As filed with the Securities and Exchange Commission on July 14, 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. 3 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 4 [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.
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Prospectus Dated_________, 1999
PAX WORLD MONEY MARKET FUND, INC.
MMA PRAXIS CLASS
A Socially Responsible Money Market Fund
P.O. Box 182446
Columbus, OH 43218-2446
1-800-9-PRAXIS
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.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Investors are advised to
read this Prospectus and retain it for future reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.
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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
Distribution Arrangements............................................ 19
Financial Highlights................................................. 21
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I. RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
Investment Objectives
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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
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The Fund is committed to making a contribution to world peace through
investment in companies that 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 objectives 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
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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 The amount of income the Fund generates will vary with changes in
prevailing interest rates.
o An investment in the Fund is not a bank deposit and is not insured by the
Federal Deposit Insurance Corporation 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.
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Risk/Return Bar Chart and Table
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A Bar Chart and Table, showing the annual and average 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 1-800-9-PRAXIS.
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FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the MMA Praxis Class of the Fund.
MMA Praxis Class
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%
====
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[The Distributor intends to voluntarily waive all or a portion of the
Distribution and Service (12b-1) Fees to cap the Total Annual Fund
Operating Expenses at 0.60%. MMA may reimburse fund for any expenses over
0.60%. This fee waiver arrangement may be terminated at any time at the
option of the Distributor.]
* Based on estimated amounts for the current fiscal year.
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
------ -------
MMA Praxis Class $87 $271
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II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
Investment Objectives
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The Fund is a money market fund whose investment objectives are to seek
maximum current income to the extent consistent with 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 would
be affected by such a change.
Principal Investment Strategies and Related Risks
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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 Fund's investment adviser, 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
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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 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, (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 $1 billion 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.
If the seller of a repurchase agreement fails to repurchase the obligation
in accordance with the terms of the agreement, the Fund may incur a loss to the
extent that the proceeds it realizes on the sale of the underlying
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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 Fund's investment adviser and sub-adviser are in the process
of working with the Fund's service providers to prepare for the Year 2000. Based
on information currently available, the investment adviser and sub-adviser do
not expect that the Fund will incur material costs to be Year 2000 compliant.
Although the investment adviser and sub-adviser do 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 Fund, to varying degrees based upon various factors, and thus may have a
corresponding adverse affect on the Fund's performance. The investment adviser
and sub-adviser are 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
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The Fund's investment adviser is Pax World Management Corp. (the
"Adviser"), whose principal office is located at 222 State Street, Portsmouth,
New Hampshire 03801. The Adviser was incorporated in 1970 under the laws of the
State of Delaware and is a registered investment adviser under the Investment
Company Act of 1940 (the "1940 Act"). As of December 31, 1998, the Adviser had
over $863,000,000 in assets under management by virtue of serving as the Adviser
to the Fund, the Pax World Fund, Inc., and the Pax World Growth Fund, Inc. The
Adviser has no clients other than the Fund, the Pax World Fund, Inc. and the Pax
World Growth Fund, Inc.
Pursuant to the Advisory Agreement entered into between the Fund and the
Adviser, the Adviser, 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-Adviser, Reich & Tang Asset Management
L.P. Under the Advisory Agreement, the Fund will pay the Adviser 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-Adviser of the
Fund under a Sub-Advisory Agreement. The Sub-Adviser is a Delaware limited
partnership and a registered investment adviser under the 1940 Act, with its
principal office at 600 Fifth Avenue, New York, New York 10020. The Sub-Adviser,
as of June 30, 1999, was investment manager, adviser or supervisor with respect
to assets aggregating approximately $13.6 billion. The Sub-Adviser 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 Adviser and
the Sub-Adviser, the Sub-Adviser 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 Adviser that the contemplated investments satisfy the
social responsibility criteria applied to the Fund. Under the Sub-Advisory
Agreement, the Adviser will pay the Sub-Adviser 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 Adviser and
Sub-Adviser, at their discretion, may voluntarily waive all or a portion of
their respective management fees.
Pursuant to an Administrative Services Agreement, the Sub-Adviser performs
clerical, accounting supervision and office service functions for the Fund. The
Sub-Adviser provides the Fund with personnel to (i)
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supervise the performance of bookkeeping and related services by Investors
Fiduciary Trust Company, the Fund'sbookkeeping 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-Adviser. The personnel rendering such services may be employees of the
Sub-Adviser or its affiliates. The Fund reimburses the Sub-Adviser 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-Adviser.
The Sub-Adviser, 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-Adviser
receives an annual fee of .10% of the Fund's average daily net assets.
Any portion of the total fees received by the Adviser and Sub-Adviser 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 MMA Praxis Class shares of the Fund under the Shareholder Servicing
Agreement. The fees are accrued daily and paid monthly.
Investment management fees and operating expenses, which are attributable
to the four 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 MMA Praxis Class are effected through the Fund's
MMA Praxis Class transfer agent which accepts orders for purchases and
redemptions from the Distributor and from shareholders directly. With respect to
the MMA Praxis Class, the minimum initial investment is $500. (See "Purchasing
and Adding to Your Shares" 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
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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 (i.e., national holidays). 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.
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Shares are issued as of the first determination of the Fund's net asset
value per share for each Class made after receipt 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 MMA Praxis Class
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.
Purchasing And Adding To Your Shares
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You may purchase MMA Praxis Class shares of the Fund through the
Distributor or through investment representatives, who may charge additional
fees and may require higher minimum investments or impose other limitations on
buying and selling shares. If you purchase shares through an investment
representative, that party is responsible for transmitting orders by close of
business and may have an earlier cut-off time for purchase and sale requests.
Consult your investment representative for specific information.
All shareholders will receive from the MMA Praxis Class transfer agent, on
behalf of the Fund, a monthly statment 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).
All purchases must be in U.S. dollars. A fee will be charged for any checks
that do not clear. The Fund reserves the right to reject third-party checks.
The Fund may waive the following minimum purchase requirements and the
Distributor may reject a purchase order if it considers it in the best interest
of the Fund and its shareholders.
Minimum Minimum
Initial Subsequent
Account Type Investment Investment
Regular (non-retirement) $500 $50
Retirement $500 $50
Automatic Investment Plan $ 50 $50
Instructions For Opening Or Adding To An Account
By Regular Mail
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How to make an Initial Investment in MMA Praxis Class shares:
1. Carefully read and complete the application. Establishing your account
privileges now saves you the inconvenience of having to add them later.
2. Make check, bank draft or money order payable to "MMA Praxis Mutual Funds"
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3. Mail to: MMA Praxis Mutual Funds, P.O. Box 182446, Columbus, OH 43218-2446
How to make Subsequent Investments in MMA Praxis Class shares:
1. Use the investment slip attached to your account statement. Or, if
unavailable,
2. Include the following information on a piece of paper:
o Fund name and MMA Praxis Class
o Amount invested
o Account name
o Account number
Include your account number on your check.
3. Mail to: MMA Praxis Mutual Funds
P.O. Box 182446,
Columbus, OH 43218-2446
By Overnight Service
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See instructions 1-2 above for subsequent investments.
3. Send to: MMA Praxis Mutual Funds
c/o BISYS Fund Services,
Attn: T.A. Operations, 3435 Stelzer Road,
Columbus, OH 43219.
Electronic Purchases
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Your bank must participate in the Automated Clearing House (ACH) and must
be a United States Bank. Your bank or broker may charge for this service.
Establish electronic purchase option on your account application or call
1-800-9-PRAXIS. Your account can generally be set up for electronic purchases
within 15 days.
Call 1-800-9-PRAXIS to arrange a transfer from your bank account.
When an electronic purchase or sale is made through the Automated Clearing
House (ACH), it may take up to eight days to clear.
By Wire Transfer
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Wire transfers allow financial institutions to send funds to each other, almost
instantaneously.
Note: Your bank may charge a wire transfer fee.
For Initial Investment:
Please call 1-800-9-PRAXIS for a confirmation number and instructions for
returning your completed application.
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For Initial and Subsequent Investments:
Instruct your bank to wire transfer your investment to:
Huntington National Bank
Routing Number: ABA #044000024
DDA#01899607545
Include:
Your name
Your confirmation number
After instructing your bank to wire the funds, call 1-800-9-PRAXIS to
advise us of the amount being transferred and the name of your bank.
You can add to your account by using the convenient options described
below. The Fund reserves the right to change or eliminate these privileges at
any time with 60 days notice.
