PROSPECTUS FOR
THE TIMOTHY PLAN
Retail Class
April 29, 1996
AS REVISED
March 11, 1997
Distributed By:
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
(800) 441-6580
The Timothy Plan (the "Fund") is a low level load, open-end diversified
management investment company. It was organized as a series Delaware
business trust and currently offers shares of one series, which has specific
investment objectives. There is no assurance that the Fund's objectives will
be achieved.
The objective of the Fund is long-term capital growth and its secondary
objective is current income. The Fund seeks to achieve its objectives by
investing in securities issued by companies which, in the opinion of the
Fund's advisor, conduct business in accordance with the stated philosophy and
principles of the Fund (See "Investment Objectives and Policies").
The Fund currently offers two classes of shares: Institutional Class and
Retail Class. This Prospectus pertains only to the Fund's Retail Class shares
which have a front-end sales charge and are subject to annual 12b-1 Plan
expenses. Shareholders, who purchase larger amounts than the initial
investment requirement, may qualify for a reduced sales charge at the time of
purchase. (See "How to Purchase Shares"). The Institutional Class is offered
in a separate prospectus which can be obtained by calling (800) TIM-PLAN.
The shares of the Fund may be purchased or redeemed at any time. Purchases
will be effected at the net asset value, plus the applicable sales charge,
next determined following receipt of the investor's request. (See
"Determination of Net Asset Value," "How to Purchase Shares," and "How to
Redeem Shares").
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read and
retain this Prospectus for future reference.
More information about the Fund and classes of shares of the Fund has been
filed with the U.S. Securities and Exchange Commission, and is contained in
the "Statement of Additional Information," dated April 29, 1996, which is
available at no charge upon request to the Fund. The Fund's Statement of
Additional Information is incorporated herein by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.<PAGE>
TABLE OF CONTENTS
Page
Expenses of the Fund . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . 4
The Fund . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Objectives and Policies . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Restrictions. . . . . . . . . . . . . . . . . . 8
Shares of Beneficial Interest. . . . . . . . . . . . . . . 9
Management of the Fund . . . . . . . . . . . . . . . . . . 9
Board of Trustees. . . . . . . . . . . . . . . . . . . .9
Investment Advisor . . . . . . . . . . . . . . . . . . .9
Investment Manager . . . . . . . . . . . . . . . . . . .10
Historical Performance of the Investment Manager . . . .11
Underwriter. . . . . . . . . . . . . . . . . . . . . . .12
Plan of Distribution . . . . . . . . . . . . . . . . . .12
Administrator. . . . . . . . . . . . . . . . . . . . . .13
Custodian, Transfer Agent and Fund Accounting/Pricing Agent.13
Expenses . . . . . . . . . . . . . . . . . . . . . . . .13
Dividends, Distributions and Taxes . . . . . . . . . . . .13
Determination of Net Asset Value . . . . . . . . . . . . .15
How to Purchase Shares . . . . . . . . . . . . . . . . . .15
How to Redeem Shares . . . . . . . . . . . . . . . . . . .18
Retirement Plans . . . . . . . . . . . . . . . . . . . . .20
Performance. . . . . . . . . . . . . . . . . . . . . . . .20
Investment Application . . . . . . . . . . . . . . . . . .22
Automatic Investment Plan Application. . . . . . . . . . .24
Application to Request to Transfer to The Timothy Plan . .26
This Prospectus is not an offering of the securities herein described in any
jurisdiction or to any person to whom it is unlawful for the Fund to make
such an offer or solicitation. No sales representative, dealer, or other
person is authorized to give any information or make any representation other
than those contained in this Prospectus.
<PAGE>
EXPENSES OF THE FUND
The following table illustrates all estimated expenses and fees that a
shareholder of the Fund's Retail Class will incur.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)
1.75%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price). . . . . . . . . . . . . . . . . . . . .none
Redemption Fees. . . . . . . . . . . . . . . . . . . .none 1
Annual Operating Expenses of the Retail Class*
(as a percentage of average net assets)
Management and Advisory Expenses After Expense Reimbursements 0.00%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . 0.85% 2
Other Expenses After Expense Reimbursements. . . . . . . . . . .1.35%
Total Operating Costs After Expense Reimbursements . . . . . . .2.20%
The purpose of this table is to assist the investor in understanding the
various expenses that an investor in the Retail Class will bear directly or
indirectly. The Fund's Retail Class had not commenced operations until
August 25, 1995, therefore, for the purpose of the table above, "Other
Expenses" is based on estimated amounts for the current fiscal year. The
Advisor has voluntarily agreed to waive its fees, so that the Retail Class'
total annual operating expenses will never exceed 2.20% of the daily average
net assets. Further, the Advisor has agreed to reimburse the Retail Class for
its other expenses so that the Retail Class' total annual expenses will never
exceed 2.20%. Absent the fee waiver and expense reimbursements, "Management
and Advisory Expenses After Expense Reimbursements" would have been 0.85% and
"Other Expenses After Expense Reimbursements" would have been estimated at
5.59% for the fiscal year ended December 31, 1995.
The following example illustrates the expenses that you would pay on a $1,000
investment over various time periods assuming (1) a 5% annual rate of return
and (2) redemption at the end of each time period. As noted in the table
above, the Fund charges no redemption fees of any kind.
1 year 3 years 5 years 10 years
$39 $85 $133 $266
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or lesser than those
shown.
The Fund issues two classes of shares that invest in the same portfolio of
securities. Shareholders of Retail Class shares are subject to a sales
charge and each class is subject to a different 12b-1 Plan, therefore,
expenses and performance figures will vary between the classes. The
information set forth in the foregoing tables and example relates only to the
Retail Class shares. The rules of the U.S. Securities and Exchange
Commission require that the maximum sales charge be reflected in the above
table. However, certain investors may qualify for a reduced sales charge.
See "How to Purchase Shares." Further information about Institutional Class
shares may be obtained by calling (800) TIM-PLAN.
1 United Missouri Bank KC NA charges $9.00 per redemption for redemptions
payable by wire.
2 For purposes of this table, "12b-1 Fees" are comprised of an asset-based
12b-1 fee up to a maximum of 0.85% of average daily net assets, of which,
up to 0.25% may be service fees to be paid to FPS Broker Services, Inc.,
dealers and others, for providing personal service and/or maintaining
shareholder accounts. Long-term holders of Retail Class shares may
eventually pay more than the economic equivalent of the maximum front-end
sales charges otherwise permitted by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
* The table reflects the expenses the Fund's Retail Class incurred during
the fiscal year ended 12/ 31/95.
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the fiscal period ended December 31,
1995 were derived from the Fund's Retail Class financial statements dated
December 31, 1995, which were audited by Tait, Weller & Baker, independent
auditors, whose unqualified report thereon is incorporated by reference into
the Statement of Additional Information. The Fund's Statement of Additional
Information may be obtained by shareholders without charge and is
incorporated by reference into this Prospectus. The table sets forth
financial data for a share of capital stock outstanding throughout the period
presented.
For the
Period Ended
December 31, 1995 *
Net Asset Value, Beginning of Period.. . .. . .. . . $10.49
Income From Investment Operations
Net investment income. . .. . .. . .. . .. . .. . . 0.11
Net gains (losses) on securities (both
realized and unrealized).. . .. . .. . .. . .. . . (0.16)
Total from investment operations.. . .. . .. . . (0.05)
Less Distributions
Distributions from net investment income.. . .. . . (0.11)
Distributions from net capital gains. . .. . .. . .. (0.25)
Total distributions . .. . .. . .. . .. . .. . . (0.36)
Net Asset Value, End of Period .. . .. . .. . .. . . $10.08
.
Total Return . . .. . .. . .. . .. . .. . .. . (0.46%) 1
Ratios/Supplemental Data
Net assets, end of period (in 000's). . .. . .. . . .. . . $ 620
Ratio of expenses to average net assets:
Before expense reimbursement . .. . .. . .. . 6.44% 2
After expense reimbursement. . .. . .. . .. . . . . . 2.20% 2
Ratio of net investment income to average net assets
Before expense reimbursement . .. . .. . .. . (3.56)% 2
After expense reimbursement . .. . .. . .. . 0.68% 2
Portfolio turnover rate. .. . .. . .. . .. . .. . 34.12%
* The Retail Class shares Fund commenced investment operations on August 25,
1995.
1 Total return calculation does not reflect sales load.
2 Annualized.
THE FUND
The Timothy Plan (the "Fund") is a low level load, open-end, diversified
management investment company commonly known as a mutual fund. The Fund was
established as a series Delaware business trust on December 16, 1993. The
Fund currently offers one series with two classes of shares: Institutional
Class and Retail Class. This Prospectus pertains only to Retail Class
shares.
