The Federal Reserve kept the fed funds target rate extremely low in the second quarter of 2015. Money market rates have also remained very low, but some rates have increased in anticipation of a change in Fed policy. The Fed, which has maintained a zero interest rate policy since the financial crisis of 2008, seems favorably inclined to raise rates, though an uneven stream of economic readings suggests that Fed officials may need more assurances of a firm economy before acting.
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 June 30, 2015, 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 1.43% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 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 June 30, 2015, was 0.01%. Its seven-day simple annualized yield without waiver was −0.17%.* 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.
Money market funds typically invest the largest portion of their assets in investments maturing in three months or less and, at the same time, are quite limited as to investments maturing in six months or more. This creates demand for high-quality, short-dated investments, which has kept the money market yield curve very flat for maturities of six months or less. At the same time, the curve out to 12 months has steepened, which means longer-term money market yields are higher than shorter-term yields. This front-end demand has restrained shorter-term yields from moving significantly higher. At the end of the second quarter, close to half of the portfolio was allocated to commercial paper and medium-term notes. The remainder was invested primarily in municipal securities, U.S. Treasuries, other U.S. government and agency securities, and certificates of deposit.
The Fed has made it clear that it needs to see economic data showing a growing economy and the potential for inflation before it begins to raise short-term benchmark rates. A weaker-than-expected first quarter of 2015 has made the timing of any rate hike subject to broad uncertainty and speculation. While acknowledging the likelihood of rate increases, we also expect that the pace of rate hikes will be measured relative to historical cycles of monetary policy tightening. As always, we remain steadfast in our focus on principal stability, quality, and liquidity.