<page>
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 811-08228
Timothy Plan
(Exact name of registrant as specified in charter)
1304 W. Fairbanks Ave. Winter Park, FL 32789
(Address of principal executive offices) (Zip code)
Arthur Alley , Timothy Plan, 1304 W. Fairbanks Ave. Winter Park, FL 32789
(Name and address of agent for service)
Registrant's telephone number, including area code: 407-644-1986
Date of fiscal year end: 12/31
Date of reporting period: 12/31/02
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, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. 3507.
<page>
Item 1. Reports to Stockholders.
December 31, 2002
Dear Shareholder:
While this may sound like deja vu (all over again as Yogi Berra would say),
the sky is not falling - even though it may seem like it at times. We have now
endured a nearly historic and almost unprecedented third consecutive year of
negative market returns (although, thankfully, some of our equity funds were
actually up in two of those three years.) The question at hand is: will we have
a fourth such year in 2003?
Although we are seeing some encouraging economic recovery signs, the two
major negatives over-hanging the market at this writing are the seemingly
inevitable war with Iraq and further potential terrorist attacks. While either
or both of these could produce some short-term market damage, I firmly believe
the underlying strength of our nation's capital markets will digest and overcome
either or both of these concerns should they occur.
If history means anything, and I believe it does, then the twelve months
following the end of a bear market have almost always produced very strong
positive returns. In all too many cases, those investors that finally lost heart
and capitulated toward the end of bear markets of longer duration have stood on
the sidelines and missed the recovery.
I have said all that to say this: your Timothy Plan has some of the finest,
proven and respected money managers in the industry serving as our sub-advisors
and we have every confidence that we will fully participate in the recovery that
we expect to follow this extraordinarily long and painful bear market.
Once again, my admonition to you is simply this - hang in there, we believe
you'll be glad you did.
Sincerely,
Arthur D. Ally,
President
<page>
Returns for the Year Ended December 31, 2002
<table>
<s> <c> <c> <c>
- ---------------------------------------- ------------------ ------------- ---------------------------
Fund/Index 12 Months 5 Years Average Annual Total
Total Return Average Return
Annual Since Inception
Return
- ---------------------------------------- ------------------ ------------- ---------------------------
- ---------------------------------------- ------------------ ------------- ---------------------------
Timothy Small Cap Value Fund - Class A
(a) (With sales charge) -23.47% -1.27% 3.46%
- ----------------------------------------
- ---------------------------------------- ------------------ ------------- ---------------------------
Russell 2000 Index (a) -20.48% -1.36% 5.67%
- ---------------------------------------- ------------------ ------------- ---------------------------
- ---------------------------------------- ------------------ ------------- ---------------------------
Timothy Small Cap Value Fund - Class B
(b) (With CDSC) -23.86% -1.14% 3.41%
- ---------------------------------------- ------------------ ------------- ---------------------------
- ---------------------------------------- ------------------ ------------- ---------------------------
Russell 2000 Index (b) -20.48% -1.36% 4.53%
- ---------------------------------------- ------------------ ------------- ---------------------------
</table>
(a) For the period March 24, 1994 (commencement of investment in accordance
with objective) to December 31, 2002.
(b) For the period August 25, 1995 (commencement of investment in
accordance with objective) to December 31, 2002.
Small A Russell 2000
3/24/94 9,478.67 10,000.00
12/31/94 9,209.13 9,487.46
12/31/95 9,939.16 12,186.72
12/31/96 11,190.36 14,196.82
12/31/97 13,579.37 17,371.71
12/31/98 12,154.15 16,929.47
12/31/99 13,683.18 20,528.10
12/31/00 15,219.92 19,907.94
12/31/01 16,690.72 20,402.82
12/31/02 13,477.61 16,223.66
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund A shares, and the Russell 2000 Index on March 24, 1994 and held
through December 31, 2002. The Russell 2000 Index is widely recognized,
unmanaged index of common stock prices. Performance figures include the change
in value of the stocks in the index and the reinvestment of dividends. The index
return does not reflect expenses, which have been deducted from the Fund's
return. The returns shown do not reflect deduction of taxes that a shareholder
would pay on fund distributions or the redemption of the fund shares. The Fund's
return represents past performance and is not predictive of future results.
Small B Russell 2000
8/25/95 10,000.00 10,000.00
12/31/95 9,954.12 10,439.54
12/31/96 11,147.06 12,161.45
12/31/97 13,431.85 14,881.16
12/31/98 11,930.73 14,502.33
12/31/99 13,246.45 17,585.03
12/31/00 14,686.39 17,053.78
12/31/01 15,973.72 17,477.72
12/31/02 12,802.30 13,897.71
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund B shares, and the Russell 2000 Index on August 25, 1995 and held
through December 31, 2002. The Russell 2000 Index is widely recognized,
unmanaged index of common stock prices. Performance figures include the change
in value of the stocks in the index and the reinvestment of dividends. The index
return does not reflect expenses, which have been deducted from the Fund's
return. The returns shown do not reflect deduction of taxes that a shareholder
would pay on fund distributions or the redemption of the fund shares. The Fund's
return represents past performance and is not predictive of future results.
<page>
Returns for the Year Ended December 31, 2002
<table>
<s> <c> <c>
- -------------------------------------------- ------------------ -----------------------------
Fund/Index 12 Months Average Annual Total Return
Total Return Since Inception
- -------------------------------------------- ------------------ -----------------------------
- -------------------------------------------- ------------------ -----------------------------
Timothy Large/Mid- Cap Value Fund -
Class A (e)(With sales charge) -20.30% -3.81%
- --------------------------------------------
- -------------------------------------------- ------------------ -----------------------------
S&P 500 Index (e) -22.10% -11.31%
- -------------------------------------------- ------------------ -----------------------------
- -------------------------------------------- ------------------ -----------------------------
Timothy Large/Mid- Cap Value Fund -
Class B (f)(With CDSC) -20.65% -3.94%
- -------------------------------------------- ------------------ -----------------------------
- -------------------------------------------- ------------------ -----------------------------
S&P 500 Index (f) -22.10% -11.52%
- -------------------------------------------- ------------------ -----------------------------
</table>
(e) For the period July 14, 1999 (commencement of investment in accordance
with objective) to December 31, 2002.
(f) For the period July 15, 1999 (commencement of investment in accordance
with objective) to December 31, 2002.
Large A S&P 500
7/14/99 9,478.67 10,000.00
12/31/99 9,215.34 10,569.26
6/30/00 9,063.02 10,524.15
12/31/00 10,353.07 9,607.24
6/30/01 10,773.70 8,963.94
12/31/01 10,387.07 8,466.29
6/30/02 10,137.70 7,352.53
12/31/02 8,737.41 6,595.64
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund A shares, and the S&P 500 Index on July 14, 1999 and held through
December 31, 2002. The S&P 500 Index is widely recognized, unmanaged index of
common stock prices. Performance figures include the change in value of the
stocks in the index and the reinvestment of dividends. The index return does not
reflect expenses, which have been deducted from the Fund's return. The returns
shown do not reflect deduction of taxes that a shareholder would pay on fund
distributions or the redemption of the fund shares. The Fund's return represents
past performance and is not predictive of future results. Large B S&P 500
7/15/99 10,000.00 10,000.00
12/31/99 9,401.49 10,483.14
6/30/00 9,401.49 10,438.40
12/31/00 10,692.39 9,528.96
6/30/01 11,085.78 8,890.90
12/31/01 10,627.36 8,397.31
6/30/02 10,333.85 7,292.62
12/31/02 8,876.38 6,541.90
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund B shares, and the S&P 500 Index on July 15, 1999 and held through
December 31, 2002. The S&P 500 Index is widely recognized, unmanaged index of
common stock prices. Performance figures include the change in value of the
stocks in the index and the reinvestment of dividends. The index return does not
reflect expenses, which have been deducted from the Fund's return. The returns
shown do not reflect deduction of taxes that a shareholder would pay on fund
distributions or the redemption of the fund shares. The Fund's return represents
past performance and is not predictive of future results.
<page>
Returns for the Year Ended December 31, 2002
<table>
<s> <c> <c>
- ---------------------------------------------- -------------- -------------------------
Fund/Index 12 Months Average Annual Total
Total Return Return
Since Inception
- ---------------------------------------------- -------------- -------------------------
- ---------------------------------------------- -------------- -------------------------
Timothy Fixed Income Fund - Class A (c)
(With sales charge) 5.65% 3.93%
- ----------------------------------------------
- ---------------------------------------------- -------------- -------------------------
Dow Jones Bond Index (c) 11.29% 8.91%
- ---------------------------------------------- -------------- -------------------------
- ---------------------------------------------- -------------- -------------------------
Timothy Fixed Income Fund - Class B (d)
(With CDSC) 4.27% 3.74%
- ---------------------------------------------- -------------- -------------------------
- ---------------------------------------------- -------------- -------------------------
Dow Jones Bond Index (d) 11.29% 9.50%
- ---------------------------------------------- -------------- -------------------------
</table>
(c) For the period July 14, 1999 (commencement of investment in accordance
with objective) to December 31, 2002.
(d) For the period August 5, 1999 (commencement of investment in accordance
with objective) to December 31, 2002.
Fixed A DJ Bond
7/14/99 9,578.54 10,000.00
9/30/99 9,616.86 9,969.60
12/31/99 9,519.33 9,973.82
3/31/00 9,400.80 10,132.59
6/30/00 9,361.68 10,237.31
9/30/00 9,559.96 10,592.01
12/31/00 9,739.80 10,912.09
3/31/01 10,073.69 11,360.53
6/30/01 10,128.70 11,444.13
9/30/01 10,291.78 11,917.07
12/31/01 10,360.64 12,083.44
3/31/02 10,233.82 11,855.42
6/30/02 10,551.72 12,121.44
9/30/02 11,182.42 12,584.35
12/31/02 11,430.06 13,447.34
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund A shares, and the Dow Jones Bond Index on July 14, 1999 and held
through December 31, 2002. The Dow Jones Bond Index is widely recognized,
unmanaged index of bond prices. Performance figures include the change in value
of the bonds in the index and the reinvestment of interests. The index return
does not reflect expenses, which have been deducted from the Fund's return. The
returns shown do not reflect deduction of taxes that a shareholder would pay on
fund distributions or the redemption of the fund shares. The Fund's return
represents past performance and is not predictive of future results.
..
Fixed B DJ Bond
8/5/99 10,000.00 10,000.00
9/30/99 10,000.00 10,100.97
12/31/99 9,928.83 10,105.25
3/31/00 9,744.34 10,266.11
6/30/00 9,713.60 10,372.21
9/30/00 9,922.40 10,731.58
12/31/00 10,139.62 11,055.87
3/31/01 10,262.91 11,510.23
6/30/01 10,201.35 11,594.93
9/30/01 10,586.58 12,074.10
12/31/01 10,558.88 12,242.66
3/31/02 10,414.82 12,011.64
6/30/02 10,706.48 12,281.17
9/30/02 11,333.18 12,750.18
12/31/02 11,563.72 13,624.54
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund B shares, and the Dow Jones Bond Index on August 5, 1999 and held
through December 31, 2002. The Dow Jones Bond Index is widely recognized,
unmanaged index of bond prices. Performance figures include the change in value
of the bonds in the index and the reinvestment of interests. The index return
does not reflect expenses, which have been deducted from the Fund's return. The
returns shown do not reflect deduction of taxes that a shareholder would pay on
fund distributions or the redemption of the fund shares. The Fund's return
represents past performance and is not predictive of future results.
<page>
Returns for the Year Ended December 31, 2002
<table>
<s> <c> <c>
- ----------------------------------------------- --------------- -----------------------------
Fund/Index 12 Months Average Annual Total Return
Total Return Since Inception
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Timothy Aggressive Growth Fund -
Class A (g)(With sales charge) -34.67% -31.22%
- -----------------------------------------------
- ----------------------------------------------- --------------- -----------------------------
Russell Mid Cap Growth Index (g) -27.41% -28.29%
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Timothy Aggressive Growth Fund -
Class B (h)(With CDSC) -35.12% -31.18%
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Russell Mid Cap Growth Index (h) -27.41% -27.76%
- ----------------------------------------------- --------------- -----------------------------
</table>
(g) For the period October 5, 2000 (commencement of investment in
accordance with objective) to December 31, 2002.
(h) For the period October 9, 2000 (commencement of investment in
accordance with objective) to December 31, 2002.
Aggr A Russell
10/5/00 9,478.67 10,000.00
12/31/00 7,914.69 8,195.28
3/31/01 6,132.70 6,139.50
6/30/01 7,127.96 7,132.99
9/30/01 5,213.27 5,150.13
12/31/01 6,265.40 6,543.89
3/31/02 6,284.36 6,428.26
6/30/02 5,241.71 5,254.44
9/30/02 4,350.71 4,351.85
12/31/02 4,322.27 4,750.49
The chart shows the value of a hypothetical initial investment of
$10,000 in the Fund A shares, and the Russell Mid Cap Growth Index on
October 5, 2000 and held through December 31, 2002. The Russell Mid
Cap Growth Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the stocks
in the index and the reinvestment of dividends. The index return does
not reflect expenses, which have been deducted from the Fund's return.
The returns shown do not reflect deduction of taxes that a shareholder
would pay on fund distributions or the redemption of the fund shares.
The Fund's return represents past performance and is not predictive of
future results.
Aggr B Russell
10/9/00 10,000.00 10,000.00
12/31/00 8,340.00 8,353.55
3/31/01 6,450.00 6,258.07
6/30/01 7,480.00 7,270.74
9/30/01 5,470.00 5,249.59
12/31/01 6,560.00 6,670.26
3/31/02 6,560.00 6,552.40
6/30/02 5,460.00 5,355.91
9/30/02 4,530.00 4,435.90
12/31/02 4,480.00 4,842.23
The chart shows the value of a hypothetical initial investment of
$10,000 in the Fund B shares, and the Russell Mid Cap Growth Index on
October 9, 2000 and held through December 31, 2002. The Russell Mid
Cap Growth Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the stocks
in the index and the reinvestment of dividends. The index return does
not reflect expenses, which have been deducted from the Fund's return.
The returns shown do not reflect deduction of taxes that a shareholder
would pay on fund distributions or the redemption of the fund shares.
The Fund's return represents past performance and is not predictive of
future results.
<page>
Returns for the Year Ended December 31, 2002
<table>
<s> <c> <c>
- ----------------------------------------------- --------------- -----------------------------
Fund/Index 12 Months Average Annual Total Return
Total Return Since Inception
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Timothy Large/Mid Cap Growth Fund -
Class A (i)(With sales charge) -33.07% -27.44%
- -----------------------------------------------
- ----------------------------------------------- --------------- -----------------------------
Russell 1000 Growth Index (i) -27.89% -29.26%
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Timothy Large/Mid Cap Growth Fund -
Class B (j)(With CDSC) -33.42% -27.32%
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Russell 1000 Growth Index (j) -27.89% -28.47%
- ----------------------------------------------- --------------- -----------------------------
</table>
(i) For the period October 5, 2000 (commencement of investment in
accordance with objective) to December 31, 2002.
(j) For the period October 9, 2000 (commencement of investment in
accordance with objective) to December 31, 2002.
Growth A Russell 1000
10/5/00 9,478.67 10,000.00
12/31/00 8,929.95 8,028.32
4/30/01 7,612.26 7,153.62
8/31/01 6,436.77 6,164.13
12/31/01 6,901.28 6,388.69
4/30/02 6,010.18 5,715.49
8/31/02 4,995.84 4,797.44
12/31/02 4,872.61 4,607.06
The chart shows the value of a hypothetical initial investment of
$10,000 in the Fund A shares, and the Russell 1000 Growth Index on
October 5, 2000 and held through December 31, 2002. The Russell 1000
Growth Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the stocks
in the index and the reinvestment of dividends. The index return does
not reflect expenses, which have been deducted from the Fund's return.
The returns shown do not reflect deduction of taxes that a shareholder
would pay on fund distributions or the redemption of the fund shares.
The Fund's return represents past performance and is not predictive of
future results.
Growth B Russell 1000
10/9/00 10,000.00 10,000.00
12/31/00 9,410.60 8,254.42
4/30/01 8,000.51 7,355.09
8/31/01 6,750.43 6,337.73
12/31/01 7,220.46 6,568.61
4/30/02 6,280.40 5,876.46
8/31/02 5,210.33 4,932.55
12/31/02 5,060.32 4,737.06
The chart shows the value of a hypothetical initial
investment of $10,000 in the Fund B shares, and the Russell 1000
Growth Index on October 9, 2000 and held through December 31,
2002. The Russell 1000 Growth Index is widely recognized,
unmanaged index of common stock prices. Performance figures
include the change in value of the stocks in the index and the
reinvestment of dividends. The index return does not reflect
expenses, which have been deducted from the Fund's return. The
returns shown do not reflect deduction of taxes that a
shareholder would pay on fund distributions or the redemption of
the fund shares. The Fund's return represents past performance
and is not predictive of future results.
<page>
Returns for the Year Ended December 31, 2002
<table>
<s> <c> <c>
- ----------------------------------------------- --------------- -----------------------------
Fund/Index 12 Months Average Annual Total Return
Total Return Since Inception
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Timothy Strategic Growth Fund -
Class A (m)(With sales charge) -29.27% -20.33%
- -----------------------------------------------
- ----------------------------------------------- --------------- -----------------------------
S&P 500 Index (m) -22.10% -18.47%
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Timothy Strategic Growth Fund -
Class B (n)(With CDSC) -29.56% -20.04%
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
S&P 500 Index (n) -22.10% -17.67%
- ----------------------------------------------- --------------- -----------------------------
</table>
(m) For the period October 5, 2000 (commencement of investment in accordance
with objective) to December 31, 2002.
(n) For the period October 9, 2000 (commencement of investment in accordance
with objective) to December 31, 2002.
Strat A S&P 500
10/5/00 9,478.67 10,000.00
12/31/00 9,109.00 9,218.08
3/31/01 7,772.51 8,125.66
6/30/01 8,360.19 8,600.84
9/30/01 6,928.91 7,339.11
12/31/01 8,049.92 8,123.35
3/31/02 8,201.80 8,145.56
6/30/02 7,043.68 7,054.70
9/30/02 5,800.12 5,836.63
12/31/02 6,009.15 6,328.47
The chart shows the value of a hypothetical initial
investment of $10,000 in the Fund A shares, and the S&P 500 Index
on October 5, 2000 and held through December 31, 2002. The S&P
500 Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the
stocks in the index and the reinvestment of dividends. The index
return does not reflect expenses, which have been deducted from
the Fund's return. The returns shown do not reflect deduction of
taxes that a shareholder would pay on fund distributions or the
redemption of the fund shares. The Fund's return represents past
performance and is not predictive of future results.
Strat B S&P 500
10/9/00 10,000.00 10,000.00
12/31/00 9,610.00 9,441.55
3/31/01 9,180.00 8,322.66
6/30/01 8,780.00 8,809.35
9/30/01 7,270.00 7,517.03
12/31/01 8,443.69 8,320.29
3/31/02 8,583.92 8,343.03
6/30/02 7,361.94 7,225.73
9/30/02 6,049.81 5,978.13
12/31/02 6,260.35 6,481.89
The chart shows the value of a hypothetical initial
investment of $10,000 in the Fund B shares, and the S&P 500 Index
on October 9, 2000 and held through December 31, 2002. The S&P
500 Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the
stocks in the index and the reinvestment of dividends. The index
return does not reflect expenses, which have been deducted from
the Fund's return. The returns shown do not reflect deduction of
taxes that a shareholder would pay on fund distributions or the
redemption of the fund shares. The Fund's return represents past
performance and is not predictive of future results.
<page>
Returns for the Year Ended December 31, 2002
<table>
<s> <c> <c>
- ----------------------------------------------- --------------- -----------------------------
Fund/Index 12 Months Average Annual Total Return
Total Return Since Inception
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Timothy Conservative Growth Fund -
Class A (k)(With sales charge) -17.59% -10.59%
- -----------------------------------------------
- ----------------------------------------------- --------------- -----------------------------
S&P 500 Index (k) -22.10% -18.47%
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
Timothy Conservative Growth Fund -
Class B (l)(With CDSC) -17.93% -10.41%
- ----------------------------------------------- --------------- -----------------------------
- ----------------------------------------------- --------------- -----------------------------
S&P 500 Index (l) -22.10% -17.67%
- ----------------------------------------------- --------------- -----------------------------
</table>
(k) For the period October 5, 2000 (commencement of investment in accordance
with objective) to December 31, 2002.
(l) For the period October 9, 2000 (commencement of investment in accordance
with objective) to December 31, 2002.
Con A S&P 500
10/5/00 9,478.67 10,000.00
12/31/00 9,450.24 9,218.08
3/31/01 8,625.59 8,125.66
6/30/01 8,995.26 8,600.84
9/30/01 8,094.79 7,339.11
12/31/01 8,948.17 8,123.35
3/31/02 9,175.91 8,145.56
6/30/02 8,464.23 7,054.70
9/30/02 7,524.81 5,836.63
12/31/02 7,781.11 6,328.47
The chart shows the value of a hypothetical initial
investment of $10,000 in the Fund A shares, and the S&P 500 Index
on October 5, 2000 and held through December 31, 2002. The S&P
500 Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the
stocks in the index and the reinvestment of dividends. The index
return does not reflect expenses, which have been deducted from
the Fund's return. The returns shown do not reflect deduction of
taxes that a shareholder would pay on fund distributions or the
redemption of the fund shares. The Fund's return represents past
performance and is not predictive of future results.
