The Federal Reserve kept the fed funds target rate extremely low in the third quarter of 2014 but continued to reduce its purchases of Treasuries and agency mortgage-backed securities, trimming its monthly purchases in $10 billion increments following its monetary policy meetings. The Fed is planning to halt its asset purchases in October, and we believe that short-term interest rate increases are likely to begin around mid- to late 2015.
The Summit Cash Reserves Fund returned 0.00% in the quarter compared with 0.00% for the Lipper Money Market Funds Average. For the 12 months ended September 30, 2014, the fund returned 0.01% versus 0.01% for the Lipper Money Market Funds Average. The fund's average annual total returns were 0.01%, 0.01%, and 1.58% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 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 September 30, 2014, was 0.01%. Its seven-day simple annualized yield without waiver was −0.29%.* 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 very short-term securities in which we invest felt no impact from the Fed's tapering of asset purchases. Money market yields remained anchored near 0.00% by the Fed's commitment to keep the fed funds rate very low "for a considerable time" after the Fed stops purchasing securities. As of September 30, a little more than half of the fund's assets were allocated to commercial paper and medium-term notes. Municipal securities also represented a substantial portion of the portfolio. The remainder was invested primarily in certificates of deposit, Treasuries, and other U.S. government and agency securities.
Much market debate now centers on the timing and pace of the removal of Fed monetary policy accommodation. Some market participants suggest the Fed may begin raising rates within the next 12 months. Still, yields in money markets are not expected to change significantly for quite some time. The tremendous demand for short-dated, high-quality assets, such as those in which we invest, suggests that rising rates will become manifest in the money markets only a few months prior to the first actual policy tightening. With that event still at the extreme end of our investment horizon, we remain comfortable operating in the longer end of our permissible weighted average maturity (WAM) range, targeting a WAM of 50 to 55 days. As always, we remain committed to managing a high-quality, diversified portfolio focused on liquidity and stability of principal.