<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Semiannual Report
Georgia Tax-Free Bond Fund
- --------------------------------------------------------------------------------
August 31, 1999
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
Georgia Tax-Free Bond Fund
* Reflecting strong economic growth, interest rates rose and bond prices fell
during the six months ended August 31.
* The fund's returns were negative for the 6- and 12-month periods as income
did not totally offset the drop in principal value.
* While disappointing, the fund's returns were better than those of the
average Georgia bond mutual fund.
* We became more defensive in the second quarter, which helped the fund's
relative performance.
* Rates may rise further if the economy remains strong, hurting total return
but aiding the fund's already attractive dividend yield.
================================================================================
UPDATES AVAILABLE
================================================================================
For updates on each fund following the end of every calendar quarter,
please see our Web site at www.troweprice.com.
================================================================================
FELLOW SHAREHOLDERS
================================================================================
The U.S. economy's above-average growth during the six months ended August 31
was good for consumers but not so good for bond investors. Interest rates rose
throughout the period as investors worried about a buildup in inflationary
pressures and the possibility -- which became the actuality -- of monetary
tightening by the Federal Reserve. As a result, declines in taxable and
municipal bond prices led to meager or negative returns on most longer-term bond
funds for the period. The Georgia Bond Fund was not exempt from this trend.
================================================================================
MARKET ENVIRONMENT
================================================================================
<PAGE>
The U. S. economy continued its robust growth, driven by exuberant consumer
spending. Although broad inflation measures did not rise appreciably, tight
labor markets, low unemployment, and a rebound in energy prices raised fears
that inflationary pressures were building. The fixed income markets reacted
nervously to these developments and to the increasing likelihood of action by
the Federal Reserve. Indeed, as summer approached, Fed Chairman Alan Greenspan
served clear warning that the central bank would act to preempt a rise in
inflation. Actions soon followed words as the Fed raised key short-term interest
rates on June 30 and again on August 24, pushing the federal funds target rate
up a total of 50 basis points (one-half of a percentage point) to 5.25%. With
these moves the Fed effectively rescinded two of its three rate reductions of
the previous fall, when it had moved swiftly to ease a global financial crisis.
Indeed, the beginnings of recovery in many of the Asian and Latin American
nations most affected by that crisis helped push the U.S. dollar lower and
interest rates higher.
[A line chart showing yields on Georgia bonds from 8/31/98 to 8/31/99.]
Interest rates rose across all maturities, with the bellwether 30-year
Treasury bond rising from the 5% area at the beginning of the year to over 6%
for the first time since mid-1998. Short-term yields rose a bit more than
intermediates and long-term bonds over the period. This created a flatter yield
curve, which is a typical occurrence when the Fed is actively raising short-term
rates. Municipal market yields, including those on Georgia bonds, also rose but
lagged the rise in Treasury yields for much of the period. Municipals were
helped by strong, seasonal demand in July from the reinvestment of maturing bond
proceeds and other cashflows. Until August, overall returns on municipals
compared favorably with their taxable counterparts, although both were modest at
best.
================================================================================
MARKET CHANGES SPELL HIGHER TAX-FREE YIELDS
================================================================================
Structural changes are taking place in the
fixed income markets resulting in higher
tax-free yields for investors.
The chart below tracks the yield on 30-year,
AAA general obligation municipal bonds as a
percentage of long-term Treasury bond yields
since 1981. Historically, the yield on these
municipal bonds has averaged about 85% of the
Treasury yield. This discount reflected both
the tax benefit of municipals and uncertainty
about future tax laws. Investors in the 31%
federal tax bracket, for example, keep only
69% of their income from taxable bonds.
Therefore, they would logically be attracted
to high-quality municipal bonds offering 85%
or more of the prevailing Treasury yield.
<PAGE>
The sharp spike in municipal yields in 1986
reflects the tax reform debate, which posed a
threat to municipal bonds' federal tax
exemption. Accordingly, municipal bond yields
reached parity with Treasury yields. However,
when the Tax Reform Act of 1986 left the tax
benefit intact, municipal bond prices rose
sharply until yields had fallen to more
normal levels. Recently, different forces
have been at work that go beyond the impact
of 1998's global financial crisis. At that
time, shaky world markets prompted foreign
investors (who have no need for U.S.
tax-exempt bonds) to buy Treasuries, and
Treasury y ields plunged to near parity with
municipals.
