As filed with the Securities and Exchange Commission on April 1, 1999
Registration No. 333-43587
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 1 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [X]
PAX WORLD MONEY MARKET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 830-5220
BERNADETTE N. FINN
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
(Name and Address of Agent for Service)
Copy to: MICHAEL R. ROSELLA, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective: (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (Date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Prospectus Dated June 1, 1999
PAX WORLD MONEY MARKET FUND, INC.
INDIVIDUAL INVESTOR CLASS
600 FIFTH AVENUE
NEW YORK, NY 10020
212-830-5220
A money market fund whose investment objective is to maximize current income to
the extent consistent with preservation of capital, maintenance of liquidity and
stability of principal. The Fund will seek to achieve this objective by
investing in short-term obligations of issuers that produce goods and services
that improve the quality of life and that are not to any degree engaged in
manufacturing defense or weapons-related products.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
Page
Risk/Return Summary: Investments, Risks,
and Performance...................................................... 3
Fee Table............................................................ 5
Investment Objectives, Principal Investment
Strategies and Related Risks......................................... 6
Management, Organization and Capital Structure....................... 8
Shareholder Information.............................................. 9
Tax Consequences..................................................... 17
Distribution Arrangements............................................ 17
Financial Highlights................................................. 19
2
<PAGE>
I. RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
Investment Objectives
- --------------------------------------------------------------------------------
The Fund seeks to maximize current income to the extent consistent with
preservation of capital, maintenance of liquidity and stability of principal.
There can be no assurance that the Fund will achieve its investment objectives.
Principal Investment Strategies
- --------------------------------------------------------------------------------
The Fund is committed to making a contribution to world peace through
investment in companies which produce goods and services that improve the
quality of life. Therefore, the Fund seeks to invest in industries such as
healthcare, education, housing, food, retail, pollution control and leisure time
and exclude investments in the military, liquor, tobacco or gambling industries.
The Fund intends to achieve its investment objective by investing
principally in short-term, high quality debt instruments including:
(i) high quality commercial paper;
(ii) repurchase agreements; and
(iii) bank certificates of deposit
The Fund is a money market fund and seeks to maintain an investment
portfolio with a dollar-weighted average maturity of 90 days or less, to value
its investment portfolio at amortized cost and to maintain a net asset value of
$1.00 per share.
Principal Risks
- --------------------------------------------------------------------------------
o Although the Fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the Fund.
o The value of the Fund's shares and the securities held by the Fund can each
decline in value.
o An investment in the Fund is not a bank deposit and is not insured by the
FDIC or any other governmental agency.
o If a vendor defaults on its repurchase obligation pursuant to a repurchase
agreement, the Fund might lose money to the extent proceeds from the sale
of collateral are less than the repurchase price. If the vendor files for
bankruptcy, the Fund may be delayed or incur costs in selling the
collateral.
o The Fund's policy to invest in issuers that produce goods and services that
improve the quality of life and to sell any investments which are found to
violate this policy may result in (i) the Fund foregoing certain higher
yielding investments or (ii) the Fund having to sell an investment at a
time when it is disadvantageous to do so.
3
<PAGE>
Risk/Return Bar Chart and Table
- --------------------------------------------------------------------------------
As of December 31, 1998, the Fund's total return for the Individual
Investor Class of shares since commencement of operation (May 27, 1998) was
2.89%. The Fund's past performance is not an indicator of how the Fund will
perform in the future. A Bar Chart and Table, showing the annual total returns
for the Fund, will be available once the Fund has been in operation for a full
calendar year.
The Fund's current 7-day yield may be obtained by calling the Fund
toll-free at 800-221-3079.
4
<PAGE>
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees........................................ .15%
Distribution and Service (12b-1) Fees.................. .25%
Other Expenses......................................... .45%
Administration Fees............................. .10%
-----
Total Annual Fund Operating Expenses................... .85%
====
------------------------
The Manager has voluntarily waived the entire Management Fee and
Administration Fee with respect to the Institutional Class, Broker
Service Class and Individual Investor Class shares. After such waivers,
the Management Fee, with respect to the Institutional Class, Broker
Service Class and Individual Investor Class was 0.00%. The Administration
Fee, with respect to the Institutional Class, Broker Service Class and
Individual Investor Class was 0.00%. The actual Total Annual Fund
Operating Expenses for the Institutional Class was 0.35%, for the Broker
Service Class 0.80% and for the Individual Investor Class 0.60%. This fee
waiver arrangement may be terminated at any time at the option of the
Advisor.
Example
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
Assume that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. Also assume that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
$87 $271 $471 $1,049
5
<PAGE>
II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STATEGIES AND RELATED RISKS
Investment Objectives
- --------------------------------------------------------------------------------
The Fund is a money market fund whose investment objectives are to seek maximum
current income to the extent consistent with the preservation of capital,
maintenance of liquidity and stability of principal. There is no assurance that
the Fund will achieve its investment objectives.
The Fund's investment objectives may not be changed without the
approval of the holders of a majority of the Fund's outstanding voting
securities that wold be affected by such a change.
Principal Investment Strategies and Related Risks
- --------------------------------------------------------------------------------
Social Criteria of Fund
The Fund endeavors, consistent with its investment objective, to make a
contribution to world peace through investment in companies that produce goods
and services that improve the quality of life. 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, retail,
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.
In order to properly supervise a securities portfolio containing the
limitations described above, care must be exercised to continuously monitor
developments of the issuers whose securities are included in the Fund.
Developments and trends in the economy and financial markets are also
considered, and the screening of many securities is required to implement the
investment philosophy of the Fund. The Advisor, Pax World Management Corp., is
responsible for such supervision and screening of the securities included in the
Fund.
If it is determined after the initial purchase by the Fund that the
company's activities fall within the exclusion described above (either by
acquisition, merger or otherwise), the securities of such company will be
eliminated from the portfolio as soon thereafter as possible taking into
consideration (i) any gain or loss which may be realized from such elimination,
(ii) the tax implications of such elimination, (iii) market timing, and the
like. In no event, however, will such security be retained longer than six (6)
months from the time the Fund learns of the investment disqualification. This
requirement may cause the Fund to dispose of the security at a time when it may
be disadvantageous to do so.
Generally
In order to maintain a share price of $1.00, the Fund must comply with
certain industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other requirements pertain to
6
<PAGE>
the maturity and credit quality of the securities in which the Fund may invest.
The Fund will only invest in securities which have, or are deemed to have, a
remaining maturity of 397 days or less. Also, the average maturity for all
securities contained in each individual portfolio of the Fund, on a
dollar-weighted basis, will be 90 days or less.
The Fund will only invest in either securities which have been rated
(or whose issuers have been rated) in the highest short-term rating category by
nationally recognized statistical rating organizations, or are unrated
securities but that have been determined by the Fund's Board of Directors to be
of comparable quality.
Subsequent to its purchase by the Fund, the quality of an investment
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. If this occurs, the Board of Directors of the Fund
shall reassess the security's credit risks and shall take such action as the
Board of Directors determines is in the best interest of the Fund and its
shareholders. Reassessment is not required, however, if the security is disposed
of or matures within five business days after the investment adviser and
sub-adviser becomes aware of the new rating and provided further that the Board
of Directors is subsequently notified of the investment adviser's and
sub-adviser's actions.
The Fund's investment adviser considers the following factors when
buying and selling securities for the Fund: (i) availability of cash, (ii)
redemption requests, (iii) yield management, (iv) credit management and (v)
social criteria.
Investments
The Fund intends to primarily invest in the following securities and
transactions:
Commercial Paper and Certain Debt Obligations: The Fund may purchase
commercial paper or similar debt obligations. Commercial paper is generally
considered to be short term unsecured debt of corporations.
Repurchase Agreements: The Fund may enter into repurchase agreements
provided that the instruments serving as collateral for the agreements are
eligible for inclusion in the Fund. A repurchase agreement arises when a buyer
purchases a security and simultaneously agrees with the vendor to resell the
security to the vendor at an agreed upon time and price.
Bank Obligations: The Fund may purchase certificates of deposit, time
deposits and bankers' acceptances issued by domestic banks, foreign branches of
domestic banks, foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks. 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 purchased 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. 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.
Risks
The Fund complies with industry-standard requirements on the quality,
maturity and diversification of its investments which are designed to help
maintain a $1.00 share price. A significant change in interest rates or a
default on the Fund's investments could cause its share price (and the value of
your investment) to change.
7
<PAGE>
Since the Fund may contain Eurodollar and other foreign obligations
issued by foreign governments, foreign and domestic banks and other foreign
issuers, the Fund may be subject to additional investment risks when compared
with those incurred by a fund which invests only in domestic issuers. 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
in most foreign securities markets are less than in the United States. The
issuers of some of these securities may be subject to less stringent or
different regulations 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 and requirements. Additional risks associated with
foreign investments may include adverse political and economic developments,
seizure or nationalization of foreign deposits and adoption of governmental
restrictions which may adversely affect the payment of principal and interest on
the foreign securities. Furthermore, some of these foreign securities may be
subject to stamp, withholding 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.
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 realizes 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.
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 Manager is in the process of working with the Fund's
service providers to prepare for the Year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur material costs
to be Year 2000 compliant. Although the Manager 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 an adverse impact on
the Fund. The Year 2000 problem may also adversely affect issuers of the
securities contained in the Portfolios, to varying degrees based upon various
factors, and thus may have a corresponding adverse affect on a Portfolio's
performance. The Manager is unable to predict what affect, if any, the Year 2000
problem will have on such issuers.
III. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
Management, Advisory and Sub-Advisory Agreements
- --------------------------------------------------------------------------------
The Fund's investment adviser is Pax World Management Corp. (the
"Advisor"), whose principal office is located at 222 State Street, Portsmouth,
New Hampshire 03801. The Advisor was incorporated in 1970 under the laws of the
State of Delaware and is a registered investment advisor under the Investment
Company Act of 1940 (the "1940 Act"). As of December 31, 1998, the Advisor had
over $863,000,000 in assets under management by virtue of serving as the Advisor
to the Fund, 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.
Pursuant to 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
8
<PAGE>
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.
Reich & Tang Asset Management L.P. will serve as the Sub-Advisor of the
Fund under a Sub-Advisory Agreement. 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 January 31, 1999, was investment manager, advisor or supervisor with
respect to assets aggregating approximately $13.0 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.
Pursuant to the terms of a Sub-Advisory Agreement between the Advisor
and the Sub-Advisor, the Sub-Advisor manages the Fund's portfolio of securities
and makes the decisions with respect to the purchase and sale of investments,
subject to the general control of the Board of Directors of the Fund and the
determination of the Advisor that the contemplated investments satisfy the
social responsibility criteria applied to the Fund. Under the Sub-Advisory
Agreement, the Advisor will pay the Sub-Advisor an annual management fee of
.075% of the Fund's average daily net assets from its advisory fee.
The management fees are accrued daily and paid monthly. The Advisor and
Sub-Advisor, at their discretion, may voluntarily waive all or a portion of
their respective management fees.
Pursuant to an Administrative Services Agreement, the Sub-Advisor
performs clerical, accounting supervision and office service functions for the
Fund. The Sub-Advisor 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 of the Fund under the Shareholder Servicing
Agreement with the Distributor. 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.
IV. SHAREHOLDER INFORMATION
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 the Fund's 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
9
<PAGE>
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.
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 balance falls below the minimum amount.
Pricing of Fund Shares
- --------------------------------------------------------------------------------
The net asset value of each Class of the Fund's shares is determined as
of 12:00 noon, New York City time, on each Fund Business Day. Fund Business Day
means weekdays (Monday through Friday) except days on which the New York Stock
Exchange is closed for trading. The net asset value of a Class is computed by
dividing the value of the Fund's net assets for such Class (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 total number of
shares outstanding for such Class. The Fund intends to maintain a stable net
asset value at $1.00 per share although there can be no assurance that this will
be achieved.
The Fund's portfolio securities are valued at their amortized cost in
compliance with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost
valuation involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium. 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.
Although the amortized cost method provides certainty in valuation, it may
result in periods during which the value of an instrument is higher or lower
than the price an investment company would receive if the instrument were sold.
Shares are 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. In order to maximize earnings on its portfolio, the Fund normally has its
assets as fully invested as is practicable. Many securities in which the Fund
invests require the immediate settlement in funds of Federal Reserve member
banks on deposit at a Federal Reserve Bank (commonly known as "Federal Funds").
The Fund does not accept a purchase order until an investor's payment has been
converted into Federal Funds and is received by the Fund's transfer agent.
Orders accompanied by Federal Funds and received after 12:00 noon, New York City
time, on a Fund Business Day will result in the issuance of shares on the
following Fund Business Day. Fund shares begin accruing income on the day the
shares are issued to an investor. The Fund reserves the right to reject any
purchase order for its shares. Certificates for Fund shares will not be issued
to an investor.
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 application 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 (including dividends paid
in cash or reinvested in additional shares of the Fund).
10
<PAGE>
Initial Purchase of Shares
Mail
Prospective shareholders may purchase Individual Investor Class shares
of the Fund by sending a check made payable to the Fund along with a completed
application form to the transfer agent for the Individual Investor Class at:
Pax World Fund Family
P.O. Box 8930
Wilmington, DE 19899-8930
Checks are accepted subject to collection at full value in United
States currency. Payment by a check drawn on any member bank of the Federal
Reserve System can normally be converted into Federal Funds within two business
days after receipt of the check. Checks drawn on a non-member bank may take
substantially longer to convert into Federal Funds and to be invested in Fund
shares. An investor's subscription will not be accepted until the Fund receives
Federal Funds.
Bank Wire
Shareholders may purchase Individual Investor Class shares of the Fund
(other than initial purchases) by wire transfer. To do so, investors must
telephone the transfer agent for the Individual Investor Class at 800-372-7827
(toll free) and then instruct a member commercial bank to wire money immediately
to:
PNC Bank, Philadelphia, PA
ABA #031-0000-53
For Pax World Money Market Fund, Inc.
Account # 85-5100-7715
Account #_____________________________
Account of (Investor's Name)__________________________
An investor planning to wire funds should instruct their bank so the
wire transfer can be accomplished before 12:00 noon, New York City time, on 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 application form to:
Pax World Fund Family
c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, DE 19809
Automatic Investment Plan
You may elect to establish telephone purchase privileges or an
Automatic Investment Plan 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 appears 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.
11
<PAGE>
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. The appropriate
form may be obtained from your broker or the Fund. You may elect at any time to
terminate your participation by notifying in writing the appropriate depositing
entity and/or federal agency. Death or legal incapacity will automatically
terminate your participation. Further, the Fund may terminate your participation
upon 30 days' notice to you.
Subsequent Purchases of Shares
Subsequent purchases can be made either by bank wire or by personal
delivery, as indicated above, or by mailing a check to:
Pax World Fund Family
P.O. Box 8930
Wilmington, DE 19899-8930
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 application form on file with the
Fund is still applicable, a shareholder may reopen an account without filing a
new application form at any time during the year the shareholder's account is
closed or during the following calendar year.
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. Shares redeemed are not entitled to participate in dividends
declared on the day a redemption becomes effective.
A shareholder's original subscription order form permits the
shareholder to redeem by written request and to elect one or more of the
additional redemption procedures described below. A shareholder may only change
the instructions indicated on his original subscription order form by
transmitting a written direction to the Fund's transfer agent. Requests to
institute or change any of the additional redemption procedures will require a
signature guaranteed letter. When a signature guarantee is called for, the
shareholder should have "Signature Guaranteed" stamped under his signature and
guaranteed by an eligible guarantor institution which includes a domestic bank,
a domestic savings and loan institution, a domestic credit union, a member bank
of the Federal Reserve System or a member firm of a national securities
exchange, pursuant to the Fund's transfer agent's standards and procedures.
Written Requests
Individual Investor Class shareholders may make a redemption in any
amount by sending a written request to:
Pax World Fund Family
P.O. Box 8930
Wilmington, DE 19899-8930
12
<PAGE>
All written requests for redemptions over $10,000 must be signed by the
shareholder with a signature guarantee unless the Shareholder Redemption Option
has been filed with the transfer agent. Normally, the redemption proceeds are
paid by check and are 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 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.
Checks
By making the appropriate election on the application 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 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 application form
or in a subsequent signature guaranteed written authorization. Redemptions
following an investment by check will not be effected until the check has
cleared, which could take up to 15 days after investment. The Fund may accept
telephone redemption instructions from any one shareholder listed in the
registration, or any pre-authorized representative. 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
13
<PAGE>
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 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 the transfer agent 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, the transfer agent 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. The
transfer agent may record all calls.
There is no redemption charge, no minimum period of investment and no
restriction on frequency of withdrawals. Proceeds of redemptions are paid by
check or bank wire. Unless other instructions are given in proper form to the
Fund's transfer agent, a check for the proceeds of a redemption will be sent to
the shareholder's address of record. If a shareholder elects to redeem all the
shares of the Fund he owns, all dividends credited to the shareholder up to the
date of redemption are paid to the shareholder in addition to the proceeds of
the redemption.
The date of payment upon redemption may not be postponed for more than
7 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.
The Fund has reserved the right to redeem the shares of any shareholder
if the net asset value of all the remaining shares in his account after a
withdrawal is less than $500. Written notice of any such mandatory redemption
will be given at least 30 days in advance to any shareholder whose account is to
be redeemed or the Fund may impose a monthly service charge of $10 on such
accounts. During the notice period any shareholder who receives such a notice
may (without regard to the normal $100 requirement for an additional investment)
make a purchase of additional shares to increase his total net asset value at
least to the minimum amount and thereby avoid such mandatory redemption.
Systematic Withdrawal Plan
- --------------------------------------------------------------------------------
Shareholders with a minimum of $10,000 invested in the Fund 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.
