<PAGE>
Dear Pax World Growth Fund Shareholder,
Since its inception in June of 1997, the Pax World Growth Fund has seen
substantial growth in both assets and number of shareholders, with nearly $10
million in assets and more than 1,700 shareholders. In addition, we are pleased
to report that the Fund's net asset value rose 7.56% during the first half of
1998.
As we said in the 1997 Annual Report, we view the current underperformance
of small-capitalization stocks relative to large-cap stocks as an opportunity to
purchase some exciting value in the technology and small-cap areas. Over time,
these companies typically grow at faster rates than the economy or the overall
market, and we are hopeful this will ultimately be reflected in the performance
of the Fund.
In our view, three ongoing economic factors - low interest rates, benign
inflation, and rising corporate profits - remain positive forces for rising
equity prices. Although we are cautiously optimistic about the stock market this
year, we believe that selectivity is becoming more important. Equally important
will be the point of entry in establishing new investment positions, because
many growth stocks are selling at unusually high valuations. As we continue to
pursue our goal of long-term investment growth, we will maintain our discipline
of buying growth at reasonable prices.
The Fund begins the second half of 1998 with a high cash and equivalents
position - 13% of assets - which gives it the flexibility to go in many
directions as opportunities arise. We appreciate the trust you have placed in us
to continue to search for exciting growth opportunities and, as always, invite
you to call or write us in New Hampshire with your thoughts and ideas.
Sincerely yours,
/s/ Laurence A. Shadek /s/ Thomas W. Grant
Laurence A. Shadek Thomas W. Grant
Chairman President
July 22, 1998
<PAGE>
- ----------------------------------------
ASSET ALLOCATION, JUNE 30, 1998
- ----------------------------------------
[CHART]
<TABLE>
<CAPTION>
<S> <C>
Cash & Equivalents 13%
U.S. Common Stocks 77%
International Common Stocks 10%
- ----------------------------------------
SECURITY DIVERSIFICATION, JUNE 30, 1998
- ----------------------------------------
[CHART]
<CAPTION>
<S> <C>
Consumer 13%
Energy 9%
Financial 5%
Health Care 21%
Telecommunications 16%
Repurchase Agreement 11%
Technology 23%
- ----------------------------------------
- -----------------------------------
PORTFOLIO HIGHLIGHTS
SIX MONTHS ENDED 6/30/98
- -----------------------------------
- -----------------------------------
KEY STATISTICS
- -----------------------------------
<CAPTION>
<S> <C>
Change in N.A.V. ($9.66
to $10.39) . . . . . . . . . .$0.73
12 Month Total Return*
(6/30/97 - 6/30/98). . . . . .1.27%
6 Month Total Return*
(12/31/97 - 6/30/98) . . . . .4.84%
Net Increase in Net Assets
Resulting from
Operations . . . . . . . . $493,713
Total Net
Assets . . . . . . . . . $9,557,144
- -----------------------------------
TEN LARGEST STOCK HOLDINGS
- -----------------------------------
<CAPTION>
PERCENT OF
COMPANY NET ASSETS
<S> <C>
Cable & Wireless
Communications ADR . . . . . . 3.9%
Worldcom Inc.. . . . . . . . . 3.8%
Pharmacia & Upjohn Inc.. . . . 3.6%
Genentech Inc. . . . . . . . . 3.6%
Amgen Inc. . . . . . . . . . . 3.4%
Biogen Inc. . . . . . . . . . 3.1%
Network Associates Inc.. . . . 3.0%
Unum Corp. . . . . . . . . . . 2.9%
General Instrument Corp. . . . 2.8%
Netscape Communications
Corp. . . . . . . . . . . . 2.8%
-----
Total. . . . . . . . . . . . .32.9%
</TABLE>
* FIGURES FOR THE PAX WORLD GROWTH
FUND INCLUDE THE EFFECTS OF THE
MAXIMUM 2.5% SALES CHARGE.
