Dear Pax World Shareholder:
On June 12, 1996, shareholders were welcomed to the Annual Meeting of Pax
World Fund in Portsmouth, NH. Reports were made by the officers of the Fund,
followed by a New England style open forum. An interesting highlight was
shareholder participation in an exercise in the use of the Fund's social screens
led by Dr. J. Elliott Corbett.
President Luther Tyson reported on new developments that are taking place in
the Fund. Your Fund continues to seek new ways to communicate with would-be
investors through the use of the Internet. An advertisement was placed on the
Internet in February 1996. The Fund obtained the following E-Mail address in
May: [email protected]. The Internet not only expands the Fund's
opportunities to reach a different market, it is also very cost-effective. Also,
President Tyson added, the Fund is attracting corporate pension funds, 401 (k)
and 403(b) plans.
Portfolio Manager Anthony Brown reviewed the management's investment strategy
for the past year. "We have not wavered from what we consider to be sound and
conservative investment principles. We recognize that our job is not only to
deliver profits to shareholders in an up market, but also to conserve your
principal in a down market. In order to achieve this goal, we have spread the
assets over more issues on the equity side of the portfolio and we are presently
favoring consumer basic stocks over cyclical stocks. On the bond side, we have
increased our bond holdings from about 26% at the first of the year to about 38%
of our total assets at the present time. This move of assets should contribute
to the protection of shareholder capital in a down market." This strategy
resulted in a net gain of $20,116,586 from operations in the first half of 1996.
The Fund's newsletter, Connection, accompanies this report. In it you will
find a fuller report of the Annual Meeting. The shareholders approved the
election of the slate of Directors named in the proxy material. Pannell Kerr
Forster, PC was approved as the outside independent auditor.
Following the Annual Meeting, the Directors declared a dividend of $0.26 per
share from undistributed net investment income payable on July 5, 1996 to all
shareholders of record as of July 1, 1996. The Directors also elected Luther E.
Tyson as President of the Fund; J. Elliott Corbett as Vice President; Anthony S.
Brown as Vice President and Treasurer; and William M. Prifti as General Counsel
and Secretary.
The performance of Pax World Fund, a balanced fund, in the first half of 1996
can be appraised by a comparison with the Lipper Balanced Fund Index. The total
return per share of Pax World Fund was 4.23%. The Lipper Balanced Fund Index's
total return was 4.50%. The year-to-year total return for Pax World Fund was
19.96%; for the Lipper Balanced Fund Index, 15.52%.
In the first half of 1996, the market has shown a high degree of volatility.
Your management expects this pattern to continue into the third quarter. For
those shareholders who have opened Automatic Investment Plans, the dips in the
market represent opportunities for long-term gains. If you would like a free
authorization form, call 1-800-767-1729.
1
When investing for college, compounding over time can literally mean the
difference of thousands of dollars in the amount you will have for education
expenses. The old adage, "It pays to start early," applies especially for
education accounts. College costs have been rising at a rate of 5% to 6% a year,
well above the inflation rate. According to The College Board, annual college
costs for a newborn in 1996 at a public university will be $19,475 at a 6%
yearly increase; for a private university, $50,325. This is the reason that Pax
World Fund's UGMA accounts (Uniform Gift to Minors Account) is growing in
attractiveness to parents and grand-parents who are planning ahead. For an
application, call 1-800-767-1729.
The Directors, all of whom are investors in Pax World Fund, Inc., appreciate
your trust and confidence in the Fund. It is a pleasure to serve your investment
needs.
