UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. _____)

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/_/ Filed by the Registrant x
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o Preliminary Proxy Statement /_/
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x Definitive Proxy Statement
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o Soliciting Material Pursuant to §240.14a-12
PAX WORLD BALANCED FUND, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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PAX WORLD BALANCED FUND, INC.
(Name
PROXY STATEMENT
AND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
January 27, 2006

Table of Registrant as Specified In Its Charter)

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0-11 (set forth the amount on which the filing fee is
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/_/ Fee paid previously with preliminary materials:

/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
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[PAX WORLD LOGO]

Contents
Page
President’s Letter i
Notice of Special Meeting iii
General 1
Proposal 5
Security Ownership of Certain Beneficial Owners and Management 9
Financial Statements 9
Shareholder Proposals 10
Other Matters to Come Before the Meeting 10
Exhibit A A

PAX WORLD BALANCED FUND, INC.

--------------

PROXY STATEMENT AND
NOTICE
222 STATE STREET
PORTSMOUTH, NEW HAMPSHIRE 03801-3853
January 27, 2006
TO THE SHAREHOLDERS OF ANNUAL MEETING OF
SHAREHOLDERS

--------------

THURSDAY, JUNE 9, 2005

TABLE OF CONTENTS

Page

President's Letter................................................. 1

Notice of Annual Meeting........................................... 2

Proxy Statement.................................................... 3

Proposal 1 - To Elect a Board of Nine Directors............... 3

Proposal 2 - To Ratify the Selection of Ernst & Young LLP
as Independent Public Accountants of the Fund.... 8

Other Business..................................................... 9

Expenses of Proxy Solicitation..................................... 9

Shareholder Proposals.............................................. 10

Security Ownership of Certain Beneficial and/or Record
Owners and Management............................................ 10

Householding of Annual Reports..................................... 11

Additional Information............................................. 11

PAX WORLD BALANCED FUND, INC.
222 STATE STREET
PORTSMOUTH, NH 03801-3853

To the Pax World Balanced Fund Shareholders:

:
As an investora shareholder in the Pax World Balanced Fund, Inc. (the "Fund"“Fund”), you are cordially invited to attend the annuala special meeting (the "Meeting"“Meeting”) of shareholders of the Fund, (the "Shareholders") to be held on February 23, 2006, at 10:4500 a.m. on Thursday, June 9,
2005, local time, at the Sheraton Harborside Portsmouth Hotel and Conference Center, 250 Market Street, Portsmouth, NHNew Hampshire 03801. The purpose
At the Meeting, you will be asked to consider and to vote on a proposal to approve an amendment to the Fund’s Certificate of Incorporation that would increase the number of authorized shares of the Meeting isFund’s common stock from seventy-five million (75,000,000) to one hundred fifty million (150,000,000) (the “Amendment”).
Due to significant cash inflows, the Fund exhausted its authorized shares of common stock available for issuance under its Certificate of Incorporation and inadvertently issued certain shares in excess of the Shareholders:

(1) to elect75,000,000 shares authorized (collectively, the “Overissue Shares”). All of the Overissue Shares were sold on the same basis as the Fund’s authorized shares and holders of the Overissue Shares have been treated by the Fund in every respect identically with holders of the Fund’s authorized shares. The Fund first became aware of the overissuance in December, 2005. At a special meeting of the Board of nine Directors each to hold office until the
next Annual Meeting of Shareholders of the Fund or untilheld on December 23, 2005, the Board adopted a successor shall have been chosenresolution approving the Amendment and shall have qualified;

(2)determined: (i) to ratifyseek shareholder approval of the selectionAmendment; (ii) pending the receipt of Ernst & Young LLP as the independent
public accountantssuch approval, to limit issuances of shares of the Fund only to certain institutions and individuals with whom the Fund or its principal underwriter has contractual commitments to issue shares, and to satisfy such issuances only from validly issued shares of common stock held in the Fund’s treasury; and (iii) to conduct a rescission offer with respect to the Overissue Shares. Before the Fund can reopen to all purchases, it must increase the number of authorized shares of its common stock.
If the Amendment is approved, the proposed increase in authorized shares of common stock from seventy-five million (75,000,000) to one hundred fifty million (150,000,000) would allow the Fund to reopen for all purchases and to effect an exchange of some or all of the year ending December 31,
2005; and

(3) to transact such other business as may properly come beforeOverissue Shares for newly authorized shares. If the Meeting.

In this regard, enclosed are (1) a Notice of Meeting, (2) a Proxy
Statement that describesAmendment is not approved, the proposals thatFund will be submittedunable to shareholdersreopen for all purchases, will treat Overissue Shares, and all rights

and claims with respect thereto, as having been eliminated in exchange for newly authorized shares and may be unable to continue sales of shares in a manner typical of an open-end investment company. The enclosed proxy statement includes a more detailed discussion of both the overissuance and the Amendment, and provides important information regarding shareholder voting. You should read the enclosed proxy statement carefully before voting.
All valid shares of common stock represented by properly executed and delivered proxies will be voted in accordance with the specifications therein. If no specification is made, proxies will be voted FOR approval atof the Meeting, and (3) a Proxy.

Although we look forward to seeingAmendment. If you at the Meeting, if you cannot attend the Meeting we ask thatafter already having returned your proxy card, you may withdraw your proxy and vote your shares in person.
Your vote is important to the Fund. Whether or not you plan to attend the Meeting in person and regardless of the number of shares you own, please complete, sign, date and return the accompanying Proxyenclosed proxy card promptly in the enclosed postage-paidpre-addressed envelope or vote by telephonerecord your voting instructions telephonically or onvia the Internet as describedInternet. No postage is required if your proxy is mailed in the enclosed pamphlet as soon as possible. These
proposals are importantUnited States.
The Board of Directors of the Fund believes that the proposed increase in the authorized shares of common stock of the Fund is advisable and yourin the best interests of the Fund and its shareholders. Accordingly, the Board of Directors unanimously recommends that shareholders vote is greatly appreciated.

Sincerely,

/s/ Thomas W. Grant

THOMAS W. GRANT
President

April 27, 2005
Portsmouth, NH

FOR approval of the Amendment.
Sincerely,
Thomas W. Grant
President
ii

PAX WORLD BALANCED FUND, INC.
222 STATE STREET
PORTSMOUTH, NHNEW HAMPSHIRE 03801-3853
NOTICE OF ANNUALSPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, JUNE 9, 2005

Notice is hereby given that the annualFEBRUARY 23, 2006
TO OUR SHAREHOLDERS:
A special meeting (the "Meeting") of the shareholders of Pax World Balanced Fund, Inc., a Delaware corporation (the "Fund"“Fund”), will be held on February 23, 2006 at 10:4500 a.m. on Thursday, June 9, 2005, local time, at the Sheraton Harborside Portsmouth Hotel and Conference Center, 250 Market Street, Portsmouth, NHNew Hampshire 03801, for the following purposes:
(1) To elect a Boardconsider approval of nine Directors, eachan amendment to hold office until the next Annual MeetingFund’s Certificate of Incorporation that would increase the Shareholdersnumber of the Fund or until a
successor shall have been chosenauthorized shares of its common stock, par value $1.00 per share, from seventy-five million (75,000,000) shares to one hundred fifty million (150,000,000) shares; and shall have qualified;

(2) To ratify the selection by the Board of Directors of Ernst & Young
LLP as the independent public accountants of the Fund for the year
ending December 31, 2005; and

(3) To transactconsider such other businessmatters as may properly come before such
Meeting or any adjournment thereof.

The close of business on April 18, 2005 has been fixed as the record date
for the determination of shareholders of the Fund entitled to notice of and to
vote at the Meeting and at any adjournment orand all adjournments thereof.
Only shareholders of record at the close of business on such dateJanuary 6, 2006 are entitled to notice of and to vote at the Meetingspecial meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Lee D. Unterman
Secretary
Portsmouth, New Hampshire
January 27, 2006
A proxy card is enclosed. Your vote is important to the Fund. Whether or not you plan to attend the special meeting in person and any adjournment or adjournments
thereof.

By Orderregardless of the Boardnumber of Directors

/s/ Lee D. Unterman

LEE D. UNTERMAN
Secretary

April 27, 2005
Portsmouth, NH

IF YOU CANNOT ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE OR VOTE BY TELEPHONE OR ON THE
INTERNET AS DESCRIBED IN THE ENCLOSED PAMPHLET.

-2-

shares you own, please complete, sign, date and return the enclosed proxy card promptly in the enclosed pre-addressed envelope or record your voting instructions telephonically or via the Internet. No postage is required if your proxy card is mailed in the United States. Returning your proxy card (or recording your voting instructions via the Internet or telephonically) will not affect your right to vote in person if you attend the special meeting.
iii

PAX WORLD BALANCED FUND, INC.
222 STATE STREET
PORTSMOUTH, NHNEW HAMPSHIRE 03801-3853
PROXY STATEMENT

This Proxy Statement
GENERAL
The enclosed proxy is furnished in connection with the solicitationsolicited by and on behalf of the Board of Directors of Pax World Balanced Fund, Inc., (the "Fund"“Fund”), for use at a special meeting of proxies
to be used at the Annual Meeting of Shareholdersshareholders (the “Meeting”) to be held at 10:4500 a.m., local time, on Thursday, June 9, 2005February 23, 2006, at the Sheraton Harborside Portsmouth Hotel and Conference Center, 250 Market Street, Portsmouth, NHNew Hampshire 03801, and at any adjournment orand all adjournments thereofand postponements thereof. This proxy statement (the "Meeting"“Proxy Statement”), for the purposes set forth
in and the accompanying notice.

Shareholders of record atproxy card (the “Proxy Card”) are first being mailed or given to the close of business on April 18, 2005, the
record date, are entitled to notice of and to vote at the Meeting. As of such
date, there were 68,621,261.850 shares of Common Stockshareholders of the Fund issued and
outstanding, the holders of which are entitled to one vote per share on all
matters brought before the Meeting. If you were a Shareholder as of said date,
you will be entitled to vote at the Meeting and your presence is desired. IF,
HOWEVER, YOU CANNOT BE PRESENT, THE BOARD OF DIRECTORS REQUESTS THAT YOU
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY OR VOTE BY TELEPHONE OR
ON THE INTERNET AS DESCRIBED IN THE ENCLOSED PAMPHLET IN ORDER TO INSURE A
QUORUM AT THE MEETING.

Representatives of Ernst & Young LLP, the Fund's independent public
accountants, are expected to be present at the Meeting. They will have the
opportunity to make a statement at the Meeting if they desire to do so and are
expected to be available to respond to appropriate questions.

or about January 27, 2006.
The persons named in the accompanying proxy, if properly executed and
returned and unless revoked, will vote the same for Proposals 1, 2 and 3 as
indicated herein, unless the proxy contains contrary directions, in which case
the proxy will be voted as directed. If a proxy is executed and returned without
indicating any voting instructions, the sharesmost recent Annual Report of the Fund, represented by the
proxy will be voted FOR Proposals 1, 2 and 3. Any shareholder of the Fund giving
a proxy prior to the Meeting may revoke it either by attending the Meeting and
voting his or her shares in person or by delivering to the Fund at the above
address prior to the date of the Meeting a letter of revocation or a later dated
proxy. In the event that the number of shares of the Fund represented at the
meeting of Shareholders on June 9, 2005 in person or by proxy is less than a
majority of the number of shares of the Fund issued and outstanding on the
record date, the persons named in the accompanying proxy will vote FOR an
adjournment of such Meeting if a majority of the number of shares of the Fund
represented in person or by proxy at such Meeting voted FOR any of the
Proposals, and otherwise, will vote AGAINST an adjournment of such Meeting.
Votes withheld from any nominee, abstentions, and broker "non-votes" will be
counted as present or represented for purposes of determining the presence or
absence of a quorum for the Meeting. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on one or more proposals
because the nominee does not have discretionary voting power and has not
received instructions from the beneficial owner.

This Proxy Statement has been mailed on or about the date hereof pursuant
to instructions from the executive offices of the Fund located in Portsmouth,
New Hampshire and has been sent through its transfer agent, PFPC, Inc. The
Fund's Annual Reportcontaining audited financial statements for the fiscal year that ended December 31, 2004, has
alreadyand the most recent Semiannual Report succeeding the Annual Report of the Fund (each, a “Report”), previously have been mailedfurnished to Shareholders. Shareholders who desire anthe Fund’s shareholders. An additional copy of the Annualeach Report may obtain itwill be furnished without charge upon request by writing to the Fund at 222 State Street, Portsmouth, NHNew Hampshire 03801-3853 telephoningor by calling 1-800-767-1729. The Reports also are available on the Fund at 1-800-767-1729,
visiting the Fund's web sitePax World Funds website at www.paxworld.com, or visitingat the website of the Securities and Exchange Commission's web siteCommission (the “Commission”) at www.sec.govwww.sec.gov.
Record Date, Quorum, Voting Power.All voting rights are vested exclusively in the holders of the Fund’s validly issued common stock, par value $1.00 per share. Holders of shares of the Fund’s validly issued common stock are entitled to one vote for each such purpose.share held. Holders of the Fund’s validly issued common stock as of January 6, 2006 (the “Record Date”) are entitled to vote at the Meeting. At the Meeting, holders of a majority in interest of the common stock of the Fund’s validly issued, outstanding and entitled to vote, present in person or by proxy, shall constitute a quorum. Holders of the Overissue Shares (defined on page 5) shall not be entitled to vote and such shares shall not be counted in determining whether a quorum is present at the Meeting. As of the Record Date, there were 72,974,911.825 shares of the Fund’s common stock validly issued and outstanding and there were 8,613,843.599 Overissue Shares issued and outstanding as of such date.
Proxies.Proxies in the accompanying form will be effective if properly executed and delivered prior to the Meeting in the enclosed postage-prepaid

envelope. You also may record your voting instructions telephonically or via the Internet in accordance with the instructions on the Proxy Card.
Method of Tabulation.The Fund’s shares of validly issued common stock represented by each effective proxy will be voted at the Meeting in accordance with the instructions thereon. If no instructions are indicated on a Proxy Card, all shares of validly issued common stock represented by such proxy will be voted FOR approval of an amendment to the Fund’s Certificate of Incorporation (the “Amendment”), which would increase the number of authorized shares of the Fund’s common stock, par value $1.00 per share, from seventy-five million (75,000,000) shares to one hundred fifty million (150,000,000) shares; and, as to any other matters of business which properly come before the Meeting, in the discretion of the named proxies.
Required Vote.Approval of the Amendment requires the affirmative vote of a majority of the Fund’s validly issued and outstanding common stock. The Overissue Shares shall not be tallied in calculating the shareholder vote with respect to the Amendment.
Abstentions and Broker Non-Votes.Abstentions and broker non-votes (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote, and (ii) the broker or nominee does not have discretionary voting power on a particular matter) would be treated as shares that are present only for purposes of determining the presence of a quorum. Therefore, abstentions and broker non-votes would have the same effect as a vote against the proposal to approve the Amendment. However, the Fund has been advised that brokers and nominees will have discretionary voting power with respect to the proposal to approve the Amendment.
Revocation.Any shareholder signing and mailing the Proxy Card (or recording his, her or its voting instructions telephonically or via the Internet) may revoke his, her or its proxy at any time before it is voted by giving written notice of the revocation to the Fund, by voting in person at the Meeting or by filing a subsequently executed Proxy Card (or by subsequently recording voting instructions telephonically or via the Internet).
Solicitation, Expenses.The Fund has retained the services of Automatic Data Processing, Inc. (“ADP”) to assist in the solicitation of proxies at an estimated total cost of approximately $230,000; however, the exact cost will depend on the amount and types of services rendered. Pursuant to a letter of indemnity between the Fund and Pax World Management Corporation (“PWMC”), 222 State Street, Portsmouth, New

Hampshire 03801-3853, the Fund’s investment adviser, PWMC will reimburse the Fund for the cost of soliciting proxies. In connection with the recordation of voting instructions telephonically or via the Internet, ADP will use procedures designed to authenticate shareholders’ identities, to allow shareholders to authorize the voting of their shares in accordance with their instructions and to allow shareholders to confirm that their instructions have been recorded properly.
As the Meeting date approaches, shareholders may receive a telephone call from a representative of ADP if their vote has not yet been received. Authorization to permit ADP to execute proxies may be obtained by telephonically or electronically transmitted instructions from shareholders of the Fund. Proxies that are obtained telephonically will be recorded in accordance with the procedures set forth below. In all cases when a telephonic proxy is solicited, ADP’s representative is required to ask for: (i) the full name and address of the shareholder, (ii) the title of the person solicited and whether such person is authorized to direct the voting of such shares (if an entity), (iii) the number of shares owned, if known, and (iv) confirmation from the shareholder that such shareholder has received this Proxy Statement and the Proxy Card in the mail. If the information solicited from the shareholder is consistent with the information provided to ADP, then the ADP representative has the responsibility to explain the process, to read the proposal listed on the proxy card and to ask for the shareholder’s voting instructions on the proposal. Although permitted to answer questions about the process, ADP’s representative is not permitted to recommend to the shareholder how to vote, other than to read the recommendation of the Board of Directors set forth in this Proxy Statement. ADP will record the shareholder’s instructions on the card. Within 72 hours, the shareholder will be sent a letter by first class mail confirming his or her vote and asking the shareholder to call ADP immediately if his, her or its votes are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not wish to provide voting instructions telephonically or via the Internet, the shareholder may still submit the proxy card originally sent with this Proxy Statement or attend the Meeting in person. Should shareholders require additional information regarding this Proxy Statement or a replacement Proxy Card, they may contact ADP toll free at 1-877-333-2192.
Adjournment.If sufficient votes in favor of the proposal are not received by the time scheduled for the Meeting, the persons named as proxies may propose adjournments of the Meeting to permit further solicitation of

proxies. No notice need be given with respect to an adjourned Meeting; however, if any such adjournment extends more than 30 days after the original date of the Meeting, the Fund shall provide notice to shareholders of record entitled to vote at the Meeting. Any adjournment shall require the affirmative vote of a majority of the stock represented at the session of the Meeting to be adjourned. The persons named as proxies will vote those proxies that they are entitled to vote FOR the Amendment in favor of an adjournment and will vote those proxies required to be voted AGAINST the Amendment against an adjournment. For purposes of determining the outcome of any vote on an adjournment of the Meeting, abstentions and broker non-votes would have the same effect as a vote against the adjournment. However, the Fund has been advised that brokers and nominees will have discretionary voting power with respect to a proposed adjournment of the Meeting.
Householding.To reduce expenses, it is intended that only one copy of this Proxy Statement will be mailed to two or more accounts sharing the same address and taxpayer identification number. If you wish to receive additional copies of this Proxy Statement and your shares are held directly with the Fund, you may call the Fund at 1-800-372-7827. Alternatively, if your shares are held through a financial institution, please contact that financial institution directly. Promptly after receipt of your request by the Fund or by the financial institution, as applicable, such party will deliver the requested copies.
Principal Underwriter.The principal underwriter of the Fund is H.G. Wellington & Co., Inc. (“Wellington”), 14 Wall Street, 17^th Floor, New York, New York 10005.
4

PROPOSAL
Approval of an Amendment to the Fund’s Certificate of Incorporation to
Increase the Number of Authorized Shares of its Common Stock
On December 23, 2005, the Fund’s Board of Directors unanimously adopted a resolution approving, subject to the approval of shareholders of the Fund, the Amendment, which would increase the number of authorized shares of its common stock, par value $1.00 per share, to one hundred fifty million (150,000,000) shares. The Fund’s Certificate of Incorporation currently authorizes the Fund to issue up to seventy-five million (75,000,000) shares of its common stock. As described in greater detail under the caption “Overissuance” below, the Fund has exhausted these shares and therefore may honor purchase requests only to the extent authorized shares remain in its treasury.
Amendment
The Amendment has two purposes: (i) to permit the Fund to effect an exchange of newly authorized shares for the Overissue Shares (as defined below) and (ii) to permit the Fund to reopen to all purchases in accordance with the terms disclosed in its prospectus. The additional 75,000,000 shares of common stock authorized by the Amendment, when issued, would have identical rights and privileges as the shares of common stock validly issued and outstanding currently.
Overissuance
Due to significant cash inflows, the Fund exhausted its authorized shares of common stock available for issuance under its Certificate of Incorporation and inadvertently issued certain shares in excess of the 75,000,000 shares authorized (collectively, the “Overissue Shares”). The Fund first became aware of the overissuance in December, 2005. At a special meeting of the Board of Directors of the Fund held on December 23, 2005, the Board adopted a resolution approving the Amendment and determined: (i) to seek shareholder approval of the Amendment; (ii) pending the receipt of such approval, to limit issuances of shares of the Fund only to certain institutions and individuals with whom the Fund or its principal underwriter has contractual commitments to issue shares, and to satisfy such issuances only from validly issues shares of common stock held in the Fund’s treasury; and (iii) to conduct a rescission offer with respect to the Overissue Shares. Before

the Fund can reopen to all purchases, it must increase the number of authorized shares of its common stock.
All of the Overissue Shares were sold on the same basis as the Fund’s authorized shares and holders of Overissue Shares have been treated by the Fund in every respect identically with holders of the Fund’s authorized shares. The Fund’s portfolio has been managed without regard to any distinction between authorized shares and Overissue Shares. The financial results for each shareholder and for the Fund as a whole would have been the same if the Overissue Shares had been authorized. If shareholders do not approve the Amendment, the Fund will continue to honor its contractual commitments until such time as no duly authorized shares remain in the Fund’s treasury.
Rescission Offer
The Board of Directors of the Fund determined that holders of the Overissue Shares will be provided an opportunity (i) to rescind their purchase(s) of Overissue Shares or (ii) subject to shareholder approval of the Amendment, to effect an exchange of newly authorized shares of the Fund for their Overissue Shares. Accordingly, the Fund is making a rescission offer (the “Rescission Offer”) with respect to the Overissue Shares, which will remain open until the later of February 23, 2006 or the date on which shareholder approval is obtained with respect to the Amendment (the “Expiration Date”). Pursuant to the Rescission Offer, which shall be made separately from the solicitation made in this Proxy Statement and only to holders of Overissue Shares, a holder of Overissue Shares can elect either (i) to effect an exchange of newly authorized shares of common stock of the Fund for its Overissue Shares on a share-for-share basis, subject to shareholder approval of the Amendment (the “Exchange Option”), or (ii) to rescind his, her or its purchase of Overissue Shares and to receive proceeds in an amount equal to the greater of (a) the original purchase price of such Overissue Shares (less any distributions made in respect thereof), plus an amount computed by reference to the then prevailing Federal Reserve discount rate (primary credit rate) plus 5.00%, and (b) the net asset value of Overissue Shares next calculated after receipt by the Fund of the holder’s acceptance of the Rescission Offer (such amount, the “Rescission Price”). If a holder of Overissue Shares does not elect to receive either the Rescission Price or duly authorized shares, the Fund will treat the Overissue Shares held by such holder, and all rights and claims with respect thereto, as having been eliminated in exchange for the newly authorized shares and such holder’s account will be changed to eliminate references to the Overissue Shares and

to refer instead to the newly authorized shares. Notwithstanding the foregoing, the Fund reserves the right to terminate the Rescission Offer at any time prior to the Expiration Date. If you are entitled to participate in the Rescission Offer, you will receive additional information from the Fund and documentation that must be completed, executed and returned in connection with the Rescission Offer. If you do not receive such information and documentation, you need not take any action in connection with the Rescission Offer.
If shareholders approve the Amendment, as soon as practicable after the later of (i) the date the Amendment has been filed with the Secretary of the State of Delaware or (ii) the Expiration Date, holders of Overissue Shares who so elect (or who are being treated by the Fund as having their Overissue Shares, and all rights and claims with respect thereto, eliminated in exchange for newly issued shares) would be deemed to have been issued duly authorized shares in exchange for their Overissue Shares. The Fund then would reopen to all purchases and the remaining newly authorized shares of common stock would be available for issuance. If shareholders do not approve the Amendment, the Fund (i) will cancel all Overissue Shares and pay holders thereof the Rescission Price, (ii) generally will remain closed to purchases, (iii) will issue shares in satisfaction of contractual commitments only from and to the knowledgeextent of duly authorized shares held in the Fund’s treasury and (iv) may be unable to continue sales of shares in a manner typical of an open-end investment company.
Pursuant to the Letter of Indemnity (defined below), PWMC has agreed to reimburse the Fund for the costs of conducting the Rescission Offer, including but not limited to the amount, if any, by which the holders’ original purchase prices of Overissue Shares (less any distributions made in respect thereof), plus an amount computed by reference to the then prevailing Federal Reserve discount rate (primary credit rate) plus 5.00%, exceed the net asset value of Overissue Shares next calculated after receipt by the Fund of the holders’ acceptances of the Rescission Offer.
Letter of Indemnity
PWMC has undertaken by letter agreement (the “Letter of Indemnity”) to indemnify and to hold the Fund harmless from, against and in respect of any and all loses, damages, liabilities, fines, penalties, bonds, assessments and reasonable and necessary costs and expenses or amounts paid in settlement incurred or suffered by the Fund as a result of or arising out of the issuance and sale by the Fund of Overissue Shares, including without limitation,

