Most of the major U.S. stock indexes recorded modest gains in the quarter and reached new or multiyear highs as investors balanced favorable corporate earnings against economic and geopolitical concerns. Some Internet-related and technology stocks saw sharp declines late in the period, however, as investors shunned fast-growing companies with elevated valuations. Both media and telecommunication services stocks recorded losses within the Lipper benchmark, although declines were sharper among the former.
The Media & Telecommunications Fund returned −1.89% in the quarter compared with −0.45% for the Lipper Telecommunication Funds Average. For the 12 months ended March 31, 2014, the fund returned 28.59% versus 19.20% for the Lipper Telecommunication Funds Average. The fund's average annual total returns were 28.59%, 29.36%, and 15.60% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2014. The fund's expense ratio was 0.81% 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.
Although telecom stocks have held up better in recent weeks, we continue to believe that they offer less long-term opportunity than favorably placed companies elsewhere in our investment universe. Compared with telecom companies that face regulatory and competitive issues, firms leveraging the Internet and other new technologies have much longer and durable runways for future growth.
While unable to predict its timing, we were not surprised by the recent pullback in the high-growth "momentum" stocks that are a major part of our investment universe. As we noted in our letter to shareholders at the start of the year, the considerable expansion in valuations in our area of the market made a pullback in price-to-earnings multiples possible. At this point, we do not expect that many of the stocks will snap back anytime soon, and we continue to believe that more muted returns for the sector are likely in 2014. We are confident that many of these fast-growing companies will prove more durable than the skeptics expect, however, which should offer opportunities to long-term, patient investors such as ourselves.