For yield, price, last transaction, and current balance, 24 hours,
7 days a week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
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T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price California
Tax-Free Funds.
Invest With Confidence (registered trademark)
T. Rowe Price
CAC
REPTCAC 2/29/96
Annual Report
T. Rowe Price
California Tax-Free Funds
February 29, 1996
Fellow Shareholders
The fiscal year ended February 29, 1996, was a banner year for bonds and the
funds that invest in them. Prices rose as yields fell through much of the
year, generating good returns for investors in fixed income securities.
Market Environment
The economy slowed in 1995, and inflation remained moderate. After tightening
monetary policy in 1994 and early 1995, the Federal Reserve reversed course
when it became clear that the economy was running out of steam. The Fed
lowered the key federal funds rate three times in the last 12 months, from 6%
at the beginning of July to 5.25% at the end of the fiscal year.
Against a background of slower growth, moderate inflation, and apparent
progress on reducing the federal budget deficit, bond yields tumbled. The
30-year Treasury yield, nearly 7.5% a year ago, fell briefly below 6% in late
December. At fiscal year-end, the long bond yield had edged back up to 6.5%,
as efforts to come up with deficit reduction legislation flagged in early
1996. Signs that stronger economic growth might resume in 1996 also
contributed to recent uneasiness in the bond market.
After moving only slightly lower during the first half of the fiscal
year, long-term municipal yields fell further in the second half. Thirty-year
prime general obligation (GO) bonds yielded 5.95% on February 28, 1995, and
were only 10 basis points lower six months later (100 basis points equal one
percent). During the most recent six months, prices rose further and yields
dropped an additional 45 basis points, to 5.4%.
Municipals with short maturities followed a different pattern, as their
yields fell more in the first half of the year than in the second. After
falling 70 basis points to 4.3% on August 31, the yield of five-year prime GO
bonds fell only 10 basis points more by February 29, 1996. The net result was
a lower and steeper municipal yield curve that led to significant price
appreciation from 1994's lows.
Table 1 California Yield Indexes
Source: T. Rowe Price Associates
California bonds provided strong returns over the past year, rebounding
from the lows of the Orange County debacle in late 1994. Overall, the
California economy gained strength, as evidenced by 1995 job growth of 2.3% --
slightly above the national rate of 2.2%. In recognition of the state's
progress, the Fitch Rating Service upgraded the state's general obligation
debt from A to A+ in February.
While Orange County's debt problems moved off the front pages,
repercussions remained. One was a drop in California issuance in 1995, down
21% versus a 3% drop nationally. Another was an increase in the use of
insurance, with 52% of new California bonds coming to market insured versus
43% nationally. Other than sizable borrowing for new toll roads in southern
California, potential issuers appear to be following more conservative
financing practices.
California Tax-Free Money Fund
The drop in short-term yields during 1995 was greater in the six-month and
one-year maturity areas than among the shortest maturities. One- and seven-day
rates fell 50 to 75 basis points over the year, while 6- and 12-month notes
fell 100 to 130 basis points, respectively. As a result, the yield curve in
the money market area was flat or sometimes saucer-shaped, so that it was
seldom possible to pick up extra yield by extending maturities.
In light of this yield curve, we adopted a "barbell" strategy for much
of the past six months, meaning that we attempted to balance investments
between the short and long ends of the money market range. Securities in the
one-year range allowed us to lock in attractive yields, thus helping to
cushion the fund's income stream from the rate declines that accompanied the
Fed's easier monetary policy. The concentration at the very shortest end of
the curve allowed us to earn a higher level of income than is usually possible
with such a low level of risk.
During the last six months, we extended the fund's maturity very
slightly to a weighted average of 48 days, compared with our peer group's
42-day average. Returns were generally in line with our peer group average for
both the 6- and 12-month periods, as shown below.
Performance Comparison
Periods Ended 2/29/96
6 Months 12 Months
_________ _________
California Tax-Free
Money Fund 1.54% 3.24%
Donoghue's California
Tax-Free Money Fund
Average 1.56 3.25
In the money market sector, the relatively narrow after-tax difference
between yields on tax-exempt securities and comparable taxable securities
means that the former are beneficial only to investors in the highest tax
brackets-a trend that has persisted for several years. Despite this, and
attesting to a growing interest in tax-free income, assets in all tax-free
money funds grew a robust 15.5% to $134 billion in 1995, and California funds'
assets expanded at a more rapid pace of 22.6%.
California Tax-Free Bond Fund
For most of the past 12 months, we concentrated on maintaining a duration
above 7.5 years to benefit from the falling rate environment. (Duration
measures the price sensitivity of a bond or bond fund to interest rate
changes. A duration of 7.5 years means a fund's share price would rise about
7.5% for each one percentage point drop in interest rates, and vice versa.) We
took advantage of a few opportunities along the way to extend duration and
capture higher yields, particularly in June, when a confluence of events-
heavy supply, worries about Orange County's maturing short-term debt, and tax
reform discussions- put pressure on the California market.
Over the past six months, we gradually moved to a more cautious
posture. Specifically, we shortened the fund's duration by about a quarter of
a year in the first two months of 1996 as municipals moved to relatively high
valuations versus taxable alternatives and the supply calendar began to build.
Reflecting generally favorable markets and our strategy, your fund
provided strong returns that were in line with its peer group average for the
6- and 12-month periods.
Performance Comparison
Periods Ended 2/29/96
6 Months 12 Months
_________ _________
California Tax-Free
Bond Fund 5.60% 10.28%
Lipper Average of California
Municipal Debt Funds 5.59 10.35
As California's recovery took hold, we looked for improving credits in
areas of the state with the strongest growth. We also increased our exposure
to general obligations from 0% to 3% as we became more confident that the
state's financial condition had stabilized after a series of credit downgrades
beginning in 1991. The fund's overall average credit quality remained
unchanged at the AA level.
