TIMOTHY PLAN, 485APOS, 1998-02-17

TIMOTHY PLAN
485APOS, 1998-02-17

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<PAGE>

[Letterhead]
FPS Services, Inc.
3200 Horizon Drive
P.O Box 61503
King of Prussia, Pennsylvania 19406-0903

VIA EDGAR

February 13, 1998

U.S. Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: The Timothy Plan
File No. 33-73248 and 811-8228
Rule 484(a) Filing, Post Effective Amendment No. 7
--------------------------------------------------

To the Staff of the Commission:

On behalf of The Timothy Plan (the "Trust"), and pursuant to paragraph (a)
of Rule 485 under the Securities Act of 1933, as amended, enclosed is
Post-Effective Amendment No.7 to the Fund's Registration Statement.

The Purpose of this filing is to reflect the creation of an additional
series to the Trust, The Timothy Plan Variable Series. The anticipated effective
date is May 1, 1998.

Should you have any question, I can be reached directly at (610) 239-475.

Sincerely,
/s/ Carolyn F. Mead, Esq.
Carolyn F. Mead, Esq.
Manager, Compliance Administration

Enclosure

cc: A. Ally, Timothy Partners, Ltd.
D. Allison, Esq., Pepper Hamilton LLP
<PAGE>

UNITED STATES FILE NO. 33-73248
-----------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 FILE NO. 811-8228
-----------------
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]

Pre-Effective Amendment No.___ [_]

Post-Effective Amendment No.67 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]

Amendment No. 78 [_]

THE TIMOTHY PLAN
(Exact name of Registrant as Specified in Charter)

1304 West Fairbanks Avenue

Winter Park, Florida 32789

(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code 407-644-1986

Arthur D. Ally, President
The Timothy Plan
1304 West Fairbanks Avenue

Winter Park, FL 32789
(Name and Address of Agent for Service)

COPIES TO: Dottie Allison, Esq.
Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICAL AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IT IS PROPOSED THAT THE FILING BECOME EFFECTIVE:

[X] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPHS (A)(1).

As filed with the U.S. Securities and Exchange
Commission on February 13, 1998
<PAGE>

CROSS REFERENCE SHEET
Pursuant to Rule 481(a)

<TABLE>
<CAPTION>
PART A
ITEM NO. PROSPECTUS CAPTION
- --------------------------------------------------------------------
<S> <C>
1. Cover Page................................ Cover Page

2. Synopsis.................................. Prospectus Summary Expenses of the Fund

3. Financial Highlights...................... Financial Highlights

4. General Description of Registrant......... Prospectus Cover, Investment Objective and Policies,
Risk Factors and Investment Restrictions

5. Management of the Fund.................... Board of Trustees, Investment Adviser, Investment
Manager, Historical Performance of the Investment
Manager, Underwriter, Administrator, Custodian,
Transfer Agent, Fund Accounting/Pricing Agent,
Distribution of Shares, and Expenses

6. Capital Stock and Other Securities........ Shares of Beneficial Interest, Dividends, Distributions and Taxes

7. Purchase of Shares Being Offered.......... Alternative Purchase Plan, Determination of Net Asset
Value, How to Purchase Shares, Retirement Plans

8. Redemption or Repurchase.................. How to Redeem Fund Shares

9. Pending Legal Proceedings.................. Inapplicable

PART B STATEMENT OF ADDITIONAL
ITEM NO. INFORMATION CAPTION
- -------- -------------------

10. Cover Page............................... Cover Page

11. Table of Contents......................... Table of Contents

12. General Information and History............ N/A

13. Investment Objective and Policies......... Cover, The Timothy Plan- Investments, Investment
Restrictions

14. Management of the Fund.................... Officers an Trustees of the Fund

15. Control Persons and Principal
Holders of Securities..................... Miscellaneous

16. Investment Advisory and Other
Services.................................. Investment Advisor, Investment Manager, Underwriter
and Administrator

17. Brokerage Allocation...................... Allocation of Portfolio Brokerage

18. Capital Stock and Other Securities........ N/A

19. Purchase, Redemption and Pricing
of Securities Being Offered............... Purchase of shares

20. Tax Status................................ N/A

21. Underwriters.............................. Underwriters, Purchase of Shares, Distribution Plan

22. Calculation of Performance Data........... Performance Calculations

23. Financial Statements...................... Audited Financial Statements
</TABLE>

PART C
- ------

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Post-Effective Amendment
No.7 to the Registration Statement.

Page 2

<PAGE>

PROSPECTUS FOR
THE TIMOTHY PLAN
CLASS A SHARES
CLASS B SHARES

MAY 1, 1998

- --------------------------------------------------------------------------------
Distributed By:
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, Florida 32789
(800) 846-7526
- --------------------------------------------------------------------------------

THE TIMOTHY PLAN (the "Trust") is an open-end diversified management investment
company. The Trust was organized as a series Delaware business trust and
currently offers shares of two series, designed to offer investors investment
opportunities that best meet their needs. This Prospectus pertains only to The
Timothy Plan series (the "Fund") of the Trust.

The primary objective of the Fund is long-term capital growth and the secondary
objective is current income. The Fund seeks to achieve its objectives by
investing in securities issued by companies which, in the opinion of the Fund's
advisor, conduct business in accordance with the stated philosophy and
principles of the Fund (See "Investment Objectives and Policies"). There is no
assurance that the Fund's objectives will be achieved.

The Fund currently offers two classes of shares: "CLASS A" shares (formerly,
Institutional Class) and "CLASS B" shares (formerly, Retail Class)
(collectively, the "Classes"). CLASS A shares may be purchased at the net asset
value per share, plus any applicable front-end sales charge. (See "Purchasing
Class A Shares" under "Alternative Purchase Plan"). CLASS B shares may be
purchased at the net asset value per share without an initial sales charge, but
are subject to a contingent deferred sales charge ("CDSC"), which may be imposed
on redemptions made within five years of purchase. (See "Purchasing Class B
Shares" under "Alternative Purchase Plan"). Both Classes of shares are subject
to different 12b-1 Plan expenses. (See "Plans of Distribution" under "Management
of Funds"). These alternatives permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase, the
length of time the investor expects to hold the shares and other circumstances.
(See "Factors to Consider in Choosing a Class of Shares" under "Alternative
Purchase Plan").

This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing in the Fund. 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 May 1, 1998, as amended from time to
time, 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 U.S. SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE U.S. SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

Visit The Timothy Plan web site on the Internet at:
WWW.TIMOTHYPLAN.COM
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary...................................................

Expenses of the Fund.................................................

Financial Highlights.................................................

The Fund.............................................................

Investment Objectives and Policies...................................

Risk Factors.........................................................

Investment Restrictions..............................................

Management of the Fund...............................................

Alternative Purchase Plan............................................

How to Purchase Shares...............................................

How to Redeem Shares.................................................

Retirement Plans.....................................................

Shares of Beneficial Interest........................................

Dividends, Distributions and Taxes...................................

Determination of Net Asset Value.....................................

Performance..........................................................

Investment Application...............................................

Automatic Investment Plan Application................................

Application to Request to Transfer to The Timothy Plan...............
</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>

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

PROSPECTUS SUMMARY

THE FUND THE TIMOTHY PLAN (the "Fund") is a separate series of The Timothy
Plan (the "Trust"), an open-end, diversified management investment
company established as a series Delaware business trust.

MINIMUM There is a minimum $1,000 initial investment for each Class of
PURCHASE shares. There is no minimum investment requirement for subsequent
investments or for qualified retirement plans.

INVESTMENT The primary objective of the Fund is long-term capital growth and
OBJECTIVES the secondary objective is current income. The Fund seeks to achieve
its objectives while abiding by the ethical standards established
for investments by the Fund. As with any mutual fund, there is no
assurance that the Fund will achieve its objectives.

INVESTMENT The Fund invests in securities issued by companies which, in the
POLICY opinion of the Fund's advisor, conduct business in accordance with
certain ethical standards. This policy precludes the investment in
securities of companies involved in the businesses of alcohol
production, tobacco production, or casino gambling, or which are
directly or indirectly involved in pornography or abortion. The
securities in which the Fund shall be precluded from investing, by
virtue of the Fund's ethical standards, are referred to as the
"Excluded Securities."

INVESTMENT Timothy Partners, Ltd. ("TPL") is the Fund's investment advisor and
ADVISOR Awad & Associates, a division of Raymond & James, Inc. (the
"Investment Manager") is the Fund's investment manager.

DISTRIBUTOR TPL is also the distributor and underwriter of the Fund's shares.

ALTERNATIVE The Fund offers two classes of shares: CLASS A shares and CLASS B
PURCHASE shares. Each Class has its own sales charge structure. Investors
PLAN may choose the Class of shares that best suits their investment
objectives. Each Class of shares represents an interest in the same
portfolio of investments of the Fund.

CLASS A SHARES. CLASS A shares are offered at net asset value per
share plus a maximum initial sales charge of 5.50% of the offering
price, reduced on investments of $25,000 or more. CLASS A shares are
subject to an annual 12b-1 distribution and service fee of up to
0.25% of the Fund's average daily net assets of the attributable
CLASS A shares.

CLASS B SHARES. CLASS B shares are offered at net asset value per
share and are subject to a maximum contingent deferred sales charge
of 5.00% of redemption proceeds on redemptions made within the first
year after purchase and declining thereafter to 0.00% after the
fifth year. CLASS B shares are subject to a combined annual
distribution fee and service fee of up to 1.00% of the Fund's
average daily net assets attributable to CLASS B shares. CLASS B
shares will automatically convert to CLASS A shares once the
economic equivalent of a 5.50% sales charge is recovered through the
distribution fee. (See "Conversion Feature" under "Alternative
Purchase Plan").

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

Page 3
<PAGE>

The above information is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus.

Page 4
<PAGE>

EXPENSES OF THE FUND

The following table illustrates all expenses and fees that a shareholder of the
Fund's CLASS A and CLASS B will incur.

SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)..... 5.50% /1/ none
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)...................................... none none
Redemption Fees................................................................. none /2/ none /2/
Contingent Deferred Sales Charge (CDSC) /3/..................................... none *
(as a percentage of the lesser of original purchase price or redemption
proceeds)
</TABLE>

* A CDSC is imposed on CLASS B shares purchased on or after September 26,
1997 at the following declining rates:

<TABLE>
<CAPTION>
REDEMPTION WITHIN PERCENTAGE
----------------- ----------
<S> <C>
First Year................................. 5.0%
Second Year................................ 4.0%
Third Year................................. 3.0%
Fourth Year................................ 2.0%
Fifth Year................................. 1.0%
Sixth Year and thereafter.................. None
</TABLE>

/1/ CLASS A shareholders who purchased shares on or before September 22, 1997
are not subject to the front-end sales load on future purchases. No charge
is assessed on shares derived from reinvestment of dividends or capital
gains distributions. The front-end sales load is reduced for purchases of
$25,000 and over. See "Purchasing Class A Shares" under "Alternative
Purchase Plan".

/2/ UMB Bank KC NA charges $9.00 per redemption for redemptions remitted by
wire. There may be fees for redemptions made through broker\dealers,
financial institutions and others.

/3/ CLASS B shareholders who purchased shares on or before September 22, 1997
are not subject to the CDSC upon redemption of such shares.

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)

<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Management and Advisory Expenses After Expense Reimbursements*.. 0.00% 0.00%
12b-1 Fees /1/.................................................. 0.25% 1.00% /2/
Other Expenses After Expense Reimbursements..................... 1.35% 1.35%
----- -----
Total Operating Costs After Expense Reimbursements.............. 1.60% 2.35%
</TABLE>

* The purpose of this table is to assist the investor in understanding the
various expenses that an investor in the Fund will bear directly or
indirectly. TPL has voluntarily agreed to waive its fees and reimburse the
Fund for its other expenses, so that the total annual operating expenses of
CLASS A and CLASS B will not exceed 1.60% and 2.35%, respectively, of each
Class' respective average daily net assets. Prior to September 22, 1997,
TPL had voluntarily agreed to waive its management fees and reimburse
expenses so that CLASS B'S (the former "Retail Class") total annual
operating expenses would not exceed 2.20%. CLASS B's expense information is
restated to reflect current fees. Absent any fee waiver and expense
reimbursements, "Management and Advisory Expenses " would have been 0.85%
for each Class of shares and "Other Expenses " for CLASS A shares would
have been 2.75% and for CLASS B shares would have been3.41%.

Page 5
<PAGE>

Example
The following example illustrates the expenses that an investor in either Class
would have directly or indirectly paid on a $1,000 investment in the Fund at the
end of the periods presented assuming a 5% annual rate of return.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
(1) Assuming a complete redemption at end of period

CLASS A $ 70* $ 103* $ 137* $ 235*
CLASS B $ 75** $ 106** $ 137** $ 269

(2) Assuming no redemption
CLASS A $ 70* $ 103* $ 137* $ 235*
CLASS B $ 24 $ 73 $ 126 $ 269
</TABLE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.

The Fund issues two classes of shares that invest in the same portfolio of
securities. Shareholders of CLASS A are subject to a front-end sales load and
shareholders of CLASS B are subject to a CDSC. Each Class is subject to
different 12b-1 Plan expenses; therefore, expenses and performance figures will
vary between the Classes.

/1/ CLASS A shares and CLASS B shares are subject to an annual 12b-1
distribution and service fee of up to 0.25% and 1.00%, respectively, of the
average daily net assets attributable to each Class of shares (of which, up
to 0.25% may be used as a service fee). (See "Plans of Distribution" under
"Management of Fund").

/2/ Long-term holders of CLASS A and CLASS B shares may eventually pay more
than the economic equivalent of the maximum front-end sales charges
otherwise permitted by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.

* Assumes maximum front-end sales load.

** Assumes deduction of the applicable CDSC.

Page 6
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights for each of the periods presented have been
audited by Tait, Weller & Baker, independent auditors, whose unqualified report
thereon appears in the Fund's Annual Report. The Annual Report, which is
incorporated by reference into the Statement of Additional Information, contains
additional performance information and is available upon request without
charge.

FINANCIAL HIGHLIGHTS
================================================================================
The table below sets forth financial date for one share of capital stock
outstanding throughout each period presented.

<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994*
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 11.24 $ 10.07 $ 9.66 $ 10.00
----------- ------------ ------------ ------------

Income From Investment Operations:
Net investment income......................................... 0.02 0.10 0.11 0.06
Net Gains (losses) on securities
(both realized and unrealized).............................. 2.37 1.17 0.66 (0.34)
----------- ------------ ------------ ------------
Total from investment operations.......................... 2.39 1.27 0.77 (0.28)
----------- ------------ ------------ ------------
Less Distributions
Distributions from net investment income:................... 0.00 (0.10) (0.11) (0.06)
Distributions from net capital gains:....................... (1.38) 0.00 (0.25) 0.00
Total distributions...................................... (1.38) (0.10) (0.36) (0.06)
----------- ------------ ------------ ------------

NET ASSET VALUE, END OF PERIOD.................................. $ 12.25 $ 11.24 $ 10.07 $ 9.66
=========== ============ ============ ============

TOTAL RETURN.................................................... 21.35%/1/ 12.59% 7.93% (2.84%)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)........................... $ 11,208 $ 7,760 $ 6,133 $ 2,217
Ratio of expenses to average net assets:

Before expense reimbursement................................ 2.75% 3.70% 5.84% 18.62%/2/
After expense reimbursement................................. 1.60% 1.60% 1.60% 1.60%/2/
Ration of net investment income (loss)
to average net assets:
Before expense reimbursement................................ (0.90%) (1.05%) (2.96%) (15.49%)/2/
After expense reimbursement................................. 0.25% 1.05% 1.28% 1.53%/2/
Portfolio turnover rate....................................... 136.36% 93.08% 34.12% 8.13%
Average commission rate paid.................................. $ 0.0580 $ 0.0593 $ N/R $ N/R/3/
</TABLE>

* Class A Shares commenced investment operations on March 21, 1994.
/1/ Total return calculation does not reflect sales load.
/2/ Annualized.
/3/ Not Required.

See accompanying notes to financial statements.

FINANCIAL HIGHLIGHTS
================================================================================
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.

<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995*
----------- ------------ ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 11.22 $ 10.08 $ 10.49
----------- ------------ ------------

Income From Investment Operations:
Net investment income (loss).................................. (0.32) 0.07 0.11
Net gains (losses) on securities
(both realized and unrealized).............................. 2.23 1.14 (0.16)
------------ ------------ ------------
Total from investment operations.......................... 2.29 1.21 (0.05)
------------ ------------ ------------
Less Distributions
Distributions from net investment income:................... 0.00 (0.07) (0.11)
Distributions from net capital gains:....................... (1.38) 0.00 (0.25)
----------- ------------ ------------
Total distributions...................................... (1.38) (0.07) (0.36)
----------- ------------ ------------

NET ASSET VALUE, END OF PERIOD.................................. $ 12.13 $ 11.22 $ 10.08
=========== ============ ============

TOTAL RETURN.................................................... 20.50%/1/ 11.98%/1/ (0.46%)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)........................... $ 11,389 $ 3,929 $ 620
Ratio of expenses to average net assets:
Before expense reimbursement................................ 3.41% 4.30% 6.44%/2/
After expense reimbursement................................. 2.26% 2.20% 2.20%/2/
Ration of net investment income (loss)
to average nets assets:
Before expense reimbursement................................ (1.56%) (1.65%) (3.56%)/2/
After expense reimbursement.................................. (0.41)% 0.45% 0.68%/2/
Portfolio turnover rate....................................... 136.36% 93.08% 34.12%
Average commission rate paid.................................. $ 0.0580 $ 0.0593 $ N/R/3/
</TABLE>

* Class B Shares commenced investment operations on August 25, 1995.
/1/ Total return calculation does not reflect redemption fee.
/2/ Annualized.
/3/ Not Required.