Con B S&P 500
10/9/00 10,000.00 10,000.00
12/31/00 9,960.00 9,441.55
3/31/01 9,070.00 8,322.66
6/30/01 9,440.00 8,809.35
9/30/01 8,470.00 7,517.03
12/31/01 9,339.23 8,320.29
3/31/02 9,559.45 8,343.03
6/30/02 8,808.70 7,225.73
9/30/02 7,807.72 5,978.13
12/31/02 8,068.07 6,481.89
The chart shows the value of a hypothetical initial
investment of $10,000 in the Fund B shares, and the S&P 500 Index
on October 9, 2000 and held through December 31, 2002. The S&P
500 Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the
stocks in the index and the reinvestment of dividends. The index
return does not reflect expenses, which have been deducted from
the Fund's return. The returns shown do not reflect deduction of
taxes that a shareholder would pay on fund distributions or the
redemption of the fund shares. The Fund's return represents past
performance and is not predictive of future results.
<page>
OFFICERS AND TRUSTEES OF THE TRUST
December 31, 2002 (Unaudited)
TIMOTHY PLAN FAMILY OF FUNDS
The following is a complete listing of all officers and
directors of The Timothy Plan. It includes background and
biography information for the benefit of the shareholders of the
Funds.
<table>
<s> <c> <c> <c> <c>
Date & Positions Held Principal Occupation
Name, Address & Age with Fund During Past 5 Years P1 O2
-----------------------------------------------------------------------------------------------------------------------------
Arthur D. Ally Trustee, President of President and controlling shareholder of 10 0
the Trust, Chairman of Covenant Funds, Inc. ("CFI"),
(Year of Birth: 1942)* the Board of Trustees a holding company. President and general
Since January 1994 partner of Timothy Partners Ltd. ("TPL"),
1304 W. Fairbanks Avenue the investment adviser and principal
underwriter to each Fund. CFI is also
Winter Park, FL the managing general partner of TPL.
----------------------------------------------------------------------------------------------------------------------------
Joseph E. Boatwright Trustee, Secretary Retired Minister. Currently serves as a 10 0
Since April 1995 consultant to the Greater Orlando Baptist
(Year of Birth: 1930)** Association. Served as Senior Pastor to
the Aloma Baptist Church from 1970-1996.
1410 Hyde Park Drive
Winter Park, FL
----------------------------------------------------------------------------------------------------------------------------
Wesley W. Pennington Trustee, Treasurer Retired Air Force Officer. Past President, 10 0
Since January 1994 Westwind Holdings, Inc., a development
(Year of Birth: 1930) company, since 1997. Past President and
controlling shareholder, Weston, Inc.,
442 Raymond Avenue a fabric treatment company, from 1979-1997.
President, Designer Services Group, 1980-1988.
Longwood, FL
----------------------------------------------------------------------------------------------------------------------------
Jock M. Sneddon Trustee Physician, Florida Hospital Centra Center. 10 0
(Year of Birth: 1947)**
6001 Vineland Drive Since January 1997
Orlando, FL
----------------------------------------------------------------------------------------------------------------------------
W. Thomas Fyler, Jr. Trustee President, controlling shareholder of W.T. 10 0
Fyler, Jr./Ephesus, Inc., a New York
(Year of Birth: 1957) State registered investment advisory firm.
Founding member of the National Association
640 Ft Washington Ave Since December 1998 of Christian Financial Consultants.
Suite 6C
New York, NY 10040
-----------------------------------------------------------------------------------------------------------------------------
Mathew D. Staver Trustee Attorney specializing in free speech, 10 0
appellate practice and religious liberty
(Year of Birth: 1956)** constitutional law.Founder of Liberty
Counsel, a religious civil liberties
210 East Palmetto Ave. Since June 2000 education and legal defense organization.
Host of two radio programs devoted to
Longwood, FL 32750 religious freedom issues. Editor of a
monthly newsletter devoted to religious
liberty topics. Mr. Staver has argued
before the United States Supreme Court
and has published numerous legal articles.
-----------------------------------------------------------------------------------------------------------------------------
Charles E. Nelson Trustee Certified Public Accountant. Director of 10 0
Operations, National Multiple Sclerosis
Society Mid Florida Chapter. Formerly
Director of Finance, Hospice of the
Comforter, Inc., a non-profit organization.
(Year of Birth: 1934) Formerly Comptroller, Florida United Methodist
Children's Home, Inc. Formerly Credit Specialist
1145 Cross Creek Since June 2000 with the Resolution Trust Corporation and
Senior Executive Vice President, Barnett Bank
Altamonte Springs, FL of Central Florida, N.A. Formerly
managing partner, Arthur Anderson, CPA firm,
Florida branch.
-----------------------------------------------------------------------------------------------------------------------------
Mark A. Minnella Trustee Principal and co-founder of Intergrity 10 0
Investors, LLC., a registered investment
(Year of Birth: 1955) advisory firm. Co-founder, treasurer and
1215 Fern Ridge Parkway Since June 2000 director of the National Association of Christian
Christian Financial Consultants.Mr. Minnella
Suite 110 is a Registered Investment Principal (NASD Series 24),
(NASD Series 24), and a registered
Creve Coeur, MO investment adviser (NASD Series 65).
-----------------------------------------------------------------------------------------------------------------------------
William Dodson Trustee Vice President - Sales, CPCF, Inc. a 10 0
registered broker-dealer and a subsidiary of
the California Baptist Foundation and the
(Year of Birth: 1960) California Southern Baptist Convention.
Mr. Dodson is a General Securities Principal
7120 N. Whitney Avenue Since November 2001 (series 24) and licensed minister.
Mr. Dodson has previous experience as a
Fresno, CA 93720 General Securities Representative (Series 7)
with two national brokerage firms.
-----------------------------------------------------------------------------------------------------------------------------
</table>
*Mr. Ally is an "interested" Trustee, as that term is defined in the 1940 Act,
because of his positions with and financial interests in CFI and TPL. **
Messrs. Boatwright, Sneddon and Staver are "interested" Trustees, as that term
is defined in the 1940 Act, because each has a limited partnership interest in
TPL.
1 Number of portfolios in fund complex overseen by Director
2 Other Directorships held by Director
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 77.07%
<table>
<s> <c> <c>
number of shares market value
BALL & ROLLER BEARINGS - 3.18%
55,600 Kaydon Corp. $ 1,179,276
-----------------
CANNED, FROZEN & PRESERVED FRUIT, VEGETABLES & FOOD SPECIALTIES - 3.33%
41,000 Corn Products International, Inc. $ 1,235,330
-----------------
CONSUMER CREDIT REPORTING, COLLECTION AGENCIES - 3.82%
88,900 NCO Group, Inc. * $ 1,417,955
-----------------
DENTAL EQUIPMENT & SUPPLIES - 3.42%
61,000 Apogent Technologies, Inc. * $ 1,268,800
-----------------
DRAWING & INSULATING NONFERROUS WIRE - 2.60%
63,500 Belden, Inc. $ 966,470
-----------------
ELECTRIC & OTHER SERVICES COMBINED - 3.64%
59,500 ALLETE, Inc. $ 1,349,460
-----------------
INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL - 3.60%
72,500 Cognex Corp. * $ 1,336,175
-----------------
INVESTMENT ADVICE - 2.48%
33,600 Investors Financial Services Corp. $ 920,304
-----------------
MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES - 3.12%
87,000 Rayovac Corp. * $ 1,159,710
-----------------
MISCELLANEOUS PLASTIC PRODUCTS - 3.72%
67,000 Spartech Corp. $ 1,382,210
-----------------
PHARMACEUTICAL PREPARATIONS - 0.13%
2,000 K-V Pharmaceutical Co. - Class A * $ 46,400
-----------------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.83%
124,800 Concord Camera Corp. * $ 677,664
-----------------
PUBLIC WAREHOUSING & STORAGE - 2.94%
33,000 Iron Mountain, Inc. * $ 1,089,330
-----------------
RAILROADS, LINE-HAUL OPERATING - 2.59%
80,000 Kansas City Southern Industries, Inc. * $ 960,000
-----------------
RETAIL-EATING PLACES - 3.03%
65,000 Ruby Tuesday, Inc. $ 1,123,850
-----------------
RETAIL-FAMILY CLOTHING STORES - 2.93%
51,700 Stage Stores, Inc. * $ 1,087,768
-----------------
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES - 3.65%
60,500 Investment Technology Group, Inc. * $ 1,352,780
-----------------
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 77.07% (cont.)
<table>
<s> <c> <c>
number of shares market value
SERVICES - BUSINESS SERVICES - 12.76%
65,000 Sourcecorp,Inc. * $ 1,208,350
53,000 Startek, Inc. * 1,462,800
71,800 Teletech Holdings, Inc. * 521,268
69,000 Viad Corp. 1,542,150
-----------------
4,734,568
-----------------
SERVICES - EMPLOYMENT AGENCIES - 1.11%
55,000 Korn/Ferry International * $ 411,400
-----------------
SERVICES - COMPUTER INTEGRATED SYSTEMS DESIGN - 2.84%
87,500 Henry Jack & Associates, Inc. $ 1,053,500
-----------------
SERVICES - MISCELLANEOUS HEALTH & ALLIED SERVICES - 1.82%
110,000 Hooper Holmes, Inc. $ 675,400
-----------------
SPECIAL INDUSTRY MACHINERY - 2.49%
164,500 Axcelis Technologies, Inc. * $ 922,680
-----------------
STATE COMMERCIAL BANKS - 2.91%
32,000 North Fork Bancorp, Inc. $ 1,079,680
-----------------
TELEPHONE & TELEGRAPH APPARATUS - 3.16%
77,500 Plantronics, Inc. * $ 1,172,575
-----------------
Total Common Stocks (cost $30,455,400) 28,603,285
-----------------
</table>
SHORT TERM INVESTMENTS - 10.77%
<table>
<s> <c> <c>
number of shares market value
2,000,000 Federated Cash Trust Series II $ 2,000,000
2,000,000 First American Treasury Obligation Fund 2,000,000
-----------------
Total Short Term Investments (cost $4,000,000) 4,000,000
-----------------
</table>
REPURCHASE AGREEMENTS - 12.20%
<table>
<s> <c> <c>
principal amount market value
$ 4,526,000 U.S. Bank Repurchase Agreement $ 4,526,000
1.05%, dated 12/31/02, due 1/2/03, repurchase price $4,526,260,
collateralized by $4,661,780 by FHLMC, 5/1/17
Total Repurchase Agreements (cost $4,526,000) 4,526,000
-----------------
TOTAL INVESTMENTS - 100.04% (identified cost $38,981,400) 33,129,285
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.04)%
(16,367)
-----------------
NET ASSETS - 100.00% $ 33,112,918
=================
</table>
* Non-income producing securities
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $38,981,400) [NOTE 1] $ 37,129,285
Cash 981
Receivables:
Interest 2,333
Dividends 28,105
Fund Shares Sold 51,994
Prepaid Expense and Other Receivables 12,717
Fund Share Commissions Receivable From Advisor 1,918
-------------------
Total Assets $ 37,227,333
===================
LIABILITIES
amount
Accrued Advisory Fees $ 27,025
Accrued 12b-1 Fees 14,224
Payable for Fund Shares Redeemed 42,031
Accrued Expenses 31,135
-------------------
Total Liabilities $ 114,415
===================
NET ASSETS
amount
Class A Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
2,031,518 shares outstanding) $ 22,603,423
Net Asset Value and Redemption Price Per Class A Share $ 11.13
($22,603,423/2,031,518 shares)
Offering Price Per Share ($11.13/0.9475) $ 11.75
Class B Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
1,370,694 shares outstanding) $ 14,509,495
Net Asset Value and Offering Price Per Class B Share
($14,509,495/1,370,694 shares) $ 10.59
Maximum Redemption Price Per Class B Share ($10.59 x 0.95) $ 10.06
Net Assets $ 37,112,918
===================
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $ 39,025,780
Accumulated Net Realized Loss on Investments $ (60,747)
Net Unrealized Depreciation in Value of Investments $ (1,852,115)
-------------------
Net Assets $ 37,112,918
===================
</table>
<page>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
<table>
<s> <c>
INVESTMENT INCOME
amount
Interest $ 55,554
Dividends 467,202
-------------------
Total Investment Income 522,756
-------------------
EXPENSES
amount
Investment Advisory Fees [NOTE 3] $ 338,392
12b-1 Fess (Class A = $57,686, Class B =$125,159) [NOTE 3] 182,845
Auditing Fees 37,675
Service Fees (Class B) [NOTE 3] 41,705
Accounting Fees 24,642
Legal Expense 9,228
Registration Fees 24,310
Transfer Agent Fees (Class A = $60,952, Class B = $40,201) 101,153
Insurance Expense 11,309
Custodian Fees 12,378
Administration Fees 11,726
Pricing Expense 3,017
Printing Expense 9,211
Miscellaneous Expense 4,656
-------------------
Total Net Expenses 812,247
-------------------
Net Investment (Loss) (289,491)
-------------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS
amount
Net Realized Loss on Investments (42,848)
Change in Unrealized Appreciation of Investments (8,276,735)
-------------------
-------------------
Net Realized and Unrealized (Loss) on Investments (8,319,583)
-------------------
Decrease in Net Assets Resulting from Operations $ (8,609,074)
===================
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
year ended year ended
12/31/02 12/31/01
Operations:
Net Investment (Loss) $ (289,491) $ (437,127)
Net Change in Unrealized Appreciation (Depreciation) of Investments (8,276,735) 3,714,604
Net Realized (Loss) on Investments (42,848) 16,332
------------------ --------------
Increase (Decrease) in Net Assets (resulting from operations) (8,609,074) 3,293,809
------------------- -----------
Distributions to Shareholders From:
Net Capital Gains:
Class A (10,661) (44,011)
Class B (7,238) (36,840)
-------------- -------------
Total Net Distributions (17,899) (80,851)
------------- -------------
Capital Share Transactions:
Proceeds from Shares Sold:
Class A 9,346,918 7,582,801
Class B 3,251,284 2,395,921
Dividends Reinvested:
Class A 7,026 44,109
Class B 6,948 42,968
Cost of Shares Redeemed:
Class A (3,430,730) (3,026,812)
Class B (2,724,918) (2,816,976)
---------------- ----------------
Increase in Net Assets (resulting from capital share
transactions) 6,456,528 4,222,011
---------------- -------------
Total Increase (Decrease) in Net Assets (2,170,445) 7,434,969
Net Assets:
Beginning of Year 39,283,363 31,848,394
---------------- --------------
End of Year $ 37,112,918 $ 39,283,363
================ ================
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold:
Class A 728,940 598,374
Class B 257,853 195,221
Shares Reinvested:
Class A 632 3,657
Class B 657 3,724
Shares Redeemed:
Class A (267,247) (239,337)
Class B (223,459) (227,826)
---------------- ----------------
Net Increase in Number of Shares Outstanding 497,376 333,813
================ ================
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each year presented.
SMALL-CAP VALUE FUND - CLASS A SHARES
<table>
<s> <c> <c> <c> <c> <c>
year year year year year
ended ended ended ended ended
12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
Per Share Operating Performance:
Net Asset Value at Beginning of Year $ 13.79 $ 12.61 $ 12.26 $ 10.89 $ 12.25
------------ ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Income (Loss) (0.05) (0.09) (0.05) (0.02) 0.01
Net Realized and Unrealized Gain (Loss) on
Investments (2.60) 1.30 1.43 1.39 (1.30)
------------ ---------- ---------- ---------- ----------
Total from Investment Operations (2.65) 1.21 1.38 1.37 (1.29)
------------ ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Realized Gains (0.01) (0.03) (1.03) - (0.07)
Dividends from Net Investment Income - - - - -
----------- ---------- ---------- ---------- ----------
Total Distributions (0.01) (0.03) (1.03) - (0.07)
------------ ---------- ---------- ---------- ----------
Net Asset Value at End of Year $ 11.13 $ 13.79 $ 12.61 $ 12.26 $ 10.89
============ ========== ========== ========== ==========
Total Return (A) (19.25)% 9.66% 11.23% 12.58% (10.50)%
Ratios/Supplemental Data:
Net Assets, End of Year (in 000s) $22,603 $21,632 $15,217 $13,377 $13,287
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 1.75% 1.89% 1.97% 2.22% 2.09%
After Reimbursement of Expenses by Advisor 1.75% 1.89% 1.76% 1.60% 1.60%
Ratio of Net Investment (Loss) to Average Net Assets:
Before Reimbursement of Expenses by Advisor (0.46)% (0.80)% (0.48)% (0.82)% (1.15)%
After Reimbursement of Expenses by Advisor (0.46)% (0.80)% (0.27)% (0.20)% (0.66)%
Portfolio Turnover 66.95% 61.41% 99.17% 78.79% 69.42%
</table>
(A) Total Return Calculation Does Not Reflect Sales Load. <page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each year presented.
SMALL-CAP VALUE FUND - CLASS B SHARES
<table>
<s> <c> <c> <c> <c> <c>
year year year year year
ended ended ended ended ended
12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
Per Share Operating Performance:
Net Asset Value at Beginning of Year $13.22 $12.19 $11.88 $10.70 $12.13
------------ ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Income (Loss)
(0.14) (0.22) (0.10) (0.11) (0.07)
Net Realized and Unrealized Gain (Loss) on
Investments (2.48) 1.28 1.39 1.29 (1.29)
------------ ---------- ---------- ---------- ----------
Total from Investment Operations
(2.62) 1.06 1.29 1.18 (1.36)
------------ ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Realized Gains
(0.01) (0.03) (0.98) - (0.07)
Dividends from Net Investment Income
- - - - -
------------ ---------- ---------- ---------- ----------
Total Distributions
(0.01) (0.03) (0.98) - (0.07)
------------ ---------- ---------- ---------- ----------
Net Asset Value at End of Year $10.59 $13.22 $12.19 $11.88 $10.70
============ ========== ========== ========== ==========
Total Return (A) (19.85)% 8.77% 10.87% 11.03% (11.18)%
Ratios/Supplemental Data:
Net Assets, End of Year (in 000s) $14,509 $17,651 $16,631 $14,351 $14,114
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 2.49% 2.72% 2.72% 2.72% 2.84%
After Reimbursement of Expenses by Advisor 2.49% 2.72% 2.51% 2.35% 2.35%
Ratio of Net Investment Income (Loss) to Average Net
Assets:
Before Reimbursement of Expenses by Advisor (1.12)% (1.78)% (1.23)% (1.34)% (1.90)%
After Reimbursement of Expenses by Advisor (1.12)% (1.78)% (1.02)% (0.97)% (1.41)%
Portfolio Turnover 66.95% 61.41% 99.17% 78.79% 69.42%
</table>
(A) Total Return Calculation Does Not Reflect
Redemption Fee.
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 89.95%
<table>
<s> <c> <c>
number of shares market value
CHEMICAL & ALLIED PRODUCTS - 1.92%
14,000 Dow Chemical Co. $ 415,800
-----------------
CLEANING PREPARATIONS, PERFUMES, COSMETICS - 2.11%
15,000 Church & Dwight Co., Inc. 456,450
-----------------
CONSTRUCTION, MINING & MATERIALS HANDLING MACHINERY & EQUIP - 2.02%
15,000 Dover Corp. 437,400
-----------------
CRUDE PETROLEUM & NATURAL GAS - 8.15%
12,000 Anadarko Petroleum Corp. 574,800
10,000 Apache Corp. 569,900
14,000 Kerr-McGee Corp. 620,200
-----------------
1,764,900
-----------------
ELECTRIC LIGHTING & WIRING EQUIPMENT - 2.19%
13,000 Cooper Industries, Inc., Class A 473,850
-----------------
ELECTRIC SERVICES - 5.37%
10,000 American Electric Power Co., Inc. 273,300
25,000 Duke Energy Corp. 488,500
26,000 TECO Energy, Inc. 402,220
-----------------
-----------------
1,164,020
-----------------
ELECTRONIC INSTRUMENTS - 3.75%
16,000 Emerson Electric Co. 813,600
-----------------
FIRE, MARINE & CASUALTY INSURANCE - 0.79%
22,500 The Phoenix Companies, Inc. * 171,000
-----------------
GENERAL INDUSTRIAL MACHINERY & EQUIPMENT - 2.38%
12,000 Ingersoll-Rand Company Ltd. 516,720
-----------------
INDUSTRIAL INORGANIC CHEMICALS - 1.11%
13,000 ATMI, Inc. * 240,760
-----------------
METAL MINING - 2.20%
6,000 Rio Tinto Plc (a) 477,180
-----------------
METAL WORKING MACHINERY & EQUIPMENT - 2.42%
14,000 SPX Corp. * 524,300
-----------------
MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS - 2.91%
30,000 Masco Corp. 631,500
-----------------
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 89.95% (Cont.)
