<PAGE>
PRESIDENT'S REPORT
Dear Shareholder:
I trust you are as pleased as we are with our new money management firm. Awad
and Associates, which took over portfolio management responsibilities on
January 1, 1997, brought a wealth of money management experience and expertise
to the Timothy Plan. I encourage you to review Jim Awad's market commentary on
the following page to get some perspective on where he sees your Timothy Plan
positioned relative to present market conditions.
It has been gratifying to see the acceleration in asset growth we are finally
experiencing. We believe this is in no small part due to the confidence
investment industry professionals have in our new money management firm. The
Timothy Plan now has over $16 million in investor assets and is growing
nicely.
Although we take our responsibility to deliver competitive investment returns
very seriously, nevertheless we have not and will not lose sight of our main
commitment to our shareholders. That is, we refuse to invest any of our
shareholders' money in any company that is actively undermining our nation's
cultural moral values through their direct or indirect support of abortion,
pornography, the production of alcohol, tobacco, or casino gambling or other
companies whose corporate practices are found to be offensive, such as active
promotion of the homosexual agenda.
While we fully subscribe to the principle that offending companies in
corporate America should be held accountable for their actions if they are
contributing to the moral decline of our culture, our mission is not to
"punish" those companies through our refusal to invest in their stock. Rather,
our purpose is the pursuit of biblical obedience. Scripture clearly admonishes
us to "come out from among them", "avoid participating in (or supporting)
immoral enterprise", etc.
We are, therefore, pleased to provide this investment alternative to you and
all others who are concerned with the moral pollution in our land. Thank you
again for your conviction that has led you to become a Timothy Plan investor.
Sincerely,
/s/ Arthur D. Ally
Arthur D. Ally
President
June 30, 1997
<PAGE>
AWAD & ASSOCIATES
MARKET COMMENTARY
JUNE 30, 1997
The economic news continues to be favorable:
.U.S. corporations are low cost producers and technology leaders in
virtually all high value added industries which are propelling
worldwide economic growth.
.As a result, corporate profits (which are the engine of equity prices)
continue to surpass expectations continuously quarter after quarter.
.The economy remains on a well-balanced path of sustainable growth.
.Inflation remains benign.
.Low inflation and shrinking federal deficits speak to gradually declining
long term interest rates.
.Demographic demand for equities continues to grow as aging baby boomers
save for their retirement.
.International investors continue to purchase U.S. financial assets due to
our strong currency and excellent competitive economic condition.
So, the building blocks of the bull market remain in place.
Having said that, we would like to note that the largest stocks are not cheap
anymore. The flood of money into index funds has created a situation where the
performance of the 100 largest stocks, which dominate the S&P, has far
exceeded that of the remaining 5,000 or so publicly traded companies.
While the S&P was up over 20% in 1996, if one eliminated the 100 largest
stocks, equities were up only 5.4%. Put another way, during the twelve months
ending April 30, 1997, the S&P was up approximately 25%, while the Russell
2000, a broader index of small to mid capitalization equities, was unchanged.
We have reached a situation where the 100 largest stocks are over-priced
relative to the broad body of common stocks.
Having managed portfolios for many years, we have seen many fads come and go.
With this perspective, we believe that stocks should ultimately go to value
and their prices will compensate for short term fads. Since the broad body of
equities is attractively priced relative to the 100 largest stocks, the best
price gains going forward could be in the small to mid cap stocks--the stocks
that could be the best growing companies of the next 10--20 years.
<PAGE>
Today one can buy good growth at a value investor's price.
Our portfolios are invested in the following conceptual areas:
.core growth holdings
.restructured companies whose future growth could surpass historical
results
.companies with temporary earnings problems which, in our opinion, have
made the stocks cheap
.takeover candidates in consolidating industries (our stocks are so cheap
that we have had four takeovers this year)
.emerging companies with exciting prospects
Our portfolios have been appreciating nicely over the last several weeks.
