PAX WORLD GROWTH FUND INC, N-1A EL/A, 1997-06-11

PAX WORLD GROWTH FUND INC
N-1A EL/A, 1997-06-11

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<PAGE> 1

As filed with the Securities and Exchange Commission
on June 11, 1997

Registration No. 333-23549

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. 2 [X]
POST-EFFECTIVE AMENDMENT NO. [ ]

AND/OR

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 2 [X]
(Check appropriate box or boxes)

PAX WORLD GROWTH FUND, INC.
(Exact name of registrant as specified in charter)

222 STATE STREET
PORTSMOUTH, NH 03801
(Address of Principal Executive Offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
800-767-1729

PAX WORLD MANAGEMENT CORP.
222 STATE STREET
PORTSMOUTH, NH 03801
ATTENTION: LAURENCE A. SHADEK
THOMAS W. GRANT
(Name and Address of Agent for Service)

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE
AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.

<PAGE> 2
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)

<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
------------- --------

PART A

<S> <C>
Item 1. Cover Page.................... Cover Page

Item 2. Synopsis...................... Fund Highlights; Fund Expenses

Item 3. Condensed Financial
Information................... Fund Expenses; How the Fund
Calculates Performance

Item 4. General Description of
Registrant.................... Cover Page; Fund Highlights;
Management of the Fund; General
Information

Item 5. Management of the Fund........ Fund Highlights; Management of the
Fund

Item 5A. Management's Discussion
of Fund Performance........... Not Applicable

Item 6. Capital Stock and Other
Securities.................... Fund Highlights; Taxes, Dividends
and Distributions; General
Information; Additional Information

Item 7. Purchase of Securities
Being Offered................. Fund Highlights; How the Fund Values
its Shares; Shareholder Guide;
Shareholder Services

Item 8. Redemption or Repurchase...... Fund Highlights; How the Fund Values
its Shares; Shareholder Guide

Item 9. Pending Legal Proceedings..... Not Applicable

PART B

Item 10. Cover Page.................... Cover Page

Item 11. Table of Contents............. Table of Contents

Item 12. General Information and
History....................... General

Item 13. Investment Objectives
and Policies.................. Investment Objectives and Policies;
Investment Restrictions

Item 14. Management of the Fund........ Management of the Fund; Distribution
</TABLE>

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<PAGE> 3
<TABLE>
<S> <C>
Item 15. Control Persons and
Principal Holders of
Securities.................... Not Applicable

Item 16. Investment Advisory and
Other Services................ Management of the Fund;
Distribution; Custodian, Transfer
and Dividend Disbursing Agent and
Independent Accountants

Item 17. Brokerage Allocation and
Other Practices............... Portfolio Transactions and Brokerage

Item 18. Capital Stock and Other
Securities.................... Not Applicable

Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered................. Purchase, Redemption and Exchange of
Fund Shares; Net Asset Value

Item 20. Tax Status.................... Taxes

Item 21. Underwriters.................. Distribution

Item 22. Calculation of Performance
Data.......................... Performance Information

Item 23. Financial Statements.......... Financial Statements
</TABLE>

PART C

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

THE DATE OF THIS PROSPECTUS IS JUNE 11, 1997

PAX WORLD GROWTH FUND, INC.

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<PAGE> 4
- ------------------------------------------------------------------------------

PROSPECTUS DATED JUNE 11, 1997

- ------------------------------------------------------------------------------

PAX WORLD GROWTH FUND, INC.
A Low-Load Growth Fund

222 State Street, Portsmouth, NH 03801
For shareholder account information: 800-372-7827
Portsmouth, NH office: 800-767-1729
603-431-8022

Pax World Growth Fund, Inc. (the "Fund") is an open-end, diversified
management investment company which seeks investments in companies producing
life-supportive goods and services and that are not, to any degree, engaged in
manufacturing defense or weapons-related products. The policy of the Fund is to
exclude from its portfolio securities of (i) companies engaged in military
activities, (ii) companies appearing on the United States Department of Defense
list of 100 largest contractors (a copy of which may be obtained from the Office
of the Secretary, Department of Defense, Washington, D.C. 20310) if five percent
(5%) or more of the gross sales of such companies are derived from contracts
with the United States Department of Defense, (iii) other companies contracting
with the United States Department of Defense if five percent (5%) or more of the
gross sales of such companies are derived from contracts with the United States
Department of Defense, and (iv) companies which derive revenue from the
production, sale and/or distribution of liquor, tobacco and/or gambling services
or equipment. See "Fund Highlights -- What is the Fund's Investment Philosophy?"
at page 1; and "How the Fund Invests -- Investment Objective and Policies" at
page 5.

The Fund's investment objective is long-term growth of capital. The
Fund seeks to achieve this objective by investing primarily in equity securities
(common stock, preferred stock and securities convertible into common stock) of
established companies with above-average growth prospects. Current income, if
any, is incidental. Under normal market conditions, the Fund intends to invest
at least seventy-five percent (75%) of its total assets in equity securities of
companies that exceed $200,000,000.00 in market capitalization. The Fund may
also invest in (i) equity securities of other companies including foreign
issuers, (ii) investment grade fixed-income securities and (iii) obligations
issued or guaranteed by U.S. Government agencies and instrumentalities, the
proceeds of which are earmarked for a specific purpose which complies with the
investment objectives and policies of the Fund, such as the Federal Farm Credit
Bank, the Federal Home Loan Bank and the Federal National Mortgage Association.
In addition, the Fund may purchase and sell put and call options on equity
securities and stock indices and foreign currency exchange contracts to hedge
its portfolio and to attempt to enhance return. The Fund will not invest in
obligations issued or guaranteed by foreign governments or the U.S. Treasury,
however, because the proceeds thereof may be used to manufacture defense or
weapons-related products or for a purpose which does not otherwise comply with
the Fund's socially conscious objectives and policies. There can be no assurance
that the Fund's investment objective will be achieved. See "Fund Highlights --
What is the Fund's Investment Philosophy?" at page 1; and "How the Fund Invests
- -- Investment Objective and Policies" at page 5. The Fund's address is 222 State
Street, Portsmouth, NH 03801 and its telephone number is 800-767-1729.

This Prospectus sets forth concisely the information about the Fund
that a prospective investor ought to know before investing. Additional
information about the Fund has been filed with the Securities and Exchange
Commission in a Statement of Additional Information dated June 11, 1997 which
information is incorporated herein by reference (is legally considered a part

<PAGE> 5
of this Prospectus) and is available without charge upon request to the Fund at
the address or telephone number noted above.

- ------------------------------------------------------------------------------
Investors are advised to read the Prospectus
and retain it for future reference.
- ------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Some prospective purchasers of Fund shares may be effecting
transactions through a securities broker-dealer which may result in a
transaction and other fees and charges, including postage and handling charges,
by such broker-dealer in addition to the sales charge imposed by the Fund. Such
transaction and other fees and charges (other than the sales charge imposed by
the Fund) would not be incurred if such purchase transaction is made directly
with the Fund.

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<PAGE> 6
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
FUND HIGHLIGHTS .......................................................... 1
What is Pax World Growth Fund, Inc? ............................. 1
What is the Fund's Investment Philosophy? ....................... 1
What is the Fund's Investment Objective? ........................ 1
Investments and Special Considerations; Risk Factors ............ 1
Who Manages the Fund? ........................................... 2
Who Advises the Fund? ........................................... 2
Who Distributes the Fund's Shares? .............................. 3
What is the Minimum Investment? ................................. 3
How Do I Purchase Shares? ....................................... 3
How Do I Sell My Shares? ........................................ 4
How Are Dividends and Distributions Paid? ....................... 4
FUND EXPENSES ............................................................ 4
HOW THE FUND INVESTS ..................................................... 5
Investment Objective and Policies ............................... 5
Investments and Special Considerations; Risk Factors ............ 7
Corporate and Other Debt-Securities .................... 7
Convertible Securities ................................. 7
Equity-Related Securities .............................. 7
Foreign Securities ..................................... 8
Illiquid and Restricted Securities ..................... 8
Portfolio Turnover ..................................... 8
Repurchase Agreements .................................. 9
Short Sales Against-The-Box ............................ 9
U.S. Government Agency and/or
Instrumentality Securities ........................... 9
When-Issued and Delayed Delivery Securities ............ 10
Borrowing for Leverage ................................. 10
Hedging and Return Enhancement Strategies ....................... 11
Option Transactions .................................... 11
Investment Restrictions ......................................... 12
MANAGEMENT OF THE FUND ................................................... 12
Officers and Directors .......................................... 12
Adviser; Sub-Adviser ............................................ 12
Distribution .................................................... 14
Custodian and Transfer and Dividend Disbursing Agent ............ 14
HOW THE FUND VALUES ITS SHARES ........................................... 14
HOW THE FUND CALCULATES PERFORMANCE ...................................... 15
TAXES, DIVIDENDS AND DISTRIBUTIONS ....................................... 16
Taxation of the Fund ............................................ 16
Taxation of Shareholders ........................................ 16
Withholding Taxes ............................................... 16
Dividends and Distributions ..................................... 16
GENERAL INFORMATION ...................................................... 17
Incorporation ................................................... 17
Description of Common Stock ..................................... 17
Shareholder Meetings ............................................ 17
SHAREHOLDER GUIDE ........................................................ 18
How to Purchase Shares .......................................... 18
In General ............................................. 18
Investing by Mail ...................................... 18
Investing by Telephone ................................. 18
Investing by Wire Transfer ............................. 18
Waiver of Sales Charges ................................ 19
How to Sell Your Shares ......................................... 19
In General ............................................. 19
Redemptions by Written Request ......................... 20
Involuntary Redemptions ................................ 20
How to Exchange Your Shares ..................................... 21
In General ............................................. 21
</TABLE>
<PAGE> 7

<TABLE>
<S> <C>
Exchanges By Mail ...................................... 21
Exchanges by Telephone ................................. 21
Shareholder Services ............................................ 21
Automatic Reinvestment of Dividends and/or
Distributions without a Sales Charge ................. 22
Automatic Monthly Investment Plan ...................... 22
Tax-Deferred Retirement Plans and Accounts.............. 22
Systematic Withdrawal Plans ............................ 22
Reports to Shareholders ................................ 22
Shareholder Inquiries .................................. 22
THE PAX WORLD MUTUAL FUND FAMILY ......................................... 22
ADDITIONAL INFORMATION ................................................... 23
</TABLE>

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<PAGE> 8
FUND HIGHLIGHTS

The following summary is intended to highlight certain information
contained in this Prospectus and is qualified in its entirety by the more
detailed information appearing elsewhere herein.

WHAT IS PAX WORLD GROWTH FUND, INC.?

Pax World Growth Fund, Inc. is a mutual fund. A mutual fund pools the
resources of investors by selling its shares to the public and investing the
proceeds of such sale in a portfolio of securities designed to achieve its
investment objective. Technically, the Fund is an open-end, diversified,
low-load management investment company.

WHAT IS THE FUND'S INVESTMENT PHILOSOPHY?

The Fund endeavors through its investment philosophy to make a
contribution to world peace through investment in companies producing
life-supportive goods and services. Thus the Fund has adopted the name Pax World
to denote this endeavor. The Fund's portfolio will consist primarily of
companies located in the United States.

The policy of the Fund is to invest in securities of companies whose
business is essentially directed toward non-military and life-supportive
activities. For example, the Fund seeks to invest in such industries as building
supplies, computer software, education, food, health care, household appliances,
housing, leisure time, pollution control, publishing, retailing, technology and
telecommunications, among others.

The Fund seeks investments in companies producing life-supportive
goods and services and that are not, to any degree, engaged in manufacturing
defense or weapons-related products. The policy of the Fund is to exclude from
its portfolio securities of (i) companies engaged in military activities, (ii)
companies appearing on the United States Department of Defense list of 100
largest contractors if five percent (5%) or more of the gross sales of such
companies are derived from contracts with the United States Department of
Defense, (iii) other companies contracting with the United States Department of
Defense if five percent (5%) or more of the gross sales of such companies are
derived from contracts with the United States Department of Defense, and (iv)
companies which derive revenue from the production, sale and/or distribution of
liquor, tobacco and/or gambling services or equipment. See "How the Fund Invests
- -- Investment Objective and Policies" at page 5.

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is long-term growth of capital. It
seeks to achieve this objective by investing primarily in equity securities
(common stock, securities convertible into common stock and preferred stock) of
established companies with above-average growth prospects. Current income, if
any, is incidental. See "How the Fund Invests -- Investment Objective and
Policies" at page 5.

INVESTMENTS AND SPECIAL CONSIDERATIONS;
RISK FACTORS

Under normal market conditions, the Fund anticipates that at least
seventy-five percent (75%) of its total assets will consist of equity securities
of companies that exceed $200,000,000.00 in market capitalization. The Fund may
also invest in (i) other equity securities including securities of foreign
issuers, (ii) investment grade fixed-income securities and (iii)
<PAGE> 9

obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, the proceeds of which are earmarked for a specific purpose
which complies with the investment objectives and policies of the Fund, such as
the Federal Farm Credit Bank, the Federal Home Loan Bank and the Federal
National Mortgage Association. In addition, the Fund may purchase and sell put
and call options on equity securities and stock indices and foreign currency
exchange contracts to hedge its portfolio and to attempt to enhance return. The
Fund will not invest in obligations issued or guaranteed by foreign governments
or the U.S. Treasury, however, because the proceeds thereof may be used to
manufacture defense or weapons-related products or for a purpose which does not
otherwise comply with the Fund's socially conscious objectives and policies. See
"How the Fund Invests -- Investment Objective and Policies" at page 5. Investing
in securities of foreign companies involves certain risks and considerations not
typically associated with investments in domestic companies. See "How the Fund
Invests -- Investments and Special Considerations; Risk Factors" at page 7.

WHO MANAGES THE FUND?

The officers of the Fund are responsible for the day-to-day operations
of the Fund and the Board of Directors of the Fund is responsible for the
general policy of the Fund. The Board of Directors meets four times per year,
reviews portfolio selections and bonding requirements, declares dividends, if
any, and reviews the activities of the executive officers of the Fund. Such
activities are consistent with their fiduciary obligations as directors under
the General Corporation Law of the State of Delaware. Members of the Board of
Directors of the Fund are reimbursed for their travel expenses for attending
meetings of the Board of Directors plus a fee of Three Hundred Dollars ($300.00)
to affiliated directors and One Thousand Dollars ($1,000.00) to unaffiliated
directors.

WHO ADVISES THE FUND?

Pursuant to an Advisory Agreement entered into between the Fund and Pax
World Management Corp., 222 State Street, Portsmouth, NH 03801 (the "Adviser"),
the Adviser, subject to the supervision of the Board of Directors of the Fund,
is responsible for managing the assets of the Fund in accordance with its
investment objective, investment program and policies. In the event that the
average net assets of the Fund are less than $5,000,000.00, the Adviser will be
compensated by the Fund for its services at an annual rate of $25,000.00; in the
event that average net assets of the Fund are equal to or in excess of
$5,000,000.00, the Adviser will be compensated by the Fund for its services at
an annual rate of one percent (1%) of average net assets up to and including
$25,000,000.00 and three-quarters of one percent (.75%) of average net assets in
excess of $25,000,000.00.

Pursuant to a Sub-Advisory Agreement entered into between the Adviser
and H.G. Wellington Capital Management, a division of H.G. Wellington & Co.,
Inc., 14 Wall Street, New York, NY 10005 (the "Sub-Adviser"), the Sub-Adviser
furnishes investment advisory services in connection with the management of the
Fund and assists in determining what securities and other instruments are
purchased and sold for the Fund and in obtaining and evaluating financial data
relevant to the Fund. In the event that the average net assets of the Fund are
less than $5,000,000.00, the Sub-Adviser will be compensated by the Adviser for
its services at an annual rate of $25,000.00; in the event that average net
assets of the Fund are equal to or in excess of $5,000,000.00, the Sub-Adviser
will be compensated by the Adviser for its services at an annual rate of
one-third of one percent (.33%) of average net assets up to and including
$25,000,000.00 and one-quarter of one percent (.25%) of average net assets in
excess of $25,000,000.00, but in no event to exceed the annual sum of Two
Hundred and Fifty Thousand Dollars ($250,000.00) net of expenses.

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<PAGE> 10
Mr. Robert P. Colin, an employee of the Sub-Adviser, is the Portfolio
Manager of the Fund. He is the person responsible for the day-to-day
management of the Fund's portfolio. Mr. Colin received his bachelor of arts
degree from Rutgers University and his masters in business administration
- -finance from New York University. Mr. Colin joined H.G. Wellington Capital
Management, a division of the Sub-Adviser, in 1991 as a Senior Vice President
and Senior Portfolio Manager. Mr. Colin was one of the original founders of
Faulkner, Dawkins & Sullivan in 1959, serving as Director of Research and
Investment Strategy. After Faulkner, Dawkins & Sullivan merged with Shearson
Lehman, and later, American Express, Mr. Colin worked briefly for Merrill
Lynch Asset Management before joining Bessemer Trust Company in 1978 as a
Senior Portfolio Manager and Director of Research. In 1983, Mr. Colin joined
General Electric Investment Corporation as a Senior Vice President of Equity
Portfolios with responsibilities for various funds under General Electric's
control, including its own pension fund.

Mr. Colin, who is a Chartered Financial Analyst, has contributed
numerous articles on investment research to professional journals and has
served as a consultant to a number of publicly-owned corporations.

WHO DISTRIBUTES THE FUND'S SHARES?

The Fund maintains a distribution expense plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, pursuant to which the
Fund incurs the expenses of distributing the Fund's shares. These expenses
include (but are not limited to) advertising expenses, the cost of printing and
mailing prospectuses to potential investors, commissions and
account servicing fees paid to, or on account of, broker-dealers or certain
financial institutions which have entered into agreements with the Fund,
compensation to and expenses incurred by officers, directors and/or employees of
the Fund for their distributional services and indirect and overhead costs
associated with the sale of Fund shares. The plan provides that (i) up to
twenty-five one hundredths of one percent (.25%) of the average daily net assets
of the shares of the Fund per annum may be used to pay for personal service
and/or the maintenance of shareholder accounts (service fee) and (ii) total
distribution fees (including the service fee of .25%) may not exceed thirty-five
one hundredths of one percent (.35%) of the average daily net assets of the
shares of the Fund per annum.

WHAT IS THE MINIMUM INVESTMENT?

The minimum initial investment is $500.00; the minimum subsequent
investment is $100.00. The minimum initial investment for individual retirement
accounts ("IRAs") (other than simple IRAs) and simplified employee pension -
IRA plans is $250.00; the minimum subsequent investment is $50.00. There is no
minimum investment for simple IRAs and "tax-sheltered accounts" under Section
403(b)(7) of the Internal Revenue Code. See "Shareholder Guide -- How to
Purchase Shares" at page 18 and "Shareholder Guide -- Shareholder Services" at
page 21.

HOW DO I PURCHASE SHARES?

You may purchase shares of the Fund directly from the Fund, through its
transfer agent, PFPC, Inc. (the "Transfer Agent"), at the net asset value per
share (NAV) next determined after receipt of your purchase order by the Transfer
Agent, plus a front-end sales charge of up to two and one-half percent (2.5%).
No sales charges are imposed on shares of the Fund purchased upon (i) the
exchange of shares of the Pax World Fund or (ii) the reinvestment of dividends
and distributions. In addition, shares of the Fund may be purchased at NAV,
without payment of a sales charge, by certain investors, including certain
pension, profit-sharing or other employee benefit plans.

