<PAGE>
UNITED STATES FILE NO. 33-73248
SECURITIES AND EXCHANGE COMMISSION ------------------
WASHINGTON, D.C. 20549 FILE NO. 811-8228
------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. _______ [ ]
Post Effective Amendment No. 6 [X]
------
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 7 [X]
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THE TIMOTHY PLAN
================
(Exact name of Registrant as Specified in Charter)
1304 West Fairbanks Avenue
Winter Park, Florida 32789
- -------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code 407-644-1986
------------
Arthur D. Ally, President
The Timothy Plan
1304 West Fairbanks Avenue
Winter Park, FL 32789
------------------------------
(Name and Address of Agent for Service)
COPIES TO: Joseph V. Del Raso, Esq.
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICAL AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IT IS PROPOSED THAT THIS FILING BECOME EFFECTIVE:
[X] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1).
Registrant has previously registered an indefinite number of shares of
common stock of The Timothy Plan under the Securities Act of 1933 pursuant to
Rule 24f-2 of the Investment Company Act of 1940, as amended. Registrant filed
a Notice pursuant to Rule 24f-2 for the fiscal year ended December 31, 1996 on
February 27, 1997.
================================================================================
As filed with the U.S. Securities and Exchange
Commission on September 22, 1997
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
Part A
Item No. Prospectus Caption
- -------------------------------------------------------------------
<S> <C> <C>
1. Cover Page.......................... Cover Page
2. Synopsis............................ Expenses of the Fund
3. Financial Highlights................ Financial Highlights
4. General Description of Registrant... Prospectus Cover, Investment Objective and
Policies, Risk Factors and Investment Restrictions
5. Management of the Fund.............. Board of Trustees, Investment Adviser, Investment
Manager, Historical Performance of the Investment Manager,
Underwriter, Administrator, Custodian, Transfer Agent, Fund
Accounting/Pricing Agent, Distribution of Shares, and Expenses
6. Capital Stock and Other Securities.. Shares of Beneficial Interest, Dividends, Distributions and Taxes
7. Purchase of Shares Being Offered.... Determination of Net Asset Value, How
to Purchase Shares, Retirement Plans
8. Redemption or Repurchase............ How to Redeem Fund Shares
9. Pending Legal Proceedings........... Inapplicable
PART B STATEMENT OF ADDITIONAL
ITEM NO. INFORMATION CAPTION
- -------- -----------------------
10. Cover Page.......................... Cover Page
11. Table of Contents................... Table of Contents
12. General Information and History..... N/A
13. Investment Objective and Policies... Cover, The Timothy Plan- Investments, Investment
Restrictions
14. Management of the Fund.............. Officers an Trustees of the Fund
15. Control Persons and Principal
Holders of Securities............... Miscellaneous
16. Investment Advisory and Other
Services............................ Investment Advisor, Investment Manager,
Underwriter and Administrator
17. Brokerage Allocation................ Allocation of Portfolio Brokerage
18. Capital Stock and Other Securities.. N/A
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
19. Purchase, Redemption and Pricing
of Securities Being Offered......... Purchase of Shares
20. Tax Status.......................... N/A
21. Underwriters........................ Underwriters, Purchase of Shares, Distribution
Plan
22. Calculation of Performance Data..... Performance Calculations
23. Financial Statements................ Audited Financial Statements
</TABLE>
PART C
- ------
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Post-Effective Amendment
No.6 to the Registration Statement.
<PAGE>
PROSPECTUS FOR
THE TIMOTHY PLAN
CLASS A SHARES
CLASS B SHARES
SEPTEMBER 22, 1997
Distributed By:
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789
(800) 846-7526
THE TIMOTHY PLAN (the "Fund") is an open-end diversified management investment
company. The Fund was organized as a series Delaware business trust and
currently offers shares of one series, which has specific investment objectives.
There is no assurance that the Fund's objectives will be achieved.
The primary objective of the Fund is long-term capital growth and the secondary
objective is current income. The Fund seeks to achieve its objectives by
investing in securities issued by companies which, in the opinion of the Fund's
advisor, conduct business in accordance with the stated philosophy and
principles of the Fund (See "Investment Objectives and Policies").
The Fund currently offers two classes of shares: "CLASS A" shares (formerly,
Institutional Class) and "CLASS B" shares (formerly, Retail Class)
(collectively, the "Classes"). CLASS A shares may be purchased at the net asset
value per share, plus any applicable front-end sales charge. (See "Purchasing
Class A Shares" under "Alternative Purchase Plan"). CLASS B shares may be
purchased at the net asset value per share without an initial sales charge, but
are subject to a contingent deferred sales charge ("CDSC"), which may be imposed
on redemptions made within five years of purchase. (See "Purchasing Class B
Shares" under "Alternative Purchase Plan"). Both Classes of shares are subject
to different 12b-1 Plan expenses. (See "Plans of Distribution" under "Management
of Funds"). These alternatives permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase, the
length of time the investor expects to hold the shares and other circumstances.
(See "Factors to Consider in Choosing a Class of Shares" under "Alternative
Purchase Plan").
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read and
retain this Prospectus for future reference.
More information about the Fund and Classes of shares of the Fund has been filed
with the U.S. Securities and Exchange Commission, and is contained in the
"Statement of Additional Information" dated April 29, September 22, 1997, which
is available at no charge upon request to the Fund. The Fund's Statement of
Additional Information is incorporated herein by reference. The Statement of
Additional Information, material incorporated by reference into this Prospectus,
<PAGE>
and other information regarding the Fund are maintained electronically with the
U.S. Securities and Exchange Commission at its Internet Web site (http:
//www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE U.S. SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Visit The Timothy Plan web site on the Internet at:
WWW.TIMOTHYPLAN.COM
Page 2
<PAGE>
TABLE OF CONTENTS
PAGE
Prospectus Summary.............................................
Expenses of the Fund...........................................
Financial Highlights...........................................
The Fund.......................................................
Investment Objectives and Policies.............................
Risk Factors...................................................
Investment Restrictions........................................
Management of the Fund.........................................
Alternative Purchase Plan......................................
How to Purchase Shares.........................................
How to Redeem Shares...........................................
Retirement Plans...............................................
Shares of Beneficial Interest..................................
Dividends, Distributions and Taxes.............................
Determination of Net Asset Value...............................
Performance....................................................
Investment Application.........................................
Automatic Investment Plan Application..........................
Application to Request to Transfer to The Timothy Plan.........
This Prospectus is not an offering of the securities herein described in any
jurisdiction or to any person to whom it is unlawful for the Fund to make such
an offer or solicitation. No sales representative, dealer, or other person is
authorized to give any information or make any representation other than those
contained in this Prospectus.
Page 3
<PAGE>
PROSPECTUS SUMMARY
THE FUND THE TIMOTHY PLAN (the "Fund") is an open-end, diversified
management investment company established as a series Delaware
business trust.
MINIMUM There is a minimum $1,000 initial investment for each Class of
PURCHASE shares. There is no minimum investment requirement for
subsequent investments or for qualified retirement plans.
INVESTMENT The primary objective of the Fund is long-term capital growth
OBJECTIVES and the secondary objective is current income. The Fund seeks
to achieve its objectives while abiding by the ethical standards
established for investments by the Fund.
INVESTMENT The Fund invests in securities issued by companies which, in the
POLICY opinion of the Fund's advisor, conduct business in accordance
with certain ethical standards. This policy precludes the
investment in securities of companies involved in the businesses
of alcohol production, tobacco production, or casino gambling,
or which are directly or indirectly involved in pornography or
abortion. The securities in which the Fund shall be precluded
from investing, by virtue of the Fund's ethical standards, are
referred to as the "Excluded Securities."
INVESTMENT Timothy Partners, Ltd. ("TPL") is the Fund's investment advisor
ADVISOR and Awad & Associates, a division of Raymond & James, Inc. (the
"Investment Manager") is the Fund's investment manager.
DISTRIBUTOR TPL is also the distributor and underwriter of the Fund's shares.
ALTERNATIVE The Fund offers two classes of shares: CLASS A shares and CLASS
PURCHASE B shares. Each Class has its own sales charge structure.
PLAN Investors may choose the Class of shares that best suits
their investment objectives. Each Class of shares represents an
interest in the same portfolio of investments of the Fund.
CLASS A SHARES. CLASS A shares are offered at net asset value per
share plus a maximum initial sales charge of 5.50% of the
offering price, reduced on investments of $25,000 or more. CLASS
A shares are subject to an annual 12b-1 distribution and service
fee of up to 0.25% of the Fund's average daily net assets of the
attributable CLASS A shares.
CLASS B SHARES. CLASS B shares are offered at net asset value per
share and are subject to a maximum contingent deferred sales
charge of 5.00% of redemption proceeds on redemptions made within
the first year after purchase and declining thereafter to 0.00%
after the fifth year. CLASS B shares are subject to a combined
annual distribution fee and service fee of up to 1.00% of the
Fund's average daily net assets attributable to CLASS B shares.
CLASS B shares will automatically convert to CLASS A shares once
the economic equivalent of a 5.50% sales charge is recovered
through the distribution fee. (See "Conversion Feature" under
"Alternative Purchase Plan").
The above information is qualified in its entirety by reference
to the more detailed information appearing elsewhere in this Prospectus.
Page 4
<PAGE>
EXPENSES OF THE FUND
The following table illustrates all expenses and fees that a shareholder of the
Fund's CLASS A and CLASS B will incur.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B
--------- ---------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).............. 5.50% /1/ none
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................... none none
Redemption Fees.......................................................................... none /2/ none /2/
Contingent Deferred Sales Charge (CDSC) /3/.............................................. none *
(as a percentage of the lesser of original purchase price or redemption proceeds)
</TABLE>
* A CDSC is imposed on CLASS B shares purchased on or after September 22,
1997 at the following declining rates:
<TABLE>
<CAPTION>
REDEMPTION WITHIN PERCENTAGE
<S> <C>
First Year...................... 5.0%
Second Year..................... 4.0%
Third Year...................... 3.0%
Fourth Year..................... 2.0%
Fifth Year...................... 1.0%
Sixth Year and thereafter....... None
</TABLE>
/1/ CLASS A shareholders who purchased shares before September 22, 1997 are not
subject to the front-end sales load on future purchases. No charge is
assessed on shares derived from reinvestment of dividends or capital gains
distributions. The front-end sales load is reduced for purchases of
$25,000 and over. See "Purchasing Class A Shares" under "Alternative
Purchase Plan".
/2/ UMB Bank KC NA charges $9.00 per redemption for redemptions remitted
by wire.
/3/ CLASS B shareholders who purchased shares before September 22, 1997 are not
subject to the CDSC upon redemption of such shares.
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- -------
<S> <C> <C>
Management and Advisory Expenses After Expense Reimbursements*.. 0.00% 0.00%
12b-1 Fees /1/.................................................. 0.25% 1.00%/2/
Other Expenses After Expense Reimbursements..................... 1.35% 1.35%
---- ----
Total Operating Costs After Expense Reimbursements.............. 1.60% 2.35%
==== ====
</TABLE>
* The purpose of this table is to assist the investor in understanding the
various expenses that an investor in the Fund will bear directly or
indirectly. TPL has voluntarily agreed to waive its fees and reimburse the
Fund for its other expenses, so that the total annual operating expenses of
CLASS A and CLASS B will not exceed 1.60% and 2.35%, respectively, of each
Class' respective average daily net assets. Prior to September 22, 1997, TPL
had voluntarily agreed to waive its management fees and reimburse expenses so
that CLASS B'S (the former "Retail Class") total annual operating expenses
would not exceed 2.20%. CLASS B'S expense information is restated to reflect
current fees. Absent any fee waiver and expense reimbursements, "Management
and Advisory Expenses After Expense Reimbursements" would have been 0.85% for
each Class of shares and "Other Expenses After Expense Reimbursements" for
CLASS A would have been 2.85% and CLASS B shares would be estimated at 3.45%.
Page 5
<PAGE>
Example
The following example illustrates the expenses that an investor in either Class
would have directly or indirectly paid on a $1,000 investment in the Fund at
the end of the periods presented assuming a 5% annual rate of return.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
(1) Assuming a complete redemption at end of period
CLASS A $70* $103* $137* $235*
CLASS B $75** $106** $137** $269
(2) Assuming no redemption
CLASS A $70* $103* $137* $235*
CLASS B $24 $73 $126 $269
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
The Fund issues two classes of shares that invest in the same portfolio of
securities. Shareholders of CLASS A are subject to a front-end sales load and
shareholders of CLASS B are subject to a CDSC. Each Class is subject to
different 12b-1 Plan expenses; therefore, expenses and performance figures will
vary between the Classes.
- --------------------------------------------------------------------------------
/1/ CLASS A shares and CLASS B shares are subject to an annual 12b-1
distribution and service fee of up to 0.25% and 1.00%, respectively, of the
average daily net assets attributable to each Class of shares, (of which, up
to 0.25% may be used as a service fee). (See "Plans of Distribution" under
"Management of Fund").
/2/ Long-term holders of CLASS A and CLASS B shares may eventually pay more than
the economic equivalent of the maximum front-end sales charges otherwise
permitted by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc.
* Assumes maximum front-end sales load.
** Assumes deduction of the applicable CDSC.
Page 6
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were derived from the Fund's financial
statements for the periods presented, which were audited by Tait, Weller &
Baker, independent auditors, whose unqualified report thereon is incorporated by
reference into the Statement of Additional Information. The Fund's Statement of
Additional Information may be obtained by shareholders without charge and is
incorporated by reference into this Prospectus. The table sets forth financial
data for a share of capital stock outstanding throughout the periods presented.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES RETAIL SHARES
----------------------------------------- -----------------------------
FOR THE YEAR FOR THE YEAR FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 * 1996 1995 **
------------ ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.07 $ 9.66 $ 10.00 $ 10.08 $ 10.49
------- ------ ------- ------- -------
Income From Investment
Operations:
Net investment
income............... 0.10 0.11 0.06 0.07 0.11
Net gains (losses) on
securities (both
realized and
unrealized).......... 1.17 0.66 (0.34) 1.14 (0.16)
------- ------ ------- ------- -------
Total from investment
operations........... 1.27 0.77 (0.28) 1.21 (0.05)
------- ------ ------- ------- -------
Less Distributions
Distributions from net
investment income:
Institutional Shares.. (0.10) (0.11) (0.06) 0.00 0.00
Retail Shares......... 0.00 0.00 0.00 (0.07) (0.11)
Distributions from net
capital gains:
Institutional Shares.. 0.00 (0.25) 0.00 0.00 0.00
Retail Shares......... 0.00 0.00 0.00 0.00 (0.25)
------- ------ ------- ------- -------
Total distributions... (0.10) (0.36) (0.06) (0.07) (0.36)
------- ------ ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 11.24 $10.07 $ 9.66 $ 11.22 $ 10.08
======= ====== ======= ======= =======
TOTAL RETURN............ 12.59% 7.93% (2.84%) 11.98% /1/ (0.46%)/1/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000s)...... $ 7,760 $6,133 $ 2,217 $ 3,929 $ 620
Ratio of expenses to
average net assets:
Before expense
reimbursement........ 3.70% 5.84% 18.62% /2/ 4.30% 6.44% /2/
After expense
reimbursement........ 1.60% 1.60% 1.60% /2/ 2.20% 2.20% /2/
Ratio of net investment
income to average net
assets:
Before expense
reimbursement........ (1.05%) (2.96%) (15.49%)/2/ (1.65%) (3.56%)/2/
After expense
reimbursement........ 1.05% 1.28% 1.53% /2/ 0.45% 0.68% /2/
Portfolio turnover
rate.................. 93.08% 34.12% 8.31% 93.08% 34.12%
Average commission rate
paid.................. $0.0593 N/R /3/ N/R /3/ $0.0593 N/R /3/
</TABLE>
* The Institutional Shares commenced investment operations on March 21, 1994.
** The Retail Shares commenced investment operations on August 25, 1995.
/1/Total return calculation does not reflect sales load.
/2/Annualized.
/3/Not Required.
Page 7
<PAGE>
THE FUND
THE TIMOTHY PLAN (the "Fund") is an open-end, diversified
management investment company commonly known as a mutual fund. The Fund was
established as a series Delaware business trust on December 16, 1993. The Fund
currently offers one series with two classes of shares: CLASS A and CLASS B.
INVESTMENT OBJECTIVES AND POLICIES
Set forth below are the investment objectives and policies of the Fund. The
investment objectives of the Fund are a fundamental policy and may not be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities. There can be no assurance that the Fund will
achieve its objectives.
The Fund's primary objective is long-term capital growth, with a secondary
objective of current income. The Fund shall seek to achieve its objectives
while abiding by ethical standards established for investments by the Fund.
Those standards preclude the investment in securities of companies involved in
the businesses of alcohol production, tobacco production, or casino gambling, or
which are directly or indirectly involved in pornography or abortion. The
securities in which the Fund shall be precluded from investing, by virtue of the
Fund's ethical standards, are referred to as the "Excluded Securities."
The Fund will invest most of its assets in common stocks and American Depository
Receipts ("ADRs"), although it may also invest in other types of securities
including securities convertible into common stocks and common stock equivalents
(including rights and warrants), preferred stocks, short-term U.S. Government
securities, and/or other high-quality, short-term debt securities (commercial
paper, repurchase agreements, bankers' acceptances, certificates of deposit and
other fixed income securities (non-convertible and convertible bonds, debentures
and notes issued by U.S. corporations and certain bank obligations and
participations). High-quality debt securities are those that are rated Aa or
better by Moody's, or AA or better by Standard & Poor's, or that are of
comparable quality. See "Risk Factors" herein, and the Statement of Additional
Information for information relating to these securities. While it is the
Fund's policy to seek long-term investments, changes will be made whenever
management believes that such changes will strengthen the Fund's investments and
realization of its objectives. The Fund will pursue its objectives by investing
a major portion of its assets in securities of companies which offer prospects
for growth of capital in accordance with the portfolio investment techniques
described below.
The Fund seeks to achieve its investment objectives by investing primarily in
common stocks and ADRs, while foregoing investments in the Excluded Securities.
Awad & Associates (the "Investment Manager"), a division of Raymond James &
Associates, Inc., serves as sub-investment advisor to Timothy Partners, Ltd.
(the "TPL"), and will select the investments for the Fund, but will not invest
in securities which TPL determines are Excluded Securities. TPL has instructed
the Investment Manager to avoid investment in any company directly involved in
the business of alcohol production, tobacco production, or casino gambling. In
addition, TPL will compile and maintain a list of companies that it determines,
by using information collected by and published by three Christian ministries,
participate directly or indirectly in either pornography or abortion. TPL will
use its best judgement in determining which companies, through their corporate
practices in either of these two areas, need to be placed on the Excluded
Securities list. TPL also reserves the right to exercise its best judgment to
exclude investment in other companies whose corporate practices may not fall
within the exclusions described above, but nevertheless could be found offensive
to basic traditional Judeo Christian values.
The three Christian ministries that publish information that TPL will utilize in
identifying companies directly or indirectly involved in pornography or abortion
are as follows: (1) The American Family Association (to identify companies
engaged in pornography); (2) Pro Vita Advisors (to identify companies that
directly and indirectly participate in abortion); and (3) Life Decisions
International (to identify companies that indirectly support abortion causes
through corporate funding programs). TPL retains the right to change the
ministries whose information it reviews, at its discretion.
Page 8
<PAGE>
After eliminating the Excluded Securities, the Investment Manager will construct
a portfolio of investments to produce the highest possible risk-adjusted return
on investment as is consistent with the Fund's objectives and policies.
The Fund will invest primarily in a diversified portfolio of equity securities
of companies whose market capitalizations exceed $200 million, and whose
securities trade on the New York Stock Exchange, the American Stock Exchange and
the NASDAQ National Market System. Since the Fund is an equity fund, the
Investment Manager seeks investments that show the greatest potential for
growth, with income as a secondary factor. Therefore, these companies may or
may not pay dividends.
Potential equity investment candidates will be analyzed to determine their
ability to repay all fixed debt obligations (including certain "off balance
sheet debts" such as operating lease obligations and unfunded pension
liabilities) from their historical level of net investment income within a
reasonable time period, generally less than five years. Securities are
typically sold when an appreciation objective is met. The Fund may invest up to
30% of its assets in cash or debt securities. Although the Investment Manager
does not utilize a market timing strategy, if market conditions are viewed to
require that the Fund take a temporary defensive position, the Fund may invest
up to 100% of its assets in (i) debt securities issued by the U.S. Government,
its agencies or instrumentalities, (ii) commercial paper, or (iii) certificates
of deposit and bankers' acceptances with respect to any of the foregoing
investments. The Fund may also invest in such securities pending the investment
of the proceeds of certain sales of portfolio securities and at such other times
when suitable equity securities are not available. It is impossible to predict
whether, or for how long, the Fund will use any such temporary defensive
strategies.
TPL will attempt to monitor and respond to changes in business policies within
the companies selected for investment. It is possible that securities in which
the Fund has invested may become Excluded Securities. In such event, the Fund
will sell its position in those securities subject to general market
considerations.
