<PAGE>
Annual Report
FOR THE YEAR ENDED DECEMBER 31, 1996
MMA Praxis
Mutual Funds
INTERMEDIATE INCOME FUND
GROWTH FUND
MMA Praxis LOGO
<PAGE>
Message
From
The
President
Dear Shareholders:
The growth of the MMA Praxis Mutual Funds continued in 1996. MMA Praxis Growth
Fund (Growth Fund) had 6,407 shareholders and $58.9 million in net assets as
of Dec. 31, 1996. This was an increase from 2,766 investors and approximately
$28.0 million respectively as of the prior year end. The MMA Praxis
Intermediate Income Fund (Income Fund) had 1,749 investors, with $27.6 million
in net assets as of Dec. 31, 1996. In the previous year, shareholders for the
Intermediate Income Fund stood at 776 with net assets at $23.5 million.
Our goal in 1997 is to continue the growth of the funds. To help in this
growth we plan to place more focus on our distribution system, particularly
the broker/dealer community that may not be as familiar with the funds. For
the first time we will have a person calling on registered representatives,
introducing them to the funds and highlighting the goals of MMA Praxis. We
believe there are many investors who want to join the socially responsible
community, but may not be aware of the options available. Our goal is to make
the funds available to as wide a community as possible.
Please be sure you take time to read the reports from the portfolio managers
which follow. This will be helpful as you review your own investment strategy
and the one- and three-year performance of the funds. The Growth Fund had a
15.9 percent total return in 1996 and a three-year average annual return of
15.7 percent.* The Intermediate Income Fund had a 2.22 percent return in 1996
and a 4.8 percent average annual three-year return.*
THE CHALLENGE OF ETHICAL INVESTMENTS
While solid investment returns are always our goal with MMA Praxis, we along
with our investors, want to invest in companies that reflect our values. Last
year presented a number of challenges for the socially responsible investment
community.
The recognition that products we buy may be made in sweatshop conditions was
troubling for all of us. While it is often assumed that sweatshop conditions
are not prevalent in this country, the news last year told us otherwise. We
are beginning to review how we can be more vigilant in this area and be
certain that the products manufactured and sold by the companies in our
portfolios are produced in an environment that is just and humane.
Charges of discrimination by employees of several international firms also
point out that there is still much to do in the area of equal employment
opportunities. Whether it is issues of race, gender or other legally protected
right, we want to be assured that companies are engaged in fair and positive
hiring and promotion practices. Not only are equal employment opportunities
right, when companies are found to be places of discrimination, the cost to
the shareholders is extremely high.
When we have concerns with the performance of certain companies, our goal is
to join with other shareholders and speak to them about the issues. We have
found that these discussions are often helpful in shaping the way these
companies respond to the challenges. When discussions do not result in actions
that we feel appropriate, we will consider offering shareholder resolutions to
work at change within these companies.
NEW INTERNATIONAL FUND COMING SOON
By April 1, 1997, we plan to introduce the MMA Praxis International Fund. This
fund will invest in companies located primarily in Europe, Australia, and the
Far East (EAFE). Oechsle International Advisors, located in Boston, Mass., has
been selected as the subadvisor for the fund. Oechsle International Advisors
was formed in 1986 and has broad experience as an international investment
advisor.
While we recognize that international investments have additional ethical
challenges than those we face domestically, our goal is to utilize the
investment screens that drive our other funds. Therefore, we will avoid
companies involved in the manufacture of military hardware, tobacco, alcohol
and gambling. When the fund is available, you can make investments the same
way you do now.**
-1-
<PAGE>
Message
From
The
President--
continued
If you have any questions about your investment, or would like to see a
prospectus for the funds, please call 1-800-9-PRAXIS. Be sure you read the
prospectus before you invest.
Thank you for your support of the MMA Praxis Mutual Funds.
/s/ J. B. Miller
J. B. Miller President
- -------
* Does not reflect contingent deferred sales charge. Had the maximum 4
percent CDSC charge been applicable, the one year return would have been
11.87 percent and the three year annualized return would have been 15.20
percent for the MMA Praxis Growth Fund; and, the one year return would have
been 1.66 percent and the three year would have been 4.22 percent for the
MMA Praxis Intermediate Fund.
** A registration statement relating to the fund has been filed with the SEC
but has not yet become effective. The fund may not be sold nor may offers
to buy be accepted prior to the time the registration statement becomes
effective. This letter shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the fund in
any state in which such offer, solicitation, or sale would be unlawful
prior to registration or qualification under the securities laws of any
such state.
-2-
<PAGE>
MMA Praxis Mutual Funds
MMA PRAXIS INTERMEDIATE INCOME FUND
1996 was a difficult year for bonds. Interest rates started the year at very
low levels. In February, strong employment growth triggered a sharp rise in
rates that continued into July. From September through November, interest
rates dropped before rising again in December.
Since interest rate increases cause bond prices to decline, the effect on 1996
performance was adverse. For example, the yield on the five-year Treasury Note
rose 0.83 percent from the beginning of the year to the end. This had a
significant adverse impact on bond prices.
The total return on the Intermediate Income Fund was 2.2 percent. In
comparison, the return on the Lehman Corporate Intermediate Index was 3.97
percent while the Lipper Intermediate Investment Grade Fund Average was up
3.27 percent.
Intermediate Income Fund
Value of a $10,000 Investment
Average Annual Total Return
Since Inception
Date 1 Year (1/4/94)
---- ------ ---------------
12/31/96 2.22% 4.83%
12/31/96* -1.65% 3.93%
Lehman Corporate
Date CDSC NO CDSC Intermediate Index
---- ---- ------- ------------------
01/04/94 10,000 10,000 10,000
12/31/94 9,225 9,591 9,734
06/30/95 10,286 10,682 10,895
12/31/95 10,867 11,267 11,582
06/30/96 10,741 11,032 11,477
12/31/96 11,221 11,517 12,043
* Reflects Applicable Deferred Sales Charge
Past performance is not indicative of future results. CDSC
reflects a 4.00 percent contingent deferred sales charge.
