Stocks pulled back in the quarter as investors worried about the slowing Chinese economy and its impact on global growth and commodity demand. Mid-caps lagged large-caps but outperformed smaller shares, while mid-cap growth and value shares were roughly in line. Energy, materials, and health care stocks fared worst within the mid-cap growth universe, while consumer and utilities shares fared best.
The Mid-Cap Growth Fund returned −6.08% in the quarter compared with −7.99% for the Russell Midcap Growth Index and −9.25% for the Lipper Mid-Cap Growth Funds Index. For the 12 months ended September 30, 2015, the fund returned 10.06% versus 1.45% for the Russell Midcap Growth Index and 1.35% for the Lipper Mid-Cap Growth Funds Index. The fund's average annual total returns were 10.06%, 14.98%, and 10.03% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2015. The fund's expense ratio was 0.77% as of its fiscal year ended December 31, 2014.
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The portfolio saw declines in a wide range of its holdings in the quarter, with its small positions in energy and consumer staples leading the declines. The portfolio's relative returns were aided by stock selection, primarily in the information technology sector. We have moderated risk within technology exposure by increasing positions in steady, durable-growth franchises, such as IT services, that are trading at more attractive valuations than certain pockets within software, Internet, and social media.
Despite the recent pullback in stock prices, we remain cautious as we enter the final months of 2015. Although stocks' late-summer swoon improved valuations, we are not convinced that it eliminated the frothiness (if probably not actual bubbles) that emerged over the past few years in certain segments of the market. To be sure, the lather has now been wiped clean of the energy sector, as stock prices have come to reflect the structural challenges oil and gas producers will face from oversupply for years to come. However, valuations remain elevated in several more prominent areas of our investment universe, with investors willing to pay very high multiples for the narrowing number of firms able to grow earnings despite the sluggish global economy. Indeed, multiples have risen even in our favorite hunting ground, the growth "plodders" in the industrial services sector and elsewhere that are able to record consistent, but not spectacular, earnings growth. Even as we struggle to find compelling new investment opportunities, however, we continue to expect that markets will eventually adjust and present attractive entry points into strong companies. In particular, we note that increasingly skeptical investors have lately given a restrained reception to initial public offerings, perhaps relieving one source of recent market excess.