PAX WORLD GROWTH FUND
SEMI-ANNUAL REPORT
----------------
PAX
WORLD
GROWTH
FUND
[Logo]
----------------
SEMI-ANNUAL
REPORT
June 30, 1999
- --------------------------------------------------------------------------------
PAX WORLD GROWTH FUND
A LOW-LOAD DIVERSIFIED GROWTH FUND
INVESTMENT ADVISER--
Pax World Management Corp.
222 State Street
Portsmouth, NH 03801-3853
TRANSFER AND DIVIDEND DISBURSING AGENT--
PFPC, Inc.
P.O. Box 8950
Wilmington, DE 19899-8950
GENERAL COUNSEL--
Bresler Goodman & Unterman, LLP
521 Fifth Avenue
New York, NY 10175
INDEPENDENT AUDITORS--
Pannell Kerr Forster PC
125 Summer Street
Boston, MA 02110-2326
- --------------------------------------------------------------------------------
-------------
PAX
WORLD
FUND
FAMILY
[Logo]
-------------
222 State Street
Portsmouth, NH 03801-3853
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
All Account Inquiries should be addressed to:
Pax World Fund Family
P.O. Box 8930
Wilmington, DE 19899
[Recycling Logo]
Printed in the USA on recycled paper
1
<PAGE>
Dear Pax World Growth Fund Shareholders:
The first half of 1999 saw reasonably good results and a nice increase in
our asset base. As of June 30, 1999, our shareholders had slightly less than
sixteen million dollars under management by the Pax World Growth Fund and our
year-to-date performance was a positive 7.91% (5.17% after deducting the 2.5%
front-end load) versus the S&P 400 MidCap return of 6.22%.
In the months ahead, we will continue to seek out quality companies that
have solid earnings viability and superior long-term prospects. At the same
time, we expect to find some new investment opportunities in companies that are
currently out of favor, including international companies, technology stocks and
Internet-related issues.
Over the past six months the Fund has seen an increase in the level of its
social activity. Anita Green, our Director of Social Research, has been an
active member of several groups that are working to broaden the impact of
socially responsible investing. To cite one example, the Pax World Fund Family
signed on with the Corporate Sunshine Group which lobbies for improved corporate
environmental reporting. Our participation in corporate dialogue is also
expected to increase, in keeping with the overall research activities of the Pax
World Fund Family.
The managers of the Pax World Growth Fund are ever mindful of the Fund's
socially responsible roots and will continue to follow and improve upon our
original guidelines.
Respectfully,
/s/Laurence A. Shadek /s/Thomas W. Grant
--------------------- ------------------
Laurence A. Shadek Thomas W. Grant
Chairman President
July 30, 1999
2
<PAGE>
ASSET ALLOCATION, JUNE 30, 1999
(PIE CHART)
U.S. Common Stocks - 68%
Cash & Equivalents - 22%
Foreign Common Stocks - 10%
SECURITY DIVERSIFICATION, JUNE 30, 1999
(PIE CHART)
Technology - 23%
Consumer - 19%
Money Markets - 15%
Telecommunications - 12%
Health Care - 11%
Financial - 7%
Energy - 4%
Industrial/Commercial - 2%
PORTFOLIO HIGHLIGHTS
SIX MONTHS ENDED 6/30/99
KEY STATISTICS
Change in NAV ($11.13
to $12.01).....................$0.88
12 Month Total Return*
(6/30/98 - 6/30/99)...........12.66%
6 Month Total Return*
(12/31/98 - 6/30/99)...........5.17%
Net Increase in Net Assets
Resulting from
Operations................$1,090,623
Total Net Assets.........$15,779,944
*Figures for the Pax World Growth Fund include the effects of the maximum 2.5%
sales charge.