The Lehman Corporate Intermediate Index is an unmanaged
index, generally representative of the intermediate
corporate bond market. This index is for illustrative
purposes only and does not reflect the deduction of expenses
associated with a mutual fund, such as investment management
and fund accounting fees. The fund's performance reflects
the deduction of these value-added services. The total
return set forth reflects a waiver of a portion of the
fund's advisory or administrative fees. In such instances,
and without waiver of fees, total return would have been
lower.
In the second half of the year, we corrected many of the mistakes of the first
half which gave us much better performance.
We are continuing to keep the fund at the same level of volatility as our
benchmark of 4.2 percent. This means a one-percent rise or fall in rates will
cause the fund value to fall or rise 4.2 percent.
Our bond quality continues to average a high Aa3.
From a social investment perspective, we made sizeable additions to multi-
family mortgage securities backed by Fannie Mae. These are important
contributors to housing for persons with moderate incomes.
In the new year, we are somewhat cautious. We do not expect any large changes
in interest rates beyond the range we experienced in 1996. We do, however,
have some concern that rising labor costs will begin to start having an
adverse impact on corporate profitability and on inflation. This should be
modest, but it will keep fixed-income
-3-
<PAGE>
MMA Praxis Mutual Funds
MMA PRAXIS INTERMEDIATE INCOME FUND (CONTINUED)
investors nervous. In this kind of environment, we expect the market to be
fairly volatile as perceptions of growth and inflation ebb and flow. We will
try to follow a steady path and not make any large shifts in the portfolio
unless some truly significant event occurs.
Delmar King, Investment Manager MMA Praxis Intermediate Income Fund
-4-
<PAGE>
MMA Praxis Mutual Funds
MMA PRAXIS GROWTH FUND
The stock market had another exceptional year. The Standard & Poor's 500 was
up 22.9 percent for the year while the MMA Praxis Growth Fund was up 15.9
percent for the year ended Dec. 31, 1996. The MMA Praxis Growth Fund has been
operating for three years and has a 15.7 percent average annual return for
that period.
Growth Fund
Value of a $10,000 Investment
Average Annual Total Return
Since Inception
Date 1 Year (1/4/94)
---- ------ ---------------
12/31/96 15.87% 15.75%
12/31/96* 11.87% 14.99%
Date CDSC NO CDSC S&P 500 Domini 400
---- ---- ------- ------- ----------
01/04/94 10,000 10,000 10,000 10,000
12/31/94 9,637 10,026 10,131 10,018
06/30/95 11,568 11,968 12,177 12,141
12/31/95 12,967 13,367 13,938 13,845
06/30/96 13,725 14,025 15,345 15,220
12/31/96 15,188 15,488 17,140 17,125
* Reflects Applicable Deferred Sales Charge
Past performance is not indicative of future results. CDSC
reflects a 4.00 percent contingent deferred sales charge.
The S&P 500 Index and the Domini 400 Social Index are
unmanaged indexes, generally representative of the stock
market and the socially responsible investment market,
respectively. These indexes are for illustrative purposes
only and do not reflect the deduction of expenses
associated with a mutual fund, such as investment
management and fund accounting fees. The fund's performance
reflects the deduction of these value-added services. At
certain times fees have been waived. Without the fee
waivers, the total return would have been lower.
Last year was a year when large capitalized growth stocks produced superior
returns relative to medium and smaller companies. When analyzing the S&P's 500
return for 1996, we find the greatest performance contributors were also its
largest capitalization companies. In fact, the 10 largest contributors
accounted for more than 40 percent of its annual return. These companies had
an average market capitalization 10 times larger than the rest of the index--
$95 billion versus $9.5 billion. This list includes companies such as Intel,
Microsoft, Coca-Cola, Merck, General Electric, IBM, Procter & Gamble, and
Philip Morris. The Nasdaq was similar in that the 10 largest companies with an
average market capitalization of $35 billion accounted for approximately 60
percent of its annual return.
It was a difficult year for many portfolio managers. Mutual funds not holding
these large companies in the portfolio more than likely underperformed
relative to the broad market. Will the outperformance of large-cap stocks
continue? In reviewing the valuation of the largest companies, we doubt if
this kind of performance can be sustained. These companies have had good
fundamentals which caused price appreciation. This is to be expected. However,
good returns garnered the attention of momentum investors which caused
additional price appreciation and, in turn, fueled an excessive appetite for
these type of companies. Investors are now beginning to look at smaller
capitalized companies that may be growing as fast as their larger counterparts
and selling at much more reasonable valuations. We have been adding such
companies to the MMA Praxis Growth portfolio.
ECONOMIC INFLUENCES
The primary reasoning behind such a strong bull market has been the
continuation of slow economic growth, moderate inflation, stable to declining
interest rates, and rising profits--all of which we have written about in the
-5-
<PAGE>
MMA Praxis Mutual Funds
MMA PRAXIS GROWTH FUND (CONTINUED)
past to support our opinion for rising stock prices. Even today, the economic
environment for stocks continues to be favorable.
On the other hand, the most often-heard bear scenario is that companies are
facing increasing labor and energy costs where companies have very little
pricing power to pass these additional costs along to the consumer. Margins
will be squeezed and profits will be disappointing. Bad news on earnings will
drive stock prices lower despite lower or stable interest rates.
BULL MARKET TOP
We believe we are in the late stages of an important bull market top. The
market has run for an unprecedented 14 years with unsustainable price
performance relative to the earnings growth. The question of how close to the
top remains to be seen. In fact, in the short-run, we would not be totally
surprised to see stocks up sharply. However, we believe this is a highly risky
environment for which to manage money. The recent new highs for the stock
market currently assume that nothing fundamental will happen to change the
psychology of the markets. For example, if interest rates rose another one-
half percent because of bad inflation news, the stock market will fall sooner
rather than later. We do not think the market can tolerate any unexpected bad
news, either domestically or internationally. We have the feeling that when
the decline begins, it will gain momentum quickly.