Automatic Investment Plan
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You can make automatic investments in the MMA Praxis Class of the Fund from
your bank account. Automatic investments can be as little as $50, once you've
invested the minimum required to open the account. You may elect at any time to
terminate your participation by writing to the Fund at P.O. Box 182446,
Columbus, OH 43218-2446. Death or legal incapacity will automatically terminate
your participation. Further, the Fund may terminate your participation upon 30
days' notice to you.
To invest regularly from your bank account:
o Complete the Automatic Investment Plan portion on your Account Application.
Make sure you note:
- Your bank name, address and account number.
- The amount you wish to invest automatically (minimum $50).
- How often you want to invest (every month, twice a month or 4 times a
year).
o Attach a voided personal check.
Selling Your Shares
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As a mutual fund shareholder, you are technically selling shares when you
request a withdrawal in cash. This is also known as redeeming shares or a
redemption of shares.
You may sell your shares at any time. Your sales price will be the next NAV
after your sell order is received by the Fund, its transfer agent, or your
investment representative. Normally you will receive your proceeds within a week
after your request is received. See "General Policies on Selling Shares" below.
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Instructions For Selling Shares
By Telephone (unless you have declined telephone sales privileges)
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1. Call 1-800-9-PRAXIS with instructions as to how you wish to receive your
funds (mail, wire, electronic transfer).
By Mail
- --------
1. Call 1-800-9-PRAXIS to request redemption forms or write a letter of
instruction indicating:
o Your Fund and account number.
o Amount you wish to redeem.
o Address where your check should be sent.
o Account owner signature.
2. Mail to: MMA Praxis Mutual Funds, P.O. Box 182446, Columbus, OH 43218-2446
By Overnight Service
- ---------------------
See instruction 1 above.
2. Send to: MMA Praxis Mutual Funds, c/o BISYS Fund Services, Attn: T.A.
Operations, 3435 Stelzer Road, Columbus, OH 43219
Wire Transfer
- --------------
You must indicate this option on your application.
Call 1-800-9-PRAXIS to request a wire transfer.
If you call by 12:00 noon Eastern time, your payment will generally be wired on
the same business day.
If you call by 4 p.m. Eastern time, your payment will normally be wired to your
bank on the next business day.
Note: Your financial institution may also charge a separate fee.
Automatic Withdrawal Plan
- --------------------------
You can receive automatic payments from your account monthly, quarterly or
annually. The minimum withdrawal is $50. To activate this feature:
o Make sure you've checked the appropriate box on the Account
Application. Or call 1-800-9-PRAXIS.
o Include a voided personal check.
o Your account must have a value of $10,000 or more to start
withdrawals.
o If the value of your account falls below $500 due to your withdrawals,
you may be asked to add sufficient funds to bring the account back to
$500 within 60 days, or the Fund may close your account and mail the
proceeds to you.
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Check Writing Privileges
- ------------------------
By making the appropriate election on the application form, an MMA Praxis
Class shareholder may request a supply of checks which may be used to effect
redemptions from the Fund. The checks will be issued in the shareholder's name.
Checks may be drawn in any amount of $250 or more for MMA Praxis 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 Fund's MMA Praxis Class 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. Investors who purchase Fund
shares by check may not receive their redemption proceeds 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.
An MMA Praxis Class shareholder must maintain a minimum $2,000 balance to
be eligible to elect the check writing privilege. If an account balance falls
below $2,000 for a non-retirement account only, the account will be charged a
$10.00 administrative fee by the Fund's MMA Praxis Class transfer agent. This
charge may be waived if the shareholder maintains at least a $10,000 in all MMA
Praxis funds, based upon shareholder accounts with common taxpayer
identification numbers.
General Policies On Selling 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 the
MMA Praxis Class of the Fund following receipt by the Fund's MMA Praxis Class
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.
Redemptions In Writing Required
- --------------------------------
You must request redemption in writing in the following situations:
14
<PAGE>
1. Redemptions from Individual Retirement Accounts ("IRAs").
2. Redemption requests requiring a signature guarantee, which include each of
the following:
o Redemptions over $10,000.
o Your account registration or the name(s) in your account has changed
within the last 15 days.
o The check is not being mailed to the address on your account.
o The check is not being made payable to the owner of the account.
o The redemption proceeds are being transferred to another Fund account
with a different registration.
A signature guarantee can be obtained from a financial institution, such as
a bank, broker-dealer, credit union, clearing agency, or savings association.
Verifying Telephone Redemptions
- --------------------------------
The Fund makes every effort to insure that telephone redemptions are only
made by authorized shareholders. All telephone calls are recorded for your
protection and you will be asked for information to verify your identity. Given
these precautions, unless you have specifically indicated on your application
that you do not want the telephone redemption feature, you may be responsible
for any fraudulent telephone orders. If appropriate precautions have not been
taken, the Fund's MMA Praxis Class transfer agent may be liable for losses due
to unauthorized transactions.
Redemptions Within 15 Business Days Of Initial Investment
- ----------------------------------------------------------
When you have made your initial investment by check, you cannot redeem any
portion of it until the Fund's MMA Praxis Class transfer agent is satisfied that
the check has cleared (which may require up to 15 days). You can avoid this
delay by purchasing shares with a certified check.
Delayed Redemption Request
- ---------------------------
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.
Closing Of Small Accounts
- --------------------------
If your Fund account falls below $500 due to your redemptions, the Fund may
ask you to increase your balance. If it is still below $500 after 60 days, the
Fund may close your account and send you the proceeds at the current NAV.
15
<PAGE>
Undeliverable Redemption Checks
- --------------------------------
For any shareholder who chooses to receive distributions in cash: If
distribution checks (i) are returned and marked as "undeliverable" or (ii)
remain uncashed for six months, your account will be changed automatically so
that all future distributions are reinvested in your account. Checks that remain
uncashed for six months will be canceled and the money reinvested in your
account in the Fund.
Exchanging Your Shares
- --------------------------------------------------------------------------------
Instructions For Exchanging Shares
You can exchange your shares in the MMA Praxis Class of the Fund for shares
of an MMA Praxis Mutual Fund (which are offered through a separate prospectus).
No transaction fees are charged for exchanges. If you wish to exchange your MMA
Praxis Class shares of the Fund, you may be required to pay any applicable
front-end sales charge.
You must meet the minimum investment requirements for the fund into which
you are exchanging. Exchanges from one fund to another are taxable. Exchanges
may be made by sending a signature guaranteed written request to MMA Praxis
Mutual Funds, P.O. Box 182446, Columbus, OH 43218-2446, or by calling
1-800-9-PRAXIS. Please provide the following information:
o Your name and telephone number.
o The exact name on your account and account number.
o Taxpayer identification number (usually your Social Security number).
o Dollar value or number of shares to be exchanged.
o The name of the Fund from which the exchange is to be made and the
account number.
o The name of the Fund into which the exchange is being made. If this is
an existing account, please provide the account number.
See "Selling Your Shares" for important information about telephone
transactions.
Notes On Exchanges
To prevent disruption in the management of the Fund, due to market timing
strategies, exchange activity may be limited to 4 exchanges within a calendar
year.
The registration and tax identification numbers of the two accounts must be
identical.
The Exchange Privilege (including automatic exchanges) may be changed or
eliminated at any time upon a 60-day notice to shareholders.
When exchanging from a fund that has no sales charge or a lower sales
charge to a fund with a higher sales charge, you may pay the difference.
Be sure to read carefully the Prospectus of any fund into which you wish to
exchange shares.
MMA Praxis Individual Retirement Account ("IRA")
- --------------------------------------------------------------------------------
An MMA Praxis IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement programs.
MMA Praxis IRA contributions may be tax-deductible and
16
<PAGE>
earnings are tax-deferred. Under the Tax Reform Act of 1986, the tax
deductibility of IRA contributions is restricted or eliminated for individuals
who participate in certain employer pension plans and whose annual income
exceeds certain limits. Existing IRAs and future contributions up to the IRA
maximums, whether deductible or not, still earn income on a tax-deferred basis.
MMA Praxis offers the following types of IRAs:
o Traditional o Education
o Roth o Simplified Employee Pension (SEP)
A SEP/IRA may be established on a group basis by an employer who wishes to
sponsor a tax-sheltered retirement program by making contributions into IRA's on
behalf of all eligible employees.
All MMA Praxis IRA distribution requests must be made in writing to the
Fund. Any additional deposits to an MMA Praxis IRA must distinguish the type and
year of the contribution.
For more information on an MMA Praxis IRA or, to request an MMA Praxis IRA
application, call the Fund at 1-800-9-PRAXIS. Shareholders are advised to
consult a tax adviser regarding IRA contribution and withdrawal requirements and
restrictions.
