Fellow Shareholders
The inaugural year of the Summit Municipal Funds ended on October 31, with
fixed-income markets weathering 12 months of sharply rising rates. During the
past year, the Federal Reserve shifted from an easy monetary policy to a
progressive tightening as evidence mounted that the economic expansion was
gaining momentum. While the economy has been growing since spring 1991, the
pace was fitful and slow during the first couple of years due to several
factors: an overhang of consumer and business debt from the 1980s, a steady
decline in defense spending, a worsening trade deficit, and higher taxes.
In mid-1993, the Fed's easy policy with the lowest interest rates in a
generation began to take effect. The economy's tempo picked up appreciably,
the unemployment rate was declining regularly, capacity utilization climbed,
and business and consumer sentiment returned to levels not seen since the
prosperity of the 1980s.
Long-term U.S. Treasury bond yields rose from 5.8% in the fall of 1993
to over 8% today in response to credit demands generated by a stronger
economy. Short-term rates started to advance as well in early February 1994
when the Fed, having achieved its goal of rejuvenating the economy, adopted a
less accommodative monetary policy. It raised the fed funds rate (overnight
lending rate among banks) in a series of steps from 3% to 4.75% by mid-August,
and another 75 basis points to 5.5% after our fiscal year ended. Interest
rates across the maturity spectrum are now two to almost three percentage
points higher than a year ago, with the largest increases in the two- to
three-year maturity range. Economic growth continued at a healthy 4.1% in the
second quarter and 3.4% in the third. The Fed is attempting to slow this pace
to the long-term trend rate of about 2.5% before inflation moves higher.
In the tax-exempt market, yields have also climbed significantly over
the past 12 months. At the end of our fiscal year, the yield on one-year Mig-1
notes stood at 4.2%, up from 2.75% on October 31, 1993, and unchanged from the
end of the last quarter. The five-year AAA General Obligation (GO) yield of
5.2% was 140 basis points higher than a year ago and 45 basis points higher
for the quarter. AAA 30-year GO bonds closed the quarter at 6.5% compared with
5.2% at the end of last October and 6.05% three months ago-annual and
quarterly increases of 130 and 45 basis points, respectively.
The tax-exempt yield curve has not flattened to the same extent as the
Treasury curve during the past 12 months, partly a result of a 40% drop in new
issuance this year that kept tax-exempt yields from rising as much as taxable
yields. For example, the yield on five-year Treasury notes is currently about
94% of the 30-year bond yield, while in the municipal market the percentage is
80%. Strong demand for shorter-term tax-free securities kept prices relatively
higher and yields lower than in the taxable sector. AAA long-term GO bonds
held steady near 82% of the yield on long-term Treasuries, providing an
after-tax benefit to investors in income tax brackets above 18%.
Chart 1 - Municipal Bond and Note Yields
Market Strategy
The Money Market Fund maintained a weighted average maturity in the range of
50 to 60 days, slightly longer than our peer group average at the end of the
quarter. While we expect higher short-term interest rates by the end of 1994,
reduced supply and solid demand in the tax-exempt money market-which keep
yields relatively low-warranted our modestly longer maturity posture. To
benefit from higher yields when the short-term tax-exempt sector "catches up"
with the taxable sector, we concentrated our purchases in two- to six-month
maturities. These securities will come due sooner than longer maturities,
allowing us to roll them over at higher yields.
Your Fund also benefited from an increase in AMT securities (private
activity securities subject to the alternative minimum tax, affecting a small
percentage of taxpayers), which provide an additional 10 to 15 basis points in
yield. As a result of these strategies and our low expense ratio, your Fund's
performance placed it in the top quartile for its peer group for both the
fourth quarter and the fiscal year (see below).
Performance Comparison
Periods Ended 10/31/94
______________________
3 Months 12 Months
_________ _________
Municipal Money Market 0.71% 2.35%
Donoghue's Tax-Free Money
Fund Average* 0.64 2.13
*Stockbroker and General Purpose Funds.
The Intermediate Fund was faced with a steep yield curve, providing
relatively less attractive yields than are available in the taxable sector. We
upgraded the credit quality of the Fund to some extent during the quarter, and
shortened both the weighted average maturity and duration, reflecting a more
defensive posture. The effective duration on October 31 was 4.51 years
compared with 4.81 years at the end of the third fiscal quarter, well below
what we perceive to be the neutral range for intermediate municipal funds (5.0
to 5.5 years). We also purchased securities with higher coupons to avoid the
problems posed by the so-called "market discount rule," which turns capital
gains in some instances into taxable ordinary income. In coming months we will
look for opportunities to replace some securities in the Fund with others
offering higher yields. We may also move to extend the duration into the
neutral range if rates begin to plateau.
This overall strategy enabled your Fund to rank first among 76 similar
funds for the fiscal year and in the top quartile for the quarter ended
October 31, 1994.**
Performance Comparison
Periods Ended 10/31/94
______________________
3 Months 12 Months
_________ _________
Municipal Intermediate -1.07% 0.18%
Lipper Intermediate Municipal
Debt Fund Average -1.80 -2.49
The Income Fund continued a defensive strategy over the past three
months. The weighted average maturity of 17.1 years was a result of
approximately 10% of the portfolio being in short-term reserves and two-thirds
in bonds with maturities greater than 10 years. Comparable funds will
generally invest upwards of 85% of the portfolio in long-term bonds and
maintain a weighted average maturity around 20 years. Our defensive posture
can be measured not only by these yardsticks, but also by the types of
securities held by the Fund. We focused on higher-coupon issues with short
call dates that were less sensitive to rising interest rates and also were not
affected by the market discount rule discussed above.
As we move through the remainder of the year and anticipate
developments in 1995, we may extend both the weighted average maturity and
duration of the Fund from a defensive to a neutral range. This strategy would
be based on our expectation for a gradually slowing economy as the Federal
Reserve's tightening begins to take hold. However, since the risk of inflation
is still high, we would want to see evidence that inflation is not
accelerating before adopting a more aggressive posture. While it is
disappointing to experience negative performance results such as we have seen
this year in the fixed-income markets, the Fund did materially outperform its
peer group average and ranked in the top quartile for both the quarter and
fiscal year.
**Based on total return, the Fund was ranked #1 of 77 funds within the
intermediate municipal investment category for the period ended September 30,
1994, according to Lipper Analytical Services. Past performance cannot
guarantee future results.
Performance Comparison
Periods Ended 10/31/94
______________________
3 Months 12 Months
________ _________
Municipal Income -2.68% -4.38%
Lipper General Municipal
Debt Fund Average -3.27 -5.86
Outlook
In our last report, we mentioned that the objective of the Summit Municipal
Funds is to "maximize tax-free income within the maturity and credit
guidelines established for each portfolio." We attempt to achieve this
objective by searching for the best available opportunities in the tax-exempt
market, by actively managing interest-rate risk, by rigorous credit research,
and by maintaining lower Fund expense ratios. We will continue to balance our
quest for higher yields against concerns about fluctuating share price in a
volatile interest rate environment.
