ANNUAL REPORT
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T. Rowe Price California Tax-Free Funds
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February 28, 1997
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Report Highlights
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* Interest rates ended the fiscal year slightly higher than a year ago,
resulting in moderate returns for municipal bond investors.
* The California Tax-Free Money Fund returned 1.43% and 2.87% for the 6- and
12-month periods, respectively, matching the average of its Lipper peer
group.
* The California Tax-Free Bond Fund returned 4.95% and 5.64% for the 6- and
12-month periods, respectively, exceeding the Lipper peer group average in
each case.
* The Money Fund maintained a slightly longer-than-average maturity over the
past six months to pick up yield; the Bond Fund kept its duration within a
narrow range and focused on adding value through security selection.
* With the economy showing ongoing strength and the Federal Reserve
indicating a bias toward a tighter monetary policy, our outlook is somewhat
cautious for the coming months.
<PAGE>
Fellow Shareholders
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The municipal bond market and your fund generated moderate returns during
the fiscal year ended February 28, 1997. Interest rates fluctuated during the
year and ended slightly higher than where they started at the end of last
February. The U.S. economy was characterized by modest wage inflation with low
unemployment, prompting the Federal Reserve to leave monetary policy unchanged
since January 1996.
MARKET ENVIRONMENT
Much of the movement in interest rates last year reflected the market's
anticipation of action or inaction by the Federal Reserve. The fund's fiscal
year began with interest rates rising due to signs of stronger growth and the
realization that balanced budget legislation would not be passed in 1996. As
market expectations for a tightening in monetary policy grew throughout the
first half, rates continued to increase. The long-term Treasury bond yield
remained in a trading range between 6.75% and 7.20% during the third quarter.
Intermediate and long- term rates then reversed course and fell through November
as it became evident that the economy was slowing in the third quarter and the
Federal Reserve was not going to raise rates. Another uptick in rates took place
over the last three months as the economy showed renewed strength and investors
once again anticipated possible tightening by the Federal Reserve.
[edgar description: insert chart California Yield Indexes. A 2-line chart
showing California Bond Index and California Money Index from 2/29/96 through
2/28/97][wrap the following paragraph around the chart]
In the municipal market, rates came full circle over the year, rising about
45 basis points (100 basis points equal one percent) during the first six months
before settling at virtually the same levels as a year ago. Long-term high-grade
general obligation bonds yielded 5.50% on February 28, 1997, versus 5.75% on
August 31, 1996, and 5.45% a year ago. Five-year high-grade bonds were 20 basis
points higher in yield than in February 1996. One-year note rates traded within
a 70-basis-point range during the year, ending at 3.70% compared with 3.25% a
year ago. California rates generally followed national trends.
As concerns regarding tax reform and flat tax legislation diminished,
municipals provided higher returns than long-term Treasuries throughout most of
the fiscal year. As a result, the yield ratio of municipals to Treasuries
decreased from 87% last year to slightly less than 81%. The higher the ratio,
the more attractive tax-exempt securities are for investors. In other words,
long-term municipal yields were 81% of the yield on comparable Treasuries on
February 28, a level that benefits investors in brackets above 19%, whereas a
year ago with the ratio at 87%, investors in brackets upwards of 13% benefited
from municipals.
==============================
California's economy continued
to expand at a healthy pace...
- ------------------------------
<PAGE>
California's economy continued to expand at a healthy pace, with nonfarm
employment growing by 2.7% compared with 2.0% for the U.S. Personal income data
for the first nine months of 1996 also showed California outpacing the nation,
with a 5.4% increase versus 4.2% for the U.S. As a result, the state's financial
picture strengthened. The governor expects the General Fund's reserve to
increase substantially by the end of fiscal 1998, assuming continued positive
economic trends and significant saving from welfare reform. California general
obligation bond ratings are strong A's, and the rating agencies are not
projecting any changes at this time. However, recent legislation to facilitate
deregulation in the state's electric power industry caused Standard & Poor's to
downgrade the debt of the Los Angeles Department of Water & Power and other
southern California utilities because of concerns over rate reductions.
Local governments face considerable uncertainty. The lack of financial
flexibility, which originated with Proposition 13 in 1978, was worsened by the
passage of Proposition 218, which requires voter approval for a variety of tax
and fee increases for cities, counties, and special districts and also mandates
voter ratification for a number of existing taxes. This development prompted
Moody's to downgrade a number of cities, including Los Angeles and San Diego, in
late 1996. Proposition 218 also complicated the legal analysis of proposed bond
issues and, in the months following adoption, reduced issuance in certain
categories, such as Mello-Roos issues. In time, most observers anticipate
legislative or judicial clarification of the varied and complex Proposition 218
legal issues and a return to normal volume levels. Large, urban counties, such
as Los Angeles, remain under fiscal pressure mainly due to heavy social service
burdens, but relief could be on the way if a state welfare reform proposal is
adopted. Orange County emerged from bankruptcy on June 12, 1996, and is now
current on all of its debt. Nevertheless, the county must rein in spending and
sharply boost its financial reserves to promote permanent financial recovery.
CALIFORNIA TAX-FREE MONEY FUND
When all was said and done, the short-term yield curve ended the year
little changed from year ago levels in the 1- to 30-day range but 20 to 50 basis
points higher in the 60-day to one-year range. Reflecting strong demand for
state tax-exemption in this high-tax state, yields on California issues averaged
15 to 20 basis points lower than yields on comparable out-of-state securities
for maturities under 90 days. However, yields on six-month and one-year
California notes were close to national levels because the large supply of
California securities tends to define the national scale.
