Frequently Asked Questions
On March 31, 2014, Pax World launched the Pax MSCI International ESG Index Fund, following the merger of the Pax World International Fund and the Pax MSCI EAFE ESG ETF (EAPS).
NEW PAX MSCI INTERNATIONAL ESG INDEX FUND INFORMATION
Q. What is the investment objective of the new Pax MSCI International ESG Index Fund?
Pax MSCI International ESG Index Fund is a passively-managed fund which seeks investment returns that closely correspond to the price and yield performance, before fees and expenses, of the MSCI EAFE ESG Index.
Q. What can you tell me about the MSCI EAFE ESG Index?
The MSCI EAFE ESG Index consists of equity securities of issuers organized or operating in developed market countries around the world, excluding the U.S. and Canada, that have high sustainability or environmental, social and governance (ESG) ratings relative to their sector and industry group peers, as rated by MSCI ESG Research annually.
The Index seeks to mirror construction of the MSCI EAFE Index, including sector and regional diversification. The MSCI EAFE Index consists of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
MSCI’s ESG research framework generates an analysis and rating of each company’s management of its ESG performance. The rating criteria address a company’s ESG performance in the context of five categories, covering key corporate stakeholders. The categories are: 1) environment, 2) community and society, 3) employees and supply chain, 4) customers – including the quality and safety record of a company’s products, and 5) governance and ethics. MSCI applies its proprietary ESG rating framework to each company by selecting the ESG rating criteria most relevant to each firm. To evaluate a company, analysts review more than 500 data points and score more than 100 indicators.
The MSCI EAFE ESG Index has outperformed the MSCI EAFE Index since its launch on October 1, 2007. Comparative performance for the MSCI EAFE ESG Index and the MSCI EAFE Index is shown below.
|Index Performance — Gross Returns (%)
(February 28, 2014) (Annualized)
|1 Year||3 Year||5 Year||
|MSCI EAFE ESG||
Past performance is not a guarantee of future results. Investors cannot invest directly in any index.
3The MSCI EAFE ESG Index is designed to measure the performance of equity securities of issuers of developed countries around the world excluding the U.S. and Canada that have high Environmental, Social and Governance (ESG) ratings relative to their sector and industry peers, as rated by MSCI ESG Research annually.
4The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. The MSCI EAFE Index consists of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
Q. Who is the portfolio manager?
Christopher H. Brown, working with other members of Pax World’s investment management team, is the lead portfolio manager responsible for the day-to-day management of the Fund. Mr. Brown is the Chief Investment Strategist of Pax World Management LLC and has been a portfolio manager with Pax World Management since 1998.
MERGER AND REORGANIZATION EVENT INFORMATION
Q. Why did Pax World create the Pax MSCI International ESG Index Fund and merge EAPS and the Pax World International Fund into the new index fund?
Pax World offered two international funds: The Pax World International Fund, an actively-managed mutual fund, and the Pax MSCI EAFE ESG Index ETF (EAPS), a passively-managed exchange traded fund (ETF). We decided to consolidate the funds in order to lower shareholder expenses, offer competitive investment performance lower adviser costs and achieve economies of scale.
Q. With these changes, should I be aware of any potential tax implications?
It is expected that the merger of EAPS and the Pax World International Fund into the new Pax MSCI International ESG Index Fund will be treated as a tax-free reorganization for federal income tax purposes. This means that neither shareholders of EAPS or the Pax World International Fund are expected to recognize any gain or loss directly as a result of the merger.
There are certain potential tax implications shareholders should be aware of associated with a dividend2 payment to be made from the Pax World International Fund prior to completion of the merger. This information is not to be considered advice for the purposes of tax planning and investors should consult with their tax adviser.
Q. What is the conversion ratio for shareholders of EAPS?
Because the 3/28 closing NAV (net asset value) of the old Pax World International Fund was used as the starting NAV for the new Pax MSCI International ESG Index Fund, a conversion ratio based on the 3/28 closing NAVs of both EAPS and the old Pax World International Fund was used to calculate the number of new fund shares owned by each EAPS shareholder. Each share of EAPS converted to 3.31029957 shares of the new Pax MSCI International ESG Index Fund.
Q. Where will I be able to find information about historical EAPS share prices and Pax World International Fund net asset values?
This data is available here.
INFORMATION FOR PAX WORLD INTERNATIONAL FUND SHAREHOLDERS
Q. How many shares of the new Pax MSCI International ESG Index Fund will I receive?
Because the March 28, 2014 closing NAV (net asset value) of the original Pax World International Fund will be used as the starting NAV for the new Pax MSCI International ESG Index Fund, International Fund shares will be exchanged for the same number of shares, and the same value, in the same share class of the new Fund.
Q. Will the Pax World International Fund be making a dividend distribution in advance of the merger?
Yes. The Pax World International Fund will make a final liquidating distribution to shareholders of record as of March 21, 2014, payable on March 25, 2014. Distribution information is available here beginning the evening of March 24.
The total distribution per share will impact the net asset value per share of the Pax World International Fund on the ex-dividend date, March 24, 2014.
