Yields on the securities in which the New York Tax-Free Money Fund invests were little changed in the fourth quarter. Yields have been contained by the Federal Reserve's commitment to keep the federal funds target rate low (0.00% to 0.25%) as it tapered its monthly asset purchases during most of 2014. Improving economic data allowed the Federal Reserve to cease its monthly purchases of Treasuries and agency mortgage-backed securities in October. With quantitative easing no longer a factor, the market's focus has turned to when the Fed may start to tighten monetary policy by raising short-term interest rates. At the end of the quarter, the yields on 90-day and six-month Treasury bills were 0.04% and 0.12%, respectively. Strong demand for short-dated municipal debt pushed overnight and seven-day yields to 0.01% and 0.03%, respectively.
The New York Tax-Free Money Fund returned 0.00% in the quarter compared with 0.01% for the Lipper New York Tax-Exempt Money Market Funds Average. For the 12 months ended December 31, 2014, the fund returned 0.01% versus 0.01% for the Lipper New York Tax-Exempt Money Market Funds Average. The fund's average annual total returns were 0.01%, 0.01%, and 0.98% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2014. The fund's expense ratio was 0.68% as of its fiscal year ended February 28, 2014. The fund's seven-day simple annualized yield as of December 31, 2014, was 0.01%. Its seven-day simple annualized yield without waiver was −0.48%.* The fund's yield more closely reflects its current earnings than the total return.
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. Return and yield will vary.
An investment in money market funds is not insured or guaranteed by the FDIC
or any other government agency. Although the fund seeks to preserve the value
of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
*In an effort to maintain a zero or positive net yield for the fund, T. Rowe Price has voluntarily waived all or a portion of the management fee it is entitled to receive from the fund. A fee waiver has the effect of increasing the fund's net yield. The 7-day yield without waiver represents what the yield would have been if we were not waiving our management fee. This voluntary waiver is in addition to any contractual expense ratio limitation in effect for the fund and may be amended or terminated at any time without prior notice. Please see the prospectus for more details.
Our primary focus in the management of your fund is principal preservation. We favor highly rated credits such as dedicated tax, water and sewer, transportation, and educational revenue bonds, as well as general obligation bonds. The overwhelming demand for these high-quality investments has kept the money market yield curve very flat. The fund remains largely invested in variable rate demand notes and fixed rate notes and bonds. We also have smaller allocations to commercial paper and variable rate trusts. As has been the case all year, we kept the portfolio's weighted average maturity longer than our peer group.
Maintaining a high credit quality across municipal issuers and the banks that provide liquidity support is the primary consideration for the New York Tax-Free Money Fund. The Fed is widely expected to begin raising short-term interest rates in mid-2015. Although money market rates are still low, they appear to have halted their multiyear decline, and some rates have inched higher. Short-term rates are not likely to rise significantly until the Fed clearly signals that a short-term rate hike is imminent. We remain committed to managing a high-quality diversified portfolio with our primary focus on liquidity and stability of principal.