PORTFOLIO STRATEGY AND POSITIONING
As we indicated earlier, we are reducing our holdings of the large capitalized
companies and buying smaller companies for the portfolio. We believe these
companies have better values relative to their growth rates and earnings
prospects.
Recent additions to the portfolio include Ionics, a developer and manufacturer
of water-treatment systems; Deere & Company, a global leader in the
manufacturing of agricultural equipment; Willamete, a forest products company;
and Alza, which designs and manufactures drug-delivery systems.
Thank you for your confidence and your investments in the MMA Praxis Growth
Fund. We believe we are investing your money in a way that reflects your
social concerns as well as being prudent in a highly volatile market. Our goal
is to provide the utmost professional service on both accounts.
Keith Yoder, Investment Manager MMA Praxis Growth Fund
-6-
<PAGE>
TABLE OF CONTENTS
Report of Independent Accountants
Page 8
Statements of Assets and Liabilities
Page 9
Statements of Operations
Page 10
Statements of Changes in Net Assets
Page 11
Schedules of Portfolio Investments
Page 12
Notes to Financial Statements
Page 17
Financial Highlights
Page 22
-7-
<PAGE>
MMA Praxis Mutual Funds
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of the MMA Praxis Mutual Funds
We have audited the accompanying statements of assets and liabilities of the
MMA Praxis Mutual Funds (comprising, respectively, the Intermediate Income
Fund and the Growth Fund), including the schedules of portfolio investments,
as of December 31, 1996, and the related statements of operations, statements
of changes in net assets, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the MMA Praxis Mutual Funds' management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996 by correspondence with the custodian and
brokers, or other auditing procedures where confirmations from brokers were
not received. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds comprising the MMA Praxis Mutual Funds as of December
31, 1996, and the results of their operations and the changes in their net
assets and the financial highlights for the periods referred to above in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Columbus, Ohio
February 14, 1997
-8-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
INTERMEDIATE
INCOME GROWTH
FUND FUND
------------ -----------
<S> <C> <C>
ASSETS:
Investments, at value (cost $26,793,102 and
$50,058,153, respectively)........................... $27,145,369 $58,871,736
----------- -----------
Interest and dividends receivable..................... 407,725 86,428
Receivable for capital shares issued.................. 104,300 69,550
Receivable for investments sold....................... 1,668 --
Unamortized organization costs........................ 13,611 13,138
Prepaid expenses...................................... 6,253 10,573
----------- -----------
Total Assets........................................ 27,678,926 59,051,425
----------- -----------
LIABILITIES:
Cash overdraft........................................ 65,310 51,774
Accrued expenses and other payables:
Investment advisory fees............................. 101 1,207
Administration fees.................................. 1,639 1,941
Distribution fees.................................... 1,170 12,924
Transfer agent fees.................................. 12,632 27,896
Legal and audit fees................................. 9,851 18,136
Custodian and accounting fees........................ 8,163 8,964
Printing costs....................................... 9,269 17,038
Other................................................ 2,783 4,816
----------- -----------
Total Liabilities................................... 110,918 144,696
----------- -----------
NET ASSETS:
Capital............................................... 27,506,924 49,123,228
Undistributed (distributions in excess of) net
investment income.................................... (288) 15,369
Net unrealized appreciation from investments.......... 352,267 8,813,583
Accumulated undistributed net realized gains (losses)
from investment transactions......................... (290,895) 954,549
----------- -----------
Net Assets.......................................... $27,568,008 $58,906,729
=========== ===========
Outstanding units of beneficial interest (shares)..... 2,800,868 4,340,466
=========== ===========
Net asset value--offering price per share*............ $9.84 $13.57
=========== ===========
</TABLE>
- -------
* Redemption price per share varies based on length of time shares are held
(Note 4).
See notes to financial statements.
-9-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
INTERMEDIATE
INCOME GROWTH
FUND FUND
------------ ----------
<S> <C> <C>
INVESTMENT INCOME:
Interest income....................................... $1,680,839 $ 232,281
Dividend income....................................... -- 830,576
---------- ----------
Total Income........................................ 1,680,839 1,062,857
---------- ----------
EXPENSES:
Investment advisory fees.............................. 127,336 334,230
Administration fees................................... 50,000 67,749
Distribution fees..................................... 254,673 451,663
Custodian and accounting fees......................... 64,868 53,954
Legal and audit fees.................................. 21,608 31,865
Organization costs.................................... 6,943 6,577
Trustees' fees and expenses........................... 6,322 10,335
Transfer agent fees................................... 57,106 115,304
Registration and filing fees.......................... 24,942 35,822
Printing costs........................................ 17,162 26,570
Other................................................. 10,499 15,995
---------- ----------
Total Expenses before voluntary reductions.......... 641,459 1,150,064
Expenses voluntarily reduced........................ (345,124) (352,486)
Expenses paid by third parties...................... (16,274) (9,501)
---------- ----------
Total Expenses...................................... 280,061 788,077
---------- ----------
Net Investment Income................................. 1,400,778 274,780
---------- ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains from investment transactions....... 21,386 2,178,561
Net change in unrealized appreciation (depreciation)
from investments...................................... (776,579) 4,711,729
---------- ----------
Net realized/unrealized gains (losses) from
investments........................................... (755,193) 6,890,290
---------- ----------
Change in net assets resulting from operations........ $ 645,585 $7,165,070
========== ==========
</TABLE>
See notes to financial statements.
