Annual Report
Summit
Municipal
Funds
October 31, 1999
T. Rowe Price
REPORT HIGHLIGHTS
Summit Municipal Funds
o Economic strength in the U.S. and recovery overseas pushed interest rates
higher across the board. Each of the funds did better than its peer group.
o The bond funds posted losses for the 6- and 12-month periods ended October
31, while the money market fund delivered steady returns.
o With municipal yields extraordinarily high in relation to taxable
alternatives, municipal bonds are an attractive choice for taxable
investors.
o The Income Fund is prudently taking advantage of the attractive yields
offered by the tax-free high-yield sector.
o We expect the U.S. economy to eventually slow, in which event municipal
bonds at these yield levels could deliver strong total returns.
UPDATES AVAILABLE
For updates on the fund following the end of each calendar quarter, please see
our Web site at www.troweprice.com.
Fellow Shareholders
After enjoying strong returns in 1998, municipal bond investors gave up some of
those gains this year because of rising interest rates. Stronger-than-expected
U.S. economic growth and an improved global outlook prompted the Federal
Reserve, which had eased aggressively last year, to raise short-term rates twice
during the summer. Municipal bond and note yields rose nearly a full percentage
point across all maturities during the 12 months ended October 31, pushing bond
prices down and resulting in negative total returns for bond funds. However, the
Summit Municipal Money Market Fund delivered steady returns, and all three funds
performed better than their peer group averages.
MARKET ENVIRONMENT
The financial markets have taken a 180-degree turn since the height of the
global financial crisis a year ago. Whereas a sharp economic slowdown was
the primary fear last fall, investors today are concerned about the
potential for a buildup in inflationary pressures as a result of robust
economic growth and the lowest unemployment in a generation. Exuberant
consumer spending continued to drive the U.S. economy, but revived foreign
demand also reinvigorated the previously weak U.S. manufacturing sector.
With a tight labor market pressuring employment costs and with commodity
prices rising, the Fed reverted to its traditional inflation-fighting role.
On November 16 (after the fund's fiscal year-end) the Fed increased key
short-term lending rates a third time, by another quarter point,
effectively rescinding its rate cuts of last fall. The central bank also
switched to a neutral stance on future rate moves.
Line Chart - Municiapl Bond and Note Yields
1-Year Moody's
30-Year AAA 5-Year AAA Investment
General Obligation General Obligation Grade 1 Note
10/98 4.92 3.70 2.95
4.89 3.75 3.05
4.94 3.75 3.05
1/99 4.87 3.65 2.95
4.99 3.78 3.00
5.04 3.82 3.15
4/99 5.08 3.85 3.20
5.16 4.00 3.20
5.33 4.33 3.50
7/99 5.41 4.30 3.55
5.60 4.40 3.75
5.70 4.43 3.75
10/99 5.89 4.58 3.95
Market Changes Spell Higher Tax-Free Yields
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Structural changes are taking place in the fixed income markets resulting in
higher tax-free yields for investors.
The chart below tracks the yield on 30-year, AAA general obligation municipal
bonds as a percentage of long-term Treasury bond yields since 1981.
Historically, the yield on these municipal bonds has averaged about 85% of the
Treasury yield. This discount reflected both the tax benefit of municipals and
uncertainty about future tax laws. Investors in the 31% federal tax bracket, for
example, keep only 69% of their income from taxable bonds. Therefore, they would
logically be attracted to high-quality municipal bonds offering 85% or more of
the prevailing Treasury yield.
The sharp spike in municipal yields in 1986 reflects the tax reform debate,
which posed a threat to municipal bonds' federal tax exemption. Accordingly,
municipal bond yields reached parity with Treasury yields. However, when the Tax
Reform Act of 1986 left the tax benefit intact, municipal bond prices rose
sharply until yields had fallen to more normal levels.
Recently, different forces have been at work that go beyond the impact of 1998's
global financial crisis. At that time, shaky world markets prompted foreign
investors (who have no need for U.S. tax-exempt bonds) to buy Treasuries, and
Treasury yields plunged to near parity with municipals.
Unusual Yield Relationships
Since then, Treasury yields have returned to pre-crisis levels, but municipal
yields are again unusually high at about 94% of Treasury yields. According to
Mary Miller, director of the T. Rowe Price municipal bond department, the
current relationship is "illogical from a tax standpoint" but unlikely to change
soon.
For one thing, the supply of Treasury debt is shrinking due to the federal
budget surplus, while outstanding municipal supply continues to grow. In
addition, the supply of taxable bonds outside of Treasuries-including corporate,
asset-backed and mortgage-backed bonds-has also risen, and this has created more
competition in the market. The availability of these competing investments is
likely to keep municipal yields relatively high in the coming months.
Over time, income makes up the vast majority of a bond investor's total return.
Therefore, these developments have given investors the opportunity to earn
higher-than-expected tax-free income with little or no sacrifice of credit
quality.
MUNICIPAL/TREASURY YIELD RATIO
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Treasury Ratio Treasury Average
6/30/1981 0.7895 0.8456
7/31/1981 0.7844 0.8456
8/31/1981 0.8322 0.8456
9/30/1981 0.8163 0.8456
10/30/1981 0.8659 0.8456
11/30/1981 0.8625 0.8456
12/31/1981 0.9331 0.8456
1/29/1982 0.8843 0.8456
2/26/1982 0.8762 0.8456
3/31/1982 0.8918 0.8456
4/30/1982 0.8832 0.8456
5/28/1982 0.8631 0.8456
6/30/1982 0.8664 0.8456
7/30/1982 0.8478 0.8456
8/31/1982 0.8206 0.8456
9/30/1982 0.8553 0.8456
10/29/1982 0.8629 0.8456
11/30/1982 0.9193 0.8456
12/31/1982 0.8646 0.8456
1/31/1983 0.8410 0.8456
2/28/1983 0.8190 0.8456
3/31/1983 0.8365 0.8456
4/29/1983 0.8140 0.8456
5/31/1983 0.8493 0.8456
6/30/1983 0.8189 0.8456
7/29/1983 0.7881 0.8456
8/31/1983 0.7837 0.8456
9/30/1983 0.8005 0.8456
10/31/1983 0.7966 0.8456
11/30/1983 0.8101 0.8456
12/30/1983 0.7870 0.8456
1/31/1984 0.7834 0.8456
2/29/1984 0.7755 0.8456
3/30/1984 0.7611 0.8456
4/30/1984 0.7552 0.8456
5/31/1984 0.7645 0.8456
6/29/1984 0.7628 0.8456
7/31/1984 0.7587 0.8456
8/31/1984 0.7761 0.8456
9/28/1984 0.8041 0.8456
10/31/1984 0.8506 0.8456
11/30/1984 0.8403 0.8456
12/31/1984 0.8373 0.8456
1/31/1985 0.7929 0.8456
2/28/1985 0.7917 0.8456
3/29/1985 0.8035 0.8456
4/30/1985 0.7940 0.8456
5/31/1985 0.8010 0.8456
6/28/1985 0.8038 0.8456
7/31/1985 0.8251 0.8456
8/30/1985 0.8447 0.8456
9/30/1985 0.8719 0.8456
10/31/1985 0.8369 0.8456
11/29/1985 0.8337 0.8456
12/31/1985 0.8801 0.8456
1/31/1986 0.8097 0.8456
2/28/1986 0.8153 0.8456
3/31/1986 0.8942 0.8456
4/30/1986 0.9310 0.8456
5/30/1986 0.9732 0.8456
6/30/1986 1.0090 0.8456
7/31/1986 0.9699 0.8456
8/29/1986 0.9306 0.8456
9/30/1986 0.8949 0.8456
10/31/1986 0.8730 0.8456
11/28/1986 0.8780 0.8456
12/31/1986 0.8755 0.8456
1/30/1987 0.8558 0.8456
2/27/1987 0.8644 0.8456
3/31/1987 0.8605 0.8456
4/30/1987 0.9079 0.8456
5/29/1987 0.8917 0.8456
6/30/1987 0.8999 0.8456
7/31/1987 0.8545 0.8456
8/31/1987 0.8360 0.8456
9/30/1987 0.8627 0.8456
10/30/1987 0.8918 0.8456
11/30/1987 0.8627 0.8456
12/31/1987 0.8463 0.8456
1/29/1988 0.8617 0.8456
2/29/1988 0.8831 0.8456
3/31/1988 0.8811 0.8456
4/29/1988 0.8343 0.8456
5/31/1988 0.8374 0.8456
6/30/1988 0.8589 0.8456
7/29/1988 0.8247 0.8456
8/31/1988 0.8172 0.8456
9/30/1988 0.8298 0.8456
10/31/1988 0.8188 0.8456
11/30/1988 0.8220 0.8456
12/30/1988 0.8232 0.8456
1/31/1989 0.7994 0.8456
2/28/1989 0.8115 0.8456
3/31/1989 0.8309 0.8456
4/28/1989 0.8130 0.8456
5/31/1989 0.8142 0.8456
6/30/1989 0.8526 0.8456
7/31/1989 0.8592 0.8456
8/31/1989 0.8536 0.8456
9/29/1989 0.8741 0.8456
10/31/1989 0.9040 0.8456
11/30/1989 0.8745 0.8456
12/29/1989 0.8593 0.8456
1/31/1990 0.8348 0.8456
2/28/1990 0.8202 0.8456
3/30/1990 0.8296 0.8456
4/30/1990 0.8177 0.8456
5/31/1990 0.8164 0.8456
6/29/1990 0.8454 0.8456
7/31/1990 0.8268 0.8456
8/31/1990 0.8074 0.8456
9/28/1990 0.8103 0.8456
10/31/1990 0.8089 0.8456
11/30/1990 0.8222 0.8456
12/31/1990 0.8500 0.8456
1/31/1991 0.8352 0.8456
2/28/1991 0.8367 0.8456
3/28/1991 0.8427 0.8456
4/30/1991 0.8316 0.8456
5/31/1991 0.8232 0.8456
6/28/1991 0.8272 0.8456
7/31/1991 0.8219 0.8456
8/30/1991 0.8318 0.8456
9/30/1991 0.8455 0.8456
10/31/1991 0.8287 0.8456
11/29/1991 0.8322 0.8456
12/31/1991 0.8656 0.8456
1/31/1992 0.8446 0.8456
2/28/1992 0.8345 0.8456
3/31/1992 0.8291 0.8456
4/30/1992 0.8092 0.8456
5/29/1992 0.8171 0.8456
6/30/1992 0.8041 0.8456
7/31/1992 0.7914 0.8456
8/31/1992 0.8242 0.8456
9/30/1992 0.8402 0.8456
10/30/1992 0.8465 0.8456
11/30/1992 0.8169 0.8456
12/31/1992 0.8252 0.8456
1/29/1993 0.8341 0.8456
2/26/1993 0.7975 0.8456
3/31/1993 0.8379 0.8456
4/30/1993 0.8154 0.8456
5/28/1993 0.8168 0.8456
6/30/1993 0.8169 0.8456
7/30/1993 0.8377 0.8456
8/31/1993 0.8703 0.8456
9/30/1993 0.8631 0.8456
10/29/1993 0.8714 0.8456
11/30/1993 0.8574 0.8456
12/31/1993 0.8204 0.8456
1/31/1994 0.8336 0.8456
2/28/1994 0.8407 0.8456
3/31/1994 0.8676 0.8456
4/29/1994 0.8406 0.8456
5/31/1994 0.8147 0.8456
6/30/1994 0.8276 0.8456
7/29/1994 0.8187 0.8456
8/31/1994 0.8192 0.8456
9/30/1994 0.8130 0.8456
10/31/1994 0.8167 0.8456
11/30/1994 0.8441 0.8456
12/30/1994 0.8380 0.8456
1/31/1995 0.8049 0.8456
2/28/1995 0.7999 0.8456
3/31/1995 0.8005 0.8456
4/28/1995 0.8177 0.8456
5/31/1995 0.8481 0.8456
6/30/1995 0.8913 0.8456
7/31/1995 0.8603 0.8456
8/31/1995 0.8788 0.8456
9/29/1995 0.8951 0.8456
10/31/1995 0.8847 0.8456
11/30/1995 0.8716 0.8456
12/29/1995 0.8750 0.8456
1/31/1996 0.8710 0.8456
2/29/1996 0.8437 0.8456
3/29/1996 0.8557 0.8456
4/30/1996 0.8414 0.8456
5/31/1996 0.8443 0.8456
6/28/1996 0.8343 0.8456
7/31/1996 0.8180 0.8456
8/30/1996 0.8091 0.8456
9/30/1996 0.8013 0.8456
10/31/1996 0.8277 0.8456
11/29/1996 0.8423 0.8456
12/31/1996 0.8215 0.8456
1/31/1997 0.8175 0.8456
2/28/1997 0.8086 0.8456
3/31/1997 0.8104 0.8456
4/30/1997 0.8068 0.8456
5/30/1997 0.7962 0.8456
6/30/1997 0.8036 0.8456
7/31/1997 0.8182 0.8456
8/29/1997 0.8096 0.8456
9/30/1997 0.8197 0.8456
10/31/1997 0.8500 0.8456
11/28/1997 0.8569 0.8456
12/31/1997 0.8484 0.8456
1/30/1998 0.8616 0.8456
2/27/1998 0.8581 0.8456
3/31/1998 0.8650 0.8456
4/30/1998 0.8738 0.8456
5/29/1998 0.8707 0.8456
6/30/1998 0.8973 0.8456
7/31/1998 0.8923 0.8456
8/31/1998 0.9380 0.8456
9/30/1998 0.9733 0.8456
10/30/1998 0.9556 0.8456
11/30/1998 0.9629 0.8456
12/31/1998 0.9744 0.8456
1/29/1999 0.9553 0.8456
2/26/1999 0.8946 0.8456
3/31/1999 0.8967 0.8456
4/30/1999 0.8983 0.8456
5/28/1999 0.8854 0.8456
6/30/1999 0.8916 0.8456
7/30/1999 0.8852 0.8456
8/1/1999 0.9230 0.8456
9/30/1999 0.9420 0.8456
10/29/1999 0.9560 0.8456
Source: Municipal Market Data
This reversal of market sentiment caused the most difficult environment for
bond investors since 1994. The yield on the 30-year Treasury bond rose
approximately 150 basis points (100 basis points equal one percentage
point) over the past year. Thirty-year AAA general obligation municipal
bond yields, which began the fiscal year at 4.92%, ended at 5.89%, with
more than 80% of the increase coming since our last report six months ago.
