Our Mutual Funds

Manager Commentary

Portfolio Manager

Sujatha R. Avutu, CFA is Portfolio Manager of the Pax World Women's Equity Fund. Prior to joining the Adviser, she spent over eight years at Evergreen Investments, where she was Managing Director and lead Portfolio Manager for Evergreen Equity Income Fund. She has over fifteen years of investment management experience. Ms. Avutu received her Bachelor of Science degree from the University of Dayton with a concentration in Finance, and a Masters of Business Administration with concentrations in Finance and Management Information Systems from Miami University. She is a Chartered Financial Analyst and is a member of Boston Security Analyst Society and Boston Bank Analyst Society.

As of March 31, 2009

How did the Fund perform for the period?
For the three month period ended March 31, 2009, the Pax World Women’s Equity Fund returned -7.11%, outperforming the -10.80% return of the benchmark Russell 3000 Index¹.

What factors contributed to the Fund’s performance?
Stock selection, particularly in the financials and energy sectors, contributed significantly to the Fund’s relative outperformance, reversing the trend from the second half of 2008. Defensive sectors such as consumer staples and utilities hurt performance. These two sectors, to which many investors fled late last year, were used as a source of funds by many investors this quarter.

Can you discuss any significant changes in the Fund’s positioning throughout the period?
I increased the Fund’s health care weighting in the second half of 2008, which made it the largest overweight position this quarter. My thesis was that cash flow security is likely to be a catalyst for strong performance as investors’ appetite for risk continues to decrease. Increased mergers and acquisitions in the sector over the last few weeks in March raised the sector’s attractiveness — again reflective of strong cash flow and balance sheets.

The largest underweight sectors in the Fund currently are industrials and consumer staples, as commodity and cyclical stock earnings remain at risk from slowing global growth. And despite recent underperformance, relative valuations remain high. An underweighting in consumer staples reflects my view that the sector is in a challenged mode and is likely to be used as a source of funds by investors if the market moves downward. I believe that if a cyclical market rebound is approaching, consumer staples performance is likely to lag as investors, aiming to focus on recovering sectors, lock in gains.

Which stocks contributed positively to performance?
CME Group (2.7%*), Genentech* and Petrobras (2.0%*) were a few stocks that contributed most significantly to performance.

I believe that global futures and options exchange powerhouse CME will enable the Fund to capitalize on the current market disruption. The extreme volatility of the ongoing credit crisis is positive for CME business, as trading volumes tend to rise. In addition, efficient financial management and a strong emphasis on expense discipline is helping drive operating margins. Furthermore, CME boasts a solid balance sheet which is critical in this environment. Genentech is a biotechnology company focused on biotherapeutics that address significant unmet medical needs. On March 12th, an agreement was reached for Roche* to acquire the outstanding Genentech shares that it does not already own for $95/share and the merger was recently completed. Finally, Petrobras, a Brazilian-based integrated oil company, gained more than 20% year-to-date, reversing the prior three-month decline following the energy market swings.

Which stocks detracted from performance?
The largest detractors to performance for the quarter were ConocoPhillips (2.5%*), Veolia Environnement (1.2%*) and State Street Corp. (1.5%*). ConocoPhillips shares came under pressure earlier this year when the company announced a significant non-cash impairment charge from write-down of goodwill and a 20% ownership in Lukoil*, a Russian oil company investment. The company also announced a 16% cut in its 2009 capex budget from its previous guidance. While this is a negative in the near-term, I believe this balance sheet repair could prove positive for the future growth. Veolia, an environmental management services company, issued a profit warning late last year. While the near-term catalysts are hard to find, I believe in the long-term opportunity of global water theme, where Veolia is well-positioned. Finally, State Street is awaiting the FDIC’s capital adequacy report of the banks. The company’s core processing business continues to thrive during this market disruption and we expect that the capital improvement measures which the company put in place will improve the outlook going forward.

What is your market outlook, particularly with respect to how it will impact your Fund?
Earnings uncertainty and negative sentiment implies what I believe is a low probability of a sustained market rally in the medium term. During periods of economic slowdown, companies that can grow consistently become very scarce; as such they tend to be in higher demand. This is especially true for companies with strong balance sheets, an important criterion in our assessment of a company’s attractiveness. I believe that the Women’s Equity Fund is positioned defensively with a quality and valuation focus and that the Fund’s holdings’ operating margins, return on assets and valuations and balance sheet strength are considerably better than those of the Russell 3000 benchmark¹.

*Portfolio holdings as of 3/31/09. Holdings are subject to change. Genentech, Roche and Lukoil 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 1.82% for the Individual Class shares and 1.57% for the Institutional Class Shares . 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 0.99% of Institutional Class shares. This reimbursement arrangement will remain in effect until at least December 31, 2012.

¹The Russell 3000 Index measures the performance of the broad U.S. Equity universe, representing approximately 98% of the U.S. Equity market. Investors cannot invest directly in an index.