-10-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND GROWTH FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income..... $ 1,400,778 $ 1,183,642 $ 274,780 $ 223,110
Net realized gains (loss-
es) from investment
transactions............. 21,386 (292,038) 2,178,561 1,898,742
Net change in unrealized
appreciation
(depreciation) from in-
vestments................ (776,579) 2,531,766 4,711,729 4,789,928
----------- ----------- ----------- -----------
Change in net assets re-
sulting from operations... 645,585 3,423,370 7,165,070 6,911,780
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLD-
ERS:
From net investment in-
come..................... (1,400,778) (1,183,642) (264,757) (223,110)
In excess of net invest-
ment income.............. (5,243) (127) -- (411)
From net realized gains
from investment
transactions............. -- -- (1,413,536) (1,898,742)
In excess of net realized
gains from investment
transactions............. -- -- -- (85,370)
Tax return of capital..... (2,071) -- -- --
----------- ----------- ----------- -----------
Change in net assets from
shareholder distributions. (1,408,092) (1,183,769) (1,678,293) (2,207,633)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares is-
sued..................... 6,287,831 5,142,236 25,680,520 10,048,490
Dividends reinvested...... 399,174 172,474 2,481,464 432,466
Cost of shares redeemed... (1,826,138) (1,933,725) (5,647,554) (2,288,479)
----------- ----------- ----------- -----------
Change in net assets from
capital transactions...... 4,860,867 3,380,985 22,514,430 8,192,477
----------- ----------- ----------- -----------
Change in net assets....... 4,098,360 5,620,586 28,001,207 12,896,624
NET ASSETS:
Beginning of period....... 23,469,648 17,849,062 30,905,522 18,008,898
----------- ----------- ----------- -----------
End of period............. $27,568,008 $23,469,648 $58,906,729 $30,905,522
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued.................... 638,171 532,400 2,024,654 869,389
Reinvested................ 40,632 17,645 194,454 39,815
Redeemed.................. (186,152) (195,215) (438,149) (199,082)
----------- ----------- ----------- -----------
Change in shares........... 492,651 354,830 1,780,959 710,122
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
-11-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
INTERMEDIATE INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------ -----------
<C> <S> <C>
ASSET BACKED SECURITIES (3.9%):
250,000 American Express Master
Trust, 7.85%, 8/15/05.. $ 267,235
300,000 Chemical Master Credit
Card Trust 1, 6.23%,
4/15/05................ 295,146
250,000 Circuit City Credit Card
Master Trust, 8.00%,
11/15/03............... 260,982
250,000 Standard Credit Card
Master Trust, 7.25%,
4/7/08................. 256,683
-----------
Total Asset Backed Securities 1,080,046
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS
(5.9%):
Federal Home Loan Mortgage Corp.,
500,000 6.00%, 8/15/07.......... 490,230
Federal National Mortgage Assoc.,
650,000 6.50%, 10/25/06......... 651,625
Vendee Mortgage Trust,
500,000 6.75%, 3/15/06.......... 496,255
-----------
Total Collateralized Mortgage 1,638,110
Obligations
-----------
CORPORATE BONDS (49.2%):
Banking (3.1%):
500,000 Banc One, 7.25%, 8/1/02. 512,500
350,000 Nations Bank Corp., 354,375
7.00%, 9/15/01.........
-----------
866,875
-----------
Financial Services (1.1%):
US Life Corp., 6.75%,
300,000 1/15/98................ 302,250
-----------
Industrial Goods & Services (3.8%):
250,000 Rite Aid Corp., 7.13%, 249,455
1/15/07................
250,000 Whirlpool Corp., 9.00%, 276,561
3/1/03.................
500,000 Worthington Industries,
7.13%, 5/15/06......... 506,875
-----------
1,032,891
-----------
Insurance (2.4%):
250,000 Allstate Corp., 6.75%, 245,625
6/15/03................
Chubb Corp., 8.75%,
165,000 11/15/99............... 175,106
Harleysville Group,
250,000 6.75%, 11/15/03........ 245,937
-----------
666,668
-----------
Machinery & Equipment (1.0%):
250,000 John Deere Capital
Corp., 8.63%, 8/1/19... 273,438
-----------
Office Equipment & Services (3.3%):
Pitney Bowes, 9.25%, 587,500
500,000 6/15/08................
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Office Equipment & Services, continued:
300,000 Xerox Credit Corp. Notes, 10.00%, 4/1/99............... $ 321,750
-----------
909,250
-----------
Oil & Gas Exploration & Production Services (3.3%):
355,000 Atlantic Richfield Co., 10.25%, 7/2/00*................ 366,981
250,000 Burlington Resources, 9.63%,
6/15/00............................................... 273,437
250,000 Louisiana Land & Exploration, 8.25%, 6/15/02........... 267,500
-----------
907,918
-----------
Oil & Gas Transmission (2.4%):
250,000 El Paso Natural Gas, 9.45%, 9/1/99..................... 267,812
300,000 NGC Corp., 6.75%, 12/15/05............................. 294,750
100,000 Questar Pipeline Co., 9.88%, 6/1/20*................... 112,250
-----------
674,812
-----------
Paper Products (1.0%):
250,000 Westvaco Corp., 10.25%, 7/1/18*........................ 265,313
-----------
Pharmaceuticals (1.0%):
250,000 Eli Lilly, 8.38%, 12/1/06.............................. 278,125
-----------
Printing & Publishing (0.8%):
200,000 R.R. Donnelley & Sons Co., 9.13%, 12/1/00.............. 218,000
-----------
Railroads (1.9%):
250,000 Consolidated Railroad Co., 9.75%, 6/1/00............... 274,375
250,000 Union Pacific Co., 6.00%, 9/1/03....................... 237,813
-----------
512,188
-----------
Retail Stores (5.8%):
500,000 Dayton Hudson Co., 9.75%, 7/1/02....................... 566,875
250,000 Kohl's Corp., 6.70%, 2/1/06............................ 241,875
250,000 Lowe's Co., Inc. 6.38%, 12/15/05....................... 240,625