<table>
<s> <c> <c>
number of shares market value
INDUSTRIAL INORGANIC CHEMICALS - 1.11%
13,000 ATMI, Inc. * $240,760
--------------------
METAL MINING - 2.20%
6,000 Rio Tinto Plc (a) 477,180
--------------------
METAL WORKING MACHINERY & EQUIPMENT - 2.42%
14,000 SPX Corp. * 524,300
--------------------
MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS - 2.91%
30,000 Masco Corp. 631,500
--------------------
MISCELLANEOUS CHEMICAL PRODUCTS - 2.21%
18,000 Cabot Corp. 477,720
--------------------
MISCELLANEOUS FABRICATED METAL PRODUCTS - 1.81%
8,500 Parker Hannifin Corp. 392,105
--------------------
MISCELLANEOUS INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT - 2.80%
10,000 ITT Industries, Inc. 606,900
--------------------
MISCELLANEOUS SHOPPING GOODS STORES - 0.93%
13,700 Office Depot, Inc. * 202,212
--------------------
NATIONAL COMMERCIAL BANKS - 4.68%
10,000 Compass Bancshares, Inc. 312,700
12,000 National City Corp. 327,840
15,000 SouthTrust Corp. 372,750
--------------------
1,013,290
--------------------
NATURAL GAS TRANSMISSION - 0.96%
30,000 El Paso Energy Corp. 208,800
--------------------
NATURAL GAS TRANSMISSION & DISTRIBUTION - 1.62%
10,000 Equitable Resources, Inc. 350,400
--------------------
PHARMACEUTICAL PREPARATIONS - 5.17%
11,000 Abbott Laboratories 440,000
12,000 Merck & Co., Inc. 679,320
--------------------
1,119,320
--------------------
PUBLIC BUILDING AND RELATED FURNITURE - 1.84%
12,000 Lear Corp. * 399,360
--------------------
RADIO TELEPHONE COMMUNICATIONS - 3.55%
14,000 Dominion Resources, Inc. 768,600
--------------------
REAL ESTATE INVESTMENT TRUSTS - 2.10%
15,000 Mack-Cali Realty Corp. 454,500
--------------------
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 89.95% (Cont.)
<table>
<s> <c> <c>
number of shares market value
RETAIL - DRUG STORES & PROPRIETARY STORES - 3.46%
30,000 CVS Corp. $749,100
--------------------
RETAIL-EATING PLACES - 3.18%
20,000 Outback Steakhouse, Inc. 688,800
--------------------
RETAIL-GROCERY STORES - 5.69%
42,000 Kroger Co. * 648,900
25,000 Safeway Inc. * 584,000
--------------------
1,232,900
--------------------
SEMICONDUCTORS & RELATED DEVICES - 1.70%
20,000 International Rectifier Corp. * 369,200
--------------------
SPECIAL INDUSTRY MACHINERY - 0.96%
18,000 Veeco Instruments, Inc. * 208,080
--------------------
STATE COMMERCIAL BANK - 1.11%
10,000 Bank of New York, Inc. 239,600
--------------------
SURETY INSURANCE - 3.04%
15,000 MBIA, Inc. 657,900
--------------------
UNSUPPORTED PLASTICS FILM & SHEET - 3.79%
22,000 Sealed Air Corp. * 820,600
--------------------
WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES - 2.03%
16,300 McKesson Corp. 440,589
--------------------
Total Common Stocks (cost $21,854,048) 19,487,456
--------------------
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
SHORT-TERM INVESTMENTS - 9.46%
<table>
<s> <c> <c>
number of shares market value
1,025,000 Huntington Money Fund - Investment A 1,025,000
1,025,000 First American Treasury Obligation Fund 1,025,000
--------------------
Total Short-Term Investments (cost $2,050,000) 2,050,000
--------------------
</table>
REPURCHASE AGREEMENTS - 2.54%
<table>
<s> <c> <c>
principal amount market value
$549,000 U.S. Bank Repurchase Agreement 549,000
1.05%, dated 12/31/02, due 1/2/03, repurchase price $549,016,
collateralized by $565,470 by FHLMC, 5/1/17
--------------------
Total Repurchase Agreements (cost $549,000) 549,000
--------------------
TOTAL INVESTMENTS - 101.95% (identified cost $24,453,048) 22,086,456
OTHER ASSETS AND LIABILITIES, NET - (1.95)% (421,764)
--------------------
NET ASSETS - 100.00% $ 21,664,692
====================
</table>
* Non-income producing securities
(a) American Depositary Receipt
<page>
STATEMENT OF ASSETS AND LIABILITIES As of
December 31, 2002
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $24,453,048) [NOTE 1] $22,086,456
Cash 625
Receivables:
Interest 985
Dividends 35,485
Fund Shares Sold 19,338
Prepaid Expenses 4,197
Fund Shares Commission Receivable from Advisor 7,305
-------------------
Total Assets $22,154,391
===================
LIABILITIES
amount
Accrued Advisory Fees $11,498
Accrued 12b-1 Fees 5,699
Payable for Fund Shares Redeemed 25,926
Payable for Investment Securities Purchased 434,046
Accrued Expenses 12,530
-------------------
Total Liabilities $489,699
===================
NET ASSETS
amount
Class A Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
1,960,525 shares outstanding) $17,855,915
Net Asset Value and Redemption price Per Class A Share
($17,855,915 /1,960,525 shares) $ 9.11
Offering Price Per Share ($9.11 / 0.9475) $ 9.61
Class B Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
434,542 shares outstanding) $ 3,808,777
Net Asset Value and Offering Price Per Class B Share
($3,808,777 / 434,542 shares) $ 8.77
Redemption Price Per Share ($8.77 x 0.95) $ 8.33
Net Assets $21,664,692
===================
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $24,409,515
Net Accumulated Realized Loss on Investments (378,231)
Net Unrealized Depreciation in Value of Investments (2,366,592)
-------------------
Net Assets $21,664,692
===================
</table>
<page>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
<table>
<s> <c>
INVESTMENT INCOME
amount
Interest $ 22,584
Dividends 351,682
----------------
Total Investment Income 374,266
----------------
EXPENSES
amount
Investment Advisory Fees [NOTE 3] 170,897
Transfer Agent Fees (Class A = $39,697, Class B = $9,654) 49,351
Administration Fees 6,530
12b-1 Fees (Class A = $40,761, Class B = $28,232) [NOTE 3] 68,993
Accounting Fees 30,238
Registration Fees 11,751
Custodian Fees 4,651
Auditing Fees 10,745
Servicing Fees (Class B) [NOTE 3] 9,613
Insurance Expense 4,541
Legal fees 4,792
Printing Expense 6,043
Miscellaneous Expense 5,970
----------------
Total Net Expenses 384,115
----------------
Net Investment Loss (9,849)
----------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS
amount
Net Realized Loss on Investments (225,785)
Change in Unrealized Depreciation of Investments (3,360,595)
----------------
Net Realized and Unrealized (Loss) on Investments (3,586,380)
----------------
Decrease in Net Assets Resulting from Operations $(3,596,229)
================
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
year ended year ended
12/31/02 12/31/01
Operations:
Net Investment Loss $(9,849) $(54,225)
Net Change in Unrealized Appreciation (Depreciation) of
Investments (3,360,595) 155,065
Net Realized (Loss) on Investments (225,785) (68,191)
---------------- ----------------
(Decrease) in Net Assets (resulting from operations) (3,596,229) 32,649
---------------- ----------------
Distributions to Shareholders From:
Net Realized Gains
Class A - (43,614)
Class B - (12,208)
Net Income:
Class A - -
Class B - -
---------------- ----------------
Total Distribution - (55,822)
---------------- ----------------
Capital Share Transactions:
Proceeds from Shares Sold:
Class A 9,987,080 10,058,695
Class B 1,423,017 1,402,013
Dividends Reinvested:
Class A - 24,145
Class B - 11,176
Cost of Shares Redeemed:
Class A (3,102,811) (1,188,436)
Class B (579,499) (360,063)
---------------- ----------------
Increase in Net Assets (resulting from capital share
transactions) 7,727,787 9,947,530
---------------- ----------------
Total Increase in Net Assets 4,131,558 9,924,357
Net Assets:
Beginning of Year 17,533,134 7,608,777
---------------- ----------------
End of Year $21,664,692 17,533,134
================ ================
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold:
Class A 976,004 931,545
Class B 145,864 133,156
Shares Reinvested:
Class A - 2,259
Class B - 1,078
Shares Redeemed:
Class A (295,672) (110,187)
Class B (61,386) (35,658)
---------------- ----------------
Net Increase in Number of Shares Outstanding 764,810 922,193
================ ================
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
LARGE/MID-CAP VALUE FUND - CLASS A SHARES
<table>
<s> <c> <c> <c> <c>
year year year period
ended ended ended ended
12/31/02 12/31/01 12/31/00 12/31/99 (B)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $10.83 $10.83 $9.68 $ 10.00
------------- ----------- ---------- ------------
Income from Investment Operations:
Net Investment Income (Loss) 0.01 (0.02) 0.04 0.02
Net Realized and Unrealized Gain (Loss) on Investments (1.73) 0.06 1.16 (0.30)
------------- ----------- ---------- ------------
Total from Investment Operations (1.72) 0.04 1.20 (0.28)
------------- ----------- ---------- ------------
Less Distributions:
Dividends from Realized Gains - (0.04) (0.02) (0.02)
Dividends from Net Investment Income - - (0.03) (0.02)
------------- ----------- ---------- ------------
Total Distributions - (0.04) (0.05) (0.04)
------------- ----------- ---------- ------------
Net Asset Value at End of Period $9.11 $10.83 $10.83 $9.68
============= =========== ========== ============
Total Return (A) (D) (15.88)% 0.33% 12.35% (3.28)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $17,856 $13,858 $4,493 $846
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 1.76% 1.70% 2.70% 4.69%(C)
After Reimbursement of Expenses by Advisor 1.76% 1.70% 1.65% 1.60%(C)
Ratio of Net Investment Income (Loss) to Average Net
Assets:
Before Reimbursement of Expenses by Advisor 0.11% (0.20)% (0.30)% (2.34)%(C)
After Reimbursement of Expenses by Advisor 0.11% (0.20)% 0.67% 0.75%(C)
Portfolio Turnover 36.79% 26.44% 50.98% 8.02%
</Table>
(A) Total Return Calculation Does Not Reflect Sales Load. (B) For the Period
July 14, 1999 (Commencement of Operations) to December 31, 1999.
(C) Annualized.
(D) For Periods Of Less Than One Full Year, Total Returns Are Not Annualized.
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
LARGE/MID-CAP VALUE FUND - CLASS B SHARES
<table>
<s> <c> <c> <c> <c>
year year year period
ended ended ended ended
12/31/02 12/31/01 12/31/00 12/31/99 (B)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $10.50 $10.60 $9.36 $10.00
-------------- ----------- ----------- ------------
Income from Investment Operations:
Net Investment Income (Loss) (0.06) (0.12) 0.01 0.02
Net Realized and Unrealized Gain (Loss) on
Investments (1.67) 0.06 1.28 (0.62)
-------------- ----------- ----------- ------------
Total from Investment Operations (1.73) (0.06) 1.29 (0.60)
-------------- ----------- ----------- ------------
Less Distributions:
Dividends from Realized Gains - (0.04) (0.02) (0.02)
Dividends from Net Investment Income
- - (0.03) (0.02)
-------------- ----------- ----------- ------------
Total Distributions - (0.04) (0.05) (0.04)
-------------- ----------- ----------- ------------
Net Asset Value at End of Year $8.77 $10.50 $10.60 $9.36
============== =========== =========== ============
Total Return (A) (D) (16.48)% (0.61)% 13.73% (4.78)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $3,809 $3,675 $2,665 $525
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 2.55% 2.66% 3.45% 5.87%(C)
After Reimbursement of Expenses by Advisor 2.55% 2.66% 2.40% 2.35%(C)
Ratio of Net Investment Income (Loss) to Average Net Assets:
Before Reimbursement of Expenses by Advisor (0.71)% (1.12)% (1.13)% (2.34)%(C)
After Reimbursement of Expenses by Advisor (0.71)% (1.12)% (0.08)% 1.15%(C)
Portfolio Turnover 36.79% 26.44% 50.98% 8.02%
</table>
(A) Total Return Calculation Does Not Reflect Redemption Fee.
(B) For the Period July 15, 1999 (Commencement of Operations) to December 31,
1999. (C) Annualized.
(D) For Periods Of Less Than One Full Year, Total Returns Are Not Annualized.
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
Bonds - 93.98%
<table>
<s> <c> <c>
par value market value
CONVERTIBLE CORPORATE BONDS - 3.63%
$ 250,000 Federal Realty Investment, 5.25%, 10/28/03 $ 240,420
250,000 Omnicare, Inc., 5.00% 12/01/2007 239,688
--------------
480,108
CORPORATE BONDS - 89.76%
10,000 Allegiance Corp., 7.30% 10/15/2006 11,315
200,000 Archer Daniels Midland Co., 6.625% 05/01/2029 220,234
250,000 Bombardier Capital, Inc., 6.125%, 6/29/06 226,240
150,000 Burlington Northern Santa Fe, 7.00% 12/15/2025 168,249
75,000 Burlington Resources, Inc., 7.375% 03/01/2029 87,466
100,000 Caterpillar, Inc., 6.625%, 07/15/2028 112,142
250,000 Champion International Corp., 7.15% 12/15/2027 266,216
300,000 Cingular Wireless, 5.625%, 12/15/06 315,409
200,000 Cit Group, Inc., 7.375%, 03/15/2003 201,964
400,000 Cit Group, Inc., 6.5%, 02/7/06 421,247
155,000 Coca Cola Enterprise, Inc., 4.375% 09/15/09 159,903
245,000 Coca Cola Enterprise, Inc., 6.95%, 11/15/26 279,576
125,000 Computer Sciences Corp., 6.75% 06/15/2006 135,570
125,000 Cooper Industries, 6.70% 09/22/2005 136,595
150,000 Cooper Tire & Rubber Co., 7.625% 03/15/2027 155,215
170,000 Cooper Tire & Rubber Co., 8.00% 12/15/2019 184,665
300,000 Credit Suisse First Boston, 6.5%, 01/15/12 321,178
55,000 CSX Transportation, 7.33% 06/01/2005 60,924
300,000 Deere & Co., 6.55% 10/01/2028 329,637
265,000 Dell Computer Corp., 7.10% 04/15/2028 285,778
315,000 Donnelley R R&Son, 6.625% 04/15/2029 318,100
250,000 Dow Chemical, 3.6%, 09/15/05 248,130
250,000 Dow Chemical 6.125%, 02/01/2011 258,007
413,000 Duke Energy Corp., 6.75% 08/01/2025 409,069
187,000 Duke Energy Field, 5.75%, 11/15/06 186,130
125,000 E. I. du Pont de Nemours & Co., 6.50% 01/15/2028 140,682
200,000 Georgia Pacific Corp., 7.75% 11/15/2029 164,000
175,000 Georgia Pacific Corp., 8.125% 06/15/2023 142,625
400,000 Household Finance Corp., 6.75% 05/15/2011 427,159
250,000 HSBC USA Capital Trust, 7.53%, 12/04/2026 261,139
142,000 Inco Ltd, 7.75% 03/15/2016 142,355
250,000 International Lease Finance Corp., 5.75%, 02/15/07 261,696
200,000 International Lease Finance Corp., 5.80%, 08/15/2007 211,317
300,000 Jersey Cent Power & Light Co., 6.75% 11/01/2025 284,573
300,000 Kraft Food, Inc., 6.50%, 11/01/2031 330,782
25,000 Lehman Brothers Holdings, Inc., 6.625% 02/05/2006 27,255
250,000 Lehman Brothers Holdings, Inc., 7%, 2/1/08 282,944
250,000 Lowe's Cos., Inc., 6.875% 02/15/2028 279,355
150,000 MCI Communications Corp., 7.75% 03/15/2024 74,250
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
Bonds - 93.98% (Cont.)
<table>
<s> <c> <c>
par value market value
CORPORATE BONDS - 89.76% (cont.)
$ 300,000 Mead Corp., 7.125% 08/01/2025 $ 310,906
250,000 Merck & Co. Inc., 5.95%, 12/1/28 264,350
100,000 Merck & Co. Inc., 6.30% 01/01/2026 109,466
100,000 Merck & Co. Inc., 6.40% 03/01/2028 111,223
250,000 National Rural Utilities Finance Corp., 5.75% 08/28/09 267,274
50,000 National Rural Utilities Finance Corp., 6%, 01/15/04 51,898
200,000 Norsk Hydro A.S., 6.7% 01/15/2018 216,669
25,000 Pennsylvania P & L, 6.55% 03/01/2006 27,662
70,000 Pep Boys Manny Moe & Jack, 7.00% 06/01/2005 67,725
100,000 PPG Industries, Inc., 7.40% 08/15/2019 107,830
11,000 Public Service Electric & Gas Co., 6.25% 01/01/2007 12,065
300,000 Public Service Electric & Gas Co., 7.00% 09/01/2024 307,734
250,000 The Sherman-Williams Co., 7.375%, 02/01/2027 275,930
200,000 Transocean Sedco Forex, Inc., 7.50% 04/15/2031 230,153
50,000 Travelers Property & Casualty Corp., 6.75% 11/15/2006 56,329
25,000 Union Electric Co., 6.875% 08/01/2004 26,717
250,000 United Parcel Services, Inc., 1.75%, 09/27/2007 266,250
300,000 Unitrin, Inc., 5.75%, 7/1/07 315,329
50,000 US Leasing International, 5.95% 10/15/2003 49,623
100,000 Virginia Electric & Power Co., 7.50% 06/01/2023 103,488
135,000 Wisconsin Energy Corp., 6.50% 04/01/2011 150,003
--------------
11,857,715
MUNICIPAL BONDS - 0.59%
50,000 Province of Manitoba, 6.75% 03/01/2003 50,353
25,000 Texas State University, 6.41% 03/15/2009 27,773
--------------
78,126
Total Bonds (cost $11,857,773) 12,415,949
--------------
SHORT TERM INVESTMENTS - 4.16%
numbers of shares market value
549,858 First American Treasury Obligation Fund (cost $549,858) 549,858
------------------
TOTAL INVESTMENTS - 98.14% (identified cost $12,407,631) 12,965,807
OTHER ASSETS AND LIABILITIES, NET - 1.86% 245,120
------------------
NET ASSETS - 100.00% $ 13,210,927
==================
</table>
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $12,407,631) [NOTE 1] $12,965,807
Receivables:
Interest 192,978
Commission Receivable due from Advisor 6,178
Fund Shares Sold 180,350
------------------
Total Assets $13,345,313
==================
LIABILITIES
amount
Payable to Custodian 114,709
Accrued Advisory Fees 7,325
Accrued 12b-1 Fees 3,821
Accrued Expenses 8,531
-----------------
Total Liabilities $134,386
NET ASSETS
amount
Class A Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
1,012,305 shares outstanding) $ 10,374,229
Net Asset Value and Redemption price Per Class A Share
($10,374,229 / 1,012,305 shares) $ 10.25
Offering Price Per Share ($10.25 / 0.9575 ) $ 10.70
Class B Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
283,231 shares outstanding) $ 2,836,698
Net Asset Value and Offering Price Per Class B Share ($2,836,698 / 283,231 shares) $ 10.02
Redemption Price Per Share ($10.02 X 0.95) $ 9.52
Net Assets $ 13,210,927
SOURCES OF NET ASSETS
amount
At Decemer 31, 2002, Net Assets Consisted of:
Paid-in Capital $12,652,751
Net Unrealized Appreciation in Value of Investments 558,176
--------------
Net Assets $13,210,927
</table>
<page>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
<table>
<s> <c>
INVESTMENT INCOME
amount
Interest $ 589,206
Total Investment Income 589,206
EXPENSES
amount
Investment Advisory Fees [NOTE 3] 56,751
Transfer Agent Fees (Class A = $23,600 Class B = $5,507) 29,107
Administration Fees 7,224
Auditing Fees 3,330
12b-1 Fees (Class A = $19,245, Class B = $13,391 ) [NOTE 3] 32,636
Accounting Fees 31,035
Registration Fees 7,082
Custodian Fees 3,149
Printing Expense 2,105
Insurance Expense 773
Legal Expense 1,403
Service Fees (Class B) [NOTE 3] 4,497
Miscellaneous Expense 1,298
Total Expenses 180,390
Expenses Waived and Reimbursed by Advisor [NOTE 3] (39,234)
Total Net Expenses 141,156
Net Investment Income 448,050
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
amount
Net Realized Gain on Investments 30,257
Change in Unrealized Appreciation of Investments 592,315
Net Realized and Unrealized Gain on Investments 622,572
Increase in Net Assets Resulting from Operations $ 1,070,622
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
year ended year ended
12/31/02 12/31/01
Operations:
Net Investment Income $448,050 $135,384
Net Change in Unrealized Appreciation (Depreciation) of
Investments 592,315 (21,421)
Net Realized Gain on Investments 30,257 6,385
------------ -----------
Increase in Net Assets (resulting from operations) 1,070,622 120,348
Distributions to Shareholders:
Net Income
Class A (366,715) (105,934)
Class B (82,816) (30,858)
Net Realized Gain
Class A (20,422) -
Class B (5,584) -
------------- -----------
Total Net Decrease (475,537) (136,792)
Capital Share Transactions:
Proceeds from Shares Sold:
Class A 6,265,246 4,520,926
Class B 2,123,831 650,127
Dividends Reinvested:
Class A 137,979 35,316
Class B 67,373 23,622
Cost of Shares Redeemed:
Class A (1,287,658) (442,396)
Class B (489,870) (144,253)
------------- -----------
Increase in Net Assets (resulting from capital share
transactions) 6,816,901 4,643,342
Total Increase in Net Assets 7,411,986 4,626,898
Net Assets:
Beginning of Year 5,798,941 1,172,043
End of Year $13,210,927 $5,798,941
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold:
Class A 640,087 462,470
Class B 219,360 67,241
Shares Reinvested:
Class A 13,832 3,626
Class B 6,858 2,469
Shares Redeemed:
Class A (132,225) (45,445)
Class B (50,448) (15,216)
-------------- -------------
Net Increase in Number of Shares Outstanding 697,464 475,145
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
FIXED INCOME FUND - CLASS A SHARES
<table>
<s> <c> <c> <c> <c>
year year year period
ended ended ended ended
12/31/02 12/31/01 12/31/00 12/31/99 (B)
Per Share Operating Performance:
Net Asset Value, Beginning $9.73 $9.53 $9.81 $10.00
----------- ------------ ------------ ------------
Income from Investment Operations:
Net Investment Income 0.45 0.40 0.49 0.12
Net Realized and Unrealized Gain (Loss) on Investments 0.53 0.20 (0.27) (0.18)
----------- ------------ ------------ ------------
Total from Investment Operations
0.98 0.60 0.22 (0.06)
----------- ------------ ------------ ------------
Less Distributions:
Dividends from Net Investment Income (0.44) (0.40) (0.50) (0.13)
Dividends from Net Realized Gain (0.02) - - -
----------- ------------------------ ------------
Total Distributions (0.46) (0.40) (0.50) (0.13)
----------- ------------ ------------ ------------
Net Asset Value at End of Period $10.25 $9.73 $9.53 $9.81
=========== ============ ============ ============
Total Return (A) (D) 10.32% 6.37% 2.32% (0.42)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $10,374 $4,773 $667 $124
Ratio of Expenses to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor 1.74% 2.44% 8.99% 13.92%(C)
After Reimbursement and Waiver of Expenses by Advisor 1.35% 1.35% 1.35% 1.35%(C)
Ratio of Net Investment Income to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor 4.49% 3.91% (2.19)% (9.88)%(C)
After Reimbursement and Waiver of Expenses by Advisor 4.88% 5.00% 5.45% 2.70%(C)
Portfolio Turnover 18.10% 20.28% 35.54% 21.25%
</table>
(A) Total Return Calculation Does Not Reflect Sales Load. (B) For the Period
July 14, 1999 (Commencement of Operations) to December 31, 1999.
