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Prospectus Dated April 9, 1998
PAX WORLD MONEY MARKET FUND, INC.
INDIVIDUAL INVESTOR CLASS
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, Inc. (the "Distributor"). There are no sales loads, exchange or
redemption fees associated with the Fund.
The Fund offers three classes of shares. This Prospectus offers the
Individual Investor Class shares for individual investors. The Individual
Investor 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 shareholders
for which they receive compensation from the Advisor, the Sub-Advisor or the
Distributor. See "Description of Shares."
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 5.
(CONTINUED ON NEXT PAGE)
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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.
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This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing in Individual Investor 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 reference 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. acts as Sub-Advisor of the Fund and Reich & Tang Distributors,
Inc. 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, Inc. is a registered broker-dealer and member of the
National Association of Securities Dealers, Inc. Pax World Management Corp. is
responsible for determining whether contemplated investments satisfy the social
responsibility criteria applied to the Fund. Reich & Tang Asset Management L.P.
performs 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.
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TABLE OF CONTENTS
Page
TABLE OF FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . 4
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT OBJECTIVES, POLICIES AND RISKS . . . . . . . . . . . . 6
RISK FACTORS AND ADDITIONAL INVESTMENT INFORMATION. . . . . . . . 10
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . 12
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . . . . 13
DESCRIPTION OF COMMON STOCK . . . . . . . . . . . . . . . . . . . 15
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . 16
DIRECT PURCHASE AND REDEMPTION PROCEDURES . . . . . . . . . . . . 17
Initial Purchases of Shares . . . . . . . . . . . . . . . . . . 17
AUTOMATIC INVESTMENT PROGRAM. . . . . . . . . . . . . . . . . . . 18
Subsequent Purchases of Shares. . . . . . . . . . . . . . . . . 18
Redemption of Shares. . . . . . . . . . . . . . . . . . . . . . 19
Systematic Withdrawal Plan. . . . . . . . . . . . . . . . . . . 21
Exchange Privilege. . . . . . . . . . . . . . . . . . . . . . . 21
INDIVIDUAL RETIREMENT ACCOUNTS. . . . . . . . . . . . . . . . . . 22
DISTRIBUTION AND SERVICE PLAN . . . . . . . . . . . . . . . . . . 23
DIVIDENDS, DISTRIBUTIONS AND TAXES. . . . . . . . . . . . . . . . 24
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . 25
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 26
Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
CUSTODIAN AND TRANSFER AGENT. . . . . . . . . . . . . . . . . . . 26
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TABLE OF FEES AND EXPENSES
ESTIMATED ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
THE PAX WORLD MONEY MARKET FUND
INDIVIDUAL INVESTOR CLASS
Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . .15%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . .25%
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .20%
Administration Fees . . . . . . . . . . . . . . . . . . . . .10%
----
Total Fund Operating Expenses. . . . . . . . . . . . . . . . . . .60%
----
----
THE PAX WORLD MONEY MARKET FUND
INDIVIDUAL INVESTOR CLASS
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Example 1 Year 3 Years
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You would pay the following
expenses on a $1,000 investment,
assuming 5% annual return and
redemption at the end of each time
period: . . . . . . . . . . . . . . $6 $19
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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.
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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 Individual Investor Class shares of the Fund are designed to meet the short-
term investment needs of individual 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 foregoing 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, Incorporated (the "Pax World Fund") and the Pax World Growth
Fund, Inc. (the "Pax World Growth Fund"). 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 seventeen other
open-end management investment companies. (See "Management of the Fund"
herein.) The Fund's shares are distributed through Reich & Tang Distributors,
Inc. (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
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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 Organization directly to a customer's 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 (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
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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
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
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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
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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. All such taxes paid by the Fund will reduce its net income
available for distribution to shareholders. The Advisor and Sub-Advisor 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.
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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
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 when-issued 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 the Fund's net assets would become so
committed. The Fund will enter into when-issued
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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.
