As of March 31, 2013
Major equity markets1, with the exception of China’s stock exchange indexes2,3, recorded positive results during the quarter ended March 31, 2013 on positive global economic news and corporate earnings results. Nevertheless, concerns about economic and monetary policies in the U.S., Europe and Asia sometimes dampened the enthusiasm of investors and executives for stocks in some sectors and for business spending, respectively.
The disparity of U.S. equity returns across the 10 Standard & Poor’s industrial sectors may reflect their restraint. Stocks in the health care sector returned 15.81% for the quarter, while the information technology sector’s return of 4.59% ranked as the lowest among the sectors. The breadth of returns was even more dramatic at the industry level. Among the 20 industry groups, pharmaceuticals, biotechnology and life sciences gained 18.48% during the quarter while the technology, hardware and equipment industry group lost 3.04%.3
For active investors, equity return dispersion was a welcome relief from the “risk-on/risk-off” conditions of some recent periods. In market conditions influenced by those conditions, stocks tended to move in correlation with one another, often ignoring the fundamental strengths of selected issues. During such times, maintaining a commitment to an investment thesis can sometimes test an investor’s resolve, but that commitment is important to fully realizing the return potential that resides in certain portfolio holdings.
The Pax World Growth Fund achieved positive results for the three-month period ended March 31, 2013. Negative returns and macro-economic influences in some sectors reduced the overall portfolio performance compared to the benchmark index.
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1Returns for major equity indexes representing the world’s largest developed economies as of March 31, 2013 are as follows: the Standard & Poor’s 500 Composite Index 10.61%; the FTSE 100 Index 6.77%; the CAC 40 2.63% (Local); the Dax 2.40% (Local); and the Nikkei 225 Index 9.75%. The S&P 500 is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization maintained by the FTSE Group, a subsidiary of the London Stock Exchange Group. The CAC 40 is a benchmark of the French stock market index. The index represents a capitalization-weighted measure of the 40 most significant values among the 100 highest market caps on the Euronext Paris exchange. The DAX is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The Nikkei Index is a price-weighted index for the Tokyo Stock Exchange calculated daily by the Nihon Keizai Shimbun newspaper. One cannot invest directly in an index.
2The Hang Seng Index is a freefloat-adjusted market capitalization-weighted stock market index in Hong Kong. It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong. These 48 constituent companies represent about 60% of capitalization of the Hong Kong Stock Exchange. The total return for the Index for the three-month period ended 3/31/2013 was -1.37%. One cannot invest directly in an index.
3 The SSE (Shanghai) Composite Index is an index of all stocks that are traded at the Shanghai Stock Exchange. The total return for the Index for the three-month period ended 3/31/2013 was -1.04%. One cannot invest directly in an index.