INVESTMENT OBJECTIVES AND POLICIES
Set forth below are the investment objectives and policies of the Fund. The
investment objectives of the Fund are a fundamental policy and may not be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities. There can be no assurance that the Fund will
achieve its objectives.
The Fund's objective is long-term capital growth, with a secondary objective
of current income. The Fund shall seek to achieve its objectives while
abiding by ethical standards established for investments by the Fund. Those
standards preclude the investment in securities of companies involved in the
businesses of alcohol production, tobacco production, or casino gambling, or
which are directly or indirectly involved in pornography or abortion. The
securities in which the Fund shall be precluded from investing, by virtue of
the Fund's ethical standards, are referred to as the "Excluded Securities."
The Fund will invest most of its assets in common stocks and American
Depository Receipts ("ADRs"), although it may also invest in other types of
securities including securities convertible into common stocks and common
stock equivalents (including rights and warrants), preferred stocks,
short-term U.S. Government securities, and/or
other high-quality, short-term debt
securities (commercial paper, repurchase agreements, bankers' acceptances,
certificates of deposit and other fixed income securities (non-convertible
and convertible bonds, debentures and notes issued by U.S. corporations and
certain bank obligations and participations). High-quality debt securities
are those that are rated Aa or better by Moody's, or AA or better by Standard
& Poor's, or that are of comparable quality. See "Risk Factors" herein, and
the Statement of Additional Information for information relating to these
securities. While it is the Fund's policy to seek long-term investments,
changes will be made whenever management believes that such changes will
strengthen the Fund's investments and realization of its objectives. The
Fund will pursue its objectives by investing a major portion of its assets
in securities of companies which offer prospects for growth of capital in
accordance with the portfolio investment techniques described below.
The Fund seeks to achieve its investment objectives by investing primarily in
common stocks and ADRs, while foregoing investments in the Excluded
Securities. Awad & Associates (the "Investment Manager"), a division of
Raymond James & Associates, Inc., as sub-investment advisor to Timothy
Partners, Ltd. (the "Advisor"), will select the investments for the Fund, but
will not invest in securities which the Advisor will determine are Excluded
Securities. The Advisor has instructed the Investment Manager to avoid
investment in any company directly involved in the business of alcohol
production, tobacco production, or casino gambling. In addition, the Advisor
will compile and maintain a list of companies that it determines, by using
information collected by and published by three Christian ministries,
participate directly or indirectly in either pornography or abortion. The
Advisor will use its best judgement in determining which companies, through
their corporate practices in either of these two areas, need to be placed on
the Excluded Securities list. The Advisor also reserves the right to
exercise its best judgement to exclude investment in other companies whose
corporate practices may not fall within the exclusions described above, but
nevertheless could be found offensive to basic traditional Judeo Christian
values.
The three Christian ministries that publish information that the Advisor will
utilize in identifying companies directly or indirectly involved in
pornography or abortion are as follows: (1) The American Family Association
(to identify companies engaged in pornography); (2) Pro Vita Advisors (to
identify companies that directly and indirectly participate in abortion); and
(3) Life Decisions International (to identify companies that indirectly
support abortion causes through corporate funding programs). The Advisor
retains the right to change the ministries whose information it reviews, at
its discretion.
After eliminating the Excluded Securities, the Investment Manager will
construct a portfolio of investments to produce the highest possible risk-
adjusted return on investment as is consistent with the Fund's objectives and
policies.
The Fund will invest primarily in a diversified portfolio of equity
securities of companies whose market capitalizations exceed $200 million, and
whose securities trade on the New York Stock Exchange, the American Stock
Exchange and the NASDAQ National Market System. Since the Fund is an equity
fund, the Investment Manager seeks investments that show the greatest
potential for growth, with income as a secondary factor. Therefore, these
companies may or may not pay dividends.
Potential equity investment candidates will be analyzed to determine their
ability to repay all fixed debt obligations (including certain "off balance
sheet debts" such as operating lease obligations and unfunded pension
liabilities) from their historical level of net investment income within a
reasonable time period, generally less than five years. Securities are
typically sold when an appreciation objective is met. The Fund may invest up
to 30% of its assets in cash or debt securities. Although the Investment
Manager does not utilize a market timing strategy, if market conditions are
viewed to require that the Fund take a temporary defensive position, the Fund
may invest up to 100% of its assets in (i) debt securities issued by the U.S.
Government, its agencies or instrumentalities, (ii) commercial paper, or
(iii) certificates of deposit and bankers' acceptances with respect to any of
the foregoing investments. The Fund may also invest in such securities
pending the investment of the proceeds of certain sales of portfolio
securities and at such other times when suitable equity securities are not
available. It is impossible to predict whether, or for how long, the Fund
will use any of such temporary defensive strategies.
The Advisor will attempt to monitor and respond to changes in business
policies within the companies selected for investment. It is possible that
securities in which the Fund has invested may become Excluded Securities. In
such event, the Fund will sell its position in those securities subject to
general market considerations.
RISK FACTORS
Investment Restrictions of the Fund. The ethical standards established for
investments by the Fund limit the pool of securities from which investment
securities may be selected by the Investment Manager. Although the Advisor
believes the Fund's investment objective of long-term capital growth can be
achieved notwithstanding the effect of the Fund's ethical standards, this
objective may be affected by the limitations imposed by the Advisor, in
eliminating the Excluded Securities as potential investments.
Advisor and Investment Manager. The principals of the managing general
partner of the Advisor have been engaged in various aspects of the retail
brokerage and financial advisory business. The Investment Manager has advised
individuals, pension funds, trusts and institutions. Awad & Associates, a
division of Raymond James & Associates, Inc., currently manages approximately
$575 million in these accounts. The Investment Manager currently serves as
co-investment advisor to one other investment company: Heritage Small Cap
Fund. The Advisor has served as investment advisor exclusively to the Fund
since the Fund's commencement of operations (March 21, 1994) but has not
previously served as investment advisor to any other investment company.
Portfolio Turnover. It is anticipated that the annualized portfolio
turnover rate for the Fund generally will not exceed a range of 50% to 75%,
and may be lower than 50%, during most periods. High portfolio turnover
involves additional transaction costs (such as brokerage commissions) which
are borne by the Fund, and might involve adverse tax effects. (See
"Dividends, Distributions and Taxes").
Risks of Certain Fixed Income Securities
Interest Bearing Debt Instruments. The market value of interest-bearing
debt securities, if and when held by the Fund, is affected by changes in
interest rates. There is normally an inverse relationship between the market
value of securities sensitive to prevailing interest rates and actual changes
in interest rates; i.e., a decline in interest rates produces an increase in
market value, while an increase in rates produces a decrease in market value.
Moreover, the longer the remaining maturity of a security, the greater the
effect of interest rate changes on the market value of such a security. In
addition, changes in an issuer's ability to make payments of interest and
principal and in the market's perception of an issuer's creditworthiness also
affect the market value of the debt securities of that issuer.
Money Market Securities. The Fund will select money market securities for
investment when such securities offer a current market rate of return which
the Fund considers reasonable in relation to the risk of the investment, and
the issuer can satisfy suitable standards of credit-worthiness set by the
Fund. The money market securities in which the Fund may invest are
repurchase agreements, certificates of deposit, U.S. Government securities,
commercial paper and securities of money market mutual funds.
Although the Fund intends to invest primarily in common stocks, common stock
equivalents, and ADRs, the Fund may invest up to 30% of its assets directly
in money market securities whenever deemed appropriate to achieve the Fund's
investment objectives. It may invest without limitation in such securities
on a temporary basis for defensive purposes.
Securities issued or guaranteed as to principal and interest by the U.S.
Government ("Government Securities") include a variety of Treasury
securities, which differ in their interest rates, maturities and date of
issue. Treasury bills have a maturity of one year or less; Treasury notes
have maturities of one to ten years; Treasury bonds generally have a maturity
of greater than five years. The Fund will only acquire Government Securities
which are supported by the "full faith and credit" of the United States.
Securities which are backed by the full faith and credit of the United States
include Treasury bills, Treasury notes, Treasury bonds and obligations of:
the Government National Mortgage Association, the Farmers Home Administration
and the Export-Import Bank. The Fund's direct investments in money market
securities will generally favor securities with shorter maturities
(maturities of less than 60 days) which are less affected by price
fluctuations than are those with longer maturities.
Certificates of deposit are certificates issued against funds deposited in a
commercial bank or a savings and loan association for a definite period of
time and earning a specified return. Bankers' acceptances are negotiable
drafts or bills of exchange, normally drawn by an importer or exporter to pay
for specific merchandise, which are "accepted" by a bank, meaning, in effect,
that the bank unconditionally agrees to pay the face value of the instrument
on maturity. Investments in bank certificates of deposit and bankers'
acceptances are generally limited to domestic banks and savings and loan
associations that are members of the Federal Deposit Insurance Corporation or
Federal Savings and Loan Insurance Corporation having a net worth of at least
$100 million dollars ("Domestic Banks") and domestic branches of foreign
banks (limited to institutions having total assets not less than $1 billion
or its equivalent).