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
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<PAGE>
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:
- - 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;
- - 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);
- - 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;
- - 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
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<PAGE>
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;
- - 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;
- - 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
- - 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,
1997, the Advisor had over $600,000,000 in assets under management by virtue of
serving as the Advisor to the Pax World Fund, and 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 the Sub-Advisor (the "Sub-Advisory 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 Sub-Advisor 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 February 28, 1998, was
investment manager, advisor or supervisor with respect to assets aggregating
approximately $11.28 billion. The Sub-Advisor acts as manager or administrator
of seventeen other registered investment companies and also advises pension
trusts, profit-sharing trusts and endowments.
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<PAGE>
Effective January 1, 1998, NEIC Operating Partnership, L.P. ("NEICOP")
was the limited partner and owner of a 99.5% interest in the Sub-Advisor
replacing New England Investment Companies, L.P. ("NEICLP") as the limited
partner and owner of such interest in the Sub-Advisor, due to a restructuring by
New England Investment Companies, Inc. ("NEIC"). Subsequently, effective March
31, 1998, Nvest Companies, L.P. ("Nvest Companies") due to a change in name of
NEICOP, replaces NEICOP as the limited partner and owner of a 99.5% interest in
the Sub-Advisor.
Reich & Tang Asset Management, Inc. (a wholly-owned subsidiary of Nvest
Companies) is the sole general partner and owner of the remaining 0.5% interest
of the Sub-Advisor. Nvest Corporation, a Massachusetts Corporation (formerly
known as New England Investment Companies, Inc.), serves as the managing general
partner of Nvest Companies.
Reich & Tang Asset Management, Inc. is an indirect subsidiary of
Metropolitan Life Insurance Company ("MetLife"). Also, MetLife directly and
indirectly owns approximately 47% of the outstanding partnership interests of
Nvest Companies and may be deemed a "controlling person" of the Sub-Advisor.
Reich & Tang, Inc. owns, directly and indirectly, approximately 13% of the
outstanding partnership interests of Nvest Companies.
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.
Nvest Companies 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 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.
The recent name change did not result in a change in control of the Sub-
advisor and has no impact upon the Sub-Advisor performance of its
responsibilities and obligations.
On January 30, 1998 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 April 1, 1998 which have terms which extend
to January 31, 2000 and may be continued in force thereafter for successive
twelve-month periods beginning each February 1, 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 March 18, 1998.
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
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<PAGE>
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 Sub-Advisor 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, Inc., the Distributor, receives
a servicing fee equal to .25% per annum of the average daily net assets of the
Individual Investor 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 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 March 18, 1998, the 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
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<PAGE>
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 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
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 Individual Investor Class transfer agent which accepts orders for
purchases and redemptions from the Distributor and from shareholders directly.
With respect to the Individual Investor Class of shares, the minimum initial
investment is $250. (See "Direct Purchase and Redemption Procedures" herein.)
The minimum amount for subsequent investments is $50 for all shareholders.
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. 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.
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<PAGE>
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.
Redemption requests received by the Fund's Individual Investor Class
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 $250. 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 $50 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.
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 800-767-1729 (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.
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
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<PAGE>
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 800-767-1729
(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 # 85-5100-7715
Fund Account # _______________________
Account of (Investor's Name) _________
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:
Pax World Fund Family
c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
AUTOMATIC INVESTMENT PROGRAM
You may elect to establish telephone purchase privileges or an Automatic
Investment where shares can be bought monthly or quarterly. Automatic
Investments are made on the 20th day of the month by electronically debiting
your checking or savings account and transferring the funds into your Pax World
Money Market account. The minimum investment for both programs is $50. Each of
these options appear on the application form. Once the account is opened, you
can call the fund at 800-767-1729 for a form to add these options to an existing
account.
You may purchase shares of the Fund (minimum of $50) 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. 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
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<PAGE>
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 $50 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 Individual
Investor Class transfer agent at:
Pax World Money Market Fund Inc.
c/o PFPC, Inc.
P.O. Box 8930
Wilmington, Delaware 19899-8930
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 change the redemption option will require a signature guaranteed letter.
