bond Fund 9.70% 8.46% 7.14% 3/31/93
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price Georgia Tax-Free Bond Fund
Financial Highlights
For a share outstanding throughout each period
Year 3/31/93
Ended through
2/28/98 2/28/97 2/29/96 2/28/95 2/28/94
NET ASSET VALUE
Beginning of
period $ 10.44 $ 10.44 $ 9.93 $ 10.37 $10.00
Investment
activities
Net investment
income 0.51* 0.52* 0.52* 0.51* 0.43*
Net realized and
unrealized gain
(loss) 0.48 - 0.51 (0.39) 0.41
Total from
investment
activities 0.99 0.52 1.03 0.12 0.84
Distributions
Net investment
income (0.51) (0.52) (0.52) (0.51) (0.43)
Net realized
gain - - - (0.05) (0.04)
Total distri-
butions (0.51) (0.52) (0.52) (0.56) (0.47)
NET ASSET VALUE
End of period $ 10.92 $ 10.44 $10.44 $ 9.93 $10.37
________________________________
________________________________________________
Ratios/Supplemental Data
Total return 9.70%* 5.15%* 10.62%* 1.42%* 8.45%*
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 4.79%* 5.01%* 5.09%* 5.26%* 4.48%*!
Portfolio turnover
rate 49.0% 71.1% 71.5% 170.2% 154.8%!
Net assets, end
of period
(in thousands) $49,455 $38,726 $32,500 $ 23,338 $22.614
* Excludes expenses in excess of a 0.65% voluntary expense limitation in
effect through 2/28/99.
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Georgia Tax-Free Bond Fund
February 28, 1998
Statement of Net Assets
Par Value
In thousands
GEORGIA 93.6%
Athens-Clarke Residential Care
Fac., Wesley Woods of Athens
6.375%, 10/1/27 $ 600 $ 612
Atlanta
Airport Fac.
Zero Coupon, 1/1/10 * 1,100 590
6.50%, 1/1/13 (FGIC Insured) * 500 536
Atlanta Special Purpose Fac., Delta
Airlines, 7.90%, 12/1/18 * 415 445
Baldwin County Hospital Auth.,
Oconee Regional Med. Center
5.15%, 12/1/09 620 630
Burke County Dev. Auth., PCR
Georgia Power
VRDN (Currently 3.65%) 1,800 1,800
VRDN (Currently 3.90%) 650 650
Oglethorpe Power
7.80%, 1/1/08 (MBIA Insured)
(Prerefunded 1/1/03!) 560 663
Cartersville Dev. Auth., PCR,
Anheuser Busch, 6.75%, 2/1/12 * 1,000 1,097
Chatham County School Dist., GO
5.00%, 8/1/10 1,000 1,028
6.25%, 8/1/16 (Prerefunded 8/1/03!) 625 697
6.75%, 8/1/18 (MBIA Insured)
(Prerefunded 8/1/03!) 750 857
Cherokee County Water and Sewage Auth.
5.50%, 8/1/23 (MBIA Insured) 1,000 1,067
Cobb-Marietta Coliseum and Exhibition
Hall Auth.
5.50%, 10/1/18 (MBIA Insured) 400 424
Coffee County Hosp. Auth., Coffee
Regional Med. Center
6.25%, 12/1/06 500 505
Coweta County Residential Care Fac.
for the Elderly Auth.
Wesley Woods of Newnan-Peachtree City
8.25%, 10/1/26 500 582
DeKalb County Dev. Auth., Emory Univ.,
6.00%, 10/1/14 550 599
Downtown Savannah Auth., GO, Public Ed.
VRDN (Currently 3.40%) 100 100
Fulco Hospital Auth.
Catholic Health East
5.25%, 11/15/11 (MBIA Insured) 840 876
5.25%, 11/15/13 (MBIA Insured) 1,555 1,603
Fulton County Dev. Auth., PCR, Special
Fac., Delta Airlines
6.95%, 11/1/12 $ 500 $ 552
Fulton County Housing Auth., Single Family
6.55%, 3/1/18 (GNMA Guaranteed) * 165 176
Fulton County School Dist., GO,
6.375%, 5/1/17 830 973
Fulton County Water and Sewage
6.25%, 1/1/09 (FGIC Insured) 1,000 1,148
6.375%, 1/1/14 (FGIC Insured) 600 702
Gainesville Water and Sewage, 6.00%,
11/15/12 (FGIC Insured) 1,000 1,132
Georgia, GO
6.30%, 3/1/08 1,300 1,503
6.30%, 3/1/09 425 493
6.50%, 4/1/09 450 531
Georgia Housing and Fin. Auth.
