MMA PRAXIS MUTUAL FUNDS, N-30D, 1998-08-10

MMA PRAXIS MUTUAL FUNDS
N-30D, 1998-08-10

Previous: SYLVAN LEARNING SYSTEMS INC, S-3, 1998-08-10

Next: REAL GOODS TRADING CORP, 10QSB, 1998-08-10

<PAGE>

Semi-Annual Report
FOR THE SIX MONTHS ENDED JUNE 30, 1998

MMA Praxis
Mutual Funds

INTERMEDIATE INCOME FUND
GROWTH FUND
INTERNATIONAL FUND
LOGO
<PAGE>

Message
From
The
President

Dear MMA Praxis Shareholders:

PERFORMANCE OVERVIEW

The first six months of 1998 have presented MMA Praxis mutual fund managers
with major challenges, opportunities and some frustration. The MMA Praxis
Intermediate Income Fund generated a total return of 3.5%* (without load),
which is very close to its benchmark target, the Lehman Aggregate Index, which
returned 3.9%.

The MMA Praxis International Fund turned in a strong six-month total return of
23.9%* (without load), significantly outpacing the MSCI EAFE Index average
performance of 15.9%. This success has brought increased exposure and
recognition to the MMA Praxis fund family. We extend our congratulations to
the portfolio manager, Tina Oechsle-Vasconcelles, for this fund's fine
performance.

The MMA Praxis Growth Fund experienced a relatively strong performance through
the first four months of this year before encountering market turbulence. At
the 1998 halfway point, the Growth Fund had returned 5.5%* (without load) to
its shareholders, as compared to it's benchmark peer, the S & P 500 Index,
which returned 12.3%.

Please refer to the following pages for comments from each of the three
portfolio managers regarding the six-month performance of their respective
funds. You also are encouraged to spend time reading the report from Mark
Regier, MMA's SRI Research and Advocacy Coordinator for an update on those
activities related to MMA's values-based investing.

PREPARING TO SURVIVE MARKET VOLATILITY

Financial markets have taken investors on a wild ride during the first six
months in 1998. One day stocks fall dramatically, only to surge ahead the
following day. And the bond market has joined in, as uncertainty over economic
growth, inflation and interest rates in the U.S. have caused bond prices to
fluctuate substantially in the last several months.

Today's markets are especially unnerving, given the fact the past few years
have been uncharacteristically calm. This was especially true in 1996 and 1997
for stocks, as this asset class grew sharply with unusually little volatility.
But considering what is driving these swings, it may be that the ride has just
begun.

What causes market volatility? Any number of events can cause the markets to
fluctuate. And it's not always clear how financial markets will react to
short-term events. For example, not too long ago, the government announced
that 705,000 new jobs had been created in a particular month. This good news--
jobs created during a period of modest economic growth--was promptly greeted
by a precipitous 171 point drop in the Dow and a 3.5% drop in the average
price of bonds.

Overall, today's market volatility has been largely attributed to political
uncertainties, economic concerns (the Asian currency crisis and how this might
affect the American economy) and the prospect of lower corporate profits.
Based on these factors, it appears that market volatility may be with us for
some time to come.

- -------
*This does not reflect the contingent deferred sales charge. Had the maximum
4.0% CDSC charge been applicable the return would have been (0.5)% for the
Intermediate Income Fund, 19.9% for the International Fund and 1.5% for the
Growth Fund.

-1-
<PAGE>

Message
From
The
President--
continued

FOUR WAYS TO HELP SURVIVE MARKET FLUCTUATIONS

What steps can you take to keep calm and remain on track with your financial
plan during periods of market volatility?

1. Maintain a long-term view. One of the biggest dangers to a financial
plan is focusing on short-term market movements. Short-term volatility
should be irrelevant to people with a 5-, 10- or 20-year investment time
horizon. Why? The following graph shows that historically, the longer you
invest, the more likely that you may achieve positive results.

RANGES OF RETURNS OVER
1-5- and 20- YEAR HOLDING PERIODS THROUGH 1997

1 yr. 5 yr. 20 yr.
----- ----- ------
Small Stocks 121 43 18
Large Stocks 55 20 15
Intermediate Term
Government Bonds 30 16 8
T-Bills 13 9 5

This illustration is hypothetical and not representative of any particular
investment.

Small Stocks are represented by the CRSP6-8 Index. Large Stocks are represented
by the S&P 500 Index from 1977 to 1997. Intermediate Term Government Bonds from
1987 to 1997 are based on the Wall Street Journal prices. The 1977 to 1987
returning are based on the CRSP Government Bond File. T-Bills are based on the
U.S. 30-day Treasury bill.

Source: Ibbotson Associates, Chicago, Foundations of Asset Allocation Workshop,
1998.

2. Properly diversify. Various investments can perform differently under
similar circumstances. For example, certain conditions may cause stocks in
general to go up while bonds go down. Additionally, a well diversified
portfolio of international stocks has a low correlation with the U.S. stock
market. Thus, one can help temper overall portfolio volatility by
diversifying among a variety of investments. The varied performance of the
three MMA Praxis Mutual Funds in the first six months of 1998 certainly
supports this strategy.

3. Avoid investment paralysis. When the market is falling, it's tempting to
stop adding to your investments. But historically, many stock market gains
have happened in quick, short bursts. As a result, you may be left on the
sidelines when the market roars forward.

If you are hesitant to invest when the market appears weak, consider this
hypothetical example. According to Ibbotson, if you had invested one dollar
at the end of 1925, and remained fully invested in the S&P 500 Index
through the years, your one dollar would have grown to $1,828.00 by the end
of 1997. However, if a market timing portfolio had switched out of the S&P
500 Index in the 35 best returning months since 1925, the original one
dollar investment would be worth only $16.67. This example highlights the
risk associated with an attempt to try to predict which asset classes will
be the best performing.

-2-
<PAGE>

Message
From
The
President--
continued

VALUE OF $1 INVESTMENT OF
YEAR-END 1925 BY DECEMBER 1997

S&P 500 $1,828.33
Treasury Bills $ 14.25
S&P minus best 35 months $ 16.67

This illustration is hypothetical and not representative of any particular
investment.

The S&P 500 Index cannot be directly invested in.

Source: Ibbotson Associates, Chicago, Foundations of Asset Allocation Workshop,
1988.

4. Schedule a check-up. If a 100-point stock market drop, sudden jump in
interest rates or turbulence in the Japanese stock market makes you
nervous, schedule a portfolio check-up with your financial advisor. He or
she can review your current portfolio, investment goals, risk tolerance and
timeframe to see if adjustments are needed. Understanding your investment
portfolio and feeling comfortable with market fluctuations can go a long
way toward helping you achieve your financial goals.

CONCLUSION

The MMA Praxis family of funds is now 4 1/2 years old. Assets have grown to
over $192 million, which represents investments from nearly 16,000
shareholders. We recognize that many of you have chosen the MMA Praxis family
of funds to assist you in planning for important personal or family financial
goals. We applaud your commitment to engage in MMA's values-based investing.

We will continue to work hard at generating competitive returns by using our
value investment style--focusing on companies that are currently undervalued
by the market. These are companies that are in a temporary slump, possess
hidden assets or are in mature industries unappreciated by Wall Street. Value-
style investing requires patience, however, as investors may occasionally have
to wait a seemingly interminable period of time for the market to recognize a
company's intrinsic value.

-3-
<PAGE>

Message
From
The
President--
continued

You can be assured that we will continue to "stay the course" and manage the
MMA Praxis Mutual Funds with an eye toward long-term, risk-managed
performance.

Your partner in investing,

/s/ John L. Liechty

John L. Liechty, ChFC
President, MMA Praxis Mutual Funds

- -------
For more information about the MMA Praxis Mutual Funds, including charges and
expenses, request a prospectus by calling 1-800-9-PRAXIS. Please read the
prospectus carefully before investing or sending money.

The MMA Praxis Mutual Funds are distributed by BISYS Fund Services.

-4-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS INTERMEDIATE INCOME FUND

Interest rates were in a tight range for most of the quarter. In June, rates
finally broke to new lows as Asian "flight to safety" buying pushed the 10-
year Treasury through the Fed funds rate.

The total return for the fund was 3.5%* (without load) for the first half of
1998. The Lehman Aggregate Index was up 3.9%. The Lipper Intermediate
Investment Grade Bond Fund Average was up 3.6%.

Our performance mirrored both benchmarks until mid-June when we shortened our
maturities because we believed the rally was over. Unfortunately, Asian
concerns hit again. We made some adjustments to extend our portfolio again and
started to recover. If we do get a correction, we expect to recover our lost
ground.

Interest rates represent a real dilemma with Asian bond buying for currency
reasons driving Treasury rates lower at the same time that a strong domestic
economy argues for higher rates. Asia will clearly slow the U.S. economy which
may push rates even lower. At the same time, monetary policy is already fairly
loose, which argues against a reduction in rates. This will force us to be
nimble to adjust to changing market perceptions.