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
19
<PAGE>
All written requests for redemption over $10,000 must be signed by the
shareholder with signature guaranteed unless the Shareholder Redemption Option
has been filed with the transfer agent. Normally the redemption proceeds are
paid by check mailed to the shareholder of record.
Shareholder Redemption Option - Shareholders may request a redemption of
up to $10,000 without a signature guarantee. The request must be in writing and
must be signed by all registered owners. For amounts of over $10,000,
shareholders may file a Shareholder Redemption Option form to waive the
signature guarantee requirement for written redemptions. The check must be made
payable to all owners on the account and will only be sent to a pre-authorized
bank account or to the address of record, and that address cannot have been
changed within the last 30 days. To request a Shareholder Redemption Option
Form, call the Fund at 800-767-1729.
CHECK WRITING PRIVILEGES
By making the appropriate election on the subscription order form, an
Individual 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 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 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 interest 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 or 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
Telephone Redemptions have a cap of $10,000, and can be done no more
than once every 30 days. Any one shareholder or a pre-authorized representative
can call for a telephone redemption.
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 or
her address or to his or her bank account as set forth in the subscription order
form or in a subsequent signature guaranteed written authorization.
20
<PAGE>
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 one shareholder listed in
the registration, or any pre-authorized. The Fund does not require a minimum
wire amount, however, there is a $10 fee for all outgoing wires. 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 or her 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, or to a pre-authorized bank account. The request cannot be honored if
an address change has been made for the account within 30 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.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders may elect to withdraw shares and receive payment from the
Fund of a specified amount automatically. Systematic withdrawals may be made on
a monthly, bi-monthly, quarterly, semi-annual or annual basis. The withdrawal
payments of the specified amount are made by the Fund on the 25th day of the
month. Whenever such 25th day of the month is not a Fund Business Day, the
payment date is the Fund Business Day preceding the 25th 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 in a letter accompanying 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
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 $50, except that
shareholders who are establishing a new account
21
<PAGE>
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
c/o 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.
22
<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 April 1, 1998, 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, Inc. (the "Distributor")
entered into a Distribution Agreement and a Shareholder Servicing Agreement.
Reich & Tang Asset Management, Inc. serves as the sole general partner
for Reich & Tang Asset Management L.P. and is the sole shareholder 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 shares, a service fee equal to
.25% per annum of the Individual Investor 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.
The Plan and the Shareholder Servicing Agreement for the Individual
Investor 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 in carrying out
its obligations under the Shareholder Servicing Agreement with respect to
Individual Investor Class
23
<PAGE>
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, for performing shareholder servicing and
related administrative functions on behalf of the Fund; (ii) to defray the cost
of, and to compensate certain others, 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 Sub-Advisory 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 Sub-Advisor 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
24
<PAGE>
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 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 or her 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
25
<PAGE>
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.
YEAR 2000
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Sub-Advisor is in the process of working with the Fund's
service providers to prepare for the year 2000. Based on information currently
available, the Sub-Advisor does not expect that the Fund will incur significant
operating expenses or be required to incur materials costs to be year 2000
compliant. Although the Sub-Advisor does not anticipate that the year 2000
issue will have a material impact on the Fund's ability to provide service at
current levels, there can be no assurance that steps taken in preparation for
the year 2000 will be sufficient to avoid any adverse impact on the Fund.
CUSTODIAN AND TRANSFER AGENTS
Investors Fiduciary Trust Company, 801 Pennsylvania Street, Kansas City,
Missouri 64105, is the custodian for the Fund's cash and securities. PFPC,
Inc., 400 Bellevue Parkway, Wilmington, Delaware 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.
26
<PAGE>
<TABLE>
<CAPTION>
<S><C>
PAX WORLD MONEY MARKET - INDIVIDUAL INVESTOR CLASS PLEASE MAIL TO PAX WORLD
DO NOT USE THIS APPLICATION TO OPEN AN IRA OR OTHER RETIREMENT ACCOUNT. FUND FAMILY, P.O. BOX 8930,
PLEASE CALL 1-800-767-1789 IF YOU NEED A RETIREMENT APPLICATION. WILMINGTON, DE 19899-8930.
