Annual Report
Summit Municipal Funds
October 31, 1996
T. Rowe Price
Report Highlights
o Following sluggish performance earlier this year, the municipal bond
market and your funds generated solid returns during the past 6- and
12-month periods.
o On October 31, 1996, yields on municipal securities were close to their
levels of a year earlier, but they had fluctuated widely during the past
year.
o All three Summit Funds outperformed their respective benchmarks during
the latest reporting periods and also since their inception on October
29, 1993.
o The threat of Fed tightening appears to be over for the next few months
at least, and we expect municipal yields to fluctuate in a range around
current levels.
o As the Summit Funds celebrate their third anniversary, we want to thank
you for your confidence in T. Rowe Price and assure you that we will
continue to seek opportune investments on your behalf.
Fellow Shareholders
Tax-free yields ended the fiscal year close to their levels of a year ago,
after fluctuating widely during the past 12 months. Overcoming a weak spell
earlier in the year, municipal bonds and the Summit Municipal Funds generated
sound returns over both the 6- and 12-month periods ended October 31, 1996.
Market Environment
During the past 12 months, bond prices and yields reflected changing economic
conditions. The economy regained strength early in 1996 after slowing in 1995.
Stronger growth, particularly in the second quarter of 1996, reversed
expectations that the Federal Reserve would continue to ease monetary policy
as it had in 1995 and earlier this year. In anticipation of a possible
tightening in monetary policy in the second and third quarters of 1996,
interest rates trended higher.
Chart 1 - Municipal Bond and Note Yields chart showing yields on 30-year AAA
GO, five-year AAA GO, and one-year Moody's Investment Grade 1 Note, 10/31/95
to 10/31/96
Long- and intermediate-term municipal yields reached their highest levels of
the year in May and June, traded in a narrow range during July and August,
then fell in September after the Federal Reserve declined to raise key
short-term rates. Short-term municipal rates rose steadily from February
through August in anticipation of Fed tightening and because of strong
seasonal borrowing by states. By the end of October, money market rates
trended lower due to lack of supply and solid demand from investors.
Over the course of the year, tax reform legislation that would negatively
affect municipals receded as an issue, spurring strong performance relative to
the taxable bond market. Municipal bonds outperformed taxable bonds decisively
from August through September due to light supply in the municipal market and
steady demand. By the end of the third quarter, long-term municipal bonds
posted their lowest yield relationship to long-term Treasuries (80.2%) of the
past 12 months.
In October, the municipal market underperformed taxables when a rush of new
supply came to market, forcing an increase in yields and a drop in prices to
accommodate the increased volume. Issuance of securities through October was
up 18% over 1995 levels, the first year-over-year increase since 1993, at
times creating buying opportunities for the Summit Funds.
Throughout the year, credit quality spreads (the difference in yields between
higher- and lower-quality bonds) narrowed, resulting in strong performance for
lower-rated and below-investment-grade securities. This was particularly
significant for the Summit Municipal Intermediate and Municipal Income Funds,
which have the ability to invest up to 20% of assets in lower-rated bonds.
Summit Municipal Money Market Fund
Short-term yields changed little from their levels of six and 12 months ago.
Six-month Moody's Investment Grade-1 (MIG-1) notes yielded 3.60% on October
31, 1996, 3.65% on April 30, and 3.75% on October 31, 1995. Similarly,
one-year MIG-1 notes ended the fiscal year at 3.70%, unchanged from the April
30 level and down from 3.90% at the close of the previous fiscal year. While
rates did not change significantly on those dates, average yields for
six-month and one-year securities were nearly 50 basis points lower over the
last 12 months than over the previous 12-month period.
The fund ended its fiscal year with a weighted average maturity of 78 days, up
substantially from 51 days six months ago. Throughout the year, we kept this
maturity significantly longer than the peer group average, which was 54 days
on October 31.
Our aggressive maturity posture stemmed from two main themes. First, we felt
reasonably confident that the Federal Reserve would keep the federal funds
rate at 5.25% through the remainder of the year - enough time to pick up the
additional yield available further out on the yield curve. Second, solid
demand has kept pace with the supply of new issues, and we anticipate lighter
short-term debt issuance over the next few months.
Performance Comparison
Periods Ended 10/31/96 6 Months 12 Months
Municipal Money
Market Fund 1.60% 3.28%
Lipper Tax-Exempt Money
Market Funds Average 1.46 2.99
Our maturity strategy, plus our higher exposure to issues subject to the
alternative minimum tax (which generally yield about 10 basis points more than
other issues), helped the fund outperform its peer group average for both the
6- and 12-month periods ended October 31.
Summit Municipal Intermediate Fund
Over the last year, intermediate-term yields fluctuated in a range of 55 to 70
basis points. We had lowered duration (a measure of sensitivity to interest
rate changes) to slightly above five years by May, as rates rose in the second
quarter. Subsequently, we kept duration in a neutral range, around 5.5 to 5.75
years, viewing the market's choppiness as an opportunity to sell on strength
and buy on weakness.
Our main focus was on enhancing the yield of the portfolio and pursuing
opportunities uncovered by our credit research. For instance, we increased our
allocation to housing revenue bonds that offer more yield in return for the
risk of being called before maturity. We also continued to favor longer-term
bonds trading to their shorter call dates because they offer greater yield
than bonds with similar interest rate risk.
We liquidated some positions that had appreciated due to their improved credit
quality and replaced them with lower-quality holdings whose financial fortunes
appeared to be improving, according to our credit research. The fund's strong
performance relative to its peers was a reflection of our trading strategy and
our exposure to medium- and lower-quality bonds that performed well.
Performance Comparison
Periods Ended 10/31/96 6 Months 12 Months
Municipal Intermediate Fund 3.95% 5.39%
Lipper Intermediate Municipal
Debt Funds Average 3.33 4.34
The fund surpassed its Lipper benchmark during the 6- and 12-month periods
ended October 31, 1996. Since inception three years ago, your fund also
exceeded its benchmark, as can be seen in the chart and table following this
letter.
Summit Municipal Income Fund
Over the last fiscal year, our primary investment focus was on identifying
sectors and individual securities with attractive credit outlooks, while
maintaining a generally neutral posture on the direction of interest rates. We
maintained the fund's duration in the longer end of what we regard as a
neutral range, which was offset by our holdings of higher-yielding securities
and housing bonds that are less interest rate-sensitive.
Throughout the year as the economy remained sound, demand grew for medium- and
lower-quality securities, resulting in higher returns than those provided by
the highest-quality issues. We took advantage of our ability to invest up to
20% of assets in below-investment-grade securities by buying well-diversified
holdings in this area. Thus, your fund benefited not only from the superior
price appreciation of its medium- and lower-quality bonds but also from their
higher income.
Chart 2 - Pie chart showing quality diversification: 44% AA, 19% BBB, 19% A,
13% BB, 3% AAA; 2% B and below
As credit spreads narrowed, we started to reduce some of our lower-quality
positions and move toward a more balanced portfolio in terms of credit
quality. One area where we are either maintaining or increasing our exposure
is housing bonds, which we think possess attractive yields and good value
given the relatively low level of interest rates.
Performance Comparison
Periods Ended 10/31/96 6 Months 12 Months
Municipal Income Fund 5.57% 7.04%
Lipper General Municipal
Debt Funds Average 4.37 5.11
This strategy, along with a somewhat larger than normal position in both
hospital bonds and higher-yielding housing bonds, enabled the fund to generate
stronger returns than its Lipper benchmark for both the six-month and one-year
periods ended October 31, 1996.