INTERMEDIATE INCOME FUND
VALUE OF A $10,000 INVESTMENT

<TABLE>
<CAPTION>
Lipper
Intermediate Lehman
Investment Aggregate
CDSC NO CDSC Grade Index
-------- ------- ------------ ---------
<S> <C> <C> <C> <C>
1/4/94 $10,000 $10,000 $10,000 $10,000
12/31/94 $ 9,590 $ 9,590 $ 9,621 $ 9,708
6/30/95 $10,680 $10,680 $10,632 $10,819
12/31/95 $11,260 $11,260 $11,257 $11,501
6/30/96 $11,030 $11,030 $11,100 $11,361
12/31/96 $11,510 $11,510 $11,621 $11,919
6/30/97 $11,760 $11,760 $11,950 $12,287
12/31/97 $12,393 $12,390 $12,619 $13,068
6/30/98 $12,727 $12,827 $13,074 $13,583
</TABLE>

**Reflects Applicable Contingent Deferred Sales Charge

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT
INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORGINAL COST. CDSC REFLECTS A 4.00 PERCENT
CONTINGENT DEFERRED SALES CHARGE.

The Lehman Aggregate Bond Index includes fixed rate debt
issues rated investment grade or higher by Moody's
Investor's Service, Standard and Poor's(R) Corporation, or
Fitch Investor's Service with at least one year to maturity.
The Lipper Intermediate Investment Grade Bond Fund Index
includes funds that invests at least 65% of its assets in
investment grade debt issues (rated in top four grades) with
dollar-weighted average maturities of five to ten years.
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. 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.

We continue to maintain a very high AA2 credit quality. This is higher than we
have been previously and is the result of adding more government agencies to
help enhance our liquidity and reduce the risk of spread widening in corporate
bonds.

From a social investment perspective, we added several mortgage pools to our
portfolio. In the corporate portion of our portfolio, we added Boston
Scientific (1.3% of net assets), a maker of medical devices particularly for
use in the cardiology field.

-5-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS INTERMEDIATE INCOME FUND (CONTINUED)
Currently, our duration is 4.6 versus 4.6 for the Lehman Aggregate Index. This
means that a 1.0% rise or fall in interest rates will cause the fund to rise
or fall 4.6%.

Going forward, we will continue to search out fixed income opportunities that
we believe will add financial and social return to your investment.

In this time of extended valuation in the stock markets, we are reminded of
the importance of a well-diversified portfolio to help balance the risks of
investing. For many shareholders, an investment in MMA Praxis Intermediate
Income Fund may be an important part of this strategy.

Thank you for the confidence you've placed in us.

Delmar K. King
Investment Manager
MMA Praxis Intermediate Income Fund
- -------
* This does not reflect the contingent deferred sales charge. Had the maximum
4.0% CDSC charge been applicable the return would have been (0.5)%.

-6-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS GROWTH FUND

Through April of this year, the MMA Praxis Growth Fund had good performance at
12.9%* (without load), relative to the Lipper Growth and Income Fund Average,
at 12.0%, and was only slightly behind its primary benchmark, the S&P 500
Index return of 15.1%. However, during the months of May and June 1998, there
was a substantial drop in the value of the MMA Praxis Growth Fund and poor
relative performance to the S&P 500 Index. The six-month return for the Growth
Fund was 5.5%* (without load) as compared to the S&P 500 Index's return of
12.3%. I know this may be causing some concern and questions to you as
shareholders.

Before I get into the fund specifics, I want to reassure each of you that our
value-oriented management style, our portfolio management and valuation
methodology has not changed. We continue to use the same sound management
techniques today that we used when the fund began in 1994. These are the same
techniques that provided good year-to-date performance through May 1, 1998. I
will be the first to admit that I have been disappointed with the performance
for the last several months. At the same time, I will also be the first to say
I believe the portfolio is structured with undervalued stocks that will be
recognized by the broader market sometime in the future.

GROWTH FUND
VALUE OF A $10,000 INVESTMENT

<TABLE>
<CAPTION>
CDSC NO CDSC S&P 500 Domini 400
-------- ------- ------------ ----------
<S> <C> <C> <C> <C>
1/4/94 $10,000 $10,000 $10,000 $10,000
12/31/94 $10,026 $10,026 $10,132 $10,018
6/30/95 $11,968 $11,968 $12,181 $12,140
12/31/95 $13,367 $13,367 $13,940 $13,845
6/30/96 $14,025 $14,025 $15,349 $15,238
12/31/96 $15,488 $15,488 $17,141 $17,125
6/30/97 $17,992 $17,992 $20,675 $20,864
12/31/97 $20,010 $19,803 $22,859 $23,680
6/30/98 $21,118 $21,018 $26,908 $30,335
</TABLE>

**Reflects Applicable 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. 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.

FACTORS CONTRIBUTING TO SHORT-TERM UNDERPERFORMANCE

First of all, there was no one single event or cause that we can point our
finger to for the recent performance. There have been a series of unrelated
events that hindered the return. We do know that each of the following has
contributed to the problems of the last several months: large company
dominance in the market, oil price declines, unforeseen company stories and
mergers and acquisitions.

-7-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS GROWTH FUND (CONTINUED)
LARGE COMPANY DOMINANCE

In our view, there has certainly been a lot of damage done to individual
stocks in the small- and mid-sized company segment of the market over the last
several months. At the same time, the large stocks held their performance
fairly well. One way to quantify this point is by taking a look at the indexes
for the months of May and June 1998. The S&P 100 Index** (the largest
component) was up 2.3% while the S&P 400 MidCap Index** was down 3.9%, and the
Russell 2000 Index**, a measurement of small cap stock performance, was down
5.1%. These are significant variations in performance for a short period of
time. We also know that as of June 30, 1998, over 52.0% of all stocks in the
S&P 500 Index lagged the index return by more than 15.0% for the past 12
months./1/ What this is telling us is that today's stock market performance is
being overwhelmingly influenced by a relative small group of stocks with huge
market capitalizations.

As we have written on several occasions, we believe the valuations are more
attractive in a select group of mid- to small-sized companies. Because of the
extended valuations of large company stocks, we intentionally lowered the
average cap size of the portfolio over the last 18 months. Through our stock
selection and sector weightings, we were able to keep pace with the overall
large cap indexes until May 1998. We still believe this is the direction to
take the portfolio.

The weighted average cap size of the MMA Praxis Growth Fund is approximately
$18 billion. The weighted average cap size of the S&P 500 Index is more than
$60 billion./2/ On July 7, 1998, the largest U.S.-based company, General
Electric, reached a market capitalization of $300 billion./2/ The largest
companies (based on capitalization) in the fund portfolio include Merck at
$159 billion (1.7% of net assets), Johnson & Johnson at $99 billion (1.3% of
net assets) and Cisco Systems at $96 billion (1.1% of net assets). Some of the
smaller names in the portfolio include Wabash National Corp. at $575 million
(2.4% of net assets), Dionex Corp. at $575 million (1.3% of net assets) and
Read-Rite Corp. at $414 million (0.5% of net assets).

As you can see, the capitalization size factor did play a critical role in the
fund's underperformance. However, we will continue to avoid those companies
whose values are extended and will seek out companies whose fundamentals meet
our proper investment criteria. We will buy the largest of the blue chip
companies at some point but not until they are more reasonably priced.

OIL DRILLING AND OIL SERVICE STOCKS--WE WERE EARLY

Oil prices peaked in the fall of 1997 at $18.50 per barrel. Today, oil is
under $13.00 per barrel. Oil drilling and service stocks began declining in
price and underperformed the broad market as oil prices began to slide. There
was also a question as to oversupply as demand weakened. The oil drilling and
services group has underperformed the broad market by 48.0% for the last nine
months./2/

The majority of our purchases in this sector of the market were made during
the second quarter of 1998. And while the prices were significantly below peak
prices of last fall, they underperformed the broader market considerably in
April and May. As we stand today, we believe the multiple compression that has
taken place among the oil drillers, such as R&B Falcon and Ensco, and the oil
services companies such as Schlumberger and Petroleum Geo Services, has run
its course. The prices today represent attractive risk-reward opportunities
going forward.

We also believe the earnings of these companies will not be impacted to the
extent that the stock prices have fallen. While it is understood that the
recent oil price declines have shifted pricing leverage away from the
contractors and to the major oil companies in the short-term, we also know the
oil companies continue their struggle to increase oil reserves and production.
They will continue to explore and drill for oil at these price levels. Many of
the companies we hold have long-term contracts to support the earnings stream.
We also believe the analysis that oil will recover in

-8-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS GROWTH FUND (CONTINUED)
price by year-end as supply and demand become balanced once again. Oil
company, drilling and oil service stocks represent about 13.0% of the growth
fund portfolio as of June 30, 1998.

COMPANY STORIES

A number of companies declined due to specific, unique issues related directly
to the company. Here are several examples:

. MCN ENERGY GROUP (2.1% of net assets) is a diversified gas utility company
in Michigan. This company was considered well managed and progressive as it
enhanced earnings for shareholders. The company has been a consistent grower
and has not had a down earnings report in many years. Toward the end of
June, the company announced it was writing off a portion of its oil and gas
exploration business and would have lower earnings for 1998 than a year
earlier. The stock price dropped 19.0% on the announcement. Today, this
company has a dividend yield of 4.3% and is selling at one of the lowest
valuations of its group.

. IONICS (1.9% of net assets) declined due to its Asian exposure. Ionics
provides water purification plants for municipalities and manufacturing
facilities. The company provides water purification used in semiconductor
production. Because of the uncertainty in the technology sector at this
time, customers are delaying orders. Ionics indicated it would not achieve
the revenue growth that was expected for the quarter. The stock declined
17%.

. THOMAS AND BETTS AND FASTENAL CO. (1.0% of net assets) declined due to
anticipated weakness in auto part sales to General Motors due to the strike.

