Supplement dated April 28, 2000
to the
Prospectus dated May 21, 1999
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
The following information supplements and supersedes any contrary
information contained in the Prospectus of Pax World Growth Fund, Inc. (the
"Fund") dated May 21, 1999, and together with such 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 an Amendment dated the date hereof
which supplements and supersedes any contrary information contained in the
Statement of Additional Information of the Fund dated May 21, 1999, 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, telephone number or website 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.
* At the direction of the Board of Directors of the Fund, the Fund
waived initial sales charges imposed on shares of the Fund purchased on and
after November 1, 1999 and the Fund will continue to waive such initial sales
charges until otherwise directed by the Board of Directors of the Fund.
<PAGE>
RISK / RETURN SUMMARY
The information set forth in the bar chart and table below provides
some indication of the risks of investing in the Fund by showing changes in the
Fund's performance from period to period and by showing how the Fund's average
annual returns for the year 1999 and period 6-11-97 to 12-31-99 compare with the
Russell Midcap Index, a broad measure of market performance. Past performance is
not necessarily an indication of how the Fund will perform in the future.
[RISK / RETURN BAR CHART]*
-3.4% 15.22% 28.30%
6-11-97 to 12-31-97 1998 1999
(cumulative)
HIGHEST & LOWEST RETURN QUARTER - SINCE INCEPTION*
4th quarter 1998: 25.76%
3rd quarter 1998: -14.82%
*The Fund's front-end sales load is not reflected in the bar chart and
return quarter table above. If this amount were reflected, returns would be less
than those shown. At the direction of the Board of Directors of the Fund, the
Fund waived initial sales charges imposed on shares of the Fund purchased on and
after November 1, 1999 and the Fund will continue to waive such initial sales
charges until otherwise directed by the fund the Board of Directors of the Fund.
Total return for the period 6-11-97 to 12-31-97 is not annualized.
RISK/RETURN TABLE, AS OF 12/31/99**
PAX WORLD GROWTH FUND RUSSELL MIDCAP INDEX
1 year 25.04% 18.23%
6-11-97 to 12-31-99 13.83% 16.89%
**The 2.5% front-end sales load is deducted from the Fund's return
figures in the Risk/Return Table above. At the direction of the Board of
Directors of the Fund, the Fund waived initial sales charges imposed on shares
of the Fund purchased on and after November 1, 1999 and the Fund will continue
to waive such initial sales charges until otherwise directed by the Board of
Directors of the Fund.
2
<PAGE>
RISK / RETURN SUMMARY: FEE TABLE
This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)(1):
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price).................2.5%(2)
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or
redemption proceeds, as applicable)......................0%
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends and Other Distributions
(as a percentage of offering price)......................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 (AS A PERCENTAGE OF AVERAGE NET
ASSETS) AS OF DECEMBER 31, 1999 (expenses that are deducted from Fund
assets)(3):
Management Fee..................................................0.00%
Distribution and/or Service (12b-1) Fees........................0.25%
Other Expenses..................................................0.33%
Total Annual Fund Net Operating Expenses(3)..............................1.58%
(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) At the direction of the Board of Directors of the Fund, the
Fund waived initial sales charges imposed on shares of the
Fund purchased on and after November 1, 1999 and the Fund will
continue to waive such initial sales charges until otherwise
directed by the Board of Directors of the Fund.
(3) Total expenses, net of expenses assumed by the Adviser.
EXAMPLE
This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
3
<PAGE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$158 $490 $845 $1,840
As noted in the table, the Fund does not charge any redemption fee. You
would, therefore, pay the same expenses if you did not redeem your shares.
In addition, the Fund does not charge sales fees (loads) on reinvested
dividends and other distributions and, therefore, the Example does not reflect
sales charges (loads) on reinvested dividends and other distributions.
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. "Other Expenses" include 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 amounts
incurred for the year ended December 31, 1999.
