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Dear Praxis shareholders:

Stock markets regained their footing in 2019, as investors focused on the positives, shedding their doubts from their late 2018 swoon. Global stock markets rose across the board, but U.S. markets led the pack again on the S&P 500 Index’s 31.5% gain. Whether this reignited optimism is justified remains to be seen.

Bonds also delivered above-normal total returns during the year, with gains to bond values more than making up for falling yields. However, not all was well in the bond markets during the year. In the belly of the year, the U.S. Treasury yield curve inverted, with short-term rates moving higher than medium-term rates, revealing bond investors’ anxiety about a possible future recession. The episode was short-lived, and the curve returned to its typical upward sloping shape by year’s end.

The Federal Reserve also sensed weakening economic fundamentals during the year, leading it to reduce the Fed Funds Rate three times in an effort to forestall any recessionary deterioration. This no doubt encouraged investors to continue bidding riskier asset classes higher.

International equity markets re-awoke, generating strong returns for the year despite several reasons to fret, including the Brexit debate and global trade tensions. Many agree that non-U.S. equity markets trade at a discount to U.S. stocks, as they have for several years, but slower growth in Europe and Japan in particular may justify this disconnect. Still, it was encouraging to see strong returns from international markets again.

We know you invest in Praxis Mutual Funds^® for more than just generating investment returns, although we eagerly accept the duty to do that on your behalf. Together, we understand that investing can be a powerful vehicle for changing the world for the better. We do this by avoiding investments in areas we believe detract from the well-being of company stakeholders, but more importantly, we seek investments that generate a positive impact on the world we share. We do it by engaging with company management teams to help them see how they can improve their impact in the world, and we do it by channeling money to community development investments that reach the underserved in our society.

As the year came to an end, we wrapped up celebrations of the 25th anniversary of the Funds. We have much to be grateful for as we looked back on the success of our team and our predecessors. We also used the occasion to renew our resolve to deliver returns that help you accomplish your investment goals and make an impact that reflects your values.

I invite you to read the following manager reports to see how we’re fulfilling our mandate. Thank you for your support of Praxis Mutual Funds.

Sincerely,

Chad M. Horning, CFA^®
President
Praxis Mutual Funds^®

Praxis Mutual Funds are advised by Everence Capital Management and distributed through FINRA member Foreside Financial Services, LLC.

The views expressed are those of the Praxis Mutual Funds’ President as of Dec. 31, 2019, are subject to change, and may differ from the views of portfolio managers or Everence Capital Management as a whole. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. All data referenced are from sources deemed to be reliable but cannot be guaranteed. Securities and sectors referenced should not be construed as a solicitation or recommendation or be used as the sole basis for any investment decision.

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Celebrating 25 years of impact through investing

Over 25 years ago, we set out to create a family of mutual funds that would allow individuals and institutions to invest according to values aligned with and inspired by the Christian Anabaptist faith tradition. At the time, along with many early socially responsible investors, this effort was defined mostly by the application of negative screens. This represented a natural desire to avoid benefiting financially from industries and activities that run counter to the principles that guide the rest of our lives.

However, we quickly came to understand that while reflecting some of our shared values and faith convictions, avoidance screens fell far short of the active, Christ-centered understanding of stewardship that was our primary guide. Christian stewardship called us not to just avoid but to engage, to champion, and to embrace. This conviction became the foundation of our stewardship investing philosophy that has continued to evolve, deepen and grow—delivering impact in myriad ways.

Though we rarely used the now commonplace “impact” term, understanding and creating impact was central to our work on many levels. And it remains that way to this day.

Today, delivering impact at Praxis means the following:

This is what the first 25 years has wrought at Praxis. I hope you will join us as we explore what will happen in the next.

Mark A. Regier
Vice President of Stewardship Investing

To learn more about any of the above areas, please visit praxismutualfunds.com/stories.

The views expressed are those of the Vice President of Stewardship Investing as of Dec. 31, 2019, are subject to change, and may differ from the views of portfolio managers or Everence Capital Management as a whole. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. All data referenced are from sources deemed to be reliable but cannot be guaranteed. Securities and sectors referenced should not be construed as a solicitation or recommendation or be used as the sole basis for any investment decision.

