Supplement dated April 28, 2000
to the
Prospectus dated May 20, 1999
PAX WORLD FUND, INCORPORATED
A No-Load Balanced 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 Fund, Incorporated (the
"Fund") dated May 20, 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 20, 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.
<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 year to year and by showing how the Fund's average
annual returns for 1, 5 and 10 years compare with a broad measure of market
performance provided by Wiesenberger, a Thomson Financial Company, consisting
sixty percent (60%) of the S&P 500 Index and forty percent (40%) of the Lehman
Brothers Aggregate Index. Past performance is not necessarily an indication of
how the Fund will perform in the future.
<TABLE>
<CAPTION>
[RISK / RETURN BAR CHART]
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10.45% 20.80% 0.63% -1.05% 2.65% 29.19% 10.36% 25.12% 24.62% 17.23%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
</TABLE>
HIGHEST & LOWEST RETURN QUARTER - PAST 10 YEARS
4th quarter 1998: 14.19%
3rd quarter 1990: -5.47%
RISK/RETURN TABLE, AS OF 12/31/99
60% S&P 500 INDEX
PAX WORLD FUND 40% LEHMAN BROTHERS AGGREGATE INDEX*
1 year 17.23% 12.00%
5 year 21.12% 20.09%
10 year 13.52% 14.10%
*THIS BLEND, CONSISTING SIXTY PERCENT (60%) OF THE S&P 500 INDEX AND FORTY
PERCENT (40%) OF THE LEHMAN BROTHERS AGGREGATE INDEX IS PROVIDED BY
WIESENBERGER, A THOMSON FINANCIAL COMPANY.
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):
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)..................0%
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or
redemption proceeds, as applicable)..................0%
-2-
<PAGE>
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):
Management Fee................................................0.51%
Distribution and/or Service (12b-1) Fees......................0.19%
Other Expenses................................................0.19%
Total Annual Fund Net Operating Expenses...............................0.89%
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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$89 $278 $483 $1072
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.
-3-
<PAGE>
FINANCIAL HIGHLIGHTS
The following Financial Highlights Table is intended to help you
understand the Fund's financial performance for the past 5 years. 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.
<TABLE>
<CAPTION>
1. PER SHARE COMPONENTS OF THE NET CHANGE DURING THE YEAR IN NET ASSET VALUE (BASED UPON AVERAGE NUMBER OF
SHARES OUTSTANDING)
YEAR ENDED DECEMBER 31
------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $21.64 $18.52 $16.56 $16.33 $13.39
------ ------ ------ ------ ------
Income from investment operations
Investment income - net (A)........................ .471 .468 .493 .550 .80
Net realized and unrealized gain (loss)
on investments (A)................ 3.167 4.008 3.622 1.122 3.07
----- ----- ----- ----- ----
Total from investment operations............................ 3.638 4.476 4.115 1.672 3.87
----- ----- ----- ----- ----
Less distributions
Dividends from net investment income .............. .459 .468 .503 .550 .79
Distributions from realized gains.................. 1.410 .880 1.650 .892 .14
Tax return of capital.............................. .009 .008 .002 - -
----- ----- ----- ----- ---
Total distributions....................... 1.878 1.356 2.155 1.442 .93
----- ----- ----- ----- ---
Net asset value, end of year................................ $23.40 $21.64 $18.52 $16.56 $16.33
------ ------ ------ ------ ------
2. TOTAL RETURN............................................ 17.23% 24.62% 25.12% 10.36% 29.19%
3. RATIOS AND SUPPLEMENTAL DATA
Ratio of total expenses to average net assets (B).. .89% .95% .91% .89% .97%
Ratio of investment income - net, to
average net assets........................ 2.05% 2.33% 2.67% 3.24% 3.44%
Portfolio turnover rate............................ 21.09% 28.59% 13.88% 34.55% 28.44%
Net assets, end of year ('000s).................... $1,064,892 $837,773 $629,001 $513,433 $476,976
Number of capital shares outstanding,
end of year ('000s)....................... 45,499 38,712 33,971 31,008 29,200
</TABLE>
(A) As of January 1, 1997, the Fund began accreting bond discounts and
amortizing bond premiums and recognized a cumulative adjustment as of
that date, which reduced net investment income and increased realized
and unrealized gain on investments for 1997 by approximately $.03 per
share.