The Fed's efforts to dampen economic growth have had little impact so
far, increasing the likelihood of further increases in the fed funds rate in
coming months. We expect money market rates to climb in step with these hikes
and yields on long-term bonds also to drift a bit higher. We do believe,
however, that bond yields, which have recently reached their heights of the
late 1980s, could plateau slightly above current levels.
With this in mind, we may adopt a somewhat more balanced approach to
the market in coming months. The yield on 30-year AAA tax-exempt bonds
currently stands at 6.5% (10.7% on a tax-equivalent basis for individuals in
the highest federal income tax bracket). If our scenario of rising short-term
rates and leveling long-term bond yields comes to pass, we will move to extend
the durations and average weighted maturities of the bond funds. However, the
Fed's progress in its battle against inflation will most likely be the key
factor in determining an appropriate strategy for each portfolio. The Summit
Municipal Funds came into existence at the beginning of one of the worst
12-month periods in bond market history. Against the backdrop of this
unsettling year, our active management of interest rate and credit risk
translated into a cautious approach to the market, which resulted in our high
performance rankings within our respective peer groups.
As always, we appreciate the opportunity to serve your investment
needs.
Respectfully submitted,
William T. Reynolds
Director
Fixed-Income Division
November 18, 1994
Financial Summary
Net Asset Value Dividend Per Share! Dividend Yield*
Per Share 3 Months Ended 3 Months Ended
________________ ________________ ________________
7/31/94 10/31/94 7/31/94 10/31/94 7/31/94 10/31/94
Municipal Money
Market Fund $ 1.00 $ 1.00 $0.006 $0.007 2.58% 3.12%
Municipal
Intermediate Fund 9.81 9.59 0.11 0.12 4.56 4.73
Municipal
Income Fund 9.46 9.08 0.12 0.13 5.20 5.50
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the average daily net asset values per share for the same
period. Municipal Money Market Fund reports a seven-day compound yield.
! Taxability of dividends. 100% of the dividends paid for the 12 months
ended October 31, 1994 were exempt from federal income tax.
Quality Diversification
Weighted Average
Quality Ratings* Quality*
________________________________ _________________
1 2 3 4 5-10 7/31/94 10/31/94
Municipal Money
Market Fund 23% 77% 0% 0% 0% 1.80 1.88
Municipal
Intermediate Fund 5 45 30 20 0 2.98 2.68
Municipal
Income Fund 7 38 19 30 6 2.95 2.93
* On a T. Rowe Price scale of 1 to 10, with Grade 1 representing highest
quality.
Duration and Maturity
Weighted Average Weighted Average
Effective Duration (years) Maturity (years)
__________________________ ________________
7/31/94 10/31/94 7/31/94 10/31/94
Municipal Money
Market Fund N/A N/A 53* 56*
Municipal
Intermediate Fund 4.81 4.51 7.59 7.03
Municipal
Income Fund 7.45 7.96 16.83 17.12
* Maturity is in days.
Chart 2 - Performance Comparison
Chart 3 - Performance Comparison
Fiscal-Year Performance
Period ended October 31, 1994
1 Year
(Since Inception 10/29/93)
__________________________
Municipal Money Market 2.35%
Municipal Intermediate 0.18
Municipal Income -4.38
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Sector Diversification
Summit Municipal Money Market Fund
Percent of Net Assets
_____________________
7/31/94 10/31/94
_______ ________
Industrial & Pollution
Control Revenue 17% 21%
Hospital Revenue 20 15
General Obligation - State 13 13
Educational Revenue 11 10
Pre-Refunded Bonds 13 7
Pooled Loan Revenue 9 7
Housing Finance Revenue 3 5
Escrowed to Maturity 1 4
General Obligation - Local 9 4
Lease Revenue 4 3
Ground Transportation Revenue 0 3
Nuclear Revenue 0 2
Air & Sea Transportation Revenue 2 2
Electric Revenue 0 1
Dedicated Tax Revenue 2 0
Other Assets Less Liabilities -4 3
Summit Municipal Intermediate Fund
Percent of Net Assets
_____________________
7/31/94 10/31/94
_______ ________
Air & Sea Transportation Revenue 23% 24%
Hospital Revenue 18 14
Lease Revenue 8 12
Housing Finance Revenue 4 11
Pre-Refunded Bonds 3 8
Miscellaneous Revenue 8 7
General Obligation - Local 9 5
Industrial & Pollution
Control Revenue 7 4
Water & Sewer Revenue 4 4
Educational Revenue 4 4
Pooled Loan Revenue 1 3
Electric Revenue 3 3
Dedicated Tax Revenue 4 1
Nuclear Revenue 1 1
Solid Waste Revenue 2 1
General Obligation - State 3 0
Other Assets Less Liabilities -2 -2
Summit Municipal Income Fund
Percent of Net Assets
_____________________
7/31/94 10/31/94
_______ ________
Hospital Revenue 21% 19%
Housing Finance Revenue 16 13
General Obligation - State 4 12
Nuclear Revenue 15 9
Water & Sewer Revenue 7 7
Air & Sea Transportation Revenue 7 7
Ground Transportation Revenue 6 5
General Obligation - Local 9 4
Pre-Refunded Bonds 4 3
Percent of Net Assets
_____________________
7/31/94 10/31/94
_______ ________
Educational Revenue 3 3
Miscellaneous Revenue 3 3
Escrowed to Maturity 2 3
Lease Revenue 1 2
Industrial & Pollution
Control Revenue 7 2
Solid Waste Revenue 2 2
Pooled Loan Revenue 0 2
Other Assets Less Liabilities -7 4
Portfolio of Investments (Amounts in thousands)
T. Rowe Price Summit Municipal Funds / October 31, 1994
Municipal Money Market Fund
Face Amount Value
__________ __________
ALASKA - 0.1%
Anchorage Telephone Utility,
(FGIC Insured), 6.00%, 6/1/95
(Pre-refunded 12/1/94!). . . . . . . . . . . . $ 50 $ 51
_____________________________________________________________________________
ARIZONA - 0.1%
Tucson, 8.20%, 7/1/07
(Pre-refunded 7/1/95!) . . . . . . . . . . . . 50 52
_____________________________________________________________________________
CALIFORNIA - 6.3%
Alameda County, GO, TRAN,
4.75%, 8/11/95 . . . . . . . . . . . . . . . . 500 500
California, GO, (AMBAC Insured),
5.00%, 8/1/95. . . . . . . . . . . . . . . . . 200 201
GO, RAW, 3.75%, 12/21/94. . . . . . . . . . 100 100
Contra Costa County, GO, TRAN,
4.25%, 7/7/95. . . . . . . . . . . . . . . . . 400 399
Oakland, COP, VRDN (Currently 3.45%) . . . . . . 1,400 1,400
Southern California Public Power
Auth., Southern Transmission,
(MBIA Insured), 9.00%, 7/1/21
(Pre-refunded 1/1/95!). . . . . . . . . . . 100 103
_____________________________________________________________________________
COLORADO - 0.1%
El Paso County, School Dist. No. 20,
GO, 9.70%, 12/15/97
(Pre-refunded 12/15/94!) . . . . . . . . . . . 50 50
_____________________________________________________________________________
DISTRICT OF COLUMBIA - 0.3%
District of Columbia, 9.75%, 6/1/05
(Pre-refunded 6/1/95!) . . . . . . . . . . . . 110 116
_____________________________________________________________________________
FLORIDA - 7.5%
Gulf Breeze, Local Gov't. Loan Program,
(FGIC Insured), VRDN
(Currently 3.40%). . . . . . . . . . . . . . . 335 335
Jacksonville Electric Auth., TECP,
3.50%, 1/12/95 . . . . . . . . . . . . . . . . 250 250
Jacksonville HFA, Baptist Medical
Center, (MBIA Insured), VRDN
(Currently 3.10%). . . . . . . . . . . . . . . 100 100
HSI Support Systems, Inc.,
(MBIA Insured), VRDN
(Currently 3.10%) . . . . . . . . . . . . . 800 800
Sunshine State Gov't. Fin.
