Persistently low rates continue to suppress income for investors in the Summit Municipal Money Market Fund. All money market rates remain closely tied to the Federal Reserve's federal funds target rate of 0.00% to 0.25%. However, for the first time in more than six years, the possibility of higher rates looms on the investment horizon. The Fed, which has maintained a zero rate stance since the 2008 financial crisis, seems inclined to begin tightening monetary policy sometime later in 2015. Most market observers feel that the U.S. economy is now strong enough for the Fed to lift rates this summer despite the absence of inflation.
The Summit Municipal Money Market 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, 2015, the fund returned 0.02% versus 0.02% for the Lipper Tax-Exempt Money Market Funds Average. The fund's average annual total returns were 0.02%, 0.01%, and 1.02% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.45% as of its fiscal year ended October 31, 2014. The fund's seven-day simple annualized yield as of March 31, 2015, was 0.01%. Its seven-day simple annualized yield without waiver was −0.40%.* 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.
The portfolio focuses on the highest-quality municipal credits, including highly rated hospitals, state and local general obligations, and guaranteed housing finance bonds. Our investment preference is for high-quality issuers with strong balance sheets. Much of our variable rate demand note issuance relies on higher-quality banks for credit enhancement, including Toronto Dominion Bank and Wells Fargo, while the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation back many of our housing bonds.
Maintaining high credit quality across municipal issuers and the banks that provide liquidity is the primary consideration for the Summit Municipal Money Market Fund. With a Fed rate liftoff on the investment horizon, we are less inclined to invest in longer-maturity issuance, which we believe does not reflect our current interest rate expectations. As such, the fund's weighted average maturity will move shorter until we believe the yield curve correctly prices in near-term rate increases. As always, we remain committed to managing a high-quality, diversified portfolio focused on liquidity and stability of principal, which we deem to be of the utmost importance to our shareholders.