MMA PRAXIS MUTUAL FUNDS, N-30D, 1999-02-26

MMA PRAXIS MUTUAL FUNDS
N-30D, 1999-02-26

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<PAGE>

Annual Report
for the year ended December 31, 1998

MMA Praxis
Mutual Funds

Intermediate Income Fund
Growth Fund
International Fund
[Logo of MMA]
<PAGE>

Message
From
The
President

Dear MMA Praxis Shareholders:

Financial markets in review

1998 will be remembered in financial history as a very extraordinary year.
Here are a few of the more memorable hallmarks of the year:

. The S&P 500 composite registered a record fourth consecutive year of 20
percent plus returns with a total return of 28.72 percent for the year.

. Performance of the S&P 500 Index, which is dominated by large capitalization
stocks, was remarkably different from the rest of the market. The Wilshire
4500 Equity Index, representing stocks outside of the S&P 500, rose only
8.63 percent for the year. Small stocks, as measured by the Russell 2000
Index, actually declined 2.53 percent.

. Even within the S&P 500, there was an unusually wide gap between returns for
growth and value stocks. The value stocks within the S&P 500 earned 14.66
percent, trailing by a remarkable 27.44 percentage points the 42.10 percent
return of the growth component.

. Interest rates declined significantly during the year, providing some
support for stock prices and elevating prices for bonds. The yield on the
benchmark 30-year U.S. Treasury Bond began the year at 6.15 percent,
declined to a low of 4.72 percent in early October and then rebounded to end
the year at 5.12 percent. For bonds, lower yields translated into higher
prices, which boosted the total return for bonds this year.

. The summer slump in stock prices sent broad market indexes lower by roughly
20 percent, technically a "bear market", one of only four in the past 20
years. Analysts cited a number of reasons for investors' concerns, including
a continuing slump in the emerging markets.

. On the international front, many of Europe's stock markets outperformed even
the S&P 500. However, markets in Asia and Latin America experienced big
declines. Europe's strong performance came from continued economic growth,
increased corporate restructuring and merger activity, and optimism about
the long-term impact of the Euro, a common currency adopted January 1, 1999,
by 11 European nations.

Growth Fund overview

MMA Praxis Growth Fund's 1998 total return was a disappointing 5.96 percent.
This compared to gains of 28.7 percent for the S&P 500 Index, 16.98 percent
for the Lipper Growth and Income Fund category and 21.75 percent for
Morningstar's Large Cap blend category. This Morningstar category measures the
average performance of mutual fund managers whose portfolios combine both
growth and value stocks.

Clearly, we are not satisfied with the Growth Fund performance. No one feels
this more acutely than the investment manager. Please read his comments
beginning on page six for a thorough analysis of those factors that
contributed to the fund's underperformance in 1998. Also provided is an
assessment of the fund's current portfolio composition and the outlook for
1999.

In our opinion, a hallmark of an outstanding investment manager is the ability
to maintain a well-defined investment philosophy that has proven to be
successful over long periods of time. Even though it's difficult, such
managers stick to their discipline pretty much through thick and thin. The
things that change, often without rhyme or reason, are the fads and

-1-
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Message
From
The
President--
continued

fashions of the marketplace. (The frenzy driving internet stocks to
stratospheric levels is a good example).

Experienced investment managers understand that from time to time the stock
market will make them look a great deal smarter than they really are, and at
other times a good bit dumber than they really are. Why is this? Because good
investment managers are rational; the stock market is not.

The short-term vagaries--excessive swings in the sudden fads that occur in the
stock market in the short run (e.g. internet stocks)--are primarily the
product of a great many aggressive investors (both institutional and
individual) all attempting to outperform the market on a month-to-month and
quarter-to-quarter basis.

MMA Praxis fund management has resisted playing this game, and we are making
long-term investment decisions consistent with our time proven, disciplined
strategy. We believe that the vast majority of Growth Fund shareholders have
invested in the fund to meet long-term financial planning goals. Thus, our
objective is to generate long-term competitive returns while employing
strategies to help manage investment risk. Although 1998 was clearly a
disappointment, we remain confident that the market pendulum will eventually
swing back through the median line of stock price rationality. It is at this
point that several of the Growth Fund holdings will be rewarded with price
appreciation.

Intermediate Income Fund overview

The Intermediate Income Fund generated respectable performance for its
shareholders on both an absolute and relative basis in 1998. For the year, the
Intermediate Income Fund produced a total return of 7.29 percent against a
8.69 percent return for its passive benchmark, the Lehman Aggregate Bond
Index. Relative to its actively managed fund benchmarks, your fund also fared
well. Lipper's Intermediate Investment Grade Bond Fund average was up 7.25
percent, while Morningstar's Intermediate Investment Grade Bond Fund bogey
gained 7.37 percent.

Investors seeking to moderate the volatility of an all equity portfolio should
consider the merits of allocating a portion of their investments to this fund.
1998 clearly illustrated that stocks and bonds do not always move together,
and a diversified portfolio can help mitigate investment risk.

For a more in-depth analysis of the investment manager's strategies, please
read pages four and five.

International Fund

The International Fund had a truly outstanding year in 1998. The fund returned
23.98 percent compared to its international benchmark represented by the
Morgan Stanley Capital International Europe, Australia and Far East Index
which gained 18.23 percent. Against its mutual fund peers, the fund also did
very well, outperforming both the Lipper and Morningstar category averages by
a wide margin. Lipper's Diversified International Fund category returned 12.69
percent and Morningstar's Foreign Stock average returned 12.26 percent.

This type of performance has not gone unnoticed. Accolades for this fund's
short-term track record have come from a variety of sources including Business
Ethics (September/October 1998 issue), The Boston Herald (September 3), The
Wall Street Journal's mutual fund scoreboard (October 28, 1998), Mutual Funds
magazine (December 1998), Kiplinger's

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<PAGE>

Message
From
The
President--
continued

Personal Finance magazine (January 1999 issue) and USA Today's investment
outlook section (December 17).

We are very pleased with the job Kathleen Harris and Tina Oechsle-
Vasconcelles, the fund's portfolio managers, have done as sub-advisors and
congratulate them on delivering such outstanding results for our shareholders.
For an in-depth commentary on the international fund strategy, please see page
eight.

Summary

In January 1999, the MMA Praxis family of mutual funds celebrated its fifth
anniversary. Assets in the three funds now total over $210 million dollars
representing investments from 18,791 shareholders.

The 1998 performance of the three MMA Praxis funds underscores the validity of
asset allocation. A balanced portfolio of domestic equities, bonds, and
international stocks--weighted in a manner consistent with an investor's risk
tolerance and investment time horizon--would have performed well during the
most recent year. Going forward, we continue to encourage our shareholders to
work with their financial advisors to develop a well-diversified portfolio. A
well-diversified portfolio can soften the inevitable, sudden, and often sharp
moves in any single asset class.

Rest assured that your fund management team will continue to work hard to
uncover those investment opportunities that will generate both financial and
social returns. Values based investing is more than a fad at MMA--it is the
foundation of good stewardship.

We count it a privilege to partner with you in helping reach your financial
planning goals.

Thank you for your investment in MMA Praxis Mutual Funds.

Sincerely,
/s/ John L. Liechty
John L. Liechty, ChFC
President, MMA Praxis Mutual Funds

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MMA Praxis Mutual Funds

MMA Praxis Intermediate Income Fund

A look back at our January 1998 calendars will remind us that the year began
with a relatively flat interest rate environment. By the time all was said and
done, rates had fallen and fixed-income securities had posted a year of widely
divergent returns.

The Russian default in August seemed the catalyst for a panicked flight to
safety which drove U.S. rates down sharply. Rates continued to fall until the
Fed's fall easing of monetary policy. This action of lowering interest rates
effectively ended the panic. As a result of ensuing calm, U.S. Treasury rates
rose and ultimately leveled out.

Performance of corporate bonds and mortgage-backed securities was in clear
contrast to the performance of Treasuries. While Treasury rates fell, pushing
their prices higher, the rates on corporate and mortgage debt remained
relatively unaffected. Safety was the battle cry of investors, and only
Treasuries seemed to fill that perceived need. Corporate rates did not
participate in the fall rate decline, nor did they participate in the end-of-
year increase seen by Treasuries. Risk and reward were inversely correlated in
1998--a happening usually seen when the public becomes concerned about the
state of the economy.

Intermediate Income Fund
Value of a $10,000 Investment

Average Annual Total Return
Since Inception
Date 1 Year 3 Year (1/4/94)
12/31/98 7.29% 5.68% 5.88%
12/31/98** 3.29% 5.08% 5.72%

Lipper Intermediate
Investment Grade Bond
CDSC NO CDSC Fund Index Lehman Aggregate Index
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
12/31/98 13,196 13,296 13,590 14,205

**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 deduction of a
declining CDSC starting at 4.00 percent for the years
illustrated.

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 invest 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 indices 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.

MMA Praxis Intermediate Income Fund ended the year with a very respectable
7.29 percent* gain. Relevant benchmarks posted returns of 8.69 percent for the
Lehman Aggregate Index and 7.25 percent for the Lipper Intermediate Investment
Grade Bond Average.

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MMA Praxis Mutual Funds

MMA Praxis Intermediate Income Fund (continued)

As Treasuries proved to be the year's best performing sector, our
underperformance of the Lehman index is not surprising--especially given the
index's 40 percent weighting toward Treasuries. Such performance disadvantage
is the result of an adherence to our social investing platforms which preclude
us from investing in U.S. Treasury securities. Over time corporate bonds and
mortgage-backed securities, by virtue of their higher yields, do outperform
Treasuries. We expect that norm to return. In fact, the yield differentials
are currently so wide that virtually any scenario short of a depression should
lead corporate and mortgage-backed securities to outperform Treasuries in
1999.

