TIMOTHY PLAN, 497, 1997-04-29

TIMOTHY PLAN
497, 1997-04-29

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<PAGE>

PROSPECTUS FOR

THE TIMOTHY PLAN

INSTITUTIONAL CLASS

APRIL 29, 1997

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Distributed By:
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
(800) 441-6580

- -------------------------------------------------------------------------------

The Timothy Plan (the "Fund") is an open-end diversified management investment
company. It was organized as a series Delaware business trust and currently
offers shares of one series, which has specific investment objectives. There
is no assurance that the Fund's objectives will be achieved.

The objective of the Fund is long-term capital growth and its secondary
objective is current income. The Fund seeks to achieve its objectives by
investing in securities issued by companies which, in the opinion of the
Fund's advisor, conduct business in accordance with the stated philosophy and
principles of the Fund (See "Investment Objectives and Policies").

The Fund currently offers two classes of shares: Institutional Class and
Retail Class. This Prospectus pertains only to the Fund's Institutional Class
shares. The Institutional Class shares have no sales charge but are subject to
annual 12b-1 Plan expenses. Retail Class shares have a front-end sales charge
and are also subject to annual 12b-1 Plan expenses. The Retail Class is
offered in a separate prospectus which can be obtained by calling (800) TIM-
PLAN.

The shares of the Fund may be purchased or redeemed at any time. Purchases and
redemptions will be effected at the net asset value next determined following
receipt of the investor's request. (See "Determination of Net Asset Value,"
"How to Purchase Shares," and "How to Redeem Shares").

This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read and
retain this Prospectus for future reference.

More information about the Fund and classes of shares of the Fund has been
filed with the U.S. Securities and Exchange Commission, and is contained in
the "Statement of Additional Information," dated April 29, 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, 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 SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Expenses of the Fund....................................................... 3
Financial Highlights....................................................... 4
The Fund................................................................... 5
Investment Objectives and Policies......................................... 5
Risk Factors............................................................... 6
Investment Restrictions.................................................... 8
Shares of Beneficial Interest.............................................. 9
Management of the Fund..................................................... 9
Board of Trustees......................................................... 9
Investment Advisor........................................................ 9
Investment Manager........................................................ 10
Historical Performance of the Investment Manager.......................... 11
Underwriter............................................................... 12
Plan of Distribution...................................................... 12
Administrator............................................................. 13
Custodian, Transfer Agent and Fund Accounting/Pricing Agent............... 13
Expenses.................................................................. 13
Dividends, Distributions and Taxes......................................... 13
Determination of Net Asset Value........................................... 15
How to Purchase Shares..................................................... 15
How to Redeem Shares....................................................... 17
Retirement Plans........................................................... 19
Performance................................................................ 19
Investment Application..................................................... 20
Automatic Investment Plan Application...................................... 22
Application to Request to Transfer to The Timothy Plan..................... 24
</TABLE>

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 2
<PAGE>

EXPENSES OF THE FUND

The following table illustrates all expenses and fees that a shareholder of
the Fund's Institutional Class will incur.

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases................................. none
Maximum Sales Load Imposed on Reinvested Dividends...................... none
Redemption Fees......................................................... none/1/
</TABLE>

ANNUAL OPERATING EXPENSES OF THE INSTITUTIONAL CLASS *
(as a percentage of average net assets)

<TABLE>
<S> <C>
Management and Advisory Expenses After Expense Reimbursements.......... 0.00%
12b-1 Fees............................................................. 0.25%/2/
Other Expenses After Expense Reimbursements............................ 1.35%
----
Total Operating Costs After Expense Reimbursements..................... 1.60%
====
</TABLE>

The purpose of this table is to assist the investor in understanding the
various expenses that an investor in the Institutional Class will bear
directly or indirectly. The Advisor has voluntarily agreed to waive its fees,
so that the Institutional Class' total annual operating expenses will never
exceed 1.60% of the daily average net assets. Further, the Advisor has agreed
to reimburse the Institutional Class for its other expenses so that the
Institutional Class' total annual expenses will never exceed 1.60%. Absent the
fee waiver and expense reimbursements, "Management and Advisory Expenses" and
"Other Expenses" would have been 0.85% and 2.85%, respectively.

The following example illustrates the expenses that you would pay on a $1,000
investment over various time periods assuming (1) a 5% annual rate of return
and (2) redemption at the end of each time period. As noted in the table
above, the Fund charges no redemption fees of any kind.

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C>
$16 $50 $87 $190
</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.

/1/United Missouri Bank KC NA charges $9.00 per redemption for redemptions
payable by wire.

/2/The Board of Trustees has adopted a Plan of Distribution pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended for the Fund's
Institutional Class. With the Plan of Distribution in place, long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge consistent with rules of the National Association of
Securities Dealers, Inc. Given the maximum rate permitted under the Fund's
Plan of Distribution, it is anticipated that it would take a substantial
number of years to reach such maximum.

* The table reflects the expenses the Fund's Institutional Class incurred
during the fiscal year ended December 31, 1996.

Page 3
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights were derived from the Fund's financial
statements related to the Institutional Class 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.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
----------------------------------------
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994*
------------ ------------ --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERI-
OD................................. $ 10.07 $ 9.66 $10.00
------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............... 0.10 0.11 0.06
Net gains (losses) on securities
(both realized and unrealized)..... 1.17 0.66 (0.34)
------- ------ ------
Total from investment operations.. 1.27 0.77 (0.28)
------- ------ ------
LESS DISTRIBUTIONS
Distributions from net investment
income:
Institutional Shares............... (0.10) (0.11) (0.06)
Retail Shares...................... 0.00 0.00 0.00
Distributions from net capital
gains:
Institutional Shares............... 0.00 (0.25) 0.00
Retail Shares...................... 0.00 0.00 0.00
------- ------ ------
Total distributions............... (0.10) (0.36) (0.06)
======= ====== ======
NET ASSET VALUE, END OF PERIOD...... $ 11.24 $10.07 $ 9.66
======= ====== ======
TOTAL RETURN........................ 12.59 % 7.93 % (2.84)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000s).............................. $ 7,760 $6,133 $2,217
Ratio of expenses to average net as-
sets:
Before expense reimbursement....... 3.70 % 5.84 % 18.62 %/1/
After expense reimbursement........ 1.60 % 1.60 % 1.60 %/1/
Ratio of net investment income to
average net assets:
Before expense reimbursement....... (1.05)% (2.96)% (15.49)%/1/
After expense reimbursement........ 1.05 % 1.28 % 1.53 %/1/
Portfolio turnover rate............. 93.08 % 34.12 % 8.31 %
Average commission rate paid........ $0.0593 N/R/2/ N/R/2/
</TABLE>
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* The Institutional Shares commenced investment operations on March 21, 1994.

/1/Annualized.

/2/Not Required.

Page 4
<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: Institutional Class and Retail Class. This
Prospectus pertains only to Institutional Class shares.

INVESTMENT OBJECTIVES AND POLICIES

Set forth below are the investment objectives and policies of the Fund. The
investment objectives of the Fund are a fundamental policy and may not be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities. There can be no assurance that the Fund will
achieve its objectives.

The Fund's objective is long-term capital growth, with a secondary objective
of current income. The Fund shall seek to achieve its objectives while abiding
by ethical standards established for investments by the Fund. Those standards
preclude the investment in securities of companies involved in the businesses
of alcohol production, tobacco production, or casino gambling, or which are
directly or indirectly involved in pornography or abortion. The securities in
which the Fund shall be precluded from investing, by virtue of the Fund's
ethical standards, are referred to as the "Excluded Securities."

The Fund will invest most of its assets in common stocks and American
Depository Receipts ("ADRs"), although it may also invest in other types of
securities including securities convertible into common stocks and common
stock equivalents (including rights and warrants), preferred stocks, short-
term U.S. Government securities, and/or other high-quality, short-term debt
securities (commercial paper, repurchase agreements, bankers' acceptances,
certificates of deposit and other fixed income securities (non-convertible and
convertible bonds, debentures and notes issued by U.S. corporations and
certain bank obligations and participations). High-quality debt securities are
those that are rated Aa or better by Moody's, or AA or better by Standard &
Poor's, or that are of comparable quality. See "Risk Factors" herein, and the
Statement of Additional Information for information relating to these
securities. While it is the Fund's policy to seek long-term investments,
changes will be made whenever management believes that such changes will
strengthen the Fund's investments and realization of its objectives. The Fund
will pursue its objectives by investing a major portion of its assets in
securities of companies which offer prospects for growth of capital in
accordance with the portfolio investment techniques described below.

The Fund seeks to achieve its investment objectives by investing primarily in
common stocks and ADRs, while foregoing investments in the Excluded
Securities. Awad & Associates (the "Investment Manager"), a division of
Raymond James & Associates, Inc., as sub-investment advisor to Timothy
Partners, Ltd. (the "Advisor"), will select the investments for the Fund, but
will not invest in securities which the Advisor will determine are Excluded
Securities. The Advisor has instructed the Investment Manager to avoid
investment in any company directly involved in the business of alcohol
production, tobacco production, or casino gambling. In addition, the Advisor
will compile and maintain a list of companies that it determines, by using
information collected by and published by three Christian ministries,
participate directly or indirectly in either pornography or abortion. The
Advisor will use its best judgement in determining which companies, through
their corporate practices in either of these two areas, need to be placed on
the Excluded Securities list. The Advisor also reserves the right to exercise
its best judgement to exclude investment in other companies whose corporate
practices may not fall within the exclusions described above, but nevertheless
could be found offensive to basic traditional Judeo Christian values.

The three Christian ministries that publish information that the Advisor will
utilize in identifying companies directly or indirectly involved in
pornography or abortion are as follows: (1) The American Family Association
(to identify companies engaged in pornography); (2) Pro Vita Advisors (to
identify companies that directly and indirectly participate in abortion); and
(3) Life Decisions International (to identify companies that indirectly
support abortion causes through corporate funding programs). The Advisor
retains the right to change the ministries whose information it reviews, at
its discretion.

Page 5
<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 of such
temporary defensive strategies.

The Advisor will attempt to monitor and respond to changes in business
policies within the companies selected for investment. It is possible that
securities in which the Fund has invested may become Excluded Securities. In
such event, the Fund will sell its position in those securities subject to
general market considerations.

RISK FACTORS

INVESTMENT RESTRICTIONS OF THE FUND. The ethical standards established for
investments by the Fund limit the pool of securities from which investment
securities may be selected by the Investment Manager. Although the Advisor
believes the Fund's investment objective of long-term capital growth can be
achieved notwithstanding the effect of the Fund's ethical standards, this
objective may be affected by the limitations imposed by the Advisor, in
eliminating the Excluded Securities as potential investments.

ADVISOR AND INVESTMENT MANAGER. The principals of the managing general partner
of the Advisor have been engaged in various aspects of the retail brokerage
and financial advisory business. The Investment Manager has advised
individuals, pension funds, trusts and institutions. Awad & Associates, a
division of Raymond James & Associates, Inc., currently manages approximately
$575 million in these accounts. The Investment Manager currently serves as co-
investment advisor to one other investment company: Heritage Small Cap Fund.
The Advisor has served as investment advisor exclusively to the Fund since the
Funds 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

Page 6
<PAGE>

value. Moreover, the longer the remaining maturity of a security, the greater
the effect of interest rate changes on the market value of such a security. In
addition, changes in an issuer's ability to make payments of interest and
principal and in the market's perception of an issuer's creditworthiness also
affect the market value of the debt securities of that issuer.

