<PAGE>
December 31, 1998
Dear Shareholder:
I cannot begin to tell you how happy I am that 1998 is behind us!
You have probably noticed that performance suffered in '98--not only for the
Timothy Plan but for almost the entire small-cap-value segment of the market.
On the next page, our money manager, Mr. Jim Awad, explains the Timothy Plan's
performance in 1998 and provides insight into the year ahead. Please be sure
to carefully review his comments.
Despite our 1998 performance, I am pleased to report that Timothy Plan assets
continue to grow as more and more concerned investors come to grips with the
fact that there truly is a moral aspect to investing. As you may know, the
Bible contains nearly 2500 verses that address money issues, but there are
fewer than 500 verses that address either faith or prayer! Many of the Bible's
financial passages deal with the subject of investing, which is why we are
committed to operating the Timothy Plan in compliance with our Lord's
directives.
I also want to bring to your attention two significant developments that bode
well for the future:
Nacfc Growth. The National Association of Christian Financial Consultants
is a professional association we helped form to help meet the needs of
Christian men and women who work in the financial services industry. The
NACFC now has more than 200 members, each one of whom is committed to
operating his or her business according to biblical principles.
New Funds In The Works. We are currently planning to add three more funds
to our mutual fund family: an income fund, a money market fund, and a
mid-to-large-cap growth fund. Our goal is to register these new funds and
make them available in time for our annual prospectus update on May 1.
Please note that these new funds are still in the planning stages. This
brief description must not be construed as an offer to sell, which can
only be made through a properly filed and effective prospectus.
Once again, I want to thank each and every one of you, our shareholders, for
your faithfulness and patience. There is much I do not know, but this one
thing I do know: The Lord ultimately rewards faithfulness.
We look forward to an exciting 1999!
Sincerely,
/s/ Arthur D. Ally
Arthur D. Ally
President
<PAGE>
AWAD & ASSOCIATES
Market Commentary
December 31, 1998
Dear Investor:
The year proved to be one of the most difficult in recent memories. As one
moved across the spectrum from growth to value and down the capitalization
range, significant positive returns became much more difficult to generate. As
we are value-oriented, pure small cap managers, we were in the interesting
position of holding excellent quality companies that were ignored in the
marketplace as investors chased a limited universe of momentum stocks.
As we head into 1999, we see many positive factors at work that suggest we are
in for a positive year. Specifically,
1) Small cap stocks have continued to post healthy earnings in 1998, in most
cases, meeting or exceeding expectations. This earnings consistency has
gone unrecognized so far but we don't expect that to last. Little exposure
to weak overseas economies, high exposure to our strong domestic economy
and strong unit growth, we believe, is a formula for strong earnings growth
from small caps in 1999.
2) Large cap stocks have felt earnings pressure as a result of the world
activities and lack of demand caused by them. More than a few have missed
estimates. Weakening earnings are likely to continue into 1999 as the world
addresses a number of issues. Consensus earnings growth estimates for large
cap stocks seem to be between 5 and 7% which we believe may be overly
optimistic.
3) Relative valuations for small cap stocks are their lowest levels in decades
as measured by the P/E of the Russell 2000 vs. the P/E of the S&P500. This
is also true when P/Bs are analyzed. This offers opportunity.
4) As the small cap market began to rally late in the year, more and more
media attention was drawn to the area. That in turn increased investor
awareness of the values available and has drawn money into the area. Small
cap stocks, measured by the Russell 2000, outperformed large cap stocks,
measured buy the S&P500 from October 8 (market bottom) through year-end.
Small caps now possess both value and momentum heading into 1999.
5) Small cap stocks represent just 6% of the total domestic equity market
capitalization. This suggests that a small re-allocation to this arena has
tremendous potential. Many investors (individual and institutional) today
use asset allocation models. Given the divergence in performance of large
and small stocks this year, it is likely these models are out of alignment.
If investors are diligent and stay true to their models, they will allocate
more dollars to small cap stocks in 1999.