Commission, TECP, 3.20 - 3.55%,
12/7/94 - 2/9/95. . . . . . . . . . . . . . 1,700 1,699
_____________________________________________________________________________
GEORGIA - 1.9%
Georgia Hosp. Equipment Fin. Auth.,
Pooled Hospital Loan, (MBIA Insured),
VRDN (Currently 3.10%). . . . . . . . . . . 500 500
Georgia Tech Foundation Fac., Inc. ,
Wardlaw Project, VRDN
(Currently 3.25%) . . . . . . . . . . . . . 300 300
_____________________________________________________________________________
HAWAII - 3.5%
Hawaii Dept. of Budget & Fin., Queens
Medical Center, (FGIC Insured),
VRDN (Currently 3.15%). . . . . . . . . . . 500 500
Honolulu City & County, GO, TECP,
3.35%, 11/8/94 . . . . . . . . . . . . . . . . 1,000 1,000
_____________________________________________________________________________
ILLINOIS - 12.8%
Chicago, City Water Works, 5.80%, 11/1/94
(Escrowed to Maturity) . . . . . . . . . . . . $ 1,500 $ 1,500
Illinois Dev. Fin. Auth., Palos Community
Hosp., VRDN (Currently 3.35%). . . . . . . . . 700 700
Illinois EFA, Northwestern Univ.,
VRDN (Currently 3.25%) . . . . . . . . . . . . 700 700
VRDN (Currently 3.20%). . . . . . . . . . . 500 500
Illinois HFA, Children's Memorial
Hosp., 10.75%, 1/1/14
(Pre-refunded 1/1/95!) . . . . . . . . . . . . 60 61
VRDN (Currently 3.25%). . . . . . . . . . . 700 700
Southwestern Illinois Dev. Auth.,
Shell Oil Company,
VRDN (Currently 3.15%)* . . . . . . . . . . 1,300 1,300
_____________________________________________________________________________
INDIANA - 3.5%
Mount Vernon, Pollution Control & Solid
Waste Disposal, General Electric,
TECP, 3.10%, 11/15 - 11/16/94*. . . . . . . 1,500 1,500
_____________________________________________________________________________
KANSAS - 4.2%
Butler County, Solid Waste Disposal Fac.,
TEXACO Refining, VRDN
(Currently 3.25%)* . . . . . . . . . . . . . . 1,800 1,800
_____________________________________________________________________________
KENTUCKY - 0.1%
Kentucky Local Correctional Fac. Auth.,
(FGIC Insured), 10.375%, 11/1/09
(Pre-refunded 11/1/94!). . . . . . . . . . . . 40 41
_____________________________________________________________________________
LOUISIANA - 9.6%
Lake Charles Harbor and Terminal
Dist. PCR, CONOCO,
VRDN (Currently 3.20%)*. . . . . . . . . . . . 1,800 1,800
Louisiana PFA, Sisters of Charity
of the Incarnate Word, TECP,
2.90 - 3.60%, 12/9/94 - 1/26/95 . . . . . . 900 900
Plaquemines Parish, Environmental,
British Petroleum Company,
VRDN (Currently 3.20%) . . . . . . . . . . . . 800 800
Saint Charles Parish PCR, Shell
Oil, VRDN (Currently 3.15%). . . . . . . . . . 300 300
Terrebonne Parish Hosp. Service Dist.
No. 1, Terrebonne General
Medical Center, 9.40%, 4/1/15
(Pre-refunded 4/1/95!) . . . . . . . . . . . . 260 271
_____________________________________________________________________________
MAINE - 0.5%
Maine, GO, TAN, 4.50%, 6/30/95 . . . . . . . . . 200 201
_____________________________________________________________________________
MARYLAND - 5.2%
Baltimore, Highway User, GO,
RAN, 5.00%, 6/9/95 . . . . . . . . . . . . . . 1,000 1,006
Maryland, GO, 11.20%, 7/1/95 . . . . . . . . . . 50 52
Maryland Dept. of Transportation,
6.10%, 12/15/94 (Escrowed to Maturity) . . . . 25 25
Maryland HHEFA, Pooled Loan
Program, VRDN (Currently 3.40%). . . . . . . . 500 500
Montgomery County, GO, 5.00%, 4/15/95. . . . . . 15 15
Prince George's County, Economic
Dev., Cintas Corp., VRDN
(Currently 3.65%)* . . . . . . . . . . . . . . 100 100
Univ. of Maryland, Equipment
Loan, 4.10%, 12/1/94 . . . . . . . . . . . . . 500 500
_____________________________________________________________________________
MASSACHUSETTS - 0.1%
Massachusetts, GO, (MBIA Insured),
6.75%, 12/1/94 . . . . . . . . . . . . . . . . $ 25 $ 25
_____________________________________________________________________________
MICHIGAN - 1.2%
Detroit, City School Dist., GO,
5.00%, 5/1/95. . . . . . . . . . . . . . . . . 500 502
_____________________________________________________________________________
MINNESOTA - 1.6%
Minneapolis CDA, Health Care Obligation
Group, (MBIA Insured),
10.50%, 11/1/13
(Pre-refunded 11/1/94!). . . . . . . . . . . . 265 270
Rochester Health Care Fac., Mayo
Foundation/Mayo Medical Center,
TECP, 3.50%, 2/1/95 . . . . . . . . . . . . 400 400
_____________________________________________________________________________
MISSOURI - 3.8%
Missouri Environmental Improvement
and Energy Resource Auth.,
Union Electric Company, TECP,
3.30%, 11/14/94. . . . . . . . . . . . . . . . 400 400
Missouri HEFA, Sisters of Mercy
Health, VRDN (Currently 3.35%) . . . . . . . . 500 500
St. Anthony's Medical Center,
VRDN (Currently 3.25%) . . . . . . . . . . . . 700 700
_____________________________________________________________________________
NEW JERSEY - 0.9%
Bergen County, Utilities Auth.,
5.80%, 12/15/94
(Escrowed to Maturity) . . . . . . . . . . . . 125 125
5.40%, 6/15/95. . . . . . . . . . . . . . . 25 25
New Jersey Highway Auth.,
Garden State Parkway,
10.50%, 1/1/14
(Pre-refunded 1/1/95!) . . . . . . . . . . . . 50 52
Rutgers State Univ., 10.125%, 5/1/16
(Pre-refunded 5/1/95!) . . . . . . . . . . . . 155 163
_____________________________________________________________________________
NEW YORK - 8.1%
New York City, GO, 10.75%, 11/15/99
(Pre-refunded 11/15/94!) . . . . . . . . . . . 250 258
GO, RAN, 4.50%, 4/12/95 . . . . . . . . . . 800 802
GO, TAN, 4.25%, 2/15/95 . . . . . . . . . . 500 501
New York Housing Fin. Agency, Mental
Hygiene, 7.30%, 11/1/94
(Escrowed to Maturity) . . . . . . . . . . . . 25 25
New York State Power Auth.,
3.80%, 3/1/95. . . . . . . . . . . . . . . . . 500 500
The Port Auth. of New York & New
Jersey, VRDN (Currently 3.15%)*. . . . . . . . 1,200 1,200
Triborough Bridge & Tunnel Auth.,
9.50%, 1/1/05 (Pre-refunded 1/1/95!) . . . . . 150 155
_____________________________________________________________________________
NORTH CAROLINA - 0.5%
North Carolina Eastern Municipal
Power Agency, 10.00%, 1/1/18
(Pre-refunded 1/1/95!) . . . . . . . . . . . . 100 102
10.50%, 1/1/03
(Pre-refunded 1/1/95!). . . . . . . . . . . 100 104
_____________________________________________________________________________
OREGON - 0.1%
Multnomah County School Dist.
