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January 1, 2001
FUND PROFILE
T. ROWE PRICE
Summit Municipal Funds
Municipal money market and bond funds for investors seeking tax-exempt income.
This profile summarizes key information about the funds that are included in the
funds' prospectus. The funds' prospectus includes additional information about
the funds, including a more detailed description of the risks associated with
investing in each fund that you may want to consider before you invest. You may
obtain the prospectus and other information about the funds at no cost by
calling 1-800-638-5660, or by visiting our Web site at www.troweprice.com.
T. ROWE PRICE RAM LOGO
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What is each fund's objective?
Municipal Money Market Fund The fund seeks preservation of capital and
liquidity, and consistent with these, the highest possible current income
exempt from federal income taxes.
Municipal Intermediate Fund The fund seeks the highest level of income
exempt from federal income taxes consistent with moderate price fluctuation.
Municipal Income Fund The fund seeks a high level of income exempt from
federal income taxes.
What is each fund's principal investment strategy?
Municipal Money Market Fund The fund, which is managed to provide a stable
share price of $1.00, invests in high-quality municipal securities whose
income is expected to be exempt from federal income taxes. The fund's
weighted average maturity will not exceed 90 days, and its yield will
fluctuate with changes in short-term interest rates.
In selecting securities, fund managers may examine the relationships among
yields on various types and maturities of money market securities in the
context of their outlook for interest rates. For example, if we expect rates
to fall, longer maturities, which typically have higher yields than shorter
maturities, may be purchased to try to preserve the fund's income level.
Conversely, shorter maturities may be favored if rates are expected to rise.
Municipal Intermediate Fund We will invest primarily in investment-grade
tax-exempt securities. There are no maturity limitations on individual
securities, but the fund's weighted average effective maturity will normally
range between five and 10 years. Targeting effective maturity gives the fund
manager additional flexibility. At least 90% of the fund's portfolio will
consist of investment-grade tax-exempt securities rated in the four highest
credit categories (AAA, AA, A, BBB) by at least one national rating agency or
the equivalent from T. Rowe Price when other ratings are not available. To
enhance income, we may invest up to 10% of the fund's total assets in
below-investment-grade bonds, known as "junk" bonds in the taxable market,
including those with the lowest ratings. The fund's income should be higher
than the Money Market Fund's, but its share price will vary.
Within this broad structure, investment decisions reflect the manager's
outlook for interest rates and the economy as well as the prices and yields
of various securities. For example, if we expect rates to fall, the manager
may buy longer-term securities to provide higher yield and appreciation
potential. And if, for instance, our economic outlook is positive, the
manager may take advantage of the 10% "basket" for noninvestment-grade bonds.
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. A significant portion of each fund's assets may be invested in securities
subject to the alternative minimum tax.
Municipal Income Fund We will invest at least 65% of total assets in
long-term, investment-grade tax-exempt bonds rated from AAA to BBB by at
least one national rating agency or rated the equivalent by T. Rowe Price if
other ratings are not available. To enhance income, we may invest up to 20%
of the fund's total assets in noninvestment-grade "junk" bonds. We may buy
securities of any maturity, and we expect the fund's weighted average
maturity to be 15 years or longer. The fund's income should be higher than
the Intermediate Fund's, but its share price should fluctuate more.
The fund manager decides to buy or sell different types of securities based
on the same type of criteria that apply to the Intermediate Fund, except that
the average maturities in this fund will be longer and the component of
noninvestment-grade bonds may go as high as 20%.
<TABLE>
Table 1 Differences Among Funds
<CAPTION>
Credit-Quality Expected Share Expected Average
Fund Categories Income Price Fluctuation Maturity
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<S> <C> <C> <C> <C> <C>
Municipal Money Market Two highest short Lower Stable 90 days or less
term
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Municipal Intermediate Primarily four Moderate Moderate 5 to 10 years
highest
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Municipal Income Primarily four Highest Highest 15+ years
highest
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</TABLE>
The Intermediate and Income Funds may use derivatives to manage interest rate
risk.
The funds may sell holdings for a variety of reasons, such as to adjust a
portfolio's average maturity or quality or to shift assets into
higher-yielding securities.
Further information about each fund's investments, including a review of
market conditions and fund strategies and their impact on performance, is
available in the annual and semiannual shareholder reports. To obtain free
copies of either of these documents, call 1-800-638-5660.
What are the main risks of investing in the funds?
Municipal Money Market Fund Since money market funds are managed to maintain
a constant $1.00 share price, they should have little risk of principal loss.