Higher risk investments--as seen in lower credit quality bonds--should
translate into higher investment returns. Yet 1998 saw corporate bond returns
inversely related to credit quality. The higher rated Aaa corporate bonds
returned 10.22 percent while Baa bonds were up only 6.85 percent. As 16
percent of the fund is invested in Baa rated bonds, overall performance was
negatively impacted.

As we enter 1999, the fund's credit quality remains a very strong Aa3 average
rating. This rating is slightly lower than that of mid-1998 due to our
shifting the portfolio away from government agencies toward more corporates.
We believe that 1999 will provide an environment in which corporate bonds
should do extremely well in comparison to government agencies.

In concert with our social investment perspective, we have focused attention
on the government agency sector. These housing-related entities finance most
of the housing stock in the U.S. As these securities played a key role in our
1998 results, these agencies also provide a basic need, housing, to the U.S.
population. Our belief is that these securities offered very attractive
returns relative to Treasuries, as well as offering a high degree of
liquidity.

Also during the year, we added our first community development security,
Freddie Mac T-011. This security represents a pool of low income mortgage
loans from Pennsylvania, Maryland and Delaware. At the heart of community
development investing (CDI) lies the conviction that all people should have
access to basic economic opportunities. The addition of this Freddie Mac
security to our portfolio allows us to address that conviction in a prudent
manner, suitable for this portfolio.

As of year end, the fund's duration stood at 4.89 versus 4.50 as seen in the
Lehman Aggregate Index. We have reduced this from earlier measures and will
take the opportunity to lower it more during possible rallies.

Early 1999 should keep rates in a fairly tight trading range. We believe, that
the current 10-year U.S. Treasury note should trade between 4.60 percent and
5.10 percent. We think it will take another consumer flight to safety to push
the rate below the 4.50 percent level.

Delmar King, Investment Manager
MMA Praxis Intermediate Income Fund
- -------
* This return does not reflect the fund's contingent deferred sales charge.
Had the maximum 4.00 percent CDSC been applied, the return would have been
3.29 percent.

-5-
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MMA Praxis Mutual Funds

MMA Praxis Growth Fund

Performance of the MMA Praxis Growth Fund was disappointing in 1998. For most
of last year, the portfolio mix was significantly underweighted in the
highflying, overpriced large capitalization stocks. At the same time, the
portfolio was overweighted in cyclical stocks. Most of the portfolio was made
up of mid to large companies but lacked the giant companies with market
capitalizations of $50 billion or more.

On average, companies with market capitalizations of greater than $20 billion
averaged a return of almost 26 percent, while companies with $5 billion to $20
billion of market capitalization only gained on average 6 percent. The latter
group is the cap size of most of the companies being held in the MMA Praxis
Growth Fund. On a market weighted basis, the Growth Fund had averaged
approximately $20 billion in market cap size for the year.

Growth Fund
Value of a $10,000 Investment

Average Annual Total Return
Since Inception
Date 1 Year 3 Year (1/4/94)
12/31/98 5.96% 16.61% 16.26%
12/31/98** 2.07% 16.12% 16.15%

NO CDSC CDSC S&P 500 Domini 400
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
12/31/98 21,102 21,202 29,392 31,853

**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 deduction of a
declining CDSC starting at 4.00 percent for the years
illustrated.

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 indices 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.

The 1998 performance is not the kind of performance that investors have come
to expect from value funds which have long been viewed as offering higher
returns with lower risk. Academic studies back up the point that traditionally
bargain-priced stocks usually fall less than the overall market in downturns.
However, this past downturn was an exception with extreme divergences in
return, both by cap size and style. In John Liechty's Message from the
President, he pointed out that the S&P 500 Barra* value stocks underperform
the S&P Barra* growth stocks by 27.44 percent. The Growth Fund was hurt by
this style factor. Our traditional value strategy of avoiding high-priced
stocks failed to protect the fund during this last sell-off and did not show
signs of recovering in the ensuing months of the market recovery. Instead,
what seemed to be safer holdings ended up suffering more than the high P/E
stocks.

Because our style is to buy stocks that represent value for an achievable and
acceptable long-term growth rate, we have tended to gravitate to cyclical and
financial services stocks, as well as companies in the energy industries. Over

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MMA Praxis Mutual Funds

MMA Praxis Growth Fund (continued)

the past year-and-one-half, this move proved fatal. Throughout the declines,
cheap stocks became even cheaper as investors moved more and more money toward
the large liquid household names. In particular, the energy sector hurt the
return by significant amounts. As oil prices declined, one would assume
capital spending would be cut--which it has. However, the stock prices
declined by greater magnitudes than the cut backs in oil production spending.
Stock prices for a number of these oil service companies are at historically
low levels, and in our opinion, did not reflect the long-term value of these
entities.

Change in strategy

During the recovery stage of last year's market correction, we began shifting
more of the portfolio towards growth oriented stocks, recognizing momentum and
investor sentiment could likely drive prices higher. We wanted to have a
greater exposure to the communications and technology sectors of the market.
For this reason, stocks such as Texas Instrument, Sun Microsystems, MCI
Worldcom, AT&T, Tellabs, Applied Materials, and Compaq Computer were added to
the portfolio.

At a first glance, these stocks do not meet the stringent fundamentals of
value-oriented investing. We recognized that the liquidity issue will continue
for a while longer. In other words, until investors are willing to put money
into mid and small-cap stocks, money will continue to gravitate to these types
of names as portfolio managers index or quasi-index their portfolios. It is no
surprise that these types of names helped our performance in the fourth
quarter and that we want to own these companies going forward. However, it
should be pointed out that we have not abandoned our style preference. The
five largest holdings in the fund reflect our value discipline, and we will
quickly move additional assets back to the mid to large-cap value side of the
portfolio. The five largest holdings are as follows: Boston Scientific, 3.5
percent; Xerox Corp., 3.3 percent; U.S. Filter, 3.2 percent; Hewlett Packard,
3.1 percent; and First Data Corp, 2.6 percent.

A lot happened in 1998 that should have sent the investment markets into a
tailspin: an impeachment in Washington, war in Iraq and an Asian financial
crisis. Yet the markets, driven and sustained by a handful of the largest
stocks, paused but momentarily, then continued to march forward. Though we
would not predict a fourth straight 20 percent plus year for the S&P 500, we
do foresee another positive year of growth for equities. Whatever unknowns may
lie ahead, we plan to maintain our commitment to managing your money in the
value-oriented style you have come to expect. In spite of a tough 1998, we
feel strongly about the long-term benefits of this style of stock management.
We appreciate the opportunity to put this conviction to work for you.

Keith Yoder, CFA
Investment Manager
MMA Praxis Growth Fund
- -------
* The S&P Barra Value Index and the S&P Barra Growth Index are unmanaged
indices widely recognized as proxies for performance of value stocks and
growth stocks, respectively. Investors cannot invest directly into these
indices.

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MMA Praxis Mutual Funds

MMA Praxis International Fund

The MMA Praxis International Fund outperformed its benchmark in 1998. It was
up 23.98 percent* compared to the Morgan Stanley Capital International (MSCI)
EAFE Index which was up 20.0 percent (in U.S. dollar terms, net dividends
reinvested). Performance was positively impacted by our overweight positions
in continental European markets like France, Italy, and Spain. The portfolio
also benefitted from being underweight in hard hit Asian markets like Japan,
Hong Kong, Singapore, and Malaysia. Stock selection, especially in Europe,
added significant value to performance.

International Fund
Value of a $10,000 Investment

Average Annual Total Return
Since Inception
Date 1 Year (4/1/97)
12/31/98 23.98% 17.14%
12/31/98** 19.98% 15.10%

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
6/31/97 12,784 13,184 11,987
12/31/98 12,791 13,191 12,426

**Reflects Applicable Contingent Deferred Sales Charge

The MSCI EAFE Index is an unmanaged index, generally
representative of international stocks. This index is for
illustrative purposes only an does not reflect the deduction
of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The fund's
performance reflects the deduction of these value-added
services. The total return set forth reflects a waiver of a
portion of the fund's advisory or administrative fees. In
such instances, and without waiver of fees, the total return
would have been lower.

International investing involves increased risk and
volatility.

During 1998, the MSCI Europe Index was up 28.5 percent (in U.S. dollar terms),
significantly outperforming the MSCI Pacific Index which was up only 2.4
percent. The fallout from Asia's economic crisis continued to impact returns
and volatility in worldwide markets through the year. The first half of the
year was dominated by continental European markets rallying as interest rates
converged ahead of EMU and as it was perceived to be the least impacted by the
Asian contagion. Asian markets, on the other hand, saw continued selling
pressure as investors realized that economic recovery was still quite far
away. During the second half of the year, market turmoil was not just isolated
to Asia; European markets had been cautiously optimistic that the Asian crisis
would have a limited impact on profitability and growth. However, concerns
began building during the third quarter when first half results revealed some
negative surprises, both in Europe and in the U.S. In August, Russia's default
and the ruble collapse reinforced that emerging market problems were not
localized in southwest Asia. Pressure increased on eastern European

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MMA Praxis Mutual Funds

MMA Praxis International Fund (continued)

markets and Brazil, effectively eliminating the possibility that some
economies would be relatively unaffected by emerging markets turmoil.
Expectations for global economic growth and corporate earnings were pared-back
across most markets. Equity markets corrected and were down on average 14.5
percent for the third quarter. During the fourth quarter, markets experienced
a strong rebound from their September/October lows. Markets started to
discount a more positive scenario when it became evident that the Fed would do
what was necessary to prevent a financial crisis. Markets welcomed this
aggressive stance in monetary policy by the Fed, which was followed with
similar actions by central banks around the world. The Asian markets in
particular rallied strongly as their currencies strengthened, allowing
interest rates to fall further. Bank and property stocks, both of which are
large components of the Asian indices, bounced in every Asian market on the
view that we have seen the worst and that policy action would be positive. In
Japan, fiscal policy was the tool used to stimulate the economy. This came in
the form of an enormous banking reform package worth $500 billion and an
additional stimulus package composed of tax cuts and public works spending
worth $150 billion. Taken together, these policy adjustments are a very
positive development for equity markets. The Asian markets were significantly
oversold and therefore, had the greatest bounce during this period. The
emerging markets also rallied. The MSCI Emerging Markets Index was up 17.4
percent (in U.S. dollar terms), in the fourth quarter. However, for the full
year, this same index was down 25.4 percent.