On behalf Of the Directors,
/s/ Luther E. Tyson
Luther E. Tyson
President
July 12,1996
OFFICERS AND DIRECTORS
Luther E. Tyson, Ph.D., President and Director
Anthony S. Brown, Vice President, Treasurer, and Director
J. Elliott Corbett, Ph.D., Vice President and Director
C. Lloyd Bailey, Director
Ralph M. Hayward, Director
Joy L. Liechty, Director
Raymond L. Mannix, Director
Sanford C. Sherman, Director
Esther J. Walls, Director
William M. Prifti, Secretary and General Counsel
2
- --------------------------------------------------------------------------------
[The following represents the ASSET ALLOCATION pie chart]
6/30/96
Cash & Equivalents 1%
U.S. Government Agency Bonds 38%
Common Stocks 61%
- --------------------------------------------------------------------------------
[The following represents the SECURITY DIVERSIFICATION pie chart]
6/30/96
Telephone Utilities 6%
Retail 10%
Food 12%
Natural Gas 12%
Pharmaceutials 14%
Other 8%
U.S. Government Agency Bonds 38%
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
Six Months ended 6/30/96
KEY STATISTICS
Change in NAV ($16.33
to $17.02)..........$0.69
12 Month Total Return
(6/30/95-6/30/96)...19.96%
6 Month Total Return
(12/31/95-6/30/96)...4.23%
Net Increase in
Net Assets Resulting
from Operations....$20,116,586
Total Net
Assets.............$496.2 million
TEN LARGEST HOLDINGS
Percent of
Company Net Assets
Merck & Co., Inc. ..........7.8%
Peoples Energy Corp. .......3.7%
Campbell Soup Co. ..........3.7%
H.J. Heinz Co. .............3.7%
Gap, Inc. ..................3.2%
Brooklyn Union Gas Co. .....3.2%
Bay State Gas Co. ..........3.1%
NYNEX Corp. ................2.9%
Wal-Mart Stores, Inc. ......2.8%
CPC International, Inc. ....2.5%
Total .....................36.6%
3
PAX WORLD FUND, INCORPORATED
SCHEDULE OF INVESTMENTS (UNAUDITED)
June 30,1996
<TABLE>
<CAPTION>
NUMBER OF MARKET PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
CONSUMER PRODUCTS
Colgate Palmolive Co. 50,000 $ 4,237,500
Dial Corp. 112,500 3,220,312
Liz Claiborne, Inc. 190,000 6,578,750
----------
14,036,562 2.83%
----------
ELECTRIC UTILITY
Teco Energy, Inc. 200,000 5,050,000 1.02
----------
FOOD
CPC International, Inc. 175,000 12,600,000
Campbell Soup Co. 258,700 18,238,350
General Mills, Inc. 200,000 10,900,000
H.J. Heinz Co. 600,000 18,225,000
----------
59,963,350 12.08
----------
HOME IMPROVEMENT PRODUCTS
Masco Corp. 100,000 3,025,000 .61
----------
LOANS - STUDENT
Student Loan Marketing Association 42,600 3,152,400 .64
----------
MAILING EQUIPMENT
Pitney Bowes, Inc. 166,700 7,959,925 1.60
----------
NATURAL GAS
Bay State Gas Co. 553,800 15,437,175
Brooklyn Union Gas Co. 587,600 16,012,100
Enron Corp. 250,000 10,218,750
Peoples Energy Corp. 551,900 18,488,650
Washington Gas Light Co. 18,400 404,800
----------
60,561,475 12.21
----------
PACKAGING
Bemis Co., Inc. 50,000 1,750,000 .35
----------
PHARMACEUTICALS
Bristol-Myers Squibb Co. 100,000 9,000,000
Johnson & Johnson 236,400 11,701,800
Merck & Co., Inc. 600,000 38,775,000
Pfizer, Inc. 118,900 8,486,488
----------
67,963,288 13.70
----------
</TABLE>
4
PAX WORLD FUND, INCORPORATED
SCHEDULE OF INVESTMENTS(UNAUDITED),
<TABLE>
<CAPTION>
NUMBER OF MARKET PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS, continued
RETAIL
Darden Restaurants, Inc. 400,000 4,300,000
Gap, Inc. 500,000 16,062,500
Home Depot, Inc. 150,000 8,100,000
Toys R Us, Inc. 200,000 5,700,000
Wal-Mart Stores, Inc. 550,000 13,956,250
----------
48,118,750 9.70%
----------
TELEPHONE UTILITIES
BellSouth Corp. 100,000 4,237,500
NYNEX Corp. 300,000 14,250,000
U.S. West, Inc. - Communications Group 200,000 6,375,000
U S. West, Inc. - Media Group 300,000 5,475,000
----------
30,337,500 6.11
---------- ------
TOTAL COMMON STOCKS 301,918,250 60.85
---------- ------
PRINCIPAL
AMOUNT
------
GOVERNMENT AGENCY BONDS
Federal Farm Credit Banks Consolidated
7.750%, due December 9, 1997 $ 10,000,000 10,233,010
Federal Home Loan Bank System
8.250%, due September 25, 1996 15,000,000 15,092,595
6.540%, due October 3, 1996 5,000,000 5,013,180
6.995%, due November 8, 1996 10,000,000 10,045,300
5.660%, due November 9, 1998 7,000,000 6,899,340
5.025%, due February 23, 1999 9,000,000 8,713,080