14
<PAGE>
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 application 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 or the Pax World Growth Fund. If only one class of shares is available in a
particular fund, the shareholder of the Fund is entitled to exchange his or her
shares for the shares available in that fund.
An exchange of shares in the Fund pursuant to the exchange privilege
is, in effect, a redemption of Fund shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a shareholder realizing a taxable gain or
loss for Federal income tax purposes.
There is no charge for the exchange privilege or limitation as to
frequency of exchanges. The minimum amount for an exchange is $50, except that
shareholders who are establishing a new account with an investment company
through the exchange privilege must insure that a sufficient number of shares
are exchanged to meet the minimum initial investment required for the investment
company into which the exchange is being made.
The exchange privilege provides Individual Investor Class shareholders
of the Fund with a convenient method to shift their investment among different
investment companies when they feel such a shift is desirable. The exchange
privilege is available to shareholders resident in any state in which shares of
the investment company being acquired may legally be sold. Shares may be
exchanged only between investment company accounts registered in identical
names. Before making an exchange, the investor should review the current
prospectus of the investment company into which the exchange is to be made.
Prospectuses may be obtained by contacting the Advisor 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
P.O. Box 8930
Wilmington, DE 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 1999, the phase out range is $31,000 to $41,000 for
single individuals and $51,000 to $61,000 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
15
<PAGE>
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.
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 $95,000 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.
Dividends and Distributions
- --------------------------------------------------------------------------------
Each dividend and capital gains distribution declared by the Fund on
its outstanding shares will, at the election of each shareholder, be paid either
in cash or in additional shares of the same Class having an aggregate net asset
value equal to the cash amount. The 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 the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, the amount and timing of any such dividend or distribution depends on the
realization by the Fund of income and capital gains from investments. Except as
described herein, the Fund's net investment income (including any net realized
short-term capital gains) will be declared as a dividend on each Fund Business
Day. The Fund declares dividends for Saturdays, Sundays and holidays on the
previous Fund Business Day. The Fund generally pays dividends monthly after the
close of business on the last calendar day of each month or after the close of
business on the previous Fund Business Day if the last calendar day of each
month is not a Fund Business Day. Capital gains distributions, if any, will be
made at least annually, and in no
16
<PAGE>
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.
Because the Individual Investor Class and Broker Service Class shares
bear the Shareholder Servicing Fee under the Plan, 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.
Tax Consequences
- --------------------------------------------------------------------------------
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 in which 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. 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 dividends-received deduction. Dividends
and distributions are treated in the same manner for federal income tax purposes
whether shareholders receive cash or additional shares.
The Fund is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions and
redemption proceeds) paid to shareholders who have not complied with Internal
Revenue Service 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.
Distributions of net capital gains, if any, designated by the Fund as
capital gain dividends are taxable to shareholders as long-term capital gains,
regardless of the length of time the Fund's shares have been held by the
shareholder. Foreign shareholders may be subject to special withholding
requirements. Foreign shareholders should consult their tax advisors about the
federal, state and local tax consequences in their particular circumstances.
V. DISTRIBUTION ARRANGEMENTS
Rule 12b-1 Fees
- --------------------------------------------------------------------------------
Investors do not pay a sales charge to purchase shares of the Fund.
However, the Fund pays fees in connection with the distribution of shares and
for services provided to the Institutional Class and Broker Service Class
shareholders. The Fund pays these fees from its assets on an ongoing basis and
therefore, over time, the payment of these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
The Fund's Board of Directors has adopted a Rule 12b-1 distribution and
service plan (the "Plan") and, pursuant to the Plan, the Fund and the
Distributor have entered into a Distribution Agreement and a Shareholder
Servicing Agreement.
Under the Distribution Agreement, the Distributor serves as distributor
of the Fund's shares and, for nominal consideration (i.e., $1.00) 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.
17
<PAGE>
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 shares and (ii) preparing, printing and delivering the
Fund's prospectus to existing shareholders of the Fund and preparing and
printing application forms for shareholder accounts. These payments are limited
to a maximum of .05% per annum of the Individual Investor Class Shares' average
daily net assets.
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.
18
<PAGE>
VI. FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the Fund's
financial performance of all classes of the Pax World Money Market Fund, Inc.
for the life of the Fund. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by McGladrey and Pullen, LLP, whose report, along with the Fund's
financial statements, is included in the annual report, which is available upon
request.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
May 27, 1998 January 13, 1999
(Commencement of Sales) to (Commencement of Sales) to
January 31, 1999 January 31, 1999
---------------------------- ---------------------------
INDIVIDUAL BROKER
INVESTOR INSTITUTIONAL SERVICE
CLASS CLASS CLASS
----- ----- -----
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C>
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from investment operations:
Net investment income.................... 0.032 0.034 0.002
Less distributions:
Dividends from net investment income..... ( 0.032) ( 0.034) ( 0.002)
-------- -------- --------
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return................................. 4.82%* 5.08%* 4.22%*
Ratios/Supplemental Data
Net assets, end of period (000).............. $ 5,495 $119,309 $ 70
Ratios to average net assets:
Expenses (net of fees waived)............ 0.60%* 0.35%* 0.80%*
Net investment income.................... 4.59%* 4.90%* 4.16%*
Advisory and administrative
services fees waived................... 0.25%* 0.25%* 0.25%*
</TABLE>
* Annualized
19
<PAGE>
Pax World Money Market - Individual Investor Class
Do not use this application to open an IRA or other retirement account. Please
call 1-800-767-1729 if you need a retirement application.
Please Mail to Pax World Fund Family, P.O. Box 8930, Wilmington, DE 19899-8930.
- --------------------------------------------------------------------------------
1. Type of Account (check one)
[ ] Individual [ ] JointTenants [ ] 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, Social Security Number Birthdate (mm dd yy)
Last Name (Required to open your account)
B__________________________________________-____-____________________/___/______
First Name, Middle Name, Social Security Number Birthdate (mm dd yy)
Last Name (Required to open your account)
JointTenants 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 Minor's Act.
____-____-______ ___/___/____
Minor's Social Security Number Birthdate (mm dd yy)
(Required to open your account)
- --------------------------------------------------------------------------------
D Name of Trustee_______________________________________________________________
Name of Second Trustee________________________________________________________
Name of Trust_________________________________________________________________
___________________________________________ _______________________________
Date of Trust (mm dd yy) (Required to open Taxpayer Identification Number
your account) (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 BUSINESS TYPE
(Required to open your account)
- --------------------------------------------------------------------------------
2. Your Mailing Address
_____________________________________________________________________________
Street address and Apartment or Box number
_____________________________________________________________________________
City State ZipCode
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 enlcosed a check (do not send cash) made payable to Pax World Money
Market Fund, Inc. $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.
<PAGE>
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
nane 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 Fund automatically. I
understand that I will receive a confirmation of each transaction and the
deduction from my bank account will appear on my bank statement.
Please invest $_________ (minimum $50) in Pax World Money Market Fund
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/Exchanges/Redemptions/Automatic Investments
Bank Name___________________________________________________________________
Name on Bank Account________________________________________________________
(Note: One common name must appear on both your Pax World Money Market Fund
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 Money market Fund, Inc. 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 whatsover. This
option, if exercised become a part of the account application and the terms,
representations and conditions thereof.
- --------------------------------------------------------------------------------
6. Your Signature
All registered owners or legal representatives must sign this section before the
Fund can open your account.
The undersigned warrant(s) that the undersigned has (have) full authority and is
(are) of legal age to purchase shares of Pax World Money market Fund and has
(have) received and read a current Prospectus of the Fund and agree(s) to its
terms. The Fund and its Transfer Agent will not be liable for acting upon
instructions or inquires believed to be genuine.
Taxpayer Identification Number Certification: As required by Federal law, I/we
certify under penalties of perjury that (1) the Social Security Number or
Taxpayer Identification Number listed above is correct, and (2) I/WE HAVE NOT
been notified by the IRS that I/we are subject to backup withholding. It is
understood that failure to supply correct numbers above may subject me/us to a
penalty of $50 for each failure.
Check this box if you ARE subject to 31% backup withholding. [ ]
[ ] I/we do not have a SSN or TIN, but have applied for one and will provide it
within 60 days. I/we understand that failure to do so will result in a 31%
backup withholding.
____________________________________________
Signature Date
____________________________________________
Signature Date
____________________________________________
Dealer No. (If applicable) Dealer Name
- --------------------------------------------------------------------------------
7. Checkwriting
After you have completed and returned this Checkwriting signature card, the Fund
will mail your checks, pre-printed with your name and address, to you.
Indicate number of required signatures_____________________
If left blank, only one signature will be required on all checks.
By signing below: I/we authorize PNC Bank to honor checks drawn by me/us on this
account. The minimum check amount is $250.
I/we accept the checkwriting terms and conditions on the reverse side.
1)________________________________________________________
Owner's or Custodian's Name (first, middle initial, last)
________________________________________________________
Signature Date of Birth (m, d, y)
2)________________________________________________________
Joint Owner's Name (first, middle initial, last)
________________________________________________________
Signature Date of Birth (m, d, y)
<PAGE>
- --------------------------------------------------------------------------------
The Checkwriting privilege allows you to withdraw money from your Pax World
Money Market account with ease and is available to individual, joint tenant and
gift to minor money market accounts.
Checkwriting privileges will be subject to the customary rules and regulations
governing checking accounts and may be terminated by the Fund or PNC Bank.
Neither the Fund nor PNC Bank shall incur liability for honoring such checks,
for effecting redemptions to pay for such checks, or for returning checks which
have not been accepted.
When a payable check is presented to the Custodian for payment, a sufficient
number of full and fractional shares from the shareholder's account to cover the
amount of the check will be redeemed at the net asset value next determined. If
there are insufficient shares in the shareholder's account, the check may be
returned. Checks presented for payment which would require the redemption of
shares purchased by check or by electronic funds transfer within the previous 10
business days may not be honored. Generally, there is no charge to you 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.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] 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
* A Custodial Account under account owner who is to be
the Uniform Gifts to Minors Account taxed.
* A Trust Supply the Taxpayer Identifica-
* A Corporation, Partnership, tion Number of the legal entity
Organization, Fiduciary, etc. or organization that will report
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 Money Market Fund account monthly or quarterly.
If you check any of the boxes in Section 5A, be sure to include your bank
account information in Section 5B.
6. YOUR SIGNATURE(S). Please be sure to sign this application. If the account
is registered in the name of:
* an individual - the individual must sign.
* joint tenants - both must sign.
* a custodian for a minor - the custodian must sign.
* a trustee or other fiduciary - the fiduciary(s) must sign and
indicate capacity.
* a corporation or other organization - an officer must sign and indicate
capacity.
ANY QUESTIONS? Call a Pax World Money Market Fund service representative at
1-800-767-1729 (toll free) for assistance.
Please return you completed application in the self-addressed envelope. If
envelope is missing, mail to:
PAX WORLD FUND FAMILY
P.O. BOX 8930
WILMINGTON, DE 19899-8930
<PAGE>
A Statement of Additional Information (SAI) dated June 1, 1999, and the Fund's
Annual and Semi-Annual Reports include additional information about the Fund and
its investments and are incorporated by reference into this prospectus. You may
obtain the SAI and the Annual and Semi-Annual Reports and other material
incorporated by reference without charge by calling the Fund at 1-800-767-1729.
To request other information, please call your financial intermediary or the
Fund.
======================================================
PAX WORLD MONEY MARKET
FUND, INC.
INDIVIDUAL INVESTOR CLASS
PROSPECTUS
& APPLICATION
JUNE 1, 1999
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020
(212) 830-5220
======================================================
A current SAI has been filed with the Securities and Exchange Commission. You
may visit the Securities and Exchange Commission's Internet website
(www.sec.gov) to view the SAI, material incorporated by reference and other
information. These materials can also be reviewed and copied at the Commission's
Public Reference Room in Washington D.C. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. In addition, copies of these materials may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, D.C.
20549-6009.
811-8591
PAXIN699P
<PAGE>
Prospectus Dated June 1, 1999
PAX WORLD MONEY MARKET FUND, INC.
INSTITUTIONAL CLASS
BROKER SERVICE CLASS
600 FIFTH AVENUE
NEW YORK, NY 10020
212-830-5220
A money market fund whose investment objective is to maximize current income to
the extent consistent with preservation of capital, maintenance of liquidity and
stability of principal. The Fund will seek to achieve this objective by
investing in short-term obligations of issuers that produce goods and services
that improve the quality of life and that are not to any degree engaged in
manufacturing defense or weapons-related products.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
Page
Risk/Return Summary: Investments, Risks,
and Performance.......................................................... 3
Fee Table................................................................ 5
Investment Objectives, Principal Investment
Strategies and Related Risks............................................. 6
Management, Organization and Capital Structure........................... 8
Shareholder Information.................................................. 10
Tax Consequences......................................................... 17
Distribution Arrangements................................................ 18
Financial Highlights..................................................... 19
2
<PAGE>
I. RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
Investment Objectives
- --------------------------------------------------------------------------------
The Fund seeks to maximize current income to the extent consistent with
preservation of capital, maintenance of liquidity and stability of principal.
There can be no assurance that the Fund will achieve its investment objectives.
Principal Investment Strategies
- --------------------------------------------------------------------------------
The Fund is committed to making a contribution to world peace through
investment in companies which produce goods and services that improve the
quality of life. Therefore, the Fund seeks to invest in industries such as
healthcare, education, housing, food, retail, pollution control and leisure time
and exclude investments in the military, liquor, tobacco or gambling industries.
The Fund intends to achieve its investment objective by investing
principally in short-term, high quality debt instruments including:
(i) high quality commercial paper;
(ii) repurchase agreements; and
(iii) bank certificates of deposit
The Fund is a money market fund and seeks to maintain an investment
portfolio with a dollar-weighted average maturity of 90 days or less, to value
its investment portfolio at amortized cost and to maintain a net asset value of
$1.00 per share.
Principal Risks
- --------------------------------------------------------------------------------
o Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the
Fund.
o The value of the Fund's shares and the securities held by the Fund can
each decline in value.
o An investment in the Fund is not a bank deposit and is not insured by
the FDIC or any other governmental agency.
o If a vendor defaults on its repurchase obligation pursuant to a
repurchase agreement, the Fund might lose money to the extent proceeds
from the sale of collateral are less than the repurchase
3
<PAGE>
price. If the vendor files for bankruptcy, the Fund may be delayed or
incur costs in selling the collateral.
o The Fund's policy to invest in issuers that produce goods and services
that improve the quality of life and to sell any investments which are
found to violate this policy may result in (i) the Fund foregoing
certain higher yielding investments or (ii) the Fund having to sell an
investment at a time when it is disadvantageous to do so.
Risk/Return Bar Chart and Table
- --------------------------------------------------------------------------------
As of December 31, 1998, the total return for the Fund's Institutional
Class of shares since commencement of operation (May 27, 1998) was 3.05%. The
Fund's past performance is not an indicator of how the Fund will perform in the
future. A Bar Chart and Table, showing the annual total returns for the Fund,
will be available once the Fund has been in operation for a full calendar year.
The Fund's current 7-day yield may be obtained by calling the Fund
toll-free at [800-221-3079.]
4
<PAGE>
FEE TABLE
This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C> <C>
INSTITUTIONAL CLASS BROKER SERVICE CLASS
Management Fees...................................... .15% .15%
Distribution and Service (12b-1) Fees................. .00% .25%
Other Expenses........................................ .45% .65%
Administration Fees...................... .10% .10%
--- ---
Total Annual Fund Operating Expenses.................. .60% 1.05%
==== =====
</TABLE>
------------------------
The Manager has voluntarily waived the entire Management Fee and
Administration Fee with respect to the Institutional Class, Broker
Service Class and Individual Investor Class shares. After such waivers,
the Management Fee, with respect to the Institutional Class, Broker
Service Class and Individual Investor Class was 0.00%. The Administration
Fee, with respect to the Institutional Class, Broker Service Class and
Individual Investor Class was 0.00%. The actual Total Annual Fund
Operating Expenses for the Institutional Class was 0.35%, for the Broker
Service Class 0.80% and for the Individual Investor Class 0.60%. This fee
waiver arrangement may be terminated at any time at the option of the
Advisor.
Example
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
Assume that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. Also assume that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Broker Service Class: $107 $334 $579 $1,283
Institutional Class: $ 61 $192 $335 $ 750
5
<PAGE>
II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STATEGIES AND RELATED RISKS
Investment Objectives
- --------------------------------------------------------------------------------
The Fund is a money market fund whose investment objectives are to seek
maximum current income to the extent consistent with the preservation of
capital, maintenance of liquidity and stability of principal. There is no
assurance that the Fund will achieve its investment objectives.
The Fund's investment objectives may not be changed without the
approval of the holders of a majority of the Fund's outstanding voting
securities that wold be affected by such a change.
Principal Investment Strategies and Related Risks
- --------------------------------------------------------------------------------
Social Criteria of Fund
The Fund endeavors, consistent with its investment objective, to make a
contribution to world peace through investment in companies that produce goods
and services that improve the quality of life. 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, retail,
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.
In order to properly supervise a securities portfolio containing the
limitations described above, care must be exercised to continuously monitor
developments of the issuers whose securities are included in the Fund.
Developments and trends in the economy and financial markets are also
considered, and the screening of many securities is required to implement the
investment philosophy of the Fund. The Advisor, Pax World Management Corp., is
responsible for such supervision and screening of the securities included in the
Fund.
If it is determined after the initial purchase by the Fund that the
company's activities fall within the exclusion described above (either by
acquisition, merger or otherwise), the securities of such company will be
eliminated from the portfolio as soon thereafter as possible taking into
consideration (i) any gain or loss which may be realized from such elimination,
(ii) the tax implications of such elimination, (iii) market timing, and the
like. In no event, however, will such security be retained longer than six (6)
months from the time the Fund learns of the investment disqualification. This
requirement may cause the Fund to dispose of the security at a time when it may
be disadvantageous to do so.