MONEY MARKET SECURITIES. The Fund will select money market securities for
investment when such securities offer a current market rate of return which
the Fund considers reasonable in relation to the risk of the investment, and
the issuer can satisfy suitable standards of credit-worthiness set by the
Fund. The money market securities in which the Fund may invest are repurchase
agreements, certificates of deposit, U.S. Government securities, commercial
paper and securities of money market mutual funds.

Although the Fund intends to invest primarily in common stocks, common stock
equivalents, and ADRs, the Fund may invest up to 30% of its assets directly in
money market securities whenever deemed appropriate to achieve the Fund's
investment objectives. It may invest without limitation in such securities on
a temporary basis for defensive purposes.

Securities issued or guaranteed as to principal and interest by the U.S.
Government ("Government Securities") include a variety of Treasury securities,
which differ in their interest rates, maturities and date of issue. Treasury
bills have a maturity of one year or less; Treasury notes have maturities of
one to ten years; Treasury bonds generally have a maturity of greater than
five years. The Fund will only acquire Government Securities which are
supported by the "full faith and credit" of the United States. Securities
which are backed by the full faith and credit of the United States include
Treasury bills, Treasury notes, Treasury bonds and obligations of: the
Government National Mortgage Association, the Farmers Home Administration and
the Export-Import Bank. The Fund's direct investments in money market
securities will generally favor securities with shorter maturities (maturities
of less than 60 days) which are less affected by price fluctuations than are
those with longer maturities.

Certificates of deposit are certificates issued against funds deposited in a
commercial bank or a savings and loan association for a definite period of
time and earning a specified return. Bankers' acceptances are negotiable
drafts or bills of exchange, normally drawn by an importer or exporter to pay
for specific merchandise, which are "accepted" by a bank, meaning, in effect,
that the bank unconditionally agrees to pay the face value of the instrument
on maturity. Investments in bank certificates of deposit and bankers'
acceptances are generally limited to domestic banks and savings and loan
associations that are members of the Federal Deposit Insurance Corporation or
Federal Savings and Loan Insurance Corporation having a net worth of at least
$100 million dollars ("Domestic Banks") and domestic branches of foreign banks
(limited to institutions having total assets not less than $1 billion or its
equivalent).

Investments in prime commercial paper may be made in notes, drafts, or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace, or any renewal thereof
payable on demand or having a maturity likewise limited.

REPURCHASE AGREEMENTS. Under a repurchase agreement the Fund acquires a debt
instrument for a relatively short period (usually not more than one week)
subject to the obligation of the seller to repurchase and the Fund to resell
such debt instrument at a fixed price. The Fund will enter into repurchase
agreements only with banks which are members of the Federal Reserve System, or
securities dealers who are members of a national securities exchange or are
market makers in government securities and report to the Market Reports
Division of the Federal Reserve Bank of New York and, in either case, only
where the debt instrument collateralizing the repurchase agreement is a U.S.
Treasury or agency obligation supported by the full faith and credit of the
United States. A repurchase agreement may also be viewed as the loan of money
by the Fund to the seller. The resale price specified is normally in excess of
the purchase price, reflecting an agreed upon interest rate. The rate is
effective for the period of time the Fund is invested in the agreement and may
not be related to the coupon rate on the underlying security. The term of
these repurchase agreements will usually be short (from overnight to one
week). At no time will the Fund invest in repurchase agreements of more than
sixty days. The securities which are

Page 7
<PAGE>

collateral for the repurchase agreements, however, may have maturity dates in
excess of sixty days from the effective date of the repurchase agreement. The
Fund will always receive, as collateral, securities whose market value,
including accrued interest, will at least equal 102% of the dollar amount to
be paid to the Fund under each agreement at its maturity, and the Fund will
make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the Custodian. If the seller defaults,
the Fund might incur a loss if the value of the collateral securing the
repurchase agreement declines, and might incur disposition costs in connection
with liquidation of the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, collection of the
collateral by the Fund may be delayed or limited. The Fund also may not be
able to substantiate its interests in the underlying securities. While
management of the Fund acknowledges these risks, it is expected that such
risks can be controlled through stringent security selection and careful
monitoring procedures. The Fund may not enter into a repurchase agreement with
more than seven days to maturity if, as a result, more than 10% of the market
value of the Fund's net assets would be invested in such repurchase agreements
and any other illiquid assets. For purposes of the diversification test for
qualification as a regulated investment company under the Internal Revenue
Code, Repurchase Agreements are not counted as cash, cash items or
receivables, but rather as securities issued by the counter-party to the
Repurchase Agreements.

SMALL-CAP INVESTMENTS. The Fund may invest in small capitalization companies,
which may offer greater opportunities for growth of capital than investments
in larger, more established companies. However, investing in smaller, newer
issuers generally involves greater risks than investing in larger, more
established issuers. Companies in which the Fund is likely to invest may have
limited product lines, markets or financial resources and may lack management
depth. The securities issued by such companies may have limited marketability
and may be subject to more abrupt or erratic market movements than securities
of larger, more established companies or the market averages in general. In
addition, many small capitalization companies may be in the early stages of
development. Accordingly, an investment in the Fund may not be appropriate for
all investors.

INVESTMENT RESTRICTIONS

The investment restrictions set forth below have been adopted by the Fund as
fundamental policies, to limit certain risks that may result from investment
in specific types of securities or from engaging in certain kinds of
transactions addressed by such restrictions. They may not be changed without
the affirmative vote of the holders of a majority of the outstanding voting
securities of the Fund. Certain of these policies are detailed below, while
other policies are set forth in the Statement of Additional Information.
Changes in values of particular Fund assets or the assets of the Fund as a
whole will not cause a violation of the investment restrictions so long as
percentage restrictions are observed by the Fund at the time it purchases any
security.

The investment restrictions specifically provide that the Fund will not:

(a) as to 75% of the Fund's total assets, invest more than 5% of
its total assets in the securities of any one issuer. (This
limitation does not apply to cash and cash items, or obligations
issued or guaranteed by the United States 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");

Page 8
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(f) invest in securities of any company if, any officer or
trustee of the Fund or the Advisor owns more than 0.5% of the
outstanding securities of such company and such officers and
trustees (who own more than 0.5%) in the aggregate own more than
5% of the outstanding securities of such company;

(g) borrow money, except the Fund may borrow from banks (i) for
temporary or emergency purposes in an amount not exceeding 5% of
the Fund's assets or (ii) to meet redemption requests that might
otherwise require the untimely disposition of portfolio
securities, in an amount up to 33 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% 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.

SHARES OF BENEFICIAL INTEREST

The beneficial interest of the Fund is divided into an unlimited number of
shares ("Shares") with a par value of $0.001 each. Each Share has equal
dividend, voting, liquidation and redemption rights. If a matter to be voted
on does not affect the interests of all classes, then only the shareholders of
the affected class shall be entitled to vote on the matter. There are no
conversion or preemptive rights. Shares, when issued, will be fully paid and
nonassessable. Fractional shares have proportional voting rights. Shares of
the Fund do not have cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of trustees can elect all
of the trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any person to the Board of
Trustees.

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES
The members of the Fund's Board of Trustees are fiduciaries for the Fund's
shareholders and are governed by the laws of the State of Delaware in this
regard. They establish policy for the operation of the Fund and appoint the
officers who conduct the daily business of the Fund. The Statement of
Additional Information contains more information regarding Officers and
Trustees.

INVESTMENT ADVISOR
Timothy Partners, Ltd. (the "Advisor") is a Florida limited partnership
organized on December 6, 1993. The Advisor supervises the investment of the
assets of the Fund in accordance with the objectives, policies and
restrictions of the Fund. The Advisor approves the portfolio of securities
selected by the Investment Manager (See "Investment Manager" below). To
determine which securities are Excluded Securities with respect to abortion
and pornography, the Advisor consults with three Christian ministries on these
issues: The American Family Association (pornography), Pro Vita Advisors
(direct and indirect participation and involvement in abortion) and Life
Decisions International (indirect participation in abortion through corporate
funding programs). The Advisor retains the right to change the ministries
whose information it reviews, at its discretion.

For its services, the Advisor is paid an annual fee equal to 0.85% of the
Fund's average daily net assets. This fee is subject to certain voluntary
reductions in fees paid by the Fund. A portion of the advisory fee is paid by
the Advisor to: (i) the Investment Manager for assisting in the selection of
portfolio securities for the Fund

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<PAGE>

and (ii) Covenant Financial Management ("CFM") as reimbursement for certain
expenses related to the daily operations of the Fund performed by CFM. In
addition, this fee also covers the cost of postage, materials and handling of
the fulfillment function of processing Prospectus requests as well as other
sundry marketing and general administration expenses. The fee payable to and
services provided by the Investment Manager are described under the heading
"Investment Manager" below. The fee payable to and services provided by CFM
are described at the end of this section. The Advisor's fee is higher than
that charged by other funds, but is comparable to fees charged by funds with
similar investment objectives. The Advisor has offices located at 1304 West
Fairbanks Avenue, Winter Park, FL 32789.

Arthur D. Ally, the President, Chairman and Trustee of the Fund, is President
and a 70% shareholder of Covenant Funds, Inc. ("Covenant"), located at 1304
West Fairbanks Avenue, Winter Park, FL 32789, which is the managing general
partner of the Advisor. Mr. Ally is also an individual general partner of the
Advisor. Neither the Advisor nor its managing general partners previously has
served as an advisor to any other registered investment company but the
Advisor has served as investment advisor exclusively to the Fund since the
Fund's commencement of operations (March 21, 1994). Prior thereto, Mr. Ally
had extensive securities industry experience having served as either financial
consultant or branch manager for three securities firms over the previous
seventeen years: Prudential Bache, Shearson Lehman Brothers and Investment
Management & Research. Some or all of these firms may be used by the
Investment Manager to execute portfolio trades for the Fund. Neither Mr. Ally
nor any affiliated person to the Fund will receive any benefit from any of
these transactions.

The Advisor and CFM have entered into an agreement dated February 23, 1994, as
amended April 23, 1996, whereby the Advisor pays CFM for certain overhead
expenses related to the daily operations of the Fund that CFM carries out.
These expenses include: salary of administrative personnel, cost of
preparation of shareholder fulfillment kits, cost of phone lines and office
space, and cost of postage and supplies. The annual fee is an amount to cover
CFM's costs in providing services to the Advisor, payable by the Advisor on a
monthly basis. Both parties have agreed that no profits will accrue to CFM as
a result of this agreement.

Arthur D. Ally is President and 100% shareholder of CFM.

INVESTMENT MANAGER
- ------------------
Effective January 1, 1997 the Fund engaged a new investment manager Awad &
Associates (the "Investment Manager"), a division of Raymond James &
Associates, Inc., pursuant to a new sub-investment advisory agreement among
the Fund, Timothy Partners, Ltd. and Awad & Associates, which was approved by
the Board of Trustees at a meeting held on November 29, 1996 and by
shareholders of record on November 14, 1996 at a Special Meeting of
Shareholders held on January 31, 1997.

