SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
Solicitation Material Pursuant to 240.14a-11(c) or 240.14a-12
The Timothy Plan
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
.........................................................................
2) Aggregate number of securities to which transaction applies:
.........................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it was
determined):
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4) Proposed maximum aggregate value of transaction:
.........................................................................
5) Total fee paid:
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed: <PAGE>
[LETTERHEAD]
The Timothy Plan
1304 West Fairbanks Ave.
Winter Park, FL 32789
January 2, 1996
Dear Shareholder:
Your fund's management and trustees have made certain decisions that need
to be ratified by you, the shareholders, which we believe will
significantly improve both the performance and operation of The Timothy
Plan (the "Fund"). You are being asked to approve four separate items:
1. The election of seven trustees.
2. The replacement of the Fund's current investment manager, Systematic
Financial Management, L.P. with the trustees' unanimous selection,
Awad and Associates.
3. The elimination of the Retail Class' current front-end load and
replacment with a Contingent Deferred Sales Charge, revision of the
Retail Class' distribution plan to include a fee increase. This will
result in a slight increase in annual operating costs, but should
dramatically increase The Timothy Plan's asset growth which, we
believe, will ultimately lower operating costs. Please review this
section very carefully. The distribution plan fee increase will only
go into effect if and when we secure non-recourse financing for
advancing the sales commissions on Retail Class shares to
participating brokers/dealers. Also note that shares of the Retail
Class outstanding before the date of the shareholder's meeting may
not be assessed as a Contingent Deferred Sales Charge upon redemption
of those share.
We enthusiastically encourage you to vote FOR all the above items. We are
convinced that each of these issues are in the best interest of you, the
shareholder, as well as the long term effectiveness of The Timothy Plan.
Thank you for your faithfulness.
Sincerely,
/s/ Arthur D. Ally
Arthur D. Ally
Chairman of the Board<PAGE>
THE TIMOTHY PLAN
1304 West Fairbanks Avenue
Winter Park, Florida 32789
1-800-846-7526
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
THE TIMOTHY PLAN
To be held January 31, 1997
TO THE SHAREHOLDERS OF THE TIMOTHY PLAN:
NOTICE IS HEREBY GIVEN that a SPECIAL MEETING OF SHAREHOLDERS (the
"Meeting") of The Timothy Plan (the "Fund"), will be held on January 31,
1997 at 1:00 p.m. Eastern time, at the offices of the Fund's investment
advisor, Timothy Partners, Ltd. (the "Advisor"), 1304 West Fairbanks
Avenue, Winter Park, Florida 32789, for the purpose of considering and
acting upon the following matters:
1. To elect seven (7) trustees by the shareholders entitled to
vote thereon, without differentiation between the classes, to
serve until their respective successors are duly elected and
qualified;
2. To ratify or reject a new sub-investment advisory agreement for
the Fund (the "New Sub-Investment Advisory Agreement") and to
approve or disapprove the continuation of the New Sub-Investment
Advisory Agreement among the Fund, Timothy Partners, Ltd. and Awad
& Associates, by the shareholders entitled to vote thereon, without
differentiation between the classes;
3. To approve or disapprove a revised distribution plan (the
"Revised Distribution Plan") on behalf of the Retail Class
shares of the Fund by the shareholders of the Retail Class
Only; and
4. To transact such other business as may properly come before the
Meeting, or any adjournment thereof.
Shareholders of record of the Fund at the close of business on
November 14, 1996 are entitled to notice of, and to vote on, the proposals
at the Meeting, or any adjournment thereof.
Shareholders are invited to attend in person. If you plan to attend
the Meeting, so indicate on the enclosed proxy card and return it promptly
in the enclosed envelope. No postage is required if mailed in the United
States. Whether you will be able to attend or not, PLEASE VOTE, SIGN AND
DATE THE PROXY AND RETURN IT PROMPTLY.
By Order of the Board of Trustees
/s/ Joseph E. Boatwright
January 2, 1997 Joseph E. Boatwright
Secretary
PLEASE RETURN YOUR PROXY IMMEDIATELY
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by or on behalf of the Board of Trustees of The Timothy Plan
(the "Fund") for use at its Special Meeting of Shareholders of the Fund
(the "Meeting") to be held on January 31, 1997, at 1:00 p.m. Eastern time
at the offices of the Fund's investment advisor, Timothy Partners, Ltd.
(the "Advisor"), 1304 West Fairbanks Avenue, Winter Park, Florida 32789,
and at any adjournment thereof. This Proxy Statement and the accompanying
form of proxy were first mailed to shareholders on or about January 2,
1997.
The Fund is an open-end, management investment company, as defined in
the Investment Company Act of 1940, as amended (the "Act"). The Fund
currently offers two classes of shares: Institutional Class shares, which
have no sales charge but are subject to annual 12b-1 Plan expenses; and
Retail Class shares which have a front-end sales charge and are subject to
annual 12b-1 Plan expenses. The Fund has authorized an unlimited number
of shares of beneficial interest (par value $0.001 per share). The shares
of the Fund do not have cumulative voting rights.
All proxies solicited by the Board of Trustees, which are properly
executed and received by the Secretary prior to the Meeting will be voted
at the Meeting, in accordance with the shareholders' instructions thereon.
If no instruction is given on a proxy, it will be voted FOR the election of
each of the nominees for trustee named below, unless authority to vote for
a particular nominee is withheld.
Shareholders of record of the Fund at the close of business on
November 14, 1996 (the "Record Date") are entitled to notice of, and to
vote on, the proposals at the Meeting and any adjournment thereof. At the
close of business on November 14, 1996, there were 999,232.309 shares of
the Fund outstanding comprised of 684,354.025 shares of the Institutional
Class and 314,878.284 shares of the Retail Class.
Some proposals require more votes than others to be approved. An
affirmative vote of a majority of the Fund's aggregate outstanding shares
(defined in the Act as the lesser of (i) 67% of the shares of the Fund
present at the Meeting, if holders of more than 50% of the outstanding
shares are present in person or by proxy, or (ii) more than 50% of the
outstanding shares of the Fund) is necessary to approve the election of
trustees (Proposal No. 1); and to approve the New Sub-Investment Advisory
Agreement (Proposal No. 2). An affirmative vote of a majority of the
aggregate outstanding shares of the Retail Class present in person or by
proxy and voting is necessary to approve the Revised Distribution Plan
(Proposal 3).
As a general matter, all shares of the Fund entitled to vote on a
matter may vote without differentiation between the separate classes on a
one-vote-per-share basis and each fractional share is entitled to a
proportionate fractional vote; provided, however, if a matter to be voted
on effects only the interests of a particular class, such as Proposal No. 3
to be voted on at this Meeting, then only the shareholders of the affected
class are entitled to vote on the matter. See "Summary of Proposals" below.
<PAGE>
SUMMARY OF PROPOSALS
PROPOSAL: SHAREHOLDERS ENTITLED
TO VOTE ON PROPOSAL:
1. To elect seven (7) trustees by the shareholders voting ALL
CLASSES
together as a single class, to serve until their respective
successors are duly elected and qualified.
2. To ratify or reject a new sub-investment advisory agreement ALL
CLASSES(the "New Sub-Investment Advisory Agreement") for the Fund
and to approve or disapprove the continuation of the New Sub-
Investment Advisory Agreement among the Fund, Timothy
Partners, Ltd. and Awad & Associates.
3. To approve or disapprove a revised distribution RETAIL CLASS ONLY
plan (the "Revised Distribution Plan") on behalf of
the Retail Class shares of the Fund by the shareholders
of the Retail Class Only.
One third of the shares issued and outstanding and entitled to vote,
present in person or represented by proxy, constitute a quorum for the
transaction of business at the Meeting. If a quorum is not present or
represented at the Meeting, the holders of a majority of the shares present
in person or by proxy shall have the power to adjourn the Meeting to a
later date, without notice other than announcement at the Meeting, until a
quorum shall be present or represented. Votes cast by proxy or in person at
the Meeting will be counted by persons appointed by the Fund to act as
election inspectors for the Meeting.
In the event that a quorum is present, but sufficient votes in favor
of the amendments are not received by the time scheduled for the Meeting,
the persons named as proxies may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of the shares present in
person or by proxy at the session of the Meeting adjourned. The persons
named as proxies will vote in favor of or against any such adjournment in
direct proportion to the proxies received for or against the proposed
amendments.
The election inspectors will count the total number of votes cast
"for" approval of the proposals for the purpose of determining whether
sufficient affirmative votes have been cast. The election inspectors will
count shares represented by proxies that withhold authority to vote for a
nominee for election as a trustee or that reflect abstentions or "broker
non-votes" (i.e., shares held by brokers or nominees as to which: (i)
instructions have not been received from the beneficial owners or persons
entitled to vote; and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) as shares that are
present and entitled to vote on the matter for purposes of determining the
presence of a quorum. With respect to the election of trustees and other
proposals, withholding authority to vote, abstentions, and broker non-votes
have the effect of a negative vote on the proposal.
The Board of Trustees knows of no business other than that
specifically mentioned in the Notice of Special Meeting which will be
presented for consideration at the Meeting. If any matters are properly
presented, it is the intention of the persons named in the enclosed proxy
to vote in accordance with their best judgment. Abstentions and broker
non-votes will be included for purposes of determining whether a quorum is
present at the Meeting, but will be treated as votes not cast and,
therefore, will not be counted for purposes of determining whether matters
to be voted upon at the Meeting have been approved.