-4-
<PAGE>
(B) This ratio is based upon total expenses, including the gross amount of
custodian fees (before being reduced pursuant to an expense offset
arrangement).
OFFICERS AND DIRECTORS
The Fund's officers conduct and supervise the daily business operations
of the Fund. The Fund's Board of Directors, in addition to overseeing the Fund's
adviser, decides upon matters of general policy. The Fund's adviser furnishes
daily investment advisory services.
The Fund currently pays each unaffiliated Director a fee of $1,000.00,
and each affiliated Director a fee of $300.00, for attendance at each meeting of
the Board of Directors of the Fund, plus reimbursement for travel expenses
incurred in connection with attending such meetings. 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.
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 the Fund, Pax World Growth Fund, Inc. (the "Pax World Growth 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, but may undertake to advise other clients in the
future. The aggregate fees paid by the Fund to the Adviser for the most recent
fiscal year was $4,773,917.
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.
-5-
<PAGE>
Amounts paid 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 $1,755,918.
SHAREHOLDER GUIDE
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 Growth 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 20, 1999
PAX WORLD FUND, INCORPORATED
A No-Load Balanced 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 Pax World
Fund, Incorporated (the "Fund") dated May 20, 1999, is not a prospectus, and
should be read in conjunction with the Fund's Prospectus dated May 20, 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.
-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>
C. Lloyd Bailey Director (since 1970) Mr. Bailey is an attorney. From 1959 to 1979, Mr.
1216 Foulkeways Bailey served as the Executive Director of the United
Gwynedd, PA 19436; (82) States Committee for UNICEF; from 1980 to 1981, Mr.
Bailey served as President of that Committee; and from
1981 to 1984, Mr. Bailey served as a consultant to that
Committee. Mr. Bailey is presently retired.
- --------------------------------------------------------------------------------------------------------------------------
Carl H. Doerge, Jr. Director (since 1998) Mr. Doerge has been a private investor since 1995.
867 Remsen Lane Prior to that, Mr. Doerge was an Executive Vice
Oyster Bay, NY 11771***; (61) 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
Growth Fund, Inc. and Pax World High Yield Fund,
Inc.
- --------------------------------------------------------------------------------------------------------------------------
Thomas W. Grant Vice Chairman of the Mr. Grant is the Vice Chairman of the Board and
14 Wall Street Board of Directors and President of the Fund, as well as the President of Pax
New York, NY 10005*/**; (58) President (since 1996) World Growth Fund, Inc., 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 Growth Fund, Inc. and Pax World High
Yield Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Anita D. Green Co-Treasurer (since Ms. Green is the Manager-Shareholder Services for the
c/o Pax World Management Corp. 1998) Pax World Fund Family and Pax World Management
222 State Street Corp. (1990-present). Ms. Green is also Co-Treasurer
Portsmouth, NH 03801-3853; (35) of Pax World Management Corp. (1998-present) and the Fund
(1998-present) and Assistant Treasurer of Pax World Growth
Fund, Inc. (1997-present) and Pax World High Yield Fund,
Inc. (1999-present)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Michelle L. Guilmette Assistant Treasurer (since Ms. Guilmette is the Dealer Representative for the Pax
c/o Pax World Management Corp. 1997); World Fund Family and Pax World Management Corp.
222 State Street Assistant Secretary (since (1999-present) and was a Shareholder Services
Portsmouth, NH 03801-3853; (26) 1999) 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 the Fund,
Pax World Growth Fund, Inc. (1999-present) and Pax World
High Yield Fund, Inc. (2000-present).
- --------------------------------------------------------------------------------------------------------------------------
Joy L. Liechty Director (since 1991) Ms. Liechty is a Client and Sales Advocate with the
1403 Ashton Court Mennonite Mutual Aid Association in Goshen, Indiana.
Goshen, IN 46526; (46) 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 Growth Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Laurence A. Shadek Chairman of the Board of Mr. Shadek is the Chairman of the Board of Directors
14 Wall Street Directors (since 1996) of the Fund, as well as the Chairman of the Board of
New York, NY 10005*/**; (50) Pax World Growth Fund, Inc., 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 the Adviser 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 Growth Fund, Inc. and Pax World High
Yield Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Sanford C. Sherman Director (since 1992) Mr. Sherman is the Chief Executive Officer, and until
91 Hillside Drive 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 Growth Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Janet Lawton Spates Co-Treasurer (since Ms. Spates serves as Operations Manager for the Pax
c/o Pax World Management Corp. 1998) World Fund Family and Pax World Management Corp.