As interest rates rose, refinancing of municipal debt declined. This drop
in refunding more than offset the increase in new borrowing-a byproduct of
the healthy economy and flush municipal coffers-and, as a result, new issue
supply of municipal bonds is running 20% below last year's heavy pace. But
demand for tax-exempt bonds also waned over the past year. Direct purchases
by retail buyers (individuals) were the sole source of increased demand as
individual investors shifted their asset allocations toward bonds. Mutual
funds experienced net redemptions while insurance companies, the third
largest holders of municipal debt, pared their holdings.
The confluence of these forces provided the silver lining in a cloudy year
for municipal bond investors: extraordinarily high tax-free yields in
relation to taxable alternatives, at a time when interest rates are
relatively high. An abundance of corporate supply during the summer reduced
demand for municipal bonds, helping push yields higher. Municipals also
looked more attractive compared with Treasuries because the federal surplus
reduced the government's borrowing needs and helped restrain the rise in
Treasury yields. Long-term tax-exempt yields are exceptionally attractive
at about 94% of long-term Treasury yields and are also generous compared
with yields on high-quality corporate and asset- and mortgage-backed bonds.
(See sidebar on page 2.)
The rise in overall interest rates makes the current investment opportunity
rarer still. Consider that for investors in the 28% tax bracket, the
current 5.89% AAA municipal yield is equivalent to an 8.18% taxable yield.
That is because such investors only get to keep 72% of any additional
dollar of taxable income (8.18 X .72 = 5.89). Higher rates in combination
with a 94% municipal yield ratio have given investors taxable-equivalent
yields they haven't seen in years. For investors in the top 39.6% federal
income tax bracket, long-term municipal bonds currently offer a
taxable-equivalent yield of 9.75%. That is more than three-and-a-half
percentage points above the current Treasury yield, with little or no
sacrifice of credit quality. Few fixed income investors would pass up 8.18%
AAA taxable yields-let alone 9.75%-yet in effect, many are doing just that
by ignoring 5.89% tax-exempt yields.
High-yield bonds outperformed the general market over the past six and 12
months, thanks to the strong economy. Though credit spreads (the difference
in yield between higher- and lower-quality bonds) did widen, the higher
coupons and lower interest rate sensitivity of high-yield municipal bonds
helped them deliver better total returns.
SUMMIT MUNICIPAL MONEY MARKET FUND
Performance Comparison
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Periods Ended 10/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Municipal Money Market Fund 1.46% 2.90%
Lipper Tax-Exempt Money
Market Funds Average 1.34 2.60
The Summit Municipal Money Market Fund again outpaced the returns of its
peer group average for the 6- and 12-month periods ended October 31. This
is a credit to our portfolio strategy and below-average expenses (the
fund's expenses rank in the lowest quartile of the Lipper Tax-Exempt Money
Market Funds Average). For the year, the fund returned 2.90%, compared with
2.60% for the Lipper category, as shown in the table.
In contrast to the municipal bond market, the tax-free money market
experienced little supply and steady demand. Year-to-date, municipal note
issuance is mirroring 1998's level, which had been the lowest since 1990.
Meanwhile, money fund assets in general grew quickly over the past year,
and tax-free money fund assets rose at a modest rate. As a result,
municipal money market yields remained somewhat low compared with taxable
alternatives.
As mentioned, yields rose nearly a full percentage point over the past
year, with most of that move occurring during the past six months. During
the latter period, yields on 180-day municipal notes rose 65 basis points
to 3.85%, while one-year yields rose 75 basis points to 3.95%. The
short-term yield curve became more positively sloped in the past six
months, with one-year yields averaging 25 basis points higher than one- to
seven-day yields. During the first six months of the fiscal year, one-year
yields offered an average of just four basis points over the shortest
maturities (100 basis points equal one percentage point).
The steeper yield curve benefited the fund as we maintained a
longer-than-average weighted average maturity (WAM) compared with our
competitors. Six months ago, the fund's WAM stood at 59 days, 19 days
longer than the peer group average. By mid- to late June, the fund's
maturity was shortened and brought to within four days of the average. This
more neutral posture coincided well with the beginning of the seasonal note
issuance calendar as well as the Fed's impending switch to a more
restrictive monetary policy. As of October 31, the fund's WAM of 56 days
remained just four days longer than the peer group average.
SUMMIT MUNICIPAL INTERMEDIATE FUND
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 10/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Municipal Intermediate Fund -2.66% -0.96%
Lipper Intermediate Municipal
Debt Funds Average -2.73 -1.47
The Summit Municipal Intermediate Fund's 0.96% loss for the fiscal year was
more limited than the 1.47% loss of the Lipper Intermediate Municipal Debt
Funds Average, as shown in the table. The story was similar for the past
six months, when your fund held its value better than its peer group
average. Results were aided by our portfolio management and below-average
expense ratio (which placed the fund in the lowest expense quartile of the
Lipper Intermediate Municipal Debt Funds Average). However, with the
greatest rise in rates coming in the latter part of the period, the
portfolio's coupon income could not overcome the share price decline from
$10.63 on April 30 to $10.12. As shown in the table on page 15, the fund
has delivered average annual compound total returns of 4.50%, 6.02%, and
5.02%, respectively, for the past three- and five-year periods and since
inception. Our dividend yield for the six months ended October 31 rose to
4.59% from 4.47% in the prior six-month period, as shown in the table on
page 9. That is equivalent to a pretax yield of 7.60% for an investor in
the top 39.6% federal income tax bracket.
The fund's duration strategy remained in a defensive range, as described in
our last letter, though duration rose to 5.4 years from 5.2 years six
months ago. (Duration measures a bond fund's sensitivity to interest rates.
For example, a fund with a duration of five years will rise about 5% in
price in response to a one-percentage-point decline in rates and fall 5% in
response to a one-percentage-point increase in rates.) Though interest
rates trended higher and economic data continued to be strong, we were
reluctant to become even more defensive because municipal bonds represented
tremendous value compared with other fixed income alternatives. While we
were cautious on the direction of interest rates, we were bullish on
municipal bonds. That is to say, municipal yields were so high in relation
to taxable yields that we felt we were being compensated for taking
slightly more interest rate risk than we might otherwise have in a rising
rate environment. Typically, when Treasury yields rise, municipal yields do
not rise quite as much, and as a result the price declines of tax-free
bonds are somewhat more limited than those of Treasuries.
During the past six months, as rates rose and bond prices fell, we tried to
maintain the fund's relatively high income by realizing losses in
individual bonds and reinvesting at higher yields. This also creates a tax
loss for the fund that can be used to offset future capital gains, thus
making the portfolio more tax-efficient. Average credit quality remained
unchanged at A+, though the composition of our investments shifted. We
moved 5% of the portfolio from local to state general obligation bonds, a
function of our tax-loss selling and our purchase of the more attractive
new issues. In addition, we pulled 6% of net assets out of industrial
revenue bonds and invested the proceeds in water and sewer and housing
bonds, which have higher credit quality, given the Fed's inclination to try
to slow economic growth.
SUMMIT MUNICIPAL INCOME FUND
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 10/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Municipal Income Fund -4.98% -3.58%
Lipper General Municipal
Debt Funds Average -5.32 -4.18
Though your fund posted losses during the 6- and 12-month periods ended
October 31, these results were still better than those of our peer group
average, as shown in the table. Portfolio management and below-average
expenses-which in fact ranked in the lowest quartile of the Lipper
category-aided relative performance. However, the $0.91 decline in the
fund's price during the 12 months overwhelmed income of $0.49, resulting in
a negative total return. Despite the difficult environment for bond
investors over the past year, the fund's long-term performance is still
solid. As shown in the table on page 15, average annual returns for the
past three- and five-year periods, and since inception six years ago, were
4.95%, 7.25%, and 5.21%, respectively. The fund's annualized dividend yield
rose from 4.70% for the six months ended April 30 to 5.03% for the six
months ended October 31, as shown in the table on page 10. That equates to
a pretax yield of 8.33% for investors in the top 39.6% federal income tax
bracket.
Pie Chart - Quality Diversification
- --------------------------------------------------------------------------------
Summit Municipal Income Fund
AAA 8
AA 44
A 21
BBB 14
BB 10
B and Below 3
In anticipation of an unfavorable bond market environment, we reduced the
fund's duration to a neutral posture of 7.6 years from 8 years six months
ago and 8.4 years at the end of the prior fiscal year. (Duration measures a
bond fund's sensitivity to interest rates. For example, a fund with a
duration of eight years will rise about 8% in price in response to a
one-percentage-point decline in rates and fall 8% in response to a
one-percentage-point increase in rates.) We chose not to reduce duration
even further, to a defensive stance, because municipal bonds represented
such good value compared with Treasury bonds. In addition, overall interest
rates were already at high levels compared with inflation. Therefore, even
if rates were to rise further we felt that long-term municipal bonds would
likely hold their value well compared with other fixed income alternatives.
Average credit quality remained unchanged from six months ago at A+.
However, we continued to nudge higher our exposure to both lower-quality
bonds and high-quality cash reserves. Bonds rated BBB and lower increased
from 24% to 27% of the portfolio over the past year. So far in 1999,
investors have favored high-quality bonds and the yields of lower-quality
bonds have grown attractive. We will probably continue adding to these
higher-yielding bonds, particularly in sectors of the market that have
performed poorly but that we feel are likely to improve. At the same time,
the fund's cash reserves during the period were higher than average to meet
the redemptions that can occur when rates rise and to limit share price
losses.