5.880%, due March 19, 1999 13,000,000 12,870,650
Federal National Mortgage Association
8.150%, due August 12, 1996 6,000,000 6,017,754
7.700%, due September 10, 1996 7,000,000 7,028,308
7.600%, due January 10, 1997 10,000,000 10,098,400
6.050%, due November 10, 1997 14,000,000 13,986,728
7.510%, due November 14, 1997 10,000,000 10,193,110
5.620%, due February 10, 1999 10,000,000 9,728,500
5.230%, due February 24, 1999 8,000,000 7,742,960
6.080%, due September 25, 2000 5,000,000 4,902,700
5.370%, due February 7, 2001 20,000,000 18,978,200
5.410%, due February 13, 2001 10,000,000 9,504,700
5.360%, due February 16, 2001 10,000,000 9,482,800
International Bank for Reconstruction
& Development
5.875%, due July 16, 1997 10,000,000 10,015,775
-----------
TOTAL GOVERNMENT AGENCY BONDS 186,547,090 37.59%
----------- ------
TOTAL INVESTMENTS 488,465,340 98.44
Cash and receivables, less liabilities 7,736,614 1.56
----------- ------
NET ASSETS $496,201,954 100.0%
============ =======
See notes to financial statements.
</TABLE>
5
PAX WORLD FUND, INCORPORATED
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
June 30,1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments, at market value - note A
Common stocks (cost - $229,740,003) $301,918,250
Bonds (cost - $191,366,682) 186,547,090
------------
488,465,340
Cash 4,378,704
Receivables
Dividends and interest 4,163,621
------------
Total assets 497,007,665
------------
LIABILITIES
Payables
Capital stock reacquired 179,184
Accrued expenses
Investment advisory fee - note B 210,761
Transfer agent fee 120,000
Other accrued expenses 295,766
Total liabilities ------------
805,711
------------
Net assets (equivalent to $17.02 per share based on 29,150,755
shares of capital stock outstanding) - note E $496,201,954
============
Net asset value, offering price and redemption price per share
($496,201,954 / 29,150,755 shares outstanding) $17.02
======
See notes to financial statements.
</TABLE>
6
PAX WORLD FUND, INCORPORATED
STATEMENT OF OPERATIONS (UNAUDITED)
Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Investment income
Income - note A
Dividends $ 4,280,010
Interest 5,385,468
-----------
Total income 9,665,478
Expenses
Investment advisory fee - note B $1,249,332
Distribution expenses - note D 490,975
Transfer agent fee 383,382
Printing 100,570
State taxes 75,500
Custodian fees - note F 71,194
Legal fees and related expenses - note B 37,832
Registration fees 33,041
Other 30,943
Directors' fees and expenses - note B 17,576
Audit fees 12,435
---------
Total expenses 2,502,780
Less: Fees paid indirectly - note F (68,191)
---------
Net expenses 2,434,589
-----------
Investment income - net 7,230,889
Realized and unrealized gain on investments - note C -----------
Net realized gain on investments 14,432,351
Change in unrealized appreciation of investments for the period (1,546,654)
-----------
Net gain on investments 12,885,697
-----------
Net increase in net assets resulting from operations $20,116,586
===========
See notes to financial statements.
</TABLE>
7
PAX WORLD FUND, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year Ended
Ended December 31,
June 30, 1996 1995
------------- -----------
(Unaudited)
<S> <C> <C>
Increase (decrease) in net assets
Operations
Investment income-net $ 7,230,889 $ 14,647,876
Net realized gain on investments 14,432,351 11,853,476
Change in unrealized appreciation of investments (1,546,654) 83,655,967
------------ ------------
Net increase in net assets
resulting from operations 20,116,586 110,157,319
Net equalization (debits) ( 7,838) ( 143,513)
Distributions to shareholders from
Investment income - net ($-0- and $.79 per share
respectively) -note A - ( 22,242,270)
Net realized gain on investments ($-0- and $.14 per share
respectively) - note A - (3,936,953)
Capital share transactions - note E ( 883,154) 4,892,325
------------ ------------
Net increase in net assets 19,225,594 88,726,908
Net assets
Beginning of period 476,976,360 388,249,452
------------ ------------
End of period (including undistributed investment income - net
of $7,542,138 and $319,087, respectively) $496,201,954 $476,976,360
============ ============
See notes to financial statements.