222 State Street (1992-present). Ms. Spates is also Co-Treasurer of Pax
Portsmouth, NH 03801-3853; (30) World Management Corp. (1998-present) and the Fund
(1998-present) and the Assistant Treasurer of Pax
World Growth Fund, Inc. (1997-present) and Pax
World High Yield Fund, Inc. (1999-present).
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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 Growth Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Lee D. Unterman Secretary (since 1997) Mr. Unterman serves as Secretary of the Fund (1997-
c/o Bresler Goodman & Unterman, present), Pax World Growth Fund, Inc. (1997-present)
LLP and Pax World High Yield Fund, Inc. (1999-present).
521 Fifth Avenue Mr. Unterman is a partner at the law firm of Bresler
New York, NY 10175; (49) Goodman & Unterman, LLP, New York, NY (1997-
present) and was a partner at the law firm of Broudy &
Jacobson, New York, NY (1988-1997).
- --------------------------------------------------------------------------------------------------------------------------
Esther J. Walls Director (since 1981) Ms. Walls was Associate Director of Libraries, State
Apartment 29-J University of New York, Stony Brook, Long Island,
160 West End Avenue NY, which position she held from 1974 to 1990. Ms.
New York, NY 10023; (74) Walls is also a member of the Board of Directors of
Pax World High Yield Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
</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 of the Fund 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 the Fund, Pax World Growth Fund,
Inc. ("Pax World Growth 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 Fund, the Pax World Growth 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. C. Lloyd Bailey $1,402.00 Not Applicable Not Applicable Not Applicable
- -----------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------
Ms. Esther J. Walls $4,310.00 Not Applicable $0.00 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 Fund, the Pax World Growth
Fund, the Pax World High Yield Fund and 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, but may undertake to
advise other clients in the future.
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.
The following table shows the approximate amount of the advisory fee of
the Fund for the years ended December 31, 1997, 1998 and 1999:
Year ended December 31, 1997: $2,889,714
Year ended December 31, 1998: $3,599,066
Year ended December 31, 1999: $4,773,917
-11-
<PAGE>
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 21,
1984, 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 incurred by the Fund under the Plan for clerical,
advertising, printing, postage and sales expenses (travel, telephone and sales
literature) totaled $1,755,918: advertising - $642,145; printing and postage
- - $128,124; and sales and related expenses - $985,649.
Pursuant to the Plan, the Fund 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 is responsible for decisions to buy and sell 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. Orders may be
directed to any broker including, to the extent and in the manner permitted by
applicable law, the Distributor and its affiliates. For the years ended December
31, 1997, 1998 and 1999, brokerage commissions amounted to approximately
$365,000, $507,000 and $490,729, 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. Brokerage commissions
paid by the Fund to the Distributor during 1997, 1998 and 1999 totaled
approximately $132,372, $140,863 and $145,892, respectively (36.3%, 27.8% and
29.7%, respectively, of total 1997, 1998 and 1999 commissions).
PURCHASE, REDEMPTION AND EXCHANGE
OF FUND SHARES
As a shareholder of the Fund, you may exchange your shares of the Fund
for shares of the Pax World Growth 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.
<PAGE>
PANNELL KERR FORSTER PC
Certified Public Accountants
75 Federal Street
Boston, MA 02110
Telephone (617) 753-9985
Telefax (617) 753-9986
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Pax World Fund, Incorporated
We have audited the statement of assets and liabilities of Pax World Fund,
Incorporated, including the schedule of investments, at December 31, 1999, and
the related statement of operations for the year then ended, 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 five years in the period then ended. 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 Fund, Incorporated at December 31, 1999, the results of its operations for
the year then ended, 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 five years
in the period then ended, in conformity with generally accepted accounting
principles.
/s/Pannell Kerr Forster, P.C.
