UNITED STATES | |
SECURITIES AND EXCHANGE COMMISSION | |
Washington, D.C. 20549 | |
SCHEDULE 14A | |
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. [ ]) | |
Filed by the Registrant [X] | |
Filed by a Party other than the Registrant [ ] | |
Check the appropriate box: | |
[X] | Preliminary Proxy Statement |
[ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
[ ] | Definitive Proxy Statement |
[ ] | Definitive Additional Materials |
[ ] | Soliciting Material Pursuant to §240.14a-12 |
PAX WORLD FUNDS SERIES TRUST III
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box): | |
[X] | No fee required. |
[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
(1) | Title of each class of securities to which transaction applies: | |
(2) | Aggregate number of securities to which transaction applies: | |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |
(4) | Proposed maximum aggregate value of transaction: | |
(5) | Total fee paid: | |
[ ] | Fee paid previously with preliminary materials. | |
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
(1) | Amount Previously Paid: | |
(2) | Form, Schedule or Registration Statement No.: | |
(3) | Filing Party: | |
(4) | Date Filed: | |
May [October 16, 2017]
Dear Fellow Shareholders,
Enclosed is a notice, proxy statement and proxy card for a Special Meeting of Pax World Funds Series Trust I (“Pax World Funds”Shareholders (the “Meeting”) andof the majority owner of Pax Ellevate Management LLC (“PEM”), the investment adviser to Pax Ellevate Global Women’s IndexLeadership Fund the only(the “Fund”), a series of Pax World Funds Series Trust III (GWI and, together with the Pax World Funds, the “Funds”), has entered into an agreement to be acquired by Impax Asset Management Ltd. (“Impax”) (the “Transaction), subject to certain customary closing conditions, including approval“Trust”). The Meeting is scheduled for [Wednesday, July 31, 2019]. If you are a shareholder of record of the investment advisoryFund as of the close of business on [May 15, 2019], you are entitled to vote at the Meeting, and sub-advisory agreements byany adjournment of the Meeting.
At the Meeting, shareholders of the Funds.
The reasonstransaction involves the sale by Ellevate Asset Management LLC, whose principal is Sallie Krawcheck, of its 49% ownership stake in PEM, which shares will be sold to Impax Asset Management LLC (“IAM”), which currently owns the remaining 51% of PEM. The occasion for the Transactionsale was a mutual agreement between the parties that the evolving nature of Sallie Krawcheck’s business endeavors focused on investing in women, including her current digital investment platform, Ellevest, are compelling. Impax,such that the avoidance of unnecessary complexity or the appearance of conflict suggest that the preferable and optimal way to structure the business relationship with PEM, and with the Fund, is through a UK-based firm with approximately $9 billion in AUM, is a leading independent investment manager specializing in opportunities arising from the transition to a more sustainable global economy. Pax and Impax have a heritage as pioneers in the field of sustainable investing and share very similar corporate cultures and values. In fact, Pax and Impax already have been working together successfully for morestrategic consulting relationship rather than a decade to manage GEM. The Transaction is supported by highly complementary areas of investment management expertise of Pax and Impax, our strong product and geographic fit, and our shared commitment to the principles and practice of sustainable investing.
The Transaction is not expected to have any material effect on the management or operation of the Funds. To highlight:
The Board of Trustees of Pax World Funds Series Trust III (the “Board”) has unanimously approved the New Advisory Agreement and recommends that you vote “FOR” the Proposal as described in the proxy statement.
Your vote is important to us. Please take a few minutes to review this proxy statement shareholders are being asked to approve new investment advisory and sub-advisory agreements because the Transaction may be deemed an “assignment” of the current agreements, resulting in the automatic termination of such agreements. Approval of the new investment advisory and sub-advisory agreements will allow the Funds to continue to receive investment advisory and sub-advisory services from their current investment adviser and sub-adviser, as applicable.
If we do not receive your vote promptly, you may be contacted by a representative of the Fund, who will remind you to vote your shares.
Thank you for your attention and consideration of this important Proposal and for your investment in the Fund. If you need additional information, please call the Fund’s proxy solicitor, Computershare Fund Services, toll-free at (888) 985-2050.
Sincerely,
/s/ Joseph F. Keefe
Joseph F. Keefe
President and Chief Executive Officer,
Pax World Funds and look forward to continuing to serve your sustainable investing needs.Series Trust III
President, Impax Asset Management LLC
/s/ Sallie Krawcheck
Sallie Krawcheck
Trustee, Pax World Funds Series Trust III
Chair, Pax Ellevate Management LLC
IMPORTANT NEWS FOR SHAREHOLDERS
While you should read the full text of the enclosed Proxy Statement, for your convenience here is a brief overview of the matters that require your vote as a shareholder of Pax World Funds Series Trust I (“Trust I”) and/or Pax World Funds Series Trust III (“Trust III” and, together with Trust I, the “Trusts”(the “Trust”).
Questions & Answers
Q. Why am I receiving this Proxy Statement?
A.
Q. In a nutshell, what am I being asked to approve?
A.
YouThe Transaction is not expected to have a material effect on the management of anythe Fund, or the investment strategy of the Fund, or the name of the Fund. Approval of the ProposalsProposal will allow the FundsFund to continue to receive investment advisory and sub-advisory services from theirits current investment adviseradviser. Ellevate’s decision to sell its minority stake in PEM to IAM, which is currently the majority owner of PEM, has been occasioned by changes in the parties’ respective business interests such that they mutually agreed that the best way to continue to work together in connection with the PEM and sub-adviser.
Q. How will the Transaction affect the Advisers?
A.
The Transaction is not expected to result in any changes in the management or operation of the investment advisory functions performed by theSince PEM’s formation in 2014, all officers and New Sub-Advisory Agreement, respectively.employees of PEM have also been officers and employees of IAM, and that is expected to continue to be the case after the Transaction. Consistent with previous no-action guidance from the staff of the Securities and Exchange Commission, following the Transaction, when PEM is a wholly-owned subsidiary of IAM, the Fund’s investment advisory agreement could be transferred from PEM to IAM upon notice to shareholders but without additional approval from shareholders, but there are no plans to do so at this time.
Q. How does the New Investment Advisory Agreement differ from mythe Fund’s Current Advisory Agreement?
A. The New Advisory Agreement is identical to the Fund’s Current Advisory Agreement, except for the date of effectiveness.
Q. Will mythe Fund’s total advisory feesfee rates change?
A.
The rate of advisory fees thatQ. Will mythe Fund’s total expenses change?
A.
The Transaction is not expected to result in any change inQ. How do the Trustees suggest that I vote?
A.
After carefully reviewingQ. When is the Meeting?
A.
The enclosed proxy is being solicited for use at theQ. Who is paying for the proxy solicitation, legal and legalother costs associated with this solicitation?
A.
Q. Will my vote make a difference?
A.
Yes. Your vote is needed to ensure that theQ. What vote is required to approve the Proposals?
A.
Q. How do I place my vote?
A.
You can vote in any one of four ways:• Over the Internet via the website listed on your proxy card;
• By telephone, with a toll-free call to the number listed on your proxy card;
• By mail, by sending the enclosed proxy card, signed and dated, to us in the enclosed envelope; or
• In person, by attending the Meeting.