================================================================================
Performance Comparison
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Periods Ended 2/28/97 ....................... 6 Months 12 Months
- --------------------------------------------------------------------------------
California Tax-Free
Money Fund .................................. 1.43% 2.87%
Lipper California Tax-Exempt
Money Market Funds Average .................. 1.43 2.86
================================================================================
<PAGE>
Your fund's performance was in line with its peer group average for both
the 6- and 12-month periods, as shown in the table.
The money fund ended the fiscal year with a weighted average maturity (WAM)
of 44 days, shorter than the 55-day WAM six months ago and a bit longer than the
40-day peer group average. Throughout the past six months, we emphasized a
modestly longer-than-average maturity. We felt reasonably confident that the
Federal Reserve would need more concrete evidence of inflation before raising
the federal funds rate, especially during the second half of 1996 when the
presidential election was so close at hand. We used our longer maturity target
to take advantage of the positive yield curve (yields rise with maturity) by
participating more heavily in 6- and 12-month municipal notes, which provided,
on average, 40 to 50 basis points more yield than very short maturities. At the
same time, we reduced our holdings of variable rate securities.
In an effort to increase the fund's yield over the past year, we increased
our holdings of securities whose income is subject to the alternative minimum
tax from 8% of the portfolio to 18%. These securities yield an additional 10
basis points on average, so we took advantage of the 20% of assets the fund is
allowed to invest in such issues.
Last year, assets in tax-exempt money funds grew 9% to a record $147
billion, and this solid source of demand increased our comfort level with our
longer maturity posture. The additional $12 billion in new cash flow more than
offset the $5 billion increase in the new issue supply. California money funds
as a group grew 11% to $17.6 billion.
CALIFORNIA TAX-FREE BOND FUND
The past year was a relatively healthy one for the California bond market
as overall returns outpaced national averages and new issuance rose 22% after
falling the previous year. Your fund also had a good year, providing returns
that exceeded its Lipper peer group average for both the 6- and 12-month periods
ended February 28.
================================================================================
Performance Comparison
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Periods Ended 2/28/97 ................... 6 Months 12 Months
- --------------------------------------------------------------------------------
California Tax-Free
Bond Fund ............................... 4.95% 5.64%
Lipper California Municipal
Debt Funds Average ...................... 4.76 4.81
================================================================================
<PAGE>
Our strategy for the past six months and year was to manage our interest
rate exposure (measured by duration) within a modest range and to use our credit
research to uncover opportunities. We began the fund's fiscal year near the low
end of what we consider a "neutral" duration range of 7.5 to 8.0 years,
increased it over the summer as interest rates reached their highs for the year,
and closed the year back near 7.5 years, reflecting a more cautious outlook. At
no time did we expect a broad swing in rates that would merit a more aggressive
strategy, nor was there such a move. As a result, there was little net change in
the fund's beginning and ending share price, and 12-month returns largely
reflected income.
Thorough credit research is essential in California, where there are always
new developments. The approval of Proposition 218, electric utility
deregulation, welfare reform, and the opening of a major toll road in the fall
of 1996 all have implications for credit quality and bond prices. We were on the
lookout for more A-rated and BBB-rated bonds that might be upgraded, but our
success in finding them was thwarted somewhat by the high level of bonds issued
with insurance (58% of new California issues in 1996). At the same time, yield
spreads between higher- and lower-quality bonds continued to narrow, and by
year-end we felt we were not compensated adequately for purchasing lower-quality
issues. Nevertheless, our duration and credit strategies enabled the fund to
post strong relative results.
OUTLOOK
The economy is in its sixth year of expansion, and while it has exhibited
few signs of inflationary pressure, the Federal Reserve remains on alert. Fed
chairman Alan Greenspan stated in recent testimony to the Senate Banking
Committee that the Fed cannot rule out a preemptive tightening in monetary
policy before signs of actual higher inflation become evident.
We expect economic growth and inflation to remain moderate throughout the
rest of 1997, with no evidence of recession visible to date. Consumer and
business sentiment remain high, inventories are not excessive, and availability
of credit is ample. The Federal Reserve, as indicated, could push the fed funds
rate higher to keep prices in check, but we believe any fed funds increase will
be small since short-term rates are well above the recent trend rate of
inflation. Overall, we remain cautious on interest rates but do not expect to
see a significant move in bond prices in the months ahead. As in the past year,
the returns from municipal securities should come primarily from income.
Respectfully submitted,
/s/
Patrice L. Berchtenbreiter
Chairman of the Investment Advisory Committee
California Tax-Free Money Fund
/s/
Mary J. Miller
Chairman of the Investment Advisory Committee
California Tax-Free Bond Fund
March 21, 1997
<PAGE>
T. Rowe Price California Tax-Free Funds
================================================================================
Portfolio Highlights
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Key statistics
8/31/96 2/28/97
California Tax-Free Money Fund
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Price Per Share .................................. $ 1.00 $ 1.00
Dividends Per Share +
For 6 months ................................ 0.014 0.014
For 12 months ............................... 0.029 0.028
Dividend Yield (7-Day Compound) * ................ 2.87% 2.85%
Weighted Average Maturity (days) ................. 55 44
Weighted Average Quality ** ...................... First Tier First Tier
California Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Price Per Share .................................. $ 10.24 $ 10.47
Dividends Per Share +
For 6 months ................................ 0.27 0.28
For 12 months ............................... 0.55 0.55
Dividend Yield *
For 6 months ................................ 5.30% 5.35%
For 12 months ............................... 5.41 5.40
Weighted Average Maturity (years) ................ 18.0 17.2
Weighted Average Effective Duration (years) ...... 7.9 7.6
Weighted Average Quality *** ..................... AA- AA-
- --------------------------------------------------------------------------------
+ Taxability of dividends: 100% and 96.9% of the California Tax-Free Money
Fund dividends paid for the 12 months ended 2/28/97 were exempt from
federal and California income taxes, respectively; 100% of the California
Tax-Free Bond Fund dividends paid for the 12 months ended 2/28/97 were
exempt from federal and California income taxes.