We look forward to making you money. We own some wonderful companies and
believe investor interest will switch from index funds to where the value is.
James D. Awad
Chairman
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ---------
<C> <S> <C>
COMMON STOCKS - 86.68%
BUSINESS SERVICES - 8.64%
22,500 Comdisco, Inc. ............................................. $ 585,000
22,000 LanVision Systems, Inc.* ................................... 148,500
9,500 National Data Corp.......................................... 411,469
20,000 StarTek, Inc.* ............................................. 301,250
---------
1,446,219
---------
CHEMICALS & ALLIED PRODUCTS - 6.08%
5,000 Georgia Gulf Corp. ......................................... 145,312
20,000 Lawter International, Inc. ................................. 252,500
11,500 Mississippi Chemical Corp. ................................. 238,625
25,000 Sano Corp.* ................................................ 381,250
---------
1,017,687
---------
DEPOSITORY INSTITUTIONS - 5.44%
11,000 Dime Bancorp, Inc.* ........................................ 192,500
23,575 IBS Financial Corp. ........................................ 427,297
4,500 SIS Bancorp, Inc. .......................................... 131,625
8,000 Wayne Bancorp, Inc. ........................................ 159,000
---------
910,422
---------
ELECTRIC, GAS & SANITARY SERVICES - 0.95%
10,000 Philip Services Corp.* ..................................... 158,750
---------
ELECTRONIC EQUIPMENT & COMPONENTS - 3.21%
6,500 Network Long Distance, Inc.* ............................... 60,937
14,000 Thermo Electron Corp.* ..................................... 476,000
---------
536,937
---------
ENGINEERING, ACCOUNTING & RESEARCH MANAGEMENT - 2.42%
53 Morrison Knudsen Corp., Warrants* .......................... 331
15,500 Right Management Consultants* .............................. 176,313
15,000 Thermo Bioanalysis Corp.* .................................. 228,750
---------
405,394
---------
FABRICATED METAL PRODUCTS - 2.02%
3,000 Harsco Corp. ............................................... 121,500
14,000 Material Sciences Corp.* ................................... 216,125
---------
337,625
---------
FURNITURE & FIXTURES - 4.07%
22,600 Falcon Products, Inc. ...................................... 303,687
16,000 Furniture Brands International, Inc.* ...................... 310,000
5,000 LADD Furniture, Inc.* ...................................... 68,750
---------
682,437
---------
HEALTH SERVICES - 2.07%
5,000 Alternative Living Services, Inc.* ......................... 112,188
10,000 American Retirement Corp.* ................................. 177,500
2,100 Assisted Living Concepts, Inc.* ............................ 58,012
---------
347,700
---------
HOME FURNISHINGS & EQUIPMENT - 2.64%
22,500 Heilig-Meyers Co. .......................................... 441,563
---------
HOTELS - 1.23%
5,000 Doubletree Corp.* .......................................... 205,625
---------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ----------
<C> <S> <C>
COMMON STOCKS - CONTINUED
INSURANCE CARRIERS - 1.01%
8,000 Danielson Holding Corp.* .................................. $ 63,000
7,000 Gryphon Holdings, Inc.* ................................... 106,750
----------
169,750
----------
MACHINERY & COMPUTER EQUIPMENT - 6.49%
10,000 ITEQ, Inc.* ............................................... 95,000
24,500 JLG Industries, Inc. ...................................... 333,813
8,000 Middleby Corp.* ........................................... 74,000
11,500 Printronix, Inc.* ......................................... 172,500
17,000 Thermo Optek Corp.* ....................................... 199,750
15,000 TransAct Technologies, Inc.* .............................. 211,875
----------
1,086,938
----------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS - 3.80%
14,000 Cooper Industries, Inc. ................................... 325,500
15,000 Metrika Systems Corp.* .................................... 233,438
5,000 ThermoQuest Corp.* ........................................ 77,500
----------
636,438
----------
MISCELLANEOUS MANUFACTURING INDUSTRY - 1.32%
7,000 K2, Inc. .................................................. 221,812
----------
OIL & GAS EXTRACTION - 6.67%
13,000 Brown (Tom), Inc.* ........................................ 276,250
