United States
Securities And Exchange Commission
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-8056
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MMA Praxis Mutual Funds
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(Exact name of registrant as specified in charter)
P.O. Box 483, Goshen, IN 46527
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(Address of principal executive offices) (Zip code)
Anthony Zacharski, Dechert LLP, 200 Clarendon Street, 27th Floor,
Boston, MA 02116
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(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 762-6212
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Date of fiscal year end: 12/31
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Date of reporting period: 12/31/05
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
Item 1. Reports to Stockholders.
Annual Report
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MMA Praxis
Mutual Funds
Annual Report
for the year ended December 31, 2005
Intermediate Income Fund
Core Stock Fund
Value Index Fund
International Fund
[LOGO]
MMA(R)
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Stewardship
Solutions
Patience and
Discipline
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Table of contents
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Table of contents
Message from the President.....................................................1
MMA Praxis Stewardship Investing Report........................................4
MMA Praxis Intermediate Income Fund
Portfolio managers' letter..................................................6
Performance review..........................................................7
Schedule of portfolio investments...........................................9
Statement of assets & liabilities..........................................20
Statement of operations....................................................21
Statements of changes in net assets........................................22
Financial highlights.......................................................23
MMA Praxis Core Stock Fund
Portfolio managers' letter.................................................26
Performance review.........................................................28
Schedule of portfolio investments..........................................30
Statement of assets & liabilities..........................................33
Statement of operations....................................................34
Statements of changes in net assets........................................35
Financial highlights.......................................................36
MMA Praxis Value Index Fund
Portfolio managers' letter.................................................39
Performance review.........................................................40
Schedule of portfolio investments..........................................42
Statement of assets & liabilities..........................................50
Statement of operations....................................................51
Statements of changes in net assets........................................52
Financial highlights.......................................................53
MMA Praxis International Fund
Portfolio manager's letter.................................................56
Performance review.........................................................58
Schedule of portfolio investments..........................................60
Statement of assets & liabilities..........................................67
Statement of operations....................................................68
Statements of changes in net assets........................................69
Financial highlights.......................................................70
Notes to financial statements.................................................72
Report of Independent Registered Public Accounting Firm.......................83
Additional fund information (unaudited).......................................84
Management of the Trust (unaudited)...........................................92
A
Glossary of Terms
Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers
Government/Credit Index and the Lehman Brothers Mortgage-Backed Securities Index
and includes treasury issues, agency issues, corporate bond issues and
mortgage-backed securities.
The Morgan Stanley Capital Index-Europe, Australia and the Far East Index
(MSCI-EAFE) is an unmanaged Morgan Stanley Capital International Index that is
designed to measure the performance of the developed stock markets of Europe,
Australia and the Far East.
The Morgan Stanley Capital AC World Free-(ex. U.S.) Index is a widely
recognized, unmanaged index composed of a sample of companies representative of
the markets of both developed and emerging markets throughout the world,
excluding the United States.
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"), is a
widely recognized index of 500 selected common stocks, most of which are listed
on the New York Stock Exchange.
Standard & Poor's 500/Citigroup Value Index (the "S&P 500/Cititgroup Value
Index"), is constructed by dividing the stocks in the S&P 500 Index into two
categories, growth and value, according to price-to-book ratios.
Gross Domestic Product (the "GDP"), is the measure of the market value of the
goods and services produced by labor and property in the United States.
Consumer Price Index (the "CPI"), is an index of prices used to measure the
change in the cost of basic goods and services in comparison with a fixed base
period.
Price-to-Earnings Ratio (the "P/E Ratio"), is a valuation ratio of a company's
current share price compared to its per-share earnings.
SuperComposite 1500 Index. Large-cap core funds have more latitude in the
companies in which they invest. These funds typically have an average
price-to-earnings ratio, price to-book ratio, and three-year sales-per share
growth value, compared to the S&P 500 Index.
The above indices are unmanaged and do not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. An investor cannot invest directly in an index, although they can invest
in the underlying securities.
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Message from the President
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1
Message from the President
Dear MMA Praxis Shareholder:
The lessons of 2005 reflect the importance of patience and discipline. It was a
year with lots of macro-level worries. For much of the year, markets were flat
or falling. However, there were also short periods when returns came in bunches.
Timing these short bursts of performance would have been difficult. It was also
a year when diversification away from the most mainstream asset classes paid
off. Committing to a fundamentals-based asset allocation also rewarded investors
adhering to this strategy. So, in the end, even though 2005 didn't feel like a
particularly good year for investors, it wasn't that bad.
Stocks, as measured by the Standard & Poor's 500, returned 4.91 percent for the
year, well below their long-term historical average. However, foreign stocks
delivered stellar returns, advancing 13.54 percent, as measured by the EAFE
Index. Overall, investors with global equity market exposure in their portfolio
had an opportunity to earn reasonably good returns. Domestically, based on most
benchmarks, value-type stocks outperformed their growth counterparts for the
sixth consecutive year (though it should be noted that in the last half of the
year, growth began to outperform value). Value's strong performance was due
largely to energy stocks, which were far and away the year's strongest
performing sector. In the fixed income markets, bonds offered only small,
nominal returns and on an inflation-adjusted basis, delivered negative returns.
First Half 2005 Second Half 2005 Annual Returns 2005
(1/1/05-6/30/05) (7/1/05-12/31/05) (1/1/05-12/31/05)
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S&P 500 Index -0.81 5.79 4.91
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Lehman Brothers Aggregate
Bond Index 2.51 -0.08 2.43
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S&P 500/Barra Value Index 0.09 5.75 5.84
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MSCI EAFE Index -1.17 14.89 13.54
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The dangers of market timing
As noted in the opening paragraph, attempts at timing the market can prove to be
difficult. (Market timing is defined as the attempt to anticipate the direction
of securities markets and reposition an investment portfolio in an effort to
capture these anticipated changes in the market). Investors who attempt to time
the market run the risk of missing periods of exceptional returns. This practice
may have a negative effect on a sound investment strategy. The chart below
illustrates the risk of attempting to time the stock market over the past 20
years. A hypothetical $1 investment in stocks invested at year-end 1984 grew to
$11.99 by year-end 2004. However, that same $1 investment would have only grown
to $2.39 had it missed the 19 best months of stock returns. One dollar invested
in Treasury bills over the 20-year period resulted in an ending wealth value of
$2.57. An unsuccessful market timer, missing the 19 best months of stock
returns, would have received a return that was lower than Treasury bills!
Although successful market timing may improve portfolio performance, it is very
difficult to time the market consistently. In addition, unsuccessful market
timing can lead to a significant opportunity loss.
2
[The following table was represented as a bar chart in the printed material.]
S&P 500 ................................... $11.99
S&P 500 minus best 19 months .............. $ 2.39
Treasury bills ............................ $ 2.57
Manager change in the MMA Praxis Core Stock Fund
MMA is very pleased to announce the appointment of Davis Advisers, LLP, as the
new sub-advisor of the MMA Praxis Core Stock Fund. After a thorough review of
the Fund, management, in consultation with the Independent Trustees of MMA
Praxis Mutual Funds, made a decision to hire a new manager to steward the assets
of this Fund. Employing an in-depth, rigorous screening process, we identified
approximately a dozen firms that embodied the right people, investment process,
discipline, and long-term performance record. From this list, we narrowed the
candidates down to three, from which the final selection was made. The MMA
Praxis Trustees approved Davis Advisers as the manager at a specially called
meeting in October of 2005. The shareholders of the Core Stock Fund also
approved this change at a specially called shareholder meeting in late December.
Davis Advisers is a well-respected, third generation investment advisory firm
that manages over $75 billion of assets. Davis Advisers has developed a culture
built on stewardship principles, championing shareholders' interests in the
money management industry. Morningstar recently named Chris Davis and Ken
Feinberg (co-managers of the MMA Praxis Core Stock Fund) as Domestic Equity
Investment Manager of the year. We are very excited about the new partnership
between Davis and MMA that links one of the premier investment management firms
in the United States with an organization in business more than 50 years, that
has a deep history of socially responsible investing experience.
Portfolio Performance
MMA Praxis Intermediate Income Fund
The Class A Share (NAV) posted gains of 1.82 percent in 2005. These returns
lagged the benchmark established for the MMA Praxis Intermediate Income Fund
(Lehman Aggregate Bond Index), which returned 2.43 percent over the same time
period. Compared to its Lipper peer group, the A Shares exceeded the average
intermediate term bond fund category average (467 funds), which gained 1.77
percent. For an in-depth analysis of this Fund's strategy, please read the
co-portfolio managers' commentary found later in this report.
MMA Praxis Core Stock Fund
The MMA Praxis Core Stock Fund Class A Share (NAV) returned 3.52 percent for the
12-month period ended December 31, 2005. These returns were less than the
established benchmark (S&P 500) for the MMA Praxis Core Stock Fund, which
returned 4.91 percent. According to Lipper, the Core Stock Fund's 2005
performance landed it in the 69th percentile among its Large-Cap Core peer group
(758 funds). On a longer-term basis, the Fund (A Share NAV) has delivered an
average annual total return of 9.79 percent over three years and -0.04 percent
average annual returns over the past five years. Lipper reports that the A
Shares of the Core Stock Fund was ranked in the 88th and 39th percentile among
its peer category group based on the three and five year numbers cited above,
respectively. The portfolio managers' report will provide you with an in-depth
analysis of those factors that contributed to the Fund's relative performance.
3
MMA Praxis Value Index Fund
As noted in the introductory comments, value once again outperformed a growth
style of investing in 2005. For the year, the MMA Praxis Value Index Fund A
Shares (NAV) were up 6.12 percent. The benchmark index for this Fund, the Barra
Value Index, gained 5.84 percent. (Note: it is not possible to invest directly
in an index, which does not incur expenses like an index fund.) Among its Lipper
peer universe, the A Share 2005 performance placed the Fund in the 40th
percentile (386 funds). Over the past three years, A Shares have delivered
average annualized returns of 16.09 percent (28th percentile).
MMA Praxis International
Fund Foreign stock markets enjoyed one of their broadest rallies in recent
memory, beating their United States counterparts for a third straight year.
Global conditions in 2005 were close to ideal for international stocks. Low
interest rates worldwide generated a wave of borrowing and investment. European
and Japanese companies continued to restructure, squeezing out larger profits
and boosting their share prices. Against this backdrop, the MMA Praxis
International Fund Class A Share (NAV) returned 12.16 percent. The Fund
underperformed its benchmark, the Morgan Stanley EAFE Index, which returned
13.54 percent. Among its Lipper peer category group (231 funds), the Class A
shares ranked in the 81st percentile.
During the past two years, socially responsible investors (SRI) in international
funds have struggled to compete with their non-SRI competitors and the benchmark
EAFE index. Our screening process excludes many large energy companies, mining
firms (commodities) and emerging companies in countries like China and Russia,
where it is difficult to obtain data on corporate behavior related to
environmental and human rights issues. Our research over the years reveals that
we will encounter periods of time (some lasting several years) where our
commitment to stewardship investing principles will result in lagging investment
performance. However, over a longer period of time, we believe that the
application of social screens will not inevitably lead to poor performance. We
appreciate your patience as we wait for improved relative performance. Please
read the commentary from the portfolio managers of the International Fund for an
in-depth analysis of the Fund's performance and an understanding of the current
investment strategy.
Closing thoughts
The year 2005 saw several major developments in MMA's stewardship investing
activities. Please be sure to read Mark Regier's report for a thorough
discussion of these important initiatives.
We remain grateful for the trust and confidence you have demonstrated in MMA
Praxis Mutual Funds. We take our stewardship responsibilities seriously and will
endeavor to generate both financial and social returns on your investments.
Thank you for allowing us to partner with you in meeting your financial planning
goals.
Sincerely,
/s/ John L. Liechty
John L. Liechty
President, MMA Praxis Mutual Funds
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MMA Praxis Stewardship Investing Update
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4
MMA Praxis Stewardship Investing Update
Why we do what we do
"Why do you choose those investments?" This is a question MMA often gets in
regard to the choices we make in focusing shareholder advocacy efforts. Given
the intentionally broad range of companies in which MMA invests in and the
nearly endless number of important social and environmental concerns that could
be raised with various corporations, this is an important question. While a
number of practical issues (complexity of topic, availability of
Anabaptist/faith-based partners, opportunities for success and impact, etc.)
logically come into play, MMA's foundational approach and perspective are set by
our biblical and theological understandings. This perspective starts with MMA's
stewardship investing philosophy and core values (available at
www.mma-online.org).
Recently, MMA's stewardship theologian, Lynn Miller, further articulated the
theological imperatives we find for MMA's involvement in shareholder advocacy.
These imperatives make it clear that the intent of our advocacy efforts is to be
both a faithful and responsible owner of resources, but also an ardent advocate
for those who are impacted by corporate policies and often are without a voice
in their creation and implementation. This approach means that - at times - MMA
is engaging companies and issues others are not. Our responsibilities to God and
Neighbor can call us to a different road.
Theological imperatives for MMA's involvement in shareholder advocacy
I. It is the responsibility of the owner
In the parable of the talents, a king goes on a journey and leaves his property
in the care of his stewards. The text says literally, that immediately after the
king left, the stewards began doing business with what they had been entrusted.
When he returned, he demanded an accounting of their stewardship. Likewise, the
stewards of a corporation (the management) are responsible to the owners (the
stakeholders) for their stewardship of that entity. Not to call management to
account for their poor stewardship (or applaud their good stewardship on our
behalf), places them in the false position of ownership.
II. It is the responsibility of the steward
As managers of property owned by someone else (shares of MMA Praxis Mutual
Funds), we have the responsibility of caring for that property in a way that
conforms to the holistic stewardship of the owner, making sure that the person's
financial holdings are squarely in line with their theological holdings. To
argue that the best steward is the one who provides the most financial profit
for the owner, no matter the ethical avenue of that profit, is to take MMA back
to a compartmentalized stewardship where how you make money does not matter as
long as your intellectual and verbal faith make spiritually profound noises.
III. It is the privilege of the brother in Christ
Intercession by a fellow Christian on behalf of one who is suffering is the
bulwark of the "one-anothers" found throughout the New Testament, the most
common of which is the commandment to "love one another." Unlike modern
romanticism, the word "love" in this commandment has nothing to do with an
emotional feeling of attraction or desire to possess. Rather, it refers to the
state of "being for" the other person. Petitioning for the redress of a wrong
done to a person or the environment by a corporation is a matter of being on the
side of the wronged, i.e. "being for" them. To not do so, by default, is to take
the side of the offender.
5
IV. It is the business of the "Christian" (literally, one who is Christ-like)
The apostle John says that Jesus is our "advocate" with the Father, the one, who
because of His "inside track," is able to plead our case before the heavenly
throne. Likewise, owners of stock have an "inside track" with the management of
a corporation, a form of access that is denied to most employees, consumers, and
neighbors of a corporations activities. To not use that access to plead the case
for safer products, more humane employee relations, less environmental damage,
or consideration of the "collateral damage" done to the public at large, is to
place comfort or profit above the gospel.
Growth rate for SRI outpaces growth of all assets under professional management
According to the latest 2005 SRI Trends Report from the Social Investment Forum,
socially responsible investment assets rose more than 258 percent since 1995
while the broader universe of all assets under management grew at less than 249
percent over the same period. In addition, SRI mutual fund assets grew by 18.5
percent to top $179 billion over the past two years. Today, over $2.29 trillion
in invested assets is involved in socially responsible investing -- nearly one
out of every 10 dollars under professional management in the United States (The
full report can be found at www.socialinvest.org.)
Mark A. Regier
Stewardship Investing Services Manager
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MMA Praxis Intermediate Income Fund
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6
MMA Praxis Intermediate Income Fund
Annual report to shareholders
Portfolio managers' letter
The year 2005 was characterized by good economic growth in spite of sharply
rising commodity prices and energy in particular. The Consumer Price Index rose
3.4 percent during 2005, which was well above the core inflation rate of 2.2
percent, the prefered measure by the Federal Reserve. Nevertheless, this
divergence aroused enough concern about inflationary risks that the Fed
increased the Federal Fund's rate by 25 basis points (a basis point = .01
percent) at every Federal open market committe meeting. The cumulative increase
for all eight meetings left the year-end Fund's rate at 4.25 percent.
The other big concern in 2005, was the boom in housing - particularly on the
East and West coasts, where home prices rose well above normal expectations. The
risk of another major asset bubble, only five years after the technology stock
mania, clearly troubled the Fed governors, adding further justification for
removing extraordinarily low interest rates.
With the front-end of the yield curve rising 2 percent, one would have expected
that rates would rise across the yield curve. In fact, rates actually declined
for the longest maturity Treasury bonds by 29 basis points. This meant that
returns in very short maturity securities and very long government bonds were
satisfactory given the low level of interest rates, while everything else
provided modest returns.
In this environment, we managed to do some things right while fortunately not
making big mistakes. Positive results came from our duration positions, which
was shorter than our benchmark, the Lehman Aggregate. We also held a large
position in agencies, which outperformed Treasuries on a duration-adjusted
basis. Further, our mortgage position was structured to benefit from higher
rates and that added to our returns. The other positive for our Fund was our
yield curve positioning.
Unfortunately, in spite of reasonable gains before expenses, which indexes like
the Lehman Aggregate do not have, our net performance lagged the Index by 61
basis points.
Outlook
As we look into 2006, it appears that the Fed will raise rates at the next
Federal Open Market Committee meeting at the end of January. Beyond that,
decisions will be driven by how strong or weak economic data appears to be.
There is general concern that the economy will eventually slow down given the
large increase in short-term interest rates and the apparent signs of slowing in
the housing market. The key word, of course, is "eventually." Some economists,
and at least one well-known money manager, believe the slowdown has already
started and will be reflected in economic data very soon. Others believe the
economy will remain strong for most of the year before slowing. Our view is
somewhere between these extremes.
We expect the economy to slow by mid-year, but underlying inflation may keep
core inflation at the high end of today's forecasts, which may lead the Fed to
push rates up more than the market currently expects. This viewpoint is not
reflected into today's bond yields. Further, we doubt the Fed will be so
accommodative that it will be cutting rates anytime soon, even if some signs of
economic weakness emerge, which market participants seems to be expecting.
Even though a slower growing economy appears probable, we doubt this will turn
into something worse. Defaults may be rising during 2006, but the level will be
low by historical standards, which should keep bond yields within normal ranges
relative to risk-free assets.
The wide range of perceptions likely means the market consensus will shift from
time to time, creating opportunities for us to make adjustments that should
enhance Fund returns.
Delmar King
MMA Praxis Intermediate Income Fund Co-Manager
Benjamin Bailey, CFA(R)
MMA Praxis Intermediate Income Fund Co-Manager
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Performance review
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7
MMA Praxis Intermediate Income Fund
Performance review
Average annual total returns as of 12/31/05
[BAR CHART OMITTED]
Inception
Date 1 Year 3 Year 5 Year 10 Year
------- ------ ------ ------ -------
Class A 5/12/99 1.82% 3.08% 4.94% 4.79%
Class A* 5/12/99 -2.02% 1.78% 4.15% 4.39%
Class B 1/4/94 1.34% 2.59% 4.49% 4.50%
Class B** 1/4/94 -2.57% 1.66% 4.33% 4.50%
Past performance does not guarantee future results. The performance data quoted
represents past performance and current returns may be lower or higher. The
investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost. These
performance figures do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. To obtain
performance information current to the most recent month end, please visit
www.mmapraxis.com.
* Reflects maximum front-end sales charge of 3.75%.
** The Fund imposes a back-end sales charge (load) on Class B Shares if you
sell your shares before a certain period of time has elasped. This is
called a Contingent Deferred Sales Charge ("CDSC"). The CDSC declines over
five years starting with year one and ending in year six as follows: 4%,
4%, 3%, 2%, 1%.
Class A Share of this Fund were not in existence prior to 5/12/99. Class A Share
performance calculated for any period prior to 5/12/99 is based on the
performance of Class B Share since inception of 1/4/94. The B Share CDSC does
not apply to performance over 5 years; therefore, the 10-year return does not
reflect the CDSC.
The total return set forth reflects certain expenses that were voluntarily
reduced, reimbursed or paid by third party. In such instances, and without this
activity, total return would have been lower.
8
MMA Praxis Intermediate Income Fund
Performance review (continued)
Growth of $10,000 investment 12/31/95 to 12/31/05
[The following table was represented as a line chart in the printed material.]
Lehman Brothers
Class A* Class B Aggregate Index(1)
12/31/1995 9,621 10,000 10,000
3/31/1996 9,439 9,811 9,823
6/30/1996 9,421 9,792 9,879
9/30/1996 9,583 9,961 10,061
12/31/1996 9,835 10,223 10,363
3/31/1997 9,748 10,132 10,305
6/30/1997 10,050 10,446 10,684
9/30/1997 10,327 10,734 11,039
12/31/1997 10,584 11,001 11,363
3/31/1998 10,736 11,159 11,540
6/30/1998 10,955 11,386 11,810
9/30/1998 11,402 11,851 12,309
12/31/1998 11,356 11,804 12,351
3/31/1999 11,276 11,720 12,289
6/30/1999 11,164 11,594 12,181
9/30/1999 11,239 11,662 12,264
12/31/1999 11,172 11,579 12,249
3/31/2000 11,358 11,761 12,519
6/30/2000 11,424 11,831 12,737
9/30/2000 11,738 12,133 13,121
12/31/2000 12,071 12,470 13,673
3/31/2001 12,425 12,824 14,088
6/30/2001 12,487 12,877 14,167
9/30/2001 13,000 13,395 14,821
12/31/2001 12,866 13,245 14,828
3/31/2002 12,779 13,144 14,841
6/30/2002 13,233 13,597 15,390
9/30/2002 13,848 14,217 16,095
12/31/2002 14,027 14,388 16,348
3/31/2003 14,198 14,551 16,576
6/30/2003 14,528 14,875 16,991
9/30/2003 14,515 14,829 16,966
12/31/2003 14,542 14,839 17,019
3/31/2004 14,885 15,173 17,472
6/30/2004 14,544 14,809 17,045
9/30/2004 14,953 15,209 17,590
12/31/2004 15,089 15,329 17,758
3/31/2005 15,031 15,254 17,672
6/30/2005 15,412 15,623 18,204
9/30/2005 15,296 15,482 18,082
12/31/2005 15,361 15,532 18,189
For performance purposes, the above graph has not been adjusted for CDSC
charges.
This chart represents historical performance of a hypothetical investment of
$10,000 in the Intermediate Income Fund from 12/31/95 to 12/31/05, and
represents the reinvestment of dividends and capital gains in the Fund.
Past performance does not guarantee future results. The performance data
quoted represents past performance and current returns may be lower or
higher. The investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. These performance figures do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
To obtain performance information current to the most recent month end, please
visit www.mmapraxis.com.
The total return set forth reflects certain expenses that were voluntarily
reduced, reimbursed or paid by third party. In such instances, and without
this activity, total return would have been lower.
* Reflects maximum front-end sales charge of 3.75%.
Class A Share of this Fund were not in existence prior to 5/12/99. Class A
Share performance calculated for any period prior to 5/12/99 is based on the
performance of Class B Share since inception of 1/4/94.
(1) The Lehman Brothers Aggregate Bond Index is an unmanaged index composed of
the Lehman Brothers Government/Credit Index and the Lehman Brothers
Mortgage-Backed Securities Index and includes Treasury issues, agency
issues, corporate bond issues and mortgage-backed securities, and is
intended to be generally representative of the bond market as a whole.
The above indices are for illustrative purposes only and the Lehman Brothers
Aggregate Bond Index 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.
An investor cannot invest directly in an index, although they can invest in
its underlying securities.