Savings Incentive Match Plans For Employees (Simple IRA Plans)
- --------------------------------------------------------------------------------
An MMA Praxis SIMPLE IRA Plan gives employers the ability to offer tax
deferred IRA accounts to their employees that are funded with salary reduction
contributions and employer matching or non-elective contributions.
403(b)(7) Defined Contribution Plan
- --------------------------------------------------------------------------------
An MMA Praxis 403(b)(7) Defined Contribution Plan offers employers that are
tax-exempt organizations the ability to establish tax-deferred accounts for
their employees that also permit salary reduction contributions.
Directed Dividends
- --------------------------------------------------------------------------------
A shareholder with an account having a current market value of at least
$5,000 may elect to have all income dividends and capital gains distributions
reinvested in an MMA Praxis Fund (provided the other fund is maintained at its
minimum required balance). The entire directed dividend (100%) must be
reinvested into the other fund if this option is chosen. This option is
available only to the same shareholder involving funds with the same shareholder
registration.
The Directed Dividend Option may be modified or terminated by the Fund at
any time after notice to the participating shareholders. Participation in the
Directed Dividend Option may be terminated or changed by the shareholder at any
time by writing the Fund's MMA Praxis Class transfer agent.
17
<PAGE>
Automatic Voluntary Charitable Contributions To The Mennonite Foundation
- --------------------------------------------------------------------------------
The Mennonite Foundation, Inc. was organized as a not-for-profit, public
foundation in 1952 and received 501(c)(3) tax status in 1953. The Foundation's
primary purposes are to facilitate the missions of church institutions through a
wide range of planned giving and asset management services, and to provide
stewardship education seminars in church and other settings.
In keeping with the socially responsible objectives of the Fund, MMA Praxis
Class shareholders may elect to make automatic, voluntary contributions of all
or a percentage of their income dividends and/or capital gains to The Mennonite
Foundation, Inc. In order to make such an election, shareholders must elect to
receive income dividends and/or capital gain distributions in cash. Shareholders
may indicate their desire to contribute by completing the appropriate section of
the account application regarding dividend elections. In order to qualify for
the automatic charitable contributions plan, shareholders are required to
maintain a minimum balance of $10,000 in the account from which voluntary
contributions are made.
The Foundation will manage contributions received from shareholders in the
Foundation's "Charitable Gift Fund," under current operating procedures.
Shareholders may advise the Foundation, with respect to their contributions, as
to the identity of desired charitable distributees, and the possible timing and
amounts of distributions. The Charitable Gift Fund has a minimum distribution
amount of $100. The Foundation retains legal and equitable control of the
Charitable Gift Fund, and follows a published list of guidelines when
determining whether to make a distribution. Shareholders with an account balance
under $10,000 may also participate in The Mennonite Foundation Charitable Gift
Fund by making contributions directly to the Foundation.
In 1998, the Foundation disbursed approximately $23.2 million to church and
charitable organizations.
Contributions to the Foundation are charitable contributions and, subject
to tax law limitations, are tax deductible on the itemized tax return of the
contributor, although the contributor must nevertheless include in income the
income dividends and/or capital gains contributed to the Foundation.
Shareholders who contribute to the Foundation will receive an annual report of
Foundation activities during the year.
The directors of the Foundation serve in a voluntary capacity and are not
paid directly or indirectly for their service to the Foundation, except for
expenses associated with directors' meetings.
You may obtain additional information, including the operating procedures
of the Charitable Gift Fund, by writing to The Mennonite Foundation, 1110 N.
Main Street, P.O. Box 483, Goshen, Indiana 46528.
Charitable Gift Option
- --------------------------------------------------------------------------------
The Charitable Gift Option allows certain shareholders of the MMA Praxis
Class of the Fund to designate all or any portion of their accounts to
automatically be transferred to a church or charitable organization at the death
of the shareholder. To participate in the Charitable Gift Option, shareholders
should call 1-800-9-PRAXIS for more information and to receive the necessary
enrollment forms. For a shareholder to change the Charitable Gift Option
instructions or to discontinue the feature, a written request must be sent to
the Fund's MMA Praxis Class transfer agent. It shall be the responsibility of
the shareholder to ascertain the tax-exempt qualification of a receiving
organization. Neither the Fund, nor the Fund's MMA Praxis Class transfer agent
will verify the qualifications of any receiving organizations, or issue any
charitable receipts. An investor should consult with his or her own tax counsel
and estate planner as to the availability and tax and probate consequences of
this feature of the Fund under applicable state or federal 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
18
<PAGE>
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 MMA Praxis Class bears a Shareholder Servicing Fee under the
Plan, the net income of and the dividends payable to the MMA Praxis Class will
be lower than the net income of and dividends payable to any other classes of
the Fund which do not bear such a fee. 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 purchase of shares in the Fund will be the purchase of an asset and the
shareholder's basis for its shares in the Fund will be its cost of the shares,
including any fees or expenses. The sale of shares in the Fund will be the
taxable disposition of an asset, with gain or loss recognized in an amount equal
to the difference between the shareholder's tax basis for the shares and the
proceeds received on the sale. The exchange of shares of one Portfolio for
shares of another Portfolio, if available, will also be treated as a taxable
disposition of the shares exchanged, on which gain or loss will be recognized.
In either case, loss recognition may be affected by the loss disallowance rules
of the Internal Revenue Code of 1986, as amended (the "Code").
The Fund intends to qualify and elect to be treated as a "regulated
investment company" under the Code. 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 expects that its distributions, as a result of its
investment objectives, will consist primarily of ordinary income. A shareholder
who elects to reinvest in additional shares will be treated for tax purposes as
if it had received and reinvested the cash dividend.
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 regarding the supplying of their taxpayer identification
numbers and the reporting of income. 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.
19
<PAGE>
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 MMA Praxis 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 MMA Praxis Class shares, a service fee equal to .25% per annum of
the MMA Praxis 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 MMA Praxis Class
shares provide that 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 MMA Praxis 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.
The Plan provides that the Adviser and Sub-Adviser 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 MMA Praxis Class) 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 Adviser,
Sub-Adviser 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.
20
<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 Individual Investor
Class, the Institutional Class, and the Broker Service Class of the Fund
(assuming reinvestment of all dividends and distributions). There are no
highlights for the MMA Praxis Class shares because there were no shares issued
in this Class during the fiscal year ended January 31, 1999. All classes have
substantially similar annual returns because the shares are invested in the same
portfolio of securities and the annual returns differ only to the extent the
classes do not have the same expenses. If the expenses of the MMA Praxis Class
are higher than the expenses of these other classes, then your annual returns
may be lower. 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>
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
21
<PAGE>
A Statement of Additional Information (SAI) dated _______, 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 1-800-9-PRAXIS.
To request other information, please call your financial intermediary or the
Fund.
================================================================================
PAX WORLD
MONEY MARKET
FUND, INC.
MMA PRAXIS CLASS
PROSPECTUS
_________, 1999
P.O. BOX 182446
COLUMBUS, OH 43218-2446
1-800-9-PRAXIS
================================================================================
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
MMA899P
<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 Prospectuses for the Institutional Class 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. each dated June 1, 1999 and
the Prospectus for the MMA Praxis Class Shares dated _____, 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,
the Individual Investor Class Shares and the MMA Praxis 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 into
the SAI from the Fund's Annual Report. The Annual Report is available, without
charge, upon request by calling the toll-free number provided. The material
relating to the purchase, redemption and pricing of shares has been incorporated
by reference to the prospectuses for each Class of shares.
This Statement of Additional Information is incorporated by reference into the
respective Prospectuses in its entirety.
Table of Contents
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund History.................................................2 Purchase, Redemption and Pricing of Shares............16
Description of the Fund and its Investments and Risks........2 Taxation of the Fund..................................17
Management of the Fund.......................................9 Underwriters..........................................18
Control Persons and Principal Holders of Securities.........10 Calculation of Performance Data.......................18
Investment Advisory and Other Services......................11 Financial Statements .................................19
Brokerage Allocation and Other Practices....................15 Description of Ratings................................20
Capital Stock and Other Securities..........................15
</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; and "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.
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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.
The Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue 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-Adviser 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.
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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 $1 billion 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's 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.
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 with respect to those
securities that are different in some respects from those incurred by a fund
which invests
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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 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, 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.
Pax World Management Corp. (the "Adviser") and Reich & Tang Asset Management
L.P. (the "Sub-Adviser") 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 Adviser and Sub-Adviser
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.
