Stocks recorded modest overall gains in the second quarter, but only after enduring significant volatility at the end of the period. Information technology stocks lagged the broader market, however.
The Science & Technology Fund returned 6.93% in the quarter compared with 1.00% for the Lipper Science & Technology Funds Index and 2.46% for the S&P 500 Index. For the 12 months ended June 30, 2016, the fund returned 7.73% versus −0.96% for the Lipper Science & Technology Funds Index and 3.99% for the S&P 500 Index. The fund's average annual total returns were 7.73%, 11.83%, and 10.36% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.84% as of its fiscal year ended December 31, 2015.
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The software sector, which represents a large allocation in the portfolio, contributed to relative results in the quarter. 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, software and services, and applications software industries. Media holdings detracted from relative performance, but we have only limited exposure to the segment.
The market's pullback in early 2016 presented us with some opportunities to add to our holdings of leading technology companies. The recovery since the spring has left valuations less appealing, however. Stocks drifted sideways throughout much of the quarter before Britain's vote to exit the European Union caused stocks to end the period on a turbulent note. Despite the near-term uncertainty, most of the major benchmarks recorded gains for the quarter on the back of a rally in the final few days. Although we still perceive formidable earnings growth prospects for a number of well-positioned firms, future cash flows for many seem to be well discounted in their valuations. Rather than rushing to deploy our larger-than-normal cash position in such an environment, we are redoubling our efforts to validate our key holdings and identify worthy new positions.