The large-cap Standard & Poor's 500 Index endured its largest quarterly decline in four years as investors worried about a China-led global slowdown and a possible rise in U.S. interest rates. The other major benchmarks fared even worse, with the typically more volatile smaller-cap indexes showing the largest declines. Technology stocks performed somewhat better than other sectors in the S&P 500 Index, but the more broadly focused Lipper Science & Technology Funds Index fared worse.
The Science & Technology Fund returned −8.55% in the quarter compared with −6.44% for the S&P 500 Index and −7.45% for the Lipper Science & Technology Funds Index. For the 12 months ended September 30, 2015, the fund returned −1.72% versus −0.61% for the S&P 500 Index and 1.13% for the Lipper Science & Technology Funds Index. The fund's average annual total returns were −1.72%, 12.12%, and 8.00% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2015. The fund's expense ratio was 0.84% as of its fiscal year ended December 31, 2014.
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Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
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We hold a large overweight in the media sector, where our holdings are concentrated in the Internet industry. We like market-leading companies that benefit from the massive secular shift to online advertising. The software sector is also a large allocation for the portfolio. Companies within this sector generally offer better and more durable businesses than many other areas of the technology industry. Our holdings are predominantly allocated to the infrastructure and applications software industries. We have limited exposure to telecommunication services. Our media overweight helped us during the quarter, but this was offset by stock selection in the group.
We continue to observe the Internet as a source of value creation, and cloud computing continues to be a growing influence in the enterprise technology world. We are finding opportunities in the semiconductor and hardware segments and continue to focus on firms with attractive prospects. We remain dedicated to applying rigorous analysis and fundamental research to achieve in-depth knowledge of companies and the industry and uncover attractive stocks.