We believe that what has happened to a number of companies in the portfolio is
only temporary. These companies will continue to grow and recover from these
isolated events. We believe stock prices also will recover from their current
depressed prices.

MERGERS AND ACQUISITIONS

A number of the companies in the portfolio were part of the mega merger and
acquisition deals that took place in the second quarter. Investors have been
quite skeptical of the prices paid to put these deals together. Since the
deals have been announced stock prices have declined. For example, we hold SBC
Communications (2.9% of net assets) in the portfolio. The company announced it
was merging with Ameritech. This was a $62 billion deal announced in May. The
SBC stock declined 14.0% over the next few days after the deal was announced.

Norwest and Wells Fargo announced a merger of the two banks. We owned both of
these banks in the portfolio. Both stocks declined on the announcement.

Under our normal financial analysis, we try to buy financially strong
companies for the portfolio. This has not been to our advantage lately because
of the acquisition activity. The strong companies have been announcing
numerous acquisitions that are at least initially frowned upon by investors.
Again, we believe these are temporary declines in stock prices due to short-
term dilution of earnings.

FINAL REMARKS

As we self-examine our work, we continue to ask questions like what has
changed? Are we doing something different? What are we missing? The answers
come out the same. We will continue to do the same things we have done as
portfolio managers for the last 15 years, and for the last 4 1/2 years with
the fund. We believe the value approach we have been using will come back and
work for us some time in the future as it has in the past. We have experienced
similar temporary declines in the past. I wish I could state with all
certainty as to when the turnaround will happen. While I cannot predict the
future, I do believe we are closer to this move up than we were two months
ago.

-9-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS GROWTH FUND (CONTINUED)
Thank you for your patience as we continue to allow our value-oriented
investing strategy to work for your benefit.

Keith Yoder, CFA
Investment Manager
MMA Praxis Growth Fund
- -------
* This does not reflect the contingent deferred sales charge. Had the maximum
4.0% CDSC charge been applicable the six-month return would have been 1.5%
and the four month return would have been 8.9%.

** The S & P 100 Index is a market capitalization weighted price only index
composed of 100 widely held common stocks. The S & P 400 Index is designed
to measure the performance of the middle capitalization sector of the U.S.
equities market consisting of 400 domestic stocks. The Russell 2000(R)
Index is a small-cap index consisting of the smallest 2,000 companies in
the Russell 3000(R) Index, representing approximately 11.0% of the Russell
3000 total market capitalization.

1 From "Big-Cap Stocks Paint a Rosy Picture," Saloman SmithBarney Research, p.
20, July 6, 1998.

2 Source: Bloomberg L.P.

-10-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS INTERNATIONAL FUND

The MMA Praxis International Fund outperformed its benchmark for the first
half of 1998. It was up 23.9%* (without load) compared to the MSCI EAFE Index
which was up 15.9% (net dividends reinvested). Performance was positively
impacted by our overweight positions in European markets like France, Italy,
Spain and the Netherlands. The portfolio also benefited from it being
underweight in hard hit Asian markets like Japan, Hong Kong, Singapore and
Malaysia. We believe stock selection overall added significantly to
performance. During the first half of 1998, the MSCI Europe Index (up 26.5% in
U.S. dollar terms) outperformed the MSCI Pacific Index (down 5.9%).

Europe continued its strong performance as bond yields trended further
downwards as inflation expectations were dampened by the Asian crisis and as
corporate profits exceeded consensus expectations. Of the major European
markets, Spain (up 43.9%), France (up 38.7%), Germany (up 36.5%) and Italy (up
33.2%) were the strongest markets. The UK market (up 15.8%) lagged continental
Europe on the view that further interest rate increases will be needed to slow
down the domestic economy while the export sector suffered from the negative
impact from strong sterling.

INTERNATIONAL FUND
VALUE OF A $10,000 INVESTMENT

CDSC NO CDSC MSCI EAFE
-------- ------- ---------
1/4/97 $10,000 $10,000 $10,000
6/30/97 $11,501 $11,501 $11,298
12/31/97 $10,640 $10,640 $10,340
6/30/97 $12,784 $13,184 $11,987

**Reflects Applicable Contingent Deferred Sales Charge

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT
INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. CDSC REFLECTS A 4.00 PERCENT
CONTINGENT DEFERRED SALES CHARGE.

The MSCI EAFE Index is an unmanaged index, generally
representative of international stocks. 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 offees, the total return
would have been lower.

International investing involves increased risk and
volatility.

In Asia, all markets suffered as the Asian crisis intensified. Despite a
slight rally earlier in the year on hopes that the worst was over, it became
evident as the year progressed that the IMF wasn't going to make everything
right and that the work-out process would take much longer than the market was
expecting. Japan has been the relative outperformer in the region (down 2.6%)
while Malaysia (down 29.6%), Singapore (down 31.0%) and Hong Kong (down 26.1%)
all were down significantly. We believe the region is dependent on the
Japanese economy

-11-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS INTERNATIONAL FUND (CONTINUED)
recovering, and there are still no signs that the government is taking the
necessary measures to stimulate the economy. Although the Japanese have
announced several fiscal stimulus packages and a bank bailout plan, and have
tried to reverse the direction of the weakening yen with concerted
intervention, the measures are just not enough to stimulate the economy and
don't have the political support to gain credibility by the market. As a
result, the yen continued to weaken during the first half of the year, to a
low of 147 against the dollar in mid-June. At these yen levels, the Chinese
started to make noises that if the yen weakened any further they might have to
devalue after all. If the Chinese would devalue, there would most likely be
another round of currency devaluations in the region, which would worsen the
outlook further. It was then that a full-scale intervention occurred where the
U.S. started to buy yen. This intervention brought the dollar back down to
below 140 but it was short-lived. When the market heard that, U.S. Treasury
Secretary Rubin was against the timing of the intervention because it was very
politically motivated ahead of President Clinton's trip to China and also that
the Japanese failed to follow it up with some strong policy measures, the yen
sold off again. In our view, the intervention was a significant event because
it showed how concerned the U.S. is about the crisis in the region and what a
complicated balancing act it is.

The emerging markets suffered throughout the year from political and economic
uncertainty. For the first half of 1998, the MSCI Emerging markets index was
down 19.1% in US dollar terms. The MSCI Emerging Asia index was down 20.2%
compared to the MSCI Emerging Latin America index, which was down 21.1%.

Stock selection added value during the period and was especially good in
Europe. In France, Suez Lyonnaise (up 49.4% in local currency terms, 3.3% of
net assets) and Renault (up 103.1%, 4.5% of net assets) added value; in
Germany, Mannesmann (up 104.1%, 3.1% of net assets) and Volkswagen (up 75.9%,
2.1% of net assets) significantly outperformed; in the Netherlands, our
holdings in VNU (up 29.2%, 2.9% of net assets) and KPN (up 57.2%, 2.1% of net
assets) were strong outperformers. In Switzerland, Nestle (up 48.3%, 3.3% of
net assets) soared and in the UK Vodafone (up 73.2%, 3.9% of net assets)
continued to be re-rated. In Japan, the portfolio's overweight exposure to
exporters with dollar exposure was additive to performance; Murata (up 35.3%,
1.0% of net assets), Pioneer Electronic (up 31.8%, 1.2% of net assets) and MEI
(up 16.8%, 1.7% of net assets).

Looking forward, we expect the same trends to continue with the better
fundamentals and visibility in earnings in Europe outweighing the negative
economic climate and poor policy initiatives in Asia. Value is emerging in
Asia and we continue to look for cheap stocks that may benefit from a positive
fundamental story. However, we believe the Asian crisis is far from over and
we expect to see further downside in the region's equity markets and
currencies. Our focus will be on Japan and what they will do to stimulate the
economy. If they do nothing credible, the yen may weaken further and put even
more pressure on the Chinese to devalue, which could set off another round of
devaluations in the region. The portfolio is currently heavily overweighted in
continental Europe specifically in France, Italy, Spain and the Netherlands.
In these markets, we believe the top down and bottom up picture is very
favorable.

Martina Oechsle-Vasconcelles
Oechsle International Advisors
MMA Praxis International Fund
- -------
* This does not reflect the contingent deferred sales charge. Had the maximum
4.0% CDSC charge been applicable the return would have been 19.9%.

-12-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS SOCIALLY RESPONSIBLE INVESTING UPDATE

Dear Shareholders:

MMA's effort to significantly increase its involvement with socially
responsible investing (SRI) activities continues. And while big changes never
happen quickly enough, we are pleased with the progress that is being made on
aspects of our SRI work--progress that is at once deeply theoretical and
strategic as well as more practical and productive.

A CHANGE TOWARD THE POSITIVE

One of the theoretical changes we continue to work at is a shift of emphasis
in our screening efforts from a focus on negative screens to a focus on
positive screens. Our hope is to strengthen our involvement with companies
involved in "life-giving" or "life-enhancing" industries and activities. We
have just begun a process of reviewing and revising our selection guidelines
to reflect this positive emphasis. And while such an effort requires a
different approach to screening activity, we feel certain this will not result
in the inclusion of companies that have traditionally been excluded from the
MMA Praxis family of funds. Tobacco, alcohol, gambling, military contracting
and abortion products simply do not constitute "life-giving" activities from
our perspective.