See accompanying notes to financial statements.

THE FUND

THE TIMOTHY PLAN (the "Trust") is an open-end, diversified management investment
company commonly known as a mutual fund. The Trust was established as a series
Delaware business trust on December 16, 1993. The Trust currently offers two
This Prospectus pertains only to The Timothy Plan series, which offers two
classes of shares: CLASS A and CLASS B.

INVESTMENT OBJECTIVES AND POLICIES

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

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

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

Page 7
<PAGE>

has instructed the Investment Manager to avoid investment in any company
directly involved in the business of alcohol production, tobacco production, or
casino gambling. In addition, TPL will compile and maintain a list of companies
that it determines, by using information collected by and published by three
Christian ministries, participate directly or indirectly in either pornography
or abortion. TPL will use its best judgement in determining which companies,
through their corporate practices in either of these two areas, need to be
placed on the Excluded Securities list. TPL also reserves the right to exercise
its best judgment to exclude investment in other companies whose corporate
practices may not fall within the exclusions described above, but nevertheless
could be found offensive to basic traditional Judeo Christian values.

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

After eliminating the Excluded Securities, the Investment Manager will construct
a portfolio of investments to produce the highest possible risk-adjusted return
on investment as is consistent with the Fund's objectives and policies.

The Fund will invest primarily in a diversified portfolio of equity securities
of companies whose market capitalizations exceed $200 million, and whose
securities trade on the New York Stock Exchange, the American Stock Exchange and
the NASDAQ National Market System. Since the Fund is an equity fund, the
Investment Manager seeks investments that show the greatest potential for
growth, with income as a secondary factor. Therefore, these companies may or
may not pay dividends.

Potential equity investment candidates will be analyzed to determine their
ability to repay all fixed debt obligations (including certain "off balance
sheet debts" such as operating lease obligations and unfunded pension
liabilities) from their historical level of net investment income within a
reasonable time period, generally less than five years. Securities are
typically sold when an appreciation objective is met. The Fund may invest up to
30% of its assets in cash or debt securities. Although the Investment Manager
does not utilize a market timing strategy, if market conditions are viewed to
require that the Fund take a temporary defensive position, the Fund may invest
up to 100% of its assets in (i) debt securities issued by the U.S. Government,
its agencies or instrumentalities, (ii) commercial paper, or (iii) certificates
of deposit and bankers' acceptances with respect to any of the foregoing
investments. The Fund may also invest in such securities pending the investment
of the proceeds of certain sales of portfolio securities and at such other times
when suitable equity securities are not available. It is impossible to predict
whether, or for how long, the Fund will use any such temporary defensive
strategies.

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

RISK FACTORS

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

ADVISOR AND INVESTMENT MANAGER. The principals of the managing general partner
of TPL have been engaged in various aspects of the retail brokerage and
financial advisory business for over 20 years. The Investment Manager has
advised individuals, pension funds, trusts and institutions. Awad & Associates,
a division of Raymond James & Associates, Inc., currently manages approximately
$960 million in these accounts. The Investment Manager currently serves as co-
investment advisor to two other investment companies: Heritage Series Trust:
Heritage Small Cap Stock Fund and the Calvert New Visions Small Cap Fund . TPL
has served as investment advisor exclusively to the Fund since the Fund's
commencement of operations (March 21, 1994), but has not previously served as
investment advisor to any other investment company.

Page 8
<PAGE>

PORTFOLIO TURNOVER. It is anticipated that the annualized portfolio turnover
rate for the Fund generally will not exceed a range of 50% to 75%, and may be
lower than 50%, during most periods. High portfolio turnover involves
additional transaction costs (such as brokerage commissions) which are borne by
the Fund, and might involve adverse tax effects. (See "Dividends, Distributions
and Taxes").

RISKS OF CERTAIN FIXED INCOME SECURITIES

INTEREST BEARING DEBT INSTRUMENTS. The market value of interest-bearing debt
securities, if and when held by the Fund, is affected by changes in interest
rates. There is normally an inverse relationship between the market value of
securities sensitive to prevailing interest rates and actual changes in interest
rates; i.e., a decline in interest rates produces an increase in market value,
while an increase in rates produces a decrease in market value. Moreover, the
longer the remaining maturity of a security, the greater the effect of interest
rate changes on the market value of such a security. In addition, changes in an
issuer's ability to make payments of interest and principal and in the market's
perception of an issuer's creditworthiness also affect the market value of the
debt securities of that issuer.

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

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

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

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

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

Page 9
<PAGE>

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 (the "Code"),
Repurchase Agreements are not counted as cash, cash items or receivables, but
rather as securities issued by the counter-party to the Repurchase Agreements.

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

INVESTMENT RESTRICTIONS

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

The investment restrictions specifically provide that the Fund will not:

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

(b) purchase more than 10% of the voting securities, or more than 10% of
any class of securities, of another investment company. For purposes of
this restriction, all outstanding fixed income securities of an issuer are
considered as one class;

(c) purchase or sell commodities or commodity futures contracts, other
than those related to stock indexes as previously outlined in "Investment
Objectives and Policies;"

(d) purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations;

(e) make loans of money or securities, except (i) by the purchase of fixed
income obligations in which the Fund may invest consistent with its
investment objectives and policies; or (ii) by investment in repurchase
agreements (See "Investment Objectives and Policies");

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

Page 10
<PAGE>

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.

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

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

INVESTMENT ADVISOR

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

For its services, TPL is paid an annual fee equal to 0.85 % of the Fund's
average daily net assets. This fee is subject to certain voluntary reductions
in fees paid by the Fund. A portion of the advisory fee is paid by TPL to: (i)
the Investment Manager for assisting in the selection of portfolio securities
for the Fund and (ii) Covenant Financial Management ("CFM") as reimbursement for
certain expenses related to the daily operations of the Fund performed by CFM.
In addition, this fee also covers the cost of postage, materials and handling of
the fulfillment function of processing prospectus requests as well as other
sundry marketing and general administration expenses. The fee payable to and
services provided by the Investment Manager are described under the heading
"Investment Manager" below. The fee payable to and services provided by CFM are
described at the end of this section. TPL's fee is higher than that charged by
other funds, but is comparable to fees charged by funds with similar investment
objectives. TPL has offices located at 1304 West Fairbanks Avenue, Winter Park,
FL 32789.

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

Page 11
<PAGE>

for the Fund. Neither Mr. Ally nor any affiliated person to the Fund will
receive any benefit from any of these transactions.

TPL and CFM have entered into an agreement dated February 23, 1994, as amended
April 23, 1996, whereby TPL pays CFM for certain overhead expenses related to
the daily operations of the Fund that CFM carries out. These expenses include:
salary of administrative personnel, cost of preparation of shareholder
fulfillment kits, cost of phone lines and office space, and cost of postage and
supplies. The annual fee is an amount to cover CFM's costs in providing
services to TPL, payable by TPL on a monthly basis. Both parties have agreed
that no profits will accrue to CFM as a result of this agreement. Arthur D.
Ally is President and shareholder of 100% of CFM.

INVESTMENT MANAGER

Awad & Associates (the "Investment Manager"), a division of Raymond James &
Associates, Inc., serves as the investment manager pursuant to a sub-investment
advisory agreement among the Fund, Timothy Partners, Ltd. and Awad & Associates,
dated January 1, 1997.

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

The Investment Manager's investment policy committee, comprised of James D.
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 part-
time since 1965 and full-time since 1969, 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 $960 million in assets at
December 31, 1997 for clients on a separate account basis utilizing the same
investment methodology that it will employ for the Fund.

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

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

Awad & Associates currently serves as co-investment advisor to two other
investment companies: Heritage Small Cap Fund and Calvert New Vision Small Cap
Fund. At January 1, 1998, Awad & Associates managed $ 158 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. Awad & Associates managed $90 million in net assets for the Calvert
New Vision Small Cap Fund and received an advisory fee of .40% of its average
daily net assets.

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 employed by the Fund. It
is important to note that these returns do not take into account the effects of
the Fund's moral screening restrictions. The Investment Manager believes that
its philosophy as a small capitalization, value-oriented investor would tend to
eliminate from its investment portfolio the securities of companies directly
involved in alcohol production, tobacco production or casino gambling, companies
which would most likely have too large a capitalization and which would be much
more mature and seasoned than the companies customarily acquired for the
Investment Manager's core portfolio. Based upon the foregoing, the Investment
Manager estimates that if the screening criteria that will be used in managing
the Fund (using data available as of December 31,1996) had been applied with
respect to the accounts included below, an insignificant percentage of the
investments in the accounts at any one time over the 11-year period ended
December 31, 1996 would have been prohibited investments, and the

Page 12
<PAGE>

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 of accounts exclusively managed by
the Fund's portfolio manager, Jim Awad, while he was employed at a previous
firm, BMI Capital, for the period from 1/1/86 through 3/12/92. These results
are shown net of management fees and commissions. The results presented from
3/13/92 forward represent only those accounts managed exclusively managed by Jim
Awad at Awad & Associates through Raymond James & Associates, and these results
are shown net of the highest wrap fee applicable to the accounts (which includes
management fees and commissions). These figures are a time-weighted average for
the entire period, all of which would not be duplicated in any individual
account and would not necessarily result in the same return for the investors.
Further, the separately managed accounts are not subject to investment
limitations, diversification requirements, and other restrictions imposed by the
Investment Company Act of 1940, as amended and the Code; such conditions, if
applicable, may have lowered the returns for the separately managed accounts.
The performance presented does not represent the historical performance of the
Fund and is not indicative of the Fund's future performance.

Source: All performance data was supplied by TPL and the Investment Manager.

<TABLE>
<CAPTION>
COMPOSITE PAST PERFORMANCE OF PAST PERFORMANCE OF FUND PAST PERFORMANCE OF
THROUGH AWAD & ASSOCIATES AND BMI CAPITAL RUSSELL 2000 INDEX
- ------- --------------------------------- -------------------
CLASS A CLASS B
------- -------
<S> <C> <C> <C> <C>
1997 25.69% 21.4% 15.50% 22.36%
1996 15.4% 14.67% 6.98% 16.5%
1995 45.7% 6.40% -5.46% 28.5%
1994 2.4% 1.99% N/A -1.9%
1993 10.3% -8.19% N/A 18.9%
1992 13.3% N/A N/A 18.4%
1991 39.8% N/A N/A 46.0%
1990 13.2% N/A N/A -19.5%
1989 9.7% N/A N/A 16.2%
1988 26.0% N/A N/A 24.9%
1987 -5.4% N/A N/A -10.8%
1986 17.6% N/A N/A 4.0%

ANNUALIZED RETURNS THROUGH DECEMBER 31, 1997

One Year 25.69% 19.67% 15.50% 22.36%
Three Years 28.18% 11.68% N/A 22.33%
Five Years 17.07% N/A N/A 16.41%
Ten Years 16.32% N/A N/A 15.76%
</TABLE>

NOTES:

1: "Past Performance of the Fund" relates to the Institutional Class and
Retail Class shares of the series of the Trust known as The Timothy Plan.
Effective September 26, 1997, the Institutional Class and Retail Class
shares were redesignated as Class A and Class B, respectively.

2: 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 accounts was derived from the sum of the
accounts' total assets, including cash, cash equivalents, short-term
investments and securities valued at current market prices.

3: The Russell 2000 Index is an unmanaged index of common stock prices
comprised of the smallest 2000 stocks in the Russell 3000 Index, which is
an annual ranking of 3000 common stocks by market capitalization. The
Russell 2000 Index represents approximately 10% of the total market
capitalization of the Russell 3000 Index. The Russell 2000 Index 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.

4: The Investment Manager's average annual management fee while at BMI
Capital over the period 1/1/82 - 3/12/92 was 1% or 100 basis points.
During this period, fees on the Investment Manager's individual
accounts

Page 13
<PAGE>

ranged from 0.5% to 1% (50 basis points to 100 basis points). The
Investment Manager's performance figures reported are net of commissions
and management fees.

5: The Composite Past Performance of Awad & Associates reported in the
preceding table for the period 3/13/92 -- 12/31/97 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 12/31/97 was approximately $197 million out of a total
client base of $ 960 million. The performance figures in the table
represent all accounts that were managed with investment strategies and
objectives substantially similar to those of the Fund. The performance
figures are shown net of the highest wrap fee applicable to the accounts
(which includes all management fees and commissions paid to Raymond James
& Associates). The performance figures reported are net of those wrap
fees.

UNDERWRITER

Timothy Partners, Ltd. ("TPL") 1304 West Fairbanks Avenue, Winter Park, Florida,
was engaged pursuant to an agreement effective July 1, 1997 to act as
underwriter for the Fund. The purpose of acting as underwriter is to facilitate
the registration of shares of the Fund under state securities laws and to assist
in the sale of shares. TPL also acts as investment advisor for the Fund. TPL
is not compensated for providing underwriting services to the Fund.

PLANS OF DISTRIBUTION

The Fund has adopted two plans of distribution ("CLASS A PLAN" and "CLASS B
PLAN") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended, whereby it may reimburse TPL or others for expenses actually incurred
by TPL or others in the promotion and distribution of the shares of each
respective Class ("distribution expenses") and servicing its shareholders by
providing personal services and/or maintaining shareholder accounts ("service
fees").

Under the CLASS A PLAN, the Fund reimburses TPL and others for distribution
expenses at an annual rate of 0.25% (of which, the full amount may be service
fees), payable on a monthly basis, of the Fund's aggregate average daily net
assets attributable to CLASS A shares.

Under the CLASS B PLAN, the Fund reimburses TPL and others for distribution
expenses and service fees at an annual rate of 1.00% (0.25% of which is a
service fee) payable on a monthly basis, of the Fund's aggregate average daily
net assets attributable to CLASS B shares. Amounts paid under the CLASS B PLAN
are paid to TPL to compensate it for the services provided and the expenses
borne by TPL and others in the distribution of CLASS B shares, including the
payment of commissions for sales of CLASS B shares. The CLASS B PLAN is
designed to permit an investor to purchase such shares without the assessment of
a front-end sales load and at the same time permit the distributor to compensate
authorized dealers with respect to such shares. In this regard, the purpose and
function of the combined CDSC and distribution fee is to provide for the
financing of the distribution of CLASS B shares.

Other expenses include, but are not limited to, the printing of prospectuses and
reports used for sales purposes, the preparation of sales literature and related
expenses, advertisements, and other distribution-related expenses, including
payments to securities dealers and others participating in the sale and
servicing of Fund shares.

All expenses of distribution and marketing in excess of the maximum amounts
permitted by the CLASS A PLAN and CLASS B PLAN per annum will be borne by TPL
and any amounts paid for the above services will be paid pursuant to a servicing
or other agreement. The CLASS A PLAN and CLASS B PLAN also cover any payments
made by the Fund, TPL, the Investment Manager, or other parties on behalf of the
Fund, TPL, or the Investment Manager,to the extent such payments are deemed to
be for the financing of any activity primarily intended to result in the sale of
shares issued by the Fund within the context of Rule 12b-1.

ADMINISTRATOR

FPS Services, Inc. ("FPS"), 3200 Horizon Drive, King of Prussia, PA 19406-0903,
is the Fund's administrator pursuant to an Administration Services Agreement
(the "Agreement") with the Fund dated January 19, 1994, as amended February 23,
1996.

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

Page 14
<PAGE>

statements, and other documents; and responding to shareholder inquiries.

CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT

The Bank of New York, 48 Wall Street, New York, New York 10286, is custodian for
the securities and cash of the Fund.

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

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

EXPENSES

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

ALTERNATIVE PURCHASE PLAN

The Alternative Purchase Plan permits an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase and
the length of time the investor expects to hold the shares. The primary
difference between the Classes lies in their sales charge structures and ongoing
expenses. CLASS A and CLASS B shares represent interests in the same portfolio
of investments of the Fund.

PURCHASING CLASS A SHARES
APPLICABLE SALES CHARGES

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

TOTAL SALES CHARGE

<TABLE>
<CAPTION>
AS A % OF AS A % OF DEALER CONCESSION
OFFERING NET AMOUNT AS A PERCENTAGE OF
AMOUNT OF YOUR INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------- --------- ---------- -----------------
<S> <C> <C> <C>
$1,000 but under $25,000..... 5.50% 5.82% 5.25%
$25,000 but under $50,000.... 4.25% 4.44% 4.00%
$50,000 but under $100,000... 3.00% 3.09% 2.75%
$100,000 but under $250,000.. 2.00% 2.04% 1.75%
$250,000 but under $500,000.. 1.00% 1.01% 0.75%
$500,000 or over............. 0.00% 0.00% 0.00%
</TABLE>

Page 15
<PAGE>

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

EXEMPTIONS FROM SALES CHARGES

CLASS A shareholders who purchased shares on or before September 22, 1997 are
not subject to the sales charge on past or future purchases. In addition, the
Fund will waive sales charges for purchases by fee-based Registered Investment
Advisers for their clients, broker/dealers with wrap fee accounts, registered
brokers for their personal investment accounts, employees and employer related
accounts of the Advisor and for investors who wish to transfer funds from other
registered investment companies into the Fund. Shares of CLASS A purchased
under the above circumstances will be issued at the net asset value next
determined after receipt of the purchase order in proper form by the transfer
agent.

