SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [10]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X ]
Amendment No. [11]
(Check appropriate box or boxes.)
THE TIMOTHY PLAN
--------------------
(Exact name of Registrant as Specified in Charter)
1304 West Fairbanks Avenue
Winter Park, FL 32789
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(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
407-644-1986
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ARTHUR D. ALLY, 1304 WEST FAIRBANKS AVENUE
WINTER PARK, FL 32789
407-644-1986
-------------------------
(Name and Address of Agent for Service)
Please send copy of communications to:
DAVID D. JONES, ESQUIRE
4747 Research Forest Drive,
Suite 180, # 303
The Woodlands, TX 77381
------------
Approximate Date of Proposed Public Offering: As soon as practicable following
effective date.
It is proposed that this filing will become effective (check appropriate box):
/X/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on _____________ pursuant to paragraph (a)(3)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on ___________ pursuant to paragraph (a)(2) of rule 485
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<PAGE>
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant declares hereby that an indefinite number or amount of its securities
has been registered by this Registration Statement.
A Rule 24f-2 Notice for the year ended December 31, 1999 was filed on March 29,
2000.
TOTAL NUMBER OF PAGES _____
EXHIBIT INDEX BEGINS
ON PAGE _____
2
<PAGE>
THE TIMOTHY PLAN
(the "Trust")
PROSPECTUS
May 1, 2000
This Prospectus offers the following Portfolios ("Funds") of the Trust:
THE TIMOTHY PLAN SMALL-CAP VALUE FUND
THE TIMOTHY PLAN LARGE/MID-CAP VALUE FUND
THE TIMOTHY PLAN FIXED-INCOME FUND
THE TIMOTHY PLAN MONEY MARKET FUND
The Timothy Plan was established to provide an investment alternative for people
who want to invest according to certain ethical standards. Each Fund invests in
a different market segment, and each Fund has its own investment objectives.
However, all the Funds have one thing in common. They do not invest in any
company that is involved in the business of alcohol production, tobacco
production or casino gambling, or which are involved, either directly or
indirectly, in pornography or abortion.
The Funds are distributed through Timothy Partners, Ltd.
1304 West Fairbanks Avenue, Winter Park, Florida 32789.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIME.
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TABLE OF CONTENTS
RISK/RETURN SUMMARY
The Timothy Plan Small-Cap Value Fund
The Timothy Plan Large/Mid-Cap Value Fund
The Timothy Plan Fixed Income Fund
The Timothy Plan Money Market Fund
FEES AND EXPENSES
INVESTING IN THE FUNDS
Class A Shares
Class B Shares
Opening and Adding To Your Account
HOW TO SELL (REDEEM) SHARES
DIVIDENDS AND DISTRIBUTIONS
THE ADVISER & INVESTMENT MANAGERS
Investment Adviser
Investment Managers
For the Small-Cap Value Fund
For the Large/Mid-Cap Value Fund
For the Fixed Income and Money Market Funds
PRINCIPAL UNDERWRITER
FEDERAL TAXES
GENERAL INFORMATION
FINANCIAL HIGHLIGHTS
FOR MORE INFORMATION
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RISK/RETURN SUMMARY
================================================================================
The Timothy Plan believes that it has a responsibility to invest in a moral and
ethical manner. Accordingly, as a matter of fundamental policy, none of our
Funds invest in any company that is involved in the business of alcohol
production, tobacco production, or casino gambling, or which are involved,
either directly or indirectly, in pornography or abortion. Such companies are
referred to throughout this Prospectus as "Excluded Securities". Excluded
Securities will not be purchased by any of our Funds. Timothy Partners
Ltd.("TPL") is investment adviser to the Funds, and is responsible for
determining those companies that are Excluded Securities.
Because none of our Funds will invest in Excluded Securities, the pool of
securities from which each Fund may choose may be limited to a certain degree.
Although TPL believes that each Fund can achieve its investment objective within
the parameters of ethical investing, eliminating Excluded Securities as
investments may have an adverse effect on a Fund's performance. However, "Total
Return" is more than just numbers. It is also investing in a way that supports
and reflects your beliefs and ideals. Each of our Funds strives to maximize both
kinds of total return.
================================================================================
THE TIMOTHY PLAN SMALL-CAP VALUE FUND
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INVESTMENT OBJECTIVE Long-term capital growth, with a secondary objective of
current income.
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PRIMARY INVESTMENT The Fund seeks to achieve its objectives by primarily
STRATEGIES investing in US small-cap stocks and American
Depository Receipts ("ADRs"). Small-Cap stocks is a
reference to the common stock of smaller companies-
companies whose total market capitalization is
generally less than $1Billion. ADRs are certificates
issued by United States banks to evidence an ownership
interest in an underlying non-USA company's stock. ADRs
generally trade on United States Stock Exchanges in the
same way that American common stock trades.
Small-Cap stocks, although more susceptible to price
movements, also enjoy growth potential that is often
not available for larger companies. As a result,
prudent investing in smaller companies can result in
greater capital growth than investing in larger
companies.
- --------------------------------------------------------------------------------
PRIMARY RISKS 1. GENERAL RISK- Like with most other mutual funds,
you can lose money by investing in this Fund.
Share prices fluctuate from day to day, and when
you sell your shares, they may be worth less than
you paid for them.
2. STOCK MARKET RISK- The Fund is an equity fund, so
it is subject to the risks inherent in the stock
market in general. The stock market is cyclical,
with prices generally rising and falling over
periods of time. Some of these price cycles can be
pronounced and last for a long time.
3. SMALL-CAP STOCK RISK- The Fund invests in smaller
companies. Smaller companies are particularly
susceptible to price swings, because, due to their
size, they often do not have the resources
available to them that are available to larger
companies.
4. EXCLUDED SECURITY RISK- Because the Fund does not
invest in Excluded Securities, the Fund may be
riskier than other Funds that invest in a broader
array of securities.
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WHO SHOULD BUY THIS FUND The Fund is appropriate for investors who understand
the risks of investing in the stock market and who are
willing to accept moderate amounts of volatility and
risk.
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5
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PAST PERFORMANCE
THE BAR CHART AND TABLE BELOW HELP SHOW THE RETURNS AND RISKS OF INVESTING IN
THE FUND BY SHOWING CHANGES IN THE FUND'S YEARLY PERFORMANCE OVER THE LIFETIME
OF THE FUND. THEY ALSO COMPARE THE FUND'S PERFORMANCE TO THE PERFORMANCE OF THE
RUSSELL 2000 INDEX** DURING EACH PERIOD. YOU SHOULD BE AWARE THAT THE FUND'S
PAST PERFORMANCE MAY NOT BE AN INDICATION OF HOW THE FUND WILL PERFORM IN THE
FUTURE.
PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS FOR CLASS A SHARES FOR CALENDAR YEARS ENDING ON
12/31(1)
- --------------------------------------------------------------------------------
25% 21.35%
20% ------
15% 12.59% ------ 12.58%
10% 7.93% ------ ------ ------
05% ------ ------ ------ ------
================================================================================
00% ------- --------
- -05% (2.84%) --------
- -10% --------
- -15% (10.50)%
- --------------------------------------------------------------------------------
1994(1) 1995 1996 1997 1998 1999
Best Quarter: 2nd Qtr 1999 19.88%
Worst Quarter: 3rd Qtr 1998 (23.18)%
Average Annual Total Returns (For Periods ending on December 31, 1999 (1)
- -------------------------------------------------------------------------
CLASS A(1) CLASS B(2) RUSSELL 2000 INDEX**
One Year 12.58% 11.03% 19.62%
Inception 6.56%(3) 6.67%(4) 15.15%(5)
(1) Class A shares commenced investment operations on March 21, 1994. Total
Return Calculation does not reflect sales load.
(2) Class B Shares commenced investment operations on August 25, 1995. Total
Return calculation does not reflect redemption fees.
(3) From March 21, 1994 (Commencement of Investment Operations).
(4) From August 25, 1995 (Commencement of Investment Operations).
(5) From March 21, 1994.
================================================================================
** The Russell 2000 Index is a widely recognized, unmanaged index of 2000
small-capitalization companies in the United States. The Index assumes
reinvestment of all dividends and distributions and does not reflect any
asset-based charges for investment management or other expenses.
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THE TIMOTHY PLAN LARGE/MID-CAP VALUE FUND
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INVESTMENT OBJECTIVE Long-term capital growth, with a secondary objective of
current income.
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PRIMARY INVESTMENT The Fund seeks to achieve its objectives by primarily
STRATEGIES investing in US common stocks and ADRs. The Fund will
normally invest in companies whose total market
capitalization exceeds $1 billion.
Larger companies, because of their increased management
depth, broader market affiliations, and capital
resources, offer the potential for long-term growth
with reduced risk.
- --------------------------------------------------------------------------------
PRIMARY RISKS (1) GENERAL RISK- Like with most other mutual funds,
you can lose money by investing in this Fund.
Share prices fluctuate from day to day, and when
you sell your shares, they may be worth less than
you paid for them.
(2) STOCK MARKET RISK- The Fund is an equity fund, so
it is subject to the risks inherent in the stock
market in general. The stock market is cyclical,
with prices generally rising and falling over
periods of time. Some of these price cycles can be
pronounced and last for a long time.
(3) MID-CAP STOCK RISK- Although the Fund invests in
companies with greater market capitalization than
the Small-Cap Value Fund, it does invest in
smaller companies. Smaller companies are
particularly susceptible to price swings, because,
due to their size, they often do not have the
resources available to them that are available to
larger companies.
(4) EXCLUDED SECURITY RISK- Because the Fund does not
invest in Excluded Securities, the Fund may be
riskier than other Funds that invest in a broader
array of securities.
- --------------------------------------------------------------------------------
WHO SHOULD BUY THIS The Fund is appropriate for investors who understand
FUND the risks of investing in the stock market and who are
willing to accept moderate amounts of volatility and
risk.
- --------------------------------------------------------------------------------
PAST PERFORMANCE
THIS FUND COMMENCED INVESTMENT OPERATIONS ON JULY 14, 1999. BECAUSE IT HAS NOT
YET ACHIEVED ONE FULL CALENDAR YEAR OF INVESTMENT PERFORMANCE, A BAR CHART AND
TABLE ARE NOT AVAILABLE.
7
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THE TIMOTHY PLAN FIXED-INCOME FUND
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INVESTMENT OBJECTIVE To generate a high level of current income consistent
with prudent investment risk.