Better earnings potential, cheaper relative valuations and leverage offer the
potential for small cap stocks to significantly out-perform their large cap
brethren in the coming year. We believe this to be the case and believe we
have positioned the portfolio to be in the vanguard of the rally in small cap
stocks in 1999. If our analysis is accurate, we believe this year could be the
reward for persevering 1998.
James D. Awad
Chairman
<PAGE>
Schedule of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Market Value
<S> <C>
COMMON STOCKS - 89.29%
Aerospace - 3.15%
30,000 Kellstrom Industries Inc.*............................ $ 862,500
Amusement & Recreation Services - 1.21%
35,500 Florida Panthers Holdings*............................ 330,594
Apparel and Accessory Stores - 1.44%
25,000 Shoe Carnival, Inc.*.................................. 278,125
15,000 U.S. Vision, Inc.*.................................... 116,250
394,375
Building Constructions - 1.36%
15,000 Blount International Inc., Class A.................... 374,063
Business Services - 22.51%
20,000 American Tower Corp*.................................. 591,250
45,000 Comdisco, Inc. ....................................... 759,375
21,000 Cunningham Graphics International Inc.*............... 320,250
38,900 Doral Financial Corp. ................................ 860,662
25,000 Eclypsys Corp.*....................................... 725,000
40,000 Health Management Systems, Inc.*...................... 315,000
12,500 Investor's Financial Services Corp. .................. 745,313
32,000 LanVision Systems, Inc.*.............................. 44,000
18,000 Metrika Systems Corp.*................................ 155,250
13,000 National Data Corp. .................................. 632,937
29,000 StarTek, Inc.*........................................ 358,875
23,000 Zebra Tech*........................................... 661,250
6,169,162
Chemicals & Allied Products - 3.40%
26,000 Aviron*............................................... 672,750
18,500 Mississippi Chemical Corp. ........................... 259,000
931,750
Consumer Products & Services - 0.78%
18,000 Gibson Greetings Inc.*................................ 213,750
Depository Institutions - 1.24%
17,000 Staten Island Bancorp Inc. ........................... 338,938
Electric, Gas & Sanitary Services - 2.92%
20,000 Cadiz Land Company, Inc.*............................. 152,500
28,000 New Horizons Worldwide, Inc.*......................... 647,500
800,000
Electronic Equipment & Components - 0.37%
10,500 Richardson Electronics, Ltd. ......................... 101,063
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Schedule of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Market Value
<S> <C>
COMMON STOCKS - continued
Engineering, Accounting & Research Management -
0.00%
53 Morrison Knudsen Corp. Warrants, 03/11/2003*........ $ 166
Food & Allied Products - 5.88%
15,000 Corn Products International Inc..................... 455,625
19,000 Smithfield Foods, Inc.*............................. 643,625
23,200 Smucker (J.M.) Co., Class B......................... 513,300
1,612,550
Health Services - 8.82%
25,000 American Retirement Corp.*.......................... 392,187
29,200 Assisted Living Concepts, Inc.*..................... 383,250
12,000 Shared Medical Systems Corp......................... 598,500
48,500 Sun Healthcare Group, Inc.*......................... 318,281
33,000 Transition Systems Inc.*............................ 495,000
22,000 Thermo Cardiosystems, Inc.*......................... 229,625
2,416,843
Hotels & Other Lodging Places - 2.29%
15,000 Gaylord Entertainment Co............................ 451,875
36,200 Lodgian, Inc.*...................................... 176,475
628,350
Insurance Carriers - 5.57%
18,000 Annuity And Life RE (Holdings), Ltd. ............... 486,000
34,500 Gryphon Holdings, Inc.*............................. 642,563
20,000 Presidential Life Corp.............................. 397,500
1,526,063
Machinery & Computer Equipment - 2.33%
15,800 Printronix, Inc.*................................... 227,125
31,400 Tokheim Corp*....................................... 306,150
31,500 TransAct Technologies, Inc.*........................ 104,344
637,619
Miscellaneous Manufacturing Industry - 3.41%
65,000 NBTY Inc............................................ 463,125
36,000 Twinlab Corp*....................................... 472,500
935,625