---------------------------------
Schedule of portfolio investments
---------------------------------
9
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 3.3%
Fleet Credit Card Master Trust II, Class A, 5.60%, 12/15/08 ............... $ 1,000,000 $ 1,003,568
Ford Credit Auto Owner Trust, 4.17%, 1/15/09 .............................. 1,000,000 992,106
Ford Credit Auto Owner Trust, 4.30%, 8/15/09 .............................. 1,000,000 989,843
Honda Auto Receivables Owner Trust, 4.15%, 10/15/10 ....................... 1,000,000 984,779
Massachusetts RRB Special Purpose Trust, 3.78%, 9/15/10 ................... 1,018,000 1,000,422
MBNA Credit Card Master Note Trust, Series 2003-A1, 3.30%, 7/15/10 ........ 1,000,000 970,268
MBNA Credit Card Master Note Trust, Series 2005-A1, 4.20%, 9/15/10 ........ 1,000,000 987,793
PG&E Energy Recovery Funding LLC, 3.87%, 6/25/11 .......................... 1,365,000 1,340,024
Standard Credit Card Master Trust, Series 1994-2, 7.25%, 4/7/08 ........... 715,000 719,712
-----------
TOTAL ASSET BACKED SECURITIES .................................................. 8,988,515
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 3.2%
Bear Stearns Commercial Mortgage Securities, 5.12%, 2/11/41 ............... 1,000,000 996,274
Bear Stearns Commercial Mortgage Securities, 4.67%, 6/11/41 ............... 1,000,000 962,816
Bear Stearns Commercial Mortgage Securities, 4.56%, 2/13/42 ............... 1,000,000 982,042
Bear Stearns Commerical Mortgage Securities, 5.13%, 10/12/42 .............. 1,000,000 1,001,764
JP Morgan Chase Commercial Mortgage Securities, 4.63%, 3/15/46 ............ 1,000,000 984,608
JP Morgan Securities, Inc., 4.50%, 9/25/19 ................................ 842,836 824,962
JP Morgan Trust, 4.90%, 10/15/42 .......................................... 1,000,000 982,929
Morgan Stanley Capital, 5.01%, 1/14/42 .................................... 1,000,000 992,839
Morgan Stanley Capital, 4.83%, 6/12/47 .................................... 1,000,000 982,811
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS ...................................... 8,711,045
-----------
CORPORATE BONDS -- 25.5%
AGRICULTURAL SERVICES -- 0.6%
Cargill, Inc., 7.50%, 9/1/26 (a) .......................................... 1,250,000 1,547,288
-----------
AUDIO/VIDEO -- 0.4%
Harman International, Inc., 7.32%, 7/1/07 ................................. 1,000,000 1,027,107
-----------
AUTOMOTIVE -- 0.3%
Lear Corp., Series B, 8.11%, 5/15/09 (b) .................................. 1,000,000 930,706
-----------
BROADCASTING/CABLE -- 0.7%
Comcast Corp., 5.85%, 1/15/10 (b) ......................................... 1,000,000 1,018,716
Cox Communications, Inc., 4.63%, 1/15/10 .................................. 1,000,000 968,053
-----------
1,986,769
-----------
BROKERAGE SERVICES -- 1.3%
Goldman Sachs Group, 6.65%, 5/15/09 ....................................... 1,000,000 1,050,885
Legg Mason, Inc., 6.75%, 7/2/08 ........................................... 1,300,000 1,353,369
Lehman Brothers Holdings, 7.00%, 2/1/08 (b) ............................... 1,000,000 1,041,004
-----------
3,445,258
-----------
COMMERCIAL BANKS -- 2.0%
Bank of America Corp., 7.75%, 8/15/15 ..................................... 1,000,000 1,188,712
Bank One Texas, 6.25%, 2/15/08 ............................................ 1,950,000 2,000,199
State Street Corp., 7.35%, 6/15/26 ........................................ 1,000,000 1,233,016
Wells Fargo Co., 5.13%, 9/1/12 (b) ........................................ 1,250,000 1,257,690
-----------
5,679,617
-----------
10
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS -- 25.5%, continued
CONSTRUCTION -- 0.4%
D.R. Horton, Inc., 8.50%, 4/15/12 ......................................... $ 500,000 $ 534,204
KB Home, 8.63%, 12/15/08 .................................................. 500,000 531,087
-----------
1,065,291
-----------
ELECTRIC - INTEGRATED -- 2.0%
Alabama Power Co., Series V, 5.60%, 3/15/33 ............................... 1,000,000 1,014,501
Midamerican Energy Co., 6.75%, 12/30/31 (b) ............................... 1,500,000 1,715,285
Pacific Gas & Electric, 6.05%, 3/1/34 (b) ................................. 1,000,000 1,034,959
Pepco Holdings, Inc., 3.75%, 2/15/06 ...................................... 1,000,000 998,751
Puget Sound Energy, Inc., 6.74%, 6/15/18 .................................. 1,000,000 1,113,039
-----------
5,876,535
-----------
ELECTRIC SERVICES -- 0.7%
AEP Texas North Co., Series B, 5.50%, 3/1/13 .............................. 1,000,000 1,011,943
FPL Energy Caithness Funding, 7.65%, 12/31/18 (a) ......................... 780,813 865,539
-----------
1,877,482
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS -- 0.6%
Applied Materials, Inc., 7.13%, 10/15/17 .................................. 1,400,000 1,551,805
-----------
FINANCE - AUTO LOANS -- 0.5%
Ford Motor Credit Co., 7.25%, 10/25/11 (b) ................................ 1,000,000 863,856
General Motors Acceptance Corp., 6.75%, 12/1/14 (b) ....................... 500,000 449,811
-----------
1,313,667
-----------
FINANCIAL SERVICES -- 1.2%
General Electric Capital Corp., 6.88%, 11/15/10 ........................... 1,000,000 1,083,916
General Electric Capital Corp., 6.75%, 3/15/32 (b) ........................ 1,000,000 1,173,851
SLM Corp., 4.00%, 1/15/09 ................................................. 1,000,000 973,133
-----------
3,230,900
-----------
FIRE, MARINE & CASUALTY INSURANCE -- 0.4%
Berkley Corp., 5.13%, 9/30/10 ............................................. 1,000,000 993,288
-----------
FOOD PROCESSING -- 1.0%
Dean Foods Co., 8.15%, 8/1/07 ............................................. 750,000 770,625
General Mills, Inc., 5.13%, 2/15/07 ....................................... 1,000,000 999,142
Hormel Foods Corp., 6.63%, 6/1/11 ......................................... 1,000,000 1,082,185
-----------
2,851,952
-----------
GENERAL MEDICAL & SURGICAL HOSPITALS -- 0.4%
HCA, Inc., 6.95%, 5/1/12 .................................................. 1,000,000 1,037,244
-----------
GOVERNMENTS (FOREIGN) -- 0.2%
CANADA
Province of Ontario, 5.70%, 12/1/08 ....................................... 500,000 449,634
-----------
INSURANCE -- 1.2%
Allstate Corp., 7.50%, 6/15/13 ............................................ 1,100,000 1,263,010
Old Republic International Corp., 7.00%, 6/15/07 .......................... 1,000,000 1,025,060
Principal Life Global, 6.25%, 2/15/12 (a)(b) .............................. 1,000,000 1,062,222
-----------
3,350,292
-----------
INTERNAL COMBUSTION ENGINES, N.E.C. -- 0.4%
Briggs & Stratton Corp., 8.88%, 3/15/11 ................................... 1,000,000 1,120,362
-----------
11
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS -- 25.5%, continued
MEDICAL - BIOMEDICAL/GENETIC -- 0.5%
Amgen, Inc., 4.00%, 11/18/09 (b) .......................................... $ 1,500,000 $ 1,454,568
-----------
MEDICAL EQUIPMENT & SUPPLIES -- 0.4%
Beckman Instruments, Inc., 7.05%, 6/1/26 .................................. 1,010,000 1,173,691
-----------
NATURAL GAS PRODUCTION AND/OR DISTRIBUTION -- 1.8%
Indiana Gas Co., 6.55%, 6/30/28 ........................................... 250,000 272,044
Keyspan Gas East, 7.88%, 2/1/10 ........................................... 1,250,000 1,380,525
National Fuel Gas Co., 6.30%, 5/27/08 ..................................... 1,000,000 1,027,966
Northern Natural Gas, 5.38%, 10/31/12 (a) ................................. 1,000,000 1,018,708
Southern Union Co., 8.25%, 11/15/29 ....................................... 1,050,000 1,286,466
-----------
4,985,709
-----------
OIL & GAS EXPLORATION, PRODUCTION & SERVICES -- 1.8%
Anadarko Finance Co., 7.50%, 5/1/31 ....................................... 1,000,000 1,225,613
Burlington Resources, Inc., 7.38%, 3/1/29 ................................. 1,073,000 1,336,179
Conoco, Inc., 6.95%, 4/15/29 .............................................. 1,075,000 1,297,421
Pemex Project, 7.38%, 12/15/14 (b) ........................................ 500,000 555,500
XTO Energy, Inc., 7.50%, 4/15/12 .......................................... 500,000 559,285
-----------
4,973,998
-----------
PUBLISHING - JOURNALS -- 0.5%
Thomson Corp., 6.20%, 1/5/12 .............................................. 1,200,000 1,264,584
-----------
REAL ESTATE -- 0.4%
EOP Operating LP, 7.00%, 7/15/11 .......................................... 1,000,000 1,070,343
-----------
RETAIL - DISCOUNT -- 0.9%
Dollar General Corp., 8.63%, 6/15/10 ...................................... 1,000,000 1,097,500
Wal-Mart Stores, 7.55%, 2/15/30 (b) ....................................... 1,000,000 1,275,993
-----------
2,373,493
-----------
RETAIL - FOOD -- 1.2%
Delhaize America, Inc., 8.13%, 4/15/11 (b) ................................ 1,000,000 1,090,067
Kroger Co., 7.63%, 9/15/06 ................................................ 1,000,000 1,015,119
YUM! Brands, Inc., 8.88%, 4/15/11 ......................................... 1,000,000 1,144,920
-----------
3,250,106
-----------
SUPRANATIONAL BANK -- 0.4%
Corporation Andina de Fomento, 5.20%, 5/21/13 ............................. 1,000,000 995,946
-----------
SURGICAL & MEDICAL INSTRUMENTS -- 0.4%
Guidant Corp., 6.15%, 2/15/06 ............................................. 1,000,000 1,001,616
-----------
TELEPHONE - INTEGRATED -- 0.8%
GTE California, Inc., 7.65%, 3/15/07 ...................................... 1,000,000 1,024,872
Sprint Capital Corp., 7.63%, 1/30/11 ...................................... 1,000,000 1,102,730
-----------
2,127,602
-----------
TRANSPORTATION SERVICES -- 1.7%
Golden State Petroleum Transportation, 8.04%, 2/1/19 ...................... 1,000,000 1,071,950
Union Tank Car Co., 7.13%, 2/1/07 ......................................... 1,550,000 1,587,797
United Parcel Service, 8.38%, 4/1/30 ...................................... 1,500,000 2,083,843
-----------
4,743,590
-----------
UTILITIES - NATURAL GAS -- 0.4%
Michigan Consolidated Gas Co., 8.25%, 5/1/14 .............................. 1,000,000 1,198,120
-----------
TOTAL CORPORATE BONDS .......................................................... 69,948,563
-----------
12
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES -- 1.2%
COMMUNITY DEVELOPMENT -- 1.2%
MMA Community Development Investment, Inc., 2.23%, 1/1/06, (c)+ ........... $ 1,350,000 $ 1,350,000
MMA Community Development Investment, Inc., 3.34%, 1/1/06, (c)+ ........... 2,025,000 2,025,000
-----------
TOTAL CORPORATE NOTES .......................................................... 3,375,000
-----------
INTEREST ONLY BONDS -- 0.6%
FREDDIE MAC -- 0.4%
5.00%, 5/15/23 ............................................................ 2,688,388 151,226
5.00%, 4/15/29 ............................................................ 2,000,000 469,638
5.50%, 11/15/32 ........................................................... 1,200,000 562,648
-----------
1,183,512
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOC. -- 0.2%
1.04%, 4/16/07 ............................................................ 12,383,439 512,001
-----------
TOTAL INTEREST ONLY BONDS ...................................................... 1,695,513
-----------
MUNICIPAL BONDS -- 0.1%
GENERAL OBLIGATIONS -- 0.1%
MONTANA
Billings Federal Office LTD., 7.25%, 2/15/15 .............................. 329,000 336,429
-----------
MUTUAL FUND -- 0.6%
MUTAL FUNDS
Pax World High Yield Fund ................................................. 187,869 1,568,706
-----------
PREFERRED STOCK -- 0.4%
COMMERCIAL BANKS -- 0.4%
HSBC USA, Inc. ............................................................ 40,000 1,032,000
-----------
U.S. GOVERNMENT AGENCIES -- 62.8%
FANNIE MAE -- 33.4%
7.25%, 1/1/07 ............................................................. 1,625,000 1,725,039
4.75%, 1/2/07 (b) ......................................................... 1,250,000 1,248,679
6.63%, 10/15/07 ........................................................... 450,000 464,235
5.25%, 1/15/09 (b) ........................................................ 5,800,000 5,888,519
7.25%, 1/15/10 ............................................................ 2,950,000 3,214,264
7.45%, 10/1/11 ............................................................ 3,053,397 3,102,018
6.13%, 3/15/12 (b) ........................................................ 4,700,000 5,029,611
4.38%, 3/15/13 (b) ........................................................ 2,500,000 2,434,320
4.38%, 7/17/13 ............................................................ 5,250,000 5,069,641
4.13%, 4/15/14 (b) ........................................................ 1,000,000 953,592
7.35%, 1/1/15 ............................................................. 367,239 402,356
5.00%, 4/15/15 (b) ........................................................ 2,250,000 2,283,937
7.00%, 7/1/15 ............................................................. 20,556 21,574
4.38%, 10/15/15 (b) ....................................................... 5,500,000 5,308,099
5.00%, 7/1/18 ............................................................. 1,096,607 1,086,451
5.00%, 9/1/18 ............................................................. 1,325,944 1,313,664
7.00%, 11/1/19 ............................................................ 123,331 129,209
7.00%, 11/1/19 ............................................................ 187,701 196,647
5.00%, 7/1/23 ............................................................. 1,970,411 1,928,498
5.00%, 4/1/24 ............................................................. 1,948,753 1,906,275
13
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 62.8%, continued
FANNIE MAE -- 33.4% continued
5.00%, 7/1/25 ............................................................. $ 2,150,935 $ 2,102,987
5.00%, 10/1/25 ............................................................ 2,472,937 2,417,811
5.50%, 11/1/25 ............................................................ 1,989,148 1,985,003
8.50%, 9/1/26 ............................................................. 488,017 529,147
6.63%, 11/15/30 ........................................................... 1,000,000 1,233,032
6.50%, 5/1/31 ............................................................. 186,335 191,177
6.50%, 6/1/32 ............................................................. 429,828 441,748
6.00%, 10/1/32 ............................................................ 371,299 375,461
5.00%, 2/1/33 ............................................................. 1,599,572 1,555,457
5.50%, 3/1/33 ............................................................. 996,456 989,440
5.50%, 4/1/33 ............................................................. 708,528 703,332
3.56%, 6/1/33 ............................................................. 1,086,313 1,086,795
6.00%, 8/1/33 ............................................................. 841,234 849,227
4.32%, 10/1/33 ............................................................ 1,778,095 1,759,756
6.00%, 10/1/33 ............................................................ 875,191 883,507
4.09%, 2/1/34 ............................................................. 2,186,920 2,257,801
5.50%, 2/1/34 ............................................................. 1,335,778 1,322,935
5.50%, 2/1/34 ............................................................. 1,394,953 1,381,541
3.86%, 4/1/34 ............................................................. 1,108,385 1,140,422
4.36%, 4/1/34 ............................................................. 140,770 144,106
4.23%, 5/1/34 ............................................................. 1,182,346 1,163,448
5.50%, 5/1/34 ............................................................. 1,452,180 1,441,530
6.00%, 8/1/34 ............................................................. 2,750,459 2,776,594
5.00%, 10/1/34 ............................................................ 1,798,631 1,742,798
5.50%, 10/1/34 ............................................................ 1,627,509 1,613,131
5.50%, 11/1/34 ............................................................ 1,748,076 1,731,268
6.00%, 11/1/34 ............................................................ 3,268,479 3,299,536
5.50%, 1/1/35 ............................................................. 2,554,343 2,531,777
5.50%, 1/1/35 ............................................................. 1,687,256 1,671,033
5.00%, 10/1/35 ............................................................ 2,966,471 2,874,386
5.50%, 10/1/35 ............................................................ 3,744,002 3,708,122
-----------
91,610,936
-----------
FEDERAL FARM CREDIT BANK -- 0.7%
4.88%, 12/16/15 ........................................................... 2,000,000 2,003,946
-----------
FEDERAL HOME LOAN BANK -- 1.6%
3.75%, 8/15/07 ............................................................ 1,000,000 984,687
4.13%, 8/13/10 ............................................................ 1,000,000 971,087
6.63%, 11/15/10 ........................................................... 900,000 969,909
3.88%, 6/14/13 ............................................................ 300,000 282,691
4.50%, 9/16/13 ............................................................ 1,250,000 1,225,783
-----------
4,434,157
-----------
FREDDIE MAC -- 23.3%
2.96%, 5/1/07 + ........................................................... 981,401 958,812
3.30%, 9/14/07 ............................................................ 1,000,000 975,436
9.00%, 6/1/08 ............................................................. 1,184 1,291
6.75%, 1/15/09 ............................................................ 292,382 295,003
14
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 62.8%, continued
FREDDIE MAC -- 23.3% continued
5.75%, 3/15/09 ............................................................ $ 5,450,000 $ 5,610,840
3.75%, 7/15/09 ............................................................ 2,000,000 2,417,261
4.13%, 7/12/10 ............................................................ 1,987,000 1,937,627
4.00%, 9/1/10 ............................................................. 1,410,218 1,365,845
6.88%, 9/15/10 (b) ........................................................ 831,000 904,586
6.00%, 6/15/11 ............................................................ 2,500,000 2,646,190
5.00%, 7/15/14 (b) ........................................................ 5,000,000 5,067,370
5.50%, 9/1/17 ............................................................. 1,267,864 1,276,223
6.00%, 9/1/17 ............................................................. 1,826,688 1,864,027
5.00%, 10/1/17 ............................................................ 935,382 927,630
5.50%, 11/1/17 ............................................................ 1,447,241 1,456,988
6.00%, 2/1/18 ............................................................. 990,363 1,010,921
5.00%, 5/1/18 ............................................................. 837,129 829,980
4.50%, 6/1/18 ............................................................. 2,238,361 2,183,116
5.00%, 9/1/18 ............................................................. 1,238,742 1,228,164
5.00%, 9/1/18 ............................................................. 1,320,523 1,309,336
5.00%, 10/1/18 ............................................................ 1,364,098 1,352,512
5.00%, 11/1/18 ............................................................ 1,322,501 1,311,207
5.00%, 4/1/19 ............................................................. 2,276,889 2,255,419
6.75%, 9/15/29 ............................................................ 675,000 834,775
7.00%, 2/1/30 ............................................................. 1,018,004 1,059,891
7.50%, 7/1/30 ............................................................. 986,620 1,035,232
5.00%, 12/15/30 ........................................................... 2,000,000 1,959,645
6.50%, 2/1/31 ............................................................. 55,926 57,318
7.00%, 3/1/31 ............................................................. 593,943 618,381
6.75%, 3/15/31 (b) ........................................................ 2,980,000 3,735,308
5.00%, 4/15/31 ............................................................ 2,000,000 1,966,081
6.50%, 8/1/31 ............................................................. 47,550 48,828
6.50%, 2/1/32 ............................................................. 432,130 443,744
6.00%, 10/1/32 ............................................................ 1,309,732 1,325,080
5.50%, 8/1/33 ............................................................. 1,967,071 1,953,834
5.50%, 11/1/33 ............................................................ 1,463,572 1,453,723
5.50%, 12/1/33 ............................................................ 1,187,785 1,179,791
3.02%, 5/1/34 ............................................................. 1,466,241 1,433,870
6.00%, 11/1/34 ............................................................ 1,315,068 1,329,748
5.00%, 7/1/35 ............................................................. 2,911,458 2,818,655
5.00%, 7/1/35 ............................................................. 1,962,155 1,899,611
-----------
64,339,299
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOC. -- 2.4%
4.50%, 4/1/06 + ........................................................... 1,222,095 1,224,440
7.50%, 9/15/07 ............................................................ 42,420 44,693
6.75%, 4/15/16 ............................................................ 127,002 133,444
7.00%, 12/20/30 ........................................................... 222,282 231,785
6.50%, 4/20/31 ............................................................ 245,540 254,875
6.50%, 7/20/31 ............................................................ 212,213 220,001
6.50%, 10/20/31 ........................................................... 458,387 475,815
15
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 62.8%, continued
7.00%, 10/20/31 ........................................................... 127,160 $ 132,596
7.00%, 3/20/32 ............................................................ 529,994 552,654
6.50%, 5/20/32 ............................................................ 272,870 283,170
6.93%, 9/15/39 ............................................................ 2,042,990 2,141,253
6.85%, 10/15/39 ........................................................... 725,384 759,632
-----------
6,454,358
-----------
SMALL BUSINESS ADMINISTRATION -- 0.0%
4.50%, 9/25/18 ............................................................ 122,256 122,333
-----------
TENNESSEE VALLEY AUTHORITY -- 1.4%
6.25%, 12/15/17 ........................................................... 2,000,000 2,236,882
4.65%, 6/15/35 ............................................................ 1,750,000 1,654,522
-----------
3,891,404
-----------
TOTAL U.S. GOVERNMENT AGENCIES ................................................. 172,856,433
-----------
U.S. TREASURY OBLIGATIONS -- 0.0%
PRIVATE EXPORT FUNDING -- 0.0%
Export Funding Trust, Series 1995-A, Class A, 8.21%, 12/29/06 ............. 24,827 25,286
-----------
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING -- 12.6%
SHORT TERM -- 12.6%
Bank of New York City Letter of Credit .................................... 56,686 56,686
Fannie Mae
7.00%, 10/25/07 ......................................................... 90 12
5.50%, 12/25/14 ......................................................... 180,478 156,647
5.50%, 6/25/15 .......................................................... 10,362 201
6.00%, 9/25/15 .......................................................... 45,120 21,820
6.00%, 10/25/15 ......................................................... 369,078 47,458
5.00%, 5/25/16 .......................................................... 10,829 8,794
6.50%, 7/25/16 .......................................................... 85,518 6,161
5.00%, 11/25/16 ......................................................... 72,191 30,507
5.50%, 12/25/16 ......................................................... 248,158 216,687
5.50%, 2/25/17 .......................................................... 40,608 41,460
5.50%, 3/25/17 .......................................................... 57,663 58,815
8.00%, 3/25/17 .......................................................... 58,011 27,366
4.00%, 7/25/17 .......................................................... 54,144 32,323
5.00%, 8/25/17 .......................................................... 20,704 9,578
5.50%, 9/25/17 .......................................................... 189,502 123,198
4.00%, 9/25/17 .......................................................... 31,584 22,402
4.50%, 12/25/17 ......................................................... 90,239 45,853
6.00%, 8/25/21 .......................................................... 47,114 16,062
7.00%, 10/25/21 ......................................................... 417,807 43,287
5.00%, 1/25/22 .......................................................... 27,072 9,579
8.00%, 7/25/22 .......................................................... 81,215 9,047
4.00%, 7/25/22 .......................................................... 902,392 637,535
4.50%, 8/25/22 .......................................................... 225,598 204,487
5.00%, 9/25/22 .......................................................... 902,392 615,543
4.50%, 4/25/23 .......................................................... 451,196 319,067
4.35%, 4/25/23 .......................................................... 679,927 470,542
16
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING -- 12.6%, continued
Fannie Mae, continued
3.50%, 6/25/23 .......................................................... 41,408 $ 27,085
6.50%, 7/25/26 .......................................................... 8,122 3,241
5.50%, 3/25/28 .......................................................... 8,282 8,474
6.295%, 9/25/28 ......................................................... 142,325 55,774
4.25%, 10/25/28 ......................................................... 41,408 32,154
6.47%, 2/25/29 .......................................................... 9,024 3,645
5.00%, 3/25/29 .......................................................... 7,899 7,831
5.50%, 12/25/29 ......................................................... 451,196 14,399
4.50%, 4/25/30 .......................................................... 36,232 13,852
6.00%, 4/25/30 .......................................................... 45,120 20,204
8.00%, 11/25/30 ......................................................... 90,239 4,976
5.00%, 4/25/31 .......................................................... 315,837 142,730
4.88%, 9/25/31 .......................................................... 20,704 21,024
7.50%, 11/25/31 ......................................................... 873,097 220,772
3.50%, 2/25/32 .......................................................... 41,408 31,927
5.00%, 4/25/32 .......................................................... 49,865 48,061
5.00%, 10/25/32 ......................................................... 37,335 31,305
4.00%, 12/25/32 ......................................................... 39,913 15,079
4.50%, 3/25/33 .......................................................... 669,197 650,476
3.50%, 6/25/33 .......................................................... 118,344 21,348
5.00%, 6/25/33 .......................................................... 83,856 80,095
4.00%, 7/25/33 .......................................................... 234,972 90,568
3.50%, 8/25/33 .......................................................... 22,567 16,931
7.50%, 7/25/41 .......................................................... 1,824,221 411,072
7.00%, 12/25/41 ......................................................... 9,024 2,374
6.50%, 12/25/41 ......................................................... 9,024 2,514
7.00%, 12/25/41 ......................................................... 4,512 1,166
7.50%, 12/25/41 ......................................................... 880,402 220,941
6.50%, 8/25/42 .......................................................... 716,942 256,444
7.50%, 12/25/42 ......................................................... 18,066 6,004
6.50%, 12/25/42 ......................................................... 2,346 929
7.50%, 3/25/44 .......................................................... 33,416 18,979
7.00%, 3/25/45 .......................................................... 212,197 63,087
7.50%, 1/25/48 .......................................................... 652,134 196,444
Fannie Pool #G80058 8.00%, 4/17/26 ........................................ 938,487 86,537
Federal Home Loan Mortgage Corp.
2.837%, 2/15/10 ......................................................... 36,707 4,149
2.478%, 5/15/10 ......................................................... 10,930 6,128
Freddie Mac
2.64%, 12/15/09 ......................................................... 175,337 169,551
6.50%, 10/15/10 ......................................................... 51,888 43,475
4.25%, 12/15/10 ......................................................... 216,574 20,085
3.32%, 12/15/11 ......................................................... 2,707 2,612
5.50%, 2/15/12 .......................................................... 180,478 156,646
4.375%, 4/15/15 ......................................................... 111,220 95,137
17
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING -- 12.6%, continued
Freddie Mac, continued
4.75%, 7/15/15 .......................................................... 330,654 $ 289,021
5.125%, 10/15/15 ........................................................ 76,198 73,640
5.00%, 12/15/15 ......................................................... 117,311 11,181
6.00%, 8/15/16 .......................................................... 221,086 152,940
4.00%, 12/15/16 ......................................................... 56,399 41,003
4.00%, 1/15/17 .......................................................... 90,239 39,003
5.50%, 5/15/17 .......................................................... 107,249 60,056
5.50%, 9/15/17 .......................................................... 45,120 46,018
5.00%, 11/15/17 ......................................................... 157,919 60,151
4.00%, 11/15/17 ......................................................... 54,144 25,475
4.00%, 11/15/17 ......................................................... 61,047 31,650
4.50%, 11/15/17 ......................................................... 41,408 29,604
4.25%, 5/15/18 .......................................................... 33,657 24,357
6.00%, 2/15/19 .......................................................... 27,072 27,647
4.50%, 3/15/19 .......................................................... 117,311 97,485
5.00%, 7/15/19 .......................................................... 180,478 142,096
4.50%, 9/15/20 .......................................................... 24,272 19,109
4.50%, 12/15/20 ......................................................... 446,684 328,334
4.50%, 6/15/21 .......................................................... 360,957 211,899
4.00%, 6/15/21 .......................................................... 436,266 252,312
5.00%, 8/15/21 .......................................................... 210,127 179,819
6.00%, 9/15/21 .......................................................... 15,756 16,212
5.50%, 11/15/21 ......................................................... 270,718 84,598
5.00%, 4/15/22 .......................................................... 315,837 102,389
5.50%, 4/15/22 .......................................................... 90 53
5.00%, 6/15/22 .......................................................... 51,888 36,210
4.00%, 6/15/22 .......................................................... 31,584 20,014
4.50%, 9/15/22 .......................................................... 21,359 17,271
7.00%, 10/15/22 ......................................................... 38,311 15,871
4.00%, 10/15/22 ......................................................... 63,167 38,375
4.25%, 12/15/22 ......................................................... 360,957 225,811
4.50%, 9/15/23 .......................................................... 182,743 160,302
4.50%, 11/15/23 ......................................................... 20,290 20,103
7.00%, 4/15/24 .......................................................... 26,224 4,374
5.50%, 6/15/24 .......................................................... 451,196 375,922
5.00%, 10/15/24 ......................................................... 34,081 32,642
5.16%, 7/15/26 .......................................................... 225,598 5,758
7.50%, 9/15/26 .......................................................... 71,731 4,703
7.50%, 9/15/26 .......................................................... 58,755 9,291
7.50%, 10/15/26 ......................................................... 75,675 11,150
7.50%, 10/15/26 ......................................................... 82,199 9,880
4.50%, 11/15/26 ......................................................... 58,655 18,118
4.00%, 11/15/26 ......................................................... 643,509 196,374
7.50%, 12/15/26 ......................................................... 64,201 8,704
7.50%, 12/15/26 ......................................................... 118,985 10,349
18
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING -- 12.6%, continued
Freddie Mac, continued
7.50%, 1/15/27 .......................................................... 54,532 $ 9,560
7.50%, 1/15/27 .......................................................... 31,891 3,784
7.50%, 2/15/27 .......................................................... 31,845 3,556
7.50%, 2/15/27 .......................................................... 34,634 2,948
7.50%, 2/15/27 .......................................................... 51,752 8,840
7.50%, 3/15/27 .......................................................... 72,074 6,359
7.50%, 7/15/27 .......................................................... 25,822 2,653
7.50%, 9/15/27 .......................................................... 33,109 4,253
7.50%, 9/15/27 .......................................................... 98,974 11,744
7.00%, 10/15/27 ......................................................... 78,671 12,967
7.00%, 10/15/27 ......................................................... 336,360 47,952
7.00%, 10/15/27 ......................................................... 201,046 19,848
7.00%, 10/15/27 ......................................................... 65,532 9,801
7.00%, 10/15/27 ......................................................... 113,052 16,908
4.00%, 10/15/27 ......................................................... 100,402 41,820
4.50%, 4/15/28 .......................................................... 42,750 35,247
7.00%, 5/15/28 .......................................................... 435,296 85,937
4.50%, 1/15/29 .......................................................... 360,957 220,326
4.00%, 6/15/29 .......................................................... 41,408 28,295
5.50%, 9/15/29 .......................................................... 225,598 42,084
4.50%, 11/15/29 ......................................................... 478,596 128,266
4.25%, 1/15/30 .......................................................... 45,120 23,167
5.50%, 3/15/30 .......................................................... 315,837 48,599
4.00%, 4/15/30 .......................................................... 16,149 11,742
4.50%, 7/15/30 .......................................................... 270,718 84,843
7.00%, 9/15/30 .......................................................... 25,637 2,851
4.25%, 11/15/30 ......................................................... 55,972 29,546
5.00%, 11/15/30 ......................................................... 451,196 154,324
4.25%, 12/15/30 ......................................................... 43,810 28,482
4.00%, 7/15/31 .......................................................... 79 35
5.00%, 8/15/31 .......................................................... 103,775 87,499
4.87%, 11/15/31 ......................................................... 16,563 16,874
4.82%, 4/15/32 .......................................................... 18,634 13,682
4.00%, 6/15/32 .......................................................... 41,408 22,913
4.77%, 9/15/32 .......................................................... 20,704 14,970
6.00%, 9/15/32 .......................................................... 9,814 10,080
3.50%, 9/15/32 .......................................................... 3,119 2,255
4.00%, 6/15/33 .......................................................... 138,099 104,336
4.50%, 7/15/33 .......................................................... 20,704 12,631
4.50%, 9/15/35 .......................................................... 12,161 11,155
Government National Mortgage Assoc.
