U.S. economic data showed fairly steady improvement over the course of the quarter. The unemployment rate fell to 6.7% in December from 7.0% in November. The Commerce Department revised its estimate of third-quarter gross domestic product growth up to a healthy 4.1% annual rate, and the housing market seemed to be holding up fairly well despite higher mortgage rates. In December, the Federal Reserve announced that it would begin to taper its asset purchases in January, removing significant uncertainty from the fixed income markets. The central bank stated that it would keep the target federal funds rate near 0% "well past" the time when the unemployment rate reaches 6.5%, effectively anchoring short-term rates at the current very low levels.
The Summit Municipal Money Market Fund returned 0.00% in the quarter compared with 0.01% for the Lipper Tax-Exempt Money Market Funds Average. For the 12 months ended December 31, 2013, 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%, 0.06%, and 1.14% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.45% as of its fiscal year ended October 31, 2012. The fund's seven-day simple annualized yield as of December 31, 2013, was 0.01%. Its seven-day simple annualized yield without waiver was −0.33%.* 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.
At this point, we are comfortable with maintaining a target weighted average maturity at the long end of our permissible range. New short-term issuance continues to be constrained as many issuers prefer to refinance with longer-dated paper to lock in the current low rates. As always, our investment selection focuses on securities with the highest credit quality. Our largest allocations include rated general obligations, housing, hospitals, and higher education. The fund also has added to prerefunded bonds, which are longer-maturity bond issues that have been refinanced and whose repayment is secured by escrowed Treasury bonds.
Maintaining a high credit quality profile with respect to municipal issuers and the banks that provide liquidity support is a key focus in the management of the fund. While the longer-term muni market will likely continue to react to the prospects for Fed tapering, the municipal money markets should remain anchored by the federal funds target rate. Therefore, yields will likely remain range-bound for the foreseeable future. As always, we remain committed to managing a high-quality diversified portfolio with our primary focus on liquidity and stability of principal.