23,000 Comstock Resources, Inc.* ................................. 240,062
13,000 Patina Oil & Gas Corp.* ................................... 105,625
9,000 Petsec Energy Ltd., ADR* .................................. 204,750
6,000 Precision Drilling Corp.* ................................. 290,250
----------
1,116,937
----------
PHOTOGRAPHIC, WATCHES, OPTICAL & MEDICAL GOODS - 4.66%
46,000 Angeion Corp.* ............................................ 198,375
45,000 ATS Medical, Inc.* ........................................ 225,000
48,000 Somanetics Corp.* ......................................... 168,000
12,000 Thermedics, Inc.* ......................................... 188,250
----------
779,625
----------
PRINTING & PUBLISHING - 4.78%
7,500 Houghton Mifflin Co. ...................................... 500,625
4,500 Waverly, Inc. ............................................. 96,750
6,000 Wiley (John) & Sons, Inc., Class A ........................ 203,250
----------
800,625
----------
REITS & HOLDING COMPANIES - 14.90%
21,000 Alexander Haagen Properties, Inc. ......................... 341,250
18,000 Arden Realty Group, Inc. .................................. 468,000
5,000 Beacon Properties Corp. ................................... 166,875
26,000 LTC Properties, Inc. ...................................... 471,250
17,000 Meridian Industrial Trust, Inc. ........................... 399,500
8,000 OMEGA Healthcare Investors, Inc. .......................... 261,500
9,000 Prentiss Properties Trust ................................. 230,625
11,000 United Dominion Realty Trust, Inc. ........................ 156,063
----------
2,495,063
----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS - CONTINUED
SOCIAL SERVICES - 3.74%
5,000 Arbor Health Care Co.* .............................. $ 155,000
23,000 ARV Assisted Living, Inc.* .......................... 253,000
10,500 Sun Healthcare Group, Inc.* ......................... 218,531
-----------
626,531
-----------
TEXTILE MILL PRODUCTS - 0.54%
5,000 Culp, Inc. .......................................... 90,625
-----------
TOTAL COMMON STOCKS (COST $13,438,358)............... 14,514,703
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
SHORT-TERM INVESTMENTS - 18.54%
$3,105,263 The Bank of New York Cash Reserve, 4.60% ............ 3,105,263
-----------
TOTAL SHORT TERM INVESTMENTS (COST $3,105,263) ...... 3,105,263
-----------
TOTAL INVESTMENTS (COST $16,543,621)** - 105.22%..... 17,619,966
LIABILITIES, LESS CASH AND OTHER ASSETS - (5.22%).... (874,979)
-----------
NET ASSETS - 100.00%................................. $16,744,987
===========
* Non-income producing security
** Cost for Federal income tax purposes is $16,543,621 and net unrealized
appreciation consists of:
Gross unrealized appreciation........................ $ 1,452,387
Gross unrealized depreciation........................ (376,042)
-----------
Net unrealized appreciation.......................... $ 1,076,345
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$16,543,621) (Note 1)............................................ $17,619,966
Cash.............................................................. 33,262
Receivables:
Dividends and interest........................................... 31,105
Capital stock sold............................................... 33,585
Deferred organization costs (Note 1).............................. 21,274
Other assets...................................................... 1,827
-----------
TOTAL ASSETS.................................................... 17,740,929
-----------
LIABILITIES
Payables:
Investment securities purchased.................................. 976,932
Due to Advisor (Note 3).......................................... 12,323
Accrued distribution expense..................................... 6,123
Accrued service fee.............................................. 564
-----------
TOTAL LIABILITIES............................................... 995,942
-----------
NET ASSETS......................................................... $16,744,987
===========
INSTITUTIONAL SHARES:
Net assets (Unlimited shares of $0.001 par beneficial
interest authorized; 733,731 shares outstanding)................ $ 9,311,823
===========
Net asset value, offering and redemption price per Institutional
Share ($9,311,823/733,731 shares)............................... $ 12.69
===========