Exceptional stock selection was one of the major contributions to strong
outperformance during the year. The portfolio was positioned in stocks and
industries that were defensive in nature, with a high degree of earnings
visibility. Given our view for a continuation of the current environment of
high systematic risk, we focused our stock selection on cash-rich companies
that we believe have the financial flexibility to weather a slowdown in
activity or a credit crunch, and still have the ability to exercise strategic
options for the long term. Our holdings were concentrated in industries such
as telecommunications, healthcare, broadcast media, retail, food, and regional
banks. Some of the portfolio's biggest holdings had strong performance for the
year: Unicredito, the Italian regional bank, up 79.6 percent in local currency
terms; Mediaset, one of Italy's leading commercial TV groups, up 54.2 percent;
Argentaria, one of Spain's leading banks with no exposure to Latin America, up
58.6 percent; Railtrack, an operator of the majority of the UK's rail
infrastructure, up 62.5 percent; and KPN, the Dutch telecom company already
facing a completely deregulated market, up 88.7 percent.

Outlook

Looking forward, we expect the severe global economic headwinds to persist
through much of 1999. Leading economic indicators continue to point to low
growth and little or no inflation around the world. As a result, we expect to
see further fiscal and monetary policy adjustments in the coming months. If
this does indeed take place, we believe that 1999 will prove to be a year of
transition toward more robust economic conditions in the year 2000. This
assumes that reflationary policies will perpetuate growth where it currently
exists and stabilize those countries that have sunk into recession and, in
some cases, depression. The latter, alone, would add meaningfully to global
growth. Low growth, reflationary policies, and eventual economic improvement
have historically proven supportive for equity markets, notwithstanding the
challenging near term operating conditions that corporations face. Therefore,
in terms of our investment strategy, we believe that what has been working
over the last year is likely to continue to work, at least for the time being.
In the current challenging economic environment, growth should be rewarded.
The dilemma is that those countries and companies that are doing well are
increasingly either fully or even richly priced; those that have stumbled and
are out of favor have become cheap, but it is highly uncertain as to when
these losers will get back on track. As a result, we believe that it will be
more rewarding to stay with the winners for the time being. As we gain more
conviction that reflation is having a positive impact on economic growth, we
are likely to shift the portfolio's composition to those countries, industries
and stocks that are cheap but not broken. Currently, the

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MMA Praxis Mutual Funds

MMA Praxis International Fund (continued)

portfolio continues to overweight Europe and underweight Asia. Our exposure to
the emerging markets is quite small given the continued volatility expected
and high equity risk premium.

Martina Oechsle
Oechsle International Advisors
- -------
* This does not reflect the contingent deferred sales charge. Had the maximum
CDSC of 4.00 percent been applied, the return would have been 19.98 percent.

-10-
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MMA Praxis Mutual Funds

MMA Praxis Socially Responsible Investing Update

1998 was a full and productive year in terms of the MMA Praxis Funds'
activities around socially responsible investing (SRI). We continued to
address key structures, policies, and procedures that are at the heart of our
efforts to move our SRI commitments to a new level. At the same time, we also
got our feet dirty staying involved in the daily grind of work and engagement
that is our hallmark as we live out our values every day.

CDI: The vision becomes reality

This past summer, we reported that the funds' investment adviser MMA Capital
Management had begun shaping the vision for a program in community development
investing (CDI), the proverbial "third leg" of SRI's three-legged stool. I am
pleased to report that this vision is quickly becoming a reality. In December
1998, MMA formalized the creation of the MMA Community Development Investing
Program. This program is a multifaceted effort to channel a small portion of
MMA assets into "high social impact" investments such as low-income housing
funds, neighborhood redevelopment projects, and micro-enterprise programs.
MMA's new CDI program is direct and powerful evidence of the commitment we
share with our shareholders to work to improve lives in communities throughout
the United States and around the world. We anticipate MMA Praxis' involvement
in this program sometime this year. Watch for future reports on MMA's
Community Development Investing Program and the ways your Praxis investments
are sharing hope and opportunity with others.

Deepening our SRI approach

Following our work in 1998 to more clearly understand why we--as an
organization and a gathering of concerned investors--are involved in socially
responsible investing, we began revisiting and revising the fundamental
guidelines that determine how we live out these convictions. Last fall, our
efforts culminated in the creation and articulation of the concept of
stewardship investing, which sees investment decisions as a natural venue for
the application of the value systems that are present and active in our lives
every day. As such, Stewardship Investing strives to embody a balanced and
rationale philosophy of responsible investment selection according to the
values that we hold most sacred--financial productivity included.

At the heart of our guideline revision process is the conviction that
stewardship investing is best represented by a positive screening or
investment selection process. Many SRI funds, MMA Praxis included, currently
rely on the use of negative screens to guide their investment selections.
These screens attempt to establish thresholds for corporate behavior in areas
deemed harmful to society or shareholder interests. While the monitoring of
corporate activity in areas such as gambling, military contracting, alcohol
production, and environmental abuse is important, we believe negative
screening alone too easily focuses on artificial minimum standards.

It is our belief that stewardship investing requires an investment-selection
process focused on positive corporate behavior and those companies that are
functionally and deliberately impacting the world, its communities and
environment, for the better. We want MMA Praxis investments to be
characterized by the values that are espoused by our shareholders and by MMA's
Anabaptist/Christian religious tradition: equity, productivity, shared
opportunity, and corporate/human responsibility. To this end, MMA and MMA
Praxis Mutual Funds will be sponsoring a major conference of academics,
theologians, and business practitioners to help identify the positive core
business values around which MMA investments will be made in the years ahead.
Look for a complete report of our social investment guideline revision efforts
in our 2000 MMA Praxis annual report.

Stewardship investing in action

In addition to the larger, systematic efforts we have been engaged in for the
past 12 months, we have also tried to remain involved in more routine
activities of socially responsible investing. One event of note was our
participation in

-11-
<PAGE>

MMA Praxis Mutual Funds

MMA Praxis Socially Responsible Investing Update (continued)

successful negotiations with Emerson Electric Co. (EMR) regarding their
compliance with provisions of the MacBride Principles for Northern Ireland.
The MacBride Principles call upon companies involved in Northern Ireland (and
Emerson is one of the U.S.'s largest employers there) to enact hiring and
workplace policies that support equal opportunity and offer protection from
religious discrimination and abuse. While the agreement was hard-won, we
believe that raising these issues with an important employer like Emerson can
directly contribute to the opportunities for peace and stability in this
troubled region of the world. We also continued our long-running dialogue with
Johnson & Johnson (JNJ) regarding the need for a "living-wage" standard in
their maquiladora facilities in Northern Mexico. While there are small signs
of movement, the living-wage barrier is a tough one to break. We believe
strongly in J & J's core values and feel that our ongoing dialogue may yet
yield positive results.

In the global arena, MMA Praxis Mutual Funds, in partnership with our
international sub-advisor, Oechsle International, hosted a ground-breaking
gathering of major players in international SRI. At this December meeting,
representatives from industry organizations, mutual fund companies, SRI
service providers, institutional investors, and others met to discuss the
challenges faced by socially concerned investors in the international
marketplace. The focus was on identifying possible collaborative solutions
that could move the entire international SRI industry forward. While nothing
official was agreed to, the group plans to meet again in the first half of
1999. Said Steve Lydenberg, of the SRI research firm Kinder, Lydenberg &
Domini, "This was an important gathering. One that was long overdue."

MMA has also recently entered a proxy monitoring, voting, and research
agreement with Proxy Monitor of New York, N.Y. The increased access to timely
information and ease of voting this new arrangement provides should aid us
fully in using our voice as shareholders in U.S. and foreign companies. We
hope to provide proxy voting reports to our MMA Praxis shareholders in the
near future-just one more way MMA is living out our stewardship investing
convictions.

Finding the bottom line

In the wider financial industry, the "bottom line" is the goal and even
responsibility of a publicly held company. The social investment industry
often speaks of a second-or social-bottom line that takes into account the
interests of all stakeholders (including the environment) and seeks to curb
the excesses or abuses that single-minded pursuit of financial profit might
entail. As you might expect, the interests and advocates of these two
objectives are frequently--and loudly--in conflict. The challenge to all
socially concerned investors is to answer for themselves: "just what is my
bottom line?"

Several weeks ago, I was a participant in an event that brought the conflict
of these competing bottom-line interests into stark detail. On January 13,
1999, I was invited to attend a White House briefing and discussion
surrounding a recently announced (and quite controversial) agreement by the
Apparel Industry Partnership (AIP), a Presidential initiative aimed at ending
corporate sweatshop abuses around the world. The AIP agreement is historic in
that it brought together apparel and footwear manufacturers, labor union
representatives, human rights groups, and religious organizations to help
formulate a possible market-based solution to the problem of sweatshops. The
agreement presented had been brought about by a two-year long process fraught
with controversy and conflict. In fact, several founding partners of the AIP
refused to endorse the agreement, claiming it was too flawed to have real and
lasting impact for workers.