TAKING ACTION

We've taken action in a number of areas over the past six months that
demonstrate MMA's commitment to socially responsible investing. In light of
continuing political and activist pressures, both Royal Dutch Shell and Total
SA were removed from the MMA Praxis International Fund portfolio due to their
dismal response to human rights concerns in Nigeria and Burma/Myanmar
respectively. In addition, our fund managers took action to make all MMA
Praxis Mutual Funds nuclear-free. This did not cause a particularly
significant shift in our holdings, but represents a commitment we feel is
consistent with MMA's understanding of sound stewardship.

In February, I traveled to Ciudad Juarez, Mexico, to participate in a dialogue
between concerned institutional investors and a high-level management
delegation from Johnson & Johnson (1.3% of net assets). Our discussion
centered on our concerns regarding sustainable wages in Johnson & Johnson's
maquiladora* plants in Mexico. Last month, during a trip to Thailand, I was
able to visit with field workers assisting refugees fleeing Burma/Myanmar and
hear their concerns about corporate involvement with the country's oppressive
government. These on-site visits are a growing edge of MMA's SRI work. And,
though the fruits of such labor are slow to mature, we remain committed to
doing more in the years ahead to help build fresh perspectives on complex
international SRI issues and to carry our message of responsible, values-based
investing to corporate leaders.

A VISION FOR COMMUNITY DEVELOPMENT INVESTING

Work continues in earnest on our plans to create an intentional, structured
program to channel a portion of MMA investments to the economic growth and
community development of underserved populations of this country and around
the world. To this end, we adopted a "vision document" to guide the
development of this project. This document declared that our new CDI program
will offer:

. a structure of integrity, incorporating both a prophetic voice and wise
management,
. a unique approach growing from MMA's distinctive strengths,
. a clear reflection of Anabaptist and Christian stewardship values,
. a company-wide commitment, offering various avenues of involvement,
. an emphasis of conviction over return,
. a "secure" management philosophy,
. an opportunity for connection with investors/communities we serve, and
. a creative and synergistic model.

-13-
<PAGE>

MMA Praxis Mutual Funds

MMA PRAXIS SOCIALLY RESPONSIBLE INVESTING UPDATE (CONTINUED)
We think this program will provide exciting opportunities for MMA Praxis
shareholders and can significantly increase the social return of our funds.
Look for more news on our Community Development Program in the MMA Praxis
annual report early in 1999.

FAITH FIRST

Why be concerned about the responsible or ethical quality of your investments?
This is an important question for MMA and one worthy of reflection by
individual MMA Praxis investors. Many SRI proponents will tell you it's simply
the right thing to do. Others may say it is a great opportunity to do good
while earning healthy returns. Recently, some have claimed that SRI is also
the wise thing to do--that companies who behave well are better positioned to
perform well in the long run. While we find all these reasons to be valid and
persuasive, at MMA we feel there is a deeper motivation for considering
carefully the investment of your financial resources.

MMA believes that a true understanding of Christian discipleship calls us to
consider the impact our activities have on the people, communities, and
creation around us. Just like the way you treat strangers and neighbors, how
you conduct local business, and the care you give to the environment every
day--your investment decisions should reflect the values you hold most sacred.

At MMA, we are working to better understand and bring into practice the
ethical and theological underpinnings that motivate our work as an
historically Anabaptist, Christian organization committed to good stewardship.
MMA is committed to modeling, as best it can, a deep commitment to centered,
Christian values and a stewardship investing perspective. We know that many of
our investors value the religious basis for MMA's investment philosophy and we
invite you to watch for more information on this exploration effort. We also
are aware that some select the MMA Praxis fund family for a variety of other,
non-religious reasons. Regardless of your motivation, we are glad you have
chosen to invest with us.

We hope that the full range of our research and advocacy activities adequately
reflect our desire to provide you with an honest, active, and deeply rooted
approach to values-based, socially responsible investing--one that meshes well
with many of the values you hold.

Mark A. Regier
SRI Research and Advocacy Coordinator
MMA Praxis Mutual Funds
- -------
* Special factories operated by foreign corporations in Latin American and
other countries. These plants are frequently accused of promoting
substandard wages and sweatshop working conditions.

-14-
<PAGE>

TABLE OF CONTENTS

Statements of Assets and Liabilities
Page 16

Statements of Operations
Page 17

Statements of Changes in Net Assets
Page 18

Schedules of Portfolio Investments
Page 19

Notes to Financial Statements
Page 27

Financial Highlights
Page 32

-15-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
INTERMEDIATE
INCOME GROWTH INTERNATIONAL
FUND FUND FUND
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost
$36,488,956 and
$113,279,396 and $21,642,979,
respectively)........................ $37,392,559 $127,435,158 $25,966,251
Cash.................................. -- 1,522 137,636
Foreign currency, at value (Cost $0, 0
and 66,408 respectively).............. -- -- 65,112
Interest and dividends receivable..... 472,605 130,428 18,057
Receivable for capital shares issued.. -- 5,165 151
Receivable for foreign currency
contracts............................. -- -- 20,214
Unrealized gain from foreign currency
contracts............................. -- -- 19,266
Receivable for investments sold....... -- 1,529,237 --
Tax reclaim receivable................ -- -- 14,589
Deferred organizational costs......... 2,870 3,310 14,920
Prepaid expenses and other assets..... 11,001 46,220 11,054
----------- ------------ -----------
Total Assets...................... 37,879,035 129,151,040 26,267,250
----------- ------------ -----------
LIABILITIES:
Payable to custodian.................. 87,415 -- --
Accrued expenses and other payables:
Investment advisory fees............ 13,118 77,572 18,688
Administration fees................. 775 1,910 685
Distribution & shareholder service
fees............................... 2,156 47,173 4,992
Legal and audit fees................ 9,945 22,414 212
Custodian and accounting fees....... 3,323 303 13,302
Other............................... 8,988 3,718 628
----------- ------------ -----------
Total Liabilities................. 125,720 153,090 38,507
----------- ------------ -----------
NET ASSETS:
Capital............................... 36,822,803 103,256,448 22,159,951
Undistributed (distributions in excess
of) net investment income............. 61,450 (64,242) (85,747)
Accumulated undistributed net realized
gains (losses)
from investments and foreign currency
transactions......................... (34,541) 11,649,982 (186,577)
Net unrealized appreciation
(depreciation) from investments
and foreign currency transactions.... 903,603 14,155,762 4,341,116
----------- ------------ -----------
Net Assets........................ $37,753,315 $128,997,950 $26,228,743
=========== ============ ===========
Outstanding shares (unlimited number
of shares authorized
with $0.01 par value)................ 3,736,794 7,775,836 1,993,649
=========== ============ ===========
Net Asset Value--offering price per
share*................................ $ 10.10 $ 16.59 $ 13.16
=========== ============ ===========
</TABLE>
- -------
* Redemption price per share varies based on length of time shares are held
(Note 4).

See notes to financial statements.

-16-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
INTERMEDIATE
INCOME GROWTH INTERNATIONAL
FUND FUND FUND
------------ ----------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................ $1,167,893 $ 171,494 $ 1,968
Dividend income........................ -- 741,201 212,335
Foreign tax witholding................. -- -- (25,299)
---------- ----------- ----------
Total Income......................... 1,167,893 912,695 189,004
---------- ----------- ----------
EXPENSES:
Investment advisory fees............... 88,274 443,025 96,301
Administration fees.................... 26,415 60,507 24,794
Distribution & shareholder service
fees................................... 220,686 749,198 133,751
Custodian and accounting fees.......... 24,195 22,220 45,188
Legal and audit fees................... 14,586 43,511 --
Organizational costs................... 3,620 3,258 2,552
Trustees' fees and expenses............ 3,298 10,326 1,852
Transfer agent fees.................... 36,846 113,557 31,027
Registration and filing fees........... 2,315 2,777 3,251
Printing costs......................... 2,113 14,447 2,668
Other.................................. -- 9,940 1,785
---------- ----------- ----------
Total expenses before voluntary fee
reductions.......................... 422,348 1,472,766 343,169
Expenses voluntarily reduced......... (227,851) (487,458) (131,974)
Expenses paid by third parties....... (1,712) (2,835) --
---------- ----------- ----------
Total Expenses....................... 192,785 982,473 211,195
---------- ----------- ----------
Net Investment Income (Loss)........... 975,108 (69,778) (22,191)
---------- ----------- ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from
investment transactions................ 249,414 9,619,659 (212,024)
Net realized gains (losses) from
foreign currency transactions.......... -- -- 221,658
Net change in unrealized appreciation
(depreciation)
from investment transactions.......... 7,400 (4,094,691) 4,493,689
Net change in unrealized appreciation
(depreciation) from foreign
currency transactions................. -- -- (49,806)
---------- ----------- ----------
Net realized/unrealized gains from
investments............................ 256,814 5,524,968 4,453,517
---------- ----------- ----------
Change in net assets resulting from
operations............................. $1,231,922 $ 5,455,190 $4,431,326
========== =========== ==========
</TABLE>

See notes to financial statements.