RETAIL SHARES:
Net assets (Unlimited shares of $0.001 par beneficial
interest authorized; 589,469 shares outstanding)................ $ 7,433,164
===========
Net asset value and redemption price per Retail Share
($7,433,164/589,469 shares)..................................... $ 12.61
===========
Offering price per share ($12.61/0.9825)......................... $ 12.83
===========
SOURCE OF NET ASSETS
At June 30, 1997, net assets consisted of:
Paid-in capital.................................................. $13,902,637
Accumulated undistributed net investment income.................. 19,070
Accumulated net realized gain on investments..................... 1,746,935
Net unrealized appreciation on investments....................... 1,076,345
-----------
NET ASSETS...................................................... $16,744,987
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends........................................................... $ 74,446
Interest............................................................ 62,544
Other income........................................................ 6,267
----------
TOTAL INCOME....................................................... 143,277
----------
EXPENSES
Investment advisory fees (Note 3)................................... 57,730
Transfer agent fees................................................. 32,946
Administration fees................................................. 28,344
Registration fees................................................... 24,537
Distribution fees - Retail Class (Note 3)........................... 19,423
Accounting fees..................................................... 15,531
Distribution fees - Institutional Class (Note 3).................... 10,505
Custodian fees...................................................... 9,110
Amortization of organization costs (Note 1)......................... 6,121
Miscellaneous expense............................................... 4,583
Service fees - Retail Class (Note 3)................................ 2,590
----------
TOTAL EXPENSES..................................................... 211,420
Expenses waived and reimbursed by Advisor (Note 3)................ (87,213)
----------
NET EXPENSES....................................................... 124,207
----------
NET INVESTMENT INCOME.............................................. 19,070
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions........................ 1,582,513
Net change in unrealized appreciation of investments................ 156,672
----------
Net realized and unrealized gain on investments..................... 1,739,185
----------
Net increase in net assets resulting from operations................ $1,758,255
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
---------------- -----------------
<S> <C> <C>
OPERATIONS
Net investment income...................... $ 19,070 $ 84,542
Net realized gain on investments........... 1,582,513 164,422
Net change in unrealized appreciation of
investments............................... 156,672 903,008
----------- -----------
Net increase in net assets resulting from
operations............................... 1,758,255 1,151,972
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income:
Institutional Shares...................... 0 (66,939)
Retail Shares............................. 0 (23,283)
----------- -----------
Net decrease in net assets resulting from
distributions............................ 0 (90,222)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Shares sold:
Institutional Shares...................... 1,034,551 2,096,319
Retail Shares............................. 2,988,637 3,317,594
Shares redeemed:
Institutional Shares...................... (534,151) (1,323,483)
Retail Shares............................. (191,497) (302,910)
Shares reinvested:
Institutional Shares...................... 0 63,849
Retail Shares............................. 0 22,639
----------- -----------
Increase in net assets derived from capital
share transactions (a).................... 3,297,540 3,874,008
----------- -----------
Total increase in net assets.............. 5,055,795 4,935,758
----------- -----------
NET ASSETS
Beginning of period........................ 11,689,192 6,753,434
----------- -----------
End of period (including undistributed net
investment income of $19,070, and $0,