Outlook
Indications of further slowing in economic growth have all but eliminated
concerns of Fed tightening in the near term. Economic activity in the fourth
quarter will be a key determinant of the direction of monetary policy, as the
Fed currently appears to be taking a wait-and-see approach.
With the elections behind us, the bond markets have begun to anticipate the
forthcoming political agenda, including tax reform and a balanced budget
agreement. Both issues faded early in the year as the campaigns took center
stage, but their revival will have an impact on municipal rates in coming
months. A balanced budget agreement seems to have bipartisan support, while
there is more resistance to serious tax reform proposals.
With municipal yields as low as they are now, we expect issuance to increase
and yields to trade in a range around current levels. Given this outlook, we
will continue to focus our efforts on enhancing performance through credit
research, bond structure, and trading opportunities while paying close
attention to evolving political issues.
We are pleased to report that the Summit Funds celebrated their three-year
anniversary at the end of October, with each one generating greater total
returns than its benchmark. We will, of course, continue to seek opportunities
to add value for our shareholders.
As always, we appreciate your confidence in T. Rowe Price.
Respectfully submitted,
William T. Reynolds
Director, Fixed Income Division
Mary J. Miller
Director, Municipal Bond Department
November 22, 1996
T. Rowe Price Summit Municipal Funds
Portfolio Highlights
Key Statistics
4/30/96 10/31/96
Summit Municipal Money Market Fund
Price Per Share $ 1.00 $ 1.00
Dividends Per Share
For 6 months 0.016 0.016
For 12 months 0.034 0.032
Dividend Yield (7-Day Compound) * 3.53% 3.29%
Weighted Average Maturity (days) 51 78
Weighted Average Quality ** First Tier First Tier
Summit Municipal Intermediate Fund
Price Per Share $ 10.07 $10.22
Dividends Per Share
For 6 months 0.24 0.24
For 12 months 0.49 0.48
Dividend Yield *
For 6 months 4.79% 4.82%
For 12 months 4.90 4.87
Weighted Average Maturity (years) 8.9 9.1
Weighted Average Effective
Duration (years) 5.5 5.7
Weighted Average Quality *** AA- AA-
Summit Municipal Income Fund
Price Per Share $ 9.71 $ 9.97
Dividends Per Share
For 6 months 0.27 0.27
For 12 months 0.54 0.54
Dividend Yield *
For 6 months 5.49% 5.57%
For 12 months 5.67 5.63
Weighted Average Maturity (years) 20.53 20.69
Weighted Average Effective
Duration (years) 8.32 8.09
Weighted Average Quality *** A A
* 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.
** All securities purchased in the money fund are rated in the two highest
categories (tiers) as established by national rating agencies or, if
unrated, are deemed of comparable quality by T. Rowe Price.
*** Based on T. Rowe Price research.
Note: The Municipal Money Market Fund seeks to maintain a stable share price
of $1.00, but this is not guaranteed. An investment in the fund is neither
insured nor guaranteed by the U.S. government.
Taxability of dividends: 100% of the income earned by the funds for the 12
months ended October 31, 1996, was exempt from federal income tax.
T. Rowe Price Summit Municipal Funds
Portfolio Highlights
Sector Diversification
Percent of Percent of
Net Assets Net Assets
4/30/96 10/31/96
Summit Municipal Money Market Fund
Air and Sea
Transportation Revenue 13% 18%
Industrial and Pollution
Control Revenue 22 16
Electric Revenue 4 12
General Obligation - Local 6 10
General Obligation - State 5 9
Housing Finance Revenue 8 8
Educational Revenue 8 7
Solid Waste Revenue 2 5
Prerefunded Bonds 12 4
Other Revenue - 4
Lease Revenue 3 3
Water and Sewer Revenue 4 2
Escrowed to Maturity - 2
All Other 11 -
Other Assets Less Liabilities 2 -
Total 100% 100%
Summit Municipal Intermediate Fund
Air and Sea Transportation Revenue 14% 14%
Solid Waste Revenue 9 12
Nuclear Revenue 3 12
Housing Finance Revenue 6 10
General Obligation - State 7 8
Hospital Revenue 9 7
Lease Revenue 5 6
Dedicated Tax Revenue 8 5
Prerefunded Bonds 9 5
Water and Sewer Revenue 7 5
Educational Revenue 5 4
General Obligation - Local 4 3
Ground Transportation Revenue 8 2
All Other 7 7
Other Assets Less Liabilities - 1 -
Total 100% 100%
Summit Municipal Income Fund
Hospital Revenue 16% 23%
Housing Finance Revenue 13 18
Industrial and Pollution
Control Revenue 7 10
Air and Sea
Transportation Revenue 8 7
General Obligation - Local 6 7
Nuclear Revenue 5 7
Water and Sewer Revenue 7 6
Life Care/Nursing Home Revenue 2 5
Ground Transportation Revenue 10 4
Educational Revenue 5 4
Solid Waste Revenue 6 3
Electric Revenue 4 2
Lease Revenue 4 2
Dedicated Tax Revenue 2 2
Other Revenue 2 2
General Obligation - State 2 2
Other Assets Less Liabilities 1 - 4
Total 100% 100%
Performance Comparison
These charts show the value of a hypothetical $10,000 investment in each fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
Chart 3 - SEC Graph: a line chart showing the cumulative growth of $10,000
invested in the Summit Municipal Money Market Fund over the past 10 years
(or"from inception" for funds lacking 10-year histories) compared with $10,000
invested in a broad-based index or average over the same period.
T. Rowe Price Summit Municipal Funds
Performance Comparison
T. Rowe Price Summit Municipal Intermediate Fund
Chart 4 - SEC Graph: a line chart showing the cumulative growth of $10,000
invested in the Summit Municipal Intermediate Fund over the past 10 years (or
"from inception" for funds lacking 10-year histories) compared with $10,000
invested in a broad-based index or average over the same period.
Chart 5 - SEC Graph: a line chart showing the cumulative growth of $10,000
invested in the Summit Municipal Income Fund over the past 10 years (or "from
inception" for funds lacking 10-year histories) compared with $10,000 invested
in a broad-based index or average over the same period.
Average Annual Compound Total Return
Since Inception
Periods Ended 10/31/96 1 Year 3 Years Inception Date
Summit Municipal
Money Market Fund 3.28% 3.05% 3.05% 10/29/93
Summit Municipal
Intermediate Fund 5.39 5.56 5.55 10/29/93
Summit Municipal
Income Fund 7.04 5.49 5.48 10/29/93
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price Summit Municipal Money Market Fund
Financial Highlights For a share outstanding throughout each period
Year 10/29/93
Ended to
10/31/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of period $ 1.000 $ 1.000 $ 1.000
Investment activities
Net investment income 0.032 0.035 0.023
Distributions
Net investment income (0.032) (0.035) (0.023)
NET ASSET VALUE
End of period $ 1.000 $ 1.000 $ 1.000
Ratios/Supplemental Data
Total return 3.28% 3.53% 2.35%
Ratio of expenses to
average net assets 0.45% 0.45% 0.45%!
Ratio of net investment
income to average net assets 3.23% 3.48% 2.56%!
