The broad market, measured by the S&P 500 Index, was virtually flat during the past three months and throughout the first half of 2015, posting its weakest first half since 2010. Stocks sputtered to a close as the Federal Reserve signaled its intention to raise short-term interest rates sometime this year, should conditions warrant such a move. Turmoil in Greece and, more significantly, China added to equities' lackluster performance. Large-cap growth stocks performed reasonably well, propelled by strength in the health care sector.
The Growth Stock Fund returned 1.02% in the quarter compared with 0.12% for the Russell 1000 Growth Index and 0.94% for the Lipper Large-Cap Growth Funds Index. For the 12 months ended June 30, 2015, the fund returned 13.47% versus 10.56% for the Russell 1000 Growth Index and 10.56% for the Lipper Large-Cap Growth Funds Index. The fund's average annual total returns were 13.47%, 19.42%, and 9.63% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2015. The fund's expense ratio was 0.68% 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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Health care stocks were the portfolio's stellar performers throughout the first six months of 2015, as it was overweight the benchmark and benefited from solid returns from several key holdings. We are currently witnessing an extensive overhaul within the sector, with various companies gearing up for a trend toward consolidation as the U.S. health care system undergoes extensive changes. Not all of the portfolio's positions worked, as our selections in the industrials and business services sector were less than ideal. Our overweight in the group also hurt performance. Airlines were especially disappointing. Stock prices fell despite the drop in oil prices, which intuitively would have benefited the companies' bottom lines.
Aside from the prevailing macroeconomic headwinds, the equity market strength during the past five years has made it more and more challenging to unearth attractive investment opportunities outside of a few key sectors. The portfolio is positioned well in health care stocks, where the fundamentals remain sound and valuations are mostly attractive. The sector has also benefited from merger and acquistion activity, which we expect to continue. In addition, we have a fairly high degree of confidence in the portfolio's consumer discretionary and industrials and business services stocks. Moving forward, our focus will be on identifying "all seasons" growth companies with the ability to grow earnings in the face of a possibly volatile macro environment.