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the average daily net asset values per share for the same
period.
** All securities purchased in the money fund are rated in the two highest
categories (tiers) as established by national rating agencies or, if
unrated, are deemed of comparable quality by T. Rowe Price.
*** Based on T. Rowe Price research.
================================================================================
<PAGE>
T. Rowe Price California Tax-Free Funds
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
Sector Diversification
Percent of Percent of
Net Assets Net Assets
8/31/96 2/28/97
California Tax-Free Money Fund
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General Obligation - Local ............................. 12% 18%
Hospital Revenue ....................................... 16 15
Water and Sewer Revenue ................................ 10 15
Lease Revenue .......................................... 10 10
Industrial and Pollution Control Revenue ............... 4 9
Nuclear Revenue ........................................ 7 6
Electric Revenue ....................................... 6 6
General Obligation - State ............................. 4 5
Prerefunded Bonds ...................................... 9 5
Pooled Loan Revenue .................................... 4 4
Air and Sea Transportation Revenue ..................... 3 3
Ground Transportation Revenue .......................... - 2
All Other .............................................. 12 1
Other Assets Less Liabilities .......................... 3 1
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Total .................................................. 100% 100%
California Tax-Free Bond Fund
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Dedicated Tax Revenue .................................. 16% 16%
Lease Revenue .......................................... 9 13
Water and Sewer Revenue ................................ 10 11
Prerefunded Bonds ...................................... 7 9
Housing Finance Revenue ................................ 8 8
Air and Sea Transportation Revenue ..................... 9 7
Nuclear Revenue ........................................ 7 7
General Obligation - Local ............................. 9 6
Hospital Revenue ....................................... 5 5
General Obligation - State ............................. 6 4
Educational Revenue .................................... 4 3
Escrowed to Maturity ................................... 2 2
Electric Revenue ....................................... 2 2
All Other .............................................. 5 6
Other Assets Less Liabilities .......................... 1 1
- --------------------------------------------------------------------------------
Total .................................................. 100% 100%
================================================================================
<PAGE>
T. Rowe Price California Tax-Free Funds
================================================================================
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[California Tax Free Money Fund - SEC Graph: a line chart ahowing the
cumulative growth of $10,000 invested in the California Money Fund from
inception compared with $10,000 invested in a broad-based index or average over
the same period]
[California Tax Free Bond Fund - SEC Graph: a line chart ahowing the
cumulative growth of $10,000 invested in the California Bond Fund from inception
compared with $10,000 invested in a broad-based index or average over the same
period]
Average Annual Compound Total Return
This table shows how each fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
================================================================================
Periods Ended 2/28/97 1 Year 3 Years 5 Years 10 Years
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California Tax-Free Money Fund 2.87% 2.89% 2.58% 3.54%
California Tax-Free Bond Fund 5.64 5.78 7.37 6.22
- --------------------------------------------------------------------------------
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
<TABLE>
T. Rowe Price California Tax-Free Money Fund
====================================================================================================================================
For a share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
<CAPTION>
Year
Ended
2/28/97 2/29/96 2/28/95 2/28/94 2/28/93
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ..................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment activities
Net investment income ............. 0.028* 0.032* 0.025* 0.019* 0.023*
Distributions
Net investment income ............. (0.028) (0.032) (0.025) (0.019) (0.023)
NET ASSET VALUE
End of period ........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Ratios/Supplemental Data
Total return ............................ 2.87%* 3.24%* 2.55%* 1.92%* 2.31%*
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 .............................. 2.82%* 3.20%* 2.51%* 1.90%* 2.29%*
Net assets, end of period
(in thousands) .......................... $ 82,210 $ 72,739 $ 76,289 $ 74,016 $ 66,617
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Excludes expenses in excess of a 0.55% voluntary expense limitation in effect 11/7/90 through 2/28/97.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price California Tax-Free Bond Fund
====================================================================================================================================
For a share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
Year
Ended
2/28/97 2/29/96 2/28/95 2/28/94 2/28/93
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period ..................... $ 10.45 $ 10.00 $ 10.43 $ 10.65 $ 9.85
Investment activities
Net investment income ............. 0.55 0.55 0.55* 0.56* 0.57*
Net realized and
unrealized gain (loss) ............ 0.02 0.45 (0.41) 0.01 0.80
Total from
investment activities ............. 0.57 1.00 0.14 0.57 1.37
Distributions
Net investment income ............. (0.55) (0.55) (0.55) (0.56) (0.57)
Net realized gain ................. N N (0.02) (0.23) N
Total distributions ............... (0.55) (0.55) (0.57) (0.79) (0.57)
NET ASSET VALUE
End of period ........................... $ 10.47 $ 10.45 $ 10.00 $ 10.43 $ 10.65
Ratios/Supplemental Data
Total return ............................ 5.64% 10.28% 1.60%* 5.37%* 14.41%*
Ratio of expenses to
average net assets ...................... 0.62% 0.63% 0.60%* 0.60%* 0.60%*
Ratio of net investment
income to average
net assets .............................. 5.29% 5.40% 5.60%* 5.19%* 5.69%*
Portfolio turnover rate ................. 47.3% 61.9% 78.0% 73.4% 57.5%
Net assets, end of period
(in thousands) .......................... $ 160,813 $ 146,194 $ 131,953 $ 151,936 $ 143,973
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Excludes expenses in excess of a 0.60% voluntary expense limitation in effect through 2/28/95.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price California Tax-Free Money Fund
================================================================================
February 28, 1997
Statement of Net Assets
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Par Value
In thousands
- --------------------------------------------------------------------------------
CALIFORNIA 96.1%
California
GO, 6.30%, 5/1/97 .................................... $ 50 $ 50
GO, 9.00%, 6/1/97 .................................... 2,000 2,026
GO, RAN, 4.50%, 6/30/97 .............................. 1,900 1,905
California Dept. of Water Resources, TECP
3.40%, 6/9 - 6/10/97 ......................... 2,600 2,600
California EFA
California Institute of Technology
VRDN (Currently 3.05%) ....................... 500 500
Stanford Univ., VRDN (Currently 3.10%) ............... 500 500
California HFFA
Catholic Healthcare West
VRDN (Currently 3.15%) (MBIA Insured) ........ 2,100 2,100
5.00%, 7/1/97 AMBAC .......................... 625 628
Kaiser Permanente, VRDN (Currently 3.20%) ............ 600 600
Pooled Loan Program, VRDN (Currently 3.30%)
(FGIC Insured) ............................... 3,000 3,000
Santa Barbara Cottage Hosp ...........................