Portfolio turnover was above average, due to the raising of cash reserves
and to the sales and purchases we made to both improve tax efficiency and
maintain a relatively high level of income. As rates rose and bond prices
declined, we sold certain bonds to realize tax losses, which we can use in
the future to offset capital gains and minimize the tax burden on
shareholders. By replacing those bonds with newly issued, higher coupon
bonds, we are able to keep shareholder income higher than it might
otherwise be.
Looking ahead, we expect to maintain our neutral posture until it appears
the Fed is satisfied that its three interest rate hikes this year are
sufficient to stem inflationary pressures. In the meantime, our emphasis
will remain on improving the yield to shareholders, particularly as we work
down our cash reserves with new purchases beginning next year.
OUTLOOK
Interest rates could continue to move somewhat higher in the months ahead
due to the persistent strength in the U.S. economy and improved global
growth. The Fed is keeping a wary eye on inflation, but is also interested
in maintaining a liquid and orderly market as year-end approaches. This
could moderate future rate increases, as evidenced by the Fed's recent move
to a neutral bias. In addition, it's important to recognize that the
increase in rates so far this year could be enough to slow certain sectors
of the economy, thereby limiting inflation concerns. For the time being, we
are focused on the high overall yields available in the municipal markets
and the exceptional appeal of tax-exempt bonds compared with taxable
alternatives.
Best wishes for a happy and prosperous New Year,
Mary J. Miller
Director, Municipal Bond Department
November 19, 1999
T. Rowe Price Summit Municipal Funds
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Portfolio Highlights
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KEY STATISTICS
4/30/99 10/31/99
Summit Municipal Money Market Fund
- --------------------------------------------------------------------------------
Price Per Share $ 1.00 $ 1.00
Dividends Per Share
For 6 months 0.014 0.014
For 12 months 0.030 0.029
Dividend Yield (7-Day Compound) * 3.22% 3.10%
Weighted Average Maturity (days) 59 56
Weighted Average Quality ** First Tier First Tier
Summit Municipal Intermediate Fund
- --------------------------------------------------------------------------------
Price Per Share $ 10.63 $ 10.12
Dividends Per Share
For 6 months 0.24 0.23
For 12 months 0.48 0.46
Dividend Yield *
For 6 months 4.47% 4.59%
For 12 months 4.55 4.70
30-Day Standardized Yield 4.00 4.67
Weighted Average Effective Maturity (years) 6.4 6.9
Weighted Average Effective Duration (years) 5.2 5.4
Weighted Average Quality *** A+ A+
(continued on next page)
T. Rowe Price Summit Municipal Funds
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
KEY STATISTICS
4/30/99 10/31/99
Summit Municipal Income Fund
- --------------------------------------------------------------------------------
Price Per Share $ 10.65 $ 9.88
Dividends Per Share
For 6 months 0.25 0.25
For 12 months 0.51 0.49
Dividend Yield *
For 6 months 4.70% 5.03%
For 12 months 4.83 5.10
30-Day Standardized Yield 4.48 5.07
Weighted Average Maturity (years) 16.6 13.9
Weighted Average Effective Duration (years) 8.0 7.6
Weighted Average Quality *** A+ A+
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the fund's net asset value per share at the end of the
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.
T. Rowe Price Summit Municipal Funds
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
4/30/99 10/31/99
Summit Municipal Money Market Fund
- --------------------------------------------------------------------------------
Air and Sea Transportation Revenue 19% 21%
Educational Revenue 15 18
Industrial and Pollution Control Revenue 17 18
General Obligation - State 15 8
Electric Revenue 6 7
General Obligation - Local 8 7
Housing Finance Revenue 7 7
Prerefunded Bonds 7 5
Hospital Revenue 1 3
Escrowed to Maturity 3 2
All Other 9 4
Other Assets Less Liabilities -7 --
- --------------------------------------------------------------------------------
Total 100% 100%
(continued on next page)
T. Rowe Price Summit Municipal Funds
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
4/30/99 10/31/99
Summit Municipal Intermediate Fund
- --------------------------------------------------------------------------------
General Obligation - Local 17% 12%
Hospital Revenue 9 11
Solid Waste Revenue 10 9
General Obligation - State 4 9
Electric Revenue 9 9
Air and Sea Transportation Revenue 7 7
Industrial and Pollution Control Revenue 12 6
Life Care/Nursing Home Revenue 5 5
Lease Revenue 5 5
Housing Finance Revenue 2 4
Dedicated Tax Revenue 6 4
Nuclear Revenue 4 4
Water and Sewer Revenue 1 4
Prerefunded Bonds 4 3
Miscellaneous 3 3
Escrowed to Maturity 2 3
Educational Revenue 1 2
All Other 2 1
Other Assets Less Liabilities -3 -1
- --------------------------------------------------------------------------------
Total 100% 100%
(continued on next page)
T. Rowe Price Summit Municipal Funds
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
4/30/99 10/31/99
Summit Municipal Income Fund
- --------------------------------------------------------------------------------
Hospital Revenue 13% 12%
Industrial and Pollution Control Revenue 13 11
Lease Revenue 8 9
Solid Waste Revenue 5 9
General Obligation - Local 6 8
Housing Finance Revenue 7 7
Life Care/Nursing Home Revenue 6 7
Ground Transportation Revenue 2 6
Air and Sea Transportation Revenue 4 6
Nuclear Revenue 7 5
Educational Revenue 2 5
Water and Sewer Revenue 5 5
Dedicated Tax Revenue 8 3
General Obligation - State 4 3
Prerefunded Bonds 3 3
Escrowed to Maturity 2 3
Electric Revenue 4 2
All Other 2 --
Other Assets Less Liabilities -1 -4
- --------------------------------------------------------------------------------
Total 100% 100%
T. Rowe Price Summit Municipal Funds
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
These charts show the value of a hypothetical $25,000 investment in the
funds over the past 10 fiscal year periods or since inception (for funds
lacking 10-year records). The result is compared with benchmarks, which may
include a broad-based market index and a peer group average or index.
Market indexes do not include expenses, which are deducted from fund
returns as well as mutual fund averages and indexes.
SEC Chart: SUMMIT MUNICIPAL MONEY MARKET FUND
Lipper Tax-Exempt
Money Market Summit Municipal
Funds Average Money Market Fund
10/29/93 25.000 25.000
10/94 25.536 25.588
10/95 26.382 26.491
10/96 27.184 27.361
10/97 28.018 28.284
10/98 28.864 29.210
10/99 29.618 30.056
SEC Chart: SUMMIT MUNICIPAL INTERMEDIATE FUND
Lipper
Lehman Summit Intermediate
7-Year Municipal Municipal
Municipal Debt Funds Intermediate
Bond Index Average Fund
10/29/93 25.000 25.000 25.000
10/94 23.910 23.529 23.905
10/95 27.458 26.755 27.416
10/96 29.025 28.183 29.345
10/97 31.490 30.538 32.438
10/98 34.013 32.744 35.177
10/99 33.411 31.394 33.917
T. Rowe Price Summit Municipal Funds
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
SEC Chart: SUMMIT MUNICIPAL INCOME FUND
Lipper
Lehman Summit Intermediate
7-Year Municipal Municipal
Municipal Debt Funds Intermediate
Bond Index Average Fund
10/29/93 25.000 25.000 25.000
10/94 24.526 24.064 25.045
10/95 27.555 26.817 27.899
10/96 28.837 28.069 29.403
10/97 30.979 30.034 31.691
10/98 33.269 32.074 33.875
10/99 33.271 31.639 33.550
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how each fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Since Inception
Periods Ended 10/31/99 1 Year 3 Years 5 Years Inception Date
Summit Municipal Money
Market Fund 2.90% 3.18% 3.27% 3.11% 10/29/93
Summit Municipal
Intermediate Fund -0.96 4.50 6.02 5.02 10/29/93
Summit Municipal
Income Fund -3.58 4.95 7.25 5.21 10/29/93
Investment return represents past performance and will vary. Shares of the bond
funds may be worth more or less at redemption than at original purchase.
Investments in the Money Fund are not insured or guaranteed by the FDIC or any
other government agency. Although the fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
fund.
T. Rowe Price Summit Municipal Money Market Fund
- --------------------------------------------------------------------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Year
Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Investment activities
Net investment income 0.029 0.032 0.033 0.032 0.035
Distributions
Net investment income (0.029) (0.032) (0.033) (0.032) (0.035)
NET ASSET VALUE
End of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) 2.90% 3.27% 3.37% 3.28% 3.53%
Ratio of total expenses
to average net assets 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment
income to average
net assets 2.87% 3.23% 3.31% 3.23% 3.48%
Net assets, end of period
(in thousands) $185,305 $170,924 $140,557 $ 96,264 $ 77,958
(diamond) Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment
of all distributions.
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
Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $ 10.70 $ 10.51 $ 10.22 $ 10.17 $ 9.59
Investment activities
Net investment income 0.46 0.48 0.49 0.48 0.48
Net realized and
unrealized gain (loss) (0.56) 0.23 0.29 0.05 0.58
Total from
investment activities (0.10) 0.71 0.78 0.53 1.06
Distributions
Net investment income (0.46) (0.48) (0.49) (0.48) (0.48)
Net realized gain (0.02) (0.04) -- -- --
Total distributions (0.48) (0.52) (0.49) (0.48) (0.48)
NET ASSET VALUE
End of period $ 10.12 $ 10.70 $ 10.51 $ 10.22 $ 10.17
----------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) (0.96)% 6.89% 7.78% 5.39% 11.39%
Ratio of total expenses
to average net assets 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment
income to average
net assets 4.43% 4.51% 4.67% 4.77% 4.93%
Portfolio turnover rate 38.5% 22.2% 53.8% 72.9% 86.1%
Net assets, end of period
(in thousands) $ 83,794 $ 75,928 $ 46,906 $ 29,175 $ 22,145
(diamond) Total return reflects the rate that an investor would have earned
on an investment in the fund during each period, assuming reinvestment
of all distributions.
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
Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $ 10.79 $ 10.44 $ 9.97 $ 9.84 $ 9.08
Investment activities
Net investment income 0.49 0.51 0.55 0.54 0.54
Net realized and
unrealized gain (loss) (0.86) 0.35 0.47 0.13 0.76
Total from
investment activities (0.37) 0.86 1.02 0.67 1.30
Distributions
Net investment income (0.49) (0.51) (0.55) (0.54) (0.54)
Net realized gains (0.05) -- -- -- --
Total distributions (0.54) (0.51) (0.55) (0.54) (0.54)
NET ASSET VALUE
End of period $ 9.88 $ 10.79 $ 10.44 $ 9.97 $ 9.84
----------------------------------------------------
Ratios/Supplemental Data
Total return(diamond) (3.58)% 8.44% 10.54% 7.04% 14.68%
Ratio of total expenses
to average net assets 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment
income to average
net assets 4.71% 4.82% 5.38% 5.51% 5.68%
Portfolio turnover rate 79.7% 48.1% 35.7% 56.7% 73.7%
Net assets, end of period
(in thousands) $ 72,558 $ 65,958 $ 29,102 $ 15,909 $ 11,108
(diamond) Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment of all
distributions.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Money Market Fund
- --------------------------------------------------------------------------------
October 31, 1999
Statement of Net Assets Par Value
- --------------------------------------------------------------------------------
In thousands
ALABAMA 0.1%
Huntsville, GO, 5.15%, 8/1/00 $ 250 $ 252
Total Alabama (Cost $252) 252
COLORADO 0.3%
Colorado Health Fac. Auth.,
Porter Memorial Hosp. Project
7.40%, 2/1/16 (Prerefunded 2/1/00!) 500 505
Total Colorado (Cost $505) 505
CONNECTICUT 0.1%
Connecticut, GO, 4.50%, 5/15/00 200 201
Connecticut, Unemployment Compensation
5.50%, 5/15/00 (AMBAC Insured) 50 50
Total Connecticut (Cost $251) 251
DELAWARE 0.2%
Delaware, GO
4.50%, 2/1/00 200 201
5.00%, 7/1/00 250 252
Total Delaware (Cost $453) 453
FLORIDA 2.6%
Florida Board of Ed.