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PRIMARY INVESTMENT To achieve its goal, the Fund normally invests in a
STRATEGIES diversified portfolio of debt securities. These include
corporate bonds, U.S. Government and agency securities
and preferred securities. The Fund will only purchase
securities for the Fund that are investment grade, a
rating of at least "BBB" as rated by Standard & Poors
or a comparable rating by another nationally recognized
rating agency. The Fund may also invest in debt
securities that have not been rated by one of the major
rating agencies, so long as the Fund's investment
manager has determined that the security is of
comparable credit quality to similar rated securities.
In managing its portfolio, the Fund' s investment
manager concentrates on sector analysis, industry
allocation and securities selection: deciding which
types of bonds and industries to emphasize at a given
time, and then which individual bonds to buy. The Fund
attempts to anticipate shifts in the business cycle in
determining types of bonds and industry sectors to
target. In choosing individual securities, the Fund
seeks out securities that appear to be undervalued
within the emphasized industry sector.
- --------------------------------------------------------------------------------
PRIMARY RISKS (1) GENERAL RISK- Like with most other mutual funds,
you can lose money by investing in this Fund.
Share prices fluctuate from day to day, and when
you sell your shares, they may be worth less than
you paid for them.
(2) INTEREST RATE RISK- When interest rates rise, bond
prices fall; the higher the Fund's duration ( a
calculation reflecting time risk, taking into
account both the average maturity of the Fund's
portfolio and its average coupon return), the more
sensitive the Fund is to interest rate risk.
(3) CREDIT RISK- The Fund could lose money if any
bonds it owns are downgraded in credit rating or
go into default. For this reason, the Fund will
only invest in investment grade bonds.
(4) SECTOR RISK- If certain industry sectors or types
of securities don't perform as well as the Fund
expects, the Fund's performance could suffer.
- --------------------------------------------------------------------------------
WHO SHOULD BUY THIS This Fund is appropriate for investors who want a high
FUND level of current income and are willing to accept a
minor degree of volatility and risk.
- --------------------------------------------------------------------------------
PAST PERFORMANCE
THIS FUND COMMENCED INVESTMENT OPERATIONS ON JULY 14, 1999. BECAUSE IT HAS NOT
YET ACHIEVED ONE FULL CALENDAR YEAR OF INVESTMENT PERFORMANCE, A BAR CHART AND
TABLE ARE NOT AVAILABLE.
================================================================================
8
<PAGE>
THE TIMOTHY PLAN MONEY MARKET FUND
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INVESTMENT OBJECTIVE The Fund seeks a high level of current income
consistent with the preservation of capital. The Fund
also attempts to maintain a stable net asset value of
$1.00.
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PRIMARY INVESTMENT The Fund invests primarily in short-term debt
STRATEGIES instruments, such as obligations of the U.S. Government
and its agencies, certificates of deposit, bankers
acceptances, commercial paper, and short-term corporate
notes. The Fund may also invest in repurchase
agreements. Under normal circumstances, the Fund will
not invest in any security with a maturity in excess of
397 days.
The Fund will only purchase securities for the Fund
that are investment grade. This means that the security
has a rating of at least "AA" as rated by Standard &
Poors or a comparable rating by another nationally
recognized rating agency. The Fund may also invest in
debt securities that have not been rated by one of the
major rating agencies, so long as the Fund's investment
manager has determined that the security is of
comparable credit quality to similar rated securities
- --------------------------------------------------------------------------------
PRIMARY RISKS MONEY MARKET RISK- An investment in the Fund is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency. Although
the Fund seeks to preserve the value of your investment
at $1.00 per share, it is possible to lose money by
investing in the Fund.
INTEREST RATE RISK- When interest rates rise, bond
prices fall; the higher the Fund's duration ( a
calculation reflecting time risk, taking into account
both the average maturity of the Fund's portfolio and
its average coupon return), the more sensitive the Fund
is to interest rate risk.
CREDIT RISK- The Fund could lose money if any bonds it
owns are downgraded in credit rating or go into
default. For this reason, the Fund will only invest in
investment grade bonds.
- --------------------------------------------------------------------------------
WHO SHOULD BUY THIS The Fund is appropriate for investors who are seeking a
FUND high level of current income and preservation of
capital.
- --------------------------------------------------------------------------------
PAST PERFORMANCE
THIS FUND COMMENCED INVESTMENT OPERATIONS ON JULY 14, 1999. BECAUSE IT HAS NOT
YET ACHIEVED ONE FULL CALENDAR YEAR OF INVESTMENT PERFORMANCE, A BAR CHART AND
TABLE ARE NOT AVAILABLE.
TO OBTAIN THE FUND'S CURRENT 7-DAY YIELD, CALL THE FUND TOLL-FREE AT
1-800-662-0201.
Additional Investment Information
- ---------------------------------
Each Fund may, for temporary defensive purposes, invest up to 100% of its assets
in obligations of the United States Government, its agencies and
instrumentalities, commercial paper, and certificates of deposit and bankers
acceptances. When a Fund takes a temporary defensive position, it will not be
investing according to its investment objective, and at such times, the
performance of the Fund will be different that if it had invested strictly
according to its objectives.
================================================================================
9
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and hold
shares of the Timothy Plan Small-Cap Value Fund ("Small"), Timothy Plan
Large/Mid-Cap Value Fund ("Mid"), and Timothy Plan Fixed-Income Fund ("Fixed").
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
CLASS A CLASS B
- -----------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES SMALL MID FIXED SMALL MID FIXED
- -----------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE ON PURCHASES
<S> <C> <C> <C> <C> <C> <C>
(as percentage of offering price) 5.50% 5.50% 4.25% None None None
- -----------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES CHARGE
(as percentage of the lesser of original
purchase price or redemption proceeds) None None None 5.00% 5.00% 5.00%
- -----------------------------------------------------------------------------------------------
REDEMPTION FEES* NONE NONE NONE NONE NONE NONE
- -----------------------------------------------------------------------------------------------
EXCHANGE FEES None None None None None None
- -----------------------------------------------------------------------------------------------
</TABLE>
* Firstar Bank, N.A., the Trust's custodian, charges a fee of $9 on
redemptions paid by wire transfer.
10
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES CLASS A CLASS B
- ---------------------------------------------------------------------------------------------------
(expenses that are deducted from Fund assets) SMALL MID FIXED SMALL MID FIXED
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MANAGEMENT FEES 0.85% 1.35% 0.95% 0.85% 1.35% 0.95%
- ---------------------------------------------------------------------------------------------------
SERVICE & DISTRIBUTION (12B-1) FEES 0.25% 0.25% 0.25% 1.00% 1.00% 1.00%
- ---------------------------------------------------------------------------------------------------
OTHER EXPENSES(1) 1.12% 3.09% 12.72% 0.87% 3.52% 12.78%
----- ----- ------ ----- ----- ------
- ---------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES (Before Reimbursement
by Adviser) 2.22% 4.69% 13.92% 2.72% 5.87% 14.73%
===== ===== ====== ===== ===== ======
- ---------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES (After Reimbursement
by Adviser) 1.60% 1.60% 1.35% 2.35% 2.35% 2.10%
===== ===== ====== ===== ===== ======
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) The Large/Mid-Cap Value Fund and the Fixed Income Fund commenced offering
Class A shares on July 14, 1999. The Large/Mid-Cap and Fixed Income Funds
commenced offering Class B shares on July 15, 1999 and August 5, 1999,
respectively. "Other Expenses" represents administrative and other expenses
incurred by these Funds during their start-up period.
(2) TPL has agreed to waive receipt of its fees and/or assume certain expenses
of the Funds, to the extent possible, to insure that total annual operating
expenses do not exceed 1.60% annually for Class A shares of the Small-Cap Value
and Large/Mid-Cap Value Funds, and 1.35% annually for Class A shares of the
Fixed Income Fund. TPL has also agreed to waive receipt of its fees and/or
assume certain expenses of the Funds, to the extent possible, to insure that
total annual operating expenses do not exceed 2.35% annually for Class B shares
of the Small-Cap Value and Large/Mid-Cap Value Funds, and 2.10% annually for
Class B shares of the Fixed Income Fund. TPL may terminate its agreement at any
time, and will notify you if it does so.
THIS TABLE DESCRIBES THE FEES AND EXPENSES YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE TIMOTHY PLAN MONEY MARKET FUND ("MONEY MARKET"). THE MONEY MARKET
FUND OFFERS ONLY NO-LOAD SHARES.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES: ANNUAL FUND OPERATING EXPENSES:
- --------------------------------- --------------------------------
<S> <C> <C> <C>
MAXIMUM SALES CHARGE ON PURCHASES NONE (expenses that are deducted from Fund assets)
(as a percentage of offering price) MANAGEMENT FEES. 0.60%
MAXIMUM DEFERRED SALES CHARGES NONE SERVICE & DISTRIBUTION (12B-1) FEES. 0.25%
(AS A PERCENTAGE OF THE LESSER OF ORIGINAL OTHER EXPENSES(1) 4.90%
-----
PURCHASE PRICE OR REDEMPTION PROCEEDS) TOTAL FUND OPERATING EXPENSES.(2) 5.75%
REDEMPTION FEES NONE* (Before Expense Reimbursements) -----
(as a percentage of amount redeemed) TOTAL FUND OPERATING EXPENSES 0.85%
EXCHANGE FEES NONE (After Expense Reimbursements) =====
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Money Market Fund commenced offering its shares on July 9, 1999. "Other
Expenses" represents administrative and other expenses incurred by these
Funds during their start-up period.
(2) TPL has agreed to waive receipt of its fees and/or assume certain expenses
of the Fund, to the extent possible, to insure that the Fund's total
expenses do not exceed 0.85%. TPL may terminate its agreement at any time,
and will notify you if it does so.
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EXAMPLE:
- --------
THE HYPOTHETICAL EXAMPLE BELOW SHOWS WHAT YOUR EXPENSES WOULD BE IF YOU INVESTED
$10,000 IN CLASS A SHARES OF EACH FUND (NO-LOAD SHARES OF THE MONEY MARKET FUND)
FOR THE TIME PERIODS INDICATED, REINVESTED ALL DISTRIBUTIONS, AND THEN REDEEMED
ALL YOUR SHARES AT THE END OF THOSE PERIODS. THE EXAMPLE ASSUMES THAT YOUR
INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S NET OPERATING EXPENSES
REMAIN THE SAME AS IN THE TABLE ABOVE. THIS EXAMPLE IS FOR COMPARISON ONLY, AND
DOES NOT REPRESENT EACH FUND'S ACTUAL EXPENSES AND RETURNS, EITHER PAST OR
FUTURE.