- ------------------------------------------------------------------------------------------------------------------------------------
1 TYPE OF ACCOUNT (CHECK ONE)
/ / INDIVIDUAL / / JOINT TENANTS / / GIFT/TRANSFER TO A MINOR
Complete A only Complete A & B Complete C only
/ / TRUST / / CORPORATION / / PARTNERSHIP OR OTHER ENTITY
Complete D only Complete E only Complete E only
- ------------------------------------------------------------------------------------------------------------------------------------
A - - / /
------------------------------------------------------------------------------------------------------------------------------
FIRST NAME, MIDDLE NAME, LAST NAME SOCIAL SECURITY NUMBER BIRTHDATE (MM DD YY)
(Required to open your account)
B - - / /
------------------------------------------------------------------------------------------------------------------------------
FIRST NAME, MIDDLE NAME, LAST NAME SOCIAL SECURITY NUMBER BIRTHDATE (MM DD YY)
(Required to open your account)
JOINT TENANTS WILL HAVE RIGHTS OF SURVIVORSHIP UNLESS OTHERWISE SPECIFIED.
- ------------------------------------------------------------------------------------------------------------------------------------
C CUSTODIAN'S NAME (ONLY ONE PERMITTED)
-----------------------------------------------------------------------------------------
AS CUSTODIAN FOR MINOR'S NAME (ONLY ONE PERMITTED)
----------------------------------------------------------------------------
- - / /
UNDER THE _____UNIFORM GIFTS _____UNIFORM TRANSFERS ------------------------------ --------------------
State TO MINOR'S ACT, OR State TO MINORS ACT. MINOR'S SOCIAL SECURITY NUMBER BIRTHDATE (MM DD YY)
(Required to open your account)
- ------------------------------------------------------------------------------------------------------------------------------------
D NAME OF TRUSTEE
--------------------------------------------------------------------------------------------------------------
NAME OF SECOND TRUSTEE (IF ANY)
----------------------------------------------------------------------------------------------
NAME OF TRUST
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------- --------------------------------------------------------------
DATE OF TRUST (MM DD YY)(Required to open your account) TAXPAYER IDENTIFICATION NUMBER (Required to open your account)
- ------------------------------------------------------------------------------------------------------------------------------------
E
------------------------------------------------------------------------------------------------------------------------------
NAME OF CORPORATION OR OTHER ENTITY. IF OTHER ENTITY, PLEASE SPECIFY TYPE IN THE SPACE BELOW, E.G., PARTNERSHIP, CLUB, ETC.
---------------------------------------------------------------- ------------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER (Required to open your account) BUSINESS TYPE
- ------------------------------------------------------------------------------------------------------------------------------------
2 YOUR MAILING ADDRESS
------------------------------------------------------------------------------------------------------------------------------
STREET ADDRESS AND APARTMENT OR BOX NUMBER
------------------------------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE
I AM A CITIZEN OF / / U.S. / / OTHER ( ) ( )
-------------------------- -------------------------- --------------------------
PLEASE SPECIFY COUNTRY AREA CODE DAY PHONE AREA CODE EVENING PHONE
- ------------------------------------------------------------------------------------------------------------------------------------
3 YOUR INITIAL INVESTMENT (MINIMUM $250.)
I HAVE ENCLOSED A CHECK (DO NOT SEND CASH) MADE PAYABLE TO PAX WORLD MONEY MARKET. $ AMOUNT ($250 MINIMUM)_________________
- ------------------------------------------------------------------------------------------------------------------------------------
4 CHOOSE HOW YOU WISH TO RECEIVE ANY DIVIDENDS AND CAPITAL GAINS.
IF NOT COMPLETED, OPTION A WILL BE ASSIGNED.