VRDN (Currently 3.10%) ....................... 3,365 3,365
California Pollution Control Fin. Auth., PCR
Exxon, VRDN (Currently 3.25%) ........................ 700 700
Pacific Gas and Electric
VRDN (Currently 3.25%) * ..................... 3,500 3,500
Shell Oil, VRDN (Currently 3.40%) * .................. 3,500 3,500
California Statewide CDA
Chevron, 3.40%, 3/3/97 * ............................. 3,350 3,350
Kaiser Permanente, VRDN (Currently 3.20%) ............ 3,100 3,100
St. Joseph Health Systems
VRDN (Currently 3.20%) ....................... 2,300 2,300
Chula Vista Industrial Dev. Agency
San Diego Gas and Electric, VRDN (Currently 3.60%) * . 1,700 1,700
Contra Costa County, GO, TRAN, 4.50%, 7/3/97 ................. 600 601
Irvine Public Fac. and Infrastructure Auth ...................
VRDN (Currently 3.15%) .................... 3,245 3,245
<PAGE>
Kern County Union High School Dist., Golden Empire Schools
VRDN (Currently 3.35%) .................... $ 1,100 $ 1,100
Long Beach Harbor, TECP, 3.35 - 4.50%, 4/3 - 5/15/97* ..... 2,500 2,501
Los Angeles, GO, 6.40%, 9/1/97 ............................ 25 25
Los Angeles County
GO, TRAN, 4.50%, 6/30/97 .......................... 1,400 1,403
Pension Obligation, GO, VRDN (Currently 3.20%)
(AMBAC Insured) ........................... 2,600 2,600
Los Angeles County Metropolitan Transportation Auth .......
Sales Tax, 3.20%, 3/5/97 (FGIC Insured) ........... 700 700
Los Angeles Wastewater
8.50%, 6/1/97 (MBIA Insured) .............. 300 303
TECP, 3.35 - 3.45%, 4/9 - 5/8/97 .......... 5,500 5,500
Metropolitan Water Dist. of Southern California
TECP, 3.40%, 4/4 - 6/10/97 ................ 1,500 1,500
VRDN (Currently 3.15%)
(AMBAC Insured) ........................... 1,400 1,400
MSR Public Power Agency, San Juan
VRDN (Currently 3.10%)
(AMBAC Insured) ........................... 1,000 1,000
Newport Beach, Hoag Memorial Hosp .........................
VRDN (Currently 3.35%) .................... 300 300
Oakland
COP, VRDN (Currently 3.65%) ....................... 1,800 1,800
GO, TRAN, 4.75%, 6/30/97 .......................... 1,000 1,003
Oakland Redev. Agency, Oakland Museum, 8.125%, 4/1/12
(AMBAC Insured)
(Prerefunded 4/1/97+) ..................... 100 102
Port of Oakland, 7.60%, 11/1/16 (BIGI Insured)
(Prerefunded 5/1/97+)* .................... 400 411
Riverside County
COP, VRDN (Currently 3.30%) ....................... 1,100 1,100
GO, TRAN, 3.25%, 3/5/97 ........................... 2,300 2,300
GO, TRAN, 4.50%, 6/30/97 .......................... 600 602
Sacramento County, GO, TRAN, 4.50%, 9/30/97 ............... 2,980 2,994
San Diego, GO, TAN, 4.50%, 7/2/97 ......................... 1,000 1,002
San Diego County Water Auth., 7.30%, 5/1/09
(Prerefunded 5/1/97+) ..................... 2,000 2,052
San Jose/Santa Clara Water Fin. Auth ......................
VRDN (Currently 3.20%) .................... $ 1,000 $ 1,000
San Luis Obispo County, GO, TRAN, 4.50%, 7/8/97 ........... 1,000 1,002
San Mateo County, GO, TRAN, 4.50%, 7/1/97 ................. 1,000 1,002
Santa Clara/El Camino Hosp. Dist., Valley Medical Center
VRDN (Currently 3.20%) .................... 500 500
<PAGE>
Southern California Public Power Auth .....................