- --------------------------------------------------------------------------------
CLASS A SHARES NO-LOAD
- --------------------------------------------------------------------------------
SMALL-CAP MID-CAP FIXED INCOME MONEY MARKET
--------- ------- ------------ ------------
- --------------------------------------------------------------------------------
One Year $ 704 $ 600 $ 561 $ 87
- --------------------------------------------------------------------------------
Three Years $1,027 $ 967 $ 849 $ 271
- --------------------------------------------------------------------------------
Five Years $1,373
- --------------------------------------------------------------------------------
Ten Years $2,346
- --------------------------------------------------------------------------------
The $9 fee that you would have to pay if you redeemed your shares by wire
transfer is not included in these figures. A maximum sales charge of 5.50% for
the Small-Cap Value and Large/ Mid-Cap Value Funds, and 4.25% for the
Fixed-Income Fund, is included in the expense calculations.
INVESTING IN THE FUNDS
Determining Share Prices
- ------------------------
Shares of each Share Class of each Fund are offered at the public offering price
("POP") for each share Class. The public offering price is each share's next
calculated net asset value ("NAV"), plus the applicable sales charge, if any.
NAV per share is calculated by adding the value of Fund investments, cash and
other assets, subtracting Fund liabilities, and then dividing the result by the
number of shares outstanding. Each Fund generally determines the total value of
its shares by using market prices for the securities comprising its portfolio.
Securities for which quotations are not available and any other assets are
valued at fair market value as determined in good faith by each Fund's Adviser,
subject to the review and supervision of the Board of Trustee. Each Fund's per
share NAV and public offering price is computed on all days on which the New
York Stock Exchange ("NYSE") is open for business, at the close of regular
trading hours on the Exchange, currently 4:00 p.m. Eastern time. In the event
that the NYSE closes early, the share price will be determined as of the time of
closing.
The Timothy Plan Money Market Fund will use the amortized cost method to compute
its net asset value. This means that securities purchased by the Fund are not
marked to market. Instead, any premium paid or discount realized will be
amortized or accrued over the life of the security and credited/debited daily
against the total assets of the Fund. This also means that, under most
circumstances, the Fund will not sell securities prior to maturity date except
to satisfy redemption requests.
Choosing the Class of Shares that is Best For You
- -------------------------------------------------
Except for the Money Market Fund, which offers only No-Load Shares, Each Fund
offers you a choice of two different share classes in which to invest. The main
differences between each share class are sales charges and ongoing fees. Both
classes of shares in any Fund represent interests in the same portfolio of
investments in that Fund. When deciding which class of shares to purchase, you
should consider your investment goals, present and future amounts you may invest
in the Fund(s), and the length of time you intend to hold your shares. You
should consider, given the length of time you may hold your shares, whether the
ongoing expenses of Class B shares will be greater than the front-end sales
charge of Class A shares, and to what extent such differences may be offset by
the higher dividends on Class A shares. To help you make a determination as to
which class of shares to buy, please refer back to the examples of Fund expenses
over time in the Risk/Return Summary.
12
<PAGE>
CLASS A SHARES.
Class A shares are offered at their public offering price ("POP"), which is net
asset value per share plus the applicable sales charge. The sales charge varies,
depending on which Fund you choose and how much you invest. There are no sales
charges on reinvested distributions. For the Small-Cap Value Fund and the
Large/Mid-Cap Value Fund, the following sales charges apply:
<TABLE>
<CAPTION>
As a % of As a % of Dealer Concession as a
Amount Invested offering price Amount Invested percentage of offering price
- --------------- -------------- --------------- ----------------------------
<S> <C> <C> <C>
$1000 to 24,999 5.50% 5.82% 5.25%
25,000 to 49,999 4.25% 4.44% 4.00%
50,000 to 99,999 3.00% 3.09% 2.75%
100,000 to 249,999 2.00% 2.04% 1.75%
250,000 to 499,999 1.00% 1.01% 0.75%
500,000 and up 0.00% 0.00% 0.00%
The following sales charges apply to the Fixed Income Fund:
<CAPTION>
As a % of As a % of Dealer Concession as a
Amount Invested offering price Amount Invested percentage of offering price
- --------------- -------------- --------------- ----------------------------
<S> <C> <C> <C>
$1000 to 24,999 4.25% 4.44% 4.00%
25,000 to 49,999 3.25% 3.36% 3.00%
50,000 to 99,999 2.25% 2.30% 2.00%
100,000 to 249,999 1.25% 1.27% 1.00%
250,000 to 499,999 0.75% 0.76% 0.50%
500,000 and up 0.00% 0.00% 0.00%
</TABLE>
The Funds' distributor will pay the appropriate dealer concession to those
selected dealers who have entered into an agreement with the distributor to sell
shares of the Funds. The dealer's concession may be changed from time to time.
The distributor may from time to time offer incentive compensation to dealers
who sell shares of the Funds 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 deemed to be an "underwriter" under the Securities Act of
1933, as amended.
Exemptions from sales charges
- -----------------------------
Class A shareholders who purchased their shares on or before September 22, 1997
are not subject to sales charges on future purchases of Class A shares of any
Timothy Plan Fund, including exchanges. Also, the Trust will waive sales charges
on purchases of Class A Shares by:
1. fee-based registered investment advisers for their clients,
2. broker/dealers with wrap fee accounts,
3. registered investment advisers or brokers for their own accounts,
4. directors, officers, agents employees and employee related accounts of any
entity which provides services to the Timothy Plan pursuant to a written
agreement for such services approved by the Board of Trustees of the
Timothy Plan, and
5. for an organization's retirement plan that places either (i) 200 or more
participants or (ii) $300,000 or more of combined participant initial
assets into the Funds.
The Trust may also, at its sole discretion, waive sales charges on purchases of
Class A Shares by:
13
<PAGE>
1. religious organizations for themselves or their members,
2. religiously-based charitable organizations and foundations for themselves
or their members, and/or
3. at times and under circumstances deemed appropriate by the Trust.
For purchasers that qualify for fee waivers, shares will be purchased at net
asset value.
Reduced Sales Charges
- ---------------------
You may qualify for a reduced sales charge by aggregating the net asset value of
all your load shares previously purchased in any Fund with the dollar amount of
shares to be purchased. For example, if you already owned Class A or Class B
shares in one or more of the Funds with an aggregate net asset value of
$450,000, and you decided to purchase an additional $60,000 of Class A shares of
any Fund, there would be no sales charge on that purchase because you had
accumulated more than $500,000 in all Funds of the Trust.
Letter of Intent
- ----------------
You can immediately qualify for a reduced or eliminated sales charge by signing
a non-binding letter of intent stating your intention to buy an amount of shares
in the Fund(s) during the next thirteen (13) months sufficient to qualify for
the reduction. Your letter will not apply to purchases made more than 90 days
prior to the letter. During the term of your letter of intent, the transfer
agent will hold in escrow shares representing the highest applicable sales load
for the Fund(s) in which you have purchased shares, each time you make a
purchase. Any shares you redeem during that period will count against your
commitment. If, by the end of your commitment term, you have purchased all the
shares you committed to purchase, the escrowed shares will be released to you.
If you have not purchased the full amount of your commitment, your escrowed
shares will be redeemed in an amount equal to the sales charge that would apply
if you had purchased the actual amount in your account(s) all at once. Any
escrowed shares not needed to satisfy that charge would be released to you.
CLASS B SHARES
Unlike Class A shares, Class B shares are sold at net asset value, without an
initial sales charge. Instead, a Contingent Deferred Sales Charge ("CDSC") is
imposed on certain redemptions of Class B shares. This means that all of your
initial investment is invested in the Fund(s) of your choice, and you will only
incur a sales charge if you redeem shares within five years. In that case, a
CDSC may be imposed on your redemption. If a CDSC is imposed, it will be an
amount equal to the lesser of the current market value or the cost of the shares
redeemed. What this means is that no sales charge is imposed on increases in the
net asset value of your shares above their original purchase price. Also, no
charge is assessed on shares derived from reinvestment of dividend or capital
gains distributions.
The amount of the CDSC, if any, varies depending on the number of years you have
held your shares. To determine that time period, all purchases made in any month
are aggregated together and deemed to have been made on the last day of the
month. For Class B shares of the Small-Cap Value, Large/Mid-Cap Value, and Fixed
Income Funds, the following CDSC charges apply:
Redemption Within CDSC Percentage
- --------------------------------------------
First Year ................. 5.00%
Second Year ................ 4.00%
Third Year ................. 3.00%
Fourth Year ................ 2.00%
Fifth Year ................. 1.00%
Sixth Year and Thereafter .. None
When you send a redemption request to the Trust, shares not subject to the CDSC
are redeemed first, then shares that have been held the longest, and so on. That
way, you will be subject to the smallest charge possible.
14
<PAGE>
CDSC 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 plan (iii) pursuant to the
Funds' Systematic Cash Withdrawal Plan, limited to 10% of the initial value of
the account, (iv) pursuant to the right of a Fund to liquidate a shareholder's
account.
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
fees paid under each Fund's Plan of Distribution for its Class B shares. Class B
shares converting to Class A shares are not subject to additional sales charges.
Distribution Fees
- -----------------
The Trust has adopted distribution and shareholder servicing plans (the
"Distribution Plans"), pursuant to Rule 12b-1 under The Investment Company Act
of 1940, as amended (the "1940 Act"), by Class of Shares, for each Fund. The
Distribution Plans provide for fees to be deducted from the average net assets
of the Funds in order to compensate TPL or others for expenses relating to the
promotion and sale of shares of each Fund.
Under the Class A Plan, the Class A shares of each Fund compensate TPL and
others for distribution expenses at a maximum annual rate of 0.25% (of which,
the full amount may be service fees), payable on a monthly basis, of each Fund's
average daily net assets attributable to Class A shares.