FINANCIAL HIGHLIGHTS
The following Financial Highlights Table is intended to help you
understand the Fund's financial performance for the past 2 years and the period
June 9, 1997 (the date operations commenced) to December 31, 1997. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate an investor would have earned (or lost)
on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Pannell Kerr Forster PC,
whose report, along with the Fund's financial statements, are included 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 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>
YEAR ENDED DECEMBER 31 Period June 9, 1997
----------------------- (the date operations
1999 1998 commenced) to
---- ---- December 31, 1999
-------------------
<S> <C> <C> <C>
Net asset value, beginning of year ........... $11.13 $9.66 $10.00
-------- -------- -------
Gain (loss) from investment operations
Investment (loss) - net ............. (.02) (.04) (.01)
Net realized and unrealized gain
(loss) on investments ...... 3.17 1.51 (.33)
-------- -------- -------
Gain (loss) from investment operations ....... 3.15 1.47 (.34)
-------- -------- -------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net asset value, end of period ............... $14.28 $11.13 $9.66
-------- -------- -------
2. TOTAL RETURN ............................. 28.30% 15.22% (3.40)%
3. RATIOS AND SUPPLEMENTAL DATA
Ratio of total expenses to average
net assets (A)(B) .......... 1.58% 1.62% 1.49%
Ratio of investment (loss) - net, to
average net assets (A) ..... (.29)% (.61)% (.56)%
Portfolio turnover rate ............. 76.40% 96.72% 50.79%
Net assets, end of period ('000s) ... $22,068 $12,372 $4,605
Number of capital shares outstanding,
end of period ('000s) ...... 1,546 1,112 477
</TABLE>
(A) These ratios for the period ended December 31, 1997 have
been annualized.
(B) This ratio is based upon total expenses, including the gross
amount of custodian fees (before being reduced pursuant to an
expense offset arrangement), net of expenses assumed by the
Adviser.
ADVISER
Pax World Management Corp., 222 State Street, Portsmouth, NH 03801-3853
(the "Adviser") is the adviser to the Fund. As of December 31, 1999, the Adviser
had over $1,130,000,000 in assets under management by virtue of serving as the
adviser to Pax World Fund, Incorporated ("Pax World Fund"), the Fund, Pax World
High Yield Fund, Inc. ("Pax World High Yield Fund") and 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"). The Adviser has no clients other than the Fund, the
Pax World Growth Fund, the Pax World High Yield Fund and the Pax World Money
Market Fund.
The aggregate fees incurred by the Fund and payable to the Adviser for
the most recent fiscal year was $148,487, although all of such fees were assumed
by 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 one and one-half
percent (1.5%) of the average daily net assets of the Fund per annum. The
Adviser was required to supply and assume a total of $315,025 for such services
for the most recent fiscal year.
Pursuant to the terms of a Sub-Advisory Agreement between the Adviser
and H.G. Wellington & Co., Inc., the Fund's sub-adviser (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
5
<PAGE>
data relevant to the Fund. Although the Adviser did not pay any fees to the
Sub-Adviser for the most recent fiscal year, the aggregate amount of accrued but
unpaid fees to the Sub-Adviser for the most recent fiscal year was $51,720.
DISTRIBUTION
The Fund maintains a distribution expense plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, that allows the
Fund to pay distribution and other fees for the sale and distribution of the
Fund's shares and for services provided to the Fund's shareholders. Amounts
incurred by the Fund under the plan for clerical, advertising, printing, postage
and sales expenses (travel, telephone and sales literature) for the most recent
fiscal year totaled approximately $149,537, of which $83,651 was assumed by the
Adviser leaving a net of $65,886 which was paid by the Fund.
SHAREHOLDER GUIDE
IN GENERAL; HOW TO PURCHASE SHARES; 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, the Pax World High Yield Fund
or the Pax World Money Market Fund or the reinvestment of dividends and
distributions. In addition, and at the direction of the Board of Directors of
the Fund, the Fund waived initial sales charges imposed on shares of the Fund
purchased on and after November 1, 1999 and the Fund will continue to waive such
initial sales charges until otherwise directed by the Board of Directors of the
Fund.
HOW TO EXCHANGE YOUR SHARES
As a shareholder of the Fund, you may exchange your shares of the Fund
for shares of the Pax World Fund, the Pax World High Yield 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 and any gain on such
transaction may be subject to federal income tax. 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. It is contemplated that this exchange
privilege will be applicable to each new Pax World mutual fund.
6
<PAGE>
Supplement dated April 28, 2000
to the
Statement of Additional Information dated May 21, 1999
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
The following information supplements and supersedes any contrary
information contained in the Statement of Additional Information of the Pax
World Growth Fund, Inc. (the "Fund") dated May 21, 1999, is not a prospectus,
and should be read in conjunction with the Fund's Prospectus dated May 21, 1999,
as amended, 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.