On the whole, investors shifted their focus in 1995 away from the
state's recent problems to the strength and durability of the economic
recovery. Improving credits and a more positive perception of the California
market are longer-term trends that should benefit the portfolio over time.
Outlook
The municipal market paid substantial attention to the topic of tax reform
last year. Concerns that proposed revisions to the tax code would be
detrimental to municipal bonds kept municipal securities from performing quite
as well as taxable alternatives. As we anticipated, these fears have lessened
somewhat as tax reform discussions have been put on hold, at least for the
moment. Municipals have already recaptured some of the ground lost to taxable
bonds, which we attribute to reduced worries about the impact of tax reform.
Unusually fierce weather this winter tended to distort many recent
economic statistics, but it looks as though the economy is on track for a year
of moderate growth. This should be enough to keep the unemployment rate in its
current zone without significantly exacerbating inflationary pressures. This
March the economic upturn completed its fifth year, making it one of the
longest peacetime expansions on record, but still without signs of an
impending recession.
Further easing by the Federal Reserve may be slow in coming, since the
Fed is concerned about the risk of fueling inflationary pressures when the
economy has only limited margins of excess capacity. The prospects for sharp
deficit reduction and the moderate inflation outlook that instilled the bond
market with confidence last year are not as compelling so far in 1996.
Consequently, we expect the bulk of returns this year to come from coupon
income rather than capital appreciation.
Respectfully submitted,
Mary J. Miller
President and Chairman of the
Investment Advisory Committee
March 20, 1996
Portfolio Highlights
California Tax-Free Money Fund
Key Statistics
Dividend Yield Periods Ended
(7-Day Compound)* 2/29/96
___________________________ _______________
On 2/28/95 3.41%
On 8/31/95 3.10
On 2/29/96 2.70
Dividend Per Share
___________________________
6 Months $0.015
12 Months** 0.032
Weighted Average Quality*** 2.0
Weighted Average Maturity 48 days
*Dividends earned and reinvested for the periods indicated are annualized
and divided by the average daily net asset values per share for the same
period.
**Taxability of dividends: 100% and 96.4% of dividends were exempt from
federal and California state income taxes, respectively.
***On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
California Tax-Free Bond Fund
Key Statistics
Periods Ended
Dividend Yield* 2/29/96
___________________________ _______________
6 Months 5.37%
12 Months 5.52
Dividend Per Share
___________________________
6 Months $0.28
12 Months** 0.55
Change in Price Per Share
___________________________
6 Months (From $10.16 to $10.45) $0.29
12 Months (From $10.00 to $10.45) 0.45
Weighted Average Quality*** 2.4
Weighted Average Maturity 18.0 years
Weighted Average
Effective Duration 7.5 years
*Dividends earned and reinvested for the periods indicated are annualized
and divided by the average daily net asset values per share for the same
period.
**Taxability of dividends: 100% of dividends were exempt from federal and
California state income taxes.
***On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
California Tax-Free Money Fund
Sector Diversification
Percent of Net Assets
2/29/96
_________________
Hospital Revenue 21%
Prerefunded Bonds 13
Water and Sewer Revenue 13
Lease Revenue 9
Dedicated Tax Revenue 8
Nuclear Revenue 7
General Obligation -- Local 7
Educational Revenue 6
Air and Sea Transportation Revenue 5
General Obligation -- State 4
Pooled Loan Revenue 4
Electric Revenue 1
Other Assets Less Liabilities 2
Sector Diversification
California Tax-Free Bond Fund
Percent of Net Assets
2/29/96
_________________
Lease Revenue 14%
Dedicated Tax Revenue 13
Water and Sewer Revenue 11
Air and Sea Transportation Revenue 10
Housing Finance Revenue 10
Nuclear Revenue 8
Prerefunded Bonds 7
General Obligation -- Local 7
Hospital Revenue 6
General Obligation -- State 3
Educational Revenue 3
Escrowed to Maturity 2
Ground Transportation Revenue 2
Electric Revenue 1
Miscellaneous Revenue 1
Pooled Loan Revenue 1
Other Assets Less Liabilities 1
Table 2 -- Performance Comparison -- California Tax-Free Money Fund
Average Annual Compound Total Return
California Tax-Free Money Fund
Periods ended February 29, 1996
Since Inception
1 Year 5 Years (9/15/86)
_______ _______ _____________
3.24% 2.71% 3.61%
Investment return represents past performance and will vary. There is no
assurance the fund will be able to maintain a stable $1.00 net asset value.