VRDN (Currently 3.20%) (AMBAC Insured) .... 4,000 4,000
Stanislaus County, GO, TRAN, 4.50%, 7/1/97 ................ 500 501
Total California (Cost .................................... $78,973) 78,973
PUERTO RICO 2.6%
Puerto Rico Commonwealth, Transportation, TRAN
4.00%, 7/30/97 ........................... 1,000 1,002
Puerto Rico Electric Power Auth ..........................
8.40%, 7/1/15 (Prerefunded 7/1/97+) ...... 285 295
9.375%, 7/1/17 (Prerefunded 7/1/97+) ..... 500 520
Puerto Rico Public Buildings Auth., GO
7.875%, 7/1/16 (Prerefunded 7/1/97+) ..... 325 336
Total Puerto Rico (Cost $2,153) 2,153
Total Investments in Securities
98.7% of Net Assets (Cost $ 81,126) $ 81,126
Other Assets Less Liabilities ......................... 1,084
NET ASSETS ............................................ $82,210
Net Assets Consist of:
Accumulated net investment income -
net of distributions ................................. $ 4
Accumulated net realized gain/loss -
net of distributions .................................. (105)
Paid-in-capital applicable to 82,314,975 no par
value shares of beneficial interest outstanding;
unlimited number of shares authorized ................. 82,311
NET ASSETS ............................................ $ 82,210
NET ASSET VALUE PER SHARE ............................. $ 1.00
* Interest subject to alternative minimum tax
+ Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
BIGI Bond Investors Guaranty Insurance
CDA Community Development Administration
COP Certificates of Participation
EFA Educational Facility Authority
FGIC Financial Guaranty Insurance Company
GO General Obligation
HFFA Health Facility Financing Authority
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
RAN Revenue Anticipation Note
TAN Tax Anticipation Note
TECP Tax-Exempt Commercial Paper
TRAN Tax Revenue Anticipation Note
VRDN Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price California Tax-Free Bond Fund
================================================================================
February 28, 1997
Statement of Net Assets
- --------------------------------------------------------------------------------
Par Value
In thousands
- --------------------------------------------------------------------------------
CALIFORNIA 98.0%
Alameda County, Public Fac., COP
6.00%, 9/1/21 (MBIA Insured) ............. $1,000 $1,035
Anaheim Public Fin. Auth., Public Improvements
5.00%, 9/1/27 (FSA Insured) .............. 1,935 1,743
Brea Public Fin. Auth., Tax Allocation Redev .............
6.75%, 8/1/22 (MBIA Insured) ............. 1,435 1,576
California
GO, 5.25%, 10/1/20 ............................... 1,700 1,603
GO, 6.40%, 2/1/20 * .............................. 2,200 2,263
GO, RAN, 4.50%, 6/30/97 .......................... 2,900 2,909
California Dept. of Water Resources
Central Valley
7.00%, 12/1/11 ........................... 1,730 2,042
7.00%, 12/1/12 ........................... 1,000 1,184
California EFA
Pooled College and Univ ..........................
5.60%, 12/1/14 ........................... 1,000 985
5.60%, 12/1/20 ........................... 1,000 964
St. Mary's College of California
7.50%, 10/1/20 (Prerefunded 10/1/00+) .... 2,000 2,258
Stanford Univ., 5.25%, 12/1/26 ................... 1,500 1,420
California HFFA, Catholic Healthcare West
5.25%, 7/1/23 (AMBAC Insured) ............ 1,000 933
California Housing Fin. Agency
6.15%, 8/1/16 * .......................... 1,000 1,016
6.70%, 8/1/15 ............................ 1,100 1,149
6.70%, 8/1/25 * .......................... 955 996
6.85%, 8/1/17 ............................ 3,015 3,160
7.20%, 8/1/09 ............................ 280 293
7.25%, 8/1/10 ............................ 185 192
7.25%, 8/1/17 ............................ 1,000 1,073
7.625%, 8/1/09 ........................... 760 780
7.875%, 8/1/19 ........................... 405 421
8.00%, 8/1/19 ............................ 200 211
8.10%, 8/1/07 ............................ 300 310
8.20%, 8/1/17 ............................ 1,425 1,475
<PAGE>
California Pollution Control Fin. Auth., PCR
Pacific Gas and Electric
5.85%, 12/1/23 (MBIA Insured) * $ ........ 2,000 $2,000
Resource Recovery, 7.15%, 2/1/11 * ............... 2,500 2,703
Southern California Edison, 6.85%, 12/1/08
(AMBAC Insured) .......................... 1,000 1,074
California Public Works Board
Dept. of Corrections, 6.875%, 11/1/14
(Prerefunded 11/1/04+) ................... 1,000 1,168
Univ. of California
5.50%, 6/1/14 ............................ 2,000 1,982
6.40%, 12/1/16 (AMBAC Insured)
(Prerefunded 12/1/02+) ................... 1,000 1,121
California Statewide CDA
Chevron Inc., VRDN (Currently 3.40%) * ............... 100 100
Sutter Health, COP
5.50%, 8/15/23 (MBIA Insured) ................ 2,000 1,914
Castaic Lake Water Agency
Water System Improvement, COP
7.00%, 8/1/12 (MBIA Insured) ................. 1,000 1,175
7.00%, 8/1/13 (MBIA Insured) ................. 1,700 2,000
Castaic Union School Dist., GO
Zero Coupon, 5/1/18 (FGIC Insured) ........... 6,675 1,976
Central Coast Water Auth., State Water Project Regional Fac ..
6.60%, 10/1/22 (AMBAC Insured)
(Prerefunded 10/1/02+) ....................... 1,000 1,128
Contra Costa County, Merrithew Memorial Hosp., COP
5.375%, 11/1/17 (MBIA Insured) ............... 2,185 2,084
Contra Costa Water Dist ......................................
