as of June 30, 2014
Fund Commentary
A combination of accommodative global central bank policies, continued stagnant growth trends and benign Treasury yields contributed to extremely low market volatility during the second quarter. On the geopolitical front, tensions shifted from Ukraine in the first quarter to Iraq in the second quarter, pushing Brent crude oil prices to a nine-month high. Despite these negative trends, stocks and other risky assets continued to march higher. There was little disparity in the absolute of the Russell 1000® Growth and Russell 1000® Value indices.

The Large Cap Growth Fund posted a total return of 3.99% for the quarter, compared with 5.13% for the Fund’s benchmark, the Russell 1000® Growth Index. Stock selection in the consumer staples, consumer discretionary and information technology sectors primarily accounted for the underperformance. Stock selection contributed positively to relative results in the financials, materials and energy sectors. Overall, our sector allocations detracted modestly from relative performance.

The final revision to first-quarter gross domestic product (GDP), which showed a contraction of (-2.9%), captured headlines during the second quarter. But, this data point seemed to represent ancient history, as real-time U.S. economic data recovered sharply in the second quarter, topped off by better-than-expected June job growth. With leading indicators painting a positive backdrop, we remain tilted toward cyclical, higher-growth opportunities. We are excited about several themes represented in the Fund, including opportunities in biotechnology and the potential for new drug discoveries, a continued housing recovery, and improving consumer sentiment and spending. Consumer gains should prove positive for our overweight position in the consumer durables industries, including autos and components and household durables.
Investor Profile

If you fit the profile of a more aggressive investor able to accept greater volatility in exchange for higher potential return than is offered by the Growth Equity Fund, you will want to consider this Fund as a core holding for your portfolio. Because companies with these characteristics often retain their earnings, investors should expect low to no dividends.

  • Combine top-down, theme-driven approach with bottom-up fundamental stock selection to construct a portfolio of primarily large-cap growth stocks.
  • Select stocks with emphasis on growth potential, quality of earnings and management experience.
  • Seek to provide long-term capital appreciation for investors looking to participate in longer-term investment themes, which may contribute to increased volatility.
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