U.S. stocks recorded stellar gains in the fourth quarter as major indexes set record highs on improving economic growth and strong corporate profits despite sluggish consumer spending. The Federal Reserve also helped boost 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 and investor sentiment as a deadlock over the budget resulting in a partial government shutdown gave way to a longer-term agreement.
The Equity Index 500 Fund returned 10.42% in the quarter compared with 10.51% for the S&P 500 Index and 10.45% for the Lipper S&P 500 Funds Index. For the 12 months ended December 31, 2013, the fund returned 32.02% versus 32.39% for the S&P 500 Index and 32.05% for the Lipper S&P 500 Funds Index. The fund's average annual total returns were 32.02%, 17.65%, and 7.13% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.28% as of its fiscal year ended December 31, 2012.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
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 Equity Index 500 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 seeks to provide broad exposure to large-cap U.S. stocks by replicating the structure and performance of the S&P 500 Index. All S&P 500 sectors produced positive returns on a total return basis. Industrials stocks performed very well, followed closely by information technology shares. Consumer discretionary, materials, financials, and health care sectors performed in line with the index. Consumer staples and energy performed well, while telecommunication services and utilities sectors 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.