Under the Class B Plan, the Class B Shares of the Fund compensate TPL and others
for distribution and service fees at an annual rate of 1.00% (0.25% of which is
a service fee) payable on a monthly basis, of each Fund's average daily net
assets attributable to Class B shares. Amounts paid under the Class B Plan are
paid to TPL and others to compensate them for services provided and expenses
incurred in the distribution of Class B shares, including the paying of
commissions for sales of Class B shares. The Class B Plan is designed to allow
investors to purchase Class B shares without incurring a front-end sales load
and to permit the distributor to compensate authorized dealers for selling such
shares. Accordingly, the Class B Plan combined with the CDSC for Class B shares
is to provide for the financing of the distribution of Class B shares. 12b-1
service fees payable on Class B shares will be paid to TPL for the first
thirteen months after the shares are purchased.
Opening And Adding To Your Account
- ----------------------------------
You can invest directly in each Fund by mail, by wire transfer, or through
broker-dealers or other financial organizations. Simply choose the one that is
most convenient for you. You may also invest in the Funds through an automatic
payment plan. Any questions you may have can be answered by calling
1-800-662-0201.
Payments for Fund shares should be in U.S. dollars, and in order to avoid fees
and delays, should be drawn on a U.S. bank. Please remember that the Trust
reserves the right to reject any purchase order for Fund shares. The minimum
initial investment amount for each Fund, in any Class of shares, is $1000.00 for
regular accounts. There is no minimum purchase requirement for additional
purchases, and there is no minimum purchase requirement for qualified retirement
plans.
To Open an Account by Mail
- --------------------------
To make your initial investment in the Funds, simply complete the Account
Registration Form included with this Prospectus, make a check payable to the
Fund of your choice, and mail the Form and check to:
The Timothy Plan
c/o Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
15
<PAGE>
To make subsequent purchases, simply make a check payable to the Fund of your
choice and mail the check to the above-mentioned address. Be sure to note your
Fund account number on the check.
Your purchase order, if accompanied by payment, will be processed upon receipt
by Unified Fund Services, Inc., the Fund's Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern time), your shares will be purchased at the Fund's
POP calculated at the close of regular trading on that day. Otherwise, your
shares will be purchased at the POP determined as of the close of regular
trading on the next business day.
Purchasing Shares by Wire Transfer
- ----------------------------------
To make an initial purchase of shares by wire transfer, you need to take the
following steps:
1. Fill out and mail or fax (317-266-8756 fax #) an Account Application to the
Transfer Agent
2. Call 1-800-662-0201 to inform us that a wire is being sent.
3. Obtain an account number from the Transfer Agent.
4. Ask your bank to wire funds to the account of:
Firstar Bank, N.A.
Cinti/Trust, ABA # 0420-0001-3
Credit: The Timothy Plan
Acct. # 488889866 (Small-Cap Value Fund)
821602174 (Large/Mid-Cap Value Fund
821602182 (Fixed Income Fund)
821602208 (Money Market Fund)
For further credit to (Your Name and Account #)
Include your name(s), address and taxpayer identification number or Social
Security number on the wire transfer instructions. The wire should state that
you are opening a new Fund account.
The Trust allows investors to fax an application to the Transfer Agent as a
convenience for the investor. However, if you fax your application to the
Transfer Agent, you must also mail the original to the Transfer Agent for the
Trust's permanent files.
To make subsequent purchases by wire, ask your bank to wire funds using the
instructions listed above, and be sure to include your account number on the
wire transfer instructions.
If you purchase Fund shares by wire, you must complete and file an Account
Registration Form with the Transfer Agent before any of the shares purchased can
be redeemed. Either fill out and mail the Application Form included with this
prospectus, or call the transfer agent and they will send you an application.
You should contact your bank (which will need to be a commercial bank that is a
member of the Federal Reserve System) for information on sending funds by wire,
including any charges that your bank may make for these services.
Purchases through Financial Service Organizations
- -------------------------------------------------
You may purchase shares of the Funds through participating brokers, dealers, and
other financial professionals. Simply call your investment professional to make
your purchase. If you are a client of a securities broker or other financial
organization, such organizations may charge a separate fee for administrative
services in connection with investments in Fund shares and may impose account
minimums and other requirements. These fees and requirements would be in
addition to those imposed by the Fund. If you are investing through a securities
broker or other financial organization, please refer to its program materials
for any additional special provisions or conditions that may be different from
those described in this Prospectus (for example, some or all of the services and
privileges described may not be available to you). Securities brokers and other
financial organizations have the responsibility of transmitting purchase orders
and funds, and of crediting their customers' accounts following redemptions, in
a timely manner in accordance with their customer agreements and this
Prospectus.
16
<PAGE>
Purchasing Shares by Automatic Investment Plan
- ----------------------------------------------
You may purchase shares of the Funds through an Automatic Investment Plan
("Plan"). The Plan provides a convenient way for you to have money deducted
directly from your checking, savings, or other accounts for investment in shares
of the Funds. You can take advantage of the Plan by filling out the Automatic
Investment Plan application, included with this Prospectus. You may only select
this option if you have an account maintained at a domestic financial
institution which is an Automated Clearing House member for automatic
withdrawals under the Plan. The Trust may alter, modify, amend or terminate the
Plan at any time, and will notify you at least 30 days in advance if it does so.
For more information, call the Transfer Agent at 1-800-662-0201.
Retirement Plans
- ----------------
Retirement plans may provide you with a method of investing for your retirement
by allowing you to exclude from your taxable income, subject to certain
limitations, the initial and subsequent investments in your plan and also
allowing such investments to grow without the burden of current income tax until
moneys are withdrawn from the plan. Contact your investment professional or call
the Fund at 1-800 TIM-PLAN to receive information concerning your options.
Other Purchase Information
- --------------------------
Federal regulations require that you provide a certified taxpayer identification
number whenever you open or reopen an account. Congress has mandated that if any
shareholder fails to provide and certify to the accuracy of the shareholder's
social security number or other taxpayer identification number, the Company will
be required to withhold a percentage, currently 31%, of all dividends,
distributions and payments, including redemption proceeds, to such shareholder
as a backup withholding procedure.
For economy and convenience, share certificates will not be issued.
The Timothy Plan wants you to be kept current regarding the status of your
account in our Fund(s). To assist you, the following statements and reports will
be sent to you:
Confirmation Statements After every transaction that affects your
account balance or your account registration.
Account Statements Quarterly.
Financial Reports Semi-annually -- to reduce Fund expenses, only
one copy of the Fund report will be mailed to each
taxpayer identification number even if you have more
than one account in the Fund.
HOW TO SELL (REDEEM) YOUR SHARES
You may sell (redeem) your shares at any time. You may request the sale of your
shares either by mail, by telephone or by wire.
By Mail
- -------
Sale requests should be mailed via U.S. mail or overnight courier service to:
The Timothy Plan
c/o Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
17
<PAGE>
The selling price for No-Load and Class A shares being redeemed will be the
Fund's per share net asset value next calculated after receipt of all required
documents in Good Order. The selling price for Class B shares being redeemed
will be the Fund's per share net asset value next calculated after receipt of
all required documents in Good Order, less any applicable CDSC. Payment of
redemption proceeds will be made no later than the third business day after the
valuation date unless otherwise expressly agreed by the parties at the time of
the transaction.
Good Order means that the request must include:
1. Your account number.
2. The number of shares to be sold (redeemed) or the dollar value of the
amount to be redeemed.
3. The signatures of all account owners exactly as they are registered on the
account.
4. Any required signature guarantees.
5. Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships and certain other types of accounts.
Signature Guarantees --
- --------------------
A signature guarantee of each owner is required to redeem shares in the
following situations, for all size transactions:
(i) if you change the ownership on your account;
(ii) when you want the redemption proceeds sent to a different address than is
registered on the account;
(iii)if the proceeds are to be made payable to someone other than the account's
owner(s);
(iv) any redemption transmitted by federal wire transfer to your bank; and
(v) if a change of address request has been received by the Trust or
Declaration Service Company within 15 days previous to the request for
redemption.
In addition, signature guarantees are required for all redemptions of $25,000 or
more from any Fund shareholder account. A redemption will not be processed until
the signature guarantee, if required, is received in Good Order.
Signature guarantees are designed to protect both you and the Trust from fraud.
To obtain a signature guarantee, you should visit a bank, trust company, member
of a national securities exchange or other broker-dealer, or other eligible
guarantor institution. (Notaries public cannot provide signature guarantees.)
Guarantees must be signed by an authorized person at one of these institutions,
and be accompanied by the words "Signature Guarantee."
By Telephone
- ------------
You may redeem your shares in the Fund by calling the Transfer Agent at
1-800-662-0201 if you elected to use telephone redemption on your account
application when you initially purchased shares. Redemption proceeds must be
transmitted directly to you or to your pre-designated account at a domestic
bank.
Shares purchased by check for which a redemption request has been received will
not be redeemed until the check or payment received for investment has cleared.
By Automated Clearing House ("ACH")
- -----------------------------------
You may request the redemption proceeds be transferred to your designated bank
if it is a member bank or a correspondent of a member bank of the ACH system.
There is no fee charged by the Trust. ACH redemption requests must be received
by the transfer agent before 4:00p.m. New York time to receive that day's
closing net assets value. ACH redemptions will be sent on the day following your
redemption request. ACH redemption funds are normally available two days after
the redemption has been processed.
18
<PAGE>
Redemption At The Option Of The Trust
- -------------------------------------
If the value of the shares in your account falls to less than $1000, the Trust
may notify you that, unless your account is increased to $1000 in value, it will
redeem all your shares and close the account by paying you the redemption
proceeds and any dividends and distributions declared and unpaid at the date of
redemption. You will have sixty days after notice to bring the account up to
$1000 before any action is taken. This minimum balance requirement does not
apply to IRAs and other tax-sheltered investment accounts. This right of
redemption shall not apply if the value of your account drops below $1000 as the
result of market action. The Trust reserves this right because of the expense to
the Fund of maintaining very small accounts.
DIVIDENDS AND DISTRIBUTIONS
Dividends paid by the Fund are derived from its net investment income. Net
investment income will be distributed at least annually. The Fund's net
investment income is made up of dividends received from the stocks it holds, as
well as interest accrued and paid on any other obligations that might be held in
its portfolio.
The Fund realizes capital gains when it sells a security for more than it paid
for it. The Fund may make distributions of its net realized capital gains (after
any reductions for capital loss carry forwards), generally, once a year.
Unless you elect to have your distributions paid in cash, your distributions
will be reinvested in additional shares of the Fund. You may change the manner
in which your dividends are paid at any time by writing to The Timothy Plan, c/o
Unified Fund Services, Inc., 431 North Pennsylvania Street, Indianapolis,
Indiana 46204.