However, there is no assurance the fund will avoid principal losses if fund
holdings default or are downgraded or interest rates rise sharply in an
unusually short period. In addition, the fund's yield will vary; it is not
fixed for a specific period like the yield on a bank certificate of deposit.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation
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(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.
Municipal Intermediate Fund and Municipal Income Fund These funds are
subject to the usual risks of fixed income investing:
. Interest rate risk This is the decline in bond prices that accompanies a
rise in the overall level of interest rates. It is the major source of risk
for investors in these two funds. Because shorter-term bond funds are less
sensitive to interest rate increases or decreases than longer-term bond
funds, price volatility for the Intermediate Fund is expected to be lower
than for the Income Fund. However, by targeting effective maturity, the
Intermediate Fund could experience greater volatility than if it focused on a
stated maturity or maturity range.
. Credit risk This is the chance that any of the funds' holdings will have
their credit ratings downgraded or will default (fail to make scheduled
interest or principal payments), potentially reducing the fund's income level
and share price. While the funds will focus on investment-grade bonds,
holdings of medium- and lower-quality securities are more susceptible to
adverse economic conditions. The funds' investments in junk bonds should be
considered speculative, as should some of their BBB securities. Finally,
adverse developments in a particular state could result in price declines for
a fund with significant investments in that state.
. Political risk This is the risk that a significant restructuring of federal
income tax rates, or even serious discussion of the issue in Congress, could
cause municipal bond prices to fall. The value of tax-exempt income strongly
influences the demand for municipal bonds, and lower tax rates would reduce
their advantage.
. Derivatives risk To the extent the funds use these instruments, they may be
exposed to additional volatility and potential losses.
As with any mutual fund, there can be no guarantee the funds will achieve
their objectives.
. The yield of each fund will fluctuate with changing market conditions and
interest rate levels. The bond funds' share prices will fluctuate as
interest rates change, so when you sell your shares, you may lose money.
How can I tell which fund is most appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for risk. The funds can be used to generate income or to
diversify a stock portfolio. The higher your tax bracket, the more likely
tax-exempt securities are appropriate. (However, if you are subject to the
alternative minimum tax (AMT), you may wish to check a fund's AMT exposure.)
If a Summit Municipal Fund's tax-exempt yield is higher than the after-tax
yield on a taxable bond or
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money fund, and you can meet the $25,000 minimum for initial purchases, the
funds could be appropriate for you. Use the table entitled Differences Among
Funds, which summarizes each fund's main characteristics, to help choose a
fund (or funds) for your particular needs. For example, only the money fund
is designed to provide principal stability, which makes it a good choice for
you if the stability and accessibility of your investment are more important
than the opportunity for higher income or total return. However, if you are
investing for the highest possible income and can tolerate some price
fluctuation, you should consider a longer-term bond fund.
The funds are not appropriate for tax-deferred accounts, such as IRAs.
. The bond funds should not represent your complete investment program or be
used for short-term trading purposes.
How has each fund performed in the past?
The bar charts showing calendar year returns and the average annual total
return table indicate risk by illustrating how much returns can differ from
one year to the next and over time. Fund past performance is no guarantee of
future returns.
The funds can also experience short-term performance swings, as shown by the
best and worst calendar quarter returns during the years depicted in the
charts.
<TABLE>
<CAPTION>
Calendar Year Total Returns
Fund "90" "91" "92" "93" "94" "95" "96" "97" "98" "99"
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <S>
Municipal
Money Market -- -- -- -- 2.58 3.56 3.22 3.39 3.22 2.97
Municipal
Intermediate -- -- -- -- -1.67 13.71 4.68 8.42 5.79 -1.21
Municipal -- -- -- -- -4.68 17.89 5.03 11.64 6.18 -4.02
Income
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</TABLE>
Municipal Money Market Quarter ended Total return
Best quarter 6/30/95 0.93%
Worst quarter 3/31/94 0.48%
Municipal Intermediate Quarter ended Total return
Best quarter 3/31/95 4.86%
Worst quarter 3/31/94 -2.78%
Municipal Income Quarter ended Total return
Best quarter 3/31/95 6.69%
Worst quarter 3/31/94 -4.84%
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<TABLE>
Table 2 Average Annual Total Returns
<CAPTION>
Periods ended
December 31, 2000
Shorter of 10 years
1 year 5 years or since inception Inception date
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<S> <C> <C> <C> <S>
Municipal Money
Market Fund 10/29/93
Lipper Tax-Exempt
Money Market Funds
Average
Municipal
Intermediate Fund 10/29/93
Lehman 7-Year
Municipal Bond Index
Lipper Intermediate
Municipal Debt Funds
Average
Municipal Income Fund 10/29/93
Lehman Municipal Bond
Index
Lipper General
Municipal Debt Funds
Average
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</TABLE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
/a/ Since 10/31/93
What fees or expenses will I pay?
