U.S. stocks recorded stellar gains in the fourth quarter as major indexes set record highs on improving economics and strong corporate profits despite sluggish consumer spending. The Federal Reserve also boosted sentiment when it announced that in January 2014 it would begin tapering its asset purchases, which have kept long-term interest rates low and helped spur demand for equities. Waning fiscal headwinds also encouraged economic activity, investor sentiment and markets as a deadlock over the budget resulting in a partial government shutdown gave way to a longer-term agreement.
The Total Equity Market Index Fund returned 10.06% in the quarter compared with 10.09% for the S&P Total Market Index and 9.49% for the Lipper Multi-Cap Core Funds Index. For the 12 months ended December 31, 2013, the fund returned 33.70% versus 33.40% for the S&P Total Market Index and 32.58% for the Lipper Multi-Cap Core Funds Index. The fund's average annual total returns were 33.70%, 18.66%, and 7.92% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.36% as of its fiscal year ended June 1, 2013.
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Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The Total Equity Market Index Fund charges a 0.5%
redemption fee on shares held 90 days or less.
The performance information shown does not reflect the deduction of the redemption fee;
if it did, the performance would be lower.
The portfolio provides investors exposure to the entire U.S. stock market by seeking to track the S&P Total Market Index. All sectors delivered positive results, led by the industrials and business services and information technology sectors. The materials and consumer discretionary sectors saw strong gains that were in line with the overall benchmark, while health care, financials, consumer staples, and energy produced good returns but underperformed the index. Telecommunications services and utilities lagged with moderate returns.
T. Rowe Price managers observe that high corporate cash levels might help strengthen the recovery in 2014, especially if companies increase capital spending. Corporations could also devote some of their cash to mergers and acquisitions, which would provide less of a direct economic benefit but help support stock prices. They caution, however, that a better economic environment does not guarantee superior stock market performance, and they would not be surprised to see stock gains moderate in the coming year.