<PAGE>
================================================================================
T. Rowe Price
- --------------------------------------------------------------------------------
Annual Report
Maryland Tax-Free Funds
- --------------------------------------------------------------------------------
February 29, 2000
- --------------------------------------------------------------------------------
REPORT HIGHLIGHTS
================================================================================
MARYLAND TAX-FREE FUNDS
- -----------------------
* The Federal Reserve continued to raise interest rates, leading to weakness
among municipal bonds.
* Rising income helped the Maryland Short-Term Tax-Free Bond Fund post a
small six-month gain on a par with its Lipper peer group.
* The Maryland Tax-Free Bond Fund had negative total returns, but notably
outperformed its Lipper average.
* Generally high credit quality, low supply, and steady demand helped
Maryland's municipals outperform the national market.
* Interest rates may still rise, but Maryland's municipal market should offer
attractive total return opportunities.
UPDATES AVAILABLE
- -----------------
For updates on T. Rowe Price funds following the end of each calendar
quarter, please see our Web site at www.troweprice.com.
FELLOW SHAREHOLDERS
- -------------------
The Federal Reserve raised the federal funds rate three times in 1999 and
twice so far in 2000 in a continuing effort to slow economic growth to a pace
that will constrain inflationary pressures. As a result of a powerful economy
and higher interest rates, many bonds posted negative returns during the past
six months, with shorter-term issues turning in the best performance. The
Maryland Short-Term Bond Fund had positive total returns for both the six-month
and one-year periods, while the Maryland Tax-Free Bond Fund's results were
negative but strong compared with its peer group average.
MARKET ENVIRONMENT
- ------------------
*******************************************************************************
MARYLAND BOND YIELDS
--------------------
Maryland bond Index Maryland 3-year GO bond
------------------- -----------------------
2/28/99 5 3.58
5.02 3.65
5.04 3.6
5/31 5.15 3.78
5.37 4.1
5.39 4.08
8/31 5.62 4.18
5.76 4.23
6.01 4.3
11/30 5.85 4.25
6.06 4.48
6.27 4.68
2/29/00 6.15 4.7
Source: T. Rowe Price Associates.
*******************************************************************************
<PAGE>
The Fed has drawn a clear line in the sand in the face of a persistently
strong economy, which surged more than 6% in the second half of 1999. By early
2000, it was evident that domestic demand was not slowing sufficiently to temper
the powerful economy, which has been augmented by a recovery in U.S. exports as
well as greater government spending. In this environment, Fed Chairman Alan
Greenspan left no room for doubt that the Fed will remain diligent in its fight
to contain inflation. Interest rates, and munic-ipal bond yields, trended upward
steadily in response to repeated Fed hikes in key short-term rates. Longer-term
rates did ease somewhat in February, but that resulted largely from unusual
activity in the Treasury market, when the Treasury Department announced its
intention to pay down federal debt further through the repurchase of Treasury
bonds. The proposed reduction in federal debt sent investors scrambling and led
to an inversion of the yield curve, with 30-year Treasury yields falling below
two-year yields. During this period, the municipal yield curve maintained a
positive slope but flattened considerably, with long-term bonds outperfor ming
short-term bonds.
After outperforming taxable bonds during the first half of 1999, municipals
lost ground in the second half. Year-end was particularly challenging for
municipal markets due to a confluence of events. Municipals began to weaken when
some buyers fled into higher-yielding corporate bonds, which flooded the market
in the third quarter. In the fourth quarter, normally strong demand from retail
investors waned because of competition from the surging stock mar-ket and from
selling to realize tax losses at year-end. Redemptions from municipal bond funds
increased as a result. One factor that aided municipals in 1999 was the
relatively light supply of new issues, down 21% nationwide from the previous
year.
*********************************
Maryland bonds tend to have
more defensive characteristics
than the rest of the country,
such as shorter maturities
and higher credit quality.
*********************************
Maryland has certainly done its share to contribute to the nation's strong
economic growth. Governor Parris N. Glendening stated in December that the
state's current economy is the best in a generation. Revenue for fiscal year
2000 is estimated to exceed $9 billion, and the state's budget now enjoys a $925
million surplus. The unemployment rate hit 2.8% in December 1999, a record low,
while personal income is projected to grow 5.6% in 2000 and 5.9% in 2001. The
state expects to use its surplus funds judiciously by making one-time capital
improvements that will fund school and transportation construction.
Compared to the national market, Maryland bonds fared well during the past
year. While the national aver age for general municipal bond funds was a 4.58%
loss, Maryland funds averaged -3.76%. On balance, Maryland bonds tend to have
more defensive characteristics than the rest of the country, such as shorter
maturities and higher credit quality. Maryland's market was also helped by a 31%
drop in new issues sold in 1999, because decreasing supply tends to support the
value of existing bonds.
<PAGE>
MARYLAND SHORT-TERM TAX-FREE BOND FUND
- --------------------------------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 2/29/00 6 Months 12 Months
--------------------- -------- ---------
Maryland Short-Term
Tax-Free Bond Fund 1.09% 1.16%
Lipper Short Municipal
Debt Funds Average 1.07 1.48
================================================================================
Despite the difficult investing environment, your fund managed to post a
modest gain and increase its dividend. Six-month total returns were 1.09%,
slightly ahead of the fund's Lipper peer group average, which measures national
municipal funds. The per share dividend for the six months rose one penny to
$0.10, and the 30-day standardized yield ended the period at 4.17% -- comparable
to a 6.52% yield on a taxable bond for investors in the 36% tax bracket. Results
for 12 months were 1.16% and trailed the Lipper benchmark.
For the past six months we carried higher cash balances as yields moved up.
Our strategy was to keep duration short in the face of the Fed's tightening
moves, while pursuing higher-yielding bonds whenever they are available -- which
is not often because of the high quality of the Maryland municipal market.
(Duration measures a bond or bond fund's price sensitivity to changes in
interest rates. The price of a bond fund with a duration of two years, for
example, would drop 2% if rates rose by one percentage point.)
We kept the fund's duration close to 2.2 years after May 1999, shorter than
the 2.4 to 2.6 range we maintained previously. In October, however, five-year
yields approached 5% for the first time since March 1995, and we have been
looking for opportunities to purchase higher-yielding issues with longer
durations. In particular, we would like to buy as many four-year bonds as
possible, but our progress is slowed by the thin supply of these issues.
The portfolio's sector diversification shows some modest shifts from six
months ago. However, since the volume of debt issuance has declined in this era
of prosperity, any changes in our profile have more to do with availability than
with a specific strategy on sector exposures.
Our portfolio remains skewed toward higher-quality sectors of our market,
including general obligations (26%), prerefunded bonds (24%), and educational
revenue bonds (9%). Average portfolio quality stands at AA.
MARYLAND TAX-FREE BOND FUND
- ---------------------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 2/29/00 6 Months 12 Months
--------------------- -------- ---------
Maryland Tax-Free
Bond Fund -0.21% -2.98%
Lipper Maryland Municipal
Debt Funds Average -0.97 -3.76
================================================================================
<PAGE>
The Maryland Tax-Free Bond Fund's returns were negative in the weak
environment but compared favorably with our Lipper benchmark. Its -0.21%
six-month return exceeded by a significant amount the -0.97% showing of the
Lipper Maryland Municipal Debt Funds Average, and the per share dividend
remained at attractive levels. Twelve-month results similarly outpaced the
Lipper average. The 30-day standardized yield finished the period at 5.18%;
taxable-equivalent yield for investors in the 36% tax bracket would be 8.09%.
Performance reflected our investment strategy, credit risk profile, and low
expenses that allow us to deliver the highest income in our peer group. Despite
negative returns in the past fiscal year, the fund's long-term record remains
strong, ranking first out of six funds in its Lipper category that have been in
existence for 10 years. Over the past five y ears, the fund ranks fifth out of
31 funds in its category, and for the past year, it ranks 11th out of 38 funds
based on total returns.
Our investment goals for the past year included a strategy of keeping our
interest rate exposure, or duration, no longer than neutral compared with our
peer group. (See Maryland Short-Term Tax-Free Bond Fund for a description of
duration.) In the second half of the year we focused on building a "barbell"
structure into the portfolio by selling bonds in the 10-year range and using the
proceeds to buy both shorter and longer bonds. This structure enhances income
and protects principal when the yield curve becomes flat.
We underweighted bonds with maturities greater than 20 years as well as
issues with very low coupons, which tend to perform poorly in a rising rate
environment. We raised cash reserves modestly in July and August to provide more
liquidity as we approached year-end, a move that protected returns by allowing
us to meet year-end redemptions without selling bonds into a weak market.
Our average credit profile remained high, which helped the fund in the
second half of the year when spreads for lower-rated bonds widened N that is,
their prices declined because investors preferred higher-rated investments.
Maryland doesn't offer many lower-quality bonds, and the ones available often
lack attractive yields because there is usually more demand than supply.
However, the recent sell-off means that better yields are available today than a
year ago, and this may be an opportunity going forward.
Our sector concentrations for the year were little changed, although we put
a bit more money to work in the housing and education sectors. We continue to
like general obligation (GO) credits. In this economy, tax revenues continually
exceed expectations, reducing the need for debt and promising further declines
in GO supply. The state of Maryland, for example, cancelled a debt sale
scheduled for February 2000 as a result of strong tax receipts and a diminished
need for borrowing.