Investments in prime commercial paper may be made in notes, drafts, or
similar instruments payable on demand or having a maturity at the time of
issuance not exceeding nine months, exclusive of days of grace, or any
renewal thereof payable on demand or having a maturity likewise limited.
Repurchase Agreements. Under a repurchase agreement the Fund acquires a
debt instrument for a relatively short period (usually not more than one
week) subject to the obligation of the seller to repurchase and the Fund to
resell such debt instrument at a fixed price. The Fund will enter into
repurchase agreements only with banks which are members of the Federal
Reserve System, or securities dealers who are members of a national
securities exchange or are market makers in government securities and report
to the Market Reports Division of the Federal Reserve Bank of New York and,
in either case, only where the debt instrument collateralizing the repurchase
agreement is a U.S. Treasury or agency obligation supported by the full faith
and credit of the United States. A repurchase agreement may also be viewed
as the loan of money by the Fund to the seller. The resale price specified
is normally in excess of the purchase price, reflecting an agreed upon
interest rate. The rate is effective for the period of time the Fund is
invested in the agreement and may not be related to the coupon rate on the
underlying security. The term of these repurchase agreements will usually be
short (from overnight to one week). At no time will the Fund invest in
repurchase agreements of more than sixty days. The securities which are
collateral for the repurchase agreements, however, may have maturity dates in
excess of sixty days from the effective date of the repurchase agreement. The
Fund will always receive, as collateral, securities whose market value,
including accrued interest, will at least equal 102% of the dollar amount to
be paid to the Fund under each agreement at its maturity, and the Fund will
make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the Custodian. If the seller defaults,
the Fund might incur a loss if the value of the collateral securing the
repurchase agreement declines, and might incur disposition costs in
connection with liquidation of the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security,
collection of the collateral by the Fund may be delayed or limited. The Fund
also may not be able to substantiate its interests in the underlying
securities. While management of the Fund acknowledges these risks, it is
expected that such risks can be controlled through stringent security
selection and careful monitoring procedures. The Fund may not enter into a
repurchase agreement with more than seven days to maturity if, as a result,
more than 10% of the market value of the Fund's net assets would be invested
in such repurchase agreements and any other illiquid assets. For purposes of
the diversification test for qualification as a regulated investment company
under the Internal Revenue Code, Repurchase Agreements are not counted as
cash, cash items or receivables, but rather as securities issued by the
counter-party to the Repurchase Agreements.
Small-Cap Investments. The Fund may invest in small capitalization
companies, which may offer greater opportunities for growth of capital than
investments in larger, more established companies. However, investing in
smaller, newer issuers generally involves greater risks than investing in
larger, more established issuers. Companies in which the Fund is likely to
invest may have limited product lines, markets or financial resources and may
lack management depth. The securities issued by such companies may have
limited marketability and may be subject to more abrupt or erratic market
movements than securities of larger, more established companies or the market
averages in general. In addition, many small capitalization companies may be
in the early stages of development. Accordingly, an investment in the Fund
may not be appropriate for all investors.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below have been adopted by the Fund as
fundamental policies, to limit certain risks that may result from investment
in specific types of securities or from engaging in certain kinds of
transactions addressed by such restrictions. They may not be changed without
the affirmative vote of the holders of a majority of the outstanding voting
securities of the Fund. Certain of these policies are detailed below, while
other policies are set forth in the Statement of Additional Information.
Changes in values of particular Fund assets or the assets of the Fund as a
whole will not cause a violation of the investment restrictions so long as
percentage restrictions are observed by the Fund at the time it purchases any
security.
The investment restrictions specifically provide that the Fund will not:
(a) as to 75% of the Fund's total assets, invest more than
5% of its total assets in the securities of any one issuer.
(This limitation does not apply to cash and cash items, or
obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities);
(b) purchase more than 10% of the voting securities, or
more than 10% of any class of securities, of another
investment company. For purposes of this restriction, all
outstanding fixed income securities of an issuer are
considered as one class;
(c) purchase or sell commodities or commodity futures
contracts, other than those related to stock indexes as
previously outlined in "Investment Objectives and
Policies;"
(d) purchase or sell real estate or interests therein,
although it may purchase securities of issuers which engage
in real estate operations;
(e) make loans of money or securities, except (i) by the
purchase of fixed income obligations in which the Fund may
invest consistent with its investment objectives and
policies; or (ii) by investment in repurchase agreements
(see "Investment Objectives and Policies");
(f) invest in securities of any company if, any officer or
trustee of the Fund or the Advisor owns more than 0.5% of
the outstanding securities of such company and such
officers and trustees (who own more than 0.5%) in the
aggregate own more than 5% of the outstanding securities of
such company;
(g) borrow money, except the Fund may borrow from banks
(i) for temporary or emergency purposes in an amount not
exceeding 5% of the Fund's assets or (ii) to meet
redemption requests that might otherwise require the
untimely disposition of portfolio securities, in an amount
up to 33 % of the value of the Fund's total assets
(including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) at the time
the borrowing was made. While borrowing exceeds 5% of the
value of the Fund's total assets, the Fund will not
purchase securities. Interest paid on borrowing will
reduce net income;
(h) pledge, hypothecate, mortgage or otherwise encumber
its assets, except in an amount up to 33 % of the value of
its net assets but only to secure borrowing for temporary
or emergency purposes, such as to effect redemptions; or
(i) purchase the securities of any issuer, if, as a
result, more than 10% of the value of a Fund's net assets
would be invested in securities that are subject to legal
or contractual restrictions on resale ("restricted
securities"), in securities for which there are no readily
available market quotations, or in repurchase agreements
maturing in more than seven days, if all such securities
would constitute more than 10% of the Fund's net assets.
SHARES OF BENEFICIAL INTEREST
The beneficial interest of the Fund is divided into an unlimited number of
shares ("Shares") with a par value of $0.001 each. Each Share has equal
dividend, voting, liquidation and redemption rights. If a matter to be voted
on does not affect the interests of all classes, then only the shareholders
of the affected class shall be entitled to vote on the matter. There are no
conversion or preemptive rights. Shares, when issued, will be fully paid and
nonassessable. Fractional shares have proportional voting rights. Shares of
the Fund do not have cumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of trustees can elect
all of the trustees if they choose to do so and, in such event, the holders
of the remaining shares will not be able to elect any person to the Board of
Trustees. Currently, there are two classes of shares issued by the Fund.
MANAGEMENT OF THE FUND
Board of Trustees
The members of the Fund's Board of Trustees are fiduciaries for the Fund's
shareholders and are governed by the laws of the State of Delaware in this
regard. They establish policy for the operation of the Fund and appoint the
officers who conduct the daily business of the Fund. The Statement of
Additional Information contains more information regarding Officers and
Trustees.
Investment Advisor
Timothy Partners, Ltd. (the "Advisor") is a Florida limited partnership
organized on December 6, 1993. The Advisor supervises the investment of the
assets of the Fund in accordance with the objectives, policies and
restrictions of the Fund. The Advisor approves the portfolio of securities
selected by the Investment Manager (See "Investment Manager" below). To
determine which securities are Excluded Securities with respect to abortion
and pornography, the Advisor consults with three Christian ministries on
these issues: The American Family Association (pornography), Pro Vita
Advisors (direct and indirect participation and involvement in abortion) and
Life Decisions International (indirect participation in abortion through
corporate funding programs). The Advisor retains the right to change the
ministries whose information it reviews, at its discretion.
For its services, the Advisor is paid an annual fee equal to 0.85% of the
Fund's average daily net assets. This fee is subject to certain voluntary
reductions in fees paid by the Fund. A portion of the advisory fee is paid by
the Advisor to: (i) the Investment Manager for assisting in the selection of
portfolio securities for the Fund and (ii) Covenant Financial Management
("CFM") as reimbursement for certain expenses related to the daily operations
of the Fund performed by CFM. In addition, this fee also covers the cost of
postage, materials and handling of the fulfillment function of processing
Prospectus requests as well as other sundry marketing and general
administration expenses. The fee payable to and services provided by the
Investment Manager are described under the heading "Investment Manager"
below. The fee payable to and services provided by CFM are described at the
end of this section. The Advisor's fee is higher than that charged by other
funds, but is comparable to fees charged by funds with similar investment
objectives. The Advisor has offices located at 1304 West Fairbanks Avenue,
Winter Park, FL 32789.
