T. Rowe Price Maryland Tax-Free Bond Fund (MDXBX)
Ticker Symbol:
Fund Status:
Open to new Retail investors  /  Open to subsequent Retail investments
Fund Management
Fund Manager
  • Hugh D. McGuirk
  • Managed Fund Since: 03/31/2000
  • Joined Firm On 09/27/1993*
  • B.S., University of Virginia; M.B.A., Harvard Business School

*Firm refers to T. Rowe Price Associates and Affiliates
Quarterly Commentaries
as of 12/31/2013

Maryland municipal bonds outperformed intermediate- and long-term Treasuries and other government-backed credits in the fourth quarter. In the municipal market, long-term interest rates increased, but not as much as Treasury yields, while shorter-term yields declined or were flat. The Federal Reserve announced in December that it would begin to taper the amount of its monthly purchases of Treasuries and mortgage-backed securities in January. We anticipate that the Fed's asset purchases will cease sometime in the second half of 2014.

The Maryland Tax-Free Bond Fund returned 0.39% in the quarter compared with −0.41% for the Lipper Maryland Municipal Debt Funds Average. For the 12 months ended December 31, 2013, the fund returned −2.75% versus −5.16% for the Lipper Maryland Municipal Debt Funds Average. The fund's average annual total returns were −2.75%, 6.74%, and 3.95% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.46% as of its fiscal year ended February 28, 2013.

For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.

Benchmark Definitions

The Maryland Tax-Free Bond Fund is managed with a buy and hold orientation. Once we buy bonds for the fund, we generally expect to hold them until maturity. Although we invested across the maturity and credit quality spectrum in recent months, we've mainly focused on bonds with maturities of 20 years and longer because we believe that they still represent the best values in our market. We favor revenue-backed securities over general obligation bonds and maintain significant overweights in the hospital and education sectors. We also have a large allocation to transportation bonds.

The decline in municipal bond prices has rattled some investors, but it does not represent a fundamental change in the nature, quality, or risk characteristics of the market. We continue to believe that Maryland municipal bonds offer attractive tax-free income for investors with a long-term focus in what is still a very low interest rate environment. The recent underperformance of long-term munis makes their nominal and tax-equivalent yields even more compelling, but if rates continue rising and market outflows persist, further price declines are likely. As always, we are on the lookout for attractively valued bonds issued by municipalities with good fundamentals.

See Glossary for additional details on all data elements.