0001104659-13-016683.txt : 20130301 0001104659-13-016683.hdr.sgml : 20130301 20130301140516 ACCESSION NUMBER: 0001104659-13-016683 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20121231 FILED AS OF DATE: 20130301 DATE AS OF CHANGE: 20130301 EFFECTIVENESS DATE: 20130301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Pax World Funds Trust II CENTRAL INDEX KEY: 0001426870 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-22187 FILM NUMBER: 13656344 BUSINESS ADDRESS: STREET 1: 30 PENHALLOW STREET STREET 2: SUITE 400 CITY: PORTSMOUTH STATE: NH ZIP: 03801 BUSINESS PHONE: 603-431-8022 MAIL ADDRESS: STREET 1: 30 PENHALLOW STREET STREET 2: SUITE 400 CITY: PORTSMOUTH STATE: NH ZIP: 03801 0001426870 S000025093 Pax MSCI EAFE ESG Index ETF C000074653 Shares EAPS 0001426870 S000025094 Pax MSCI North America ESG Index ETF C000074654 Shares NASI N-CSR 1 a13-2692_2ncsr.htm N-CSR

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number

811-22187

 

PAX WORLD FUNDS TRUST II

(Exact name of registrant as specified in charter)

 

30 Penhallow Street, Suite 400, Portsmouth, NH

 

03801

(Address of principal executive offices)

 

(Zip code)

 

Pax World Management LLC

30 Penhallow Street, Suite 400, Portsmouth, NH  03801

Attn.:  Joseph Keefe

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

800-767-1729

 

 

Date of fiscal year end:

December 31

 

 

Date of reporting period:

12/31/12

 

 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).  The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

 

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public.  A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number.  Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC  20549-0609.  The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. §3507.

 



 

Item 1.   Annual Report to Shareholders

 



December 31, 2012

ANNUAL REPORT

Pax MSCI North America
ESG Index ETF

(NASI)

Pax MSCI EAFE ESG
Index ETF

(EAPS)




Table of Contents

Letter to Shareholders

   

2

   

Sustainability Update

   

5

   

Commentary and Portfolio Highlights

   

8

   

Pax MSCI North America ESG Index ETF

   

8

   

Pax MSCI EAFE ESG Index ETF

   

12

   

Shareholder Expense Examples

   

17

   

Schedules of Investments

   

19

   

Statements of Assets and Liabilities

   

25

   

Statements of Operations

   

26

   

Statements of Changes in Net Assets

   

27

   

Financial Highlights

   

28

   

Notes to Financial Statements

   

30

   
Report of Independent Registered Public
Accounting Firm
   

40

   

For More Information

General Fund Information

888.729.3863

www.esgshares.com

Transfer Agent and
Custodian

State Street Bank and Trust Company

1 Lincoln Street

Boston, MA 02111

Investment Adviser

Pax World Management LLC

30 Penhallow Street, Suite 400

Portsmouth, NH 03801

Distributor

ALPS Distributors, Inc.

1290 Broadway, #1100

Denver, CO 80203



Letter to Shareholders

by Joseph Keefe, President & CEO

Dear fellow shareholders,

In the investment world, 2012 was a curious year. Markets remained somewhat volatile, the economy continued to stumble through an anemic recovery, businesses were reluctant to hire, money remained on the sidelines, and "uncertainty" seemed to be the recurring explanation for why things weren't getting any better. Uncertainty over Europe's fiscal situation, uncertainty about slowing growth in China, the U.S. election, the so-called "fiscal cliff," changes in tax policy... Every piece of good news, and there was some—lower household debt, improved consumer sentiment and spending, home prices recovering, banks starting to lend after repairing their balance sheets—was greeted with a big, "Yes, but... there's still so much uncertainty."

At year end, however, the S & P 500 Index1 was up 16.00%, the Russell 2000 Index2 of small-cap stocks was up 16.35%, the Lipper High Yield Bond Funds Index3 was up 15.40% and international developed markets as represented by the MSCI EAFE Index4 were up 17.32%. Markets performed quite well, in other words, even against a backdrop of caution and uncertainty.

As the year closed, Congress wisely chose to steer clear of the fiscal cliff and a self-inflicted recession. President Obama got some of the revenue he wanted and we will have to see what transpires in the next act of the seemingly endless drama over spending and taxes. My strong sense is that, should Congress and the President avoid budget sequestration, which would be as silly as it is destructive, and perhaps even come to terms on an earnest long-term deficit reduction and economic growth package, this would send the mother of all positive

1The S&P 500 Index is an unmanaged index of large capitalization common stocks.

2The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

3The Lipper High Yield Bond Funds Index tracks the results of the 30 largest mutual funds in the Lipper High Current Yield Bond Funds Average. The Lipper High Current Yield Bond Funds Average is a total return performance average of mutual funds tracked by Lipper, Inc. that aim at high (relative) current yield from fixed income securities, have no quality or maturity restrictions and tend to invest in lower grade debt issues. The Lipper High Current Yield Bond Funds Index is not what is typically considered 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.

4The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consisted of the following 22 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. Performance for the MSCI EAFE Index is shown "net", which includes dividend reinvestments after deduction of foreign withholding tax.

An investor cannot invest directly in an index.


2



signals to the market. Much of the uncertainty, much of the delayed hiring and pent-up demand, much of the cash on the sidelines, would suddenly dissipate. A full-fledged recovery could begin to take shape. In fact, one could argue that it is already underway—if only policy makers would not undermine it.

In the meantime, herein you will find information about how Pax World's two Exchange-Traded Funds ("ETFs")—the Pax MSCI North America ESG Index Fund (NASI) and the Pax MSCI EAFE ESG Fund (EAPS)—performed in 2012.

At Pax World, our view is that sustainable investors need to remain focused on the long term even as companies, markets and policy makers too often allow the short-term to dominate. The preoccupation with short-term profit at the expense of more meaningful long-term metrics is taking an increasing toll. In 2012, that toll arguably included Hurricane Sandy. In fact, the environmental fallout from our current economic paradigm is becoming acute. All of earth's natural systems—air, water, minerals, oil, forests and rainforests, soil, wetlands, fisheries, coral reefs, the oceans themselves—are in serious decline. Climate change (and the altered weather patterns associated with it) may be the most urgent crisis but it is really only a symptom. "The problem," as Australian ecologist Paul Gilding has written, "is the delusion that we can have infinite quantitative economic growth, that we can keep having more and more stuff, on a finite planet."5

Our ability to address climate change and other environmental and resource challenges has been hampered by our long-time underinvestment in infrastructure. My own view is that we need to be sounding the alarm about climate change, resource scarcity and the need for a massive public/private investment in clean energy, energy efficiency and other resource optimization technologies. The problem is not going away. A warming climate, rising global population, a growing middle class in developing nations, increased demand for resources, including food and water, rising commodity prices... The age of resource scarcity is upon us.

As a result of these trends, we see a rapidly accelerating global demand for efficiency solutions in the areas of energy (renewable energy and energy efficiency), water (water infrastructure and technologies, pollution control) and waste (waste management and technologies, environmental support services). And we see growing demand for sustainable investment solutions more generally. Sustainable investing offers investors strategies to manage the risks and take advantage of the opportunities associated with the transition to a low-carbon, resource-efficient global economy. It offers a way for investors to be part of the solution rather than part of the problem, and to align their investments with the urgent need for solutions to these critical issues.

2012 was a challenging year but something tells me 2013 will be too. That's OK. In fact, that's what we are here for: to help investors manage their way through these challenges times. The fundamental premise underlying sustainable investing is that business corporations and markets need to alter their focus from maximizing short-term profit to maximizing long-term value, and long-term value must expressly include the societal benefits associated with or

5Paul Gilding, the Great Disruption, Bloomsbury Press, 2011, p. 186.


3



derived from economic activity. The connections between economic output and ecological/societal health should not be incidental, let alone negative, but must be expressly and positively linked. At Pax World, we promise to stay committed to this approach, which in the long run we think best serves investors, society and the planet.

Peace,

Joseph F. Keefe
President and CEO


4




December 31, 2012

Sustainable Investing

Sustainability Update

The second half of 2012 put three of the issues at the heart of sustainable investing into the public spotlight: climate, board diversity and guns.

Climate change has been there before, of course, but after two very bad hurricane years in 2004 and 2005, followed by gridlock on emissions at the federal policy level, the issue drifted into a news backwater for a few years. It came roaring back with Hurricane Sandy, followed by news that 2012 was the hottest year on record for the contiguous United States, and the ninth hottest on record globally (the only eight years with higher temperatures have all happened since 1987). Moreover, after four years of doing very little on climate change, President Obama has made action on climate change a political priority for his second term.

Whether climate change tops the news charts is often a matter of what else is happening at any given moment. But it has been a top priority for Pax World for many years, as it is one of the most profound challenges humanity faces, and will require the active commitment of the sustainable investment community to help solve it. For our part, Pax World has taken action on several fronts: offsetting our own greenhouse gas emissions through Native Energy, encouraging companies to understand their own emissions and take steps to reduce them, and joining others to support public policies needed to morph our economy from one dependent on fossil fuels to one based on clean, renewable energy. Some specific recent actions include:

•  Pax World endorsed a letter to the U.S. Congress, organized by the Investor Network on Climate Risk (INCR), urging the extension of the production tax credit for wind energy. The tax credit was extended by Congress in its deal with the President to avoid the fiscal cliff.

•  Pax World signed on to an investor letter sponsored by Ceres to the newly formed oil sands industry collaborative named Canada's Oil Sands Innovation Alliance (COSIA). Investors laid out clear and specific expectations for how the industry can improve its environmental and social performance.

•  Pax World signed on to a letter, sponsored by the American Sustainable Business Council, to EPA Administrator Lisa Jackson in support of the adoption of the Greenhouse Gas New Source Performance Standard or the Carbon Pollution Standard for New Power Plants, which would establish a national carbon pollution standard for new power plants for the first time.


5



December 31, 2012

Sustainability Update, continued

While not much happened in U. S. policy circles with respect to board diversity, the global landscape has been more lively. Several European states (including France, the Netherlands, Italy and Belgium) enacted legislation in 2011 aimed at improving gender balance on corporate boards, following earlier actions in Norway. That prompted the European Commission to assess gender diversity on boards, and in November 2012 the Commission proposed to set an objective of 40% female representation on public company boards as a quota to be met in 2020. That action, plus efforts elsewhere in the world (e.g., Australia) to improve gender balance on boards, kept the spotlight on board diversity. Over the past year, Pax has filed several shareholder proposals urging companies to diversify their boards, and most recently we were successful in convincing Hospitality Properties Trust and Riverbed Technologies to modify their governance guidelines to specify that gender diversity would be a component of every director search. Pax World continues to file resolutions and conduct focused dialogues with companies in pursuit of gender balance on corporate boards. Pax World has also been deeply involved with the Thirty Percent Coalition, an organization comprising industry leaders, including senior business executives, national women's organizations, institutional investors with approximately $1.2 trillion in assets under management, corporate governance experts and board members. The goal of the Coalition is to assure that women hold 30% of board seats at public companies by the end of 2015. That coalition has, in the past few months, sent letters urging greater gender diversity on boards to all the companies in the S&P 500 that have no women on their boards, and we are in the process of sending letters to companies in the Russell 1000 index that have no women on their boards.

Guns also debuted on the investment landscape in 2012 with the terrible incident in Newtown, Connecticut. While shootings in schools or other public places have long ignited horror and outrage, the shockwave rarely reached into the investment world. This time, however, it did, and almost immediately after the incident, some of the nation's largest pension funds announced that they would divest or are considering divesting holdings in gun manufacturers. A lot of editorial debate has since been devoted to whether this would really affect the fortunes of gun manufacturers. We don't think that is the crux of the matter. Pax World chose, right from the start, not to invest in companies that manufacture weapons, and we remain committed to that choice—not because we think it will drive gun manufacturers' stock prices down to the point where they disappear, but because we would rather not profit from the manufacture of guns, and we would rather not be owners of companies that siphon millions of dollars, through political contributions and gun purchase programs, to the National Rifle Association.


6



December 31, 2012

Sustainability Update, continued

While fund managers, gun owners and activists of many stripes debate the wisdom of introducing this ultra-polarized political issue onto the landscape of fund management, the fact remains that the status quo is not neutral with respect to the place or type of guns in our society: those who own stocks of gun makers are profiting from the use of guns in our society, and the companies they own are deeply involved in the political landscape of gun ownership and control. Over the past seven years, corporations have contributed between $19.6 million and $52.6 million1 to the NRA's Ring of Freedom program, and the NRA has fiercely resisted public policy attempts to place any limits on the type of guns that may be sold or owned in the United States, including assault weapons.

We are under no illusion that investments are somehow socially neutral. They have consequences. At Pax World, the focus of all our advocacy, directly with companies and also through public policy, is to make our economy and society more sustainable, which we believe will be good for investors along with everyone else.

1Violence Policy Center, Blood Money: How the Gun Industry Bankrolls the NRA, April 2011.


7



Pax MSCI North America ESG Index ETF

December 31, 2012

Commentary

The Pax MSCI North America ESG Index ETF (NASI) employs a passive management approach, seeking to track the performance of the MSCI North America ESG Index, a broadly diversified, sector-neutral index of American and Canadian companies with superior ESG performance as rated by MSCI ESG Research.

For the one-year period ended December 31, 2012, the Fund's NAV return was 12.77%, tracking the MSCI North America ESG Index return of 13.41% and the MSCI North America Index return of 15.57%.

During the period the financial, health care and the consumer discretionary sectors made the most positive contributions to performance while utilities and the energy sectors contributed the least amount to performance. There were no sectors that had a negative contribution to performance during the period. From a country prospective, the United States (88.88% average weight of total investments for the period) made up the largest positive contribution to performance due to its significant weight in the ETF. During the period, Canada (10.25% average weight of total investments) also contributed positively to performance.

Companies that contributed positively to performance included Oracle Corp., a manufacturer of enterprise software systems which reported strong earnings on cloud computing demand; Gilead Sciences, Inc., a biopharmaceutical company received FDA approval for their HIV drug and had positive results in a late stage trial for their new Hepatitis C drug. Both companies posted strong returns during the period. Companies that detracted most from performance included Hewlett-Packard Co., a manufacturer of computer and printer systems; and Intel Corp., a manufacturer of computer components. Both companies declined during the period due to weak demand for personal computers.

The Fund described herein is indexed to an MSCI index. The Fund referred to herein is not sponsored, endorsed or promoted by MSCI or its affiliates, and MSCI and its affiliates bear no liability with respect to any such fund or any index on which such fund is based.

The MSCI North America ESG Index is designed to measure the performance of equity securities of issuers organized or operating in the United States and Canada that have high environmental, social and governance (ESG) ratings relative to their sector and industry group peers, as rated by MSCI ESG Research annually.

MSCI ESG Research evaluates companies' ESG characteristics and derives corresponding ESG scores and ratings. Companies are ranked by ESG score against their sector peers to determine their eligibility for the MSCI ESG indices. MSCI ESG Research identifies the highest-rated companies in each peer group to meet the float-adjusted market capitalization sector targets. The rating system is based on general and industry specific ESG criteria, assigning ratings on a 9-point scale from AAA (highest) to C (lowest). Constituents of the MSCI EAFE Index having an ESG rating of B or above are eligible for inclusion in the Index.


8



December 31, 2012

Commentary, continued

The MSCI North America ESG Index includes or utilizes data, ratings, analysis, reports, analytics or other information or materials from MSCI's ESG Research Group within Institutional Shareholder Services Inc., an indirect wholly-owned subsidiary of MSCI. The prospectus contains a more detailed description of the limited relationship MSCI has with Pax World Management LLC, ESG Shares and any related funds.

The MSCI North America Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of North America.

Unlike the Fund, the MSCI North America ESG Index and the MSCI North America Index are not investments, are not professionally managed and do not reflect deductions for fees, expenses or taxes.


9



Pax MSCI North America ESG Index ETF

December 31, 2012

Portfolio Highlights (Unaudited)

Total Return—Historical Growth of $10,000—Since Inception

Returns—Period ended December 31, 2012

       

Total Return

 
   

One year

  Since
Inception1
 

NAV Return2

   

12.77

%

   

8.72

%

 

Market Value Return2

   

12.37

%

   

8.70

%

 

MSCI North America ESG Index3

   

13.41

%

   

9.39

%

 

MSCI North America Index4

   

15.57

%

   

11.50

%

 

Total annual operating expenses for Pax MSCI North America ESG Index ETF are 0.50%

All total return figures assume reinvestment of dividends and capital gains at net asset value; actual returns may differ. Performance data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Total returns for periods of less than one year have not been annualized. For more recent month-end performance data, please visit www.esgshares.com or call us at 888-729-3863.

An index is a statistical measure of a specified financial market or sector. An index does not actually hold a portfolio of securities, incur expenses or pay any transaction costs. Therefore, index returns do not reflect deductions for fees or expenses and are not available for direct investment. In comparison, the Fund's performance is negatively impacted by these deductions. Fund returns do not reflect brokerage commissions on transactions in Fund shares or taxes that a shareholder would pay on Fund distributions.

1The Fund's inception date is May 18, 2010.

2The NAV return is based on the closing NAV (net asset value per share) of the Fund and the Market Value return is based on the market price per share of the Fund. The market prices used for Market Value returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times.


10



Pax MSCI North America ESG Index ETF

December 31, 2012

Portfolio Highlights (Unaudited), continued

3The MSCI North America ESG Index is designed to measure the performance of equity securities of issuers organized or operating in North America that have high environmental, social and governance (ESG) ratings from MSCI, selected initially and adjusted annually by MSCI.

4The MSCI North America Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of North America.

Asset Allocation

 

Percent of Net Assets

 

Common Stocks

   

99.8

%

 

Money Market Fund

   

0.7

%

 

Other Assets & Liabilities

   

(0.5

)%

 

Total Net Assets

   

100.0

%

 

Top Ten Holdings

Company

 

Percent of Net Assets

 

IBM

   

3.1

%

 

Johnson & Johnson

   

2.9

%

 

Procter & Gamble Co.

   

2.8

%

 

Google, Inc. (Class A)

   

2.8

%

 

Oracle Corp.

   

2.0

%

 

Merck & Co., Inc.

   

1.9

%

 

PepsiCo, Inc.

   

1.6

%

 

QUALCOMM, Inc.

   

1.6

%

 

Cisco Systems, Inc.

   

1.6

%

 

Intel Corp.

   

1.5

%

 

Total

   

21.8

%

 

Ten largest holdings do not include money market securities, certificates of deposit, commercial paper or cash and equivalents, if applicable. Holdings are subject to change.

Sector Diversification

Sector

 

Percent of Net Assets

 

Information Technology

   

19.0

%

 

Financials

   

18.3

%

 

Health Care

   

12.1

%

 

Consumer Discretionary

   

11.9

%

 

Industrials

   

10.5

%

 

Consumer Staples

   

10.1

%

 

Energy

   

8.7

%

 

Materials

   

5.0

%

 

Utilities

   

2.5

%

 

Telecommunication Services

   

1.7

%

 

Cash and cash equivalents plus other assets less liabilities

   

0.2

%

 

Total

   

100.0

%

 

Geographical Diversification

Country

 

Percent of Net Assets

 

United States

   

89.5

%

 

Canada

   

10.3

%

 

Other Countries

   

0.7

%

 

Other Assets & Liabilities

   

(0.5

)%

 

Total

   

100.0

%

 


11



Pax MSCI EAFE ESG Index ETF

December 31, 2012

Commentary

The Pax MSCI EAFE ESG Index ETF (EAPS) employs a passive management approach, seeking to track the performance of the MSCI EAFE ESG Index, which consists of companies operating in developed market countries around the world, excluding the U.S. and Canada, that have superior ESG performance as rated by MSCI ESG Research.

For the one-year period ended December 31, 2012, the Fund's NAV return was 16.98%, almost matching the MSCI EAFE ESG Index return of 17.03%, while slightly underperforming the MSCI EAFE index return of 17.32%.

During the period, regional exposure to Europe, which is the largest regional weighting (41.17% average weight of total investments for the period) in the ETF, was the greatest positive contributor to performance. The European sovereign debt crisis1 abated during the period and drove many of the European stock indices higher for the year. UK (23.98% average weight of total investments for the period) also made a meaningful positive contribution during the period. Greece (0.16% average weight of total investments for the period) was the only country that had a negative contribution to performance.

Companies that contributed positively to performance included HSBC Holdings PLC, a London based international banking and financial services company; and Mitsui Fudosan Co. Ltd, a Tokyo, Japan based real estate service and development company. The European sovereign debt crisis stabilized during the period driving shares higher for many of the large-cap European banks. A continued recovery from the tsunami and nuclear disaster helped support higher prices for many Japanese real estate companies. Companies that detracted from performance included Shikoku Electric Power, a Japan based electric utility company; and BG Group PLC, a U.K. based energy company. Plant shutdowns, regulatory scrutiny and new safety standards weighed heavily on the shares Japanese electric utilities. Project delays and a poor outlook for growth depressed shares of BG Group during the latter part of the year.

1Sovereign debt are bonds issued by a national government in a foreign currency, in order to finance the issuing country's growth. Sovereign debt is generally a riskier investment when it comes from a developing country, and a safer investment when it comes from a developed country. The stability of the issuing government is an important factor to consider, when assessing the risk of investing in sovereign debt, and sovereign credit ratings help investors weigh this risk.

The Fund described herein is indexed to an MSCI index. The Fund referred to herein is not sponsored, endorsed or promoted by MSCI or its affiliates, and MSCI and its affiliates bear no liability with respect to any such fund or any index on which such fund is based.

The MSCI EAFE ESG Index is a free float-adjusted market capitalization weighted index designed to measure the performance of equity securities of issuers organized or operating in developed market countries around the world excluding the U.S. and Canada that have high environmental, social and governance (ESG) ratings relative to their sector and industry group peers, as rated by MSCI ESG Research annually. The Index targets


12



December 31, 2012

Commentary, continued

sector weights that reflect the relative sector weights of the MSCI Europe & Middle East Index and the MSCI Pacific Index. MSCI ESG Research evaluates companies' ESG characteristics and derives corresponding ESG scores and ratings. Companies are ranked by ESG score against their sector peers to determine their eligibility for the MSCI ESG indices. MSCI ESG Research identifies the highest-rated companies in each peer group to meet the float-adjusted market capitalization sector targets. The rating system is based on general and industry-specific ESG criteria, assigning ratings on a 9-point scale from AAA (highest) to C (lowest). Constituents of the MSCI EAFE Index having an ESG rating of B or above are eligible for inclusion in the Index.

The MSCI EAFE ESG Index includes or utilizes data, ratings, analysis, reports, analytics or other information or materials from MSCI's ESG Research Group within Institutional Shareholder Services Inc., an indirect wholly-owned subsidiary of MSCI. The prospectus contains a more detailed description of the limited relationship MSCI has with Pax World Management LLC, ESG Shares and any related funds.

The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consisted of the following 22 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

The MSCI Europe & Middle East Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in Europe and the Middle East. The MSCI Europe & Middle East Index consisted of the following 17 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

The MSCI Pacific Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in the Pacific region. The MSCI Pacific Index consisted of the following 5 developed market country indices: Australia, Hong Kong, Japan, New Zealand, and Singapore.

Unlike the Fund, the MSCI EAFE ESG Index, the MSCI EAFE Index, the MSCI Europe & Middle East Index and the MSCI Pacific Index are not investments, are not professionally managed and do not reflect deductions for fees, expenses or taxes.


13



Pax MSCI EAFE ESG Index ETF

December 31, 2012

Portfolio Highlights (Unaudited)

Total Return—Historical Growth of $10,000—Since Inception

Returns—Period ended December 31, 2012

       

Total Return

 
   

One year

  Since
Inception1
 

NAV Return2

   

16.98

%

   

0.31

%

 

Market Value Return2

   

19.71

%

   

1.54

%

 

MSCI EAFE ESG Index3

   

17.03

%

   

0.77

%

 

MSCI EAFE Index4

   

17.32

%

   

-0.22

%

 

Total annual operating expenses for Pax MSCI EAFE ESG Index ETF are 0.55%

All total return figures assume reinvestment of dividends and capital gains at net asset value; actual returns may differ. Performance data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Total returns for periods of less than one year have not been annualized. For more recent month-end performance data, please visit www.esgshares.com or call us at 888-729-3863.

An index is a statistical measure of a specified financial market or sector. An index does not actually hold a portfolio of securities, incur expenses or pay any transaction costs. Therefore, index returns do not reflect deductions for fees or expenses and are not available for direct investment. In comparison, the Fund's performance is negatively impacted by these deductions. Fund returns do not reflect brokerage commissions on transactions in Fund shares or taxes that a shareholder would pay on Fund distributions.

1The Fund's inception date is January 27, 2011.

2The NAV return is based on the closing NAV (net asset value per share) of the Fund and the Market Value return is based on the market price per share of the Fund. The market prices used for Market Value returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times.


14



Pax MSCI EAFE ESG Index ETF

December 31, 2012

Portfolio Highlights (Unaudited), continued

3MSCI EAFE ESG Index is a free float-adjusted market capitalization weighted index designed to measure the performance of equity securities of issuers organized or operating in Europe and the Asia Pacific region that have high environmental, social and governance (ESG) ratings from MSCI, selected initially and adjusted annually by MSCI.

4The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consisted of the following 22 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

Asset Allocation

 

Percent of Net Assets

 

Common Stocks

   

99.5

%

 

Preferred Stock

   

0.3

%

 

Money Market Fund

   

2.7

%

 

Rights

   

0.0

%*

 

Other Assets & Liabilities

   

(2.5

)%

 

Total Net Assets

   

100.0

%

 

*Less than 0.05%.

Top Ten Holdings

Company

 

Percent of Net Assets

 

HSBC Holdings PLC

   

3.9

%

 

Vodafone Group PLC

   

3.0

%

 

Roche Holding AG

   

2.8

%

 

Novartis AG

   

2.6

%

 

GlaxoSmithKline PLC

   

2.5

%

 

Commonwealth Bank of Australia

   

2.3

%

 

BASF SE

   

2.0

%

 

Westpac Banking Corp.

   

2.0

%

 

Novo Nordisk A/S (Class B)

   

1.6

%

 

Colruyt SA

   

1.6

%

 

Total

   

24.3

%

 

Ten largest holdings do not include money market securities, certificates of deposit, commercial paper or cash and equivalents, if applicable. Holdings are subject to change.

Sector Diversification

Sector

 

Percent of Net Assets

 

Financials

   

26.7

%

 

Consumer Discretionary

   

13.1

%

 

Health Care

   

11.8

%

 

Industrials

   

11.7

%

 

Consumer Staples

   

11.7

%

 

Materials

   

7.4

%

 

Energy

   

5.6

%

 

Telecommunication Services

   

5.2

%

 

Information Technology

   

3.9

%

 

Utilities

   

2.7

%

 

Cash and cash equivalents plus other assets less liabilities

   

0.2

%

 

Total

   

100.0

%

 


15



Pax MSCI EAFE ESG Index ETF

December 31, 2012

Portfolio Highlights (Unaudited), continued

Geographical Diversification

Country

 

Percent of Net Assets

 

Japan

   

22.9

%

 

United Kingdom

   

22.5

%

 

Australia

   

10.0

%

 

Switzerland

   

9.2

%

 

France

   

8.0

%

 

Germany

   

5.5

%

 

Spain

   

5.4

%

 

Sweden

   

4.6

%

 

Netherlands

   

2.7

%

 

Belgium

   

2.0

%

 

Denmark

   

2.0

%

 

Italy

   

1.3

%

 

Finland

   

0.8

%

 

New Zealand

   

0.7

%

 

Hong Kong

   

0.7

%

 

Luxembourg

   

0.5

%

 

Norway

   

0.5

%

 

Austria

   

0.4

%

 

Israel

   

0.1

%

 

Ireland

   

0.0

%*

 

Short Term Investment

   

2.7

%

 

Other Assets & Liabilities

   

(2.5

)%

 

Total

   

100.0

%

 

*Less than 0.05%.


16



December 31, 2012

Shareholder Expense Examples (Unaudited)

Examples As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of your fund shares and (2) ongoing costs, including management fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and compare these costs with the ongoing costs of investing in other funds. For more information, see the prospectus or talk to your financial adviser.

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period beginning on July 1, 2012 and ending on December 31, 2012.

Actual Expenses The first line in the table provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Examples for Comparison Purposes The second line in the table provides information about hypothetical account values and hypothetical expenses based on each Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table under each Fund is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning


17



December 31, 2012

Shareholder Expense Examples (Unaudited), continued

different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account Value
(7/1/12)
  Ending
Account Value
(12/31/12)
  Annualized
Expense
Ratio
  Expenses Paid
During Period1
 

Pax MSCI North America ESG Index ETF

 

Based on Actual Fund Return

 

$

1,000

   

$

1,070.50

     

0.50

%

 

$

2.60

   

Based on Hypothetical 5% Return

   

1,000

     

1,022.59

     

0.50

%

   

2.54

   

Pax MSCI EAFE ESG Index ETF

 

Based on Actual Fund Return

 

$

1,000

   

$

1,123.70

     

0.55

%

 

$

2.94

   

Based on Hypothetical 5% Return

   

1,000

     

1,022.34

     

0.55

%

   

2.80

   

1 Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the period beginning on July 1, 2012 and ending on December 31, 2012).


18




Pax MSCI North America ESG Index ETF

December 31, 2012

Schedule of Investments

Security Description

 

Shares

 

Value

 

COMMON STOCKS: 99.8%

 

Consumer Discretionary: 11.9%

 

Advance Auto Parts, Inc.

   

129

   

$

9,333

   

Autoliv, Inc.

   

171

     

11,524

   

AutoZone, Inc. (a)

   

62

     

21,975

   

Bed Bath & Beyond, Inc. (a)

   

426

     

23,818

   

Best Buy Co., Inc.

   

526

     

6,233

   

BorgWarner, Inc. (a)

   

206

     

14,754

   

Cablevision Systems Corp. (Class A)

   

351

     

5,244

   

Canadian Tire Corp., Ltd. (Class A)

   

138

     

9,616

   

CarMax, Inc. (a)

   

403

     

15,129

   

Chipotle Mexican Grill, Inc. (a)

   

55

     

16,360

   

Darden Restaurants, Inc.

   

228

     

10,276

   
Discovery Communications, Inc.
(Series A) (a)
   

254

     

16,124

   
Discovery Communications, Inc.
(Series C) (a)
   

170

     

9,945

   

Ford Motor Co.

   

6,392

     

82,776

   

GameStop Corp. (Class A)

   

241

     

6,047

   

Genuine Parts Co.

   

276

     

17,548

   

Gildan Activewear, Inc.

   

205

     

7,480

   

Harley-Davidson, Inc.

   

409

     

19,976

   

Hasbro, Inc.

   

205

     

7,360

   

J.C. Penney Co., Inc.

   

288

     

5,676

   

Johnson Controls, Inc.

   

1,208

     

37,086

   

Kohl's Corp.

   

400

     

17,192

   

Liberty Global, Inc. (Series A) (a)

   

245

     

15,433

   

Liberty Global, Inc. (Series C) (a)

   

200

     

11,750

   
Liberty Media Corp. – Interactive
(Class A) (a)
   

925

     

18,204

   
Liberty Media Corp. – Liberty Capital
(Class A) (a)
   

188

     

21,810

   

LKQ Corp. (a)

   

537

     

11,331

   

Lowe's Cos., Inc.

   

2,110

     

74,947

   

Macy's, Inc.

   

734

     

28,641

   

Marriott International, Inc. (Class A)

   

473

     

17,629

   

Mattel, Inc.

   

602

     

22,045

   

McDonald's Corp.

   

1,811

     

159,748

   

Mohawk Industries, Inc. (a)

   

103

     

9,318

   

Netflix, Inc. (a)

   

93

     

8,629

   

Newell Rubbermaid, Inc.

   

512

     

11,402

   

NIKE, Inc. (Class B)

   

1,306

     

67,390

   

Nordstrom, Inc.

   

295

     

15,782

   

O'Reilly Automotive, Inc. (a)

   

213

     

19,046

   

PetSmart, Inc.

   

196

     

13,395

   

Ross Stores, Inc.

   

405

     

21,931

   

Royal Caribbean Cruises, Ltd.

   

251

     

8,534

   
Scripps Networks Interactive, Inc.
(Class A)
   

163

     

9,441

   

Staples, Inc.

   

1,231

     

14,033

   

Starbucks Corp.

   

1,362

     

73,030

   
Starwood Hotels & Resorts
Worldwide, Inc.
   

347

     

19,904

   

Target Corp.

   

1,117

     

66,093

   

The Gap, Inc.

   

563

     

17,476

   

The TJX Cos., Inc.

   

1,321

     

56,076

   

Thomson Reuters Corp.

   

680

     

19,655

   

Tiffany & Co.

   

224

     

12,844

   

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

Consumer Discretionary, continued

 

Tim Hortons, Inc.

   

281

   

$

13,780

   

Time Warner Cable, Inc.

   

550

     

53,454

   

Time Warner, Inc.

   

1,704

     

81,502

   

Under Armour, Inc. (Class A) (a)

   

142

     

6,891

   

V.F. Corp.

   

157

     

23,702

   

Virgin Media, Inc.

   

470

     

17,272

   

Whirlpool Corp.

   

136

     

13,838

   
     

1,427,428

   

Consumer Staples: 10.1%

 

Avon Products, Inc.

   

765

     

10,985

   

Bunge, Ltd.

   

253

     

18,391

   

Campbell Soup Co.

   

338

     

11,793

   

Coca-Cola Enterprises, Inc.

   

536

     

17,007

   

Colgate-Palmolive Co.

   

857

     

89,591

   

ConAgra Foods, Inc.

   

733

     

21,624

   

Dr. Pepper Snapple Group, Inc.

   

375

     

16,568

   

Empire Co., Inc. (Class A)

   

53

     

3,138

   

Energizer Holdings, Inc.

   

117

     

9,358

   

General Mills, Inc.

   

1,163

     

46,997

   
Green Mountain Coffee Roasters,
Inc. (a)
   

234

     

9,678

   

H.J. Heinz Co.

   

567

     

32,705

   

Herbalife, Ltd.

   

206

     

6,786

   

Hormel Foods Corp.

   

257

     

8,021

   

Kellogg Co.

   

444

     

24,797

   

Kimberly-Clark Corp.

   

698

     

58,932

   

Loblaw Cos., Ltd.

   

200

     

8,422

   

McCormick & Co., Inc.

   

214

     

13,595

   

Mead Johnson Nutrition Co.

   

361

     

23,786

   

Metro, Inc. (Class A)

   

177

     

11,258

   
Mondelez International, Inc.
(Class A)
   

3,018

     

76,868

   

PepsiCo, Inc.

   

2,794

     

191,193

   

Procter & Gamble Co.

   

4,950

     

336,055

   

Safeway, Inc.

   

430

     

7,779

   

Saputo, Inc.

   

229

     

11,571

   

Sysco Corp.

   

1,037

     

32,831

   

The Clorox Co.

   

219

     

16,035

   

The Estee Lauder Cos., Inc. (Class A)

   

419

     

25,081

   

The J.M. Smucker Co.

   

200

     

17,248

   

The Kroger Co.

   

929

     

24,173

   

Whole Foods Market, Inc.

   

308

     

28,130

   
     

1,210,396

   

Energy: 8.7%

 

Apache Corp.

   

700

     

54,950

   

ARC Resources, Ltd.

   

527

     

12,935

   

Cameron International Corp. (a)

   

437

     

24,673

   

Cenovus Energy, Inc.

   

1,353

     

45,236

   

Cimarex Energy Co.

   

152

     

8,775

   

Concho Resources, Inc. (a)

   

174

     

14,017

   

Continental Resources, Inc. (a)

   

80

     

5,879

   

Core Laboratories NV

   

85

     

9,291

   

Crescent Point Energy Corp.

   

580

     

21,914

   

Denbury Resources, Inc. (a)

   

692

     

11,210

   

Devon Energy Corp.

   

681

     

35,439

   

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19



Pax MSCI North America ESG Index ETF

December 31, 2012

Schedule of Investments, continued

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

Energy, continued

 

Enbridge, Inc.

   

1,346

   

$

58,155

   

Energen Corp.

   

128

     

5,772

   

Enerplus Corp.

   

354

     

4,586

   

EOG Resources, Inc.

   

484

     

58,462

   

EQT Corp.

   

265

     

15,630

   

FMC Technologies, Inc. (a)

   

425

     

18,203

   

Hess Corp.

   

544

     

28,810

   

Kinder Morgan Management, LLC (a)

   

180

     

13,583

   

Marathon Oil Corp.

   

1,250

     

38,325

   

Marathon Petroleum Corp.

   

610

     

38,430

   

National-Oilwell Varco, Inc.

   

766

     

52,356

   

Newfield Exploration Co. (a)

   

240

     

6,427

   

Nexen, Inc.

   

940

     

25,084

   

Noble Corp.

   

447

     

15,565

   

Noble Energy, Inc.

   

315

     

32,048

   

Oceaneering International, Inc.

   

192

     

10,328

   

Pacific Rubiales Energy Corp.

   

518

     

12,023

   

Penn West Petroleum, Ltd.

   

873

     

9,469

   

Phillips 66

   

1,066

     

56,605

   

Pioneer Natural Resources Co.

   

207

     

22,064

   
Plains Exploration &
Production Co. (a)
   

227

     

10,655

   

QEP Resources, Inc.

   

315

     

9,535

   

Range Resources Corp.

   

287

     

18,032

   

Southwestern Energy Co. (a)

   

620

     

20,714

   

Spectra Energy Corp.

   

1,157

     

31,679

   

Suncor Energy, Inc.

   

2,785

     

91,491

   

Superior Energy Services, Inc. (a)

   

279

     

5,781

   

Talisman Energy, Inc.

   

1,830

     

20,676

   

The Williams Cos., Inc.

   

1,121

     

36,702

   

Ultra Petroleum Corp. (a)

   

270

     

4,895

   

Weatherford International, Ltd. (a)

   

1,346

     

15,062

   

Whiting Petroleum Corp. (a)

   

208

     

9,021

   
     

1,040,487

   

Financials: 18.3%

 

ACE, Ltd.

   

608

     

48,518

   

AFLAC, Inc.

   

829

     

44,036

   

American Express Co.

   

1,832

     

105,303

   

American Tower Corp. (b)

   

709

     

54,784

   

Ameriprise Financial, Inc.

   

378

     

23,674

   

Annaly Capital Management, Inc. (b)

   

1,723

     

24,191

   

Arch Capital Group, Ltd. (a)

   

238

     

10,477

   

Assurant, Inc.

   

155

     

5,379

   

Axis Capital Holdings, Ltd.

   

209

     

7,240

   

Bank of Nova Scotia

   

2,058

     

118,763

   

BB&T Corp.

   

1,238

     

36,038

   
Berkshire Hathaway, Inc.
(Class B) (a)
   

1,645

     

147,556

   

BlackRock, Inc.

   

235

     

48,577

   

Boston Properties, Inc. (b)

   

269

     

28,463

   

Capital One Financial Corp.

   

1,044

     

60,479

   

CBRE Group, Inc. (Class A) (a)

   

553

     

11,005

   

Chubb Corp.

   

481

     

36,229

   

Cincinnati Financial Corp.

   

273

     

10,691

   

CME Group, Inc.

   

561

     

28,448

   

Comerica, Inc.

   

350

     

10,619

   

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

Financials, continued

 

Discover Financial Services

   

924

   

$

35,620

   

Duke Realty Corp. (b)

   

462

     

6,408

   

Eaton Vance Corp.

   

204

     

6,497

   

Federal Realty Investment Trust (b)

   

112

     

11,650

   

Franklin Resources, Inc.

   

268

     

33,688

   

HCP, Inc. (b)

   

813

     

36,731

   

Health Care REIT, Inc. (b)

   

458

     

28,071

   

Host Hotels & Resorts, Inc. (b)

   

1,259

     

19,729

   

Hudson City Bancorp, Inc.

   

843

     

6,854

   

Intercontinental Exchange, Inc. (a)

   

128

     

15,848

   

Invesco, Ltd.

   

792

     

20,663

   

KeyCorp

   

1,693

     

14,255

   

Legg Mason, Inc.

   

223

     

5,736

   

Liberty Property Trust (b)

   

206

     

7,369

   

M&T Bank Corp.

   

201

     

19,792

   

Marsh & McLennan Cos., Inc.

   

965

     

33,264

   

New York Community Bancorp, Inc.

   

777

     

10,179

   

Northern Trust Corp.

   

384

     

19,261

   

NYSE Euronext

   

458

     

14,445

   

PartnerRe, Ltd.

   

115

     

9,256

   

People's United Financial, Inc.

   

637

     

7,701

   

PNC Financial Services Group, Inc.

   

950

     

55,394

   

Principal Financial Group, Inc.

   

534

     

15,230

   

ProLogis, Inc. (b)

   

816

     

29,776

   

Prudential Financial, Inc.

   

830

     

44,264

   

Regency Centers Corp. (b)

   

160

     

7,539

   

Regions Financial Corp.

   

2,508

     

17,857

   

RenaissanceRe Holdings, Ltd.

   

91

     

7,395

   

Royal Bank of Canada

   

2,592

     

155,879

   

Simon Property Group, Inc. (b)

   

543

     

85,843

   

State Street Corp.

   

865

     

40,664

   

T. Rowe Price Group, Inc.

   

450

     

29,309

   

The Bank of New York Mellon Corp.

   

2,137

     

54,921

   

The Charles Schwab Corp.

   

1,919

     

27,557

   

The Macerich Co. (b)

   

234

     

13,642

   

The NASDAQ OMX Group, Inc.

   

229

     

5,727

   

The Progressive Corp.

   

1,030

     

21,733

   

The Toronto-Dominion Bank

   

1,640

     

137,943

   

The Travelers Cos., Inc.

   

696

     

49,987

   

U.S. Bancorp

   

3,388

     

108,213

   

Ventas, Inc. (b)

   

513

     

33,201

   

Vornado Realty Trust (b)

   

295

     

23,624

   
     

2,189,185

   

Health Care: 12.1%

 

Abbott Laboratories

   

2,820

     

184,710

   

Aetna, Inc.

   

600

     

27,780

   

Agilent Technologies, Inc.

   

618

     

25,301

   

Baxter International, Inc.

   

982

     

65,460

   

Becton, Dickinson & Co.

   

358

     

27,992

   

Biogen Idec, Inc. (a)

   

403

     

59,108

   

Bristol-Myers Squibb Co.

   

3,014

     

98,226

   

CIGNA Corp.

   

508

     

27,158

   

DENTSPLY International, Inc.

   

252

     

9,982

   

Edwards Lifesciences Corp. (a)

   

204

     

18,395

   

Gilead Sciences, Inc. (a)

   

1,360

     

99,892

   

Henry Schein, Inc. (a)

   

159

     

12,793

   

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20



Pax MSCI North America ESG Index ETF

December 31, 2012

Schedule of Investments, continued

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

Health Care, continued

 

Humana, Inc.

   

290

   

$

19,903

   

Johnson & Johnson

   

4,957

     

347,486

   

Life Technologies Corp. (a)

   

317

     

15,558

   

Medtronic, Inc.

   

1,840

     

75,477

   

Merck & Co., Inc.

   

5,467

     

223,819

   

Patterson Cos., Inc.

   

158

     

5,408

   

ResMed, Inc.

   

255

     

10,600

   
Valeant Pharmaceuticals
International, Inc. (a)
   

522

     

31,109

   

Vertex Pharmaceuticals, Inc. (a)

   

373

     

15,644

   

Waters Corp. (a)

   

158

     

13,765

   

WellPoint, Inc.

   

593

     

36,125

   
     

1,451,691

   

Industrials: 10.5%

 

3M Co.

   

1,184

     

109,934

   

AMETEK, Inc.

   

427

     

16,042

   

Avery Dennison Corp.

   

187

     

6,530

   

C.H. Robinson Worldwide, Inc.

   

289

     

18,271

   

Canadian National Railway Co.

   

784

     

71,125

   

CSX Corp.

   

1,864

     

36,777

   

Cummins, Inc.

   

324

     

35,105

   

Danaher Corp.

   

1,058

     

59,142

   

Deere & Co.

   

668

     

57,729

   

Dover Corp.

   

326

     

21,421

   

Eaton Corp. PLC

   

783

     

42,439

   

Emerson Electric Co.

   

1,306

     

69,166

   

Equifax, Inc.

   

212

     

11,473

   
Expeditors International
Washington, Inc.
   

376

     

14,871

   

Fastenal Co.

   

499

     

23,298

   

IHS, Inc. (Class A) (a)

   

100

     

9,600

   

Illinois Tool Works, Inc.

   

757

     

46,033

   

Ingersoll-Rand PLC

   

528

     

25,323

   

Iron Mountain, Inc.

   

256

     

7,949

   

J.B. Hunt Transport Services, Inc.

   

166

     

9,912

   

Joy Global, Inc.

   

189

     

12,054

   

Manpower, Inc.

   

142

     

6,026

   

Masco Corp.

   

639

     

10,646

   

Norfolk Southern Corp.

   

574

     

35,496

   

PACCAR, Inc.

   

602

     

27,216

   

Pall Corp.

   

205

     

12,353

   

Parker Hannifin Corp.

   

268

     

22,796

   

Pentair, Ltd.

   

370

     

18,186

   

Pitney Bowes, Inc.

   

354

     

3,767

   

Precision Castparts Corp.

   

261

     

49,439

   

Quanta Services, Inc. (a)

   

368

     

10,043

   

Robert Half International, Inc.

   

239

     

7,605

   

Rockwell Automation, Inc.

   

253

     

21,249

   

Rockwell Collins, Inc.

   

250

     

14,543

   

Roper Industries, Inc.

   

171

     

19,063

   

Southwest Airlines Co.

   

342

     

3,502

   

The Dun & Bradstreet Corp.

   

85

     

6,685

   

Tyco International, Ltd.

   

818

     

23,926

   

Union Pacific Corp.

   

850

     

106,862

   

United Parcel Service, Inc. (Class B)

   

1,300

     

95,849

   

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

Industrials, continued

 

W.W. Grainger, Inc.

   

105

   

$

21,249

   

Waste Management, Inc.

   

778

     

26,250

   

Xylem, Inc.

   

328

     

8,889

   
     

1,255,834

   

Information Technology: 19.0%

 

Accenture PLC (Class A)

   

1,140

     

75,810

   

Adobe Systems, Inc. (a)

   

877

     

33,045

   

Analog Devices, Inc.

   

528

     

22,208

   

Applied Materials, Inc.

   

2,222

     

25,420

   

Autodesk, Inc. (a)

   

401

     

14,175

   

CA, Inc.

   

601

     

13,210

   

CGI Group, Inc. (Class A) (a)

   

365

     

8,409

   

Cisco Systems, Inc.

   

9,625

     

189,131

   

Citrix Systems, Inc. (a)

   

330

     

21,697

   
Cognizant Technology Solutions Corp.
(Class A) (a)
   

539

     

39,913

   

Corning, Inc.

   

2,701

     

34,087

   

Dell, Inc.

   

2,702

     

27,371

   

EMC Corp. (a)

   

3,762

     

95,179

   

Flextronics International, Ltd. (a)

   

1,217

     

7,558

   

Google, Inc. (Class A) (a)

   

467

     

331,276

   

Hewlett-Packard Co.

   

3,552

     

50,616

   

IBM

   

1,949

     

373,331

   

Intel Corp.

   

8,986

     

185,381

   

Intuit, Inc.

   

497

     

29,571

   

Lam Research Corp. (a)

   

328

     

11,851

   

Microchip Technology, Inc.

   

340

     

11,081

   

Motorola Solutions, Inc.

   

463

     

25,780

   

Nuance Communications, Inc. (a)

   

437

     

9,754

   

NVIDIA Corp.

   

1,085

     

13,335

   

Open Text Corp. (a)

   

102

     

5,699

   

Oracle Corp.

   

7,006

     

233,440

   

QUALCOMM, Inc.

   

3,058

     

189,657

   

Salesforce.com, Inc. (a)

   

235

     

39,503

   

Symantec Corp. (a)

   

1,261

     

23,719

   

Teradata Corp. (a)

   

297

     

18,381

   

Texas Instruments, Inc.

   

2,056

     

63,613

   

Xerox Corp.

   

2,368

     

16,150

   

Yahoo!, Inc. (a)

   

2,048

     

40,755

   
     

2,280,106

   

Materials: 5.0%

 

Agnico-Eagle Mines, Ltd.

   

306

     

16,021

   

Agrium, Inc.

   

280

     

27,879

   

Air Products & Chemicals, Inc.

   

373

     

31,339

   

Alcoa, Inc.

   

1,892

     

16,423

   

Allegheny Technologies, Inc.

   

180

     

5,465

   

Ball Corp.

   

263

     

11,769

   

Celanese Corp. (Series A)

   

279

     

12,424

   

Cliffs Natural Resources, Inc.

   

252

     

9,717

   

Eastman Chemical Co.

   

272

     

18,510

   

Ecolab, Inc.

   

516

     

37,100

   

Franco-Nevada Corp.

   

259

     

14,769

   
International Flavors &
Fragrances, Inc.
   

143

     

9,515

   

International Paper Co.

   

737

     

29,362

   

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21



Pax MSCI North America ESG Index ETF

December 31, 2012

Schedule of Investments, continued

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

Materials, continued

 

Kinross Gold Corp.

   

2,022

   

$

19,617

   

LyondellBasell Industries NV (Class A)

   

560

     

31,970

   

MeadWestvaco Corp.

   

303

     

9,657

   

Nucor Corp.

   

563

     

24,310

   

Osisko Mining Corp. (a)

   

685

     

5,504

   

Owens-Illinois, Inc. (a)

   

277

     

5,892

   

Potash Corp. of Saskatchewan, Inc.

   

1,536

     

62,446

   

Praxair, Inc.

   

537

     

58,775

   

Rock-Tenn Co. (Class A)

   

125

     

8,739

   

Sealed Air Corp.

   

324

     

5,673

   

Sigma-Aldrich Corp.

   

214

     

15,746

   

Silver Wheaton Corp.

   

627

     

22,581

   

Teck Resources, Ltd. (Class B)

   

1,023

     

37,141

   

The Sherwin-Williams Co.

   

157

     

24,150

   

Yamana Gold, Inc.

   

1,325

     

22,769

   
     

595,263

   

Telecommunication Services: 1.7%

 

BCE, Inc.

   

464

     

19,866

   

CenturyLink, Inc.

   

1,116

     

43,658

   

Crown Castle International Corp. (a)

   

525

     

37,884

   

Frontier Communications Corp.

   

1,768

     

7,567

   

Level 3 Communications, Inc. (a)

   

260

     

6,009

   
Rogers Communications, Inc.
(Class B)
   

687

     

31,159

   
SBA Communications Corp.
(Class A) (a)
   

218

     

15,482

   

Sprint Nextel Corp. (a)

   

5,323

     

30,181

   

Windstream Corp.

   

1,040

     

8,611

   
     

200,417

   

Utilities: 2.5%

 

American Water Works Co., Inc.

   

312

     

11,585

   

Calpine Corp. (a)

   

555

     

10,062

   

Canadian Utilities, Ltd. (Class A)

   

101

     

7,297

   

CenterPoint Energy, Inc.

   

719

     

13,841

   

Consolidated Edison, Inc.

   

520

     

28,881

   

Integrys Energy Group, Inc.

   

138

     

7,206

   

MDU Resources Group, Inc.

   

318

     

6,754

   

NextEra Energy, Inc.

   

712

     

49,263

   

NiSource, Inc.

   

501

     

12,470

   

Northeast Utilities

   

556

     

21,729

   

Oneok, Inc.

   

348

     

14,877

   

Pepco Holdings, Inc.

   

404

     

7,922

   

PG&E Corp.

   

734

     

29,492

   

Pinnacle West Capital Corp.

   

193

     

9,839

   

Sempra Energy

   

404

     

28,660

   

TransAlta Corp.

   

455

     

6,909

   

Wisconsin Energy Corp.

   

408

     

15,035

   

Xcel Energy, Inc.

   

864

     

23,078

   
     

304,900

   

TOTAL COMMON STOCKS

 

(Cost $11,012,025)

       

11,955,707

   

Security Description

 

Shares

 

Value

 

SHORT TERM INVESTMENT: 0.7%

 

MONEY MARKET FUND: 0.7%

 

SSgA Prime Money Market Fund

 

(Cost $82,665)

   

82,665

   

$

82,665

   

TOTAL INVESTMENTS: 100.5%

 

(Cost $11,094,690)

       

12,038,372

   
OTHER ASSETS &
LIABILITIES: (0.5)%
       

(53,937

)

 

Net Assets: 100.0%

     

$

11,984,435

   

(a)  Non-income producing security.

(b)  REIT Real Estate Investment Trust

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22



Pax MSCI EAFE ESG Index ETF

December 31, 2012

Schedule of Investments

Security Description

 

Shares

 

Value

 

COMMON STOCKS: 99.5%

 

Australia: 10.0%

 
Australia & New Zealand Banking
Group, Ltd.
   

7,631

   

$

198,459

   

Commonwealth Bank of Australia

   

4,663

     

301,021

   

Fortescue Metals Group, Ltd.

   

3,439

     

16,602

   

GPT Group (a)

   

13,916

     

53,167

   

Mirvac Group (a)

   

33,394

     

51,484

   

National Australia Bank, Ltd.

   

7,176

     

186,253

   

Newcrest Mining, Ltd.

   

2,898

     

66,733

   

Orica, Ltd.

   

77

     

2,004

   

Origin Energy, Ltd.

   

3,412

     

41,162

   

OZ Minerals, Ltd.

   

1,707

     

11,874

   

Westpac Banking Corp.

   

9,601

     

259,560

   

Woolworths, Ltd.

   

4,058

     

123,568

   
     

1,311,887

   

Austria: 0.4%

 

OMV AG

   

1,293

     

46,632

   

Belgium: 2.0%

 

Colruyt SA

   

4,244

     

209,823

   

Delhaize Group

   

1,106

     

44,109

   

KBC Groep NV

   

396

     

13,653

   
     

267,585

   

Denmark: 2.0%

 

Danske Bank A/S (b)

   

2,796

     

47,258

   

Novo Nordisk A/S (Class B)

   

1,330

     

215,396

   
     

262,654

   

Finland: 0.8%

 

Nokia OYJ

   

10,649

     

41,080

   

Stora Enso OYJ (R Shares)

   

3,432

     

23,732

   

UPM-Kymmene OYJ

   

3,090

     

35,871

   
     

100,683

   

France: 8.0%

 

Carrefour SA

   

2,153

     

54,911

   

CGG – Veritas (b)

   

1,545

     

46,014

   

Compagnie de Saint-Gobain

   

1,790

     

76,037

   

Danone SA

   

1,953

     

128,497

   

France Telecom SA

   

5,446

     

59,874

   

L'Oreal SA

   

1,035

     

143,141

   

Renault SA

   

3,480

     

186,664

   

Schneider Electric SA

   

1,688

     

122,022

   

Societe BIC SA

   

948

     

112,886

   

Technip SA

   

896

     

102,583

   

Veolia Environnement SA

   

1,660

     

20,036

   
     

1,052,665

   

Germany: 5.2%

 

BASF SE

   

2,796

     

262,276

   

Bayerische Motoren Werke AG

   

1,157

     

111,247

   

Deutsche Boerse AG

   

320

     

19,495

   

Deutsche Post AG

   

4,094

     

89,599

   

HeidelbergCement AG

   

113

     

6,828

   

Hochtief AG (b)

   

518

     

30,001

   

K+S AG

   

832

     

38,392

   

Metro AG

   

812

     

22,481

   

SAP AG

   

1,290

     

103,218

   
     

683,537

   

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

Hong Kong: 0.7%

 

CLP Holdings, Ltd.

   

5,500

   

$

46,018

   

Li & Fung, Ltd.

   

22,000

     

38,829

   
     

84,847

   

Ireland: 0.0% (c)

 

Experian PLC

   

155

     

2,469

   

Israel: 0.1%

 

Delek Group, Ltd.

   

56

     

13,095

   

Italy: 1.3%

 

ENI SpA

   

2,848

     

68,863

   

Intesa Sanpaolo SpA

   

33,879

     

58,066

   

Pirelli & C. SpA

   

54

     

616

   

UniCredit SpA (b)

   

9,672

     

47,258

   
     

174,803

   

Japan: 22.9%

 

Aisin Seiki Co., Ltd.

   

1,000

     

30,810

   

Canon, Inc.

   

2,200

     

84,982

   

Central Japan Railway Co.

   

1,100

     

89,053

   

Chugai Pharmaceutical Co., Ltd.

   

3,300

     

63,012

   

Denso Corp.

   

1,100

     

37,822

   

East Japan Railway Co.

   

1,100

     

70,988

   

Eisai Co., Ltd.

   

800

     

33,308

   

Fast Retailing Co., Ltd.

   

100

     

25,259

   

Fuji Heavy Industries, Ltd.

   

8,000

     

99,555

   

Fujitsu, Ltd.

   

22,000

     

91,598

   
Hitachi Construction Machinery
Co., Ltd.
   

2,200

     

45,595

   

Honda Motor Co., Ltd.

   

4,400

     

160,042

   

Kao Corp.

   

2,200

     

57,223

   

KDDI Corp.

   

1,100

     

77,476

   

Komatsu, Ltd.

   

4,400

     

111,139

   

Konica Minolta Holdings, Inc.

   

11,000

     

78,367

   

Kubota Corp.

   

11,000

     

125,438

   
McDonald's Holdings Co.
(Japan), Ltd.
   

800

     

21,141

   

Mitsubishi Electric Corp.

   

11,000

     

92,997

   
Mitsubishi UFJ Financial
Group, Inc.
   

34,900

     

186,074

   
Mitsubishi UFJ Lease & Finance
Co., Ltd.
   

1,090

     

46,517

   

Mitsui Fudosan Co., Ltd.

   

7,000

     

169,201

   

Mizuho Financial Group, Inc.

   

58,600

     

106,404

   

Murata Manufacturing Co., Ltd.

   

800

     

46,724

   

Nidec Corp.

   

100

     

5,806

   

Nikon Corp.

   

1,100

     

32,136

   

Nippon Steel Corp.

   

11,000

     

26,716

   

Nissan Motor Co., Ltd.

   

9,900

     

92,857

   

NTT DoCoMo, Inc.

   

55

     

78,876

   

Panasonic Corp.

   

5,500

     

33,204

   

Resona Holdings, Inc.

   

3,800

     

17,228

   

Santen Pharmaceutical Co., Ltd.

   

2,200

     

84,346

   

Seven & I Holdings Co., Ltd.

   

300

     

8,455

   

Shikoku Electric Power Co., Inc.

   

3,300

     

52,478

   

Shin-Etsu Chemical Co., Ltd.

   

1,100

     

66,536

   

Softbank Corp.

   

2,200

     

79,894

   

Sony Corp.

   

3,300

     

36,563

   

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23



Pax MSCI EAFE ESG Index ETF

December 31, 2012

Schedule of Investments, continued

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

Japan, continued

 
Sumitomo Mitsui Financial
Group, Inc.
   

3,400

   

$

122,489

   

Suzuken Co., Ltd.

   

300

     

8,428

   

Takashimaya Co., Ltd.

   

10,000

     

70,896

   

Takeda Pharmaceutical Co., Ltd.

   

2,200

     

98,086

   

The Chugoku Electric Power Co., Inc.

   

7,700

     

120,489

   

Toho Gas Co., Ltd.

   

1,000

     

5,355

   

Ube Industries, Ltd.

   

11,000

     

26,207

   
     

3,017,770

   

Luxembourg: 0.5%

 

Tenaris SA

   

3,376

     

69,345

   

Netherlands: 2.7%

 

Akzo Nobel NV

   

1,223

     

80,209

   
ASML Holding NV    

1,102

     

69,738

   

Unilever NV

   

5,392

     

204,983

   
     

354,930

   

New Zealand: 0.7%

 

Auckland International Airport, Ltd.

   

42,116

     

92,771

   

Norway: 0.5%

 

Norsk Hydro ASA

   

7,372

     

36,931

   

Statoil ASA

   

1,111

     

27,749

   
     

64,680

   

Spain: 5.4%

 

Banco Bilbao Vizcaya Argentaria SA

   

13,547

     

124,308

   

Banco de Sabadell SA

   

9,627

     

25,067

   

Banco Santander SA

   

24,136

     

194,107

   
Distribuidora Internacional de
Alimentacion SA (b)
   

1,066

     

6,760

   

Ferrovial SA

   

3,877

     

57,248

   

Iberdrola SA

   

13,650

     

75,494

   

Industria de Diseno Textil SA

   

1,113

     

154,809

   

Repsol YPF SA

   

3,487

     

70,499

   
     

708,292

   

Sweden: 4.6%

 

Atlas Copco AB

   

2,005

     

54,953

   

Hennes & Mauritz AB (Class B)

   

4,133

     

142,628

   

Modern Times Group AB (Class B)

   

54

     

1,881

   

Nordea Bank AB

   

11,816

     

112,794

   

Sandvik AB

   

3,943

     

62,732

   
Skandinaviska Enskilda Banken AB
(Class A)
   

5,751

     

48,842

   

Swedbank AB (Class A)

   

6,095

     

118,987

   

Volvo AB (Class B)

   

4,669

     

63,732

   
     

606,549

   

Switzerland: 9.2%

 

Compagnie Financiere Richemont SA

   

1,754

     

136,817

   

Lindt & Spruengli AG (b)

   

19

     

61,856

   

Novartis AG

   

5,545

     

348,020

   

Roche Holding AG

   

1,851

     

372,081

   

Swiss Re AG (b)

   

898

     

64,651

   

Syngenta AG

   

328

     

131,365

   

Xstrata PLC

   

5,906

     

101,666

   
     

1,216,456

   

Security Description

 

Shares

 

Value

 

COMMON STOCKS, continued

 

United Kingdom: 22.5%

 

Associated British Foods PLC

   

3,868

   

$

98,336

   

BG Group PLC

   

10,086

     

165,997

   

Bunzl PLC

   

9,818

     

161,028

   

Burberry Group PLC

   

923

     

18,394

   

Fresnillo PLC

   

1,338

     

40,171

   

GlaxoSmithKline PLC

   

15,379

     

333,731

   

HSBC Holdings PLC

   

49,407

     

519,533

   

Lonmin PLC

   

113

     

522

   

Marks & Spencer Group PLC

   

6,811

     

42,326

   

National Grid PLC

   

3,000

     

34,282

   

Pearson PLC

   

9,861

     

190,425

   

Prudential PLC

   

9,691

     

136,340

   

Reckitt Benckiser Group PLC

   

560

     

35,310

   

RSA Insurance Group PLC

   

50,288

     

102,751

   

Standard Chartered PLC

   

7,155

     

183,005

   

Tesco PLC

   

27,052

     

147,749

   

Tullow Oil PLC

   

4,047

     

82,954

   

Unilever PLC

   

4,906

     

188,682

   

Vodafone Group PLC

   

155,054

     

389,276

   

Wolseley PLC

   

1,598

     

75,329

   

WPP PLC

   

917

     

13,236

   
     

2,959,377

   

TOTAL COMMON STOCKS

 

(Cost $12,581,162)

       

13,091,027

   

PREFERRED STOCK: 0.3%

 

Germany: 0.3%

 
ProSiebenSat.1 Media AG Preference
Shares
   

1,131

     

31,761

   

TOTAL PREFERRED STOCK

 

(Cost $27,049)

       

31,761

   

RIGHTS: 0.0% (c)

 

Spain: 0.0% (c)

 

Repsol SA, Expires 01/11/13 (b)

   

3,487

     

2,124

   

TOTAL RIGHTS

 

(Cost $2,181)

       

2,124

   

SHORT TERM INVESTMENT: 2.7%

 

United States: 2.7%

 

MONEY MARKET FUND: 2.7%

 

SSgA Prime Money Market Fund

 

(Cost $360,485)

   

360,485

     

360,485

   

TOTAL INVESTMENTS: 102.5%

 

(Cost $12,970,877)

       

13,485,397

   
OTHER ASSETS &
LIABILITIES: (2.5)%
       

(323,412

)

 

Net Assets: 100.0%

     

$

13,161,985

   

(a)  REIT Real Estate Investment Trust

(b)  Non-income producing security.

(c)  Amount shown represents less than 0.05% of net assets.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24




December 31, 2012

Statements of Assets and Liabilities

    Pax MSCI
North America
ESG Index ETF
  Pax MSCI
EAFE ESG
Index ETF
 

ASSETS

 

Investments, at value (Note B)

 

$

12,038,372

   

$

13,485,397

   

Cash

   

221

     

   

Foreign currency, at value

   

9,220

     

67,991

   

Receivable for investments sold

   

     

146,584

   

Receivable for foreign taxes recoverable

   

     

7,056

   

Dividends receivable (Note B)

   

15,061

     

22,355

   

Total Assets

   

12,062,874

     

13,729,383

   

LIABILITIES

 

Due to custodian

   

     

377,510

   

Payable for investments purchased

   

     

63,662

   

Distributions payable

   

73,364

     

120,632

   

Accrued advisory fee (Note C)

   

5,075

     

5,594

   

Total Liabilities

   

78,439

     

567,398

   

NET ASSETS

 

$

11,984,435

   

$

13,161,985

   

NET ASSETS CONSIST OF:

 

Paid in capital

 

$

11,046,762

   

$

12,750,652

   
Undistributed (distribution in excess of) net
investment income
   

(4,538

)

   

(13,565

)

 

Accumulated net realized gain (loss) on:

 
Investments and foreign
currency transactions
   

(1,429

)

   

(89,051

)

 

Net unrealized appreciation (depreciation) of:

 

Investments

   

943,682

     

514,520

   

Foreign currency

   

(42

)

   

(571

)

 

NET ASSETS

 

$

11,984,435

   

$

13,161,985

   

NET ASSET VALUE PER SHARE

 

Net asset value per share

 

$

29.96

   

$

23.93

   
Outstanding beneficial interest shares (unlimited
amount authorized, $0.01 par value)
   

400,000

     

550,000

   

COST OF INVESTMENTS:

 

Investments, at cost (Note B)

 

$

11,094,690

   

$

12,970,877

   

Foreign currency, at cost

 

$

9,249

   

$

67,963

   

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25



For the Year Ended December 31, 2012

Statements of Operations

    Pax MSCI
North America
ESG Index ETF
  Pax MSCI
EAFE ESG
Index ETF
 

INVESTMENT INCOME

 

Dividend income

 

$

232,509

   

$

345,545

   

Foreign taxes withheld

   

(3,397

)

   

(25,902

)

 

Total Investment Income

   

229,112

     

319,643

   

EXPENSES

 

Advisory fee (Note C)

   

48,799

     

46,747

   

Total Expenses

   

48,799

     

46,747

   

Net Investment Income

   

180,313

     

272,896

   
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
 

Net realized gain (loss) on:

 

Investments

   

1,339

     

(55,547

)

 

Foreign currency transactions

   

(304

)

   

(3,241

)

 
Net change in unrealized appreciation
(depreciation) on:
 

Investments

   

667,667

     

915,618

   

Foreign currency translation

   

(50

)

   

5

   
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions
   

668,652

     

856,835

   

Net increase in net assets from operations

 

$

848,965

   

$

1,129,731

   

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26



Statements of Changes in Net Assets

    Pax MSCI North America
ESG Index ETF
  Pax MSCI EAFE ESG
Index ETF
 
    Year Ended
12/31/12
  Year Ended
12/31/11
  Year Ended
12/31/12
  For the Period
1/27/11*-12/31/11
 
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
 

Net investment income (loss)

 

$

180,313

   

$

61,239

   

$

272,896

   

$

67,901

   
Net realized gain (loss) on investments
and foreign currency transactions
   

1,035

     

29,178

     

(58,788

)

   

(32,731

)

 
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translation
   

667,617

     

(23,263

)

   

915,623

     

(401,674

)

 
Net increase (decrease) in net assets
resulting from operations
   

848,965

     

67,154

     

1,129,731

     

(366,504

)

 

Net equalization credits and charges

   

18,490

     

5,761

     

93,498

     

24,122

   

Distributions to shareholders from:

 

Net investment income

   

(179,103

)

   

(61,217

)

   

(282,212

)

   

(69,682

)

 

Total distributions to shareholders

   

(179,103

)

   

(61,217

)

   

(282,212

)

   

(69,682

)

 

From capital share transactions:

 

Proceeds from sale of shares sold

   

5,913,515

     

2,632,435

     

8,107,461

     

4,643,191

   

Net income equalization (Note B)

   

(18,490

)

   

(5,761

)

   

(93,498

)

   

(24,122

)

 
Net increase in net assets from
capital share transactions
   

5,895,025

     

2,626,674

     

8,013,963

     

4,619,069

   
Net increase in net assets during
the year
   

6,583,377

     

2,638,372

     

8,954,980

     

4,207,005

   

Net assets at beginning of year

   

5,401,058

     

2,762,686

     

4,207,005

     

   

Net assets at end of year (1)

 

$

11,984,435

   

$

5,401,058

   

$

13,161,985

   

$

4,207,005

   
(1) Including undistributed (distribution in
excess of) net investment income
 

$

(4,538

)

 

$

(688

)

 

$

(13,565

)

 

$

(1,008

)

 

Shares of beneficial interest:

 

Shares sold

   

200,000

     

100,000

     

350,000

     

200,000

   

Net increase in shares outstanding

   

200,000

     

100,000

     

350,000

     

200,000

   

* Commencement of operations

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27




Financial Highlights

Selected data for a share outstanding throughout each period

   

Pax MSCI North America ESG Index ETF

 
    Year Ended
12/31/12
  Year Ended
12/31/11
  For the Period
5/18/10*-12/31/10
 
Net asset value, beginning of
period
 

$

27.01

   

$

27.63

   

$

25.00

   
Income (loss) from investment
operations:
 

Net investment income1

   

0.54

     

0.44

     

0.27

   

Net realized and unrealized gain (loss)2

   

2.84

     

(0.76

)

   

2.62

   

Total from investment operations

   

3.38

     

(0.32

)

   

2.89

   

Net equalization credits and charges

   

0.06

     

0.04

     

   

Distributions to shareholders from:

 

Net investment income

   

(0.49

)

   

(0.34

)

   

(0.26

)

 

Total distributions

   

(0.49

)

   

(0.34

)

   

(0.26

)

 

Net asset value, end of period

 

$

29.96

   

$

27.01

   

$

27.63

   

Total return3

   

12.77

%

   

(1.03

)%

   

11.58

%

 

Net assets, end of period (in 000's)

 

$

11,984

   

$

5,401

   

$

2,763

   
Ratio of expenses to average net
assets
   

0.50

%

   

0.50

%

   

0.50

%4

 
Ratio of net investment income to
average net assets
   

1.85

%

   

1.60

%

   

1.69

%4

 

Portfolio turnover rate5

   

9

%

   

10

%

   

30

%

 

1  Based on average shares outstanding during the period.

2  Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund.

3  Total return is calculated assuming a purchase of shares at net asset value on the first day of the period, reinvestment of all dividends and distributions at net asset value during the period, and a sale at net asset value on the last day of the period. Total return for periods of less than one year is not annualized. Broker commission charges are not included in this calculation.

4  Annualized.

5  Portfolio turnover rate excludes the value of securities received or delivered from in kind processing of creations or redemptions of the Fund's capital shares.

*  Commencement of operations.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28



Financial Highlights

Selected data for a share outstanding throughout each period

   

Pax MSCI EAFE ESG Index ETF

 
    Year Ended
12/31/12
  For the Period
1/27/11*-12/31/11
 

Net asset value, beginning of period

 

$

21.04

   

$

25.06

   

Income (loss) from investment operations:

 

Net investment income1

   

0.72

     

0.62

   

Net realized and unrealized gain (loss)2

   

2.54

     

(4.30

)

 

Total from investment operations

   

3.26

     

(3.68

)

 

Net equalization credits and charges

   

0.25

     

0.22

   

Distributions to shareholders from:

 

Net investment income

   

(0.62

)

   

(0.56

)

 

Total distributions

   

(0.62

)

   

(0.56

)

 

Net asset value, end of period

 

$

23.93

   

$

21.04

   
Total return3    

16.98

%

   

(14.04

)%

 

Net assets, end of period (in 000's)

 

$

13,162

   

$

4,207

   

Ratio of expenses to average net assets

   

0.55

%

   

0.55

%4

 

Ratio of net investment income to average net assets

   

3.21

%

   

2.91

%4

 
Portfolio turnover rate5    

8

%

   

11

%

 

1  Based on average shares outstanding during the period.

2  Amounts shown in this caption for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values for the Fund.

3  Total return is calculated assuming a purchase of shares at net asset value on the first day of the period, reinvestment of all dividends and distributions at net asset value during the period, and a sale at net asset value on the last day of the period. Total return for periods of less than one year is not annualized. Broker commission charges are not included in this calculation.

4  Annualized.

5  Portfolio turnover rate excludes the value of securities received or delivered from in kind processing of creations or redemptions of the Fund's capital shares.

*  Commencement of operations.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29




December 31, 2012

Notes to the Financial Statements

Note A—Organization

Pax World Funds Trust II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an open-end management investment company organized under the laws of the Commonwealth of Massachusetts on February 7, 2008.

As of December 31, 2012, the Trust offered two portfolios, the Pax MSCI North America ESG Index ETF and the Pax MSCI EAFE ESG Index ETF (each referred to as a "Fund" or collectively as the "Funds"). The Funds commenced operations on May 18, 2010 and January 27, 2011, respectively and first listed on NYSE Arca, Inc. on May 19, 2010 and January 28, 2011, respectively. Each Fund operates as a non-diversified investment company. The Funds' investment objectives are to seek investment returns that closely correspond to the price and yield performance, before fees and expenses, of the MSCI North America ESG Index and the MSCI EAFE ESG Index, respectively.

Note B—Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements:

Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Indemnifications and Guarantees Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown as this could involve future claims that may be made against the Trust that have not yet occurred. However, while the Trust has a relatively short operating history, the Trust nonetheless expects this risk of loss to be remote.

Valuation of Investments For purposes of calculating the net asset value ("NAV"), determined ordinarily as of the close of regular trading (normally 4:00 p.m. Eastern time) (the "NYSE Close") on the New York Stock Exchange


30



December 31, 2012

("NYSE") on each day (a "Business Day") that the NYSE is open for trading, the Funds normally use pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities, subject to possible fair value adjustments. Information that becomes known to the Funds or their agents after NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or NAV determined earlier that day.

Fair values for various types of securities and other instruments are determined on the basis of closing prices or last sales prices on an exchange or other market, or based on quotes or other market information obtained from quotation reporting systems, established market makers or pricing services. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost, which approximates fair value.

Investments denominated in currencies other than the U.S. dollar are converted to U.S. dollars using daily exchange rates obtained from pricing services. As a result, the NAV of a Fund's shares may be affected by changes in the value of currencies in relation to the U.S. dollar.

If market quotations are not readily available (including in cases when available market quotations are deemed to be unreliable), the Funds' investments will be valued as determined in good faith pursuant to policies and procedures approved by the Board of Trustees (so called "evaluated pricing"). The Board has delegated to the Adviser's Best Execution and Valuation Committee the day-to-day responsibility for making evaluated pricing determinations with respect to Fund holdings. The Best Execution and Valuation Committee is comprised of representatives of the Adviser, including several members of the Portfolio Management team, the Director of Trading, the Chief Compliance Officer and the Chief Financial Officer. One of the functions of the Best Execution and Valuation Committee is to value securities where current and reliable market quotations are not readily available. The Committee meets periodically and reports to the Board at each quarterly meeting regarding any securities for which evaluated pricing was employed during the previous quarter. All actions taken by the Best Execution and Valuation Committee are reviewed and ratified by the Board. Evaluated pricing may require subjective determinations about the value of a security or other asset, and fair values used to determine a Fund's NAV may differ from quoted or published prices, or from prices that are used by others, for the same investments. Also, the use of


31



December 31, 2012

Notes to the Financial Statements, continued

evaluated pricing may not always result in adjustments to the prices of securities or other assets held by a Fund.

The Funds may determine that market quotations are not readily available due to events relating to a single issuer (e.g., corporate actions or announcements) or events relating to multiple issuers (e.g., governmental actions or natural disasters). The Funds may determine the fair value of investments based on information provided by pricing services and other third-party vendors, which may recommend fair value prices or adjustments with reference to other securities, indices or assets. In considering whether fair value pricing is required and in determining fair values, the Funds may, among other things, consider significant events (which may be considered to include changes in the value of U.S. securities or securities indices) that occur after the close of the relevant market and the usual time of valuation. Evaluated pricing could result in a difference between the prices used to calculate the Funds' NAVs and the prices used by the Funds' benchmark indices, which, in turn, could result in a difference between the Funds' performance and the performance of the Funds' benchmark indices.

Non-U.S. markets can be significantly more volatile than U.S. markets, causing the prices of some of the Funds' investments to fluctuate significantly, rapidly and unpredictably. Non-U.S. securities may be less liquid than U.S. securities; consequently, the Funds may at times be unable to sell non-U.S. securities at desirable times or prices. Other risks related to non-U.S. securities include delays in the settlement of transactions; less publicly available information about issuers; different reporting, accounting and auditing standards; the effect of political, social, diplomatic or economic events; seizure, expropriation or nationalization of the issuer or its assets; and the possible imposition of currency exchange controls. If a Fund invests substantially in securities of non-U.S. issuers tied economically to a particular country or geographic region, it will be subject to the risks associated with such country or geographic region to a greater extent than a fund that is more diversified across countries or geographic regions.

The Board of Trustees of the Trust has determined that, because shares of the Funds are purchased or redeemed principally by the delivery of securities in kind, rather than cash, the use of local market closing prices to determine the value of non-U.S. securities, rather than fair values determined as of the NYSE Close to give effect to intervening changes in one or more indices, is unlikely to result in material dilution of the interests of the Funds' shareholders. Therefore, and in order to minimize tracking error relative to the each Fund's benchmark


32



December 31, 2012

index (which is based on local market closing prices), the Funds generally intend to use local market closing prices to value non-U.S. securities, and may determine in the future to value non-U.S. securities using a different methodology.

Fair Value Measurements Fair value is defined as the price that the Fund would receive upon selling an investment in orderly transaction between market participants. Various inputs are used in determining value, these inputs are summarized in the three broad Levels listed below.

• Level 1 –  quoted prices in active markets for identical investments

• Level 2 –  other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

• Level 3 –  significant unobservable inputs (including the Funds' own assumptions in determining the fair value of investments)

Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a general summary of valuation inputs and classifications for different categories of securities.

Equity Securities Equity securities, including common stocks, preferred stocks and exchange-traded funds, for which market quotations are readily available, valued at the last reported sale price or official closing price as reported by an independent pricing service, are generally categorized as Level 1 in the hierarchy. Foreign equities may also be valued at official close, or may be valued based on the fair value pricing procedures noted above. When third-party fair value pricing of foreign securities methods are applied, they are generally categorized as Level 2. To the extent that significant inputs for equity securities are unobservable, values are categorized as Level 3 in the hierarchy.

Short-term Investments Short-term securities, including repurchase agreements, with remaining maturities of 60 days or less, which are valued at amortized cost, are generally categorized as Level 2 in the hierarchy.


33



December 31, 2012

Notes to the Financial Statements, continued

The following is a summary of the inputs used to value the Funds' net assets as of December 31, 2012:

Pax MSCI North America ESG Index ETF

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Common Stocks

 

$

11,955,707

   

$

   

$

   

$

11,955,707

   

Money Market Fund

   

82,665

     

     

     

82,665

   

Total

 

$

12,038,372

   

$

   

$

   

$

12,038,372

   

Pax MSCI EAFE ESG Index ETF

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Common Stocks

 

$

13,091,027

   

$

   

$

   

$

13,091,027

   

Preferred Stock

   

31,761

     

     

     

31,761

   

Rights

   

2,124

     

     

     

2,124

   

Money Market Fund

   

360,485

     

     

     

360,485

   

Total

 

$

13,485,397

   

$

   

$

   

$

13,485,397

   

The Funds did not hold any Level 2 or Level 3 categorized securities during the year ended December 31, 2012.

Transfers in and out of Levels during the period are assumed to be transferred on the last day of the period at their current value. There were no transfers between Level 1 and Level 2 during the period.

Investment Transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses from the sale or disposition of securities are determined on the identified cost basis, which is also used for federal income tax purposes. Corporate actions (including cash dividends) are recorded net of foreign tax withholdings.

Investment Income Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discount and amortization of premiums, if any. The value of additional securities received as dividend payments is recorded as income and as an increase to the cost basis of such securities.

Distributions to Shareholders Distributions to shareholders are recorded by the Funds on the ex-dividend date. The Funds expect to pay dividends of net investment income and to make distributions of capital gains, if any, at least annually. Income and capital gains distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

Equalization The Funds follow the accounting practice known as "Equalization" by which a portion of the proceeds from sales and costs of reacquiring Fund shares, equivalent on a per share basis to the amount of distributable net


34



December 31, 2012

investment income on the date of the transaction, is credited or charged to undistributed net investment income. As a result, undistributed net investment income per share is unaffected by sales or reacquisition of Fund shares. Amounts related to Equalization can be found on the Statements of Changes.

Expenses The Funds are charged a unified management fee that includes all the costs and expenses of the Funds (other than taxes, charges of governmental agencies, interest, brokerage commissions incurred in connection with portfolio transactions and extraordinary expenses), including accounting expenses, administrator, transfer agent and custodian fees, Fund legal fees and other expenses (See Note C).

Federal Income Taxes The Funds intend to elect to be treated and qualify each year as regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). If each Fund so qualifies and satisfies certain distribution requirements, such Fund will ordinarily not be subject to federal income tax on its net investment income (which includes short-term capital gains) and net capital gains that it distributes to shareholders. The Funds expect to distribute all or substantially all of their income and gains to shareholders every year. Therefore, no Federal income or excise tax provision is required. The Funds are treated as separate entities for U.S. Federal income tax purposes.

Foreign Currency Transactions The accounting records of the Funds are maintained in U.S. dollars. In addition, purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively.

Note C—Investment Advisory Fee and Transactions

The Trust has entered into an Investment Advisory Contract, (the "Management Contract") with Pax World Management LLC (the "Adviser"). Pursuant to the terms of the Management Contract, the Adviser, subject to the supervision of the Board of Trustees of the Trust, is responsible for managing the assets of each Fund in accordance with the Funds' investment objectives, investment programs and policies.


35



December 31, 2012

Notes to the Financial Statements, continued

Pursuant to the Management Contract the Adviser has contracted to furnish the Funds continuously with an investment program, determining what investments to purchase, sell and exchange for the Funds and what assets to hold uninvested. The Adviser also has contracted to provide office space and certain management and administrative facilities for the Funds. Each Fund pays a unified management fee to the Adviser at the following annual rates (expressed as a percentage of the average daily net assets of such Fund):

   

Annual Rate

 

Pax MSCI North America ESG Index ETF

   

0.50

%

 

Pax MSCI EAFE ESG Index ETF

   

0.55

%

 

Out of the investment advisory fee, the Adviser bears all expenses of managing and operating the Funds, except taxes, charges of governmental agencies, interest, brokerage commissions incurred in connection with portfolio transactions and extraordinary expenses. The aggregate remuneration paid to the Trust's Trustees (and borne by the Adviser) was $25,132.

Note D—Investment Information

During the year ended December 31, 2012, the Funds had purchases and sales of investment securities as follows:

   

Purchases

 

Sales

 

Purchases In-Kind

 

Sales In-Kind

 

Pax MSCI North America ESG Index ETF

 

$

924,112

   

$

859,710

   

$

5,913,272

   

$

   

Pax MSCI EAFE ESG Index ETF

 

$

724,986

   

$

799,719

   

$

8,117,255

   

$

   

The identified cost of investments for federal income tax purposes and the gross unrealized appreciation and depreciation at December 31, 2012 were as follows:

   

Identified Cost

  Gross Unrealized
Appreciation
  Gross Unrealized
Depreciation
  Net Unrealized
Appreciation
(Depreciation)
 

Pax MSCI North America ESG Index ETF

 

$

11,100,136

   

$

1,257,744

   

$

319,508

   

$

938,236

   

Pax MSCI EAFE ESG Index ETF

 

$

12,985,308

   

$

1,019,232

   

$

519,143

   

$

500,089

   

Tax Information The RIC Modernization Act of 2010, the "Act", was signed into law on December 22, 2010. Under the Act, the Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, losses incurred post-enactment will be required to be utilized prior to the losses incurred in pre-enactment years. As a result, pre-enactment capital loss carryforwards may


36



December 31, 2012

be more likely to expire unused. Additionally, post-enactment losses that are carried forward will retain their character as either short-term or long-term capital losses, rather than being considered as all short-term as under previous law.

At December 31, 2012, the Funds had capital loss carryforwards which may be used to offset any net realized gains expiring December 31:

    Carryforwards
Utilized in
2012
  No Expiration
Short-term
  No Expiration
Long-term
 

Pax MSCI North America ESG Index ETF

 

$

7,248

   

$

   

$

   

Pax MSCI EAFE ESG Index ETF

 

$

   

$

42,202

   

$

46,613

   

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of gain (loss) on foreign currency transactions and tax treatment related to investments in REITs and PFICs. For the year ended December 31, 2012, the Funds recorded the following reclassifications:

    Undistributed Net
Investment Income
  Accumulated Net
Realized Gain (Loss)
  Paid In
Capital
 

Pax MSCI North America ESG Index ETF

 

$

(5,060

)

 

$

5,060

   

$

   

Pax MSCI EAFE ESG Index ETF

 

$

(3,241

)

 

$

3,241

   

$

   

Net assets were not affected by these reclassifications.

The tax character of distributions paid during the years ended December 31, 2012 and December 31, 2011 were as follows:

   

Distributions Paid in 2012

 

Distributions Paid in 2011

 
    Ordinary
Income
  Long-term
Capital Gains
  Ordinary
Income
  Long-term
Capital Gains
 

Pax MSCI North America ESG Index ETF

 

$

179,103

   

$

   

$

61,217

   

$

   

Pax MSCI EAFE ESG Index ETF

 

$

282,212

   

$

   

$

69,682

   

$

   

As of December 31, 2012 the components of distributable earnings on a tax basis were as follows:

    Undistributed
Net Investment
Income
  Undistributed
Long-term
Capital Gain
  Net Unrealized
Appreciation
(Depreciation)
 

Pax MSCI North America ESG Index ETF

 

$

   

$

406

   

$

938,194

   

Pax MSCI EAFE ESG Index ETF

 

$

882

   

$

   

$

499,266

   


37



December 31, 2012

Notes to the Financial Statements, continued

The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations, which may differ from GAAP. These differences primarily relate to investments in foreign denominated securities and real estate investment trusts. Additionally, timing differences may occur due to wash sale loss deferrals. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period, and may result in reclassification among certain capital accounts. For tax purposes, short-term capital gains are considered ordinary income.

Management has analyzed the Funds' tax positions taken for all open years which remain subject to examination by the Funds' major tax jurisdictions (years 2010 and 2011). The Funds recognize interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. Management has concluded that, as of and during the year ended December 31, 2012, no provision for federal income tax is necessary and, therefore, the Funds did not have a liability for any unrecognized tax expenses.

Note E—Shareholder Transactions

The Funds issue and redeem shares only to Authorized Participants (typically broker-dealers) in exchange for delivery of a basket of assets (securities and/ or cash), referred to as a Creation Unit, in aggregations of 50,000 shares. The Fund may impose a creation transaction fee and a redemption transaction fee to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units. The standard creation and redemption transaction fee of $1,000 for Pax MSCI North America ESG Index ETF and $1,800 for Pax MSCI EAFE ESG Index ETF is charged on each transaction of Creation Units purchased or redeemed by an investor on the same day. Purchasers and redeemers of Creation Units for cash (when cash creations and redemptions are permitted) will also be subject to an additional variable charge of up to a maximum of four times the standard creation/ redemption transaction fee to offset the transaction cost to the Fund of buying portfolio securities. In addition, purchasers and redeemers of Creation Units are responsible for payment of the costs of transferring securities to or from a Fund. From time to time, the Adviser may cover the cost of any transaction fees.

Retail investors may only buy and sell shares of the Fund on a national securities exchange (NYSE Arca) through a broker-dealer. Such transactions may be subject to customary brokerage commission charges. Shares can be bought


38



December 31, 2012

and sold throughout the trading day like other publicly-traded securities, trading at current market prices, which may be different from the Funds' net asset value.

Note F—Other

Subsequent Event On February 20, 2013, Pax World Funds Trust II announced the termination and subsequent liquidation of Pax MSCI North America ESG Index ETF (NASI) and the withdrawal of the fund listing with NYSE Arca. The last day of trading for NASI on NYSE Arca will be March 13, 2013.

Between March 13 and March 22, 2013, the process of closing down and liquidating the fund will occur. The Trust will then make a final liquidation distribution to remaining NASI shareholders.

Recent Accounting Pronouncements In December 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements related to derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact, if any, of the update's adoption on the financial statements of the Funds.


39




December 31, 2012

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Pax World Funds Trust II:

We have audited the accompanying statement of assets and liabilities of Pax MSCI North America ESG Index ETF and Pax MSCI EAFE ESG Index ETF (two of the three funds constituting the Pax World Funds Trust II) (the "Funds"), including the schedules of investments, as of December 31, 2012, and the related statements of operations for the year then ended, the statement of changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2012, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Pax MSCI North America ESG Index ETF and Pax MSCI EAFE ESG Index ETF of Pax World Funds Trust II at December 31, 2012, the results of their operations for the year then ended, the changes in their net assets and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts
February 22, 2013


40



December 31, 2012 (Unaudited)

Other Information

Frequency Distribution of Discounts and Premiums Bid/Offer Midpoint vs. NAV as of December 31, 2012 (Unaudited)

The following chart is provided to show the frequency at which the daily market price on the NYSE Arca, Inc. (the "Exchange"), the secondary market for shares of the Fund, was at a discount or premium to such Fund's NAV). The market price of the Fund generally is determined using the midpoint between the highest bid and the lowest offer on the Exchange, as of the time that the Fund's NAV is calculated (referred to as the "Bid/Offer Midpoint"). The Fund's Bid/Offer Midpoint may at times be at, above or below its NAV. The discount or premium is the percentage difference between the NAV and the Bid/Offer Midpoint of a Fund. A discount is the amount that a Fund is trading below the reported NAV, expressed as a percentage of the NAV. A premium is the amount that a Fund is trading above the reported NAV, expressed as a percentage of NAV. The NAV of the Fund will fluctuate with changes in the market value of its portfolio holdings. The Bid/Offer Midpoint of the Fund will fluctuate in accordance with changes in its NAV, as well as supply and demand. Premium/Discount frequency data quoted represents past performance. Past performance does not guarantee future results.

   

Bid/Offer Midpoint Above NAV

 

Bid/Offer Midpoint Below NAV

 

Commencement of Trading

  50-99
Basis Points
  100-199
Basis Points
  >200
Basis Points
  50-99
Basis Points
  100-199
Basis Points
  >200
Basis Points
 
Pax MSCI North America ESG Index ETF
05/18/10 through 12/31/12
   

71

     

35

     

7

     

17

     

6

     

1

   
Pax MSCI EAFE ESG Index ETF
01/27/11 through 12/31/12
   

111

     

85

     

19

     

41

     

25

     

22

   

Tax Information (Unaudited)

For Federal income tax purposes, the percentage of Trust distributions which qualify for the corporate dividends paid deduction for the fiscal year ended December 31, 2012 is 100.00% for the Pax MSCI North America ESG Index ETF and 0.00% for the Pax MSCI EAFE ESG Index ETF.

For the fiscal year ended December 31, 2012 certain dividends paid by the Trust may be designated as qualified dividend income and subject to a maximum tax rate of 15%, as provided for the Jobs and Growth Tax Relief Reconciliation Act of 2003. Complete information will be reported in conjunction with your 2012 Form 1099-DIV.

For the fiscal year ended December 31, 2012, the Pax MSCI EAFE ESG Index ETF earned foreign source income totaling $345,529 and paid $24,483 in foreign taxes which it intends to pass through to its shareholders.


41



December 31, 2012 (Unaudited)

Proxy Voting (Unaudited)

You may obtain a description of the policies and procedures that the Funds use to determine how to vote proxies relating to their portfolio securities, without charge, upon request by contacting the Fund at 888.729.3863 or on the SEC's website at www.sec.gov. The information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month year ended June 30 is available without charge, upon request, by telephoning ESG Shares (toll-free) at 888.729.3863 or visiting ESG Shares website at www.esgshares.com and will be available without charge by visiting the SEC's website at www.sec.gov.

Quarterly Portfolio Holdings Disclosure (Unaudited)

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Each Fund's Form N-Qs are available on the SEC website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330. Information contained in the Fund's Form N-Qs may also be obtained by visiting ESG Shares website at www.esgshares.com or telephoning ESG Shares (toll-free) at 888.729.3863.

Management of the Funds (Unaudited)

The business of the Trust is managed under the direction of the Trust's Board of Trustees. The Adviser serves as investment adviser to the Funds pursuant to an investment advisory agreement between the Adviser and the Trust. The Trust's Board of Trustees oversees the Adviser and decides upon matters of general policy. The Board of Trustees meets at least four (4) times per year, and reviews the performance and operations of the Funds. The Adviser, either directly or through others selected by the Adviser, furnishes daily investment advisory services.

Officers/Trustees

The following table reflects the name and age, position(s) held with the Trust, the term of office and length of time served, the principal occupation(s) during the past five (5) years, other directorships held, and the number of portfolios overseen in the Pax World Fund Family of those persons who were the trustees and/or officers of the Funds on December 31, 2012. The trustees and officers set forth in the first table below (Interested Trustees and Officers) are considered interested persons under the 1940 Act by virtue of their position or


42



December 31, 2012 (Unaudited)

affiliation with the Adviser. The trustees in the second table (Disinterested Trustees) are not considered interested persons and have no affiliation with the Adviser. The business address of each trustee and officer is 30 Penhallow Street, Suite 400, Portsmouth, NH 03801.

None of the officers or trustees of the Funds are related to one another by blood, marriage or adoption. The aggregate remuneration paid on behalf of each Fund during the period covered by the report to (i) all Trustees and all members of any advisory board for regular compensation; (ii) each Trustee and each member of an advisory board for special compensation; (iii) all officers; and (iv) each person of whom any officer or Trustee of the Fund is an affiliated person is as follows: Pax MSCI North America ESG Index ETF, $12,594; and Pax MSCI EAFE ESG Index ETF, $12,538.

Interested Trustees and Officers

Name and Age

  Position(s) Held With the
Trust; Term of Office1; and
Length of Time Served
  Principal Occupation(s) During Past
Five Years and Other Directorships Held
by Trustee or Officer
  Number of
Portfolios in the
Pax World Fund
Family Overseen
by Trustee
 
Laurence A. Shadek
(63)
 

Trustee (since 2008)

 

Chairman of the Board of the Adviser (1996–present); Executive Vice-President of Wellington Shields & Co. LLC or its predecessor (1986–present); Trustee of Pax World Funds Series Trust I (2006–present); Executive Vice President of Pax World Money Market Fund (1998–2008); Chairman of the Board of Directors of the Pax World Balanced Fund (1996–2006), Pax World Growth Fund (1997–2006), and Pax World High Yield Bond Fund (1999–2006); member of the Board of Trustees of Franklin & Marshall College (1998–present).

 

13

 


43



December 31, 2012 (Unaudited)

Name and Age

  Position(s) Held With the
Trust; Term of Office1; and
Length of Time Served
  Principal Occupation(s) During Past
Five Years and Other Directorships Held
by Trustee or Officer
  Number of
Portfolios in the
Pax World Fund
Family Overseen
by Trustee
 
Joseph Keefe
(59)
 

Trustee, Chief Executive Officer (since 2008)

 

Chief Executive Officer (2005–present) and President (2006–present) of the Adviser; Trustee of Pax World Funds Series Trust I (2006–present); President of Pax World Money Market Fund (2006–2008); Senior Vice President of the Pax World Balanced, Pax World Growth, and Pax World High Yield Bond Fund (2005–2006); President of New Circle Communications LLC (2000–2005); Chair of the Board, Women Thrive Worldwide (2009–present); Co-Chair of The Carbon Coalition (2003–present); member of the Boards of Directors of Americans for Campaign Reform (2003–present), On Belay (2006–2011) and the Social Investment Forum (2000–2006).