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<PAGE> 11

See "Shareholder Guide -- How to Purchase Shares" at page 18; and "How The Fund
Values its Shares" at page 14.

HOW DO I SELL MY SHARES?

You may redeem your shares at any time at the NAV next determined after
the Transfer Agent receives your sell order. See "Shareholder Guide -- How to
Sell Your Shares" at page 19.

HOW ARE DIVIDENDS AND DISTRIBUTIONS PAID?

The Fund expects to pay dividends of net investment income
semi-annually and distributions of net capital gains at least annually.
Dividends and distributions will be automatically reinvested in additional
shares of the Fund at NAV without a sales charge unless you request that they be
paid to you in cash. See "Taxes, Dividends and Distributions" at page 16.

FUND EXPENSES

<TABLE>
<S> <C>
Shareholder Transaction Expenses(1):

Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ...................................... 2.5 %

Maximum Sales Load Imposed on Reinvested Dividends
and Other Distributions
(as a percentage of offering price) ...................................... 0%

Maximum Deferred Sales Load
(as a percentage of original purchase price or
redemption proceeds, as applicable) ...................................... 0%

Redemption Fees
(as a percentage of amount redeemed, if applicable) ...................... 0%

Exchange Fees
(as a percentage of average net assets) .................................. 0%

Annual Fund Operating Expenses (as a percentage of average net assets):

Management Fee ........................................................... 1.0 %

12b-1 Fees ............................................................... 0.15%

Other Expenses (estimated) ............................................... 0.35%

Total Fund Operating Expenses ............................................ 1.50%
</TABLE>

- ----------
(1) Pursuant to the rules of the National Association of Securities
Dealers, Inc., the aggregate initial sales charges, deferred sales
charges and asset-based sales charges on shares of the Fund may not
exceed 6.25% of total gross sales, subject to certain exclusions. This
6.25% limitation is imposed on the Fund rather than on a per
shareholder basis.

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<PAGE> 12
Example:

You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:

1 Year 3 Years

$15.00 $46.56

As noted in the table above, the Fund charges no redemption fees.

THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that an investor in the Fund will bear, whether
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Management of the Fund" at page 12. "Other Expenses" include
estimated operating expenses of the Fund, such as directors' and professional
fees, registration fees, reports to shareholders, transfer agency and custodian
fees and is based on estimated amounts for the current fiscal year.

HOW THE FUND INVESTS

INVESTMENT OBJECTIVE AND POLICIES

Under normal market conditions, the Fund intends to invest at least
seventy-five percent (75%) of its total assets in equity securities of companies
that exceed $200,000,000.00 in market capitalization. Stocks will be selected on
a company-by-company basis primarily through the use of fundamental analysis.
The Fund's Adviser looks for companies that have demonstrated growth in earnings
and sales, high returns on equity and assets, or other strong financial
characteristics, and, in the judgment of the Adviser, are attractively valued.
These companies tend to have a unique market niche, a strong new product profile
or superior management.

-5-
<PAGE> 13
currency exchange contracts to hedge its portfolio and to attempt to enhance
return. The Fund will not invest in obligations issued or guaranteed by foreign
governments or the U.S. Treasury, however, because the proceeds thereof may be
used to manufacture defense or weapons-related products or for a purpose which
does not otherwise comply with the Fund's socially conscious objectives and
policies.

The Fund reserves the right to hold temporarily other types of
securities without limit, including commercial paper, bankers' acceptances,
non-convertible debt securities (corporate) or government securities and high
quality money market securities or cash (foreign currencies or United States
dollars), in such proportions as, in the opinion of the Adviser, prevailing
market, economic or political conditions warrant. The Fund may also temporarily
hold cash and invest in high quality foreign or domestic money market
instruments pending investment of proceeds from new sales of Fund shares or to
meet ordinary daily cash needs.

Consistent with its social criteria, the Fund will seek investments in
companies that produce life-supportive goods and services and are not to any
degree engaged in manufacturing defense or weapons-related products. By way of
illustration, the Fund will invest in such industries as building supplies,
computer software, education, food, health care, household appliances, housing,
leisure time, pollution control, publishing, retailing, technology and
telecommunications, among others. The Fund will endeavor (but is not required)
to invest in companies which have adopted and administer fair employment and
pollution control policies to the extent information reflecting such policies
and administrative practices is available to the Fund.

The policy of the Fund is to exclude from its portfolio securities of
(i) companies engaged in military activities, (ii) companies appearing on the
United States Department of Defense list of 100 largest contractors if five
percent (5%) or more of the gross sales of such companies are derived from
contracts with the United States Department of Defense, (iii) other companies
contracting with the United States Department of Defense if five percent (5%) or
more of the gross sales of such companies are derived from contracts with the
United States Department of Defense, and (iv) companies which derive revenue
from the production, sale and/or distribution of liquor, tobacco and/or gambling
services or equipment.

In order to properly supervise a securities portfolio containing the
limitations described above, care must be exercised to continuously monitor
developments of the companies whose securities are included in the portfolio.
Developments and trends in the economy and financial markets are also
considered, and the screening of many securities is required to implement the
investment philosophy of the Fund.

If after the initial purchase by the Fund it is determined that the
company's activities fall within the exclusion described above (either by
acquisition, merger or otherwise), the securities of such companies will be
eliminated from the portfolio as soon thereafter as possible taking into
consideration (i) any gain or loss which may be realized from such elimination,
(ii) the tax implications of such elimination, (iii) market timing, and the
like. In no event, however, will such security be retained longer than six
months from the time the Fund learns of the investment disqualification. This
requirement may cause the Fund to dispose of the security at a time when it may
be disadvantageous to do so.

The Fund's investment objective is a fundamental policy and may not be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities, as defined in the Investment Company Act.
Investment policies that are not fundamental may be modified by the Board of
Directors.

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<PAGE> 14
SHAREHOLDERS SHOULD UNDERSTAND THAT ALL INVESTMENTS INVOLVE RISK AND
THERE CAN BE NO GUARANTEE AGAINST LOSS RESULTING FROM AN INVESTMENT IN THE FUND,
NOR CAN THERE BE ANY ASSURANCE THAT THE FUND'S INVESTMENT OBJECTIVE WILL BE
ATTAINED. See "Investment Objective and Policies" in the Statement of Additional
Information, a copy of which is available without charge upon request by writing
to the Fund at 222 State Street, Portsmouth, NH 03801 or by telephoning
800-767-1729.

INVESTMENTS AND SPECIAL CONSIDERATIONS;
RISK FACTORS

Corporate and Other Debt Securities

The Fund may invest in investment grade corporate and other debt
obligations of domestic and foreign issuers. Bonds and other debt securities are
used by issuers to borrow money from investors. The issuer pays the investor a
fixed or variable rate of interest and must repay the amount borrowed at
maturity. Investment grade debt securities are rated within the four highest
quality grades as determined by Moody's Investors Service (Moody's) (currently
Aaa, Aa, A and Baa for bonds), or Standard & Poor's Ratings Group (S&P)
(currently AAA, AA, A and BBB for bonds), or by another nationally recognized
statistical rating organization ("NRSRO") or, in unrated securities which are of
equivalent quality in the opinion of the Adviser.

Convertible Securities

A convertible security can be converted at a stated price within a
specified period of time into a certain quantity of the common Stock of the same
or a different issuer. Convertible securities are senior to common stocks in a
corporation's capital structure, but are usually subordinated to similar
nonconvertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from a common stock but lower than
that afforded by a similar nonconvertible security), a convertible security also
affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation dependent upon a market price advance in
the convertible security's underlying common stock.

In general, the market value of a convertible security is at least the
higher of its "investment value" (i.e., its value as a fixed-income security) or
its "conversion value" (i.e., its value upon conversion into its underlying
common stock). The price of a convertible security is influenced, in part, by
the market value of the security's underlying stock. The price of a convertible
security tends to increase as the market value of the underlying stock rises,
and it tends to decrease as the market value of the underlying stock declines.
While no securities investment is without some risk, investments in convertible
securities generally entail less risk than investments in the common stock of
the same issuer.

Equity-Related Securities

The Fund may invest in equity-related securities. Equity-related
securities are common stock, preferred stock, rights, warrants and debt
securities or preferred stock which are convertible or exchangeable for common
stock or preferred stock. See "Convertible Securities" above.

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<PAGE> 15
Foreign Securities

While the Fund intends to invest primarily in domestic securities, it
may invest in foreign securities. Investors in the Fund should be aware that
foreign securities involve certain risks, including political or economic
instability in the country of the issuer, the difficulty of predicting
international trade patterns, the possibility of imposition of exchange controls
and the risk of currency fluctuations. Such securities may be subject to greater
fluctuations in price than securities issued by U.S. corporations or issued or
guaranteed by U.S. Government instrumentalities or agencies. In addition, there
may be less publicly available information about a foreign company than about a
domestic company. Foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic companies.

Additional costs could be incurred in connection with any international
investment activities engaged in by the Fund. Foreign brokerage commissions are
generally higher than United States brokerage commissions. Increased custodian
costs as well as administrative difficulties may also be involved.

If a security is denominated in a foreign currency, it will be affected
by changes in currency exchange rates and in exchange control regulations, and
costs may be incurred in connection with conversions between currencies. Such
changes also will affect the Fund's income and distributions to shareholders. In
addition, although the Fund may receive income in such currencies, the Fund will
be required to compute and distribute its income in U.S. dollars. Therefore, if
the exchange rate for any such currency declines after the Fund's income has
been accrued and translated into U.S. dollars, the Fund could be required to
liquidate portfolio securities to make such distributions, particularly in
instances in which the amount of income the Fund is required to distribute is
not immediately reduced by the decline in such currency.

Illiquid and Restricted Securities

The Fund may invest up to 10% of its net assets in illiquid securities,
including repurchase agreements which have a maturity of longer than seven (7)
days, securities with legal or contractual restrictions on resale (restricted
securities) and securities that are not readily marketable in securities markets
either within or outside of the United States. Restricted securities eligible
for resale pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act") and privately placed commercial paper that have a readily
available market are not considered illiquid for purposes of this limitation.
The Adviser will monitor the liquidity of such restricted securities under the
supervision of the Board of Directors. Repurchase agreements subject to demand
are deemed to have a maturity equal to the applicable notice period. See
"Investments and Special Considerations; Risk Factors -- Illiquid and Restricted
Securities" in the Statement of Additional Information, a copy of which is
available without charge upon request by writing to the Fund at 222 State
Street, Portsmouth, NH 03801 or by telephoning 800-767-1729.

Portfolio Turnover

While as a matter of policy, the Fund will try to limit the turnover of
its portfolio, it is possible that, as a result of the Fund's investment
policies and social criteria, its portfolio turnover rate may exceed
seventy-five percent (75%), although the rate is not expected to exceed one
hundred percent (100%). High portfolio turnover (over one hundred percent
(100%)) may involve correspondingly greater brokerage commissions and other

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<PAGE> 16

transaction costs, which will be borne directly by the Fund. See "Portfolio
Transactions and Brokerage" in the Statement of Additional Information, a copy
of which is available without charge upon request by writing to the Fund at 222
State Street, Portsmouth, NH 03801 or by telephoning 800-767-1729. In addition,
high portfolio turnover may result in increased short-term capital gains, which,
when distributed to shareholders, are treated as ordinary income. See "Taxes,
Dividends and Distributions" at page 16.

Repurchase Agreements

The Fund may enter into repurchase agreements whereby the seller of the
security agrees to repurchase that security from the Fund at a mutually
agreed-upon time and price. The repurchase date is usually within a day or two
of the original purchase, although it may extend over a number of months. The
Fund's repurchase agreements will at all times be fully collateralized by
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities (other than the U.S. Treasury) in an amount at least equal to
the purchase price of the underlying securities (including accrued interest
earned thereon). In the event of a default or bankruptcy by a seller, the Fund
will promptly seek to liquidate the collateral. To the extent that the proceeds
from any sale of such collateral upon a default in the obligation to repurchase
are less than the repurchase price, the Fund will suffer a loss. See
"Investments and Special Considerations; Risk Factors -- Repurchase Agreements"
in the Statement of Additional Information, a copy of which is available without
charge upon request by writing to the Fund at 222 State Street, Portsmouth, NH
03801 or by telephoning 800-767-1729.

Short Sales Against-the-Box

The Fund may make short sales against-the-box for the purpose of
deferring realization of gain or loss for federal income tax purposes. A short
sale "against-the-box" is a short sale in which the Fund owns an equal amount of
the securities sold short or securities convertible into or exchangeable for,
without payment of any further consideration, securities of the same issue as,
and equal in amount to, the securities sold short.

U.S. Government Agency and/or
Instrumentality Securities

The Fund may invest in securities issued or guaranteed by U.S. agencies
or instrumentalities, the proceeds of which are earmarked for a specific purpose
which complies with the investment objectives and policies of the Fund, such as
the Federal Farm Credit Bank, the Federal Home Loan Bank and the Federal
National Mortgage Association. The Fund will not invest in obligations issued or
guaranteed by foreign governments or the U.S. Treasury, however, because the
proceeds thereof may be used to manufacture defense or weapons-related products
or for a purpose which does not otherwise comply with the Fund's socially
conscious objectives and policies. Not all U.S. Government securities are backed
by the full faith and credit of the United States. Some are supported only by
the credit of the issuing agency. See "Investments and Special Considerations;
Risk Factors -- U.S. Government Agency and/or Instrumentality Securities" in the
Statement of Additional Information, a copy of which is available without charge
upon request by writing to the Fund at 222 State Street, Portsmouth, NH 03801 or
by telephoning 800-767-1729.

In connection with its commitment to assist in the development of
housing, the Fund may invest in mortgage-backed securities and other derivative
mortgage products, including those representing an undivided ownership interest
in a pool of mortgages, e.g., Government National Mortgage Association ("GNMA"),
Federal National Mortgage Association ("FNMA") and

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<PAGE> 17
Federal Home Loan Mortgage Corporation ("FHLMC") certificates. These
certificates are in most cases "pass-through" instruments, through which the
holder receives a share of all interest and principal payments from the
mortgages underlying the certificate, net of certain fees.

Mortgage-backed securities are subject to the risk that the principal
on the underlying mortgage loans may be prepaid at any time. Although the extent
of prepayments on a pool of mortgage loans depends on various economic and other
factors, as a general rule prepayments on fixed rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Accordingly, amounts available for reinvestment by the
Fund are likely to be greater during a period of declining interest rates and,
as a result, likely to be reinvested at lower interest rates than during a
period of rising interest rates. Mortgage-backed securities may decrease in
value as a result of increases in interest rates and may benefit less than other
fixed income securities from declining interest rates because of the risk of
prepayment. See "Investments and Special Considerations; Risk Factors -- U.S.
Government Agency and/or Instrumentality Securities" in the Statement of
Additional Information, a copy of which is available without charge upon request
by writing to the Fund at 222 State Street, Portsmouth, NH 03801 or by
telephoning 800-767-1729.

When-Issued and Delayed Delivery Securities

The Fund may purchase or sell securities on a when-issued or delayed
delivery basis. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Fund with payment and delivery taking
place a month or more in the future in order to secure what is considered to be
an advantageous price and yield to the Fund at the time of entering into the
transaction. While the Fund will only purchase securities on a when-issued or
delayed delivery basis with the intention of acquiring the securities, the Fund
may sell the securities before the settlement date, if it is deemed advisable.
At the time the Fund makes the commitment to purchase securities on a
when-issued or delayed delivery basis, the Fund will record the transaction and
thereafter reflect the value, each day, of such security in determining the net
asset value of the Fund. At the time of delivery of the securities, the value
may be more or less than the purchase price. The Fund's Custodian will maintain,
in a segregated account of the Fund, cash, or other liquid high-grade debt
obligations having a value equal to or greater than the Fund's purchase
commitments; the Custodian will likewise segregate securities sold on a delayed
delivery basis. See "Investment Objective and Policies; Risk Factors --
When-Issued and Delayed Delivery Securities" in the Statement of Additional
Information, a copy of which is available without charge upon request by writing
to the Fund at 222 State Street, Portsmouth, NH 03801 or by telephoning
800-767-1729.

Borrowing For Leverage

From time to time, the Fund may borrow up to twenty percent (20%) of
the value of its total assets (calculated when the loan is made) for temporary,
extraordinary or emergency purposes or for the clearance of transactions. The
Fund may pledge up to twenty percent (20%) of the value of its total assets to
secure such borrowings. Such borrowings may subject the Fund to greater risks
and costs than funds that do not borrow. For example, the Fund may have to sell
a portion of its investments at a time when it would otherwise not want to sell
such investments in order to comply with the capital coverage requirements of
the Investment Company Act, which require the value of the Fund's assets, less
its liabilities other than borrowings, to be equal to at least three hundred
percent (300%) of all borrowings including the proposed borrowing. In addition,
because interest on money the Fund borrows is an

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<PAGE> 18
expense of the Fund, the Fund's expenses may increase more than the expenses of
funds that do not borrow and the NAV per share of the Fund may fluctuate more
than the NAV per share of funds that do not borrow. See "Investment Objective
and Policies; Risk Factors -- Borrowing for Leverage" in the Statement of
Additional Information, a copy of which is available without charge upon request
by writing to the Fund at 222 State Street, Portsmouth, NH 03801 or by
telephoning 800-767-1729.

HEDGING AND RETURN ENHANCEMENT STRATEGIES

The Fund may also engage in various portfolio strategies to reduce
certain risks of its investments and to attempt to enhance return. These
strategies currently include the use of options, futures contracts and options
thereon. The Fund's ability to use these strategies may be limited by market
conditions, regulatory limits and tax considerations and there can be no
assurance that any of these strategies will succeed. See "Investment Objective
and Policies," "Investments and Special Considerations; Risk Factors" and
"Taxes" in the Statement of Additional Information, a copy of which is available
without charge upon request by writing to the Fund at 222 State Street,
Portsmouth, NH 03801 or by telephoning 800-767-1729. New financial products and
risk management techniques continue to be developed and the Fund may use these
new investments and techniques to the extent consistent with its investment
objective and policies.

Options Transactions

The Fund may purchase and write (i.e., sell) put and call options on
securities, stock indices and currencies that are traded on U.S. or foreign
securities exchanges or in the over-the-counter market to enhance return or to
hedge the Fund's portfolio. These options may be on equity securities, stock
indices (e.g., S&P 500) and foreign currencies. The Fund may write covered put
and call options to generate additional income through the receipt of premiums,
purchase put options in an effort to protect the value of securities (or
currencies) that it owns against a decline in market value and purchase call
options in an effort to protect against an increase in the price of securities
(or currencies) it intends to purchase. The Fund may also purchase put and call
options to offset previously written put and call options of the same series.
See "Investments and Special Considerations; Risk Factors -- Options on
Securities" and "Investments and Special Considerations; Risk Factors -- Options
on Securities Indices" in the Statement of Additional Information, a copy of
which is available without charge upon request by writing to the Fund at 222
State Street, Portsmouth, NH 03801 or by telephoning 800-767-1729.

A call option gives the purchaser, in exchange for a premium paid, the
right for a specified period of time to purchase the securities or currency
subject to the option at a specified price (the exercise price or strike price).
The writer of a call option, in return for the premium, has the obligation, upon
exercise of the option, to deliver, depending upon the terms of the option
contract, the underlying securities or a specified amount of cash to the
purchaser upon receipt of the exercise price. When the Fund writes a call
option, the Fund gives up the potential for gain on the underlying securities or
currency in excess of the exercise price of the option during the period that
the option is open.