As of the Record Date, the following persons owned more than 5% of
the outstanding shares of the Retail Class shares:
Name & Address of Beneficial Owners Percentage of Retail Class
Southwest Securities, Inc. 6.83%
Dallas, TX
As of the Record Date, no individual trustee of the Fund, except Mr.
Boatwright, owns beneficially more than 1% of the outstanding voting shares
of the Fund, and the trustees together do not own beneficially, more than
1% of the outstanding voting shares of the Fund.
Shareholders who execute proxies retain the right to revoke them at
any time before they are voted by notifying the Fund or by voting at the
Meeting. A proxy, when executed and not revoked, will be voted as
directed. In the absence of such direction, proxies will be voted in favor
of the applicable proposal.
The solicitation of proxies is being made primarily through mailing
this Proxy Statement and the accompanying Proxy. Additional solicitation
may be made by the officers or trustees of the Fund by mail, telephone or
telegraph, or in person. It is not anticipated that any solicitations will
be made by specially engaged employees or paid proxy solicitors. The cost
of the preparation of this Proxy Statement and Proxy and the costs of
solicitation will be borne by the Advisor. Further solicitation may be made
by mail or telephone by regular employees of the Advisor who will receive
no compensation for such solicitation.
Audited financial statements of the Fund in the form of an Annual
Report to Shareholders dated December 31, 1995 and semi-annuals have been
mailed prior to this proxy mailing. The annual report is not to be
regarded as proxy soliciting material. The Fund will furnish, without
charge, a copy of the Fund's Annual Report to any shareholder who requests
one. Shareholders may obtain the Annual Report by calling the Fund at (800)
TIM-PLAN.
PROPOSAL NO. 1
ELECTION OF TRUSTEES
At the Meeting, seven (7) nominees will be put forward for election
as trustees. Each trustee so elected will hold office until his successor
is elected and qualifies, or until his term as trustee is terminated as
provided in the Fund's By-Laws. Each of the seven nominees listed below
for election to the Board of Trustees has consented to be nominated and to
serve, if elected, as trustee. If any of the nominees are unavailable to
serve as trustee, the proxies will be voted for such other persons as the
Board of Trustees may recommend. The Fund currently knows of no reason why
any of the nominees listed below will be unable to serve if elected.
Messrs. Arthur D. Ally, Wesley W. Pennington and Mark Schweizer have served
in their capacities as trustees since January 19, 1994 and were elected by
the sole shareholder of the Fund at the organizational meeting held January
19, 1994. Joseph E. Boatwright has served in his capacity as a trustee
since April 20, 1995 and was elected by the Board of Trustees at a Board of
Trustees meeting held on April 20, 1995. Messrs. Jock M. Sneddon, Philip
B. Crosby and Daniel D. Busby are not currently serving on the Board of
Trustees of the Fund. Messrs. Sneddon, Crosby and Busby have been
nominated by the current trustees who are not "interested persons" of the
Advisor, Messrs. Pennington and Schweizer. Messrs. Ally, Boatwright,
Sneddon and Crosby are "interested persons" of the Advisor and Messrs.
Schweizer, Pennington and Busby are not an "interested persons" of the
Advisor as that term is defined in the Act.
TRUSTEES, EXECUTIVE OFFICERS AND NOMINEES
The following table sets forth information with respect to the
nominees for election as trustees and the current Board of Trustees:
Position(s)
Held with Trustee Principal Occupation(s)
Name and Address Age Registrant Since During the Past Five Years
Arthur D. Ally * 54 Chairman & 1994 President, Covenant Financial
1304 West Fairbanks Ave President Management, Inc. (1990-
Winter Park, Florida present).
Wesley W. Pennington 65 Trustee 1994 Secretary/Treasurer, American
442 Raymond Ave. Call to Greatness(publishing);
Longwood, Florida President & Sole Shareholder,
Weston, Inc.(fabric treatment)
(1979-present); President &
Sole Shareholder, Designer
Services Group, Inc.(furniture
storage & delivery) (1981-1991).
Mark Schweizer 64 Trustee 1994 Retired; prior thereto
1290 Palmetto Ave. Architect/Engineer, President
Winter Park, Florida of Schweizer, Inc.(1960-1996).
Joseph E. Boatwright*64 Secretary 1995 Retired; prior thereto Senior
1410 Hyde Park Drive & Trustee Pastor; Aloma Baptist Church
Winter Park, Florida (1970-1996).
Jock M. Sneddon * 49 N/A N/A Physician, Florida Hospital
6001 Vineland Drive Center(present); prior thereto
Orlando, FL President and Director of
Sneddon & Helmers M.D.P.A.
(1976-1993).
Philip B. Crosby * 70 N/A N/A Owner and Founder; Career IV
P.O. Box 1927 (1991-current); prior thereto
Winter Park, Florida Founder, Philip Crosby,
Associates, Inc. (1979-
retired 1991).
Position(s)
Held with Trustee Principal Occupation(s)
Name and Address Age Registrant Since During the Past Five Years
Daniel D. Busby, CPA 55 N/A N/A CFO,International Center
P.O. Box 50188 of Wesleyan Church (1986-
Indianapolis, IN present); and Partner,
Busby, Keller & Co.
* These trustees and officers are considered "interested persons" of the
Funds within the meaning of Section 2(a)(19) of the Act. The trustees
and officers considered "interested persons" are so deemed by reason of
their affiliation with the Fund's investment advisor and as a result of
being a trustee and/or officer of the Fund.
There have been no purchases or sales of the securities of the Fund's
investment advisor since December 31, 1996 by any trustee or nominee for
trustee.
The officers conduct and supervise the daily business operations of the
Fund, while the trustees, in addition to functions set forth under
"Investment Advisor," "Investment Manager," and "Underwriter," review such
actions and decide on general policy. Compensation to officers and
trustees of the Fund who are affiliated with the Advisor is paid by the
Advisor, and not by the Fund. For the fiscal year ended December 31, 1996,
the Fund did not compensate any of its trustees. In addition, no trustee
served on the Board of Directors of another investment company managed by
the Advisor for the calendar year ended December 31, 1996.
The Fund has no separate Nominating or Compensation Committee. Subject
to the provisions of the Act, the trustees have filled and will continue to
fill any vacancies on the Board, provided that a majority of the trustees
have been approved by the shareholders and the selection and nomination of
trustees who are not "interested persons" of the Fund will be at the
discretion of the trustees who are not "interested persons." The Fund has
an Audit Committee of which Messrs. Pennington and Schweizer are members.
There were four meetings of the Board of Trustees and one of its Audit
Committee during the fiscal year ended December 31, 1996. All of the
incumbent trustees attended at least 75% of the aggregate of all Board of
Trustees' meetings held and the total number of meetings held by all
committees of the Board on which they served during the fiscal year ended
December 31, 1995. The Audit Committee, which last met on March 10, 1996,
has the responsibility, among other things, to: (i) recommend the selection
of the Fund's independent auditors; (ii) review and approve the scope of
the independent auditors' audit activity; (iii) review the financial
statements which are subject to the independent auditors' certification;
and (iv) review with the independent auditors the adequacy of the Fund's
basic accounting system and the effectiveness of the Fund's internal audit
activities and internal accounting controls.
Recommendation:
The trustees previously elected by the shareholders unanimously
recommend a vote FOR each nominee. The trustees believe that the
nominees will serve the best interests of shareholders. Shareholders
vote together on this issue. Votes will be counted in the aggregate.
An affirmative vote of the majority of the outstanding shares of the
Fund present in person or by proxy is necessary to elect the nominees
for trustees. Unless a contrary specification is made, any executed but
unmarked proxy will be voted FOR this Proposal
No. 1.
PROPOSAL NO. 2
APPROVAL OF THE NEW SUB-INVESTMENT ADVISORY
AGREEMENT FOR THE FUND
General
At the Meeting, shareholders will be asked to approve a
New Sub-Investment Advisory Agreement among the Fund, Timothy
Partners, Ltd., and Awad & Associates. At its meeting on November 14, 1996,
the Board of Trustees determined that the sub-investment advisory agreement
with Systematic Financial Management, L.P. ("Systematic") was no longer in
the best interests of the shareholders of the Fund. In reaching this
conclusion, the Board of Trustees considered various factors, including the
investment performance of Systematic, its fee structure and investment
philosophy. The factors considered by the Board of Trustees in determining
the reasonableness and fairness of the proposed New Sub-Investment Advisory
Agreement are described under "Evaluation of the New Sub-Investment
Advisory Agreement by the Board of Trustees."
The Board of Trustees has determined that the New Sub-Investment Advisory
Agreement is in the best interests of the Fund and its shareholders. The
sub-investment advisory agreement with Systematic terminated December 31,
1996 and the New Sub-Advisory Agreement became effective January 1, 1997.
The Board of Trustees, including a majority of the trustees deemed not
"interested persons" of the Fund, approved the New Sub-Investment Advisory
Agreement at a meeting held on November 29, 1996. Pursuant to Rule 15a-4
of the Act, the Fund may commence the New Sub-Investment Advisory Agreement
before it has been approved by a majority of the "outstanding voting
securities" of the Fund, as long as such approval is obtained within 120
days after the termination of the sub-investment advisory agreement with
Systematic. Therefore, shareholders are being asked to ratify the
New Sub-Investment Advisory Agreement and approve its continuation.