TEN LARGEST STOCK HOLDINGS
PERCENT OF
COMPANY NET ASSETS
America Online Inc..............4.6%
Nextel Communications
Inc............................3.8%
Readers Digest
Association Inc................3.8%
Sprint Corp. (PCS Group)........3.6%
Sanmina Corp....................3.6%
AVT Corp. ......................3.6%
Telefonos de Mexico
"L"ADS.........................3.6%
GM Hughes Electronics ..........3.6%
MediaOne Group Inc..............3.5%
Symbol Technologies Inc.........3.5%
Total..........................37.2%
3
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
An Annual Meeting of the Shareholders of the Fund was held at 9:45 a.m. on
Thursday, June 10, 1999 at the State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA 02110. The matters voted upon and the number of votes cast
for, against or withheld, as well as the number of abstentions and broker
non-votes as to each matter, are as follows:
(A) to elect a Board of six Directors, each to hold office until the next
Annual Meeting of the Shareholders of the Fund or until a successor shall have
been chosen and shall have qualified:
Carl H. Doerge, Jr.
For: 670,226.882
Against: 14,089.905
Abstain: 0.000
Broker Non-Votes: 0.000
Thomas W. Grant
For: 670,418.959
Against: 13,897.828
Abstain: 0.000
Broker Non-Votes: 0.000
John L. Kidde
For: 666,226.651
Against: 18,090.136
Abstain: 0.000
Broker Non-Votes: 0.000
Joy L. Liechty
For: 671,831.841
Against: 12,484.946
Abstain: 0.000
Broker Non-Votes: 0.000
Laurence A. Shadek
For: 669,476.114
Against: 14,840.673
Abstain: 0.000
Broker Non-Votes: 0.000
Nancy S. Taylor
For: 670,367.828
Against: 13,948.959
Abstain: 0.000
Broker Non-Votes: 0.000
(constituting all of the members of the Board of Directors of the Fund);
(B) to ratify the selection by the Board of Directors of Pannell Kerr
Forster PC as the independent public accountants of the Fund for the year ending
December 31, 1999:
For: 650,093.724
Against: 2,977.030
Abstain: 31,246.033
Broker Non-Votes: 0.000
(C) to transact such other business as may properly come before such annual
meeting or any adjournment thereof:
For: 605,002.492
Against: 7,609.489
Abstain: 71,704.806
Broker Non-Votes: 0.000
4
<PAGE>
PAX WORLD GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED)
June 30, 1999
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS
<S> <C> <C> <C>
BIO-TECHNOLOGY
Amgen, Inc........................................ 7,500 $ 456,562
BioChem Pharmaceuticals, Inc...................... 10,000 187,500
-------------
644,062 4.1%
-------------
CONSUMER PRODUCTS AND SERVICES
Crestline Capital Corp............................ 15,000 252,187
Host Marriott Corp................................ 25,000 296,875
Koninklijke Philips Electronics, NV............... 4,600 464,025
MediaOne Group, Inc............................... 7,500 557,813
Reader's Digest Association, Inc.................. 15,000 596,250
Suiza Foods Corp.................................. 10,000 418,750
Sylvan Learning Systems, Inc...................... 15,000 407,812
-------------
2,993,712 19.0
-------------
DATA/NETWORK PRODUCTS AND SERVICES
America Online, Inc............................... 6,500 720,038
AVT Corp.......................................... 15,000 568,125
Juniper Networks, Inc............................. 500 74,500
Network Associates, Inc........................... 10,000 146,875
Newbridge Networks Corp........................... 10,000 287,500
-------------
1,797,038 11.4
-------------
ELECTRONIC SYSTEMS AND SERVICES
Robotic Vision Systems, Inc....................... 25,000 93,750
Sanmina Corp...................................... 7,500 569,062
Symbol Technologies, Inc.......................... 15,000 553,125
-------------
1,215,937 7.7
-------------
ENERGY
Baker Hughes, Inc................................. 15,000 502,500
EEX Corp.......................................... 10,000 69,375
--------------
571,875 3.6
-------------
FINANCIAL
H&R Block, Inc.................................... 10,000 500,000
Unum Corp......................................... 10,000 547,500
-------------
1,047,500 6.6
-------------
</TABLE>
5
<PAGE>
PAX WORLD GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED), CONTINUED
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS, continued
<S> <C> <C> <C>
HEALTH CARE
Sunrise Assisted Living, Inc...................... 15,000 $ 523,125 3.3%
------------
INDUSTRIAL - COMMERCIAL
Airborne Freight.................................. 15,000 415,313 2.6
-------------
MEDICAL DEVICES/PHARMACEUTICALS
INCYTE Pharmaceuticals, Inc....................... 10,000 264,375
Steris Corp....................................... 15,000 290,625
-------------
555,000 3.5
-------------
SATELLITE SYSTEMS
GM Hughes Electronics............................. 10,000 562,500 3.6
-------------
TELECOMMUNICATIONS
Nextel Communications, Inc........................ 12,000 602,250
Qwest Communications International, Inc.......... 7,500 247,969
Sprint Corp. (PCS Group).......................... 10,000 571,250
Telefonos de Mexico "L" ADS ...................... 7,000 565,688
-------------
1,987,157 12.6
------------- -------
TOTAL COMMON STOCKS 12,313,219 78.0
------------ -------
MONEY MARKET SHARES
Pax World Money Market Fund.......................... 2,384,479 2,384,479 15.1
------------ ------
TOTAL INVESTMENTS............................... 14,697,698 93.1
Cash, receivables and deferred costs less