A put option gives the purchaser, in return for a premium, the right,
for a specified period of time, to sell the securities or currency subject to
the option to the writer of the put at the specified exercise price. The writer
of the put option, in return for the premium, has the obligation, upon exercise
of the option, to acquire the securities or currency underlying the

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<PAGE> 19
option at the exercise price. The Fund might, therefore, be obligated to
purchase the underlying securities or currency for more than their current
market price.

The Fund will write only "covered" options. An option is covered if, so
long as the Fund is obligated under the option, it owns an offsetting position
in the underlying security or currency or maintains cash, U.S. Government
securities or other liquid high-grade debt obligations with a value sufficient
at all times to cover its obligations in a segregated account. See Investments
and Special Considerations; Risk Factors -- Options on Securities" and
"Investments and Special Considerations; Risk Factors -- Options on Securities
Indices" in the Statement of Additional Information, a copy of which is
available without charge upon request by writing to the Fund at 222 State
Street, Portsmouth, NH 03801 or by telephoning 800-767-1729.

INVESTMENT RESTRICTIONS

The Fund is subject to certain investment restrictions which, like its
investment objective, constitute fundamental policies. Fundamental policies
cannot be changed without the approval of a majority of the Fund's outstanding
voting securities (which is defined as the vote at a special or annual meeting
of the shareholders of the Fund, duly called, (i) of sixty-seven percent (67%)
of the voting securities present at such meetings if the holders of more than
fifty percent (50%) of the outstanding voting securities are present or
represented by proxy, or (ii) of more than fifty percent (50%) of the
outstanding voting securities, whichever is less). See "Investment Restrictions"
in the Statement of Additional Information, a copy of which is available without
charge upon request by writing to the Fund at 222 State Street, Portsmouth, NH
03801 or by telephoning 800-767-1729.

MANAGEMENT OF THE FUND

OFFICERS AND DIRECTORS

The Fund's officers conduct and supervise the daily business operations
of the Fund. The Fund's Board of Directors, in addition to overseeing the
Adviser and Sub-Adviser, decides upon matters of general policy. The Fund's
Adviser and Sub-Adviser furnish daily investment advisory services. Members of
the Board of Directors of the Fund are reimbursed for their travel expenses for
attending meetings of the Board of Directors plus Three Hundred Dollars
($300.00) to affiliated directors and One Thousand Dollars ($1,000.00) to
unaffiliated directors. See "Management of the Fund" in the Statement of
Additional Information, a copy of which is available without charge upon request
by writing to the Fund at 222 State Street, Portsmouth, NH 03801 or by
telephoning 800-767-1729.

ADVISER; SUB-ADVISER

Pax World Management Corp., 222 State Street, Portsmouth, NH 03801 (the
"Adviser"), is the adviser to the Fund. It was incorporated in 1970 under the
laws of the State of Delaware. Pursuant to the terms of an Advisory Agreement
entered into between the Fund and the Adviser (the "Advisory Agreement"), the
Adviser, subject to the supervision of the Board of Directors of the Fund, is
responsible for managing the assets of the Fund in accordance with the Fund's
investment objective, investment program and policies. As of December 31, 1996,
the Adviser had over $513,000,000.00 in assets under management by virtue of
serving as the adviser to the Pax World Fund, Inc. (the "Pax World Fund"). The
Adviser has no clients other than the Fund and the Pax World Fund.

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<PAGE> 20
Pursuant to the terms of the Advisory Agreement, the Adviser will be
compensated as follows: in the event that the average net assets of the Fund are
less than $5,000,000.00, the Adviser will be compensated by the Fund for its
services at an annual rate of $25,000.00; in the event that the average net
assets of the Fund are equal to or in excess of $5,000,000.00, the Adviser will
be compensated by the Fund for its services at an annual rate of one percent
(1%) of average net assets up to and including $25,000,000.00 and three-quarters
of one percent (.75%) of average net assets in excess of $25,000,000.00.

The Adviser has, however, agreed to supply and pay for such services as
are deemed by the Board of Directors of the Fund to be necessary or desirable
and proper for the continuous operations of the Fund (excluding all taxes and
charges of governmental agencies and brokerage commissions incurred in
connection with portfolio transactions) which are in excess of one and one-half
percent (1-1/2%) of the average net asset value of the Fund per annum. Such
expenses include (i) management, distribution and sub-advisory fees; (ii) the
fees of affiliated and unaffiliated Directors; (iii) the fees of the Fund's
Custodian and Transfer Agent; (iv) the fees of the Fund's legal counsel and
independent accountants; (v) the reimbursement of organization expenses; and
(vi) expenses related to shareholder communications including all expenses of
shareholders' and Board of Directors' meetings and of preparing, printing and
mailing reports, proxy statements and prospectuses to shareholders.

H. G. Wellington & Co., Inc., 14 Wall Street, New York, NY 10005 (the
"Sub-Adviser"), is the sub-adviser to the Fund. It was incorporated in 1984
under the laws of the State of Delaware and is also a registered
broker-dealer.

Pursuant to the terms of a Sub-Advisory Agreement between the Adviser
and the Sub-Adviser, the Sub-Adviser furnishes investment advisory services in
connection with the management of the Fund, determines what securities and other
instruments are purchased and sold for the Fund and is responsible for obtaining
and evaluating financial data relevant to the Fund. In the event that the
average net assets of the Fund are less than $5,000,000.00, the Sub-Adviser will
be compensated by the Adviser for its services at an annual rate of $25,000.00;
in the event that average net assets of the Fund are equal to or in excess of
$5,000,000.00, the Sub-Adviser will be compensated by the Adviser for its
services at an annual rate of one-third of one percent (.33%) of average net
assets up to and including $25,000,000.00 and one-quarter of one percent (.25%)
of average net assets in excess of $25,000,000.00, but in no event to exceed the
annual sum of Two Hundred and Fifty Thousand Dollars ($250,000.00) net of
expenses.

Thomas W. Grant, the President of the Adviser, is also the President of
the Sub-Adviser and has been associated with that firm since 1991. Mr. Grant
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. Laurence A. Shadek, the Chairman of the Board of Directors of the
Adviser, is also an Executive Vice-President of the Sub-Adviser and, together
with members of his family, own a 26.67% interest in the Sub-Adviser. Mr.
Shadek 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 a limited partner and
Account Executive with the firm Moore & Schley. Each of Mr. Grant and Mr.
Shadek serve as a member of the Board of Directors of the Fund and the Pax
World Fund.

Mr. Robert P. Colin, an employee of the Sub-Adviser, is the Portfolio
Manager of the Fund. He is the person responsible for the day-to-day

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<PAGE> 21
management of the Fund's portfolio. Mr. Colin received his bachelor of arts
degree from Rutgers University and his masters in business administration
- -finance from New York University. Mr. Colin joined H.G. Wellington Capital
Management, a division of the Sub-Adviser, in 1991 as a Senior Vice President
and Senior Portfolio Manager. Mr. Colin was one of the original founders of
Faulkner, Dawkins & Sullivan in 1959, serving as Director of Research and
Investment Strategy. After Faulkner, Dawkins & Sullivan merged with Shearson
Lehman, and later, American Express, Mr. Colin worked briefly for Merrill
Lynch Asset Management before joining Bessemer Trust Company in 1978 as a
Senior Portfolio Manager and Director of Research. In 1983, Mr. Colin joined
General Electric Investment Corporation as a Senior Vice President of Equity
Portfolios with responsibilities for various funds under General Electric's
control, including its own pension fund.

The Adviser and Sub-Adviser are responsible for decisions to buy and
sell securities and options on securities for the Fund, the selection of
brokers and dealers to effect the transactions and the negotiation of brokerage
commissions, if any. In placing orders for portfolio securities of the Fund,
the Fund is required to give primary consideration to obtaining the most
favorable price and efficient execution. Within the framework of this policy,
the Fund will consider the research and investment services provided by brokers
and dealers who effect or are parties to portfolio transactions of the Fund.
Orders may be directed to any broker including, to the extent and in the manner
permitted by applicable law, the Sub-Adviser and its affiliates. See "Portfolio
Transactions and Brokerage" in the Statement of Additional Information, a copy
of which is available without charge upon request by writing to the Fund at 222
State Street, Portsmouth, NH 03801 or by telephoning 800-767-1729.

DISTRIBUTION

The Fund maintains a distribution expense plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, pursuant to which the Fund
incurs the expenses of distributing the Fund's shares. These expenses include
(but are not limited to) advertising expenses, the cost of printing and mailing
prospectuses to potential investors, commissions and account servicing fees paid
to, or on account of, broker-dealers or certain financial institutions which
have entered into agreements with the Fund, compensation to and expenses
incurred by officers, directors and/or employees of the Fund for their
distributional services and indirect and overhead costs associated with the sale
of Fund shares. The plan provides that (i) up to twenty-five one hundredths of
one percent (.25%) of the average daily net assets of the shares of the Fund per
annum may be used to pay for personal service and/or the maintenance of
shareholder accounts (service fee) and (ii) total distribution fees (including
the service fee of .25%) may not exceed thirty-five one hundredths of one
percent (.35%) of the average daily net assets of the shares of the Fund per
annum. See "Distribution" in the Statement of Additional Information, a copy of
which is available without charge upon request by writing to the Fund at 222
State Street, Portsmouth, NH 03801 or by telephoning 800-767-1729.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110 (the "Custodian"), will serve as the custodian for the Fund's portfolio
securities and cash and, in that capacity, maintains certain financial and
accounting books and records pursuant to an agreement with the Fund.

PFPC, Inc., 400 Bellevue Parkway, Wilmington, DE 19809 (the "Transfer
Agent"), will serve as the transfer agent and dividend disbursing agent for the
Fund and in those capacities maintains certain books and records for the Fund.
Shareholder inquiries relating to a shareholder account should be directed to
the Transfer Agent at Pax World Mutual Funds, P.O. Box 8930, Wilmington, DE
19899-8930.

HOW THE FUND VALUES ITS SHARES

The Fund's net asset value per share or NAV is determined by
subtracting its liabilities from the value of its assets and dividing the
remainder by the number of outstanding shares. For valuation purposes,
quotations of foreign

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<PAGE> 22
securities in a foreign currency are converted to U.S. dollar equivalents.
The Board of Directors of the Fund has fixed the specific time of day for the
computation of the Fund's NAV to be as of 4:15 P.M., New York time.

Portfolio securities are valued based on market quotations or, if not
readily available, at fair value as determined in good faith under procedures
established by the Fund's Board of Directors. See "Net Asset Value" in the
Statement of Additional Information, a copy of which is available without charge
upon request by writing to the Fund at 222 State Street, Portsmouth, NH
03801 or by telephoning 800-767-1729.

The Fund will compute its NAV once daily on days that the New York
Stock Exchange is open for trading except on days on which no orders to
purchase, sell or redeem shares have been received by the Fund or days on which
changes in the value of the Fund's portfolio securities do not materially affect
the NAV. The New York Stock Exchange is closed on the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. See "Net Asset Value" in the Statement
of Additional Information, a copy of which is available without charge upon
request by writing to the Fund at 222 State Street, Portsmouth, NH 03801 or by
telephoning 800-767-1729.

HOW THE FUND CALCULATES PERFORMANCE

From time to time, the Fund may advertise its total return (including
"average annual" total return and "aggregate" total return) and yield in
advertisements or sales literature. These figures are based on historical
earnings and are not intended to indicate future performance. The "total return"
shows how much an investment in the Fund would have increased (decreased) over a
specified period of time (i.e., one, five, or ten years or since inception of
the Fund) assuming that all distributions and dividends by the Fund were
reinvested on the reinvestment dates during the period and less all recurring
fees. The "aggregate" total return reflects actual performance over a stated
period of time. "Average annual" total return is a hypothetical rate of return
that, if achieved annually, would have produced the same aggregate total return
if performance had been constant over the entire period. "Average annual" total
return smooths out variations in performance and takes into account any
applicable sales charges. Neither "average annual" total return nor "aggregate"
total return takes into account any federal or state income taxes which may be
payable upon redemption. The "yield" refers to the income generated by an
investment in the Fund over a one-month or 30-day period. This income is then
"annualized;" that is, the amount of income generated by the investment during
that 30-day period is assumed to be generated each 30-day period for twelve
periods and is shown as a percentage of the investment. The income earned on the
investment is also assumed to be reinvested at the end of the sixth 30-day
period. The Fund also may include comparative performance information in
advertising or marketing the Fund's shares. Such performance information may
include data from Lipper Analytical Services, Inc., Morningstar Publications,
Inc., and other industry publications, business periodicals and market indices.
See "Performance Information" in the Statement of Additional Information, a copy
of which is available without charge upon request by writing to the Fund at 222
State Street, Portsmouth, NH 03801 or by telephoning 800-767-1729. Further
performance information will be contained in the Fund's annual and semi-annual
reports to shareholders, which will be available without charge. See
"Shareholder Guide -- Shareholder Services" at page 21.

-15-
<PAGE> 23
TAXES, DIVIDENDS AND DISTRIBUTIONS

TAXATION OF THE FUND

The Fund intends to elect to qualify and intends to remain qualified as
a regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"). Accordingly, the Fund will
not be subject to federal income taxes on its net investment income and capital
gains, if any, that it distributes to its shareholders.

TAXATION OF SHAREHOLDERS

All dividends out of net investment income, together with distributions
of net short-term capital gains, will be taxable as ordinary income to the
shareholder whether or not reinvested. Any net long-term capital gains
distributed to shareholders will be taxable as such to the shareholder, whether
or not reinvested and regardless of the length of time a shareholder has owned
his or her shares. The maximum federal long-term capital gains rate for
individual shareholders is currently twenty-eight percent (28%) and the
maximum federal tax rate for ordinary income is thirty-nine and six-tenths
percent (39.6%).

Any gain or loss realized upon a sale or redemption of shares by a
shareholder who is not a dealer in securities will be treated as long-term
capital gain or loss if the shares have been held more than one year and
otherwise as short-term capital gain or loss. Any such loss, however, on shares
that are held for six months or less, will be treated as a long-term capital
loss to the extent of any capital gain distributions received by the
shareholder.

WITHHOLDING TAXES

Under U.S. Treasury Regulations, the Fund is required by federal law to
withhold and remit to the U.S. Treasury thirty-one percent (31%) of dividend,
capital gain income and redemption proceeds, payable on the accounts of those
shareholders who fail to furnish their tax identification numbers on IRS Form
W-9 (or IRS Form W-8 in the case of certain foreign shareholders) with the
required certifications regarding the shareholder's status under the federal
income tax law. In connection with this withholding requirement, therefore, a
purchaser of the Fund's shares will be asked to certify on our application that
the Social Security or tax identification number provided is correct and that
such purchaser is not subject to thirty-one percent (31%) back-up withholding
for previously underreporting to the IRS.

Shareholders are urged to consult their own tax advisers regarding
specific questions as to federal, state or local taxes. See "Taxes" in the
Statement of Additional Information, a copy of which is available without charge
upon request by writing to the Fund at 222 State Street, Portsmouth, NH
03801 or by telephoning 800-767-1729.

DIVIDENDS AND DISTRIBUTIONS

The Fund expects to pay dividends on net investment income, if any,
semi-annually and to make distributions of any capital gains in excess of net
long-term capital losses at least annually.

Dividends and distributions will be paid in additional Fund shares,
based on the NAV at the close of business on the ex-dividend date or such other
date as the Board of Directors may determine, unless the shareholder

-16-
<PAGE> 24
elects in writing not less than ten (10) days prior to the ex-dividend date to
receive (i) such dividends in cash and distributions in additional shares or
(ii) such dividends and distributions in cash. Such election should be submitted
to the Transfer Agent at Pax World Mutual Funds, P.O. Box 8930, Wilmington, DE
19899-8930. The Fund will notify each shareholder after the close of the Fund's
taxable year both of the dollar amount and the taxable status of that year's
dividends and distributions on a per share basis.

When the Fund goes "ex-dividend", its NAV is reduced by the amount of
the dividend or distribution. If you buy shares just prior to the ex-dividend
date, the price you pay will include the dividend or distribution and a portion
of your investment will be returned to you as a taxable distribution. You
should, therefore, consider the timing of dividends when making your purchases.

GENERAL INFORMATION

Incorporation

The Fund was incorporated under the laws of the State of Delaware on
March 12, 1997. The Fund is registered under the Act as an open-end management
investment company commonly known as a mutual fund.

Description of Common Stock

The Fund is currently authorized to issue 25,000,000 shares of Common
Stock, $1.00 par value per share; however, the Board of Directors of the Fund
may increase or decrease the number of authorized shares. In accordance with the
Fund's Articles of Incorporation, the Board of Directors may also authorize the
creation of additional series of common stock and classes within such series,
with such preferences, privileges, limitations and voting and dividend rights as
the Board may determine.

Shares of the Fund, when issued, are fully paid, nonassessable, fully
transferable and redeemable at the option of the holder. Shares are also
redeemable at the option of the Fund under certain circumstances as described
under "Shareholder Guide -- How to Sell Your Shares" at page 19.

Each share of common stock is equal as to earnings, assets and voting
privileges. There are no conversion, preemptive or other subscription rights. In
the event of liquidation, each share of common stock of the Fund is entitled to
its portion of all of the Fund's assets after all debts and expenses of the Fund
have been paid. The Fund's shares do not have cumulative voting rights for the
election of Directors.

As of June 9, 1997, Pax World Management Corp., 222 State Street,
Portsmouth, NH 03801, was the sole initial shareholder of the Fund's shares.

Shareholder Meetings

The Fund does not intend to hold annual meetings of shareholders unless
otherwise required by law. The Fund will not be required to hold meetings of
shareholders unless, for example, the election of directors is required to be
acted on by shareholders under the Investment Company Act. Shareholders have
certain rights, including the right to call a meeting upon a vote of 10% or more
of the Fund's outstanding shares for the purpose of voting on the removal of one
or more directors or to transact any other business.

-17-
<PAGE> 25
SHAREHOLDER GUIDE

HOW TO PURCHASE SHARES

In General

Shares of the Fund are offered for sale by the Fund on a continuous
basis at the NAV next determined following receipt of an order by the Transfer
Agent, plus an initial sales charge. In some cases, however, purchases are not
subject to an initial sales charge, and the offering price is the NAV.
See "Waiver of Sales Charges" below.

The minimum initial investment is $500.00; the minimum subsequent
investment is $100.00. The minimum initial investment for IRAs (other than
simple IRAs) and simplified employee pension - IRA plans is $250.00; the minimum
subsequent investment is $50.00. There is no minimum investment for simple IRAs
and "tax-sheltered accounts" under Section 403(b)(7) of the Internal Revenue
Code. See "Shareholder Services" below.

If a stock certificate is desired, it must be requested in writing for
each transaction. Certificates are issued only for full shares.

The Fund reserves the right to reject any purchase order (including an
exchange) or to suspend or modify the continuous offering of its shares. See
"How to Sell Your Shares" below.

Investing by Mail

Prospective shareholders may purchase shares of the Fund by completing
and signing the "Investment Application" enclosed with this Prospectus and
sending the application, together with a check to the Transfer Agent at Pax
World Mutual Funds, P.O. Box 8930, Wilmington, DE 19899-8930. Purchases without
full payment will not be processed until payment is received. A confirmation of
the purchase will be issued showing the account number and number of shares
owned and the ownership of shares shall be recorded on the books of the Transfer
Agent in an account under the shareholder's name.