RISK FACTORS
INVESTMENT RESTRICTIONS OF THE FUND. The ethical standards established for
investments by the Fund limit the pool of securities from which investment
securities may be selected by the Investment Manager. Although TPL believes the
Fund's investment objective of long-term capital growth can be achieved
notwithstanding the effect of the Fund's ethical standards, this objective may
be affected by the limitations imposed by TPL, in eliminating the Excluded
Securities as potential investments.
ADVISOR AND INVESTMENT MANAGER. The principals of the managing general partner
of TPL have been engaged in various aspects of the retail brokerage and
financial advisory business for the past 20 years. The Investment Manager has
advised individuals, pension funds, trusts and institutions. Awad & Associates,
a division of Raymond James & Associates, Inc., currently manages approximately
$724 million in these accounts. The Investment Manager currently serves as co-
investment advisor to one other investment company: Heritage Small Cap Fund. TPL
has served as investment advisor exclusively to the Fund since the Fund's
commencement of operations (March 21, 1994) but has not previously served as
investment advisor to any other investment company.
PORTFOLIO TURNOVER. It is anticipated that the annualized portfolio turnover
rate for the Fund generally will not exceed a range of 50% to 75%, and may be
lower than 50%, during most periods. High portfolio turnover involves
additional transaction costs (such as brokerage commissions) which are borne by
the Fund, and might involve adverse tax effects. (See "Dividends, Distributions
and Taxes").
RISKS OF CERTAIN FIXED INCOME SECURITIES
INTEREST BEARING DEBT INSTRUMENTS. The market value of interest-bearing debt
securities, if and when held by the Fund, is affected by changes in interest
rates. There is normally an inverse relationship between the market value of
securities sensitive to prevailing interest rates and actual changes in interest
rates; i.e., a decline in interest rates produces an increase in market value,
while an increase in rates produces a decrease in market value. Moreover, the
longer the remaining maturity of a security, the greater the effect of interest
rate changes on the market value of such a security. In addition, changes in an
issuer's ability to make payments of interest and principal and in the market's
perception of
Page 9
<PAGE>
an issuer's creditworthiness also affect the market value of the debt
securities of that issuer.
MONEY MARKET SECURITIES. The Fund will select money market securities for
investment when such securities offer a current market rate of return which the
Fund considers reasonable in relation to the risk of the investment, and the
issuer can satisfy suitable standards of creditworthiness set by the Fund. The
money market securities in which the Fund may invest are repurchase agreements,
certificates of deposit, U.S. Government securities, commercial paper and
securities of money market mutual funds.
Although the Fund intends to invest primarily in common stocks, common stock
equivalents, and ADRs, the Fund may invest up to 30% of its assets directly in
money market securities whenever deemed appropriate to achieve the Fund's
investment objectives. It may invest without limitation in such securities on a
temporary basis for defensive purposes.
Securities issued or guaranteed as to principal and interest by the U.S.
Government ("Government Securities") include a variety of Treasury securities,
which differ in their interest rates, maturities and date of issue. Treasury
bills have a maturity of one year or less; Treasury notes have maturities of one
to ten years; Treasury bonds generally have a maturity of greater than five
years. The Fund will only acquire Government Securities which are supported by
the "full faith and credit" of the United States. Securities which are backed
by the full faith and credit of the United States include Treasury bills,
Treasury notes, Treasury bonds and obligations of the Government National
Mortgage Association, the Farmers Home Administration and the Export-Import
Bank. The Fund's direct investments in money market securities will generally
favor securities with shorter maturities (maturities of less than 60 days) which
are less affected by price fluctuations than are those with longer maturities.
Certificates of deposit are certificates issued against funds deposited in a
commercial bank or a savings and loan association for a definite period of time
and earning a specified return. Bankers' acceptances are negotiable drafts or
bills of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Investments in bank certificates of deposit and bankers' acceptances are
generally limited to domestic banks and savings and loan associations that are
members of the Federal Deposit Insurance Corporation or Federal Savings and Loan
Insurance Corporation having a net worth of at least $100 million dollars
("Domestic Banks") and domestic branches of foreign banks (limited to
institutions having total assets not less than $1 billion or its equivalent).
Investments in prime commercial paper may be made in notes, drafts, or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace, or any renewal thereof
payable on demand or having a maturity likewise limited.
REPURCHASE AGREEMENTS. Under a repurchase agreement the Fund acquires a debt
instrument for a relatively short period (usually not more than one week)
subject to the obligation of the seller to repurchase and the Fund to resell
such debt instrument at a fixed price. The Fund will enter into repurchase
agreements only with banks which are members of the Federal Reserve System, or
securities dealers who are members of a national securities exchange or are
market makers in government securities and report to the Market Reports Division
of the Federal Reserve Bank of New York and, in either case, only where the debt
instrument collateralizing the repurchase agreement is a U.S. Treasury or agency
obligation supported by the full faith and credit of the United States. A
repurchase agreement may also be viewed as the loan of money by the Fund to the
seller. The resale price specified is normally in excess of the purchase price,
reflecting an agreed upon interest rate. The rate is effective for the period
of time the Fund is invested in the agreement and may not be related to the
coupon rate on the underlying security. The term of these repurchase agreements
will usually be short (from overnight to one week). At no time will the Fund
invest in repurchase agreements of more than sixty days. The securities which
are collateral for the repurchase agreements, however, may have maturity dates
in excess of sixty days from the effective date of the repurchase agreement. The
Fund will always receive, as collateral, securities whose market value,
including accrued interest, will at least equal 102% of the dollar amount to be
paid to the Fund under each agreement at its maturity, and the Fund will make
payment for such securities only upon physical delivery or evidence of book
entry transfer to the account of the Custodian. If the seller defaults, the
Fund might incur a loss if the value of the collateral securing the repurchase
agreement declines, and might incur disposition costs in connection with
liquidation of the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, collection of the
collateral by the Fund may be delayed or limited. The Fund also may not be able
to substantiate its interests in the underlying securities. While management of
the Fund acknowledges these risks, it is expected that such risks can be
controlled through stringent security selection and careful monitoring
procedures. The
Page 10
<PAGE>
Fund may not enter into a repurchase agreement with more than seven days to
maturity if, as a result, more than 10% of the market value of the Fund's net
assets would be invested in such repurchase agreements and any other illiquid
assets. For purposes of the diversification test for qualification as a
regulated investment company under the Internal Revenue Code (the "Code"),
Repurchase Agreements are not counted as cash, cash items or receivables, but
rather as securities issued by the counter-party to the Repurchase Agreements.
SMALL-CAP INVESTMENTS. The Fund may invest in small capitalization companies,
which may offer greater opportunities for growth of capital than investments in
larger, more established companies. However, investing in smaller, newer
issuers generally involves greater risks than investing in larger, more
established issuers. Companies in which the Fund is likely to invest may have
limited product lines, markets or financial resources and may lack management
depth. The securities issued by such companies may have limited marketability
and may be subject to more abrupt or erratic market movements than securities
of larger, more established companies or the market averages in general. In
addition, many small capitalization companies may be in the early stages of
development. Accordingly, an investment in the Fund may not be appropriate for
all investors.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below have been adopted by the Fund as
fundamental policies, to limit certain risks that may result from investment in
specific types of securities or from engaging in certain kinds of transactions
addressed by such restrictions. They may not be changed without the affirmative
vote of the holders of a majority of the outstanding voting securities of the
Fund. Certain of these policies are detailed below, while other policies are
set forth in the Statement of Additional Information. Changes in values of
particular Fund assets or the assets of the Fund as a whole will not cause a
violation of the investment restrictions so long as percentage restrictions are
observed by the Fund at the time it purchases any security.
The investment restrictions specifically provide that the Fund will not:
(a) as to 75% of the Fund's total assets, invest more than 5% of its total
assets in the securities of any one issuer. (This limitation does not
apply to cash and cash items, or obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities);
(b) purchase more than 10% of the voting securities, or more than 10% of
any class of securities, of another investment company. For purposes of
this restriction, all outstanding fixed income securities of an issuer are
considered as one class;
(c) purchase or sell commodities or commodity futures contracts, other
than those related to stock indexes as previously outlined in "Investment
Objectives and Policies;"
(d) purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations;
(e) make loans of money or securities, except (i) by the purchase of fixed
income obligations in which the Fund may invest consistent with its
investment objectives and policies; or (ii) by investment in repurchase
agreements (See "Investment Objectives and Policies");
(f) invest in securities of any company if, any officer or trustee of the
Fund or TPL owns more than 0.5% of the outstanding securities of such
company and such officers and trustees (who own more than 0.5%) in the
aggregate own more than 5% of the outstanding securities of such company;
(g) borrow money, except the Fund may borrow from banks (i) for temporary
or emergency purposes in an amount not exceeding 5% of the Fund's assets or
(ii) to meet redemption requests that might otherwise require the untimely
disposition of portfolio securities, in an amount up to 33 1/3% of the
value of the Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing was made. While borrowing exceeds 5%
Page 11
<PAGE>
of the value of the Fund's total assets, the Fund will not purchase
securities. Interest paid on borrowing will reduce net income;
(h) pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 33 1/3% of the value of its net assets, but only to
secure borrowing for temporary or emergency purposes, such as to effect
redemptions; or
(i) purchase the securities of any issuer, if, as a result, more than 10%
of the value of a Fund's net assets would be invested in securities that
are subject to legal or contractual restrictions on resale ("restricted
securities"), in securities for which there are no readily available market
quotations, or in repurchase agreements maturing in more than seven days,
if all such securities would constitute more than 10% of the Fund's net
assets.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
- -----------------
The members of the Fund's Board of Trustees are fiduciaries for the Fund's
shareholders and are governed by the laws of the State of Delaware in this
regard. They establish policy for the operation of the Fund and appoint the
officers who conduct the daily business of the Fund. The Statement of
Additional Information contains more information regarding Officers and
Trustees.
INVESTMENT ADVISOR
- ------------------
Timothy Partners, Ltd. ("TPL") is a Florida limited partnership organized on
December 6, 1993. TPL supervises the investment of the assets of the Fund in
accordance with the objectives, policies and restrictions of the Fund. TPL
approves the portfolio of securities selected by the Investment Manager (See
"Investment Manager" below). To determine which securities are Excluded
Securities with respect to abortion and pornography, TPL consults with three
Christian ministries on these issues: The American Family Association
(pornography), Pro Vita Advisors (direct and indirect participation and
involvement in abortion) and Life Decisions International (indirect
participation in abortion through corporate funding programs). TPL retains the
right to change the ministries whose information it reviews, at its discretion.
For its services, TPL 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 TPL to: (i) the
Investment Manager for assisting in the selection of portfolio securities for
the Fund and (ii) Covenant Financial Management ("CFM") as reimbursement for
certain expenses related to the daily operations of the Fund performed by CFM.
In addition, this fee also covers the cost of postage, materials and handling of
the fulfillment function of processing prospectus requests as well as other
sundry marketing and general administration expenses. The fee payable to and
services provided by the Investment Manager are described under the heading
"Investment Manager" below. The fee payable to and services provided by CFM are
described at the end of this section. TPL's fee is higher than that charged by
other funds, but is comparable to fees charged by funds with similar investment
objectives. TPL has offices located at 1304 West Fairbanks Avenue, Winter Park,
FL 32789.
Arthur D. Ally, the President, Chairman and Trustee of the Fund, is President
and a 70% shareholder of Covenant Funds, Inc. ("Covenant"), which is the
managing general partner of TPL, located at 1304 West Fairbanks Avenue, Winter
Park, FL 32789. Mr. Ally is also an individual general partner of TPL. Neither
TPL nor its managing general partners previously has served as an advisor to any
other registered investment company but TPL has served as investment advisor
exclusively to the Fund since the Fund's commencement of operations (March 21,
1994). Prior thereto, Mr. Ally had extensive securities industry experience
having served as either financial consultant or branch manager for three
securities firms over the previous seventeen years: Prudential Bache, Shearson
Lehman Brothers and Investment Management & Research. Some or all of these
firms may be used by the Investment Manager to execute portfolio trades for the
Fund. Neither Mr. Ally nor any affiliated person to the Fund will receive any
benefit from any of these transactions.
TPL and CFM have entered into an agreement dated February 23, 1994, as amended
April 23, 1996, whereby TPL pays
Page 12
<PAGE>
CFM for certain overhead expenses related to the daily operations of the Fund
that CFM carries out. These expenses include: salary of administrative
personnel, cost of preparation of shareholder fulfillment kits, cost of phone
lines and office space, and cost of postage and supplies. The annual fee is an
amount to cover CFM's costs in providing services to TPL, payable by TPL 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 shareholder of 100% of
CFM.
INVESTMENT MANAGER
- ------------------
Effective January 1, 1997, the Fund engaged a new investment manager, Awad &
Associates (the "Investment Manager"), a division of Raymond James & Associates,
Inc., pursuant to a new sub-investment advisory agreement among the Fund,
Timothy Partners, Ltd. and Awad & Associates, which was approved by the Board of
Trustees at a meeting held on November 29, 1996 and by shareholders of record as
of November 14, 1996 at a Special Meeting of Shareholders held on January 31,
1997.
The Investment Manager has offices at 477 Madison Avenue, New York, New York
10022. The Investment Manager is a joint venture between James Awad, a twenty-
six year veteran of the investment management business, and Raymond James
Financial, a diversified financial services firm traded on the New York Stock
Exchange. The Investment Manager has been retained by TPL pursuant to a sub-
investment advisory agreement to assist in the selection and management of the
Fund's investment securities and prepare the portfolio of securities of selected
issuers with business practices that meet the objectives and policies of the
Fund. TPL reviews the portfolio to insure compliance with the Fund's ethical
standards.
The Investment Manager's investment policy committee, comprised of James Awad,
Dan Veru and Carol Egan, is responsible for the day-to-day management of the
Fund's portfolio. James Awad is the senior investment officer of the Investment
Manager. Mr. Awad has been in the investment business since 1965, focusing on
research and portfolio management. Prior to forming Awad & Associates, he was
President of BMI Capital, a successful money management firm he founded. In
addition, Mr. Awad managed assets at Neuberger & Berman, Channing Management and
First Investment Corp. The Investment Manager managed approximately $724 million
in assets at December 31, 1996 for clients on a separate account basis utilizing
the same investment methodology that it will employ for the Fund.
The Investment Manager effects portfolio transactions for the Fund. In this
regard, the Investment Manager will be governed by the policies set forth under
"Investment Objectives and Policies".
For its services, the Investment Manager is paid an annual fee by TPL equal to
0.42% of the average daily net assets of the Fund with respect to the first $10
million in assets; 0.40% of the next $5 million in assets; 0.35% of the next $10
million in assets; and 0.25% of assets over $25 million.
Awad & Associates currently serves as co-investment advisor to one other
investment company: Heritage Small Cap Fund. At January 1, 1996, Awad &
Associates managed $70 million in net assets of Heritage Small Cap Fund and
received an advisory fee of 0.50% of its average daily net assets with respect
to the first $50 million in assets and 37.5% thereafter.
INVESTMENT MANAGER'S HISTORICAL PERFORMANCE
- -------------------------------------------
Set forth below are certain performance data provided by the Investment Manager
relating to the composite of separately managed equity accounts of clients of
the Investment Manager. These accounts have substantially similar investment
objectives and policies as the Fund's and they are managed using substantially
similar investment strategies and techniques as those contemplated by the Fund.
It is important to note that these returns do not take into account the effects
of the Fund's moral screening restrictions. The Investment Manager believes
that its philosophy as a small capitalization, value-oriented investor would
tend to eliminate from its investment portfolio the securities of companies
directly involved in alcohol production, tobacco production or casino gambling,
companies which would most likely have too large a capitalization and which
would be much more mature and seasoned than the companies customarily acquired
for the Investment Manager's core portfolio. Based upon the foregoing, the
Investment Manager estimates that if the screening criteria that will be used in
managing the Fund (using data available as of December 31,1996) had been applied
with respect to the accounts included below, an insignificant percentage of the
investments in the accounts at any one time over the 10-year period ended
December 31, 1996 would have been prohibited investments, and the differential
in performance would have been immaterial. It cannot be determined that future
holdings of the Fund would be substantially identical to those in the otherwise
similar accounts managed by the Investment Manager.
Page 13
<PAGE>
These performance figures include the results carried over from a previous firm,
BMI Capital, for the period from 1/1/86 through 9/30/96. These results are shown
net of management fees and commissions. The results presented from 10/1/92
forward represent only those accounts managed by Awad & Associates through
Raymond James & Associates, and these results are shown net of an assumed wrap
fee of 2.5% (which includes management fees and commissions). These figures are
a time-weighted average for the entire period, all of which would not be
duplicated in any individual account and would not necessarily result in the
same return for the investors. Further, the separately managed accounts are not
subject to investment limitations, diversification requirements, and other
restrictions imposed by the Investment Company Act of 1940, as amended and the
Code; such conditions, if applicable, may have lowered the returns for the
separately managed accounts. The performance presented does not represent the
historical performance of the Fund and is not indicative of the Fund's future
performance.
<TABLE>
<CAPTION>
COMPOSITE PAST PERFORMANCE OF PAST PERFORMANCE OF
THROUGH AWAD & ASSOCIATES AND BMI CAPITAL S&P 500
- --------------------------- ---------------------------------- --------------------
<S> <C> <C>
1996 15.9% 23.0%
1995 46.2% 37.6%
1994 2.9% 1.3%
1993 10.8% 10.1%
1992 13.8% 7.6%
1991 39.8% 30.5%
1990 -13.2% -3.1%
1989 9.7% 31.7%
1988 26.0% 16.6%
1987 -5.4% 5.2%
1986 17.6% 18.4%
ANNUALIZED RETURNS THROUGH JUNE 30, 1997
- ----------------------------------------
1997 YTD 12.01% 18.63%
One Year 15.56% 28.74%
Three Years 24.66% 23.65%
Five Years 17.68% 15.79%
Ten Years 11.40% 10.83%
</TABLE>
NOTES:
- ------
1: The annualized return is calculated from monthly data, allowing for
compounding. The formula used is in accordance with the acceptable
methods set forth by the Association for Investment Management Research,
the Bank Administration Institute and the Investment Council Association
of America. Market value of the account was the sum of the account's
total assets, including cash, cash equivalence, short-term investments and
securities valued at current market prices.
2: The S&P Index is an unmanaged index which assumes reinvestment of
dividends and is generally considered representative of securities similar
to those invested in by the Investment Manager for the purpose of the
composite performance numbers set forth above.
3: The Investment Manager's average annual management fee while at BMI
Capital over the period 1/1/82 -9/30/92 was 1% or 100 basis points.
During this period, fees on the Investment Manager's individual accounts
ranged from 0.5% to 1% (50 basis points to 100 basis points).
4: The past performance returns reported in the preceding table for the
period 10/1/92 -- 6\30\97 (following the establishment of Awad &
Associates as a division of Raymond James & Associates) were based on a
universe of "wrap fee" accounts managed for various broker/dealers which
are coordinated through Raymond James & Associates. The total value of
these accounts at 6/27/97 was approximately $161 million out of
a total client base of $625 million. This universe was selected due to
the commonality of structure and management fees among these clients as
well as the similarity of investment strategies and objectives to those of
the Fund. The average wrap fee is 2.5% annually (which includes all
management fees and commissions of Raymond James & Associates). The
performance figures reported are net of those wrap fees.
Page 14
<PAGE>
UNDERWRITER
- -----------
Timothy Partners, Ltd. ("TPL") 1304 West Fairbanks Avenue, Winter Park, Florida,
was engaged pursuant to an agreement effective July 1, 1997 to act as
underwriter for the Fund. The purpose of acting as underwriter is to facilitate
the registration of shares of the Fund under state securities laws and to assist
in the sale of shares. TPL also acts as investment advisor for the Fund. TPL is
not compensated for providing underwriting services to the Fund.
PLANS OF DISTRIBUTION
- ---------------------
The Fund has adopted two plans of distribution ("CLASS A PLAN" and "CLASS B
PLAN") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended, whereby it may reimburse TPL or others for expenses actually incurred
by TPL or others in the promotion and distribution of the shares of each
respective Class ("distribution expenses") and servicing its shareholders by
providing personal services and/or maintaining shareholder accounts ("service
fees").
Under the CLASS A PLAN, the Fund reimburses TPL and others for distribution
services at an annual rate of 0.25% (of which, the full amount may be service
fees), payable on a monthly basis, of the Fund's aggregate average daily net
assets attributable to CLASS A shares.
Under the CLASS B PLAN, the Fund pays TPL a fee at an annual rate of 1.00% (of
which, up to 0.25% may be service fees) payable on a monthly basis, of the
Fund's aggregate average daily net assets attributable to CLASS B shares.