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
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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-Adviser 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 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
- --------
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.
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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.
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
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<PAGE>
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-Adviser 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 Adviser or the Sub-Adviser,
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;
(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
8
<PAGE>
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 the debt securities described
above under "Description of the Fund and its Investments 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, employs Pax World Management Corp. to serve as
Adviser to the Fund. Reich & Tang Asset Management L.P. will serve as the
Sub-Adviser of the Fund under a Sub-Advisory Agreement entered into between the
Adviser and Sub-Adviser. Due to the services performed by the Sub-Adviser, 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. Steven W.
Duff, Director of the Fund, may be deemed an "interested person" of the Fund, as
defined in the 1940 Act, on the basis of his affiliation with the Sub-Adviser.
Steven W. Duff, 45 - Director of the Fund, has been President of the Mutual
Funds division of the Sub-Adviser 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 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 Adviser
since 1996 and President of H.G. Wellington & Co., Inc. since 1991. His address
is 14 Wall
9
<PAGE>
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, Inc.
Laurence A. Shadek, 49 - Executive Vice-President of the Fund, has been Chairman
of the Board of the Adviser 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, Inc.
Bernadette N. Finn, 51 - Secretary of the Fund, has been Vice President of the
Mutual Funds division of the Sub-Adviser 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-Adviser 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, 42 - Treasurer of the Fund, has been Vice President and
Treasurer of the Sub-Adviser 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, 35 - Assistant Treasurer of the Fund, has been Vice President
of the Mutual Funds division of the Sub-Adviser since December 1997. Ms. Holtzer
was formerly Manager of Fund Accounting for the Sub-Adviser 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-Adviser 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-Adviser
do not receive compensation from the Fund.
<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 adviser.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
[On May 3, 1999 there were 108,790,593 Institutional Class of shares
outstanding, 375,329 Broker Service Class of shares outstanding 7,473,931
Individual Investor Class of shares outstanding and no MMA Praxis Class of
shares outstanding. As of May 3, 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 3, 1999:]
Name and Address % of Class Nature of Ownership
- ---------------- ---------- -------------------
Institutional Class
- -------------------
10
<PAGE>
Pax World Management Corp.
Balanced Fund
222 State Street
Portsmouth, NH 03801 [98.55%] Beneficial
Broker Service Class
- --------------------
Mrs. Mary Ingram Grant
c/o H.G. Wellington & Co., Inc.
14 Wall Street
New York, NY 10005 [32.85%] Record
Laurence A. Shadek IRA
H.G. Wellington & Co., Inc. TTEE
14 Wall Street
New York, NY 10005 [19.40%] Record
Estate of Alice W. Grant
Michael D. Grant, Jr., Thomas
W. Grant & Patricia G. Warner
c/o H.G. Wellington & Co., Inc.
14 Wall Street
New York, NY 10005 [14.52%] Record
Estate of Michael D. Grant
Michael D. Grant, Jr., Thomas
W. Grant & Patricia G. Warner
c/o H.G. Wellington & Co., Inc.
14 Wall Street
New York, NY 10005 [7.54%] Record
Ruotolo Associates Profit
Sharing Plan
c/o H.G. Wellington & Co., Inc.
14 Wall Street
New York, NY 10005 [7.06%] Record
Rutolo Associates
Attn: George Rutolo
c/o H.G. Wellington & Co., Inc.
14 Wall Street
New York, NY 10005 [6.16%] Record
Individual Investor Class
- -------------------------
Pax World Money Market Fund
P.O Box 8950
Wilmington, DE 19899
Attn: Ray Werkmeister [100.00%] Beneficial
V. INVESTMENT ADVISORY AND OTHER SERVICES
The Investment Adviser 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 Adviser had
over $863,000,000 in assets under management by virtue of serving as Adviser to
the Pax World Fund, Incorporated and the Pax World Growth Fund, Inc. The Adviser
has no other clients other than the Fund, the Pax World Fund and the Pax World
Growth Fund.
11
<PAGE>
The Sub-Adviser is a Delaware limited partnership with principal offices at 600
Fifth Avenue, New York, New York 10020. The Sub-Adviser, as of June 30, 1999,
was investment manager, adviser or supervisor with respect to assets aggregating
approximately $13.6 billion. In addition to the Fund, the Sub-Adviser 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-Adviser replacing New
England Investment Companies, L.P. ("NEICLP") as the limited partner and owner
of such interest in the Sub-Adviser, 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-Adviser. 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-Adviser. 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 advisers or sub-advisers 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 Adviser or the Sub-Adviser, approved an Investment Advisory Agreement
with the Adviser 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 Adviser (the "Advisory Agreement"), the Adviser, 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-Adviser. Under the Advisory
Agreement, the Fund will pay the Adviser 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 Adviser received an Advisory fee totaling $71,643, all of which was
waived.
Pursuant to the Sub-Advisory Agreement, the Sub-Adviser 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 Adviser 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-Adviser 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-Adviser, or of reckless disregard of its
obligations thereunder, the Sub-Adviser shall not be liable for any action or
failure to act in accordance with its duties thereunder.
12
<PAGE>
For its services under the Sub-Advisory Agreement, the Sub-Adviser receives from
the Adviser a fee equal to .075% per annum of the Fund's average daily net
assets from its advisory fee. The fees are accrued daily and paid monthly.
Investment management fees and operating expenses which are attributable to each
Class of the Fund will be allocated daily to each Class based on the percentage
of outstanding shares at the end of the day. Additional shareholder services
provided by Participating Organizations to Institutional Class shareholders
pursuant to the distribution and service plan shall be compensated by Reich &
Tang Distributors, Inc. (the "Distributor") from its shareholder servicing fee,
the Sub-Adviser 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-Adviser. For the Fund's
fiscal year ended January 31, 1999, the Sub-Adviser received Sub-Advisory fees
totaling $35,822, all of which was waived.
Pursuant to the Administrative Services Agreement with the Fund, the Sub-Adviser
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-Adviser. The personnel
rendering such services may be employees of the Sub-Adviser, of its affiliates
or of other organizations. The Fund pays the Sub-Adviser for such personnel and
for rendering such services at rates which must be agreed upon by the Fund and
the Sub-Adviser, 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-Adviser. It is intended that such rates will be the actual costs of the
Sub-Adviser. The Fund also reimburses the Sub-Adviser 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-Adviser. The
Sub-Adviser, 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-Adviser 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-Adviser
received administration fees totaling $47,762, all of which was waived.
Any portion of the total fees received by the Sub-Adviser may be used to provide
shareholder services and for distribution of Fund shares. (See "Distribution and
Service Plan" herein.)
Expense Limitation
The Sub-Adviser 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-Adviser 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-Adviser 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
The Fund's distributor is Reich & Tang Distributors, Inc., a Delaware
corporation with principal offices at 600 Fifth Avenue, New York, New York
10020.
Pursuant to Rule 12b-1 under the 1940 Act, the Securities and Exchange
Commission requires that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by the Rule. The Fund's Board of Directors has adopted a
distribution and service plan (the "Plan") and, pursuant to the Plan, the Fund
has entered into a Distribution Agreement and a Shareholder Servicing Agreement
(with respect to the Individual Investor Class, Broker Service Class and the MMA
Praxis Class) 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,
Broker Service Class and MMA Praxis Class shares. For its services under the
Shareholder Servicing Agreement (with respect to Individual Investor Class,
Broker Service Class and MMA Praxis Class shares only), the Distributor receives
from the Fund a fee equal to .25% per annum of the Individual Investor Class,
Broker Service Class and MMA Praxis 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,
Broker Service Class or MMA Praxis 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.
For the Fund's fiscal year ended January 31, 1999, the amount payable to the
Distributor under the Distribution and Service Plan and Shareholder Servicing
Agreement adopted thereunder pursuant to Rule 12b-1 under the 1940 Act, totaled
$4,185 for the Individual Investor Class and $10 for the Broker Service Class,
$0 of which was waived.
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 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-Adviser 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, Broker Service Class and MMA
Praxis 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, Broker Service Class
and MMA Praxis 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-Adviser 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
14
<PAGE>
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 21, 1999 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-Adviser, and shall continue
until March 31, 2000. The Plan provides that it may continue in effect for
successive annual periods provided it is approved by the Individual Investor
Class, Broker Service Class and MMA Praxis 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,
Broker Service Class and MMA Praxis 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, Broker Service Class and MMA Praxis 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. BISYS Fund Services, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, is the
transfer agent for the MMA Praxis 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-Adviser 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-Adviser or its affiliates. If, however, the Fund and other
investment companies or accounts managed by the Sub-Adviser 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-Adviser occur contemporaneously, the purchase or sale orders
may be aggregated in order to obtain any price advantage available to large
denomination purchasers or sellers.