The crux of the AIP agreement was the establishment of a Fair Labor
Association, jointly controlled by corporations and non-governmental
organizations. This new association would monitor company compliance with an
agreed-upon code of conduct for production facilities around the world,
produce compliance reports for the public, and issue a "service mark" to
certified companies indicating their involvement/compliance with Fair Labor
Association guidelines. While there have been many points of criticism to this
plan, perhaps the most important has been the absence of a

-12-
<PAGE>

MMA Praxis Mutual Funds

MMA Praxis Socially Responsible Investing Update (continued)
commitment to researching and providing workers a "living wage." We define
such a wage as an income level that allows workers to provide for the food,
shelter, health and safety needs of his/her family plus a little money for
savings. The companies counter that a "living wage" would raise the bar too
far, too fast and inhibit broad-based company participation and other
workplace improvements.

So what is our response? At MMA, the bottom line must include more than
increased profits provided by a rush-to-the-bottom wage competition in
underdeveloped countries. For us, the issue of a living wage is very
important. In our minds, the concept of faithful and holistic stewardship is
not fulfilled when the sale of cheap athletic shoes and discount polo shirts
creates significant corporate profits at the expense of malnourished children
and impoverished, unhealthy communities. At the same time, we are mindful of
the challenges and complexities of the largely ungoverned global marketplace
where a responsible manufacturer can literally be priced out of existence. We
support the market-based approach of the AIP agreement as it seeks to reward
companies for choosing to take a higher road. We are concerned about the
credibility of the agreement and its structures, and encourage groups like the
Interfaith Center and union bodies to rejoin this effort while maintaining
their concerns about its content and implementation. Finally, we encourage the
AIP to re-integrate the living wage concern into the association agreement. We
believe it is more than commitment that people of good conscience should
expectit is one that our global neighbors deserve.

Mark A. Regier
SRI Research and Advocacy Coordinator
MMA Praxis Mutual Funds

-13-
<PAGE>

Table of Contents

Report of Independent Accountants
Page 15

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 33

-14-
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholder and Trustees of
The MMA Praxis Mutual Funds:

In our opinion, the accompanying statements of assets and liabilities,
including the schedules of portfolio investments, and the related statements
of operations and changes in net assets, and the financial highlights present
fairly, in all material respects, the financial position of MMA Praxis
Intermediate Income Fund, MMA Praxis Growth Fund and MMA Praxis International
Fund (constituting MMA Praxis Mutual Funds, hereafter referred to as the "the
Funds") at December 31, 1998, the results of each of their operations, the
changes in their net assets, and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP

Columbus, Ohio
February 11, 1999

-15-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Statements of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Intermediate
Income Growth International
Fund Fund Fund
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $41,331,487,
$123,652,350 and
$25,338,694, respectively)............. $42,470,985 $136,898,394 $31,242,290
Cash.................................... -- 58,600 --
Foreign currency, at value (Cost $0, 0
and 48,261 respectively)................ -- -- 37,991
Interest and dividends receivable....... 595,852 169,640 9,271
Receivable for capital shares issued.... -- 500 --
Receivable for investments sold......... -- -- 49,926
Tax reclaim receivable.................. -- -- 38,567
Deferred organizational costs........... -- -- 12,712
Prepaid expenses and other assets....... 11,042 38,410 13,621
----------- ------------ -----------
Total Assets........................ 43,077,879 137,165,544 31,404,378
----------- ------------ -----------
LIABILITIES:
Payable for investments purchased....... 502,422 -- --
Payable for capital shares redeemed..... -- 307 1,091
Cash overdraft.......................... 143,083 -- 71,334
Net unrealized loss from foreign
currency contracts...................... -- -- 118,545
Accrued expenses and other payables:
Investment advisory fees.............. 16,168 81,344 22,978
Administration fees................... 691 1,490 548
Distribution and shareholder service
fees................................. 2,500 44,995 2,716
Legal and audit fees.................. 12,358 35,210 8,183
Custodian and accounting fees......... 3,738 1,094 8,045
Printing.............................. 8,093 23,767 6,029
Other................................. 1,191 1,211 1,916
----------- ------------ -----------
Total Liabilities................... 690,244 189,418 241,385
----------- ------------ -----------
NET ASSETS:
Capital stock, at par value............. 41,677 89,570 23,879
Additional paid-in-capital.............. 41,178,542 120,702,306 27,037,807
Accumulated undistributed (distributions
in excess) of net investment income.... (848) (331) (338,564)
Accumulated undistributed net realized
gains (losses)
from investments and foreign currency
transactions........................... 28,766 2,938,537 (1,337,585)
Net unrealized appreciation
(depreciation) from investments
and translation of assets and
liabilities in foreign currencies...... 1,139,498 13,246,044 5,777,456
----------- ------------ -----------
Net Assets.......................... $42,387,635 $136,976,126 $31,162,993
=========== ============ ===========
Outstanding shares (unlimited number of
shares
authorized with $0.01 par value)....... 4,167,686 8,957,043 2,387,910
=========== ============ ===========
Net asset value--offering price per
share*.................................. $ 10.17 $ 15.29 $ 13.05
=========== ============ ===========
</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 year ended December 31, 1998
<TABLE>
<CAPTION>
Intermediate
Income Growth International
Fund Fund Fund
------------ ----------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................ $2,439,983 $ 511,306 $ 39,392
Dividend income........................ -- 1,526,785 382,887
Foreign tax withholding................ -- -- (14,827)
---------- ----------- -----------
Total Income......................... 2,439,983 2,038,091 407,452
---------- ----------- -----------
EXPENSES:
Investment advisory fees............... 188,733 902,315 220,117
Administration fees.................... 56,496 122,573 50,000
Distribution & shareholder service
fees................................... 471,832 1,525,299 305,717
Custodian and accounting fees.......... 48,434 50,947 82,699
Legal and audit fees................... 22,727 74,080 11,542
Organizational costs................... 6,490 6,568 4,777
Trustees' fees and expenses............ 6,978 18,991 3,707
Transfer agent fees.................... 71,070 302,098 69,000
Registration and filing fees........... 9,640 25,584 16,722
Printing costs......................... 7,081 37,187 12,494
Other.................................. 6,414 16,901 1,887
---------- ----------- -----------
Total expenses before reimbursement
from
investment adviser and voluntary
reductions.......................... 895,895 3,082,543 778,662
Expenses voluntarily reduced......... (478,221) (1,012,637) (292,608)
Expenses paid by third parties....... (4,020) (6,949) --
---------- ----------- -----------
Total Expenses....................... 413,654 2,062,957 486,054
---------- ----------- -----------
Net Investment Income.................. 2,026,329 (24,866) (78,602)
---------- ----------- -----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from
investment transactions................ 363,895 11,456,000 (1,122,800)
Net realized gains (losses) from
foreign currency transactions.......... -- -- 33,141
Net change in unrealized appreciation
(depreciation) from
investment transactions............... 243,295 (5,004,409) 6,074,013
Net change in unrealized appreciation
(depreciation) from translation of
assets and liabilities in foreign
currencies ........................... -- -- (193,790)
---------- ----------- -----------
Net realized/unrealized gains (losses)
from investments
and foreign currencies................ 607,190 6,451,591 4,790,564
---------- ----------- -----------
Change in net assets resulting from
operations............................. $2,633,519 $ 6,426,725 $ 4,711,962
========== =========== ===========
</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 Fund
-------------------------- -------------------------- ---------------------------
Year Year Year Year Year April 1, 1997
Ended Ended Ended Ended Ended Through
December 31, December 31, December 31, December 31, December 31, December 31,
1998 1997 1998 1997 1998 1997 (a)
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
From Investment
Activities:
Operations:
Net investment income
(loss).................. $ 2,026,329 $ 1,708,663 $ (24,866) $ 185,414 $ (78,602) $ (84,253)
Net realized gains
(losses) from
investment transac-
tions.................. 363,895 9,746 11,456,000 11,233,412 (1,122,800) (165,439)
Net realized gains
(losses) from
foreign currency trans-
actions................ -- -- -- -- 33,141 13,493
Net change in unrealized
appreciation
(depreciation) from
investment
transactions........... 243,295 543,936 (5,004,409) 9,436,871 6,074,013 (170,417)
Net change in unrealized
appreciation
(depreciation) from
foreign currency
transactions........... -- -- -- -- (193,790) 67,649
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets
resulting from
operations.............. 2,633,519 2,262,345 6,426,725 20,855,697 4,711,962 (338,967)
----------- ----------- ------------ ------------ ----------- -----------
Distributions to
Shareholders:
From net investment
income.................. (2,026,329) (1,708,376) -- (195,657) -- --
In excess of net
investment income...... (871) (6,900) (5,594) -- (229,547) (691)
From net realized gains
from
investment transactions. (50,583) -- (10,523,193) (10,157,638) -- --
In excess of net
realized gains from
investment
transactions........... -- -- -- -- (18,574) (30,081)
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets from
distributions to
shareholders............ (2,077,783) (1,715,276) (10,528,787) (10,353,295) (248,121) (30,772)
----------- ----------- ------------ ------------ ----------- -----------
Capital Transactions:
Proceeds from shares
issued.................. 9,897,569 7,168,209 37,346,093 31,880,957 10,642,995 17,740,485
Dividends reinvested.... 1,065,580 713,683 10,073,822 9,613,901 100,821 24,278
Cost of shares redeemed. (2,470,626) (2,657,593) (10,651,224) (6,594,492) (1,290,098) (149,590)
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets from
capital transactions.... 8,492,523 5,224,299 36,768,691 34,900,366 9,453,718 17,615,173
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets..... 9,048,259 5,771,368 32,666,629 45,402,768 13,917,559 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........... $42,387,635 $33,339,376 $136,976,126 $104,309,497 $31,162,993 $17,245,434
=========== =========== ============ ============ =========== ===========
Share Transactions:
Issued.................. 976,210 727,038 2,319,601 2,086,508 860,904 1,635,650
Reinvested.............. 105,231 72,532 687,391 626,203 8,374 2,351
Redeemed................ (243,888) (270,306) (687,305) (415,821) (105,160) (14,210)
----------- ----------- ------------ ------------ ----------- -----------
Change in shares......... 837,553 529,264 2,319,687 2,296,890 764,118 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
December 31, 1998
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
Asset Backed Securities (1.3%)
250,000 American Express Master Trust, Series 1994-3, Class A,
7.85%, 8/15/05....................................... $ 278,067
250,000 Circuit City Credit Card Master Trust, Series 1994-2,
Class A, 8.00%, 11/15/03............................. 255,783
-----------
Total Asset Backed Securities (Cost $496,641) 533,850
-----------
Collateralized Mortgage Obligations (4.8%)
130,444 Federal Home Loan Mortgage Corp., Series 32, Class D,
7.50%, 10/25/04...................................... 130,230
351,000 Federal National Mortgage Assoc., Series 1996-M6,
Class G, 7.75%, 9/17/23, ACES........................ 369,208
550,000 Federal National Mortgage Assoc., Series 1997-M4,
Class C, 7.30%, 8/17/18, ACES........................ 581,281
403,944 Small Business Investment Companies, Series 1995-P10C,
Class 1, 6.00%, 9/25/18.............................. 441,562
500,000 Vendee Mortgage Trust, Series 1993-2, Class I, 6.75%,
3/15/06.............................................. 505,650
-----------
Total Collateralized Mortgage Obligations (Cost $1,909,358) 2,027,931
-----------
Corporate Bonds (51.9%)
Banks (3.4%)
500,000 Banc One Corp., 7.25%, 8/1/02......................... 530,000
350,000 NationsBank Corp., 7.00%, 9/15/01..................... 364,000
500,000 Swiss Bank Corp.-New York, 7.38%, 6/15/17............. 535,000
-----------
1,429,000
-----------
Brokerage Services (1.3%)
500,000 Morgan Stanley, Dean, Witter, Discover & Co., 9.38%,
6/15/01.............................................. 543,750
-----------
Chemicals--General (1.2%)
500,000 Witco Corp., 6.60%, 4/1/03............................ 512,500
-----------
Financial Services (3.5%)
500,000 Crown Cork & Seal Financial PLC, 7.00%, 12/15/06...... 527,499
500,000 Equifax, Inc., 6.90%, 7/1/28.......................... 518,125
162,500 Export Funding Trust, Series 1994-A, Class A, 7.89%,
2/15/05.............................................. 175,926
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
Corporate Bonds, continued:
Financial Services, continued:
250,000 Golden West Financial Corp., 10.25%, 12/1/00.......... $ 271,563
-----------
1,493,113
-----------
Food Distributors & Wholesalers (1.4%)
250,000 Secured Finance, Inc.--Kroger, 9.05%, 12/15/04........ 297,500
260,000 SUPERVALU, Inc., 7.80%, 11/15/02...................... 281,125
-----------
578,625
-----------
Food Products (3.6%)
500,000 Dean Foods Co., 6.90%, 10/15/17....................... 518,125
500,000 H.J. Heinz Co., 7.50%, 4/26/00........................ 513,050
500,000 Sara Lee Corp., 5.75%, 9/3/03......................... 508,125
-----------
1,539,300
-----------
Forest Products--Lumber & Paper (3.0%)
250,000 Westvaco Corp., 10.25%, 7/1/18, Callable 7/1/98 @
105.13............................................... 263,125
1,000,000 Weyerhaeuser Co., 6.95%, 8/1/17....................... 1,002,500
-----------
1,265,625
-----------
Governments (Foreign) (1.3%)
500,000 Province of Quebec, Series NJ, 7.50%, 7/15/23......... 567,500
-----------
Heavy Machinery (0.7%)
250,000 John Deere Capital Corp., 8.63%, 8/1/19, Callable
8/1/04 @ 100......................................... 282,813
-----------
Industrial Goods & Services (7.1%)
1,000,000 American Greetings, 6.10%, 8/1/28..................... 1,025,000
1,000,000 Boston Scientific Corp., 6.63%, 3/15/05............... 943,750
1,000,000 Masco Corp., 7.13%, 8/15/13........................... 1,062,499
-----------
3,031,249
-----------
Insurance (3.6%)
250,000 Allstate Corp., 6.75%, 6/15/03........................ 260,625
55,000 Chubb Corp., 8.75%, 11/15/99.......................... 56,678
250,000 Harleysville Group, Inc., 6.75%, 11/15/03............. 259,688
400,000 Protective Life Corp., 7.95%, 7/1/04.................. 439,500
500,000 W.R. Berkley Corp., 6.25%, 1/15/06.................... 497,499
-----------
1,513,990
-----------
</TABLE>
Continued