The funds are 100% no load. There are no fees or charges to buy or sell fund
shares, reinvest dividends, or exchange into other T. Rowe Price funds. There
are no 12b-1 fees. Redemption proceeds of less than $5,000 sent by wire are
subject to a $5 fee paid to the fund.
Each T. Rowe Price Summit Fund has a single, all-inclusive fee covering
investment management and operating expenses. This fee will not fluctuate. In
contrast, most mutual funds have a fixed management fee plus a fee for
operating expenses that varies according to a number of other factors.
<TABLE>
Table 3 Fees and Expenses of the Funds
<CAPTION>
Annual fund operating expenses
(expenses that are deducted from fund assets)
Total annual fund
Fund Management fee /a/ Other expenses operating expenses /a/
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<S> <C> <C> <C> <S>
Municipal Money Market 0.45% 0.00% 0.45%
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Municipal Intermediate 0.50 0.00 0.50
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Municipal Income 0.50 0.00 0.50
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</TABLE>
/a/ The management fee includes operating expenses.
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Example. The following table gives you a rough idea of how expense ratios
may translate into dollars and helps you to compare the cost of investing in
these funds with that of other mutual funds. Although your actual costs may
be higher or lower, the table shows how much you would pay if operating
expenses remain the same, you invest $10,000, earn a 5% annual return, and
hold the investment for the following periods and then redeem:
<TABLE>
<CAPTION>
Fund 1 year 3 years 5 years 10 years
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<S> <C> <C> <C> <C> <S>
Municipal Money Market $46 $144 $252 $567
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Municipal Intermediate 51 160 280 628
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Municipal Income 51 160 280 628
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</TABLE>
Who manages the funds?
The funds are managed by T. Rowe Price Associates, Inc. Founded in 1937, T.
Rowe Price and its affiliates manage investments for individual and
institutional accounts. The company offers a comprehensive array of stock,
bond, and money market funds directly to the investing public.
Municipal Money Market Fund Patrice Berchtenbreiter Ely manages the fund
day-to-day and has been chairman of its Investment Advisory Committee since
2000. She joined T. Rowe Price in 1972 and has been managing investments
since 1986.
Municipal Intermediate Fund Charles B. Hill manages the fund day-to-day and
has been chairman of its Investment Advisory Committee since 2000. He joined
T. Rowe Price in 1991 and has been managing investments since 1986.
Municipal Income Fund Konstantine B. Mallas manages the fund day-to-day and
has been chairman of its Investment Advisory Committee since 2000. He joined
T. Rowe Price in 1987 and has been managing investments since 1991.
How can I purchase shares?
Fill out the New Account Form and return it with your check in the postpaid
envelope. The minimum initial purchase is $25,000. The minimum subsequent
investment is $1,000 ($100 for gifts or transfers to minors or Automatic
Asset Builder). You can also open an account by bank wire, by exchanging from
another T. Rowe Price fund, or by transferring assets from another financial
institution.
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How can I sell shares?
You may redeem or sell any portion of your account on any business day.
Simply write to us or call. You can also access your account at any time via
Tele*Access /(R)/ or our Web site. We offer convenient exchange among our
entire family of domestic and international funds. Restrictions may apply in
special circumstances, and some redemption requests need a signature
guarantee.
When will I receive income and capital gain distributions?
Each fund distributes income monthly and capital gains, if any, at year-end.
Although most income will not be subject to federal income tax, short-term
gains are taxable at ordinary income rates and long-term gains are taxable at
the current capital gains rate. Income from certain "private activity" bonds
may be taxable for those investors subject to the alternative minimum tax
(AMT). Distributions are reinvested automatically in additional shares unless
you choose another option, such as receiving a check.
What services are available?
A wide range, including but not limited to:
. retirement plans for individuals and large and small businesses;
. automated information and transaction services by telephone or computer;
. electronic transfers between fund and bank accounts;
. automatic investing and automatic exchange;
. brokerage services; and
. asset manager accounts.
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T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
www.troweprice.com
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T. Rowe Price Investment Services, Inc., Distributor
