Large-cap growth stocks posted solid second-quarter gains. Stocks advanced despite the troubling environment characterized by escalating violence in various corners of the globe; slowing growth and credit concerns in China; mixed U.S. economic data; and, most recently, an eruption of sectarian violence in Iraq. Large- and mid-cap stocks outperformed small-caps, although there was no clear leadership across growth and value categories. Within the large-cap Standard & Poor's 500 Index, energy was far and away the strongest sector. Utilities and information technology also delivered impressive results. The laggard was financials, with a return of just over 2% for the period.
The Blue Chip Growth Fund returned 4.16% in the quarter compared with 5.23% for the S&P 500 Index and 4.32% for the Lipper Large-Cap Growth Funds Index. For the 12 months ended June 30, 2014, the fund returned 30.06% versus 24.61% for the S&P 500 Index and 28.07% for the Lipper Large-Cap Growth Funds Index. The fund's average annual total returns were 30.06%, 20.09%, and 8.82% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2014. The fund's expense ratio was 0.74% as of its fiscal year ended December 31, 2013.
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We are focused on high-quality, stable-growth companies that could perform well even if the economy only experiences modest expansion in the second half of the year. Our bottom-up stock selection process favors secular growth companies, those that can deliver steady revenues, earnings, and cash flow growth. We have trimmed some of the portfolio's more cyclical and capital-intensive holdings. At the end of the quarter, the portfolio's largest sector allocations were in consumer discretionary, information technology, and health care. The portfolio had minimal exposure to defensive sectors, including consumer staples, telecommunication services, and utilities. The largest underweight allocations were to financials and consumer staples stocks, which are sectors where we believe it will be difficult to generate above-average earnings gains.
We remain optimistic about the equity market's near- and longer-term prospects. An expansion in price/earnings multiples drove most of the gains in U.S. stocks in 2013. Going forward, stock prices are more likely to be driven by earnings growth, which should continue at a moderate pace through the rest of the year. Valuations appear reasonable from a historical perspective. We will attempt to take advantage of market volatility and investor uncertainty to buy fundamentally sound companies that can generate double-digit earnings and durable cash flow growth when they are out of favor.