Since then, Treasury yields have returned to
pre-crisis levels, but municipal yields are
again unusually high at about 94% of Treasury
yields. According to Mary Miller, director of
the T. Rowe Price municipal bond department,
the current relationship is "illogical from a
tax standpoint" but unlikely to change soon.
For one thing, the supply of Treasury debt is
shrinking due to the federal budget surplus,
while outstanding municipal supply continues
to grow. In addition, the supply of taxable
bonds outside of TreasuriesNincluding
corporate, asset-backed and mortgage-backed
bondsNhas also risen, and this has created
more competition in the market. As a result,
even as tax-exempt yields have risen in
relation to Treasury yields over the past two
years, they have fallen in relation to the
yields on other high-quality taxable bonds.
Over time, income makes up the vast majority
of a bond investor's total return. Therefore,
these developments have given investors the
opportunity to earn higher-than-expected
tax-free income with little or no sacrifice
of credit quality.
- --------------------------------------------------------------------------------
[Municipal Treasury Yield ratio chart showing 1981-8/99 Tresury ratio and
Treasury Average. Source: Municipal Market Data.]
================================================================================
In August, however, this trend reversed. A huge supply of corporate bonds
came to market, pushing up yields on these taxable bonds and attracting
"crossover" institutional buyers N those who buy either corporate or municipal
bonds depending on their after-tax yields.
<PAGE>
The drop in demand for municipals from these institutional investors (some
of whom also sold municipals from their portfolios) combined with the reluctance
by dealers to add to their bond inventories created a weak market tone. After
outperforming taxable bonds through July, municipals lost ground in August, and
their performance fell more in line with the taxable side for the entire
six-month period.
============================
Until August, overall
returns on municipals
compared favorably with
their taxable counterparts,
although both were
modest . . .
- ----------------------------
The Georgia economy remained robust. Positive trends such as strong job
creation, population growth, conservative financial management, and a low debt
burden continued to support the state's AAA credit rating. Through July of 1999,
unemployment remained at a low 3.7%, and Georgia outpaced the nation with
nonfarm employment growth above 3%. Job growth benefited from the fast-growing
services sector (especially business, transportation, and health services),
which more than offset recent employment losses in the manufacturing sector. The
Atlanta area is estimated to account for 80% of the state's job and population
gains, and the area's infrastructure is now confronting growth-related strains
in transportation and water and sewer services.
For the fourth straight year, Georgia closed its fiscal year with a general
fund operating surplus, which allowed the state to increase its general fund
balance. This provides substantial financial flexibility and a cushion in case
of an economic downturn. Overall revenues for fiscal 1999 are already up 7.7%
over prior-year levels, led by increases in individual income and sales taxes.
The state projects yet another sizable operating surplus for the current year.
Conservative borrowing policies continued to allow debt levels to remain low at
2.8% of personal income, and debt service accounted for a manageable 5.6% of
estimated 1999 revenues. Bond issuance is expected to remain stable, although
the new Georgia Regional Transportation Authority has the power to borrow up to
$1 billion. This should not hurt Georgia's credit standing, however.
================================================================================
PERFORMANCE AND STRATEGY REVIEW
================================================================================
PERFORMANCE COMPARISON
- ----------------------
Periods Ended 8/31/99 6 Months 12 Months
- --------------------- -------- ---------
Georgia Tax-Free Bond Fund -3.05% -0.92%
Lipper Georgia Municipal Debt
Funds Average -3.36 -1.58
================================================================================
<PAGE>
The Georgia municipal market and your fund suffered along with all fixed
income markets in the past six months as rates rose sharply. Principal return
was down for both the 6- and 12-month periods. For the longer period, the fund's
steady income component offset virtually all of the principal decline, resulting
in a smaller negative return. The difficult market conditions during the past
six months, however, led to a larger overall loss. Total returns for both
periods, while disappointing, comfortably exceeded the fund's peer group
averages. Relative returns were aided by your fund's more defensive structure
and by below-average fees.
We have held to three fundamental principles in the management of your
fund:
* use strong credit analysis to separate the strong issuers from
the weak;
* provide intensive market surveillance through experienced trading
to take advantage of any inefficiencies in the municipal market;
and
* combine our knowledge of market and economic trends to assemble
the best possible portfolio that meets the objectives of our
shareholders and reflects our outlook.