(i) losses relating to any threatened or pending claims, proceedings, actions or investigations (whether formal or informal) that allege violations of the General Corporation Law of the State of Delaware or the federal securities laws (including but not limited to the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended), (ii) losses relating to any claims, proceedings or actions that may be threatened or commenced in the future by any person (including any regulatory authority) relating to the foregoing, and (iii) all liabilities and expenses incurred by the Fund under the provisions of the Certificate of Incorporation of the Fund no Shareholder,
other than (i) Charles Schwab & Co., Inc. Special Custody Accountproviding for indemnification of directors and officers. PWMC also has agreed to reimburse the Exclusive BenefitFund for all costs associated with the Rescission Offer as well as the costs associated with obtaining shareholder approval of Customers, (ii) ING Life Insurance & Annuity Co.,the Amendment. By virtue of his status as a guarantor of the obligations of PWMC under the Letter of Indemnity and (iii)
National Financial Services Corp. FBO Exclusive Benefitas a shareholder of Customers, ownedPWMC, Laurence A. Shadek, a Director of the Fund who is an “interested person” of the Fund as that term is used in Section 2(a)(19) of the Investment Company Act of 1940, as amended, may be deemed to have a substantial interest in this proposal.
Board Recommendation
The Board of Directors of the Fund believes that the proposed increase in the authorized shares of common stock of the Fund is advisable and in the best interests of the Fund and its shareholders. Accordingly, the Board of Directors unanimously recommends that shareholders vote FOR approval of the proposed amendment to the Fund’s Certificate of Incorporation.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information as of the Record Date regarding the beneficial ownership of the Fund’s shares by the only persons known by the Fund to beneficially and/or of recordown more than 5% of the outstanding shares of Common
Stockcommon stock of the Fund. IF YOU CANNOT ATTENDCollectively, the Directors and executive officers of the Fund own less than 1% of the Fund’s outstanding shares of common stock. The number of shares beneficially owned is determined under rules of the Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose.
Name and Address of Beneficial Owner Shares
Beneficially
Owned Percent
Ownership of
Outstanding
Fund Shares
Charles Schwab & Co., Inc. 9,749,779.951 13.36 %
Special Custody Account for the Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, California 94104
ING Life Insurance & Annuity Co. 4,166,872.218 5.71 %
151 Farmington Avenue
Hartford, Connecticut 06156
National Financial Services Corp. 7,022,421.417 9.62 %
FBO Exclusive Benefit of Customers
One World Financial Center
200 Liberty Street
New York, New York 10281
FINANCIAL STATEMENTS
The Fund’s audited statement of assets and liabilities, including schedule of investments, as of December 31, 2004, and the related statement of operations, statement of changes in net assets, financial highlights and notes to the financial statements for the year ended December 31, 2004, and the Fund’s unaudited statement of assets and liabilities, including schedule of investments, as of June 30, 2005, and the related statement of operations, statement of changes in net assets, financial highlights and notes to the financial statements for the six-month period ended June 30, 2005, are attached hereto as Exhibit A. The information provided as of and for the year ended December 31, 2004 has been audited by Ernst & Young LLP, the

Fund’s independent registered public accounting firm. No representative of Ernst & Young LLP is expected to be present at the Meeting, but one can be made available to respond to appropriate questions, if necessary.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Fund’s proxy materials relating to the next annual meeting of shareholders must have been received by the Fund on or before December 28, 2005, must have complied with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and must have been mailed to the Fund’s principal executive offices at 222 State Street, Portsmouth, New Hampshire 03801-3853, Attention: Secretary.
OTHER MATTERS TO COME BEFORE THE MEETING PLEASE COMPLETE, SIGN, DATE
No Director is aware of any matters that will be presented for action at the Meeting other than the matter set forth herein. Should any other matters requiring a vote of shareholders arise, the proxy in the accompanying form will confer upon the person or persons entitled to vote the shares represented by such proxy the discretionary authority to vote the shares as to any such other matters in accordance with their best judgment in the interest of the Fund.
10

EXHIBIT A
FINANCIAL STATEMENTS
Financial statements for the Fund for the year ended December 31, 2004 and for the six-month period ended June 30, 2005 are presented on the following pages. Certain information reflects financial results for a single Fund share. The financial statements for the year ended December 31, 2004 have been audited by Ernst & Young LLP, the Fund’s independent registered public accounting firm, whose report is included herewith. The financial statements for the six-month period ended June 30, 2005 are unaudited.
A

Schedule of Investments
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE NUMBER
OF SHARES VALUE
STOCKS: 70.8%
COMMON STOCKS: 70.7%
CONSUMER DISCRETIONARY: 8.1%
Belo Corp. Series A 200,000 $ 5,248,000
BJ’S Wholesale Club, Inc.(a) 350,000 10,195,500
Comcast Corp. Class A(a) 150,000 4,992,000
Comcast Corp. Class A Special(a) 200,000 6,568,000
DIRECTV Group, Inc.(a) 700,000 11,718,000
Koninklijke Philips Electronics NV ADR 650,000 17,225,000
Staples, Inc. 650,000 21,911,500
Starbucks Corp.(a) 375,000 23,385,000
Tribune Co. 400,000 16,856,000
118,099,000
CONSUMER STAPLES: 6.7%
Avon Products, Inc. 400,000 15,480,000
Corn Products International, Inc. 380,400 20,374,224
CVS Corp. 300,000 13,521,000
Dean Foods Co.(a) 375,000 12,356,250
General Mills, Inc. 200,000 9,942,000
Gillette Co. 350,000 15,673,000
Supervalu, Inc. 300,000 10,356,000
97,702,474
ENERGY: 7.0%
Apache Corp 425,000 21,492,250
Baker Hughes, Inc. 325,000 13,867,750
BP PLC ADR 150,000 8,760,000
Cal Dive International, Inc.(a) 225,000 9,168,750
Chesapeake Energy Corp. 800,000 13,200,000
Equitable Resources, Inc. 250,000 15,165,000
A-1

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE NUMBER
OF SHARES VALUE
Questar Corp. 250,000 $ 12,740,000
Tidewater, Inc. 225,000 8,012,250
102,406,000
FINANCIALS: 5.7%
American International Group, Inc. 275,000 18,059,250
Fannie Mae 225,000 16,022,250
Hospitality Properties Trust 200,000 9,200,000
Jefferson-Pilot Corp. 250,000 12,990,000
SLM Corp. 250,000 13,347,500
St. Joe Co. 225,000 14,445,000
84,064,000
HEALTH CARE: 12.8%
Abbott Laboratories, Inc. 200,000 9,330,000
Amgen, Inc.(a) 400,000 25,660,000
Baxter International, Inc. 250,000 8,635,000
Becton Dickinson & Co. 127,100 7,219,280
Caremark Rx, Inc.(a) 600,000 23,658,000
Fisher Scientific International, Inc.(a) 336,000 20,959,680
Glaxosmithkline PLC ADR 250,000 11,847,500
Johnson & Johnson, Inc. 225,000 14,269,500
Medtronic, Inc. 350,000 17,384,500
Stryker Corp. 400,000 19,300,000
Sybron Dental Specialties, Inc.(a) 250,000 8,845,000
Wellpoint Health Networks, Inc.(a) 175,000 20,125,000
187,233,460
INDUSTRIALS: 4.1%
Chicago Bridge & Iron Co. NV 285,000 11,400,000
Donnelley R R & Sons Co. 200,000 7,058,000
Pentair, Inc. 375,000 16,335,000
Ryder Systems, Inc. 333,300 15,921,741
A-2

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE NUMBER
OF SHARES VALUE
United Parcel Service, Inc. Class B 100,000 $ 8,546,000
59,260,741
INFORMATION TECHNOLOGY: 14.7%
Accenture Ltd. Class A(a) 350,000 9,450,000
Amdocs Ltd.(a) 300,000 7,875,000
Applied Materials, Inc.(a) 350,000 5,985,000
Checkfree Corp.(a) 296,000 11,271,680
Check Point Software Technologies, Ltd.(a) 300,000 7,389,000
Citrix Systems, Inc.(a) 450,000 11,038,500
Dell Inc.(a) 550,000 23,177,000
eBay, Inc.(a) 150,000 17,442,000
EMC Corp.(a) 1,950,000 28,996,500
Fair Isaac Corp. 350,000 12,838,000
Fiserv, Inc.(a) 463,511 18,628,507
Intuit, Inc.(a) 350,000 15,403,500
Microsoft Corp. 500,000 13,355,000
Mykrolis Corp.(a) 428,000 6,064,760
Nam Tai Electronics 275,000 5,293,750
SAP Aktiengesellschaft ADR 400,000 17,684,000
Secure Computing Corp.(a) 275,000 2,744,500
214,636,697
MATERIALS: 5.2%
Aracruz Celulose SA ADR 175,000 6,597,500
Avery Dennison Corp. 225,000 13,493,250
Cemex SA ADR 600,000 21,852,000
Masco Corp. 350,000 12,785,500
Nucor Corp. 150,000 7,851,000
Sealed Air Corp.(a) 250,000 13,317,500
75,896,750
A-3

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE NUMBER
OF SHARES VALUE
TELECOMMUNICATION SERVICES:
3.5%
America Movil SA ADR 475,000 $ 24,866,250
Telefonos de Mexico SA ADR
(representing ordinary shares L) 250,000 9,580,000
Vodafone Group PLC ADR 600,000 16,428,000
50,874,250
UTILITIES: 2.9%
Aqua America, Inc. 332,875 8,185,396
KeySpan Corp. 300,000 11,835,000
Peoples Energy Corp. 299,300 13,154,235
UGI Corp. 250,000 10,227,500
43,402,131
TOTAL COMMON STOCKS
(Cost $700,889,907) 1,033,575,503
PREFERRED STOCKS: 0.1%
FINANCIALS: 0.1%
HRPT Properties Trust, Series B 50,000 1,382,750
Regency Centers Corp. 32,000 852,960
TOTAL PREFERRED STOCKS
(Cost $2,249,740) 2,235,710
TOTAL STOCKS
(Cost $703,139,647) 1,035,811,213
BONDS: 25.8%
MORTGAGE-BACKED SECURITIES: 4.1%
U.S. GOVERNMENT MORTGAGE-BACKED: 3.9%
A-4

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE PRINCIPAL
AMOUNT VALUE
FREDDIE MAC (Mortgage-Backed): 1.9%
5.000%, due July 1, 2007 $ 349,964 $ 357,507
4.500%, due March 1, 2008 1,634,652 1,654,696
4.500%, due April 1, 2008 1,920,307 1,943,853
3.500%, due May 1, 2008 2,011,974 1,978,749
5.000%, due October 1, 2008 2,653,962 2,711,656
4.000%, due September 1, 2010 4,314,996 4,297,596
4.000%, due May 1, 2014 3,368,522 3,340,542
4.500%, due September 1, 2018 1,515,686 1,514,233
4.000%, due September 1, 2018 1,280,461 1,254,298
5.500%, due October 1, 2018 938,926 970,626
5.500%, due October 1, 2018 1,063,835 1,099,752
5.000%, due October 1, 2018 1,445,951 1,469,581
5.000%, due November 1, 2018 868,581 882,775
5.000%, due November 1, 2018 830,715 844,291
6.500%, due May 1, 2029 559,984 588,456
6.500%, due December 1, 2029 679,688 714,247
6.500%, due June 1, 2032 815,192 855,986
26,478,844
FANNIE MAE (Mortgage-Backed): 2.0%
5.500%, due December 1, 2011 1,500,000 1,543,125
5.000%, due January 1, 2014 2,459,685 2,538,870
5.000%, due February 1, 2014 1,675,933 1,729,886
5.500%, due November 1, 2014 3,367,147 3,511,072
5.000%, due April 1, 2018 5,500,000 5,593,291
5.000%, due November 1, 2018 421,251 428,396
5.000%, due November 1, 2018 1,090,987 1,109,492
5.000%, due November 1, 2018 1,076,060 1,094,313
5.000%, due February 1, 2019 3,084,213 3,135,579
5.000%, due April 1, 2019 1,219,706 1,240,019
A-5

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE PRINCIPAL
AMOUNT VALUE
5.000%, due June 1, 2019 $ 2,897,442 $ 2,945,697
5.500%, due July 1, 2019 2,933,895 3,034,100
8.000%, due May 1, 2030 259,238 281,093
6.500%, due June 1, 2032 1,114,916 1,170,238
29,355,171
COMMERCIAL MORTGAGE-BACKED: 0.2%
Nomura Asset Securities Corp.
6.590%, due March 15, 2030 3,000,000 3,246,857
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $59,371,008) 59,080,872
U.S. GOVERNMENT AGENCY BONDS: 15.6%
FEDERAL FARM CREDIT BANK: 0.2%
3.700%, due October 27, 2008 3,000,000 2,990,634
FEDERAL HOME LOAN BANK SYSTEM: 8.8%
2.200%, due April 28, 2006 4,000,000 3,953,424
2.625%, due January 30, 2007 3,000,000 2,961,036
2.000%, due March 12, 2007 3,000,000 2,996,118
3.280%, due May 7, 2007 3,000,000 2,991,570
3.050%, due May 10, 2007 2,060,000 2,046,126
3.100%, due May 21, 2007 5,000,000 4,968,140
2.750%, due July 23, 2007 3,000,000 2,953,467
2.000%, due September 24, 2007 3,000,000 2,994,912
2.000%, due September 24, 2007 3,000,000 2,994,912
4.130%, due January 14, 2008 3,500,000 3,501,344
3.520%, due January 30, 2008 3,000,000 2,992,467
A-6

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE PRINCIPAL
AMOUNT VALUE
3.200%, due March 3, 2008 $ 3,000,000 $ 2,968,362
3.700%, due April 2, 2008 5,000,000 4,997,420
3.500%, due April 21, 2008 4,000,000 3,962,488
3.530%, due April 29, 2008 4,000,000 3,988,568
2.500%, due April 30, 2008 5,000,000 4,995,920
4.100%, due July 14, 2008 4,000,000 3,995,588
3.375%, due July 21, 2008 5,000,000 4,950,595
3.510%, due July 22, 2008 2,500,000 2,488,035
3.250%, due August 14, 2008 2,750,000 2,751,920
3.750%, due October 21, 2008 5,000,000 4,942,120
4.125%, due November 17, 2008 3,000,000 3,000,129
4.100%, due November 17, 2008 3,000,000 3,000,126
4.250%, due December 3, 2008 3,000,000 3,000,138
4.000%, due January 29, 2009 3,000,000 3,002,937
3.790%, due February 13, 2009 4,000,000 3,988,936
3.750%, due March 24, 2009 3,000,000 2,968,284
2.000%, due April 15, 2009 4,000,000 3,957,060
3.250%, due May 12, 2009 6,000,000 5,997,636
4.250%, due May 12, 2009 4,000,000 4,001,088
3.000%, due August 21, 2009 3,000,000 3,000,465
4.520%, due August 26, 2009 3,000,000 3,026,439
4.000%, due October 19, 2009 3,000,000 2,995,959
5.040%, due June 7, 2010 3,000,000 3,024,882
4.625%, due October 7, 2010 5,000,000 5,000,225
4.875%, due December 1, 2011 3,250,000 3,261,466
128,620,302
FREDDIE MAC (Agency): 4.0%
3.000%, due May 21, 2007 5,000,000 4,962,510
3.800%, due June 28, 2007 3,000,000 3,025,002
3.000%, due August 15, 2007 3,000,000 2,971,056
2.500%, due December 24, 2007 2,500,000 2,434,390
A-7

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE PRINCIPAL
AMOUNT VALUE
3.250%, due March 14, 2008 $ 3,000,000 $ 2,963,625
3.500%, due April 15, 2008 5,305,000 5,287,324
4.125%, due August 19, 2008 7,000,000 6,964,076
4.000%, due January 14, 2009 3,000,000 2,985,339
3.500%, due April 1, 2009 3,000,000 2,966,592
4.000%, due August 4, 2009 4,000,000 3,993,724
4.125%, due November 18, 2009 3,000,000 3,014,076
3.000%, due November 23, 2009 3,765,000 3,770,629
4.850%, due December 7, 2009 4,000,000 4,039,444
4.750%, due December 8, 2010 5,000,000 5,025,265
6.250%, due March 5, 2012 4,000,000 4,182,108
58,585,160
FANNIE MAE (Agency): 2.6%
3.050%, due April 20, 2007 4,000,000 3,975,688
3.750%, due May 17, 2007 3,000,000 3,005,640
4.320%, due July 26, 2007 4,000,000 4,034,184
3.000%, due November 28, 2007 3,000,000 2,999,823
3.000%, due May 12, 2008 3,000,000 2,979,207
3.750%, due December 8, 2008 3,000,000 2,988,846
3.677%, due February 17, 2009 7,324,000 7,390,868
4.250%, due November 23, 2009 2,000,000 2,003,008
3.625%, due December 28, 2009 4,000,000 4,006,628
5.030%, due September 23, 2011 5,000,000 5,018,260
38,402,152
TOTAL U.S. GOVERNMENT AGENCY BONDS
(Cost $229,225,095) 228,598,248
CORPORATE BONDS: 6.1%
CONSUMER DISCRETIONARY: 0.5%
Lowes Cos., Inc.
7.500%, due December 15, 2005 3,200,000 3,332,237
A-8

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE PRINCIPAL
AMOUNT VALUE
Tandy Corp.
6.950%, due September 1, 2007 $ 994,000 $ 1,076,376
Toyota Motor Credit Corp.
2.750%, due August 6, 2009 2,727,270 2,672,002
7,080,615
CONSUMER STAPLES: 0.3%
CVS Corp.
3.875%, due November 1, 2007 5,000,000 5,025,905
FINANCIALS: 2.0%
AFLAC, Inc.
6.500%, due April 15, 2009 5,000,000 5,452,670
Chubb Corp.
3.950%, due April 1, 2008 5,000,000 5,009,580
CIT Group, Inc.
5.500%, due November 30, 2007 10,000,000 10,475,210
SLM Corp. Tranche TR 00034
4.000%, due January 15, 2009 4,000,000 4,001,748
SLM Corp. Tranche TR 00061
3.500%, due June 23, 2014 1,600,000 1,579,696
SLM Corp. Tranche TR 00066
4.000%, due July 25, 2014 3,075,000 3,064,760
29,583,664
HEALTH CARE: 1.7%
Baxter International, Inc.
5.250%, due May 1, 2007 5,000,000 5,165,480
Bristol Myers Squibb Co.
5.750%, due October 1, 2011 8,400,000 9,008,807
Unitedhealth Group, Inc.
5.200%, due January 17, 2007 4,835,000 5,010,747
Wellpoint, Inc., 144A
3.750%, due December 14, 2007(b) 2,000,000 2,000,330
A-9