January 21, 2000
4
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD FUND, INCORPORATED
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
ASSETS
<S> <C>
Investments, at value - note A
Common stocks (cost - $360,087,970) ....................................... $ 693,788,236
Preferred stocks (cost - $12,447,722) ..................................... 10,075,000
Bonds (amortized cost - $279,810,758) ..................................... 271,778,820
Certificates of deposit (cost - $1,500,000) ............................... 1,500,000
Pax World Money Market Fund (cost - $71,911,714) .......................... 71,911,714
--------------
1,049,053,770
Cash ......................................................................... 12,669,258
Receivables
Dividends and interest .................................................... 4,879,663
Other ..................................................................... 3,076
--------------
Total assets ........................................................... 1,066,605,767
--------------
LIABILITIES
Payables
Capital stock reacquired .................................................. 954,791
Withheld foreign dividend tax liability ................................... 14,688
Accrued expenses
Investment advisory fee - note B .......................................... 433,543
Transfer agent fee ........................................................ 120,000
Distribution expenses ..................................................... 130,330
Other accrued expenses .................................................... 60,616
--------------
Total liabilities ...................................................... 1,713,968
--------------
Net assets (equivalent to $23.40 per share based on 45,499,353
shares of capital stock outstanding) - note E ...................... $1,064,891,799
--------------
Net asset value, offering price and redemption price per share
($1,064,891,799 / 45,499,353 shares outstanding).................... $ 23.40
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD FUND, INCORPORATED
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
<S> <C> <C>
Investment income
Income - note A
Dividends
Pax World Money Market Fund............................. $ 4,639,222
Other investments....................................... 8,400,377 $ 13,039,599
------------
Interest .................................................. 14,436,408
--------------
Total income......................................... 27,476,007
Expenses
Investment advisory fee - note B........................... 4,773,917
Distribution expenses - note D............................. 1,755,918
Transfer agent fee......................................... 972,385
Custodian fees - note F.................................... 229,201
State and foreign taxes.................................... 171,400
Printing and mailing....................................... 167,617
Audit fees................................................. 68,959
Registration fees.......................................... 67,734
Legal fees and related expenses - note B................... 60,895
Other...................................................... 51,349
Directors' fees and expenses - note B...................... 35,147
-------------
Total expenses.......................................... 8,354,522
Less: Fees paid indirectly - note F..................... (189,685)
------------
Net expenses.................................... 8,164,837
---------------
Investment income - net................................. 19,311,170
--------------
Realized and unrealized gain on investments - notes A
and C
Net realized gain on investments.............................. 59,654,186
Change in unrealized appreciation of investments
for the year................................................ 73,483,006
--------------
Net gain on investments................................. 133,137,192
-------------
Net increase in net assets resulting from
operations............................................. $152,448,362
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD FUND, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31
1999 1998
------------------------
<S> <C> <C>
Increase in net assets
Operations
Investment income - net ........................... $ 19,311,170 $ 16,473,815
Net realized gain on investments .................. 59,654,186 32,342,171
Change in unrealized appreciation of investments .. 73,483,006 112,901,738
--------------- ---------------
Net increase in net assets resulting from
operations .................................... 152,448,362 161,717,724
Net equalization credits ............................. 382,410 275,435
Distributions to shareholders from
Investment income - net ($.459 and $.468 per share,
respectively) - note A .......................... (19,169,759) (16,751,495)
Net realized gain on investments ($1.410 and $.880
per share, respectively) - note A ............... (59,654,097) (32,342,583)
Capital share transactions - note E .................. 153,112,359 95,872,040
--------------- ---------------
Net increase in net assets ..................... 227,119,275 208,771,121
Net assets
Beginning of year .................................... 837,772,524 629,001,403
--------------- ---------------
End of year (including undistributed investment
income - net: $530,790 and $6,969, respectively) .. $ 1,064,891,799 $ 837,772,524
--------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD FUND, INCORPORATED
SCHEDULE OF INVESTMENTS
December 31, 1999
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
Best Foods, Inc................................... 150,000 $ 7,884,375
Costco Wholesale Corp. ........................... 150,000 13,687,500
Gap, Inc.......................................... 500,000 23,000,000