Average Annual Compound Total Return
California Tax-Free Bond Fund
Periods ended February 29, 1996
Since Inception
1 Year 5 Years (9/15/86)
_______ _______ _____________
10.28% 8.25% 6.82%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
Table 3 -- Performance Comparison -- California Tax-Free Bond Fund
Statement of Net Assets
T. Rowe Price California Tax-Free Money Fund / February 29, 1996
(amounts in thousands)
Amount Value
______ ______
CALIFORNIA - 97.7%
California, GO, RAN, (FGIC Insured),
5.75%, 4/25/96 . . . . . . . . . . . . . . . . . . $ 290 $ 291
GO, RAW, 5.75%, 4/25/96. . . . . . . . . . . . . 2,715 2,724
California Dept. of Water Resources,
4.00%, 12/1/96 . . . . . . . . . . . . . . . . . . 100 100
TECP, 3.05%, 3/29/96 . . . . . . . . . . . . . . 1,000 1,000
California EFA, California Institute Of
Technology, VRDN (Currently 3.00%) . . . . . . . . 1,100 1,100
Stanford University,
VRDN (Currently 2.75%) . . . . . . . . . . . . . 3,000 3,000
California HFFA, Catholic Healthcare West,
(MBIA Insured), VRDN (Currently 3.00%) . . . . . . 2,200 2,200
Kaiser Permanente,
VRDN (Currently 2.90%) . . . . . . . . . . . . . 2,400 2,400
Pooled Loan Program, (FGIC Insured),
VRDN (Currently 3.00%) . . . . . . . . . . . . . 3,000 3,000
Santa Barbara Cottage Hosp.,
VRDN (Currently 2.75%) . . . . . . . . . . . . . 3,400 3,400
California Pollution Control Fin. Auth.,
Pacific Gas and Electric, TECP,
3.10 - 3.40%, 4/3 - 5/14/96 *. . . . . . . . . . . 3,500 3,500
California Statewide Community Dev. Auth.,
Kaiser Permanente, VRDN (Currently 2.90%). . . . . 1,100 1,100
St. Joseph Health Systems,
VRDN (Currently 2.90%) . . . . . . . . . . . . . 3,400 3,400
Concord Redev. Agency, (AMBAC Insured),
9.00%, 7/1/13 (Prerefunded 7/1/96!). . . . . . . . 50 52
Contra Costa Trans. Auth., Sales Tax,
(FGIC Insured), VRDN (Currently 3.10%) . . . . . . 500 500
East Bay Municipal Utility Dist.,
Waste Water Systems,
TECP, 2.90 - 3.20%, 3/15 - 5/9/96. . . . . . . . . 1,700 1,700
Elk Grove Unified School Dist., GO, TRAN,
4.50%, 7/31/96 . . . . . . . . . . . . . . . . . . 1,000 1,002
Huntington Park Redev. Agency, Huntington Park,
8.25%, 4/1/12 (Prerefunded 4/1/96!). . . . . . . . 1,880 1,925
Irvine Public Fac. and Infrastructure Auth.,
VRDN (Currently 3.25%) . . . . . . . . . . . . . . 2,400 2,400
Irvine Ranch Water Dist., Capital Improvement,
VRDN (Currently 3.30%) . . . . . . . . . . . . . . 600 600
Kern County Union High School Dist.,
Golden Empire Schools,
VRDN (Currently 3.05%) . . . . . . . . . . . . . . 1,100 1,100
Long Beach, GO, TRAN, 4.50%, 9/19/96 . . . . . . . 1,000 1,003
Harbor Dept., TECP, 3.20 - 3.30%,
4/10 - 5/14/96 * . . . . . . . . . . . . . . . . 2,500 2,500
Los Angeles County Metropolitan Trans. Auth.,
Union Station Gateway, (FSA Insured),
VRDN (Currently 2.95%) . . . . . . . . . . . . . . 3,400 3,400
Los Angeles Dept. Water and Power,
TECP, 3.10%, 3/18 - 5/17/96. . . . . . . . . . . . 1,700 1,700
Los Angeles Harbor Dept., TECP,
3.40%, 5/15/96 . . . . . . . . . . . . . . . . . . 1,500 1,500
Los Angeles Waste Water Systems, TECP,
3.10 - 3.15%, 3/20 - 5/17/96 . . . . . . . . . . . 2,000 2,000
Metropolitan Water Dist. of Southern California,
TECP, 3.20%, 5/13/96 . . . . . . . . . . . . . . . 400 400
MSR Public Power Agency, San Juan,
(AMBAC Insured), VRDN (Currently 3.05%). . . . . . 1,000 1,000
Newport Beach, Hoag Memorial Hosp. Presbyterian,
VRDN (Currently 3.35%) . . . . . . . . . . . . . . 2,850 2,850
Oakland, COP, VRDN (Currently 3.40%) . . . . . . . 2,100 2,100
GO, (FGIC Insured), 6.80%, 8/1/96. . . . . . . . 350 354
GO, TRAN, 4.50%, 7/31/96 . . . . . . . . . . . . 1,000 1,002
Pittsburg Redev. Agency,
Los Medanos Community Dev.,
7.75%, 8/1/08 (Prerefunded 8/1/96!). . . . . . . . $ 2,500 $ 2,588
Sacramento Municipal Utility Dist., Electric,
7.50%, 5/1/16 (Prerefunded 5/1/96!). . . . . . . . 30 30
6.625%, 2/1/17 (Prerefunded 2/1/97!) . . . . . . 1,575 1,654
San Bernardino County Transportation Auth.,
VRDN (Currently 2.80%) . . . . . . . . . . . . . . 1,700 1,700
San Diego County Water Auth.,
COP, 4.40%, 5/1/96 . . . . . . . . . . . . . . . . 1,750 1,752
San Francisco City and County,
GO, TRAN, 4.75%, 9/19/96 . . . . . . . . . . . . . 500 504
San Jose/Santa Carla Water Fin. Auth.,
VRDN (Currently 2.75%) . . . . . . . . . . . . . . 1,000 1,000
San Mateo County, COP, VRDN (Currently 2.90%). . . 785 785
Santa Clara/El Camino Hosp. Dist.,
Valley Medical Center,
VRDN (Currently 2.90%) . . . . . . . . . . . . . . 500 500
Santa Clara, Electric, (MBIA Insured),
4.85%, 7/1/96. . . . . . . . . . . . . . . . . . . 50 50
Sonoma County, GO, TRAN, 4.25%, 11/1/96. . . . . . 1,000 1,003
South Poway Community Fac.,
9.75%, 3/2/11 (Prerefunded 3/2/96!). . . . . . . . 1,600 1,648
Southern California Met. Water,
TECP, 3.20%, 4/12/96 . . . . . . . . . . . . . . . 600 600
Southern California Public Power Auth.,
7.875%, 7/1/18 (Prerefunded 7/1/96!) . . . . . . 775 809
7.00%, 7/1/22 (Prerefunded 7/1/96!). . . . . . . 140 145
PUERTO RICO - 0.7%
Puerto Rico Commonwealth, (MBIA Insured),
7.70%, 7/1/99 (Prerefunded 7/1/96!). . . . . . . . 495 517
Total Investments in Securities -
98.4% of Net Assets (Cost $71,588) . . . . . . . . 71,588
Other Assets Less Liabilities . . . . . . . . . . 1,151
__________
Net Assets Consist of: Value
_______
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . . . $ 4
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . . . . . (118)
Paid-in-capital applicable to 72,857,065
shares of no par value shares of beneficial
interest outstanding;
unlimited numbers of shares authorized . . . . . . 72,853
__________
NET ASSETS . . . . . . . . . . . . . . . . . . . . $ 72,739
__________
. __________
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . $1.00
_____
_____
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
HFFAHealth Facility Financing Authority
MBIA Municipal Bond Investors Assurance Corp.