We encourage you to vote, following the instructions that appear on your proxy card. Whichever method you choose, please take the time to read the full text of the Proxy Statement before you vote.
Q. If I send my proxy in now as requested, can I change my vote later?
A.
You may revoke your proxy at any time before it is voted by: (1) sending a written revocation to the Secretary of theQ. Whom should I call for additional information about this Proxy Statement?
A.
We will be happy to answer your questions about this proxy solicitation. Please call Computershare, thePROMPT EXECUTION AND RETURN OF YOUR PROXY CARD IS REQUESTED. INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE ARE INCLUDED, SHOULD YOU PREFER TO VOTE BY ONE OF THOSE METHODS.
PAX WORLD FUNDS SERIES TRUST III (the “Trust”), on behalf of its series:
Pax Ellevate Global Women’s IndexLeadership Fund
30 Penhallow Street, Suite 400
Portsmouth, New Hampshire 03801
NOTICE OF A JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 2017
NOTICE IS HEREBY GIVEN that a Joint Special Meeting of Shareholders (the “Meeting”) will be held on December 19, 2017[July 31, 2019] at 3:[3:00 P.M.] Eastern Time, at the offices of the TrustsTrust at 30 Penhallow Street, Suite 400, Portsmouth, New Hampshire 03801 for the purpose of considering the proposals (each a “Proposal” and collectively, the “Proposals”).following proposal. In addition, shareholders may be asked to consider and act upon other matters which may properly come before the Meeting or any adjournment thereof.
1. |
In eachthe Proposal, Fund shareholders are asked to approve a new agreementthe New Advisory Agreement with the Funds’Fund’s current investment adviser or sub-adviser, as applicable,(PEM) with the same advisory fee rate and on identical terms to those of the Funds’Fund’s current agreement, except for the date of effectiveness. Under applicable law, the purchase by Impax Asset Management Ltd. of a majorityLLC of the ownership interests currently held by Ellevate Asset Management LLC in PWM,PEM, the investment adviser to the Trust I Funds and a controlling shareholder of PEM, the investment adviser to GWI,Fund, the only series of the Trust III Fund (the “Transaction”), may be deemed to be an “assignment” of eachthe Fund’s current investment advisory and sub-advisory agreements, as applicable,agreement, resulting in the automatic termination of such agreements.agreement. The Transaction is not expected to have a material effect on the management or operation of eitherthe Trust or the Fund(s) within that Trust.Fund. Approval of the ProposalsProposal will allow the FundsFund to continue to receive investment advisory and sub-advisory services from theirPEM, its current investment adviser and sub-adviser, as applicable.adviser. Shareholders of eachthe Fund will vote together as a single class.
All Shareholders are cordially invited to attend the Meeting. However, if you are unable to attend the Meeting, you are requested to mark, sign and date the enclosed proxy card and return it promptly in the enclosed, postage-paid envelope so that the Meeting may be held and a maximum number of shares may be voted. In addition,Alternatively, you can vote easily and quickly by Internet, by telephone or in person. Your vote is important no matter how many shares you own. You may change your vote even though a proxy has already been returned by providing written notice to the Trust, by submitting a subsequent proxy using the mail, by Internet, by telephone or by voting in person at the Meeting.
Shareholders of record as of the close of business on September 29, 2017May 15, 2019 (the “Record Date”) are entitled to notice of and to vote at the Meeting and any adjournment of the Meeting.
The Proposal is described in the Proxy Statement. Please read it carefully.
The persons named as proxies will vote in their discretion on any other business that may properly come before the Meeting or any adjournment thereof.
The Trustees unanimously recommend that you vote “FOR” all of the Proposals.
By Order of the Board of Trustees | ||
/s/ JOSEPH F. KEEFE | ||
Joseph F. Keefe | ||
Chief Executive Officer Pax World Funds Series Trust III |
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED OR RECORD YOUR VOTING INSTRUCTIONS BY TELEPHONE OR OVER THE INTERNET SO THAT YOU WILL BE REPRESENTED AT THE MEETING.
TABLE OF CONTENTS
BOARD CONSIDERATIONS IN APPROVING THE NEW ADVISORY | |
OTHER INFORMATION | |
EXHIBIT A INFORMATION REGARDING CURRENT ADVISORY | A-1 |
EXHIBIT B FORM OF NEW ADVISORY | B-1 |
EXHIBIT C BOARD OF TRUSTEES’ CONSIDERATION OF THE CURRENT ADVISORY | C-1 |
EXHIBIT D | D-1 |
EXHIBIT E | |
PAX WORLD FUNDS SERIES TRUST III, on behalf of its series:
Pax Ellevate Global Women’s IndexLeadership Fund
30 Penhallow Street, Suite 400
Portsmouth, New Hampshire 03801
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
[July 31, 2019]
This Proxy Statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Trustees (the “Board”) of each of Pax World Funds Series Trust I (“Trust I”) and Pax World Funds Series Trust III (“Trust III” and, together with Trust I, the “Trusts”(the “Trust”) for use at the joint special meeting of the shareholders of the series of each Trust (each aPax Ellevate Global Women’s Leadership Fund (the “Fund” and collectively, the “Funds”) (the “Meeting”) to be held on December 19, 2017[July 31, 2019] at 3:00[3:00] P.M. Eastern Time, at the offices of the TrustsTrust at 30 Penhallow Street, Suite 400, Portsmouth, New Hampshire 03801, and at any adjournment thereof, for the purposes set forth in the accompanying Notice of a Joint Special Meeting of Shareholders (the “Notice”). The Notice, this Proxy Statement and the enclosed proxy card are first being mailed, or otherwise being made available, to shareholders on or about October 16, 2017.[June 14, 2019]. Please read this Proxy Statement and keep it for future reference.
The Meeting has been called for the purpose of having the shareholders of each Trustthe Fund consider and take action upon the proposalsproposal listed in the Notice (each a(the “Proposal” and collectively, the “Proposals”). This Proxy Statement contains information you should know before voting on the Proposals.Proposal. As described in greater detail below, this Proxy Statement asks you to consider and vote on certain Proposalsa Proposal in connection with the purchase by Impax Asset Management Ltd. (“Impax”) of a majority of the ownership interests in Pax World Management LLC (“PWM”IAM”), the investment adviser to the Trust I Funds andcurrently a controlling shareholder of Pax Ellevate Management LLC (“PEM” and, together with PWM,or the “Advisers”“Adviser”), of the interests in PEM currently held by Ellevate Asset Management LLC (“Ellevate”) (the “Transaction”). PEM is the investment adviser to Pax Ellevate Global Women’s IndexLeadership Fund (“GWI”(the “Fund”), the only Trust III Fund.series of the Trust. In addition, shareholders may be asked to consider and act upon other matters which may properly come before the Meeting or any adjournment thereof. References herein to the “Board” and the “Trustees” shall refer to the relevant Board and its members, unless otherwise indicated.
The following Proposal is a list of the Proposals presented in this Proxy StatementStatement: to approve a new investment advisory agreement between Pax Ellevate Management LLC and the Funds that are affected by such Proposals:
Shareholders of eachthe Fund will vote together as a single class.