-17-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE INCOME GROWTH INTERNATIONAL
FUND FUND FUNDS
------------------------- -------------------------- --------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS APRIL 1, 1997
ENDED ENDED ENDED ENDED ENDED THROUGH
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997 1998 1997 (A)
----------- ------------ ------------ ------------ ----------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss).................. $ 975,108 $ 1,708,663 $ (69,778) $ 185,414 $ (22,191) $ (84,253)
Net realized gains
(losses) from
investment transac-
tions.................. 249,414 9,746 9,619,659 11,233,412 (212,024) (165,439)
Net realized gains
(losses) from
foreign currency trans-
actions................ -- -- -- -- 221,658 13,493
Net change in unrealized
appreciation
(depreciation) from in-
vestment transactions.. 7,400 543,936 (4,094,691) 9,436,871 4,493,689 (170,417)
Net change in unrealized
appreciation
(depreciation) from
foreign
currency transactions.. -- -- -- -- (49,806) 67,649
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets
resulting from
operations.............. 1,231,922 2,262,345 5,455,190 20,855,697 4,431,326 (338,967)
----------- ----------- ------------ ------------ ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income.................. (913,090) (1,708,376) -- (195,657) -- --
In excess of net
investment income....... -- (6,900) -- -- -- (691)
From net realized gains
from
investment transactions. -- -- -- (10,157,638) -- --
In excess of net
realized gains from
investment
transactions........... -- -- -- -- -- (30,081)
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets from
distributions to
shareholders............ (913,090) (1,715,276) -- (10,353,295) -- (30,772)
----------- ----------- ------------ ------------ ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 4,755,780 7,168,209 23,178,541 31,880,957 4,867,000 17,740,485
Dividends reinvested.... 477,807 713,683 18,883 9,613,901 -- 24,278
Cost of shares redeemed. (1,138,480) (2,657,593) (3,964,161) (6,594,492) (315,017) (149,590)
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets from
capital transactions.... 4,095,107 5,224,299 19,233,263 34,900,366 4,551,983 17,615,173
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets..... 4,413,939 5,771,368 24,688,453 45,402,768 8,983,309 17,245,434
NET ASSETS:
Beginning of period..... 33,339,376 27,568,008 104,309,497 58,906,729 17,245,434 --
----------- ----------- ------------ ------------ ----------- -----------
End of period........... $37,753,315 $33,339,376 $128,997,950 $104,309,497 $26,228,743 $17,245,434
=========== =========== ============ ============ =========== ===========
SHARE TRANSACTIONS:
Issued.................. 472,083 727,038 1,378,933 2,086,508 396,229 1,635,650
Reinvested.............. 47,582 72,532 1,208 626,203 -- 2,351
Redeemed................ (113,004) (270,306) (241,661) (415,821) (26,372) (14,210)
----------- ----------- ------------ ------------ ----------- -----------
Change in shares......... 406,661 529,264 1,138,480 2,296,890 369,857 1,623,791
=========== =========== ============ ============ =========== ===========
</TABLE>
- -------
(a) Period from commencement of operations.

See notes to financial statements.

-18-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
INTERMEDIATE INCOME FUND

SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
ASSET BACKED SECURITIES (1.9%)
250,000 American Express Master Trust, Series 1994-3, Class A,
7.85%, 8/15/05....................................... $ 274,980
250,000 Circuit City Credit Card Master Trust, Series 1994-2,
Class A, 8.00%, 11/15/03............................. 257,103
175,000 Export Funding Trust, Series 1994-A, Class A, 7.89%,
2/15/05.............................................. 186,270
-----------
Total Asset Backed Securities (Cost $674,059) 718,353
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS (4.5%)
250,000 Federal Home Loan Mortgage Corp., Series 32, Class D,
7.50%, 10/25/04...................................... 252,793
351,000 Federal National Mortgage Assoc., Series 1996-M6,
Class G, 7.75%, 9/17/23, ACES........................ 370,744
550,000 Federal National Mortgage Assoc., Series 1997-M4,
Class C, 7.30%, 8/17/18, ACES........................ 588,500
500,000 Vendee Mortgage Trust, Series 1993-2, Class I, 6.75%,
3/15/06.............................................. 505,385
-----------
Total Collateralized Mortgage Obligations (Cost $1,623,636) 1,717,422
-----------
CORPORATE BONDS (46.4%)
Banks (3.8%)
500,000 Banc One Corp., 7.25%, 8/1/02......................... 518,750
350,000 NationsBank Corp., 7.00%, 9/15/01..................... 360,063
500,000 Swiss Bank Corp.-New York, 7.38%, 6/15/17............. 553,125
-----------
1,431,938
-----------
Brokerage Services (1.4%)
500,000 Morgan Stanley, Dean, Witter, Discover & Co., 9.38%,
6/15/01.............................................. 543,750
-----------
Chemicals--General (1.4%)
500,000 Witco Corp., 6.60%, 4/1/03............................ 510,000
-----------
Computers & Peripherals (2.8%)
1,000,000 International Business Machines Corp., 7.00%,
10/30/25............................................. 1,068,750
-----------
Financial Services (1.9%)
250,000 Golden West Financial Corp., 10.25%, 12/1/00.......... 273,438
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Financial Services, continued:
400,000 Protective Life Corp., 7.95%, 7/1/04.................. $ 426,500
-----------
699,938
-----------
Food Distributors & Wholesalers (1.5%)
250,000 Secured Finance, Inc.--Kroger, 9.05%, 12/15/04........ 288,438
260,000 SUPERVALU, Inc., 7.80%, 11/15/02...................... 275,275
-----------
563,713
-----------
Food Products (2.7%)
500,000 Dean Foods Co., 6.90%, 10/15/17....................... 520,625
500,000 H.J. Heinz Co., 7.50%, 4/26/00........................ 512,350
-----------
1,032,975
-----------
Forest Products--Lumber & Paper (3.4%)
250,000 Westvaco Corp., 10.25%, 7/1/18, Callable 7/1/98 @
105.13............................................... 262,813
1,000,000 Weyerhaeuser Co., 6.95%, 8/1/17....................... 1,026,250
-----------
1,289,063
-----------
Governments (Foreign) (1.5%)
500,000 Province of Quebec, Series NJ, 7.50%, 7/15/23......... 560,625
-----------
Heavy Machinery (0.7%)
250,000 John Deere Capital Corp., 8.63%, 8/1/19, Callable
8/1/04 @ 100......................................... 275,313
-----------
Industrial Goods & Services (1.3%)
500,000 Boston Scientific Corp., 6.63%, 3/15/05............... 496,875
-----------
Insurance (3.0%)
250,000 Allstate Corp., 6.75%, 6/15/03........................ 255,313
110,000 Chubb Corp., 8.75%, 11/15/99.......................... 113,933
250,000 Harleysville Group, Inc., 6.75%, 11/15/03............. 252,500
500,000 W.R. Berkley Corp., 6.25%, 1/15/06.................... 493,750
-----------
1,115,496
-----------
Metals--Fabrication (1.4%)
500,000 Worthington Industries, Inc., 7.13%, 5/15/06.......... 529,375
-----------
</TABLE>

Continued

-19-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
INTERMEDIATE INCOME FUND

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Oil & Gas Exploration, Production & Services (1.4%)
250,000 Burlington Resources, Inc., 9.63%, 6/15/00............ $ 266,875
250,000 Louisiana Land & Exploration Co., 8.25%, 6/15/02...... 263,125
-----------
530,000
-----------
Oil & Gas Transmission (4.6%)
250,000 El Paso Natural Gas Co., 9.45%, 9/1/99................ 259,063
250,000 Equitable Resources, Inc., 7.50%, 7/1/99.............. 253,750
100,000 Questar Pipeline Co., 9.88%, 6/1/20, Callable 6/1/00 @
104.67............................................... 110,500
500,000 Sonat, Inc., 6.88%, 6/1/05............................ 519,375
500,000 Tennessee Gas Pipeline Co., 7.50%, 4/1/17............. 542,500
-----------
1,685,188
-----------
Railroads (0.7%)
250,000 Conrail, Inc., 9.75%, 6/1/00.......................... 266,563
-----------
Retail--Department Stores (2.9%)
300,000 Dayton Hudson Co., 8.50%, 12/1/22, Callable 12/1/02 @
103.75............................................... 337,500
500,000 J. C. Penney & Co., 7.25%, 4/1/02..................... 519,375
250,000 Kohl's Corp., 6.70%, 2/1/06........................... 253,750
-----------
1,110,625
-----------
Textile Manufacturing (0.7%)
250,000 VF Corp., 7.60%, 4/1/04, Callable 4/1/01 @ 100........ 265,625
-----------
Transportation Services (2.4%)
250,000 GATX Corp., 8.63%, 12/1/04............................ 280,313
600,000 Union Tank Car Co., 7.13%, 2/1/07..................... 632,250
-----------
912,563
-----------
Utilities--Natural Gas (1.5%)
500,000 Michigan Consolidated Gas Co., 8.25%, 5/1/14.......... 580,625
-----------
Utilities--Electric (1.3%)
250,000 Alabama Power Co., 7.00%, 1/1/03...................... 254,063
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Utilities--Electric, continued:
250,000 Potomac Electric Power Co., 5.00%, 9/1/02, Callable
9/1/98 @ 94.37....................................... $ 241,563
-----------
495,626
-----------
Utilities--Electric & Gas (0.7%)
246,000 Public Service Electric & Gas Co., 6.00%, 7/1/98...... 246,000
-----------
Utilities--Telecommunications (3.4%)
500,000 Ameritech Capital Funding Corp., 6.13%, 10/15/01...... 502,500
250,000 Northwestern Bell Telephone Co., 9.50%, 5/1/00........ 264,688
500,000 U.S. West Communications, Inc., 9.50%, 5/1/00......... 529,375
-----------
1,296,563
-----------
Total Corporate Bonds (Cost $16,928,875) 17,507,189
-----------
MEDIUM TERM NOTES (4.2%)
Financial Services (0.7%)
250,000 Capital Holding Corp., Series B, 9.27%, 5/7/01........ 270,625
-----------
Food Products (0.7%)
250,000 International Multifoods Corp., Series A, 6.71%,
10/5/00.............................................. 251,875
-----------
Retail (1.4%)
500,000 ShopKo Stores, Inc., 8.50%, 3/15/02................... 529,375
-----------
Utilities--Natural Gas (0.7%)
250,000 UGI Utilities, Inc., Series B, 7.17%, 6/15/07......... 266,875
-----------
Utilities--Electric (0.7%)
250,000 Kentucky Power Co., 6.65%, 5/1/03..................... 253,438
-----------
Total Medium Term Notes (Cost $1,534,515) 1,572,188
-----------
U.S. GOVERNMENT AGENCIES (42.1%)
Federal Home Loan Bank (2.7%)
1,000,000 5.89%, 6/30/08........................................ 1,003,300
-----------
Federal Home Loan Mortgage Corp. (11.5%)
138,833 6.50%, 12/1/99, Gold Pool #M80145..................... 140,089
500,000 6.10%, 9/18/00........................................ 504,255
500,000 5.63%, 9/5/01......................................... 499,085
</TABLE>