5.00%, 10/1/20 (FGIC Insured) ................ 1,500 1,350
7.625%, 10/1/08 (Prerefunded 10/1/98+) ....... 500 540
Corona Redev. Agency, Tax Allocation
6.25%, 9/1/13 (FGIC Insured) ................. 1,000 1,066
Coronado CDA, Tax Allocation, 5.70%, 9/1/12 (FSA Insured) .... 1,000 1,028
East Bay Municipal Utility Dist., Water System, 6.00%, 6/1/12 2,000 2,078
Emeryville Public Fin. Auth., Housing Increment Loan
6.20%, 9/1/25 ................................ 1,000 1,006
Foothill / Eastern Transportation Corridor Agency
California Toll Road, Zero Coupon, 1/1/17 ............ $4,000 $1,159
<PAGE>
Fresno Joint Powers Fin. Auth, 5.75%, 9/2/98 ................. 500 507
Inglewood Redev. Agency, Century Redev., 6.125%, 7/1/23 ...... 2,800 2,794
Inland Empire Solid Waste Fin. Auth ..........................
San Bernardino County Landfills
6.25%, 8/1/11 (FSA Insured) * ................ 1,000 1,069
Irvine Public Fac. and Infrastructure Auth ...................
VRDN (Currently 3.15%) ....................... 855 855
Kern County Union High School Dist., GO
7.00%, 8/1/10 (MBIA Insured) ................. 1,000 1,184
Long Beach, Harbor, 7.25%, 5/15/19 * ......................... 2,500 2,629
Los Angeles, Wastewater, 7.10%, 6/1/18 ....................... 1,000 1,070
Los Angeles County
Civic Center Heating and Refrigerating Plant, COP
8.00%, 6/1/10 (Prerefunded 6/1/98+) .......... 500 536
Marina del Rey, COP, 6.50%, 7/1/08 ................... 1,000 1,040
Public Works Fin. Auth ...............................
5.50%, 10/1/18 (FSA Insured) ................. 1,500 1,481
Los Angeles County Metropolitan Transportation Auth ..........
Sales Tax, 7.40%, 7/1/15 ............................. 515 557
Los Angeles County Public Works Fin. Auth ....................
Multiple Capital Fac .................................
5.125%, 6/1/17 (AMBAC Insured) ............... 4,000 3,776
Los Angeles Harbor Dept
6.50%, 8/1/25 (Prerefunded 8/1/02+) ........ 1,000 1,116
6.625%, 8/1/19 * ........................... 2,500 2,680
7.60%, 10/1/18 (Escrowed to Maturity) ...... 3,000 3,763
Los Angeles Municipal Improvement Corp., Central Library
6.35%, 6/1/20 .............................. 1,500 1,557
Midpeninsula Regional Open Space Dist., Fin. Auth
5.90%, 9/1/14 (AMBAC Insured) .............. 1,250 1,294
Modesto Irrigation Dist. Fin. Auth., Geysers
6.00%, 10/1/15 (MBIA Insured) .............. 1,500 1,567
Mojave Water Agency, Morongo Basin
5.75%, 9/1/15 (FGIC Insured) ............... 2,000 2,035
Mt. Diablo Hosp. Dist., 8.00%, 12/1/11 (AMBAC Insured)
(Prerefunded 12/1/00+) ..................... 1,250 1,432
Newport Beach, Hoag Memorial Hosp
VRDN (Currently 3.35%) ..................... $1,000 $1,000
Oakland, GO, 7.60%, 8/1/21 (FGIC Insured) .................. 3,500 3,729
Orange County
COP, 6.00%, 7/1/26 (MBIA Insured) .................. 1,000 1,026
Juvenile Justice Center, COP
7.625%, 6/1/19 (Prerefunded 6/1/99+) ....... 1,750 1,916
Recovery, 6.00%, 6/1/10 (MBIA Insured) ............. 2,500 2,682
<PAGE>
Orange County Local Transportation Auth., Sales Tax
6.00%, 2/15/09 (AMBAC Insured) ............. 750 806
Orchard School Dist., GO, 6.50%, 8/1/19 (FGIC Insured) ..... 1,000 1,094
Pittsburg PFA, Wastewater, 5.375%, 6/1/22 (FGIC Insured) ... 1,000 949
Placentia PFA, Special Tax, 6.60%, 9/1/15 .................. 1,000 994
Pomona Unified School Dist., GO
6.15%, 8/1/15 (MBIA Insured) ............... 1,000 1,079
Rancho Mirage Joint Powers Fin. Auth
Eisenhower Medical Center
5.25%, 7/1/17 (MBIA Insured) ............... 1,000 950
Riverside County, Desert Justice Fac., COP
6.00%, 12/1/12 (MBIA Insured) .............. 1,000 1,044
Sacramento City Fin. Auth., Lease, 5.00%, 11/1/14 .......... 2,000 1,901
Sacramento County
GO, TRAN, 4.50%, 9/30/97 ........................... 1,000 1,005
Public Fac., Coroner Crime Laboratory, COP
6.375%, 10/1/14 (AMBAC Insured) ............ 1,000 1,081
Saddleback Valley Unified School Dist
Public Fin. Auth., Special Tax
6.00%, 9/1/15 (FSA Insured) ................ 1,375 1,467
Special Tax, Zero Coupon, 9/1/19 (FSA Insured) ..... 2,370 646
San Bernardino County, West Valley Detention Center
7.70%, 11/1/18 (Prerefunded 11/1/98+) ...... 500 542
San Diego, IDR, San Diego Gas and Electric
6.40%, 9/1/18 (MBIA Insured) ............... 1,175 1,258
San Francisco Building Auth., San Francisco Civic
Center Complex
5.25%, 12/1/16 (AMBAC Insured) ............. 1,000 962
San Francisco City and County
Airport
6.30%, 5/1/25 (FGIC Insured) * ............. 1,000 1,052
6.50%, 5/1/18 (AMBAC Insured) * ............ 4,000 4,261
San Francisco City and County
Public Utility Commission
6.00%, 11/1/15 ............................. $3,000 $3,091
8.00%, 11/1/11 ............................. 1,000 1,050
Santa Ana Housing Auth., Villa Del Sol Apartments
5.65%, 11/1/21 * ........................... 1,000 1,021
Santa Clara County Fin. Auth., VMC Fac
7.75%, 11/15/11 (AMBAC Insured) ............ 1,000 1,243
<PAGE>
Santa Clara Redev. Agency, Bayshore North
7.00%, 7/1/10 (AMBAC Insured) ........... 3,000 3,524
Santa Margarita/Dana Point Auth .........................