Timely, properly-executed proxies will be voted as you instruct. If no specification is made with respect to athe Proposal, shares will be voted in accordance with the recommendation of the Trustees as to thatthe Proposal. The solicitation is being made primarily by the mailing of this Proxy Statement and the accompanying proxy card. Supplemental solicitations of proxies may be made by personal interview, mail, telephone, facsimile or e-mail by officers and Trustees of yourthe Fund, officers and employees of PWMPEM and other representatives of yourthe Fund (who will receive no compensation therefor in addition to their regular compensation). In addition, Computershare Inc., operating under the name of Computershare Fund Services (“Computershare”), has been retained to assist in the solicitation of proxies of shareholders of the TrustsTrust at a cost that is not expected to exceed $343,392,approximately $[30,000], although actual costs may be substantially higher. PWM and ImpaxPEM will bear the costs incurred in connection with the solicitation of proxies, the costs of holding the Meeting, and other expenses associated with obtaining the approval of the Funds’Fund’s shareholders.
A copy of eachthe Trust’s semi-annual and annual reports may be obtained, without charge, by writing to PWMPEM at 30 Penhallow Street, Suite 400, Portsmouth, New Hampshire 03801, telephoning PWMPEM at 800-767-1729 (toll-free), visiting the PWMFund’s website at www.paxworld.com or visiting the Securities and Exchange Commission’s website at www.sec.gov.
Shareholders of record as of the close of business on September 29, 2017May 15, 2019 (the “Record Date”) are entitled to receive notice of, and to vote at, the Meeting or any adjournment thereof. Shareholders of athe Fund on the Record Date shall be entitled to one vote for each whole share held as to any matter on which they are entitled to vote, and each fractional share shall be entitled to a proportionate fractional vote.
PROPOSAL: APPROVAL OF NEW ADVISORY AGREEMENTS
The Board has approved, and is recommending to shareholders of eachthe Fund that they approve Proposals 1 and 2the Proposal relating to the new investment advisory agreement between PWMPEM and the Trust, I, on behalf of each Trust Ithe Fund and PEM and Trust III, on behalf of GWI, the only Trust III Fund, respectively (the “New Advisory Agreements”Agreement”).
Information Regarding the Transaction
The approval of the New Advisory AgreementsAgreement is required as a result of an anticipated changeschange to the ownership of PWM and PEM. As announced on September 18, 2017, Impax has entered into an agreement to acquire a majority of the ownership interests in PWM, the investment adviser to the Trust I Funds (the “Transaction”). Upon consummation of the Transaction, Impax willPEM, which could be presumed, and likely deemed to “control” PWM. In addition, because more than half of PEM’s ownership interest is currently owned by PWM, the Transaction also will result in Impax being presumed,an “assignment” and likely deemed, to control PEM. Accordingly, the Transaction will result in the “assignment”termination of each of the current investment advisory agreement between PWM and Trust I, on behalf of each Trust I Fund (the “Current Trust I Advisory Agreement”), and the current investment advisory agreement between PEM and the Trust, III, on behalf of GWIthe Fund (the “Current Trust III Advisory Agreement” and, together with). [As announced on May [ ], 2019], under the Current Trust I Advisoryterms of PEM’s LLC Agreement, Ellevate Asset Management LLC, whose principal is Sallie Krawcheck, is selling its 49% ownership stake in PEM to Impax Asset Management LLC (“IAM”), which currently owns the “Current Advisory Agreements”remaining 51% of PEM (the “Transaction”). Upon consummationthe closing (the “Closing”) of the Transaction, itPEM will become a wholly-owned subsidiary of IAM.
The occasion for the sale was a mutual agreement between the parties that the evolving nature of Sallie Krawcheck’s business endeavors focused on investing in women, including her current digital investment platform, Ellevest, are such that the avoidance of unnecessary complexity or the appearance of conflict suggest that the preferable and optimal way to structure the business relationship with PEM, and with the Fund, is also expected that PWMthrough a strategic consulting relationship rather than an ownership interest. As indicated above, upon the Closing, Ellevate will change its name from “Pax World Management LLC”no longer be deemed, and IAM will continue to “Impax Investment Management (US) LLC.”
Under the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations thereunder, an investment advisory agreement terminates automatically in the event of its assignment. Therefore, yourthe Fund’s Current Advisory Agreement is expected to terminate upon consummation of the Transaction. Accordingly, you are being asked to approve athe New Advisory Agreement with respect to your Fund(s)the Fund to be effective upon shareholder approval and consummation of the Transaction (regardless of the order in which those events occur, although it is expected that the Meeting will take place prior to consummation of the Transaction). Such approval will enable the AdvisersAdviser to continue to provide investment advisory services to the FundsFund without interruption. If the New Advisory Agreements areAgreement is approved, theyit will continue through December 19, 2019for an initial two-year term and for subsequent one-year terms thereafter so long as that continuance is approved in a manner consistent with the 1940 Act. If the New Advisory Agreements areAgreement is not approved, for a Fund, the Board will evaluate other short- and long-term options permitted by law, which may include relying on an interim investment advisory agreement of limited duration for thatthe Fund.
The Transaction is not expected to have a material effect on the management or operations of any Fund.
Information Regarding the Advisers
PEM, 30 Penhallow Street, Suite 400, Portsmouth, NH, 03801, is the investment adviser to the Trust I Funds. PWM is a limited liability company organized under the laws of Delaware. As of December 31, 2016, PWM had approximately $4.2 billion in assets under management. PWM succeeded to the business of PWM Corp. on January 1, 2010. PWM Corp., 2 Duck Pond Road, Alpine, NJ 07620, was originally organized in 1970 and currently owns 75% of PWM’s ownership interests. As a result, PWM Corp. may be deemed to “control” PWM. All of the capital stock of PWM Corp. is currently owned by members of the Shadek family.
Current Advisory Agreements
The Current Advisory Agreements are between PWM and Trust I, on behalf of the Trust I Funds, andAgreement is between PEM and the Trust, III, on behalf of GWI.the Fund. The Current Advisory Agreements wereAgreement was most recently approved by the relevant Board at a meeting held on June 7-8, 2017.[June 7, 2018]. The date of eachthe Current Advisory Agreement and the date on which it was last approved by shareholders are provided at Exhibit A.
Comparison of the Current Advisory AgreementsAgreement and the New Advisory Agreements
The advisory fee rate and terms of the New Advisory Agreement for each Trust are identical to those of the Current Advisory Agreement, for each Trust, except for the date of effectiveness.
Services.
Compensation.
In return for services rendered pursuant to the terms of the investment advisoryLimitation of Liability.
In the absence of willful misfeasance, bad faith or gross negligence on the part ofTermination. The Current Advisory Agreements were originally effective upon their execution and remained in full force and effect continuously thereafter. As described above, the New Advisory Agreements will be effective upon shareholder approval and consummation of the Transaction (regardless of the order in which those events occur, although it is expected that the Meeting will take place prior to consummation of the Transaction). The New Advisory Agreements will have an initial term of two years and may be continued for successive one-year periods thereafter if approved at least annually in the manner required by the 1940 Act and the rules and regulations thereunder.
Approval of New Advisory AgreementsAgreement by the Board
At an in-person meeting of the Board held on September 20, 2017,May 7, 2019, at which a majority of Trustees, including a majority of Independent Trustees, were present, the Board considered and unanimously approved the New Advisory Agreements.Agreement. On the basis of the considerations discussed below, the Board unanimously concluded that the approval of the New Advisory Agreements would be in the best interests of each Fund.