We brought all of these to bear in this period.
The rising tide of the strong national and local economy strengthens
tax-supported credits. Therefore, we have emphasized state and local general
obligation credits in security selection, with the combined
allocation to such bonds remaining a primary emphasis in the portfolio. In
contrast, the health care area, particularly hospitals, has been under pressure
from the stricter reimbursement environment, and we cut our hospital exposure
from 10% to 3% in the past six months.
=============================
Realizing losses helps
us increase fund income
and also minimize or
avoid future distributions
of capital gains.
- -----------------------------
Municipal interest rates have risen almost 100 basis points (one percentage
point) from the extraordinary environment of October 1998. As they rose, we
increased our trading activity to realize losses where available and reinvested
the proceeds into higher-yielding securities as opportunities arose. Realizing
losses helps us increase fund income and also minimize or avoid future
distributions of capital gains.
Finally, as financial market conditions worsened in the second quarter we
shifted to a more defensive posture, which helped relative performance over a
difficult summer. While the fund's duration at the beginning and end of the
period (shown in the Key Statistics table on page 7) was little changed, we took
steps to offset the duration extension that occurs in a rising rate environment
when the likelihood of callable bonds being retired early diminishes.
<PAGE>
================================================================================
OUTLOOK
================================================================================
The fixed income markets are entering a period of uncertainty caused
primarily by conjecture regarding Federal Reserve monetary policy. The Fed is
keeping a close eye on inflationary buildup, particularly in the labor markets,
and could tighten another 25 basis points if it intends to move the federal
funds rate back to its level of a year ago. On the other hand, the Fed wants to
maintain a liquid and orderly market going into the end of the year.
The risks in the market appear to be weighted toward higher interest rates
unless the economy slows without Fed action over the next few months. This
environment would not be particularly favorable for overall bond returns but may
enhance the already attractive level of income generated by Georgia tax-free
municipal bonds. Yields on long-term municipals remain unusually high relative
to taxable bonds with similar characteristics, as discussed on page 2. We expect
to maintain our cautious approach in managing your fund and will continue to
seek opportunities to increase income.
Respectfully submitted,
/s/
Hugh D. McGuirk
Chairman of the Investment Advisory Committee
September 20, 1999
================================================================================
T. ROWE PRICE GEORGIA TAX-FREE BOND FUND
- ----------------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
KEY STATISTICS
- --------------
2/28/99 8/31/99
------- -------
Price Per Share $11.03 $10.45
Dividends Per Share
For 6 months 0.25 0.25
For 12 months 0.50 0.50
Dividend Yield *
For 6 months 4.63% 4.76%
For 12 months 4.67 4.88
30-Day Standardized Yield 3.95 4.61
Weighted Average Maturity (years) 15.2 15.3
Weighted Average Effective Duration (years) 7.7 7.8
Weighted Average Quality ** AA- AA-
* Dividends earned and reinvested for the periods indicated are
annualized and divided by the fund's net asset value at the end of the
period.
** Based on T. Rowe Price research.
================================================================================
<PAGE>
T. ROWE PRICE GEORGIA TAX-FREE BOND FUND
- ----------------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
SECTOR DIVERSIFICATION
- ----------------------
Percent of Percent of
Net Assets Net Assets
2/28/99 8/31/99
------- -------
Nuclear Revenue 8% 17%
General Obligation - Local 13 14
Prerefunded Bonds 13 12
Water and Sewer Revenue 13 11
Housing Finance Revenue 7 8
Industrial and Pollution Control Revenue 7 8
Escrowed to Maturity 5 5
General Obligation - State 7 4
Life Care/Nursing Home Revenue 2 4
Educational Revenue 3 3
Dedicated Tax Revenue 3 3
Hospital Revenue 10 3
Air and Sea Transportation Revenue 2 2
Miscellaneous Revenue 2 2
Electric Revenue 4 2
All Other 1 1
Other Assets Less Liabilities - 1
Total 100% 100%
================================================================================
<PAGE>
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 benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from the fund returns as well as mutual
fund averages and indexes.
[SEC chart for Georgia shown here]
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 8/31/99 1 Year 3 Years 5 Years Inception Date
- --------------------- ------ ------- ------- --------- ----
Georgia Tax-Free Bond Fund -0.92% 5.59% 6.24% 5.83% 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.