Arthur D. Ally, the President, Chairman and Trustee of the Fund, is President
and a 70% shareholder of Covenant Funds, Inc. ("Covenant"), located at 1304
West Fairbanks Avenue, Winter Park, FL 32789, which is the managing general
partner of the Advisor. Mr. Ally is also an individual general partner of
the Advisor. Neither the Advisor nor its managing general partners
previously has served as an advisor to any other registered investment
company but the Advisor has served as investment advisor exclusively to the
Fund since the Fund's commencement of operations (March 21, 1994). Prior
thereto, Mr. Ally had extensive securities industry experience having served
as either financial consultant or branch manager for three securities firms
over the previous seventeen years: Prudential Bache, Shearson Lehman
Brothers and Investment Management & Research. Some or all of these firms
may be used by the Investment Manager to execute portfolio trades for the
Fund. Neither Mr. Ally nor any affiliated person to the Fund will receive
any benefit from any of these transactions.
The Advisor and CFM have entered into an agreement dated February 23, 1994,
as amended April 23, 1996, whereby the Advisor pays CFM for certain overhead
expenses related to the daily operations of the Fund that CFM carries out.
These expenses include: salary of administrative personnel, cost of
preparation of shareholder fulfillment kits, cost of phone lines and office
space, and cost of postage and supplies. The annual fee is an amount to
cover CFM's costs in providing services to the Advisor, payable by the
Advisor on a monthly basis. Both parties have agreed that no profits will
accrue to CFM as a result of this agreement. Arthur D. Ally is President and
100% shareholder of CFM.
Investment Manager
Effective January 1, 1997 the Fund engaged a new investment manager Awad &
Associates (the "Investment Manager"), a division of Raymond James &
Associates, Inc., pursuant to a new sub-investment advisory agreement among
the Fund, Timothy Partners, Ltd. and Awad & Associates, which was approved by
the Board of Trustees at a meeting held on November 29, 1996 and by
shareholders of record on November 14, 1996 at a Special Meeting of
Shareholders held on January 31, 1997.
The Investment Manager has offices at 477 Madison Avenue, New York, New York
10022. The Investment Manager is a joint venture between James Awad, a
twenty-six year veteran of the investment management business, and Raymond
James Financial, a diversified financial services firm traded on the New York
Stock Exchange. The Investment Manager has been retained by the Advisor
pursuant to a sub-advisory agreement to assist in the selection and
management of the Fund's investment securities and prepare the portfolio of
securities of selected issuers with business practices that meet the
objectives and policies of the Fund. The Advisor reviews the portfolio to
insure compliance with the Fund's ethical standards.
The Investment Manager's investment policy committee, comprised of James
Awad, Dan Veru and Carol Egan, is responsible for the day-to-day management
of the Fund's portfolio. James Awad is the senior investment officer of the
Investment Manager. Mr. Awad has been in the investment business since 1965,
focusing on research and portfolio management. Prior to forming Awad &
Associates, he was President of BMI Capital, a successful money management
firm he founded. In addition, Mr. Awad managed assets at Neuberger & Berman,
Channing Management and First Investment Corp. The Investment Manager
managed approximately $575 million in assets at December 31, 1996 for clients
on a separate account basis utilizing the same investment methodology that it
will employ for the Fund.
The Investment Manager places portfolio transactions for the Fund. In this
regard, the Investment Manager will be governed by the policies set forth
under "Investment Objectives and Policies".
For its services, the Investment Manager is paid an annual fee by the Advisor
equal to 0.42% of the average daily net assets of the Fund with respect to
the first $10 million in assets; 0.40% of the next $5 million in assets;
0.35% of the next $10 million in assets; and 0.25% of assets over $25
million.
Awad & Associates currently serves as co-investment advisor to one other
investment company: Heritage Small Cap Fund. At January 1, 1996, Awad &
Associates managed $70 million in net assets of Heritage Small Cap Fund and
received an advisory fee of 0.50% of its average daily net assets with
respect to the first $50 million in assets and 37.5% thereafter.
Investment Manager's Historical Performance
Set forth below are certain performance data provided by the Investment
Manager relating to the composite of separately managed equity accounts of
clients of the Investment Manager. These accounts have substantially similar
investment objectives and policies as the Fund's and they are managed using
substantially similar investment strategies and techniques as those
contemplated by the Fund. It is important to note that these returns do not
take into account the effects of the Fund's moral screening restrictions,
which the Advisor estimates would eliminate about 2.85% of the Investment
Manager's current core portfolio.
These performance figures include the results carried over from a previous
firm, BMI Capital, for the period from 1/1/82 through 9/30/92. These results
are shown net of management fees and commissions. The results presented from
10/1/92 forward represent only those accounts managed by Awad & Associates
through Raymond James & Associates, and these results are shown net of an
assumed management fee of 0.5% (50 basis points). These figures are a
time-weighted average for the entire period, all of which would not be
duplicated in any individual account and would not
necessarily result in the same return
for the investors. Further, the separately managed accounts are not subject
to investment limitations, diversification requirements, and other
restrictions imposed by the Investment Company Act of 1940, as amended and
the Internal Revenue Code; such conditions, if applicable, may have lowered
the returns for the separately managed accounts. The performance presented
does not represent the historical performance of the Fund and is not
indicative of the Fund's future performance.
Composite Past Performance of Past Performance of
Through Awad & Associates and BMI Capital S&P 500
1996 15.9% 23.0%
1995 46.2% 37.6%
1994 2.9% 1.3%
1993 10.8% 10.1%
1992 13.8% 7.6%
1991 39.8% 30.5%
1990 -13.2% -3.1%
1989 9.7% 31.7%
1988 26.0% 16.6%
1987 -5.4% 5.2%
1986 17.6% 18.4%
<PAGE>
Annualized Returns through December 31, 1996
One Year 15.9% 23.0%
Three Years 20.3% 19.7%
Five Years 17.1% 15.2%
Ten Years 13.3% 15.3%
Notes:
1: The annualized return is calculated from monthly data, allowing for
compounding. The formula used is in accordance with the acceptable methods
set forth by the Association For Investment Management Research, the Bank
Administration Institute and the Investment Council Association of America.
Market value of the account was the sum of the account's total assets,
including cash, cash equivalence, short term investments and securities
valued at current market prices.
2: The cumulative return means that one dollar invested in the composite
account on January 1, 1982 had grown to $9.51 by December 31, 1996.
3: The 15-year mean is the arithmetic average of the annual returns for the
calendar years listed.
4: The S&P Index is an unmanaged index which assumes reinvestment of
dividends and is generally considered representative of securities similar
to those invested in by the Investment Manager for the purpose of the
composite performance numbers set forth above.
5: The Investment Manager's average annual management fee while at BMI
Capital over the period 1/1/82 - 9/30/92 was 1% or 100 basis points. During
this period, fees on the Investment Manager's individual accounts ranged
from 0.5% to 1% (50 basis points to 100 basis points).
6: The past performance returns reported in the preceding table for the
period 10/1/92 -- 1/31/97 (following the establishment of Awad & Associates
as a division of Raymond James & Associates) were based on a universe of
"wrap fee" accounts managed for various broker/dealers which are coordinated
through Raymond James & Associates. The total value of these accounts at
1/31/97 was approximately $150 million out of a total client base of $625
million. This universe was selected due to the commonality of structure and
management fees among these clients as well as the similarity of investment
strategies and objectives to those of the Fund. The average wrap fee is
2.5% annually (which includes all management fees and commissions of Raymond
James & Associates). The performance figures reported are net of those wrap
fees.
Underwriter
FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, King of Prussia, PA
19406-0903, was engaged pursuant to an agreement dated January 19, 1994, as
amended February 23, 1996. The purpose of acting as underwriter is to
facilitate the registration of shares of the Fund under state securities laws
and to assist in the sale of shares. The fee for such services is borne by
the Advisor.
Plan of Distribution
The Fund has adopted a plan pursuant to Rule 12b-1 (the "12b-1 Plan") under
the Investment Company Act of 1940, as amended, whereby it may reimburse FPSB
or others for expenses actually incurred by FPSB or others in the promotion
and distribution of the Fund's Retail Class shares. These expenses include,
but are not limited to, the printing of prospectuses and reports used for
sales purposes, the preparation of sales literature and related expenses,
advertisements, and other distribution-related expenses, including payments
to securities dealers and others participating in the sale and servicing of
Retail Class shares. The maximum amount which the Fund may pay to FPSB and
others (and which FPSB may re-allow to securities dealers and others
participating in the sale of shares) for such distribution expenses is 0.85%
per annum of the Fund's average daily net assets, of which, up to 0.25% may
be service fees to be paid to FPSB, dealers and others, for providing
personal services and/or maintaining shareholder accounts, payable on a
monthly basis. All expenses of distribution and marketing in excess of
0.85% per annum will be borne by the Advisor and any amounts paid for the
above services will be paid pursuant to a servicing or other agreement. The
12b-1 Plan also covers any payments made by the Fund, the Advisor, the
Investment Manager, FPSB, or other parties on behalf of the Fund, the
Advisor, the Investment Manager, or FPSB, to the extent such payments are
deemed to be for the financing of any activity primarily intended to result
in the sale of shares issued by the Fund within the context of Rule 12b-1.