250,000 May Department Stores, 9.88%, 12/1/02.................. 288,750
260,000 Supervalu, Inc., 7.80%, 11/15/02....................... 274,300
-----------
1,612,425
-----------
Savings & Loans (1.0%):
250,000 Golden West Financial, 10.25%,
12/1/00............................................... 280,937
-----------
</TABLE>
Continued
-12-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
INTERMEDIATE INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Supermarkets (1.0%):
250,000 Secured Finance, Inc.-Kroger, 9.05%, 12/15/04........... $ 283,125
-----------
Textile Products (0.9%):
250,000 V F Corp., 7.60%, 4/1/04*............................... 254,375
-----------
Transportation & Shipping (1.0%):
250,000 General American Transportation, 8.63%, 12/1/04......... 272,500
-----------
Utilities--Electric (5.8%):
250,000 Alabama Power Co., 7.00%, 1/1/03*....................... 252,188
300,000 Allegheny Generating Co., 5.63%, 9/1/03................. 282,375
250,000 Florida Power & Electric, 6.88%, 4/1/04................. 248,438
300,000 Iowa Electric Light & Power Co., 8.63%, 5/15/01......... 321,375
250,000 Pennsylvania Power & Light Co., 7.75%, 5/1/02........... 263,125
250,000 Potomac Electric Power, 5.00%, 9/1/02................... 231,250
-----------
1,598,751
-----------
Utilities--Gas (1.9%):
250,000 Equitable Resources, 7.50%, 7/1/99...................... 256,875
250,000 Southern Natural Gas, 8.88%, 2/15/01.................... 270,000
-----------
526,875
-----------
Utilities--Gas & Electric (2.8%):
250,000 Baltimore Gas & Electric Co., 8.38%, 8/15/01............ 267,500
250,000 Pacific Gas & Electric Co., 9.06%, 12/15/97............. 256,875
246,000 Public Service Electric & Gas, 6.00%, 7/1/98............ 245,385
-----------
769,760
-----------
Utilities--Telephone (3.9%):
500,000 Mountain States Telephone, 9.50%, 5/1/00................ 542,500
250,000 Northwestern Bell Telephone, 9.50%, 5/1/00.............. 270,938
250,000 Southern New England Telephone, 7.13%, 8/1/07........... 254,375
-----------
1,067,813
-----------
Total Corporate Bonds 13,574,289
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- -----------
<C> <S> <C>
MEDIUM TERM NOTES (5.2%):
Finance (1.0%):
250,000 Capital Holding Corp., 9.27%, 5/7/01.................... $ 273,750
-----------
Insurance (1.0%):
255,000 W. R. Berkley, 6.71%, 3/4/03............................ 255,956
-----------
Pharmaceutical (0.9%):
250,000 Smithkline Beecham Corp., 7.50%, 5/1/02*................ 253,750
-----------
Utility--Electric (0.9%):
250,000 Kentucky Power, 6.65%, 5/1/03........................... 245,938
-----------
Utility--Telephone (1.4%):
400,000 Southwestern Bell Capital, 6.62%, 11/27/06, Series D.... 389,000
-----------
Total Medium Term Notes 1,418,394
-----------
U.S. GOVERNMENT AGENCIES (34.2%):
Federal Farm Credit Bank:
250,000 6.05%, 3/10/03.......................................... 244,245
Federal Home Loan Mortgage Corp.:
150,000 1/23/97................................................. 149,493
205,496 6.50%, 12/1/99.......................................... 204,366
500,000 6.38%, 8/14/01.......................................... 500,605
250,000 5.63%, 1/10/03.......................................... 239,460
600,000 6.22%, 3/24/03.......................................... 591,282
531,231 7.00%, 7/1/15........................................... 521,610
486,730 6.50%, 11/1/15.......................................... 465,659
535,459 7.00%, 4/1/16........................................... 525,430
Federal National Mortgage Association:
400,000 4.95%, 9/30/98.......................................... 393,100
400,000 6.60%, 6/24/99.......................................... 404,800
250,000 6.18%, 3/15/01.......................................... 248,290
750,000 6.38%, 8/14/01.......................................... 750,907
247,414 7.03%, 9/1/05........................................... 248,496
247,403 6.72%, 10/1/05.......................................... 246,480
298,499 6.71%, 5/1/06........................................... 297,383
450,000 7.38%, 9/1/06........................................... 451,687
348,733 7.75%, 9/17/23.......................................... 360,067
Government National Mortgage Association:
411,980 6.50%, 11/15/10......................................... 410,645
479,336 6.50%, 4/20/11.......................................... 468,407
303,684 7.50%, 2/15/23.......................................... 314,016
505,646 7.00%, 3/15/26.......................................... 494,486
</TABLE>
Continued
-13-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
INTERMEDIATE INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Export Funding Trust:
212,500 7.89%, 2/15/05.......................................... $ 223,078
Small Business Administration:
178,843 6.00%, 9/25/18, Pool #502410............................ 179,288
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED
Small Business Administration, continued:
500,000 7.35%, 8/1/05, SBIC 95-C................................ $ 501,250
-----------
Total U.S. Government Agencies 9,434,530
-----------
Total (Cost-$26,793,102)(a) $27,145,369
===========
</TABLE>
- -------
Percentages indicated are based on net assets of $27,568,008.
* Put and demand features exist allowing the Fund to require the repurchase
of the instrument within variable time periods of less than one year.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized
appreciation........... $542,391
Unrealized
depreciation........... (190,124)
--------
Net unrealized
appreciation........... $352,267
========
</TABLE>
See notes to financial statements.