liabilities....................................... 1,082,246 6.9
------------- -------
NET ASSETS...................................... $15,779,944 100.0%
------------- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
June 30, 1999
<TABLE>
<CAPTION>
ASSETS
Investments, at value - note A
<S> <C>
Common stocks (cost - $10,396,917)................................................. $12,313,219
Pax World Money Market Fund (cost - $2,384,479).................................... 2,384,479
-----------
14,697,698
Cash.................................................................................... 1,519,074
Receivables
Dividends and interest............................................................. 22,196
Reimbursement of expenses from Adviser............................................. 28,432
Organization costs - note A............................................................. 3,000
Deferred offering costs - note A........................................................ 25,288
Deferred registration fees - note A .................................................... 12,907
-----------
Total assets................................................................... 16,308,595
-----------
LIABILITIES
Payables
Investment securities purchased.................................................... 487,045
Organization costs, deferred offering costs and deferred registration fees
payable to Adviser - note A.................................................... 41,195
Accrued expenses........................................................................ 411
-----------
Total liabilities.............................................................. 528,651
-----------
Net assets (equivalent to $12.01 per share based on
1,314,309 shares of capital stock outstanding) - note E............... $15,779,944
-----------
Net asset value and redemption price per share
($15,779,944 / 1,314,309 shares outstanding).......................... $12.01
------
Offering price per share.................................................. $12.32
------
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
7
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
Investment income
<S> <C> <C>
Income - note A
Dividends
Pax World Money Market Fund.............................. $ 34,692
Other Investments........................................ 36,410
------------
Total income......................................... $ 71,102
Expenses
Investment advisory fee - note B.............................. 65,332
Distribution expenses - note D ............................... 42,786
Transfer agent fee............................................ 36,996
Registration fees - note A.................................... 29,077
Legal fees and related expenses - note B...................... 28,665
Audit fees.................................................... 25,733
Custodian fees - note F....................................... 22,781
Printing and postage.......................................... 14,803
Directors' fees and expenses - note B......................... 9,324
Amortization of organizational costs, deferred offering
costs and deferred registration fees - note A............ 6,866
Other......................................................... 4,588
-----------
Total expenses........................................... 286,951
Less: Fees paid indirectly - note F...................... (4,796)
Expenses assumed by Adviser - notes B
and G.......................................... (178,458)
-----------
Net expenses....................................... 103,697
-----------
Investment (loss), net................................... (32,595)
-----------
Realized and unrealized gain on investments - note C
Net realized gain on investments.................................. 468,662
Unrealized appreciation of investments for the period ................. 654,556
-----------
Net gain on investments.................................. 1,123,218
-----------
Net increase in net assets resulting from operations..... $ 1,090,623
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year Ended
Ended December 31,
June 30, 1999 1998
------------- ----
(Unaudited)
<S> <C> <C>
Increase in net assets
Operations
Investment (loss), net .................... $ (32,595) $ (49,159)
Net realized gain on investments .......... 468,662 192
Change in unrealized appreciation
of investments for the period ........ 654,556 1,481,290
------------ ------------
Net increase in net assets
resulting from operations ........ 1,090,623 1,432,323
Capital share transactions - note E ........... 2,317,230 6,334,540
------------ ------------
Net increase in net assets ........... 3,407,853 7,766,863
Net assets
Beginning of period ........................... 12,372,091 4,605,228
------------ ------------
End of period (including accumulated
investment loss, net: $88,067 and
$55,472, respectively) .................... $ 15,779,944 $ 12,372,091
------------ ------------
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
9
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1999
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 producing goods
and services that improve the quality of life and that are not, to any degree,
engaged in manufacturing defense or weapons-related products. 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. Shares in money market funds are valued
at $1 per share.
