SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. _____)
Filed by the registrant: [X]Registrant /X/
Filed by a partyParty other than the registrant: [ ]Registrant /_/
Check the appropriate box:
[X]/X/ Preliminary proxy statement
[ ]Proxy Statement
/_/ Definitive proxy statement
[ ]Proxy Statement
/_/ Definitive additional materials
[ ]Additional Materials
/_/ Soliciting material pursuantMaterial Pursuant to Rule 14a-11(c) or Rule 14a-12
Pax World Fund, Incorporated
----------------------------------/_/ Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
PAX WORLD FUND, INCORPORATED
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(Name of Registrant as Specified inIn Its Charter)
Pax World Fund, Incorporated
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(Name of Person[s]Person(s) Filing Proxy Statement)Statement, if Other Than the Registrant)
Payment of filing feeFiling Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ]/X/ No fee required
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined.
[ ]determined):*
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/_/ Fee paid previously with preliminary materials:
/_/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule,Schedule or registration statementRegistration no.:
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(3) Filing party:
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(4) Date filed:
CONFIDENTIAL PRELIMINARY PROXY
FOR SEC USE ONLY-----------------------------------------------------------------
PAX WORLD FUND, INCORPORATED
--------------
PROXY STATEMENT AND
NOTICE OF SPECIALANNUAL MEETING OF
SHAREHOLDERS
--------------
THURSDAY, SEPTEMBER __, 1996
CONFIDENTIAL PRELIMINARY PROXY
FOR SEC USE ONLYThursday, June 8, 2000
TABLE OF CONTENTS
Page
----
President's Letter ........................................................ --
Notice of Annual Meeting .................................................. --
Proxy Statement ........................................................... --
Proposal A - To Elect a Board of Eight Directors .......................... --
Proposal B - To Ratify the Selection of Pannell Kerr Forster PC
as Independent Public Accountants of the Fund ................ --
Proposal C - To Amend the Certificate of Incorporation of the Fund
to Change the Name of the Fund to "Pax World Balanced
Fund, Inc." .................................................. --
Proposal D - To Amend the By-laws of the Fund and to Approve Certain
Changes to the Fund's Fundamental Investment Policies to
Prohibit the Fund from Investing in Companies Appearing on the
United States Department of Defense List of 100 Largest
Contractors, if 5% or more of the Gross Sales of such
Companies are Derived from Contracts with the United States
Department of Defense ........................................ --
Proposal E - To Amend the By-laws of the Fund and to Approve Certain
Changes to the Fund's Fundamental Investment Policies to
Permit the Fund to Invest up to a total of 25% of the Value
of its Assets in Securities of Foreign Issuers ............... --
Other Business ............................................................ --
Expenses of Proxy Solicitation ............................................ --
Security Ownership of Certain Beneficial Owners and Management ............ --
Additional Information .................................................... --
PAX WORLD FUND, INCORPORATED
224222 STATE STREET
PORTSMOUTH, NEW HAMPSHIRE 03801NH 03801-3853
To the Pax World Fund Shareholders:
I am pleased to inform you on behalf ofAs an investor in the Pax World Fund, Incorporated (the "Fund"), thatyou
are cordially invited to attend the Fund's Adviser (Pax World Management Corp.annual meeting (the "Adviser""Meeting"),
has arranged for the sale of
its outstanding capital stock to certain membersshareholders of the Shadek Family of New Jersey. These members of the Shadek family have had
outstanding careers in the securities industry, financial management,
advertising, and marketing. Looking forward to an adviser for the twenty-first
century, the independent Directors have approved and recommend this sale.
In this regard, enclosed are (1) a Notice of Meeting, (2) Proxy Statement,
and (3) Proxy Card for a Special Meeting of ShareholdersFund (the "Special Meeting""Shareholders")
of the Fund to be held at 10:00 AM[10:45] a.m. on
September , 1996Thursday, June 8, 2000 at the State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA 02210.02110. The purpose of the Special Meeting is for the shareholdersShareholders (i)
to elect a Board of the Fund (the
"Shareholders")eight Directors, each to vote on the approval of a new Investment Contract between the
Fund and the Adviser. A shareholder's vote is required due to the change in
ownership of the Adviser's stock.
In accordance with the Investment Company Act of 1940 as amended, the
acquisition of the stock of the Adviser by certain members of the Shadek family
automatically terminates the present Investment Advisory Contract between the
Adviser and the Fund. Therefore, one of the conditions to the parties'
consummation of the Acquisition Agreement is approval by the Shareholders of a
new Investment Advisory Contract between the Adviser and the Fund. The terms of
the proposed Investment Advisory Contract are substantially the same as the
terms of the present Advisory Contract with the Fund.
I wish to stress that from the perspective of the Fund's shareholders, most
things will not immediately change. During the first year of transition, Anthony
S. Brown will remain as Executive Vice President, Treasurer and Portfolio
Manager. Luther E. Tyson will remain as President of the Fund. State Street Bank
& Trust Company will continue to be the Bank of Deposit. PFPC of Wilmington, DE
will continue to be the Fund's Transfer and Disbursing Agent. There will be no
advisory fee change. The current Independent Directors will continue in office.
Nothing will be changed in the social and economic criteria of the Fund. Pax
World Fund, Incorporated will continue to be the leader in socially responsible
investing.
The Independent Directors of the Fund believe that the purchase by the new
owners of the Adviser will enhance the financial services provided by the Fund,
augment the organization and provide continuity of management, all of which will
ensure the continued ability of the Adviser to provide shareholders with
investment management and administrative services of the quality they have come
to expect intohold office until the next century. Accordingly,Annual
Meeting of the Board of Directors of the Fund or until a successor shall have
approvedbeen chosen and shall have qualified, (ii) to ratify the selection of Pannell
Kerr Forster PC as the independent public accountants of the Fund for the year
ending December 31, 2000, (iii) to amend the Certificate of Incorporation of the
Fund to change the name of the Fund to "Pax World Balanced Fund, Inc.," (iv) to
amend the By- laws of the Fund and to approve certain changes to the Fund's
fundamental investment policies to prohibit the Fund from investing in companies
appearing on the United States Department of Defense list of 100 largest
contractors, if 5% or more of the gross sales of such companies are derived from
contracts with the United States Department of Defense, (v) to amend the By-laws
of the Fund and to approve certain changes to the Fund's fundamental investment
policies to permit the Fund to invest up to a total of 25% of the value of its
assets in securities of foreign issuers, and (vi) to transact such other
business as may properly come before the Meeting.
In this proposed transactionyear's proxy, we are asking you to vote on three amendments -
one to the Fund's Certificate of Incorporation and recommendstwo that affect the Fund's
By-laws and fundamental investment policies.
Proposal C is to change the name of the Fund to "Pax World Balanced
Fund, Inc." We have found that some shareholders and prospective shareholders
are unaware that the Shareholders
similarlyFund is a balanced fund, and consequently may think they
are investing in a different type of fund. We believe that inserting the word
"Balanced" into the Fund's name will alleviate this confusion. Additionally, the
proposed name is consistent with how our other mutual funds are named: Pax World
Growth Fund, Inc., Pax World High Yield Fund, Inc., and Pax World Money Market
Fund, Inc.
Proposal D addresses a slight change to the Fund's social screens and,
therefore, a word of explanation is in order. Since the Fund's inception in
1971, it has been precluded from investing in any companies appearing on the
United States Department of Defense List of 100 Largest Contractors. However,
some companies on that list are not involved in military activities. For
example, there are health care, telecommunications and overnight package
delivery companies that appear on the list. We believe that excluding such
companies simply because they appear on the list has prevented the Fund's
portfolio manager from making certain investments which would be both
advantageous to the Fund's shareholders and consistent with
the Fund's goal of investing in companies providing goods and services that
improve the quality of life.
PLEASE BE ASSURED THAT THE FUND IS NOT ALTERING ITS LONG-STANDING
PRACTICE OF EXCLUDING FROM ITS PORTFOLIO COMPANIES THAT ARE IN ANY WAY ENGAGED
IN MILITARY ACTIVITIES. We will continue to adhere to our "zero tolerance"
policy with regard to such companies. We are merely seeking the ability to
invest in companies on the United States Department of Defense List of 100
Largest Contractors, provided that the following two criteria are met: (i) such
companies are not engaged to any degree in military activities, and (ii) such
companies do not derive 5% or more of their gross sales from contracts with the
United States Department of Defense. This policy is identical to the policy
employed by each of the other funds comprising the Pax World Fund Family.
Approval of Proposal D, therefore, will standardize this social screen among all
of the Pax World funds.
Proposal E concerns the Fund's ability to invest in securities issued
by foreign companies. During the past year, the Fund identified several
attractive investment opportunities overseas, but was unable to take advantage
of them due to the Fund's 10% cap on foreign investments. Given the emerging
global economy, we fear that our inability to invest more than 10% of the value
of the Fund's assets in foreign investments unduly limits the portfolio
managers' ability to invest the Fund's assets and could potentially hurt the
Fund's return in the future. We are asking, therefore, for your approval to
increase the Fund's ability to invest in foreign issuers from 10% of the value
of the Fund's assets to a maximum of 25%.
In this regard, enclosed are (1) a Notice of Meeting, (2) a Proxy
Statement that describes the proposals that will be submitted to shareholders
for approval at the Meeting, and (3) a Proxy.
Although we look forward to seeing you at the Meeting, if you cannot
attend the Meeting, we ask that you complete, sign, date and return the
accompanying Proxy as soon as possible in the enclosed postage-paid envelope.
These proposals are important and your vote in favor.is greatly appreciated.
Sincerely,
LUTHER E. TYSON,THOMAS W. GRANT
President
Pax World Fund, Incorporated.
