Most state and local governments remain conservative about adding to indebtedness and have acted responsibly by cutting spending and raising taxes and fees to close budget deficits. While state tax revenues are growing again, the pattern has been slower and more uneven than historically, and expense pressures continue. We believe that many states deserve high credit ratings and will be able to continue servicing their outstanding debts. However, we have longer-term concerns about some states' ability to address sizable pension obligations and other retirement benefits. Municipal bonds enjoyed a strong quarter amid declining yields, increased demand, and reduced issuance.
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, 2014, the fund returned 0.01% versus 0.02% for the Lipper Tax-Exempt Money Market Funds Average. The fund's average annual total returns were 0.01%, 0.03%, and 1.12% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2014. The fund's expense ratio was 0.45% as of its fiscal year ended October 31, 2013. The fund's seven-day simple annualized yield as of March 31, 2014, was 0.01%. Its seven-day simple annualized yield without waiver was −0.34%.* 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.
As always, credit quality plays a major role in the management of the fund. As such, we favor highly rated general obligation securities (GOs), housing finance debt, and hospitals and higher education bonds. Some of the prominent positions in the portfolio include the credits of well-financed medical centers, university revenue issues, and the GOs of states with healthy financial structures. We continue to like prerefunded bonds (which are escrowed in U.S. Treasury debt) and prefer high-quality issuers that can provide self-liquidity.
While the Fed has started the long process of removing monetary accommodation, money market yields are not expected to change significantly for quite some time. Our view is that the Fed will not begin actively targeting short-term interest rates until 2015. Obviously, Fed policy is subject to the ever-changing fortunes of the U.S. economy. Still, given our outlook, we remain comfortable operating in the longer end of our permissible weighted average maturity range. We remain committed to managing a high-quality, diversified portfolio that focuses on the liquidity and stability of principal important to our shareholders.