No. 1, 10.25%, 12/15/95
(Pre-refunded 12/15/94!) . . . . . . . . . . . 60 62
_____________________________________________________________________________
PENNSYLVANIA - 3.1%
Pennsylvania Higher Ed. Assistance Agency,
Student Loan, VRDN
(Currently 3.35%)* . . . . . . . . . . . . . . $ 1,000 $ 1,000
Pennsylvania Higher Ed. Fac. Auth.,
Univ. of Pennsylvania,
(MBIA Insured), 9.125%, 6/1/15
(Pre-refunded 6/1/95!) . . . . . . . . . . . . 20 21
Philadelphia HHEFA, Einstein
Medical Center, 10.00%, 4/1/11
(Pre-refunded 4/1/95!) . . . . . . . . . . . . 100 104
Pittsburgh, GO, (FGIC Insured),
9.00%, 3/1/02
(Pre-refunded 3/1/95!) . . . . . . . . . . . . 100 104
Scranton Lackawanna Health and
Welfare Auth., Community Medical
Center, 9.875%, 3/1/12
(Pre-refunded 3/1/95!) . . . . . . . . . . . . 95 99
_____________________________________________________________________________
PUERTO RICO - 0.2%
Puerto Rico Housing Bank and
Fin. Agency, 7.25%, 12/1/06
(Pre-refunded 12/1/94!). . . . . . . . . . . . 85 88
_____________________________________________________________________________
SOUTH CAROLINA - 0.2%
Piedmont Municipal Power Agency,
11.00%, 1/1/25
(Pre-refunded 1/1/95!) . . . . . . . . . . . . 30 31
(AMBAC Insured), 9.375%, 1/1/14
(Pre-refunded 1/1/95!). . . . . . . . . . . 70 73
_____________________________________________________________________________
TENNESSEE - 2.1%
Memphis Airport, GO, VRDN
(Currently 3.35%)* . . . . . . . . . . . . . . 900 900
_____________________________________________________________________________
TEXAS - 6.6%
Hale County Industrial Dev. Corp.
PCR, AMOCO, 3.75%, 3/1/95. . . . . . . . . . . 400 400
Houston, Airport, TECP, 3.65%, 2/7/95* . . . . . 800 800
Sam Rayburn Municipal Power
Agency, (MBIA Insured),
9.25%, 9/1/8
(Pre-refunded 9/1/95!). . . . . . . . . . . 70 74
San Antonio, Electric & Gas,
10.90%, 2/1/99
(Pre-refunded 2/1/95!) . . . . . . . . . . . . 385 399
(BIGI Insured), 9.375%, 2/1/09
(Pre-refunded 2/1/95!). . . . . . . . . . . 25 26
Sewer, 5.00%, 12/1/98
(Pre-refunded 12/1/94!). . . . . . . . . . . . 10 10
Texas A & M Univ., Permanent Univ.
Fund, TECP, 3.25%, 11/30/94. . . . . . . . . . 400 400
University of Texas Board of Regents,
TECP, 3.45 - 3.60%,
12/6/94 - 1/17/95. . . . . . . . . . . . . . . 705 705
_____________________________________________________________________________
UTAH - 2.7%
Intermountain Power Agency,
Power Supply, 7.00%, 7/1/17
(Pre-refunded 7/1/95!) . . . . . . . . . . . . 45 46
7.00%, 7/1/18
(Pre-refunded 7/1/95!). . . . . . . . . . . 25 25
Utah Housing Fin. Agency, Single
Family Mortgage, (CGIC Insured),
VRDN (Currently 3.25%). . . . . . . . . . . 1,100 1,100
_____________________________________________________________________________
VIRGINIA - 5.2%
Fairfax County IDA, Inova Health
System, TECP, 3.60 - 3.65%,
1/24 - 2/10/95 . . . . . . . . . . . . . . . . 1,200 1,199
Virginia HDA, Commonwealth
Mortgage, 4.20%, 5/11/95*. . . . . . . . . . . 1,000 1,001
_____________________________________________________________________________
WASHINGTON - 0.1%
Seattle, Sewer, 7.00%, 1/1/16
(Pre-refunded 1/1/95!) . . . . . . . . . . . . $ 60 $ 62
_____________________________________________________________________________
WISCONSIN - 2.4%
Wisconsin, Operating Notes,
GO, 4.50%, 6/15/95 . . . . . . . . . . . . . . 1,000 1,002
_____________________________________________________________________________
WYOMING - 2.3%
Lincoln County PCR, Exxon,
TECP, 3.60%, 1/11/95 . . . . . . . . . . . . . 1,000 999
Total Investments in Securities -
96.9% of Net Assets
(Cost - $41,271) . . . . . . . . . . . . . . . $ 41,267
* - Interest subject to alternative minimum tax
! - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
BIGI - Bond Investors Guaranty Insurance
CGIC - Capital Guaranty Insurance Corp.