AMBAC AMBAC Indemnity Corp
RAN Revenue Anticipation Note
COP Certificates of Participation
RAW Revenue Anticipation Warrant
EFA Educational Facility Authority
TECP Tax-Exempt Commercial Paper
FGIC Financial Guaranty Insurance CompanyTRANTax Revenue Anticipation Note
FSA Financial Security Assurance Corp.
VRDN Variable Rate Demand Note
GO General Obligation
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
T. Rowe Price California Tax-Free Bond Fund / February 29, 1996
(amounts in thousands)
Amount Value
________ ________
CALIFORNIA - 98.6%
Alameda, Santa Rita Jail, COP, (MBIA Insured),
5.00%, 12/1/15 . . . . . . . . . . . . . . . . . . $ 1,000 $ 928
Brea Public Fin. Auth., Tax Allocation Redev.,
(MBIA Insured), 6.75%, 8/1/22. . . . . . . . . . . 1,435 1,594
California, GO, Zero Coupon, 10/1/06 . . . . . . . 2,000 1,163
6.40%, 2/1/20 *. . . . . . . . . . . . . . . . . 2,200 2,242
(MBIA Insured), 5.50%, 4/1/08. . . . . . . . . . 1,595 1,680
California Dept. of Water Resources,
Central Valley, 7.00%, 12/1/11 . . . . . . . . . . 1,730 2,054
7.00%, 12/1/12 . . . . . . . . . . . . . . . . . 1,000 1,185
California EFA, California Institute Of Technology,
VRDN (Currently 3.00%) . . . . . . . . . . . . . . 900 900
Pomona College, 6.00%, 2/15/17 . . . . . . . . . 2,850 2,924
Pooled College and Univ., 5.60%, 12/1/20 . . . . 1,000 951
St. Mary's College of California,
7.50%, 10/1/20 (Prerefunded 10/1/00!). . . . . . 2,000 2,309
California HFA, Catholic Healthcare West,
(AMBAC Insured), 5.75%, 7/1/15 . . . . . . . . . . 1,050 1,061
Memorial Health Services, VRDN
(Currently 2.90%). . . . . . . . . . . . . . . . 600 600
California HFFA, Sutter Health, VRDN
(Currently 3.20%). . . . . . . . . . . . . . . . . 100 100
California Housing Fin. Agency,
8.10%, 8/1/07. . . . . . . . . . . . . . . . . . 300 318
7.20%, 8/1/09. . . . . . . . . . . . . . . . . . 325 342
7.625%, 8/1/09 . . . . . . . . . . . . . . . . . 900 925
7.25%, 8/1/10. . . . . . . . . . . . . . . . . . 230 235
6.70%, 8/1/15. . . . . . . . . . . . . . . . . . 1,100 1,140
6.85%, 8/1/17. . . . . . . . . . . . . . . . . . 3,115 3,259
7.25%, 8/1/17. . . . . . . . . . . . . . . . . . 1,000 1,062
8.20%, 8/1/17. . . . . . . . . . . . . . . . . . 1,425 1,499
7.875%, 8/1/19 . . . . . . . . . . . . . . . . . 465 489
8.00%, 8/1/19. . . . . . . . . . . . . . . . . . 220 234
6.70%, 8/1/25 *. . . . . . . . . . . . . . . . . 985 1,013
(MBIA Insured), 6.05%, 8/1/15 *. . . . . . . . . 1,685 1,688
California Maritime Infrastructure Auth.,
San Diego Unified Port Dist. Airport,
(AMBAC Insured), 5.00%, 11/1/20 *. . . . . . . . . 1,000 914
California Pollution Control Fin. Auth.,
PCR, Pacific Gas and Electric, (MBIA Insured),
5.85%, 12/1/23 * . . . . . . . . . . . . . . . . . 2,000 2,004
Southern California Edison,
VRDN (Currently 3.50%) . . . . . . . . . . . . . 3,100 3,100
(AMBAC Insured), 6.85%, 12/1/08. . . . . . . . 1,000 1,091
California Public Works Board,
(AMBAC Insured), 6.40%, 12/1/16. . . . . . . . . . 1,000 1,079
Dept. of Corrections, 6.875%, 11/1/14. . . . . . 1,000 1,119
Dept. of Justice Building, 5.625%, 5/1/20. . . . 1,000 992
Univ. of California, Berkley Life Sciences,
7.60%, 3/1/09 (Prerefunded 3/1/98!). . . . . . . 1,250 1,367
5.50%, 6/1/14. . . . . . . . . . . . . . . . . 2,000 1,988
California Statewide Communities Dev. Auth.,
Chevron Inc., VRDN (Currently 3.30%) * . . . . . . 100 100
Sutter Health, COP, (MBIA Insured),
5.50%, 8/15/23 . . . . . . . . . . . . . . . . . 2,000 1,947
Castaic Lake Water Agency, Water System Improvement,
COP, (MBIA Insured), 7.00%, 8/1/12 . . . . . . . . 1,000 1,181
7.00%, 8/1/13. . . . . . . . . . . . . . . . . . 1,700 2,009
Castaic Union School Dist., GO,
(FGIC Insured), Zero Coupon, 5/1/18. . . . . . . . 6,675 1,819
Central Coast Water Auth.,
State Water Project Regional Fac.,
(AMBAC Insured), 6.60%, 10/1/22. . . . . . . . . . $ 1,000 $ 1,110
Concord Fin. Auth., Concord Police Fac.,
5.25%, 8/1/19. . . . . . . . . . . . . . . . . . . 2,200 2,022
Contra Costa Water Dist.,
7.625%, 10/1/08 (Prerefunded 10/1/98!) . . . . . . 500 557
Corona Redev. Agency, Tax Allocation,
(FGIC Insured), 6.25%, 9/1/13. . . . . . . . . . . 1,000 1,070
Cupertino, COP, 5.75%, 1/1/16. . . . . . . . . . . 3,700 3,648
East Bay Municipal Utility Dist., Water System,
6.00%, 6/1/12. . . . . . . . . . . . . . . . . . . 2,000 2,060
(FGIC Insured), 5.00%, 6/1/26. . . . . . . . . . 1,500 1,384
Emeryville Public Fin. Auth., Housing Increment