Investing by Telephone

The Fund may accept telephone orders from broker-dealers which have
been previously approved by the Fund by telephoning 800-635-1404. It is the
responsibility of such broker-dealers to promptly forward purchase orders and
payments for such orders to the Fund. The Fund reserves the right to cancel any
purchase order for which payment has not been received by the third business day
following the investment.

Transactions in Fund shares through your broker-dealer may be subject
to transaction or other fees, including postage and handling charges, imposed by
your broker/dealer (in addition to the sales charge imposed by the Fund) which
would otherwise not be charged if the shares were purchased directly from the
Fund.

Investing by Wire Transfer

Shareholders may purchase shares of the Fund (other than initial
purchases) by wire transfer. To do so, you must (i) telephone the Transfer Agent
at 800-372-7827 (individual shareholders) or 800-635-1404 (broker/dealers) to
advise them that you would like to purchase shares of the

-18-
<PAGE> 26

Fund by wire transfer and then (ii) give instructions to your bank to transfer
funds by wire to the following account:

Bank Name: PNC Bank, Philadelphia, PA
ABA Number: 031-0000-53
Account Name: Pax World Growth Fund, Inc.
Account No.: 510-077-1

specifying on the wire your name and individual Fund account number.

If you arrange for receipt by the Custodian of federal funds prior to
4:15 P.M., New York time, on a business day, you may purchase shares of the
Fund as of that day.

Waiver of Sales Charges

No initial sales charges are imposed on shares of the Fund purchased
for a period of six months from the date of this prospectus or upon the exchange
of shares of the Pax World Fund or the reinvestment of dividends and
distributions. In addition, shares of the Fund may be purchased at NAV, without
payment of an initial sales charge, (a) for a period of one year from the date
of this Prospectus by any investor who owns as of the date of this Prospectus or
has owned at any time during the four year period immediately preceding the date
of this Prospectus shares of the Pax World Fund, and (b) by (i) any investor
provided that the amount invested by such investor in the Fund or other Pax
World Mutual Funds totals at least $1,000,000.00; (ii) any pension,
profit-sharing or other employee benefit plans qualified under Section 401 of
the Internal Revenue Code, IRAs, simple IRAs, simplified employee pension - IRA
plans and deferred compensation and annuity plans under Sections 457 and
403(b)(7) of the Internal Revenue Code; (iii) trustees, officers, directors,
employees (including retirees) and sales representatives of the Fund, the
Adviser, the Sub-Adviser or certain affiliated companies, for themselves, their
spouses and their dependent children; and (iv) registered representatives and
employees of broker-dealers having selling group agreements with the Fund, for
themselves, their spouses and their dependent children. Finally, if you redeem
your shares and have not previously exercised the repurchase privilege, you may
reinvest, within 90 days after the date of redemption, any portion or all of the
proceeds of such redemption in shares of the Fund at the NAV next determined
after the order is received without payment of an initial sales charge.

You must notify the Transfer Agent that you are entitled to the
reduction or waiver of the sales charge. The reduction or waiver will be granted
subject to confirmation of your entitlement. See "Purchase, Redemption and
Exchange of Fund Shares -- Purchase of Shares -- Waiver of Sales Charges" in the
Statement of Additional Information, a copy of which is available without charge
upon request by writing to the Fund at 222 State Street, Portsmouth, NH 03801 or
by telephoning 800-767-1729.

HOW TO SELL YOUR SHARES

In General

You can redeem shares of the Fund at any time for cash at the NAV per
share next determined after the redemption request is received in proper form by
the Transfer Agent. See "How the Fund Values its Shares" at page 14.

-19-
<PAGE> 27
Redemptions by Written Request

If you hold shares in non-certificate form, a written request for
redemption signed by you exactly as the account is registered is required. If
you hold certificates, the certificates signed in the names(s) shown on the face
of the certificates, must be received by the Transfer Agent in order for the
redemption request to be processed. If redemption is requested by a corporation,
partnership, trust or fiduciary, written evidence of authority acceptable to the
Transfer Agent must be submitted before such request will be accepted. All
correspondence and documents concerning redemptions should be directed to the
Transfer Agent at Pax World Mutual Funds, P.O. Box 8930, Wilmington, DE
19899-8930.

If the proceeds of the redemption (i) exceed $5,000.00 (unless the
record owner has provided to the Transfer Agent a Shareholder Redemption Option
form authorizing the Transfer Agent to redeem shares of the Fund upon written
instructions without a signature guarantee), (ii) are to be paid to a person
other than the record owner, (iii) are to be sent to an address other than the
address on the Transfer Agent's records or within thirty (30) days after the
Transfer Agent has been notified of an address change, or (iv) are to be paid to
a corporation, partnership, trust or fiduciary, the signature(s) on the
redemption request and on the certificates, if any, or stock power must be
guaranteed by an "eligible guarantor institution." An "eligible guarantor
institution" includes any bank, broker/dealer or credit union. The Transfer
Agent reserves the right to request additional information from, and make
reasonable inquiries of, any eligible guarantor institution.

Payment for shares presented for redemption will be made by check
within seven (7) days after receipt by the Transfer Agent of the certificate
and/or written request except as indicated below. Such payment may be postponed
or the right of redemption suspended at times (i) when the New York Stock
Exchange is closed for other than customary weekends and holidays, (ii) when
trading on such Exchange is restricted, (iii) when an emergency exists as a
result of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (iv) during any other period when the Securities
and Exchange Commission ("SEC"), by order, so permits; provided that applicable
rules and regulations of the SEC shall govern as to whether the conditions
prescribed in (ii), (iii) or (iv) exist.

Payment for redemption of recently purchased shares will be delayed
until the Fund or the Transfer Agent has been advised that the purchase check
has been honored, up to fifteen (15) days from the time of receipt of the
purchase check by the Transfer Agent. Such delay may be avoided by purchasing
shares by wire or by certified or official bank check.

Involuntary Redemption

In order to reduce expenses of the Fund, the Board of Directors may
redeem all of the shares of any shareholder, other than a shareholder which is
an IRA or other tax-deferred retirement plan, whose account has a net asset
value of less than $500.00 due to a redemption. The Fund will give any such
shareholder sixty (60) days' prior written notice in which to purchase
sufficient additional shares to avoid such redemption.

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<PAGE> 28
HOW TO EXCHANGE YOUR SHARES

In General

As a shareholder of the Fund, you have an exchange privilege with the
Pax World Fund, Inc., subject to the minimum investment requirement of such
fund. No sales charge will be imposed at the time of exchange. An exchange will
be treated as a redemption and purchase for tax purposes. See "Purchase,
Redemption and Exchange of Fund Shares -- Exchange of Shares" in the Statement
of Additional Information, a copy of which is available without charge upon
request by writing to the Fund at 222 State Street, Portsmouth, NH 03801 or by
telephoning 800-767-1729.

Exchanges by Mail

You may exchange shares by mail by writing to the Transfer Agent at Pax
World Mutual Funds, P.O. Box 8930, Wilmington, DE 19899-8930.

If you hold certificates, the certificates, signed in the name(s) shown
on the face of the certificates, must be returned to the Transfer Agent in order
for the shares to be exchanged. See "How to Sell Your Shares" above.

Exchanges By Telephone

In order to exchange shares by telephone, you must authorize telephone
exchanges on your initial application form or by written notice to the Transfer
Agent and hold shares in non-certificate form. Thereafter, you may call the Fund
at 800-372-7827 to execute a telephone exchange of shares, on weekdays, except
holidays, between the hours of 8:00 A.M. and 6:00 P.M., New York time. For your
protection and to prevent fraudulent exchanges, your telephone call may be
recorded and you will be asked to provide your personal identification number. A
written confirmation of the exchange transaction will be sent to you. NEITHER
THE FUND NOR ITS AGENTS WILL BE LIABLE FOR ANY LOSS, LIABILITY OR COST WHICH
RESULTS FROM ACTING UPON INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE UNDER
THE FOREGOING PROCEDURES. All exchanges will be made on the basis of the
relative NAV of the two funds next determined after the request is received in
good order. The exchange privilege is available only in states where the
exchange may legally be made.

In periods of severe market or economic conditions the telephone
exchange of shares may be difficult to implement and you should make exchanges
by mail by writing to the Transfer Agent at the address noted below.

SHAREHOLDER SERVICES

The Fund offers investors the following special programs:

AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR DISTRIBUTION WITHOUT A SALES
CHARGE. For your convenience, all dividends and distributions, if any,
will be automatically reinvested in additional full and fractional
shares of the Fund at the NAV prevailing at the close of business on
the ex-dividend date unless and until you notify the Transfer Agent in
writing at least ten (10) days prior to such ex-dividend date that you
elect to receive (i) receive such dividends in cash and distributions
in additional shares or (ii) such dividends and distributions in cash.
Stock certificates will not be physically issued on reinvestment of
such dividends and distributions, but a record of the shares purchased
will be added

-21-
<PAGE> 29
to your account and a confirmation of such reinvestment will be
sent to you by the Transfer Agent.

AUTOMATIC MONTHLY INVESTMENT PLAN. Under the Fund's Automatic Monthly
Investment Plan, you may make regular purchases of the Fund's shares
(other than simplified employee pension - IRA plan purchases) via an
automatic debit to a bank account. For additional information about
this service, you may contact the Transfer Agent directly.

TAX-DEFERRED RETIREMENT PLANS. Various tax-deferred retirement plans
and accounts, including IRAs, simple IRAs, simplified employee pension
- IRA plans and "tax-sheltered accounts" under Section 403(b)(7) of the
Internal Revenue Code, are available through the Fund. Information
regarding the establishment of these plans, the administration,
custodial fees and other details is available from the Fund or the
Transfer Agent. If you are considering adopting such a plan, you should
consult with your own legal or tax adviser with respect to the
establishment and maintenance of such a plan.

SYSTEMATIC WITHDRAWAL PLANS. A systematic withdrawal plan is available
to shareholders, which provides for monthly, bi-monthly, quarterly or
semi-annual checks. See "Shareholder Services --Systematic Withdrawal
Plan" in the Statement of Additional Information, a copy of which is
available without charge upon request by writing to the Fund at 222
State Street, Portsmouth, NH 03801 or by telephoning 800-767-1729.

REPORTS TO SHAREHOLDERS. The Fund will send you annual and semi-annual
reports. The financial statements appearing in annual reports are
audited by independent accountants. In order to reduce duplicate
mailing and printing expenses, the Fund will provide one annual and
semi-annual shareholder report and annual prospectus per household. You
may request additional copies of such reports by calling 800-767-1729
(toll-free) or by writing to the Fund at 222 State Street, Portsmouth,
NH 03801-3853. In addition, monthly unaudited financial data are
available upon request from the Fund.

SHAREHOLDER INQUIRIES. Inquiries should be directed to the
Transfer Agent at Pax World Mutual Funds, P.O. Box 8930, Wilmington, DE
19899-8930, or by telephone at 800-372-7827 (toll-free) or, from
outside the U.S.A., at 302-791-2844 (collect).

For additional information regarding the services and privileges
described above, see "Purchase, Redemption and Exchange of Fund Shares" in the
Statement of Additional Information, a copy of which is available without charge
upon request by writing to the Fund at 222 State Street, Portsmouth, NH
03801 or by telephoning 800-767-1729.

THE PAX WORLD MUTUAL FUND FAMILY

Pax World Management Corp. currently offers two mutual funds designed
to meet your individual needs - Pax World Fund and Pax World Growth Fund. We
welcome you to review the investment options available through our family of
funds. For more information on the Pax World Mutual Funds, including charges and
expenses, contact your financial adviser or telephone the Fund at 800-767-1729
for a free prospectus. Read the prospectus carefully before you invest or send
money.

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<PAGE> 30
ADDITIONAL INFORMATION

This Prospectus, including the Statement of Additional Information
which has been incorporated by reference herein, does not contain all the
information set forth in the Registration Statement filed by the Fund with the
SEC under the Securities Act. Copies of the Registration Statement may be
obtained at a reasonable charge from the SEC or may be examined, without charge,
at the office of the SEC in Washington, D.C.

-23-
<PAGE> 31
P R O S P E C T U S

- --------------------------------------------------------------------------------
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations, other than those contained in
this Prospectus, in connection with the offer contained herein, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Fund. This Prospectus does not constitute an offer
by the Fund to sell or a solicitation of any offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such offer in such jurisdiction.
-------------------------------------------------------------------------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FUND HIGHLIGHTS .......................................................... 1
What is Pax World Growth Fund, Inc? ............................. 1
What is the Fund's Investment Philosophy? ....................... 1
What is the Fund's Investment Objective? ........................ 1
Investments and Special Considerations; Risk Factors ............ 1
Who Manages the Fund? ........................................... 2
Who Advises the Fund? ........................................... 2
Who Distributes the Fund's Shares? .............................. 3
What is the Minimum Investment? ................................. 3
How Do I Purchase Shares? ....................................... 3
How Do I Sell My Shares? ........................................ 4
How Are Dividends and Distributions Paid? ....................... 4
FUND EXPENSES ............................................................ 4
HOW THE FUND INVESTS ..................................................... 5
Investment Objective and Policies ............................... 5
Investments and Special Considerations; Risk Factors ............ 7
Corporate and Other Debt-Securities .................... 7
Convertible Securities ................................. 7
Equity-Related Securities .............................. 7
Foreign Securities ..................................... 8
Illiquid and Restricted Securities ..................... 8
Portfolio Turnover ..................................... 8
Repurchase Agreements .................................. 9
Short Sales Against-The-Box ............................ 9
U.S. Government Agency and/or
Instrumentality Securities ........................... 9
When-Issued and Delayed Delivery Securities ............ 10
Borrowing for Leverage ................................. 10
Hedging and Return Enhancement Strategies ....................... 11
Option Transactions .................................... 11
Investment Restrictions ......................................... 12
MANAGEMENT OF THE FUND ................................................... 12
Officers and Directors .......................................... 12
Adviser; Sub-Adviser ............................................ 12
Distribution .................................................... 14
Custodian and Transfer and Dividend Disbursing Agent ............ 14
HOW THE FUND VALUES ITS SHARES ........................................... 14
HOW THE FUND CALCULATES PERFORMANCE ...................................... 15
TAXES, DIVIDENDS AND DISTRIBUTIONS ....................................... 16
Taxation of the Fund ............................................ 16
Taxation of Shareholders ........................................ 16
Withholding Taxes ............................................... 16
Dividends and Distributions ..................................... 16
GENERAL INFORMATION ...................................................... 17
Incorporation ................................................... 17
Description of Common Stock ..................................... 17
Shareholder Meetings ............................................ 17
</TABLE>
<PAGE> 32

<TABLE>
<S> <C>
SHAREHOLDER GUIDE ........................................................ 18
How to Purchase Shares .......................................... 18
In General ............................................. 18
Investing by Mail ...................................... 18
Investing by Telephone ................................. 18
Investing by Wire Transfer ............................. 18
Waiver of Sales Charges ................................ 19
How to Sell Your Shares ......................................... 19
In General ............................................. 19
Redemptions by Written Request ......................... 20
Involuntary Redemptions ................................ 20
How to Exchange Your Shares ..................................... 21
In General ............................................. 21
Exchanges By Mail ...................................... 21
Exchanges by Telephone ................................. 21
Shareholder Services ............................................ 21
Automatic Reinvestment of Dividends and/or
Distributions without a Sales Charge ................. 22
Automatic Monthly Investment Plan ...................... 22
Tax-Deferred Retirement Plans and Accounts ............. 22
Systematic Withdrawal Plans ............................ 22
Reports to Shareholders ................................ 22
Shareholder Inquiries .................................. 22
THE PAX WORLD MUTUAL FUND FAMILY ......................................... 22
ADDITIONAL INFORMATION ................................................... 23
</TABLE>

- --------------------------------------------------------------------------------

PAX WORLD GROWTH FUND, INC.

The date of this Prospectus is June 11, 1997

-ii-
<PAGE> 33
PAX WORLD GROWTH FUND, INC.

Statement of Additional Information
dated June 11, 1997

Pax World Growth Fund, Inc. (the "Fund") is an open-end, diversified
management investment company whose investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily in
equity securities (common stock, preferred stock and securities convertible into
common stock) of established companies with above-average growth prospects.
Current income, if any, is incidental.

Under normal market conditions, the Fund intends to invest at least
seventy-five percent (75%) of its total assets in equity securities of companies
that exceed $200,000,000.00 in market capitalization. The Fund may also invest
in (i) equity securities of other companies including foreign issuers, (ii)
investment grade fixed-income securities and (iii) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities, the proceeds of
which are earmarked for a specific purpose which complies with the investment
objectives and policies of the Fund, such as the Federal Farm Credit Bank, the
Federal Home Loan Bank and the Federal National Mortgage Association. In
addition, the Fund may purchase and sell put and call options on equity
securities and stock indices and foreign currency exchange contracts to hedge
its portfolio and to attempt to enhance return. The Fund will not invest in
obligations issued or guaranteed by foreign governments or the U.S. Treasury,
however, because the proceeds thereof may be used to manufacture defense or
weapons-related products or for a purpose which does not otherwise comply with
the Fund's socially conscious objectives and policies. There can be no assurance
that the Fund's investment objective will be achieved. See "How the Fund Invests
- -- Investment Objective and Policies" in the Prospectus. The Fund's address is
222 State Street, Portsmouth, NH 03801, and its telephone number is
800-767-1729.

This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Fund's Prospectus dated June 11, 1997, a copy
of which may be obtained from the Fund upon request.

<PAGE> 34
TABLE OF CONTENTS

Page
----

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES ........................................ 1
Investment Objective ............................................ 1
Investment Philosophy ........................................... 1
INVESTMENTS AND SPECIAL CONSIDERATIONS; RISK FACTORS ..................... 2
Foreign Securities .............................................. 2
Forward Foreign Currency Exchange Contracts ..................... 2
Illiquid and Restricted Securities .............................. 3
Options on Securities ........................................... 4
Options on Securities Indices ................................... 5
Portfolio Turnover .............................................. 6
Position Limits ................................................. 7
Repurchase Agreements ........................................... 7
Short-term Investments .......................................... 7
U.S. Government Agency and/or
Instrumentality Securities ................................... 7
When-issued and Delayed Delivery Securities ..................... 8
Borrowing for Leverage .......................................... 8
INVESTMENT RESTRICTIONS .................................................. 9
MANAGEMENT OF THE FUND ................................................... 11
ADVISER; SUB-ADVISER ..................................................... 13
DISTRIBUTION ............................................................. 15
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
AND INDEPENDENT ACCOUNTANTS ........................................... 16
PORTFOLIO TRANSACTIONS AND BROKERAGE ..................................... 16
PURCHASE, REDEMPTION AND EXCHANGE OF FUND SHARES ......................... 17
Purchase of Shares .............................................. 17
In General ............................................. 17
Waiver of Sales Charges ................................ 18
Sales of Shares ................................................. 18
In General ............................................. 18
Involuntary Redemption ................................. 19
Exchange of Shares .............................................. 19
NET ASSET VALUE .......................................................... 19
PERFORMANCE INFORMATION .................................................. 20
Average Annual Total Return ..................................... 20
Yield ........................................................... 20
TAXES .................................................................... 21
SHAREHOLDER SERVICES ..................................................... 22
Automatic Reinvestment of Dividends and/or
Distributions without a Sales Charge .......................... 22
Automatic Monthly Investment Plan ............................... 22
Tax-Deferred Retirement Plans and Accounts ...................... 23
Systematic Withdrawal Plans ..................................... 23
Reports to Shareholders ......................................... 24
Shareholder Inquiries ........................................... 24
</TABLE>

<PAGE> 35
INVESTMENT OBJECTIVE AND POLICIES

Investment Objective

Under normal market conditions, the Fund anticipates that at least
seventy-five percent (75%) of its total assets will consist of equity securities
of companies that exceed $200,000,000.00 in market capitalization. Stocks will
be selected on a company-by-company basis primarily through the use of
fundamental analysis. The Fund's adviser, Pax World Management Corp. (the
"Adviser"), looks for companies that have demonstrated growth in earnings and
sales, high returns on equity and assets, or other strong financial
characteristics, and, in the judgment of the Adviser, are attractively valued.
These companies tend to have a unique market niche, a strong new product profile
or superior management.

