The Fund's consumer staples sector had a positive return, compared to the negative return for the consumer staples stocks in the Russell Midcap® Value benchmark. Strong performers among the consumer staples stocks were Campbell Soup Company (1.5% of the Fund), General Mills Inc. (1.0%) and Clorox Company (1.2%), all of which were up by double digits for the quarter. The decline in commodity inflation helped the outlook for the profit margins of these food and consumer product companies. An underweighted position in the energy sector also helped to boost the Fund's relative performance.

In contrast to these favorable factors, the industrials, materials, utilities and consumer discretionary sectors of the Fund had a negative impact on relative performance. In the industrials sector, General Cable Corporation (1.3%) was weak because of concerns about eroding fundamentals in Europe and the implications of a global slowdown for emerging markets. We believe that the demand for General Cable's products is more secular than cyclical and anticipate that the stock should recover once the credit scare passes. Terex Corp. (1.4%) was down after the company cut earnings expectations, citing slowing non-residential construction demand. We believe the shares are attractive at current levels. In the materials sector, Allegany Technologies Inc. (1.2%) and Reliance Steel & Aluminum Co. (1.4%) were both down significantly due to a sharp decline in commodity prices and weakening global demand. In the utilities sector, the Fund's gas utility holdings were negatively impacted by the sharp decline in natural gas prices. Finally, in the consumer discretionary segment, BorgWarner Inc. (1.9%), an auto supplier, and Penske Automotive Group Inc. (1.5%), an auto retailer, were hurt by economic weakness in North America and Europe.