Loan 6.20%, 9/1/25 . . . . . . . . . . . . . . . . 1,000 1,007
Foothill / Eastern Transportation Corridor Agency,
California Toll Road, Zero Coupon, 1/1/17. . . . . 4,000 1,076
6.00%, 1/1/34. . . . . . . . . . . . . . . . . . 800 764
Fresno, Sewer, (MBIA Insured), 5.00%, 9/1/23 . . . 1,000 926
Fresno Joint Powers Fin. Auth, 5.75%, 9/2/98 . . . 700 711
Inglewood Redev. Agency, Century Redev.,
6.125%, 7/1/23 . . . . . . . . . . . . . . . . . . 2,200 2,202
Irvine Public Fac. and Infrastructure Auth.,
VRDN (Currently 3.25%) . . . . . . . . . . . . . . 800 800
Irvine Ranch Water Dist.,
VRDN (Currently 3.20%) . . . . . . . . . . . . . . 200 200
Capital Improvement,
VRDN (Currently 3.30%) . . . . . . . . . . . . . 500 500
Kern County Union High School Dist., GO,
(MBIA Insured), 7.00%, 8/1/10. . . . . . . . . . . 1,000 1,198
Long Beach Harbor, 7.25%, 5/15/19 *. . . . . . . . 2,500 2,678
Los Angeles, Wastewater System,
7.10%, 6/1/18. . . . . . . . . . . . . . . . . . . 1,000 1,095
Los Angeles County, Civic Center Heating and
Refrigerating Plant, COP, 8.00%,
6/1/10 (Prerefunded 6/1/98!) . . . . . . . . . . . 500 554
Marina del Rey, COP, 6.50%, 7/1/08 . . . . . . . 1,000 1,024
Los Angeles County Metropolitan Trans. Auth.,
Sales Tax, 7.40%, 7/1/15 . . . . . . . . . . . . . 515 572
Los Angeles County Sanitation Dist.,
5.00%, 10/1/23 . . . . . . . . . . . . . . . . . . 750 680
Los Angeles Harbor Dept., 6.625%, 8/1/19 * . . . . 2,500 2,677
GO, 7.60%, 10/1/18 (Escrowed to Maturity). . . . 3,000 3,352
Los Angeles Municipal Improvement Corp.,
Central Library, 6.35%, 6/1/20 . . . . . . . . . . 1,500 1,542
Manhattan Beach Unified School Dist.,
GO, (FGIC Insured), Zero Coupon, 9/1/08. . . . . . 1,750 899
Zero Coupon, 9/1/09. . . . . . . . . . . . . . . 1,000 481
Zero Coupon, 9/1/10. . . . . . . . . . . . . . . 675 305
Mt. Diablo Hosp. Dist., (AMBAC Insured),
8.00%, 12/1/11 (Prerefunded 12/1/00!). . . . . . . 1,250 1,479
Newport Beach, Hoag Memorial Hosp. Presbyterian,
VRDN (Currently 3.35%) . . . . . . . . . . . . . . 100 100
Northridge Water Dist.,
(AMBAC Insured), 5.25%, 2/1/18 . . . . . . . . . . 1,000 951
Oakland, COP, VRDN (Currently 3.40%) . . . . . . . 1,115 1,115
GO, (FGIC Insured), 7.60%, 8/1/21. . . . . . . . 3,500 3,823
Orange County, COP,
7.625%, 6/1/19 (Prerefunded 6/1/99!) . . . . . . . 1,750 1,966
Orange County Local Transportation Auth.,
Sales Tax, (AMBAC Insured),
6.00%, 2/15/09 . . . . . . . . . . . . . . . . . 750 807
Orchard School Dist., GO,
(FGIC Insured), 6.50%, 8/1/19. . . . . . . . . . . 1,000 1,099
Pittsburg PFA, Wastewater,
(FGIC Insured), 5.375%, 6/1/22 . . . . . . . . . . 1,000 965
Port of Oakland, (BIGI Insured),
7.25%, 11/1/16 . . . . . . . . . . . . . . . . . . 1,600 1,685
Riverside County, Desert Justice Fac.,
COP, (MBIA Insured), 6.00%, 12/1/12. . . . . . . . 1,000 1,042
Sacramento County, Public Fac., Coroner
Crime Laboratory, COP, (AMBAC Insured),
6.375%, 10/1/14. . . . . . . . . . . . . . . . . . $ 1,000 $ 1,074
Telecommunications Systems,
COP, VRDN (Currently 3.20%). . . . . . . . . . . 200 200
San Bernardino County,
West Valley Detention Center,
7.70%, 11/1/18 (Prerefunded 11/1/98!). . . . . . . 500 559
San Bernardino Joint Powers Fin. Auth.,
DOT, 5.20%, 12/1/06. . . . . . . . . . . . . . . . 1,765 1,764
San Diego, IDR, San Diego Gas and Electric,
(MBIA Insured), 6.40%, 9/1/18. . . . . . . . . . . 1,175 1,258
San Francisco Bay Area Rapid Transit Dist.,
Sales Tax, (FGIC Insured), 5.50%, 7/1/20 . . . . . 1,000 987
San Francisco City and County, Airport,
(AMBAC Insured), 6.50%, 5/1/18 * . . . . . . . . . 4,000 4,336
(FGIC Insured), 6.30%, 5/1/25 *. . . . . . . . 2,000 2,093
Public Utility Commission, 8.00%, 11/1/11. . . . 1,000 1,086
San Joaquin Hills Trans. Corridor Agency,
Toll Road, Zero Coupon, 1/1/00 . . . . . . . . . . 1,500 1,234
Santa Clara County Fin. Auth., VMC Fac.,
(AMBAC Insured), 7.75%, 11/15/11 . . . . . . . . . 1,000 1,266
Santa Clara Redev. Agency, Bayshore North,
(AMBAC Insured), 7.00%, 7/1/10 . . . . . . . . . . 3,000 3,561
Santa Margarita/Dana Point Auth.,
(MBIA Insured), 7.25%, 8/1/10. . . . . . . . . . . 1,000 1,213
South Orange County PFA, (MBIA Insured),
7.00%, 9/1/07. . . . . . . . . . . . . . . . . . . 2,000 2,378
Southern California Public Power Auth.,
6.75%, 7/1/10. . . . . . . . . . . . . . . . . . 2,100 2,394
6.00%, 7/1/12. . . . . . . . . . . . . . . . . . 1,000 1,026
6.75%, 7/1/12. . . . . . . . . . . . . . . . . . 1,700 1,947
Torrance, Little Company of Mary Hosp.,