Continued

-20-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
INTERMEDIATE INCOME FUND

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
500,000 6.83%, 3/20/04, Callable 3/20/99 @ 100................. $ 503,125
424,685 7.00%, 11/1/07, Gold Pool #E48054...................... 432,236
500,000 6.50%, 3/25/13 CMO..................................... 500,938
428,717 7.00%, 7/1/15, Gold Pool #D91111....................... 434,980
466,480 6.50%, 11/1/15, Gold Pool #D91169...................... 464,945
379,331 7.00%, 4/1/16, Gold Pool #D91297....................... 384,842
496,490 6.50%, 3/1/18, Pool #420910............................ 494,326
-----------
4,358,821
-----------
Federal National Mortgage Assoc. (20.6%)
2,105,000 4.78%, 7/7/98.......................................... 2,102,749
500,000 6.18%, 3/15/01......................................... 506,010
500,000 6.45%, 4/23/01......................................... 509,685
1,000,000 6.58%, 10/2/01......................................... 1,025,960
492,691 6.47%, 12/1/01, Pool #73821............................ 496,902
500,000 6.41%, 2/6/02.......................................... 511,850
450,000 7.38%, 9/1/06, Pool #73682............................. 472,368
493,387 7.45%, 10/1/11, Pool #73725............................ 534,259
995,087 6.50%, 5/1/18, Pool #251729............................ 990,739
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc., continued:
500,000 8.10%, 8/12/19......................................... $ 630,340
-----------
7,780,862
-----------
Government National Mortgage Assoc. (5.6%)
354,545 6.50%, 11/15/10, Pool #417766.......................... 361,480
297,987 7.50%, 2/15/23, Pool #328498........................... 304,659
450,254 7.00%, 3/15/26, Pool #398518........................... 457,427
965,277 6.00%, 12/20/27, Pool #80143........................... 980,963
-----------
2,104,529
-----------
Small Business Administration (1.7%)
461,452 7.35%, 8/10/05, Series 1995-PIOC, Class 1.............. 484,525
144,659 6.25%, 9/25/18, Pool #502410........................... 145,370
-----------
629,895
-----------
Total U.S. Government Agencies (Cost $15,727,871) 15,877,407
-----------
Total Investments
(Cost $36,488,956) (a)--99.1% 37,392,559
-----------
Other assets in excess of liabilities 0.9% 360,756
-----------
Total Net Assets--100.0% $37,753,315
===========
</TABLE>
- -------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:

<TABLE>
<S> <C>
Unrealized appreciation. $927,769
Unrealized depreciation. (24,166)
--------
Net unrealized
appreciation............ $903,603
========
</TABLE>

ACES--Automatic Common Exchange Securities

See notes to financial statements

-21-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
GROWTH FUND

SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS (86.6%)
Automotive Parts (2.4%)
118,000 Wabash National Corp.................................. $ 3,038,500
------------
Banks (1.4%)
20,000 First Chicago NBD Corp................................ 1,772,500
------------
Building Materials (3.9%)
29,000 Fastenal Co........................................... 1,346,688
60,000 Masco Corp............................................ 3,630,000
------------
4,976,688
------------
Chemicals--General (5.4%)
66,000 Air Products & Chemicals, Inc......................... 2,639,999
80,000 Morton International, Inc............................. 2,000,000
66,000 Sigma-Aldrich Corp.................................... 2,318,250
------------
6,958,249
------------
Computers & Peripherals (1.6%)
15,000 Cisco Systems, Inc. (b)............................... 1,380,938
1,000 Hewlett-Packard Co.................................... 59,875
68,000 Read-Rite Corp. (b)................................... 616,250
------------
2,057,063
------------
Containers--Metal, Glass, Paper, Plastic (1.6%)
68,200 Sonoco Products Co.................................... 2,063,050
------------
Electronic & Electrical--General (4.3%)
39,000 Emerson Electric Co................................... 2,352,188
65,000 Thomas & Betts Corp................................... 3,201,250
------------
5,553,438
------------
Financial Services (2.6%)
56,000 Federal National Mortgage Assoc....................... 3,402,000
------------
Food Distributors & Wholesalers (2.4%)
122,000 Sysco Corp............................................ 3,126,250
------------
Heavy Machinery (2.1%)
52,000 Deere & Co............................................ 2,749,500
------------
Home Decoration Products (1.9%)
50,000 Newell Co............................................. 2,490,625
------------
Insurance (2.1%)
33,000 Chubb Corp............................................ 2,652,375
------------
Leisure--Recreation (1.5%)
100,000 Callaway Golf Co...................................... 1,968,750
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Medical Supplies (3.3%)
26,000 Biomet, Inc........................................... $ 859,625
6,000 Boston Scientific Corp. (b)........................... 429,750
79,000 St. Jude Medical, Inc. (b)............................ 2,908,188
------------
4,197,563
------------
Newspapers (2.7%)
50,000 Central Newspapers, Inc............................... 3,487,500
------------
Office Equipment & Service (2.6%)
33,600 Xerox Corp............................................ 3,414,600
------------
Oil & Gas Exploration, Production & Services (8.8%)
64,000 Amoco Corp............................................ 2,664,000
51,000 Anadarko Petroleum Corp............................... 3,426,563
143,000 ENSCO International, Inc.............................. 2,484,625
120,000 R&B Falcon Corp. (b).................................. 2,715,000
------------
11,290,188
------------
Oilfield Services & Equipment (4.6%)
110,000 Petroleum Geo-Services, Sponsored ADR (b)............. 3,354,999
38,000 Schlumberger, Ltd..................................... 2,595,875
------------
5,950,874
------------
Pharmaceuticals (10.9%)
82,000 ALZA Corp. (b)........................................ 3,546,499
48,000 Amgen, Inc. (b)....................................... 3,138,000
52,000 Eli Lilly & Company................................... 3,435,250
23,000 Johnson & Johnson, Inc................................ 1,696,250
16,000 Merck & Co., Inc...................................... 2,140,000
------------
13,955,999
------------
Precision Instruments & Related (1.3%)
63,000 Dionex Corp. (b)...................................... 1,661,625
------------
Real Estate Investment Trust (1.7%)
40,000 AMB Property Corp..................................... 980,000
52,200 Duke Realty Investments, Inc.......................... 1,236,488
------------
2,216,488
------------
Retail (1.5%)
30,000 May Department Stores Co.............................. 1,965,000
------------
Retail--Specialty Stores (1.2%)
85,000 Pep Boys--Manny, Moe & Jack........................... 1,609,688
------------
</TABLE>

Continued

-22-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
GROWTH FUND

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Software & Computer Services (1.8%)
70,000 First Data Corp....................................... $ 2,331,875
------------
Utilities--Natural Gas (6.3%)
36,200 El Paso Natural Gas Co................................ 1,384,650
107,000 MCN Energy Group, Inc................................. 2,661,625
120,000 Williams Cos., Inc.................................... 4,049,999
------------
8,096,274
------------
Utilities--Telecommunications (2.9%)
95,000 SBC Communications, Inc............................... 3,800,000
------------
Water Treatment System (3.8%)
89,000 United States Filter Corp. (b)........................ 2,497,563
67,000 Ionics, Inc. (b)...................................... 2,470,625
------------
4,968,188
------------
Total Common Stocks (Cost $97,582,358) 111,754,850
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
PREFERRED STOCKS (0.6%)
Automotive Parts (0.6%)
30,000 Dura Automotive Systems, 7.50%, 3/31/28............... $ 735,000
------------
Total Preferred Stocks (Cost $750,000) 735,000
------------
U.S. GOVERNMENT AGENCIES (11.6%)
Federal Home Loan Mortgage Corp. (11.6%)
7,980,000 5.16%, 7/14/98........................................ 7,964,279
6,750,000 5.28%, 7/20/98........................................ 6,730,560
250,000 6.50%, 3/25/13 CMO.................................... 250,469
------------
Total U.S. Government Agencies (Cost $14,947,038) 14,945,308
------------
Total Investments
(Cost $113,279,396) (a)--98.8% 127,435,158
------------
Other assets in excess of liabilities 1.2% 1,562,792
------------
Total Net Assets--100.0% $128,997,950
============
</TABLE>
- -------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:

<TABLE>
<S> <C>
Unrealized
appreciation......... $20,813,764
Unrealized
depreciation......... (6,658,002)
-----------
Net unrealized
appreciation......... $14,155,762
===========
</TABLE>

(b) Represents non-income producing securities.