A. / / I WOULD LIKE ALL DIVIDENDS AND CAPITAL GAINS REINVESTED IN MY ACCOUNT.
B. / / I WOULD LIKE ALL DIVIDENDS AND CAPITAL GAINS PAID TO ME IN CASH.
C. / / I WOULD LIKE ALL DIVIDENDS PAID TO ME IN CASH AND CAPITAL GAINS REINVESTED IN MY ACCOUNT.
- ------------------------------------------------------------------------------------------------------------------------------------
5 TELEPHONE PURCHASES/EXCHANGES/REDEMPTIONS;
AUTOMATIC INVESTMENT PLAN
A / / I hereby authorize the Fund and transfer agent to honor telephoned instructions to purchase/exchange/redeem shares,
when directed, and, as specified by transmitting the proceeds, if applicable, to me at my address of record or by
crediting/debiting my preauthorized bank account. I hereby ratify any such instructions and agree to indemnify the Fund
and its transfer agent from all loss, liability, cost, damage and expense for acting upon such instructions.
/ / I want this privilege for MY REPRESENTATIVE OF RECORD to have authority to give instructions for telephone
purchases/exchanges/redemptions. The name of my current representative of record for third party administration is
(name, institution, if any):
---------------------------------------------------------------------------------------------
/ / I would like to invest in Pax World Money Market automatically by completing the following information and
returning it to the Fund. I understand I will receive a confirmation of each transaction and the deduction from my
bank account will appear on my bank statement.
Please invest the amount indicated below (minimum $50) in Pax World Money Market.
Investments of $ on the 20th day of every / / month / / quarter beginning
----------------------------- -------------------
Your automatic investment program normally becomes active 20 business days after your application is processed.
B PLEASE ATTACH A VOIDED UNSIGNED CHECK OR SAVINGS DEPOSIT SLIP FOR THE BANK ACCOUNT TO BE CREDITED/DEBITED IN CONNECTION WITH
TELEPHONE PURCHASES/REDEMPTIONS OR AUTOMATIC INVESTMENTS.
Bank Name
-----------------------------------------------------------------------------------------------------------------
Name on Bank Account
------------------------------------------------------------------------------------------------------
(Note: One common name must appear on both your Pax World account registration and bank account registration).
Your Bank Account Number
--------------------------------------------------------------------------------------------------
Your Signature
------------------------------------------------------------------------------------------------------------
Signature (If Joint Account)
----------------------------------------------------------------------------------------------
This is a / / Checking / / Savings Account
As a convenience to me, you are hereby requested and authorized to pay and charge to my account debits drawn on my account by
and payable to the order of Pax World Fund Family. This authority is to remain in effect until revoked by me in writing
and, until you actually receive such notice, I agree you shall be fully protected in honoring any such check. I further agree
that if any such check is dishonored, whether with or without cause and whether intentionally or inadvertently, you shall be
under no liability whatsoever. This option, if exercised, shall become a part of the account application and the terms,
representations and conditions thereof.
- ------------------------------------------------------------------------------------------------------------------------------------
6 YOUR SIGNATURE ---------------------------------------------------------------
7 CHECKWRITING
All registered owners or legal representatives must sign After you have completed and returned this Checkwriting
this section before the Fund can open your account. signature card, the Fund will mail your checks, pre-printed
with your name and address, to you.
The undersigned warrant(s) that the undersigned has (have)
full authority and is (are) of legal age to purchase shares Indicate number of required signatures
of Pax World Money Market and has (have) received and read ---------------------
a current Prospectus of the Fund and agree(s) to its terms. If left blank, only one signature will be required on all
The Fund and its Transfer Agent will not be liable for checks.
acting upon instructions or inquiries believed to be
genuine. By signing below: I/we authorize PNC Bank to honor checks
drawn by me/us on this account. The minimum check amount
Taxpayer Identification Number Certification: As required is $250.
by Federal law, I/we certify under penalties of perjury
that (1) the Social Security Number or Taxpayer I/we accept the checkwriting terms and conditions on the
Identification Number listed above is correct, and (2) I/WE reverse side.