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Praxis Impact Bond Fund

Annual Report to Shareholders

Portfolio Managers’ Commentary (unaudited)

For the year ended Dec. 31, 2019, the Praxis Impact Bond Fund’s Class I Shares had a return of 8.15%, and the Class A Shares (without load) returned 7.75%. The Bloomberg Barclays U.S. Aggregate Bond Index, the Fund’s benchmark, returned 8.72%. Over the last five years, the Class I Shares returned 2.96% (average annual return) versus 3.05% for the Fund’s benchmark and over the last 10 years, the Class I Shares returned 3.75% (average annual return) versus 3.75% for the Fund’s benchmark. The Praxis Impact Bond Fund has been in the Morningstar Intermediate Term Bond category for many years. On April 30, 2019, Morningstar split this category into two and the Fund was moved to the US Fund Intermediate Core Bond category. This was the more conservative fund category in the split and we feel that it is the most appropriate category, based upon our management of the Fund. When ranked within its Fund category, the Class I Shares were in the 59th percentile for the one-year time period, 38th percentile for the 5-year period and 43rd percentile for the last 10 years.

In the last quarter of 2018, the 10-year Treasury bond yield reached a high of 3.24%, but it ended the year at 2.69%. That wasn’t the lowest yield in 2019 – in fact, that turned out to be near the peak for 2019 as the 10-year Treasury yield finished at 1.92%. At the beginning of 2019, the Federal Reserve was expected to keep the Fed Funds rate steady, but instead tariffs, trade wars and a global economic slowdown pushed the Fed to lower the Federal Funds target rate three times, starting in July. Generally, when expectations of slower economic growth and a potential recession fester, the stock market tends to fall, but instead equity investors kept their faith in the Fed to protect them from the downside. The strong stock market led to lower corporate spreads and this plus lower yields produced a 14.5% total return in the Bloomberg Barclays Corporate Index. This was the strongest total return for corporate bonds since 2009 and better than any other year in the last 20.

2019 turned out to be a decent year in terms of the economic data, despite heightened concerns of an economic slowdown during the summer. The unemployment rate started at 3.9% and ended at 3.5%, which matched a 50-year low. This was only 0.1% from matching the lowest rate in the last 65 years. The labor market has been very strong during this economic cycle. Inflation as measured by the consumer price index (CPI) was below 2 percent for most of the year, but it did finish at 2.3% by December. Gross domestic product (GDP) in 2019 fell back to 2.3% year-over-year, which is right near its average level over this decade. Each of those numbers was fine, but the tariffs and global trade wars proved to be a real problem for the manufacturing sector. Although the manufacturing sector is a relatively small part of the overall economy, manufacturing indices went from strong expansion territory in 2018 to recessionary levels by the last quarter of the year. Weakness in the manufacturing sector, along with the concerning market signal the inverted U.S. Treasury yield curve implied, were the major reasons for the growth concerns that arose during 2019.

The Fed acknowledged that it raised the Fed Funds rate too far and too fast in 2018 by decreasing the rate three times in 2019, back down to the lower bound of 1.5%. This led to a strong decrease in short-term interest rates, with the 6-month Treasury bill moving lower by 0.90%. Interestingly, the 6-month Treasury bill yield increased by just over 0.90% in 2018. Longer term interest rates also moved lower during the year, with the 30-year Treasury down about 0.63% in the calendar year. We increased our duration in the Fund by the end of 2018, but we started lowering the duration too quickly during the year as interest rates fell. This lower duration was the biggest detractor from performance versus the index.

The Praxis Impact Bond Fund has a higher than index weight to corporate bonds, but the bonds generally have a shorter time period to maturity and they generally are less risky than bonds in the index. This combination hurt the Fund versus the index and versus peers, especially in the last half of the year. Our continued underweight to mortgage-backed securities was a positive for the full year. The lack of U.S. Treasury holdings in the Fund was also a positive as U.S. agency bonds, which we hold in lieu of Treasury securities, gained 0.54% in 2019 on an excess return basis versus Treasuries.