The Board is recommending to shareholders of GEMthe Fund that they approve the New Sub-AdvisoryAdvisory Agreement. The New Sub-AdvisoryAdvisory Agreement would be effective upon shareholder approval and the consummation of the Transaction.
The Board of Trustees recommends that shareholders vote “FOR” Proposal 3.
BOARD CONSIDERATIONS IN APPROVING THE NEW ADVISORY AGREEMENTS AND
At a meeting held on September 20, 2017,May 7, 2019, the Trustees, including a majority of the Independent Trustees, approved the New Advisory AgreementsAgreement and recommended that shareholders of the FundsFund approve the New Advisory Agreements. Also at the September Meeting, the Trustees, including a majority of the Independent Trustees, approved the New Sub-Advisory Agreement and recommended that shareholders of GEM approve the New Sub-Advisory Agreement (together with the New Advisory Agreements, the “New Agreements”).Agreement. The Trustees took such actions after discussion among themselves and with representatives of the AdvisersAdviser and ImpaxIAM of the information provided to them by the AdvisersAdviser and ImpaxIAM in connection with the Transaction at meetings held on May 25, 2017, June 6, 2017 and September 13-14, 2017.Transaction. The Independent Trustees were assisted in their evaluation of the New AgreementsAdvisory Agreement by independent legal counsel, from whom they received assistance and advice, including a review of the legal standards applicable to the consideration of advisory arrangements, and with whom they met separately from management.
The Trustees noted that the Transaction is structured as a purchase by ImpaxIAM of a majorityall of the ownership interests in PWM.PEM. The Trustees, including the Independent Trustees, considered that the Transaction may be deemed to be an “assignment” of the Current Advisory Agreements and the Current Sub-Advisory Agreement, (together, the “Current Agreements”), resulting in the automatic termination of such agreementsagreement under the 1940 Act upon the closing of the Transaction. The Trustees considered that the New AgreementsAdvisory Agreement would permit the Advisers and ImpaxAdviser to continue to provide the same services to the FundsFund that theyit currently provide,provides, on the same terms, following the Transaction. The Trustees further considered management’s representation that the Transaction is not expected to have a material effect on the management of anythe Fund.
The Trustees, including the Independent Trustees, considered the potential impact of the Transaction on PWM,PEM, noting that PWM and Impax share a similar corporate culture and commitment to sustainable investing, and have a long history of working together on GEM.PEM currently is 51% owned by IAM. The Trustees also considered the Transaction’s potential impact on the operations, personnel, organizational structure, capitalization and financial and other resources of the AdvisersAdviser and Impax.IAM, noting that presently, all officers and employees of PEM are also officers and employees of IAM, and it is expected that will remain the case after the Transaction. The Trustees considered statements made by representatives of the AdvisersAdviser and ImpaxIAM as to their expectations regarding the continuity of, and any anticipated changes to, the Advisers’Adviser’s personnel following the Transaction, including Christopher Brown’s stated intention to retire from PWM effective December 31, 1017.Transaction. The Trustees considered the expected benefits to the FundsFund from the Transaction, including potential access to additional resources in investment management, research, operations, compliance, information technology, financial management, marketing and distribution. The Trustees noted that the Transaction may better position the Advisers to attract institutional clients, which may ultimately benefit Fund shareholders by enabling PWM to further deepen its research and investment management resources.Transaction. The Trustees also considered that PWM and Impax havePEM had agreed to bear all costs associated with the Transaction, including the costs of obtaining shareholder approval of the New Agreements.
The Trustees, including the Independent Trustees, noted that the Transaction is not expected to cause any reduction in the nature, extent or quality of services now provided to any of the FundsFund or to have any adverse effect on the Advisers’ or Impax’sAdviser’s ability to fulfill theirits obligations to the FundsFund under the New Advisory Agreements and the New Sub-Advisory Agreement, respectively.Agreement. The Trustees concluded that providing for the continued management of the FundsFund by the Advisers and Impax, as applicable,Adviser following the Transaction would benefit the Funds.
The Trustees, including the Independent Trustees, also took into account their deliberations and conclusions in connection with their recent approval of the Current Agreements,Advisory Agreement, including with respect to (i) the nature, extent and quality of the Advisers’ and Impax’sAdviser’s services; (ii) the investment performance of eachthe Fund; (iii) the advisory fees paid by eachthe Fund to the relevant Adviser and the sub-advisory fee paid by PWM to Impax relative to eachthe Fund’s Broadridge peer group (or, for GEM, relative to a peer group identified by PWM as emphasizing clean technology investments);group; (iv) the costs of the services provided by eachthe Adviser and the estimated profitability of eachthe Adviser’s relationship with the relevant Trust; (v) the direct and indirect benefits to PWM and ImpaxPEM from their relationshipsits relationship with the respective Funds,Fund, including reputational and other “fall out” benefits; and (vi) the extent to which the Advisers and Impax, as applicable,Adviser may realize economies of scale or other efficiencies in managing and supporting the Funds.Fund. The Trustees noted that they had approved the continuation of the Current AgreementsAdvisory Agreement for the FundsFund at their June 7-8, 20177 meeting (the “June Meeting”), after evaluating materials provided in connection with the contract review process at their March and June 20172018 meetings. Appendix C contains a further description of the process followed, information reviewed and material factors considered by the Trustees in approving the continuation of the Current AgreementsAdvisory Agreement at the June Meeting.
Based on the foregoing and other relevant considerations, the Trustees, including a majority of the Independent Trustees, voted to approve the New Advisory AgreementsAgreement and to recommend approval of the New Advisory AgreementsAgreement by shareholders of the Funds. The Trustees, including a majority of the Independent Trustees, also voted to approve the New Sub-Advisory Agreement and to recommend approval of the New Sub-Advisory Agreement by shareholders of GEM.Fund. Based on their evaluation of factors that they deemed to be material, including those factors described above, the Trustees, including the Independent Trustees, unanimously concluded that approval of the New AgreementsAdvisory Agreement would be in the best interests of shareholders of eachthe Fund.
OTHER INFORMATION
Information About Other Service Providers
ALPS Distributors, Inc., 1290 Broadway, Suite 1100, Denver, Colorado 80203 (the “Distributor”), serves as the principal underwriter of the Funds’Fund’s shares pursuant to a distribution contract with eachthe Trust. The Distributor has no obligation to buy the Fund’s shares, and purchases the Fund’s shares only upon receipt of orders from authorized financial services firms or investors.
Affiliated Brokerage
The Funds haveFund has no Affiliated Brokers and therefore did not pay any commissions to Affiliated Brokers (i.e., a broker that is an affiliated person of the Fund; that is an affiliated person of such person; or an affiliated person of which is an affiliated person of the Fund or athe Fund’s investment adviser or principal underwriter) during the fiscal year ended December 31, 2016.2018.
Section 15(f) of the 1940 Act
Section 15(f) of the 1940 Act provides a non-exclusive "safe harbor" under which an investment adviser to a registered investment company or an affiliated person of such an investment adviser may receive any amount or benefit in connection with a sale of securities or any other interest in such adviser which results in an assignment of an investment advisory contract with such company if (i) for a period of three years following such assignment, a majority of the board of trustees of such company are not interested persons of the investment adviser of such company or the predecessor adviser of such company and (ii) no "unfair burden" is imposed on such company as a result of such assignment or any express or implied terms, conditions or understandings applicable thereto.