Amounts paid under the CLASS B PLAN are paid to TPL to compensate it for the
services provided and the expenses borne by TPL and others in the distribution
of CLASS B shares, including the payment of commissions for sales of CLASS B
shares. The CLASS B PLAN is designed to permit an investor to purchase such
shares without the assessment of a front-end sales load and at the same time
permit the distributor to compensate authorized dealers with respect to such
shares. In this regard, the purpose and function of the combined CDSC and
distribution fee is to provide for the financing of the distribution of CLASS B
shares.
Other 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 Fund shares.
All expenses of distribution and marketing in excess of the maximum amounts
permitted by the CLASS A PLAN and CLASS B PLAN per annum will be borne by TPL
and any amounts paid for the above services will be paid pursuant to a servicing
or other agreement. The CLASS A PLAN and CLASS B PLAN also cover any payments
made by the Fund, TPL, the Investment Manager, or other parties on behalf of the
Fund, TPL, or the Investment Manager, to the extent such payments are deemed to
be for the financing of any activity primarily intended to result in the sale of
shares issued by the Fund within the context of Rule 12b-1.
ADMINISTRATOR
- -------------
FPS Services, Inc. ("FPS"), 3200 Horizon Drive, King of Prussia, PA 19406-0903,
is the Fund's administrator pursuant to an Administration Services Agreement
(the "Agreement") with the Fund dated January 19, 1994, as amended February 23,
1996. Under the Agreement, FPS receives a fee at the annual rate of 0.15% of
the first $50 million in average net assets of the Fund, 0.10% of the next $50
million in average net assets and 0.05% of average net assets over $100 million.
There is a minimum fee of $50,000 per year for the initial series/class issued
by the Fund and $12,000 per year for each additional series or class of shares.
Page 15
<PAGE>
The services FPS provides to the Fund include: considering and monitoring of any
third parties furnishing services to the Fund; providing the necessary office
space, equipment and personnel to perform administrative and clerical functions
for the Fund; preparing, filing and distributing proxy materials, periodic
reports to shareholders, registration statements, and other documents; and
responding to shareholder inquiries.
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT
- -----------------------------------------------------------
The Bank of New York, 48 Wall Street, New York, New York 10286, is custodian for
the securities and cash of the Fund.
FPS serves as the Fund's transfer agent. As transfer agent, it maintains the
records of each shareholder's account, answers shareholder inquiries concerning
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent, and performs other shareholder
service functions. Shareholder inquiries should be directed to the transfer
agent at (800) 662-0201.
FPS also performs certain accounting and pricing services for the Fund. This
includes the daily calculation of the Fund's net asset value.
EXPENSES
- --------
Expenses attributable to the Fund, but not a particular Class, will be allocated
to each Class on the basis of relative net assets. Except as indicated above,
the Fund is responsible for the payment of its expenses, other than those borne
by TPL. These expenses may include, but are not limited to: (a) management
fees; (b) the charges and expenses of the Fund's legal counsel and independent
accountants; (c) brokers' commissions, mark-ups and mark-downs and any issue or
transfer taxes chargeable to the Fund in connection with its securities
transactions; (d) all taxes and corporate fees payable by the Fund to
governmental agencies; (e) the fees of any trade association of which the Fund
is a member; (f) the cost of stock certificates, if any, representing shares of
the Fund; (g) amortization and reimbursements of the organization expenses of
the Fund and the fees and expenses involved in registering and maintaining
registration of the Fund and its shares with the U.S. Securities and Exchange
Commission, and the preparation and printing of the Fund's registration
statements and prospectuses for such purposes; (h) allocable communications
expenses with respect to investor services and all expenses of shareholders and
trustee meetings and of preparing, printing and mailing prospectuses and reports
to shareholders; (i) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business; (j) state filing fees; and (k) compensation for employees of the Fund.
ALTERNATIVE PURCHASE PLAN
The Alternative Purchase Plan permits an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase and
the length of time the investor expects to hold the shares. The primary
difference between the Classes lies in their sales charge structures and ongoing
expenses. CLASS A and CLASS B shares represent interests in the same portfolio
of investments of the Fund.
PURCHASING CLASS A SHARES
APPLICABLE SALES CHARGES
CLASS A shares of the Fund are offered at the public offering price, which is
the net asset value per share plus any applicable sales charge. The sales
charge is a variable percentage of the offering price depending upon the amount
of the sale. No sales charge will be assessed on the reinvestment of
distributions. The sales charge will be assessed as follows:
Page 16
<PAGE>
TOTAL SALES CHARGE
<TABLE>
<CAPTION>
AS A % OF AS A % OF DEALER CONCESSION
OFFERING NET AMOUNT AS A PERCENTAGE OF
AMOUNT OF YOUR INVESTMENT PRICE INVESTED OFFERING PRICE
- -------------------------------- ---------- ----------- -------------------
<S> <C> <C> <C>
$1,000 but under $25,000..... 5.50% 5.82% 5.25%
$25,000 but under $50,000.... 4.25% 4.44% 4.00%
$50,000 but under $100,000... 3.00% 3.09% 2.75%
$100,000 but under $250,000.. 2.00% 2.04% 1.75%
$250,000 but under $500,000.. 1.00% 1.01% 0.75%
$500,000 or over............. 0.00% 0.00% 0.00%
</TABLE>
The distributor will pay the appropriate dealer concession to those selected
dealers who have entered into an agreement with the distributor. The dealer's
concession may be changed from time to time. The distributor may from time to
time offer incentive compensation to dealers (which sell shares of the Fund
subject to sales charges) allowing such dealers to retain an additional portion
of the sales load. A dealer who receives all of the sales load may be
considered an "underwriter" under the Securities Act of 1933, as amended. All
such sales charges are paid to the securities dealer involved in the trade, if
any. The foregoing schedule of sales charges applies to single purchases and to
purchases made under a Letter of Intent and pursuant to the Rights of
Accumulation, both of which are described below.
EXEMPTIONS FROM SALES CHARGES
CLASS A shareholders who purchased shares before September 22, 1997 are not
subject to the sales charge on past or future purchases. In addition, the Fund
will waive sales charges for purchases by fee-based Registered Investment
Advisers for their clients, broker/dealers with wrap fee accounts and for
investors who wish to transfer funds from other registered investment companies
into the Fund. Shares of CLASS A purchased under the above circumstances will
be issued at the net asset value next determined after receipt of the purchase
order in proper form by the transfer agent.
REDUCED SALES CHARGES
The sales charge for purchases of CLASS A shares of the Fund may be reduced
through Rights of Accumulation or Letter of Intent. To qualify for a reduced
sales charge, investors must so notify their authorized dealer, the Fund or the
Fund's transfer agent or distributor at the time of each purchase of shares
which qualifies for the reduction.
RIGHTS OF ACCUMULATION
A shareholder may qualify for a reduced sales charge by aggregating the net
asset values of shares requiring the payment of an initial sales charge,
previously purchased and currently owned with the dollar amount of shares to be
purchased.
LETTER OF INTENT
An investor may qualify for a reduced sales charge immediately by signing a non-
binding Letter of Intent stating the investor's intention to invest during the
next 13 months a specified amount which, if made at one time, would qualify for
a reduced sales charge. The first investment cannot be made more than 90 days
prior to the date of the Letter of Intent. Any redemptions made during the 13
month period will be subtracted from the amount of purchases in determining
whether the Letter of Intent has been completed. During the term of a Letter of
Intent, the transfer agent will hold shares representing 5.50% of the indicated
amount in escrow for payment of a higher sales load if the full amount indicated
in the Letter of Intent is not purchased. The escrowed shares will be released
when the full amount indicated has been purchased. If the full amount indicated
is not purchased within the 13 month period, an investor's escrowed shares will
be redeemed in an amount equal to the difference in the dollar amount of sales
charge actually paid and the amount of sales charge the investor would have had
to pay on his or her aggregate purchases if the total of such purchases had been
made at a single time.
Page 17
<PAGE>
PURCHASING CLASS B SHARES
CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on certain redemptions of
CLASS B shares. Because CLASS B shares are sold without an initial sales charge,
the entire amount of an investor's purchase payment is invested in the Fund.
CLASS B shares which are held for five years or more after purchase (calculated
from the last day of the month in which the shares were purchased) will not be
subject to any charge upon redemption. Shares redeemed sooner than five years
after purchase may, however, be subject to a contingent deferred sales charge
upon redemption. The charge is assessed on an amount equal to the lesser of the
then current market value or the cost of the shares being redeemed. Accordingly,
no sales charge is imposed on increases in net asset value above the initial
purchase price. In addition, no charge is assessed on shares derived from
reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, varies depending on the number of years from the
time of payment for the purchase of CLASS B shares until the time of redemption
of such shares. Solely for purposes of determining the number of years from the
time of any payment for the purchases of shares, all payments during a month are
aggregated and deemed to have been made on the last day of the month. The amount
of any applicable CDSC will be calculated by multiplying the lesser of the
original purchase price or the net asset value of such shares at the time of
redemption by the applicable percentage shown in the table below.
REDEMPTION WITHIN PERCENTAGE
----------------- ----------
First Year 5.0%
Second Year 4.0%
Third Year 3.0%
Fourth Year 2.0%
Fifth Year 1.0%
Sixth Year and thereafter None
In determining whether a CDSC is applicable to a redemption, it is assumed that
the redemption is first, of any shares in the shareholder's account that are not
subject to a CDSC; second, of shares held for over five years or shares acquired
pursuant to reinvestment of dividends or distributions, and third, of shares
held longest during the five-year period.
A commission or transaction fee of 4.00% of the purchase amount will be paid by
the Fund's distributor to authorized dealers at the time of purchase.
Additionally, the distributor may, from time to time, pay additional promotional
incentives in the form of cash or other compensation to authorized dealers that
sell CLASS B shares of the Fund.
CONTINGENT DEFERRED SALES CHARGE WAIVERS
The CDSC is waived on redemptions of CLASS B shares (i) following the death or
disability (as defined in the Code) of a shareholder; (ii) in connection with
certain distributions from an IRA or other retirement plans; (iii) pursuant to
the Fund's Systematic Cash Withdrawal Plan, but limited to 10% annually of the
initial value of the account; and (iv) effected pursuant to the right of the
Fund to liquidate a shareholder's account as described under "How to Redeem
Shares."
CONVERSION FEATURE
CLASS B shares automatically convert to CLASS A shares once the economic
equivalent of a 5.50% sales charge is recovered by the Fund for each investment
account. The sales charge is recoverable by the Fund through the distribution
fee paid pursuant to the CLASS B PLAN. The purpose of the conversion feature is
to relieve the long-time shareholders frOM THE higher distribution fee
associated with the CLASS B shares, once distributors have been adequately
compensated for the higher distribution expenses attributable to the CLASS B
shares through payments made pursuant to the CLASS B PLAN. Such conversion will
be on the basis of the relative net asset values per share, without the
imposition of any sales load, fee or other charge.
CLASS B shares acquired through reinvestment of dividends will convert to CLASS
A shares pro rata with CLASS B shares not acquired through dividend
reinvestment.
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<PAGE>
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES
In deciding which Class of shares to purchase, investors should take into
consideration their investment goals, present and anticipated purchase amounts
and time horizons. Investors should consider whether, during the anticipated
life of their investment in the Fund, the accumulated distribution fees and the
CDSC on CLASS B shares prior to the conversion would be less than the initial
sales charge on CLASS A shares purchased at the same time, and to what extent
such differential would be offset by the higher dividends per share on CLASS A
shares. To assist investors in making this determination, investors should
refer to the Example under " Expenses of the Fund," regarding the effect of the
charges applicable to each Class of shares. In this regard, CLASS A shares may
be more beneficial to the investor who qualifies for reduced initial sales
charges or purchase at net asset value, as described under "Alternative Purchase
Plan -Purchasing Class A Shares."
Over time, the cumulative expense of the 1.00% annual service and distribution
fees on the CLASS B shares of the Fund will approximate or exceed the expense of
the maximum 5.50% initial sales charge plus the 0.25% annual distribution and
service fee on the CLASS A shares of the Fund. CLASS A shares are subject to a
lower distribution fee and, accordingly receive correspondingly higher dividends
per share. However, because initial sales charges are deducted at the time of
purchase, investors in CLASS A shares do not have all their funds invested
initially and, therefore, initially own fewer shares. Other investors might
determine that it is more advantageous to purchase CLASS B shares and have all
their funds invested initially, while remaining subject to a CDSC. Ongoing
distribution fees on CLASS B shares are offset to the extent of the additional
funds originally invested and any return realized on those funds. However,
there can be no assurance as to the return, if any, which will be realized on
such additional funds.
CLASS A shares may be appropriate for investors who prefer to pay the sales
charge up front, want to take advantage of the reduced sales charges available
on larger investments, wish to maximize their current income from the start,
prefer not to pay redemption charges or have a longer-term investment horizon.
CLASS B shares may be appropriate for investors who wish to avoid a front-end
sales charge, put 100% of their investment dollars to work immediately or have a
longer-term investment horizon. CLASS B shareholders pay a CDSC if they redeem
during the first five years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable CDSC in addition to the annual CLASS B service and
distribution fee, as compared with the cost of the applicable initial sales
charge and annual service and distribution fee applicable to CLASS A shares.
HOW TO PURCHASE SHARES
GENERAL
Shares of the Fund may be purchased directly from the Fund or through authorized
dealers at the net asset value per share, plus the applicable sales charge for
CLASS A shares and at the net asset value per share for CLASS B shares. While no
sales charge is imposed at the time CLASS B shares are purchased, a CDSC charge
may be imposed at the time of redemption. (See "Purchasing Class B Shares" under
"Alternative Purchase Plan"). The Fund reserves the right to reject any purchase
order and to suspend the offering of shares of the Fund. The Fund will not
accept a check endorsed over by a third-party. The minimum initial investment
for CLASS A shares and CLASS B shares is $1,000 with no minimum for subsequent
investments. The Fund reserves the right to vary the initial investment minimum
and minimums for additional investments at any time. There is no minimum initial
investment requirement for qualified retirement plans.
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<PAGE>
Purchase orders for shares of the Fund which are received by the transfer agent
in proper form prior to the close of regular trading hours on the NYSE
(currently 4:00 p.m. Eastern time) on any day that the Fund calculates its net
asset value, are priced according to the net asset value determined on that day.
Purchase orders for shares of the Fund received after the close of the NYSE on a
particular day are priced as of the time the net asset value per share is next
determined.
Purchases may be made in one of the following ways:
PURCHASES BY MAIL
Shares may be purchased initially by completing the Investment Application on
pages XX and XX of this Prospectus and mailing it to the transfer agent,
together with a check payable to THE TIMOTHY PLAN, c/o FPS Services, Inc., 3200
Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903. All checks for
purchase of shares must be drawn on U.S. banks and be made payable to the Fund
in U.S. dollars.
Subsequent investments in an existing account in the Fund may be made at any
time by sending a check payable to THE TIMOTHY PLAN, c/o UMB Bank KC, NA, P.O.
Box 412797, Kansas City, MO 64141-2797. Please enclose the stub of your account
statement along with the amount of the investment and the name of the account
for which the investment is to be made and the account number. Please note: A
$20 fee will be charged to your account for any payment check returned to the
custodian.
PURCHASES THROUGH BROKER/DEALERS
The Fund may accept telephone orders from broker/dealers or service
organizations which have been previously approved by the Fund. It is the
responsibility of such broker/dealers or service organizations to promptly
forward purchase orders and payments for the same to the Fund. Shares of the
Fund may be purchased through broker/dealers, banks and bank trust departments
who may charge the investor a transaction fee or other fee for their services at
the time of purchase. Minimums of broker/dealers or accounts opened through a
fund network may apply.
Wire orders for shares of the Fund received by FPS prior to 4:00 p.m., Eastern
time, are confirmed at that day's public offering price. Orders received by
dealers after 4:00 p.m., Eastern time, are confirmed at the public offering
price on the following business day.
PURCHASES BY WIRE
To order shares for purchase by wiring federal funds, the transfer agent must
first be notified by calling (800) 662-0201 to request an account number and
furnish the Fund with your tax identification number. Following notification to
the transfer agent, federal funds and registration instructions should be wired
through the Federal Reserve System to:
UMB BANK KC NA
ABA #10-10-00695
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
FBO "THE TIMOTHY PLAN - CLASS (A) or (B)"
ACCOUNT OF (exact name(s) of account registration)
SHAREHOLDER ACCOUNT # _______________
A completed application with signature(s) of registrant(s) must be filed with
the transfer agent immediately subsequent to the initial wire. Investors should
be aware that some banks may impose a wire service fee. Shareholders may be
subject to 31% withholding if original application is not received.
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<PAGE>
AUTOMATIC INVESTMENT PLAN
Shares of the Fund may be purchased through an Automatic Investment Plan (the
"Plan"). The Plan provides a convenient method by which investors may have
monies deducted directly from their checking, savings or bank money market
accounts for investment in the Fund. The minimum investment pursuant to this
Plan is $100 per month. If you desire to take advantage of this Plan simply
complete and remit the Automatic Investment Plan Application on pages XX and XX.
The account designated will be debited in the specified amount, on the date
indicated, and Fund shares will be purchased. Only an account maintained at a
domestic financial institution which is an ACH member may be so designated. The
Fund may alter, modify or terminate this Plan at any time. For information
about participating in the Automatic Investment Plan, call FPS Services, Inc. at
(800) 662-0201.
HOW TO REDEEM SHARES
Fund shares may be redeemed at their net asset value (subject to any applicable
CDSC for CLASS B shares) on any business day that the NYSE is open. (See
"Determination of Net Asset Value"). Redemptions will be effective at the net
asset value per share next determined after the receipt by the transfer agent of
a redemption request meeting the requirements described below. The Fund normally
sends redemption proceeds on the next business day, but in any event redemption
proceeds are sent within seven calendar days of receipt of a redemption request
in proper form. Payment may also be made by wire directly to any bank previously
designated by the shareholder in a shareholder account application. There is a
$9.00 charge for redemptions by wire. Please note that the shareholder's bank
also may impose a fee for wire service. The Fund will honor redemption requests
of shareholders who recently purchased shares by check, but will not mail the
proceeds until it is reasonably satisfied that the purchase check has cleared,
which may take up to fifteen days from the purchase date, at which time the
redemption proceeds will be mailed to the shareholder. To avoid delays of this
kind, you may wish to purchase by wire if you are planning on redeeming your
shares in the near future.
Except as noted below, redemption requests received in proper form by the
transfer agent prior to the close of regular trading hours on the NYSE on any
business day that the Fund calculates its per share net asset value are
effective that day.
Redemption requests received after the close of the NYSE are effective as of the
time the net asset value per share is next determined.
Shares of the Fund may be redeemed through certain brokers, financial
institutions or service organizations, banks and bank trust departments who may
charge the investor a transaction fee or other fee for their services at the
time of redemption. Such fees would not otherwise be charged if the shares were
directly redeemed from the Fund.
The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of TPL or the Board
of Trustees, result in the necessity of the Fund selling assets under
disadvantageous conditions and to the detriment of the remaining shareholders of
the Fund.
Pursuant to the Fund's Agreement and Declaration of Trust, payment for shares
redeemed may be made either in cash or in-kind, or partly in cash and partly in-
kind. However, the Fund has elected, pursuant to Rule 18f-1 under the Act, to
redeem its shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund, during any 90 day period for any one shareholder.
Payments in excess of this limit will also be made wholly in cash unless the
Board of Trustees believes that economic conditions exist which would make such
a practice detrimental to the best interests of the Fund. Any portfolio
securities paid or distributed in-kind would be valued as described under
"Determination of Net Asset Value." In the event that an in-kind distribution
is made, a shareholder may incur additional expenses, such as the payment of
brokerage commissions, on the sale or other disposition of the securities
received from the Fund. In-kind payments need not constitute a cross-section of
the Fund's portfolio. Where a shareholder has requested redemption of all or a
part of the shareholder's investment, and where the Fund completes such
redemption in-kind, the Fund will not recognize gain or loss for federal tax
purposes, on the securities used to complete the redemption but the shareholder
will recognize gain or loss equal to the difference between the fair market
value of the securities received and the shareholder's basis in the Fund shares
redeemed.
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<PAGE>
Shares may be redeemed in one of the following ways:
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to the
transfer agent at 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-
0903.
A written redemption request to the transfer agent must: (i) identify the
shareholder's account number, (ii) state the number of shares or dollars to be
redeemed and (iii) be signed by each registered owner exactly as the shares are
registered. A redemption request for amounts above $25,000, or redemption
requests for which proceeds are to be mailed somewhere other than the address of
record, must be accompanied by signature guarantees. Signatures must be
guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
Broker/dealers guaranteeing signatures must be members of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. The transfer agent may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees and
guardians.
A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. Questions with
respect to the proper form for redemption requests should be directed to the
transfer agent at (800) 662-0201.
REDEMPTION BY TELEPHONE
Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by instructing the transfer
agent by telephone. In order to arrange for redemption by wire or telephone
after an account has been opened, or to change the bank or account designated to
receive redemption proceeds, a written request, accompanied by a signature
guarantee, must be sent to the transfer agent at the address listed above.