The Fund may also invest in (i) equity securities of other companies
that are undergoing changes in management or product and marketing dynamics that
have not yet been reflected in reported earnings but that are expected to impact
earnings in the intermediate-term -- these securities often lack investor
recognition and are often favorably valued, (ii) other equity-related
securities, (iii) equity securities of foreign issuers, (iv) investment grade
fixed-income securities, and (v) obligations issued or guaranteed by U.S.
Government agencies and instrumentalities, the proceeds of which are earmarked
for a specific purpose which complies with the investment objectives and
policies of the Fund, such as the Federal Farm Credit Bank, the Federal Home
Loan Bank and the Federal National Mortgage Association. In addition, the Fund
may purchase and sell put and call options on equity securities and stock
indices and foreign currency exchange contracts to hedge its portfolio and to
attempt to enhance return. The Fund will not invest in obligations issued or
guaranteed by foreign governments or the U.S. Treasury, however, because the
proceeds thereof may be used to manufacture defense or weapons-related products
or for a purpose which does not otherwise comply with the Fund's socially
conscious objectives and policies. Investing in securities of foreign companies
involves certain risks and considerations not typically associated with
investments in domestic companies. See "How the Fund Invests -- Investments and
Special Considerations; Risk Factors" in the Prospectus.

Investment Philosophy

The Fund seeks investments in companies producing life-supportive
goods and services and that are not, to any degree, engaged in manufacturing
defense or weapons-related products. The policy of the Fund is to exclude from
its portfolio securities of (i) companies engaged in military activities, (ii)
companies appearing on the United States Department of Defense list of 100
largest contractors if five percent (5%) or more of the gross sales of such
companies are derived from contracts with the United States Department of
Defense, (iii) other companies contracting with the United States Department of
Defense if five percent (5%) or more of the gross sales of such companies
<PAGE> 36
are derived from contracts with the United States Defense Department, and (iv)
companies which derive revenue from the production, sale and/or distribution of
liquor, tobacco and/or gambling services or equipment. By way of illustration,
the Fund will invest in such industries as building supplies, computer software,
education, food, health care, household appliances, housing, leisure time,
pollution control, technology and telecommunications, among others. The Fund's
portfolio will consist primarily of companies located in the United States. See
"Fund Highlights -- What is the Fund's Investment Philosophy" in the Prospectus.

There can be no assurance that the Fund's investment objective will be
achieved.

INVESTMENTS AND SPECIAL CONSIDERATIONS;
RISK FACTORS

FOREIGN SECURITIES

The Fund is permitted to invest in foreign corporate and government
securities. "Foreign Government securities" include debt securities issued or
guaranteed, as to payment of principal and interest, by governments,
quasi-governmental entities, governmental agencies, supranational entities and
other governmental entities (collectively, "Government Entities") of foreign
countries denominated in the currencies of such countries or in U.S. dollars
(including debt securities of a Government Entity in any such country
denominated in the currency of another such country).

A "supranational entity" is an entity constituted by the national
governments of several countries to promote economic development. Examples of
such supranational entities include, among others, the Asian Development Bank,
the European Investment Bank and the World Bank (International Bank for
Reconstruction and Development). Debt securities of "quasi-governmental
entities" are issued by entities owned by a national, state, or equivalent
government or are obligations of a political unit that are not backed by the
national government's "full faith and credit" and general taxing powers.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

The Fund may enter into forward foreign currency exchange contracts in
limited circumstances. When the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, or when the Fund
anticipates the receipt in a foreign currency of dividends or interest

-2-
<PAGE> 37
payments on a security which it holds, the Fund may desire to "lock-in" the U.S.
dollar price of the security or the U.S. dollar equivalent of such dividend or
interest payment, as the case may be. By entering into a forward contract for a
fixed amount of dollars, for the purchase or sale of the amount of foreign
currency involved in the underlying transactions, the Fund may be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the foreign currency during the period
between the date on which the security is purchased or sold, or on which the
dividend or interest payment is declared, and the date on which such payments
are made or received.

Additionally, when the investment adviser believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, the Fund may enter into a forward contract for a fixed amount of
dollars, to sell the amount of foreign currency approximating the value of some
or all of the Fund's portfolio securities denominated in such foreign currency.
The projection of short-term currency market movement is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. The Fund's Custodian will place cash or liquid securities into a
segregated account of the Fund in an amount equal to the value of the Fund's
total assets committed to the consummation of forward foreign currency exchange
contracts. If the value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the Fund's
commitments with respect to such contracts.

The Fund generally will not enter into a forward contract with a term
of greater than one year. At the maturity of a forward contract, the Fund may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract with the same
currency trader obligating it to purchase, on the same maturity date, the same
amount of the foreign currency.

If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. Should forward contract prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent that the price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward contract prices increase,
the Fund will suffer a loss to the extent that the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.

ILLIQUID AND RESTRICTED SECURITIES

The Fund may not invest more than ten percent (10%) of its net assets
in repurchase agreements which have a maturity of longer than seven (7) days or
in other illiquid securities, including securities that are illiquid by virtue
of the absence of a readily available market (either within or outside of the
United States) or legal or contractual restrictions on resale. Historically,
illiquid securities have included securities subject to contractual or legal
restrictions on resale because they have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), securities which are
otherwise not readily marketable and repurchase agreements having a maturity of
longer than seven (7) days. Securities which have not been registered under the
Securities Act are referred to as private placements or restricted securities
and are purchased directly from the issuer or in the secondary market. Mutual
funds do not typically hold a significant amount of

-3-
<PAGE> 38
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.

Restricted securities eligible for resale pursuant to Rule 144A under
the Securities Act and commercial paper for which there is a readily available
market will not be deemed to be illiquid. The investment adviser will monitor
the liquidity of such restricted securities subject to the supervision of the
Board of Directors. In reaching liquidity decisions, the investment adviser will
consider, inter alia, the following factors: (i) the frequency of trades and
quotes for the security; (ii) the number of dealers wishing to purchase or sell
the security and the number of other potential purchasers; (iii) dealer
undertakings to make a market in the security and (iv) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer). In addition, in order for commercial paper that is issued in
reliance on Section 4(2) of the Securities Act to be considered liquid, (i) it
must be rated in one of the at least two nationally recognized statistical
rating organizations ("NRSRO"), or if only one NRSRO rates the securities, by
that NRSRO, or, if unrated, be of comparable quality in the view of the
investment adviser; and (ii) it must not be "traded flat" (i.e., without accrued
interest) or in default as to principal or interest. Repurchase agreements
subject to demand are deemed to have a maturity equal to the notice period.

OPTIONS ON SECURITIES

The Fund may purchase and write (i.e., sell) put and call options on
securities that are traded on U.S. or foreign securities exchanges or that are
traded in the over-the-counter markets.

A call option is a short-term contract pursuant to which the purchaser,
in return for a premium paid, has the right to buy the security underlying the
option at a specified exercise price at any time during the term of the option.
The writer of the call option, who receives the premium, has the obligation,
upon exercise of the option, to deliver the underlying security against payment
of the exercise price.

A put option is a similar contract which gives the purchaser, in return
for a premium, the right to sell the underlying security at a specified price
during the term of the option. The writer of the put option, who receives the
premium, has the obligation to buy the underlying security upon exercise at the
exercise price.

A call option written by the Fund is "covered" if (i) the Fund owns the
security underlying the option or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash
consideration held in a segregated account by its Custodian) or (ii) the Fund
holds on a share-for-share basis a call on the same security as the call written
where the exercise price of the call held is equal to or less than the exercise
price of the call written or greater than the exercise price of the call written
if the difference is maintained by the Fund in cash, U.S. Government securities
or other liquid high-grade debt obligations in a segregated account with its
Custodian.

-4-
<PAGE> 39
A put option written by the Fund is "covered" if the Fund maintains
cash, U.S. Government securities or other liquid high-grade debt obligations
with a value equal to the exercise price in a segregated account with its
Custodian, or else holds on a share-for-share basis a put on the same security
as the put written where the exercise price of the put held is equal to or
greater than the exercise price of the put written.

The Fund may also purchase a "protective put," i.e., a put option
acquired for the purpose of protecting a portfolio security from a decline in
market value. In exchange for the premium paid for the put option, the Fund
acquires the right to sell the underlying security at the exercise price of the
put regardless of the extent to which the underlying security declines in value.
The loss to the Fund is limited to the premium paid for, and transaction costs
in connection with, the put plus the initial excess, if any, of the market price
of the underlying security over the exercise price. However, if the market price
of the security underlying the put rises, the profit the Fund realizes on the
sale of the security will be reduced by the premium paid for the put option less
any amount (net of transaction costs) for which the put may be sold. Similar
principles apply to the purchase of puts on stock indices, as described below.

The Fund may write put and call options on stocks only if they are
covered, and such options must remain covered so long as the Fund is obligated
as a writer. The Fund does not intend to purchase options on equity securities
if the aggregate premiums paid for such outstanding options would exceed ten
percent (10%) of the Fund's total assets.

OPTIONS ON SECURITIES INDICES

In addition to options on securities, the Fund may also purchase and
sell put and call options on securities indices traded on U.S. or foreign
securities exchanges or traded in the over-the-counter markets. Options on
securities indices are similar to options on securities except that, rather than
the right to take or make delivery of a security at a specified price, an option
on a securities index gives the holder the right to receive, upon exercise of
the option, an amount of cash if the closing level of the securities index upon
which the option is based is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. This amount of cash is
equal to such difference between the closing price of the index and the exercise
price of the option expressed in dollars times a specified multiple (the
multiplier). The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. All settlements on options on indices
are in cash, and gain or loss depends on price movements in the securities
market generally (or in a particular industry or segment of the market) rather
than price movements in individual securities.

The multiplier for an index option performs a function similar to the
unit of trading for a stock option. It determines the total dollar value per
contract of each point in the difference between the exercise price of an option
and the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers. Because exercises of index options are settled in cash, a
call writer cannot determine the amount of its settlement obligations in advance
and, unlike call writing on specific stocks, cannot provide in advance for, or
cover, its potential settlement obligations by acquiring and holding the
underlying securities. In addition, unless the Fund has other liquid assets
which are sufficient to satisfy the exercise of a call, the Fund would be
required to liquidate portfolio securities or borrow in order to satisfy the
exercise.

-5-
<PAGE> 40
Because the value of an index option depends upon movements in the
level of the index rather than the price of a particular security, whether the
Fund will realize a gain or loss on the purchase or sale of an option on an
index depends upon movements in the level of security prices in the market
generally or in an industry or market segment rather than movements in the price
of a particular security. Accordingly, successful use by the Fund of options on
indices would be subject to the investment adviser's ability to predict
correctly movements in the direction of the securities market generally or of a
particular industry. This requires different skills and techniques than
predicting changes in the price of individual stocks.

The distinctive characteristics of options on indices create certain
risks that are not present with stock options.

Index prices may be distorted if trading of certain stocks included in
the index is interrupted. Trading in the index options also may be interrupted
in certain circumstances, such as if trading were halted in a substantial number
of stocks included in the index. If this occurred, the Fund would not be able to
close out options which it had purchased or written and, if restrictions on
exercise were imposed, may be unable to exercise an option it holds, which could
result in losses to the Fund. It is the Fund's policy to purchase or write
options only on indices which include a number of stocks sufficient to minimize
the likelihood of a trading halt in the index.

The ability to establish and close out positions on such options will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop in all index option contracts. The
Fund will not purchase or sell any index option contract unless and until, in
the investment adviser's opinion, the market for such options has developed
sufficiently that the risk in connection with such transactions is not
substantially greater than the risk in connection with options on securities in
the index.

The Fund will write put options on stock indices and foreign
currencies only if they are covered by segregating with the Fund's Custodian an
amount of cash, U.S. Government securities, or liquid assets equal to the
aggregate exercise price of the puts. The Fund does not intend to purchase
options on securities indices if the aggregate premiums paid for such
outstanding options would exceed ten percent (10%) of the Fund's total assets.

PORTFOLIO TURNOVER

As a result of the investment policies described above, the Fund may
engage in a substantial number of portfolio transactions and its portfolio
turnover rate may exceed seventy-five percent (75%), although the Fund's
portfolio turnover rate is not expected to exceed one hundred percent (100%).
The portfolio turnover rate is generally the percentage computed by dividing the
lesser of portfolio purchases or sales (excluding all securities, including
options, whose maturities or expiration date at acquisition were one year or
less) by the monthly average value of the portfolio. High portfolio turnover
(over one hundred percent (100%)) involves correspondingly greater brokerage
commissions and other transaction costs, which are borne directly by the Fund.
In addition, high portfolio turnover may also mean that a proportionately
greater amount of distributions to shareholders will be taxed as ordinary income
rather than long-term capital gains compared to investment companies with lower
portfolio turnover. See "Portfolio Transactions and Brokerage" and "Taxes" on
pages 16 and 21, respectively.

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<PAGE> 41
POSITION LIMITS

Transactions by the Fund in futures contracts and options will be
subject to limitations, if any, established by each of the exchanges, boards of
trade or other trading facilities (including NASDAQ) governing the maximum
number of options in each class which may be written or purchased by a single
investor or group of investors acting in concert, regardless of whether the
options are written on the same or different exchanges, boards of trade or other
trading facilities or are held or written in one or more accounts or through one
or more brokers. An exchange, board of trade or other trading facility may order
the liquidation of positions in excess of these limits, and it may impose
certain other sanctions.

REPURCHASE AGREEMENTS

The Fund will enter into repurchase transactions only with parties
meeting creditworthiness standards approved by the Fund's Board of Directors.
The Fund's investment adviser will monitor the creditworthiness of such parties,
under the general supervision of the Board of Directors. In the event of a
default or bankruptcy by a seller, the Fund will promptly seek to liquidate the
collateral. To the extent that the proceeds from any sale of such collateral
upon a default in the obligation to repurchase are less than the repurchase
price, the Fund will suffer a loss.

SHORT-TERM INVESTMENTS

When conditions dictate a defensive strategy, the Fund may temporarily
invest in money market instruments, including commercial paper of corporations,
certificates of deposit, bankers' acceptances and other obligations of domestic
and foreign banks, obligations issued or guaranteed by the U.S. Government, its
agencies or its instrumentalities and repurchase agreements (described more
fully below). Such investments may be subject to certain risks, including future
political and economic developments, the possible imposition of withholding
taxes on interest income, the seizure or nationalization of foreign deposits and
foreign exchange controls or other restrictions.

U.S. GOVERNMENT AGENCY AND/OR
INSTRUMENTALITY SECURITIES

The Fund may invest in securities issued by U.S. Government agencies or
instrumentalities other than the U. S. Treasury. These obligations may or may
not be backed by the full faith and credit of the United States. In the case of
securities not backed by the full faith and credit of the United States, the
Fund must look principally to the agency issuing or guaranteeing the obligation
for ultimate repayment and may not be able to assert a claim against the United
States if the agency or instrumentality issuing or guaranteeing the obligation
does not meet its commitments. Obligations of the Government National Mortgage
Association ("GNMA"), the Farmers Home Administration and the Small Business
Administration are backed by the full faith and credit of the United States.
Securities in which the Fund may invest which are not backed by the full faith
and credit of the United States include obligations such as those issued by the
Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation ("FHLMC"),
the Federal National Mortgage Association, the Student Loan Marketing
Association and Resolution Funding Corporation , each of which has the right to
borrow from the U.S. Treasury to meet its obligations, and obligations of the
Farm Credit System, the obligations of which may be satisfied only by the

-7-
<PAGE> 42
individual credit of the issuing agency. FHLMC investments may include
collateralized mortgage obligations.

In connection with its commitment to assist in the development of
housing, the Fund may invest in mortgage-backed securities, including those
which represent undivided ownership interests in pools of mortgages. The U.S.
Government or the issuing agency or instrumentality guarantees the payment of
interest on and principal of these securities. However, the guarantees do not
extend to the yield or value of the securities nor do the guarantees extend to
the yield or value of the Fund's shares. These securities are in most cases
"pass-through" instruments, through which the holders receive a share of all
interest and principal payments from the mortgages underlying the securities,
net of certain fees. Because the prepayment characteristics of the underlying
mortgages vary, it is not possible to predict accurately the average life of a
particular issue of pass-through certificates. Mortgage-backed securities are
often subject to more rapid repayment than their maturity date would indicate as
a result of the pass-through of prepayments of principal on the underlying
mortgage obligations. During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
The Fund's ability to invest in high-yielding mortgage-backed securities will be
adversely affected to the extent that prepayments of mortgages must be
reinvested in securities which have lower yields than the prepaid mortgages.
Moreover, prepayments of mortgages which underlie securities purchased at a
premium could result in capital losses.

The Fund may invest in both Adjustable Rate Mortgage Securities
("ARMs"), which are pass-through mortgage securities collateralized by
adjustable rate mortgages, and Fixed-Rate Mortgage Securities ("FRMs"), which
are collateralized by fixed-rate mortgages.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

From time to time, in the ordinary course of business, the Fund may
purchase or sell securities on a when-issued or delayed delivery basis, that is,
delivery and payment can take place a month or more after the date of the
transaction. The Fund will limit such purchases to those in which the date for
delivery and payment falls within 120 days of the date of the commitment. The
Fund will make commitments for such when-issued transactions only with the
intention of actually acquiring the securities. The Fund's Custodian will
maintain, in a separate account of the Fund, cash, U.S. Government securities or
other liquid high-grade debt obligations having a value equal to or greater than
such commitments. If the Fund chooses to dispose of the right to acquire a
when-issued security prior to its acquisition, it could, as with the disposition
of any other portfolio security, incur a gain or loss due to market
fluctuations.

BORROWING FOR LEVERAGE

From time to time, the Fund may increase its ownership of securities by
borrowing and investing the borrowed funds, subject to the restrictions stated
in the Prospectus. Pursuant to the requirements of the Investment Company Act,
any such borrowing will be made only to the extent that the value of the Fund's
assets, less its liabilities other than borrowings, is equal to at least 300% of
all borrowings including the proposed borrowing. If the value of the Fund's
assets, when computed in that manner, falls below such 300% asset coverage
requirement, the Fund is required, within three (3) days, to reduce its bank
debt to the extent necessary to meet that coverage requirement. To do so, the
Fund may have to sell a portion of its investments at a time when it would
otherwise not want to sell such investments. In addition, because interest on
money the Fund borrows is an expense of the

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<PAGE> 43
Fund, the Fund's expenses may increase more than the expenses of funds that do
not borrow and the NAV per share of the Fund may fluctuate more than the NAV per
share of funds that do not borrow.

INVESTMENT RESTRICTIONS

The following restrictions are fundamental policies. Fundamental policies
are those which cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. A "majority of the Fund's
outstanding voting securities," when used in this Statement of Additional
Information, means the lesser of (i) sixty-seven percent (67%) of the shares
represented at a meeting at which more than fifty percent (50%) of the
outstanding voting shares are present in person or represented by proxy or (ii)
more than fifty percent (50%) of the outstanding voting shares.