15
<PAGE>
No portfolio transactions are executed with the Sub-Adviser or its affiliates
acting as principal. In addition, the Fund will not buy bankers' acceptances,
certificates of deposit or commercial paper from the Sub-Adviser 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 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.
The Fund is subdivided into four classes of shares of beneficial interest;
Institutional Class, Individual Investor Class, Broker Service Class and MMA
Praxis 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, Broker Service Class and MMA Praxis Class shares will be
assessed a Shareholder Servicing Fee of .25% of the average daily net assets of
the Individual Investor Class, Broker Service Class and MMA Praxis 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, Broker Service
Class and MMA Praxis 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.
16
<PAGE>
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
The material relating to the purchase, redemption and pricing of shares in the
prospectus for each Class of Shares is located in the Shareholder Information
section of each prospectus and 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 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 and elect to be treated as a regulated investment
company under 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 distributed to shareholders
or on its 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
17
<PAGE>
depending upon the shareholder's holding period for the shares. Non-corporate
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. 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 as 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 back up 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, distributions
(whether requested to be 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
The Fund calculates a seven-day yield quotation using a standard method
prescribed by the rules of the Securities and Exchange Commission. 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 quotient 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
18
<PAGE>
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 one
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%. There are no seven-day yield available for the MMA Praxis Class shares
since these shares were not yet in existence as of January 31, 1999.
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 (relating to Broker
Service Class and Individual Investor Class only) between the
Registrant and Reich & Tang Distributors, Inc.
(m.4) Form of Distribution and Service Plan (relating the MMA Praxis
Class) pursuant to Rule 12b-1 under the Investment Company Act of 1940.
(m.5) Form of Distribution Agreement (relating to the MMA Praxis
Class) between the Registrant and Reich & Tang Distributors, Inc.
(m.6) Form of Shareholder Servicing Agreement (relating to the MMA
Praxis Class) between the Registrant and Reich & Tang Distributors, Inc.
(n) Financial Data Schedule (For EDGAR Filing Only).
(o) Amendment No. 1 to 18f-3 Multi-Class Plan.
* (p) Powers of Attorney.
- ----------
* Filed with Pre-Effective Amendement No. 1 to the Registration Statement No.
333-43587 on April 7, 1998, and incorporated by reference herein.
** Filed with Reistration 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 business and other connections of the Advisor's directors and executive
officers are as set forth below. Except as otherwise indicated, the address of
each person is 222 State Street, Portsmouth, NH 03801.
<TABLE>
<CAPTION>
<S> <C> <C>
Position(s) Held With the
Name Adviser Principal Occupation(s)
- ---- -------------------------- -----------------------
Katherine Shadek Boyle Senior Vice President; Director Senior Vice President, Pax World
Management Corp.
Thomas W. Grant President; Director President, Pax World Management Corp.; Vice Chairman
of the Board and President, Pax World Fund,
Incorporated; President, Pax World Growth Fund, Inc.;
President, Pax World Money Market Fund, Inc.,
President, H.G. Wellington & Co., Inc.
James M. Shadek Senior Vice President for Social Research; Senior Vice President for Social Research and
Secretary; Director Secretary Pax World Management Corp.; Treasurer, Pax
World Growth Fund, Inc.; Account Executive, H.G.
Wellington & Co., Inc.
Laurence A. Shadek Chairman of the Board; Director Chairman of the Board, Pax World Management Corp.;
Chairman of the Board, Pax World Fund Incorporated;
Chairman of the Board, Pax World Growth Fund, Inc.;
Executive Vice President Pax World Money Market Fund,
Inc.; Executive Vice President H.G. Wellington & Co.,
Inc.
Thomas F. Shadek Senior Vice President - Marketing; Director Senior Vice President - Marketing, Pax World
Management Corp.
</TABLE>
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" and "Investment Advisory and Other Services" in the
Statement of Additional Information constituting parts A and B, respectively, of
the Registration Statement are incorporated herein by reference.
The Registrant's sub-adviser, Reich & Tang Asset Management L.P., is a
registered investment adviser. Nvest Companies, L.P. ("Nvest) is the limited
partner and owner of a 99.5% interest in RTAMLP. Reich & Tang Asset Management,
Inc. ("RTAM") (an indirect wholly-owned subsidiary of Nvest) is the sole general
partner and owner of the remaining .05% interest in RTAMLP. RTAMLP's investment
advisory clients include seventeen registered investment companies, which invest
principally in money market instruments. In addition, two of RTAMLP's advisory
clients are registered investment companies which invest 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, has been 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,
Director of The New England since March 1993, Chairman of the Board of Directors
of NEIC's subsidiaries other than Loomis, Sayles & Company, L.P. ("Loomis") and
C-2
<PAGE>
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. Neil Ryland, Executive Vice President, Treasurer
and Chief Financial Officer Nvest Corporation since July 1993. Edward N.
Wadsworth, Executive Vice President, General Counsel, Clerk and Secretary of
Nvest Corporation since December 1989, 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 of NEIC since September 1993, and Vice
President of Reich & Tang Mutual Funds since July 1994. Richard E. Smith, III
has been a Director of RTAM since July 1994, and President and Director of RTAM
since July 1994, President and Chief Operating Officer of the Reich & Tang
Capital Management Group since July 1994. Steven W. Duff has been a Director of
RTAM since October 1994, and President and Chief Executive Officer of Reich &
Tang Mutual Funds since August 1994. Mr. Duff is President and a
Director/Trustee of 14 funds in the Reich & Tang Fund Complex, President of Back
Bay Funds, Inc., Director of Pax World Money Market Fund, Inc., 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, and Vice President of Reich & Tang
Mutual Funds since July 1994. Ms. Finn is also Secretary of 14 funds in the
Reich & Tang Complex and a Vice President and Secretary of 5 funds in the Reich
& Tang Fund Complex. Richard DeSanctis has been Treasurer of RTAM since July
1994, Assistant Treasurer of NEIC since September 1993, Treasurer of the Reich &
Tang Mutual Funds since July 1994. Mr. DeSanctis is also Treasurer of 18 funds
in the Reich & Tang Fund Complex. and is Vice President and Treasurer of
Cortland Trust, Inc. Richard I. Weiner has been Vice President of RTAM since
July 1994, Vice President of NEIC since September 1993, and Vice President of
Reich & Tang Asset Management L.P. Capital Management Group since July 1994. Mr.
Weiner has served as a Vice President of Reich & Tang, Inc. since September
1982. Rosanne 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, in
addition she is also Assistant Treasurer of 19 funds in the Reich & Tang Fund
Complex.
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.
(b) 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) 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.
C-3
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 14th day of July, 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 July 14, 1999
By: /s/ Steven W. Duff
Steven W. Duff
(2) Principal Financial and Treasurer July 14, 1999
Accounting Officer
By: /s/ Richard De Sanctis
Richard De Sanctis
(3) Majority of Directors
Steven W. Duff Director July 14, 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.
EXHIBIT j
McGLADREY & PULLEN, L.L.P. RSM
-------------------------- ---
Certified Public Accountants & Consultants international
CONSENT OF INDEPENDENT AUDITORS
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.
3 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
July 13, 1999
PAX WORLD MONEY MARKET FUND, INC.
MMA PRAXIS CLASS OF SHARES
FORM OF
Distribution and Service Plan Pursuant to Rule
12b-1 Under the Investment Company Act of 1940
The Distribution and Service Plan (the "Plan") is adopted by Pax World
Money Market Fund, Inc. (the "Fund") on behalf of the MMA Praxis Class of shares
of the Fund in accordance with the provisions of Rule 12b-1 under the Investment
Company Act of 1940 (the "Act").
The Plan
1. The Fund and Reich & Tang Distributors, Inc. (the
"Distributor"), have entered into a Distribution Agreement, in a form
satisfactory to the Fund's Board of Directors, under which the Distributor will
act as distributor of the Fund's MMA Praxis Class of shares. Pursuant to the
Distribution Agreement, with respect to the MMA Praxis Class of shares, the
Distributor, as agent of the Fund, will solicit orders for the purchase of the
Fund's MMA Praxis Class of shares, provided that any subscriptions and orders
for the purchase of the Fund's shares will not be binding on the Fund until
accepted by the Fund as principal.