2
<PAGE>
PAX WORLD GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED)
June 30, 1998
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
CONSUMER
Comcast Corp., Class A . . . . . . . . 5,000 $ 202,969
General Nutrition Co., Inc.. . . . . . 4,000 124,500
Host Marriott Corp.. . . . . . . . . . 10,000 178,125
Petsmart, Inc. . . . . . . . . . . . . 15,000 150,000
Sony Corp. ADR . . . . . . . . . . . . 4,000 344,538
Sylvan Learning Systems, Inc.. . . . . 7,500 245,625
-----------
1,245,757 13.0%
-----------
ENERGY
Baker Hughes, Inc. . . . . . . . . . . 5,000 172,812
EEX Corp.. . . . . . . . . . . . . . . 25,000 234,375
Enron Corp.. . . . . . . . . . . . . . 5,000 270,313
R&B Falcon Corp. . . . . . . . . . . . 10,000 226,250
-----------
903,750 9.5
-----------
FINANCIAL
ElderTrust . . . . . . . . . . . . . . 10,000 171,875
Unum Corp. . . . . . . . . . . . . . . 5,000 277,500
-----------
449,375 4.7
-----------
HEALTH CARE
Amgen, Inc.. . . . . . . . . . . . . . 5,000 326,875
BioChem Pharmaceuticals, Inc.. . . . . 5,000 132,500
Biogen, Inc. . . . . . . . . . . . . . 6,000 294,000
Centocor, Inc. . . . . . . . . . . . . 5,000 181,250
CliniChem Development, Inc.. . . . . . 125 719
Genentech, Inc.. . . . . . . . . . . . 5,000 339,375
Genesis Health Ventures, Inc.. . . . . 10,000 250,000
Pharmacia & Upjohn, Inc. . . . . . . . 7,500 345,938
Sunrise Assisted Living, Inc.. . . . . 5,000 171,875
-----------
$ 2,042,532 21.4%
-----------
</TABLE>
3
<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
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED
TECHNOLOGY
Applied Voice Technology, Inc. . . . . 4,000 $ 92,000
CIENA Corp.. . . . . . . . . . . . . . 3,500 243,687
Cisco Systems, Inc.. . . . . . . . . . 2,500 235,494
GM Hughes Electronics. . . . . . . . . 5,000 235,625
General Instrument Corp. . . . . . . . 10,000 271,875
Lernout & Hauspie Speech Products. . . 2,500 149,219
Netscape Communications Corp.. . . . . 10,000 270,625
Network Associates, Inc. . . . . . . . 6,000 287,250
Oracle Systems Corp. . . . . . . . . . 5,000 122,812
Security Dynamics Technologies, Inc. . 6,000 111,000
Tellabs, Inc.. . . . . . . . . . . . . 2,000 143,250
-----------
2,162,837 22.6%
-----------
TELECOMMUNICATIONS
AirTouch Communications, Inc.. . . . . . 5,000 291,600
Cable & Wireless Communications ADR. . . 10,000 368,750
Nextel Communications, Inc.. . . . . . . 10,000 248,750
Telefonos de Mexico "L" ADS. . . . . . . 5,000 240,312
Worldcom, Inc. . . . . . . . . . . . . . 7,500 363,281
-----------
1,512,693 15.8
----------- -------
TOTAL COMMON STOCKS. . . . . . . . . 8,316,944 87.0
----------- -------
REPURCHASE AGREEMENT PRINCIPAL
AMOUNT
------
State Street Bank repurchase
agreement, 4%, dated June 25, 1998,
due July 1, 1998 (underlying
security: 5.75% U.S. Government
obligation due September 30, 1999;
market value $1,017,538) . . . . . . . $1,010,000 1,010,000 10.6
----------- -------
TOTAL INVESTMENTS. . . . . . . . . . 9,326,944 97.6
Cash, receivables and deferred costs
less liabilities . . . . . . . . . . . 230,200 2.4
----------- -------
NET ASSETS . . . . . . . . . . . . . $ 9,557,144 100.0%
----------- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
June 30, 1998
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Investments, at value - note A
Common stocks (cost - $7,943,426) . . . . . . . . . . . . . . $ 8,316,944
Repurchase agreement (cost - $1,010,000). . . . . . . . . . . 1,010,000
-----------
9,326,944
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596,397
Receivables
Dividends and interest. . . . . . . . . . . . . . . . . . . . 2,923
Reimbursement of expenses from Adviser. . . . . . . . . . . . 20,467
Organization costs - note A. . . . . . . . . . . . . . . . . . . . 4,000
Deferred offering costs - note A . . . . . . . . . . . . . . . . . 33,718
Deferred registration fees - note A . . . . . . . . . . . . . . . 17,209
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . 10,001,658
-----------
LIABILITIES
Payables
Investment securities purchased . . . . . . . . . . . . . . . 379,694
Capital shares reacquired . . . . . . . . . . . . . . . . . . 9,789
Organization costs, deferred offering costs and deferred
registration fees payable to Adviser - note A. . . . . . 54,927
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . 104
-----------
Total liabilities. . . . . . . . . . . . . . . . . . . . 444,514
-----------
Net assets (equivalent to $10.39 per share based
on 919,546 shares of capital stock
outstanding) - note E. . . . . . . . . . . . . $ 9,557,144
-----------
Net asset value and redemption price per share