The Fund may not:

1. Purchase securities on margin (but the Fund may obtain such
short-term credits as may be necessary for the clearance of
transactions); provided that the deposit or payment by the Fund of
initial or maintenance margin in connection with futures or options is
not considered the purchase of a security on margin.

2. Make short sales of securities or maintain a short position
if, when added together, more than twenty-five percent (25%) of the
value of the Fund's net assets would be (i) deposited as collateral for
the obligation to replace securities borrowed to effect short sales and
(ii) allocated to segregated accounts in connection with short sales.
Short sales "against-the-box" are not subject to this limitation.

3. Issue senior securities, borrow money or pledge its assets,
except that the Fund may borrow from banks up to twenty percent (20%)
of the value of its total assets (calculated when the loan is made) for
temporary, extraordinary or emergency purposes or for the clearance of
transactions. The Fund may pledge up to twenty percent (20%) of the
value of its total assets to secure such borrowings. For purposes of
this restriction, the purchase or sale of securities on a when-issued
or delayed delivery basis, forward foreign currency exchange contracts
and collateral arrangements relating thereto, and collateral
arrangements with respect to futures contracts and options thereon and
with respect to the writing of options and obligations of the Fund to
Directors pursuant to deferred compensation arrangements are not deemed
to be a pledge of assets or the issuance of a senior security.

4. Purchase any security if as a result: (i) with respect to
seventy-five percent (75%) of the Fund's total assets, more than five
percent (5%) of the Fund's total assets (determined at the time of
investment) would then be invested in securities of a single issuer,
(ii) twenty-five percent (25%) or more of the Fund's total assets
(determined at the time of the investment) would be invested in a
single industry, or (iii) the Fund would own more than ten percent
(10%) of the outstanding voting securities of a single issuer.

5. Purchase any security if as a result the Fund would then
have more than five percent (5%) of its total assets (determined at the
time of investment) invested in securities of companies (including
predecessors) less than three years old, except that

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<PAGE> 44

the Fund may invest in the securities of any U.S. Government
agency or instrumentality (other than the U.S. Treasury), and in
any security guaranteed by such an agency or instrumentality, the
proceeds of which are earmarked for a specific purpose which complies
with the investment objectives and policies of the Fund, such as the
Federal Farm Credit Bank, the Federal Home Loan Bank and the
Federal National Mortgage Association.

6. Buy or sell real estate or interests in real estate, except
that the Fund may purchase and sell securities which are secured by
real estate, securities of companies which invest or deal in real
estate and publicly traded securities of real estate investment trusts.
The Fund may not purchase interests in real estate limited partnerships
which are not readily marketable.

7. Buy or sell commodities or commodity contracts. (For
purposes of this restriction, futures contracts on currencies and on
securities indices and forward foreign currency exchange contracts are
not deemed to be commodities or commodity contracts.)

8. Act as underwriter except to the extent that, (i) in
connection with the disposition of portfolio securities, it may be
deemed to be an underwriter under certain federal securities laws, and
(ii) the Fund may invest up to five percent of the value of its assets
(at time of investment) in portfolio securities which the Fund might
not be free to sell to the public without registration of such
securities under the Securities Act of 1933. The Fund's position in
such restricted securities may adversely affect the liquidity and
marketability of such restricted securities and the Fund may not be
able to dispose of its holdings in these securities at reasonable price
levels. The Fund has not adopted a fundamental investment policy with
respect to investments in restricted securities. See "Illiquid and
Restricted Securities" above.

9. Make investments for the purpose of exercising control or
management.

10. Invest in interests in oil, gas or other mineral
exploration or development programs, except that the Fund may invest in
the securities of companies which invest in or sponsor such programs.

11. Make loans, except that the Fund may enter into repurchase
transactions with parties meeting creditworthiness standards approved
by the Fund's Board of Directors. See "Investments and Special
Considerations; Risk Factors -- Repurchase Agreements" at page 7.

12. Invest more than ten percent (10%) of the value of its
assets in securities of foreign issuers.

In order to comply with certain "blue sky" restrictions, the Fund will
not as a matter of operating policy:

1. Invest in oil, gas and mineral leases.

2. Invest in securities of any issuer if, to the knowledge of
the Fund, any Officer or Director of the Fund or the Fund's Manager or
Adviser or Sub-Adviser (as defined below) owns more than one-half of
one percent (.5%) of the outstanding securities of such issuer, and
such Officers and Directors who own more than

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<PAGE> 45
one-half of one percent (.5%) own in the aggregate more than five
percent (5%) of the outstanding securities of such issuer.

3. Purchase warrants if as a result the Fund would then have
more than five percent (5%) of its assets (determined at the time of
investment) invested in warrants. Warrants will be valued at the lower
of cost or market and investment in warrants which are not listed on
the New York Stock Exchange or American Stock Exchange or a major
foreign exchange will be limited to two percent (2%) of the Fund's net
assets (determined at the time of investment). For purposes of this
limitation, warrants acquired in units or attached to securities are
deemed to be without value.

Whenever any fundamental investment policy or investment restriction
states a maximum percentage of the Fund's assets, it is intended that if the
percentage limitation is met at the time the investment is made, a later change
in percentage resulting from changing total or net asset value will not be
considered a violation of such policy.

MANAGEMENT OF THE FUND

The officers of the Fund are responsible for the day-to-day operations
of the Fund and the Board of Directors of the Fund, in addition to overseeing
the Adviser and Sub-Adviser, is responsible for the general policy of the Fund.
The Board of Directors meets four times per year, reviews portfolio selections
and bonding requirements, declares dividends, if any, and reviews the activities
of the executive officers of the Fund. Such activities are consistent with their
fiduciary obligations as directors under the General Corporation Law of the
State of Delaware. Members of the Board of Directors of the Fund are reimbursed
for their travel expenses for attending meetings of the Board of Directors plus
Three Hundred Dollars ($300.00) for affiliated directors and One Thousand
Dollars ($1,000.00) for unaffiliated directors. The Fund's Adviser and
Sub-Adviser furnish daily investment advisory services.

The following table reflects the name and address, position held with
the Fund and principal occupation during the past five (5) years for those
persons who are the officers and directors of the Fund.

<TABLE>
<CAPTION>
Name, Address and Age Position(s) Held with the Fund Principal Occupation(s) During Past Five Years
- --------------------- ------------------------------ ----------------------------------------------
<S> <C> <C>
Carl H. Doerge, Jr., 867 Director Private investor (1995 - present); Executive
Remsen Lane, Oyster Bay, NY Vice President and Managing Director, Smith
11771; (59) Barney (1971 - 1995)

Thomas W. Grant, 14 Wall President; Director Vice Chairman of the Board, Pax World Fund,
Street, New York, NY 10005*; Incorporated (1996 - present); President, Pax
(55) World Management Corp. (1996 - present);
President, H. G. Wellington & Co., Inc. (1991 -
present)

Anita D. Green, c/o Pax World Assistant Treasurer Manager - Shareholder Services for Pax World
Management Corp., 222 State Fund, Incorporated, Pax World Management Corp.
Street, Portsmouth, NH 03801; (1990 - present)
(32)
</TABLE>

-11-
<PAGE> 46

<TABLE>
<S> <C> <C>
John L. Kidde, c/o KDM Director President, KDM Development Corporation (1988 -
Development Corporation, 209 present)
Cooper Avenue, Suite 5-D,
Upper Montclair, NJ 07043;
(63)

Joy L. Liechty, 1403 Director Client and Sales Advocate, Menonite Mutual Aid
Ashton Court, Goshen, IN Association, Goshen, IN 46526 (1989 - present)
46526; (42)

James M. Shadek, 14 Wall Treasurer Account Executive, H. G. Wellington & Co., Inc.
Street, New York, NY 10005*; (1986 - present); Senior Vice President for
(44) Social Research, Pax World Management Corp.
(1996 - present)

Laurence A. Shadek, 14 Wall Chairman of the Board; Chairman of the Board, Pax World Fund,
Street, New York, NY 10005*; Director Incorporated (1996 - present); Chairman of the
(46) Board, Pax World Management Corp. (1996 -
present); Executive Vice President, H. G.
Wellington & Co., Inc. (1986 - present)

Janet Lawton Spates, c/o Pax Assistant Treasurer Operations Manager for Pax World Fund,
World Management Corp., 222 Incorporated, Pax World Management Corp. (1992
State Street, Portsmouth, NH - present)
03801; (27)

Nancy S. Taylor, 5298 N. Director Senior minister, First Congregational Church,
Riffle Way, Boise, ID 83703; Boise, ID (1992 - present); Associate minister,
(41) Immanuel Congregational Church, Hartford, CT
(1987 - 1992)

Lee D. Unterman, c/o Broudy & Secretary Partner, Broudy & Jacobson, New York, NY (1988
Jacobson, 230 Park Avenue, New - present)
York, NY 10169*; (46)
</TABLE>

* Designates an "Interested" officer or director, as defined in the
Investment Company Act, by reason of his or her affiliation with the
Adviser.

** Designates a member of the Executive Committee, Investment Committee
and/or Audit Committee. Members of the Executive Committee assist in
making investment decisions and in executing various decisions of the
Board of Directors.

-12-
<PAGE> 47
No person on such date owned of record or beneficially five percent
(5%) or more of the outstanding Common Stock of the Fund and all officers and
directors as a group own less than one percent (1%) of the outstanding Common
Stock of the Fund.

Certain directors and officers of the Fund are also directors and
officers of Pax World Fund, Inc., the other investment company managed by the
Adviser. None of the officers or directors are related to one another by blood,
marriage or adoption, except that Laurence A. Shadek and James M.
Shadek are brothers.

Members of the Board of Directors of the Fund are reimbursed for their
travel expenses for attending meetings of the Board of Directors plus Three
Hundred Dollars ($300.00) for affiliated directors and One Thousand Dollars
($1,000.00) for unaffiliated directors.

ADVISER; SUB-ADVISER

Pax World Management Corp., 222 State Street, Portsmouth, NH 03801 (the
"Adviser") is the adviser to the Fund. It was incorporated in 1970 under the
laws of the State of Delaware. Pursuant to the terms of an Advisory Agreement
entered into between the Fund and the Adviser (the "Advisory Agreement"), the
Adviser, subject to the supervision of the Board of Directors of the Fund, is
responsible for managing the assets of the Fund in accordance with the Fund's
investment objective, investment program and policies. The Adviser determines
what securities and other instruments are purchased and sold for the Fund and is
responsible for obtaining and evaluating financial data relevant to the Fund. As
of December 31, 1996, the Adviser had over $513,000,000.00 in assets under
management by virtue of serving as the adviser to the Pax World Fund, Inc. (the
"Pax World Fund"). The Adviser has no clients other than the Fund and the Pax
World Fund.

Pursuant to the terms of the Advisory Agreement, the Adviser will be
compensated as follows: in the event that the average net assets of the Fund are
less than $5,000,000.00, the Adviser will be compensated by the Fund for its
services at an annual rate of $25,000.00; in the event that the average net
assets of the Fund are equal to or in excess of $5,000,000.00, the Adviser will
be compensated by the Fund for its services at an annual rate of one percent
(1%) of average net assets up to and including $25,000,000.00 and

-13-
<PAGE> 48
three-quarters of one percent (.75%) of average net assets in excess of
$25,000,000.00.

The Adviser has, however, agreed to supply and pay for such services as
are deemed by the Board of Directors of the Fund to be necessary or desirable
and proper for the continuous operations of the Fund (excluding all taxes and
charges of governmental agencies and brokerage commissions incurred in
connection with portfolio transactions) which are in excess of one and one-half
percent (1.5%) of the average net asset value of the Fund per annum. Such
expenses include (i) management, distribution and sub-advisory fees; (ii) the
fees of affiliated and unaffiliated Directors; (iii) the fees of the Fund's
Custodian and Transfer Agent; (iv) the fees of the Fund's legal counsel and
independent accountants; (v) the reimbursement of organization expenses; and
(vi) expenses related to shareholder communications including all expenses of
shareholders' and Board of Directors' meetings and of preparing, printing and
mailing reports, proxy statements and prospectuses to shareholders.

The Advisory Agreement provides that (i) it may be terminated by the
Fund or the Adviser at any time upon not more than sixty (60) days', nor less
than thirty (30) days', written notice, and (ii) will terminate automatically in
the event of its assignment (as defined in the Investment Company Act). In
addition, the Advisory Agreement provides that it may continue in effect for a
period of more than two (2) years from its execution only so long as such
continuance is specifically approved at least annually in accordance with the
requirements of the Investment Company Act.

The Advisory Agreement was approved by the Board of Directors,
including a majority of the Directors who are not parties to the contract or
interested persons of any such party, as defined in the Investment Company Act,
on June 6, 1997, and by the initial shareholder of the Fund on June 9, 1997.

H. G. Wellington Capital Management, a division of H. G. Wellington &
Co., Inc., 14 Wall Street, New York, NY 10005 (the "Sub-Adviser") is the
sub-adviser to the Fund. H. G. Wellington & Co., Inc. was incorporated in
1984 under the laws of the State of Delaware and is also a registered
broker-dealer.

-14-
<PAGE> 49
sixty-seven one hundredths percent (26.67%) interest in the Sub-Adviser. Mr.
Shadek 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 a limited partner and
Account Executive with the firm Moore & Schley. Each of Mr. Grant and Mr.
Shadek serve as a member of the Board of Directors of the Fund and the Pax
World Fund.

Mr. Robert P. Colin, an employee of the Sub-Adviser, is the Portfolio
Manager of the Fund. He is the person responsible for the day-to-day
management of the Fund's portfolio. Mr. Colin received his bachelor of arts
degree from Rutgers University and his masters in business administration
- -finance from New York University. Mr. Colin joined H. G. Wellington Capital
Management, a division of the Sub-Adviser, in 1991 as a Senior Vice President
and Senior Portfolio Manager. Mr. Colin was one of the original founders of
Faulkner, Dawkins & Sullivan in 1959, serving as Director of Research and
Investment Strategy. After Faulkner, Dawkins & Sullivan merged with Shearson
Lehman, and later, American Express, Mr. Colin worked briefly for Merrill
Lynch Asset Management before joining Bessemer Trust Company in 1978 as a
Senior Portfolio Manager. In 1983, Mr. Colin joined General Electric
Investment Corporation as a Senior Vice President of Equity Portfolios with
responsibilities for various funds under General Electric's control, including
its own pension fund.

In connection with this offering, the Fund, the Adviser and the
Sub-Adviser have been represented by single counsel. Therefore, to the extent
that the Fund and this offering would benefit by further independent review,
such benefit will not be available in this offering.

DISTRIBUTION

The Fund maintains a distribution expense plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, pursuant to which the Fund
incurs the expenses of distributing the Fund's shares. These expenses include
(but are not limited to) advertising expenses, the cost of printing and mailing
prospectuses to potential investors, commissions and account servicing fees paid
to, or on account of, broker-dealers or certain financial institutions which
have entered into agreements with the Fund, compensation to and expenses
incurred by officers, directors and/or employees of the Fund for their
distributional services and indirect and overhead costs associated with the sale
of Fund shares. The plan provides that (i) up to twenty-five one hundredths of
one percent (.25%) of the average daily net assets of the shares of the Fund per
annum may be used to pay for personal service and/or the maintenance of
shareholder accounts (service fee) and (ii) total distribution fees (including
the service fee of .25%) may not exceed thirty-five one hundredths of one
percent (.35%) of the average daily net assets of the shares of the Fund per
annum.

The Plan will continue in effect from year to year, provided that each
such continuance is approved at least annually by a vote of the Board of
Directors, including a majority vote of the Rule 12b-1 Directors, cast in person
at a meeting called for the purpose of voting on such continuance. The Plan may
be terminated at any time, without penalty, by the vote of a majority of the
Rule 12b-1 Directors or by the vote of the holders of a majority of the
outstanding shares of the Fund on not more than 60 days', nor less than 30
days', written notice to any other party to the Plan. The Plan may not be
amended to increase materially the amounts to be spent for the services
described therein without approval by the shareholders of the Fund, and all
material amendments are required to be approved by the Board of Directors in the
manner described above. The Plan will automatically terminate in the event of
its assignment. The Fund will not be obligated to pay expenses incurred under
the Plan if it is terminated or not continued.

-15-
<PAGE> 50
Pursuant to the Plan, the Board of Directors will review at least
quarterly a written report of the distribution expenses incurred on behalf of
the Fund. The report will include an itemization of the distribution expenses
and the purposes of such expenditures.

The Plan was adopted on June 6, 1997 by the Board of Directors of the
Fund, including a majority of the Directors who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan, at a meeting called for the
purpose of voting on such Plan.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
AND INDEPENDENT ACCOUNTANTS

State Street Bank and Trust Company, 225 Franklin Street, Boston MA
02110 (the "Custodian"), will serve as custodian for the Fund's portfolio
securities and cash and, in that capacity, maintains certain financial and
accounting books and records pursuant to an agreement with the Fund. See "How
the Fund is Managed -- Custodian and Transfer and Dividend Disbursing Agent" in
the Prospectus.

PFPC, Inc., 400 Bellevue Parkway, Wilmington, DE 19809 (the "Transfer
Agent"), will serve as the transfer and dividend disbursing agent for the Fund.
The Transfer Agent provides customary transfer agency services to the Fund,
including the handling of shareholder communications, the processing of
shareholder transactions, the maintenance of shareholder account records,
payment of dividends and distributions and related functions. For these
services, the Transfer Agent receives an annual fee per shareholder account of
Ten Dollars ($10.00), a new account set-up fee for each manually established
account of Five Dollars ($5.00) and a monthly inactive zero balance account fee
per shareholder account of Thirty Cents ($0.30). The Transfer Agent is also
reimbursed for its out-of-pocket expenses, including but not limited to postage,
stationery, printing, allocable communication expenses and other costs.
Shareholder inquiries relating to a shareholder account should be directed to
the Transfer Agent at Pax World Mutual Funds, P.O. Box 8930, Wilmington,
DE 19899-8930.

Pannell Kerr Forster, P.C., 125 Summer Street, Boston, MA 02110 serves
as the Fund's independent accountants, and in that capacity audits the Fund's
annual reports.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Adviser and Sub-Adviser are responsible for decisions to buy and
sell securities and options on securities for the Fund, the selection of brokers
and dealers to effect the transactions and the negotiation of brokerage
commissions, if any. Broker-dealers may receive negotiated brokerage commissions
on Fund portfolio transactions, including options and the purchase and sale of
underlying securities upon the exercise of options. Orders may be directed to
any broker including, to the extent and in the manner permitted by applicable
law, the Sub-Adviser and its affiliates.

Equity securities traded in the over-the-counter market and bonds,
including convertible bonds, are generally traded on a "net" basis with dealers
acting as principal for their own accounts without a stated commission, although
the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which includes
an amount of compensation payable to the underwriter, generally referred to as
the underwriter's concession or discount. On

-16-
<PAGE> 51
occasion, certain money market instruments and U.S. Government agency securities
may be purchased directly from the issuer, in which case no commissions or
discounts are paid.