COP - Certificates of Participation
FGIC - Financial Guaranty Insurance Company
GO - General Obligation
HDA - Housing Development Authority
HEFA - Health & Educational Facility Authority
HHEFA - Health & Higher Educational Facility Authority
HFA - Health Facility Authority
IDA - Industrial Development Authority
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
RAN - Revenue Anticipation Note
RAW - Revenue Anticipation Warrant
TAN - Tax Anticipation Note
TECP - Tax-Exempt Commercial Paper
TRAN - Tax Revenue Anticipation Note
VRDN - Variable Rate Demand Note
Municipal Intermediate Fund
Face Amount Value
__________ __________
ALABAMA - 4.0%
Birmingham Airport Auth.,
(AMBAC Insured), 7.35%, 7/1/04*. . . . . . . . $ 500 $ 538
_____________________________________________________________________________
ARIZONA - 3.7%
Phoenix Airport, (MBIA
Insured), 5.25%, 7/1/00. . . . . . . . . . . . 500 490
_____________________________________________________________________________
CALIFORNIA - 12.3%
California Public Works Board, Dept.
Of Corrections, 6.00%, 11/1/05 . . . . . . . . 500 501
Los Angeles County, Marina Del
Ray, COP, 5.25%, 7/1/96. . . . . . . . . . . . 600 601
Los Angeles County Transportation
Commission, Sales Tax,
(MBIA Insured), 6.50%, 7/1/20
(Pre-refunded 7/1/02!) . . . . . . . . . . . . 500 533
_____________________________________________________________________________
DISTRICT OF COLUMBIA - 3.3%
Metropolitan Washington D.C. Airport
Auth., (BIGI Insured),
8.10%, 10/1/08*. . . . . . . . . . . . . . . . 400 435
_____________________________________________________________________________
FLORIDA - 4.1%
Lakeland, Electric & Water,
7.00%, 10/1/05
(Pre-refunded 10/1/99!). . . . . . . . . . . . $ 500 $ 542
_____________________________________________________________________________
GEORGIA - 7.7%
Fulco Hosp. Auth., Georgia Baptist
Health Care System, 5.90%, 9/1/02. . . . . . . 650 624
Georgia Hosp. Equipment Fin. Auth.,
Pooled Hospital Loan, (MBIA Insured)
VRDN (Currently 3.70%) . . . . . . . . . . . . 400 400
_____________________________________________________________________________
HAWAII - 0.4%
Honolulu City & County, GO,
6.90%, 2/1/98. . . . . . . . . . . . . . . . . 50 53
_____________________________________________________________________________
ILLINOIS - 8.2%
Chicago - O'Hare Int'l. Airport,
(MBIA Insured), 5.70%, 1/1/03* . . . . . . . . 120 118
International Terminal,
7.50%, 1/1/05* . . . . . . . . . . . . . . . . 160 171
(MBIA Insured), 7.50%, 1/1/05*. . . . . . . 250 269
Illinois HFA, Glen Oak Medical
Center, 9.50%, 11/15/15. . . . . . . . . . . . 75 85
Holy Cross Hosp., 4.875%, 3/1/96 . . . . . . . 350 347
Southwestern Illinois Dev. Auth.,
Shell Oil Company,
VRDN (Currently 3.15%)* . . . . . . . . . . 100 100
_____________________________________________________________________________
KANSAS - 0.8%
Butler County, Solid Waste Disposal
Fac., TEXACO Refining, VRDN
(Currently 3.25%)* . . . . . . . . . . . . . . 100 100
_____________________________________________________________________________
KENTUCKY - 3.0%
Kentucky, Property & Buildings,
6.40%, 11/1/01 . . . . . . . . . . . . . . . . 390 405
_____________________________________________________________________________
LOUISIANA - 2.3%
West Baton Rouge Parish, Dow
Chemical Company, VRDN
(Currently 3.25%)* . . . . . . . . . . . . . . 100 100
Plaquemines Parish, Environmental,
VRDN (Currently 3.20%) . . . . . . . . . . . . 200 200
_____________________________________________________________________________
MARYLAND - 0.7%
Northeast Maryland Waste Disposal Auth.,
Montgomery County Resource
Recovery, 5.70%, 7/1/03* . . . . . . . . . . . 100 96
_____________________________________________________________________________
MASSACHUSETTS - 4.0%
Massachusetts Housing Fin. Agency,
Insured Rental, (AMBAC Insured),
5.90%, 7/1/03* . . . . . . . . . . . . . . . . 400 397
Massachusetts Port Auth.,
(FGIC Insured), 7.375%, 7/1/10*. . . . . . . . 135 143
_____________________________________________________________________________
MICHIGAN - 0.7%
Wayne County, Detroit Metropolitan
Wayne County Airport,
(MBIA Insured), 4.90%, 12/1/05 . . . . . . . . 100 87
_____________________________________________________________________________
MISSOURI - 3.0%
Missouri HEFA, Bethesda Health Group
of St. Louis, Inc.,
5.25%, 8/15/96 . . . . . . . . . . . . . . . . $ 400 $ 395
_____________________________________________________________________________
NEW HAMPSHIRE - 3.6%
New Hampshire Housing Fin. Auth.,
Single Family Mortgage,
5.90%, 1/1/01*. . . . . . . . . . . . . . . 115 113
5.90%, 7/1/01*. . . . . . . . . . . . . . . 115 113
6.00%, 7/1/02*. . . . . . . . . . . . . . . 125 123
6.10%, 1/1/03*. . . . . . . . . . . . . . . 130 127
_____________________________________________________________________________
NEW JERSEY - 5.8%
New Jersey, Waste Water Treatment
Trust, 6.875%, 6/15/05 . . . . . . . . . . . . 500 528
New Jersey Economic Dev. Auth.,
Market Transition Fac.,
(MBIA Insured), 5.40%, 7/1/02. . . . . . . . . 255 247
_____________________________________________________________________________
NEW YORK - 10.3%
Dormitory Auth. of the State of
New York, State Univ. Ed. Fac.,
7.40%, 5/15/01 . . . . . . . . . . . . . . . . 150 161
New York City, GO,
7.50%, 2/1/04. . . . . . . . . . . . . . . . . 500 536
New York City Ind. Dev. Agency,
Terminal One Group Assoc.,
5.80%, 1/1/05* . . . . . . . . . . . . . . . . 700 673
_____________________________________________________________________________
OHIO - 3.6%
Ohio Building Auth., State Fac.