================================================================================
<PAGE>
T. ROWE PRICE GEORGIA TAX-FREE BOND FUND
- ---------------------------------------- Unaudited
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
8/31/99 2/28/99 2/28/98 2/28/97 2/29/96 2/28/95
NET ASSET VALUE
Beginning of period $ 11.03 $ 10.92 $ 10.44 $ 10.44 $ 9.93 $ 10.37
- ----------------------------------------------------------------------------------------------------
Investment activities
Net investment income 0.25* 0.50* 0.51* 0.52* 0.52* 0.51*
Net realized and
unrealized gain (loss) (0.58) 0.11 0.48 - 0.51 (0.39)
- ----------------------------------------------------------------------------------------------------
Total from
investment activities (0.33) 0.61 0.99 0.52 1.03 0.12
- ----------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.25) (0.50) (0.51) (0.52) (0.52) (0.51)
Net realized gain - - - - - (0.05)
- ----------------------------------------------------------------------------------------------------
Total distributions (0.25) (0.50) (0.51) (0.52) (0.52) (0.56)
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE
====================================================================================================
End of period $ 10.45 $ 11.03 $ 10.92 $ 10.44 $ 10.44 $ 9.93
====================================================================================================
==Ratios/Supplemental=Data==========================================================================
Total return** (3.05)%* 5.73%* 9.70%* 5.15%* 10.62%* 1.42%*
- ----------------------------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.65%*+ 0.65%* 0.65%* 0.65%* 0.65%* 0.65%*
- ----------------------------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 4.57%*+ 4.59%* 4.79%* 5.01%* 5.09%* 5.26%*
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate 51.3%+ 19.9% 49.0% 71.1% 71.5% 170.2%
- ----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 61,527 $ 62,037 $ 49,455 $ 38,726 $ 32,500 $ 23,338
- ----------------------------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment of
all distributions.
* Excludes expenses in excess of a 0.65% voluntary expense limitation in
effect through 2/28/01.
+ Annualized
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE GEORGIA TAX-FREE BOND FUND
- ----------------------------------------
Unaudited August 31, 1999
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Par Value
In thousands
GEORGIA 93.9%
Albany Dougherty Payroll Dev. Auth., Solid Waste Disposal
5.20%, 5/15/28 * $ 1,000 $ 913
- ------------------------------------------------------------------------------------------------------
Americus and Sumter County Hosp. Auth., Magnolia Manor
6.375%, 5/15/29 1,000 950
- ------------------------------------------------------------------------------------------------------
Athens-Clarke Residential Care Fac. for the Elderly Auth.
Wesley Woods of Athens
5.30%, 10/1/01 500 501
- ------------------------------------------------------------------------------------------------------
6.375%, 10/1/27 600 579
- ------------------------------------------------------------------------------------------------------
Atlanta Airport Fac.
Zero Coupon, 1/1/10 * 1,285 708
- ------------------------------------------------------------------------------------------------------
6.50%, 1/1/13 (FGIC Insured) * 500 521
- ------------------------------------------------------------------------------------------------------
Atlanta Special Purpose Fac., Delta Airlines, 7.90%, 12/1/18 * 415 426
- ------------------------------------------------------------------------------------------------------
Atlanta Water and Sewer, Water and Wastewater
5.00%, 11/1/29 (FGIC Insured) 500 446
- ------------------------------------------------------------------------------------------------------
Brunswick and Glynn County Dev., Georgia-Pacific
5.55%, 3/1/26 * 1,000 917
- ------------------------------------------------------------------------------------------------------
Burke County Dev. Auth., PCR
Georgia Power
VRDN (Currently 3.10%) 300 300
- ------------------------------------------------------------------------------------------------------
VRDN (Currently 3.15%) 300 300
- ------------------------------------------------------------------------------------------------------
5.75%, 9/1/23 (MBIA Insured) 550 542
- ------------------------------------------------------------------------------------------------------
Oglethorpe Power
7.80%, 1/1/08 (MBIA Insured)
(Prerefunded 1/1/03+) 560 633
- ------------------------------------------------------------------------------------------------------
Power Plant Vogtle
VRDN (Currently 3.00%) 600 600
- ------------------------------------------------------------------------------------------------------
VRDN (Currently 3.05%) * 800 800
- ------------------------------------------------------------------------------------------------------
5.40%, 5/1/34 1,500 1,377
- ------------------------------------------------------------------------------------------------------
<PAGE>
Cartersville Dev. Auth., PCR, Anheuser Busch, 6.75%, 2/1/12 * 1,000 1,063
- ------------------------------------------------------------------------------------------------------
Chatham County School Dist., GO
5.00%, 8/1/10 1,000 997
- ------------------------------------------------------------------------------------------------------
6.25%, 8/1/16 (Prerefunded 8/1/03+) 625 676
- ------------------------------------------------------------------------------------------------------
6.75%, 8/1/18 (MBIA Insured)
(Prerefunded 8/1/03+) 750 826
- ------------------------------------------------------------------------------------------------------
Cherokee County School District, GO, 5.00%, 2/1/14 500 481
- ------------------------------------------------------------------------------------------------------
Cherokee County Water and Sewage Auth.