5.50%, 8/20/28 .......................................................... 17,389 17,627
4.75%, 7/20/31 .......................................................... 40,828 13,712
4.00%, 3/20/33 .......................................................... 41,201 24,824
4.67%, 5/16/34 .......................................................... 27,045 20,033
19
MMA Praxis Intermediate Income Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING -- 12.6%, continued
Government National Mortgage Assoc. #2004-68 Principal Only
0%, 5/20/31 ........................................................... 20,704 $ 10,924
Northern Institutional Liquid Asset Portfolio ............................. 21,888,390 21,888,390
U.S. Treasury Bond, 6.375%, 8/15/27 ....................................... 68,174 86,132
U.S. Treasury Inflation Indexed Bonds, 3%, 7/15/12 ........................ 754,085 895,022
------------
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING ..................... 34,504,412
------------
TOTAL INVESTMENTS (COST $304,321,317 ) -- 110.4% ............................... 303,041,902
Liabilities in excess of other assets -- (10.4%) .......................... (28,531,539)
------------
NET ASSETS -- 100.0% ........................................................... $274,510,363
============
- ----------
(a) 144A security is restricted as to resale to institutional investors. These
securities have been deemed liquid under guidelines established by the
Board of Trustees. At December 31, 2005, these securities were valued at
$4,493,757 or 1.6% of net assets.
(b) All or part of this security was on loan, as of December 31, 2005.
(c) Represents affiliated restricted security as to resale to investors and is
not registered under the Securities Act of 1933. These securities have
been deemed illiquid under guidelines established by the Board of
Trustees. Acquisition date and current cost: MMA Community Development
Investment, Inc., 2.23% - 12/01, $1,350,000 and MMA Community Development
Investment, Inc., 3.34% - 12/01, $2,025,000. At December 31, 2005, these
securities had an aggregate market value of $3,375,000, representing 1.2%
of net assets. (d)
+ Variable rate security. Rates presented are the rates in effect at
December 31, 2005. Date presented reflects next rate change date.
UNREALIZED
SWAP AGREEMENTS UNITS DEPRECIATION
---------- ------------
Sold 5 Year Credit Default Swap Protection with Morgan Stanley,
based upon Gannett Co. Inc., 6.38%, 4/1/12, Maturing 12/20/09,
(Notional amount of $1,000,000) ........................................... 1 $ 6,516
See notes to financial statements.
- -----------------------------------
Statement of assets and liabilities
- -----------------------------------
20
MMA Praxis Intermediate Income Fund
Statement of assets and liabilities
December 31, 2005
ASSETS:
Investments, at value (cost $266,441,905)* ................... $ 265,162,490
Investments in affiliates, at value (cost $3,375,000) ........ 3,375,000
Investments held as collateral for securities loaned, at value 34,504,412
-------------
Total Investments .......................................... 303,041,902
-------------
Cash ......................................................... 1,780,969
Interest and dividends receivable ............................ 2,918,034
Receivable for capital shares sold ........................... 2,729,394
Receivable for investments sold .............................. 29,673
Prepaid expenses ............................................. 9,810
-------------
Total Assets ............................................ 310,509,782
-------------
LIABILITIES:
Unrealized depreciation on swap contracts .................... 6,516
Distributions payable to shareholders ........................ 199,943
Payable for capital shares redeemed .......................... 898,774
Payable for securities loaned ................................ 34,504,412
Accrued expenses and other payables:
Investment advisory fees ................................... 111,515
Administration fees ........................................ 31,106
Distribution fees .......................................... 22,966
Other ...................................................... 224,187
-------------
Total Liabilities ....................................... 35,999,419
-------------
NET ASSETS:
Capital ...................................................... 277,835,988
Distributions in excess of net investment income ............. (64,079)
Accumulated net realized loss on investments, foreign
currency transactions and swap contracts ................... (1,972,204)
Net unrealized depreciation on investments, foreign
currency translations and swap contracts ................... (1,289,342)
-------------
Net Assets ............................................. $ 274,510,363
=============
Net Assets
Class A .................................................... $ 239,583,211
Class B .................................................... 34,927,152
-------------
Total ................................................... $ 274,510,363
=============
Shares Outstanding
(unlimited number of shares authorized with $.01 par value)
Class A .................................................... 24,628,593
Class B .................................................... 3,589,944
-------------
Total ................................................... 28,218,537
=============
Net asset value
Class A - Redemption Price Per Share ....................... $ 9.73
=============
Class A - Maximum Sales Charge ............................. 3.75%
=============
Class A - Maximum Offering Price Per Share
(100%/(100%-Maximum Sales Charge)) of
net asset value adjusted to the nearest cent ............ $ 10.11
=============
Class B - offering price per share** ....................... $ 9.73
=============
* Includes securities on loan of $33,057,778.
** Redemption price per share (Class B) varies by length of time shares are
held.
See notes to financial statements.
-----------------------
Statement of operations
-----------------------
21
MMA Praxis Intermediate Income Fund
Statement of operations
For the year ended December 31, 2005
INVESTMENT INCOME:
Interest ....................................................... $ 12,705,147
Dividends ...................................................... 10,376
Income from securities lending ................................. 29,618
Interest from affiliates ....................................... 84,845
------------
Total Investment Income ...................................... 12,829,986
------------
EXPENSES:
Investment advisory fees ....................................... 1,363,936
Administration fees ............................................ 418,561
Distribution fees-Class A ...................................... 417,710
Distribution fees-Class B ...................................... 283,076
Shareholder servicing fees-Class A ............................. 587,588
Shareholder servicing fees-Class B ............................. 83,915
Legal fees and expenses ........................................ 182,482
Custodian fees ................................................. 28,514
Trustees' fee and expenses ..................................... 22,493
Transfer agent fees ............................................ 13,205
Other expenses ................................................. 162,982
------------
Total expenses before reductions/reimbursements ........... 3,564,462
Expenses waived by Investment Adviser ........................ (134,653)
Expenses reduced by Distributor .............................. (674,502)
Expenses reduced by Custodian ................................ (27,199)
------------
Net Expenses .............................................. 2,728,108
------------
Net Investment Income .......................................... 10,101,878
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on security transactions, foreign
currency transactions and swap contracts ..................... 511,246
Change in unrealized appreciation/depreciation of investments
and foreign currency translations during the year ............ (6,035,208)
Change in unrealized appreciation/depreciation of swap contracts
during the year .............................................. (6,583)
------------
Net realized and unrealized loss on investments,
foreign currency transactions and swap contracts ............. (5,530,545)
------------
Net increase in net assets resulting from operations ........... $ 4,571,333
============
See notes to financial statements.
- -----------------------------------
Statements of changes in net assets
- -----------------------------------
22
MMA Praxis Intermediate Income Fund
Statements of changes in net assets
Year Ended Year Ended
December 31, December 31,
2005 2004
- -------------------------------------------------------------------------------------------------------
From Investment Activities:
Net investment income ................................................ $ 10,101,878 $ 5,895,664
Net realized gain (loss) on investments, foreign currency transactions
and swap contracts ................................................. 511,246 386,849
Change in unrealized appreciation/depreciation of investments, foreign
currency translations and swap contracts during the year ........... (6,041,791) 2,243,973
------------- -------------
Net increase in net assets resulting from operations ................. 4,571,333 8,526,486
------------- -------------
Distributions to Class A Shareholders:
From net investment income ......................................... (9,492,380) (4,954,626)
Distributions to Class B Shareholders:
From net investment income ......................................... (1,306,408) (1,481,661)
------------- -------------
Change in net assets from distributions to shareholders .............. (10,798,788) (6,436,287)
------------- -------------
Change in net assets from capital transactions ....................... 10,631,576 184,508,255
------------- -------------
Change in net assets ................................................. 4,404,121 186,598,454
Net Assets:
Beginning of year .................................................. 270,106,242 83,507,788
------------- -------------
End of year ........................................................ $ 274,510,363 $ 270,106,242
============= =============
(Distributions in excess of)/accumulated net investment income ....... $ (64,079) $ 23,131
============= =============
See notes to financial statements.
--------------------
Financial highlights
--------------------
23
MMA Praxis Intermediate Income Fund
Financial highlights
For a share outstanding throughout the year indicated.
Class A Shares
-------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year .............. $ 9.95 $ 9.99 $ 10.05 $ 9.69 $ 9.62
----------- ----------- ----------- ----------- -----------
Investment Activities:
Net investment income ...................... 0.37 0.39 0.39 0.48 0.54
Net realized and unrealized gains
(losses) from investments, foreign
currency transactions and swap contracts.. (0.19) (0.02) (0.03) 0.37 0.07
----------- ----------- ----------- ----------- -----------
Total from Investment Activities ........... 0.18 0.37 0.36 0.85 0.61
----------- ----------- ----------- ----------- -----------
Distributions:
Net investment income ...................... (0.40) (0.41) (0.42) (0.49) (0.54)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year .................... $ 9.73 $ 9.95 $ 9.99 $ 10.05 $ 9.69
=========== =========== =========== =========== ===========
Total Return (excludes sales charge) ............ 1.82% 3.77% 3.67% 9.02% 6.47%
Ratios/Supplemental Data:
Net Assets at end of year (000) ............ $ 239,583 $ 231,369 $ 39,270 $ 32,931 $ 26,931
Ratio of expenses to average net assets .... 0.94% 0.91% 0.85% 0.85% 0.85%
Ratio of net investment income to
average net assets ....................... 3.77% 3.69% 3.85% 4.94% 5.59%
Ratio of expenses to average net assets* ... 1.23% 1.33% 1.58% 1.69% 1.65%
Portfolio Turnover (a) ..................... 37.79% 30.29% 47.58% 58.16% 36.00%
- ------------------------------------------------------------------------------------------------------------------------------------
* During the year, certain expenses were voluntarily reduced/reimbursed. If
such expense reductions had not occurred, the ratios would have been as
indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements.
24
MMA Praxis Intermediate Income Fund
Financial highlights, continued
For a share outstanding throughout the year indicated.
Class B Shares
--------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2005 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year .......... $ 9.94 $ 9.98 $ 10.05 $ 9.69 $ 9.61
---------- ---------- ---------- ---------- ----------
Investment Activities:
Net investment income ..................... 0.33 0.33 0.34 0.45 0.52
Net realized and unrealized gains
(losses) from investments, foreign
currency transactions and swap contracts (0.20) (0.01) (0.03) 0.36 0.07
---------- ---------- ---------- ---------- ----------
Total from Investment Activities .......... 0.13 0.32 0.31 0.81 0.59
---------- ---------- ---------- ---------- ----------
Distributions:
Net investment income ..................... (0.34) (0.36) (0.38) (0.45) (0.51)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year ................ $ 9.73 $ 9.94 $ 9.98 $ 10.05 $ 9.69
========== ========== ========== ========== ==========
Total Return (excludes redemption charge) ... 1.34% 3.30% 3.14% 8.64% 6.21%
Ratios/Supplemental Data:
Net Assets at end of year (000) ........... $ 34,927 $ 39,506 $ 44,238 $ 41,544 $ 35,814
Ratio of expenses to average net assets ... 1.39% 1.38% 1.30% 1.20% 1.20%
Ratio of net investment income to
average net assets ..................... 3.31% 3.31% 3.41% 4.59% 5.26%
Ratio of expenses to average net assets* .. 1.79% 1.91% 2.07% 2.19% 2.15%
Portfolio Turnover (a) .................... 37.79% 30.29% 47.58% 58.16% 36.00%
- -----------------------------------------------------------------------------------------------------------------------------------
* During the year, certain expenses were voluntarily reduced, reimbursed or
paid by third party. If such activity had not occurred, the ratios would
have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements.
25
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- --------------------------
MMA Praxis Core Stock Fund
- --------------------------
26
MMA Praxis Core Stock Fund
Annual report to shareholders
Portfolio managers' letter
With the widespread surge in stock prices during the fourth quarter, 2005 turned
in respectable, if not overly impressive, returns for U.S. equity investors. Not
a bad investment result for a year that saw persistently high energy prices,
continued hostilities in Iraq, a devastating Atlantic hurricane season, and
bombings in London's transportation system. As discouraging as these events are,
they were offset by positives that provided investors with just enough
confidence to continue supporting higher prices in the equity market indexes.
Among the positive catalysts were an extension to the corporate profits cycle
that was declared dead a year ago and robust mergers and acquisitions activity.
Overall economic growth also is likely to come in at 3.5 percent, a good number
for this point in the economic cycle.
Taking a step back from the averages, the positive return for the year is in
large part due to the performance in the energy sector, without which the
Standard & Poor's 500 Index (up 4.9 percent) would have risen by over 2
percentage points less than it did. Energy prices also put pressure on
pocketbooks and profit margins all across the economy, which hindered other
non-energy sectors.
Oil prices remain persistently high even though there is evidence that the
worldwide supply-demand of the actual commodity is in relative balance. Other
factors, principally the financial interest in oil futures, appear to be behind
the run-up in prices. By some measures, a large part of the demand for oil is
coming from investors who have no interest in taking ownership of physical
barrels of oil, but rather are buying contracts on the slippery stuff in hopes
of making an investment return. A run up in gold and other non-petroleum
commodity prices suggests that investors are concerned about inflation or other
"bad things" that might happen in the coming years. Recent concerns about the
possibility that Iran might choose to curtail oil production as retaliation
against Western governments for pressuring them to halt development of nuclear
capability, have also caused upward pressure on energy prices.
With the above as backdrop, the MMA Praxis Core Stock Fund also generated
positive returns for the year, lagging its benchmark, the S&P 500 Index, by
slightly more than the fees charged to shareholders. The Fund's investments in
energy companies also benefited returns with particular strength coming from the
oil services company Transocean up over 48 percent for the year. Despite the
high oil prices, other areas of the portfolio also generated handsome returns.
In particular, Jabil Circuit (up 40 percent), the contract manufacturer
continued to benefit from its very strong operating program relative to its
peers. Also driving the company's success is the increasing desire of original
equipment manufacturers, that is, the brand name electronics companies many of
us are familiar with, to contract all or part of the manufacturing to companies
like Jabil. Amgen, the biotechnology company, also delivered very good results
during the year.
Unfortunately, we weren't able to completely avoid a few trouble spots during
2005. Dell (down 30 percent), a stock that has done well for us over the last
few years, suffered particularly in the second half of the year as investors
questioned whether it could keep up its dominance and resulting growth rate.
Similarly, media conglomerate Gannett (down 23 percent) also struggled during
the year as its newspaper division reflected the challenges in broader print
media. Finally, despite making progress on its financial reporting systems
followed by a nice recovery in the stock during the fourth quarter, Fannie Mae
fell 24 percent during for the year.
As we've been saying for the last few letters, stocks seem to be neither overly
expensive nor cheap relative to earnings prospects. However, on the size
continuum, there is some reason to expect that large companies may begin to fare
better than small company stocks, which have been on a tear over the last half
decade. This signal isn't very strong, though, so we wouldn't be surprised if
the small cap indexes have one more year of outperformance in them.
Stewardship investing impacts
In an attempt to quantify the impacts of MMA's screens on its equity products,
we performed a study on the last 10 years of investment performance. Since the
performance of the Core Stock Fund reflects both the impact of exclusionary
screening and portfolio manager decisions, the study was performed on a passive
portfolio of stocks that resulted from applying MMA's screens to the S&P 500
Index. The screens applied reflected the actual companies that MMA excluded from
purchase during the last 10 years. The time period chosen may not be long enough
to ensure statistical integrity, but we believe the descriptive statistics shed
light on the question of whether screens as MMA chooses to apply them, adversely
affected performance.
27
Over the entire period, the MMA-screened portfolio generated a return a fraction
of a percent better than the return of the S&P 500 Index on an annual basis. In
the simplest terms, MMA's screens appear not to have adversely affected
performance over the period. But more interesting is that the impact of the
screens was consistently positive to performance from 1995 through 1999, and
consistently negative from 2000 through 2005. In other words, there were long
periods during which it was to our advantage that certain areas of the market
were restricted from our use as well as long periods when the screens were a
handicap. Finally, we believe all of this supports the many independent studies
conducted in recent years that conclude that at worst, socially responsible
investing screens are neutral to stock portfolio performance over long periods
of time.
Signing off
With the beginning of trading in 2006, John Nussbaum and I handed over portfolio
management responsibilities of the MMA Praxis Core Stock Fund to co-portfolio
managers Christopher Davis and Kenneth Feinberg of Davis Selected Advisers. In
preparation for this transfer, we began an adjustment to portfolio holdings
during the fourth quarter that resulted in more trading than one might normally
expect from us. We undertook this strategy in order to minimize the market
impact that can occur from selling illiquid stocks quickly and to position the
portfolio to better reflect the investment strategy of Davis Selected Advisers.
We look forward to continuing to serve MMA Praxis shareholders in the management
of the MMA Praxis Value Index Fund and we wish Chris and Ken well as they manage
the assets shareholders have entrusted to the MMA Praxis Core Stock Fund.
Chad Horning, CFA(R)
Co-manager, MMA Praxis Core Stock Fund
John Nussbaum, CFA(R)
Co-manager, MMA Praxis Core Stock Fund
- ------------------
Performance review
- ------------------
28
MMA Praxis Core Stock Fund
Performance review
Average annual total returns as of 12/31/05
[BAR CHART OMITTED]
Inception
Date 1 Year 3 Year 5 Year 10 Year
---- ------ ------ ------ -------
Class A 5/12/99 3.52% 9.79% -0.04% 5.91%
Class A* 5/12/99 -1.94% 7.84% -1.12% 5.34%
Class B 1/4/94 2.88% 9.09% -0.67% 5.46%
Class B** 1/4/94 -1.12% 8.24% -0.87% 5.46%
Past performance does not guarantee future results. The performance data quoted
represents past performance and current returns may be lower or higher. The
investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost. These
performance figures do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. To obtain
performance information current to the most recent month end, please visit
www.mmapraxis.com.
* Reflects maximum front-end sales charge of 5.25%.
** The Fund imposes a back-end sales charge (load) on Class B Shares if you
sell your shares before a certain period of time has elasped. This is
called a Contingent Deferred Sales Charge ("CDSC"). The CDSC declines over
five years starting with year one and ending in year six as follows: 4%,
4%, 3%, 2%, 1%.
Class A Share of this Fund were not in existence prior to 5/12/99. Class A Share
performance calculated for any period prior to 5/12/99 is based on the
performance of Class B Share since inception of 1/4/94. The B Share CDSC does
not apply to performance over 5 years; therefore, the 10-year return does not
reflect the CDSC.
The total return set forth reflects certain expenses that were voluntarily
reduced, reimbursed or paid by third party. In such instances, and without this
activity, total return would have been lower.
29
Growth of $10,000 investment 12/31/95 to 12/31/05
[The following table was represented as a line chart in the printed material.]
Standard &
Poor's
500 Stock
Class A* Class B Index (1)
12/31/1995 9,475 10,000 10,000
3/31/1996 9,684 10,221 10,537
6/30/1996 9,941 10,492 11,010
9/30/1996 10,333 10,905 11,350
12/31/1996 10,980 11,588 12,296
3/31/1997 11,205 11,825 12,626
6/30/1997 12,754 13,461 14,830
9/30/1997 13,521 14,270 15,941
12/31/1997 14,178 14,963 16,398
3/31/1998 15,729 16,600 18,686
6/30/1998 14,963 15,792 19,303
9/30/1998 12,811 13,521 17,383
12/31/1998 15,022 15,855 21,085
3/31/1999 15,631 16,497 22,135
6/30/1999 17,458 18,406 23,696
9/30/1999 16,220 17,090 22,216
12/31/1999 16,928 17,784 25,521
3/31/2000 17,728 18,593 26,107
6/30/2000 17,345 18,165 25,413
9/30/2000 17,179 17,954 25,167
12/31/2000 16,856 17,601 23,198
3/31/2001 15,620 16,295 20,447
6/30/2001 16,070 16,722 21,643
9/30/2001 14,222 14,780 18,466
12/31/2001 15,528 16,099 20,439
3/31/2002 15,793 16,355 20,495
6/30/2002 14,130 14,621 17,749
9/30/2002 11,981 12,363 14,682
12/31/2002 12,709 13,108 15,921
3/31/2003 12,190 12,547 15,419
6/30/2003 13,488 13,865 17,793
9/30/2003 13,731 14,084 18,264
12/31/2003 15,094 15,463 20,488
3/31/2004 15,441 15,793 20,835
6/30/2004 15,660 16,000 21,193
9/30/2004 15,151 15,451 20,796
12/31/2004 16,248 16,540 22,716
3/31/2005 15,831 16,089 22,228
6/30/2005 15,989 16,224 22,532
9/30/2005 16,258 16,469 23,344
12/31/2005 16,822 17,018 23,831
For performance purposes, the above graph has not been adjusted for CDSC
charges.
This chart represents historical performance of a hypothetical investment of
$10,000 in the Core Stock Fund from 12/31/95 to 12/31/05, and represents the
reinvestment of dividends and capital gains in the Fund.
Past performance does not guarantee future results. The performance data quoted
represents past performance and current returns may be lower or higher. The
investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost. These
performance figures do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. To obtain
performance information current to the most recent month end, please visit
www.mmapraxis.com.
The total return set forth reflects certain expenses that were voluntarily
reduced, reimbursed or paid by third party. In such instances, and without this
activity, total return would have been lower.
* Reflects maximum front-end sales charge of 5.25%.
Class A Shares of this Fund were not in existence prior to 5/12/99. Class A
Share performance calculated for any period prior to 5/12/99 is based on the
performance of Class B Share since inception of 1/4/94.
(1) The S&P 500 Composite Stock Price Index (the "S&P 500(R) Index") is a
widely recognized, unmanaged index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange.
The above index is for illustrative purposes only and does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of these value-added services. An investor cannot invest directly in
an index, although they can invest in its underlying securities.
- ---------------------------------
Schedule of portfolio investments
- ---------------------------------
30
MMA Praxis Core Stock Fund
Schedule of portfolio investments
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 96.6%
BANKS -- 4.8%
Fifth Third Bancorp (b)......................................................... 75,000 $ 2,829,000
State Street Corp. (b).......................................................... 40,000 2,217,600
Wells Fargo Co.................................................................. 158,000 9,927,140
------------
14,973,740
------------
BEVERAGES -- 1.7%
PepsiCo, Inc.................................................................... 90,600 5,352,648
------------
BROADCASTING/CABLE -- 2.4%
Comcast Corp - Class A (a)...................................................... 290,000 7,528,400
------------
BROKERAGE SERVICES -- 2.9%
J.P. Morgan Chase & Co.......................................................... 230,000 9,128,700
------------
BUILDING MATERIALS & CONSTRUCTION -- 0.8%
Vulcan Materials Co............................................................. 37,000 2,506,750
------------
CHEMICALS - GENERAL -- 0.5%
Air Products & Chemicals, Inc. (b).............................................. 26,000 1,538,940
------------
COMPUTERS & PERIPHERALS -- 4.3%
Cisco Systems, Inc. (a)......................................................... 227,000 3,886,240
Dell, Inc. (a).................................................................. 134,000 4,018,660
EMC Corp. (a)................................................................... 51,000 694,620
Intel Corp...................................................................... 199,000 4,967,040
------------
13,566,560
------------
CONSUMER FINANCIAL SERVICES -- 5.4%
American Express Co............................................................. 225,000 11,578,500
H&R Block, Inc. (b)............................................................. 210,000 5,155,500
------------
16,734,000
------------
CONSUMER GOODS & SERVICES -- 2.7%
Procter & Gamble Co. (b)........................................................ 148,000 8,566,240
------------
CONTAINERS - PAPER & PLASTIC -- 3.1%
Sealed Air Corp. (a)(b)......................................................... 135,000 7,582,950
Sonoco Products Co. (b)......................................................... 70,900 2,084,460
------------
9,667,410
------------
COSMETICS & TOILETRIES -- 3.9%
Avon Products, Inc.............................................................. 150,000 4,282,500
Colgate-Palmolive Co............................................................ 48,000 2,632,800
Kimberly Clark Corp. (b)........................................................ 89,600 5,344,640
------------
12,259,940
------------
ELECTRONIC & ELECTRICAL - GENERAL -- 4.9%
Emerson Electric Co............................................................. 85,000 6,349,500
Jabil Circuit, Inc. (a)......................................................... 169,000 6,268,210
Texas Instruments, Inc.......................................................... 87,000 2,790,090
------------
15,407,800
------------
FINANCIAL SERVICES -- 5.4%
Citigroup, Inc.................................................................. 175,000 8,492,750
Fannie Mae...................................................................... 115,000 5,613,150
Morgan Stanley.................................................................. 49,000 2,780,260
------------
16,886,160
------------
31
MMA Praxis Core Stock Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 96.6%, continued
FOOD DISTRIBUTORS & WHOLESALERS -- 1.4%
Sysco Corp...................................................................... 138,000 $ 4,284,900
------------
FOOD PRODUCTS -- 1.0%
The Hershey Co.................................................................. 55,000 3,038,750
------------
INSURANCE -- 7.0%
American International Group, Inc............................................... 185,000 12,622,550
Bershire Hathaway, Inc. - Class A (a)(b)........................................ 60 5,317,200
Chubb Corp...................................................................... 38,600 3,769,290
------------
21,709,040
------------
MANUFACTURING -- 3.1%
3M Co........................................................................... 51,000 3,952,500
Tyco International, Ltd. (b).................................................... 203,000 5,858,580
------------
9,811,080
------------
MEDICAL SUPPLIES -- 7.0%
Biomet, Inc. (b)................................................................ 101,000 3,693,570
Johnson & Johnson, Inc.......................................................... 160,000 9,616,000
Medtronic, Inc.................................................................. 145,000 8,347,650
------------
21,657,220
------------
MULTIMEDIA -- 0.8%
Time Warner, Inc................................................................ 139,300 2,429,392
------------
NEWSPAPERS -- 0.9%
Gannett Co., Inc................................................................ 45,000 2,725,650
------------
OFFICE EQUIPMENT & SERVICES -- 1.6%
Pitney Bowes, Inc. (b).......................................................... 120,000 5,070,000
------------
OIL & GAS EXPLORATION, PRODUCTION & SERVICES -- 4.4%
Anadarko Petroleum Corp......................................................... 79,900 7,570,525
ENSCO International, Inc. (b)................................................... 43,900 1,946,965
Transocean Sedco Forex, Inc. (a)(b)............................................. 62,000 4,320,780
------------
13,838,270
------------
OIL - INTEGRATED -- 3.7%
BP Amoco PLC ADR (b)............................................................ 179,000 11,495,380
------------
OILFIELD SERVICES & EQUIPMENT -- 1.4%
Schlumberger Ltd................................................................ 44,000 4,274,600
------------
PHARMACEUTICALS -- 7.2%
Cardinal Health, Inc. (b)....................................................... 140,000 9,625,000
Caremark Rx (a)................................................................. 94,000 4,868,260
Pfizer, Inc..................................................................... 334,000 7,788,880
------------
22,282,140
------------
RETAIL -- 5.5%
Costco Wholesale Corp........................................................... 157,000 7,766,790
Target Corp..................................................................... 92,000 5,057,240
Wal-Mart Stores, Inc............................................................ 92,000 4,305,600
------------
17,129,630
------------
SOFTWARE & COMPUTER SERVICES -- 5.6%
First Data Corp. (b)............................................................ 89,000 3,827,890
Microsoft Corp.................................................................. 333,000 8,707,950
Oracle Corp. (a)................................................................ 397,000 4,847,370
------------
17,383,210
------------
32
MMA Praxis Core Stock Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 96.6%, continued
TECHNOLOGY -- 0.5%
Applied Materials, Inc. (b)..................................................... 93,800 1,682,772
------------
TELECOMMUNICATIONS -- 1.8%
AT&T, Inc....................................................................... 124,950 3,060,026
Verizon Communications, Inc..................................................... 87,000 2,620,440
------------
5,680,466
------------
TRANSPORTATION SERVICES -- 0.9%
United Parcel Service, Inc. - Class B........................................... 39,000 2,930,850
------------
TOTAL COMMON STOCKS ............................................................ 301,540,638
------------
U.S. GOVERNMENT AGENCIES - DISCOUNT NOTES* -- 1.1%
FANNIE MAE -- 1.1%
4.16%, 1/3/06................................................................... 3,500,000 3,500,000
------------
CORPORATE NOTES -- 1.2%
COMMUNITY DEVELOPMENT -- 1.2%
MMA Community Development Investment, Inc., 2.23%, 1/1/06, (c)+ ................ 1,495,000 1,495,000
MMA Community Development Investment, Inc., 3.34%, 1/1/06, (c)+ ................ 2,370,000 2,370,000
------------
TOTAL CORPORATE NOTES........................................................... 3,865,000
------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING -- 14.2%
SHORT TERM -- 14.2%
Northern Institutional Liquid Asset Portfolio................................... 44,494,997 44,494,997
------------
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING ..................... 44,494,997
------------
TOTAL INVESTMENTS (COST $330,050,900) -- 113.1%................................. 353,400,635
Liabilities in excess of other assets -- (13.1%)............................ (40,945,342)
------------
NET ASSETS -- 100.0%............................................................ $312,455,293
============
- ----------
(a) Non-income producing securities.