REDUCED SALES CHARGES

The sales charge for purchases of CLASS A shares of the Fund may be reduced
through Rights of Accumulation or Letter of Intent. To qualify for a reduced
sales charge, investors must so notify their authorized dealer, the Fund or the
Fund's transfer agent or distributor at the time of each purchase of shares
which qualifies for the reduction.

RIGHTS OF ACCUMULATION

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

LETTER OF INTENT

An investor may qualify for a reduced sales charge immediately by signing a non-
binding Letter of Intent stating the investor's intention to invest during the
next 13 months a specified amount which, if made at one time, would qualify for
a reduced sales charge. The first investment cannot be made more than 90 days
prior to the date of the Letter of Intent. Any redemptions made during the 13
month period will be subtracted from the amount of purchases in determining
whether the Letter of Intent has been completed. During the term of a Letter of
Intent, the transfer agent will hold shares representing 5.50% of the indicated
amount in escrow for payment of a higher sales load if the full amount indicated
in the Letter of Intent is not purchased. The escrowed shares will be released
when the full amount indicated has been purchased. If the full amount indicated
is not purchased within the 13 month period, an investor's escrowed shares will
be redeemed in an amount equal to the difference in the dollar amount of sales
charge actually paid and the amount of sales charge the investor would have had
to pay on his or her aggregate purchases if the total of such purchases had been
made at a single time.

PURCHASING CLASS B SHARES
CONTINGENT DEFERRED SALES CHARGE

A contingent deferred sales charge (CDSC) is imposed on certain redemptions of
CLASS B shares. Because CLASS B shares are sold without an initial sales
charge, the entire amount of an investor's purchase payment is invested in the
Fund. CLASS B shares which are held for five years or more after purchase
(calculated from the last day of the month in which the shares were purchased)
will not be subject to any charge upon redemption. Shares redeemed sooner than
five years after purchase may, however, be subject to a contingent deferred
sales charge upon redemption. The charge is assessed on an amount equal to the
lesser of the then current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no charge is assessed on
shares derived from reinvestment of dividends or capital gains distributions.

The amount of the CDSC, if any, varies depending on the number of years from the
time of payment for the purchase of CLASS B shares until the time of redemption
of such shares. Solely for purposes of determining the number of years from the
time of any payment for the purchases of shares, all payments during a month are
aggregated and deemed to have been made on the last day of the month. The amount
of any applicable CDSC will be calculated by multiplying the lesser of the
original purchase price or the net asset value of such shares at the time of
redemption by the applicable percentage shown in the table below.

Page 16
<PAGE>

<TABLE>
<CAPTION>
REDEMPTION WITHIN PERCENTAGE
----------------- ----------
<S> <C>
First Year.............................. 5.0%
Second Year............................. 4.0%
Third Year.............................. 3.0%
Fourth Year............................. 2.0%
Fifth Year.............................. 1.0%
Sixth Year and thereafter............... None
</TABLE>

In determining whether a CDSC is applicable to a redemption, it is assumed that
the redemption is first, of any shares in the shareholder's account that are not
subject to a CDSC; second, of shares held for over five years or shares acquired
pursuant to reinvestment of dividends or distributions, and third, of shares
held longest during the five-year period.

A commission or transaction fee of 4.00% of the purchase amount will be paid by
the Fund's distributor to authorized dealers at the time of purchase.
Additionally, the distributor may, from time to time, pay additional promotional
incentives in the form of cash or other compensation to authorized dealers that
sell CLASS B shares of the Fund.

CONTINGENT DEFERRED SALES CHARGE WAIVERS

The CDSC is waived on redemptions of CLASS B shares (i) following the death or
disability (as defined in the Code) of a shareholder; (ii) in connection with
certain distributions from an IRA or other retirement plans; (iii) pursuant to
the Fund's Systematic Cash Withdrawal Plan, but limited to 10% annually of the
initial value of the account; and (iv) effected pursuant to the right of the
Fund to liquidate a shareholder's account as described under "How to Redeem
Shares."

CONVERSION FEATURE

CLASS B shares automatically convert to CLASS A shares once the economic
equivalent of a 5.50% sales charge is recovered by the Fund for each investment
account. The sales charge is recoverable by the Fund through the distribution
fee paid pursuant to the CLASS B PLAN. The purpose of the conversion feature is
to relieve the long-time shareholders from the higher distribution fee
associated with the CLASS B shares, once distributors have been adequately
compensated for the higher distribution expenses attributable to the CLASS B
shares through payments made pursuant to the CLASS B PLAN. Such conversion will
be on the basis of the relative net asset values per share, without the
imposition of any sales load, fee or other charge.

CLASS B shares acquired through reinvestment of dividends will convert to CLASS
A shares pro rata with CLASS B shares not acquired through dividend
reinvestment.

FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES

In deciding which Class of shares to purchase, investors should take into
consideration their investment goals, present and anticipated purchase amounts
and time horizons. Investors should consider whether, during the anticipated
life of their investment in the Fund, the accumulated distribution fees and the
CDSC on CLASS B shares prior to the conversion would be less than the initial
sales charge on CLASS A shares purchased at the same time, and to what extent
such differential would be offset by the higher dividends per share on CLASS A
shares. To assist investors in making this determination, investors should refer
to the Example under " Expenses of the Fund," regarding the effect of the
charges applicable to each Class of shares. In this regard, CLASS A shares may
be more beneficial to the investor who qualifies for reduced initial sales
charges or purchase at net asset value, as described under "Alternative Purchase
Plan - Purchasing Class A Shares."

Over time, the cumulative expense of the 1.00% annual service and distribution
fees on the CLASS B shares of the Fund will approximate or exceed the expense of
the maximum 5.50% initial sales charge plus the 0.25% annual distribution and
service fee on the CLASS A shares of the Fund. CLASS A shares are subject to a
lower distribution fee and, accordingly receive correspondingly higher dividends
per share. However, because initial sales charges are deducted at the time of
purchase, investors in CLASS A shares do not have all their funds invested
initially and, therefore, initially own fewer shares. Other investors might
determine that it is more advantageous to purchase CLASS B shares and have all
their funds invested initially, while remaining subject to a CDSC. Ongoing
distribution fees on CLASS B shares are offset to the extent of the additional
funds originally invested and any return realized on those funds. However,
there can be no assurance as to the return, if any, which will be realized on
such additional funds.

CLASS A shares may be appropriate for investors who prefer to pay the sales
charge up front, want to take advantage of the reduced sales charges available
on larger investments, wish to maximize their current income from the start,
prefer not to pay redemption charges or have a longer-term investment horizon.
CLASS B shares may be appropriate for investors who wish to avoid a front-end
sales charge, put 100% of their investment dollars to work immediately or have a
longer-term investment horizon. CLASS B shareholders pay a CDSC if they redeem
during the first five years after

Page 17
<PAGE>

purchase, unless a sales charge waiver applies. Investors expecting to redeem
during this period should consider the cost of the applicable CDSC in addition
to the annual CLASS B service and distribution fee, as compared with the cost of
the applicable initial sales charge and annual service and distribution fee
applicable to CLASS A shares.

- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------

General

Shares of the Fund may be purchased directly from the Fund or through authorized
dealers at the net asset value per share, plus the applicable sales charge for
CLASS A shares and at the net asset value per share for CLASS B shares. While
no sales charge is imposed at the time CLASS B shares are purchased, a CDSC
charge may be imposed at the time of redemption. (See "Purchasing Class B
Shares" under "Alternative Purchase Plan"). The Fund reserves the right to
reject any purchase order and to suspend the offering of shares of the Fund.
The Fund will not accept a check endorsed over by a third-party. The minimum
initial investment for CLASS A shares and CLASS B shares is $1,000 with no
minimum for subsequent investments. The Fund reserves the right to vary the
initial investment minimum and minimums for additional investments at any time.
There is no minimum initial investment requirement for qualified retirement
plans.

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

Purchases may be made in one of the following ways:

PURCHASES BY MAIL

Shares may be purchased initially by completing the Investment Application on
pages XX AND XX of this Prospectus and mailing it to the transfer agent,
together with a check payable to THE TIMOTHY PLAN, c/o FPS Services, Inc., 3200
Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903. All checks for
purchase of shares must be drawn on U.S. banks and be made payable to the Fund
in U.S. dollars.

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

PURCHASES THROUGH BROKER/DEALERS

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

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

PURCHASES BY WIRE

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

UMB BANK KC NA
ABA #10-10-00695
-----------
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
-------------
FBO "THE TIMOTHY PLAN -CLASS (A) or (B)"
----------

Page 18
<PAGE>

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

Fund shares may be redeemed at their net asset value (subject to any applicable
CDSC for CLASS B shares) on any business day that the NYSE is open. (See
"Determination of Net Asset Value"). Redemptions will be effective at the net
asset value per share next determined after the receipt by the transfer agent of
a redemption request meeting the requirements described below. The Fund
normally sends redemption proceeds on the next business day, but in any event
redemption proceeds are sent within seven calendar days of receipt of a
redemption request in proper form. Payment may also be made by wire directly to
any bank previously designated by the shareholder in a shareholder account
application. There is a $9.00 charge for redemptions by wire. Please note that
the shareholder's bank also may impose a fee for wire service. The Fund will
honor redemption requests of shareholders who recently purchased shares by
check, but will not mail the proceeds until it is reasonably satisfied that the
purchase check has cleared, which may take up to fifteen days from the purchase
date, at which time the redemption proceeds will be mailed to the shareholder.
To avoid delays of this kind, you may wish to purchase by wire if you are
planning on redeeming your shares in the near future.

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

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

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

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

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

Page 19
<PAGE>

Fund will not recognize gain or loss for federal tax purposes, on the securities
used to complete the redemption but the shareholder will recognize gain or loss
equal to the difference between the fair market value of the securities received
and the shareholder's basis in the Fund shares redeemed.

Shares may be redeemed in one of the following ways:

REDEMPTION BY MAIL

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

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

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

REDEMPTION BY TELEPHONE

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

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

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

SYSTEMATIC CASH WITHDRAWAL PLAN

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

CLASS B shareholders who establish a Withdrawal Plan may redeem up to 10%
annually of the shareholder's initial account balance without incurring a
contingent deferred sales charge. Initial account balance means the amount of
the shareholder's investment at the time the election to participate in the
Withdrawal Plan is made. (See "Purchasing Class B Shares - Waiver of Contingent
Deferred Sales Charge").

REDEMPTION BY AUTOMATED CLEARING HOUSE ("ACH")

A shareholder may elect to have redemption proceeds, cash distributions or
systematic cash withdrawal payments transferred to a bank, savings and loan
association or credit union that is an on-line member of the ACH system. There

Page 20
<PAGE>

are no fees charged by the Fund associated with the use of the ACH service.

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

ADDITIONAL INFORMATION

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

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

- --------------------------------------------------------------------------------
RETIREMENT PLANS
- --------------------------------------------------------------------------------

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

- --------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
- --------------------------------------------------------------------------------

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

- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS, AND TAXES
- --------------------------------------------------------------------------------

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

Dividends paid by the Fund with respect to its CLASS A and CLASS B shares are
calculated in the same manner and at the same time. Both CLASS A and CLASS B
shares of the Fund will share proportionately in the investment income and
expenses of the Fund, except that the per share dividends of CLASS B shares will
be less than per share dividends of CLASS A shares as a result of additional
distribution expenses charged to CLASS B shares.

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

Page 21
<PAGE>

timing requirements imposed by the Code and by meeting certain other
requirements relating to the sources of its income and diversification of its
assets.

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

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

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

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

In addition to federal taxes, shareholders may be subject to state and local
taxes on distributions. Each year, the Fund will mail you information on the
tax status of the Fund's dividends and distributions. Of course, shareholders
who are not subject to tax on their income would not be required to pay tax on
amounts distributed to them by the Fund.

The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.

The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the Fund.

- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------

The net asset value per share of each Class of the Fund 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.

Page 22
<PAGE>

reported bid price in the market on that day, if any. Securities for which
market quotations are not readily available and all other assets will be valued
at their respective fair market value as determined in good faith by, or under
procedures established by, the Board of Trustees. In determining fair value,
the Trustees may employ an independent pricing service.

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

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

- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------

From time to time the Fund may advertise performance data. Fund performance may
be shown by presenting one or more performance measurements, including average
total return and aggregate annual total return. Average annual return reflects
the average percentage change per year in value of an investment in the Fund.
Aggregate total return reflects the total percentage change over the stated
period. Any fees charged by banks or their institutional investors directly to
their customer accounts in connections with investments in the Fund will not be
included in the Fund's calculations of total returns.

The Fund may compare its investment performance with appropriate market indices
such as Russell 2000 Index and to appropriate mutual fund indices; and the Fund
may advertise its ranking compared to other similar mutual funds as reported by
industry analysts such as Lipper Analytical Services, Inc.

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

The performance of CLASS A shares and CLASS B shares will differ because of
CLASS A'S front-end sales charge (when applicable) and CLASS B'S CDSC (when
applicable) and higher 12b-1 distribution expenses. Shareholders may obtain
current performance information about the Fund by calling (800) TIM-PLAN.

Further information about the performance of the Fund is included in the Fund's
Semi-Annual Report dated June 30, 1997 and Annual Report dated December 31,
1997, which may be obtained without charge by contacting the Fund at (800) TIM-
PLAN.

Page 23
<PAGE>

----------------------------
TIMOTHY PLAN(R) BROKER DEALER:_____________
APPLICATION FOR CLASS A AND CLASS B REGISTERED REP:____________
MAIL TO: BRANCH #:___ REP #:_______
BRANCH NAME:_______________
FPS SERVICES, INC. P O BOX 61503, KING OF BRANCH ADDRESS:____________
PRUSSIA, PA 19406-0903 PHONE NUMBER: ( ) - Ext:
----------------------------

1. INITIAL INVESTMENT ($1,000 minimum)
FORM OF PAYMENT
[_] Check for $_____________enclosed. (make payable to "The Timothy Plan -
Class A or B") You must indicate which class of shares in which you wish
to invest.
[_] Class A [_] Class B (Please check one.)
[_] By Wire*1 An initial purchase of $_____________________ was wired on
_____ _____ ______
Date by

__________________________________to account #__________________________________
Name of your Bank or Broker Number assigned by F/P/S

2. REGISTRATION (Please Print) No certificate will be issued unless requested in
writing. INDIVIDUAL Must complete items 1, 3, 4 and 8 (you may choose options
5, 6 or 7).

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

- --------------------------------------------------- ----------------------
Joint Owner 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.

<TABLE>
<S> <C> <C> <C>
Income Dividends (check one box/line only) [_]reinvested [_]paid in cash
Capital Gains Distributions (check one box/line only) [_]reinvested [_]paid in cash
</TABLE>

5. LETTER OF INTENT (CLASS A ONLY)
[_] I intend to purchase, although I am not obligated to do so, shares of the
Fund within a 13-month period which, together with the total asset value of
shares owned, will aggregate at least (check one): [_] $25,000 [_] $50,000
[_] $100,000 [_] $250,000 [_] $500,000

RIGHTS OF ACCUMULATION
I would like to apply Rights of Accumulation, if available, to my purchases of
Fund shares. I understand that the exercise of these rights is subject to
confirmation of my holdings by the Fund's transfer agent, FPS Services, Inc. I
agree to notify FPS Services, Inc. of my desire to apply these rights at the
time of purchase and to provide the account numbers, names and relationships of
each person to me.

___________________________________________________
Fund Account Title Fund Account Number

*1 Before making an initial investment by wire, you must be assigned an
account number by calling (800) 662-0201. Then have your local bank wire
your funds to: United Missouri Bank, N.A., ABA # 10-10-00695 for credit to
FPS Services, Inc. AC # 98-7037-071-9 (The Timothy Plan). Be sure to include
your name and account number on the wire.

*2 (Joint ownership with rights of survivorship unless otherwise noted).

Page 24
<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

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)

__________________________ and were adopted at a meeting of the Board of
(state)
Directors or Trustees of the organization or corporation duly called and held on

________________ at which a quorum was preset and acting throughout, and that
the same are now in full force and effect.

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

_____________________________ ___________________________

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

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

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

Page 25

<PAGE>

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

HOW DOES IT WORK?

1. FPS Services, Inc., through our bank, United Missouri Bank KC NA, draws an
automatic clearing house (ACH) debit electronically against your personal
checking account each month, according to your instructions.

2. Choose any amount ($100 or more) that you would like to invest regularly and
your debit for this amount will be processed by FPS Services, Inc. as if you
had written a check yourself.

3. Shares will be purchased and a confirmation sent to you.

HOW DO I SET IT UP?

1. Complete the forms and the Fund Application Form if you do not already have
an existing account.

2. Mark one of your personal checks or deposit slips VOID, attach it to the
forms below and mail to FPS Services, Inc., P.O. Box 61503, King of Prussia,
PA 19406-0903

3. As soon as your bank accepts your authorization, debits will be generated and
your Automatic Investment Plan started. In order for you to have ACH debits
from your account, your bank must be able to accept ACH transactions and/or
be a member of an ACH association. Your branch manager should be able to tell
you your bank's capabilities. We cannot guarantee acceptance by your bank.

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

______________________________________________________________________

AUTOMATIC INVESTMENT PLAN APPLICATION

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

Please start an Automatic Investment Plan for me and invest____________________
($100 or more)

on the [_] 10th [_] 15th [_] 20th of each month,

in shares of THE TIMOTHY PLAN - [_] CLASS A OR [_] CLASS B. (Please check one).