6.875%, 7/1/15 . . . . . . . . . . . . . . . . . . 1,330 1,426
Tri City Hosp. Dist., Oceanside Hosp.,
(MBIA Insured), 7.50%, 2/1/17. . . . . . . . . . . 2,000 2,297
Turlock Irrigation Dist.,
(MBIA Insured), 6.00%, 1/1/10. . . . . . . . . . . 1,000 1,093
Univ. of California, Parking System.,
7.75%, 11/1/16 (Prerefunded 11/1/96!). . . . . . . 250 262
Upland, San Antonio Community Hosp.,
COP, 5.75%, 1/1/07 . . . . . . . . . . . . . . . . 1,000 1,040
Valley Health Systems, 6.50%, 5/15/25. . . . . . . 750 714
Vista CDA, (MBIA Insured), 5.25%, 9/1/15 . . . . . 1,000 962
5.50%, 9/1/23. . . . . . . . . . . . . . . . . . 1,510 1,481
Walnut Creek, John Muir Medical Center,
COP, (MBIA Insured), 5.00%, 2/15/16. . . . . . . . 2,000 1,857
PUERTO RICO - 0.8%
Puerto Rico Electric Power Auth.,
7.00%, 7/1/21 (Prerefunded 7/1/01!). . . . . . . . 1,000 1,149
Total Investments in Securities -
99.4% of Net Assets
(Cost $136,887). . . . . . . . . . . . . . . . . . $145,388
Futures Contracts
Contract Unrealized
Expiration Value Gain (Loss)
________ ________ __________
Long, 35 U.S. Treasury
thirty-year contracts,
$220,357 of Municipal
Bonds pledged as
initial margin 6/96 $4,001 $ (24)
Net payments (receipts)
of variation margin to date. . . . . . . . . . . . 26
Variation margin receivable (payable) on open
future contracts . . . . . . . . . . . . . . . . . 2
Other Assets Less Liabilities . . . . . . . . . . 804
__________
Net Assets Consist of: Value
_________
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . . . $ 5
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . . . . . (1,200)
Net unrealized gain (loss) . . . . . . . . . . . . 8,477
Paid-in-capital applicable to 13,991,141
shares of no par value shares of beneficial
interest outstanding;
unlimited number of shares authorized. . . . . . . 138,912
_________
NET ASSETS . . . . . . . . . . . . . . . . . . . . $146,194
__________
__________
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . $10.45
______
______
* Interest subject to alternative minimum tax
GO General Obligation
! Used in determining portfolio maturity
HFA Health Facility Authority
AMBAC AMBAC Indemnity Corp.
HFFA Health Facility Financing Authority
BIGI Bond Investors Guaranty Insurance
IDR Industrial Development Revenue
COP Certificates of Participation
MBIA Municipal Bond Investors Assurance Corp.
CDA Community Development Administration
PCR Pollution Control Revenue
DOT Department of Transportation
PFA Public Facility Authority
EFA Educational Facility Authority
VRDN Variable Rate Demand Note
FGIC Financial Guaranty Insurance Company
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price California Tax-Free Income Trust / Year Ended February 29, 1996
(in thousands)
Money Fund Bond Fund
____________ ____________
INVESTMENT INCOME
Interest income. . . . . . . . . . . . . . . $ 2,699 $ 8,373
___________ ___________
Expenses
Investment management. . . . . . . . . . . 175 609
Custodian and accounting . . . . . . . . . 103 119
Shareholder servicing. . . . . . . . . . . 82 111
Legal and audit. . . . . . . . . . . . . . 14 14
Prospectus and shareholder reports . . . . 5 8
Trustees . . . . . . . . . . . . . . . . . 6 7
Registration . . . . . . . . . . . . . . . 6 3
Miscellaneous. . . . . . . . . . . . . . . 5 4
___________ ___________
Total expenses . . . . . . . . . . . . . . 396 875
___________ ___________
Net investment income. . . . . . . . . . . 2,303 7,498
___________ ___________
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities . . . . . . . . . . . . . . . . 25 2,541
Futures. . . . . . . . . . . . . . . . . . - (155)
___________ ___________
Net realized gain (loss) . . . . . . . . . 25 2,386
___________ ___________
Change in net unrealized gain or loss on:
Securities . . . . . . . . . . . . . . . . 25 3,737
Futures. . . . . . . . . . . . . . . . . . - (24)
___________ ___________
Change in net unrealized
gain or loss . . . . . . . . . . . . . . . 25 3,713
___________ ___________
Net realized and unrealized
gain (loss). . . . . . . . . . . . . . . . . 50 6,099
___________ ___________
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS. . . . . . . . . . . . . . . $ 2,353 $ 13,597
___________ ___________
___________ ___________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price California Tax-Free Income Trust
(in thousands)
Money Fund Bond Fund
___________________ ___________________
Year Year Year Year
Ended Feb. Ended Feb. Ended Feb. Ended Feb.