THE INVESTMENT ADVISER & INVESTMENT MANAGERS
INVESTMENT ADVISER
Timothy Partners Ltd., (" TPL"), 1304 West Fairbanks Avenue, Winter Park,
Florida, 32789, is a Florida limited partnership organized on December 6, 1993
and is registered with the Securities and Exchange Commission as an investment
adviser. TPL supervises the investment of the assets of each Fund in accordance
with the objectives, policies and restrictions of the Trust. TPL approves the
portfolio of securities selected by the investment managers. To determine which
securities are Excluded Securities, TPL conducts its own research and consults a
number of Christian ministries on these issues. TPL retains the right to change
the sources from whom it acquires its information, at its discretion. TPL has
been the Adviser to the Funds since their inceptions.
Covenant Funds, Inc., a Florida corporation ("CFI"), is the managing general
partner of TPL. Arthur D. Ally is President, Chairman and Trustee of the Trust,
as well as President and 70% shareholder of CFI. Mr. Ally has over eighteen
years experience in the investment industry prior to founding TPL, having worked
for Prudential Bache, Shearson Lehman Brothers and Investment Management &
Research. Some or all of these firms may be utilized by an investment manager to
execute portfolio trades for a Fund. Neither Mr. Ally nor any affiliated person
of the Trust will receive any benefit from such transactions.
For its services, TPL is paid an annual fee equal to 0.85% on the Small-Cap
Value Fund, 0.85% on the Large/Mid-Cap Value Fund, 0.60% on the Fixed-Income
Fund, and 0.60% on the Money Market Fund.
INVESTMENT MANAGERS
Small-Cap Value Fund
- --------------------
Awad Asset Management, Inc. ("Awad"), a wholly-owned subsidiary of Raymond James
Financial, Inc., a diversified financial services firm traded on the New York
Stock Exchange, is the investment manager for the Small-Cap Value Fund. Awad has
offices at 250 Park Avenue, New York, New York 10177. Awad selects the
investments for the Small-Cap Value Fund's portfolio, subject to the investment
restrictions of the Trust and under the supervision of TPL.
19
<PAGE>
James D. Awad, Dan Veru and Carol Egan make up the team responsible for managing
the day-to-day investments for the Fund. James Awad is the Senior Investment
Officer of the investment manager. Prior to forming Awad Asset Management, Inc.,
Mr. Awad was founder and president of BMI Capital. He also managed assets at
Neuberger & Berman, Channing Management and First Investment Corp. Mr. Awad has
been involved either full or part-time in the investment business since 1965.
Awad & Associates has served as investment manager to the Fund since January 1,
1997. It also serves as investment co-adviser to two other investment companies:
Heritage Small-Cap Stock Fund and Calvert New Vision Small-Cap Fund. As of
December 31, 1999, Awad & Associates managed in excess of $1 billion in assets.
In choosing the securities in which to invest, the Awad uses extensive
fundamental analysis to develop earnings forecasts and to identify attractive
investment opportunities relative to market valuation. Individual companies are
scrutinized concerning their individual growth prospects and their competitive
positions within their respective industries. Individual company analysis
focuses upon the outlook for sales, profit margins, returns on capital, cash
flow and earnings per share.
Mid-Cap Value Fund
- ------------------
Fox Asset Management, Inc. ("Fox"), 44 Sycamore Avenue, Little Silver, NJ 07739,
is responsible for the investment and reinvestment of the Mid-Cap Value Fund's
assets. Mr. J. Peter Skirkanich, President and majority shareholder of Fox, is
responsible for the day-to-day recommendations regarding the investment of the
Fund's portfolio. Fox was founded in 1987 and offers investment advice and
services to individuals, institutions, trusts, charities and regulated
investment companies. As of December 31, 1999, Fox managed approximately $2.2
billion in assets.
Mr. Skirkanich is the founder of the firm, serves as chairman of the firm's
investment committee, and is the firm's controlling shareholder, with an
approximate holding of 73% of the firm's outstanding stock. Mr. Skirkanich was
formerly Managing Director of Dreman Value Management, Inc., an investment
counseling firm. Prior to that, he was a Vice President of Investments at
Kidder, Peabody & Company and Shearson/American Express, where he managed
individual and corporate accounts for twelve years. He began his investment
career as an analyst with Prudential Bache Securities.
Prior to embarking on his investment career, Mr. Skirkanich served three years
with the U.S. State Department and two years with Ernst & Whinney in both the
tax and audit areas. Mr. Skirkanich is a graduate of the Wharton School,
University of Pennsylvania. Currently he serves as a trustee on the Board of
Overseers for the School of Engineering and Applied Sciences at the University.
By gubernatorial appointment, he also serves as a member of the State Investment
Council for the State of New Jersey.
Fixed-Income Fund and Money Market Fund
- ---------------------------------------
Carr & Associates, Inc.("Carr"), 150 Broadway, Suite 509, New York, New York,
serves as investment manager to the Fixed Income and Money Market Funds. Carr
was founded by Michael F. Carr in 1989 and has provided investment advisory
services to institutional and individual investors since that time. Each of the
Firm's co-principals is a Chartered Financial Analyst with over 38 years of
investment industry experience.
Michael F. Carr, President and Chief Investment Officer for the Firm, is
responsible for the day to day recommendations regarding the investment of the
Funds' portfolios. Mr. Carr has spent his entire 40 year career in the
investment industry. Immediately prior to founding the firm, Mr. Carr was a
Senior Vice President of Shearson Lehman Hutton. Mr. Carr is a Chartered
Financial Analyst and a member of the Association for Investment Management and
Research and the New York Society of Security Analysts. A graduate of the
University of Notre Dame, Mr. Carr received his Masters of Business
Administration degree from New York University.
20
<PAGE>
PRINCIPAL UNDERWRITER
Timothy Partners Ltd.. ("TPL") acts as principal underwriter for the Trust. The
purpose of acting as an underwriter is to facilitate the registration of the
Funds' shares under state securities laws and to assist in the sale of shares.
TPL also acts as Investment Adviser to the Trust. TPL is not compensated for
providing underwriting services to the Trust.
FEDERAL TAXES
The Trust intends to qualify and maintain its qualification as a "regulated
investment company" under the Internal Revenue Code (hereafter the "Code"),
meaning that to the extent a fund's earnings are passed on to shareholders as
required by the Code, the Trust itself is not required to pay federal income
taxes on the earnings. Accordingly, each Fund will pay dividends and make such
distributions as are necessary to maintain its qualification as a regulated
investment company under the Code.
Before you purchase shares of any Fund, you should consider the effect of both
dividends and capital gain distributions that are expected to be declared or
that have been declared but not yet paid. When the Fund makes these payments,
its share price will be reduced by the amount of the payment, so that you will
in effect have paid full price for the shares and then received a portion of
your price back as a taxable dividend distribution.
The Trust will notify you annually as to the tax status of dividend and capital
gains distributions paid by the Funds. Such dividends and capital gains may also
be subject to state and local taxes.
You may realize a taxable gain or loss when redeeming shares of a Fund depending
on the difference in the prices at which you purchased and sold the shares.
Because your state and local taxes may be different than the federal taxes
described above, you should see your tax adviser regarding these taxes.
GENERAL INFORMATION
Total return for the Funds may be calculated on an average annual total return
basis or an aggregate total return basis. Average annual total return reflects
the average annual percentage change in value of an investment over the
measuring period. Aggregate total return reflects the total percentage change in
value of an investment over the measuring period. Both measures assume the
reinvestment of dividends and distributions.
Total return of each Fund may be compared to those of mutual funds with similar
investment objectives and to bond, stock or other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor mutual fund performance.
FINANCIAL HIGHLIGHTS
The financial highlights tables and performance graphs presented below are
intended to help you understand each Fund's financial performance since it
commenced investment operations. Certain information reflects financial results
for a single Fund share. The total returns in the table represent the rate that
an investor would have earned (or lost) on an investment in a Fund, and for a
particular share class of a Fund (assuming reinvestment of all dividends and
distributions) for the time periods indicated. This information has been audited
by Tait, Weller & Baker, whose report, along with each Fund's financial
statements, are included in the Trust's annual report, dated December 31, 1999,
which is available without charge upon request.
21
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE FUND, CLASS A SHARES
- ---------------------------------------------------------------------------------------------------------------------
PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
PER SHARE OPERATING 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94*
PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF PERIOD $ 10.89 $ 12.25 $ 11.24 $ 10.07 $ 9.66 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income (0.02) 0.01 0.02 0.10 0.11 0.06
Net Gains (losses) on Securities 1.39 (1.30) 2.37 1.17 0.66 (0.34)
(Realized & Unrealized)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.37 (1.29) 2.39 1.27 0.77 (0.28)
---- ---- ---- ---- ---- ----
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions
From Net Investment Income 0.00 (0.07) 0.00 (0.10) (0.11) (0.06)
From Net Capital Gains 0.00 0.00) (1.38) 0.00 (0.25) 0.00
---- ---- ---- ---- ---- ----
Total Distributions 0.00 (0.07) (1.38) (0.10) (0.36) (0.06)
---- ---- ---- ----
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.26 $ 10.89 $ 12.25 $ 11.24 $ 10.07 $ 9.66
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (A) 12.58% (10.50)% 21.35% 12.59% 7.93% (2.84)%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in 000s) $ 13,377 $ 13,287 $ 11,208 $ 7,760 $ 6,133 $ 2,217
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets
Before Expense Reimbursements 2.22% 2.09% 2.75% 3.70% 5.84% 6.44%(B)
After Expense Reimbursements 1.60% 1.60% 1.60% 1.60% 1.60% 1.60%(B)
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (loss)
to Average Net Assets
Before Expense Reimbursements (0.82)% (1.15)% (0.90)% (1.05)% (2.96)% 15.49%(B)
After Expense Reimbursements (0.20)% (0.66)% 0.25% 1.05% 1.28% 1.53%(B)
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 78.79% 69.42% 136.36% 93.08% 34.12% 8.31%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Class A Shares commenced investment operations on March 21, 1994.
(A) Total Return Calculation does not reflect Sales Load.
(B) Annualized.