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE PRINCIPAL
AMOUNT VALUE
Wellpoint, Inc., 144A
4.250%, due December 15, 2009(b) $ 3,000,000 $ 3,001,881
24,187,245
INDUSTRIALS: 0.4%
Pentair, Inc.
7.850%, due October 15, 2009 5,000,000 5,720,095
INFORMATION TECHNOLOGY: 0.4%
Fiserv, Inc.
4.000%, due April 15, 2008 3,000,000 3,012,390
Thermo Electron Corp
7.625%, due October 30, 2008 3,000,000 3,348,150
6,360,540
TELECOMMUNICATION SERVICES: 0.4%
Vodafone Airtouch PLC
7.750%, due February 15, 2010 5,000,000 5,808,520
UTILITIES: 0.4%
National Fuel Gas Co.
6.303%, due May 27, 2008 5,500,000 5,913,297
TOTAL CORPORATE BONDS
(Cost $89,977,452) 89,679,881
TOTAL BONDS
(Cost $378,573,555) 377,359,001
COMMERCIAL PAPER: 0.5%
Bellsouth Corp.
2.001%, due January 19, 2005 3,000,000 2,997,013
Toyota Motor Credit, Co.
1.979%, due January 13, 2005 5,000,000 4,996,717
TOTAL COMMERCIAL PAPER
(Cost $7,993,730) 7,993,730
A-10

Schedule of Investments (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS,
NAME OF ISSUER AND TITLE OF ISSUE PRINCIPAL
AMOUNT VALUE
CERTIFICATES OF DEPOSIT: 0.1%
South Shore Bank
1.000%, due April 10, 2005 $ 500,000 $ 500,000
Self Help Credit Union
2.880%, due May 26, 2005 250,000 250,000
TOTAL CERTIFICATES OF DEPOSIT
(Cost $750,000) 750,000
NUMBER
OF SHARES
MONEY MARKET SHARES: 2.7%
Pax World Money Market Fund—Note B(c)
(Cost $38,931,855) 38,931,855 38,931,855
TOTAL INVESTMENTS: 99.9%
(Cost $1,129,388,788) $ 1,460,845,799
Other assets and liabilities (Net): 0.1% 1,355,625
Net Assets: 100% $ 1,462,201,424
(a) Non income producing security.
(b) Security purchased pursuant to Rule 144A of the Securities Act of 1933 and may be resold only to qualified institutional buyers.
(c) Controlled Affiliate—security is managed by Pax World Management Corp., the Fund’s adviser.
ADR—American Depository Receipt
See notes to financial statements
A-11

Statement of Assets and Liabilities
December 31, 2004
PAX WORLD BALANCED FUND, INC.
ASSETS
Investments, at value—note A
(cost—$1,090,456,933) $ 1,421,913,944
Investments, at value in affiliates
(cost—$38,931,855) 38,931,855
Total Investments 1,460,845,799
Cash 500,099
Prepaid expenses 172,059
Receivables
Capital stock sold 1,939,685
Dividends and interest—note A 4,146,066
Investment securities sold 1,421,227
Due from adviser—note B 108,803
Total Assets 1,469,133,738
LIABILITIES
Payables:
Capital stock reacquired 4,685,567
Investment securities purchased 977,584
Accrued expenses:
Investment advisory fees—note B 602,564
Distribution expense 318,489
Transfer agent fees 128,574
Legal and audit fees 65,064
Custodian fees 26,086
Administration fees 472
Other accrued expenses 127,914
Total Liabilities 6,932,314
NET ASSETS $ 1,462,201,424
NET ASSETS REPRESENTED BY:
Paid in Capital $ 1,130,227,659
Undistributed net investment income 242,403
Accumulated net realized gain (loss) 274,350
Net unrealized appreciation of:
Investments 331,457,012
NET ASSETS $ 1,462,201,424
Shares of capital stock outstanding
(75,000,000 authorized shares and $1.00 par value) 62,961,708
Net Asset Value per Share $ 23.22
See notes to financial statements
A-12

Statement of Operations
Year Ended December 31, 2004
PAX WORLD BALANCED FUND, INC.
INVESTMENT INCOME
Income—note A
Dividends (net of withholding tax of $205,444) $ 13,083,050
Dividends from affiliate 457,527
Interest 12,706,422
Total Income 26,246,999
Expenses
Investment advisory fee—note B 6,543,464
Distribution expense—note B 3,115,834
Transfer agent fees 1,256,800
Printing and other shareholder communication fees 362,996
Custodian fees 325,519
Legal fees and related expenses 335,871
Directors’ fees and expenses—note B 139,157
Audit fees 64,097
Registration fees 14,963
Administration fees 13,333
State taxes 84,766
Other expenses 87,088
Total Expenses 12,343,888
Less: Fees paid indirectly—note D (7,490 )
Money market advisory fee waiver—note B (27,516 )
Net expenses 12,308,882
Net investment income (loss) $ 13,938,117
REALIZED AND UNREALIZED GAIN—notes A and C
Net realized gain on:
Investments 40,294,784
Change in unrealized appreciation (depreciation) on:
Investments 115,493,208
Net realized and unrealized gain on investments and foreign currency 155,787,992
Net increase in net assets resulting from operations $ 169,726,109
See notes to financial statements
A-13

Statements of Changes in Net Assets
PAX WORLD BALANCED FUND, INC.
Year Ended Year Ended
December 31, 2004 December 31, 2003
Increase (decrease) in net assets
Operations
Investment income (loss), net $ 13,938,117 $ 12,135,196
Net realized gain (loss) on investments and foreign currency transactions 40,294,784 (19,832,291)
Change in unrealized appreciation (depreciation) on investments and foreign currency transactions 115,493,208 186,044,323
Net increase in net assets resulting from operations 169,726,109 178,347,228
Distributions to shareholders from:
Net investment income (13,344,000) (11,834,367)
Tax return of capital — (331,248)
Total distributions to shareholders (13,344,000) (12,165,615)
From capital share transactions:
Net increase in net assets from capital share transactions 81,776,924 25,193,760
Net increase in net assets 238,159,033 191,375,373
Net assets
Beginning of year 1,224,042,391 1,032,667,018
End of year¹ $ 1,462,201,424 $ 1,224,042,391
¹ Includes undistributed net investment income $ 242,403 $ —
See notes to financial statements
A-14

Statements of Changes in Net Assets—Capital Stock Activity
PAX WORLD BALANCED FUND, INC.
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2004 2003 2004 2003
Shares Amount
Common Stock
Shares sold 9,722,177 42,156,563 $ 208,620,381 $ 782,790,843
Shares issued in reinvestment of distributions 568,310 577,536 12,569,837 11,332,089
Shares redeemed (6,515,120 ) (41,495,133 ) (139,413,294 ) (768,929,172 )
Net increase 3,775,367 1,238,966 $ 81,776,924 $ 25,193,760
A-15

Financial Highlights
PAX WORLD BALANCED FUND, INC.
1. Selected Data for a share outstanding throughout each period
Year Ended December 31
2004 2003 2002 2001 2000
Net Asset Value, beginning of period $ 20.68 $ 17.82 $ 19.91 $ 22.41 $ 23.40
Income (loss) from investment operations
Investment income, net1 0.23 0.20 0.33 0.47 0.51
Realized and unrealized gain (loss) on investments, net 2.53 2.87 (2.09 ) (2.49 ) 0.78
Total from investment operations 2.76 3.07 (1.76 ) (2.02 ) 1.29
Less distributions
Dividends from investment income, net 0.22 0.20 0.33 0.47 0.53
Distributions from realized gains — — — — 1.74
Tax return of capital — 0.01 — 0.01 0.01
Total distributions 0.22 0.21 0.33 0.48 2.28
Net asset value, end of period $ 23.22 $ 20.68 $ 17.82 $ 19.91 $ 22.41
2. Total return2 13.39 % 17.27 % (8.86 )% (9.09 )% 5.66 %
3. Ratios and supplemental data
Net assets, end of period
(’000,000s) $ 1,462 $ 1,224 $ 1,033 $ 1,161 $ 1,230
Ratio to average net assets:
Net expenses, excluding custody credits 0.95 % 0.99 % 0.95 % 0.94 % 0.96 %
Net investment income 1.07 % 1.09 % 1.74 % 2.27 % 2.14 %
Portfolio turnover rate 33.02 % 19.33 % 36.96 % 37.50 % 26.49 %
Net expenses, including custody credits and expenses assumed by Adviser 0.95 % 0.99 % 0.95 % 0.94 % 0.96 %
Net expenses, excluding custody credits and expenses assumed by Adviser 0.95 % 0.99 % 0.97 % 0.94 % 0.96 %
(1) Based on average shares outstanding during the period.
(2) Total return represents aggregate total return for the period indicated, and does not reflect the deduction of any applicable sales charges.
A-16

Notes to Financial Statements
December 31, 2004
PAX WORLD BALANCED FUND, INC.
NOTE A—ORGANIZATION AND RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY
TELEPHONE OR ON THE INTERNET AS DESCRIBED IN THE ENCLOSED PAMPHLET AS PROMPTLY
AS POSSIBLE.

PROPOSAL 1 -- TO ELECT A BOARDSUMMARY OF NINE DIRECTORS

SIGNIFICANT ACCOUNTING POLICIES
Organization
Pax World Balanced Fund, Inc. (“Balanced Fund” or the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “Act”).
The purpose of this proposalFund’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 or companies that derive revenue from the manufacture of tobacco, liquor, and/or gambling products.
The Fund’s 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.
Accounting estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
Valuation of investments
Securities listed on any national, regional, local or foreign exchange are valued at the closing prices on such exchanges. Securities listed on the NASDAQ national market system (other than options on stock and stock indices) are valued using the NASDAQ Official Closing Price (the “NOCP”). Shares in money market funds are valued at $1 per share. Certificates of
A-17

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
deposit, if any, are valued at cost; accrued interest to December 31, 2004 is included in dividends and interest receivable. Securities and assets for which market quotations are not readily available are valued based on fair value as determined in good faith by Pax World Management Corp. (the “Adviser”) in accordance with procedures approved by the Board of Directors.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses from the sale or disposition of securities 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, if any. The Fund amortizes purchase price premium and accretes discount on bonds, if any, over the remaining life of the bonds using the effective interest method of amortization; for callable bonds, the amortization period is to the most likely call date.
Expenses
Expenses of the Fund, which are directly identifiable to the Fund, are applied to the Fund. Expenses, which are not readily identifiable to the Fund, are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative net assets of the Fund and other Pax World Funds. The Fund has a 12b-1 plan.
Distributions to shareholders
Distributions to shareholders are recorded by the Fund on the ex-dividend dates.
The Fund intends to declare and distribute dividends from net investment income, if any, semi-annually.
A-18

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
The Fund will distribute net realized capital gains, if any, annually.
Federal income taxes
The Fund has qualified and intends to continue to qualify for and elect treatment as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended. 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 taxable income to the shareholders. Therefore, no Federal income or excise tax provision is required. The Pax World Funds (including the Fund) are treated as separate entities for U.S. Federal income tax purposes.
Foreign currency transactions
The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions.
Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively.
NOTE B—INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES AND OTHER PARTIES
The Fund has entered into an Investment Advisory Agreement (the “Agreement”) with Pax World Management Corp. (the “Adviser”). Pursuant to the Agreement, 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
A-19

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
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.
As compensation for services rendered, the Fund pays the Adviser a fee accrued daily and paid monthly, at the annual rate set forth below as a percentage of the average daily net assets of the Fund. Pursuant to the terms of the Advisory Agreement between the Fund and the Adviser, the Adviser will be compensated by the Fund for its services at an annual rate of three-quarters of one percent (.75%) of average daily net assets up to and including $25,000,000 and one-half of one percent (.50%) of average daily net assets in excess of $25,000,000.
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) with respect to the Fund that exceed, on a per annum basis, one and one-half percent (1.5%) of the average daily net assets of the Fund. Such expenses include (i) management and distribution fees; (ii) the fees of affiliated and unaffiliated Directors; (iii) the fees of the Fund’s custodian and transfer agent; (iv) the fees of the Fund’s legal counsel and independent accountants; (v) the reimbursement of organizational 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. For the year ended December 31, 2004, there were no expense reimbursements or voluntary fee waivers for the Fund.
The Fund maintains a distribution expense plan (the “Plan”) pursuant to Rule 12b-1 under the Act pursuant to which the Fund incurs the expenses of distributing its shares. The Fund has instituted this plan. Such expenses include (but are not limited to) advertising, compensation of underwriters, dealers and sales personnel, the printing and mailing of prospectuses to other than current shareholders, and the printing and mailing of sales literature. The Plan provides that the Fund may pay to one or more of its 12b-1
A-20

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
distributors (i) individually and in the aggregate, up to twenty-five hundredths of one percent (.25%) per annum of its average daily net assets of the Fund for personal service and/or the maintenance of shareholder accounts as defined by Rule 2830 of the National Association of Securities Dealers Rules of Conduct, and (ii) total distribution fees (including the service fee of ..25% of 1%) up to twenty-five hundredths of one percent (.25%) of its average daily net assets with respect the Fund. 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. For the year ended December 31, 2004, the Fund was not charged expenses in excess of the contractual rate.
The Fund is permitted to invest in the Pax World Money Market Fund, Inc., which is also managed by the Adviser. 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 that the Fund has invested in the Pax World Money Market Fund, Inc. For the year ended December 31, 2004, the advisory fee was waived with respect to the Fund in the amount of $27,516.
Several individuals who are officers and/or Directors of the Fund are also employees of the Adviser.
The Fund currently pays each of its unaffiliated Directors a fee of $2,000, and each of its affiliated Directors a fee of $1,000, for attendance at each meeting of the Board of Directors of the Fund. PursuantIn addition, the Fund pays $1,000 to each member of its Audit Committee for attendance at each meeting of such committee. The Fund pays $300 to each member of its Nominating Committee for attendance at each meeting of such committee.
Mr. Lee Unterman, a partner with Kurzman Karelsen & Frank, LLP, is Secretary of the Fund. During the year ended December 31, 2004, the Fund incurred legal fees and related expenses with Kurzman Karelsen & Frank, LLP, general counsel for the Fund, in the amount of $331,185.
A-21

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
Substantially all of the Adviser’s capital stock is 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-five and seventy-three hundredths percent (25.73%) ownership interest in H.G. Wellington and Co., Inc., the Funds’ distributor and a brokerage firm that the Funds may use to execute brokerage transactions (“H.G. Wellington”). Thomas W. Grant, the President of the Adviser and of H.G. Wellington, has less than 5% ownership interest in the Adviser and H.G. Wellington. Brokerage commissions and Distribution expenses under the Plan paid to H.G. Wellington during the year ended December 31, 2004 are as follows:
Brokerage % of Total Distribution
Commission Commissions Expenses
$ 198,778 21.46 % $ 5,855
NOTE C—INVESTMENTS INFORMATION
Purchases and proceeds from sales of investments for the Fund for the year ended December 31, 2004 are as follows:
Purchases Proceeds
U.S. U.S.
Government Government
Investments* Bonds Investments* Bonds
$ 280,934,621 $ 220,184,319 $ 250,961,110 $ 163,736,395
* excluding short-term investments and U.S. Government bonds
A-22

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
The term “affiliated company” includes other investment companies that are managed by a fund’s adviser. At December 31, 2004, the Fund held the following security of an affiliated company, Pax World Money Market Fund, Inc.:
Value at Purchased Sold Value at Dividend
12/31/03 Cost Cost 12/31/04 Income
$ 36,700,004 * $ 324,312,241 $ 322,080,390 $ 38,931,855 $ 457,527
* A “controlled affiliate” is a company in which a fund has ownership of at least 25% of the voting securities. At December 31, 2004, the Fund held at least 25% of the Pax World Money Market Fund, Inc.
For Federal income tax purposes, the identified cost of investments owned at December 31, 2004 as well as the gross unrealized appreciation and depreciation of investments and resulting net unrealized appreciation (depreciation) as of December 31, 2004 were as follows for the Fund:
Identified
cost of Net
investments Gross Gross unrealized
for Federal unrealized unrealized appreciation
income tax basis appreciation depreciation (depreciation)
$ 1,129,388,787 $ 338,590,871 $ 7,133,859 $ 331,457,012
NOTE D—TAX INFORMATION
The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the provisionsFund’s capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations.
A-23

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
For the year ended December 31, 2004, permanent differences resulting primarily from differing treatments for paydowns, foreign currency transactions and net investment loss were identified and reclassified among the components of net assets as follows:
Accumulated
Undistributed Net Net Realized
Investment Income Gain (Loss) Paid-In Capital
$ (351,714 ) $ 351,714 $ 0
Net investment income, net realized gains (losses) and net assets were not affected by these reclassifications.
Under current tax laws, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the By-lawsfollowing fiscal year. The Fund incurred losses in the amount of $202,650 during the period November 1, 2004 through December 31, 2004, which have been deferred for tax purposes until fiscal year 2005.
The tax character of distributions paid during the years ended December 31 was as follows:
2004 2004 2003 2003
Ordinary Long-Term Ordinary Tax Return
Income Capital Gains Income of Capital
$ 13,344,000 $ 0 $ 11,834,367 $ 331,248
As of December 31, 2004, the components of distributable earnings (net unrealized appreciation as stated in note C) on a tax basis were as follows:
Undistributed Undistributed
Ordinary Income Long-Term Capital Gain
$ 719,403 $ 0
At December 31, 2004, the Fund had no capital loss carryforwards.
NOTE E—CUSTODIAN BANK AND CUSTODIAN FEES
The custodian fees charged are reduced, pursuant to expense offset arrangements with the Fund, by an earnings credit which is based upon the
A-24

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
average cash balance maintained at the Fund’s custodian. If the Fund did not have such offset arrangements, it could have invested such amounts in income-producing assets. Custody credits for the Fund for the year ended December 31, 2004, reported as Fees paid indirectly in the Statements of Operations, are $7,490.
NOTE F—PROXY VOTING (Unaudited)
You may obtain a description of the Fund’s proxy voting policies and procedures, without charge, upon request by contacting the Fund at 800-767-1729 or on the SEC’s website at www.sec.gov.
The information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 is available without charge, upon request, by telephoning Pax World at 800-767-1729, visiting Pax World’s website at www.paxworld.com, or by visiting the SEC’s website at www.sec.gov.
NOTE G—QUARTERLY PORTFOLIO HOLDINGS DISCLOSURE (Unaudited)
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s Forms N-Q may also be obtained by visiting Pax World’s website at www.paxworld.com or telephoning Pax World (toll-free) at 800-767-1729.
NOTE H—MANAGEMENT OF THE FUND (Unaudited)
The Fund’s officers are responsible for the day-to-day operations of the Fund. The Fund’s Board of Directors oversee the Adviser and decide upon matters of general policy. The Board of Directors meets four (4) times per year, reviews portfolio selections and bonding requirements, declares dividends, if any, and reviews the activities of the executive officers of the
A-25

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
Fund. Such activities are consistent with their fiduciary obligations as directors under the General Corporation Law of the State of Delaware. The Adviser furnishes daily investment advisory services.
Officers/Directors
The following table reflects the name, address and age, position(s) held with the Fund, the Boardterm of Directors has determined thatoffice and length of time served, the principal occupation(s) during the past five (5) years, other directorships held, and the number of Directors shall be fixed at nine. It
is intended thatportfolios overseen in the accompanying proxy will be voted forPax World Fund Family of those persons who are the election as
Directorsofficers and/or directors of the nine nominees listed below, unless such authority has been
withheld in the proxy, in which case the proxy will be voted as indicated
thereon. In the election of Directors, those nine nominees receiving the highest
number of votes cast at the Meeting, providing a quorum is present, shall be
elected.

All of the nominees named below are currently Directors of the FundFund. The directors and have served in that capacity continuously since originally elected or appointed.
The nomineesofficers set forth in the first table below (Interested Nominees)Directors and Officers) are considered interested persons under the Investment Company Act of 1940, as amended, by virtue of their position or affiliation with Pax World Management
Corp., the Fund's investment adviser (the "Adviser"),Adviser and/or H. G.H.G. Wellington & Co., Inc., the Fund'sFund’s distributor and a brokerage firm that the Fund may use to execute brokerage transactions ("H. G. Wellington"(“H.G. Wellington”). The nomineesdirectors and officers in the second table (Disinterested Nominees)Directors and Officers) are not considered interested persons and have no affiliation with the Adviser or H. G.H.G. Wellington.
None of the directors or

-3-

officers of the Fund are related to one another by blood, marriage or adoption.
If elected,adoption, except that Laurence A. Shadek and James M. Shadek are brothers. The aggregate remuneration paid by the Fund during the period covered by the report to: (i) all directors and all members of any advisory board for regular compensation; (ii) each nominee will serve until the next Annual Meetingdirector and each member of Shareholdersan advisory board for special compensation; (iii) all officers; and (iv) each person of whom any officer or director of the Fund or until their successor shall have been chosenis an affiliated person is $129,000.
A-26

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
Interested Directors and shall have qualified or as otherwise provided in the By-laws of the Fund.

