PAX WORLD GROWTH FUND INC, 485BPOS, 1998-05-04

PAX WORLD GROWTH FUND INC
485BPOS, 1998-05-04

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<PAGE> 1
As filed with the Securities and Exchange Commission
on May 1, 1998
-----

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. [ ]
POST-EFFECTIVE AMENDMENT NO. 1 [X]

AND/OR

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 1 [X]
(Check appropriate box or boxes)

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

222 STATE STREET
PORTSMOUTH, NH 03801-3853
(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 03801-3853
ATTENTION: LAURENCE A. SHADEK
THOMAS W. GRANT
(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):

<TABLE>
<S> <C> <C> <C>
[X] Immediately upon filing pursuant to paragraph (b) [X] On (date) pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1) [ ] On (date) pursuant to paragraph (a)(1)

[ ] 75 days after filing pursuant to paragraph (a)(2) [ ] On (date) pursuant to paragraph (a)(2) of
rule 485
</TABLE>
If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940, as amended. Registrant's Rule 24f-2 Notice for
fiscal year ended December 31, 1997 was filed with the Securities and Exchange
Commission on March 31, 1998.

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

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

-2-

<PAGE> 3
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

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.

<PAGE> 4

PROSPECTUS DATED MAY 1, 1998

PAX WORLD GROWTH FUND, INC.
A LOW-LOAD GROWTH FUND

222 STATE STREET, PORTSMOUTH, NH 03801-3853
FOR SHAREHOLDER ACCOUNT INFORMATION: 800-372-7827
PORTSMOUTH, NH OFFICE: 800-767-1729
603-431-8022

WEBSITE: HTTP://WWW.PAXFUND.COM

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
manufacture of liquor, tobacco and/or gambling products. See "Fund
Highlights -- What is the Fund's Investment Philosophy?" at page 4; and "How the
Fund Invests -- Investment Objective and Policies" at page 8.

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 May 1, 1998 which information is
incorporated herein by reference (is legally considered a part of this
Prospectus) and is available without charge upon request to the Fund at the
address or telephone number noted above. The Securities and Exchange Commission
maintains a web site (http://www.sec.gov) that contains the Statement of
Additional Information and other reports and information regarding the Fund
which have been filed electronically with the Securities and Exchange Commission
(the "SEC").

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

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 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.
<PAGE> 5

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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FUND HIGHLIGHTS............................................. 3
What is Pax World Growth Fund, Inc?.................... 3
What is the Fund's Investment Philosophy?.............. 4
What is the Fund's Investment Objective?............... 4
Investments and Special Considerations; Risk Factors... 4
Who Manages the Fund?.................................. 5
Who Advises the Fund?.................................. 5
Who Distributes the Fund's Shares?..................... 6
What is the Minimum Investment?........................ 6
How Do I Purchase Shares?.............................. 6
How Do I Sell My Shares?............................... 7
How Are Dividends and Distributions Paid?.............. 7
FUND EXPENSES............................................... 7
HOW THE FUND INVESTS........................................ 8
Investment Objective and Policies...................... 8
Investments and Special Considerations; Risk Factors... 10
Corporate and Other Debt-Securities............... 10
Convertible Securities............................ 10
Equity-Related Securities......................... 10
Foreign Securities................................ 10
Illiquid and Restricted Securities................ 11
Portfolio Turnover................................ 11
Repurchase Agreements............................. 12
Short Sales Against-the-Box....................... 12
U.S. Government Agency and/or Instrumentality
Securities......................................... 12
When-Issued and Delayed Delivery Securities....... 13
Borrowing for Leverage............................ 13
Hedging and Return Enhancement Strategies.............. 14
Option Transactions............................... 14
Investment Restrictions................................ 15
MANAGEMENT OF THE FUND...................................... 15
Officers and Directors................................. 15
Adviser; Sub-Adviser................................... 16
Distribution........................................... 18
Custodian and Transfer and Dividend Disbursing Agent... 18
HOW THE FUND VALUES ITS SHARES.............................. 18
HOW THE FUND CALCULATES PERFORMANCE......................... 19
TAXES, DIVIDENDS AND DISTRIBUTIONS.......................... 20
Taxation of the Fund................................... 20
Taxation of Shareholders............................... 20
</TABLE>

2
<PAGE> 6

<TABLE>
<CAPTION>
PAGE
<S> <C>
Withholding Taxes...................................... 20
Dividends and Distributions............................ 21
GENERAL INFORMATION......................................... 21
Incorporation.......................................... 21
Description of Common Stock............................ 21
Shareholder Meetings................................... 22
SHAREHOLDER GUIDE........................................... 22
How to Purchase Shares................................. 22
In General........................................ 22
Investing by Mail................................. 23
Investing by Telephone............................ 23
Investing by Wire Transfer........................ 24
Waiver of Sales Charges........................... 24
How to Sell Your Shares................................ 25
In General........................................ 25
Redemptions by Written Request.................... 25
Redemptions by Telephone.......................... 26
Involuntary Redemptions........................... 26
How to Exchange Your Shares............................ 26
In General........................................ 26
Exchanges by Mail................................. 27
Exchanges by Telephone............................ 27
Shareholder Services................................... 27
Automatic Reinvestment of Dividends and/or
Distributions Without a Sales Charge............... 27
Automatic Investment Plan......................... 27
Tax-Deferred Retirement Plans..................... 27
Systematic Withdrawal Plans....................... 28
Reports to Shareholders........................... 28
Shareholder Inquiries............................. 28
THE PAX WORLD FUND FAMILY................................... 28
ADDITIONAL INFORMATION...................................... 28
</TABLE>

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.

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<PAGE> 7

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 manufacture of liquor, tobacco and/or
gambling products. See "How the Fund Invests -- Investment Objective and
Policies" at page 8.

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 8.

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 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) 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

4
<PAGE> 8

Fund Invests -- Investment Objective and Policies" at page 8. 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 10.

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 $300.00 to affiliated directors and $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 03801-3853 (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 daily 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 daily 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 daily net assets up to and including
$25,000,000 and three-quarters of one percent (.75%) of average daily net assets
in excess of $25,000,000.

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 daily 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 daily 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 daily net assets up to and including $25,000,000
and one-quarter of one percent (.25%) of average daily net assets in excess of
$25,000,000, but in no event to exceed the annual sum of $250,000 net of
expenses.

Mr. Robert P. Colin, an employee of the Sub-Adviser, is the Portfolio
Manager of the Fund and the Portfolio Co-Manager of the Pax World Fund,
Incorporated (the "Pax World 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

5
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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 (the "Investment Company Act"),
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 (including, but not
limited to, travel and telephone expenses). The plan provides that (i) up to
twenty-five one hundredths of one percent (.25%) of the average daily net assets
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 Fund per
annum. The plan may be terminated at any time, without penalty, by (a) the vote
of a majority of the members of the Board of Directors of the Fund 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 or
(b) the vote of the holders of a majority of the outstanding shares of the Fund.
If the plan is terminated, the payment of fees to third parties under the plan
would be discontinued.

WHAT IS THE MINIMUM INVESTMENT?

The minimum initial investment is $250.00; the minimum subsequent
investment is $50.00. There is no minimum investment, however, 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 22 and
"Shareholder Guide -- Shareholder Services" at page 27.

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

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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. See
"Shareholder Guide -- How to Purchase Shares" at page 22; and "How The Fund
Values its Shares" at page 18.

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 25.

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 20.

FUND EXPENSES

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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 NET OPERATING EXPENSES(2) (AS A PERCENTAGE OF
AVERAGE NET ASSETS):
Management Fee......................................... 0%
12b-1 Fees............................................. .35%
Other Expenses......................................... 1.14%
Total Fund Net Expenses(2).................................. 1.49%
</TABLE>

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(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.

(2) Total expenses, net of expenses assumed by the Adviser.