Payment of Expenses
PEM will be responsible for the costs of the Meeting and any adjourned or postponed session, including the costs of retaining Computershare, preparing and mailing the notice, proxy statement, and proxy, and the solicitation of proxies, including reimbursement to broker-dealers and others who forwarded proxy materials to their clients.
Outstanding Shares and Beneficial Ownership of Shares
All shareholders of record as of the Record Date are entitled to one vote for each share held on that date and to fractional votes for any fractional shares held on that date. The table at Exhibit ED lists for each Fund the total number of shares outstanding as of the Record Date, for each class of athe Fund’s shares entitled to vote at the Meeting.
The table in Exhibit FE lists each holder of more than 5% of any class of shares of eachthe Fund as of the Record Date. The Trustees and officers of the Trusts,Trust, together as a group, beneficially owned less than 1% of the outstanding shares of any class of shares of athe Fund as of December 31, 2016.
Annual and Semi-Annual Report to Shareholders
For a free copy of the Funds’Fund’s annual report for the fiscal year ended December 31, 20162018 or the Funds’Fund’s semi-annual report for the six-month period ended June 30, 2017,2018, shareholders may call (800) 372-7827,767-1729, write to the FundsFund at: P.O. Box 9824, Providence, RI 02940-8024, or visit the Funds’Fund’s website at www.paxworld.com.
Submission of Shareholder Proposals
The Trusts areTrust is organized as an open-end management investment companiescompany under the laws of the Commonwealth of Massachusetts. As such, the Trusts areTrust is not required to, and dodoes not, hold annual meetings. Nonetheless, the Board may call a special meeting of shareholders for action by shareholder vote as may be required by the 1940 Act or as required or permitted by the Declaration of Trust and By-Laws of eachthe Trust. Shareholders of the FundsFund who wish to present a proposal for action at a future meeting should submit a written proposal to the Trust for inclusion in a future proxy statement. Submission of a proposal does not necessarily mean that such proposal will be included in athe Fund’s proxy statement since inclusion in the proxy statement is subject to compliance with certain federal regulations. Shareholders retain the right to request that a meeting of the shareholders be held for the purpose of considering matters requiring shareholder approval.
Required Vote
To be approved, with respect to a particular Fund, eachthe Proposal must be approved by the affirmative “vote of a majority of the outstanding voting securities” of thatthe Fund. The “vote of a majority of the outstanding voting securities” is defined in the 1940 Act as the affirmative vote of the lesser of (i) 67% or more of the voting securities of a Fund entitled to vote on the proposal present at the Meeting or represented by proxy, if more than 50% of the Fund’s outstanding voting securities are present or represented by proxy; or (ii) more than 50% of the outstanding voting securities of the Fund entitled to vote on the proposal. Shareholders of eachthe Fund vote together as a single class. The approval of Proposal 3 by shareholders of GEM is not contingent upon the approval of Proposal 1 as it relates to GEM. If the shareholders of athe Fund do not approve the New Advisory Agreements or the New Sub-Advisory Agreement, with respect to that Fund, the Board will take such further action with respect to that Fund as they may deem to be in the interest of the Fund.
Voting and Other Matters
If you wish to participate in the Meeting, you may submit the proxy card included with this proxy statement or attend in person. Your vote is important no matter how many shares you own. You can vote easily and quickly by mail, by Internet, by telephone or in person. At any time before the Meeting, you may change your vote, even though a proxy has already been returned, by written notice to the relevant Trust or by submitting a subsequent proxy, by mail, by Internet, by telephone or by voting in person at the Meeting. Should shareholders require additional information regarding the proxy or replacement proxy cards, they may contact the proxy solicitor, Computershare, toll-free at [(XXX) XXX-XXXX].(888) 985-2050. The solicitation of proxies will be largely by mail, but may include telephonic, Internet or oral communication by officers and service providers of the Trusts,Trust, who will receive no compensation therefor in addition to their regular compensation for these services. The costs of the solicitation of proxies and the costs of holding the Meeting will be borne by PWM and Impax.PEM. All proxy cards solicited that are properly executed and received in time to be voted at the Meeting will be voted at the Meeting or any adjournment thereof according to the instructions on the proxy card.If no specification is made on an executed proxy card, it will be voted FOR the matters specified on the proxy card.
If your shares are held of record by a broker-dealer and you wish to vote in person at the Meeting, you should obtain a legal proxy from your broker of record and present it to the inspector of elections at the Meeting. Thirty percent (30%) of the shares of athe Fund or the Trust as a whole entitled to vote constitutes a quorum of athe Fund or the Trust as a whole, respectively.
For purposes of determining the presence of a quorum, abstentions or “broker non-votes” (i.e., shares held of record by a financial intermediary, such as a broker, or nominee, typically in “street name,” as to which proxies have been returned but (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter) will be counted as present. A quorum of shareholders of athe Fund is required to take action at the Meeting on Proposals affecting such Fund.
If a quorum is not present at the Meeting, or if a quorum is present at the Meeting but sufficient votes to approve athe Proposal are not received, or if other matters arise requiring shareholder attention, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. A shareholder vote may be taken on one or more of the Proposals referred to above prior to such adjournment if sufficient votes have been received and it is otherwise appropriate. Any adjournment will require the affirmative vote of a majority of those shares present at the Meeting or represented by proxy, whether or not a quorum is present. The persons named as proxies will vote those proxies that they are entitled to vote FOR suchthe Proposal in favor of such an adjournment, and will vote those proxies required to be voted AGAINST suchthe Proposal, against such an adjournment. PWM and ImpaxPEM will bear the cost of any additional solicitation or any adjourned sessions.
For all matters to be voted upon, an abstention or broker non-vote will not be considered a vote cast. Abstentions and broker non-votes will have the same effect as a vote against the Proposals in respect of each Fund entitled to vote thereon.
No business other than the matters described above are expected to come before the Meeting, but should any matter incident to the conduct of the Meeting or any question as to an adjournment of the Meeting arise, the persons named in the enclosed proxy will vote thereon according to their best judgment.
Communications to the BoardsBoard of Trustees may be addressed to the relevant Trust as follows: Board of Trustees, c/o John L. Liechty, Chairman of the Board, 30 Penhallow Street, Suite 400, Portsmouth, NH 03801; communications to an individual Trustee may be addressed to such member, 30 Penhallow Street, Suite 400, Portsmouth, NH 03801. A copy of all communications addressed to the Board of Trustees as a whole shall be provided to each member of the Board of Trustees. EachThe Trust reserves the right to amend this policy at any time and from time to time without prior notice to the shareholders.
Shareholders Sharing the Same Address
As permitted by law, only one copy of this Proxy Statement may be delivered to shareholders residing at the same address, unless such shareholders have notified the TrustsTrust of their desire to receive multiple copies of the shareholder reports and proxy statements that the Trusts send.Trust sends. If you would like to receive an additional copy, please contact Computershare by calling toll-free at[(XXX) XXX-XXXX](888) 985-2050or send your request to Computershare at [P.O.P.O. Box 43078, Providence, RI 02940-3078].02940-3078. The TrustsTrust will then promptly deliver, upon request, a separate copy of this Proxy Statement to any shareholder residing at an address to which only one copy was mailed. Shareholders wishing to receive separate copies of the Trusts’Trust’s shareholder reports and proxy statements in the future, and shareholders sharing an address that wish to receive a single copy if they are receiving multiple copies, should also make a request as indicated.