29, 1996 28, 1995 29, 1996 28, 1995
___________ __________ ___________ ___________
INCREASE (DECREASE) IN
NET ASSETS FROM
Operations
Net investment
income. . . . . . . . . $ 2,303 $ 1,966 $ 7,498 $ 7,507
Net realized
gain (loss) . . . . . . 25 (97) 2,386 (3,509)
Change in net unrealized
gain or loss. . . . . . 25 (20) 3,713 (3,009)
. . . . . . . . . . . . _________ _________ _________ _________
Increase (decrease) in
net assets from
operations. . . . . . . 2,353 1,849 13,597 989
_________ _________ _________ _________
Distributions to shareholders
Net investment
income. . . . . . . . . (2,303) (1,966) (7,498) (7,507)
Net realized gain . . . - - - (284)
_________ _________ _________ _________
Decrease in net
assets from
distributions . . . . . (2,303) (1,966) (7,498) (7,791)
_________ _________ _________ _________
Capital share transactions*
Shares sold . . . . . . 58,518 94,040 25,056 25,265
Distributions
reinvested. . . . . . . 2,098 1,810 5,185 5,456
Shares redeemed . . . . (64,216) (93,460) (22,099) (43,902)
_________ _________ _________ _________
Increase (decrease) in
net assets from
capital share
transactions. . . . . . (3,600) 2,390 8,142 (13,181)
_________ _________ _________ _________
Increase (decrease) in
net assets . . . . . . . . (3,550) 2,273 14,241 (19,983)
NET ASSETS
Beginning of period. . . . 76,289 74,016 131,953 151,936
_________ _________ _________ _________
End of period. . . . . . . $ 72,739 $ 76,289 $146,194 $131,953
_________ _________ _________ _________
_________ _________ _________ _________
*Share information
Shares sold . . . . . . 58,518 94,040 2,445 2,578
Distributions
reinvested. . . . . . . 2,098 1,810 506 556
Shares redeemed . . . . (64,216) (93,460) (2,159) (4,498)
_________ _________ _________ _________
Increase (decrease) in
shares outstanding. . . (3,600) 2,390 792 (1,364)
_________ _________ _________ _________
_________ _________ _________ _________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price California Tax-Free Income Trust / February 29, 1996
Note 1 - Significant Accounting Policies
T. Rowe Price California Tax-Free Income Trust (the Trust) is registered under
the Investment Company Act of 1940. The California Tax-Free Money Fund (the
Money Fund) and the California Tax-Free Bond Fund (the Bond Fund),
diversified, open-end management investment companies, are the two portfolios
established by the Trust.
A) Valuation - Debt securities are generally traded in the over-the-counter
market. Except for securities held by the Money Fund, investments in
securities originally issued with maturities of one year or more 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. Securities held by the Bond Fund
with maturities when issued of less than one year are stated at fair value,
which is determined by using a matrix system that establishes a value for each
security based on money market yields. Securities held by the Money Fund are
valued at amortized cost. Financial futures contracts are valued at closing
settlement prices.
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
each fund, as authorized by the Board of Trustees.
B) 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.
C) 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. 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. Payments ("variation margin") made or received by the
Bond Fund to settle the daily fluctuations in the value of futures contracts
are recorded as unrealized gain or loss until the contracts are closed.
Unrealized gains and losses on futures contracts are included in Change in net
unrealized gain or loss in the accompanying financial statements.
Note 2 - Investment Transactions
Consistent with its investment objective, the Bond Fund engages in the
following practices to manage exposure to certain risks or enhance
performance. The investment objective, policies, program, and risk factors of
the fund are described more fully in the fund's prospectus and Statement of
Additional Information.
A) Futures Contracts - At February 29, 1996, the Bond Fund was a party to
futures contracts, which provide for the future sale by one party and purchase
by another of a specified amount of a specific financial instrument at an
agreed upon price, date, time, and place. Risks arise from possible
illiquidity of the futures market and from movements in security values.
B) Other - Purchases and sales of portfolio securities for the Bond Fund,
other than short-term securities, aggregated $87,386,000 and $81,450,000,
respectively, for the year ended February 29, 1996.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since each fund intends to
continue to qualify as a regulated investment company and distribute all of
its income. The Money Fund has unused realized capital loss carryforwards for
federal income tax purposes of $118,000, of which $19,000 expires in 1997,
$26,000 expires in 1998, and $73,000 in 2004. The Bond Fund has unused
realized capital loss carryforwards for federal income tax purposes of
$1,084,000, which expires in 2003. Capital loss carryforwards utilized in
fiscal 1996 amounted to $2,120,000. 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, $1,000 of
undistributed net investment income was reclassified as a decrease to
undistributed net realized gains during the year ended February 29, 1996. The
results of operations and net assets were not affected by the
reclassifications.
At February 29, 1996, the aggregate cost of investments for the Money
and Bond funds for federal income tax and financial reporting purposes was
$71,588,000 and $136,887,000, respectively. For the Money Fund, amortized cost
is equivalent to value; and for the Bond Fund, net unrealized gain aggregated
$8,501,000, of which $8,692,000 related to appreciated investments and
$191,000 to depreciated investments.