Administration Building, (MBIA Insured),
5.65%, 10/1/05 . . . . . . . . . . . . . . . . 500 483
_____________________________________________________________________________
PENNSYLVANIA - 2.9%
Philadelphia Gas Works,
(AMBAC Insured), 4.25%, 8/1/00 . . . . . . . . 425 386
_____________________________________________________________________________
TENNESSEE - 1.9%
Metropolitan Nashville Airport
Auth., (FGIC Insured),
6.25%, 7/1/00. . . . . . . . . . . . . . . . . 250 258
_____________________________________________________________________________
TEXAS - 5.8%
Brazos Higher Ed. Auth.,
Student Loan, 5.95%, 6/1/02* . . . . . . . . . 500 496
Brazos River Harbor Navigation
Dist., Dow Chemical Company,
VRDN (Currently 3.25%)* . . . . . . . . . . 100 100
Coastal Bend Health Fac. Dev. Corp.,
Incarnate Word Health Services,
(AMBAC Insured), 5.40%, 11/15/01 . . . . . . . 95 93
Harris County Flood Control Dist.,
GO, 6.75%, 10/1/02 . . . . . . . . . . . . . . 85 90
_____________________________________________________________________________
UTAH - 2.6%
Intermountain Power Agency,
Power Supply, 5.90%, 7/1/03. . . . . . . . . . 350 350
_____________________________________________________________________________
VIRGINIA - 4.1%
Virginia HDA, Commonwealth
Mortgage, 6.125%, 1/1/99*. . . . . . . . . . . $ 50 $ 50
5.75%, 7/1/99*. . . . . . . . . . . . . . . 500 499
_____________________________________________________________________________
WASHINGTON - 3.1%
Washington Health Care Fac. Auth.,
Sisters of Providence, VRDN
(Currently 3.05%). . . . . . . . . . . . . . . 300 300
Washington Public Power Supply
System, 6.30%, 7/1/01. . . . . . . . . . . . . 110 112
_____________________________________________________________________________
Total Investments in Securities -
101.9% of Net Assets
(Cost - $13,861) . . . . . . . . . . . . . . . $ 13,568
* - Interest subject to alternative minimum tax
! - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
BIGI - Bond Investors Guaranty Insurance
COP - Certificates of Participation
FGIC - Financial Guaranty Insurance Company
GO - General Obligation
HDA - Housing Development Authority
HEFA - Health & Educational Facility Authority
HFA - Health Facility Authority
MBIA - Municipal Bond Investors Assurance Corp.
VRDN - Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
Municipal Income Fund
Face Amount Value
__________ ________
CALIFORNIA - 4.5%
Los Angeles County, Marina
Del Ray, COP, 5.25%, 7/1/96. . . . . . . . . . $ 200 $ 201
San Joaquin Hills Transportation
Corridor Agency, Toll Road,
6.75%, 1/1/32. . . . . . . . . . . . . . . . . 95 88
_____________________________________________________________________________
CONNECTICUT - 1.2%
Connecticut HEFA, Griffin Hosp.,
6.00%, 7/1/13. . . . . . . . . . . . . . . . . 95 81
_____________________________________________________________________________
DISTRICT OF COLUMBIA - 1.7%
Metropolitan Washington D.C.
Airport Auth., (BIGI Insured),
8.10%, 10/1/08*. . . . . . . . . . . . . . . . 100 109
_____________________________________________________________________________
FLORIDA - 1.5%
Jacksonville HFA, HSI Support
Systems, Inc., (MBIA Insured),
VRDN (Currently 3.10%) . . . . . . . . . . . . 100 100
_____________________________________________________________________________
GEORGIA - 7.7%
Georgia Hosp. Equipment Fin. Auth.,
Pooled Hospital Loan, (MBIA Insured),
VRDN (Currently 3.70%) . . . . . . . . . . . . 100 100
Municipal Electric Auth. of
Georgia, (FGIC Insured),
5.70%, 1/1/19. . . . . . . . . . . . . . . . . 320 275
Rockdale County Dev. Auth., Solid
Waste Disposal, Visy Paper, Inc.,
7.50%, 1/1/26* . . . . . . . . . . . . . . . . 125 119
_____________________________________________________________________________
ILLINOIS - 7.2%
Chicago - O'Hare Int'l. Airport,
International Terminal,
(MBIA Insured), 7.50%, 1/1/17. . . . . . . . . $ 85 $ 89
Illinois HFA, Glen Oak Medical
Center, 9.50%, 11/15/15. . . . . . . . . . . . 80 90
Holy Cross Hosp., 6.70%, 3/1/14. . . . . . . . 300 282
_____________________________________________________________________________
MARYLAND - 11.0%
Anne Arundel County, Consolidated
Water & Sewer, GO, 5.00%, 2/1/20 . . . . . . . 300 234
Maryland Community Dev. Administration,
Single Family, 5.875%, 4/1/17* . . . . . . . . 100 95
7.375%, 4/1/26* . . . . . . . . . . . . . . 90 91
Maryland HHEFA, Doctor's
Community Hosp., 5.50%, 7/1/24 . . . . . . . . 100 73
Univ. of Maryland Medical
System, 9.50%, 1/1/14
(Pre-refunded 7/22/96!). . . . . . . . . . . . 200 220
_____________________________________________________________________________
MASSACHUSETTS - 3.6%
Massachusetts Bay Transportation
Auth., GO, 5.30%, 3/1/04 . . . . . . . . . . . 250 232
_____________________________________________________________________________
MISSISSIPPI - 1.5%
Warren County, PCR, Mississippi
Power and Light, 7.00%, 4/1/22 . . . . . . . . 100 96
_____________________________________________________________________________
NEW HAMPSHIRE - 3.0%
New Hampshire Housing Fin. Auth.,
Single Family Mortgage, 6.85%, 7/1/14* . . . . 200 195
_____________________________________________________________________________
NEW JERSEY - 8.0%
New Jersey HFFA, Irvington General
Hosp., (FHA Insured),
5.875%, 8/1/06 . . . . . . . . . . . . . . . . 250 246
Raritan Bay Medical Center,
7.25%, 7/1/27. . . . . . . . . . . . . . . . . 100 93
New Jersey Turnpike Auth.,
10.375%, 1/1/03
(Escrowed to Maturity) . . . . . . . . . . . . 150 179
_____________________________________________________________________________
NEW MEXICO - 3.3%
New Mexico Ed. Assistance
Foundation, Student Loan,
4.90%, 12/1/01*. . . . . . . . . . . . . . . . 225 212
_____________________________________________________________________________
NEW YORK - 13.1%
Dormitory Auth. of the State of
New York, City Univ.,
6.00%, 7/1/16. . . . . . . . . . . . . . . . . 180 161
Erie County Water Auth.,
(AMBAC Insured),
Zero Coupon, 12/1/17 . . . . . . . . . . . . . 550 103
New York City Ind. Dev. Agency,
Terminal One Group Assoc.,
6.00%, 1/1/15* . . . . . . . . . . . . . . . . 275 249
New York State Mortgage Agency,
Homeowner Mortgage,
6.45%, 10/1/17 . . . . . . . . . . . . . . . . 100 95
Triborough Bridge & Tunnel
Auth., 5.00%, 1/1/17 . . . . . . . . . . . . . 300 238
_____________________________________________________________________________
OHIO - 3.1%
Cuyahoga County, Univ. Hosp. of
Cleveland, VRDN (Currently 3.10%). . . . . . . 100 100
Ohio Water Dev. Auth., Toledo
Edison, 8.00%, 10/1/23 . . . . . . . . . . . . 100 98
_____________________________________________________________________________
OKLAHOMA - 2.2%
Tulsa Municipal Airport,
American Airlines,
7.375%, 12/1/20* . . . . . . . . . . . . . . . 150 141
_____________________________________________________________________________
PENNSYLVANIA - 2.2%
Delaware County Health Care Auth.,
Mercy Health Care Corp.,
4.875%, 11/15/97 . . . . . . . . . . . . . . . $ 150 $ 145
_____________________________________________________________________________
PUERTO RICO - 8.7%
Puerto Rico Aqueduct and Sewer
Auth., 7.875%, 7/1/17. . . . . . . . . . . . . 250 273
Puerto Rico Municipal Fin.