HAVE NOT been notified by the IRS that I/we are subject to
backup withholding. It is understood that failure to 1)
supply correct numbers above may subject me/us to a ---------------------------------------------------------
penalty of $50 for each failure. Owner's or Custodian's Name (first, middle initial, last)
Check this box if you ARE subject to 31% backup
withholding. / / ---------------------------------------------------------
Signature Date of Birth (m, d, y)
/ / I/we do not have a SSN or TIN, but have applied for
one and will provide it within 60 days. I/we understand 2)
that failure to do so will result in a 31% backup ---------------------------------------------------------
withholding. Joint Owner's Name (first, middle initial, last)
--------------------------------------------------------- ---------------------------------------------------------
Signature Date Signature Date of Birth (m, d, y)
---------------------------------------------------------------
---------------------------------------------------------
Signature Date
---------------------------------------------------------
Dealer No. (If applicable) Dealer Name
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- UNFOLD HERE FOR NEW ACCOUNT APPLICATION
NEW ACCOUNT INSTRUCTIONS
1. TYPE OF ACCOUNT. An account may be registered as only one of the following:
- - Individual -
| Supply the Social Security
- - Joint Tenants / Number of the registered
\ account owner who is to be
- - A Custodial Account under the Uniform Gifts | taxed.
to Minors Account -
-
- - A Trust | Supply the Taxpayer Identifica-
/ tion Number of the legal entity
- - A Corporation, Partnership, \ or organization that will report
Organization, Fiduciary, etc. | income and/or gains.
-
Please check the box that corresponds to the type of account you are opening and fill in the required information exactly as you
wish it to appear on the account.
2. YOUR MAILING ADDRESS. Please complete all information requested as it is required to open your account.
3. YOUR INITIAL INVESTMENT. An initial investment of at least $250 is required to open an account. Additional purchases must be
at least in the amount of $50.
4. RECEIVING YOUR DIVIDENDS AND CAPITAL GAINS. Check the option you prefer for receiving your dividend and capital gain
distributions. If you do not select an option, all dividends and capital gains will be reinvested in your account.
5. TELEPHONE/PURCHASES/EXCHANGES/REDEMPTIONS; AUTOMATIC INVESTMENT PLAN. In this section you can authorize telephone privileges
for yourself and/or your representative of record. With the Fund's Automatic Investment Plan, you can have $50 or more
automatically withdrawn from your bank account and
- ---------------------------------------------------------------- invested in your Pax World account monthly or quarterly. If
you check any of the boxes in Section 5A, be sure to include
The Checkwriting privilege allows you to withdraw money from your bank account information in Section 5B.
your Pax World Money Market account with ease and is available
to individual, joint tenant and gift to minor money market 6. YOUR SIGNATURE(S). Please be sure to sign this application.
accounts. If the account is registered in the name of:
- an individual - the individual must sign.
Checkwriting privileges will be subject to the customary rules - joint tenants - both must sign.
and regulations governing checking accounts and may be - a custodian for a minor - the custodian must sign.
terminated by the Fund or PNC Bank. Neither the Fund nor PNC - a trustee or other fiduciary - the fiduciary(s) must sign and
Bank shall incur liability for honoring such checks, for indicate capacity.
effecting redemptions to pay for such checks, or for returning - a corporation or other organization - an officer must sign
checks which have not been accepted. and indicate capacity.
When a payable check is presented to the Custodian for ANY QUESTIONS? Call a Pax World service representative at
payment, a sufficient number of full and fractional shares 1-800-767-1729 (toll free) for assistance.
from the shareholder's account to cover the amount of the
check will be redeemed at the net asset value next determined. Please return your completed application in the self-addressed
If there are insufficient shares in the shareholder's account, envelope. If envelope is missing, mail to:
the check may be returned. Checks presented for payment which
would require the redemption of shares purchased by check or PAX WORLD FUND FAMILY
by electronic funds transfer within the previous 10 business P.O. BOX 8930
days may not be honored. Generally, there is no charge to you WILMINGTON, DE 19899-8930
for the clearance of checks, but the Fund does reserve the
right to charge a service fee for checks returned for
insufficient funds, stop payment, or check copy services.
This checkwriting procedure for redemption enables
shareholders to receive the daily dividends declared on the
shares to be redeemed until such time as the check is
presented for payment.
- ----------------------------------------------------------------
</TABLE>