(C) Annualized.
(D) For Periods Of Less Than One Full Year, Total Return Is Not Annualized.
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
FIXED INCOME FUND - CLASS B SHARES
<table>
<s> <c> <c> <c> <c>
year year year period
ended ended ended ended
12/31/02 12/31/01 12/31/00 12/31/99 (B)
Per Share Operating Performance:
Net Asset Value, Beginning $9.55 $9.54 $9.80 $10.00
Income from Investment Operations:
Net Investment Income 0.37 0.40 0.45 0.15
Net Realized and Unrealized Gain (Loss) on Investments 0.52 (0.01) (0.25) (0.22)
----------- ---------- ----------- ----------
Total from Investment Operations 0.89 0.39 0.20 (0.07)
Less Distributions:
Dividends from Net Investment Income (0.40) (0.38) (0.46) (0.13)
Dividends from Net Realized Gain (0.02) - - -
---------- ---------- ---------- ----------
Total Distributions (0.42) (0.38) (0.46) (0.13)
Net Asset Value at End of Period $ 10.02 $9.55 $9.54 $9.80
Total Return (A) (D) 9.52% 4.13% 2.12% (0.92)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $ 2,837 $ 1,026 $ 506 $ 243
Ratio of Expenses to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor 2.61% 3.46% 9.74% 14.73%(C)
After Reimbursement and Waiver of Expenses by Advisor 2.10% 2.10% 2.10% 2.10%(C)
Ratio of Net Investment Income to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor 3.57% 2.93% (2.94)% (2.20)%(C)
After Reimbursement and Waiver of Expenses by Advisor 4.08% 4.29% 4.70% 10.42%(C)
Portfolio Turnover 18.10% 20.28% 35.54% 21.25%
</table>
(A) Total Return Calculation Does Not Reflect Redemption Fee. (B) For the Period
August 5, 1999 (Commencement of Operations) to December 31, 1999.
(C) Annualized.
(D) For Periods Of Less Than One Full Year, Total Return Is Not Annualized.
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 89.91%
<table>
<s> <c> <c>
number of shares market value
AIR TRANSPORTATION, SCHEDULED - 3.54%
3,200 JetBlue Airways Corp.* $ 86,400
2,680 Ryanair Holdings Plc.* (a) 104,949
-----------------
191,349
-----------------
BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) - 1.11%
2,200 Medimmune, Inc.* 59,774
-----------------
COMMUNICATIONS EQUIPMENT - 1.01%
2,750 UTStarcom, Inc.* 54,533
-----------------
COMPUTER STORAGE DEVICES - 1.79%
9,650 Network Appliance, Inc.* 96,500
-----------------
DRILLING OIL & GAS WELLS - 1.47%
2,700 Ensco International, Inc. 79,515
-----------------
ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS - 1.14%
1,550 St. Jude Medical, Inc.* 61,566
-----------------
FIRE, MARINE & CASUALTY INSURANCE - 1.36%
1,950 Mercury General Corp. 73,281
-----------------
HOSPITAL & MEDICAL SERVICE PLANS - 0.91%
2,020 First Health Group Corp.* 49,187
-----------------
HOUSEHOLD AUDIO & VIDEO EQUIPMENT - 2.04%
1,850 Harman International Industries, Inc. 110,075
-----------------
INDUSTRIAL INORGANIC CHEMICALS - 1.60%
1,500 Praxair, Inc. 86,655
-----------------
MOTOR VEHICLE PARTS & ACCESSORIES - 2.05%
3,500 Gentex Corp.* 110,740
-----------------
OIL & GAS FIELD MACHINERY & EQUIPMENT - 2.02%
5,000 National-Oilwell, Inc.* 109,200
-----------------
OIL, GAS, FIELD SERVICES - 1.62%
2,700 BJ Services Co.* 87,237
-----------------
ORDNANCE & ACCESSORIES, (NO VEHICLES/GUIDED MISSILES) - 1.64%
1,425 Alliant Techsystem, Inc.* 88,849
-----------------
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES - 2.33%
4,400 Biomet, Inc. 126,104
-----------------
PERSONAL CREDIT INSTITUTIONS - 1.06%
550 SLM Corp. 57,123
-----------------
PHARMACEUTICAL PREPARATIONS - 3.65%
4,100 Biovail Corp.* 108,281
2,300 TEVA Pharmaceutical Industries, Ltd (a) 88,803
-----------------
197,084
-----------------
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 89.91% (cont.)
<table>
<s> <c> <c>
number of shares market value
PRINTED CIRCUIT BOARDS - 2.42%
7,285 Jabil Circuit, Inc.* $ 130,547
-----------------
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT - 1.04%
1,250 L 3 Communications Holdings, Inc.* 56,137
-----------------
RADIO BROADCASTING STATIONS - 1.41%
3,350 Cox Radio, Inc. - Class A* 76,413
-----------------
RETAIL - EATING PLACES - 3.74%
3,800 Brinker International, Inc.* 122,550
2,200 Cheesecake Factory, Inc.* 79,530
-----------------
202,080
-----------------
RETAIL - HOBBY, TOY & GAME SHOPS - 2.12%
3,650 Michaels Stores, Inc.* 114,245
-----------------
RETAIL - HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 2.91%
4,550 Bed Bath & Beyond, Inc.* 157,112
-----------------
RETAIL - RETAIL STORES - 1.55%
4,900 PETsMART, Inc. 83,937
-----------------
RETAIL - VARIETY STORES - 3.16%
4,529 Dollar Tree Stores, Inc.* 111,278
1,900 Family Dollar Stores, Inc. 59,299
-----------------
170,577
-----------------
SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS. - 1.06%
1,950 Garmin Ltd.* 57,135
-----------------
SEMICONDUCTORS & RELATED DEVICES - 8.00%
8,350 Altera Corp.* 103,039
5,000 Intersil Holding Corp. - Class A* 69,700
1,850 Maxim Integrated Products, Inc. 61,124
2,375 Microchip Technology, Inc.* 58,069
2,100 Qlogic Corp.* 72,471
3,300 Xilinx, Inc.* 67,980
-----------------
432,383
-----------------
SERVICES - ADVERTISING AGENCIES - 1.00%
1,600 Lamar Advertising Co. - Class A * 53,840
-----------------
SERVICES - COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH - 2.15%
2,650 Affymetrix, Inc.* 60,658
7,000 Millenium Pharmaceuticals, Inc.* 55,580
-----------------
116,238
-----------------
SERVICES - COMPUTER INTEGRATED SYSTEMS DESIGN - 1.63%
5,400 Yahoo, Inc. * 88,290
-----------------
SERVICES - COMPUTER PROCESSING & DATA PREPARATION - 2.14%
2,200 Affiliated Computer Services, Inc. - Class A* 115,830
-----------------
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 89.91% (cont.)
<table>
<s> <c> <c>
number of shares market value
SERVICES - EDUCATIONAL SERVICES - 3.01%
1,325 Apollo Group, Inc. - Class A* $ 58,300
2,750 Corinthian Colleges, Inc.* 104,115
-----------------
162,415
-----------------
SERVICES - EQUIPMENT RENTAL & LEASING - 1.11%
1,200 Rent-A-Center, Inc.* 59,940
-----------------
SERVICES - HELP SUPPLY SERVICES - 2.19%
3,700 Manpower, Inc. 118,030
-----------------
SERVICES - MANAGEMENT CONSULTING SERVICES - 1.29%
2,200 Hewitt Associates LLC* 69,718
-----------------
SERVICES - MISC HEALTH & ALLIED SERVICES - 1.09%
1,675 Accredo Health, Inc.* 59,044
-----------------
SERVICES - PERSONAL SERVICES - 1.06%
1,250 Weight Watchers International, Inc.* 57,463
-----------------
SERVICES - PREPACKAGED SOFTWARE - 4.42%
2,400 Cognos, Inc.* 56,280
2,650 Mercury Interactive Corp.* 78,572
3,200 National Instruments Corp.* 103,968
-----------------
238,820
-----------------
SERVICES - SPECIALTY OUTPATIENT FACILITIES - 1.77%
5,900 Caremark RX, Inc.* 95,875
-----------------
SPECIAL INDUSTRY MACHINERY - 1.09%
2,100 Novellus Systems, Inc.* 58,968
-----------------
SURETY INSURANCE - 2.88%
1,239 AMBAC Financial Group, Inc. 69,681
2,856 The PMI Group, Inc. 85,794
-----------------
155,475
-----------------
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS - 3.06%
2,550 Boston Scientific Corp.* 108,426
1,850 Guidant Corp.* 57,072
-----------------
165,498
-----------------
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE) - 0.91%
11,200 Sprint PCS Group* 49,056
-----------------
TELEVISION BROADCASTING STATIONS - 1.36%
3,000 Univision Communications, Inc.* 73,500
-----------------
Total Common Stocks (cost $4,980,456) 4,857,338
-----------------
SHORT TERM INVESTMENTS - 10.17%
number of shares market value
264,373 Federated Cash Trust Series II Treasury Fund 264,373
285,119 First American Treasury Obligation Fund, Class S 285,119
------------------
Total Short Term Investments (cost $549,492) 549,492
TOTAL INVESTMENTS - 100.08% (identified cost $5,529,948) 5,406,830
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.08)% (4,609)
-----------------
NET ASSETS - 100.00% $ 5,402,221
-----------------
-----------------
</table>
* Non-income producing securities
(a) American Depositary Receipt
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $5,529,948) [NOTE 1] $5,406,830
Receivables:
Interest 199
Dividends 188
Fund Shares Sold 18,550
Prepaid expenses 1,513
Due from Advisor 8,556
---------------
Total Assets $5,435,836
LIABILITIES
amount
Accrued 12b-1 fees $ 1,385
Payable for Investments Purchased 21,567
Payable for Fund Shares Redeemed 2,073
Accrued Expenses 8,590
----------------
Total Liabilities $ 33,615
NET ASSETS
amount
Class A Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
1,070,562 shares outstanding) $ 4,877,616
Net Asset Value and Redemption price Per Class A Share
($4,877,616 / 1,070,562 shares) $ 4.56
Offering Price Per Share ($4.56/ 0.9475) $ 4.81
Class B Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
116,970 shares outstanding) $ 524,605
Net Asset Value and Offering Price Per Class B Share
($524,605 / 116,970 shares) $ 4.48
Maximum Redemption Price Per Class B Share ($4.48 x 0.95) $ 4.26
Net Assets $ 5,402,221
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $ 7,392,000
Accumulated Net Realized Loss on Investments (1,866,661)
Net Unrealized Depreciation in Value of Investments (123,118)
--------------
Net Assets $ 5,402,221
</table>
<page>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
<table>
<s> <c>
INVESTMENT INCOME
amount
Interest $3,451
Dividends 5,764
-------------
Total Investment Income 9,215
EXPENSES
amount
Investment Advisory Fees [NOTE 3] 38,873
Custodian Fees 9,168
Transfer Agent Fees (Class A =$20,555, Class B = $2,209) 22,764
Accounting Fees 24,855
Registration Fees 5,286
12b-1 Fees (Class A =$10,498, Class B =$3,389) [NOTE 3] 13,887
Administration Fees 5,633
Auditing Fees 1,854
Service Fees (Class B) [NOTE 3] 1,127
Legal Expense 835
Printing Expense 987
Insurance Expense 543
Miscellaneous Expense 336
------------
Total Expenses 126,148
Expenses Waived and Reimbursed by Advisor [NOTE 3] (49,212)
Total Net Expenses 76,936
Net Investment Loss (67,721)
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS
amount
Net Realized Loss on Investments (1,224,764)
Change in Unrealized Depreciation of Investments (395,808)
Net Realized and Unrealized Loss on Investments (1,620,572)
---------------
Decrease in Net Assets Resulting from Operations $(1,688,293)
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
Year ended year ended
12/31/02 12/31/01
Operations:
Net Investment Loss $ (67,721) $(31,803)
Net Change in Unrealized Appreciation (Depreciation) of
Investments (395,808) 301,255
Net Realized Loss on Investments (1,224,764) (598,152)
------------ ------------
Decrease in Net Assets (resulting from operations) (1,688,293) (328,700)
Capital Share Transactions:
Proceeds from Shares Sold:
Class A 3,330,868 3,299,422
Class B 408,599 299,660
Cost of Shares Redeemed:
Class A (440,288) (242,322)
Class B (121,158) (81,183)
Increase in Net Assets (resulting from capital share ----------- ------------
transactions) 3,178,021 3,275,577
Total Increase in Net Assets 1,489,728 2,946,877
Net Assets:
Beginning of Year 3,912,493 965,616
End of Year $ 5,402,221 3,912,493
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold:
Class A 611,101 483,348
Class B 77,504 43,517
Shares Redeemed:
Class A (71,715) (38,071)
Class B (21,856) (11,971)
------------- ----------
Net Increase in Number of Shares Outstanding 595,034 476,823
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period.
AGGRESSIVE GROWTH FUND - CLASS A SHARES
<table>
<s> <c> <c> <c>
year year period
ended ended ended
12/31/02 12/31/01 12/31/00(B)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $ 6.61 $8.35 $10.00
Income from Investment Operations:
Net Investment Loss (0.05) (0.05) -
Net Realized and Unrealized Loss on Investments (2.00) (1.69) (1.65)
----------- --------- -----------
Total from Investment Operations (2.05) (1.74) (1.65)
Less Distributions:
Dividends from Realized Gains - - -
Dividends from Net Investment Income - - -
---------- -------- -----------
Total Distributions - - -
Net Asset Value at End of Period $ 4.56 $ 6.61 $ 8.35
Total Return (A) (D) (31.01)% (20.84)% (16.50)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $ 4,878 $ 3,510 $ 717
Ratio of Expenses to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor 2.64% 3.87% 10.20%(C)
After Reimbursement and Waiver of Expenses by Advisor 1.60% 1.60% 1.60%(C)
Ratio of Net Investment Loss to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor (2.44)% (3.53)% (8.91)%(C)
After Reimbursement and Waiver of Expenses by Advisor (1.40)% (1.26)% (0.31)%(C)
Portfolio Turnover 134.34% 113.39% 19.00%
</table>
(A) Total Return Calculation Does Not Reflect Sales Load. (B) For The Period
October 4, 2000 (commencement of operations) to December 31, 2000.
(C) Annualized
(D) For Periods of Less Than A Full Year, The Total Return Is Not Annualized.
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period.
AGGRESSIVE GROWTH FUND - CLASS B SHARES
<table>
<s> <c> <c> <c>
year year period
ended ended ended
12/31/02 12/31/01 12/31/00(B)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $ 6.56 $ 8.34 $ 10.00
------------- ------------- -------------
Income from Investment Operations:
Net Investment Loss (0.08) (0.11) -
Net Realized and Unrealized Loss on Investments (2.00) (1.67) (1.66)
------------- ------------- -------------
Total from Investment Operations (2.08) (1.78) (1.66)
------------- ------------- -------------
Less Distributions:
Dividends from Realized Gains - - -
Dividends from Net Investment Income - - -
------------- ------------- -------------
Total Distributions - - -
------------- ------------- -------------
Net Asset Value at End of Period $ 4.48 $ 6.56 $ 8.34
============= ============= =============
Total Return (A) (D) (31.71)% (21.34)% (16.60)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $ 525 $ 402 $ 248
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 3.70% 4.63% 10.95%(C)
After Reimbursement of Expenses by Advisor 2.35% 2.35% 2.35%(C)
Ratio of Net Investment Loss to Average Net
Assets:
Before Reimbursement of Expenses by Advisor (3.50)% (4.24)% (9.66)%(C)
After Reimbursement of Expenses by Advisor (2.15)% (1.96)% (1.06)%(C)
Portfolio Turnover 134.34% 113.39% 19.00%
</table>
(A) Total Return Calculation Does Not Reflect Redemption Fee.
(B) For The Period October 6, 2000 (commencement of operations) to December 31,
2000. (C) Annualized (D) For Periods of Less Than A Full Year, The Total Return
Is Not Annualized.