A year ago, we were concerned about maintaining the fund's yield in a low
rate environment. This past year, however, allowed us to rebuild income by
selling lower-yielding bonds at losses and reinvesting in new issues with higher
coupons. These losses can be used to offset the fund's capital gains now and in
the future. Outlook
<PAGE>
Looking into 2000, we are a bit more constructive on our market than
earlier in the year. Municipal bond issuance has been light in the first two
months of 2000, and redemption activity has abated, creating bet- ter market
dynamics. We expect to take advantage of issues with higher yields across all
maturities, which can greatly enhance returns in an environment of low
inflation. These yields are also extremely attractive compared with yields in
the taxable market, particularly among longer-term bonds.
Except for soaring oil and some other commodity prices, overall inflation
remains in check. However, the strong pace of economic growth is straining the
supply of both labor and products. Cost pressures have been mounting, and the
Fed is concerned that they will be reflected in higher inflation. As long as
accelerating inflation remains a threat, the Fed is likely to move short-term
rates higher in the months ahead. That could create further short-term losses
but, in our view, any slowdown in economic growth as a result of Fed tightening
should reduce inflation pressure and bode well for long-term performance.
We thank you for your perseverance through this past year and assure you
that we are doing everything we can to increase our tax-free dividend. Although
there is no guarantee that the seas won't continue to be stormy, we can promise
a steady hand as we navigate these waters. We are cautiously optimistic that
current market conditions offer an opportunity to lock in higher yields, and we
will diligently and prudently scrutinize the Maryland municipal market for such
opportunities.
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 23, 2000
Effective March 1, 2000, Hugh D. McGuirk has taken over day-to-day
management of the Maryland Tax-Free Bond Fund and has become Chairman of its
Investment Advisory Committee. Mary Miller remains with T. Rowe Price as
Director of the Municipal Bond Department. Mr. McGuirk has been a member of the
fund's advisory committee since 1995, and has been involved in the municipal
bond management process at T. Rowe Price since 1993. This updates the portfolio
management section of the Maryland Tax-Free Bond Fund prospectus dated July 1,
1999.
================================================================================
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
- -------------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
KEY STATISTICS
- --------------
8/31/99 2/29/00
MARYLAND SHORT-TERM TAX-FREE BOND FUND
- ----------------------------------------------------------------------------
Price Per Share $ 5.08 $ 5.04
- ----------------------------------------------------------------------------
Dividends Per Share
- ----------------------------------------------------------------------------
For 6 months 0.09 0.10
- ----------------------------------------------------------------------------
For 12 months 0.19 0.19
- ---------------------------------------------------------------------------
Dividend Yield *
- ----------------------------------------------------------------------------
For 6 months 3.67% 3.82%
- ----------------------------------------------------------------------------
For 12 months 3.80 3.80
- ----------------------------------------------------------------------------
30-Day Standardized Yield 3.68 4.17
- ----------------------------------------------------------------------------
Weighted Average Maturity (years) 2.5 2.5
- ---------------------------------------------------------------------------
Weighted Average Effective Duration (years) 2.2 2.2
- ----------------------------------------------------------------------------
Weighted Average Quality ** AA AA
- ----------------------------------------------------------------------------
MARYLAND TAX-FREE BOND FUND
- ----------------------------------------------------------------------------
Price Per Share $ 10.16 $ 9.87
- ----------------------------------------------------------------------------
Dividends Per Share
- ----------------------------------------------------------------------------
For 6 months 0.27 0.27
- ----------------------------------------------------------------------------
For 12 months 0.54 0.53
- ----------------------------------------------------------------------------
Dividend Yield *
- ----------------------------------------------------------------------------
For 6 months 5.27% 5.49%
- ----------------------------------------------------------------------------
For 12 months 5.42 5.53
- ----------------------------------------------------------------------------
30-Day Standardized Yield 4.75 5.18
- ----------------------------------------------------------------------------
Weighted Average Maturity (years) 15.7 16.2
- ----------------------------------------------------------------------------
Weighted Average Effective Duration (years) 7.5 8.0
- ----------------------------------------------------------------------------
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 Maryland Tax-Free Funds
- -------------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
SECTOR DIVERSIFICATION
- ----------------------
Percent of Percent of
Net Assets Net Assets
8/31/99 2/29/00
MARYLAND SHORT-TERM TAX-FREE BOND FUND
- ------------------------------------------------------------------------------
Prerefunded Bonds 28% 24%
- ------------------------------------------------------------------------------
General Obligation - Local 16 22
- ------------------------------------------------------------------------------
Solid Waste Revenue 8 11
- ------------------------------------------------------------------------------
Educational Revenue 10 9
- ------------------------------------------------------------------------------
Lease Revenue 3 7
- ------------------------------------------------------------------------------
Hospital Revenue 10 5
- ------------------------------------------------------------------------------
Life Care/Nursing Home Revenue 5 5
- ------------------------------------------------------------------------------
Dedicated Tax Revenue 2 4
- ------------------------------------------------------------------------------
General Obligation - State 7 4
- ------------------------------------------------------------------------------
Water and Sewer Revenue 2 2
- ------------------------------------------------------------------------------
Miscellaneous Revenue 2 2
- ------------------------------------------------------------------------------
Ground Transportation Revenue 4 2
- ------------------------------------------------------------------------------
All Other 4 2
- ------------------------------------------------------------------------------
Other Assets Less Liabilities -1 1
- ------------------------------------------------------------------------------
Total 100% 100%
<PAGE>
MARYLAND TAX-FREE BOND FUND
- ------------------------------------------------------------------------------
Housing Finance Revenue 14% 16%
- ------------------------------------------------------------------------------
Prerefunded Bonds 15 15
- ------------------------------------------------------------------------------
Hospital Revenue 12 12
- ------------------------------------------------------------------------------
General Obligation - Local 10 10
- ------------------------------------------------------------------------------
Educational Revenue 5 7
- ------------------------------------------------------------------------------
General Obligation - State 8 7
- ------------------------------------------------------------------------------
Ground Transportation Revenue 5 5
- ------------------------------------------------------------------------------
Water and Sewer Revenue 4 5
- ------------------------------------------------------------------------------
Escrowed to Maturity 4 4
- ------------------------------------------------------------------------------
Solid Waste Revenue 4 4
- ------------------------------------------------------------------------------
Miscellaneous Revenue 5 4
- ------------------------------------------------------------------------------
Lease Revenue 4 3
- ------------------------------------------------------------------------------
Electric Revenue 3 2
- ------------------------------------------------------------------------------
Dedicated Tax Revenue 3 2
- ------------------------------------------------------------------------------
All Other 4 3
- ------------------------------------------------------------------------------
Other Assets Less Liabilities - 1
- ------------------------------------------------------------------------------
Total 100% 100%
================================================================================
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
- -------------------------------------
PERFORMANCE COMPARISON
- ----------------------
These charts show the value of a hypothetical $10,000 investment in each
fund over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with 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 fund returns as well as mutual
fund averages and indexes.
Lehman 3-yr State Lipper Short Municipal Maryland Short-Term
GO Bond Index Debt Funds Average Tax-Free Bond Fund
---------------------- ------------------- -------------------
1/93 10000 10000 10000
2/93 10154 10113 10167
2/94 10507 10448 10522
2/95 10783 10679 10799
2/96 11653 11302 11501
2/97 12169 11748 11875
2/98 12815 12299 12416
2/99 13488 12846 12970
2/00 13676 13039 13121
******************************************************************
Lehman Municipal Lipper Maryland Municipal Maryland Tax-Free
Bond Index Debt Funds Average Bond Fund
---------------- ------------------- -----------------
2/90 10000 10000 10000
2/91 10922 10852 10837
2/92 12013 11821 11826
2/93 13666 13325 13452
2/94 14423 14045 14249
2/95 14695 14247 14453
2/96 16318 15655 15899
2/97 17217 16404 16713
2/98 18790 17854 18165
2/99 19946 18824 19218
2/00 19530 18166 18646
******************************************************************
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 2/29/00 1 Year 5 Years 10 Years Inception Date
- --------------------- ------ ------- -------- --------- ----
Maryland Short-Term
Tax-Free Bond Fund 1.16% 3.97% - 3.91% 1/29/93
Maryland Tax-Free Bond Fund -2.98 5.23 6.43% - 3/31/87
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
- ----------------------------------------------------
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
Year
Ended
2/29/00 2/28/99 2/28/98 2/28/97 2/29/96
NET ASSET VALUE
Beginning of period $ 5.17 $ 5.14 $ 5.11 $ 5.15 $ 5.04
- -------------------------------------------------------------------------------
Investment activities
Net investment income(loss) 0.19* 0.19* 0.20* 0.20* 0.21*
Net realized and
unrealized gain (loss) (0.13) 0.03 0.03 (0.04) 0.11
- -------------------------------------------------------------------------------
Total from
investment activities 0.06 0.22 0.23 0.16 0.32
- -------------------------------------------------------------------------------
Distributions
Net investment income (0.19) (0.19) (0.20) (0.20) (0.21)
- -------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 5.04 $ 5.17 $ 5.14 $ 5.11 $ 5.15
Ratios/Supplemental=Data=======================================================
Total return** 1.16%* 4.46%* 4.56%* 3.26%* 6.49%*
- -------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.60%* 0.62%* 0.65%* 0.65%* 0.65%*
- -------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 3.70%* 3.80%* 3.89%* 3.98%* 4.14%*
- -------------------------------------------------------------------------------
Portfolio turnover rate 41.4% 46.4% 60.4% 21.4% 39.3%
- -------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $124,135 $122,552 $109,424 $\102,252 $ 85,784
- --------------------------------------------------------------------------------
** 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 6/30/98, and a 0.60% voluntary expense limitation in effect
from 7/1/98 through 2/28/01.