Check one:

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

__________________________________________________________________
Name as account is registered

__________________________________________________________________
Street

__________________________________________________________________
City State Zip + ext.

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

Signature(s): _______________________________

_______________________________

Page 26
<PAGE>

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

TO:_______________________________ __________________________________

Name of Your Bank Bank Checking Account Number

____________________________________________________________________
Address of Bank or Branch Where Account is Maintained

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

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

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

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

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

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

INDEMNIFICATION AGREEMENT

TO: The bank named above

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

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

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

Page 27
<PAGE>

----------------------------
TIMOTHY PLAN(R) BROKER DEALER:_____________
REGISTERED REP:____________
BRANCH #:___ REP #:_______
CLASS A AND CLASS B BRANCH NAME:_______________
Request for Transfer 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 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

<TABLE>
<S> <C> <C> <C> <C>
Type of Account: [_] Individual [_] Joint [_] UGMA [_] Trust

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

3. AMOUNT TO BE TRANSFERRED TO THE TIMOTHY PLAN

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

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

4. TRANSFER INSTRUCTIONS

Make check payable to: The Timothy Plan [_] Class A or [_] Class B. You
must indicate which class of shares in which you wish to invest. (Please
check one.)
Mail to: Post Office Box 61503, King of Prussia, PA 19406-4902.

5. INVESTOR'S AUTHORIZATION

______________________________ ______ ______ _____ ____________________
Signature of Participant Date Signature Guarantee

Page 28

<PAGE>

THIS PAGE INTENTIONALLY LEFT BLANK.

Page 29
<PAGE>

NOTES

Page 30
<PAGE>

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

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

UNDERWRITER
Timothy Partners, Ltd
1304 West Fairbanks Avenue
Winter Park, FL 32789

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

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

LEGAL COUNSEL
Pepper, Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103

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

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

Visit The Timothy Plan web site on the Internet at:
WWW.TIMOTHYPLAN.COM
<PAGE>

PROSPECTUS FOR
THE TIMOTHY PLAN VARIABLE SERIES
MAY 1, 1998

________________________________________________________________________________
Distributed By:
Timothy Partners, Ltd., 1304 West Fairbanks Avenue, Winter Park, Florida 32789
(800) 846-7526
________________________________________________________________________________

The Fund is intended to be a funding vehicle for variable annuity contracts ("VA
Contracts") offered through separate accounts of the Annuity Investors Life
Insurance Company (the "Insurance Company").

This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing in the Fund through a VA
Contract offered by the Insurance Company. Investors should read and retain
this Prospectus for future reference.

More information about the Fund has been filed with the U.S. Securities and
Exchange Commission, and is contained in the "Statement of Additional
Information" dated May 1, 1998, as amended from time to time, 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).

SHARES OF THE FUND MAY BE PURCHASED ONLY BY THE SEPARATE ACCOUNTS OF INSURANCE
COMPANIES, FOR THE PURPOSE OF FUNDING VARIABLE ANNUITY CONTRACTS. THE FUND MAY
NOT BE AVAILABLE IN YOUR STATE DUE TO VARIOUS INSURANCE REGULATIONS. PLEASE
CHECK WITH YOUR INSURANCE COMPANY FOR AVAILABILITY. IF THE FUND IS NOT
AVAILABLE IN YOUR STATE, THIS PROSPECTUS IS NOT TO BE CONSIDERED A SOLICITATION.
THIS PROSPECTUS SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS OF THE
SEPARATE ACCOUNT OF THE SPECIFIC INSURANCE PRODUCT, WHICH ACCOMPANIES THIS
PROSPECTUS.

Visit The Timothy Plan web site on the Internet at:
WWW.TIMOTHYPLAN.COM

<PAGE>

TABLE OF CONTENTS

PAGE
Prospectus Summary.....................................

The Fund...............................................

Investment Objectives and Policies.....................

Risk Factors...........................................

Investment Restrictions................................

Management of the Fund.................................

Purchases and Redemptions of Shares....................

Shares of Beneficial Interest..........................

Dividends, Distributions and Taxes.....................

Determination of Net Asset Value.......................

Performance............................................

Page 2
<PAGE>

================================================================================

PROSPECTUS SUMMARY

THE FUND THE TIMOTHY PLAN VARIABLE SERIES (the "Fund") is a separate series
of The Timothy Plan (the "Trust"), an open-end, diversified
management investment company established as a series Delaware
business trust. The Fund is designed to provide an investment
vehicle for variable annuity contracts ("VA Contracts") offered by
the Annuity Investors Life Insurance Company (the "Insurance
Company").

INVESTMENT The primary objective of the Fund is long-term capital growth and
OBJECTIVES the secondary objective is current income. The Fund seeks to
achieve its objectives while abiding by the ethical standards
established for investments by the Fund. As with any mutual fund,
there is no assurance that the Fund will achieve its objectives.

INVESTMENT Timothy Partners, Ltd. ("TPL") is the Fund's investment advisor and
ADVISOR Awad & Associates (the "Investment Manager"), a division of Raymond
& James, Inc. is the Fund's investment manager

DISTRIBUTOR TPL is also the distributor and underwriter of the Fund's shares.

PURCHASES Purchases and redemptions of shares may be made only by the
AND Insurance Company for its separate accounts at the direction of VA
REDEMPTIONS Contract owners. Please refer to the prospectus of your VA Contract
for information on how to direct investments in, or redemptions
from, the Fund and any fees that may apply.

The above information is qualified in its entirety by reference to
the more detailed information appearing elsewhere in this
Prospectus.

Page 3
<PAGE>

- --------------------------------------------------------------------------------
THE FUND
- --------------------------------------------------------------------------------

THE TIMOTHY PLAN (the "Trust") is an open-end, diversified management investment
company commonly known as a mutual fund. The Trust was established as a series
Delaware business trust on December 16, 1993. The Trust currently offers two
series of shares: The Timothy Plan and The Timothy Plan Variable Series. This
Prospectus only pertains to The Timothy Plan Variable Series (the "Fund").
Shares of the Fund are offered only for the purpose of funding variable annuity
contracts ("VA Contracts") offered through separate accounts of the Annuity
Investors Life Insurance Company (the "Insurance Company").

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

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

Page 4
<PAGE>

companies engaged in pornography); (2) Pro Vita Advisors (to identify companies
that directly and indirectly participate in abortion); and (3) Life Decisions
International (to identify companies that indirectly support abortion causes
through corporate funding programs). TPL retains the right to change the
ministries whose information it reviews, at its discretion.

Potential equity investment candidates will be analyzed to determine their
ability to repay all fixed debt obligations (including certain "off balance
sheet debts" such as operating lease obligations and unfunded pension
liabilities) from their historical level of net investment income within a
reasonable time period, generally less than five years. Securities are
typically sold when an appreciation objective is met. The Fund may invest up to
30% of its assets in cash or debt securities. Although the Investment Manager
does not utilize a market timing strategy, if market conditions are viewed to
require that the Fund take a temporary defensive position, the Fund may invest
up to 100% of its assets in (I) debt securities issued by the U.S. Government,
its agencies or instrumentalities, (ii) commercial paper, or (iii) certificates
of deposit and bankers' acceptances with respect to any of the foregoing
investments. The Fund may also invest in such securities pending the investment
of the proceeds of certain sales of portfolio securities and at such other times
when suitable equity securities are not available. It is impossible to predict
whether, or for how long, the Fund will use any such temporary defensive
strategies.

- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------

RISKS OF CERTAIN FIXED INCOME SECURITIES

Page 5
<PAGE>

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.

Although the Fund intends to invest primarily in common stocks, common stock
equivalents, and ADDS, 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.

REPURCHASE AGREEMENTS. Under a repurchase agreement the Fund acquires a debt
instrument for a relatively short period (usually not more than one week)
subject to the obligation of the seller to repurchase and the Fund to resell
such debt instrument at a fixed price. The Fund will enter into repurchase
agreements only with banks which are members of the Federal Reserve System, or
securities dealers who are members of a national securities exchange or are
market makers in government securities and report to the Market Reports Division
of the Federal Reserve Bank of New York and, in either case, only where the debt
instrument collateralizing the repurchase agreement is a U.S. Treasury or agency
obligation supported by the full faith and credit of the United States. A
repurchase agreement may also be viewed as the loan of money by the Fund to the
seller. The resale price specified is normally in excess of the purchase price,
reflecting an agreed upon interest rate. The rate is effective for the period
of time the Fund is invested in the agreement and may not be related to the
coupon rate on the underlying security. The term of these repurchase agreements
will usually be short (from overnight to one week). At no time will the Fund
invest in repurchase agreements of more than sixty days. The securities which
are collateral for the repurchase agreements, however, may have maturity dates
in excess of sixty days from the effective date of the repurchase agreement. The
Fund will always receive, as collateral, securities whose market value,
including accrued interest, will at least equal 102% of the dollar amount to be
paid to the Fund under each agreement at its maturity, and the Fund will make
payment for such securities only upon physical delivery or evidence of book
entry transfer to the account of the Custodian. If the seller defaults, the
Fund might incur a loss if the value of the collateral securing the repurchase
agreement declines, and might incur disposition costs in connection with
liquidation of the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, collection of the
collateral by the Fund may be delayed or limited. The Fund also may not be able
to substantiate its interests in the underlying securities. While management of
the Fund acknowledges these risks, it is expected that such risks can be
controlled through stringent security selection and careful monitoring
procedures. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 10%

Page 6
<PAGE>

of the market value of the Fund's net assets would be invested in such
repurchase agreements and any other illiquid assets. For purposes of the
diversification test for qualification as a regulated investment company under
the Internal Revenue Code (the "Code"), Repurchase Agreements are not counted as
cash, cash items or receivables, but rather as securities issued by the counter-
party to the Repurchase Agreements.

- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

The investment restrictions specifically provide that the Fund will not:

(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;

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

(h) pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 33 1/3%

Page 7
<PAGE>

of the value of its net assets, but only to secure borrowing for temporary
or emergency purposes, such as to effect redemptions; or

- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------

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

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

For its services, TPL is paid an annual fee equal to 1.0% of the Fund's average
daily net assets. This fee is subject to certain voluntary reductions in fees
paid by the Fund. A portion of the advisory fee is paid by TPL to: (i) the
Investment Manager for assisting in the selection of portfolio securities for
the Fund and (ii) Covenant Financial Management ("CFM") as reimbursement for
certain expenses related to the daily operations of the Fund performed by CFM.
In addition, this fee also covers the cost of postage, materials and handling of
the fulfillment function of processing prospectus requests as well as other
sundry marketing and general administration expenses. The fee payable to and
services provided by the Investment Manager are described under the heading
"Investment Manager" below. The fee payable to and services provided by CFM are
described at the end of this section. TPL's fee is higher than that charged by
other funds, but is comparable to fees charged by funds with similar investment
objectives. TPL has offices located at 1304 West Fairbanks Avenue, Winter Park,
FL 32789.

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

Certain administrative and recordkeeping services that would otherwise be
performed by the Advisor or its service providers may be performed by the
Insurance Company. The Advisor or its service providers may make payments to the
Insurance Company to defray the cost of providing these types of services of
variable Fund Services.

Page 8
<PAGE>

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

The Investment Manager's investment policy committee, comprised of James D.
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 part-time
since 1965 and full-time since 1969, 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 $960 million in assets at
December 31, 1997 for clients on a separate account basis utilizing the same
investment methodology that it will employ for the Fund.

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

The Investment Manager currently serves as co-investment advisor to two other
investment companies: Heritage Series Trust: Heritage Small Cap Stock Fund and
the Calvert New Visions Small Cap Fund. At January 1, 1998, Awad & Associates
managed $158 million in net assets of Heritage Small Cap Stock 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. As of the same date, Awad &
Associates managed $90 million in net assets of the Calvert New Vision Small Cap
Fund and received an advisory fee of 0.40% of its average daily net assets.

INVESTMENT MANAGER'S HISTORICAL PERFORMANCE
- -------------------------------------------

These performance figures include the results of accounts exclusively managed by
the Fund's portfolio manager, Jim Awad, while he was employed at a previous
firm, BMI Capital, for the period from 1/1/86 through 3/12/92. These results
are shown net of management fees and commissions. The results presented from
3/13/92 forward represent only those accounts managed exclusively by Jim Awad at
Awad & Associates through Raymond James & Associates, and these results are
shown net of the highest wrap fee applicable to the accounts (which includes
management fees and commissions). The results presented also include the
performance of The Timothy Plan-Class A and Class B Shares, the other series of
the Trust, which invests in a substantially similar portfolio as the Fund. 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

Page 9

<PAGE>

necessarily result in the same return for the investors. Further, the
separately managed accounts are not subject to investment limitations,
diversification requirements, and other restrictions imposed by the Investment
Company Act of 1940, as amended and the Code; such conditions, if applicable,
may have lowered the returns for the separately managed accounts. The
performance presented does not represent the historical performance of the Fund
and is not indicative of the Fund's future performance.

Source: All performance data was supplied by TPL and the Investment Manager.

<TABLE>
<CAPTION>
COMPOSITE PAST PERFORMANCE OF PAST PERFORMANCE OF PAST PERFORMANCE OF
THROUGH AWAD & ASSOCIATES AND BMI CAPITAL THE TIMOTHY PLAN RUSSELL 2000 INDEX
- ------- --------------------------------- ---------------- ------------------
CLASS A CLASS B
_______ _______
<S> <C> <C> <C> <C>
1997 25.69% 14.67% 15.50% 22.36%
1996 15.4% 6.40% 6.98% 16.5%
1995 45.7% 1.99% -5.46% 28.5%
1994 2.4% -8.19% N/A -1.9%
1993 10.3% N/A N/A 18.9%
1992 13.3% N/A N/A 18.4%
1991 39.8% N/A N/A 46.0%
1990 -13.2% N/A N/A -19.5%
1989 9.7% N/A N/A 16.2%
1988 26.0% N/A N/A 24.9%
1987 -5.4% N/A N/A -10.8%
1986 17.6% N/A N/A 4.0%
</TABLE>

<TABLE>
<CAPTION>
ANNUALIZED RETURNS THROUGH DECEMBER 31, 1997
- --------------------------------------------
<S> <C> <C> <C> <C>
One Year 25.69% 19.67% 15.50% 22.36%
Three Years 28.18% 11.68% N/A 22.33%
Five Years 17.07% N/A N/A 16.41%
Ten Years 16.32% N/A N/A 15.76%
</TABLE>

NOTES:
- ------
1: "Fund Performance" relates to the Institutional Class and Retail Class
--
shares of the series of the Trust known as The Timothy Plan. Effective
September 26, 1997, the Institutional Class and Retail Class shares were
redesignated as Class A and Class B, respectively.

3: The Russell 2000 Index is an unmanaged index of common stock prices
--
comprised of the smallest 2000 stocks in the Russell 3000 Index, which is
an annual ranking of 3000 common stocks by market capitalization. The
Russell 2000 Index represents approximately 10% of the total market
capitalization of the Russell 3000 Index. The Russell 2000 Index 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.

4: The Investment Manager's average annual management fee while at BMI
--
Capital over the period 1/1/82 -3/12/92 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). The
Investment Manager's performance figures reported are net of commissions
and management fees.

5: The Composite Past Performance of Awad & Associates reported in the
--
preceding table for the period 3/13/92 -- 12/31/97 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 12/31/97 was approximately $197 million out of a total
client base of $960 million. The performance figures in the table
represent all accounts that were managed with investment strategies and
objectives substantially similar to those

Page 10
<PAGE>

of the Fund. The performance figures are shown net of the highest wrap
fee applicable to the accounts (which includes all management fees and
commissions paid to Raymond James & Associates). The performance figures
reported are net of those wrap fees.

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

ADMINISTRATOR
- -------------

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

EXPENSES
- --------

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

- --------------------------------------------------------------------------------
PURCHASES AND REDEMPTIONS OF SHARES
- --------------------------------------------------------------------------------

Purchases and redemptions of shares may be made only by Insurance Company for
its separate accounts at the direction of VA Contract owners. Please refer to
the prospectus of your VA Contract for information on how to direct investments
in or redemptions from the Fund and any fees that may apply. Generally, the
Insurance Company places orders for shares based upon payments and withdrawal
requests received from VA Contract owners during the day and places an order to
purchase or redeem the net number of shares by the following morning. Orders
are usually executed at the net asset value per share determined at the end of
the business day that a payment or withdrawal request is received by the
Insurance Company. There are no sales or redemption charges. However, certain
sales or deferred sales

Page 11
<PAGE>

charges and other charges may apply to your VA Contract. Those charges are
disclosed in the separate account prospectus. The Trust reserves the right to
suspend the offering of Fund shares, or to reject any specific purchase order.

Redemption proceeds will normally be wired to the Insurance Company on the next
business day after receipt of the redemption instructions by the Fund, but in no
event later than 7 days following receipt of instructions. The Fund may suspend
redemptions or postpone payments when the New York Stock Exchange ("NYSE") is
closed or when trading is restricted for any reason (other than weekends or
holidays) or under emergency circumstances as determined by the U.S. Securities
and Exchange Commission.

ADDITIONAL INFORMATION

- --------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
- --------------------------------------------------------------------------------

The beneficial interest of the Fund is divided into an unlimited number of
shares ("Shares") with a par value of $0.001 each. There are no preemptive
rights. Shares, when issued, will be fully paid and nonassessable. Fractional
shares have proportional voting rights. Shares of the Fund do not have
cumulative voting rights, which means that the holders of more than 50% of the
shares voting for the election of Trustees can elect all of the Trustees if they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any person to the Board of Trustees.