Officers

- --------------------------------------------------------------------------------------------------------------------
Interested Nominees
- --------------------------------------------------------------------------------------------------------------------
Number of
Name,
Address and Age Position(s) Held Portfolios in
with the Pax World the Pax World
Funds; Fund;
Term of Office1;
and Length of Time Served Principal Occupation(s)
During Past Fund Family
Office(1) and Length 5 Years and Other Directorships
Held by Director or Officer Number of Portfolios in the Pax World Fund Family Overseen by the
Name, Address and Age of Time Served by the Nominee Nominee
- ------------------------------------ ---------------------- -------------------------------------- -----------------
Director
Thomas W. Grant
14 Wall Street
New York, NY 10005; (63)2, 3, and 4 Vice Chairman of the Board of Directors; Director and President (since 1996) Mr. Grant is the Vice Chairman of 3
14 Wall Street Board of Directors; the Board and President of Pax World
New York, NY 10005; (63) (2) Director and Balancedthe Fund Inc. (1996-present),
President - Pax the President of Pax World Growth World Balanced Fund Fund, Inc. (1997-present), the Pax World
Inc. (since 1996) High Yield Fund Inc.
(1999-present), the Pax World Money Director and Market Fund Inc. (1998-present), President - Pax Pax World Management Corp.
World Growth Fund,the Adviser (1996-present), and H.G. Wellington
Inc. (since 1997) & Co., Inc. (1991-present). Mr. Grant has been associated with H.G. President - Pax Wellington & Co., Inc. since 1991
World Money Market and served previously with the firm Fund, Inc. (since of Fahnestock & Co. for twenty-six
1998) years as a partner, managing director and senior officer. His Director and duties encompassed branch office President - Pax management, corporate finance,
World High Yield syndications and municipal and
Fund, Inc. (since corporate bonds. Mr. Grant is a
1999) graduate of the University of North Carolina (BA). Mr. Grant is also is a member of the board of directors of the Securities Investor Protection Corporation (2003-present).
- ------------------------------------ ---------------------- -------------------------------------- -----------------
3
A-27

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
Name,
Address and Age Position(s) Held with Fund;
Term of Office1;
and Length of Time Served Principal Occupation(s)
During Past 5 Years and Other Directorships
Held by Director or Officer Number of Portfolios in the Pax World Fund Family Overseen by Director
Laurence A. Shadek
14 Wall Street
New York, NY 10005; (55)2, 3, and 4 Chairman of the Board of Directors; Director (since 1996) Mr. Shadek is the Chairman of the 3
14 Wall Street Board of Directors; Board of Directors of Pax World
New York, NY 10005; (55) (2) Director - Pax World Balancedthe Fund Inc. (1996-present), Balanced Fund, Inc.the Pax World Growth Fund Inc.
(since 1996) (1997-present), and the Pax World High Yield Fund Inc. (1999-present), an
Chairman of the Executive Vice President of the Pax
Board of Directors; World Money Market Fund Inc.
Director - Pax World (1998-present), the Chairman of the Growth Fund, Inc. Board of Pax World Management Corp.
(since 1997)the Adviser (1996-present), and an Executive Vice-President of H.G. Wellington &
Executive Vice Co., Inc. (1986-present). Mr.
President - Pax Shadek, together with members of his World Money Market family, owns substantially all of Fund, Inc. (since the outstanding shares of capital 1998) stock of Pax World Management Corp.the Adviser and a 25.73% interest in H.G. Chairman of the Wellington & Co., Inc.Wellington. Mr. Shadek
Board of Directors; has been associated with H.G. Director - Pax World Wellington & Co., Inc. since March
High Yield Fund, 1986 and was previously associated
Inc. (since 1999) with Stillman, Maynard & Co., where he was a general partner. Mr. Shadek'sShadek’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 NYU Stern School of Business (MBA). Mr. Shadek is a member of the Board of Trustees of Franklin & Marshall College.
- ------------------------------------ ---------------------- -------------------------------------- -----------------

- --------------------------------------------------------------------------------------------------------------------
Disinterested Nominees
- --------------------------------------------------------------------------------------------------------------------
Number of
3
A-28

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
Disinterested Directors and Officers
Name,
Address and Age Position(s) Held Portfolios in
with the Pax World the Pax World
Funds; Fund;
Term of Office1;
and Length of Time Served Principal Occupation(s)
During Past Fund Family
Office1 and Length 5 Years and Other Directorships
Held by Director or Officer Number of Portfolios in the Pax World Fund Family Overseen by the
Name, Address and Age of Time Served by the Nominee Nominee
- ------------------------------------ ---------------------- -------------------------------------- -----------------
Director
Carl H. Doerge, Jr.
867 Remsen Lane
Oyster Bay, NY 11771; (66)5, 6, and 7 Director - Pax World (since 1998) Mr. Doerge has been a private 3
c/o Pax World Management Corp. Balanced Fund, Inc. investor since 1995. Prior to that, 222 State Street (since 1998) Mr. Doerge was Executive Vice Portsmouth, NH 03801; (66) (3) President and Managing Director of Director - Pax World Smith Barney for approximately
Growth Fund, Inc. twenty-four years. Mr. Doerge is a (since 1997) memberMember of the Board of Trustees, the Deputy Mayor and the Police Director - Pax World Commissioner of the Village of Upper
High Yield Fund, Brookville, NY. Mr. Doerge also is a
Inc. (since 1999) member of the Board of Directors (1998-present) and Chairman of the Investment Committee (1999-present) of St. Johnland Nursing Home in Kings Park, NY.
- ------------------------------------ ---------------------- -------------------------------------- -----------------
3
Anita D. Green
c/o Pax World Management Corp.
222 State Street
Portsmouth, NH 03801; (40) Co-Treasurer (1998-2004) Ms. Green serves as the Vice President of Social Research (2003-present) and was the Director of Social Research (1996-2003) and Manager of Shareholder Services (1990-2000) for the Adviser. Ms. Green was also a Co-Treasurer of the Adviser (1998-2004) and the Fund (1998-2004) and an Assistant Treasurer of the Pax World Growth Fund (1997-2004) and the Pax World High Yield Fund (1999-2004). Ms. Green is a member of the Board of Directors of the Social Investment Forum (SIF), the steering committee of the SIF International Working Group, and the steering committee of the Social Investment Research Analyst Network. N/A
A-29

-4-

- ------------------------------------ ---------------------- -------------------------------------- -----------------
Conservation Society and served as its Acting President and Chief Executive Officer (2000-2001). Mr. Large also is a member of the Boards of Directors of the Nature Conservancy of Long Island (where he served as Acting Executive Director in 1998), the Nature Conservancy of New York, North Shore Wildlife Sanctuary, Matinicock Planning Board, Nassau Community College and Long Island Index. Mr. Large also serves on the Investment Advisory Committee of the Episcopal Diocese of Long Island.
- ------------------------------------ ---------------------- -------------------------------------- -----------------
3
A-30

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
Name,
Address and Age Position(s) Held with Fund;
Term of Office1;
and Length of Time Served Principal Occupation(s)
During Past 5 Years and Other Directorships
Held by Director or Officer Number of Portfolios in the Pax World Fund Family Overseen by Director
Louis F. Laucirica
30 Oldchester Road
Essex Fells, NJ 07021; (63)8, 9 and 10 Director - Pax World (since 2003) Mr. Laucirica is an Associate Dean 3
c/o Pax World Management Corp. Balanced Fund, Inc. and Director of Undergraduate
222 State Street (since 2003) Studies of Stevens Institute of Portsmouth, NH 03801; (63) (4) Technology, Howe School
Director - Pax World (1999-present). Prior to that, Mr. Growth Fund, Inc. Laucirica was Executive-in-Residence (since 2003) and Executive Director-ProfessionalDirector Professional and International Programs of Pace Director - Pax World University, Lubin School
High Yield Fund, (1998-1999), and the President and
Inc. (since 2003) Chief Executive Officer of Norton Performance Plastics Corporation (1989-1998). Mr. Laucirica had been associated with the Norton company since 1972.
- ------------------------------------ ---------------------- -------------------------------------- -----------------
3
Joy L. Liechty
1403 Ashton Court
Goshen, IN 46526;
(51)8 and 9 Director - Pax World (since 1991) Ms. Liechty is a Client/Sales 2
c/o Pax World Management Corp. Balanced Fund, Inc. Advocate and Corporate Conference
222 State Street (since 1991) Planner with the Mennonite Mutual Portsmouth, NH 03801; (51) (4) Aid Association, a faith-based Director - Pax World socially responsible investing,
Growth Fund, Inc. financial services and insurance
(since 1997) institution located in Goshen, Indiana (1989-present). Ms. Liechty has been associated with that organization since 1976, serving as the Manager of Client Services from 1980 to 1989.
- ------------------------------------ ---------------------- -------------------------------------- -----------------
2
A-31

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
Name,
Address and Age Position(s) Held with Fund;
Term of Office1;
and Length of Time Served Principal Occupation(s)
During Past 5 Years and Other Directorships
Held by Director or Officer Number of Portfolios in the Pax World Fund Family Overseen by Director
Sanford C. Sherman
91 Hillside Drive
Portsmouth, NH 03801; (68)5 and 6 Director - Pax World (since 1992) Mr. Sherman is a Trustee of the 2
c/o Pax World Management Corp. Balanced Fund, Inc. Piscataqua Savings Bank, Portsmouth,
222 State Street (since 1992) NH (1972-present) and the Chairman
Portsmouth, NH 03801; (68) (3) of the Piscataqua Savings Bank Trust Director - Pax World Committee (1999-present). Mr.
Growth Fund, Inc. Sherman also was the Chief Executive
(since 1999) Officer until December 31, 2000, and was the President until December 31, 1999, of the Piscataqua Savings Bank, positions he held since April 1981. For 21 years prior thereto, Mr. Sherman held various other positions with the bank, including Vice President and Treasurer.
- ------------------------------------ ---------------------- -------------------------------------- -----------------
2
Janet Lawton Spates
c/o Pax World Management Corp.
222 State Street
Portsmouth, NH 03801; (34) Treasurer (since 1998) Ms. Spates serves as the Chief Operating Officer for the Adviser (1992-present). Ms. Spates is also Treasurer of the Adviser (1998-present) and Treasurer of the Fund (1998-present) and an Assistant Treasurer of the Pax World Growth Fund (1997-present) and the Pax World High Yield Fund (1999-present). N/A
Nancy S. Taylor
600 Salem End Road
Framingham, MA 01702; (49)8 and 9 Director - Pax World (since 1997) Dr. Taylor serves as the Senior 2
c/o Pax World Management Corp. Balanced Fund, Inc. Minister of the Old South Church in 222 State Street (since 1997) Boston, MA (2005-present). She
Portsmouth, NH 03801; (49) (4) previously served as the Minister Director - Pax World and President of the Massachusetts
Growth Fund, Inc. Conference of the United Church of
(since 1997) Christ (2001-2005) and before that as Senior Minister ofwith the First Congregational Church in Boise, Idaho (1992-2001). Dr. Taylor is a Trustee of Andover Newton Theological School (2002-present) and a director of Ecclesia Ministries, a ministry to Boston'sBoston’s homeless population (2003-present).
- ------------------------------------ ---------------------- -------------------------------------- -----------------
2
A-32

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
Name,
Address and Age Position(s) Held with Fund;
Term of Office1;
and Length of Time Served Principal Occupation(s)
During Past 5 Years and Other Directorships
Held by Director or Officer Number of Portfolios in the Pax World Fund Family Overseen by Director
Lee D. Unterman
c/o Kurzman Karelsen & Frank, LLP
230 Park Avenue
New York, NY 10169; (53) Secretary (since 1997) and Chief Compliance Officer (since 2004) Mr. Unterman serves as the Secretary of the Fund (1997-present), the Pax World Growth Fund (1997-present) and the Pax World High Yield Fund (1999-present) and as Chief Compliance Officer for the Fund, the Pax World Growth Fund and the Pax World High Yield Fund and for the Adviser (2004-present). Mr. Unterman is a Partner with the law firm of Kurzman Karelsen & Frank, LLP (2000-present) and was a Partner with the law firms of Bresler Goodman & Unterman, LLP (1997-2000) and Broudy & Jacobson (1988-1997). In addition, Mr. Unterman serves as the Chief Compliance Officer and Chief Operating Officer (since September 2004) of David J. Greene and Company, LLC, a registered broker/dealer and investment adviser, which is not currently engaged in the public mutual fund industry. N/A
Esther J. Walls
Apartment 29-J
160 West End Avenue
New York, NY 10023; (78) Director - Pax World Ms. Walls is a director of Pax World 3
c/o Pax World Management Corp. Balancedthe Fund Inc. Balanced Fund, Inc. (1981-present), 222 State Street (since 1981)the Pax World Growth Fund Inc.
Portsmouth, NH 03801; (78) (2002-present) and the Pax World High Director - Pax World Yield Fund Inc. (1999-present). In
Growth Fund, Inc. addition, Ms. Walls was Associate
(since 2002) Director of Libraries, State University of New York, Stony Brook, Director - Pax World Long Island, NY (1974-1990). Ms.
High Yield Fund, Walls also was a member of the
Inc. (since 1999) Boards of Directors of UNICEF and the International Relations Committee of the American Library Association.
- ------------------------------------ ---------------------- -------------------------------------- -----------------
3
(1)Directors of the Fund are elected each year at the Fund'sFund’s Annual Meeting of Shareholders and hold office until the next Annual Meeting of Shareholders of the Fund or until a successor shall have been chosen and shall have qualified. Officers of the Fund are elected each year at the Fund’s Annual Meeting of the Board of Directors and hold office until the
A-33

Notes to Financial Statements (Continued)
December 31, 2004
PAX WORLD BALANCED FUND, INC.
next Annual Meeting of the Board of Directors of the Fund or until a successor shall have been chosen and shall have qualified.
(2), (3) and (4)Designates a member of the Investment Committee of the Fund. The Investment Committee has the responsibility of overseeing the Fund'sFund’s investments.

(3)
(5), (6) and (7)Designates a member of the Audit Committee of the Fund. 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. (4) The Board of Directors of the Fund has determined that the Fund has three “financial experts” (as defined under Regulation S-K of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) serving on the Audit Committee, namely Messrs. Carl H. Doerge, Jr., James M. Large, Jr. and Sanford C. Sherman.
(8), (9) and (10)Designates a member of the Nominating Committee of the Fund. The Nominating Committee has the responsibility of nominating new members toof the Fund'sFund’s Board of Directors.

Along with those
The Statement of Additional Information includes additional information about Fund Directors and Officers mentioned above,is available upon request without charge by calling 800-767-1729 between the following
are Officershours of 9:00 a.m. and 8:00 p.m. Eastern Time or by visiting our website at www.paxworld.com.
A-34

Report of Ernst & Young LLP, Independent Registered
Public Accounting Firm
To the Shareholders and Board of Directors of
PAX World Balanced Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the PAX World Balanced Fund, Inc. (the “Fund”) as of December 31, 2004, and the related statement of operations for the year then ended, and the statements of changes in net assets and financial highlights for each of the two 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. The financial highlights for each of the three years in the period ended December 31, 2002 were audited by other auditors, whose report dated January 17, 2003, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes considerations of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2004, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. 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 the PAX World Balanced Fund, Inc. at December 31, 2004, the results of its operations for the year then ended, and the changes in its net assets and financial highlights for each of the two years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
March 10, 2005
A-35

Schedule of Investments (Unaudited)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, NUMBER
NAME OF ISSUER AND TITLE OF ISSUE OF SHARES VALUE
STOCKS: 64.8%
COMMON STOCKS: 64.7%
CONSUMER DISCRETIONARY: 4.8%
Belo Corp. Series A 156,900 $ 3,760,893
BJ’s Wholesale Club, Inc.(a) 350,000 11,371,500
Comcast Corp. Class A(a) 225,000 6,907,500
Comcast Corp. Class A Special(a) 225,000 6,738,750
Honda Motor LTD ADR 125,000 3,076,250
Koninklijke Philips Electronics NV ADR 650,000 16,373,500
Staples, Inc. 975,000 20,787,000
Toyota Motor Credit Corp. ADR 100,000 7,149,000
Tribune Co. 167,400 5,889,132
82,053,525
CONSUMER STAPLES: 8.4%
Avon Products, Inc. 400,000 15,140,000
Corn Products International, Inc. 760,800 18,076,608
CVS Corp. 600,000 17,442,000
General Mills, Inc. 121,100 5,666,269
Gillette Co. 375,000 18,986,250
Kimberly-Clark Corp. 350,000 21,906,500
Estee Lauder Cos., Inc. 250,000 9,782,500
McCormick & Co., Inc. 350,000 11,438,000
PepsiCo, Inc. 250,000 13,482,500
Supervalu, Inc. 300,000 9,783,000
141,703,627
ENERGY: 7.4%
Apache Corp. 425,000 27,455,000
Baker Hughes, Inc. 325,000 16,627,000
BP PLC ADR 150,000 9,357,000
A-36

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, NUMBER
NAME OF ISSUER AND TITLE OF ISSUE OF SHARES VALUE
Cal Dive International, Inc.(a) 225,000 $ 11,783,250
Chesapeake Energy Corp. 800,000 18,240,000
Equitable Resources, Inc. 250,000 17,000,000
Questar Corp. 250,000 16,475,000
Tidewater, Inc. 225,000 8,577,000
125,514,250
FINANCIALS: 4.6%
Capital Automotive REIT 175,000 6,679,750
CheckFree Corp.(a) 296,000 10,081,760
Fannie Mae 225,000 13,140,000
The First Marblehead Corp.(a) 50,000 1,753,000
Hospitality Properties Trust 200,000 8,814,000
Jefferson-Pilot Corp. 250,000 12,605,000
National City Corp. 225,000 7,677,000
SLM Corp. 125,000 6,350,000
St. Joe Co. 125,000 10,192,500
77,293,010
HEALTH CARE: 11.4%
Abbott Laboratories, Inc. 200,000 9,802,000
Amgen, Inc.(a) 400,000 24,184,000
Astrazeneca PLC ADR 100,000 4,126,000
Baxter International, Inc. 250,000 9,275,000
Becton Dickinson & Co. 127,100 6,668,937
Caremark Rx, Inc.(a) 600,000 26,712,000
Glaxosmithkline PLC ADR 300,000 14,553,000
Johnson & Johnson, Inc. 225,000 14,625,000
Medtronic, Inc. 350,000 18,126,500
Stryker Corp. 350,000 16,646,000
Sybron Dental Specialties, Inc.(a) 250,000 9,405,000
UnitedHealth Group, Inc. 200,000 10,428,000
Wellpoint Health Networks, Inc.(a) 400,000 27,856,000
192,407,437
A-37

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, NUMBER
NAME OF ISSUER AND TITLE OF ISSUE OF SHARES VALUE
INDUSTRIALS: 4.4%
American Standard Cos., Inc. 300,000 $ 12,576,000
Chicago Bridge & Iron Co. N.V. 650,000 14,859,000
Donnelley R R & Sons Co. 200,000 6,902,000
Pentair, Inc. 450,000 19,264,500
Ryder Systems, Inc 333,300 12,198,780
TNT N.V. ADR 325,000 8,238,750
74,039,030
INFORMATION TECHNOLOGY: 12.7%
Accenture Ltd. Class A(a) 400,000 9,068,000
Amdocs Ltd.(a) 300,000 7,929,000
Applied Materials, Inc. 350,000 5,663,000
Check Point Software Technologies, Ltd.(a) 300,000 5,940,000
Cisco Systems, Inc.(a) 830,000 15,861,300
Citrix Systems, Inc.(a) 500,000 10,830,000
Dell Inc.(a) 550,000 21,730,500
EMC Corp.(a) 1,950,000 26,734,500
Fair Isaac Corp 350,000 12,775,000
Fiserv, Inc.(a) 463,511 19,907,797
Intuit, Inc.(a) 350,000 15,788,500
Microsoft Corp. 650,000 16,146,000
Mykrolis Corp.(a) 428,000 6,081,880
Nam Tai Electronics 325,000 7,390,500
QUALCOMM, Inc. 475,000 15,679,750
SAP Aktiengesellschaft ADR 350,000 15,155,000
Secure Computing Corp.(a) 275,000 2,992,000
215,672,727
MATERIALS: 3.7%
Aracruz Celulose SA ADR 175,000 6,081,250
A-38

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, NUMBER
NAME OF ISSUER AND TITLE OF ISSUE OF SHARES VALUE
Cemex SA ADR 600,000 $ 25,452,000
Masco Corp. 350,000 11,116,000
Nucor Corp. 150,000 6,843,000
Sealed Air Corp.(a) 250,000 12,447,500
61,939,750
TELECOMMUNICATION SERVICES: 3.6%
America Movil SA ADR 450,000 26,824,500
BT Group ADR 225,000 9,360,000
France Telecom ADR 100,000 2,914,000
Philippine Long Dist Tel Co. ADR 99,900 2,902,095
Telefonos de Mexico SA ADR
(representing ordinary shares L) 500,000 9,445,000
Vodafone Group PLC ADR 400,000 9,728,000
61,173,595
UTILITIES: 3.7%
Aqua America, Inc. 332,875 9,899,703
KeySpan Corp. 300,000 12,210,000
Peoples Energy Corp. 299,300 13,007,578
UGI Corp. 500,000 13,950,000
Veolia Environment ADR 350,000 13,090,000
62,157,281
TOTAL COMMON STOCKS
(Cost $800,498,396) 1,093,954,232
PREFERRED STOCKS: 0.1%
FINANCIALS: 0.1%
HRPT Properties Trust, Series B 50,000 1,354,000
A-39

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, NUMBER
NAME OF ISSUER AND TITLE OF ISSUE OF SHARES VALUE
Regency Centers Corp. 32,000 $ 823,840
TOTAL PREFERRED STOCKS
(Cost $2,249,740) 2,177,840
TOTAL STOCKS
(Cost $802,748,136) 1,096,132,072
PRINCIPAL
AMOUNT
BONDS: 29.2%
MORTGAGE-BACKED SECURITIES: 5.0%
U.S. GOVERNMENT MORTGAGE-BACKED: 4.8%
FREDDIE MAC (Mortgage-Backed): 1.4%
5.000%, due July 1, 2007 $ 290,730 294,771
4.500%, due March 1, 2008 1,366,963 1,373,374
4.500%, due April 1, 2008 1,592,576 1,600,045
3.500%, due May 1, 2008 1,780,011 1,737,311
5.000%, due October 1, 2008 1,858,306 1,884,264
4.000%, due September 1, 2010 3,962,792 3,921,110
4.000%, due May 1, 2014 3,060,412 3,013,675
4.000%, due September 1, 2018 1,015,951 994,812
4.500%, due September 1, 2018 1,470,210 1,464,748
5.000%, due October 1, 2018 1,408,574 1,425,519
5.500%, due October 1, 2018 987,570 1,014,156
5.500%, due October 1, 2018 914,789 939,416
5.000%, due November 1, 2018 807,797 817,514
5.000%, due November 1, 2018 714,573 723,169
6.500%, due May 1, 2029 535,479 556,197
A-40

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT VALUE
6.500%, due December 1, 2029 $ 577,920 $ 600,281
6.500%, due June 1, 2032 762,783 790,836
23,151,198
FANNIE MAE (Mortgage-Backed): 3.4%
5.500%, due December 1, 2011 1,206,814 1,224,035
5.000%, due January 1, 2014 2,183,196 2,227,801
5.000%, due February 1, 2014 1,488,946 1,519,367
5.500%, due October 1, 2014 2,802,454 2,884,812
5.500%, due November 1, 2014 3,070,897 3,161,143
5.000%, due April 1, 2018 4,992,862 5,052,710
5.000%, due November 1, 2018 230,379 233,140
5.000%, due November 1, 2018 1,061,786 1,074,513
5.000%, due November 1, 2018 1,039,991 1,052,457
5.000%, due February 1, 2019 2,933,945 2,968,378
5.000%, due April 1, 2019 1,085,634 1,098,375
5.000%, due June 1, 2019 2,665,699 2,696,984
5.500%, due July 1, 2019 2,512,326 2,580,653
4.500%, due November 1, 2019 2,856,235 2,845,469 ��
5.000%, due January 2, 2020 2,442,605 2,471,272
5.000%, due March 1, 2020 2,961,673 2,996,731
5.000%, due October 1, 2023 2,440,920 2,460,736
4.500%, due January 1, 2025 1,969,860 1,948,916
5.000%, due June 1, 2025 2,987,480 3,011,377
8.000%, due May 1, 2030 255,342 274,622
6.500%, due June 1, 2032 1,107,192 1,147,761
4.000%, due June 1, 2033 3,688,817 3,484,134
1.000%, due January 1, 2035 4,986,241 4,941,627
6.000%, due April 1, 2035 2,972,522 3,048,513
1.000%, due June 1, 2035 1,997,223 2,007,577
58,413,103
A-41