August , 1996Incorporated
April 14, 2000
PAX WORLD FUND, INCORPORATED
224222 STATE STREET
PORTSMOUTH, NEW HAMPSHIRE 03801NH 03801-3853
--------------
NOTICE OF SPECIALANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER , 1996ON THURSDAY, JUNE 8, 2000
--------------
A specialNotice is hereby given that the annual meeting (the "Meeting") of the
shareholders (the "Special Meeting") of Pax World Fund, Incorporated (the "Fund") will be held at
[10:45] a.m. on Thursday, June 8, 2000 at the State Street Bank and Trust
Company, 225 Franklin Street, Boston, MA 02210 on day, September __, 1996 at
10:00 AM02110 for the following purposes:
(A) To approveelect a new investment advisory contract betweenBoard of eight Directors, each to hold office until the
next Annual Meeting of the Shareholders of the Fund or until a
successor shall have been chosen and shall have qualified;
(B) To ratify the selection by the Board of Directors of Pannell Kerr
Forster PC as the independent public accountants of the Fund for the
year ending December 31, 2000;
(C) To amend the Certificate of Incorporation of the Fund to change the
name of the Fund to "Pax World Balanced Fund, Inc.";
(D) To amend the By-laws of the Fund and Pax World Management Corp., a Delaware corporation (the "Adviser"), to become effective uponapprove certain changes to
the consummationFund's fundamental investment policies to prohibit the Fund from
investing in companies appearing on the United States Department of
Defense List of 100 largest contractors, if 5% or more of the proposed acquisitiongross
sales of such companies are derived from contracts with the United
States Department of Defense;
(E) To amend the By-laws of the stockFund and to approve certain changes to
the Fund's fundamental investment policies to permit the Fund to
invest up to a total of 25% of the Adviser by the purchasers describedvalue of its assets in the accompanying Proxy
Statement.
(B)securities
of foreign issuers; and
(F) To transact such other business as may properly come before such
specialannual meeting or any adjournment thereof.
The close of business on April 12, 2000 has been fixed as the record
date for the determination of shareholders of the Fund entitled to notice of and
to vote at the Meeting and any
adjournment or adjournments thereof. Only shareholders of record at the close of
business on August 9, 1996 will
besuch date are entitled to notice of, and to vote at, the Special Meeting.Meeting and
any adjournment or adjournments thereof.
By Order of the Board of Directors
WILLIAM M. PRIFTI,LEE D. UNTERMAN
Secretary
August , 1996April 14, 2000
Portsmouth, New HampshireNH
IF YOU CANNOT ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
PAX WORLD FUND, INCORPORATED
224222 STATE STREET
PORTSMOUTH, NEW HAMPSHIRE 03801NH 03801-3853
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of
proxies by and of behalf of the non-interested members of the Board of Directors of Pax World Fund, Incorporated (the "Fund") of
proxies to be used at the SpecialAnnual Meeting of Shareholders to be held at [10:45]
a.m. on Thursday, June 8, 2000 at the State Street Bank and Trust Company, 225
Franklin Street, Boston, MA 02110, and at 10:00 AM on September , 1996any adjournment or adjournments
thereof (the "Special
Meeting""Meeting"), for the purposes set forth in the accompanying notice.
This Proxy Statement has been mailed pursuantShareholders of record at the close of business on April 12, 2000, the
record date, are entitled to instructions fromnotice of and to vote at the executive officesMeeting. As of such
date, there were ______________ shares of Common Stock of the Fund locatedissued and
outstanding, the holders of which are entitled to one vote per share on all
matters brought before the Meeting. If you were a Shareholder as of said date,
you will be entitled to vote at Portsmouth, New Hampshirethe Meeting and had been
sent through its transfer agent,your presence is desired. IF,
HOWEVER, YOU CANNOT BE PRESENT, THE BOARD OF DIRECTORS REQUESTS THAT YOU
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY FOR THIS PURPOSE IN ORDER
TO INSURE A QUORUM AT THE MEETING.
Representatives of Pannell Kerr Forster PC, the Provident Financial Processing Corp.
Shares ofCompany's independent
public accountants, are expected to be present at the Fund represented byAnnual Meeting. They will
have the opportunity to make a statement at the meeting if they desire to do so
and are expected to be available to respond to appropriate questions.
The persons named in the accompanying proxy, if properly signedexecuted and
returned and unless revoked, will vote the same for Proposals A, B, C, D, E and
F as indicated herein, unless the proxy contains contrary directions, in which
case the proxy will be voted at the Special Meeting in accordance with
instruction thereon.as directed. If a proxy is signedexecuted and returned
without indicating any voting instructions, the shares of the Fund represented
by the proxy will be voted FOR ProposalProposals A, B, C, D, E and B.F. Any shareholder of
the Fund ("Shareholder") giving a proxy prior to the Special Meeting may revoke it either by a writing deliveredattending
the Meeting and voting his or her shares in person or by delivering to the Fund
at the above address prior to the date of the Meeting a letter of revocation or
a later dated proxy. In the event that the number of shares of the Fund
represented at the meeting of Shareholders on June 8, 2000 in person or by votingproxy
is less than a majority of the number of shares of the Fund issued and
outstanding on the record date, the persons named in the accompanying proxy will
vote FOR an adjournment of such meeting if a majority of the number of shares of
the Fund represented in person or by proxy at such meeting voted FOR any of the
Special Meeting.Proposals, and otherwise, will vote AGAINST an adjournment of such meeting.
This Proxy Statement has been mailed pursuant to instructions from the
executive offices of the Fund located in Portsmouth, New Hampshire and has been
sent through its transfer agent, PFPC, Inc. The Fund's Annual Report for the
fiscal year which ended December 31, 1999 has already been mailed to
Shareholders. Shareholders who desire an additional copy of recordthe Annual
Report may obtain it without charge by writing to the Fund at 222 State Street,
Portsmouth, NH 03801-3853, telephoning the close of business on August 9, 1996 are
entitled to notice ofFund at 1-800-767-1729, visiting the
Fund's web site at http://www.paxfund.com or visiting the Securities and
to voteExchange Commission's web site at the Special Meeting and any adjournment
thereof. As of August 9, 1996, there were shares outstanding. Shareholders of
record at the close of business on August 9, 1996 will be entitled to one votehttp://www.sec.gov for each share held.such purpose.
As of the record date, no shareholder,Shareholder, to the knowledge of the Fund,
[except for Charles Schwab & Co. Inc. which holds Common Stock of the Fund in a
special custody account for the exclusive benefit of its customers,] owned of
record or beneficially owned more than 5% of the Fund's outstanding shares.
WHETHER OR NOTshares of Common Stock of
the Fund.
IF YOU PLAN TOCANNOT ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS PROMPTLY AS POSSIBLE.
SHOULD YOU ATTEND THE
MEETING AND WISH-2-
PROPOSAL A -- TO CHANGE YOUR VOTE, YOU MAY FILEELECT A NEW PROXY AT THAT TIME.
PRINCIPAL TERMSBOARD OF THE PROPOSED ACQUISITION AGREEMENTEIGHT DIRECTORS
---------------
The purpose of this proposal is to elect a Board of Directors of the
Fund. Pursuant to the provisions of the By-laws of the Fund, the Board of
Directors has determined that the number of Directors shall be fixed at eight.
It is intended that the accompanying proxy will be voted for the election as
Directors of the eight nominees listed below, unless such authority has been
withheld in the proxy, in which case the proxy will be voted as indicated
thereon. In the election of Directors, those eight nominees receiving the
highest number of votes cast at the Meeting, providing a quorum is present,
shall be elected.
All of the nominees named below are currently Directors of the Fund and
have served in that capacity continuously since originally elected or appointed.
If elected, each nominee will serve until the next Annual Meeting of
Shareholders of the Fund or until their successor shall have been chosen and
shall have qualified or as otherwise provided in the By-laws of the Fund.
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Approximate Fund
Shares Owned
Name, Age, Address and Principal Occupation Director Since Beneficially and/or of
Record on April 12,
2000
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C. Lloyd Bailey, age 82, 1216 Foulkeways, Gwynedd, PA 19436, is an 1970 __________
attorney. From 1959-1979, Mr. Bailey served as the Executive Director of the
United States Committee for UNICEF; from 1980-1981, Mr. Bailey served as
President of that Committee; and from 1981 to 1984, Mr. Bailey served as a
consultant to that Committee. Mr. Bailey is presently retired.
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Carl H. Doerge, Jr., age 61, 867 Remsen Lane, Oyster Bay, NY 11771, has 1998 __________
been a private investor since 1995. Prior to that, Mr. Doerge was an
Executive Vice President and Managing Director of Smith Barney for
approximately twenty-four years. Mr. Doerge is also a member of the Board
of Directors of Pax World Growth Fund, Inc. and Pax World High Yield Fund,
Inc.
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*Thomas W. Grant, age 58, 14 Wall Street, New York, NY 10005, the Vice 1996 __________
Chairman of the Board and President of the Fund, is also the President of
Pax World Growth Fund, Inc., the President of Pax World High Yield Fund,
Inc., the President of Pax World Money Market Fund, Inc., the President of
Pax World Management Corp., the Fund's adviser (the "Adviser"), and the
President of H. G. Wellington & Co., Inc. Mr. Grant has been associated with
H. G. Wellington & Co., Inc. since 1991 and served previously with the firm
of Fahnestock & Co. for twenty-six years as a partner, managing director and
senior officer. His duties encompassed branch office management, corporate
finance, syndications and municipal and corporate bonds. Mr. Grant is a
graduate of the University of North Carolina (BA). Mr. Grant is also a
member of the Board of Directors of Pax World Growth Fund, Inc. and Pax
World High Yield Fund, Inc.