Neither the Fund nor any of its service contractors will be liable for any loss
or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions
are genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, his or her banking
institution, bank account number and the name in which his or her bank account
is registered. To the extent that the Fund fails to use reasonable procedures
to verify the genuineness of telephone instructions, it and/or its service
contractors may be liable for any such instructions that prove to be fraudulent
or unauthorized.
The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time by the Fund.
SYSTEMATIC CASH WITHDRAWAL PLAN
The Fund offers a Systematic Cash Withdrawal Plan ("Withdrawal Plan") as another
option which may be utilized by an investor who wishes to withdraw funds from
his or her account on a regular basis. To participate in this option, an
investor must either own or purchase shares having a value of $10,000 or more.
Automatic payments by check will be mailed to the investor on either a monthly,
quarterly, semi-annual or annual basis in amounts of $100 or more. All
withdrawals are processed on the 25th of the month or, if such day is not a
business day, on the next business day and paid promptly thereafter. Please
complete the appropriate section on the Investment Application enclosed within
this Prospectus, indicating the amount of the distribution and the desired
frequency.
CLASS B shareholders who establish a Withdrawal Plan may redeem up to 10%
annually of the shareholder's initial account balance without incurring a
contingent deferred sales charge. Initial account balance means the amount of
the shareholder's investment at the time the election to participate in the
Withdrawal Plan is made. (See "Purchasing Class B Shares - Waiver of Contingent
Deferred Sales Charge").
REDEMPTION BY AUTOMATED CLEARING HOUSE ("ACH")
A shareholder may elect to have redemption proceeds, cash distributions or
systematic cash withdrawal payments transferred to a bank, savings and loan
association or credit union that is an on-line member of the ACH system. There
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<PAGE>
are no fees charged by the Fund associated with the use of the ACH service.
ACH redemption requests must be received by the Fund's transfer agent before
4:00 p.m. New York time to receive that day's closing net asset value. ACH
redemptions will be sent on the day following the shareholder's request. The
funds from the ACH redemption will normally be available two days after the
redemption has been processed.
ADDITIONAL INFORMATION
The Fund also reserves the right to involuntarily redeem an investor's account
where the account is worth less than the minimum initial investment required
when the account is established, presently $1,000. (Any redemption of shares
from an inactive account established with a minimum investment may reduce the
account below the minimum initial investment, and could subject the account to
redemption initiated by the Fund.) The Fund will advise the shareholder of such
intention in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares in
any amount necessary to bring the account back to $1,000.
If the Trustees determine that it would be detrimental to the best interest of
the remaining shareholders of the Fund to make payment in cash, the Fund may pay
the redemption price in whole or in part by distribution in-kind of readily
marketable securities, from the Fund, within certain limits prescribed by the
U.S. Securities and Exchange Commission. Such securities will be valued on the
basis of the procedures used to determine the net asset value at the time of the
redemption. If shares are redeemed in-kind, the redeeming shareholder will
incur brokerage costs in converting the assets into cash.
RETIREMENT PLANS
The Fund offers its shares for use in certain Tax Deferred (such as IRA, defined
contribution, 401(k) and 403(b)(7) plans) Retirement Plans. The Fund sponsors
IRA and 403(b)(7) plans. Information on these Retirement Plans is available
from FPS or by reviewing the Statement of Additional Information.
SHARES OF BENEFICIAL INTEREST
The beneficial interest of the Fund is divided into an unlimited number of
shares ("Shares") with a par value of $0.001 each. If a matter to be voted on
does not affect the interests of all Classes, then only the shareholders of the
affected Class shall be entitled to vote on the matter. There are no preemptive
rights. Shares, when issued, will be fully paid and nonassessable. Fractional
shares have proportional voting rights. Shares of the Fund do not have
cumulative voting rights, which means that the holders of more than 50% of the
shares voting for the election of trustees can elect all of the trustees if they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any person to the Board of Trustees. Currently, there are two
classes of shares issued by the Fund.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The Fund will declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the year
from its investments, and the Fund will distribute net realized capital gains,
if any, once with respect to each year. Expenses of the Fund, including the
advisory fee, are accrued each day. Reinvestments of dividends and
distributions in additional shares of the Fund will be made at the net asset
value determined on the ex-date of the dividend or distribution unless the
shareholder has elected in writing to receive dividends or distributions in
cash. An election may be changed by notifying FPS in writing thirty days prior
to record date.
Dividends paid by the Fund with respect to its CLASS A and CLASS B shares are
calculated in the same manner and at the same time. Both CLASS A and CLASS B
shares of the Fund will share proportionately in the investment income and
expenses of the Fund, except that the per
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<PAGE>
share dividends of CLASS B shares will be less than per share dividends of CLASS
A shares as a result of additional distribution expenses charged to CLASS B
shares.
As the sole series of THE TIMOTHY PLAN, the Fund has qualified, and intends to
continue to qualify, as a regulated investment company under Subchapter M of the
Code. As such, the Fund will not be subject to federal income tax, or to any
excise tax, to the extent its earnings are distributed in accordance with the
timing requirements imposed by the Code and by meeting certain other
requirements relating to the sources of its income and diversification of its
assets.
The Fund intends to distribute substantially all of its net investment income
and net capital gains. Dividends from net investment income or net short-term
capital gains will be taxable to you as ordinary income, whether received in
cash or in additional shares. Dividends from net investment income will
generally qualify, in part, for the 70% corporate dividends received deduction,
subject to certain holding period and debt financing restrictions imposed under
the Code on the corporate investor claiming the deduction. The portion of the
dividends so qualified depends on the aggregate qualifying dividend income
received by the Fund from domestic (U.S.) sources.
Distributions paid by the Fund from long-term capital gains, whether received in
cash or in additional shares, are taxable to those investors who are subject to
income tax as long-term capital gains, regardless of the length of time an
investor has owned shares in the Fund. The Fund does not seek to realize any
particular amount of capital gains during a year; rather, realized gains are a
by-product of Fund management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year. Also, for
those investors subject to tax, if purchases of shares in the Fund are made
shortly before the record date for a dividend or capital gains distribution, a
portion of the investment will be returned as a taxable distribution.
Dividends which are declared in October, November or December to shareholders of
record in such a month but which, for operational reasons, may not be paid to
the shareholder until the following January, will be treated for tax purposes as
if paid by the Fund and received by the shareholder on December 31 of the
calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
two mutual funds (or two series of a mutual fund). Any loss incurred on sale or
exchange of the Fund's shares, held for six months or less, will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares. All or a portion of any applicable sales charge incurred
in purchasing the Fund's shares will not be included in the federal tax basis of
any of such shares sold or exchanged within ninety (90) days of their purchase
(for purposes of determining gain or loss upon sale of such shares) if the sale
proceeds are reinvested in the Fund or in another fund and a sales charge that
would otherwise apply to the reinvestment is reduced or eliminated. Any portion
of such sales charge excluded from the tax basis of the shares sold will be
added to the tax basis of the shares acquired in the reinvestment.
In addition to federal taxes, shareholders may be subject to state and local
taxes on distributions. Each year, the Fund will mail you information on the
tax status of the Fund's dividends and distributions. Of course, shareholders
who are not subject to tax on their income would not be required to pay tax on
amounts distributed to them by the Fund.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Class of the Fund share is determined by
the Fund as of the close of regular trading
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<PAGE>
on each day that the New York Stock Exchange (NYSE) is open for unrestricted
trading from Monday through Friday and on which there is a purchase or
redemption of the Fund's share. The net asset value is determined by the Fund by
dividing the value of the Fund's securities, plus any cash and other assets,
less all liabilities, by the number of shares outstanding. Expenses and fees of
the Fund, including the advisory and the distributor fees, are accrued daily and
taken into account for the purpose of determining the net asset value.
Fund securities listed or traded on a securities exchange for which
representative market quotations are available will be valued at the last quoted
sales price on the security's principal exchange on that day. Listed securities
not traded on an exchange that day, and other securities which are traded in the
over-the-counter market, will be valued at the last reported bid price in the
market on that day, if any. Securities for which market quotations are not
readily available and all other assets will be valued at their respective fair
market value as determined in good faith by, or under procedures established by,
the Board of Trustees. In determining fair value, the Trustees may employ an
independent pricing service.
Money market securities with less than sixty days remaining to maturity when
acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
money market security with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity, and
will then be valued on an amortized cost basis based upon the value on such date
unless the Trustees determine during such 60 day period that this amortized cost
value does not represent fair market value.
Net asset value is calculated separately for each Class of the Fund based on
expenses applicable to the particular Class. Although the methodology and
procedures for determining net asset value are identical for the Fund's Classes,
the net asset value of the Classes may differ because of the different fees and
expenses charged to each Class.
PERFORMANCE
Total return data may from time to time be included in advertisements about the
Fund. The Fund's total return may be calculated on an annualized and aggregate
basis for various periods (which periods will be stated in the advertisement).
Average annual return reflects the average percentage change per year in value
of an investment in the Fund. Aggregate total return reflects the total
percentage change over the stated period. Any fees charged by banks or their
institutional investors directly to their customer accounts in connections with
investments in the Fund will not be included in the Fund's calculations of total
returns.
The Fund may compare its investment performance with appropriate market indices
such as the S&P Index and to appropriate mutual fund indices; and the Fund may
advertise its ranking compared to other similar mutual funds as reported by
industry analysts such as Lipper Analytical Services, Inc.
All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of the investments in
the Fund, and the operating expenses of each Class. Investment performance also
often reflects the risk associated with the Fund's investment objectives and
policies. These factors should be considered when comparing the Fund to other
mutual funds and other investment vehicles.
The performance of CLASS A shares and CLASS B shares will differ because of
CLASS A's front-end sales charge (when applicable) and CLASS B's CDSC (when
applicable) and higher 12b-1 distribution expenses. Shareholders may obtain
current performance information about the Fund by calling (800) TIM-PLAN.
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<PAGE>
Further information about the performance of the Fund is included in the Fund's
Semi-Annual Report dated June 30, 1997 and Annual Report, dated December 31,
1996, which may be obtained without charge by contacting the Fund at (800)
TIM-PLAN.
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<PAGE>
TIMOTHY PLAN/(R)/ BROKER DEALER: _____________________
APPLICATION FOR CLASS A AND CLASS B REGISTERED REP: ____________________
BRANCH #: ________ REP #: __________
BRANCH NAME: _______________________
BRANCH ADDRESS: ____________________
PHONE NUMBER: ( ) - Ext:
MAIL TO:
FPS SERVICES, INC. P O BOX 61503, KING OF PRUSSIA, PA 19406-0903
1. INITIAL INVESTMENT ($1,000 minimum)
FORM OF PAYMENT
[ ] Check for $_____________ enclosed. (make payable to "The Timothy Plan -
Class A or B")
You must indicate which class of shares in which you wish to invest.
[ ] Class A [ ] Class B (Please check one.)
[ ] By Wire*/1/ An initial purchase of $____________ was wired on _______
Date
by ______________________________ to account # _________________________
Name of your Bank or Broker Number assigned by F/P/S
2. REGISTRATION (Please Print) No certificate will be issued unless
requested in writing.
INDIVIDUAL Must complete items 1, 3, 4 and 8 (you may choose options 5,6
or 7).
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ] [ ][ ][ ] [ ][ ] [ ][ ][ ][ ]
First Name Middle Name Last Name Social Security Number
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ] [ ][ ][ ] [ ][ ] [ ][ ][ ][ ]
Joint Owner Middle Name Last Name Social Security Number
First Name*2
Citizen of: [ ] United States [ ] Other (Please Indicate) ___________
GIFT TO MINORS Must complete items 1, 3, 4 and 8 (you may choose options
5, 6, or 7).
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Name of Custodian (Name one only) As Custodian For (Name one only)
Under the ________ Uniform Gift to Minors Act [ ][ ][ ] [ ][ ] [ ][ ][ ][ ]
State Security Number
CORPORATIONS, PARTNERSHIPS, TRUSTS AND OTHERS Must complete items 1, 3, 4,
9 and 10 (you may choose options 5, 6, or 7).
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Name of Corporation, Partnership, Trust or Other
[ ][ ][ ][ ][ ][ ] [ ][ ][ ][ ][ ][ ][ ][ ][ ] [ ][ ] [ ][ ] [ ][ ]
Tax ID # Name of Trustee(s) Date of Trust
3. MAILING ADDRESS OF RECORD AND TELEPHONE NUMBER(S)
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Street Address and Apartment Number
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
City State Zip Code Zip Extend
[ ][ ][ ][ ] [ ][ ][ ][ ][ ][ ][ ] [ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
(Area Code) Daytime Telephone (Area Code) Evening Telephone Number
4. DISTRIBUTION OPTIONS (Please indicate one) See page XX of the
Prospectus for more detail.
Income Dividends (check one box/line only) [ ] reinvested [ ] paid in cash
Capital Gains
Distributions (check one box/line only) [ ] reinvested [ ] paid in cash
5. LETTER OF INTENT (CLASS A ONLY)
[ ] I intend to purchase, although I am not obligated to do so, shares of the
Fund within a 13-month period which, together with the total asset value
of shares owned, will aggregate at least (check one):
[ ] $25,000 [ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000
RIGHTS OF ACCUMULATION
I would like to apply Rights of Accumulation, if available, to my purchases
of Fund shares. I understand that the exercise of these rights is subject to
confirmation of my holdings by the Fund's transfer agent, FPS Services, Inc.
I agree to notify FPS Services, Inc. of my desire to apply these rights at
the time of purchase and to provide the account numbers, names and
relationships of each person to me.
---------------------------------------------------------
Fund Account Title Fund Account Number
*1 Before making an initial investment by wire, you must be assigned an
account number by calling (800) 662-0201. Then have your local bank wire
your funds to: United Missouri Bank, N.A., ABA # 10-10-00695 for credit to
FPS Services, Inc. AC # 98-7037-071-9 (The Timothy Plan). Be sure to include
your name and account number on the wire.
*2 (Joint ownership with rights of survivorship unless otherwise noted).
<PAGE>
6. SYSTEMATIC WITHDRAWAL PLAN ($10,000 minimum necessary) See page XX of the
Prospectus for more detail.
A check in the amount of $_____________(minimum $100.00) will be sent to you
at your address of record unless otherwise noted.
Please select
desired frequency: [ ] Monthly
[ ] Quarterly, in the months of __________, __________,
__________, and __________.
[ ] Semi-Annual or Annual, in the month(s)
of __________, __________, or __________.
To send cash distributions via the Automated Clearing House System ("ACH"),
please contact the Fund at (800) TIM-PLAN to obtain the proper form(s).
7. TELEPHONE PRIVILEGES See page XX of the Prospectus for more detail.
[ ] REDEEM SHARES BY TELEPHONE
I (we) authorize FPS Services, Inc. to honor telephone instructions for my
(our) account which I (we) understand the proceeds of which will be mailed
only to the address of record or wired to the bank specified below. Neither
the Fund or FPS Services, Inc. will be liable for properly acting upon
telephone instructions believed to be genuine. Please attach a voided check
on your account if the bank option is chosen.
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Name of Bank City State
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Bank Routing Number Account Number [ ] Checking [ ] Savings
8. AUTOMATIC INVESTMENT PLAN (For this option - please complete and send in
form on pages XX and XX of the Prospectus).
9. SIGNATURE AND CERTIFICATION (This Section must be completed by INDIVIDUAL,
----
JOINT and CUSTODIAL accounts).
THE FOLLOWING IS REQUIRED BY FEDERAL TAX LAW TO AVOID 31% BACKUP
WITHHOLDING; "BY SIGNING BELOW, I CERTIFY UNDER PENALTIES OF PERJURY THAT
THE SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER ENTERED ABOVE IS
CORRECT (OR I AM WAITING FOR A NUMBER TO BE ISSUED TO ME), AND THAT I HAVE
NOT BEEN NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP WITHHOLDING UNLESS
I HAVE CHECKED THE BOX." IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING, CHECK BOX [ ]. THE INTERNAL REVENUE SERVICE
DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN
THE CERTIFICATION REQUIRED TO AVOID BACKUP WITHHOLDING. RECEIPT OF CURRENT
PROSPECTUS IS HEREBY ACKNOWLEDGED.
Receipt of current prospectus is hereby acknowledged.
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ] [ ][ ] [ ][ ] [ ][ ]
Signature [ ] Owner [ ] Custodian [ ] Trustee Date
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ] [ ][ ] [ ][ ] [ ][ ]
Signature of Joint Owner (if applicable) Date
10.RESOLUTIONS (This Section must be completed by CORPORATIONS, PARTNERSHIPS,
----
TRUSTS and OTHER ORGANIZATIONS).
RESOLVED: That this corporation or organization become a shareholder of the
Timothy Plan (the "Fund) and that _________________________________ is (are)
authorized to complete and execute the Application on behalf of the
corporation or organization and take any action for it as may be necessary or
appropriate with respect to its shareholders account(s) with the Fund, and it
is
FURTHER RESOLVED: That any one of the above noted officers is authorized to
sign any documents necessary or appropriate to appoint FPS Services, Inc. as
redemption agent of the corporation for shares of the Fund, to establish or
acknowledge terms and conditions governing the redemption of said shares or
to otherwise implement the privileges elected on the application.
11.CERTIFICATE (This Section must be completed by CORPORATIONS,PARTNERSHIPS,
----
TRUSTS and OTHER ORGANIZATIONS).
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the:
________________________________________ incorporated or formed under the
(Name of Corporation)
laws of _______________ and were adopted at a meeting of the Board of
(State)
Directors or Trustees of the organization or corporation duly called and
held on ________________ at which a quorum was preset and acting
throughout, and that the same are now in full force and effect.
I further certify that the following is (are) the duly elected officer(s) of
the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
NAME TITLE
______________________________________ ____________________________________
______________________________________ ____________________________________
Witness my hand and the seal of the corporation or organization this
___________ day of _______________________, 19 ______.
_____________________________________ _____________________________________
*Secretary-Clerk Other Authorized Officer (if required)
* If the Secretary or other recording officer is authorized to act by the
above resolutions, this certificate must also be signed by another officer.
<PAGE>
AUTOMATIC INVESTMENT PLAN APPLICATION
- --------------------------------------------------------------------------------
HOW DOES IT WORK?
1. FPS Services, Inc., through our bank, United Missouri Bank KC NA, draws an
automatic clearing house (ACH) debit electronically against your personal
checking account each month, according to your instructions.
2. Choose any amount ($100 or more) that you would like to invest regularly and
your debit for this amount will be processed by FPS Services, Inc. as if you
had written a check yourself.
3. Shares will be purchased and a confirmation sent to you.
HOW DO I SET IT UP?
1. Complete the forms and the Fund Application Form if you do not already have
an existing account.
2. Mark one of your personal checks or deposit slips VOID, attach it to the
forms below and mail to FPS Services, Inc., P.O. Box 61503, King of Prussia,
PA 19406-0903
3. As soon as your bank accepts your authorization, debits will be generated and
your Automatic Investment Plan started. In order for you to have ACH debits
from your account, your bank must be able to accept ACH transactions and/or
be a member of an ACH association. Your branch manager should be able to
tell you your bank's capabilities. We cannot guarantee acceptance by your
bank.
4. Please allow one month for processing of your Automatic Investment Plan
before the first debit occurs.
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN APPLICATION
TO: FPS Services, Inc.
P.O. Box 61503
King of Prussia, PA 19406-0903
Please start an Automatic Investment Plan for me and
invest _______________________________________.
($100 or more)
on the [ ] 10th [ ] 15th [ ] 20th of each month,
in shares of THE TIMOTHY PLAN - [ ] CLASS A OR [ ] CLASS B. (Please check one).
Check one:
[ ] I am in the process of establishing an account.
or
[ ] My account number is: _____________________________________________________
________________________________________________________________________________
Name as account is registered
________________________________________________________________________________
Street
________________________________________________________________________________
City State Zip + ext.
I understand that my ACH debit will be dated on the day of each month as
indicated above or as specified by written request. I agree that if such debit
is not honored upon presentation, FPS Services, Inc. may discontinue this
service and any share purchase made upon deposit of such debit may be canceled.
I further agree that if the net asset value of the shares purchased with such
debit is less when said purchase is canceled than when the purchase was made,
FPS Services, Inc. shall be authorized to liquidate other shares or fractions
thereof held in my account to make up the deficiency. This Automatic Investment
Plan may be discontinued by FPS Services, Inc. upon 30-days written notice or at
any time by the investor by written notice to FPS Services, Inc. which is
received not later than 5 business days prior to the above designed investment
date.
Signature(s): _______________________________________
_______________________________________
<PAGE>
AUTOMATIC INVESTMENT PLAN APPLICATION
- --------------------------------------------------------------------------------
BANK REQUEST AND AUTHORIZATION
TO: __________________________________ _______________________________
Name of Your Bank Bank Checking Account Number
_______________________________________________________________________
Address of Bank or Branch Where Account is Maintained
As a convenience to me, please honor ACH debits on my account drawn by FPS
Services, Inc., United Missouri Bank KC NA and payable to "THE TIMOTHY PLAN -
CLASS A or CLASS B".
