1. Diane Keefe, CFA Portfolio Manager www.paxfund.com dkeefe@paxfund.com (212) 266-0327 October 20, 2002 PAX World High Yield Fund SRI in the Rockies Making Lemonade Out of a Sour Credit Market

2. 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. Launched:October 8, 1999 Assets:$19.1 Million as of September 30, 2002 SEC Yield:7.4% No LoadFund Ticker: PAXHX PAX World High Yield Fund

3. Investment Assumptions/ Strategies for 2002-3 AssumptionsStrategie s PAX World High Yield Fund 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 Technology/Internet/Telecom will continue to lag recovery Energy prices are likely to stay elevated due to geo-political risk Purchase high quality cyclicals when leverage begins to decline Maintain underweight in cellular, cable & tech. 3-D seismic, natural gas, E&P cos.

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

5. Investment Process PAX World High Yield Fund

6. 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 Duration4.5 Yrs.4.8 Yrs. Average Moody RatingB2B2 Average S&PB+B PAX World High Yield Fund

7. YTD 2002 near-average performance with below average risk Beta0.700.14 Below Ml HY Index Std. Deviation9.021.12 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 Portfolio Statistics As of July 31, 2002* Goal: Above Average Performance for Below Average Risk Achieved in 2000 & 2001 PAX World High Yield Fund

8. Portfolio Sector Holdings As of September 30, 2002 Pax World High Yield Fund

9. 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 Research Process Pax World High Yield Fund

10. Market percent Rating Valueof bonds 1.ISTAR Finl Inc 8.75% Due 8/15/08BB+$ 675,705 3.53% 2.Premier Intl Foods 12% due 9/1/09B-$ 535,000 2.79% 3.American Achievement 11.625% 1/1/07B+$ 512,500 2.68% 4.Weight Watchers 13% due 10/1/09B$ 503,800 2.63% 5.Roundys Inc 8.875% 6/15/12B$ 490,0002.56% 6.Comp Gen. De Geo 10.625% 11/15/07BB$ 469,375 2.45% 7.Bally Total Fitness 9.875% 10/15/07B-$461,875 2.41% 8.Ingles Mkts Inc 8.875% 12/1/11B+$ 457,500 2.39% 9.Hovnanian K Enter. Inc 8% 4/1/12BB-$ 447,5002.34% 10.NBTY Inc 8.625% 9/15/07B+$ 411,0702.15% Top Ten Holdings as of September 30, 2002 PAX World High Yield Fund

11. Performance vs. Benchmark Top 16% of High Yield Bond Funds for the 2-year period ended September 30, 2002 Comparison to 336 other HY Funds PAX World High Yield fund 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% S&P 500 Index - 17.27 % - 20.47 %- 41.63 %