respectively)............................. $16,744,987 $11,689,192
=========== ===========
(a)Transactions in capital stock were:
Shares sold:
Institutional Shares..................... 89,458 201,664
Retail Shares............................ 255,944 314,924
Shares redeemed:
Institutional Shares..................... (45,974) (126,226)
Retail Shares............................ (16,699) (28,244)
Shares reinvested:
Institutional Shares..................... 0 5,687
Retail Shares............................ 0 2,022
----------- -----------
Increase in shares outstanding............ 282,729 369,827
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
---------------------------------------------------------
SIX MONTHS FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, 1997 DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1996 1995 1994 *
------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.24 $ 10.07 $ 9.66 $10.00
------- ------- ------ ------
Income From Investment
Operations:
Net investment
income............... 0.03 0.10 0.11 0.06
Net gains (losses) on
securities (both
realized and
unrealized).......... 1.42 1.17 0.66 (0.34)
------- ------- ------ ------
Total from investment
operations.......... 1.45 1.27 0.77 (0.28)
------- ------- ------ ------
Less Distributions
Distributions from net
investment income:
Institutional
Shares.............. 0.00 (0.10) (0.11) (0.06)
Retail Shares........ 0.00 0.00 0.00 0.00
Distributions from net
capital gains:
Institutional
Shares.............. 0.00 0.00 (0.25) 0.00
Retail Shares........ 0.00 0.00 0.00 0.00
------- ------- ------ ------
Total distributions.. 0.00 (0.10) (0.36) (0.06)
------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 12.69 $ 11.24 $10.07 $ 9.66
======= ======= ====== ======
TOTAL RETURN............ 12.90% 12.59% 7.93% (2.84%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000s)...... $ 9,312 $ 7,760 $6,133 $2,217
Ratio of expenses to
average net assets:
Before expense
reimbursement........ 2.88% /1/ 3.70% 5.84% 18.62% /1/
After expense
reimbursement........ 1.60% /1/ 1.60% 1.60% 1.60% /1/
Ratio of net investment
income to average net
assets:
Before expense
reimbursement........ (0.77%)/1/ (1.05%) (2.96%) (15.49%)/1/
After expense
reimbursement........ 0.51% /1/ 1.05% 1.28% 1.53% /1/
Portfolio turnover
rate.................. 120.89% 93.08% 34.12% 8.31%
Average commission rate
paid.................. $0.0568 $0.0593 N/R /2/ N/R /2/
</TABLE>
* The Institutional Shares commenced investment operations on March 21, 1994.
/1/Annualized
/2/Not Required
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
RETAIL SHARES
----------------------------------------------
SIX MONTHS FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED
JUNE 30, 1997 DECEMBER 31 DECEMBER 31,
(UNAUDITED) 1996 1995 *
------------- ------------ --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 11.22 $ 10.08 $10.49
------- ------- ------
Income From Investment
Operations:
Net investment income........ 0.00 0.07 0.11
Net gains (losses) on
securities (both realized
and unrealized)............. 1.39 1.14 (0.16)
------- ------- ------
Total from investment
operations................. 1.39 1.21 (0.05)
------- ------- ------
Less Distributions
Distributions from net
investment income:
Institutional Shares........ 0.00 0.00 0.00
Retail Shares............... 0.00 (0.07) (0.11)
Distributions from net
capital gains:
Institutional Shares........ 0.00 0.00 0.00
Retail Shares............... 0.00 0.00 (0.25)
------- ------- ------
Total distributions......... 0.00 (0.07) (0.36)
------- ------- ------
NET ASSET VALUE, END OF
PERIOD........................ $ 12.61 $ 11.22 $10.08
======= ======= ======
TOTAL RETURN................... 12.39% /1/ 11.98% /1/ (0.46%)/1/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000s)........................ $ 7,433 $ 3,929 $ 620
Ratio of expenses to average
net assets:
Before expense
reimbursement............... 3.48% /2/ 4.30% 6.44% /2/
After expense reimbursement.. 2.20% /2/ 2.20% 2.20% /2/
Ratio of net investment income
to average net assets:
Before expense
reimbursement............... (1.37%)/2/ (1.65%) (3.56%)/2/
After expense reimbursement.. (0.09%)/2/ 0.45% 0.68% /2/
Portfolio turnover rate....... 120.89% 93.08% 34.12%
Average commission rate paid.. $0.0568 $0.0593 N/R /3/
</TABLE>
* The Retail Shares commenced investment operations on August 25, 1995.
