Diane Keefe, CFA

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PAX World High Yield Fund SRI in the
Rockies Making Lemonade Out of a Sour Credit
Market


October 20, 2002

Diane Keefe, CFA Portfolio Manager www.paxfund.co
m dkeefe_at_paxfund.com [phone]

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PAX World High Yield Fund


Launched October 8, 1999 Assets 19.1 Million
as of September 30, 2002 SEC Yield 7.4 No
Load Fund Ticker PAXHX













Primary Objective High Current Income Secondary
Objective Capital Appreciation

Pax World High Yield Funds Additional
Objective Consistent with the other members of
the PAX World Family, the PAX World High Yield
Fund seeks to achieve its objective by investing
in companies that produce goods and services that
improve the quality of life and that are not to
any degree engaged in manufacturing defense or
weapons related products.


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Investment Assumptions/ Strategies for 2002-3
Assumptions
Strategies

• Expect war with Iraq in February
• Low interest rates make BB have positive
  performance related to
• rolling down the yield curve

• Keep 10 cash for buying opportunities and get
  less dependent on any one industry performance
• Seek BB Investments in 8 - 9 ½ range

• may weaken related to current acct. deficit and
  deficits rising

• Maintain or increase exposure to Europe

• Fallen angels will increase if recession
  continues
• Emerging mkts. may catch pneumonia from US severe
  cold or changes in Brazilian domestic policies

• Use market corrections as opportunities to
  upgrade credit quality and diversify
• Stay away from emerging mkts. until panic in full
  swing then target Mexico investment grade
  companies

• GDP estimate 1 to 2
• Old economy weakness begins to recover if war is
  brief

• Purchase high quality cyclicals when leverage
  begins to decline

• Technology/Internet/Telecom will continue to lag
  recovery

• Maintain underweight in cellular, cable tech.

• Energy prices are likely to stay elevated due to
  geo-political risk

• 3-D seismic, natural gas, EP cos.

PAX World High Yield Fund
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Portfolio Structure Credit Rating Distribution As
of September 30, 2002

PAX World High Yield Fund
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Investment Process
PAX World High Yield Fund
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Pax World HY Fund Portfolio Statistics
9/30/02 8/31/02 Average YTM 9.9
11.3 Average Maturity 7.4 Yrs. 7.4
Yrs. Average Coupon 9.4 10.1 Average
Duration 4.5 Yrs. 4.8 Yrs. Average Moody
Rating B2 B2 Average SP B B
PAX World High Yield Fund
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Pax World High Yield FundPortfolio StatisticsAs
of July 31, 2002 Goal Above Average
Performance for Below Average Risk Achieved in
2000 2001
YTD 2002 near-average performance with below
average risk Beta 0.70 0.14 Below Ml HY
Index Std. Deviation 9.02 1.12 Below ML HY
Index Total Return Last Bull Market
(9/30/01-12/30/01) 4.94 Last Bear Market
(12/31/01 7/31/02) - 7.14 Best 1-Year
(Ended 11/30/01) 10.34 Worst 1-Year (Ended
7/31/02) - 8.02 Provided by
morningstar
PAX World High Yield Fund
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Portfolio Sector Holdings As of September 30, 2002
Pax World High Yield Fund
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Research ProcessPax World High Yield Fund

• Use proprietary model to determine credit quality
  and credit trend independent of rating agencies
• Analyze management strength, competitive
  position, special situations, and economic
  forecast implications for industries companies
• Social research team reviews for diversity on
  boards, environmental performance, labor
  relations, product liability, and discrimination
  law suits in addition to primary screens against
  alcohol, tobacco, gaming, weapons

PAX World High Yield fund
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Top Ten Holdings as of September 30, 2002

• Market percent
• Rating Value of bonds
• ISTAR Finl Inc 8.75 Due 8/15/08 BB
  675,705 3.53
• Premier Intl Foods 12 due 9/1/09 B- 535,000
  2.79
• American Achievement 11.625 1/1/07 B
  512,500 2.68
• Weight Watchers 13 due 10/1/09 B 503,800
  2.63
• Roundys Inc 8.875 6/15/12 B 490,000 2.56
• Comp Gen. De Geo 10.625 11/15/07 BB 469,375
  2.45
• Bally Total Fitness 9.875 10/15/07 B- 461,875
  2.41
• Ingles Mkts Inc 8.875 12/1/11 B 457,500
  2.39
• Hovnanian K Enter. Inc 8 4/1/12 BB-
  447,500 2.34
• NBTY Inc 8.625 9/15/07 B 411,070 2.15

PAX World High Yield Fund
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Performance vs. Benchmark Top 16 of High Yield
Bond Funds for the 2-year period ended September
30, 2002Comparison to 336 other HY Funds
Qtr ended 1-Yr ended 2-Yrs ended Sept 30,
2002 Sept 30, 2002 sept 30, 2002 Pax World HY
Fund 0.73 0.84 - 0.60 Lipper HY
Index - 2.98 - 3.20 - 8.11 Lipper
HY Average - 3.54 - 2.17 - 5.87
Market benchmarks 10-Year Treasury
11.10 12.76 27.57 SP 500 Index -
17.27 - 20.47 - 41.63
PAX World High Yield fund