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-3-
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Approximate Fund
Shares Owned
Name, Age, Address and Principal Occupation Director Since Beneficially and/or of
Record on April 12,
2000
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Joy L. Liechty, age 46, 1403 Ashton Court, Goshen, IN 46526, is a Client and 1991 __________
Sales Advocate with the Mennonite Mutual Aid Association in Goshen,
Indiana. Ms. Liechty has been associated with that organization since 1980,
serving as the Manager of Client Services from 1980 to 1989. Ms. Liechty is
also a member of the Board of Directors of Pax World Growth Fund, Inc.
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*+Laurence A. Shadek, age 50, 14 Wall Street, New York, NY 10005, the 1996 __________
Chairman of the Board of Directors of the Fund, is also the Chairman of
the Board of Pax World Growth Fund, Inc., the Chairman of the Board of Pax
World High Yield Fund, Inc., an Executive Vice President of Pax World
Money Market Fund, Inc., the Chairman of the Board of the Adviser, and an
Executive Vice-President of H. G. Wellington & Co., Inc.. Mr. Shadek,
together with members of his family, owns all of the outstanding shares of
capital stock of the Adviser and a 26.67% interest in H. G. Wellington & Co.,
Inc. Mr. Shadek has been associated with H. G. Wellington & Co., Inc. since
March 1986 and was previously associated with Stillman, Maynard & Co.,
where he was a general partner. Mr. Shadek's investment experience includes
twelve years as a limited partner and Account Executive with the firm Moore
& Schley. Mr. Shadek is a graduate of Franklin & Marshall College (BA) and
New York University, School of Graduate Business Administration (MBA).
Mr. Shadek is also a member of the Board of Directors of Pax World Growth
Fund, Inc. and Pax World High Yield Fund, Inc.
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Sanford C. Sherman, age 63, 91 Hillside Drive, Portsmouth, NH 03801, is the 1992 __________
Chief Executive Officer, and until December 31, 1999 was the President, of
the Piscataqua Savings Bank, Portsmouth, NH - positions he has held since
April 1981. For 21 years prior thereto, Mr. Sherman held various other
positions with the bank, including Vice President and Treasurer. Mr.
Sherman also served the bank as a Trustee for 20 years. Mr. Sherman is also a
member of the Board of Directors of Pax World Growth Fund, Inc.
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Nancy S. Taylor, age 44, 5298 N. Riffle Way, Boise, ID 83703, is a Senior 1997 __________
Minister with the First Congregational Church in Boise, Idaho and has been
associated with that organization since 1992. Prior to that, Ms. Taylor was an
Associate Minister with the Immanuel Congregational Church in Hartford,
Connecticut for approximately five years. Ms. Taylor is also a member of the
Board of Directors of Pax World Growth Fund, Inc.
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Esther J. Walls, M.L.S., age 73, Apartment 29-J, 160 West End Avenue, New 1981 _________
York, NY 10023, was Associate Director of Libraries, State University of New
York, Stoney Brook, Long Island, NY, which position she held from 1974 to
1990. Ms. Walls is also a member of the Board of Directors of Pax World
High Yield Fund, Inc.
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* "Interested person", as defined by the Investment Company Act of 1940, as
amended.
+ "Controlling person" of the Adviser.
The Fund currently pays each unaffiliated Director a fee of $1,000.00,
and each affiliated Director a fee of $300.00, for attendance at each meeting of
the Board of Directors of the Fund, plus reimbursement for travel expenses
incurred in connection with attending such meetings. In addition, the Fund pays
$500.00 to each member of the Audit Committee for attendance at each meeting of
the Audit Committee, plus reimbursement for travel expenses incurred in
connection with attending such meetings. Other than the foregoing amounts, none
of the members of the Board
-4-
of Directors of the Fund receives compensation from the Fund for services
performed as members of the Board of Directors of the Fund. Director's fees paid
by the Fund, Pax World Growth Fund, Inc., Pax World High Yield Fund, Inc. and
Pax World Money Market Fund, Inc. in 1999 and travel expenses reimbursed by the
Fund, Pax World Growth Fund, Inc., Pax World High Yield Fund, Inc. and Pax World
Money Market Fund, Inc. in 1999 to members of the Board of Directors are as
follows:
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Pax World Fund, Pax World Growth Pax World High Pax World Money
Incorporated Fund, Inc. Yield Fund, Inc. Market Fund, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Mr. C. Lloyd Bailey $1,402.00 Not Applicable Not Applicable Not Applicable
- ----------------------------------------------------------------------------------------------------------------------
Mr. Carl H. Doerge, Jr. $5,327.00 $4,380.00 $0.00 Not Applicable
- ----------------------------------------------------------------------------------------------------------------------
Mr. Thomas W. Grant $2,136.00 $1,278.00 $0.00 Not Applicable
- ----------------------------------------------------------------------------------------------------------------------
Ms. Joy L. Liechty $5,014.00 $3,224.00 Not Applicable Not Applicable
- ----------------------------------------------------------------------------------------------------------------------
Mr. Laurence A. Shadek $2,136.00 $1,278.00 $0.00 Not Applicable
- ----------------------------------------------------------------------------------------------------------------------
Mr. Sanford C. Sherman $5,120.00 $2,557.00 Not Applicable Not Applicable
- ----------------------------------------------------------------------------------------------------------------------
Ms. Nancy S. Taylor $5,995.00 $3,333.00 Not Applicable Not Applicable
- ----------------------------------------------------------------------------------------------------------------------
Ms. Esther J. Walls $4,310.00 Not Applicable $0.00 Not Applicable
- ----------------------------------------------------------------------------------------------------------------------
All of the issued and outstanding shares of capital stock of the
Adviser are currently owned by Mr. Laurence A. Shadek and his three siblings,
Messrs. Thomas F. Shadek and James M. Shadek and Ms. Katherine Shadek Boyle. In
addition, the Shadek family has a twenty-six and sixty-seven one hundredths
percent (26.67%) ownership interest in H. G. Wellington & Co., Inc., a brokerage
firm that the Fund may utilize to execute security transactions ("H. G.
Wellington"). Brokerage commissions paid by the Fund to H. G. Wellington during
1998 and 1999 totaled $140,863 and $145,892, respectively (27.8% and 29.7%,
respectively, of total 1998 and 1999 commissions). Thomas W. Grant, the
President of H. G. Wellington, has less than a 5% ownership interest in H. G.
Wellington.
The Board of Directors of the Fund is proposingheld a total of four (4) meetings
during the year ended December 31, 1999. The Board has an Audit Committee
consisting of Messrs. Carl H. Doerge, Jr. and Sanford C. Sherman, and an
Investment Committee consisting of Messrs. Laurence A. Shadek, Thomas W. Grant,
Robert P. Colin (Portfolio Co-Manager of the Fund) and Christopher H. Brown
(Portfolio Co-Manager of the Fund). The Audit Committee has responsibility for
shareholder approval atoverseeing the Special Meeting a new investment advisory contract with Pax World Management
Corp. (the "Adviser") in connection withestablishment and maintenance of an effective financial control
environment, for overseeing the proposed acquisitionprocedures for evaluating the system of internal
accounting control and for evaluating audit performance. The Investment
Committee has responsibility for overseeing the investments of the Fund. The
Fund has no nominating committee or other standing committee. The Audit
Committee held one (1) meeting during the year and the Investment Committee held
four (4) meetings during the year. Each director attended all of the issued and outstanding stockmeetings of
the Adviser by certain membersBoard of Directors and the committee upon which they served, except Mr. C.
Lloyd Bailey who was
-5-
unable to attend the June and September 1999 meetings of the Shadek
familyBoard of New Jersey.
2
The following table describesDirectors
and Ms. Esther J. Walls was unable to attend the persons who are purchasing the stock held
by the present holdersDecember 1999 meeting of the
stockBoard of Directors.
Along with those Officers and Directors mentioned above, the following
individuals are also Officers of the Adviser,Fund:
- -------------------------------------------------------------------------------------------------------------------------
Name, Age, Address and Principal Occupation Position
- -------------------------------------------------------------------------------------------------------------------------
Anita D. Green, age 35, c/o Pax World Management Corp. 222 State Street, Portsmouth, NH 03801- Co-Treasurer
3853, serves as Manager-Shareholder Services for the Pax World Fund Family and Pax World (since 1998)
Management Corp. (1990-present). Ms. Green is also Co-Treasurer of Pax World Management
Corp. (1998-present) and the Fund (1998-present) and the Assistant Treasurer of Pax World
Growth Fund, Inc. (1998-present) and Pax World High Yield Fund, Inc. (1999-present).
- -------------------------------------------------------------------------------------------------------------------------
Michelle L. Guilmette, age 26, c/o Pax World Management Corp., 222 State Street, Portsmouth, NH Assistant Treasurer
03801-3853, serves as the Dealer Representative for the Pax World Fund Family and Pax World (since 1997);
Management Corp. (1999-present) and was a Shareholder Services Representative for the Pax World Assistant Secretary
Fund Family and Pax World Management Corp. (1992-1999). Ms. Guilmette is also Assistant (since 1999)
Treasurer (1997-present) and Assistant Secretary (1999-present) of the Fund and Assistant
Secretary of Pax World Growth Fund, Inc. (1999-present).
- -------------------------------------------------------------------------------------------------------------------------
Janet Lawton Spates, age 30, c/o Pax World Management Corp., 222 State Street, Portsmouth, NH Co-Treasurer
03801-3853, serves as Operations Manager for the Pax World Fund Family and Pax World (since 1998)
Management Corp. (1992-present). Ms. Spates is also Co-Treasurer of the Pax World Management
Corp. (1998-present) and the Fund (1998-present) and the Assistant Treasurer of Pax World
Growth Fund, Inc. (1998-present) and Pax World High Yield Fund, Inc. (1999-present).