</TABLE>
8
PAX WORLD FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30,1996
NOTE A - ACCOUNTING POLICIES
Pax World Fund, Incorporated (the "Fund") is a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. Significant accounting policies of the Fund are as follows:
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.
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.
Equalization: The Fund uses the accounting practice known as
"equalization" by which a portion of the proceeds from sales and costs of
redemptions of capital shares, equivalent on a per share basis to the amount of
undistributed net investment income on the date of the transactions, is credited
or charged to undistributed income. As a result, undistributed net investment
income per share is unaffected by sales or redemptions of capital shares.
Equalization is a permanent book/tax difference that causes a difference
between investment income and distributions.
Distributions to Shareholders: All distributions to shareholders are
recorded by the Fund on the ex-dividend dates.
In accordance with the Internal Revenue Code and applicable Revenue
Rulings, the amount of the 1995 distribution which could be designated as a
capital gain dividend ($11,855,124) was reduced by $7,918,171, the amount of the
1994 capital loss carryover utilized in 1995. The resulting distribution
designated as a capital gain dividend was $3,936,953. The 1995 distribution of
net investment income, correspondingly, was increased by $7,918,171.
Accounting Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Other: The Fund follows industry practice and records security
transactions on the trade date. Dividend income is recognized on the ex-dividend
date, and interest income is recognized on an accrual basis.
NOTE B - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement ("Agreement") with Pax World
Management Corp. ("Adviser") which provides for payment by the Fund of an annual
investment advisory fee of 3/4 of 1% of its average daily net assets on the
first $25,000,000 and 1/2 of 1% of its average daily net assets in excess of
that amount. Three officers and directors of the Fund are also of officers and
directors of the Adviser. The Agreement provides for an expense reimbursement
from the Adviser if the Fund's total expenses, exclusive of interest, brokerage
commissions or fees, and taxes, but including the investment advisory fee,
exceeds 1-1/2% of the average daily net asset value of the Fund for any full
fiscal year. No expense reimbursement was required for either 1995 or the six
months ended June 30,1996.
All Directors are paid by the Fund for attendance at directors' meetings.
During the six months ended June 30,1996, the Fund incurred legal fees and
related expenses of $37,832 with William M. Prifti, Esq., general counsel for
the Fund. Mr. Prifti is Secretary of the Fund.
NOTE C - INVESTMENTS
Purchases and proceeds from sales of investments, other than U.S.
Government agency bonds, for the six months ended June 30, 1996, aggregated
$12,010,824 and $73,027,793, respectively. Purchases and proceeds
9
PAX WORLD FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), continued
from sales and maturities of U. S. Government agency bonds for the six months
ended June 30, 1996, aggregated $74,599,573 and $9,000,000, respectively.
Net realized gain or loss on sales of investments is determined on the
basis of identified cost. If determined on an average cost basis, the net
realized gain for the six months ended June 30, 1996, would have been
approximately the same.
For Federal income tax purposes, the identified cost of investments owned
at June 30, 1996 was $421,106,685.
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. The plan provides that the
Fund may incur distribution expenses of up to twenty-five one hundredths of one
percent (.25%) per annum of its average daily net assets to finance activity
which is primarily intended to result in the sale of Fund shares. Such expenses
include (but are not limited to) travel and telephone expenses, preparation and
distribution of sales literature and advertising, and compensation to be paid to
and expenses to the incurred by officers, directors and/or employees of the Fund
or other third parties for their distributional services, if sales of the Fund
are made by such third parties during a fiscal year. The Board may terminate the
plan at any time with no penalty to 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:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30 1996 December 31,1995
------------ ----------------
Shares Dollars Shares Dollars
------ ------- ------ -------
(Unaudited)
<S> <C> <C> <C> <C>
Shares sold 1,709,187 $ 28,220,290 2,834,187 $ 42,166,166
Shares issued in reinvestment of
dividends - - 1,512,585 24,008,199
--------- ------------ --------- ------------
1,709,187 28,220,290 4,346,772 66,174,365
Shares redeemed ( 1,758,583) (29,103,444) (4,146,698) (61,282,040)
--------- ------------ --------- ------------
Net increase (decrease) ( 49,396) $( 883,154) 200,074 $ 4,892,325
========= ============ ========= ============
The components of net assets at June 30, 1996 (unaudited), are as follows:
Paid-in capital (75,000,000 shares of $1 par value authorized) $414,788,629
Undistributed investment income 7,542,138
Undistributed net capital gains 14,430,703
Accumulated prior years' net realized losses on investments ( 7,918,171)
Net unrealized appreciation of investments 67,358,655
------------
Net assets $496,201,954
------------
</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.