5.50%, 8/1/23 (MBIA Insured) $ 1,000 $ 992
- ------------------------------------------------------------------------------------------------------
Cobb-Marietta Coliseum and Exhibition Hall Auth.
5.50%, 10/1/18 (MBIA Insured) 500 499
- ------------------------------------------------------------------------------------------------------
Columbia County, Courthouse/Detention Center, 5.625%, 2/1/20 1,500 1,483
- ------------------------------------------------------------------------------------------------------
Coweta County Residential Care Fac. for the Elderly Auth.
Wesley Woods of Newnan-Peachtree City
8.25%, 10/1/26 500 556
- ------------------------------------------------------------------------------------------------------
Dalton Dev. Auth., Hamilton Health Care
5.25%, 8/15/10 (MBIA Insured) 520 520
- ------------------------------------------------------------------------------------------------------
DeKalb County Dev. Auth., Emory Univ., 6.00%, 10/1/14 550 572
- ------------------------------------------------------------------------------------------------------
Effingham County Dev. Auth., Fort James, 5.625%, 7/1/18 * 600 566
- ------------------------------------------------------------------------------------------------------
Forsyth County School Dist., 5.125%, 7/1/15 500 486
- ------------------------------------------------------------------------------------------------------
Fulton County Dev. Auth., PCR, Special Fac., Delta Airlines
6.95%, 11/1/12 500 525
- ------------------------------------------------------------------------------------------------------
Fulton County Housing Auth., Single Family
6.55%, 3/1/18 (GNMA Guaranteed) * 165 171
- ------------------------------------------------------------------------------------------------------
Fulton County School Dist., GO, 6.375%, 5/1/17 830 912
- ------------------------------------------------------------------------------------------------------
Fulton County Water and Sewage
4.75%, 1/1/28 (FGIC Insured) 1,000 852
- ------------------------------------------------------------------------------------------------------
6.25%, 1/1/09 (FGIC Insured) 1,000 1,095
- ------------------------------------------------------------------------------------------------------
6.375%, 1/1/14 (FGIC Insured)
(Escrowed to Maturity) 600 663
- ------------------------------------------------------------------------------------------------------
Gainesville Water and Sewage, 6.00%, 11/15/12 (FGIC Insured) 1,000 1,071
- ------------------------------------------------------------------------------------------------------
<PAGE>
Georgia, GO
6.25%, 4/1/14 1,000 1,094
- ------------------------------------------------------------------------------------------------------
6.50%, 4/1/09 550 616
- ------------------------------------------------------------------------------------------------------
Georgia Housing and Fin. Auth.
Home Ownership, 6.60%, 6/1/25 * 250 260
- ------------------------------------------------------------------------------------------------------
Single Family Mortgage
5.80%, 12/1/26 * 1,000 976
- ------------------------------------------------------------------------------------------------------
6.05%, 12/1/16 * 500 511
- ------------------------------------------------------------------------------------------------------
6.125%, 12/1/15 420 432
- ------------------------------------------------------------------------------------------------------
6.25%, 12/1/28 * 500 516
- ------------------------------------------------------------------------------------------------------
6.50%, 12/1/17 (FHA Guaranteed) * 1,000 1,036
- ------------------------------------------------------------------------------------------------------
6.60%, 12/1/23 (FHA Guaranteed) * 555 577
- ------------------------------------------------------------------------------------------------------
Georgia Housing and Fin. Auth.