2. The Fund and the Distributor have entered into a
Shareholder Servicing Agreement with respect to the MMA Praxis Class of shares
of the Fund, in a form satisfactory to the Fund's
<PAGE>
Board of Directors, which provides that the Distributor will be paid a service
fee for providing or for arranging for others to provide all personal
shareholder servicing and related maintenance of shareholder account functions
not performed by us or our transfer agent.
3. The Manager may make payments from time to time from its
own resources, which may include the management fees and administrative services
fees received by the Manager from the Fund and from other companies, and past
profits for the following purposes:
(i) to pay the costs of, and to compensate others, including
organizations whose customers or clients are MMA Praxis Class Fund
Shareholders ("Participating Organizations"), for performing personal
shareholder servicing and related maintenance of shareholder account
functions on behalf of the Fund;
(ii) to compensate Participating Organizations for providing
assistance in distributing the Fund's MMA Praxis Class of shares; and
(iii) to pay the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective
shareholders, advertising, and other promotional activities, including
salaries and/or commissions of sales personnel of the Distributor and
other persons, in connection with the distribution of the Fund's MMA
Praxis Class of shares.
2
<PAGE>
The Distributor may also make payments from time to time from its own resources,
which may include the service fee and past profits for the purpose enumerated in
(i) above. Further, the Distributor may 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 (1) the Manager for any fiscal year
under the Investment Management Contract or the Administrative Services
Agreement in effect for that year or otherwise or (2) to the Distributor under
the Shareholder Servicing Agreement in effect for that year or otherwise. The
Investment Management Contract will also require the Manager to reimburse the
Fund for any amounts by which the Fund's annual operating expenses, including
distribution expenses, exceed in the aggregate in any fiscal year the limits
prescribed by any state in which the Fund's shares are qualified for sale.
4. The Fund will pay for (i) telecommunications expenses,
including the cost of dedicated lines and CRT terminals, incurred by the
Distributor and Participating Organizations in carrying out its obligations
under the Shareholder Servicing Agreement with respect to the MMA Praxis
Individual Class of shares of the Fund 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.
3
<PAGE>
5. Payments by the Distributor or Manager to Participating
Organizations as set forth herein are subject to compliance by them with the
terms of written agreements in a form satisfactory to the Fund's Board of
Directors to be entered into between the Distributor and the Participating
Organizations.
6. The Fund and the Distributor will prepare and furnish to
the Fund's Board of Directors, at least quarterly, written reports setting forth
all amounts expended for servicing and distribution purposes by the Fund, the
Distributor and the Manager, pursuant to the Plan and identifying the servicing
and distribution activities for which such expenditures were made.
7. The Plan became effective upon approval by (i) a majority
of the outstanding voting securities of the Fund (as defined in the Act), and
(ii) a majority of the Board of Directors of the Fund, including a majority of
the Directors who are not interested persons (as defined in the Act) of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreement entered into in connection with the Plan, pursuant to a
vote cast in person at a meeting called for the purpose of voting on the
approval of the Plan.
8. The Plan will remain in effect until ___________ __, 2000
unless earlier terminated in accordance with its terms, and thereafter may
continue in effect for successive annual periods if approved each year in the
manner described in clause (ii) of paragraph 7 hereof.
4
<PAGE>
9. The Plan may be amended at any time with the approval of
the Board of Directors of the Fund, provided that (i) any material amendments of
the terms of the Plan will be effective only upon approval as provided in clause
(ii) of paragraph 7 hereof, and (ii) any amendment which increases materially
the amount which may be spent by the Fund pursuant to the Plan will be effective
only upon the additional approval as provided in clause (i) of paragraph 7
hereof (with each class of the Fund voting separately).
10. The Plan may be terminated without penalty at any time (i)
by a vote of the majority of the entire Board of Directors of the Fund and by a
vote of a majority of the Directors of the Fund who are not interested persons
(as defined in the Act) of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan,
or (ii) by a vote of a majority of the outstanding voting securities of the Fund
(with each class of the Fund voting separately) (as defined in the Act).
5
FORM OF
DISTRIBUTION AGREEMENT
PAX WORLD MONEY MARKET FUND, INC.
the "Fund"
MMA PRAXIS CLASS OF SHARES
600 Fifth Avenue
New York, New York 10020
_______, 1999
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020
Ladies and Gentlemen:
We hereby confirm our agreement with you as follows:
1. In consideration of the agreements on your part herein
contained and of the payment by us to you of a fee of $1 per year and on the
terms and conditions set forth herein we have agreed that you shall be, for the
period of this agreement, a distributor, as our agent, for the unsold portion of
such number of shares of Common Stock, $.001 par value per share, as may be
effectively registered from time to time under the Securities Act of 1933, as
amended (the "1933 Act"). This agreement is being entered into pursuant to the
Distribution and Service Plan (the "Plan") adopted by us in accordance with Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act").
2. We hereby agree that you will act as our agent, and hereby
appoint you our agent, to offer, and to solicit offers to subscribe to, the
unsold balance of shares of our Common Stocks as shall then be effectively
registered under the Act. All subscriptions for shares of our Common Stock
obtained by you shall be directed to us for acceptance and shall not be binding
on us until accepted by us. You shall have no authority to make binding
subscriptions on our behalf. We reserve the right to sell shares of our Common
Stock through other distributors or directly to investors through subscriptions
received by us at our principal office in New York, New York. The right given to
you under this agreement shall not apply to shares of our Common Stock issued in
connection with (a) the merger or consolidation of any other investment company
with us, (b) our acquisition by purchase or otherwise of all or substantially
all of the assets or stock of any other investment company, or (c) the
reinvestment
<PAGE>
in shares of our Common Stock by our shareholders of dividends or other
distributions or any other offering by us of securities to our shareholders.
3. You will use your best efforts to obtain subscriptions to
shares of our Common Stock upon the terms and conditions contained herein and in
our Prospectus, as in effect from time to time. You will send to us promptly all
subscriptions placed with you. We shall furnish you from time to time, for use
in connection with the offering of shares of our Common Stock, such other
information with respect to us and shares of our Common Stock as you may
reasonably request. We shall supply you with such copies of our Registration
Statement and Prospectus, as in effect from time to time, as you may request.
Except as we may authorize in writing, you are not authorized to give any
information or to make any representation that is not contained in the
Registration Statement or Prospectus, as then in effect. You may use employees,
agents and other persons, at your cost and expense, to assist you in carrying
out your obligations hereunder, but no such employee, agent or other person
shall be deemed to be our agent or have any rights under this agreement. You may
sell our shares to or through qualified brokers, dealers and financial
institutions under selling and servicing agreements provided that no dealer,
financial institution or other person shall be appointed or authorized to act as
our agent without our written consent.
With respect to the MMA Praxis Class of shares of the Fund,
you will arrange for organizations whose customers or clients are shareholders
of our Fund ("Participating Organizations") to enter into agreements with you
for the performance of shareholder servicing and related administrative
functions not performed by you or the Transfer Agent. Pursuant to our
Shareholder Servicing Agreement with you with respect to the MMA Praxis Class of
shares, you may make payments to Participating Organizations for performing
shareholder servicing and related administrative functions with respect to the
MMA Praxis Class of shares. Such payments will be made only pursuant to written
agreements approved in form and substance by our Board of Directors to be
entered into by you and the Participating Organizations. It is recognized that
we shall have no obligation or liability to you or any Participating
Organization for any such payments under the agreements with Participating
Organizations. Our obligation is solely to make payments to you under the
Shareholder Servicing Agreement (with respect to the MMA Praxis Class of shares)
and to the Manager under the Investment Management Contract and the
Administrative Services Contract. All sales of our shares effected through you
will be made in compliance with all applicable federal securities laws and
regulations and the Constitution, rules and regulations of the National
Association of Securities Dealers, Inc. ("NASD").
2
<PAGE>
4. We reserve the right to suspend the offering of shares of
our Common Stock at any time, in the absolute discretion of our Board of
Directors, and upon notice of such suspension you shall cease to offer shares of
our Common Stocks hereunder.
5. Both of us will cooperate with each other in taking such
action as may be necessary to qualify shares of our Common Stock for sale under
the securities laws of such states as we may designate, provided, that you shall
not be required to register as a broker-dealer or file a consent to service of
process in any such state where you are not now so registered. Pursuant to the
Sub-Advisory Agreement in effect between us and the Sub-Advisor, we will pay all
fees and expenses of registering shares of our Common Stock under the Act and of
qualification of shares of our Common Stocks, and to the extent necessary, our
qualification under applicable state securities laws. You will pay all expenses
relating to your broker-dealer qualification.