-19-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
Intermediate Income Fund

Schedule of Portfolio Investments, Continued
December 31, 1998
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
Corporate Bonds, continued:
Metals--Fabrication (1.2%)
500,000 Worthington Industries, Inc., 7.13%, 5/15/06.......... $ 527,500
-----------
Oil & Gas Exploration, Production & Services (1.3%)
250,000 Burlington Resources, Inc., 9.63%, 6/15/00............ 265,313
250,000 Louisiana Land & Exploration Co., 8.25%, 6/15/02...... 267,812
-----------
533,125
-----------
Oil & Gas Transmission (4.0%)
250,000 El Paso Natural Gas Co., 9.45%, 9/1/99................ 256,250
250,000 Equitable Resources, Inc., 7.50%, 7/1/99.............. 252,500
100,000 Questar Pipeline Co., 9.88%, 6/1/20, Callable 6/1/00 @
104.67............................................... 109,500
500,000 Sonat, Inc., 6.88%, 6/1/05............................ 533,749
500,000 Tennessee Gas Pipeline Co., 7.50%, 4/1/17............. 533,125
-----------
1,685,124
-----------
Railroads (0.6%)
250,000 Conrail, Inc., 9.75%, 6/1/00.......................... 265,313
-----------
Retail--Department Stores (2.7%)
300,000 Dayton Hudson Co., 8.50%, 12/1/22, Callable 12/1/02 @
103.75............................................... 338,625
250,000 Kohl's Corp., 6.70%, 2/1/06........................... 261,250
500,000 ShopKo Stores, Inc., 8.50%, 3/15/02................... 533,750
-----------
1,133,625
-----------
Textile Manufacturing (0.6%)
250,000 VF Corp., 7.60%, 4/1/04, Callable 4/1/01 @ 100........ 274,688
-----------
Transportation Services (2.2%)
250,000 GATX Corp., 8.63%, 12/1/04............................ 287,500
600,000 Union Tank Car Co., 7.13%, 2/1/07..................... 656,250
-----------
943,750
-----------
Utilities--Natural Gas (1.3%)
500,000 Michigan Consolidated Gas Co., 8.25%, 5/1/14.......... 570,625
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
Corporate Bonds, continued:
Utilities--Electric (3.0%)
250,000 Potomac Electric Power Co., 5.00%, 9/1/02, Callable
9/1/99 @ 95.644...................................... $ 241,563
1,000,000 PSI Energy, Inc., 6.50%, 8/1/05....................... 1,040,000
-----------
1,281,563
-----------
Utilities--Telecommunications (4.9%)
500,000 Ameritech Capital Funding Corp., 6.13%, 10/15/01...... 512,500
250,000 Ameritech Capital Funding Corp., 5.95%, 1/15/38,
Putable 1/15/05 @ 100................................ 257,188
500,000 Frontier Corp., 6.00%, 10/15/03....................... 503,750
250,000 Northwestern Bell Telephone Co., 9.50%, 5/1/00........ 263,125
500,000 U.S. West Communications, Inc., 9.50%, 5/1/00......... 526,874
-----------
2,063,437
-----------
Total Corporate Bonds (Cost $21,353,807) 22,036,215
-----------
Medium Term Notes (2.5%)
Financial Services (0.6%)
250,000 Capital Holding Corp., Series B, 9.27%, 5/7/01........ 271,875
-----------
Food Products (0.6%)
250,000 International Multifoods Corp., Series A, 6.71%,
10/5/00.............................................. 254,688
-----------
Utilities--Natural Gas (0.7%)
250,000 UGI Utilities, Inc., Series B, 7.17%, 6/15/07......... 276,875
-----------
Utilities--Electric (0.6%)
250,000 Kentucky Power Co., 6.65%, 5/1/03..................... 255,000
-----------
Total Medium Term Notes (Cost $1,007,172) 1,058,438
-----------
U.S. Government Agencies (39.7%)
Federal Home Loan Bank (4.3%)
1,000,000 5.89%, 6/30/08........................................ 1,039,760
750,000 5.80%, 9/2/08......................................... 775,140
-----------
1,814,900
-----------
Federal Home Loan Mortgage Corp. (11.0%)
1,250,000 4.50%, 1/4/99......................................... 1,250,000
103,733 6.50%, 12/1/99........................................ 104,993
</TABLE>
Continued

-20-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
Intermediate Income Fund

