1997 ANNUAL
REPORT
-------
P A X
-------
WORLD
-------
GROWTH
-------
FUND
-------
[Graphic Omitted]
ANNUAL
REPORT
DECEMBER 31, 1997
<PAGE>
Dear Pax World Growth Fund Shareholder:
Since its inception last June, the Pax World Growth Fund has experienced
an impressive inflow of assets. We are honored that so many of you have
demonstrated your faith in the potential of our new fund during a time that can
only be described as unsettled. In recognition of the concerns many of you may
be feeling at this time, we want to share our thoughts about the Fund's first
six months and the market environment that it faces going forward.
The Dow Jones Industrial Average hit an all-time high during the day of
August 5, 1997, then, like a roller-coaster, plunged 7.3% in its worst monthly
fall in seven years. It started September with a record 257-point climb but
dropped 550 points during a harrowing October, as profit taking, nervousness
associated with the tenth anniversary of "The Crash," and troubles in the Asian
economies rattled traders' nerves. The market continued its dizzying ride into
November, then began a recovery which has continued to this day, though not
without fits of volatility along the way.
Because the Fund emphasizes long-term growth, it invests in fast-growing
sectors of the economy, including technology, and it seeks smaller companies
whose potential for growth may be greater than that of more-established firms.
The developments in Asia had their greatest impact on such companies, and the
Fund's performance during the latter part of 1997 reflected this impact.
Looking ahead, we firmly believe that the market's recent worries creates
opportunities for the Fund. In technology, consumer products, and
energy/environmental services in particular, we are finding companies whose
price-earnings multiples are now below the S&P 500's average but whose earnings
growth for at least the next few years may be twice the average. With a steady
eye on the long-term goals of the Fund and its investors, we will continue to
seek such companies for our portfolio.
If you wish to track the Fund, it is listed in the newspapers as
PAXWldGro. The ticker symbol is PXWGX. The share price is also available 24
hours a day through our website at www.paxfund.com or the automated phone system
at 800-372-7827.
Again, we appreciate the trust and confidence you have exhibited by
investing with us, and we look forward to the challenges and opportunities that
lie ahead.
Sincerely yours,
/s/ Laurence A. Shadek /s/ Thomas W. Grant
Laurence A. Shadek Thomas W. Grant
Chairman President
January 20, 1998
<PAGE>
QUESTIONS AND ANSWERS - Robert P. Colin, Portfolio Manager
- --------------------------------------------------------------------------------
Q. What factors affected Pax World Growth Fund's performance during the past
year?
A. Pax World Growth Fund experienced a decline of 3.4% for the 5 1/2 months
since the Fund began trading in mid-1997 for the following reasons:
A) Being a new fund, we did not accumulate sufficient capital for
investment purposes until July, 1997. The all-time intra-day high
for the Dow Jones Industrial Average occurred on August 7th, which
was followed by the biggest point decline ever recorded on October
27th.
B) As a "growth" fund, the Fund began the investment process with a 25%
(of assets) weighting in small-to-medium capitalization technology
issues. The October-November market decline, which was exacerbated
by the financial crises throughout Asia, exacted a heavy toll on
technology stocks during that period.
C) However, the Fund's net asset value rose in the final month of the
year, despite investors' continued selling -- for tax loss reasons
-- in the technology sector.
Q. What was your investment strategy during the period under review?
A. The rationale for adding a growth fund to the Pax World Fund Family was to
provide existing, as well as new, shareholders with an opportunity to
participate in many of the dynamic growth sectors of the U.S. economy as
well as in other economies around the world. Although some of these
sectors, notably technology, experienced negative returns during the third
and fourth quarters of 1997, we continue to believe that a portion of
individual and family investment assets should be positioned in what are
generally recognized to be "growth" companies.
Q. Would you give us some examples of the stocks purchased by Pax World
Growth Fund?
A. Our five largest positions at this very early stage of development were:
1. Network Associates Inc. - network management (anti-virus) software
2. Sony Corp. ADR - world leader in consumer electronics
3. Genentech Inc.- a major biotechnology company
4. ACNielsen Corp. - consumer market research
5. Reading & Bates Corp. - energy services
As the name implies, Pax World Growth Fund will be seeking not just U.S.
growth stocks, but investments in leading global entities as well. Sony Corp., a
world leader in consumer electronics (which incidentally trades on the NYSE), is
one example of the equity investment opportunities available to investors in Pax
World Growth Fund.
2
<PAGE>
- --------------------------------------------------------------------------------
Security Diversification, 12/31/97
- --------------------------------------------------------------------------------
[The following information was represented as a pie chart in the printed
material.]
Technology 24%
Health Care 17%
Consumer Products 15%
Energy 12%
Telecommunications 7%
Industrial 7%
Financial 4%
- --------------------------------------------------------------------------------
Ten Largest Stock Holdings, 12/31/97
- --------------------------------------------------------------------------------
Percent of
Company Net Assets
Network Associates Inc........4.6%
Sony Corp. ADR................4.1%
Genentech Inc.................4.0%
ACNielsen Corp................3.7%
Reading & Bates Corp..........3.6%
AirTouch Communications Inc...3.6%
Hospitality Properties Trust..3.6%
Cable & Wireless
Communications ADR...........3.6%
Genesis Health Ventures Inc...3.4%
Host Marriott Corp............3.4%
- ----------------------------------
Total........................37.6%
- --------------------------------------------------------------------------------
Asset Allocation, 12/31/97
- --------------------------------------------------------------------------------
[The following information was represented as a pie chart in the printed
material.]
Common Stocks 87%
Cash & Equivalents 13%
3
<PAGE>
PAX WORLD GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 1997
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
- --------------------------------------------------------------------------------
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. ADR.................... 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
----------
4
<PAGE>
PAX WORLD GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS, continued
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
- --------------------------------------------------------------------------------
COMMON STOCKS, continued
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
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%
---------- -------
See notes to financial statements.
5
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
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
-----------
See notes to financial statements.
6
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF OPERATIONS
Period March 12, 1997 (the date of incorporation) to December 31, 1997
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)
---------
See notes to financial statements.
7
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Period March 12, 1997 (the date of incorporation) to December 31, 1997
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
----------
See notes to financial statements.
8
<PAGE>
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 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),
9
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, continued
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.
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.
10
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, continued
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 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.
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. The Sub-Adviser is
compensated by the Adviser without reimbursement from the Fund.
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).
11
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, continued
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.
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:
Shares Dollars
-------- ----------
Shares sold................................... 482,291 $4,885,876
Shares redeemed............................... (5,507) (54,836)
-------- ----------
Net increase.................................. 476,784 $4,831,040
--------- ----------
12
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, continued
The components of net assets at December 31, 1997 are as follows:
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
----------
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:
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
--------
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.
13
<PAGE>
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)
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
14
<PAGE>
[LETTERHEAD OF PANNELL KERR FORSTER PC]
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
15
<PAGE>
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:
1-800-372-7827
For Broker Services:
1-800-635-1404
Transfer and Disbursing Agent-
PFPC, Inc.
Attn: Pax World Growth Fund
P.O. Box 8950
Wilmington, DE 19899-8950
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 02110-2326
Investment Adviser-
Pax World Management Corp.
222 State Street
Portsmouth, NH 03801-3853
1-800-767-1729
All Account Inquiries should be addressed to:
Pax World Growth Fund, Inc.
P.O. Box 8930
Wilmington, DE 19899-8930
Printed in the USA on recycled paper [RECYCLE LOGO]