* At the direction of the Board of Directors of the Fund, the Fund
waived initial sales charges imposed on shares of the Fund purchased on and
after November 1, 1999 and the Fund will continue to waive such initial sales
charges until otherwise directed by the Board of Directors of the Fund.
7
<PAGE>
MANAGEMENT OF THE FUND
The following table reflects the name and address, position held with
the Fund and principal occupation during the past five (5) years for those
persons who are the officers and directors of the Fund.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name and Address Position with the Fund Principal Occupation During the Past 5 Years
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Carl H. Doerge, Jr. Director (since 1997) Mr. Doerge has been a private investor since
867 Remsen Lane 1995. Prior to that, Mr. Doerge was an Executive
Oyster Bay, NY 11771***; (61) Vice President and Managing Director of Smith
Barney for approximately twenty-four years. Mr.
Doerge is also a member of the Board of Directors
of Pax World Fund, Incorporated and Pax World High
Yield Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Thomas W. Grant Vice Chairman of the Mr. Grant is the President of the Fund, as well as
14 Wall Street Board of Directors and the Vice Chairman of the Board and President of
New York, NY 10005*/**; (58) President (since 1997) Pax World Fund, Incorporated, the President of Pax
World High Yield Fund, Inc., the President of Pax
World Money Market Fund, Inc., the President of
Pax World Management Corp., and the President of
H.G. Wellington & Co., Inc. Mr. Grant has been
associated with H. G. Wellington & Co., Inc. since
1991 and 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. Grant is a graduate of the
University of North Carolina (BA). Mr. Grant is
also a member of the Board of Directors of Pax
World Fund, Incorporated and Pax World High Yield
Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Anita D. Green Assistant Treasurer Ms. Green is the Manager-Shareholder Services for
c/o Pax World Management Corp. (since 1997) the Pax World Fund Family and Pax World
222 State Street Management Corp. (1990-present). Ms. Green is
Portsmouth, NH 03801-3853; (35) also Co-Treasurer of Pax World Management Corp.
(1998-present) and Pax World Fund, Incorporated
(1998-present) and Assistant Treasurer of the Fund
(1997-present) and Pax World High Yield Fund, Inc.
(1999-present).
- ---------------------------------------------------------------------------------------------------------------------
Michelle L. Guilmette Assistant Secretary Ms. Guilmette is the Dealer Representative for the
c/o Pax World Management Corp. (since 1999) Pax World Fund Family and Pax World Management
222 State Street Corp. (1999-present) and was a Shareholder
Portsmouth, NH 03801-3853; (26) Services Representative for the Pax World Fund
Family and Pax World Management Corp. from 1992 to
1999. Ms. Guilmette is also Assistant Treasurer
(1997-present) and Assistant Secretary (1999-present)
of Pax World Fund, Incorporated, the Fund
(1999-present) and Pax World High Yield Fund, Inc.
(2000-present).
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John L. Kidde Director (since 1997) Mr. Kidde is the President of KDM Development
c/o KDM Development Corporation Corporation and has been associated with that
209 Cooper Avenue, Suite 5-D company since 1988. Mr. Kidde is also a member of
Upper Montclair, NJ 07043; (65) the Board of Directors of Pax World High Yield
Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Joy L. Liechty Director (since 1997) Ms. Liechty is a Client and Sales Advocate with
1403 Ashton Court the Mennonite Mutual Aid Association in Goshen,
Goshen, IN 46526; (46) Indiana. Ms. Liechty has been associated with
that organization since 1980, serving as the
Manager of Client Services from 1980 to 1989. Ms.
Liechty is also a member of the Board of Directors
of Pax World Fund, Incorporated.
- ---------------------------------------------------------------------------------------------------------------------
James M. Shadek Treasurer (since 1997) Mr. Shadek is an Account Executive at H. G.
14 Wall Street Wellington & Co., Inc. (1986-present) and Senior
New York, NY 10005*; (47) Vice President for Social Research at Pax World
Management Corp. (1996-present). Mr. Shadek is
also Treasurer of the Fund (1997-present) and Pax
World High Yield Fund, Inc. (1999-present).
