Manager Commentary

As of September 30, 2008

View Q3 Market Commentary

How did the Fund perform?
For the three month period ending September 30, 2008, the Women’s Equity Fund returned -11.42% versus the -8.73% return for the benchmark Russell 3000 Index. The Fund outperformed the Lipper Multi-Cap Core Fund Index by 0.19% during the same period.

Why did the Fund trail the index during the quarter?
The unprecedented credit crisis and the attempt by regulators to fix ensuing problems created massive confusion in the equity markets over the last few weeks. At the epicenter of this are financial companies, which represented more than 15 percent of assets in the Women’s Equity Fund. Additionally, energy markets staged their own roller-coaster ride; giving back their ascension of the prior quarter. As these sectors experienced a loss of confidence in terms of liquidity crisis and demand destruction, stocks continued to fall precipitously without regard to fundamentals. The Women’s Equity Fund’s underperformance has been primarily influenced by unfavorable stock selection and the fact that a number of holdings in the Portfolio are out of favor in the industrial and technology sectors, in addition to the financial and energy sectors.

Can you discuss any significant changes in the Fund’s positioning throughout the quarter?
The biggest change I made to the Fund was reducing its cyclical sector exposure in industrials and energy names. The reduction in the industrial sector was primarily driven by macro economic conditions. Although oil prices gave back all the appreciation from the prior quarter, credit market seizure started to impact the cyclical sectors, with a marked slowdown in demand for industrial products and services. On the other hand, I increased the Fund’s exposure in the defensive healthcare and consumer staples sectors, and did so opportunistically in the discretionary sector. I took the opportunity to reposition holdings from lower cash flow growth to companies with higher cash flow and improved long term outlooks.

Which stocks contributed positively to performance versus the index?
Collectively, stock selection in consumer staples such as Procter & Gamble (2.2%*), Pepsi (1.4%*) and Colgate-Palmolive (1.4%*), along with consumer discretionary stock Nike (1.6%*) helped performance, as these stocks are viewed as fairly insulated from credit risks and economic slowdown. Selective financial stocks showed some signs of recovery following the prior quarter’s carnage of the sector. JPMorgan Chase (2.2%*) was a positive contributor to the Fund during the quarter. JPM was not only able to withstand the credit turmoil, it was able to participate in purchasing reasonable franchises — Bear Stears and Washington Mutual — at distressed prices. Citigroup (1.3%*) helped performance after the company took significant measures to address its problem loans and raise capital.

Which stocks detracted from performance?
Not surprisingly, energy companies gave back the previous quarter’s outperformance with a massive decline in the energy commodity sector. Chesapeake Energy (2.2%*), BG Group (2.0%*) and Baker Hughes* were detractors to the Fund’s performance. The Fund continues to hold many of these stocks because their underlying fundamentals are very strong and are priced attractively. I believe that as the companies continue to deliver cash flow and earnings, stock performance will recover. Another stock that hurt the Fund’s performance was Goldman Sachs*. During the last few weeks of the quarter, a loss of confidence in investment banks occured at an astonishing rate as regulators and Congress contemplated how to curb the liquidity crisis. Although Goldman Sachs posted a positive second quarter and a strong balance sheet just a day before, it did not deter investors’ aversion to investment banks. The stock declined dramatically in a massively chaotic environment. The Fund sold half of its position in an effort to manage risk. The stock stabilized only after the regulators allowed Goldman Sachs to change its charter to a bank and Berkshire Hathaway’s subsequent investment in the company.

What is your market outlook, particularly with respect to how it will impact your Fund?
The Women’s Equity Fund is positioned for near-term market stabilization with a gradual market recovery in 2009. I believe a concerted effort by the monetary authorities to re-liquefy around the global economies will likely help restore credit and markets. Domestically, concerns of an economic slowdown due to the credit freeze are at the front and center of investors’ fears. The Troubled Asset Relief Plan (TARP) passed by the House and the Senate along with the Global rate cuts might initiate a gradual thaw-out of the credit markets , which should help equity markets. The bill allows banks to sell their troubled assets at market prices, alleviating their balance sheet pressure. That said, my view is that the recovery will be a slow and long process. With continuing market dislocations and sluggish demand, we are likely to see lackluster corporate profit growth in the intermediate term. In this environment, I expect market returns to mirror corporate profits with no additional support derived from multiple expansions. The catalysts for growth and multiple expansions will be earnings visibility supported by stable economic and credit market expectations.

*Portfolio holdings as of 9/30/08. Holdings are subject to change. Baker Hughes and Goldman Sachs are currently not held by the Fund.

An investment in the fund involves risk, including loss of principal. Performance data quoted represents past performance, which does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Pax World Women’s Equity Fund, a series of Pax World Funds Series Trust I, acquired the Women’s Equity Fund on October 29, 2007. Performance information shown for periods prior to the acquisition is the performance of the Retail Class shares of the acquired Women’s Equity Fund, which has not been adjusted to reflect any differences in expenses between the acquired Women’s Equity Fund and the Pax World Women’s Equity Fund; if such expense adjustments were reflected, the returns would be higher than those shown. To obtain performance for the most recent month-end, click here. For standardized performance, click here.

Total annual Women’s Equity Fund operating expenses, gross of any fee waivers or reimbursements, are 1.79%. The Women’s Equity Fund’s investment adviser has contractually agreed to reimburse expenses (excluding Acquired Fund Fees and Expenses) allocable to Individual Investor Class shares of the Women’s Equity Fund to the extent such expenses exceed 1.24% of the average daily net assets of Individual Investor Class shares and Institutional Class shares, respectively, of the Women’s Equity Fund. This reimbursement arrangement will remain in effect until at least December 31, 2010.

The Russell 3000 Index measures the performance of the broad U.S. Equity universe, representing approximately 98% of the U.S. Equity market.

The Lipper Multi-Cap Core Funds Index tracks the results of the 30 largest mutual funds in the Lipper Multi- Cap Value Funds Average. The Lipper Multi-Cap Core Funds Average is a total return performance average of mutual funds tracked by Lipper, Inc. that invest in companies with a variety of market capitalization ranges without concentrating more than 75% in any one market capitalization range over an extended period of time. The Lipper Multi-Cap Core Funds Index is not what is typically considered to be an “index” because it tracks the performance of other mutual funds rather than changes in the value of a group of securities, a securities index or some other traditional economic indicator.

PAX000222  (2/09)