- -------------------------------------------------------------------------------------------------------------------------
Lee D. Unterman, age 49, c/o Bresler, Goodman & Unterman, LLP, 521 Fifth Avenue, New York, Secretary
NY 10175, serves as Secretary of the Fund (1997-present), Pax World Growth Fund, Inc. (1997- (since 1997)
present) and Pax World High Yield Fund, Inc. (1999-present). Mr. Unterman is a Partner at the
law firm of Bresler Goodman & Unterman, LLP, New York, NY (1997-present) and was a Partner
at the law firm of Broudy & Jacobson, New York, NY (1988-1997).
- -------------------------------------------------------------------------------------------------------------------------
PROPOSAL B -- TO RATIFY THE SELECTION OF PANNELL KERR FORSTER PC AS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE FUND
---------------
The Board of Directors has unanimously approved the selection of
Pannell Kerr Forster PC ("PKF") as the independent public accountants of the
Fund for the fiscal year ending December 31, 2000 and the agehereby seeks shareholder
ratification of such purchasers.
PROPOSED PERCENTAGE
OF OWNERSHIP
OF PAX WORLD
AGE MANAGEMENT CORP.
Laurence A. Shadek 46 25%
Thomas Shadek 45 25%
James Shadek 44 25%
Katherine Boyle 36 25%
Laurence A. Shadek is an Executive Vice Presidentselection. PKF has advised the Fund that neither PKF nor
any of H.G. Wellington & Co.,
Inc. andits members has, been associated with that firm since March 1986. He was previously
associated with Stillman, Maynard & Co., where he was a general partner. Mr.
Shadek's investment experience includes 12 years as Limited Partner and Account
Executive with the firm Moore & Schley. He is a graduate of Franklin & Marshall
College (BA) and New York University, School of Graduate Business Administration
(MBA).
Thomas Shadek is a graduate of Columbia College and holds an MBA from
Columbia Graduate School of Business. For the last eight years, heor has headed
his own direct marketing business in San Diego, California. He is currently an
officer and shareholder of Direct Marketing Enterprises, Inc., Wildlife
Education, Ltd., Seawood Broadcasters, Inc. and Lompoc
Gala, Inc.
James Shadek is a graduate of Columbia College and holds an MBA from New
York University, Graduate School of Business. He has workedhad in the brokerage
businesspast three years, any financial
interest in the Fund or any relation to the Fund other than their duties as
an account executive for the past seventeen yearsauditors and currently is
employed as such at H.G. Wellington & Co., Inc.
Katherine Shadek Boyle is a graduateaccountants. Representatives of Franklin & Marshall College and Tobe
Coburn School of Fashion Marketing. In additionPKF are expected to having had employment
experience in public relations and fashion research, Ms. Boyle worked for four
yearsbe present at
the brokerage firmMeeting, will be given the opportunity to make a statement if they so desire
and are expected to be available to respond to appropriate questions.
-6-
PROPOSAL C -- TO AMEND THE CERTIFICATE OF INCORPORATION
OF THE FUND TO CHANGE THE NAME OF THE FUND TO
"PAX WORLD BALANCED FUND, INC."
---------------
PROPOSAL
The Fund's Certificate of Stillman, Maynard & Co.
Thomas W. Grant, who it is proposed will become PresidentIncorporation provides that the Fund reserves
the right to amend, alter, change or repeal any provision contained in its
Certificate of Incorporation in the manner prescribed by statute. The General
Corporation Law of the Adviser, is
currentlyState of Delaware states, among other things, that the
PresidentFund may amend its Certificate of H.G. Wellington & Co., Inc.Incorporation to change its corporate name if
(i) its board of directors adopts a resolution setting forth the amendment
proposed, declaring its advisability, and has been associated
withdirecting that firm since 1991; Mr. Grant served previously with the firm of
Fahnestock & Co. for twenty years as a partner, managing director and senior
officer. His duties encompassed branch office management, corporate finance,
syndication and municipal and corporate bonds. He is a graduateamendment proposed
be considered at the next annual meeting of the University of North Carolina (BA).
H.G. Wellington & Co., Inc. of which Mr. Laurence A. Shadek is an officerstockholders, and shareholder, is(ii) a
Delaware corporation authorized by its charter to engage
in the activities of a broker dealer and also engages in investment advisory
activities. Mr. Shadek and members of his family own a 26.76% interest in said
brokerage firm.
Under the terms of the Acquisition Agreement between the purchasers and the
sellers, dated as of August , 1996 (the "Acquisition Agreement") allmajority of the outstanding stock entitled to vote thereon votes in favor of
the Adviser will be acquired by the purchasers. The total
consideration to be paid to Messrs. Tyson,
3
Corbett and Brown and to Mr. Paul V. Brown, Jr.,such amendment. This proposal seeks shareholder approval of an additional stockholder of
the Adviser, will be not less than $15,000,000 in the aggregate and will be paid
to each seller in proportion to their holdings of stock.
Consummation of the acquisition is subject to several conditions, including
approval by the Shareholders of the new Investment Advisory Contract between the
Adviser and the Fund (the "New Contract"). Provided that all conditions and
provisions of the Acquisition Agreement are either satisfied or waived, the
closing of the acquisition will take place on or shortly after the Special
Meeting. The corporate officers of the Adviser following the consummation of the
acquisition will be: Chairman -- Laurence A. Shadek; President -- Thomas W.
Grant; Senior Vice President Marketing -- Thomas Shadek; Senior Vice President
for Social Research -- James Shadek; Senior Vice President -- Katherine Shadek
Boyle. In addition, Anthony S. Brown will serve as an Executive Vice President
of the Adviser and continue as Portfolio Manager. Luther E. Tyson will serve as
Executive Vice President of the Adviser. Messrs. Laurence Shadek and Thomas
Grant will become Directors of the Adviser and of the Fund.
The Adviser is authorized to issue 16,000 shares of common stock of which
13,175 shares are outstanding. The Adviser serves as investment adviseramendment to the
Fund and has so served since August 5, 1971. Luther E. Tyson, J. Elliott Corbett
and Anthony S. Brown each own approximately 29%Certificate of the voting common stock of
the Adviser. Luther E. Tyson is the President and a Director of the Adviser, J.
Elliott Corbett is the Vice President and a Director of the Adviser, and Anthony
S. Brown is the Treasurer and Assistant Secretary and a Director of the Adviser.
The foregoing persons have held these positions since 1971.
To assure continuity of the Fund's policies and performance, Messrs. Tyson
and Brown have agreed to enter into employment agreements with the Adviser for a
period of one year following the consummation of the acquisition. Pursuant to
such employment agreements Mr. Tyson will receive a salary of one hundred twelve
thousand five hundred dollars ($112,500) for serving as Executive Vice President
of the Adviser and continuing his functions with the Fund and Mr. Anthony S.
Brown will receive a salary of one hundred eighty seven thousand five hundred
dollars ($187,500) for serving as Senior Vice President of the Adviser. Mr.
Brown continues as Treasurer of the Adviser and of its Fund and as Portfolio
Manager for the Fund. Both agreements also contain bonus and non-compete
provisions.
PROPOSAL A -- APPROVAL OF INVESTMENT ADVISORY CONTRACT
WITH PAX WORLD MANAGEMENT CORP.
Under the present contract, the Adviser provides the Fund with investment
advice, in accordance with the Fund's investments policy, limitations and
restrictions, keeps the books and recordsIncorporation of the Fund and computesto change the value of
the principal incomename of the Fund and its shares.to "Pax
World Balanced Fund, Inc."
In addition,particular, this proposal would amend the Adviser
furnishes the Fund with office space, clerical and management services,
statistical research and analytical and technical services. The Fund bears the
costs of all administrative activities performed by the Adviser which are
required in selling the Fund's shares including without limitation, printing and
mailing costs of Fund share certificates, the commission or feestitle of the custodian, transfer agent and dividend disbursing agent, independent
accountants,
4
independent directors and legal counsel. The Fund will also bear any expensesCertificate
of the Adviser in connection with the Fund's administrative activities performed by
the Adviser under the present contract which are directly connected with, or
required by virtue of the act of selling the Fund's shares including without
limitation, reports, notices to Fund's shareholders, proxy materials, taxes,
commissions and other expenses in connection with the purchase and sale of Fund
investments: provided, however, that the Adviser pays any Fund expenses other
than taxes and brokerage commissions in excess of one and half percent per
annum.
The Adviser is paid a monthly fee based on daily average net assetsIncorporation of the Fund at an annual rateto provide as follows:
Certificate of three quartersIncorporation
of
one percent ( 3/4 of 1%)Pax World Balanced Fund, Inc.
and Article "First" of the Fund's average daily net asset value on the first twenty five million dollars
($25 million) and one halfCertificate of one percent ( 1/2 of 1%) of the Fund's average
daily net asset value in excess of that figure. The Adviser earned fees totaling
$2,192,000 for fiscal year ended 1995 $2,091,000 for fiscal year ended 1994, and
$2,489,000 for fiscal year ended 1993. The net asset valueIncorporation of the Fund on August
9, 1996 was $ .
Approvalto provide
as follows:
FIRST: The name of the present contract was obtained on December 14, 1995 by vote
of all of the Fund's Directors, including a majority of those directors who are
not "interested persons" (as that termcorporation is defined in the Investment Company Act
of 1940, as amended (the "1940 Act")). The terms of the present contract provide
for it to remain in force from year to year so long as renewal thereof is
specifically approved at least annually by the Board of Directors of the Fund.