10
PAX WORLD FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (UNAUDITED), continued
NOTE G - DIVIDEND DECLARATION
The Board of Directors has declared an ordinary dividend of $.26 per share,
payable July 5, 1996, to shareholders of record on July 1, 1996.
PAX WORLD FUND, INCORPORATED - 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>
Six Months Year Ended December 31
Ended ----------------------------------------
June 30, 1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $16.33 $13.39 $13.55 $14.27 $14.99 $13.97
------ ------ ------ ------ ------ ------
Income from investment operations
Investment income - net .26 .80 .49 .51 .64 .82
Realized and unrealized gain
(loss) on investments - net .43 3.07 (.15) (.66) (.39) 2.17
------ ------ ------ ------ ------ ------
Total from investment operations .69 3.87 .34 (.15) .25 2.99
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income - .79(A) .50 .50 .67 .77
Distributions from realized gains - .14(A) - .07 .13 1.04
Tax return of capital - - - - .17 .16
------ ------ ------ ------ ------ ------
Total distributions - .93 .50 .57 .97 1.97
------ ------ ------ ------ ------ ------
Net asset value, end of period $17.02 $16.33 $13.39 $13.55 $14.27 $14.99
------ ------ ------ ------ ------ ------
- --------------------------------------------------------------------------------------------------
2. TOTAL RETURN 4.23% 29.19% 2.65% (1.05)% .6% 20.8%
- --------------------------------------------------------------------------------------------------
3. RATIOS AND SUPPLEMENTAL DATA
Ratio of expenses to average
net assets (B) 1.00%(D) .97% .98% .94% 1.0% 1.2%
Ratio of investment income -
net to average net assets 2.97%(D) 3.44% 3.66% 3.63% 3.7% 5.1%
Portfolio turnover rate 17.11% 28.44% 25.45% 22.15% 17.4% 25.7%
Average commission rate paid (C) $ .0536 $ .0714
Net assets, end of period ('000s) $496,202 $476,976 $388,249 $462,762 $469,275 $270,488
Number of capital shares out-
standing, end of period ('000s) 29,151 29,200 29,000 34,142 32,878 18,042
------ ------ ------ ------ ------ ------
(A) Reference is made to note A to the financial statements.
(B) In order to conform to current disclosure requirements, the ratios for the
six months ended June 30, 1996 and for 1995 are based upon total expenses,
including the gross amount of custodian fees (before being reduced pursuant
to an expense offset arrangement). The ratios for prior years were based
upon net expenses and are not required to be restated.
(C) The average commission rates for the six months ended June 30, 1996 and for
the year ended December 31, 1995 are presented to conform to current
disclosure requirements. This disclosure was not required in prior years and
has not been computed for the prior years.
(D) Unaudited ratios for the six months ended June 30, 1996 have been
annualized.
</TABLE>
11
PAX WORLD FUND, INCORPORATED
224 State Street, Portsmouth, New Hampshire 03801
1 -800 767-1729
A NO-LOAD DIVERSIFIED FUND
Transfer and Disbursing Agent
PFPC, Inc.
P.O. Box 8950
Wilmington, Delaware 19899
For Shareholder Account Information
1-800-372-7827
General Counsel
William M. Prifti, Esq.
220 Broadway
Suite 204
Lynnfield, Massachusetts 01940 PAX
WORLD FUND INC
Independent Auditors --------------
Pannell Kerr Forster, P.C.
125 Summer Street
Boston, Massachusetts 02110 [PHOTO OF GLOBE]
Investment Adviser
Pax World Management Corp.
224 State Street
Portsmouth, New Hampshire 03801
1-800-767-1729 SEMI-ANNUAL
REPORT
All account inquiries should be addressed to: JUNE 30, 1996
Pax World Fund, Inc.
P.O. Box 8930
Wilmington, Delaware 19899
PAX WORLD FUND, INC.
TOTAL RETURN
PERIODS ENDED JUNE 30,1996
Annualized Cumulative
1 Year 19.96% 19.96%
5 Years 8.63% 51.29%
10 Years 9.51% 148.01%
15 Years 12.25% 465.79%