($9,557,144 DIVIDED BY 919,546 shares
outstanding) . . . . . . . . . . . . . . . . . $10.39
------
Offering price per share. . . . . . . . . . . . . . $10.66
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
Six Months Ended June 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Investment income (loss)
Income - note A
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,128
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 7,595
----------
Total income. . . . . . . . . . . . . . . . . . . . . . 18,723
Expenses
Investment advisory fee - note B . . . . . . . . . . . . . . $ 30,835
Distribution expenses - note D . . . . . . . . . . . . . . . 70,799
Legal fees and related expenses - note B . . . . . . . . . . 38,153
Registration fees - note A . . . . . . . . . . . . . . . . . 22,379
Custodian fees - note F. . . . . . . . . . . . . . . . . . . 20,319
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . 16,666
Transfer agent fee . . . . . . . . . . . . . . . . . . . . . 15,824
Printing and postage . . . . . . . . . . . . . . . . . . . . 14,555
Amortization of organization costs, deferred offering
costs and deferred registration fees - note A . . . . . 6,866
Directors' fees and expenses - note B. . . . . . . . . . . . 6,726
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,024
----------
Total expenses. . . . . . . . . . . . . . . . . . . . . 245,146
Less: Fees paid indirectly - note F . . . . . . . . . . (3,797)
Expenses assumed by Adviser - notes B
and G . . . . . . . . . . . . . . . . . . . . . (192,819)
----------
Net expenses. . . . . . . . . . . . . . . . . . . 48,530
----------
Investment (loss) - net . . . . . . . . . . . . . . . . (29,807)
----------
Realized and unrealized gain (loss) on investments - note C
Net realized (loss) on investments. . . . . . . . . . . . . . . . (69,542)
Change in unrealized appreciation of investments
for the period . . . . . . . . . . . . . . . . . . . . . . . 593,062
----------
Net gain on investments . . . . . . . . . . . . . . . . 523,520
----------
Net increase in net assets resulting from operations. . $ 493,713
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
PAX WORLD GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period
March 12, 1997
(the date of
Six Months incorporation) to
Ended December 31,
June 30, 1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
Increase (decrease) in net assets
Operations
Investment (loss) - net. . . . . . . . . . . . . . . . . . . $ (29,807) $ (6,313)
Net realized gain (loss) on investments. . . . . . . . . . . (69,542) 45
Change in unrealized appreciation
(depreciation) of investments
for the period . . . . . . . . . . . . . . . . . . . . 593,062 (219,544)
------------ -----------
Net increase (decrease) in net assets
resulting from operations. . . . . . . . . . . . . 493,713 (225,812)
Capital share transactions - note E. . . . . . . . . . . . . 4,458,203 4,831,040
------------ -----------
Net increase in net assets. . . . . . . . . . . . . . . 4,951,916 4,605,228
Net assets
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 4,605,228 --
------------ -----------
End of period (including accumulated investment
loss - net: $36,120 and $6,313,
respectively) . . . . . . . . . . . . . . . . . . . . . . . $ 9,557,144 $ 4,605,228
------------ -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1998
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Pax World Growth Fund, Inc. ("Fund"), incorporated in Delaware on March
12, 1997, is a diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended. The Fund commenced
operations on June 9, 1997 with the issuance of 10,000 shares of capital stock
to Pax World Management Corp., the Fund's Adviser ("Adviser"). Investment
operations commenced July 9, 1997.
The Fund's policy is to invest in securities of companies whose business is
essentially directed toward non-military and life-supportive activities. Its
investment objective is long-term growth of capital. It seeks to achieve this
objective by investing primarily in equity securities (common stock, securities
convertible into common stock and preferred stock) of established companies with
above-average growth prospects. Current income, if any, is incidental.
VALUATION OF INVESTMENTS
Securities listed on any national, regional or local exchange are valued at
the closing prices on such exchanges. Securities listed on the NASDAQ national
market system are valued using quotations obtained from the market maker where
the security is traded most extensively. Repurchase agreements are valued at
cost; interest accrued to June 30 is included in interest receivable.