In the event the New Sub-Investment Advisory Agreement is not approved by the
shareholders of the Fund, the trustees of the Fund will consider what other
action is appropriate based upon the best interests of the shareholders of
the Fund.
The following summary provides information about the Fund's investment
advisor, investment advisory agreement, Systematic and its sub-investment
advisory agreement, the proposed new investment manager and the terms and
conditions of the proposed New Sub-Investment Advisory Agreement.
Information Concerning the Fund's Investment Advisor and Investment
Advisory Agreement
Timothy Partners, Ltd. (the "Advisor"), 1304 West Fairbanks Avenue,
Winter Park, Florida 32789, 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 objective, policies and restrictions of the
Fund. The Advisor approves the portfolio of securities selected by the
Fund's investment manager, pursuant to a sub-investment advisory agreement.
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) Systematic for assisting in the selection of
portfolio securities for the Fund and (ii) Covenant Financial Management,
Inc. ("CFM") as reimbursement for certain expenses related to the daily
operations of the Fund performed by CFM. In addition, this fee 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 Advisor's fee is higher than that
charged by other funds, but is comparable to fees charged by funds with
similar investment objectives.
Arthur D. Ally, the President, Chairman of the Board and trustee of the
Fund, is President, Director and a 70% shareholder of Covenant Funds, Inc.
("Covenant"), 1304 West Fairbanks Avenue, Winter Park, Florida 32789, which
is the managing general partner of the Advisor. Mr. Ally also is an
individual general partner of the Advisor. Neither the Advisor nor its
managing general partner had previously served as an advisor to a
registered investment company. Mr. Ally, however, has had extensive
securities industry experience, having served as financial consultant and
branch manager for three securities firms over the past nineteen years:
Prudential Bache, Shearson Lehman Brothers and Investment Management &
Research. Some or all of these firms may be used by the Fund's investment
manager to execute portfolio trades for the Fund. Neither Mr. Ally nor any
person affiliated with the Fund receives any benefit from any such
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: salaries of administrative
personnel, cost of preparing 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.
The Advisor provides portfolio management for the Fund pursuant to an
investment advisory agreement between Timothy Partners, Ltd. and the Fund
dated February 23, 1994, as amended August 28, 1995 (the "Advisory
Agreement"). The Advisory Agreement permits the Advisor to retain, at the
Advisor's expense, the services of a sub-investment advisor. A copy of the
Advisory Agreement and its amendment is attached to this Proxy Statement as
Exhibit A.
The Advisory Agreement provides that the Advisor and the Fund may share
facilities common to each in the conduct of their respective businesses,
with the appropriate proration of expenses between them. In addition, the
Fund is responsible for paying the costs incurred in connection with: the
maintenance of its corporate existence; the maintenance of its own books,
records and procedures; communication with shareholders; the payment of
dividends; transfer of stock, including issuance, redemption and repurchase
of shares; preparation of share certificates; reports and notices to
shareholders; calling and holding of shareholders' meetings; miscellaneous
office expenses; brokerage commissions; custodian fees; legal and
accounting fees; the fees and expenses of the Fund's non-interested
trustees; and taxes.
The Advisory Agreement was approved by the Board of Trustees of the Fund
on January 19, 1994, and was approved by the initial shareholders of the
Fund on January 26, 1994. The amendment to the Advisory Agreement was
approved by the Board of Trustees of the Fund on July 25, 1995. The
Advisory Agreement will remain in effect until February 23, 1997, after
which it may continue in effect from year to year if specifically approved
at least annually by vote of "a majority of the outstanding voting
securities" of the Fund, as defined in the Act, or by the Board of Trustees
and, in either event, by the vote of a majority of the trustees who are not
parties to the Advisory Agreement or interested persons of any such party,
cast in person at a meeting called for such purpose.
The Advisory Agreement may be terminated without penalty at any time upon
60 days' written notice by the Fund, by vote of the holders of a majority
of the Fund's outstanding voting securities or by Timothy Partners, Ltd.
The Advisory Agreement will automatically terminate in the event of its
assignment.
Pursuant to the Advisory Agreement, the Advisor is entitled to an annual
fee, payable monthly, of 0.85% of the average daily net assets of the Fund.
For the fiscal years ended December 31, 1995 and 1996, the Fund accrued
advisory fees of $41,257 and $78,848 (unaudited), respectively. However,
the advisory fees noted above were waived by the Advisor.
The Advisor does not perform investment advisory services for any other
investment company.
Information Concerning Systematic and Its Sub-Investment Advisory Agreement
The sub-investment advisory agreement among Systematic, Timothy Partners,
Ltd. and the Fund was initially approved by the trustees of the Fund on
January 19, 1994, and was approved by the initial shareholders of the Fund
on January 26, 1994. The sub-investment advisory agreement with Systematic
was submitted for shareholder approval at a Special Meeting of Shareholders
held on May 12, 1995. The sub-investment advisory agreement with
Systematic was revised and submitted for shareholder approval because
Systematic Financial Management, L.P. entered into a partnership which
resulted in an "assignment," as that term is defined in the Act.
The sub-investment advisory agreement with Systematic provided for automatic
termination in the event of an assignment.
Pursuant to the sub-investment advisory agreement, Systematic assisted in
the selection and management of the Fund's investment securities.
Systematic prepared the portfolio of securities of selected issuers with
business practices that met the objective and policies of the Fund. The
Advisor reviewed the portfolio to insure compliance with the Fund's ethical
standards.
Pursuant to the terms of the sub-investment advisory agreement with
Systematic, Timothy Partners, Ltd. paid Systematic a monthly fee at the
annual rate of 0.50% of the average daily net assets of the Fund with
respect to the first $100 million in assets of the Fund, 0.40% of the next
$100 million, 0.30% of the next $100 million in assets, and 0.25% of assets
over $300 million. For the fiscal years ended December 31, 1995 and 1996,
Timothy Partners, Ltd. paid Systematic sub-investment advisory fees of
$21,039 and $46,381 (unaudited).
Information Concerning the Fund's Proposed New Investment Manager and
Proposed New Sub-Investment Advisory Agreement
The Advisor has completed a national money manager search in an effort to
find a suitable replacement for Systematic. This search resulted in the
selection of Awad & Associates as a potential candidate. On November 29,
1996, the trustees, including a majority of the trustees deemed not
"interested persons" as that term is defined in the Act, unanimously agreed
to the selection of Awad & Associates as the new investment manger.
Organization and Management
Awad & Associates, a division of Raymond James & Associates, Inc., have
their principal offices located at 477 Madison Avenue, New York, New York
10022. Awad & Associates is a joint venture between James Awad, a twenty-six
year veteran of the investment management business, and Raymond James
Financial, a New York Stock Exchange investment firm.
Awad & Associates offers professional asset management services for
individuals, pension funds, trusts and institutions. Awad & Associates has
experience in managing a variety of equity, balanced and fixed-income
portfolios. Its area of expertise is the selection of small to medium
capitalization equities with low price/earning ratios. Awad & Associates
managed approximately $575 million in assets at November 30, 1996.
The senior investment officer is James Awad. 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. Mr. Awad earned an MBA from Harvard Business School and a
BS Cum Laude from Washington & Lee University.
Dennison Veru is President of Awad & Associates. Mr. Veru joined Awad &
Associates from Smith Barney Harris Uphamn where he was Senior Vice
President of the firm's Whiffletree Capital Management division
specializing in small and medium capitalization stocks. From 1988 through
1990, he was a Vice President of Broad Street Investment Management. Prior
thereto, he was an Assistant Vice President at Drexel Burnham Lambert. Mr.
Veru is a graduate of Franklin and Marshall College.
Representing Raymond James Financial is Tom James, Chairman of the Board
of Raymond James Financial. Mr. James is on the Investment Advisory Board
which reviews all portfolios managed by Awad & Associates. Mr. James has
been Chairman of Raymond James Financial since 1973.
Tom Barry, immediate past President of Rockefeller & Company, which
manages investment for the Rockefeller family, is also on the Investment
Advisory Board of Awad & Associates. He will review investment strategy on
a quarterly basis.
Administration of Awad & Associates is managed by Carol Egan, a seasoned
Wall Street manager who has worked with James Awad for the past ten years.
Investment Management Goals and Strategy of Awad & Associates
With respect to equity portfolios, the goals in managing portfolios are
as follows: (i) protect capital; (ii) increase capital net of expenses
substantially in excess of inflation and in excess of risk-free returns;
(iii) compare favorably to various stock indices over time; and (iv) keep
volatility to as little as possible.
To achieve these goals, the firm employs a strategy of fundamental
research. This consists of internal proprietary research, the use of
Raymond James Financial's seventeen analysts, reliance on research of only
high quality regional firms and of major Wall Street firms. Companies
considered for portfolios have characteristics such as: steady earnings and
cash flow growth; dominant market share or domination of market niche; good
and/or improving balance sheet; excess cash flow generation; ability to do
well in a stagnant economy but possibility to benefit from an improvement
in economic fundamentals; and high management stock ownership. Decisions
to buy or sell a security are based on valuation disciplines such as: low
absolute price/earning ratios; low price/earning relative to equities in
general; and low price relative to intrinsic value.
Awad & Associates currently serves as co-investment advisor to one other
investment company: Heritage Small Cap Fund. At January 1, 1996, Awad &
Associates managed $46 million in net assets of Heritage Small Cap Fund and
received an advisory fee of 0.50% of its average daily net assets.
