Pax World Women’s Equity Fund

wef-holdings.gifInvestment Objective
The Pax World Women’s Equity Fund’s investment objective is to seek long-term growth of capital.

Principal Investment Strategies
Under normal market conditions, the Women’s Equity Fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities (such as common stocks, preferred stocks and securities convertible into common or preferred stocks).

In selecting investments, the Women’s Equity Fund’s investment adviser applies sustainable investing criteria, emphasizing companies that promote gender equity through internal policies and programs, transparency regarding the effectiveness of those policies and programs, and accountability among employees to assure implementation and observance of the same. The Women’s Equity Fund may invest in securities of companies with any market capitalization.

The Women’s Equity Fund may invest up to 45% of its assets in securities of non-U.S. issuers, including American Depositary Receipts (“ADRs”). The Women’s Equity Fund may invest no more than 25% of its assets in securities of non-U.S. issuers other than ADRs. The Women’s Equity 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.

The Women’s Equity Fund’s investment adviser selects securities on a company-bycompany basis primarily through use of fundamental analysis. The Fund may invest in both growth and value companies and may emphasize one or the other based on its assessment of economic and market conditions. In selecting investments for the Women’s Equity Fund, the investment adviser seeks to emphasize companies with long-term records of stable operating characteristics and the ability to achieve sustainable returns on invested capital.

In selecting growth companies, Women’s Equity Fund’s investment adviser will seek companies it believes have above-average long-term growth potential, and select investments based, among other factors, on:

  • strong management,
  • demonstrated growth in earnings and sales,
  • superior industry positions and
  • competitive advantages over industry peers.

In selecting value companies, Women’s Equity Fund’s adviser will attempt to identify companies that exhibit the following characteristics:

  • attractive valuation (considering factors such as price-to-earnings ratio1, price-to-book ratio2 and/or price-to-cash flow ratio3),
  • a healthy and/or improving balance sheet;
  • overall financial strength and
  • catalysts for changes that improve future earnings prospects.

Sustainable Investing
The Women’s Equity Fund seeks to invest in forward-thinking companies with sustainable business models that meet positive environmental, social and governance standards. The Women’s Equity 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.

Gender Criteria
The Women’s Equity Fund seeks to invest primarily in companies that, in addition to meeting Pax World’s other financial, environmental, social and governance criteria, take affirmative steps to attract, retain and promote women, and to advance gender equity and women’s empowerment in the workplace and beyond.

Specifically, the Women’s Equity Fund endeavors to invest in companies that promote gender equity through internal policies and programs, transparency regarding the effectiveness of those policies and programs and accountability among employees to assure implementation and observance of the same. Examples include:

  • Promotion of women to top executive positions and compensating them accordingly;
  • Representation of women on the board of directors and in senior management;
  • Strong support from senior executives for workplace equality;
  • Career development and training programs for women employees;
  • Close monitoring of hiring and promotion activity to assure gender equity;
  • Programs to address work/life balance concerns, including in particular women’s health, safety and childcare responsibilities;
  • Programs to address discrimination against women and to protect women from harassment and violence;
  • Use of women-owned companies as vendors and service providers;
  • Positive images of women in their advertising, promotion and marketing; and
  • Accountability and transparency to employees, investors and the communities in which they operate.

When possible, the Women’s Equity Fund endeavors to vote shareholder proxies in accordance with gender criteria, in addition to other environmental, social and governance criteria; to engage in dialogue with corporate management on issues of concern; to initiate and support shareholder resolutions on gender-related issues; and to support public policy initiatives that promote greater corporate transparency, accountability and social responsibility on issues of gender equality.

The Women’s Equity Fund also endeavors to avoid investing in companies involved in the exploitation and trafficking of women, whose products demean women or who use negative stereotypes in their advertising, promotion or marketing. Similarly, the Women’s Equity Fund endeavors to avoid companies that fail to provide a safe work environment for women by encouraging or tolerating harassment, as well as companies that have a history or pattern of discrimination or mistreatment of women.

The Women’s Equity Fund may also invest in community development financial institutions, including micro-credit or micro-finance institutions (financial institutions that provide financial services and loans to entrepreneurs and individuals in emerging market economies) that advance women’s equity and sustainable development around the globe.

1Price-to-earning ratio (“P/E ratio”) is the price of a share of a company’s stock divided by the income or profit earned by each share. The P/E ratio is used to estimate how much an investor is willing to pay for $1 in earnings. A higher P/E ratio generally indicates that investors are expecting higher future earnings than from a company with a lower P/E ratio. Because different industries and sectors have different growth prospects, it is generally most useful to compare P/E ratios among companies in the same industry, sector and market.
2Price-to-book ratio (“P/B ratio”) is the current market price for a share of a company’s stock divided by per share value on the company’s most recent quarter-end balance sheet. A higher P/B ratio may indicate that investors are willing to pay a premium over the value of a company’s hard assets; a low P/B ratio may indicate that a stock is undervalued by the market. It is generally most useful to compare P/B ratios among companies in the same industry, sector and market.
3Price-to-cash flow ratio compares a company’s current market value to its operating cash flow. A lower price-to-cash flow relative to its industry and sector may indicate that a company’s stock is undervalued by the market; a higher price-to-cash flow relative to its industry and sector may indicate overvaluation.