/1/Total return calculation does not reflect sales load.
/2/Annualized
/3/Not Required
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The Timothy Plan (the "Fund" ) is organized as a series Delaware business
trust pursuant to a trust agreement dated December 16, 1993. The Fund is
registered under the Investment Company Act of 1940, as amended, as an open-
end diversified management investment company. The Fund's primary objective is
long-term capital growth, with a secondary objective of current income. The
Fund seeks to achieve its investment objective by investing primarily in
common stocks and ADRs while abiding by ethical standards established for
investments by the Fund. The Fund currently consists of one series comprised
of two separate classes of shares (Institutional Class shares and Retail Class
shares) which vary with respect to sales charges, distribution costs, voting
rights and dividends. Shareholders of Retail Class shares are subject to a
sales charge and each class is subject to different 12b-1 Plan expenses. The
following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last reported sales price on the last
business day of the period. Unlisted securities, or listed securities in which
there were no sales, are valued at the mean of the closing bid and ask prices.
Short-term obligations with remaining maturities of 60 days or less are valued
at cost plus accrued interest which approximates market value.
B. INVESTMENT INCOME AND SECURITIES TRANSACTIONS. Security transactions are
accounted for on the date the securities are purchased or sold (trade date).
Cost is determined and gains and losses are based on the identified cost basis
for both financial statement and federal income tax purposes. Dividend income
and distributions to shareholders are reported on the ex-dividend date.
Interest income and expenses are accrued daily.
C. NET ASSET VALUE PER SHARE. Net asset value per share of the capital stock
of the Fund is determined daily as of the close of trading on the New York
Stock Exchange by dividing the value of its net assets by the number of Fund
shares outstanding. Net Asset Value is calculated separately for each class of
the Fund based on expenses applicable to a particular class. The net asset
value of the classes may differ because of different fees and expenses charged
to each class.
D. ORGANIZATION COSTS. Organization costs are being amortized on a straight
line basis over five years from inception.
E. FEDERAL INCOME TAXES. It is the policy of the Fund to comply with all
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
F. USE OF ESTIMATES. In preparing financial statements in conformity with
generally accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements, as well as the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments,
aggregated $17,799,055 and $13,595,123 respectively, for the six months ended
June 30, 1997.
<PAGE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Timothy Partners, LTD., ("TPL") is the investment advisor for the Fund
pursuant to an investment advisory agreement (the "Agreement") effective March
21, 1994, as amended August 28, 1995. Under the terms of the Agreement, TPL
receives a fee, accrued daily and paid monthly, at an annual rate of 0.85% of
the average daily net assets of the Fund. TPL has voluntarily agreed to waive
its fees to the extent total annualized expenses, inclusive of distribution
expenses, exceed 1.60%, with respect to the Institutional Class, and 2.20%,
with respect to the Retail Class, of the Fund's average daily net assets. For
the six months ended June 30, 1997, advisory fees of $57,730 were waived by
TPL and TPL reimbursed the Fund $87,213. Effective July 1, 1997 the Fund is
engaging TPL to act as sole underwriter and accordingly revised the
distribution plans (the "Plans") on behalf of each class pursuant to Rule 12b-
1 under the Investment Company Act of 1940, as amended. The revised Plans
provide that the Fund will reimburse TPL or others for expenses actually
incurred in the promotion or distribution of shares. Under the Institutional
Class Plan, the Fund will reimburse TPL a fee at an annual rate of 0.25%,
payable monthly, of the average daily net assets attributable to such class of
shares. Under the Retail Class Plan, the Fund will reimburse TPL a fee at an
annual rate of 0.85%, payable monthly, of which, 0.25% may be a service fee,
of the average daily net assets attributable to such class of shares.