Schedule of Portfolio Investments, Continued
December 31, 1998
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. Government Agencies, continued:
Federal Home Loan Mortgage Corp., continued:
500,000 0.25%, 1/20/99......................................... $ 502,422
500,000 6.10%, 9/18/00......................................... 509,740
500,000 5.63%, 9/5/01.......................................... 509,115
375,911 7.00%, 11/1/07......................................... 383,662
500,000 6.50%, 3/25/13 CMO..................................... 499,371
452,972 6.50%, 11/1/15......................................... 456,333
437,805 6.50%, 3/1/18.......................................... 440,642
-----------
4,656,278
-----------
Federal National Mortgage Assoc. (19.4%)
500,000 6.18%, 3/15/01......................................... 513,240
500,000 6.45%, 4/23/01......................................... 516,745
1,000,000 6.58%, 10/2/01......................................... 1,042,810
490,072 6.47%, 12/1/01......................................... 498,679
500,000 6.41%, 2/6/02.......................................... 519,770
500,000 6.25%, 7/25/04......................................... 499,925
450,000 7.38%, 9/1/06.......................................... 478,400
993,163 6.24%, 4/1/08.......................................... 1,029,869
491,217 7.45%, 10/1/11......................................... 543,542
949,051 6.50%, 5/1/18.......................................... 955,239
746,377 6.50%, 6/1/18.......................................... 751,251
900,000 5.63%, 4/17/28......................................... 882,810
-----------
8,232,280
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
U.S. Government Agencies, continued:
Government National Mortgage Assoc. (4.7%)
344,216 6.50%, 11/15/10....................................... $ 353,768
295,937 7.50%, 2/15/23........................................ 315,252
831,821 6.00%, 12/20/27....................................... 845,854
492,939 6.00%, 5/20/28........................................ 486,679
-----------
2,001,553
-----------
Small Business Administration (0.3%)
108,995 6.25%, 9/25/18, Pool #502410.......................... 109,540
-----------
Total U.S. Government Agencies
(Cost $16,564,509) 16,814,551
-----------
Total Investments (Cost $41,331,487)
(a)--100.2% 42,470,985
Liabilities in excess of other assets--(0.2)% (83,350)
-----------
Total Net Assets--100.0% $42,387,635
===========
</TABLE>
- ---------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:

<TABLE>
<S> <C>
Unrealized
appreciation.......... $1,238,459
Unrealized
depreciation.......... (98,961)
----------
Net unrealized
appreciation.......... $1,139,498
==========
</TABLE>

ACES--Automatic Common Exchange Securities
CMO--Collateralized Mortgage Obligation
PLC--Public Liability Co.

See notes to financial statements

-21-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
Growth Fund

Schedule of Portfolio Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------ ------------
<C> <S> <C>
Common Stocks (96.8%)
Automotive Parts (2.4%)
165,000 Wabash National Corp.................................. $ 3,351,563
------------
Banks (3.6%)
32,400 Bank One Corp......................................... 1,654,425
52,000 KeyCorp............................................... 1,664,000
40,000 Wells Fargo Company................................... 1,597,500
------------
4,915,925
------------
Beverages (2.2%)
73,000 PepsiCo, Inc.......................................... 2,988,438
------------
Building Materials (3.0%)
62,000 Fastenal Co........................................... 2,728,000
50,000 Masco Corp............................................ 1,437,500
------------
4,165,500
------------
Chemicals--General (5.4%)
66,000 Air Products & Chemicals, Inc......................... 2,640,000
50,000 Morton International, Inc............................. 1,225,000
120,000 Sigma-Aldrich Corp.................................... 3,525,000
------------
7,390,000
------------
Computers & Peripherals (7.8%)
20,000 Cisco Systems, Inc. (b)............................... 1,856,250
50,000 Compaq Computer Corp.................................. 2,096,875
61,600 Hewlett-Packard Co.................................... 4,208,049
20,000 Intel Corp............................................ 2,371,250
------------
10,532,424
------------
Consumer Goods & Services (1.5%)
22,000 Procter & Gamble Co................................... 2,008,875
------------
Containers--Metal, Glass, Paper, Plastic (1.0%)
45,000 Sonoco Products Co.................................... 1,333,125
------------
Cosmetics & Toiletries (1.9%)
55,000 Gillette Co........................................... 2,657,188
------------
Electronic & Electrical--General (2.5%)
80,000 Thomas & Betts Corp................................... 3,465,000
------------
Environmental Control (1.7%)
78,100 Ionics, Inc. (b)...................................... 2,338,119
------------
Financial Services (4.7%)
42,000 Fannie Mae............................................ 3,108,000
51,600 Freddie Mac........................................... 3,324,975
------------
6,432,975
------------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------ ------------
<C> <S> <C>
Common Stocks, continued
Food Distributors & Wholesalers (1.4%)
70,000 Sysco Corp............................................ $ 1,920,625
------------
Food Products (3.0%)
50,000 Kellogg Co............................................ 1,706,250
86,000 Sara Lee Corp......................................... 2,424,125
------------
4,130,375
------------
Home Decoration Products (1.5%)
50,000 Newell Co............................................. 2,062,500
------------
Insurance (4.1%)
90,000 Allstate.............................................. 3,476,250
33,000 Chubb Corp............................................ 2,140,875
------------
5,617,125
------------
Leisure--Recreation (0.8%)
105,000 Callaway Golf Co...................................... 1,076,250
------------
Medical Supplies (7.3%)
36,000 Biomet, Inc........................................... 1,449,000
180,000 Boston Scientific Corp. (b)........................... 4,826,249
25,000 Johnson & Johnson, Inc................................ 2,096,875
57,000 St. Jude Medical, Inc. (b)............................ 1,578,188
------------
9,950,312
------------
Newspapers (3.6%)
50,000 Central Newspapers, Inc............................... 3,571,875
21,900 Gannett Co., Inc...................................... 1,412,550
------------
4,984,425
------------
Office Equipment & Service (5.0%)
35,000 Pitney Bowes, Inc..................................... 2,312,188
38,000 Xerox Corp............................................ 4,484,000
------------
6,796,188
------------
Oil & Gas Exploration, Production & Services (4.2%)
150,000 Global Marine, Inc. (b)............................... 1,378,125
100,000 The Williams Cos., Inc................................ 3,118,750
45,000 Transocean Offshore, Inc.............................. 1,206,563
------------
5,703,438
------------
Oil & Gas Transmission (0.9%)
36,200 El Paso Energy Corp................................... 1,260,213
------------
Oilfield Services & Equipment (1.4%)
125,000 Petroleum Geo-Services, Sponsored ADR (b)............. 1,968,750
------------
</TABLE>
Continued

-22-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
Growth Fund

Schedule of Portfolio Investments, Continued
December 31, 1998

<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------ ------------
<C> <S> <C>
Common Stocks, continued
Pharmaceuticals (6.4%)
20,000 ALZA Corp. (b)........................................ $ 1,045,000
17,000 Amgen, Inc. (b)....................................... 1,777,563
10,000 Bristol-Myers Squibb Co............................... 1,338,125
18,000 Merck & Co., Inc...................................... 2,658,374
25,000 Warner-Lambert Co..................................... 1,879,687
------------
8,698,749
------------
Precision Instruments & Related (1.4%)
53,000 Dionex Corp. (b)...................................... 1,941,125
------------
Retail (1.2%)
32,000 Lowe's Cos., Inc...................................... 1,638,000
------------
Retail--Department Stores (1.0%)
25,000 Dayton Hudson Corp.................................... 1,356,250
------------
Software & Computer Services (2.5%)
110,000 First Data Corp....................................... 3,485,625
------------
Technology (1.0%)
33,000 Applied Materials, Inc. (b)........................... 1,408,688
------------
Telecommunications (6.8%)
25,000 AT&T Corp............................................. 1,881,250
45,000 Bell Atlantic Corp.................................... 2,385,000
30,000 MCI Worldcom, Inc. (b)................................ 2,152,500
55,000 SBC Communications, Inc............................... 2,949,374
------------
9,368,124
------------
</TABLE>

<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------ ------------
<C> <S> <C>
Common Stocks, continued
Telecommunications--Services & Equipment (1.5%)
30,000 Tellabs, Inc. (b)..................................... $ 2,056,875
------------
Utilities--Natural Gas (0.9%)
62,000 MCN Energy Group, Inc................................. 1,181,875
------------
Water Treatment System (3.2%)
190,000 United States Filter Corp. (b)........................ 4,346,250
------------
Total Common Stocks (Cost $119,278,709) 132,530,894
------------
Preferred Stocks (0.5%)
Automotive Parts (0.5%)
30,000 Dura Automotive Systems, 7.50%, 3/31/28............... 742,500
------------
Total Preferred Stocks (Cost $750,000) 742,500
------------
U.S. Government Agencies (2.6%)
Federal Home Loan Mortgage Corp. (2.6%)
3,625,000 4.50%, 1/4/99......................................... 3,625,000
------------
Total U.S. Government Agencies
(Cost $3,623,641) 3,625,000
------------
Total Investments
(Cost $123,652,350) (a)--99.9% 136,898,394
Other assets in excess of liabilities--0.1% 77,732
------------
Total Net Assets--100.0% $136,976,126
============
</TABLE>
- ---------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$302,288. Cost for federal income tax purposes differs from market value
by net unrealized appreciation of securities as follows:

<TABLE>
<S> <C>
Unrealized
appreciation......... $20,209,104
Unrealized
depreciation......... (7,265,348)
-----------
Net unrealized
appreciation......... $12,943,756
===========
</TABLE>

(b) Represents non-income producing securities.

ADR--American Depository Receipt

See notes to financial statements.