In placing orders for portfolio securities of the Fund, the Fund is
required to give primary consideration to obtaining the most favorable price and
efficient execution. Within the framework of this policy, the Fund will consider
the research and investment services provided by brokers and dealers who effect
or are parties to portfolio transactions of the Fund. Such research and
investment services are those which brokerage houses customarily provide to
institutional investors and include statistical and economic data and research
reports on particular companies and industries. Such services are used by the
Fund in its investment activities. Commission rates are established pursuant to
negotiations with the broker or dealer based on the quality and quantity of
execution services provided by the broker in the light of generally prevailing
rates. The Fund's policy is to pay higher commissions to brokers, other than the
Sub-Adviser, for particular transactions than might be charged if a different
broker had been selected, on occasions when, in the Fund's opinion, this policy
furthers the objective of obtaining best price and execution. In addition, the
Fund is authorized to pay higher commissions on brokerage transactions for the
Fund to brokers other than the Sub-Adviser (or any affiliate) in order to secure
research and investment services described above, subject to review by the
Fund's Board of Directors from time to time as to the extent and continuation of
this practice. The allocation or orders among brokers and the commission rates
paid are reviewed periodically by the Fund's Board of Directors.

Subject to the above considerations, the Sub-Adviser (or any affiliate)
may act as a securities broker for the Fund. In order for the Sub-Adviser (or
any affiliate) to effect any portfolio transactions for the Fund, the
commissions, fees or other remuneration received by the Sub-Adviser (or any
affiliate) must be reasonable and fair compared to the commissions, fees or
other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on an exchange
during a comparable period of time. This standard would allow the Sub-Adviser
(or any affiliate) to receive no more than the remuneration which would be
expected to be received by an unaffiliated broker in a commensurate arm's-length
transaction. Furthermore, the Board of Directors of the Fund, including a
majority of the Directors who are not "interested" persons, has adopted
procedures which are reasonably designed to provide that any commissions, fees
or other remuneration paid to the Sub-Adviser (or any affiliate) are consistent
with the foregoing standard. In accordance with Section 11(a) of the Securities
Exchange Act of 1934, the Sub-Adviser may not retain compensation for effecting
transactions on a national securities exchange for the Fund unless the Fund has
expressly authorized the retention of such compensation. The Sub-Adviser must
furnish to the Fund at least annually a statement setting forth the total amount
of all compensation retained by the Sub-Adviser from transactions effected for
the Fund during the applicable period. Brokerage with the Sub-Adviser is also
subject to such fiduciary standards as may be imposed by applicable law.

PURCHASE, REDEMPTION AND EXCHANGE
OF FUND SHARES

PURCHASE OF SHARES

In General

-17-
<PAGE> 52
not subject to an initial sales charge, and the offering price is the NAV.
See "Waiver of Sales Charges" below.

The minimum initial investment is $500.00; the minimum subsequent
investment is $100.00. The minimum initial investment for individual retirement
accounts ("IRAs") (other than simple IRAs) and simplified employee pension - IRA
plans is $250.00; the minimum subsequent investment is $50.00. There is no
minimum investment for simple IRAs and "tax-sheltered accounts" under Section
403(b)(7) of the Internal Revenue Code, as amended (the "Internal Revenue
Code"). See "Shareholder Services" below.

If a stock certificate is desired, it must be requested in writing for
each transaction. Certificates are issued only for full shares. There is no
charge to the investor for issuance of a certificate.

The Fund reserves the right to reject any purchase order (including an
exchange) or to suspend or modify the continuous offering of its shares.

Waiver of Sales Charges

No initial sales charges are imposed on shares of the Fund purchased
for a period of six months from the date of this prospectus or upon the exchange
of shares of the Pax World Fund or the reinvestment of dividends and
distributions. In addition, shares of the Fund may be purchased at NAV, without
payment of an initial sales charge, (a) for a period of one year from the date
of this Prospectus by any investor who owns as of the date of this Prospectus or
has owned at any time during the four year period immediately preceding the date
of this Prospectus shares of the Pax World Fund, and (b) by (i) any investor
provided that the amount invested by such investor in the Fund or other Pax
World Mutual Funds totals at least $1,000,000.00; (ii) any pension,
profit-sharing or other employee benefit plans qualified under Section 401 of
the Internal Revenue Code, IRAs, simple IRAs, simplified employee pension -
IRA plans and deferred compensation and annuity plans under Sections 457 and
403(b)(7) of the Internal Revenue Code; (iii) trustees, officers, directors,
employees (including retirees) and sales representatives of the Fund, the
Adviser, the Sub-Adviser or certain affiliated companies, for themselves, their
spouses and their dependent children; and (iv) registered representatives and
employees of broker-dealers having selling group agreements with the Fund, for
themselves, their spouses and their dependent children. Finally, if you redeem
your shares and have not previously exercised the repurchase privilege, you may
reinvest, within 90 days after the date of redemption, any portion or all of the
proceeds of such redemption in shares of the Fund at the NAV next determined
after the order is received without payment of an initial sales charge.

Prospective investors must notify the Transfer Agent that they are
entitled to the reduction or waiver of the sales charge. The reduction or waiver
will be granted subject to confirmation of your entitlement.

SALE OF SHARES

In General

Shares of the Fund can be redeemed at any time for cash at the NAV per
share next determined after the redemption request is received in proper form by
the Transfer Agent. See "How the Fund Values its Shares" in the Prospectus; and
"Net Asset Value" at page 19.

-18-
<PAGE> 53
Involuntary Redemption

In order to reduce expenses of the Fund, the Board of Directors may
redeem all of the shares of any shareholder, other than a shareholder which is
an IRA or other tax-deferred retirement plan, whose account has a net asset
value of less than $500.00 due to a redemption. The Fund will give any such
shareholder 60 days' prior written notice in which to purchase sufficient
additional shares to avoid such redemption.

EXCHANGE OF SHARES

The Fund makes available to its shareholders the privilege of
exchanging their shares of the Fund for shares of the Pax World Fund, Inc.,
subject in each case to the minimum investment requirements of such funds.
Shares of such other Pax World Mutual Funds may also be exchanged for shares of
the Fund. All exchanges are made on the basis of relative net asset value next
determined after receipt of an order in proper form. An exchange will be treated
as a redemption and purchase for tax purposes. Shares may be exchanged for
shares of another fund only if shares of such fund may legally be sold under
applicable state laws. It is contemplated that this Exchange Privilege will be
applicable to any new Pax World Mutual Funds.

Additional details about the Exchange Privilege and prospectuses for
each of the Pax World Mutual Funds are available from the Fund or the Fund's
Transfer Agent. The Exchange Privilege may be modified, terminated or suspended
on sixty (60) days' notice.

NET ASSET VALUE

Under the Investment Company Act, the Board of Directors is responsible
for determining in good faith the fair value of securities of the Fund. In
accordance with procedures adopted by the Board of Directors, the value of
investments listed on a securities exchange and NASDAQ National Market System
securities (other than options on stock and stock indices) are valued at the
last sales price on the day of valuation, or, if there was no sale on such day,
the mean between the last bid and asked prices on such day, as provided by a
pricing service. Corporate bonds (other than convertible debt securities) and
U.S. Government securities that are actively traded in the over-the-counter
market, including listed securities for which the primary market is believed to
be over-the-counter, are valued on the basis of valuations provided by a pricing
service which uses information with respect to transactions in bonds, quotations
from bond dealers, agency ratings, market transactions in comparable securities
and various relationships between securities in determining value. Convertible
debt securities that are actively traded in the over-the-counter market,
including listed securities for which the primary market is believed to be
over-the-counter, are valued at the mean between the last reported bid and asked
prices provided by principal market makers or independent pricing agents.
Options traded on an exchange are valued at the mean between the most recently
quoted bid and asked prices on the respective exchange. Should an extraordinary
event, which is likely to affect the value of the security, occur after the
close of an exchange on which a portfolio security is traded, such security will
be valued at fair value considering factors determined in good faith by the
investment adviser under procedures established by and under the general
supervision of the Fund's Board of Directors.

Securities or other assets for which market quotations are not readily
available are valued at their fair value as determined in good faith by the
Board of Directors. Short-term debt securities are valued at cost, with interest
accrued or discount amortized to the date of maturity, if their

-19-
<PAGE> 54
original maturity was sixty (60) days or less, unless this is determined by the
Board of Directors not to represent fair value. Short-term securities with
remaining maturities of sixty (60) days or more, for which market quotations are
readily available, are valued at their current market quotations as supplied by
an independent pricing agent or principal market maker. The Fund will compute
its net asset value at 4:15 P.M., New York time, on each day the New York Stock
Exchange is open for trading except on days on which no orders to purchase, sell
or redeem Fund shares have been received or days on which changes in the value
of the Fund's portfolio securities do not affect net asset value. In the event
the New York Stock Exchange closes early on any business day, the net asset
value of the Fund's shares shall be determined at a time between such closing
and 4:15 P.M., New York time.

PERFORMANCE INFORMATION

Average Annual Total Return.
- ----------------------------

The Fund may from time to time advertise its average annual total
return. See "How the Fund Calculates Performance" in the Prospectus.

Average annual total return is computed according to the following
formula:
(n)
P (1+T) = ERV

Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.

ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10 year
periods (or fractional portion thereof).

Average annual total return takes into account any applicable initial
or deferred sales charges but does not take into account any federal or state
income taxes that may be payable upon redemption.

Yield.
- ------

The Fund may also advertise its yield. See "How the Fund Calculates
Performance" in the Prospectus.

Yield is computed according to the following formula:

a - b (6)
2[(--------------- + 1) - 1]
cd

Where: a = Dividends and interest earned during the period
b = Expenses accrued for the period (net of
reimbursements)
c = The average daily number of shares outstanding during
the period that were entitled to receive dividends
d = The maximum offering price per share on the last day
of the period.

Yield does not take into account any federal or state income taxes that
may be payable upon redemption or any applicable initial or contingent deferred
sales charges.

-20-
<PAGE> 55
TAXES

The Fund intends to elect to qualify and remain qualified as a
regulated investment company under the Internal Revenue Code. This relieves the
Fund (but not its shareholders) from paying federal income tax on income which
is distributed to shareholders and permits net long-term capital gains of the
Fund (i.e., the excess of net long-term capital gains over net short-term
capital losses) to be treated as long-term capital gains of the shareholders,
regardless of how long shareholders have held their shares in the Fund.

Qualification as a regulated investment company requires, among other
things, that (a) at least ninety percent (90%) of the Fund's annual gross income
(without reduction for losses from the sale or other disposition of securities)
be derived from interest, dividends, and gains from the sale or other
disposition of securities or options thereon or foreign currencies, or other
income (including but not limited to gains from options, futures or forward
contracts) derived with respect to its business of investing in such securities
or currencies; (b) the Fund derive less than thirty percent (30%) of its gross
income from gains (without reduction for losses) from the sale or other
disposition of securities, options thereon, forward contracts and foreign
currencies held for less than three (3) months (except for foreign currencies
directly related to the Fund's business of investing in foreign securities) (the
short-short rule); (c) the Fund diversify its holdings so that, at the end of
each quarter of the taxable year (i) at least fifty percent (50%) of the market
value of the Fund's assets is represented by cash, U.S. Government securities
and other securities limited in respect of any one issuer to an amount not
greater than five percent (5%) of the market value of the Fund's assets and ten
percent (10%) of the outstanding voting securities of such issuer, and (ii) not
more than twenty-five percent (25%) of the value of its assets is invested in
the securities of any one industry (other than U.S. Government securities); and
(d) the Fund distribute to its shareholders at least ninety percent (90%) of its
net investment income (including short-term capital gains) other than long-term
capital gains in each year.

Gains or losses on sales of securities by the Fund will be treated as
long-term capital gains or losses if the securities have been held by it for
more than one year except in certain cases where the Fund acquires a put or
writes a call thereon or makes a short sale against-the-box. Other gains or
losses on the sale of securities will be short-term capital gains or losses.
Gains and losses on the sale, lapse or other termination of options on
securities will generally be treated as gains and losses from the sale of
securities (assuming they do not qualify as Section 1256 contracts). If an
option written by the Fund on securities lapses or is terminated through a
closing transaction, such as a repurchase by the Fund of the option from its
holder, the Fund will generally realize short-term capital gain or loss. If
securities are sold by the Fund pursuant to the exercise of a call option
written by it, the Fund will include the premium received in the sale proceeds
of the securities delivered in determining the amount of gain or loss on the
sale. Certain of the Fund's transactions may be subject to wash sale, short
sale, conversion transaction and straddle provisions of the Internal Revenue
Code. In addition, debt securities acquired by the Fund may be subject to
original issue discount and market discount rules.

Gain or loss on the sale, lapse or other termination of options on
stock will be capital gain or loss and will be long-term or short-term depending
upon the holding period of the option. In addition, positions which are part of
a straddle will be subject to certain wash sale and short sale provisions of the
Internal Revenue Code. In the case of a straddle, the Fund may be required to
defer the recognition of losses on positions it holds to the extent of any
unrecognized gain on offsetting positions held by the Fund. The

-21-
<PAGE> 56
conversion transaction rules may apply to certain transactions to treat all or a
portion of the gain thereon as ordinary income rather than as capital gain.

The Fund is required to distribute ninety-eight percent (98%) of its
ordinary income in the same calendar year in which it is earned. The Fund is
also required to distribute during the calendar year ninety-eight percent (98%)
of the capital gain net income it earned during the twelve (12) months ending on
October 31 of such calendar year, as well as all undistributed ordinary income
and undistributed capital gain net income from the prior year or the
twelve-month period ending on October 31 of such prior year, respectively. To
the extent it does not meet these distribution requirements, the Fund will be
subject to a nondeductible four percent (4%) excise tax on the undistributed
amount. For purposes of this excise tax, income on which the Fund pays income
tax is treated as distributed.

Any dividends paid shortly after a purchase by an investor may have the
effect of reducing the per share net asset value of the investor's shares by the
per share amount of the dividends. Furthermore, such dividends, although in
effect a return of capital, are subject to federal income taxes. Therefore,
prior to purchasing shares of the Fund, the investor should carefully consider
the impact of dividends, including capital gains distributions, which are
expected to be or have been announced.

The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund.

SHAREHOLDER SERVICES

The Fund makes available to its shareholders the following privileges
and plans:

Automatic Reinvestment of Dividends and/or
Distributions Without a Sales Charge

For the convenience of investors, all dividends and distributions, if
any, will be automatically reinvested in additional full and fractional shares
of the Fund. An investor may direct the Transfer Agent in writing not less than
ten (10) days prior to the ex-dividend date to receive (i) such dividends in
cash and distributions in additional shares or (ii) such dividends and
distributions in cash. Any shareholder who receives a cash payment representing
a dividend or distribution may reinvest such dividend or distribution at net
asset value by returning the check or the proceeds to the Transfer Agent within
thirty (30) days after the payment date. Such investment will be made at the net
asset value per share next determined after receipt of the check or proceeds by
the Transfer Agent.

Automatic Monthly Investment Plan

Under the Fund's Automatic Monthly Investment Plan, an investor may,
for other than simplified employee pension - IRA purchases, arrange to have a
fixed amount automatically invested in shares of the Fund monthly by authorizing
his or her bank account to be debited to invest specified dollar amounts in
shares of the Fund. The investor's bank must be a member of the Automatic
Clearing House System. Stock certificates are not issued to Automatic Monthly
Investment Plan participants.

-22-
<PAGE> 57
Further information about this plan and an application form can be
obtained from the Fund or the Transfer Agent.

Deferred Retirement Plans and Accounts

Various tax-deferred retirement plans and accounts, including IRAs,
simple IRAs, simplified employee pension - IRA plans and "tax-sheltered
accounts" under Section 403(b)(7) of the Internal Revenue Code are available
through the Fund. Information regarding the establishment of these plans, and
the administration, custodial fees and other details are available from the Fund
or the Transfer Agent.

Investors who are considering the adoption of such a plan should
consult with their own legal counsel or tax adviser the establishment and
maintenance of any such plan.

Systematic Withdrawal Plans

A systematic withdrawal plan is available to shareholders through the
Transfer Agent. Such withdrawal plan provides for monthly, bi-monthly,
quarterly or semi-annual checks in any amount, except as provided below, up to
the value of the shares in the shareholder's account.

In the case of shares held through the Transfer Agent (i) a $10,000.00
minimum account value applies, (ii) withdrawals may not be for less than $100.00
and (iii) the shareholder must elect to have all dividends and/or

-23-
<PAGE> 58
distributions automatically reinvested in additional full and fractional shares
at net asset value on shares held under this plan.

The Transfer Agent acts as agent for the shareholder in redeeming
sufficient full and fractional shares to provide the amount of the periodic
withdrawal payment. The systematic withdrawal plan may be terminated at any
time, and the Fund reserves the right to initiate a fee of up to Five Dollars
($5.00) per withdrawal, upon thirty (30) days' written notice to the
shareholder. Withdrawal payments should not be considered as dividends, yield or
income. If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.

Furthermore, each withdrawal constitutes a redemption of shares, and
any gain or loss realized must be recognized for federal income tax purposes.
Each shareholder should consult his or her own tax adviser with regard to the
tax consequences of the plan, particularly if used in connection with a
retirement plan.

Reports to Shareholders

The Fund will send annual and semi-annual reports. The financial
statements appearing in annual reports are audited by independent accountants.
In order to reduce duplicate mailing and printing expenses, the Fund will
provide one annual and semi-annual shareholder report and annual prospectus per
household. You may request additional copies of such reports by calling
800-767-1729 (toll-free) or by writing to the Fund at 222 State Street,
Portsmouth, NH 03801-3853. In addition, monthly unaudited financial data are
available upon request from the Fund.

Shareholder Inquiries

Inquiries should be directed to the Transfer Agent at Pax World Mutual
Funds, P.O. Box 8930, Wilmington, DE 19899-8930, or by telephone at 800-372-7827
(toll-free) or, from outside the U.S.A., at 302-791-2844 (collect).

-24-
<PAGE> 59
INDEPENDENT AUDITORS' REPORT

The Shareholder and Board of Directors of
Pax World Growth Fund, Inc.

We have audited the statement of assets and liabilities of Pax World
Growth Fund, Inc. as of June 9, 1997. This financial statement is the
responsibility of the Fund's management. Our responsibility is to express an
opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the statement of assets and liabilities presents
fairly, in all material respects, the financial position of Pax World Growth
Fund, Inc. as of June 9, 1997, in conformity with generally accepted accounting
principles.

/s/ PANNELL KERR FORSTER, P.C.

Boston, MA
June 10, 1997

-25-
<PAGE> 60
PAX WORLD GROWTH FUND, INC.

Statement of Assets and Liabilities
As of June 9, 1997

<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash ........................................................ $100,000

Organization costs (note 1) ................................. 5,000

Deferred offering cost (note 1) ............................. 42,148
--------

Total assets ........................................... 147,148
--------

LIABILITIES

Organization and deferred offering costs payable (note 1) ... 47,148
--------

Net Assets (note 1)
Applicable to 10,000 shares of common stock ............ $100,000
--------

Calculation of offering price

Net asset value price per share ........................ $ 10
</TABLE> --------

See notes to financial statement.

-26-
<PAGE> 61
PAX WORLD GROWTH FUND, INC.

NOTES TO FINANCIAL STATEMENT
JUNE 9, 1997

Note 1 - Accounting policies

Pax World Growth Fund, Inc. (the "Fund"), which was incorporated in
Delaware on March 12, 1997, is an open-end, diversified management
investment company. The Fund has had no significant operations other
than the issuance of 10,000 shares of common stock for $100,000 on
June 9, 1997, to Pax World Management Corp. There are 25,000,000
shares of $1.00 par value common stock authorized.