Prior to July 1, 1997, FPS Broker Services, Inc. ("FPSB") acted as sole
underwriter to the Fund and the previous plans provided that the Fund would
reimburse FPSB or others for expenses actually incurred in the promotion and
distribution of shares at the same annual rates noted above. For the six
months ended June 30, 1997, the Fund reimbursed FPSB $32,518 for distribution
costs incurred. Certain Officers and Trustees of the Fund are affiliated
persons of TPL.
NOTE 4--SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders was held on January 31, 1997, to elect the
seven members to the Board of Trustees, to vote on a new sub-investment
advisory agreement among the Fund, Timothy Partners, LTD., and Awad &
Associates, a division of Raymond James & Associates, Inc., and to vote on a
revised 12b-1 distribution plan on behalf of the Retail Class only. The
results were as follows:
FOR THE ELECTION OF THE SEVEN MEMBERS TO THE BOARD OF TRUSTEES:
<TABLE>
<CAPTION>
VOTES VOTES
FOR WITHHELD
<S> <C> <C>
Arthur D. Ally 514,374 9,727
Joseph E. Boatwright 514,638 9,463
Daniel D. Busby 514,839 9,462
Philip B. Crosby 514,537 9,564
Wesley W. Pennington 514,840 9,261
Mark Schweizer 514,840 9,261
Jock M. Sneddon 514,537 9,564
</TABLE>
FOR THE ELECTION OF THE NEW SUB-INVESTMENT ADVISORY AGREEMENT:
<TABLE>
<S> <C>
GRANT: 512,562
WITHHOLD: 11,539
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------
FOR THE ELECTION OF THE REVISED 12B-1 DISTRIBUTION PLAN ON BEHALF OF THE
RETAIL CLASS ONLY (WHICH IS TO BECOME EFFECTIVE UPON IMPLEMENTATION OF A CDSC.
AS OF JUNE 30, 1997, THE REVISION IS NOT IN EFFECT):
<TABLE>
<S> <C>
GRANT: 166,112
WITHHOLD: 4,272
</TABLE>
At a meeting held March 4, 1997, the Board of Trustees appointed a new
independent Trustee to fill the vacancy created by the death of Mr. Mark
Schweizer. Following a review of possible candidates, the current independent
Trustees nominated and the full Board subsequently elected Mr. Scott
Fehrenbacher as a Trustee, to serve in such capacity, unless earlier removed
or until the election and qualification of his successor.
<PAGE>
THE TIMOTHY PLAN
1304 West Fairbanks Avenue
Winter Park, FL 32789
BOARD OF TRUSTEES
Arthur D. Ally
Joseph E. Boatwright
Daniel D. Busby
Philip B. Crosby
Scott Fehrenbacher
Wesley W. Pennington
Jock M. Sneddon
OFFICERS
Arthur D. Ally, President
Joseph E. Boatwright, Secretary
Wesley W. Pennington, Treasurer
INVESTMENT ADVISOR
Timothy Partners, LTD.
1304 West Fairbanks Avenue
Winter Park, FL 32789
DISTRIBUTOR
Timothy Partners, LTD.
1304 West Fairbanks Avenue
Winter Park, FL 32789
TRANSFER AGENT
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
AUDITORS
Tait, Weller & Baker
Two Penn Center Plaza, Suite 700
Philadelphia, PA 19102
LEGAL COUNSEL
Stradley, Ronon, Stevens, & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
For additional information or a prospectus, please call:
1-800-846-7526
Visit the Timothy Plan web site on the Internet at:
WWW.TIMOTHYPLAN.COM
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective Prospectus which includes
details regarding the Fund's objectives, policies, expenses and other
information.
(ART)
SEMI-ANNUAL
REPORT
June 30, 1997