The Investment Manager has offices at 477 Madison Avenue, New York, New York
10022. The Investment Manager is a joint venture between James Awad, a twenty-
six year veteran of the investment management business, and Raymond James
Financial, a diversified financial services firm traded on the New York Stock
Exchange. The Investment Manager has been retained by the Advisor pursuant to
a sub-advisory agreement to assist in the selection and management of the
Fund's investment securities and prepare the portfolio of securities of
selected issuers with business practices that meet the objectives and policies
of the Fund. The Advisor reviews the portfolio to insure compliance with the
Fund's ethical standards.

The Investment Manager's investment policy committee, comprised of James Awad,
Dan Veru and Carol Egan, is responsible for the day-to-day management of the
Fund's portfolio. James Awad is the senior investment officer of the
Investment Manager. Mr. Awad has been in the investment business since 1965,
focusing on research and portfolio management. Prior to forming Awad &
Associates, he was President of BMI Capital, a successful money management
firm he founded. In addition, Mr. Awad managed assets at Neuberger & Berman,
Channing Management and First Investment Corp. The Investment Manager managed
approximately $575 million in assets at December 31, 1996 for clients on a
separate account basis utilizing the same investment methodology that it will
employ for the Fund.

Page 10
<PAGE>

The Investment Manager places portfolio transactions for the Fund. In this
regard, the Investment Manager will be governed by the policies set forth
under "Investment Objectives and Policies".

For its services, the Investment Manager is paid an annual fee by the Advisor
equal to 0.42% of the average daily net assets of the Fund with respect to the
first $10 million in assets; 0.40% of the next $5 million in assets; 0.35% of
the next $10 million in assets; and 0.25% of assets over $25 million.

Awad & Associates currently serves as co-investment advisor to one other
investment company: Heritage Small Cap Fund. At January 1, 1996, Awad &
Associates managed $70 million in net assets of Heritage Small Cap Fund and
received an advisory fee of 0.50% of its average daily net assets with respect
to the first $50 million in assets and 37.5% thereafter.

INVESTMENT MANAGER'S HISTORICAL PERFORMANCE
Set forth below are certain performance data provided by the Investment
Manager relating to the composite of separately managed equity accounts of
clients of the Investment Manager. These accounts have substantially similar
investment objectives and policies as the Fund's and they are managed using
substantially similar investment strategies and techniques as those
contemplated by the Fund. It is important to note that these returns do not
take into account the effects of the Fund's moral screening restrictions. 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 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.

These performance figures include the results carried over from a previous
firm, BMI Capital, for the period from 1/1/82 through 9/30/92. These results
are shown net of management fees and commissions. The results presented from
10/1/92 forward represent only those accounts managed by Awad & Associates
through Raymond James & Associates, and these results are shown net of an
assumed management fee of 0.5% (50 basis points). These figures are a time-
weighted average for the entire period, all of which would not be duplicated
in any individual account and would not necessarily result in the same return
for the investors. Further, the separately managed accounts are not subject to
investment limitations, diversification requirements, and other restrictions
imposed by the Investment Company Act of 1940, as amended and the Internal
Revenue Code; such conditions, if applicable, may have lowered the returns for
the separately managed accounts. The performance presented does not represent
the historical performance of the Fund and is not indicative of the Fund's
future performance.

<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%
</TABLE>

Page 11
<PAGE>

<TABLE>
<CAPTION>
ANNUALIZED RETURNS THROUGH DECEMBER 31, 1996
- --------------------------------------------
<S> <C> <C>
One Year 15.9% 23.0%
Three Years 20.3% 19.7%
Five Years 17.1% 15.2%
Ten Years 13.3% 15.3%
</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 cumulative return means that one dollar invested in the
composite account on January 1, 1982 had grown to $9.51 by December 31,
1996.

3: The 15-year mean is the arithmetic average of the annual returns for
the calendar years listed.

4: The S&P Index is an unmanaged index which assumes reinvestment of
dividends and is generally considered representative of securities
similar to those invested in by the Investment Manager for the purpose
of the composite performance numbers set forth above.

5: The Investment Manager's average annual management fee while at BMI
Capital over the period 1/1/82--9/30/92 was 1% or 100 basis points.
During this period, fees on the Investment Manager's individual
accounts ranged from 0.5% to 1% (50 basis points to 100 basis points).

6: The past performance returns reported in the preceding table for the
period 10/1/92--1/31/97 (following the establishment of Awad &
Associates as a division of Raymond James & Associates) were based on a
universe of "wrap fee" accounts managed for various broker/dealers
which are coordinated through Raymond James & Associates. The total
value of these accounts at 1/31/97 was approximately $150 million out
of a total client base of $625 million. This universe was selected due
to the commonality of structure and management fees among these clients
as well as the similarity of investment strategies and objectives to
those of the Fund. The average wrap fee is 2.5% annually (which
includes all management fees and commissions of Raymond James &
Associates). The performance figures reported are net of those wrap
fees.

UNDERWRITER
FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, King of Prussia, PA
19406-0903, was engaged pursuant to an agreement dated January 19, 1994, as
amended February 23, 1996. The purpose of acting as underwriter is to
facilitate the registration of shares of the Fund under state securities laws
and to assist in the sale of shares. The fee for such services is borne by the
Advisor.

PLAN OF DISTRIBUTION
The Fund has adopted a plan pursuant to Rule 12b-1 (the "12b-1 Plan") under
the Investment Company Act of 1940, as amended, whereby it may reimburse FPSB
or others for expenses actually incurred by FPSB or others in the promotion
and distribution of the Fund's Institutional Class shares. These expenses
include, but are not limited to, the printing of prospectuses and reports used
for sales purposes, the preparation of sales literature and related expenses,
advertisements, and other distribution-related expenses, including payments to
securities dealers and others participating in the sale and servicing of
Institutional Class shares, including payment for providing personal services
and/or maintaining shareholder accounts. The maximum amount which the Fund may
pay to FPSB and others (and which FPSB may re-allow to securities dealers and
others participating in the sale of shares) for such distribution expenses is
0.25% per annum of the Fund's average daily net assets payable on a monthly
basis. All expenses of distribution and marketing in excess of 0.25% per annum
will be borne by the Advisor. The 12b-1 Plan also covers any payments made by
the Fund, the Advisor, the Investment Manager,

Page 12
<PAGE>

FPSB, or other parties on behalf of the Fund, the Advisor, the Investment
Manager, or FPSB, to the extent such payments are deemed to be for the
financing of any activity primarily intended to result in the sale of shares
issued by the Fund within the context of Rule 12b-1.

ADMINISTRATOR
- -------------
FPS Services, Inc. ("FPS"), 3200 Horizon Drive, King of Prussia, PA 19406-
0903, is the Fund's administrator pursuant to an Administration Services
Agreement (the "Agreement") with the Fund dated January 19, 1994, as amended
February 23, 1996. Under the Agreement, FPS receives a fee at the annual rate
of 0.15% of the first $50 million in average net assets of the Fund, 0.10% of
the next $50 million in average net assets and 0.05% of average net assets
over $100 million. There is a minimum fee of $50,000 per year for the initial
series/class issued by the Fund and $12, 000 per year for each additional
series or class of shares.

The services FPS provides to the Fund include: considering and monitoring of
any third parties furnishing services to the Fund; providing the necessary
office space, equipment and personnel to perform administrative and clerical
functions for the Fund; preparing, filing and distributing proxy materials,
periodic reports to shareholders, registration statements, and other
documents; and responding to shareholder inquiries.

CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT
- -----------------------------------------------------------
The Bank of New York, 48 Wall Street, New York, New York 10286, is custodian
for the securities and cash of the Fund.

FPS serves as the Fund's transfer agent. As transfer agent, it maintains the
records of each shareholder's account, answers shareholder inquiries
concerning accounts, processes purchases and redemptions of the Fund's shares,
acts as dividend and distribution disbursing agent, and performs other
shareholder service functions. Shareholder inquiries should be directed to the
transfer agent at (800) 662-0201.

FPS also performs certain accounting and pricing services for the Fund. This
includes the daily calculation of the Fund's net asset value.

EXPENSES
- --------
Except as indicated above, the Fund is responsible for the payment of its
expenses, other than those borne by the Advisor. These expenses may include,
but are not limited to: (a) management fees; (b) the charges and expenses of
the Fund's legal counsel and independent accountants; (c) brokers'
commissions, mark-ups and mark-downs and any issue or transfer taxes
chargeable to the Fund in connection with its securities transactions; (d) all
taxes and corporate fees payable by the Fund to governmental agencies; (e) the
fees of any trade association of which the Fund is a member; (f) the cost of
stock certificates, if any, representing shares of the Fund; (g) amortization
and reimbursements of the organization expenses of the Fund and the fees and
expenses involved in registering and maintaining registration of the Fund and
its shares with the U.S. Securities and Exchange Commission, and the
preparation and printing of the Fund's registration statements and
prospectuses for such purposes; (h) allocable communications expenses with
respect to investor services and all expenses of shareholders and trustee
meetings and of preparing, printing and mailing prospectuses and reports to
shareholders; (i) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business; (j) state filing fees; and (k) compensation for employees of the
Fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund will declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the year
from its investments, and the Fund will distribute net realized capital gains,
if any, once with respect to each year. Expenses of the Fund, including the
advisory fee, are accrued each day. Reinvestments of dividends and
distributions in additional shares of the Fund will be made at the net asset
value determined on the ex date of the dividend or distribution unless the
shareholder has elected in writing to receive dividends or distributions in
cash. An election may be changed by notifying FPS in writing thirty days prior
to record date.

Page 13
<PAGE>

Dividends paid by the Fund with respect to its Institutional Class and Retail
Class shares are calculated in the same manner and at the same time. Both
Institutional Class and Retail Class shares of the Fund will share
proportionately in the investment income and expenses of the Fund, except that
the per share dividends of Retail Class shares will differ from the per share
dividends of Institutional Class shares as a result of additional distribution
expenses charged to Retail Class shares.

As the sole series of The Timothy Plan, the Fund has qualified, and intends to
continue to qualify, as a regulated investment company under Subchapter M of
the Internal Revenue Code (the "Code"). As such, the Fund will not be subject
to federal income tax, or to any excise tax, to the extent its earnings are
distributed in accordance with the timing requirements imposed by the Code and
by meeting certain other requirements relating to the sources of its income
and diversification of its assets.

The Fund intends to distribute substantially all of its net investment income
and net capital gains. Dividends from net investment income or net short-term
capital gains will be taxable to you as ordinary income, whether received in
cash or in additional shares. Dividends from net investment income will
generally qualify, in part, for the 70% corporate dividends received
deduction, subject to certain holding period and debt financing restrictions
imposed under the Code on the corporate investor claiming the deduction. The
portion of the dividends so qualified depends on the aggregate qualifying
dividend income received by the Fund from domestic (U.S.) sources.

