Technology stocks performed surprisingly well in the quarter given the strong rally earlier in the year. Within the S&P 500 Index, the sector outperformed the overall market for the quarter, but technology stocks lagged somewhat on a total return basis for the year as a whole. Media, software, and semiconductor stocks were particularly strong, while health care- and energy-oriented firms lagged.
The Science & Technology Fund returned 13.53% in the quarter compared with 10.51% for the S&P 500 Index and 10.32% for the Lipper Science & Technology Funds Index. For the 12 months ended December 31, 2013, the fund returned 43.70% versus 32.39% for the S&P 500 Index and 36.79% for the Lipper Science & Technology Funds Index. The fund's average annual total returns were 43.70%, 24.29%, and 7.60% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.88% as of its fiscal year ended December 31, 2012. Investors should note that the fund's short-term performance is highly unusual and unlikely to be sustained.
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.
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The software segment is our largest industry allocation, and we are considerably overweight relative to the benchmark. Companies within this segment generally offer better and more durable businesses. Our holdings are predominantly allocated to the infrastructure and systems software areas. We hold an overweight in media, where our holdings are concentrated in the Internet industry. We particularly like market-leading companies that are benefiting from the massive and durable shift to online advertising.
The Internet continues be a source of value creation as a platform of extraordinary global reach, and we expect that Internet connectivity and services will continue to play an increasing role in everyday life through its inclusion in everything from wearable devices to appliances. Overall, we remain optimistic about the sector's potential investing given the ability of technology to provide competitive advantages for businesses. Technology is also a source of productivity and entertainment, creating a compelling case to spend on it at the consumer level as well. We will continue to leverage our global research platform and fundamental research to seek attractive opportunities.