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 93.50%
<table>
<s> <c> <c>
number of shares market value
ACCIDENT & HEALTH INSURANCE - 2.52%
12,000 AFLAC, Inc. $ 361,440
-----------------
AIRCRAFT ENGINES & ENGINE PARTS - 1.29%
3,000 United Technologies Corp. 185,820
-----------------
BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) - 7.53%
13,925 Amgen, Inc. * 673,135
15,000 MedImmune, Inc. * 407,550
-----------------
1,080,685
-----------------
CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) - 3.44%
4,000 3M Co. 493,200
-----------------
ELECTRONIC COMPUTERS - 3.73%
20,000 Dell Computer Corp. * 534,800
-----------------
ELECTRONIC CONNECTORS - 1.28%
8,000 Molex, Inc. 184,320
-----------------
FIRE, MARINE & CASUALTY INSURANCE - 4.70%
11,650 American International Group, Inc. 673,952
-----------------
FUNCTIONS RELATED TO DEPOSITORY BANKING - 2.19%
20,000 Concord EFS, Inc. * 314,800
-----------------
GENERAL INDUSTRIAL MACHINERY & EQUIPMENT - 1.35%
3,000 Illinois Tool Works, Inc. 194,580
-----------------
NATIONAL COMMERCIAL BANKS - 2.68%
20,250 MBNA Corp. 385,155
-----------------
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES - 4.52%
12,500 Biomet, Inc. 358,250
7,000 Zimmer Holdings, Inc. * 290,640
-----------------
648,890
-----------------
PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS - 2.92%
8,000 Colgate Palmolive Co. 419,440
-----------------
PERSONAL CREDIT INSTITUTIONS - 5.06%
7,000 SLM Corp. 727,020
-----------------
PHARMACEUTICAL PREPARATIONS - 6.76%
8,000 Allergan, Inc. 460,960
9,000 Merck & Co. , Inc. 509,490
-----------------
970,450
-----------------
RETAIL-DEPARTMENT STORES -1.95%
5,000 Kohl's Corp.* 279,750
-----------------
RETAIL-DRUG STORES & PROPRIETARY STORES - 4.72%
23,200 Walgreen Co. 677,208
-----------------
RETAIL-HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 3.61%
15,000 Bed Bath & Beyond, Inc. * 517,950
-----------------
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
COMMON STOCKS - 93.50% - continued
<table>
<s> <c> <c>
number of shares market value
RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS - 5.90%
15,000 Home Depot, Inc. $ 359,400
13,000 Lowes Companies, Inc. 487,500
-----------------
846,900
-----------------
RETAIL-VARIETY STORES - 2.09%
10,000 Target Corp. 300,000
-----------------
SEMICONDUCTORS & RELATED DEVICES - 2.33%
13,000 Linear Technology Corp. 334,360
-----------------
SERVICES-COMPUTER PROCESSING AND DATA PREPARATION - 3.62%
13,250 Automatic Data Processing, Inc. 520,063
-----------------
SERVICES-PREPACKAGED SOFTWARE - 1.54%
29,675 Siebel Systems, Inc. * 221,969
-----------------
SHIP & BOAT BUILDING & REPAIRING - 3.87%
7,000 General Dynamics Corp. 555,590
-----------------
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS - 4.21%
9,000 Stryker Corp. 604,080
-----------------
TRUCKING & COURIER SERVICES (NO AIR) - 3.08%
7,000 United Parcel Service, Inc., Class B 441,560
-----------------
WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES - 3.91%
9,475 Cardinal Health, Inc. 560,825
-----------------
WHOLESALE-GROCERIES & RELATED PRODUCTS - 2.70%
13,000 Sysco Corp. 387,270
-----------------
Total Common Stocks (cost $14,908,884) 13,422,077
-----------------
SHORT-TERM INVESTMENTS - 4.88%
number of shares market value
700,000 First American Treasury Obligation Fund (cost $700,000) 700,000
-----------------
TOTAL INVESTMENTS - 98.38% (identified cost $15,608,884) 14,122,077
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.62% 232,437
-----------------
NET ASSETS - 100.00% $ 14,354,514
=================
</table>
*Non-income producing securities
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
<table>
<s> <c>
ASSETS amount
Investments in Securities at Value (identified cost $15,608,884 ) [NOTE 1] $ 14,122,077
Cash 206,458
Receivables:
Interest 385
Dividends 11,214
Fund Shares Sold 32,563
Prepaid Expenses 2,439
Fund Shares Commissions Receivable from Advisor 2,680
-------------------
Total Assets $ 14,377,816
===================
LIABILITIES
amount
Accrued Advisory Fees $ 5,009
Accrued 12b-1 Fees 3,574
Payable for Fund Shares Redeemed 4,219
Accrued Expenses 10,500
-------------------
Total Liabilities $ 23,302
===================
NET ASSETS
amount
Class A Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
2,537,331 shares outstanding) $ 13,043,636
Net Asset Value and Redemption Price Per Class A Share
($13,043,636/2,537,331 shares) $ 5.14
Offering Price Per Share ($5.14/0.9475) $ 5.42
Class B Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
258,687 shares outstanding) $ 1,310,878
Net Asset Value and Offering Price Per Class B Share
($1,310,878/258,687 shares) $ 5.07
Maximum Redemption Price Per Class B Share ($5.07 x 0.95 ) $ 4.81
Net Assets $ 14,354,514
===================
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $ 19,148,358
Accumulated Net Realized Loss on Investments (3,307,037)
Net Unrealized Depreciation in Value of Investments (1,486,807)
-------------------
Net Assets $ 14,354,514
===================
</table>
<page>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
INVESTMENT INCOME
<table>
<s> <c>
amount
Interest $ 4,944
Dividends 68,112
-------------------
Total Investment Income 73,056
-------------------
EXPENSES
amount
Investment Advisory Fees [NOTE 3] 104,074
Administration Fees 6,783
12b-1 Fees (Class A = $28,156, Class B = 8,042) [NOTE 3] 36,198
Accounting Fees 21,863
Registration Fees 6,623
Transfer Agent Fees (Class A = $30,064, Class B = $2,869) 32,933
Custodian Fees 4,421
Pricing Expense 2,918
Printing Expense 2,693
Auditing Fees 5,348
Insurance Expense 1,337
Legal Expense 2,001
Service Fees (Class B) [NOTE 3] 2,683
Miscellaneous Expense 926
-------------------
Total Expenses 230,801
Expenses Waived and Reimbursed by Advisor [NOTE 3] (26,641)
-------------------
Total Net Expenses 204,160
-------------------
Net Investment Loss (131,104)
-------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
amount
Net Realized Loss on Investments (2,799,300)
Change in Unrealized Depreciation of Investments (1,277,088)
-------------------
-------------------
Net Realized and Unrealized Loss on Investments (4,076,388)
-------------------
Decrease in Net Assets Resulting from Operations $ (4,207,492)
===================
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
year ended year ended
12/31/02 12/31/01
Operations:
Net Investment Loss $ (131,104) $ (57,897)
Net Change in Unrealized Depreciation of Investments (2,799,300) (146,495)
Net Realized Loss on Investments (1,277,088) (505,974)
------------ ------------
Decrease in Net Assets (resulting from operations) (4,207,492) (710,366)
Capital Share Transactions:
Proceeds from Shares Sold:
Class A 9,248,432 8,195,887
Class B 996,860 735,212
Cost of Shares Redeemed:
Class A (1,215,853) (302,549)
Class B (239,508) (136,616)
Increase in Net Assets (resulting from capital share ------------ -------------
transactions) 8,789,931 8,491,934
Total Increase in Net Assets 4,582,439 7,781,568
Net Assets:
Beginning of Year 9,772,075 1,990,507
End of Year $14,354,514 $9,772,075
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold:
Class A 1,523,174 1,091,786
Class B 173,694 98,379
Shares Redeemed:
Class A (202,436) (39,278)
Class B (42,116) (18,377)
------------ ------------
Net Increase in Number of Shares Outstanding 1,452,316 1,132,510
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
LARGE/MID CAP GROWTH FUND - CLASS A SHARES
<table>
<s> <c> <c> <c>
year ended year ended period ended
12/31/02 12/31/01 12/31/00 (B)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $ 7.28 $ 9.43 $ 10.00
Income from Investment Operations:
Net Investment Loss (0.04) (0.04) -
Net Realized and Unrealized Loss on Investments (2.10) (2.11) (0.57)
------------ ------------ --------------
Total from Investment Operations (2.14) (2.15) (0.57)
Net Asset Value at End of Period $ 5.14 $ 7.28 $ 9.43
Total Return (A)(D) (29.40)% (22.80)% (5.69)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $ 13,044 $ 8,854 $ 1,547
Ratio of Expenses to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor 1.80% 2.32% 5.55%(C)
After Reimbursement and Waiver of Expenses by Advisor 1.60% 1.60% 1.60%(C)
Ratio of Net Investment Loss to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor (1.21)% (1.72)% (3.98)%(C)
After Reimbursement and Waiver of Expenses by Advisor (1.01)% (1.00)% (0.03)%(C)
Portfolio Turnover 52.28% 20.47% 4.46%
</table>
(A) Total Return Calculation Does Not Reflect Sales Load. (B) For the period
October 5, 2000 (commencement of operations) to December 31, 2000.
(C) Annualized
(D) For periods of less than a full year, the total return is not annualized.
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
LARGE/MID CAP GROWTH FUND - CLASS B SHARES
<table>
<s> <c> <c> <c>
year ended year ended year ended
12/31/02 12/31/01 12/31/00 (b)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $ 7.22 $ 9.41 $10.00
Income from Investment Operations:
Net Investment Loss (0.07) (0.08) (0.01)
Net Realized and Unrealized Loss on Investments (2.08) (2.11) (0.58)
---------- ---------- ------------
Total from Investment Operations (2.15) (2.19) (0.59)
Net Asset Value at End of Period $ 5.07 $ 7.22 $ 9.41
Total Return (A)(D) (29.92)% (23.27)% (5.89)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $ 1,311 $ 918 $ 444
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 2.72% 3.66% 6.30% (C)
After Reimbursement of Expenses by Advisor 2.35% 2.35% 2.35% (C)
Ratio of Net Investment Loss to Average Net
Assets:
Before Reimbursement of Expenses by Advisor (2.12)% (3.11)% (4.73)% (C)
After Reimbursement of Expenses by Advisor (1.75)% (1.80)% (0.78)% (C)
Portfolio Turnover 52.28% 20.47% 4.46%
</table>
(A) Total Return Calculation Does Not Reflect Sales Load. (B) For the period
October 9, 2000 (Commencement of operations) to December 31, 2000.
(C) Annualized
(D) For periods of less than a full year, the total return is not annualized.
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
MUTUAL FUNDS - 99.70%
<table>
<s> <c> <c>
number of shares market value
755,427 Timothy Aggressive Growth Fund, Class A * $ 3,444,749
1,125,575 Timothy Large/Mid-Cap Growth Fund, Class A * 5,785,453
463,303 Timothy Large/Mid-Cap Value Fund, Class A * 4,220,690
298,543 Timothy Small Cap Value Fund, Class A 3,322,778
-----------------
TOTAL COMMON STOCK (Cost $21,268,116) 16,773,670
TOTAL INVESTMENTS - 99.70% (identified cost $21,268,116) 16,773,670
OTHER ASSETS AND LIABILITIES - 0.30% 50,294
-----------------
NET ASSETS - 100.00% $ 16,823,964
================
</table>
* Non-income producing securities
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $21,268,116 ) [NOTE 1] $ 16,773,670
Receivables:
Fund Shares Sold 78,288
Interest Receivable 40
Due From Advisor 6,303
-------------------
Total Assets $ 16,858,301
===================
LIABILITIES
amount
Payable for Fund Shares Redeemed 2,760
Payable to Custodian 7,375
Accrued Advisory Fees 2,937
Accrued 12b-1 Fees 7,508
Accrued Expenses 13,757
-------------------
Total Liabilities $ 34,337
===================
NET ASSETS
amount
Class A Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
1,173,014 shares outstanding) $ 7,430,334
Net Asset Value and Redemption Price Per Class A Share
($7,430,334/ 1,173,014 shares) $ 6.33
Offering Price Per Share ($6.33/0.9475) $ 6.68
Class B Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
1,504,056 shares outstanding) $ 9,393,630
Net Asset Value and Offering Price Per Class B Share
($9,393,630 / 1,504,056 shares) $ 6.25
Maximum Redemption Price Per Class B Share ($6.25 x 0.95) $ 5.94
Net Assets $16,823,964
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $ 21,338,655
Net Accumulated Realized Loss on Investments (20,245)
Net Unrealized Depreciation in Value of Investments (4,494,446)
----------------
Net Assets $ 16,823,964
</table>
<page>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
INVESTMENT INCOME
<table>
<s> <c>
amount
Interest $ 1,080
-------------------
Total Investment Income 1,080
-------------------
EXPENSES
amount
Investment Advisory Fees [NOTE 3] 22,738
Accounting Fees 25,577
Transfer Agent Fees (Class A = $15,875, Class B = $21,693) 37,568
12b-1 Fees (Class A = $15,932, Class B = $66,371) [NOTE 3] 82,303
Custodian Fees 6,070
Administration Fees 8,908
Auditing Fees 6,963
Service Fees (Class B) [NOTE 3] 60,208
Registrations Expense 9,974
Legal Expense 2,483
Insurance Expense 1,604
Printing Expense 3,393
Miscellaneous Expense 1,455
-------------------
Total Expenses 269,244
Expenses Waived and Reimbursed by Advisor [NOTE 3] (13,709)
-------------------
Total Net Expenses 255,535
-------------------
Net Investment Loss (254,455)
-------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
amount
Net Realized Loss on Investment Securities (21,847)
Capital Gain Distributions from other Investment Companies 1,559
Change in Unrealized Depreciation of Investments (4,365,635)
-------------------
Net Realized and Unrealized Loss on Investments (4,385,923)
-------------------
Decrease in Net Assets Resulting from Operations $ (4,640,378)
===================
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE IN NET ASSETS
<table>
<s> <c> <c>
year ended year ended
12/31/02 12/31/01
Operations:
Net Investment Loss $(254,455) $ (101,757)
Net Change in Unrealized Depreciation of Investments (4,365,635) (92,430)
Capital Gain Distributions from Other Investment Companies 1,559 13,115
Net Realized Loss on Investments (21,847) (630)
-------------- -------------
Decrease in Net Assets (resulting from operations) (4,640,378) (181,702)
Distributions to Shareholders:
Net Capital Gains:
Class A (233) (7,201)
Class B (298) (11,483)
-------------- -------------
Total Distributions (531) (18,684)
Capital Share Transactions:
Proceeds from Shares Sold:
Class A 5,482,338 4,330,628
Class B 6,156,072 6,707,533
Dividends Reinvested:
Class A 226 7,101
Class B 280 10,787
Cost of Shares Redeemed:
Class A (772,079) (114,860)
Class B (1,118,254) (384,975)
Increase in Net Assets (resulting from capital share -------------- ---------------
transactions) 9,748,583 10,556,214
-------------- ---------------
Total Increase in Net Assets 5,107,674 10,355,828
Net Assets:
Beginning of year 11,716,290 1,360,462
End of Year $ 16,823,964 $ 11,716,290
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold:
Class A 728,315 517,676
Class B 827,148 788,513
Cost of Shares Reinvested:
Class A 35 848
Class B 44 1,298
Shares Redeemed:
Class A (106,990) (14,332)
Class B (159,680) (47,397)
------------- -------------
Net Increase in Number of Shares Outstanding 1,288,872 1,246,606
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
STRATEGIC GROWTH FUND - CLASS A SHARES
<table>
<s> <c> <c> <c>
year year period
ended ended ended
12/31/02 12/31/01 12/31/00(D)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $ 8.47 $ 9.61 $ 10.00
Income from Investment Operations:
Net Investment Loss (0.07) (0.05) (0.01)
Net Realized and Unrealized Loss on Investments (2.07) (1.08) (0.38)
------------ ---------- -----------
Total from Investment Operations (2.14) (1.13) (0.39)
Less Distributions:
Dividends from Realized Gains - * (0.01) -
Dividends from Net Investment Income - - -
------------ ---------- ----------
Total Distributions - (0.01) -
Net Asset Value at End of Period $ 6.33 $ 8.47 $ 9.61
Total Return (A) (B) (25.26)% (11.72)% (3.90)%(B)
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $ 7,430 $ 4,675 $ 456
Ratio of Expenses to Average Net Assets:
Before Reimbursement and waiver of Expenses by Advisor 1.34% 1.68% 6.80%(C)
After Reimbursement and waiver of Expenses by Advisor 1.25% 1.25% 1.25%(C)
Ratio of Net Investment Loss to Average Net Assets:
Before Reimbursement and waiver of Expenses by Advisor (1.34)% (1.61)% (6.22)%(C)
After Reimbursement and waiver of Expenses by Advisor (1.25)% (1.18)% (0.67)%(C)
Portfolio Turnover 0.67% 0.15% 0.30%
</table>
(A) Total Return Calculation Does Not Reflect Sales Load. (B) For Periods Of
Less Than A Full Year, The Total Return is Not Annualized.
(C) Annualized
(D) For the Period October 5, 2000 (commencement of operations) to December 31,
2000. * Distribution was less than $0.01 per share
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
STRATEGIC GROWTH FUND - CLASS B SHARES
<table>
<s> <c> <c> <c>
year year period
ended ended ended
12/31/02 12/31/01 12/31/00(D)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $ 8.42 $ 9.61 $ 10.00
Income from Investment Operations:
Net Investment Loss (0.12) (0.09) (0.03)
Net Realized and Unrealized Loss on
Investments (2.05) (1.09) (0.36)
------------ ----------- -----------
Total from Investment Operations (2.17) (1.18) (0.39)
Less Distributions:
Dividends from Realized Gains - * (0.01) -
Dividends from Net Investment Income - - -
------------ ----------- ----------
Total Distributions - (0.01) -
Net Asset Value at End of Period $ 6.25 $ 8.42 $ 9.61
Total Return (A) (B) (25.77)% (12.24)% (3.90)%(B)
Ratios/Supplemental Data:
Net Assets, End of Period (in 000s) $ 9,394 $ 7,042 $ 904
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 2.10% 2.27% 7.55%(C)
After Reimbursement of Expenses by Advisor 2.00% 2.00% 2.00%(C)
Ratio of Net Investment Loss to Average Net
Assets:
Before Reimbursement of Expenses by Advisor (2.10)% (2.21)% (6.97)%(C)
After Reimbursement of Expenses by Advisor (2.00)% (1.94)% (1.42)%(C)
Portfolio Turnover 0.67% 0.15% 0.30%
</table>
(A) Total Return Calculation Does Not Reflect Redemption Fee.
(B) For Periods Of Less Than A Full Year, The Total Return is Not Annualized (C)
Annualized (D) For the Period October 9, 2000 (commencement of operations) to
December 31, 2000.
* Distribution was less than $0.01 per share
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
<table>
<s> <c> <c>
Common Stocks - 99.56%
number of shares market value
507,037 Timothy Fixed Income Fund, Class A $ 5,197,125
673,530 Timothy Large/Mid-Cap Growth Fund, Class A * 3,461,943
572,421 Timothy Large/Mid-Cap Value Fund, Class A * 5,214,755
311,528 Timothy Small Cap Value Fund, Class A 3,467,307
-----------------
Total Common Stocks (cost $19,328,619) $ 17,341,130
-----------------
Short Term Investments - 0.05%
number of shares market value
9,465 First American Treasury Obligation Fund (cost $9,465) $ 9,465
-----------------
TOTAL INVESTMENTS - 99.61% (identified cost $19,338,084) 17,350,595
OTHER ASSETS AND LIABILITIES, NET - 0.39% 67,917
-----------------
NET ASSETS - 100.00% $ 17,418,512
=================
</table>
* Non-income producing securities
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $19,338,084) [NOTE 1] $ 17,350,595
Cash 101
Receivables:
Dividends 52,579
Interest 26
Commission Receivable due from Advisor 6,893
Fund shares sold 87,071
-------------------
Total Assets $ 17,497,265
===================
LIABILITIES
amount
Accrued 12b-1 fees 7,267
Payable for Fund Shares Redeemed 60,938
Accrued Expenses 10,548
-------------------
Total Liabilities $ 78,753
===================
NET ASSETS
amount
Class A Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
1,167,424 shares outstanding) $ 9,572,913
Net Asset Value and Redemption price Per Class A Share
($9,572,913 / 1,167,424 shares) $ 8.20
Offering Price Per Share ($8.20 / 0.9475) $ 8.65
Class B Shares:
Net Assets (unlimited shares of $0.001 par beneficial interest authorized;
973,787 shares outstanding) $ 7,845,599
Net Asset Value and Offering Price Per Class B Share
($7,845,599 / 973,787 shares) $ 8.06
Maximum Redemption Price Per Share ($8.06 x 0.95) $ 7.66
Net Assets $ 17,418,512
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $ 19,436,169
Accumulated Net Realized Loss on Investments $ (30,168)
Net Unrealized Depreciation in Value of Investments $ (1,987,489)
----------------
Net Assets $ 17,418,512
</table>
<page>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
<table>
<s> <c>
INVESTMENT INCOME
amount
Interest $ 951
Dividends 206,061
-------------------
Total Investment Income 207,012
-------------------
EXPENSES
amount
Investment Advisory Fees [NOTE 3] 21,442
Transfer Agent Fees (Class A =$21,205, Class B =$15,697) 36,902
Administration Fees 8,907
12b-1 Fees (Class A =$20,620, Class B =$46,001) [NOTE 3] 66,621
Accounting Fees 26,014
Custodian Fees 5,703
Auditing Fees 6,859
Servicing Fees (Class B) [NOTE 3] 51,283
Insurance Expense 1,314
Legal Expense 2,377
Registration Expense 11,118
Printing Expense 2,978
Miscellaneous Expense 1,378
-------------------
Total Expenses 242,896
Expenses Waived and Reimbursed by Advisor [NOTE 3] (26,278)
-------------------
Total Net Expenses 216,618
-------------------
Net Investment Income (9,606)
-------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
amount
Net Realized Loss on Investments -
Capital Gain Distributions from other Investment Companies 7,227
Change in Unrealized Depreciation of Investments (2,136,114)
-------------------
Net Realized and Unrealized Loss on Investments (2,128,887)
-------------------
Increase in Net Assets Resulting from Operations $ (2,138,493)
===================
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
Year ended Year ended
12/31/02 12/31/01
Operations:
Net Investment Income (Loss) $ (9,606) $ 500
Net Change in Unrealized Appreciation (Depreciation) of
Investments (2,136,114) 151,801
Capital Gain Distributions From Other Investment Companies 7,227 12,637
Net Realized (Loss) on Investments - (50,032)
----------- -----------
Increase (Decrease) in Net Assets (resulting from operations) (2,138,493) 114,906
Distributions to shareholders:
Net Income
Class A (116) (645)
Class B (97) (42)
Capital Gains
Class A - (5,335)
Class B - (3,857)
Total Distributions (213) (9,879)
Capital Share Transactions:
Proceeds from Shares Sold:
Class A 6,269,947 5,611,527
Class B 5,548,608 3,920,643
Cost of Shares Redeemed:
Class A (1,299,346) (198,550)
Class B (1,089,694) (98,233)
Cost of Shares Reinvested:
Class A 109 5,497
Class B 92 3,633
Increase in Net Assets (resulting from capital share
transactions) 9,429,716 9,244,517
Total Increase in Net Assets 7,291,010 9,349,544
Net Assets:
Beginning of Year 10,127,502 777,958
End of Year $ 17,418,512 $ 10,127,502
Shares of Capital Stock of the Fund Sold:
Shares Sold:
Class A 708,893 604,976
Class B 634,425 427,286
Cost of Shares Redeemed:
Class A (155,281) (21,550)
Class B (125,870) (10,746)
Cost of Shares Reinvested:
Class A 13 590
Class B 11 394
------------ ----------------
Net Increase in Number of Shares Outstanding 1,062,191 1,000,950
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
CONSERVATIVE GROWTH FUND - CLASS A SHARES
<table>
<s> <c> <c> <c>
year year period
ended ended ended
12/31/02 12/31/01 12/31/00(D)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $ 9.43 $ 9.98 $ 10.00
Income from Investment Operations:
Net Investment Income (Loss) 0.02 (0.01) 0.02
Net Realized and Unrealized Loss on
Investments (1.25) (0.53) (0.04)
----------- ---------- -------------
Total from Investment Operations (1.23) (0.54) (0.02)
Less Distributions:
Dividends from Realized Gains - (0.01) -
Dividends from Net Investment Income - * (0.00) * -
---------- ---------- -------------
Total Distributions - (0.01) -
Net Asset Value at End of Period $ 8.20 $ 9.43 $ 9.98
Total Return (A) (B) (13.03)% (5.41)% (0.20)%
Ratios/Supplimental Data:
Net Assets, End of Period (in 000s) $ 9,573 $ 5,787 $ 297
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 1.38% 1.74% 9.91%(C)
After Reimbursement of Expenses by Advisor 1.20% 1.20% 1.20%(C)
Ratio of Net Investment Income (Loss) to Average Net Assets:
Before Reimbursement of Expenses by Advisor 0.06% (0.17)% (7.41)%(C)
After Reimbursement of Expenses by Advisor 0.24% 0.37% 1.30%(C)
Portfolio Turnover 0.00% 4.03% 0.56%
</table>
(A) Total Return Calculation Does Not Reflect Sales Load.