(b) All or part of this security was on loan, as of December 31, 2005.
(c) Represents affiliated restricted security as to resale to investors and is
not registered under the Securities Act of 1933. These securities have
been deemed illiquid under guidelines established by the Board of
Trustees. Acquisition date and current cost: MMA Community Development
Investment, Inc., 2.23% - 12/01, $1,495,000 and MMA Community Development
Investment, Inc., 3.34% - 12/01, $2,370,000. At December 31, 2005, these
securities had an aggregate market value of $3,865,000, representing 1.2%
of net assets.
* Effective yield at purchase.
+ Variable rate security. Rates presented are the rates in effect at
December 31, 2005. Date presented reflects next rate change date.
ADR - American Depositary Receipt
PLC - Public Liability Co.
UNREALIZED
FUTURES CONTRACTS PURCHASED CONTRACTS DEPRECIATION
--------- ------------
S&P 500 Index Futures Contract, expiring March, 2006
(underlying face amount at value $4,391,800)......... 14 $ 50,575
See notes to financial statements.
-----------------------------------
Statement of assets and liabilities
-----------------------------------
33
MMA Praxis Core Stock Fund
Statement of assets and liabilities
December 31, 2005
ASSETS:
Investments, at value (cost $281,690,903)* ........................................ $305,040,638
Investments in affiliates, at value (cost $3,865,000) ............................. 3,865,000
Investments held as collateral for securities loaned, at value .................... 44,494,997
------------
Total Investments ............................................................ 353,400,635
------------
Cash .............................................................................. 2,952,729
Cash held as collateral for futures contracts ..................................... 220,500
Interest and dividends receivable ................................................. 317,727
Receivable for capital shares sold ................................................ 1,232,310
Prepaid expenses .................................................................. 9,738
------------
Total Assets ................................................................. 358,133,639
------------
LIABILITIES:
Distributions payable to shareholders ............................................. 52,038
Payable for securities loaned ..................................................... 44,494,997
Payable for capital shares redeemed ............................................... 589,596
Payable for variation margin on future contracts .................................. 18,550
Accrued expenses and other payables:
Investment advisory fees ....................................................... 198,115
Administration fees ............................................................ 36,674
Distribution fees .............................................................. 47,524
Other .......................................................................... 240,852
------------
Total Liabilities ............................................................ 45,678,346
------------
NET ASSETS:
Capital ........................................................................... 295,575,518
Accumulated net realized loss on investments and futures contracts ............... (6,419,385)
Net unrealized appreciation on investments ........................................ 23,349,735
Unrealized depreciation of futures contracts ...................................... (50,575)
------------
Net Assets ................................................................... $312,455,293
============
Net Assets
Class A ........................................................................ $208,639,630
Class B ........................................................................ 103,815,663
------------
Total ........................................................................ $312,455,293
============
Shares Outstanding
(unlimited number of shares authorized with $.01 par value)
Class A ........................................................................ 14,470,673
Class B ........................................................................ 7,460,653
------------
Total ........................................................................ 21,931,326
============
Net asset value
Class A - Redemption Price Per Share ........................................... $ 14.42
============
Class A - Maximum Sales Charge ................................................. 5.25%
============
Class A - Maximum Offering Price Per Share
(100%/(100%-Maximum Sales Charge)) of
net asset value adjusted to the nearest cent ................................. $ 15.22
============
Class B - offering price per share** ........................................... $ 13.92
============
* Includes securities on loan of $43,402,559.
** Redemption price per share (Class B) varies by length of time shares are
held.
See notes to financial statements.
- -----------------------
Statement of operations
- -----------------------
34
MMA Praxis Core Stock Fund
Statement of operations
For the year ended December 31, 2005
INVESTMENT INCOME:
Dividends ......................................................................... $ 5,383,230
Interest .......................................................................... 262,696
Interest from affiliates .......................................................... 97,984
Income from securities lending .................................................... 7,574
------------
Total Investment Income ........................................................ 5,751,484
------------
EXPENSES:
Investment advisory fees .......................................................... 2,313,100
Administration fees ............................................................... 604,237
Distribution fees-Class A ......................................................... 376,766
Distribution fees-Class B ......................................................... 833,164
Shareholder servicing fees-Class A ................................................ 503,768
Shareholder servicing fees-Class B ................................................ 229,497
Legal fees and expenses ........................................................... 208,204
Reimbursement of Fund expenses paid by Adviser .................................... 170,785
Custodian fees .................................................................... 31,005
Trustees' fees and expenses ....................................................... 26,893
Transfer agent fees ............................................................... 23,178
Other expenses .................................................................... 213,795
------------
Total expenses before reductions/reimbursements ............................ 5,534,392
Expenses reduced by Distributor ................................................ (605,950)
Expenses reduced by Custodian .................................................. (31,203)
------------
Net Expenses .............................................................. 4,897,239
------------
Net Investment Income ............................................................. 854,245
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on security transactions and futures contracts .................. 15,920,554
Change in unrealized appreciation/depreciation of investments during the year ..... (6,824,782)
Change in unrealized appreciation/depreciation of futures contracts during the year (56,000)
------------
Net realized and unrealized gain on investments and futures contracts ............. 9,039,772
------------
Net increase in net assets resulting from operations .............................. $ 9,894,017
============
See notes to financial statements.
-----------------------------------
Statements of changes in net assets
-----------------------------------
35
MMA Praxis Core Stock Fund
Statements of changes in net assets
Year Ended Year Ended
December 31, December 31,
2005 2004
- ------------------------------------------------------------------------------------------------------
From Investment Activities:
Net investment income ......................................... $ 854,245 $ 1,195,369
Net realized gains on investments and futures contracts ....... 15,920,554 742,212
Change in unrealized appreciation (depreciation) of investments
and futures contracts during the year ...................... (6,880,782) 20,789,513
------------- -------------
Net increase in net assets resulting from operations .......... 9,894,017 22,727,094
------------- -------------
Distributions to Class A Shareholders:
From net investment income ............................. (887,403) (993,307)
Distributions to Class B Shareholders:
From net investment income ............................. -- (201,381)
------------- -------------
Change in net assets from distributions to shareholders ....... (887,403) (1,194,688)
------------- -------------
Change in net assets from capital transactions ................ (21,969,154) 135,292,931
------------- -------------
Change in net assets .......................................... (12,962,540) 156,825,337
Net Assets:
Beginning of year ...................................... 325,417,833 168,592,496
------------- -------------
End of year ............................................ $ 312,455,293 $ 325,417,833
============= =============
Accumulated net investment income ............................. $ -- $ 681
============= =============
See notes to financial statements.
- --------------------
Financial highlights
- --------------------
36
MMA Praxis Core Stock Fund
Financial highlights
For a share outstanding throughout the year indicated.
Class A Shares
---------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year ................ $ 13.99 $ 13.06 $ 11.00 $ 13.44 $ 14.59
----------- ----------- ----------- ----------- -----------
Investment Activities:
Net investment income .......................... 0.07 0.08 0.05 0.04 0.03
Net realized and unrealized gains
(losses) from investments .................... 0.42 0.92 2.01 (2.48) (1.18)
----------- ----------- ----------- ----------- -----------
Total from Investment Activities ............... 0.49 1.00 2.06 (2.44) (1.15)
----------- ----------- ----------- ----------- -----------
Distributions:
Net investment income .......................... (0.06) (0.07) --(a) -- --
Tax return of capital .......................... -- -- --(a) -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ............................ (0.06) (0.07) -- -- --
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year ...................... $ 14.42 $ 13.99 $ 13.06 $ 11.00 $ 13.44
=========== =========== =========== =========== ===========
Total Return (excludes sales charge) .............. 3.52% 7.65% 18.77% (18.15%) (7.88%)
Ratios/Supplemental Data:
Net Assets at end of year (000) ................ $ 208,640 $ 202,474 $ 41,244 $ 25,314 $ 24,780
Ratio of expenses to average net assets ........ 1.34% 1.33% 1.25% 1.20% 1.20%
Ratio of net investment income to
average net assets ........................... 0.50% 1.04% 0.45% 0.35% 0.25%
Ratio of expenses to average net assets* ....... 1.60% 1.65% 1.86% 1.94% 1.86%
Portfolio Turnover (b) ......................... 32.66% 9.99% 7.68% 10.20% 17.58%
- -----------------------------------------------------------------------------------------------------------------------------------
* During the year, certain expenses were voluntarily reduced/reimbursed. If
such expense reductions had not occurred, the ratios would have been as
indicated.
(a) Distribution per share was less than $0.005.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements.
37
MMA Praxis Core Stock Fund
Financial highlights, continued
For a share outstanding throughout the year indicated.
Class B Shares
---------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year ................. $ 13.53 $ 12.67 $ 10.74 $ 13.19 $ 14.42
----------- ----------- ----------- ----------- -----------
Investment Activities:
Net investment income (loss) .................... (0.02) 0.01 (0.02) (0.02) (0.04)
Net realized and unrealized gains
(losses) from investments .................... 0.41 0.87 1.95 (2.43) (1.19)
----------- ----------- ----------- ----------- -----------
Total from Investment Activities ................ 0.39 0.88 1.93 (2.45) (1.23)
----------- ----------- ----------- ----------- -----------
Distributions:
Net investment income ........................... -- (0.02) -- -- --
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year ....................... $ 13.92 $ 13.53 $ 12.67 $ 10.74 $ 13.19
=========== =========== =========== =========== ===========
Total Return (excludes redemption charge) .......... 2.88% 6.96% 17.97% (18.57%) (8.53%)
Ratios/Supplemental Data:
Net Assets at end of year (000) ................. $ 103,815 $ 121,817 $ 127,348 $ 111,598 $ 139,788
Ratio of expenses to average net assets ......... 1.99% 1.98% 1.90% 1.75% 1.75%
Ratio of net investment income to
average net assets ............................ (0.14%) 0.50% (0.21%) (0.20%) (0.31%)
Ratio of expenses to average net assets* ........ 2.09% 2.22% 2.33% 2.44% 2.36%
Portfolio Turnover (a) .......................... 32.66% 9.99% 7.68% 10.20% 17.58%
- ------------------------------------------------------------------------------------------------------------------------------------
* During the year, certain expenses were voluntarily reduced, reimbursed or
paid by third party. If such activity had not occurred, the ratios would
have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements.
38
This page intentionally left blank.
---------------------------
MMA Praxis Value Index Fund
---------------------------
39
MMA Praxis Value Index Fund
Annual report to shareholders
Portfolio managers' letter
The value style of investing again outpaced the growth style during the year
2005, mainly on strong performance from energy stocks, which are traditionally
seen as value style investments. The end of 2005 caps off a half-decade during
which the value style outperformed the growth style by more than 20 percentage
points cumulatively. However, it is common for leadership to change over time
and we wouldn't be surprised to see the growth style of investing perform
relatively stronger over the coming years.
The MMA Praxis Value Index Fund performed well against this backdrop as it
continues to reflect many of the characteristics and the performance trajectory
of its benchmark, the Standard & Poor's Barra Value Index. No one characteristic
accounts for the Fund's slight outperformance of the benchmark, but the impact
of applying MMA's screens was a modest negative to performance during the year.
This wasn't unexpected during a year when sectors where we don't invest because
of our social screens - like energy, mining and metals, and tobacco - performed
very well.
The year 2006 will bring changes to the MMA Praxis Value Index Fund as Standard
& Poor's will cease publishing returns for the Barra Value Index as of June 30.
This change gives the managers of the Fund the opportunity to improve the
construction methodology and operation of the Fund while still targeting the
large company value style of investing. Stay tuned for more on these upcoming
changes.
Chad Horning, CFA(R)
Co-manager, MMA Praxis Value Index Fund
John Nussbaum, CFA(R)
Co-manager, MMA Praxis Value Index Fund
- ------------------
Performance review
- ------------------
40
MMA Praxis Value Index Fund
Performance review
Average annual total returns as of 12/31/05
[BAR CHART OMITTED]
Inception
Date 1 Year 3 Year 5 Year
---- ------ ------ ------
Class A 5/1/01 6.12% 16.09% 1.38%
Class A* 5/1/01 0.60% 14.03% 0.22%
Class B 1/4/94 5.61% 15.47% 0.84%
Class B** 1/4/94 1.61% 14.72% 0.63%
Past performance does not guarantee future results. The performance data quoted
represents past performance and current returns may be lower or higher. The
investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost. These
performance figures do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. To obtain
performance information current to the most recent month end, please visit
www.mmapraxis.com.
* Reflects maximum front-end sales charge of 5.25%.
** The Fund imposes a back-end sales charge (load) on Class B Shares if you
sell your shares before a certain period of time has elasped. This is
called a Contingent Deferred Sales Charge ("CDSC"). The CDSC declines over
five years starting with year one and ending in year six as follows: 4%,
4%, 3%, 2%, 1%.
The total return set forth reflects certain expenses that were voluntarily
reduced, reimbursed or paid by third party. In such instances, and without this
activity, total return would have been lower.
41
Growth of $10,000 investment 5/1/01 to 12/31/05
[The following table was represented as a line chart in the printed material.]
Standard & Poor's
500 Citigroup
Class A* Class B Value Index(1)
5/1/2001 9,479 10,000 10,000
6/30/2001 9,261 9,376 9,687
9/30/2001 7,933 8,012 8,117
12/31/2001 8,368 8,448 8,765
3/31/2002 8,340 8,409 8,881
6/30/2002 7,321 7,370 7,936
9/30/2002 5,849 5,877 6,312
12/31/2002 6,460 6,486 6,937
3/31/2003 6,123 6,138 6,555
6/30/2003 7,253 7,342 7,790
9/30/2003 7,407 7,489 7,988
12/31/2003 8,422 8,509 9,142
3/31/2004 8,607 8,686 9,448
6/30/2004 8,625 8,771 9,523
9/30/2004 8,743 8,881 9,622
12/31/2004 9,522 9,654 10,577
3/31/2005 9,305 9,434 10,320
6/30/2005 9,530 9,745 10,587
9/30/2005 9,878 10,091 10,951
12/31/2005 10,104 10,299 11,196
This chart represents historical performance of a hypothetical investment of
$10,000 in the Value Index Fund from 5/1/01 to 12/31/05, and represents the
reinvestment of dividends and capital gains in the Fund.
Past performance does not guarantee future results. The performance data quoted
represents past performance and current returns may be lower or higher. The
investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost. These
performance figures do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. To obtain
performance information current to the most recent month end, please visit
www.mmapraxis.com.
The total return set forth reflects certain expenses that were voluntarily
reduced, reimbursed or paid by third party. In such instances, and without this
activity, total return would have been lower.
* Reflects maximum front-end sales charge of 5.25%.
** Reflects applicable contingent deferred sales charge of 1.00%.
(1) The S&P 500/Citigroup Value Index is a market capitalization weighted
index. All the stocks in the underlying parent index are allocated into
value or growth. Stocks that no not have pure value or pure growth
characteristics have their market caps distributed between the value and
growth indices. Prior to December 19, 2005 this index represented the S&P
500/Barra Value Index.
The above index is for illustrative purposes only and does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of these value-added services. An investor cannot invest directly in
an index, although they can invest in its underlying securities..
- ---------------------------------
Schedule of portfolio investments
- ---------------------------------
42
MMA Praxis Value Index Fund
Schedule of portfolio investments
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 98.8%
ADVERTISING AGENCIES -- 0.1%
Interpublic Group of Co., Inc. (a)(b)........................................... 6,190 $ 59,734
-----------
AIRLINES -- 0.1%
Southwest Airlines Co........................................................... 3,320 54,548
-----------
APPAREL MANUFACTURERS -- 0.3%
Jones Apparel Group, Inc........................................................ 1,590 48,845
Liz Claiborne, Inc.............................................................. 1,350 48,357
V.F. Corp....................................................................... 1,280 70,835
-----------
168,037
-----------
AUTOMOTIVE -- 0.5%
AutoNation, Inc. (a)............................................................ 1,920 41,722
Cummins Engine, Inc. (b)........................................................ 140 12,562
Ford Motor Co. (b).............................................................. 26,760 206,587
-----------
260,871
-----------
BANKS -- 15.0%
AmSouth Bancorp................................................................. 4,960 130,002
Bank of America Corp............................................................ 56,160 2,591,783
Bank of New York Co., Inc....................................................... 10,230 325,826
BB&T Corp....................................................................... 7,580 317,678
Comerica, Inc................................................................... 2,380 135,089
Compass Bancshares, Inc......................................................... 1,640 79,196
Fifth Third Bancorp. (b)........................................................ 7,370 277,996
First Horizon National Corp..................................................... 1,720 66,117
Golden West Financial Corp...................................................... 1,100 72,600
Huntington Bancshares, Inc...................................................... 3,230 76,713
KeyCorp......................................................................... 5,700 187,701
M & T Bank Corp................................................................. 670 73,064
Marshall & Ilsley Corp.......................................................... 1,540 66,282
National City Corp.............................................................. 7,710 258,825
North Fork Bancorp., Inc........................................................ 5,150 140,904
Northern Trust Corp............................................................. 251 13,007
Regions Financial Corp.......................................................... 6,400 218,624
State Street Corp............................................................... 640 35,482
SunTrust Banks, Inc............................................................. 5,050 367,437
U.S. Bancorp.................................................................... 25,400 759,205
Wachovia Corp................................................................... 18,250 964,694
Wells Fargo Co.................................................................. 8,650 543,479
Zions Bancorp................................................................... 740 55,914
-----------
7,757,618
-----------
BEVERAGES -- 0.2%
Coca-Cola Enterprises, Inc...................................................... 3,470 66,520
Pepsiamericas, Inc.............................................................. 860 20,004
-----------
86,524
-----------
BROADCAST SERVICES & PROGRAMMING -- 0.5%
CCE Spinco, Inc. (a)............................................................ 659 8,630
Clear Channel Communications, Inc. (b).......................................... 7,560 237,761
Univision Communications, Inc. (a).............................................. 1,130 33,211
-----------
279,602
-----------
43
MMA Praxis Value Index Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 98.8%, continued
BROKERAGE SERVICES -- 8.6%
A.G. Edwards, Inc............................................................... 814 $ 38,144
Bear Stearns Co., Inc........................................................... 1,580 182,537
Goldman Sachs Group, Inc........................................................ 3,340 426,551
J.P. Morgan Chase & Co.......................................................... 48,930 1,942,032
Lehman Brothers Holdings, Inc................................................... 1,760 225,579
Merrill Lynch & Co.............................................................. 11,690 791,764
Morgan Stanley Dean Witter & Co................................................. 15,070 855,072
-----------
4,461,679
-----------
CABLE TV -- 0.6%
Comcast Corp., Class A (a)...................................................... 12,750 330,990
-----------
CHEMICALS - GENERAL -- 0.7%
Air Products & Chemicals, Inc................................................... 3,100 183,489
Engelhard Corp.................................................................. 1,310 39,497
Lyondell Petrochemical.......................................................... 2,860 68,125
Sovereign Bancorp............................................................... 4,410 95,344
-----------
386,455
-----------
COMPUTERS & PERIPHERALS -- 2.2%
Ceridian Corp. (a).............................................................. 448 11,133
EMC Corp. (a)................................................................... 6,690 91,118
Hewlett-Packard Co.............................................................. 26,710 764,707
NCR Corp. (a)................................................................... 2,600 88,244
Sun Microsystems, Inc. (a)(b)................................................... 47,740 200,031
-----------
1,155,233
-----------
CONSTRUCTION SERVICES -- 0.2%
D.R. Horton, Inc................................................................ 1,290 46,092
Lennar Corp..................................................................... 830 50,646
-----------
96,738
-----------
CONSUMER PRODUCTS -- 0.0%
Bausch & Lomb, Inc.............................................................. 250 16,975
-----------
CONTAINERS - PAPER & PLASTIC -- 0.1%
Bemis Co., Inc.................................................................. 1,270 35,382
-----------
COSMETICS & TOILETRIES -- 0.0%
Alberto-Culver Co., Class B..................................................... 136 6,222
-----------
DISTRIBUTION -- 0.4%
Avnet, Inc. (a)................................................................. 2,040 48,838
Genuine Parts Co................................................................ 2,580 113,313
W.W. Grainger, Inc.............................................................. 350 24,885
-----------
187,036
-----------
ELECTRIC SERVICES -- 1.0%
Allegheny Energy, Inc. (a)...................................................... 2,400 75,960
Cinergy Corp. (b)............................................................... 2,950 125,257
Consolidated Edison, Inc.(b).................................................... 3,430 158,911
NiSource, Inc................................................................... 4,050 84,483
Pepco Holdings, Inc............................................................. 2,850 63,755
-----------
508,366
-----------
44
MMA Praxis Value Index Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 98.8%, continued
ELECTRONIC & ELECTRICAL - GENERAL -- 0.5%
American Power Conversion Corp.................................................. 50 $ 1,100
Fisher Scientific International, Inc. (a)(b).................................... 550 34,023
Freescale Semiconductor, Inc. (a)............................................... 4,030 101,434
Jabil Circuit, Inc. (a)......................................................... 84 3,116
LSI Logic Corp. (a)............................................................. 5,720 45,760
Micron Technology, Inc. (a)..................................................... 3,760 50,046
Molex, Inc. (a)................................................................. 212 5,501
Novellus Systems, Inc. (a)...................................................... 974 23,493
Solectron Corp. (a)............................................................. 2,980 10,907
-----------
275,380
-----------
ENERGY -- 0.9%
Valero Energy................................................................... 8,620 444,792
-----------
FINANCIAL SERVICES -- 13.8%
Ambac Financial Group, Inc...................................................... 1,210 93,243
Ameriprise Financial, Inc....................................................... 3,440 141,040
Capital One Financial Corp...................................................... 1,410 121,824
Charles Schwab Corp............................................................. 560 8,215
CIT Group, Inc.................................................................. 2,930 151,715
Citigroup, Inc.................................................................. 70,740 3,433,013
Countrywide Credit Industries, Inc.............................................. 4,730 161,719
E*Trade Group, Inc. (a)......................................................... 5,440 113,478
Federal Home Loan Mortgage Corp................................................. 9,660 631,281
Federal National Mortgage Association........................................... 13,530 660,399
Janus Capital Group, Inc........................................................ 3,070 57,194
MBIA, Inc....................................................................... 1,800 108,288
MBNA Corp....................................................................... 17,550 476,658
MGIC Investment Corp............................................................ 1,260 82,933
PNC Financial Services Group.................................................... 4,280 264,632
Washington Mutual, Inc.......................................................... 13,800 600,300
-----------
7,105,932
-----------
FOOD DISTRIBUTORS & WHOLESALERS -- 0.8%
Albertsons, Inc................................................................. 5,140 109,739
Dean Foods Co. (a).............................................................. 1,880 70,801
Safeway, Inc. (b)............................................................... 6,550 154,973
SUPERVALU, Inc.................................................................. 1,740 56,515
-----------
392,028
-----------
FOOD PRODUCTS -- 0.4%
Kraft Foods, Inc. (b)........................................................... 7,010 197,261
-----------
FOOD STORES -- 0.4%
Kroger Co. (a).................................................................. 10,140 191,443
-----------
FORESTRY -- 0.2%
Plum Creek Timber Co., Inc...................................................... 2,560 92,288
-----------
FURNITURE & HOME FURNISHINGS -- 0.1%
Leggett & Platt, Inc............................................................ 2,570 59,007
-----------
45
MMA Praxis Value Index Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 98.8%, continued
HEALTH CARE SERVICES -- 0.7%
Aetna, Inc...................................................................... 520 $ 49,041
AmerisourceBergen Corp.......................................................... 2,950 122,130
Humana, Inc. (a)................................................................ 160 8,693
McKesson HBOC, Inc.............................................................. 1,030 53,138
Medco Health Solutions, Inc. (a)................................................ 980 54,684
Tenet Healthcare Corp. (a)...................................................... 6,980 53,467
-----------
341,153
-----------
HOTELS & MOTELS -- 0.1%
Starwood Hotels & Resorts Worldwide, Inc........................................ 984 62,838
-----------
INDUSTRIAL GOODS & SERVICES -- 0.1%
Masco Corp...................................................................... 1,340 40,455
-----------
INSURANCE -- 8.7%
AFLAC, Inc...................................................................... 770 35,743
Allstate Corp................................................................... 9,070 490,415
American International Group, Inc............................................... 17,060 1,164,003
Aon Corp........................................................................ 4,470 160,697
Chubb Corp...................................................................... 2,870 280,256
CIGNA Corp...................................................................... 950 106,115
Cincinnati Financial Corp....................................................... 2,000 89,360
Hartford Financial Services Group, Inc.......................................... 2,650 227,609
Jefferson-Pilot Corp............................................................ 1,910 108,736
Lincoln National Corp........................................................... 1,800 95,454
Marsh & McLennan Cos., Inc...................................................... 7,890 250,586
MetLife, Inc.................................................................... 10,170 498,329
Principal Financial Group, Inc.................................................. 1,960 92,963
Protective Life Corp............................................................ 970 42,457
SAFECO Corp..................................................................... 1,770 100,005
The St. Paul Travelers Companies, Inc........................................... 9,680 432,406
Torchmark Corp.................................................................. 1,170 65,052
UnumProvident Corp. (b)......................................................... 4,140 94,185
Wellpoint, Inc. (a)............................................................. 2,310 184,315
-----------
4,518,686
-----------
INSURANCE PROPERTY-CASUALTY -- 0.8%
ACE Ltd......................................................................... 4,510 241,015
XL Capital, Ltd................................................................. 2,440 164,407
-----------
405,422
-----------
MACHINERY -- 0.6%
Deere & Co...................................................................... 3,370 229,531
Ingersoll-Rand Co., Ltd......................................................... 2,540 102,540
-----------
332,071
-----------
MANUFACTURING -- 1.5%
Brunswick Corp.................................................................. 470 19,110
Cooper Industries, Ltd., Class A................................................ 1,280 93,440
Dover Corp...................................................................... 790 31,987
SPX Corp. (b)................................................................... 1,110 50,805
Tyco International, Ltd. (b).................................................... 16,890 487,446
Whirlpool Corp.................................................................. 990 82,922
-----------
765,710
-----------
46
MMA Praxis Value Index Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 98.8%, continued
MEDICAL - BIOMEDICAL/GENETIC -- 0.2%
Biogen Idec, Inc. (a)........................................................... 1,850 $ 83,861
Chiron Corp. (a)................................................................ 290 12,893
-----------
96,754
-----------
MEDICAL - HOSPITALS -- 0.0%
Health Management Associates, Inc., Class A..................................... 680 14,933
-----------
MEDICAL SUPPLIES -- 0.0%
Hillenbrand Industry, Inc....................................................... 340 16,799
-----------
METALS -- 0.7%
Alcan, Inc. (b)................................................................. 4,820 197,379
Nucor Corp. (b)................................................................. 2,360 157,459
-----------
354,838
-----------
MINING -- 0.3%
Placer Dome, Inc. (b)........................................................... 6,440 147,669
-----------
MULTIMEDIA -- 1.7%
Time Warner, Inc................................................................ 51,510 898,334
-----------
NEWSPAPERS -- 0.8%
Gannett Co., Inc................................................................ 3,350 202,909
The New York Times Company - Class A (a)........................................ 2,030 53,694
The Washington Post Company - Class B........................................... 82 62,730
Tribune Co...................................................................... 3,660 110,752
-----------
430,085
-----------
OFFICE EQUIPMENT & SERVICES -- 0.4%
Xerox Corp. (a)................................................................. 13,430 196,750
-----------
OIL & GAS EXPLORATION, PRODUCTION & SERVICES -- 3.7%
Anadarko Petroleum Corp......................................................... 3,450 326,888
Apache Corp..................................................................... 4,600 315,192
Burlington Resources, Inc....................................................... 5,290 455,997
Devon Energy Corp............................................................... 6,210 388,373
ENSCO International, Inc........................................................ 220 9,757
GlobalSantaFe Corp. (b)......................................................... 280 13,482
Murphy Oil Corp................................................................. 2,310 124,717
Nabors Industries, Ltd. (a)..................................................... 190 14,393
National-Oilwell Varco, Inc. (a)................................................ 280 17,556
Noble Corp...................................................................... 60 4,232
Rowan Cos., Inc. (b)............................................................ 150 5,346
Transocean Sedco Forex, Inc. (a)................................................ 340 23,695
Weatherford International Ltd. (a).............................................. 970 35,114
Williams Cos., Inc.............................................................. 8,010 185,592
-----------
1,920,334
-----------
OIL & GAS TRANSMISSION -- 0.7%
El Paso Corp. (b)............................................................... 8,980 109,197
KeySpan Corp.................................................................... 2,400 85,656
Sempra Energy................................................................... 3,410 152,904
-----------
347,757
-----------
47
MMA Praxis Value Index Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 98.8%, continued
OIL - INTEGRATED -- 8.2%
BP Amoco PLC ADR................................................................ 48,140 $ 3,091,551
ConocoPhillips.................................................................. 19,400 1,128,692
-----------
4,220,243
-----------
PAPER PRODUCTS -- 1.2%
International Paper Co.......................................................... 6,860 230,564
MeadWestvaco Corp............................................................... 2,590 72,598
Temple-Inland, Inc.............................................................. 1,600 71,760
Weyerhaeuser Co................................................................. 3,400 225,556
-----------
600,478
-----------
PHARMACEUTICALS -- 5.0%
Cardinal Health, Inc............................................................ 540 37,125
Caremark Rx, Inc. (a)........................................................... 500 25,895
King Pharmaceuticals, Inc. (a).................................................. 3,380 57,190
Pfizer, Inc..................................................................... 103,080 2,403,826
Watson Pharmaceutical, Inc. (a)................................................. 1,530 49,740
-----------
2,573,776
-----------
PRINTING - COMMERCIAL -- 0.2%
R.R. Donnelley & Sons Co........................................................ 3,070 105,025
RAILROADS -- 0.3%
CSX Corp........................................................................ 1,180 59,909
Norfolk Southern Corp........................................................... 1,590 71,279
-----------
131,188
-----------
RAW MATERIALS -- 0.2%
Vulcan Materials Co............................................................. 1,430 96,883
-----------
REAL ESTATE INVESTMENT TRUST -- 2.0%
AMB Property Corp............................................................... 980 48,187
Apartment Investment & Management Co. (b)....................................... 1,390 52,639
Archstone-Smith Trust........................................................... 2,930 122,738
Avalonbay Communities, Inc...................................................... 1,100 98,175
Duke Realty Corp................................................................ 2,060 68,804
Equity Office Properties Trust.................................................. 5,680 172,274
Equity Residential Properties Trust............................................. 4,090 160,001
ProLogis........................................................................ 3,620 169,126
Vornado Realty Trust............................................................ 1,650 137,726
-----------
1,029,670
-----------
RECREATIONAL PRODUCTS -- 0.2%
Mattel, Inc..................................................................... 5,650 89,383
-----------
RESIDENTIAL BUILDING CONSTRUCTION -- 0.2%
Centex Corp..................................................................... 610 43,609
KB Home......................................................................... 250 18,165
Pulte Homes, Inc................................................................ 1,590 62,582
-----------
124,356
-----------
RESTAURANTS -- 1.2%
McDonald's Corp................................................................. 17,600 593,472
Wendy's International, Inc...................................................... 518 28,625
-----------
622,097
-----------
48
MMA Praxis Value Index Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 98.8%, continued
RETAIL -- 1.8%
Circuit City Stores, Inc.(b).................................................... 1,380 $ 31,174
Costco Wholesale Corp........................................................... 2,470 122,191
CVS Corp........................................................................ 2,730 72,127
Family Dollar Stores, Inc....................................................... 1,950 48,341
Federated Department Stores, Inc................................................ 3,918 259,880
J.C. Penney Co., Inc............................................................ 3,250 180,700
Office Depot, Inc. (a).......................................................... 520 16,328
Sears Holding Company (a)....................................................... 1,160 134,015
The Gap, Inc.................................................................... 4,650 82,026
-----------
946,782
-----------
SOFTWARE & COMPUTER SERVICES -- 0.2%
Affiliated Computer Services - Class A (a)...................................... 320 18,938
Siebel Systems, Inc............................................................. 7,630 80,725
Symbol Technologies, Inc........................................................ 790 10,128
-----------
109,791
-----------
SOFTWARE & SERVICES -- 0.3%
Compuware Corp. (a)............................................................. 5,420 48,617
Symantec Corp. (a).............................................................. 6,350 111,125
-----------
159,742
-----------
TELECOMMUNICATIONS -- 8.3%
ALLTEL Corp..................................................................... 5,350 337,585
AT&T, Inc....................................................................... 54,620 1,337,644
BellSouth Corp.................................................................. 25,570 692,947
CenturyTel, Inc................................................................. 1,880 62,341
Sprint Nextel Corp.............................................................. 27,680 646,605
Telephone & Data Systems, Inc................................................... 1,510 54,405
Verizon Communications, Inc..................................................... 38,660 1,164,439
-----------
4,295,966
-----------
TELECOMMUNICATIONS-SERVICES & EQUIPMENT -- 0.7%
Avaya, Inc. (a)................................................................. 5,860 62,526
Comverse Technology, Inc. (a)................................................... 776 20,634
Nortel Networks Corp. (a)(b).................................................... 62,990 192,750
Scientific-Atlanta, Inc......................................................... 60 2,584
Tellabs, Inc. (a)............................................................... 7,050 76,845
-----------
355,339
-----------
TRANSPORTATION SERVICES -- 0.1%
FedEx Corp...................................................................... 490 50,661
Yellow Roadway Corp. (a)........................................................ 480 21,413
-----------
72,074
-----------
TRAVEL SERVICES -- 0.1%
Sabre Holdings Corp............................................................. 1,840 44,362
-----------
TOTAL COMMON STOCKS ............................................................ 51,077,884
-----------
49
MMA Praxis Value Index Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES -- 0.8%
COMMUNITY DEVELOPMENT -- 0.8%
MMA Community Development Investment, Inc., 2.23%, 1/1/06, (c)+................. 75,000 $ 75,000
MMA Community Development Investment, Inc., 3.34%, 1/1/06, (c)+................. 335,000 335,000
-----------
TOTAL CORPORATE NOTES........................................................... 410,000
-----------
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING -- 6.0%
SHORT TERM -- 6.0%
Anz Bank Government Letter of Credit............................................ 10,613 10,613
Banco Santander Central Hispano S.A. Letter of Credit........................... 15,921 15,921
Bank of New York City Letter of Credit.......................................... 106 106
Chase Manhattan Letter of Credit................................................ 1 1
Krediet Bank Letter of Credit................................................... 7,522 7,522
Lloyds Letter of Credit......................................................... 47,759 47,759
LOCC HSBC Letter of Credit...................................................... 21,227 21,227
Monte Dei Paschi Di Siena Letter of Credit...................................... 26,533 26,533
National Australia Letter of Credit............................................. 53,065 53,065
Northern Institutional Liquid Asset Portfolio................................... 2,667,876 2,667,876
Paribas Letter of Credit........................................................ 63,678 63,678
Royal Bank Canada Letter of Credit.............................................. 31,839 31,839
San Paolo IMI Bank Letter of Credit............................................. 21,226 21,226
Standard Chartered Bank Letter of Credit........................................ 15,920 15,920
U.S. Treasury Bond, 8.75%, 8/15/20.............................................. 1,298 1,911
U.S. Treasury Bond, 7.25%, 5/15/16.............................................. 32,862 40,671
U.S. Treasury Bond, 8.00%, 11/15/21............................................. 27,145 37,689
U.S. Treasury Inflation Indexed Bonds, 3.875%, 4/15/29.......................... 9,453 15,551
Westpac Letter of Credit........................................................ 15,813 15,813
-----------
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING...................... 3,094,921
-----------
TOTAL INVESTMENTS (COST $46,778,264) -- 105.6%................................... 54,582,805
Liabilities in excess of other assets -- (5.6%)............................. (2,904,667)
-----------
NET ASSETS -- 100.0%............................................................. $51,678,138
===========
- ----------------
(a) Non-income producing securities.