Net assets, end of period
(in thousands) $ 96,264 $ 77,958 $ 42,592
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Intermediate Fund
Financial Highlights For a share outstanding throughout each period
Year 10/29/93
Ended to
10/31/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of period $ 10.17 $ 9.59 $ 10.00
Investment activities
Net investment income 0.48 0.48 0.43
Net realized and
unrealized gain (loss) 0.05 0.58 (0.41)
Total from
investment activities 0.53 1.06 0.02
Distributions
Net investment income (0.48) (0.48) (0.43)
NET ASSET VALUE
End of period $ 10.22 $ 10.17 $ 9.59
Ratios/Supplemental Data
Total return 5.39% 11.39% 0.18%
Ratio of expenses to
average net assets 0.50% 0.50% 0.50%!
Ratio of net investment
income to average net assets 4.77% 4.93% 4.50%!
Portfolio turnover rate 72.9% 86.1% 157.5%!
Net assets, end of period
(in thousands) $ 29,175 $ 22,145 $ 13,309
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Income Fund
Financial Highlights For a share outstanding throughout each period
Year 10/29/93
Ended to
10/31/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of period $ 9.84 $ 9.08 $ 10.00
Investment activities
Net investment income 0.54 0.54 0.50
Net realized and
unrealized gain (loss) 0.13 0.76 (0.92)
Total from
investment activities 0.67 1.30 (0.42)
Distributions
Net investment income (0.54) (0.54) (0.50)
NET ASSET VALUE
End of period $ 9.97 $ 9.84 $ 9.08
Ratios/Supplemental Data
Total return 7.04% 14.68% (4.38)%
Ratio of expenses to
average net assets 0.50% 0.50% 0.50%!
Ratio of net investment
income to average net assets 5.51% 5.68% 5.23%!
Portfolio turnover rate 56.7% 73.7% 161.1%!
Net assets, end of period
(in thousands) $ 15,909 $ 11,108 $ 6,453
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Money Market Fund
October 31, 1996
Statement of Net Assets Par Value
In thousands
ALABAMA 1.6%
Baldwin County Board
of Education, GO, 5.00%, 2/1/97 $ 550 $ 552
Jefferson County, Sewer,
RAW, VRDN (Currently 3.60%) 1,000 1,000
Total Alabama (Cost $1,552) 1,552
ALASKA 3.6%
Alaska Industrial Dev. and Export Auth.
Healy Coal, VRDN (currently 3.65%)* 3,500 3,500
Total Alaska (Cost $3,500) 3,500
ARIZONA 0.1%
Salt River
Agricultural Improvement and Power Dist.
7.00%, 1/1/19 (Prerefunded 1/1/97!) 100 100
Total Arizona (Cost $100) 100
CALIFORNIA 7.2%
California, GO, RAN, 4.50%, 6/30/97 1,700 1,706
Oakland
COP, VRDN (Currently 3.70%) 3,200 3,200
GO, TRAN, 4.75%, 6/30/97 1,000 1,005
San Luis Obispo County,
GO, TRAN, 4.50%, 7/8/97 1,000 1,004
Total California (Cost $6,915) 6,915
COLORADO 0.7%
Denver City and County Board
of Water Commissioners
6.00%, 11/15/96 (FGIC Insured) 650 650
Total Colorado (Cost $650) 650
DISTRICT OF COLUMBIA 1.0%
Dist. of Columbia, American Univ.,
VRDN (Currently 3.60%) 1,000 1,000
Total District of Columbia (Cost $1,000) 1,000
FLORIDA 3.8%
Dade County
Guaranteed Entitlement, 9.60%, 2/1/97
(Escrowed to Maturity) 100 102
Florida Board Of Education
Capital Outlay, Public Education
6.00%, 5/1/97 (Escrowed to Maturity) 100 101
7.00%, 6/1/97 (Escrowed to Maturity) 165 168
Greater Orlando Aviation Auth.
7.30%, 10/1/97 175 180
TECP, 3.65%, 11/14/96 * 1,500 1,500
Jacksonville Florida Electric Auth.
Electric Systems
3.90%, 10/1/97 400 401
TECP, 3.55%, 1/30/97 1,000 1,000
St Johns River Power Park,
9.60%, 10/1/97 220 231
Total Florida (Cost $3,683) 3,683
GEORGIA 4.8%
Atlanta, Airport Fac.,
4.60%, 1/1/97 (AMBAC Insured) 200 200
Savannah Economic Dev. Auth.
Home Depot, VRDN (Currently 3.75%) 4,400 4,400
Total Georgia (Cost $4,600) 4,600
IDAHO 1.0%
Idaho, GO, TAN, 4.50%, 6/30/97 1,000 1,004
Total Idaho (Cost $1,004) 1,004
ILLINOIS 2.1%
Illinois, GO, 4.20%, 6/1/97 500 501
Lake County Water and Sewer
W. W. Grainger, Inc.,
VRDN (Currently 3.85%) * 1,500 1,500
Total Illinois (Cost $2,001) 2,001
INDIANA 4.9%
Petersburg Solid Waste Disposal
Indianapolis Power and Light Co.
VRDN (Currently 3.65%) * 4,700 4,700
Wells County, 9.75%, 1/15/08
(Prerefunded 1/15/97!) 50 52
Total Indiana (Cost $4,752) 4,752
KANSAS 2.9%
Butler County
Solid Waste Disposal Fac., Texaco Inc.
VRDN (Currently 3.70%) * 2,500 2,500
Wyandotte County Capital Improvement
Criminal Justice Complex, COP,
7.875%, 9/1/07 (Prerefunded 9/1/97!) 300 316
Total Kansas (Cost $2,816) 2,816
KENTUCKY 4.7%
Carroll County, Solid Waste Disposal Fac.
Kentucky Utilities Co.
VRDN (Currently 3.70%) * 4,500 4,500
Total Kentucky (Cost $4,500) 4,500
LOUISIANA 3.2%
Louisiana Recovery Dist.
Sales Tax
5.50%, 7/1/97 (Escrowed to Maturity) 1,000 1,012
3.90%, 7/1/97 (FGIC Insured)
(Escrowed to Maturity) 150 150
Plaquemines Parish
The British Petroleum Company
VRDN (Currently 3.70%) * 1,800 1,800
Saint Charles Parish, PCR
Shell Oil, VRDN (Currently 3.70%) * 100 100
Total Louisiana (Cost $3,062) 3,062
MARYLAND 1.1%
Baltimore County, Public Improvement,
GO, 6.50%, 4/1/97 100 101
Howard County, GO, 5.30%, 8/15/97 60 61
Maryland, State and Local Fac. Loan,
GO, 4.75%, 2/1/97 100 100
Maryland DOT, 7.00%, 7/1/01 (Prerefunded 7/1/97!) 50 52
Maryland HHEFA
Howard County General Hosp.,
7.00%, 7/1/17 (Prerefunded 7/1/97!) 35 36
Memorial Hosp. of Cumberland,
9.25%, 7/1/17 (Prerefunded 7/1/97!) 50 53
Prince Georges County, GO
6.90%, 9/1/99 (Prerefunded 9/1/97!) 250 261
Washington Suburban Sanitation Dist.
General Construction, GO
5.60%, 11/1/96 50 50
7.25%, 1/1/04 (Prerefunded 1/1/97!) 300 307
Total Maryland (Cost $1,021) 1,021
MICHIGAN 3.6%
Detroit School Dist.