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Maryland Tax-Free Bond Fund
- -----------------------------------------
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
Year
Ended
2/29/00 2/28/99 2/28/98 2/28/97 2/29/96
NET ASSET VALUE
Beginning of period $ 10.73 $ 10.67 $ 10.35 $ 10.40 $ 9.99
- ------------------------------------------------------------------------------
Investment activities
Net investment income(loss) 0.53 0.54 0.55 0.56 0.57
Net realized and
unrealized gain (loss) (0.85) 0.06 0.32 (0.05) 0.41
- ------------------------------------------------------------------------------
Total from
investment activities (0.32) 0.60 0.87 0.51 0.98
- ------------------------------------------------------------------------------
Distributions
Net investment income (0.53) (0.54) (0.55) (0.56) (0.57)
Net realized gain (0.01) - - - -
- ------------------------------------------------------------------------------
Total distributions (0.54) (0.54) (0.55) (0.56) (0.57)
- ------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 9.87 $ 10.73 $ 10.67 $ 10.35 $ 10.40
Ratios/Supplemental=Data======================================================
Total return** (2.98)% 5.80% 8.68% 5.12% 10.00%
- ------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.51% 0.51% 0.51% 0.54% 0.54%
- ------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 5.23% 5.10% 5.31% 5.47% 5.53%
- ------------------------------------------------------------------------------
Portfolio turnover rate 29.2% 15.4% 19.2% 26.2% 23.9%
- ------------------------------------------------------------------------------
Net assets, end of period
(in millions) $ 979 $ 1,063 $ 926 $ 820 $ 799
- ------------------------------------------------------------------------------
** 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.
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Maryland Short-Term Tax-Free Bond Fund
- ---------------------------------------------------- February 29, 2000
STATEMENT OF NET ASSETS
- -----------------------
Par Value
In thousands
MARYLAND 90.6%
Anne Arundel County, GO
TECP, 3.55%, 3/1/00 $ 1,500 $ 1,500
- ---------------------------------------------------------------------------
Consolidated Solid Waste
5.75%, 2/1/04 * 350 359
- ---------------------------------------------------------------------------
6.00%, 2/1/01 * 350 355
- ---------------------------------------------------------------------------
6.00%, 2/1/02 * 350 358
- ---------------------------------------------------------------------------
6.00%, 2/1/03 * 325 335
- ---------------------------------------------------------------------------
Water and Sewer
4.75%, 9/1/01 1,030 1,035
- ---------------------------------------------------------------------------
5.00%, 3/15/02 * 1,280 1,287
- ---------------------------------------------------------------------------
5.00%, 3/15/03 * 1,345 1,350
- ---------------------------------------------------------------------------
Baltimore City
COP, 5.25%, 4/1/04 (MBIA Insured) 2,160 2,188
- ---------------------------------------------------------------------------
Water Projects
6.50%, 7/1/20 (MBIA Insured)
(Prerefunded 7/1/00+) 345 348
- ---------------------------------------------------------------------------
Baltimore City, GO
Consolidated Public Improvement
7.50%, 10/15/00 (FGIC Insured) 500 510
- ---------------------------------------------------------------------------
Baltimore County, GO
Consolidated Public Improvement
5.50%, 6/1/04 1,000 1,025
- ---------------------------------------------------------------------------
Baltimore County
Consolidated Public Improvement
6.00%, 7/1/05 (Prerefunded 7/1/02+) 500 523
- ---------------------------------------------------------------------------
Stella Maris
7.50%, 3/1/21 (Prerefunded 3/1/01+) 1,000 1,050
- ---------------------------------------------------------------------------
Baltimore County Economic Dev.
Maryvale Preparatory School Fac.
6.50%, 5/1/08 1,000 951
- ---------------------------------------------------------------------------
Baltimore County Metropolitan Dist.
6.10%, 7/1/06 (Prerefunded 7/1/02+) 1,500 1,573
- ---------------------------------------------------------------------------
<PAGE>
Charles County, County Commissioners
Fox Chase Apartments, 7.25%, 10/1/01 185 184
- ---------------------------------------------------------------------------
New Forest Apartments, 7.25%, 11/1/01 365 363
- ---------------------------------------------------------------------------
Frederick County, Public Fac., GO
5.00%, 7/1/02 3,275 3,302
- ---------------------------------------------------------------------------
Maryland Economic Dev.
Associated Jewish Charities
5.25%, 7/15/02 $ 305 $ 301
- ---------------------------------------------------------------------------
5.25%, 7/15/03 320 312
- ---------------------------------------------------------------------------
5.50%, 7/15/04 340 332
- ---------------------------------------------------------------------------
5.50%, 7/15/05 360 349
- ---------------------------------------------------------------------------
5.50%, 7/15/06 380 364
- ---------------------------------------------------------------------------
5.50%, 7/15/07 400 380
- ---------------------------------------------------------------------------
Maryland Energy Fin. Admin.
Wheelabrator Water Technologies
5.75%, 12/1/04 2,570 2,605
- ---------------------------------------------------------------------------
Maryland, GO
State & Local Fac.
4.85%, 10/15/02 500 503
- ---------------------------------------------------------------------------
5.00%, 10/15/02 930 939
- ---------------------------------------------------------------------------
5.00%, 8/1/04 1,000 1,007
- ---------------------------------------------------------------------------
5.20%, 3/15/04 2,500 2,533
- ---------------------------------------------------------------------------
<PAGE>
Maryland HHEFA
Bradford Oaks Nursing and Rehabilitation Center
5.375%, 1/1/01 200 199
- ---------------------------------------------------------------------------
Broadmead
4.60%, 7/1/01 375 373
- ---------------------------------------------------------------------------
4.90%, 7/1/04 250 244
- ---------------------------------------------------------------------------
Charity Obligation Group
4.60%, 11/1/26 (Prerefunded 11/1/03+) 1,035 1,028
- ---------------------------------------------------------------------------
Easton Memorial Hosp.
5.00%, 7/1/00 (MBIA Insured) 335 336
- ---------------------------------------------------------------------------
5.00%, 7/1/01 (MBIA Insured) 360 362
- ---------------------------------------------------------------------------
5.00%, 7/1/02 (MBIA Insured) 370 372
- ---------------------------------------------------------------------------
5.00%, 7/1/03 (MBIA Insured) 390 392
- ---------------------------------------------------------------------------
5.00%, 7/1/04 (MBIA Insured) 410 412
- ---------------------------------------------------------------------------
5.00%, 7/1/05 (MBIA Insured) 430 430
- ---------------------------------------------------------------------------
Francis Scott Key Medical Center
6.75%, 7/1/23 (FGIC Insured)
(Prerefunded 7/1/00+) 35 36
- ---------------------------------------------------------------------------
Greater Baltimore Medical Center
6.75%, 7/1/19 (Prerefunded 7/1/01+) 2,025 2,124
- ---------------------------------------------------------------------------
Maryland HHEFA
Johns Hopkins Univ.
5.50%, 7/1/01 $ 2,500 $ 2,535
- ---------------------------------------------------------------------------
5.50%, 7/1/02 4,000 4,077
- ---------------------------------------------------------------------------
<PAGE>
Kennedy Krieger Institute
6.00%, 7/1/01 125 126
- ---------------------------------------------------------------------------
6.00%, 7/1/02 220 222
- ---------------------------------------------------------------------------
6.00%, 7/1/03 380 382
- ---------------------------------------------------------------------------
6.00%, 7/1/04 405 405
- ---------------------------------------------------------------------------
6.00%, 7/1/05 430 428
- ---------------------------------------------------------------------------
Stella Maris, 4.75%, 7/1/21 4,625 4,609
- ---------------------------------------------------------------------------
Union Hosp. of Cecil County
6.70%, 7/1/22
(Prerefunded 7/1/02+) 1,725 1,829
- ---------------------------------------------------------------------------
Univ. of Maryland Medical System
6.50%, 7/1/21 (FGIC Insured)
(Prerefunded 7/1/01+) 2,250 2,310
- ---------------------------------------------------------------------------
7.00%, 7/1/17 (FGIC Insured)
(Prerefunded 7/1/01+) 2,250 2,367
- ---------------------------------------------------------------------------
Washington County Hosp.
6.375%, 7/1/22 (AMBAC Insured)
(Prerefunded 7/1/02+) 1,365 1,440
- ---------------------------------------------------------------------------
Maryland Ind. Dev. Fin. Auth.
American Center for Physics Headquarters Fac.
5.80%, 1/1/01 400 402
- ---------------------------------------------------------------------------
Way Station, 4.90%, 12/31/11 2,110 2,049
- ---------------------------------------------------------------------------
Maryland Stadium Auth.
VRDN (Currently 3.95%) * 3,000 3,000
- ---------------------------------------------------------------------------
Maryland Transportation Auth., Transportation Fac.