4.80%, 6/1/00 250 251
Capital Outlay, GO
7.25%, 6/1/23 (Prerefunded 6/1/00!) 150 156
Florida Dept. of Natural Resources
VRDN (Currently 3.57%)
(FGIC Insured) 2,000 2,000
Lee County HFA, Single Family,
3.15%, 11/15/99 * 2,375 2,375
Total Florida (Cost $4,782) 4,782
GEORGIA 4.4%
Georgia, GO
4.375%, 7/1/00 250 251
6.25%, 4/1/00 1,230 1,244
Savannah Economic Dev. Auth.
Home Depot
VRDN (Currently 3.60%) * $ 2,250 $ 2,250
VRDN (Currently 3.65%) * 4,400 4,400
Total Georgia (Cost $8,145) 8,145
HAWAII 0.1%
Hawaii, 5.70%, 11/1/99
(Escrowed to Maturity) 200 200
Honolulu, GO, 6.90%, 6/1/00
(Escrowed to Maturity) 50 51
Total Hawaii (Cost $251) 251
ILLINOIS 8.5%
Chicago, GO, 3.75%, 12/1/99 5,000 5,000
Chicago Metropolitan Water
Reclamation Dist., GO
4.70%, 12/1/99 300 301
5.60%, 12/1/99 75 75
Cook County, GO
4.375%, 11/15/99 (MBIA Insured) 250 250
5.10%, 11/15/99 (FGIC Insured) 250 250
Illinois, 5.75%, 6/15/00
(Escrowed to Maturity) 100 101
Illinois, GO, 5.25%, 4/1/00 360 362
Illinois HDA, 3.65%, 7/26/00 * 1,000 1,000
Illinois HFA, Resurrection
Health Care Systems
TECP, 3.50%, 11/24/99 5,000 5,000
Illinois Student Assistance
Commission, Student Loan
VRDN (Currently 3.55%) * 700 700
Lake County, PCR, W.W. Grainger
VRDN (Currently 3.70%) * 1,500 1,500
Southwestern Dev. Auth.,
Solid Waste Disposal
Shell Oil, Wood River
VRDN (Currently 3.60%) * 1,200 1,200
Total Illinois (Cost $15,739) 15,739
INDIANA 6.5%
Indiana HFFA, Ascension Health, VRDN
(Currently 3.80%) 2,000 2,000
Indiana Univ., 6.90%, 8/1/03
(Prerefunded 8/1/00!) 350 365
Indianapolis Airport Auth.,
Gas Utility, 3.70%, 2/9/00 3,000 3,000
Petersburg Solid Waste Disposal
Indianapolis Power and Light
VRDN (Currently 3.60%) * $ 300 $ 300
VRDN (Currently 3.70%) * 6,300 6,300
Total Indiana (Cost $11,965) 11,965
KENTUCKY 4.1%
Jefferson County, PCR, Gas & Electric
TECP, 3.50%, 11/12/99 5,000 5,000
TECP, 3.80%, 2/22/00 * 2,000 2,000
Kentucky Property and Buildings Commission
7.35%, 12/1/04 (Prerefunded 12/1/99!) 100 102
Kentucky Turnpike Auth., Revitalization Project
7.25%, 5/15/02 (Prerefunded 5/15/00!) 500 517
Total Kentucky (Cost $7,619) 7,619
LOUISIANA 5.2%
New Orleans Aviation Board
VRDN (Currently 3.60%)
(MBIA Insured) * 5,340 5,340
Plaquemines Parish, British Petroleum
VRDN (Currently 3.60%) * 1,100 1,100
Saint Charles Parish, PCR, Shell Oil
VRDN (Currently 3.60%) * 3,100 3,100
Total Louisiana (Cost $9,540) 9,540
MAINE 4.6%
Maine Ed. Marketing Corp., Student Loan
VRDN (Currently 3.55%) * 7,500 7,500
VRDN (Currently 3.55%)
(AMBAC Insured) * 1,000 1,000
Total Maine (Cost $8,500) 8,500
MARYLAND 5.0%
Anne Arundel County, GO
BAN, Consolidated Solid Waste
TECP, 3.55%, 2/9/00 * 4,000 4,000
Water and Sewer, 4.00%, 3/15/00 * 1,235 1,238
Baltimore City, Waste Water Utility
6.50%, 7/1/20 (MBIA Insured)
(Prerefunded 7/1/00!) $ 75 $ 76
Carroll County, GO, County
Commissioners, 6.50%, 11/1/99 100 100
Charles County, GO, 6.50%, 12/1/99 50 50
Howard County, Consolidated Public Improvement
6.90%, 5/15/07 (Prerefunded 5/15/00!) 300 305
Maryland, GO
6.50%, 7/1/00 155 158
6.70%, 3/1/05 (Prerefunded 3/1/00!) 400 412
State and Local Fac.
4.00%, 2/15/00 500 501
4.10%, 8/1/00 110 110
4.80%, 2/1/00 200 201
4.875%, 6/1/00 100 101
Maryland DOT
4.25%, 12/15/99 50 50
6.30%, 9/1/04 400 414
6.50%, 11/1/99 500 500
Maryland HHEFA
7.00%, 7/1/00 (AMBAC Insured)
(Prerefunded 7/1/00!) 50 52
Montgomery County, 6.80%, 11/1/06
(Prerefunded 11/1/99!) 250 255
Montgomery County, GO, 8.60%, 5/1/00 125 128
Montgomery County, GO,
Consolidated Public Improvement
6.80%, 11/1/07 (Prerefunded 11/1/99!) 100 102
6.80%, 11/1/09 (Prerefunded 11/1/99!) 20 21
Univ. of Maryland
4.00%, 10/1/00 525 526
5.30%, 12/1/99 25 25
Total Maryland (Cost $9,325) 9,325
MASSACHUSETTS 0.0%
Massachusetts, GO
7.00%, 3/1/10 (FGIC Insured)
(Prerefunded 3/1/00!) $ 25 $ 26
Massachusetts Bay Transportation Auth.
General Transportation Systems
7.625%, 3/1/15 (MBIA Insured)
(Prerefunded 3/1/00!) 55 56
Total Massachusetts (Cost $82) 82
MICHIGAN 3.1%
Univ. of Michigan Hosp.,
Medical Service Plan, 5.80%, 12/1/99 250 250
Wayne/Charter County Airport,
Detroit Metropolitan Airport
VRDN (Currently 3.55%) * 5,500 5,500
Total Michigan (Cost $5,750) 5,750
MINNESOTA 1.2%
Minneapolis, GO, 4.375%, 12/1/99 750 751
Minneapolis-St. Paul Housing & Redev. Auth.
Health One, 8.00%, 8/15/14
(Prerefunded 8/15/00!) 50 53
Minnesota, GO
VRDN (Currently 3.57%) 700 700
4.90%, 8/1/00 100 101
5.20%, 8/1/00 50 50
Minnesota Public Fac. Auth.,
Water Pollution
VRDN (Currently 3.57%) 500 500
Total Minnesota (Cost $2,155) 2,155
MISSISSIPPI 0.8%
Jackson County, Port Fac., VRDN
(Currently 3.70%) 1,400 1,400
Total Mississippi (Cost $1,400) 1,400
NEVADA 2.8%
Clark County Airport
VRDN (Currently 3.60%) * $ 270 $ 270
3.75%, 3/1/00 * 5,000 5,000
Total Nevada (Cost $5,270) 5,270
NEW JERSEY 0.1%
New Jersey, GO, 5.10%, 2/15/00 75 75
New Jersey Transportation Auth., Trust Fund
4.50%, 6/A15/00 (Escrowed to Maturity) 135 136
Total New Jersey (Cost $211) 211
NEW MEXICO 0.3%
Chaves County, Eastern New Mexico Medical Center
8.625%, 12/1/19 (Prerefunded 12/1/99!) 485 496
New Mexico, GO, Capital Projects,
4.60%, 8/1/00 100 101
Total New Mexico (Cost $597) 597
NORTH CAROLINA 2.0%
Charlotte, GO, 5.00%, 2/1/00 500 502
Charlotte Airport, VRDN
(Currently 3.55%) * 2,970 2,970
Greensboro, GO, Public Improvement
6.80%, 5/1/04 (Prerefunded 5/1/00!) 100 103
North Carolina, GO, 4.50%, 6/1/00 125 126
Total North Carolina (Cost $3,701) 3,701
OHIO 0.5%
Ohio, GO, Infrastructure Improvement,
4.20%, 8/1/00 50 50
Ohio Public Fac. Commission
Higher Ed.
4.50%, 11/1/99 100 100
5.00%, 11/1/99 715 715
Total Ohio (Cost $865) 865
OREGON 0.8%
Oregon Housing and Community Services Dept.
Single Family Mortgage,
3.48%, 6/29/00 * $ 1,500 $ 1,500
Total Oregon (Cost $1,500) 1,500
PENNSYLVANIA 3.1%
Montgomery County HHEFA
Bryn Mawr Hosp.
6.80%, 12/1/99 (Escrowed to Maturity) 100 100
7.40%, 12/1/08 (Prerefunded 12/1/99!) 50 51
Pennsylvania, 6.875%, 11/1/01
(Prerefunded 11/1/99!) 15 15
Pennsylvania, GO, 6.00%, 11/1/99
(MBIA Insured) 50 50
Pennsylvania Higher Ed. Fac. Auth.
Student Loan
VRDN (Currently 3.55%) * 5,100 5,100
Pennsylvania Turnpike Commission
7.15%, 12/1/09 (AMBAC Insured)
(Prerefunded 12/1/99!) 100 102
7.50%, 12/1/09 (MBIA Insured)
(Prerefunded 12/1/99!) 100 103
7.55%, 12/1/17 (AMBAC Insured)
(Prerefunded 12/1/99!) 135 138
Total Pennsylvania (Cost $5,659) 5,659
SOUTH CAROLINA 1.4%
Greenville Hosp. Fac., 7.00%, 5/1/17
(Prerefunded 5/1/00!) 100 104
Oconee County, 3.90%, 1/18/00 * 1,500 1,500
South Carolina, GO, Capital Improvement,
5.50%, 4/1/00 1,000 1,007
Total South Carolina (Cost $2,611) 2,611
SOUTH DAKOTA 2.8%
South Dakota HDA
VRDN (Currently 3.75%) * 105 105
Homeownership Mortgage
3.20%, 12/2/99 * 3,000 3,000
3.20%, 4/7/00 * 2,000 2,000
Total South Dakota (Cost $5,105) 5,105
TEXAS 11.1%
Austin Utility Systems
9.50%, 5/15/15 (Prerefunded 5/15/00!) $ 100 $ 103
10.75%, 5/15/15 (Prerefunded 5/15/00!) 280 291
11.30%, 11/15/14 (Prerefunded 11/15/99!) 710 712
Gulf Coast Waste Disposal Auth.