INFORMATION FOR EAPS SHAREHOLDERS
Q. How many shares of the new Pax MSCI International ESG Index Fund will I receive?
Upon completion of the merger, shares and dollar value of investments in EAPS was exchanged for an equal dollar value of the Institutional Class shares of the Pax MSCI International ESG Index Fund, which has an identical expense structure as EAPS.
Q. Will EAPS be making a dividend distribution in advance of the merger?
No. EAPS will be the “survivor” fund and will follow the funds’ normal dividend cycle of semi-annual income dividends in June and December and distributions of capital gains, if any, in December.
INFORMATION FOR INVESTMENT ADVISORS/DEALERS
Q. What are the tickers and CUSIPs for the new Pax MSCI International ESG Index Fund?
The new Pax MSCI International ESG Index Fund will assume the tickers and CUSIPs of the Pax World International Fund, which are:
|Individual Investor Class
Shareholders of EAPS will receive shares of the Institutional Class in an amount equivalent to the dollar equivalent of the net asset value of their EAPS shares as of the close of business on March 28, 2014.
Q. What happens if I have not contacted the transfer agent to establish an account in the Pax MSCI International ESG Index Fund in advance of the merger?
If a broker/dealer firm that held EAPS shares did not contact the Fund’s transfer agent to instruct how their account should be set up by March 28, 2014, a redeem-only account was established in nominee name, where shares were placed until contact is made between the broker/dealer and BFDS to determine proper account setup.
Please direct inquiries to either your usual NSCC back-office contact at BFDS or directly to Pax World at firstname.lastname@example.org or 1-800-372-7827.
About Pax World Management LLC
Pax World is a leader in sustainable investing, the full integration of environmental, social and governance (ESG) factors into investment analysis, security selection, portfolio construction and risk management. Pax World combines rigorous ESG analysis with equally rigorous financial analysis in seeking to identify better-managed, industry leading companies that meet positive corporate responsibility standards, have a clear vision for managing risk, and are focused on delivering long-term value to shareholders. Pax World launched the first socially responsible mutual fund in the U.S. in 1971 and today offers a family of mutual funds including ESG Managers® Portfolios, multimanager asset allocation portfolios powered by Morningstar Associates. For more information, visit www.paxworld.com.
MSCI is a leading provider of investment decision support tools to investors globally, including asset managers, banks, hedge funds and pension funds. MSCI products and services include indices, portfolio risk and performance analytics, and governance tools.
MSCI designs and calculates global equity indices, which, over the last 40 years, have become the most widely used global equity benchmarks by institutional investors. MSCI's global equity benchmark indices contribute to the investment process by serving as relevant performance benchmarks and effective research tools, and as the basis for various investment vehicles.
1The fund described herein is indexed to an MSCI index. The fund referred to herein is not sponsored, endorsed, or promoted by MSCI or its affiliates, and MSCI and its affiliates bear no liability with respect to any such fund or any index on which such fund is based. The MSCI EAFE ESG Index is designed to include equity securities of issuers organized or operating in Europe, Australasia and the Far East that have high environmental, social and governance (ESG) ratings relative to their peers as rated by MSCI ESG Research annually. The MSCI EAFE ESG Index includes or utilizes data, ratings, analysis, reports, analytics or other information or materials from MSCI's ESG Research Group within Institutional Shareholder Services Inc., an indirect wholly-owned subsidiaries of MSCI. One cannot invest directly in an index.
2Dividends are not guaranteed and a company’s future abilities to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time.
RISKS: Equity investments are subject to market fluctuations, the fund’s share price can fall because of weakness in the broad market, a particular industry, or specific holdings. International investments involve risk of capital loss from unfavorable fluctuations in currency values, differences in generally accepted accounting principles, economic or political instability in other nations or increased volatility and lower trading volume. Investments involve risk, including potential loss of principal. Stocks will fluctuate in response to factors that may affect a single company, industry, sector, or the market as a whole and may perform worse than the market. Funds that emphasize investments in smaller companies generally will experience greater price volatility.
You should consider a fund's investment objectives, risks and charges and expenses carefully before investing. For this and other important information, please obtain a fund prospectus by calling 800.767.1729 or visiting www.paxworld.com. Please read it carefully before investing. Past performance is no guarantee of future results.
Distributor: ALPS Distributors, Inc.
Neither Pax World Management LLC nor ALPS Distributors, Inc., are affiliated with MSCI Inc., MSCI ESG Research or Morningstar Associates, LLC.
Separately managed accounts and related advisory services are provided by Pax World Management LLC, a federally registered investment adviser. ALPS Distributors, Inc. is not the distributor for Pax World's separately managed accounts.
On 3/31/2014 Pax World International Fund and Pax MSCI EAFE ESG Index ETF merged into the Pax MSCI International ESG Index Fund (the Fund), a passively managed index fund which seeks investment returns that closely correspond to the price and yield performance, before fees and expenses, of the MSCI EAFE ESG Index. Based on the similarity of the Fund to Pax MSCI EAFE ESG Index ETF, Pax MSCI EAFE ESG Index ETF (the Predecessor Fund) is treated as the survivor of the mergers for accounting and performance reporting purposes. Accordingly, all performance and other information shown for the Fund for periods prior to 3/31/2014 is that of the Predecessor Fund.