(b) All or part of this security was on loan as of December 31, 2005.
(c) Represents affiliated restricted security as to resale to investors and is
not registered under the Securities Act of 1933. These securities have
been deemed illiquid under guidelines established by the Board of
Trustees. Acquisition date and current cost: MMA Community Development
Investment, Inc., 2.23% - 7/02, $75,000 and MMA Community Development
Investment, Inc., 3.34% - 12/01, $335,000. At December 31, 2005, these
securities had an aggregate market value of $410,000, representing 0.8% of
net assets.
+ Variable rate security. Rates presented are the rates in effect at
December 31, 2005. Date presented reflects next rate change date.
ADR - American Depositary Receipt
PLC - Public Liability Co.
UNREALIZED
FUTURES CONTRACTS PURCHASED CONTRACTS DEPRECIATION
S&P Barra Value Index Futures Contract, expiring March, 2006
(underlying face amount at value $487,800)............ 3 $ 9,750
See notes to financial statements.
- -----------------------------------
Statement of assets and liabilities
- -----------------------------------
50
MMA Praxis Value Index Fund
Statement of assets and liabilities
December 31, 2005
ASSETS:
Investments, at value (cost $43,273,343)* ............................. $ 51,077,884
Investments in affiliates, at value (cost $410,000) ................... 410,000
Investments held as collateral for securities loaned, at value ........ 3,094,921
------------
Total Investments ................................................ 54,582,805
------------
Cash .................................................................. 226,505
Cash held as collateral for futures contracts ......................... 39,236
Interest and dividends receivable ..................................... 54,802
Receivable for capital shares sold .................................... 149,742
Receivable for investments sold ....................................... 5,379,121
Prepaid expenses ...................................................... 6,543
------------
Total Assets ..................................................... 60,438,754
------------
LIABILITIES:
Distributions payable to shareholders ................................. 79,627
Payable for investments purchased ..................................... 5,488,187
Payable for securities loaned ......................................... 3,094,921
Payable for capital shares redeemed ................................... 32,421
Payable for variation margin on future contracts ...................... 4,725
Accrued expenses and other payables:
Investment advisory fees ............................................ 11,319
Administration fees ................................................. 5,379
Distribution fees ................................................... 8,839
Other ............................................................... 35,198
------------
Total Liabilities ................................................ 8,760,616
------------
NET ASSETS:
Capital ............................................................... 45,056,919
Distributions in excess of net investment income ...................... (16,939)
Accumulated net realized loss on investments and futures contracts .... (1,156,633)
Net unrealized appreciation on investments ............................ 7,804,541
Unrealized depreciation of futures contracts .......................... (9,750)
------------
Net Assets ....................................................... $ 51,678,138
============
Net Assets
Class A ............................................................. $ 39,874,341
Class B ............................................................. 11,803,797
------------
Total ............................................................ $ 51,678,138
============
Shares Outstanding
(unlimited number of shares authorized with $.01 par value)
Class A ............................................................. 3,952,983
Class B ............................................................. 1,171,698
------------
Total ............................................................ 5,124,681
============
Net asset value
Class A - Redemption Price Per Share ................................ $ 10.09
============
Class A - Maximum Sales Charge ...................................... 5.25%
============
Class A - Maximum Offering Price Per Share
(100%/(100%-Maximum Sales Charge)) of
net asset value adjusted to the nearest cent ................... $ 10.65
============
Class B - offering price per share** ................................ $ 10.07
============
* Includes securities on loan of $2,783,771.
**Redemption price per share (Class B) varies by length of time shares are held.
See notes to financial statements.
-----------------------
Statement of operations
-----------------------
51
MMA Praxis Value Index Fund
Statement of operations
For the year ended December 31, 2005
INVESTMENT INCOME:
Dividends ............................................................................. $ 1,194,577
Foreign tax withholding ............................................................... (69)
Income from securities lending ........................................................ 1,703
Interest from affiliates .............................................................. 10,527
-----------
Total Investment Income ............................................................. 1,206,738
-----------
EXPENSES:
Investment advisory fees .............................................................. 140,192
Administration fees ................................................................... 71,657
Distribution fees-Class A ............................................................. 71,375
Distribution fees-Class B ............................................................. 78,169
Shareholder servicing fees-Class A .................................................... 90,782
Shareholder servicing fees-Class B .................................................... 24,408
Reimbursement of Fund expenses paid by Adviser ........................................ 76,328
Legal fees and expenses ............................................................... 32,130
Custodian fees ........................................................................ 4,280
Trustees' fee and expenses ............................................................ 3,391
Transfer agent fees ................................................................... 4,919
Other expenses ........................................................................ 57,965
-----------
Total expenses before reductions/reimbursements .................................. 655,596
Expenses reduced by Distributor ..................................................... (109,608)
Expenses reduced by Custodian ....................................................... (4,555)
-----------
Net Expenses ..................................................................... 541,433
-----------
Net Investment Income ................................................................. 665,305
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on security transactions and futures contracts ...................... 553,329
Change in unrealized appreciation/depreciation of investments during the year ......... 1,740,242
Change in unrealized appreciation/depreciation of futures contracts during the year ... (11,775)
-----------
Net realized and unrealized gain on investments and futures contracts ................. 2,281,796
-----------
Net increase in net assets resulting from operations .................................. $ 2,947,101
===========
See notes to financial statements.
- -----------------------------------
Statements of changes in net assets
- -----------------------------------
52
MMA Praxis Value Index Fund
Statements of changes in net assets
Year Ended Year Ended
December 31, December 31,
2005 2004
- ------------------------------------------------------------------------------------------------------
From Investment Activities:
Net investment income ............................................. $ 665,305 $ 497,782
Net realized gain on investments and futures contracts ............ 553,329 562,304
Change in unrealized appreciation/depreciation from investments
and futures contracts during the year ........................... 1,728,467 3,676,319
------------ ------------
Net increase in net assets resulting from operations .............. 2,947,101 4,736,405
------------ ------------
Distributions to Class A Shareholders:
From net investment income .................................... (567,190) (426,675)
Distributions to Class B Shareholders:
From net investment income .................................... (98,099) (71,107)
------------ ------------
Change in net assets from distributions to shareholders ........... (665,289) (497,782)
------------ ------------
Change in net assets from capital transactions .................... 6,229,137 7,462,494
------------ ------------
Change in net assets .............................................. 8,510,949 11,701,117
Net Assets:
Beginning of year ............................................. 43,167,189 31,466,072
------------ ------------
End of year ................................................... $ 51,678,138 $ 43,167,189
============ ============
Distributions in excess of net investment income .................. $ (16,939) $ --
============ ============
See notes to financial statements.
--------------------
Financial highlights
--------------------
53
MMA Praxis Value Index Fund
Financial highlights
For a share outstanding throughout the period indicated.
Class A Shares
--------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Period Ended
December 31, December 31, December 31, December 31, December 31,
2005 2004 2003 2002 2001(a)
- -----------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period ......... $ 9.65 $ 8.65 $ 6.72 $ 8.79 $ 10.00
------------ ----------- ---------- ------------ ------------
Investment Activities:
Net investment income .................... 0.15 0.12 0.10 0.07 0.03
Net realized and unrealized gains (losses)
from investments ...................... 0.44 1.00 1.93 (2.07) (1.20)
------------ ----------- ---------- ------------ ------------
Total from Investment Activities ......... 0.59 1.12 2.03 (2.00) (1.17)
------------ ----------- ---------- ------------ ------------
Distributions:
Net investment income .................... (0.15) (0.12) (0.10) (0.07) (0.03)
Tax return of capital .................... -- -- --(b) -- --
------------ ----------- ---------- ------------ ------------
Total Distributions ...................... (0.15) (0.12) (0.10) (0.07) (0.04)
------------ ----------- ---------- ------------ ------------
Net Asset Value, End of Period ............... $ 10.09 $ 9.65 $ 8.65 $ 6.72 $ 8.79
============ =========== ========== ============ ============
Total Return (excludes sales charge) ......... 6.12% 13.07% 30.38% (22.81%) (11.72%)(c)
Ratios/Supplemental Data:
Net assets at end of period (000) ........ $ 39,874 $ 33,640 $ 25,815 $ 15,071 $ 14,136
Ratio of expenses to average net assets .. 1.04% 1.04% 0.95% 0.95% 0.95%(d)
Ratio of net investment income to
average net assets .................... 1.55% 1.45% 1.49% 0.98% 0.61%(d)
Ratio of expenses to average net assets* . 1.30% 1.48% 1.71% 2.13% 2.44%(d)
Portfolio Turnover (e) ....................... 25.25% 24.76% 35.21% 30.61% 17.86%
- -----------------------------------------------------------------------------------------------------------------------
* During the period, certain expenses were voluntarily reduced/reimbursed.
If such expense reductions had not occurred, the ratios would have been as
indicated.
(a) For the period from May 2, 2001 (commencement of operations) through
December 31, 2001.
(b) Distribution per share was less than $0.005.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements.
54
MMA Praxis Value Index Fund
Financial highlights, continued
For a share outstanding throughout the period indicated.
Class B Shares
--------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Period Ended
December 31, December 31, December 31, December 31, December 31,
2005 2004 2003 2002 2001(a)
- -----------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period ......... $ 9.62 $ 8.64 $ 6.71 $ 8.78 $ 10.00
------------ ----------- ---------- ------------ ------------
Investment Activities:
Net investment income .................... 0.09 0.08 0.07 0.03 --
Net realized and unrealized gains (losses)
from investments ...................... 0.45 0.98 1.93 (2.07) (1.20)
------------ ----------- ---------- ------------ ------------
Total from Investment Activities ......... 0.54 1.06 2.00 (2.04) (1.20)
------------ ----------- ---------- ------------ ------------
Distributions:
Net investment income .................... (0.09) (0.08) (0.07) (0.03) (0.01)
Net realized gains ....................... -- -- -- -- (0.01)
------------ ----------- ---------- ------------ ------------
Total Distributions ...................... (0.09) (0.08) (0.07) (0.03) (0.02)
------------ ----------- ---------- ------------ ------------
Net Asset Value, End of Period ............... $ 10.07 $ 9.62 $ 8.64 $ 6.71 $ 8.78
============ =========== ========== ============ ============
Total Return (excludes redemption charge) .... 5.61% 12.31% 29.82% (23.24%) (12.01%)(b)
Ratios/Supplemental Data:
Net Assets at end of period (000) ........ $ 11,804 $ 9,155 $ 5,651 $ 3,227 $ 2,593
Ratio of expenses to average net assets .. 1.59% 1.60% 1.50% 1.50% 1.50%(c)
Ratio of net investment income to
average net assets .................... 1.00% 0.91% 0.94% 0.44% 0.04%(c)
Ratio of expenses to average net assets* . 1.78% 1.99% 2.21% 2.64% 2.58%(c)
Portfolio Turnover (d) ....................... 25.25% 24.76% 35.21% 30.61% 17.86%
- -----------------------------------------------------------------------------------------------------------------------
* During the period, certain expenses were voluntarily reduced/reimbursed.
If such expense reductions had not occurred, the ratios would have been as
indicated.
(a) For the period from May 2, 2001 (commencement of operations) through
December 31, 2001.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements.
55
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- -----------------------------
MMA Praxis International Fund
- -----------------------------
56
MMA Praxis International Fund
Annual report to shareholders
Portfolio manager's letter
Background
The MMA Praxis International Fund invests in international equities that are
screened to exclude companies that are deemed not socially responsible (SRI).
This means that several industries are excluded entirely from consideration and
that investment in certain other industries is limited. Ineligible industries
include gambling, defense, alcohol, nuclear power, abortifacients, and adult
entertainment. Industries which are considered for investment at a limited level
include industrials, manufacturing, and mining. In total, there are about 880
foreign companies that are ineligible for investment by MMA Praxis due to the
restrictions. Thus, holders of the MMA Praxis International Fund can be
comforted in knowing their Fund invests its assets using rigorous SRI criteria.
A result of the SRI policy is that some large companies that constitute
significant weights in the Morgan Stanley Capital International (MSCI) EAFE
Index are excluded. For example Eriscsson, Siemens, and Total. The EAFE Index,
against which the Fund is compared, has no such restrictions. The large number
of excluded stocks and industries means that comparing the Fund performance with
an index that has no similar restrictions can result in wide performance
differences.
Results
Overall, 2005 was a strong year in international equity markets. The MSCI EAFE
Index returned 29.0 percent in local currency terms. While a strengthening U.S.
dollar eroded part of these gains, the index still provided a rewarding total
return of 13.5 percent to U.S. dollar-based investors. The year was made up of
two distinct periods: first, the U.S.-dollar based returns were negative in the
first and second quarters, and second, there was a stark reversal of this
fortune with strong positive gains in both the third and fourth quarters. For
2005, the Fund returned 12.16 percent, making it the best performing SRI fund in
the Lipper multi-cap international equity universe.
Strategy
During the year, the portfolio structure was revised significantly, reflecting
the improved economic outlook, consumer confidence, and investor sentiment in
many areas. The main area of change was the increase in the exposure to Japanese
companies and to more growth-oriented companies in general. At the start of the
year, the Fund was underweight in Japan and the portfolio retained that position
up to the third quarter. By the end of the year, the portfolio had moved the
Fund's Japanese exposure to a modest overweight position -- the first time in
almost 15 years that the portfolio had taken such a position in Japan. This
proved to be the correct strategy as Japan was one of the weakest performing
markets in the world in the first six months. This position reversed itself
sharply in the third and fourth quarters making Japan one of the top performers
over the year as a whole. The switch to Japan was sourced from selective sales
in Europe and the United Kingdom of existing holdings which had seen some run up
in price over the preceding months. The Fund maintained its moderate exposure to
emerging markets, which had another very strong year of performance.
Contributors and detractors
The Fund's increase in its Japanese holdings and its timing proved beneficial to
performance. There were many strong performers over the course of the year,
including many consumer discretionary and financial services companies. These
included Yamada Denki, the consumer electronics and white goods retailer that
increased its market penetration, department store Isetan, and specialty
clothing retailer United Arrows, all of which benefited from increased consumer
confidence and expenditure. In financial services, Orix, the diversified
provider specializing in equipment leasing and Nissin were the main drivers.
Mitsubishi Estate, a major owner of commercial property in the best part of
Tokyo, and the beneficiary of strong increases in rental levels and property
prices, contributed positively to Fund returns during the period. Within
emerging markets, the Fund had a strong contribution from its exposure to
Mexico, Korea, and Hungary. From a sector view, many of the largest benefits
from consumer discretionary and financials are recorded above in this
commentary. The other strongly contributing sector was information technology
where strong stock outperformances more than outweighed the impact of an
underweight position. A stock of note was France's Neopost, the office equipment
company and product competitor of Pitney Bowes. Other notables in the year were
energy, where strength in the oil companies earlier in the year was diluted
somewhat towards year end. BP, the integrated U.K.-based global player and the
Fund's largest individual holding by weight, provided solid absolute returns for
the Fund as did RWE, the German utility, and Cemex, BHP Billiton, and Imperial
Chemical Industries in Materials.
57
The major detractors geographically were the United Kingdom, France, and
Australia. Three stocks were significant in the United Kingdom: Kingfisher, the
home improvement retail group similar to the U.S.'s Home Depot, which suffered
from a fall in demand and margin contraction, Smith and Nephew, the hip and knee
replacement manufacturer, and Vodafone, the global telecom provider that
suffered from its difficulties in the Japanese marketplace. France's weakness
was from the performance of a number of specific companies including France
Telecom, due to increased worries on the outlook for fixed-line providers,
Vivendi, the French conglomerate with exposure to media and wireless telecom,
and Carrefour, the local and internationally expanding food retailer. The larger
detracting sectors included industrials, telecom services, and health care.
Outlook
We believe the stock markets of foreign industrialized nations continue to offer
attractive investment opportunities, although they may not match the results of
2005. Healthy growth trends and favorable valuation levels encourage us to
believe that foreign stocks are well positioned to outperform the U.S. market
again in 2006. Adding to the prospect of strong relative results of foreign
investing is our belief that the U.S. dollar may begin to weaken again against
major foreign currencies, including the Euro and Japanese Yen. We believe the
tax advantages that encouraged many U.S. companies to repatriate foreign
earnings have largely run their course, while the yield advantages of U.S.
fixed-rate investments will narrow. In addition, foreign investors may become
more concerned about the worsening budget and current account deficits in the
United States. Any weakness in the U.S. dollar will give an added boost to the
performance of international equities held by U.S. dollar-based investors.
Gilman C. Gunn, III
MMA Praxis International Fund Manager
- ------------------
Performance review
- ------------------
58
MMA Praxis International Fund
Performance review
Average annual total returns as of 12/31/05
[The following table was represented as a barchart in the printed material.]
Inception
Date 1 Year 3 Year 5 Year 10 Year
---------- ---------- ---------- ---------- ----------
Class A 5/12/99 12.16% 17.94% -0.25% 4.58%
Class A* 5/12/99 6.25% 15.85% -1.32% 3.95%
Class B 4/1/97 11.50% 17.21% -0.86% 4.12%
Class B** 4/1/97 7.50% 16.47% -1.06% 4.12%
Past performance does not guarantee future results. The performance data quoted
represents past performance and current returns may be lower or higher. The
investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost. These
performance figures do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. To obtain
performance information current to the most recent month end, please visit
www.mmapraxis.com.
* Reflects maximum front-end sales charge of 5.25%.
** The Fund imposes a back-end sales charge (load) on Class B Shares if you
sell your shares before a certain period of time has elasped. This is
called a Contingent Deferred Sales Charge ("CDSC"). The CDSC declines over
five years starting with year one and ending in year six as follows: 4%,
4%, 3%, 2%, 1%.
Class A Share of this Fund were not in existence prior to 5/12/99. Class A Share
performance calculated for any period prior to 5/12/99 is based on the
performance of Class B Share since inception of 4/1/97. The B Share CDSC does
not apply to performance over 5 years; therefore, the 10-year return does not
reflect the CDSC.
The total return set forth reflects certain expenses that were voluntarily
reduced, reimbursed or paid by third party. In such instances, and without this
activity, total return would have been lower.
59
Growth of $10,000 investment 4/1/97 to 12/31/05
[The following table was represented as a line chart in the printed material.]
MMA Praxis International Fund
MSCI AC World-Free- MSCI EAFE
Date Class A* CLASS B (ex.U.S.) Index(1) Index(2)
---------- --------- -------------------- ----------
4/1/1997 9,479 10,000 10,000 10,000
6/30/1997 10,902 11,501 11,298 11,306
9/30/1997 10,949 11,550 11,194 11,234
12/31/1997 10,085 10,639 10,229 10,361
3/31/1998 11,737 12,382 11,626 11,893
6/30/1998 12,496 13,183 11,454 12,028
9/30/1998 10,867 11,464 9,722 10,326
12/31/1998 12,503 13,190 11,708 12,468
3/31/1999 12,762 13,463 11,985 12,650
6/30/1999 13,327 14,060 12,545 12,980
9/30/1999 14,083 14,830 12,972 13,559
12/31/1999 17,811 18,731 15,327 15,871
3/31/2000 18,222 19,143 15,447 15,863
6/30/2000 16,588 17,401 14,816 15,245
9/30/2000 15,267 15,996 13,609 14,024
12/31/2000 14,209 14,867 13,016 13,656
3/31/2001 12,213 12,763 11,305 11,791
6/30/2001 11,612 12,110 11,291 11,688
9/30/2001 9,706 10,102 9,623 10,058
12/31/2001 10,596 11,015 10,478 10,760
3/31/2002 10,723 11,146 10,650 10,821
6/30/2002 10,137 10,517 10,368 10,611
9/30/2002 8,128 8,423 8,367 8,522
12/31/2002 8,553 8,841 8,941 9,074
3/31/2003 7,669 7,920 8,288 8,336
6/30/2003 8,976 9,257 9,934 9,968
9/30/2003 9,566 9,846 10,796 10,783
12/31/2003 10,873 11,180 12,643 12,628
3/31/2004 11,324 11,613 13,254 13,184
6/30/2004 10,942 11,204 13,162 13,242
9/30/2004 10,872 11,120 13,295 13,211
12/31/2004 12,508 12,767 15,344 15,240
3/31/2005 12,427 12,658 15,395 15,225
6/30/2005 12,248 12,457 15,393 15,111
9/30/2005 13,337 13,546 17,214 16,688
12/31/2005 14,030 14,235 17,970 17,376
For performance purposes, the above graph has not been adjusted for CDSC
charges.