Wayne County School Aid, GO, RAN
4.50%, 5/1/97 2,000 2,005
Wayne/Charter County Airport
Detroit Metropolitan Airport,
VRDN (currently 3.65%)* 1,500 1,500
Total Michigan (Cost $3,505) 3,505
MINNESOTA 1.7%
Minnesota, GO
6.50%, 8/1/97 40 40
6.60%, 8/1/97 90 92
7.10%, 8/1/01 (Prerefunded 8/1/97!) 1,000 1,025
Univ. of Minnesota, TECP, 3.70%, 12/5/96 500 500
Total Minnesota (Cost $1,657) 1,657
MISSISSIPPI 0.6%
Jackson County Industrial Sewage Fac.
Chevron, VRDN (Currently 3.70%) * 600 600
Total Mississippi (Cost $600) 600
NEW HAMPSHIRE 0.8%
New Hampshire HHEFA
Dartmouth Ed. Loan Corp.,
3.75%, 6/1/97 765 765
Total New Hampshire (Cost $765) 765
NEW MEXICO 4.2%
Albuquerque, Airport, VRDN
(Currently 3.60%) * 3,000 3,000
Santa Fe, Single Family Mortgage,
4.00%, 11/15/96 * 1,000 1,000
Total New Mexico (Cost $4,000) 4,000
NEW YORK 4.2%
New York City, GO, RAN,
4.50%, 4/15/97 3,000 3,012
Rochester, GO, BAN, 4.50%, 10/30/97 1,000 1,008
Total New York (Cost $4,020) 4,020
NORTH CAROLINA 0.7%
North Carolina Medical Care Commission
Carolina Medicorp., 7.875%, 5/1/15
(Prerefunded 5/1/97!) 115 119
Winston Salem, GO, 6.50%, 6/1/97 500 508
Total North Carolina (Cost $627) 627
OHIO 3.6%
Cleveland
Ohio State Univ., GO
(Currently 3.90%), 6/1/97
(AMBAC Insured) 165 165
Erie County
Firelands Community Hosp.,
8.875%, 1/1/15
(Prerefunded 1/1/97!) 290 295
Ohio Housing Fin. Agency,
4.00%, 8/13/97 * 3,000 3,000
Total Ohio (Cost $3,460) 3,460
PENNSYLVANIA 5.2%
Pennsylvania, GO, TAN, 4.50%, 6/30/97 1,000 1,005
Pennsylvania Higher Ed. Fac. Auth.
Student Loan
VRDN (Currently 3.60%) * 4,000 4,000
Total Pennsylvania (Cost $5,005) 5,005
TENNESSEE 2.1%
Tennessee HDA, Homeownership,
3.85%, 5/29/97 * 2,000 2,000
Total Tennessee (Cost $2,000) 2,000
TEXAS 8.3%
Houston
Water
8.10%, 12/1/08
(Prerefunded 12/1/96!) 285 292
8.10%, 12/1/10 (BIGI Insured)
(Prerefunded 12/1/96!) 245 251
8.20%, 12/1/16 (MBIA Insured)
(Prerefunded 12/1/96!) 105 107
Water and Sewer
7.125%, 12/1/16
(Prerefunded 12/1/96!) 125 128
8.20%, 12/1/15
(Prerefunded 12/1/96!) 190 195
4.50%, 12/1/96 (MBIA Insured) 500 500
Houston Airport, TECP, 3.60 - 3.65%,
11/8/96 - 1/13/97 * 4,000 4,000
Texas, GO, TRAN, 4.75%, 8/29/97 2,500 2,516
Total Texas (Cost $7,989) 7,989
UTAH 11.0%
Salt Lake City, Airport, VRDN
(Currently 3.60%) 4,400 4,400
Salt Lake County
Kennecott / RTZ Corp.,
Solid Waste Disposal
VRDN (Currently 3.65%) * 4,700 4,700
Utah Housing Fin. Agency
Single Family Mortgage,
VRDN (Currently 3.65%)
(CGIC Insured) 1,500 1,500
Total Utah (Cost $10,600) 10,600
VIRGINIA 8.2%
Alexandria IDA, Ogden Martin,
VRDN (Currently 3.65%) * 4,650 4,650
Capital Region Airport Commission
Richmond Int'l. Airport, VRDN
(Currently 3.55%)
(AMBAC Insured) * 3,000 3,000
Virginia HDA, 5.60%, 7/1/97 * 250 252
Total Virginia (Cost $7,902) 7,902
WASHINGTON 0.8%
Univ. of Washington
Housing and Dining, 4.00%, 12/1/96
(MBIA Insured) 100 100
Washington
GO, 4.00%, 7/1/97 90 90
Motor Vehicle Fuel Tax, GO,
8.40%, 9/1/97 550 570
Total Washington (Cost $760) 760
WEST VIRGINIA 0.3%
West Virginia Hosp. Fin. Auth.
United Hosp. Center, Inc.,
7.35%, 4/1/97
(CGIC Insured)
(Escrowed to Maturity) 300 304
Total West Virginia (Cost $304) 304
WISCONSIN 1.1%
Milwaukee, GO, 4.80%, 2/15/97 400 401
Wisconsin, GO
4.55%, 5/1/97 100 100
5.75%, 5/1/97 500 505
Total Wisconsin (Cost $1,006) 1,006
WYOMING 1.0%
Converse County, PCR, Pacificorp,
TECP, 3.55%, 11/29/96 1,000 1,000
Total Wyoming (Cost $1,000) 1,000
Total Investments in Securities
100.1% of Net Assets (Cost $96,356) $ 96,356
Other Assets Less Liabilities (92)
NET ASSETS $ 96,264
Net Assets Consist of:
Paid-in-capital applicable to 96,263,957
shares of $0.0001 par value capital stock
outstanding; 1,000,000,000 shares of the
Corporation authorized $ 96,264
NET ASSETS $ 96,264
NET ASSET VALUE PER SHARE $ 1.00
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
BAN Bond Anticipation Note
BIGI Bond Investors Guaranty Insurance
CGIC Capital Guaranty Insurance Corp.
COP Certificates of Participation
DOT Department of Transportation
FGIC Financial Guaranty Insurance Company
GO General Obligation
HDA Housing Development Authority
HHEFA Health & Higher Educational 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
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Intermediate Fund
October 31, 1996
Statement of Net Assets Par Value
In thousands
ALABAMA 1.9%
Birmingham Airport Auth.,
7.35%, 7/1/04 (AMBAC Insured) * $ 500 $ 547
Total Alabama (Cost $529) 547
CALIFORNIA 2.7%
California Public Works Board
Dept. of Corrections, 6.00%, 11/1/05
(MBIA Insured) 250 271
Foothill / Eastern Transportation
Corridor Agency California Toll Road,
Zero Coupon, 1/1/05 350 220
Upland, San Antonio Community Hosp.,
COP, 5.75%, 1/1/07 300 306
Total California (Cost $757) 797
COLORADO 3.6%
Denver City and County Airport
5.60%, 11/15/11 (MBIA Insured) * 500 493
6.75%, 11/15/22 (MBIA Insured) * 500 544
Total Colorado (Cost $1,019) 1,037
DISTRICT OF COLUMBIA 1.8%
Washington D.C. Metropolitan Airport Auth.
6.625%, 10/1/12 (MBIA Insured) * 500 537
Total District of Columbia (Cost $545) 537
FLORIDA 10.3%
Dade County
Resource Recovery Fac., 6.00%, 10/1/06
(AMBAC Insured) * 500 532
Dade County School Board, COP
5.75%, 5/1/08 (MBIA Insured) 365 377
Florida Division of Bond Fin.