The Fund intends 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 also intends to comply with the diversification requirements of Section
817(h) of the Code for variable annuity contracts and variable life insurance
policies so that the VA Contract owners should not be subject to federal tax on
distributions of dividends and income from the Fund to the Participating
Insurance Company separate accounts. VA Contract owners should review the
prospectus for their VA Contract for information regarding the tax consequences
to them of purchasing a contract or policy.

Under current tax law, dividends or capital gain distributions from the Fund are
not currently taxable when left to accumulate within a VA contract. Depending
on the VA contract, withdrawals from the contracts may be subject to ordinary
income tax and, in addition, to a 10% penalty tax on withdrawals before age
9 1/2.

Page 12
<PAGE>

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

- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------

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

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

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

Page 13
<PAGE>

- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------

From time to time the Fund (or the Insurance Company) may advertise performance
data. Fund performance may be shown by presenting one or more performance
measurements, including average total return and aggregate annual total return.
Average annual return reflects the average percentage change per year in value
of an investment in the Fund. Aggregate total return reflects the total
percentage change over the stated period. Any fees charged by banks or their
institutional investors directly to their customer accounts in connections with
investments in the Fund will not be included in the Fund's calculations of total
returns.

The Fund may compare its investment performance with appropriate market indices
such as the Russell 2000 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 and the composition of the investments
in the Fund. 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.

TOTAL RETURNS AND YIELDS QUOTED FOR THE FUND INCLUDE THE FUND'S EXPENSES, BUT
MAY NOT INCLUDE CHARGES AND EXPENSES ATTRIBUTABLE TO ANY PARTICULAR INSURANCE
PRODUCT. BECAUSE SHARES OF THE FUND MAY BE PURCHASED ONLY THROUGH VA CONTRACTS,
YOU SHOULD CAREFULLY REVIEW THE PROSPECTUS OF YOUR VA CONTRACT FOR INFORMATION
ON RELEVANT CHARGES AND EXPENSES. Excluding these charges from quotations of
the Fund's performance has the effect of increasing the performance quoted. You
should bear in mind the effect of these charges when comparing the Fund's
performance to that of other mutual funds.

Further information about the performance of the Fund is included in the Fund's
Semi-Annual Report dated June 30, 1997 and Annual Report, dated December 31,
1997, which may be obtained without charge by contacting the Fund at (800) TIM-
PLAN. Shareholders may obtain current performance information about the Fund by
calling (800) TIM-PLAN.

Page 14
<PAGE>

NOTES

Page 15
<PAGE>

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

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

UNDERWRITER
Timothy Partners, Ltd
1304 West Fairbanks Avenue
Winter Park, FL 32789

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

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

LEGAL COUNSEL
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103

AUDITORS
Tait, Weller & Baker
Eight Penn Center
Suite 800
Philadelphia, PA 19103-2108

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

Visit The Timothy Plan web site on the Internet at:
WWW.TIMOTHYPLAN.COM
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

THE TIMOTHY PLAN

THE TIMOTHY PLAN-CLASS A AND CLASS B
AND
THE TIMOTHY PLAN VARIABLE SERIES

MAY 1, 1998

- --------------------------------------------------------------------------------
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, Florida 32789
(800) 846-7526
- --------------------------------------------------------------------------------

This Statement of Additional Information is in addition to and supplements the
current Prospectuses of The Timothy Plan (the "Trust"), which currently consists
of two separate investment series: THE TIMOTHY PLAN and THE TIMOTHY PLAN
VARIABLE SERIES.

THE TIMOTHY PLAN (the "Trust") is an open-end diversified investment company,
currently offering two series of shares (collectively, the "Funds"): The Timothy
Plan series (referred to herein as the "Timothy Fund") currently offers two
classes of shares: Class A (formerly, Institutional Class) and Class B
(formerly, Retail Class). The Timothy Plan Variable Series (referred to herein
as the "Timothy Variable Fund") is a single class series of the Trust whose
shares are only offered to insurance companies for the purpose of funding
variable annuity contracts ("VA Contracts") offered through separate accounts of
the Annuity Investors Life Insurance Company (the "Insurane Company").

This Statement of Additional Information is not a prospectus but supplements and
should be read in conjunction with The Timothy Plan and The Timothy Plan
Variable Series Prospectuses. Copies of the Prospectuses may be obtained from
the Trust without charge by writing the Trust at 1304 West Fairbanks Avenue,
Winter Park, Florida 32789 or by calling the Trust at (800) 846-7526. Retain
this Statement of Additional Information for future reference.

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

- --------------------------------------------------------------------------------
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
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 TRUST......................................

DISTRIBUTION PLANS......................................................

TAXATION................................................................

GENERAL INFORMATION.....................................................

Audits and Reports.................................................

Miscellaneous......................................................

PERFORMANCE.............................................................

Comparisons and Advertisements.....................................

FINANCIAL STATEMENTS....................................................
</TABLE>

Page 2
<PAGE>

THE TIMOTHY PLAN - INVESTMENTS

Each Fund seeks to achieve its objectives by making investments selected in
accordance with that Fund's investment restrictions and policies. Each Fund
will vary its investment strategy as described in that Fund's Prospectus to
achieve its objectives. This Statement of Additional Information contains
further information concerning the techniques and operations of the Funds, the
securities in which they will invest, and the policies they will follow.

THE TIMOTHY FUND issues two classes of shares (Class A and Class B) that invest
in the same portfolio of securities. Class A and Class B shares differ with
respect to sales structure and 12b-1 Plan expenses.

THE TIMOTHY VARIABLE FUND issues only one class of shares and is intended to be
a funding vehicle for variable annuity contracts ("VA Contracts") offered
through separate accounts of Annuity Investors Life Insurance Company (the
"Insurance Company").

Both Funds have a primary investment objective of long-term capital growth and a
secondary objective of current income. The Funds seek to achieve their stated
objectives by investing in securities issued by companies which, in the opinion
of the Funds' Advisor, conduct business in accordance with the stated philosophy
and principles of the Funds. The following information supplements the
information provided in each Fund's Prospectus.

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 Funds invest.

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 Funds 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 Funds 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 Funds with opportunities which are consistent with the Funds'
investment objectives and policies.

WARRANTS The Funds 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.

Page 3
<PAGE>

AMERICAN DEPOSITORY RECEIPTS The Funds 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 Funds 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 Funds do 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 each 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 that 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 Funds to purchase or sell
securities for short-term trading purposes, but the Funds may sell securities to
recognize gains or avoid potential for loss. The Funds 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. Each Fund presently estimates
that its annualized portfolio turnover rate generally will not exceed a range of
50% to 75%, and may be lower than 50%, during most periods. The portfolio
turnover rate for the Timothy Fund for the fiscal years ended December 31, 1996
and 1997 was 93.08% and 136.36%, respectively. As of December 31, 1997, the
Timothy Variable Fund had not commenced operations and therefore, did not have
any portfolio turnover to report. High portfolio turnover would involve
additional transaction costs (such as brokerage commissions) which are borne by
the Funds, or adverse tax effects. (See "Dividends, Distributions and Taxes" in
each Fund's Prospectus.)

INVESTMENT RESTRICTIONS

In addition to those set forth in the Funds' current Prospectuses, the Funds
have adopted the Investment Restrictions set forth below, which are fundamental
policies of each Fund, and which cannot be changed without the approval of a
majority of the outstanding voting securities of each Fund. 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

Page 4
<PAGE>

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 a 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 Trust has entered into an advisory agreement with Timothy Partners,
Ltd.(TPL), effective January 19, 1994, as amended August 28, 1995 and September
1, 1997, for the provision of investment advisory services on behalf of the
Timothy Fund, subject to the supervision and direction of the Fund's Board of
Trustees. Pursuant to the Investment Advisory Agreement, the Trust is obligated
to pay TPL a monthly fee equal to an annual rate of 0.85% of the Timothy 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 Funds' shares are offered for sale.

With respect to the Timothy Fund, for the period March 21, 1994 (commencement of
operations) through December 31, 1994 and for the years ended December 31, 1995,
1996 and 1997, advisory fees of $7,938, $41,257, $78,848 and $142,990,
respectively, were payable to TPL and TPL reimbursed the Timothy Fund $135,114,
$189,534 $194,967, and $193,945, respectively. TPL has voluntarily undertaken to
waive its advisory fee and reimburse expenses on behalf of the Timothy Fund to
the extent normal operating expenses (including investment advisory fees but
excluding interest, taxes, brokerage fees, commissions and extraordinary
charges) exceed 1.35% of the Fund's average daily net assets.

The Trust has entered into an advisory agreement with Timothy Partners, Ltd.
(TPL), effective May 1, 1998 for the provision of investment advisory services
on behalf of the Timothy Variable Fund, subject to the supervision and direction
of the Fund's Board of Trustees. Pursuant to the Investment Advisory Agreement,
the Trust is obligated to pay TPL a monthly fee equal to an annual rate of 1.00%
of the Timothy Variable 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.

No advisory fee information is included for the Timothy Variable Fund since this
Fund had not commenced operations as of December 31, 1997. TPL has voluntarily
undertaken to waive its advisory fee and reimburse expenses on behalf of the
Timothy Variable Fund to the extent normal operating expenses (including
investment advisory fees but excluding interest, taxes, brokerage fees,
commissions and extraordinary charges) exceed 1.35% of the Fund's average daily
net assets.

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

Page 5
<PAGE>

annually by the Board of Trustees or by vote of a majority of the outstanding
voting securities of the Trust, and only if the terms of the renewal thereof
have been approved by the vote of a majority of the Trustees of the Trust 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 TPL and Awad & Associates (the "Investment
Manager"), dated January 1, 1997, as amended May 1, 1998 (the "Sub-Investment
Advisory Agreement"), the Investment Manager provides advice and assistance to
TPL in the selection of appropriate investments for the Funds, subject to the
supervision and direction of the Funds' Board of Trustees. As compensation for
its services, with respect to each Fund, the Investment Manager receives from
TPL an annual fee at a rate equal to 0.42% of the first $10 million in assets of
the Fund; 0.40% of the next $5 million in assets; 0.35% of the next $10 million
in assets; and 0.25% of assets over $25 million.

The Sub-Investment Advisory Agreement is initially effective for two years. The
Agreement may be renewed by the parties after its initial term only so long as
such renewal and continuance are specifically approved at least annually by the
Board of Trustees or by vote of a majority of the outstanding voting securities
of the Trust, and only if the terms of renewal thereof have been approved by the
vote of a majority of the Trustees of the Trust 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.

Prior to January 1, 1997, TPL paid Systematic Financial Management, L.P. for
advice and assistance in the selection of appropriate investments for the
Timothy Fund. For the period March 21, 1994 (commencement of operations)
through December 31, 1994 and for the fiscal years ended December 31, 1995 and
1996, TPL paid Systematic Financial Management, L.P. sub-advisory fees of
$3,969, $20,628 and $46,381, respectively. For the fiscal year ended December
31, 1997, TPL paid Awad & Associates $66,356 for sub-investment advisory
services on behalf of the Timothy Fund.

UNDERWRITER

Effective July 1, 1997, Timothy Partners, Ltd. (TPL), 1304 West Fairbanks
Avenue, Winter Park, Florida 32789, acts as an underwriter of the Timothy Funds'
shares for the purpose of facilitating the registration of shares of the Funds
under state securities laws and to assist in sales of shares pursuant to an
underwriting agreement (the "Underwriting Agreement") approved by the Fund's
Trustees. TPL is not compensated for providing underwriting services to the
Funds.

In that regard, TPL has agreed at its own expense to qualify as a broker/dealer
under all applicable federal or state laws in those states which the Funds
shall from time to time identify to TPL as states in which it wishes to offer
its shares for sale, in order that state registrations may be maintained by the
Funds.

TPL is a broker/dealer registered with the U.S. Securities and Exchange
Commission and is a member in good standing of the National Association of
Securities Dealers, Inc.

The Funds shall continue to bear the expense of all filing or registration fees
incurred in connection with the registration of shares under state securities
laws.

The Underwriting Agreement may be terminated by either party upon 60 days' prior
written notice to the other party.

ADMINISTRATOR

FPS Services, Inc., 3200 Horizon Drive, King of Prussia, PA 19406, (the
"Administrator"), provides certain

Page 6
<PAGE>

administrative services to the Trust 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 Funds; (2) coordinates with, and monitors, any third parties furnishing
services to the Funds; (3) provides the Funds 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 Funds 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
Funds required by applicable law; (6) prepares and, after approval by the Funds,
files and arranges for the distribution of proxy materials and periodic reports
to shareholders of the Funds as required by applicable law; (7) prepares and,
after approval by the Funds, 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 Funds 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 Funds 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 Trust; 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 Trust 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, 1996 and 1997, the Trust paid $39,583, $54,297,
$62,581 and $ 65,386, 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 Funds, 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 Funds 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 Funds'
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 Funds. Brokerage may also
be allocated to dealers in consideration of the each Fund's share distribution
but only when execution and price are comparable to that offered by other
brokers. For the fiscal years ended December 31, 1996 and 1997, the Timothy Fund
incurred brokerage commissions of $32,684 and $133,628, respectively. No
information is provided for the Timothy Variable Fund as that Fund had not
commenced operations as of December 31, 1997.

TPL, through the Investment Manager, is responsible for making the Funds',
portfolio decisions subject to instructions described in each Fund's Prospectus.
The Board of Trustees may however impose limitations on the allocation of
portfolio brokerage.

Securities held by one Fund may also be held by the other Fund or other accounts
for which TPL or the Investment Manager serves as an advisor, or held by TPL or
the Investment Manager for their own accounts. If purchases or sales of
securities for a Fund or other entities for which they act as investment advisor
or for their advisory clients arise for consideration at or about the same time,
transactions in such securities will be made, insofar as feasible, for the
respective entities and clients in a manner deemed equitable to all. To the
extent that transactions on behalf of more than one client of TPL or Investment
Manager during the same period may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse
effect on price.

Page 7
<PAGE>

On occasions when TPL or the Investment Manager deems the purchase or sale of a
security to be in the best interests of one Fund as well as the other Fund or
other accounts, they may to the extent permitted by applicable laws and
regulations, but will not be obligated to, aggregate the securities to be sold
or purchased for the Fund with those to be sold or purchased for the other Fund
or accounts in order to obtain favorable execution and lower brokerage
commissions. In that event, allocation of the securities purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Investment
Manager in the manner it considers to be most equitable and consistent with its
fiduciary obligations to the Funds and to such other accounts. In some cases
this procedure may adversely affect the size of the position obtainable for a
Fund.

The Board of Trustees of the Funds periodically reviews the brokerage placement
practices of the Investment Manager on behalf of the Funds, and reviews the
prices and commissions, if any, paid by the Funds to determine if they were
reasonable.

The Investment Manager also may consider sales of the VA Contracts by a broker-
dealer as a factor in the selection of broker-dealers to execute transactions
for the Timothy Variable Fund. In addition, the Investment Manager may place
portfolio trades for both Funds with its affiliated brokers, including Raymond
James or its affiliates. As stated above, any such placement of trades will be
subject to the ability of the affiliated broker-dealer to provide best
execution, the Trust's procedures governing such affiliated trades and the
Conduct Rules of the National Association of Securities Dealers, Inc.

PURCHASE OF SHARES

THE TIMOTHY FUND
- ----------------

The shares of the Timothy Fund are continuously offered by the distributor.
Orders will not be considered complete until receipt by the distributor of a
completed account application form, and receipt by the Custodian of payment for
the shares purchased. Once both are received, such orders will be confirmed at
the next determined net asset value per share, plus the applicable sales load
for Class A shares (based upon valuation procedures described in the
Prospectus), as of the close of business of the business day on which the
completed order is received, normally 4 o'clock p.m. Eastern Time. Completed
orders received by the Fund after 4 o'clock p.m. will be confirmed at the next
day's price.

TAX-DEFERRED RETIREMENT PLANS (TIMOTHY FUND ONLY)
- -------------------------------------------------

Shares of the Timothy Fund are available to all types of tax-deferred retirement
plans such as Individual Retirement Accounts (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 Timothy Fund sponsors an 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 Timothy 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.

Page 8
<PAGE>

The Timothy 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 Timothy 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.

The Timothy Fund also offers a Roth IRA. While contributions to a Roth IRA are
not currently deductible, the amounts within the accounts accumulate tax-free
and qualified distributions will not be included in a shareholder's taxable
income. The contribution limit is $2,000 annually ($4,000 for joint returns) in
aggregate with contributions to traditional IRAs. Certain income phaseouts
apply.

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 Timothy 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.

TIMOTHY VARIABLE FUND
- ---------------------

The Timothy Variable Fund currently only offers its shares to the Annuity
Investors Life Insurance Company, but may, in the future, offer its shares to
other insurance company separate accounts. The separate accounts invest in
shares of the Timothy Variable Fund in accordance with the allocation
instructions received from holders of the VA contracts. Shares of the Timothy
Variable Fund are sold at net asset value as described in that Fund's
Prospectus.

REDEMPTIONS

The redemption price will be based upon the net asset value per share (subject
to any applicable CDSC for Class B shares) next determined after receipt of the
redemption request, provided it has been submitted in the manner described
below. The redemption price may be more or less than your cost, depending upon
the net asset value per share at the time of redemption. Class B shares of the
Timothy 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 Timothy Fund.

Payment for shares tendered for redemption is made by check within seven days
after tender in proper form, except that the Funds reserve 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 Funds is not reasonably predictable or it is not reasonably
practicable for the Funds 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 Funds.