Distributions paid by the Fund from long-term capital gains, whether received
in cash or in additional shares, are taxable to those investors who are
subject to income tax as long-term capital gains, regardless of the length of
time an investor has owned shares in the Fund. The Fund does not seek to
realize any particular amount of capital gains during a year; rather, realized
gains are a byproduct of Fund management activities. Consequently, capital
gains distributions may be expected to vary considerably from year to year.
Also, for those investors subject to tax, if purchases of shares in the Fund
are made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution.

Dividends which are declared in October, November or December to shareholders
of record in such a month but which, for operational reasons, may not be paid
to the shareholder until the following January, will be treated for tax
purposes as if paid by the Fund and received by the shareholder on December 31
of the calendar year in which they are declared.

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.

Page 14
<PAGE>

DETERMINATION OF NET ASSET VALUE

The net asset value per Fund share is determined by the Fund as of the close
of regular trading on each day that the New York Stock Exchange (the "NYSE")
is open for unrestricted trading from Monday through Friday and on which there
is a purchase or redemption of the Fund's share. The net asset value is
determined by the Fund by dividing the value of the Fund's securities, plus
any cash and other assets, less all liabilities, by the number of shares
outstanding. Expenses and fees of the Fund, including the advisory and the
distributor fees, are accrued daily and taken into account for the purpose of
determining the net asset value.

Fund securities listed or traded on a securities exchange for which
representative market quotations are available will be valued at the last
quoted sales price on the security's principal exchange on that day. Listed
securities not traded on an exchange that day, and other securities which are
traded in the over-the-counter market, will be valued at the last reported bid
price in the market on that day, if any. Securities for which market
quotations are not readily available and all other assets will be valued at
their respective fair market value as determined in good faith by, or under
procedures established by, the Board of Trustees. In determining fair value,
the Trustees may employ an independent pricing service.

Money market securities with less than sixty days remaining to maturity when
acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
money market security with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity,
and will then be valued on an amortized cost basis based upon the value on
such date unless the Trustees determine during such 60 day period that this
amortized cost value does not represent fair market value.

Net asset value is calculated separately for each class of the Fund based on
expenses applicable to the particular class. Although the methodology and
procedures for determining net asset value are identical for the Fund's
classes, the net asset value of the classes may differ because of the
different fees and expenses charged to each class.

HOW TO PURCHASE SHARES

Shares of the Fund may be purchased directly from the Fund at the net asset
value next determined after receipt of the order in proper form by the
transfer agent. There is no sales load in connection with the purchase of
shares. The Fund reserves the right to reject any purchase order and to
suspend the offering of shares of the Fund. The Fund will not accept a check
endorsed over by a third-party. The minimum initial investment is $25,000,
with no minimum subsequent investment. The Fund reserves the right to vary the
initial investment minimum and minimums for additional investments at any
time. There is no minimum investment requirement for qualified retirement
plans.

At the discretion of the Fund, investors may be permitted to purchase Fund
shares by transferring securities to the Fund that meet the Fund's investment
objectives and policies. Securities transferred to the Fund will be valued in
accordance with the same procedures used to determine the Fund's net asset
value at the time of the next determination of net asset value after such
acceptance. Shares issued by the Fund in exchange for securities will be
issued at net asset value determined as of the same time. All dividends,
interest, subscription, or other rights pertaining to such securities shall
become the property of the Fund and must be delivered to the Fund by the
investor upon receipt from the issuer. Investors who are permitted to transfer
such securities will be required to recognize a gain or loss on such transfer,
and pay tax thereon, if applicable, measured by the difference between the
fair market value of the securities and the investors' basis therein.
Securities will not be accepted in exchange for shares of the Fund unless: (l)
such securities are, at the time of the exchange, eligible to be included in
the Fund and current market quotations are readily available for such
securities; (2) the investor represents and warrants that all securities
offered to be exchanged are not subject to any restrictions upon their sale by
the Fund under the Securities Act of 1933 or under the laws of the country in
which the principal market for such

Page 15
<PAGE>

securities exists, or otherwise and (3) the value of any such security (except
U.S. Government securities) being exchanged together with other securities of
the same issuer owned by the Fund, will not exceed 5% of the Fund's net assets
immediately after the transaction.

Purchase orders for shares of the Fund which are received by the transfer
agent in proper form prior to the close of regular trading hours on the NYSE
(currently 4:00 p.m. Eastern time) on any day that the Fund calculates its net
asset value, are priced according to the net asset value determined on that
day. Purchase orders for shares of the Fund received after the close of the
NYSE on a particular day are priced as of the time the net asset value per
share is next determined.

Purchases may be made in one of the following ways:

PURCHASES BY MAIL
Shares may be purchased initially by completing the Investment Application on
pages 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 payable in U.S.
dollars.

Subsequent investments in an existing account in the Fund may be made at any
time by sending a check payable to The Timothy Plan, c/o United Missouri Bank
KC, NA, P.O. Box 412797, Kansas City, MO 64141-2797. Please enclose the stub
of your account statement along with the amount of the investment and the name
of the account for which the investment is to be made and the account number.
Please note: A $20 fee will be charged to your account for any payment check
returned to the custodian.

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. Such fees would not otherwise be charged if the
shares were purchased directly from the Fund.

PURCHASES BY WIRE
To order shares for purchase by wiring federal funds, the transfer agent must
first be notified by calling (800) 662-0201 to request an account number and
furnish the Fund with your tax identification number. Following notification
to the transfer agent, federal funds and registration instructions should be
wired through the Federal Reserve System to:

UNITED MISSOURI BANK KC NA
ABA #10-10-00695
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
FBO "THE TIMOTHY PLAN--INSTITUTIONAL CLASS"
ACCOUNT OF (exact name(s) of account registration)
SHAREHOLDER ACCOUNT #

A completed application with signature(s) of registrant(s) must be filed
with the transfer agent immediately subsequent to the initial wire. Investors
should be aware that some banks may impose a wire service fee. Shareholders
may be subject to 31% withholding if original application is not received.

Page 16
<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 at
(800) 662-0201.

HOW TO REDEEM SHARES

Shareholders may redeem their shares of the Fund without charge on any
business day that the NYSE is open (see "Determination of Net Asset Value").
Redemptions will be effective at the net asset value per share next determined
after the receipt by the transfer agent of a redemption request meeting the
requirements described below. The Fund normally sends redemption proceeds on
the next business day, but in any event redemption proceeds are sent within
seven calendar days of receipt of a redemption request in proper form. Payment
may also be made by wire directly to any bank previously designated by the
shareholder in a shareholder account application. There is a $9.00 charge for
redemptions by wire. Please note that the shareholder's bank also may impose a
fee for wire service. The Fund will honor redemption requests of shareholders
who recently purchased shares by check, but will not mail the proceeds until
it is reasonably satisfied that the purchase check has cleared, which may take
up to fifteen days from the purchase date, at which time the redemption
proceeds will be mailed to the shareholder. To avoid delays of this kind, you
may wish to purchase by wire if you are planning on redeeming your shares in
the near future.

Except as noted below, redemption requests received in proper form by the
transfer agent prior to the close of regular trading hours on the NYSE on any
business day that the Fund calculates its per share net asset value are
effective that day.

Redemption requests received after the close of the NYSE are effective as of
the time the net asset value per share is next determined.

The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Advisor or
the Board of Trustees, result in the necessity of the Fund selling assets
under disadvantageous conditions and to the detriment of the remaining
shareholders of the Fund.

Pursuant to the Fund's Agreement and Declaration of Trust, payment for shares
redeemed may be made either in cash or in-kind, or partly in cash and partly
in-kind. However, the Fund has elected, pursuant to Rule 18f-1 under the Act,
to redeem its shares solely in cash up to the lesser of $250,000 or 1% of the
net asset value of the Fund, during any 90 day period for any one shareholder.
Payments in excess of this limit will also be made wholly in cash unless the
Board of Trustees believes that economic conditions exist which would make
such a practice detrimental to the best interests of the Fund. Any portfolio
securities paid or distributed in-kind would be valued as described under
"Determination of Net Asset Value." In the event that an in-kind distribution
is made, a shareholder may incur additional expenses, such as the payment of
brokerage commissions, on the sale or other disposition of the securities
received from the Fund. In-kind payments need not constitute a cross-section
of the Fund's portfolio. Where a shareholder has requested redemption of all
or a part of the shareholder's investment, and where the Fund completes such
redemption in-kind, the Fund will not recognize gain or loss for federal tax
purposes, on the securities used to complete the redemption but the
shareholder will recognize gain or loss equal to the difference between the
fair market value of the securities received and the shareholder's basis in
the Fund shares redeemed. Shares may be redeemed in one of the following ways:

Page 17
<PAGE>

REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to the
transfer agent at 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA
19406-0903.

A written redemption request to the transfer agent must: (i) identify the
shareholder's account number, (ii) state the number of shares or dollars to be
redeemed and (iii) be signed by each registered owner exactly as the shares
are registered. A redemption request for amounts above $25,000, or redemption
requests for which proceeds are to be mailed somewhere other than the address
of record, must be accompanied by signature guarantees. Signatures must be
guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations. Broker-dealers guaranteeing signatures must be members of a
clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees. Signature guarantees
will be accepted from any eligible guarantor institution which participates in
a signature guarantee program. The transfer agent may require additional
supporting documents for redemptions made by corporations, executors,
administrators, trustees and guardians.

A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. Questions with
respect to the proper form for redemption requests should be directed to the
transfer agent at (800) 662-0201.

REDEMPTION BY TELEPHONE
Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by instructing the transfer
agent by telephone. In order to arrange for redemption by wire or telephone
after an account has been opened, or to change the bank or account designated
to receive redemption proceeds, a written request must be sent to the transfer
agent at the address listed above.

Neither the Fund nor any of its service contractors will be liable for any
loss or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions
are genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, his or her banking
institution, bank account number and the name in which his or her bank account
is registered. To the extent that the Fund fails to use reasonable procedures
to verify the genuineness of telephone instructions, it and/or its service
contractors may be liable for any such instructions that prove to be
fraudulent or unauthorized.

The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time by the Fund.

SYSTEMATIC CASH WITHDRAWAL PLAN
The Fund offers a Systematic Cash Withdrawal Plan as another option which may
be utilized by an investor who wishes to withdraw funds from his or her
account on a regular basis. To participate in this option, an investor must
either own or purchase shares having a value of $25,000 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.

Page 18
<PAGE>

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 $25,000.

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 United States Securities and Exchange Commission. Such securities will
be valued on the basis of the procedures used to determine the net asset value
at the time of the redemption. If shares are redeemed in kind, the redeeming
shareholder will incur brokerage costs in converting the assets into cash.

RETIREMENT PLANS

The Fund offers its shares for use in certain Tax Deferred (such as IRA,
defined contribution, 401(k) and 403(b)(7) plans) Retirement Plans. The Fund
sponsors IRA and 403(b)(7) plans. Information on these Plans is available from
FPS or by reviewing the Statement of Additional Information.

PERFORMANCE

Total return data may from time to time be included in advertisements about
the Fund. The Fund's total return may be calculated on an annualized and
aggregate basis for various periods (which periods will be stated in the
advertisement). Average annual return reflects the average percentage change
per year in value of an investment in the Fund. Aggregate total return
reflects the total percentage change over the stated period.