Dept. of Environmental Preservation
6.00%, 7/1/06 (MBIA Insured) 500 540
Florida Turnpike Auth.,
5.50%, 7/1/05 (AMBAC Insured) 500 522
Indian Trace Community Dev. Dist.
Water Management, 5.50%, 5/1/07
(MBIA Insured) 500 515
Leesburg, Leesburg Regional
Medical Center, 5.20%, 7/1/02 500 508
Total Florida (Cost $2,926) 2,994
GEORGIA 5.0%
Coweta County Residential Care Fac.
for the Elderly Auth.
Wesley Woods of Newnan-Peachtree City
7.625%, 10/1/06 400 402
Georgia Municipal Electric Auth.
6.00%, 1/1/05 (AMBAC Insured) 1,000 1,068
Total Georgia (Cost $1,454) 1,470
HAWAII 3.0%
Hawaii
Airport Systems
7.50%, 7/1/20 (FGIC Insured) * 300 329
6.70%, 7/1/05 (MBIA Insured) * 500 547
Total Hawaii (Cost $848) 876
ILLINOIS 4.2%
Chicago, GO, 5.75%, 1/1/05
(AMBAC Insured) 660 693
Chicago-O'Hare Int'l. Airport
Int'l. Terminal
7.50%, 1/1/05 110 119
7.50%, 1/1/05 (Prerefunded 1/1/00!) 50 55
7.50%, 1/1/05 (MBIA Insured)
(Prerefunded 1/1/00!) 80 89
7.50%, 1/1/05 (MBIA Insured) * 170 185
Illinois HFA
Glen Oaks Medical Center /
Hinsdale Health System
9.50%, 11/15/15 75 86
Total Illinois (Cost $1,208) 1,227
KENTUCKY 2.8%
Carroll County
Solid Waste Disposal Fac.,
Kentucky Utilities Co.
VRDN (Currently 3.70%) * 400 400
Kentucky Property and Buildings
Commission, 6.40%, 11/1/01 390 422
Total Kentucky (Cost $819) 822
LOUISIANA 0.3%
Saint Charles Parish, PCR
Shell Oil, VRDN (Currently 3.70%) * 100 100
Total Louisiana (Cost $100) 100
MARYLAND 10.0%
Maryland Energy Fin. Administration
Wheelabrator, 5.85%, 12/1/05 * 1,000 1,032
Maryland HHEFA, Good Samaritan
Hosp., 5.50%, 7/1/05 1,000 1,022
Northeast Maryland Waste Disposal Auth.
Southwest Resource Recovery Fac.
5.80%, 7/1/04 * 240 248
7.10%, 1/1/03 (MBIA Insured) 550 616
Total Maryland (Cost $2,831) 2,918
MASSACHUSETTS 1.5%
Massachusetts, GO, 6.30%,
11/1/05 (FGIC Insured) 250 274
Massachusetts Port Auth., 7.375%,
7/1/10 (FGIC Insured) * 135 150
Total Massachusetts (Cost $396) 424
MICHIGAN 7.2%
Greater Detroit Resource Recovery Auth.
6.25%, 12/13/05 (AMBAC Insured) 1,000 1,088
Michigan HDA, 5.75%, 12/1/09 * 1,000 1,001
Total Michigan (Cost $2,062) 2,089
MISSISSIPPI 1.1%
Claiborne County, PCR
Systems Energy Resources,
9.875%, 12/1/14 300 334
Total Mississippi (Cost $331) 334
NEW HAMPSHIRE 1.7%
New Hampshire Housing Fin. Auth.
Single Family
5.90%, 1/1/01 * 115 119
5.90%, 7/1/01 * 115 119
6.00%, 7/1/02 * 125 129
6.10%, 1/1/03 * 130 134
Total New Hampshire (Cost $485) 501
NEW YORK 10.2%
Dormitory Auth. of the State of New York
City Univ., 6.875%,
7/1/14 (MBIA Insured) 350 391
State Univ. Ed. Fac.,
7.40%, 5/15/01 150 163
Nassau County IDA, Hofstra Univ.,
6.70%, 1/1/09 250 275
New York City, GO, 6.00%, 8/1/04 250 257
New York State Environmental
Fac. Corp., PCR Water Revolving Fund,
6.875%, 6/15/10 500 549
New York State Housing Fin. Agency,
GO, 5.85%, 9/15/09 300 300
New York State Mortgage Agency
Homeownership Mortgage,
5.80%, 10/1/06 * 500 514
Port Auth. of New York and New Jersey
Special Project, 6.50%, 10/1/01 * 500 516
Total New York (Cost $2,830) 2,965
OHIO 0.7%
Akron
Municipal Baseball Stadium, COP
Zero Coupon, 12/1/01 285 215
Total Ohio (Cost $214) 215
PENNSYLVANIA 3.4%
Pennsylvania, GO, 5.375%,
11/15/03 (FGIC Insured) 500 521
Pennsylvania Intergovernmental
Cooperative Auth. Special Tax,
7.00%, 6/15/04 (FGIC Insured) 400 456
Total Pennsylvania (Cost $948) 977
PUERTO RICO 3.6%
Puerto Rico Commonwealth, GO
5.50%, 7/1/06 (MBIA Insured) 1,000 1,045
Total Puerto Rico (Cost $1,023) 1,045
SOUTH CAROLINA 6.9%
South Carolina Public Service Auth.
6.50%, 7/1/24 (AMBAC Insured)
(Prerefunded 7/01/02!) 495 551
6.25%, 1/1/05 (MBIA Insured) 1,350 1,471
Total South Carolina (Cost $1,963) 2,022
TEXAS 7.5%
Austin Airport, 5.75%,
11/15/08 (MBIA Insured) * 500 514
Brazos Higher Ed. Auth.,
Student Loan, 5.95%, 6/1/02 * 500 520
Harris County
Toll Road, 6.50%, 8/15/17
(AMBAC Insured)
(Prerefunded 8/15/02!) 750 835
Houston, Water and Sewer, 7.00%,
12/1/03 (AMBAC Insured) 270 307
Total Texas (Cost $2,068) 2,176
VIRGINIA 6.5%
Leesburg, Utility Systems, 6.10%,
7/1/07 (MBIA Insured) 500 533
Virginia HDA
5.75%, 7/1/99 * 500 514
6.125%, 1/1/99 * 50 51
6.50%, 7/1/03 * 250 263
Virginia Transportation Board
Northern Virginia Transportation Dist.
5.80%, 5/15/04 500 532
Total Virginia (Cost $1,841) 1,893
WASHINGTON 3.3%
Washington, GO, 6.50%, 5/1/04 400 442
Washington Public Power Supply System,
6.30%, 7/1/01 500 532
Total Washington (Cost $949) 974
WYOMING 1.0%
Sublette County, PCR, Exxon,
VRDN (Currently 3.60%) * 300 300
Total Wyoming (Cost $300) 300
Total Investments in Securities
100.2% of Net Assets (Cost $28,446) $ 29,240
Other Assets Less Liabilities (65)
NET ASSETS $ 29,175
Net Assets Consist of:
Accumulated net realized gain/loss -
net of distributions $ (169)
Net unrealized gain (loss) 794
Paid-in-capital applicable to 2,854,606
shares of $0.0001 par value capital stock
outstanding; 1,000,000,000 shares of the
Corporation authorized 28,550
NET ASSETS $ 29,175
NET ASSET VALUE PER SHARE $ 10.22
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
COP Certificates of Participation
FGIC Financial Guaranty Insurance Company
GO General Obligation
HDA Housing Development Authority
HFA Health Facility Authority
HHEFA Health and Higher Educational Facility Authority
IDA Industrial Development 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.