We don’t believe we can predict the future, but the dramatic drop of interest rates in 2019 was different than our expectations. Inflation stayed lower than we expected and that helped push interest rates down. On the other hand, GDP growth and the unemployment rate were in line with our expectations.

We believe that 2020 will be an even more difficult year for GDP growth. The stimulus of tax cuts is wearing off and there is still a lot of uncertainty with tariffs, trade wars, political and geopolitical concerns. We are in the longest economic expansion cycle since the inception of the data in 1854 and it is difficult to know if this will be the year it finally ends. We will stay diligent in our assessment of the most likely outcome for economic growth and adjust our positioning to take advantage of either an abundance of exuberance or pessimism if those conditions present themselves.

According to Bloomberg New Energy Finance (BNEF), the global sustainable finance market had another record year. BNEF defines sustainable finance to include green, social and sustainability bonds and loans. Issuance in 2019 reached $465 billion, after $261 billion of issuance in 2018. The entire market had $5 billion of issuance in 2012. The Europe, Middle East and Africa market is the largest

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Praxis Impact Bond Fund

Annual Report to Shareholders

Portfolio Managers’ Commentary (unaudited), continued

geographic issuance area, but the Americas are in second place. Green bonds fund projects that have positive environmental benefits. Social bonds fund projects that have positive social outcomes and sustainability bonds fund projects that have a mix of a green and social impact.

We were able to keep the Fund’s holdings of positive impact bonds – fixed-income investments that have a positive impact on the climate and/or community – to about 30% of the portfolio by Dec. 31, 2019. We bought many new bonds, but a lot of bonds matured. Some examples of new bond purchases were one that supported an impact investment through Overseas Private Investment Corporation (OPIC) that lent to Sarona Frontier Markets, and another through OPIC that supported women’s impact investments. There was a sustainability bond for a CDFI (Community Development Finance Institution), and many other green, social and sustainability bonds.

Of the 127 bonds in the Fund that we define as positive impact holdings, 88 provide clear benefits to the climate. The remaining positive impact bonds produce benefits to communities by funding affordable housing, community development, education, sustainability and social bonds, and more.

As we start 2020, we are positioned for the expectation that corporate bonds will not perform as well as they did in 2019. We continue to look for additional opportunities to enhance the financial return of the Praxis Impact Bond Fund and to make a positive impact on the world that we share.

Benjamin J. Bailey, CFA^®
Praxis Impact Bond Fund Co-Manager
Praxis Mutual Funds^®

Chris Woods, CFA^®
Praxis Impact Bond Fund Co-Manager
Praxis Mutual Funds^®

The views expressed are those of the portfolio managers as of Dec. 31, 2019, are subject to change, and may differ from the views of other portfolio managers or Everence Capital Management as a whole. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. All data referenced are from sources deemed to be reliable but cannot be guaranteed. Securities and sectors referenced should not be construed as a solicitation or recommendation or be used as the sole basis for any investment decision.

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Praxis Impact Bond Fund

Performance Review (unaudited)

Growth of $10,000 investment from 12/31/09 to 12/31/19

This chart represents historical performance of a hypothetical investment of $10,000 in Class A Shares (adjusted for the maximum sales charge of 3.75%) of the Fund and Index from 12/31/09 to 12/31/19 and includes the reinvestment of dividends and capital gains.

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.praxismutualfunds.com. Indexes are unmanaged, do not incur fees, and it is not possible to invest directly in an index.

The total returns shown reflect any expenses that were contractually or voluntarily reduced, reimbursed or paid by any party during the periods presented. In such instances, and without activity, the total returns would have been lower.

*    The total return figures shown reflect the maximum sales charge applicable to Class A Shares for the Fund. Class A Shares have a maximum sales charge on purchases of 3.75%.

**    Reflects the expense ratios as reported in the Prospectus dated April 30, 2019. Contractual fee waivers are in effect from May 1, 2019 through April 30, 2020 for Class A.

¹    Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index composed of the Bloomberg Barclays U.S. Government/Credit Index and the Bloomberg Barclays U.S. 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 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 expenses. An investor cannot invest directly in an index, although an investor can invest in its underlying securities.

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