INVESTMENT TRANSACTIONS
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses are determined on the identified cost
basis, which is also used for Federal income tax purposes.
INVESTMENT INCOME
Dividend income is recognized on the ex-dividend date. Interest income is
recognized on the accrual basis.
ORGANIZATION COSTS
Costs incurred in connection with the organization of the Fund ($5,000)
were paid by the Adviser. These costs were capitalized and are being amortized
on a straight-line basis over 60 months from July 9, 1997, the date investment
operations commenced; a corresponding payable to the Adviser was recorded by the
Fund. The costs will be repaid to the Adviser in accordance with the
amortization schedule. Amortization expense of $500 for the six months ended
June 30, 1999, is included on the statement of operations. Reference is made to
note G.
10
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
DEFERRED OFFERING COSTS
Costs incurred in connection with the initial offering of the Fund's shares
($42,148) were paid by the Adviser. These costs were capitalized by the Fund and
are being amortized on a straight-line basis over 60 months from July 9, 1997,
the date investment operations commenced; a corresponding payable to the Adviser
was recorded by the Fund. These costs will be repaid to the Adviser in
accordance with the amortization schedule. Amortization expense of $4,215 for
the six months ended June 30, 1999, is included on the statement of operations.
Reference is made to note G.
DEFERRED REGISTRATION FEES
Initial state registration fees were paid 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 capitalized by the Fund and is
being amortized on a straight-line basis over 60 months from July 9, 1997, the
date investment operations commenced; a corresponding payable to the Adviser was
recorded by the Fund. These costs will be repaid to the Adviser in accordance
with the amortization schedule. Amortization expense of $2,151 for the six
months ended June 30, 1999, is included on the statement of operations.
Reference is made to note G.
All recurring, annual fees are 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. There were no
repurchase agreements outstanding at June 30, 1999.
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
Distributions to shareholders, if any, are recorded by the Fund on the
ex-dividend dates. There were no distributions made in 1998 because (1) there
was a net investment loss for 1998 and (2) the net capital gain for 1998 was
$192.
11
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), 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.
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 and
director of the Adviser. Two other officers of the Fund, who are not directors
of the Fund, are also officers 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 and
distribution 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 $143,015 and $286,966,
respectively, for such services for the six months ended June 30, 1999 and the
year ended December 31, 1998. Additionally, the Adviser assumed, on a voluntary
basis, expenses of $35,443 and $41,381, respectively, for the six months ended
June 30, 1999 and the year ended December 31, 1998. 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.
12
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
All Directors are paid by the Fund for attendance at directors' meetings.
During the six months ended June 30, 1999, the Fund incurred legal fees and
related expenses of $28,665 with Bresler Goodman & Unterman, LLP, general
counsel for the Fund. Mr. Lee Unterman, a partner with that firm, 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 six months ended June 30,
1999 and the year ended December 31, 1998 totaled $9,367 and $20,799,
respectively (30.8% and 31.1% of total commissions for the respective periods).
At the June 11, 1998 Annual Meeting, shareholders approved changes to the
Fund's investment policies to permit the Fund to invest in the Pax World Money
Market Fund, which is also managed by the Adviser.
NOTE C - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of investments, excluding short-term
investments, aggregated $6,921,066 and $5,891,591, respectively, for the six
months ended June 30, 1999. 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 six months ended June 30, 1999, would have been
approximately the same.
For Federal income tax purposes, the identified cost of investments owned
at June 30, 1999 was $12,781,396. Gross unrealized appreciation and depreciation
of investments aggregated $2,786,186 and $869,884, respectively, at June 30,
1999, resulting in net unrealized appreciation of $1,916,302.
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.