ORGANIZATION COSTS
Costs incurred in connection with the organization of the Fund ($5,000)
were paid initially by the Adviser. These costs were deferred and are being
amortized on a straight-line basis over 60 months from July 9, 1997, the date
investment operations commenced. The costs will be repaid to the Adviser in
accordance with the amortization schedule. Amortization expense of $500 for the
six months ended June 30, 1998 is included on the statement of operations.
Reference is made to note G.
DEFERRED OFFERING COSTS
Costs incurred in connection with the initial offering of the Fund's shares
($42,148) were paid initially by the Adviser. These costs were deferred and are
being amortized on a straight-line basis over 60 months from July 9, 1997, the
date investment operations commenced. The costs will be repaid to the Adviser in
accordance with the amortization schedule. Amortization expense of $4,215 for
the six months ended June 30, 1998 is included on the statement of operations.
Reference is made to note G.
DEFERRED REGISTRATION FEES
Initial state registration fees were paid initially by the Adviser. The
portion of the fees incurred for the initial registration of the Fund with the
50 states and the Commonwealth of Puerto Rico ($21,511), as distinguished from
the portion which represents the recurring, annual fee, was deferred and is
being amortized on a straight-line basis over 60 months from July 9, 1997, the
date investment operations commenced. The costs will be repaid to the Adviser in
accordance with the amortization schedule.
8
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
Amortization expense of $2,151 for the six months ended June 30, 1998 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.
FEDERAL INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute substantially all its taxable income to its shareholders. Therefore,
no Federal income tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS
All distributions to shareholders are recorded by the Fund on the
ex-dividend dates. There were no distributions made in 1997; there was a net
investment loss for the period July 9, 1997 to December 31, 1997 and the capital
gain for the same period was $45.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
OTHER
The Fund follows industry practice and records security transactions on the
trade date. Dividend income is recognized on the ex-dividend date, and interest
income is recognized on an accrual basis.
9
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
NOTE B - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Advisory Agreement ("Agreement") between the Fund and the
Adviser, the Adviser furnishes investment advisory services in connection with
the management of the Fund. Under the Agreement, the Adviser, subject to the
supervision of the Board of Directors of the Fund, is responsible for managing
the assets of the Fund in accordance with its investment objectives, investment
program and policies. The Adviser determines what securities and other
instruments are purchased and sold for the Fund and is responsible for obtaining
and evaluating financial data relevant to the Fund. In the event that the
average net assets of the Fund are less than $5,000,000, the Adviser will be
compensated by the Fund for its services at an annual rate of $25,000; in the
event that average net assets of the Fund are equal to or in excess of
$5,000,000, the annual investment advisory fee will be 1% of its average daily
net assets on the first $25,000,000 and 3/4% of its average daily net assets in
excess of that amount. Two officers, who are also directors of the Fund, are
also officers and directors of the Adviser and H.G. Wellington Capital
Management, a division of H.G. Wellington & Co., Inc. ("Sub-Adviser"). Another
officer of the Fund, who is not a director of the Fund, is also an officer 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,
distribution and sub-advisory fees; (ii) the fees of affiliated and unaffiliated
Directors; (iii) the fees of the Fund's Custodian and Transfer Agent; (iv) the
fees of the Fund's legal counsel and independent accountants; (v) the
reimbursement of organization expenses; and (vi) expenses related to shareholder
communications including all expenses of shareholders' and Board of Directors'
meetings and of preparing, printing and mailing reports, proxy statements and
prospectuses to shareholders. The Adviser was required to supply and assume a
total of $164,074 and $159,152, respectively, for such services for the six
months ended June 30, 1998 and the period March 12, 1997 (the date of
incorporation) to December 31, 1997. Additionally, the Adviser assumed, on a
voluntary basis, expenses of $28,745 and $17,121, respectively, for the six
months ended June 30, 1998 and the period March 12, 1997 (the date of
incorporation) to December 31, 1997. Reference is made to note G.
Pursuant to the terms of a Sub-Advisory Agreement between the Adviser and
the Sub-Adviser, the Sub-Adviser furnishes investment advisory services in
connection with the management of the Fund, determines what securities and other
instruments are purchased and sold for the Fund and is responsible for obtaining
and evaluating financial data relevant to the Fund. The Sub-Adviser is
compensated by the Adviser without reimbursement from the Fund.
All Directors are paid by the Fund for attendance at directors' meetings.