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<S> <C> <C>
Example: 1 Year 3 Years
You would pay the following expenses on a $1,000.00
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period:............... $14.90 $46.25
</TABLE>

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 15. "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

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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
manufacture of liquor, tobacco and/ or gambling products.
In order to properly supervise a securities portfolio containing the
limitations described above, care must be exercised to continuously monitor
developments of the 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 it is determined after the initial purchase by the Fund that the
company's activities fall within the exclusion described above (either by
acquisition, merger or otherwise), the securities of such company will be
eliminated from the portfolio as soon thereafter as possible taking into
consideration (i) any gain or loss which may be realized from such elimination,
(ii) the tax implications of such elimination, (iii) market timing, and the
like. In no event, however, will such security be retained longer than six (6)
months from the time the Fund learns of the investment disqualification. This
requirement may cause the Fund to dispose of the security at a time when it may
be disadvantageous to do so.
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.
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

9
<PAGE> 13

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 03801-3853 or by
telephoning 800-767-1729 (toll free).

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,
in the opinion of the Adviser, of equivalent quality.

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.

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

10
<PAGE> 14

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 domestic companies 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 U.S. 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 ten percent (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 03801-3853 or by telephoning
800-767-1729 (toll free).

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 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

11
<PAGE> 15

Fund at 222 State Street, Portsmouth, NH 03801-3853 or by telephoning
800-767-1729 (toll free). 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 20.

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 be fully collateralized at all times 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
03801-3853 or by telephoning 800-767-1729 (toll free).

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
03801-3853 or by telephoning 800-767-1729 (toll free).
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

12
<PAGE> 16

representing an undivided ownership interest in a pool of mortgages, e.g.,
Government National Mortgage Association, Federal National Mortgage Association
and Federal Home Loan Mortgage Corporation 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 03801-3853 or by
telephoning 800-767-1729 (toll free).

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. State Street Bank and Trust
Company, 225 Franklin Street, Boston, MA 02110 (the "Custodian"), 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 03801-3853 or by
telephoning 800-767-1729 (toll free).

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

13
<PAGE> 17

greater risks and costs than mutual 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 expense
of the Fund, the Fund's expenses may increase more than the expenses of mutual
funds that do not borrow and the NAV per share of the Fund may fluctuate more
than the NAV per share of mutual 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 03801-3853 or
by telephoning 800-767-1729 (toll free).

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
03801-3853 or by telephoning 800-767-1729 (toll free). New financial products
and risk management techniques continue to be developed and the Fund may use
these new products and techniques to the extent consistent with its investment
objective and policies.

Option 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 03801-3853 or by telephoning 800-767-1729 (toll
free).
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

14
<PAGE> 18

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 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 the
Fund owns, while obligated under the option, 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
03801-3853 or by telephoning 800-767-1729 (toll free).

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 meeting 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
03801-3853 or by telephoning 800-767-1729(toll free).

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 $300.00 to affiliated directors and
$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
03801-3853 or by telephoning 800-767-1729 (toll free).

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<PAGE> 19

ADVISER; SUB-ADVISER

Pax World Management Corp., 222 State Street, Portsmouth, NH 03801-3853
(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, 1997, the Adviser had over $634,000,000 in assets under management
by virtue of serving as the adviser to the Fund and the Pax World Fund. The
Adviser has no clients other than the Fund, the Pax World Fund and the Pax World
Money Market Fund, Inc., a socially responsible money market fund which is being
advised by the Adviser for the specific purpose of assuring that the social
responsibility screens used by such fund are the same as those applied to the
Fund (the "Pax World Money Market Fund").

Pursuant to the terms of the Advisory Agreement, the Adviser will be
compensated as follows: in the event that the average daily 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 the average daily
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 daily net assets up to and including $25,000,000 and
three-quarters of one percent (.75%) of average daily 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 (1-1/2%) of the average daily 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 Adviser
was required to supply and assume a total of $159,152.00 for such services for
the period from March 12, 1997 (the date of incorporation of the Fund) to
December 31, 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.

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 daily 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 daily net assets of the Fund are equal to or
in excess of $5,000,000, the Sub-Adviser will

16
<PAGE> 20

be compensated by the Adviser for its services at an annual rate of one-third of
one percent (.33%) of average daily net assets up to and including $25,000,000
and one-quarter of one percent (.25%) of average daily net assets in excess of
$25,000,000, but in no event to exceed the annual sum of $250,000 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 twenty-six and 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
twelve years as a limited partner and Account Executive with the firm Moore &
Schley. Each of Mr. Grant and Mr. Shadek serves as a member of the Board of
Directors of the Fund.

Mr. Robert P. Colin, an employee of the Sub-Adviser, is the Portfolio
Manager of the Fund and the Portfolio Co-Manager of the Pax World 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 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.
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 03801-3853 or by telephoning 800-767-1729 (toll free).

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<PAGE> 21

DISTRIBUTION

The Fund maintains a distribution expense plan pursuant to Rule 12b-1 under
the Investment Company Act 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 (including,
but not limited to, travel and telephone expenses). The plan provides that (i)
up to twenty-five one hundredths of one percent (.25%) of the average daily net
assets 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 Fund per
annum. The plan may be terminated at any time, without penalty, by (a) the vote
of a majority of the members of the Board of Directors of the Fund 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 or
(b) the vote of the holders of a majority of the outstanding shares of the Fund.
If the plan is terminated, the payment of fees to third parties under the plan
would be discontinued. 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 03801-3853 or by telephoning
800-767-1729 (toll free).

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 Fund Family, 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
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.

18
<PAGE> 22

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-
3853 or by telephoning 800-767-1729 (toll free).

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,
Martin Luther King, Jr. 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 03801-3853 or by telephoning 800-767-1729 (toll free).

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) 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 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 03801-3853 or by telephoning
800-767-1729 (toll free). 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 27.

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<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 percent (20%), the maximum federal
mid-term capital gains rate is currently twenty-eight percent (28%), and the
maximum federal tax rate for ordinary income is currently thirty-nine and
six-tenths percent (39.6%); however, with respect to sales between May 7, 1997
and July 28, 1997, the twenty percent (20%) tax rate applies to securities held
for more than twelve (12) months.

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 (i) long-term
capital gain or loss if the shares have been held more than eighteen (18)
months, (ii) mid-term capital gain or loss if the shares have been held twelve
(12) to eighteen (18) months and (iii) otherwise as short-term capital gain or
loss. Any such loss, however, on shares that are held for six (6) 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 the Fund's
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 Internal Revenue
Service.
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 03801-3853 or by
telephoning 800-767-1729 (toll free).

20
<PAGE> 24

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 elects in
writing not less than five (5) 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 Fund Family, P.O. Box 8930, Wilmington, DE
19899-8930. The Fund will notify each shareholder after the close of the Fund's
taxable year of both 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 Investment Company 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 25.

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.

21
<PAGE> 25

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 ten percent
(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.

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, 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 Fund will compute its NAV once daily as of
4:15 P.M., New York time, 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. NAV is computed by
dividing the value of the Fund's net assets (i.e., the value of its assets less
liabilities) by the total number of shares of the Fund outstanding. The Fund's
investments are valued based on market value or, where market quotations are not
readily available, based on fair value as determined in good faith under
procedures established by the Fund's Board of Directors. For further information
regarding the methods employed in valuing the Fund's investments, see "Net Asset
Value" in the Statement of Additional Information.

If an order is received in proper form by the Transfer Agent or other
entity authorized to receive orders on behalf of the Fund by the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time) on a business day, Fund shares will be purchased at the public
offering price determined as of the close of trading on the floor of the New
York Stock Exchange on that day; otherwise, Fund shares will be purchased at the
public offering price determined as of the close of trading on the floor of the
New York Stock Exchange on the next business day, except where shares are
purchased through certain financial institutions that have entered into
agreements with the Fund as provided below.

22
<PAGE> 26

York Stock Exchange on the day that such order was received by such financial
institution. Otherwise, the orders will be based on the next determined NAV,
plus applicable sales charges. It is the financial institution's responsibility
to transmit orders so that they will be received by the Transfer Agent or such
other entity on a timely basis.

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" at page 25.