[PERFORMANCE GRAPH INSERTED HERE]
22
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE FUND, CLASS B SHARES
- ------------------------------------------------------------------------------------------------------------
PERIOD PERIOD PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
PER SHARE OPERATING PERFORMANCE 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF PERIOD $ 10.70 $ 12.13 $ 11.22 $ 10.08 $ 10.49
- ------------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income (0.11) (0.07) (0.03) 0.07 0.11
Net Gains (losses) on Securities 1.29 (1.29) 2.32 1.14 (0.16)
(Realized & Unrealized)
- ------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.18 (1.36) 2.29 1.21 (0.05)
---- ---- ---- ---- ----
- ------------------------------------------------------------------------------------------------------------
Less Distributions
From Net Investment Income 0.00 (0.07) (1.38) 0.00 (0.25)
From Net Capital Gains 0.00 0.00 0.00 (0.07) (0.11)
---- ---- ---- ---- ----
Total Distributions 0.00 (0.07) (1.38) (0.07) (0.36)
---- ---- ----
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.88 $ 10.70 $ 12.13 $ 11.22 $ 10.08
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN (A) 11.03% (11.18)% 20.50% 11.98% (0.46)%
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000s) $ 14,351 $ 14,114 $ 11,389 $ 3,929 $ 620
- ------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets
Before Expense Reimbursements 2.72% 2.84% 3.41% 4.30% 6.44% B
After Expense Reimbursements 2.35% 2.35% 2.26% 2.20% 2.20% B
- ------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (loss)
to Average Net Assets
Before Expense Reimbursements (1.34)% (1.90)% (1.56)% 1.65% 3.56% B
After Expense Reimbursements (0.97)% (1.41)% (0.41)% 0.45% 0.68% B
- ------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 78.79% 69.42% 136.36% 93.08% 34.12%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Class B Shares commenced investment operations on August 25, 1995. (A)
Total return calculation does not include redemption fee.
(B) Annualized
[PERFORMANCE GRAPH INSERTED HERE]
23
<PAGE>
LARGE/MID-CAP VALUE FUND
PERIOD ENDING 12/31/99
- --------------------------------------------------------------------------------
CLASS A CLASS B
PER SHARE OPERATING PERFORMANCE SHARES(1) SHARES(2)
- --------------------------------------------------------------------------------
NET ASSET VALUE
BEGINNING OF PERIOD $ 10.00 $ 10.00
- --------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.02 0.02
Net Gains (losses) on Securities (0.30) (0.62)
(Realized & Unrealized)
- --------------------------------------------------------------------------------
Total from Investment Operations (0.28) (0.60)
---- ----
- --------------------------------------------------------------------------------
Less Distributions
From Net Investment Income (0.02) (0.02)
From Net Capital Gains (0.02) (0.02)
---- ----
Total Distributions (0.04) (0.04)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.68 $ 9.36
- --------------------------------------------------------------------------------
TOTAL RETURN (3.28)%(3) (4.78)%(4)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $ 845,879 $ 524,605
- --------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets
Before Expense Reimbursements(5) 4.69% 5.87%
After Expense Reimbursements(5) 1.60% 2.35%
- --------------------------------------------------------------------------------
Ratio of Net Investment Income (loss)
to Average Net Assets
Before Expense Reimbursements(5) (2.34)% (2.34)%
After Expense Reimbursements(5) 0.75% 1.15%
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 8.02% 8.02%
- --------------------------------------------------------------------------------
(1) For the Period July 14, 1999 (Commencement of Operations) through December
31, 1999.
(2) For the Period July 15, 1999 (Commencement of Operations) through December
31, 1999.
(3) Does not reflect sales charge.
(4) Does not reflect redemption fees.
(5) Annualized.
[PERFORMANCE GRAPH INSERTED HERE]
24
<PAGE>
FIXED INCOME FUND
PERIOD ENDING 12/31/99
- --------------------------------------------------------------------------------
CLASS A CLASS B
PER SHARE OPERATING PERFORMANCE SHARES(1) SHARES(2)
- --------------------------------------------------------------------------------
NET ASSET VALUE
BEGINNING OF PERIOD $ 10.00 $ 10.00
- --------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.12 0.15
Net Gains (losses) on Securities (0.18) (0.22)
(Realized & Unrealized)
- --------------------------------------------------------------------------------
Total from Investment Operations (0.06) (0.07)
---- ----
- --------------------------------------------------------------------------------
Less Distributions
From Net Investment Income 0.00 0.00
From Net Capital Gains (0.13) (0.13)
---- ----
Total Distributions (0.13) (0.13)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.81 $ 9.80
- --------------------------------------------------------------------------------
TOTAL RETURN (0.42)%(3) (0.92)%(4)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $ 124,062 $ 243,086
- --------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets
Before Expense Reimbursements(5) 13.92% 14.73%
After Expense Reimbursements(5) 1.35% 2.10%
- --------------------------------------------------------------------------------
Ratio of Net Investment Income (loss)
to Average Net Assets
Before Expense Reimbursements(5) (9.88)% (2.20)%
After Expense Reimbursements(5) 2.70% 10.42%
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 21.25% 21.25%
- --------------------------------------------------------------------------------
(1) For the Period July 14, 1999 (Commencement of Operations) through December
31, 1999.
(2) For the Period August 5, 1999 (Commencement of Operations) through December
31, 1999.
(3) Does not reflect sales charge.
(4) Does not reflect redemption fees.
(5) Annualized.
[PERFORMANCE GRAPH INSERTED HERE]
25
<PAGE>
MONEY MARKET FUND
PERIOD ENDING 12/31/99
- ------------------------------------------------------
NO-LOAD
PER SHARE OPERATING PERFORMANCE SHARES(1)
- ------------------------------------------------------
NET ASSET VALUE
BEGINNING OF PERIOD $ 1.00
- ------------------------------------------------------
Income from Investment Operations
Net Investment Income 0.02
Net Gains (losses) on Securities 0.00
(Realized & Unrealized)
- ------------------------------------------------------
Total from Investment Operations 0.02
----
- ------------------------------------------------------
Less Distributions
From Net Investment Income 0.00
From Net Capital Gains (0.02)
----
Total Distributions (0.02)
- ------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ------------------------------------------------------
TOTAL RETURN (2) 1.78%
- ------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $ 760,184
- ------------------------------------------------------
Ratio of Expenses to Average Net Assets
Before Expense Reimbursements(3) 5.75%
After Expense Reimbursements(3) 0.85%
- ------------------------------------------------------
Ratio of Net Investment Income (loss)
to Average Net Assets
Before Expense Reimbursements(3) (0.73)%
After Expense Reimbursements(3) 4.17%
- ------------------------------------------------------
(1) For the Period July 9, 1999 (Commencement of Operations) through December
31, 1999.
(2) Not Annualized.
(3) Annualized.
[PERFORMANCE GRAPH INSERTED HERE]
26
<PAGE>
FOR MORE INFORMATION
Additional information about the Trust is available in the Trust's annual report
to shareholders, dated December 31, 1999 and its semi-annual report to
shareholders, dated June 31, 1999. In the Trust's annual and semi-annual
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Trust's performance during its last
year of operations.
STATEMENT OF ADDITIONAL BY MAIL:
INFORMATION (SAI)
The Timothy Plan.
The SAI contains more detailed c/o Unified Fund Services, Inc.
Information on all aspects of the 431 North Pennsylvania Street
Trust. A current SAI, dated May 1, Indianapolis, Indiana 46204
2000, has been filed with the SEC
and is incorporated by reference BY PHONE: 1-800-626-0201
into this prospectus.
ON THE INTERNET:
www.timothyplan.com
To request a free copy of the SAI,
or the Trust's latest annual or semi- Or you may view or obtain these
annual reports, please contact the Trust. documents from the SEC.
IN PERSON: at the SEC's Public
Reference Room in Washington,
D.C.
BY PHONE: 1-800-SEC-0330
BY MAIL: Public Reference
Section, Securities and Exchange
Commission, Washington, D.C.
20549-6009
(duplicating fee required)
ON THE INTERNET:
www.sec.gov
The Timothy Plan
Investment Company Act No.
811-08228
27
<PAGE>
THE TIMOTHY PLAN
(the "Trust")
PROSPECTUS
May 1, 2000
This Prospectus offers the following Portfolios ("Funds") of the Trust:
THE TIMOTHY PLAN SMALL-CAP VARIABLE SERIES
THE TIMOTHY PLAN MID-CAP VARIABLE SERIES
THE TIMOTHY PLAN FIXED-INCOME VARIABLE SERIES
These Funds are intended to be funding vehicles for Variable Annuity Contracts
("VA Contracts") offered through separate accounts of the Annuity Investors Life
Insurance Company (the "Insurance Company"). Currently, only the Small-Cap
Variable Series is being offered by the Insurance Company. The Trust has filed
an Application For Exemptive Order under the Investment Company Act of 1940, as
amended, to allow all three Funds to be offered through the separate accounts of
the Insurance Company, as well as through the separate accounts of additional
insurance companies. If, as and when the Trust's Application is approved, the
Trust intends to enter into Participation Agreements with additional insurance
companies to offer the Funds. You will be informed of any such change.
The Timothy Plan was established to provide an investment alternative for people
who want to invest according to certain ethical standards. Each Fund invests in
a different market segment, and each Fund has its own investment objectives.
However, all the Funds have one thing in common. They do not invest in any
company that is involved in the business of alcohol production, tobacco
production or casino gambling, or which are involved, either directly or
indirectly, in pornography or abortion.
The Funds are distributed through Timothy Partners, Ltd.
1304 West Fairbanks Avenue, Winter Park, Florida 32789.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIME.
- --------------------------------------------------------------------------------
28
<PAGE>
TABLE OF CONTENTS
RISK/RETURN SUMMARY
The Timothy Plan Small-Cap Value Fund
The Timothy Plan Large/Mid-Cap Value Fund
The Timothy Plan Fixed Income Fund
The Timothy Plan Money Market Fund
PURCHASES AND REDEMPTIONS OF SHARES
DIVIDENDS AND DISTRIBUTIONS
THE INVESTMENT ADVISER & INVESTMENT MANAGERS
Investment Adviser
Investment Managers
For the Small-Cap Value Fund
For the Large/Mid-Cap Value Fund
For the Fixed Income and Money Market Funds
PRINCIPAL UNDERWRITER
GENERAL INFORMATION
FINANCIAL HIGHLIGHTS
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
29
<PAGE>
RISK/RETURN SUMMARY
================================================================================
The Timothy Plan believes that it has a responsibility to invest in a moral and
ethical manner. Accordingly, as a matter of fundamental policy, none of our
Funds invest in any company that is involved in the business of alcohol
production, tobacco production, or casino gambling, or which are involved,
either directly or indirectly, in pornography or abortion. Such companies are
referred to throughout this Prospectus as "Excluded Securities". Excluded
Securities will not be purchased by any of our Funds. Timothy Partners
Ltd.("TPL") is investment adviser to the Funds, and is responsible for
determining those companies that are Excluded Securities.