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Schedule of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Market Value
<S> <C>
COMMON STOCKS - continued
Photographic, Watches, Optical & Medical Goods -
6.29%
66,000 Angeion Corp.*...................................... $ 72,191
34,000 Armor Holdings, Inc.*............................... 388,875
45,000 ATS Medical, Inc.*.................................. 315,000
37,100 Cooper Companies, Inc.*............................. 767,506
48,000 Somanetics Corp.*................................... 84,000
21,000 Thermolase Corp*.................................... 95,813
1,723,385
Printing & Publishing - 6.55%
15,500 Houghton Mifflin Co................................. 732,375
22,000 Wiley (John) & Sons, Inc., Class A.................. 1,062,875
1,795,250
Railroad Transportation - 1.33%
28,500 Genesee & Wyoming Inc., Class A*.................... 363,375
Reits & Holding Companies - 5.68%
10,000 Correctional Properties Trust....................... 180,625
25,000 Innkeepers USA Trust................................ 295,312
26,000 LTC Properties, Inc................................. 432,250
23,000 Mid-Atlantic Realty Trust........................... 283,187
9,600 New Plan Excel Realty Trust, Inc.................... 213,000
5,000 OMEGA Healthcare Investors, Inc..................... 150,937
1,555,311
Telecommunications - 2.76%
4,826 IXC Communications Inc.*............................ 162,274
45,000 Periphonics Corporation*............................ 593,438
755,712
Total Common Stocks (Cost $24,470,384).............. 24,466,444
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Schedule of Investments
December 31, 1998
<TABLE>
<CAPTION>
Principal Market Value
Amount
<S> <C>
Bonds - 1.57%
$ 500,000 American Retirement Corp., 5.75%, 10/01/2002....... $ 430,625
Total Bonds (Cost $516,412)........................ 430,625
<CAPTION>
Shares
<S> <C>
Short-Term Investments - 8.80%
2,411,025 Star Bank Treasury Fund............................ 2,411,025
Total Short-Term Investments (Cost $2,411,025)..... 2,411,025
Total Investmants (Cost $27,397,821)** - 99.66%.... 27,308,094
Other Assets, Less Other Liabilities - 0.34%....... 93,647
NET ASSETS - 100.00%............................... $ 27,401,741
* Non-income producing security
** Cost for Federal income tax purposes is $27,397,821 and net
unrealized depreciation consists of:
Gross unrealized appreciation...................... $ 3,896,529
Gross unrealized depreciation...................... (3,986,256)
Net unrealized depreciation........................ $ (89,727)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Description Amount
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$27,397,821) (Note 1)....................................... $ 27,308,094
Cash......................................................... 142,836
Receivables:
Due from Advisor............................................. 13,826
Dividends and interest....................................... 34,682
Capital stock sold........................................... 61,651
Deferred organization costs (Note 1)......................... 2,707
Other assets................................................. 1,808
Total Assets............................................... 27,565,604
LIABILITIES
Capital stock redeemed....................................... 100,401
Distribution payable......................................... 5,965
Accrued distribution expense (Note 3)........................ 11,082
Accrued service fee (Note 3)................................. 2,802
Accrued expenses............................................. 19,487
Other liabilities............................................ 24,126
Total Liabilities.......................................... 163,863
NET ASSETS.................................................... $ 27,401,741
Class A Shares (Note 1):
Net assets (Unlimited shares of $0.001 par beneficial
interest authorized; 1,219,666 shares outstanding).......... $ 13,287,479
Net asset value and redemption price per Class A Share
($13,287,479/1,219,666 shares).............................. $ 10.89
Offering price per share ($10.89/0.945)...................... $ 11.52
Class B Shares (Note 1):
Net assets (Unlimited shares of $0.001 par beneficial
interest authorized; 1,319,562 shares outstanding).......... $ 14,114,262
Net asset value and offering price per Class B Share
($14,114,262/1,319,562 shares).............................. $ 10.70
