Large-cap U.S. stocks were roughly flat for the second quarter, as optimism about resilient corporate earnings growth and enthusiasm about a reaccelerating U.S. economy gave way to worries over the ongoing Greek debt crisis. The economy shrugged off a first-quarter slump due to weather conditions and West Coast port closures and posted good job growth, healthy wage gains, and solid consumer spending. The U.S. economy looks to be on solid enough footing to withstand the fallout from Greece, which is unlikely to bring about a broader European financial contagion. According to S&P Dow Jones indices, net dividend increases totaled $12.5 billion during the quarter, and the weighted average yield of the S&P 500 Index was 2.11% at the end of the period.
The Dividend Growth Fund returned −0.42% in the quarter compared with 0.28% for the S&P 500 Index and −0.07% for the Lipper Large-Cap Core Funds Index. For the 12 months ended June 30, 2015, the fund returned 7.93% versus 7.42% for the S&P 500 Index and 5.25% for the Lipper Large-Cap Core Funds Index. The fund's average annual total returns were 7.93%, 16.59%, and 8.15% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2015. The fund's expense ratio was 0.65% as of its fiscal year ended December 31, 2014.
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Large positions in the financials and consumer staples sectors generated slight gains for the portfolio, helping to offset declines in energy and utilities, which represent smaller positions. Against a backdrop of modest global economic expansion, we favor industrials and business services stocks where there is secular growth and emphasize companies with attractive valuations that suggest limited downside. We favor names with diversified operations, high-gross-margin businesses, and long-term growth prospects that should thrive even after the cyclical upturn fades. The information technology sector remains our largest underweight position relative to the S&P 500 Index, but we believe certain companies are poised for strong growth, particularly in the IT services industry.
The outlook for U.S. equities remains generally positive. But after a six-year bull run that has seen the S&P 500 rise more than 200%, we note that investors may have grown too complacent about the risk of short-term market volatility. Equities still appear quite attractive when measured against very low Treasury yields, but their somewhat high absolute valuations make them vulnerable to the Fed's timetable for returning interest rates to more historically normal levels. A mature economic cycle also implies that companies will have a harder time expanding margins by cutting costs and that only companies that are executing well will be able to see solid profit growth. We believe that finding the standout performers in each industry will be increasingly important in the coming months and that the careful selection of individual stocks is likely to add value relative to a broad-based, index approach.