Administrator
FPS Services, Inc. ("FPS"), 3200 Horizon Drive, King of Prussia,
PA 19406-0903, is the Fund's administrator pursuant to an Administration
Services Agreement (the "Agreement") with the Fund dated January 19, 1994,
as amended February 23, 1996. Under the Agreement, FPS
receives a fee at the annual
rate of 0.15% of the first $50 million in average net assets of the Fund,
0.10% of the next $50 million in average net assets and 0.05% of average net
assets over $100 million. There is a minimum fee of $50,000 per year for the
initial series/class issued by the Fund and $12,000 per year for each
additional series or class of shares.
The services FPS provides to the Fund include: considering and monitoring of
any third parties furnishing services to the Fund; providing the necessary
office space, equipment and personnel to perform administrative and clerical
functions for the Fund; preparing, filing and distributing proxy materials,
periodic reports to shareholders, registration statements, and other
documents; and responding to shareholder inquiries.
Custodian, Transfer Agent and Fund Accounting/Pricing Agent
The Bank of New York, 48 Wall Street, New York, New York 10286, is custodian
for the securities and cash of the Fund.
FPS serves as the Fund's transfer agent. As transfer agent, it maintains the
records of each shareholder's account, answers shareholder inquiries
concerning accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent, and performs
other shareholder service functions. Shareholder inquiries should be
directed to the transfer agent at (800) 662-0201.
FPS also performs certain accounting and pricing services for the Fund. This
includes the daily calculation of the Fund's net asset value.
Expenses
Except as indicated above, the Fund is responsible for the payment of its
expenses, other than those borne by the Advisor. These expenses may include,
but are not limited to: (a) management fees; (b) the charges and expenses of
the Fund's legal counsel and independent accountants; (c) brokers'
commissions, mark-ups and mark-downs and any issue or transfer taxes
chargeable to the Fund in connection with its securities transactions; (d)
all taxes and corporate fees payable by the Fund to governmental agencies;
(e) the fees of any trade association of which the Fund is a member; (f) the
cost of stock certificates, if any, representing shares of the Fund; (g)
amortization and reimbursements of the organization expenses of the Fund and
the fees and expenses involved in registering and maintaining registration of
the Fund and its shares with the U.S. Securities and Exchange Commission, and
the preparation and printing of the Fund's registration statements and
prospectuses for such purposes; (h) allocable communications expenses with
respect to investor services and all expenses of shareholders and trustee
meetings and of preparing, printing and mailing prospectuses and reports to
shareholders; (i) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business; (j) state filing fees; and (k) compensation for employees of the
Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund will declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the
year from its investments, and the Fund will distribute net realized capital
gains, if any, once with respect to each year. Expenses of the Fund,
including the advisory fee, are accrued each day. Reinvestments of dividends
and distributions in additional shares of the Fund will be made at the net
asset value determined on the ex date of the dividend or distribution unless
the shareholder has elected in writing to receive dividends or distributions
in cash. An election may be changed by notifying FPS in writing thirty days
prior to record date.
Dividends paid by the Fund with respect to its Institutional Class and Retail
Class shares are calculated in the same manner and at the same time. Both
Institutional Class and Retail Class shares of the Fund will share
proportionately in the investment income and expenses of the Fund, except
that the per share dividends of Retail Class shares will differ from the per
share dividends of Institutional Class shares as a result of additional
distribution expenses charged to Retail Class shares.
As the sole series of The Timothy Plan, the Fund has qualified, and intends
to continue to qualify, as a regulated investment company under Subchapter M
of the Internal Revenue Code (the "Code"). As such, the Fund will not be
subject to federal income tax, or to any excise tax, to the extent its
earnings are distributed in accordance with the timing requirements imposed
by the Code and by meeting certain other requirements relating to the sources
of its income and diversification of its assets.
The Fund intends to distribute substantially all of its net investment income
and net capital gains. Dividends from net investment income or net
short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. Dividends from net investment
income will generally qualify, in part, for the 70% corporate dividends
received deduction, subject to certain holding period and debt financing
restrictions imposed under the Code on the corporate investor claiming the
deduction. The portion of the dividends so qualified depends on the aggregate
qualifying dividend income received by the Fund from domestic (U.S.) sources.
Distributions paid by the Fund from long-term capital gains, whether received
in cash or in additional shares, are taxable to those investors who are
subject to income tax as long-term capital gains, regardless of the length of
time an investor has owned shares in the Fund. The Fund does not seek to
realize any particular amount of capital gains during a year; rather,
realized gains are a byproduct of Fund management activities. Consequently,
capital gains distributions may be expected to vary considerably from year to
year. Also, for those investors subject to tax, if purchases of shares in the
Fund are made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution.
Dividends which are declared in October, November or December to shareholders
of record in such a month but which, for operational reasons, may not be paid
to the shareholder until the following January, will be treated for tax
purposes as if paid by the Fund and received by the shareholder on December
31 of the calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares
between two mutual funds (or two series of a mutual fund). Any loss incurred
on sale or exchange of the Fund's shares, held for six months or less, will
be treated as a long-term capital loss to the extent of capital gain
dividends received with respect to such shares. All or a portion of the
sales charge incurred in purchasing the Fund's shares will not be included in
the federal tax basis of any of such shares sold or exchanged within ninety
(90) days of their purchase (for purposes of determining gain or loss upon
sale of such shares) if the sale proceeds are reinvested in the Fund or in
another fund and a sales charge that would otherwise apply to the
reinvestment is reduced or eliminated. Any portion of such sales charge
excluded from the tax basis of the shares sold will be added to the tax basis
of the shares acquired in the reinvestment.
In addition to federal taxes, shareholders may be subject to state and local
taxes on distributions. Each year, the Fund will mail you information on the
tax status of the Fund's dividends and distributions. Of course, shareholders
who are not subject to tax on their income would not be required to pay tax
on amounts distributed to them by the Fund.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied
with IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the
Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value per Fund share is determined by the Fund as of the close
of regular trading on each day that the New York Stock Exchange (NYSE) is
open for unrestricted trading from Monday through Friday and on which there
is a purchase or redemption of the Fund's share. The net asset value is
determined by the Fund by dividing the value of the Fund's securities, plus
any cash and other assets, less all liabilities, by the number of shares
outstanding. Expenses and fees of the Fund, including the advisory and the
distributor fees, are accrued daily and taken into account for the purpose of
determining the net asset value.
Fund 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 market, 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 value as determined in good faith by, or under
procedures established by, the Board of Trustees. In determining fair value,
the Trustees may employ an independent pricing service.
Money market securities with less than sixty days remaining to maturity when
acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
money market security with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity,
and will then be valued on an amortized cost basis based upon the value on
such date unless the Trustees determine during such 60 day period that this
amortized cost value does not represent fair market value.
Net asset value is calculated separately for each class of the Fund based on
expenses applicable to the particular class. Although the methodology and
procedures for determining net asset value are identical for the Fund's
classes, the net asset value of the classes may differ because of the
different fees and expenses charged to each class.
HOW TO PURCHASE SHARES
Shares of the Fund may be purchased directly from the Fund at the net asset
value per share, plus the applicable sales load, next determined after
receipt of the order in proper form by the transfer agent. There is a sales
load in connection with the purchase of shares which is reduced on purchases
involving large amounts and which may be eliminated in certain circumstances
described under "Reduced Sales Charges". The Fund reserves the right to
reject any purchase order and to suspend the offering of shares of the Fund.
The Fund will not accept a check endorsed over by a third-party. The minimum
initial investment is $1,000, with no minimum subsequent investment. The
Fund reserves the right to vary the initial investment minimum and minimums
for additional investments at any time. There is no minimum investment
requirement for qualified retirement plans.