General Mills, Inc................................ 200,000 7,150,000
Koninklijke Philips Electronics, NV ADR........... 115,000 15,525,000
Masco Corp........................................ 400,000 10,150,000
MediaOne Group, Inc............................... 225,000 17,282,812
Sony Corp. ADR.................................... 125,000 35,593,750
Starbucks Corp.................................... 420,000 10,185,000
Tribune Co........................................ 400,000 22,025,000
Wendy's International, Inc........................ 396,540 8,178,637
--------------
170,662,074 16.0%
--------------
ENERGY
Enron Corp........................................ 1,000,000 44,375,000
Questar Corp. .................................... 200,000 3,000,000
--------------
47,375,000 4.4
--------------
FINANCIAL
American Gen Corp................................. 160,000 12,140,000
H&R Block, Inc.................................... 250,000 10,937,500
SLM Holding Corp.................................. 200,000 8,450,000
--------------
31,527,500 3.0
--------------
HEALTH CARE
Amgen, Inc........................................ 1,050,000 63,065,625
Baxter International, Inc......................... 150,000 9,421,875
Bristol-Myers Squibb Co........................... 250,000 16,046,875
Guidant Corp...................................... 200,000 9,400,000
Johnson & Johnson................................. 100,000 9,312,500
Medtronic, Inc.................................... 200,000 7,287,500
Merck & Co., Inc.................................. 400,000 26,825,000
--------------
141,359,375 13.3
--------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD FUND, INCORPORATED
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
COMMON STOCKS (CONTINUED)
TECHNOLOGY
<S> <C> <C> <C>
America Online, Inc............................... 120,000 $ 9,052,500
Apple Computer.................................... 150,000 15,421,875
ASM Lithography Holdings NV....................... 50,000 5,687,500
Cisco Systems, Inc................................ 100,000 10,712,500
Computer Associates International, Inc............ 150,000 10,490,625
EMC Corp. (Mass.)................................. 250,000 27,312,500
Fiserv, Inc....................................... 275,000 10,535,938
Microsoft Corp.................................... 25,000 2,918,750
Pitney Bowes, Inc................................. 196,593 9,497,899
SAP Aktiengesellschaft ADR........................ 50,000 2,603,125
-------------
104,233,212 9.8%
-------------
TELECOMMUNICATIONS
Allegiance Telecom, Inc........................... 12,000 1,107,000
BellSouth Corp.................................... 350,000 16,384,375
Cable & Wireless PLC.............................. 200,000 10,587,500
Loral Space Communications........................ 500,000 12,156,250
McLeod USA, Inc................................... 5,000 294,375
SBC Communications, Inc........................... 400,000 19,500,000
Telefonos de Mexico, SA ADR (representing
ordinary shares L).............................. 100,000 11,250,000
U.S. West, Inc. - Communications Group............ 250,000 18,000,000
Vodafone AirTouch PLC ADR......................... 1,250,000 61,875,000
-------------
151,154,500 14.2
-------------
UTILITIES
American Water Works, Inc......................... 142,080 3,019,200
DPL, Inc. ........................................ 300,000 5,193,750
Keyspan Corp...................................... 587,600 13,624,975
NiSource, Inc..................................... 400,000 7,150,000
Peoples Energy Corp............................... 551,900 18,488,650
-------------
47,476,575 4.5
------------- -------
TOTAL COMMON STOCKS............................ 693,788,236 65.2
------------- -------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD FUND, INCORPORATED
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
PREFERRED STOCKS
<S> <C> <C> <C>
CONSUMER
Suiza Foods Corp. Capital Trust II
5.500% Convertible Preferred.................... 75,000 $ 2,587,500 .2%
REAL ESTATE
Equity Residential Properties Trust 7.250%
Convertible Preferred Series G.................. 160,000 3,160,000 .3
UTILITIES
NiSource, Inc. 7.750% Series B
Convertible Preferred .......................... 120,000 4,327,500 .4
-------------- -------
TOTAL PREFERRED STOCKS......................... 10,075,000 .9
------------- -------
TOTAL STOCKS......................................... 703,863,236 66.1
------------- -------
PRINCIPAL
GOVERNMENT AGENCY BONDS AMOUNT
-------
Federal Farm Credit Bank
5.000%, due October 2, 2003....................... $10,000,000 9,389,100
Federal Home Loan Bank System
5.250%, due August 9, 2002........................ 10,000,000 9,646,900
6.890%, due August 28, 2002....................... 5,000,000 4,971,100
5.025%, due November 5, 2002...................... 10,000,000 9,551,600
5.905%, due December 23, 2002..................... 14,000,000 13,709,080
5.750%, due April 28, 2003........................ 7,000,000 6,753,880
6.495%, due June 23, 2003......................... 5,000,000 4,897,650
5.590%, due October 6, 2003....................... 12,000,000 11,480,640
5.250%, due October 27, 2003...................... 10,000,000 9,448,400
5.335%, due February 19, 2004..................... 10,000,000 9,454,700
5.485%, due February 26, 2004..................... 5,000,000 4,750,000
6.000%, due May 25, 2004.......................... 5,885,000 5,646,834
6.805%, due June 28, 2004......................... 5,000,000 4,910,950
6.000%, due October 6, 2004....................... 5,000,000 4,771,850
6.750%, due November 16, 2004..................... 5,000,000 4,885,950
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD FUND, INCORPORATED
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
GOVERNMENT AGENCY BONDS (CONTINUED)
<S> <C> <C> <C>
Federal Home Loan Mortgage Corp.