Single Family Mortgage
6.65%, 12/1/20 * $ 480 $ 500
- ------------------------------------------------------------------------------------------------------
Georgia Municipal Gas Auth., Southern Storage Gas, 6.00%, 7/1/04 500 530
- ------------------------------------------------------------------------------------------------------
Gwinnett County Water and Sewer Auth., 5.25%, 8/1/18 600 573
- ------------------------------------------------------------------------------------------------------
Hall County and Gainsville Hosp. Auth.
Northeast Georgia Health Systems
5.50%, 5/15/29 (MBIA Insured) 500 477
- ------------------------------------------------------------------------------------------------------
Hall County School Dist., GO
6.30%, 12/1/07 (AMBAC Insured)
(Prerefunded 12/1/04+) 1,000 1,101
- ------------------------------------------------------------------------------------------------------
Henry County School Dist., GO, 6.00%, 8/1/14 (MBIA Insured) 330 345
- ------------------------------------------------------------------------------------------------------
Jackson County School Dist., GO, 6.00%, 7/1/14 (MBIA Insured) 1,000 1,082
- ------------------------------------------------------------------------------------------------------
Macon Water Auth., 5.25%, 10/1/16 500 485
- ------------------------------------------------------------------------------------------------------
Meriwether County School Dist., 5.50%, 2/1/16 (FSA Insured) 1,000 997
- ------------------------------------------------------------------------------------------------------
Metropolitan Atlanta Rapid Transit Auth.
Sales Tax
5.50%, 7/1/17 (MBIA Insured) 1,000 992
- ------------------------------------------------------------------------------------------------------
6.90%, 7/1/20 (MBIA Insured)
(Prerefunded 7/1/04+) 1,325 1,485
- ------------------------------------------------------------------------------------------------------
7.00%, 7/1/11 (Escrowed to Maturity) 1,335 1,542
- ------------------------------------------------------------------------------------------------------
7.00%, 7/1/11 (MBIA Insured)
(Escrowed to Maturity) 635 735
- ------------------------------------------------------------------------------------------------------
<PAGE>
Milledgeville, Water and Sewer, 6.00%, 12/1/21 (FSA Insured) 500 529
- ------------------------------------------------------------------------------------------------------
Monroe County Dev. Auth., PCR, Georgia Power Company
VRDN (Currently 3.15%) 500 500
- ------------------------------------------------------------------------------------------------------
Municipal Electric Auth. of Georgia
Zero Coupon, 1/1/09 1,000 581
- ------------------------------------------------------------------------------------------------------
5.70%, 1/1/19 (MBIA Insured) 300 305
- ------------------------------------------------------------------------------------------------------
6.50%, 1/1/12 520 570
- ------------------------------------------------------------------------------------------------------
6.60%, 1/1/18 1,035 1,147
- ------------------------------------------------------------------------------------------------------
7.25%, 1/1/24 (AMBAC Insured) 1,000 1,213
- ------------------------------------------------------------------------------------------------------
Paulding County
Water and Sewer, 6.00%, 12/1/13 (MBIA Insured) 1,000 1,068
- ------------------------------------------------------------------------------------------------------
School Dist., GO, 6.00%, 2/1/13 (MBIA Insured) 1,000 1,066
- ------------------------------------------------------------------------------------------------------
Peach County School Dist., GO, 6.40%, 2/1/19 (MBIA Insured) 500 551
- ------------------------------------------------------------------------------------------------------
Private Colleges and Univ. Auth.
Agnes Scott College, 4.75%, 6/1/28 (MBIA Insured) $ 750 $ 638
- ------------------------------------------------------------------------------------------------------
Mercer Univ., 5.375%, 10/1/29 1,000 918
- ------------------------------------------------------------------------------------------------------
Putnam County Dev. Auth., PCR
Georgia Power Plant Branch Project
VRDN (Currently 3.15%) 1,300 1,300
- ------------------------------------------------------------------------------------------------------
VRDN (Currently 3.25%) 900 900
- ------------------------------------------------------------------------------------------------------
Rockdale County Dev. Auth., Solid Waste Disposal, Visy Paper
7.40%, 1/1/16 * 470 488
- ------------------------------------------------------------------------------------------------------
Rockdale County School Dist., GO, 6.50%, 1/1/09 1,000 1,091
- ------------------------------------------------------------------------------------------------------
Savannah Economic Dev. Auth., Union Camp, 6.15%, 3/1/17 500 524
- ------------------------------------------------------------------------------------------------------
Savannah Hosp. Auth., 5.25%, 7/1/13 (FSA Insured) 940 921
- ------------------------------------------------------------------------------------------------------
Smyrna Downtown Dev. Auth.