At the discretion of the Fund, investors may be permitted to purchase Fund
shares by transferring securities to the Fund that meet the Fund's investment
objectives and policies. Securities transferred to the Fund will be valued
in accordance with the same procedures used to determine the Fund's net asset
value at the time of the next determination of net asset value after such
acceptance. Shares issued by the Fund in exchange for securities will be
issued at net asset value determined as of the same time. All dividends,
interest, subscription, or other rights pertaining to such securities shall
become the property of the Fund and must be delivered to the Fund by the
investor upon receipt from the issuer. Investors who are permitted to
transfer such securities will be required to recognize a gain or loss on such
transfer, and pay tax thereon, if applicable, measured by the difference
between the fair market value of the securities and the investors' basis
therein. Securities will not be accepted in exchange for shares of the Fund
unless: (l) such securities are, at the time of the exchange, eligible to be
included in the Fund and current market quotations are readily available for
such securities; (2) the investor represents and warrants that all securities
offered to be exchanged are not subject to any restrictions upon their sale
by the Fund under the Securities Act of 1933 or under the laws of the country
in which the principal market for such securities exists, or otherwise and
(3) the value of any such security (except U.S. Government securities) being
exchanged together with other securities of the same issuer owned by the
Fund, will not exceed 5% of the Fund's net assets immediately after the
transaction.
Purchase orders for shares of the Fund which are received by the transfer
agent in proper form prior to the close of regular trading hours on the NYSE
(currently 4:00 p.m. Eastern time) on any day that the Fund calculates its
net asset value, are priced according to the net asset value determined on
that day. Purchase orders for shares of the Fund received after the close of
the NYSE on a particular day are priced as of the time the net asset value
per share is next determined.
Purchases may be made in one of the following ways:
Purchases by Mail
Shares may be purchased initially by completing the Investment Application on
pages 22 and 23 of this Prospectus and mailing it to the transfer agent,
together with a check payable to The Timothy Plan, c/o FPS Services, Inc.,
3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903. All
checks for purchase of shares must be drawn on U.S. banks and payable in U.S.
dollars.
Subsequent investments in an existing account in the Fund may be made at any
time by sending a check payable to The Timothy Plan, c/o United Missouri Bank
KC, NA, P.O. Box 412797, Kansas City, MO 64141-2797. Please enclose the
stub of your account statement along with the amount of the investment and
the name of the account for which the investment is to be made and the
account number. Please note: A $20 fee will be charged to your account for
any payment check returned to the custodian.
Purchases through Broker/Dealers
The Fund may accept telephone orders from broker-dealers or service
organizations which have been previously approved by the Fund. It is the
responsibility of such broker-dealers or service organizations to promptly
forward purchase orders and payments for the same to the Fund. Shares of the
Fund may be purchased through broker-dealers,
banks and bank trust departments who may charge the investor a transaction
fee or other fee for their services at the time of purchase.
Wire orders for shares of the Fund received by FPS prior to 4:00 p.m.,
Eastern time, are confirmed at that day's public offering price. Orders
received by dealers after 4:00 p.m., Eastern time, are confirmed at the
public offering price on the following business day.
Applicable Sales Charges
Shares of the Fund are offered at the public offering price which is the net
asset value per share, plus any applicable sales charge. The sales charge is
a variable percentage of the offering price depending upon the amount of the
sale. No sales charge will be assessed on the reinvestment of distributions.
The sales charge will be assessed as follows:<PAGE>
Total Sales Charge
As a % of As a % of Dealer Concession
Offering net amount as a percentage of
Amount of Your Investment Price Invested Offering Price
$1,000 but under $10,000. . 1.75% 1.78% 1.50%
$10,000 but under $25,000 . 1.50% 1.52% 1.25%
$25,000 but under $50,000 . 1.25% 1.27% 1.00%
$50,000 but under $100,000. 1.00% 1.01% 0.75%
$100,000 or over . . . . 0.00% 0.00% 0.00%
Shares purchased through the Fund may be purchased at the net asset value per
share next determined after receipt of the order without a sales charge by
403(b)(7) participants. At the discretion of the Fund, investors may be
permitted to purchase Fund shares without a sales charge by transferring
securities to the Fund that meet the Fund's investment objectives and
policies.
The distributor will pay the appropriate dealer concession to those selected
dealers who have entered into an agreement with the distributor. The
dealer's concession may be changed from time to time. The distributor may
from time to time offer incentive compensation to dealers (which sell shares
of the Fund subject to sales charges) allowing such dealers to retain an
additional portion of the sales load. A dealer who receives all of the sales
load may be considered an "underwriter" under the Securities Act of 1933, as
amended. All such sales charges are paid to the securities dealer involved
in the trade, if any. The foregoing schedule of sales charges applies to
single purchases and to purchases made under a Letter of Intent and pursuant
to the Rights of Accumulation, both of which are described below.
Reduced Sales Charges
The sales charge for purchases of shares of the Fund may be reduced through
Rights of Accumulation or Letter of Intent. To qualify for a reduced sales
charge, an investor must so notify his or her distributor at the time of each
purchase of shares which qualifies for the reduction.
Rights of Accumulation
A shareholder may qualify for a reduced sales charge by aggregating the net
asset values of shares requiring the payment of an initial sales charge,
previously purchased and currently owned with the dollar amount of shares to
be purchased.
Letter of Intent
An investor may qualify for a reduced sales charge immediately by signing a
non-binding Letter of Intent stating the investor's intention to invest
during the next 13 months a specified amount which, if made at one time,
would qualify for a reduced sales charge. The first investment cannot be
made more than 90 days prior to the date of the Letter of Intent. Any
redemptions made during the 13 month period will be subtracted from the
amount of purchases in determining whether the Letter of Intent has been
completed. During the term of a Letter of Intent, the transfer agent will
hold shares representing 1.75% of the indicated amount in escrow for payment
of a higher sales load if the full amount indicated in the Letter of Intent
is not purchased. The escrowed shares will be released when the full amount
indicated has been purchased. If the full amount indicated is not purchased
within the 13 month period, an investor's escrowed shares will be redeemed in
an amount equal to the difference in the dollar amount of sales charge
actually paid and the amount of sales charge the investor would have had to
pay on his or her aggregate purchases if the total of such purchases had been
made at a single time.
Purchases by Wire
To order shares for purchase by wiring federal funds, the transfer agent must
first be notified by calling (800) 662-0201 to request an account number and
furnish the Fund with your tax identification number. Following notification
to the transfer agent, federal funds and registration instructions should be
wired through the Federal Reserve System to:
UNITED MISSOURI BANK KC NA
ABA #10-10-00695
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
FBO "THE TIMOTHY PLAN - RETAIL CLASS"
ACCOUNT OF (exact name(s) of account registration)
SHAREHOLDER ACCOUNT #
A completed application with signature(s) of registrant(s) must be filed with
the transfer agent immediately subsequent to the initial wire. Investors
should be aware that some banks may impose a wire service fee. Shareholders
may be subject to 31% withholding if original application is not received.
Automatic Investment Plan
Shares of the Fund may be purchased through an Automatic Investment Plan (the
"Plan"). The Plan provides a convenient method by which investors may have
monies deducted directly from their checking, savings or bank money market
accounts for investment in the Fund. The minimum investment pursuant to this
Plan is $100 per month. If you desire to take advantage of this Plan simply
complete and remit the Automatic Investment Plan Application on pages 24 and
25. The account designated will be debited in the specified amount, on the
date indicated, and Fund shares will be purchased. Only an account
maintained at a domestic financial institution which is an ACH member may be
so designated. The Fund may alter, modify or terminate this Plan at any
time. For information about participating in the Automatic Investment Plan,
call FPS Services, Inc. at (800) 662-0201.
HOW TO REDEEM SHARES
Shareholders may redeem their shares of the Fund without charge on any
business day that the NYSE is open (see "Determination of Net Asset Value").
Redemptions will be effective at the net asset value per share next
determined after the receipt by the transfer agent of a redemption request
meeting the requirements described below. The Fund normally sends redemption
proceeds on the next business day, but in any event redemption proceeds are
sent within seven calendar days of receipt of a redemption request in proper
form. Payment may also be made by wire directly to any bank previously
designated by the shareholder in a shareholder account application. There is
a $9.00 charge for redemptions by wire. Please note that the shareholder's
bank also may impose a fee for wire service. The Fund will honor redemption
requests of shareholders who recently purchased shares by check, but will not
mail the proceeds until it is reasonably satisfied that the purchase check
has cleared, which may take up to fifteen days from the purchase date, at
which time the redemption proceeds will be mailed to the shareholder. To
avoid delays of this kind, you may wish to purchase by wire if you are
planning on redeeming your shares in the near future.
Except as noted below, redemption requests received in proper form by the
transfer agent prior to the close of regular trading hours on the NYSE on any
business day that the Fund calculates its per share net asset value are
effective that day.
Redemption requests received after the close of the NYSE are effective as of
the time the net asset value per share is next determined.
Retail Class shares of the Fund may be redeemed through certain brokers,
financial institutions or service organizations, banks and bank trust
departments who may charge the investor a transaction fee or other fee for
their services at the time of redemption. Such fees would not otherwise be
charged if the shares were directly redeemed from the Fund.
