Stocks recorded solid gains in the final quarter of the year, helping reverse the previous quarter's slide and pushing large-cap benchmarks back into positive territory for 2015 on a total return (including dividends) basis. Most of the rebound occurred in the first month of the quarter, however, and stocks were volatile in the closing weeks of the year as terrorist attacks, geopolitical instability, and uncertainty over monetary policies periodically took tolls on sentiment. Global technology stocks outperformed the broader market, and the media, technology, semiconductors, and software segments all delivered solid results. Hardware and telecommunication services shares recorded losses.
The Global Technology Fund returned 15.43% in the quarter compared with 8.67% for the MSCI All Country World Index Information Technology and 10.65% for the Lipper Global Science / Technology Funds Index. For the 12 months ended December 31, 2015, the fund returned 21.06% versus 3.64% for the MSCI All Country World Index Information Technology and 7.08% for the Lipper Global Science / Technology Funds Index. The fund's average annual total returns were 21.06%, 19.76%, and 14.29% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.91% as of its fiscal year ended December 31, 2014.
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.
The portfolio's relative performance in the period was driven by stock selection in the media segment, where we have large positions in companies that are using the Internet to seize advertising revenue and subscriber share from traditional media companies. An underweight in the strongly performing software segment detracted a bit from relative returns.
We are more optimistic than many about the global economic and market outlook in 2016, and the recent sharp pullback in stock prices has renewed the valuation appeal of many high-growth technology companies. The U.S. economy appears fundamentally healthy, and Europe seems to be following the same path to healing that the U.S. took a few years ago by engaging in massive quantitative easing that is reducing the value of the euro and increasing competitiveness. Although China's struggles have dominated market sentiment recently, we are also optimistic that the country is successfully managing the transition to a consumer-focused economy, and we are seeing firm growth trends in much of the data. Most notably, many of the companies that we meet with are reporting bottoming trends in their businesses, suggesting that the global technology sector will re-accelerate in the coming year.