The Fund may compare its investment performance with appropriate market
indices such as the S&P Index and to appropriate mutual fund indices; and the
Fund may advertise its ranking compared to other similar mutual funds as
reported by industry analysts such as Lipper Analytical Services, Inc.

All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based
on many factors, including market conditions, the composition of the
investments in the Fund, and the Fund's operating expenses. Investment
performance also often reflects the risk associated with the Fund's investment
objectives and policies. These factors should be considered when comparing the
Fund to other mutual funds and other investment vehicles.

Further information about the performance of the Fund is included in the
Fund's Annual Report, dated December 31, 1996, which may be obtained without
charge by contacting the Fund at (800) TIM-PLAN.

Page 19
<PAGE>

INVESTMENT ADVISOR
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789

INVESTMENT MANAGER
Awad & Associates
477 Madison Avenue
New York, New York 10022

UNDERWRITER
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406

SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406

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
<PAGE>

PROSPECTUS FOR

THE TIMOTHY PLAN

RETAIL CLASS

APRIL 29, 1997

- -------------------------------------------------------------------------------

Distributed By:
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
(800) 441-6580

- -------------------------------------------------------------------------------

The Timothy Plan (the "Fund") is a low level load, open-end diversified
management investment company. It was organized as a series Delaware business
trust and currently offers shares of one series, which has specific investment
objectives. There is no assurance that the Fund's objectives will be achieved.

The Fund currently offers two classes of shares: Institutional Class and
Retail Class. This Prospectus pertains only to the Fund's Retail Class shares
which have a front-end sales charge and are subject to annual 12b-1 Plan
expenses. Shareholders, who purchase larger amounts than the initial
investment requirement, may qualify for a reduced sales charge at the time of
purchase. (See "How to Purchase Shares"). The Institutional Class is offered
in a separate prospectus which can be obtained by calling (800) TIM-PLAN.

The shares of the Fund may be purchased or redeemed at any time. Purchases
will be effected at the net asset value, plus the applicable sales charge,
next determined following receipt of the investor's request. (See
"Determination of Net Asset Value," "How to Purchase Shares," and "How to
Redeem Shares").

This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read and
retain this Prospectus for future reference.

More information about the Fund and classes of shares of the Fund has been
filed with the U.S. Securities and Exchange Commission, and is contained in
the "Statement of Additional Information," dated April 29, 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, 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).

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Expenses of the Fund....................................................... 3
Financial Highlights....................................................... 4
The Fund................................................................... 5
Investment Objectives and Policies......................................... 5
Risk Factors............................................................... 6
Investment Restrictions.................................................... 8
Shares of Beneficial Interest.............................................. 9
Management of the Fund..................................................... 9
Board of Trustees......................................................... 9
Investment Advisor........................................................ 9
Investment Manager........................................................ 10
Historical Performance of the Investment Manager.......................... 11
Underwriter............................................................... 12
Plan of Distribution...................................................... 12
Administrator............................................................. 13
Custodian, Transfer Agent and Fund Accounting/Pricing Agent............... 13
Expenses.................................................................. 13
Dividends, Distributions and Taxes......................................... 13
Determination of Net Asset Value........................................... 15
How to Purchase Shares..................................................... 15
How to Redeem Shares....................................................... 18
Retirement Plans........................................................... 20
Performance................................................................ 20
Investment Application..................................................... 22
Automatic Investment Plan Application...................................... 24
Application to Request to Transfer to The Timothy Plan..................... 26
</TABLE>

Page 2
<PAGE>

EXPENSES OF THE FUND

The following table illustrates all estimated expenses and fees that a
shareholder of the Fund's Retail Class will incur.

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)............................................................... 1.75%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price)...................................................... none
Redemption Fees....................................................... none/1/
</TABLE>

ANNUAL OPERATING EXPENSES OF THE RETAIL CLASS*
(as a percentage of average net assets)

<TABLE>
<S> <C>
Management and Advisory Expenses After Expense Reimbursements.......... 0.00%
12b-1 Fees............................................................. 0.85%/2/
Other Expenses After Expense Reimbursements............................ 1.35%
----
Total Operating Costs After Expense Reimbursements..................... 2.20%
====
</TABLE>

The purpose of this table is to assist the investor in understanding the
various expenses that an investor in the Retail Class will bear directly or
indirectly. The Advisor has voluntarily agreed to waive its fees, so that the
Retail Class' total annual operating expenses will never exceed 2.20% of the
daily average net assets. Further, the Advisor has agreed to reimburse the
Retail Class for its other expenses so that the Retail Class' total annual
expenses will never exceed 2.20%. Absent the fee waiver and expense
reimbursements, "Management and Advisory Expenses After Expense
Reimbursements" would have been 0.85% and "Other Expenses After Expense
Reimbursements" would have been 3.45% for the fiscal year ended December 31,
1996.

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C>
$39 $85 $133 $266
</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 Retail Class shares are subject to a sales charge
and each class is subject to a different 12b-1 Plan, therefore, expenses and
performance figures will vary between the classes. The information set forth
in the foregoing tables and example relates only to the Retail Class shares.
The rules of the U.S. Securities and Exchange Commission require that the
maximum sales charge be reflected in the above table. However, certain
investors may qualify for a reduced sales charge. See "How to Purchase
Shares." Further information about Institutional Class shares may be obtained
by calling (800) TIM-PLAN.
- -------------------------------------------------------------------------------

/1/United Missouri Bank KC NA charges $9.00 per redemption for redemptions
payable by wire.

/2/For purposes of this table, "12b-1 Fees" are comprised of an asset-based
12b-1 fee up to a maximum of 0.85% of average daily net assets, of which,
up to 0.25% may be service fees to be paid to FPS Broker Services, Inc.,
dealers and others, for providing personal service and/or maintaining
shareholder accounts. Long-term holders of Retail Class shares may
eventually pay more than the economic equivalent of the maximum front-end
sales charges otherwise permitted by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.

* The table reflects the expenses the Fund's Retail Class incurred during the
fiscal year ended December 31, 1996.

Page 3
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights were derived from the Fund's financial
statements related to the Retail Class 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.

<TABLE>
<CAPTION>
RETAIL SHARES
------------------------------
FOR THE YEAR FOR THE PERIOD
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995*
------------ --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 10.08 $10.49
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................ 0.7 0.11
Net gains (losses) on securities (both real-
ized and unrealized)........................ 1.14 (0.16)
------- ------
Total from investment operations........... 1.21 (0.05)
======= ======
LESS DISTRIBUTIONS
Distributions from net investment income:
Institutional Shares........................ 0.00 0.00
Retail Shares............................... (0.07) (0.11)
Distributions from net capital gains:
Institutional Shares........................ 0.00 0.00
Retail Shares............................... 0.00 (0.25)
------- ------
Total distributions........................ (0.07) (0.36)
======= ======
NET ASSET VALUE, END OF PERIOD............... $ 11.22 $10.08
TOTAL RETURN................................. 11.98% /1/ (0.46%) /1/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)......... $ 3,929 $ 620
Ratio of expenses to average net assets:
Before expense reimbursement................ 4.30% 6.44% /2/
After expense reimbursement................. 2.20% 2.20% /2/
Ratio of net investment income to average net
assets:
Before expense reimbursement................ (1.65)% (3.56)% /2/
After expense reimbursement................. 0.45% 0.68% /2/
Portfolio turnover rate...................... 93.08% 34.12%
Average commission rate paid................. $0.0593 N/R /3/
</TABLE>
- -------------------------------------------------------------------------------

*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 4
<PAGE>

THE FUND

The Timothy Plan (the "Fund") is a low level load, open-end, diversified
management investment company commonly known as a mutual fund. The Fund was
established as a series Delaware business trust on December 16, 1993. The Fund
currently offers one series with two classes of shares: Institutional Class
and Retail Class. This Prospectus pertains only to Retail Class shares.

INVESTMENT OBJECTIVES AND POLICIES

Page 5
<PAGE>

RISK FACTORS

RISKS OF CERTAIN FIXED INCOME SECURITIES

Page 6
<PAGE>

interest rates produces an increase in market value, while an increase in
rates produces a decrease in market value. Moreover, the longer the remaining
maturity of a security, the greater the effect of interest rate changes on the
market value of such a security. In addition, changes in an issuer's ability
to make payments of interest and principal and in the market's perception of
an issuer's creditworthiness also affect the market value of the debt
securities of that issuer.

Page 7
<PAGE>

At no time will the Fund invest in repurchase agreements of more than sixty
days. The securities which are collateral for the repurchase agreements,
however, may have maturity dates in excess of sixty days from the effective
date of the repurchase agreement. The Fund will always receive, as collateral,
securities whose market value, including accrued interest, will at least equal
102% of the dollar amount to be paid to the Fund under each agreement at its
maturity, and the Fund will make payment for such securities only upon
physical delivery or evidence of book entry transfer to the account of the
Custodian. If the seller defaults, the Fund might incur a loss if the value of
the collateral securing the repurchase agreement declines, and might incur
disposition costs in connection with liquidation of the collateral. In
addition, if bankruptcy proceedings are commenced with respect to the seller
of the security, collection of the collateral by the Fund may be delayed or
limited. The Fund also may not be able to substantiate its interests in the
underlying securities. While management of the Fund acknowledges these risks,
it is expected that such risks can be controlled through stringent security
selection and careful monitoring procedures. The Fund may not enter into a
repurchase agreement with more than seven days to maturity if, as a result,
more than 10% of the market value of the Fund's net assets would be invested
in such repurchase agreements and any other illiquid assets. For purposes of
the diversification test for qualification as a regulated investment company
under the Internal Revenue Code, Repurchase Agreements are not counted as
cash, cash items or receivables, but rather as securities issued by the
counter-party to the Repurchase Agreements.

INVESTMENT RESTRICTIONS

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);

(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;

Page 8
<PAGE>

SHARES OF BENEFICIAL INTEREST

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES
- -----------------

The members of the Fund's Board of Trustees are fiduciaries for the Fund's
shareholders and are governed by the laws of the State of Delaware in this
regard. They establish policy for the operation of the Fund and appoint the
officers who conduct the daily business of the Fund. The Statement of
Additional Information contains more information regarding Officers and
Trustees.

INVESTMENT ADVISOR
- ------------------

Timothy Partners, Ltd. (the "Advisor") is a Florida limited partnership
organized on December 6, 1993. The Advisor supervises the investment of the
assets of the Fund in accordance with the objectives, policies and
restrictions of the Fund. The Advisor approves the portfolio of securities
selected by the Investment Manager (See "Investment Manager" below). To
determine which securities are Excluded Securities with respect to abortion
and pornography, the Advisor consults with three Christian ministries on these
issues: The American Family Association (pornography), Pro Vita Advisors
(direct and indirect participation and involvement in abortion) and Life
Decisions International (indirect participation in abortion through corporate
funding programs). The Advisor retains the right to change the ministries
whose information it reviews, at its discretion.