Organization costs

Costs incurred in connection with the organization and initial
registration of the Fund will be paid initially by Pax World Management
Corp. and will be repaid to Pax World Management Corp. upon
commencement of investment operations. These costs will be deferred and
amortized over the period of benefit not to exceed 60 months from the
date the Fund commences investment operations.

Deferred offering costs

The cost incurred and expected to be incurred in association with the
initial registration of the Fund will be paid by Pax World Management
Corp. and will be repaid to Pax World Management Corp. upon
commencement of investment operations. These costs will be deferred and
amortized over the period of benefit not to exceed 12 months from the
date the Fund commences investment operations. If any of the initial
shares of the Fund are redeemed by any holder thereof during the period
of amortization of offering expenses, the redemption proceeds will be
reduced by the pro-rata amount of unamortized offering expenses based
on the number of initial shares being redeemed to the number of the
initial shares outstanding.

Accounting estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Federal income taxes

The Fund intends on complying with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies
and to distribute substantially all its taxable income to its
shareholders.

Note 2 - Advisory agreement and other transactions with affiliates

Pursuant to an Advisory Agreement between the Fund and Pax World
Management Corp. (the "Adviser"), the Adviser furnishes investment
advisory services in connection with the management of the Fund. Under
the Advisory Agreement, the Adviser, subject to the supervision of the
Board of Directors of the Fund, is responsible for managing the assets
of the Fund in accordance with its investment objectives, investment
program and policies. The Adviser determines what securities and other
instruments are purchased and sold for the Fund and is responsible for
obtaining and evaluating financial data relevant to the Fund. Two
officers, who are also directors of the Fund, are also officers and
directors of the Adviser and Sub-Adviser. Another officer of the Fund,
who is not a director of the Fund, is also an officer of the Adviser.
In the event that the average net assets of the Fund are less than
$5,000,000, the Adviser will be compensated by the Fund for its
services at an annual rate of $25,000; in the event that average net
assets of the Fund are equal to or in excess of $5,000,000, the
Adviser will be compensated by the Fund for its services at an annual
rate of one percent (1%) of average net assets up to and including
$25,000,000 and three-quarters of one percent (.75%) of average net
assets in excess of $25,000,000.

The Adviser has, however, agreed to supply and pay for such services as
are deemed by the Board of Directors of the Fund to be necessary or
desirable and proper for the continuous operations of the Fund
(excluding all taxes and charges of governmental agencies and brokerage
commissions incurred in connection with portfolio transactions) which
are in excess of one and one-half percent (1.5%) of the average net
asset value of the Fund per annum. Such expenses include (i)
management, distribution and sub-advisory fees; (ii) the fees of
affiliated and unaffiliated Directors; (iii) the fees of the Fund's
Custodian and Transfer Agent; (iv) the fees of the Fund's legal counsel
and independent accountants; (v) the reimbursement of organization
expenses; and (vi) expenses related to shareholder communications
including all expenses of shareholders' and Board of Directors'
meetings and of preparing, printing and mailing reports, proxy
statements and prospectuses to shareholders.

-27-
<PAGE> 62

Pursuant to the terms of a Sub-Advisory Agreement between the Adviser
and H. G. Wellington Capital Management, a division of H. G. Wellington
& Co., Inc., 14 Wall Street, New York, New York 10005 (the
"Sub-Adviser"), the Sub-Adviser furnishes investment advisory services
in connection with the management of the Fund, determines what
securities and other instruments are purchased and sold for the Fund
and is responsible for obtaining and evaluating financial data relevant
to the Fund. In the event that the average net assets of the Fund are
less than $5,000,000, the Sub-Adviser will be compensated by the
Adviser for its services at an annual rate of $25,000; in the event
that average net assets of the Fund are equal to or in excess of
$5,000,000, the Sub-Adviser will be compensated by the Adviser for its
services at an annual rate of one-third of one percent (.33%) of
average net assets up to and including $25,000,000 and one-quarter of
one percent (.25%) of average net assets in excess of $25,000,000, but
in no event to exceed the annual sum of Two Hundred and Fifty Thousand
Dollars ($250,000) net of expenses.

All of the Adviser's capital stock is currently owned by four siblings
whose family has an ownership interest in the Sub-Adviser.

The Fund incurred legal fees and related expenses of $33,761 with
Broudy & Jacobson, general counsel for the Fund, in connection with
the organization and initial registration of the Fund. Mr. Lee Unterman
is a partner with Broudy & Jacobson and is Secretary of the Fund.

Note 3 - Distribution expense plan

Pursuant to a plan of distribution (the "Plan") adopted by the Fund
under Rule 12b-1 of the Investment Company Act of 1940, the Fund incurs
the expenses of distributing the Fund's shares.

These expenses include (but are not limited to) advertising expenses,
the cost of printing and mailing prospectuses to potential investors,
commissions and account servicing fees paid to, or on account of,
broker-dealers or certain financial institutions which have entered
into agreement with the Fund, compensation to and expenses incurred by
officers, directors and/or employees of the Fund for their
distributional services and indirect and overhead costs associated with
the sale of Fund shares. The Plan provides that (i) up to twenty-five
one hundredths of one percent (.25%) of the average daily net assets of
the shares of the Fund per annum may be used to pay for personal
service and/or the maintenance of shareholder accounts (service fee)
and (ii) total distribution fees (including the service fee of .25%)
may not exceed thirty-five one hundredths of one percent (.35%) of the
average daily net assets of the shares of the Fund per annum.

-28-
<PAGE> 63
PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements:

(i) Financial Statements included in the Prospectus constituting
Parts A and B of this Registration Statement:

None.

(b) Exhibits:

1. Articles of Incorporation.*

2. By-Laws.*

3. Not Applicable.

4. Instruments defining rights of shareholders.*

5(a). Form of Advisory Agreement between the Registrant and
Pax World Management Corp.*

5(b). Form of Sub-Advisory Agreement between Pax World
Management Corp. and H. G. Wellington & Co., Inc.*

6. Not Applicable.

7. Not Applicable.

8(a). Form of Custodian Contract between the Registrant and
State Street Bank and Trust Company.*

8(b). Form of Data Access Services Addendum to Custodian
Agreement between the Registrant and State Street Bank
and Trust Company.*

9. Form of Transfer Agency Services Agreement between the
Registrant and PFPC, Inc.*

10. Opinion of Broudy & Jacobson.**

11. Consent of Independent Accountants.**

12. Not Applicable.

13. Form of Purchase Agreement.*

14. Not Applicable.

15. Form of Distribution and Service Plan.*

16. Not Applicable.

17. Not Applicable.

- ----------
* Previously filed and not filed herewith.
** Filed herewith.

*** To be filed by Amendment.
<PAGE> 64
Item 25. Persons Controlled by or under Common Control with Registrant.

None.

Item 26. Number of Holders of Securities.

Not Applicable.

Item 27. Indemnification.

As permitted by Section 17(h) and (i) of the Investment Company Act of
1940 (the "1940 Act") and pursuant to Section 8.04 of the Fund's By-Laws
(Exhibit 2 to the Registration Statement), officers, directors, employees and
agents of the Registrant will not be liable to the Registrant, any shareholder,
officer, director, employee, agent or other person for any action or failure to
act, except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 145 of the General Corporation Law of the State of Delaware permits
indemnification of directors who acted in good faith and reasonably believed
that the conduct was in the best interests of the Registrant.

The Registrant has purchased an insurance policy insuring its officers
and directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.

Section 8 of the Advisory Agreement (Exhibit 5 to the Registration
Statement) and Section 7 of the Sub-Advisory Agreement (Exhibit 5 to the
Registration Statement) limit the liability of the Adviser and the Sub-Adviser,
respectively, to liabilities arising from willful misfeasance, bad faith or
gross negligence in the performance of their respective duties or from reckless
disregard by them of their obligations and duties under the Advisory and
Sub-Advisory Agreement.

The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws in a manner consistent with Release No. 11330 of the
Securities and Exchange Commission under the 1940 Act so long as the
interpretation of Section 17(h) and 17(i) of such Act remain in effect and are
consistently applied.

Under Section 17(h) of the 1940 Act, it is the position of the staff of
the Securities and Exchange Commission that if there is neither a court
determination on the merits that the defendant is not liable nor a court
determination that the defendant was not guilty of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of one's office, no indemnification will be permitted unless an
independent legal counsel (not including a counsel who does work for either the
Registrant, its investment adviser, its principal underwriter or persons
affiliated with these persons) determines, based upon a review of the facts,
that the person in question was not guilty of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.

-2-
<PAGE> 65
Under its Articles of Incorporation, the Registrant may advance funds
to provide for indemnification. Pursuant to the Securities and Exchange
Commission staff's position on Section 17(h) advances will be limited in the
following respect:

(i) Any advances must be limited to amounts used, or to be used,
for the preparation and/or presentation of a defense to the
action (including cost connected with preparation of a
settlement);

(ii) Any advances must be accompanied by a written promise by, or
on behalf of, the recipient to repay that amount of the
advance which exceeds the amount to which it is ultimately
determined that he is entitled to receive from the Registrant
by reason of indemnification;

(iii) Such promise must be secured by a surety bond or other
suitable insurance; and

(iv) Such surety bond or other insurance must be paid for by the
recipient of such advance.

Item 28. Business and Other Connections of the Investment Adviser.

See "Fund Highlights -- Who Advises the Fund?" and "Adviser;
Sub-Adviser" in the Prospectus constituting Part A of this Registration
Statement and "Adviser; Sub-Adviser" in the Statement of Additional Information
constituting Part B of this Registration Statement.

The business and other connections of the Adviser's directors and
executive officers are as set forth below. Except as otherwise indicated, the
address of each person is 222 State Street, Portsmouth, NH 03801.

<TABLE>
<CAPTION>
Name Position(s) Held with the Principal Occupation(s)
Adviser
<S> <C> <C>
Katherine Shadek Boyle Senior Vice President; Senior Vice President, Pax World Management
Director Corp.

Anthony S. Brown Executive Vice President and Executive Vice President and Treasurer, Pax
Treasurer World Management Corp.; Executive Vice
President, Treasurer and Portfolio Manager, Pax
World Fund Incorporated

Thomas W. Grant President; Director President, Pax World Management Corp.; Vice
Chairman of the Board, Pax World Fund,
Incorporated; President, Pax World Growth Fund,
Inc.; President, H. G. Wellington & Co., Inc.
</TABLE>

-3-
<PAGE> 66
<TABLE>
<S> <C> <C>
James M. Shadek Senior Vice President for Senior Vice President for Social Research, Pax
Social Research; Director World Management Corp.; Treasurer, Pax World
Growth Fund, Inc.; Account Executive, H. G.
Wellington & Co., Inc.

Laurence A. Shadek Chairman of the Board; Chairman of the Board, Pax World Management
Director Corp.; Chairman of the Board, Pax World Fund,
Incorporated; Chairman of the Board, Pax World
Growth Fund, Inc.; Executive Vice President,
H. G. Wellington & Co., Inc.

Thomas F. Shadek Senior Vice President Senior Vice President -Marketing, Pax World
-Marketing; Director Management Corp.

Luther E. Tyson Executive Vice President Executive Vice President, Pax World Management
Corp.; President, Pax World Fund, Incorporated
</TABLE>

Item 29. Principal Underwriters

Not Applicable.

Item 30. Location of Accounts and Records

The accounts, books and other documents relating to shareholder
accounts and activity required to be maintained by Section 31(a) of the 1940 Act
and the Rules thereunder are maintained by PFPC, Inc. and are located at 400
Bellevue Parkway, Wilmington, DE 19809. All other accounts, books and other
documents required to be maintained by Section 31(a) of the 1940 Act and the
Rules thereunder are maintained by the Fund at 222 State Street, Portsmouth, NH
03801 and by the State Street Bank and Trust Company at 225 Franklin Street,
Boston MA 02110.

Item 31. Management Services

Other than as set forth under the captions "Fund Highlights -- Who
Manages the Fund?" and "Management of the Fund" in the Prospectus and the
captions "Management of the Fund" in the Statement of Additional Information,
constituting Parts A and B, respectively, of this Registration Statement, the
Registrant is not a party to any management-related service contract.

Item 32. Undertakings

Registrant makes the following undertaking:

To file a post-effective amendment, using financial statements which
may not be certified, within four (4) to six (6) months from the effective date
of this Registration Statement.

-4-
<PAGE> 67
To call a meeting of shareholders for the purpose of voting upon the
question of removal of any member of the Board of Directors of the Fund when
requested in writing so to do by the record holders of not less than ten
percent (10%) of the outstanding shares of the Fund.

To assist in communications with shareholders of the Fund in accordance
with the provisions of Section 16(c) of the Investment Company Act.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York, on the 11th day of
June, 1997.

PAX WORLD GROWTH FUND, INC.

By: /s/ Thomas W. Grant
----------------------------
Thomas W. Grant
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Laurence A. Shadek Chairman of the Board, 6/11/97
- ---------------------------- Director
Laurence A. Shadek

/s/ Thomas W. Grant President, Director 6/11/97
- ----------------------------
Thomas W. Grant

/s/ James M. Shadek Treasurer 6/11/97
- ----------------------------
James M. Shadek

/s/ Carl H. Doerge, Jr. Director 6/11/97
- ----------------------------
Carl H. Doerge, Jr.

/s/ John L. Kidde Director 6/11/97
- ----------------------------
John L. Kidde

/s/ Joy L. Liechty Director 6/11/97
- ----------------------------
Joy L. Liechty

/s/ Nancy S. Taylor Director 6/11/97
- ----------------------------
Nancy S. Taylor
</TABLE>

-5-
<PAGE> 68
PAX WORLD GROWTH FUND, INC.

Exhibit Index

Description

1. Articles of Incorporation.*

2. By-Laws.*

4. Instruments defining rights of shareholders.*

5(a). Form of Advisory Agreement between the Registrant
and Pax World Management Corp.*

5(b). Form of Sub-Advisory Agreement between Pax World
Management Corp. and H. G. Wellington & Co., Inc.*

8(a). Form of Custodian Contract between the Registrant
and State Street Bank and Trust Company.*

8(b). Form of Data Access Services Addendum to Custodian
Agreement between the Registrant and State Street
Bank and Trust Company.*

9. Form of Transfer Agency Services Agreement between the
Registrant and PFPC, Inc.*

10. Opinion of Broudy & Jacobson.**

11. Consent of Independent Accountants.**

13. Form of Purchase Agreement.*

15. Form of Distribution and Service Plan.*

16. Not Applicable.

17. Not Applicable.

- ----------

* Previously filed and not filed herewith.
** Filed herewith.
*** To be filed by Amendment.

<PAGE> 1
Exhibit 10

BROUDY & JACOBSON
SUITE 2400
230 PARK AVENUE
NEW YORK, NEW YORK 10169
(212) 953-0900

June 11, 1997

PAX WORLD GROWTH FUND, INC.
222 State Street
Portsmouth, NH 03801

Pax World Growth Fund, Inc.
Registration Statement on SEC Form N-1A
SEC File No.: 333-23549

Dear Sirs:

We have acted as counsel for PAX WORLD GROWTH FUND, INC., a
Delaware corporation (the "Fund"), in connection with the preparation and filing
with the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended, of a registration statement on Form N-1A relating to the
issuance and sale by the Fund of an indefinite number of shares (the "Shares")
of its common stock, par value $1.00 per share (the "Common Stock"), in the
manner and on the terms set forth in such Registration Statement.

In so acting, we have examined and are familiar with the
following documents:

(i) the Registration Statement, filed by the Fund with
the SEC for the purpose of registering the Shares
under the Securities Act of 1933, as amended,
together with exhibits filed therewith and amendments
filed thereto (the "Registration Statement");

(ii) the Certificate of Incorporation and the By-laws of
the Fund, certified by the Secretary of the Fund;

(iii) certain of the corporate minutes of the Fund,
certified by the Secretary of the Fund; and

(iv) good standing certificate(s), telegram(s) or
telefax(es) issued by the jurisdiction in which the
Fund is incorporated.
<PAGE> 2
We have also reviewed such other documents and have made such
further investigations as we have considered necessary or appropriate for the
purpose of rendering this opinion. With respect to factual matters which are
material to our opinion, we have relied upon certificates of the Fund and
officers of the Fund, including representations and warranties as to factual
matters contained in the Registration Statement, upon which certificates and
representations and warranties we believe we are justified in relying.

The opinions contained herein are subject to the following
limitations and qualifications:

1. We have made no independent verification of factual matters
with respect to the Fund and consequently we do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement.

2. The enforceability of, and the rights and remedies set
forth in and the effect of, the agreements, documents and instruments with
respect to which we opine herein may be limited by bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium and other laws of general
application relating to or affecting the enforcement of rights of creditors; the
enforceability of the obligations of the parties are subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law); and the effect of applicable laws and court
decisions may hereafter limit or render unenforceable certain of your rights and
remedies.

3. We have assumed (i) the authenticity and completeness of
all documents submitted to us as originals and the conformity to authentic
original documents of all documents submitted to us as certified, conformed or
photostatic copies, and (ii) the genuineness of all signatures on all documents
examined by us.

4. We are members of the bar of the State of New York, and we
do not purport to be experts in, and express no opinion with respect to, the
laws of any jurisdiction other than the federal laws of the United States of
America and the laws of the State of New York and, to the extent necessary to
render the opinions expressed herein, the corporation laws of the State of
Delaware. We note that we are not licensed to practice law in the State of
Delaware, and to the extent that any opinion expressed herein involves the law
of Delaware, such opinion should be understood to be based solely upon our
review of the good standing certificate referred to above, the published
statutes of that State and, where applicable, published cases, rules or
regulations of regulatory bodies of that State.

-2-
<PAGE> 3
Based on the foregoing and subject to the assumptions,
limitations and qualifications set forth herein, we are of the opinion that:

1. The Fund is a corporation duly organized and validly
existing under the laws of the State of Delaware.

2. The Company's authorized capital stock consists solely of
25,000,000 shares of Common Stock, par value $1.00 per share, 10,000 of which
are issued and outstanding and 24,990,000 of which are held in its treasury.
Under Delaware law, shares of Common Stock which are issued and subsequently
redeemed by the Fund will be, by virtue of such redemption, restored to the
status of authorized and unissued shares.

3. Subject to the effectiveness of the Registration Statement
and compliance with applicable state securities laws, upon the issuance of the
Shares for a consideration not less than the par value thereof as required by
the laws of Delaware, and not less than the net asset value thereof as required
by the Investment Company Act of 1940, as amended, and in accordance with the
terms of the Registration Statement, such Shares will be legally issued and
outstanding and fully paid and non-assessable.

This opinion is given as of the date hereof. We assume no
obligation to update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention or any changes in laws
which may hereafter occur.

We hereby consent to the filing of this opinion with the SEC
as part of the Registration Statement and with any state securities commission
where such filing is required. In giving this consent, we do not admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended.

Please be advised that Lee D. Unterman, a member of this firm,
serves as the Secretary of the Fund.

Sincerely,

/s/ BROUDY & JACOBSON

-3-

<PAGE> 1
Exhibit 11

Consent of Independent Auditors

We consent to the use in Pre-Effective Amendment No. 2 to
Registration Statement No. 333-23549 of Pax World Growth Fund, Inc. of our
report dated as of June 10, 1997, appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
reference to us under the heading "Custodian, Transfer and Dividend Disbursing
Agent and Independent Accountants" in the Statement of Additional Information.

/s/ PANNEL KERR FORSTER, P.C.

Boston, Massachusetts
June 10, 1997