6. We represent to you that our Registration Statement and
Prospectus have been carefully prepared to date in conformity with the
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Securities and Exchange Commission (the "SEC") thereunder. We represent and
warrant to you, as of the date hereof, that our Registration Statement and
Prospectus contain all statements required to be stated therein in accordance
with the 1933 Act and the 1940 Act and the SEC's rules and regulations
thereunder; that all statements of fact contained therein are or will be true
and correct at the time indicated or the effective date as the case may be; and
that neither our Registration Statement nor our Prospectus, when they shall
become effective or be authorized for use, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of shares
of our Common Stock. We will from time to time file such amendment or amendments
to our Registration Statement and Prospectus as, in the light of future
development, shall, in the opinion of our counsel, be necessary in order to have
our Registration Statement and Prospectus at all times contain all material
facts required to be stated therein or necessary to make any statements therein
not misleading to a purchaser of shares of our Common Stock. If we shall not
file such amendment or amendments within fifteen days after our receipt of a
written request from you to do so, you may, at your option, terminate this
agreement immediately. We will not file any amendment to our Registration
Statement or Prospectus without giving you reasonable notice thereof in advance;
provided, however, that nothing in this agreement shall in any way limit our
right to file such amendments to our Registration Statement or Prospectus, of
whatever character, as we may deem advisable, such right being in all respects
absolute and unconditional. We represent and warrant to you that any
3
<PAGE>
amendment to our Registration Statement or Prospectus hereafter filed by us will
be carefully prepared in conformity within the requirements of the 1933 Act and
the 1940 Act and the SEC's rules and regulations thereunder and will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the 1933 Act and the 1940 Act and the SEC's rules and
regulations thereunder; that all statements of fact contained therein will, when
the same shall become effective, be true and correct; and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of our
shares.
7. We agree to indemnify, defend and hold you, and any person
who controls you within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which you or
any such controlling person may incur, under the 1933 Act or the 1940 Act, or
under common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in our Registration Statement or
Prospectus in effect from time to time or arising out of or based upon any
alleged omission to state a material fact required to be stated in either of
them or necessary to make the statements in either of them not misleading;
provided, however, that in no event shall anything herein contained be so
construed as to protect you against any liability to us or our security holders
to which you would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of your duties, or by reason of
your reckless disregard of your obligations and duties under this agreement. Our
agreement to indemnify you and any such controlling person is expressly
conditioned upon our being notified of any action brought against you or any
such controlling person, such notification to be given by letter or by telegram
addressed to us at our principal office in New York, New York, and sent to us by
the person against whom such action is brought within ten days after the summons
or other first legal process shall have been served. The failure so to notify us
of any such action shall not relieve us from any liability which we may have to
the person against whom such action is brought other than on account of our
indemnity agreement contained in this paragraph 7. We will be entitled to assume
the defense of any suit brought to enforce any such claim, and to retain counsel
of good standing chosen by us and approved by you. In the event we do elect to
assume the defense of any such suit and retain counsel of good standing approved
by you, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case we do
not
4
<PAGE>
elect to assume the defense of any such suit, or in case you, in good faith,
do not approve of counsel chosen by us, we will reimburse you or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by you or them. Our indemnification
agreement contained in this paragraph 7 and our representations and warranties
in this agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of you or any controlling person and shall
survive the sale of any shares of our Common Stock made pursuant to
subscriptions obtained by you. This agreement of indemnity will inure
exclusively to your benefit, to the benefit of your successors and assigns, and
to the benefit of any of your controlling persons and their successors and
assigns. We agree promptly to notify you of the commencement of any litigation
or proceeding against us in connection with the issue and sale of any shares of
our Common Stock.
8. You agree to indemnify, defend and hold us, our several
officers and directors, and any person who controls us within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which we, our officers or directors, or any
such controlling person may incur under the 1933 Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by us,
our officers or directors or such controlling person shall arise out of or be
based upon any alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our Registration
Statement or Prospectus as in effect from time to time, or shall arise out of or
be based upon any alleged omission to state a material fact in connection with
such information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading. Your agreement
to indemnify us, our officers and directors, and any such controlling person is
expressly conditioned upon your being notified of any action brought against us,
our officers or directors or any such controlling person, such notification to
be given by letter or telegram addressed to you at your principal office in New
York, New York, and sent to you by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. You shall have a right to control the defense of such action,
with counsel of your own choosing, satisfactory to us, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event you and we, our officers or directors or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of any such action. The failure so to notify you of any such action shall not
relieve
5
<PAGE>
you from any liability which you may have to us, to our officers or directors,
or to such controlling person other than on account of your indemnity agreement
contained in this paragraph 8.
9. We agree to advise you immediately:
a. of any request by the SEC for amendments to our
Registration Statement or Prospectus or for additional information,
b. of the issuance by the SEC of any stop order suspending
the effectiveness of our Registration Statement or Prospectus or the initiation
of any proceedings for that purpose,
c. of the happening of any material event which makes untrue
any statement made in our Registration Statement or Prospectus or which requires
the making of a change in either of them in order to make the statements therein
not misleading, and
d. of all action of the SEC with respect to any amendments
to our Registration Statement or Prospectus.
10. This agreement will become effective on the date hereof
and will remain in effect thereafter for successive twelve-month periods
(computed from each ____________), provided that such continuation is
specifically approved at least annually by vote of our Board of Directors and of
a majority of those of our directors who are not interested persons (as defined
in the 1940 Act) and have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan, cast in person
at a meeting called for the purpose of voting on this agreement. This agreement
may be terminated at any time, without the payment of any penalty, (i) by vote
of a majority of our entire Board of Directors, and by a vote of a majority of
our Directors who are not interested persons (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of the Plan
or in any agreement related to the Plan, or (ii) by vote of a majority of our
outstanding voting securities, as defined in the Act, on sixty days' written
notice to you, or (iii) by you on sixty days' written notice to us.
11. This Agreement may not be transferred, assigned, sold or
in any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the SEC thereunder.
12. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or
6
<PAGE>
restrict your right, the right of any of your employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the 1940 Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to another
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
PAX WORLD MONEY MARKET FUND, INC.
MMA PRAXIS CLASS OF SHARES
By:
Accepted: _________, 1999
REICH & TANG DISTRIBUTORS, INC.
By: ___________________________________
7
SHAREHOLDER SERVICING
AGREEMENT
PAX WORLD MONEY MARKET FUND, INC.
(the "Fund")
MMA PRAXIS CLASS OF SHARES
600 Fifth Avenue
New York, New York 10020
February __, 1999
Reich & Tang Distributors, Inc. ("Distributor")
600 Fifth Avenue
New York, New York 10020
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We hereby employ you, pursuant to the Distribution and
Service Plan, as amended, adopted by us in accordance with Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended (the "Act"), to
provide the services listed below on behalf of the MMA Class of shares. You will
perform, or arrange for others including organizations whose customers or
clients are shareholders of our corporation (the "Participating Organizations")
to perform, all personal shareholder servicing and related maintenance of
shareholder account functions ("Shareholder Services") not performed by us or
our transfer agent.
2. You will be responsible for the payment of all expenses
incurred by you in rendering the foregoing services, except that we will pay for
(i) telecommunications expenses, including the cost of dedicated lines and CRT
terminals, incurred by the Distributor and Participating Organizations in
rendering such services to the MMA Praxis Class Shareholders, and (ii)
preparing, printing and delivering our prospectus to existing shareholders and
preparing and printing subscription application forms for shareholder accounts.
3. You may make payments from time to time from your own
resources, including the fee payable hereunder and past profits to compensate
Participating Organizations, for providing Shareholder Services to the MMA
Praxis Class Shareholders of the Fund. Payments to Participating Organizations
to compensate them for providing Shareholder Services are subject to compliance
by
2
<PAGE>
them with the terms of written agreements satisfactory to our Board of Directors
to be entered into between the Distributor and the Participating Organizations.
The Distributor will in its sole discretion determine the amount of any payments
made by the Distributor pursuant to this Agreement, provided, however, that no
such payment will increase the amount which we are required to pay either to the
Distributor under this Agreement or to the Advisor under the Advisory Agreement,
the Administrative Services Agreement, or otherwise.
4. We will expect of you, and you will give us the benefit of,
your best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
5. In consideration of your performance, we will pay you a
service fee as defined by Article III, Section 26(b)(9) of the Rules of Fair
Practice, as amended, of the National Association of Securities Dealers, Inc. at
the annual rate of one quarter of one percent (0.25%) of the Fund's MMA Praxis
Class share's average daily net assets. Your fee will be accrued by us daily,
and will be payable on the last day of each calendar month for services
performed hereunder during that month or on such other schedule as you shall
request of us in writing. You may waive your right to any fee to which you are
entitled hereunder, provided such waiver is delivered to us in writing.