-14-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (84.7%):
Banks (7.8%):
15,000 AmSouth Bankcorp. ..................................... $ 725,625
15,000 BankAmerica Corp....................................... 1,496,250
28,100 First Chicago Corp..................................... 1,510,375
18,000 KeyCorp................................................ 909,000
-----------
4,641,250
-----------
Building Materials (1.5%):
25,000 Masco Corp............................................. 900,000
-----------
Chemicals--General (5.8%):
25,000 Air Products & Chemicals, Inc.......................... 1,728,125
27,000 Sigma-Aldrich.......................................... 1,685,812
-----------
3,413,937
-----------
Computers & Peripherals (4.2%):
8,000 Cisco Systems (b)...................................... 509,000
28,000 Hewlett-Packard Co..................................... 1,407,000
50,000 Oak Technology, Inc. (b)............................... 562,500
-----------
2,478,500
-----------
Containers--Metal, Glass, Paper, Plastic (1.8%):
40,000 Sonoco Products Co. ................................... 1,035,000
-----------
Electronic & Electrical--General (5.4%):
25,000 DSC Communications Corp. (b)........................... 446,875
16,000 Emerson Electric Co.................................... 1,548,000
27,000 Thomas & Betts Corp.................................... 1,198,125
-----------
3,193,000
-----------
Environmental Control (0.9%):
11,000 Ionics, Inc. (b) ...................................... 528,000
-----------
Financial Services (2.2%):
35,000 Federal National Mortgage Assoc........................ 1,303,750
-----------
Food Distributors & Wholesalers (4.1%):
30,000 Albertsons, Inc........................................ 1,068,750
41,000 Sysco Corp............................................. 1,337,625
-----------
2,406,375
-----------
Food Processing & Packaging (0.3%):
11,100 J.M. Smucker, Class B.................................. 177,600
-----------
Forest Products--Lumber, Paper (1.8%):
15,000 Willamette Industries, Inc............................. 1,044,375
-----------
Heavy Machinery--Industrial, Farm, Construction (2.4%):
35,000 Deere & Co............................................. 1,421,875
-----------
Insurance--Property, Casualty, Health (5.3%):
12,000 Allstate Corp.......................................... 694,500
10,000 American International Group, Inc...................... 1,082,500
25,000 Chubb Corp............................................. 1,343,750
-----------
3,120,750
-----------
Medical Supplies (2.6%):
34,800 Biomet, Inc............................................ 526,350
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Medical Supplies, continued:
24,000 St. Jude Medical, Inc. (b)............................. $ 1,023,000
-----------
1,549,350
-----------
Newspapers (2.3%):
18,000 Gannett Co., Inc....................................... 1,347,750
-----------
Office Equipment & Supplies (1.7%):
18,000 Pitney Bowes, Inc...................................... 981,000
-----------
Oil & Gas Exploration, Production, & Services (6.9%):
20,000 Amoco Corp............................................. 1,610,000
15,000 Anadarko Petroleum..................................... 971,250
11,000 Atlantic Richfield Co.................................. 1,457,500
-----------
4,038,750
-----------
Pharmaceuticals (7.7%):
40,000 Alza Corp., Class A (b)................................ 1,035,000
16,000 Eli Lilly & Co......................................... 1,168,000
22,000 Johnson & Johnson, Inc................................. 1,094,500
16,000 Merck & Co., Inc. ..................................... 1,268,000
-----------
4,565,500
-----------
Precision Instruments & Related (1.5%):
25,000 Dionex Corp. (b)....................................... 875,000
-----------
Publishing (0.7%):
13,200 R.R. Donnelley & Sons Co............................... 414,150
-----------
Restaurants (2.3%):
30,000 McDonald's Corp........................................ 1,357,500
-----------
Retail (2.5%):
15,000 Lowes Companies., Inc.................................. 532,500
20,000 May Department Stores.................................. 935,000
-----------
1,467,500
-----------
Semiconductors (1.6%):
7,000 Intel Corp............................................. 916,563
-----------
Soaps & Cleaning Agents (1.8%):
10,000 Procter & Gamble Co.................................... 1,075,000
-----------
Textile Manufacturing (1.1%):
9,500 V.F. Corp.............................................. 641,250
-----------
Trucks--Manufacturing (1.7%):
55,000 Wabash National Corp. ................................. 1,010,625
-----------
Utilities--Natural Gas (4.1%):
30,000 Consolidated Natural Gas............................... 1,657,500
15,000 El Paso Natural Gas.................................... 757,500
-----------
2,415,000
-----------
Utilities--Telecommunications (2.7%):
15,000 Pacific Telesis Group.................................. 551,250
20,000 SBC Communications..................................... 1,035,000
-----------
1,586,250
-----------
Total Common Stocks 49,905,600
-----------
</TABLE>
Continued
-15-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- -----------
<C> <S> <C>
PREFERRED STOCKS (0.4%):
Financial Services (0.4%):
10,000 American General Capital, 8.13%, 9/30/25............... $ 255,000
-----------
Total Preferred Stocks 255,000
-----------
REAL ESTATE INVESTMENT TRUSTS (0.9%):
14,000 Duke Realty Investments, Inc............................ 539,000
-----------
Total Real Estate Investment Trusts 539,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (13.9%):
Federal Home Loan Mortgage Corp.:
1,750,000 1/9/97.................................................. $ 1,747,655
600,000 1/16/97................................................. 598,590
440,000 1/23/97................................................. 438,513
Federal National Mortgage Association:
2,000,000 1/17/97................................................. 1,994,960
3,400,000 1/24/97................................................. 3,392,418
-----------
Total U.S. Government Agencies 8,172,136
-----------
Total (Cost--$50,058,153) (a) $58,871,736
===========
</TABLE>
- -------
Percentages indicated are based on net assets of $58,906,729.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized
appreciation.......... $9,801,896
Unrealized
depreciation.......... (988,313)
----------
Net unrealized
appreciation.......... $8,813,583
==========
</TABLE>
(b) Non-income producing securities.
See notes to financial statements.
-16-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1.ORGANIZATION:
The MMA Praxis Mutual Funds (the "Company") is an open-end management
investment company established as a Delaware business trust under a
Declaration of Trust dated September 27, 1993, and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Company
currently consists of the Intermediate Income Fund and the Growth Fund
(individually a "Fund", collectively "the Funds"). Between the date of
organization and the date of commencement of operations (January 4, 1994),
the Fund had no operations other than those relating to organizational
matters, including the issuance on December 28, 1993 of 5,000 shares of the
Intermediate Income Fund and 5,000 shares of the Growth Fund at $10.00 per
share to Mennonite Mutual Aid Association.