Investing by Mail

Prospective shareholders may purchase shares of the Fund by completing and
signing the "New Account Application" enclosed with this Prospectus and sending
the application, together with a check to the Transfer Agent at Pax World Fund
Family, P.O. Box 8930, Wilmington, DE 19899-8930 or by overnight delivery c/o
PFPC, Inc., 400 Bellevue Parkway, Wilmington, DE 19809. 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

In order to purchase shares by telephone, you must authorize telephone
purchases on your initial application form or by written notice to the Transfer
Agent. Thereafter, you may call the Fund at 800-372-7827 (toll free) to execute
a telephone purchase 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 purchases, your telephone call may be recorded and you will be asked
to provide your personal identification number. A written confirmation of the
purchase 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 purchases will be made on the basis of the NAV of the Fund next determined
after the funds are received, plus applicable sales charges.

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

The Fund may accept telephone orders from broker-dealers which have been
previously approved by the Fund by telephoning 800-635-1404 (toll free). 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 (3rd)
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.

23
<PAGE> 27

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 (toll free) (individual shareholders) or 800-635-1404 (toll free)
(broker/dealers) to advise the Transfer Agent that you would like to purchase
shares of the Fund by wire transfer and then (ii) give instructions to your bank
to transfer funds by wire to the following account:

<TABLE>
<S> <C>
Bank Name: PNC Bank, Philadelphia, PA
ABA Number: 031-0000-53
Account Name: Pax World Growth Fund, Inc.
Account No.: 85-5100-7715
Further Credit: Name of Shareholder and
Account Number
</TABLE>

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 upon
the exchange of shares of the Pax World Fund or the Pax World Money Market 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 (1) year from June 11, 1997 by any investor who owned as of
such date or owned at any time during the four (4) year period immediately
preceding such date 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; (ii) any pension, profit-sharing
or other employee benefit plans qualified under Section 401 of the Internal
Revenue Code, IRAs, Education IRAs, Roth IRAs, SIMPLE IRAs, Simplified Employee
Pension -- IRA plans and retirement and deferred compensation and annuity plans
and trusts used to fund those plans, including, but not limited to, those
defined in Sections 401(a), 403(b) or 457 of the Internal Revenue Code and
"rabbi trusts"; (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; (iv) registered representatives and employees of broker-dealers having
selling group agreements with the Fund, for themselves, their spouses and their
dependent children; (v) investment advisers or financial planners who place
trades for their own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services and clients of such
investment advisors or financial planners who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisor or financial planner on the books and records of the broker or agent, or
(vi) at the discretion of the Board of Directors of the Fund. Finally, if you
redeem your shares and have not previously exercised the repurchase privilege,
you may reinvest, within ninety (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.

24
<PAGE> 28

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 03801-3853 or by telephoning 800-767-1729 (toll
free).

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 18.

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 Fund Family, P.O. Box 8930, Wilmington, DE
19899-8930 or by overnight delivery c/o PFPC, Inc., 400 Bellevue Parkway,
Wilmington, DE 19809.

If the proceeds of the redemption (i) exceed $10,000.00 (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 domestic bank or trust company, broker, dealer,
clearing agency or savings association who are participants in a medallion
program recognized by the Securities Transfer Agents Association. The three
recognized medallion programs are Securities Transfer Agents Medallion Program
(STAMP), Stock Exchanges Medallion Program (SEMP) and the New York Stock
Exchange, Inc. Medallion Signature Program (MSP). Signature guarantees which are
not a part of these programs will not be accepted. 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

25
<PAGE> 29

reasonably practicable for the Fund fairly to determine the value of its net
assets, or (iv) during any other period when the 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.

Redemptions by Telephone

Redemptions by telephone must be in amounts of at least $1,000.00 and may
not be for more than $10,000.00. In addition, the proceeds from a telephone
redemption may be paid only to the owner(s) of record and may be sent only to
the address of record or a pre-authorized bank account, and cannot be made
within thirty (30) days after the Transfer Agent has been notified of an address
change. If there are multiple owners of record, the Transfer Agent may rely upon
the instructions of only one owner of record.

In order to redeem shares by telephone, you must authorize telephone
redemptions 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 (toll free) to execute a telephone redemption 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 redemptions,
your telephone call may be recorded and you will be asked to provide your
personal identification number. A written confirmation of the redemption
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.

Involuntary Redemptions

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 $250.00 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.

HOW TO EXCHANGE YOUR SHARES

In General

As a shareholder of the Fund, you have an exchange privilege with the Pax
World Fund and the Pax World Money Market Fund, subject to the minimum
investment requirement of such funds. 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 03801-3853 or by telephoning 800-767-1729 (toll free).

26
<PAGE> 30

Exchanges by Mail

You may exchange shares by mail by writing to the Transfer Agent at Pax
World Fund Family, P.O. Box 8930, Wilmington, DE 19899-8930 or by overnight
delivery c/o PFPC, Inc., 400 Bellevue Parkway, Wilmington, DE 19809.

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" at page 25.

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 (toll free) on weekdays, except holidays, between the hours of
8:00 A.M. and 6:00 P.M., New York time, to exchange shares between accounts that
are registered in the same names. 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 above.

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 five (5) days prior to such ex-dividend date that you elect to
receive (i) 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 to your
account and a confirmation of such reinvestment will be sent to you by the
Transfer Agent.

AUTOMATIC INVESTMENT PLAN. Under the Fund's Automatic Investment Plan,
you may make regular monthly or quarterly purchases of the Fund's shares
via an automatic debit to a bank account. For additional information about
this service, you may contact the Transfer Agent directly at 800-372-7827
between the hours of 8:00 A.M. and 6:00 P.M., New York time.

TAX-DEFERRED RETIREMENT PLANS. Various tax-deferred retirement plans
and accounts, including IRAs, Education IRAs, Roth IRAs, SIMPLE IRAs,
Simplified Employee Pension --

27
<PAGE> 31

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 03801-3853 or by telephoning 800-767-1729 (toll
free).

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 one annual prospectus per household. You may request
additional copies of such reports by writing to the Fund at 222 State
Street, Portsmouth, NH 03801-3853, telephoning the Fund at 1-800-767-1729,
visiting the Fund's web site at http://www.paxfund.com or visiting the
SEC's web site at http://www.sec.gov for such purpose. 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 Fund Family, P.O. Box 8930, Wilmington, DE 19899-8930,
or by telephone at 800-372-7827 (toll-free) or, from outside the United
States, 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 03801-3835,
telephoning the Fund at 1-800-767-1729, visiting the Fund's web site at
http://www.paxfund.com or visiting the SEC's web site at http://www.sec.gov for
such purpose.

THE PAX WORLD 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 Fund Family, including charges and
expenses, contact your financial adviser or telephone the Fund at 800-767-1729
(toll free) for a free prospectus. Read the prospectus carefully before you
invest or send money.

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

28
<PAGE> 32

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 or by
visiting the SEC's web site at http://www.sec.gov for such purpose.

YEAR 2000. As the year 2000 approaches, an issue has emerged regarding how
existing application software programs and operating systems can accommodate
this date value. Failure to adequately address this issue could have potentially
serious repercussions. The Adviser is in the process of working with the Fund's
service providers to prepare for the year 2000. Based on information currently
available, the Adviser does not expect that the Fund will incur significant
operating expenses or be required to incur materials costs to be year 2000
compliant. Although the Adviser does not anticipate that the year 2000 issue
will have a material impact on the Fund's ability to provide service at current
levels, there can be no assurance that steps taken in preparation for the year
2000 will be sufficient to avoid any adverse impact on the Fund.

29
<PAGE> 33

PAX WORLD GROWTH FUND
A LOW-LOAD DIVERSIFIED GROWTH FUND
222 State Street
Portsmouth, NH 03801-3853
http://www.paxfund.com/

For General Fund Information, please call:
1-800-767-1729

For Shareholder Account Information, please call:
1-800-372-7827

For Broker Services, please call:
1-800-635-1404

Transfer and Dividend Disbursing Agent-PFPC, Inc.
Attn: Pax World Growth Fund
P.O. Box 8950
Wilmington, DE 19899

General Counsel-
Rosner Bresler
Goodman & Unterman, LLP
521 Fifth Avenue
New York, NY 10175

Independent Auditors-
Pannell Kerr Forster, P.C.
125 Summer Street
Boston, MA 02110

Investment Adviser-
Pax World Management Corp.
222 State Street
Portsmouth, NH 03801-3853

All Account Inquiries should be addressed to:
The Pax World Growth Fund
P.O. Box 8930
Wilmington, DE 19899

Printed in the USA on recycled paper [RECYCLE LOGO]

Prospectus &
Application

PROSPECTUS
&
APPLICATION

[PAX WORLD GROWTH FUND LOGO]

MAY 1, 1998
<PAGE> 34

PAX WORLD GROWTH FUND, INC.