Home Ownership Program, 6.60%, 6/1/25 * 250 267
Single Family Mortgage
5.75%, 12/1/07 (FHA Guaranteed) * 85 90
6.05%, 12/1/16 * 500 527
6.125%, 12/1/15 420 445
6.25%, 12/1/28 * 500 530
6.50%, 12/1/17 (FHA Guaranteed) * 1,000 1,065
6.60%, 12/1/23 (FHA Guaranteed) * 555 593
6.65%, 12/1/20 * 480 515
Georgia Municipal Gas Auth., Southern
Storage Gas
6.00%, 7/1/04 500 545
Gwinnett County School Dist., GO
6.30%, 12/1/07 (AMBAC Insured)
(Prerefunded 12/1/04!) 1,000 1,136
Gwinnett County Water and Sewer
Auth., 5.25%, 8/1/18 600 610
Henry County School Dist., GO
6.00%, 8/1/14 (MBIA Insured) 330 361
Jackson County School Dist., GO
6.00%, 7/1/14 (MBIA Insured) 1,000 1,094
Metropolitan Atlanta Rapid Transit Auth.
Sales Tax
5.50%, 7/1/17 (MBIA Insured) 1,000 1,044
6.90%, 7/1/20 (MBIA Insured)
(Prerefunded 7/1/04!) 1,300 1,510
Metropolitan Atlanta Rapid Transit Auth.
Sales Tax
7.00%, 7/1/11 (Escrowed to Maturity)$1,335 $ 1,643
7.00%, 7/1/11 (MBIA Insured)
(Escrowed to Maturity) 635 781
Milledgeville, Water and Sewer, 6.00%,
12/1/21 (FSA Insured) 500 567
Municipal Electric Auth. of Georgia
Zero Coupon, 1/1/09 545 301
5.70%, 1/1/19 (MBIA Insured) 300 325
6.50%, 1/1/12 625 718
6.60%, 1/1/18 1,025 1,197
7.25%, 1/1/24 (AMBAC Insured) 1,000 1,308
Paulding County, Water and Sewer
6.00%, 12/1/13 (MBIA Insured) 1,000 1,134
Paulding County School Dist., GO
6.00%, 2/1/13 (MBIA Insured) 1,000 1,129
Peach County School Dist., GO
6.40%, 2/1/19 (MBIA Insured) 500 560
6.50%, 2/1/07 (MBIA Insured) 300 347
Rockdale County Dev. Auth., Solid
Waste Disposal, Visy Paper
7.40%, 1/1/16 * 485 526
Rockdale County School Dist., GO,
6.50%, 1/1/09 1,000 1,133
Savannah Downtown Dev. Auth.
6.70%, 2/1/20 (MBIA Insured)
(Prerefunded 2/1/05!) 1,000 1,159
Savannah Economic Dev. Auth., Union
Camp, 6.15%, 3/1/17 500 563
Total Georgia (Cost $43,202) 46,294
PUERTO RICO 9.4%
Puerto Rico Highway and Transportation Auth.
5.00%, 7/1/38 1,000 950
6.625%, 7/1/12 (FSA Insured) 1,000 1,102
Puerto Rico Infrastructure Fin. Auth.
5.25%, 7/1/10 (AMBAC Insured) 1,000 1,066
Puerto Rico Municipal Fin. Agency, GO
5.50%, 7/1/21 (FSA Insured) 1,000 1,040
Puerto Rico Public Building Auth.,
GO, Gov't. Fac.
5.25%, 7/1/21 500 498
Total Puerto Rico (Cost $4,496) 4,656
Total Investments in Securities
103.0% of Net Assets (Cost $47,698) $ 50,950
Other Assets Less Liabilities (1,495)
NET ASSETS $ 49,455
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ 1
Accumulated net realized gain/loss -
net of distributions (674)
Net unrealized gain (loss) 3,252
Paid-in-capital applicable to 4,529,544
no par value shares of beneficial
interest outstanding; unlimited number
of shares authorized 46,876
NET ASSETS $ 49,455
___________
NET ASSET VALUE PER SHARE $ 10.92
___________
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Authority
FSA Financial Security Assurance Corp.