Because none of our Funds will invest in Excluded Securities, the pool of
securities from which each Fund may choose may be limited to a certain degree.
Although TPL believes that each Fund can achieve its investment objective within
the parameters of ethical investing, eliminating Excluded Securities as
investments may have an adverse effect on a Fund's performance. However, "Total
Return" is more than just numbers. It is also investing in a way that supports
and reflects your beliefs and ideals. Each of our Funds strives to maximize both
kinds of total return.
================================================================================
THE TIMOTHY PLAN SMALL-CAP VARIABLE SERIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Long-term capital growth, with a secondary objective of
current income.
- --------------------------------------------------------------------------------
PRIMARY INVESTMENT The Fund seeks to achieve its objectives by primarily
STRATEGIES investing in US small-cap stocks and American
Depository Receipts ("ADRs"). Small-Cap stocks is a
reference to the common stock of smaller companies-
companies whose total market capitalization is greater
than $200 Million and less than $6 Billion. ADRs are
certificates issued by United States banks to evidence
an ownership interest in an underlying non-USA
company's stock. ADRs generally trade on United States
Stock Exchanges in the same way that American common
stock trades.
Small cap stocks, although more susceptible to price
movements, also enjoy growth potential that is often
not available for larger companies. As a result,
prudent investing in smaller companies can result in
greater capital growth than investing in larger
companies.
- --------------------------------------------------------------------------------
PRIMARY RISKS 5. GENERAL RISK- Like with most other mutual funds,
you can lose money by investing in this Fund.
Share prices fluctuate from day to day, and when
you sell your shares, they may be worth less than
you paid for them.
6. STOCK MARKET RISK- The Fund is an equity fund, so
it is subject to the risks inherent in the stock
market in general. The stock market is cyclical,
with prices generally rising and falling over
periods of time. Some of these price cycles can be
pronounced and last for a long time.
7. SMALL-CAP STOCK RISK- The Fund invests in smaller
companies. Smaller companies are particularly
susceptible to price swings, because, due to their
size, they often do not have the resources
available to them that are available to larger
companies.
8. EXCLUDED SECURITY RISK- Because the Fund does not
invest in Excluded Securities, the Fund may be
riskier than other Funds that invest in a broader
array of securities.
- --------------------------------------------------------------------------------
WHO SHOULD BUY THIS The Fund is appropriate for investors who understand
FUND the risks of investing in the stock market and who are
willing to accept moderate amounts of volatility and
risk.
- --------------------------------------------------------------------------------
30
<PAGE>
PAST PERFORMANCE
THE BAR CHART AND TABLE BELOW HELP SHOW THE RETURNS AND RISKS OF INVESTING IN
THE FUND BY SHOWING CHANGES IN THE FUND'S YEARLY PERFORMANCE OVER THE LIFETIME
OF THE FUND. THEY ALSO COMPARE THE FUND'S PERFORMANCE TO THE PERFORMANCE OF THE
RUSSELL 2000 INDEX** DURING EACH PERIOD. YOU SHOULD BE AWARE THAT THE FUND'S
PAST PERFORMANCE MAY NOT BE AN INDICATION OF HOW THE FUND WILL PERFORM IN THE
FUTURE.
Performance Bar
Chart and Table
Year-by-Year Total Returns for calendar years ending on 12/31
- -------------------------------------------------------------
25%
20% 19.17%
15% --------
10% 3.08% --------
05% ------- --------
===============================
00%
- -------------------------------
1998* 1999
Best Quarter: 2nd Qtr 1999 19.88%
Worst Quarter: 3rd Qtr 1998 (23.18)%
Average Annual Total Returns (For Periods ending on December 31, 1999)
- ----------------------------------------------------------------------
FUND RUSSELL 2000 INDEX**
---- --------------------
One Year 19.17% 19.62%
Inception* 13.70% 5.60%
* From May 22, 1998 (Commencement of Investment Operations).
** The Russell 2000 Index is a widely recognized, unmanaged index of 2000
small-capitalization companies in the United States. The Index assumes
reinvestment of all dividends and distributions and does not reflect any
asset-based charges for investment management or other expenses.
================================================================================
THE TIMOTHY PLAN LARGE/MID-CAP VARIABLE SERIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Long-term capital growth, with a secondary objective of
current income.
- --------------------------------------------------------------------------------
PRIMARY INVESTMENT The Fund seeks to achieve its objectives by primarily
STRATEGIES investing in US common stocks and ADRs. The Fund will
normally invest in companies whose total market
capitalization exceeds $6 billion.
Larger companies, because of their increased management
depth, broader market affiliations, and capital
resources, offer the potential for long-term growth
with reduced risk.
- --------------------------------------------------------------------------------
31
<PAGE>
- --------------------------------------------------------------------------------
PRIMARY RISKS 1. GENERAL RISK- Like with most other mutual funds,
you can lose money by investing in this Fund.
Share prices fluctuate from day to day, and when
you sell your shares, they may be worth less than
you paid for them.
2. STOCK MARKET RISK- The Fund is an equity fund, so
it is subject to the risks inherent in the stock
market in general. The stock market is cyclical,
with prices generally rising and falling over
periods of time. Some of these price cycles can be
pronounced and last for a long time.
3. MID-CAP STOCK RISK- Although the Fund invests in
companies with greater market capitalization than
the Small-Cap Fund, it does invest in smaller
companies. Smaller companies are particularly
susceptible to price swings, because, due to their
size, they often do not have the resources
available to them that are available to larger
companies.
4. EXCLUDED SECURITY RISK- Because the Fund does not
invest in Excluded Securities, the Fund may be
riskier than other Funds that invest in a broader
array of securities.
- --------------------------------------------------------------------------------
WHO SHOULD BUY THIS The Fund is appropriate for investors who understand
FUND the risks of investing in the stock market and who are
willing to accept moderate amounts of volatility and
risk.
- --------------------------------------------------------------------------------
Past Performance
- ----------------
This Fund has not yet been offered through variable accounts, so it has no
performance history to report.
================================================================================
THE TIMOTHY PLAN FIXED-INCOME VARIABLE SERIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE To generate a high level of current income consistent
with prudent investment risk.
- --------------------------------------------------------------------------------
PRIMARY INVESTMENT To achieve its goal, the Fund normally invests in a
STRATEGIES diversified portfolio of debt securities. These include
corporate bonds, U.S. Government and agency securities
and preferred securities. The Fund will only purchase
securities for the Fund that are investment grade, a
rating of at least "AA" as rated by Standard & Poors or
a comparable rating by another nationally recognized
rating agency. The Fund may also invest in debt
securities that have not been rated by one of the major
rating agencies, so long as the Fund's investment
manager has determined that the security is of
comparable credit quality to similar rated securities.
In managing its portfolio, the Fund' s investment
manager concentrates on sector analysis, industry
allocation and securities selection: deciding which
types of bonds and industries to emphasize at a given
time, and then which individual bonds to buy. The Fund
attempts to anticipate shifts in the business cycle in
determining types of bonds and industry sectors to
target. In choosing individual securities, the Fund
seeks out securities that appear to be undervalued
within the emphasized industry sector.
- --------------------------------------------------------------------------------
PRIMARY RISKS 1. GENERAL RISK- Like with most other mutual funds,
you can lose money by investing in this Fund.
Share prices fluctuate from day to day, and when
you sell your shares, they may be worth less than
you paid for them.
2. INTEREST RATE RISK- When interest rates rise, bond
prices fall; the higher the Fund's duration ( a
calculation reflecting time risk, taking into
account both the average maturity of the Fund's
portfolio and its average coupon return), the more
sensitive the Fund is to interest rate risk.
- --------------------------------------------------------------------------------
32
<PAGE>
- --------------------------------------------------------------------------------
3. CREDIT RISK- The Fund could lose money if any
bonds it owns are downgraded in credit rating or
go into default. For this reason, the Fund will
only invest in investment grade bonds.
4. SECTOR RISK- If certain industry sectors or types
of securities don't perform as well as the Fund
expects, the Fund's performance could suffer.
- --------------------------------------------------------------------------------
WHO SHOULD BUY THIS This Fund is appropriate for investors who want a high
FUND level of current income and are willing to accept a
minor degree of volatility and risk.
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- ----------------
THIS FUND HAS NOT YET BEEN OFFERED THROUGH VARIABLE ACCOUNTS, SO IT HAS NO
PERFORMANCE HISTORY TO REPORT.
================================================================================
Additional Investment Information
- ---------------------------------
Each Fund may, for temporary defensive purposes, invest up to 100% of its assets
in obligations of the United States Government, its agencies and
instrumentalities, commercial paper, and certificates of deposit and bankers
acceptances. When a Fund takes a temporary defensive position, it will not be
investing according to its investment objective, and at such times, the
performance of the Fund will be different that if it had invested strictly
according to its objectives.
================================================================================
PURCHASES AND REDEMPTIONS OF SHARES
Purchases and Redemptions of Shares in any of the Funds may be made only by
Insurance Company for its separate accounts at the direction of VA Account
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 on
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 of withdrawal request
is received by the Insurance Company. There are no sales or redemption charges.
However, certain sales or deferred sales charges and other charges may apply to
your VA Contract. Those charges are disclosed in the separate account offering
prospectus. The Trust reserves the right to suspend the offering of any of the
Fund's shares, or to reject any purchase order.
Purchase orders for shares of the Funds which are received by the transfer agent
in proper form prior to the close of trading hours on the New York Stock
Exchange (NYSE) (currently 4:00 p.m. Eastern Time) on any day that the Funds
calculate their net asset value, are priced according to the net asset value
determined on that day. Purchase orders for shares of a 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.
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 Funds may suspend
redemptions or postpone payments when the NYSE is closed or when trading is
restricted for any reason (other than weekends or holidays) or under emergency
circumstances as determined by the Securities and Exchange Commission.
Other Purchase Information
- --------------------------
If the Trustees determine that it would be detrimental to the best interests of
the remaining shareholders of a Fund to make payments in cash, a Fund may pay
the redemption price, in whole or in part by distribution in-kind of readily
marketable securities, from that Fund, within certain limits prescribed by the
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 to cash.
33
<PAGE>
For economy and convenience, share certificates will not be issued.
