Money fund assets have remained fairly steady since the end of December, with asset levels at the end of March slightly higher than they were a year ago. During the quarter, the U.S. Treasury announced that it was readying a floating rate note auction program, pending development of regulations and system enhancements. While money fund managers are in support of this program, no consensus can be reached on what the index rate would be. These notes would increase the supply of eligible investments for money funds, which have been returning close to 0% because of the Federal Reserve's low interest rate policy.
The Tax-Exempt Money Fund returned 0.00% in the quarter compared with 0.00% for the Lipper Tax-Exempt Money Market Funds Average. For the 12 months ended March 31, 2013, the fund returned 0.02% versus 0.01% for the Lipper Tax-Exempt Money Market Funds Average. The fund's average annual total returns were 0.02%, 0.31%, and 1.15% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2013. The fund's expense ratio was 0.49% as of its fiscal year ended February 29, 2012. The fund's seven-day simple annualized yield as of March 31, 2013, was 0.01%. Its seven-day simple annualized yield without waiver was −0.35%.* 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.
Credit quality continues to play a big role in the management of the fund. We have been favoring and maintaining an overweight to highly rated hospitals, local and state general obligation bonds, and higher education debt. As always, bank liquidity providers play a big part in financing short-term municipal debt. We are mindful of their impact on the fund and are exposed to major participants. The portfolio's weighted average maturity shortened from 33 to 29 days during the quarter.
Municipal money market funds continue to operate in an extremely challenging investment environment. Investment rates, and therefore shareholder income, remain near 0%. We believe that the municipal market remains high quality and that a rebounding economy will improve the near-term prospects of many of the state's issuers. As always, our primary goal is principal preservation. Liquidity and principal stability remain fundamental needs for shareholders, and we are focused on managing the fund with those needs in mind.