(B) For Periods Of Less Than A Full Year, The Total Return Is Not Annualized.
(C) Annualized (D) For the period October 5, 2000 (Commencement of Operations)
to December 31, 2000.
* Distribution was less than $0.01 per share.
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
CONSERVATIVE GROWTH FUND - CLASS B SHARES
<table>
<s> <c> <c> <c>
year year period
ended ended ended
12/31/02 12/31/01 12/31/00(D)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $9.33 $ 9.96 $ 10.00
Income from Investment Operations:
Net Investment Loss (0.03) (0.02) -
Net Realized and Unrealized Loss on
Investments (1.24) (0.60) (0.04)
----------- --------- ------------
Total from Investment Operations (1.27) (0.62) (0.04)
Less Distributions:
Dividends from Realized Gains - (0.01) -
Dividends from Net Investment Income -* 0.00 * -
----------- ---------- -------------
Total Distributions - (0.01) -
Net Asset Value at End of Period $ 8.06 $ 9.33 $ 9.96
Total Return (A) (B) (13.64)% (6.23)% (0.40)%
Ratios/Supplimental Data:
Net Assets, End of Period (in 000s) $ 7,846 $ 4,340 $ 481
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 2.13%(C) 2.70% 10.66%(C)
After Reimbursement of Expenses by Advisor 1.95%(C) 1.95% 1.95%(C)
Ratio of Net Investment Income (Loss) to Average Net Assets:
Before Reimbursement of Expenses by Advisor (0.67)%(C) (1.19)% (8.16)%(C)
After Reimbursement of Expenses by Advisor (0.49)%(C) (0.44)% 0.55%(C)
Portfolio Turnover 0.00% 4.03% 0.56%
</table>
(A) Total Return Calculation Does Not Reflect Sales Load.
(B) For Periods Of Less Than A Full Year, The Total Return Is Not Annualized.
(C) Annualized (D) For the period October 5, 2000 (Commencement of Operations)
to December 31, 2000.
* Distribution was less than $0.01 per share.
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
SHORT TERM INVESTMENTS - 95.67%
<table>
<s> <c> <c>
par value market value
Government Agencies - 95.67%
400,000 Federal Home Loan Bank, 1.29%, 01/10/2003 $ 399,857
450,000 Federal Home Loan Bank, 1.52%, 01/24/2003 449,543
300,000 Federal Home Loan Bank, 1.10%, 02/12/2003 299,605
300,000 Federal Home Loan Bank, 1.24%, 02/14/2003 299,535
300,000 Federal Home Loan Bank, 1.49%, 02/19/2003 299,380
300,000 Federal Home Loan Bank, 1.52%, 03/21/2003 298,986
450,000 Federal Home Loan Bank, 1.56%, 04/23/2003 447,794
900,000 Federal Home Loan Bank, 1.19%, 05/21/2003 895,800
-----------------
Total Short Term Investments (cost $3,390,500) 3,390,500
-----------------
Money Market Instruments - 3.85%
136,556 First American Treasury Obligation Fund, 0.70%, (a) ( 136,556
(Cost $136,556) -----------------
TOTAL INVESTMENTS - 99.52% (identified cost $3,527,056) 3,527,056
-----------------
OTHER ASSETS AND LIABILITIES, NET - .48% 16,972
-----------------
NET ASSETS - 100.00% $ 3,544,028
=================
</table>
(a) Variable rate security; the rate shown represents the rate at December 31,
2002.
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $3,527,056) [NOTE 1] $ 3,527,056
Receivables:
Interest 109
Fund Shares Sold 21,872
From Investment Advisor 684
-------------------
Total Assets $ 3,549,721
===================
LIABILITIES
amount
Payable for Fund Shares Redeemed $ 1,771
Accrued Expenses 3,922
-------------------
Total Liabilities $ 5,693
===================
NET ASSETS
amount
$
Shares of Capital Stock Outstanding (par value $0.001,
unlimited shares authorized) $ 3,543,730
Net Asset Value, Offering and Redemption Price Per Share
($3,544,028 / 3,543,730 shares) $ 1.00
Net Assets $ 3,544,028
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $ 3,543,804
Undistributed Net Investment Income $ 224
------------------
Net Assets $ 3,544,028
</table>
<page>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
<table>
<s> <c>
INVESTMENT INCOME
amount
Interest $ 54,138
-------------------
Total Investment Income 54,138
-------------------
EXPENSES
amount
Investment Advisory Fees [NOTE 3] 19,878
Transfer Agent Fees 13,633
Administration Fees 3,363
Accounting Fees 13,625
Auditing Fees 1,118
Insurance Fees 439
Legal Fees 483
Registration Fees 4,692
Custodian Fees 2,126
Pricing Fees 1,265
Printing Fees 771
Miscellaneous Expense 7
-------------------
Total Expenses 61,400
Expenses Waived and Reimbursed by Advisor [NOTE 3] (33,176)
-------------------
Total Net Expenses 28,224
-------------------
Net Investment Income 25,914
-------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
amount
Increase in Net Assets Resulting from Operations $ 25,914
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
year ended year ended
12/31/02 12/31/01
Operations:
Net Investment Income $ 25,914 $ 61,576
----------- -----------
Increase in Net Assets (resulting from operations) 25,914 61,576
Distributions to Shareholders:
Net Income (25,691) (61,546)
Capital Share Transactions:
Proceeds from Shares Sold 3,588,622 4,203,813
Dividends Reinvested 25,035 60,191
Cost of Shares Redeemed (2,844,283) (2,892,945)
Increase in Net Assets (resulting from capital share ------------- -------------
transactions) 769,374 1,371,059
Total Increase in Net Assets 769,597 1,371,089
Net Assets:
Beginning of Year 2,774,431 1,403,342
End of Year (including accumulated net
investment income of $224) $3,544,028 $2,774,431
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold 3,588,547 4,203,813
Shares Reinvested 25,035 60,191
Shares Redeemed (2,844,283) (2,892,945)
------------ -------------
Net Increase in Number of Shares Outstanding 769,299 1,371,059
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below set forth financial data for one share of capital stock
outstanding throughout each period presented.
MONEY MARKET FUND - CLASS A SHARES
<table>
<s> <c> <c> <c> <c>
year year year period
ended ended ended ended
12/31/02 12/31/01 12/31/00 12/31/99 (B)
Per Share Operating Performance:
Net Asset Value at Beginning of Period $1.00 $ 1.00 $ 1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.01 0.03 0.05 0.02
--------- --------- --------- -----------
Total from Investment Operations 0.01 0.03 0.05 0.02
Less Distributions:
Dividends from Realized Gains - - - -
Dividends from Net Investment Income (0.01) (0.03) (0.05) (0.02)
--------- ----------- --------- ----------
Total Distributions (0.01) (0.03) (0.05) (0.02)
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return (A) 0.80% 3.34% 5.34% 1.78%
Ratios/Supplimental Data:
Net Assets, End of Period (in 000s) $3,544 $2,774 $1,403 $ 760
Ratio of Expenses to Average Net Assets:
Before Reimbursement of Expenses by Advisor 1.85% 2.33% 4.53% 5.75%(C)
After Reimbursement of Expenses by Advisor 0.85% 0.73% 0.85% 0.85%(C)
Ratio of Net Investment Income (Loss) to Average Net Assets:
Before Reimbursement of Expenses by Advisor (.22)% 1.45% 1.58% (0.73)%(C)
After Reimbursement of Expenses by Advisor 0.78% 3.05% 5.25% 4.17%(C)
</table>
(A) Not Annualized.
(B) For the Period July 9, 1999 (Commencement of Operations) to December 31,
1999. (C) Annualized.
<page>
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
TIMOTHY PLAN FAMILY OF FUNDS
Note 1 - Significant Accounting Policies
The Timothy Plan (the "Trust") is organized as a series of a Delaware
business trust pursuant to a trust agreement dated December 16, 1993. The Trust
is registered under the Investment Company Act of 1940, as amended, as an
open-end diversified management investment company. The Trust currently consists
of eleven series. These financials include the following eight series: The
Timothy Plan Aggressive Growth Fund, The Timothy Plan Conservative Growth Fund,
The Timothy Plan Fixed Income Fund, The Timothy Plan Small-Cap Value Fund, The
Timothy Plan Large/Mid-Cap Growth Fund, The Timothy Plan Large/Mid-Cap Value
Fund, The Timothy Plan Money Market Fund, and The Timothy Plan Strategic Growth
Fund, ("the Funds").
The Timothy Plan Aggressive Growth Fund's investment objective is long-term
growth of capital. The Fund seeks to achieve its investment objective by
normally investing at least 65% of the Fund's total assets in US common stocks
without regard to market capitalizations and investing in the securities of a
limited number of companies which the Fund's Adviser believes show a high
probability for superior growth.
The Timothy Plan Conservative Growth Fund seeks to generate moderate levels
of long-term capital growth with a secondary objective of current income. The
Fund seeks to achieve its investment objective by normally investing at least
75% of its net assets in the following Funds: approximately 15%-20% of its net
assets in the Timothy Plan Small-Cap Value Fund; approximately 25%-30% of its
net assets in the Timothy Plan Large/Mid-Cap Value Fund; approximately 15%-20%
of its net assets in the Timothy Plan Large/Mid-Cap Growth Fund; and
approximately 25%-30% in the Timothy Plan Fixed Income Fund.
The Timothy Plan Fixed Income Fund seeks to generate a high level of
current income consistent with prudent investment risk. To achieve its goal, the
Fund normally invests in a diversified portfolio of debt securities. These
include corporate bonds, U.S. Government and agency securities and preferred
securities. The Fund will only purchase high quality securities.
The Timothy Plan Small-Cap Value 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 Timothy Plan Large/Mid-Cap Growth Fund's investment objective is
long-term growth of capital. Current income is not a significant investment
consideration and any such income realized will be considered incidental to the
Fund's investment objective. The Fund seeks to achieve its investment objective
by normally investing at least 65% of the Fund's total assets in US common
stocks with market capitalizations in excess of $1 billion.
The Timothy Plan Large/Mid-Cap Value Fund's investment objective is
long-term capital growth, with a secondary objective of current income. The Fund
seeks to achieve its objectives by primarily investing in common stocks and
ADRs. The Fund will invest in the common stock of companies whose total market
capitalization generally exceeds $1 billion.
The Timothy Plan Money Market Fund seeks to generate a high level of
current income consistent with the preservation of capital. To achieve its goal,
the Fund normally invests in short-term debt instruments, such as obligations of
the U.S. Government and its agencies, certificates of deposit, bankers
acceptances, commercial paper and short-term corporate notes.
<page>
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 - continued
TIMOTHY PLAN FAMILY OF FUNDS
Note 1 - Significant Accounting Policies (cont.)
The Timothy Plan Strategic Growth Fund seeks to generate medium to high
levels of long-term capital growth. The Fund seeks to achieve its investment
objective by normally investing at least 75% of its net assets in the following
Funds: approximately 15%-20% of its net assets in the Timothy Plan Small-Cap
Value Fund; approximately 20%-25% of its net assets in the Timothy Plan
Large/Mid-Cap Value Fund; approximately 30%-35% of its net assets in the Timothy
Plan Large/Mid-Cap Growth Fund; and approximately 15%-20% in the Timothy Plan
Aggressive Growth Fund.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America 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 Timothy Plan Large/Mid-Cap Value 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 Funds 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 following Funds, The Timothy Plan Aggressive Growth Fund, The Timothy Plan
Conservative Growth Fund, The Timothy Plan Fixed Income Fund, The Timothy Plan
Small-Cap Value Fund, The Timothy Plan Large/Mid-Cap Growth Fund, The Timothy
Plan Large/Mid-Cap Value Fund, The Timothy Plan Strategic Growth Fund. The asset
value of the classes may differ because of different fees and expenses charged
to each class.
D. Classes Class specific expenses are borne by that class. Income,
expenses, and realized and unrealized gains/losses are allocated to the
respective classes on the basis of relative daily net assets.
E. Use of Estimates In preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
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.
<page>
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 - continued
TIMOTHY PLAN FAMILY OF FUNDS
Note 2 - Purchases and Sales of Securities
The following is a summary of the cost of purchases and proceeds from the
sale of securities, other than short-term investments, for the year ended
December 31, 2002:
funds purchases sales
- --------------------------------------------------------------------------------
Agggressive Growth Fund $ 8,625,766 $ 5,727,079
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Conservative Growth Fund $ 9,515,000 $ -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fixed Income Fund $ 8,421,079 $ 1,589,413
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Large/Mid-Cap Growth Fund $ 14,439,918 $ 6,155,982
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Large/Mid-Cap Value Fund $ 13,173,759 $ 6,442,425
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Small-Cap Value Fund $ 27,296,134 $ 22,103,029
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Strategic Growth Fund $ 9,660,000 $ 100,000
- --------------------------------------------------------------------------------
Note 3 - Investment Management Fee and Other Transactions with Affiliates
Timothy Partners, LTD., ("TPL") is the investment advisor for the Funds
pursuant to an investment advisory agreement (the "Agreement") effective May 1,
1998. 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
Timothy Plan Aggressive Growth, The Timothy Plan Small-Cap Value, The Timothy
Plan Large/Mid-Cap Growth and The Timothy Plan Large/Mid-Cap Value Funds; 0.60%
of the average daily net assets of The Timothy Plan Fixed Income and Timothy
Plan Money Market Funds; and 0.15% of the average daily net assets of The
Timothy Plan Conservative Growth and The Timothy Plan Strategic Growth Funds.
TPL has voluntarily agreed to reduce fees payable to it by the Funds and
reimburse other expenses to the extent necessary to limit the Funds' aggregate
annual operating expenses, excluding brokerage commissions and other portfolio
transaction expenses, interest, taxes, capital expenditures and extraordinary
expenses to 0.85% for the Timothy Plan Money Market Fund and to the specified
percentages listed below for each class of shares:
funds Class A Class B
- --------------------------------------------------------------------------
Agggressive Growth Fund 1.60% 2.35%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Conservative Growth Fund 1.20% 1.95%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Fixed Income Fund 1.35% 2.10%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Large/Mid-Cap Growth Fund 1.60% 2.35%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Large/Mid-Cap Value Fund N/A N/A
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Small-Cap Value Fund N/A N/A
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Strategic Growth Fund 1.25% 2.00%
- --------------------------------------------------------------------------
<page>
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 - continued
TIMOTHY PLAN FAMILY OF FUNDS
Note 3 - Investment Management Fee and Other Transactions with Affiliates
(cont.)
For the year ended December 31, 2002, TPL waived and reimbursed the Funds
as follows:
waivers and
funds reimbursements
- --------------------------------------------------------------------------
Agggressive Growth Fund $ 49,212
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Conservative Growth Fund $ 26,278
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Fixed Income Fund $ 39,234
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Large/Mid-Cap Growth Fund $ 26,641
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Large/Mid-Cap Value Fund $ -
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Money Market Fund $ 33,176
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Small-Cap Value Fund $ -
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Strategic Growth Fund $ 13,709
- --------------------------------------------------------------------------
For the Timothy Plan Aggressive Growth Fund, The Timothy Plan Fixed Income
Fund, The Timothy Plan Large/Mid-Cap Growth Fund, and the Timothy Plan Money
Market Fund have agreed to repay these expenses in the first, second and third
years following the fiscal year ending December 31, 2004 to the extent the total
expenses of the funds for any such year do not exceed 1.60% for Class A of the
Aggressive and Large/Mid-Cap Growth Funds, 1.35% for Class A of the Fixed Income
Fund, 2.35% for Class B of the Aggressive and Large/Mid-Cap Growth Funds, 2.10%
for Class B of the Fixed Income Fund, and 0.85% for the Money Market Fund or any
lower expense limitations to which each Fund's adviser may agree.
The Timothy Plan Aggressive Growth, Timothy Plan Conservative Growth,
Timothy Plan Fixed Income, Timothy Plan Large/Mid-Cap Growth, Timothy Plan
Large/Mid-Cap Value, Timothy Plan Small-Cap Value, and Timothy Plan Strategic
Growth Funds have adopted shareholder services plans (the "Plans") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended. The Plans
provide that the Fund will pay TPL or others for expenses that relate to the
promotion or distribution of shares. Under the Class A Plan, the Funds will pay
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 Plans, the Fund
will pay 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, 2002, the Funds paid TPL under the terms of the Plan as
follows:
funds distribution costs service fees
- --------------------------------------------------------------------------
Aggressive Growth Fund $ 13,887 $ 1,127
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Conservative Growth Fund $ 66,621 $ 51,283
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fixed Income Fund $ 32,636 $ 4,497
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Large/Mid-Cap Growth Fund $ 36,198 $ 2,683
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Large/Mid-Cap Value Fund $ 68,993 $ 9,613
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------
Small-Cap Value Fund $ 182,845 $ 41,705
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Strategic Growth Fund $ 82,303 $ 60,208
- --------------------------------------------------------------------------------
<Page>
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 - continued
TIMOTHY PLAN FAMILY OF FUNDS
Note 4 - Unrealized Appreciation (Depreciation)
At December 31, 2002, the cost for federal income tax purposes is and the
composition of gross unrealized appreciation (depreciation) of investment
securities is as follows:
<table>
<s> <c> <c> <c> <c>
funds cost app dep net app. / dep.