The investment objective of the Intermediate Income Fund is to seek current
income. Under normal market conditions, the Fund will invest substantially
all, but in no event less than 65% of its total assets in fixed income
securities. The investment objective of the Growth Fund is to seek capital
appreciation. The Fund invests primarily in undervalued securities of medium
to large capitalization companies.
2.SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Company in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses for the period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Investments in common and preferred stocks, corporate bonds, commercial
paper, municipal bonds, U.S. Government securities and securities of U.S.
Government agencies of the Funds are valued at their market values
determined on the basis of the latest available bid prices in the
principal market (closing sales prices if the principal market is an
exchange) in which such securities are normally traded. Investments in
investment companies are valued at their respective net asset values as
reported by such companies. The differences between the cost and market
values of investments are reflected as either unrealized appreciation or
depreciation.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis and includes, where applicable, the pro rata amortization of
premium or accretion of discount. Dividend income is recorded on the ex-
dividend date. Gains or losses realized on sales of securities are
determined by comparing the identified cost of the security lot sold with
the net sales proceeds.
REPURCHASE AGREEMENTS:
The Funds may acquire repurchase agreements from member banks of the
Federal Deposit Insurance Corporation and from registered broker-dealers
which the adviser deems creditworthy under guidelines approved by the
Board of Trustees, subject to the seller's agreement to repurchase such
securities at a mutually
Continued
-17-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1996
agreed-upon date and price. The repurchase price generally equals the
price paid by a Fund plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller, under a repurchase agreement,
is required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued
interest). Securities subject to repurchase agreements are held by the
Company's custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system.
OPTIONS TRANSACTIONS:
When a Fund writes a covered call or put option, an amount equal to the
premium received is included in the Fund's statement of assets and
liabilities as a liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. If an
option expires on its stipulated expiration date or if the Fund enters
into a closing purchase transaction, a gain or loss is realized. If a
written call option is exercised, a gain or loss is realized for the sale
of the underlying security and the proceeds from the sale are increased by
the premium originally received. If a written put option is exercised, the
cost of the security acquired is decreased by the premium originally
received.
When a Fund purchases a call or put option, an amount equal to the premium
paid is included in the Fund's statement of assets and liabilities as an
investment, and is subsequently marked-to-market to reflect the current
market value of the option. If an option expires on the stipulated
expiration date or if the Fund enters into a closing sale transaction, a
gain or loss is realized. If the Fund exercises a call option, the cost of
the security acquired is increased by the premium paid for the call. If
the Fund exercises a put option, a gain or loss is realized from the sale
of the underlying security, and the proceeds from such sale are decreased
by the premium originally paid. Written and purchased options are non-
income producing securities. The options techniques utilized are to hedge
against fluctuations in the value of securities which the Funds hold or
intend to purchase. As of December 31, 1996 the Funds had no options
outstanding.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared and paid monthly for the
Intermediate Income Fund and declared and paid quarterly for the Growth
Fund, and distributable net realized capital gains, if any, are declared
and distributed at least annually.
Dividends from net investment income and from net realized capital gains
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments of mortgage-backed securities,
expiring capital loss carry-forwards and deferrals of certain losses.
FEDERAL INCOME TAXES:
It is the policy of each Fund to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or substantially
all, Federal income taxes.
Continued
-18-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1996
ORGANIZATION COSTS:
Costs incurred by the Company in connection with its organization and
registration of shares have been deferred and are amortized using the
straight-line method over a period of five years from the commencement of
the public offering of shares of the Funds. In the event that any of the
initial shares of the Funds are redeemed during the amortization period by
any holder thereof, the redemption proceeds will be reduced by any
unamortized organizational expenses of the Company in the same proportion
as the number of said shares of the Fund being redeemed bears to the
number of initial shares of that Fund that are outstanding at time of
redemption.
OTHER:
Each Fund maintains a cash balance with its custodian and receives a
reduction of their custody fees and expenses for the amounts of interest
earned on such uninvested cash balance. For financial reporting purposes
for the year ended December 31, 1996, custodian fees and expenses paid by
third parties were increased by $16,274 and $9,501 for the Intermediate
Income Fund and the Growth Fund, respectively. There was no effect on net
investment income. The Funds could have invested such cash amounts in an
income producing asset if they had not agreed to a reduction of fees or
expenses under the expense offset arrangement with their custodian.
3.PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
<S> <C> <C>
Intermediate Income Fund.............................. $12,551,013 $ 7,237,149
Growth Fund........................................... $26,417,379 $13,856,771
</TABLE>
4.RELATED PARTY TRANSACTIONS:
Menno Insurance Service, Inc. doing business as MMA Capital Management, (the
"Adviser") (a separate corporate entity controlled by Mennonite Mutual Aid,
Inc.), provides investment advisory services to the Company. Under the terms
of the investment advisory agreement, the Adviser is entitled to receive
fees based on a percentage of the average net assets of each of the
Intermediate Income Fund and the Growth Fund.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
an Ohio limited partnership, and BISYS Fund Services Ohio, Inc. ("BISYS
Ohio") are subsidiaries of the BISYS Group, Inc.
BISYS serves the Company as administrator. Under the terms of the
administration agreement, BISYS receives fees that are computed daily as a
percentage of the average net assets of each of Fund with a minimum of
$50,000 if the net assets are less than $50 million per Fund.
BISYS also serves as Fund distributor. BISYS receives fees for providing
distribution services under the Distribution Service Plan (the "Plan")
pursuant to Rule 12b-1 of the 1940 Act. Under the Plan, each Fund pays BISYS
a fee not to exceed, on an annual basis, 1.00% of the average daily net
asset value of each Fund for payments made to banks, broker/dealers and
other institutions, including affiliates of the Adviser, and for expenses
BISYS and any of
Continued
-19-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1996
its affiliates or subsidiaries incur for providing distribution or
shareholder service assistance. Under the Plan, BISYS pays 95% of these fees
to the Adviser.