5.40%, 7/1/02 2,000 2,032
- ---------------------------------------------------------------------------
6.10%, 7/1/00 400 403
- ---------------------------------------------------------------------------
Maryland Water Quality Fin. Administration,
Revolving Loan Fund
7.25%, 9/1/11 (Prerefunded 9/1/00+) 575 595
- ---------------------------------------------------------------------------
Montgomery County, GO
6.30%, 4/1/02 1,250 1,291
- ---------------------------------------------------------------------------
9.75%, 6/1/01 1,700 1,809
- ---------------------------------------------------------------------------
Consolidated Public Improvement
5.00%, 5/1/01 1,480 1,492
- ---------------------------------------------------------------------------
5.25%, 1/1/04 2,000 2,029
- ---------------------------------------------------------------------------
<PAGE>
Montgomery County, GO
Consolidated Public Improvement
5.50%, 7/1/03 $ 1,000 $ 1,023
- ---------------------------------------------------------------------------
5.60%, 7/1/04 4,000 4,118
- ---------------------------------------------------------------------------
5.70%, 7/1/05 965 999
- ---------------------------------------------------------------------------
Northeast Maryland Waste Disposal Auth.
Montgomery County Resources
5.60%, 7/1/02 * 2,000 2,023
- ---------------------------------------------------------------------------
5.70%, 7/1/03 * 4,260 4,324
- ---------------------------------------------------------------------------
7.10%, 1/1/03 (MBIA Insured) 1,000 1,058
- ---------------------------------------------------------------------------
Solid Waste
5.30%, 7/1/00 * 1,765 1,771
- ---------------------------------------------------------------------------
5.90%, 7/1/05 * 2,250 2,300
- ---------------------------------------------------------------------------
Southwest Resources
5.80%, 7/1/04 * 60 61
- ---------------------------------------------------------------------------
7.05%, 1/1/02 (MBIA Insured) 1,500 1,560
- ---------------------------------------------------------------------------
Prince George's County
Collington Episcopal, 5.40%, 4/1/02 450 443
- ---------------------------------------------------------------------------
Dimensions Health
7.00%, 7/1/22 (Prerefunded 7/1/02+) 1,500 1,603
- ---------------------------------------------------------------------------
7.25%, 7/1/17 (Prerefunded 7/1/02+) 5,500 5,907
- ---------------------------------------------------------------------------
Equipment Acquistion Program, COP
5.00%, 10/15/00 (MBIA Insured) 4,050 4,072
- ---------------------------------------------------------------------------
Prince George's County Housing Auth., Largo Oxford
4.50%, 12/1/07 (Prerefunded 12/1/01+) 2,000 1,997
- ---------------------------------------------------------------------------
Univ. of Maryland
5.50%, 4/1/10 (Prerefunded 4/1/03+) 1,000 1,038
- ---------------------------------------------------------------------------
6.40%, 4/1/06 (Prerefunded 10/1/02+) 500 529
- ---------------------------------------------------------------------------
Auxiliary Fac. and Tuition, 5.00%, 4/1/02 3,145 3,166
- ---------------------------------------------------------------------------
Washington Suburban Sanitary Dist., GO
6.50%, 11/1/13 (Prerefunded 11/1/01+) 1,000 1,051
- ---------------------------------------------------------------------------
7.00%, 6/1/01 1,480 1,527
- ---------------------------------------------------------------------------
8.00%, 1/1/02 1,460 1,544
- ---------------------------------------------------------------------------
Total Maryland (Cost $113,677) 12,475
- ---------------------------------------------------------------------------
<PAGE>
PUERTO=RICO==7.2%==========================================================
Puerto Rico Ind. Medical and Environmental, PCR
4.25%, 9/1/13 1,500 1,457
- ---------------------------------------------------------------------------
Puerto Rico Municipal Fin. Agency
5.50%, 8/1/02 $ 5,000 $ 5,079
- ---------------------------------------------------------------------------
Puerto Rico Telephone Auth.
5.45%, 1/16/15 (MBIA Insured)
(Prerefunded 1/1/03+) 2,400 2,471
- ---------------------------------------------------------------------------
Total Puerto Rico (Cost $9,090) 9,007
- ---------------------------------------------------------------------------
U.=S.=VIRGIN=ISLANDS==1.0%=================================================
Virgin Island Water and Power Auth.
5.00%, 7/1/02 1,200 1,192
- ---------------------------------------------------------------------------
Total U. S. Virgin Islands (Cost $1,212) 1,192
=Total=Investments=in=Securities===========================================
98.8% of Net Assets (Cost $123,979) $ 122,674
Other Assets Less Liabilities 1,461
NET ASSETS $ 124,135
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 2
Accumulated net realized gain/loss - net of distributions (253)
Net unrealized gain (loss) (1,305)
Paid-in-capital applicable to 24,627,310 no par value
shares of beneficial interest outstanding;
unlimited number of shares authorized 125,691
NET ASSETS $ 124,135
NET ASSET VALUE PER SHARE $ 5.04
* Interest subject to alternative minimum tax
+ Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
COP Certificates of Participation
FGIC Financial Guaranty Insurance Company
GO General Obligation
HHEFA Health & Higher Educational Facility Authority
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
TECP Tax-Exempt Commercial Paper
VRDN Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Maryland Tax-Free Bond Fund
- ----------------------------------------- February 29, 2000
STATEMENT OF NET ASSETS
- -----------------------
Par Value
In thousands
MARYLAND 95.5%
Allegany Co., PCR, Westvaco, 6.20%, 1/1/08 $ 1,350 $ 1,399
- ------------------------------------------------------------------------------
Anne Arundel County
Special Tax Dist., Farmington Village
6.25%, 6/1/25 4,222 3,763
- ------------------------------------------------------------------------------
Anne Arundel County, PCR
Baltimore Gas & Electric, TECP, 3.65%, 4/7/00 1,200 1,200
- ------------------------------------------------------------------------------
Anne Arundel County, GO
4.50%, 8/1/24 3,250 2,577
- ------------------------------------------------------------------------------
TECP, 3.55%, 3/1/00 1,000 1,000
- ------------------------------------------------------------------------------
Consolidated General Improvement
6.30%, 8/1/16 (Prerefunded 8/1/05+) 775 828
- ------------------------------------------------------------------------------
6.30%, 8/1/19 (Prerefunded 8/1/05+) 725 775
- ------------------------------------------------------------------------------
6.30%, 8/1/20 (Prerefunded 8/1/05+) 705 754
- ------------------------------------------------------------------------------
6.30%, 8/1/21 (Prerefunded 8/1/05+) 790 844
- ------------------------------------------------------------------------------
Consolidated Water and Sewer
4.50%, 8/1/24 3,410 2,703
- ------------------------------------------------------------------------------
6.30%, 8/1/22 (Prerefunded 8/1/05+) 450 481
- ------------------------------------------------------------------------------
6.30%, 8/1/24 (Prerefunded 8/1/05+) 720 769
- ------------------------------------------------------------------------------
7.20%, 4/15/13 (Prerefunded 4/15/00+) 625 640
- ------------------------------------------------------------------------------
7.20%, 4/15/14 (Prerefunded 4/15/00+) 625 640
- ------------------------------------------------------------------------------
Anne Arundel County Economic Dev.
Baltimore Gas & Electric, TECP, 3.75%, 4/10/00 * 2,000 2,000
- ------------------------------------------------------------------------------
Baltimore City
Board of Ed. Admin., COP
5.00%, 4/1/13 (MBIA Insured) 3,460 3,257
- ------------------------------------------------------------------------------
5.00%, 4/1/14 (MBIA Insured) 3,635 3,384
- ------------------------------------------------------------------------------
5.00%, 4/1/16 (MBIA Insured) 4,000 3,645
- ------------------------------------------------------------------------------
Convention Center
6.00%, 9/1/17 (FGIC Insured)
(Prerefunded 9/1/04+) 5,180 5,404
- ------------------------------------------------------------------------------
<PAGE>
COP
7.20%, 4/1/10 (MBIA Insured)
(Prerefunded 4/1/00+) 3,250 3,324
- ------------------------------------------------------------------------------
7.25%, 4/1/16 (MBIA Insured)
(Prerefunded 4/1/00+) 10,700 10,942
- ------------------------------------------------------------------------------
Baltimore City
Parking Fac.