5.400%, due January 14, 2002...................... $ 5,000,000 $ 4,885,150
6.180%, due June 14, 2002......................... 5,000,000 4,911,700
6.110%, due June 18, 2003......................... 10,000,000 9,707,800
Federal National Mortgage Association
6.110%, due September 20, 2000.................... 12,000,000 11,981,280
6.080%, due September 25, 2000.................... 5,000,000 4,991,400
5.820%, due December 5, 2000...................... 15,000,000 14,927,400
5.370%, due February 7, 2001...................... 20,000,000 19,750,000
5.410%, due February 13, 2001..................... 10,000,000 9,878,100
5.360%, due February 16, 2001..................... 10,000,000 9,871,900
6.710%, due July 24, 2001......................... 7,000,000 7,015,330
6.510%, due September 27, 2002.................... 5,000,000 4,954,425
5.430%, due November 3, 2003...................... 10,000,000 9,512,500
5.375%, due November 17, 2003..................... 8,000,000 7,612,480
5.810%, due February 23, 2004..................... 10,000,000 9,585,900
6.000%, due March 12, 2004........................ 10,000,000 9,621,900
5.880%, due March 25, 2004........................ 9,000,000 8,628,750
6.930%, due June 30, 2004......................... 5,000,000 4,908,600
--------------
TOTAL GOVERNMENT AGENCY BONDS.................. 267,013,249 25.1%
-------------- -----
CORPORATE BONDS
American General Finance Corp.
5.750%, due November 1, 2003...................... 2,500,000 2,373,533
Sears Roebuck Acceptance Corp.
6.000%, due March 20, 2003........................ 2,500,000 2,392,038
--------------
TOTAL CORPORATE BONDS.......................... 4,765,571 .4
-------------- ------
TOTAL BONDS.................................... 271,778,820 25.5
-------------- ------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
PAX WORLD FUND, INCORPORATED
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
NUMBER OF PERCENT OF
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE NET ASSETS
CERTIFICATES OF DEPOSIT
<S> <C> <C> <C>
South Shore Bank 5.650%, due
October 11, 2000................................ $ 1,000,000 $ 1,000,000
Self Help Credit Union 5.420%, due
May 31, 2000................................... 500,000 500,000
--------------
TOTAL CERTIFICATES OF DEPOSIT................. 1,500,000 .1%
-------------- -------
NUMBER
MONEY MARKET SHARES OF SHARES
---------
Pax World Money Market Fund....................... 71,911,714 71,911,714 6.8
-------------- -------
TOTAL INVESTMENTS............................. 1,049,053,770 98.5
Cash and receivables, less liabilities............ 15,838,029 1.5
-------------- -------
NET ASSETS.................................... $1,064,891,799 100.0%
-------------- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
PAX WORLD FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Pax World Fund, Incorporated ("Fund") is a diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended. 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 primarily to provide its shareholders with a diversified
holding of securities of companies which offer primarily income and conservation
of principal and secondarily possible long-term growth of capital through
investment in common and preferred stocks and debt securities.
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. Certificates of deposit are valued at cost; accrued interest to
December 31, 1999 is included in dividends and interest receivable.
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 recorded on the ex-dividend date. Interest income is
recorded on the accrual basis and includes accretion of discount and
amortization of premiums.
The Fund amortizes purchase price premium and accretes discount on bonds
over the remaining life of the bonds using the effective interest method of
amortization; for callable bonds, the amortization period is to the first call
date. Net discount accretion for 1999 and 1998 was $183,942 and $219,398,
respectively.
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
13
<PAGE>
PAX WORLD FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
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.
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 Pax
World Management Corp. ("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.
The Agreement provides for payment by the Fund to the Adviser 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. 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. 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 1999 or 1998.
Two officers, who are also directors of the Fund, are also officers and
directors of the Adviser. Two other officers of the Fund, who are not directors
of the Fund, are also officers of the Adviser.
All Directors are paid by the Fund for attendance at directors' meetings.