CMO--Collateralized Mortgage Obligation

See notes to financial statements.

-23-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
INTERNATIONAL FUND

SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMERCIAL PAPER (4.2%)
1,100,000 Nomura Holding, 6.30%, 7/1/98.......................... $ 1,100,000
-----------
Total Commercial Paper (Cost $1,100,000) 1,100,000
-----------
COMMON STOCKS (94.8%)
AUSTRALIA (1.3%)
Banks (1.2%)
46,182 Australia & New Zealand Banking Group.................. 318,583
-----------
Beverages (0.1%)
2,949 Coca-Cola Amatil Ltd. (b).............................. 19,723
-----------
338,306
-----------
CANADA (1.5%)
Building & Construction Product--Misc. (0.2%)
6,000 Macmillan Bloedel Ltd.................................. 64,058
-----------
Telecommunications (1.3%)
8,000 BCE, Inc............................................... 339,195
-----------
403,253
-----------
FRANCE (18.9%)
Automotive (4.5%)
20,842 Renault SA (b)......................................... 1,185,499
-----------
Automotive Parts (2.5%)
6,341 Valeo SA............................................... 648,151
-----------
Banks (1.6%)
5,104 Banque Nationale De Paris.............................. 417,030
-----------
Diversified (2.0%)
2,500 Vivendi................................................ 533,821
-----------
Electronic & Electrical--General (3.3%)
10,967 Schneider SA........................................... 874,490
-----------
Machinery & Engineering (0.4%)
1,373 Sidel SA............................................... 99,920
-----------
Steel--Producers (1.3%)
21,584 Usinor SA.............................................. 333,433
-----------
Utilities--Water (3.3%)
5,281 Suez Lyonnaise des Eaux................................ 869,099
-----------
4,961,443
-----------
GERMANY (5.1%)
Automotive (2.1%)
562 Volkswagen AG.......................................... 540,195
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GERMANY, CONTINUED:
Machinery & Engineering (3.1%)
7,930 Mannesmann AG.......................................... $ 804,408
-----------
1,344,603
-----------
HONG KONG (1.1%)
Real Estate (1.1%)
41,000 Hutchison Whampoa Ltd.................................. 216,414
35,000 New World Development Co. Ltd.......................... 67,754
-----------
284,168
-----------
ITALY (8.5%)
Banks (4.0%)
115,211 Banca Di Roma (b)...................................... 239,814
9,498 Banca Popolare De Bergamo.............................. 195,565
118,179 Credito Italiano SpA (b)............................... 618,635
-----------
1,054,014
-----------
Radio & Television (2.2%)
89,661 Mediaset SpA........................................... 572,251
-----------
Telecommunications (2.3%)
82,509 Telecom Italia SpA..................................... 607,370
-----------
2,233,635
-----------
JAPAN (13.7%)
Automotive Parts (1.1%)
18,000 Denso Corp............................................. 298,303
-----------
Brokerage Services (1.1%)
25,000 Nomura Securities Co. Ltd.............................. 290,918
-----------
Chemicals--General (0.1%)
2,000 Shin-Etsu Chemical Co. Ltd............................. 34,586
-----------
Electronic & Electrical--General (5.9%)
28,000 Matsushita Electric Industrial
Company, Ltd.......................................... 449,904
7,000 Murata Manufacturing Co. Ltd........................... 226,970
17,000 Pioneer Electronic Corp................................ 324,603
2,000 Rohm Co. Ltd........................................... 205,354
3,800 Sony Corp.............................................. 327,197
-----------
1,534,028
-----------
Food Distributors, Supermarkets & Wholesalers (1.1%)
6,000 Yokado Co. Ltd......................................... 282,307
-----------
</TABLE>

Continued

-24-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
INTERNATIONAL FUND

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Office Equipment (1.4%)
16,000 Canon, Inc............................................ $ 363,152
-----------
Real Estate (0.8%)
17,000 Mitsui Fudosan Co. Ltd................................ 134,251
18,000 Sumitomo Realty & Development Co. Ltd................. 79,375
-----------
213,626
-----------
Utilities--Telecommunications (2.1%)
68 Nippon Telegraph & Telephone Corp..................... 563,461
-----------
3,580,381
-----------
MEXICO (0.8%)
Utilities--Telecommunications (0.8%)
4,392 Telefonos de Mexico SA, Sponsored ADR, Class L........ 211,091
-----------
NETHERLANDS (11.5%)
Banks (1.5%)
5,978 ING Groep N.V......................................... 391,437
-----------
Electronic & Electrical--General (1.4%)
4,512 Philips Electronics N.V............................... 379,286
-----------
Human Resources (0.9%)
8,753 Vedior................................................ 247,413
-----------
Newspapers (2.9%)
20,097 Verenigde Nederlandse Uitgeversbedrijven Vererigd
Bezit................................................ 730,092
-----------
Retail (1.3%)
8,870 Vendex N.V............................................ 340,982
-----------
Transportation (1.4%)
14,369 TNT Post Group N.V. (b)............................... 367,309
-----------
Utilities--Telecommunications (2.1%)
14,369 Koninklijke KPN N.V................................... 553,083
-----------
3,009,602
-----------
NEW ZEALAND (1.0%)
Telecommunications (1.0%)
88,040 Telecom Corporation of
New Zealand Ltd...................................... 253,690
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
PORTUGAL (0.9%)
Telecommunications (0.9%)
4,590 Portugal Telecom....................................... $ 243,266
-----------
SPAIN (6.5%)
Banks (3.9%)
17,100 Banco Santander SA..................................... 438,419
26,440 Argentaria SA.......................................... 594,118
-----------
1,032,537
-----------
Utilities--Telecommunications (2.5%)
14,312 Telefonica de Espana SA................................ 662,826
-----------
1,695,363
-----------
SWEDEN (0.3%)
Retail--Specialty Stores (0.3%)
1,276 Hennes & Mauritz AB, Class B........................... 81,441
-----------
SWITZERLAND (6.2%)
Food Processing & Packaging (3.3%)
400 Nestle SA.............................................. 856,006
-----------
Pharmaceuticals (2.9%)
290 Novartis AG............................................ 482,565
28 Roche Holding AG-Genussshein........................... 274,958
-----------
757,523
-----------
1,613,529
-----------
UNITED KINGDOM (17.1%)
Chemicals--General (2.4%)
39,520 Imperial Chemical Industries PLC....................... 634,335
-----------
Food Distributors, Supermarkets & Wholesalers (4.6%)
44,600 Somerfield PLC......................................... 285,010
269,513 ASDA Group PLC......................................... 929,720
-----------
1,214,730
-----------
Pharmaceuticals (3.3%)
28,391 Glaxo Wellcome PLC..................................... 854,563
-----------
Transportation (2.9%)
31,327 Railtrack Group PLC.................................... 767,834
-----------
Utilities--Telecommunications (3.9%)
80,803 Vodafone Group PLC..................................... 1,025,980
-----------
4,497,442
-----------
</TABLE>

Continued

-25-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
INTERNATIONAL FUND

<TABLE>
<S> <C>
Unrealized
appreciation........ $ 5,330,832
Unrealized
depreciation........ (1,007,560)
-----------
Net unrealized
appreciation........ $ 4,323,272
===========
</TABLE>

(b) Represents non-income producing securities.

ADR--American Depository Receipt
GDR--Global Depository Receipt
PLC--Public Limited Co.

See notes to financial statements.

-26-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
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, as amended and restated
December 1, 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, the Growth Fund, and the International Fund
(individually a "Fund", collectively "the Funds"). The Intermediate Income
Fund and the Growth Fund commenced operations January 4, 1994 and the
International Fund commenced operations April 1, 1997. Between the date of
organization and the date of commencement of operations the Funds 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, also the
issuance on April 1, 1997 of 5,000 shares of the International Fund at
$10.00 per share to the 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. The investment objective of the
International Fund is capital appreciation. Current income is a secondary
objective. This Fund will invest at least 65% of the value of its total
assets in equity securities of foreign 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:

Securities are valued at 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. The Funds use various independent
pricing services to value most of their investments. If market quotations
are not available, the securities will be valued by a method which the
Board of Trustees believes accurately reflects fair value.

SECURITIES TRANSACTIONS AND RELATED INCOME:

Security transactions are accounted for on the trade 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. 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.

Continued

-27-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1998
(UNAUDITED)

FOREIGN CURRENCY TRANSLATION:

The market value of investment securities, other assets and liabilities of
the International Fund denominated in foreign currencies are translated
into U.S. dollars at the current exchange rate at the close of each
business day. Purchases and sales of securities, income receipts and
expense payments are translated into U.S. dollars based at the exchange
rate on the date of the transaction.

The Funds do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized/unrealized gain
(loss) from investments.

Reported net realized foreign exchange gains or losses arise from sales
and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized between the trade and settlement dates
on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities including investments in securities
at fiscal year end, resulting from changes in the exchange rate.