222 State Street, Portsmouth, NH 03801-3853
For shareholder account information: 800-372-7827
Portsmouth, NH office: 800-767-1729
603-431-8022

Website: http://www.paxfund.com

STATEMENT OF ADDITIONAL INFORMATION

DATED MAY 1, 1998

This Statement of Additional Information is not a Prospectus and should be read
in conjunction with the Fund's Prospectus dated May 1, 1998 to which it relates,
a copy of which may be obtained by writing to the Fund at 222 State Street,
Portsmouth, NH 03801-3853, telephoning the Fund at 1-800-767-1729, visiting the
Fund's web site at http://www.paxfund.com or visiting the Securities and
Exchange Commission's web site at http://www.sec.gov for such purpose.

<PAGE> 35

PAX WORLD GROWTH FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

DATED MAY 1, 1998

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 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 03801-3853, and its telephone number
is 800-767-1729 (toll free).

This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Fund's Prospectus dated May 1, 1998, a copy of
which may be obtained by writing to the Fund at 222 State Street, Portsmouth, NH
03801-3853, telephoning the Fund at 1-800-767-1729, visiting the Fund's web site
at http://www.paxfund.com or visiting the Securities and Exchange Commission's
(the "SEC's") web site at http://www.sec.gov for such purpose.

<PAGE> 36

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES........................... 3
Investment Objective................................... 3
Investment Philosophy.................................. 4
INVESTMENTS AND SPECIAL CONSIDERATIONS; RISK FACTORS........ 4
Foreign Securities..................................... 4
Forward Foreign Currency Exchange Contracts............ 5
Illiquid and Restricted Securities..................... 6
Options on Securities.................................. 6
Options on Securities Indices.......................... 7
Portfolio Turnover..................................... 9
Position Limits........................................ 9
Repurchase Agreements.................................. 9
Short-term Investments................................. 9
U.S. Government Agency and/or Instrumentality
Securities............................................ 10
When-issued and Delayed Delivery Securities............ 10
Borrowing for Leverage................................. 11
INVESTMENT RESTRICTIONS..................................... 11
MANAGEMENT OF THE FUND...................................... 13
ADVISER; SUB-ADVISER........................................ 15
DISTRIBUTION................................................ 17
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT AND
INDEPENDENT ACCOUNTANTS................................... 18
PORTFOLIO TRANSACTIONS AND BROKERAGE........................ 19
PURCHASE, REDEMPTION AND EXCHANGE OF FUND SHARES............ 20
Purchase of Shares..................................... 20
In General........................................ 20
Waiver of Sales Charges........................... 21
Sales of Shares........................................ 22
In General........................................ 22
Involuntary Redemption............................ 22
Exchange of Shares..................................... 22
NET ASSET VALUE............................................. 22
PERFORMANCE INFORMATION..................................... 23
Average Annual Total Return............................ 23
TAXES....................................................... 24
SHAREHOLDER SERVICES........................................ 25
Automatic Reinvestment of Dividends and/or
Distributions without a Sales Charge.................. 25
Automatic Investment Plan.............................. 26
Tax-Deferred Retirement Plans and Accounts............. 26
Systematic Withdrawal Plans............................ 26
Reports to Shareholders................................ 26
Shareholder Inquiries.................................. 27
</TABLE>

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<PAGE> 37

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

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 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 which are, in the judgment of the Adviser, 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.
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.

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<PAGE> 38

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 are
derived from contracts with the United States Defense Department, and (iv)
companies which derive revenue from the manufacture of liquor, tobacco and/or
gambling 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, 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.
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 it is determined after the initial purchase by the Fund that the
company's activities fall within the exclusion described above (either by
acquisition, merger or otherwise), the securities of such company will be
eliminated from the portfolio as soon thereafter as possible taking into
consideration (i) any gain or loss which may be realized from such elimination,
(ii) the tax implications of such elimination, (iii) market timing, and the
like. In no event, however, will such security be retained longer than six (6)
months from the time the Fund learns of the investment disqualification. This
requirement may cause the Fund to dispose of the security at a time when it may
be disadvantageous to do so.
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 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).

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<PAGE> 39

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. 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).

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 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. State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110 (the "Custodian"), 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.

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<PAGE> 40

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 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 (7) 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,

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<PAGE> 41

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 the 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 the
Custodian.
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 the 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

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<PAGE> 42

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 One Hundred (100) means
that a one-point difference will yield One Hundred Dollars ($100.00). 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.
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 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.

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<PAGE> 43

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 19 and 24, respectively.

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 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.

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<PAGE> 44

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, 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
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, which are
pass-through mortgage securities collateralized by adjustable rate mortgages,
and Fixed-Rate Mortgage Securities, 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 one hundred twenty (120) days of
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<PAGE> 45

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 three
hundred percent (300%) of all borrowings including the proposed borrowing. If
the value of the Fund's assets, when computed in that manner, falls below such
three hundred percent (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
Fund, the Fund's expenses may increase more than the expenses of mutual funds
that do not borrow and the NAV per share of the Fund may fluctuate more than the
NAV per share of mutual 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

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<PAGE> 46

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 (3) years old, except that 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 the 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 (5%) 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. 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
12
<PAGE> 47

"Investments and Special Considerations; Risk Factors -- Repurchase
Agreements" at page 9.
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, the Fund's Adviser or the Fund's
Sub-Adviser 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 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 (4) 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. 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>
Position(s) Held
Name, Address and Age with the Fund Principal Occupation(s) During Past Five Years
<S> <C> <C>
Carl H. Doerge, Jr., Director Private investor (1995-present); Executive Vice
867 Remsen Lane, President and Managing Director, Smith Barney
Oyster Bay, NY 11771**; (59) (1971-1995)
</TABLE>

13
<PAGE> 48

<TABLE>
<CAPTION>
Position(s) Held
Name, Address and Age with the Fund Principal Occupation(s) During Past Five Years
<S> <C> <C>
Thomas W. Grant, President; President, Pax World Money Market Fund, Inc.
14 Wall Street, Director (1998-present); Vice Chairman of the Board, Pax
New York, NY 10005*/**; (56) World Fund, Incorporated (1996-present);
President, Pax World Management Corp.
(1996-present); President, H. G. Wellington &
Co., Inc. (1991-present)

Anita D. Green, Assistant Manager-Shareholder Services for the Pax World
c/o Pax World Management Corp., Treasurer Fund Family, Pax World Management Corp.
222 State Street, (1990-present); Co-Treasurer, Pax World Fund,
Portsmouth, NH 03801-3853; (33) Incorporated (1998-present)

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

Joy L. Liechty, Director Client and Sales Advocate, Mennonite Mutual Aid
1403 Ashton Court, Association, Goshen, IN 46526 (1989-present)
Goshen, IN 46526; (44)

James M. Shadek, Treasurer Account Executive, H. G. Wellington & Co., Inc.
14 Wall Street, (1986-present); Senior Vice President for Social
New York, NY 10005*; (45) Research, Pax World Management Corp.
(1996-present)

Laurence A. Shadek, Chairman of the Executive Vice President, Pax World Money Market
14 Wall Street, Board; Director Fund, Inc. (1998-present); Chairman of the
New York, NY 10005*/**; (48) Board, Pax World Fund, Incorporated
(1996-present); Chairman of the Board, Pax World
Management Corp. (1996-present); Executive Vice
President, H. G. Wellington & Co., Inc.
(1986-present)

Janet Lawton Spates, Assistant Operations Manager for the Pax World Fund
c/o Pax World Management Corp., Treasurer Family, Pax World Management Corp.
222 State Street, (1992-present); Co-Treasurer, Pax World Fund,
Portsmouth, NH 03801-3853; (28) Incorporated (1998-present)
</TABLE>

14
<PAGE> 49

<TABLE>
<CAPTION>
Position(s) Held
Name, Address and Age with the Fund Principal Occupation(s) During Past Five Years
<S> <C> <C>
Nancy S. Taylor, Director Senior minister, First Congregational Church,
5298 N. Riffle Way, Boise, ID (1992-present); Associate minister,
Boise, ID 83703**; (42) Immanuel Congregational Church, Hartford, CT
(1987-1992)

Lee D. Unterman, Secretary Partner, Rosner Bresler Goodman & Unterman, LLP,
c/o Rosner, Bresler, Goodman & New York, NY (1997-present); Partner, Broudy &
Unterman, LLP, Jacobson, New York, NY (1988-1997)
521 Fifth Avenue,
New York, NY 10175; (47)
</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 Investment Committee and/or Audit Committee. The
Investment Committee has the responsibility of overseeing the investments of
the Fund; the Audit Committee has the responsibility of overseeing the
establishment and maintenance of an effective financial control environment,
for overseeing the procedures for evaluating the system of internal
accounting control and for evaluating audit performance.

