Performance and Portfolio Update

  • The Pax ESG Beta Quality Fund trailed the benchmark Russell 1000 Index in the third quarter by a small margin. 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 Fund’s overweight to stocks in the top ESG quartile, those with the strongest ESG profiles as measured by the Pax Sustainability Scorex, contributed to performance. However, stocks with the weakest ESG profiles also performed well during the quarter. As such, the Fund’s underweight to those companies in the bottom ESG quartile offset positive contribution from the top ESG quartile.
  • The strategy’s exposure to companies with higher earnings yield, which was the worst performing factor during the quarter, was the largest style factor detractor.
  • The overweight toward quality factors contributed positively to relative results for the period. Particularly, the strategy’s exposure to companies with higher earnings quality and profitability.
  • Industry exposures, which are driven by the factor and ESG tilts, contributed to relative returns for the quarter. Particularly, an underweight to banks and diversified financials helped results following concerns over weakening demand for loans.

Performance

(as of 9/30/18)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
ESG Beta Quality Fund - Investor Class-0.247.098.1916.1214.5012.0211.165.67
ESG Beta Quality Fund - Class A˜-0.247.068.1116.1014.5012.0111.165.67
ESG Beta Quality Fund - Institutional Classƒ-0.237.098.3416.3314.7512.2811.435.80
Russell 1000 Index0.387.4210.4917.7617.0713.6712.09-
Lipper Multi-Cap Core Funds Index0.006.018.5015.2515.4911.7611.13-

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 paxstaging.wpengine.com

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

1The 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 8.44% (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 5/1/2018 prospectus.

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 13.07% (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 9/30/18)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
ESG Beta Quality Fund - Class A (Load)-5.721.152.189.7412.3510.7510.535.39

Factors


(as of 9/30/18)
Factor Exposure
Total Relative Factor
Contribution (%)

Past performance is no guarantee of future results.
2Beta 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 9/30/18)
FundBenchmark
Market Cap (weighted avg.)$203,012M$224,002M
Forward Price/Earnings17.1618.37
ROE26.4818.85
Beta
0.891.00
Number of Securities154984

 


Top Ten Holdings

(as of 9/30/18)
Apple, Inc. 3.4%, Amazon.com, Inc. 3.4%, Microsoft Corp. 2.7%, MasterCard, Inc., Class A 2.7%, Verizon Communications, Inc. 2.6%, Alphabet, Inc., Class A 2.4%, Johnson & Johnson 2.4%, PepsiCo, Inc. 2.3%, Texas Instruments, Inc. 2.2% and Prudential Financial, Inc. 2.0%. Holdings are subject to change.

xThe Pax Sustainability Score is a proprietary ranking of companies’ environmental, social and governance (ESG) performance developed by Pax World’s Sustainability Research Team. The scoring framework is shaped by the team’s collective experience and insights on how sustainability impacts financial performance. Learn more about the Pax Sustainability Score here.

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.
An Ex-Ante Beta is used for Funds with less than 2 years of performance history under its new mandate. The Ex-Ante Beta is calculated using a multi-factor risk model. Beta explains common variations in stock returns due to different stock sensitivities to the market relative to its underlying benchmark for the current period, not historical. 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.

PAX008258 (1/19)

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