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT VALUE
COMMERCIAL MORTGAGE-BACKED: 0.2%
Nomura Asset Securities Corp.
6.590%, due March 15, 2030 $ 3,000,000 $ 3,186,011
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $88,322,507) 84,750,312
U.S. GOVERNMENT AGENCY BONDS: 18.1%
FEDERAL FARM CREDIT BANK: 1.6%
3.700%, due October 27, 2008 3,000,000 2,970,594
4.550%, due April 26, 2010 5,000,000 5,032,830
4.480%, due June 21, 2010 3,000,000 2,983,878
4.950%, due May 9, 2012 7,000,000 7,008,274
4.950%, due May 16, 2012 5,000,000 4,991,430
5.300%, due June 22, 2015 3,000,000 2,998,554
4.990%, due January 28, 2015 1,000,000 1,006,806
26,992,366
FEDERAL HOME LOAN BANK SYSTEM: 9.0%
2.200%, due April 28, 2006 4,000,000 3,950,024
2.625%, due January 30, 2007 3,000,000 2,945,313
3.280%, due May 7, 2007 3,000,000 2,970,000
3.100%, due May 21, 2007 5,000,000 4,932,655
2.750%, due July 23, 2007 3,000,000 2,935,653
4.000%, due September 24, 2007 3,000,000 3,009,429
4.000%, due January 28, 2008 1,500,000 1,498,341
3.520%, due January 30, 2008 3,000,000 2,971,782
4.500%, due February 15, 2008 2,000,000 2,002,516
A-42

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT VALUE
3.200%, due March 3, 2008 $ 3,000,000 $ 2,948,316
3.700%, due April 2, 2008 5,000,000 4,966,765
3.500%, due April 21, 2008 4,000,000 3,936,508
3.530%, due April 29, 2008 4,000,000 3,963,408
4.100%, due July 14, 2008 4,000,000 3,968,580
3.375%, due July 21, 2008 5,000,000 4,904,415
3.510%, due July 22, 2008 2,500,000 2,473,015
3.250%, due August 14, 2008 2,750,000 2,743,857
3.750%, due October 21, 2008 5,000,000 4,914,610
4.125%, due November 17, 2008 3,000,000 2,994,687
4.100%, due November 17, 2008 3,000,000 2,993,529
4.250%, due December 3, 2008 3,000,000 2,999,949
3.000%, due December 11, 2008 1,000,000 1,000,597
4.000%, due January 29, 2009 3,000,000 2,987,721
3.790%, due February 13, 2009 4,000,000 3,964,856
3.750%, due March 24, 2009 3,000,000 2,953,227
2.000%, due April 15, 2009 4,000,000 3,954,656
4.250%, due May 12, 2009 4,000,000 3,975,248
3.250%, due May 12, 2009 6,000,000 5,966,040
3.500%, due August 21, 2009 3,000,000 3,000,030
4.520%, due August 26, 2009 3,000,000 3,002,424
4.000%, due October 19, 2009 3,000,000 2,980,017
4.350%, due February 16, 2010 3,000,000 3,005,160
4.450%, due February 24, 2010 3,000,000 3,004,179
5.040%, due June 7, 2010 3,000,000 3,000,513
4.625%, due October 7, 2010 5,000,000 5,000,595
4.875%, due December 1, 2011 3,250,000 3,250,455
4.270%, due January 17, 2012 3,000,000 2,971,962
4.950%, due January 26, 2012 3,000,000 3,010,518
5.250%, due March 3, 2012 5,000,000 5,023,275
4.950%, due March 15, 2012 3,000,000 3,031,707
4.650%, due June 29, 2012 3,000,000 2,994,417
A-43

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT VALUE
4.800%, due July 19, 2012 $ 3,500,000 $ 3,504,795
5.300%, due August 16, 2012 3,000,000 3,006,069
5.450%, due April 27, 2015 3,000,000 3,046,539
5.250%, due July 14, 2016 3,000,000 3,007,323
151,665,675
FREDDIE MAC (Agency): 3.5%
3.800%, due June 28, 2007 3,000,000 2,997,891
3.000%, due August 15, 2007 3,000,000 2,950,602
4.050%, due September 24, 2007 2,500,000 2,501,568
2.500%, due December 24, 2007 2,500,000 2,420,963
3.250%, due March 14, 2008 3,000,000 2,940,486
3.500%, due April 15, 2008 5,305,000 5,245,149
4.125%, due August 19, 2008 7,000,000 6,991,621
4.000%, due January 14, 2009 3,000,000 2,965,752
3.500%, due April 1, 2009 3,000,000 2,948,568
4.000%, due August 4, 2009 4,000,000 3,976,136
4.125%, due November 18, 2009 3,000,000 2,998,386
3.000%, due November 23, 2009 3,765,000 3,757,447
4.850%, due December 7, 2009 4,000,000 4,007,480
4.750%, due December 8, 2010 5,000,000 4,992,010
5.875%, due March 21, 2011 3,000,000 3,234,666
6.250%, due March 5, 2012 4,000,000 4,143,412
59,072,137
FANNIE MAE (Agency): 4.0%
3.050%, due April 20, 2007 4,000,000 3,946,964
4.320%, due July 26, 2007 4,000,000 4,002,512
3.000%, due November 28, 2007 3,000,000 2,993,532
3.000%, due May 12, 2008 3,000,000 2,966,181
4.000%, due August 8, 2008 3,000,000 2,989,119
3.750%, due December 8, 2008 3,000,000 2,972,388
4.000%, due January 26, 2009 4,000,000 3,993,240
A-44

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT VALUE
4.290%, due February 17, 2009 $ 7,324,000 $ 7,268,704
4.250%, due November 23, 2009 2,000,000 1,993,528
3.625%, due December 28, 2009 4,000,000 3,989,720
4.300%, due February 17, 2010 3,000,000 3,004,845
4.400%, due March 8, 2010 3,000,000 3,006,297
5.000%, due April 6, 2010 4,000,000 4,034,916
4.750%, due April 19, 2010 3,000,000 3,032,403
5.030%, due September 23, 2011 5,000,000 5,014,305
4.750%, due February 21, 2013 6,000,000 5,993,484
5.000%, due March 2, 2015 7,000,000 7,061,222
68,263,360
TOTAL U.S. GOVERNMENT AGENCY BONDS
(Cost $304,207,290) 305,993,538
CORPORATE BONDS: 6.1%
CONSUMER DISCRETIONARY: 0.7%
Lowes Cos., Inc.
7.500%, due December 15, 2005 3,200,000 3,251,056
Tandy Corp.
6.950%, due September 1, 2007 994,000 1,033,387
Toyota Motor Credit Corp.
4.160%, due July 28, 2008 3,000,000 2,961,300
Toyota Motor Credit Corp.
2.750%, due August 6, 2009 2,454,540 2,400,822
Toyota Motor Credit Corp.
5.010%, due January 18, 2015 2,000,000 1,937,620
11,584,185
CONSUMER STAPLES: 0.6%
CVS Corp.
3.875%, due November 1, 2007 5,000,000 4,978,595
A-45

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT VALUE
Estee Lauder Cos., Inc.
6.000%, due January 15, 2012 $ 1,599,000 $ 1,746,306
Supervalu, Inc.
7.500%, due May 15, 2012 3,000,000 3,445,221
10,170,122
FINANCIALS: 1.9%
AFLAC, Inc.
6.500%, due April 15, 2009 5,000,000 5,421,085
Chubb Corp.
3.950%, due April 1, 2008 5,000,000 4,967,215
CIT Group, Inc.
5.500%, due November 30, 2007 10,000,000 10,286,110
SLM Corp. Tranche TR 00034
4.000%, due January 15, 2009 4,000,000 3,971,240
SLM Corp. Tranche TR 00084
4.300%, due June 1, 2009 2,000,000 1,963,340
SLM Corp. Tranche TR 00061
3.850%, due June 23, 2014 1,600,000 1,564,752
SLM Corp. Tranche TR 00066
4.000%, due July 25, 2014 3,075,000 3,046,956
31,220,698
HEALTH CARE: 1.4%
Baxter International, Inc.
5.250%, due May 1, 2007 5,000,000 5,094,970
Bristol Myers Squibb Co.
5.750%, due October 1, 2011 8,400,000 8,998,878
UnitedHealth Group, Inc.
5.200%, due January 17, 2007 4,835,000 4,914,565
Wellpoint, Inc.
3.750%, due December 14, 2007 2,000,000 1,975,386
A-46

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT VALUE
Wellpoint, Inc.
4.250%, due December 15, 2009 $ 3,000,000 $ 2,989,728
23,973,527
INDUSTRIALS: 0.3%
Pentair, Inc.
7.850%, due October 15, 2009 5,000,000 5,628,785
INFORMATION TECHNOLOGY: 0.2%
Fiserv, Inc.
4.000%, due April 15, 2008 3,000,000 2,959,902
TELECOMMUNICATION SERVICES: 0.7%
British Telecommunication PLC
8.125%, due December 15, 2010 5,000,000 5,926,550
CenturyTel, Inc.
5.000%, due February 15, 2015 2,000,000 1,937,760
France Telecom SA
8.000%, due March 1, 2011 3,000,000 3,485,481
11,349,791
UTILITIES: 0.3%
National Fuel Gas Co.
6.303%, due May 27, 2008 5,500,000 5,812,147
TOTAL CORPORATE BONDS
(Cost $103,419,856) 102,699,157
TOTAL BONDS
(Cost $495,949,653) 493,443,007
CERTIFICATES OF DEPOSIT: 0.1%
Self Help Credit Union
3.700%, due May 26, 2006 250,000 250,000
South Shore Bank
2.750%, due October 11, 2005 500,000 500,000
TOTAL CERTIFICATES OF DEPOSIT
(Cost $750,000) 750,000
A-47

Schedule of Investments (Unaudited) (Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
PERCENT OF NET ASSETS, PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT VALUE
COMMERCIAL PAPER: 2.0%
Bellsouth Corp
3.09%, due July 13, 2005 $ 6,000,000 $ 5,993,820
Constitution State Corporate
3.25%, due August 1, 2005 7,000,000 6,980,470
The Procter & Gamble Co.
3.02%, due July 5, 2005 8,000,000 7,997,333
The Procter & Gamble Co.
2.87%, due July 18, 2005 5,000,000 4,992,917
McCormick & Co., Inc.
3.39%, due November 29, 2005 8,000,000 7,887,924
TOTAL COMMERCIAL PAPER
(Cost $33,852,464) 33,852,464
NUMBER
OF SHARES
MONEY MARKET SHARES: 4.1%
Pax World Money Market Fund—
note B(c)
(Cost $68,980,906) 68,980,906 68,980,906
TOTAL INVESTMENTS: 100.2%
(Cost $1,402,281,159) 1,693,158,449
Other assets and liabilities (Net): (0.2%) (2,675,354 )
Net assets: 100.0% $ 1,690,483,095
(a) Non-income producing security.
(b) Security purchased pursuant to Rule 144A of the Securities Act of 1933 and may be resold only to qualified institutional buyers
(c) Controlled Affiliate—Security is managed by Pax World Management Corp., the Fund’s Adviser.
ADR—American Depository Receipt
See notes to financial statements
A-48

Statement of Assets and Liabilities (Unaudited)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
ASSETS
Investments, at value—note A
(cost—$1,333,300,253) $ 1,624,177,543
Investments, at value in affiliates
(cost—$68,980,906) 68,980,906
Total Investments 1,693,158,449
Cash 500,390
Prepaid expenses 94,515
Receivables:
Capital stock sold 16,396,136
Dividends and interest—note A 6,275,672
Investment securities sold 3,768,292
Total Assets 1,720,193,454
LIABILITIES
Payables:
Capital stock reacquired 1,088,995
Investment securities purchased 27,368,434
Accrued expenses:
Investment advisory fees—note B 659,612
Distribution expense 196,778
Transfer agent fee 203,996
Legal and Audit fees 17,627
Custodian fees 42,197
Administration fee 4,223
Other accrued expenses 128,497
Total Liabilities 29,710,359
NET ASSETS $ 1,690,483,095
NET ASSETS REPRESENTED BY:
Paid in Capital $ 1,348,694,331
Undistributed net investment income (loss) 9,855,367
Accumulated net realized gain (loss) 41,056,107
Net unrealized appreciation of:
Investments 290,877,290
NET ASSETS $ 1,690,483,095
Shares of capital stock outstanding
(75,000,000 authorized shares, and $1 par value for all funds) 72,470,017
Net asset value per share $ 23.33
See notes to financial statements
A-49

Statement of Operations (Unaudited)
Six Months Ended June 30, 2005
PAX WORLD BALANCED FUND, INC.
INVESTMENT INCOME
Income—note A
Dividends (net of withholding tax of $216,941) $ 7,493,801
Dividends from affiliate 833,213
Interest 8,628,779
Total Income 16,955,793
Expenses
Investment advisory fees—note B 3,853,548
Distribution expenses—note B 1,811,944
Transfer agent fees 848,574
Printing and other shareholder communication fees 221,269
Custodian fees 202,921
Legal fees and related expenses 105,986
Directors’ fees and expenses—note B 128,432
Audit fees 35,627
Registration fees 30,304
Administration fees 17,209
State taxes 37,511
Other expenses 83,237
Total Expenses 7,376,562
Less: Fees paid indirectly—note D (9,408 )
Money market advisory fee waiver—note B (24,325 )
Net expenses 7,342,829
Net investment income (loss) 9,612,964
REALIZED AND UNREALIZED GAIN (LOSS)—notes A and C
Net realized gain on:
Investments 40,781,757
Change in unrealized appreciation (depreciation) on:
Investments (40,579,722 )
Net realized and unrealized gain on investments and foreign currency 202,035
Net increase in net assets resulting from operations $ 9,814,999
See notes to financial statements
A-50

Statementsof Changes in Net Assets
PAX WORLD BALANCED FUND, INC.
Six Months Ended Year Ended
June 30, 2005 December 31, 2004
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS
Operations:
Investment income (loss), net $ 9,612,964 $ 13,938,117
Net realized gain on investments and foreign currency transactions 40,781,757 40,294,784
Change in unrealized appreciation (depreciation) on investments and foreign currency translations (40,579,722 ) 115,493,208
Net increase (decrease) in net assets resulting from operations 9,814,999 169,726,109
Distributions to shareholders from:
Net investment income Common Stock — (13,344,000 )
Total distributions to shareholders — (13,344,000 )
From capital share transactions:
Net increase in net assets from capital share transactions 218,466,672 81,776,924
Redemption fees — —
Net increase in net assets 228,281,671 238,159,033
NET ASSETS
Beginning of period 1,462,201,424 1,224,042,391
End of year¹ $ 1,690,483,095 $ 1,462,201,424
¹Includes undistributed net investment income (loss) $ 9,855,367 $ 242,403
See notes to financial statements
A-51

Statements of Changes in Net Assets—Capital Stock Activity
PAX WORLD BALANCED FUND, INC.
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2005 December 31, June 30, 2005 December 31,
(Unaudited) 2004 (Unaudited) 2004
Shares Amount
Common Stock
Shares sold 12,000,912 9,722,177 $ 275,784,815 $ 208,620,381
Shares issued in reinvestment of distributions 60 568,310 1,401 12,569,837
Shares redeemed (2,492,663 ) (6,515,120 ) (57,319,544 ) (139,413,294 )
Net increase 9,508,309 3,775,367 $ 218,466,672 $ 81,776,924
See notes to financial statements
A-52

Financial Highlights
PAX WORLD BALANCED FUND, INC.
1. Selected data for a share outstanding throughout each period
Six Months
Ended
June 30, Year Ended December 31
2005 2004 2003 2002 2001 2000
(Unaudited)
Net asset value, beginning of period $ 23.22 $ 20.68 $ 17.82 $ 19.91 $ 22.41 $ 23.40
Income (loss) from investment operations
Investment income, net1 0.14 0.23 0.20 0.33 0.47 0.51
Realized and unrealized gain (loss) on investments, net (0.03 ) 2.53 2.87 (2.09 ) (2.49 ) 0.78
Total from investment operations 0.11 2.76 3.07 (1.76 ) (2.02 ) 1.29
Less distributions
Dividends from investment income, net — 0.22 0.20 0.33 0.47 0.53
Distributions from realized gains — — — — — 1.74
Tax return of capital — — 0.01 — 0.01 0.01
Total distributions — 0.22 0.21 0.33 0.48 2.28
Net asset value, end of period $ 23.33 $ 23.22 $ 20.68 $ 17.82 $ 19.91 $ 22.41
2. Total return2 0.47 %3 13.39 % 17.27 % (8.86 )% (9.09 )% 5.66 %
3. Ratios and supplemental data
Net assets, end of period
(‘000,000s) $ 1,690 $ 1,462 $ 1,224 $ 1,033 $ 1,161 $ 1,230
Ratio to average net assets:
Net expenses, excluding custody credits 0.96 %4 0.95 % 0.99 % 0.95 % 0.94 % 0.96 %
Net investment income 1.26 %4 1.07 % 1.09 % 1.74 % 2.27 % 2.14 %
Portfolio turnover rate 13.46 %3 33.02 % 19.33 % 36.96 % 37.50 % 26.49 %
Net expenses, including custody credits and expenses assumed by Adviser 0.96 %4 0.95 % 0.99 % 0.95 % 0.94 % 0.96 %
Net expenses, excluding custody credits and expenses assumed by Adviser 0.96 %4 0.95 % 0.99 % 0.97 % 0.94 % 0.96 %
(1)Based on average shares outstanding during the period
(2)Total return represents aggregate total return for the period indicated, and does not reflect the deduction of any applicable sales charges
(3)Not Annualized
(4)Annualized
A-53

Notes to Financial Statements (Unaudited)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
NOTE A—ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Pax World Balanced Fund, Inc. (“Balanced Fund” or the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “Act”).
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 or companies that derive revenue from the manufacture of tobacco, liquor, and/or gambling products.
The Fund’s 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.
Accounting estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
Valuation of investments
Securities listed on any national, regional, local or foreign exchange are valued at the closing prices on such exchanges. Securities listed on the NASDAQ national market system (other than options on stock and stock indices) are valued using the NASDAQ Official Closing Price (the “NOCP”).
A-54

Notes to Financial Statements (Unaudited)(Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
Shares in money market funds are valued at $1 per share. Certificates of deposit, if any, are valued at cost; accrued interest to June 30, 2005 is included in dividends and interest receivable. Securities and assets for which market quotations are not readily available are valued based on fair value as determined in good faith by Pax World Management Corp. (the “Adviser”) in accordance with procedures approved by the Board of Directors.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses from the sale or disposition of securities 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, if any. The Fund amortizes purchase price premium and accretes discount on bonds, if any, over the remaining life of the bonds using the effective interest method of amortization; for callable bonds, the amortization period is to the most likely call date.
Expenses
Expenses of the Fund that are directly identifiable to the Fund are applied to the Fund. -5-

- ----------------------------------- ------------------------------------ ------------------------------------------
Position(s) Held with the Pax Principal Occupation(s) During Past 5
World Funds; Term of Office(1) and Years and Other Directorships Held by
Name, Address and Age Length of Time Served the Officer
- ----------------------------------- ------------------------------------ ------------------------------------------

Michelle Lee Guilmette Assistant Treasurer (since 1997) Ms. Guilmette is the Operations
c/o Pax World Management Corp. and Assistant Secretary (since Specialist - Broker/Dealer Services
222 State Street 1999) - Pax World Balanced Fund, (1999-present) and was a Shareholder
Portsmouth, NH 03801; (31) Inc. Services Representative (1992-1999) for
Pax World Management Corp. Ms. Guilmette
Assistant Secretary - Pax World also is an Assistant Treasurer of Pax
Growth Fund, Inc. (since 1999) World Balanced Fund, Inc.
(1997-present), and an Assistant
Assistant Secretary - Pax World Secretary of Pax World Balanced Fund,
High Yield Fund, Inc. (since 2000) Inc. (1999-present), Pax World Growth
Fund, Inc. (1999-present) and Pax World
High Yield Fund, Inc. (2000-present).
- ----------------------------------- ------------------------------------ ------------------------------------------
Janet Lawton Spates Treasurer - Pax World Balanced Ms. Spates serves as the Chief Financial
c/o Pax World Management Corp. Fund, Inc. (since 1998) Officer for Pax World Management Corp.
222 State Street (1992-present). Ms. Spates also is
Portsmouth, NH 03801; (35) Assistant Treasurer - Pax World Treasurer of Pax World Management Corp.
Growth Fund, Inc. (since 1997) (1998-present) and of Pax World Balanced
Fund, Inc. (1998-present) and an
Assistant Treasurer - Pax World Assistant Treasurer of Pax World Growth
High Yield Fund, Inc. (since 1999) Fund, Inc. (1997-present) and Pax World
High Yield Fund, Inc. (1999-present).
- ----------------------------------- ------------------------------------ ------------------------------------------
Lee D. Unterman Secretary (since 1997) and Chief Mr. Unterman serves as the Secretary of
c/o Kurzman Karelsen & Frank, LLP Compliance Officer (since 2004) - Pax World Balanced Fund, Inc.
230 Park Avenue Pax World Balanced Fund, Inc. (1997-present), Pax World Growth Fund,
New York, NY 10169; (54) Inc. (1997-present) and Pax World High
Secretary (since 1997) and Chief Yield Fund, Inc. (1999-present) and as
Compliance Officer (since 2004) - Chief Compliance Officer for Pax World
Pax World Growth Fund, Inc. Balanced Fund, Inc., Pax World Growth
Fund, Inc. and Pax World High Yield
Secretary (since 1999) and Chief Fund, Inc. and for Pax World Management
Compliance Officer (since 2004) - Corp. (2004-present). Mr. Unterman is a
Pax World High Yield Fund, Inc. Partner with the law firm of Kurzman
Karelsen & Frank, LLP (2000-present) and
was a Partner with the law firms of
Bresler, Goodman & Unterman, LLP
(1997-2000) and Broudy & Jacobson
(1988-1997). In addition, Mr. Unterman
serves as the Chief Compliance Officer
(since September 2004) of David J.
Greene and Company, LLC, a registered
broker/dealer and investment adviser,
which is not currently engaged in the
public mutual fund industry.
- ----------------------------------- ------------------------------------ ------------------------------------------

(1) OfficersExpenses that are not readily identifiable to the Fund are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative net assets of the Pax World Funds. The Fund has a 12b-1 plan.
Distributions to shareholders
Distributions to shareholders are recorded by the Fund on the ex-dividend dates.
A-55

Notes to Financial Statements (Unaudited)(Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
The Fund intends to declare and distribute dividends from net investment income, if any, semi-annually.
The Fund will distribute net realized capital gains, if any, annually.
Federal income taxes
The Fund has qualified and intends to qualify for and elect treatment as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended. 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 taxable income to the shareholders. Therefore, no Federal income or excise tax provision is required. The Pax World Funds are treated as separate entities for U.S. Federal income tax purposes.
Foreign currency transactions
The accounting records of the Fund are elected each yearmaintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the Fund's Annual Meetingrates of exchange prevailing on the respective dates of such transactions.
Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively.
NOTE B—INVESTMENT ADVISORY FEE AND TRANSACTIONS WITH AFFILIATES AND OTHER PARTIES
The Fund has entered into an Investment Advisory Agreement (the “Agreement”) with Pax World Management Corp. (the “Adviser”). Pursuant to the Agreement, the Adviser furnishes investment advisory services in connection with the management of the Board of Directors and hold office untilFund. Under the next Annual MeetingAgreement, the
A-56

Notes to Financial Statements (Unaudited)(Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
Adviser, subject to the supervision of the Board of Directors of the Fund, or untilis 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.
As compensation for services rendered, the Fund pays the Adviser a successor shall have been chosenfee, accrued daily and shall have qualified.