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, Incorporated (the "Pax World Fund"), another investment
company managed by the Adviser, and the Pax World Money Market Fund, Inc., a
socially responsible money market fund which is being advised by the Adviser for
the specific purpose of assuring that the social responsibility screens used by
such fund are the same as those applied to the Fund (the "Pax World Money Market
Fund"). 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 $300.00
for affiliated directors and $1,000.00 for unaffiliated directors.

ADVISER; SUB-ADVISER

Pax World Management Corp., 222 State Street, Portsmouth, NH 03801-3853
(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, 1997, the Adviser had over $634,000,000
in assets under management by virtue of serving as the adviser to the Fund and
the Pax World Fund. The Adviser has no clients other than the Fund, the Pax
World Fund, and the Pax World Money Market Fund.

15
<PAGE> 50

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 daily 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 Adviser
was required to supply and assume a total of $159,152.00 for such services for
the period from March 12, 1997 (the date of incorporation of the Fund) to
December 31, 1997.

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.

16
<PAGE> 51

percent (.25%) of average daily net assets in excess of $25,000,000, but in no
event to exceed the annual sum of $250,000 net of expenses.

Mr. Robert P. Colin, an employee of the Sub-Adviser, is the Portfolio
Manager of the Fund and the Portfolio Co-Manager of the Pax World 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.

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.
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

17
<PAGE> 52

assets 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 Fund per
annum. The plan may be terminated at any time, without penalty, by (a) the vote
of a majority of the members of the Board of Directors of the Fund 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 or
(b) the vote of the holders of a majority of the outstanding shares of the Fund.
If the plan is terminated, the payment of fees to third parties under the plan
would be discontinued.

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 (as hereinafter defined),
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 sixty (60)
days, nor less than thirty (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.
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 (the "Rule 12b-1 Directors"), 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
18
<PAGE> 53

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 Fund
Family, 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 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.

19
<PAGE> 54

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

The minimum initial investment is $250.00; the minimum subsequent
investment is $50.00. There is no minimum investment, however, 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.

Shares of the Fund are offered for sale by the Fund on a continuous basis
at the NAV, 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 Fund will compute its NAV once daily as of
4:15 P.M., New York time, 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. NAV is computed by
dividing the value of the Fund's net assets (i.e., the value of its assets less
liabilities) by the total number of shares of the Fund outstanding. The Fund's
investments are valued based on market value or, where market quotations are not
readily available, based on fair value as determined in good faith under
procedures established by the Fund's Board of Directors. For further Information
regarding the methods employed in valuing the Fund's investments, see "Net Asset
Value" in the Statement of Additional Information.

20
<PAGE> 55

Orders for the purchase of Fund shares received, by certain financial
institutions that have entered into agreements with the Fund, by the close of
trading on the floor of the New York Stock Exchange on any business day and
transmitted to the Transfer Agent or other entity authorized to receive orders
on behalf of the Fund by 8:00 p.m., New York time (or, due to unforeseen
circumstances, by 9:30 a.m., New York time, on the following business day) will
be based on the NAV, plus applicable sales charges, determined as of the close
of trading on the floor of the New York Stock Exchange on the day that such
order was received by such financial institution. Otherwise, the orders will be
based on the next determined NAV, plus applicable sales charges. It is the
financial institution's responsibility to transmit orders so that they will be
received by the Transfer Agent or such other entity on a timely basis.

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

21
<PAGE> 56

for their own accounts if the accounts are linked to the master account of such
investment advisor or financial planner on the books and records of the broker
or agent, or (vi) at the discretion of the Board of Directors of the Fund.
Finally, if you redeem your shares and have not previously exercised the
repurchase privilege, you may reinvest, within ninety (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. See "How the Fund Values its Shares" in the Prospectus; and "Net Asset
Value" at page 22.

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 $250.00 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.

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 and Pax World Money
Market Fund, subject to the minimum investment requirement of such funds. 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 of the Fund may be exchanged
for shares of the Pax World Fund and Pax World Money Market Fund only if legally
permissible 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

22
<PAGE> 57

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 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:

<TABLE>
<S> <C>
P (1+T) (n) = ERV
Where: P = a hypothetical initial payment of $1,000.00.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000.00 payment
made at the beginning of the one, five or ten year periods
(or fractional portion thereof).
</TABLE>

23
<PAGE> 58

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.

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 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 (c)
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 (1) 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.

24
<PAGE> 59

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 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
(12)-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.

25
<PAGE> 60

AUTOMATIC INVESTMENT PLAN

Under the Fund's Automatic Investment Plan, an investor may arrange to have
a fixed amount automatically invested in shares of the Fund monthly or quarterly
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
Investment Plan participants.

Further information about this plan and an application form can be obtained
from the Fund or the Transfer Agent.

TAX-DEFERRED RETIREMENT PLANS AND ACCOUNTS

Various tax-deferred retirement plans and accounts, including IRAs,
Education IRAs, Roth 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 with respect to 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 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

26
<PAGE> 61

printing expenses, the Fund will provide one annual and semi-annual shareholder
report and one annual prospectus per household. You may request additional
copies of such reports by writing to the Fund at 222 State Street, Portsmouth,
NH 03801-3853, telephoning the Fund at 1-800-767-1729, visiting the Fund's web
site at http://www.paxfund.com or visiting the SEC's web site at
http://www.sec.gov for such purpose. 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 Fund
Family, P.O. Box 8930, Wilmington, DE 19899-8930, or by telephone at
800-372-7827 (toll-free) or, from outside the United States, at 302-791-2844
(collect).

27
<PAGE> 62

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders

Pax World Growth Fund, Inc.

We have audited the statement of assets and liabilities of Pax World Growth
Fund, Inc., including the schedule of investments, at December 31, 1997, and the
related statement of operations, statement of changes in net assets and
financial highlights for the period March 12, 1997 (the date of incorporation)
to December 31, 1997. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights 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 statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian and brokers. 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 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Pax
World Growth Fund, Inc. at December 31, 1997, the results of its operations,
changes in its net assets, and financial highlights for the period March 12,
1997 (the date of incorporation) to December 31, 1997, in conformity with
generally accepted accounting principles.

/s/ PANNELL KERR FORSTER, P.C.

January 16, 1998

28
<PAGE> 63

PAX WORLD GROWTH FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS

Investments, at value -- note A
Common stocks (cost -- $4,204,226)........................ $3,984,682
Repurchase agreement (cost -- $637,000)................... 637,000
----------
4,621,682
Cash........................................................ 105,316
Receivables
Dividends and interest.................................... 3,185
Investment securities sold................................ 2,582
Organization costs -- note A................................ 4,500
Deferred offering costs -- note A........................... 37,933
Deferred registration fees -- note A........................ 19,360
----------
Total assets...................................... 4,794,558
----------

LIABILITIES

Payables
Investment securities purchased........................... 127,340
Organization costs, deferred offering costs and deferred
registration fees payable to Adviser -- note A......... 61,793
Accrued expenses
Transfer agent fee........................................ 197
----------
Total liabilities................................. 189,330
----------
Net assets (equivalent to $9.66 per share based on 476,784
shares of capital stock outstanding) -- note E............ $4,605,228
==========
Net asset value and redemption price per share ($4,605,228 /
476,784 shares outstanding)............................... $ 9.66
==========
Offering price per share.................................... $ 9.91
==========
</TABLE>

See notes to financial statements.
29
<PAGE> 64

PAX WORLD GROWTH FUND, INC.