Redemption price per share ($10.70 * 0.95)................... $ 10.17
SOURCE OF NET ASSETS
At December 31, 1998, net assets consisted of:
Paid-in capital.............................................. 28,515,949
Accumulated net realized loss on investments................. (1,024,481)
Net unrealized depreciation on investments................... (89,727)
Net Assets................................................. $ 27,401,741
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Operations
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Description Amount
<S> <C>
INVESTMENT INCOME
Dividends..................................................... $ 250,026
Interest...................................................... 147,976
Total Income................................................ 398,002
EXPENSES
Investment advisory fees (Note 3)............................. 215,187
Transfer agent fees........................................... 65,290
Administration fees........................................... 48,021
Distribution fees - Class B (Note 3).......................... 97,212
Accounting & pricing fees..................................... 41,957
Registration fees............................................. 25,373
Distribution fees - Class A (Note 3).......................... 30,886
Custodian fees................................................ 9,940
Printing expense.............................................. 14,834
Amortization of organization costs (Note 1)................... 12,344
Service fees - Class B (Note 3)............................... 32,404
Insurance expense............................................. 2,520
Audit expense................................................. 10,000
Legal expense................................................. 4,000
Miscellaneous expense......................................... 16,427
Total Expenses.............................................. 626,395
Expenses waived and reimbursed by Advisor (Note 3)......... (124,004)
Net Expenses................................................ 502,391
Net Investment Loss......................................... (104,389)
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from security transactions.................. (1,024,293)
Net change in unrealized depreciation of investments.......... (1,805,419)
Net realized and unrealized loss on investments............. (2,829,712)
Net decrease in net assets resulting from operations........ $ (2,934,101)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets
December 31, 1998
<TABLE>
<CAPTION>
Year Ended Year Ended
Description December 31, 1998 December 31, 1997
<S> <C> <C>
OPERATIONS
Net investment loss........................... $ (104,389) $ (7,295)
Net realized gain (loss) on investments....... (1,024,293) 2,264,075
Net change in unrealized appreciation
(depreciation) of investments................ (1,805,419) 796,018
Net increase (decrease) in net assets
resulting from operations.................... (2,934,101) 3,052,798
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net capital gains:
Class A...................................... (89,117) (1,122,228)
Class B...................................... (98,253) (1,119,087)
Net decrease in net assets resulting from
distributions................................ (187,370) (2,241,315)
CAPITAL SHARE TRANSACTIONS
Shares sold:
Class A...................................... 5,917,565 2,955,444
Class B...................................... 6,088,477 6,742,913
Shares redeemed:
Class A...................................... (2,464,485) (1,215,244)
Class B...................................... (1,796,707) (541,565)
Shares reinvested:
Class A...................................... 88,440 1,075,532
Class B...................................... 92,993 1,079,174
Increase in net assets derived from capital
share transactions (a)....................... 7,926,283 10,096,254
Total increase in net assets................. 4,804,812 10,907,737
NET ASSETS
Beginning of year............................. 22,596,929 11,689,192
End of year................................... $ 27,401,741 $ 22,596,929
(a) Transactions in capital stock were:
Shares sold:
Class A..................................... 514,690 232,439
Class B..................................... 535,115 542,712
Shares redeemed:
Class A..................................... (217,873) (96,627)
Class B..................................... (163,152) (43,891)
Shares reinvested:
Class A..................................... 8,122 88,668