Such approval by the Directors has been given since the Fund was formed in 1971.
TERMS OF THE PROPOSED NEW CONTRACT
As required by the 1940 Act, the present contract provides that it will
automatically terminate in the event of its "assignment". The 1940 Act defines
the term "assignment" to include a direct or indirect transfer of a controlling
interest in the Fund's adviser. Since the sale by the shareholders of the
Adviser constitutes an "assignment" of the present contract, under the 1940 Act,
the present contract will automatically terminate upon the closing of the
acquisition.
On July 11, 1996, the Directors of the Fund unanimously approved the New
Contract, to become effective simultaneously with the closing of the acquisition
of the stock of the Adviser. A copy of the proposed New Contract is attached
hereto as Exhibit A.
The new contract contains no new substantive provisions. Both the present
and the New Contracts provide that the Adviser is to receive a monthly fee for
its services equal to a percent of the Fund's average daily net asset value as
follows: three quarters of one percent ( 3/4 of 1%) of the first twenty five
million dollars ($25 million) and one half of one percent ( 1/2 of 1%) of the
Fund's average daily net asset value in excess of that figure.
The New Contract contains the same provisions as the present contract with
respect to renewal and termination by the Fund. The New Contract will remain in
effect until September , 1997 and from year to year thereafter, provided its
continuance is approved at least annually by vote of at least a majority of the
disinterested directors of the Fund. Further, the New Contract may be terminated
by either party upon 60 days prior written notice and will automatically
terminate in the event of its "assignment" as defined in the 1940 Act.
5PAX WORLD
BALANCED FUND, INC.
REQUIRED VOTE; REASONS FOR THE DIRECTORS' APPROVAL
The Board of Directors of the Fund including the disinterested directors, considered the proposed amendment to
the Fund's Certificate of Incorporation so as to change in controlthe name of the Adviser and the proposed New ContractFund to
"Pax World Balanced Fund, Inc." at a meeting held on July 11, 1996.March 9, 2000. The Board of
Directors requested and received relevant information from the Adviser and
counsel regarding such changes. Among other things, the purchasers regardingBoard of Directors
considered that (i) some shareholders and prospective shareholders are unaware
that the purchasers
acquisitionFund is a balanced fund, and may think they are investing in a
different type of fund; inserting the stock ofword "Balanced" into the Adviser.
The disinterested Directors analyzedFund's name will
alleviate this confusion, and considered all aspects of(ii) the proposed sale. They metname is consistent with representatives ofhow the
Adviserother mutual funds comprising the Pax World Fund Family are named: Pax World
Growth Fund, Inc., Pax World High Yield Fund, Inc., and the purchasers.
All the Directors were informed by the Adviser and the purchasers that they
expect the Adviser to continue to operate without substantial change as a result
of the acquisition. They were further informed by the purchasers that they
intend to adhere to the social responsibility aspects regarding the Fund's
investment philosophy with the present Fund and with any further funds that may
be established.
The disinterested Directors considered among other things that (1) the
acquisition has been structured in an effort to ensure the continuity of
advisory services through retention of substantially all of the Adviser's
personnel and the addition of personnel of the purchasers; and that (2) during a
transition period of at least one year, the day-to-day business operation of the
Adviser will be managed by substantially the same individuals who presently
manage the Adviser. In addition, the disinterested Directors have considered the
experience and performance records of the personnel of the purchasers, the
opportunities for the growth of the Fund and the fact that the New Contract is
on the same terms as the present contract including the investment advisory fee
charged to thePax World Money Market
Fund.
In addition, the disinterested Directors have taken into
consideration the current age of the interested directors (e.g. Messrs. Tyson,
Corbett and Brown) and the desire by the managing directors of the Fund to be
relieved of the responsibility of continued management indefinitely of the Fund,
having been involved in such endeavor for more than the past 26 years.-7-
After review of the information and representations provided to them,
the independent directorsDirectors determined that the New Contractproposed amendment to the Fund's Certificate
of Incorporation would be in the best interest of the Fund and its shareholders.
The Board of Directors of the Fund believes that the proposed amendment to the
Fund's Certificate of Incorporation will (i) alleviate possible confusion by the
shareholders and potential shareholders concerning the type of fund in which
they have or are considering investing, and (ii) standardize the naming of the
funds comprising the Pax World Fund Family. Accordingly, the Directors present
at the meeting of the Board of Directors held on March 9, 2000 voted unanimously
to approve, subject to approval by a majority of the outstanding shares of the
Fund as required by the Fund's Certificate of Incorporation and the General
Corporation Law of the State of Delaware, the proposed amendment to the Fund's
Certificate of Incorporation, declared such amendment's advisability, directed
that such amendment be considered at the next Annual Meeting of Shareholders of
the Fund and recommends that the Shareholders similarly vote in favor of such
amendment.
RECOMMENDATION
THE DIRECTORS OF THE FUND BELIEVE THAT THE PROPOSED AMENDMENT TO THE
FUND'S CERTIFICATE OF INCORPORATION IS IN THE BEST INTEREST OF THE FUND AND ITS
SHAREHOLDERS AND, ACCORDINGLY, RECOMMEND THAT SHAREHOLDERS VOTE FOR THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF THE FUND AS DISCUSSED ABOVE.
---------------
PROPOSAL D -- TO AMEND THE BY-LAWS OF THE FUND AND TO
APPROVE CERTAIN CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES TO PROHIBIT THE FUND FROM
INVESTING IN COMPANIES APPEARING ON THE UNITED STATES
DEPARTMENT OF DEFENSE LIST OF 100 LARGEST CONTRACTORS,
IF 5% OR MORE OF THE GROSS SALES OF SUCH COMPANIES
ARE DERIVED FROM CONTRACTS WITH
THE UNITED STATES DEPARTMENT OF DEFENSE
---------------
PROPOSAL
The Investment Company Act of 1940, as amended, requires a registered
investment company, including the Fund, to have certain specific investment
policies that cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. Investment companies may
also elect to designate other policies that may be changed only by a shareholder
vote. Both types of policies are often referred to as "fundamental" policies.
-8-
Paragraph 5 of Article XXVII of the Fund's By-laws, as well as the
Fund's fundamental investment policies, prohibits the Fund from investing in
securities of 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. 20301).
This proposal seeks shareholder approval of a change to the Fund's
By-laws and these fundamental investment policies so as to prohibit the Fund
from investing in companies appearing on the United States Department of Defense
list of 100 largest contractors, if 5% or more of the gross sales of such
companies are derived from contracts with the United States Department of
Defense.
In particular, this proposal would amend clause (1) of the first
sentence of Paragraph 5 of Article XXVII of the Fund's By-laws to provide that
the Fund shall not directly or indirectly:
(1) invest in the securities of companies appearing on the
United States Department of Defense list of 100 largest
contractors IF FIVE PERCENT (5%) OR MORE OF THE GROSS SALES
OF SUCH COMPANIES ARE DERIVED FROM CONTRACTS WITH THE UNITED
STATES DEPARTMENT OF DEFENSE. Other contracting companies
will not be considered if 5 percent (5%) or more of their
gross sales for their prior fiscal year was derived from
such contracts.
and the fundamental investment policies of the Fund, as set forth in the Fund's
Prospectus under the heading "What are the Principal Investment Strategies of
the Fund", and elsewhere, to provide that
In addition, the policy of the Fund is to exclude from its
portfolio securities of (i) companies engaged in military
activities, [and] (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. 20301), IF FIVE PERCENT
(5%) OR MORE OF THE GROSS SALES OF SUCH COMPANIES ARE DERIVED
FROM CONTRACTS WITH THE UNITED STATES DEPARTMENT OF DEFENSE...
REQUIRED VOTE; REASONS FOR DIRECTORS' APPROVAL
The Board of Directors of the Fund considered the proposed change to
the Fund's By-laws and fundamental investment policies so as to prohibit the
Fund from investing in companies appearing on the United States Department of
Defense list of 100 largest contractors, if 5% or more of the gross sales of
such companies are derived from contracts with the United States Department of
Defense at a meeting held on March 9, 2000. The Board of Directors requested and
received relevant information from the Adviser and counsel regarding such
changes. Among other things, the Board of Directors considered that (i) certain
companies
-9-
appearing on the United States Department of Defense List of 100 Largest
Contractors are not engaged in military activities; for example, there are
health care, telecommunications and overnight package delivery companies on the
list, (ii) excluding such companies simply because they appear on that list is
not consistent with the Fund's goal of investing in companies providing goods
and services that improve the quality of life, and (iii) approval of this change
would not alter the Fund's long- standing practice of excluding from its
portfolio companies that are engaged in military activities; it is merely
seeking the ability to invest in companies on the United States Department of
Defense List of 100 Largest Contractors, provided that the following two
criteria are met: (A) such companies are not engaged in military activities, and
(B) such companies do not derive 5% or more of their gross sales from contracts
with the United States Department of Defense. The Directors were further advised
that the proposed policy is identical to the policy employed by each of the
other funds comprising the Pax World Fund Family.
After review of the information and representations provided to them,
the Directors determined that the proposed changes to the Fund's By-laws and
fundamental investment policies would be in the best interest of the Fund and
its shareholders. Accordingly, the Directors present at the meeting of the Board
of Directors held on July 11, 1996 (including a majority of the
independent directors)March 9, 2000 voted unanimously to approve, the New Contract between the
Fund and the Adviser, subject to
approval by a majority of the outstanding shares of the Fund as required by the
Fund's By-laws, the proposed changes to become effective upon consummation of the acquisition.Fund's By-laws and fundamental
investment policies and recommends that the Shareholders similarly vote in
favor.