- ---------------------------------------------------------------------------------------------------------------------
Laurence A. Shadek Chairman of the Board Mr. Shadek is the Chairman of the Board of
14 Wall Street of Directors (since Directors of the Fund, as well as the Chairman of
New York, NY 10005*/**; (50) 1997) the Board of Pax World Fund, Incorporated, the
Chairman of the Board of Pax World High Yield
Fund, Inc., an Executive Vice President of Pax
World Money Market Fund, Inc., the Chairman of the
Board of Pax World Management Corp. and an
Executive Vice-President of H. G. Wellington &
Co., Inc. Mr. Shadek, together with members of
his family, owns all of the outstanding shares of
capital stock of Pax World Management Corp. and a
26.67% interest in H.G. Wellington & Co., Inc.
Mr. Shadek has been associated with H. G.
Wellington & Co., Inc. since March 1986 and 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. Mr. Shadek is a graduate of
Franklin & Marshall College (BA) and New York
University, School of Graduate Business
Administration (MBA). Mr. Shadek is also a member
of the Board of Directors of Pax World Fund,
Incorporated and Pax World High Yield Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Sanford C. Sherman Director (since 1999) Mr. Sherman is the Chief Executive Officer, and
91 Hillside Drive until December 31, 1999 was the President, of the
Portsmouth, NH 03801***; (63) Piscataqua Savings Bank, Portsmouth, NH -
positions he has held since April 1981. For 21
years prior thereto, Mr. Sherman held various
other positions with the bank, including Vice
President and Treasurer. Mr. Sherman also served
the bank as a Trustee for 20 years. Mr. Sherman
is also a member of the Board of Directors of Pax
World Fund, Incorporated.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janet Lawton Spates Assistant Treasurer Ms. Spates serves as Operations Manager for the
c/o Pax World Management Corp. (since 1997) Pax World Fund Family and Pax World Management
222 State Street Corp. (1992-present). Ms. Spates is also
Portsmouth, NH 03801-3853; (30) Co-Treasurer of Pax World Management Corp.
(1998-present) and Pax World Fund, Incorporated
(1998-present) and Assistant Treasurer of the Fund
(1997-present) and Pax World High Yield Fund, Inc.
(1999-present).
- ---------------------------------------------------------------------------------------------------------------------
Nancy S. Taylor Director (since 1997) Ms. Taylor is a Senior Minister with the First
5298 N. Riffle Way Congregational Church in Boise, Idaho and has been
Boise, ID 83703; (44) associated with that organization since 1992.
Prior to that, Ms. Taylor was an Associate
Minister with the Immanuel Congregational Church
in Hartford, Connecticut for approximately five
years. Ms. Taylor is also a member of the Board
of Directors of Pax World Fund, Incorporated.
- ---------------------------------------------------------------------------------------------------------------------
Lee D. Unterman Secretary (since 1997) Mr. Unterman serves as Secretary of Pax World
c/o Bresler Goodman & Unterman, LLP Fund, Incorporated (1997-present), the Fund
521 Fifth Avenue (1997-present) and Pax World High Yield Fund, Inc.
New York, NY 10175; (49) (1999-present). Mr. Unterman is a partner at the
law firm of Bresler Goodman & Unterman, LLP, New
York, NY (1997-present) and was a partner at the
law firm of Broudy & Jacobson, New York, NY
(1988-1997).
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Designates an "Interested" officer or director, as defined in the
Investment Company Act of 1940, as amended, by reason of his or her
affiliation with the Adviser.
** Designates a member of the Investment Committee. The Investment
Committee has the responsibility of overseeing the investments of the
Fund.
*** Designates a member of the Audit Committee. 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.
To the knowledge of the Fund, no person owns beneficially five percent
(5%) or more of the outstanding Common Stock of the Fund. All officers and
directors as a group own less than one percent (1%) of the outstanding Common
Stock of the Fund.