Class B..................................... 8,699 89,856
Increase in shares outstanding.............. 685,601 813,157
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Financial Highlights - Class A
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
For the For the For the For the For the
Description Year Ended Year Ended Year Ended Year Ended Period Ended
December December December December December
31, 1998 31, 1997 31, 1996 31, 1995 31, 1994*
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 12.25 $ 11.24 $ 10.07 $ 9.66 $ 10.00
Income From Investment
Operations:
Net investment
income................ 0.00 0.02 0.10 0.11 0.06
Net gains (losses) on
securities
(both realized and
unrealized)........... (1.29) 2.37 1.17 0.66 (0.34)
Total from investment
operations.......... (1.29) 2.39 1.27 0.77 (0.28)
Less Distributions
Distributions from
net investment
income............... 0.00 0.00 (0.10) (0.11) (0.06)
Distributions from
net capital gains.... (0.07) (1.38) 0.00 (0.25) 0.00
Total distributions.. (0.07) (1.38) (0.10) (0.36) (0.06)
Net Asset Value, End of
Period................. $ 10.89 $ 12.25 $ 11.24 $ 10.07 $ 9.66
Total Return............ (10.50%)/1/ 21.35%/1/ 12.59% 7.93% 2.84%
Ratios/Supplemental Data
Net assets, end of
period (in 000s)...... $ 13,287 $ 11,208 $ 7,760 $ 6,133 $ 2,217
Ratio of expenses to
average net assets:
Before expense
reimbursement........ 2.09% 2.75% 3.70% 5.84% 18.62%/2/
After expense
reimbursement........ 1.60% 1.60% 1.60% 1.60% 1.60%/2/
Ratio of net
investment income
(loss) to average net
assets:
Before expense
reimbursement........ (1.15%) (0.90%) (1.05%) (2.96%) (15.49%)/2/
After expense
reimbursement........ (0.66%) 0.25% 1.05% 1.28% 1.53%/2/
Portfolio turnover
rate.................. 69.42% 136.36% 93.08% 34.12% 8.31%
</TABLE>
* Class A Shares commenced investment operations on March 21, 1994.
/1/Total return calculation does not reflect sales load.
/2/Annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights - Class B
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
For the For the For the For the
Description Year Ended Year Ended Year Ended Period Ended
December December December December
31, 1998 31, 1997 31, 1996 31, 1995*
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 12.13 $ 11.22 $ 10.08 $ 10.49
Income From Investment
Operations:
Net investment income
(loss)................ (0.08) (0.03) 0.07 0.11
Net gains (losses) on
securities
(both realized and
unrealized)........... (1.28) 2.32 1.14 (0.16)
Total from investment
operations.......... (1.36) 2.29 1.21 (0.05)
Less Distributions
Distributions from
net investment
income............... 0.00 0.00 (0.07) (0.11)
Distributions from
net capital gains.... (0.07) (1.38) 0.00 (0.25)
Total distributions.. (0.07) (1.38) (0.07) (0.36)
Net Asset Value, End of
Period................. $ 10.70 $ 12.13 $ 11.22 $ 10.08
Total Return............ (11.18%)/1/ 20.50%/1/ 11.98%/1/ (0.46%)/1/
Ratios/Supplemental Data
Net assets, end of
period (in 000s)...... $ 14,114 $ 11,389 $ 3,929 $ 620
Ratio of expenses to
average net assets:
Before expense
reimbursement........ 2.84% 3.41% 4.30% 6.44%/2/
After expense
reimbursement........ 2.35% 2.26% 2.20% 2.20%/2/
Ratio of net
investment income
(loss)
to average net
assets:
Before expense
reimbursement........ (1.90%) (1.56%) (1.65%) (3.56%)/2/
After expense
reimbursement........ (1.41%) (0.41%) 0.45% 0.68%/2/
Portfolio turnover
rate.................. 69.42% 136.36% 93.08% 34.12%
</TABLE>
* Class B Shares commenced investment operations on August 25, 1995.
/1/Total return calculation does not reflect redemption fee.
/2/Annualized.
See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements
December 31, 1998
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 is comprised of two separate
classes of shares (Class A shares and Class B shares) which vary with respect
to sales charges, distribution costs, voting rights and dividends. Effective
September 22, 1997, Class A changed its load structure from no-load to a
front-end sales load, and Class B shares changed from a front end-sales load
to a contingent deferred sales charge ("CDSC"). Each class is also 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. The Fund has made certain
investments in real estate investment trusts ("REITs") which pay dividends to
their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REIT's taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital.