STATEMENT OF OPERATIONS

PERIOD MARCH 12, 1997 (THE DATE OF INCORPORATION) TO

DECEMBER 31, 1997

<TABLE>
<S> <C> <C>
Investment income (loss)
Income -- note A
Dividends.............................................. $ 6,474
Interest............................................... 3,929
---------
Total income...................................... 10,403
Expenses
Investment advisory fee -- note B......................... $ 12,500
Distribution expenses -- note D........................... 78,615
Legal fees and related expenses -- note B................. 37,802
Custodian fees -- note F.................................. 14,542
Registration fees -- note A............................... 10,755
Directors' fees and expenses -- note B.................... 10,015
Transfer agent fee........................................ 7,828
Amortization of organization costs, deferred offering
costs and deferred registration fees -- note A......... 6,866
Audit fees................................................ 5,495
Other..................................................... 4,693
Printing.................................................. 3,878
---------
Total expenses.................................... 192,989
Less:Expenses assumed by Adviser -- notes B and
G............................................ (176,273)
---------
Net expenses............................... 16,716
---------
Investment (loss) -- net.......................... (6,313)
---------
Realized and unrealized gain (loss) on investments -- note C
Net realized gain on investments.......................... 45
Unrealized depreciation of investments for the period..... (219,544)
---------
Net (loss) on investments......................... (219,499)
---------
Net (decrease) in net assets resulting from
operations...................................... $(225,812)
=========
</TABLE>

See notes to financial statements.
30
<PAGE> 65

PAX WORLD GROWTH FUND, INC.

STATEMENT OF CHANGES IN NET ASSETS

PERIOD MARCH 12, 1997 (THE DATE OF INCORPORATION) TO

DECEMBER 31, 1997

<TABLE>
<S> <C>
Increase in net assets
Operations
Investment (loss) -- net............................... $ (6,313)
Net realized gain on investments....................... 45
Unrealized depreciation of investments................. (219,544)
----------
Net (decrease) in net assets resulting from
operations....................................... (225,812)
Capital share transactions -- note E...................... 4,831,040
----------
Net increase in net assets........................ 4,605,228
Net assets
Beginning of period....................................... --
----------
End of period (including accumulated investment loss --net
of $6,313)............................................. $4,605,228
==========
</TABLE>

See notes to financial statements.
31
<PAGE> 66

PAX WORLD GROWTH FUND, INC.

SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
--------------------------------- --------- ---------- ----------
<S> <C> <C> <C>

COMMON STOCKS
CONSUMER PRODUCTS
General Nutrition Co., Inc. ...................... 1,600 $ 54,400
Host Marriott Corp. .............................. 8,000 157,000
Nestle SA Sponsored ADR........................... 2,000 149,625
Polaroid Corp. ................................... 1,200 58,425
Sony Corp......................................... 2,100 190,575
Sylvan Learning Systems, Inc. .................... 2,500 97,500
----------
707,525 15.4%
----------
ENERGY
Baker Hughes, Inc. ............................... 3,000 130,875
EEX Corp. ........................................ 15,000 135,938
Enron Corp. ...................................... 3,000 124,686
Reading & Bates Corp. ............................ 4,000 167,500
----------
558,999 12.1
----------
FINANCIAL
Hospitality Properties Trust...................... 5,000 164,375 3.6
----------
HEALTH CARE
BioChem Pharmaceuticals, Inc. .................... 3,100 64,713
Chiron Corp. ..................................... 5,000 85,000
Covance, Inc. .................................... 5,000 99,375
Genentech, Inc. .................................. 3,000 181,875
Genesis Health Ventures, Inc. .................... 6,000 158,250
IDEXX Laboratories, Inc. ......................... 5,000 79,688
Sunrise Assisted Living, Inc. .................... 3,000 129,375
----------
798,276 17.3
----------
INDUSTRIAL
ACNielsen Corp. .................................. 7,000 170,625
Jacobs Engineering Group, Inc. ................... 6,000 152,250
----------
322,875 7.0
----------
TECHNOLOGY
Applied Voice Technology, Inc. ................... 2,000 56,500
Cabletron Systems, Inc. .......................... 5,000 75,000
DSC Communications, Corp. ........................ 5,000 120,000
Netscape Communications Corp. .................... 3,500 85,313
Network Associates, Inc. ......................... 4,000 211,500
New Era of Networks, Inc. ........................ 5,000 56,250
NextLevel Systems Inc. ........................... 8,350 149,256
Oracle Systems Corp. ............................. 5,000 111,563
</TABLE>

32
<PAGE> 67

PAX WORLD GROWTH FUND, INC.

SCHEDULE OF INVESTMENTS (CONTINUED)

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
--------------------------------- --------- ---------- ----------
<S> <C> <C> <C>
Symbol Technologies, Inc. ........................ 3,500 $ 132,125
Tellabs, Inc. .................................... 2,000 105,750
----------
1,103,257 24.0%
----------
TELECOMMUNICATIONS
AirTouch Communications, Inc. .................... 4,000 166,250
Cable & Wireless Communications ADR............... 6,000 163,125
----------
329,375 7.2
---------- -----
Total Common Stocks....................... $3,984,682 86.6
---------- -----
PRINCIPAL
AMOUNT
--------
REPURCHASE AGREEMENT
State Street Bank (U.S. Government agency and
instrumentality bonds); 2%; dated December 31,
1997; due January 2, 1998......................... $637,000 $ 637,000 13.8
---------- -----
Total Investments......................... 4,621,682 100.4
Liabilities, less cash, receivables and deferred
costs............................................. (16,454) (.4)
---------- -----
Net Assets................................ $4,605,228 100.0%
========== =====
</TABLE>

See notes to financial statements.
33
<PAGE> 68

PAX WORLD GROWTH FUND, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

NOTE A -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Pax World Growth Fund, Inc. ("Fund"), incorporated in Delaware on March 12,
1997, is a diversified, open-end management investment company registered under
the Investment Company Act of 1940, as amended. The Fund commenced operations on
June 9, 1997 with the issuance of 10,000 shares of capital stock to Pax World
Management Corp., the Fund's Adviser ("Adviser"). Investment operations
commenced July 9, 1997.

The Fund's policy is to invest in securities of companies whose business is
essentially directed toward non-military and life-supportive activities. Its
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.

Valuation of investments

Securities listed on any national, regional or local exchange are valued at
the closing prices on such exchanges. Securities listed on the NASDAQ national
market system are valued using quotations obtained from the market maker where
the security is traded most extensively. Repurchase agreements are valued at
cost; accrued interest to December 31 is included in interest receivable.

Organization costs

Costs incurred in connection with the organization of the Fund were paid
initially by the Adviser. These costs were deferred and are being amortized on a
straight-line basis over 60 months from July 9, 1997, the date investment
operations commenced. The costs will be repaid to the Adviser in accordance with
the amortization schedule. Amortization expense of $500 for the period ended
December 31, 1997 is included on the statement of operations. Reference is made
to note G.

Deferred offering costs

Costs incurred in connection with the initial offering of the Fund's shares
were paid initially by the Adviser. These costs were deferred and are being
amortized on a straight-line basis over 60 months from July 9, 1997, the date
investment operations commenced. Management has elected to change the
amortization period from 12 months, as disclosed in the notes to financial
statements accompanying the June 9, 1997 statement of assets and liabilities
contained in the

34
<PAGE> 69

PAX WORLD GROWTH FUND, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Statement of Additional Information dated June 11, 1997 filed with the Fund's
Prospectus of the same date. Management deems that 60 months is more
representative of the period of benefit. The costs will be repaid to the Adviser
in accordance with the amortization schedule. Amortization expense of $4,215 for
the period ended December 31, 1997 is included on the statement of operations.
Reference is made to note G.