Proposed Fee Schedule, Terms and Conditions of the New Sub-Investment
Advisory Agreement
Pursuant to the New Sub-Investment Advisory Agreement, Awad & Associates
assists in the selection and management of the Fund's investment
securities. Awad & Associates prepares the portfolio of securities of
selected issuers with business practices that meet the objective and
policies of the Fund. Timothy Partners, Ltd. reviews the portfolio to
insure compliance with the Fund's ethical standards. The
New Sub-Investment Advisory Agreement sets forth substantially the same
conditions as the sub-investment advisory agreement with Systematic
except for the fee schedule.
For their services, Awad & Associates offered to manage the Fund's
portfolio for the following annual fee schedule which is paid by the
Advisor:
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.
If the proposed sub-investment advisory fee had been in effect throughout
the fiscal years ended December 31, 1995 and 1996, the sub-investment
advisory fees would have amounted to $17,672 and $38,960 (unaudited),
respectively. For the fiscal year ended December 31, 1995 this would have
represented a 16% decrease over the actual sub-investment management fee of
$21,039. For the fiscal year ended December 31, 1996 this would have
represented a 16% decrease over the actual sub-investment management fee of
$46,381 (unaudited).
Tables reflecting: (i) current fees and expenses; and (ii) pro forma fees
and expenses, based on the pending approval of Proposal 2 and Proposal 3,
are attached as Appendix A.
Awad & Associates would provide the Advisor and the Fund with portfolio
management, research and analysis, advice and recommendations with respect
to the purchase and sale of securities and making of investment commitments
by Timothy Partners, Ltd., the Fund's investment advisor, for the Fund
pursuant to the New Sub-Investment Advisory Agreement among Awad &
Associates, Timothy Partners, Ltd., and the Fund. A form of the
New Sub-Investment Advisory Agreement is attached to this Proxy Statement as
Exhibit B.
The New Sub-Investment Advisory Agreement provides that Awad & Associates
will, at its own expense, provide office space, furnishings, equipment and
people required for performing such services. Awad & Associates also
furnishes all necessary advisory and research facilities and prepares
reports to comply with the reporting requirements of various federal and
state regulatory authorities. The Fund pays all of its own expenses other
than those expressly assumed by Timothy Partners, Ltd. or Awad &
Associates.
The New Sub-Investment Advisory Agreement may be terminated without
penalty at any time upon 60 days' written notice by the Fund, by vote of
the holders of a majority of the Fund's outstanding voting securities or by
Timothy Partners, Ltd.; it will automatically terminate in the event of its
assignment.
The New Sub-Investment Advisory Agreement became effective January 1,
1997 and will, pending shareholder approval, continue in effect for an
initial term of two years, and may continue thereafter from year to year if
specifically approved at least annually by vote of "a majority of the
outstanding voting securities" of the Fund, as defined under the Act, or by
the Board of Trustees and, in either event, by the vote of a majority of
the trustees who are not parties to the New Sub-Investment Advisory
Agreement or interested persons of any such party, cast in person at a
meeting called for such purpose.
Evaluation of the New Sub-Investment Advisory Agreement by the Board of
Trustees
The Board of Trustees of the Fund met on November 29, 1996 to consider
the New Sub-Investment Advisory Agreement and its anticipated effects upon
the investment management provided to Timothy Partners, Ltd. and the Fund.
The proposal was considered by the full Board of Trustees. In addition,
the Fund's legal counsel provided the Board of Trustees with materials
describing the Board's duties to the shareholders in considering such a
proposal, the various factors to be considered and standards to be applied,
and confirmed that their decision should be based on whether the fee
proposal was fair and reasonable in light of the nature and quality of the
services provided to the Fund by Awad & Associates. After full
consideration of the proposal, the trustees, including all of the trustees
who are not parties to the New Sub-Investment Advisory Agreement or
interested persons of any such party, unanimously voted to approve the New
Sub-Investment Advisory Agreement and to recommend the New Sub-Investment
Advisory Agreement to shareholders for their approval.
In determining whether or not it was appropriate to approve the
New Sub-Investment Advisory Agreement and to recommend approval to
shareholders, the Board considered written material and information presented
orally at the Meeting. In particular, the trustees considered the fairness
of the compensation to be received by Awad & Associates for its
sub-investment advisory services and its effect on the Fund's expense ratio.
Subsequent to the Board's review of the material, the Board determined that
the fee payable to Awad & Associates by the Advisor, a fee lower than that
paid to Systematic; was fair and reasonable, and that the proposed fees and
New Sub-Investment Advisory Agreement would have no impact on the expense
ratio of the Fund.
In addition, the trustees considered the prior investment performance of
the investment personnel at Awad & Associates who would be providing
services to The Timothy Plan. In proposing the New Sub-Investment Advisory
Agreement, Awad & Associates emphasized the qualifications and experience
of personnel to provide high quality service to the Fund and its ability
adhere to the moral screening precesses currently maintained by the Fund.
The performance figures presented below are based on a composite of Awad
& Associates' accounts, including individuals, IRAs and Trusts which have
investment objectives and policies similar to the Fund's. These figures
reflect deductions of assumed management fees and commissions, and are a
time-weighted average for the entire period, all or which would not be
duplicated in any individual account, resulting in a different return for
the investors. The composites shown include accounts carried over from a
previous firm, BMI Capital. For the equity portfolio, from October 1, 1992
forward, the figures presented are only for those accounts managed by Awad
& Associates through Raymond James Financial. Past performance is no
guarantee of future results.
Composite Past Performance of Awad & Associates and BMI Capital
1996 - 17.70%* 1990 - (13.20%) 1984 - (2.30%)
1995 - 48.50% 1989 - 9.60% 1983 - 20.90%
1994 - 4.80% 1988 - 26.10% 1982 - 54.20%
1993 - 12.30% 1987 - (5.40%) 1981 - 8.80%
1992 - 14.50% 1986 - 17.50% 1980 - 42.70%
1991 - 39.70% 1985 - 17.30%
* 1996 returns through September 30, 1996.
It is also important to note that these returns do not take into account
the effects of the Fund's moral screening restrictions. Both the Advisor
and the trustees, however, have examined this aspect and have concluded
that the application of the Fund's moral screens would not have materially
affected the results.
The trustees also considered, among other things, the following: (i) the
nature of the investment goals and investment strategies used by Awad &
Associates, emphasizing both growth and value characteristics; (ii) the
extent to which the economies of scale that the Advisor might experience as
a result of growth in the Fund's assets; and (iii) Awad & Associates'
reputation within the securities industry.
The Board of Trustees determined that the terms of the New Sub-Investment
Advisory Agreement are fair and reasonable and in the best interests of the
Fund and its shareholders.
Portfolio Allocation
The Advisory Agreement provides that decisions regarding the placement of
portfolio brokerage are made by Timothy Partners, Ltd., with the primary
considerations being to obtain efficiency in execution of orders and the
most favorable net prices for the Fund. Consistent with those objectives,
transactions may be allocated to brokers and dealers who furnish certain
research services to the Advisor. Such research services supplement the
Advisor's and Awad & Associates own research activities and provide a
benefit to the Advisor which is not easily evaluated in terms of a dollar
amount and is not reflected in a direct monetary benefit to the Fund. Such
research may be used to benefit any other investment companies and accounts
advised by the Advisor, as well as the Fund. Transactions may also be
executed through brokers and dealers who sell shares of the Fund, but such
sales will not be either a qualifying or disqualifying factor in the
selection of executing broker-dealers. The Advisory Agreement authorizes
the Advisor to place portfolio transactions for the Fund with broker-dealers
for commissions which are greater than another broker or dealer
might charge if the Advisor determines in good faith that the commission
paid was reasonable in relation to the brokerage or research services
provided by such member, broker or dealer, viewed in terms of that
particular transaction or the Advisor's overall responsibilities with
respect to its accounts, including the Fund, as to which it exercises
investment discretion.
Information Concerning the Fund's Underwriter and Administrator.
FPS Broker Services, Inc. (formerly, Fund/Plan Broker Services, Inc.)(the
"Underwriter" or "FPSB") is the underwriter and distributor of the Fund
pursuant to an underwriting agreement dated January 19, 1994, as amended
February 23, 1996, which was last approved at a meeting of the Fund's Board
of Trustees held on March 6, 1996. The Underwriter is a Pennsylvania
corporation formed on April 19, 1989, and is a broker-dealer registered
with the U.S. Securities and Exchange Commission and a member of the
National Association of Securities Dealers, Inc. The Underwriter, located
at 3200 Horizon Drive, King of Prussia, Pennsylvania 19406-0903, is a
wholly-owned subsidiary of FPS Services, Inc. (the servicing agent,
administrator, transfer agent and accounting/pricing agent for the Fund).
FPS Services, Inc. is located at the same address as the Underwriter. At
the present time, the Underwriter serves as distributor for seventeen other
non-affiliated fund groups.
Recommendation:
The Act requires that the New Sub-Investment Advisory Agreement be
approved by the affirmative vote of a majority of the outstanding
voting securities of the Fund, which means the lesser of (i) 67% or
more of the shares of the Fund present or represented by proxy at the
Meeting, if more than 50% of the outstanding shares of the Fund are
represented, or (ii) more than 50% of the outstanding shares of the
Fund. The Board of Trustees recommends that you vote FOR approval of
the New Sub-Investment Advisory Agreement. Unless a contrary
specification is made, any executed but unmarked proxies will be voted
FOR this Proposal No. 2.