- ---------------------------------------------------------------------------------------------------
Aggressive Growth Fund $ 5,546,980 $ 208,225 $ (348,375) $ (140,150)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Conservative Growth Fund $ 19,357,562 $ 249,669 $ (2,256,636) $ (2,006,967)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Fixed Income Fund $ 12,407,631 $ 697,667 $ (139,491) $ 558,176
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Large/Mid-Cap Growth Fund $ 15,608,884 $ 441,455 $ (1,928,262) $ (1,486,807)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Large/Mid-Cap Value Fund $ 24,556,348 $ 987,756 $ (3,457,648) $ (2,469,892)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Money Market Fund $ 3,527,056 N/A N/A N/A
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Small-Cap Value Fund $ 39,042,377 $ 2,085,244 $ (3,998,336) $ (1,913,092)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Strategic Growth Fund $ 21,290,692 $ - $ (4,517,022) $ (4,517,022)
- ---------------------------------------------------------------------------------------------------
</table>
Note 5 - Distributions to Shareholders
The tax character of distributions paid during 2002 and 2001 were as follows:
<table>
<s> <c> <c> <c> <c>
Aggressive Conservative Fixed Income Large/Mid-Cap
Growth Fund Growth Fund Fund Growth Fund
--------------------------------------------------------------------------
2002
Ordinary Income $ - $ 213 $ 461,329 $ -
Long-term Capital Gains - - 14,208 -
--------------------------------------------------------------------------
--------------------------------------------------------------------------
$ - $ 213 $ 475,537 $ -
==========================================================================
2001
Ordinary Income $ - $ 2,422 $ 136,792 $ -
Long-term Capital Gains - 7,457 - -
--------------------------------------------------------------------------
--------------------------------------------------------------------------
$ - $ 9,879 $ 136,792 $ -
==========================================================================
</table>
As of December 31, 2002, the components of distributable earnings on a tax
basis were as follows:
<table>
<s> <c> <c> <c> <c>
Undistributed Ordinary Income $ - $ - $ - $ -
Undistributed Long-term Captial Gains (1,620,075) (10,690) - (3,241,153)
Unrealized Appreciation (Depreciation) (369,704) (2,006,967) 558,176 (1,552,691)
--------------------------------------------------------------------------
$(1,989,779) $ (2,017,657) $ 558,176 $ (4,793,844)
==========================================================================
</table>
<page>
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 - continued
TIMOTHY PLAN FAMILY OF FUNDS
Note 5 - Distributions to Shareholders - continued
The tax character of distributions paid during 2002 and 2001 were as follows:
<table>
<s> <c> <c> <c> <c>
Large/Mid-Cap Money Small-Cap Strategic
Value Fund Market Fund Value Fund Growth Fund
--------------------------------------------------------------
2002
Ordinary Income $ - $ 25,691 $ - $ -
Long-term Capital Gains - - 17,899 531
---------------------------------------------------------------
---------------------------------------------------------------
$ - $ 25,691 $ 17,899 $ 531
===============================================================
2001
Ordinary Income $ 55,822 $ 61,546 $ 64,519 $ -
Long-term Capital Gains - - 16,332 18,684
---------------------------------------------------------------
---------------------------------------------------------------
$ 55,822 $ 61,546 $ 80,851 $ 18,684
===============================================================
</table>
As of December 31, 2002, the components of distributable earnings on a tax
basis were as follows:
<table>
<s> <c> <c> <c> <c>
Undistributed Ordinary Income $ - $ 224 $ - $ -
Undistributed Long-term Captial Gains (224,362) - 230 1,602
Unrealized Appreciation (Depreciation) 2,520,461) - (1,913,092) (4,516,293)
---------------------------------------------------------------
$ (2,744,823) $ 224 $ (1,912,862) $ (4,514,691)
===============================================================
</table>
Note 6 - Capital Loss Carryforwards
Loss Year
Carryforward Expiring
Aggressive Growth Fund $ 544,723 2009
1,075,352 2010
Conservative Growth Fund $ 10,690 2010
Large/Mid-Cap Growth Fund $ 278,925 2009
2,962,228 2010
Large/Mid-Cap Value Fund $ 141,935 2009
82,427 2010
To the extent these loss carryforwards are used to offset future capital
gains, it is probable that the amount, which is offset, will not be distributed
to shareholders. The Aggressive Growth, Large/Mid-Cap Growth and Large/Mid-Cap
Value Funds have elected to defer post-October losses of $228,626, $65,884, and
$50,569, which will be available to offset gains in 2003.
<page>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
December 31, 2002
TIMOTHY PLAN FAMILY OF FUNDS
To the Shareholders and Board of Trustees
The Timothy Plan
Winter Park, Florida
We have audited the accompanying statements of assets and liabilities of
The Timothy Plan (comprising respectively; The Timothy Aggressive Growth Fund,
The Timothy Conservative Growth Fund, The Timothy Fixed Income Fund, The Timothy
Small-Cap Value Fund, The Timothy Large/Mid-Cap Growth Fund, The Timothy
Large/Mid-Cap Value Fund, The Timothy Money Market Fund and The Timothy
Strategic Growth Fund), including the portfolios of investments as of December
31, 2002, and 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 periods indicated thereon.
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 auditing standards generally
accepted in the United States of America. Those 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, 2002, by correspondence with the custodian
and brokers or by other appropriate procedures where replies from brokers were
not received. 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, 2002, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods indicated
thereon, in conformity with accounting principles generally accepted in the
United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 12, 2003
<page>
December 31, 2002
Dear Shareholder:
While this may sound like deja vu (all over again as Yogi Berra would say),
the sky is not falling - even though it may seem like it at times. We have now
endured a nearly historic and almost unprecedented third consecutive year of
negative market returns (although, thankfully, some of our equity funds were
actually up in two of those three years.) The question at hand is: will we have
a fourth such year in 2003?
Although we are seeing some encouraging economic recovery signs, the two
major negatives over-hanging the market at this writing are the seemingly
inevitable war with Iraq and further potential terrorist attacks. While either
or both of these could produce some short-term market damage, I firmly believe
the underlying strength of our nation's capital markets will digest and overcome
either or both of these concerns should they occur.
If history means anything, and I believe it does, then the twelve months
following the end of a bear market have almost always produced very strong
positive returns. In all too many cases, those investors that finally lost heart
and capitulated toward the end of bear markets of longer duration have stood on
the sidelines and missed the recovery.
I have said all that to say this: your Timothy Plan has some of the finest,
proven and respected money managers in the industry serving as our sub-advisors
and we have every confidence that we will fully participate in the recovery that
we expect to follow this extraordinarily long and painful bear market.
Once again, my admonition to you is simply this - hang in there, we believe
you'll be glad you did.
Sincerely,
Arthur D. Ally,
President
<page>
Returns for the Year Ended December 31, 2002
- ---------------------------- ------------- ----------------------------------
Fund/Index 6 Month Total Return
Since Inception
May 1, 2002
- ---------------------------- ------------- ----------------------------------
- ---------------------------- ------------- ----------------------------------
Timothy Conservative -6.35% -10.00%
Growth Portfolio Variable
Series Fund
- ----------------------------
- ----------------------------
S&P 500 Index -10.29% -18.02%
- ---------------------------- ------------- ----------------------------------
Cons Annuity S&P 500
5/1/02 10,000.00 10,000.00
5/31/02 9,960.00 9,839.42
6/30/02 9,610.00 9,138.56
7/31/02 9,030.00 8,426.46
8/31/02 9,110.00 8,481.63
9/30/02 8,690.00 7,560.68
10/31/02 8,850.00 8,225.50
11/30/02 9,190.00 8,709.17
12/31/02 8,999.80 8,197.80
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund, and the S&P 500 Index on May 1, 2002 and held through December 31,
2002. The S&P 500 Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the stocks in the
index and the reinvestment of dividends. The index returns do not reflect
expenses, which have been deducted from the Fund's return. The returns shown do
not reflect deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The Fund's return represents
past performance and is not predictive of future results.
<page>
Returns for the Year Ended December 31, 2002
- ---------------------------- ------------- ----------------------------------
Fund/Index 6 Month Total Return
Since Inception
May 6, 2002
- ---------------------------- ------------- ----------------------------------
- ---------------------------- ------------- ----------------------------------
Timothy Strategic Growth -10.50% -17.50%
Portfolio Variable Series
Fund
- ----------------------------
- ----------------------------
S&P 500 Index -10.29% -15.41%
- ---------------------------- ------------- ----------------------------------
Strat Annuity S&P 500
5/6/02 10,000.00 10,000.00
5/31/02 9,870.00 9,839.42
6/30/02 9,240.00 9,138.56
7/31/02 8,460.00 8,426.46
8/31/02 8,500.00 8,481.63
9/30/02 7,940.00 7,560.68
10/31/02 8,240.00 8,225.50
11/30/02 8,600.00 8,709.17
12/31/02 8,270.00 8,197.80
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund, and the S&P 500 Index on May 6, 2002 and held through December 31,
2002. The S&P 500 Index is widely recognized, unmanaged index of common stock
prices. Performance figures include the change in value of the stocks in the
index and the reinvestment of dividends. The index returns do not reflect
expenses, which have been deducted from the Fund's return. The returns shown do
not reflect deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The Fund's return represents
past performance and is not predictive of future results.
<page>
SCHEDULE OF
INVESTMENTS
As of December 31, 2002
Timothy Plan Conservative Growth Portfolio Variable Series
MUTUAL FUNDS - 99.33%
<table>
<s> <c> <c>
number of shares market value
40,040 Timothy Fixed Income Fund - Class A $ 410,405
58,110 Timothy Large Mid Cap Growth Fund - Class A * 298,687
45,314 Timothy Large Mid Cap Value Fund - Class A * 412,812
148,888 Timothy Plan Money Market Fund 148,888
20,168 Timothy Small Cap Value Fund - Class A 224,473
--------------
Total Mutual Funds (cost $1,603,268) 1,495,265
SHORT TERM INVESTMENTS - 0.36%
number of shares market value
5,406 First American Government Money Market Fund 5,406
-----------------
Total Short Term Investments (cost $5,406) 5,406
Total Investments - 99.69% (identified cost $1,608,674) 1,500,671
OTHER ASSETS AND LIABILITIES, NET - 0.31% 4,612
Net Assets - 100.00% $ 1,505,283
==================
</table>
* Non-income producing securities.
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
Timothy Plan Conservative Growth Portfolio Variable Series
ASSETS
<table>
<s> <c>
amount
Investments in Securities at Value (identified cost $1,608,674) [NOTE 1] $ 1,500,671
Receivables:
Fund Shares Sold 2,260
Interest 157
Dividends 4,184
Due From Investment Advisor 3,162
Total Assets 1,510,434
==================
LIABILITIES
amount
Accrued Expenses 5,151
Total Liabilities 5,151
NET ASSETS
amount
Net Assets $ 1,505,283
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $ 1,613,363
Undistributed Net Investment Income 1,422
Accumulated Net Realized Loss (1,499)
Net Unrealized Depreciation in Value of Investments (108,003)
Net Assets $ 1,505,283
Shares of Capital Stock Outstanding (No Par Value, Unlimited Shares Authorized) 167,811
Net Asset Value, Offering and Redemption Price Per Share
($1,505,283 / 167,811 Shares) $ 8.97
</table>
<page>
STATEMENT OF OPERATIONS
For the period May 1, 2002 (commencement of operations) to December 31, 2002
Timothy Plan Conservative Growth Portfolio Variable Series
<table>
<s> <c>
INVESTMENT INCOME
amount
Interest $ 749
Dividends 11,766
Total Investment Income 12,515
EXPENSES
amount
Investment Advisory Fees [Note 3] 768
Auditing Fees 686
Transfer Agent Fees 3,734
Custodian Fees 1,784
Legal Fees 1,181
Pricing Fees 387
Participation Fees 1,921
Printing Fees 686
Fund Accounting Expense 11,450
Miscellaneous Expense 1,005
Total Expenses 23,602
Expenses Waived by Advisor [Note 3] (17,132)
Total Net Expenses 6,470
Net Investment Income 6,045
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
amount
Net Realized (Loss) on Investments (1,732)
Capital gain distributions from other investment companies 553
Change in Unrealized (Depreciation) of Investments (108,003)
Net Realized and Unrealized (Loss) on Investments (109,182)
(Decrease) in Net Assets Resulting from Operations $ (103,137)
===============
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
Timothy Plan Conservative Growth Portfolio Variable Series
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c>
Period ended
12/31/02 (a)
Operations:
Net Investment Income $ 6,045
Net Realized (Loss) on Investments (1,732)
Capital gain distributions from other investment companies 553
Net Change in Unrealized (Depreciation) of Investments (108,003)
------------
(Decrease) in Net Assets (resulting from operations) (103,137)
Distributions to Shareholders:
Net Income (4,622)
Net Realized Gains (321)
------------
Total Distributions to Shareholders (4,943)
Capital Share Transactions:
Proceeds from Shares Sold 2,114,970
Dividends Reinvested 4,944
Cost of Shares Redeemed (506,551)
------------
Increase in Net Assets (resulting from capital share transactions) 1,613,363
Total Increase in Net Assets 1,505,283
Net Assets:
Beginning of Period -
End of Period [Including undistributed net investment income of $1,422] $ 1,505,283
==============
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold 219,877
Shares Reinvested 551
Shares Redeemed (52,617)
------------
Net Increase in Number of Shares Outstanding 167,811
=============
</table>
(a) For the period May 1, 2002 (commencement of operations) to December 31,
2002.
<page>
FINANCIAL HIGHLIGHTS
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
Timothy Plan Conservative Growth Portfolio Variable Series
Period
ended (C)
12/31/02
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 10.00
Income from Investment Operations:
Net Investment Income 0.07
Net Realized and Unrealized (Loss) on Investments (1.07)
-----------
Total from Investment Operations (1.00)
Less Distributions:
Dividends from Net Investment Income (Loss) (0.03)
Dividends from Realized Gains -
-----------
Total Distributions (0.03)
Net Asset Value at End of Period $ 8.97
Total Return (B) (10.00)%
Ratios/Supplimental Data:
Net Assets, End of Period (in 000s) $ 1,505
Ratio of Expenses to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor 3.09%(A)
After Reimbursement and Waiver of Expenses by Advisor 0.85%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor (1.45)(A)
After Reimbursement and Waiver of Expenses by Advisor 0.79%(A)
Portfolio Turnover 6.48%
(A) Annualized.
(B) For Periods of Less Than One Full Year, Total Returns Are Not Annualized.
(C) For the period May 1, 2002 (commencement of operations) to December 31,
2002.
<page>
SCHEDULE OF
INVESTMENTS
As of December 31, 2002
Timothy Plan Strategic Growth Portfolio Variable Series
<table>
<s> <c> <c>
MUTUAL FUNDS - 97.97%
number of shares market value
49,885 Timothy Aggressive Growth - Class A * $ 227,474
12,803 Timothy Fixed Income - Class A 131,229
82,805 Timothy Large Mid Cap Growth - Class A * 425,617
32,487 Timothy Large Mid Cap Value - Class A * 295,954
20,637 Timothy Small Cap Value - Class A 229,692
-------------
Total Mutual Funds (cost $1,390,000) 1,309,966
SHORT TERM INVESTMENTS - 0.27%
number of shares market value
3,595 First American Government Money Market Fund 3,595
------------
Total Short Term Investments (cost $3,595) 3,595
Total Investments - 98.24% (identified cost $1,393,595) 1,313,561
OTHER ASSETS AND LIABILITIES, NET - 1.76% 23,587
Net Assets - 100.00% $ 1,337,148
===================
</table>
* Non-income producing securities.
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
Timothy Plan Strategic Growth Portfolio Variable Series
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $1,393,595) [NOTE 1] $ 1,313,561
Receivables:
Fund Shares Sold 24,603
Interest 16
Dividends 1,295
Due from Investment Advisor 4,312
--------------
Total Assets 1,343,787
==============
LIABILITIES
amount
Payable for Fund Shares Redeemed 79
Accrued Expenses 6,560
------------
Total Liabilities 6,639
============
NET ASSETS
amount
Net Assets $ 1,337,148
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
Paid-in Capital $ 1,416,940
Accumulated Net Realized Gain on Investments 242
Net Unrealized Depreciation in Value of Investments (80,034)
Net Assets $ 1,337,148
Shares of Capital Stock Outstanding (No Par Value, Unlimited Shares Authorized) 162,040
Net Asset Value, Offering and Redemption Price Per Share
($1,337,148/ 162,040 Shares) $ 8.25
</table>
<page>
STATEMENT OF OPERATIONS
For the period May 6, 2002 (commencement of operations) to December 31, 2002
Timothy Plan Strategic Growth Portfolio Variable Series
<table>
<s> <c>
INVESTMENT INCOME
amount
Interest $ 185
Dividends 2,676
-------------
Total Investment Income 2,861
EXPENSES
amount
Investment Advisory Fees [Note 3] 460
Auditing Fees 1,044
Transfer Agent Fees 3,796
Accounting Fees 11,637
Legal Fees 1,206
Custodian Fees 1,866
Pricing Fees 392
Participation Fees 1,153
Printing Fees 1,044
Miscellaneous Expense 1,121
--------------
Total Expenses 23,719
Expenses Waived by Advisor [Note 3] (19,820)
Total Net Expenses 3,899
Net Investment (Loss) (1,038)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
amount
Capital gain distributions from other investment companies 242
Change in Unrealized (Depreciation) of Investments (80,034)
Net Realized and Unrealized (Loss) on Investments (79,792)
-------------
(Decrease) in Net Assets Resulting from Operations $ (80,830)
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
Timothy Plan Strategic Growth Portfolio Variable Series
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c>
Period
ended
12/31/02 (a)
Operations:
Net Investment (Loss) $ (1,038)
Capital gain distributions from other investment companies $ 242
Net Change in Unrealized (Depreciation) of Investments (80,034)
------------
(Decrease) in Net Assets (resulting from operations) (80,830)
Distributions to Shareholders:
Net Income -
Net Realized Gains -
------------
Total Distributions to Shareholders -
Capital Share Transactions:
Proceeds from Shares Sold 1,440,046
Dividends Reinvested -
Cost of Shares Redeemed (22,068)
------------
Increase in Net Assets (resulting from capital share transactions) 1,417,978
Total Increase in Net Assets 1,337,148
Net Assets:
Beginning of Period -
End of Period $ 1,337,148
============
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold 164,517
Shares Reinvested -
Shares Redeemed (2,477)
------------
Net Increase in Number of Shares Outstanding 162,040
============
</table>
(a) For the period May 6, 2002 (commencement of operations) to December 31,
2002.
<page>
FINANCIAL HIGHLIGHTS
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
Timothy Plan Strategic Growth Portfolio Variable Series
Period
ended (C)
12/31/02
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 10.00
Income from Investment Operations:
Net Investment (Loss) (0.01)
Net Realized and Unrealized (Loss) on Investments (1.74)
---------
Total from Investment Operations (1.75)
Less Distributions:
Dividends from Net Investment Income (Loss) -
Dividends from Realized Gains -
-----------
Total Distributions -
Net Asset Value at End of Period $ 8.25
Total Return (B) (17.50)%
Ratios/Supplimental Data:
Net Assets, End of Period (in 000s) $ 1,337
Ratio of Expenses to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor 5.14%(A)
After Reimbursement and Waiver of Expenses by Advisor 0.85%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets:
Before Reimbursement and Waiver of Expenses by Advisor (4.52)%(A)
After Reimbursement and Waiver of Expenses by Advisor (0.23)%(A)
Portfolio Turnover 0.00%
(A) Annualized.
(B) For Periods of Less Than One Full Year, Total Returns Are Not Annualized.
(C) For the period May 6, 2002 (commencement of operations) to December 31,
2002.
<page>
NOTES TO FINANCIAL STATEMENTS
Timothy Plan Conservative Growth Portfolio Variable Series
Timothy Plan Strategic Growth Portfolio Variable Series
December 31, 2002
Note 1 - Significant Accounting Policies The Timothy Plan Conservative
Growth Portfolio Variable Series and the Timothy Plan Strategic Growth Portfolio
Variable Series (individually the "Fund", collectively the "Funds") were
organized as a diversified series of The Timothy Plan (the "Trust"). The Trust
is an open-ended investment company established under the laws of Delaware by an
Agreement and Declaration of Trust dated December 14, 1993 (the "Trust
Agreement"). The Conservative Growth Portfolio's primary objective is moderate
long-term capital growth, with a secondary objective of current income only to
the extent that the Timothy Funds in which the Conservative Growth Portfolio
invests seek current income. The Strategic Growth Portfolio's primary investment
objective is medium to high levels of long term capital growth, with a secondary
objective of current income only to the extent that the Timothy Funds in which
the Strategic Growth Portfolio invests seek current income. The Conservative
Growth Portfolio seeks to achieve its investment objectives by investing
primarily in the following Timothy Funds: Small Cap Value Fund, Large/Mid Cap
Value Fund, Large/Mid Cap Growth Fund, Fixed Income Fund and the Money Market
Fund. The Strategic Growth Portfolio seeks to achieve its investment objectives
by investing primarily in the following Timothy Funds: Small Cap Value Fund,
Large/Mid Cap Value Fund, Large/Mid Cap Growth Fund, Aggressive Growth Fund and
the Fixed Income Fund. Each Fund is one of one series of funds currently
authorized by the Board of Trustees. The following is a summary of significant
accounting policies consistently followed by the Funds in the preparation of its
financial statements. The policies are in conformity with accounting principles
generally accepted in the United States of America for investment companies. The
Conservative Growth Portfolio began operations May 1, 2002 and the Strategic
Growth Portfolio began operations May 6, 2002.
A. Security Valuation. Each Fund purchases Class A Shares of the Timothy
Funds at net asset value without any sales charges. With respect to securities
owned by the Timothy Funds, securities listed or traded on a securities exchange
for which representative market quotations are available will be valued at the
last quoted sales price on the security's principal exchange on that day. Listed
securities not traded on an exchange that day, and other securities which are
traded in the over-the-counter markets, will be valued at the last reported bid
price in the market on that day, if any. Securities for which market quotations
are not readily available and all other assets will be valued at their
respective fair market values as determined by the Adviser in conformity with
guidelines adopted by and subject to the review of the Board of Trustees.
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 per share of the capital stock of
each 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.
D. 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.
<page>
NOTES TO FINANCIAL STATEMENTS
Timothy Plan Conservative Growth Portfolio Variable Series
Timothy Plan Strategic Growth Portfolio Variable Series
December 31, 2002
E. Use of Estimates. In preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
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 The following is a summary of
the cost of purchases and proceeds from the sale of securities, other than
short-term investments, for the period May 1, 2002 (commencement of operations)
for the Conservative Growth Portfolio and May 6, 2002 (commencement of
operations) for the Strategic Growth Portfolio to December 31, 2002:
funds purchases sales
- --------------------------------------------------------------------------------
Conservative Growth Portfolio $ 1,526,407 $ 70,295
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Strategic Growth Portfolio $ 1,390,000 $ -
- --------------------------------------------------------------------------------
Note 3 - Investment Management Fee and Other Transactions with Affiliates
Timothy Partners, LTD., ("TPL") is the investment Advisor for the Fund pursuant
to an Amended and Restated Investment Advisory Agreement (the "Agreement")
effective April 27, 2001. Under the terms of the Agreement, TPL receives a fee,
accrued daily and paid monthly, at an annual rate of 0.10% of the average daily
net assets of each Fund.