Principal Executive Officers and Directors
The following table sets forth the name and principal occupation of PWM’s and PEM’s principal executive officers and directors as well as each officer or Trustee of the FundsFund who is an officer, employee, director or shareholder of each of PWM and PEM. Certain of PWM’sPEM’s principal executive officers also serve as Trustees or officers of the Trusts.Trust. The business address of each such officer and/or director of each of PWM and PEM is 30 Penhallow Street, Suite 400, Portsmouth, NH 03801.
Name | Position(s) Held With the Trust; Term of Office; and Length of Time Served | Principal Occupation(s) During Past Five Years and Other Directorships Held by Officer/Director |
Chief Executive Officer (2005-present) and President (2006-present) of | ||
Sallie Krawcheck1 | Chair of PEM (2014-present); Chief Executive Officer of Ellevest (2016-present); Owner, Ellevate Network (2013-present); Director, 2U President, Bank of America Wealth Management (2009-2011); Chief Executive Officer, Citi Wealth Management (2007-2008); Chief Financial Officer, Citi (2005-2007); Chief Executive Officer, Smith Barney (2002-2005); Chief Executive Officer, Sanford C. Bernstein & Co. (2001-2002). | |
John Boese | Chief Compliance Officer of | |
Maureen Conley | Senior Vice President of Shareholder Services/Operations (2005-present) for | |
Alicia K. DuBois | Chief Financial Officer for | |
Robert Silva | Director of Fund Administration for |
1 | Upon consummation of the Transaction, |
The following table sets forth the name and principal occupation of Impax’sIAM’s principal executive officers and directors. The business address of each such officer and/or director of ImpaxIAM is Norfolk House, 31 St. James’s Square, London, SW1Y 4JR, United Kingdom.30 Penhallow Street, Suite 400, Portsmouth, NH 03801.
Name | Five Years and Other Directorships Held |
Ian Simm | Board Member of IAM (2018-present); Chief Executive of Impax Asset Management Group plc (2005-present); Member of the Board of Impax Asset Management Group plc (2001-present), Impax Asset Management Ltd. (1998-present) and Impax Asset Management (AIFM) Ltd. (2013 - present); member of the board of the Natural Environment Research Council (2013-2018); member of the Steering Committee of the UK's Green Finance Institute (2018-present). |
Charlie Ridge | Board Member of IAM (2018-present); Chief Financial Officer of Impax Asset Management Group plc (2010-present); Member of the Board of Impax Asset Management Ltd. (2009-present) and Impax Asset Management (AIFM) Ltd. (2013 - present). |
Maureen Conley | Senior Vice President of Shareholder Services/Operations (2005-present) for IAM and for PEM (2014-present); Secretary of Pax World Funds Trust II (2008-2014). |
Alicia K. DuBois | Chief Financial Officer for IAM (2006-present) and for PEM (2014-present); Treasurer for Pax World Funds Trust II (2008-2014). |
Robert Silva | Director of |
EXHIBIT A
INFORMATION REGARDING CURRENT ADVISORY AGREEMENTS
Fund Name | Date of Agreement | Date of Last Shareholder Approval | Purpose of Submission to Shareholders |
Pax Ellevate Global Women’s | November 29, 2017 | Initial Approval |
The Funds payFund pays an advisory fee to their respectivethe Adviser at the following annual ratesrate (expressed as a percentage of the average daily net assets of suchthe Fund). The following table also shows the advisory fee paid to the Advisers by each Fund, after giving effect to any reimbursement or waiverAdviser by the Advisers, as applicable,Fund for the year ended December 31, 2016.
Fund | Annual Rate | Aggregate Advisory Fees Paid |
Pax Large Cap Fund1 | 0.65% | $283,565 |
Pax Mid Cap Fund1 | 0.75% | $938,887 |
Pax Small Cap Fund | 0.75% | $4,765,306 |
Pax ESG Beta Quality Fund2 | 0.65%* | $1,384,180 |
Pax ESG Beta Dividend Fund1 | 0.65%* | $49,002 |
Pax MSCI EAFE ESG Leaders Index Fund | 0.55%* | $2,574,091 |
Pax Global Women’s Index Fund | 0.65%* | $645,392 |
Pax Global Environmental Markets Fund3 | 0.80% | $2,550,303 |
Pax Core Bond Fund1 | 0.40% | $130,828 |
Pax High Yield Bond Fund | 0.50% | $1,974,071 |
Pax Balanced Fund4 | 0.05%* | $7,116,806 |
Fund | Annual Rate | Aggregate Advisory Fees Paid |
Pax Ellevate Global Women’s Leadership Fund | 0.55%* | $1,325,032 |
* | The management fee is a unified fee that includes all of the operating costs and expenses of the Fund (other than taxes, charges of governmental agencies, interest, brokerage commissions incurred in connection with portfolio transactions, distribution and/or service fees payable under a plan pursuant to Rule 12b-1 under the Investment Company Act of 1940, acquired fund fees and expenses and extraordinary expenses), including accounting expenses, administrator, transfer agent and custodian fees, legal fees and other expenses. |
EXHIBIT B
FORM OF NEW ADVISORY AGREEMENTS
INVESTMENT ADVISORY CONTRACT FOR TRUST I
Investment Advisory Contract (this "Contract") dated as of _____ between PAX WORLD FUNDS SERIES TRUST I, a Massachusetts business trust (the “Trust”), and PAX WORLD MANAGEMENT LLC, a Delaware limited liability company (the “Manager”).
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
1. | SERVICES TO BE RENDERED BY THE MANAGER. |
(a)
The Manager, at its expense, will furnish continuously an investment program for the Fund, will determine what investments shall be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund shall be held uninvested and will, on behalf the Fund, make changes in such investments. Subject always to the control of the trustees of the Trust (collectively, the "Trustees"), the Manager will also manage, supervise and conduct the other affairs and business of the Fund, and matters incidental thereto. In the performance of its duties, the Manager will comply with the provisions of applicable law, the Agreement and Declaration of Trust and Bylaws of the Trust and the stated investment objectives and policies of the Fund, and will use its best efforts to safeguard and promote the welfare of the Fund and to comply with other policies which the Trustees may from time to time determine and shall exercise the same care and diligence expected of the Trustees.(b)
The Manager shall pay all of the operating costs and expenses of the Fund (other than those described in Section 1(d) below, which shall be paid by the Trust), including but not limited to custodian fees, transfer agent fees, administrative fees and expenses, accounting expenses, Fund legal fees, any other expenses (including clerical expenses) of issue, sale, repurchase or redemption of shares, expenses of registering or qualifying shares for sale, transfer taxes, all expenses of preparing the Trust’s registration statement and prospectus, and the cost of printing and delivering to shareholders prospectuses and reports, all officer salaries and officer expenses, rent and ordinary office expenses of suitable office space, the expenses of all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties faithfully, and all necessary administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the affairs of each Fund, including the determination of the Fund’s net asset value.(c)
The Manager, at its expense, shall place all orders for the purchase and sale of portfolio investments for the Fund’s account with brokers or dealers selected by the Manager. In the selection of such brokers or dealers and the placing of such orders, the Manager shall use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Manager, bearing in mind the Fund’s best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such policies as the Trustees may determine, the Manager shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Manager determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Manager’s overall responsibilities with respect to the Fund and to other clients of the Manager as to which the Manager exercises investment discretion.(d)
The Fund shall not be required to pay any expenses of the Fund other than the following: charges of governmental agencies, interest incurred on borrowing by the Fund, if any, portfolio transaction expenses, taxes (other than transfer taxes contemplated by Section 1(b) above), fees and expenses under any plan adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940 (the “1940 Act”) and extraordinary expenses of the Fund.2. | OTHER AGREEMENTS, ETC. |
It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, director, officer or employee of, or be otherwise interested in, the Manager, and in any person controlled by or under common control with the Manager, and that the Manager and any person controlling, controlled by or under common control with the Manager may have an interest in the Fund. It is also understood that the Manager and any person controlled by or under common control with the Manager have and may have advisory, management, service or other contracts with other organizations and persons, and may have other interests and business.
3. | COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER. |
The Fund will pay to the Manager, as compensation for the Manager’s services rendered, for the facilities furnished and for the expenses borne by the Manager pursuant to paragraphs (a), (b) and (c) of Section 1, a fee as described in SCHEDULE A hereto.
In the event that expenses of the Fund for any fiscal year should exceed the expense limitation on investment company expenses imposed by any statute or regulatory authority of any jurisdiction in which shares of the Fund are qualified for offer or sale, the compensation due the Manager for such fiscal year shall be reduced by the amount of excess by a reduction or refund thereof. In the event that the expenses of the Fund exceed any expense limitation which the Manager may, by written notice to the Fund, voluntarily declare to be effective subject to such terms and conditions as the Manager may prescribe in such notice, the compensation due the Manager shall be reduced, and, if necessary, the Manager shall assume expenses of the Fund to the extent required by the terms and conditions of such expense limitation.
4. | ASSIGNMENT TERMINATES THIS CONTRACT. |
This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment.
5. | EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. |
This Contract shall become effective upon its execution, and shall remain in full force and effect continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a)
Either party hereto may at any time terminate this Contract with respect to the Fund by not more than sixty days’ nor less than thirty days’ written notice delivered or mailed by registered mail, postage prepaid, to the other party, or(b)
If (i) the Trustees, or the shareholders of the Fund by the affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a majority of the Trustees who are not interested persons of the Fund, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate at the close of business on the second anniversary of its execution, or upon the expiration of one year from the effective date of the last such continuance, whichever is later.Action by the Fund under clause (a) above may be taken either (i) by vote of a majority of the Trustees or (ii) by the affirmative vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 6 will be without the payment of any penalty.
6. | CERTAIN DEFINITIONS. |
For the purposes of this Contract, the “affirmative vote of a majority of the outstanding shares of the Fund” means the affirmative vote, at a duly called and held meeting of shareholders of the Fund, (a) of the holders of 67% or more of the shares of the Fund present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Fund entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Fund entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms “affiliated person”, “control”, “interested person” and “assignment” shall have their respective meanings defined in the 1940 Act, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under the 1940 Act; the term “specifically approve at least annually” shall be construed in a manner consistent with the 1940 Act; and the term “brokerage and research services” shall have the meaning given in the Securities Exchange Act of 1934 and the rules and regulations thereunder.
7. | NON-LIABILITY OF THE MANAGER. |
The Manager shall give the Fund the benefit of its best judgment and efforts in rendering the services set forth herein. In the absence of willful misfeasance, bad faith or gross negligence on the part of the Manager, or reckless disregard of its obligations and duties hereunder, the Manager shall not be subject to any liability to the Fund or to any shareholder of the Fund, for any act or omission in the course of, or connected with, rendering services hereunder.
8. | LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, AND SHAREHOLDERS. |
A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of the Commonwealth of Massachusetts, and notice is hereby given that this Contract is executed on behalf of the Trustees as trustees of the Trust and not individually and that the obligations of or arising out of this Contract are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Fund.
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IN WITNESS WHEREOF, PAX WORLD FUNDS SERIES TRUST III and PAX ELLEVATE MANAGEMENT LLC have each caused this Contract to be signed in duplicate in its behalf by its President or a Vice President thereunto duly authorized, all as of the day and year first above written.
PAX WORLD FUNDS SERIES TRUST III | |||
By: | |||
Name: | |||
Title: | |||
PAX ELLEVATE MANAGEMENT LLC | |||
By: | |||
Name: | |||
Title: |
SCHEDULE A
Fee Schedule
Pax Ellevate Global Women’s IndexLeadership Fund
For services rendered as described in this Contract, Pax Ellevate Global Women’s Index Fund shall pay the Manager a fee, computed and paid monthly, at the annual rate of 0.65%0.55% of the average net asset value of the Fund.
Fee Calculation
Such average net asset value shall be determined by taking an average of all of the determinations of such net asset value during such month at the close of business on each business day during such month while this Contract is in effect. Such fee shall be payable for each month within 15 days after the end of such month and shall commence accruing as of the date of the initial issuance of shares of each Fund to the public.
If the Manager shall serve for less than the whole of a month, the foregoing compensation shall be prorated.
EXHIBIT C
BOARD OF TRUSTEES’TRUSTEES’ CONSIDERATION OF THE CURRENT ADVISORY AGREEMENTS AND THE CURRENT SUB-ADVSORY AGREEMENTS
Review Process.
TheDuring the course of the contract review meetings, the Trustees met and discussed the Management Contracts and each Subadvisory Contract with representatives of the Advisers. The Independent Trustees were assisted in their evaluation of the Management Contracts and each Subadvisory Contract by independent legal counsel, from whom they received assistance and advice, including a written memorandum regarding the legal standards applicable to the consideration of advisory arrangements, and with whom they met separately from management. The Independent Trustees requested additional information, to which management responded.
In their deliberations, the Trustees did not identify any particular information that was all-important or controlling. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, or given different weights to various factors in reaching their unanimous conclusion. The Trustees’ conclusions were based, in part, on their consideration of these arrangements during the course of the year and in prior years. The Trustees evaluated the information available to them on a Fund-by-Fund basis, and their determinations were made separately in respect of each Pax Fund; however, they also took into account the common interests of all the Pax Funds in their review.
Nature, Extent and Quality of Services.
In considering the Management Contracts and each Subadvisory Contract, the Trustees, including the Independent Trustees, evaluated the nature, extent and quality of the advisory services provided to each Trust by the relevant Adviser and, with respect to Trust I, each Subadviser. They considered the terms of the relevant Management Contract and each Subadvisory Contract, as applicable, and received and considered information provided by management that described, among other matters:In addition to considering the Pax Funds’ investment performance (see below), the Trustees of each Trust considered, among other matters, the general oversight of the relevant Trust by its Adviser. They also took into account information concerning the investment philosophies and processes used by the Advisers and each Subadviser in managing the Pax Funds as well as their in-house investment and sustainable research capabilities. They also considered various investment resources available to the Advisers and each Subadviser, including research services acquired with “soft dollars” available to the Advisers and each Subadviser as a result of securities transactions effected for the Pax Funds.