6
<PAGE>
Generally
In order to maintain a share price of $1.00, the Fund must comply with
certain industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other requirements pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in each individual portfolio of the Fund, on a dollar-weighted basis,
will be 90 days or less.
The Fund will only invest in either securities which have been rated
(or whose issuers have been rated) in the highest short-term rating category by
nationally recognized statistical rating organizations, or are unrated
securities but that have been determined by the Fund's Board of Directors to be
of comparable quality.
Subsequent to its purchase by the Fund, the quality of an investment
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. If this occurs, the Board of Directors of the Fund
shall reassess the security's credit risks and shall take such action as the
Board of Directors determines is in the best interest of the Fund and its
shareholders. Reassessment is not required, however, if the security is disposed
of or matures within five business days after the investment adviser and
sub-adviser become aware of the new rating and provided further that the Board
of Directors is subsequently notified of the investment adviser's and
sub-adviser's actions.
The Fund's investment adviser and sub-adviser consider the following
factors when buying and selling securities for the Fund: (i) availability of
cash, (ii) redemption requests, (iii) yield management, and (iv) social
criteria.
Investments
The Fund intends to primarily invest in the following securities and
transactions:
Commercial Paper and Certain Debt Obligations: The Fund may purchase
commercial paper or similar debt obligations. Commercial paper is generally
considered to be short term unsecured debt of corporations.
Repurchase Agreements: The Fund may enter into repurchase agreements
provided that the instruments serving as collateral for the agreements are
eligible for inclusion in the Fund. A repurchase agreement arises when a buyer
purchases a security and simultaneously agrees with the vendor to resell the
security to the vendor at an agreed upon time and price.
Bank Obligations: The Fund may purchase certificates of deposit, time
deposits and bankers' acceptances issued by domestic banks, foreign branches of
domestic banks, foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks. 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 purchased 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. 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.
7
<PAGE>
Risks
The Fund complies with industry-standard requirements on the quality,
maturity and diversification of its investments which are designed to help
maintain a $1.00 share price. A significant change in interest rates or a
default on the Fund's investments could cause its share price (and the value of
your investment) to change.
Since the Fund may contain Eurodollar and other foreign obligations
issued by foreign governments, foreign and domestic banks and other foreign
issuers, the Fund may be subject to additional investment risks when compared
with those incurred by a fund which invests only in domestic issuers. 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
in most foreign securities markets are less than in the United States. The
issuers of some of these securities may be subject to less stringent or
different regulations 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 and requirements. Additional risks associated with
foreign investments may include adverse political and economic developments,
seizure or nationalization of foreign deposits and adoption of governmental
restrictions which may adversely affect the payment of principal and interest on
the foreign securities. Furthermore, some of these foreign securities may be
subject to stamp, withholding 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.
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 realizes 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.
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 Manager is in the process of working with the Fund's
service providers to prepare for the Year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur material costs
to be Year 2000 compliant. Although the Manager 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 an adverse impact on
the Fund. The Year 2000 problem may also adversely affect issuers of the
securities contained in the Portfolios, to varying degrees based upon various
factors, and thus may have a corresponding adverse affect on a Portfolio's
performance. The Manager is unable to predict what affect, if any, the Year 2000
problem will have on such issuers.
III. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
Management, Advisory and Sub-Advisory Agreements
- --------------------------------------------------------------------------------
The Fund's investment adviser is Pax World Management Corp. (the
"Advisor"), whose principal office is located at 222 State Street, Portsmouth,
New Hampshire 03801. The Advisor was incorporated in 1970 under the laws of the
State of Delaware and is a registered investment advisor under the 1940 Act. As
of December
8
<PAGE>
31, 1998, the Advisor had over $863,000,000 in assets under management by virtue
of serving as the Advisor to the Fund, the Pax World Fund, Inc. and the Pax
World Growth Fund, Inc. The Advisor has no clients other than the Fund, the Pax
World Fund, Inc. and the Pax World Growth Fund, Inc..
Pursuant to 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.
Reich & Tang Asset Management L.P. will serve as the Sub-Advisor of the
Fund under a Sub-Advisory Agreement. 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 January 31, 1999, was investment manager, advisor or supervisor with
respect to assets aggregating approximately $13.0 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.
Pursuant to the terms of a Sub-Advisory Agreement between the Advisor
and the Sub-Advisor, the Sub-Advisor manages the Fund's portfolio of securities
and makes the decisions with respect to the purchase and sale of investments,
subject to the general control of the Board of Directors of the Fund and the
determination of the Advisor that the contemplated investments satisfy the
social responsibility criteria applied to the Fund. Under the Sub-Advisory
Agreement, the Advisor will pay the Sub-Advisor an annual management fee of
.075% of the Fund's average daily net assets from its advisory fee.
The management fees are accrued daily and paid monthly. The Advisor and
Sub-Advisor, at their discretion, may voluntarily waive all or a portion of
their respective management fees.
Pursuant to an Administrative Services Agreement, the Sub-Advisor
performs clerical, accounting supervision and office service functions for the
Fund. The Sub-Advisor 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 Fund's Distributor,
receives a servicing fee equal to .25% per annum of the average daily net assets
of the Broker Service Class shares of the Fund under the Shareholder Servicing
Agreement with the Distributor. 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.
9
<PAGE>
IV. SHAREHOLDER INFORMATION
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 the Fund's Institutional Class or Broker
Service Class shares are effected through the Fund's Institutional Class
transfer agent or Clearing Brokers, respectively, which accept orders for
purchases and redemptions from the Distributor and from shareholders directly.
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 balance falls below the minimum amount.
Pricing of Fund Shares
- --------------------------------------------------------------------------------
The net asset value of each Class of the Fund's shares is determined as
of 12:00 noon, New York City time, on each Fund Business Day. Fund Business Day
means weekdays (Monday through Friday) except days on which the New York Stock
Exchange is closed for trading. The net asset value of a Class is computed by
dividing the value of the Fund's net assets for such Class (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 total number of
shares outstanding for such Class. The Fund intends to maintain a stable net
asset value at $1.00 per share although there can be no assurance that this will
be achieved.
The Fund's portfolio securities are valued at their amortized cost in
compliance with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost
valuation involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium. 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.
Although the amortized cost method provides certainty in valuation, it may
result in periods during which the value of an instrument is higher or lower
than the price an investment company would receive if the instrument were sold.
Shares are issued as of the first determination of the Fund's net asset
value per share for each Class made after acceptance of the investor's or
Clearing Broker's purchase order. In order to maximize earnings on its
portfolio, the Fund normally has its assets as fully invested as is practicable.
Many securities in which the Fund invests require the immediate settlement in
funds of Federal Reserve member banks on deposit at a Federal Reserve Bank
(commonly known as "Federal Funds"). The Fund does not accept a purchase order
until an investor's payment has been converted into Federal Funds and is
received by the Fund's transfer agent. Orders accompanied by Federal Funds and
received after 12:00 noon, New York City time, on a Fund Business Day will
result in the issuance of shares on the following Fund Business Day. Fund shares
begin accruing income on the day the shares are issued to an investor. The Fund
reserves the right to reject any purchase order for its shares. Certificates for
Fund shares will not be issued to an investor.
Purchase of Fund Shares
- --------------------------------------------------------------------------------
Investors may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. Certain Participating
Organizations are compensated by the Distributor from its Shareholder Servicing
Fee and by the Sub-Advisor from its management fee for the performance of these
services. An investor who purchases shares through a Participating Organization
that receives payment from the Sub-Advisor or the Distributor will become an
Individual Investor Class or Broker Service Class shareholder. All other
investors, and investors who have accounts with Participating Organizations but
who do not wish to invest in the Fund through their Participating Organizations,
may invest in the Fund directly as Institutional Class shareholders of the Fund
and not receive the benefit of the servicing functions performed by a
Participating Organization.
10
<PAGE>
Institutional Class shares may also be offered to investors who purchase their
shares through Participating Organizations who do not receive compensation from
the Distributor or the Sub-Advisor because they may not be legally permitted to
receive such as fiduciaries. The Sub-Advisor pays the expenses incurred in the
distribution of Institutional Class shares. Participating Organizations whose
clients become Institutional Class shareholders will not receive compensation
from the Sub-Advisor or Distributor for the servicing they may provide to their
clients. With respect to the Institutional Class of shares, the minimum initial
investment in the Fund is $100,000.
Broker Service Class shares will only be offered to the clearance
clients of clearing broker-dealers that have entered into an agreement with the
Distributor ("Clearing Brokers"). Broker Service Class shares are subject to a
service fee pursuant to the Fund's Rule 12b-1 Distribution and Service Plan. The
Clearing Brokers provide shareholder servicing to Broker Service Class
shareholders and are compensated for such by the Sub-Advisor and/or the
Distributor. With respect to the Broker Service Class of shares, the minimum
initial investment in the Fund is $1,000. The minimum amount for subsequent
investments is $100 for all shareholders.
Investments Through Participating Organizations
- --------------------------------------------------------------------------------
Investors who have accounts with Participating Organizations
("Participant Investors") may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. "Participating
Organizations" are securities brokers, banks and financial institutions or other
industry professionals or organizations which have entered into shareholder
servicing agreements with the Distributor with respect to investment of their
customer accounts in the Fund. When instructed by its customer to purchase or
redeem Fund shares, the Participating Organization, on behalf of the customer,
transmits to the Fund's transfer agent a purchase or redemption order, and in
the case of a purchase order, payment for the shares being purchased.
Participating Organizations may confirm to their customers who are
shareholders in the Fund each purchase and redemption of Fund shares for the
customers' accounts. Also, Participating Organizations may send their customers
periodic account statements showing the total number of Fund shares owned by
each customer as of the statement closing date, purchases and redemptions of
Fund shares by each customer during the period covered by the statement and the
income earned by Fund shares of each customer during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Participant Investors whose Participating Organizations have not undertaken to
provide such statements will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in
connection with their use of specialized purchase and redemption procedures
offered to Participant Investors by the Participating Organizations. In
addition, Participating Organizations offering purchase and redemption
procedures similar to those offered to shareholders who invest in the Fund
directly may impose charges, limitations, minimums and restrictions in addition
to or different from those applicable to shareholders who invest in the Fund
directly. Accordingly, the net yield to investors who invest through
Participating Organizations may be less than by investing in the Fund directly.
A Participant Investor should read this Prospectus in conjunction with the
materials provided by the Participating Organization describing the procedures
under which Fund shares may be purchased and redeemed through the Participating
Organization.
In the case of qualified Participating Organizations, orders received
by the Fund's transfer agent before 12:00 noon, New York City time, on a Fund
Business Day, without accompanying Federal Funds will result in the issuance of
shares on that day provided that the Federal Funds required in connection with
the orders are received by the Fund's transfer agent before 4:00 p.m., New York
City time, on that day. Orders for which Federal Funds are received after 4:00
p.m., New York City time, will not result in share issuance until the following
Fund Business Day. Participating Organizations are responsible for instituting
procedures to insure that purchase orders by their respective clients are
processed expeditiously.
11
<PAGE>
Investments Through Clearing Brokers
- --------------------------------------------------------------------------------
Persons who maintain accounts with Clearing Brokers may, if they wish,
invest in the Fund through such Clearing Brokers. When instructed by its
customer to purchase or redeem Fund shares, the Clearing Brokers, on behalf of
the customer, transmits to the Fund's transfer agent a purchase or redemption
order, and in the case of a purchase order, payment for the shares being
purchased.
Clearing Brokers may confirm to their customers who are shareholders in
the Fund ("Broker Service Class Shareholders") each purchase and redemption of
Fund shares for the customers' accounts. Also, Clearing Brokers may send their
customers periodic account statements showing the total number of Fund shares
owned by each customer as of the statement closing date, purchases and
redemptions of Fund shares by each customer during the period covered by the
statement and the income earned by Fund shares of each customer during the
statement period (including dividends paid in cash or reinvested in additional
Fund shares).
Clearing Brokers may charge Broker Service Class Shareholders a fee in
connection with their use of specialized purchase and redemption procedures
offered to them by Clearing Brokers. In addition, Clearing Brokers offering
purchase and redemption procedures similar to those offered to shareholders who
invest in the Fund directly may impose charges, limitations, minimums and
restrictions in addition to or different from those applicable to shareholders
who invest in the Fund directly. Accordingly, the net yield to investors who
invest through Clearing Brokers may be less than by investing in the Fund
directly. A Broker Service Class Shareholder should read this Prospectus in
conjunction with the materials provided by the Clearing Brokers describing the
procedures under which Fund shares may be purchased and redeemed through the
Clearing Brokers.
In the case of Clearing Brokers, orders received by the Fund's transfer
agent before 12:00 noon, New York City time, on a Fund Business Day, without
accompanying Federal Funds will result in the issuance of shares on that day
provided that the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will not result in share issuance until the following Fund Business
Day. Clearing Brokers are responsible for instituting procedures to insure that
purchase orders by their respective clients are processed expeditiously.
Direct Purchase and Redemption Procedures
- --------------------------------------------------------------------------------
The following purchase and redemption procedures apply to investors who
wish to invest in the Fund directly. These investors may obtain the subscription
order form necessary to open an account by telephoning the Fund at either
212-830-5220 (within New York State) or at 800-241-3263 (toll free outside New
York State).
All shareholders will receive from the Fund a monthly statement listing
the total number of shares of the Fund owned as of the statement closing date,
purchases and redemptions of shares of the Fund during the month covered by the
statement and the dividends paid on shares of the Fund (including dividends paid
in cash or reinvested in additional shares of the Fund).
Initial Purchase of Shares
Mail
Investors may send a check made payable to the Fund along with a
completed subscription order form to:
Pax World Money Market Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Checks are accepted subject to collection at full value in United
States currency. Payment by a check drawn on any member bank of the Federal
Reserve System can normally be converted into Federal Funds within two business
days after receipt of the check. Checks drawn on a non-member bank may take
substantially longer to convert into Federal Funds and to be invested in Fund
shares. An investor's subscription will not be accepted until the Fund receives
Federal Funds.
12
<PAGE>
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of
money among banks, an investor should first obtain a new account number by
telephoning the Fund at either 212-830-5220 (within New York State) or at
800-241-3263 (outside New York State) and then instruct a member commercial bank
to wire money immediately to:
Investors Fiduciary Trust Company
ABA #101003621
Reich & Tang Funds
DDA #890752-954-6
For Pax World Money Market Fund, Inc.
Account of (Investor's Name)
Account #
SS #/Tax I.D.#_____________________
The investor should then promptly complete and mail the subscription
order form.
An investor planning to wire funds should instruct their bank so the
wire transfer can be accomplished before 12:00 noon, New York City time, on 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 Money Market Fund, Inc.
c/o Reich & Tang Mutual Funds
600 Fifth Avenue - 8th Floor
New York, New York 10020
Electronic Funds Transfers (EFT), Pre-authorized Credit and Direct Deposit
Privilege
You may purchase shares of the Fund (minimum of $100) by having salary,
dividend payments, interest payments or any other payments designated by you, or
by having federal salary, social security, or certain veteran's military or
other payments from the federal government, automatically deposited into your
Fund account. You can also have money debited from your checking account. To
enroll in any one of these programs, you must file with the Fund a completed EFT
Application, Pre-authorized Credit Application, or a Direct Deposit Sign-Up Form
for each type of payment that you desire to include in the Privilege. The
appropriate form may be obtained from your broker or the Fund. You may elect at
any time to terminate your participation by notifying in writing the appropriate
depositing entity and/or federal agency. Death or legal incapacity will
automatically terminate your participation in the Privilege. Further, the Fund
may terminate your participation upon 30 days' notice to you.
Subsequent Purchases of Shares
Subsequent purchases can be made either by bank wire or by personal
delivery, as indicated above, or by mailing a check to:
Pax World Money Market Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
13
<PAGE>
There is a $100 minimum for each subsequent purchase. All payments
should clearly indicate the shareholder's account number.
Provided that the information on the subscription order form on file
with the Fund is still applicable, a shareholder may reopen an account without
filing a new subscription order form at any time during the year the
shareholder's account is closed or during the following calendar year.
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. Shares redeemed are not entitled to participate in dividends
declared on the day a redemption becomes effective.
A shareholder's original subscription order form permits the
shareholder to redeem by written request and to elect one or more of the
additional redemption procedures described below. A shareholder may only change
the instructions indicated on his original subscription order form by
transmitting a written direction to the Fund's transfer agent. Requests to
institute or change any of the additional redemption procedures will require a
signature guaranteed letter. When a signature guarantee is called for, the
shareholder should have "Signature Guaranteed" stamped under his signature and
guaranteed by an eligible guarantor institution which includes a domestic bank,
a domestic savings and loan institution, a domestic credit union, a member bank
of the Federal Reserve System or a member firm of a national securities
exchange, pursuant to the Fund's transfer agent's standards and procedures.
Written Requests
Shareholders may make a redemption in any amount by sending a written
request to:
Pax World Money Market Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
All written requests for redemption must be signed by the shareholder
with a signature guarantee. Normally, the redemption proceeds are paid by check
and are mailed to the shareholder of record.
Checks
By making the appropriate election on the subscription order form, a
Broker Service Class Shareholder may request a supply of checks which may be
used to effect redemptions from any one or more of the Classes of shares of the
Fund in which the shareholder is invested. The checks will be issued in the
shareholder's name and the shareholder 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 determined by the Clearing Broker for Broker Service
Class Shareholders, and may be used like an ordinary commercial bank check
except that they may not be certified. The checks are drawn on a special account
maintained by the Fund with the agent bank. When a check is presented to the
Fund's agent bank, it instructs the transfer agent to redeem a sufficient number
of full and fractional shares in the shareholder's account to cover the amount
of the check. The canceled check is usually returned to the shareholder. The use
of a check to make a withdrawal enables the Broker Service Class 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 Broker Service Class Shareholder for checks
provided by the Fund. The Fund reserves the right to impose a charge or impose a
different minimum check amount in the future, if the Board of Directors
determines that doing so is in the best interests of the Fund and its
shareholders.