13
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
NOTE E - CAPITAL AND RELATED TRANSACTIONS
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
------------- -----------------
Shares Dollars Shares Dollars
---------------------- -----------------------
(Unaudited)
<S> <C> <C> <C> <C>
Shares sold......................... 290,079 $ 3,313,509 772,823 $ 7,699,550
Shares redeemed..................... (87,541) (996,279) (137,836) (1,365,010)
--------- ----------- --------- ------------
Net increase ....................... 202,538 $ 2,317,230 634,987 $ 6,334,540
-------- ----------- --------- ------------
</TABLE>
<TABLE>
<CAPTION>
The components of net assets at June 30, 1999 (unaudited), are as follows:
<S> <C>
Paid-in capital (25,000,000 shares of $1 par value authorized)................. $13,482,810
Accumulated net investment (loss).............................................. (88,067)
Undistributed capital gains.................................................... 468,899
Net unrealized appreciation of investments..................................... 1,916,302
-----------
Net assets............................................................ $15,779,944
-----------
</TABLE>
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.
14
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
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>
<CAPTION>
<S> <C>
Expenses assumed by the Adviser in accordance with the Advisory Agreement,
including amortization of the organization costs for the period ($500)............. $143,015
Expenses assumed by the Adviser on a voluntary basis
Recurring registration fees........................................................ 29,077
Amortization of deferred offering costs............................................ 4,215
Amortization of deferred registration fees......................................... 2,151
--------
Total expenses assumed by Adviser.................................................. $178,458
--------
</TABLE>
The expenses assumed on a voluntary basis had the effect of reducing the
ratio of net expenses (after subtracting the expenses assumed by the Adviser in
accordance with the Advisory Agreement) to average net assets from 2.02% to
1.50% for the six months ended June 30, 1999. (The ratio of total expenses to
average net assets which is required disclosure in the financial highlights is
based upon total expenses for the year after subtracting the expenses assumed by
the Adviser but before the reduction of custodian fees for the income earned
pursuant to an expense offset arrangement. This ratio is 1.57% for the six
months ended June 30, 1999.)
Reference is made to notes A and B.
NOTE H - YEAR 2000 (Unaudited)
State Street Bank and Trust Company (the custodian), PFPC Inc. (the
transfer agent) and the Adviser all currently use a wide variety of computer
programs and devices which represent the calendar year portion of dates by their
last two digits. These programs and devices are critical to the Fund's
operations. Calculations performed with these truncated date fields may not work
properly with dates from 2000 and beyond.
These entities are in the process of executing detailed plans to modify or
replace significant applications as necessary to ensure Year 2000 compliance.
All necessary systems modifications and testing are expected to be completed by
fall 1999. The Fund does not expect to incur any costs relating to the year 2000
conversion.
15
<PAGE>
PAX WORLD GROWTH FUND, INC. - FINANCIAL HIGHLIGHTS
The following per share data, ratios and supplemental data 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 IN NET ASSET VALUE
(BASED UPON AVERAGE NUMBER OF SHARES OUTSTANDING).
<TABLE>
<CAPTION>
Period June 9, 1997
(The Date Operations
Six Months Ended Year Ended Commenced) to
June 30, 1999 December 31, 1998 December 31, 1997
-------------- ----------------- ------------------
(Unaudited)
<S> <C> <C> <C>
Net asset value, beginning
of period........................ $11.13 $ 9.66 $10.00
------ ------ ------
Gain (loss) from investment
operations
Investment (loss), net............ (.02) (.04) (.01)
Realized and unrealized gain
(loss) on investments, net....... .90 1.51 (.33)
----- ---- ----
Gain (loss) from investment
operations....................... .88 1.47 (.34)
----- ---- ----
Net asset value, end of period....... $12.01 $11.13 $ 9.66
------ ------ ------
2. TOTAL RETURN ....................... 7.91% 15.22% (3.40)%
3. RATIOS AND SUPPLEMENTAL DATA
Ratio of total expenses to average
net assets (A)(B).................. 1.57% 1.62% 1.49%
Ratio of investment (loss), net, to
average net assets (A)............. (.47)% (.61)% (.56)%
Portfolio turnover rate............. 56.81% 96.72% 50.79%
Net assets, end of period ('000s)... $15,780 $12,372 $ 4,605
Number of capital shares
outstanding, end of period ('000s) 1,314 1,112 477
</TABLE>
(A) These ratios have been annualized for the six months ended June 30, 1999
and the period ended December 31, 1997.
(B) Total expenses, net of expenses assumed by the Adviser.