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. The Fund
has a capital loss carryover available to offset future capital gains, if any,
of approximately $1,000,000 which expires in 2006.
<PAGE>
Notes to Financial Statements
December 31, 1998
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 $23,445,880 and $15,762,595 respectively, for the year ended
December 31, 1998.
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 Class A, and 2.35%, with respect to
Class B, of the Fund's average daily net assets. For the year ended December
31, 1998, advisory fees of $89,797 were waived by TPL and TPL reimbursed the
Fund $34,207. Effective July 1, 1997, the Fund engaged 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 Class A 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 Class B Plan, the Fund will
reimburse TPL a fee at an annual rate of 1.00%, payable monthly, of which,
0.25% may be a service fee and 0.75% may be payable to outside broker/dealers,
of the average daily net assets attributable to such class of shares. For the
year ended December 31, 1998, the Fund reimbursed TPL $160,502 for
distribution costs incurred.
<PAGE>
Timothy Plan Performance Graphs
illustration of $10,000 Investment
[GRAPH OF CLASS A] [GRAPH OF CLASS B]
CLASS A RUSSELL 2000 CLASS B RUSSELL 2000
3/21/94 9450 10000 8/25/95 10000 10000
6/30/94 9006 9571 9/30/95 10067 10166
9/30/94 9289 10202 12/31/95 9954 10349
12/31/94 9181 9972 3/31/96 10300 10834
3/31/95 9362 10387 6/30/96 10487 11353
6/30/95 9837 11297 9/30/96 10399 11346
9/30/95 10037 12363 12/31/96 11147 11877
12/31/95 9909 12585 3/31/97 11058 11220
3/31/96 10263 13175 6/30/97 12528 12983
6/30/96 10470 13806 9/30/97 13800 14864
9/30/96 10401 13797 12/31/97 13432 14314
12/31/96 11157 14443 3/31/98 14107 15744
3/31/97 11077 13645 6/30/98 13509 14981
6/30/97 12596 15788 9/30/98 10353 11909
9/30/97 13896 18076 12/31/98 11931 13821
12/31/97 13538 17407
3/31/98 14257 19146
6/30/98 13682 18218
9/30/98 10510 14482
12/31/98 12117 16807
Past performance is not indicative of Past performance is not indicative
future results of future results
Note 1: Effective September 22, 1997, Note 1: The Fund returns are net of
Class A began charging a front end the CDSC charge placed on
sales charge on purchases. This front redemptions.
end sales charge is reflected in the
returns.
Note 2: As of September 22, 1997 a
front-end sales load was no longer
placed on purchases. For fiscal
years prior to that date, a front-
end sales load would have affected
the performance of the Fund.
<PAGE>
Report Of Independent Certified Public Accounts
Board Of Trustees And Shareholders
The Timothy Plan
Winter Park, Florida
We have audited the accompanying statement of assets and liabilities of The
Timothy Plan, including the schedule of investments as of December 31, 1998
and the related statement of operations for the year then ended, and the
statement of changes in net assets for each of the two years then ended and
the financial highlights for each of the four years then ended and for the
period March 21, 1994 (commencement of operations) to December 31, 1994. These
financial statements and financial highlights are the responsibility of the
Trust's 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 generally accepted auditing
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1998, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. 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
Timothy Plan as of December 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the two years then
ended and the financial highlights for each of the four years then ended and
for the period March 21, 1994 to December 31, 1994, in conformity with
generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
February 19, 1999
<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
Declaration Services Group
555 North Lane
Conshohocken, PA 19428
AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, PA 19103
LEGAL COUNSEL
The Law Offices of
David D. Jones, P.C.
518 Kimberton #134
Phoenixville, PA 19460
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.
[LOGO APPEARS HERE]
THE
TIMOTHY
PLAN
ANNUAL REPORT
December 31, 1998