6.70%, 2/1/20 (MBIA Insured)
(Prerefunded 2/1/05+) 1,000 1,116
- ------------------------------------------------------------------------------------------------------
Total Georgia (Cost $57,492) 57,807
- ------------------------------------------------------------------------------------------------------
<PAGE>
PUERTO=RICO==5.0%=====================================================================================
Puerto Rico Electric Power Auth., 5.25%, 7/1/13 (MBIA Insured) 1,000 999
- ------------------------------------------------------------------------------------------------------
Puerto Rico Highway and Transportation Auth.
6.625%, 7/1/12 (FSA Insured) 1,000 1,064
- ------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Fin. Agency, GO
5.50%, 7/1/21 (FSA Insured) 1,000 1,001
- ------------------------------------------------------------------------------------------------------
Total Puerto Rico (Cost $3,060) 3,064
98.9% of Net Assets (Cost $60,552) $ 60,871
Other Assets Less Liabilities 656
NET ASSETS $ 61,527
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 1
Accumulated net realized gain/loss - net of distributions (631)
Net unrealized gain (loss) 319
Paid-in-capital applicable to 5,888,495 shares of no par value
shares of beneficial interest outstanding; unlimited
number of shares authorized 61,838
NET ASSETS $ 61,527
NET ASSET VALUE PER SHARE $ 10.45
* 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.
</TABLE>
================================================================================
<PAGE>
T. ROWE PRICE GEORGIA TAX-FREE BOND FUND
- ---------------------------------------- Unaudited
STATEMENT OF OPERATIONS
- -----------------------
In thousands
6 Months
Ended
8/31/99
==Investment=Income=============================================================
Interest income $ 1,657
- --------------------------------------------------------------------------------
Expenses
Investment management 96
Custody and accounting 50
Shareholder servicing 34
Prospectus and shareholder reports 11
Legal and audit 8
Trustees 3
Registration 2
Miscellaneous 2
- --------------------------------------------------------------------------------
Total expenses 206
Expenses paid indirectly (1)
- --------------------------------------------------------------------------------
Net expenses 205
- --------------------------------------------------------------------------------
Net investment income 1,452
- --------------------------------------------------------------------------------
==Realized=and=Unrealized=Gain=(Loss)===========================================
Net realized gain (loss)
Securities (210)
Futures 8
- --------------------------------------------------------------------------------
Net realized gain (loss) (202)
Change in net unrealized gain or loss on securities (3,191)
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (3,393)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
================================================================================
ASSETS FROM OPERATIONS $ (1,941)
================================================================================
The accompanying notes are an integral part of these financial statements.
===============================================================================
<PAGE>
T. ROWE PRICE GEORGIA TAX-FREE BOND FUND
- ---------------------------------------- Unaudited
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
In thousands
6 Months Year
Ended Ended
8/31/99 2/28/99
==Increase=(Decrease)=in=Net=Assets============================================
Operations
Net investment income $ 1,452 $ 2,519
Net realized gain (loss) (202) 245
Change in net unrealized gain or loss (3,191) 258
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (1,941) 3,022
- -------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (1,452) (2,519)
- -------------------------------------------------------------------------------
Capital share transactions*
Shares sold 9,001 20,966
Distributions reinvested 1,150 1,991
Shares redeemed (7,268) (10,878)
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 2,883 12,079
==Net=Assets===================================================================
Increase (decrease) during period (510) 12,582
Beginning of period 62,037 49,455
End of period $ 61,527 $ 62,037
- --------------------------------------------------------------------------------
*Share information
Shares sold 831 1,909
Distributions reinvested 107 181
Shares redeemed (677) (993)
- -------------------------------------------------------------------------------
Increase (decrease) in shares outstanding 261 1,097
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE GEORGIA TAX-FREE BOND FUND
- ---------------------------------------- Unaudited
August 31, 1999
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. Expenses paid indirectly reflect credits earned on daily
uninvested cash balances at the custodian, which are used to reduce the fund's
custody charges.