This chart represents historical performance of a hypothetical investment of
$10,000 in the International Fund from 4/1/97 to 12/31/05, and represents the
reinvestment of dividends and capital gains in the Fund.
Past performance does not guarantee future results. The performance data quoted
represents past performance and current returns may be lower or higher. The
investment return and principal value will fluctuate so that an investor's
shares, when redeemed may be worth more or less than the original cost. These
performance figures do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. To obtain
performance information current to the most recent month end, please visit
mmapraxis.com.
The total return set forth reflects certain expenses that were voluntarily
reduced, reimbursed or paid by third party. In such instances, and without this
activity, total return would have been lower.
* Reflects maximum front-end sales charge of 5.25%.
Class A Share of this Fund were not in existence prior to 5/12/99. Class A Share
performance calculated for any period prior to 5/12/99 is based on the
performance of Class B Share since inception of 4/1/97.
(1) The MSCI AC World Free (ex-U.S.) Index is a widely recognized, unmanaged
index composed of a sample of companies representative of the markets of
both developed and emerging markets throughout the world, excluding the
United States.
(2) The MSCI EAFE Index is a widely recognized, unmanaged index composed of a
sample of companies representative of the developed markets throughout the
world, excluding the United States and Canada.
The above 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. An investor cannot invest directly in
an index, although they can invest in its underlying securities.
- ---------------------------------
Schedule of portfolio investments
- ---------------------------------
60
MMA Praxis International Fund
Schedule of portfolio investments
December 31, 2005
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.2%
ARGENTINA -- 0.2%
AGRICULTURE -- 0.1%
Cresud S.A. ADR ...................................... 11,503 $ 125,728
----------
REAL ESTATE -- 0.1%
IRSA Inversiones y Representaciones S.A. (a)(b) ...... 16,061 194,017
----------
319,745
----------
BELGIUM -- 1.2%
CHEMICALS-SPECIALTY -- 0.2%
Umicore (b) .......................................... 2,160 254,795
----------
SPECIAL PURPOSE ENTITY -- 0.7%
Groupe Bruxelles Lamber S.A .......................... 9,965 977,793
----------
TELECOMMUNICATIONS -- 0.3%
Option N.V. (a)(b) ................................... 6,836 508,035
----------
1,740,623
----------
BERMUDA -- 0.4%
INSURANCE -- 0.4%
Catlin Group, Ltd. ................................... 63,967 534,388
----------
BRAZIL -- 0.5%
TELECOMMUNICATIONS -- 0.5%
Telemig Celular Participacoes S.A. (b) ............... 10,115 398,633
Tim Participacoes ADR (b) ............................ 12,566 317,668
----------
716,301
----------
CANADA -- 0.5%
OIL COMP-INTEGRATED -- 0.3%
Petro-Canada ......................................... 9,400 377,213
----------
WIRELESS TELECOMMUNICATIONS -- 0.2%
Sierra Wireless (a) .................................. 29,400 325,486
----------
702,699
----------
DENMARK -- 0.2%
INSURANCE -- 0.2%
Trygvesta AS (a) .................................... 6,476 327,294
----------
FINLAND -- 0.8%
MACHINERY & ENGINEERING -- 0.2%
KCI Konecranes Oyj (b) ............................... 4,600 226,745
----------
PAPER PRODUCTS -- 0.4%
UPM-Kymmene Oyj ...................................... 32,700 641,336
----------
TELECOMMUNICATIONS -- 0.2%
Elisa Oyj ............................................ 15,450 286,365
----------
1,154,446
----------
FRANCE -- 10.0%
ADVERTISING -- 0.2%
Havas S.A ............................................ 82,074 354,794
----------
BANKS -- 1.3%
BNP Paribas S.A ...................................... 24,293 1,966,515
----------
61
MMA Praxis International Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.2%, continued
BUILDING & CONSTRUCTION -- 1.9%
Bouygues S.A ......................................... 16,180 $ 791,418
Compagnie de Saint-Gobain ............................ 20,239 1,204,487
Imerys S.A ........................................... 9,172 663,717
----------
2,659,622
----------
ELECTRIC SERVICES -- 0.7%
Schneider Electric S.A. (b) .......................... 10,829 966,383
----------
FOOD DIVERSIFIED -- 1.2%
Sodexho Alliance S.A ................................. 42,521 1,752,509
----------
FOOD RETAIL -- 0.9%
Carrefour S.A ........................................ 29,226 1,370,007
----------
INSURANCE -- 0.7%
CNP Assurances ....................................... 13,319 1,050,566
----------
MEDIA -- 1.5%
Vivendi Universal S.A. (b) ........................... 72,341 2,267,001
----------
OFFICE AUTOMATION & EQUIPMENT -- 1.1%
Neopost S.A .......................................... 15,558 1,560,683
----------
PUBLISHING -- 0.3%
Pagesjaunes .......................................... 17,579 457,822
----------
TIRE & RUBBER -- 0.2%
Michelin (b) ......................................... 5,488 308,605
----------
14,714,507
----------
GERMANY -- 9.5%
APPAREL MANUFACTURERS -- 0.7%
Adidas-Salomon AG .................................... 5,757 1,093,240
----------
BANKS -- 1.9%
Deutsche Bank AG (b) ................................. 28,578 2,774,708
----------
CHEMICALS -- 1.0%
BASF AG .............................................. 19,952 1,529,571
----------
ELECTRIC - INTEGRATED -- 2.5%
RWE AG (b) ........................................... 49,589 3,663,601
----------
INSURANCE -- 0.3%
Allianz AG ........................................... 2,696 408,543
----------
MACHINERY / PRINT TRADE -- 0.2%
Heidelberger Druckmaschin (b) ........................ 6,872 263,779
----------
PHARMACEUTICALS -- 1.1%
Fresenius AG ......................................... 11,708 1,586,303
----------
PUBLISHING -- 0.1%
Axel Springer AG ..................................... 1,482 186,051
----------
REAL ESTATE INVESTMENT / MANAGEMENT -- 0.8%
IVG Immobilien AG .................................... 55,069 1,160,274
----------
TELECOMMUNICATIONS -- 0.6%
Deutsche Telecom AG (a) .............................. 50,013 832,810
----------
TIRE & RUBBER -- 0.3%
Continental AG (b) .................................. 5,485 486,559
----------
13,985,439
----------
62
MMA Praxis International Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.2%, continued
HONG KONG -- 1.6%
DIVERSIFIED FINANCIAL SERVICES -- 0.9%
Guoco Group, Ltd. .................................... 114,000 $ 1,261,488
-----------
REAL ESTATE INVESTMENT / MANAGEMENT -- 0.2%
Hysan Development Company, Ltd. ...................... 119,000 294,672
-----------
TELEVISION -- 0.5%
Television Broadcasts, Ltd. .......................... 140,000 743,903
-----------
2,300,063
-----------
IRELAND -- 1.8%
BANKS -- 1.1%
Anglo Irish Bank Corp. PLC ........................... 104,994 1,595,396
-----------
FINANCIAL SERVICES -- 0.7%
Irish Life & Permanent PLC ........................... 51,343 1,043,461
-----------
2,638,857
-----------
ITALY -- 0.5%
ELECTRIC - INTEGRATED -- 0.4%
Enel SpA ............................................. 81,316 638,991
-----------
RETAIL -- 0.1%
Geox SpA ............................................. 6,854 75,452
-----------
714,443
-----------
JAPAN -- 32.1%
APPAREL -- 0.6%
UNITED ARROWS, LTD. (b) .............................. 13,100 828,608
-----------
AUTOMOTIVE -- 2.4%
Toyota Motor Corp. ................................... 66,600 3,455,927
----------
BANKS -- 2.8%
Bank of Yokohama, Ltd. ............................... 122,000 998,219
Chiba Bank ........................................... 67,000 561,837
Mitsubishi Tokyo Financial Group, Inc. ............... 143 1,939,970
Sumitomo Trust & Banking Co. ......................... 58,000 592,589
-----------
4,092,615
BUILDING & CONSTRUCTION -- 0.4%
Okumura Corp. ........................................ 92,000 517,178
----------
CHEMICALS -- 1.2%
Hitachi Chemical Co., Ltd. ........................... 24,500 648,126
Sanyo Chemical Industries, Ltd. ...................... 28,000 235,510
Sumitomo Chemical Co., Ltd. .......................... 60,000 412,074
Tokuyama Corp. ....................................... 32,000 411,056
-----------
1,706,766
-----------
COMPUTER SERVICES -- 0.2%
NEC Fielding, Ltd. ................................... 17,600 345,464
-----------
COSMETICS & TOILETRIES -- 1.4%
Shiseido Company, Ltd. ............................... 109,000 2,033,237
-----------
63
MMA Praxis International Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.2%, continued
ELECTRONIC & ELECTRICAL - GENERAL -- 4.2%
CANON, Inc. .......................................... 27,000 $ 1,579,617
Fanuc Ltd. ........................................... 16,200 1,374,953
Ngk Insulators, Ltd. ................................. 52,000 773,342
Sharp Corp. .......................................... 111,000 1,688,435
THK CO., LTD ........................................ 29,200 762,557
-----------
6,178,904
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS -- 1.4%
ADVANTEST CORP. (b) .................................. 7,900 796,430
ROHM CO., LTD ........................................ 7,000 761,489
Tokyo Electron, Ltd. ................................. 7,800 490,063
-----------
2,047,982
-----------
ENTERTAINMENT SYSTEMS -- 0.6%
Nintendo Co., Ltd. ................................... 7,100 857,851
-----------
FINANCIAL SERVICES -- 6.4%
Mizuho Financial Group ............................... 143 1,134,882
Nissin Co., Ltd. (b) ................................. 361,500 885,819
Orix Corp. ........................................... 16,000 4,076,648
SANYO SHINPAN FINANCE CO., LTD ....................... 6,360 456,212
Takefuji Corp. ....................................... 39,450 2,679,282
-----------
9,232,843
-----------
FOOD PRODUCTS & SERVICES -- 0.3%
Ezaki Glico Co., Ltd. ................................ 42,000 428,404
-----------
INSURANCE -- 1.6%
Mitsui Sumitomo Insurance Co. ........................ 154,000 1,884,196
Sompo Japan Insurance, Inc. .......................... 32,000 432,762
-----------
2,316,958
-----------
MACHINERY / MACHINE TOOLS -- 0.3%
Nabtesco Corp. ....................................... 33,000 425,021
-----------
MACHINERY / PRINT TRADE -- 0.2%
Komori Corp. ......................................... 19,000 349,585
-----------
MOTION PICTURES & SERVICES -- 0.3%
Toho Co., Ltd. ....................................... 21,600 483,500
-----------
PHARMACEUTICALS -- 0.2%
Eisai Co., Ltd. ...................................... 8,000 335,764
-----------
REAL ESTATE INVESTMENT / MANAGEMENT -- 1.4%
Mitsubishi Estate Co., Ltd. .......................... 101,000 2,098,101
-----------
RETAIL -- 4.4%
AOYAMA TRADING Co., Ltd. ............................. 17,800 602,188
Isetan Co., Ltd. .................................... 66,500 1,418,072
Takashimaya Co., Ltd. ................................ 41,000 654,943
Yamada Denki Co., Ltd. (b) ........................... 30,500 3,817,025
-----------
6,492,228
-----------
SEMICONDUCTORS -- 0.2%
NEC Electronics Corp. (b) ............................ 10,800 354,384
-----------
TEXTILES -- 0.8%
TORAY INDUSTRIES, INC ................................ 140,000 1,141,937
-----------
64
MMA Praxis International Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.2%, continued
TRANSPORTATION SERVICES -- 0.8%
Central Japan Railway Co. ............................ 117 $ 1,120,994
-----------
46,844,251
-----------
MEXICO -- 1.1%
BUILDING PRODUCTS -- 1.1%
Cemex S.A. ADR ....................................... 26,720 1,585,298
-----------
NETHERLANDS -- 4.4%
BUILDING & CONSTRUCTION -- 0.1%
Koninklijke Boskalis Westminster N.V ................. 1,135 75,613
-----------
CHEMICALS -- 0.1%
Akzo Nobel N.V ....................................... 4,704 218,111
-----------
DISTRIBUTION/WHOLESALE -- 0.4%
Buhrmann N.V. (a)(b) ................................. 35,166 517,692
-----------
ELECTRONIC & ELECTRICAL - GENERAL -- 2.3%
Philips Electronics N.V .............................. 112,738 3,504,912
-----------
FINANCIAL SERVICES -- 0.5%
ING Groep N.V ........................................ 19,667 682,469
-----------
FOOD DIVERSIFIED -- 0.4%
Wessanen N.V ......................................... 42,839 649,929
-----------
HUMAN RESOURCES -- 0.4%
Randstad Holding N.V ................................. 1,745 75,826
USG People N.V ....................................... 11,904 504,724
-----------
580,550
-----------
TELECOMMUNICATIONS -- 0.2%
Koninklijke (Royal) KPN N.V .......................... 28,614 287,038
-----------
6,516,314
-----------
NORWAY -- 1.1%
OIL COMP-INTEGRATED -- 0.5%
Statoil ASA (b) ...................................... 29,500 677,518
-----------
TELECOM SERVICES -- 0.6%
Telenor ASA .......................................... 97,800 960,045
-----------
1,637,563
-----------
SOUTH AFRICA -- 0.1%
TELECOMMUNICATIONS -- 0.1%
MTN Group, Ltd. ...................................... 21,040 206,659
-----------
SOUTH KOREA -- 0.3%
AUTOMOTIVE -- 0.3%
Hyundai Motor Co., Ltd. GDR (b) ...................... 14,807 484,189
-----------
SPAIN -- 1.2%
BUILDING & CONSTRUCTION -- 0.1%
Fomento De Construc Y Contra ......................... 3,157 179,097
-----------
UTILITIES - TELECOMMUNICATIONS -- 1.1%
Telefonica S.A ....................................... 101,415 1,526,600
-----------
1,705,697
-----------
SWEDEN -- 0.3%
METAL PROCESSORS -- 0.3%
Assa Abloy AB (a) .................................... 31,800 500,277
-----------
65
MMA Praxis International Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.2%, continued
SWITZERLAND -- 8.7%
BANKS -- 0.9%
UBS AG Registered .................................... 14,507 $ 1,381,146
-----------
CHEMICALS -- 0.8%
Lonza Group AG ....................................... 18,561 1,135,696
-----------
FOOD PRODUCTS -- 2.1%
Lindt & Spruengli AG ................................. 351 597,555
Nestle S.A ........................................... 8,151 2,437,856
-----------
3,035,411
-----------
INSURANCE -- 1.1%
Baloise Holding, Ltd. ................................ 9,574 559,212
Swiss Re ............................................. 14,880 1,089,388
-----------
1,648,600
-----------
INVESTMENT COMPANIES -- 0.6%
Pargesa Holding AG (b) ............................... 9,444 806,405
-----------
PHARMACEUTICALS -- 3.1%
Novartis AG .......................................... 26,723 1,404,279
Roche Holding AG ..................................... 21,520 3,231,276
-----------
4,635,555
-----------
PUBLISHING -- 0.1%
Edipresse S.A ........................................ 245 100,312
-----------
12,743,125
-----------
UNITED KINGDOM -- 22.7%
BANKS -- 4.9%
HBOS PLC ............................................. 41,589 710,266
HSBC Holdings PLC .................................... 104,901 1,684,120
Lloyds TSB Group PLC ................................. 109,987 924,050
Royal Bank of Scotland Group PLC ..................... 127,195 3,841,129
-----------
7,159,565
-----------
CHEMICALS -- 0.2%
Imperial Chemical Industries PLC ..................... 42,364 241,653
-----------
ELECTRIC SERVICES -- 0.2%
Centrais Electricas Brasileiras S.A .................. 16,000,000 272,633
-----------
INSURANCE -- 0.5%
Amlin PLC ............................................ 180,762 772,939
-----------
MEDICAL PRODUCTS -- 1.2%
Smith & Nephew PLC ................................... 193,621 1,785,784
-----------
MINERALS -- 2.4%
Billiton PLC ......................................... 217,273 3,544,262
-----------
OIL COMP-INTEGRATED -- 6.4%
BP PLC ............................................... 703,985 7,504,409
Royal Dutch Shell PLC - Class A ...................... 23,451 714,647
Royal Dutch Shell PLC - Class B ...................... 32,097 1,026,176
-----------
. 9,245,232
-----------
PHARMACEUTICALS -- 2.6%
GlaxoSmithKline PLC .................................. 149,798 3,786,514
-----------
66
MMA Praxis International Fund
Schedule of portfolio investments, continued
December 31, 2005
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------
COMMON STOCKS -- 99.2%, continued
PHOTOGRAPHIC PRODUCTS -- 0.3%
Photo-Me International PLC .................................... 232,346 $ 491,759
-------------
REAL ESTATE OPERATORS/DEVELOPERS -- 0.4%
British Land Co., PLC ......................................... 33,418 612,697
-------------
RETAIL -- 1.4%
Kingfisher PLC ................................................ 395,116 1,616,430
Next PLC ...................................................... 17,966 474,539
-------------
2,090,969
-------------
TELECOMMUNICATIONS -- 2.2%
AFK Sistema ................................................... 8,139 191,267
Eircom Group PLC .............................................. 421,452 988,305
Vodafone Group PLC ............................................ 930,033 2,008,416
-------------
3,187,988
-------------
33,191,995
-------------
TOTAL COMMON STOCKS ........................................... 145,264,173
-------------
CORPORATE NOTES -- 1.0%
COMMUNITY DEVELOPMENT -- 1.0%
DOMESTIC -- 1.0%
MMA Community Development Investment, Inc., 2.23%, 1/1/06, (c)+ $ 495,000 495,000
MMA Community Development Investment, Inc., 3.34%, 1/1/06, (c)+ 980,000 980,000
-------------
TOTAL CORPORATE NOTES ......................................... 1,475,000
-------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING -- 9.8%
SHORT TERM -- 9.8%
Northern Institutional Liquid Asset Portfolio ................. 13,951,815 13,951,815
U.S. Treasury Inflation Indexed Bonds, 2.375%, 1/15/25 ........ 418,854 470,108
-------------
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING .... 14,421,923
-------------
TOTAL INVESTMENTS (COST $133,059,303) -- 110.0% ............... 161,161,096
Liabilities in excess of other assets -- (10.0%) .......... (14,607,389)
-------------
NET ASSETS -- 100.0% .......................................... $ 146,553,707
=============
- ------------
(a) Non-income producing securities.
(b) All or part of this security was on loan, as of December 31, 2005.
(c) Represents affiliated restricted security as to resale to investors and is
not registered under the Securities Act of 1933. These securities have
been deemed illiquid under guidelines established by the Board of
Trustees. Acquisition date and current cost: MMA Community Development
Investment, Inc., 2.23% - 12/01, $495,000 and MMA Community Development
Investment, Inc., 3.34% - 12/01, $980,000. At December 31, 2005, these
securities had an aggregate market value of $1,475,000, representing 1.0%
of net assets.
+ Variable rate security. Rates presented are the rates in effect at
December 31, 2005. Date presented reflects next rate change date.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
PLC - Public Liability Co.
See notes to financial statements.
-----------------------------------
Statement of assets and liabilities
-----------------------------------
67
MMA Praxis International Fund
Statement of assets and liabilities
December 31, 2005
ASSETS:
Investments, at value (cost $117,162,380)* ......................................... $ 145,264,173
Investments in affiliates, at value (cost $1,475,000) .............................. 1,475,000
Investments held as collateral for securities loaned, at value ..................... 14,421,923
-------------
Total Investments ............................................................ 161,161,096
-------------
Cash ............................................................................... 414,716
Foreign currency, at value (cost $5) ............................................... 5
Unrealized appreciation on foreign forward currency exchange contracts ............. 2
Interest and dividends receivable .................................................. 151,864
Receivable for capital shares sold ................................................. 86,841
Tax reclaim receivable ............................................................. 107,962
Prepaid expenses ................................................................... 6,816
-------------
Total Assets ................................................................. 161,929,302
-------------
LIABILITIES:
Payable for securities loaned ...................................................... 14,421,923
Distributions payable to shareholders .............................................. 70,496
Payable for investments purchased .................................................. 1,903
Payable for capital shares redeemed ................................................ 599,135
Accrued expenses and other payables:
Investment advisory fees ........................................................ 112,840
Administration fees ............................................................. 15,986
Distribution fees ............................................................... 14,661
Other ........................................................................... 138,651
-------------
Total Liabilities ............................................................ 15,375,595
-------------
NET ASSETS:
Capital ............................................................................ 142,070,268
Distributions in excess of net investment income ................................... (740,494)
Accumulated net realized loss on investments and foreign currency transactions ..... (22,877,860)
Net unrealized appreciation on investments and foreign currency translations ....... 28,101,793
-------------
Net Assets ................................................................... $ 146,553,707
=============
Net Assets
Class A ......................................................................... $ 121,172,930
Class B ......................................................................... 25,380,777
-------------
Total ........................................................................ $ 146,553,707
=============
Shares Outstanding
(unlimited number of shares authorized with $.01 par value)
Class A ......................................................................... 10,147,325
Class B ......................................................................... 2,156,978
-------------
Total ........................................................................ 12,304,303
=============
Net asset value
Class A - Redemption Price Per Share ............................................ $ 11.94
=============
Class A - Maximum Sales Charge .................................................. 5.25%
=============
Class A - Maximum Offering Price Per Share
(100%/(100%-Maximum Sales Charge)) of
net asset value adjusted to the nearest cent ................................. $ 12.60
=============
Class B - offering price per share** ............................................ $ 11.77
=============
* Includes securities on loan of $13,714,818.
**Redemption price per share (Class B) varies by length of time shares are held.
See notes to financial statements.
- -----------------------
Statement of operations
- -----------------------
68
MMA Praxis International Fund
Statement of operations
For the year ended December 31, 2005
INVESTMENT INCOME:
Dividends ............................................................................ $ 3,417,756
Foreign tax withholding .............................................................. (274,372)
Interest ............................................................................. 2,077
Income from securities lending ....................................................... 34,701
Interest from affiliates ............................................................. 40,152
------------
Total Investment Income ........................................................... 3,220,314
------------
EXPENSES:
Investment advisory fees ............................................................. 1,249,736
Administration fees .................................................................. 266,090
Distribution fees-Class A ............................................................ 209,992
Distribution fees-Class B ............................................................ 179,457
Shareholder servicing fees-Class A ................................................... 287,345
Shareholder servicing fees-Class B ................................................... 50,441
Reimbursement of Fund expenses paid by Adviser ....................................... 173,308
Custodian fees ....................................................................... 106,740
Legal fees and expenses .............................................................. 70,622
Trustees' fees and expenses .......................................................... 10,650
Transfer agent fees .................................................................. 10,030
Other expenses ....................................................................... 143,904
------------
Total expenses before reductions/reimbursements ............................... 2,758,315
Expenses reduced by Distributor ................................................... (309,135)
Expenses reduced by Custodian ..................................................... (103,656)
------------
Net Expenses .................................................................. 2,345,524
------------
Net Investment Income ................................................................ 874,790
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on security transactions and foreign currency transactions ......... 13,174,668
Change in unrealized appreciation/depreciation of investments and foreign currency
translations during the year .................................................... 2,258,943
------------
Net realized and unrealized gain on investments and foreign currency transactions .... 15,433,611
------------
Net increase in net assets resulting from operations ................................. $ 16,308,401
============
See notes to financial statements
-----------------------------------
Statements of changes in net assets
-----------------------------------
69
MMA Praxis International Fund
Statements of changes in net assets
Year Ended Year Ended
December 31, December 31,
2005 2004
- ------------------------------------------------------------------------------------------------------------
From Investment Activities:
Net investment income ................................................ $ 874,790 $ 54,672
Net realized gain on investments and foreign currency transactions ... 13,174,668 84,921
Change in unrealized appreciation/depreciation of investments
and foreign currency translations during the year ............... 2,258,943 17,646,871
------------- -------------
Net increase in net assets resulting from operations ................. 16,308,401 17,786,464
------------- -------------
Distributions to Class A Shareholders:
From net investment income ...................................... (1,424,269) (321,650)
Distributions to Class B Shareholders:
From net investment income ...................................... (138,729) (110)
------------- -------------
Change in net assets from distributions to shareholders ............... (1,562,998) (321,760)
------------- -------------
Change in net assets from capital transactions ........................ (6,572,436) 2,052,238
------------- -------------
Change in net assets .................................................. 8,172,967 19,516,942
Net Assets:
Beginning of year ............................................... 138,380,740 118,863,798
------------- -------------
End of year ..................................................... $ 146,553,707 $ 138,380,740
============= =============
Distributions in excess of net investment income ...................... $ (740,494) $ (290,960)
============= =============
See notes to financial statements.
- --------------------
Financial highlights
- --------------------
70
MMA Praxis International Fund
Financial highlights
For a share outstanding throughout the year indicated.
Class A Shares
----------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year .......... $ 10.78 $ 9.43 $ 7.45 $ 9.28 $ 12.53
------------ ------------ ------------ ------------ ------------
Investment Activities:
Net investment income .................... 0.08 0.01 0.04 0.01 0.04
Net realized and unrealized gains
(losses) from investments ............ 1.22 1.37 2.00 (1.79) (3.23)
------------ ------------ ------------ ------------ ------------
Total from Investment Activities ......... 1.30 1.38 2.04 (1.78) (3.19)
------------ ------------ ------------ ------------ ------------
Distributions:
Net investment income .................... (0.14) (0.03) (0.06) (0.03) (0.06)
Tax return of capital .................... -- -- -- (0.02) --
------------ ------------ ------------ ------------ ------------
Total Distributions ...................... (0.14) (0.03) (0.06) (0.05) (0.06)
------------ ------------ ------------ ------------ ------------
Net Asset Value, End of Year ................ $ 11.94 $ 10.78 $ 9.43 $ 7.45 $ 9.28
============ ============ ============ ============ ============
Total Return (excludes sales charge) ........ 12.16% 14.68% 27.53% (19.29%) (25.42%)
Ratios/Supplemental Data:
Net Assets at end of year (000) .......... $ 121,173 $ 115,687 $ 97,396 $ 68,989 $ 71,043
Ratio of expenses to average net assets .. 1.58% 1.63% 1.50% 1.45% 1.45%
Ratio of net investment income to
average net assets .................... 0.74% 0.16% 0.49% 0.11% 0.11%
Ratio of expenses to average net assets* . 1.90% 2.01% 2.14% 2.24% 2.16%
Portfolio Turnover (a) ...................... 71.93% 81.85% 145.51% 76.38% 61.33%
- ----------------------------------------------------------------------------------------------------------------------------------
* During the year, certain expenses were voluntarily reduced/reimbursed. If
such expense reductions had not occurred, the ratios would have been as
indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements.
71
MMA Praxis International Fund
Financial highlights, continued
For a share outstanding throughout the year indicated.
Class B Shares
--------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year .......... $ 10.62 $ 9.32 $ 7.39 $ 9.23 $ 12.51
------------ ------------ ------------ ------------ ------------
Investment Activities
Net investment income (loss) ............. (0.01) (0.05) (0.01) (0.04) (0.04)
Net realized and unrealized gains
(losses) from investments ............ 1.22 1.35 1.98 (1.78) (3.20)
------------ ------------ ------------ ------------ ------------
Total from Investment Activities ......... 1.21 1.30 1.97 (1.82) (3.24)
------------ ------------ ------------ ------------ ------------
Distributions:
Net investment income .................... (0.06) -- (a) (0.04) -- (0.04)
Tax return of capital .................... -- -- -- (0.02) --
------------ ------------ ------------ ------------ ------------
Total Distributions ...................... (0.06) -- (0.04) (0.02) (0.04)
------------ ------------ ------------ ------------ ------------
Net Asset Value, End of Year ................ $ 11.77 $ 10.62 $ 9.32 $ 7.39 $ 9.23
============ ============ ============ ============ ============
Total Return (excludes redemption charge) .. 11.50% 13.95% 26.73% (19.73%) (25.92%)
Ratios/Supplemental Data:
Net Assets at end of year (000) .......... $ 25,381 $ 24,094 $ 21,468 $ 17,608 $ 22,364
Ratio of expenses to average net assets .. 2.23% 2.28% 2.15% 2.00% 2.00%
Ratio of net investment income to
average net assets .................... 0.10% (0.49%) (0.15%) (0.44%) (0.44%)
Ratio of expenses to average net assets* . 2.39% 2.51% 2.63% 2.74% 2.65%
Portfolio Turnover (b) ...................... 71.93% 81.85% 145.51% 76.38% 61.33%
- --------------------------------------------------------------------------------------------------------------------------------
* During the year, certain expenses were voluntarily reduced/reimbursed. If
such expense reductions had not occurred, the ratios would have been as
indicated.