The Trustees considered, among other matters, that each Adviser provides the relevant Trust with office space and personnel, and provides oversight and coordination of the Pax Funds’ third-party service providers. These services include accounting, bookkeeping, tax, legal, audit, custody and transfer agency services, and preparation of prospectuses, shareholder reports and other regulatory filings. They also took into account the Advisers’ compliance and operational functions, as well as the resources being devoted by the Advisers to such functions.
The Trustees concluded, within the context of their overall conclusions regarding the Management Contracts and each Subadvisory Contract, that the scope of the services provided to each Pax Fund and to be provided under the relevant Management Contract, and to each Pax Fund by its applicable Subadviser, was consistent with such Fund’s operational requirements; that the Advisers have the capabilities, resources and personnel necessary to provide the advisory services currently required by each Pax Fund; and that, overall, the nature, extent and quality of the services provided by and to be provided by the Advisers to the relevant Trust, and each applicable Subadviser to each Pax Fund, were sufficient to warrant approval of the Management Contracts and each Subadvisory Contract.
Fund Performance.
In connection with the contract review meetings, the Trustees, including the Independent Trustees, reviewed information prepared by Broadridge Financial Solutions, Inc. (“Broadridge”) regarding the total return investment performance of the Pax Funds, comparing each Pax Fund’s investment results with those of other mutual funds within their Broadridge peer group over theIn addition to the information reviewed by the Trustees at the contract review meetings, the Trustees receive, during the year, detailed comparative performance information for each Pax Fund including performance relative to one or more selected securities indices or other benchmarks. The Trustees also considered the portfolio turnover rates of each Pax Fund.
Based on this and other information, the Trustees concluded, within the context of their overall conclusions regarding the Management Contracts and each Subadvisory Contract, that the relevant performance record and process in managing each Pax Fund were sufficient to support approval of the Management Contracts and each Subadvisory Contract.
Fees and Other Expenses.
The Trustees, including the Independent Trustees, considered the advisory fees paid by each Pax Fund and proposed to be paid to the relevant Adviser, and the Trustees of Trust I, including the Independent Trustees, considered subadvisory fees paid to each Subadviser byThe Trustees of Trust I considered the expenses indirectly borne by the Balanced Fund through its investment in other funds (including funds advised by PWM),Pax Funds, and the extent to which the services provided by PWMIAM to the Balanced Fund were distinct from, and not duplicative of the services it provides to such Fund afforded the Fund access to a more diversified investment portfolio than would otherwise have been practicable in light of theother Pax Funds’ current asset levels.Funds. The Trustees of each Trust noted that the relevant Adviser, at the time of the contract review meetings, did not have a significant institutional advisory business outside of the Pax Funds, and considered the differences in the services provided and proposed to be provided to institutional clients and those provided to the Pax Funds, as well as differences in the advisory fees charged and proposed to be charged to such clients and those charged to the Pax Funds. The Trustees observed that the Pax Funds’ advisory fees and total expenses remained generally in line with those of other mutual funds identified by Broadridge (or, for the Global Environmental Markets Fund, PWM).
The Trustees, including the Independent Trustees, also considered that mostnone of the Pax Funds includingwith at least five years of performance history (the Small Cap Fund, the ESG Beta Quality Fund, the MSCI EAFE ESG Leaders Index Fund, are on the “Less Expenses” side of a 4-quadrant performance versus expenses summary, which is based on a 5-year period. The Trustees considered thatGlobal Women’s Leadership Fund, the Mid CapGlobal Environmental Markets Fund, which had expenses within 1 bps of its Broadridge performance universe, was split between the “Less Return Less Expenses” quadrant and the “Less Return More Expenses” quadrant. The Trustees considered that the High Yield Bond Fund whichand the Balanced Fund) had underperformed over the 5-year period, was in the “Less Return More Expenses” quadrant.both lower returns and higher net expenses than its peer group median. The Trustees also noted that the new Pax Funds, including the Large Cap Fund, the Mid Cap Fund, the ESG Beta Dividend Fund, and the Core Bond Fund and the Global Opportunities Fund, were excluded from the 4-quadrantfour-quadrant performance versus expenses summary. Based on these observations, the Trustees concluded that the Pax Funds generally have lower expenses than their peers.
Costs of Services Provided and Profitability
Possible Fall-Out Benefits.
The Trustees of Trust I, including the Independent Trustees, considered information regarding the direct and indirect benefits toThe Trustees of Trust III, including the Independent Trustees, considered information regarding the direct and indirect benefits to PEM from its relationship with the Global Women’s IndexLeadership Fund, including reputational and other “fall out” benefits. The Trustees of Trust III considered the receipt of these benefits in light of PEM’s profitability, and concluded that such benefits were not excessive.
Possible Economies of Scale
Conclusions. Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees of each Trust, including the Independent Trustees, unanimously concluded that the continuationapproval of the Management Contracts with respect to each Pax Fund and the continuationapproval of the Subadvisory Contracts for the applicable Pax Funds, was in the best interests of the Pax Funds and that the Management Contracts and the Subadvisory Contracts should be approved.
EXHIBIT DFORM OF NEW SUB-ADVISORY AGREEMENT
OUTSTANDING SHARES [TO BE UPDATED]
As of the Record Date, the total number of shares outstanding for eachthe Fund is set forth in the table below:
Fund Name |
Investor Class | Institutional Class |
Pax Ellevate Global Women's Leadership Fund | 4,101,858.270 | 9,160,496.090 |
EXHIBIT F
E
BENEFICIAL OWNERSHIP OF SHARES [TO BE UPDATED]
As of the Record Date, the following persons owned, of record and beneficially (unless otherwise indicated), 5% or more of a class of eachthe Fund’s outstanding shares.
The information as to beneficial ownership is based on statements furnished to the Fund by the Trustees, and/or on the records of the Trusts’Trust’s transfer agent.
Share Class | Name and Address | Shares Owned | Percent of Class |
Investor Class | NATIONAL FINANCIAL SVCS LLC FBO EXCLUSIVE BENE OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT 4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310-1995 | 790,662.165 | 19.28% |
Investor Class | CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF CUSTOMERS 211 MAIN ST SAN FRANCISCO CA 94105-1905 | 688,724.410 | 16.79% |
Investor Class | PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0001 | 266,324.968 | 6.49% |
Institutional Class | MORGAN STANLEY SMITH BARNEY LLC FOR THE EXCLUSIVE BENEFIT OF ITS CUSTOMERS 1 NEW YORK PLAZA FL 12TH FL NEW YORK NY 10004-1901 | 2,000,126.379 | 21.83% |
Institutional Class | NATIONAL FINANCIAL SVCS LLC FBO EXCLUSIVE BENE OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT 4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310-1995 | 1,785,824.381 | 19.49% |
Institutional Class | MLPF&S INC FOR THE SOLE BENEFIT OF CUSTOMERS 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 | 631,655.339 | 6.90% |
Institutional Class | CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF CUSTOMERS 211 MAIN ST SAN FRANCISCO CA 94105-1905 | 612,757.676 | 6.69% |