T. Rowe Price Summit Municipal Income Fund
October 31, 1996
Statement of Net Assets Par Value
In thousands
ALABAMA 2.0%
Baldwin County
Eastern Shore Health Care Auth.,
Thomas Hosp. 6.75%, 4/1/21 200 204
Mobile IDB, Mobile Energy Services,
6.95%, 1/1/20 100 106
Total Alabama (Cost $296) 310
ALASKA 1.6%
Alaska Housing Fin. Corp., 5.875%,
12/1/24 (MBIA Insured) 250 250
Total Alaska (Cost $240) 250
CALIFORNIA 7.6%
Foothill / Eastern Transportation
Corridor Agency California Toll Road,
Zero Coupon, 1/1/26 500 78
Long Beach Harbor, 5.25%,
5/15/25 (MBIA Insured) * 250 234
Placentia PFA, Special Tax,
6.60%, 9/1/15 100 99
San Joaquin Hills Transportation
Corridor Agency Toll Road
Zero Coupon, 1/1/19 550 136
6.75%, 1/1/32 150 157
Santa Ana Housing Auth.
Villa Del Sol Apartments,
5.65%, 11/1/21 300 303
Southern California Public Power
Auth., 6.00%, 7/1/12 200 202
Total California (Cost $1,132) 1,209
COLORADO 1.8%
Denver City and County Airport
5.50%, 11/15/13 (MBIA Insured) * 300 291
Total Colorado (Cost $289) 291
DISTRICT OF COLUMBIA 0.7%
Washington D.C. Metropolitan
Airport Auth. 8.10%, 10/1/08
(BIGI Insured) * 100 109
Total District of Columbia (Cost $106) 109
GEORGIA 4.4%
Coweta County Residential Care Fac.
for the Elderly Auth. Wesley Woods
of Newnan-Peachtree City
8.20%, 10/1/16 215 216
Georgia HFA, Single Family,
6.45%, 12/1/27 * 250 256
Rockdale County Dev. Auth.
Solid Waste Disposal, Visy Paper, Inc.
7.50%, 1/1/26 * 225 232
Total Georgia (Cost $690) 704
HAWAII 1.5%
Honolulu City and County, GO, 5.25%,
11/1/13 (MBIA Insured) 250 243
Total Hawaii (Cost $242) 243
IDAHO 0.7%
Idaho Housing Agency
Single Family
6.60%, 7/1/27 (FHA Guaranteed) * 100 103
Total Idaho (Cost $100) 103
ILLINOIS 7.7%
Chicago, GO
5.50%, 1/1/18 (AMBAC Insured) 250 244
5.125%, 1/1/16 (FGIC Insured) 300 280
Chicago - O'Hare Int'l. Airport
Int'l. Terminal, 7.50%, 1/1/17
(MBIA Insured) 85 93
Illinois HFA
Community Hosp. of Ottawa,
6.85%, 8/15/24 200 207
Glen Oaks Medical Center,
9.50%, 11/15/15 75 86
Holy Cross Hosp., 6.70%, 3/1/14 300 308
Total Illinois (Cost $1,198) 1,218
KENTUCKY 2.0%
Ashland, Sewage and Solid Waste,
7.125%, 2/1/22 200 216
Kenton County Airport Board,
Delta Airlines, 7.50%, 2/1/20 * 100 107
Total Kentucky (Cost $300) 323
LOUISIANA 4.4%
Plaquemines Parish
The British Petroleum Company
VRDN (Currently 3.70%) * 600 600
Saint Charles Parish, PCR
Shell Oil, VRDN (Currently 3.70%) * 100 100
Total Louisiana (Cost $700) 700
MARYLAND 2.8%
Maryland CDA
Single Family
5.875%, 4/1/17 * 95 95
7.25%, 4/1/19 140 148
7.375%, 4/1/26 * 90 93
Maryland Energy Fin. Administration
Wheelabrator, 6.45%, 12/1/16 100 104
Total Maryland (Cost $429) 440
MASSACHUSETTS 3.7%
Massachusetts HEFA
Melrose Wakefield Healthcare,
5.375%, 7/1/05 350 349
Massachusetts Port Auth.,
7.125%, 7/1/12 110 111
Massachusetts Turnpike Auth.,
GO, BAN, 5.00%, 6/1/99 125 128
Total Massachusetts (Cost $586) 88
MICHIGAN 2.7%
Michigan Hosp. Fin. Auth.
Henry Ford Hosp., 5.25%, 11/15/20 300 284
Pontiac Osteopathic Hosp.,
6.00%, 2/1/24 150 143
Total Michigan (Cost $416) 427
MISSISSIPPI 1.7%
Claiborne County, PCR
Systems Energy Resources,
7.30%, 5/1/25 150 157
Warren County, PCR
Mississippi Power and Light,
7.00%, 4/1/22 100 105
Total Mississippi (Cost $250) 262
NEVADA 2.8%
Clark County Airport Fac.
MaCarren Int'l. Airport
6.00%, 7/1/17 (MBIA Insured) * 250 252
Clark County, IDR, Southwest Gas,
6.50%, 12/1/33 * 200 200
Total Nevada (Cost $429) 452
NEW HAMPSHIRE 1.3%
New Hampshire Housing Fin. Auth.
Single Family, 6.85%, 7/1/14 * 200 209
Total New Hampshire (Cost $200) 209
NEW JERSEY 9.9%
New Jersey HFFA
Columbus Hosp., 7.50%, 7/1/21 290 300
Irvington General Hosp.
5.875%, 8/1/06 (FHA Guaranteed) 210 216
Raritan Bay Medical Center,
7.25%, 7/1/27 200 207
New Jersey Housing and Mortgage
Fin. Agency Home Buyer,
6.35%, 10/1/27 (MBIA Insured) * 250 256
New Jersey Sports and Exposition Auth.
Monmouth Park, 8.00%, 1/1/25 100 110
New Jersey Wastewater Treatment Trust,
6.375%, 4/1/11 200 214
Rutgers, The State Univ., 6.35%, 5/1/06 250 270
Total New Jersey (Cost $1,499) 1,573
NEW YORK 15.2%
Dormitory Auth. of the State
of New York Nyack Hosp.,
6.00%, 7/1/06 250 253
Erie County Water Auth.
Zero Coupon, 12/1/17
(AMBAC Insured) 550 122
Nassau County IDA, Hofstra Univ.,
6.80%, 1/1/11 290 318
New York City, GO, 6.25%, 8/1/09 350 357
New York City Municipal Water Fin. Auth.