RECOMMENDATION
THE DIRECTORS OF THE FUND BELIEVE THAT THE NEW CONTRACT WITHPROPOSED CHANGES TO THE
ADVISER ISFUND'S BY-LAWS AND FUNDAMENTAL POLICIES ARE IN THE BEST INTEREST OF THE FUND AND
ITS SHAREHOLDERS AND, ACCORDINGLY, HAVE
APPROVED THE NEW CONTRACT AND RECOMMEND THAT SHAREHOLDERS VOTE FOR THIS PROPOSALTHE
AMENDMENT TO THE BY-LAWS OF THE FUND AND CERTAIN CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES AS DISCUSSED ABOVE.
EFFECTPROPOSAL E -- TO AMEND THE BY-LAWS OF FAILURETHE FUND
AND TO APPROVE THE NEW CONTRACT
IF THE NEW CONTRACT IS NOT APPROVED BY THE FUND'S SHAREHOLDERS AT THE
SPECIAL MEETING, THE PRESENT CONTRACT WILL CONTINUE IN EFFECT IN ACCORDANCE WITH
ITS TERMS AND THE ADVISER AND THE PURCHASERS HAVE THE RIGHT TO TERMINATE THE
ACQUISITION AGREEMENT. IN SUCH EVENT, THERE IS NO GUARANTEE THAT THE ADVISER
WILL BE ABLE TO ATTRACT ANY OTHER PURCHASERS WHO ARE AS COMMITTEDCERTAIN CHANGES TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES AS ISTO PERMIT THE SHADEK FAMILY.
6
DIRECTORS AND OFFICERS
AsFUND TO INVEST
UP TO A TOTAL OF 25% OF THE VALUE OF ITS ASSETS
IN SECURITIES OF FOREIGN ISSUERS
---------------
PROPOSAL
The Investment Company Act of August , 19961940, as amended, requires a registered
investment company, including the present DirectorsFund, to have certain specific investment
policies that cannot be changed
-10-
without the approval of the holders of a majority of the Fund's outstanding
voting securities. Investment companies may also elect to designate other
policies that may be changed only by a shareholder vote. Both types of policies
are often referred to as "fundamental" policies.
Paragraph 5 of Article XXVII of the Fund's By-laws, as well as the
Fund's fundamental investment policies, currently prohibit the Fund from
investing more than ten percent (10%) of the value of its assets in securities
of foreign issuers under circumstances that would subject it to federal interest
equalization tax or at prices that reflect such tax.
This proposal seeks shareholder approval of changes to the Fund's
By-laws and Officersthese fundamental investment policies so as to permit the Fund to
invest up to and including twenty-five percent (25%) of the value of its assets
in securities of foreign issuers without regard to the federal interest
equalization tax or prices that reflect such tax. (Such tax was repealed
effective February 1, 1977 by the Tax Reform Act of 1976, rendering this clause
moot.)
In particular, this proposal would amend clause (13) of the first
sentence of Paragraph 5 of Article XXVII of the Fund's By-laws to provide that
the Fund shall not directly or indirectly:
(13) invest more than twenty-five percent (25%) of the value of its
assets in securities of foreign issuers; to the extent that such
information is available, the Fund will seek to invest abroad in
companies that contribute to improving the standard of living of
peoples in those countries and whose products and services are
consistent with the Fund's objective of essentially non-military
investments.
and Number 13 of the fundamental investment policies of the Fund, as set forth
in the Fund's Statement of Additional Information under the heading "Investment
Restrictions", to provide that the Fund may not:
13. Invest more than twenty-five percent (25%) of the value of its
assets in securities of foreign issuers.
REQUIRED VOTE; REASONS FOR DIRECTORS' APPROVAL
The Board of Directors of the Fund considered the proposed changes to the
Fund's By-laws and fundamental investment policies so as to permit the Fund to
invest up to and including twenty-five percent (25%) of the value of its assets
in securities of foreign issuers at meetings held on December 9, 1999 and March
9, 2000. The Board of Directors requested and received relevant information from
the Adviser and counsel regarding such changes. Among other things, the Board of
Directors considered that (i) the Fund is, from time to time, unable to take
advantage of certain potentially attractive overseas investment opportunities
due to the Fund's prohibition on investing more than 10% of the value of its
assets in securities of foreign issuers,
-11-
and (ii) the securities of many foreign issuers are now listed on several United
States based exchanges, such as the New York Stock Exchange and the National
Association of Securities Dealers Automated Quotation system, and as a group (nine persons) own beneficially % (less than 1%)result,
the detail and substance of the information available to investors with respect
to such issuers equals that of the detail and substance of information available
to investors with respect to securities issued by United States based issuers.
After review of the information and representations provided to them,
the Directors determined that the proposed changes to the Fund's By-laws and
fundamental investment policies would be in the best interest of the Fund and
its shareholders. Accordingly, the Directors present at meetings of the Board of
Directors held on December 9, 1999 and March 9, 2000 voted unanimously to
approve, subject to approval by a majority of the outstanding shares of the Fund. The current Directors areFund
as follows:
FUND SHARES OWNED
BENEFICIALLY ON
AUGUST 9, 1996
PERCENT OF
NAME, PRINCIPAL OCCUPATION DIRECTOR TOTAL SHARES
DURING THE LAST FIVE YEARS SINCE AGE OUTSTANDING
-------------------------- ----- --- -----------
Luther E. Tyson*, President and Chairman of the 1970 73
Board of Directors from inception (1970) to date; from
inception to date President and a Director of the
Investment Adviser.
J. Elliott Corbett*, Vice President and a Director of the 1970 74
Fund and holds similar positions with the Investment
Adviser from inception (1970) to the present date.
Anthony S. Brown*, Vice President, Treasurer and 1970 61
Director of the Fund and holds similar positions with
the Investment Adviser from inception (1970) to the
present date.
Raymond L. Mannix, a Director of the Fund currently 1970 94
retired and a trustee of several private trusts.
E. Lloyd Bailey, a Director of the Fund, retired. 1970 78
Ralph M. Hayward, a Director of the Fund, President 1978 78
and principal stockholder of Fisher-James Company,
Inc. Biddeford, Maine an office supply and equipment
dealer from 1980 to present.
Esther J. Walls, a Director of the Fund, retired since 1981 65
1990.
Joy L. Liechty, a Director of the Fund and from 1989 to 1991 42
the present, Client and Sales Advocate of Mennonite
Mutual Aid Association.
Sanford C. Sherman, a Director of the Fund and from 1992 60
1981 to the present, President of the Piscataqua
Savings Bank of Portsmouth, N.H.
- ---------------
* Interested Person ofrequired by the Fund underFund's By-laws, the 1940 Act.
The 1940 Act providesproposed changes to the Fund's By-laws
and fundamental investment policies and recommends that the affiliates of an investment adviser to a fund
may receive any amount or benefitShareholders
similarly vote in connection with a sale of securities of the
adviser which results in an assignment of the investment advisory contract with
the fund or a change of control of the adviser if, among other things, for at
least three years following such action, at least 75% of the Directors
7
of the fund are not "interested persons" of the new Adviser or the predecessor
adviser. The 1940 Act further provides that any vacancy on the Board of
Directors which occurs in connection with compliance with the aforementioned 75%
requirement and which must be filled by a person who is not an interested person
of the adviser, should be filled only by a person who is selected and proposed
for election by a majority of directors who are not themselves interested
persons and who are elected by the shareholders of the Fund.
In addition, no "unfair burden" may be imposed on the Fund as a result of
such sale of an interest in the Adviser, and no express or implied terms,
conditions or understandings may be applicable to such sale. For this purpose,
an "unfair burden" includes any arrangement during the two-year period after the
transaction whereby either the predecessor or successor investment adviser, or
any of their interested persons, receives any compensation in connection with
the purchase or sale of portfolio securities to or from the Fund (other than
bona fide ordinary compensation as principal underwriter or distributor for the
Fund) or receives any compensation from the Fund or its securities holders for
more than bona fide investment advisory or other services. No such compensation
arrangements are contemplated to the proposed transaction.
Three of the Fund's existing Directors are interested persons of the
Adviser. The other six Directors are not interested persons. In order to satisfy
the above requirements of the 1940 Act and to meet a condition to consummation
of the proposed acquisition, Messers. Tyson, Corbett and Brown have agreed to
resign from the Board of Directors of the Fund effective upon consummation of
the acquisition of the Adviser by the purchasers. No other changes in the
membership of the Board of Directors of the Fund are anticipated. If the
acquisition is consummated, the members of the Board of Directors of the Fund
will number eight and will consist of Laurence A. Shadek and Thomas W. Grant who
will be interested persons of the Adviser and the Fund and the present six
directors who will not be interested persons of the Adviser or the Fund. Each
will serve until the next annual meeting of shareholders or until his successor
is duly elected. It is intended that at least 75% percent of the Board of
Directors of the Fund will be non-interested persons of the Adviser for at least
three years after the acquisition of the Adviser.
The officers of the Fund immediately following consummation of the
acquisition will be:
Laurence A. Shadek, Chairman of the Board of Directors
Luther E. Tyson, President
Thomas W. Grant, Vice Chairman of the Board of Directors
Anthony S. Brown, Senior Vice President, Treasurer and Portfolio Manager
William M. Prifti, Esq., Secretary
The Fund currently pays each Director who receives no compensation from the
Adviser a Director's fee of $1,000 for attendance at each Directors meeting and
$1,000 is also paid to members of the Audit Committee. Each of the Fund's
Directors receive reimbursement for travel expenses incurred in attending Board
meetings. The Fund does not compensate its officers for services rendered in
such capacity (except for legal counsel who occupies the position of Secretary)
nor has the Fund adopted a pension plan or any other plan that would afford
benefits in any way to its Officers or Directors.