OWNERSHIP OF SHARES IN THE PAX WORLD FUND FAMILY

paid monthly, at the annual rates set forth below as a percentage of the average daily net assets of the Fund. Pursuant to the terms of the Agreement between the Fund and the Adviser, the Adviser will be compensated by the Fund for its services at an annual rate of three-quarters of one percent (.75%) of average daily net assets up to and including $25,000,000 and one-half of one percent (.50%) of average daily net assets in excess of $25,000,000.
The following table shows the amount of equity securities ownedAdviser has agreed to supply and pay for such services as are deemed by each
member of 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) that exceed, on a per annum basis, one and one-half percent (1.5%) of the average daily net assets of the Fund. Such expenses include (i) management and distribution fees; (ii) the fees of affiliated and unaffiliated Directors; (iii) the fees of the Fund’s custodian and transfer agent; (iv) the fees of the Funds’ legal counsel and independent accountants; (v) the reimbursement of organizational 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. For the six months ended June 30, 2005, there were no expense reimbursements or voluntary fee waivers for the Fund.
The Agreements were approved by their respective Boards of Directors, 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 9, 2005. In reaching this decision, the Board, including a majority
A-57

Notes to Financial Statements (Unaudited)(Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
of the Directors who are not parties to such Agreement or interested persons of any such party, considered, among other things, the historical and recent performance of the Adviser on behalf of the Fund and its shareholders, the historical relationship of the Adviser to the Fund, the commitment of the Adviser to the socially responsible investing policies of the Fund and the competitive nature of the fee charged by the Adviser.
More specifically, the Directors reviewed the Adviser’s most recent financial statements and were satisfied with the Adviser’s financial health and the level of profit earned by the Adviser. They also were provided with, and reviewed, a chart comparing the fees charged by the Adviser with those being charged by advisers to other socially responsible funds and similar charts comparing performance and expense ratios of the Fund to those of other socially responsible funds. The Directors were satisfied that the fees charged by the Adviser and the expenses being charged back to the Fund were reasonable and appropriate. The Directors also reviewed the latest versions of the various policies and procedures adopted by the Adviser with respect to the management of the Fund, and discussed the recent personnel changes undertaken by the Adviser to strengthen its management and compliance capabilities. After reviewing the foregoing, the Directors were sufficiently satisfied with the nature, extent and quality of service being provided by the Adviser to unanimously renew the Agreements.
The Fund maintains a distribution expense plan (the “Plan”) pursuant to Rule 12b-1 under the Act pursuant to which the Fund incurs the expenses of distributing its shares. The Fund has instituted this plan. Such expenses include (but are not limited to) advertising, compensation of underwriters, dealers and sales personnel, the printing and mailing of prospectuses to other than current shareholders, and the printing and mailing of sales literature. The Plan provides that the Fund may pay to one or more of its 12b-1 distributors (i) individually and in the aggregate, up to twenty-five hundredths of one percent (.25%) per annum of its average daily net assets for personal service and/or the maintenance of shareholder accounts as defined by Rule 2830 of the National Association of Securities Dealers Rules of Conduct, and (ii) total distribution fees (including the service fee of .25 of 1%) up to twenty-
A-58

Notes to Financial Statements (Unaudited)(Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
five hundredths of one percent (.25%) of its average daily net assets. 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 all
registered investment companiesthe 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 any of the Plans is terminated, the payment of fees to third parties would be discontinued at that time.
The Fund is permitted to invest in the Pax World Money Market Fund, Family overseenInc., which is also managed by such
member asthe Adviser. The Adviser has agreed to waive the portion of December 31, 2004:

- --------------------------------------- -------------------------- -------------------------------
Aggregate Dollar Range of
Equity Securitiesthe 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 that the Fund has invested in All
Funds Overseen or to be
Dollar Range of Equity Overseen by the Nominee in
Securities in the Fund the Pax World Fund Family
- --------------------------------------- -------------------------- -------------------------------

- --------------------------------------- -------------------------- -------------------------------
Interested Directors
- --------------------------------------- -------------------------- -------------------------------
Mr. Thomas W. Grant $50,001 - $100,000 $50,001 - $100,000
- --------------------------------------- -------------------------- -------------------------------
Mr. Laurence A. Shadek $50,001 - $100,000 Over $100,000#
- --------------------------------------- -------------------------- -------------------------------

- --------------------------------------- -------------------------- -------------------------------
Disinterested Directors
- --------------------------------------- -------------------------- -------------------------------
Mr. Carl H. Doerge, Jr. $50,001 - $100,000 over $100,000
- --------------------------------------- -------------------------- -------------------------------
Mr. James M. Large, Jr. None None
- --------------------------------------- -------------------------- -------------------------------
Mr. Louis F. Laucirica $0 - $10,000 $10,001 - $50,000
- --------------------------------------- -------------------------- -------------------------------
Ms. Joy L. Liechty $10,001 - $50,000 $10,001 - $50,000
- --------------------------------------- -------------------------- -------------------------------
Mr. Sanford C. Sherman $10,001 - $50,000 $50,001 - $100,000
- --------------------------------------- -------------------------- -------------------------------
Dr. Nancy S. Taylor $50,001 - $100,000 $50,001 - $100,000
- --------------------------------------- -------------------------- -------------------------------
Ms. Esther J. Walls $10,001 - $50,000 $10,001 - $50,000
- --------------------------------------- -------------------------- -------------------------------

# Includes shares of the Pax World GrowthMoney Market Fund, Inc. and Pax World High
YieldFor the six months ended June 30, 2005, the advisory fee was waived in the amount of $24,325.
Several individuals who are officers and/or Directors of the Fund Inc. ownedare also employees of record by the Adviser.

COMPENSATION OF DIRECTORS

Effective January 1, 2005,
The Fund currently pays each of its unaffiliated Directors an annual retainer of $3,500 and each of its affiliated Directors an annual retainer of $1,750. Also, the Fund pays each of its interested
directors an annual retainerunaffiliated Directors a fee of $1,750$2,000, and each of its disinterested
directors an annual retainer fee of $3,500. The Fund also pays each of its
interested directorsaffiliated Directors a fee of $1,000, and each of its disinterested directors a
fee of $2,000, for attendance at each meeting of the Board of Directors of the Fund. Members of the Board of Directors of the Fund are also reimbursed for
their travel expenses for attending meetings of the Board of Directors.
In addition, the Fund pays $1,000 to each member of its Audit Committee for attendance at each meeting of its Audit Committee, plus reimbursement for travel
expenses

-6-

incurred in connection with attending such meetings.committee. The Fund also pays $300 to each member of its Nominating Committee for attendance at each meeting of its
Nominating Committee, plus reimbursement for travel expenses incurred in
connectionsuch committee.
Lee D. Unterman, Esq., a partner with attending such meetings. Other than the foregoing amounts, nonelaw firm of the members of the Board of Directors of the Fund receives compensation from
the Fund for services performed as a member of the Board of DirectorsKurzman Karelsen & Frank, LLP, is Secretary and Chief Compliance Officer of the Fund. The following table sets forth certain information relating to all
directors ofDuring the six months ended June 30, 2005, the Fund incurred legal fees and related expenses with Kurzman Karelsen & Frank, LLP, general counsel for each of the three highest paid executive officers
of the Fund, who received aggregate compensationin the amount of $103,340.
A-59

Notes to Financial Statements (Unaudited)(Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
Additionally, Kurzman Karelsen & Frank, LLP serves as general counsel for the Adviser and provides legal services, from time to time, to H.G. Wellington & Co., Inc. (“H.G. Wellington”), the Fund’s distributor and a brokerage firm that the Fund for the most
recently completed fiscal year exceeding $60,000:

- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Pension or Total Compensation
Retirement from the Fund and
Aggregate Benefits Accrued Estimated the Pax World Fund
Compensation from as Part of Fund Annual Benefits Family Paid to
Name of Person and Position the Fund Expenses Upon Retirement Directors*
- -------------------------------------- ------------------- ------------------ ----------------- --------------------

- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Interested Person
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Mr. Thomas W. Grant $4,000 0 0 $6,700 (3)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Mr. Laurence A. Shadek $4,000 0 0 $6,700 (3)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------

- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Disinterested Person
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Mr. Carl H. Doerge, Jr. $19,000 0 0 $39,000 (3)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Mr. James M. Large, Jr. $19,000 0 0 $39,000 (3)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Mr. Louis F. Laucirica $16,000 0 0 $33,000 (3)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Ms. Joy L. Liechty $16,000 0 0 $24,000 (2)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Mr. Sanford C. Sherman $19,000 0 0 $28,500 (2)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Dr. Nancy S. Taylor $16,000 0 0 $24,000 (2)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------
Ms. Esther J. Walls $16,000 0 0 $33,000 (3)
- -------------------------------------- ------------------- ------------------ ----------------- --------------------

* The total compensation paidmay use to such persons by the Fund and the Pax World Fund
Family for the fiscal year ended December 31, 2004. The parenthetical number
represents the number of investment companies (including the Pax World Money
Market Fund) from which such person receives compensation that are considered
part of the Pax World Fund Family, because, among other things, they have a
common investment adviser or sub-adviser.

Director's fees paid by the Fund, Pax World Growth Fund, Inc., Pax World
High Yield Fund, Inc. and Pax World Money Market Fund, Inc. in 2004 and travel
expenses reimbursed by the Fund, Pax World Growth Fund, Inc., Pax World High
Yield Fund, Inc. and Pax World Money Market Fund, Inc. in 2004 to members of the
Board of Directors of the Fund are as follows:

Pax World Balanced Pax World Growth Pax World High Pax World Money
Fund, Inc. Fund, Inc. Yield Fund, Inc. Market Fund, Inc.

Interested Directors
Mr. Thomas W. Grant $5,483.97 $2,358.48 $2,795.90 Not Applicable
Mr. Laurence A. Shadek $4,383.86 $1,583.86 $1,723.99 Not Applicable

Disinterested Directors
Mr. Carl H. Doerge, Jr. $19,866.63 $10,366.62 $10,906.09 Not Applicable
Mr. James M. Large, Jr. $19,000.00 $9,500.00 $10,500.00 Not Applicable
Mr. Louis F. Laucirica $16,848.26 $8,848.26 $9,166.66 Not Applicable
Ms. Joy L. Liechty $16,836.42 $8,836.40 Not Applicable Not Applicable
Mr. Sanford C. Sherman $19,109.71 $9,609.71 Not Applicable Not Applicable
Dr. Nancy S. Taylor $16,094.53 $8,094.53 Not Applicable Not Applicable
Ms. Esther J. Walls $16,180.77 $8,180.77 $9,180.76 Not Applicable
execute brokerage transactions.
Substantially all of the issued and outstanding shares ofAdviser’s capital stock of the Adviser areis 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-five and seventy-three one
hundredths percent (25.73%) ownership interest in H. G.H.G. Wellington. Brokerage
commissions paid by the Fund to H. G. Wellington during 2003 and 2004 totaled
$274,273 and $198,778, respectively (28% and 21%, respectively, of total 2003
and 2004 commissions) and 12b-1 distribution expenses under the Fund's
distribution expense plan maintained pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended, paid by the Fund to H. G. Wellington during
2003 and 2004 totaled $5,239 and $5,855, respectively. Thomas W. Grant, the President of the Adviser and H. G.H.G. Wellington, has less than a 5% ownership interest in the Adviser and H. G.H.G. Wellington. The Board of Directors ofBrokerage commissions and distribution expenses under the Fund held a total of four (4) meetingsPlan paid to H.G. Wellington during the yearsix months ended December 31, 2004. In addition, the independent membersJune 30, 2005 were as follows:
Brokerage % of Total Distribution
Commission Commissions Expenses
$62,713 12.80 % $3,060
NOTE C—INVESTMENTS INFORMATION
Purchases and proceeds from sales of the Board of Directors of the Fund held a total of four (4) meetings during the
year ended December 31, 2004. The Board has an Audit Committee consisting of
Messrs. Carl H.

-7-

Doerge, Jr., James M. Large, Jr. and Sanford C. Sherman, an Investment Committee
consisting of Messrs. Laurence A. Shadek, Thomas W. Grant and Christopher H.
Brown (Portfolio Manager of the Fund), and a Nominating Committee consisting of
Mr. Louis F. Laucirica, Ms. Joy L. Liechty and Dr. Nancy S. Taylor. The Audit
Committee has responsibilityinvestments for 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. The Fund's Board of Directors has determined that the Fund has
three "financial experts" (as defined under Regulation S-K of the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended)
serving on its Audit Committee, namely Messrs. Carl H. Doerge, Jr., James M.
Large, Jr. and Sanford C. Sherman. The Investment Committee has responsibility
for overseeing the investments of the Fund. The Nominating Committee has
responsibility for nominating new members to the Fund's Board of Directors. The
Nominating Committee does not have a charter and is in the process of developing
policies and procedures with regard to identifying and evaluating candidates for
nomination to the Fund's Board of Directors. Shareholders of the Fund who desire
to recommend candidates to the Fund's Board of Directors at this time should
follow the procedures for shareholder proposals described below in the section
entitled "Shareholder Proposals". The Fund has no other standing committee. The
Audit Committee held three (3) meetings during the year and the Investment
Committee held two (2) meetings during the year. The Nominating Committee did
not meet during the year. Each director attended all of the meetings of the
Board of Directors and the committee(s) upon which they served and the 2004
Annual Meeting of the Shareholders of the Fund.

Communications to the Board of Directors of the Fund may be addressed as
follows: Board of Directors, Pax World Balanced Fund, Inc., c/o Laurence A.
Shadek, Chairman of the Board, Pax World Balanced Fund, Inc., 222 State Street,
Portsmouth, NH 03801-3853; communications to an individual member of the Board
of Directors of the Fund may be addressed to such member c/o Pax World Balanced
Fund, Inc., 222 State Street, Portsmouth, NH 03801-3853. A copy of all
communications addressed to the Board of Directors of the Fund as a whole shall
be provided to each member of the Board of Directors of the Fund. The Fund
reserves the right to amend this policy at any time and from time to time
without prior notice to the Fund's shareholders.

PROPOSAL 2 -- TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS OF THE FUND

The Board of Directors of the Fund, on the recommendation of the Audit
Committee of the Board of Directors, has unanimously approved the selection of
Ernst & Young LLP ("EY") as the independent public accountants of the Fund for the fiscal year ending December 31,six months ended June 30, 2005 were as follows:
Purchases Sales
U.S. U.S.
Government Government
Investments* Bonds Investments* Bonds
$244,663,244 $134,982,131 $172,066,716 $24,444,939
* excluding short-term investments and hereby seeks shareholder
ratification of such selection. EY has advisedU.S. Government bonds
A-60

Notes to Financial Statements (Unaudited)(Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
The term “affiliated company” includes other investment companies that are managed by a fund’s adviser. At June 30, 2005, the Fund that neither EY nor anyheld the following security of its members or employeesan affiliated company, Pax World Money Market Fund, Inc.:
Value at Purchased Sold Value at Dividend
12/31/04 Cost Cost 6/30/05 Income
$38,931,855 * $225,127,051 $195,078,000 $68,980,906 $833,213
* A “controlled affiliate” is a company in which a fund has or has had inownership of at least 25% of the past three years, any
financial interest invoting securities. At June 30, 2005, the Fund or any relation to the Fund other than the
ownership by less than ten EY employeesheld at least 25% of shares of one or more funds
comprising the Pax World Fund Family, which shares were divested by such
employees, either prior to or immediately upon EY's initial selection as the
independent public accountants of the Fund, in accordance with the rules and
regulations promulgated by the Securities and Exchange Commission.
Representatives of EY are expected to be present at the Meeting, will be given
the opportunity to make a statement if they so desire and are expected to be
available to respond to appropriate questions.(1)

AUDIT FEES. The aggregate fees billed the Fund for each of the last two
fiscal years for professional services rendered by EY and the Fund's former
principal accountant, Pannell Kerr Forster, P.C. ("PKF"), for the audit of the
Fund's annual financial statements and review of the financial statements
included in the Fund's interim reports or services that are normally provided by
the accountants in connection with statutory and regulatory filings or
engagements (including tax fees reported under "Tax Fees", below) for fiscal
years 2003 and 2004 were as follows:

- ------------------------ --------------------- ---------------------
2003 2004
- ------------------------ --------------------- ---------------------
EY $50,500 $64,097
- ------------------------ --------------------- ---------------------
PKF $38,156 $0
- ------------------------ --------------------- ---------------------

AUDIT-RELATED FEES. The aggregate fees billed in each of the last two
fiscal years for assurance and related services by EY and PKF that are
reasonably related to the performance of the audit or review of the Fund's
financial statements and are not reported under "Audit Fees", above, of this
Item were $0 and $0 for fiscal years 2003 and 2004, respectively - none of which
were required to be approved by the Audit Committee of the Fund's Board of
Directors pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. There
were no services rendered by the Fund's principal accountant during fiscal years
2003 and 2004 under this category.

TAX FEES. The aggregate fees billed in each of the last two fiscal
years for professional services rendered by EY and PKF for tax compliance, tax
advice, and tax planning for fiscal years 2003 and 2004, respectively - none of
which were required to be approved by the Audit Committee of the Fund's Board of
Directors pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, were
as follows:

- --------

(1) At a meeting of the Board of Directors of the Fund held on March 13, 2003,
the Board of Directors unanimously voted to terminate the retention of the
Fund's prior independent public accountants, Pannell Kerr Forster, P.C. ("PKF"),
as a result of the Board's concern about the accuracy of certain tax advice
provided by PKF to the Fund and Pax World High YieldMoney Market Fund, Inc. (the "High Yield
Fund") in prior years. In particular, PKF caused
For Federal income tax purposes, the Fund to pay state income
taxes to the State of New Hampshire for fiscal years 1991 through 2001,
inclusive, and the High Yield Fund to pay such taxes to the State of New
Hampshire for fiscal years 2000 and 2001, even though a statutory exemption was
available. An application for a refund of those taxes has been made to the State
of New Hampshire and the Fund and the High Yield Fund are also seeking
reimbursement from PKF of the amount paid for those taxes. Shareholders should
note that there have been no disagreements between the Fund and PKF on any
matter of accounting principles or practices and PKF has never rendered an
adverse or qualified opinion about the Fund's financials. Under the
circumstances, however, and notwithstanding the fact that the Audit Committee of
the Board of Directors and the Board of Directors of the Fund have been pleased,
in general, with the services rendered by PKF to the Pax World Fund Family for
twenty years, the Board of Directors of the Fund, acting upon the recommendation
of the Audit Committee of the Board of Directors, felt it necessary and
appropriate to seek new independent public accountants for the Fund.

-8-

- ------------------------ --------------------- ---------------------
2003 2004
- ------------------------ --------------------- ---------------------
EY $9,500 $10,500
- ------------------------ --------------------- ---------------------
PKF $0 $0
- ------------------------ --------------------- ---------------------

The nature of the services comprising the fees disclosed under this category
are: review and execution of federal, state and excise tax returns and advice
concerning tax compliance and planning.

ALL OTHER FEES. The aggregate fees billed in each of the last two fiscal
years for products and services provided by EY and PKF, other than the services
reported in "Audit Fees", "Audit-Related Fees", and "Tax Fees", above, of this
Item, are $0 and $0 for fiscal years 2003 and 2004, respectively - none of which
were required to be approved by the Audit Committee of the Fund's Board of
Directors pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. There
were no services rendered by the principal accountants during fiscal years 2003
and 2004 under this category.

The pre-approval policies and procedures of the Audit Committee of the
Fund's Board of Directors described in paragraph (c)(7)(i) of Rule 2-01 of
Regulation S-X are as follows: all audit and non-audit services outside the
scope of the engagement letter entered into between the Fund and EY dated
September 30, 2003 are subject to pre-approval by the Audit Committee of the
Board of Directors of the Fund.

