Most of the major indexes recorded modest gains in the quarter and reached new or multiyear highs as investors balanced favorable corporate earnings against economic and geopolitical concerns. Value stocks handily outperformed growth shares for the quarter, while mid-caps outpaced both smaller and larger shares. Health care stocks performed best within the mid-cap growth universe, bested only by the very small utilities sector. Financials lagged and was the only sector to record a loss for the period.
The Mid-Cap Growth Fund returned 2.84% in the quarter compared with 2.04% for the Russell Midcap Growth Index, 3.04% for the S&P MidCap 400 Index, and 1.37% for the Lipper Mid-Cap Growth Funds Index. For the 12 months ended March 31, 2014, the fund returned 25.81% versus 24.22% for the Russell Midcap Growth Index, 21.24% for the S&P MidCap 400 Index, and 23.98% for the Lipper Mid-Cap Growth Funds Index. The fund's average annual total returns were 25.81%, 24.45%, and 11.39% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2014. The fund's expense ratio was 0.80% as of its fiscal year ended December 31, 2012.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
We assemble the portfolio on a stock-by-stock basis, but health care is one large area of investment for the portfolio. Despite potential challenges from economic uncertainties or reform, we continue to be constructive on the numerous positive long-term drivers for the health care sector: an aging population; Americans' willingness to spend on health care to achieve a higher-quality life; and the pace of scientific advances and the prospects for safer and better drugs.
Throughout much of the first quarter, investors continued to favor "dream stocks," the select group of companies that has seemed to defy the sluggish global economy by offering the potential, at least, for rapid growth. The reassessment of these highfliers in the last weeks of the quarter was a factor in mid-cap growth stocks underperforming their value counterparts. We expect this reexamination will continue in coming months. When they do, we suspect that the current emphasis on "total available market," or TAM in the current parlance, will not be enough to justify the prices of many of these stocks. In general, we expect that our focus on valuation and our broadly diversified portfolio will serve us well in coming months.