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. In addition,
the Fund pays $500.00 to each member of the Audit Committee for attendance at
each meeting of the Audit Committee, plus reimbursement for travel expenses
incurred in connection with attending such meetings. Other than the foregoing
amounts, none of the members of the Board of Directors of the Fund receives
compensation from the Fund for services performed as members of the Board of
Directors of the Fund. Director's fees paid by Pax World Fund, Incorporated
("Pax World Fund"), the Fund, Pax World High Yield Fund, Inc. ("Pax World High
Yield Fund") and 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 ("Pax World Money Market Fund") in 1999 and travel
expenses reimbursed by the Pax World Fund, the Fund, the Pax World High Yield
Fund and the Pax World Money Market Fund in 1999 to members of the Board of
Directors are as follows:
10
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Pax World Fund, Pax World Growth Pax World High Pax World Money
Incorporated Fund, Inc. Yield Fund, Inc. Market Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mr. Carl H. Doerge, Jr. $5,327.00 $4,380.00 $0.00 Not Applicable
- ---------------------------------------------------------------------------------------------------------------------
Mr. Thomas W. Grant $2,136.00 $1,278.00 $0.00 Not Applicable
- ---------------------------------------------------------------------------------------------------------------------
Mr. John L. Kidde Not Applicable $4,378.00 $0.00 Not Applicable
- ---------------------------------------------------------------------------------------------------------------------
Ms. Joy L. Liechty $5,014.00 $3,224.00 Not Applicable Not Applicable
- ---------------------------------------------------------------------------------------------------------------------
Mr. Laurence A. Shadek $2,136.00 $1,278.00 $0.00 Not Applicable
- ---------------------------------------------------------------------------------------------------------------------
Mr. Sanford C. Sherman $5,120.00 $2,557.00 Not Applicable Not Applicable
- ---------------------------------------------------------------------------------------------------------------------
Ms. Nancy S. Taylor $5,995.00 $3,333.00 Not Applicable Not Applicable
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
Pax World Management Corp., 222 State Street, Portsmouth, NH 03801-3853
(the "Adviser") is the adviser to the Fund. 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, 1999, the Adviser had over $1,130,000,000 in assets under
management by virtue of serving as the adviser to the Pax World Fund, the Fund,
the Pax World High Yield Fund and the Pax World Money Market Fund. The Adviser
has no clients other than the Pax World Fund, the Fund, the Pax World High Yield
Fund and the Pax World Money Market Fund, but may undertake to advise other
clients in the future.
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 one and one-half
percent (1.5%) of the average daily net assets of the Fund per annum. The
Adviser was required to supply and assume a total of $315,025 for such services
for the most recent fiscal year.
The Advisory Agreement was approved by the Board of Directors of the
Fund, 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 10, 1999.
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. 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.
11
<PAGE>
The following table shows the approximate amount of the advisory and
sub-advisory fees for the period commencing on June 9, 1997 (the date operations
commenced) and ending on December 31, 1997 and for the years ended December 31,
1998 and 1999:
<TABLE>
<CAPTION>
Approximate Approximate
Amount of Amount of
Advisory Fees Sub-Advisory Fees
------------- ----------------------
<S> <C> <C>
Period commencing June 9, 1997
(the date operations commenced) $12,500.00 $14,583.00
to December 31, 1997
Year ended December 31, 1998: $69,558.00 $27,591.00
Year ended December 31, 1999: $148,487.00 $51,720.00
</TABLE>
DISTRIBUTION
The Fund maintains a distribution expense plan (the "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. The Plan was adopted on June 6,
1997 and approved on June 10, 1999 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. During the most recent
fiscal year, amounts paid by the Fund under the Plan for clerical, advertising,
printing, postage and sales expenses (travel, telephone and sales literature)
totaled $149,537: advertising - $43,712; printing and postage - $47,480; and
sales and related expenses - $58,345. Of such total, the Adviser assumed
$83,651, leaving a net of $65,886 paid by the Fund.
Pursuant to the Plan, the Fund has entered into a Distribution
Agreement (the "Distribution Agreement") with H. G. Wellington & Co., Inc., 14
Wall Street, New York, NY 10005 (the "Distributor"). Under the Distribution
Agreement the Distributor serves as distributor of the Fund's shares and, for
nominal consideration and as agent for the Fund, solicits orders for the
purchase of Fund shares, provided, however, that orders are not binding on the
Fund until accepted by the Fund as principal. The Distribution Agreement was
adopted on June 11, 1998, and approved on June 10, 1999, by the Board of
Directors of the Fund, including a majority of the Rule 12b-1 Directors, at a
meeting called for the purpose of voting on such agreement.
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. For the period commencing on June 9,
1997 (the date operations commenced) and ending on December 31, 1997 and for the
years
12
<PAGE>
ended December 31, 1998 and 1999, brokerage commissions amounted to
approximately $24,903, $66,919 and $56,152, respectively.