The Fund's Board of Directors held four meetings during the fiscal year
ended December 31, 1995. Each of the Directors attended at least 75% of the
aggregate number of meetings held in the fiscal year and each meeting of a
committee on which they served as a member. The Board of
8
Directors of the Fund has no standing committees, other than an audit committee
which held two meetings during the 1995 fiscal year. The Audit Committee reviews
the financial statements of the Fund and monitors all of the Fund's auditing
procedures. It is composed of Raymond L. Mannix and Ralph M. Hayward who are not
interested persons of the Fund (as defined in the 1940 Act).
The executive committee of the Fund acts as the investment committee and
selects investments for portfolio purchase or sale on the recommendation of the
Adviser. The Investment Committee is presently composed of Luther E. Tyson and
Anthony S. Brown, each of whom is an interested person of the Fund (as defined
in the 1940 Act). Upon consummation of the acquisition Messrs. Laurence Shadek,
Grant and Brown will constitute the Investment Committee of the Fund.
Messrs. Shadek and Grant are officers, directors and employees of the
Adviser and Mr. Shadek will own 25% of the outstanding voting stock of the
Adviser after the acquisition. Both persons are "interested persons" (as that
defined in the 1940 Act) of the Fund. They receive no remuneration of any kind
from the Fund. The remaining directors of the Fund are not "interested persons"
and receive no compensation from the Adviser.
INFORMATION REGARDING BROKERAGE
If the New Contract with the Adviser is approved and the acquisition of the
Adviser is consummated, the Fund will continue its current policies relating to
brokerage, which are set forth below.
The purchase and sale of securities and all trading activities are conducted
by or under the control of the Portfolio Manager of the Fund. In purchasing and
selling portfolio securities, the Fund's primary consideration is to obtain the
best possible price and the most efficient possible execution. Subject to this
objective, brokerage business is generally allocated to brokerage houses which
provide services in executing trades and furnishing market quotations and data
to the Fund. The amount allocated to any particular broker may not necessarily
reflect the actual or proportionate value of services rendered to the Fund. No
formula is used in the allocation of portfolio transactions. Commissions are
negotiated on all securities transactions. The broker-dealers may be selected to
participate in portfolio transactions on the basis of their professional
capability and the value and quality of their brokerage research services. This
selection is made by the Portfolio Manager of the Fund which also directs the
trading for the Fund. In his capacity as portfolio manager and as portfolio
trader, the Portfolio Manager negotiates prices and determines commissions.
Brokerage services may include such factors as furnishing market quotations,
knowledge of a particular security or market, proven ability to handle a
particular type of trade, willingness and ability to take positions in
securities and promptness, reliability and confidentiality. Research services
may include the furnishing of analysis and reports concerning industries,
securities, economic factors and portfolio strategy.
Although such research is often useful, the Adviser has advised the Fund
that no dollar value can be ascribed to it, and it is not a substitute for
services provided by the Adviser to the Fund. The receipt of research from
broker-dealers does not materially reduce or otherwise affect the expenses
incurred by the Adviser in the performance of its services to the Fund. No
commitments regarding
9
the allocation of brokerage business among broker-dealers exist on the part of
Portfolio Manager, the Adviser, the Directors of the Fund or any other
affiliated person. There is no formula for determining the allocation of trading
among broker-dealers.
In 1995, the Fund purchased and sold securities with a total market
value of approximately $243,159,000 other than short term investments.
Over the past three years, compensation for brokerage commissions paid to
H. G. Wellington & Co., Inc. has not exceeded 15% of total brokerage
commissions paid by the Fund.favor.
RECOMMENDATION
THE DIRECTORS OF THE FUND BELIEVE THAT THE PROPOSED CHANGES TO THE
FUND'S BY-LAWS AND FUNDAMENTAL INVESTMENT POLICIES ARE IN THE BEST INTEREST OF
THE FUND AND ITS SHAREHOLDERS AND, ACCORDINGLY, RECOMMEND THAT SHAREHOLDERS VOTE
FOR THE AMENDMENT TO THE BY-LAWS OF THE FUND AND CERTAIN CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES AS DISCUSSED ABOVE.
OTHER BUSINESS
The Directors of the Fund are not aware of any other business to be
acted upon at the Special Meeting other than described herein. It is not anticipated
that other matters will be brought before the Special Meeting. If, however, other
matters are duly brought before the Special Meeting, or any adjournments thereof, the
persons appointed as proxies will have discretion to vote or act thereon
according to their best judgment.
EXPENSES OF PROXY SOLICITATION
The cost of the Special Meeting, including the solicitation of proxies, will be
borne equally by the current shareholders of the Adviser and the Shadek
family except that in no event will the Shadek family's share of such expenses
exceed $30,000. Fund counsel fees will be borne equally by such persons.Fund. The proposed solicitation of proxies will be made by mail but
supplemental solicitations may be by mail, telephone, or telegraph personally by
regular employeesshareholder service representatives and/or officers of the AdviserFund who will not be
additionally compensated therefor.for providing such services. It is anticipated that the
cost for such supplemental solicitations, if any, would be nominal. The Fund
will forward to any record owners proxy materials for any beneficial ownersowner that
such record owners may request.
10
EXHIBIT A
INVESTMENT ADVISORY CONTRACT
Ladies-12-
[SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding shares of voting
securities of the Fund beneficially owned as of April 12, 2000 by each person
known by the Fund to beneficially own 5% or more of the outstanding securities
of the Fund.
- -----------------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Amount and Nature of Beneficial Percent of
Owner Ownership Class
- -----------------------------------------------------------------------------------------------------------------------
Common Stock Charles Schwab & Co. __________ shares of the Common Stock of _____%]
101 Montgomery Street the Fund owned for special custody account
San Francisco, CA 94104 for the exclusive benefit of customers
- -----------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
The officers of the Fund are responsible for the day-to-day operations
of the Fund and Gentlemen:the Board of Directors of the Fund is responsible for the
general policy of the Fund; Pax World Management Corp., 222 State Street,
Portsmouth, NH 03801-3853 is the adviser to the Fund; the Fund's shares are
distributed through a distribution expense plan maintained by the Fund pursuant
to Rule 12b-1 of the Act; and H.G. Wellington & Co., Inc., 14 Wall Street, New
York, NY 10005, serves as distributor of the Fund's shares and, for nominal
consideration and as agent for the Fund, solicits orders for the purchase of
Fund shares, provided, however, that orders are not binding on the Fund until
accepted by the Fund as principal.
-13-
PAX WORLD FUND, INCORPORATED
C/O PFPC, INC.
P.O. BOX 9426
WILMINGTON, DE 19899
PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, JUNE 8, 2000
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF PAX WORLD FUND, INCORPORATED
The undersigned hereby appoints Laurence A. Shadek and/or Lee D.
Unterman as Proxies, each with full powers to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
common stock of Pax World Fund, Incorporated (the "Fund"), is an investment
company registered underheld on record by the Investment Company Actundersigned
on April 12, 2000, at the annual meeting of 1940 (the "Investment
Company Act"). The Fund is an open-end diversified management investment
company,shareholders to be held on Thursday,
June 8, 2000 or at any adjournment or adjournments thereof.
NOTE: Please sign exactly as definedname appears above. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person. PLEASE DO NOT INDICATE ADDRESS
CORRECTIONS OR CHANGES, REGISTRATION CHANGES OR ANY
OTHER INFORMATION ON THIS CARD.
----------------------------------------------------
Signature(s) of Shareholder(s)
----------------------------------------------------
Signature(s) of Shareholder(s)
----------------------------------------------------
Dated:
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
PAX WORLD FUND, INCORPORATED
ANNUAL SHAREHOLDERS MEETING - JUNE 8, 2000
PROPOSALS:
A. To elect the Investment Company Act, and invests and reinvests its
assets in a portfolio of investments. The Fund hereby engages Pax World
Management Corporation to actfollowing eight nominees as its investment adviser and financial agent,
subject to the terms and conditions herein set forth.
SECTION 1. MANAGEMENT SERVICES
The Fund will, from time to time, furnish to you detailed statements of the
investments and resources of the Fund and information as to its investment
needs, and will make available to you such financial reports, proxy statements,
legal and other information relating to its investments as may be in the
possession of the Fund or available to it.
You shall, at your expense, use your experience, staff and other facilities to
conduct and maintain a continuous review of the Fund's investments, resources,
and needs, and shall from time to time furnish to the Directors of the Fund (the
"Directors") or others,Fund:
C. Lloyd Bailey; Carl H. Doerge, Jr.; Thomas W. Grant; Joy L. Liechty;
Laurence A. Shadek; Sanford C. Sherman; Nancy S. Taylor; and Esther J.
Walls
[ ] FOR all such nominees
[ ] Vote WITHHELD for all such nominees
[ ] FOR all such nominees (except as noted to the contrary):
To withhold authority to vote for any individual nominee(s),
write the name(s) of such nominee(s) on the line below:
------------------------------------------------------------
B. To ratify the selection of Pannell Kerr Forster PC as the Directors shall direct, your advice and
recommendations with respect to the purchase and sale of investments by the Fund
and the making of commitments thereto. In conducting such review and furnishing
such advice and recommendations, you shall be guided by the Fund's investment
policy and restrictions as delineated and limited by the statements contained in
the various documents and amendments therein filed with the Securities and
Exchange Commission.