Page 9
<PAGE>

Advisor to: (i) the Investment Manager for assisting in the selection of
portfolio securities for the Fund and (ii) Covenant Financial Management
("CFM") as reimbursement for certain expenses related to the daily operations
of the Fund performed by CFM. In addition, this fee also covers the cost of
postage, materials and handling of the fulfillment function of processing
Prospectus requests as well as other sundry marketing and general
administration expenses. The fee payable to and services provided by the
Investment Manager are described under the heading "Investment Manager" below.
The fee payable to and services provided by CFM are described at the end of
this section. The Advisor's fee is higher than that charged by other funds,
but is comparable to fees charged by funds with similar investment objectives.
The Advisor has offices located at 1304 West Fairbanks Avenue, Winter Park, FL
32789.

Arthur D. Ally, the President, Chairman and Trustee of the Fund, is President
and a 70% shareholder of Covenant Funds, Inc. ("Covenant"), located at 1304
West Fairbanks Avenue, Winter Park, FL 32789, which is the managing general
partner of the Advisor. Mr. Ally is also an individual general partner of the
Advisor. Neither the Advisor nor its managing general partners previously has
served as an advisor to any other registered investment company but the
Advisor has served as investment advisor exclusively to the Fund since the
Funds 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.

INVESTMENT MANAGER
- ------------------

Effective January 1, 1997 the Fund engaged a new investment manager Awad &
Associates (the "Investment Manager"), a division of Raymond James &
Associates, Inc., pursuant to a new sub-investment advisory agreement among
the Fund, Timothy Partners, Ltd. and Awad & Associates, which was approved by
the Board of Trustees at a meeting held on November 29, 1996 and by
shareholders of record on November 14, 1996 at a Special Meeting of
Shareholders held on January 31, 1997.

Page 10
<PAGE>

The Investment Manager places portfolio transactions for the Fund. In this
regard, the Investment Manager will be governed by the policies set forth
under "Investment Objectives and Policies".

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 Funds 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 Funds 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 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 11
<PAGE>

<TABLE>
<CAPTION>
COMPOSITE PAST PERFORMANCE OF PAST PERFORMANCE OF
THROUGH AWAD & ASSOCIATES AND BMI CAPITAL S&P 500
- ------- --------------------------------- -------------------
ANNUALIZED RETURNS THROUGH DECEMBER 31, 1996
<S> <C> <C>
One Year 15.9% 23.0%
Three Years 20.3% 19.7%
Five Years 17.1% 15.2%
Ten Years 13.3% 15.3%
</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 cumulative return means that one dollar invested in the composite
--
account on January 1, 1982 had grown to $9.51 by December 31, 1996.

3: The 15-year mean is the arithmetic average of the annual returns for the
--
calendar years listed.

4: The S&P Index is an unmanaged index which assumes reinvestment of
--
dividends and is generally considered representative of securities similar
to those invested in by the Investment Manager for the purpose of the
composite performance numbers set forth above.

5: The Investment Manager's average annual management fee while at BMI
--
Capital over the period 1/1/82--9/30/92 was 1% or 100 basis points. During
this period, fees on the Investment Manager's individual accounts ranged
from 0.5% to 1% (50 basis points to 100 basis points).

6: The past performance returns reported in the preceding table for the
--
period 10/1/92--1/31/97 (following the establishment of Awad & Associates
as a division of Raymond James & Associates) were based on a universe of
"wrap fee" accounts managed for various broker/dealers which are
coordinated through Raymond James & Associates. The total value of these
accounts at 1/31/97 was approximately $150 million out of a total client
base of $625 million. This universe was selected due to the commonality of
structure and management fees among these clients as well as the similarity
of investment strategies and objectives to those of the Fund. The average
wrap fee is 2.5% annually (which includes all management fees and
commissions of Raymond James & Associates). The performance figures
reported are net of those wrap fees.

UNDERWRITER
- -----------

FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, King of Prussia, PA
19406-0903, was engaged pursuant to an agreement dated January 19, 1994, as
amended February 23, 1996. The purpose of acting as underwriter is to
facilitate the registration of shares of the Fund under state securities laws
and to assist in the sale of shares. The fee for such services is borne by the
Advisor.

PLAN OF DISTRIBUTION
- --------------------

The Fund has adopted a plan pursuant to Rule 12b-1 (the "12b-1 Plan") under
the Investment Company Act of 1940, as amended, whereby it may reimburse FPSB
or others for expenses actually incurred by FPSB or others in the promotion
and distribution of the Fund's Retail Class shares. These expenses include,
but are not limited to, the printing of prospectuses and reports used for
sales purposes, the preparation of sales literature and related expenses,
advertisements, and other distribution-related expenses, including payments to
securities dealers and others participating in the sale and servicing of
Retail Class shares. The maximum amount which the Fund may pay to FPSB and
others (and which FPSB may re-allow to securities dealers and others
participating in the sale of shares) for such distribution expenses is 0.85%
per annum of the Fund's average daily net assets,

Page 12

<PAGE>

of which, up to 0.25% may be service fees to be paid to FPSB, dealers and
others, for providing personal services and/or maintaining shareholder
accounts, payable on a monthly basis. All expenses of distribution and
marketing in excess of 0.85% per annum will be borne by the Advisor and any
amounts paid for the above services will be paid pursuant to a servicing or
other agreement. The 12b-1 Plan also covers any payments made by the Fund, the
Advisor, the Investment Manager, FPSB, or other parties on behalf of the Fund,
the Advisor, the Investment Manager, or FPSB, to the extent such payments are
deemed to be for the financing of any activity primarily intended to result in
the sale of shares issued by the Fund within the context of Rule 12b-1.

ADMINISTRATOR
- -------------
FPS Services, Inc. ("FPS"), 3200 Horizon Drive, King of Prussia, PA 19406-
0903, is the Fund's administrator pursuant to an Administration Services
Agreement (the "Agreement") with the Fund dated January 19, 1994, as amended
February 23, 1996. Under the Agreement, FPS receives a fee at the annual rate
of 0.15% of the first $50 million in average net assets of the Fund, 0.10% of
the next $50 million in average net assets and 0.05% of average net assets
over $100 million. There is a minimum fee of $50,000 per year for the initial
series/class issued by the Fund and $12,000 per year for each additional
series or class of shares.

FPS also performs certain accounting and pricing services for the Fund. This
includes the daily calculation of the Fund's net asset value.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Page 13
<PAGE>

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.

The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares
between two mutual funds (or two series of a mutual fund). Any loss incurred
on sale or exchange of the Fund's shares, held for six months or less, will be
treated as a long-term capital loss to the extent of capital gain dividends
received with respect to such shares. All or a portion of the sales charge
incurred in purchasing the Fund's shares will not be included in the federal
tax basis of any of such shares sold or exchanged within ninety (90) days of
their purchase (for purposes of determining gain or loss upon sale of such
shares) if the sale proceeds are reinvested in the Fund or in another fund and
a sales charge that would otherwise apply to the reinvestment is reduced or
eliminated. Any portion of such sales charge excluded from the tax basis of
the shares sold will be added to the tax basis of the shares acquired in the
reinvestment.

Page 14
<PAGE>

DETERMINATION OF NET ASSET VALUE

The net asset value per Fund share is determined by the Fund as of the close
of regular trading on each day that the New York Stock Exchange (NYSE) is open
for unrestricted trading from Monday through Friday and on which there is a
purchase or redemption of the Fund's share. The net asset value is determined
by the Fund by dividing the value of the Fund's securities, plus any cash and
other assets, less all liabilities, by the number of shares outstanding.
Expenses and fees of the Fund, including the advisory and the distributor
fees, are accrued daily and taken into account for the purpose of determining
the net asset value.

HOW TO PURCHASE SHARES

Shares of the Fund may be purchased directly from the Fund at the net asset
value per share, plus the applicable sales load, next determined after receipt
of the order in proper form by the transfer agent. There is a sales load in
connection with the purchase of shares which is reduced on purchases involving
large amounts and which may be eliminated in certain circumstances described
under "Reduced Sales Charges". The Fund reserves the right to reject any
purchase order and to suspend the offering of shares of the Fund. The Fund
will not accept a check endorsed over by a third-party. The minimum initial
investment is $1,000, with no minimum subsequent investment. The Fund reserves
the right to vary the initial investment minimum and minimums for additional
investments at any time. There is no minimum investment requirement for
qualified retirement plans.

Page 15
<PAGE>

rights pertaining to such securities shall become the property of the Fund and
must be delivered to the Fund by the investor upon receipt from the issuer.
Investors who are permitted to transfer such securities will be required to
recognize a gain or loss on such transfer, and pay tax thereon, if applicable,
measured by the difference between the fair market value of the securities and
the investors' basis therein. Securities will not be accepted in exchange for
shares of the Fund unless: (l) such securities are, at the time of the
exchange, eligible to be included in the Fund and current market quotations
are readily available for such securities; (2) the investor represents and
warrants that all securities offered to be exchanged are not subject to any
restrictions upon their sale by the Fund under the Securities Act of 1933 or
under the laws of the country in which the principal market for such
securities exists, or otherwise and (3) the value of any such security (except
U.S. Government securities) being exchanged together with other securities of
the same issuer owned by the Fund, will not exceed 5% of the Fund's net assets
immediately after the transaction.

Purchases may be made in one of the following ways:

PURCHASES THROUGH BROKER/DEALERS
The Fund may accept telephone orders from broker-dealers or service
organizations which have been previously approved by the Fund. It is the
responsibility of such broker-dealers or service organizations to promptly
forward purchase orders and payments for the same to the Fund. Shares of the
Fund may be purchased through broker-dealers, banks and bank trust departments
who may charge the investor a transaction fee or other fee for their services
at the time of purchase.

Wire orders for shares of the Fund received by FPS prior to 4:00 p.m., Eastern
time, are confirmed at that day's public offering price. Orders received by
dealers after 4:00 p.m., Eastern time, are confirmed at the public offering
price on the following business day.

Page 16
<PAGE>

APPLICABLE SALES CHARGES
Shares of the Fund are offered at the public offering price which is the net
asset value per share, plus any applicable sales charge. The sales charge is a
variable percentage of the offering price depending upon the amount of the
sale. No sales charge will be assessed on the reinvestment of distributions.
The sales charge will be assessed as follows:

- -------------------------------------------------------------------------------

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 $10,000.......... 1.75% 1.78% 1.50%
$10,000 but under $25,000......... 1.50% 1.52% 1.25%
$25,000 but under $50,000......... 1.25% 1.27% 1.00%
$50,000 but under $100,000........ 1.00% 1.01% 0.75%
$100,000 or over.................. 0.00% 0.00% 0.00%
</TABLE>

- -------------------------------------------------------------------------------

At the discretion of the Fund, investors may be permitted to purchase Fund
shares without a sales charge by transferring securities to the Fund that meet
the Funds investment objectives and policies.

The distributor will pay the appropriate dealer concession to those selected
dealers who have entered into an agreement with the distributor. The dealer's
concession may be changed from time to time. The distributor may from time to
time offer incentive compensation to dealers (which sell shares of the Fund
subject to sales charges) allowing such dealers to retain an additional
portion of the sales load. A dealer who receives all of the sales load may be
considered an "underwriter" under the Securities Act of 1933, as amended. All
such sales charges are paid to the securities dealer involved in the trade, if
any. The foregoing schedule of sales charges applies to single purchases and
to purchases made under a Letter of Intent and pursuant to the Rights of
Accumulation, both of which are described below.