5.25%, 7/1/21 (FGIC Insured) $ 2,000 $ 1,846
- ------------------------------------------------------------------------------
5.90%, 7/1/11 (FGIC Insured) 590 620
- ------------------------------------------------------------------------------
5.90%, 7/1/12 (FGIC Insured) 1,195 1,253
- ------------------------------------------------------------------------------
6.00%, 7/1/14 (FGIC Insured) 5,155 5,408
- ------------------------------------------------------------------------------
6.00%, 7/1/15 (FGIC Insured) 5,460 5,699
- ------------------------------------------------------------------------------
6.00%, 7/1/16 (FGIC Insured) 5,785 6,024
- ------------------------------------------------------------------------------
6.00%, 7/1/17 (FGIC Insured) 6,135 6,363
- ------------------------------------------------------------------------------
6.00%, 7/1/18 (FGIC Insured) 6,505 6,710
- ------------------------------------------------------------------------------
Port Fac., E.I. DuPont - Conoco
6.50%, 10/1/11 10,400 10,982
- ------------------------------------------------------------------------------
Tindeco Wharf Apartments
6.60%, 12/20/24 (GNMA Guaranteed) 1,000 1,025
- ------------------------------------------------------------------------------
Wastewater
5.60%, 7/1/13 (MBIA Insured) 19,300 19,515
- ------------------------------------------------------------------------------
5.65%, 7/1/20 (MBIA Insured) 2,000 1,960
- ------------------------------------------------------------------------------
Water
5.80%, 7/1/15 (FGIC Insured) 3,350 3,385
- ------------------------------------------------------------------------------
6.00%, 7/1/15 (FGIC Insured) 6,250 6,524
- ------------------------------------------------------------------------------
Baltimore City, GO
Consolidated Public Improvement
Zero Coupon, 10/15/06 (FGIC Insured) 3,100 2,170
- ------------------------------------------------------------------------------
Zero Coupon, 10/15/08 (FGIC Insured)
(Prerefunded 10/15/05+) 3,800 2,361
- ------------------------------------------------------------------------------
Zero Coupon, 10/15/09 (FGIC Insured)
(Prerefunded 10/15/05+) 4,600 2,685
- ------------------------------------------------------------------------------
Zero Coupon, 10/15/11 (FGIC Insured) 1,240 644
- ------------------------------------------------------------------------------
Zero Coupon, 10/15/11 (FGIC Insured)
(Prerefunded 10/15/05+) 7,500 3,862
- ------------------------------------------------------------------------------
<PAGE>
5.50%, 10/15/16 (FGIC Insured) 1,775 1,754
- ------------------------------------------------------------------------------
7.00%, 10/15/07 (MBIA Insured) 500 558
- ------------------------------------------------------------------------------
7.00%, 10/15/08 (MBIA Insured) 5,190 5,836
- ------------------------------------------------------------------------------
7.50%, 10/15/09 (FGIC Insured) 2,635 3,071
- ------------------------------------------------------------------------------
Baltimore County
North Brooke Apartments
6.35%, 1/20/21 (GNMA Guaranteed) 3,000 3,048
- ------------------------------------------------------------------------------
Pickersgill Retirement Community
7.70%, 1/1/21 (Prerefunded 1/1/02+) 3,550 3,789
- ------------------------------------------------------------------------------
Stella Maris, 7.50%, 3/1/21 (Prerefunded 3/1/01+) 2,760 2,897
- ------------------------------------------------------------------------------
Baltimore County, GO
Pension Funding
5.125%, 8/1/14 $ 4,300 $ 4,100
- ------------------------------------------------------------------------------
5.125%, 8/1/15 4,195 3,959
- ------------------------------------------------------------------------------
Baltimore County Economic Dev.
Maryvale Preparatory School Fac.,
6.50%, 5/1/11 600 557
- ------------------------------------------------------------------------------
Calvert County Economic Dev.
Asbury Solomons Islands Fac.
5.00%, 1/1/27 (MBIA Insured) 1,750 1,499
- ------------------------------------------------------------------------------
Calvert County, PCR, Baltimore Gas and Electric
5.55%, 7/15/14 5,550 5,503
- ------------------------------------------------------------------------------
Carroll County, GO
Consolidated Public Improvement
County Commissioners
5.50%, 12/1/16 1,230 1,212
- ------------------------------------------------------------------------------
5.50%, 12/1/17 1,230 1,204
- ------------------------------------------------------------------------------
5.50%, 12/1/18 1,230 1,195
- ------------------------------------------------------------------------------
5.50%, 12/1/19 1,130 1,093
- ------------------------------------------------------------------------------
5.625%, 10/1/20 1,900 1,854
- ------------------------------------------------------------------------------
7.30%, 10/1/20 (Prerefunded 10/1/00+) 2,000 2,077
- ------------------------------------------------------------------------------
<PAGE>
Carroll County
Copper Ridge, 7.75%, 1/1/18
(Prerefunded 1/1/03+) 3,000 3,263
- ------------------------------------------------------------------------------
Fairhaven, 7.75%, 1/1/11 (Prerefunded 1/1/01+) 1,000 1,047
- ------------------------------------------------------------------------------
Charles County
Holly Station, 6.45%, 5/1/26 (FHA Guaranteed) 1,780 1,796
- ------------------------------------------------------------------------------
New Forest Apartments
6.10%, 11/1/28 (FHA Guaranteed) 5,000 4,926
- ------------------------------------------------------------------------------
Damascus Gardens Dev., Multi Family
7.375%, 8/15/17 (FHA Guaranteed)
(Escrowed to Maturity) 3,685 4,169
- ------------------------------------------------------------------------------
Frederick City, GO, General Improvement
6.125%, 12/1/09 (FGIC Insured) 1,840 1,910
- ------------------------------------------------------------------------------
Frederick County
Buckinghams Choice
5.90%, 1/1/17 1,855 1,580
- ------------------------------------------------------------------------------
6.00%, 1/1/24 750 626
- ------------------------------------------------------------------------------
Public Facilities, GO, 5.75%, 7/1/19 6,530 6,522
- ------------------------------------------------------------------------------
Gaithersburg Hosp. Fac.
Asbury Methodist Home
5.50%, 1/1/20 $ 3,250 $ 2,787
- ------------------------------------------------------------------------------
Shady Grove Adventist Hosp.
6.50%, 9/1/12 (FSA Insured) 5,000 5,467
- ------------------------------------------------------------------------------
Howard County
Golf Course Fac., 6.00%, 2/15/21 3,110 3,118
- ------------------------------------------------------------------------------
Howard County, GO
COP, 8.15%, 2/15/20 465 580
- ------------------------------------------------------------------------------
Metropolitan Dist.
7.15%, 5/15/14 (Prerefunded 5/15/00+) 1,005 1,021
- ------------------------------------------------------------------------------
7.15%, 5/15/15 (Prerefunded 5/15/00+) 1,080 1,098
- ------------------------------------------------------------------------------
7.15%, 5/15/16 (Prerefunded 5/15/00+) 1,160 1,179
- ------------------------------------------------------------------------------
7.15%, 5/15/17 (Prerefunded 5/15/00+) 1,245 1,265
- ------------------------------------------------------------------------------
Laurel
6.90%, 7/1/07 (MBIA Insured)
(Prerefunded 7/1/01+) 1,000 1,051
- ------------------------------------------------------------------------------
7.00%, 7/1/09 (MBIA Insured)
(Prerefunded 7/1/01+) 550 578
- ------------------------------------------------------------------------------
<PAGE>
Maryland, GO
5.25%, 7/15/13 23,900 23,449
- ------------------------------------------------------------------------------
5.25%, 7/15/14 10,045 9,758
- ------------------------------------------------------------------------------
5.70%, 3/15/10 5,000 5,171
- ------------------------------------------------------------------------------
6.316%, 8/1/12 10,000 9,247
- ------------------------------------------------------------------------------
7.00%, 10/15/03 (Prerefunded 10/15/00+) 2,000 2,056
- ------------------------------------------------------------------------------
7.10%, 10/15/04 (Prerefunded 10/15/00+) 3,000 3,100
- ------------------------------------------------------------------------------
Maryland, CDA
6.20%, 7/1/23 * 3,885 3,824
- ------------------------------------------------------------------------------
Residential
5.15%, 3/1/18 * 4,250 3,804
- ------------------------------------------------------------------------------
6.125%, 9/1/20 * 5,160 5,124
- ------------------------------------------------------------------------------
Single Family
5.60%, 4/1/18 3,740 3,521
- ------------------------------------------------------------------------------
5.85%, 7/1/27 * 7,000 6,539
- ------------------------------------------------------------------------------
5.875%, 7/1/16 3,655 3,585
- ------------------------------------------------------------------------------
5.875%, 9/1/25 * 3,500 3,343
- ------------------------------------------------------------------------------
5.90%, 9/1/19 * 2,000 1,915
- ------------------------------------------------------------------------------
5.95%, 9/1/29 * 20,475 19,441
- ------------------------------------------------------------------------------
6.00%, 4/1/17 2,500 2,492
- ------------------------------------------------------------------------------
Maryland, CDA
Single Family
6.45%, 4/1/14 $ 1,000 $ 1,016
- ------------------------------------------------------------------------------
6.75%, 4/1/10 * 5,000 5,121
- ------------------------------------------------------------------------------
6.75%, 4/1/26 * 9,135 9,257
- ------------------------------------------------------------------------------
6.80%, 4/1/22 * 3,065 3,134
- ------------------------------------------------------------------------------
6.80%, 4/1/24 * 2,670 2,731
- ------------------------------------------------------------------------------
<PAGE>
6.85%, 4/1/11 4,895 4,999
- ------------------------------------------------------------------------------
7.00%, 4/1/14 2,720 2,779
- ------------------------------------------------------------------------------
7.05%, 4/1/17 4,750 4,853
- ------------------------------------------------------------------------------
7.25%, 4/1/11 2,000 2,040
- ------------------------------------------------------------------------------
7.25%, 4/1/19 * 9,000 9,173
- ------------------------------------------------------------------------------
7.25%, 4/1/27 9,250 9,438
- ------------------------------------------------------------------------------
7.375%, 4/1/10 490 499
- ------------------------------------------------------------------------------
7.60%, 4/1/17 1,665 1,690
- ------------------------------------------------------------------------------
Maryland Economic Dev., Assoc. Jewish Charities
5.67%, 7/15/29 16,645 14,063
- ------------------------------------------------------------------------------
Maryland Energy Fin. Admin.
Wheelabrator Technologies
6.30%, 12/1/10 * 6,145 6,293
- ------------------------------------------------------------------------------
6.45%, 12/1/16 * 2,600 2,612
- ------------------------------------------------------------------------------
Maryland HHEFA
Anne Arundel Medical Center
5.125%, 7/1/33 (FSA Insured) 7,000 6,007
- ------------------------------------------------------------------------------
Bradford Oaks Nursing and Rehabilitation Center
6.375%, 1/1/19 1,500 1,298
- ------------------------------------------------------------------------------
6.375%, 1/1/27 2,000 1,664
- ------------------------------------------------------------------------------
Calvert Memorial Hosp., 5.00%, 7/1/28 1,550 1,208
- ------------------------------------------------------------------------------
Doctor's Community Hosp.