You shall place at the disposalindependent
public accountants of the Fund such statistical research,
analytical and technical services, information and reports as may reasonably be
required, shall furnishFund.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
C. To amend the Fund with, and pay the salaries of, executive,
administrative, and clerical personnel, and in general shall supervise the
affairs of the Fund, subject to the control of the Directors. Your advice and
recommendations with respect to the purchase and sale of investments and the
making of investment commitments shall be submitted at the principal offices of
the Fund to the Directors of the Fund, to an investment committee thereof, or to
such other person or persons as the Directors or such investment committee shall
designate for that purpose. The Directors, such investment committee, or such
designated person or persons shall have full authority to act upon such advice
and recommendations and to place orders on behalf of the Fund for the purchase
and sale of investments. Reports of portfolio recommendations shall be made
quarterly to the Directors or more frequently as the Directors may from time to
time determine.
SECTION 2. DUTIES AS FINANCIAL AGENT OF THE FUND.
You shall keep the books and financial records of the Fund, and on behalf of the
Fund shall compare the value of the principal and income of the Fund and of its
shares (in accordance with the instructions of the Directors) at such times as
the Directors may direct, and shall perform such other services as are
reasonably related to the foregoing duties. You shall furnish to the Fund and
the Distributor statements with respect to the valuation of the Fund and its
shares, at such times, and in such forms, as the Directors may prescribe.
A-1
SECTION 3. BROKERAGE SERVICES
When and if the Directors so request, you shall furnish brokerage services in
connection with the Fund's investments, and may make such charges for those
services as are permitted by law or by the applicable rules of the National
Association of Securities Dealers, Inc., or any stock exchange, but only if and
to the extent that any such charges are permitted by the By-Laws and/or ArticlesCertificate of Incorporation of the Fund as then in effect.
At any time when you shall have been requested to act in your capacity as broker
in connection with any ofchange the
Fund's investments, you shall deposit with or
obtain from the Fund's Custodian any and all of such securities and investments
only in accordance with the requirements and provisions of the Custodial
Contract. It is the intent hereof that the Fund's Custodian shall obtain and
maintain the exclusive possession of, and be responsible for, the security and
safekeeping of the Fund's investments, and that you shall have possession of
such investments only as shall be required to implement transactions normally
requiring the services of a broker, and which have been directed by the
Directors or persons appointed by them.
SECTION 4. ADDITIONAL SERVICES, EXPENSES, ETC.
You shall furnish to the Fund, and pay for, such office space and facilities,
including, without being limited to, stenographic, telephone, telegraphic,
mailing, and other facilities as the Directors shall request in connection with
the operations of the Fund. It is the intent of this contract that through your
staff you shall supply and pay for such services as are deemed by the Directors
to be necessary or desirable and proper for the continuous operations of the
Fund. However, you shall not be required to pay for the commissions or fees of
the Fund's Custodian, distributor, registrar, transfer agent and dividend
disbursing agent, independent accountants, and legal counsel; not to pay for any
expenses in connection with the Fund's administrative activities performed by
you under this contract which are not directly connected with or required by
virtue of the act of selling the Fund's shares, including without limitation the
printing and mailing costs of Fund share certificates, reports and notices to
Fund shareholders, and proxy materials; and taxes, commissions, and other
expenses in connection with the purchase and sale of Fund investments; provided,
however, that you shall pay any Fund expenses, excluding taxes and brokerage
commissions, in excess of one and one-half per cent (1 1/2 %) of the average net
asset valuename of the Fund per annum.
SECTION 5. INDEPENDENT CONTRACTOR
You shall, for all purposes, be deemed to be an independent contractor and shall
have no authority to act for or represent"Pax World Balanced Fund, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
D. To amend the Fund unless otherwise provided. No
agreement, bid, offer, commitment, contract or other engagement entered into by
you, whether on your behalf or purported to have been entered into on behalf of
the Fund, shall be binding upon the Fund, and all acts authorized to be done by
you under this contract shall be done by you as an independent contractor and
not as agent.
SECTION 6. MULTIPLE CAPACITIES, TRANSACTIONS
Nothing contained in this contract shall be deemed to prohibit you from acting,
and being separately compensated for so acting, in one or more capacities on
behalf of the Fund, including but not limited to, the capacities of investment
adviser, broker, and distributor. Whenever you shall be
A-2
required to act in multiple capacities, either under this contract or by virtue
of this and any other contract between you and the Fund, you shall maintain the
appropriate separate accounts and records for each such capacity.
Except to the extent necessary for performance of your obligations hereunder,
nothing in this contract shall restrict your right or the right of any of your
directors, officers or employees (whether or not they are directors, officers or
employees of the Fund) 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 any other
corporation, firm, individual or association or to participate or to be
otherwise interested, as principal, agent or otherwise, in sales, purchases or
other transactions with the Fund or its directors, officers, agents, attorneys,
servants, independent contractors, brokers, custodian, underwriters,
distributors and other persons, except as may be prohibited by the Investment
Company Act of 1940.
It is understood and agreed that the directors, officers, agents, employees and
Shareholders of the Fund may be interested in the Company as directors,
officers, agents, employees and shareholders and may be interested in the Fund
as a shareholder or otherwise. Specifically, it is understood and agreed that
the officers, directors, shareholders and employees of the Company may
simultaneously be directors and/or officers of the Fund, but that they are to
receive no remuneration solely for acting in those capacities.
SECTION 7. COMPENSATION FOR SERVICES.
Except as provided below, you shall receive such compensation for your services
as is provided in this Section, and such payments shall be the only compensation
to which you shall be entitled under this contract. The compensation referred to
herein shall not be deemed to include, and shall be in addition to (i) any
charges you may make to the Fund in your capacity as broker for purchases or
sales of securities and investments pursuant to Section 3 hereof, and (ii) any
payments which you may receive in connection with your services as Distributor
of the Fund's shares.
Subject to the foregoing exceptions and limitations, the Fund will pay to you a
fee per annum computed at the following rates: 3/4 of 1% on the first $25
million dollars of the average net asset valueBy-laws of the Fund and 1/2 of 1%to approve certain changes to the
Fund's fundamental investment policies to prohibit the Fund from
investing in excess of $25 million dollars for the fiscal year. The fee shall be paid to you
in monthly installmentscompanies
appearing on the last business dayUnited States Department of each month and the amountDefense List of each such shall be computed and accrued on the basis100
largest contractors, only if 5% or more of the net asset valuegross sales of such
companies are derived from contracts with the United States Department
of Defense.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
E. To amend the By-laws of the Fund at the end of each business day during each calendar month.
SECTION 8. LIABILITY
You shall give the Fund the benefit of your best judgment and efforts in
rendering the services set forth herein, and the Fund agrees as an inducement to the undertaking of these services by you that you shall not be liable for any
loss suffered by the Fund resulting from any error of judgment or any mistake of
law or fact in connection with any matters as to which this contract relates,
except that nothing herein contained shall be construed to protect you against
any liability by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties or by reckless disregard of your obligations or
duties under this contract.
A-3
SECTION 9. APPROVAL OF CONTRACT TERMINATION.
As promptly as practicable after its execution, this contract will be submittedapprove certain changes to the
Fund's shareholders for approval at a meeting thereof duly convened for
such purpose. If approved at such meeting byfundamental investment policies to permit the voteFund to invest up
to and including 25% of the holdersvalue of a
majorityits assets in securities of
foreign issuers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
F. In their discretion, on all other business that may properly come
before the Fund's outstanding voting shares,Meeting and any adjournment or adjournments thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign on the contract shall be
effective September, 1996 for an initial term expiring June 30, 1997. Thereafter
the contract will continue in effect for successive yearly terms ending June 30,
following the conclusion of each annual meeting of shareholders, unless earlier
terminated by either party as set forth below, provided that the renewal of the
contract and its terms are specifically approved annually by the vote of the
holders of a majority of the Fund's outstanding shares or annually by the
majority vote of the disinterested directors. The contract is terminable by
either party on sixty (60) days written notice, with or without cause and
without payment of any penalty, and will terminate automatically in the event of
any assignment, unless an order is issued by the Securities and Exchange
Commission conditionally or unconditionally exempting such assignment from the
provisions of Section 15(a) of the Investment Company Act of 1940, in which
event this contract shall continue in full force and effect.
This contract may not be amended, transferred or assigned, or in any manner
hypothecated or pledged, nor may any new contract become effective, without the
affirmative vote or written consent of the holders of a majority of the
outstanding voting shares of the Fund; provided, that this limitation shall not
prevent any non-material amendments to the contract or such amendments as may be
required by federal or state regulatory bodies.
SECTION 10. CONCERNING APPLICABLE PROVISIONSreverse side
THIS PROXY WILL BE VOTED AS SPECIFIED.
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ADOPTION OF LAW, ETC.
This contract shall be subject to all applicable provisions of law, including
without being limited to, the applicable provisions of the Investment company
Act of 1940, and to the extent that any provisions herein contained conflict
with any such applicable provisions of law, the latter shall control.
This contract is executed and delivered in Portsmouth, N.H. and the laws of the
State of New Hampshire shall except to the extent that any applicable provisions
of some other laws shall be controlling, govern the construction, validity and
effect of this contract.
The headings preceding the text of the several Sections herein are inserted
solely for convenience of reference and shall not affect the meaning,
construction, or effect of this contract.
A-4
If the contract set forth herein is acceptable to you, please so indicate by
executing the enclosed copy of this letter and returning the same to the
undersigned, whereupon this letter shall constitute a binding contract between
the parties herein.
Very truly yours
PAX WORLD FUND, INCORPORATED
By_________________________________
(corporate seal)
Accepted by
Pax World Management Corp.
By_______________________________
President
By_______________________________
Secretary
Date: , 1996
A-5PROPOSALS A, B, C, D, E AND F AS
SAID PROXIES, AND EACH OF THEM, MAY DETERMINE.