I agree that your rights with respect to such debit shall be the same as if it
were a check drawn upon you and signed personally by me. This authority shall
remain in effect until you receive written notice from me changing its terms or
revoking it, and until you actually receive such notice, I agree that you shall
be fully protected in honoring such debit.
I further agree that if any debit is dishonored, whether with or without cause
or whether intentionally or inadvertently, you shall be under no liability
whatsoever.
DEPOSITOR'S ____________________________________________________________
Signature of Bank Depositor(s) as shown on bank records.
NOTE: Your bank must be able to accept ACH transactions and/or be a member of
an ACH association in order for you to use this service.
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
TO: The bank named above
So that you may comply with your Depositor's request and authorization, THE
TIMOTHY PLAN agrees as follows:
1. To indemnify and hold you harmless from any loss you may suffer arising
from or in connection with the payment by you of a debit drawn by FPS
Services, Inc. to the order of THE TIMOTHY PLAN designated on the account
of your depositor(s) executing the authorization including any costs or
expenses reasonably incurred in connection with such loss. THE TIMOTHY
PLAN will not, however, indemnify you against any loss due to your payment
of any debit generated against insufficient funds.
2. To refund to you any amount erroneously paid by you to FPS Services, Inc.
on any such debit if claim for the amount of such erroneous payment is made
by you within 3 months of the date of such debit on which erroneous payment
was made.
<PAGE>
TIMOTHY PLAN/(R)/ BROKER DEALER: _____________________
CLASS A AND CLASS B REGISTERED REP: ____________________
Request for Transfer BRANCH #: ________ REP #: __________
BRANCH NAME: _______________________
BRANCH ADDRESS: ____________________
PHONE NUMBER: ( ) - Ext:
MAIL TO:
FPS SERVICES, INC. P O BOX 61503, KING OF PRUSSIA, PA 19406-0903
1. INVESTOR INFORMATION
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
First Name Middle Initial Last Name
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Street Address
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
City State Zip Code Zip Extend
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Social Date (Area Residence (Area Business
Security of Birth Code) Telephone Code) Telephone
Number Number Number
2. PREVIOUS INVESTMENT FIRM
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Name of Previous Firm
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Address
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ] [ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
Investor's Name Account Number
<TABLE>
<S> <C> <C> <C> <C>
Type of Account: [ ] Individual [ ] Joint [ ] UGMA [ ] Trust
Type of Assets: [ ] Mutual Fund [ ] Money Market [ ] CD (Immediately/At Maturity) [ ] Securities
</TABLE>
3. AMOUNT TO BE TRANSFERRED TO THE TIMOTHY PLAN
[ ] Liquidate all assets from the above account and transfer the proceeds.
[ ] Liquidate $___________________from the above account and transfer
the proceeds.
4. TRANSFER INSTRUCTIONS
Make check payable to: The Timothy Plan [ ] Class A or [ ] Class B. You must
indicate which class of shares in which you wish to invest. (Please check
one.)
Mail to: Post Office Box 61503, King of Prussia, PA 19406-4902.
5. INVESTOR'S AUTHORIZATION
[ ][ ][ ][ ][ ][ ][ ][ ][ ] [ ][ ] [ ][ ] [ ][ ] [ ][ ][ ][ ][ ][ ][ ]
Signature of Participant Date Signature Guarantee
<PAGE>
INVESTMENT ADVISOR
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789
INVESTMENT MANAGER
Awad & Associates
477 Madison Avenue
New York, NY 10022
UNDERWRITER
Timothy Partners, Ltd
1304 West Fairbanks Avenue
Winter Park, FL 32789
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Tait, Weller & Baker
Two Penn Center
Suite 700
Philadelphia, PA 19102-1707
For Additional Information About The Timothy Plan, Please Call:
(800) TIM-PLAN
Visit The Timothy Plan web site on the Internet at:
WWW.TIMOTHYPLAN.COM
<PAGE>
THE TIMOTHY PLAN
STATEMENT OF ADDITIONAL INFORMATION
September 22, 1997
- --------------------------------------------------------------------------------
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, Florida 32789
(800) 846-7526
- --------------------------------------------------------------------------------
A copy of the Prospectus of THE TIMOTHY PLAN (the "Fund") is available without
charge upon request to the Fund.
The Fund is an open-end diversified investment company, currently offering one
series of shares. The series currently offers two classes of shares: Class A
(formerly, Institutional Class) and Class B (formerly, Retail Class). The
shares of the Fund may be purchased or redeemed at any time. Purchases will be
effected at the net asset value next computed (subject to any front-end sales
charge for Class A shares) after receipt of the order in proper form by the
transfer agent. Redemptions will be effected at the net asset value next
computed (subject to any applicable contingent deferred sales charge (CDSC) for
Class B shares) after receipt of the order in proper form by the transfer agent.
The objective of the Fund is long-term capital growth and its secondary
objective is current income. The Fund will use a variety of investment
strategies in an effort to balance Fund risks. There can be no assurance that
the objectives of the Fund will be achieved.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONNECTION WITH THE FUND'S PROSPECTUS DATED SEPTEMBER 22, 1997 RETAIN
THIS STATEMENT OF ADDITIONAL INFORMATION FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
THE TIMOTHY PLAN - INVESTMENTS...........................................
INVESTMENT RESTRICTIONS..................................................
INVESTMENT ADVISOR.......................................................
INVESTMENT MANAGER.......................................................
UNDERWRITER..............................................................
ADMINISTRATOR............................................................
ALLOCATION OF PORTFOLIO BROKERAGE........................................
PURCHASE OF SHARES.......................................................
Tax-Deferred Retirement Plans.......................................
REDEMPTIONS..............................................................
OFFICERS AND TRUSTEES OF THE FUND........................................
DISTRIBUTION PLAN........................................................
TAXATION.................................................................
GENERAL INFORMATION......................................................
Audits and Reports..................................................
Miscellaneous.......................................................
PERFORMANCE..............................................................
Comparisons and Advertisements......................................
FINANCIAL STATEMENTS.....................................................
Page 2
<PAGE>
THE TIMOTHY PLAN - INVESTMENTS
The Fund seeks to achieve its objectives by making investments selected in
accordance with the Fund's investment restrictions and policies. The Fund will
vary its investment strategy as described in the Fund's prospectus to achieve
its objectives. This Statement of Additional Information contains further
information concerning the techniques and operations of the Fund, the securities
in which it will invest, and the policies it will follow. The Fund issues two
classes of shares (Class A and Class B) that invest in the same portfolio of
securities. Class A and Class B shares differ with respect to sales structure
and 12b-1 Plan expenses.
COMMON STOCK Common stock is defined as shares of a corporation that entitle
the holder to a pro rata share of the profits of the corporation, if any,
without a preference over any other shareholder or class of shareholders,
including holders of the corporation's preferred stock and other senior equity.
Common stock usually carries with it the right to vote, and frequently, an
exclusive right to do so. Holders of common stock also have the right to
participate in the remaining assets of the corporation after all other claims,
including those of debt securities and preferred stock, are paid.
PREFERRED STOCK Generally, preferred stock receives dividends prior to
distributions on common stock and usually has a priority of claim over common
stockholders if the issuer of the stock is liquidated. Unlike common stock,
preferred stock does not usually have voting rights; preferred stock, in some
instances, is convertible into common stock. In order to be payable, dividends
on preferred stock must be declared by the issuer's Board of Trustees.
Dividends on the typical preferred stock are cumulative, causing dividends to
accrue even if not declared by the Board of Trustees. There is, however, no
assurance that dividends will be declared by the Board of Trustees of issuers of
the preferred stocks in which the Fund invests.
CONVERTIBLE SECURITIES Traditional convertible securities include corporate
bonds, notes and preferred stocks that may be converted into or exchanged for
common stock, and other securities that also provide an opportunity for equity
participation. These securities are generally convertible either at a stated
price or a stated rate (that is, for a specific number of shares of common stock
or other security). As with other fixed income securities, the price of a
convertible security to some extent varies inversely with interest rates. While
providing a fixed-income stream (generally higher in yield than the income
derivable from a common stock but lower than that afforded by a non-convertible
debt security), a convertible security also affords the investor an opportunity,
through its conversion feature, to participate in the capital appreciation of
the common stock into which it is convertible. As the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis and so may not experience market value declines to
the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the price of a convertible security tends to
rise as a reflection of the value of the underlying common stock. To obtain
such a higher yield, the Fund may be required to pay for a convertible security
an amount in excess of the value of the underlying common stock. Common stock
acquired by the Fund upon conversion of a convertible security will generally be
held for so long as the advisor or investment manager anticipates such stock
will provide the Fund with opportunities which are consistent with the Fund's
investment objectives and policies.
WARRANTS The Fund may invest in warrants, in addition to warrants acquired in
units or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the issuer's capital stock at a set price for a specified period of time.
AMERICAN DEPOSITORY RECEIPTS The Fund may make foreign investments through the
purchase and sale of sponsored or unsponsored American Depository Receipts
("ADRs"). ADRs are receipts typically issued by a U.S. bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. The Fund may purchase ADRs whether they are "sponsored" or
"unsponsored". "Sponsored" ADRs are issued jointly by the issuer of the
underlying security and a depository. "Unsponsored" ADRs are issued without
participation of the issuer of the deposited security. The Fund does not
consider any ADRs purchased to be foreign. Holders of unsponsored ADRs
Page 3
<PAGE>
generally bear all the costs of such facilities. The depository of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect to the
deposited securities. Therefore, there may not be a correlation between
information concerning the issuer of the security and the market value of an
unsponsored ADR. ADRs may result in a withholding tax by the foreign country of
source which will have the effect of reducing the income distributable to
shareholders. Because the Fund will not invest more than 50% of the value of
its total assets in stock or securities issued by foreign corporations, it will
be unable to pass through the foreign taxes the Fund pays (or is deemed to pay)
to shareholders under the Internal Revenue Code of 1986, as amended (the
"Code").
PORTFOLIO TURNOVER It is not the policy of the Fund to purchase or sell
securities for short-term trading purposes, but the Fund may sell securities to
recognize gains or avoid potential for loss. The Fund will, however, sell any
portfolio security (without regard to the time it has been held) when the
investment advisor believes that market conditions, credit-worthiness factors or
general economic conditions warrant such a step. The Fund presently estimates
that the annualized portfolio turnover rate generally will not exceed a range of
50% to 75%, and may be lower than 50%, during most periods. The annualized
portfolio turnover rate for the period March 21, 1994 (commencement of
operations) through December 31, 1994 and the portfolio turnover rate for the
fiscal years ended December 31, 1995 and 1996, were 8.31%, 34.12% and 93.08%,
respectively. The portfolio turnover rate for the semi-annual period ended June
30, 1997 was 120.89%. High portfolio turnover would involve additional
transaction costs (such as brokerage commissions) which are borne by the Fund,
or adverse tax effects. (See "Dividends, Distributions and Taxes" in the
Prospectus.)
INVESTMENT RESTRICTIONS
In addition to those set forth in the Fund's current Prospectus, the Fund has
adopted the Investment Restrictions set forth below, which are fundamental
policies of the Fund, and which cannot be changed without the approval of a
majority of the outstanding voting securities. As provided in the Investment
Company Act of 1940, as amended (the "1940 Act"), a "vote of a majority of the
outstanding voting securities" means the affirmative vote of the lesser of (i)
more than 50% of the outstanding shares, or (ii) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares are represented
at the meeting in person or by proxy. These investment restrictions provide
that each Fund will not:
(1) issue senior securities;
(2) engage in the underwriting of securities except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933 in disposing
of a portfolio security;
(3) purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations;
(4) invest for the purpose of exercising control or management of another
company;
(5) purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest
in the securities of companies which invest in or sponsor such
programs;
(6) invest more than 25% of the value of the Fund's total assets in one
particular industry, except for temporary defensive purposes;
(7) make purchases of securities on "margin", or make short sales of
securities, provided that the Fund may enter into futures contracts and
related options and make initial and variation margin deposits in
connection therewith; and
Page 4
<PAGE>
(8) invest in securities of any open-end investment company, except that
the Fund may purchase securities of money market mutual funds, but such
investments in money market mutual funds may be made only in accordance
with the limitations imposed by the 1940 Act and the rules thereunder,
as amended.
So long as percentage restrictions are observed by the Fund at the time it
purchases any security, changes in values of particular Fund assets or the
assets of the Fund as a whole will not cause a violation of any of the foregoing
restrictions.
INVESTMENT ADVISOR
The Fund has entered into an advisory agreement with Timothy Partners, Ltd.
(TPL), effective January 19, 1994 (the "Investment Advisory Agreement"), as
amended August 28, 1995, for the provision of investment advisory services,
subject to the supervision and direction of the Fund's Board of Trustees.
Pursuant to the Investment Advisory Agreement, the Fund is obligated to pay the
TPL a monthly fee equal to an annual rate of 0.85% of the Fund's average daily
net assets. This fee is higher than that charged by some funds, but is
comparable to fees charged by funds with similar investment objectives. The
Investment Advisory Agreement specifies that the advisory fee will be reduced to
the extent necessary to comply with the most stringent limits prescribed by any
state in which the Fund's shares are offered for sale. The most stringent
current state restriction limits a fund's allowable aggregate operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary expenses
such as litigation costs) in any fiscal year to 2.5% of the first $30 million of
net assets of the Fund, 2% of the next $70 million of net assets of the Fund,
and 1.5% of average annual net assets of the Fund in excess of $100 million.
For the period March 21, 1994 (commencement of operations) through December 31,
1994 and for the years ended December 31, 1995 and 1996, advisory fees of
$7,938, $41,257 and $78,848, respectively, were paid to the TPL and the
TPL reimbursed the Fund $135,114, $189,534 and $194,967 respectively. For
the semi-annual period ended June 30, 1997 an advisory fee of $57,730 was paid
to TPL and TPL reimbursed the Fund $87,213.
The Investment Advisory Agreement is initially effective for two years. The
Investment Advisory Agreement may be renewed after its initial term only so long
as such renewal and continuance are specifically approved at least annually by
the Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund, and only if the terms of the renewal thereof have been
approved by the vote of a majority of the Trustees of the Fund who are not
parties thereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. The Investment
Advisory Agreement will terminate automatically in the event of its assignment.
INVESTMENT MANAGER
Pursuant to an agreement between the TPL and Awad & Associates (the "Investment
Manager"), a division of Raymond James & Associates, Inc., effective January 1,
1997 (the "Sub-Investment Advisory Agreement"), the Investment Manager provides
advice and assistance to the TPL in the selection of appropriate investments for
the Fund, subject to the supervision and direction of the Fund's Board of
Trustees. As compensation for its services, the Investment Manager receives from
the TPL an annual fee at a rate equal to 0.42% of 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.
The Sub-Investment Advisory Agreement is initially effective for two years. The
Agreement may be renewed by the parties after its initial term only so long as
such renewal and continuance are specifically approved at least annually by the
Board of Trustees or by vote of a majority of the outstanding voting securities
of the Fund, and only if the terms of renewal thereof have been approved by the
vote of a majority of the Trustees of the Fund who are not parties thereto or
interested persons of any such party, cast in person at the meeting called for
the purpose of voting on such approval. The Sub-Investment Advisory Agreement
will terminate automatically in the event of its assignment.
Page 5
<PAGE>
Prior to January 1, 1997, TPL paid Systematic Financial Management,
L.P. for advice and assistance in the selection of appropriate investments for
the Fund. For the period March 21, 1994 (commencement of operations) through
December 31, 1994 and for the fiscal years ended December 31, 1995 and 1996,
TPL paid Systematic Financial Management, L.P. sub-advisory fees of
$3,969, $20,628 and $46,381, respectively. For the semi-annual period ended
June 30, 1997 the Fund paid Awad & Associates $xx,xxx for sub-investment
advisory services.
UNDERWRITER
Effective July 1, 1997, Timothy Partners, Ltd. (TPL), 1304 West Fairbanks
Avenue, Winter Park, Florida 32789, acts as an underwriter of the Fund shares
for the purpose of facilitating the registration of shares of the Fund under
state securities laws and to assist in sales of shares pursuant to an
underwriting agreement (the "Underwriting Agreement") approved by the Fund's
Trustees. TPL is not compensated for providing underwriting services to the
Fund.
In that regard, TPL has agreed at its own expense to qualify as a
broker/dealer under all applicable federal or state laws in those states which
the Fund shall from time to time identify to FPSB as states in which it wishes
to offer its shares for sale, in order that state registrations may be
maintained by the Fund.
TPL is a broker/dealer registered with the U.S. Securities and Exchange
Commission and is a member in good standing of the National Association of
Securities Dealers, Inc.
The Fund shall continue to bear the expense of all filing or registration fees
incurred in connection with the registration of shares under state securities
laws.
The Underwriting Agreement may be terminated by either party upon 60 days prior
written notice to the other party.
ADMINISTRATOR
FPS Services, Inc., 3200 Horizon Drive, King of Prussia, PA 19406, (the
"Administrator"), provides certain administrative services to the Fund pursuant
to an Administrative Services Agreement.
Under the Administrative Services Agreement, the Administrator: (1) coordinates
with the Custodian and Transfer Agent and monitors the services they provide to
the Fund; (2) coordinates with, and monitors, any third parties furnishing
services to the Fund; (3) provides the Fund with necessary office space,
telephones and other communications facilities and personnel competent to
perform administrative and clerical functions; (4) supervises the maintenance by
third parties of such books and records of the Fund as may be required by
applicable federal or state law; (5) prepares or supervises the preparation by
third parties of all federal, state and local tax returns and reports of the
Fund required by applicable law; (6) prepares and, after approval by the Fund,
files and arranges for the distribution of proxy materials and periodic reports
to shareholders of the Fund as required by applicable law; (7) prepares and,
after approval by the Fund, arranges for the filing of such registration
statements and other documents with the Securities and Exchange Commission and
other federal and state regulatory authorities as may be required by applicable
law; (8) reviews and submits to the officers of the Fund for their approval
invoices or other requests for payment of the Funds expenses and instructs the
Custodian to issue checks in payment thereof; and (9) takes such other action
with respect to the Fund as may be necessary in the opinion of the Administrator
to perform its duties under the agreement.
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<PAGE>
As compensation for services performed under the Administrative Services
Agreement, the Administrator receives a fee payable monthly at an annual rate of
0.15% of the first $50 million in average net assets of the Fund; 0.10% of the
next $50 million in average net assets; and 0.05% of average net assets over
$100 million. There is a minimum fee of $50,000 per year for the initial
series/class of shares issued by the Fund and $12,000 per year for each
additional separate series/class of shares. For the period March 21, 1994
(commencement of operations) through December 31, 1994 and for the fiscal years
ended December 31, 1995 and 1996, the Fund paid $39,583, $54,297 and $62,581,
respectively, for Administration fees. For the semi-annual period ended June
30, 1997 the Fund paid $28,344 for Administration fees.
ALLOCATION OF PORTFOLIO BROKERAGE
The Investment Manager, when effecting the purchases and sales of portfolio
securities for the account of the Fund, will seek execution of trades either (i)
at the most favorable and competitive rate of commission charged by any broker,
dealer or member of an exchange, or (ii) at a higher rate of commission charges
if reasonable in relation to brokerage and research services provided to the
Fund or the Investment Manager by such member, broker, or dealer. Such services
may include, but are not limited to, any one or more of the following:
information on the availability of securities for purchase or sale, statistical
or factual information, or opinions pertaining to investments. The Fund's
Investment Manager may use research and services provided to it by brokers and
dealers in servicing all its clients, however, not all such services will be
used by the Investment Manager in connection with the Fund. Brokerage may also
be allocated to dealers in consideration of the Fund's share distribution but
only when execution and price are comparable to that offered by other brokers.
The Fund incurred brokerage commissions of $7,631 for the period March 21, 1994
(commencement of operations) through December 31, 1994 and for the fiscal years
ended December 31, 1995 and 1996, the Fund incurred brokerage commissions of
$13,704 and $32,684, respectively. For the semi-annual period ended June 30,
1997 the Fund incurred brokerage commission of $85,609.
TPL, through the Investment Manager, is responsible for making the Fund's
portfolio decisions subject to instructions described in the prospectus. The
Board of Trustees may however impose limitations on the allocation of portfolio
brokerage.
PURCHASE OF SHARES
The shares of the Fund are continuously offered by the distributor. Orders will
not be considered complete until receipt by the distributor of a completed
account application form, and receipt by the Custodian of payment for the shares
purchased. Once both are received, such orders will be confirmed at the next
determined net asset value per share, plus the applicable sales load for Class A
shares (based upon valuation procedures described in the Prospectus), as of the
close of business of the business day on which the completed order is received,
normally 4 o'clock p.m. Eastern Time. Completed orders received by the Fund
after 4 o'clock p.m. will be confirmed at the next day's price.