-23-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
International Fund

Schedule of Portfolio Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
Commercial Paper (4.8%)
United States (4.8%)
Financial Services (4.8%)
1,500,000 R.R. Donnelley, 5.10%, 1/4/99.......................... $ 1,499,363
-----------
Total Commercial Paper (Cost $1,499,363) 1,499,363
-----------
Common Stocks (95.5%)
Australia (1.0%)
Banks (1.0%)
46,182 Australia & New Zealand Banking Group.................. 302,524
-----------
Beverages (0.0%)
2,938 Coca-Cola Amatil Ltd................................... 10,956
-----------
313,480
-----------
Canada (1.5%)
Telecommunications (1.5%)
12,000 BCE, Inc............................................... 451,970
-----------
France (12.7%)
Automotive (2.2%)
15,236 Renault SA............................................. 684,610
-----------
Automotive Parts (2.1%)
8,111 Valeo SA............................................... 639,470
-----------
Diversified (2.5%)
3,000 Vivendi................................................ 778,732
-----------
Electronic & Electrical--General (2.1%)
10,967 Schneider SA........................................... 665,558
-----------
Machinery & Engineering (0.4%)
1,373 Sidel SA............................................... 116,506
-----------
Utilities--Water (3.4%)
5,281 Suez Lyonnaise des Eaux................................ 1,085,317
-----------
3,970,193
-----------
Germany (2.9%)
Machinery & Engineering (2.9%)
7,930 Mannesmann AG.......................................... 909,401
-----------
Greece (0.4%)
Telecommunications (0.4%)
4,160 Hellenic Telecommunication Organization SA............. 110,669
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued
Hong Kong (1.9%)
Real Estate (1.9%)
43,000 Cheung Kong (Holdings) Ltd............................. $ 309,442
41,000 Hutchison Whampoa Ltd.................................. 289,756
-----------
599,198
-----------
Italy (11.4%)
Banks (5.1%)
199,211 Banca Di Roma (b)...................................... 338,282
95,917 Banca Nazionale de Lavoro (b).......................... 287,653
9,498 Banca Popolare De Bergamo.............................. 230,985
118,179 Credito Italiano SpA (b)............................... 702,025
-----------
1,558,945
-----------
Radio & Television (2.3%)
89,661 Mediaset SpA........................................... 728,645
-----------
Telecommunications (4.0%)
72,509 Olivetti SpA (b)....................................... 252,853
117,209 Telecom Italia SpA..................................... 1,002,277
-----------
1,255,130
-----------
3,542,720
-----------
Japan (16.3%)
Automotive Parts (1.5%)
26,000 Denso Corp............................................. 481,752
-----------
Brokerage Services (0.5%)
17,000 Nomura Securities Co. Ltd.............................. 148,453
-----------
Drugs (1.6%)
13,000 Takeda Chemical Industries............................. 501,345
-----------
Electronic & Electrical--General (3.7%)
27,000 Matsushita Electric Industrial Company, Ltd............ 478,498
7,000 Murata Manufacturing Co. Ltd........................... 291,055
4,000 Rohm Co. Ltd........................................... 364,905
-----------
1,134,458
-----------
Financial Services (1.3%)
105,000 Sakura Bank Ltd........................................ 241,098
100 Shohkoh Fund & Co. Ltd................................. 32,270
1,900 Takefuji Corp.......................................... 138,967
-----------
412,335
-----------
</TABLE>
Continued

-24-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
International Fund

Schedule of Portfolio Investments, Continued
December 31, 1998

<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
Common Stocks, continued
Food Distributors, Supermarkets & Wholesalers (1.6%)
7,000 Yokado Co. Ltd........................................ $ 490,263
-----------
Office Equipment (1.1%)
16,000 Canon, Inc............................................ 342,563
-----------
Telecommunications (3.4%)
26 NTT Mobile Communication Network, Inc................. 1,071,841
-----------
Utilities--Telecommunications (1.6%)
64 Nippon Telegraph & Telephone Corp..................... 494,767
-----------
5,077,777
-----------
Mexico (0.7%)
Utilities--Telecommunications (0.7%)
4,392 Telefonos de Mexico SA, Sponsored ADR, Class L........ 213,836
-----------
Netherlands (10.4%)
Banks (1.2%)
5,978 ING Groep N.V......................................... 364,732
-----------
Food Distributors, Supermarkets & Wholesalers (1.0%)
11,780 Laurus NV............................................. 297,534
-----------
Human Resources (0.0%)
1 Vedior................................................ 20
-----------
Publishing (3.0%)
24,627 Verenigde Nederlandse Uitgeversbedrijven Vererigd
Bezit ............................................... 929,090
-----------
Retail (1.7%)
21,770 Vendex NV............................................. 528,976
-----------
Utilities--Telecommunications (3.5%)
22,524 Koninklijke KPN NV (b)................................ 1,128,200
-----------
3,248,552
-----------
New Zealand (1.6%)
Telecommunications (1.6%)
53,379 Telecom Corporation of New Zealand Ltd................ 117,021
91,061 Telecom Corporation of New Zealand Ltd................ 396,855
-----------
513,876
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued
Portugal (1.5%)
Telecommunications (1.5%)
10,090 Portugal Telecom....................................... $ 462,637
-----------
Singapore (0.2%)
Banks (0.2%)
6,000 Development Bank Of Singapore Ltd...................... 54,183
-----------
Spain (5.4%)
Banks (3.4%)
40,378 Argentaria SA.......................................... 1,047,271
-----------
Telecommunications (0.0%)
14,312 Telefonica SA.......................................... 12,727
-----------
Utilities--Telecommunications (2.0%)
14,312 Telefonica de Espana SA................................ 637,362
-----------
1,697,360
-----------
Sweden (0.5%)
Banks (0.2%)
4,460 Skandinaviska Enskilda Banken.......................... 47,046
-----------
Retail--Specialty Stores (0.3%)
1,276 Hennes & Mauritz AB, Class B........................... 104,214
-----------
151,260
-----------
Switzerland (6.9%)
Food Processing & Packaging (2.8%)
400 Nestle SA.............................................. 870,780
-----------
Pharmaceuticals (4.1%)
337 Novartis AG............................................ 662,476
51 Roche Holding AG-Genussshein........................... 622,331
-----------
1,284,807
-----------
2,155,587
-----------
United Kingdom (19.6%)
Automotive (1.6%)
147,542 LucasVarity PLC........................................ 492,188
-----------
Broadcasting/Cable (1.8%)
72,418 British Sky Broadcasting Group PLC..................... 550,032
-----------
Chemicals--General (0.9%)
31,520 Imperial Chemical Industries PLC....................... 273,228
-----------
</TABLE>
Continued

-25-
<PAGE>

MMA PRAXIS MUTUAL FUNDS
International Fund

Schedule of Portfolio Investments, Continued
December 31, 1998
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued
United Kingdom, continued
Food Distributors, Supermarkets & Wholesalers (5.1%)
269,513 ASDA Group PLC......................................... $ 718,586
130,600 Somerfield PLC......................................... 873,515
-----------
1,592,101
-----------
Pharmaceuticals (3.2%)
28,691 Glaxo Wellcome PLC..................................... 983,840
-----------
Transportation (2.8%)
33,527 Railtrack Group PLC.................................... 876,338
-----------
Utilities--Telecommunications (4.2%)
80,803 Vodafone Group PLC..................................... 1,309,445
-----------
6,077,172
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
Common Stocks, continued
United States (0.6%)
Pharmaceuticals (0.6%)
4,530 Gedeon Richter GDR (c)................................ $ 193,056
-----------
Total Common Stocks (Cost $23,839,331) 29,742,927
-----------
Total Investments
(Cost $25,338,694) (a)--100.3% 31,242,290
Liabilities in excess of other assets--(0.3)% (79,297)
-----------
Total Net Assets--100.0% $31,162,993
===========
</TABLE>
- ---------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of market to market
adjustments for passive foreign investment companies of $448,595. Cost for
federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:

<TABLE>
<S> <C>
Unrealized
appreciation.......... $6,287,367
Unrealized
depreciation.......... (832,366)
----------
Net unrealized
appreciation.......... $5,455,001
==========
</TABLE>
(b) Represents non-income producing securities.
(c) 144a security which is restricted as to resale to institutional investors.
ADR--American Depository Receipt
PLC--Public Liability Co.
GDR--Global Depository Receipt

Foreign Currency Contracts
<TABLE>
<CAPTION>
Current
Contract Value in Appreciation/
Price U.S. Dollars (Depreciation) Delivery Date
--------- ------------ -------------- -----------------
<S> <C> <C> <C> <C>
Currency Sold:
French Franc........... $ 5.5860 $ 37,629 $ (242) January 29, 1999
French Franc........... 5.5860 12,297 (91) January 29, 1999
Japanese Yen........... 113.0709 2,264,067 (119,474) February 26, 1999
---------
Currency Purchased:
New Zealand Dollar..... 1.8877 301,950 1,262 March 4, 1999
---------
Net unrealized loss from
foreign
currency contracts..... $(118,545)
=========
</TABLE>
See notes to financial statements.

-26-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Notes to Financial Statements
December 31, 1998
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.

The investment objective of the Intermediate Income Fund is to seek current
income with capital appreciation as a secondary objective. 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 with current
income as a secondary objective. The Fund invests primarily in undervalued
securities of medium to large capitalization companies. Under normal market
conditions, the Growth Fund will invest substantially all, but in no event
less than 65% of its total assets in equity securities. The investment
objective of the International Fund is capital appreciation, with current
income as a secondary objective. Under normal market conditions, 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
December 31, 1998

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.

Dividends and Distributions:

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.

The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income
tax regulations, which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary
or permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the composition of net assets
based on their federal tax-basis treatment; temporary differences do not
require reclassification.

Continued

-28-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Notes to Financial Statements, Continued
December 31, 1998

Dividends and distributions to shareholders which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized gains. To the extent
they exceed net investment income and net realized gains for tax purposes,
they are reported as distributions of capital.

As of December 31, 1998, the following reclassification have been made to
increase (decrease) such accounts with offsetting adjustments made to
additional paid-in-capital:

<TABLE>
<CAPTION>
Accumulated Accumulated Undistributed Net
Undistributed Net Realized Gain (Loss) on Investments
Investment Income and Foreign Currency Transactions
----------------- -----------------------------------
<S> <C> <C>
Intermediate Income
Fund.................... $ 591 $ (591)
Growth Fund............. $24,593 $(24,593)
International Fund...... $33,141 $(33,141)
</TABLE>

Federal Income Taxes:

It is each Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute timely, all of its net investment company taxable and net
capital gains to shareholders. Therefore, no federal income tax provision
is required. (Under the applicable foreign tax law, a withholding tax may
be imposed on interest, dividends and capital gains earned on foreign
investments at various rates. Where available, the Fund will file for
claims on foreign taxes withheld.)