Environmental Fac., Amoco Oil
VRDN (Currently 3.60%) * 800 800
Harris County, GO, Toll Road,
6.40%, 8/1/00 50 51
Houston, GO
Public Improvement, 3.50%, 3/1/00 325 325
5.60%, 3/1/00 150 151
Houston Airport Systems, VRDN
(Currently 3.62%) 2,805 2,805
Panhandle Plains Higher Ed. Auth.,
Student Loan
VRDN (Currently 3.55%) * 3,200 3,200
VRDN (Currently 3.55%) 2,300 2,300
South Texas Higher Ed. Auth., Sallie Mae
VRDN (Currently 3.55%)
(MBIA Insured) * 6,800 6,800
Texas, GO
Veterans Land, VRDN
(Currently 3.55%) 1,000 1,000
TRAN, 4.50%, 8/31/00 2,000 2,013
Total Texas (Cost $20,551) 20,551
UTAH 10.0%
Intermountain Power Agency
10.00%, 7/1/12 (Prerefunded 7/1/00!) 125 132
Salt Lake City, Airport,
VRDN (Currently 3.50%) * 7,100 7,100
Salt Lake County, Kennecott/RTZ,
Solid Waste Disposal
VRDN (Currently 3.57%) * 4,400 4,400
Utah, GO, 4.70%, 7/1/00 200 201
Utah State Board of Regents,
VRDN (Currently 3.55%) * 6,700 6,700
Total Utah (Cost $18,533) 18,533
VIRGINIA 8.0%
Capital Region Airport Commission,
Richmond Int'l. Airport
VRDN (Currently 3.70%)
(AMBAC Insured) * $ 1,000 $ 1,000
Chesterfield County, GO,
4.20%, 11/1/99 200 200
Fairfax County, GO,
4.70%, 6/1/00 250 252
Henrico County IDA
Motorola, VRDN (Currently 3.60%) * 8,500 8,500
White Oak Semiconductor
VRDN (Currently 3.55%) * 3,844 3,844
Norfolk, GO, Capital Improvement
5.25%, 6/1/00 (FGIC Insured) 250 252
Roanoke IDA, Roanoke Memorial Hosp.
7.50%, 7/1/20 (Prerefunded 7/1/00!) 600 626
Virginia Ed. Loan Auth., 5.25%, 3/1/00
(Escrowed to Maturity) 195 196
Total Virginia (Cost $14,870) 14,870
WASHINGTON 6.8%
Port of Seattle, TECP,
3.60%, 12/1/99 3,000 3,000
Port of Seattle
4.80%, 11/1/99 (AMBAC Insured) 200 200
5.90%, 11/1/99 * 1,500 1,500
6.00%, 11/1/00 (FGIC Insured) * 1,325 1,351
Seattle Water Systems,
4.60%, 12/1/99 85 85
Washington, GO
4.50%, 8/1/00 200 201
5.00%, 5/1/00 200 202
6.10%, 6/1/00 150 152
Washington Housing Fin. Commission
VRDN (Currently 3.00%) * 1,250 1,250
Single Family, 3.85%, 10/10/00 * 1,000 1,000
Washington Public Power Supply Systems
5.10%, 7/1/00 100 101
5.45%, 7/1/00 500 506
7.00%, 7/1/11 (FGIC Insured)
(Prerefunded 7/1/00!) 820 854
Washington Public Power Supply Systems
7.25%, 7/1/00 $ 300 $ 306
7.50%, 7/1/17 50 52
7.50%, 7/1/18 (FGIC Insured)
(Prerefunded 7/1/00!) 215 224
8.00%, 7/1/17 (Prerefunded 7/1/00!) 100 105
Nuclear Project
7.00%, 7/1/12 (Prerefunded 7/1/00!) 445 463
7.00%, 7/1/12 (FGIC Insured)
(Prerefunded 7/1/00!) 985 1,023
Total Washington (Cost $12,575) 12,575
WEST VIRGINIA 0.4%
West Virginia Housing Dev. Fund,
4.40%, 5/1/00 * 755 757
Total West Virginia (Cost $757) 757
WISCONSIN 2.2%
Wisconsin, GO
3.65%, 3/7/00 3,000 3,000
4.10%, 11/1/99 500 500
4.80%, 11/1/99 500 500
5.30%, 5/1/00 100 101
Total Wisconsin (Cost $4,101) 4,101
WYOMING 0.6%
Lincoln County, PCR, Exxon, VRDN
(Currently 3.60%) * 1,100 1,100
Total Wyoming (Cost $1,100) 1,100
Total Investments in Securities
99.7% of Net Assets (Cost $184,720) $ 184,720
Other Assets Less Liabilities 585
NET ASSETS $ 185,305
----------
Net Assets Consist of:
Accumulated net realized gain/loss
- - net of distributions $ (6)
Paid-in-capital applicable to 185,306,977
shares of $0.0001 par value capital stock
outstanding; 4,000,000,000 shares
of the Corporation authorized 185,311
NET ASSETS $ 185,305
----------
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
DOT Department of Transportation
FGIC Financial Guaranty Insurance Company
GO General Obligation
HDA Housing Development Authority
HFA Health Facility Authority
HFFA Health Facility Financing Authority
HHEFA Health & Higher Educational Facility Authority
IDA Industrial Development Authority
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
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, 1999
Statement of Net Assets Par Value
- --------------------------------------------------------------------------------
In thousands
ALABAMA 0.6%
Birmingham Airport Auth.
7.35%, 7/1/04 (AMBAC Insured) * $ 500 $ 512
Total Alabama (Cost $511) 512
ALASKA 0.6%
Alaska HFC, 5.75%, 12/1/11 * 500 498
Total Alaska (Cost $497) 498
CALIFORNIA 2.7%
California Pollution Control Fin. Auth.,
PCR, USA Waste Services
5.00%, 6/1/08 1,000 907
California Public Works Board,
Dept. of Corrections
6.00%, 11/1/05 (MBIA Insured) 250 269
Foothill / Eastern
Transportation Corridor Agency
Toll Road
Zero Coupon, 1/1/05 350 275
Zero Coupon, 1/15/17 (MBIA Insured) 500 174
Southern California Public Power Auth.
6.61%, 7/1/17 (FGIC Insured)
(Escrowed to Maturity) 600 607
Total California (Cost $2,313) 2,232
COLORADO 0.8%
Denver City and County Airport
6.75%, 11/15/22 (MBIA Insured)
(Prerefunded 11/15/02!) * 105 114
6.75%, 11/15/22 (MBIA Insured) * 395 421
E-470 Public Highway Auth.
Zero Coupon, 8/31/26
(Prerefunded 8/31/05!) 1,000 156
Total Colorado (Cost $668) 691
CONNECTICUT 1.6%
Connecticut, GO, 5.00%, 6/15/06 475 480
Connecticut Dev. Auth.,
Mystic Marinelife Aquarium
6.875%, 12/1/17 $ 150 $ 151
Mashantucket Western Pequot Tribe
5.60%, 9/1/09 200 195
5.70%, 9/1/12 500 477
Total Connecticut (Cost $1,337) 1,303
DISTRICT OF COLUMBIA 1.2%
Washington D.C. Metropolitan Airport Auth.
6.25%, 10/1/21 (MBIA Insured) * 500 502
6.625%, 10/1/12 (MBIA Insured) * 500 532
Total District of Columbia (Cost $1,053) 1,034
FLORIDA 6.6%
Dade County, Resource Recovery Fac.
6.00%, 10/1/06 (AMBAC Insured) * 500 528
Dade County School Board, COP
5.75%, 5/1/08 (MBIA Insured) 365 384
Dade County School Dist., GO
6.00%, 7/15/04 (MBIA Insured) 1,700 1,799
Escambia County, PCR, Champion Int'l.
6.90%, 8/1/22 * 1,250 1,304
Florida Division of Bond Fin.
Dept. of Environmental Preservation
6.00%, 7/1/06 (MBIA Insured) 500 533
Indian Trace Community Dev. Dist.,
Water Management
5.50%, 5/1/07 (MBIA Insured) 500 518
Leesburg Hosp., Regional
Medical Center, 5.20%, 7/1/02 500 504
Total Florida (Cost $5,539) 5,570
GEORGIA 0.9%
Coweta County Residential Care
Fac. for the Elderly Auth.
Wesley Woods of Newnan-Peachtree City
7.625%, 10/1/06 400 422
Municipal Electric Auth. of Georgia,
Zero Coupon, 1/1/09 570 330
Total Georgia (Cost $738) 752
HAWAII 5.9%
Hawaii, Airport, 6.70%, 7/1/05
(MBIA Insured) * $ 500 $ 526
Hawaii Dept. of Budget and Fin.
Hawaiian Electric,
4.95%, 4/1/12 (MBIA Insured) 3,000 2,821
Wilcox Memorial Hosp., 5.50%, 7/1/09 1,690 1,627
Total Hawaii (Cost $5,291) 4,974
ILLINOIS 5.2%
Chicago, GO, 5.75%, 1/1/05
(AMBAC Insured) 660 685
Chicago Board of Ed., GO
Zero Coupon, 12/1/12 (FGIC Insured) 2,000 945
Chicago-O'Hare Int'l. Airport
Int'l. Terminal
7.50%, 1/1/05 * 110 113
7.50%, 1/1/05 (MBIA Insured) * 170 174
7.50%, 1/1/05 (MBIA Insured)
(Prerefunded 1/1/00!) * 80 82
7.50%, 1/1/05 (Prerefunded 1/1/00!) * 50 52
Illinois HFA
Edward Obligated Group
5.00%, 2/15/09 (AMBAC Insured) 500 488
Glen Oaks Medical Center
9.50%, 11/15/15
(Escrowed to Maturity) 70 75
Hinsdale Hosp.
7.00%, 11/15/19
(Escrowed to Maturity) 260 287
Metropolitan Pier & Expo Auth.,
McCormick Place
5.375%, 12/15/17 (FGIC Insured) 1,000 927
Will County, Amoco Chemical, VRDN
(Currently 3.60%) * 500 500
Total Illinois (Cost $4,459) 4,328
INDIANA 1.5%
Goshen, Greencroft Obligation Group,
5.20%, 8/15/06 750 705
St. Joseph County Economic Dev.
Madison Center
5.10%, 2/15/05 260 254
5.25%, 2/15/07 295 285
Total Indiana (Cost $1,301) 1,244
IOWA 0.3%
Iowa HFA, Wesley Retirement,
6.25%, 2/1/12 $ 250 $ 238
Total Iowa (Cost $250) 238
KENTUCKY 3.0%
Kenton County Airport Board,
Delta Airlines, 7.50%, 2/1/12 * 2,000 2,099
Kentucky Property and
Buildings Commission,
6.40%, 11/1/01 390 405
Total Kentucky (Cost $2,552) 2,504
LOUISIANA 5.9%
Calcasieu Parish IDA,
Entergy Gulf States,
5.45%, 7/1/10 400 372
Louisiana, GO
5.00%, 4/15/03 1,000 1,013
5.50%, 4/15/07 (AMBAC Insured) 3,000 3,077
Plaquemines Parish, British Petroleum
VRDN (Currently 3.60%) * 200 200
St. Charles Parish,
PCR, 4.85%, 5/31/02 300 297
Total Louisiana (Cost $5,122) 4,959
MARYLAND 8.2%
Maryland Energy Fin. Admin.
Wheelabrator Technologies
5.85%, 12/1/05 * 1,510 1,541
6.30%, 12/1/10 * 250 260
Maryland HHEFA
Good Samaritan Hosp.
5.50%, 7/1/05 (Escrowed to Maturity) 700 724
Montgomery County, GO
Consolidated Public Improvement
5.00%, 5/1/06 1,250 1,267
5.10%, 4/1/05 1,200 1,225
Northeast Maryland Waste Disposal Auth.
Montgomery County Resources
6.20%, 7/1/10 * 750 775
6.30%, 7/1/16 (MBIA Insured) * 500 507
Northeast Maryland Waste Disposal Auth.
Montgomery County Resources
7.10%, 1/1/03 (MBIA Insured) $ 550 $ 590
Total Maryland (Cost $6,964) 6,889
MASSACHUSETTS 2.2%
Massachusetts, GO
5.25%, 8/1/15 625 585
6.30%, 11/1/05 (FGIC Insured) 250 269
Massachusetts Port Auth.