5.50%, 7/1/24 3,030 2,323
- ------------------------------------------------------------------------------
8.75%, 7/1/22 (Prerefunded 7/1/00+) 6,800 7,038
- ------------------------------------------------------------------------------
Francis Scott Key Medical Center
5.00%, 7/1/18 (FGIC Insured) 4,880 4,351
- ------------------------------------------------------------------------------
5.00%, 7/1/23 (FGIC Insured) 3,000 2,582
- ------------------------------------------------------------------------------
7.00%, 7/1/10 (FGIC Insured)
(Prerefunded 7/1/00+) 2,000 2,059
- ------------------------------------------------------------------------------
Frederick Memorial Hosp.
5.00%, 7/1/23 (FGIC Insured) 5,500 4,733
- ------------------------------------------------------------------------------
5.00%, 7/1/28 (FGIC Insured) 3,750 3,168
- ------------------------------------------------------------------------------
<PAGE>
Maryland HHEFA
Good Samaritan Hosp.
5.60%, 7/1/06 (Escrowed to Maturity) $ 1,545 $ 1,586
- ------------------------------------------------------------------------------
5.70%, 7/1/07 (Escrowed to Maturity) 1,875 1,936
- ------------------------------------------------------------------------------
5.75%, 7/1/13 (Escrowed to Maturity) 2,480 2,538
- ------------------------------------------------------------------------------
5.75%, 7/1/13 (AMBAC Insured)
(Escrowed to Maturity) 1,520 1,555
- ------------------------------------------------------------------------------
Helix Health
5.00%, 7/1/27 (AMBAC Insured)
(Escrowed to Maturity) 8,970 7,886
- ------------------------------------------------------------------------------
5.125%, 7/1/10 (AMBAC Insured)
(Escrowed to Maturity) 2,485 2,449
- ------------------------------------------------------------------------------
5.25%, 8/15/38 (AMBAC Insured) 18,200 15,987
- ------------------------------------------------------------------------------
Holy Cross Hosp.
7.125%, 7/1/10 (AMBAC Insured)
(Prerefunded 7/1/00+) 1,400 1,442
- ------------------------------------------------------------------------------
7.50%, 7/1/01 (AMBAC Insured)
(Prerefunded 7/1/00+) 1,655 1,707
- ------------------------------------------------------------------------------
Howard County General Hosp.
5.50%, 7/1/21 (Escrowed to Maturity) 5,600 5,401
- ------------------------------------------------------------------------------
Johns Hopkins Hosp.
Zero Coupon, 7/1/19 9,460 2,921
- ------------------------------------------------------------------------------
4.50%, 5/15/35 2,000 1,495
- ------------------------------------------------------------------------------
5.50%, 5/15/38 10,590 9,638
- ------------------------------------------------------------------------------
7.00%, 7/1/23 (Prerefunded 7/1/00+) 1,305 1,343
- ------------------------------------------------------------------------------
Johns Hopkins Medical Institute Parking Fac.
5.375%, 7/1/20 (AMBAC Insured) 5,550 5,151
- ------------------------------------------------------------------------------
Johns Hopkins Univ.
5.125%, 7/1/20 14,600 13,160
- ------------------------------------------------------------------------------
5.25%, 7/1/15 3,500 3,361
- ------------------------------------------------------------------------------
5.25%, 7/1/16 7,540 7,189
- ------------------------------------------------------------------------------
5.25%, 7/1/17 3,100 2,925
- ------------------------------------------------------------------------------
6.00%, 7/1/39 15,950 15,853
- ------------------------------------------------------------------------------
<PAGE>
Kennedy Kreiger Institute
6.75%, 7/1/22 (Prerefunded 7/1/01+) 2,850 2,933
- ------------------------------------------------------------------------------
7.40%, 7/1/11 (Prerefunded 7/1/01+) 370 391
- ------------------------------------------------------------------------------
Loyola College
5.00%, 10/1/39 8,500 7,000
- ------------------------------------------------------------------------------
5.375%, 10/1/26 (MBIA Insured) 5,820 5,289
- ------------------------------------------------------------------------------
Maryland HHEFA
Maryland General Hosp.
6.20%, 7/1/24 (MBIA Insured) $ 4,000 $ 4,050
- ------------------------------------------------------------------------------
Mercy Medical Center
5.75%, 7/1/26 (FSA Insured) 3,810 3,685
- ------------------------------------------------------------------------------
6.50%, 7/1/13 (FSA Insured) 2,155 2,344
- ------------------------------------------------------------------------------
Peninsula Regional Medical Center
5.00%, 7/1/23 (MBIA Insured) 10,000 8,606
- ------------------------------------------------------------------------------
Sinai Hosp.
7.30%, 7/1/05 (AMBAC Insured) (Prerefunded +) 2,000 2,061
- ------------------------------------------------------------------------------
TECP, 3.55%, 3/2/00 2,000 2,000
- ------------------------------------------------------------------------------
Union Hosp. of Cecil County
6.625%, 7/1/12 (Prerefunded 7/1/02+) 1,545 1,636
- ------------------------------------------------------------------------------
Union Memorial Hosp.
6.60%, 7/1/06 (MBIA Insured)
(Prerefunded 7/1/01+) 500 524
- ------------------------------------------------------------------------------
6.75%, 7/1/11 (MBIA Insured)
(Prerefunded 7/1/01+) 3,000 3,146
- ------------------------------------------------------------------------------
6.75%, 7/1/21 (MBIA Insured)
(Prerefunded 7/1/01+) 7,895 8,280
- ------------------------------------------------------------------------------
Univ. of Maryland Medical System
5.00%, 7/1/20 (FGIC Insured) 5,875 5,146
- ------------------------------------------------------------------------------
7.00%, 7/1/11 (MBIA Insured)
(Prerefunded 7/1/01+) 4,550 4,786
- ------------------------------------------------------------------------------
7.00%, 7/1/17 (FGIC Insured)
(Prerefunded 7/1/01+) 7,770 8,174
- ------------------------------------------------------------------------------
7.00%, 7/1/22 (FGIC Insured) 2,020 2,285
- ------------------------------------------------------------------------------
Upper Chesapeake Hosp
5.125%, 1/1/38 (FSA Insured) 7,915 6,730
- ------------------------------------------------------------------------------
<PAGE>
Maryland Ind. Dev. Fin. Auth.
American Center for Physics Headquarters Fac.
6.25%, 1/1/07 5,770 5,768
- ------------------------------------------------------------------------------
6.375%, 1/1/12 5,900 5,936
- ------------------------------------------------------------------------------
6.625%, 1/1/17 4,250 4,262
- ------------------------------------------------------------------------------
Bon Secours Health
5.929%, 8/26/22 (FSA Insured) 15,000 15,130
- ------------------------------------------------------------------------------
Holy Cross Health, 5.60%, 12/1/09 2,780 2,826
- ------------------------------------------------------------------------------
Maryland Local Gov't. Income Trust, GO, COP
6.80%, 8/1/01 $ 1,615 $ 1,656
- ------------------------------------------------------------------------------
7.125%, 8/1/09 3,000 3,095
- ------------------------------------------------------------------------------
Maryland-National Capital Park Planning Commission
6.90%, 7/1/05 (Prerefunded 7/1/00+) 1,400 1,441
- ------------------------------------------------------------------------------
6.90%, 7/1/06 (Prerefunded 7/1/00+) 1,350 1,389
- ------------------------------------------------------------------------------
6.90%, 7/1/07 (Prerefunded 7/1/00+) 1,400 1,441
- ------------------------------------------------------------------------------
6.90%, 7/1/08 (Prerefunded 7/1/00+) 1,400 1,441
- ------------------------------------------------------------------------------
6.90%, 7/1/09 (Prerefunded 7/1/00+) 1,400 1,441
- ------------------------------------------------------------------------------
Little Bennett Golf Fac.
8.25%, 10/1/11 (Prerefunded 10/1/02+) 1,980 2,176
- ------------------------------------------------------------------------------
Maryland-National Capital Park Planning Commission,
5.375%, 1/15/16 1,300 1,262
- ------------------------------------------------------------------------------
Maryland Stadium Auth.
Baltimore Convention Center Expansion
VRDN (Currently 3.95%) * 11,400 11,400
- ------------------------------------------------------------------------------
5.875%, 12/15/11 (AMBAC Insured) 2,025 2,069
- ------------------------------------------------------------------------------
Sports Fac.
5.60%, 3/1/14 (AMBAC Insured) 1,000 1,002
- ------------------------------------------------------------------------------
5.75%, 3/1/22 (AMBAC Insured) 6,705 6,557
- ------------------------------------------------------------------------------
<PAGE>
Maryland Transportation Auth.
Zero Coupon, 7/1/07 (FGIC Insured) 8,500 5,753
- ------------------------------------------------------------------------------
Zero Coupon, 7/1/08 (FGIC Insured) 2,000 1,278
- ------------------------------------------------------------------------------
Zero Coupon, 7/1/09 (FGIC Insured) 10,410 6,278
- ------------------------------------------------------------------------------
6.80%, 7/1/16 (Escrowed to Maturity) 13,560 15,058
- ------------------------------------------------------------------------------
Baltimore-Washington Int'l. Airport
6.25%, 7/1/14 (FGIC Insured) * 3,105 3,197
- ------------------------------------------------------------------------------
6.40%, 7/1/19 (FGIC Insured) * 1,305 1,311
- ------------------------------------------------------------------------------
Maryland Water Quality Fin. Admin.
