Equities climbed in the quarter amid signs that the U.S. economy was recovering from a weather-driven contraction in the first quarter and hopes that new stimulus measures in Europe would boost eurozone economies. Corporate merger activity was supportive, and signs of a de-escalation of the crisis in Ukraine were encouraging. Information technology stocks modestly outperformed the broader market. Within the major segments of the tech universe, semiconductors stocks experienced the strongest returns, while hardware and health care shares also performed very well. Media and IT services stocks lagged and recorded modest overall losses for the period.
The Science & Technology Fund returned 4.72% in the quarter compared with 5.23% for the S&P 500 Index and 3.77% for the Lipper Science & Technology Funds Index. For the 12 months ended June 30, 2014, the fund returned 35.53% versus 24.61% for the S&P 500 Index and 32.09% for the Lipper Science & Technology Funds Index. The fund's average annual total returns were 35.53%, 18.75%, and 8.35% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2014. The fund's expense ratio was 0.86% as of its fiscal year ended December 31, 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.
Many Internet-related and higher-multiple stocks suffered a sharp setback in March, a trend that continued through most of May. However, we were able to use this opportunity to add to select names with strong secular growth drivers trading at attractive valuations. The software sector is a large allocation for the portfolio, and one in which we are overweight relative to the benchmark. Companies within this sector generally offer better and more durable businesses than in other segments. Our holdings are predominantly allocated to the infrastructure and systems software industries.
We continue to focus on the key themes of cloud computing and online advertising and commerce. It is critical that we thoroughly understand and accurately assess these spaces given they will continue to offer substantial value creation and value destruction. In aggregate, valuations within the technology sector appear full, unsurprisingly so given equities' strong run since 2009. Overall, technology remains an integral component of both our business and personal lives, while at the same time blurring the space between the two. As such, we will continue to leverage our global research platform that applies in-depth research to achieve in-depth knowledge of companies and the industry and uncover attractive stocks.