PROPOSAL NO. 3
TO APPROVE OR DISAPPROVE A REVISED DISTRIBUTION PLAN FOR THE RETAIL CLASS
SHARES BY THE SHAREHOLDERS OF THE RETAIL CLASS ONLY
General
The Board of Trustees recently reviewed the current methods of
distribution the Retail Class through the imposition of a front-end sales
load in combination with a 12b-1 fee. After careful evaluation of all
relevant factors the Board has determined that the imposition of a
contingent deferred sales charge (CDSC), instead of a front-end sales load,
in combination with a slightly modified 12b-1 fee, would likely facilitate
distribution of the Retail Class shares, which in turn would result in
economies of scale and reduced expenses to the Retail Class and its
shareholders. At the Meeting, Retail Class shareholders will be asked to
approve a revised Distribution Plan (the "Revised Distribution Plan") on
behalf of the Retail Class shares of the Fund, in connection with the
implementation of a CDSC. If the Advisor is unable to secure financing to
implement the CDSC, the 12b-1 fee on behalf of the Retail Class shares will
continue in to remain in effect in its current form.
Unlike a front-end sales load, a CDSC is imposed upon redemption proceeds
and declines to zero if shares are held for a certain period. As proposed,
the CDSC would impose a maximum deferred sales charge but would decline to
zero if the shares are held for five years or longer. Also, the CDSC
allows a shareholder's entire investment to be fully invested without the
deduction of a front-end sales charge.
The CDSC, used in combination with this proposed Revised Distribution
Plan, would facilitate sales of the Retail Class shares because it allows
the Fund's distributor to advance selling commissions (of 4.00%) to
brokers/dealers who sell shares. This advance commission may be financed
by a financing entity. The advance commission to broker/dealers will be
higher than the current sales load payable to the broker/dealer and should
generate a greater incentive to brokers/dealers to sell Retail Class
shares. The proposed distribution fee will then be used in part to help
offset the initial commission advance, plus the cost of financing the
advance, if any.
Elimination of the current front-end sales load and implementation of the
CDSC does not require approval by shareholders. However, the Board of
Trustees has made the implementation of the CDSC contingent upon the
Revised Distribution Plan, which requires approval by shareholders of the
Retail Class. The CDSC would apply to all share purchases after January
31, 1997. The Revised Distribution Plan, if approved, will become
effective January 31, 1997, contingent upon implementation of the CDSC.
The following discussion describes the current distribution plan and the
proposed revisions to the distribution plan. Although shareholders are not
being asked to approve the CDSC, the elimination of the 1.75% front-end
sales load and implementation of a CDSC is contingent upon shareholder
approval of the Revised Distribution Plan as described below.
Current Distribution Plan
The Retail Class currently is subject to a front-end sales charge when
shares are purchased. Shares of the Retail Class are sold subject to a
maximum sales load of 1.75% of the amount purchased. Pending shareholder
approval of the Revised Distribution Plan and implementation of a CDSC,
Retail Class shares will be offered to the general public that may be
purchased at a price equal to the next determined net asset value per share
subject to a CDSC at the time of redemption, the amount of which will
depend on the number of years the shares redeemed have been held.
The Retail Class currently has a Distribution Plan (the "Current
Distribution Plan") in effect that was last approved by the Board of
Trustees at a meeting held on July 25, 1995 and approved by the initial
shareholder of the Retail Class on July 25, 1995. An amendment to the
Current Distribution Plan to allow up to 0.25% of the total distribution
fee to be accrued as a service fee was approved by the Board of Trustees of
the Fund at a meeting held March 10, 1996. The Current Distribution Plan
provides that the maximum amount which the Fund may pay to the Underwriter
and others (and which the Underwriter 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 Retail Class' average daily net assets,
0.25% of which may be service fees payable to the Underwriter, dealers and
others, for providing personal services and/or maintaining shareholder
accounts, payable on a monthly basis. For the fiscal year ended December
31, 1996, the Retail Class paid $18,950 (unaudited) in aggregate, which was
0.85% of the Retail Class' average daily net assets. Of the aggregate amount
paid pursuant to the Current Distribution Plan, for the fiscal year ended
December 31, 1996, $16,273 (unaudited), accrued as 12b-1 fees and $2,677
(unaudited), accrued as service fees. Of the amount accrued as 12b-1 fees,
$10,960 was paid to participating brokers/dealers and of the amount accrued
as services fees, $2,276 was paid to Timothy Partners, Ltd. for the providing
personal services and maintaining shareholder accounts pursuant to a servicing
agreement.
Proposed Revised Distribution Plan
The trustees believe it would be in the best interests of the Fund and
its shareholders to amend the Current Distribution Plan to increase 12b-1
fees payable by the Retail Class from 0.85% of the Retail Class' average
daily net assets equivalent to 1.00% of the Retail Class' average daily
net assets. A distribution plan allows the Retail Class to compensate
FPSB or others for expenses actually incurred by FPSB or others in the
promotion and distribution of the 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 proposed maximum amount which the Retail Class 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
1.00% per annum of the Retail Class' average daily net assets, of which,
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 1.00% 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 Retail
Class, 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 Retail
Class within the context of Rule 12b-1. Long-term shareholders of Retail
Class shares may pay more than the economic equivalent of the maximum
front-end sales charge currently permitted by the rules of the National
Association of Securities Dealers, Inc. governing investment company sales
charges.
Evaluation of the Revised Distribution Plan by the Board of Trustees
At a meeting on November 29, 1996, the Board of Trustees, including the
trustees who are not "interested persons" of the Fund (as defined in the
Act), considered and approved the Revised Distribution Plan. In connection
with the approval of the Revised Distribution Plan the Board of Trustees,
considered and approved a revised Multiple Class Plan, pursuant to Rule
18f-3, which presents the differences between the classes and the features
or the Retail Class. The Fund's legal counsel provided materials to the
Board of Trustees on the nature of the matters to be considered and the
standards to be used by the Board of Trustees in reaching its decision.
Subsequent to review and consideration of the materials and information
presented in writing and orally by the Advisor and the Fund's legal
counsel, the Board of Trustees concluded that the slight 0.15% increase in
the annual 12b-1 fees under the Revised Distribution Plan is more than
offset by the benefit of eliminating the 1.75% front-end sales charge. In
addition, the implementation of a CDSC would likely: (i) encourage current
shareholders to make additional investments in the Fund's Retail Class
since additional purchases would be fully invested; (ii) attract new
investors and assets to the Retail Class to benefit the Retail Class and
its shareholders by realizing economies of scale; (iii) facilitate
distribution of Retail Class shares; and (iv) maintain the competitive
position of the Fund in relation to other mutual funds that have
implemented or are seeking to implement similar distribution and service
arrangements.
The trustees also believe these changes in the manner in which the Fund
distributes its shares will significantly increase the growth of investment
funds flowing into the Retail Class which, in turn, may lower operating
costs of the Fund's Retail Class as the fixed portion of the Retail Class'
administration expenses would be applied to a larger asset base. The Board
of Trustees determined, in the exercise of reasonable business judgment
and, in light of their fiduciary duties under the Act and state law, that
there is a reasonable likelihood that the increase will benefit the Fund's
Retail Class and its shareholders. In addition, the Board of Trustees has
determined, in exercise of its reasonable business judgement, and in light
of the current method of distribution and alternative methods of
distribution, that the proposed method (Proposal No. 3) of distribution
would offer the greatest benefit to the Fund's Retail Class from the use of
its assets.
The trustees, therefore, recommend you vote FOR this change. Although
the target date to implement this change is January 31, 1997, the actual
implementation may vary somewhat since it is dependent on the securing of
satisfactory financing for the commission advances to brokers/dealers.
Tables reflecting: (i) current fees and expenses; and (ii) pro forma fees
and expenses, based on the pending approval of Proposal 2 and Proposal 3,
are attached as Appendix A.
Although the maximum service or distribution fees could not be increased
without further shareholder approval, it should be noted that a front-end
sales load and CDSC may be implemented or changed by a fund's Board of
Trustees. Any such change, however, would apply only to shares sold after
appropriate approval by the Board of Trustees and disclosure to
shareholders.
Recommendation:
The Act requires that the Revised Distribution Agreement be approved by
the affirmative vote of a majority of the outstanding voting securities
of the Retail Class shareholders of the Fund, which means the lesser of
(i) 67% or more of the shares of the Retail Class present or
represented by proxy at the Meeting, if more than 50% of the
outstanding shares of the Retail Class are represented or (ii) more
than 50% of the outstanding shares of the Retail Class. The Board of
Trustees recommends that you vote FOR approval of the Revised
Distribution Plan. Unless a contrary specification is made, any
executed but unmarked proxies will be voted FOR this Proposal No. 3.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund is not required, nor does it intend, to hold regular annual
meetings of its shareholders. Any shareholder who wishes to submit a
proposal for consideration at the next meeting of shareholders, when and if
such a meeting is called, should submit such proposal promptly.
Shareholders may receive, upon request and without charge, a copy of the
Fund's Annual Report and most recent Semi-Annual Report by contacting The
Timothy Plan at 1-800-846-7526.
Respectively Submitted,
/s/ Joseph E. Boatwright
Joseph E. Boatwright
Secretary<PAGE>
Appendix A
The following tables show, for the Fund's fiscal years ended December 31,
1995 and 1996: (a) the shareholder current transaction expenses for the
Retail Class only; (b) the actual operating expenses for each class of the
Fund's shares as a percentage of average net assets; and (c) the pro forma
operating expenses assuming the proposed New Sub-Investment Advisory
Agreement had been in effect throughout the year.
