Pax World Value Fund
Investment Objective
The Pax World Value Fund’s investment objective is to seek long-term capital appreciation. The Value Fund’s portfolio manager seeks to generate capital appreciation with moderate risk. The fund focuses on high quality businesses that are fundamentally attractive with good earnings in good industries.
Principal Investment Strategies
Under normal market conditions, the Value Fund invests primarily in equity securities (such as common stocks, preferred stocks and securities convertible into common or preferred stocks) of companies that have capitalization of the smallest company included in the Russell 3000 Value Index and that the Value Fund’s investment adviser believes are undervalued relative to their future growth prospects in relation to the market and their respective industry groups.
The Russell 3000 Value Index includes those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 3000 Index includes securities reflecting the broad U.S. equity universe, representing approximately 98% of the U.S. equity market. As of the latest reconstitution of the Russell 3000 Value Index, the smallest company in the index had a market capitalization of approximately $260 million. The Value Fund may invest in convertible securities of any credit quality, including convertible securities rated in the lowest rating category by Standard & Poor’s Ratings Group, Moody’s Investors Service or another major rating agency and unrated convertible securities determined
by the Value Fund’s investment adviser to be of comparable quality (commonly referred to as “junk bonds”).
The Value Fund’s investment adviser selects equity securities on a company-by-company basis primarily through the use of fundamental analysis. Undervalued companies tend to have lower stock prices relative to their earnings potential and other financial measures. The investment adviser attempts to identify companies for possible investment by analyzing their growth prospects based on their market and competitive position, financial condition and economic, political and regulatory environment.
The following characteristics may also be considered in analyzing the attractiveness of such companies - valuation factors such as price-to-earnings ratio; price-to-book ratio and/or price-to-cash flow ratio; a healthy balance sheet; overall financial strength; and catalysts for changes that improve future earnings prospects. The Value Fund may sell a particular security if any of the original reasons for purchase change materially, in response to adverse market conditions, when a more attractive investment is identified or to meet redemption requests. The Value Fund may invest up to 45% of its assets in securities of non-U.S. issuers, including American Depository Receipts (“ADRs”). The Value Fund may invest no more than 25% of its assets in securities of non-U.S. issuers other than ADRs. The Value Fund’s investments in securities of non-U.S. issuers, if any, may include investments in emerging markets and may be diversified across multiple countries or geographic regions, or may be focused in a single country or geographic region.
1The Value Fund’s investment adviser has contractually agreed to reimburse expenses (excluding Acquired Fund Fees and Expenses) allocable to Individual Investor Class, Institutional Class and R Class shares of the Value Fund to the extent such expenses exceed 1.49%, 1.24% and 1.74% of the average daily net assets of Individual Investor Class, Institutional Class and R Class shares, respectively, of the Value Fund. This reimbursement arrangement will remain in effect for a minimum of three years, through December 31, 2010.