The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Advisor
or the Board of Trustees, result in the necessity of the Fund selling assets
under disadvantageous conditions and to the detriment of the remaining
shareholders of the Fund.
Pursuant to the Fund's Agreement and Declaration of Trust, payment for shares
redeemed may be made either in cash or in-kind, or partly in cash and partly
in-kind. However, the Fund has elected, pursuant to Rule 18f-1 under the
Act, to redeem its shares solely in cash up to the lesser of $250,000 or 1%
of the net asset value of the Fund, during any 90 day period for any one
shareholder. Payments in excess of this limit will also be made wholly in
cash unless the Board of Trustees believes that economic conditions exist
which would make such a practice detrimental to the best interests of the
Fund. Any portfolio securities paid or distributed in-kind would be valued
as described under "Determination of Net Asset Value." In the event that an
in-kind distribution is made, a shareholder may incur additional expenses,
such as the payment of brokerage commissions, on the sale or other
disposition of the securities received from the Fund. In-kind payments need
not constitute a cross-section of the Fund's portfolio. Where a shareholder
has requested redemption of all or a part of the shareholder's investment,
and where the Fund completes such redemption in-kind, the Fund will not
recognize gain or loss for federal tax purposes, on the securities used to
complete the redemption but the shareholder will recognize gain or loss equal
to the difference between the fair market value of the securities received
and the shareholder's basis in the Fund shares redeemed. Shares may be
redeemed in one of the following ways:
Redemption by Mail
Shares may be redeemed by submitting a written request for redemption to the
transfer agent at 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA
19406-0903.
A written redemption request to the transfer agent must: (i) identify the
shareholder's account number, (ii) state the number of shares or dollars to
be redeemed and (iii) be signed by each registered owner exactly as the
shares are registered. A redemption request for amounts above $25,000, or
redemption requests for which proceeds are to be mailed somewhere other than
the address of record, must be accompanied by signature guarantees.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. Eligible
guarantor institutions include banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations. Broker-dealers guaranteeing signatures
must be members of a clearing corporation or maintain net capital of at least
$100,000. Credit unions must be authorized to issue signature guarantees.
Signature guarantees will be accepted from any eligible guarantor institution
which participates in a signature guarantee program. The transfer agent may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees and guardians.
A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. Questions
with respect to the proper form for redemption requests should be directed to
the transfer agent at (800) 662-0201.
Redemption by Telephone
Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by instructing the transfer
agent by telephone. In order to arrange for redemption by wire or telephone
after an account has been opened, or to change the bank or account designated
to receive redemption proceeds, a written request must be sent to the
transfer agent at the address listed above.
Neither the Fund nor any of its service contractors will be liable for any
loss or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions
are genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, his or her
banking institution, bank account number and the name in which his or her
bank account is registered. To the extent that the Fund fails to use
reasonable procedures to verify the genuineness of telephone instructions, it
and/or its service contractors may be liable for any such instructions that
prove to be fraudulent or unauthorized.
The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time by the Fund.
Systematic Cash Withdrawal Plan
The Fund offers a Systematic Cash Withdrawal Plan as another option which may
be utilized by an investor who wishes to withdraw funds from his or her
account on a regular basis. To participate in this option, an investor must
either own or purchase shares having a value of $10,000 or more. Automatic
payments by check will be mailed to the investor on either a monthly,
quarterly, semi-annual or annual basis in amounts of $100 or more. All
withdrawals are processed on the 25th of the month or, if such day is not a
business day, on the next business day and paid promptly thereafter. Please
complete the appropriate section on the Investment Application enclosed
within this Prospectus, indicating the amount of the distribution and the
desired frequency.
Redemption by Automated Clearing House ("ACH")
A shareholder may elect to have redemption proceeds, cash distributions or
systematic cash withdrawal payments transferred to a bank, savings and loan
association or credit union that is an on-line member of the ACH system.
There are no fees charged by the Fund associated with the use of the ACH
service.
ACH redemption requests must be received by the Fund's transfer agent before
4:00 p.m. New York time to receive that day's closing net asset value. ACH
redemptions will be sent on the day following the shareholder's request. The
funds from the ACH redemption will normally be available two days after the
redemption has been processed.
Additional Information
The Fund also reserves the right to involuntarily redeem an investor's
account where the account is worth less than the minimum initial investment
required when the account is established, presently $1,000. (Any redemption
of shares from an inactive account established with a minimum investment may
reduce the account below the minimum initial investment, and could subject
the account to redemption initiated by the Fund.) The Fund will advise the
shareholder of such intention in writing at least sixty (60) days prior to
effecting such redemption, during which time the shareholder may purchase
additional shares in any amount necessary to bring the account back to
$1,000.
If the Trustees determine that it would be detrimental to the best interest
of the remaining shareholders of the Fund to make payment in cash, the Fund
may pay the redemption price in whole or in part by distribution in kind of
readily marketable securities, from the Fund, within certain limits
prescribed by the U.S. Securities and Exchange Commission. Such securities
will be valued on the basis of the procedures used to determine the net asset
value at the time of the redemption. If shares are redeemed in kind, the
redeeming shareholder will incur brokerage costs in converting the assets
into cash.
RETIREMENT PLANS
The Fund offers its shares for use in certain Tax Deferred (such as IRA,
defined contribution, 401(k) and 403(b)(7) plans) Retirement Plans. The Fund
sponsors IRA and 403(b)(7) plans. Information on these Plans is available
from FPS or by reviewing the Statement of Additional Information.
PERFORMANCE
Total return data may from time to time be included in advertisements about
the Fund. The Fund's total return may be calculated on an annualized and
aggregate basis for various periods (which periods will be stated in the
advertisement). Average annual return reflects the average percentage change
per year in value of an investment in the Fund. Aggregate total return
reflects the total percentage change over the stated period. Any fees
charged by banks or their institutional investors directly to their customer
accounts in connections with investments in the Retail Class shares of the
Fund will not be included in the Fund's calculations of total returns.
The Fund may compare its investment performance with appropriate market
indices such as the S&P Index and to appropriate mutual fund indices; and the
Fund may advertise its ranking compared to other similar mutual funds as
reported by industry analysts such as Lipper Analytical Services, Inc.
All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based
on many factors, including market conditions, the composition of the
investments in the Fund, and the Fund's operating expenses. Investment
performance also often reflects the risk associated with the Fund's
investment objectives and policies. These factors should be considered when
comparing the Fund to other mutual funds and other investment vehicles.
The performance of the Institutional Class shares will normally be higher
than the Retail Class shares because of the sales charge (when applicable)
and additional distribution expenses charged to the Retail Class shares.
Shareholders may obtain current performance information about the Fund by
calling (800) TIM-PLAN.
Further information about the performance of the Fund is included in the
Fund's Annual Report, dated December 31, 1995, which may be obtained without
charge by contacting the Fund at (800) TIM-PLAN.<PAGE>
Timothy Plan
Retail Class
Application
1. Initial Investment ($1,000 minimum)
Form of Payment
Check for $__________________ enclosed (make payable to
"The Timothy Plan")
By Wire*1 An initial purchase of $_________ was wired on
by
Date
_________________________________________________ to account #
______________________________
Name of your Bank or Broker Number assigned by F/P/S
2. Registration (Please Print) No certificate will be issued unless
requested in writing.
Individual Must complete items 1, 3, 4 and 8
(you may choose options 5, 6 or 7).
First Name Middle Name Last Name Social Security Number
Joint Owner First Name*2 Middle Name Last Name Social Security Number
Citizen of: United States Other (Please Indicate)
_____________________________________
Gift to Minors Must complete items 1, 3, 4 and 8
(you may choose options 5, 6, or 7).
Custodian (Name one only) As Custodian For (Name one only)
Under the ____________________________ Uniform Gift to Minors Act
State Security Number
Corporations, Partnerships, Trusts and Others Must complete items
1, 3, 4, 9 and 10 (you may choose options 5, 6, or 7).
Name of Corporation, Partnership, Trust or Other
Tax ID # Name of Trustee(s) Date of Trust
3. Mailing Address of Record and Telephone Number(s)
Street Address and Apartment Number
City State Zip Code Zip Extend (Area Code)
Daytime Telephone Number
(Area Code) Evening Telephone Number
4. Distribution Options (Please indicate one) See page 11 of the
Prospectus for more detail.
Income Dividends (check one box/line only) reinvested
paid in cash
Capital Gains Distributions (check one box/line only)
reinvested paid in cash
*1 Before making an initial investment by wire, you must be assigned
an account number by calling (800) 662-0201. Then
have your local bank wire your funds to: United
Missouri Bank, N.A., ABA # 10-10-00695 for credit to FPS
AC # 98-7037-071-9
(The Timothy Plan). Be sure to include your name and account number
on the wire.