Water and Sewer
6.00%, 6/15/09 200 212
5.00%, 6/15/17 (FGIC Insured) 100 93
New York State Environmental
Fac. Corp., PCR State Water
Revolving Fund, 6.90%, 11/15/15 200 227
New York State Mortgage Agency
Homeowner Mortgage
6.45%, 10/1/17 100 104
6.625%, 4/1/25 * 100 105
7.50%, 4/1/26 * 250 271
New York State Urban Dev. Corp.,
State Fac., 5.60%, 4/1/15 150 146
Port Auth. of New York and New Jersey
Special Project, 6.50%, 10/1/01 * 200 206
Total New York (Cost $2,287) 2,414
NORTH CAROLINA 2.4%
North Carolina Eastern Municipal
Power Agency 5.625%, 1/1/24 400 385
Total North Carolina (Cost $385) 385
OHIO 3.6%
Akron
Municipal Baseball Stadium, COP
Zero Coupon, 12/1/16 300 216
Dayton Special Fac., Emery Air Freight,
6.05%, 10/1/09 250 254
Ohio Water Dev. Auth., PCR,
Toledo Edison, 8.00%, 10/1/23 * 100 108
Total Ohio (Cost $563) 578
OKLAHOMA 1.0%
Tulsa Municipal Airport,
American Airlines,
7.375%, 12/1/20 * 150 159
Total Oklahoma (Cost $148) 159
PENNSYLVANIA 1.8%
Beaver County IDA, PCR,
Cleveland Electric, 7.75%, 7/15/25 100 108
Erie County IDA, Beverly Enterprises,
6.625%, 5/1/02 100 101
Philadelphia Airport Auth.,
6.10%, 6/15/25
(AMBAC Insured) * 75 76
Total Pennsylvania (Cost $270) 285
PUERTO RICO 1.5%
Puerto Rico Commonwealth, 5.50%, 7/1/15 250 246
Total Puerto Rico (Cost $236) 246
SOUTH CAROLINA 1.3%
South Carolina Public Service Auth.
6.25%, 1/1/22 (AMBAC Insured) 200 212
Total South Carolina (Cost $202) 212
SOUTH DAKOTA 1.2%
South Dakota HDA, Homeownership,
6.65%, 5/1/14 185 194
Total South Dakota (Cost $185) 194
TEXAS 5.1%
Amarillo Health Fac. Corp.
Sears Panhandle Retirement,
7.75%, 8/15/26 200 200
Harris County, Toll Road,
6.375%, 8/15/24 (MBIA Insured) 250 269
Tarrant County Health Fac.
Harris Methodist Health Systems
5.125%, 9/1/12 (AMBAC Insured) 200 189
Texas, Veterans Housing Assistance,
GO, 6.25%, 12/1/15 155 158
Total Texas (Cost $778) 816
UTAH 1.2%
Intermountain Power Agency,
5.75%, 7/1/19 200 195
Total Utah (Cost $190) 195
VIRGINIA 6.6%
Fairfax County IDA, Inova Health
Care System, 6.00%, 8/15/26 200 202
Henrico County IDA
Bon Secours Health System
6.25%, 8/15/20 (MBIA Insured) 200 218
Peninsula Port Auth.,
Riverside Health Systems,
6.625%, 7/1/18 200 210
Virginia Ed. Loan Auth.
Student Loan Program, 5.55%, 9/1/10
(Prerefunded 3/1/06!)* 55 56
Virginia HDA
6.50%, 5/1/13 * 100 104
6.60%, 7/1/20 * 250 257
Total Virginia (Cost $1,016) 1,047
WISCONSIN 4.1%
Wisconsin HEFA
National Regency of New Berlin,
8.00%, 8/15/25 200 201
Sinai Samaritan Medical Center
5.875%, 8/15/26 (MBIA Insured) 200 200
Wisconsin Housing and Economic Dev. Auth.
Homeownership, 6.45%, 9/1/27 * 250 255
Total Wisconsin (Cost $641) 656
Total Investments in Securities
104.3% of Net Assets (Cost $16,003) $ 16,598
Futures Contracts
In thousands
Contract Unrealized
Expiration Value Gain (Loss)
__________ _______ __________
Short, 1 U.S.
Treasury thirty-
year contract,
$10,000,000 of
Municipal bonds
pledged as initial
margin 12/96 $ (113,000) $ (6)
Short, 2 Municipal
Bond Index contracts,
$15,000,000 of
Municipal bonds
pledged as initial
margin 12/96 $ (231,750) (9)
Net payments
(receipts) of
variation margin
to date 13
Variation margin
receivable (payable)
on open futures
contracts (2)
Other Assets Less
Liabilities (687)
NET ASSETS $ 15,909
Net Assets Consist of:
Accumulated net realized gain/loss -
net of distributions $ (208)
Net unrealized gain (loss) 580
Paid-in-capital applicable to
1,595,031 shares of $0.0001
par value capital stock outstanding;
1,000,000,000 shares of the
Corporation authorized 15,537
NET ASSETS $ 15,909
NET ASSET VALUE PER SHARE $ 9.97
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
BAN Bond Anticipation Note
BIGI Bond Investors Guaranty Insurance
CDA Community Development Administration
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
IDA Industrial Development Authority
IDB Industrial Development Bond
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
PFA Public Facility Authority
VRDN Variable Rate Demand Note
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Funds
Statement of Operations
In thousands
Money Intermediate Income
Market Fund Fund
Fund
Year Year Year
Ended Ended Ended
10/31/96 10/31/96 10/31/96
Investment Income
Interest income $ 3,100 $ 1,346 $ 817
Investment management and
administrative expenses 379 127 68
Net investment income 2,721 1,219 749
Realized and Unrealized
Gain (Loss)
Net realized gain (loss)
Securities 1 159 98
Futures - 1 3
Net realized gain (loss) 1 160 101
Change in net unrealized gain
or loss
Securities (12) (32) 105
Futures - - (15)
Change in net unrealized
gain or loss (12) (32) 90
Net realized and unrealized
gain (loss) (11) 128 191
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 2,710 $ 1,347 $ 940
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Funds
Statement of Changes in Net Assets
In thousands Money Market Intermediate Income
Fund Fund Fund
Year Year Year
Ended Ended Ended
10/31/96 10/31/95 10/31/96 10/31/95 10/31/96 10/31/95
Increase (Decrease)
in Net Assets
Operations
Net investment
income $ 2,721 $ 2,174 $ 1,219 $ 904 $ 749 $ 525
Net realized
gain (loss) 1 - 160 23 101 (17)
Change in net
unrealized
gain or loss (12) 16 (32) 1,119 90 757
Increase
(decrease)
in net
assets from
operations 2,710 2,190 1,347 2,046 940 1,265
Distributions to
shareholders
Net investment
income (2,721) (2,174) (1,219) (904) (749) (525)
Capital share
transactions*
Shares
sold 126,457 125,403 12,096 12,683 8,604 7,350
Distributions
reinvested 2,457 1,932 765 578 351 230
Shares
redeemed (110,597) (91,985) (5,959) (5,567) (4,345) (3,665)
Increase
(decrease) in
net assets
from capital
share trans-
actions 18,317 35,350 6,902 7,694 4,610 3,915
Net Assets
Increase
(decrease)
during
period 18,306 35,366 7,030 8,836 4,801 4,655
Beginning
of period 77,958 42,592 22,145 13,309 11,108 6,453
End of
period $ 96,264 $ 77,958 $ 29,175 $ 22,145 $ 15,909 $ 11,108
*Share
information
Shares
sold 126,457 125,403 1,188 1,303 872 784
Distributions
reinvested 2,457 1,932 76 58 36 24
Shares
redeemed (110,597) (91,985) (587) (571) (442) (390)
Increase
(decrease)
in shares
outstanding 18,317 35,350 677 790 466 418
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Funds
October 31, 1996
Notes to Financial Statements
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), Summit Municipal Intermediate Fund (the
Intermediate Fund), and the Summit Income Fund (the Income Fund), diversified,
open-end management investment companies, are the three portfolios established
by the Corporation and commenced operations on October 29, 1993.