All of the issued and outstanding shares of capital stock of the
Adviser are currently owned by Mr. Laurence A. Shadek and his three siblings,
Messrs. Thomas F. Shadek and James M. Shadek and Ms. Katherine Shadek Boyle. In
addition, the Shadek family has a twenty-six and sixty-seven one hundredths
percent (26.67%) ownership interest in the Distributor, of which the Sub-Adviser
is a division, and which is a brokerage firm that the Fund may utilize to
execute security transactions. Brokerage commissions paid by the Fund to the
Distributor for the period commencing on June 9, 1997 (the date operations
commenced) and ending on December 31, 1997 and for the years ended December 31,
1998 and 1999 totaled $7,700, $20,799 and $15,538, respectively (31%, 31% and
28%, respectively, of the total commissions for such period and years,
respectively).
PURCHASE AND EXCHANGE
OF FUND SHARES
PURCHASE OF SHARES
No initial sales charges are imposed on shares of the Fund purchased
upon the exchange of shares of the Pax World Fund, the Pax World High Yield Fund
or the Pax World Money Market Fund or the reinvestment of dividends and
distributions. In addition, and at the direction of the Board of Directors of
the Fund, the Fund waived initial sales charges imposed on shares of the Fund
purchased on and after November 1, 1999 and the Fund will continue to waive such
initial sales charges until otherwise directed by the Board of Directors of the
Fund.
EXCHANGE OF SHARES
As a shareholder of the Fund, you may exchange your shares of the Fund
for shares of the Pax World Fund, the Pax World High Yield 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 and any gain on such
transaction may be subject to federal income tax. 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. It is contemplated that this exchange
privilege will be applicable to each new Pax World mutual fund.
13
<PAGE>
PANNELL KERR FORSTER PC
Certified Public Accountants
75 Federal Street
Boston, MA 02110
Tel: (617) 753-9985
Fax: (617) 753-9986
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, 1999, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the two years in the period then ended and
the period June 9, 1997 (the date operations commenced) 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1999, 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 audits provide 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, 1999, the results of its operations for
the year then ended, and the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the two years
in the period then ended and the period June 9, 1997 (the date operations
commenced) to December 31, 1997, in conformity with generally accepted
accounting principles.
/s/Pannell Kerr Forster, P.C.
January 21, 2000
14
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
ASSETS
<S> <C>
Investments, at value - note A
Common stocks (cost - $13,241,796) ........................................ $19,106,430
Pax World Money Market Fund (cost - $2,628,441) ........................... 2,628,441
-----------
21,734,871
Cash ........................................................................... 494,868
Receivables
Dividends and interest .................................................... 19,996
Organization costs - note A .................................................... 2,500
Deferred offering costs - note A ............................................... 21,073
Deferred registration fees - note A ............................................ 10,756
-----------
Total assets .......................................................... 22,284,064
-----------
LIABILITIES
Payables
Capital stock reacquired .................................................. 181,668
Organization costs, deferred offering costs and deferred registration fees
payable to Adviser - note A ........................................... 34,329
Accrued expenses ............................................................... 34
-----------
Total liabilities ..................................................... 216,031
-----------
Net assets (equivalent to $14.28 per share based on
1,545,779 shares of capital stock outstanding) - note E ...... $22,068,033
-----------
Net asset value and redemption price per share
($22,068,033 / 1,545,779 shares outstanding) ................. $ 14.28
-----------
Offering price per share (effective November 1, 1999, the Board of
Directors voted to waive the 2.5% initial
sales charge until further notice) ........................... $ 14.28
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
<S> <C> <C>
Investment income (loss)
Income - note A
Dividends
Pax World Money Market Fund.............................. $ 84,216
Other investments........................................ 91,367 $ 175,583
-------------
Interest...................................................... 15,148
--------------
Total income............................................... 190,731
Expenses
Investment advisory fee - note B.............................. 148,487
Distribution expenses - note D ............................... 149,537
Transfer agent fee............................................ 68,518
Legal fees and related expenses - note B...................... 45,100
Audit fees.................................................... 44,733
Custodian fees - note F....................................... 42,672
Printing and mailing.......................................... 35,774
Registration fees - note A.................................... 29,776
Directors' fees and expenses - note B......................... 20,487
