As of September 30, 2013
During the third quarter ended September 30, 2013, equity investments in the U.S. as measured by the Standard & Poor’s 500 Index1 (S&P 500) continued their strong 2013 performance. Small cap stocks as measured by the S&P SmallCap 600 Index2 continued to outperform large and mid-cap stock returns this year. During the quarter, the S&P SmallCap 600 Index recorded a 10.73% increase in value while the S&P 400 MidCap Index3 was up 7.54% and the broader S&P 500 Index was up 5.24%. For the year-to-date through September 30, the S&P SmallCap 600 Index returned 28.66% while the S&P 400 MidCap Index has returned 23.23% and the S&P 500 is up 19.79%.
The Pax World Small Cap Fund return for the quarter ended September 30, 2013 was 11.30% compared to 10.21% for its benchmark, the Russell 2000 Index4. Top performing sectors in the portfolio relative to the index were health care, consumer discretionary and materials. In each case, strong stock selection was the primary driver of relative outperformance while an underweight allocation to consumer discretionary also contributed. Only two sectors negatively impacted the portfolio’s performance relative to the benchmark: financials and consumer staples. Underperformance in the financials sector was attributable to stock selection and, to a lesser degree, an overweight allocation to the sector. An underweight allocation to consumer staples relative to the index was the largest contributor to a small relative underperformance of the portfolio compared to the benchmark in the sector.
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1The S&P 500 Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices. One cannot invest directly in an index.
2The S&P SmallCap 600 measures the small cap segment of the U.S. equity market. The index is designed to be an investable portfolio of companies that meet specific inclusion criteria to ensure that they are liquid and financially viable. One cannot invest directly in an index.
3The S&P MidCap 400 provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment. One cannot invest directly in an index.
4The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. One cannot invest directly in an index.