Agency, GO, 5.00%, 7/1/98. . . . . . . . . . . 295 290
_____________________________________________________________________________
SOUTH DAKOTA - 2.8%
South Dakota HDA, Homeownership
Mortgage, 6.65%, 5/1/14. . . . . . . . . . . . 185 180
_____________________________________________________________________________
TEXAS - 3.7%
Texas, Veterans Housing Assistance,
GO, 6.25%, 12/1/15 . . . . . . . . . . . . . . 250 242
_____________________________________________________________________________
VIRGINIA - 4.5%
Fairfax County Water Auth.,
5.75%, 4/1/29. . . . . . . . . . . . . . . . . 100 85
Virginia HDA, Commonwealth
Mortgage, 4.80%, 1/1/05. . . . . . . . . . . . 120 107
Multifamily, 6.50%, 5/1/13 . . . . . . . . . . 100 96
_____________________________________________________________________________
WASHINGTON - 1.3%
Washington Public Power Supply
System, (MBIA Insured),
5.60%, 7/1/15. . . . . . . . . . . . . . . . . 95 81
Total Investments in Securities -
95.8% of Net Assets (Cost - $6,451). . . . . . . $ 6,184
* - Interest subject to alternative minimum tax
! - Used in determining portfolio maturity
AMBAC - AMBAC Indemnity Corp.
BIGI - Bond Investors Guaranty Insurance
COP - Certificates of Participation
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Authority
GO - General Obligation
HDA - Housing Development Authority
HEFA - Health & Educational Facility Authority
HFA - Health Facility Authority
HFFA - Health Facility Financing Authority
HHEFA - Health & Higher Educational Facility
Authority
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
VRDN - Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
Statement of Assets and Liabilities
T. Rowe Price Summit Municipal Funds / October 31, 1994
Amounts in Thousands
__________________________________
Money
Market Intermediate Income
Fund Fund Fund
_________ __________ _________
ASSETS
Investments in securities
at value (Cost - $41,271,
$13,861, and $6,451). . . . . . . . . $ 41,267 $ 13,568 $ 6,184
Receivable for investment
securities sold . . . . . . . . . . . 2,678 504 -
Other assets . . . . . . . . . . . . . 969 573 330
_________ _________ _________
Total assets. . . . . . . . . . . . . 44,914 14,645 6,514
_________ _________ _________
LIABILITIES
Payable for investment
securities purchased. . . . . . . . . 2,085 996 -
Other liabilities. . . . . . . . . . . 237 340 61
_________ _________ _________
Total liabilities . . . . . . . . . . 2,322 1,336 61
_________ _________ _________
Net Assets. . . . . . . . . . . . . . $ 42,592 $ 13,309 $ 6,453
_________ _________ _________
_________ _________ _________
Net Assets Consisting of:
Accumulated realized gains/losses
- net of distributions. . . . . . . . (1) (352) (291)
Net unrealized depreciation
of investments. . . . . . . . . . . . (4) (293) (267)
Paid-in-capital applicable to
42,597,383, 1,387,513, and
710,891 shares of $0.0001 par
value capital stock outstanding;
1,000,000,000 shares of the
Corporation authorized. . . . . . . . 42,597 13,954 7,011
_________ _________ _________
Net Assets . . . . . . . . . . . . . . $ 42,592 $ 13,309 $ 6,453
_________ _________ _________
_________ _________ _________
Net Asset Value Per Share. . . . . . . $1.00 $9.59 $9.08
_____ _____ _____
_____ _____ _____
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Summit Municipal Funds / From October 29,1993 (Commencement of
Operations) to October 31, 1994
Amounts in Thousands
________________________________
Money
Market Intermediate Income
Fund Fund Fund
________ __________ ________
INVESTMENT INCOME
Interest income. . . . . . . . . . . . $ 621 $ 527 $ 286
EXPENSES
Investment management and
administrative fees . . . . . . . . (94) (53) (25)
________ ________ ________
Net investment income. . . . . . . . . 527 474 261
________ ________ ________
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
Securities. . . . . . . . . . . . . (1) (359) (300)
Futures . . . . . . . . . . . . . . - 7 9
________ ________ ________
Net realized loss . . . . . . . . . (1) (352) (291)
Change in net unrealized
appreciation or
depreciation. . . . . . . . . . . . (4) (293) (267)
________ ________ ________
Net loss on investments. . . . . . . . (5) (645) (558)
________ ________ ________
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS. . . . . . . $ 522 $ (171) $ (297)
________ ________ ________
________ ________ ________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Summit Municipal Funds / From October 29,1993 (Commencement of
Operations) to October 31, 1994
Amounts in Thousands
__________________________________
Money
Market Intermediate Income
Fund Fund Fund
________ __________ ________
INCREASE (DECREASE) IN
NET ASSETS
Operations
Net investment income . . . . . . . $ 527 $ 474 $ 261
Net realized loss on
investments . . . . . . . . . . . (1) (352) (291)
Change in net unrealized
appreciation or depreciation
of investments. . . . . . . . . . (4) (293) (267)
________ ________ ________
Increase (decrease) in net
assets from operations. . . . . . 522 (171) (297)
________ ________ ________
Distributions to shareholders
Net investment income . . . . . . . (527) (474) (261)
________ ________ ________
Capital share transactions(1)
Sold. . . . . . . . . . . . . . . . 68,449 19,663 7,757
Distributions reinvested. . . . . . 491 386 223
Redeemed. . . . . . . . . . . . . . (26,383) (6,125) (999)
________ ________ ________
Increase in net assets from
capital share
transactions. . . . . . . . . . . 42,557 13,924 6,981
________ ________ ________
Total increase . . . . . . . . . . . 42,552 13,279 6,423
NET ASSETS
Beginning of period . . . . . . . . 40 30 30
________ ________ ________
End of period . . . . . . . . . . . $ 42,592 $ 13,309 $ 6,453
________ ________ ________
________ ________ ________
(1) Share transactions
Sold . . . . . . . . . . . . . . 68,449 shs. 1,971 shs. 789 shs.
Distributions reinvested . . . . 491 39 24
Redeemed . . . . . . . . . . . . (26,383) (625) (105)
________ ________ ________
Net increase in
shares outstanding. . . . . . . 42,557 1,385 708
________ ________ ________
________ ________ ________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Summit Municipal Funds / October 31, 1994
Note 1 - Significant Accounting Policies
T. Rowe Price Summit Municipal Funds, Inc. (the Corporation) is registered
under the Investment Company Act of 1940. The Summit Municipal Money Market
Fund (the Money Market Fund), the Summit Municipal Intermediate Fund (the
Intermediate Fund) and the Summit Municipal Income Fund (the Income Fund),
diversified, open-end management investment companies, are the three
portfolios established by the Corporation.