Amortization of organization costs, deferred offering
costs and deferred registration fees - note A............ 13,732
State and foreign taxes....................................... 3,718
Other......................................................... 3,116
---------------
Total expenses........................................... 605,650
Less: Fees paid indirectly - note F...................... (11,078)
Expenses assumed by Adviser - notes B
and G......................................... (357,533)
---------------
Net expenses....................................... 237,039
---------------
Investment (loss) - net.................................. (46,308)
---------------
Realized and unrealized gain on investments - notes A and C
Net realized gain on investments.................................. 198
Change in unrealized appreciation of investments
for the year ................................................. 4,602,888
--------------
Net gain on investments.................................. 4,603,086
--------------
Net increase in net assets resulting from operations..... $ 4,556,778
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31
----------------------
1999 1998
---- ----
<S> <C> <C>
Increase in net assets
Operations
Investment (loss) - net .............. $ (46,308) $ (49,159)
Net realized gain on investments ..... 198 192
Change in unrealized appreciation
of investments .............. 4,602,888 1,481,290
------------ ------------
Net increase in net assets
resulting from operations ... 4,556,778 1,432,323
Capital share transactions - note E ...... 5,139,164 6,334,540
------------ ------------
Net increase in net assets ...... 9,695,942 7,766,863
Net assets
Beginning of year ........................ 12,372,091 4,605,228
------------ ------------
End of year (net of accumulated investment
loss - net: $101,780 and $55,472,
respectively) ........................ $ 22,068,033 $ 12,372,091
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
PAX WORLD GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
COMMON STOCKS
<S> <C> <C> <C>
CONSUMER PRODUCTS AND SERVICES
Koninklijke Philips Electronics, NV ADR........... 4,600 $ 621,000
Martha Stewart Living, Inc. Class A .............. 5,000 120,000
Masco Corp. ...................................... 20,000 507,500
MediaOne Group, Inc. ............................. 10,000 768,125
Polaroid Corp..................................... 25,000 470,313
Reader's Digest Association, Inc.................. 15,000 438,750
Ross Stores, Inc. ................................ 25,000 448,437
-------------
3,374,125 15.3%
-------------
ELECTRONIC SYSTEMS AND SERVICES
Robotic Vision Systems, Inc. .................... 25,000 231,250
Symbol Technologies, Inc.......................... 15,000 953,437
-------------
1,184,687 5.4
-------------
FINANCIAL/REAL ESTATE
H&R Block, Inc. .................................. 15,000 656,250
Host Marriott Corp. REIT.......................... 19,840 163,680
-------------
819,930 3.7
HEALTH CARE SERVICES
Amgen, Inc. ...................................... 15,000 900,938
BioChem Pharmaceuticals, Inc. ................... 5,000 108,750
Chiron Corp. .................................... 20,000 847,500
Elan PLC ADR...................................... 15,000 442,500
Sunrise Assisted Living, Inc...................... 10,000 137,500
-------------
2,437,188 11.0
-------------
INDUSTRIAL - COMMERCIAL
Airborne Freight Corp. ........................... 20,000 440,000
United Parcel Service, Inc. Class B............... 3,000 207,000
-------------
647,000 2.9
-------------
SATELLITE SYSTEMS
General Motors Corp. Class H
(GM Hughes Electronics)......................... 15,000 1,440,000 6.5
-------------
</TABLE>
18
<PAGE>
PAX WORLD GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
COMMON STOCKS (CONTINUED)
<S> <C> <C> <C>
TECHNOLOGY
America Online, Inc............................... 13,000 $ 980,688
At Home Corp. Series A............................ 15,000 643,125
AVT Corp.......................................... 15,000 705,000
BMC Software, Inc................................. 5,000 399,687
Fiserv, Inc....................................... 20,000 766,250
Network Associates, Inc........................... 15,000 400,312
Novell, Inc....................................... 25,000 998,438
-------------
4,893,500 22.2%
-------------
TELECOMMUNICATIONS
Convergys Corp. .................................. 20,000 615,000
Nextel Communications, Inc. Class A ............. 12,000 1,237,500
Qwest Communications International, Inc. ......... 15,000 645,000
Sprint Corp. (PCS Group) Series 1................. 10,000 1,025,000
Telefonos de Mexico, SA ADR (representing
ordinary shares L).............................. 7,000 787,500
--------------
4,310,000 19.6
-------------- -------
TOTAL COMMON STOCKS............................. 19,106,430 86.6
-------------- -------
MONEY MARKET SHARES
Pax World Money Market Fund.......................... 2,628,441 2,628,441 11.9
-------------- -------
TOTAL INVESTMENTS............................... 21,734,871 98.5
Cash, receivables and deferred costs less
liabilities....................................... 333,162 1.5
-------------- -------
NET ASSETS...................................... $ 22,068,033 100.0%
-------------- ------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 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 $1,000 for the year ended
December 31, 1999 is included on the statement of operations. Reference is made
to note G.