TAX-DEFERRED RETIREMENT PLANS
- -----------------------------
Shares of the Fund are available to all types of tax-deferred retirement plans
such as IRA's, employer-sponsored defined contribution plans (including 401(k)
plans) and tax-sheltered custodial accounts described in Section 403(b)(7) of
the Internal Revenue Code. Qualified investors benefit from the tax-free
compounding of income dividends and capital gains distributions. The Fund
sponsors an Individual Retirement Accounts (IRA). Individuals, who are not
active participants (and, when a joint return is filed, who do not have a spouse
who is an active participant) in an employer maintained retirement plan are
eligible to contribute on a deductible basis to an IRA account. The IRA
deduction is also retained for individual taxpayers and married couples with
adjusted gross incomes not in excess of certain specified limits. All
individuals who have earned income may make nondeductible IRA contributions to
the extent that they are not eligible for a deductible contribution. Income
earned by an IRA account will continue to be tax deferred.
Page 7
<PAGE>
A special IRA program is available for employers under which the employers may
establish IRA accounts for their employees in lieu of establishing tax qualified
retirement plans. Known as SEP-IRA's (Simplified Employee Pension-IRA), they
free the employer of many of the record keeping requirements of establishing and
maintaining a tax qualified retirement plan trust.
If you are entitled to receive a distribution from a qualified retirement plan,
you may rollover all or part of that distribution into the Fund's IRA. Your
rollover contribution is not subject to the limits on annual IRA contributions.
You can continue to defer Federal income taxes on your contribution and on any
income that is earned on that contribution.
The Fund also sponsors 403(b)(7) Retirement Plans. The Fund offers a plan for
use by schools, hospitals, and certain other tax-exempt organizations or
associations who wish to use shares of the Fund as a funding medium for a
retirement plan for their employees (the "403(b)(7) Plan"). Contributions are
made to the 403(b)(7) Plan as a reduction to the employee's regular
compensation. Such contributions, to the extent they do not exceed applicable
limitations (including a generally applicable limitation of $9,500 per year),
are excludable from the gross income of the employee for Federal Income tax
purposes.
In all these Plans, distributions of net investment income and capital gains
will be automatically reinvested.
All the foregoing retirement plan options require special plan documents.
Please call the Fund at (800) TIM-PLAN (or (800) 846-7526) to obtain information
regarding the establishment of retirement plan accounts. In the case of IRAs
and 403(b)(7) Plans, Semper Trust Company acts as the plan custodian and charges
$12.00 per account in connection with plan establishment and maintenance. These
fees are detailed in the plan documents. You should consult with your attorney
or other tax advisor for specific advice prior to establishing a plan.
REDEMPTIONS
The redemption price will be based upon the net asset value per share (subject
to any applicable CDSC for Class B shares) next determined after receipt of the
redemption request, provided it has been submitted in the manner described
below. The redemption price may be more or less than your cost, depending upon
the net asset value per share at the time of redemption. Retail Class shares of
the Fund may be redeemed through certain brokers, financial institutions or
service organizations, banks and bank trust departments who may charge the
investor a transaction fee or other fee for their services at the time of
redemption. Such fees would not otherwise be charged if the shares were
purchased directly from the Fund.
Payment for shares tendered for redemption is made by check within seven days
after tender in proper form, except that the Fund reserves the right to suspend
the right of redemption, or to postpone the date of payment upon redemption
beyond seven days: (i) for any period during which the NYSE is restricted, (ii)
for any period during which an emergency exists as determined by the U.S.
Securities and Exchange Commission as a result of which disposal of securities
owned by the Fund is not reasonably predictable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or
(iii) for such other periods as the U.S Securities and Exchange Commission may
by order permit for the protection of shareholders of the Fund.
Pursuant to the Fund's Agreement and Declaration of Trust, payment for shares
redeemed may be made either in cash or in-kind, or partly in cash and partly in-
kind. However, the Fund has elected, pursuant to Rule 18f-1 under the 1940 Act,
to redeem its shares solely in cash up to the lesser of $250,000 or 1% of the
net asset value of the Fund, during any 90-day period for any one shareholder.
Payments in excess of this limit will also be made wholly in cash unless the
Board of Trustees believes that economic conditions exist which would make such
a practice detrimental to the best interests of the Fund. Any portfolio
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<PAGE>
securities paid or distributed in-kind would be valued as described under
"Determination of Net Asset Value" in the Fund's prospectus. In the event that
an in-kind distribution is made, a shareholder may incur additional expenses,
such as the payment of brokerage commissions, on the sale or other disposition
of the securities received from the Fund. In-kind payments need not constitute
a cross-section of the Fund's portfolio. Where a shareholder has requested
redemption of all or a part of the shareholder's investment, and where the Fund
completes such redemption in-kind, the Fund will not recognize gain or loss for
federal tax purposes, on the securities used to complete the redemption. The
shareholder will recognize gain or loss equal to the difference between the fair
market value of the securities received and the shareholder's basis in the Fund
shares redeemed.
OFFICERS AND TRUSTEES OF THE FUND
The trustees and principal executive officers and their principal occupations
for the past five years are listed below.
<TABLE>
<CAPTION>
POSITION AND
OFFICE HELD WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE THE REGISTRANT DURING THE PAST FIVE YEARS
- ---------------------------- --------- ----------------------- ------------------------------------
<S> <C> <C> <C>
Arthur D. Ally * 55 President and President, Covenant Financial
1304 West Fairbanks Ave Trustee Management, Inc. (1990-present)
Winter Park, Florida
Joseph E. Boatwright * 65 Secretary and Retired; prior thereto Senior Pastor;
1410 Hyde Park Drive Trustee Aloma Baptist Church, (1970-1996)
Winter Park, Florida
Wesley W. Pennington 66 Trustee Secretary/Treasurer, American Call to
442 Raymond Ave. Greatness (publishing); President & Sole
Longwood, Florida Shareholder, Weston, Inc. (fabric
treatment) (1979-present); President &
Sole Shareholder, Designer Services
Group, Inc. (furniture storage & delivery)
(1981-1991)
Jock M. Sneddon * 49 Trustee Physician, Florida Hospital
6001 Vineland Drive Center (present); prior thereto
Orlando, Florida President and Director of Sneddon
& Helmers M.D. P. A. (1976-1993)
Philip B. Crosby * 70 Trustee Owner and Founder; Career IV
P.O. Box 1927 (1991-current); prior thereto
Winter Park, Florida Founder, Philip Crosby,
Associates, Inc. (1979-retired 1991).
Daniel D. Busby, CPA 55 Trustee CFO, International Center
P.O. Box 50188 of Wesleyan Church (1986-
Indianapolis, IN present); and Partner, Busby, Keller &
Co.
Scott Fehrenbacher 38 Trustee President, Institute for American
13621 171st N.E. Values Investing (1996-current); prior
Redmond, WA thereto Stockbroker, Linsco/Private
Ledger (1990-1996)
</TABLE>
* These trustees and officers are considered "interested persons" of the Funds
Page 9
<PAGE>
within the meaning of Section 2(a)(19) of the 1940 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.
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 TPL is paid by TPL, and not by the Fund. For the fiscal year
ended December 31, 1996, the Fund did not pay compensation to any of its
trustees. In addition, no trustee served on the Board of Directors of another
investment company managed by TPL for the calendar year ended December 31, 1996.
DISTRIBUTION PLAN
As noted in the Fund's Prospectuses, each Class of the Fund has adopted a plan
pursuant to Rule 12b-1 under the 1940 Act (collectively, the "Plans") whereby
the Fund may pay up to a maximum of 0.25% for Class A shares and up to a maximum
of 1.00% for Class B shares (of which, up to 0.25% may be service fees to be
paid by each respective class of shares to TPL, dealers and others, for
providing personal service and/or maintaining shareholder accounts) per annum of
its average daily net assets for expenses incurred by the Underwriter in the
distribution of the Fund's shares. The fees are paid on a monthly basis, based
on the Fund's average daily net assets attributable to such class of shares.
Pursuant to the Plan, TPL, as underwriter, is entitled to a reimbursement each
month (up to the maximum of 0.25% for Class A shares and 1.00% for Class B
shares per annum of average net assets of the Fund) for the actual expenses
incurred in the distribution and promotion of the Fund's shares, including but
not limited to, printing of prospectuses and reports used for sales purposes,
preparation and printing 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 dealer agreement with the underwriter. Any expense of distribution in
excess of 0.25% for Class A shares or 1.00% for Class B shares per annum will be
borne by the TPL without any reimbursement or payment by the Fund.
Prior to July 1, 1997, FPS Broker Services, Inc. (FPSB) served as the Fund's
sole underwriter. For the period ended December 31, 1994 and fiscal year ended
December 31, 1995, the Fund reimbursed FPSB $1,985 and $11,606, respectively,
for distribution costs incurred by the Fund. For the fiscal year ended December
31, 1996, the Fund reimbursed FPSB $36,568 for distribution costs incurred as
follows: $ 7,063 for printing; $18,465 compensation to underwriters and
distribution services; $11,040 compensation to dealers for Class B shares
(formerly, the Retail Class).
The Plans also provide that to the extent that the Fund, TPL, the Investment
Manager, or other parties on behalf of the Fund, TPL, the Investment Manager,
make payments that are deemed to be payments for the financing of any activity
primarily intended to result in the sale of shares issued by the Fund within the
context of Rule 12b-1, such payments shall be deemed to be made pursuant to the
Plans. In no event shall the payments made under the Plans, plus any other
payments deemed to be made pursuant to the Plans, exceed the amount permitted to
be paid pursuant to the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., Article III, Section 26(d)(4).
The Board of Trustees has determined that a consistent cash flow resulting from
the sale of new shares is necessary and appropriate to meet redemptions and to
take advantage of buying opportunities without having to make unwarranted
liquidations of portfolio securities. The Board therefore believes that it will
likely benefit the Fund to have monies available for the direct distribution
activities of the Underwriter in promoting the sale of the Fund's shares, and to
avoid any uncertainties as to whether other payments constitute distribution
expenses on behalf of the Fund. The Board of Trustees, including the non-
Page 10
<PAGE>
interested trustees, has concluded that in the exercise of their reasonable
business judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plans will benefit the Fund and its shareholders.
The Plans have been approved by the Fund's Board of Trustees, including all
of the trustees who are non-interested persons as defined in the 1940 Act. The
Plans must be renewed annually by the Fund's Board of Trustees, including a
majority of the trustees who are non-interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plans. The
votes must be cast in person at a meeting called for that purpose. It is also
required that the selection and nomination of such trustees be done by the non-
interested trustees. The Plans and any related agreements may be terminated at
any time, without any penalty: 1) by vote of a majority of the non-interested
trustees on not more than 60 days' written notice, 2) by the Underwriter on not
more than 60 days' written notice, 3) by vote of a majority of the Fund's
outstanding shares, on 60 days' written notice, and 4) automatically by any act
that terminates the Underwriting Agreement with the underwriter. The
underwriter or any dealer or other firm may also terminate their respective
agreements at any time upon written notice.
The Plans and any related agreement may not be amended to increase materially
the amounts to be spent for distribution expenses without approval by a majority
of the Fund's outstanding shares, and all material amendments to the Plans or
any related agreements shall be approved by a vote of the non-interested
trustees, cast in person at a meeting called for the purpose of voting on any
such amendment.
The underwriter is required to report in writing to the Board of Trustees of the
Fund, at least quarterly, on the amounts and purpose of any payment made under
the Plans, as well as to furnish the Board with such other information as may
reasonably be requested in order to enable the Board to make an informed
determination of whether the Plans should be continued.
TAXATION
The Fund intends to qualify each year as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
In order to so qualify, a fund must, among other things (i) derive at least 90%
of its gross income from dividends, interest, payments with respect to certain
securities loans, gains from the sale of securities or foreign currencies, or
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies; (ii) derive less than 30% of its gross income
from the sale or other disposition of stock or securities or certain futures and
options thereon held for less than three months ("short-short gains"); (iii)
distribute at least 90% of its dividends, interest and certain other taxable
income each year; and (iv) at the end of each fiscal quarter maintain at least
50% of the value of its total assets in cash, government securities, securities
of other regulated investment companies, and other securities of issuers which
represent, with respect to each issuer, no more than 5% of the value of a fund's
total assets and 10% of the outstanding voting securities of such issuer, and
with no more than 25% of its assets invested in the securities (other than those
of the government or other regulated investment companies) of any one issuer or
of two or more issuers which the Fund controls and which are engaged in the
same, similar or related trades and businesses.
To the extent the Fund qualifies for treatment as a regulated investment
company, it will not be subject to federal income tax on income and net capital
gains paid to shareholders in the form of dividends or capital gains
distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of the
Fund's "required distributions" over actual distributions in any calendar year.
Generally, the "required distribution" is 98% of a fund's ordinary income for
the calendar year plus 98% of its capital gain net income recognized during the
one-year period ending on December 31 plus undistributed amounts from prior
years. The Fund intends to make distributions sufficient to avoid imposition of
the excise tax. Distributions declared by the Fund during October, November or
December to shareholders of record during such month and paid by January 31 of
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<PAGE>
the following year will be taxable to shareholders in the calendar year in which
they are declared, rather than the calendar year in which they are received.
Shareholders will be subject to federal income taxes on distributions made by
the Fund whether received in cash or additional shares of the Fund.
Distributions of net investment income and net short-term capital gains, if any,
will be taxable to shareholders as ordinary income. Distributions of net long-
term capital gains, if any, will be taxable to shareholders as long-term capital
gains, without regard to how long a shareholder has held shares of the Fund. A
loss on the sale of shares held for six months or less will be treated as a
long-term capital loss to the extent of any long-term capital gain dividend paid
to the shareholder with respect to such shares. Dividends eligible for
designation under the dividends received deduction and paid by the Fund may
qualify in part for the 70% dividends received deduction for corporations
provided, however, that those shares have been held for at least 45 days.
The Fund will notify shareholders each year of the amount of dividends and
distributions, including the amount of any distribution of long-term capital
gains, and the portion of its dividends which may qualify for the 70% deduction.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action at any time, and retroactively.
Each Class of shares of a Fund will share proportionately in the investment
income and expenses of that Fund, except that each Fund will incur different
distributions expenses.
Dividends and distributions also may be subject to state and local taxes.
Shareholders are urged to consult their tax advisors regarding specific
questions as to federal, state and local taxes.
GENERAL INFORMATION
AUDITS AND REPORTS
- ------------------
The accounts of the Fund are audited each year by Tait, Weller & Baker of
Philadelphia, PA, independent certified public accountants whose selection must
be ratified annually by the Board of Trustees.
Shareholders receive semi-annual and annual reports of the Fund including the
annual audited financial statements and a list of securities owned.
MISCELLANEOUS
- -------------
As of July 2, 1997, Mr. Boatwright owned beneficially more than 1% of the
outstanding shares of Class A, however the Trustees and officers of the Fund
individually and as a group owned beneficially less than 1.00% of the
outstanding shares of the Fund.
As of July 2, 1997, the following persons owned of record or exercised voting
control over 5% of the outstanding shares of the Class B shares of the Fund:
Name & Address of Beneficial Owners Percentage
- ----------------------------------- ----------
Southwest Securities Inc. 7.28%
Dallas, TX
Page 12
<PAGE>
PERFORMANCE
Performance information for the Class A and Class B shares of the Fund
will vary due to the effect of expense ratios on the performance calculations.
Current yield and total return may be quoted in advertisements, shareholder
reports or other communications to shareholders. Yield is the ratio of income
per share derived from the Fund's investments to a current maximum offering
price expressed in terms of percent. The yield is quoted on the basis of
earnings after expenses have been deducted. Total return is the total of all
income and capital gains paid to shareholders, assuming reinvestment of all
distributions, plus (or minus) the change in the value of the original
investment, expressed as a percentage of the purchase price. Occasionally, the
Fund may include its distribution rate in advertisements. The distribution rate
is the amount of distributions per share made by the Fund over a 12-month period
divided by the current maximum offering price.
U.S. Securities and Exchange Commission rules require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by the Fund be accompanied by certain
standardized performance information computed as required by the Commission.
Current yield and total return quotations used by the Fund are based on the
standardized methods of computing performance mandated by the Commission. An
explanation of those and other methods used by the Fund to compute or express
performance follows.
As the following formula indicates, the average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period less any fees charged to all shareholder accounts and
annualizing the result. The calculation assumes the maximum sales load is
deducted from the initial $1,000 purchase order and that all dividends and
distributions are reinvested at the net asset value on the reinvestment dates
during the period. The quotation assumes the account was completely redeemed at
the end of each one, five and ten-year period and assumes the deduction of all
applicable charges and fees. According to the SEC formula:
P(1+T)/n /= ERV
where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the one, five or ten-year periods, determined at the end of
the one, five or ten-year periods (or fractional portion thereof).
Based on the foregoing calculations, the average annual total return for Class A
shares, for the period March 21, 1994 (commencement of operations) through
December 31, 1996, and for the one year period ended December 31, 1996, was
6.16% and 12.59%, respectively. The average annual total return for Class B
shares, for the period August 25, 1995 (commencement of operations) through
December 31, 1996 and for the one year period ended December 31, 1996 was 6.83%
and 10.00%, respectively. For the periods March 21, 1994 through June 30, 1997
and the three year period ended June 30, 1997 the average annual total return
for the Institutional Class was 9.16% and 11.82%, respectively. For the period
August 25, 1995 through June 30, 1997 the average annual total return was
11.83%. Regardless of the method used, past performance is not necessarily
indicative of future results, but is an indication of the return to shareholders
only for the limited historical period used.
Page 13
<PAGE>
COMPARISONS AND ADVERTISEMENTS
- ------------------------------
To help investors better evaluate how an investment in the Fund might satisfy
their investment objective, advertisements regarding the Fund may discuss yield
or total return for the Fund as reported by various financial publications.
Advertisements may also compare yield or total return to yield or total return
as reported by other investments, indices, and averages. The following
publications, indices, and averages may be used:
Lipper Mutual Fund Performance Analysis;
Lipper Mutual Fund Indices;
CDA Weisenberger; and
Morningstar
From time to time, the Fund may also include in sales literature and advertising
(including press releases) TPL comments on current news items, organizations
which violate the Fund's philosophy (and are screened out as unacceptable
portfolio holdings), channels of distribution and organizations which endorse
the Fund as consistent with their philosophy of investment.
FINANCIAL STATEMENTS
The Fund's Financial Statements, including the notes thereto, dated December 31,
1996, which have been audited by Tait, Weller & Baker, are incorporated by
reference from the Fund's 1996 Annual Report to Shareholders. The Fund's
unaudited Financial Statements, including the notes thereto, dated June 30,
1997, are incorporated by reference from the Fund's 1997 Semi-Annual Report to
Shareholders.
Page 14
<PAGE>
POST EFFECTIVE AMENDMENT NO. 6
TO REGISTRATION STATEMENT NO. 33-73248
ON FORM N-1A
PART C. OTHER INFORMATION.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
- --------------------------------------------
(A) Financial Statements:
(1) The Financial Highlights are included in Part A of this Registration
Statement on Form N-1A. The following audited Financial Statements are
incorporated by reference in Part B of this Registration Statement on Form
N1-A for the periods ended December 31, 1996 and June 30, 1997 (unaudited):
(i) Schedule of Investments at December 31, 1996.
(ii) Statement of Assets and Liabilities at December 31, 1996.
(iii) Statement of Operations for the period ended December 31,
1996.
(iv) Statement of Changes in Net Assets for the year ended
December 31, 1996.
(v) Notes to Financial Statements.
(vi) Financial Highlights.
(vii) Report of Independent Accountants
(i) Schedule of Investments at June 30, 1997 (unaudited).
(ii) Statement of Assets and Liabilities at June 30, 1997
(unaudited).
(iii) Statement of Operations for the period ended June 30, 1997
(unaudited).
(iv) Statement of Changes in Net Assets for the period ended
June 30, 1997 (unaudited).
(v) Notes to Financial Statements (unaudited).
(vi) Financial Highlights (unaudited).
(2) All required financial statements are included or incorporated by
reference in Parts A and B hereof. All other financial statements and
schedules are inapplicable.
(B) Exhibits:
(1) Agreement and Declaration of Trust is incorporated herein by reference
to Post Effective Amendment No. 4 as Exhibit No. 99(1) to Item 24 as
electronically filed on April 26, 1996.
(2) By-Laws of Registrant dated January 19, 1994 is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No. 99(2) to
Item 24 as electronically filed on April 26, 1996.
(3) None
(4) Specimen Copy of each security to be issued by the registrant:
Registrant proposes to maintain investments as non-certificated book
entry shares.
(5) Investment Advisory Agreements:
(a)(i) Amendment dated March 12, 1997 to Investment Advisory
Agreement dated January 19, 1994 between Registrant and
Timothy Partners, Ltd. is filed herewith electronically.
(a)(ii) Amendment dated August 28, 1995 to Investment Advisory
Agreement dated January 19, 1994 between Registrant and
Timothy Partners, Ltd. is incorporated herein by reference to
Post Effective Amendment No. 4 as Exhibit No. 99(5)(a)(i) to
Item 24 as electronically filed on April 26, 1996.