14
<PAGE>
Broker Service Class 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 Broker Service Class Shareholders.
Telephone
The Fund accepts telephone requests for redemption from Institutional
Class Shareholders who elect this option. The proceeds of a telephone redemption
will be sent to the 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. Redemptions following an investment by check
will not be effected until the check has cleared, which could take up to 15 days
after investment. The Fund may accept telephone redemption instructions from any
person with respect to accounts of shareholders who elect this service, and thus
shareholders risk possible loss of dividends in the event of a telephone
redemption not authorized by them. Telephone requests to wire redemption
proceeds must be for amounts in excess of $1,000. The Fund will employ
reasonable procedures to confirm that telephone redemption instructions are
genuine, and will require that Institutional 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 unauthorized or fraudulent instructions. The
telephone redemption option may be modified or discontinued at any time upon 60
days written notice to shareholders.
A shareholder of Institutional Class shares making a telephone
withdrawal should call the Fund at 212-830-5220; outside New York State at
800-241-3263 and state (i) the name of the shareholder appearing on the Fund's
records, (ii) his or her account number with the Fund, (iii) the amount to be
withdrawn and (iv) the name of the person requesting the redemption. Usually,
the proceeds are sent to the investor on the same Fund Business Day the
redemption is effected, provided the redemption request is received prior to
12:00 noon, New York City time and on the next Fund Business Day if the
redemption request is received after 12:00 noon, New York City time.
There is no redemption charge, no minimum period of investment and no
restriction on frequency of withdrawals. Proceeds of redemptions are paid by
check or bank wire. Unless other instructions are given in proper form to the
Fund's transfer agent, a check for the proceeds of a redemption will be sent to
the shareholder's address of record. If a shareholder elects to redeem all the
shares of the Fund he owns, all dividends credited to the shareholder up to the
date of redemption are paid to the shareholder in addition to the proceeds of
the redemption.
The date of payment upon redemption may not be postponed for more than
7 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.
The Fund has reserved the right to redeem the shares of any shareholder
if the net asset value of all the remaining shares in his account after a
withdrawal is less than $500. Written notice of any such mandatory redemption
will be given at least 30 days in advance to any shareholder whose account is to
be redeemed or the Fund may impose a monthly service charge of $10 on such
accounts. During the notice period any shareholder who receives such a notice
may (without regard to the normal $100 requirement for an additional investment)
make a purchase of additional shares to increase his total net asset value at
least to the minimum amount and thereby avoid such mandatory redemption.
15
<PAGE>
Systematic Withdrawal Plan
- --------------------------------------------------------------------------------
Shareholders may elect to withdraw shares and receive payment from the
Fund of a specified amount of $50 or more automatically on a monthly or
quarterly basis. The monthly or quarterly withdrawal payments of the specified
amount are made by the Fund on the 23rd day of the month. Whenever such 23rd day
of the month is not a Fund Business Day, the payment date is the Fund Business
Day preceding the 23rd day of the month. In order to make a payment, a number of
shares equal in aggregate net asset value to the payment amount are redeemed at
their net asset value on the Fund Business Day immediately preceding the date of
payment. To the extent that the redemptions to make plan payments exceed the
number of shares purchased through reinvestment of dividends and distributions,
the redemptions reduce the number of shares purchased on original investment,
and may ultimately liquidate a shareholder's investment.
The election to receive automatic withdrawal payments may be made at
the time of the original subscription by so indicating on the subscription order
form for Institutional Class Shareholders or by so indicating on the appropriate
form from their Clearing Broker for Broker Service Class Shareholders. The
election may also be made, changed or terminated at any later time by sending a
signature guaranteed written request to the transfer agent.
Exchange Privilege
- --------------------------------------------------------------------------------
Shareholders of the Fund are entitled to exchange some or all of their
shares in the Fund for shares of the Pax World Fund, Incorporated or the Pax
World Growth Fund, Inc., as well as certain other investment companies which
retain Pax World Management Corp. as its investment advisor or sub-advisor and
which participate in the exchange privilege program with the Fund. If only one
class of shares is available in a particular fund, the shareholder of the Fund
is entitled to exchange his or her shares for the shares available in that fund.
An exchange of shares in the Fund pursuant to the exchange privilege
is, in effect, a redemption of Fund shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a shareholder realizing a taxable gain or
loss for Federal income tax purposes.
There is no charge for the exchange privilege or limitation as to
frequency of exchanges. The minimum amount for an exchange is $1,000, except
that shareholders who are establishing a new account with an investment company
through the exchange privilege must insure that a sufficient number of shares
are exchanged to meet the minimum initial investment required for the investment
company into which the exchange is being made.
The exchange privilege provides shareholders of the Fund with a
convenient method to shift their investment among different investment companies
when they feel such a shift is desirable. The exchange privilege is available to
shareholders resident in any state in which shares of the investment company
being acquired may legally be sold. Shares may be exchanged only between
investment company accounts registered in identical names. Before making an
exchange, the investor should review the current prospectus of the investment
company into which the exchange is to be made. Prospectuses may be obtained by
contacting the Distributor at the address or telephone number set forth on the
cover page of this Prospectus.
Instructions for exchanges may be made by sending a signature
guaranteed written request to:
Pax World Fund Family
c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
or, for shareholders who have elected that option, by telephone. The
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.
16
<PAGE>
Dividends and Distributions
- --------------------------------------------------------------------------------
Each dividend and capital gains distribution declared by the Fund on
its outstanding shares will, at the election of each shareholder, be paid either
in cash or in additional shares of the same Class having an aggregate net asset
value equal to the cash amount. The 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 the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, the amount and timing of any such dividend or distribution depends on the
realization by the Fund of income and capital gains from investments. Except as
described herein, the Fund's net investment income (including any net realized
short-term capital gains) will be declared as a dividend on each Fund Business
Day. The Fund declares dividends for Saturdays, Sundays and holidays on the
previous Fund Business Day. The Fund generally pays dividends monthly after the
close of business on the last calendar day of each month or after the close of
business on the previous Fund Business Day if the last calendar day of each
month is not a Fund Business Day. Capital gains distributions, if any, will be
made at least annually, and in no event later than 60 days after the end of the
Fund's fiscal year. There is no fixed dividend rate, and there can be no
assurance that the Fund will pay any dividends or realize any capital gains.
Because the Individual Investor Class and Broker Service Class shares
bear the Shareholder Servicing Fee under the Plan, 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.
Tax Consequences
- --------------------------------------------------------------------------------
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 in which 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. 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 dividends-received deduction. Dividends
and distributions are treated in the same manner for federal income tax purposes
whether shareholders receive cash or additional shares.
The Fund is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions and
redemption proceeds) paid to shareholders who have not complied with Internal
Revenue Service 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.
Distributions of net capital gains, if any, designated by the Fund as
capital gain dividends are taxable to shareholders as long-term capital gains,
regardless of the length of time the Fund's shares have been held by the
shareholder. Foreign shareholders may be subject to special withholding
requirements. Foreign shareholders should consult their tax advisors about the
federal, state and local tax consequences in their particular circumstances.
17
<PAGE>
V. DISTRIBUTION ARRANGEMENTS
Rule 12b-1 Fees
- --------------------------------------------------------------------------------
Investors do not pay a sales charge to purchase shares of the Fund.
However, the Fund pays fees in connection with the distribution of shares and
for services provided to the Institutional Class and Broker Service Class
shareholders. The Fund pays these fees from its assets on an ongoing basis and
therefore, over time, the payment of these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
The Fund's Board of Directors has adopted a Rule 12b-1 distribution and
service plan (the "Plan") and, pursuant to the Plan, the Fund and the
Distributor have entered into a Distribution Agreement and a Shareholder
Servicing Agreement.
Under the Distribution Agreement, the Distributor serves as distributor
of the Fund's shares and, for nominal consideration( i.e., $1.00) 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 Broker Service Class shares, a service fee equal to .25% per
annum of the Broker Service Class shares' average daily net assets (the
"Shareholder Servicing Fee") for providing personal shareholder services and for
the maintenance of shareholder accounts. The fee is accrued daily and paid
monthly. Any portion of the fee may be deemed to be used by the Distributor for
payments to Clearing Brokers with respect to their provision of such services to
their clients or customers who are shareholders of the Broker Service Class
shares of the Fund.
The Plan and the Shareholder Servicing Agreement for the Broker Service
Class provide that, in addition to the Shareholder Servicing Fee, the Fund will
pay for (i) telecommunications expenses including the cost of dedicated lines
and CRT terminals, incurred by the Distributor or Clearing Broker in carrying
out its obligations under the Shareholder Servicing Agreement with respect to
Broker Service Class shares and (ii) preparing, printing and delivering the
Fund's prospectus to existing shareholders of the Fund and preparing and
printing application forms for shareholder accounts. These payments are limited
to a maximum of .05% per annum of the Broker Service Class Shares' average daily
net assets.
The Plan provides that the Advisor and Sub-Advisor may make payments
from time to time from their own resources, which may include the advisory fee,
the management fee and past profits for the following purposes: (i) to defray
the costs of, and to compensate others, including Participating Organizations
and Clearing Brokers with whom the Distributor has entered into written
agreements, for performing shareholder servicing and related administrative
functions on behalf of the Fund; (ii) to defray the cost of, and to compensate
certain others, including Participating Organizations and Clearing Brokers for
providing assistance in distributing the Broker Service Class shares; and (iii)
to pay the costs of printing and distributing the Fund's prospectus to
prospective investors, and to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection 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.
18
<PAGE>
VI. FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the Fund's
financial performance of all classes of the Pax World Money Market Fund, Inc.
for the life of the Fund. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by McGladrey and Pullen, LLP, whose report, along with the Fund's
financial statements, is included in the annual report, which is available upon
request.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
May 27, 1998 January 13, 1999
(Commencement of Sales) to (Commencement of Sales) to
January 31, 1999 January 31, 1999
---------------------------- ---------------------------
INDIVIDUAL BROKER
INVESTOR INSTITUTIONAL SERVICE
CLASS CLASS CLASS
----- ----- -----
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C>
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from investment operations:
Net investment income.................... 0.032 0.034 0.002
Less distributions:
Dividends from net investment income..... ( 0.032) ( 0.034) ( 0.002)
-------- -------- --------
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return................................. 4.82%* 5.08%* 4.22%*
Ratios/Supplemental Data
Net assets, end of period (000).............. $ 5,495 $119,309 $ 70
Ratios to average net assets:
Expenses (net of fees waived)............ 0.60%* 0.35%* 0.80%*
Net investment income.................... 4.59%* 4.90%* 4.16%*
Advisory and administrative
services fees waived................... 0.25%* 0.25%* 0.25%*
</TABLE>
* Annualized
19
<PAGE>
A Statement of Additional Information (SAI) dated June 1, 1999, and the Fund's
Annual and Semi-Annual Reports include additional information about the Fund and
its investments and are incorporated by reference into this prospectus. You may
obtain the SAI and the Annual and Semi-Annual Reports and other material
incorporated by reference without charge by calling the Fund at 1-800-767-1729.
To request other information, please call your financial intermediary or the
Fund.
======================================================
PAX WORLD MONEY MARKET
FUND, INC.
INSTITUTIONAL CLASS
BROKER SERVICE CLASS
PROSPECTUS
JUNE 1, 1999
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020
(212) 830-5220
======================================================
A current SAI has been filed with the Securities and Exchange Commission. You
may visit the Securities and Exchange Commission's Internet website
(www.sec.gov) to view the SAI, material incorporated by reference and other
information. These materials can also be reviewed and copied at the Commission's
Public Reference Room in Washington D.C. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. In addition, copies of these materials may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, D.C.
20549-6009.
811-8591
PAXI&B699P
<PAGE>
PAX WORLD MONEY 600 Fifth Avenue, New York, NY 10020
MARKET FUND, INC. (212) 830-5200
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
June 1, 1999
Relating to the Prospectus for the Institutional Class and Broker Service Class
Shares of Pax World Money Market Fund, Inc. dated June 1, 1999 and the
Prospectus for the Individual Investor Class Shares of Pax World Money Market
Fund, Inc. dated June 1, 1999.
This Statement of Additional Information (SAI) is not a prospectus. This SAI
expands upon and supplements the information contained in the current
Prospectuses of the Institutional Class Shares and Broker Service Class Shares
of Pax World Money Market Fund, Inc., and the Individual Investor Class Shares
of Pax World Money Market Fund, Inc. and should be read in conjunction with each
respective prospectus.
A Prospectus for each Class of Fund shares may be obtained from any
Participating Organization or by writing or calling the Fund toll-free at
1-800-767-1729.
The Financial Statements of the Fund have been incorporated by reference to the
Fund's Annual Report. The Annual Report is available, without charge, upon
request by calling the toll-free number provided.
This Statement of Additional Information is incorporated by reference into the
respective prospectus in its entirety.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Table of Contents
- -----------------------------------------------------------------------------------------------------------------------------
Fund History................................................ Purchase, Redemption and Pricing of Shares.................
Description of the Fund and its Investment Risks............ Taxation of the Fund.......................................
Management of the Fund...................................... Underwriters...............................................
Control Persons and Principal Holders of Securities......... Calculation of Performance Data............................
Investment Advisory and Other Services..................... Financial Statements ......................................
Brokerage Allocation and Other Practices.................... Description of Ratings.....................................
Capital Stock and Other Securities..........................
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
I. FUND HISTORY
The Fund was incorporated on November 26, 1997 in the state of Maryland.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
The Fund is an open-end, diversified management investment company. The Fund's
investment objectives are to seek as high a level of current income to the
extent consistent with preserving capital and maintaining liquidity. No
assurance can be given that these objectives will be achieved.
The following discussion expands upon the description of the Fund's investment
objectives and policies in the Prospectus.
The Fund may only purchase United States dollar-denominated securities that have
been determined by the Fund's Board of Directors to present minimal credit risks
and that are Eligible Securities at the time of acquisition. The term Eligible
Securities means: (i) securities which have or are deemed to have remaining
maturities of 397 days or less and rated in the two highest short-term rating
categories by any two nationally recognized statistical rating organizations
("NRSROs") or in such categories by the only NRSRO that has rated the Municipal
Obligations (collectively, the "Requisite NRSROs"); or (ii) unrated securities
determined by the Fund's Board of Directors to be of comparable quality. In
addition, securities which have or are deemed to have remaining maturities of
397 days or less but that at the time of issuance were long-term securities
(i.e. with maturities greater than 366 days) are deemed unrated and may be
purchased if such had received a long-term rating from the Requisite NRSROs in
one of the three highest rating categories. Provided, however, that such may not
be purchased if it (i) does not satisfy the rating requirements set forth in the
preceding sentence and (ii) has received a long-term rating from any NRSRO that
is not within the three highest long-term rating 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. 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 S&P and Moody's are "AAA" and "AA" by
S&P in the case of long-term bonds and notes or "Aaa" and "Aa" by Moody's in the
case of bonds; "SP-1" and "SP-2" by S&P or "MIG-1" and "MIG-2" by Moody's in the
case of notes; "A-1" and "A-2" by S&P or "Prime-1" and "Prime-2" by Moody's in
the case of tax-exempt commercial paper. The highest rating in the case of
variable and floating demand notes is "VMIG-1" by Moody's or "SP-1/AA" by S&P.
Such instruments may produce a lower yield than would be available from less
highly rated instruments.
All investments by the Fund will mature or will be deemed to mature within 397
days or less from the date of acquisition and the average maturity of the Fund
portfolio (on a dollar-weighted basis) will be 90 days or less. The maturities
of variable rate demand instruments held in the Fund's portfolio will be deemed
to be the longer of the period required before the Fund is entitled to receive
payment of the principal amount of the instrument through demand, or the period
remaining until the next interest rate adjustment, although the stated
maturities may be in excess of 397 days.
Subsequent to its purchase by the Fund, a rated security may cease to be rated
or its rating may be reduced below the minimum required for purchase by the
Fund. If this occurs, the Board of Directors of the Fund shall promptly reassess
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 investment
adviser and sub-adviser becoming aware of the new rating and provided further
that the Board of Directors is subsequently notified of the investment adviser's
and sub-adviser's actions.
In addition, in the event that a security (i) is in default, (ii) ceases to be
an Eligible Security under Rule 2a-7 of the Investment Company Act of 1940 (the
"1940 Act") or (iii) is determined to no longer present minimal credit risks, or
an event of insolvency occurs with respect to the issues of a portfolio security
or the provider of any Demand Feature or Guarantee, the Fund will dispose of the
security absent a determination by the Fund's Board of Directors that disposal
of the security would not be in the best interests of the Fund. Disposal of the
security shall occur 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 SEC of such fact and of the actions that the Fund intends to
take in response to the situation.
The Fund shall not invest more than 5% of the total market value of any
Portfolio'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.
2
<PAGE>
The Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Code (the "Code"). For the Fund to qualify, at the
close of each quarter of the taxable year, at least 50% of the value of its
total assets must consist of cash, government securities, investment company
securities and other securities. They must be limited in respect of any one
issuer to not more than 5% in value of the total assets of the Fund and to not
more than 10% of the outstanding voting securities of such issuer. In addition,
at the close of each quarter of its taxable year, not more than 25% in value of
the Fund's total assets may be invested in securities of one issuer (however,
this restriction does not apply to the Fund's investing in Government
securities). The limitations described in this paragraph regarding qualification
as a "regulated investment company" are not fundamental policies and may be
revised if applicable Federal income tax requirements are revised. (See "Federal
Income Taxes" herein.)