6. This Agreement will become effective on the date hereof and
thereafter for successive twelve-month periods (computed from each ___________),
provided that such continuation is specifically approved at least annually by
vote of our Board of Directors and of a majority of those of our directors who
are not interested persons (as defined in the Act) and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan, cast in person at a meeting called for the purpose of
voting on this Agreement. This Agreement may be terminated at any time, without
the payment of any penalty, (i) by vote of a majority of our entire Board of
Directors, and by a vote of a majority of our Directors who are not interested
persons (as defined in the Act) and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan,
or (ii) by vote of a majority of the outstanding voting securities of the Fund's
MMA Praxis Class of shares, as defined in the Act, on sixty days' written notice
to you, or (iii) by you on sixty days' written notice to us.
2
<PAGE>
7. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission
thereunder.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, the
right of any of your employees or the right of any officers or directors of
Reich & Tang Asset Management, Inc., your general partner, who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to another
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
PAX WORLD MONEY MARKET FUND, INC.
MMA PRAXIS CLASS OF SHARES
By:
ACCEPTED: February __, 1999
REICH & TANG DISTRIBUTORS, INC.
By: __________________________
3
PAX WORLD MONEY MARKET FUND, INC.
RULE 18f-3 MULTI-CLASS PLAN
Amendment No. 1
August , 1999
I. Introduction.
Pursuant to Rule 18f-3 under the Investment Company Act of
1940, as amended (the "1940 Act"), the following sets forth the method for
allocating fees and expenses among each class of shares of Pax World Money
Market Fund, Inc. (the "Company" or "Multi-Class Fund"). In addition, this Rule
18f-3 Multi-Class Plan (the "Plan") sets forth the shareholder servicing
arrangements, distribution arrangements, conversion features, exchange
privileges and other shareholder services of each class of shares in the
Multi-Class Fund.
The Company is an open-end series investment company
registered under the 1940 Act and the shares of which are registered on Form
N-1A under the Securities Act of 1933 (Reg. No. 333-43587). This Plan was
originally approved by the Board of Directors on ______, 1998. Upon the
effective date of this Amendment, the Company hereby elects to offer multiple
classes of pursuant to the provisions of this Amendment.
This Amendment serves to create an MMA Praxis Retail ("MMA")
Class of Shares of the Multi-Class Fund for the purpose of accommodating clients
and customers of MMA Capital Management.
II. Allocation of Expenses.
Pursuant to Rule 18f-3 under the 1940 Act, the Company shall
allocate to each class of shares (i) any fees and expenses incurred by the
Company in connection with the distribution of such class of shares under a
distribution and service plan adopted for such class of shares pursuant to Rule
12b-1, and (ii) any fees and expenses incurred by the Company under a
shareholder servicing plan in connection with the provision of shareholder
services to the holders of such class of shares. In addition, pursuant to Rule
18f-3, the Company may allocate the following fees and expenses to a particular
class of shares:
(i) transfer agent fees and related expenses
identified by the transfer agent as being
attributable to such class of shares;
<PAGE>
(ii) printing and postage expenses related to
preparing and distributing materials such as
shareholder reports, prospectuses, reports,
and proxies to current shareholder of such
class of shares or to regulatory agencies
with respect to such class of shares;
(iii) blue sky registration or qualification fees
incurred by such class of shares;
(iv) Securities and Exchange Commission
registration fees incurred by such class of
shares;
(v) the expense of administrative personnel and
services (including, but not limited to,
those of a fund accountant, or divided
paying agent charged with calculating net
asset values or determining or paying
dividends 1 ) as required to support the
shareholders of such class of shares;
(vi) litigation or other legal expenses relating
solely to such class of shares;
(vii) fees of the Company's Directors incurred as
a result of issues relating to such class of
shares; and
(viii) independent accountants'fees relating solely
to such class of shares.
The initial determination of the class expenses that will be
allocated by the Company to a particular class of shares and any subsequent
changes thereto will be reviewed by the Board of Directors and approved by a
vote of the Directors of the Company, including a majority of the Directors who
are not interested persons of the Company.
Income, realized and unrealized capital gains and losses, and
any expenses of the Multi-Class Fund not allocated to a particular class of the
Fund pursuant to this Plan shall be allocated to each class of the Fund on the
basis of the net asset value of that class in relation to the net asset of the
Fund.
III. Class Arrangements.
The following summarizes the Rule 12b-1 distribution fees,
shareholder servicing fees, exchange privileges and other shareholder services
applicable to each class of shares of the Multi-Class Fund. Additional details
regarding such fees and services are set forth in the Fund's current Prospectus
and Statement of Additional Information.
- --------
1. Rule 18f-3 requires that services related to the management of the
portfolio's assets, such as custodial fees, be borne by the fund and
not by class.
<PAGE>
A. Institutional Class Shares -
1. Initial Sales Load: None.
2. Contingent Deferred Sales Charge: None.
3. Redemption Fees: None.
4. Rule 12b-1 Distribution Fees: None.
5. Rule 12b-1 Shareholder Servicing Fees: None.
6. Conversion Features: None.
7. Exchange Privileges: None
8. Other Incidental Shareholder Services: As
provided in the Prospectus.
B. Individual Investor Class Shares -
1. Initial Sales Load: None.
2. Contingent Deferred Sales Charge: None.
3. Redemption Fees: None.
4. Rule 12b-1 Distribution Fees: None.
5. Rule 12b-1 Shareholder Servicing Fees: Up to
.25% per annum of average daily net assets.
6. Conversion Features: None.
7. Exchange Privileges: As provided in the
Prospectus.
8. Other Incidental Shareholder Services: As
provided in the Prospectus.
C. Broker Service Class Shares-
1. Maximum Initial Sales Load: None.
<PAGE>
2. Contingent Deferred Sales Charge: None.
3. Redemption Fees: None.
4. Rule 12b-1 Distribution Fees: None.
5. Rule 12b-1 Shareholder Servicing Fees: Up to
.25 per annum of the average daily net
assets.
6. Sub-Accounting/Transfer Agent Fee: .20% per
annum of the average daily net assets.
7. Conversion Features: None.
8. Exchange Privileges: None.
9. Other Incidental Shareholder Services: As
provided in the Prospectus.
D. MMA Praxis Retail Class Shares -
1. Initial Sales Load: None.
2. Contingent Deferred Sales Charge: None.
3. Redemption Fees: None.
4. Rule 12b-1 Distribution Fees: None.
5. Rule 12b-1 Shareholder Servicing Fees: Up to
.25% per annum of average daily net assets.
6. Sub-Accounting/Transfer Agent Fee: [.20%]
per annum of the average daily net assets.
7. Conversion Features: None.
8. Exchange Privileges: As provided in the
Prospectus.
9. Other Incidental Shareholder Services: As
provided in the Prospectus.
IV. Board Review.
<PAGE>
The Board of Directors of the Company shall review this Plan
as frequently as it deems necessary. Prior to any material amendments to this
Plan, the Company's Board of Directors, including a majority of the Directors
that are not interested persons of the Company, shall find that the Plan, as
proposed to be amended (including any proposed amendments to the method of
allocating class and/or fund expenses), is in the best interest of each class of
shares of a Multi-Class Fund individually and the Fund as a whole. In
considering whether to approve any proposed amendments(s) to the Plan, the
Directors of the Company shall request and evaluate such information as they
consider reasonably necessary to evaluate the proposed amendments(s) to the
Plan.
In making its initial determination to approve this Plan, the
Board focused on, among other things, the relationship between or among the
classes and examined potential conflicts of interest between classes regarding
the allocation of fees, services, waivers and reimbursement of expenses, and
voting rights. The Board evaluated the level of services provided to each class
and the cost of those services to ensure that the services are appropriate and
the allocation of expenses is reasonable. In approving any subsequent amendments
to this Plan, the Board shall focus on and evaluate such factors as well as any
others deemed necessary by the Board.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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
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</LEGEND>
<CIK> 0001051862
<NAME> Pax World Money Market Fund, Inc.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and supporting
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</LEGEND>
<CIK> 0001051862
<NAME> Pax World Money Market Fund, Inc.
<SERIES>
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
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schedules as of the end of the most current period and is
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</LEGEND>
<CIK> 0001051862
<NAME> Pax World Money Market Fund, Inc.
<SERIES>
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