Stocks recorded modest overall gains in the second quarter, but only after enduring significant volatility at the end of the period. Global technology stocks lagged, however. Media and semiconductor stocks performed best, while electric components and telecommunication services stocks fared worst.
The Global Technology Fund returned 2.46% in the quarter compared with −1.60% for the MSCI All Country World Index Information Technology and 0.12% for the Lipper Global Science / Technology Funds Index. For the 12 months ended June 30, 2016, the fund returned 9.74% versus 1.56% for the MSCI All Country World Index Information Technology and −0.85% for the Lipper Global Science / Technology Funds Index. The fund's average annual total returns were 9.74%, 17.40%, and 14.40% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.91% as of its fiscal year ended December 31, 2015.
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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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Stock selection in the software industry benefited results, as did stock selection and an overweight in the Internet industry, which also aided relative performance. Conversely, stock selection in semiconductors and media detracted from comparisons with the benchmark.
We expect global growth to continue in the coming months, but only at a modest pace. Such an environment generally favors our concentrated focus on technology companies whose growth does not depend on a robust overall economy, often because they are seizing market share from other firms. While the sell-off at the start of 2016 offered an attractive window to add to positions in leading firms, we do not see a wide range of valuation opportunities. In part, this is because large technology companies have also been on the hunt for promising smaller competitors, leaving fewer opportunities for direct investment in promising new technologies and markets. As a result, our cash position is the highest that it has been in some time. We do not believe now is the time to stretch to put this cash to work, however, by doubling down our investments in companies where valuations already discount their impressive prospects. Instead, we will be on the lookout for future bouts of volatility, whether sparked by political developments, new global financial concerns, or other worries, as an opportunity to add to our leading positions and find new ones.