The Funds total return of 0.24% for the quarter outperformed the benchmark. The primary positive contributor to relative performance was income from the Funds investments in corporate credits. This was offset slightly in December by the Funds above-benchmark stance with respect to duration and corresponding interest rate sensitivity.
We anticipate the opportunity to reinvest into a steeper yield curve throughout the first quarter of 2014, as investors discount not only the timetable for the end of quantitative easing, but also the timing of an eventual Fed tightening. However, Fed policy will be governed by incoming data with respect to such measures as employment growth, capacity utilization and inflation, meaning that interest rates will likely remain somewhat volatile.
If you're seeking an investment that may generate higher yields than money market funds with less volatility than short duration bond funds, this Fund may be appropriate for you. The Fund is intended for investors with an investment horizon of at least one year who are seeking to move a portion of their money market fund assets.
The Fund is not a money market fund, which maintains a $1.00 NAV, and the Fund's share price will fluctuate with its returns.
- Seek to yield more than a money market fund with potential for capital appreciation.
- Strive to maintain a 6-18 month average maturity, under normal circumstances, with a maximum security maturity of three years.
- Manage Fund in an effort to have an average portfolio quality of A or better, with all securities to be investment grade.