Pursuant to the Trust'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 Trust 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 Trust, 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 Trust. Any
portfolio securities paid or distributed in-kind would be valued as described
under "Determination of Net Asset Value" in the each 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,

Page 9
<PAGE>

on the sale or other disposition of the securities received from the Funds. In-
kind payments need not constitute a cross-section of the a 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.
<PAGE>

OFFICERS AND TRUSTEES OF THE TRUST

The Trustees and principal executive officers and their principal occupations
for the past five years are listed below.

<TABLE>
<CAPTION>
POSITION AND
OFFICE HELD WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE THE REGISTRANT DURING THE PAST FIVE YEARS
- --------------- --- ---------------- --------------------------
<S> <C> <C> <C>
Arthur D. Ally * 56 President and President, Covenant Financial
1304 West Fairbanks Ave Trustee Management, Inc.
General Winter Park, Florida (1990-present);
Partner, Timothy Partners, Ltd
(1993-present)

Joseph E. Boatwright * 67 Secretary and Consultant, Greater Orlando Baptist
1410 Hyde Park Drive Trustee Assoc. (Ministerial) (1996-present)
Winter Park, Florida Retired; prior thereto Senior Pastor;

Aloma Baptist Church (1970-1996)

Wesley W. Pennington 67 Trustee President, Westwind Holdings, Inc.
442 Raymond Ave. (Developmental) (1997-present); President
Longwood, Florida & Sole Shareholder, Weston, Inc., (fabric)
treatment) (1979-1997); Secretary/
Treasurer, American Call to Greatness
(publishing) (1994-1995); President & Sole
Shareholder, Designer Services Group, Inc.
(Furniture storage & delivery) (1980-1994)

Jock M. Sneddon * 50 Trustee Physician, Florida Hospital
6001 Vineland Drive Center (present); prior thereto
Orlando, Florida President and Director of Sneddon
& Helmers M.D. P. A. (1976-1993)

Philip B. Crosby * 71 Trustee Owner and Founder; Career IV, Inc.
P.O. Box 1927 (lecturing) (1991-present);Founder, Philip
Winter Park, FL Crosby, Associates, Inc. (1979- 1991
and from 1997 - present); Director
Security National Bank (banking) 1991-
1995): Trustee, Rollins College (education)
(1994-present)

Daniel D. Busby, CPA 56 Trustee Partner, Busby, Keller & Co.;
P.O. Box 50188 Consultant to Non-Profit Organizations
Indianapolis, IN (1997-present)

Scott Fehrenbacher 38 Trustee President, Institute for American
13621 171st N.E. Values Investing (1996-current); prior
Redmond, WA thereto Stockbroker, Linsco/Private Ledger
(1990-1996)
</TABLE>

* These Trustees and officers are considered "interested persons" of the Funds
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

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<PAGE>

with the Funds' investment advisor and as a result of being a Trustee and/or
officer of the Funds Mr. Ally is also considered an "interested person" because
of his affiliation with TPL, the Fund's principal underwriter.

The officers conduct and supervise the daily business operations of the Funds,
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 Funds who
are affiliated with TPL is paid by TPL, and not by the Fund. For the fiscal year
ended December 31, 1997, the Timothy Fund did not pay compensation to any of its
Trustees. In addition, no Trustee served on the Board of Directors of another
investment company managed by TPL for the calendar year ended December 31, 199.
As of December 31, 1997, the Timothy Variable Fund had not commenced operations
and therefore, no compensation was paid to its Board of Trustees.

DISTRIBUTION PLANS (APPLICABLE ONLY TO THE TIMOTHY FUND)

As noted in the Timothy Fund's Prospectus, each Class of the Timothy Fund has
adopted a plan pursuant to Rule 12b-1 under the 1940 Act (collectively, the
"Plans") whereby the Fund may pay up to a maximum of 0.25% for Class A shares
and up to a maximum of 1.00% for Class B shares (of which, up to 0.25% may be
service fees to be paid by each respective class of shares to TPL, dealers and
others, for providing personal service and/or maintaining shareholder accounts)
per annum of its average daily net assets for expenses incurred by the
Underwriter in the distribution of the Timothy Fund's shares. The fees are paid
on a monthly basis, based on the Fund's average daily net assets attributable to
such class of shares.

Pursuant to the Plans, TPL, as underwriter, is entitled to a reimbursement each
month (up to the maximum of 0.25% for Class A shares and 1.00% for Class B
shares per annum of average net assets of the Timothy Fund) for the actual
expenses incurred in the distribution and promotion of the Timothy Fund's
shares, including but not limited to, printing of prospectuses and reports used
for sales purposes, preparation and printing of sales literature and related
expenses, advertisements, and other distribution-related expenses as well as any
distribution or service fees paid to securities dealers or others who have
executed a dealer agreement with the underwriter. Any expense of distribution in
excess of 0.25% for Class A shares or 1.00% for Class B shares per annum will be
borne by the TPL without any reimbursement or payment by the Timothy Fund.

Prior to July 1, 1997, FPS Broker Services, Inc. (FPSB) served as the Fund's
sole underwriter. For the period ended December 31, 1994 and fiscal year ended
December 31, 1995, the Fund reimbursed FPSB $1,985 and $11,606, respectively,
for distribution costs incurred by the Fund. For the fiscal year ended December
31, 1996, the Fund reimbursed FPSB $36,568 for distribution costs incurred as
follows: $7,063 for printing; $18,465 compensation to underwriters and
distribution services; $11,040 compensation to dealers for Class B shares
(formerly, the Retail Class). For the period January 1, 1997 to June 30, 1997,
the Timothy Fund reimbursed FPSB $32,518 for distribution costs incurred as
follows: $10,505 compensation to dealers for Class A shares and $22,522 as
compensation to dealers for Class B shares and $2,590 for servicing the Class B
shareholder accounts.

Effective July 1, 1997, Timothy Partners, Ltd. (TPL), serves as the Timothy
Funds' sole underwriter. For the period July 1, 1997 to December 31, 1997, the
Fund reimbursed TPL $58,563 for distribution-related expenses as follows: $.

The Plans also provide that to the extent that the Timothy Fund, TPL, the
Investment Manager, or other parties on behalf of the Fund, TPL, the Investment
Manager makes payments that are deemed to be payments for the financing of any
activity primarily intended to result in the sale of shares issued by the Fund
within the context of Rule 12b-1, such payments shall be deemed to be made
pursuant to the Plans. In no event shall the payments made under the Plans, plus
any other payments deemed to be made pursuant to the Plans, exceed the amount
permitted to be paid pursuant to the Conduct Rules 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

Page 12
<PAGE>

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 Plans will benefit
the Fund and its shareholders.

The Plans have been approved by the Fund's Board of Trustees, including all of
the Trustees who are non-interested persons as defined in the 1940 Act. The
Plans must be renewed annually by the Fund's Board of Trustees, including a
majority of the Trustees who are non-interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plans. The
votes must be cast in person at a meeting called for that purpose. It is also
required that the selection and nomination of such Trustees be done by the non-
interested Trustees. The Plans and any related agreements may be terminated at
any time, without any penalty: 1) by vote of a majority of the non-interested
Trustees on not more than 60 days' written notice, 2) by the Underwriter on not
more than 60 days' written notice, 3) by vote of a majority of the Fund's
outstanding shares, on 60 days' written notice, and 4) automatically by any act
that terminates the Underwriting Agreement with the underwriter. The underwriter
or any dealer or other firm may also terminate their respective agreements at
any time upon written notice.

The Plans and any related agreement may not be amended to increase materially
the amounts to be spent for distribution expenses without approval by a majority
of the Fund's outstanding shares, and all material amendments to the Plans or
any related agreements shall be approved by a vote of the non-interested
Trustees, cast in person at a meeting called for the purpose of voting on any
such amendment.

The underwriter is required to report in writing to the Board of Trustees of the
Fund, at least quarterly, on the amounts and purpose of any payment made under
the Plans, as well as to furnish the Board with such other information as may
reasonably be requested in order to enable the Board to make an informed
determination of whether the Plans should be continued.

TAXATION

The both Funds intend 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) distribute at least 90% of its dividends,
interest and certain other taxable income each year; and (iii) 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 each 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.

As noted in its Prospectus, the Timothy Variable Fund must, and intends to,
comply with the diversification requirements imposed by Section 817(h) of the
Code and the regulations thereunder. These requirements, which are in addition
to the diversification requirements mentioned above, place certain limitations
on the proportion of the Timothy Variable Fund's assets that may be represented
by any single investment (which includes all securities of the same issuer). For
purposes of Section 817(h), all securities of the same issuer, all interests in
the same real property project, and all interests in the same commodity are
treated as a single investment. In addition, each U.S. Government agency or
instrumentality is treated as a separate issuer, while the securities of a
particular foreign government and

Page 13
<PAGE>

its agencies, instrumentalities and political subdivisions all will be
considered securities issued by the same issuer. For information concerning the
consequences of failure to meet the requirements of Section 817(h), refer to the
respective prospectuses for the VA Contracts.

An excise tax at the rate of 4% will be imposed on the excess, if any, of the
Funds' "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 Funds intend to make distributions sufficient to avoid imposition of
the excise tax. Distributions declared by the Funds 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 Funds.
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 Funds 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 Funds 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 the Timothy Fund will share proportionately in the
investment income and expenses of that Fund, except that each class will incur
different distribution 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 Trust 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 Funds, including the
annual audited financial statements and a list of securities owned.

MISCELLANEOUS
- -------------

As of January 29, 1998, the officers and Trustees, as a group, owned benefically
19,419.952 outstanding voting shares of Class A shares and 559.977 of Class B
shares, which in the aggregate amounts to 19,979.929 shares of the Trust.

As of January 29, 1998, no one owned of record or exercised voting control over

Page 14
<PAGE>

5% of the outstanding shares of the Class A or Class B shares of the Trust.

PERFORMANCE

Performance information for the Class A and Class B shares of the Timothy 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 Funds 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 Funds may include their
distribution rates in advertisements. The distribution rate is the amount of
distributions per share made by a Fund over a 12-month period divided by the
current maximum offering price.

U.S. Securities and Exchange Commission ("Commission") rules require the use of
standardized performance quotations or, alternatively, that every non-
standardized performance quotation furnished by the Funds be accompanied by
certain standardized performance information computed as required by the
Commission. Current yield and total return quotations used by the Funds are
based on the standardized methods of computing performance mandated by the
Commission. An explanation of those and other methods used by the Funds 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 Commission formula:

P(1+T)/n /= ERV
where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.

ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the one, five or ten-year periods, determined at
the end of the one, five or ten-year periods (or fractional portion
thereof).

Based on the foregoing calculations, the average annual total return for
Class A shares, for the period March 21, 1994 (commencement of operations)
through December 31, 1996, and for the one year period ended December 31, 1996
and December 31, 1997, was 4.01% 6.40%% and 14.67%, respectively. The average
annual total return for Class B shares, for the period August 25, 1995
(commencement of operations) through December 31, 1996 and for the one year
period ended December 31, 1996, and December 31, 1997 was 5.46%, 10.00% and
6.98%, respectively. For the periods March 21, 1994 through December 31, 1997
and the three year period ended December 31, 1997 the average annual total
return for the Class A was 8.34% and 7.28%,

Page 15
<PAGE>

respectively. For the period August 25, 1995 through December 31, 1997 the
average annual total return for Class B was 12.27%. 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 Funds might satisfy
their investment objective, advertisements regarding the Funds may discuss total
return for the Funds as reported by various financial publications.
Advertisements may also compare total return to 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 Funds may also include in sales literature and
advertising (including press releases) TPL comments on current news items,
organizations which violate the Funds' 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 Timothy Fund Financial Statements, including the notes thereto, dated
December 31, 1997, which have been audited by Tait, Weller & Baker, are
incorporated by reference from the Timothy Fund's 1997 Annual Report to
Shareholders. There are no Financial Statements for the Timothy Variable Fund
since that Fund had not commenced operations as of December 31, 1997.

Page 16
<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
Timothy Partners, Ltd.
1304 West Fairbanks Ave.
Winter Park, FL 32789

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

Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103

AUDITORS

Tait, Weller & Baker
Eight Penn Center
Suite800
Philadelphia, PA 19103-2108

Page 17
<PAGE>

POST EFFECTIVE AMENDMENT NO. 76
TO REGISTRATION STATEMENT NO. 33-73248
ON FORM N-1A

PART C, OTHER INFORMATION.

Item 24. Financial Statements and Exhibits.

(A) Financial Statements:

(1) The Financial Highlights for the Timothy Plan Series of the Trust are
included in Part A of this Registration Statement on Form N-1A. The
following audited Financial Statements are incorporated by reference
in Part B of this Registration Statement on Form N1-A for the periods
ended December 31, 1997 (unaudited):

(i) Schedule of Investments at December 31, 1997.

(ii) Statement of Assets and Liabilities at December 31, 1997.

(iii) Statement of Operations for the period ended December 31,
1997.

(iv) Statement of Changes in Net Assets for the year ended December
31, 1997.
(v) Notes to Financial Statements.
(vi) Financial Highlights.
(vii) Report to Financial Accountants.

(2) The financial statements of The Timothy Plan Variable Series are not
available as the Series did not commence operations as of December 31,
1997.
(3) All required financial statements are included or incorporated by
reference in Parts A and B hereof. All other financial statements and
schedules are inapplicable.

(B) Exhibits:
(1) Agreement and Declaration of Trust is incorporated herein by reference
to Post Effective Amendment No.4 as Exhibit No.99(1) to Item 24 as
electronically filed on April 26, 1996.
(2) By-laws of Registrant dated January 19, 1994 is incorporated herein by
reference to Post Effective Amendment No.4 as Exhibit No.99(2) to Item
24 as electronically filed on April 26, 1996.
(3) None
(4) Specimen Copy of each security to be issued by the registrant:
Registrant proposes to maintain investments as non-certificated book
entry shares.
(5) Investment Advisory Agreements:

(a)(i) Form of Amendment to Investment Advisory Agreement dated May
1, 1998 between the Registrant and Timothy Partners, Ltd, is
filed herewith electronically.

(a)(ii) Form of Investment Advisory Agreement dated May 1, 1998,
between the Registrant on behalf of The Timothy Plan
Variable Series, and Timothy Partners, Ltd. dated May 1,
1998 is filed herewith electronically.

(a)(iii) Amendment dated March 12, 1997 to Investment Advisory
Agreement dated January 19, 1994 between Registrant and
Timothy Partners, Ltd. is incorporated herein by reference
to Post-Effective No. 6 as Exhibit No. 99(5)(a)(i) to Item
24 as electronically filed on July 18, 1997.

(a)(iv) Amendment dated August 28, 1995 to Investment Advisory
Agreement dated January 19, 1994 between Registrant and
Timothy Partners, Ltd. is incorporated herein by reference
to Post Effective Amendment No.4 as Exhibit No. 99(5)(a)(i)
to Item 24 as electronically filed on April 26, 1996.

<PAGE>

(a)(vii) Investment Advisory Agreement dated January 19, 1994 between
Registrant and Timothy Partners, Ltd. is incorporated herein by
reference to Post-Effective Amendment No. 4 as Exhibit No.
99(5)(a)(ii) to Item 24 as electronically filed on April 26,
1996.

(b)(i) Form of Amendment to Sub-Investment Advisory Agreement dated May
1, 1998 between Timothy Partners, Ltd,. Awad & Associates and the
Registrant is filed herewith electronically.

(b)(ii) Sub-Investment Advisory Agreement dated January 1, 1997 among
Timothy Partners, Ltd. Awad & Associates and the Registrant is
incorporated by reference to Post-Effective Amendment No.5 as
Exhibit 99(5)(b)(i).

(6) (a) DISTRIBUTION AGREEMENT:

(a)(i) Underwriting Agreement dated July 1, 1997 between the Registrant
and Timothy Partners, Ltd. is incorporated herein by reference to
Post Effective No. 6 as Exhibit No. 99(6)(a)(i) to Item 24 as
electronically filed on July 18, 1997.

(b) None

(7) None
(8) CUSTODIAN AGREEMENT
(a) Custodian Agreement between Registrant and The Bank of New York,
dated November 11, 1994 is incorporated herein by reference to
Post-Effective Amendment No. 5.

(9) OTHER MATERIAL CONTRACTS

(a)(i) Form of Amendment dated May 1, 1998 to Shareholder Services
Agreement dated January 19, 1994 between the Registrant and FPS
Services Inc. is filed herewith electronically.

(a)(ii) Amendment dated February 23, 1996, to Shareholder Services
Agreement dated January 19, 1994 between Registrant and FPS
Services, Inc. is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No.99(9)(a)(i) to Item 24
as electronically filed on April 26, 1996.

(a)(iii) Shareholder Services Agreement dated January 19, 1994 between
Registrant and FPS Services, Inc. is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No. 99
(9)(a)(ii) to Item 24 as electronically filed on April 26, 1997.

(b)(i) Form of Amendment dated May 1, 1998 to Administration Agreement
dated January 19, 1994 between the Registrant and FPS Services,
Inc. is filed herewith electronically.

(b)(ii) Amendment dated February 23, 1996, to Administration Agreement
dated January 19, 1994 between Registrant and FPS Services, Inc.
is incorporated herein by reference to Post Effective Amendment
No. 4 as Exhibit No. 99(9)(b)(i) to Item 24 as electronically
filed on April 26, 1996.

(b)(iii) Administration Agreement dated January 19, 1994 between
Registrant and FPS Services, Inc. is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No.
99(9)(b)(ii) to Item 24 as electronically filed on April 26,
1996.