6.70%, 9/1/13 (Prerefunded 9/1/01+) 1,280 1,346
- ------------------------------------------------------------------------------
7.10%, 9/1/13 (Prerefunded 9/1/01+) 985 1,041
- ------------------------------------------------------------------------------
7.25%, 9/1/11 (Prerefunded 9/1/00+) 1,700 1,760
- ------------------------------------------------------------------------------
7.25%, 9/1/12 (Prerefunded 9/1/00+) 2,000 2,071
- ------------------------------------------------------------------------------
Revolving Loan Fund
Zero Coupon, 9/1/02 1,185 1,046
- ------------------------------------------------------------------------------
Zero Coupon, 9/1/07 1,125 750
- ------------------------------------------------------------------------------
6.00%, 9/1/15 1,600 1,622
- ------------------------------------------------------------------------------
Montgomery County
7.10%, 10/1/10 (Prerefunded 10/1/00+) 1,840 1,908
- ------------------------------------------------------------------------------
Golf Course, 6.125%, 10/1/22 2,260 2,085
- ------------------------------------------------------------------------------
Montgomery County, GO
Consolidated Public Improvement
Zero Coupon, 7/1/09 $ 1,500 $ 908
- ------------------------------------------------------------------------------
5.375%, 5/1/09 2,850 2,892
- ------------------------------------------------------------------------------
5.375%, 5/1/10 5,700 5,764
- ------------------------------------------------------------------------------
5.375%, 5/1/16 5,750 5,595
- ------------------------------------------------------------------------------
6.00%, 1/1/20 6,500 6,649
- ------------------------------------------------------------------------------
6.125%, 10/1/13 (Prerefunded 10/1/04+) 2,500 2,662
- ------------------------------------------------------------------------------
6.125%, 10/1/14 (Prerefunded 10/1/04+) 3,150 3,355
- ------------------------------------------------------------------------------
7.10%, 10/1/09 (Prerefunded 10/1/00+) 1,000 1,037
- ------------------------------------------------------------------------------
<PAGE>
Montgomery County Housing Opportunities Commission
Multi-Family
6.25%, 7/1/25 5,500 5,528
- ------------------------------------------------------------------------------
7.50%, 7/1/24 3,000 3,077
- ------------------------------------------------------------------------------
Single Family
Zero Coupon, 7/1/27 5,285 964
- ------------------------------------------------------------------------------
Zero Coupon, 7/1/28 12,985 2,264
- ------------------------------------------------------------------------------
5.75%, 7/1/13 1,750 1,735
- ------------------------------------------------------------------------------
5.80%, 7/1/17 880 853
- ------------------------------------------------------------------------------
5.90%, 7/1/17 1,835 1,811
- ------------------------------------------------------------------------------
6.00%, 7/1/17 4,110 4,079
- ------------------------------------------------------------------------------
6.50%, 7/1/11 2,550 2,587
- ------------------------------------------------------------------------------
6.65%, 7/1/16 2,185 2,228
- ------------------------------------------------------------------------------
6.80%, 7/1/17 2,445 2,483
- ------------------------------------------------------------------------------
7.50%, 7/1/17 280 286
- ------------------------------------------------------------------------------
Montomery County Housing Opportunities Commission,
6.90%, 7/1/19 2,000 2,033
- ------------------------------------------------------------------------------
Montgomery County, PCR, Potomac Electric
5.375%, 2/15/24 4,110 3,704
- ------------------------------------------------------------------------------
Morgan State Univ., Academic Fees and Auxiliary Fac
6.05%, 7/1/15 (MBIA Insured) 1,090 1,142
- ------------------------------------------------------------------------------
Northeast Maryland Waste Disposal Auth.
Baltimore Resco Retrofit, 5.00%, 1/1/12 * 5,750 4,681
- ------------------------------------------------------------------------------
Montgomery County Resources
6.00%, 7/1/08 * 10,000 10,209
- ------------------------------------------------------------------------------
6.20%, 7/1/10 * 7,750 7,933
- ------------------------------------------------------------------------------
6.30%, 7/1/16 (MBIA Insured) * 13,985 14,290
- ------------------------------------------------------------------------------
Southwest Resource Recovery Fac.
6.30%, 7/1/16 * 5,000 5,075
- ------------------------------------------------------------------------------
<PAGE>
Prince George's County
Dimensions Health
5.375%, 7/1/14 $ 2,685 $ 2,132
- ------------------------------------------------------------------------------
7.00%, 7/1/01 1,305 1,324
- ------------------------------------------------------------------------------
7.00%, 7/1/22 (Prerefunded 7/1/02+) 2,660 2,843
- ------------------------------------------------------------------------------
7.20%, 7/1/06 420 430
- ------------------------------------------------------------------------------
7.20%, 7/1/06 (Prerefunded 7/1/02+) 1,985 2,129
- ------------------------------------------------------------------------------
Solid Waste Management
6.90%, 6/30/05 (Prerefunded 6/30/00+) 1,500 1,544
- ------------------------------------------------------------------------------
6.90%, 6/30/06 (Prerefunded 6/30/00+) 1,000 1,029
- ------------------------------------------------------------------------------
7.00%, 6/30/07 (Prerefunded 6/30/00+) 1,120 1,153
- ------------------------------------------------------------------------------
7.00%, 6/30/09 (Prerefunded 6/30/00+) 1,255 1,292
- ------------------------------------------------------------------------------
Prince George's County Housing Auth.
New Keystone, 6.80%, 7/1/25 (MBIA Insured) 2,600 2,671
- ------------------------------------------------------------------------------
Riverview Terrace Apartments
6.70%, 6/20/20 (GNMA Guaranteed) 1,500 1,556
- ------------------------------------------------------------------------------
Single Family, 5.75%, 8/1/30 (GNMA Guaranteed) 1,920 1,761
- ------------------------------------------------------------------------------
Stevenson Apartments
6.35%, 7/20/20 (GNMA Guaranteed) 2,200 2,231
- ------------------------------------------------------------------------------
Prince George's County IDA, Upper Marlboro Justice
5.25%, 6/30/19 (MBIA Insured) 1,500 1,375
- ------------------------------------------------------------------------------
Prince George's County, PCR
Potomac Electric
5.75%, 3/15/10 6,750 6,937
- ------------------------------------------------------------------------------
6.375%, 1/15/23 7,175 7,285
- ------------------------------------------------------------------------------
Saint Mary's County, GO
Consolidated Public Improvement
5.25%, 10/1/12 1,490 1,475
- ------------------------------------------------------------------------------
5.50%, 10/1/13 1,680 1,688
- ------------------------------------------------------------------------------
6.00%, 10/1/15 1,875 1,945
- ------------------------------------------------------------------------------
6.00%, 10/1/16 1,980 2,045
- ------------------------------------------------------------------------------
6.00%, 10/1/17 1,095 1,125
- ------------------------------------------------------------------------------
6.00%, 10/1/18 2,215 2,267
- ------------------------------------------------------------------------------
6.00%, 10/1/19 2,345 2,394
- ------------------------------------------------------------------------------
<PAGE>
Univ. of Maryland
6.50%, 4/1/12 (Prerefunded 10/1/02+) 440 467
- ------------------------------------------------------------------------------
6.375%, 4/1/09 (Prerefunded 10/1/02+) 2,100 2,221
- ------------------------------------------------------------------------------
Univ. of Maryland
Auxiliary Fac. and Tuition
5.60%, 4/1/11 $ 3,155 $ 3,206
- ------------------------------------------------------------------------------
5.75%, 4/1/17 4,500 4,500
- ------------------------------------------------------------------------------
Washington Suburban Sanitary Dist.
6.625%, 6/1/18 (Prerefunded 6/1/04+) 3,665 3,903
- ------------------------------------------------------------------------------
6.90%, 6/1/08 (Prerefunded 6/1/00+) 1,500 1,541
- ------------------------------------------------------------------------------
6.90%, 6/1/09 (Prerefunded 6/1/00+) 2,300 2,362
- ------------------------------------------------------------------------------
Washington Suburban Sanitary Dist., GO
6.20%, 6/1/11 2,400 2,509
- ------------------------------------------------------------------------------
6.20%, 6/1/12 1,500 1,554
- ------------------------------------------------------------------------------
6.40%, 1/1/15 2,270 2,368
- ------------------------------------------------------------------------------
Worcester County Sanitary Dist.
6.50%, 8/15/12 (Prerefunded 8/15/02+) 1,265 1,340
- ------------------------------------------------------------------------------
Worcester County Sanitary Dist., GO
6.50%, 8/15/12 735 774
- ------------------------------------------------------------------------------
Total Maryland (Cost $939,783) 935,637
- ------------------------------------------------------------------------------
PUERTO=RICO==3.0%=============================================================
Puerto Rico Commonwealth, GO
6.25%, 7/1/11 (MBIA Insured) 2,000 2,172
- ------------------------------------------------------------------------------
6.25%, 7/1/12 (MBIA Insured) 1,750 1,899
- ------------------------------------------------------------------------------
Puerto Rico Electric Power Auth.