Description of Investments
The following discussion expands upon the description of the Fund's primary
investments and also outlines other types of securities and transactions which,
although not primary investments, the Fund is permitted to invest in.
Repurchase Agreements
When the Fund purchases securities, it may enter into a repurchase agreement
with the seller wherein the seller agrees, at the time of sale, to repurchase
the security at a mutually agreed upon time and price. The Fund may enter into
repurchase agreements with member banks of the Federal Reserve System and with
broker-dealers who are recognized as primary dealers in United States government
securities by the Federal Reserve Bank of New York. Although the securities
subject to a repurchase agreement might bear maturities exceeding one year,
settlement for the repurchase would never be more than 397 days after the Fund's
acquisition of the securities and normally would be within a shorter period of
time. The resale price will be in excess of the purchase price, reflecting an
agreed upon market rate effective for the period of time the Fund's money will
be invested in the security, and will not be related to the coupon rate of the
purchased security. At the time the Fund enters into a repurchase agreement, the
value of the underlying security, including accrued interest, will be equal to
or exceed the value of the repurchase agreement, and, in the case of a
repurchase agreement exceeding one day, the seller will agree that the value of
the underlying security, including accrued interest, will at all times be equal
to or exceed the value of the repurchase agreement. The Fund may engage in a
repurchase agreement with respect to any security in which the Fund is
authorized to invest, even though the underlying security may mature in more
than one year. The collateral securing the seller's obligation must be of a
credit quality at least equal to the Fund's investment criteria for the Fund
securities and will be held by the Fund custodian or in the Federal Reserve Book
Entry System.
For purposes of the 1940 Act, a repurchase agreement is deemed to be a loan from
the Fund to the seller subject to the repurchase agreement and is, therefore,
subject to the Fund's investment restrictions applicable to loans. It is not
clear whether a court would consider the securities purchased by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the securities before repurchase of the security under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Delays may result in the loss of interest or the decline in
the price of the security. If the court characterized the transaction as a loan
and the Fund has not perfected a security interest in the security, the Fund may
be required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for the Fund, the
Sub-Advisor seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case the Fund may
incur a loss if the proceeds to the Fund of the sale to a third party are less
than the repurchase price. However, if the market value of the securities
subject to the repurchase agreement becomes less than the repurchase price
(including interest), the Fund involved will direct the seller of the security
to deliver additional securities so that the market value of all securities
subject to the repurchase agreement will equal or exceed the repurchase price.
It is possible that the Fund will be unsuccessful in seeking to impose on the
seller a contractual obligation to deliver additional securities.
3
<PAGE>
Commercial Paper and Certain Debt Obligations
The Fund may purchase 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.
Domestic and Foreign Bank Obligations
The Fund may purchase 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 (the "FDIC"). 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 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 the 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.
4
<PAGE>
Since the Fund may contain securities issued by foreign agencies or
instrumentalities, and by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the Fund may be subject to
additional investment risks with respect to those securities that are different
in some respects from those incurred by a fund which invests only in debt
obligations of the United States and domestic issuers, although such obligations
may be higher yielding when compared to the securities of the United States and
domestic issuers. In making foreign investments, therefore, the Fund will give
appropriate consideration to the following factors, among others.
Foreign securities markets generally are not as developed or efficient
as those in the United States. Securities of some foreign issuers are less
liquid and more volatile than securities of comparable United States issuers.
Similarly, volume and liquidity in most foreign securities markets are less than
in the United States and, at times, volatility of price can be greater than in
the United States. The issuers of some of these securities, such as bank
obligations, may be subject to less stringent or different regulation than are
United States issuers. In addition, there may be less publicly available
information about a non-United States issuer and non-United States issuers
generally are not subject to uniform accounting and financial reporting
standards, practices and requirements comparable to those applicable to United
States issuers.
Because evidences of ownership of such securities usually are held
outside the United States, the Fund will be subject to additional risks which
include possible adverse political and economic developments, possible seizure
or nationalization of foreign deposits and possible adoption of governmental
restrictions which might adversely affect the payment of principal and interest
on the foreign securities or might restrict the payment of principal and
interest to the issuer, whether from currency blockage or otherwise.
Furthermore, some of these securities may be subject to stamp or other
excise taxes levied by foreign governments, which have the effect of increasing
the cost of such securities and reducing the realized gain or increasing the
realized loss on such securities at the time of sale. Income earned or received
by the Fund from sources within foreign countries may be reduced by withholding
and other taxes imposed by such countries. Tax conventions between certain
countries and the United States, however, may reduce or eliminate such taxes.
The Advisor and Sub-Advisor will attempt to minimize such taxes by timing of
transactions and other strategies, but there can be no assurance that such
efforts will be successful. 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.
United States Government Securities
The Fund may purchase 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.
Variable Rate Demand Instruments
The Fund may purchase variable rate demand instruments. Variable rate demand
instruments that the Fund will purchase are tax exempt Municipal Securities or
taxable (variable amount master demand notes) debt obligations that provide for
a periodic adjustment in the interest rate paid on the instrument and permit the
holder to demand payment of the unpaid principal balance plus accrued interest
at specified intervals upon a specified number of days' notice either from the
issuer or by drawing on a bank letter of credit, a guarantee, insurance or other
credit facility issued with respect to such instrument.
5
<PAGE>
The variable rate demand instruments in which the Fund may invest are payable on
not more than thirty calendar days' notice either on demand or at specified
intervals not exceeding one year depending upon the terms of the instrument. The
terms of the instruments provide that interest rates are adjustable at intervals
ranging from daily to up to one year and their adjustments are based upon the
prime rate of a bank or other appropriate interest rate adjustment index as
provided in the respective instruments. The Fund will decide which variable rate
demand instruments it will purchase in accordance with procedures prescribed by
its Board of Directors to minimize credit risks. Utilizing the amortized cost
method of valuation, the Fund may only purchase variable rate demand instruments
if (i) the instrument is subject to an unconditional demand feature, exercisable
by the Fund in the event of default in the payment of principal or interest on
the underlying securities, which itself qualifies as a First Tier Eligible
Security or (ii) the instrument is not subject to an unconditional demand
feature but does qualify as a First Tier Eligible Security and has a long-term
rating by the Requisite NRSROs in one of the two highest rating categories or,
if unrated, is determined to be of comparable quality by the Fund's Board of
Directors. If an instrument is ever deemed to be of less than high quality, the
Fund either will sell it in the market or exercise the demand feature.
The variable rate demand instruments in which the Fund may invest include
participation certificates purchased by the Fund from banks, insurance companies
or other financial institutions in fixed or variable rate, tax-exempt Municipal
Securities (expected to be concentrated in industrial revenue bonds) or taxable
debt obligations (variable amount master demand notes) owned by such
institutions or affiliated organizations. A participation certificate would give
the Fund an undivided interest in the obligation in the proportion that the
Fund's participation interest bears to the total principal amount of the
obligation and provides the demand repurchase feature described below. Where the
institution issuing the participation certificate does not meet the Fund's high
quality standards, the participation certificate is backed by an irrevocable
letter of credit or guaranty of a bank (which may be a bank issuing a confirming
letter of credit, or a bank serving as agent of the issuing bank with respect to
the possible repurchase of the participation certificate or a bank serving as
agent of the issuer with respect to the possible repurchase of the issue) or
insurance policy of an insurance company that the Board of Directors of the Fund
has determined meets the prescribed quality standards for the Fund. The Fund has
the right to sell the participation certificate back to the institution and,
where applicable, draw on the letter of credit, guarantee or insurance after no
more than 30 days' notice either on demand or at specified intervals not
exceeding 397 days (depending on the terms of the participation), for all or any
part of the full principal amount of the Fund's participation interest in the
security, plus accrued interest. The Fund intends to exercise a demand only (1)
upon a default under the terms of the bond documents, (2) as needed to provide
liquidity to the Fund in order to make redemptions of the Fund shares, or (3) to
maintain a high quality investment portfolio. The institutions issuing the
participation certificates may retain a service and letter of credit fee (where
applicable) and a fee for providing the demand repurchase feature, in an amount
equal to the excess of the interest paid on the instruments over the negotiated
yield at which the participation certificates were purchased by the Fund. The
total fees generally range from 5% to 15% of the applicable "prime rate"1 or
other interest rate index. With respect to insurance, the Fund will attempt to
have the issuer of the participation certificate bear the cost of the insurance,
although the Fund retains the option to purchase insurance if necessary, in
which case the cost of insurance will be an expense of the Fund subject to the
expense limitation on investment company expenses prescribed by any state in
which the Fund's shares are qualified for sale. The Sub-Advisor has been
instructed by the Fund's Board of Directors to continually monitor the pricing,
quality and liquidity of the variable rate demand instruments held by the Fund,
including the participation certificates, on the basis of published financial
information and reports of the rating agencies and other bank analytical
services to which the Fund may subscribe. Although these instruments may be sold
by the Fund, the Fund intends to hold them until maturity, except under the
circumstances stated above (see "Dividends and Distributions" and "Tax
Consequences" in the Prospectuses).
While the value of the underlying variable rate demand instruments may change
with changes in interest rates generally, the variable rate nature of the
underlying variable rate demand instruments should minimize changes in value of
the instruments. Accordingly, as interest rates decrease or securities
- --------
1 The "prime rate" is generally the rate charged by a bank to its creditworthy
customers for short-term loans. The prime rate of a particular bank may differ
from other banks and will be the rate announced by each bank on a particular
day. Changes in the prime rate may occur with great frequency and generally
become effective on the date announced.
6
<PAGE>
increase, the potential for capital appreciation and the risk of potential
capital depreciation is less than would be the case with a portfolio of fixed
income securities. The Fund may contain variable rate demand instruments on
which stated minimum or maximum rates, or maximum rates set by state law, limit
the degree to which interest on such variable rate demand instruments may
fluctuate; to the extent it does, increases or decreases in value may be
somewhat greater than would be the case without such limits. Additionally, the
Fund may contain variable rate demand participation certificates in fixed rate
Municipal Securities and taxable debt obligations (the Fund will not acquire a
variable note demand participation certificate in fixed rate municipal
securities without an opinion of counsel). The fixed rate of interest on these
obligations will be a ceiling on the variable rate of the participation
certificate. In the event that interest rates increased so that the variable
rate exceeded the fixed rate on the obligations, the obligations could no longer
be valued at par and this may cause the Fund to take corrective action,
including the elimination of the instruments. Because the adjustment of interest
rates on the variable rate demand instruments is made in relation to movements
of the applicable banks' prime rate, or other interest rate adjustment index,
the variable rate demand instruments are not comparable to long-term fixed rate
securities. Accordingly, interest rates on the variable rate demand instruments
may be higher or lower than current market rates for fixed rate obligations or
obligations of comparable quality with similar maturities.
For purposes of determining whether a variable rate demand instrument held by
the Fund matures within 397 days from the date of its acquisition, the maturity
of the instrument will be deemed to be the longer of (1) the period required
before the Fund is entitled to receive payment of the principal amount of the
instrument or (2) the period remaining until the instrument's next interest rate
adjustment. The maturity of a variable rate demand instrument will be determined
in the same manner for purposes of computing the Fund's dollar-weighted average
portfolio maturity. If a variable rate demand instrument ceases to meet the
investment criteria of the Fund, it will be sold in the market or through
exercise of the repurchase demand.
When-Issued Securities
The Fund may purchase debt obligations offered on a "when-issued" or "delayed
delivery" basis. When so offered, the price, which is generally expressed in
yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for the when-issued securities takes place at a later date.
Normally, the settlement date occurs within one month of the purchase of debt
obligations; during the period between purchase and settlement, no payment is
made by the purchaser to the issuer and no interest accrues to the purchaser. To
the extent that assets of the Fund are not invested prior to the settlement of a
purchase of securities, the Fund will earn no income; however, it is intended
that the Fund will be fully invested to the extent practicable and subject to
the policies stated above. While when-issued securities may be sold prior to the
settlement date, it is intended that the Fund will purchase such securities with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a debt
obligation on a when-issued basis, it will record the transaction and reflect
the value of the security in determining its net asset value. The Fund does not
believe that the net asset value or income of the Fund's securities portfolios
will be adversely affected by their purchase of debt obligations on a
when-issued basis. The Fund will establish a segregated account in which it will
maintain cash and marketable securities equal in value to commitments for
when-issued securities. Such segregated securities either will mature or, if
necessary, be sold on or before the settlement date.
Participation Interests
The Fund may purchase from banks participation interests in all or part of
specific holdings of Municipal or other debt obligations (including corporate
loans). Where the institution issuing the participation does not meet the Fund's
quality standards, the participation may be backed by an irrevocable letter of
credit or guarantee that the Board of Directors has determined meets the
prescribed quality standards of the Fund. Thus, even if the credit of the
selling bank does not meet the quality standards of the Fund, the credit of the
entity issuing the credit enhancement will meet such prescribed quality
standards. The Fund will have the right to sell the participation interest back
to the bank for the full principal amount of the Fund's interest in the
Municipal or debt obligation plus accrued interest, but only (1) as required to
provide liquidity to the Fund, (2) to maintain the quality standards of the
Fund's investment portfolio or (3) upon a default under the terms of the debt
obligation. The selling bank may receive a fee from the Fund in connection with
the arrangement. When purchasing bank participation interests, the Fund will
treat both the bank and the underlying borrower as the issuer of the instrument
for the purpose of complying with the diversification requirement of the
investment restrictions discussed below.
7
<PAGE>
Privately Placed Securities
The Fund may invest in securities issued as part of privately negotiated
transactions between an issuer and one or more purchasers. Except with respect
to certain commercial paper issued in reliance on the exemption from regulations
in Section 4(2) of the Securities Act of 1933 (the "Securities Act") and
securities subject to Rule 144A of the Securities Act which are discussed below,
these securities are typically not readily marketable, and therefore are
considered illiquid securities. The price the Fund pays for illiquid securities,
and any price received upon resale, may be lower than the price paid or received
for similar securities with a more liquid market. Accordingly, the valuation of
privately placed securities by the Fund will reflect any limitations on their
liquidity. As a matter of policy, the Fund will not invest more than 10% of the
market value of the total assets of the Fund in repurchase agreements maturing
in over seven days and other illiquid investments. The Fund may purchase
securities that are not registered ("restricted securities") under the
Securities Act, but can be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act. The Fund may also purchase certain
commercial paper issued in reliance on the exemption from regulations in Section
4(2) of the Securities Act ("4(2) Paper"). However, the Fund will not invest
more than 10% of its net assets in illiquid investments, which include
securities for which there is no ready market, securities subject to contractual
restriction on resale, certain investments in asset-backed and receivable-backed
securities and restricted securities (unless, with respect to these securities
and 4(2) Paper, the Fund's Directors continuously determine, based on the
trading markets for the specific restricted security, that it is liquid). The
Directors may adopt guidelines and delegate to the Sub-Advisor the daily
function of determining and monitoring liquidity of restricted securities and
4(2) Paper. The Directors, however, will retain sufficient oversight and be
ultimately responsible for the determinations.
Since it is not possible to predict with assurance exactly how this market for
restricted securities sold and offered under Rule 144A will develop, the
Directors will carefully monitor the Fund investments in these securities,
focusing on such factors, among others, as valuation, liquidity and availability
of information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted securities.
Investment Restrictions
The Fund has adopted the following fundamental investment restrictions. They may
not be changed without the approval by a majority vote of the Fund's outstanding
shares. The term "majority vote of the Fund's outstanding shares" means the vote
of the lesser of (i) 67% or more of the shares of the Fund present at a meeting,
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Fund. The Fund may not:
(a) invest in securities of companies that have conducted operations for
less than three years, including the operations of predecessors;
(b) invest in or hold securities of any issuer if, to the knowledge of the
Fund, any officer or director of the Fund, the Advisor or the
Sub-Advisor, individually owning beneficially more than 1/2 of 1% of
the securities of the issuer, in the aggregate own more than 5% of the
issuer's securities;
(c) (1) make investments for the purpose of exercising control over any
issuer or other person; (2) purchase securities having voting rights
at the time of purchase; (3) purchase securities of other investment
companies, except in connection with a merger, acquisition,
consolidation, reorganization or acquisition of assets; (4) invest in
real estate, including real estate limited partnerships (other than
debt obligations secured by real estate or interests therein or debt
obligations issued by companies which invest in real estate or
interests therein); (5) invest in commodities, commodity contracts,
commodity options, interests and leases in oil, gas or other mineral
exploration or development programs (the Fund may, however, purchase
and sell securities of companies engaged in the exploration,
development, production, refining, transportation and marketing of
oil, gas or minerals); (6) purchase restricted securities or purchase
securities on margin; (7) make short sales of securities or
intentionally maintain a short position in any security or write,
purchase or sell puts, calls, straddles, spreads or any combination
thereof; (8) act as an underwriter of securities or (9) issue senior
securities, except insofar as the Fund may be deemed to have issued a
senior security in connection with any permitted borrowing; and
8
<PAGE>
(d) invest more than 25% of the value of the Fund's total assets in
securities of companies in the same industry (excluding U.S.
Government securities).
(e) 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;
(f) 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);
(g) 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;
(h) invest more than 5% of the Fund's assets in securities that are
subject to underlying puts from the same institution, and no single
bank shall issue its letter of credit and no single financial
institution shall issue a credit enhancement covering more than 5% of
the total assets of the Fund. However, if the puts are exercisable by
the Fund in the event of default on payment of principal and interest
on the underlying security, then the Fund may invest up to 10% of its
assets in securities underlying puts issued or guaranteed by the same
institution; additionally, a single bank can issue its letter of
credit or a single financial institution can issue a credit
enhancement covering up to 10% of the Fund's assets, where the puts
offer the Fund such default protection;
(i) 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;
(j) 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 (ii) 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; in addition the
Fund will not make additional investments when borrowings exceed 5% of
the Fund's net assets; and
(k) pledge, mortgage, assign or encumber any of the Fund's assets except
to the extent necessary to secure a borrowing permitted by the
foregoing clause made with respect to the Fund.