<PAGE>
================================================================================
NOTE 2 - INVESTMENT TRANSACTIONS
================================================================================
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $15,947,000 and $15,230,000, respectively, for the six
months ended August 31, 1999.
================================================================================
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. As of February 28, 1999, the fund had capital loss carryforwards for
federal income tax purposes of $363,000, all of which expires in 2003. The fund
intends to retain gains realized in future periods that may be offset by
available capital loss carryforwards.
At August 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled $60,552,000.
Net unrealized gain aggregated $319,000 at period-end, of which $1,506,000
related to appreciated investments and $1,187,000 to depreciated 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 $19,000 was payable at August 31, 1999. 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
August 31, 1999, and for the six months 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, 2001, which would cause the
fund's ratio of total expenses to average net assets to exceed 0.65%.
Thereafter, through February 28, 2003, 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 total expenses to average net assets to exceed 0.65%. Pursuant
to this agreement, $37,000 of management fees were not accrued by the fund for
the six months ended August 31, 1999. Additionally, $152,000 of unaccrued
management fees related to a previous agreement are subject to reimbursement
through February 28, 2001.
<PAGE>
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 $62,000 for the six months
ended August 31, 1999, of which $11,000 was payable at period-end.
================================================================================
T. ROWE PRICE SHAREHOLDER SERVICES
- ----------------------------------
INVESTMENT SERVICES AND INFORMATION
-----------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE 1-800-225-5132 Available Monday through
Friday from 8 a.m. to 10 p.m. ET and weekends from 8:30
a.m. to 5 p.m. ET.
IN PERSON Available in T. Rowe Price Investor
Centers.
ACCOUNT SERVICES
----------------
CHECKING Available on most fixed income funds
($500 minimum).
AUTOMATIC INVESTING From your bank account or
paycheck.
AUTOMATIC WITHDRAWAL Scheduled, automatic
redemptions.
DISTRIBUTION OPTIONS Reinvest all, some, or none
of your distributions.
AUTOMATED 24-HOUR SERVICES Including
Tele*AccessRegistration Mark and the T. Rowe Price Web
site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
-------------------
INDIVIDUAL INVESTMENTS Stocks, bonds, options,
precious metals, and other securities at a savings over
full-service commission rates.**
<PAGE>
INVESTMENT INFORMATION
----------------------
COMBINED STATEMENT Overview of all your accounts
with T. Rowe Price.
SHAREHOLDER REPORTS Fund managers' reviews of
their strategies and results.
T. ROWE PRICE REPORT Quarterly investment
newsletter discussing markets and financial strategies.
PERFORMANCE UPDATE Quarterly review of all T. Rowe
Price fund results.
INSIGHTS Educational reports on investment
strategies and financial markets.
INVESTMENT GUIDES Asset Mix Worksheet, College
Planning Kit, Diversifying Overseas: A Guide to
International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of
T. Rowe Price Investment Services, Inc.,
Member NASD/SIPC.
** Based on a January 1999 survey for
representative-assisted stock trades.
Services vary by firm, and commissions
may vary depending on size of order.
======================================================================
FOR FUND AND ACCOUNT INFORMATION
OR TO CONDUCT TRANSACTIONS,
24 HOURS, 7 DAYS A WEEK
By touch-tone telephone
TELE*ACCESS 1-800-638-2587
By Account Access on the Internet
WWW.TROWEPRICE.COM/ACCESS
FOR ASSISTANCE
WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132
TO OPEN A BROKERAGE ACCOUNT
OR OBTAININFORMATION, CALL:
1-800-638-5660
<PAGE>
INTERNET ADDRESS:
www.troweprice.com
PLAN ACCOUNT LINES FOR RETIREMENT
PLAN PARTICIPANTS:
The appropriate 800 number appears
on your retirement account statement.
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 appropriate
to the fund or funds covered in this
report.
WALK-IN INVESTOR CENTERS:
For directions, call 1-800-225-5132
or visit our Web site
BALTIMORE AREA
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
BOSTON AREA
386 Washington Street
Wellesley
COLORADO SPRINGS
4410 ArrowsWest Drive
Los Angeles Area
WARNER CENTER
21800 Oxnard Street, Suite 270
Woodland Hills
TAMPA
4200 West Cypress Street
10th Floor
WASHINGTON, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Investment Services, Inc., Distributor. F92-051 8/31/99