The Advisor has contractually agreed to reduce fees payable to it by the
Funds and reimburse other expenses to the extent necessary to limit each Fund's
aggregate annual operating expenses, excluding brokerage commissions and other
portfolio transaction expenses, interest, taxes, capital expenditures and
extraordinary expenses, to 0.85% of average daily net assets through May 1,
2004. As a result, the Advisor has waived a portion of their fee and reimbursed
the Fund for expenses in excess of the limit in the amount of $17,132 for the
Conservative Growth Portfolio and $19,820 for the Strategic Growth Portfolio for
the period May 1, 2002 (commencement of operations) and May 6, 2002
(commencement of operations) to December 31, 2002, respectively.
Note 4 - Unrealized Appreciation (Depreciation)
At December 31, 2002, the cost for federal income tax purposes is and the
composition of gross unrealized appreciation (depreciation) of investment
securities is as follows:
funds cost app dep net app. / dep.
- --------------------------------------------------------------------------------
Conservative Growth $ 1,610,727 $ 19,442 $ (129,498) $ (110,056)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Strategic Growth $ 1,393,595 $ 4,475 $ (84,509) $ (80,034)
- --------------------------------------------------------------------------------
<page>
NOTES TO FINANCIAL STATEMENTS
Timothy Plan Conservative Growth Portfolio Variable Series
Timothy Plan Strategic Growth Portfolio Variable Series
December 31, 2002
Note 5 - Distributions to Shareholders
The tax character of distributions paid during 2002 were as follows:
Conservative Growth Strategic Growth
Portfolio Portfolio
2002
Ordinary Income $ 4,943 $ -
Long-term Capital Gains - -
---------------------- ------------------
$ 4,943 $ -
====================== ===================
As of December 31, 2002, the components of distributable earnings on a tax
basis were as follows:
Undistributed Ordinary Income $ 1,422 $ -
Undistributed Long-term Capital Gains 554 242
Unrealized (Depreciation) (110,056) (80,034)
---------------- --------------
$ (108,080) $ (79,792)
================ ==============
<page>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Timothy Plan Conservative Growth Portfolio Variable Series
The Timothy Plan Strategic Growth Portfolio Variable Series
Winter Park, Florida
We have audited the accompanying statement of assets and liabilities of The
Timothy Plan Conservative Growth Portfolio Variable Series and The Timothy Plan
Strategic Growth Portfolio Variable Series, each a series of shares of The
Timothy Plan, including the portfolio of investments, as of December 31, 2002,
and the related statements of operations, the statement of changes in net assets
and the financial highlights for the periods 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 auditing standards generally
accepted in the United States of America. Those 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, 2002, 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 Conservative Growth Portfolio Variable Series and The Timothy Plan
Strategic Growth Portfolio Variable Series as of December 31, 2002, the results
of its operations, the changes in their net assets, and the financial highlights
for the periods then ended, in conformity with accounting principles generally
accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 7, 2003
<page>
December 31, 2002
Dear Shareholder:
While this may sound like deja vu (all over again as Yogi Berra would say),
the sky is not falling - even though it may seem like it at times. We have now
endured a nearly historic and almost unprecedented third consecutive year of
negative market returns (although, thankfully, our Small Cap Variable account
was actually up in two of those three years.) The question at hand is: will the
negative market environment continue in 2003?
Although we are seeing some encouraging economic recovery signs, the two
major negatives over-hanging the market at this writing are the seemingly
inevitable war with Iraq and further potential terrorist attacks. While either
or both of these could produce some short-term market damage, I firmly believe
the underlying strength of our nation's capital markets will digest and overcome
either or both of these concerns should they occur.
If history means anything, and I believe it does, then the twelve months
following the end of a bear market have almost always produced very strong
positive returns. In all too many cases, those investors that finally lost heart
and capitulated toward the end of bear markets of longer duration have stood on
the sidelines and missed the recovery.
I have said all that to say this: your Timothy Plan fund has one of the
finest, proven and respected money managers in the industry serving as our
sub-advisor and we have every confidence that we will fully participate in the
recovery that we expect to follow this extraordinarily long and painful bear
market.
Once again, my admonition to you is simply this - hang in there, we believe
you'll be glad you did.
Sincerely,
Arthur D. Ally,
President
<page>
Returns for the Year Ended December 31, 2002
- ---------------------------- ------------- ----------------------------------
Fund/Index 1 Year Average Annual Total Return
Since Inception
May 22, 1998
- ---------------------------- ------------- ----------------------------------
- ---------------------------- ------------- ----------------------------------
Timothy Small Cap Variable -17.38% 4.68%
Fund
- ----------------------------
- ----------------------------
Russell 2000 Index -20.48% 2.74%
- ---------------------------- ------------- ----------------------------------
Annuity Russell 2000
5/28/98 10,000.00 10,000.00
12/31/98 10,380.00 9,180.43
6/30/99 11,510.00 10,032.71
12/31/99 12,391.68 11,131.87
6/30/00 13,804.15 11,469.88
12/31/00 13,402.34 10,795.58
6/30/01 14,481.95 11,535.42
12/31/01 14,941.03 11,063.94
6/30/02 14,643.35 10,543.80
12/31/02 12,343.93 8,797.69
The chart shows the value of a hypothetical initial investment of $10,000
in the Fund, and the Russell 2000 Index on May 22, 1998 and held through
December 31, 2002. The Russell 2000 Index is widely recognized, unmanaged index
of common stock prices. Performance figures include the change in value of the
stocks in the index and the reinvestment of dividends. The index returns do not
reflect expenses, which have been deducted from the Fund's return. The returns
shown do not reflect deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The Fund's return represents
past performance and is not predictive of future results.
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
Timothy Plan Small-Cap Variable Series
<table>
<s> <c> <c>
COMMON STOCKS - 73.28%
number of shares market value
BALL & ROLLER BEARINGS - 2.50%
5,700 Kaydon Corp. $ 120,897
BUSINESS SERVICES - 3.00%
9,100 NCO Group, Inc. * 145,145
CANNED, FROZEN & PRESERVED FRUIT, VEGETABLES & FOOD SPECIALTIES - 2.80%
4,500 Corn Products International, Inc. 135,585
DENTAL EQUIPMENT & SUPPLIES - 4.30%
10,000 Apogent Technologies, Inc. * 208,000
DRAWING & INSULATING NONFERROUS WIRE - 2.04%
6,500 Belden, Inc. 98,930
ELECTRIC & OTHER SERVICES COMBINED - 2.81%
6,000 ALLETE, Inc. 136,080
LIFE INSURANCE - 0.43%
2,100 Presidential Life Corp. 20,853
MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT, & SUPPLIES - 2.70%
9,800 Rayovac Corp. * 130,634
MISCELLANEOUS PLASTIC PRODUCTS - 3.84%
9,000 Spartech Corp. 185,670
PHARMACEUTICAL PREPARATIONS - 0.24%
500 K-V Pharmaceutical Co. - Class A * 11,600
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 2.81%
25,000 Concord Camera Corp. * 135,750
PUBLIC WAREHOUSING & STORAGE - 2.56%
3,750 Iron Mountain, Inc. * 123,788
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT - 1.60%
9,800 CommScope, Inc. * 77,420
RAILROADS, LINE-HAUL OPERATING - 1.98%
8,000 Kansas City Southern Industries, Inc. * 96,000
RETAIL - EATING PLACES - 2.50%
7,000 Ruby Tuesday, Inc. 121,030
RETAIL - FAMILY CLOTHING STORES - 3.44%
7,900 Stage Stores, Inc. 166,216
SCIENTIFIC/TECHNICAL INSTRUMENTS - 3.05%
8,000 Cognex Corp. * 147,440
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES - 3.07%
6,650 Investment Technology Group 148,694
SEMICONDUCTOR EQUIPMENT/MATERIALS - 2.72%
23,500 Axcelis Technologies, Inc. * 131,811
</table>
<page>
SCHEDULE OF INVESTMENTS
As of December 31, 2002
Timothy Plan Small-Cap Variable Series
<table>
<s> <c> <c>
COMMON STOCKS - 73.28% - continued
number of shares market value
SERVICES - BUSINESS SERVICES - 12.59%
8,120 SOURCECORP, Inc. * $ 150,951
8,250 StarTek, Inc. * 227,700
10,200 TeleTech Holdings, Inc. * 74,052
7,000 Viad Corp. 156,450
---------------
609,153
SERVICES - COMPUTER PROGRAMMING SERVICES - 1.39%
12,000 Hall, Kinion & Associates, Inc. * 67,092
SERVICES - COMPUTER INTEGRATED SYSTEMS DESIGN - 2.31%
9,300 Henry Jack & Associates, Inc. 111,972
SERVICES - EMPLOYMENT AGENCIES - 1.73%
11,200 Korn/Ferry International * 83,776
SERVICES - MISCELLANEOUS HEALTH & ALLIED SERVICES - 2.41%
19,000 Hooper Holmes, Inc. 116,660
STATE COMMERCIAL BANKS - 1.02%
1,900 Capital Crossing Bank * 49,115
TELEPHONE & TELEGRAPH APPARATUS - 3.44%
11,000 Plantronics, Inc. * 166,430
Total Common Stocks (cost $4,418,694) $ 3,545,741
SHORT TERM INVESTMENTS - 27.30%
number of shares/principal amount market value
$ 721,000 U.S. Bank Repurchase Agreement $ 721,000
1.05%, dated 12/31/02, due 1/2/03, repurchase price $721,042,
collateralized by $735,500 by FHLMC, 5/1/17
300,000 Huntington Money Fund - Investment A 300,000
300,000 Star Bank Treasury 300,000
--------------
Total Short Term Investments (cost $1,321,000) 1,321,000
Total Investments - 100.58% (identified cost $5,739,694) $ 4,866,741
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.58)% (27,830)
Net Assets - 100.00% $ 4,838,911
==============
</table>
* Non-income producing securities.
<page>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2002
Timothy Plan Small-Cap Variable Series
<table>
<s> <c>
ASSETS
amount
Investments in Securities at Value (identified cost $5,739,694) [NOTE 1] $ 4,866,741
Cash 630
Receivables:
Interest 305
Dividends 3,359
Due from Advisor 1,959
------------------
Total Assets 4,872,994
==================
LIABILITIES
amount
Payable for Fund Shares Redeemed 27,833
Accrued Expenses 6,250
------------------
Total Liabilities 34,083
==================
NET ASSETS
amount
Net Assets $ 4,838,911
SOURCES OF NET ASSETS
amount
At December 31, 2002, Net Assets Consisted of:
$
Paid-in Capital $ 5,726,722
Accumulated Net Realized Loss (14,858)
Net Unrealized Depreciation in Value of Investments (872,953)
----------------
Net Assets $ 4,838,911
Shares of Capital Stock Outstanding (No Par Value, Unlimited Shares Authorized) 452,383
Net Asset Value, Offering and Redemption Price Per Share
($4,838,911 / 452,383 Shares) $ 10.70
</table>
<page>
STATEMENT OF OPERATIONS
For the year ended December 31, 2002
Timothy Plan Small-Cap Variable Series
<table>
<s> <c>
INVESTMENT INCOME
amount
nterest $ 8,296
Dividends 52,265
-----------------
Total Investment Income 60,561
-----------------
EXPENSES
amount
Investment Advisory Fees [Note 3] 55,555
Transfer Agent Fees 11,881
Administration Fees 124
Accounting Fees 11,626
Custodian Fees 2,276
Pricing Fees 3,074
Registration Fees 73
Report Printing Fees 666
Auditing Fees 1,329
Insurance Expense 759
Participation Fees 11,114
Legal Expense 1,604
Miscellaneous Expense 1,040
-----------------
Total Expenses 101,121
Expenses Waived by Advisor [Note 3] (34,673)
-----------------
Total Net Expenses 66,448
-----------------
Net Investment (Loss) (5,887)
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
amount
Net Realized Gain on Investments 63,638
Change in Unrealized Appreciation (Depreciation) of Investments (1,186,240)
-----------------
Net Realized and Unrealized (Loss) on Investments (1,122,602)
-----------------
(Decrease) in Net Assets Resulting from Operations $ (1,128,489)
=================
</table>
<page>
STATEMENT OF CHANGES IN NET ASSETS
Timothy Plan Small-Cap Variable Series
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
year ended year ended
12/31/02 12/31/01
Operations:
Net Investment (Loss) $ (5,887) $ (5,957)
Net Realized Gain on Investments 63,638 167,770
Net Change in Unrealized Appreciation (Depreciation) of Investments (1,186,240) 336,860
-------------- -------------
Increase (Decrease) in Net Assets (resulting from operations) (1,128,489) 498,673
-------------- -------------
Distributions to Shareholders:
Return of Capital (35,110) -
Net Realized Gains (2,099) (238,059)
------------- -------------
Total Distributions to Shareholders (37,209) (238,059)
------------- -------------
Capital Share Transactions:
Proceeds from Shares Sold 2,288,278 1,934,183
Dividends Reinvested 37,209 238,059
Cost of Shares Redeemed (1,435,018) (644,261)
------------ --------------
Increase (Decrease) in Net Assets (resulting from capital share transactions) 890,469 1,527,981
------------ --------------
Total Increase (Decrease) in Net Assets (275,229) 1,788,595
Net Assets:
Beginning of Year 5,114,140 3,325,545
------------ ------------
End of Year $ 4,838,911 $ 5,114,140
============ =============
Shares of Capital Stock of the Fund Sold and Redeemed:
Shares Sold 178,384 153,573
Shares Reinvested 3,482 18,495
Shares Redeemed (121,453) (50,727)
------------ -------------
Net Increase in Number of Shares Outstanding 60,413 121,341
============ =============
</table>
<page>
FINANCIAL HIGHLIGHTS
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
Timothy Plan Small-Cap Variable Series
<table>
<s> <c> <c> <c> <c> <c>
year year year year period
ended ended ended ended ended
12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 (a)
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 13.05 $ 12.29 $ 12.37 $ 10.38 $ 10.00
Income from Investment Operations:
Net Investment Income (Loss) (0.01) (0.02) 0.07 (0.06) 0.08
Net Realized and Unrealized Gain (Loss) on (2.26) 1.42 0.94 2.07 0.30
Investments
------------- ------------- ------------ ---------- ----------
Total from Investment Operations (2.27) 1.40 1.01 2.01 0.38
Less Distributions:
Dividends from Net Investment Income - - (0.08) (0.02) -
Dividends from Realized Gains - (0.64) (1.01) - -
Return of Capital (0.08) - - - -
------------- -------------- ----------- ------------ -----------
Total Distributions (0.08) (0.64) (1.09) (0.02) -
Net Asset Value at End of Period $ 10.70 $ 13.05 $ 12.29 $ 12.37 $ 10.38
=========== =========== =========== ============ ===========
Total Return (B) (17.38)% 11.48% 8.16% 19.38% 3.80%
Ratios/Supplimental Data:
Net Assets, End of Period (in 000s) $ 4,839 $ 5,114 $ 3,326 $ 1,137 $ 301
Ratio of Expenses to Average Net Assets:
Before Reimbursement and Waiver of 1.82% 2.00% 1.83% 2.60% 2.88% (c)
Expenses by Advisor
After Reimbursement and Waiver of 1.20% 1.20% 1.20% 1.18% 1.20% (c)
Expenses by Advisor
Ratio of Net Investment Income (Loss) to
Average Net Assets:
Before Reimbursement and Waiver of (0.73)% (0.94)% 0.11% (1.47)% 0.98% (c)
Expenses by Advisor
After Reimbursement and Waiver of (0.11)% (0.14)% 0.74% (0.05)% 2.66% (c)
Expenses by Advisor
Portfolio Turnover 69.14% 67.40% 85.82% 65.60% 3.00%
</table>
(a) For the Period May 22, 1998 (Commencement of Operations) to December
31,1998. (b) For Periods of Less Than One Full Year, Total Returns Are Not
Annualized.
(c) Annualized. <page>
NOTES TO FINANCIAL STATEMENTS
Timothy Plan Small-Cap Variable Series
December 31, 2002
Note 1 - Significant Accounting Policies The Timothy Plan Small-Cap
Variable Series (the "Fund") was organized as a diversified series of The
Timothy Plan (the "Trust"). The Trust is an open-ended investment company
established under the laws of Delaware by an Agreement and Declaration of Trust
dated December 14, 1993 (the "Trust Agreement"). 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 American Depositary Receipts (ADRs) while abiding by ethical
standards established for investments by the Fund. The Fund is one of one series
of funds currently authorized by the Board of Trustees. 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
accounting principles generally accepted in the United States of America for
investment companies.
F. 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.
G. 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.
H. Net Asset Value Per Share. Net asset 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.
I. 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.
J. Use of Estimates. In preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
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 $3,333,913 and
$2,990,412 respectively, for the year ended December 31, 2002.
Note 3 - Investment Management Fee and Other Transactions with Affiliates
Timothy Partners, LTD., ("TPL") is the investment Advisor for the Fund pursuant
to an Amended and Restated Investment Advisory Agreement (the "Agreement")
effective June 11, 2001. Under the terms of the Agreement, TPL receives a fee,
accrued daily and paid monthly, at an annual rate of 1.00% of the average daily
net assets of the Fund.
<page>
NOTES TO FINANCIAL STATEMENTS
Timothy Plan Small-Cap Variable Series
December 31, 2002
Note 3 - Investment Management Fee and Other Transactions with Affiliates -
continued The Advisor has voluntarily agreed to reduce fees payable to it by the
Fund and reimburse other expenses to the extent necessary to limit the Fund's
aggregate annual operating expenses, excluding brokerage commissions and other
portfolio transaction expenses, interest, taxes, capital expenditures and
extraordinary expenses, to 1.20% of average daily net assets through December
31, 2002. As a result, the Advisor has waived a portion of their fee and
reimbursed the Fund for expenses in excess of the limit in the amount of $34,673
for the year ended December 31, 2002. There is no guarantee that the Advisor
will waive fees and/or reimburse expenses in the future.
Note 4 - Unrealized Appreciation (Depreciation) At December 31, 2002, the
cost for federal income tax purposes is $5,739,694. At December 31, 2002 the
composition of gross unrealized appreciation (depreciation) of investment
securities for tax purposes is as follows:
Appreciation Depreciation Net Appreciation
The Timothy Plan Small-Cap $131,910 ($1,004,863) ($872,953)
Variable Series
Note 5 - Distributions to Shareholders The tax character of
distributions paid during 2002 and 2001 were as follows:
Small-Cap
Variable Fund
--------------------
2002
Ordinary Income $ 2,099
Long-term Capital Gains -
Return of Capital 35,110
-------------------
-------------------
$ 37,209
===================
2001
Ordinary Income $ 105,047
Long-term Capital Gains 133,012
-------------------
-------------------
$ 238,059
===================
As of December 31, 2002, the components of distributable earnings on a tax basis
were as follows:
Undistributed Ordinary Income $ -
Undistributed Long-term Captial Gains -
Unrealized (Depreciation) (887,811)
-------------------
$ (887,811)
===================
The difference between book basis and tax basis unrealized
depreciation is attributable to the tax deferral of losses on post-October
losses.
<page>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Timothy Plan Small-Cap Variable Series
Winter Park, Florida
We have audited the accompanying statement of assets and
liabilities of The Timothy Plan Small-Cap Variable Series, a series of
shares of The Timothy Plan, including the portfolio of investments, as
of December 31, 2002, the related statements of operations for the
year then ended, 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 in the period then ended and the period May 22, 1998 to
December 31, 1998. These financial statements and financial highlights
are the responsibility of the Fund'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 auditing standards
generally accepted in the United States of America. Those 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, 2002, 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 Small-Cap Variable Series as of
December 31, 2002, 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 in the
period then ended and the period May 22, 1998 to December 31, 1998, in
conformity with accounting principles generally accepted in the United
States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 7, 2003
<page>
Item 2. Code of Ethics. Not applicable to Annual Reports for the
period ended December 31, 2002.
Item 3. Audit Committee Financial Expert. Not applicable to
Annual Reports for the period ended December 31, 2002.
Items 4-8. Reserved
Item 9. Controls and Procedures. Not applicable to Annual Reports
for the period ended December 31, 2002.
Item 10. Exhibits. Certifications required by Item 10(b) of Form
N-CSR are 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) .........Timothy Plan
By (Signature and Title)
* /s/ Arthur Ally
[Arthur Ally, President]
Date 3/3/03...
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/ Arthur Ally
[Arthur Ally, President]
Date 3/3/03 .........
By (Signature and Title)
* /s/ Arthur Ally
[Arthur Ally, Chief Financial Officer]
Date 3/3/03 .........
<page>