(a)(iii) Investment Advisory Agreement dated January 19, 1994 between
Registrant and Timothy Partners, Ltd. is incorporated herein
by reference to Post-Effective Amendment No. 4 as Exhibit No.
99(5)(a)(ii) to Item 24 as electronically filed on April 26,
1996.
(b)(i) Sub-Investment Advisory Agreement dated January 1, 1997 among
Timothy Partners, Ltd., Awad & Associates and the Registrant
is incorporated by reference to Post-Effective Amendment No.
5 as Exhibit 99(5)(b)(i).
(6) (a) DISTRIBUTION AGREEMENTS:
(a)(i) Underwriting Agreement dated July 1, 1997 between the
Registrant and Timothy Partners, Ltd. is filed herewith
electronically.
<PAGE>
(a)(ii) Underwriting Agreement dated January 19, 1994 between
Registrant and FPS Broker Services, Inc. is incorporated
herein by reference to Post Effective Amendment No. 4 as
Exhibit No. 99 (6)(a)(ii) to Item 24 as electronically filed
on April 26, 1996.
(b) None
(7) None
(8) CUSTODIAN AGREEMENT
(a) Custodian Agreement between Registrant and The Bank of New
York, dated November 11, 1994 is incorporated herein by
reference to Post Effective Amendment No. 5.
(9) OTHER MATERIAL CONTRACTS:
(a)(i) Amendment dated February 23, 1996, to Shareholder Services
Agreement dated January 19, 1994 between Registrant and FPS
Services, Inc. is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (9)(a)(i) to Item
24 as electronically filed on April 26, 1996.
(a)(ii) Shareholder Services Agreement dated January 19, 1994 between
Registrant and FPS Services, Inc. is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No. 99
(9)(a)(ii) to Item 24 as electronically filed on April 26,
1997.
(b)(i) Amendment dated February 23, 1996, to Administration
Agreement dated January 19, 1994 between Registrant and FPS
Services, Inc. is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (9)(b)(i) to Item
24 as electronically filed on April 26, 1996.
(b)(ii) Administration Agreement dated January 19, 1994 between
Registrant and FPS Services, Inc. is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No. 99
(9)(b)(ii) to Item 24 as electronically filed on April 26,
1996.
(c) Accounting Services Agreement dated February 23, 1996 between
Registrant and FPS Services, Inc. is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No. 99
(9)(c) to Item 24 as electronically filed on April 26, 1996.
(d)(i) Amendment dated May 1, 1996 to Administrative Agreement dated
January 19, 1994 between Registrant and Covenant Financial
Management, Inc. is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (9)(d)(i) to Item
24 as electronically filed on April 26, 1996.
(d)(ii) Administrative Agreement dated January 19, 1994 between
Registrant and Covenant Financial Management, Inc. is
incorporated herein by reference to Post Effective Amendment
No. 4 as Exhibit No. 99 (9)(d)(ii) to Item 24 as
electronically filed on April 26, 1996.
(10) OPINION AND CONSENT OF COUNSEL AS TO THE LEGALITY OF THE SECURITIES TO
BE ISSUED:
(a) To be filed by the Registrant on a yearly basis along with
its Rule 24f-2 Notice.
(11) CONSENTS
(a) Consent of Tait, Weller & Baker is filed herewith
electronically.
(12) None.
(13) LETTERS OF UNDERSTANDING RELATING TO INITIAL CAPITAL:
(a) Investment letters between the Registrant and Phillis B.
Crosby, Michael J. Demaray, Thomas J. Snyder, William R.
Cadle, Bernice I. Cradle, Mary A. Gibson, Delbert E. Rich,
Gwynn M. Reel, Charles E. Davis, Gregory Tighe and Frank
Salerno are incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (13) to Item 24
as electronically filed on April 26, 1996.
(14) MODEL PLANS:
(a) Form of 403(b)(7) Retirement Plan is incorporated herein by
reference to exhibit 99(14)(a) of Post-Effective No. 5.
<PAGE>
(b) Form of Individual Retirement Account (I.R.A.) is
incorporated herein by reference to Post Effective Amendment
No. 4 as Exhibit No. 99 to Item 24 as electronically filed on
April 26, 1996.
(15) PLANS UNDER 12b-1:
(a)(i) Addendum dated July 1, 1997 on behalf of Class A shares is
filed herewith.
(a)(ii) Distribution Plan dated February 10, 1996, on behalf of
Institutional Class shares is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No. 99
(15)(a) to Item 24 as electronically filed on April 26, 1996.
(b)(i) Distribution Plan dated September 22, 1997 on behalf of Class
B shares is filed herewith.
(b)(ii) Addendum dated July 1, 1997 on behalf of Class B shares is
filed herewith.
(b)(iii) Distribution Plan dated February 10, 1996, on behalf of the
Retail shares is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (15)(b) to Item
24 as electronically filed on April 26, 1996.
(c) Shareholder Services Agreement dated January 1, 1996 between
Timothy Partners, Ltd. and FPS Broker Services, Inc. on
behalf of the Institutional Class shares is incorporated
herein by reference to Post Effective Amendment No. 4 as
Exhibit No. 99 (15)(c) to Item 24 as electronically filed on
April 26, 1996.
(d) Shareholder Services Agreement dated January 1, 1996 between
Timothy Partners, Ltd. and FPS Broker Services, Inc. on
behalf of the Retail Class shares is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No. 99
(15)(d) to Item 24 as electronically filed on April 26, 1996.
(16) Schedule of Computations of Performance Quotations incorporated herein
by reference to Post Effective Amendment No. 4 as Exhibit No. 99 (16)
to Item 24 as electronically filed on April 26, 1996.
(18) Multiple Class Plan is filed herewith electronically.
(19) Powers of Attorney on behalf of Scott Fehrenbacher is filed herewith
electronically.
(27) Financial Data Schedule is filed herewith electronically.
<TABLE>
<CAPTION>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
- ----------------------------------------------------------------------------
<S> <C>
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
- --------------------------------------------
Number of Record Holders
as of July 2, 1997
TITLE OF CLASS
--------------
Institutional Class Common Stock, 1102
par value $0.001 per share
Retail Class Common Stock, 880
par value $0.001 per share
</TABLE>
ITEM 27. INDEMNIFICATION.
- --------------------------
Under the terms of the Delaware Business Trust Act and the Registrant's
Agreement and Declaration of Trust and By-Laws, no officer or Trustee of the
Fund shall have any liability to the Fund or its shareholders for damages,
except to the extent such limitation of liability is precluded by Delaware law,
the Agreement and Declaration of Trust, or the By-Laws.
The Delaware Business Trust Act, section 3817, permits a business trust to
indemnify any Trustee, beneficial owner, or other person from and against any
claims and demands whatsoever. Section 3803 protects a Trustee, when acting in
such capacity, from liability to any person other than the business trust or
beneficial owner for any act, omission, or obligation of the business trust or
any Trustee thereof, except as otherwise provided in the Agreement and
<PAGE>
Declaration of Trust.
The Agreement and Declaration of Trust provides that the Trustees shall not be
liable for any neglect or wrong-doing of any officer, agent, employee, manager
or underwriter of the Fund, nor shall any Trustee be responsible for the act or
By-Laws, the Fund may indemnify to the fullest extent each Trustee and officer
of the Fund acting in such capacity, except each Trustee and officer of the Fund
acting in such capacity, except as otherwise provided in the Agreement and
Declaration of Trust.
The Agreement and Declaration of Trust provides that the Trustees shall not be
liable for any neglect or wrong-doing of any officer, agent, employee, manager
or underwriter of the Fund, nor shall any Trustee be responsible for the act or
omission of any other Trustee. Subject to the provisions of ;the By-Laws, the
Fund may indemnify to the fullest extent each Trustee and officer of the Fund
acting in such capacity, except that no provision in the Agreement and
Declaration of Trust shall be effective to protect or purport to protect and
indemnify any Trustee or officer of the Fund from or against any liability to
the Fund or any shareholder to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The By-Laws provide indemnification for each Trustee and officer who is a party
or is threatened to be made a party to any proceeding, by reason of service in
such capacity, to the fullest extent, if it is determined that Trustee or
officer acted in good faith and reasonably believed: (a) in the case of conduct
in his official capacity as an agent of the Fund, that his conduct was in the
Fund's best interests and (b) in all other cases, that his conduct was at least
not opposed to the Fund's best interests and (c) in the case of a criminal
proceeding, that he had no reasonable cause to believe the conduct of that
person was unlawful. However, there shall be no indemnification for any
liability arising by reason of willful misfeasance, bad faith, gross negligence,
or the reckless disregard of the duties involved in the conduct of the Trustee's
or officer's office. Further, no indemnification shall be made:
(a) In respect of any proceeding as to which any Trustee or officer of the Fund
shall have been adjudged to be liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted from an
action taken in the person's official capacity; or
(b) In respect of any proceeding as to which any Trustee or officer of the Fund
shall have been adjudged to be liable in the performance of that person's
duty to the Fund, unless and only to the extent that the court in which
that action was brought shall determine upon application that in view of
all the relevant circumstances of the case, that person is fairly and
reasonably entitled to indemnity for the expenses which the court shall
determine; however, in such case, indemnification with respect to any
proceeding by or in the right of the Fund or in which liability shall have
been adjudged by reason of the disabling conduct set forth in the preceding
paragraph shall be limited to expenses; or
(c) Of amounts paid in settling or otherwise disposing of a proceeding, with or
without court approval, or of expenses incurred in defending a proceeding
which is settled or otherwise disposed of without court approval, unless
the required court approval set forth in the By-Laws is obtained.
In any event, the Fund shall indemnify each officer and Trustee against
reasonable expenses incurred in connection with the successful defense of any
proceeding to which each such officer or Trustee is a party by reason of service
in such Capacity, provided that the Board of Trustees, including a majority who
are disinterested, non-party Trustees, also determines that such officer or
Trustee was not liable by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his or her duties or office. The Fund
shall advance to each officer and Trustee who is made a party to the proceeding
by reason of service in such capacity the expenses incurred by such person in
connection therewith, if (a) the officer or Trustee affirms in writing that his
good faith belief that he has met the standard of conduct necessary for
indemnification, and gives a written undertaking to repay the amount of advance
if it is ultimately determined that he has not met those requirements, and (b) a
determination that the facts then known to those making the determination would
not preclude indemnification.
The Trustees and officers of the Fund are entitled and empowered under the
Declaration of Trust and By-Laws, to the fullest extent permitted by law, to
purchase errors and omissions liability insurance with assets of the Fund,
whether or not the fund would have the power to indemnify him against such
liability under the Declaration of Trust or By-Laws.
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers, the underwriter or control persons
of the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable. See also Item 32.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF ADVISOR.
- ----------------------------------------------------
Timothy Partners, Ltd. ("TPL") serves as investment advisor of the Fund. The
following persons serving as directors or officers of the TPL have held the
following positions with the TPL for the past two years.
<TABLE>
<CAPTION>
Position and Positions with
Name and Offices with Offices with
Business Address Timothy Partners, Ltd. the Registrant
- --------------------- ---------------------- --------------
<S> <C> <C>
Arthur D. Ally President of Covenant President and
Fund, Inc.; Managing Trustee
General Partner of
Timothy Partners, Ltd.
and Individual General
Partner of Timothy Partners, Ltd.
</TABLE>
Covenant Financial Management, Inc. is a marketing/consulting firm owned by
Arthur Ally that will render consulting advise to TPL with regard to
marketing plans to be employed to target potential investor groups that might be
interested in investing in the Fund because of its investment objectives and
criteria.
ITEM 29. PRINCIPAL UNDERWRITER.
- -------------------------------
(a) Timothy Partners, Ltd. (TPL) is the principal underwriter for the
Registrants securities and currently acts as underwriter for the
Registrant only.
<PAGE>
(b) The table below sets forth certain information as to the Underwriter's
Directors, Officers and Control Persons:
<TABLE>
<CAPTION>
Name and Position and Offices Positions and Offices
Business Address with Underwriter with the Registrant
- ---------------- ---------------- ---- --------------
<S> <C> <C>
Arthur D. Ally President of Covenant President and
Fund, Inc.; Managing Trustee
General Partner of
Timothy Partners, Ltd.
and Individual General
Partner of Timothy Partners, Ltd.
</TABLE>
<PAGE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
- -------------------------------------------
Each account, book or other document required to be maintained by Section 31(a)
of the 1940 Act and Rules 17 CFR 270.31a-1 to 31a-3 promulgated thereunder, is
maintained by the Fund at 1304 West Fairbanks Avenue, Winter Park, Florida
32789, except for those maintained by the Fund's Custodian, The Bank of New
York, 48 Wall Street, New York, New York 10286, and the Fund's Administrator,
Transfer, Redemption and Dividend Disbursing Agent and Accounting Services
Agent, FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia,
PA 19406-0903.
ITEM 31. MANAGEMENT SERVICES.
- ------------------------------
Not applicable.
ITEM 32. UNDERTAKINGS.
- -----------------------
(a) Inapplicable.
(b) Inapplicable.
(c) The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the respective latest annual report to
shareholders, upon request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting of shareholders
for the purpose of voting upon the question of removal of any Trustee when
requested in writing to do so by the record holders of not less than 10 percent
of the Registrant's outstanding shares and to assist its shareholders in
accordance with the requirements of Section 16(c) of the Investment Company Act
of 1940, as amended relating to shareholder communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant hereby certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No. 6
to its Registration Statement pursuant to Rule 485(a) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment No. 5 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in Winter Park, State of Florida, on the 22nd day of July,
-----
1997.
THE TIMOTHY PLAN
By: /s/ Arthur D. Ally
---------------------------------------
Arthur D. Ally, President & Trustee
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 6 to the Registrant's Registration Statement has been signed below
by the following persons in the capacities indicated.
Signature Title Date
- --------- ----- ----
/s/ Arthur D. Ally* President and Trustee July 18, 1997
- ---------------------------
/s/ Joseph E. Boatwright* Secretary and Trustee July 18, 1997
- ---------------------------
/s/ Wesley Pennington* Treasurer and Trustee July 18, 1997
- ---------------------------
/s/ Scott Fehrenbacher Trustee July 18, 1997
/s/ Jock M. Sneddon* Trustee July 18, 1997
/s/ Philip B. Crosby* Trustee July 18, 1997
/s/ Daniel D. Busby* Trustee July 18, 1997
*By: /s/ Gretchen B. Zepernick
--------------------------------
Gretchen B. Zepernick, as
Attorney-in-Fact & Agent, pursuant
to Power of Attorney
<PAGE>
INDEX TO EXHIBITS ON FORM N-1A
EXHIBIT
99B5(a)(i) Amendment to Investment Advisory Agreement
99B6(a)(i) Underwriting Agreement
99B11(a) Auditors Consent
99B15(a)(i) Addendum to Distribution Plan - Class A
99B15(b)(i) Addendum to Distribution Plan - Class B
99B15(b)(ii) Distribution Plan - Class B
99B18 Multiple Class Plan
99B19 Powers of Attorney
99B27(a) Financial Data Schedule - Class A
99B27(b) Financial Data Schedule - Class B
<PAGE>
Exhibit 99B(5)(a)(i)
AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
This amendment, dated as of the 12th day of March, 1997 made by and between
---- -----------
THE TIMOTHY PLAN (the "Trust"), a Delaware business trust operating as a
registered investment company under the Investment Company Act of 1940, as
amended, duly organized and existing under the laws of the State of Delaware and
TIMOTHY PARTNERS, LTD. (the "Investment Advisor"), a Florida limited
partnership and registered investment advisor under the Investment Advisers Act
of 1940, as amended (collectively, the "Parties").
WITNESSETH:
WHEREAS, the Trust and Investment Advisor have entered into an agreement
dated January 19, 1994 (the "Investment Advisory Agreement"), wherein the
Investment Advisor has agreed to serve as an advisor and provide investment
management services; and
WHEREAS, the Parties wish to amend the Investment Advisory Agreement to add
language to paragraph 1 of page 1 to read as follows:
"As the Investment Adviser is structured as a partnership, shareholders of
the Trust will be notified (as required by Section 205 of the Investment
Advisers Act of 1940, as amended) of any significant ownership changes in
the Investment Advisor within ten (10) days of any such change in such
ownership."
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 Investment Advisory Agreement to add a new paragraph 1 of
page 1 as set forth above.
2. This amendment's effective date shall be September 1, 1994.
IN WITNESS WHEREOF, the Parties hereto have caused this amendment
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
/s/ Arthur D. Ally /s/ Arthur D. Ally
- --------------------------------------- ---------------------------------
By: Arthur D. Ally, Chairman By: Arthur D. Ally, President
/s/Joseph E. Boatwright /s/ Bonnie Ally
- --------------------------------------- ---------------------------------
Attest: Joseph E. Boatwright, Secretary Attest: Bonnie Ally, Secretary
<PAGE>
Exhibit 99B(6)(a)(i)
UNDERWRITING AGREEMENT
----------------------
This Agreement, dated as of the 1st day of July, 1997, 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. (Timothy Partners) a registered investment
advisor and broker/dealer existing as a Florida limited partnership
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Trust Instrument to issue separate
series of shares representing interests in separate investment portfolios (the
"Series"), which Series are identified on Schedule "B" attached hereto, and
which Schedule "B" may be amended from time to time by mutual agreement among
the Parties; and
WHEREAS, Timothy Partners has been appointed investment advisor to the
Trust; and
WHEREAS, Timothy Partners is a broker-dealer registered with the U.S.
Securities and Exchange Commission and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Parties are desirous of entering into an agreement providing
for the distribution by Timothy Partners of shares of the Series of the Trust
(the "Shares").
NOW, THEREFORE, in consideration of the promises and agreements of the
Parties contained herein, the Parties agree as follows:
1. Appointment.
-----------
The Trust hereby appoints Timothy Partners as its exclusive agent for the
distribution of the Shares, and Timothy Partners hereby accepts such
appointment under the terms of this Agreement. The Trust agrees that it
will not sell any shares to any person except to fill orders for the shares
received through Timothy Partners; provided, however, that the foregoing
exclusive right shall not apply: (a) to shares issued or sold in
connection with the merger or consolidation of any other investment company
with the Trust or the acquisition by purchase or otherwise of all or
substantially all of the assets of any investment company or substantially
all of the outstanding shares of any such company by the Trust; (b) to
shares which may be offered by the Trust to its stockholders for
reinvestment of cash distributed from capital gains or net investment
income of the Trust; or (c) to shares which may be issued to shareholders
of other funds who exercise any exchange privilege set forth in the Trust's
prospectus. Notwithstanding any other provision hereof, the Trust may
terminate, suspend, or withdraw the offering of the Shares whenever, in its
sole discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
-----------------------------
(a) Timothy Partners is hereby granted the right as agent for the Trust,
to sell Shares to the public against orders therefor at the public
offering price (as defined in sub-paragraph 2(c) hereof).
(b) Timothy Partners will also have the right to take, as agent for the
Trust, all actions which, in Timothy Partners' judgment, are necessary
to carry into effect the distribution of the Shares.
(c) The public offering price shall be the net asset value of the Shares
then in effect.
<PAGE>
(d) The net asset value of the Shares shall be determined in the manner
provided in the then current prospectus, and statement of additional
information relating to the Shares and when determined shall be
applicable to all transactions as provided in the prospectus. The net
asset value of the Shares shall be calculated by the Trust or by
another entity on behalf of the Trust. Timothy Partners shall have no
duty to inquire into or liability for the accuracy of the net asset
value per Share as calculated.
(e) On every sale, the Trust shall receive the applicable net asset value
of the Shares promptly.
(f) Upon receipt of purchase instructions, Timothy Partners will transmit
such instructions to the Trust or its transfer agent for registration
of the Shares purchased.
(g) Nothing in this Agreement shall prevent Timothy Partners or any
affiliated person (as defined in the Act) of Timothy Partners from
acting as underwriter or distributor for any other person, firm or
corporation (including other investment companies) or in any way limit
or restrict Timothy Partners or such affiliated person from buying,
selling or trading any securities for its or their own account or for
the accounts of others for whom it or they may be acting; provided,
however, that Timothy Partners expressly agrees that it will not for
its own account purchase any shares of the Trust except for investment
purposes and that it will not for its own account sell any such shares
except by redemption of such shares by the Trust, and that it will
undertake no activities which, in its judgment, will adversely affect
the performance of its obligations to the Trust under this Agreement.
(h) Timothy Partners may repurchase Shares at such prices and upon such
terms and conditions as shall be specified in the prospectus.
3. Rules of Sale of Shares.
-----------------------
Timothy Partners does not agree to sell any specific number of Shares.
Timothy Partners, as Underwriter for the Trust, undertakes to sell Shares
on a best efforts basis and only against orders received therefor.
The Trust reserves the right to refuse at any time or times to sell any of
its Shares for any reason deemed adequate by it.
4. Rules of NASD.
-------------
(a) Timothy Partners will conform to the Rules of Fair Practice of the
NASD and the securities laws of any jurisdiction in which it sells,
directly or indirectly, any Shares.