Deferred registration fees

Initial state registration fees were paid initially by the Adviser. The
portion of the fees incurred for the initial registration of the Fund with the
50 states and the Commonwealth of Puerto Rico ($21,511), as distinguished from
the portion which represents the recurring, annual fee, was deferred and is
being amortized on a straight-line basis over 60 months from July 9, 1997, the
date investment operations commenced. The costs will be repaid to the Adviser in
accordance with the amortization schedule. Amortization expense of $2,151 for
the period ended December 31, 1997 is included on the statement of operations.
Reference is made to note G.

The portion of the state registration fee which represented the recurring,
annual fee ($10,755) is included on the statement of operations.

Repurchase agreements

The Fund may enter into repurchase agreements. 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 be fully
collateralized at all times 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. The Fund has not experienced any such losses.

Federal income taxes

The Fund's policy is to comply 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. Therefore,
no Federal income tax provision is required.

Distributions to shareholders

All distributions to shareholders are recorded by the Fund on the
ex-dividend dates. There were no distributions made in 1997; there was a net
investment loss for the period and the capital gain was less than $.01 per
share.

35
<PAGE> 70

PAX WORLD GROWTH FUND, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

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.

Other

The Fund follows industry practice and records security transactions on the
trade date. Dividend income is recognized on the ex-dividend date, and interest
income is recognized on an accrual basis.

NOTE B -- INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Pursuant to an Advisory Agreement ("Agreement") between the Fund and the
Adviser, the Adviser furnishes investment advisory services in connection with
the management of the Fund. Under the 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. 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 annual investment Advisory fee will be 1% of its average daily
net assets on the first $25,000,000 and 3/4% of its average daily net assets in
excess of that amount. Two officers, who are also directors of the Fund, are
also officers and directors of the Adviser and H.G. Wellington Capital
Management, a division of H.G. Wellington & Co., Inc. ("Sub-Adviser"). Another
officer of the Fund, who is not a director of the Fund, is also an officer of
the Adviser.

The Adviser has 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 1.5% of the average daily 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
36
<PAGE> 71

PAX WORLD GROWTH FUND, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

shareholders. The Adviser was required to supply and assume a total of $159,152
for such services for the period March 12, 1997 (the date of incorporation) to
December 31, 1997. Reference is made to note G.

All Directors are paid by the Fund for attendance at directors' meetings.

During the period March 12, 1997 (the date of incorporation) to December
31, 1997, the Fund incurred legal fees and related expenses of $71,563 primarily
with Rosner Bresler Goodman & Unterman, LLP (current general counsel for the
Fund) and Broudy & Jacobson (the initial general counsel for the Fund). Of the
total, $33,761 was incurred in connection with the organization and initial
registration of the Fund and are included in the deferred costs. Mr. Lee
Unterman, currently a partner with Rosner Bresler Goodman & Unterman, LLP (and
formerly a partner with Broudy & Jacobson), is Secretary of the Fund.

All of the Adviser's capital stock is currently owned by four siblings
whose family has an ownership interest in the Sub-Adviser, which is a division
of the brokerage firm which the Fund utilizes to execute security transactions.
Brokerage commissions paid to this firm during the period July 9, 1997 (the date
investment operations commenced) to December 31, 1997 totaled $7,700 (30.9% of
total commissions for the period).

NOTE C -- INVESTMENTS

Purchases and proceeds from sales of investments, excluding short-term
investments, aggregated $5,174,124 and $969,943, respectively, for the period
July 9, 1997 (the date investment operations commenced) to December 31, 1997.
There were no U.S. Government agency bonds purchased or sold during the period.

Net realized gain or loss on sales of investments is determined on the
basis of identified cost. If determined on an average cost basis, the net
realized gain for the period July 9, 1997 (the date investment operations
commenced) to December 31, 1997 would have been approximately the same.

For Federal income tax purposes, the identified cost of investments owned
at December 31, 1997 was $4,841,226.

37
<PAGE> 72

PAX WORLD GROWTH FUND, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE D -- DISTRIBUTION EXPENSES

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 (including, but not limited to, travel and telephone expenses).
The Plan provides that (i) up to twenty-five one hundredths of one percent
(.25%) of the average daily net assets 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 Fund per annum. The Plan may be terminated at any time,
without penalty, by (a) the vote of 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 or
(b) the vote of the holders of a majority of the outstanding shares of the Fund.
If the Plan is terminated, the payment of fees to third parties would be
discontinued at that time.

NOTE E -- CAPITAL AND RELATED TRANSACTIONS

Transactions in capital stock were as follows for the period June 9, 1997
(the date operations commenced) to December 31, 1997:

<TABLE>
<CAPTION>
SHARES DOLLARS
------- ----------
<S> <C> <C>
Shares sold............................................... 482,291 $4,885,876
Shares redeemed........................................... (5,507) (54,836)
------- ----------
Net increase.............................................. 476,784 $4,831,040
------- ----------
</TABLE>

The components of net assets at December 31, 1997 are as follows:

<TABLE>
<S> <C> <C>
Paid-in capital (25,000,000 shares of $1 par value authorized)..... $4,831,040
Net investment (loss).............................................. (6,313)
Undistributed capital gains........................................ 45
Net unrealized (depreciation) of investments....................... (219,544)
----------
Net assets............................................... $4,605,228
----------
</TABLE>

38
<PAGE> 73

PAX WORLD GROWTH FUND, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE F -- CUSTODIAN BANK AND CUSTODIAN FEES

State Street Bank and Trust Company is the custodian bank for the Fund's
assets. The custodian fees charged by the bank are reduced, pursuant to an
expense offset arrangement, by an earnings credit which is based upon the
average cash balances maintained at the bank. If the Fund did not have such an
offset arrangement, it could have invested the amount of the offset in an
income-producing asset. The amount of earnings credit for the period ended
December 31, 1997 was not material.

NOTE G -- EXPENSES ASSUMED BY ADVISER

The Adviser has assumed certain expenses incurred by the Fund, some in
accordance with the Advisory Agreement (note B) and others on a voluntary basis,
as follows:

<TABLE>
<S> <C>
Expenses assumed by the Adviser in accordance with the
Advisory Agreement, including amortization of the
organization costs for the period ($500).................. $159,152
Expenses assumed by the Adviser on a voluntary basis
Recurring registration fees............................... 10,755
Amortization of deferred offering costs................... 4,215
Amortization of deferred registration fees................ 2,151
--------
Total expenses assumed by Adviser................. $176,273
--------
</TABLE>

The expenses assumed on a voluntary basis had the effect of reducing the
annualized ratio of total expenses to average net assets from 3.02% to 1.49% for
the period June 9, 1997 (the date operations commenced) to December 31, 1997.

Reference is made to notes A and B.

39
<PAGE> 74

PAX WORLD GROWTH FUND, INC.

FINANCIAL HIGHLIGHTS

The following per share data, ratios and supplemental data at December 31,
1997 and for the period June 9, 1997 (the date operations commenced) to December
31, 1997 have been derived from information provided in the financial statements
and the Fund's underlying financial records.