If a percentage restriction is adhered to at the time of an investment a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or in the amount of a Fund's portfolio's assets will not
constitute a violation of such restriction.
III. MANAGEMENT OF THE FUND
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has the Advisor, to serve as investment advisor to
the Fund. Reich & Tang Asset Management L.P. will serve as the Sub-Advisor of
the Fund under a Sub-Advisory Agreement entered into between the Advisor and
Sub-Advisor. Due to the services performed by the Sub-Advisor, the Fund
currently has no employees and its officers are not required to devote full-time
to the affairs of the Fund.
The Directors and Officers of the Fund, and their principal occupations for the
past five years, are listed below. Unless otherwise indicated, the address of
each such person, is 600 Fifth Avenue, New York, New York 10020. Mr. Duff may be
deemed an "interested person" of the Fund, as defined in the 1940 Act, on the
basis of his affiliation with the Sub-Advisor.
Steven W. Duff, 45 - Director of the Fund, has been President of the Mutual
Funds division of the Sub-Advisor since September 1994. Mr. Duff was formerly
Director of Mutual Fund Administration at NationsBank with which he was
associated from June 1981 to August 1994. Mr. Duff is President and
Director/Trustee of 14 funds in the Reich & Tang Fund Complex, President of Back
Bay Funds, Inc., Executive Vice President of Reich & Tang Equity Fund, Inc., and
President and Chief Executive Officer of Tax Exempt Proceeds Fund, Inc.
Dr. W. Giles Mellon, 68 - Director of the Fund, is Professor of Business
Administration in the Graduate School of Management, Rutgers University, with
which he has been associated since 1966. His address
9
<PAGE>
is Rutgers University Graduate School of Management, 92 New Street, Newark, New
Jersey 07102. Dr. Mellon is Director/Trustee of 15 other funds in the Reich &
Tang Fund Complex.
Robert Straniere, 57 - Director of the Fund, has been a member of the New York
State Assembly and a partner with Straniere & Straniere Law Firm since 1981. His
address is 182 Rose Avenue, Staten Island, New York 10306. Mr. Straniere is also
a Director/Trustee of 15 other funds in the Reich & Tang Fund Complex and a
Director of Life Cycle Mutual Funds, Inc.
Dr. Yung Wong, 60 - Director of the Fund, was Director of Shaw Investment
Management (U.K.) Limited from 1994 to October 1995 and formerly was a General
Partner of Abacus Partners Limited Partnership (a general partner of a venture
capital investment firm) from 1984 to 1994. His address is 29 Alden Road,
Greenwich, Connecticut 06831. Dr. Wong has been a Director of Republic Telecom
Systems Corporation (a provider of telecommunications equipment) since January
1989 and of TelWatch, Inc. (a provider of network management software) since
August 1989. Dr. Wong is also a Director/Trustee of 15 other funds in the Reich
& Tang Fund Complex. Dr. Wong is also a Trustee of Eclipse Financial Asset
Trust.
Thomas W. Grant, 58- President of the Fund, has been President of the Advisor
since 1996 and President of H.G. Wellington & Co., Inc. since 1991. His address
is 14 Wall Street, New York, New York 10005. Mr. Grant is also the President and
a Director of Pax World Growth Fund, Inc. and Vice Chairman of the Board and
President of Pax World Fund, Incorporated.
Laurence A. Shadek, 49 - Executive Vice-President of the Fund, has been Chairman
of the Board of the Advisor since 1996 and Executive Vice-President of H.G.
Wellington & Co., Inc. since 1986. His address is 14 Wall Street, New York, New
York 10005. Mr. Shadek is also Chairman of the Board of Pax World Growth Fund,
Inc. and Chairman of the Board of Pax World Fund, Incorporated.
Bernadette N. Finn, 51 - Secretary of the Fund, has been Vice President of the
Mutual Funds division of the Sub-Advisor since September 1993. Ms. Finn was
formerly Vice President and Assistant Secretary of Reich & Tang, Inc. with which
she was associated from September 1970 to September 1993. Ms. Finn is Secretary
of 13 other funds in Reich & Tang Fund Complex, and a Vice President and
Secretary of 5 funds in the Reich & Tang Fund Complex.
Molly Flewharty, 46 - Vice President of the Fund, has been Vice President of the
Mutual Funds division of the Sub-Advisor since September 1993. Ms. Flewharty was
formerly Vice President of Reich & Tang, Inc. with which she was associated from
December 1977 to September 1993. Ms. Flewharty is Vice President of 18 other
funds in the Reich & Tang Fund Complex.
Richard De Sanctis, 41 - Treasurer of the Fund, has been Vice President and
Treasurer of the Sub-Advisor since September 1993. Mr. De Sanctis was formerly
Controller of Reich & Tang, Inc. from January 1991 to September 1993 and Vice
President and Treasurer of Cortland Financial Group, Inc. and Vice President of
Cortland Distributors, Inc. from 1989 to December 1990. Mr. De Sanctis is
Treasurer of 17 other funds in the Reich & Tang Fund Complex and is Vice
President and Treasurer of Cortland Trust, Inc.
Rosanne Holtzer, 33 - Assistant Treasurer of the Fund, has been Vice President
of the Mutual Funds division of the Sub-Advisor since December 1997. Ms. Holtzer
was formerly Manager of Fund Accounting for the Sub-Advisor with which she was
associated with from June 1986. She is Assistant Treasurer of 18 other funds in
the Reich & Tang Fund Complex.
Directors of the Fund not affiliated with the Sub-Advisor receive from the Fund
an annual retainer of $1,000 and a fee of $250 for each meeting of the Board of
Directors attended and are reimbursed for all out-of-pocket expenses relating to
attendance at such meetings. Directors who are affiliated with the Sub-Advisor
do not receive compensation from the Fund.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMPENSATION TABLE
(1) (2) (3) (4) (5)
Name of Person, Estimated Aggregate Pension or Retirement Estimated Annual Total Compensation
Position Compensation from Benefits Accrued as Part Benefits upon from Fund and Fund
Registrant for Fiscal Year of Fund Expenses Retirement Complex Paid to
Directors*
W. Giles Mellon,
Director $2,000 0 0 $58,500 (16 Funds)
Robert Straniere,
Director $2,000 0 0 $58,500 (16 Funds)
Yung Wong,
Director $2,000 0 0 $58,500 (16 Funds)
</TABLE>
* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ended January 31, 1999. The parenthetical number represents the
number of investment companies (including the Fund) from which such person
receives compensation that are considered part of the same Fund Complex as the
Fund, because, among other things, they have a common investment advisor.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On May 2, 1999 there were _____Institutional Class, ______Broker Service Class
of shares outstanding and _ _ Individual Investor Class of shares outstanding.
As of May 2, 1999, the amount of shares owned by all officers and directors of
the Fund, as a group, was less than 1% of the outstanding shares. Set forth
below is certain information as to persons who owned 5% or more of the Fund's
outstanding shares as of May 2, 1999:
Name and Address % of Class Nature of Ownership
Broker Service Class
Institutional Class
Individual Investor Class
V. INVESTMENT ADVISORY AND OTHER SERVICES
The Investment Advisor for the Fund is Pax World Management Corp., a Delaware
corporation incorporated in 1970 with principal offices at 222 State Street,
Portsmouth, New Hampshire 03801-3853. As of December 31, 1998, the Advisor had
over $863,000,000 in assets under management by virtue of serving as Advisor to
the Pax World Fund, Incorporated and the Pax World Growth Fund, Inc. The Advisor
has no other clients other than the Fund, the Pax World Fund and the Pax World
Growth Fund.
The Sub-Advisor is a Delaware limited partnership with principal offices at 600
Fifth Avenue, New York, New York 10020. The Sub-Advisor, as of January 31, 1999,
was investment manager, advisor or supervisor with respect to assets aggregating
approximately $13 billion. In addition to the
11
<PAGE>
Fund, the Sub-Advisor acts as investment manager and administrator of seventeen
other investment companies and also advises pension trusts, profit sharing
trusts and endowments.
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,
NEICOP changed its name to Nvest Companies, L.P. ("Nvest Companies").
Reich & Tang Asset Management, Inc. (an indirect 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.
Nvest Companies is a holding company offering to institutional clients a broad
array of investment styles across a wide range of asset categories through
thirteen subsidiaries, divisions and affiliates. Its business units include AEW
Capital Management, L.P., Back Bay Advisors, L.P., Capital Growth Management,
L.P., Graystone Partners, L.P., Harris Associates, L.P., Jurika & Voyles, L.P.,
Loomis, Sayles & Co., L.P., New England Funds, L.P., Reich & Tang Capital
Management, Reich & Tang Funds, Snyder Capital Management, L.P., Vaughan,
Nelson, Scarborough & McCullough, L.P. and Westpeak Investment Advisors, L.P.
These affiliates, in the aggregate, are investment advisors or sub-advisors of
80 other registered investment companies.
On 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 the Advisor effective April 9, 1998, which has a term which extends to
March 31, 2000 and may be continued in force thereafter for successive
twelve-month periods beginning each April 9, provided that such continuance is
specifically approved annually by majority vote of the Fund's outstanding voting
securities or by a majority of the Directors who are not parties to the
Investment Advisory Agreement or interested persons of any such party, by votes
cast in person at a meeting called for the purpose of voting on such matter. The
Investment Advisory Agreement and Sub-Advisory Agreement were approved by the
sole shareholder of the Fund on March 18, 1998.
Pursuant to the terms of an Advisory Agreement entered into between the Fund and
the Advisor (the "Advisory Agreement"), the Advisor, subject to the supervision
of the Board of Directors of the Fund, is responsible for determining whether
contemplated investments satisfy the social responsibility criteria applied to
the Fund and overseeing the performance of the Sub-Advisor. Under the Advisory
Agreement, the Fund will pay the Advisor an annual advisory fee of .15% of the
Fund's average daily net assets. For the Fund's fiscal year ended January 31,
1999, the Advisor received an Advisory fee totaling $71,643 all of which was
waived.
Pursuant to the Sub-Advisory Agreement, the Sub-Advisor manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund and the determination of the Advisor that the contemplated investments
satisfy the social responsibility criteria applied to the Fund.
The Sub-Advisory Agreement is terminable without penalty by the Fund on sixty
days' written notice when authorized either by majority vote of its outstanding
voting shares or by a vote of a majority of its Board of Directors, who are not
interested parties, or by the Sub-Advisor on sixty days' written notice, and
will automatically terminate in the event of its assignment. The Sub-Advisory
Agreement provides that in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Sub-Advisor, or of reckless disregard of its
obligations thereunder, the Sub-Advisor shall not be liable for any action or
failure to act in accordance with its duties thereunder.
For its services under the Sub-Advisory Agreement, the Sub-Advisor receives from
the Advisor a fee equal to .075% per annum of the Fund's average daily net
assets from its advisory fee. The fees are
12
<PAGE>
accrued daily and paid monthly. Investment management fees and operating
expenses which are attributable to each Class of the Fund will be allocated
daily to each Class based on the percentage of outstanding shares at the end of
the day. Additional shareholder services provided by Participating Organizations
to Institutional Class shareholders pursuant to the distribution and service
plan shall be compensated by Reich & Tang Distributors, Inc. (the "Distributor")
from its shareholder servicing fee, the Sub-Advisor from its management fee and
the Fund itself. Expenses incurred in the distribution of Institutional Class
shares and the servicing of Institutional Class shares shall be paid by the
Sub-Advisor. For the Fund's fiscal year ended January 31, 1999, the Sub-Advisor
received Sub-Advisory fees totaling $35,822 all of which was waived.
Pursuant to the Administrative Services Agreement with the Fund, the Sub-Advisor
also performs clerical, accounting supervision, office service and related
functions for the Fund and provides the Fund with personnel to (i) supervise the
performance of bookkeeping and related services by Investors Fiduciary Trust
Company, the Fund's bookkeeping or recordkeeping agent, (ii) prepare reports to
and filings with regulatory authorities, and (iii) perform such other services
as the Fund may from time to time request of the Sub-Advisor. The personnel
rendering such services may be employees of the Sub-Advisor, of its affiliates
or of other organizations. The Fund pays the Sub-Advisor for such personnel and
for rendering such services at rates which must be agreed upon by the Fund and
the Sub-Advisor, provided that the Fund does not pay for services performed by
any such persons who are also officers of the general partner of the
Sub-Advisor. It is intended that such rates will be the actual costs of the
Sub-Advisor. The Fund also reimburses the Sub-Advisor for all of the Fund's
operating costs, including rent, depreciation of equipment and facilities,
interest and amortization of loans financing equipment used by the Fund and all
of the expenses incurred to conduct the Fund's affairs. The amounts of such
reimbursements must be agreed upon between the Fund and the Sub-Advisor. The
Sub-Advisor, at its discretion, may voluntarily waive all or a portion of the
administrative services fee and the operating expense reimbursement. For its
services under the Administrative Services Agreement, the Sub-Advisor receives
from the Fund a fee equal to .10% per annum of the Fund's average daily net
assets. For the Fund's fiscal year ended January 31, 1999, the Sub-Advisor
received administration fees totaling $47,762 all of which was waived.
Any portion of the total fees received by the Sub-Advisor may be used to provide
shareholder services and for distribution of Fund shares. (See "Distribution and
Service Plan" herein.)
Expense Limitation
The Sub-Advisor has agreed, pursuant to the Sub-Advisory Agreement, to reimburse
the Fund for its expenses (exclusive of interest, taxes, brokerage and
extraordinary expenses) which in any year exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale. For the purpose of this obligation to reimburse expenses,
the Fund's annual expenses are estimated and accrued daily, and any appropriate
estimated payments are made to it on a monthly basis. Subject to the obligations
of the Sub-Advisor to reimburse the Fund for its excess expenses as described
above, the Fund has, under the Sub-Advisory Agreement, confirmed its obligation
for payment of all its other expenses, including taxes, brokerage fees and
commissions, commitment fees, certain insurance premiums, interest charges and
expenses of the custodian, transfer agent and dividend disbursing agent's fees,
telecommunications expenses, auditing and legal expenses, bookkeeping agent
fees, costs of forming the corporation and maintaining corporate existence,
compensation of disinterested Directors, costs of investor services,
shareholder's reports and corporate meetings, Securities and Exchange Commission
registration fees and expenses, state securities laws registration fees and
expenses, expenses of preparing and printing the Fund's prospectus for delivery
to existing shareholders and of printing application forms for shareholder
accounts and the fees and reimbursements payable to the Sub-Advisor under the
Sub-Advisory Agreement and the Administrative Services Agreement and the
Distributor under the Shareholder Servicing Agreement.
The Fund may from time to time contract to have management services performed by
third parties as discussed herein and the management of the Fund intends to do
so whenever it appears advantageous to the Fund. The Fund's expenses for such
services are among the expenses subject to the expense limitation described
above. As a result of the recent passage of the National Securities Markets
Improvement Act of 1996, all state expense limitations have been eliminated at
this time.
The Fund has reserved the right to charge individual shareholder accounts for
expenses actually incurred by such account for postage, wire transfers and
certain other shareholder expenses, as well as to impose a monthly service
charge for accounts whose account value falls below the minimum amount.
13
<PAGE>
Distribution and Service Plan
Pursuant to Rule 12b-1 under the 1940 Act, the Securities and Exchange
Commission requires that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by the Rule. The Fund's Board of Directors has adopted a
distribution and service plan (the "Plan") and, pursuant to the Plan, the Fund
has entered into a Distribution Agreement and a Shareholder Servicing Agreement
with the Distributor as distributor of the Fund's shares.
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 Plan, the Fund and the Distributor will enter into a Shareholder
Servicing Agreement, with respect to the Fund's Individual Investor Class and
Broker Service Class shares. For its services under the Shareholder Servicing
Agreement (with respect to Individual Investor Class and Broker Service Class
shares only), the Distributor receives from the Fund a fee equal to .25% per
annum of the Individual Investor Class and Broker Service Class shares of the
Fund's average daily net assets (the "Shareholder Servicing Fee") for providing
personal shareholder services and for the maintenance of shareholder accounts.
The fee is accrued daily and paid monthly and any portion of the fee may be
deemed to be used by the Distributor for payments to Clearing Brokers with
respect to servicing their clients or customers who are shareholders of the
Individual Investor Class and Broker Service Class of the Fund. The
Institutional Class shareholders do not receive the benefit of such services
from Clearing Brokers and, therefore, will not be assessed a Shareholder
Servicing Fee.
Under the Distribution Agreement, the Distributor, for nominal consideration and
as agent for the Fund, will solicit orders for the purchase of the Fund's
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as principal.
The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for (i) telecommunications
expenses, including the cost of dedicated lines and CRT terminals, incurred by
the Clearing Brokers and Distributor in carrying out their obligations under the
Shareholder Servicing Agreement with respect to the Fund's Individual Investor
Class and Broker Service Class shares and (ii) preparing, printing and
delivering the Fund's prospectus to existing shareholders of the Fund and
preparing and printing subscription application forms for shareholder accounts.