REDUCED SALES CHARGES
The sales charge for purchases of shares of the Fund may be reduced through
Rights of Accumulation or Letter of Intent. To qualify for a reduced sales
charge, an investor must so notify his or her distributor at the time of each
purchase of shares which qualifies for the reduction.

RIGHTS OF ACCUMULATION
A shareholder may qualify for a reduced sales charge by aggregating the net
asset values of shares requiring the payment of an initial sales charge,
previously purchased and currently owned with the dollar amount of shares to
be purchased.

LETTER OF INTENT
An investor may qualify for a reduced sales charge immediately by signing a
non-binding Letter of Intent stating the investor's intention to invest during
the next 13 months a specified amount which, if made at one time, would
qualify for a reduced sales charge. The first investment cannot be made more
than 90 days prior to the date of the Letter of Intent. Any redemptions made
during the 13 month period will be subtracted from the amount of purchases in
determining whether the Letter of Intent has been completed. During the term
of a Letter of Intent, the transfer agent will hold shares representing 1.75%
of the indicated amount in escrow for payment of a higher sales load if the
full amount indicated in the Letter of Intent is not purchased. The escrowed
shares will be released when the full amount indicated has been purchased. If
the full amount indicated is not purchased within the 13 month period, an
investor's escrowed shares will be redeemed in an amount equal to the
difference in the dollar amount of sales charge actually paid and the amount
of sales charge the investor would have had to pay on his or her aggregate
purchases if the total of such purchases had been made at a single time.

Page 17
<PAGE>

UNITED MISSOURI BANK KC NA
ABA #10-10-00695
------------
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
-----------------
FBO "THE TIMOTHY PLAN--RETAIL CLASS"
ACCOUNT OF (exact name(s) of account registration)
---------------------------------------
SHAREHOLDER ACCOUNT #
-------------

A completed application with signature(s) of registrant(s) must be filed with
the transfer agent immediately subsequent to the initial wire. Investors
should be aware that some banks may impose a wire service fee. Shareholders
may be subject to 31% withholding if original application is not received.

AUTOMATIC INVESTMENT PLAN
Shares of the Fund may be purchased through an Automatic Investment Plan (the
"Plan"). The Plan provides a convenient method by which investors may have
monies deducted directly from their checking, savings or bank money market
accounts for investment in the Fund. The minimum investment pursuant to this
Plan is $100 per month. If you desire to take advantage of this Plan simply
complete and remit the Automatic Investment Plan Application on pages 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

Redemption requests received after the close of the NYSE are effective as of
the time the net asset value per share is next determined.

Retail Class shares of the Fund may be redeemed through certain brokers,
financial institutions or service organizations, banks and bank trust
departments who may charge the investor a transaction fee or other fee for
their services at the time of redemption. Such fees would not otherwise be
charged if the shares were directly redeemed from the Fund.

Page 18
<PAGE>

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.

Page 19
<PAGE>

it and/or its service contractors may be liable for any such instructions that
prove to be fraudulent or unauthorized.

SYSTEMATIC CASH WITHDRAWAL PLAN
The Fund offers a Systematic Cash Withdrawal Plan as another option which may
be utilized by an investor who wishes to withdraw funds from his or her
account on a regular basis. To participate in this option, an investor must
either own or purchase shares having a value of $10,000 or more. Automatic
payments by check will be mailed to the investor on either a monthly,
quarterly, semi-annual or annual basis in amounts of $100 or more. All
withdrawals are processed on the 25th of the month or, if such day is not a
business day, on the next business day and paid promptly thereafter. Please
complete the appropriate section on the Investment Application enclosed within
this Prospectus, indicating the amount of the distribution and the desired
frequency.

REDEMPTION BY AUTOMATED CLEARING HOUSE ("ACH")
A shareholder may elect to have redemption proceeds, cash distributions or
systematic cash withdrawal payments transferred to a bank, savings and loan
association or credit union that is an on-line member of the ACH system. There
are no fees charged by the Fund associated with the use of the ACH service.

ACH redemption requests must be received by the Fund's transfer agent before
4:00 p.m. New York time to receive that day's closing net asset value. ACH
redemptions will be sent on the day following the shareholder's request. The
funds from the ACH redemption will normally be available two days after the
redemption has been processed.

ADDITIONAL INFORMATION
The Fund also reserves the right to involuntarily redeem an investor's account
where the account is worth less than the minimum initial investment required
when the account is established, presently $1,000. (Any redemption of shares
from an inactive account established with a minimum investment may reduce the
account below the minimum initial investment, and could subject the account to
redemption initiated by the Fund.) The Fund will advise the shareholder of
such intention in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares
in any amount necessary to bring the account back to $1,000.

If the Trustees determine that it would be detrimental to the best interest of
the remaining shareholders of the Fund to make payment in cash, the Fund may
pay the redemption price in whole or in part by distribution in kind of
readily marketable securities, from the Fund, within certain limits prescribed
by the U.S. Securities and Exchange Commission. Such securities will be valued
on the basis of the procedures used to determine the net asset value at the
time of the redemption. If shares are redeemed in kind, the redeeming
shareholder will incur brokerage costs in converting the assets into cash.

RETIREMENT PLANS

PERFORMANCE

Page 20
<PAGE>

investment in the Fund. Aggregate total return reflects the total percentage
change over the stated period. Any fees charged by banks or their
institutional investors directly to their customer accounts in connections
with investments in the Retail Class shares of the Fund will not be included
in the Fund's calculations of total returns.

The performance of the Institutional Class shares will normally be higher than
the Retail Class shares because of the sales charge (when applicable) and
additional distribution expenses charged to the Retail Class shares.
Shareholders may obtain current performance information about the Fund by
calling (800) TIM-PLAN.

Further information about the performance of the Fund is included in the Funds
Annual Report, dated December 31, 1996, which may be obtained without charge
by contacting the Fund at (800) TIM-PLAN.

Page 21
<PAGE>

INVESTMENT ADVISOR
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789

INVESTMENT MANAGER
Awad & Associates
477 Madison Avenue
New York, NY 10022

UNDERWRITER
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903

SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903

CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286

LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098

AUDITORS
Tait, Weller & Baker
Two Penn Center
Suite 700
Philadelphia, PA 19102-1707

For Additional Information About The Timothy Plan, Please Call:
(800) TIM-PLAN
<PAGE>

BROKER DEALER: _________
TIMOTHY PLAN (R) REGISTERED REP: ________
INSTITUTIONAL CLASS BRANCH #: __ REP #: ___
[LOGO] Application BRANCH NAME: ___________
MAIL TO: BRANCH ADDRESS: ________
FPS Services, Inc. P O Box 61503, King of PHONE NUMBER: ( ) - Ext:
Prussia, PA 19406-0903

1. INITIAL INVESTMENT ($25,000 minimum)
FORM OF PAYMENT

[_] Check for $__________enclosed (make payable to "The Timothy Plan")
[_] By Wire */1/ An initial purchase of $__________was wired on ___ ___ ___ by
Date
___________________________ to account #___________________________
Name of your Bank or Broker Number assigned by F/P/S

2. REGISTRATION (Please Print) No certificate will be issued unless requested
in writing.

INDIVIDUAL Must complete items 1, 3, 4 and 8 (you may choose options 5, 6
or 7).

----------------------------------------------------- ----------------------
First Name Middle Name Last Name Social Security Number

----------------------------------------------------- ----------------------
Joint Owner First Name *2 Middle Name Last Name Social Security Number

Citizen of: [_] United States [_] Other (Please Indicate) _____________

GIFT TO MINORS Must complete items 1, 3, 4 and 8 (you may choose options 5,
6, or 7).

------------------------------------------------------------------------------
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 Number (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

[_] 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):
[_] $10,000 [_] $25,000 [_] $50,000 [_] $100,000

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 20
<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: __________________
_____________________________________________________________
(Name of Corporation)
incorporated
or formed under the laws of _________________
(State)
and were adopted at a meeting of
the Board of Directors or Trustees of the organization or corporation duly
called and held on __________ at which a quorum was preset and acting
throughout, and that the same are now in full force and effect.

I further certify that the following is (are) the duly elected officer(s)
of the corporation or organization, authorized to act in accordance with
the foregoing resolutions.
NAME TITLE

----------------------------------- -----------------------------------

Witness my hand and the seal of the corporation or organization this ________
day of ______, 19__.

----------------------------------- -----------------------------------
*Secretary-Clerk Other Authorized Officer (if
required)

* If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
Page 21
<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 - INSTITUTIONAL CLASS.

Check one:

[ ] I am in the process of establishing an account.
or
[ ] My account number is: ____________________________________
______________________________________________________________
Name as account is registered
______________________________________________________________
Street
______________________________________________________________
City State Zip + ext.

I understand that my ACH debit will be dated on the day of each month as
indicated above or as specified by written request. I agree that if such debit
is not honored upon presentation, FPS Services, Inc. may discontinue this
service and any share purchase made upon deposit of such debit may be
canceled. I further agree that if the net asset value of the shares purchased
with such debit is less when said purchase is canceled than when the purchase
was made, FPS Services, Inc. shall be authorized to liquidate other shares or
fractions thereof held in my account to make up the deficiency. This Automatic
Investment Plan may be discontinued by FPS Services, Inc. upon 30-days written
notice or at any time by the investor by written notice to FPS Services, Inc.
which is received not later than 5 business days prior to the above designed
investment date.

Signature(s):____________________________________

____________________________________
Page 22
<PAGE>

AUTOMATIC INVESTMENT PLAN APPLICATION
- -------------------------------------------------------------------------------

BANK REQUEST AND AUTHORIZATION

TO: ___________________________________ _______________________________
Name of Your Bank Bank Checking Account Number

_____________________________________________________________
Address of Bank or Branch Where Account is Maintained

As a convenience to me, please honor ACH debits on my account drawn by FPS
Services, Inc., United Missouri Bank KC NA and payable to "THE TIMOTHY PLAN".

I agree that your rights with respect to such debit shall be the same as if it
were a check drawn upon you and signed personally by me. This authority shall
remain in effect until you receive written notice from me changing its terms
or revoking it, and until you actually receive such notice, I agree that you
shall be fully protected in honoring such debit.

I further agree that if any debit is dishonored, whether with or without cause
or whether intentionally or inadvertently, you shall be under no liability
whatsoever.

DEPOSITOR'S _____________________________________________________________
Signature of Bank Depositor(s) as shown on bank records.

NOTE: Your bank must be able to accept ACH transactions and/or be a member of
an ACH association in order for you to use this service.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

INDEMNIFICATION AGREEMENT

TO: The bank named above

So that you may comply with your Depositor's request and authorization, THE
TIMOTHY PLAN agrees as follows:

1. To indemnify and hold you harmless from any loss you may suffer arising
from or in connection with the payment by you of a debit drawn by FPS
Services, Inc. to the order of THE TIMOTHY PLAN designated on the
account of your depositor(s) executing the authorization including any
costs or expenses reasonably incurred in connection with such loss. THE
TIMOTHY PLAN will not, however, indemnify you against any loss due to
your payment of any debit generated against insufficient funds.