Valuation Debt securities are generally traded in the over-the-counter
market. Except for securities held by the Money Market Fund, investments in
securities 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. Securities
held by the Money Market Fund are valued at amortized cost. Financial 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
each fund, as authorized by the Board of Directors.
Premiums and Discounts Premiums and original issue discounts on municipal
securities are amortized for both financial reporting and tax purposes. Market
discounts are recognized upon disposition of the security as gain or loss for
financial reporting purposes and as ordinary income for tax purposes.
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 the identified cost basis. Distributions to shareholders are
recorded by each fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax regulations
and may differ from those determined in accordance with generally accepted
accounting principles. Payments ("variation margin") made or received by each
fund to settle the daily fluctuations in the value of futures contracts are
recorded as unrealized gains or losses until the contracts are closed.
Unrealized gains and losses on futures contracts are included in Change in net
unrealized gain or loss in the accompanying financial statements.
Note 2 - Investment Transactions
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Futures Contracts At October 31, 1996, the Income Fund was a party to futures
contracts, which provide for the future sale by one party and purchase by
another of a specified amount of a specific financial instrument at an agreed
upon price, date, time, and place. Risks arise from possible illiquidity of
the futures market and from movements in security values.
Other Purchases and sales of portfolio securities, other than short-term
securities, for the year ended October 31, 1996, were as follows:
Intermediate Income
Fund Fund
Purchases $25,861,000 $12,473,000
Sales 17,817,000 7,369,000
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since each fund intends to
continue to qualify as a regulated investment company and distribute all of
its income. Capital loss carryforwards utilized by the Money Market Fund in
1996 amounted to $1,000. The Intermediate Fund has unused realized capital
loss carryforwards for federal income tax purposes of $169,000, which expires
in 2002. Capital loss carryforwards utilized by the Intermediate Fund in 1996
amounted to $155,000. The Income Fund has unused realized capital loss
carryforwards for federal income tax purposes of $224,000, of which $213,000
expires in 2002 and $11,000 in 2003, respectively. Capital loss carryforwards
utilized by the Income Fund in 1996 amounted to $78,000. Each fund intends to
retain gains realized in future periods that may be offset by available
capital loss carryforwards.
In order for the Income Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, the
following reclassifications were made during the year ended October 31, 1996.
The results of operations and net assets were not affected by the
reclassifications.
Undistributed net realized gain (1,000)
Paid-in-capital 1,000
At October 31, 1996, the aggregate costs of investments for the Money Market,
Intermediate, and Income Funds for federal income tax and financial reporting
purposes were $96,356,000, $28,446,000, and $16,003,000, respectively. For the
Money Market Fund, amortized cost is equivalent to value; and for the
Intermediate and Income Funds, net unrealized gain (loss) on investments was
as follows:
Intermediate Income
Fund Fund
Appreciated investments $ 803,000 $ 606,000
Depreciated investments (9,000) (11,000)
Net unrealized gain (loss) $ 794,000 $ 595,000
Note 4 - 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
annual fee, of which $18,000 was payable at October 31, 1996 by the Money
Market Fund. The fee, computed daily and paid monthly, is equal to 0.45% of
average daily net assets for the Money Market Fund and 0.50% of average daily
net assets for the Intermediate and Income Funds. Pursuant to the agreement,
investment management, shareholder servicing, transfer agency, accounting, and
custody services are provided to each fund, and interest, taxes, brokerage
commissions, and extraordinary expenses are paid directly by each fund.
T. Rowe Price Summit Municipal Funds
Report of Independent Accountants
To the Board of Directors of T. Rowe Price
Summit Municipal Funds, Inc., and Shareholders 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 statements of net assets of T. Rowe Price
Summit Municipal Funds, Inc. (which includes 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, 1996, and the
related statements of operations for the year then ended, and the statements
of changes in net assets for each of the two years then ended and financial
highlights for each of the two years then ended and the period from 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, 1996 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 T.
Rowe Price Summit Municipal Funds, Inc. as of October 31, 1996, the results of
their operations, the changes in their net assets and financial highlights for
the respective periods stated in the first paragraph in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
November 22, 1996
T. Rowe Price Investment Services and Information
Knowledgeable Service Representatives
By Phone Shareholder service representatives are available from 8 a.m. to 10
p.m ET Monday through Friday and from 8:30 a.m. to 5 p.m. ET on weekends. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
Automated 24-Hour Services
Tele*Access(registered trademark) Call 1-800-638-2587 to obtain information
such as account balance, date and amount of your last transaction, latest
dividend payment, fund prices, and yields. Additionally, you have the ability
to request prospectuses, statements, and account and tax forms; to reorder
checks; and to initiate purchase, redemption, and exchange orders for
identically registered accounts.
T. Rowe Price OnLine Through a personal computer via dial-up modem, you can
replicate all the services available on Tele*Access plus conduct transactions
in your Discount Brokerage and Variable Annuity Accounts.
Account Services
Checking Write checks for $500 or more on any money market and most bond fund
accounts (except the High Yield and Emerging Markets Bond Funds).
Automatic Investing Build your account over time by investing directly from
your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal If you need money from your fund account on a regular
basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
Discount Brokerage*
Investments Available You can trade stocks, bonds, options, precious metals,
and other securities at a savings over regular commission rates.
To Open an Account Call a shareholder service representative for more
information.
INVESTMENT INFORMATION
Combined Statement A comprehensive overview of your T. Rowe Price accounts is
provided. The summary page gives you earnings by tax category, provides total
portfolio value, and lists your investments by type -- stock, bond, and money
market. Detail pages itemize account transactions by fund.
Shareholder Reports Portfolio managers review the performance of the funds in
plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report This is a quarterly newsletter with relevant
articles on market trends, personal financial planning, and T. Rowe Price's
economic perspective.
Performance Update This quarterly report reviews recent market developments
and provides comprehensive performance information for every T. Rowe Price
fund.
Insights This library of information includes reports on mutual fund tax
issues, investment strategies, and financial markets.
Detailed Investment Guides Our widely acclaimed Asset Mix Worksheet, College
Planning Kit, Retirees Financial Guide, and Retirement Planning Kit (also
available on disk for PC use) can help you determine and reach your investment
goals.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
For yield, price, last transaction current balance or to conduct
transactions, 24 hours, 7 days a week, call Tele*Access(registered trademark):
1-800-638-2587 toll free
For assistance with your existing fund account, call: Shareholder Service
Center
1-800-225-5132 toll free
625-6500 Baltimore area
To open a Discount Brokerage account or obtain information, call:
1-800-638-5660 toll free
Internet address: http://www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Summit
Municipal Funds.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor RPRTSMUNI 10/31/96
APPENDIX
Chart 1 - Municipal Bond and Note Yields chart showing yields on 30-year AAA
GO, five-year AAA GO, and one-year Moody's Investment Grade 1 Note, 10/31/95
to 10/31/96
Chart 2 - Pie chart showing quality diversification: 44% AA, 19% BBB, 19% A,
13% BB, 3% AAA; 2% B and below
Charts 3, 4, 5 - Line charts showing the cumulative growth of $10,000 invested
in the Summit Municipal Money Market Fund, Summit Municipal Intermediate Fund,
and Summit Municipal Income Fund over the past 10 years (or "from inception"
for funds lacking 10-year histories) compared with $10,000 invested in a
broad-based index or average over the same period.
