Balanced Fund
Investment Objective
The Balanced Fund’s primary investment objective is to seek income and conservation of principal. As a secondary investment objective, the Balanced Fund seeks long-term growth of capital.
Principal Investment Strategies
The Balanced Fund follows a Sustainable Investing approach, combining rigorous financial analysis with equally rigorous environmental, social, and governance (ESG) analysis in order to identify investments. Under normal market conditions, the Balanced Fund expects to invest approximately 60% of its assets in equity securities (such as common stocks, preferred stocks and securities convertible into common or preferred stocks) and 40% of its assets in debt securities (including but not limited to debt securities convertible into equity securities). However, depending on market conditions, the equity portion of the Balanced Fund’s portfolio may range from 50% to 75% of its assets and the debt portion of the Balanced Fund’s portfolio may range from 25% to 50% of its assets.
With respect to the equity portion of its investment portfolio, the Balanced Fund may invest in securities of companies with any market capitalization and intends to focus on economic sectors that its investment adviser believes will outpace the overall rate of growth of the United States Gross Domestic Product. With respect to the debt portion of its investment portfolio, the Balanced Fund intends to invest primarily in obligations issued or guaranteed by the United States government or its agencies and instrumentalities with short- to intermediate-term maturities (two to six years) and corporate bonds that are, at the time of purchase, rated at least investment grade (rated BBB-1 or higher by Standard & Poor’s Ratings Group or Baa2 or higher by Moody’s Investors Service) or unrated and determined by the Balanced Fund’s investment adviser to be of comparable quality.
The Balanced Fund’s portfolio managers use both qualitative analysis and quantitative techniques when allocating the Balanced Fund’s assets between equity securities and debt securities within the above-described ranges. The Balanced Fund’sinvestment adviser generally determines to sell an equity security for one or more reasons, including, but not limited to, a desired change in asset allocation (e.g. allocating more of the Balanced Fund’s portfolio to debt securities), a lack of confidence in the management of an issuer, a deterioration in the fundamentals of an issuer, when the security becomes overweighted relative to a sector or to the Balanced Fund’s portfolio as a whole or when the security becomes overvalued relative to its peers or to the market. The Balanced Fund generally determines to sell a debt security for one or more reasons, including, but not limited to, a desired change in asset allocation (e.g., allocating more of the Balanced Fund’s portfolio to equity securities); a change in the duration strategy, the sector allocation strategy or the relative value of the security within a sector (e.g., spread tightening, “busted” calls, tender offers); an anticipated change in the security’s credit rating; or a deterioration in the fundamentals of the issuer. The Balanced Fund may also consider selling a particular security to replace the security with a more attractive investment or in order to meet redemption requests, or if a company no longer meets Pax World’s environmental, social or governance standards.
The Balanced Fund may invest up to 45% of its assets in securities of non-U.S. issuers, including American Depositary Receipts (“ADRs”). The Balanced Fund may invest no more than 25% of its assets in securities of non-U.S. issuers other than ADRs. The Balanced Fund’s investments in securities of non-U.S. issuers may include investments in emerging markets.
The Balanced Fund may utilize derivatives, including but not limited to repurchase agreements, foreign currency exchange contracts, options and futures contracts, for hedging and for investment purposes.
In response to unfavorable market and other conditions, the Balanced Fund may deviate from its principal investment strategies by making temporary investments of some or all of its assets in high quality debt securities, cash and cash equivalents. The Balanced Fund may not achieve its investment objectives if it does so.
Except as otherwise noted in this Prospectus or the Statement of Additional Information, the Balanced Fund’s investment policies are not fundamental and may be changed without a vote of shareholders.
In making the determination to vary the Balanced Fund’s asset allocation, the investment adviser considers various quantitative and qualitative data relating to the U.S. and foreign economies, forecasts for interest rates and the relationship between short- and long-term interest rates (yield curve), current and projected trends in inflation, relative valuation levels in the equity and fixed income markets and various segments within those markets, the outlook and projected growth of various industrial sectors, information relating to business cycles, borrowing trends and the cost of capital and political trends. The investment adviser retains the flexibility to reallocate the Balanced Fund’s assets or to vary percentages based on its ongoing analyses of the equity and fixed income markets, although these tactical shifts are not expected to be large or frequent in nature.
Sustainable Investing
The Balanced Fund seeks to invest in forward-thinking companies with sustainable business models that meet positive environmental, social and governance standards. The Balanced Fund avoids investing in companies that its investment adviser determines are significantly involved in the manufacture of weapons or weapons-related products, manufacture tobacco products or engage in unethical business practices.
1BBB- rating is Standard & Poor’s rating of bonds of adequate credit quality. Protection of interest and principal is considered adequate, but the entity is more susceptible to adverse changes in financial and economic conditions, or there may be other adversities present which reduce the strength of the entity and its rated securities.
2Baa rating is a Moody’s rating of bonds. Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics.