As filed with the Securities and Exchange Commission on December 31, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
----
Post-Effective Amendment No. [ ]
----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
PAX WORLD MONEY MARKET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 830-5220
BERNADETTE N. FINN
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
(Name and Address of Agent for Service)
Copy to: MICHAEL R. ROSELLA, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective: (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (Date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
The Registrant declares that an indefinite amount of its shares of beneficial
interest is being registered by this Registration Statement pursuant to Section
24(f) under the Investment Company Act of 1940, as amended, and Rule 24f-2
thereunder.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may declare.
654547.1
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PAX WORLD MONEY MARKET FUND, INC.
Registration Statement on Form N-1A
-----------------------
CROSS REFERENCE SHEET -
Pursuant to Rule 404(c)
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<TABLE>
<CAPTION>
Part A
<S> <C>
Item No. Prospectus Heading
1. Cover Page........................ Cover Page
2. Synopsis.......................... Introduction; Table of Fees and Expenses
3. Condensed Financial
Information....................... Financial Highlights
4. General Description of
Registrant........................ General Information; Investment Objectives, Policies and
Risks
5. Management of the Fund............ Distribution and Service Plan; Management of the Fund;
Custodian and Transfer Agents
5a. Management's Discussion of
Fund Performance.................. Not Applicable
6. Capital Stock and Other
Securities........................ Description of Common Stock; How to Purchase and
Redeem Shares; General Information; Dividends and
Distributions; Dividends, Distributions and Taxes
7. Purchase of Securities Being
Offered........................... How to Purchase and Redeem Shares; Distribution and
Service Plan; Net Asset Value
8. Redemption or Repurchase.......... How to Purchase and Redeem Shares
9. Legal Proceedings................. Not Applicable
654547.1
<PAGE>
Part B
Item No. Caption in Statement of Additional Information
10. Cover Page........................ Cover Page
11. Table of Contents................. Contents
12. General Information and
History........................... Management, Advisory and Sub-Advisory Agreements
13. Investment Objectives and
Policies.......................... Investment Objectives, Policies and Risks
14. Management of the Registrant...... Management, Advisory and Sub-Advisory Agreements
15. Control Persons and
Principal Holders of Management, Advisory and Sub-Advisory Agreements;
Securities........................ Description of Common Stock
16. Investment Advisory and Management, Advisory and Sub-Advisory Agreements;
Other Services.................... Expense Limitation; Distribution and Service Plan;
Custodian and Transfer Agents
17. Brokerage Allocation.............. Portfolio Transactions
18. Capital Stock and Other
Securities........................ Description of Common Stock
19. Purchase, Redemption and
Pricing of Securities
Being Offered..................... How to Purchase and Redeem Shares; Net Asset Value
20. Tax Status........................ Not Applicable
21. Underwriters...................... Distribution and Service Plan
22. Calculations of Yield
Quotations of Money Market
Funds............................. Yield Quotations
23. Financial Statements.............. Independent Auditor's Report; Statement of Net Assets;
Statement of Operations; Statement of Changes in Net
Assets; Notes to Financial Statements
</TABLE>
<PAGE>
Subject to Completion Dated December ___, 1997
- --------------------------------------------------------------------------------
PROSPECTUS
____________, 1997
PAX WORLD MONEY MARKET FUND, INC. 600 FIFTH AVENUE
NEW YORK, N.Y. 10020
(212) 830-5220
================================================================================
The Pax World Money Market Fund, Inc. (the "Fund") is designed to meet the
short-term investment needs of institutional investors ("Institutional
Investors"), individual investors and investors utilizing the Fund as a sweep
vehicle ("Sweep Investors") in connection with an account with a broker-dealer
that has entered into an agreement with the Fund's distributor, Reich & Tang
Distributors L.P. (the "Distributor"). There are no sales loads, exchange or
redemption fees associated with the Fund.
The Fund seeks to maximize current income to the extent consistent with the
preservation of capital and the maintenance of liquidity and to maintain a
stable net asset value of $1 per share. There can be no assurance that these
objectives will be achieved. The Fund seeks to achieve these objectives by
investing in short-term money market obligations with maturities of 397 days or
less, including bank certificates of deposit, time deposits, bankers'
acceptances, high quality commercial paper, securities issued or guaranteed by
certain agencies or instrumentalities of the United States Government, and
repurchase agreements calling for resale in 397 days or less backed by the
foregoing securities.
Consistent with the other members of the Pax World Fund Family, the Fund seeks
to achieve its objective by investing in issuers that produce life supportive
goods and services and that are not to any degree engaged in manufacturing
defense or weapons-related products. The policy of the Fund is to exclude from
its portfolio securities of (i) companies engaged in military activities, (ii)
companies appearing on the United States Department of Defense list of 100
largest contractors (a copy of which may be obtained from the Office of the
Secretary, Department of Defense, Washington, D.C. 20310) if five percent (5%)
or more of the gross sales of such companies are derived from contracts with the
United States Department of Defense, (iii) other companies contracting with the
United States Department of Defense if five percent (5%) or more of the gross
sales of such companies are derived from contracts with the United States
Department of Defense, and (iv) companies which derive revenue from the
manufacture of liquor, tobacco and/or gambling products. See "Introduction" on
page 4.
The Fund offers three classes of shares. This Prospectus offers the
Institutional Class shares for Institutional Investors. The Institutional Class
shares of the Fund are not subject to a service fee and either are sold directly
to Institutional Investors or are sold through financial intermediaries that do
not receive compensation from the Advisor, the Sub-Advisor or the Distributor.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing in Institutional Class shares
of the Fund. Additional information about the Fund, including additional
information concerning risk factors relating to an investment in the Fund, has
been filed with the Securities and Exchange Commission and is available upon
request and without charge by calling or writing the Fund at the above address.
The "Statement of Additional Information" bears the same date as this Prospectus
and is incorporated by referenced into this Prospectus in its entirety. The
Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains the Statement of Additional Information and other reports and
information regarding the Fund which have been filed electronically with the
Securities and Exchange Commission. This Prospectus should be read and retained
by investors for future reference.
Pax World Management Corp., 222 State Street, Portsmouth, New Hampshire
03801-3853 (the "Advisor") is the advisor to the Fund. Reich & Tang Asset
Management, L.P. will act as Sub-Advisor of the Fund and Reich & Tang
Distributors L.P. acts as Distributor of the Fund's shares. Pax World Management
Corp. and Reich & Tang Asset Management L.P. are each registered investment
advisers. Reich & Tang Distributors L.P. is a registered broker-dealer and
member of the National Association of Securities Dealers, Inc. Pax World
Management Corp. will be responsible for determining whether contemplated
investments satisfy the social responsibility criteria applied to the Fund.
Reich & Tang Asset Management L.P. will perform the day to day portfolio
management of the Fund utilizing the securities of issuers approved by the
Advisor.
An investment in the Fund is neither insured nor guaranteed by the United States
Government. The Fund seeks to maintain an investment portfolio with a
dollar-weighted average maturity of 90 days or less, and to value its investment
portfolio at amortized cost and maintain a net asset value of $1.00 per share.
There can be no assurance that the Fund's objectives will be achieved or that
the Fund's stable net asset value of $1.00 per share can be maintained.
Shares in the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
619109.4
1
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SAID OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
619109.4
2
<PAGE>
TABLE OF FEES AND EXPENSES
Estimated Annual Operating Expenses
(as a percentage of average net assets)
The Pax World Money Market Fund
Institutional Class
Management Fees .15%
12b-1 Fees None
Other Expenses .20%
Administration Fees .10%
Total Fund Operating Expenses .35%
======
The Pax World Money Market Fund
Institutional Class
EXAMPLE 1 Year 3 Years
------ -------
You would pay the following expenses on a
$1,000 investment, assuming 5% annual
return and redemption at the end of each
time period:
The purpose of the above fee table is to assist an investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The Advisor and/or Sub-Advisor at their discretion may voluntarily
waive all or a portion of the Management Fees and Administration Fees and
voluntarily reimburse the Fund's other operating expenses. The expenses shown
are at the levels anticipated for the current year. For a further discussion of
these fees see "Management of the Fund" and "Distribution and Service Plan"
herein.
The figures reflected in this example should not be considered to be a
representation of past or future expenses. Actual expenses may be greater or
less than those shown above.
619109.4
3
<PAGE>
INTRODUCTION
Pax World Money Market Fund, Inc. (the "Fund") is a no-load, diversified,
open-end management investment company offering investors a managed portfolio of
money market instruments, together with a high degree of liquidity. The
Institutional Class shares of the Fund are designed to meet the short-term
investment needs of institutional investors ("Institutional Investors"). The net
asset value of each Fund share is expected to remain constant at $1.00, although
this cannot be assured.
The investment objective of the Fund is to maximize current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.
There is no assurance that the Fund will achieve its investment objective. The
investment objective of the Fund may not be changed without shareholder
approval.
The Fund endeavors, consistent with its investment objective, to make a
contribution to world peace through investment in companies producing
life-supportive goods and services. The policy of the Fund is to invest in
securities of companies whose business is essentially directed toward
non-military and life-supportive activities. For example, the Fund seeks to
invest in such industries as health care, education, housing, food, retailing,
pollution control and leisure time among others.
The policy of the Fund is to exclude from its portfolio securities of (i)
companies engaged in military activities, (ii) companies appearing on the United
States Department of Defense list of 100 largest contractors (a copy of which
may be obtained from the Office of the Secretary, Department of Defense,
Washington, D.C. 20310) if five percent (5%) or more of the gross sales of such
companies are derived from contracts with the United States Department of
Defense, (iii) other companies contracting with the United States Department of
Defense if five percent (5%) or more of the gross sales of such companies are
derived from contracts with the United States Department of Defense, and (iv)
companies which derive revenue from the manufacture of liquor, tobacco and/or
gambling products.
The Fund attempts to achieve its objective through investment in short-term
money market obligations with maturities of 397 days or less, including bank
certificates of deposit, time deposits, bankers' acceptances, high quality
commercial paper, securities issued or guaranteed by certain agencies or
instrumentalities of the United States Government, and repurchase agreements
calling for resale in 397 days or less backed by the forgoing securities. The
Fund seeks to maintain an investment portfolio with a dollar-weighted average
maturity of 90 days or less, and to value its investment portfolio at amortized
cost and maintain a net asset value of $1.00 per share. There can be no
assurance that this value will be maintained.
The Fund's investment advisor is Pax World Management Corp. (the "Advisor")
which is a registered investment advisor and which currently acts as manager or
advisor to two other open-end management investment companies, the Pax World
Fund, Inc. and the Pax World Growth Fund, Inc. The Fund's Sub-Advisor is Reich &
Tang Asset Management L.P. (the "Sub-Advisor"), which is a registered investment
advisor and which currently acts as manager or administrator to [fifteen] other
open-end management investment companies. (See "Management of the Fund" herein.)
The Fund's shares are distributed through Reich & Tang Distributors L.P. (the
"Distributor"), with whom the Fund has entered into a Distribution Agreement and
Shareholder Servicing Agreement (with respect to Individual Investor Class and
Broker Service Class shares of the Fund only) pursuant to the Fund's
distribution and service plan adopted under Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act"). (See "Distribution and Service
Plan" herein.)
On any day on which the New York Stock Exchange is open for trading ("Fund
Business Day"), investors may, without charge by the Fund, initiate purchases
and redemptions of shares of the Fund's common stock at their net asset value,
which will be determined daily. (See "How to Purchase and Redeem Shares" and
"Net Asset Value" herein.) Dividends from accumulated net income are declared by
the Fund on each Fund Business Day. The Fund pays interest dividends monthly on
the last calendar day of the month or, if the last calendar day of the month is
not a Fund Business Day, on the preceding Fund Business Day.
Net capital gains, if any, will be distributed at least annually, and in no
event later than within 60 days after the end of the Fund's fiscal year. All
dividends and distributions of capital gains are automatically invested in
additional shares of the same class of the Fund unless a shareholder has elected
by written notice to the Fund to receive either of such distributions in cash.
(See "Dividends, Distributions and Taxes" herein.)
The Fund may from time to time advertise its current yield and effective yield
for the Fund (computed separately for each Class of shares). The Fund's current
yield is calculated by dividing its average daily net income per share of the
Fund (excluding realized gains or losses) for a recent seven-day period by its
constant net asset value per share of $1.00 and annualizing the result on a
365-day basis. The Fund's effective yield is calculated by increasing its
current yield according to a formula that takes into account the compounding
effect of the reinvestment of dividends. Performance for each Class of shares
may vary due to variations in expenses of each Class of shares. Any fees charged
by a Participating
619109.4
4
<PAGE>
Organization directly to a customers account will not be included in yield
calculations. See "How to Purchase and Redeem Shares - Investments through
Participating Organizations."
An investment in the Fund entails certain risks, including risks associated with
the purchase of when-issued securities, repurchase agreements and with privately
placed securities, as well as certain risks associated with the purchase of
foreign issues. Risk factors for the Fund are further described under "Risk
Factors and Additional Investment Information" herein.
INVESTMENT OBJECTIVES,
POLICIES AND RISKS
Social Criteria of Fund
The policy of the Fund is to seek investments in issuers that are not to any
degree engaged in manufacturing defense or weapons-related products. The policy
of the Fund is to exclude from its portfolio securities of (i) companies engaged
in military activities, (ii) companies appearing on the United States Department
of Defense list of 100 largest contractors (a copy of which may be obtained from
the Office of the Secretary, Department of Defense, Washington, D.C. 20310) if
five percent (5%) or more of the gross sales of such companies are derived from
contracts with the United States Department of Defense, (iii) other companies
contracting with the United States Department of Defense if five percent (5%) or
more of the gross sales of such companies are derived from contracts with the
United States Department of Defense, and (iv) companies which derive revenue
from the manufacture of liquor, tobacco and/or gambling products.
In order to properly supervise a securities portfolio containing the limitations
described above, care must be exercised to continuously monitor developments of
the issuers whose securities are included in the Fund. Developments and trends
in the economy and financial markets are also considered, and the screening of
many securities is required to implement the investment philosophy of the Fund.
The Advisor, Pax World Management Corp., is responsible for such supervision and
screening of the securities included in the Fund.
If it is determined after the initial purchase by the Fund that the company's
activities fall within the exclusion described above (either by acquisition,
merger or otherwise), the securities of such company will be eliminated from the
portfolio as soon thereafter as possible taking into consideration (i) any gain
or loss which may be realized from such elimination, (ii) the tax implications
of such elimination, (iii) market timing, and the like. In no event, however,
will such security be retained longer than six (6) months from the time the Fund
learns of the investment disqualification. This requirement may cause the Fund
to dispose of the security at a time when it may be disadvantageous to do so.
The Fund's investment objective is a fundamental policy and may not be changed
without the approval of the holders of a majority of the Fund's outstanding
voting securities, as defined in the 1940 Act. Investment policies that are not
fundamental may be modified by the Board of Directors.
Permitted Investments:
United States Government Securities: Short-term obligations issued or guaranteed
by agencies or instrumentalities of the United States Government the proceeds of
which are earmarked for a specific purpose which complies with the investment
objectives and policies of the Fund. These include issues of agencies and
instrumentalities established under the authority of an act of Congress. These
securities are not supported by the full faith and credit of the United States
Treasury, some are supported by the right of the issuer to borrow from the
Treasury, and still others are supported only by the credit of the agency or
instrumentality. Although obligations of federal agencies and instrumentalities
are not debts of the United States Treasury, in some cases payment of interest
and principal on such obligations is guaranteed by the United States Government,
e.g., obligations of the Federal Housing Administration, the Export-Import Bank
of the United States, the Small Business Administration, the Government National
Mortgage Association, the General Services Administration and the Maritime
Administration; in other cases payment of interest and principal is not
guaranteed, e.g., obligations of the Federal Home Loan Bank System and the
Federal Farm Credit Bank.
Domestic and Foreign Bank Obligations: Certificates of deposit, time deposits,
commercial paper, bankers' acceptances issued by domestic banks, foreign
branches of domestic banks, foreign subsidiaries of domestic banks, and domestic
and foreign branches of foreign banks and corporate instruments supported by
bank letters of credit. See "Risk Factors and Additional Investment Information"
herein. Certificates of deposit are certificates representing the obligation of
a bank to repay funds deposited with it for a specified period of time. Time
deposits are non-negotiable deposits maintained in a bank for a specified period
of time (in no event longer than seven days) at a stated interest rate. Time
deposits and certificates of deposit which may be held by the Fund will not
benefit from insurance from the Federal Deposit Insurance Corporation. Bankers'
acceptances are credit instruments evidencing the obligation of a bank to pay a
draft drawn on it by a customer. These instruments reflect the obligation both
of the bank and of the drawer to pay the face amount of the instrument upon
maturity. The Fund limits its investments in obligations of domestic banks,
foreign branches of domestic banks and foreign
619109.4
5
<PAGE>
subsidiaries of domestic banks to banks having total assets in excess of one
billion dollars or the equivalent in other currencies. The Fund limits its
investments in obligations of domestic and foreign branches of foreign banks to
dollar-denominated obligations of such banks which at the time of investment
have more than $5 billion, or the equivalent in other currencies, in total
assets and which are considered by the Fund's Board of Directors to be First
Tier Eligible Securities (as defined below) at the time of acquisition. The Fund
generally limits investments in bank instruments to (a) those which are fully
insured as to principal by the FDIC or (b) those issued by banks which at the
date of their latest public reporting have total assets in excess of $1.5
billion. However, the total assets of a bank will not be the sole factor
determining the Fund's investment decisions and the Fund may invest in bank
instruments issued by institutions which the Fund's Board of Directors believes
present minimal credit risks.
U.S. dollar-denominated obligations issued by foreign branches of domestic banks
or foreign branches of foreign banks ("Eurodollar" obligations) and domestic
branches of foreign banks ("Yankee dollar" obligations). The Fund will limit its
aggregate investments in foreign bank obligations, including Eurodollar
obligations and Yankee dollar obligations, to 25% of its total assets at the
time of purchase, provided that there is no limitation on the Fund investments
in (a) Eurodollar obligations, if the domestic parent of the foreign branch
issuing the obligations is unconditionally liable in the event that the foreign
branch fails to pay on the Eurodollar obligation for any reason; and (b) Yankee
dollar obligations, if the U.S. branch of the foreign bank is subject to the
same regulation as U.S. banks. Eurodollar, Yankee dollar and other foreign bank
obligations include time deposits, which are non-negotiable deposits maintained
in a bank for a specified period of time at a stated interest rate. The Fund
will limit its purchases of time deposits to those which mature in seven days or
less, and will limit its purchases of time deposits maturing in two to seven
days to 10% of such Fund's total assets at the time of purchase.
Eurodollar and other foreign obligations involve special investment risks,
including the possibility that liquidity could be impaired because of future
political and economic developments, that the obligations may be less marketable
than comparable domestic obligations of domestic issuers, that a foreign
jurisdiction might impose withholding taxes on interest income payable on those
obligations, that deposits may be seized or nationalized, that foreign
governmental restrictions such as exchange controls may be adopted which might
adversely affect the payment of principal of and interest on those obligations,
that the selection of foreign obligations may be more difficult because there
may be less information publicly available concerning foreign issuers, that
there may be difficulties in enforcing a judgment against a foreign issuer or
that the accounting, auditing and financial reporting standards, practices and
requirements applicable to foreign issuers may differ from those applicable to
domestic issuers. In addition, foreign banks are not subject to examination by
United States Government agencies or instrumentalities.
Since the Fund may contain securities issued by foreign agencies or
instrumentalities, and by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the Fund may be subject to
additional investment risks with respect to those securities that are different
in some respects from those incurred by a fund which invests only in debt
obligations of the United States and domestic issuers, although such obligations
may be higher yielding when compared to the securities of the United States and
domestic issuers. In making foreign investments, therefore, the Fund will give
appropriate consideration to the following factors, among others.
Foreign securities markets generally are not as developed or efficient as those
in the United States. Securities of some foreign issuers are less liquid and
more volatile than securities of comparable United States issuers. Similarly,
volume and liquidity in most foreign securities markets are less than in the
United States and, at times, volatility of price can be greater than in the
United States. The issuers of some of these securities, such as bank
obligations, may be subject to less stringent or different regulation than are
United States issuers. In addition, there may be less publicly available
information about a non-United States issuer and non-United States issuers
generally are not subject to uniform accounting and financial reporting
standards, practices and requirements comparable to those applicable to United
States issuers.
Because evidences of ownership of such securities usually are held outside the
United States, the Fund will be subject to additional risks which include
possible adverse political and economic developments, possible seizure or
nationalization of foreign deposits and possible adoption of governmental
restrictions which might adversely affect the payment of principal and interest
on the foreign securities or might restrict the payment of principal and
interest to the issuer, whether from currency blockage or otherwise.
Furthermore, some of these securities may be subject to stamp or other excise
taxes levied by foreign governments, which have the effect of increasing the
cost of such securities and reducing the realized gain or increasing the
realized loss on such securities at the time of sale. Income earned or received
by the Fund from sources within foreign countries may be reduced by withholding
and other taxes imposed by such countries. Tax conventions between certain
countries and the United States, however, may reduce or eliminate such taxes.
The Advisor and Sub-Advisor will attempt to minimize such taxes by timing of
transactions and other strategies, but there can be no assurance that such
efforts will be successful.
619109.4
6
<PAGE>
All such taxes paid by the Fund will reduce its net income available for
distribution to shareholders. The Advisor and SubAdvisor will consider available
yields, net of any required taxes, in selecting foreign securities.
Variable Amount Master Demand Notes: unsecured demand notes that permit
investment of fluctuating amounts of money at variable rates of interest
pursuant to arrangements with issuers who meet the foregoing quality criteria.
The interest rate on a variable amount master demand note is periodically
redetermined according to a prescribed formula. Although there is no secondary
market in master demand notes, the payee may demand payment of the principal and
interest upon notice not exceeding five business or seven calendar days.
Commercial Paper and Certain Debt Obligations: commercial paper or short-term
debt obligations that have been determined by the Fund's Board of Directors to
present minimal credit risks and that are First Tier Eligible Securities (as
defined below) at the time of acquisition, so that the Fund is able to employ
the amortized cost method of valuation. Commercial paper generally consists of
short-term unsecured promissory notes issued by corporations, banks or other
borrowers.
The Fund may only purchase securities that have been determined by the Fund's
Board of Directors to present minimal credit risks and that are First Tier
Eligible Securities at the time of acquisition. The term First Tier Eligible
Securities means (i) securities that have remaining maturities of 397 days or
less and are rated in the highest short-term rating category by any two
nationally recognized statistical rating organizations ("NRSROs") or in such
category by the only NRSRO that has rated the securities (collectively, the
"Requisite NRSROs") (acquisition in the latter situation must also be ratified
by the Board of Directors); (ii) securities that have remaining maturities of
397 days or less but that at the time of issuance were long-term securities and
whose issuer has received from the Requisite NRSROs a rating with respect to
comparable short-term debt in the highest short-term rating category; and (iii)
unrated securities determined by the Fund's Board of Directors to be of
comparable quality. Where the issuer of a long-term security with a remaining
maturity which would otherwise qualify it as a First Tier Eligible Security does
not have rated short-term debt outstanding, the long-term security is treated as
unrated but may not be purchased if it has a long-term rating from any NRSRO
that is below the two highest long-term categories. A determination of
comparability by the Board of Directors is made on the basis of its credit
evaluation of the issuer, which may include an evaluation of a letter of credit,
guarantee, insurance or other credit facility issued in support of the
securities or participation certificates. While there are several organizations
that currently qualify as NRSROs, two examples of NRSROs are Standard & Poor's
Rating Services, a division of the McGraw-Hill Companies("S&P") and Moody's
Investors Service, Inc. ("Moody's"). The two highest ratings by Moody's for debt
securities are "Aaa" and "Aa" or by S&P are "AAA" and "AA". The highest rating
for domestic and foreign commercial paper is "Prime-1" by Moody's or "A- 1" by
S&P and "SP-1/AA" by S&P or "VMIG-1" and "VMIG-2" by Moody's in the case of
variable and floating rate demand notes. (See "Description of Ratings" in the
Statement of Additional Information.)
Subsequent to its purchase by the Fund, the quality of an investment may cease
to be rated or its rating may be reduced so that it ceases to be a First Tier
Eligible Security. If this occurs, the Board of Directors of the Fund shall
reassess promptly whether the security presents minimal credit risks and shall
cause the Fund to take such action as the Board of Directors determines is in
the best interest of the Fund and its shareholders. However, reassessment is not
required if the security is disposed of or matures within five business days of
the Advisor and Sub-Advisor becoming aware of the new rating and provided
further that the Board of Directors is subsequently notified of the Advisor's
and Sub-Advisor's actions.
In addition, in the event that a security (1) is in default, (2) ceases to be an
eligible investment under Rule 2a-7 or (3) is determined to no longer present
minimal credit risks, the Fund will dispose of the security absent a
determination by the Fund's Board of Directors that disposal of the security
would not be in the best interest of the Fund. In the event that the security is
disposed of, it shall be disposed of as soon as practicable, consistent with
achieving an orderly disposition by sale, exercise of any demand feature, or
otherwise. In the event of a default with respect to a security which
immediately before default accounted for 1/2 of 1% or more of the Fund's total
assets, the Fund shall promptly notify the Securities and Exchange Commission of
such fact and of the actions that the Fund intends to take in response to the
situation.
The Fund may enter into repurchase agreements providing for resale in 397 days
or less covering any of the foregoing securities which may have maturities in
excess of 397 days, provided that the instruments serving as collateral for the
agreements are eligible for inclusion in the Fund.
RISK FACTORS AND ADDITIONAL
INVESTMENT INFORMATION
When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed delivery basis.
Delayed delivery agreements are commitments by the Fund to dealers or issuers to
acquire securities beyond the customary same-day settlement for money market
instruments. These commitments fix the payment price and interest rate to be
received on the investment. Delayed delivery agreements will not be used as a
speculative or leverage technique. Rather, from time to time, the Advisor and
619109.4
7
<PAGE>
the Sub-Adivsor can anticipate that cash for investment purposes will result
from scheduled maturities of existing portfolio instruments or from net sales of
shares of the Fund; therefore, to assure that the Fund will be as fully invested
as possible in instruments meeting its investment objective, the Fund may enter
into delayed delivery agreements, but only to the extent of anticipated funds
available for investment during a period of not more than five business days.
Money Market Obligations are sometimes offered on a "when-issued" basis, that
is, the date for delivery of and payment for the securities is not fixed at the
date of purchase, but is set after the securities are issued (normally within
forty-five days after the date of the transaction). The payment obligation and
the interest rate that will be received on the securities are fixed at the time
the buyer enters into the commitment. The Fund will only make commitments to
purchase such Money Market Instruments with the intention of actually acquiring
such securities, but the Fund may sell these securities before the settlement
date if it is deemed advisable.
If the Fund enters into a delayed delivery agreement or purchases a when-issued
security, it will direct Investors Fiduciary Trust Company, the Fund's custodian
(the "Custodian") to place cash or other high grade securities (including Money
Market Obligations) in a separate account of the Fund in an amount equal to its
delayed delivery agreements or whenissued commitments. If the market value of
such securities declines, additional cash or securities will be placed in the
account on a daily basis so that the market value of the account will equal the
amount of the Fund's delayed delivery agreements and when-issued commitments. To
the extent that funds are in a separate account, they will not be available for
new investment or to meet redemptions. Investment in securities on a when-issued
basis and use of delayed agreements may increase the Fund's exposure to market
fluctuation; or may increase the possibility that the Fund will incur a
short-term loss, if the Fund must engage in portfolio transactions in order to
honor a when-issued commitment or accept delivery of a security under a delayed
delivery agreement. The Fund will employ techniques designed to minimize these
risks.
No additional delayed delivery agreements or when-issued commitments will be
made if more than 25% of a Fund's net assets would become so committed. The Fund
will enter into when-issued and delayed delivery transactions only when the time
period between trade date and settlement date is at least 30 days and not more
than 120 days.
Repurchase Agreements
When the Fund purchases securities, it may enter into a repurchase agreement
with the seller wherein the seller agrees, at the time of sale, to repurchase
the security at a mutually agreed upon time and price, thereby determining the
yield during the purchaser's holding period. This arrangement results in a fixed
rate of return insulated from market fluctuations during such period. The Fund
may enter into repurchase agreements with member banks of the Federal Reserve
System and with broker-dealers who are recognized as primary dealers in United
States government securities by the Federal Reserve Bank of New York whose
creditworthiness has been reviewed and found to meet the investment criteria of
the Fund. Although the securities subject to the repurchase agreement might bear
maturities exceeding 397 days, settlement for the repurchase would never be more
than one year after the Fund's acquisition of the securities and normally would
be within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the security, and will not be
related to the coupon rate of the purchased security. At the time the Fund
enters into a repurchase agreement the value of the underlying security,
including accrued interest, will be equal to or exceed the value of the
repurchase agreement and, in the case of a repurchase agreement exceeding one
day, the seller will agree that the value of the underlying security, including
accrued interest, will at all times be equal to or exceed the value of the
repurchase agreement. The Fund may engage in a repurchase agreement with respect
to any security in which it is authorized to invest, even though the underlying
security may mature in more than one year. The collateral securing the seller's
obligation must be of a credit quality at least equal to the Fund's investment
criteria for Fund securities and will be held by the Fund's custodian or in the
Federal Reserve Book Entry System. Nevertheless, if the seller of a repurchase
agreement fails to repurchase the obligation in accordance with the terms of the
agreement, the Fund which entered into the repurchase agreement may incur a loss
to the extent that the proceeds it realized on the sale of the underlying
obligation are less than the repurchase price. Repurchase agreements may be
considered loans to the seller of the underlying security. Income with respect
to repurchase agreements is not tax-exempt. If bankruptcy proceedings are
commenced with respect to the seller, the Fund's realization upon the collateral
may be delayed or limited. The Fund may invest no more than 10% of its net
assets in illiquid securities including repurchase agreements maturing in more
than seven days. See "Investment Restrictions" herein. The Fund may, however,
enter into "continuing contract" or "open" repurchase agreements under which the
seller is under a continuing obligation to repurchase the underlying obligation
from the Fund on demand and the effective interest rate is negotiated on a daily
basis.
Securities purchased pursuant to a repurchase agreement are held by the Fund's
custodian and (i) are recorded in the name of the Fund with the Federal Reserve
Book Entry System or (ii) the Fund receives daily written confirmation of each
purchase of a security and a receipt from the custodian. The Fund purchases
securities subject to a repurchase agreement only when the purchase price of the
security acquired is equal to or less than its market price at the time of
purchase.
619109.4
8
<PAGE>
Privately Placed Securities
The Fund may invest in securities issued as part of privately negotiated
transactions between an issuer and one or more purchasers. Except with respect
to certain commercial paper issued in reliance on the exemption from regulations
in Section 4(2) of the Securities Act of 1933 (the "Securities Act") and
securities subject to Rule 144A of the Securities Act which are discussed below,
these securities are typically not readily marketable and are therefore
considered illiquid securities. The price the Fund pays for illiquid securities,
and any price received upon resale, may be lower than the price paid or received
for similar securities with a more liquid market. Accordingly, the valuation of
privately placed securities purchased by the Fund will reflect any limitations
on their liquidity.
The Fund may purchase securities that are not registered ("restricted
securities") under the Securities Act, but can be offered and sold to "qualified
institutional buyers" under Rule 144A of the Securities Act. The Fund may also
purchase certain commercial paper issued in reliance on the exemption from
regulations in Section 4(2) of the Securities Act ("4(2) Paper"). However, the
Fund will not invest more than 10% of its net assets in illiquid investments,
which include securities for which there is no readily available market,
securities subject to contractual restriction on resale, certain investments in
]asset-backed and receivable-backed securities and restricted securities
(unless, with respect to these securities and 4(2) Paper, the Fund's Directors
continuously determine, based on the trading markets for the specific restricted
security, that it is liquid). The Directors may adopt guidelines and delegate to
the Advisor or Sub-Advisor the daily function of determining and monitoring
liquidity of restricted securities and 4(2) Paper. The Directors, however, will
retain sufficient oversight and be ultimately responsible for these
determinations.
Since it is not possible to predict with assurance exactly how this market for
restricted securities sold and offered under Rule 144A will develop, the
Directors will carefully monitor the Fund's investments in these securities,
focusing on such factors, among others, as valuation, liquidity and availability
of information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted securities.
INVESTMENT RESTRICTIONS
The Fund operates under the following investment restrictions which, together
with the investment objective of the Fund, may not be changed without
shareholder approval and which apply to the Fund.
The Fund may not:
o invest more than 5% of the total market value of the Fund's
assets (determined at the time of the proposed investment and
giving effect thereto) in the securities of any one issuer
other than the United States Government, its agencies or
instrumentalities;
o invest more than 25% of the value of the Fund's total assets
in securities of companies in the same industry (excluding
United States government securities and certificates of
deposit and bankers' acceptances of domestic banks) if the
purchase would cause more than 25% of the value of the Fund's
total assets to be invested in companies in the same industry
(for the purpose of this restriction wholly-owned finance
companies are considered to be in the industry of their
parents if their activities are similarly related to financing
the activities of their parents);
o acquire securities that are not readily marketable or
repurchase agreements calling for resale within more than
seven days if, as a result thereof, more than 10% of the value
of its net assets would be invested in such illiquid
securities;
o invest more than 5% of the Fund's assets in securities that
are subject to underlying puts from the same institution, and
no single bank shall issue its letter of credit and no single
financial institution shall issue a credit enhancement
covering more than 5% of the total assets of the Fund.
However, if the puts are exercisable by the Fund in the event
of default on payment of principal and interest on the
underlying security, then the Fund may invest up to 10% of
its assets in securities underlying puts issued or guaranteed
by the same institution; additionally, a single bank can
issue its letter of credit or a single financial institution
can issue a credit enhancement covering up to 10% of the
Fund's assets, where the puts offer the Fund such default
protection;
o make loans, except that the Fund may purchase for the Fund the
debt securities described above under "Investment Objectives,
Policies and Risks" and may enter into repurchase agreements
as therein described;
o borrow money, unless (i) the borrowing does not exceed 10% of
the total market value of the assets of the Fund with respect
to which the borrowing is made (determined at the time of
borrowing but without giving
619109.4
9
<PAGE>
effect thereto) and the money is borrowed from one or more
banks as a temporary measure for extraordinary or emergency
purposes or to meet unexpectedly heavy redemption requests and
furthermore the Fund will not make additional investments when
borrowings exceed 5% of the Fund's net assets; and
o pledge, mortgage, assign or encumber any of the Fund's assets
except to the extent necessary to secure a borrowing permitted
by clause (d) made with respect to the Fund.
MANAGEMENT OF THE FUND
Management, Advisory and Sub-Advisory
Agreements
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has employed Pax World Management Corp., 222 State
Street, Portsmouth, New Hampshire 03801 (the "Advisor"), to act as investment
advisor to the Fund. The Advisor was incorporated in 1970 under the laws of the
State of Delaware and is a registered investment advisor, under the 1940 Act.
Pursuant to the terms of an Advisory Agreement entered into between the Fund and
the Advisor (the "Advisory Agreement"), the Advisor, subject to the supervision
of the Board of Directors of the Fund, is responsible for determining whether
contemplated investments satisfy the social responsibility criteria applied to
the Fund and for overseeing the performance of the Sub-Advisor. Under the
Advisory Agreement the Fund will pay the Advisor an annual advisory fee of .15%
of the Fund's average daily net assets. As of December 31, 1996, the Advisor had
over $600,000,000 in assets under management by virtue of serving as the Advisor
to the Pax World Fund, Inc. (the "Pax World Fund") and the Pax World Growth
Fund, Inc. (the "Pax World Growth Fund"). The Advisor has no clients other than
the Fund, the Pax World Fund and the Pax World Growth Fund. Reich & Tang Asset
Management L.P. will serve as the SubAdvisor of the Fund under a Sub-Advisory
Agreement entered into between the Advisor and the Sub-Advisor (the "SubAdvisory
Agreement"). The Advisor and Sub-Advisor provide persons satisfactory to the
Fund's Board of Directors to serve as officers of the Fund. Such officers, as
well as certain other employees and Directors of the Fund, may be officers of
the Advisor, Reich & Tang Asset Management, Inc., the sole general partner of
the Sub-Advisor or employees of the SubAdvisor or its affiliates. Due to the
services performed by the Advisor and Sub-Advisor, the Fund currently has no
employees and its officers are not required to devote full-time to the affairs
of the Fund. The Statement of Additional Information contains general background
information regarding each Director and principal officer of the Fund.
The Sub-Advisor is a Delaware limited partnership and a registered investment
advisor, under the 1940 Act, with its principal office at 600 Fifth Avenue, New
York, New York 10020. The Sub-Advisor, as of July 31, 1997, was investment
manager, advisor or supervisor with respect to assets aggregating approximately
$10.67 billion. The Sub-Advisor acts as manager or administrator of [fifteen]
other registered investment companies and also advises pension trusts,
profit-sharing trusts and endowments.
New England Investment Companies, L.P. ("NEICLP") is the limited partner and
owner of a 99.5% interest in the Sub- Advisor. Reich & Tang Asset Management,
Inc. (a wholly-owned subsidiary of NEICLP) is the general partner and owner of
the remaining .5% interest of the Sub-Advisor. New England Investment Companies,
Inc. ("NEIC"), a Massachusetts Corporation, serves as the sole general partner
of NEICLP.
On August 30, 1996, The New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. The Sub-Advisor is an indirect
wholly-owned subsidiary of NEICLP, but Reich & Tang Asset Management, Inc., its
sole general partner, is now an indirect subsidiary of MetLife. Also, MetLife
New England Holdings, Inc., a wholly-owned subsidiary of MetLife, owns
approximately 48.5% of the outstanding limited partnership interest of NEICLP
and may be deemed a "controlling person" of the SubAdvisor. Reich & Tang, Inc.
owns approximately 16% of the outstanding partnership units of NEICLP.
MetLife is a mutual life insurance company with assets of $297.6 billion at
December 31, 1996. It is the second largest life insurance company in the United
States in terms of total assets. MetLife provides a wide range of insurance and
investment products and services to individuals and groups and is the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. MetLife and its affiliates provide insurance or other
financial services to approximately 36 million people worldwide.
NEIC is a holding company offering a broad array of investment styles across a
wide range of asset categories through thirteen subsidiaries, divisions and
affiliates to institutional clients. Its business units include AEW Capital
Management, L.P., Back Bay Advisors, L.P., Capital Growth Management, L.P.,
Graystone Partners, L.P., Harris Associates, L.P., Jurika & Voyles, L.P.,
Loomis, Sayles & Company, L.P., New England Investment Associates, Inc., Reich &
Tang Capital
619109.4
10
<PAGE>
Management, Reich & Tang Funds, Vaughan-Nelson, Scarborough & McConnell, Inc.,
and Westpeak Investment Advisors, L.P. These affiliates in the aggregate are
investment advisors or managers to 80 other registered investment companies.
On , the Board of Directors, including a majority of the Directors who are not
interested persons (as defined in the 1940 Act) of the Fund, the Advisor or the
Sub-Advisor, approved an Investment Advisory Agreement with Pax World Management
Corp. and a Sub-Advisory Agreement with Reich & Tang Asset Management L.P. each
effective , which have terms which extend to and may be continued in force
thereafter for successive twelve-month periods beginning each , provided that
such continuance is specifically approved annually by majority vote of the
Fund's outstanding voting securities or by a majority of the Directors who are
not parties to the Investment Advisory Agreement and Sub-Advisory Agreement or
interested persons of any such party, by votes cast in person at a meeting
called for the purpose of voting on such matter. The Investment Advisory
Agreement and Sub-Advisory Agreement were approved by the sole shareholder of
the Fund on , 1997.
Pursuant to the terms of a Sub-Advisory Agreement between the Advisor and the
Sub-Advisor, the Sub-Advisor manages the Fund's portfolio of securities and
makes the decisions with respect to the purchase and sale of investments,
subject to the general control of the Board of Directors of the Fund and the
determination of the Advisor that the contemplated investments satisfy the
social responsibility criteria applied to the Fund. Under the Sub-Advisory
Agreement the Advisor will pay the Sub-Advisor an annual management fee of
[.075]% of the Fund's average daily net assets from its advisory fee. The
management fees are accrued daily and paid monthly. The Sub-Advisor, at its
discretion, may voluntarily waive all or a portion of the Management Fee.
Pursuant to an Administrative Services Agreement for the Fund, the Sub-Advisor
performs clerical, accounting supervision and office service functions for the
Fund and provides the Fund with personnel to (i) supervise the performance of
bookkeeping and related services by Investors Fiduciary Trust Company, the
Fund's bookkeeping agent; (ii) prepare reports to and filings with regulatory
authorities; and (iii) perform such other administrative services as the Fund
may from time to time request of the Sub-Advisor. The personnel rendering such
services may be employees of the Sub-Advisor or its affiliates. The Fund
reimburses the Sub-Advisor for all of the Fund's operating costs including rent,
depreciation of equipment and facilities, interest and amortization of loans
financing equipment used by the Fund and all the expenses incurred to conduct
the Fund's affairs. The amount of such reimbursement must be agreed upon between
the Fund and the Sub-Advisor. The Sub-Advisor, at its discretion, may
voluntarily waive all or a portion of the administrative services fee and the
operating expense reimbursement. For its services under the Administrative
Services Agreement, the SubAdvisor receives an annual fee of .10% of the Fund's
average daily net assets.
Any portion of the total fees received by the Advisor and Sub-Advisor and their
past profits may be used to provide shareholder services and for distribution of
Fund shares. (See "Distribution and Service Plan" herein.) The fees are accrued
daily and paid monthly.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Fund, which was incorporated on November 26,
1997 in Maryland, consists of twenty billion shares of stock having a par value
of one tenth of one cent ($.001) per share. Except as noted below, each share
has equal dividend, distribution, liquidation and voting rights within the Fund
and a fractional share has those rights in proportion to the percentage that the
fractional share represents of a whole share. Generally, shares will be voted in
the aggregate except if voting by Fund Class is required by law or the matter
involved affects only one Fund Class, in which case shares will be voted
separately by Fund Class. There are no conversion or preemptive rights in
connection with any shares of the Fund. All shares when issued in accordance
with the terms of the offering will be fully paid and nonassessable. Shares of
the Fund are redeemable at net asset value, at the option of the shareholder. On
, 1997, the Sub-Advisor purchased $100,000 of the Fund's shares at an initial
subscription price of $1.00 per share.
The Fund is subdivided into three classes of shares of beneficial interest. Each
share, regardless of Class, will represent an interest in the same portfolio of
investments and will have identical voting, dividend, liquidation and other
rights, preferences, powers, restrictions, limitations, qualifications,
designations and terms and conditions, except that: (i) each Class of shares
will have different class designations; (ii) only the Individual Investor Class
and Broker Service Class shares will be assessed a Shareholder Servicing Fee of
.25% of the average daily net assets of the Individual Investor Class and Broker
Service Class shares of the Fund pursuant to the Rule 12b-1 Distribution and
Service Plan of the Fund; (iii) only the holders of the Individual Investor
Class and Broker Service Class shares will be entitled to vote on matters
pertaining to the Plan and any related agreements applicable to that class in
accordance with provisions of Rule 12b-1; (iv) only the Broker Service Class
shares will be assessed an additional sub-transfer agent accounting fee of .20%
of the average daily net assets of the Broker Service Class shares of the Fund;
and (v) the exchange privilege will permit shareholders to exchange their shares
only for shares of a fund that participates in an Exchange Privilege Program
with the Fund. Payments that are made under the Plans will be calculated and
charged daily to the appropriate Class prior to determining daily net asset
value per share and dividends/distributions.
619109.4
11
<PAGE>
Generally, all shares will be voted in the aggregate, except if voting by Class
is required by law or the matter involved affects only one Class, in which case
shares will be voted separately by Class. The shares of the Fund have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares outstanding voting for the election of directors can elect 100% of
the directors if the holders choose to do so, and, in that event, the holders of
the remaining shares will not be able to elect any person or persons to the
Board of Directors. The Fund's By-laws provide the holders of a majority of the
outstanding shares of the Fund present at a meeting in person or by proxy will
constitute a quorum for the transaction of business at all meetings.
HOW TO PURCHASE AND REDEEM SHARES
Investors who have accounts with Participating Organizations may invest in the
Fund through their Participating Organizations in accordance with the procedures
established by the Participating Organizations. Certain Participating
Organizations are compensated by the Distributor from its Shareholder Servicing
Fee and by the Sub-Advisor from its management fee for the performance of these
services. An investor who purchases shares through a Participating Organization
that receives payment from the Sub-Advisor or the Distributor will become an
Individual Investor Class or Broker Service Class shareholder. (See "Investments
Through Participating Organizations" herein.) All other investors, and investors
who have accounts with Participating Organizations but who do not wish to invest
in the Fund through their Participating Organizations, may invest in the Fund
directly as Institutional Class shareholders of the Fund and not receive the
benefit of the servicing functions performed by a Participating Organization.
Institutional Class shares may also be offered to investors who purchase their
shares through Participating Organizations who do not receive compensation from
the Distributor or the Sub-Advisor because they may not be legally permitted to
receive such as fiduciaries. The SubAdvisor pays the expenses incurred in the
distribution of Institutional Class shares. Participating Organizations whose
clients become Institutional Class shareholders will not receive compensation
from the Sub-Advisor or Distributor for the servicing they may provide to their
clients. (See "Direct Purchase and Redemption Procedures" herein.) With respect
to the Institutional Class of shares, the minimum initial investment in the Fund
is $100,000.
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a sales charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent which
accepts orders for purchases and redemptions from the Distributor and from
shareholders directly.
In order to maximize earnings, the Fund normally has its assets as fully
invested as is practicable. Many securities in which the Fund invests require
immediate settlement in funds of Federal Reserve member banks on deposit at a
Federal Reserve bank (commonly known as "Federal Funds"). Accordingly, the Fund
does not accept a subscription or invest an investor's payment in portfolio
securities until the payment has been converted into Federal Funds.
Shares will be issued as of the first determination of the Fund's net asset
value per share for each Class made after acceptance of the investor's purchase
order. An investor's funds will not be invested by the Fund during the period
before the Fund's receipt of Federal Funds and its issuance of Fund shares. The
Fund reserves the right to reject any purchase order for its shares.
Shares are issued as of 12:00 noon, New York City time, on any Fund Business
Day, as defined herein, on which an order for the shares and accompanying
Federal Funds are received by the Fund's transfer agent before 12:00 noon, New
York City time. Orders accompanied by Federal Funds and received after 12:00
noon, New York City time on a Fund Business Day will not result in share
issuance until the following Fund Business Day. Fund shares begin accruing
income on the day the shares are issued to an investor.
There is no redemption charge, no minimum period of investment and no
restriction on frequency of withdrawals. Proceeds of redemptions are paid by
check or bank wire. Unless other instructions are given in proper form to the
Fund's transfer agent, a check for the proceeds of a redemption will be sent to
the shareholder's address of record. If a shareholder elects to redeem all the
shares of the Fund he owns, all dividends credited to the shareholder up to the
date of redemption are paid to the shareholder in addition to the proceeds of
the redemption.
The date of payment upon redemption may not be postponed for more than seven
days after shares are tendered for redemption, and the right of redemption may
not be suspended, except for any period during which the New York Stock
Exchange, Inc. is closed (other than customary weekend and holiday closings) or
during which the Securities and Exchange Commission determines that trading
thereon is restricted, or for any period during which an emergency (as
determined by the Securities and Exchange Commission) exists as a result of
which disposal by the Fund of its securities is not reasonably practicable or as
a result of which it is not reasonably practicable for the Fund fairly to
determine the value of its net assets, or for such other period as the
Securities and Exchange Commission may by order permit for the protection of the
shareholders of the Fund.
619109.4
12
<PAGE>
Redemption requests received by the Fund's transfer agent before 12:00 noon, New
York City time, on any day on which the New York Stock Exchange, Inc. is open
for trading become effective at 12:00 noon that day. A redemption request
received after 12:00 noon on any day on which the New York Stock Exchange, Inc.
is open for trading becomes effective on the next Fund Business Day. Shares
redeemed are not entitled to participate in dividends declared on the day or
after the day a redemption becomes effective.
The Fund has reserved the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in his account after a withdrawal is
less than $[500]. Written notice of any such mandatory redemption will be given
at least 30 days in advance to any shareholder whose account is to be redeemed
or the Fund may impose a monthly service charge of $10 on such accounts. During
the notice period any shareholder who receives such a notice may (without regard
to the normal $[100] requirement for an additional investment) make a purchase
of additional shares to increase his total net asset value at least to the
minimum amount and thereby avoid such mandatory redemption.
The Fund has reserved the right to charge individual shareholder accounts for
expenses actually incurred by such account for postage, wire transfers and
certain other shareholder expenses, as well as to impose a monthly service
charge for accounts whose net asset value falls below the minimum amount.
Investments Through
Participating Organizations
Investors who have accounts with Participating Organziations ("Participant
Investors") may, if they wish, invest in the Fund through the Participating
Organizations with which they have accounts. "Participating Organizations" are
securities brokers, banks and financial institutions or other industry
professionals or organizations which have entered into shareholder servicing
agreements with the Distributor with respect to investment of their customer
accounts in the Fund. When instructed by its customer to purchase or redeem Fund
shares, the Participating Organization, on behalf of the customer, transmits to
the Fund's transfer agent a purchase or redemption order, and in the case of a
purchase order, payment for the shares being purchased.
Participating Organizations may confirm to their customers who are shareholders
in the Fund each purchase and redemption of Fund shares for the customers'
accounts. Also, Participating Organizations may send their customers periodic
account statements showing the total number of Fund shares owned by each
customer as of the statement closing date, purchases and redemptions of Fund
shares by each customer during the period covered by the statement and the
income earned by Fund shares of each customer during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Participant Investors whose Participating Organizations have not undertaken to
provide such statements will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in connection
with their use of specialized purchase and redemption procedures offered to
Participant Investors by the Participating Organizations. In addition,
Participating Organizations offering purchase and redemption procedures similar
to those offered to shareholders who invest in the Fund directly may impose
charges, limitations, minimums and restrictions in addition to or different from
those applicable to shareholders who invest in the Fund directly. Accordingly,
the net yield to investors who invest through Participating Organizations may be
less than by investing in the Fund directly. A Participant Investor should read
this Prospectus in conjunction with the materials provided by the Participating
Organization describing the procedures under which Fund shares may be purchased
and redeemed through the Participating Organization.
In the case of qualified Participating Organizations, orders received by the
Fund's transfer agent before 12:00 noon, New York City time, on a Fund Business
Day, without accompanying Federal Funds will result in the issuance of shares on
that day provided that the Federal Funds required in connection with the orders
are received by the Fund's transfer agent before 4:00 p.m., New York City time,
on that day. Orders for which Federal Funds are received after 4:00 p.m., New
York City time, will not result in share issuance until the following Fund
Business Day. Participating Organizations are responsible for instituting
procedures to insure that purchase orders by their respective clients are
processed expeditiously.
DIRECT PURCHASE AND
REDEMPTION PROCEDURES
The following purchase and redemption procedures apply to investors who wish to
invest in the Fund directly. These investors may obtain the subscription order
form necessary to open an account by telephoning the Fund at either 212-830-
5220 (within New York State) or at 800-241-[3263] (toll free outside New York
State).
All shareholders will receive from the Fund a monthly statement listing the
total number of shares of the Fund owned as of the statement closing date,
purchases and redemptions of shares of the Fund during the month covered by the
statement and the dividends paid on shares of the Fund of each shareholder
during the statement period (including dividends paid in cash or reinvested in
additional shares of the Fund). Certificates for Fund shares will not be issued
to an investor.
619109.4
13
<PAGE>
Initial Purchase of Shares
Mail
Investors may send a check made payable to the Fund along with a completed
Subscription order form to:
Pax World Money Market Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member bank of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on a non-member bank may take
substantially longer to convert into Federal Funds and to be invested in Fund
shares. An investor's subscription will not be accepted until the Fund receives
Federal Funds.
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of money
among banks, an investor should first obtain a new account number by telephoning
the Fund at either 212-830-5220 (within New York State) or at 800-241-[3263]
(outside New York State) and then instruct a member commercial bank to wire
money immediately to:
Investors Fiduciary Trust Company
ABA #101003621
Reich & Tang Funds
DDA #890752-951-1
For Pax World Money Market Fund, Inc.
Account of (Investor's Name)
Fund Account #____________________
SS #/Tax I.D.#_____________________
The investor should then promptly complete and mail the subscription order form.
An investor planning to wire funds should instruct his bank early in the day so
the wire transfer can be accomplished the same day. There may be a charge by the
investor's bank for transmitting the money by bank wire, and there also may be a
charge for use of Federal Funds. The Fund does not charge investors in the Fund
for its receipt of wire transfers. Payment in the form of a "bank wire" received
prior to 12:00 noon, New York City time, on a Fund Business Day will be treated
as a Federal Funds payment received on that day.
Personal Delivery
Deliver a check made payable to "Pax World Money Market Fund, Inc." along with a
completed subscription order form to:
Reich & Tang Funds
600 Fifth Avenue - 9th Floor
New York, New York 10020
Electronic Funds Transfers (EFT),
Pre-authorized Credit and Direct
Deposit Privilege
You may purchase shares of the Fund (minimum of $100) by having salary, dividend
payments, interest payments or any other payments designated by you, or by
having federal salary, social security, or certain veteran's military or other
payments from the federal government, automatically deposited into your Fund
account. You can also have money debited from your checking account. To enroll
in any one of these programs, you must file with the Fund a completed EFT
Application, Pre-authorized Credit Application, or a Direct Deposit Sign-Up Form
for each type of payment that you desire to include in the Privilege. The
appropriate form may be obtained from your broker or the Fund. You may elect at
any time to terminate your participation by notifying in writing the appropriate
depositing entity and/or federal agency. Death or legal incapacity will
automatically terminate your participation in the Privilege. Further, the Fund
may terminate your participation upon 30 days' notice to you.
Subsequent Purchases of Shares
There is a $[100] minimum for each subsequent purchase. All payments should
clearly indicate the shareholder's account number. Provided that the information
on the subscription order form on file with the Fund is still applicable, a
shareholder
619109.4
14
<PAGE>
may reopen an account without filing a new subscription order form at any time
during the year the shareholder's account is closed or during the following
calendar year.
Subsequent purchases can be made either by bank wire or by personal delivery, as
indicated above, or by mailing a check to the Fund's transfer agent at:
Pax World Money Market Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
Redemption of Shares
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
Class of the Fund following receipt by the Fund's transfer agent of the
redemption order. Normally payment for redeemed shares is made on the Fund
Business Day the redemption is effected, provided the redemption request is
received prior to 12:00 noon, New York City time and on the next Fund Business
Day if the redemption request is received after 12:00 noon, New York City time.
However, redemption requests will not be effected unless the check (including a
certified or cashier's check) used for investment has been cleared for payment
by the investor's bank, currently considered by the Fund to occur within 15 days
after investment.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee. When a
signature guarantee is called for, the shareholder should have "Signature
Guaranteed" stamped under his signature and guaranteed by an eligible guarantor
institution which includes a domestic bank, a domestic savings and loan
institution, a domestic credit union, a member bank of the Federal Reserve
System or a member firm of a national securities exchange, pursuant to the
Fund's transfer agent's standards and procedures.
Written Requests
Shareholders may make a redemption in any amount by sending a written request
to:
Pax Funds Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
All written requests for redemption must be signed by the shareholder with
signature guaranteed. Normally the redemption proceeds are paid by check mailed
to the shareholder of record.
Telephone
The Fund accepts telephone requests for redemption from shareholders who elect
this option. The proceeds of a telephone redemption will be sent to the
shareholder at his address or to his bank account as set forth in the
subscription order form or in a subsequent signature guaranteed written
authorization. Redemptions following an investment by check will not be effected
until the check has cleared, which could take up to 15 days after investment.
The Fund may accept telephone redemption instructions from any person with
respect to accounts of shareholders who elect this service, and thus
shareholders risk possible loss of dividends in the event of a telephone
redemption not authorized by them. Telephone requests to wire redemption
proceeds must be for amounts in excess of $1,000. The Fund will employ
reasonable procedures to confirm that telephone redemption instructions are
genuine, and will require that shareholders electing such option provide a form
of personal identification. The failure by the Fund to employ such reasonable
procedures may cause the Fund to be liable for any losses incurred by investors
due to telephone redemptions based upon unauthorized or fraudulent instructions.
The telephone redemption option may be modified or discontinued at any time upon
60 days written notice to shareholders.
A shareholder of Institutional Class Institutional shares making a telephone
withdrawal should call the Fund at 212-830- 5220; outside New York State at
800-241-3263 and state (i) the name of the shareholder appearing on the Fund's
records, (ii) his account number with the Fund, (iii) the amount to be withdrawn
and (iv) the name of the person requesting the redemption. Usually, the proceeds
are sent to the investor on the same Fund Business Day the redemption is
effected, provided the redemption request is received prior to 12:00 noon, New
York City time and on the next Fund Business Day if the redemption request is
received after 12:00 noon, New York City time.
619109.4
15
<PAGE>
Specified Amount Automatic
Withdrawal Plan
Shareholders may elect to withdraw shares and receive payment from the Fund of a
specified amount of $50 or more automatically on a monthly or quarterly basis.
The monthly or quarterly withdrawal payments of the specified amount are made by
the Fund on the 23rd day of the month. Whenever such 23rd day of the month is
not a Fund Business Day, the payment date is the Fund Business Day preceding the
23rd day of the month. In order to make a payment, a number of shares equal in
aggregate net asset value to the payment amount are redeemed at their net asset
value on the Fund Business Day immediately preceding the date of payment. To the
extent that the redemptions to make plan payments exceed the number of shares
purchased through reinvestment of dividends and distributions, the redemptions
reduce the number of shares purchased on original investment, and may ultimately
liquidate a shareholder's investment.
The election to receive automatic withdrawal payments may be made at the time of
the original subscription by so indicating on the subscription order form. The
election may also be made, changed or terminated at any later time by sending a
signature guaranteed written request to the transfer agent.
Exchange Privilege
Shareholders of the Fund are entitled to exchange some or all of a Class of
shares in the Fund for shares of the Pax World Fund Inc. or the Pax World Growth
Fund Inc., as well as certain other investment companies which retain Pax World
Management Corp. as its investment advisor or sub-advisor and which participate
in the exchange privilege program with the Fund. If only one class of shares is
available in a particular fund, the shareholder of the Fund is entitled to
exchange his or her shares for the shares available in that fund.
An exchange of shares in the Fund pursuant to the exchange privilege is, in
effect, a redemption of Fund shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a shareholder realizing a taxable gain or
loss for Federal income tax purposes.
There is no charge for the exchange privilege or limitation as to frequency of
exchanges. The minimum amount for an exchange is [$1,000], except that
shareholders who are establishing a new account with an investment company
through the exchange privilege must insure that a sufficient number of shares
are exchanged to meet the minimum initial investment required for the investment
company into which the exchange is being made.
The exchange privilege provides shareholders of the Fund with a convenient
method to shift their investment among different investment companies when they
feel such a shift is desirable. The exchange privilege is available to
shareholders resident in any state in which shares of the investment company
being acquired may legally be sold. Shares may be exchanged only between
investment company accounts registered in identical names. Before making an
exchange, the investor should review the current prospectus of the investment
company into which the exchange is to be made. Prospectuses may be obtained by
contacting the Distributor at the address or telephone number set forth on the
cover page of this Prospectus.
Instructions for exchanges may be made by sending a signature guaranteed written
request to:
Pax World Fund Family
c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
or, for shareholders who have elected that option, by telephone. The Fund
reserves the right to reject any exchange request and may modify or terminate
the exchange privilege at any time.
DISTRIBUTION AND SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Securities and Exchange
Commission has required that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by Rule 12b-1. Effective ______, 1997, the Fund's Board of
Directors adopted a distribution and service plan (the "Plan") and, pursuant to
the Plan, the Fund and Reich & Tang Distributors L.P. (the "Distributor")
entered into a Distribution Agreement and a Shareholder Servicing Agreement.
Reich & Tang Asset Management, Inc. serves as the sole general partner for both
Reich & Tang Asset Management L.P. and Reich & Tang Distributors L.P., and Reich
& Tang Asset Management L.P. serves as the sole limited partner of the
Distributor.
619109.4
16
<PAGE>
Under the Distribution Agreement, the Distributor serves as distributor of the
Fund's shares and, for nominal consideration and as agent for the Fund, will
solicit orders for the purchase of the Fund's shares, provided that any orders
will not be binding on the Fund until accepted by the Fund as principal.
The Plan provides that the Advisor and Sub-Advisor may make payments from time
to time from their own resources, which may include the advisory fee, the
management fee and past profits for the following purposes: (i) to defray the
costs of, and to compensate others, including Participating Organizations with
whom the Distributor has entered into written agreements, for performing
shareholder servicing and related administrative functions on behalf of the
Fund; (ii) to defray the costs of, and to compensate certain others, including
Participating Organizations for providing assistance in distributing the shares;
and (iii) to pay the costs of printing and distributing the Fund's prospectus to
prospective investors, and to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection with the distribution of the Fund's
shares. The Distributor may also make payments from time to time from its own
resources, which may include the Shareholder Servicing Fee (with respect to
Individual Investor Class and Broker Service Class shares) and past profits, for
the purposes enumerated in (i) above. The Distributor will determine the amount
of such payments made pursuant to the Plan, provided that such payments will not
increase the amount which the Fund is required to pay to the Advisor,
Sub-Advisor or Distributor for any fiscal year under either the Advisory
Agreement or the SubAdvisory Agreement, the Administrative Services Contract or
the Shareholder Servicing Agreement in effect for that year.
The Glass-Steagall Act and other applicable laws and regulations prohibit banks
and other depository institutions from engaging in the business of underwriting,
selling or distributing most types of securities. However, in the opinion of the
SubAdvisor based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other services for
investment companies such as the shareholder servicing and related
administrative functions referred to above. The Fund's Board of Directors will
consider appropriate modifications to the Fund's operations, including
discontinuance of any payments then being made under the Plan to banks and other
depository institutions, in the event of any future change in such laws or
regulations which may affect the ability of such institutions to provide the
above-mentioned services. It is not anticipated that the discontinuance of
payments to such an institution would result in loss to shareholders or change
in the Fund's net asset value. In addition, state securities laws on this issue
may differ from the interpretations of Federal law expressed herein and banks
and financial institutions may be required to register as dealers pursuant to
state law.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, at the election of each shareholder, be paid in
cash or in additional shares of the same Class having an aggregate net asset
value as of the payment date of such dividend or distribution equal to the cash
amount of such dividend or distribution. Election to receive dividends and
distributions in cash or shares is made at the time shares are subscribed for
and may be changed by notifying the Fund in writing at any time prior to the
record date for a particular dividend or distribution. If the shareholder makes
no election, the Fund will make the distribution in shares. There is no sales or
other charge in connection with the reinvestment of dividends and capital gains
distributions.
While it is intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Except as described herein, the Fund's net investment income
(including net realized short-term capital gains, if any) will be declared as a
dividend on each Fund Business Day. The Fund declares dividends for Saturdays,
Sundays and holidays on the previous Fund Business Day. The Fund generally pays
dividends monthly after the close of business on the last calendar day of each
month or after the close of business on the previous Fund Business Day if the
last calendar day of each month is not a Fund Business Day. Capital gains
distributions, if any, will be made at least annually, and in no event later
than 60 days after the end of the Fund's fiscal year. There is no fixed dividend
rate, and there can be no assurance that the Fund will pay any dividends or
realize any capital gains.
The Individual Investor Class and Broker Service Class shares will bear the
Shareholder Servicing Fee under the Plan. As a result, the net income of and the
dividends payable to the Individual Investor Class and Broker Service Class
shares will be lower than the net income of and dividends payable to the
Institutional Class shares of the Fund. Dividends paid to each Class of shares
of the Fund will, however, be declared and paid on the same days at the same
times and, except as noted with respect to the Shareholder Servicing Fee payable
under the Plan, will be determined in the same manner and paid in the same
amounts.
The Fund intends to qualify for and elect special treatment applicable to a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended. To qualify as a regulated investment company, the Fund must meet
certain complex tests concerning its investments and distributions. For each
year the Fund qualifies as a regulated investment
619109.4
17
<PAGE>
company, it will not be subject to federal income tax on income distributed to
its shareholders in the form of dividends or capital gains distributions.
Additionally, the Fund will not be subject to a federal excise tax if the Fund
distributes at least 98% of its ordinary income and 98% of its capital gain
income to its shareholders. Dividends of net ordinary income and distributions
of net short-term capital gains are taxable to the recipient shareholders as
ordinary income but will not be eligible, in the case of corporate shareholders,
for the dividend-received deduction.
The Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gains distributions and redemptions) paid
to shareholder who have not complied with IRS regulations. In connection with
this withholding requirement, a shareholder will be asked to certify on his
application that the social security or tax identification number provided is
correct and that the shareholder is not subject to 31% backup withholding for
previous underreporting to the IRS.
NET ASSET VALUE
The Fund determines the net asset value of the shares of the Fund (computed
separately for each Class of shares) as of 12:00 noon, New York City time, by
dividing the value of the Fund's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued but
excluding capital stock and surplus) by the number of shares outstanding at the
time the determination is made. The Fund determines its net asset value on each
Fund Business Day. Fund Business Day for this purpose means any day on which the
Fund's custodian is open for trading. Purchases and redemptions will be effected
at the time of determination of net asset value next following the receipt of
any purchase or redemption order. (See "Purchase and Redemption of Shares" and
"Other Purchase and Redemption Procedures" herein.)
In order to maintain a stable net asset value per share for each Class of $1.00,
the Fund's portfolio securities are valued at their amortized cost. Amortized
cost valuation involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium, except
that if fluctuating interest rates cause the market value of the Fund's
portfolio to deviate more than 1/2 of 1% from the value determined on the basis
of amortized cost, the Board of Directors will consider whether any action
should be initiated to prevent any material dilutive effect on investors.
Although the amortized cost method provides certainty in valuation, it may
result in periods during which the stated value of an instrument is higher or
lower than the price an investment company would receive if the instrument were
sold. There is no assurance that the Fund will maintain a stable net asset value
per share of $1.00.
GENERAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on November
26, 1997 and it is registered with the Securities and Exchange Commission as a
diversified, open-end management investment company.
The Fund prepares semi-annual unaudited and annual audited reports which include
a list of investment securities held by the Fund and which are sent to
shareholders.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the By-laws of the Fund provide for annual
meetings only (a) for the election of directors, (b) for approval of revised
investment advisory contracts with respect to a particular class or series of
stock, (c) for approval of revisions to the Fund's distribution agreement with
respect to a particular class or series of stock, and (d) upon the written
request of holders of shares entitled to cast not less than 25% of all the votes
entitled to be cast at such meeting. Annual and other meetings may be required
with respect to such additional matters relating to the Fund as may be required
by the Act including the removal of Fund director(s) and communication among
shareholders, any registration of the Fund with the SEC or any state, or as the
Directors may consider necessary or desirable. Each Director serves until the
next meeting of the shareholders called for the purpose of considering the
election or reelection of such Director or of a successor to such Director, and
until the election and qualification of his or her successor, elected at such a
meeting, or until such Director sooner dies, resigns, retires or is removed by
the vote of the shareholders.
For further information with respect to the Fund and the shares offered hereby,
reference is made to the Fund's Registration Statement filed with the Securities
and Exchange Commission and copies thereof may be obtained upon payment of
certain duplicating fees.
CUSTODIAN AND TRANSFER AGENTS
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is the custodian for the Fund's cash and securities. Reich & Tang
Services L.P., 600 Fifth Avenue, New York, New York 10020 is the transfer agent
and dividend agent for the Institutional Class shares of the Fund. The Fund's
custodian and transfer agent do not assist in, and are not responsible for,
investment decisions involving assets of the Fund.
619109.4
18
<PAGE>
TABLE OF CONTENTS
Table of Fees and Expenses PAX
Selected Financial Information WORLD
Introduction MONEY
Investment Objectives, MARKET FUND, INC.
Policies and Risks PROSPECTUS
Social Criteria of Portfolio
Risk Factors and Additional __________, 1997
Investment Information
Investment Restrictions
Management of the Fund
Description of Common Stock
How to Purchase and Redeem Shares
Investments Through
Participating Organizations
Direct Purchase and
Redemption Procedures
Initial Purchase of Shares
Electronic Fund Transfers (EFT),
Pre-Authorized Credit
and Direct Deposit Privilege
Subsequent Purchases of Shares
Redemption of Shares
Specified Amount Automatic
Withdrawal Plan
Exchange Privilege
Distribution and Service Plan
Dividends, Distributions and Taxes
Net Asset Value
General Information
Custodian and Transfer Agents
619109.4
<PAGE>
Subject to Completion Dated December ___, 1997
- --------------------------------------------------------------------------------
PROSPECTUS
____________, 1997
PAX WORLD MONEY MARKET FUND, INC. 600 FIFTH AVENUE
NEW YORK, N.Y. 10020
(212) 830-5220
================================================================================
The Pax World Money Market Fund, Inc. (the "Fund") is designed to meet the
short-term investment needs of institutional investors ("Institutional
Investors"), individual investors and investors utilizing the Fund as a sweep
vehicle ("Sweep Investors") in connection with an account with a broker-dealer
that has entered into an agreement with the Fund's distributor, Reich & Tang
Distributors L.P. (the "Distributor"). There are no sales loads, exchange or
redemption fees associated with the Fund.
The Fund seeks to maximize current income to the extent consistent with the
preservation of capital and the maintenance of liquidity and to maintain a
stable net asset value of $1 per share. There can be no assurance that these
objectives will be achieved. The Fund seeks to achieve these objectives by
investing in short-term money market obligations with maturities of 397 days or
less, including bank certificates of deposit, time deposits, bankers'
acceptances, high quality commercial paper, securities issued or guaranteed by
certain agencies or instrumentalities of the United States Government, and
repurchase agreements calling for resale in 397 days or less backed by the
foregoing securities.
Consistent with the other members of the Pax World Fund Family, the Fund seeks
to achieve its objective by investing in issuers that produce life supportive
goods and services and that are not to any degree engaged in manufacturing
defense or weapons-related products. The policy of the Fund is to exclude from
its portfolio securities of (i) companies engaged in military activities, (ii)
companies appearing on the United States Department of Defense list of 100
largest contractors (a copy of which may be obtained from the Office of the
Secretary, Department of Defense, Washington, D.C. 20310) if five percent (5%)
or more of the gross sales of such companies are derived from contracts with the
United States Department of Defense, (iii) other companies contracting with the
United States Department of Defense if five percent (5%) or more of the gross
sales of such companies are derived from contracts with the United States
Department of Defense, and (iv) companies which derive revenue from the
manufacture of liquor, tobacco and/or gambling products. See "Introduction" on
page 4.
The Fund offers three classes of shares. This Prospectus offers the Individual
Investor Class shares for individual investors and the Broker Service Class
shares for Sweep Investors of clearing broker-dealers that have entered into an
agreement with the Distributor ("Clearing Brokers"). The Individual Investor
Class and Broker Service Class shares of the Fund are subject to a service fee
pursuant to the Fund's Rule 12b-1 Distribution and Service Plan and are sold
through financial intermediaries who provide servicing to Individual Investor
Class and Broker Service Class shareholders for which they receive compensation
from the Advisor, the Sub-Advisor or the Distributor. The Broker Service Class
shares are subject to an additional sub-transfer agent accounting fee. See
"Description of Shares."
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing in Individual Investor Class
or Broker Service Class shares of the Fund. Additional information about the
Fund, including additional information concerning risk factors relating to an
investment in the Fund, has been filed with the Securities and Exchange
Commission and is available upon request and without charge by calling or
writing the Fund at the above address. The "Statement of Additional Information"
bears the same date as this Prospectus and is incorporated by referenced into
this Prospectus in its entirety. The Securities and Exchange Commission
maintains a web site (http://www.sec.gov) that contains the Statement of
Additional Information and other reports and information regarding the Fund
which have been filed electronically with the Securities and Exchange
Commission. This Prospectus should be read and retained by investors for future
reference.
Pax World Management Corp., 222 State Street, Portsmouth, New Hampshire
03801-3853 (the "Advisor") is the advisor to the Fund. Reich & Tang Asset
Management, L.P. will act as Sub-Advisor of the Fund and Reich & Tang
Distributors L.P. acts as Distributor of the Fund's shares. Pax World Management
Corp. and Reich & Tang Asset Management L.P. are each registered investment
advisers. Reich & Tang Distributors L.P. is a registered broker-dealer and
member of the National Association of Securities Dealers, Inc. Pax World
Management Corp. will be responsible for determining whether contemplated
investments satisfy the social responsibility criteria applied to the Fund.
Reich & Tang Asset Management L.P. will perform the day to day portfolio
management of the Fund utilizing the securities of issuers approved by the
Advisor.
An investment in the Fund is neither insured nor guaranteed by the United States
Government. The Fund seeks to maintain an investment portfolio with a
dollar-weighted average maturity of 90 days or less, and to value its investment
portfolio at amortized cost and maintain a net asset value of $1.00 per share.
There can be no assurance that the Fund's objectives will be achieved or that
the Fund's stable net asset value of $1.00 per share can be maintained.
652644.2
1
<PAGE>
Shares in the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SAID OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
652644.2
2
<PAGE>
TABLE OF FEES AND EXPENSES
Estimated Annual Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
The Pax World Money Market Fund
Individual Broker
Investor Service
Class Class
----- -----
<S> <C> <C>
Management Fees .15% .15%
12b-1 Fees .25% .25%
Other Expenses .20% .40%
Administration Fees .10% .10%
----------
Total Fund Operating Expenses .60% .80%
====== ======
</TABLE>
<TABLE>
<CAPTION>
The Pax World Money Market Fund
Individual Investor Broker Service
Class Class
------------------- --------------
<S> <C> <C> <C> <C>
EXAMPLE 1 Year 3 Years 1 Year 3 Years
------ ------- ------ -------
</TABLE>
You would pay the following expenses on a
$1,000 investment, assuming 5% annual
return and redemption at the end of each
time period:
The purpose of the above fee table is to assist an investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The Advisor and/or Sub-Advisor at their discretion may voluntarily
waive all or a portion of the Management Fees and Administration Fees and
voluntarily reimburse the Fund's other operating expenses. The Distributor at
its discretion may voluntarily waive all or a portion of the 12b-1 Fee. The
expenses shown are at the levels anticipated for the current year. For a further
discussion of these fees see "Management of the Fund" and "Distribution and
Service Plan" herein.
The figures reflected in this example should not be considered to be a
representation of past or future expenses. Actual expenses may be greater or
less than those shown above.
652644.2
3
<PAGE>
INTRODUCTION
Pax World Money Market Fund, Inc. (the "Fund") is a no-load, diversified,
open-end management investment company offering investors managed portfolio of
money market instruments, together with a high degree of liquidity. The
Individual Investor Class and Broker Service Class shares of the Fund are
designed to meet the short-term investment needs of individual investors and
investors utilizing the Fund as a sweep vehicle ("Sweep Investors") in
connection with an account with a broker-dealer that has entered into an
agreement with the Fund's Distributor, Reich & Tang Distributors L.P.,
respectively. The net asset value of each Fund share is expected to remain
constant at $1.00, although this cannot be assured.
The investment objective of the Fund is to maximize current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.
There is no assurance that the Fund will achieve its investment objective. The
investment objective of the Fund may not be changed without shareholder
approval.
The Fund endeavors, consistent with its investment objective, to make a
contribution to world peace through investment in companies producing
life-supportive goods and services. The policy of the Fund is to invest in
securities of companies whose business is essentially directed toward
non-military and life-supportive activities. For example, the Fund seeks to
invest in such industries as health care, education, housing, food, retailing,
pollution control and leisure time among others.
The policy of the Fund is to exclude from its portfolio securities of (i)
companies engaged in military activities, (ii) companies appearing on the United
States Department of Defense list of 100 largest contractors (a copy of which
may be obtained from the Office of the Secretary, Department of Defense,
Washington, D.C. 20310) if five percent (5%) or more of the gross sales of such
companies are derived from contracts with the United States Department of
Defense, (iii) other companies contracting with the United States Department of
Defense if five percent (5%) or more of the gross sales of such companies are
derived from contracts with the United States Department of Defense, and (iv)
companies which derive revenue from the manufacture of liquor, tobacco and/or
gambling products.
The Fund attempts to achieve its objective through investment in short-term
money market obligations with maturities of 397 days or less, including bank
certificates of deposit, time deposits, bankers' acceptances, high quality
commercial paper, securities issued or guaranteed by certain agencies or
instrumentalities of the United States Government, and repurchase agreements
calling for resale in 397 days or less backed by the forgoing securities. The
Fund seeks to maintain an investment portfolio with a dollar-weighted average
maturity of 90 days or less, and to value its investment portfolio at amortized
cost and maintain a net asset value of $1.00 per share. There can be no
assurance that this value will be maintained.
The Fund's investment advisor is Pax World Management Corp. (the "Advisor"),
which is a registered investment advisor and which currently acts as manager or
advisor to two other open-end management investment companies, the Pax World
Fund, Inc. and the Pax World Growth Fund, Inc. The Fund's Sub-Advisor is Reich &
Tang Asset Management L.P. (the "Sub-Advisor"), which is a registered investment
advisor and which currently acts as manager or administrator to [fifteen] other
open-end management investment companies. (See "Management of the Fund" herein.)
The Fund's shares are distributed through Reich & Tang Distributors L.P. (the
"Distributor"), with whom the Fund has entered into a Distribution Agreement and
Shareholder Servicing Agreement (with respect to Individual Investor Class and
Broker Service Class shares of the Fund only) pursuant to the Fund's
distribution and service plan adopted under Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act"). (See "Distribution and Service
Plan" herein.)
On any day on which the New York Stock Exchange is open for trading ("Fund
Business Day"), investors may, without charge by the Fund, initiate purchases
and redemptions of shares of the Fund's common stock at their net asset value,
which will be determined daily. (See "How to Purchase and Redeem Shares" and
"Net Asset Value" herein.) Dividends from accumulated net income are declared by
the Fund on each Fund Business Day. The Fund pays interest dividends monthly on
the last calendar day of the month or, if the last calendar day of the month is
not a Fund Business Day, on the preceding Fund Business Day.
Net capital gains, if any, will be distributed at least annually, and in no
event later than within 60 days after the end of the Fund's fiscal year. All
dividends and distributions of capital gains are automatically invested in
additional shares of the same class of the Fund unless a shareholder has elected
by written notice to the Fund to receive either of such distributions in cash.
(See "Dividends, Distributions and Taxes" herein.)
The Fund may from time to time advertise its current yield and effective yield
for the Fund (computed separately for each Class of shares). The Fund's current
yield is calculated by dividing its average daily net income per share of the
Fund (excluding realized gains or losses) for a recent seven-day period by its
constant net asset value per share of $1.00 and annualizing the result on a
365-day basis. The Fund's effective yield is calculated by increasing its
current yield according
652644.2
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to a formula that takes into account the compounding effect of the reinvestment
of dividends. Performance for each Class of shares may vary due to variations in
expenses of each Class of shares. Any fees charged by a Participating
Organization directly to a customers account will not be included in yield
calculations. See "How to Purchase and Redeem Shares - Investments through
Participating Organizations."
An investment in the Fund entails certain risks, including risks associated with
the purchase of when-issued securities, repurchase agreements and with privately
placed securities, as well as certain risks associated with the purchase of
foreign issues. Risk factors for the Fund are further described under "Risk
Factors and Additional Investment Information" herein.
INVESTMENT OBJECTIVES,
POLICIES AND RISKS
Social Criteria of Fund
The policy of the Fund is to seek investments in issuers that are not to any
degree engaged in manufacturing defense or weapons-related products. The policy
of the Fund is to exclude from its portfolio securities of (i) companies engaged
in military activities, (ii) companies appearing on the United States Department
of Defense list of 100 largest contractors (a copy of which may be obtained from
the Office of the Secretary, Department of Defense, Washington, D.C. 20310) if
five percent (5%) or more of the gross sales of such companies are derived from
contracts with the United States Department of Defense, (iii) other companies
contracting with the United States Department of Defense if five percent (5%) or
more of the gross sales of such companies are derived from contracts with the
United States Department of Defense, and (iv) companies which derive revenue
from the manufacture of liquor, tobacco and/or gambling products.
In order to properly supervise a securities portfolio containing the limitations
described above, care must be exercised to continuously monitor developments of
the issuers whose securities are included in the Fund. Developments and trends
in the economy and financial markets are also considered, and the screening of
many securities is required to implement the investment philosophy of the Fund.
The Advisor, Pax World Management Corp., is responsible for such supervision and
screening of the securities included in the Fund.
If it is determined after the initial purchase by the Fund that the company's
activities fall within the exclusion described above (either by acquisition,
merger or otherwise), the securities of such company will be eliminated from the
portfolio as soon thereafter as possible taking into consideration (i) any gain
or loss which may be realized from such elimination, (ii) the tax implications
of such elimination, (iii) market timing, and the like. In no event, however,
will such security be retained longer than six (6) months from the time the Fund
learns of the investment disqualification. This requirement may cause the Fund
to dispose of the security at a time when it may be disadvantageous to do so.
The Fund's investment objective is a fundamental policy and may not be changed
without the approval of the holders of a majority of the Fund's outstanding
voting securities, as defined in the 1940 Act. Investment policies that are not
fundamental may be modified by the Board of Directors.
Permitted Investments:
United States Government Securities: Short-term obligations issued or guaranteed
by agencies or instrumentalities of the United States Government the proceeds of
which are earmarked for a specific purpose which complies with the investment
objectives and policies of the Fund. These include issues of agencies and
instrumentalities established under the authority of an act of Congress. These
securities are not supported by the full faith and credit of the United States
Treasury, some are supported by the right of the issuer to borrow from the
Treasury, and still others are supported only by the credit of the agency or
instrumentality. Although obligations of federal agencies and instrumentalities
are not debts of the United States Treasury, in some cases payment of interest
and principal on such obligations is guaranteed by the United States Government,
e.g., obligations of the Federal Housing Administration, the Export-Import Bank
of the United States, the Small Business Administration, the Government National
Mortgage Association, the General Services Administration and the Maritime
Administration; in other cases payment of interest and principal is not
guaranteed, e.g., obligations of the Federal Home Loan Bank System and the
Federal Farm Credit Bank.
Domestic and Foreign Bank Obligations: Certificates of deposit, time deposits,
commercial paper, bankers' acceptances issued by domestic banks, foreign
branches of domestic banks, foreign subsidiaries of domestic banks, and domestic
and foreign branches of foreign banks and corporate instruments supported by
bank letters of credit. See "Risk Factors and Additional Investment Information"
herein. Certificates of deposit are certificates representing the obligation of
a bank to repay funds deposited with it for a specified period of time. Time
deposits are non-negotiable deposits maintained in a bank for a specified period
of time (in no event longer than seven days) at a stated interest rate. Time
deposits and certificates of deposit which may be held by the Fund will not
benefit from insurance from the Federal Deposit Insurance Corporation. Bankers'
acceptances are credit instruments evidencing the obligation of a bank to pay a
draft drawn on it by a customer. These instruments reflect the obligation both
of the bank and of the drawer to pay the face amount of the instrument upon
652644.2
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<PAGE>
maturity. The Fund limits its investments in obligations of domestic banks,
foreign branches of domestic banks and foreign subsidiaries of domestic banks to
banks having total assets in excess of one billion dollars or the equivalent in
other currencies. The Fund limits its investments in obligations of domestic and
foreign branches of foreign banks to dollar-denominated obligations of such
banks which at the time of investment have more than $5 billion, or the
equivalent in other currencies, in total assets and which are considered by the
Fund's Board of Directors to be First Tier Eligible Securities (as defined
below) at the time of acquisition. The Fund generally limits investments in bank
instruments to (a) those which are fully insured as to principal by the FDIC or
(b) those issued by banks which at the date of their latest public reporting
have total assets in excess of $1.5 billion. However, the total assets of a bank
will not be the sole factor determining the Fund's investment decisions and the
Fund may invest in bank instruments issued by institutions which the Fund's
Board of Directors believes present minimal credit risks.
U.S. dollar-denominated obligations issued by foreign branches of domestic banks
or foreign branches of foreign banks ("Eurodollar" obligations) and domestic
branches of foreign banks ("Yankee dollar" obligations). The Fund will limit its
aggregate investments in foreign bank obligations, including Eurodollar
obligations and Yankee dollar obligations, to 25% of its total assets at the
time of purchase, provided that there is no limitation on the Fund investments
in (a) Eurodollar obligations, if the domestic parent of the foreign branch
issuing the obligations is unconditionally liable in the event that the foreign
branch fails to pay on the Eurodollar obligation for any reason; and (b) Yankee
dollar obligations, if the U.S. branch of the foreign bank is subject to the
same regulation as U.S. banks. Eurodollar, Yankee dollar and other foreign bank
obligations include time deposits, which are non-negotiable deposits maintained
in a bank for a specified period of time at a stated interest rate. The Fund
will limit its purchases of time deposits to those which mature in seven days or
less, and will limit its purchases of time deposits maturing in two to seven
days to 10% of such Fund's total assets at the time of purchase.
Eurodollar and other foreign obligations involve special investment risks,
including the possibility that liquidity could be impaired because of future
political and economic developments, that the obligations may be less marketable
than comparable domestic obligations of domestic issuers, that a foreign
jurisdiction might impose withholding taxes on interest income payable on those
obligations, that deposits may be seized or nationalized, that foreign
governmental restrictions such as exchange controls may be adopted which might
adversely affect the payment of principal of and interest on those obligations,
that the selection of foreign obligations may be more difficult because there
may be less information publicly available concerning foreign issuers, that
there may be difficulties in enforcing a judgment against a foreign issuer or
that the accounting, auditing and financial reporting standards, practices and
requirements applicable to foreign issuers may differ from those applicable to
domestic issuers. In addition, foreign banks are not subject to examination by
United States Government agencies or instrumentalities.
Since the Fund may contain securities issued by foreign agencies or
instrumentalities, and by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the Fund may be subject to
additional investment risks with respect to those securities that are different
in some respects from those incurred by a fund which invests only in debt
obligations of the United States and domestic issuers, although such obligations
may be higher yielding when compared to the securities of the United States and
domestic issuers. In making foreign investments, therefore, the Fund will give
appropriate consideration to the following factors, among others.
Foreign securities markets generally are not as developed or efficient as those
in the United States. Securities of some foreign issuers are less liquid and
more volatile than securities of comparable United States issuers. Similarly,
volume and liquidity in most foreign securities markets are less than in the
United States and, at times, volatility of price can be greater than in the
United States. The issuers of some of these securities, such as bank
obligations, may be subject to less stringent or different regulation than are
United States issuers. In addition, there may be less publicly available
information about a non-United States issuer and non-United States issuers
generally are not subject to uniform accounting and financial reporting
standards, practices and requirements comparable to those applicable to United
States issuers.
Because evidences of ownership of such securities usually are held outside the
United States, the Fund will be subject to additional risks which include
possible adverse political and economic developments, possible seizure or
nationalization of foreign deposits and possible adoption of governmental
restrictions which might adversely affect the payment of principal and interest
on the foreign securities or might restrict the payment of principal and
interest to the issuer, whether from currency blockage or otherwise.
Furthermore, some of these securities may be subject to stamp or other excise
taxes levied by foreign governments, which have the effect of increasing the
cost of such securities and reducing the realized gain or increasing the
realized loss on such securities at the time of sale. Income earned or received
by the Fund from sources within foreign countries may be reduced by withholding
and other taxes imposed by such countries. Tax conventions between certain
countries and the United States, however, may reduce or eliminate such taxes.
The Advisor and Sub-Advisor will attempt to minimize such
652644.2
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<PAGE>
taxes by timing of transactions and other strategies, but there can be no
assurance that such efforts will be successful. All such taxes paid by the Fund
will reduce its net income available for distribution to shareholders. The
Advisor and SubAdvisor will consider available yields, net of any required
taxes, in selecting foreign securities.
Variable Amount Master Demand Notes: unsecured demand notes that permit
investment of fluctuating amounts of money at variable rates of interest
pursuant to arrangements with issuers who meet the foregoing quality criteria.
The interest rate on a variable amount master demand note is periodically
redetermined according to a prescribed formula. Although there is no secondary
market in master demand notes, the payee may demand payment of the principal and
interest upon notice not exceeding five business or seven calendar days.
Commercial Paper and Certain Debt Obligations: commercial paper or short-term
debt obligations that have been determined by the Fund's Board of Directors to
present minimal credit risks and that are First Tier Eligible Securities (as
defined below) at the time of acquisition, so that the Fund is able to employ
the amortized cost method of valuation. Commercial paper generally consists of
short-term unsecured promissory notes issued by corporations, banks or other
borrowers.
The Fund may only purchase securities that have been determined by the Fund's
Board of Directors to present minimal credit risks and that are First Tier
Eligible Securities at the time of acquisition. The term First Tier Eligible
Securities means (i) securities that have remaining maturities of 397 days or
less and are rated in the highest short-term rating category by any two
nationally recognized statistical rating organizations ("NRSROs") or in such
category by the only NRSRO that has rated the securities (collectively, the
"Requisite NRSROs") (acquisition in the latter situation must also be ratified
by the Board of Directors); (ii) securities that have remaining maturities of
397 days or less but that at the time of issuance were long-term securities and
whose issuer has received from the Requisite NRSROs a rating with respect to
comparable short-term debt in the highest short-term rating category; and (iii)
unrated securities determined by the Fund's Board of Directors to be of
comparable quality. Where the issuer of a long-term security with a remaining
maturity which would otherwise qualify it as a First Tier Eligible Security does
not have rated short-term debt outstanding, the long-term security is treated as
unrated but may not be purchased if it has a long-term rating from any NRSRO
that is below the two highest long-term categories. A determination of
comparability by the Board of Directors is made on the basis of its credit
evaluation of the issuer, which may include an evaluation of a letter of credit,
guarantee, insurance or other credit facility issued in support of the
securities or participation certificates. While there are several organizations
that currently qualify as NRSROs, two examples of NRSROs are Standard & Poor's
Rating Services, a division of the McGraw-Hill Companies("S&P") and Moody's
Investors Service, Inc. ("Moody's"). The two highest ratings by Moody's for debt
securities are "Aaa" and "Aa" or by S&P are "AAA" and "AA". The highest rating
for domestic and foreign commercial paper is "Prime-1" by Moody's or "A- 1" by
S&P and "SP-1/AA" by S&P or "VMIG-1" and "VMIG-2" by Moody's in the case of
variable and floating rate demand notes. (See "Description of Ratings" in the
Statement of Additional Information.)
Subsequent to its purchase by the Fund, the quality of an investment may cease
to be rated or its rating may be reduced so that it ceases to be a First Tier
Eligible Security. If this occurs, the Board of Directors of the Fund shall
reassess promptly whether the security presents minimal credit risks and shall
cause the Fund to take such action as the Board of Directors determines is in
the best interest of the Fund and its shareholders. However, reassessment is not
required if the security is disposed of or matures within five business days of
the Advisor and Sub-Advisor becoming aware of the new rating and provided
further that the Board of Directors is subsequently notified of the Advisor's
and Sub-Advisor's actions.
In addition, in the event that a security (1) is in default, (2) ceases to be an
eligible investment under Rule 2a-7 or (3) is determined to no longer present
minimal credit risks, the Fund will dispose of the security absent a
determination by the Fund's Board of Directors that disposal of the security
would not be in the best interest of the Fund. In the event that the security is
disposed of, it shall be disposed of as soon as practicable, consistent with
achieving an orderly disposition by sale, exercise of any demand feature, or
otherwise. In the event of a default with respect to a security which
immediately before default accounted for 1/2 of 1% or more of the Fund's total
assets, the Fund shall promptly notify the Securities and Exchange Commission of
such fact and of the actions that the Fund intends to take in response to the
situation.
The Fund may enter into repurchase agreements providing for resale in 397 days
or less covering any of the foregoing securities which may have maturities in
excess of 397 days, provided that the instruments serving as collateral for the
agreements are eligible for inclusion in the Fund.
RISK FACTORS AND ADDITIONAL
INVESTMENT INFORMATION
When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed delivery basis.
Delayed delivery agreements are commitments by the Fund to dealers or issuers to
acquire securities beyond the customary same-day settlement for money market
instruments. These commitments fix the payment price and interest rate to be
received on the investment. Delayed
652644.2
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<PAGE>
delivery agreements will not be used as a speculative or leverage technique.
Rather, from time to time, the Advisor and the Sub-Advisor can anticipate that
cash for investment purposes will result from scheduled maturities of existing
portfolio instruments or from net sales of shares of the Fund; therefore, to
assure that the Fund will be as fully invested as possible in instruments
meeting its investment objective, the Fund may enter into delayed delivery
agreements, but only to the extent of anticipated funds available for investment
during a period of not more than five business days.
Money Market Obligations are sometimes offered on a "when-issued" basis, that
is, the date for delivery of and payment for the securities is not fixed at the
date of purchase, but is set after the securities are issued (normally within
forty-five days after the date of the transaction). The payment obligation and
the interest rate that will be received on the securities are fixed at the time
the buyer enters into the commitment. The Fund will only make commitments to
purchase such Money Market Instruments with the intention of actually acquiring
such securities, but the Fund may sell these securities before the settlement
date if it is deemed advisable.
If the Fund enters into a delayed delivery agreement or purchases a when-issued
security, it will direct Investors Fiduciary Trust Company, the Fund's custodian
(the "Custodian") to place cash or other high grade securities (including Money
Market Obligations) in a separate account of the Fund in an amount equal to its
delayed delivery agreements or whenissued commitments. If the market value of
such securities declines, additional cash or securities will be placed in the
account on a daily basis so that the market value of the account will equal the
amount of the Fund's delayed delivery agreements and when-issued commitments. To
the extent that funds are in a separate account, they will not be available for
new investment or to meet redemptions. Investment in securities on a when-issued
basis and use of delayed agreements may increase the Fund's exposure to market
fluctuation; or may increase the possibility that the Fund will incur a
short-term loss, if the Fund must engage in portfolio transactions in order to
honor a when-issued commitment or accept delivery of a security under a delayed
delivery agreement. The Fund will employ techniques designed to minimize these
risks.
No additional delayed delivery agreements or when-issued commitments will be
made if more than 25% of a Fund's net assets would become so committed. The Fund
will enter into when-issued and delayed delivery transactions only when the time
period between trade date and settlement date is at least 30 days and not more
than 120 days.
Repurchase Agreements
When the Fund purchases securities, it may enter into a repurchase agreement
with the seller wherein the seller agrees, at the time of sale, to repurchase
the security at a mutually agreed upon time and price, thereby determining the
yield during the purchaser's holding period. This arrangement results in a fixed
rate of return insulated from market fluctuations during such period. The Fund
may enter into repurchase agreements with member banks of the Federal Reserve
System and with broker-dealers who are recognized as primary dealers in United
States government securities by the Federal Reserve Bank of New York whose
creditworthiness has been reviewed and found to meet the investment criteria of
the Fund. Although the securities subject to the repurchase agreement might bear
maturities exceeding 397 days, settlement for the repurchase would never be more
than one year after the Fund's acquisition of the securities and normally would
be within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the security, and will not be
related to the coupon rate of the purchased security. At the time the Fund
enters into a repurchase agreement the value of the underlying security,
including accrued interest, will be equal to or exceed the value of the
repurchase agreement and, in the case of a repurchase agreement exceeding one
day, the seller will agree that the value of the underlying security, including
accrued interest, will at all times be equal to or exceed the value of the
repurchase agreement. The Fund may engage in a repurchase agreement with respect
to any security in which it is authorized to invest, even though the underlying
security may mature in more than one year. The collateral securing the seller's
obligation must be of a credit quality at least equal to the Fund's investment
criteria for Fund securities and will be held by the Fund's custodian or in the
Federal Reserve Book Entry System. Nevertheless, if the seller of a repurchase
agreement fails to repurchase the obligation in accordance with the terms of the
agreement, the Fund which entered into the repurchase agreement may incur a loss
to the extent that the proceeds it realized on the sale of the underlying
obligation are less than the repurchase price. Repurchase agreements may be
considered loans to the seller of the underlying security. Income with respect
to repurchase agreements is not tax-exempt. If bankruptcy proceedings are
commenced with respect to the seller, the Fund's realization upon the collateral
may be delayed or limited. The Fund may invest no more than 10% of its net
assets in illiquid securities including repurchase agreements maturing in more
than seven days. See "Investment Restrictions" herein. The Fund may, however,
enter into "continuing contract" or "open" repurchase agreements under which the
seller is under a continuing obligation to repurchase the underlying obligation
from the Fund on demand and the effective interest rate is negotiated on a daily
basis.
Securities purchased pursuant to a repurchase agreement are held by the Fund's
custodian and (i) are recorded in the name of the Fund with the Federal Reserve
Book Entry System or (ii) the Fund receives daily written confirmation of each
purchase of a security and a receipt from the custodian. The Fund purchases
securities subject to a repurchase agreement only when the purchase price of the
security acquired is equal to or less than its market price at the time of
purchase.
652644.2
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Privately Placed Securities
The Fund may invest in securities issued as part of privately negotiated
transactions between an issuer and one or more purchasers. Except with respect
to certain commercial paper issued in reliance on the exemption from regulations
in Section 4(2) of the Securities Act of 1933 (the "Securities Act") and
securities subject to Rule 144A of the Securities Act which are discussed below,
these securities are typically not readily marketable and are therefore
considered illiquid securities. The price the Fund pays for illiquid securities,
and any price received upon resale, may be lower than the price paid or received
for similar securities with a more liquid market. Accordingly, the valuation of
privately placed securities purchased by the Fund will reflect any limitations
on their liquidity.
The Fund may purchase securities that are not registered ("restricted
securities") under the Securities Act, but can be offered and sold to "qualified
institutional buyers" under Rule 144A of the Securities Act. The Fund may also
purchase certain commercial paper issued in reliance on the exemption from
regulations in Section 4(2) of the Securities Act ("4(2) Paper"). However, the
Fund will not invest more than 10% of its net assets in illiquid investments,
which include securities for which there is no readily available market,
securities subject to contractual restriction on resale, certain investments in
asset-backed and receivable-backed securities and restricted securities (unless,
with respect to these securities and 4(2) Paper, the Fund's Directors
continuously determine, based on the trading markets for the specific restricted
security, that it is liquid). The Directors may adopt guidelines and delegate to
the Advisor or Sub-Advisor the daily function of determining and monitoring
liquidity of restricted securities and 4(2) Paper. The Directors, however, will
retain sufficient oversight and be ultimately responsible for these
determinations.
Since it is not possible to predict with assurance exactly how this market for
restricted securities sold and offered under Rule 144A will develop, the
Directors will carefully monitor the Fund's investments in these securities,
focusing on such factors, among others, as valuation, liquidity and availability
of information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted securities.
INVESTMENT RESTRICTIONS
The Fund operates under the following investment restrictions which, together
with the investment objective of the Fund, may not be changed without
shareholder approval and which apply to the Fund.
The Fund may not:
o invest more than 5% of the total market value of the Fund's
assets (determined at the time of the proposed investment and
giving effect thereto) in the securities of any one issuer
other than the United States Government, its agencies or
instrumentalities;
o invest more than 25% of the value of the Fund's total assets
in securities of companies in the same industry (excluding
United States government securities and certificates of
deposit and bankers' acceptances of domestic banks) if the
purchase would cause more than 25% of the value of the Fund's
total assets to be invested in companies in the same industry
(for the purpose of this restriction wholly-owned finance
companies are considered to be in the industry of their
parents if their activities are similarly related to financing
the activities of their parents);
o acquire securities that are not readily marketable or
repurchase agreements calling for resale within more than
seven days if, as a result thereof, more than 10% of the value
of its net assets would be invested in such illiquid
securities;
o invest more than 5% of the Fund's assets in securities that
are subject to underlying puts from the same institution, and
no single bank shall issue its letter of credit and no single
financial institution shall issue a credit enhancement
covering more than 5% of the total assets of the Fund.
However, if the puts are exercisable by the Fund in the event
of default on payment of principal and interest on the
underlying security, then the Fund may invest up to 10% of
its assets in securities underlying puts issued or guaranteed
by the same institution; additionally, a single bank can
issue its letter of credit or a single financial institution
can issue a credit enhancement covering up to 10% of the
Fund's assets, where the puts offer the Fund such default
protection;
o make loans, except that the Fund may purchase for the Fund the
debt securities described above under "Investment Objectives,
Policies and Risks" and may enter into repurchase agreements
as therein described;
652644.2
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<PAGE>
o borrow money, unless (i) the borrowing does not exceed 10% of
the total market value of the assets of the Fund with respect
to which the borrowing is made (determined at the time of
borrowing but without giving effect thereto) and the money is
borrowed from one or more banks as a temporary measure for
extraordinary or emergency purposes or to meet unexpectedly
heavy redemption requests and furthermore the Fund will not
make additional investments when borrowings exceed 5% of the
Fund's net assets; and
o pledge, mortgage, assign or encumber any of the Fund's assets
except to the extent necessary to secure a borrowing permitted
by clause (d) made with respect to the Fund.
MANAGEMENT OF THE FUND
Management, Advisory and Sub-Advisory
Agreements
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has employed Pax World Management Corp., 222 State
Street, Portsmouth, New Hampshire 03801 (the "Advisor"), to act as investment
advisor to the Fund. The Advisor was incorporated in 1970 under the laws of the
State of Delaware and is a registered investment advisor, under the 1940 Act.
Pursuant to the terms of an Advisory Agreement entered into between the Fund and
the Advisor (the "Advisory Agreement"), the Advisor, subject to the supervision
of the Board of Directors of the Fund, is responsible for determining whether
contemplated investments satisfy the social responsibility criteria applied to
the Fund and for overseeing the performance of the Sub-Advisor. Under the
Advisory Agreement the Fund will pay the Advisor an annual advisory fee of .15%
of the Fund's average daily net assets. As of December 31, 1996, the Advisor had
over $600,000,000 in assets under management by virtue of serving as the Advisor
to the Pax World Fund, Inc. (the "Pax World Fund") and the Pax World Growth
Fund, Inc. (the "Pax World Growth Fund"). The Advisor has no clients other than
the Fund, the Pax World Fund and the Pax World Growth Fund. Reich & Tang Asset
Management L.P. will serve as the SubAdvisor of the Fund under a Sub-Advisory
Agreement entered into between the Advisor and the Sub-Advisor (the "SubAdvisory
Agreement"). The Advisor and Sub-Advisor provide persons satisfactory to the
Fund's Board of Directors to serve as officers of the Fund. Such officers, as
well as certain other employees and Directors of the Fund, may be officers of
the Advisor, Reich & Tang Asset Management, Inc., the sole general partner of
the Sub-Advisor or employees of the SubAdvisor or its affiliates. Due to the
services performed by the Advisor and Sub-Advisor, the Fund currently has no
employees and its officers are not required to devote full-time to the affairs
of the Fund. The Statement of Additional Information contains general background
information regarding each Director and principal officer of the Fund.
The Sub-Advisor is a Delaware limited partnership and a registered investment
advisor, under the 1940 Act, with its principal office at 600 Fifth Avenue, New
York, New York 10020. The Sub-Advisor, as of July 31, 1997, was investment
manager, advisor or supervisor with respect to assets aggregating approximately
$10.67 billion. The Sub-Advisor acts as manager or administrator of [fifteen]
other registered investment companies and also advises pension trusts,
profit-sharing trusts and endowments.
New England Investment Companies, L.P. ("NEICLP") is the limited partner and
owner of a 99.5% interest in the Sub- Advisor. Reich & Tang Asset Management,
Inc. (a wholly-owned subsidiary of NEICLP) is the general partner and owner of
the remaining .5% interest of the Sub-Advisor. New England Investment Companies,
Inc. ("NEIC"), a Massachusetts Corporation, serves as the sole general partner
of NEICLP.
On August 30, 1996, The New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. The Sub-Advisor is an indirect
wholly-owned subsidiary of NEICLP, but Reich & Tang Asset Management, Inc., its
sole general partner, is now an indirect subsidiary of MetLife. Also, MetLife
New England Holdings, Inc., a wholly-owned subsidiary of MetLife, owns
approximately 48.5% of the outstanding limited partnership interest of NEICLP
and may be deemed a "controlling person" of the SubAdvisor. Reich & Tang, Inc.
owns approximately 16% of the outstanding partnership units of NEICLP.
MetLife is a mutual life insurance company with assets of $297.6 billion at
December 31, 1996. It is the second largest life insurance company in the United
States in terms of total assets. MetLife provides a wide range of insurance and
investment products and services to individuals and groups and is the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. MetLife and its affiliates provide insurance or other
financial services to approximately 36 million people worldwide.
NEIC is a holding company offering a broad array of investment styles across a
wide range of asset categories through thirteen subsidiaries, divisions and
affiliates to institutional clients. Its business units include AEW Capital
Management, L.P., Back Bay Advisors, L.P., Capital Growth Management, L.P.,
Graystone Partners, L.P., Harris Associates, L.P., Jurika
652644.2
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<PAGE>
& Voyles, L.P., Loomis, Sayles & Company, L.P., New England Investment
Associates, Inc., Reich & Tang Capital Management, Reich & Tang Funds,
Vaughan-Nelson, Scarborough & McConnell, Inc., and Westpeak Investment Advisors,
L.P. These affiliates in the aggregate are investment advisors or managers to 80
other registered investment companies.
On , the Board of Directors, including a majority of the Directors who are not
interested persons (as defined in the 1940 Act) of the Fund, the Advisor or the
Sub-Advisor, approved an Investment Advisory Agreement with Pax World Management
Corp. and a Sub-Advisory Agreement with Reich & Tang Asset Management L.P. each
effective , which have terms which extend to and may be continued in force
thereafter for successive twelve-month periods beginning each , provided that
such continuance is specifically approved annually by majority vote of the
Fund's outstanding voting securities or by a majority of the Directors who are
not parties to the Investment Advisory Agreement and Sub-Advisory Agreement or
interested persons of any such party, by votes cast in person at a meeting
called for the purpose of voting on such matter. The Investment Advisory
Agreement and Sub-Advisory Agreement were approved by the sole shareholder of
the Fund on , 1997.
Pursuant to the terms of a Sub-Advisory Agreement between the Advisor and the
Sub-Advisor, the Sub-Advisor manages the Fund's portfolio of securities and
makes the decisions with respect to the purchase and sale of investments,
subject to the general control of the Board of Directors of the Fund and the
determination of the Advisor that the contemplated investments satisfy the
social responsibility criteria applied to the Fund. Under the Sub-Advisory
Agreement the Advisor will pay the Sub-Advisor an annual management fee of
[.075]% of the Fund's average daily net assets from its advisory fee. The
management fees are accrued daily and paid monthly. The Sub-Advisor, at its
discretion, may voluntarily waive all or a portion of the Management Fee.
Pursuant to an Administrative Services Agreement for the Fund, the Sub-Advisor
performs clerical, accounting supervision and office service functions for the
Fund and provides the Fund with personnel to (i) supervise the performance of
bookkeeping and related services by Investors Fiduciary Trust Company, the
Fund's bookkeeping agent; (ii) prepare reports to and filings with regulatory
authorities; and (iii) perform such other administrative services as the Fund
may from time to time request of the Sub-Advisor. The personnel rendering such
services may be employees of the Sub-Advisor or its affiliates. The Fund
reimburses the Sub-Advisor for all of the Fund's operating costs including rent,
depreciation of equipment and facilities, interest and amortization of loans
financing equipment used by the Fund and all the expenses incurred to conduct
the Fund's affairs. The amount of such reimbursement must be agreed upon between
the Fund and the Sub-Advisor. The Sub-Advisor, at its discretion, may
voluntarily waive all or a portion of the administrative services fee and the
operating expense reimbursement. For its services under the Administrative
Services Agreement, the SubAdvisor receives an annual fee of .10% of the Fund's
average daily net assets.
Any portion of the total fees received by the Advisor and Sub-Advisor and their
past profits may be used to provide shareholder services and for distribution of
Fund shares. (See "Distribution and Service Plan" herein.) The fees are accrued
daily and paid monthly.
In addition, Reich & Tang Distributors L.P., the Distributor, receives a
servicing fee equal to .25% per annum of the average daily net assets of the
Individual Investor Class and Broker Service Class shares (the "Shareholder
Servicing Fee") of the Fund under the Shareholder Servicing Agreement. The fees
are accrued daily and paid monthly. Investment management fees and operating
expenses, which are attributable to the three Classes of shares of the Fund,
will be allocated daily to each Class of shares based on the percentage of
shares outstanding for each Class at the end of the day.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Fund, which was incorporated o n November
26, 1997 in Maryland, consists of twenty billion shares of stock having a par
value of one tenth of one cent ($.001) per share. Except as noted below, each
share has equal dividend, distribution, liquidation and voting rights within the
Fund and a fractional share has those rights in proportion to the percentage
that the fractional share represents of a whole share. Generally, shares will be
voted in the aggregate except if voting by Fund Class is required by law or the
matter involved affects only one Fund Class, in which case shares will be voted
separately by Fund Class. There are no conversion or preemptive rights in
connection with any shares of the Fund. All shares when issued in accordance
with the terms of the offering will be fully paid and nonassessable. Shares of
the Fund are redeemable at net asset value, at the option of the shareholder. On
, 1997, the Sub-Advisor purchased $100,000 of the Fund's shares at an initial
subscription price of $1.00 per share.
The Fund is subdivided into three classes of shares of beneficial interest. Each
share, regardless of Class, will represent an interest in the same portfolio of
investments and will have identical voting, dividend, liquidation and other
rights, preferences, powers, restrictions, limitations, qualifications,
designations and terms and conditions, except that: (i) each Class of shares
will have different class designations; (ii) only the Individual Investor Class
and Broker Service Class shares will be assessed a Shareholder Servicing Fee of
.25% of the average daily net assets of the Individual Investor Class and Broker
Service Class shares of the Fund pursuant to the Rule 12b-1 Distribution and
Service Plan of the Fund;
652644.2
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<PAGE>
(iii) only the holders of the Individual Investor Class and Broker Service Class
shares will be entitled to vote on matters pertaining to the Plan and any
related agreements applicable to that class in accordance with provisions of
Rule 12b-1; (iv) only the Broker Service Class shares will be assessed an
additional sub-transfer agent accounting fee of .20% of the average daily net
assets of the Broker Service Class shares of the Fund; and (v) the exchange
privilege will permit shareholders to exchange their shares only for shares of a
fund that participates in an Exchange Privilege Program with the Fund. Payments
that are made under the Plans will be calculated and charged daily to the
appropriate Class prior to determining daily net asset value per share and
dividends/distributions.
Generally, all shares will be voted in the aggregate, except if voting by Class
is required by law or the matter involved affects only one Class, in which case
shares will be voted separately by Class. The shares of the Fund have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares outstanding voting for the election of directors can elect 100% of
the directors if the holders choose to do so, and, in that event, the holders of
the remaining shares will not be able to elect any person or persons to the
Board of Directors. The Fund's By-laws provide the holders of a majority of the
outstanding shares of the Fund present at a meeting in person or by proxy will
constitute a quorum for the transaction of business at all meetings.
HOW TO PURCHASE AND REDEEM SHARES
Broker Service Class shares will only be offered to the clearance clients of
clearing broker-dealers that have entered into an agreement with the Distributor
("Clearing Brokers"). Broker Service Class shares are subject to a service fee
pursuant to the Fund's Rule 12b-1 Distribution and Service Plan. The Clearing
Brokers provide shareholder servicing to Broker Service Class shareholders and
are compensated for such by the Manager and/or the Distributor. (See
"Investments Through Clearing Brokers" herein.) With respect to the Individual
Investor Class of shares, the minimum initial investment is $500. (See "Direct
Purchase and Redemption Procedures" herein.) With respect to the Broker Service
Class of shares, the minimum initial investment in the Fund is $1,000. The
minimum amount for subsequent investments is $100 for all shareholders.
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a sales charge for either sales or redemptions. All
transactions in Fund Individual Investor Class shares are effected through the
Fund's transfer agent which accepts orders for purchases and redemptions from
the Distributor and from shareholders directly. All transactions in Fund Broker
Service Class shares are effected through the Clearing Brokers which accept
orders for purchases and redemptions.
In order to maximize earnings, the Fund normally has its assets as fully
invested as is practicable. Many securities in which the Fund invests require
immediate settlement in funds of Federal Reserve member banks on deposit at a
Federal Reserve bank (commonly known as "Federal Funds"). Accordingly, the Fund
does not accept a subscription or invest an investor's payment in portfolio
securities until the payment has been converted into Federal Funds.
Shares will be issued as of the first determination of the Fund's net asset
value per share for each Class made after acceptance of the investor's or
Clearing Broker's purchase order. Funds will not be invested by the Fund during
the period before the Fund's receipt of Federal Funds and its issuance of Fund
shares. The Fund reserves the right to reject any purchase order for its shares.
Shares are issued as of 12:00 noon, New York City time, on any Fund Business
Day, as defined herein, on which an order for the shares and accompanying
Federal Funds are received by the Fund's transfer agent before 12:00 noon, New
York City time. Orders accompanied by Federal Funds and received after 12:00
noon, New York City time on a Fund Business Day will not result in share
issuance until the following Fund Business Day. Fund shares begin accruing
income on the day the shares are issued to an investor.
There is no redemption charge, no minimum period of investment and no
restriction on frequency of withdrawals. Proceeds of redemptions are paid by
check or bank wire. Unless other instructions are given in proper form to the
Fund's transfer agent, a check for the proceeds of a redemption will be sent to
the shareholder's address of record. If a shareholder elects to redeem all the
shares of the Fund he owns, all dividends credited to the shareholder up to the
date of redemption are paid to the shareholder in addition to the proceeds of
the redemption.
The date of payment upon redemption may not be postponed for more than seven
days after shares are tendered for redemption, and the right of redemption may
not be suspended, except for any period during which the New York Stock
Exchange, Inc. is closed (other than customary weekend and holiday closings) or
during which the Securities and Exchange Commission determines that trading
thereon is restricted, or for any period during which an emergency (as
determined by the Securities and Exchange Commission) exists as a result of
which disposal by the Fund of its securities is not reasonably practicable or as
a result of which it is not reasonably practicable for the Fund fairly to
determine the value of its net assets,
652644.2
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<PAGE>
or for such other period as the Securities and Exchange Commission may by order
permit for the protection of the shareholders of the Fund.
Redemption requests received by the Fund's transfer agent or Clearing Brokers
before 12:00 noon, New York City time, on any day on which the New York Stock
Exchange, Inc. is open for trading become effective at 12:00 noon that day. A
redemption request received after 12:00 noon on any day on which the New York
Stock Exchange, Inc. is open for trading becomes effective on the next Fund
Business Day. Shares redeemed are not entitled to participate in dividends
declared on the day or after the day a redemption becomes effective.
The Fund has reserved the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in his account after a withdrawal is
less than $500. Written notice of any such mandatory redemption will be given at
least 30 days in advance to any shareholder whose account is to be redeemed or
the Fund may impose a monthly service charge of $10 on such accounts. During the
notice period any shareholder who receives such a notice may (without regard to
the normal $100 requirement for an additional investment) make a purchase of
additional shares to increase his total net asset value at least to the minimum
amount and thereby avoid such mandatory redemption.
The Fund has reserved the right to charge individual shareholder accounts for
expenses actually incurred by such account for postage, wire transfers and
certain other shareholder expenses, as well as to impose a monthly service
charge for accounts whose net asset value falls below the minimum amount.
Investments Through
Clearing Brokers
Persons who maintain accounts with Clearing Brokers may, if they wish, invest in
the Fund through such Clearing Brokers. When instructed by its customer to
purchase or redeem Fund shares, the Clearing Brokers, on behalf of the customer,
transmits to the Fund's transfer agent a purchase or redemption order, and in
the case of a purchase order, payment for the shares being purchased.
Clearing Brokers may confirm to their customers who are shareholders in the Fund
("Broker Service Class Shareholders") each purchase and redemption of Fund
shares for the customers' accounts. Also, Clearing Brokers may send their
customers periodic account statements showing the total number of Fund shares
owned by each customer as of the statement closing date, purchases and
redemptions of Fund shares by each customer during the period covered by the
statement and the income earned by Fund shares of each customer during the
statement period (including dividends paid in cash or reinvested in additional
Fund shares).
Clearing Brokers may charge Broker Service Class Shareholders a fee in
connection with their use of specialized purchase and redemption procedures
offered to them by Clearing Brokers. In addition, Clearing Brokers offering
purchase and redemption procedures similar to those offered to shareholders who
invest in the Fund directly may impose charges, limitations, minimums and
restrictions in addition to or different from those applicable to shareholders
who invest in the Fund directly. Accordingly, the net yield to investors who
invest through Clearing Brokers may be less than by investing in the Fund
directly. A Broker Service Class Shareholder should read this Prospectus in
conjunction with the materials provided by the Clearing Brokers describing the
procedures under which Fund shares may be purchased and redeemed through the
Clearing Brokers.
In the case of Clearing Brokers, orders received by the Fund's transfer agent
before 12:00 noon, New York City time, on a Fund Business Day, without
accompanying Federal Funds will result in the issuance of shares on that day
provided that the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will not result in share issuance until the following Fund Business
Day. Clearing Brokers are responsible for instituting procedures to insure that
purchase orders by their respective clients are processed expeditiously.
DIRECT PURCHASE AND
REDEMPTION PROCEDURES
The following purchase and redemption procedures apply to investors who wish to
invest in Individual Investor Class shares of the Fund directly. These investors
may obtain the subscription order form necessary to open an account by
telephoning the Fund at 800-372-7827 (toll free).
All shareholders will receive from the Fund a monthly statement listing the
total number of shares of the Fund owned as of the statement closing date,
purchases and redemptions of shares of the Fund during the month covered by the
statement and the dividends paid on shares of the Fund of each shareholder
during the statement period (including dividends paid in cash or reinvested in
additional shares of the Fund). Certificates for Fund shares will not be issued
to an investor.
652644.2
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<PAGE>
Initial Purchase of Shares
Mail
Prospective shareholders may purchase Individual Investor Class shares of the
Fund by sending a check made payable to the Fund along with a completed
subscription order form to the transfer agent for the Individual Investor Class
at:
Pax World Money Market Fund Inc.
c/o Pax World Fund Family
P.O. Box 8930
Wilmington, Delaware 19899-8930
Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member bank of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on a non-member bank may take
substantially longer to convert into Federal Funds and to be invested in Fund
shares. An investor's subscription will not be accepted until the Fund receives
Federal Funds.
Bank Wire
Shareholders may purchase Individual Investor Class shares of the Fund (other
than initial purchases) by wire transfer. To do so, investors must telephone the
transfer agent for the Individual Investor Class at 800-372-7827 (toll free) and
then instruct a member commercial bank to wire money immediately to:
PNC Bank, Philadelphia, PA
ABA #031-0000-53
For Pax World Money Market Fund Inc.
Account of (Investor's Name)
Fund Account # ___________________
SS #/Tax I.D. # ___________________
The investor should then promptly complete and mail the subscription order form.
An investor planning to wire funds should instruct his bank early in the day so
the wire transfer can be accomplished the same day. There may be a charge by the
investor's bank for transmitting the money by bank wire, and there also may be a
charge for use of Federal Funds. The Fund does not charge investors in the Fund
for its receipt of wire transfers. Payment in the form of a "bank wire" received
prior to 12:00 noon, New York City time, on a Fund Business Day will be treated
as a Federal Funds payment received on that day.
Personal Delivery
Deliver a check made payable to "Pax World Money Market Fund Inc." along with a
completed subscription order form to:
For Individual Investor Class shares:
For Broker Service Class shares:
Reich & Tang Funds
600 Fifth Avenue - 9th Floor
New York, New York 10020
Electronic Funds Transfers (EFT),
Pre-authorized Credit and Direct
Deposit Privilege
You may purchase shares of the Fund (minimum of $100) by having salary, dividend
payments, interest payments or any other payments designated by you, or by
having federal salary, social security, or certain veteran's military or other
payments from the federal government, automatically deposited into your Fund
account. You can also have money debited from your checking account. To enroll
in any one of these programs, you must file with the Fund a completed EFT
Application, Pre-authorized Credit Application, or a Direct Deposit Sign-Up Form
for each type of payment that you desire to include in the Privilege. The
appropriate form may be obtained from your broker or the Fund. You may elect at
any time to terminate your participation by notifying in writing the appropriate
depositing entity and/or federal agency. Death or legal
652644.2
14
<PAGE>
incapacity will automatically terminate your participation in the Privilege.
Further, the Fund may terminate your participation upon 30 days' notice to you.
Subsequent Purchases of Shares
There is a $[100] minimum for each subsequent purchase. All payments should
clearly indicate the shareholder's account number. Provided that the information
on the subscription order form on file with the Fund is still applicable, a
shareholder may reopen an account without filing a new subscription order form
at any time during the year the shareholder's account is closed or during the
following calendar year.
Subsequent purchases can be made either by bank wire or by personal delivery, as
indicated above, or by mailing a check to the Fund's transfer agents at:
For Individual Investor Class shares:
Pax World Money Market Fund Inc.
PFPC, Inc.
P.O. Box 8950
Wilmington, Delaware 19899
For Broker Service Class shares:
Pax World Money Market Fund Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
Redemption of Shares
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
Class of the Fund following receipt by the Fund's transfer agent of the
redemption order. Normally payment for redeemed shares is made on the Fund
Business Day the redemption is effected, provided the redemption request is
received prior to 12:00 noon, New York City time and on the next Fund Business
Day if the redemption request is received after 12:00 noon, New York City time.
However, redemption requests will not be effected unless the check (including a
certified or cashier's check) used for investment has been cleared for payment
by the investor's bank, currently considered by the Fund to occur within 15 days
after investment.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. An Individual Investor Class shareholder may only
change the instructions indicated on his original subscription order form by
transmitting a written direction to the Fund's transfer agent. Requests to
institute or change any of the additional redemption procedures will require a
signature guarantee. When a signature guarantee is called for, the Individual
Investor Class shareholder should have "Signature Guaranteed" stamped under his
signature and guaranteed by an eligible guarantor institution. A signature
guarantee may be obtained from a domestic bank or trust company, broker, dealer,
clearing agency or savings association who are participants in a medallion
program recognized by the Securities Transfer Association. The three recognized
medallion programs are Securities Transfer Agent Medallion Program (STAMP),
Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange, Inc.
Medallion Signature Program (MSP). Signature guarantees which are not a part of
these programs will not be accepted.
Written Requests
Individual Investor Class shareholders may make a redemption in any amount by
sending a written request to:
Pax World Money Market Fund Inc.
c/o Pax World Fund Family
P.O. Box 8930
Wilmington, Delaware 19899-8930
All written requests for redemption must be signed by the shareholder with
signature guaranteed. Normally the redemption proceeds are paid by check mailed
to the shareholder of record.
Check Writing Privileges
By making the appropriate election on the subscription order form, an Individual
Class or Broker Service Class shareholder may request a supply of checks which
may be used to effect redemptions from any one or more of the Classes of shares
of the Fund in which the shareholder is invested. The checks will be issued in
the shareholder's name and the shareholder
652644.2
15
<PAGE>
will receive a separate supply of checks for each Class of shares of the Fund
for which checks are requested. Checks may be drawn in any amount of $250 or
more for Individual Investor Class shareholders, or in any amount determined by
the Clearing Broker for Broker Service Class Shareholders, and may be used like
an ordinary commercial bank check except that they may not be certified. The
checks are drawn on a special account maintained by the Fund with the agent
bank. When a check is presented to the Fund's agent bank, it instructs the
transfer agent to redeem a sufficient number of full and fractional shares in
the shareholder's account to cover the amount of the check. The canceled check
is usually returned to the shareholder. The use of a check to make a withdrawal
enables the shareholder in the Fund to receive dividends on the shares to be
redeemed up to the Fund Business Day on which the check clears. Fund shares
purchased by check may not be redeemed by check until the check has cleared,
which could take up to 15 days following the date of purchase.
There is no charge to the shareholder for checks provided by the Fund. The Fund
reserves the right to impose a charge or impose a different minimum check amount
in the future, if the Board of Directors determines that doing so is in the best
interests of the Fund and its shareholders.
Shareholders electing the checking option are subject to the procedures, rules
and regulations of the Fund's agent bank governing checking accounts. Checks
drawn on a jointly owned account may, at the shareholder's election, require
only one signature. Checks in amounts exceeding the value of the shareholder's
account at the time the check is presented for payment will not be honored.
Since the dollar value of the account changes daily, the total value of the
account may not be determined in advance and the account may not be entirely
redeemed by check. In addition, the Fund reserves the right to charge the
shareholder's account a fee up to $20 for checks not honored as a result of an
insufficient account value, a check deemed not negotiable because it has been
held longer than six months, an unsigned check and a post-dated check. The Fund
reserves the right to terminate or modify the check redemption procedure at any
time or to impose additional fees following notification to the Fund's
shareholders.
Telephone
The Fund accepts telephone requests for redemption from Individual Investor
Class shareholders who elect this option. The proceeds of a telephone redemption
will be sent to the Individual Investor Class shareholder at his address or to
his bank account as set forth in the subscription order form or in a subsequent
signature guaranteed written authorization. Redemptions following an investment
by check will not be effected until the check has cleared, which could take up
to 15 days after investment. The Fund may accept telephone redemption
instructions from any person with respect to accounts of Individual Investor
Class shareholders who elect this service, and thus shareholders risk possible
loss of dividends in the event of a telephone redemption not authorized by them.
Telephone requests to wire redemption proceeds must be for amounts in excess of
$[1,000]. The Fund will employ reasonable procedures to confirm that telephone
redemption instructions are genuine, and will require that Individual Investor
Class shareholders electing such option provide a form of personal
identification. The failure by the Fund to employ such reasonable procedures may
cause the Fund to be liable for any losses incurred by investors due to
telephone redemptions based upon unauthorized or fraudulent instructions. The
telephone redemption option may be modified or discontinued at any time upon 60
days written notice to Individual Investor Class shareholders.
A shareholder of Individual Investor Class Shares making a telephone withdrawal
should call PFPC, Inc. at 800-372-7827 and state (i) the name of the shareholder
appearing on the Fund's records, (ii) his account number with the Fund, (iii)
the amount to be withdrawn and (iv) the name of the person requesting the
redemption. This privilege only allows the check to be made payable to the
owner(s) of the account and may only be sent to the address of record. The
request cannot be honored if an address change has been made for the account
within 60 days of the telephone redemption request. If there are multiple
account owners, PFPC, Inc. may rely on the instructions of only one owner. This
account option is not available for retirement account shares or shares
represented by a certificate. PFPC, Inc. may record all calls.
Specified Amount Automatic
Withdrawal Plan
Shareholders may elect to withdraw shares and receive payment from the Fund of a
specified amount of $50 or more automatically on a monthly or quarterly basis.
The monthly or quarterly withdrawal payments of the specified amount are made by
the Fund on the 23rd day of the month. Whenever such 23rd day of the month is
not a Fund Business Day, the payment date is the Fund Business Day preceding the
23rd day of the month. In order to make a payment, a number of shares equal in
aggregate net asset value to the payment amount are redeemed at their net asset
value on the Fund Business Day immediately preceding the date of payment. To the
extent that the redemptions to make plan payments exceed the number of shares
purchased through reinvestment of dividends and distributions, the redemptions
reduce the number of shares purchased on original investment, and may ultimately
liquidate a shareholder's investment.
652644.2
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<PAGE>
The election to receive automatic withdrawal payments may be made at the time of
the original subscription by so indicating on the subscription order form for
Individual Investor Class shareholders or by so indicating on the appropriate
form from Clearing Broker for Broker Service Class Shareholders. The election
may also be made, changed or terminated at any later time by sending a signature
guaranteed written request to the transfer agent.
Exchange Privilege
Individual Investor Class shareholders of the Fund are entitled to exchange some
or all of their shares in the Fund for shares of the Pax World Fund, Inc. or the
Pax World Growth Fund, Inc. If only one class of shares is available in a
particular fund, the shareholder of the Fund is entitled to exchange his or her
shares for the shares available in that fund.
An exchange of shares in the Fund pursuant to the exchange privilege is, in
effect, a redemption of Fund shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a shareholder realizing a taxable gain or
loss for Federal income tax purposes.
There is no charge for the exchange privilege or limitation as to frequency of
exchanges. The minimum amount for an exchange is [$1,000], except that
shareholders who are establishing a new account with an investment company
through the exchange privilege must insure that a sufficient number of shares
are exchanged to meet the minimum initial investment required for the investment
company into which the exchange is being made.
The exchange privilege provides Individual Investor Class shareholders of the
Fund with a convenient method to shift their investment among different
investment companies when they feel such a shift is desirable. The exchange
privilege is available to shareholders resident in any state in which shares of
the investment company being acquired may legally be sold. Shares may be
exchanged only between investment company accounts registered in identical
names. Before making an exchange, the investor should review the current
prospectus of the investment company into which the exchange is to be made.
Prospectuses may be obtained by contacting the Distributor at the address or
telephone number set forth on the cover page of this Prospectus.
Instructions for exchanges may be made by sending a signature guaranteed written
request to:
Pax World Fund Family
PFPC, Inc.
P.O. Box 8930
Wilmington, Delaware 19899-8930
or, for shareholders who have elected that option, by telephone. The signature
guarantee must be by a recognized medallion program as described under
"Redemption of Shares" herein. The Fund reserves the right to reject any
exchange request and may modify or terminate the exchange privilege at any time.
INDIVIDUAL RETIREMENT ACCOUNTS
The Fund has available a form of individual retirement account ("IRA") for
investment in shares of the Fund's Individual Investor Class shares only.
Individuals earning compensation generally may make IRA contributions of up to
the lesser of their compensation or $2,000 annually. However, the deductibility
of an individual's IRA contribution may be reduced or eliminated if the
individual or, in the case of a married individual filing jointly, either the
individual or the individual's spouse is an active participant in an
employer-sponsored retirement plan. Thus, in the case of an active participant,
the deduction will be reduced proportionately if adjusted gross income is within
a phase out range and will not be available if adjusted gross income is above
the phase out range. For 1998, the phase out range is $30,000 to $40,000 for
single individuals and $50,000 to $60,000 for married couples filing a joint
return, with annual increases thereafter. An individual is not considered an
active participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant. In addition, an individual with a
non-working spouse may establish a separate IRA for the spouse and annually
contribute a total of up to $4,000 to the two IRAs, provided that no more than
$2,000 may be contributed to the IRA of either spouse. However, the deduction
for an individual, who is not an active participant in an employer sponsored
retirement plan but whose spouse is, is phased out at adjusted gross income
between $150,000 and $160,000.
The minimum investment required to open an IRA is $250.
Withdrawals from an IRA, other than that portion, if any, of the withdrawal
considered to be a return of the investor's non-deductible IRA contribution, are
taxed as ordinary income when received. Such withdrawals may be made without
penalty after the participant reaches age 59 1/2, and must commence shortly
after age 70 1/2. Except for withdrawals to pay for certain qualified higher
education expense and first time home buyer expense, withdrawals before age 59
1/2 or the failure to commence withdrawals on a timely basis after age 70 1/2
may involve the payment of certain penalties.
652644.2
17
<PAGE>
The Fund also makes available education IRA's and Roth IRA's. Education IRA's
permit eligible individuals to contribute up to $500 per year per beneficiary
under 18 years old. The $500 annual contribution limit is phased out for single
individuals with modified adjusted gross income between $90,000 and $110,000 and
for married couples filing a joint return with modified adjusted gross income
between $150,000 and $160,000. Above the phase out ranges no contribution is
allowed. Distributions from an education IRA are generally excluded from income
when used for qualified higher education expenses.
An individual may make an annual contribution of up to $2,000 to a Roth IRA.
Unlike a traditional IRA, contributions to a Roth IRA are not deductible.
However, distributions are generally excluded from income provided they occur at
least five years after the first contribution to the IRA and are either after
the individual reaches age 59 1/2, because of death or disability, or for first
time home buyer's expenses. The maximum annual contribution to a Roth IRA is
just like any other IRA, the lesser of the individual's compensation or $2,000.
However, the maximum annual contribution to a Roth IRA is reduced by
contributions to any other IRA and is phased out for single individuals with
adjusted gross income between $95,000 and $110,000 and for married couples
filing a joint return with adjusted gross income between $150,000 and $160,000.
The requirement that distributions from an IRA must commence at age 70 1/2 does
not apply to a Roth IRA.
Fund Individual Investor Class shares may also be a suitable investment for
assets of other types of qualified pension or profit-sharing plans, including
cash or deferred or salary reduction "section 401(k) plans" which give
participants the right to defer portions of their compensation for investment on
a tax-deferred basis until distributions are made from the plans.
An investor should contact the Fund to obtain further information concerning a
Fund IRA and required disclosure statement. An investor should consult their tax
Advisor as well, particularly in view of changes in the tax law.
DISTRIBUTION AND SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Securities and Exchange
Commission has required that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by Rule 12b-1. Effective ______, 1997, the Fund's Board of
Directors adopted a distribution and service plan (the "Plan") and, pursuant to
the Plan, the Fund and Reich & Tang Distributors L.P. (the "Distributor")
entered into a Distribution Agreement and a Shareholder Servicing Agreement.
Reich & Tang Asset Management, Inc. serves as the sole general partner for both
Reich & Tang Asset Management L.P. and Reich & Tang Distributors L.P., and Reich
& Tang Asset Management L.P. serves as the sole limited partner of the
Distributor.
Under the Distribution Agreement, the Distributor serves as distributor of the
Fund's shares and, for nominal consideration and as agent for the Fund, will
solicit orders for the purchase of the Fund's shares, provided that any orders
will not be binding on the Fund until accepted by the Fund as principal.
Under the Shareholder Servicing Agreement, the Distributor receives, with
respect to the Individual Investor Class and Broker Service Class shares, a
service fee equal to .25% per annum of the Individual Investor Class and Broker
Service Class shares' average daily net assets (the "Shareholder Servicing Fee")
for providing personal shareholder services and for the maintenance of
shareholder accounts. The fee is accrued daily and paid monthly and any portion
of the fee may be deemed to be used by the Distributor for payments to Clearing
Brokers with respect to their provision of such services to their clients or
customers who are shareholders of the Broker Service Class shares of the Fund.
The Plan and the Shareholder Servicing Agreement for the Individual Investor
Class and Broker Service Class provide that, in addition to the Shareholder
Servicing Fee, the Fund will pay for (i) telecommunications expenses including
the cost of dedicated lines and CRT terminals, incurred by the Distributor and
Clearing Brokers in carrying out their obligations under the Shareholder
Servicing Agreement with respect to Individual Investor Class and Broker Service
Class shares and (ii) preparing, printing and delivering the Fund's prospectus
to existing shareholders of the Fund and preparing and printing subscription
application forms for shareholder accounts.
The Plan provides that the Advisor and Sub-Advisor may make payments from time
to time from their own resources, which may include the advisory fee, the
management fee and past profits for the following purposes: (i) to defray the
costs of, and to compensate others, including Clearing Brokers with whom the
Distributor has entered into written agreements, for performing shareholder
servicing and related administrative functions on behalf of the Fund; (ii) to
defray the cost of, and to compensate certain others, including Clearing Brokers
for providing assistance in distributing the Broker Service Class shares; and
(iii) to pay the costs of printing and distributing the Fund's prospectus to
prospective investors, and to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection
652644.2
18
<PAGE>
with the distribution of the Fund's shares. The Distributor may also make
payments from time to time from its own resources, which may include the
Shareholder Servicing Fee (with respect to Individual Investor Class and Broker
Service Class shares) and past profits, for the purposes enumerated in (i)
above. The Distributor will determine the amount of such payments made pursuant
to the Plan, provided that such payments will not increase the amount which the
Fund is required to pay to the Advisor, Sub-Advisor or Distributor for any
fiscal year under either the Advisory Agreement or the SubAdvisory Agreement,
the Administrative Services Contract or the Shareholder Servicing Agreement in
effect for that year.
The Clearing Brokers whose clearance clients offer the Broker Service Class
shares to their retail brokerage clients have contracted with the Distributor to
perform certain sub-transfer agent accounting services for those clients who
have invested in the Broker Service Class shares of the Fund. In consideration
of the provision of these sub-transfer agency accounting services, the Clearing
Brokers will receive sub-transfer agency fees from the Distributor or its
affiliate, the Fund's transfer agent. As a result of the payment of the
sub-transfer agency accounting fees to these broker-dealers, Broker Service
Class shares will have higher transfer agency charges than the other classes of
the Fund.
The broker-dealers whose clients are Sweep Investors have contracted with the
Distributor to perform certain sub-transfer agent accounting services for those
clients who have invested in the Broker Service Class shares of the Fund. In
consideration of the provision of these sub-transfer agent accounting services,
the broker-dealers will receive sub-transfer agency fees from the Distributor or
its affiliate the Fund's transfer agent. As a result of the payment of the
sub-transfer agent accounting fees to these broker-dealers, Broker Service Class
shares will have higher transfer agency charges than the other classes of the
Fund.
The Glass-Steagall Act and other applicable laws and regulations prohibit banks
and other depository institutions from engaging in the business of underwriting,
selling or distributing most types of securities. However, in the opinion of the
SubAdvisor based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other services for
investment companies such as the shareholder servicing and related
administrative functions referred to above. The Fund's Board of Directors will
consider appropriate modifications to the Fund's operations, including
discontinuance of any payments then being made under the Plan to banks and other
depository institutions, in the event of any future change in such laws or
regulations which may affect the ability of such institutions to provide the
above-mentioned services. It is not anticipated that the discontinuance of
payments to such an institution would result in loss to shareholders or change
in the Fund's net asset value. In addition, state securities laws on this issue
may differ from the interpretations of Federal law expressed herein and banks
and financial institutions may be required to register as dealers pursuant to
state law.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, at the election of each shareholder, be paid in
cash or in additional shares of the same Class having an aggregate net asset
value as of the payment date of such dividend or distribution equal to the cash
amount of such dividend or distribution. Election to receive dividends and
distributions in cash or shares is made at the time shares are subscribed for
and may be changed by notifying the Fund in writing at any time prior to the
record date for a particular dividend or distribution. If the shareholder makes
no election, the Fund will make the distribution in shares. There is no sales or
other charge in connection with the reinvestment of dividends and capital gains
distributions.
While it is intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Except as described herein, the Fund's net investment income
(including net realized short-term capital gains, if any) will be declared as a
dividend on each Fund Business Day. The Fund declares dividends for Saturdays,
Sundays and holidays on the previous Fund Business Day. The Fund generally pays
dividends monthly after the close of business on the last calendar day of each
month or after the close of business on the previous Fund Business Day if the
last calendar day of each month is not a Fund Business Day. Capital gains
distributions, if any, will be made at least annually, and in no event later
than 60 days after the end of the Fund's fiscal year. There is no fixed dividend
rate, and there can be no assurance that the Fund will pay any dividends or
realize any capital gains.
The Individual Investor Class and Broker Service Class shares will bear the
Shareholder Servicing Fee under the Plan. As a result, the net income of and the
dividends payable to the Individual Investor Class and Broker Service Class
shares will be lower than the net income of and dividends payable to the
Institutional Class shares of the Fund. Dividends paid to each Class of shares
of the Fund will, however, be declared and paid on the same days at the same
times and, except as noted with respect to the Shareholder Servicing Fee payable
under the Plan, will be determined in the same manner and paid in the same
amounts.
652644.2
19
<PAGE>
The Fund intends to qualify for and elect special treatment applicable to a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended. To qualify as a regulated investment company, the Fund must meet
certain complex tests concerning its investments and distributions. For each
year the Fund qualifies as a regulated investment company, it will not be
subject to federal income tax on income distributed to its shareholders in the
form of dividends or capital gains distributions. Additionally, the Fund will
not be subject to a federal excise tax if the Fund distributes at least 98% of
its ordinary income and 98% of its capital gain income to its shareholders.
Dividends of net ordinary income and distributions of net short-term capital
gains are taxable to the recipient shareholders as ordinary income but will not
be eligible, in the case of corporate shareholders, for the dividend-received
deduction.
The Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gains distributions and redemptions) paid
to shareholder who have not complied with IRS regulations. In connection with
this withholding requirement, a shareholder will be asked to certify on his
application that the social security or tax identification number provided is
correct and that the shareholder is not subject to 31% backup withholding for
previous underreporting to the IRS.
NET ASSET VALUE
The Fund determines the net asset value of the shares of the Fund (computed
separately for each Class of shares) as of 12:00 noon, New York City time, by
dividing the value of the Fund's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued but
excluding capital stock and surplus) by the number of shares outstanding at the
time the determination is made. The Fund determines its net asset value on each
Fund Business Day. Fund Business Day for this purpose means any day on which the
Fund's custodian is open for trading. Purchases and redemptions will be effected
at the time of determination of net asset value next following the receipt of
any purchase or redemption order. (See "Purchase and Redemption of Shares" and
"Other Purchase and Redemption Procedures" herein.)
In order to maintain a stable net asset value per share for each Class of $1.00,
the Fund's portfolio securities are valued at their amortized cost. Amortized
cost valuation involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium, except
that if fluctuating interest rates cause the market value of the Fund's
portfolio to deviate more than 1/2 of 1% from the value determined on the basis
of amortized cost, the Board of Directors will consider whether any action
should be initiated to prevent any material dilutive effect on investors.
Although the amortized cost method provides certainty in valuation, it may
result in periods during which the stated value of an instrument is higher or
lower than the price an investment company would receive if the instrument were
sold. There is no assurance that the Fund will maintain a stable net asset value
per share of $1.00.
GENERAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on November
26, 1997 and it is registered with the Securities and Exchange Commission as a
diversified, open-end management investment company.
The Fund prepares semi-annual unaudited and annual audited reports which include
a list of investment securities held by the Fund and which are sent to
shareholders.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the By-laws of the Fund provide for annual
meetings only (a) for the election of directors, (b) for approval of revised
investment advisory contracts with respect to a particular class or series of
stock, (c) for approval of revisions to the Fund's distribution agreement with
respect to a particular class or series of stock, and (d) upon the written
request of holders of shares entitled to cast not less than 25% of all the votes
entitled to be cast at such meeting. Annual and other meetings may be required
with respect to such additional matters relating to the Fund as may be required
by the Act including the removal of Fund director(s) and communication among
shareholders, any registration of the Fund with the SEC or any state, or as the
Directors may consider necessary or desirable. Each Director serves until the
next meeting of the shareholders called for the purpose of considering the
election or reelection of such Director or of a successor to such Director, and
until the election and qualification of his or her successor, elected at such a
meeting, or until such Director sooner dies, resigns, retires or is removed by
the vote of the shareholders.
For further information with respect to the Fund and the shares offered hereby,
reference is made to the Fund's Registration Statement filed with the Securities
and Exchange Commission and copies thereof may be obtained upon payment of
certain duplicating fees.
CUSTODIAN AND TRANSFER AGENTS
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is the custodian for the Fund's cash and securities. Reich & Tang
Services L.P., 600 Fifth Avenue, New York, New York 10020 is the transfer agent
and dividend agent for the Broker Service Class shares of the Fund. PFPC, Inc.,
400 Bellevue Parkway, Wilmington, Delaware
652644.2
20
<PAGE>
19809 is the transfer agent and dividend agent for Individual Investor Class
shares of the Fund. The Fund's custodian and transfer agents do not assist in,
and are not responsible for, investment decisions involving assets of the Fund.
652644.2
21
<PAGE>
TABLE OF CONTENTS
Table of Fees and Expenses PAX
Selected Financial Information WORLD
Introduction MONEY
Investment Objectives, MARKET FUND, INC.
Policies and Risks
Social Criteria of Portfolio PROSPECTUS
Risk Factors and Additional _______, 1997
Investment Information
Investment Restrictions
Management of the Fund
Description of Common Stock
How to Purchase and Redeem Shares
Investments Through
Clearing Brokers
Direct Purchase and
Redemption Procedures
Initial Purchase of Shares
Electronic Fund Transfers (EFT),
Pre-Authorized Credit
and Direct Deposit Privilege
Subsequent Purchases of Shares
Redemption of Shares
Specified Amount Automatic
Withdrawal Plan
Exchange Privilege
Individual Retirement Accounts
Distribution and Service Plan
Dividends, Distributions and Taxes
Net Asset Value
General Information
Custodian and Transfer Agents
652644.2
<PAGE>
PAX WORLD
MONEY MARKET FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
________ __, 1997
Relating to the Prospectus for the Institutional
Class Shares of Pax World Money Market Fund, Inc.
dated _______ __, 1997 and the Prospectus for the
Individual Investor Class and Broker Service Class
Shares of Pax World Money Market Fund, Inc.
dated _______ __, 1997
This Statement of Additional Information, although not in itself a prospectus,
expands upon and supplements the information contained in the current
prospectuses of the Institutional Class Shares of Pax World Money Market Fund,
Inc., and the Individual Investor Class and Broker Service Class Shares of Pax
World Money Market Fund, Inc. (each the "Fund") and should be read in
conjunction with each respective prospectus. The Fund's respective prospectus
may be obtained from any Participating Organization or by writing or calling the
Fund. This Statement of Additional Information is incorporated by reference into
the respective prospectus in its entirety.
Table of Contents
Investment Objectives, Policies and Risks.......................
Investments and Investment Techniques...........................
Investment Restrictions.........................................
Portfolio Transactions..........................................
Purchase and Redemption of Shares and Other
Purchase and Redemption Procedures............................
Yield Quotations................................................
Management, Advisory and Sub-Advisory Agreements................
Distribution and Service Plan...................................
Description of Common Stock.....................................
Custodian and Transfer Agents...................................
Net Asset Value.................................................
Description of Ratings..........................................
652637.1
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Pax World Money Market Fund, Inc. (the "Fund") is a diversified, no-load,
open-end management investment company consisting of money market instruments
which are designed to meet the short-term investment needs of individual,
corporate and institutional investors. There are no sales loads, exchange or
redemption fees associated with the Fund.
Social Criteria of Fund
The policy of the Fund is to seek to invest in companies that are not to any
degree engaged in manufacturing defense or weapons-related products. The policy
of the Fund is to exclude from its portfolio securities of (i) companies engaged
in military activities, (ii) companies appearing on the United States Department
of Defense list of 100 largest contractors (a copy of which may be obtained from
the Office of the Secretary, Department of Defense, Washington, D.C. 20310) if
five percent (5%) or more of the gross sales of such companies are derived from
contracts with the United States Department of Defense, (iii) other companies
contracting with the United States Department of Defense if five percent (5%) or
more of the gross sales of such companies are derived from contracts with the
United States Department of Defense, and (iv) companies which derive revenue
from the manufacture of liquor, tobacco and/or gambling products.
In order to properly supervise a securities portfolio containing the limitations
described above, care must be exercised to continuously monitor developments of
the companies whose securities are included in the Fund. Developments and trends
in the economy and financial markets are also considered, and the screening of
many securities is required to implement the investment philosophy of the Fund.
The Advisor, Pax World Management Corp., is responsible for such supervision and
screening of the securities included in the Fund.
A detailed description of the types and quality of the securities in which the
Fund may invest is further described in each of the Fund's Prospectuses and is
incorporated herein by reference. The investment objectives stated below for the
Fund are fundamental and may be changed only with the approval of a majority of
outstanding shares of the Fund.
General Investment Objectives and Policies of the Fund
The Fund's investment objectives are to maximize current income and to maintain
liquidity and a stable net asset value of $1.00 per share of each Class. The
Fund attempts to accomplish these objectives by investing exclusively in high
quality, short-term money market obligations with maturities of 397 days or
less. The Fund will only purchase high quality money market instruments that
have been determined by the Fund's Board of Directors to present minimal credit
risks and that are First Tier Eligible Securities at the time of acquisition, so
that the Fund is able to employ the amortized cost method of valuation. The term
First Tier Eligible Securities means (i) securities that have remaining
maturities of 397 days or less and are rated in the highest short-term rating
category by any two nationally recognized statistical rating organizations
("NRSROs") or in such category by the only NRSRO that has rated the securities
(collectively, the "Requisite NRSROs") (acquisition in the latter situation must
also be ratified by the Board of Directors); (ii) securities that have remaining
maturities of 397 days or less but that at the time of issuance were long-term
securities and whose issuer has received from the Requisite NRSROs a rating with
respect to comparable short-term debt in the highest short-term category; and
(iii) unrated securities determined by the Fund's Board of Directors to be of
comparable quality. Where the issuer of a long-term security with a remaining
maturity which would otherwise qualify it as a First Tier Eligible Security does
not have rated short-term debt outstanding, the long-term security is treated as
unrated but may not be purchased if it has a long-term rating from any NRSRO
that is below the two highest long-term categories. A determination of
comparability by the Board of Directors is made on the basis of its credit
evaluation of the issuer, which may include an evaluation of a letter of credit,
guarantee, insurance or other credit facility issued in support of the
securities or participation certificates. There can be no assurance that the
Fund can achieve these objectives or that it will be able to maintain a stable
net asset value of $1.00 per share of each Class.
Risk Factors
The Fund may invest in certain foreign securities. Investment in obligations of
foreign issuers and in foreign branches of domestic banks involves somewhat
different investment risks from those affecting obligations of United States
domestic issuers. There may be limited publicly available information with
respect to foreign issuers and foreign issuers are not generally subject to
uniform accounting, auditing and financial standards and requirements comparable
to those applicable to domestic companies. There may also be less government
supervision and regulation of foreign securities exchanges, brokers and listed
companies than in the United States. Foreign securities markets have
substantially less volume than national securities exchanges and securities of
some foreign companies are less liquid and more volatile than securities of
comparable domestic companies. Brokerage commissions and other transaction costs
on foreign securities exchanges are generally higher than in the United States.
Dividends and interest paid by foreign issuers may be subject to withholding and
other foreign taxes, which may decrease the net return on foreign investments as
compared to dividends and interest paid to the Fund by domestic companies.
Additional risks include future political and economic developments, the
possibility that a foreign jurisdiction might impose or change withholding taxes
on income payable with respect to foreign securities, the possible seizure,
nationalization
652637.1
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<PAGE>
or expropriation of the foreign issuer or foreign deposits and the possible
adoption of foreign governmental restrictions such as exchange controls.
The investment objectives and policies of the Fund are pursued through the
following additional strategies employed in the management of the Fund which are
described under "Investments and Investment Techniques":
1. Change in Ratings
2. Amortized Cost Valuation of Portfolio Securities
3. Variable Rate Demand Instruments
4. When-Issued Securities
5. Repurchase Agreements
6. Participation Interests
7. Domestic and Foreign Bank Obligations, Certificates of Deposit, Commercial
Paper, Time Deposits and Bankers' Acceptances
8. Privately Placed Securities
INVESTMENTS AND INVESTMENT TECHNIQUES
Change in Ratings
Subsequent to its purchase by the Fund, an issue of securities may cease to be
rated or its rating may be reduced below the minimum required for purchases. To
the extent that the ratings accorded by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Rating Services, a division of the McGraw-Hill
Companies ("S&P") for securities may change as a result of changes in these
ratings systems, the sub-advisor for the Fund, Reich & Tang Asset Management
L.P. (the "Sub-Advisor"), will attempt to use comparable ratings as standards
for its investment in debt securities in accordance with the investment policies
contained therein. However, if the Fund holds any variable rate demand
instruments with stated maturities in excess of one year, such instruments must
maintain their high quality rating or must be sold from the Fund. See "Variable
Rate Demand Instruments" herein. The Board of Directors of the Fund shall
reassess promptly whether the security presents minimal credit risks and shall
cause the Fund to take such action as the Board of Directors determines is in
the best interest of the Fund and its shareholders. However, reassessment is not
required if the security is disposed of or matures within five business days of
the Sub-Advisor becoming aware of the new rating and provided further that the
Board of Directors is subsequently notified of the Sub-Advisor's actions.
In addition, in the event that a security (1) is in default, (2) ceases to be an
Eligible Security under Rule 2a-7 of the Investment Company Act of 1940 (the
"1940 Act") or (3) is determined to no longer present minimal credit risks, the
Fund will dispose of the security absent a determination by the Fund's Board of
Directors that disposal of the security would not be in the best interests of
the Fund. In the event that the security is disposed of, it shall be disposed of
as soon as practicable consistent with achieving an orderly disposition by sale,
exercise of any demand feature, or otherwise. In the event of a default with
respect to a security which immediately before default accounted for 1/2 of 1%
or more of the Fund's total assets, the Fund shall promptly notify the
Securities and Exchange Commission of such fact and of the actions that the Fund
intends to take in response to the situation.
Amortized Cost Valuation of Portfolio Securities
Pursuant to Rule 2a-7 under the 1940 Act, the Fund uses the amortized cost
method of valuing its investments, which facilitates the maintenance of the
Fund's per share net asset value at $1.00. The amortized cost method involves
initially valuing a security at its cost and thereafter amortizing to maturity
any discount or premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument.
Consistent with the provisions of Rule 2a-7, the Fund maintains a
dollar-weighted average portfolio maturity of 90 days or less, purchases only
instruments having effective maturities of 397 days or less, and invests only in
securities determined by or under the direction of the Board of Directors to be
of high quality with minimal credit risks.
The Board of Directors has also established procedures designed to stabilize, to
the extent reasonably possible, the Fund's price per share of each Class as
computed for the purpose of sales and redemptions at $1.00. Such procedures
include review of the Fund's investments by the Board of Directors at such
intervals as it deems appropriate to determine whether the Fund's net asset
value calculated by using available market quotations or market equivalents
(i.e., determination of value by reference to interest rate levels, quotations
of comparable securities and other factors) deviates from $1.00 per share for
each Class based on amortized cost. Market quotations and market equivalents
used in such review may be obtained from an independent pricing service approved
by the Board of Directors.
The extent of deviation between the Fund's net asset value based upon available
market quotations or market equivalents and $1.00 per share based on amortized
cost, will be periodically examined by the Board of Directors. If such deviation
exceeds
652637.1
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<PAGE>
1/2 of 1%, the Board of Directors will promptly consider what action, if any,
will be initiated. In the event the Board of Directors determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, they will take such corrective action as
they regard to be necessary and appropriate, including the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding part or all of dividends or payment of
distributions from capital or capital gains; redemptions of shares in kind; or
establishing a net asset value per share by using available market quotations or
equivalents. The Fund may hold cash for the purpose of stabilizing its net asset
value per share. Holdings of cash, on which no return is earned, would tend to
lower the yield on the Fund's shares.
Variable Rate Demand Instruments
The Fund may purchase variable rate demand instruments. Variable rate demand
instruments that the Fund will purchase are tax exempt Municipal Securities or
taxable (variable amount master demand notes) debt obligations that provide for
a periodic adjustment in the interest rate paid on the instrument and permit the
holder to demand payment of the unpaid principal balance plus accrued interest
at specified intervals upon a specified number of days' notice either from the
issuer or by drawing on a bank letter of credit, a guarantee, insurance or other
credit facility issued with respect to such instrument.
The variable rate demand instruments in which the Fund may invest are payable on
not more than thirty calendar days' notice either on demand or at specified
intervals not exceeding one year depending upon the terms of the instrument. The
terms of the instruments provide that interest rates are adjustable at intervals
ranging from daily to up to one year and their adjustments are based upon the
prime rate of a bank or other appropriate interest rate adjustment index as
provided in the respective instruments. The Fund will decide which variable rate
demand instruments it will purchase in accordance with procedures prescribed by
its Board of Directors to minimize credit risks. Utilizing the amortized cost
method of valuation, the Fund may only purchase variable rate demand instruments
if (i) the instrument is subject to an unconditional demand feature, exercisable
by the Fund in the event of default in the payment of principal or interest on
the underlying securities, which itself qualifies as a First Tier Eligible
Security or (ii) the instrument is not subject to an unconditional demand
feature but does qualify as a First Tier Eligible Security and has a long-term
rating by the Requisite NRSROs in one of the two highest rating categories or,
if unrated, is determined to be of comparable quality by the Fund's Board of
Directors. If an instrument is ever deemed to be of less than high quality, the
Fund either will sell it in the market or exercise the demand feature.
The variable rate demand instruments in which the Fund may invest include
participation certificates purchased by the Fund from banks, insurance companies
or other financial institutions in fixed or variable rate, tax-exempt Municipal
Securities (expected to be concentrated in industrial revenue bonds) or taxable
debt obligations (variable amount master demand notes) owned by such
institutions or affiliated organizations. A participation certificate would give
the Fund an undivided interest in the obligation in the proportion that the
Fund's participation interest bears to the total principal amount of the
obligation and provides the demand repurchase described below. Where the
institution issuing the participation certificate does not meet the Fund's high
quality standards, the participation certificate is backed by an irrevocable
letter of credit or guaranty of a bank (which may be a bank issuing a confirming
letter of credit, or a bank serving as agent of the issuing bank with respect to
the possible repurchase of the participation certificate or a bank serving as
agent of the issuer with respect to the possible repurchase of the issue) or
insurance policy of an insurance company that the Board of Directors of the Fund
has determined meets the prescribed quality standards for the Fund. The Fund has
the right to sell the participation certificate back to the institution and,
where applicable, draw on the letter of credit, guarantee or insurance after no
more than 30 days' notice either on demand or at specified intervals not
exceeding 397 days (depending on the terms of the participation), for all or any
part of the full principal amount of the Fund's participation interest in the
security, plus accrued interest. The Fund intends to exercise a demand only (1)
upon a default under the terms of the bond documents, (2) as needed to provide
liquidity to the Fund in order to make redemptions of the Fund shares, or (3) to
maintain a high quality investment portfolio. The institutions issuing the
participation certificates may retain a service and letter of credit fee (where
applicable) and a fee for providing the demand repurchase feature, in an amount
equal to the excess of the interest paid on the instruments over the negotiated
yield at which the participation certificates were purchased by the Fund. The
total fees generally range from 5% to 15% of the applicable "prime rate"1 or
other interest rate index. With respect to insurance, the Fund will attempt to
have the issuer of the participation certificate bear the cost of the insurance,
although the Fund retains the option to purchase insurance if necessary, in
which case the cost of insurance will be an expense of the Fund subject to the
expense limitation on investment company expenses prescribed by any state in
which the Fund's shares are qualified for sale. The Sub-Advisor has been
instructed by the Fund's Board of Directors to continually monitor the pricing,
quality and liquidity of the variable rate demand instruments held by the Fund,
including the participation certificates, on the basis of
- --------
1 The "prime rate" is generally the rate charged by a bank to its creditworthy
customers for short-term loans. The prime rate of a particular bank may differ
from other banks and will be the rate announced by each bank on a particular
day. Changes in the prime rate may occur with great frequency and generally
become effective on the date announced.
652637.1
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<PAGE>
published financial information and reports of the rating agencies and other
bank analytical services to which the Fund may subscribe. Although these
instruments may be sold by the Fund, the Fund intends to hold them until
maturity, except under the circumstances stated above (see "Dividends,
Distributions and Taxes" in the Prospectus).
While the value of the underlying variable rate demand instruments may change
with changes in interest rates generally, the variable rate nature of the
underlying variable rate demand instruments should minimize changes in value of
the instruments. Accordingly, as interest rates decrease or securities increase,
the potential for capital appreciation and the risk of potential capital
depreciation is less than would be the case with a portfolio of fixed income
securities. The Fund may contain variable rate demand instruments on which
stated minimum or maximum rates, or maximum rates set by state law limit the
degree to which interest on such variable rate demand instruments may fluctuate;
to the extent it does, increases or decreases in value may be somewhat greater
than would be the case without such limits. Additionally, the Fund may contain
variable rate demand participation certificates in fixed rate Municipal
Securities and taxable debt obligations (the Fund will not acquire a variable
note demand participation certificate in fixed rate municipal securities without
an opinion of counsel). The fixed rate of interest on these obligations will be
a ceiling on the variable rate of the participation certificate. In the event
that interest rates increased so that the variable rate exceeded the fixed rate
on the obligations, the obligations could no longer be valued at par and this
may cause the Fund to take corrective action, including the elimination of the
instruments. Because the adjustment of interest rates on the variable rate
demand instruments is made in relation to movements of the applicable banks'
prime rate, or other interest rate adjustment index, the variable rate demand
instruments are not comparable to long-term fixed rate securities. Accordingly,
interest rates on the variable rate demand instruments may be higher or lower
than current market rates for fixed rate obligations or obligations of
comparable quality with similar maturities.
For purposes of determining whether a variable rate demand instrument held by
the Fund matures within 397 days from the date of its acquisition, the maturity
of the instrument will be deemed to be the longer of (1) the period required
before the Fund is entitled to receive payment of the principal amount of the
instrument or (2) the period remaining until the instrument's next interest rate
adjustment. The maturity of a variable rate demand instrument will be determined
in the same manner for purposes of computing the Fund's dollar-weighted average
portfolio maturity. If a variable rate demand instrument ceases to meet the
investment criteria of the Fund, it will be sold in the market or through
exercise of the repurchase demand.
When-Issued Securities
The Fund may purchase debt obligations offered on a "when-issued" or "delayed
delivery" basis. When so offered, the price, which is generally expressed in
yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for the when-issued securities takes place at a later date.
Normally, the settlement date occurs within one month of the purchase of debt
obligations; during the period between purchase and settlement, no payment is
made by the purchaser to the issuer and no interest accrues to the purchaser. To
the extent that assets of the Fund are not invested prior to the settlement of a
purchase of securities, the Fund will earn no income; however, it is intended
that the Fund will be fully invested to the extent practicable and subject to
the policies stated above. While when-issued securities may be sold prior to the
settlement date, it is intended that the Fund will purchase such securities with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a debt
obligation on a when-issued basis, it will record the transaction and reflect
the value of the security in determining its net asset value. The Fund does not
believe that the net asset value or income of the Fund's securities portfolios
will be adversely affected by their purchase of debt obligations on a
when-issued basis. The Fund will establish a segregated account in which it will
maintain cash and marketable securities equal in value to commitments for
when-issued securities. Such segregated securities either will mature or, if
necessary, be sold on or before the settlement date.
Repurchase Agreements
When the Fund purchases securities, it may enter into a repurchase agreement
with the seller wherein the seller agrees, at the time of sale, to repurchase
the security at a mutually agreed upon time and price. The Fund may enter into
repurchase agreements with member banks of the Federal Reserve System and with
broker-dealers who are recognized as primary dealers in United States government
securities by the Federal Reserve Bank of New York. Although the securities
subject to a repurchase agreement might bear maturities exceeding one year,
settlement for the repurchase would never be more than 397 days after the Fund's
acquisition of the securities and normally would be within a shorter period of
time. The resale price will be in excess of the purchase price, reflecting an
agreed upon market rate effective for the period of time the Fund's money will
be invested in the security, and will not be related to the coupon rate of the
purchased security. At the time the Fund enters into a repurchase agreement the
value of the underlying security, including accrued interest, will be equal to
or exceed the value of the repurchase agreement, and, in the case of a
repurchase agreement exceeding one day, the seller will agree that the value of
the underlying security, including accrued interest, will at all times be equal
to or exceed the value of the repurchase agreement. The Fund may engage in a
repurchase agreement with respect to any security in which the Fund is
authorized to invest, even though the underlying security may mature in more
than one year. The collateral securing the
652637.1
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seller's obligation must be of a credit quality at least equal to the Fund's
investment criteria for the Fund securities and will be held by the Fund
custodian or in the Federal Reserve Book Entry System.
For purposes of the 1940 Act, a repurchase agreement is deemed to be a loan from
the Fund to the seller subject to the repurchase agreement and is therefore
subject to the Fund's investment restrictions applicable to loans. It is not
clear whether a court would consider the securities purchased by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the securities before repurchase of the security under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Delays may result in the loss of interest or the decline in
the price of the security. If the court characterized the transaction as a loan
and the Fund has not perfected a security interest in the security, the Fund may
be required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for the Fund, the
Sub-Advisor seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case the Fund may
incur a loss if the proceeds to the Fund of the sale to a third party are less
than the repurchase price. However, if the market value of the securities
subject to the repurchase agreement becomes less than the repurchase price
(including interest), the Fund involved will direct the seller of the security
to deliver additional securities so that the market value of all securities
subject to the repurchase agreement will equal or exceed the repurchase price.
It is possible that the Fund will be unsuccessful in seeking to impose on the
seller a contractual obligation to deliver additional securities.
Participation Interests
The Fund may purchase from banks participation interests in all or part of
specific holdings of Municipal or other debt obligations (including corporate
loans). Where the institution issuing the participation does not meet the Fund's
quality standards, the participation may be backed by an irrevocable letter of
credit or guarantee that the Board of Directors has determined meets the
prescribed quality standards of the Fund. Thus, even if the credit of the
selling bank does not meet the quality standards of the Fund, the credit of the
entity issuing the credit enhancement will meet such prescribed quality
standard. The Fund will have the right to sell the participation interest back
to the bank for the full principal amount of the Fund's interest in the
Municipal or debt obligation plus accrued interest, but only (1) as required to
provide liquidity to the Fund, (2) to maintain the quality standards of the
Fund's investment portfolio or (3) upon a default under the terms of the debt
obligation. The selling bank may receive a fee from the Fund in connection with
the arrangement. When purchasing bank participation interests, the Fund will
treat both the bank and the underlying borrower as the issuer of the instrument
for the purpose of complying with the diversification requirement of the
investment restrictions discussed below.
Domestic and Foreign Bank Obligations, Certificates of Deposit and Bankers'
Acceptances
The Fund may purchase certificates of deposit, time deposits, bankers'
acceptances, commercial paper and other obligations issued or guaranteed by the
50 largest banks in the United States. For this purpose banks are ranked by
total deposits as shown by their most recent annual financial statements. The
"other obligations" in which the Fund may invest include instruments (such as
bankers' acceptances, commercial paper and certificates of deposit) issued by
United States subsidiaries of the 50 largest banks in the United States where
the instruments are guaranteed as to principal and interest by such banks. At
the time the Fund invests in any certificate of deposit, bankers' acceptance or
other bank obligation, the issuer or its parent must have its debt rated within
the quality standards of the Fund or if unrated be of comparable quality as
determined by the Fund's Board of Directors.
Privately Placed Securities
The Fund may invest in securities issued as part of privately negotiated
transactions between an issuer and one or more purchasers. Except with respect
to certain commercial paper issued in reliance on the exemption from regulations
in Section 4(2) of the Securities Act of 1933 (the "Securities Act") and
securities subject to Rule 144A of the Securities Act which are discussed below,
these securities are typically not readily marketable, and therefore are
considered illiquid securities. The price the Fund pays for illiquid securities,
and any price received upon resale, may be lower than the price paid or received
for similar securities with a more liquid market. Accordingly, the valuation of
privately placed securities by the Fund will reflect any limitations on their
liquidity. As a matter of policy, the Fund will not invest more than 10% of the
market value of the total assets of the Fund in repurchase agreements maturing
in over seven days and other illiquid investments. The Fund may purchase
securities that are not registered ("restricted securities") under the
Securities Act, but can be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act. The Fund may also purchase certain
commercial paper issued in reliance on the exemption from regulations in Section
4(2) of the Securities Act ("4(2) Paper"). However, the Fund will not invest
more than 10% of its net assets in illiquid investments, which include
securities for which there is no ready market, securities subject to contractual
restriction on resale, certain investments in asset-backed and receivable-backed
652637.1
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<PAGE>
securities and restricted securities (unless, with respect to these securities
and 4(2) Paper, the Fund's Directors continuously determine, based on the
trading markets for the specific restricted security, that it is liquid). The
Directors may adopt guidelines and delegate to the Sub-Advisor the daily
function of determining and monitoring liquidity of restricted securities and
4(2) Paper. The Directors, however, will retain sufficient oversight and be
ultimately responsible for the determinations.
Since it is not possible to predict with assurance exactly how this market for
restricted securities sold and offered under Rule 144A will develop, the
Directors will carefully monitor the Fund investments in these securities,
focusing on such factors, among others, as valuation, liquidity and availability
of information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted securities.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions which are in addition
to those described in the Prospectus. Under the following restrictions, which
may not be changed without the approval by a majority vote of the Fund's
outstanding shares and which apply to the Fund, the Fund may not:
(a) invest in securities of companies that have conducted operations for less
than three years, including the operations of predecessors;
(b) invest in or hold securities of any issuer if to the knowledge of the Fund
officers and directors of the Fund or officers and directors of the Fund,
the Advisor and the Sub-Advisor, individually owning beneficially more than
1/2 of 1% of the securities of the issuer, in the aggregate own more than
5% of the issuer's securities;
(c) (1) make investments for purpose of exercising control over any issuer or
other person; (2) purchase securities having voting rights at the time of
purchase; (3) purchase securities of other investment companies, except in
connection with a merger, acquisition, consolidation, reorganization or
acquisition of assets; (4) invest in real estate, including real estate
limited partnerships, (other than debt obligations secured by real estate
or interests therein or debt obligations issued by companies which invest
in real estate or interests therein); (5) invest in commodities, commodity
contracts, commodity options, interests and leases in oil, gas or other
mineral exploration or development programs (the Fund may, however,
purchase and sell securities of companies engaged in the exploration,
development, production, refining transporting and marketing of oil, gas or
minerals); (6) purchase restricted securities or purchase securities on
margin; (7) make short sales of securities or intentionally maintain a
short position in any security or write, purchase or sell puts, calls,
straddles, spreads or any combination thereof; (8) act as an underwriter of
securities or (9) issue senior securities, except insofar as the Fund may
be deemed to have issued a senior security in connection with any permitted
borrowing; and
(d) invest more than 25% of the value of the Fund's total assets in securities
of companies in the same industry (excluding U.S. Government securities).
PORTFOLIO TRANSACTIONS
The Fund's purchases and sales of portfolio securities usually are principal
transactions. Portfolio securities are normally purchased directly from the
issuer, from banks and financial institutions or from an underwriter or market
maker for the securities. There are usually no brokerage commission paid for
such purchases. The Fund has paid no brokerage commissions since its formation.
Any transaction for which the Fund pays a brokerage commission will be effected
at the best price and execution available. Purchases from underwriters of
portfolio securities include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price.
Allocation of transactions, including their frequency, to various dealers is
determined by the Sub-Advisor in its best judgment and in a manner deemed in the
best interest of shareholders of the Fund rather than by any formula. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price. No preference in purchasing portfolio securities will
be given to banks or dealers that are Participating Organizations.
Investment decisions for the Fund will be made independently from those for any
other investment companies or accounts that may now be or may hereafter become
managed by the Sub-Advisor or its affiliates. If, however, the Fund and other
investment companies
652637.1
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<PAGE>
or accounts managed by the Sub-Advisor are simultaneously engaged in the
purchase or sale of the same security, the transactions may be averaged as to
price and allocated equitably to each account. In some cases, this policy might
adversely affect the price paid or received by the Fund or the size of the
position obtainable for the Fund. In addition, when purchases or sales of the
same security for the Fund and for other investment companies managed by the
Sub-Advisor occur contemporaneously, the purchase or sale orders may be
aggregated in order to obtain any price advantage available to large
denomination purchasers or sellers.
No portfolio transactions are executed with the Sub-Advisor or its affiliates
acting as principal. In addition, the Fund will not buy bankers' acceptances,
certificates of deposit or commercial paper from the Sub-Advisor or its
affiliates.
PURCHASE AND REDEMPTION OF SHARES AND OTHER PURCHASE AND REDEMPTION PROCEDURES
The material relating to the purchase and redemption of shares of each Class in
the respective Prospectuses is herein incorporated by reference.
YIELD QUOTATIONS
The Fund calculates a seven-day yield quotation (computed separately for each
Class of shares) using a standard method prescribed by the rules of the
Securities and Exchange Commission. Under that method, the Fund's yield figure,
which is based on a chosen seven-day period, is computed as follows: the Fund's
return for the seven-day period (which is obtained by dividing the net change in
the value of a hypothetical account having a balance of one share at the
beginning of the period by the value of such account at the beginning of the
period, which is expected to always be $1.00) is multiplied by (365/7) with the
resulting annualized yield figure carried to the nearest hundredth of one
percent. For purposes of the foregoing computation, the determination of the net
change in account value during the seven-day period reflects (i) dividends
declared on the original share and on any additional shares, including the value
of any additional shares purchased with dividends paid on the original share,
and (ii) fees charged to all shareholder accounts. Realized capital gains or
losses and unrealized appreciation or depreciation of the Fund's portfolio
securities are not included in the computation.
The Fund also compiles a compound effective yield quotation (computed separately
for each Class of shares) for a seven-day period by using a formula prescribed
by the Securities and Exchange Commission. Under that formula, the Fund's
unannualized return for the seven-day period (described in the preceding
paragraph) is compounded by adding one to the base period return, raising the
sum to a power equal to 365/7 and subtracting one from the result (i.e.,
effective yield = (base return +1) 365/7-1).
Although published yield information is useful to investors in reviewing the
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period for the Fund is
not an indication, or representation by the Fund, of future yields or rates of
return on the Fund's shares. The Fund's yields are not fixed or guaranteed, and
an investment in the Fund is not insured. Accordingly, the Fund's yield
information may not necessarily be used to compare Fund shares with investment
alternatives which, like money market instruments or bank accounts, may provide
a fixed rate of interest. In addition, investments in the Fund may not
necessarily be used to compare with investment alternatives which are insured or
guaranteed.
Investors who purchase the Fund's shares directly may realize a higher yield
than Participant Investors because they will not be subject to any fees or
charges that may be imposed by Participating Organizations.
MANAGEMENT, ADVISORY AND SUB-ADVISORY AGREEMENTS
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has employed Pax World Management Corp., 222 State
Street, Portsmouth, New Hampshire 03801 (the "Advisor"), to act as investment
advisor to the Fund. It was incorporated in 1970 under the laws of the State of
Delaware. Pursuant to the terms of an Advisory Agreement entered into between
the Fund and the Advisor (the "Advisory Agreement"), the Advisor, subject to the
supervision of the Board of Directors of the Fund, is responsible for
determining whether contemplated investments satisfy the social responsibility
criteria applied to the Fund and overseeing the performance of the Sub-Advisor.
Under the Advisory Agreement the Fund will pay the Advisor an annual advisory
fee of .15% of the Fund's average daily net assets. As of December 31, 1996, the
Advisor had over $600,000,000 in assets under management by virtue of serving as
the Advisor to the Pax World Fund, Inc. (the "Pax World Fund") and the Pax World
Growth Fund, Inc. (the "Pax World Growth Fund"). The Advisor has no clients
other than the Fund, the Pax World Fund and the Pax World Growth Fund. Reich &
Tang Asset Management L.P. will serve as the Sub-Advisor of the Fund under a
Sub-Advisory Agreement entered into between the Advisor and Sub-Advisor (the
"Sub-Advisory Agreement"). The Sub-Advisor provides persons satisfactory to the
Fund's Board of Directors to serve as officers
652637.1
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<PAGE>
of the Fund. Such officers, as well as certain other employees and Directors of
the Fund, may be officers of Reich & Tang Asset Management, Inc., the sole
general partner of the Sub-Advisor or employees of the Sub-Advisor or its
affiliates. Due to the services performed by the Sub-Advisor, the Fund currently
has no employees and its officers are not required to devote full-time to the
affairs of the Fund. The Statement of Additional Information contains general
background information regarding each Director and principal officer of the
Fund.
The Sub-Advisor is a Delaware limited partnership with principal offices at 600
Fifth Avenue, New York, New York 10020. The Sub-Advisor, as of July 31, 1997,
was investment manager, advisor or supervisor with respect to assets aggregating
approximately $10.67 billion. In addition to the Fund, Reich & Tang Asset
Management L.P.'s advisory clients include, among others, AEW Commercial
Mortgage Securities Fund, Inc., California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax
Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal Income
Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal
Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North Carolina
Daily Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income Fund,
Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc. and Tax Exempt
Proceeds Fund, Inc. The Sub-Advisor also advises pension trusts, profit sharing
trusts and endowments.
New England Investment Companies, L.P. ("NEICLP") is the limited partner and
owner of a 99.5% interest in the Sub-Advisor. Reich & Tang Asset Management,
Inc. (a wholly-owned subsidiary of NEICLP) is the general partner and owner of
the remaining .5% interest of the Sub-Advisor.
On August 30, 1996, The New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. The Sub-Advisor remains an indirect
wholly-owned subsidiary of NEICLP, but Reich & Tang Asset Management, Inc., its
sole general partner, is now an indirect subsidiary of MetLife. Also, MetLife
New England Holdings, Inc., a wholly-owned subsidiary of MetLife, owns
approximately 48.5% of the outstanding limited partnership interest of NEICLP
and may be deemed a "controlling person" of the Sub-Advisor. Reich & Tang, Inc.
owns approximately 16% of the outstanding partnership units of NEICLP.
MetLife is a mutual life insurance company with assets of $297.6 billion at
December 31, 1996. It is the second largest life insurance company in the United
States in terms of total assets. MetLife provides a wide range of insurance and
investment products and services to individuals and groups and is the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. MetLife and its affiliates provide insurance or other
financial services to approximately 36 million people worldwide.
NEIC is a holding company offering a broad array of investment styles across a
wide range of asset categories through thirteen subsidiaries, divisions and
affiliates to institutional clients. Its business units include AEW Capital
Management, L.P., Back Bay Advisors, L.P., Capital Growth Management, L.P.,
Graystone Partners, L.P., Harris Associates, L.P., Jurika & Voyles, L.P.,
Loomis, Sayles & Co., L.P., New England Funds Management, L.P., Reich & Tang
Capital Management, Reich & Tang Funds, Vaughan-Nelson, Scarborough & McConnell
L.P. and Westpeak Investment Advisors, L.P. These affiliates, in the aggregate,
are investment advisors or sub-advisors of 80 other registered investment
companies.
On , the Board of Directors, including a majority of the Directors who
are not interested persons (as defined in the 1940 Act) of the Fund, the Advisor
or the Sub-Advisor, approved an Investment Advisory Agreement with Pax World
Management Corp. effective , which has a term which extends to
and may be continued in force thereafter for successive twelve-month
periods beginning each , provided that such continuance is
specifically approved annually by majority vote of the Fund's outstanding voting
securities or by a majority of the Directors who are not parties to the
Investment Advisory Agreement or interested persons of any such party, by votes
cast in person at a meeting called for the purpose of voting on such matter. The
Investment Advisory Agreement was approved by the sole shareholder of the Fund
on , 1997.
Pursuant to the Sub-Advisory Agreement, the Sub-Advisor manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund and the determination of the Advisor that the contemplated investments
satisfy the social responsibility criteria applied to the Fund.
The Sub-Advisory Agreement is terminable without penalty by the Fund on sixty
days' written notice when authorized either by majority vote of its outstanding
voting shares or by a vote of a majority of its Board of Directors, or by the
Sub-Advisor on sixty days' written notice, and will automatically terminate in
the event of its assignment. The Sub-Advisory Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on the part of the
Sub-Advisor, or of reckless
652637.1
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disregard of its obligations thereunder, the Sub-Advisor shall not be liable for
any action or failure to act in accordance with its duties thereunder.
For its services under the Sub-Advisory Agreement, the Sub-Advisor receives from
the Advisor a fee equal to .075% per annum of the Fund's average daily net
assets from its advisory fee. The fees are accrued daily and paid monthly.
Investment management fees and operating expenses which are attributable to each
Class of the Fund will be allocated daily to each Class based on the percentage
of outstanding shares at the end of the day. Additional shareholder services
provided by Participating Organizations to Institutional Class shareholders
pursuant to the distribution and service plan shall be compensated by the
Distributor from its shareholder servicing fee, the Sub-Advisor from its
management fee and the Fund itself. Expenses incurred in the distribution of
Institutional Class shares and the servicing of Institutional Class shares shall
be paid by the Sub-Advisor.
Pursuant to the Administrative Services Agreement with the Fund, the Sub-Advisor
also performs clerical, accounting supervision, office service and related
functions for the Fund and provides the Fund with personnel to (i) supervise the
performance of bookkeeping and related services by Investors Fiduciary Trust
Company, the Fund's bookkeeping or record keeping agent, (ii) prepare reports to
and filings with regulatory authorities, and (iii) perform such other services
as the Fund may from time to time request of the Sub-Advisor. The personnel
rendering such services may be employees of the Sub-Advisor, of its affiliates
or of other organizations. The Fund pays the Sub-Advisor for such personnel and
for rendering such services at rates which must be agreed upon by the Fund and
the Sub-Advisor, provided that the Fund does not pay for services performed by
any such persons who are also officers of the general partner of the
Sub-Advisor. It is intended that such rates will be the actual costs of the
Sub-Advisor. The Fund also reimburses the Sub-Advisor for all of the Fund's
operating costs, including rent, depreciation of equipment and facilities,
interest and amortization of loans financing equipment used by the Fund and all
of the expenses incurred to conduct the Fund's affairs. The amounts of such
reimbursements must be agreed upon between the Fund and the Sub-Advisor. The
Sub-Advisor, at its discretion, may voluntarily waive all or a portion of the
administrative services fee and the operating expense reimbursement. For its
services under the Administrative Services Agreement, the Sub-Advisor receives
from the Fund a fee equal to .10% per annum of the Fund's average daily net
assets.
Any portion of the total fees received by the Sub-Advisor may be used to provide
shareholder services and for distribution of Fund shares (see "Distribution and
Service Plan" herein).
Expense Limitation
The Sub-Advisor has agreed, pursuant to the Sub-Advisory Agreement, to reimburse
the Fund for its expenses (exclusive of interest, taxes, brokerage and
extraordinary expenses) which in any year exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale. For the purpose of this obligation to reimburse expenses,
the Fund's annual expenses are estimated and accrued daily, and any appropriate
estimated payments are made to it on a monthly basis. Subject to the obligations
of the Sub-Advisor to reimburse the Fund for its excess expenses as described
above, the Fund has, under the Sub-Advisory Agreement, confirmed its obligation
for payment of all its other expenses, including taxes, brokerage fees and
commissions, commitment fees, certain insurance premiums, interest charges and
expenses of the custodian, transfer agent and dividend disbursing agent's fees,
telecommunications expenses, auditing and legal expenses, bookkeeping agent
fees, costs of forming the corporation and maintaining corporate existence,
compensation of disinterested Directors, costs of investor services,
shareholder's reports and corporate meetings, Securities and Exchange Commission
registration fees and expenses, state securities laws registration fees and
expenses, expenses of preparing and printing the Fund's prospectus for delivery
to existing shareholders and of printing application forms for shareholder
accounts and the fees and reimbursements payable to the Sub-Advisor under the
Sub-Advisory Agreement and the Administrative Services Agreement and the
Distributor under the Shareholder Servicing Agreement.
The Fund may from time to time contract to have management services performed by
third parties as discussed herein and the management of the Fund intends to do
so whenever it appears advantageous to the Fund. The Fund's expenses for such
services are among the expenses subject to the expense limitation described
above. As a result of the recent passage of the National Securities Markets
Improvement Act of 1996, all state expense limitations have been eliminated at
this time.
The Fund has reserved the right to charge individual shareholder accounts for
expenses actually incurred by such account for postage, wire transfers and
certain other shareholder expenses, as well as to impose a monthly service
charge for accounts whose net asset value falls below the minimum amount.
Directors and Officers
The Directors and Officers of the Fund, and their principal occupations for the
past five years, are listed below. The address of each such person, unless
otherwise indicated, is 600 Fifth Avenue, New York, New York, 10020. Mr. Duff
may be deemed an "interested person" of the Fund, as defined in the 1940 Act, on
the basis of his affiliation with the Sub-Advisor.
Steven W. Duff, 43 - President and Director of the Fund, has been President of
the Mutual Funds division of the Sub-Advisor since September 1994. Mr. Duff was
formerly Director of Mutual Fund Administration at NationsBank with which he was
652637.1
-10-
<PAGE>
associated from June 1981 to August 1994. Mr. Duff is President and a
Director of California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc.,
Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income
Fund, Inc., New York Daily Tax Free Income Fund, Inc., North Carolina Daily
Municipal Income Fund, Inc. and Short Term Income Fund, Inc., President and
Trustee of Florida Daily Municipal Income Fund and Pennsylvania Daily Municipal
Income Fund, President of Cortland Trust, Inc., President and Chief Executive
Officer of Tax Exempt Proceeds Fund, Inc., Executive Vice President of Reich &
Tang Equity Fund, Inc.
Dr. W. Giles Mellon, 66 - Director of the Fund, is Professor of Business
Administration and Area Chairman of Economics in the Graduate School of
Management, Rutgers University with which he has been associated since 1966. His
address is Rutgers University Graduate School of Management, 92 New Street,
Newark, New Jersey 07102. Dr. Mellon is also a Director of AEW Commercial
Mortgage Securities Fund, Inc., California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc.,
Delafield Fund, Inc., Michigan Daily Tax Free Income Fund, Inc., New Jersey
Daily Municipal Income Fund, Inc., North Carolina Daily Municipal Income Fund,
Inc., Reich & Tang Equity Fund, Inc. and Short Term Income Fund, Inc., and a
Trustee of Florida Daily Municipal Income Fund and Pennsylvania Daily Municipal
Income Fund.
Robert Straniere, 55 - Director of the Fund, has been a member of the New York
State Assembly and a partner with Straniere & Straniere Law Firm since 1981.
His address is 182 Rose Avenue, Staten Island, New York 10306. Mr. Straniere is
also a Director of AEW Commercial Mortgage Securities Fund, Inc., California
Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc.,
Daily Tax Free Income Fund, Inc., Delafield Fund, Inc., Life Cycle Mutual Funds,
Inc., Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Reich &
Tang Equity Fund, Inc. and Short Term Income Fund, Inc., and a Trustee of
Florida Daily Municipal Income Fund and Pennsylvania Daily Municipal Income
Fund.
Dr. Yung Wong, 58 - Director of the Fund, was Director of Shaw Investment
Management (U.K.) Limited from 1994 to October 1995 and formerly was a General
Partner of Abacus Partners Limited Partnership (a general partner of a venture
capital investment firm) from 1984 to 1994. His address is 29 Alden Road,
Greenwich, Connecticut 06831. Dr. Wong has been a Director of Republic Telecom
Systems Corporation (a provider of telecommunications equipment) since January
1989 and of TelWatch, Inc. (a provider of network management software) since
August 1989. Dr. Wong is also a Director of AEW Commercial Mortgage Securities
Fund, Inc., California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund Inc.,
Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income
Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Reich & Tang
Equity Fund, Inc. and Short Term Income Fund, Inc., and a Trustee of Florida
Daily Municipal Income Fund and Pennsylvania Daily Municipal Income Fund.
Bernadette N. Finn, 49 - Vice President and Secretary of the Fund, has been Vice
President of the Mutual Funds division of the Sub-Advisor since September 1993.
Ms. Finn was formerly Vice President and Assistant Secretary of Reich & Tang,
Inc. with which she was associated with from September 1970 to September 1993.
Ms. Finn is also Secretary of AEW Commercial Mortgage Securities Fund, Inc.,
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc., Florida
Daily Municipal Income Fund, Michigan Daily Tax Free Income Funds, Inc., New
Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund,
Inc., North Carolina Daily Municipal Income Fund, Inc., Pennsylvania Daily
Municipal Income Fund and Tax Exempt Proceeds Fund, Inc., a Vice President and
Secretary of Delafield Fund, Inc., Reich & Tang Equity Fund, Inc. and Short Term
Income Fund, Inc.
Molly Flewharty, 46 - Vice President of the Fund, has been Vice President of the
Mutual Funds division of the Sub-Advisor since September 1993. Ms. Flewharty was
formerly Vice President of Reich & Tang, Inc. with which she was associated with
from December 1977 to September 1993. Ms. Flewharty is also a Vice President of
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc., Delafield
Fund, Inc., Florida Daily Municipal Income Fund, Michigan Daily Tax Free Income
Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax
Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund, Inc., Short
Term Income Fund, Inc. and Tax Exempt Proceeds Fund, Inc.
Lesley M. Jones, 49 - Vice President of the Fund, has been Senior Vice President
of the Mutual Funds division of the Sub-Advisor since September 1993. Ms. Jones
was formerly Senior Vice President of Reich & Tang, Inc. with which she was
associated with from April 1973 to September 1993. Ms. Jones is also a Vice
President of California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Florida Daily Municipal Income Fund, Michigan Daily Tax Free Income Fund, Inc.,
New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free Income
Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pennsylvania Daily
Municipal Income Fund, Reich & Tang Equity Fund, Inc. and Short Term Income
Fund, Inc.
652637.1
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<PAGE>
Dana E. Messina, 40 - Vice President of the Fund, has been Executive Vice
President of the Mutual Funds division of the Sub-Advisor since January 1995 and
was Vice President from September 1993 to January 1995. Ms. Messina was formerly
Vice President of Reich & Tang, Inc. with which she was associated with from
December 1980 to September 1993. Ms. Messina is also Vice President of
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc., Delafield
Fund, Inc., Florida Daily Municipal Income Fund, Michigan Daily Tax Free Income
Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax
Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund, Inc., Short
Term Income Fund, Inc., and Tax Exempt Proceeds Funds, Inc.
Richard De Sanctis, 40 - Treasurer of the Fund, has been Vice President and
Treasurer of the Sub-Advisor since September 1993. Mr. De Sanctis was formerly
Controller of Reich & Tang, Inc., from January 1991 to September 1993 and Vice
President and Treasurer of Cortland Financial Group, Inc. and Vice President of
Cortland Distributors, Inc. from 1989 to December 1990. Mr. De Sanctis is also
Treasurer of AEW Commercial Mortgage Securities Fund, Inc., California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily Tax
Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal Income
Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal
Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North Carolina
Daily Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income Fund,
Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc. and Tax Exempt
Proceeds Fund, Inc. and is Vice President and Treasurer of Cortland Trust, Inc.
Directors of the Fund not affiliated with the Sub-Advisor receive from the Fund
an annual retainer of $1,000 and a fee of $250 for each meeting of the Board of
Directors attended and are reimbursed for all out-of-pocket expenses relating to
attendance at such meetings. Directors who are affiliated with the Sub-Advisor
do not receive compensation from the Fund. See Compensation Table.
COMPENSATION TABLE
<TABLE>
(1) (2) (3) (4) (5)
<CAPTION>
Name of Person, Aggregate Compensation from Pension or Retirement Benefits Estimated Annual Benefits Total Compensation from
Position Registrant for Fiscal Year Accrued as Part of Fund upon Retirement Fund and Fund Complex
Expenses Paid to Directors*
<S> <C> <C> <C> <C>
W. Giles Mellon, $-- 0 0 (13 Funds)
Director
Robert Straniere, $-- 0 0 (13 Funds)
Director
Yung Wong, $-- 0 0 (13 Funds)
Director
</TABLE>
* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ended ________, 1998 (and, with respect to certain of the funds
in the Fund Complex, estimated to be paid during the fiscal year ended ________,
199__). The parenthetical number represents the number of investment companies
(including the Fund) from which such person receives compensation that are
considered part of the same Fund complex as the Fund, because, among other
things, they have a common investment advisor.
Counsel and Auditors
Legal matters in connection with the issuance of shares of stock of the Fund are
passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New York 10022.
Matters in connection with Massachusetts law are passed upon by Dechert, Price &
Rhoads, Ten Post Office Square South, Boston, Massachusetts 02109-4603.
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017, independent
certified public accountants, have been selected as auditors for the Fund.
DISTRIBUTION AND SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Securities and Exchange
Commission requires that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by the Rule. The Fund's Board of Directors has adopted a
distribution and service plan (the "Plan") and, pursuant to the Plan, the Fund
has entered into a Distribution Agreement and a Shareholder Servicing Agreement
(with respect to Institutional Class shares only) with the Reich & Tang
Distributors L.P., (the "Distributor") as distributor of the Fund's shares.
652637.1
-12-
<PAGE>
Reich & Tang Asset Management, Inc. serves as the sole general partner for both
Reich & Tang Asset Management L.P. and Reich & Tang Distributors L.P., and Reich
& Tang Asset Management L.P. serves as the sole limited partner of the
Distributor.
Under the Plan, the Fund and the Distributor will enter into a Shareholder
Servicing Agreement, with respect to the Fund's Individual Investor Class and
Broker Service Class shares. For its services under the Shareholder Servicing
Agreement (with respect to Individual Investor Class and Broker Service Class
shares only), the Distributor receives from the Fund a fee equal to .25% per
annum of the Individual Investor Class and Broker Service Class shares of the
Fund's average daily net assets (the "Shareholder Servicing Fee") for providing
personal shareholder services and for the maintenance of shareholder accounts.
The fee is accrued daily and paid monthly and any portion of the fee may be
deemed to be used by the Distributor for payments to Clearing Brokers with
respect to servicing their clients or customers who are shareholders of the
Individual Investor Class and Broker Service Class of the Fund. The
Institutional Class shareholders do not receive the benefit of such services
from Clearing Brokers and, therefore, will not be assessed a Shareholder
Servicing Fee.
Under the Distribution Agreement, the Distributor, for nominal consideration and
as agent for the Fund, will solicit orders for the purchase of the Fund's
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as principal.
The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for (i) telecommunications
expenses including the cost of dedicated lines and CRT terminals, incurred by
the Clearing Brokers and Distributor in carrying out their obligations under the
Shareholder Servicing Agreement with respect to the Fund's Individual Investor
Class and Broker Service Class shares and (ii) preparing, printing and
delivering the Fund's prospectus to existing shareholders of the Fund and
preparing and printing subscription application forms for shareholder accounts.
The Plan provides that the Sub-Advisor may make payments from time to time from
its own resources, which may include the advisory fee, the management fee, and
past profits for the following purposes: (i) to defray the costs of, and to
compensate others, including Participating Organizations and Clearing Brokers
with whom the Distributor has entered into written agreements for performing
shareholder servicing and related administrative functions on behalf of the
Fund; (ii) to defray the costs of, and to compensate others, including certain
Participating Organizations and Clearing Brokers for providing assistance in
distributing the Fund's Individual Investor Class and Broker Service Class
shares; and (iii) to pay the costs of printing and distributing the Fund's
prospectus to prospective investors, and to defray the cost of the preparation
and printing of brochures and other promotional materials, mailings to
prospective shareholders, advertising, and other promotional activities,
including the salaries and/or commissions of sales personnel in connection with
the distribution of the Fund's shares. The Distributor may also make payments
from time to time from its own resources, which may include the Shareholder
Servicing Fee with respect to Individual Investor Class and Broker Service Class
shares and past profits for the purpose enumerated in (i) above. The Distributor
will determine the amount of such payments made pursuant to the Plan, provided
that such payments will not increase the amount that the Fund is required to
pay to the Sub-Advisor and the Distributor for any fiscal year under the
Advisory Agreement or the Sub-Advisory Agreement, the Administrative Services
Contract or the Shareholder Servicing Agreement in effect for that year.
In accordance with Rule 12b-1, the Plan provides that all written agreements
relating to the Plan entered into between either the Fund or the Distributor and
Participating Organizations or other organizations must be in a form
satisfactory to the Fund's Board of Directors. In addition, the Plan requires
the Fund and the Distributor to prepare, at least quarterly, written reports
setting forth all amounts expended for distribution purposes by the Fund and the
Distributor pursuant to the Plan and identifying the distribution activities for
which those expenditures were made.
The Plan was most recently approved on by the Board of Directors including a
majority of the Directors who are not interested persons (as defined in the 1940
Act) of the Fund or the Sub-Advisor and shall continue until
__________________________. The Plan provides that it may continue in effect for
successive annual periods provided it is approved by the Individual Investor
Class and Broker Service Class shareholders or by the Board of Directors,
including a majority of directors who are not interested persons of the Fund and
who have no direct or indirect interest in the operation of the Plan or in the
agreements related to the Plan. The Plan further provides that it may not be
amended to increase materially the costs which may be spent by the Fund for
distribution pursuant to the Plan without Individual Investor Class and Broker
Service Class shareholder approval, and the other material amendments must be
approved by the Directors in the manner described in the preceding sentence. The
Plan may be terminated at any time by a vote of a majority of the disinterested
Directors of the Fund or by a majority vote of the Fund's Individual Investor
Class and Broker Service Class shareholders.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Fund, which was incorporated on November 26,
1997 in Maryland, consists of twenty billion shares of stock having a par value
of one tenth of one cent ($.001) per share. Except as noted below, each share
has equal
652637.1
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<PAGE>
dividend, distribution, liquidation and voting rights within the Fund and a
fractional share has those rights in proportion to the percentage that the
fractional share represents of a whole share. Generally, shares will be voted in
the aggregate except if voting by Fund Class is required by law or the matter
involved affects only one Fund Class, in which case shares will be voted
separately by Fund Class. There are no conversion or preemptive rights in
connection with any shares of the Fund. All shares when issued in accordance
with the terms of the offering will be fully paid and nonassessable. Shares of
the Fund are redeemable at net asset value, at the option of the shareholder. On
, 1997, the Sub-Advisor purchased $100,000 of the Fund's shares at an
initial subscription price of $1.00 per share.
The Fund is subdivided into three classes of shares of beneficial interest,
Institutional Class, Individual Investor Class and Broker Service Class. Each
share, regardless of Class, will represent an interest in the same portfolio of
investments and will have identical voting, dividend, liquidation and other
rights, preferences, powers, restrictions, limitations, qualifications,
designations and terms and conditions, except that: (i) each Class of shares
will have different class designations; (ii) only the Individual Investor Class
and Broker Service shares will be assessed a Shareholder Servicing Fee of .25%
of the average daily net assets of the Individual Investor Class and Broker
Service Class shares of the Fund pursuant to the Rule 12b-1 Distribution and
Service Plan of the Fund; (iii) only the holders of the Individual Investor
Class and Broker Service Class shares will be entitled to vote on matters
pertaining to the Plan and any related agreements applicable to that class in
accordance with provisions of Rule 12b-1; (iv) only the Broker Service Class
shares will be assessed an additional sub-transfer agent accounting fee of .20%
of the average daily net assets of the Broker Service Class shares of the Fund;
and (v) the exchange privilege will permit shareholders to exchange their shares
only for shares of a fund that participates in an Exchange Privilege Program
with the Fund. Payments that are made under the Plans will be calculated and
charged daily to the appropriate Class prior to determining daily net asset
value per share and dividends/distributions.
Generally, all shares will be voted in the aggregate, except if voting by Class
is required by law or the matter involved affects only one Class, in which case
shares will be voted separately by Class. The shares of the Fund have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares outstanding voting for the election of directors can elect 100% of
the directors if the holders choose to do so, and, in that event, the holders of
the remaining shares will not be able to elect any person or persons to the
Board of Directors. The Fund's By-laws provide that the holders of a majority of
the outstanding shares of the Fund present at a meeting in person or by proxy
will constitute a quorum for the transaction of business at all meetings.
As of _______, 1997, there are no persons who own 5% or more of any class of the
Fund's shares.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the By-laws of the Fund provide for annual
meetings only (a) for the election of Directors, (b) for approval of revised
investment advisory contracts with respect to a particular class or series of
beneficial interest, (c) for approval of revisions to the Fund's Distribution
Agreement with respect to a particular class or series of beneficial interest
and (d) upon the written request of holders of shares entitled to cast not less
than 10% of all the votes entitled to be cast at such meeting. Annual and other
meetings may be required with respect to such additional matters relating to the
Fund as may be required by the 1940 Act including the removal of Fund
Director(s) and communication among shareholders, any registration of the Fund
with the Securities and Exchange Commission or any state, or as the Director may
consider necessary or desirable. For example, procedures for calling a
shareholder's meeting for the removal of Directors of the Fund, similar to those
set forth in Section 16(c) of the 1940 Act, are available to shareholders of the
Fund. A meeting for such purpose can be called by the holders of at least 10% of
the Fund's outstanding shares of beneficial interest. The Fund will aid
shareholder communications with other shareholders as required under Section
16(c) of the 1940 Act. Each Director serves until the next meeting of the
shareholders called for the purpose of considering the election or reelection of
such Director or of a successor to such Director, and until the election and
qualification of his or her successor, elected at such a meeting, or until such
Director sooner dies, resigns, retires or is removed by the vote of the
shareholders.
CUSTODIAN AND TRANSFER AGENTS
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is custodian for its cash and securities. Reich & Tang Services L.P., 600
Fifth Avenue, New York, New York 10020 is transfer agent and dividend disbursing
agent for the Institutional Class and Broker Service Class shares of the Fund.
PFPC, Inc., 400 Bellevue Parkway, Wilmington, Delaware 19809 is the transfer
agent and dividend agent for Individual Investor Class shares of the Fund. The
custodian and transfer agents do not assist in, and are not responsible for,
investment decisions involving assets of the Fund.
652637.1
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<PAGE>
NET ASSET VALUE
Pursuant to rules of the Securities and Exchange Commission, the Board of
Directors has established procedures to stabilize the Fund's net asset value at
$1.00 per share of each Class. These procedures include a review of the extent
of any deviation of net asset value per share, based on available market rates,
from $1.00. Should that deviation exceed 1/2 of 1%, the Board will consider
whether any action should be initiated to eliminate or reduce material dilution
or other unfair results to shareholders. Such action may include redemption of
shares in kind, selling portfolio securities prior to maturity, reducing or
withholding dividends and utilizing a net asset value per share as determined by
using available market quotations. The Fund will maintain a dollar-weighted
average portfolio maturity of 90 days or less, will not purchase any instrument
with a remaining maturity greater than 397 days or subject to a repurchase
agreement having a duration of greater than one year, will limit portfolio
investments, including repurchase agreements, to those United States
dollar-denominated instruments that the Fund's Board of Directors determines
present minimal credit risks, and will comply with certain reporting and
record-keeping procedures. The Fund has also established procedures to ensure
that portfolio securities meet the quality criteria as provided in Rule 2a-7 of
the 1940 Act. (See "Investment Objectives, Policies and Risks" in the
Prospectus.)
DESCRIPTION OF RATINGS
Commercial Paper and Corporate Bond Ratings
Description of Prime-1 and A-1 Commercial Paper Ratings
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist with
the issuer; and (8) recognition by management of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations.
Commercial paper rated A by S&P has the following characteristics. Liquidity
ratios are adequate to meet cash requirements. Long-term senior debt rating
should be A or better. In some cases, BBB credits may be allowed if other
factors outweigh the BBB rating. The issuer should have access to at least two
additional channels of borrowing. Basic earnings and cash flow should have an
upward trend with allowances made for unusual circumstances. Typically the
issuer's industry should be well established and the issuer should have a strong
position within its industry and the reliability and quality of management
should be unquestioned. Issuers rated A are further referred by use of numbers
1, 2 and 3 to denote relative strength within this highest classification.
Description of Aa and AA Corporate Bond Ratings
Bonds rate Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with bonds rated Aaa (Moody's highest rating) they comprise
what are generally known as high-grade bonds. Aa bonds are rated lower than the
best bonds because margins of protection may not be as large as Aaa securities
or fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat larger
than in Aaa securities.
Bonds rated AA by S&P are judged to be high-quality debt obligations. Their
capacity to pay principal and interest is considered very strong, and in the
majority of instances they differ from AAA issues only in a small degree. Bonds
rated AAA are considered by S&P to be highest grade obligations and indicate an
extremely strong capacity to pay principal and interest.
652637.1
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<PAGE>
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
* (A) Financial Statements
Included in Prospectus Part A:
(1) Table of Fees and Expenses
Included in Statement of Additional Information Part B:
(1) Report of McGladrey & Pullen, LLP, independent
accountants, dated December __, 1997; and
(2) Statement of Net Assets (audited).
(B) Exhibits
(1) Articles of Incorporation of the Registrant.
(2) By-Laws of the Registrant.
(3) Not applicable.
(4) Not applicable.
* (5) Advisory Agreement between the Registrant and Pax
World Management Corp.
* (5.1) Sub-Advisory Agreement between Pax world Management
* (6) See Distribution Agreement filed as Exhibit 15.2.
(7) Not applicable.
* (8) Custody Agreement between the Registrant and
Investors Fiduciary Trust Company.
* (9) Not Applicable.
* (9.1) Administrative Services Agreement between the
Registrant and Reich & Tang Asset Management
L.P.
* (10) Consent Opinion of Messrs. Battle Fowler LLP as
to the use of their name under the headings
"Federal Income Taxes" in the Prospectus and
"Counsel and Auditors" in the Statement of
Additional Information.
* (11) Consent of Independent Accountants filed as
Exhibit 11 herein.
* (12) Not Applicable.
- --------
* To be filed by Amendment
654547.1
C-1
<PAGE>
* (13) Form of written assurance of Reich & Tang Asset
Management L.P. that its purchase of shares of
the Registrant was for investment purposes
without any present intention of redeeming or
reselling.
(14) Not Applicable.
* (15.1) Distribution and Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940.
* (15.2) Distribution Agreement between the Registrant
and Reich & Tang Distributors L.P.
* (15.3) Shareholder Servicing Agreement between the
Registrant and Reich & Tang Distributors L.P.
(16) Not applicable.
* (17) Financial Data Schedule (For EDGAR Filing Only)
Item 25. Persons controlled by or Under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
Number of Record Holders
Title of Class as of
Common Stock
(par value $.0001)
Institutional Class
Individual Investor Class
Broker Service Class
Item 27. Indemnification.
In accordance with Section 2-418 of the General
Corporation Law of the State of Maryland, Article NINTH of the
Registrant's Articles of Incorporation provides as follows:
"NINTH: (a) The Corporation shall indemnify (i) its
currently acting and former directors and officers, whether
serving the Corporation or at its request any other entity, to
the fullest extent required or permitted by the General Laws of
the State of Maryland now or hereafter in force, including the
advance of expenses under the procedures and to the fullest
extent permitted by law, and (ii) other employees and agents to
such extent as shall be authorized by the Board of Directors or
the By-Laws and as permitted by law. Nothing contained herein
shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
The foregoing rights of indemnification shall not be exclusive of
any other rights to which those seeking indemnification may be
entitled. The Board of Directors may take such action as is
necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time
such by-laws, resolutions or contracts implementing such
provisions or such indemnification arrangements as may be
permitted by law. No amendment of the charter of the Corporation
or repeal
- --------
* To be filed by Amendment
654547.1
C-2
<PAGE>
of any of its provisions shall limit or eliminate the right of
indemnification provided hereunder with respect to acts or
omissions occurring prior to such amendment or repeal.
(b) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment
Company Act of 1940, no director or officer of the Corporation
shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall
be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office. No
amendment of the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the limitation of
liability provided to directors and officers hereunder with
respect to any act or omission occurring prior to such amendment
or repeal."
In Section 7 of the Distribution Agreement relating to the
securities being offered hereby, the Registrant agrees to
indemnify Pax World Money Market Fund, Inc. and any person who
controls Pax World Money Market Fund, Inc., within the meaning of
the Securities Act of 1933, against certain types of civil
liabilities arising in connection with the Registration Statement
or Prospectus.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Securities Act") may be
permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than a payment by
the Registrant of expenses incurred or paid by a director,
officer or the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Insofar as the Investment Company Act of 1940 may be
concerned, in the event that a claim for indemnification is
asserted by a director, officer or controlling person of the
Registrant in connection with the securities being registered,
the Registrant will not make such indemnification unless (i) the
Registrant has submitted, before a court or other body, the
question of whether the person to be indemnified was liable by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties, and has obtained a final decision
on the merits that such person was not liable by reason of such
conduct or (ii) in the absence of such decision, the Registrant
shall have obtained a reasonable determination, based upon a
review of the facts, that such person was not liable by virtue of
such conduct, by (a) the vote of a majority of directors who are
neither interested persons as such term is defined in the
Investment Company Act of 1940, nor parties to the proceeding or
(b) an independent legal counsel in a written opinion.
The Registrant will not advance attorneys' fees or other
expenses incurred by the person to be indemnified unless the
Registrant shall have received an undertaking by or on behalf of
such person to repay the advance unless it is ultimately
determined that such person is entitled to indemnification and
one of the following conditions shall have occurred: (x) such
person shall provide security for his undertaking, (y) the
Registrant shall be insured against losses arising by reason of
any lawful advances or (z) a majority of the disinterested,
non-party directors of the Registrant, or an independent legal
counsel in a written opinion, shall have determined that based on
a review of readily available facts there is reason to believe
that such person ultimately will be found entitled to
indemnification.
Item 28. Business and Other Connections of Investment Adviser.
654547.1
C-3
<PAGE>
The description of the Reich & Tang Asset Management L.P.
("RTAMLP") under the caption "Management of the Fund" in the Prospectus and
"Management and Investment Management Contract" in the Statement of Additional
Information constituting parts A and B, respectively, of the Registration
Statement are incorporated herein by reference.
New England Investment Companies, L.P. ("NEICLP") is the limited
partner and owner of 99.5% interest in Reich & Tang Asset Management L.P. (the
"Manager"). Reich & Tang Asset Management, Inc. (a wholly-owned subsidiary of
NEICLP) is the sole general partner of NEICLP. Reich & Tang Asset Management
L.P. serves as the sole general partner of Reich & Tang Distributors L.P. Reich
& Tang Asset Management, Inc. serves as the sole limited partner of Reich & Tang
Distributors L.P.
On August 30, 1996, The New England Mutual Life Insurance Company
and Metropolitan Life Insurance Company ("MetLife") merged, with MetLife being
the continuing company. The Manager remains a wholly-owned subsidiary of NEICLP,
but Reich & Tang Asset Management, Inc., its sole general partner, is now an
indirect subsidiary of MetLife. Also, MetLife New England Holding, Inc., a
wholly-owned subsidiary of MetLife, owns 51% of the outstanding limited
partnership interest of NEICLP and may be deemed a "controlling person" of the
Manager. Reich & Tang, Inc. owns approximately 16% of the outstanding
partnership units of NEICLP.
Registrant's investment adviser, RTAMLP, is a registered
investment adviser. RTAMLP's investment advisory clients include California
Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc.,
Cortland Trust, Inc., Daily Tax Free Income Fund, Inc., Florida Daily Municipal
Income Fund, Institutional Daily Income Fund, New Jersey Daily Municipal Income
Fund, Inc., New York Daily Tax Free Income Fund, Inc., Michigan Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Short Term Income Fund, Inc., and Tax
Exempt Proceeds Fund, Inc., registered investment companies whose addresses are
600 Fifth Avenue, New York, New York 10020, which invest principally in money
market instruments, Delafield Fund, Inc. and Reich & Tang Equity Fund, Inc.,
registered investment companies whose addresses are 600 Fifth Avenue, New York,
New York 10020, which invest principally in equity securities. In addition,
Reich & Tang Asset Management L.P. is the sole general partner of Alpha
Associates, August Associates, Reich & Tang Minutus L.P., Reich & Tang Minutus
II, L.P., Reich & Tang Equity Partnerships L.P. and Tucek Partners, L.P.,
private investment partnerships organized as limited partnerships.
Peter S. Voss, President, Chief Executive Officer and a Director of NEIC
since October 1992, Chairman of the Board of NEIC since December 1992, Group
Executive Vice President, Bank of America, responsible for the global asset
management private banking businesses, from April 1992 to October 1992,
Executive Vice President of Security Pacific Bank, and Chief Executive Officer
of Security Pacific Hoare Govett Companies, a wholly owned subsidiary of
Security Pacific Corporation, from April 1988 to April 1992, Director of The New
England since March 1993, Chairman of the Board of Directors of NEIC's
subsidiaries other than Loomis, Sayles & Company, Incorporated ("Loomis") and
Back Bay Advisors, Inc. ("Back Bay"), where he serves as a Director, and
Chairman of the Board of Trustees of all of the mutual funds in the TNE Fund
Group and the Zenith Funds. G. Neal Ryland, Executive Vice President, Treasurer
and Chief Financial Officer NEIC since July 1993, Executive Vice President and
Chief Financial Officer of The Boston Company, a diversified financial services
company, from March 1989 until July 1993; from September 1985 to December 1988,
Mr. Ryland was employed by Kenner Parker Toys, Inc. as Senior Vice President and
Chief Financial Officer. Edward N. Wadsworth, Executive Vice President, General
Counsel, Clerk and Secretary of NEIC since December 1989, Senior Vice President
and Associate General Counsel of The New England from 1984 until December 1992,
and Secretary of Westpeak and Draycott and the Treasurer of NEIC. Lorraine C.
Hysler has been Secretary of RTAM since July 1994, Assistant Secretary of NEIC
since September 1993, Vice President of the Mutual Funds Group of NEICLP from
September 1993 until July 1994, and Vice President of Reich & Tang Mutual Funds
since July 1994. Ms. Hysler joined Reich & Tang, Inc. in May 1977 and served as
Secretary from April 1987 until September 1993. Richard E. Smith, III has been a
Director of Reich & Tang Asset Management Inc. since July 1994, President and
Chief Operating Officer of the Capital Management Group of NEICLP from May 1994
until July 1994, President and Chief Operating Officer of the Reich & Tang
Capital Management Group since July 1994, Executive Vice President and Director
of Rhode Island Hospital Trust from March 1993 to May 1994, President, Chief
Executive Officer and Director of USF&G Review Management Corp. from January
1988 until September 1992. Steven W. Duff has been a Director of RTAM since
October 1994, President and Chief Executive Officer of Reich & Tang Funds since
August 1994, Senior Vice President of NationsBank from June 1981 until August
1994; Mr. Duff is President and a Director of California Daily Tax Free Income
Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily Tax Free Income
Fund, Inc., Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North
Carolina Daily Municipal Income Fund, Inc. and Short Term Income Fund, Inc.,
President and Trustee
654547.1
C-4
<PAGE>
of Florida Daily Municipal Income Fund, Pennsylvania Daily Municipal Income
Fund, President and Chief Executive Officer of Tax Exempt Proceeds Fund, Inc.,
and Executive Vice President of Reich & Tang Equity Fund, Inc. Bernadette N.
Finn has been Vice President - Compliance of RTAM since July 1994, Vice
President of Mutual Funds Division of NEICLP from September 1993 until July
1994, Vice President of Reich & Tang Funds since July 1994. Ms. Finn joined
Reich & Tang, Inc. in September 1970 and served as Vice President from September
1982 until May 1987 and as Vice President and Assistant Secretary from May 1987
until September 1993. Ms. Finn is also Secretary of California Daily Tax Free
Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust,
Inc., Daily Tax Free Income Fund, Inc., Florida Daily Municipal Income Fund,
Michigan Daily Tax Free Income Funds, Inc., New Jersey Daily Municipal Income
Fund, Inc., New York Daily Tax Free Income Fund, Inc., North Carolina Daily
Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income Fund and Tax
Exempt Proceeds Fund, Inc., a Vice President and Secretary of Delafield Fund,
Inc., Reich & Tang Equity Fund, Inc. and Short Term Income Fund, Inc. Richard De
Sanctis has been Vice President and Treasurer of RTAM since July 1994, Assistant
Treasurer of NEIC since September 1993 and Treasurer of the Mutual Funds Group
of NEICLP from September 1993 until July 1994, Treasurer of the Reich & Tang
Funds since July 1994. Mr. De Sanctis joined Reich & Tang, Inc. in December 1990
and served as Controller of Reich & Tang, Inc., from January 1991 to September
1993. Mr. De Sanctis was Vice President and Treasurer of Cortland Financial
Group, Inc. and Vice President of Cortland Distributors, Inc. from 1989 to
December 1990. Mr. De Sanctis is also Treasurer of AEW Commercial Mortgage
Securities Fund, Inc., California Daily Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield
Fund, Inc., Florida Daily Municipal Income Fund, Michigan Daily Tax Free Income
Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax
Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund, Inc., Reich
& Tang Government Securities Trust, Tax Exempt Proceeds Fund, Inc. and Short
Term Income Fund, Inc. and is Vice President and Treasurer of Cortland Trust,
Inc.
Item 29. Principal Underwriters.
(a) Reich & Tang Distributors L.P., the Registrant's Distributor
is also distributor for California Daily Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income
Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal Income Fund,
Institutional Daily Income Fund, Michigan Daily Tax Free Income Fund, Inc., New
Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund,
Inc., North Carolina Daily Municipal Income, Inc., Pennsylvania Daily Municipal
Income Fund, Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc. and
Tax Exempt Proceeds Fund, Inc.
(b) The following are the directors and officers of Reich & Tang
Asset Management, Inc., the general partner of Reich & Tang Distributors L.P.
Reich & Tang Distributors L.P. does not have any officers. The principal
business address of Messrs. Voss, Ryland, and Wadsworth is 399 Boylston Street,
Boston, Massachusetts 02116. For all other persons the principal address is 600
Fifth Avenue, New York, New York 10020.
654547.1
C-5
<PAGE>
<TABLE>
<CAPTION>
Positions and Offices
With the General Partner Positions and Offices
Name of the Distributor With Registrant
<S> <C> <C>
Peter S. Voss Director None
G. Neal Ryland Director None
Edward N. Wadsworth Clerk None
Richard E. Smith III Director None
Steven W. Duff Director President and Director
Bernadette N. Finn Vice President - Compliance Secretary
and Secretary
Lorraine C. Hysler Secretary None
Richard De Sanctis Vice President and Treasurer
Treasurer
Richard I. Weiner Vice President None
</TABLE>
(c) Not applicable
Item 30. Location of Accounts and Records.
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained in the physical possession of Registrant at Reich &
Tang Asset Management L.P., 600 Fifth Avenue, New York, New York 10020 the
Registrant's Manager; Reich & Tang Services, 600 Fifth Avenue, New York, New
York 10020, the Registrant's transfer agent and dividend distributing agent; and
at Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64104, the Registrant's custodian.
Item 31. Management Services.
Not Applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) The Registrant undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the effective
date of its Securities Act Registration Statement.
654547.1
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of New York, and State of New York, on the 31st day
of December, 1997.
PAX WORLD MONEY MARKET FUND, INC.
By:/s/ Bernadette N. Finn
-----------------------------
Bernadette N. Finn, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated below.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C> <C>
(1) Principal Executive Officer: Chairman and President
Steven W. Duff
December 31, 1997
By: /s/ Steven W. Duff
-----------------------------
Steven W. Duff
(2) Majority of Directors
Steven W. Duff Director December 31, 1997
Bernadette N. Finn Director
By: /s/ Steven W. Duff
-----------------------------
Steven W. Duff
By: /s/ Bernadette N. Finn
-----------------------------
Bernadette N. Finn
</TABLE>
654547.1
C-7
<PAGE>
Exhibit Index
(1) Articles of Incorporation of the Registrant.
(2) By-Laws of the Registrant.
(3) Not applicable.
(4) Not applicable.
* (5) Advisory Agreement between the Registrant and Pax
World Management Corp.
* (5.1) Sub-Advisory Agreement between Pax World
Management Corp. and Reich & Tang Management L.P.
* (6) Distribution Agreement filed as Exhibit 15.2.
(7) Not applicable.
* (8) Form of Custody Agreement between the Registrant
and Investors Fiduciary Trust Company.
* (9) Not applicable.
* (9.1) Administrative Services Agreement between the
Registrant and Reich & Tang Asset Management L.P.
* (10) Consent of Messrs. Battle Fowler LLP as to the
legality of the securities being registered,
including their consent to the filing thereof and
as to the use of their name under the headings
"Federal Income Taxes" and "Counsel and Auditors"
in the Statement of Additional Information.
* (11) Consent of Independent Accountants.
(12) Not applicable.
* (13) Form of written assurance of Reich & Tang Asset
Management L.P. that its purchase of shares of the
registrant was for investment purposes without any
present intention of redeeming or reselling.
(14) Not applicable.
* (15.1) Distribution and Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940
* (15.2) Distribution Agreement between the Registrant and
Reich & Tang Distributors L.P.
* (15.3) Shareholder Servicing Agreement between the
Registrant and Reich & Tang Distributors L.P.
(16) Not applicable.
- --------
* To be filed by Amendment
654547.1
C-8
ARTICLES OF INCORPORATION
OF
PAX WORLD MONEY MARKET FUND, INC.
FIRST: (1) The name of the incorporator is Amy
McGuffin.
(2) The incorporator's post office address
is 75 East 55th Street, New York, New York 10022.
(3) The incorporator is over eighteen years
of age.
(4) The incorporator is forming the
corporation named in these Articles of Incorporation under the General
Corporation Law of the State of Maryland.
SECOND: The name of the corporation (hereinafter
called the "Corporation") is Pax World Money Market Fund, Inc.
THIRD: The purposes for which the Corporation is
formed are:
(1) to conduct, operate and carry on the
business of an investment company;
(2) to subscribe for, invest in, reinvest
in, purchase or otherwise acquire, hold, pledge, sell, assign,
transfer, exchange, distribute or otherwise dispose of notes,
bills, bonds, debentures and other negotiable or
non-negotiable instruments, obligations and evidences of
indebtedness issued or guaranteed as to principal and interest
by the United States Government, or any agency or
instrumentality thereof, any State or local government, or any
agency or instrumentality thereof, or any other securities of
any kind issued by any corporation or other issuer organized
under the laws of the United States or any State, territory or
possession thereof or any foreign country or any subdivision
thereof or otherwise, to pay for the same in cash or by the
issue of stock, including treasury stock, bonds and notes of
the Corporation or otherwise; and to exercise any and all
rights, powers and privileges of ownership or interest in
respect of any and all such investments of every kind and
description, including and without limitation, the right to
consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations or
corporations to exercise any of
654204.1
<PAGE>
said rights, powers and privileges in respect of any
said investments;
(3) to conduct research and investigations
in respect of securities, organizations, business and general
business and financial conditions in the United States of
America and elsewhere for the purpose of obtaining information
pertinent to the investment and employment of the assets of
the Corporation and to procure any and all of the foregoing to
be done by others as independent contractors and to pay
compensation therefor;
(4) to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the
Corporation, and to endorse, guarantee or undertake the
performance of any obligation, contract or engagement of any
other person, firm, association or corporation;
(5) to issue, sell, distribute, repurchase,
redeem, retire, cancel, acquire, hold, resell, reissue,
dispose of, transfer, and otherwise deal in, shares of stock
of the Corporation, including shares of stock of the
Corporation in fractional denominations, and to apply to any
such repurchase, redemption, retirement, cancellation or
acquisition of shares of stock of the Corporation, any funds
or property of the Corporation, whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by
the laws of the State of Maryland and by these Articles of
Incorporation;
(6) to conduct its business, promote its
purposes, and carry on its operations in any and all of its
branches and maintain offices both within and without the
State of Maryland, in any and all States of the United States
of America, in the District of Columbia, and in any or all
commonwealths, territories, dependencies, colonies,
possessions, agencies, or instrumentalities of the United
States of America and of foreign governments;
(7) to carry out all or any part of the
foregoing purposes or objects as principal or agent, or in
conjunction with any other person, firm, association,
corporation or other entity, or as a partner or member of a
partnership, syndicate or joint venture or otherwise, and in
any part of the world to the same extent and as fully as
natural persons might or could do;
654204.1
-2-
<PAGE>
(8) to have and exercise all of the powers
and privileges conferred by the laws of the State of Maryland
upon corporations formed under the laws of such State; and
(9) to do any and all such further acts and
things and to exercise any and all such further powers and
privileges as may be necessary, incidental, relative,
conducive, appropriate or desirable for the foregoing
purposes.
The enumeration herein of the objects and purposes of the
Corporation shall be construed as powers as well as objects and purposes and
shall not be deemed to exclude by inference any powers, objects or purposes
which the Corporation is empowered to exercise, whether expressly by force of
the laws of the State of Maryland now or hereafter in effect, or impliedly by
the reasonable construction of the said law.
FOURTH: The post office address of the principal
office of the Corporation within the State of Maryland is 11 East
Chase Street, Baltimore City, Maryland 21202.
FIFTH: The resident agent of the Corporation in the
State of Maryland is CSC - Lawyers Incorporating Service Company,
Maryland, at 11 East Chase Street, Baltimore, Maryland 21202.
SIXTH: (1) The total number of shares of stock of all classes
and series which the Corporation initially has authority to issue is twenty
billion (20,000,000,000) shares of capital stock (par value of One Tenth of One
Cent $.001 per share), amounting in aggregate par value to $20,000,000. All of
such shares are classified as "Common Stock".
(2) The Board of Directors may classify or
reclassify any unissued shares of capital stock (whether or not such shares have
been previously classified or reclassified) from time to time by setting or
changing in any one or more respects the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of such shares of stock.
(3) Unless otherwise prohibited by law, so long
as the Corporation is registered as an open-end management company under the
Investment Company Act of 1940, the Board of Directors shall have the power and
authority, without the approval of the holders of any outstanding shares, to
increase or decrease the number of shares of capital stock or the number of
shares of capital stock of any class or series that the Corporation has
authority to issue.
654204.1
-3-
<PAGE>
(4) Until such time as the Board of Directors
shall provide otherwise in accordance with Section (2) of this Article SIXTH
four billion (4,000,000,000) shares of the authorized shares of stock of the
Corporation shall be allocated to the following class of Common Stock: Pax World
Money Market Fund, Inc. Common Stock. The balance of sixteen billion
(16,000,000,000) shares of such stock may be issued in this class, or in any new
class or classes each comprising such number of shares and having such
designations, limitations and restrictions thereof as shall be fixed and
determined from time to time by resolution or resolutions providing for the
issuance of such stock adopted by the Board of Directors.
(5) Any series of Common Stock shall be referred
to herein individually as a "Series" and collectively, together with any further
series from time to time established, as the "Series".
(6) The following is a description of the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the shares of Common Stock of the Corporation (unless provided
otherwise by the Board of Directors with respect to any such additional Series
at the time it is established and designated):
(a) Asset Belonging to Series. All consideration
received by the Corporation from the issue or sale of shares
of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any investment or reinvestment
of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject
only to the rights of creditors, and shall be so recorded upon
the books of account of the Corporation. Such consideration,
assets, income, earnings, profits and proceeds, together with
any General Items allocated to that Series as provided in the
following sentence, are herein referred to collectively as
"assets belonging to" that Series. In the event that there are
any assets, income, earnings, profits or proceeds which are
not readily identifiable as belonging to any particular Series
(collectively, "General Items"), such General Items shall be
allocated by or under the supervision of the Board of
Directors to and among any one or more of the Series
established and designated from time to time in such manner
and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable; and any General
654204.1
-4-
<PAGE>
Items so allocated to a particular Series shall belong to that
Series. Each such allocation by the Board of Directors shall
be conclusive and binding for all purposes.
(b) Liabilities of Series. The assets belonging to
each particular Series shall be charged with the liabilities
of the Corporation in respect of that Series and all expenses,
costs, charges and reserves attributable to that Series, and
any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as
pertaining to any particular Series, shall be allocated and
charged by or under the supervision of the Board of Directors
to and among any one or more of the Series established and
designated from time to time in such manner and on such basis
as the Board of Directors, in its sole discretion, deems fair
and equitable. The liabilities, expenses, costs, charges and
reserves allocated and so charged to a Series are herein
referred to collectively as "liabilities of" that Series. Each
allocation of liabilities, expenses, costs, charges and
reserves by or under the supervision of the Board of Directors
shall be conclusive and binding for all purposes.
(c) Dividends and Distributions. Dividends and
capital gains distributions on shares of a particular Series
may be paid with such frequency, in such form and in such
amount as the Board of Directors may determine by resolution
adopted from time to time, or pursuant to a standing
resolution or resolutions adopted only once or with such
frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities of that Series.
All dividends on shares of a particular Series shall be paid
only out of the income belonging to that Series and all
capital gains distributions on shares of a particular series
shall be paid only out of the capital gains belonging to that
Series. All dividends and distributions on shares of a
particular Series shall be distributed pro rata to the holders
of that Series in proportion to the number of shares of that
Series held by such holders at the date and time of record
established for the payment of such dividends or
distributions, except that in connection with any dividend or
distribution program or procedure, the Board of Directors may
determine that no dividend or distribution shall be payable on
shares as to which the stockholder's purchase order and/or
payment have not been received by the time or times
established by the Board of Directors under such program or
procedure.
654204.1
-5-
<PAGE>
Dividends and distributions may be paid in cash,
property or additional shares of the same or another Series,
or a combination thereof, as determined by the Board of
Directors or pursuant to any program that the Board of
Directors may have in effect at the time for the election by
stockholders of the form in which dividends or distributions
are to be paid. Any such dividend or distribution paid in
shares shall be paid at the current net asset value thereof.
(d) Voting. On each matter submitted to a vote of the
stockholders, each holder of shares shall be entitled to one
vote for each share standing in his name on the books of the
Corporation, irrespective of the Series thereof, and all
shares of all Series shall vote as a single class ("Single
Class Voting"); provided, however, that (i) as to any matter
with respect to which a separate vote of any Series is
required by the Investment Company Act of 1940 or by the
Maryland General Corporation Law, such requirement as to a
separate vote by that Series shall apply in lieu of Single
Class Voting; (ii) in the event that the separate vote
requirement referred to in clause (i) above applies with
respect to one or more Series, then, subject to clause (iii)
below, the shares of all other Series shall vote as a single
class; and (iii) as to any matter which does not affect the
interest of a particular Series, including liquidation of
another Series as described in subsection (7) below, only the
holders of shares of the one or more affected Series shall be
entitled to vote.
(e) Redemption by Stockholders. Each holder of shares
of a particular Series shall have the right at such times as
may be permitted by the Corporation to require the Corporation
to redeem all or any part of his shares of that Series, at a
redemption price per share equal to the net asset value per
share or that Series next determined after the shares are
properly tendered for redemption, less such redemption fee or
sales charge, if any, as may be established from time to time
by the Board of Directors in its sole discretion. Payment of
the redemption price shall be in cash; provided, however, that
if the Board of Directors determines, which determination
shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Corporation may, to
the extent and in the manner permitted by the Investment
Company Act of 1940, make payment wholly or partly in
securities or other assets belonging to the Series of which
the shares being redeemed are a part,
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at the value of such securities or assets used in such
determination of net asset value.
Payment by the Corporation for shares of stock of the
Corporation surrendered to it for redemption shall be made by
the Corporation within such period from surrender as may be
required under the Investment Company Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the
Corporation may postpone payment of the redemption price and
may suspend the right of the holders of shares of any Series
to require the Corporation to redeem shares of that Series
during any period or at any time when and to the extent
permissible under the Investment Company Act of 1940.
(f) Redemption by Corporation. The Board of Directors
may cause the Corporation to redeem at their net asset value
the shares of any Series held in an account having, because of
redemptions or exchanges, a net asset value on the date of the
notice of redemption less than the Minimum Amount, as defined
below, in that Series specified by the Board of Directors from
time to time in its sole discretion, provided that at least 30
days prior written notice of the proposed redemption has been
given to the holder of any such account by first class mail,
postage prepaid, at the address contained in the books and
records of the Corporation and such holder has been given an
opportunity to purchase the required value of additional
shares.
(i) The term "Minimum Amount" when used
herein shall mean One Thousand Dollars ($1,000)
unless otherwise fixed by the Board of Directors from
time to time, provided that the Minimum Amount may
not in any event exceed Twenty-Five Thousand Dollars
($25,000). The Board of Directors may establish
differing Minimum Amounts for each class and series
of the Corporation's stock and for holders of shares
of each such class and series of stock based on such
criteria as the Board of Directors may deem
appropriate.
(ii) The Corporation shall be entitled but
not required to redeem shares of stock from any
stockholder or stockholders, as provided in this
subsection (6), to the extent and at such times as
the Board of Directors shall, in its absolute
discretion, determine to be necessary or advisable to
prevent the Corporation from qualifying as a
"personal holding company", within the meaning of
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the Internal Revenue Code of 1986, as amended from
time to time.
(g) Liquidation. In the event of the liquidation of a
particular Series, the stockholders of the Series that is
being liquidated shall be entitled to receive, as a class,
when and as declared by the Board of Directors, the excess of
the assets belonging to that Series over the liabilities of
that Series. The holders of shares of any particular Series
shall not be entitled thereby to any distribution upon
liquidation of any other Series. The assets so distributable
to the stockholders of any particular Series shall be
distributed among such stockholders in proportion to the
number of shares of that Series held by them and recorded on
the books of the Corporation. The liquidation of any
particular Series in which there are shares then outstanding
may be authorized by vote of a majority of the Board of
Directors then in office, subject to the approval of a
majority of the outstanding voting securities of that Series,
as defined in the Investment Company Act of 1940, and without
the vote of the holders of shares of any other Series. The
liquidation of a particular Series may be accomplished, in
whole or in part, by the transfer of assets of such Series to
another Series or by the exchange of shares of Series for the
shares of another Series.
(h) Net Asset Value Per Share. The net asset value
per share of any Series shall be the quotient obtained by
dividing the value of the net assets of that Series (being the
value of the assets belonging to that Series less the
liabilities of that Series) by the total number of shares of
that Series outstanding, all as determined by or under the
direction of the Board of Directors in accordance with
generally accepted accounting principles and the Investment
Company Act of 1940. Subject to the applicable provisions of
the Investment Company Act of 1940, the Board of Directors, in
its sole discretion, may prescribe and shall set forth in the
By-Laws of the Corporation or in a duly adopted resolution of
the Board of Directors such bases and times for determining
the value of the assets belonging to, and the net asset value
per share of outstanding shares of, each Series, or the net
income attributable to such shares, as the Board of Directors
deems necessary or desirable. The Board of Directors shall
have full discretion, to the extent not inconsistent with the
Maryland General Corporation Law and the Investment Company
Act of 1940, to determine which item shall be treated as
income and which items
654204.1
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as capital and whether any item of expense shall be charged to
income or capital. Each such determination and allocation
shall be conclusive and binding for all purposes.
The Board of Directors may determine to maintain the
net asset value per share of any Series at a designated
constant dollar amount and in connection therewith may adopt
procedures not inconsistent with the Investment Company Act of
1940 for the continuing declaration of income attributable to
that Series as dividends and for the handling of any losses
attributable to that Series. Such procedures may provide that
in the event of any loss, each stockholder shall be deemed to
have contributed to the capital of the Corporation
attributable to that Series his pro rata portion of the total
number of shares required to be canceled in order to permit
the net asset value per share of that Series to be maintained,
after reflecting such loss, at the designated constant dollar
amount. Each stockholder of the Corporation shall be deemed to
have agreed, by his investment in any Series with respect to
which the Board of Directors shall have adopted any such
procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Equality. All shares of each particular Series
shall represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities of that
Series), and each share of any particular Series shall be
equal to each other share of that Series. The Board of
Directors may from time to time divide or combine the shares
of any particular Series into a greater or lesser number of
shares of that series without thereby changing the
proportionate interest in the assets belonging to that Series
or in any way affecting the rights of holders of shares of any
other Series.
(j) Conversion or Exchange Rights. Subject to
compliance with the requirements of the Investment Company Act
of 1940, the Board of Directors shall have the authority to
provide that holders of shares of any Series shall have the
right to convert or exchange said shares into shares of one or
more other Series of shares in accordance with such
requirements and procedures as may be established by the Board
of Directors.
(7) The Board of Directors may, from time to time and without
stockholder action, classify shares of a particular
654204.1
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Series into one or more additional classes of that Series, the voting, dividend,
liquidation and other rights of which shall differ from the classes of common
stock of that Series to the extent provided in Articles Supplementary for such
additional class, such Articles to be filed for record with the appropriate
authorities of the State of Maryland. Each class so created shall consist, until
further changed, of the lesser of (x) the number of shares classified in Section
(5) of this Article SIXTH or (y) the number of shares that could be issued by
issuing all of the shares of that Series currently or hereafter classified less
the total number of shares of all classes of such Series then issued and
outstanding. Any class of a Series of Common Stock shall be referred to herein
individually as a "Class" and collectively, together with any further class or
classes of such Series from time to time established, as the "Classes".
(8) All Classes of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation and other rights with any other shares
of Common Stock of that Series; provided, however, that notwithstanding anything
in the charter of the Corporation to the contrary:
(a) Any class of shares may be subject to such sales
loads, contingent deferred sales charges, Rule 12b-1 fees,
administrative fees, service fees, or other fees, however
designated, in such amounts as may be established by the Board
of Directors from time to time in accordance with the
Investment Company Act of 1940.
(b) Expenses related solely to a particular Class of
a Series (including, without limitation, distribution expenses
under a Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other
arrangement, however designated) shall be borne by that Class
and shall be appropriately reflected (in the manner determined
by the Board of Directors) in the net asset value, dividends,
distributions and liquidation rights of the shares of that
Class.
(c) As to any matter with respect to which a separate
vote of any Class of a Series is required by the Investment
Company Act of 1940 or by the Maryland General Corporation Law
(including, without limitation, approval of any plan,
agreement or other arrangement referred to in subsection (b)
above), such requirement as to a separate vote by that Class
shall apply in lieu of Single Class Voting, and if permitted
by the Investment Company Act of 1940 or the Maryland General
Corporation Law, the Classes of more than one Series
654204.1
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<PAGE>
shall vote together as a single class on any such matter which
shall have the same effect on each such Class. As to any
matter which does not affect the interest of a particular
Class of a Series, only the holders of shares of the affected
Classes of that Series shall be entitled to vote.
(9) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, and wherever the words
"share" or "shares" are used in the charter or By-Laws of the Corporation, they
shall be deemed to include fractions of shares where the context does not
clearly indicate that only full shares are intended.
(10) The Corporation shall not be obligated to issue
certificates representing shares of any Class or Series of capital stock. At the
time of issue or transfer of shares without certificates, the Corporation shall
provide the stockholder with such information as may be required under the
Maryland General Corporation Law.
(11) No holder of any shares of stock of the Corporation shall
be entitled as of right to subscribe for, purchase, or otherwise acquire any
such shares which the Corporation shall issue or propose to issue; and any and
all of the shares of stock of the Corporation, whether now or hereafter
authorized, may be issued, or may be reissued or transferred if the same have
been reacquired and have treasury status, by the Board of Directors to such
persons, firms, corporations and associations, and for such lawful
consideration, and on such terms, as the Board of Directors in its discretion
may determine, without first offering same, or any thereof, to any said holder.
(12) All persons who shall acquire stock or other securities
of the Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended.
SEVENTH: The number of directors of the Corporation, until
such number shall be increased pursuant to the By-Laws of the Corporation, shall
be two. The number of directors shall never be less than the number prescribed
by the General Corporation Law of the State of Maryland and shall never be more
than twenty. The names of the persons who shall act as directors of the
Corporation until their successors are duly chosen and qualify are Steven W.
Duff and Bernadette N. Finn.
EIGHTH: The following provisions are inserted for the
purpose of defining, limiting and regulating the powers of the
Corporation and of the Board of Directors and stockholders.
654204.1
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(1) The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors which shall have and may
exercise all powers of the Corporation except those powers which are by law, by
these Articles of Incorporation or by the By-Laws conferred upon or reserved to
the stockholders. In furtherance and not in limitation of the powers conferred
by law, the Board of Directors shall have power:
(a) to make, alter and repeal the By-Laws of the
Corporation;
(b) to issue and sell, from time to time, shares of
any class or series of the Corporation's stock in such amounts
and on such terms and conditions, and for such amount and kind
of consideration, as the Board of Directors shall determine,
provided that the consideration per share to be received by
the Corporation shall be not less than the greater of the net
asset value per share of that class of stock at such time
computed in accordance with Article SIXTH hereof or the par
value thereof;
(c) from time to time to set apart out of any
assets of the Corporation otherwise available for dividends a
reserve or reserves for working capital or for any other
proper purpose or purposes, and to reduce, abolish or add to
any such reserve or reserves from time to time as said Board
of Directors may deem to be in the best interests of the
Corporation; and to determine in its discretion what part of
the assets of the Corporation available for dividends in
excess of such reserve or reserves shall be declared in
dividends and paid to the stockholders of the Corporation; and
(d) from time to time to determine to what extent
and at what times and places and under what conditions and
regulations the accounts, books and records of the
Corporation, or any of them, shall be open to the inspection
of the stockholders; and no stockholder shall have any right
to inspect any account or book or document of the Corporation,
except as conferred by the laws of the State of Maryland,
unless and until authorized to do so by resolution of the
Board of Directors or of the stockholders of the Corporation.
(2) Notwithstanding any provision of the General Corporation
Law of the State of Maryland requiring a greater proportion than a majority of
the votes of all classes or of any class of the Corporation's stock entitled to
be cast in order to take or authorize any action, any such action may be taken
or authorized upon the concurrence of a majority of the aggregate number of
votes entitled to be cast thereon subject to any
654204.1
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applicable requirements of the Investment Company Act of 1940, as from time to
time in effect, or rules or orders of the Securities and Exchange Commission or
any successor thereto.
(3) Except as may otherwise be expressly provided by
applicable statutes or regulatory requirements, the presence in person or by
proxy of the holders of one-third of the shares of stock of the Corporation
entitled to vote shall constitute a quorum at any meeting of the stockholders.
(4) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the discretion of the Board of
Directors, as to the amount of the assets, debts, obligations, or liabilities of
the Corporation, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purposes for creating such reserves or
charges, as to the use, alteration or cancellation of any reserves or charges
(whether or not any debt, obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged or shall by
then or thereafter required to be paid or discharged), as to the value of or the
method of valuing any investment owned or held by the Corporation, as to the
market value or fair value of any investment or fair value of any other asset of
the Corporation, as to the allocation of any asset of the Corporation to a
particular class or classes of the Corporation's stock, as to the charging of
any liability of the Corporation to a particular class or classes of the
Corporation's stock, as to the number of shares of the Corporation outstanding,
as to the estimated expense to the Corporation in connection with purchases of
its shares, as to the ability to liquidate investments in orderly fashion, or as
to any other matters relating to the issue, sale, purchase and/or other
acquisition or disposition of investments or shares of the Corporation, shall be
final and conclusive and shall be binding upon the Corporation and all holders
of its shares, past, present and future, and shares of the Corporation are
issued and sold on the condition and understanding that any and all such
determinations shall be binding as aforesaid.
(5) Except to the extent prohibited by the Investment Company
Act of 1940, as amended, or rules, regulations or orders thereunder promulgated
by the Securities and Exchange Commission or any successor thereto or by the
By-Laws of the Corporation, a director, officer or employee of the Corporation
shall not be disqualified by his position from dealing or contracting with the
Corporation, nor shall any transaction or contract of the Corporation be void or
voidable by reason of the fact that any director, officer or employee or any
firm of which any director, officer or employee is a member or any corporation
of which any director, officer or employee is a stockholder, officer or
director, is in any way interested in such transaction or
654204.1
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contract; provided that in case a director, or a firm or corporation of which a
director is a member, stockholder, officer or director, is so interested, such
fact shall be disclosed to or shall have been known by the Board of Directors or
a majority thereof; and any director of the Corporation who is so interested, or
who is a member, stockholder, officer or director of such firm or corporation,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of the Corporation which shall authorize any such transaction
or contract, with like force and effect as if he were not such director, or
member, stockholder, officer or director of such firm or corporation.
(6) Specifically and without limitation of the foregoing
subsection (e) but subject to the exception therein prescribed, the Corporation
may enter into management or advisory, underwriting, distribution and
administration contracts and other contracts, and may otherwise do business,
with Reich & Tang Asset Management L.P., and any parent, subsidiary, partner, or
affiliate of such firm or any affiliates of any such affiliate, or the
stockholders, directors, officers, partners and employees thereof, and may deal
freely with one another notwithstanding that the Board of Directors of the
Corporation may be composed in part of directors, officers, partners or
employees of such firm and/or its parents, subsidiaries or affiliates and that
officers of the Corporation may have been, be or become directors, officers, or
employees of such firm, and/or its parents, subsidiaries or affiliates, and
neither such management or advisory, underwriting, distribution or
administration contracts nor any other contract or transaction between the
Corporation and such firm and/or its parents, subsidiaries or affiliates shall
be invalidated or in any way affected thereby, nor shall any director or officer
of the Corporation be liable to the Corporation or to any stockholder or
creditor thereof or to any person for any loss incurred by it or him under or by
reason of such contract or transaction; provided that nothing herein shall
protect any director or officer of the Corporation against any liability to the
Corporation or to its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office; and provided always that
such contract or transaction shall have been on terms that were not unfair to
the Corporation at the time at which it was entered into.
NINTH: (1) The Corporation shall indemnify (i) its currently
acting and former directors and officers, whether serving the Corporation or at
its request any other entity, to the fullest extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force, including the
advance of expenses under the procedures and to the fullest extent permitted by
law, and (ii) other employees and agents to
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such extent as shall be authorized by the Board of Directors or the By-Laws and
as permitted by law. Nothing contained herein shall be construed to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such indemnification
arrangements as may be permitted by law. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or eliminate the
right of indemnification provided hereunder with respect to acts or omissions
occurring prior to such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act of
1940, no director or officer of the Corporation shall be personally liable to
the Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. No amendment of the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the limitation of liability provided to
directors and officers hereunder with respect to any act or omission occurring
prior to such amendment or repeal.
TENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in these Articles of Incorporation or
in any amendment hereto in the manner now or hereafter prescribed by the laws of
the State of Maryland and all rights conferred upon stockholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned, being the incorporator of
the Corporation, has adopted and signed these Articles of Incorporation for the
purpose of forming the corporation described herein pursuant to the General
Corporation
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law of the State of Maryland and does hereby acknowledge that said adoption and
signing are her act.
/s/ Amy McGuffin
-------------------------------
Amy McGuffin
Dated: November 25, 1997
654204.1
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BY-LAWS
OF
PAX WORLD MONEY MARKET FUND, INC.
a Maryland corporation
ARTICLE I
Offices
Section 1. Principal Office in Maryland. The
Corporation shall have a principal office in the City of
Baltimore, State of Maryland.
Section 2. Other Offices. The Corporation may have offices
also at such other places within and without the State of Maryland as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of stockholders shall be
held at such place, either within the State of Maryland or at such other place
within the United States, as shall be fixed from time to time by the Board of
Directors.
Section 2. Annual Meetings. The Corporation shall not be
required to hold an annual meeting of its stockholders in any year in which none
of the following is required to be acted on by the holders of any class or
series of stock under the Investment Company Act of 1940: (a) election of the
directors, (b) approval of the Corporation's investment advisory agreement with
respect to a particular class or series; (c) ratification of the selection of
independent public accountants; and (d) approval of the Corporation's
distribution agreement with respect to a particular class or series. In the
event that the Corporation shall be required to hold an annual meeting of
stockholders by the Investment Company Act of 1940, such meeting of stockholders
shall be held on a date fixed from time to time by the Board of Directors not
less than ninety nor more than one hundred twenty days following the end of such
fiscal year of the Corporation.
Section 3. Notice of Annual Meeting. Written or printed notice
of an annual meeting, stating the place, date and hour thereof, shall be given
to each stockholder entitled to vote
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thereat not less than ten nor more than ninety days before the date of the
meeting.
Section 4. Special Meetings. Special meetings of stockholders
may be called by the chairman, the president or by the Board of Directors and
shall be called by the secretary upon the written request of holders of shares
entitled to cast not less than twenty-five percent of all the votes entitled to
be cast at such meeting. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. In the case of
such request for a special meeting, upon payment by such stockholders to the
Corporation of the estimated reasonable cost of preparing and mailing a notice
of such meeting, the secretary shall give the notice of such meeting. The
secretary shall not be required to call a special meeting to consider any matter
which is substantially the same as a matter acted upon at any special meeting of
stockholders held within the preceding twelve months unless requested to do so
by the holders of shares entitled to cast not less than a majority of all votes
entitled to be cast at such meeting.
Section 5. Notice of Special Meeting. Written or printed
notice of a special meeting of stockholders, stating the place, date, hour and
purpose thereof, shall be given by the secretary to each stockholder entitled to
vote thereat not less than ten nor more than ninety days before the date fixed
for the meeting.
Section 6. Business of Special Meetings. Business
transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice thereof.
Section 7. Quorum. Except as may otherwise be expressly
provided by applicable statutes or regulations, the holders of one-third of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business.
Section 8. Voting. When a quorum is present at any meeting,
the affirmative vote of a majority of the votes cast shall decide any question
brought before such meeting, unless the question is one upon which by express
provision of the Investment Company Act of 1940, as from time to time in effect,
or other statutes or rules or orders of the Securities and Exchange Commission
or any successor thereto or of the Articles of Incorporation, a different vote
is required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Proxies. Each stockholder shall at every
meeting of stockholders be entitled to one vote in person or by
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proxy for each share of the stock having voting power held by such stockholder,
but no proxy shall be voted after eleven months from its date, unless otherwise
provided in the proxy.
Section 10. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, to express consent to corporate action
in writing without a meeting, or to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date
which shall be not more than ninety days and, in the case of a meeting of
stockholders, not less than ten days prior to the date on which the particular
action requiring such determination of stockholders is to be taken. In lieu of
fixing a record date, the Board of Directors may provide that the stock transfer
books shall be closed for a stated period, but not to exceed, in any case,
twenty days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days immediately
preceding such meeting. If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders: (1) the record date for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day on which
notice of the meeting of stockholders is mailed or the day thirty days before
the meeting, whichever is the closer date to the meeting; and (2) the record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of business on the
day on which the resolution of the Board of Directors, declaring the dividend or
allotment of rights, is adopted, provided that the payment or allotment date
shall not be more than ninety days after the date of the adoption of such
resolution.
Section 11. Inspectors of Election. The directors, in advance
of any meeting, may, but need not, appoint one or more inspectors to act at the
meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need not, appoint one or
more inspectors. In case any person who may be appointed as an inspector fails
to appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his or her
ability. The inspectors, if any, shall determine the number of shares
outstanding and the voting power
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of each, the shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the person presiding at the meeting
or any stockholder, the inspector or inspectors, if any, shall make a report in
writing of any challenge, question or matter determined by him or her or them
and execute a certificate of any fact found by him or her or them.
Section 12. Informal Action by Stockholders. Except to the
extent prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders entitled to vote on the
subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
Board of Directors
Section 1. Number of Directors. The number of directors shall
be fixed at no less than two nor more than twenty. Within the limits specified
above, the number of directors shall be fixed from time to time by the Board of
Directors, but the tenure of office of a director in office at the time of any
decrease in the number of directors shall not be affected as a result thereof.
The directors shall be elected to hold office at the annual meeting of
stockholders, except as provided in Section 2 of this Article, and each director
shall hold office until the next annual meeting of stockholders or until his
successor is elected and qualified. Any director may resign at any time upon
written notice to the Corporation. Any director may be removed, either with or
without cause, at any meeting of stockholders duly called and at which a quorum
is present by the affirmative vote of the majority of the votes entitled to be
cast thereon, and the vacancy in the Board of Directors caused by such removal
may be filled by the stockholders at the time of such removal. Directors need
not be stockholders.
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Section 2. Vacancies and Newly Created Directorships. Any
vacancy occurring in the Board of Directors for any cause, including an increase
in the number of directors, may be filled by the stockholders or by a majority
of the remaining members of the Board of Directors even if such majority is less
than a quorum. So long as the Corporation is a registered investment company
under the Investment Company Act of 1940, vacancies in the Board of Directors
may be filled by a majority of the remaining members of the Board of Directors
only if, immediately after filing any such vacancy, at least two-thirds of the
directors then holding office shall have been elected to such office at a
meeting of stockholders. A director elected by the Board of Directors to fill a
vacancy shall be elected to hold office until the next annual meeting of
stockholders or until his successor is elected and qualifies.
Section 3. Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors which shall
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Articles of Incorporation or by these
By-Laws conferred upon or reserved to the stockholders.
Section 4. Annual Meeting. The first meeting of each newly
elected Board of Directors shall be held immediately following the adjournment
of the annual meeting of stockholders and at the place thereof. No notice of
such meeting to the directors shall be necessary in order legally to constitute
the meeting, provided a quorum shall be present. In the event such meeting is
not so held, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors.
Section 5. Other Meetings. The Board of Directors of the
Corporation or any committee thereof may hold meetings, both regular and
special, either within or without the State of Maryland. Regular meetings of the
Board of Directors may be held without notice at such time and at such place as
shall from time to time be determined by the Board of Directors. Special
meetings of the Board of Directors may be called by the chairman, the president
or by two or more directors. Notice of special meetings of the Board of
Directors shall be given by the secretary to each director at least three days
before the meeting if by mail or at least 24 hours before the meeting if given
in person or by telephone or by telegraph. The notice need not specify the
business to be transacted.
Section 6. Quorum and Voting. At meetings of the
Board of Directors, two of the directors in office at the time,
but in no event less than one-third of the entire Board of
Directors, shall constitute a quorum for the transaction of
business. When required pursuant to Section 15(c) under the
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Investment Company Act of 1940 or Rule 12b-1 thereunder a quorum shall also
require the presence in person of a majority of directors who are not parties to
a contract or agreement to be voted upon or interested persons of any such
party. The action of a majority of the directors present at a meeting at which a
quorum is present shall be the action of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 7. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, appoint from
among its members an executive committee and other committees of the Board of
Directors, each committee to be composed of two or more of the directors of the
Corporation. The Board of Directors may, to the extent provided in the
resolution, delegate to such committees, in the intervals between meetings of
the Board of Directors, any or all of the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except the power
to declare dividends, to issue stock, to recommend to stockholders any action
requiring stockholders' approval, to amend the By-Laws or to approve any merger
or share exchange which does not require stockholders' approval. Such committee
or committees shall have the name or names as may be determined from time to
time by resolution adopted by the Board of Directors. Unless the Board of
Directors designates one or more directors as alternate members of any
committee, who may replace an absent or disqualified member at any meeting of
the committee, the members of any such committee present at any meeting and not
disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member of such committee. At
meetings of any such committee, a majority of the members or alternate members
of such committee shall constitute a quorum for the transaction of business and
the act of a majority of the members or alternate members present at any meeting
at which a quorum is present shall be the act of the committee.
Section 8. Minutes of Committee Meetings. The committees shall
keep regular minutes of their proceedings.
Section 9. Informal Action by Board of Directors and
Committees. Any action, except approving the Rule 12b-1 Plan and the Advisory
Agreement, required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the Board of Directors or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
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Section 10. Meetings by Conference Telephone. Except to the
extent prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, the members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time and such participation shall constitute presence in person at such meeting.
Section 11. Fees and Expenses. The directors may be paid their
expenses of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
Notices
Section 1. General. Notices to directors and stockholders
mailed to them at their post office addresses appearing on the books of the
Corporation shall be deemed to be given at the time when deposited in the United
States mail.
Section 2. Waiver of Notice. Whenever any notice is required
to be given under the provisions of the statutes, of the Articles of
Incorporation or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed the equivalent of notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
ARTICLE V
Officers
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors at its first meeting after each annual meeting
of stockholders and shall be a chairman
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of the Board of Directors, a president, a secretary and a treasurer. The Board
of Directors may also choose such vice presidents and additional officers or
assistant officers as it may deem advisable. Any number of offices, except the
offices of president and vice president, may be held by the same person. No
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law to be executed, acknowledged or
verified by two or more officers.
Section 2. Other Officers and Agents. The Board of Directors
may appoint such other officers and agents as it desires who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 3. Tenure of Officers. The officers of the Corporation
shall hold office at the pleasure of the Board of Directors. Each officer shall
hold his or her office until his or her successor is elected and qualifies or
until his or her earlier resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Any officer elected or appointed by
the Board of Directors may be removed at any time by the Board of Directors
when, in its judgment, the best interests of the Corporation will be served
thereby. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors.
Section 4. Chairman of the Board of Directors. The chairman of
the Board of Directors shall be the chief executive officer of the Corporation,
shall preside at all meetings of the stockholders and of the Board of Directors,
shall have general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The chairman shall execute on behalf of the Corporation, and may
affix the seal or cause the seal to be affixed to, all instruments requiring
such execution except to the extent that signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 5. President. The president shall, in the absence of
the chairman of the Board of Directors, preside at all meetings of the
stockholders or of the Board of Directors. The president shall have general and
active management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect. The
president shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the Corporation.
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Section 6. Vice Presidents. The vice presidents shall act
under the direction of the president and in the absence or disability of the
president shall perform the duties and exercise the power of the president. They
shall perform such other duties and have such other powers as the president or
the Board of Directors may from time to time prescribe. The Board of Directors
may designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and, in that event, the duties and
powers of the president shall descend to the vice presidents in the specified
order of seniority.
Section 7. Secretary. The secretary shall act under the
direction of the president. Subject to the direction of the president, the
secretary shall attend all meetings of the Board of Directors and all meetings
of stockholders and record the proceedings in a book to be kept for that purpose
and shall perform like duties for the committees designated by the Board of
Directors when required. The secretary shall give, or cause to be given, notice
of all meetings of stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the president or the
Board of Directors. The secretary shall keep in safe custody the seal of the
Corporation and shall affix the seal or cause it to be affixed to any instrument
requiring it.
Section 8. Assistant Secretaries. The assistant secretaries in
the order of their seniority, unless otherwise determined by the president or
the Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe.
Section 9. Treasurer. The treasurer shall act under the
direction of the president. Subject to the direction of the president he shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all monies and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. The treasurer shall disburse the funds of the
Corporation as may be ordered by the president or the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the president and
the Board of Directors, at its regular meetings, or when the Board of Directors
so requires, an account of all his or her transactions as treasurer and of the
financial condition of the Corporation.
Section 10. Assistant Treasurers. The assistant treasurers in
the order of their seniority, unless otherwise determined by the president or
the Board of Directors, shall, in
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the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. They shall perform such other duties and have such
other powers as the president or the Board of Directors may from time to time
prescribe.
ARTICLE VI
Certificates of Stock
Section 1. General. Every holder of stock of the Corporation
who has made full payment of the consideration for such stock shall be entitled
upon request to have a certificate, signed by, or in the name of the Corporation
by, the president or a vice president and countersigned by the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number and class of whole shares of stock owned by
such holder in the Corporation.
Section 2. Fractional Share Interests or Scrip. The
Corporation may, but shall not be obliged to, issue fractions of a share of
stock, arrange for the disposition of fractional interests by those entitled
thereto, pay in cash the fair value of fractions of a share of stock as of the
time when those entitled to receive such fractions are determined, or issue
scrip or other evidence of ownership which shall entitle the holder to receive a
certificate for a full share of stock upon the surrender of such scrip or other
evidence of ownership aggregating a full share. Fractional shares of stock shall
have proportionately to the respective fractions represented thereby all the
rights of whole shares, including the right to vote, the right to receive
dividends and distributions and the right to participate upon liquidation of the
Corporation, excluding, however, the right to receive a stock certificate
representing such fractional shares. The Board of Directors may cause such scrip
or evidence of ownership to be issued subject to the condition that it shall
become void if not exchanged for certificates representing full shares of stock
before a specified date or subject to the condition that the shares of stock for
which such scrip or evidence of ownership is exchangeable may be sold by the
Corporation and the proceeds thereof distributed to the holders of such scrip or
evidence of ownership, or subject to any other reasonable conditions which the
Board of Director shall deem advisable, including provision for forfeiture of
such proceeds to the Corporation if not claimed within a period of not less than
three years after the date of the original issuance of scrip certificates.
Section 3. Signatures on Certificates. Any of or all the
signatures on a certificate may be a facsimile. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
cease to be such officer before
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such certificate is issued, it may be issued with the same effect as if he or
she were such officer at the date of issue. The seal of the Corporation or a
facsimile thereof may, but need not, be affixed to certificates of stock.
Section 4. Lost, Stolen or Destroyed Certificates. The Board
of Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Corporation alleged
to have been lost, stolen or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his or her legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.
Section 5. Transfer of Shares. Upon request by the registered
owner of shares, and if a certificate has been issued to represent such shares
upon surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, subject to the Corporation's
rights to redeem or purchase such shares, it shall be the duty of the
Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the By-Laws and of the law regarding the transfer of shares
have been duly complied with, to record the transactions upon its books, issue a
new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.
Section 6. Registered Owners. The Corporation shall be
entitled to recognize the person registered on its books as the owner of shares
to be the exclusive owner for all purposes including, redemption, voting and
dividends, and the Corporation shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
ARTICLE VII
Miscellaneous
Section 1. Reserves. There may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in their
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absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for repairing or maintaining any property of the Corporation,
or for the purchase of additional property, or for such other purpose as the
Board of Directors shall think conducive to the interest of the Corporation, and
the Board of Directors may modify or abolish any such reserve.
Section 2. Dividends. Dividends upon the stock of the
Corporation may, subject to the provisions of the Articles of Incorporation and
of the provisions of applicable law, be declared by the Board of Directors at
any time. Dividends may be paid in cash, in property or in shares of the
Corporation's stock, subject to the provisions of the Articles of Incorporation
and of applicable law.
Section 3. Capital Gains Distributions. The amount and number
of capital gains distributions paid to the stockholders during each fiscal year
shall be determined by the Board of Directors. Each such payment shall be
accompanied by a statement as to the source of such payment, to the extent
required by law.
Section 4. Checks. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
Section 6. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words,
"Corporate Seal, Maryland". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in another manner reproduced.
Section 7. Filing of By-Laws. A certified copy of the
By-Laws, including all amendments, shall be kept at the principal
office of the Corporation in the State of Maryland.
Section 8. Annual Report. The books of account of the
Corporation shall be examined by an independent firm of public accountants at
the close of each annual fiscal period of the Corporation and at such other
times, if any, as may be directed by the Board of Directors of the Corporation.
Within one hundred and twenty days of the close of each annual fiscal period a
report based upon such examination at the close of that fiscal period shall be
mailed to each stockholder of the Corporation of record at the close of such
annual fiscal period, unless the Board of Directors shall set another record
date, at his address as the same appears on the books of the Corporation. Each
such
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report shall contain such information as is required to be set forth therein by
the Investment Company Act of 1940 and the rules and regulations promulgated by
the Securities and Exchange Commission thereunder. Such report shall also be
submitted at the annual meeting of the stockholders and filed within twenty days
thereafter at the principal office of the Corporation in the State of Maryland.
Section 9. Stock Ledger. The Corporation shall maintain at its
principal office outside of the State of Maryland an original or duplicate stock
ledger containing the names and addresses of all stockholders and the number of
shares of stock hold by each stockholder. Such stock ledger may be in written
form or in any other form capable of being converted into written form within a
reasonable time for visual inspection.
Section 10. Ratification of Accountants by Stockholders. At
every annual meeting of the stockholders of the Corporation otherwise called
there shall be submitted for ratification or rejection the name of the firm of
independent public accountants which has been selected for the current fiscal
year in which such annual meeting is held by a majority of those members of the
Board of Directors who are not investment advisers of, or interested person (as
defined in the Investment Company Act of 1940) of an investment adviser of, or
officers or employees of, the Corporation.
Section 11. Custodian. All securities and similar investments
owned by the Corporation shall be held by a custodian which shall be either a
trust company or a national bank of good standing, having a capital surplus and
undivided profits aggregating not less than two million dollars ($2,000,000), or
a member firm of the New York Stock Exchange, Inc. The terms of custody of such
securities and cash shall include such provisions required to be contained
therein by the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder by the Securities and Exchange Commission.
Upon the resignation or inability to serve of any such
custodian the Corporation shall (a) use its best efforts to obtain a successor
custodian, (b) require the cash and securities of the Corporation held by the
custodian to be delivered directly to the successor custodian, and (c) in the
event that no successor custodian can be found, submit to the stockholders of
the Corporation, before permitting delivery of such cash and securities to
anyone other than a successor custodian, the question whether the Corporation
shall be dissolved or shall function without a custodian; provided, however,
that nothing herein contained shall prevent the termination of any agreement
between the Corporation and any such custodian by the affirmative vote of the
holders of a majority of all the stock of the Corporation at the time
outstanding and entitled to vote. Upon
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its resignation or inability to serve and pending action by the Corporation as
set forth in this section, the custodian may deliver any assets of the
Corporation held by it to a qualified bank or trust company in the City of New
York, or to a member firm of the New York Stock Exchange, Inc. selected by it,
such assets to be held subject to the terms of custody which governed such
retiring custodian.
Section 12. Investment Advisers. The Corporation may enter
into one or more management or advisory, underwriting, distribution or
administration contract with any person, firm, partnership, association or
corporation but such contract or contracts shall continue in effect only so long
as such continuance is specifically approved annually by a majority of the Board
of Directors or by vote of the holders of a majority of the voting securities of
the Corporation, and in either case by vote of a majority of the directors who
are not parties to such contracts or interested persons (as defined in the
Investment Company Act of 1940) of any such party cast in person at a meeting
called for the purpose of voting on such approval.
ARTICLE VIII
Amendments
The Board of Directors shall have the power, by a majority
vote of the entire Board of Directors at any meeting thereof, to make, alter and
repeal By-Laws of the Corporation.
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