The Plan provides that the Sub-Advisor may make payments from time to time from
its own resources, which may include the advisory fee, the management fee, and
past profits for the following purposes: (i) to defray the costs of, and to
compensate others, including Participating Organizations and Clearing Brokers
with whom the Distributor has entered into written agreements for performing
shareholder servicing and related administrative functions on behalf of the
Fund; (ii) to defray the costs of, and to compensate others, including certain
Participating Organizations and Clearing Brokers, for providing assistance in
distributing the Fund's Individual Investor Class and Broker Service Class
shares; and (iii) to pay the costs of printing and distributing the Fund's
prospectus to prospective investors, and to defray the cost of the preparation
and printing of brochures and other promotional materials, mailings to
prospective shareholders, advertising, and other promotional activities,
including the salaries and/or commissions of sales personnel in connection with
the distribution of the Fund's shares. The Distributor may also make payments
from time to time from its own resources, which may include the Shareholder
Servicing Fee with respect to Individual Investor Class and Broker Service Class
shares and past profits for the purpose enumerated in (i) above. The Distributor
will determine the amount of such payments made pursuant to the Plan, provided
that such payments will not increase the amount that the Fund is required to pay
to the Sub-Advisor and the Distributor for any fiscal year under the Advisory
Agreement or the Sub-Advisory Agreement, the Administrative Services Contract or
the Shareholder Servicing Agreement in effect for that year.
In accordance with Rule 12b-1, the Plan provides that all written agreements
relating to the Plan entered into between either the Fund or the Distributor and
Participating Organizations or other organizations must be in a form
satisfactory to the Fund's Board of Directors. In addition, the Plan requires
the Fund and the Distributor to prepare, at least quarterly, written reports
setting forth all amounts expended for distribution purposes by the Fund and the
Distributor pursuant to the Plan and identifying the distribution activities for
which those expenditures were made.
The Plan was most recently approved on January 30, 1998 by the Board of
Directors, including a majority of the Directors who are not interested persons
(as defined in the 1940 Act) of the Fund or the Sub-Advisor, and shall continue
until March 31, 1999. The Plan provides that it may continue in effect
14
<PAGE>
for successive annual periods provided it is approved by the Individual Investor
Class and Broker Service Class shareholders or by the Board of Directors,
including a majority of directors who are not interested persons of the Fund and
who have no direct or indirect interest in the operation of the Plan or in the
agreements related to the Plan. The Plan further provides that it may not be
amended to increase materially the costs which may be spent by the Fund for
distribution pursuant to the Plan without Individual Investor Class and Broker
Service Class shareholder approval, and the other material amendments must be
approved by the Directors in the manner described in the preceding sentence. The
Plan may be terminated at any time by a vote of a majority of the disinterested
Directors of the Fund or the Fund's Individual Investor Class and Broker Service
Class shareholders.
Custodian and Transfer Agents
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is custodian for the Fund's cash and securities. Reich & Tang Services,
Inc., 600 Fifth Avenue, New York, New York 10020 is transfer agent and dividend
disbursing agent for the Institutional Class and Broker Service Class shares of
the Fund. PFPC, Inc., 400 Bellevue Parkway, Wilmington, Delaware 19809 is the
transfer agent and dividend agent for Individual Investor Class shares of the
Fund. The custodian and transfer agents do not assist in, and are not
responsible for, investment decisions involving assets of the Fund.
Counsel and Auditors
Legal matters in connection with the issuance of shares of stock of the Fund are
passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New York 10022.
Matters in connection with Massachusetts law are passed upon by Dechert, Price &
Rhoads, Ten Post Office Square South, Boston, Massachusetts 02109-4603.
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017, independent
certified public accountants, have been selected as auditors for the Fund.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
The Fund's purchases and sales of portfolio securities usually are principal
transactions. Portfolio securities are normally purchased directly from the
issuer, from banks and financial institutions or from an underwriter or market
maker for the securities. There are usually no brokerage commissions paid for
such purchases. The Fund has paid no brokerage commissions since its formation.
Any transaction for which the Fund pays a brokerage commission will be effected
at the best price and execution available. Purchases from underwriters of
portfolio securities include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price.
Allocation of transactions, including their frequency, to various dealers is
determined by the Sub-Advisor in its best judgment and in a manner deemed in the
best interest of shareholders of the Fund rather than by any formula. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price. No preference in purchasing portfolio securities will
be given to banks or dealers that are Participating Organizations.
Investment decisions for the Fund will be made independently from those for any
other investment companies or accounts that may now be or may hereafter become
managed by the Sub-Advisor or its affiliates. If, however, the Fund and other
investment companies or accounts managed by the Sub-Advisor are simultaneously
engaged in the purchase or sale of the same security, the transactions may be
averaged as to price and allocated equitably to each account. In some cases,
this policy might adversely affect the price paid or received by the Fund or the
size of the position obtainable for the Fund. In addition, when purchases or
sales of the same security for the Fund and for other investment companies
managed by the Sub-Advisor occur contemporaneously, the purchase or sale orders
may be aggregated in order to obtain any price advantage available to large
denomination purchasers or sellers.
No portfolio transactions are executed with the Sub-Advisor or its affiliates
acting as principal. In addition, the Fund will not buy bankers' acceptances,
certificates of deposit or commercial paper from the Sub-Advisor or its
affiliates.
VII. CAPITAL STOCK AND OTHER SECURITIES
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
15
<PAGE>
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,
Institutional Class, Individual Investor Class and Broker Service Class. Each
share, regardless of Class, will represent an interest in the same portfolio of
investments and will have identical voting, dividend, liquidation and other
rights, preferences, powers, restrictions, limitations, qualifications,
designations and terms and conditions, except that: (i) each Class of shares
will have different class designations; (ii) only the Individual Investor Class
and Broker Service Class shares will be assessed a Shareholder Servicing Fee of
.25% of the average daily net assets of the Individual Investor Class and Broker
Service Class shares of the Fund pursuant to the Rule 12b-1 Distribution and
Service Plan of the Fund; (iii) only the holders of the Individual Investor
Class and Broker Service Class shares will be entitled to vote on matters
pertaining to the Plan and any related agreements applicable to that class in
accordance with provisions of Rule 12b-1; (iv) only the Broker Service Class
shares will be assessed an additional sub-transfer agent accounting fee of .20%
of the average daily net assets of the Broker Service Class shares of the Fund;
and (v) the exchange privilege will permit shareholders to exchange their shares
only for shares of a fund that participates in an Exchange Privilege Program
with the Fund. Payments that are made under the Plan will be calculated and
charged daily to the appropriate Class prior to determining daily net asset
value per share and dividends/distributions.
Generally, all shares will be voted in the aggregate, except if voting by Class
is required by law or the matter involved affects only one Class, in which case
shares will be voted separately by Class. The shares of the Fund have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares outstanding voting for the election of directors can elect 100% of
the directors if the holders choose to do so, and, in that event, the holders of
the remaining shares will not be able to elect any person or persons to the
Board of Directors. The Fund's By-laws provide that the holders of a majority of
the outstanding shares of the Fund present at a meeting in person or by proxy
will constitute a quorum for the transaction of business at all meetings.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the By-laws of the Fund provide for annual
meetings only (a) for the election of Directors, (b) for approval of revised
investment advisory contracts with respect to a particular class or series of
beneficial interest, (c) for approval of revisions to the Fund's Distribution
Agreement with respect to a particular class or series of beneficial interest
and (d) upon the written request of holders of shares entitled to cast not less
than 10% of all the votes entitled to be cast at such meeting. Annual and other
meetings may be required with respect to such additional matters relating to the
Fund as may be required by the 1940 Act including the removal of Fund
Director(s) and communication among shareholders, any registration of the Fund
with the Securities and Exchange Commission or any state, or as the Directors
may consider necessary or desirable. For example, procedures for calling a
shareholder's meeting for the removal of Directors of the Fund, similar to those
set forth in Section 16(c) of the 1940 Act, are available to shareholders of the
Fund. A meeting for such purpose can be called by the holders of at least 10% of
the Fund's outstanding shares of beneficial interest. The Fund will aid
shareholder communications with other shareholders as required under Section
16(c) of the 1940 Act. Each Director serves until the next meeting of the
shareholders called for the purpose of considering the election or reelection of
such Director or of a successor to such Director, and until the election and
qualification of his or her successor, elected at such a meeting, or until such
Director sooner dies, resigns, retires or is removed by the vote of the
shareholders.
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
The material relating to the purchase and redemption of shares in the prospectus
for each class of shares offered is hereby incorporated by reference.
Net Asset Value
Pursuant to rules of the Securities and Exchange Commission, the Board of
Directors has established procedures to stabilize the Fund's net asset value at
$1.00 per share of each Class. These procedures
16
<PAGE>
include a review of the extent of any deviation of net asset value per share,
based on available market rates, from $1.00. Should that deviation exceed 1/2 of
1%, the Board will consider whether any action should be initiated to eliminate
or reduce material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, reducing or withholding dividends and utilizing a net asset value per
share as determined by using available market quotations. The Fund will maintain
a dollar-weighted average portfolio maturity of 90 days or less, will not
purchase any instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater than one year,
will limit portfolio investments, including repurchase agreements, to those
United States dollar-denominated instruments that the Fund's Board of Directors
determines present minimal credit risks, and will comply with certain reporting
and record-keeping procedures. The Fund has also established procedures to
ensure that portfolio securities meet the quality criteria as provided in Rule
2a-7 of the 1940 Act. (See "Investment Objectives, Principal Investment
Strategies and Related Risks" in the Prospectus.)
IX. TAXATION OF THE FUND
Federal Income Taxes
The Fund intends to qualify for and elects to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify as a regulated investment company, the Fund
must distribute to shareholders at least 90% of its investment company taxable
income (which includes, among other items, dividends, taxable interest and the
excess of net short-term capital gains over net long-term capital losses), and
meet certain diversification of assets, source of income, and other requirements
of the Code. By meeting these requirements, the Fund generally will not be
subject to Federal income tax on its investment company taxable income and net
capital gains (the excess of net long-term capital gains over net short-term
capital losses) designated by the Fund as capital gain dividends and distributed
to shareholders. If the Fund does not meet all of these Code requirements, it
will be taxed as an ordinary corporation and its distributions will generally be
taxed to shareholders as ordinary income. In determining the amount of net
capital gains to be distributed, any capital loss carryover from prior years
will be applied against capital gains to reduce the amount of distributions
paid.
Amounts, other than tax-exempt interest, not distributed on a timely basis in
accordance with a calendar year distribution requirement may be subject to a
nondeductible 4% excise tax. To prevent imposition of the excise tax, the Fund
must distribute for the calendar year an amount equal to the sum of (1) at least
98% of its ordinary income (excluding any capital gains or losses) for the
calendar year, (2) at least 98% of the excess of its capital gains over capital
losses (adjusted for certain losses) for the one-year period ending October 31
of such year, and (3) all ordinary income and capital gain net income (adjusted
for certain ordinary losses) for previous years that were not distributed during
such years.
Generally, on the sale or exchange of obligations held for more than one year,
gain realized by the Fund that is not attributable to accrued market discount
will be long-term capital gain. However, gain on the disposition of a bond
purchased at a market discount generally will be treated as ordinary income
rather than capital gain, to the extent of the accrued market discount.
Distributions of investment company taxable income generally are taxable to
shareholders as ordinary income. Distributions from the Fund are not eligible
for the dividends-received deduction available to corporations. Distributions of
net capital gains, if any, designated by the Fund as capital gain dividends are
taxable to shareholders as long-term capital gains, regardless of the length of
time the Fund's shares have been held by the shareholder. All distributions are
taxable to the shareholder whether reinvested in additional shares or received
in cash. Shareholders will be notified annually as to the Federal tax status of
distributions.
Upon the taxable disposition (including a sale or redemption) of shares of the
Fund, a shareholder may realize a gain or loss, depending upon its basis in the
shares. Such gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands, and will be long-term or
short-term, generally depending upon the shareholder's holding period for the
shares. Non-corporate
17
<PAGE>
shareholders are subject to tax at a maximum rate of 20% on capital gains
resulting from the disposition of shares held for more than 12 months. However,
a loss realized by a shareholder on the disposition of Fund shares with respect
to which capital gains dividends have been paid will, to the extent of such
capital gain dividends, also be treated as long-term capital loss if such shares
have been held by the shareholder for six months or less.
Income received by the Fund from sources within foreign countries may be subject
to withholding and other similar income taxes imposed by the foreign country,
which may decrease the net return on foreign investments as compared to
dividends and interest paid by domestic issuers. The Fund does not expect to be
eligible to elect to allow shareholders to claim such foreign taxes or a credit
against their U.S. tax liability.
The Fund is required to report to the Internal Revenue Service ("IRS") all
distributions to shareholders except in the case of certain exempt shareholders.
Distributions by the Fund (other than distributions to exempt shareholders) are
generally subject to withholding of Federal income tax at a rate of 31% ("backup
withholding") if (1) the shareholder fails to furnish the Fund with and to
certify the shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the Fund or a shareholder that the
shareholder has failed to report properly certain interest and dividend income
to the IRS and to respond to notices to that effect, or (3) when required to do
so, the shareholder fails to certify that he or she is not subject to backup
withholding. If the withholding provisions are applicable, any such
distributions (whether reinvested in additional shares or taken in cash) will be
reduced by the amounts required to be withheld.
The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be subject
to state and local taxes, and the treatment of distributions under state and
local income tax laws may differ from the Federal income tax treatment.
Shareholders should consult their tax advisors with respect to particular
questions of Federal, state and local taxation. Shareholders who are not U.S.
persons should consult their tax advisors regarding U.S. foreign tax
consequences of ownership of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. tax at a rate of
30% (or at a lower rate under a tax treaty).
X. UNDERWRITERS
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a sales charge. The Distributor does not receive an
underwriting commission. In effecting sales of Fund shares under the
Distribution Agreement, the Distributor, for nominal consideration (i.e., $1.00)
and as agent for the Fund, will solicit orders for the purchase of the Fund's
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as principal.
The 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. In the opinion of the
Sub-Adviser, however, 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.
XI. CALCULATION OF PERFORMANCE DATA
18
<PAGE>
The Fund calculates a seven-day yield quotation using a standard method
prescribed by the rules of the SEC. Under that method, the Fund's portfolios'
yield figures, which are based on a chosen seven-day period, are computed as
follows: the portfolio's return for the seven-day period is obtained by dividing
the net change in the value of a hypothetical account having a balance of one
share at the beginning of the period by the value of such account at the
beginning of the period (expected to always be $1.00). This is multiplied by
(365/7) with the resulting annualized figure carried to the nearest hundredth of
one percent. For purposes of the foregoing computation, the determination of the
net change in account value during the seven-day period reflects (i) dividends
declared on the original share and on any additional shares, including the value
of any additional shares purchased with dividends paid on the original share,
and (ii) fees charged to all shareholder accounts. Realized capital gains or
losses and unrealized appreciation or depreciation of the Fund's portfolio
securities are not included in the computation. Therefore annualized yields may
be different from effective yields quoted for the same period.
The portfolio's "effective yield" for each Class is obtained by adjusting its
"current yield" to give effect to the compounding nature of the Fund's
portfolio, as follows: the unannualized base period return is compounded and
brought out to the nearest one hundredth of one percent by adding one to the
base period return, raising the sum to a power equal to 365 divided by 7, and
subtracting one from the result, i.e., effective yield = [(base period return +
1)365/7] - 1.
Although published yield information is useful to investors in reviewing the
Fund's portfolios' performance, investors should be aware that the Fund's
portfolios' yields fluctuate from day to day. The Fund's portfolios' yields for
any given period are not an indication, or representation by the Fund, of future
yields or rates of return on the Fund's shares, and may not provide a basis for
comparison with bank deposits or other investments that pay a fixed yield for a
stated period of time. Investors who purchase the Fund's shares directly may
realize a higher yield than Participant Investors because they will not be
subject to any fees or charges that may be imposed by Participating
Organizations.
The Fund may from time to time advertise its portfolios' tax equivalent current
yield. The tax equivalent yield for each Class is computed based upon a 30-day
(or one month) period ended on the date of the most recent balance sheet
included in this Statement of Additional Information. It is computed by dividing
that portion of the yield of the Fund (as computed pursuant to the formulae
previously discussed) which is tax exempt by one minus a stated income tax rate
and adding the quotient to that portion, if any, of the yield of the Fund that
is not tax exempt. The tax equivalent yield for the Fund may also fluctuate
daily and does not provide a basis for determining future yields.
The Fund may from time to time advertise a tax equivalent effective yield table
which shows the yield that an investor would need to receive from a taxable
investment in order to equal a tax-free yield from the Fund. This is calculated
by dividing that portion of the Fund's effective yield that is tax-exempt by 1
minus a stated income tax rate and adding the quotient to that portion, if any,
of the Fund's effective yield that is not tax-exempt.
The Fund's yield for the Institutional Class for the seven day period ended
January 31, 1999 was 4.60% which is equivalent to an effective yield of 4.70%.
The Fund's yield for the Broker Service Class for the seven day period ended
January 31, 1999 was 4.15% which is equivalent to an effective yield of 4.23%.
The Fund's yield for the Individual Investor Class for the seven day period
ended January 31, 1999 was 4.35% which is equivalent to an effective yield of
4.44%.
XII. FINANCIAL STATEMENTS
The audited financial statements for the Fund for the fiscal year ended January
31, 1999 and the report therein of McGladrey & Pullen, LLP, are herein
incorporated by reference to the Fund's Annual Report. The Annual Report is
available upon request and without charge.
19
<PAGE>
DESCRIPTION OF RATINGS*
Description of Moody's Investors Service, Inc.'s Two Highest Municipal Bond
Ratings:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities, or fluctuation of protective elements
may be of greater amplitude, or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
Con. ( c ) Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These are bonds
secured by (i) earnings of projects under construction, (ii) earnings of
projects unseasoned in operating experience, (iii) rentals which begin when
facilities are completed, or (iv) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
Description of Moody's Investors Service, Inc.'s Two Highest Ratings of State
and Municipal Notes and Other Short-Term Loans:
Moody's ratings for state and municipal notes and other short-term loans will be
designated Moody's Investment Grade ("MIG"). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in
short-term borrowing, while various factors of the first importance in bond risk
are of lesser importance in the short run. Symbols used will be as follows:
MIG-1: Loans bearing this designation are of the best quality, enjoying strong
protection from established cash flows of funds for their servicing or from
established and broad-based access to the market for refinancing, or both.