Current Shareholder Transaction Expenses for the RETAIL CLASS ONLY
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/
* The elimination of the front-end sales load is contingent upon
implementation of the CDSC and shareholder approval of the Revised
Distribution Plan (Proposal 3).
Annual Fund Expenses
Institutional Class Retail Class
Actual/2/ Pro Forma Actual/3/ Pro Forma
Management and Advisory Expenses
After Expense Reimbursements 0.00% 0.85% 0.00% 0.85%
12b-1 Fees 0.25% 0.25% 0.85% 1.00%
Other Expenses After Expense Reimbursements
1.35% 0.50% 1.35% 0.50%
Total Operating Costs After Expense Reimbursements
1.60% 1.60% 2.20% 2.35%
/1/ United Missouri Bank KC NA charges $9.00 per redemption for
redemptions payable by wire.
/2/ The Advisor has voluntarily agreed to waive its fees, so that the
Institutional Class' total annual operating expenses will never exceed
1.60% of the average daily net assets. Further, the Advisor has agreed to
reimburse the Institutional Class for its other expenses so that the
Institutional Class' total annual expenses will never exceed 1.60%. Absent
the fee waiver and expense reimbursements, Actual "Management and Advisory
Expenses" and Actual "Other Expenses" for the fiscal year December 31, 1995
would have been 0.85% and 4.99%, respectively, and 0.85% and 2.85% (unaudited),
respectively, for the fiscal year ended December 31, 1996. The pro forma
percentage reflects the total expense ratio had those fees not been waived
and had the new fee structure been in effect.
/3/ 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 average daily net assets. Further, the Advisor has agreed to reimburse
the Retail Class for its other expenses so that the Fund's total annual
expenses will never exceed 2.20%. Absent the fee waiver and expense
reimbursements, Actual "Management and Advisory Expenses" and Actual "Other
Expenses" would have been 0.85% and 5.59%, respectively, for the fiscal
year ended December 31, 1995 and 0.85% and 3.45% (unaudited), respectively,
for the fiscal year ended December 31, 1996. The pro forma percentage
reflects the total expense ratio had those fees not been waived and the new
fee structure been in effect.
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 currently charges no redemption fees of any kind.
1 year 3 years 5 Years 10 Years
Institutional Class
Existing $16 $50 $87 $190
Proposed $16 $50 $87 $190
Retail Class
Existing $39 $85 $133 $266
Proposed $73 $101 $134 $269
The purpose of these tables is to assist the investor in understanding
the various expenses that an investor in the Fund will bear directly or
indirectly. 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.
<PAGE>
Exhibit A
AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
This Agreement, dated as of the 28th day of August, 1995 made by and
between The Timothy Plan, a Delaware business trust (the "Trust") operating
as a registered investment company under the Investment Company Act of
1940, as amended (the "Act"), duly organized and existing under the laws of
the State of Delaware and Timothy Partners, Ltd., a Florida limited
partnership (the "Advisor") and is a registered Advisor under the
Investment Advisers Act of 1940 (collectively, the "Parties").
WITNESSETH:
WHEREAS, the Trust and Advisor have entered into an agreement dated
January 19, 1994, wherein the Advisor has agreed to serve as an advisor and
provide investment management services (the "Investment Advisory
Agreement"); and
WHEREAS, the Parties wish to amend the Investment Advisory Agreement to
reduce its compensation from 1.00% to 0.85% of the Trust's daily average
net assets; and
WHEREAS, the Trustees upon full consideration of the proposal, has
determined that in the exercise of their reasonable business judgement, and
in light of their fiduciary duties, there is a reasonable likelihood that
the amendment to the Investment Advisory Agreement will benefit the Trust
and its shareholders.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do
hereby agree:
1. To amend the compensation for the services to be rendered to the
Trust by the Advisor under the provisions of the Investment
Advisory Agreement, from 1.00% to 0.85% of the Trust's daily
average net assets.
2. This Agreement's effective date shall be August 28, 1995.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
consisting of one type written page to be signed by their duly authorized
officers and their corporate seals hereunto duly affixed as of the day and
year first above written.
The Timothy Plan Timothy Partners, Ltd.
By Covenant Funds, Inc.
Managing General Partner
Arthur D. Ally, Chairman By: Arthur D. Ally, President
Attest: Joseph E. Boatwright, Secretary Attest: Bonnie Ally, Secretary<PAGE>
THE TIMOTHY PLAN
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made by and between THE TIMOTHY PLAN, a Delaware business
trust, (hereinafter called the "Trust") and TIMOTHY PARTNERS, LTD., a
Florida limited partnership, (hereinafter called "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940 (the "1940
Act") and engages in the business of investing and reinvesting its assets
in securities, and the Investment Adviser is a registered Investment
Adviser under the Investment Advisers Act of 1940 (the "Advisers Act") and
engages in the business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Adviser to serve as the
investment adviser for the Trust effective as of the date of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it
is agreed as follows:
1. The Trust hereby employs the Investment Adviser to manage the
investment and reinvestment of the Trust's assets and to administer its
affairs, subject to the direction of the Board of Trustees and officers of
the Trust for the period and on the terms hereinafter set forth. The
Investment Adviser hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth
for the compensation herein provided. The Investment Adviser shall for all
purposes herein, be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to
act for or to represent the Trust in any way, or in any way be deemed an
agent of the Trust. The Investment Adviser shall regularly make decisions
as to what securities to purchase and sell on behalf of the Trust and shall
record and implement such decisions and shall furnish the Board of Trustees
of the Trust with such information and reports regarding the Trust's
investments as the Investment Adviser deems appropriate or as the Trustees
of the Trust may reasonably request. Subject to compliance with the
requirements of the 1940 Act, the Investment Adviser may retain as a
sub-adviser to the Trust, at the Investment Adviser's own expense, any
investment adviser registered under the Advisers Act.
2. The Trust shall conduct its own business and affairs and shall
bear the expenses and salaries necessary and incidental thereto including,
but not in limitation of the foregoing, the costs incurred in: the
maintenance of its corporate existence; the maintenance of its own books,
records and procedures; dealing with its own shareholders; the payment of
dividends; transfer of stock, including issuance, redemption and repurchase
of shares; preparation of share certificates; reports and notices to
shareholders; calling and holding of shareholders' meetings; miscellaneous
office expenses; brokerage commissions; custodian fees; legal and
accounting fees; and taxes. Partners and employees of the Investment
Adviser say be trustees, officers and employees of the funds of which
Timothy Partners, Ltd. is Investment Adviser. Partners and employees of the
Investment Adviser who are trustees, officers and/or employees of the Trust
shall not receive any compensation from the Trust for acting in such dual
capacity.
In the conduct of the respective businesses of the parties hereto
and in the performance of this Agreement, the Trust and Investment Adviser
may share facilities common to each, with appropriate proration of expenses
between them.
3. (a) The Investment Adviser shall place and execute Trust orders
for the purchase and sale of portfolio securities with broker/dealers.
Subject to the primary objective of obtaining the best available prices and
execution, the Investment Adviser will place orders for the purchase and
sale of portfolio securities for the Trust with such broker/dealers as it
may select from time to time, including brokers who provide statistical,
factual and financial information and services to the Trust, to the
Investment Adviser, or to any other fund for which the Investment Adviser
provides investment advisory services and/or with broker/dealers who sell
shares of the Trust or who sell shares of any other fund for which the
Investment Adviser provides investment advisory services. Broker/dealers
who sell shares of the funds of which Timothy Partners, Ltd. is Investment
Adviser, shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance
with the Rules of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Trust, the Investment Adviser may ask the
Trust and the Trust may agree to pay a member of an exchange, broker or
dealer an amount of commission for effecting a securities transaction in
excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, in such instances
where it and the Investment Adviser have determined in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Investment
Adviser's overall responsibilities with respect to the Trust and to other
funds for which the Investment Adviser exercises investment discretion.
4. As compensation for the services to be rendered to the Trust by
the Investment Adviser under the provisions of this Agreement, the Trust
shall pay to the Investment Adviser from the Trust's assets an annual fee
equal to 1.00% of the daily average net assets of the Trust, payable on a
monthly basis, subject to reduction to the extent necessary to comply with
the most stringent limits prescribed by any state in which the Trust's
shares are offered for sale.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the
number of calendar days, during which the Agreement is in effect, bears to
the number of calendar days in the month, and shall be payable within 10
days after the date of termination.
5. The services to be rendered by the Investment Adviser to the Trust
under the provisions of this Agreement are not to be deemed to be
exclusive, and the Investment Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
6. The Investment Adviser, its partners, employees, and agents may
engage in other businesses, may render investment advisory services to
other investment companies, or to any other corporation, association, firm
or individual, and may render underwriting services to the Trust or to any
other investment company, corporation, association, firm or individual.
7. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of the
Investment Adviser to the Trust, the Investment Adviser shall not be
subject to liabilities to the Trust or to any shareholder of the Trust for
any action or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security, or otherwise.
8. The Trust agrees that, in the event that the Investment Adviser
ceases to be the Trust's investment adviser for any reason, the Trust will
(unless the Investment Adviser otherwise agrees in writing) promptly take
all necessary steps to propose to the shareholders at the next regular
meeting that the Trust change to a name not including the word "Timothy."