A) Security valuation - Debt securities are generally traded in the
over-the-counter market. Investments in securities with remaining maturities
of one year or more are stated at fair value as furnished by dealers who make
markets in such securities or by an independent pricing service, which
considers yield or price of bonds of comparable quality, coupon, maturity, and
type, as well as prices quoted by dealers who make markets in such securities.
Except with respect to certain securities held by the Money Market Fund,
securities with remaining maturities less than one year are stated at fair
value which is determined by using a matrix system that establishes a value
for each security based on money market yields. Securities held by the Money
Market Fund with remaining maturities of 60 days or less are valued at
amortized cost. Financial futures contracts and options on futures contracts
are valued at closing settlement prices.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by, or under the supervision of, the officers of
the Fund, as authorized by the Board of Directors.
B) Premiums and Discounts - Premiums on municipal securities are amortized for
both financial and tax reporting purposes. Discounts, other than original
issue, are not amortized for financial reporting purposes.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Distributions to shareholders are
recorded by the Fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. Payments
("variation margin") made or received by the Intermediate or Income Funds,
dependent on the daily fluctuations in the value of the futures contracts, are
recorded as unrealized gains or losses until the contracts are closed
Note 2 - Organization
The Corporation was organized on September 14, 1993 and had no operations
prior to October 29, 1993, other than those related to organizational matters,
including the following sale of shares of the Funds' capital stock on October
22, 1993, to T. Rowe Price Associates, Inc.:
Money
Market Intermediate Income
Fund Fund Fund
_________ ___________ _________
Shares Sold 40,000 3,000 3,000
Net Asset Value
Per Share $1.00 $10.00 $10.00
Note 3 - Portfolio Transactions
Purchase and sales of portfolio securities, other than short-term securities,
for the period ended October 31, 1994, were as follows:
Intermediate Income
Fund Fund
_____________ ____________
Purchases $29,098,000 $13,625,000
Sales 15,132,000 7,168,000
Note 4 - Federal Income Taxes
No provision for federal income taxes is required since each Fund intends to
qualify as a regulated investment company and distribute all of its income.
The Money Market, Intermediate and Income Funds have unused realized capital
loss carryforwards for federal income tax purposes of $1,000, $352,000, and
$291,000, respectively at October 31, 1994, which expire in 2002.
At October 31, 1994, the aggregate costs of investments for the Money
Market, Intermediate and Income Funds for federal income tax and financial
reporting purposes were $41,271,000, $13,861,000, and $6,451,000,
respectively. Net unrealized appreciation (depreciation) was as follows:
Money
Market Intermediate Income
Fund Fund Fund
_________ ___________ _________
Appreciated
Investments $ 4,000 $ 4,000$ 8,000
Depreciated
Investments (8,000) (297,000) (275,000)
_________ _________ _________
Net Unrealized
Appreciation
(Depreciation) $ (4,000) $(293,000) $(267,000)
_________ _________ _________
_________ _________ _________
Note 5 - Related Party Transactions
The investment management and administrative agreement between each Fund and
T. Rowe Price Associates, Inc. (the Manager) provides for an all-inclusive
investment management fee, computed daily and paid monthly, based on each
Fund's daily net assets. The effective annual all-inclusive fee rate is equal
to 0.45% for the Money Market Fund, 0.50% for the Intermediate and Income
Funds. Services provided under the agreement include investment management,
shareholder servicing, transfer agency, fund accounting and investment
custody. The agreement provides that the Fund pay its own interest, taxes,
brokerage commissions and extraordinary expenses. At October 31, 1994,
investment management and administrative fees payable were $7,000 for the
Municipal Money Market Fund.
Financial Highlights
T. Rowe Price Summit Municipal Funds / From October 29,1993 (Commencement of
Operations) to October 31, 1994
For a share outstanding throughout the period
_____________________________________________
Money
Market Intermediate Income
Fund Fund Fund
________ __________ ________
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . . $ 1.000 $ 10.00 $ 10.00
_______ ________ ________
Investment Activities
Net investment
income. . . . . . . . . . . 0.023 0.43 0.50
Net realized and
unrealized loss . . . . . . - (0.41) (0.92)
_______ ________ ________
Total from
Investment
Activities. . . . . . . . . 0.023 0.02 (0.42)
_______ ________ ________
Distributions
Net investment
income. . . . . . . . . . . (0.023) (0.43) (0.50)
________ ________ ________
NET ASSET VALUE, END
OF PERIOD. . . . . . . . . . $ 1.000 $ 9.59 $ 9.08
_______ ________ ________
_______ ________ ________
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . 2.35% 0.18% (4.38)%
Ratio of Expenses
to Average
Net Assets . . . . . . . . . 0.45%! 0.50%! 0.50%!
Ratio of Net Investment
Income to Average
Net Assets . . . . . . . . . 2.56%! 4.50%! 5.23%!
Portfolio Turnover
Rate . . . . . . . . . . . . - 157.5%! 161.1%!
Net Assets,
End of Period
(in thousands) . . . . . . . $ 42,592 $13,309 $ 6,453
! Annualized.
Report of Independent Accountants
To the Board of Directors of the T. Rowe Price Summit Municipal Funds, Inc.
andShareholders of the T. Rowe Price Summit Municipal Money Market Fund, T.
Rowe Price Summit Municipal Intermediate Fund and T. Rowe Price Summit
Municipal Income Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments of the T. Rowe Price Summit Municipal
Funds, Inc. (which include the T. Rowe Price Summit Municipal Money Market
Fund, T. Rowe Price Summit Municipal Intermediate Fund, and T. Rowe Price
Summit Municipal Income Fund), as of October 31, 1994, and the related
statement of operations, statement of changes in net assets and financial
highlights for the period October 29, 1993 (commencement of operations) to
October 31, 1994. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of October 31, 1994 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the portfolios of the T. Rowe Price Summit Municipal
Funds, Inc., as of October 31, 1994, the results of their operations, the
changes in their net assets and financial highlights for the period stated in
the first paragraph in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
November 22, 1994
Chart 1 - Municipal Bond and Note Yields
Shows interest rate levels of Lehman Brothers Municipal Bond Index, Five-Year
General Obligation, and Six-Month Moody's Investment Grade 1 Note from Oct.
31, 1993 through October 31, 1994.
Chart 2 - Performance Comparison
Shows $10,000 invested in Summit Municipal Intermediate Fund in 10/93 growing
to $10,018 on 10/94, $10,000 invested in Lehman Brothers 7 Year Municipal Bond
Index in 10/93 declining to $9,810 on 10/94, and $10,000 invested in Lipper
Intermediate Municipal Debt Funds Average in 10/93 declining to $9,751 on
10/94.
Chart 3 - Performance Comparison
Shows $10,000 invested in Summit Municipal Income Fund in 10/93 declining to
$9,562 on 10/94, $10,000 invested in Lehman Brothers Municipal Bond Index in
10/93 declining to $9,564 on 10/94, and $10,000 invested in Lipper General
Municipal Debt Funds Average in 10/93 declining to $9,414 on 10/94.