2. To refund to you any amount erroneously paid by you to FPS Services,
Inc. on any such debit if claim for the amount of such erroneous payment
is made by you within 3 months of the date of such debit on which
erroneous payment was made.
Page 23
<PAGE>

BROKER DEALER: _________
TIMOTHY PLAN (R) REGISTERED REP: ________
INSTITUTIONAL CLASS BRANCH #: __ REP #: ___
[LOGO] Request for Transfer BRANCH NAME: ___________
MAIL TO: BRANCH ADDRESS: ________
FPS Services, Inc. P O Box 61503, King of Prussia, PA 19406-0903

<TABLE>
<S> <C>
1. INVESTOR INFORMATION PHONE NUMBER: ( ) - Ext:

----------------------------------------------------------------------------------
First Name Middle Initial Last Name

----------------------------------------------------------------------------------
Street Address

----------------------------------------------------------------------------------
City State Zip Code Zip Extend

---------------------- ------------- ----------- --------------------------
Social Security Number Date of Birth (Area Code) Residence Telephone Number

----------- -------------------------
(Area Code) Business Telephone Number

2. PREVIOUS INVESTMENT FIRM

---------------------------------------------------------------------------------
Name of Previous Firm

---------------------------------------------------------------------------------
Address

--------------------------------------------- ----------------------------
Investor's Name Account Number

Type of Account: [_] Individual [_] Joint [_] UGMA [_] Trust

Type of Assets: [_] Mutual Fund [_] Money Market [_] CD (Immediately/At Maturity) [_] Securities

</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

Mail to: Post Office Box 61503, King of Prussia, PA 19406-4902.

5. INVESTOR'S AUTHORIZATION

----------------------------- ---------- --------------------------
Signature of Participant Date Signature Guarantee

Page 24
<PAGE>
--------------------------------------
BROKER DEALER: ______________________
[LOGO TIMOTHY PLAN (R) REGISTERED REP: _____________________
APPEARS RETAIL CLASS BRANCH #: ___________ REP #: _______
HERE] Application 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")
[_] By Wire /*1/ An initial purchase of $______ was wired on by
--- --- ---
Date
__________________________________ to account #__________________________
Name of your Bank or Broker Number assigned by F/P/S

2. REGISTRATION (Please Print) No certificate will be issued unless requested
in writing.

INDIVIDUAL Must complete items 1, 3, 4 and 8 (you may choose options 5, 6
or 7).

----------------------------------------------------- -----------------
First Name Middle Name Last Name Social Security Number

----------------------------------------------------- -----------------
Joint Owner First Name/*2/ Middle Name Last Name Social Security Number

Citizen of: [_] United States [_] Other (Please Indicate) ________________

GIFT TO MINORS Must complete items 1, 3, 4 and 8 (you may choose options 5,
6, or 7).

----------------------------------------------------------------------------
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 Number (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

RIGHTS OF ACCUMULATION

---------------------------------------------
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 22
<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 laws of _______
(Name of Corporation) (State)

and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on _________ at which a
quorum was preset and acting throughout, and that the same are now in full
force and effect.

I further certify that the following is (are) the duly elected officer(s)
of the corporation or organization, authorized to act in accordance with
the foregoing resolutions.

NAME TITLE

----------------------------------- --------------------------------------

Witness my hand and the seal of the corporation or organization this ________
day of ______, 19__.

----------------------------------- --------------------------------------
/*/Secretary-Clerk Other Authorized Officer (if required)

/*/If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.

Page 23
<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

4. Please allow one month for processing of your Automatic Investment Plan
before the first debit occurs.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

AUTOMATIC INVESTMENT PLAN APPLICATION

TO: FPS Services, Inc.
P.O. Box 61503
King of Prussia, PA 19406-0903

Please start an Automatic Investment Plan for me and invest _______________.
($100 or more)

on the [ ] 10th [ ] 15th [ ] 20th of each month, in shares of THE TIMOTHY
PLAN - RETAIL CLASS.

Check one:

[ ] I am in the process of establishing an account.
or
[ ] My account number is:
------------------------------------

- --------------------------------------------------------------
Name as account is registered

- --------------------------------------------------------------
Street

- --------------------------------------------------------------
City State Zip + ext.

Signature(s):
------------------------------------

------------------------------------

Page 24
<PAGE>

AUTOMATIC INVESTMENT PLAN APPLICATION
- -------------------------------------------------------------------------------

BANK REQUEST AND AUTHORIZATION

TO:
----------------------------------- ----------------------------
Name of Your Bank Bank Checking Account Number

-------------------------------------------------------------
Address of Bank or Branch Where Account is Maintained

As a convenience to me, please honor ACH debits on my account drawn by FPS
Services, Inc., United Missouri Bank KC NA and payable to "THE TIMOTHY PLAN".

I 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:

Page 25
<PAGE>
--------------------------------------
BROKER DEALER: ______________________
[LOGO] TIMOTHY PLAN (R) REGISTERED REP: _____________________
APPEARS RETAIL CLASS BRANCH #: _____________ REP #: _____
HERE] Request for Transfer 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 of (Area Code) Residence (Area Code) Business
Security Birth Telephone Telephone
Number Number Number

2. PREVIOUS INVESTMENT FIRM

----------------------------------------------------------------------------
Name of Previous Firm

----------------------------------------------------------------------------
Address

--------------------------------------------- ------------------------
Investor's Name Account Number

Type of Account: [_] Individual [_] Joint [_] UGMA
[_] Trust

Type of Assets: [_] Mutual Fund [_] Money Market [_] CD (Immediately/At
Maturity)
[_] Securities

3. AMOUNT TO BE TRANSFERRED TO THE TIMOTHY PLAN

[_] Liquidate all assets from the above account and transfer the proceeds.

[_] Liquidate $ ___________ from the above account and transfer the proceeds.

4. TRANSFER INSTRUCTIONS

Make check payable to: The Timothy Plan

Mail to: Post Office Box 61503, King of Prussia, PA 19406-4902.

5. INVESTOR'S AUTHORIZATION

----------------------------- ---------- --------------------------
Signature of Participant Date Signature Guarantee

Page 26

THE TIMOTHY PLAN

STATEMENT OF ADDITIONAL INFORMATION
April 29, 1997

FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
(800) 441-6580

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: Institutional Class and Retail
Class. The shares of the Fund may be purchased or redeemed at
any time. Purchases and redemptions will be effected at the
net asset value next computed 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 APRIL 29, 19976 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 . . . . . . . . . . . . . . . .

THE TIMOTHY PLAN - INVESTMENTS

The Fund seeks to achieve its objective 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 objective.
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
(Institutional Class and Retail Class) that invest in the same
portfolio of securities. Shareholders of Retail Class shares
are subject to a sales charge and each class is subject to
different 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 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. 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

(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. (the "Advisor"), 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 Advisor 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 Advisor and the Advisor
reimbursed the Fund $135,114, $189,534 and $194,967
respectively.

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 Advisor 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 Advisor 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 Advisor 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>
Prior to January 1, 1997, the Advisor 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, the
Advisor paid Systematic Financial Management, L.P. sub-advisory
fees of $3,969, $20,628 and $46,381, respectively.

UNDERWRITER

FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, King of
Prussia, PA 19406, 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.

In that regard, FPSB 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.

FPSB 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.

For the services to be provided under the Underwriting
Agreement, FPSB is entitled to receive an annual fixed fee of
$15,000, for one series, plus $2,500 for each additional
operational series or class, payable in advance. This fee is
fixed for a one (1) year period from the date of the agreement
and may be increased or decreased in future years by an
amendment signed by both the Fund and FPSB. The fees for such
services are borne entirely by the Advisor. The Fund does not
impose any sales loads or redemption fees. 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, and if so
terminated, the pro-rata portion of the unearned fee will be
returned to the Fund.

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.

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.

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.

The Advisor, 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 Retail Class 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.

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

Under normal circumstances you may redeem your shares at any
time without a fee. The redemption price will be based upon
the net asset value per share 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 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.
Position and
Office Held with Principal Occupation
Name and Address Age the Registrant during the past five years

Arthur D. Ally * 55 President and President, Covenant
1304 West Fairbanks Ave Trustee Financial Management,
Winter Park, Florida Inc. (1990-present)

Joseph E. Boatwright * 65 Secretary and Retired; prior thereto;
1410 Hyde Park Drive Trustee Senior Pastor Aloma
Winter Park, Florida Baptist Church, (1970-1996)

Wesley W. Pennington 66 Trustee Secretary/Treasurer,
442 Raymond Ave. America Call to Greatness
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
Orlando, Florida thereto President and
Director of Sneddon &
Helmers M.D.P.A. (1976-
1993)

Philip B. Crosby * 70 Trustee Owner and Founder; Career
P.O. Box 1927 IV (1991-current); prior
Winter Park, Florida thereto 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 Farenbacher 38 Trustee President, Institute for
13621 171st N.E. American Values Investing
Redmond, WA (1996-current; prior
thereto Stockbroker,
Linseo/Private Ledger
(1990-1996)

* These trustees and officers are considered "interested
persons" of the Funds 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 the Advisor is paid by the
Advisor, 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 the Advisor
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 (the
"Plan") whereby the Fund may pay up to a maximum of 0.25% for
Institutional Class shares and up to a maximum of 0.85% for
Retail Class shares (of which, up to 0.25% may be service fees
to be paid by each respective class of shares to FPBS, 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.

Pursuant to the Plan, the Underwriter is entitled to a
reimbursement each month (up to the maximum of 0.25% for
Institutional Class shares and 0.85% for Retail Class 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 Institutional Class shares or 0.85% for Retail Class shares
per annum will be borne by the Advisor without any
reimbursement or payment by the Fund.

For the period ended December 31, 1994 and fiscal year ended
December 31, 1995, the Fund reimbursed the Underwriter $1,985
and $11,606, respectively, for distribution costs incurred by
the Fund. For the fiscal year ended December 31, 1996, the
Fund reimbursed the Underwriter $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 the Retail Class shares.

The Plan also provides that to the extent that the Fund, the
Advisor, the Investment Manager, the Underwriter, or other
parties on behalf of the Fund, the Advisor, the Investment
Manager, or the Underwriter 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 Plan. In no event shall the payments made
under the Plan, plus any other payments deemed to be made
pursuant to the Plan, 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-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
Plan will benefit the Fund and its shareholders.
The Plan has 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 Plan 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 Plan. 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 Plan 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 Plan 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 Plan 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 Plan, 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 Plan 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 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 February 10, 1997, Mr. Boatwright owned benefically more
than 1% of the outstanding shares of the Institutional Class,
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 February 10, 1997, the following persons owned of record
or exercised voting control over 5% of the outstanding shares
of the Retail Class shares of the Fund:

Name & Address of Beneficial Owners Percentage

Southwest Securities Inc. 7.28%
Dallas, TX

PERFORMANCE

Performance information for the Institutional Class and Retail
Class 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 Institutional Class 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 Retail Class 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. 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.

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) the
Advisors 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 Shareholder's.<PAGE>
INVESTMENT ADVISOR
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789

INVESTMENT MANAGER
Awad & Associates
477 Madison Avenue
New York, New York 10022

UNDERWRITER
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406

SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406

CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 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