MIG-2: Loans bearing this designation are of high quality, with margins of
protection ample although not so large as in the preceding group.
Description of Standard & Poor's Rating Services Two Highest Debt Ratings:
AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only to a small degree.
Plus ( + ) or Minus ( - ): The AA rating may be modified by the addition of a
plus or minus sign to show relative standing within the AA rating category.
Provisional Ratings: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and risk. Standard &
Poor's does not provide ratings for state and municipal notes.
Description of Standard & Poor's Rating Services Two Highest Commercial Paper
Ratings:
A: Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1: This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
A-2: Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
Description of Moody's Investors Service, Inc.'s Two Highest Commercial Paper
Ratings:
Moody's employs the following designations, both judged to be investment grade,
to indicate the relative repayment capacity of rated issues: Prime-1, highest
quality; Prime-2, higher quality.
- -----------------------
* As described by the rating agencies.
20
<PAGE>
PART C - OTHER INFORMATION
Item 23. Exhibits.
** (a) Articles of Incorporation of the Registrant.
** (b) By-Laws of the Registrant.
(c) Not applicable.
* (d.1) Form of Advisory Agreement between the Registrant and Pax World
Management Corp.
* (d.2) Form of Sub-Advisory Agreement between Pax World Management Corp. and
Reich & Tang Asset Management L.P.
* (e) Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc.
(f) Not applicable.
* (g) Form of Custody Agreement between the Registrant and Investors
Fiduciary Trust Company.
* (h) Form of Administrative Services Agreement between the Registrant and
Reich & Tang Asset Management L.P.
* (i) Consent Opinion of Messrs. Battle Fowler LLP as to the use of their
name under the headings "Federal Income Taxes" in the Prospectus
and "Counsel and Auditors" in the Statement of Additional Information.
(j) Consent of Independent Accountants.
(k) Audited Financial Statements, for fiscal year ended January 31, 1999
(filed with Annual Report and incorporated by reference herein).
* (l) Written assurance of Pax World Management Corp. that its purchase of
shares of the Registrant was for investment purposes without any
present intention of redeeming or reselling.
* (m.1) Form of Distribution and Service Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940.
* (m.2) Form of Distribution Agreement between the Registrant and Reich &
Tang Distributors, Inc.
* (m.3) Form of Shareholder Servicing Agreements (with respect to Broker
Service Class and Individual Investor Class only) between the
Registrant and Reich & Tang Distributors, Inc.
(n) Financial Data Schedule (For EDGAR Filing Only).
* (o) 18f-3 Multi-Class Plan.
* (p) Powers of Attorney.
- ----------------------------
* Filed with Pre-Effective Amendment No. 1 to the Registration Statement No.
333-43587 on April 7, 1998, and incorporated by reference herein.
** Filed with Registration Statement No. 333-43587 on December 31, 1997, and
incorporated by reference herein.
C-1
<PAGE>
Item 24. Persons controlled by or Under Common Control with Registrant.
None.
Item 25. Indemnification.
Filed as Item 27 of Pre-Effective Amendment No. 1 to the Registration Statement
No. 333-43587 on April 7, 1998 and incorporated herein by reference.
Item 26. Business and Other Connections of Investment Adviser.
The description of Reich & Tang Asset Management L.P. ("RTAMLP") under the
caption "Management , Organization, and Capital Structure" in the Prospectus and
"Management of the Fund" in the Statement of Additional Information constituting
parts A and B, respectively, of the Registration Statement are incorporated
herein by reference. The Registrant's investment adviser, Reich & Tang Asset
Management L.P. is a registered investment adviser. Reich & Tang Asset
Management L.P.'s investment advisory clients include California Daily Tax Free
Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust,
Inc., Daily Tax Free Income Fund, Inc., Florida Daily Municipal Income Fund,
Georgia Daily Municipal Income Fund, Inc., Institutional Daily Income Fund,
Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income
Fund, Inc., New York Daily Tax Free Income Fund, Inc., Pax World Money Market
Fund, Inc., Pennsylvania Daily Municipal Income Fund, Short Term Income Fund,
Inc., Tax Exempt Proceeds Fund, Inc., and Virginia Daily Municipal Income Fund,
Inc., registered investment companies whose addresses are 600 Fifth Avenue, New
York, New York 10020, which invest principally in money market instruments;
Delafield Fund, Inc. and Reich & Tang Equity Fund, Inc. are registered
investment companies whose address is 600 Fifth Avenue, New York, New York
10020, which invests principally in equity securities. In addition, RTAMLP is
the sole general partner of Alpha Associates L.P., August Associates L.P., Reich
& Tang Minutus I, L.P., Reich & Tang Minutus II, L.P., Reich & Tang Equity
Partners L.P., Reich & Tang Micro Cap L.P., Reich & Tang Concentrated Portfolio
L.P. and Tucek Partners L.P., private investment partnerships organized as
limited partnerships. Peter S. Voss, President, Chief Executive Officer and a
Director of Nvest Corporation (Formerly New England Investment Companies, Inc.)
since October 1992, Chairman of the Board of Nvest Corporation since December
1992, Group Executive Vice President, Bank of America, responsible for the
global asset management private banking businesses, from April 1992 to October
1992, Executive Vice President of Security Pacific Bank, and Chief Executive
Officer of Security Pacific Hoare Govett Companies a wholly-owned subsidiary of
Security Pacific Corporation, from April 1988 to April 1992, Director of The New
England since March 1993, Chairman of the Board of Directors of Nvest
Corporation's subsidiaries other than Loomis, Sayles & Company, L.P. ("Loomis")
and Back Bay Advisors, L.P. ("Back Bay"), where he serves as a Director, and
Chairman of the Board of Trustees of all of the mutual funds in the TNE Fund
Group and the Zenith Funds. G. Neal Ryland, Executive Vice President, Treasurer
and Chief Financial Officer since July 1993, Executive Vice President and Chief
Financial Officer of The Boston Company, a diversified financial services
company, from March 1989 until July 1993, from September 1985 to December 1988,
Mr. Ryland was employed by Kenner Parker Toys, Inc. as Senior Vice President and
Chief Financial Officer. Edward N. Wadsworth, Executive Vice President, General
Counsel, Clerk and Secretary of Nvest Corporation since December 1989, Senior
Vice President and Associate General Counsel of The New England from 1984 until
December 1992, and Secretary of Westpeak and Draycott and the Treasurer of Nvest
Corporation. Lorraine C. Hysler has been Secretary of RTAM since July 1994,
Assistant Secretary since September 1993, Vice President of the Mutual Funds
Group of NEICLP from September 1993 until July 1994, and Vice President of Reich
& Tang Mutual Funds since July 1994. Ms. Hysler joined Reich & Tang, Inc. in May
1977 and served as Secretary from April 1987 until September 1993. Richard E.
Smith, III has been a Director of RTAM since July 1994, President and Chief
Operating Officer of the Capital Management Group of NEICLP from May 1994 until
July 1994, President and Chief Operating Officer of the Reich & Tang Capital
Management Group since July 1994, Executive Vice President and Director of Rhode
Island Hospital Trust from March 1993 to May 1994, President, Chief Executive
Officer and Director of USF&G Review Management Corp. from January 1988 until
September 1992. Steven W. Duff has been a Director of RTAM since October 1994,
President and Chief Executive Officer of Reich & Tang Mutual Funds since August
1994, Senior Vice President of NationsBank from June 1981 until August 1994, Mr.
Duff is President and a Director of Back Bay Funds, Inc., California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily Tax
Free Income Fund, Inc., Michigan Daily Tax Free Income Fund, Inc., New Jersey
Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc.,
North Carolina Daily Municipal Income Fund, Inc., Pax World Money Market Fund,
Inc., Short Term Income Fund, Inc. and Virginia Daily Municipal Income Fund,
Inc. President and Trustee of Institutional Daily Municipal Income Fund,
Pennsylvania Daily Municipal Income Fund, President and Chief Executive Officer
of Tax Exempt Proceeds Fund, Inc., and Executive Vice President of Reich & Tang
Equity Fund, Inc. Bernadette N. Finn has been Vice President/Compliance of RTAM
since July 1994, Vice President of Mutual Funds Division of NEICLP from
September 1993 until July 1994, Vice President of Reich & Tang Mutual Funds
since July 1994. Ms. Finn joined
C-2
<PAGE>
Reich & Tang, Inc. in September 1970 and served as Vice President from September
1982 until May 1987 and as Vice President and Assistant Secretary from May 1987
until September 1993. Ms. Finn is also Secretary of Back Bay Funds, Inc.,
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Cortland Trust, Inc., Delafield Fund, Inc., Daily Tax Free Income
Fund, Inc., Institutional Daily Municipal Income Fund, Michigan Daily Tax Free
Income Funds, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily
Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Tax
Exempt Proceeds Fund, Inc., and Virginia Daily Municipal Income Fund, Inc. a
Vice President and Secretary of Reich & Tang Equity Fund, Inc., and Short Term
Income Fund, Inc. Richard DeSanctis has been Treasurer of RTAM since July 1994,
Assistant Treasurer since September 1993 and Treasurer of the Mutual Funds Group
of NEICLP from September 1993 until July 1994, Treasurer of the Reich & Tang
Mutual Funds since July 1994. Mr. DeSanctis joined Reich & Tang, Inc. in
December 1990 and served as Controller of Reich & Tang, Inc., from January 1991
to September 1993. Mr. DeSanctis was Vice President and Treasurer of Cortland
Financial Group, Inc. and Vice President of Cortland Distributors, Inc. from
1989 to December 1990. Mr. DeSanctis is also Treasurer of Back Bay Funds, Inc.,
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Institutional Daily Municipal Income Fund, Michigan Daily Tax Free Income Fund,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich & Tang
Equity Fund, Inc., Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc.
and Virginia Daily Municipal Income Fund, Inc., and is Vice President and
Treasurer of Cortland Trust, Inc. Richard I. Weiner has been Vice President of
RTAM since July 1994, has been Vice President of Nvest Corporation since
September 1993, Vice President of the Capital Management Group of NEIC from
September 1993 until July 1994, Vice President of Reich & Tang Asset Management
L.P. Capital Management Group since July 1994. Mr. Weiner joined Reich & Tang,
Inc. in August 1970 and has served as a Vice President since September 1982.
Rosanne D. Holtzer has been Vice President of the Mutual Funds division of the
Manager since December 1997. Ms. Holtzer was formerly Manager of Fund Accounting
for the Manager with which she was associated with from June 1986. She is also
Assistant Treasurer of Back Bay Funds, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc., Florida
Daily Municipal Income Fund, Institutional Daily Income Fund, Michigan Daily Tax
Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York
Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund,
Inc. Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal Income
Fund, Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and Virginia
Daily Municipal Income Fund, Inc. and is Vice President and Assistant Treasurer
of Cortland Trust, Inc.
Item 27. Principal Underwriters.
(a) Reich & Tang Distributors, Inc., the Registrant's
Distributor, is also distributor for Back Bay Funds, Inc., California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland
Trust, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc., Florida
Daily Municipal Income Fund, Institutional Daily Income Fund, Michigan Daily Tax
Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York
Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income, Inc.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund, Inc., Short
Term Income Fund, Inc. and Tax Exempt Proceeds Fund, Inc.
The following are the directors and officers of Reich & Tang
Distributors, Inc. The principal business address of Messrs. Voss, Ryland, and
Wadsworth is 399 Boylston Street, Boston, Massachusetts 02116. For all other
persons the principal address is 600 Fifth Avenue, New York, New York 10020.
Positions and Offices Positions and Offices
Name With the Distributor With Registrant
Peter S. Voss President and Director None
G. Neal Ryland Director None
Edward N. Wadsworth Executive Officer None
Richard E. Smith III Director None
Steven W. Duff Director President and Director
Bernadette N. Finn Vice President Vice President and Secretary
Lorraine C. Hysler Secretary None
Richard De Sanctis Treasurer Treasurer
Richard I. Weiner Vice President None
Peter J. DeMarco Executive Vice President None
C-3
<PAGE>
(c) Not applicable
Item 28. Location of Accounts and Records.
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained in the physical possession of Registrant at Reich &
Tang Asset Management L.P., 600 Fifth Avenue, New York, New York 10020 the
Registrant's Manager; Reich & Tang Services, 600 Fifth Avenue, New York, New
York 10020, the Registrant's transfer agent and dividend distributing agent; and
at Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64104, the Registrant's custodian.
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of New York, and
State of New York, on the 1st day of April, 1999.
PAX WORLD MONEY MARKET FUND, INC.
By:/s/ Bernadette N. Finn
Bernadette N. Finn, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the date indicated below.
Signature Title Date
(1) Principal Executive Officer:
Steven W. Duff Chairman April 1, 1999
By: /s/ Steven W. Duff
Steven W. Duff
(2) Principal Financial and Treasurer April 1, 1999
Accounting Officer
By: /s/ Richard De Sanctis
Richard De Sanctis
(3) Majority of Directors
Steven W. Duff Director April 1, 1999
Dr. W. Giles Mellon Director
Robert Straniere Director
Dr. Yung Wong Director
By: /s/ Steven W. Duff
Steven W. Duff
By: /s/ Bernadette N. Finn
Bernadette N. Finn
Attorney-in-Fact *
- -----------------------------
* Filed with Registration Statement No. 333-43587 on April 7, 1998, and
incorporated by reference herein.
C-5
<PAGE>
EXHIBIT j
McGLADREY & PULLEN, L.L.P. RSM
-------------------------- ---
Certified Public Accountants & Consultants international
CONSENT OF INDEPENDENT AUDITORS
21
<PAGE>
We hereby consent to the use of our report dated February 26, 1999, on
the financial statments referred to therein, in the Post-Effective Amendment No.
1 to the Registration Statement on Form N-1A, File No. 333-43587 of Pax World
Money Market Fund, Inc. as filed with the Securities and Exchange Commission.
We also consent to the reference to our Firm in each Prospectus under
the caption "Financial Highlights" and in the Statement of Additional
Information under the captions "Counsel and Auditors" and "Financial
Statements".
\s\McGladrey & Pullen, LLP
New York, New York
March 31, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and supporting
schedules as of the end of the most current period and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001051862
<NAME> Pax World Money Market Fund, Inc.
<SERIES>
<NUMBER> 1
<NAME> Individual Investor Class
<S> <C>
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> MAY-27-1998
<PERIOD-END> JAN-31-1999
<PERIOD-TYPE> 12-MOS
<INVESTMENTS-AT-COST> 124588848
<INVESTMENTS-AT-VALUE> 124588848
<RECEIVABLES> 230142
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 141790
<TOTAL-ASSETS> 124960780
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 87027
<TOTAL-LIABILITIES> 87027
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 124873753
<SHARES-COMMON-STOCK> 124873753
<SHARES-COMMON-PRIOR> 100000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 124873753
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2506746
<OTHER-INCOME> 0
<EXPENSES-NET> 171358
<NET-INVESTMENT-INCOME> 2335388
<REALIZED-GAINS-CURRENT> 260
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2335648
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2335388
<DISTRIBUTIONS-OF-GAINS> 260
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 172393363
<NUMBER-OF-SHARES-REDEEMED> 49733438
<SHARES-REINVESTED> 2113828
<NET-CHANGE-IN-ASSETS> 124773753
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 71643
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 290791
<AVERAGE-NET-ASSETS> 69732923
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and supporting
schedules as of the end of the most current period and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001051862
<NAME> Pax World Money Market Fund, Inc.
<SERIES>
<NUMBER> 2
<NAME> Institutional Class
<S> <C>
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> MAY-27-1998
<PERIOD-END> JAN-31-1999
<PERIOD-TYPE> 12-MOS
<INVESTMENTS-AT-COST> 124588848
<INVESTMENTS-AT-VALUE> 124588848
<RECEIVABLES> 230142
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 141790
<TOTAL-ASSETS> 124960780
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 87027
<TOTAL-LIABILITIES> 87027
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 124873753
<SHARES-COMMON-STOCK> 124873753
<SHARES-COMMON-PRIOR> 100000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 124873753
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2506746
<OTHER-INCOME> 0
<EXPENSES-NET> 171358
<NET-INVESTMENT-INCOME> 2335388
<REALIZED-GAINS-CURRENT> 260
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2335648
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2335388
<DISTRIBUTIONS-OF-GAINS> 260
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 172393363
<NUMBER-OF-SHARES-REDEEMED> 49733438
<SHARES-REINVESTED> 2113828
<NET-CHANGE-IN-ASSETS> 124773753
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 71643
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 290791
<AVERAGE-NET-ASSETS> 69732923
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and supporting
schedules as of the end of the most current period and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001051862
<NAME> Pax World Money Market Fund, Inc.
<SERIES>
<NUMBER> 3
<NAME> Broker Class
<S> <C>
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> MAY-27-1998
<PERIOD-END> JAN-31-1999
<PERIOD-TYPE> 12-MOS
<INVESTMENTS-AT-COST> 124588848
<INVESTMENTS-AT-VALUE> 124588848
<RECEIVABLES> 230142
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 141790
<TOTAL-ASSETS> 124960780
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 87027
<TOTAL-LIABILITIES> 87027
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 124873753
<SHARES-COMMON-STOCK> 124873753
<SHARES-COMMON-PRIOR> 100000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 124873753
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2506746
<OTHER-INCOME> 0
<EXPENSES-NET> 171358
<NET-INVESTMENT-INCOME> 2335388
<REALIZED-GAINS-CURRENT> 260
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2335648
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2335388
<DISTRIBUTIONS-OF-GAINS> 260
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 172393363
<NUMBER-OF-SHARES-REDEEMED> 49733438
<SHARES-REINVESTED> 2113828
<NET-CHANGE-IN-ASSETS> 124773753
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 71643
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 290791
<AVERAGE-NET-ASSETS> 69732923
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