 

13

 
John Boese
(49)
 

Chief Compliance Officer (since 2008)

 

Chief Compliance Officer of the Adviser (2006–present); Chief Compliance Officer of Pax World Funds Series Trust I (2006–present); Vice President and Chief Regulatory Officer of the Boston Stock Exchange, Boston, MA (2000–2006).

 

N/A

 
Maureen Conley
(50)
 

Secretary (since 2008)

 

Senior Vice President of Shareholder Services/Operations (2005–present) and Manager of Shareholder Services (2000–2005) for the Adviser; Secretary of Pax World Funds Series Trust I (2006–present).

 

N/A

 
Alicia K. DuBois
(53)
 

Treasurer (since 2008)

 

Chief Financial Officer for the Adviser (2006–present); Treasurer of Pax World Funds Series Trust I (2006–present); Assistant Treasurer for both Jefferson Pilot Investment Advisory Corp. and Jefferson Pilot Variable Fund, Inc. (2001–2006); and Assistant Vice President at Lincoln Financial Group (formerly Jefferson-Pilot Corp.) (2005–2006)

 

N/A

 
Scott LaBreche
(40)
 

Assistant Treasurer (since 2010)

 

Director, Portfolio Analysis & Reporting for the Adviser (2009–present); Assistant Treasurer of Pax World Funds Series Trust I (2010–present); Fund Administration Manager & Portfolio Analyst for the Adviser (2007–2009); Securities Fund Analyst, Lincoln Financial Group (formerly Jefferson Pilot Financial) (2000–2007).

 

N/A

 


44



December 31, 2012 (Unaudited)

Disinterested Trustees

Name and Age

  Position(s) Held With the
Trust; Term of Office1; and
Length of Time Served
  Principal Occupation(s) During Past
Five Years and Other Directorships Held by
Trustee or Officer
  Number of
Portfolios in the
Pax World Fund
Family Overseen
by Trustee
 
Adrian P. Anderson
(58)2
 

Trustee (since 2008)

 

Trustee of Pax World Funds Series Trust I (2007–present; Chief Executive Officer of North Point Advisors, LLC (2004–present); Senior Consultant of Gray and Co. (1999–2004).

 

13

 
Carl H. Doerge, Jr.
(74)2
  Chairman of the
Board of Trustees;
Trustee (since 2008)
 

Trustee of Pax World Funds Series Trust I (2006–present); Private investor (1995–present); member of the Board of Trustees and Police Commissioner of the Village of Upper Brookville, NY (1998–present); member of the Board of Directors (1998–present) and Chairman of the Investment Committee (1999–present) of St. Johnland Nursing Home in Kings Park, NY.

 

13

 
Cynthia Hargadon
(57)3
 

Trustee (since 2008)

 

Trustee of Pax World Funds Series Trust I (2006–present); Senior Consultant and Partner of North Point Advisors, LLC (2003–2006, 2010–present); Managing Director of CRA Rogers Casey (2006–2010).

 

13

 
Louis F. Laucirica
(71)2
 

Trustee (since 2008)

 

Trustee of Pax World Funds Series Trust I (2006–present); Associate Dean and Director of Undergraduate Studies of Stevens Institute of Technology, Howe School (1999–2010).

 

13

 
John L. Liechty
(58)3
 

Trustee (since 2010)

 

Trustee of Pax World Funds Series Trust I (2010–present); Principal, Integrated Investment Solutions (2009–present); Principal, Integrated Financial Planning (2010–present); President and CEO, MMA Praxis Mutual Funds (1997–2008).

 

13

 
Nancy S. Taylor
(57)3
 

Trustee (since 2008)

 

Trustee of Pax World Funds Series Trust I (2006–present); Senior Minister, Old South Church in Boston, MA (2005–present); Trustee, Andover Newton Theological School (2002–present); Board of Managers, Old South Meeting House (2005–present); Director, Ecclesia Ministries, a ministry to Boston's homeless population (2003–present).

 

13

 

1 Trustees of the Funds hold office until a successor is chosen and qualifies. Officers of the Funds are appointed by the Board of Trustees and hold office until a successor is chosen and qualifies.

2 Designates a member of the Audit Committee. The Audit Committee has the responsibility of overseeing the establishment and maintenance of an effective financial control environment, for overseeing the procedures for evaluating the system of internal accounting control and for evaluating audit performance. The Audit Committee meets on at least a quarterly basis.

3 Designates a member of the Nomination, Compensation & Compliance Committee. The Nomination, Compensation & Compliance Committee is responsible for considering and recommending Board candidates, reviewing and recommending Board compensation, and overseeing regulatory and fiduciary compliance matters. The Nomination, Compensation & Compliance Committee meets on at least a quarterly basis.


45



December 31, 2012 (Unaudited)

The Statement of Additional Information includes additional information about the trustees and is available upon request without charge by calling 888.729.3863 between the hours of 9:00 a.m. and 6:00 p.m. Eastern time or by visiting our website at www.esgshares.com.

This annual report is intended for shareholders of the ESG Shares ETFs only, and is not authorized for distribution to other persons unless accompanied or preceded by a prospectus. Please consider the Funds' investment objectives, risks and charges and expenses carefully before investing. The Funds' prospectus contains this and other information about the Funds and may be obtained by calling 888.729.3863, e-mailing info@esgshares.com or visiting www.esgsharess.com. The performance data quoted herein 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. In addition, current performance may be lower or higher than the performance data quoted herein. For more recent month-end performance information, please call 888.729.3863or visit www.esgshares.com.


46




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30 Penhallow Street, Suite 400
Portsmouth NH 03801

888.729.3863
www.esgshares.com

ESG000288




 

Item 2.           Code of Ethics.

 

As of December 31, 2012, the Registrant has adopted a “code of ethics,” as such term is defined in paragraph (b) of this Item 2, that applies to all officers of the Registrant, including Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or by a third party.  A copy of the code of ethics is filed as an exhibit to this Form N-CSR.

 

Item 3.           Audit Committee Financial Expert.

 

The Registrant’s Board of Trustees has determined that Carl H. Doerge, Jr. and Adrian Anderson, who each serve on the Board’s Audit Committee, qualify as “audit committee financial experts,” as such term is defined in paragraph (b) of this Item 3. The Board also has determined that Messrs. Doerge and Anderson are “independent,” as such term is interpreted by subparagraph (a)(2) of this Item 3. The Securities and Exchange Commission has stated that the designation of a person as an audit committee financial expert pursuant to this Item 3 of the Form N-CSR does not impose on such a person any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Audit Committee and the Board of Trustees in the absence of such designation or identification.

 

Item 4.           Principal Accountant Fees and Services.

 

(a)           Audit Fees.     The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $18,000 and $18,000 for the fiscal years ended December 31, 2012 and 2011, respectively.

 

(b)           Audit-Related Fees.     The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 and $0 for the fiscal years ended December 31, 2012 and 2011, respectively.

 

(c)           Tax Fees.     The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning were $15,000 and $15,000 for the fiscal years ended December 31, 2012 and 2011, respectively. Fees disclosed under this category are for professional services related to review and execution of federal, state and excise tax returns and advice concerning tax compliance and planning.

 

(d)           All Other Fees.     The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item, are $0 and $0 for the fiscal years ended December 31, 2012 and 2011, respectively.

 

(e)           (1)    To the extent required by applicable regulations, the Audit Committee approves in advance all audit and non-audit services rendered to the Registrant by the independent registered public accounting firm and all non-audit services to the Registrant’s investment adviser and any entity controlling, controlled by or under common control with the Registrant’s investment adviser that provide ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant.

 

(2)     With respect to the services described in paragraphs (b) through (d) of this Item, no amount was approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X and no amount was required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

 

(f)            Not applicable.

 

(g)           The aggregate non-audit fees billed by the Registrant’s accountant for services rendered to the Registrant, or to the Registrant’s investment adviser, or to any entity controlling, controlled by or under common control with the adviser that provides ongoing services to the Registrant totaled $0 and $0, for the fiscal years ended December 31, 2012 and 2011, respectively.

 

(h)           Not applicable.

 



 

Item 5.   Audit Committee of Listed Registrants.

 

The registrant has an audit committee which was established by the Board of Trustees of the Trust in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended.  The members of the registrant’s audit committee are Adrian P. Anderson, Carl H. Doerge, Jr. and Louis F. Laucirica.

 

Item 6.           Schedule of Investments.

 

A complete series of schedules of investments are included as part of the Report to Shareholders filed under Item 1

 

Item 7.           Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

 

This disclosure is not applicable to the Registrant, as it is an open-end investment company.

 

Item 8.           Portfolio Managers of Closed-End Management Investment Companies.

 

This disclosure is not applicable to the Registrant, as it is an open-end investment company.

 

Item 9.           Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

 

This disclosure is not applicable to the Registrant, as it is an open-end investment company.

 

Item 10.         Submission of Matters to a Vote of Security Holders.

 

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that have been implemented since the Registrant last provided disclosure in response to the requirements of this Item.

 

Item 11.         Controls and Procedures.

 

(a)           It is the conclusion of the Registrant’s principal executive officer and principal financial officer (or persons performing similar functions), based on an evaluation of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) (the “Disclosure Controls”) as of a date within 90 days of the filing date of this report on Form N-CSR, that the design and operation of the Disclosure Controls are effective to reasonably ensure that information required to be disclosed by the Registrant in this report on Form N-CSR has been recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

 

(b)           There has been no change in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the second fiscal quarter of the period covered by this report on Form N-CSR that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 12.         Exhibits.

 

(a)

(1)

 

The registrant’s code of ethics pursuant to Item 2 of Form N-CSR is filed with the registrant’s annual Form N-CSR.

 

 

 

 

 

(2)

 

Certifications of the principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached.

 

 

 

 

 

(3)

 

Written solicitation to repurchase securities issued by closed-end companies: not applicable.

 



 

(b)                                 Certification of the principal executive officer and principal financial officer of the Registrant required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended.

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)

 

Pax World Funds Trust II

 

 

 

By (Signature and Title)

 

/s/ Joseph F. Keefe

 

 

Joseph F. Keefe, President

 

 

 

Date

 

February 22, 2013

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf by the Registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)

 

/s/ Joseph F. Keefe

 

 

Joseph F. Keefe, President (Principal Executive Officer)

 

 

 

Date

 

February 22, 2013

 

 

 

By (Signature and Title)

 

/s/ Alicia K. DuBois

 

 

Alicia K. DuBois, Treasurer (Principal Financial Officer)

 

 

 

Date

 

February 22, 2013

 


EX-99.CODEETH 2 a13-2692_2ex99dcodeeth.htm EX-99.CODEETH

Exhibit 99.CODEETH

 

Code of Ethics
and
Insider Trading Policy

 

for

 

Pax World Management LLC

Under Rule 204A-1 of the Investment Advisers Act of 1940

 

and

 

Pax World Funds Series Trust I

Pax World Funds Trust II

Under Rule 17j-1 of the Investment Company Act of 1940

 

 

As of March 2012

 



 

I.             Preamble

 

The Code of Ethics (the “Code”) for Pax World Management LLC (“PWM” or the “Adviser”) and Pax World Funds Series Trust I and Pax World Funds Trust II (the “Trusts”), hereinafter, (the “Code”) has been adopted in accordance with the rules under the Investment Company Act of 1940 and the Investment Advisers Act of 1940.(1)  The Code applies to all supervised persons who include but are not limited to: all employees, officers, and persons whom the Chief Compliance Officer (the “CCO”) deem covered by this policy.

 

Supervised persons will receive the Code initially when hired and thereafter on an annual basis.  Supervised persons are required to provide a written acknowledgement of receipt of the Code.  The written acknowledgement requirement may be satisfied by signing the attached attestation page and returning it to the Compliance Department (“Compliance”).

 

A supervised person means any partner, officer, director (or other person occupying a similar status or performing similar functions), or an employee of an investment adviser, or other person who provides investment advice on behalf of the investment adviser.

 

Supervised persons are required to report to the CCO any violations of this Code of which they have knowledge.

 

A.                                    Statement of Fiduciary Responsibility and Business Conduct

 

This Code is based on the overriding principle that supervised persons act as fiduciaries for shareholders’ investments in the Pax World Funds.  Accordingly, supervised persons must conduct their business activities at all times in accordance with federal securities laws and the following standards:

 

Shareholders’ interests come first.  In the course of fulfilling their duties and responsibilities to Pax World Funds’ shareholders, supervised persons must at all times place the interests of Pax World Fund shareholders first.  In particular, supervised persons must avoid serving their own personal interests ahead of the interests of Pax World Fund shareholders.

 

Conflicts of Interest.  Supervised persons must avoid any situation involving an actual or potential conflict of interest or possible impropriety with respect to their duties and responsibilities to Pax World Fund shareholders.

 

Compromising situations must be avoided.  Supervised persons must not take advantage of their position of trust and responsibility at Pax World.  Supervised persons must avoid any situation that might compromise or call into question their

 


(1)   The rules under the Investment Company Act of 1940 and the Investment Advisers Act of 1940 both require a written Fund and a written Investment Adviser’s Code of Ethics.  These rules and procedures have been combined into one document for better ease of use and understanding.

 



 

exercise of full independent judgment in the best interest of Pax World Fund shareholders.

 

The remainder of this Code sets forth specific rules and procedures which are consistent with the aforementioned fiduciary responsibilities and standards of business conduct.  Supervised persons are required to report any violations of this Code to Compliance.

 

B.                                    Unlawful Actions with Respect to the Funds

 

Rule 17j-1 makes it unlawful for any affiliated person of a register investment company or any affiliated person of an investment adviser of such investment company, in connection with the purchase or sale, directly or indirectly, by such person of a security held or to be acquired by such investment company:

 

To employ any device, scheme or artifice to defraud the Fund;

 

To make any untrue statement of a material fact to the Fund or to omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading;

 

To engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Fund; or

 

To engage in any manipulative practice with respect to the Fund.

 

C.                                    Gift and Entertainment Policy

 

Conflicts of interest occur when personal interests interfere or appear to interfere with the responsibilities to Pax World or Pax World Funds.  Therefore, no supervised person shall seek or accept gifts, entertainment, or other items greater than a de minimus value from any person or entity, including any Pax World Fund shareholder, or client, when such gift or entertainment is in relation to doing business with Pax World.  Similarly, supervised persons should not offer gifts, favors, entertainment or other things of value that could be viewed as overly generous or aimed at influencing decision-making or causing a client or prospective client to feel beholden to Pax World or the supervised person.

 

·                  Giving, receiving or soliciting gifts in a business may give rise to an appearance of impropriety or may raise a potential conflict of interest;

 

·                  Supervised persons should not accept or provide any gifts or favors that might influence the decisions you or the recipient must make in business transactions involving Pax World or the Funds or that others might reasonably believe would influence those decisions;

 

·                  De Minimus gifts and favors, which would not be regarded by others as improper, may be accepted or given on an occasional basis.  Entertainment that satisfies these requirements and conforms to generally accepted business practices is also permissible;

 



 

·                  Where there is a law or rule that applies to the conduct of a particular business or the acceptance of gifts of even nominal value, the law or rule must be followed.

 

For the purposes of this provision, an occasional meal, an occasional ticket to a sporting event, the theatre or comparable entertainment, or a holiday gift of fruit or foods or other comparable gift will not be considered to be in violation of this section:

 

D.                                    Reporting Requirements

 

This gift reporting requirement is for the purpose of helping Pax World monitor the activities of its employees.  Therefore, in the interest of maintaining a complete and accurate record, all gifts and entertainment regardless of value should be reported to Compliance.  This report may be informal and requires only:

 

·                                          Entity who provided the gift or entertainment

·                                          Value or estimated value

·                                          Date

·                                          Reason

·                                          If entertainment, please provide the names of the attendees and the type and place of entertainment.

 

Any supervised person who accepts, directly or indirectly, anything of value from any person or entity that does business with or on behalf of Pax World or the Funds, including gifts and gratuities with value in excess of $100 per year, must obtain consent from Compliance before accepting such gift.  Consent is not required for bona fide entertainment if, during such dining or entertainment, you are accompanied by the person or representative of the entity that does business with Pax World or the Funds, however, it must be reported.

 

Compliance will maintain a gift log with all of the reported Gifts and Entertainment.

 

When a group or department receives a gift and the gift is over the $100 value, the value of the gift may be allocated to each employee as appropriate.  However, this type of gift must also be reported.

 

E.                                    Insider Trading

 

Court and SEC administrative decisions interpreting the anti-fraud provisions of the federal securities laws generally make it unlawful for any person to trade securities for themselves or their clients while in possession of material non-public information or selectively to disclose such information to others who may trade based on that information.  Violation of these provisions may result in civil and criminal penalties, including fines and jail sentences, as well as dismissal by the company.  Although there are exceptions to these prohibitions, these exceptions are limited.

 

“Non-public” information is any information that has not been disclosed generally to the marketplace.  Information received about a company that is not yet in general circulation should be considered non-public.  As a general rule, one should be able to point to some

 



 

fact to show that the information is widely available; for example, its publication in The Wall Street Journal or in other major news publications, to show that the information is public.

 

“Material” information is any information about a company or the market for the company’s securities that is likely to be considered important by reasonable investors, including reasonable speculative investors, in determining whether to trade.  Information that affects the price of the company’s securities is likely to be deemed material.

 

While it is not possible to identify in advance all information that will be deemed to be material,  such information could include earnings, dividend actions, mergers and acquisitions, major discoveries, major new products, significant advances in research, major personnel changes, labor negotiations, price changes or major marketing changes, government investigations, or significant litigation.

 

Material non-public information might be inadvertently disclosed to you by a company director, officer or employee.  It also might be disclosed to you by persons with business relationships with the company.  In such a case, you should immediately report the facts to Compliance for a decision regarding appropriate steps.

 

In addition, whenever you receive information about a company, you should refrain from trading while in possession of that information unless you first determine that the information is public, non-material, or both.  You should also refrain from disclosing the information to others, such as family, relatives, business, or social acquaintances, who do not need to know it for legitimate business reasons.  If you have any questions at all as to whether the information is material and non-public, you should consult Compliance before trading, recommending trading, or divulging the information.

 

PWM officers, directors and employees shall not disclose any non-public information (whether or not it is material) relating to the Adviser or its securities transactions to any person outside the Adviser, unless such disclosure has been authorized by the Adviser.  Material, non-public information should be kept confidential and may not be communicated to any person except members of the Board of Directors of PWM, the compliance and legal departments and other firm employees who the Board of Directors or Chief Compliance Officer determines need such information to carry out their professional responsibilities.  Such person must treat the information confidentially and the information must be secured.

 

II.            Compliance Procedures

 

A.                                    Pre-clearance

 

The following pre-clearance policies and procedures have been established to aid officers, directors (not including the independent directors) and employees in their duty to detect and prevent insider trading.  Further, the procedures will help ensure that officers, directors, and employees do not engage in trading practices that appear abusive or unethical.

 



 

Pre-Clearance.  Access Persons who have access to non-public information (including current, non-public Fund(s) holdings information) or who are involved in making securities decisions for the Fund(s) shall obtain clearance prior to effecting any securities transaction in which they, their families (including spouse, minor children and adults living in the same household of the officer, director or employee), or trust of which they are trustees or in which they have a beneficial interest are parties.

 

Access Persons generally are directors, officers, or general partners or advisory persons of a Fund or of a Fund’s adviser.  Generally they have access to non-public information or are involved in making securities decisions for the Fund(s).  Please see the definitions in Section VIII.

 

Requests for Pre-Clearance.  All requests for pre-clearance must be made in writing. All clearance or denial of clearance decisions will be delivered in writing confirming the details of the pre-clearance request.

 

72/24 Hour Rule.  Clearance will be effective for a period not longer than seventy-two (72) hours.  Clearance to trade, however, may not be granted if the Funds traded or intend to trade within a twenty-four (24) hour period before or after clearance is requested.

 

Confidentiality.  Requests for clearance will be kept confidential by Compliance.

 

Certain high-risk trading activities, if used in the personal trading portfolio of the management of the Adviser (the officers, directors or employees), are risky not only because of the nature of the securities transactions themselves, but also because of the potential that action necessary to close out the transactions may become prohibited during the pendency of the transactions.  Examples of such activities include short sales of common stock and trading in derivative instruments.  PWM officers, directors and employees should understand that short sales and trading in derivative instruments involve special risks.  For example, if the Adviser becomes aware of material, non-public information about the issuer of the underlying securities, PWM personnel may find themselves “frozen” in a position in a derivative security.  The Adviser will not bear any losses resulting in personal accounts through the implementation of this policy.

 

B.                                    Reporting Requirements for Access Persons

 

To ensure that Access Persons do not conduct abusive or unethical trading practices, each Access Person of the Funds and the Investment Adviser who has access to current Pax World Fund holdings information, or who is involved in making securities decisions for the Funds, and his/her family members (including spouse whether or not recognized by law, minor children, and adults living in the same household) will submit to Compliance a listing of all securities owned of record and beneficially held (including ownership in trusts and other nominee accounts, except for accounts over which such person does not have any direct or indirect control, and including shares of mutual funds which it advises or sub-advises and any shares of a fund advised by an affiliate of PWM if under common control with PWM).

 

Initial Holdings Report — Each Access Person must file a completed Initial Holdings Report with Compliance within ten (10) days of becoming an Access Person.

 



 

The Initial Holdings Report shall include:

 

The title, number of shares and principle amount of each security held unless otherwise exempt by this document in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person.

 

The name of any broker, broker dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and

 

The date that the report is submitted by the Access Person.

 

Note: The information in the Initial Holdings Report must be no older than 45 days prior to becoming an Access Person.

 

Quarterly Transaction Report — Each Access Person who has access to current Pax World Fund holdings information, or who is involved in making securities decisions for the Funds must file a completed Quarterly Transaction Report with Compliance within thirty (30) days after the end of the calendar quarter in which the transactions to which the report relates were effected.

 

The Quarterly Transaction Report shall include:

 

The date of the transaction, the title, the interest rate, and maturity date (if applicable), the number of shares and the principle amount of each security;

 

The nature of the transaction, (i.e., purchase sale, etc);

 

The price of the security at which the transaction was affected; and

 

The date on which the Report was submitted by the Access Person

 

Access Persons are NOT required to furnish a quarterly report if it would duplicate information contained in an account statement received by the investment company or the investment company adviser in a timely manner.

 

Annual Holdings Reports — Annually, each Access Person who has access to current Pax World Fund holdings information, or who is involved in making securities decisions for the Funds must file a completed Annual Holdings Report with Compliance.  This report must be current as of no more than thirty (30) days before the report is submitted.

 

The Annual Holdings Report shall include:

 

The title and number of shares (to equity securities) and principle amount (for debt securities) of each covered security in which the Access Person had any direct or indirect beneficial ownership;

 



 

The name of any broker, dealer or bank in which the Access Person maintains an account where securities are held in the direct or indirect benefit of the Access Person; and

 

The date that the report was submitted by the Access Person.

 

Access Persons are NOT required to furnish an annual report if it would duplicate information contained in an account statement received by the investment company or the investment company adviser in a timely manner.

 

C.                                    Monthly Statements for Access Persons

 

In order to ensure that the provisions of this Code are observed each Access Person shall direct his/her broker, dealer, transfer agent, or bank to supply Compliance, on a timely and confidential basis, duplicate copies of monthly statements for all covered securities.

 

III.          Prohibited Transactions for Supervised Persons

 

No supervised person shall engage in any act, practice or course of conduct, which would violate the provisions of any applicable federal securities law, such as:

 

·                  Disclose to other persons the securities activities engaged in or contemplated for the Funds.

 

·                  Directly or indirectly acquire any beneficial interest in securities in an initial public offering (“IPO”) or in a private placement without prior approval from the investment adviser, and the adviser must retain record of the approval.

 

·                  Make any purchase or sale including a “put” or “call” or a short sale of a security, in anticipation of its being approved for purchase or sale by the Funds.

 

·                  Execute or place orders for transactions for themselves or members of their immediate families twenty-four (24) hours before or after the security has been purchased or sold by the Funds.

 

The prohibitions of this Section III shall not apply to:

 

Purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control;

 

Purchases or sales which are non-volitional on the part of either the Access Person or the Trust;

 

Purchases which are part of an automatic investment plan;

 



 

Purchases affected upon the exercise of rights issued by an issuer pro-rata to all holders of its securities to the extent such rights were acquired from such issuer, and sales of such rights so acquired.

 

IV.          Sanctions

 

Upon discovering a violation of this Code, Compliance may issue a verbal warning or memorandum of reprimand and notify the Board of Trustees, as an initial warning to the subject party.  Upon discovery of a second violation, Compliance shall report the same to the Board of Trustees and shall conduct an in-person meeting with such individual to discuss compliance with the Code of Ethics.  For any subsequent violations by the same individual, any or all of the other sanctions listed below may be imposed.  The imposition of any of these sanctions will be documented and kept in such person’s personnel file.  This list however, is not intended to be exhaustive and may be modified based on the nature of the violation:

 

Verbal warning

 

Memorandum of reprimand;

 

In-Person meeting with the Chief Compliance Officer or Board of Trustees or any combination of the above to discuss compliance with the Code of Ethics;

 

Disgorgement of profits;

 

Letter of censure;

 

Withholding of salary or bonus;

 

Suspension;

 

Termination of employment;

 

Notification of appropriate governmental, regulatory, or legal authority.

 

V.            Material Holdings

 

The Funds will not acquire or hold securities of which the Funds’ officers, directors or employees hold a material amount.  Holdings of 10 percent or more will be construed as material holdings.

 

VI.          Reporting

 

No less frequently than annually, the Trusts will furnish to the Board, and the Board must consider, a written report that, 1. describes any issues arising under the Code of Ethics or procedures since the last report to the Board, including, but not limited to, information about material violations of the Code of Ethics or procedures and any sanctions imposed in response to the material violations; and, 2. certifies that the Funds and the Adviser have adopted procedures reasonably necessary to prevent Access Persons from violating the Code of Ethics.

 



 

VII.         Quick Reference for Access persons who have access to non-public information (including current, non-public Fund(s) holdings information) or who are involved in making securities decisions for the Fund(s)

 

Access Persons must, in addition to the other provisions of the Code:

 

·                  Trades.  Pre-clear trades after which he or she has 72 hours to place their trade.  Trades for family members (including spouse whether or not recognized by law, minor children, and adults living in the same household) as well as any trust account for which the Access Person is a trustee, or any account which he or she has a beneficial interest in must also be pre-cleared.

 

·                  Filing Requirements.  Access Persons are required to file:

 

·                  Initial Holdings Report

 

·                  Quarterly Transaction Report*

 

·                  Annual Holdings Report*

 


* Quarterly and Annual reports are not required if they would duplicate information received by Compliance via account statements.

 

VIII        Definitions

 

·                  Access Person — Any director, officer, general partner or advisory person of a Fund or of a Fund’s investment advisor.(2)

 


(2)   Rule 17j-1 under the Investment Company Act defines Access Person to:

 

(i)             Any advisory person of a Fund or of a Fund’s adviser.  If an investment adviser’s primary business is advising Funds or other advisory clients, all of the investment adviser’s directors, officers, and general partners are presumed to be Access Persons of any Fund advised by the investment adviser.  All of the Fund’s directors, officers, and general partners are presumed to by Access Persons of the Fund.

 

(ii)          Any director, officer or general partner of a principal underwriter who, in the ordinary course of business makes, participates in or obtains information regarding, the purchase or sale or sale of Covered Securities by a Fund for which the principal underwriter acts, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the Fund regarding the purchase or sale of Covered Securities.

 

Rule 204A-1 under the Investment Advisers Act defines an Access Person to be:

 

(i)             Any supervised persons:

 

a.                          Who have access to non-public information regarding any clients’ purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any reportable fund, or

 

b.                          Who is involved in making securities recommendations to clients, or who has access to such recommendations that are nonpublic.

 



 

·                  Advisory Person — Means:

 

·                  Any employee of the Adviser or Funds who, in connection with his regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security by clients of the Adviser or the Funds, or whose functions relate to the making of any recommendation with respect to such purchases or sales; and

 

·                  Any natural person in a control relationship to any client of the Adviser or Fund who obtains information concerning recommendations to the client concerning the purchase or sale of a security.

 

·                  Beneficial Ownership — Shall be defined and interpreted in the same manner as it would be in determining whether a person is a subject to the provisions of Section 16 of the Securities and Exchange Act of 1934 and the rules and regulations thereunder.  In general terms beneficial ownership includes situations where the “access person” has the right to enjoy some economic benefit from the ownership of the security regardless of who is the registered owner.  This includes:

 

·                  Securities held by a member of the “access person’s” immediate family sharing the same household, including adoptive relationships and any other relationship (whether or not recognized by law) which the Compliance Officer determines could lead to possible conflicts of interest, diversions of corporate opportunity, or appearances of impropriety.

 

·                  Securities held by the partnership or limited partnership of which the “access person” is a general partner.

 

·                  Securities held in trust in which the “access person” has an interest.

 

·                  Securities that the “access person” has a right to acquire through the exercise or conversion of any derivative security, whether or not presently exercisable.

 

·                  Chief Compliance Officer—  John Boese

 

·                  Compliance — the Compliance Department of PWM and the Trusts.

 

·                  Control — The power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company.  There is a presumption of control on the part of any person who owns beneficially 25% of the voting securities of the company.

 

·                  Covered Securities — A security as defined in section 2(a)(36) of the Investment Company Act of 1940.  A covered security includes but is not limited to:

 

·                  Any note;

 



 

·                  Stock;

 

·                  Treasury stock;

 

·                  Security future;

 

·                  Bond;

 

·                  Debenture; or

 

·                  Evidence of indebtedness

 

·                  Shares of a mutual fund which the Access Person advises or sub-advises and shares of any mutual fund advised by an affiliate of PWM if under common control.

 

The following are not “covered securities” and are exempt from the reporting requirement:

 

·                  Accounts over which the investment adviser and the individual have no direct or indirect influence or control;

 

·                  Direct obligations of the United States Government

 

·                  Certain Money Market Instruments

 

·                  Share of open-end investment companies

 

·                  De Minimus — Generally worth $100 or less.

 

·                  Fund(s) — the Pax World Funds, and/or Pax World Series Trust I and or Pax World Funds Trust II.

 

·                  Interested Person — An “interested person” of the Funds includes:

 

·                  Officers of the Funds or PWM

 

·                  Analysts and certain research personnel

 

·                  Portfolio Managers

 

·                  Portfolio Administrators

 

·                  Supervised Person — An employee of PWM

 



 

IX.          Attestation

 

I have read the Code of Ethics and I understand the forgoing and I agree to abide by the standards of conduct as indicated.

 

 

 

 

 

Signature

 

Date

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

Access Person:  Yes  o     No  o

 


EX-99.CERT 3 a13-2692_2ex99dcert.htm EX-99.CERT

Exhibit 99.CERT

 

CERTIFICATION

 

I, Joseph F. Keefe, certify that:

 

1.             I have reviewed this report on Form N-CSR of Pax World Funds Trust II;

 

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.             The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)             Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5.             The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:

February 22, 2013

 

/s/ Joseph F. Keefe

 

 

Joseph F. Keefe, President (Principal Executive Officer)

 



 

CERTIFICATION

 

I, Alicia K. DuBois, certify that:

 

1.             I have reviewed this report on Form N-CSR of Pax World Funds Trust II;

 

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.             The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)             Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5.             The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:

February 22, 2013

 

/s/ Alicia K. DuBois

 

 

Alicia K. DuBois, Treasurer (Principal Financial Officer)

 


EX-99.906CERT 4 a13-2692_2ex99d906cert.htm EX-99.906CERT

Exhibit 99.906CERT

 

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the attached Report on Form N-CSR for Pax World Funds Series Trust II (the “Registrant”), each of the undersigned officers hereby certifies, to the best of such officer’s knowledge, that:

 

1.                                      The Form N-CSR of the Registrant for the period ended December 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.                                      The information contained in the Form N-CSR of the Registrant for the period ended December 31, 2012 fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

Date:  February 22, 2013

 

 

 

 

 

/s/ Joseph F. Keefe

 

 

Joseph F. Keefe

 

 

President (Principal Executive Officer)

 

 

 

 

 

 

 

 

/s/ Alicia K. DuBois

 

 

Alicia K. DuBois

 

 

Treasurer (Principal Financial Officer)

 

 

 


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