(c)(i) Form of Amendment dated May 1, 1998 to Accounting Series
Agreement dated February 23, 1996 between the Registrant and FPS
Services, Inc., is filed herewith electronically.

(c)(ii) Accounting Services Agreement dated February 23, 1996 between
Registrant and FPS Services, Inc. is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No.
99(9)(c) to Item 24 as electronically filed on April 26,
1996.

(d)(i) Amendment dated May 1, 1996 to Administrative Agreement dated
January 19, 1994 between Registrant and Covenant Financial
Management, Inc. is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (9)(d)(i) to Item 24
as electronically filed on April 26, 1996.

(d)(ii) Administrative Agreement dated January 19, 1994 between
Registrant and Covenant Financial Management, Inc. is
incorporated herein by reference to Post Effective.

<PAGE>

Amendment No.4 as Exhibit No.99 (9)(d)(ii) to Item 24 as
electronically filed on April 26, 1996.

(10) OPINION AND CONSENT OF COUNSEL AS TO THE LEGALITY OF THE SECURITIES TO BE
ISSUED:
(a) To be filed by the Registrant on a yearly basis along with its
Rule 24-f-2 Notice.
(11) CONSENTS
(a) Consent of Talt, Walker & Baker to be filed by amendment

(12) None.
(13) LETTERS OF UNDERSTANDING RELATING TO INITIAL CAPITAL:
(a) Investment letters between the Registrant and Phillis B. Crosby,
Michael J. Demaray, Thomas J. Synder, WIlliam R. Cadle, Bernice
I. Cadle, Mary A. Gibson, Delbert E. Rich, Gwynn M. Rea Charles
E. Davis, Gregory Tighs and Frank Salerno are incorporated herein
by reference to Post Effective Amendment No.4 as Exhibit No.99
(13) to Item 24 as electronically filed on April 26, 1996.
(14) MODEL PLANS:
(a) Form of 403(b)(7) Retirement Plan is incorporated herein by
reference to exhibit 99(14)(a) of Post-Effective No.5.
(b) Form of Individual Retirement Account (I.R.A.) is incorporated
herein by reference to Post effective Amendment No.4 as Exhibit
No.99 (14)(b) to Item 24 as electronically filed on April 26,
1996.
(15) PLANS UNDER 12b-1:

(a)(i) Addendum dated July 1, 1997 on behalf of Class A shares is
incorporated herein by reference to Post-Effective No.6 as
Exhibit No.99(15)(a)(i) to Item 24 as electronically filed on
July 18, 1997.
(a)(ii) Distribution Plan dated February 10, 1996, on behalf of
Institutional Class shares is incorporated herein by reference to
Post Effective Amendment No.4 as Exhibit No.99(15)(a) to Item 24
as electronically filed on April 26, 1996.

(b)(i) Distribution Plan dated September 22, 1997 on behalf of Class B
shares is incorporated herein by reference to Post Effective No.6
as Exhibit No.99(15)(b)(i) to Item 24 as electronically filed on
July 18, 1997 filed herewith.

(b)(ii) Addendum dated July 1, 1997 on behalf of Class B shares is
incorporated herein by reference to Post-Effective No.6 as
Exhibit No.99(15)(b)(ii) to Item 24 as electronically filed on
July 18, 1997.
(b)(iii) Distribution Plan dated February 10, 1996, on behalf of the
Retail shares is incorporated herein by reference to
Post Effective Amendment No.4 as Exhibit No.99(15)(b) to Item 24
as electronically filed on April 26, 1996.
(c) Shareholder Services Agreement dated January 1, 1996 between
Timothy Partners, Ltd. and FPS Broker Services, Inc. on behalf of
the Institutional Class shares is incorporated herein by
reference to Post Effective Amendment No.4 as Exhibit
No.99(15)(c) to Item 24 as electronically filed on April 26,
1996.
(d) Shareholders Services Agreement dated January 1, 1996 between
Timothy Partners, Ltd. and FPS Broker Services, Inc. on behalf of
the Retail Class shares is incorporated herein by reference to
Post Effective Amendment No.4 as Exhibit No.99(15)(d) to Item 24
as electronically filed on April 26, 1996.
(16) Schedule of Computations of Performance Quotations incorporated herein by
reference to Post Effective Amendment No.4 as exhibit No.99(16) to Item 24
as electronically filed on April 26, 1996.

(18) Multiple Class Plan is incorporated herein by reference to Post-Effective
No.6 as Exhibit No.99(18) to Item as electronically filed on July 18,
1997.

(19) Powers of Attorney are incorporated herein by reference to Post-effective
No.5 as Exhibit No.99(19) to Item 24 as electronically filed on February
27, 1997 and on behalf of Scott Fehrenbacher incorporated herein by
reference to Post-Effective No.6 as Exhibit No.99(19) to Item 24 as
electronically filed on July 18, 1997.
(27) Financial Data Schedule is filed herewith electronically.
<PAGE>

Item 25. Persons Controlled by or under Common Control with Registrant.
- -----------------------------------------------------------------------
None.

Item 26. Number of Holders of Securities.
- -----------------------------------------

Number of Record Holders
Title of Class as of January 29, 1998

Class A Common Stock 1209
par value $0.001 Per share

Class B Common Stock, 1184
par value $0.001 per share

Item 27. Indemnification.
- -------------------------
Under the terms of the Delaware Business Trust Act and the Registrant's
Agreement and Declaration of Trust and By-Laws, no officer or Trustee of the
Fund shall have any liability to the Fund or its shareholders for damages,
except to the extent such limitation of liability is precluded by Delaware law,
the Agreement and Declaration of Trust, or the By-Laws.

The Delaware Business Trust Act, section 3817, permits a business trusts to
indemnify any Trustee, beneficial owner, or other person from and against any
claims and demands whatsoever. Section 3803 protects a Trustee, when acting in
such capacity, from liability to any person other than the business trust or
beneficial owner for any act, omission, or obligation of the business trust or
any Trustee thereof, except as otherwise provided in the Agreement and
Declaration of Trust.

The Agreement and Declaration of Trust provides that the Trustees shall not be
liable for any neglect or wrong-doing of any officer, agent, employee, manager
or underwriter of the Fund, nor shall any Trustee be responsible for the act or
By-Laws, the Fund may indemnify to the fullest extent each Trustee and officer
of the Fund acting in such capacity, except each Trustee and officer of the Fund
acting in such capacity, except as otherwise provided in the Agreement and
Declaration of Trust.

The Agreement and Declaration of Trust provides that the Trustee shall not be
liable for any neglect or wrong-doing of any officer, agent, employee, manager
or underwriter of the Fund, nor shall any Trustee be responsible for the act or
omission of any other Trustee. Subject to the provisions of; the By-Laws,the
Fund may indemnify to the fullest extent each Trustee and officer of the Fund
acting in such capacity, except that no provision in the Agreement and
Declaration of Trust shall be effective to protect or purport to protect and
indemnify any Trustee or officer of the Fund from or against any liability to
the Fund or any shareholder to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

The By-Laws provide indemnification for each Trustee and officer who is a party
or is threatened to be made a party to any proceeding, by reason of service in
such capacity, to the fullest extent, if it is determined that Trustee or
officer acted in good faith and reasonably believed: (a) in the case of conduct
in his official capacity as an agent of the Fund, that his conduct was in the
Fund's best interests and (b) in all other cases, that his conduct was at least
not opposed to the Fund's best interests and (c) in the case of a criminal
proceeding, that he had no reasonable cause to believe the conduct of that
person was unlawful. However, there shall be no indemnification for any
liability arising by reason of willful misfeasance, bad faith, gross negligence,
or the reckless disregard of the duties involved in the conduct of the Trustee's
or officer's office. Further, no indemnification shall be made:

(a) In respect of the proceeding as to which any Trustee or officer of the Fund
shall have been adjudged to be liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted from an
action taken in the person's official capacity; or

(b) In respect of any proceeding as to which any Trustee or officer of the Fund
shall have been adjudged to be
<PAGE>

liable in the performance of that person's duty to the Fund, unless and
only to the extent that the court in which that action was brought shall
determine upon application that in view of all the relevant circumstances
of the case, that person is fairly and reasonably entitled to indemnity for
the expenses which the court shall determine; however, in such case,
indemnification with respect to any proceeding by or in the right of the
Fund or in which liability shall have been adjudged by reason of the
disabling conduct set forth in the proceding paragraph shall be limited to
expenses; or

(c) Of amounts paid in settling or otherwise disposing of a proceeding, with or
without court approval, or of expenses incurred in defending a proceeding
which is settled or otherwise disposed of without court approval, unless
the required court approval set forth in the By-Laws is obtained.

In any event, the Fund shall indemnify each officer and Trustee against
reasonable expenses incurred in connection with the successful defense of any
proceeding to which each such officer or Trustee is a party by reason of
service in such Capacity, provided that the Board of Trustees, including a
majority who are disinterested, non-party Trustees, also determines that such
officer or Trustee was not liable by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of his or her duties or office. The Fund
shall advance to each officer and Trustee who is made a party to the proceeding
by reason of service in such capacity the expenses incurred by such person in
connection therewith, if (a) the officer or Trustee affirms in writing that his
good faith belief that he has met the standard of conduct necessary for
indemnification, and gives a written undertaking to repay the amount of advance
if it is ultimately determined that he has not met those requirements, and (b) a
determination that the facts then known to those making the determination would
not preclude indemnification.

The Trustees and officers of the Fund are entitled and empowered under the
Declaration of Trust and By-Laws, to the fullest extent permitted by law, to
purchase errors and omissions liability insurance with assets of the Fund,
whether or not the fund would have the power to indemnify him against such
liability under the Declaration of Trust or By-Laws.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers, the underwriter or control persons
of the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable. See also Item 32.

Item 28. Business and Other Connections of Advisor.
- --------------------------------------------------

Timothy Partners, Ltd. ("TPL") serves as investment advisor of the Fund. The
following persons serving as directors or officers of TPL have held the
following positions with TPL for the past two years.

Position and Positions with
Name and Offices with Offices with
Business Address Timothy Partners, Ltd. the Registrant
---------------- ---------------------- --------------

Arthur D. Ally President of Covenant President and
Fund, Inc.; Managing Trustee
General Partner of
Timothy Partners, Ltd.
and Individual General
Partner of Timothy
Partners, Ltd.

Covenant Financial Management, Inc. is a marketing/consulting firm owned by
Arthur Ally that will render consulting advise to TPL with regard to marketing
plans to be employed to target potential investor groups that might be
interested in investing in the Fund because of its investment objectives and
criteria.

Item 29. Principal Underwriter.
- -------------------------------

(a) Timothy Partners, Ltd. (TPL) is the principal underwriter for the
Registrants securities and currently acts as underwriter for the
Registrant only.
<PAGE>

(b) The table below sets forth certain information as to the Underwriter's
Directors, Officers and Control Persons:

Name and Position and Offices Positions and Offices
Business Address with Underwriter with the Registrant
- ---------------- --------------------- ---------------------

Arthur D. Ally President of Covenant President and
1304 West Fairbanks Avenue Fund, Inc., Managing Trustee
Winter Park, Florida 32789 General Partner of
Timothy Partners, Ltd.
and Individual General
Partner of Timothy Partners,
Ltd.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
- ------------------------------------------
Each account, book or other document required to be maintained by Section 31(a)
of the 1940 Act and Rules 17 CFR 270.31a-1 to 31a-3 promulgated thereunder, is
maintained by the Fund at 1304 West Fairbanks Avenue, Winter Park, Florida
32789, except for those maintained by the Fund's Custodian. The Bank of New
York, 48 Wall Street, New York, New York 10286, and the Fund's Administrator,
Transfer, Redemption and Dividend Disbursing Agent and Accounting Services
Agent, FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia,
PA 19406-0903.
ITEMS 31. MANAGEMENT SERVICES.
- -----------------------------
Not applicable.

ITEM 32. UNDERTAKINGS.
- ----------------------
(a) Inapplicable.

(b) The Registrant undertakes to file a Post-Effective Amendment including the
financial statements of The Timothy Plan Variable Series, which need not be
certified within four to six months of commencement of operations.
(c) The Registrant hereby undertakes to furnish each person to whom a Prospectus
is delivered with a copy of the respective latest annual report to shareholders,
upon request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting of shareholders
for the purpose of voting upon the question of removal of any Trustee when
requested in writing to do so by the record holders of not less than 10 percent
of the Registrant's outstanding shares and to assist its shareholders in
accordance with the requirements of Section 16(c) of the Investment Company Act
of 1940, as amended relating to shareholder communications.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant hereby certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No.
7 to its Registration Statement pursuant to Rule 485(a) under the Securities
Act of 1933 and has duly caused this Post-Effective Amendment No. 6 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in Winter Park, State of Florida, on the __ day of February,
1998.

THE TIMOTHY PLAN

By: /s/ Arthur D. Ally
-------------------------------------
Arthur D. Ally, President & Trustee

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No.7.6 to the Registrant's Registration Statement has been signed
below by the following persons in the capacities indicated.

Signature Title Date
- --------- ----- ----

/s/ Arthur D. Ally* President and Trustee February, 1998
- -------------------

/s/ Joseph E. Boatwright* Secretary and Trustee February, 1998
- -------------------------

/s/ Wesley Pennington* Treasurer and Trustee February, 1998
- ----------------------

/s/ Scott Fehrenbacher* Trustee February, 1998
- -----------------------

/s/ Jock M. Sneddon* Trustee February, 1998
- --------------------

/s/ Phillip B. Crosby* Trustee February, 1998
- ----------------------

/s/ Daniel D. Busby* Trustee February, 1998
- --------------------

*By: /s/ Gerald J. Holland
---------------------

Gerald J. Holland
Attorney-in-Fact & Agent, pursuant
to Power of Attorney
<PAGE>

INDEX TO EXHIBITS ON FORM N-1A

EXHIBIT

99B5(a)(i) Form of Amendment to Investment Advisory Agreement
99B5(a)(ii) Form of Investment Advisory Agreement
99B5(b)(i) Form of Amendment to Sub-Investment Advisory Agreement
99B9(a)(i) Form of Amendment to Shareholder Services Agreement
99B9(b)(i) Form of Amendment to Administration Agreement
99B9(c)(i) Form of Amendment to Accounting Services Agreement
99B11(a) Auditors Consent
99B27(a) Financial Data Schedule- Class A
99B27(b) Financial Data Schedule- Class B

<PAGE>

EXHIBIT 99.B5(A)(I)

FORM OF AMENDMENT TO THE TIMOTHY PLAN
INVESTMENT ADVISORY AGREEMENT

This amendment, dated as of the _____th day of __________________, 1998,
made by and between THE TIMOTHY PLAN (the "Trust"), a Delaware business trust
operating as a registered investment company under the Investment Company Act of
1940, as amended, duly organized and existing under the laws of the State of
Delaware and TIMOTHY PARTNERS, LTD. (the "Investment Advisor"), a Florida
limited partnership and registered investment advisor under the Investment
Advisers Act of 1940, as amended (collectively, the "Parties").

WITNESSETH:

WHEREAS, the Trust and Investment Advisor have entered into an agreement
dated January 19, 1994 as subsequently amended (the "Investment Advisory
Agreement"), wherein the Investment Advisor has agreed to serve as an advisor
and provide investment management services; and

WHEREAS, the Trust is authorized to issue separate series of shares
representing interests in separate investment portfolios (each referred to as a
"Series" and collectively, as the "Series"); and

WHEREAS, the Parties wish to amend the Investment Advisory Agreement to
clarify that such Agreement governs only The Timothy Plan Series of the Trust;

NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree:

1. To amend the initial introductory paragraph of the Investment Advisory
Agreement to read as follows:

AGREEMENT, made by and between THE TIMOTHY PLAN, a Delaware business
trust ( the "Trust") on behalf of THE TIMOTHY PLAN series of the Trust
(the "Fund") and TIMOTHY PARTNERS, LTD., a Florida limited partnership
(the "Investment Advisor").

2. The effective date of this amendment shall be May 1, 1998.
<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused this amendment
consisting of one type written page, to be signed by their duly authorized
officers and their corporate seals hereunto duly affixed as of the day and year
first above written.

THE TIMOTHY PLAN TIMOTHY PARTNERS, LTD.

____________________________ _______________________________
By: Arthur D. Ally, Chairman BY: COVENANT FUNDS, INC.
MANAGING GENERAL PARTNER
Arthur D. Ally, President

____________________________ _______________________________
Attest: Joseph E. Boatwright, Secretary Attest: Bonnie Ally, Secretary

<PAGE>

EXHIBIT 99.B5(A)(II)

INVESTMENT ADVISORY AGREEMENT
FOR THE TIMOTHY PLAN VARIABLE SERIES

AGREEMENT, made by and between THE TIMOTHY PLAN, a Delaware business trust
(the "Trust") on behalf of THE TIMOTHY PLAN VARIABLE SERIES (the "Fund") and
TIMOTHY PARTNERS, LTD., a Florida limited partnership (the "Investment
Advisor").

W I T N E S S E T H:

WHEREAS, the Trust has been organized and operates as an investment company
registered under the Investment Company Act of 1940 (the "1940 Act") and engages
in the business of investing and reinvesting its assets in securities, and the
Investment Advisor is a registered Investment Advisor under the Investment
Advisers Act of 1940 (the "Advisers Act") and engages in the business of
providing investment management services; and

WHEREAS, the Trust wishes to retain the Investment Advisor to serve as
Investment Advisor to the Fund and the Investment Advisor is willing to furnish
such services to the Fund.

NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:

1. The Trust hereby employs the Investment Advisor to manage the
investment and reinvestment of the Fund's assets and to administer its affairs,
subject to the direction of the Board of Trustees and officers of the Trust for
the period and on the terms hereinafter set forth. The Investment Advisor hereby
accepts such employment and agrees during such period to render the services and
assume the obligations herein set forth for the compensation herein provided.
The Investment Advisor shall for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to
<PAGE>

act for or to represent the Fund in any way, or in any way be deemed an agent of
the Fund. The Investment Advisor shall regularly make decisions as to what
securities to purchase and sell on behalf of the Fund and shall record and
implement such decisions and shall furnish the Board of Trustees of the Trust
with such information and reports regarding the Fund's investments as the
Investment Advisor deems appropriate or as the Trustees of the Trust may
reasonably request. Subject to compliance with the requirements of the 1940 Act,
the Investment Advisor may retain as a sub-Advisor to the Fund, at the
Investment Advisor's own expense, any investment Advisor registered under the
Advisers Act. As the Investment Advisor is structured as a partnership,
shareholders of the Fund will be notified (as required by Section 205 of the
Advisers Act of any significant ownership changes in the Investment Advisor
within ten (10) days of any such change in ownership.

2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; and taxes. Partners and employees of
the Investment Advisor may be trustees, officers and employees of the funds of
which Timothy Partners, Ltd. is Investment Advisor. Partners and employees of
the Investment Advisor who are trustees, officers and/or employees of the Trust
shall not receive any compensation from the Fund for acting in such dual
capacity.

In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Fund and Investment Advisor may share
facilities common
<PAGE>

to each, with appropriate proration of expenses between them.

3. (a) The Investment Advisor shall place and execute Fund orders for the
purchase and sale of portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the
Investment Advisor will place orders for the purchase and sale of portfolio
securities for the Fund with such broker/dealers as it may select from time to
time, including brokers who provide statistical, factual and financial
information and services to the Fund, to the Investment Advisor, or to any other
fund for which the Investment Advisor provides investment advisory services
and/or with broker/dealers who sell shares of the Fund or who sell shares of any
other fund for which the Investment Advisor provides investment advisory
services. Broker/dealers who sell shares of the funds of which Timothy Partners,
Ltd. is Investment Advisor, shall only receive orders for the purchase or sale
of portfolio securities to the extent that the placing of such orders is in
compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.

(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Trust, the Investment Advisor may ask the Fund and
the Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Investment
Advisor have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Advisor's overall responsibilities with
respect to the Fund and to other funds for which the Investment Advisor
exercises investment discretion.
<PAGE>

4. As compensation for the services to be rendered to the Fund by the
Investment Advisor under the provisions of this Agreement, the Fund shall pay to
the Investment Advisor from the Fund's assets an annual fee equal to 1.00% of
the daily average net assets of the Fund, payable on a monthly basis, subject to
reduction to the extent necessary to comply with the most stringent limits
prescribed by any state in which the Fund's shares are offered for sale.

If this Agreement is terminated prior to the end of any calendar month,
the management fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of calendar
days, during which the Agreement is in effect, bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.

5. The services to be rendered by the Investment Advisor to the Fund under
the provisions of this Agreement are not to be deemed to be exclusive, and the
Investment Advisor shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

6. The Investment Advisor, its partners, employees, and agents may engage
in other businesses, may render investment advisory services to other investment
companies, or to any other corporation, association, firm or individual, and may
render underwriting services to the Fund or to any other investment company,
corporation, association, firm or individual.

7. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of duties of the Investment Advisor to
the Fund, the Investment Advisor shall not be subject to liabilities to the Fund
or to any shareholder of the Fund for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.

8. The Fund agrees that, in the event that the Investment Advisor ceases
to be the
<PAGE>

Fund's investment advisor for any reason, the Fund will (unless the Investment
Advisor otherwise agrees in writing) promptly take all necessary steps to
propose to the shareholders at the next regular meeting that the Fund change to
a name not including the word "Timothy." The Fund agrees that the word "Timothy"
in its name is derived from the name of the Investment Advisor and is the
property of the Investment Advisor for copyright and all other purposes and that
therefore such word may be freely used by the Investment Advisor as to other
investment activities or other investment products.

9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund and only if the terms
and the renewal hereof have been approved by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. No amendment to this Agreement shall be effective unless the terms
thereof have been approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of Trustees of the Trust
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund at
any time, without the payment of a penalty, on sixty days' written notice to the
Investment Advisor of the Fund's intention to do so, pursuant to action by the
Board of Trustees of the Fund or pursuant to a vote of a majority of the
outstanding voting securities of the Fund. The Investment Advisor may terminate
this Agreement at any time, without the payment of penalty on sixty days'
written notice to the Fund of its intention to do so. Upon
<PAGE>

termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Fund to pay to the Investment
Advisor the fee provided in Paragraph 4 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment.

10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.

11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment" shall
have the meaning defined in the 1940 Act.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to
be affixed and duly attested and their presents to be signed by their duly
authorized officers the ____ day of _______________, 1998 .
--

Attest: THE TIMOTHY PLAN

__________________________ By:_____________________

Attest: TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.
Managing General Partner

__________________________ By:_____________________
Arthur D. Ally, President

<PAGE>

Exhibit 99.B5(b)(i)

FORM OF AMENDMENT TO SUB-INVESTMENT ADVISORY AGREEMENT

This amendment, dated as of the _______ day of _____________________ , 1998
made by and between TIMOTHY PARTNERS, LTD. (hereinafter referred to as the
"Investment Advisor") and AWAD & ASSOCIATES, a division of Raymond James &
Associates (hereinafter referred to as the "Investment Manager") (collectively,
the "Parties").

WITNESSETH:

WHEREAS, the Investment Advisor and Investment Manager have entered into an
agreement dated January 1, 1997 (the "Sub-Investment Advisory Agreement"),
wherein the Investment Manager has agreed to furnish research, analysis, advice
and recommendations with respect to the purchase and sale of securities and the
making of investment commitments by the Investment Advisor regarding assets of
The Timothy Plan (hereinafter referred to as the "Trust") subject to oversight
- ----------------
by the Board of Trustees of the Fund and the supervision of the Investment
Advisor; and

WHEREAS, the Parties wish to amend the Sub-Investment Advisory Agreement to
reflect the creation of an additional series of the Trust;

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree:

1. To add a first preamble to the Sub-Investment Advisory Agreement to read
as follows:

WHEREAS, The Timothy Plan (hereinafter referred to as the "Trust") is
----------------
authorized to issue separate series of shares representing interests in
separate investment portfolios (each referred to as a "Series" and
collectively, as the "Series"), which Series are identified on Schedule
A attached hereto, and which Schedule A may be amended form time to time
by mutual agreement of the Investment Advisor and the Investment
Manager; and

2. To amend the second preamble to the Sub-Investment Advisory Agreement to
read as follows:

WHEREAS, the Investment Advisor and Investment Manager have entered into
an agreement dated January 1, 1997 (the "Sub-Investment Advisory
Agreement"), wherein the Investment Manager has agreed to furnish
research, analysis, advice and recommendations with respect to the
purchase and sale of securities and the making of investment commitments
by the Investment Advisor regarding assets of each Series of the Trust,
subject to oversight by the Board of Trustees of the Trust and the
supervision of the Investment Advisor; and

3. To add a Schedule "A" to the Sub-Investment Advisory Agreement in the
form attached hereto as Schedule "A" to reflect the separate Series of
the Trust.
<PAGE>

4. The Effective Date of this Amendment shall be May 1, 1998.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment
consisting of two type written pages, together with Schedule "A", to be signed
by their duly authorized officers and their corporate seals hereunto duly
affixed as of the day and year first above written.

ATTEST: THE TIMOTHY PLAN

_________________________ By:__________________________

ATTEST: TIMOTHY PARTNERS, LTD.

________________________ By:__________________________
COVENANT FUNDS, INC.
Managing General Partner

ATTEST: AWAD & ASSOCIATES

________________________ By:__________________________

<PAGE>

SCHEDULE "A"

IDENTIFICATION OF SERIES

Below are listed the "Series" to which services under this Sub-Investment
Advisory Agreement are to be performed as of the execution date of this
Agreement:

"The Timothy Plan"
"The Timothy Plan Variable Series"

This Schedule "A" may be amended from time to time by agreement of the Parties.

<PAGE>

AMENDMENT TO SHAREHOLDER SERVICES AGREEMENT

This amendment, dated as of the _____ day of May , 1998 made by and
between THE TIMOTHY PLAN (the "Trust"), a Delaware business trust operating as a
registered investment company under the Investment Company Act of 1940, as
amended, duly organized and existing under the laws of the State of Delaware and
FPS SERVICES, INC. ("FPS"), a corporation duly organized and existing under the
laws of the State of Delaware (collectively, the "Parties").

WITNESSETH THAT:

WHEREAS, the Trust and FPS have entered into an agreement dated January 19,
1994, which became effective February 23, 1994, wherein FPS has agreed to serve
as Transfer, Redemption and Dividend Disbursing Agent to the Trust and to
perform certain other functions in connection with these duties ("Shareholder
Services Agreement"); and

WHEREAS, the Parties wish to amend the Shareholder Services Agreement to
reflect the creation of an additional series for the Trust; and
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree:

1. To amend Schedule "C" to the Shareholder Services Agreement in the form
attached hereto as Schedule "C" to reflect the addition of The Timothy
Plan Variable Series.

2. This Amendment's Effective Date shall be May 1, 1998.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
consisting of one type written page, together with Schedule "C", to be signed by
their duly authorized officers and their corporate seals hereunto duly affixed
as of the day and year first above written.

THE TIMOTHY PLAN FPS SERVICES, INC.

___________________________ _________________________________
By: Arthur D. Ally, Chairman By: Kenneth J. Kempf, President

___________________________ _________________________________
Attest: Joseph E. Boatwright, Attest: Janet F. Davis, Secretary
Secretary

- --------------------------------------------------------------------------------
Amendment to the Shareholder Services Agreement between The Timothy Plan and FPS
Services, Inc.
<PAGE>

SCHEDULE "C"
============

IDENTIFICATION OF SERIES

Below are listed the "Series and Classes" to which services under this Agreement
are to be performed as of the execution date of this Agreement:

"The Timothy Plan - Class A"
"The Timothy Plan - Class B"
"The Timothy Plan Variable Series"

This Schedule "C" may be amended from time to time by agreement of the Parties.

- --------------------------------------------------------------------------------
Amendment to the Shareholder Services Agreement between The Timothy Plan and FPS
Services, Inc.
Schedule "C"; Page 1 of 1

<PAGE>

EXHIBIT 99.B9(B)(I)

AMENDMENT TO ADMINISTRATION AGREEMENT

This Agreement, dated as of the ____ day of May, 1998, made by and between
The Timothy Plan, a Delaware Business Trust (the "Trust") operating as a
registered investment company under the Investment Company Act of 1940, as
amended (the "Act"), duly organized and existing under the laws of the State of
Delaware and FPS SERVICES, INC. ("FPS"), a corporation duly organized and
existing under the laws of the State of Delaware (collectively, the "Parties").

WITNESSETH THAT:

WHEREAS, the Trust and Fund/Plan have entered into an agreement dated
January 19, 1994, which become effective February 23, 1994, wherein FPS
(formerly Fund/Plan Services, Inc.) has agreed to serve as administrator to
provide certain administrative services to the Trust (Administrative Services
Agreement"); and

WHEREAS, the Parties wish to amend the Administrative Services Agreement to
reflect the creation of an additional series for the Trust; and

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree:

1. To amend Schedule "C" to the Administrative Services Agreement in the
form attached hereto as Schedule "C" to reflect the additional of The
Timothy Plan Variable Series.

2. This Amendment's Effective Date shall be May 1, 1998.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
consisting of one type written page, together with Schedule "C" to be signed by
their duly authorized officers and their corporate seals hereunto duly affixed
as of the day and year first above written.

THE TIMOTHY PLAN FPS SERVICES, INC.

_______________________________________ _________________________________
By: Arthur D. Ally, Chairman By: Kenneth J. Kempf, President

_______________________________________ _________________________________
Attest: Joseph E. Boatwright, Secretary Attest: Janet F. Davis, Secretary
<PAGE>

SCHEDULE "C"

IDENTIFICATION OF SERIES

Below are listed the "Series and Classes" to which services under this
Agreement are to be performed as of the execution date of this Agreement:

"The Timothy Plan- Class A"
"The Timothy Plan- Class B"
"The Timothy Plan Variable Series"

This Schedule "C" may be amended from time to time by agreement of the Parties.

<PAGE>

AMENDMENT TO ACCOUNTING SERVICES AGREEMENT

This Agreement, dated as of the _____ day of May , 1998, made by and
---------
between The Timothy Plan, a Delaware Business Trust (the "Trust") operating as a
----------------
registered investment company under the Investment Company Act of 1940, as
amended (the "Act"), duly organized and existing under the laws of the State of
Delaware and FPS Services, Inc. ("FPS"), a corporation duly organized and
------------------
existing under the laws of the State of Delaware (collectively, the "Parties").

WITNESSETH THAT:

WHEREAS, the Trust and Fund/Plan have entered into an agreement dated
January 19, 1994, which became effective February 23, 1994, wherein FPS
(formerly Fund/Plan Services, Inc.) has agreed to serve as Accounting Services
Agent to provide certain accounting services to the Trust ("Accounting Services
Agreement"); and

WHEREAS, the Parties wish to amend the Accounting Services Agreement to
reflect the creation of an additional series for the Trust; and

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree:

1. To amend Schedule "C" to the Accounting Services Agreement in the form
attached hereto as Schedule "C" to reflect the addition of The Timothy
Plan Variable Series.

2. This Amendment's Effective Date shall be May 1, 1998.

THE TIMOTHY PLAN FPS SERVICES, INC.

_______________________________ _______________________________
By: Arthur D. Ally, Chairman By: Kenneth J. Kempf, President

_______________________________ _________________________________
Attest: Joseph E. Boatwright, Secretary Attest: Janet F. Davis, Secretary

________________________________________________________________________________
Amendment to Accounting Services Agreement between The Timothy Plan and FPS
Services, Inc.

Page 1

<PAGE>

SCHEDULE "C"

IDENTIFICATION OF SERIES

Below are listed the "Series and Classes" to which services under this Agreement
are to be performed as of the execution date of this Agreement:

"The Timothy Plan - Class A"
"The Timothy Plan - Class B"
"The Timothy Plan Variable Series

This Schedule "C" may be amended from time to time by agreement of the Parties.

________________________________________________________________________________
Amendment to Accounting Services Agreement between The Timothy Plan and FPS
Services, Inc.

Schedule "C"; Page 1

<PAGE>

<ARTICLE> 6
<CIK> 0000916490
<NAME> THE TIMOTHY PLAN
<SERIES>
<NUMBER> 1
<NAME> CLASS A
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 20,785,541
<INVESTMENTS-AT-VALUE> 22,501,232
<RECEIVABLES> 82,273
<ASSETS-OTHER> 413
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<SHARES-COMMON-STOCK> 914,727
<SHARES-COMMON-PRIOR> 690,247
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 187,182
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,715,691
<NET-ASSETS> 11,208,072
<DIVIDEND-INCOME> 172,686
<INTEREST-INCOME> 131,990
<OTHER-INCOME> 6,212
<EXPENSES-NET> 318,183
<NET-INVESTMENT-INCOME> (7,295)
<REALIZED-GAINS-CURRENT> 2,264,075
<APPREC-INCREASE-CURRENT> 796,018
<NET-CHANGE-FROM-OPS> 3,052,798
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,122,228
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 232,439
<NUMBER-OF-SHARES-REDEEMED> 96,627
<SHARES-REINVESTED> 88,668
<NET-CHANGE-IN-ASSETS> 10,907,737
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 164,422
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 142,990
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 512,128
<AVERAGE-NET-ASSETS> 9,369,068
<PER-SHARE-NAV-BEGIN> 11.24
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 2.37
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.38
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.25
<EXPENSE-RATIO> 1.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<CIK> 0000916490
<NAME> THE TIMOTHY PLAN
<SERIES>
<NUMBER> 2
<NAME> CLASS B
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 20,785,541
<INVESTMENTS-AT-VALUE> 22,501,232
<RECEIVABLES> 82,273
<ASSETS-OTHER> 413
<OTHER-ITEMS-ASSETS> 15,052
<TOTAL-ASSETS> 22,635,403
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,474
<TOTAL-LIABILITIES> 38,474
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20,694,056
<SHARES-COMMON-STOCK> 938,901
<SHARES-COMMON-PRIOR> 350,224
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 187,182
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,715,691
<NET-ASSETS> 11,388,857
<DIVIDEND-INCOME> 172,686
<INTEREST-INCOME> 131,990
<OTHER-INCOME> 6,212
<EXPENSES-NET> 318,183
<NET-INVESTMENT-INCOME> (7,295)
<REALIZED-GAINS-CURRENT> 2,264,075
<APPREC-INCREASE-CURRENT> 796,018
<NET-CHANGE-FROM-OPS> 3,052,798
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,119,087
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 542,712
<NUMBER-OF-SHARES-REDEEMED> 43,891
<SHARES-REINVESTED> 89,856
<NET-CHANGE-IN-ASSETS> 10,907,737
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 164,422
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 142,990
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 512,128
<AVERAGE-NET-ASSETS> 7,453,437
<PER-SHARE-NAV-BEGIN> 11.22
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> 2.32
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.38
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.13
<EXPENSE-RATIO> 2.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>