Organization Costs:

Costs incurred by the Funds in connection with their organization and
registration of shares have been deferred and are amortized using the
straight-line method over a period of five years from the commencement of
the public offering of shares of the Funds. In the event that any of the
initial shares of the Funds are redeemed during the amortization period by
any holder thereof, the redemption proceeds will be reduced by any
unamortized organizational expenses of the Company in the same proportion
as the number of said shares of the Fund being redeemed bears to the
number of initial shares of that Fund that are outstanding at time of
redemption.

Other:

Each Fund maintains a cash balance with its custodian and receives a
reduction of their custody fees and expenses for the amounts of interest
earned on such uninvested cash balance. For financial reporting purposes
for the year ended December 31, 1998, custodian fees and expenses paid by
third parties were $4,020 and $6,949 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.

Continued

-29-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Notes to Financial Statements, Continued
December 31, 1998

3. Purchases and Sales of Securities:

Purchases and sales of securities (excluding short-term securities) for the
year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Intermediate Income Fund........................... $ 21,140,825 $ 12,205,026
Growth Fund........................................ $128,798,540 $102,227,344
International Fund................................. $ 17,124,084 $ 10,917,383
</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.

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
assets 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. These amounts include the payment of a
service fee of up to 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 year ended
December 31, 1998, BISYS Ohio received fees of $113,554; $341,563; $122,896;
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 the
Adviser. 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

Continued

-30-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Notes to Financial Statements, Continued
December 31, 1998

the date of the original purchase or at the date of redemption. The sales
charge will not be imposed on increases above the NAV at the time of
purchase or shares purchased through the reinvestment of dividends from net
investment income or capital gains. For the year ended December 31, 1998,
the Distributor received approximately $1,356,753 from commissions earned on
sales of shares of the Funds, all of which the Distributor reallowed to
dealers of the Funds' shares.

Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios.

Information regarding these transactions are as follows for the year ended
December 31, 1998:

<TABLE>
<CAPTION>
Intermediate
Income Growth International
Fund Fund Fund
------------ -------- -------------
<S> <C> <C> <C>
Investment advisory fee waivers............ $ 33,861 $ -- $ 19,238
12b-1 fee waivers.......................... $357,538 $731,963 $217,110
Shareholder services fee waivers........... $ 86,822 $280,674 $ 56,260
</TABLE>

5. Federal Income Tax Information (Unaudited):

Capital Loss Carryforward:

At December 31, 1998 the following Funds had net capital loss carryforwards
to offset future net capital gains, if any, to the extent provided by the
Treasury regulations:
<TABLE>
<CAPTION>
Amount Expires
---------- -------
<S> <C> <C>
International Fund......................................... $1,184,219 2006
</TABLE>

To the extent that these carryforwards are used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders.

Long Term Capital Gains Distributions:

During the fiscal year ended December 31, 1998 the Funds declared long term
capital gain distributions as follows:

<TABLE>
<CAPTION>
Long-Term
20%
----------
<S> <C>
Intermediate Income Fund.......................................... $ 50,614
Growth Fund....................................................... 9,772,163
</TABLE>

Dividend Received Deduction:

For corporate shareholders the following percentage of the total ordinary
income distributions paid during the fiscal year ended December 31, 1998
qualify for the corporate dividends received deduction for the following
funds:

<TABLE>
<CAPTION>
Percentage
----------
<S> <C>
Growth Fund........................................................ 27.84%
</TABLE>
Continued

-31-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Notes to Financial Statements, Continued
December 31, 1998

Post October Loss Deferral:

Capital (and foreign currency) losses incurred after October 31, within a
Fund's fiscal year are deemed to arise on the first business day of the
following fiscal year for tax purposes. The following Funds have incurred
and will elect to defer such capital losses (and foreign currency losses):

<TABLE>
<CAPTION>
Post-October
Post-October Foreign
Capital Losses Currency Losses
-------------- ---------------
<S> <C> <C>
International Fund............................. $153,366 $66,951
</TABLE>

-32-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Financial Highlights
<TABLE>
<CAPTION>
Intermediate Income Fund
-------------------------------------------------------------------
Year Year Year Year January 4,
Ended Ended Ended Ended 1994 to
December 31, December 31, December 31, December 31, December 31,
1998 1997 1996 1995 1994 (a)
------------ ------------ ------------ ------------ ------------
<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.. 0.54 0.55 0.54 0.53 0.45
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 0.17 0.17 (0.33) 1.03 (0.86)
------- ------- ------- ------- -------
Total from Investment
Activities.............. 0.71 0.72 0.21 1.56 (0.41)
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.54) (0.55) (0.54) (0.53) (0.45)
Net realized gains..... (0.01) -- -- -- --
------- ------- ------- ------- -------
Total Distributions..... (0.55) (0.55) (0.54) (0.53) (0.45)
------- ------- ------- ------- -------
Net Asset Value, End of
Period.................. $ 10.17 $ 10.01 $ 9.84 $ 10.17 $ 9.14
======= ======= ======= ======= =======
Total Return (excludes
redemption charge)..... 7.29% 7.60% 2.22% 17.47% (4.09)%(b)
Ratios/Supplementary
Data:
Net Assets at end of
period (000).......... $42,388 $33,339 $27,568 $23,470 $17,849
Ratio of expenses to
average net assets.... 1.10% 1.10% 1.10% 1.10% 1.10%(c)
Ratio of net investment
income
to average net assets. 5.37% 5.65% 5.50% 5.49% 4.96%(c)
Ratio of expenses to
average net assets*... 2.37%** 2.62%** 2.52%** 2.64% 2.83%(c)
Ratio of net investment
income
to average net
assets*............... 4.10% 4.15% 4.15% 3.95% 3.23%(c)
Portfolio Turnover..... 33.89% 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 years ended December 31, 1998, 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.

See notes to financial statements.

-33-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Financial Highlights
<TABLE>
<CAPTION>
Growth Fund
-------------------------------------------------------------------
Year Year Year Year January 4,
Ended Ended Ended Ended 1994 to
December 31, December 31, December 31, December 31, December 31,
1998 1997 1996 1995 1994 (a)
------------ ------------ ------------ ------------ ------------
<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)................ -- 0.04 0.07 0.10 0.09
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 0.84 3.86 1.85 3.12 (0.07)
-------- -------- ------- ------- -------
Total from Investment
Activities.............. 0.84 3.90 1.92 3.22 0.02
-------- -------- ------- ------- -------
Distributions
Net investment income.. -- (0.04) (0.07) (0.10) (0.09)
Net realized gains..... (1.27) (1.71) (0.35) (0.79) (0.19)
-------- -------- ------- ------- -------
Total Distributions..... (1.27) (1.75) (0.42) (0.89) (0.28)
-------- -------- ------- ------- -------
Net Asset Value, End of
Period.................. $ 15.29 $ 15.72 $ 13.57 $ 12.07 $ 9.74
======== ======== ======= ======= =======
Total Return (excludes
redemption charge)..... 5.96% 29.15% 15.87% 33.32% 0.27%(b)
Ratios/Supplementary
Data:
Net Assets at end of
period (000).......... $136,976 $104,309 $58,907 $30,906 $18,009
Ratio of expenses to
average net assets.... 1.69% 1.72% 1.74% 1.75% 1.75%(c)
Ratio of net investment
income (loss) to
average net assets.... (0.02)% 0.22% 0.61% 0.90% 1.02%(c)
Ratio of expenses to
average net assets*... 2.53%** 2.66%** 2.55%** 2.81% 3.25%(c)
Ratio of net investment
income (loss) to
average net assets*... (0.86)% (0.71)% (0.17)% (0.16)% (0.48)%(c)
Portfolio Turnover..... 91.32% 53.26% 33.98% 48.91% 35.22%
</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.

** During the years ended December 31, 1998, 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.

See notes to financial statements.

-34-
<PAGE>

MMA PRAXIS MUTUAL FUNDS

Financial Highlights
<TABLE>
<CAPTION>
International Fund
--------------------------
Year April 1, 1997
Ended through
December 31, December 31,
1998 1997 (a)
------------ -------------
<S> <C> <C>
Net Asset Value, Beginning of Period.............. $ 10.62 $ 10.00
------- -------
Investment Activities
Net investment income (loss)..................... (0.02) (0.05)
Net realized and unrealized gains from investment
transactions.................................... 2.56 0.69
------- -------
Total from Investment Activities.................. 2.54 0.64
------- -------
Distributions
In excess of net investment income............... (0.10) --
In excess of net realized gains.................. (0.01) (0.02)
------- -------
Total Distributions............................... (0.11) (0.02)
------- -------
Net Asset Value, End of Period.................... $ 13.05 $ 10.62
======= =======
Total Return (excludes redemption charge)......... 23.98% 6.40%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)................ $31,163 $17,245
Ratio of expenses to average net assets.......... 1.99% 2.00%(c)
Ratio of net investment income (loss) to average
net assets...................................... (0.32)% (0.93)%(c)
Ratio of expenses to average net assets*......... 3.19% 4.29%(c)
Ratio of net investment income (loss) to average
net assets*..................................... (1.52)% (3.21)%(c)
Portfolio Turnover............................... 47.19% 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.

See notes to financial statements.

-35-
<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
PricewaterhouseCoopers
L.L.P.
100 East Broad Street
Columbus, Ohio 43215

Transfer Agent
BISYS Fund Services
Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219

Annual Report
for the year ended December 31, 1998

MMA Praxis Mutual Funds

Intermediate Income Fund
Growth Fund
International Fund
MMA PRAXIS LOGO

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.

2/99
PRINTED WITH SOY INK
RECYCLED PAPER LOGO