During 1999, the Fund incurred legal fees and related expenses of $60,895
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 a brokerage firm which the Fund
utilizes to execute security transactions. Brokerage
14
<PAGE>
PAX WORLD FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
commissions paid to this firm during 1999 and 1998 totaled $145,892 and
$140,863, respectively, (29.7% and 27.8%, 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 - INVESTMENTS
Purchases and proceeds from sales of investments, excluding short-term
investments and U.S. Government agency bonds, aggregated $164,348,448 and
$131,205,582, respectively, for 1999. Purchases and proceeds from sales and
maturities of U.S. Government agency bonds aggregated $111,892,461 and
$46,000,000, respectively, for 1999.
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 $725,758,164. Gross unrealized appreciation and
depreciation of investments aggregated $342,792,564 and $19,496,958,
respectively, at December 31, 1999, resulting in net unrealized appreciation of
$323,295,606.
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 to finance activity which is primarily intended
to result in the sale of Fund 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.
15
<PAGE>
PAX WORLD FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
NOTE E - CAPITAL AND RELATED TRANSACTIONS
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1999 1998
---- ----
Shares Dollars Shares Dollars
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold .............. 11,130,593 $ 254,077,925 9,126,274 $ 182,396,781
Shares issued in reinvest-
ment of distributions .. 3,299,473 73,784,954 2,232,027 45,625,923
------------- ------------- ------------- -------------
14,430,066 327,862,879 11,358,301 228,022,704
Shares redeemed .......... (7,642,767) (174,750,520) (6,617,044) (132,150,664)
------------- ------------- ------------- -------------
Net increase ............. 6,787,299 $ 153,112,359 4,741,257 $ 95,872,040
------------- ------------- ------------- -------------
The components of net assets at December 31, 1999 are as follows:
<S> <C>
Paid-in capital (75,000,000 shares of $1 par value authorized).. $ 748,985,443
Undistributed investment income ................................ 530,790
Excess distribution of capital gains ........................... (1,869)
Accumulated prior years' net realized losses on investments .... (7,918,171)
Net unrealized appreciation of investments ..................... 323,295,606
---------------
Net assets ................................................ $ 1,064,891,799
---------------
</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.
16
<PAGE>
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 YEAR IN NET ASSET VALUE
(BASED UPON AVERAGE NUMBER OF SHARES OUTSTANDING)
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year....... $ 21.64 $ 18.52 $ 16.56 $ 16.33 $ 13.39
---------- -------- -------- -------- --------
Income from investment operations
Investment income - net (A)........... .471 .468 .493 .550 .80
Net realized and unrealized gain (loss)
on investments (A)................. 3.167 4.008 3.622 1.122 3.07
---------- -------- -------- -------- --------
Total from investment operations............ 3.638 4.476 4.115 1.672 3.87
---------- -------- -------- -------- --------
Less distributions
Dividends from net investment
income ............................. .459 .468 .503 .550 .79
Distributions from realized gains........ 1.410 .880 1.650 .892 .14
Tax return of capital.................... .009 .008 .002 -- --
---------- -------- -------- -------- --------
Total distributions................. 1.878 1.356 2.155 1.442 .93
---------- -------- -------- -------- --------
Net asset value, end of year............. $ 23.40 $ 21.64 $ 18.52 $ 16.56 $ 16.33
---------- -------- -------- -------- --------
2. TOTAL RETURN............................ 17.23% 24.62% 25.12% 10.36% 29.19%
3. RATIOS AND SUPPLEMENTAL DATA
Ratio of total expenses to average net
assets (B).............................. .89% .95% .91% .89% .97%
Ratio of investment income - net, to
average net assets...................... 2.05% 2.33% 2.67% 3.24% 3.44%
Portfolio turnover rate.................. 21.09% 28.59% 13.88% 34.55% 28.44%
Net assets, end of year ('000s).......... $1,064,892 $837,773 $629,001 $513,433 $476,976
Number of capital shares outstanding,
end of year ('000s)..................... 45,499 38,712 33,971 31,008 29,200
</TABLE>
(A) As of January 1, 1997, the Fund began accreting bond discounts and
amortizing bond premiums and recognized a cumulative adjustment as of
that date, which reduced net investment income and increased net
realized and unrealized gain on investments for 1997 by approximately
$.03 per share.
(B) This ratio is based upon total expenses, including the gross amount of
custodian fees (before being reduced pursuant to an expense offset
arrangement).
17