(b) Timothy Partners will require each dealer with whom Timothy Partners
has a selling agreement to conform to the applicable provisions of the
prospectus, with respect to the public offering price of the Shares,
and Timothy Partners shall not cause the Trust to withhold the placing
of purchase orders so as to make a profit thereby.
(c) The Trust agrees to furnish to Timothy Partners sufficient copies of
any agreements, plans, communications with the public or other
materials it intends to use in connection with any sales of Shares in
adequate time for Timothy Partners to file and clear such materials
with the proper
<PAGE>
authorities before they are put in use. In addition,
the Trust agrees not to use any such materials until so filed and
cleared for use by appropriate authorities and Timothy Partners.
(d) Timothy Partners, at its own expense, will qualify as a dealer or
broker, or otherwise, under all applicable state or federal laws
required in order that the Shares may be sold in such states as may be
mutually agreed upon by the parties.
(e) Timothy Partners shall not, in connection with any sale or
solicitation of a sale of the Shares, make or authorize any
representative, Service Organization, broker or dealer to make, any
representations concerning the Shares except those contained in the
prospectus covering the Shares and in communications with the public
or sales materials approved by Timothy Partners as information
supplemental to such prospectus. Copies of the prospectus will be
supplied by the Trust to Timothy Partners in reasonable quantities
upon request.
5. Records to be Supplied by the Trust.
-----------------------------------
The Trust shall furnish to Timothy Partners copies of all information,
financial statements and other papers which Timothy Partners may reasonably
request for use in connection with the distribution of the Shares
including, but not be limited to, one certified copy of all financial
statements prepared for the Trust by its independent public accountants.
6. Expenses.
--------
(a) The Trust will bear the following expenses:
(i) preparation, setting in type, and printing of sufficient
copies of the prospectuses and statements of additional
information for distribution to shareholders, and the
distribution of same to the shareholders;
(ii) preparation, printing and distribution of reports and other
communications to shareholders;
(iii) registration of the Shares under the federal securities laws;
(iv) qualification of the Shares for sale in the jurisdictions
mutually agreed upon by the Trust and Timothy Partners;
(v) maintaining facilities for the issue and transfer of the
Shares;
(vi) supplying information, prices and other data to be furnished
by the Trust under this Agreement; and
(vii) any original issue taxes or transfer taxes applicable to the
sale or delivery of the Shares or certificates therefor.
(b) Timothy Partners will pay all other expenses incident to the sale and
distribution of the Shares sold hereunder.
<PAGE>
7. Compensation.
------------
For its services under this Agreement, Timothy Partners shall serve in this
capacity without compensation. The services provided include acting as
primary underwriter/ distributor of the Trust and licensing/regulatory
agent for Timothy Partners personnel.
8. Liability of Timothy Partners.
------------------------------
(a) Timothy Partners, its directors, officers, employees, shareholders and
agents shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the
performance of this Agreement, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or
negligence on the part of Timothy Partners in the performance of its
obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Timothy Partners
against any and all liability, loss, damages, costs or expenses
(including reasonable counsel fees) which Timothy Partners may incur
or be required to pay hereafter, in connection with any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which Timothy Partners may be
involved as a party or otherwise or with which Timothy Partners may be
threatened, by reason of the offer or sale of the Trust shares prior
to the execution of this Agreement except for losses resulting from
willful misfeasance, bad faith or negligence on the part of Timothy
Partners in the performance of its obligations and duties or by reason
of its reckless disregard of its obligations and duties under this
Agreement.
(c) The Trust agrees to indemnify and hold harmless Timothy Partners, and
each person, who controls Timothy Partners within the meaning of
Section 15 of the Securities Act of 1933, as amended (the "Securities
Act"), or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), against any and all losses, claims,
damages and liabilities, joint or several (including any reasonable
investigative, legal and other expenses incurred in connection
therewith) to which they, or any of them, may become subject under the
Act, the Securities Act, the Exchange Act or other federal or state
law or regulation, at common law or otherwise insofar as such losses,
claims, damages or liabilities (or actions, suits or proceedings in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in a
prospectus, statement of additional information, supplement thereto,
sales literature or other written information prepared by the Trust
and furnished by the Trust to Timothy Partners for Timothy Partners'
use hereunder, disseminated by the Trust or arise out of or are based
upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Such indemnity shall not, however, inure to
the benefit of Timothy Partners (or any person controlling Timothy
Partners) on account of any losses, claims, damages or liabilities (or
actions, suits or proceedings in respect thereof) arising from the
sale of the shares of the Trust to any person by Timothy Partners (i)
if such untrue statement or omission or alleged untrue statement or
omission was made in the prospectus, statement of additional
information, or supplement,
<PAGE>
sales or other literature, in reliance upon and in conformity with
information furnished to the Trust by Timothy Partners specifically
for use therein or (ii) if such losses, claims, damages or liabilities
arise out of or are based upon an untrue statement or omission or
alleged untrue statement or omission in the prospectus, statement of
additional information, or supplement, sales or other literature, if
the Trust shall correct the untrue statement or omission or the
alleged untrue statement or omission which is the basis of the loss,
claim, damage or liability for which indemnification is sought and a
copy of the corrected prospectus was not delivered to such person at
or before the confirmation of the sale to such person, unless such
failure to deliver the corrected prospectus was a result of
noncompliance by the Trust.
(d) Timothy Partners agrees to indemnify and hold harmless the Trust and
each person, if any, who controls the Trust within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
insofar as such losses, claims, damages or liabilities arise out of or
are based upon any untrue statement or omission or alleged untrue
statement of a material fact contained in the prospectus or statement
of additional information or any supplement thereto, or arise out of
or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if based upon information furnished
in writing to the Trust by Timothy Partners specifically for use
therein.
9. Termination of this Agreement.
-----------------------------
This Agreement shall automatically terminate in the event of its
assignment. This Agreement may be terminated with respect to the Trust at
any time, without payment of any penalty, by vote of a majority of the
members of the Board of Trustees of the Trust who are not interested
persons of the Trust or by vote of a majority of the outstanding voting
securities of the Trust or by Timothy Partners on sixty (60) days' written
notice to the other party.
10. Effective Period of this Agreement.
----------------------------------
This Agreement shall be effective on the date noted above and shall remain
in full force and effect for a period of two (2) years thereafter (unless
terminated as set forth in Paragraph 10), and from year to year thereafter,
but only so long as such continuance is specifically approved at least
annually by:
(i) a majority of the outstanding voting securities of the Trust; or
(ii) a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons of any such party by vote cast in
person at a meeting called for the purpose of voting on such approval.
The provisions of paragraph 8 hereof shall survive the termination of this
Agreement.
11. Amendments.
----------
No provision of this Agreement may be amended or modified, in any manner
whatsoever except by a written agreement properly authorized and executed
by the Parties.
12. Section Headings Section and Paragraph headings are for convenience only
----------------
and shall not be construed as part of this Agreement.
13. Reports.
-------
Timothy Partners shall prepare reports for the Board of Trustees of the
Trust on a quarterly basis showing such information as from time to time
shall be reasonably
<PAGE>
requested by such Board.
14. Severability.
------------
If any part, term or provision of this Agreement is held by any court to be
illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not affected, and the
rights and obligations of the parties shall be construed and enforced as if
the Agreement did not contain the particular part, term or provision held
to be illegal or invalid.
15. Governing Law.
-------------
This Agreement shall be governed by the laws of the State of Florida and
that the venue of any action arising under this Agreement shall be County
of Orange, State of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement consisting of
eight type written pages, together with Schedules "A" and "B", to be signed by
their duly authorized officers and their corporate seals hereunto duly affixed
and attested, as of the day and year first above written.
The Timothy Plan Timothy Partners,Ltd.
- ---------------- ---------------------
/s/Arthur D. Ally /s/Arthur D. Ally
- ----------------------------- -----------------------------
By: Arthur D. Ally, President By: Arthur D. Ally, President
/s/Joseph E. Boartwright /s/Bonnie Ally
- ----------------------------- -----------------------------
Attest: Joseph E. Boatwright, Secretary Attest: Bonnie Ally, Secretary
(SEAL) (SEAL)
<PAGE>
SCHEDULE "A"
UNDERWRITER/DISTRIBUTION SERVICES
FOR
THE TIMOTHY PLAN
TIMOTHY PARTNERS
- ----------------
Timothy Partners, a fully registered Broker/Dealer and member of the National
Association of Securities Dealers (NASD) offers Underwriter/Sponsor and
Distribution/Marketing Services to our Mutual Fund Clients.
UNDERWRITER/SPONSOR SERVICES
- ----------------------------
As Underwriter/Sponsor, Timothy Partners assumes the responsibility for
distribution of Trust shares within the guidelines outlined by the Investment
Company Act of 1940, as amended, of the U.S. Securities Exchange Commission as
well as the NASD. This includes, but is not limited to, submission of Trust
literature to the NASD as well as registration and licensing of Trust personnel.
Underwriter/Sponsor services include:
A) Preparation and execution of Underwriter and 12b-1 Plan Agreements
. Monitoring accruals
. Monitoring expenses
. Disbursements for expenses and trail commissions
B) Quarterly 12b-1 Reports to Board of Trustees
C) Literature review, recommendations and submission to the NASD
D) Initial NASD Licensing and Transfers of Registered Representatives
. U-4 Form and Fingerprint Submission to NASD
. Supplying Series 6 and 63 written study material
. Registration for Exam Preparation classes
. Renewals and Terminations of Representatives
E) Written supervisory procedures and manuals for Registered Representatives
F) Ongoing compliance updates for Representatives regarding sales practices,
written correspondence and other communications with the public.
G) NASD Continuing Education Requirement
<PAGE>
SCHEDULE "B"
IDENTIFICATION OF SERIES
Below are listed the "Series" to which services under this Agreement are to be
performed as of the execution date of this Agreement:
"The Timothy Plan - Institutional Class"
"The Timothy Plan - Retail Class"
This Schedule "B" may be amended from time to time by agreement of the Parties.
<PAGE>
EXHIBIT 99B11
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our firm in Post-Effective Amendment No. 6
to the Registration Statement of Form N-1A of The Timothy Plan and to the use of
our report dated January 17, 1997 on the financial statements and financial
highlights. Such financial statements and financial highlights are incorporated
by reference in the Statement of Additional Information, which is part of such
Registration Statement.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 16, 1997
<PAGE>
Exhibit 99B(15)(a)(i)
ADDENDUM TO
DISTRIBUTION PLAN
OF
THE TIMOTHY PLAN - INSTITUTIONAL CLASS
WHEREAS, Timothy Partners, Ltd. ("TPL") acts as Distributor for The Timothy
Plan (the "Fund") pursuant to an Underwriting Agreement dated as of July 1,
1997; and
WHEREAS, the Fund has adopted a Distribution Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "Plan").
NOW THEREFORE,
1. This Addendum is adopted pursuant to the Plan.
2. TPL agrees that it is a Distributor under the Plan.
3. TPL agrees to the terms and conditions of the Plan, and agrees to
comply with the Plan.
TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.
Managing General Partner
By: /s/ Arthur D. Ally
--------------------------------------
ACCEPTED AND AGREED TO
this 1 day of July, 1997.
--- ----
THE TIMOTHY PLAN
By: /s/ Arthur D. Ally
------------------------------
<PAGE>
Exhibit 99B(15)(b)(i)
DISTRIBUTION PLAN
OF
THE TIMOTHY PLAN - CLASS B
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 Class B shares (the "Class B") 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 Class B shares of the Trust.
The Provisions of the Plan are:
1. Class B shares of the Trust shall compensate the Advisor and
Distributor or others for all expenses incurred by such parties in the promotion
and distribution of shares of Class B shares 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 Class B 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 Class B.
2. The maximum aggregate amount which may be compensated by Class B of
the Trust to such parties pursuant to paragraph 1 shall be 1.00% per annum of
-----
the average daily net assets of Class B; provided however, that payment made
under any servicing agreement entered into by Class B pursuant to Paragraph 1 of
this Plan shall be 0.25% per annum of the average daily net assets of Class B.
-----
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 Class B shares, 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 Class B shares 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.
<PAGE>
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 Class B
shares for distribution pursuant to Paragraph 1 hereof without approval by a
majority of Class B's 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 22 day of Sepetember , 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: /s/Arthur D. Ally
-----------------------------------------
TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.,
Managing General Partner
By: /s/Arthur D. Ally
-----------------------------------------
<PAGE>
Exhibit 99B(15)(b)(ii)
ADDENDUM TO
DISTRIBUTION PLAN
OF
THE TIMOTHY PLAN - RETAIL CLASS
WHEREAS, Timothy Partners, Ltd. ("TPL") acts as Distributor for The Timothy
Plan (the "Fund") pursuant to an Underwriting Agreement dated as of July 1,
1997; and
WHEREAS, the Fund has adopted a Distribution Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "Plan").
NOW THEREFORE,
1. This Addendum is adopted pursuant to the Plan.
2. TPL agrees that it is a Distributor under the Plan.
3. TPL agrees to the terms and conditions of the Plan, and agrees to
comply with the Plan.
TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.
Managing General Partner
By: /s/ Arthur D. Ally
-------------------------------------
ACCEPTED AND AGREED TO
this 1 day of July , 1997.
--- ------
THE TIMOTHY PLAN
By: /s/ Arthur D. Ally
-------------------------------------------
<PAGE>
Exhibit 99B(18)
THE TIMOTHY PLAN
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
The Timothy Plan (the "Fund") hereby adopts this Multiple Class Plan
(the "Plan") pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which sets forth the separate distribution
arrangements and expense allocations of each class of the Fund. This Plan has
been adopted by a majority of the Board of Trustees, including a majority of the
independent trustees, of the Fund. The Board has determined that the Plan is in
the best interests of each Class and the Trust as a whole. The Plan sets forth
the provisions relating to the establishment of multiple classes of shares for
the Trust.
1. The Trust may offer two classes of shares, Class A and Class B shares.
2. Class A shares are sold subject to a front-end sales charge of 5.50%
for an investment of $1,000 but under $25,000, 4.25% for investments over
$25,000 but under $50,000, 3.00% for investments over $50,000 but under
$100,000, 2.00% for investments over $100,000 but under $250,000, and 1.00% for
investment over $250,000 but under $500,000. There is no sales load for
investments over $500,000.
Class A shares are subject to Rule 12b-1 distribution expenses. Class
A shares of the Trust will reimburse Timothy Partners, Ltd. ("TPL"), as
investment advisor and distributor or others for all expenses incurred by such
parties in the promotion and distribution of shares of Class A 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 ("Distribution
Fees"), 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 Class A 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 Class A
("Service Fees").
The maximum aggregate amount which may be reimbursed by the Class A
shares of the Trust to such parties shall be 0.25% per annum of the average
-----
daily net assets attributable to Class A shares; provided however, that payment
made under any servicing agreement entered into by the Class A shall not exceed
0.25% per annum of the average daily net assets attributable to Class A.
- -----
3. Class B shares are subject to Rule 12b-1 expenses. Class B shares of
the Trust shall reimburse TPL, as investment advisor and distributor or others
for all expenses incurred by
<PAGE>
such parties in the promotion and distribution of shares of Class B shares of
the Trust, for Distribution Fees, 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 Class B shares 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 Service Fees.
The maximum aggregate amount which may be reimbursed by Class B shares
of the Trust to such parties shall be 0.25% per annum of the average daily net
-----
assets attributable to Class B shares.
4. The Trust's Rule 12b-1 Plans relating to both Class A and Class B
shares shall operate in accordance with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., Article III, section 26(d).
5. Certain expenses attributable to the Fund, and not to a particular
class will be borne by each class on the basis of the relative aggregate net
assets of the Fund. Notwithstanding the foregoing, the investment manager or
other service provider may waive or reimburse the expenses of a specific class
or classes to the extent permitted under Rule 18f-3 under the 1940 Act.
6. Dividends and other distributions paid by each class of shares, to the
extent that any dividends are paid, will be calculated in the same manner, at
the same time, on the same day, and will be in the same amount, except that any
Distribution Fees, Service Fees and class expenses allocated to a class will be
borne exclusively by that class.
7. Class B shares will automatically convert to Class A shares once the
economic equivalent of a 5.50% sales charge is recovered by the Fund through the
Class B distribution fee for each investment account.
8. Each Class shall vote separately and exclusively with respect to any
matter related to the respective Rule 12b-1 Plan. Each Class shall vote
separately with respect to any matter that relates solely to that Class.
9. On an ongoing basis, the trustees pursuant to their fiduciary
responsibilities under the Investment Company Act of 1940, as amended, (the
"Act"), and otherwise, will monitor the Trust for the existence of any material
conflicts between the interests of the classes of shares. The trustees,
including a majority of the independent trustees, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop. The
Advisor and the Distributor shall be responsible for alerting the Board to any
material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of
the trustees of the Trust, including a majority of the trustees who are not
"interested persons" of the Trust, as defined in the Act.
Date: July 29 , 1997
------------
<PAGE>
EXHIBIT 99B(19)
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints Joseph M. O'Donnell, Gerald J. Holland, William J. Baltrus and Gretchen
B. Zepernick and each of them, with full power to act without the other, as a
true and lawful attorney-in-fact and agent, with full and several power of
substitution, to sign any and all Amendments to Registration Statement No. 33-
73248 of The Timothy Plan (the "Trust") to be filed with the U.S. Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended; and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the U.S. Securities
and Exchange Commission and to take any appropriate action to qualify or
register all or part of the securities of the Trust for sale in various states;
granting to such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act requisite and necessary to be
done in connection therewith, as fully as that person might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or any substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the
29th day of May, 1997.
/s/ Scott Fehrenbacher
-------------------------------
SCOTT FEHRENBACHER
TRUSTEE
ACKNOWLEDGMENT
--------------
State of Florida )
) ss:
County of Orange )
The foregoing instrument was acknowledged before me this 29th day of May 1997,
by SCOTT FEHRENBACHER, TRUSTEE of The Timothy Plan.
- --------------------
Notary Public
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000916490
<NAME> THE TIMOTHY PLAN
<SERIES>
<NUMBER> 1
<NAME> INSTITUTIONAL CLASS
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 10,727,008
<INVESTMENTS-AT-VALUE> 11,646,681
<RECEIVABLES> 26,800
<ASSETS-OTHER> 356
<OTHER-ITEMS-ASSETS> 60,658
<TOTAL-ASSETS> 11,734,495
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,303
<TOTAL-LIABILITIES> 45,303
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,610,777
<SHARES-COMMON-STOCK> 690,247
<SHARES-COMMON-PRIOR> 609,122
<ACCUMULATED-NII-CURRENT> (5,680)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 164,422
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 919,673
<NET-ASSETS> 11,689,192
<DIVIDEND-INCOME> 190,723
<INTEREST-INCOME> 55,616
<OTHER-INCOME> 0
<EXPENSES-NET> 161,797
<NET-INVESTMENT-INCOME> 84,542
<REALIZED-GAINS-CURRENT> 164,422
<APPREC-INCREASE-CURRENT> 903,008
<NET-CHANGE-FROM-OPS> 1,151,972
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 66,939
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 201,664
<NUMBER-OF-SHARES-REDEEMED> 126,226
<SHARES-REINVESTED> 5,687
<NET-CHANGE-IN-ASSETS> 4,935,758
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 78,848
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 356,764
<AVERAGE-NET-ASSETS> 9,275,969
<PER-SHARE-NAV-BEGIN> 10.07
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> 1.17
<PER-SHARE-DIVIDEND> .10
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.24
<EXPENSE-RATIO> 1.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000916490
<NAME> THE TIMOTHY PLAN
<SERIES>
<NUMBER> 2
<NAME> RETAIL CLASS
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 10,727,008
<INVESTMENTS-AT-VALUE> 11,646,681
<RECEIVABLES> 26,800
<ASSETS-OTHER> 356
<OTHER-ITEMS-ASSETS> 60,658
<TOTAL-ASSETS> 11,734,495
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,303
<TOTAL-LIABILITIES> 45,303
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,610,777
<SHARES-COMMON-STOCK> 350,224
<SHARES-COMMON-PRIOR> 61,522
<ACCUMULATED-NII-CURRENT> (5,680)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 164,422
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 919,673
<NET-ASSETS> 11,689,192
<DIVIDEND-INCOME> 190,723
<INTEREST-INCOME> 55,616
<OTHER-INCOME> 0
<EXPENSES-NET> 161,797
<NET-INVESTMENT-INCOME> 84,542
<REALIZED-GAINS-CURRENT> 164,422
<APPREC-INCREASE-CURRENT> 903,008
<NET-CHANGE-FROM-OPS> 1,151,972
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 23,283
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 314,924
<NUMBER-OF-SHARES-REDEEMED> 28,244
<SHARES-REINVESTED> 2,022
<NET-CHANGE-IN-ASSETS> 4,935,758
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 78,848
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 356,764
<AVERAGE-NET-ASSETS> 9,275,969
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> 1.14
<PER-SHARE-DIVIDEND> .07
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.22
<EXPENSE-RATIO> 2.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