7.25%, 8/1/10 (MBIA Insured) ............ 1,000 1,198
South Orange County PFA, 7.00%, 9/1/07 (MBIA Insured) ... 2,000 2,336
Southern California Public Power Auth ...................
VRDN (Currently 3.20%) (AMBAC Insured) .. 2,000 2,000
Multiple Projects
6.75%, 7/1/10 ........................... 2,100 2,356
6.75%, 7/1/12 ........................... 1,700 1,920
Palo Verde, 5.00%, 7/1/15 (AMBAC Insured) ....... 2,000 1,866
Torrance, Little Co. of Mary Hosp., 6.875%, 7/1/15 ...... 1,305 1,393
Tri City Hosp. Dist., 7.50%, 2/1/17 (MBIA Insured)
(Prerefunded 2/1/02+) ................... 2,000 2,306
Tulare County, Capital Improvement, COP
6.00%, 2/15/16 (MBIA Insured) ........... 1,000 1,035
Univ. of California
Multiple Purpose
5.00%, 9/1/14 (AMBAC Insured) ........... 3,000 2,836
5.00%, 9/1/23 (AMBAC Insured) ........... 1,000 895
Upland, San Antonio Community Hosp., COP, 5.75%, 1/1/07 . 1,000 1,030
Vista CDA, 5.50%, 9/1/23 (MBIA Insured) ................. 1,510 1,469
Total California (Cost .................................. $148,913) 157,598
PUERTO RICO 0.7%
Puerto Rico Electric Power Auth .........................
7.00%, 7/1/21 (Prerefunded 7/1/01+) ..... 1,000 1,124
Total Puerto Rico (Cost $1,009) 1,124
Total Investments in Securities
98.7% of Net Assets (Cost $149,922) $158,722
Other Assets Less Liabilities 2,091
NET ASSETS $160,813
Net Assets Consist of:
Accumulated net investment income - net of distributions $6
Accumulated net realized gain/loss - net of distributions (1,168)
Net unrealized gain (loss) 8,800
Paid-in-capital applicable to 15,363,543 no par
shares of beneficial interest outstanding;
unlimited number of shares authorized 153,175
NET ASSETS $160,813
NET ASSET VALUE PER SHARE $10.47
<PAGE>
* Interest subject to alternative minimum tax
+ Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
CDA Community Development Administration
COP Certificates of Participation
EFA Educational Facility Authority
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance Corp.
GO General Obligation
HFFA Health Facility Financing Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
PFA Public Facility Authority
RAN Revenue Anticipation Note
TRAN Tax Revenue Anticipation Note
VRDN Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price California Tax-Free Income Trust
================================================================================
Statement of Operations
Money Fund Bond Fund
In thousands
Year
Ended
2/28/97 2/28/97
- --------------------------------------------------------------------------------
Investment Income
Interest income ..................................... $ 2,550 $ 8,864
Expenses
Investment management ......................... 195 644
Custody and accounting ........................ 101 119
Shareholder servicing ......................... 85 119
Legal and audit ............................... 11 11
Prospectus and shareholder reports ............ 10 13
Trustees ...................................... 6 7
Registration .................................. 4 5
Miscellaneous ................................. 4 6
Total expenses ................................ 416 924
Net investment income ............................... 2,134 7,940
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities .................................... 13 51
Futures ....................................... - (38)
Written options ............................... - 26
Net realized gain (loss) ...................... 13 39
Change in net unrealized gain or loss
Securities .................................... - 299
Futures ....................................... - 24
Change in net unrealized gain or loss ......... - 323
Net realized and unrealized gain (loss) ............. 13 362
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS .............................. $ 2,147 $ 8,302
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price California Tax-Free Income Trust
====================================================================================================================================
Statement of Changes in Net Assets
In thousands Money Fund Bond Fund
<CAPTION>
Year Year
Ended Ended
2/28/97 2/29/96 2/28/97 2/29/96
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations
Net investment income ............ $ 2,134 $ 2,303 $ 7,940 $ 7,498
Net realized gain (loss) ......... 13 25 39 2,386
Change in net unrealized
gain or loss ..................... -- 25 323 3,713
Increase (decrease) in
net assets from operations ....... 2,147 2,353 8,302 13,597
Distributions to shareholders
Net investment income ............ (2,134) (2,303) (7,940) (7,498)
Capital share transactions *
Shares sold ...................... 78,584 58,518 32,731 25,056
Distributions reinvested ......... 1,995 2,098 5,523 5,185
Shares redeemed .................. (71,121) (64,216) (23,997) (22,099)
Increase (decrease) in
net assets from capital
share transactions ............... 9,458 (3,600) 14,257 8,142
Net Assets
Increase (decrease) during period ...... 9,471 (3,550) 14,619 14,241
Beginning of period .................... 72,739 76,289 146,194 131,953
End of period .......................... $ 82,210 $ 72,739 $ 160,813 $ 146,194
*Share information
Shares sold ...................... 78,584 58,518 3,166 2,445
Distributions reinvested ......... 1,995 2,098 535 506
Shares redeeemed ................. (71,121) (64,216) (2,328) (2,159)
Increase (decrease)
in shares outstanding ............ 9,458 (3,600) 1,373 792
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price California Tax-Free Income Trust
================================================================================
February 28, 1997
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 two of the portfolios
established by the trust and commenced operations on September 15, 1986.