The Trust agrees that the word "Timothy" in its name is derived from the
name of the Investment Adviser and is the property of the Investment
Adviser for copyright and all other purposes and that therefore such word
may be freely used by the Investment Adviser as to other investment
activities or other investment products.
9. This Agreement shall be executed and become effective as of the
date written below if approved by the vote of a majority of the outstanding
voting securities of the Trust. It shall continue in effect for a period of
two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of
Trustees or by vote of a majority of the outstanding voting securities of
the Trust and only if the terms and the renewal hereof have been approved
by the vote of a majority of the Trustees of the Trust who are not parties
hereto or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. No amendment to this
Agreement shall be effective unless the terms thereof have been approved by
the vote of a majority of the outstanding voting securities of the Trust
and by the vote of a majority of Trustees of the Trust who are not parties
to the Agreement or interested persons of any such party, cast in person at
a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the
Trust at any time, without the payment of a penalty, on sixty days' written
notice to the Investment Adviser of the Trust's intention to do so,
pursuant to action by the Board of Trustees of the Trust or pursuant to a
vote of a majority of the outstanding voting securities of the Trust. The
Investment Adviser may terminate this Agreement at any time, without the
payment of penalty on sixty days' written notice to the Trust of its
intention to do so. Upon termination of this Agreement, the obligations of
all the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to such termination, and except for the
obligation of the Trust to pay to the Investment Adviser the fee provided
in Paragraph 4 hereof, prorated to the date of termination. This Agreement
shall automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the Investment Company Act
of 1940.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals
to be affixed and duly attested and their presents to be signed by their
duly authorized officers the 19 day of January , 199 4
.
Attest: THE TIMOTHY PLAN
By:
Attest: TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.
Managing General Partner
By:
Arthur D. Ally, President<PAGE>
Exhibit B
SUB-INVESTMENT ADVISORY AGREEMENT
between
TIMOTHY PARTNERS, LTD.
and
AWAD & ASSOCIATES
SUB-INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this 1st day of
January , 1997, by and between TIMOTHY PARTNERS, LTD. (hereinafter
referred to as the "Investment Adviser") and AWAD & ASSOCIATES (hereinafter
referred to as the "Investment Manager"), which Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one instrument.
WITNESSETH:
WHEREAS, the General Partners (the "Partners") of the Investment Adviser
wish to enter into a contract with the Investment Manager to render the
Investment Adviser the following services:
To furnish research, analysis, advice and recommendations with respect to
the purchase and sale of securities and the making of investment
commitments by the Investment Adviser regarding assets of The Timothy Plan
(hereinafter referred to as the "Fund") subject to oversight by the Board
of Trustees of the Fund and the supervision of the Investment Adviser.
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and intending to be bound, the parties agree as follows:
1. As compensation for the services enumerated above, the
Investment Adviser will pay the Investment Manager an annual fee, which fee
shall be payable monthly.
The amount of such fee shall equal 0.42% of the average daily net
assets of the Fund with respect to the first $10 million in assets of the
Fund, 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.
2. This Agreement shall become effective as of the date first
above written, subject to the approval of the shareholders of the Fund in
accordance with the provisions of the Investment Company Act of 1940 (the
"Act").
3. This Agreement shall continue for a period ending two years
from its effective date. It may be renewed thereafter by the Investment
Adviser and the Investment Manager for successive periods not exceeding one
year only so long as such renewal and continuance is specifically approved
at least annually by the Fund's Board of Trustees or by a vote of the
majority of the outstanding voting securities of the Fund as prescribed by
the Act and provided further that such continuance is approved at least
annually thereafter by a vote of a majority of the Fund's Trustees, who are
not parties to such Agreement or interested persons of such a party, cast
in person at a meeting called for the purpose of voting on such approval.
This Agreement will terminate automatically without the payment of any
penalty upon termination of the Investment Advisory Agreement or upon sixty
days' written notice by the Fund to the Investment Manager that the
Trustees or the shareholders by vote of a majority of the outstanding
voting securities of the Fund, as provided by the Act, has terminated the
Investment Advisory Agreement. This Agreement may also be terminated by
the Investment Manager without penalty upon sixty days' written notice to
the Fund.
This Agreement shall terminate automatically in the event of its
assignment or the assignment of the Investment Advisory Agreement.
4. Subject to the supervision of the Board of Trustees of the
Fund and the Investment Adviser, the Investment Manager will provide
recommendations for a continuous investment program for the Fund, including
investment research and management with respect to securities and
investments, including cash and cash equivalents in the Fund. The
Investment Manager will recommend to the Investment Adviser from time to
time what securities and other investments should be purchased, retained or
sold by the Fund. The Investment Manager will provide the services under
this Agreement in accordance with the Fund's investment objective, policies
and restrictions as stated in the Prospectus. The Investment Manager
further agrees that it:
a. will conform with all applicable Rules and Regulations
of the SEC and will, in addition, conduct its activities under this
Agreement in accordance with regulations of any other Federal or State
agencies which now has or in the future will have jurisdiction over its
activities;
b. will recommend placement of orders pursuant to its
investment determinations for the Fund either directly with any broker or
dealer, or with the issuer. In recommending placement of orders with
brokers or dealers, the Investment Manager will attempt to assist the
Investment Adviser to obtain the best net price and the most favorable
execution of its orders. Consistent with this obligation, when the
execution and price offered by two or more brokers or dealers are
comparable, the Investment Manager has been advised that the Fund has
authorized the Investment Adviser, in its discretion, to purchase and sell
securities to and from brokers and dealers who promote the sale of Fund
shares. In no instance will securities be purchased from or sold to the
Investment Manager or any affiliated person of the Investment Manager as
principal. Notwithstanding the foregoing sentence, the Investment Manager
may arrange for the execution of brokered transactions through an
affiliated broker dealer in conformity with policies and procedures for
such purpose if, when, and as established by the Trustees of the Fund.
c. will provide, at its own cost, all office space and
facilities necessary to furnish the foregoing services to be provided by
the Investment Manager of the Fund.
5. It is expressly understood and agreed that the services to
be rendered by the Investment Manager to the Investment Adviser under the
provisions of this Agreement are not to be deemed to be exclusive, and the
Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be materially impaired thereby, and provided further
that the services to be rendered by the Investment Manager to the
Investment Adviser under this Agreement and the compensation provided for
in Paragraph 1 hereof shall be limited solely to services with reference to
the Fund.
6. The Investment Adviser agrees that it will furnish currently
to the Investment Manager all information reasonably necessary to permit
the Investment Manager to give the advice called for under this Agreement
and such information with reference to the Fund that is reasonably
necessary to permit the Investment Manager to carry out its
responsibilities under this Agreement, and the parties agree that they will
from time to time consult and make appropriate arrangements as to specific
information that is required under this paragraph and the frequency and
manner with which it shall be supplied.
7. The Investment Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Investment
Adviser or the Fund in connection with any matters to which this Agreement
relates except that nothing herein contained shall be construed to protect
the Investment Manager against any liability by reason of the Investment
Manager's willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reckless disregard of its obligations or
duties under this Agreement.
8. In compliance with the provisions of the Investment Advisory
Agreement between the Fund and the Investment Adviser, the Investment
Manager agrees with the Investment Adviser that, subject to the terms and
conditions of this Paragraph 9, the Fund may use the name "Timothy" in, or
as a portion of, its name so long as the Investment Adviser, or any
successor in interest, continues as the Investment Adviser. Should the
Fund terminate the Investment Adviser or any successor in interest, or if
the Investment Adviser shall give notice of termination of the Investment
Advisory Agreement, then the Investment Adviser may elect to notify the
Fund in writing that permission to use the name "Timothy" has been
withdrawn. It is understood that the Fund has, in its Investment Advisory
Agreement, expressly agreed that it, its Officers, Trustees and
Shareholders upon receipt of such notice, will take all necessary action
and proceed expeditiously to change the name of the Fund and not use any
other name or take any action which would indicate the Fund's continued
association with the Investment Adviser. If the use of the name "Timothy"
is so withdrawn as aforesaid, it is understood and agreed that there shall
be no limitation with respect to the future use of the name "Timothy" by
the Investment Adviser or its successor in interest.
9. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
the Agreement shall not be affected thereby. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, without applying the principles of conflicts of law thereunder.
10. Any notice to be given hereunder may be given by personal
notification or by first class mail, postage prepaid, to the party
specified at the address stated below:
a. To the Investment Adviser at:
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789
Attn: Arthur D. Ally
b. To the Investment Manager at:
Awad and Associates
477 Madison Ave 16th Floor
New York, NY 10022
Attn: James Awad
c. To the Fund at:
The Timothy Plan
1304 West Fairbanks Avenue
Winter Park, FL 32789
Attn: Arthur D. Ally
d. With copies to:
Joseph V. Del Raso, Esquire
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
ATTEST: THE TIMOTHY PLAN
_________________________ By:__________________________
ATTEST: TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.
Managing General Partner
By:
ATTEST: AWAD & ASSOCIATES
________________________ By:_________________________<PAGE>
Exhibit C
DISTRIBUTION PLAN
OF
THE TIMOTHY PLAN - RETAIL CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by The
Timothy Plan (the "Trust") for the Retail Class shares (the "Retail Class")
of the Trust and any separate series of the Trust hereinafter organized. The
Plan has been approved by a majority of the Trust's Board of Trustees,
including a majority of the trustees who are not interested persons of the
Trust and who have no direct or indirect financial interest in the operation
of the Plan (the "non-interested trustees"), cast in person at a meeting
called for the purpose of voting on such Plan.