7.375%, 7/1/10 (FGIC Insured) * 100 104
7.375%, 7/1/10 (FGIC Insured)
(Prerefunded 7/1/00!) * 35 37
Massachusetts Water Pollution,
6.00%, 8/1/15 800 811
Total Massachusetts (Cost $1,820) 1,806
MICHIGAN 7.8%
Garden City HFA, Garden City Hosp.,
5.375%, 9/1/03 1,465 1,427
Greater Detroit Resource Recovery Auth.
6.25%, 12/13/05 (AMBAC Insured) 1,000 1,071
Michigan HFA, Mercy Health,
5.00%, 8/15/12 1,395 1,280
Michigan State Hosp. Fin. Auth.,
Ascension Health
5.30%, 11/15/06 1,000 1,000
Michigan Strategic Fund,
Holland Home, 5.00%, 11/15/03 830 797
Wayne County (Charter) Airport
5.25%, 12/1/12 (MBIA Insured) * 1,000 959
Total Michigan (Cost $6,704) 6,534
MISSISSIPPI 0.3%
Jackson County Ind. Sewage Fac., Chevron
VRDN (Currently 3.60%) * 250 250
Total Mississippi (Cost $250) 250
MISSOURI 0.5%
Good Shepherd Nursing Home Dist.
Nursing Home Fac., 5.45%, 8/15/08 $ 420 $ 394
Total Missouri (Cost $420) 394
NEW HAMPSHIRE 0.5%
New Hampshire Housing Fin. Auth.
Single Family
5.90%, 1/1/01 * 110 111
5.90%, 7/1/01 * 110 112
6.00%, 7/1/02 * 115 117
6.10%, 1/1/03 * 120 123
Total New Hampshire (Cost $455) 463
NEW JERSEY 1.7%
New Jersey Ed. Fac. Auth.
Georgian Court College, 5.00%, 7/1/04 475 469
New Jersey Transportation Trust Fund Auth.
Transportation Systems,
5.625%, 6/15/14 1,000 1,000
Total New Jersey (Cost $1,516) 1,469
NEW YORK 13.3%
Dormitory Auth. of the State of New York
City Univ.
5.50%, 7/1/03 1,000 1,024
6.875%, 7/1/14 (MBIA Insured)
(Prerefunded 7/1/04!) 350 388
Mental Health Services Fac.,
6.00%, 2/15/06 1,500 1,571
Nyack Hosp., 6.00%, 7/1/06 250 253
State Univ. Ed. Fac., 7.40%, 5/15/01 150 155
Long Island Power Auth., 5.00%, 4/1/05 500 503
Nassau County IDA, Hofstra Univ.
6.70%, 1/1/09 (Prerefunded 1/1/05!) 250 275
New York City, GO
5.00%, 11/15/08 1,500 1,468
New York City, GO
5.25%, 8/1/03 $ 1,500 $ 1,526
7.00%, 8/1/04 1,000 1,088
New York State Environmental Fac., PCR
Water Revolving Fund
6.875%, 6/15/10 50 53
6.875%, 6/15/10 (Prerefunded 6/15/01!) 450 477
New York State Housing Fin. Agency
Service Contract Obligation
5.85%, 9/15/09 300 308
New York State Mortgage Agency,
Homeowner Mortgage
5.80%, 10/1/06 * 500 512
Port Auth. of New York and New Jersey
5.875%, 9/15/15 (FGIC Insured) * 1,000 1,004
6.50%, 10/1/01 * 500 512
Total New York (Cost $11,032) 11,117
NORTH CAROLINA 1.2%
North Carolina, GO, Public Improvement,
5.25%, 3/1/12 1,010 1,000
Total North Carolina (Cost $1,015) 1,000
OHIO 1.7%
Fairfield Economic Dev. Auth.,
Beverly Enterprises
8.50%, 1/1/03 175 181
Ohio HFA, Residential,
5.025%, 3/1/21 * 1,250 1,235
Total Ohio (Cost $1,432) 1,416
PENNSYLVANIA 2.9%
Pennsylvania, GO, 5.375%,
11/15/03 (FGIC Insured) 500 515
Pennsylvania Intergovernmental
Cooperative Auth., Special Tax
7.00%, 6/15/04 (FGIC Insured)
(Escrowed to Maturity) 400 438
Philadelphia Auth. for Ind. Dev.
Pauls Run Care Fac., 5.85%, 5/15/13 500 456
Philadelphia HHEFA, Childrens Hosp.,
5.25%, 2/15/06 1,000 1,004
Total Pennsylvania (Cost $2,452) 2,413
SOUTH CAROLINA 4.3%
Charleston County Resource Recovery,
Foster Wheeler
5.10%, 1/1/08 (AMBAC Insured) * $ 1,700 $ 1,679
South Carolina Public Service Auth.
6.25%, 1/1/05 (MBIA Insured) 1,350 1,434
Santee Cooper, 6.50%, 7/1/24
(AMBAC Insured)
(Prerefunded 7/1/02!) 495 530
Total South Carolina (Cost $3,635) 3,643
TENNESSEE 1.1%
Memphis-Shelby County Airport Auth.
6.25%, 2/15/11 (MBIA Insured) * 200 212
Tennessee Housing Dev. Agency
4.95%, 7/1/10 * 420 401
5.05%, 7/1/11 * 355 338
Total Tennessee (Cost $981) 951
TEXAS 4.1%
Abilene Health Fac. Dev.,
Sears Methodist Retirement System
5.40%, 11/15/09 700 641
Austin Airport, 5.75%, 11/15/08
(MBIA Insured) * 500 514
Brazos Higher Ed. Auth.,
Student Loan, 5.95%, 6/1/02 * 470 482
Harris County Health Fac. Dev.
Texas Childrens Hosp.,
5.375%, 10/1/12 1,000 960
Houston, Water and Sewer,
7.00%, 12/1/03 (AMBAC Insured) 270 293
Tarrant County Health Fac. Dev.,
Texas Health Resources
5.75%, 2/15/10 (MBIA Insured) 500 511
Total Texas (Cost $3,492) 3,401
UTAH 1.2%
Utah State Board of Regents
VRDN (Currently 3.55%)
(AMBAC Insured) * 1,000 1,000
Total Utah (Cost $1,000) 1,000
VIRGINIA 4.1%
Alexandria IDA, Ogden Martin, VRDN
(Currently 3.60%) * $ 1,300 $ 1,300
Bedford County IDA,
Georgia-Pacific, 4.60%, 8/1/04 320 315
Leesburg Utilities System
6.10%, 7/1/07 (MBIA Insured)
(Prerefunded 7/1/02!) 500 530
Southeastern Public Service Auth.
Solid Waste Systems, 5.875%, 7/1/08 * 500 498
Virginia HDA, 6.50%, 7/1/03 * 250 254
Virginia Transportation Board
Northern Virginia Transportation Dist.
5.80%, 5/15/04 500 522
Total Virginia (Cost $3,415) 3,419
WASHINGTON 1.2%
Washington Health Care Fac. Auth.
Virginia Mason Medical Center
6.00%, 8/15/08 (MBIA Insured) 500 526
Washington Public Power Supply System
Nuclear Project, 6.30%, 7/1/01
(FSA Insured) 500 516
Total Washington (Cost $1,047) 1,042
WEST VIRGINIA 7.5%
Putnam County, PCR, Appalachian Power,
6.60%, 7/1/19 3,950 4,031
West Virginia, GO, Zero Coupon,
11/1/12 (FGIC Insured) 950 460
West Virginia Building Commission, Lottery
5.00%, 7/1/04 (MBIA Insured) 1,735 1,755
Total West Virginia (Cost $6,449) 6,246
Total Investments in Securities
100.6% of Net Assets (Cost $85,710) $ 84,292
Other Assets Less Liabilities (498)
NET ASSETS $ 83,794
----------
Net Assets Consist of:
Accumulated net realized gain/loss
- - net of distributions $ (664)
Net unrealized gain (loss) (1,418)
Paid-in-capital applicable to 8,277,137
shares of $0.0001 par value capital stock
outstanding; 4,000,000,000 shares of the
Corporation authorized 85,876
NET ASSETS $ 83,794
----------
NET ASSET VALUE PER SHARE $ 10.12
----------
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
AMBAC AMBAC Indemnity Corp.
COP Certificates of Participation
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance Corp.
GO General Obligation
HDA Housing Development Authority
HFA Health Facility Authority
HFC Housing Finance Corp.
HHEFA Health & 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, 1999
Statement of Net Assets Par Value
- --------------------------------------------------------------------------------
In thousands
ALABAMA 0.3%
Baldwin County Eastern Shore Health Care Auth.
Thomas Hosp., 6.75%, 4/1/21 $ 200 $ 200
Total Alabama (Cost $196) 200
ALASKA 2.9%
Alaska HFC, 5.75%, 12/1/11 * 1,150 1,146
Alaska Student Loan Corp.,
5.10%, 7/1/10 (AMBAC Insured) * 1,000 957
Total Alaska (Cost $2,142) 2,103
CALIFORNIA 6.4%
California Pollution Control Fin. Auth., PCR
USA Waste Services, 5.00%, 6/1/18 600 544
California Statewide Community Dev. Auth.
Internext Group, 5.375%, 4/1/17 1,000 886
Chula Vista, Sub-Gateway Town Center,
7.50%, 1/1/32 * 500 467
Foothill / Eastern Transportation Corridor
Agency Toll Road
Zero Coupon, 1/15/17 (MBIA Insured) 500 174
Zero Coupon, 1/1/26 500 105
Zero Coupon, 1/1/07 1,000 803
Los Angeles Regional Airports
LAX Airport Improvement, 5.65%, 8/1/17 * 965 890
Placentia PFA, Special Tax,
6.60%, 9/1/15 100 101
Pomona Unified School Dist., GO
6.15%, 8/1/15 (MBIA Insured) 145 153
Poway Community Fac. Dist.,
6.75%, 8/15/15 225 232
Santa Ana Housing Auth.,
Villa Del Sol Apartments
5.65%, 11/1/21 * 300 306
Total California (Cost $4,936) 4,661
COLORADO 2.0%
Denver City and County Airport
5.25%, 11/15/23 (MBIA Insured) 150 134
E-470 Public Highway Auth.
Zero Coupon, 8/31/26
(Prerefunded 8/31/05!) $ 2,000 $ 312
5.00%, 9/1/26 (MBIA Insured) 1,175 1,008
Total Colorado (Cost $1,560) 1,454
CONNECTICUT 0.7%
Connecticut Dev. Auth.,
Mystic Marinelife Aquarium
7.00%, 12/1/27 200 202
Mashantucket, (144a),
5.75%, 9/1/27 300 272
Total Connecticut (Cost $491) 474
DELAWARE 0.4%
Delaware Economic Dev. Auth.
Peninsula United Methodist Homes,
6.30%, 5/1/22 300 286
Total Delaware (Cost $295) 286
FLORIDA 1.6%
Lee County IDA, Shell Point
Village Health Care Fac.
5.75%, 11/15/11 500 479
Tampa Solid Waste Systems
McKay Bay Refuse to Energy,
5.25%, 10/1/12 * 700 677
Total Florida (Cost $1,246) 1,156
GEORGIA 2.9%
Athens-Clarke Residential Care Fac.
for the Elderly Auth.
Wesley Woods of Athens, 6.375%, 10/1/27 200 183
Atlanta Water and Wastewater,
5.50%, 11/1/13 500 497
Coweta County Residential Care Fac.
for the Elderly Auth.
Wesley Woods of Newnan-Peachtree City
8.20%, 10/1/16 215 234
Georgia Housing Fin. Auth.,
Single Family, 6.45%, 12/1/27 * 210 214
Municipal Electric Auth. of Georgia
Zero Coupon, 1/1/09 1,000 580
5.70%, 1/1/19 (MBIA Insured) 170 166
Rockdale County Dev. Auth.,
Solid Waste Disposal
Visy Paper, 7.50%, 1/1/26 * $ 225 $ 231
Total Georgia (Cost $2,153) 2,105
HAWAII 1.8%
Hawaii, GO, 5.25%, 4/1/13
(MBIA Insured) 1,000 961
Honolulu, GO, 5.125%, 7/1/13
(FGIC Insured) 400 377
Total Hawaii (Cost $1,460) 1,338
IDAHO 0.1%
Idaho Housing Agency, Single Family
6.60%, 7/1/27 (FHA Guaranteed) * 90 92
Total Idaho (Cost $90) 92
ILLINOIS 7.6%
Chicago, GO, 3.75%, 12/1/99 2,000 1,998
Chicago - O'Hare Int'l.