During the six months ended June 30, 1998, the Fund incurred legal fees and
related expenses of $38,153 with Rosner Bresler Goodman & Unterman, LLP (now
known as 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
10
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
execute security transactions. Brokerage commissions paid to this firm during
the six months ended June 30, 1998 and the period July 9, 1997 (the date
investment operations commenced) to December 31, 1997 totaled $8,408 and $7,700,
respectively (25.8% and 30.9% of total commissions for the respective periods).
At the June 11, 1998 Annual Meeting, the 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. As of June 30, 1998,
the Fund had no investments in the Pax World Money Market Fund.
NOTE C - INVESTMENTS
Purchases and proceeds from sales of investments, excluding short-term
investments, aggregated $5,642,507 and $1,833,765, respectively, for the six
months ended June 30, 1998. 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 loss for the six months ended June 30, 1998 would have been
approximately the same.
For Federal income tax purposes, the identified cost of investments owned
at June 30, 1998 was $8,953,426.
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.
11
<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>
Period June 9, 1997
(the date operations
Six Months Ended commenced) to
June 30, 1998 December 31, 1997
----------------------- ------------------------
Shares Dollars Shares Dollars
---------- ----------- ---------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Shares sold. . . . . . . . 482,223 $ 4,863,115 482,291 $ 4,885,876
Shares redeemed. . . . . . (39,461) (404,912) (5,507) (54,836)
---------- ----------- ---------- -----------
Net increase . . . . . . . 442,762 $ 4,458,203 476,784 $ 4,831,040
---------- ----------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
The components of net assets at June 30, 1998 (unaudited), are as follows:
<S> <C>
Paid-in capital (25,000,000 shares of $1 par value authorized) . . $ 9,289,243
Accumulated net investment (loss). . . . . . . . . . . . . . . . . (36,120)
Accumulated capital (losses) . . . . . . . . . . . . . . . . . . . (69,497)
Net unrealized appreciation of investments . . . . . . . . . . . . 373,518
-----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,557,144
-----------
</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.
12
<PAGE>
PAX WORLD GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
NOTE G - EXPENSES ASSUMED BY ADVISOR
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) . . . $ 164,074
Expenses assumed by the Adviser on a voluntary basis
Recurring registration fees. . . . . . . . . . . . . . . . . . . . . . . . . 22,379
Amortization of deferred offering costs. . . . . . . . . . . . . . . . . . . 4,215
Amortization of deferred registration fees . . . . . . . . . . . . . . . . . 2,151
---------
Total expenses assumed by Adviser. . . . . . . . . . . . . . . . . . . . . . $ 192,819
---------
</TABLE>
The expenses assumed on a voluntary basis had the effect of reducing the
annualized ratio of total expenses (after subtracting the expenses assumed by
the Adviser in accordance with the Advisory Agreement) to average net assets
from 2.47% to 1.59% for the six months ended June 30, 1998.
Reference is made to notes A and B.
13
<PAGE>
PAX WORLD GROWTH FUND, INC. - FINANCIAL HIGHLIGHTS
The following per share data, ratios and supplemental data 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 commenced) to
June 30, 1998 December 31, 1997
------------- -----------------
(Unaudited)
<S> <C> <C>
Net asset value, beginning of period. . . . . . . . . . . . . . . $ 9.66 $ 10.00
-------- --------
Gain (loss) from investment operations
Investment (loss), net. . . . . . . . . . . . . . . . . (.03) (.01)
Realized and unrealized gain (loss) on
investments, net . . . . . . . . . . . . . . . . . .76 (.33)
-------- --------
Gain (loss) from investment operations. . . . .73 (.34)
-------- --------
Net asset value, end of period. . . . . . . . . . . . . . . . . . $ 10.39 $ 9.66
-------- --------
- ---------------------------------------------------------------------------------------------------------
2. TOTAL RETURN (A) . . . . . . . . . . . . . . . . . . . . . . . . . 7.56% (3.40)%
- ---------------------------------------------------------------------------------------------------------
3. RATIOS AND SUPPLEMENTAL DATA
Ratio of total expenses to average net assets (B). . . . . . 1.59% 1.49%
Ratio of investment (loss) - net to average net
assets (B). . . . . . . . . . . . . . . . . . . . . . . (.90)% (.56)%
Portfolio turnover rate. . . . . . . . . . . . . . . . . . . 33.18% 50.79%
Net assets, end of period ('000s). . . . . . . . . . . . . . $ 9,557 $ 4,605
Number of capital shares outstanding, end
of period ('000s) . . . . . . . . . . . . . . . . . . . 920 477
(A) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(B) These ratios have been annualized for both periods.
</TABLE>
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