1. Per share components of the net change during the period June 9, 1997 (the
date operations commenced) to December 31, 1997 in net asset value (based
upon average number of shares outstanding)

<TABLE>
<S> <C>
Net asset value, June 9, 1997 (initial offering
price)................................................ $10.00
------
Loss from investment operations
Investment (loss) -- net.......................... (.01)
Realized and unrealized gain (loss) on
investments -- net................................ (.33)
------
Loss from investment operations................. (.34)
------
Net asset value, December 31, 1997..................... $ 9.66
------
2. Total return............................................. (3.40)%
------
3. Ratios and supplemental data
Ratio of total expenses to average net assets(A)..... 1.49%
Ratio of investment (loss) -- net to average net
assets(A)........................................... (.56)%
Portfolio turnover rate.............................. 50.79%
Average commission rate paid......................... $.1776
Net assets, December 31, 1997 ('000s)................ $4,605
Number of capital shares outstanding, December 31,
1997 ('000s)........................................ 477
(A) These ratios have been annualized
</TABLE>

40
<PAGE> 75

PAX WORLD GROWTH FUND
A LOW-LOAD DIVERSIFIED GROWTH FUND
222 State Street
Portsmouth, NH 03801-3853
http://www.paxfund.com/

For General Fund Information, please call:
1-800-767-1729

For Shareholder Account Information, please call:
1-800-372-7827

For Broker Services, please call:
1-800-635-1404

Transfer and Dividend Disbursing Agent-PFPC, Inc.
Attn: Pax World Growth Fund
P.O. Box 8950
Wilmington, DE 19899

General Counsel-
Rosner Bresler
Goodman & Unterman, LLP
521 Fifth Avenue
New York, NY 10175

Independent Auditors-
Pannell Kerr Forster, P.C.
125 Summer Street
Boston, MA 02110

Investment Adviser-
Pax World Management Corp.
222 State Street
Portsmouth, NH 03801-3853

All Account Inquiries should be addressed to:
The Pax World Growth Fund
P.O. Box 8930
Wilmington, DE 19899

Printed in the USA on recycled paper [RECYCLE LOGO]

Prospectus &
Application

PROSPECTUS
&
APPLICATION

[PAX WORLD GROWTH FUND LOGO]

MAY 1, 1998
<PAGE> 76
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:

Part A - Financial Highlights

Part B - Statements of Assets and Liabilities, Operations,
Changes in Net Assets, Notes to Financial
Statements, all as of December 31, 1997, and
Independent Auditors' Report.

(b) Exhibits:

1. Articles of Incorporation. Incorporated by reference to the
Registrant's Registration Statement on Form N-1A filed with
the Securities and Exchange Commission on March 18, 1997--
Registration No. 333-23549 ("Registration Statement").

2. By-Laws. Incorporated by reference to the Registration
Statement.

3. Not Applicable.

4. Instruments defining rights of shareholders. Incorporated by
reference to the Registration Statement.

5(a). Form of Advisory Agreement between the Registrant and Pax
World Management Corp. Incorporated by reference to the
Registration Statement.

5(b). Form of Sub-Advisory Agreement between Pax World Management
Corp. and H.G. Wellington & Co., Inc. Incorporated by
reference to the Registration Statement.

6. Not Applicable.

7. Not Applicable.

8(a). Form of Custodian Contract between the Registrant and State
Street Bank and Trust Company. Incorporated by reference to
Pre-Effective Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A filed with the Securities and Exchange
Commission on May 27, 1997--Registration No. 333-23549
("Pre-Effective Amendment No. 1").

8(b). Form of Data Access Services Addendum to Custodian Agreement
between the Registrant and State Street Bank and Trust Company.
Incorporated by reference to Pre-Effective Amendment No. 1.

9 Form of Transfer Agency Services Agreement between the
Registrant and PFPC, Inc. Incorporated by reference to
Pre-Effective Amendment No. 1.
<PAGE> 77
10. Opinion of Counsel. Incorporated by reference to Pre-Effective
Amendment No. 1. Representation and Consent of Counsel is filed
herewith.

11. Consent of Independent Accountants.

12. Not Applicable.

13. Form of Purchase Agreement. Incorporated by reference to
Pre-Effective Amendment No. 1.

14. Not Applicable.

15. Form of Distribution and Service Plan. Incorporated by reference
to Pre-Effective Amendment No. 1.

16. Not Applicable.

17. Not Applicable.

18. Not Applicable.

Item 25. Persons Controlled by or under Common Control with Registrant.

None.

Item 26. Number of Holders of Securities.

Set forth below is the number of record holders of securities of the
Registrant as of December 31, 1997:

<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Common 962
--------------

</TABLE>

Item 27. Indemnification.

As permitted by Section 17(h) and (i) of the Investment Company Act of
1940, as amended (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.

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

-2-
<PAGE> 78
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.

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

Thomas W. Grant President; Director President, Pax World
Management Corp.; Vice
Chairman of the Board
and President,
</TABLE>

-3-

<PAGE> 79
<TABLE>
<S> <C> <C>
Pax World Fund, Incorporated; President,
Pax World Growth Fund, Inc.; President,
Pax World Money Market Fund, Inc.;
President, H.G. Wellington & Co., Inc.

James M. Shadek Senior Vice President for Senior Vice President for Social Research
Social Research; Secretary; and Secretary, Pax World Management
Director 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
Director Management Corp.; Chairman of the
Board, Pax World Fund, Incorporated;
Chairman of the Board, Pax World
Growth Fund, Inc.; Executive Vice
President, Pax World Money Market Fund.
Inc.; Executive Vice President, H.G.
Wellington & Co., Inc.

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

</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 19809-3853. 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. The Applicant's corporate minute books are kept at the law
offices of Rosner Bresler Goodman & Unterman, LLP, 521 Fifth Avenue, New York,
NY 10175.

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 Post-Effective Amendment to
the Registrant's Registration Statement, the Registrant is not a party to any
management-related service contract.

Item 32 Undertakings

-4-

<PAGE> 80
Registrant makes the following undertaking:

(1) 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.

(2) To furnish each person to whom a prospectus is delivered with a copy of the
Fund's latest Annual Report to Shareholders, upon request and without
charge.

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 30th day of
April, 1998. The Registrant certified that this Registration Statement meets
all the requirements for effectiveness under Rule 485(b) of the Securities Act
of 1933.

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 4/30/98
- -------------------------- Director
Laurence A. Shadek

/s/ Thomas W. Grant President, Director 4/30/98
- --------------------------
Thomas W. Grant

/s/ James M. Shadek Treasurer 4/30/98
- --------------------------
James M. Shadek

/s/ Carl H. Doerge, Jr. Director 4/30/98
- --------------------------
Carl H. Doerge, Jr.

/s/ John L. Kidde Director 4/30/98
- --------------------------
John L. Kidde

/s/ Joy L. Liechty Director 4/30/98
- --------------------------
Joy L. Liechty

/s/ Nancy S. Taylor Director 4/30/98
- --------------------------
Nancy S. Taylor
</TABLE>

-5-

<PAGE> 81
PAX WORLD GROWTH FUND, INC.

Exhibit Index

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. Representation and Consent of Counsel.**

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.

18. Not Applicable.

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

<PAGE> 1
Exhibit 10

Rosner Bresler Goodman & Unterman, LLP
521 Fifth Avenue
New York, NY 10175

April 30, 1998

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Pax World Growth Fund, Inc.

Ladies and Gentlemen:

The undersigned has reviewed Post-Effective Amendment No. 1 to
Registration Statement No. 333-23549 of Pax World Growth Fund, Inc. on Form
N-1A and represents that such documentation, including the Prospectus, does not
contain disclosures which would render it ineligible to become effective
pursuant to paragraph (b) of Rule 485.

/s/ ROSNER BRESLER GOODMAN & UNTERMAN, LLP

<PAGE> 2
Rosner Bresler Goodman & Unterman, LLP
521 Fifth Avenue
New York, NY 10175

April 30, 1998
To the Shareholders and the Board of Directors
of Pax World Growth Fund, Inc.

Consent of Counsel

We consent to the use in Post-Effective Amendment No. 1 to Registration
Statement No. 333-23549 of Pax World Growth Fund, Inc. on Form N-1A of the
reference to us on the back page of the Prospectus and under the heading
"Adviser, Sub-Adviser" in the Statement of Additional Information.

/s/ ROSNER BRESLER GOODMAN & UNTERMAN, LLP

<PAGE> 1
Exhibit 11

Pannell Kerr Forster, P.C.
125 Summer Street
Boston, Ma 02110

Consent of Independent Auditors

To the Shareholders and the Board of Directors
of Pax World Growth Fund, Inc.:

We consent to the use in Post-Effective Amendment No. 1 to Registration
Statement No. 333-23549 of Pax World Growth Fund, Inc. on Form N-1A of our
report dated January 16, 1998, appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
reference to us on the back page of the Prospectus and under the heading
"Custodian, Transfer and Dividend Disbursing Agent and Independent Accountants"
in the Statement of Additional Information.

/s/ PANNELL KERR FORSTER P.C.

Boston, Massachusetts
April 27, 1998