Performance and Portfolio Update

  • The Fund modestly underperformed the benchmark Russell 1000 Index in the first quarter. The main drivers of the return difference were company specific. From a factor perspective, the factors used in the strategy construction had a positive impact on relative returns.
  • The overweight towards quality factors produced positive relative results for the period. The Fund’s exposure to companies with lower volatility (i.e., low beta) was the largest factor contributor for the period. Exposure to companies with higher profitability and earnings quality were also material contributors. These results were partially offset by the Fund’s exposure to value stocks, as measured by earnings yield, as this style factor has underperformed in recent history.
  • The Fund overweights its portfolio toward companies with ESG strength. During the quarter, this overweight to ESG leaders and accompanying underweight to companies with weaker ESG profiles in aggregate had a positive impact on performance.
  • As part of the Fund’s proprietary SmartCarbonTM approach, there is no fossil fuel exposure in the portfolio, which benefited performance with the Energy sector down more than -50%.1

Performance

(as of 3/31/20)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
ESG Beta Quality Fund - Investor Class-12.59-20.55-20.55-9.913.604.598.954.76
ESG Beta Quality Fund - Class A˜-12.58-20.56-20.56-9.933.604.588.964.76
ESG Beta Quality Fund - Institutional Classƒ-12.56-20.53-20.53-9.713.854.849.224.90
Russell 1000 Index-13.21-20.22-20.22-8.034.646.2210.39
Lipper Multi-Cap Core Funds Index-14.11-21.60-21.60-11.092.224.078.53

Performance data quoted represent past performance, which does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance for the most recent month-end, call 800.767.1729 or visit impaxam.com

Figures include reinvested dividends, capital gains distributions and changes in principal value.

2The inception date for the Pax ESG Beta Quality Fund Institutional Class is April 2, 2007, the Investor Class inception date is June 11, 1997, and the Class A shares inception date is May 1, 2013.

The performance information shown for Institutional Class shares represents the performance of the Investor Class shares for the period prior to Institutional Class inception (April 2, 2007). Expenses have not been adjusted to reflect the expenses allocable to Institutional Class shares. If such expenses were reflected, the returns would be higher than those shown. Institutional Class shares average annual return since April 2, 2007, is 6.52% (annualized).

Total annual Pax ESG Beta Quality Fund operating expenses, gross of any fee waivers or reimbursements, for Investor Class, Class A and Institutional Class shares are 0.90%, 0.90% and 0.65%, respectively, as of 5/1/2019 prospectus.ˆ  

The performance information shown for Class A represents the performance of the Investor Class shares for the period prior to Class A inception. Expenses have not been adjusted to reflect the expenses allocable to Class A shares. Class A inception date return since May 1, 2013, is 8.29% (annualized). A 1.00% CDSC (contingent deferred sales charge) may be charged on any shares sold within 18 months of purchase over $1 million. POP (public offering price) reflects the maximum sales load for the Fund’s Class A Shares of 5.50%.

Performance
after sales charge

(as of 3/31/20)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
ESG Beta Quality Fund - Class A (Load)-17.39-24.92-24.92-14.871.663.418.344.50

Factors


(for quarter ended 3/31/20)
Factor Exposure
Total Relative Factor
Contribution (%)

Past performance is no guarantee of future results.
3Beta reflects the sensitivity of a Fund’s return to fluctuations in its benchmark; A beta for a benchmark is 1.00: a beta greater than 1.00 indicates above-average volatility and risk.

Portfolio Characteristics

(as of 3/31/20)
FundBenchmark
Market Cap (weighted avg.)$245,131M$259,160M
Forward Price/Earnings13.2816.67
ROE27.6221.71
Beta
0.931.00
Number of Securities158996

1Q1 2020 Energy sector performance as represented by S&P 500 Index Energy sector.

Top 10 Holdings

(as of 3/31/20)
Microsoft Corp. 4.6%, Apple, Inc. 4.4%, Amazon.com, Inc. 3.5% , Johnson & Johnson 3.1% , Alphabet, Inc., Class A 2.8% , Verizon Communications, Inc. 2.7% , Allstate Corp., The 2.4% , Texas Instruments, Inc. 2.4% , Thermo Fisher Scientific, Inc. 2.2% and Intel Corp. 2.1%. Holdings are subject to change.

Definitions

ƒWeighted Average is an average in which each quantity to be averaged is assigned a weight. These weightings determine the relative importance of each quantity on the average.
Forward Price-Earnings Ratio or P/E FY1 ratio is a ratio for valuing a company that measures its current share price relative to its per-share earnings over the next 12 months.
Return on Equity: The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.
A historical Beta is used for Funds with greater than 3 years of performance history under the same mandate. Three-year Beta is used. Beta reflects the sensitivity of a Fund’s return to fluctuations in its benchmark; a beta for a benchmark is 1.00; a beta greater than 1.00 indicates above-average volatility and risk.

The statements and opinions expressed are those of the author as of the date of this report. All information is historical and not indicative of future results and subject to change. This information is not a recommendation to buy or sell any security. Past performance does not guarantee future results.

PAX009192 (7/20)

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