Valuation
Debt securities are generally traded in the over-the-counter market. Except
for securities held by the Money Fund, 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. Securities held by the Money Fund
are valued at amortized cost.
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-divid end 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.
<PAGE>
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objectives, 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.
Options
Call and put options on futures contracts give the holder the right to
purchase or sell, respectively, a particular futures contract at a specified
price on a certain date. Risks arise from possible illiquidity of the options
market and from movements in underlying futures prices. Transactions in options
written and related premiums received for the Bond Fund during the year ended
February 28, 1997, were as follows:
================================================================================
Number of
Contracts Premiums
- --------------------------------------------------------------------------------
Outstanding at beginning of period ............. N $N
Written ........................................ 25 31,000
Closed ......................................... (25) (31,000)
Outstanding at end of period ................... N $N
================================================================================
Other
Purchases and sales of portfolio securities for the Bond Fund, other than
short-term securities, aggregated $81,114,000 and $67,439,000, respectively, for
the year ended February 28, 1997.
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 $105,000, of which $9,000 expires in 1998, and
$96,000 in 2003. Capital loss carryforwards utilized by the Money Fund in 1997
amounted to $13,000. The Bond Fund has unused realized capital loss
carryforwards for federal income tax purposes of $1,085,000, of which $1,084,000
expires in 2003, and $1,000 in 2005. 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 28, 1997. The results
of operations and net assets were not affected by the reclassifications.
<PAGE>
================================================================================
Undistributed net investment income ......................... $ 1,000
Undistributed net realized gain ............................. (7,000)
Paid-in-capital ............................................. 6,000
================================================================================
At February 28, 1997, the aggregate costs of investments for the Money and
Bond Funds for federal income tax and financial reporting purposes were
$81,126,000 and $149,922,000, respectively. For the Money Fund, amortized cost
is equivalent to value; and for the Bond Fund, net unrealized gain aggregated
$8,800,000, of which $8,828,000 related to appreciated investments and $28,000
to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between each fund and the manager
provides for an annual investment management fee, of which $16,000 and $53,000
were payable at February 28, 1997, by the Money 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 (the group). The group fee rate ranges from 0.48% for the
first $1 billion of assets to 0.305% for assets in excess of $50 billion. At
February 28, 1997, and for the year then ended, the effective annual group fee
rate was 0.33%. Each fund pays a pro-rata share of the group fee based on the
ratio of its net assets to those of the group.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through February 28, 1997, which would cause the
Money Fund's ratio of expenses to average net assets to exceed 0.55%. Pursuant
to this agreement, $130,000 of management fees were not accrued by the Money
Fund for the year ended February 28, 1997, and $141,000, remains unaccrued from
the prior period. Subject to shareholder approval, the Money Fund may reimburse
the manager for these expenses through February 28, 1999, provided that average
net assets have grown or expenses have declined sufficiently to allow
reimbursement without causing the fund's ratio of expenses to average net assets
to exceed 0.55%.
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 $132,000 and
$163,000, respectively, for the year ended February 28, 1997, of which $12,000
and $15,000, respectively, were payable at period-end.
<PAGE>
T. Rowe Price California Tax-Free Income Trust
================================================================================
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
(two of the portfolios comprising the T. Rowe Price California Tax-Free Income
Trust) as of February 28, 1997, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for 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 28, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of T.
Rowe Price California Tax-Free Money Fund and T. Rowe Price California Tax-Free
Bond Fund as of February 28, 1997, the results of their operations, the changes
in their net assets, and financial highlights for each of the respective periods
stated in the first paragraph, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
March 19, 1997
<PAGE>
T. Rowe Price Shareholder Services
================================================================================
Investment Services And Information
- --------------------------------------------------------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone
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 T. Rowe Price OnLine.
DISCOUNT BROKERAGE*
Individual Investments
Stocks, bonds, options, precious metals, and other securities at a savings
over regular commission rates.
INVESTMENT INFORMATION
Combined Statement
Overview of your T. Rowe Price accounts.
Shareholder Reports
Fund managers' reviews of their strategies and results.
<PAGE>
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, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
T. Rowe Price Mutual Funds
================================================================================
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
OTC**
Science & Technology
Small-Cap Value*
Spectrum Growth
Value
<PAGE>
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
- --------------------------------------------------------------------------------
DOMESTIC TAXABLE
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
DOMESTIC TAX-FREE
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
Global Government Bond
Emerging Markets Bond
International Bond
<PAGE>
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
** Effective May 1, 1997, the fund's name will change to Small-Cap Stock.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc., T. Rowe Price Insurance
Agency, Inc., and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
<PAGE>
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access [Registration Mark]:
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
http://www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price California Tax-Free Funds.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor.
RPRTCAC 2/28/97