The percentage of services described in "Audit-Related Fees", "Tax Fees"
and "All Other Fees", above, that were approved by the Audit Committee of the
Fund's Board of Directors pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X and the percentage of services described in "Audit-Related Fees",
"Tax Fees" and "All Other Fees", above, that were required to be approved by the
Audit Committee of the Fund's Board of Directors pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X were as follows:

Item Approved Required to be
Approved
2003 Audit-Related Fees Not Applicable 0%
Tax Fees 0% 0%
All Other Fees Not Applicable 0%
2004 Audit-Related Fees Not Applicable 0%
Tax Fees 0% 0%
All Other Fees Not Applicable 0%

The percentage of hours expended on the principal accountant's engagement
to audit the Fund's financial statements for the most recent fiscal year that
were attributed to work performed by persons other than the principal
accountant's full-time, permanent employees was less than fifty percent.

The aggregate non-audit fees billed by the Fund's accountant for services
rendered to the Fund, and rendered to the Adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling, controlled
by, or under common control with the Adviser that provides ongoing services to
the Fund are $0 and $0 for fiscal years 2003 and 2004, respectively.

The Audit Committee of the Fund's Board of Directors has not considered
whether the provision of non-audit services that were rendered to the Adviser
(not including any sub-adviser whose role is primarily portfolio management and
is subcontracted with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the Adviser that
provides ongoing services to the Fund that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence because there were no
non-audit services rendered by the Fund's principal accountant to the Adviser or
such other entities.

OTHER BUSINESS

The Directors of the Fund are not aware of any other business to be acted
upon at the Meeting other than described herein. It is not anticipated that
other matters will be brought before the Meeting. If, however, other matters are
duly brought before the Meeting, or any adjournments thereof, the persons
appointed as proxies will have discretion to vote or act thereon according to
their best judgment.

EXPENSES OF PROXY SOLICITATION

Theidentified cost of the Meeting, including the solicitation of proxies, will be
borne by the Fund. The proposed solicitation of proxies will be made by mail but
supplemental solicitations may be by mail, telephone, or telegraph personally by
shareholder service representatives and/or officers of the Fund who will not be
additionally compensated for providing such services. It is anticipated that the
cost for supplemental solicitations provided by the Fund's shareholder service
representatives and/or officers, if any, would be nominal. The Fund will forward
to any record owners proxy materials for any beneficial owner that such record
owners may request.

-9-

SHAREHOLDER PROPOSALS

If a shareholder of the Fund wants to include a proposal in the Fund's
proxy statement and form of proxy for presentationinvestments owned at the 2006 Annual Meeting of
Shareholders, the proposal must be received by December 28,June 30, 2005, and must
otherwise comply with the rules of the Securities and Exchange Commission
relating to the submission of shareholder proposals. Proposals must be mailed to
the Fund's principal executive offices at 222 State Street, Portsmouth, NH
03801-3853 Attention: Secretary. A shareholder proposal not included in the
Fund's proxy statement for the 2006 Annual Meeting of Shareholders will be
ineligible for presentation at that meeting.

SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL AND/OR RECORD OWNERS AND MANAGEMENT

Name and Address of Amount and Nature of
Title of Class Beneficial/Record Owner Beneficial/Record Ownership Percent of Class

Common Stock Charles Schwab & Co. Inc. 8,910,588.399 shares of 12.990%
Special Custody Account for the the Common Stock of the
Exclusive Benefit of Customers Fund
101 Montgomery Street
San Francisco, CA 94104

Common Stock ING Life Insurance & Annuity Co. 3,686,621.500 shares of 5.370%
151 Farmington Avenue the Common Stock of the
Hartford, CT 06156 Fund

Common Stock National Financial Services Corp. 4,680,077.989 shares of 6.820%
FBO Exclusive Benefit of Customers the Common Stock of the
One World Financial Center Fund
200 Liberty Street
New York, NY 10281

Interested Directors and Officers

Common Stock Mr. Thomas W. Grant 1,993.719 shares of the 0.003%
14 Wall Street Common Stock of the Fund
New York, NY 10005

Common Stock Mr. Laurence A. Shadek 3,212.077 shares of the 0.005%
14 Wall Street Common Stock of the Fund
New York, NY 10005

Disinterested Directors and Officers

Common Stock Mr. Carl H. Doerge, Jr. 4,158.827 shares of the 0.006%
c/o Pax World Management Corp. Common Stock of the Fund
222 State Street
Portsmouth, NH 03801

Common Stock Mr. James M. Large, Jr. 0.000 shares of the Common 0.000%
c/o Pax World Management Corp. Stock of the Fund
222 State Street
Portsmouth, NH 03801

Common Stock Mr. Louis F. Laucirica 299.467 shares of the Less than 0.001%
c/o Pax World Management Corp. Common Stock of the Fund
222 State Street
Portsmouth, NH 03801

Common Stock Ms. Joy L. Liechty 1,460.022 shares of the 0.002%
c/o Pax World Management Corp. Common Stock of the Fund
222 State Street
Portsmouth, NH 03801

Common Stock Mr. Sanford C. Sherman 1,852.227 shares of the 0.003%
c/o Pax World Management Corp. Common Stock of the Fund
222 State Street
Portsmouth, NH 03801

-10-

Common Stock Dr. Nancy S. Taylor 3,535.390 shares of the 0.005%
c/o Pax World Management Corp. Common Stock of the Fund
222 State Street
Portsmouth, NH 03801

Common Stock Ms. Esther J. Walls 1,046.703 shares of the 0.002%
c/o Pax World Management Corp. Common Stock of the Fund
222 State Street
Portsmouth, NH 03801

HOUSEHOLDING OF ANNUAL REPORTS

The Securities and Exchange Commission permits the delivery of a single
set of annual reports to any household at which two or more shareholders reside,
if the shareholders consent. This procedure, referred to as householding,
reduces the volume of duplicate information you receive, as well as the Fund's
expenses.

If you prefer to receive separate copiesgross unrealized appreciation and depreciation of investments and resulting net unrealized appreciation (depreciation) as of June 30, 2005, were as follows:
Identified
cost of Net
investments Gross Gross unrealized
for Federal unrealized unrealized appreciation
income tax basis appreciation depreciation (depreciation)
$1,402,281,159 $314,008,731 $23,131,441 $290,877,290
NOTE D—TAX INFORMATION
Under current tax laws, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the Fund's annual report,
either now orfollowing fiscal year. The Fund incurred losses in the future,amount of $202,650 during the period November 1, 2004 through December 31, 2004, which have been deferred for tax purposes until fiscal year 2005.
At December 31, 2004, the Fund will promptly deliver, upon your written
or oral request, a separate copy of the annual report, as requested,had no capital loss carryforwards.
NOTE E—CUSTODIAN BANK AND CUSTODIAN FEES
The custodian fees charged are reduced, pursuant to any
shareholder at such shareholder's address to which a single copy was delivered.
Notice should be given by writing toexpense offset arrangements with the Fund, at 222 State Street, Portsmouth,
NH 03801-3853 or telephoningby an earnings credit which is based upon the Fund at 1-800-767-1729. If you are currently a
shareholder of the Fund sharing an address with another shareholder of the Fund
and wish
A-61

Notes to have only one annual report delivered to your household in the
future, please contact us at the same address or telephone number.

ADDITIONAL INFORMATION

The officers of the Fund are responsible for the day-to-day operations of
the Fund and the Board of Directors of the Fund is responsible for the general
policy of the Fund; Pax World Management Corp., 222 State Street, Portsmouth, NH
03801-3853 is the adviser to the Fund; the Fund's shares are distributed through
a distribution expense plan maintained by the Fund pursuant to Rule 12b-1 of the
Investment Company Act of 1940, as amended; and H.G. Wellington & Co., Inc., 14
Wall Street, New York, NY 10005, 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.

-11-

PROXY PROXY

Financial Statements (Unaudited)(Continued)
June 30, 2005
PAX WORLD BALANCED FUND, INC.
C/
average cash balance maintained at the Fund’s custodian. If the Fund did not have such offset arrangements, it could have invested such amounts in income-producing assets. Custody credits for the Fund for the six months ended June 30, 2005, reported as Fees paid indirectly in the Statements of Operations, were $9,408.
NOTE G—PROXY VOTING
You may obtain a description of the Fund’s proxy voting policies and procedures, without charge, upon request by contacting the Fund directly at 800-767-1729 or on the SEC’s website at www.sec.gov.
The information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 is available without charge, upon request, by telephoning Pax World (toll-free) at 800-767-1729 or by visiting Pax World’s website at www.paxworld.com or the SEC’s website at www.sec.gov.
NOTE H—QUARTERLY PORTFOLIO HOLDINGS DISCLOSURE
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Information contained in the Fund’s Forms N-Q may also be obtained by visiting Pax World’s website at www.paxworld.com or telephoning Pax World (toll-free) at 800-767-1729.
A-62

Printed in USA on recycled paper

EVERYSHAREHOLDER’SVOTEISIMPORTANT
PLEASESIGN,DATEAND&nbs p;RETURNYOURPROXY TODAY
P.O. BOX 9112
FARMINGDALE,NY11735 VOTETODAY BYMAIL,TOUCH-TONEPHONEORTHEINTERNET.
CALLTOLLFREE1-888-221-0697ORLOGONTOwww.proxyweb.com.
PAXWORLDBALANCEDFUND,INC.
222STATESTREET
PORTSMOUTH,NEWHAMPSHIRE03801-3853
TheundersignedherebyappointsJosephF. KeefeandMaureenL.Conleyoranyoneormoreofthem,proxiesforthe undersigned, eachwithfullpower ofsubstitution,tovoteallsharesofcommonstockofPaxWorldBalancedFund,Inc.(the“Fund”)thattheundersignedisentitledtovote,atthespecial meetingofshareholderstobeheldonFebruary23,2006at10:00a.m.,localtime,attheSheratonHarborsidePortsmouthHotel andConferenceCenter,250 MarketStreet,Portsmouth,NewHampshire03801,andatany andalladjournmentsandpostponementsthereof.
THISPROXYWHENPROPERLYEXECUTEDWILLBEVOTED IN THEMANNERDIRECTEDHEREINBY THEUNDERSIGNEDSHAREHOLDER(S). IFNODIRECTION ISINDICATED,THESHARESREPRESENTEDBYTHISPROXY WILLBEVOTED AT THEMEETING“FOR” APPROVALOFTHE AMENDMENT TO THE FUND’S CERTIFICATE OF INCORPORATION, WHICH WILL INCREASE THE NUMBER OF AUTHORIZED SHARES OF ITS COMMON STOCK, PAR VALUE $1.00PERSHARE,FROMSEVENTY-FIVEMILLION(75,000,000)SHARESTO PFPC, INC.
760 MOORE ROAD
KING OF PRUSSIA, PA 19406

PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, JUNE 9, 2005

ONEHUNDREDFIFTY MILLION(150,000,000)SHARES.
TheundersignedherebyacknowledgesreceiptoftheNoticeofSpecial MeetingofShareholdersandtheProxyStatementfurnished therewith. The undersignedherebyrevokesanyproxiesgivenpriortothedatereflectedbelow.
Date
Signature(s)ofShareholder(s) (SignintheBox)
Pleasecomplete,dateandsignexactlyasyournameap pears herein.Ifsharesareheldjointly, eachholdershouldsign.When signingasattorney,executor,administrator,trustee,guardian or corporateofficial,pleaseaddyourtitle.
N66505 PWB gv

Pleasefillinbox(es)asshownusingblackorblueinkornumber2pencil.X PLEASEDONOTUSEFINEPOINTPENS.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSDIRECTORS OF PAX WORLD BALANCEDTHE FUND INC.

The undersigned hereby appoints Laurence A. Shadek and/or Lee D.
Unterman as Proxies, each with full powers to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
common stock of Pax World Balanced Fund, Inc. held on record by the undersigned
on April 18, 2005, at the annual meeting of shareholders to be held on Thursday,
June 9, 2005, or at any adjournment or adjournments thereof.

VOTE VIA THE INTERNET: HTTPS://VOTE.PROXY-DIRECT.COM
VOTE BY TELEPHONE: 1-866-241-6192
CONTROL NUMBER: 999 9999 9999 999

NOTE: Please sign exactly as your name appears on this
proxy card. When shares are held by joint tenants, both
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in partnership
name by authorized person.. PLEASE DO NOT INDICATE
ADDRESS CORRECTIONS OR CHANGES, REGISTRATION CHANGES OR
ANY OTHER INFORMATION ON THIS CARD.

---------------------------------------------
Signature

---------------------------------------------
Signature of joint owner, if any

________________________________________, 2005
Date

I plan to attend the Meeting Yes /_/ No /_/

PLEASE COMPLETE, SIGN DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY
TELEPHONE OR ON THE INTERNET AS DESCRIBEDCARD IN THE ENCLOSED, PAMPHLET.

PAX WORLD BALANCED FUND, INC.
ANNUAL SHAREHOLDERS MEETING - JUNE 9, 2005

THIS SELF-ADDRESSEDENVELOPEORRECORDYOURVOTINGINSTRUCTIONSVIATHEINTERNETORTELEPHONE. RETURNINGYOURPROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FORCARD(OR PROVIDING VOTING INSTRUCTIONS VIA THE ADOPTION OF PROPOSALS 1, 2 AND 3 AS SAID PROXIES, AND EACH
OF THEM, MAY DETERMINE.

TOINTERNET OR TELEPHONE) WILL NOT AFFECT YOUR RIGHT TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: [ ]

1. To elect the following nine nominees as Directors of the Fund:

01 Carl H. Doerge, Jr. 02 Thomas W. Grant 03 James M. Large, Jr.
04 Louis F. Laucirica 05 Joy L. Liechty 06 Laurence A. Shadek
07 Sanford C. Sherman 08 Nancy S. Taylor 09 Esther J. Walls

[ ] FOR ALL

[ ] WITHHOLD ALL

[ ] FOR ALL EXCEPT

To withhold your vote for any individual nominee(s),
mark the "FOR ALL EXCEPT" box and write the number(s)
of such nominee(s) on the line provided below:

----------------------------------------------

2. To ratify the selection of Ernst & Young LLP as the independent
public accountants of the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In their discretion, on all other business that may properly come
before the Meeting and any adjournment or adjournments thereof.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY
TELEPHONE OR ON THE INTERNET AS DESCRIBED IN THE
ENCLOSED PAMPHLET.

-2-

EVERY PROXY VOTE IS IMPORTANT!

VOTE YOUR PROXY ON THE PHONE OR INTERNET.

IT SAVES MONEY! Telephone and Internet voting saves postage costs, which can
help minimize expenses.

IT SAVES TIME! Telephone and Internet voting is instantaneous - 24 hours a day.

IT'S EASY! Just follow these simple steps:

1. Read your proxy statement and have it at hand.

2. Call toll-free 1-866-241-6192 or go to website
https://vote.proxy-direct.com.

3. Enter your 14-digit CONTROL NUMBER from your proxy card.

4. Follow the recorded or on-screen directions.

5. Do NOT mail your proxy card when you vote by phone or Internet.

I M P O R T A N T

PLEASE SEND IN YOUR PROXY... TODAY!

Please sign and date the enclosed proxy and return it promptly. This will help
save the expense of follow-up letters and telephone calls to shareholders who
have not responded.

COME AND MEET PAX WORLD!

We'd love to meet you! We invite you to join us for the Pax World Annual
Shareholders Meeting on June 9, 2005 in Portsmouth, NH. Come and hear reports
from the Chairman of the Board, President, Portfolio Managers and Vice President
of Social Research.

(See other side for details.)

PAX WORLD ANNUAL SHAREHOLDERS MEETING

WHERE: Sheraton Harborside Hotel ~ 250 Market Street ~ Portsmouth, NH

WHEN: Thursday, June 9, 2005 - 9:45am - 1:00pm

WHEN YOU VOTE, PLEASE LET US KNOWPERSON IF YOU PLAN TO JOIN US FORATTEND THE MEETING!
o Check the RSVP box on your Proxy Vote Card, or
o Click on the RSVP box on the Proxy Vote website (details on the
Proxy Vote Card), or
o RSVP when you vote by phone at 1-866-241-6192

IF YOU PLAN TO VOTE YOUR SHARES AT THE
MEETING, YOU MAY RSVP BY CALLING US AT 1-800-767-1729 OR BY
E-MAIL AT info@paxworld.com.

SPECIALMEETING.
FOR AGAINST ABSTAIN
(1) To approve anamendmenttotheFund’sCertificateofIncorporationthat
wouldincreasethe numberofauthorizedsharesofitscommonstock,par o o o
value$1.00pershare,fromseventy- fivemillion(75,000,000)shares to
onehundredfiftymillion(150,000,000)shares.
PLEASE RSVP BEFORE JUNE 1ST. Continental Breakfast will be served.

-2-

~~/_/~~
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
o	Preliminary Proxy Statement ~~/_/~~
o	Confidential, ~~For~~for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ~~/X/~~
x	Definitive Proxy Statement ~~/_/~~
o	Definitive Additional Materials ~~/_/~~
o	Soliciting Material Pursuant to §240.14a-12

- -------------------------------------------------------------------------------------------------------------------- Interested Nominees - -------------------------------------------------------------------------------------------------------------------- Number of
Name, Address and Age		Position(s) Held ~~Portfolios in~~ with ~~the Pax World the Pax World Funds;~~ Fund; Term of Office1; and Length of Time Served		Principal Occupation(s) During Past ~~Fund Family Office(1) and Length~~ 5 Years and Other Directorships Held by Director or Officer		Number of Portfolios in the Pax World Fund Family Overseen by the Name, Address and Age of Time Served by the Nominee Nominee - ------------------------------------ ---------------------- -------------------------------------- ----------------- ~~Director~~
Thomas W. Grant 14 Wall Street New York, NY 10005; (63)2, 3, and 4		Vice Chairman of the Board of Directors; Director and President (since 1996)		Mr. Grant is the Vice Chairman of ~~3 14 Wall Street Board of Directors;~~ the Board and President of ~~Pax World New York, NY 10005; (63) (2) Director and Balanced~~the Fund ~~Inc.~~ (1996-present), ~~President - Pax~~ the President of Pax World Growth ~~World Balanced~~ Fund ~~Fund, Inc.~~ (1997-present), the Pax World ~~Inc. (since 1996)~~ High Yield Fund ~~Inc.~~ (1999-present), the Pax World Money ~~Director and~~ Market Fund ~~Inc.~~ (1998-present), ~~President - Pax Pax World Management Corp. World Growth Fund,~~the Adviser (1996-present), and H.G. Wellington ~~Inc. (since 1997) & Co., Inc.~~ (1991-present). Mr. Grant has been associated with H.G. ~~President - Pax~~ Wellington ~~& Co., Inc.~~ since 1991 ~~World Money Market~~ and served previously with the firm ~~Fund, Inc. (since~~ of Fahnestock & Co. for twenty-six ~~1998)~~ years as a partner, managing director and senior officer. His ~~Director and~~ duties encompassed branch office ~~President - Pax~~ management, corporate finance, ~~World High Yield~~ syndications and municipal and ~~Fund, Inc. (since~~ corporate bonds. Mr. Grant is a ~~1999)~~ graduate of the University of North Carolina (BA). Mr. Grant is also is a member of the board of directors of the Securities Investor Protection Corporation (2003-present). ~~- ------------------------------------ ---------------------- -------------------------------------- -----------------~~		3

~~- ------------------------------------ ---------------------- -------------------------------------- -----------------~~ Conservation Society and served as its Acting President and Chief Executive Officer (2000-2001). Mr. Large also is a member of the Boards of Directors of the Nature Conservancy of Long Island (where he served as Acting Executive Director in 1998), the Nature Conservancy of New York, North Shore Wildlife Sanctuary, Matinicock Planning Board, Nassau Community College and Long Island Index. Mr. Large also serves on the Investment Advisory Committee of the Episcopal Diocese of Long Island. ~~- ------------------------------------ ---------------------- -------------------------------------- -----------------~~
	3

DATE ANDSIGNONREVERSESIDE.