GNMA Government National Mortgage Association
GO General Obligation
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 Georgia Tax-Free Bond Fund
Statement of Operations
In thousands
Year
Ended
2/28/98
Investment Income
Interest income $ 2,377
Expenses
Investment management 108
Custody and accounting 88
Shareholder servicing 47
Prospectus and shareholder reports 16
Legal and audit 8
Registration 7
Trustees 6
Miscellaneous 4
Total expenses 284
Net investment income 2,093
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 412
Futures (89)
Net realized gain (loss) 323
Change in net unrealized gain or loss on securities 1,669
Net realized and unrealized gain (loss) 1,992
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 4,085
___________
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Georgia Tax-Free Bond Fund
Statement of Changes in Net Assets
In thousands
Year
Ended
2/28/98 2/28/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ 2,093 $ 1,734
Net realized gain (loss) 323 170
Change in net unrealized gain
or loss 1,669 (99)
Increase (decrease) in net assets
from operations 4,085 1,805
Distributions to shareholders
Net investment income (2,093) (1,734)
Capital share transactions*
Shares sold 15,932 10,973
Distributions reinvested 1,573 1,312
Shares redeemed (8,768) (6,130)
Increase (decrease) in net assets
from capital share
transactions 8,737 6,155
Net Assets
Increase (decrease) during period 10,729 6,226
Beginning of period 38,726 32,500
End of period $ 49,455 $ 38,726
_________________________
*Share information
Shares sold 1,494 1,066
Distributions reinvested 148 127
Shares redeemed (821) (597)
Increase (decrease) in shares
outstanding 821 596
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Georgia Tax-Free Bond Fund
February 28, 1998
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 Georgia Tax-Free Bond Fund (the
fund), a nondiversified, open-end management investment company, is one of
the portfolios established by the trust and commenced operations on March
31, 1993.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
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 the 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 the 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, aggregated $30,289,000 and $20,614,000, respectively, for the
year ended February 28, 1998.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the fund intends
to continue to qualify as a regulated investment company and distribute
all of its income. The fund has unused realized capital loss carryforwards
for federal income tax purposes of $610,000 which expires in 2003. Capital
loss carryforwards utilized in fiscal 1998 amounted to $345,000. The fund
intends to retain gains realized in future periods that may be offset by
available capital loss carryforwards.
At February 28, 1998, the aggregate cost of investments for federal income
tax and financial reporting purposes was $47,698,000, and net unrealized
gain aggregated $3,252,000, all of which was related to appreciated
investments.
Note 4 - Related Party Transactions
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment
management fee, of which $8,000 was payable at February 28, 1998. 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 0.30% for
assets in excess of $80 billion. At February 28, 1998, and for the year
then ended, the effective annual group fee rate was 0.32%. The 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, 1999, which would cause
the fund's ratio of expenses to average net assets to exceed 0.65%.
Thereafter, through February 28, 2001, the 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, $78,000 of management fees were
not accrued by the fund for the year ended February 28, 1998.
Additionally, $216,000 of unaccrued management fees related to a previous
expense limitation are subject to reimbursement through February 28, 1999.
In addition, the fund has entered into agreements with the manager and a
wholly owned subsidiary of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share
price and maintains the financial records of the fund. T. Rowe Price
Services, Inc., is the fund's transfer and dividend disbursing agent and
provides shareholder and administrative services to the fund. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $103,000 for the year ended February 28, 1998, of which
$9,000 was payable at period-end.
Tax Information (unaudited) for the Tax Year Ended 2/28/98
We are providing this information as required by the Internal Revenue
Code. The amounts shown may differ from those elsewhere in this report
because of differences between tax and financial reporting requirements.
The fund's dividend income included $2,059,000 which qualified as
exempt-interest dividends.
T. Rowe Price Georgia Tax-Free Bond Fund
Report of Independent Accountants
To the Shareholders and Board of Trustees of
T. Rowe Price Georgia Tax-Free Bond Fund
We have audited the accompanying statement of net assets of T. Rowe Price
Georgia Tax-Free Bond Fund (one of the portfolios comprising the T. Rowe
Price State Tax-Free Income Trust) as of February 28, 1998, and the
related statement of operations for the year then ended, statement of
changes in net assets for each of the two years in the period then ended,
and financial highlights for each of the three years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits. The financial highlights for each of the preceding periods
presented were audited by other auditors, whose report, dated March 17,
1995, expressed an unqualified opinion thereon.
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, 1998, by
correspondence with the custodian and the brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of T. Rowe Price Georgia Tax-Free Bond Fund as of February 28, 1998, the
results of its operations, the changes in its 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 18, 1998
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(registered trademark):
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 Georgia Tax-Free
Bond Fund.
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
Invest With Confidence(registered trademark)
T. Rowe Price
T. Rowe Price Investment Services, Inc., Distributor.
F92-050 2/28/98