FORWARD FOREIGN CURRENCY CONTRACTS:

The International Fund may enter into forward foreign currency exchange
contracts for the purchase or sale of specific foreign currencies at a
fixed price on a future date. Risks may arise upon entering these
contracts for the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. The International Fund will
enter into forward contracts as a hedge against specific transactions or
portfolio positions to protect against adverse currency movements. The
forward foreign currency exchange contracts are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purposes as unrealized until the contract
settlement date, at which time the International Fund records a realized
gain or loss equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.

DISTRIBUTIONS 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. Dividends from net investment income are declared and paid twice a
year for the International Fund. 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

Continued

-28-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1998
(UNAUDITED)

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.

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 six months ended June 30, 1998, custodian fees and expenses paid
by third parties were increased by $1,712 and $2,835 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.

Expenses that are directly related to one of the Funds are charged
directly to that Fund. Other operating expenses of the Company are
prorated to the Funds on the basis of relative net assets.

3. PURCHASES AND SALES OF SECURITIES:

Purchases and sales of securities (excluding short-term securities) for the
six months ended June 30, 1998 were as follows:

<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Intermediate Income Fund............................. $ 8,838,740 $ 5,534,679
Growth Fund.......................................... $38,347,731 $30,665,739
International Fund................................... $ 9,916,458 $ 5,596,972
</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 daily net assets of each of the
Funds as follows; 0.50% for the Intermediate Income Fund, 0.74% for the
Growth Fund and 0.90% for the International Fund. Oechsle International
Advisors, L.P., Boston, Massachusetts serves as the sub-adviser to the
International 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.

Continued

-29-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1998
(UNAUDITED)

BISYS serves the Company as administrator. Under the terms of the
administration agreement, BISYS receives fees that are computed daily at an
annual rate of 0.15% of a Fund's average net assets, with an annual minimum
of $50,000 until a Fund's net assets reach $50 million. Upon reaching $50
million the fee will be calculated at an annual rate of 0.10% of the funds
daily net assets.

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 its affiliates or subsidiaries incur for providing
distribution or shareholder service assistance. BISYS pays 95% of these fees
to the Adviser pursuant to an agreement under the Plan.

Pursuant to a Shareholder Servicing Agreement, BISYS provides administrative
services to shareholders for which it receives a fee not to exceed, on an
annual basis, 0.25% of the average daily net assets of each Fund.

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 a 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. For the six months ended
June 30, 1998, BISYS Ohio received fees of $57,399; $132,522; $56,055; from
the Intermediate Income Fund, the Growth Fund, and the International Fund,
respectfully, for these 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 six months ended June 30, 1998, the
Distributor received approximately $761,084 from commissions earned on sales
of shares of the Funds, all of which the Distributor reallowed to dealers of
the Funds' shares.

<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>

Continued

-30-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1998
(UNAUDITED)

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 six months
ended June 30, 1998:

<TABLE>
<CAPTION>
INTERMEDIATE
INCOME GROWTH INTERNATIONAL
FUND FUND FUND
------------ ------- -------------
<S> <C> <C> <C>
Investment advisory fee waivers............. 19,521 -- 19,110
12b-1 fee waivers........................... 167,721 349,592 88,249
Shareholder services fee waivers............ 40,609 137,866 24,615
</TABLE>

5. SUBSEQUENT EVENTS:

Oechsle International Advisers, L.P., sub-adviser to the funds, is
undergoing a reorganization effective August 17, 1998. At that time a new
sub-advisory agreement with the reorganized entity, Oechsle Group, LLC, will
be voted on at a special meeting of shareholders.

-31-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND
---------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR JANUARY 4,
ENDED ENDED ENDED ENDED 1994 TO
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1994 (A)
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 10.01 $ 9.84 $ 10.17 $ 9.14 $ 10.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.28 0.55 0.54 0.53 0.45
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 0.07 0.17 (0.33) 1.03 (0.86)
------- ------- ------- ------- -------
Total from Investment
Activities.............. 0.35 0.72 0.21 1.56 (0.41)
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.26) (0.55) (0.54) (0.53) (0.45)
------- ------- ------- ------- -------
Total Distributions..... (0.26) (0.55) (0.54) (0.53) (0.45)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD.................. $ 10.10 $ 10.01 $ 9.84 $ 10.17 $ 9.14
======= ======= ======= ======= =======
Total Return (excludes
redemption charge)...... 3.50%(b) 7.60% 2.22% 17.47% (4.09)%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $37,753 $33,339 $27,568 $23,470 $17,849
Ratio of expenses to
average net assets..... 1.09%(c) 1.10% 1.10% 1.10% 1.10%(c)
Ratio of net investment
income
to average net assets. 5.52%(c) 5.65% 5.50% 5.49% 4.96%(c)
Ratio of expenses to
average net assets*.... 2.39%(c)** 2.62%** 2.52%** 2.64% 2.83%(c)
Ratio of net investment
income
to average net
assets*............... 4.22%(c) 4.15% 4.15% 3.95% 3.23%(c)
Portfolio Turnover..... 16.47% 60.05% 30.25% 31.57% 4.95%
</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 six months ended June 30, 1998 and the years ended December 31,
1997 and 1996 the Intermediate Income 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.

See notes to financial statements.

-32-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH FUND
----------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR JANUARY 4,
ENDED ENDED ENDED ENDED 1994 TO
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1994 (A)
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 15.72 $ 13.57 $ 12.07 $ 9.74 $ 10.00
-------- -------- ------- ------- -------
Investment Activities
Net investment income
(loss)................. (0.01) 0.04 0.07 0.10 0.09
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 0.88 3.86 1.85 3.12 (0.07)
-------- -------- ------- ------- -------
Total from Investment
Activities.............. 0.87 3.90 1.92 3.22 0.02
-------- -------- ------- ------- -------
Distributions
Net investment income.. -- (0.04) (0.07) (0.10) (0.09)
Net realized gains..... -- (1.71) (0.35) (0.79) (0.19)
-------- -------- ------- ------- -------
Total Distributions..... -- (1.75) (0.42) (0.89) (0.28)
-------- -------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD.................. $ 16.59 $ 15.72 $ 13.57 $ 12.07 $ 9.74
======== ======== ======= ======= =======
Total Return (excludes
redemption charge)...... 5.53%(b) 29.15% 15.87% 33.32% 0.27%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $128,998 $104,309 $58,907 $30,906 $18,009
Ratio of expenses to
average net assets..... 1.64%(c) 1.72% 1.74% 1.75% 1.75%(c)
Ratio of net investment
income (loss) to
average net assets.... (0.12)%(c) 0.22% 0.61% 0.90% 1.02%(c)
Ratio of expenses to
average net assets*.... 2.46%(c)** 2.66%** 2.55%** 2.81% 3.25%(c)
Ratio of net investment
income (loss)
to average net
assets*............... (0.93)%(c) (0.71)% (0.17)% (0.16)% (0.48)%(c)
Portfolio Turnover..... 27.23% 53.26% 33.98% 48.91% 35.22%
</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 six months ended June 30, 1998 and the years ended December 31,
1997 and 1996, the Growth 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.

See notes to financial statements.

-33-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL FUND
----------------------------
SIX MONTHS APRIL 1, 1997
ENDED THROUGH
JUNE 30, DECEMBER 31,
1998 1997 (A)
----------- -------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 10.62 $ 10.00
------- -------
Investment Activities
Net investment income (loss)................... -- (0.05)
Net realized and unrealized gains from
investment transactions........................ 2.54 0.69
------- -------
Total from Investment Activities................ 2.54 0.64
------- -------
Distributions
Net investment income.......................... -- --
Net realized gains............................. -- (0.02)
------- -------
Total Distributions............................. -- (0.02)
------- -------
NET ASSET VALUE, END OF PERIOD.................. $ 13.16 $ 10.62
======= =======
Total Return (excludes redemption charge)....... 23.92%(b) 6.40%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).............. $26,229 $17,245
Ratio of expenses to average net assets........ 1.97%(c) 2.00%(c)
Ratio of net investment income (loss) to
average net assets............................. (1.92)%(c) (0.93)%(c)
Ratio of expenses to average net assets*....... 3.21%(c) 4.29%(c)
Ratio of net investment income (loss) to
average net assets*............................ (3.16)%(c) (3.21)%(c)
Portfolio Turnover............................. 27.45% 51.46%
</TABLE>
- -------
* During the period certain expenses were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and reimbursements had not
occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.

See notes to financial statements.

-34-
<PAGE>

INVESTMENT ADVISER
MMA Capital Management
Post Office Box 483
Goshen, Indiana 46527

INVESTMENT SUB-ADVISER (INTERNATIONAL
FUND ONLY)
Oechsle International Advisers, L.P.
One International Place
Boston, Massachusetts 02110

ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219

LEGAL COUNSEL
Dechert Price & Rhoads
1775 Eye Street, NW
Washington, DC 20006

AUDITORS
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, Ohio 43215

TRANSFER AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219

Semi-Annual Report
FOR THE SIX MONTHS ENDED JUNE 30, 1998

MMA Praxis Mutual Funds

INTERMEDIATE INCOME FUND
GROWTH FUND
INTERNATIONAL FUND
LOGO
MMA PRAXIS

This report is for the information of shareholders of
MMA Praxis Mutual Funds, but it may also be used as
sales literature when preceded or accompanied by the
current prospectus, which gives details about charges,
expenses, investment objectives, and operating
policies of the Funds. Read the prospectus carefully
before investing or sending money.

8/98
LOGO
RECYCLED PAPER

LOGO
SOY INK