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 $14,000 and $51,000 was payable at February 29, 1996 by the
Money Fund and Bond Fund, respectively. The fee is computed daily and paid
monthly, and consists of an Individual Fund Fee equal to 0.10% of average
daily net assets and a Group Fee. The Group Fee is based on the combined
assets of certain mutual funds sponsored by the Manager or Rowe Price-Fleming
International, Inc. (the Group). The Group Fee rate ranges from 0.48% for the
first $1 billion of assets to 0.31% for assets in excess of $34 billion. At
February 29, 1996, and for the year then ended, the effective annual Group Fee
rate was 0.33% and 0.34%, respectively. Each fund pays a pro rata share of the
Group Fee based on the ratio of its net assets to those of the Group.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through February 28, 1997, for the Money and
Bond funds which would cause each fund's ratio of expenses to average net
assets to exceed 0.55% and 0.65%, respectively. Pursuant to this agreement,
$141,000 of management fees were not accrued by the Money Fund for the year
ended February 29, 1996. Pursuant to a prior agreement, $404,000 and $256,000
of management fees remain unaccrued for the Money and Bond funds,
respectively, as a result of each fund's ratio of expenses to average net
assets exceeding 0.55% and 0.60%, respectively, in prior periods. Subject to
shareholder approval, each fund may reimburse the Manager for these expenses,
provided that average net assets have grown or expenses have declined
sufficiently to allow reimbursement without causing each fund's ratio of
expenses to average net assets to exceed 0.55% and 0.65%, respectively, for
the current limitation period and 0.55% and 0.60%, respectively, for the prior
periods.
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 Money and Bond funds incurred
expenses pursuant to these related party agreements totaling approximately
$135,000 and $163,000, respectively, for the year ended February 29, 1996, of
which $12,000 and $16,000, respectively, were payable at period-end.
Financial Highlights
T. Rowe Price California Tax-Free Money Fund
For a share outstanding throughout each period
______________________________________________
Year Ended
______________________________________________
Feb. 29, Feb. 28, Feb. 28, Feb. 28,Feb. 29,
1996 1995 1994 1993 1992
__________________________________________
NET ASSET VALUE, BEGINNING
OF PERIOD. . . . . . . . . $1.000 $1.000 $1.000 $1.000 $1.000
Investment activities
Net investment
income*. . . . . . . . . . 0.032* 0.025* 0.019* 0.023* 0.035*
Distributions
Net investment
income . . . . . . . . . . (0.032) (0.025) (0.019) (0.023) (0.035)
______ ______ ______ ______ ______
NET ASSET VALUE,
END OF PERIOD. . . . . . . . $1.000 $1.000 $1.000 $1.000 $1.000
______ ______ ______ ______ ______
______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total return . . . . . . . . 3.24% 2.55% 1.92% 2.31% 3.55%
Ratio of expenses to
average net assets . . . . . 0.55%* 0.55%* 0.55%* 0.55%* 0.55%*
Ratio of net investment
income to average
net assets . . . . . . . . . 3.20% 2.51% 1.90% 2.29% 3.50%
Net assets, end of period
(in thousands) . . . . . . . $72,739 $76,289 $74,016 $66,617 $70,302
* Excludes expenses in excess of a 0.55% voluntary expense limitation in
effect November 7, 1990 through February 28, 1997.
Financial Highlights
T. Rowe Price California Tax-Free Bond Fund
For a share outstanding throughout each period
______________________________________________
Year Ended
______________________________________________
Feb. 29, Feb. 28, Feb. 28, Feb. 28,Feb. 29,
1996 1995 1994 1993 1992
__________________________________________
NET ASSET VALUE, BEGINNING
OF PERIOD. . . . . . . . . $10.00 $10.43 $10.65 $ 9.85 $ 9.51
______ ______ ______ ______ ______
Investment activities
Net investment
income . . . . . . . . . . 0.55 0.55* 0.56* 0.57* 0.59*
Net realized and unrealized
gain (loss). . . . . . . . 0.45 (0.41) 0.01 0.80 0.34
______ ______ ______ ______ ______
Total from investment
activities . . . . . . . . 1.00 0.14 0.57 1.37 0.93
______ ______ ______ ______ ______
Distributions
Net investment
income . . . . . . . . . . (0.55) (0.55) (0.56) (0.57) (0.59)
Net realized gain. . . . . - (0.02) (0.23) - -
. ______ ______ ______ ______ ______
Total distributions. . . . (0.55) (0.57) (0.79) (0.57) (0.59)
______ ______ ______ ______ ______
NET ASSET VALUE,
END OF PERIOD. . . . . . . . $10.45 $10.00 $10.43 $10.65 $ 9.85
______ ______ ______ ______ ______
______ ______ ______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total return . . . . . . . . 10.28% 1.60% 5.37% 14.41% 10.05%
Ratio of expenses to
average net assets . . . . . 0.63% 0.60%* 0.60%* 0.60%* 0.60%*
Ratio of net investment
income to average
net assets . . . . . . . . . 5.40% 5.60% 5.19% 5.69% 6.07%
Portfolio turnover rate. . . 61.9% 78.0% 73.4% 57.5% 80.3%
Net assets, end of period
(in thousands) . . . . $146,194 $131,953 $151,936 $143,973 $108,494
* Excludes expenses in excess of a 0.60% voluntary expense limitation in
effect November 7, 1990 through February 28, 1995.
Report of Independent Accountants
To the Shareholders and Board of Trustees
of T. Rowe Price California Tax-Free Funds
We have audited the accompanying statement of net assets of T. Rowe Price
California Tax-Free Money Fund and T. Rowe Price California Tax-Free Bond Fund
(the two portfolios comprising the T. Rowe Price California Tax-Free Income
Trust) as of February 29, 1996, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of February 29, 1996, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of T.
Rowe Price California Tax-Free Money Fund and T. Rowe Price California
Tax-Free Bond Fund as of February 29, 1996, the results of their operations,
the changes in their net assets, and financial highlights for each of the
respective periods stated in the first paragraph, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
March 19, 1996
Table 1: A 2-line chart showing yields on short- and long-term California
issues using T. Rowe Price indexes from 2/95 to 2/96.
Table 2: chart showing growth of $10,000 in funds versus
benchmarks from 9/86 through 2/96.
Table 3: chart showing growth of $10,000 in funds versus
benchmarks from 9/86 through 2/96.