N66505 PWBgv

Brokerage			% of Total			Distribution
Commission			Commissions			Expenses
	$	198,778		21.46	%		$	5,855

Purchases				Proceeds
		U.S.				U.S.
		Government				Government
Investments*		Bonds		Investments*		Bonds
$	280,934,621	$	220,184,319	$	250,961,110	$	163,736,395

Value at			Purchased		Sold		Value at		Dividend
12/31/03			Cost		Cost		12/31/04		Income
$	36,700,004	*	$	324,312,241	$	322,080,390	$	38,931,855	$	457,527

				Accumulated
Undistributed Net				Net Realized
Investment Income				Gain (Loss)			Paid-In Capital
	$	(351,714	)		$	351,714		$	0

2004		2004			2003		2003
Ordinary		Long-Term			Ordinary		Tax Return
Income		Capital Gains			Income		of Capital
$	13,344,000		$	0	$	11,834,367		$	331,248

PAX WORLD BALANCED FUND, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
x	No fee required.
o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
	(1)	Title of each class of securities to which transaction applies:

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	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule ~~14a-12~~ 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

	(4)	Proposed maximum aggregate value of transaction:

	(5)	Total fee paid:

o	Fee paid previously with preliminary materials.
o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1)	Amount Previously Paid:

	(2)	Form, Schedule or Registration Statement No.:

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	(4)	Date Filed:


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		Page
President’s Letter		i
Notice of Special Meeting		iii
General		1
Proposal		5
Security Ownership of Certain Beneficial Owners and Management		9
Financial Statements		9
Shareholder Proposals		10
Other Matters to Come Before the Meeting		10
Exhibit A		A

Name and Address of Beneficial Owner	Shares Beneficially Owned	Percent Ownership of Outstanding Fund Shares
Charles Schwab & Co., Inc.	9,749,779.951		13.36	%
Special Custody Account for the Exclusive Benefit of Customers 101 Montgomery Street San Francisco, California 94104
ING Life Insurance & Annuity Co.	4,166,872.218		5.71	%
151 Farmington Avenue Hartford, Connecticut 06156
National Financial Services Corp.	7,022,421.417		9.62	%
FBO Exclusive Benefit of Customers One World Financial Center 200 Liberty Street New York, New York 10281

PERCENT OF NET ASSETS, NAME OF ISSUER AND TITLE OF ISSUE	NUMBER OF SHARES		VALUE
STOCKS: 70.8%
COMMON STOCKS: 70.7%
CONSUMER DISCRETIONARY: 8.1%
Belo Corp. Series A		200,000	$	5,248,000
BJ’S Wholesale Club, Inc.(a)		350,000	10,195,500
Comcast Corp. Class A(a)		150,000	4,992,000
Comcast Corp. Class A Special(a)		200,000	6,568,000
DIRECTV Group, Inc.(a)		700,000	11,718,000
Koninklijke Philips Electronics NV ADR		650,000	17,225,000
Staples, Inc.		650,000	21,911,500
Starbucks Corp.(a)		375,000	23,385,000
Tribune Co.		400,000	16,856,000
			118,099,000
CONSUMER STAPLES: 6.7%
Avon Products, Inc.		400,000	15,480,000
Corn Products International, Inc.		380,400	20,374,224
CVS Corp.		300,000	13,521,000
Dean Foods Co.(a)		375,000	12,356,250
General Mills, Inc.		200,000	9,942,000
Gillette Co.		350,000	15,673,000
Supervalu, Inc.		300,000	10,356,000
			97,702,474
ENERGY: 7.0%
Apache Corp		425,000	21,492,250
Baker Hughes, Inc.		325,000	13,867,750
BP PLC ADR		150,000	8,760,000
Cal Dive International, Inc.(a)		225,000	9,168,750
Chesapeake Energy Corp.		800,000	13,200,000
Equitable Resources, Inc.		250,000	15,165,000

PERCENT OF NET ASSETS, NAME OF ISSUER AND TITLE OF ISSUE	PRINCIPAL AMOUNT		VALUE
FREDDIE MAC (Mortgage-Backed): 1.9%
5.000%, due July 1, 2007	$	349,964	$	357,507
4.500%, due March 1, 2008	1,634,652		1,654,696
4.500%, due April 1, 2008	1,920,307		1,943,853
3.500%, due May 1, 2008	2,011,974		1,978,749
5.000%, due October 1, 2008	2,653,962		2,711,656
4.000%, due September 1, 2010	4,314,996		4,297,596
4.000%, due May 1, 2014	3,368,522		3,340,542
4.500%, due September 1, 2018	1,515,686		1,514,233
4.000%, due September 1, 2018	1,280,461		1,254,298
5.500%, due October 1, 2018	938,926		970,626
5.500%, due October 1, 2018	1,063,835		1,099,752
5.000%, due October 1, 2018	1,445,951		1,469,581
5.000%, due November 1, 2018	868,581		882,775
5.000%, due November 1, 2018	830,715		844,291
6.500%, due May 1, 2029	559,984		588,456
6.500%, due December 1, 2029	679,688		714,247
6.500%, due June 1, 2032	815,192		855,986
			26,478,844
FANNIE MAE (Mortgage-Backed): 2.0%
5.500%, due December 1, 2011	1,500,000		1,543,125
5.000%, due January 1, 2014	2,459,685		2,538,870
5.000%, due February 1, 2014	1,675,933		1,729,886
5.500%, due November 1, 2014	3,367,147		3,511,072
5.000%, due April 1, 2018	5,500,000		5,593,291
5.000%, due November 1, 2018	421,251		428,396
5.000%, due November 1, 2018	1,090,987		1,109,492
5.000%, due November 1, 2018	1,076,060		1,094,313
5.000%, due February 1, 2019	3,084,213		3,135,579
5.000%, due April 1, 2019	1,219,706		1,240,019

ASSETS
Investments, at value—note A (cost—$1,090,456,933)	$	1,421,913,944
Investments, at value in affiliates (cost—$38,931,855)	38,931,855
Total Investments	1,460,845,799
Cash	500,099
Prepaid expenses	172,059
Receivables
Capital stock sold	1,939,685
Dividends and interest—note A	4,146,066
Investment securities sold	1,421,227
Due from adviser—note B	108,803
Total Assets	1,469,133,738
LIABILITIES
Payables:
Capital stock reacquired	4,685,567
Investment securities purchased	977,584
Accrued expenses:
Investment advisory fees—note B	602,564
Distribution expense	318,489
Transfer agent fees	128,574
Legal and audit fees	65,064
Custodian fees	26,086
Administration fees	472
Other accrued expenses	127,914
Total Liabilities	6,932,314
NET ASSETS	$	1,462,201,424
NET ASSETS REPRESENTED BY:
Paid in Capital	$	1,130,227,659
Undistributed net investment income	242,403
Accumulated net realized gain (loss)	274,350
Net unrealized appreciation of:
Investments	331,457,012
NET ASSETS	$	1,462,201,424
Shares of capital stock outstanding (75,000,000 authorized shares and $1.00 par value)	62,961,708
Net Asset Value per Share	$	23.22

INVESTMENT INCOME
Income—note A
Dividends (net of withholding tax of $205,444)	$	13,083,050
Dividends from affiliate	457,527
Interest	12,706,422
Total Income	26,246,999
Expenses
Investment advisory fee—note B	6,543,464
Distribution expense—note B	3,115,834
Transfer agent fees	1,256,800
Printing and other shareholder communication fees	362,996
Custodian fees	325,519
Legal fees and related expenses	335,871
Directors’ fees and expenses—note B	139,157
Audit fees	64,097
Registration fees	14,963
Administration fees	13,333
State taxes	84,766
Other expenses	87,088
Total Expenses	12,343,888
Less: Fees paid indirectly—note D	(7,490		)
Money market advisory fee waiver—note B	(27,516		)
Net expenses	12,308,882
Net investment income (loss)	$	13,938,117
REALIZED AND UNREALIZED GAIN—notes A and C
Net realized gain on:
Investments	40,294,784
Change in unrealized appreciation (depreciation) on:
Investments	115,493,208
Net realized and unrealized gain on investments and foreign currency	155,787,992
Net increase in net assets resulting from operations	$	169,726,109

	Year Ended			Year Ended
	December 31, 2004			December 31, 2003
Increase (decrease) in net assets
Operations
Investment income (loss), net		$	13,938,117		$	12,135,196
Net realized gain (loss) on investments and foreign currency transactions		40,294,784			(19,832,291)
Change in unrealized appreciation (depreciation) on investments and foreign currency transactions		115,493,208			186,044,323
Net increase in net assets resulting from operations		169,726,109			178,347,228
Distributions to shareholders from:
Net investment income		(13,344,000)			(11,834,367)
Tax return of capital		—			(331,248)
Total distributions to shareholders		(13,344,000)			(12,165,615)
From capital share transactions:
Net increase in net assets from capital share transactions		81,776,924			25,193,760
Net increase in net assets		238,159,033			191,375,373
Net assets
Beginning of year		1,224,042,391			1,032,667,018
End of year¹		$	1,462,201,424		$	1,224,042,391
¹ Includes undistributed net investment income		$	242,403		$	—

	Year Ended December 31
	2004			2003			2002			2001			2000
Net Asset Value, beginning of period	$	20.68		$	17.82		$	19.91		$	22.41		$	23.40
Income (loss) from investment operations
Investment income, net1	0.23			0.20			0.33			0.47			0.51
Realized and unrealized gain (loss) on investments, net	2.53			2.87			(2.09		)	(2.49		)	0.78
Total from investment operations	2.76			3.07			(1.76		)	(2.02		)	1.29
Less distributions
Dividends from investment income, net	0.22			0.20			0.33			0.47			0.53
Distributions from realized gains	—			—			—			—			1.74
Tax return of capital	—			0.01			—			0.01			0.01
Total distributions	0.22			0.21			0.33			0.48			2.28
Net asset value, end of period	$	23.22		$	20.68		$	17.82		$	19.91		$	22.41
2. Total return2	13.39		%	17.27		%	(8.86		)%	(9.09		)%	5.66		%
3. Ratios and supplemental data
Net assets, end of period (’000,000s)	$	1,462		$	1,224		$	1,033		$	1,161		$	1,230
Ratio to average net assets:
Net expenses, excluding custody credits	0.95		%	0.99		%	0.95		%	0.94		%	0.96		%
Net investment income	1.07		%	1.09		%	1.74		%	2.27		%	2.14		%
Portfolio turnover rate	33.02		%	19.33		%	36.96		%	37.50		%	26.49		%
Net expenses, including custody credits and expenses assumed by Adviser	0.95		%	0.99		%	0.95		%	0.94		%	0.96		%
Net expenses, excluding custody credits and expenses assumed by Adviser	0.95		%	0.99		%	0.97		%	0.94		%	0.96		%

Undistributed			Undistributed
Ordinary Income			Long-Term Capital Gain
	$	719,403		$	0

Name, Address and Age		Position(s) Held with Fund; Term of Office1; and Length of Time Served		Principal Occupation(s) During Past 5 Years and Other Directorships Held by Director or Officer		Number of Portfolios in the Pax World Fund Family Overseen by Director
Laurence A. Shadek 14 Wall Street New York, NY 10005; (55)2, 3, and 4		Chairman of the Board of Directors; Director (since 1996)		Mr. Shadek is the Chairman of the ~~3 14 Wall Street Board of Directors;~~ Board of Directors of ~~Pax World New York, NY 10005; (55) (2) Director - Pax World Balanced~~the Fund ~~Inc.~~ (1996-present), ~~Balanced Fund, Inc.~~the Pax World Growth Fund ~~Inc. (since 1996)~~ (1997-present), and the Pax World High Yield Fund ~~Inc.~~ (1999-present), an ~~Chairman of the~~ Executive Vice President of the Pax ~~Board of Directors;~~ World Money Market Fund ~~Inc. Director - Pax World~~ (1998-present), the Chairman of the ~~Growth Fund, Inc.~~ Board of ~~Pax World Management Corp. (since 1997)~~the Adviser (1996-present), and an Executive Vice-President of H.G. Wellington ~~& Executive Vice Co., Inc.~~ (1986-present). Mr. ~~President - Pax~~ Shadek, together with members of his ~~World Money Market~~ family, owns substantially all of ~~Fund, Inc. (since~~ the outstanding shares of capital ~~1998)~~ stock of ~~Pax World Management Corp.~~the Adviser and a 25.73% interest in H.G. ~~Chairman of the Wellington & Co., Inc.~~Wellington. Mr. Shadek ~~Board of Directors;~~ has been associated with H.G. ~~Director - Pax World~~ Wellington ~~& Co., Inc.~~ since March ~~High Yield Fund,~~ 1986 and was previously associated ~~Inc. (since 1999)~~ with Stillman, Maynard & Co., where he was a general partner. Mr. ~~Shadek's~~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 NYU Stern School of Business (MBA). Mr. Shadek is a member of the Board of Trustees of Franklin & Marshall College. - ------------------------------------ ---------------------- -------------------------------------- ----------------- - -------------------------------------------------------------------------------------------------------------------- Disinterested Nominees - -------------------------------------------------------------------------------------------------------------------- Number of		3

PERCENT OF NET ASSETS,	NUMBER
NAME OF ISSUER AND TITLE OF ISSUE	OF SHARES	VALUE
STOCKS: 64.8%
COMMON STOCKS: 64.7%
CONSUMER DISCRETIONARY: 4.8%
Belo Corp. Series A	156,900	$	3,760,893
BJ’s Wholesale Club, Inc.(a)	350,000	11,371,500
Comcast Corp. Class A(a)	225,000	6,907,500
Comcast Corp. Class A Special(a)	225,000	6,738,750
Honda Motor LTD ADR	125,000	3,076,250
Koninklijke Philips Electronics NV ADR	650,000	16,373,500
Staples, Inc.	975,000	20,787,000
Toyota Motor Credit Corp. ADR	100,000	7,149,000
Tribune Co.	167,400	5,889,132
		82,053,525
CONSUMER STAPLES: 8.4%
Avon Products, Inc.	400,000	15,140,000
Corn Products International, Inc.	760,800	18,076,608
CVS Corp.	600,000	17,442,000
General Mills, Inc.	121,100	5,666,269
Gillette Co.	375,000	18,986,250
Kimberly-Clark Corp.	350,000	21,906,500
Estee Lauder Cos., Inc.	250,000	9,782,500
McCormick & Co., Inc.	350,000	11,438,000
PepsiCo, Inc.	250,000	13,482,500
Supervalu, Inc.	300,000	9,783,000
		141,703,627
ENERGY: 7.4%
Apache Corp.	425,000	27,455,000
Baker Hughes, Inc.	325,000	16,627,000
BP PLC ADR	150,000	9,357,000

PERCENT OF NET ASSETS,	PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE	AMOUNT		VALUE
6.500%, due December 1, 2029	$	577,920	$	600,281
6.500%, due June 1, 2032	762,783		790,836
			23,151,198
FANNIE MAE (Mortgage-Backed): 3.4%
5.500%, due December 1, 2011	1,206,814		1,224,035
5.000%, due January 1, 2014	2,183,196		2,227,801
5.000%, due February 1, 2014	1,488,946		1,519,367
5.500%, due October 1, 2014	2,802,454		2,884,812
5.500%, due November 1, 2014	3,070,897		3,161,143
5.000%, due April 1, 2018	4,992,862		5,052,710
5.000%, due November 1, 2018	230,379		233,140
5.000%, due November 1, 2018	1,061,786		1,074,513
5.000%, due November 1, 2018	1,039,991		1,052,457
5.000%, due February 1, 2019	2,933,945		2,968,378
5.000%, due April 1, 2019	1,085,634		1,098,375
5.000%, due June 1, 2019	2,665,699		2,696,984
5.500%, due July 1, 2019	2,512,326		2,580,653
4.500%, due November 1, 2019	2,856,235		2,845,469		��
5.000%, due January 2, 2020	2,442,605		2,471,272
5.000%, due March 1, 2020	2,961,673		2,996,731
5.000%, due October 1, 2023	2,440,920		2,460,736
4.500%, due January 1, 2025	1,969,860		1,948,916
5.000%, due June 1, 2025	2,987,480		3,011,377
8.000%, due May 1, 2030	255,342		274,622
6.500%, due June 1, 2032	1,107,192		1,147,761
4.000%, due June 1, 2033	3,688,817		3,484,134
1.000%, due January 1, 2035	4,986,241		4,941,627
6.000%, due April 1, 2035	2,972,522		3,048,513
1.000%, due June 1, 2035	1,997,223		2,007,577
			58,413,103

PERCENT OF NET ASSETS,	PRINCIPAL
NAME OF ISSUER AND TITLE OF ISSUE	AMOUNT		VALUE
COMMERCIAL PAPER: 2.0%
Bellsouth Corp 3.09%, due July 13, 2005	$	6,000,000	$	5,993,820
Constitution State Corporate 3.25%, due August 1, 2005	7,000,000		6,980,470
The Procter & Gamble Co. 3.02%, due July 5, 2005	8,000,000		7,997,333
The Procter & Gamble Co. 2.87%, due July 18, 2005	5,000,000		4,992,917
McCormick & Co., Inc. 3.39%, due November 29, 2005	8,000,000		7,887,924
TOTAL COMMERCIAL PAPER (Cost $33,852,464)			33,852,464
	NUMBER
	OF SHARES
MONEY MARKET SHARES: 4.1%
Pax World Money Market Fund— note B(c) (Cost $68,980,906)	68,980,906		68,980,906
TOTAL INVESTMENTS: 100.2% (Cost $1,402,281,159)			1,693,158,449
Other assets and liabilities (Net): (0.2%)			(2,675,354		)
Net assets: 100.0%			$	1,690,483,095

ASSETS
Investments, at value—note A (cost—$1,333,300,253)	$	1,624,177,543
Investments, at value in affiliates (cost—$68,980,906)	68,980,906
Total Investments	1,693,158,449
Cash	500,390
Prepaid expenses	94,515
Receivables:
Capital stock sold	16,396,136
Dividends and interest—note A	6,275,672
Investment securities sold	3,768,292
Total Assets	1,720,193,454
LIABILITIES
Payables:
Capital stock reacquired	1,088,995
Investment securities purchased	27,368,434
Accrued expenses:
Investment advisory fees—note B	659,612
Distribution expense	196,778
Transfer agent fee	203,996
Legal and Audit fees	17,627
Custodian fees	42,197
Administration fee	4,223
Other accrued expenses	128,497
Total Liabilities	29,710,359
NET ASSETS	$	1,690,483,095
NET ASSETS REPRESENTED BY:
Paid in Capital	$	1,348,694,331
Undistributed net investment income (loss)	9,855,367
Accumulated net realized gain (loss)	41,056,107
Net unrealized appreciation of:
Investments	290,877,290
NET ASSETS	$	1,690,483,095
Shares of capital stock outstanding (75,000,000 authorized shares, and $1 par value for all funds)	72,470,017
Net asset value per share	$	23.33

INVESTMENT INCOME
Income—note A
Dividends (net of withholding tax of $216,941)	$	7,493,801
Dividends from affiliate	833,213
Interest	8,628,779
Total Income	16,955,793
Expenses
Investment advisory fees—note B	3,853,548
Distribution expenses—note B	1,811,944
Transfer agent fees	848,574
Printing and other shareholder communication fees	221,269
Custodian fees	202,921
Legal fees and related expenses	105,986
Directors’ fees and expenses—note B	128,432
Audit fees	35,627
Registration fees	30,304
Administration fees	17,209
State taxes	37,511
Other expenses	83,237
Total Expenses	7,376,562
Less: Fees paid indirectly—note D	(9,408		)
Money market advisory fee waiver—note B	(24,325		)
Net expenses	7,342,829
Net investment income (loss)	9,612,964
REALIZED AND UNREALIZED GAIN (LOSS)—notes A and C
Net realized gain on:
Investments	40,781,757
Change in unrealized appreciation (depreciation) on:
Investments	(40,579,722		)
Net realized and unrealized gain on investments and foreign currency	202,035
Net increase in net assets resulting from operations	$	9,814,999

	Six Months Ended				Year Ended
	June 30, 2005				December 31, 2004
	(Unaudited)
INCREASE (DECREASE) IN NET ASSETS
Operations:
Investment income (loss), net		$	9,612,964			$	13,938,117
Net realized gain on investments and foreign currency transactions		40,781,757				40,294,784
Change in unrealized appreciation (depreciation) on investments and foreign currency translations		(40,579,722		)		115,493,208
Net increase (decrease) in net assets resulting from operations		9,814,999				169,726,109
Distributions to shareholders from:
Net investment income Common Stock		—				(13,344,000		)
Total distributions to shareholders		—				(13,344,000		)
From capital share transactions:
Net increase in net assets from capital share transactions		218,466,672				81,776,924
Redemption fees		—				—
Net increase in net assets		228,281,671				238,159,033
NET ASSETS
Beginning of period		1,462,201,424				1,224,042,391
End of year¹		$	1,690,483,095			$	1,462,201,424
¹Includes undistributed net investment income (loss)		$	9,855,367			$	242,403

	Six Months						Six Months
	Ended			Year Ended			Ended			Year Ended
	June 30, 2005			December 31,			June 30, 2005			December 31,
	(Unaudited)			2004			(Unaudited)			2004
	Shares						Amount
Common Stock
Shares sold		12,000,912			9,722,177		$	275,784,815		$	208,620,381
Shares issued in reinvestment of distributions		60			568,310		1,401			12,569,837
Shares redeemed		(2,492,663	)		(6,515,120	)	(57,319,544		)	(139,413,294		)
Net increase		9,508,309			3,775,367		$	218,466,672		$	81,776,924

	Six Months Ended June 30,				Year Ended December 31
	2005				2004			2003			2002			2001			2000
	(Unaudited)
Net asset value, beginning of period		$	23.22		$	20.68		$	17.82		$	19.91		$	22.41		$	23.40
Income (loss) from investment operations
Investment income, net1		0.14			0.23			0.20			0.33			0.47			0.51
Realized and unrealized gain (loss) on investments, net		(0.03		)	2.53			2.87			(2.09		)	(2.49		)	0.78
Total from investment operations		0.11			2.76			3.07			(1.76		)	(2.02		)	1.29
Less distributions
Dividends from investment income, net		—			0.22			0.20			0.33			0.47			0.53
Distributions from realized gains		—			—			—			—			—			1.74
Tax return of capital		—			—			0.01			—			0.01			0.01
Total distributions		—			0.22			0.21			0.33			0.48			2.28
Net asset value, end of period		$	23.33		$	23.22		$	20.68		$	17.82		$	19.91		$	22.41
2. Total return2		0.47		%3	13.39		%	17.27		%	(8.86		)%	(9.09		)%	5.66		%
3. Ratios and supplemental data
Net assets, end of period (‘000,000s)		$	1,690		$	1,462		$	1,224		$	1,033		$	1,161		$	1,230
Ratio to average net assets:
Net expenses, excluding custody credits		0.96		%4	0.95		%	0.99		%	0.95		%	0.94		%	0.96		%
Net investment income		1.26		%4	1.07		%	1.09		%	1.74		%	2.27		%	2.14		%
Portfolio turnover rate		13.46		%3	33.02		%	19.33		%	36.96		%	37.50		%	26.49		%
Net expenses, including custody credits and expenses assumed by Adviser		0.96		%4	0.95		%	0.99		%	0.95		%	0.94		%	0.96		%
Net expenses, excluding custody credits and expenses assumed by Adviser		0.96		%4	0.95		%	0.99		%	0.97		%	0.94		%	0.96		%

Purchases		Sales
	U.S.		U.S.
	Government		Government
Investments*	Bonds	Investments*	Bonds
$244,663,244	$134,982,131	$172,066,716	$24,444,939

Identified
cost of			Net
investments	Gross	Gross	unrealized
for Federal	unrealized	unrealized	appreciation
income tax basis	appreciation	depreciation	(depreciation)
$1,402,281,159	$314,008,731	$23,131,441	$290,877,290


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	Pleasecomplete,dateandsignexactlyasyournameap pears herein.Ifsharesareheldjointly, eachholdershouldsign.When signingasattorney,executor,administrator,trustee,guardian or corporateofficial,pleaseaddyourtitle.

		FOR	AGAINST	ABSTAIN
(1)	To approve anamendmenttotheFund’sCertificateofIncorporationthat
	wouldincreasethe numberofauthorizedsharesofitscommonstock,par	o	o	o
	value$1.00pershare,fromseventy- fivemillion(75,000,000)shares to
	onehundredfiftymillion(150,000,000)shares.