SEC Press Release

Washington, D.C., July 30, 2008 – The Securities and Exchange Commission today charged New Hampshire-based Pax World Management Corp. with violating investment restrictions in socially responsible mutual funds that investors were told would not contain securities issued by companies involved with producing weapons, alcohol, tobacco or gambling products.

The SEC alleges that Pax World, the SEC-registered investment adviser to several socially responsible mutual funds, including the Pax World Growth Fund and Pax World High Yield Fund, purchased at least 10 securities that the Funds’ socially responsible investing (SRI) restrictions prohibited them from buying – contrary to representations it made to investors and the boards of the Funds. Pax World agreed to settle the SEC's charges and was ordered to pay a penalty of $500,000.

“Advisers simply cannot tell investors they are going to do one thing with their funds and then not follow through on those promises,” said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. “This is particularly true with socially responsible mutual funds because their stated investment restrictions are likely the primary reason an investor chooses to invest in these funds in the first place.”

David Bergers, Director of the SEC’s Boston Regional Office, added, “Mutual fund companies marketing socially responsible funds should take care that their representations to investors match their investments. Like all investment advisers, advisers to socially responsible funds must have adequate procedures and internal controls to ensure compliance with the funds' stated investment restrictions.”

According to the SEC’s order, Pax World violated the Funds’ SRI restrictions by making purchases in the securities of companies that derived revenue from the manufacture of alcohol or gambling products, derived more than 5 percent of their revenue from contracts with the U.S. Department of Defense, or failed to satisfy the Funds’ environmental or labor standards. Pax World Funds held at least one security that violated their SRI restrictions at all times from 2001 through early 2006. For example:

* In 2003, Pax World purchased for the Growth Fund securities issued by an oil and gas exploration company that had failed its three most recent screens.

* In 2004, Pax World purchased for the High Yield Fund securities issued by a conglomerate primarily engaged in the shipping industry but which derived revenue from gambling and the manufacture of liquor.

The SEC also alleged that Pax World failed to consistently follow its own internal SRI-related policies and procedures that required that all new securities be screened by Pax World's Social Research Department prior to purchase to ensure compliance with the funds' SRI disclosures. Pax World failed to screen 8 percent of all new security purchases from 2001 to 2005.

Without admitting or denying the findings in the SEC’s Order, Pax World agreed to be censured and to cease and desist from any further violations of certain antifraud, false filing, and other provisions of the securities laws in addition to paying the $500,000 penalty. The Commission’s settlement takes into account the remedial acts undertaken by Pax World as well as its cooperation.

The SEC acknowledges the assistance of the New Hampshire Bureau of Securities Regulation.

PAX Statement

Statement of Joseph F. Keefe

President and CEO

Pax World Management Corp.

July 30, 2008

Pax World Management Corp. (“Pax World”), investment adviser to Pax World Funds, today entered into a Settlement Order with the Securities and Exchange Commission (“SEC”), concluding their investigation that began in December 2004, prior to my arrival as CEO. Since arriving in May 2005, I have worked diligently to address these issues and to cooperate with the SEC in its investigation.

As recounted in the Settlement Order, which Pax World can neither admit nor deny, errors occurred during the 2001 – 2005 time period that involved our Social Research Department and affected two of our funds – the Growth Fund and the High Yield Fund. Under the terms of the settlement – which involves claims of negligent conduct, not intentional wrongdoing – Pax has agreed to a cease and desist order and a civil penalty of $500,000. The Settlement Order claims that:

· 41 securities were purchased by the former portfolio managers of the Growth and High Yield Funds that either were not socially screened prior to purchase or had failed a screen. Of these, 10 securities (out of approximately 650 purchased by Pax World Funds during that time period) actually failed the social screens and therefore should never have been purchased.

· In addition, our Social Research Department made an error in applying our weapons screen to one company.

· Although the management re-screened portfolio holdings, it did not do so continuously and did not report its social screening mistakes properly to the board of the Growth Fund and High Yield Fund.

There was no financial harm to shareholders resulting from the issues described in the SEC Order. Moreover, the Pax World Balanced Fund, which held approximately 92-97% of Pax World assets during this time period, did not purchase any unscreened securities and was not cited in the Order.

We take these issues very seriously and Pax World’s response has been vigorous. The portfolio managers of the two funds involved – the Growth Fund and the High Yield Bond Fund – as well as the head of the Social Research Department, and Pax World’s outside counsel and chief compliance officer are no longer employed by the firm.

Since my arrival in 2005, Pax World has also implemented a top-to-bottom reorganization and modernization of its business operations. This has included an overhaul of management and compliance functions, new policies, procedures and controls, plus significant new investments in people and technology. We are confident that the steps we have taken to upgrade Pax World management, personnel and compliance controls will help us assure that mistakes of this nature are not made in the future. In fact, the Chair of the Board of Pax World Funds, in a letter to shareholders available on the Pax World web site (www.paxworld.com), has stated that these improvements “have resulted in significant benefits to the Funds’ shareholders.” I would also note that the SEC cited Pax World’s substantial remediation efforts in its Order.

Today, we are a company that is moving forward, and that is focused on the future. Over the past year, Pax has acquired or launched five new mutual funds – including the Pax World Value Fund, Small Cap Fund, International Fund, Global Green Fund and Women’s Equity Fund – and has hired new portfolio managers, analysts and a UK-based sub-advisor to help manage these new funds. We are now a better, stronger company – one that is busy launching new funds, hiring new personnel, providing better service to our shareholders, and leading the next generation of sustainable investing.

We regret and take full responsibility for what occurred during the 2001 – 2005 time period. We are also proud of the progress we have made and we are committed to meeting the highest standards going forward. We are pleased to report that these regulatory issues have been resolved.