Airport, Int'l. Terminal
7.50%, 1/1/17 (MBIA Insured) * 85 87
Chicago Board of Ed., GO
School Reform Board
Zero Coupon, 12/1/15 (AMBAC Insured) 1,000 380
5.25%, 12/1/17 1,000 922
5.75%, 12/1/20 (AMBAC Insured) 300 289
DuPage County, Windsor Park Manor,
7.20%, 12/1/14 200 203
Illinois HFA
Community Hosp. of Ottawa,
6.85%, 8/15/24 200 208
Glen Oaks Medical Center
7.00%, 11/15/19 (Escrowed to Maturity) 145 160
9.50%, 11/15/15 (Escrowed to Maturity) 70 75
Highland Park Hosp., 5.75%, 10/1/17
(MBIA Insured) 140 135
Holy Cross Hosp., 6.70%, 3/1/14 300 306
Riverside Health Systems,
6.00%, 11/15/18 750 714
Total Illinois (Cost $5,684) 5,477
INDIANA 2.1%
Indiana HFFA, Deaconess Hosp.,
5.75%, 3/1/19 1,000 937
Indiana State Office Building Commission,
Correctional Fac.
5.50%, 7/1/20 (AMBAC Insured) $ 500 $ 466
St. Joseph County Economic Dev.,
Madison Center
5.50%, 2/15/21 150 130
Total Indiana (Cost $1,642) 1,533
IOWA 0.2%
Iowa HFA, Wesley Retirement,
6.25%, 2/1/12 160 153
Total Iowa (Cost $160) 153
KENTUCKY 0.2%
Kenton County Airport Board,
Delta Airlines, 7.50%, 2/1/20 * 100 105
Total Kentucky (Cost $100) 105
LOUISIANA 1.7%
Plaquemines Parish, British Petroleum
VRDN (Currently 3.60%) * 900 900
St. Charles Parish, PCR,
4.85%, 6/1/30 * 300 297
Total Louisiana (Cost $1,200) 1,197
MARYLAND 2.2%
Maryland CDA, Single Family,
7.25%, 4/1/19 * 140 144
Maryland Economic Dev.,
5.50%, 7/15/09 445 423
Maryland Energy Fin. Admin.,
Wheelabrator Technologies
6.45%, 12/1/16 * 500 513
Northeast Maryland Waste Disposal Auth.
Montgomery County Resources,
6.20%, 7/1/10 * 500 517
Total Maryland (Cost $1,645) 1,597
MASSACHUSETTS 2.0%
Massachusetts HEFA,
Melrose Wakefield Healthcare
5.375%, 7/1/05 (Escrowed to Maturity) 350 360
Massachusetts Water Pollution,
6.00%, 8/1/18 1,050 1,065
Total Massachusetts (Cost $1,415) 1,425
MICHIGAN 3.2%
Michigan Hosp. Fin. Auth.,
Ascension Health Credit
5.20%, 11/15/33 $ 1,000 $ 1,000
Michigan Strategic Fund
Holland Home
5.00%, 11/15/03 200 192
5.75%, 11/15/18 250 219
WMX Technologies, 6.00%, 12/1/13 * 1,000 942
Total Michigan (Cost $2,490) 2,353
MINNESOTA 0.3%
Minneapolis, Walker Methodist,
5.875%, 11/15/18 250 222
Total Minnesota (Cost $246) 222
MISSISSIPPI 0.8%
Mississippi Business Fin.,
Systems Energy Resources
5.875%, 4/1/22 500 441
Warren County, PCR,
Mississippi Power and Light
7.00%, 4/1/22 100 104
Total Mississippi (Cost $596) 545
NEVADA 2.0%
Clark County Airport
6.00%, 7/1/29 (MBIA Insured) 1,000 992
McCarren Int'l Airport
6.00%, 7/1/17 (MBIA Insured) * 250 248
Clark County, IDR, Southwest Gas,
6.50%, 12/1/33 * 200 192
Total Nevada (Cost $1,410) 1,432
NEW HAMPSHIRE 0.9%
New Hampshire HHEFA,
Wentworth Douglass Hosp.
5.375%, 1/1/15 (MBIA Insured) 500 479
New Hampshire Housing Fin. Auth.,
Single Family
6.85%, 7/1/14 * 185 190
Total New Hampshire (Cost $683) 669
NEW JERSEY 5.9%
New Jersey Economic Dev. Auth.
Continental Airlines,
6.25%, 9/15/19 * $ 1,000 $ 947
Evergreens, 6.00%, 10/1/17 130 119
Transportation Project
5.75%, 5/1/10 (FSA Insured) 1,000 1,041
New Jersey HFFA, Irvington General Hosp.
5.875%, 8/1/06 (FHA Guaranteed)
(Prerefunded 8/1/04!) 160 171
New Jersey Housing and Mortgage Fin. Agency
6.35%, 10/1/27 (MBIA Insured) * 250 256
New Jersey Sports and Exposition Auth.,
Monmouth Park
8.00%, 1/1/25 (Prerefunded 1/1/05!) 100 116
New Jersey Transportation Trust Fund Auth.
Transportation Systems, 5.75%, 6/15/15 500 502
New Jersey Turnpike Auth.
10.375%, 1/1/03 (Escrowed to Maturity) 560 616
New Jersey Wastewater Treatment Trust
6.375%, 4/1/11 (Prerefunded 4/1/04!) 200 217
Rutgers, The State Univ., 6.35%, 5/1/06 250 265
Total New Jersey (Cost $4,254) 4,250
NEW MEXICO 2.3%
Bernalillo County, New Mexico Gross Receipts,
5.50%, 10/1/13 1,225 1,211
Farmington, PCR, 6.30%, 12/1/16 500 486
Total New Mexico (Cost $1,729) 1,697
NEW YORK 11.1%
Dormitory Auth. of the State of New York
North Shore Univ. Hosp.
5.50%, 11/1/14 (MBIA Insured) 500 490
Nyack Hosp., 6.00%, 7/1/06 250 253
Metropolitan Transportation Auth.
Commuter Fac., 5.00%, 7/1/05 275 275
Nassau County IDA, Hofstra Univ.
6.80%, 1/1/11 (Prerefunded 1/1/05!) 290 320
New York City, GO, 6.25%, 8/1/09 $ 350 $ 371
New York City Health and Hosp.
Health System Bonds
5.25%, 2/15/17 (AMBAC Insured) 730 647
New York City Municipal Water Fin. Auth.
Water and Sewer, 6.00%, 6/15/09 200 211
New York State Energy Research
and Dev. Auth., PCR
New York Electric and Gas
6.15%, 7/1/26 (MBIA Insured) * 200 199
New York State Environmental Fac., PCR
State Water Revolving Fund,
6.90%, 11/15/15 200 220
New York State Mortgage Agency
Homeowner Mortgage
5.85%, 10/1/18 * 1,000 977
6.625%, 4/1/25 * 95 99
7.50%, 4/1/26 * 250 263
Port Auth. of New York and New Jersey
5.875%, 9/15/15 (FGIC Insured) * 1,000 1,004
6.50%, 10/1/01 * 200 205
Suffolk County, GO, Public Improvement
5.25%, 10/15/15 (FGIC Insured) 1,000 931
Triborough Bridge and Tunnel Auth.,
General Purpose
5.90%, 1/1/08 1,500 1,577
Total New York (Cost $8,087) 8,042
NORTH CAROLINA 0.8%
North Carolina Medical Care Commission Hosp.
Firsthealth of the Carolinas,
4.75%, 10/1/26 750 598
Total North Carolina (Cost $691) 598
OHIO 4.6%
Akron, Municipal Baseball Stadium,
COP, STEP, 0%, 12/1/16 300 281
Fairfield Economic Dev. Auth.,
Beverly Enterprises
8.50%, 1/1/03 70 72
Franklin County Health Care Fac.,
Ohio Presbyterian
5.35%, 7/1/09 500 469
Ohio Building Auth.,
Adult Correctional Fac.
5.50%, 10/1/11 $ 1,000 $ 1,008
5.50%, 10/1/16 1,000 964
Ohio Air Quality Dev. Auth., PCR,
Cleveland Electric
6.00%, 8/1/20 500 463
Ohio Water Dev. Auth., PCR,
Toledo Edison, 8.00%, 10/1/23 * 100 108
Total Ohio (Cost $3,473) 3,365
OKLAHOMA 1.6%
Oklahoma Capitol Improvement Auth.,
5.25%, 9/1/13 1,000 965
Tulsa Municipal Airport,
American Airlines, 7.375%, 12/1/20 * 150 155
Total Oklahoma (Cost $1,135) 1,120
OREGON 2.0%
Port of Portland, Portland Int'l. Airport
5.50%, 7/1/14 (AMBAC Insured) * 1,500 1,443
Total Oregon (Cost $1,479) 1,443
PENNSYLVANIA 1.6%
Beaver County IDA, PCR,
Cleveland Electric, 7.625%, 5/1/25 100 107
Bucks County IDA, Chandler Hall,
6.10%, 5/1/14 500 461
Erie County IDA, Beverly Enterprises,
6.625%, 5/1/02 70 70
Pennsylvania Economic Dev. Fin. Auth.,
National Gypsum
6.25%, 11/1/27 * 500 475
Philadelphia Airport Auth.,
6.10%, 6/15/25 (AMBAC Insured) * 75 74
Total Pennsylvania (Cost $1,247) 1,187
PUERTO RICO 0.3%
Puerto Rico Highway
and Transportation Auth.,
5.50%, 7/1/15 250 240
Total Puerto Rico (Cost $236) 240
SOUTH CAROLINA 2.2%
Connector 2000 Assoc.,
Greenville Toll Road
Zero Coupon, 1/1/12 1,000 432
South Carolina Public Service Auth.
5.875%, 1/1/23 (FGIC Insured) $ 1,000 $ 975
Santee Cooper, 6.25%, 1/1/22
(AMBAC Insured) 200 201
Total South Carolina (Cost $1,764) 1,608
SOUTH DAKOTA 1.0%
South Dakota Education Loans,
Student Loan, 5.60%, 6/1/20 * 600 546
South Dakota HDA, Homeownership,
6.65%, 5/1/14 185 192
Total South Dakota (Cost $785) 738
TENNESSEE 1.2%
Memphis-Shelby County Airport Auth.
6.25%, 2/15/11 (MBIA Insured) * 100 106
Metropolitan Gov't. of Nashville
and Davidson Counties
Mur-Ci Homes, 7.75%, 12/1/26 200 194
Shelby County Tennessee, GO,
5.00%, 3/1/20 500 439
Tennessee Housing Dev.
Agency, Homeownership
Zero Coupon, 7/1/17 * 445 145
Total Tennessee (Cost $921) 884
TEXAS 8.7%
Alliance Airport Auth.,
American Airlines, 7.50%, 12/1/29 * 1,000 1,042
Amarillo Health Fac. Dev.,
Sears Panhandle Retirement
7.75%, 8/15/26
(Prerefunded 8/15/06!) 200 235
Gulf Coast Waste Disposal Auth.,
Amoco Oil
VRDN (Currently 3.60%) * 1,000 1,000
Harris County, Toll Road
6.375%, 8/15/24 (MBIA Insured)
(Prerefunded 8/15/04!) 250 272
Harris County Health Fac. Dev.,
Texas Childrens Hosp.