7.00%, 7/1/11 (Prerefunded 7/1/01+) 1,200 1,265
- ------------------------------------------------------------------------------
Puerto Rico Highway and Transportation Auth.
4.75%, 7/1/38 10,000 7,814
- ------------------------------------------------------------------------------
5.50%, 7/1/15 (FSA Insured) 5,000 5,000
- ------------------------------------------------------------------------------
<PAGE>
Puerto Rico Municipal Fin. Agency
6.00%, 7/1/14 (Prerefunded 7/1/04+)
(FSA Insured) 3,060 3,254
- ------------------------------------------------------------------------------
Puerto Rico Municipal Fin. Agency, GO
5.50%, 7/1/21 (FSA Insured) 2,375 2,269
- ------------------------------------------------------------------------------
6.00%, 7/1/12 (FSA Insured) 5,000 5,309
- ------------------------------------------------------------------------------
Total Puerto Rico (Cost $28,937) 28,982
- ------------------------------------------------------------------------------
U.S.=VIRGIN=ISLANDS==0.4%=====================================================
Virgin Islands PFA, GO, Gross Receipts Taxes,
6.50%, 10/1/24 4,250 4,204
- ------------------------------------------------------------------------------
Total U. S. Virgin Islands (Cost $4,250) 4,204
98.9% of Net Assets (Cost $972,970) $ 968,823
Other Assets Less Liabilities 10,548
NET ASSETS $ 979,371
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 18
Accumulated net realized gain/loss - net of distributions (7,740)
Net unrealized gain (loss) (4,147)
Paid-in-capital applicable to 99,208,396 no par value
shares of beneficial interest outstanding;
unlimited number of shares authorized 991,240
NET ASSETS $ 979,371
NET ASSET VALUE PER SHARE $ 9.87
* Interest subject to alternative minimum tax
+ Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
CDA Community Development Administration
COP Certificates of Participation
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
PFA Public Facility Authority
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 Year
Ended Ended
2/29/00 2/29/00
Investment Income (Loss)
Interest income $ 5,452 $ 59,476
- ---------------------------------------------------------------------------
Expenses
Investment management 532 4,357
Custody and accounting 101 172
Shareholder servicing 94 606
Legal and audit 13 14
Prospectus and shareholder reports 8 60
Trustees 6 9
Registration 3 38
Miscellaneous 4 6
- ---------------------------------------------------------------------------
Total expenses 761 5,262
Expenses paid indirectly (1) (11)
- ---------------------------------------------------------------------------
Net expenses 760 5,251
- ---------------------------------------------------------------------------
Net investment income (loss) 4,692 54,225
- ---------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (37) (7,632)
Futures - 449
- ---------------------------------------------------------------------------
Net realized gain (loss) (37) (7,183)
Change in net unrealized gain
or loss on securities (3,124) (79,301)
- ---------------------------------------------------------------------------
Net realized and unrealized gain (loss) (3,161) (86,484)
- ---------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 1,531 $ (32,259)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
- -------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
In thousands
Short-Term
Bond Fund Bond Fund
Year Year
Ended Ended
2/29/00 2/28/99 2/29/00 2/28/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 4,692 $ 4,277 $ 54,225 $ 50,299
Net realized gain (loss) (37) 435 (7,183) 489
Change in net unrealized
gain or loss (3,124) 271 (79,301) 4,337
- --------------------------------------------------------------------------------
Increase (decrease) in
net assets from operations 1,531 4,983 (32,259) 55,125
- --------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (4,692) (4,277) (54,225) (50,299)
Net realized gain - - (1,002) -
- --------------------------------------------------------------------------------
Decrease in net assets
from distributions (4,692) (4,277) (55,227) (50,299)
- --------------------------------------------------------------------------------
Capital share transactions *
Shares sold 60,256 50,730 204,647 225,022
Distributions reinvested 3,989 3,552 40,122 36,608
Shares redeemed (59,501) (41,860) (241,073) (129,711)
- --------------------------------------------------------------------------------
Increase (decrease) in
net assets from capital
share transactions 4,744 12,422 3,696 131,919
- --------------------------------------------------------------------------------
Net Assets
Increase (decrease)
during period 1,583 13,128 (83,790) 136,745
Beginning of period 122,552 109,424 1,063,161 926,416
- --------------------------------------------------------------------------------
End of period $ 124,135 $ 122,552 $ 979,371 $1,063,161
*Share information
Shares sold 11,825 9,854 19,871 21,026
Distributions reinvested 784 690 3,939 3,419
Shares redeemed (11,694) (8,141) (23,722) (12,133)
Increase (decrease)
in shares outstanding 915 2,403 88 12,312
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
- ------------------------------------- February 29, 2000
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-end management investment companies, are two of the
portfolios established by the trust and commenced operations on January 29,
1993, and March 31, 1987, respectively.
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 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. Expenses paid indirectly reflect credits earned on daily
uninvested cash balances at the custodian and are used to reduce each fund's
custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
- --------------------------------
Short-Term
Bond Fund Bond Fund
--------- ---------
Purchases $ 56,177,000 $ 297,767,000
Sales 50,574,000 293,654,000
******************************************************************
Purchases and sales of portfolio securities, other than short-term
securities, for the year ended February 29, 2000, were as follows:
<PAGE>
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. As of February 29, 2000, the Short-Term Bond had capital loss
carryforwards for federal income tax purposes of $130,000, of which $121,000,
expires in 2004 and $9,000 expires in 2008. As of February 29, 2000, the Bond
Fund had capital loss carryforwards of $5,728,000, all of which expires in 2008.
Each fund intends to retain gains realized in future periods that may be offset
by available capital loss carryforwards.
In order for the Bond Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, the following
reclassifications were made during the year ended February 29, 2000. The results
of operations and net assets were not affected by the increases/(decreases) to
these accounts.
******************************************************************
Undistributed net realized gain $ 626,000
Paid-in-capital (626,000)
******************************************************************
At February 29, 2000, the costs of investments for the Short-Term Bond and
Bond Funds were substantially the same for federal income tax purposes as for
financial reporting and totaled $123,979,000 and $972,970,000, respectively. Net
unrealized gain (loss) on investments was as follows:
******************************************************************
Short-Term
Bond Fund Bond Fund
--------- ---------
Appreciated investments $ 23,000 $ 20,620,000
Depreciated investments (1,328,000) (24,767,000)
Net unrealized gain (loss) $(1,305,000) $ (4,147,000)
******************************************************************
<PAGE>
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 $39,000 and $321,000 were payable at February 29, 2000 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
fir st $1 billion of assets to 0.295% for assets in excess of $120 billion. At
Feb ruary 29, 2000, and for the year then ended, the effective annual group fee
rate was 0.32%. 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, 2001, which would cause the
Short-Term Bond Fund's ratio of total expenses to average net assets to exceed
0.60%. 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
Short-Term Bond Fund's ratio of total expenses to average net assets to exceed
0.60%. Pursuant to this agreement, $2,000 of management fees were not accrued by
the Short-Term Bond Fund for the year ended February 29, 2000. Additionally,
$7,000 of unaccrued management fees related to a previous expense limitations
are subject to reimbursement through February 28, 2001.
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 approximat
ely $144,000 and $564,000, respectively, for year ended February 29, 2000, of
which $14,000 and $59,000, respectively, were payable at period-end.
================================================================================
<PAGE>
T. Rowe Price Maryland Tax-Free Funds
- -------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of T. Rowe Price State Tax-Free Income Trust and
Shareholders of Maryland Short-Term Tax-Free Bond Fund
and Maryland Tax-Free Bond Fund
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Maryland Short-Term Tax-Free Bond Fund and Maryland Tax-Free Bond Fund (two of
the portfolios comprising T. Rowe Price State Tax-Free Income Trust, hereafter
referred to as "the Funds") at February 29, 2000 and the results of each of
their operations, the changes in each of their net assets and the financial
highlights for each of the fiscal periods presented, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
February 29, 2000 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
March 17, 2000
================================================================================
T. Rowe Price Maryland Tax-Free Funds
- -------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 2/29/00
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 Short-Term Bond Fund's distributions to shareholders included
$4,667,000 which qualified as exempt-interest dividends. The Bond Fund's
distributions to shareholders included: * $33,000 from short-term capital gains.
* $969,000 from long-term capital gains, subject to the 20% rate gains category,
* $54,187,000 which qualified as exempt-interest dividends.
================================================================================
<PAGE>
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
<PAGE>
BROKERAGE SERVICES*
-------------------
Individual Investments Stocks, bonds,
options, precious metals, and other
securities at a savings over full-service
commission rates. **
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 September 1999
survey for
representative-assisted stock
trades. Services vary by firm,
and commissions may vary
depending on size of order.
================================================================================
T. Rowe Price Mutual Funds
- --------------------------
STOCK FUNDS
- -----------
DOMESTIC
- --------
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
<PAGE>
STOCK FUNDS
- -----------
DOMESTIC
- --------
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
INTERNATIONAL/GLOBAL
- --------------------
Emerging Markets Stock
European Stock
Global Stock
International Discovery*
International Growth & Income
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 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 Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
- --------------------
Emerging Markets Bond
Global 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
- ---------------------
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
<PAGE>
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.
# Investments in the funds are not insured or guaranteed by the FDIC or
any other government agency. Although the funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the funds.
Please call for a prospectus. Read it carefully before investing.
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.
================================================================================
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
obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
<PAGE>
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. C12-050 2/29/00