BISYS Ohio serves each Fund as transfer agent and fund accountant. For
transfer agent services, BISYS Ohio is entitled to receive fees based upon
the number of shareholders with specified minimum per fund. For fund
accounting services, BISYS Ohio is entitled to receive fees based on a
percentage of the average daily net assets of each Fund. In addition, BISYS
Ohio is reimbursed for certain out-of-pocket expenses incurred in providing
such transfer agency and fund accounting services.
Certain officers of the Company are affiliated with BISYS and/or MMA Capital
Management, Inc. Such officers are not paid any fees directly by the Funds
for serving as officers of the Company.
Certain redemptions of shares made within 5 years of purchase are subject to
contingent deferred sales charges ("CDSCs"). The applicable CDSC is equal to
a percentage of the lesser of the net asset value per share ("NAV") at the
date of the original purchase or at the date of redemption. The sales charge
will not be imposed on increases above the NAV at the time of purchase or
shares purchased through the reinvestment of dividends from net investment
income or capital gains. For the year ended December 31, 1996, neither the
Adviser nor BISYS have received any money from commissions earned on sales
of shares of the Funds.
<TABLE>
<CAPTION>
YEAR OF REDEMPTION CDSC
------------------ -----
<S> <C>
First 4.00%
Second 4.00%
Third 3.00%
Fourth 2.00%
Fifth 1.00%
Sixth and up 0.00%
</TABLE>
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios.
Information regarding these transactions are as follows for the year ended
December 31, 1996:
<TABLE>
<CAPTION>
INTERMEDIATE INCOME GROWTH
FUND FUND
------------------- --------
<S> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)............. 0.50% 0.74%
Voluntary fee reductions........................ $103,179 $565
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)............. 0.15% 0.15%
Voluntary fee reductions........................ -- $7,899
12B-1 FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)............. 1.00% 1.00%
Voluntary fee reductions........................ $241,945 $344,022
FUND ACCOUNTING AND TRANSFER AGENT FEES......... $96,027 $147,338
</TABLE>
Continued
-20-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1996
5. ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Growth Fund designates the following distributions for the dividends
received deduction for corporations:
<TABLE>
<S> <C>
Dividend income...................................................... $830,576
Dividend income per share............................................ $ 0.055
</TABLE>
6. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
As of December 31, 1996, for Federal income tax purposes, the Intermediate
Income Fund has capital loss carryforwards available to offset future
capital gains, if any, of approximately $290,895 which expires in 2003.
-21-
<PAGE>
MMA PRAXIS MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND GROWTH FUND
--------------------------------------- ---------------------------------------
YEAR YEAR JANUARY 4, YEAR YEAR JANUARY 4,
ENDED ENDED 1994 TO ENDED ENDED 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 (A) 1996 1995 1994 (A)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 10.17 $ 9.14 $ 10.00 $ 12.07 $ 9.74 $ 10.00
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.54 0.53 0.45 0.07 0.10 0.09
Net realized and
unrealized gains
(losses) from
investments........... (0.33) 1.03 (0.86) 1.85 3.12 (0.07)
------- ------- ------- ------- ------- -------
Total from Investment
Activities............. 0.21 1.56 (0.41) 1.92 3.22 0.02
------- ------- ------- ------- ------- -------
Distributions
Net investment income.. (0.54) (0.53) (0.45) (0.07) (0.10) (0.09)
Net realized gains..... -- -- -- (0.35) (0.79) (0.19)
------- ------- ------- ------- ------- -------
Total Distributions... (0.54) (0.53) (0.45) (0.42) (0.89) (0.28)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 9.84 $ 10.17 $ 9.14 $ 13.57 $ 12.07 $ 9.74
======= ======= ======= ======= ======= =======
Total Return (excludes
redemption charge)..... 2.22% 17.47% (4.09)%(b) 15.87% 33.32% 0.27%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $27,568 $23,470 $17,849 $58,907 $30,906 $18,009
Ratio of expenses to
average net assets.... 1.10% 1.10% 1.10%(c) 1.74% 1.75% 1.75%(c)
Ratio of net investment
income to average net
assets................ 5.50% 5.49% 4.96%(c) 0.61% 0.90% 1.02%(c)
Ratio of expenses to
average net assets*... 2.52%** 2.64% 2.83%(c) 2.55%** 2.81% 3.25%(c)
Ratio of net investment
income (loss) to
average net assets*... 4.15% 3.95% 3.23%(c) (0.17)% (0.16)% (0.48)%(c)
Portfolio Turnover..... 30.25% 31.57% 4.95% 33.98% 48.91% 35.22%
Average commission rate
paid (d).............. $0.1038
</TABLE>
- ---------
* During the period, certain expenses were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
* During the year ended December 31, 1996, each Fund received credits from its
custodian for interest earned on uninvested cash balances which were used to
offset custodian fees. If such credits had not occurred, the expense ratio
would have been as indicated. The ratio of net investment income was not
affected.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
See notes to financial statements.
-22-
<PAGE>
Annual Report
INVESTMENT ADVISER FOR THE YEAR ENDED DECEMBER 31, 1996
MMA Capital
Management
Post Office Box 483 MMA Praxis Mutual Funds
Goshen, Indiana
46527
INTERMEDIATE INCOME FUND
ADMINISTRATOR AND GROWTH FUND
DISTRIBUTOR
BISYS Fund Services MMA Praxis LOGO
3435 Stelzer Road
Columbus, Ohio 43219 This report is for the
information of shareholders
of MMA Praxis Mutual Funds,
but it may also be used as
sales literature when
LEGAL COUNSEL preceded or accompanied by
Dechert Price & the current prospectus,
Rhoads which gives details about
1500 K Street, NW charges, expenses,
Washington, DC 20005 investment objectives, and
operating policies of the
AUDITORS Funds. Read the prospectus
Coopers & Lybrand carefully before investing
L.L.P. or sending money.
100 East Broad
Street
Columbus, Ohio 43215
TRANSFER AGENT
BISYS Fund Services
Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
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