5.375%, 10/1/12 1,000 960
Texas, GO
TRAN, 4.50%, 8/31/00 1,000 1,006
Veterans Housing Assistance,
6.25%, 12/1/15 45 45
Texas Water Dev. Board,
4.75%, 7/15/20 1,000 839
Tomball Hosp. Auth.,
Tomball Regional Hosp.,
6.00%, 7/1/19 $ 500 $ 463
Tyler Health Fac. Dev.,
Mother Frances Hosp.,
5.625%, 7/1/13 500 452
Total Texas (Cost $6,511) 6,314
UTAH 5.0%
Carbon County, Solid Waste Disposal,
Laidlaw Environmental
7.45%, 7/1/17 (MBIA Insured) * 200 208
Intermountain Power Agency
5.25%, 7/1/15 (MBIA Insured) 1,000 933
5.75%, 7/1/16 (MBIA Insured) 500 493
Utah State Board of Regents
VRDN (Currently 3.55%)
(AMBAC Insured) * 2,000 2,000
Total Utah (Cost $3,708) 3,634
VIRGINIA 5.6%
Alexandria IDA, Ogden Martin, VRDN
(Currently 3.60%) * 2,400 2,400
Fairfax County Water Auth.
5.80%, 1/1/16
(Escrowed to Maturity) 625 644
Peninsula Port Auth.,
Riverside Health
6.625%, 7/1/18
(Prerefunded 7/1/02!) 200 215
Pocahontas Parkway Assoc., Toll Road,
Zero Coupon, 8/15/15 1,500 535
Prince William County Service Auth.,
Water & Sewer Systems
6.00%, 7/1/29 (FGIC Insured)
(Prerefunded 7/1/01!) 85 87
Virginia HDA
6.50%, 5/1/13 * 100 104
6.60%, 7/1/20 * 90 91
Total Virginia (Cost $4,177) 4,076
WASHINGTON 1.9%
Chelan County Public Utility
Columbia River-Rock Hydroelectric
Zero Coupon, 6/1/18
(MBIA Insured) 585 187
Tacoma, Solid Waste Utilities
5.50%, 12/1/17 (AMBAC Insured) $ 800 $ 758
Washington Health Care Fac. Auth.
Virginia Mason Medical Center
6.00%, 8/15/08 (MBIA Insured) 400 421
Total Washington (Cost $1,420) 1,366
WEST VIRGINIA 1.3%
West Virginia Building Commission
5.375%, 7/1/18 (AMBAC Insured) 500 469
Regional Jail, 5.375%, 7/1/21
(AMBAC Insured) 500 465
Total West Virginia (Cost $1,048) 934
WISCONSIN 2.5%
Oconto Falls CDA, Oconto Falls Tissue,
7.75%, 12/1/22 * 200 203
Wisconsin HEFA
Childrens Hosp. of Wisconsin
5.625%, 2/15/15 (AMBAC Insured) 500 489
Sinai Samaritan Medical Center
5.875%, 8/15/26 (MBIA Insured) 200 192
Waukesha Memorial Hosp.
5.25%, 8/15/19 (AMBAC Insured) 300 268
National Regency of New Berlin,
8.00%, 8/15/25 200 213
Wisconsin Housing and Economic Dev. Auth.
Homeownership
6.20%, 3/1/27 * 200 199
6.45%, 9/1/27 * 250 255
Total Wisconsin (Cost $1,836) 1,819
WYOMING 2.6%
Lincoln County, PCR, Exxon, VRDN
(Currently 3.60%) * 1,900 1,900
Total Wyoming (Cost $1,900) 1,900
Total Investments in Securities
104.5% of Net Assets (Cost $78,241) $ 75,792
Futures Contracts
In thousands
Contract Unrealized
Expiration Value Gain (Loss)
---------- --------- -----------
Short, municipal bond
index futures, 10
contracts, $50,000 of
Nassau County IDA pledged
as initial margin 12/99 $ (1,104) $ (15)
Net payments (receipts)
of variation margin to date 3
Variation margin receivable
(payable) on open futures contracts (12)
Other Assets Less Liabilities (3,222)
NET ASSETS $ 72,558
----------
Net Assets Consist of:
Accumulated net realized gain/loss
- - net of distributions $ (1,471)
Net unrealized gain (loss) (2,464)
Paid-in-capital applicable to 7,340,397
shares of $0.0001 par value capital stock
outstanding; 2,000,000,000 shares
of the Corporation authorized 76,493
NET ASSETS $ 72,558
----------
NET ASSET VALUE PER SHARE $ 9.88
----------
* Interest subject to alternative minimum tax
! Used in determining portfolio maturity
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers-total of such securities at period-end amounts to
0.4% of net assets.
AMBAC AMBAC Indemnity Corp.
CDA Community Development Administration
COP Certificates of Participation
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Authority
FSA Financial Security Assurance Corp.
GO General Obligation
HDA Housing Development Authority
HEFA Health & Educational Facility Authority
HFA Health Facility Authority
HFC Housing Finance Corp.
HFFA Health Facility Financing Authority
HHEFA Health & Higher Educational Facility Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance Corp.
PCR Pollution Control Revenue
PFA Public Facility Authority
STEP Stepped Coupon Note for which the interest rate will adjust on specified
future date
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 Funds
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
Money Intermediate Income
Market Fund Fund
Fund
Year Year Year
Ended Ended Ended
10/31/99 10/31/99 10/31/99
Investment Income
Interest income $ 5,907 $ 4,296 $ 3,982
Expenses
Investment management
and administrative 801 435 381
Net investment income 5,106 3,861 3,601
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (6) (629) (1,477)
Futures -- (4) 63
Net realized gain (loss) (6) (633) (1,414)
Change in net unrealized gain or loss
Securities -- (4,242) (4,948)
Futures -- (9) (15)
Change in net unrealized gain or loss -- (4,251) (4,963)
Net realized and
unrealized gain (loss) (6) (4,884) (6,377)
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 5,100 $ (1,023) $ (2,776)
---------------------------------------
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 Fund Intermediate Fund Income Fund
Year Year Year
Ended Ended Ended
10/31/99 10/31/98 10/31/99 10/31/98 10/31/99 10/31/98
Increase (Decrease) in Net Assets
Operations
Net investment
income $ 5,106 $ 4,990 $ 3,861 $ 2,869 $ 3,601 $ 2,382
Net realized
gain (loss) (6) 5 (633) 110 (1,414) 269
Change in net
unrealized
gain or loss -- -- (4,251) 1,259 (4,963) 1,035
Increase (decrease)
in net assets from
operations 5,100 4,995 (1,023) 4,238 (2,776) 3,686
Distributions to shareholders
Net investment
income (5,106) (4,990) (3,861) (2,869) (3,601) (2,382)
Net realized gain -- -- (146) (196) (325) --
Decrease in net assets
from distributions (5,106) (4,990) (4,007) (3,065) (3,926) (2,382)
Capital share transactions *
Shares sold 182,876 185,986 35,959 41,899 42,172 50,158
Distributions
reinvested 4,814 4,737 2,565 2,005 2,589 1,568
Shares redeemed (173,303) (160,361) (25,628) (16,055) (31,459) (16,174)
Increase (decrease)
in net assets from
capital share
transactions 14,387 30,362 12,896 27,849 13,302 35,552
Net Assets
Increase (decrease)
during period 14,381 30,367 7,866 29,022 6,600 36,856
Beginning of period 170,924 140,557 75,928 46,906 65,958 29,102
End of period $185,305 $170,924 $ 83,794 $ 75,928 $ 72,558 $ 65,958
----------------------------------------------------------
*Share information
Shares sold 182,876 185,986 3,400 3,958 3,993 4,699
Distributions
reinvested 4,814 4,737 244 189 247 147
Shares redeemed (173,303) (160,361) (2,461) (1,517) (3,016) (1,517)
Increase (decrease)
in shares
outstanding 14,387 30,362 1,183 2,630 1,224 3,329
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Summit Municipal Funds
- --------------------------------------------------------------------------------
October 31, 1999
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 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 and commenced operations on
October 29, 1993.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Debt securities are generally traded in the over-the-counter
market. Except for securities held by the Money Fund, investments in
securities with original 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. Securities held by the
Intermediate and Income funds with original maturities of 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 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 that 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 a 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 their investment objectives, the Intermediate and Income
Funds engage in the following practices to manage exposure to certain risks
or enhance performance. The investment objective, policies, program, and
risk factors of each fund are described more fully in each fund's
prospectus and Statement of Additional Information.
Noninvestment-Grade Debt Securities At October 31, 1999, the Income Fund
held investments in noninvestment-grade debt securities, commonly referred
to as "high-yield" or "junk" bonds. A real or perceived economic downturn
or higher interest rates could adversely affect the liquidity or value, or
both, of such securities because such events could lessen the ability of
issuers to make principal and interest payments.
Futures Contracts At October 31, 1999, 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, 1999, were as follows:
---------------------------------------------------------------------------
Intermediate Income
Fund Fund
Purchases $42,310,000 $63,729,000
Sales 29,678,000 56,427,000
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. The Money Fund has capital loss carryforwards for federal
income tax purposes of $6,000, all of which expires in 2007. The
Intermediate Fund has capital loss carryforwards for federal income tax
purposes of $663,000, all of which expires in 2007. The Income Fund has
capital loss carryforwards of $1,484,000, all of which expires in 2007.
In order for each 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, 1999. The
results of operations and net assets were not affected by the
increases/(decreases) to these accounts.
---------------------------------------------------------------------------
Money Intermediate Income
Fund Fund Fund
Undistributed net investment income $ - $ (1,000) $ (1,000)
Undistributed net realized gain (5,000) 43,000 57,000
Paid-in-capital 5,000 (42,000) (56,000)
At October 31, 1999, the costs of investments for the Money Market,
Intermediate, and Income Funds for federal income tax purposes was
substantially the same as for financial reporting and totaled $184,720,000,
$85,710,000, and $78,241,000, respectively. For the Money 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 $ 636,000 $ 547,000
Depreciated investments (2,054,000) (2,996,000)
Net unrealized gain (loss) $ (1,418,000) $ (2,449,000)
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 $93,000, $51,000, and $43,000 were
payable at October 31, 1999 by the Money Market, Intermediate, and Income
Funds, respectively. The fee is 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
Summit Municipal Money Market Fund,
Summit Municipal Intermediate Fund, and
Summit Municipal Income Fund
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position
of Summit Municipal Money Market Fund, Summit Municipal Intermediate Fund
and Summit Municipal Income Fund (comprising T. Rowe Price Summit Municipal
Funds, Inc., hereafter referred to as the "Funds") at October 31, 1999, and
the results of each of their operations, the changes in each of their net
assets and the financial highlights for each of the fiscal periods
presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Funds' management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at October 31, 1999
by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 17, 1999
T. Rowe Price Summit Municipal Funds
- --------------------------------------------------------------------------------
Tax Information (Unaudited) for the Tax Year Ended 10/31/99
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The funds' distributions included capital gain amounts as follows:
---------------------------------------------------------------------------
Intermediate Income
Fund Fund
Short-term gains $73,000 $195,000
Long-term gains subject to 20% rate $73,000 $130,000
The Money, Intermediate, and Income Funds' dividend income included $5,069,000,
$3,812,000, and $3,551,000, respectively, which qualified as exempt-interest
dividends.
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services and Information
- --------------------------------------------------------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
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Distribution Options Reinvest all, some, or none of your distributions.
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the T. Rowe Price Web site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
Individual Investments Stocks, bonds, options, precious metals, and other
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INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
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* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
** Based on a September 1999 survey for representative-assisted stock
trades. Services vary by firm, and commissions may vary depending on
size of order.
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Bond
International Bond
MONEY MARKET FUNDS!
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
! Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the funds. Please call for a prospectus. Read it carefully
before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
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For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
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 appropriate
to the fund or funds covered in this
report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site
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T. Rowe Price, Invest With Confidence (registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. C09-050 10/31/99