*2 (Joint ownership with rights of survivorship unless otherwise noted).
5. Systematic Withdrawal Plan ($10,000 minimum necessary)
See page 17 of the Prospectus for more detail.
A check in the amount of $______________________ (minimum $100.00)
will be sent to you at your address of record unless otherwise noted.
Please select desired frequency: Monthly Quarterly, in the months of
Semi-Annual or Annual, in the month(s) of ____, __________, or __________.
To send cash distributions via the Automated Clearing House System ("ACH"),
please contact the Fund at (800) TIM-PLAN to obtain the proper form(s).
6. Telephone Privileges See page 17 of the Prospectus for more detail.
Redeem Shares by Telephone
I (we) authorize FPS Services, Inc. to honor telephone
instructions for my (our) account which I (we) understand the
proceeds of which will be mailed only to the address of record
or wired to the bank specified below. Neither the FPS Services, Inc.
will be liable for properly acting upon telephone instructions believed
to be genuine. Please attach a voided check on your account if the
bank option is chosen.
Name of Bank City State
Bank Routing Number Account Number Checking Savings
7. Automatic Investment Plan (For this option - please complete and send
in form on pages 21 and 22 of the Prospectus).
8. Signature and Certification (This Section must be completed by
Individual, Joint and Custodial accounts).
The following is required by Federal tax law to avoid 31% backup
withholding; "By signing below, I certify under penalties of perjury
that the social security or taxpayer
identification number entered above is correct (or I am waiting for a
number to be issued to me), and that I have not been notified by the
IRS that I am subject to backup
withholding unless I have checked the box." If you have been
notified by the IRS that you are subject to backup withholding,
check box [ ].
Receipt of current prospectus is hereby acknowledged.
Signature Owner Custodian Trustee Date
Signature of Joint Owner (if applicable)
Date
9. Resolutions (This Section must be completed by Corporations,
Partnerships, Trusts and Other Organizations).
RESOLVED: That this corporation or organization become a shareholder of
the Timothy Plan (the "Fund) and that _________________
_______________ is (are) authorized to complete and execute the
Application on behalf of the corporation or organization and take any
action for it as may be necessary or appropriate with respect
to its shareholders account(s) with the Fund, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized
to sign any documents necessary or appropriate to appoint
FPS Services, Inc. as redemption agent of the corporation for shares of
the Fund, to establish or acknowledge terms and conditions
governing the redemption of said shares or to otherwise implement the
privileges elected on the application.
10. Certificate (This Section must be completed by Corporations,
Partnerships, Trusts and Other Organizations).
I hereby certify that the foregoing resolutions
are in conformity with the Charter and By-Laws or other
empowering documents of the:
___________________________________________________
incorporated or formed under the laws of _______________
(Name of Corporation)(State)
and were adopted at a meeting of the Board of Directors or
Trustees of the organization or corporation duly called
and held on ________________ at which a quorum was preset and
acting throughout, and that the same are now in full force and effect.
I further certify that the following is (are) the duly elected
officer(s) of the corporation or organization, authorized to act
in accordance with the foregoing resolutions.
NAME TITLE
____________________________ __________________________
____________________________ ___________________________
Witness my hand and the seal of the corporation or organization this
___________ day of _______________________, 19 ______.
________________________
____________________ *Secretary-Clerk
Other Authorized Officer (if required)
* If the Secretary or other recording officer is authorized
to act by the above resolutions, this certificate must also
be signed by another officer.<PAGE>
Automatic Investment Plan Application
How does it work?
1. FPS Services, Inc., through our bank, United Missouri Bank KC NA,
draws an automatic clearing house (ACH) debit electronically against
your personal checking account each month, according to your instructions.
2. Choose any amount ($100 or more) that you would like to invest
regularly and your debit for this amount will be processed by
FPS Services, Inc. as if you had written a check yourself.
3. Shares will be purchased and a confirmation sent to you.
How do I set it up?
1. Complete the forms and the Fund Application Form if
you do not already have an existing account.
2. Mark one of your personal checks or deposit slips VOID,
attach it to the forms below and mail to FPS Services, Inc.,
P.O. Box 61503, King of Prussia, PA 19406-0903
3. As soon as your bank accepts your authorization,
debits will be generated and your Automatic Investment Plan started.
In order for you to have ACH debits from your account, your bank must
be able to accept ACH transactions and/or be a member of an ACH
association. Your branch manager should be able to tell you your
bank's capabilities. We cannot guarantee acceptance by your bank.
4. Please allow one month for processing of your
Automatic Investment Plan before the first debit occurs.
- --------------------------------------------------------------
Automatic Investment Plan Application
TO: FPS Services, Inc.
P.O. Box 61503
King of Prussia, PA 19406-0903
Please start an Automatic Investment Plan for me and invest
($100 or more)
on the [ ] 10th [ ] 15th [ ] 20th of each month, in shares of
THE TIMOTHY PLAN - RETAIL CLASS.
Check one:
[ ] I am in the process of establishing an account. or
[ ] My account number is:
Name as account is registered
Street
City State Zip + ext.
I understand that my ACH debit will be dated on the day of each month as
indicated above or as specified by written request. I agree that if
such debit is not honored upon presentation, FPS Services, Inc.
may discontinue this service and any share purchase made upon
deposit of such debit may be canceled. I
further agree that if the net asset value of the shares purchased
with such debit is less when said purchase is canceled than when
the purchase was made, FPS Services, Inc. shall be authorized to
liquidate other shares or fractions thereof held in my account to
make up the deficiency. This Automatic Investment Plan may
be discontinued by FPS Services, Inc. upon 30-days written notice
or at any time by the investor by written notice to FPS Services,
Inc. which is received not later than 5 business days prior to
the above designed investment date.
Signature(s): <PAGE>
Automatic Investment Plan Application
Bank Request and Authorization
TO:
Name of Your Bank Bank Checking Account
Number
Address of Bank or Branch Where Account is Maintained
As a convenience to me, please honor ACH debits on my account drawn by FPS
Services, Inc., United Missouri Bank KC NA and payable to "THE TIMOTHY PLAN".
I agree that your rights with respect to such debit shall be the same as if it
were a check drawn upon you and signed personally by me. This authority shall
remain in effect until you receive written notice from me
changing its terms or
revoking it, and until you actually receive such notice, I agree that you
shall be fully protected in honoring such debit.
I further agree that if any debit is dishonored, whether with or without
cause or whether intentionally or inadvertently, you shall be under no
liability whatsoever.
DEPOSITOR'S
Signature of Bank Depositor(s) as shown on bank records.
NOTE: Your bank must be able to accept ACH transactions and/or be a member of
an ACH association in order for you to use this service.
Indemnification Agreement
TO: The bank named above
So that you may comply with your Depositor's request and authorization, THE
TIMOTHY PLAN agrees as follows:
1. To indemnify and hold you harmless from any loss you may suffer arising
from or in connection with the payment by you of a debit drawn by FPS
Services, Inc. to the order of THE TIMOTHY PLAN designated on the account
of your depositor(s) executing the authorization including any costs or
expenses reasonably incurred in connection with such loss.
THE TIMOTHY PLAN will not, however, indemnify you against
any loss due to your payment
of any debit generated against insufficient funds.
2. To refund to you any amount erroneously paid by you to FPS Services, Inc.
on any such debit if claim for the amount of such erroneous payment is
made by you within 3 months of the date of such debit on which
erroneous payment was made.
<PAGE>
Timothy Plan
Retail Class
Request for Transfer
1. Investor Information
First Name
Middle Initial Last Name
Street Address
City State Zip Code Zip Extend
Social Security Number Date of Birth (Area Code)
Residence Telephone Number (Area Code) Business
Telephone Number
2. Previous Investment Firm
Name of Previous Firm
Address
Investor's Name Account Number
Type of Account: Individual Joint UGMA Trust
Type of Assets: Mutual Fund Money Market CD(Immediately/At Maturity)
Securities
3. Amount To Be Transferred To The Timothy Plan
Liquidate all assets from the above account and transfer the proceeds.
Liquidate $_________________________ from the above account and transfer
the proceeds.
4. Transfer Instructions
Make check payable to: The Timothy Plan
Mail to: Post Office Box 874, Conshohocken, PA 19428-0874.
5. Investor's Authorization
Signature of Participant Date Signature Guarantee<PAGE>
INVESTMENT ADVISOR
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789
INVESTMENT MANAGER
Awad & Associates
477 Madison Avenue
New York, NY 10022
UNDERWRITER
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Tait, Weller & Baker
Two Penn Center
Suite 700
Philadelphia, PA 19102-1707
For Additional Information About The Timothy Plan, Please Call:
(800) TIM-PLAN