In reviewing the Plan, the Board of Trustees determined that the adoption
of the Plan would be prudent and in the best interests of the Trust and its
shareholders. Such approval included a determination that in the exercise of
their reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Trust and its
shareholders. The Plan has also been approved by a vote of the sole initial
shareholder of the Retail Class shares of the Trust.
The Provisions of the Plan are:
1. The Retail Class of the Trust shall compensate the Advisor, the
Distributor or others for all expenses incurred by such parties in the
promotion and distribution of shares of the Retail Class of the Trust,
including but not limited to, the printing of prospectuses and reports used
for sales purposes, expenses of preparation of sales literature and related
expenses, advertisements, and other distribution-related expenses, as well as
any distribution or service fees paid to securities dealers or others who
have executed a servicing agreement with the Trust on behalf of the Retail
Class or the Distributor, which form of agreement has been approved by the
Trustees, including the non-interested trustees. The monies to be paid
pursuant to any such servicing agreement shall be used to pay dealers or
others for, among other things, furnishing personal services and maintaining
shareholder accounts, which services include, among other things, assisting
in establishing and maintaining customer accounts and records; assisting with
the purchase and redemption requests; arranging for bank wires; monitoring
dividend payments from the Trust on behalf of customers; forwarding certain
shareholder communications from the Trust to customers; receiving and
answering correspondence; and aiding in maintaining the investment of their
respective customers in the Retail Class.
2. The maximum aggregate amount which may be compensated by the Retail
Class of the Trust to such parties pursuant to paragraph 1 shall be 1.00% per
annum of the average daily net assets of the Retail Class; provided however,
that payment made under any servicing agreement entered into by the Retail
Class pursuant to Paragraph 1 of this Plan shall be 0.25% per annum of the
average daily net assets of the Retail Class.
3. The Advisor and the Distributor shall collect and monitor the
documentation of payments made under paragraph 1, and shall furnish to the
Board of Trustees of the Trust, for their review, on a quarterly basis, a
written report of the monies compensated to them and others under the Plan as
to the Trust's Retail Class, and shall furnish the Board of Trustees of the
Trust with such other information as the Board may reasonably request in
connection with the payments made under the Plan as to the Trust's Retail
Class in order to enable the Board to make an informed determination of
whether the Plan should be continued.
4. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually
by the Trust's Board of Trustees, including the non-interested trustees, cast
in person at a meeting called for the purpose of voting on the Plan.
5. The Plan, or any agreements entered into pursuant to this Plan, may
be terminated at any time, without penalty, by vote of a majority of the
outstanding voting securities of the Trust, or by vote of a majority of the
non-interested Trustees, on not more than sixty (60) days' written notice,
and shall terminate automatically in the event of any act that constitutes an
assignment of the management agreement between the Trust and the Manager.
6. The Plan and any agreements entered into pursuant to this Plan may
not be amended to increase materially the amount to be spent by the Trust's
Retail Class for distribution pursuant to Paragraph 1 hereof without approval
by a majority of the Retail Class' outstanding voting securities.
7. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested trustees cast
in person at a meeting called for the purpose of voting on any such
amendment.
8. So long as the Plan is in effect, the selection and nomination of
the Trust's non-interested trustees shall be committed to the discretion of
such non-interested trustees.
9. This Plan shall take effect on the day of
, 199 7.
This Plan and the terms and provisions thereof are hereby accepted
and agreed to by the Trust, the Advisor and the Distributor as evidenced by
their execution hereof.
THE TIMOTHY PLAN
By:
TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.,
Managing General Partner
By:
FPS BROKER SERVICES, INC.
By:
PROXY THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES PROXY
OF THE TIMOTHY PLAN (the "Fund") - INSTITUTIONAL CLASS SHARES
SPECIAL MEETING JANUARY 31, 1997 AT 1:00 P.M. EASTERN TIME
The undersigned hereby appoints Gretchen B. Zepernick with the power of
substitution, as Proxy, and hereby authorizes her to vote as designated
below, as effectively as the undersigned could do if personally present, all
the shares of THE TIMOTHY PLAN - INSTITUTIONAL CLASS SHARES held of record by
the undersigned on November 14, 1996, at the Special Meeting of Shareholders,
or any adjournment thereof, to be held at 1:00 p.m. Eastern time on January
31, 1997 at the offices of the Fund's investment advisor, Timothy Partners,
Ltd., 1304 West Fairbanks Avenue, Winter Park, Florida, 32789.
1. ELECTION OF A BOARD OF TRUSTEES.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for
all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name on the list below.)
Arthur D. Ally Wesley W. Pennington Mark Schweizer
Joseph E. Boatwright Jock M. Sneddon Philip B. Crosby Daniel D. Busby
2. TO RATIFY OR REJECT A NEW SUB-INVESTMENT ADVISORY AGREEMENT AND TO
APPROVE OR DISAPPROVE THE CONTINUATION OF THE NEW SUB-INVESTMENT
ADVISORY AGREEMENT AMONG THE FUND, TIMOTHY PARTNERS, LTD. AND AWAD &
ASSOCIATES, BY THE SHAREHOLDERS ENTITLED TO VOTE THEREON WITHOUT
DIFFERENTIATION BETWEEN THE CLASSES.
GRANT WITHHOLD
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING, OR ANY ADJOURNMENT THEREOF.
GRANT WITHHOLD
(Continued and to be signed on reverse.)
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
This Proxy is solicited on behalf of the Board of Trustees and when properly
executed will be voted as specified. If no specification is made, the
undersigned's vote, as a shareholder of The Timothy Plan - Institutional
Class, will be cast for Proposals (1) and (2). If any other matters properly
come before the meeting about which the proxy holders were not aware prior to
the time of the solicitation, authorization is given to the proxy holders to
vote in accordance with the views of management thereon. The management is
not aware of any such matters. The undersigned acknowledges receipt of the
Notice of Meeting and Proxy Statement dated January 2, 1997. Please sign
exactly as your name appears below. When shares are held by joint tenants,
both should sign.
Signature*
Dated: , 1997
* Please sign exactly as your name appears on this Proxy. If signing for
an estate, trust or
corporation, title or capacity should be stated.
CHECK HERE IF YOU PLAN TO ATTEND THE MEETING. (
PERSON(S) WILL ATTEND.)
<PAGE>
PROXY THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES PROXY
OF THE TIMOTHY PLAN (the "Fund") - RETAIL CLASS SHARES
SPECIAL MEETING JANUARY 31, 1997 AT 1:00 P.M. EASTERN TIME
The undersigned hereby appoints Gretchen B. Zepernick with the power of
substitution, as Proxy, and hereby authorizes her to vote as designated
below, as effectively as the undersigned could do if personally present, all
the shares of THE TIMOTHY PLAN - RETAIL CLASS SHARES held of record by the
undersigned on November 14, 1996, at the Special Meeting of Shareholders, or
any adjournment thereof, to be held at 1:00 p.m. Eastern time on January 31,
1997 at the offices of the Fund's investment advisor, Timothy Partners, Ltd.,
1304 West Fairbanks Avenue, Winter Park, Florida, 32789.
1. ELECTION OF A BOARD OF TRUSTEES
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for
all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name on the list below.)
Arthur D. Ally Wesley W. Pennington Mark Schweizer
Joseph E. Boatwright Jock M. Sneddon Philip B. Crosby Daniel D. Busby
2. TO RATIFY OR REJECT A NEW SUB-INVESTMENT ADVISORY AGREEMENT AND TO
APPROVE OR DISAPPROVE THE CONTINUATION OF THE NEW SUB-INVESTMENT
ADVISORY AGREEMENT AMONG THE FUND, TIMOTHY PARTNERS, LTD. AND AWAD &
ASSOCIATES, BY THE SHAREHOLDERS ENTITLED TO VOTE THEREON WITHOUT
DIFFERENTIATION BETWEEN THE CLASSES.
GRANT WITHHOLD
3. TO APPROVE OR DISAPPROVE A REVISED DISTRIBUTION PLAN ON BEHALF OF THE
RETAIL CLASS SHARES OF THE FUND BY THE SHAREHOLDERS OF THE RETAIL CLASS
ONLY.
GRANT WITHHOLD
4. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING, OR ANY ADJOURNMENT THEREOF.
GRANT WITHHOLD
(Continued and to be signed on reverse.)
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
This Proxy is solicited on behalf of the Board of Trustees and when properly
executed will be voted as specified. If no specification is made, the
undersigned's vote, as a shareholder of The Timothy Plan - Retail Class, will
be cast for Proposals (1), (2) and (3). If any other matters properly come
before the meeting about which the proxy holders were not aware prior to the
time of the solicitation, authorization is given to the proxy holders to vote
in accordance with the views of management thereon. The management is not
aware of any such matters. The undersigned acknowledges receipt of the
Notice of Meeting and Proxy Statement dated January 2, 1997. Please sign
exactly as your name appears below. When shares are held by joint tenants,
both should sign.
Signature*
Dated: , 1997
* Please sign exactly as your name appears on this Proxy. If signing for
an estate, trust or
corporation, title or capacity should be stated.
CHECK HERE IF YOU PLAN TO ATTEND THE MEETING. (
PERSON(S) WILL ATTEND.)