(a) Distribution per share was less than $0.005.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
See notes to financial statements.
- -----------------------------
Notes to financial statements
- -----------------------------
72
MMA Praxis Mutual Funds
Notes to financial statements
December 31, 2005
1. Organization:
The MMA Praxis Mutual Funds (the "Trust") 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 Trust currently consists of the MMA Praxis Intermediate Income Fund,
the MMA Praxis Core Stock Fund, the MMA Praxis Value Index Fund, and the MMA
Praxis International Fund (individually a "Fund", collectively "the Funds").
These are also known as the Intermediate Income Fund, Core Stock Fund, Value
Index Fund, and International Fund.
The Funds currently offer two classes of shares, Class A and Class B. Each class
of shares in a Fund has identical rights and privileges except with respect to
fees paid under the distribution and shareholder servicing agreements, voting
rights on matters affecting a single class of shares and the exchange privileges
of each class of shares.
Under the Trust's organizational documents, its officers and trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Trust. In addition, in the normal course of business, the Trust
enters into contracts with its vendors and others that provide general
indemnification. Each Fund's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against a Fund.
However, based on experience, the Trust expects the risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with U.S. generally accepted accounting principles ("GAAP"). The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses for the reporting
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. A pricing service would normally consider such factors as yield,
risk, quality, maturity, type of issue, trading characteristics, special
circumstances and other factors it deems relevant in determining valuations of
normal institutional trading units of debt securities and would not rely
exclusively on quoted prices. When fair valuing foreign securities held by the
International Fund, certain pricing services might use computerized pricing
models to systematically calculate adjustments to foreign security close prices
based on the latest market movements. Such pricing models utilize market data
that has been obtained between the local market close and the NYSE close to
compute adjustments to foreign security close prices. The methods used by the
pricing service and the valuations so established will be reviewed by the
Adviser under general supervision of the Funds' Board of Trustees. Securities
for which market quotations are not readily available, or are unreliable, are
valued at their fair value as determined in good faith in accordance with
consistently applied procedures established by and under the general supervision
of the Board of Trustees.
73
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
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. Income and realized and unrealized gains and losses on
investments are allocated to each class of shares based upon relative net assets
or other appropriate basis.
Risks associated with Foreign Securities and Currencies:
Investments in securities of foreign issuers carry certain risks not ordinarily
associated with investments in securities of domestic issuers. Such risks
include adverse future political and economic developments and the possible
imposition of exchange controls or other foreign governmental laws and
restrictions. In addition, with respect to certain countries, there is the
possibility of expropriation of assets, confiscatory taxation, political or
social instability or diplomatic developments which could adversely affect
investments in those countries.
Certain countries may also impose substantial restrictions on investments on
their capital markets by foreign entities, including restriction on investment
in issuers or industries deemed sensitive to the relevant nation's interests.
These factors may limit the investment opportunities available or result in lack
of liquidity and high price volatility with respect to securities of issuers
from developing countries.
Foreign Currency Translation:
The market value of investment securities, other assets and liabilities of the
Intermediate Income Fund, the Value Index Fund and 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 Funds' books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from the 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. As of December 31, 2005, the
International Fund had the following forward foreign currency exchange contracts
outstanding as follows:
74
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
Settlement Initial Market Net Unrealized
Date To Receive Value Value Appreciation
- --------------------------------------------------------------------------------
Contracts To Buy
1/3/06 434 EUR $514.46 $514.59 $0.13
1/3/06 388 EUR $459.67 $459.88 $0.21
1/4/06 784 EUR $927.40 $928.64 $1.24
-----
$1.58
=====
EUR - Euro
Futures Contracts:
The Funds may invest in futures contracts (stock or bond index futures contracts
or interest rate futures) to hedge or manage risks associated with a Funds'
securities investments. To enter into a futures contract, an amount of cash and
cash equivalents, equal to a certain percentage of the market value of the
futures contracts, is deposited in a segregated account with the Fund's
Custodian and/or in a margin account with a broker to collateralize the position
and thereby ensure that the use of such futures is unleveraged. Positions in
futures contracts may be closed out only on an exchange that provides a
secondary market for such futures. However, there can be no assurance that a
liquid secondary market will exist for any particular futures contract at any
specific time. Thus, it may not be possible to close a futures position. In the
event of adverse price movements, a Fund would continue to be required to make
daily cash payments to maintain its required margin. In such situations, if a
Fund had insufficient cash, it might have to sell portfolio securities to meet
daily margin requirements at a time when it would be disadvantageous to do so.
In addition, a Fund might be required to make delivery of the instruments to
underlying futures contracts it holds. The inability to close the futures
position also could have an adverse impact on a Fund's ability to hedge or
manage risks effectively.
Successful use of futures by a Fund is also subject to MMA Capital Management's
(the "Adviser") ability to predict movements correctly in the direction of the
market. There is an imperfect correlation between movements in the price of the
future and movements in the price of the securities that are the subject of the
hedge. In addition, the price of futures may not correlate perfectly with
movement in the cash market due to certain market distortions. Due to the
possibility of price distortion in the futures market and because of the
imperfect correlation between the movements in the cash market and movements in
the price of futures, a correct forecast of general market trends or interest
rate movements by the Adviser may still not result in a successful hedging
transaction over a short time frame.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond the limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some futures
to substantial losses.
75
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
The trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
Swap Agreements:
The Funds may enter into event-linked swaps, including credit default swaps. The
credit default swap market allows a Fund to manage credit risk through buying
and selling credit protection on specific names or a basket of names. The
transactions are documented through swap documents. A "buyer" of credit
protection agrees to pay a counterparty to assume the credit risk of an issuer
upon the occurrence of certain events. The "seller" of credit protection
receives a premium and agrees to assume the credit risk of an issuer upon the
occurrence of certain events.
Restricted Securities:
Investments in restricted securities are valued by the Board of Trustees or
valued pursuant to valuation procedures approved by the Board of Trustees (the
"Valuation Procedures"). The Valuation Procedures contemplate the Board's
delegation of the implementation of the Valuation Procedures to the Adviser. In
valuing restricted securities under the Valuation Procedures, the Adviser will
consider (but is not limited to) certain specific and general factors enumerated
in the Valuation Procedures. The Valuation Procedures require that the Adviser
report to the Board at each of its regular quarterly meetings regarding
valuation of restricted securities and actions taken in connection with the
Valuation Procedures.
Securities Lending:
In order to generate additional income, each Fund may, from time to time,
subject to its investment objectives and policies, lend its portfolio securities
to broker-dealers, banks, or institutional borrowers of securities pursuant to
agreements requiring that the loans be secured by collateral equal in value to
100% of the value of the securities loaned. Collateral for loans of portfolio
securities must consist of: (1) cash in U.S. dollars, (2) obligations issued or
guaranteed by the U.S. Treasury or by any agency or instrumentality of the U.S.
Government, or (3) irrevocable, non-transferable, stand-by letters of credit
issued by banks domiciled or doing business within the U.S. and meeting certain
credit requirements at the time of issuance. This collateral will be valued
daily by the Adviser. Should the market value of the loaned securities increase,
the borrower is required to furnish additional collateral to that Fund.
During the time portfolio securities are on loan, the borrower pays the Fund any
dividends or interest received on such securities. Loans are subject to
termination by the Fund or the borrower at any time. While the Fund does not
have a right to vote on securities on loan, each Fund intends to terminate the
loan and regain the right to vote if that is considered important with respect
to the investment. While the lending of securities may subject a Fund to certain
risks, such as delays or an inability to regain the securities in the event the
borrower were to default or enter into bankruptcy, each Fund will have the
contract right to retain the collateral described above.
76
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
The Northern Trust Company serves as the Securities Lending Agent. For providing
this service, the Securities Lending Agent retains 40% of the securities lending
income. The securities lending income is shown net of fees on the Statement of
operations. For the year ended December 31, 2005, the Funds had securities on
loan as follows:
Fee paid to Market Market Value
Northern Trust Value of of Loaned
Company Collateral Securities
- --------------------------------------------------------------------------------
Intermediate Income Fund $19,739 $34,504,412 $33,057,778
Core Stock Fund 5,044 44,494,997 43,402,559
Value Index Fund 1,128 3,094,921 2,783,771
International Fund 23,128 14,421,923 13,714,818
Community Development Investments:
Consistent with the investment criteria for socially responsible investing, the
Board of Trustees of the Funds has authorized the Funds to make certain types of
community development investments. In connection with the community development
investments, the Funds have received from the Securities and Exchange Commission
("SEC") an exemptive order that would permit each of the Funds to invest a
limited portion of their respective net assets in securities issued by an
affiliate of MMA Capital Management (the "Adviser"), MMA Community Development
Investments, Inc. ("MMA CDI"). MMA CDI is a not-for-profit corporation that was
organized specifically to promote community development investing and it seeks
to fund its efforts primarily through the sale to investors of interests in
certain investment pools that it has established (the "CDI-Notes"). Assets
raised through offerings of CDI-Notes are then invested directly in non-profit
and not-for-profit community development organizations. Each Fund, in accordance
with guidelines established by the Board of Trustees and in compliance with the
SEC's exemptive order, would be permitted to invest up to 3% of its net assets
in CDI-Notes. CDI-Notes have certain specific risk factors associated with them.
These types of investments offer a rate of return below the prevailing market
rate at acquisition and are considered illiquid, unrated and below-investment
grade. They also involve a greater risk of default or price decline than
investment-grade securities. However, these investments have been determined by
the Board of Trustees as being a beneficial way to carry out each Fund's goals
for stewardship investing at the community level. In addition, these investments
are priced in accordance with procedures approved by the Board of Trustees.
Dividends and Distributions:
Dividends from net investment income are declared and paid monthly for the
Intermediate Income Fund. Dividends from the net investment income are declared
and paid semi-annually for the Core Stock Fund, the Value Index Fund, and 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 GAAP. 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.
77
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
Federal Income Taxes:
It is each Fund's policy to continue to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies, as defined in applicable sections of Subchapter M of the Internal
Revenue Code, and to distribute timely all of its net investment company taxable
income 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 International Fund will file
for claims on foreign taxes withheld.
In-Kind Purchases:
The Funds received payment for shareholder purchases in securities rather than
cash, known as "purchases in kind" in accordance with the application pursuant
to Section 17(b) of the Investment Company Act of 1940 for an order exempting
the transaction from Section 17(a) of the Act. During the year ended December
31, 2004, the Intermediate Income Fund and Core Stock Fund received securities
valued at $171,836,168 and $130,229,953, respectively, for in-kind purchases,
from the Mennonite Foundation, Inc. and Mennonite Retirement Trust, related
parties to the Funds. There were no such transactions during the year ended
December 31, 2005.
Other:
Expenses that are directly related to a Fund are charged directly to that Fund.
Other operating expenses of the Trust are prorated to each Fund on the basis of
relative net assets to the Trust or another reasonable basis. Expenses specific
to a class are charged directly to that class.
Each Fund maintains a cash balance with its custodian and receives a reduction
of its 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, 2005, custodian fees and expenses reduced by the custodian were
$27,199, $31,203, $4,555 and $103,656 for the Intermediate Income Fund, the Core
Stock Fund, the Value Index Fund and the International 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.
The Funds will charge a redemption fee of 2.00% of the total redemption amount
if you sell or exchange your shares after holding them for less than 30 days
subject to certain exceptions and limitations described in the prospectus.
78
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
3. Purchases and Sales of Securities:
Purchases and sales of securities (excluding short-term debt securities having
maturities one year or less) for the year ended December 31, 2005 were as
follows:
Purchases Sales
- --------------------------------------------------------------------------------
Intermediate Income Fund $ 117,817,726 $ 97,972,030
Core Stock Fund 97,886,552 115,269,874
Value Index Fund 17,716,630 11,657,128
International Fund 96,006,173 102,358,471
4. Related Party Transactions:
Menno Insurance Service, Inc. d/b/a MMA Capital Management, (the "Adviser") (a
separate corporate entity controlled by Mennonite Mutual Aid, Inc.), provides
investment advisory services to the Funds. 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 Core Stock Fund; 0.30% for
the Value Index Fund and 0.90% for the International Fund. Evergreen Investment
Management Company, LLC, serves as the sub-adviser to the International Fund.
The Adviser entered into expense limitation agreements pursuant to which the
Adviser agreed to waive fees and/or reimburse expenses to the extent necessary
in order to limit the total annual fund operating expenses (excluding brokerage
costs, interest, taxes, dividends, fees paid to vendors providing fair value
pricing and fund compliance services, legal fees, costs relating to such
services and extraordinary expenses).
Effective May 1, 2004, each Fund has agreed to repay the Adviser for the amounts
waived and/or reimbursed by the Adviser pursuant to the expense limitation
agreement provided that such repayment does not cause the total annual fund
operating expenses of Class A and Class B of each Fund to exceed 0.85% and
1.30%, respectively, for the Intermediate Income Fund, 1.25% and 1.90%,
respectively, for the Core Stock Fund, 0.95% and 1.50%, respectively, for the
Value Index Fund, and 1.50% and 2.15%, respectively, for the International Fund.
Effective May 1, 2005, the Funds have agreed to repay the Adviser for the
amounts waived and/or reimbursed by the Adviser pursuant to the expense
limitation agreement provided that such repayment does not cause the total
annual fund operating expenses of Class A and Class B of each Fund to exceed
0.86% and 1.31%, respectively, for the Intermediate Income Fund, 1.26% and
1.91%, respectively, for the Core Stock Fund, 0.96% and 1.51%, respectively, for
the Value Index Fund, and 1.50% and 2.15%, respectively, for the International
Fund. For the year ended December 31, 2005, the Adviser waived investment
advisory fees in the Intermediate Income Fund in the amount of $134,653. For the
year ended December 31, 2005, the Core Stock Fund, Value Index Fund and
International Fund repaid the Adviser in the amounts of $170,785, $76,328 and
$173,308 for fees waived during the year ended December 31, 2002, respectively.
79
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
As of December 31, 2005, the Funds had the following amounts (and year of
expiration) subject to repayment to the Adviser:
Fund Fees Waived Repayment Expires Balance
- ---- ---------- --------------- --------
Intermediate Income Fund 2003 2006 $ 384,992
2004 2007 365,525
2005 2008 134,653
Core Stock Fund 2003 2006 549,482
2004 2007 446,557
Value Index Fund 2003 2006 65,343
International Fund 2003 2006 428,062
2004 2007 227,962
During the year ended December 31, 2005, the Intermediate Income Fund, Core
Stock Fund, Value Index Fund and International Fund had $429,721, $641,338,
$27,963, and $355,057 subject to repayment to the Adviser expire, respectively.
Effective September 23, 2005, Integrated Fund Services, Inc. ("IFS") provides
administrative, accounting, transfer agency, shareholder servicing and dividend
disbursing services on behalf of the Trust. For these services, IFS receives an
annual fee, paid monthly, from each Fund. For the year ended December 31, 2005,
IFS earned $101,209, $117,470, $18,583, and $53,505 from the Intermediate Income
Fund, Core Stock Fund, Value Index Fund, and International Fund, respectively.
Prior to September 23, 2005, BISYS Fund Services ("BISYS") served the Funds as
Administrator. Under the terms of the agreement effective July 1, 2003, BISYS
received fees for administration, transfer agent, and fund accounting services
computed daily at an annual rate of each Fund's average daily net assets. The
fees for the Intermediate Income Fund, Core Stock Fund, Value Index Fund and
International Fund were 0.30%, 0.35%, 0.30%, and 0.40%, respectively.
Effective September 23, 2005, IFS Fund Distributors, Inc. ("Underwriter") is the
Funds' principal underwriter and, as such, acts as exclusive agent for
distribution of the Funds' shares. Under the terms of the Underwriting Agreement
between the Trust and the Underwriter, the Underwriter earned $1,108, $2,878,
$2,152 and $1,924 from underwriting and broker commissions on the sale of share
of the Intermediate Income Fund, Core Stock Fund, Value Index Fund, and
International Fund, respectively, for the year ended December 31, 2005. In
addition, the Underwriter collected $3,828, $10,656, $3,077, and $1,514 of
contingent deferred sales loads of the Intermediate Income Fund, Core Stock
Fund, Value Index Fund, and International Fund, respectively.
The Trust has adopted a Plan of Distribution (12b-1 plan) for each Fund under
which each Fund may directly incur or reimburse the Adviser or the Underwriter
for expenses related to the distribution and promotion of shares. Class A shares
of each Fund may each pay an annual fee of up to 0.50% of average daily net
assets of such Fund's Class A shares. The Adviser or Underwriter may use p to
0.25% of the 12b-1 fee for shareholder servicing and up to 0.25% for
distribution. Class B shares of each Fund may each pay an annual fee of up to
1.00% of the average daily net assets of such Fund's Class B shares. The Adviser
or Underwriter may incur 0.25% of the 12b-1 fee for shareholder servicing an dup
to 0.75% for distribution.
Prior to September 23, 2005, BISYS Fund Services Limited Partnership ("Prior
Distributor") served as the Funds' distributor. For the year ended December 31,
2005, the Prior Distributor received approximately $618,533 from commissions
earned on sales of Class A shares and on redemption of Class B shares of the
Funds, all of which the Prior Distributor reallowed to dealers of the Funds'
shares. Of the commissions reallowed, $22,481 went to affiliated dealers. For
the year ended December 31, 2005, the Prior Distributor waived fees in the
amount of $647,502, $605,950, $109,608, and $309,135 for the Intermediate Income
Fund, Core Stock Fund, Value Index Fund, and International Fund, respectively.
80
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
Effective September 23, 2005, under the terms of the Compliance Services
Agreement between the Trust and IFS, IFS provides certain compliance services to
the Trust, including developing and assisting in implementing a compliance
program for IFS on behalf of the Trust and providing administrative support
services to the Funds' Compliance Program and Chief Compliance Officer.
Prior to September 23, 2005, the Funds contracted with BISYS to provide certain
compliance services on behalf of the Funds. Subject to the direction and control
of the Trustees, BISYS developed and assisted in implementing a compliance
program on behalf of the Funds and provided the Chief Compliance Officer to the
Funds.
Certain officers of the Trust are affiliated with the Adviser and/or IFS. Such
officers are not paid any fees directly by the Funds for serving as officers of
the Trust.
5. Capital Share Transactions:
Transactions in shares of the Funds are summarized below:
Intermediate Income Fund Core Stock Fund Value Index Fund
---------------------------------------------------------------------------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, December 31, December 31, December 31,
2005 2004 2005 2004 2005 2004
- ----------------------------------------------------------------------------------------------------------------------------
Capital Transactions:
Class A Shares:
Proceeds from
shares issued $ 32,408,348 $ 33,778,593 $ 29,090,957 $ 32,039,777 $ 8,394,187 $ 7,063,609
Proceeds from
transfer in-kind -- 171,836,168 -- 130,229,953 -- --
Dividends reinvested 7,325,276 3,495,431 763,982 856,911 435,011 501,696
Cost of shares redeemed (25,225,814) (20,142,179) (30,953,564) (14,459,512) (4,654,565) (2,793,313)
------------- ------------- ------------- ------------- ------------- -------------
Class A Share Transactions $ 14,507,810 $ 188,968,013 $ (1,098,625) $ 148,667,129 $ 4,174,633 $ 4,771,992
============= ============= ============= ============= ============= =============
Class B Shares:
Proceeds from
shares issued $ 3,220,936 $ 4,491,607 $ 5,821,732 $ 7,562,743 $ 3,353,838 $ 3,039,809
Dividends reinvested 1,207,386 1,653,704 9 197,483 95,344 92,926
Cost of shares redeemed (8,304,556) (10,605,069) (26,692,270) (21,134,424) (1,394,678) (442,233)
------------- ------------- ------------- ------------- ------------- -------------
Class B Share
Transactions $ (3,876,234) (4,459,758) (20,870,529) $ (13,374,198) $ 2,054,504 $ 2,690,502
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease)
from capital transactions $ 10,631,576 $ 184,508,255 $ (21,969,154) $ 135,292,931 $ 6,229,137 $ 7,462,494
============= ============= ============= ============= ============= =============
Share Transactions:
Class A Shares:
Issued 3,286,362 3,394,143 2,092,157 2,398,766 866,001 793,952
Issued from
transfer in-kind -- 17,501,087 -- 10,008,066 -- --
Reinvested 744,269 351,392 54,554 61,252 44,166 55,434
Redeemed (2,556,857) (2,023,466) (2,221,367) (1,080,862) (477,425) (311,876)
------------- ------------- ------------- ------------- ------------- -------------
Change in Class A Shares 1,473,774 19,223,156 (74,656) 11,387,222 432,742 537,510
============= ============= ============= ============= ============= =============
Class B Shares:
Issued 326,273 451,560 436,151 584,909 348,972 342,824
Reinvested 122,694 167,265 -- 14,596 9,710 10,239
Redeemed (843,610) (1,067,030) (1,991,235) (1,634,687) (144,184) (49,880)
------------- ------------- ------------- ------------- ------------- -------------
Change in Class B Shares (394,643) (448,205) (1,555,084) (1,035,182) 214,498 303,183
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease)
from share transactions 1,079,131 18,774,951 (1,629,740) 10,352,040 647,240 840,693
============= ============= ============= ============= ============= =============
International Fund
-----------------------------
Year Year
Ended Ended
December 31, December 31,
2005 2004
- ------------------------------------------------------------
Capital Transactions:
Class A Shares:
Proceeds from
shares issued $ 13,034,316 $ 14,958,246
Proceeds from
transfer in-kind -- --
Dividends reinvested 1,188,251 279,065
Cost of shares redeemed (19,580,189) (12,844,688)
------------- -------------
Class A Share Transactions $ (5,357,622) $ 2,392,623
============= =============
Class B Shares:
Proceeds from
shares issued $ 2,355,254 $ 2,078,255
Dividends reinvested 134,393 110
Cost of shares redeemed (3,704,461) (2,418,750)
------------- -------------
Class B Share
Transactions $ (1,214,814) $ (340,385)
------------- -------------
Net increase (decrease)
from capital transactions $ (6,572,436) $ 2,052,238
============= =============
Share Transactions:
Class A Shares:
Issued 1,202,582 1,558,892
Issued from
transfer in-kind -- --
Reinvested 109,446 29,594
Redeemed (1,767,755) (1,318,678)
------------- -------------
Change in Class A Shares (455,727) 269,808
============= =============
Class B Shares:
Issued 220,149 218,069
Reinvested 13,048 9
Redeemed (344,623) (253,891)
------------- -------------
Change in Class B Shares (111,426) (35,813)
------------- -------------
Net increase (decrease)
from share transactions (567,153) 233,995
============= =============
81
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
6. Federal Income Tax Information:
The character of dividends paid to shareholders for federal income tax purposes
during the years ended December 31, 2005 and 2004 was as follows:
Intermediate Income Fund Core Stock Fund Value Index Fund International Fund
------------------------------------------------------------------------------------------------------
2005 2004 2005 2004 2005 2004 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
From ordinary income $10,798,788 $ 6,436,287 $ 854,926 $ 1,194,688 $ 665,289 $ 497,782 $ 1,562,998 $ 321,760
From long-term capital gains -- -- 32,477 -- -- -- -- --
------------------------------------------------------------------------------------------------------
Total distributions $10,798,788 $ 6,436,287 $ 887,403 $ 1,194,688 $ 665,289 $ 497,782 $ 1,562,998 $ 321,760
======================================================================================================
The following information is computed on a tax basis for each item as of
December 31, 2005:
Intermediate Core Value
Income Stock Index International
Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------
Tax cost of portfolio investments $ 304,323,065 $ 330,050,900 $ 47,487,199 $ 135,997,412
----------------------------------------------------------------------
Gross unrealized appreciation $ 2,904,358 $ 45,663,185 $ 8,956,212 $ 26,016,349
Gross unrealized depreciation (4,189,015) (22,313,450) (1,860,606) (852,665)
----------------------------------------------------------------------
Net unrealized appreciation
(depreciation) (1,284,657) 23,349,735 7,095,606 25,163,684
Undistributed ordinary income -- -- -- 1,949,638
Undistributed long term gains -- 4,555,083 -- --
Capital loss carryforward (1,634,842) (11,025,043) (456,985) (22,629,883)
Post-October losses (335,614) -- -- --
Other temporary differences (70,512) -- (17,402) --
----------------------------------------------------------------------
Accumulated earnings (deficit) $ (3,325,625) $ 16,879,775 $ 6,621,219 $ 4,483,439
======================================================================
The difference between book basis and tax basis unrealized appreciation
(depreciation) is attributable primarily to the tax defferal of losses on wash
sales and investments in Passive Foreign Investment Companies.
As of December 31, 2005, the following Funds had net capital loss carry forwards
to offset future net capital gains, if any:
Amount Expires
- --------------------------------------------------------------------------------
Intermediate Income Fund $ 270,941 2008
532,675 2009
673,793 2010
157,433 2012
-------------
$ 1,634,842
=============
Core Stock Fund* $ 2,975,753 2010
8,049,290 2011
-------------
$ 11,025,043
=============
Value Index Fund $ 456,985 2011
=============
International Fund $ 22,629,883 2010
=============
* Capital losses may be subject to limitations due to an ownership change during
the fiscal year ended December 31, 2004.
82
MMA Praxis Mutual Funds
Notes to financial statements, continued
December 31, 2005
During the year ended December 31, 2005, the following Funds utilized capital
loss carryforwards:
Intermediate Income Fund $ 238,909
Core Stock Fund 11,102,681
Value Index Fund 831,457
International Fund 13,001,752
Certain reclassifications, the result of permanent differences between financial
statement and income tax reporting requirements, have been made to the
components capital. These reclassifications have no impact on the net assets or
net asset value per share of the Funds and are designed to present the Fund's
capital accounts on a tax basis. The following reclassifications have been made
to the following Funds for the year ended December 31, 2005:
Accumulated Accumulated
Paid-In Net Investment Net Realized
Capital Income (Loss) Gains (Losses)
- --------------------------------------------------------------------------------
Intermediate Income Fund $ (2) $ 609,700 $ (609,698)
Core Stock Fund (1) 32,477 (32,476)
Value Index Fund (1) (16,955) 16,956
International Fund -- (238,674) 238,674
-------------------------------------------------------
Report of Independent Registered Public Accounting Firm
-------------------------------------------------------
83
Report of Independent Registered Public
Accounting Firm
To the Board of Trustees and Shareholders of the
MMA Praxis Mutual Funds
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of the MMA Praxis Mutual Funds
(comprised of the MMA Praxis Intermediate Income Fund, MMA Praxis Core Stock
Fund, MMA Praxis Value Index Fund, and the MMA Praxis International Fund)
(collectively, "the Funds") as of December 31, 2005, the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Funds' internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Funds' internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2005, by correspondence with the
custodian and brokers. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
MMA Praxis Mutual Funds as of December 31, 2005, the results of their operations
for the year then ended, the changes in their net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Cincinnati, Ohio
February 13, 2006
- ---------------------------
Additional fund information
- ---------------------------
84
MMA Praxis Mutual Funds
Additional fund information (unaudited)
December 31, 2005
Security Allocation:
The MMA Praxis Mutual Funds invested, as a percentage of net assets, in the
following industries as of December 31, 2005:
- --------------------------------------------------------------------------------
Intermediate Income Fund
- --------------------------------------------------------------------------------
Percentage of
Security Allocation Net Assets
- --------------------------------------------------------------------------------
Corporate Bonds 25.5%
Fannie Mae 33.4%
Freddie Mac 23.3%
Securities Lending Collateral 12.5%
Asset Backed Securities 3.3%
Collateralized Mortgage Obligations 3.2%
Government National Mortgage Assoc 2.4%
Federal Home Loan Bank 1.6%
Tennessee Valley Authority 1.4%
Corporate Notes 1.2%
Federal Farm Credit Bank 0.7%
Mutual Funds 0.6%
Interest Only Bonds 0.6%
Preferred Stock 0.4%
Municipal Bonds 0.1%
U.S. Treasury Obligations 0.0%
Small Business Administration 0.0%
- --------------------------------------------------------------------------------
Total 110.2%
================================================================================
- --------------------------------------------------------------------------------
Core Stock Fund
- --------------------------------------------------------------------------------
Percentage of
Security Allocation Net Assets
- --------------------------------------------------------------------------------
Common Stocks 96.6%
Securities Lending Collateral 14.2%
Corporate Notes 1.2%
U.S. Government Agencies - Discount 1.1%
- --------------------------------------------------------------------------------
Total 113.1%
================================================================================
- --------------------------------------------------------------------------------
Value Index Fund
- --------------------------------------------------------------------------------
Percentage of
Security Allocation Net Assets
- --------------------------------------------------------------------------------
Common Stocks 98.8%
Securities Lending Collateral 6.0%
Corporate Notes 0.8%
- --------------------------------------------------------------------------------
Total 105.6%
================================================================================
- --------------------------------------------------------------------------------
International Fund
- --------------------------------------------------------------------------------
Percentage of
Security Allocation Net Assets
- --------------------------------------------------------------------------------
Japan 32.1%
United Kingdom 22.7%
France 10.0%
Securities Lending Collateral 9.8%
Germany 9.5%
Switzerland 8.7%
Netherlands 4.4%
Ireland 1.8%
Hong Kong 1.6%
Belgium 1.2%
Spain 1.2%
Norway 1.1%
Mexico 1.1%
Corporate Notes - Domestic 1.0%
Finland 0.8%
Brazil 0.5%
Italy 0.5%
Canada 0.5%
Bermuda 0.4%
Sweden 0.3%
South Korea 0.3%
Denmark 0.2%
Argentina 0.2%
South Africa 0.1%
- --------------------------------------------------------------------------------
Total 110.0%
================================================================================
85
MMA Praxis Mutual Funds
Additional fund information, continued (unaudited)
December 31, 2005
Dividend Received Deduction
For corporate shareholders, the following ordinary dividends paid during the
year ended December 31, 2005, qualify for the corporate dividends received
deduction:
Intermediate Income Fund 0.31%
Core Stock Fund 100%
Value Index Fund 100%
International Fund 3%
Proxy Voting
The Adviser and Sub-Adviser are responsible for exercising the voting rights
associated with the securities purchased and held by the Funds. A description of
the policies and procedures that the Adviser and Sub-Adviser use in fulfilling
this responsibility and information regarding how those proxies were voted
during the twelve month period ended June 30 are available (i) without charge,
upon request, by calling 800-977-2947; and (ii) on the Securities and Exchange
Commission's ("commission's) Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The Trust files a complete listing of The Schedules of Portfolio Investments for
each Fund as of the end of the first and third quarters of each fiscal year on
Form N-Q. The complete listing (i) is available on the Commission's Web site,
(ii) may be reviewed and copied at the Commission's Public Reference Room in
Washington, DC; and (iii) will be made available to shareholders upon request by
calling (800) 977-2947. Information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
The Statement of Additional Information contains more information about the
Funds and can be obtained free of charge by calling (800) 977-2947.