20
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
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 $8,430 for
the year ended December 31, 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 $4,302 for the year
ended December 31, 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 December 31, 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 either 1999 or 1998
because (1) there was a net investment loss for both years and (2) capital gains
for the same periods were $198 and $192, respectively.
21
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
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. The Adviser has agreed to waive the portion of the
advisory fee necessary to offset the amount of the advisory fee payable by Pax
World Money Market Fund, Inc. to the Adviser with respect to any assets of the
Fund which are invested in the Pax World Money Market Fund, Inc.
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 $315,025 and $286,966,
respectively, for such services for 1999 and 1998. Additionally, the Adviser
assumed, on a voluntary basis, expenses of $42,508 and $41,381, respectively,
for 1999 and 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
22
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
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 1999, the Fund incurred legal fees and related expenses of $45,100
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 a brokerage firm which the Fund utilizes to execute security transactions.
Brokerage commissions paid to this firm during 1999 and 1998 totaled $15,538 and
$20,799, respectively (27.7% and 31.1%, respectively, of total 1999 and 1998
commissions).
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, Inc., which is also managed by the Adviser.
NOTE C - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of investments, excluding short-term
investments, aggregated $14,499,106 and $10,156,288, respectively, for 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 1999 would have been approximately the same.
For Federal income tax purposes, the identified cost of investments owned
at December 31, 1999 was $15,870,237. Gross unrealized appreciation and
depreciation of investments aggregated $6,864,073 and $999,439, respectively, at
December 31, 1999, resulting in net unrealized appreciation of $5,864,634.
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
23
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
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:
Year Ended December 31
----------------------
1999 1998
---- ----
Shares Dollars Shares Dollars
------ ------- ------ -------
Shares sold ... 646,534 $ 7,753,787 772,823 $ 7,699,550
Shares redeemed (212,526) (2,614,623) (137,836) (1,365,010)
----------- ----------- ----------- -----------
Net increase .. 434,008 $ 5,139,164 634,987 $ 6,334,540
----------- ----------- ----------- -----------
The components of net assets at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Paid-in capital (25,000,000 shares of $1 par value authorized)...... $16,304,744
Accumulated net investment (loss)................................... (101,780)
Undistributed capital gains......................................... 435
Net unrealized appreciation of investments.......................... 5,864,634
-----------
Net assets...................................................... $22,068,033
-----------
</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.
24
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
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 ($1,000) ................................................. $315,025
Expenses assumed by the Adviser on a voluntary basis
Recurring registration fees ....................................... 29,776
Amortization of deferred offering costs ........................... 8,430
Amortization of deferred registration fees ........................ 4,302
--------
Total expenses assumed by Adviser ................................. $357,533
--------
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 3.8% to 1.5%
for 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 1.6% for 1999.)
Reference is made to notes A and B.
25
<PAGE>
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
Year Ended December 31 (the date operations
---------------------- commenced) to
1999 1998 December 31, 1997
---- ---- -----------------
<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)
Net realized and unrealized gain (loss)
on investments.............................. 3.17 1.51 (.33)
------- -------- -------
Gain (loss) from investment
operations............................. 3.15 1.47 (.34)
------- -------- -------
Net asset value, end of period.................... $ 14.28 $ 11.13 $ 9.66
------- -------- -------
2. TOTAL RETURN .................................... 28.30% 15.22% (3.40)%
3. RATIOS AND SUPPLEMENTAL DATA
Ratio of total expenses to average net,
assets (A)(B).................................. 1.58% 1.62% 1.49%
Ratio of investment (loss) - net, to
average net assets (A)......................... (.29)% (.61)% (.56)%
Portfolio turnover rate........................... 76.40% 96.72% 50.79%
Net assets, end of period ('000s)................. $22,068 $ 12,372 $ 4,605
Number of capital shares outstanding,
end of period ('000s).......................... 1,546 1,112 477
</TABLE>
(A) These ratios for the period ended December 31, 1997 have been annualized.
(B) This ratio is based upon total expenses, including the gross amount of
custodian fees (before being reduced pursuant to an expense offset
arrangement), net of expenses assumed by the Adviser.
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