Special Meeting of Shareholders
On December 22, 2005, a Special Meeting of Shareholders of the Core Stock Fund
was held to approve or disapprove a new sub-advisory agreement between the
Adviser and Davis Select Advisers, L.P. effective January 2, 2006. The new
sub-advisory agreement was approved as follows:
Shares
----------------------------------------------
For Against Abstain
---------- ------------ -------
11,987,410 27,653 200,440
86
MMA Praxis Mutual Funds
Additional fund information, continued (unaudited)
December 31, 2005
Expense Comparison
As a shareholder of the MMA Praxis Mutual Funds, you incur two types of costs:
(1) transaction costs, including sales charges (loads) on purchases, reinvested
dividends, or other distributions; redemption fees; and exchange fees; (2)
ongoing costs, including management fees; distribution and service 12b-1 fees;
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the MMA Praxis Mutual Funds and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from July 1, 2005 through December 31,
2005.
Actual Expenses
The table below provides information about actual account values and actual
expenses. You may use the information below, together with the amount you
invested, to estimate the expenses that you paid over the period. Simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), then multiply the result by the number in the table under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
Beginning Ending Expense Paid Expense Ratio
Account Value Account Value During Period* During Period**
7/1/05 12/31/05 7/1/05-12/31/05 7/1/05-12/31/05
- --------------------------------------------------------------------------------------------------
Intermediate Income Fund
Class A $ 1,000.00 $ 996.80 $ 4.85 0.96%
Class B 1,000.00 994.30 7.11 1.41%
Core Stock Fund
Class A 1,000.00 1,052.10 7.02 1.36%
Class B 1,000.00 1,049.00 10.37 2.01%
Value Index Fund
Class A 1,000.00 1,060.40 5.51 1.06%
Class B 1,000.00 1,056.70 8.34 1.61%
International Fund
Class A 1,000.00 1,145.50 8.46 1.57%
Class B 1,000.00 1,142.70 11.96 2.21%
* Expenses are equal to the average account value times the Fund's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
** Annualized.
87
MMA Praxis Mutual Funds
Additional fund information, continued (unaudited)
December 31, 2005
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on each MMA Praxis Mutual Fund's expense ratio and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the table is
useful in comparing ongoing costs only, and will not help you determine the
relative costs of owning different funds. In addition, if these transactional
costs were included, your costs would have been higher.
Beginning Ending Expense Paid Expense Ratio
Account Value Account Value During Period* During Period**
7/1/05 12/31/05 7/1/05-12/31/05 7/1/05-12/31/05
- --------------------------------------------------------------------------------------------------
Intermediate Income Fund
Class A $ 1,000.00 $ 1,020.35 $ 4.91 0.96%
Class B 1,000.00 1,018.08 7.19 1.41%
Core Stock Fund
Class A 1,000.00 1,018.36 6.90 1.36%
Class B 1,000.00 1,015.08 10.20 2.01%
Value Index Fund
Class A 1,000.00 1,019.86 5.40 1.06%
Class B 1,000.00 1,017.09 8.18 1.61%
International Fund
Class A 1,000.00 1,017.32 7.96 1.57%
Class B 1,000.00 1,014.04 11.24 2.21%
* Expenses are equal to the average account value times the Fund's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
** Annualized.
88
MMA Praxis Mutual Funds
Additional fund information, continued (unaudited)
December 31, 2005
INFORMATION FOR SHAREHOLDERS REGARDING THE RENEWAL OF THE INVESTMENT ADVISORY
AGREEMENT WITH MMA CAPITAL MANAGEMENT
At a meeting held on November 21, 2005, the Board of Trustees of the Funds
approved the continuation of the Investment Advisory Agreement between each of
the Funds and Menno Insurance Service, Inc., d/b/a MMA Capital Management. The
Board of Trustees requested and received from the Adviser information and data
relating to the Investment Advisory Agreement and the Funds. In concluding that
it was in the best interests of the Funds and their shareholders to retain MMA
Capital Management for an additional year, the Board, including a majority of
those Trustees who are not "interested persons" of the Funds or the Adviser (the
"Independent Trustees") advised by independent legal counsel, gave weight to the
following factors, among others:
Nature, Quality and Extent of Services
The Trustees discussed the nature, quality and extent of services MMA Capital
Management would provide to the Funds in the coming year, noting that there
should be no change in service or investment strategy other than the appointment
of Davis Selected Advisers, L.P. as sub-adviser to the MMA Praxis Core Stock
Fund. The Trustees considered the Adviser's shareholder servicing and compliance
efforts before the Board concluded that it was satisfied with the nature,
quality and extent of services provided to the Funds by the MMA Capital
Management.
Investment Performance of the Funds and MMA
The Trustees reviewed the Funds' performance results relative to their
benchmarks as well as to their respective peer groups over the past year. Based
upon discussions regarding each Fund's performance, the Trustees determined that
they continued to be satisfied with the long term performance of each Fund and
of the Adviser, particularly in light of the SRI processes and philosophies as
compared to each Fund's peer group members.
Costs of Services and Profitability of MMA and Affiliates
The Trustees then reviewed information and data regarding the costs of providing
the advisory services to the Funds and the resulting profits to the Adviser.
Representatives of the Adviser addressed the Trustees' questions concerning
guidelines for manager selection, payment of platform fees, revenue sharing
arrangements and expense waivers and reimbursements. In its review of the Funds'
total expenses, the Trustees considered the Adviser's fee, as well as other Fund
expenses, such as transfer agent fees, custodial, legal and audit fees. The
Trustees also noted the effects of the Adviser's voluntary expense waivers and
expense reimbursements on fees and expense levels. As part of its review, the
Trustees considered the expense ratios and profitability information by Fund
compared to peer group fund expense ratios and profitability information.
Finally, the Board reviewed the fee structures and other information provided by
the Adviser regarding its services to other clients before concluding that the
costs of the services provided to the Funds by MMA Capital Management were
reasonable and fair.
Economies of Scale
The Trustees considered the extent to which economies of scale would be realized
as the Funds grow and whether the investment advisory contract fee rates reflect
those economies of scale for the benefit of the Funds' shareholders. The Adviser
represented to the Trustees that the Adviser would consider appropriate
breakpoints as the Funds grew in size, but that, currently, the Funds' asset
values had not reached a level at which economies of scale could be realized.
The Board then considered the information provided regarding the fee breakpoint
levels of peer group funds, and concluded that asset levels did not justify
breakpoints at this time.
89
MMA Praxis Mutual Funds
Additional fund information, continued (unaudited)
December 31, 2005
Other Benefits
The Trustees discussed the extent to which MMA Capital Management and its
affiliates might derive other benefits, including soft dollar credits or other
similar benefits from the Adviser's relationship with the Funds. The Trustees
noted that that the Adviser had voluntarily discontinued the practice of
generating soft dollar credits to purchase third-party research services in
2004. Discussion ensued regarding other potential benefits to MMA Capital
Management and its affiliates from the relationship with the Funds, and the
Board concluded that such benefits were not material.
INFORMATION FOR SHAREHOLDERS REGARDING THE RENEWAL OF THE
SUB-INVESTMENT ADVISORY AGREEMENT WITH EVERGREEN
At a meeting held on November 21, 2005, the Board of Trustees of the Funds
approved the continuation of the Sub-Investment Advisory Agreement between Menno
Insurance Service, Inc., d/b/a MMA Capital Management, and Evergreen Investment
Management Company, LLC, with respect to portfolio management of the MMA Praxis
International Fund. The Board of Trustees requested and received from the
Sub-Adviser information and data relating to the Sub-Investment Advisory
Agreement and the International Fund. In concluding that it was in the best
interests of the International Fund and its shareholders to continue the
relationship with Evergreen for an additional year, the Board, including a
majority of the Independent Trustees advised by independent legal counsel, gave
weight to the following factors, among others:
Nature, Quality and Extent of Services
The Trustees considered the nature, quality and extent of services Evergreen
would provide to the International Fund in the coming year, including the
Sub-Adviser's representation that should be no change in service or investment
strategy in the coming year. The Trustees considered Evergreen's compliance
capabilities, its compliance record with respect to the International Fund, and
the quality of communication among the Adviser, Sub-Adviser and the Board.
Discussion continued regarding Evergreen's portfolio managers, conflicts of
interest and best execution practices. Following discussion, the Board concluded
that the nature, quality and extent of services provided to the International
Fund by Evergreen met their expectations.
Investment Performance of the International Fund and Evergreen
The Trustees reviewed year-to-date and historical performance data for the
International Fund, noting that the International Fund underperformed both its
benchmark (the MSCI EAFE Index) and the Evergreen International Equity Fund for
the period from January 1, 2005 to September 30, 2005. Discussion then ensued
regarding the comparative performance information provided to the Board by the
Sub-Adviser. The Trustees determined that, while the performance of the
International Fund over the past year had been less than satisfactory relative
to the Fund's benchmarks, the peer funds were not limited in their stock
selection by SRI criteria. In addition, the Trustees expressed their confidence
that Evergreen's management style will benefit the International Fund in the
long term and provide for satisfactory long term performance.
Costs of Services and Profitability of Evergreen and Affiliates
The Trustees considered the costs of the services provided by Evergreen to the
International Fund and the profits to be realized by Evergreen and its
affiliates from their relationship with the International Fund. The Trustees
discussed the comparative fee and profitability information provided by
Evergreen, noting, in particular, the data suggesting that the sub-advisory fees
charged by Evergreen fell in the mid-range of the sub-advisory fees charged to
comparable fund groups. The Board then concluded that the costs of the services
to be provided to the International Fund and the profits to be realized by
Evergreen and its affiliates from the relationship with the International Fund
were reasonable and fair in light of the industry comparisons provided.
90
MMA Praxis Mutual Funds
Additional fund information, continued (unaudited)
December 31, 2005
Economies of Scale
The Trustees noted that Evergreen's sub-advisory fee schedule currently
incorporates breakpoints. The Trustees also acknowledged Evergreen's
representation that the firm would consider additional breakpoints as assets in
the International Fund grew to levels where economies of scale could be
realized.
Other Benefits
The Trustees considered the extent to which Evergreen or its affiliates would
derive other benefits, including soft dollar credits or other similar benefits,
from Evergreen's relationship with the International Fund. Discussion then
ensued regarding Evergreen's soft dollar practices. The Board concluded that
Evergreen did not derive significant benefits, other than its sub-advisory fees
and traditional soft-dollar benefits, from its relationship with the
International Fund.
INFORMATION FOR SHAREHOLDERS REGARDING THE APPOINTMENT
OF DAVIS AS SUB-ADVISER
On December 22, 2005, the shareholders of the MMA Praxis Core Stock Fund
approved a new Sub-Investment Advisory Agreement between Menno Insurance
Services, Inc. d/b/a MMA Capital Management, and Davis Selected Advisers, L.P.
In determining whether to approve the Agreement and to recommend its approval to
shareholders of the Core Stock Fund, the Board of Trustees of the Funds
considered information and data provided by the Adviser and Davis, including
information regarding the selection process employed by the Adviser in proposing
Davis. At a meeting of the Board held on October 28, 2005, Davis representatives
gave an oral presentation to the Board, and the Trustees had the opportunity to
ask questions and request additional information. In concluding that approval of
the Agreement was in the best interests of the Core Stock Fund and its
shareholders, the Board, including a majority of the Independent Trustees
advised by independent legal counsel, gave weight to the following factors,
among others:
Nature, Quality and Extent of Services
The Trustees considered the benefits to the shareholders of engaging Davis as a
sub-adviser to the Core Stock Fund, in light of the nature, extent and quality
of the services to be provided by Davis. Pursuant to the Sub-Investment Advisory
Agreement, Davis would be obligated to provide day-to-day portfolio management
services and comply with all Fund policies and applicable rules and regulations.
The Board concluded that the nature and extent of services to the Core Stock
Fund appeared consistent with Davis' experience and obligations to other
investment companies. With respect to the quality of services, the Trustees
considered, among other things, the organizational depth and stability of the
firm, noting that the firm had over 35 years of investment management
experience. The Trustees reviewed the qualifications, backgrounds and
responsibilities of the portfolio managers who would be responsible for the
day-to-day management of the Fund. The Trustees also considered information
pertaining to Davis' organizational structure, senior management, investment
operations and compliance capabilities.
Investment Performance of the Core Stock Fund and Davis
The Trustees reviewed information about the historical performance of the Core
Stock Fund, noting that the average annual returns (gross and net) for the Fund
for the last one, three, and ten years ending September 30, 2005 were lower than
those of the Fund's benchmark, the S&P 500 Index. In contrast, the Trustees
received and considered information regarding the performance of other
investment companies managed by Davis utilizing an investment style and strategy
similar to that proposed by the Core Stock Fund. The Trustees noted that Davis
had generally outperformed the S&P Index over the same time periods and, in
fact, demonstrated strong historical performance against the S&P Index since
Davis' inception in 1969.
91
MMA Praxis Mutual Funds
Additional fund information, continued (unaudited)
December 31, 2005
Costs of Services and Profitability of Davis and Affiliates
The Trustees reviewed information regarding the costs of the services to be
provided by Davis to the Core Stock Fund and the profits to be realized by Davis
and its affiliates from their relationship with the Fund. The Trustees noted
that the fees proposed by Davis exceeded the fees proposed by the other two
firms considered in the final stages of the sub-advisory selection process. The
Trustees determined, however, that Davis' proposed fee schedule was consistent
with the fees Davis disclosed as charging to other investment companies of
similar size and with a similar investment strategy. A discussion then ensued
regarding the reasonableness of the sub-advisory fee in light of the consistency
with which Davis has historically generated returns in excess of its benchmark
at low risk and a representation by Davis that the profitability to be realized
by Davis and its affiliates from the relationship with the Core Stock Fund would
be substantially similar to that of other clients for which Davis serves as
sub-adviser. The Trustees reviewed information regarding the expense ratios of
other similar funds that indicated the relatively average to low expense ratio
of the Core Stock Fund. Finally, the Trustees considered that the initial term
of the Sub-Investment Advisory Agreement was limited to one year. Based on the
quality of service that the Trustees expect that Davis will provide to the Core
Stock Fund, the determination that the overall expense ratio of the Fund is
average to low in comparison to its peers and the relatively short initial
contractual term, the Board concluded that the sub-advisory fees under the
Agreement are reasonable and fair.
Economies of Scale
The Trustees considered the extent to which economies of scale would be realized
as the Core Stock Fund grows and whether the sub-advisory fee reflect those
economies of scale. The Trustees noted that Davis' proposed sub-advisory fee
incorporates breakpoints for assets.
Other Benefits
The Trustees assessed potential ancillary benefits to Davis and its affiliates
as a result of the relationship with the Core Stock Fund, including soft dollar
arrangements. The Trustees received information that Davis does not participate
in third-party soft dollar arrangements, but may take into account the research
and resources, as well as the execution capacity, of a brokerage firm in
selecting brokers to execute transactions on behalf of the Core Stock Fund . In
this regard, the Trustees noted that Davis' best execution and soft dollar
policies and procedures were adequate to address any potential conflicts of
interest. Based on the information provided, the Board concluded that any
potential ancillary benefits to Davis were not significant.
92
Management of the Trust
(unaudited)
Listed below is basic information regarding the Trustees and principal officers
of the Trust. The Trust's Statement of Additional Information includes
additional information about the Trustees and is available, without charge, upon
request by calling (800) 977-2947.
Position with the Number of Other
Company, Term of Portfolios in Fund Trusteeships
Name, Age and Office and Length Principal Occupation During Complex Overseen Held by
Address of Time Served the Past Five Years by Trustee Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
Interested Trustees(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Howard L. Brenneman* Chairman and President and CEO, Mennonite 4 N/A
1110 North Main Street Trustee, Indefinite, Mutual Aid (December 1991 - July
Goshen, IN 46528 since12/2/93 2005); Business and Financial
Birth date: 3/26/40 Consultant and Director of
Strategic Planning and
Development, Prairie View, Inc.,
mental health facility (1986 - 1991)
Bruce Harder* Trustee, Indefinite, Retired; Executive Director for 4 N/A
1110 North Main Street since 2/11/00 Finance and Administration, Tri-
Goshen, IN 46528 Met, the Tri-County Metropolitan
Birth date: 1/17/41 Transportation District of Oregon,
public transportation system for
Portland, Oregon (1986 - 2003);
Chairman of the Board, Mennonite
Mutual Aid, Goshen Indiana (1997
- 2003)
- ----------------------------------------------------------------------------------------------------------------------------------
(1) This Trustee is an "interested" person under the Investment Company Act of 1940 because of his affiliation with the Adviser.
Independent Trustees
- ----------------------------------------------------------------------------------------------------------------------------------
Karen Klassen Harder, Ph.D. Trustee, Indefinite, Professor, Bluffton University 4 N/A
1110 North Main Street since 12/2/93 (September 2001 - present);
Goshen, IN 46528 Professor, Bethel College (January
Birth date: 1/22/56 1990 - 2001)
Richard Reimer, Ph.D. Trustee, Indefinite, Retired; Professor of Economics - 4 N/A
1110 North Main Street since 12/2/93 Emeritus since 1996, The College
Goshen, IN 46528 of Wooster (1962 - 1996); former
Birth date: 10/6/31 Board member, Mennonite Mutual
Aid, Goshen, Indiana (through
December 2001)
R. Clair Sauder Trustee, Indefinite, Partner, Encore Enterprises, LLC, 4 N/A
1110 North Main Street since 6/30/02 retail home furnishings (May 2001 -
Goshen, IN 46528 present); Partner, C&D Enterprises
Birth date: 1/11/43 Unlimited, commercial real estate
(1982 - present)
Donald E. Showalter, Esq. Trustee, Indefinite, Senior Partner, the law firm of 4 N/A
1110 North Main Street since 12/2/93 Wharton, Aldhizer, & Weaver (June
Goshen, IN 46528 1965 - present); Director,
Birth date: 2/23/41 Rockingham Heritage Bank (April
1998 - present)
Allen Yoder, Jr. Trustee, Indefinite, Retired; President, Jayco, Inc., 4 N/A
1110 North Main Street since 12/2/93 manufacturer of recreational
Goshen, IN 46528 vehicles (September 1993 - 1994);
Birth date: 8/4/27 President, Deutsch Kase Haus,
cheese manufacturer (1985 - 2002)
- ----------------------------------------------------------------------------------------------------------------------------------
93
Management of the Trust
(unaudited), continued
Position with the Company, Term of Principal Occupation
Name, Age and Address Office and Length of Time Served During the Past Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
John L. Liechty President, Indefinite, since 8/19/97 Executive Management, Mennonite Mutual Aid (1976 -
1110 North Main Street present)
Goshen, IN 46528
Birth date: 6/12/54
Marlo J. Kauffman Vice President, Indefinite, since 12/2/93 Financial Services Operation Manager, Mennonite Mutual
1110 North Main Street Aid (1981 - present); President, MMA Securities, Inc.
Goshen, IN 46527 (2003 - present); OSJ Principal, ProEquities, Inc., a
Birth date: 9/19/56 broker-dealer (1994 - present)
Steven T. McCabe Treasurer, Indefinite, since 9/23/05 Vice President Fund Accounting and Financial Reporting of
303 Broadway, Suite 1100 Integrated Fund Services, Inc. (2004-present); Vice
Cincinnati, OH 45202 President-Custody Services (2003-2004) Fifth Third Bank;
Birth date: 6/5/64 Assistant Vice President and Director of Mutual Fund
Accounting (1997-2003) Fifth Third Bank
Brian E. Hirsch Chief Compliance Officer, Indefinite, Vice President-Compliance of IFS Financial Services, Inc.,
303 Broadway, Suite 1100 since 9/23/05 Director of Compliance of Fort Washington Brokerage
Cincinnati, OH 45202 Services, Inc.; Chief Compliance Officer of Puglisi & Co.
Birth date: 12/29/56 from 2001 until 2002
Tina H. Bloom Secretary, Indefinite, since 9/23/05 Vice President - Managing Attorney of Integrated Fund
303 Broadway, Suite 1100 Services, Inc. and IFS Fund Distributors, Inc.
Cincinnati, OH 45202
Birth date: 8/20/68
- ------------------------------------------------------------------------------------------------------------------------------------
This page intentionally left blank.
This page intentionally left blank.
Integrated Fund Services, Inc.
303 Broadway, Suite 1100
Cincinatti, Ohio 45202-4203
2050592
Item 2. Code of Ethics.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to its principal executive officer and principal
financial officer. During the period covered by this report, no amendments were
made to the provisions of the code of ethics, nor did the registrant grant any
waivers, including any implicit waivers, from the provisions of the code of
ethics.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert serving on its audit committee. Mr.
R. Clair Sauder is the registrant's "audit committee financial expert" and is
"independent", as each term is defined in Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. Audit fees totaled $51,000 for the December 31, 2005 fiscal year
and $47,300 for the December 31, 2004 fiscal year, including fees associated
with the annual audit and filings of the registrant's Form N-1A and Form N-SAR.
(b) Audit-Related Fees. There were no audit-related fees for the December 31,
2005 or December 31, 2004 fiscal years.
(c) Tax Fees. Tax fees totaled $8,000 for the December 31, 2005 fiscal year and
$7,700 for the December 31, 2004 fiscal year and consisted of fees for tax
compliance services during both years.
(d) All Other Fees. There were no other fees for the December 31, 2005 or
December 31, 2004 fiscal years.
(e) (1) Audit Committee Pre-Approval Policies.
(A) Audit Services
Before an auditor is engaged by the funds to render audit services, the
committee shall review and approve the engagement. (see also "delegation"
below.)
(B) Permissible Non-Audit Services
The committee shall review and approve in advance any proposal (except as
set forth in (1) through (3) below) that the funds employ their auditor to
render "permissible non-audit services" to the funds. (a "permissible non-audit
service" is defined as a non-audit service that is not prohibited by rule
2-01(c)(4) of regulation s-x1 or other applicable law or regulation.) The
committee shall also review and approve in advance any proposal (except as set
forth in (1) through (3) below) that the adviser, and any entity controlling,
controlled by, or under common control with the adviser that provides ongoing
services to the funds (an "adviser-affiliated service provider"), employ the
funds' auditor to render non-audit services, if such engagement would relate
directly to the operations and financial reporting of the funds. As a part of
its review, the committee shall consider whether the provision of such services
is consistent with the auditor's independence. (see also "delegation" below.)
pre-approval by the committee of non-audit services is not required so Long as:
(1) (a) with respect to the funds, the aggregate amount of all such
permissible non-audit services provided to the funds constitutes no more than 5%
of the total amount of revenues paid to the auditor by the funds during the
fiscal year in which the services are provided; (b) with respect to the adviser
and any adviser-affiliated service provider, the aggregate amount of all such
non-audit services provided constitutes no more than 5% of the total amount of
revenues (of the type that would have to be pre-approved by the committee) paid
to the auditor by the funds, the adviser and any adviser-affiliated service
provider during the fiscal year in which the services are provided;
(2) such services were not recognized by the funds at the time of
the engagement to be non-audit services; and
(3) such services are promptly brought to the attention of the
committee and approved prior to the completion of the audit by the committee or
its delegate(s) (as defined below).
(C) Delegation
The committee may delegate to one or more of its members ("delegates")
authority to pre-approve the auditor's provision of audit services or
permissible non-audit services to the funds, or the provision of non- audit
services to the adviser or any adviser-affiliated service provider. Any
pre-approval determination made by a delegate shall be presented to the full
committee at its next meeting. The committee shall communicate any pre-approval
made by it or a delegate to the fund administrator/fund accounting agent, who
will ensure that the appropriate disclosure is made in the funds' periodic
reports and other documents as required under the federal securities laws.
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1 non-audit services that are prohibited by rule 2-01(c)(4) of regulation s-x
include: (i) bookkeeping or other services related to accounting records or
financial statements of the audit client; (ii) financial information systems
design and implementation; (iii) appraisal or valuation services, fairness
opinions, or contribution-in-kind reports; (iv) actuarial services; (v) internal
audit outsourcing services; (vi) management functions; (vii) human resources;
(viii) broker-dealer, investment adviser, or investment banking services; (ix)
legal services; and (x) expert services unrelated to the audit.
(e)(2) All services described in paragraphs (b) through (d) of Item 4 were
approved by the Audit Committee.
(f) Not applicable
(g) The aggregate non-audit fees for services to the registrant, its investment
adviser and any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant were $20,950 for
the fiscal year ended December 31, 2005 and $36,925 for the fiscal year ended
December 31, 2004.
(h) Not applicable
Item 5. Audit Committee of Listed Registrants.
Not applicable
Item 6. Schedule of Investments.
The Schedule of Investments in securities of unaffiliated issuers is included in
the Annual Report.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant does not have procedures by which shareholders may recommend
nominees to its Board of Trustees.
Item 11. Controls and Procedures.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940), as of a date within 90 days of the filing date of this report, the
registrant's principal executive officer and principal financial officer have
concluded that the registrant's disclosure controls and procedures are
effective.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the registrant's last fiscal half-year that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of Ethics for Senior Financial Officers is filed herewith
(a)(2) Certifications required by Item 12(a) of Form N-CSR are filed herewith.
(a)(3) Not applicable.
(b) Certification required by Item 12(b) of Form N-CSR is filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MMA Praxis Mutual Funds
By (Signature and Title)
/s/ John L. Liechty
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John L. Liechty
President
Date: March 6, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)
/s/ John L. Liechty
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John L. Liechty
President
Date: March 6, 2006
By (Signature and Title)
/s/ Steven T. McCabe
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Steven T. McCabe
Treasurer
Date: March 6, 2006