The public offering price for the Funds is based upon each Fund's net asset
value per share. Net asset value per share, per Class, is calculated by adding
the value of Fund investments, cash and other assets, subtracting Fund
liabilities for each share Class, and then dividing the result by the number of
shares outstanding for each Class . The assets of each Funds are valued at
market value or, if market quotes cannot be readily obtained, fair value is used
as determined by the Board of Trustees. The net asset value of the Fund's shares
is computed on all days on which the New York Stock Exchange is open for
business at the close of regular trading hours on the Exchange, currently 4:00
p.m. East Coast time.
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 markets, 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 values as determined by the Board of trustees. Money market securities
with less than 60 remaining to maturity when acquired by a Fund will be valued
on an amortized cost basis by the Funds, 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 a Fund acquires a money market security with more than 60 days
remaining to its maturity, it will be valued at amortized cost when it reaches
60 days to maturity unless the Trustees determine that such a valuation will not
fairly represent its fair market value.
DIVIDENDS AND DISTRIBUTIONS
Dividends paid by the Fund are derived from its net investment income. Net
investment income will be distributed at least annually. The Fund's net
investment income is made up of dividends received from the stocks it holds, as
well as interest accrued and paid on any other obligations that might be held in
its portfolio.
The Fund realizes capital gains when it sells a security for more than it paid
for it. The Fund may make distributions of its net realized capital gains (after
any reductions for capital loss carry forwards), generally, once a year.
Under current tax law, dividends or capital gains distributions from a Fund are
not currently taxable when left to accumulate within a VA Contract. Depending on
the VA Contract, withdrawals from the Contract may be subject to ordinary income
tax, and an additional penalty of 10% on withdrawals before age 59 1/2.
THE INVESTMENT ADVISER & INVESTMENT MANAGERS
INVESTMENT ADVISER
Timothy Partners Ltd., (" TPL"), 1304 West Fairbanks Avenue, Winter Park,
Florida, 32789, is a Florida limited partnership organized on December 6, 1993
and is registered with the Securities and Exchange Commission as an investment
adviser. TPL supervises the investment of the assets of each Fund in accordance
with the objectives, policies and restrictions of the Trust. TPL approves the
portfolio of securities selected by the investment managers. To determine which
securities are Excluded Securities, TPL conducts its own research and consults a
number of Christian ministries on these issues. TPL retains the right to change
the sources from whom it acquires its information, at its discretion. TPL has
been the Adviser to the Funds since their inceptions.
Covenant Funds, Inc., a Florida corporation ("CFI"), is the managing general
partner of TPL. Arthur D. Ally is President, Chairman and Trustee of the Trust,
as well as President and 70% shareholder of CFI. Mr. Ally has over eighteen
years experience in the investment industry prior to founding TPL, having worked
for Prudential Bache, Shearson Lehman Brothers and Investment Management &
Research. Some or all of these firms may be utilized by
34
<PAGE>
an investment manager to execute portfolio trades for a Fund. Neither Mr. Ally
nor any affiliated person of the Trust will receive any benefit from such
transactions.
For its services, TPL is paid an annual fee equal to 0.85% on the Small-Cap
Value Fund, 0.85% on the Large/Mid-Cap Value Fund, 0.60% on the Fixed-Income
Fund, and 0.60% on the Money Market Fund. A portion of the advisory fees are
paid by TPL to: (1) the investment managers for assisting in the selection of
portfolio securities for each Fund, and (2) Covenant Funds, Inc. ("CFI") as
reimbursement for expenses related to the daily operations of the Trust
performed by CFI. These fees also cover the expenses of postage, materials,
fulfillment of shareholder requests, and a variety of other administrative and
marketing expenses.
INVESTMENT MANAGERS
Small-Cap Value Fund
- --------------------
Awad & Associates ("Awad"), a division of Raymond James & Associates, Inc., is
the investment manager for the Small-Cap Fund. Awad has offices at 477 Madison
Avenue, New York, New York 10022, and is a joint enterprise between James D.
Awad, a thirty year veteran of the investment management business, and Raymond
James Financial, a diversified financial services firm traded on the New York
Stock Exchange. Awad selects the investments for the Small-Cap Fund's portfolio,
subject to the investment restrictions of the Trust and under the supervision of
TPL.
James D. Awad, Dan Veru and Carol Egan make up the team responsible for managing
the day-to-day investments for the Fund. James Awad is the Senior Investment
Officer of the investment manager. Prior to forming Awad & Associates, Mr. Awad
was founder and president of BMI Capital. He also managed assets at Neuberger &
Berman, Channing Management and First Investment Corp. Mr. Awad has been
involved either full or part-time in the investment business since 1965.
For its services as investment manager to the Small-Cap Fund, Awad is paid an
annual fee by TPL equal to 0.42% of the Fund's average daily assets up to $10
million, 0.40% for the next $5 million in average daily net assets, 0.35% for
the next $10 million in average daily net assets, and 0.25% of average daily net
assets over $25 million.
Awad & Associates has served as investment manager to the Fund since January 1,
1997. It also serves as investment co-adviser to two other investment companies:
Heritage Small-Cap Stock Fund and Calvert New Vision Small Cap Fund. As of
December 31, 1999, Awad & Associates managed in excess of $1 billion in assets.
In choosing the securities in which to invest, the Awad uses extensive
fundamental analysis to develop earnings forecasts and to identify attractive
investment opportunities relative to market valuation. Individual companies are
scrutinized concerning their individual growth prospects and their competitive
positions within their respective industries. Individual company analysis
focuses upon the outlook for sales, profit margins, returns on capital, cash
flow and earnings per share.
Mid-Cap Value Fund
- ------------------
Fox Asset Management, Inc. ("Fox"), 44 Sycamore Avenue, Little Silver, NJ 07739,
is responsible for the investment and reinvestment of the Mid-Cap Value Fund's
assets. Mr. J. Peter Skirkanich, President and majority shareholder of Fox, is
responsible for the day-to-day recommendations regarding the investment of the
Fund's portfolio. Fox was founded in 1987 and offers investment advice and
services to individuals, institutions, trusts, charities and regulated
investment companies. As of December 31, 1999, Fox managed approximately $2.2
billion in assets.
Mr. Skirkanich is the founder of the firm, serves as chairman of the firm's
investment committee, and is the firm's controlling shareholder, with an
approximate holding of 73% of the firm's outstanding stock. Mr. Skirkanich was
formerly Managing Director of Dreman Value Management, Inc., an investment
counseling firm. Prior to that, he was a Vice President of Investments at
Kidder, Peabody & Company and Shearson/American Express, where he
35
<PAGE>
managed individual and corporate accounts for twelve years. He began his
investment career as an analyst with Prudential Bache Securities.
Prior to embarking on his investment career, Mr. Skirkanich served three years
with the U.S. State Department and two years with Ernst & Whinney in both the
tax and audit areas. Mr. Skirkanich is a graduate of the Wharton School,
University of Pennsylvania. Currently he serves as a trustee on the Board of
Overseers for the School of Engineering and Applied Sciences at the University.
By gubernatorial appointment, he also serves as a member of the State Investment
Council for the State of New Jersey.
For its services as investment manager to the Mid-Cap Fund, Fox is paid an
annual fee by TPL equal to 0.42% of the Fund's average daily assets up to $10
million, 0.40% for the next $5 million in average daily net assets, 0.35% for
the next $10 million in average daily net assets, and 0.25% of average daily net
assets over $25 million.
Fixed-Income Fund and Money Market Fund
- ---------------------------------------
Carr & Associates, Inc.("Carr"), 150 Broadway, Suite 509, New York, New York,
serves as investment manager to the Fixed Income and Money Market Funds. Carr
was founded by Michael F. Carr in 1989 and has provided investment advisory
services to institutional and individual investors since that time. Each of the
Firm's co-principals is a Chartered Financial Analyst with over 38 years of
investment industry experience.
Michael F. Carr, President and Chief Investment Officer for the Firm, is
responsible for the day to day recommendations regarding the investment of the
Funds' portfolios. Mr. Carr has spent his entire 40 year career in the
investment industry. Immediately prior to founding the firm, Mr. Carr was a
Senior Vice President of Shearson Lehman Hutton. Mr. Carr is a Chartered
Financial Analyst and a member of the Association for Investment Management and
Research and the New York Society of Security Analysts. A graduate of the
University of Notre Dame, Mr. Carr received his Masters of Business
Administration degree from New York University.
For its services as investment manager to the Mid-Cap Fund, Carr is paid an
annual fee by TPL equal to 0.20% of the Fund's average daily assets. For its
services to the Money Market Fund, Carr is paid an annual fee by TPL equal to
0.08% of the Fund's average daily net assets.
PRINCIPAL UNDERWRITER
Timothy Partners Ltd.. ("TPL") acts as principal underwriter for the Trust. The
purpose of acting as an underwriter is to facilitate the registration of the
Funds' shares under state securities laws and to assist in the sale of shares.
TPL also acts as Investment Adviser to the Trust. TPL is not compensated for
providing underwriting services to the Trust.
GENERAL INFORMATION
Total return for the Funds may be calculated on an average annual total return
basis or an aggregate total return basis. Average annual total return reflects
the average annual percentage change in value of an investment over the
measuring period. Aggregate total return reflects the total percentage change in
value of an investment over the measuring period. Both measures assume the
reinvestment of dividends and distributions.
Total return of each Fund may be compared to those of mutual funds with similar
investment objectives and to bond, stock or other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor mutual fund performance.
36
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table set forth below is intended to help you
understand the Small-Cap Variable Series' financial performance since it
commenced investment operations on May 22, 1998. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Tait, Weller & Baker, whose report, along with
the Fund's financial statements, are included in the Trust's annual report,
which is available without charge upon request.
The Mid-Cap Variable Series and The Fixed-Income Variable Series have not yet
been offered by the Insurance Company and have no financial information to
report. Financial highlights for these Funds will be available with the
publication of the Trust's next Annual Report after the Funds become available.
THE TIMOTHY PLAN SMALL-CAP VARIABLE SERIES
- --------------------------------------------------------------------------------
PERIOD PERIOD
ENDED ENDED
PER SHARE OPERATING PERFORMANCE 12/31/99 12/31/98*
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.38 $ 10.00
- --------------------------------------------------------------------------------
Income from Investment Operations
Net Investment Income (0.01) 0.08
Net Gains (losses) on Securities 2.02 0.30
(Realized & Unrealized)
- --------------------------------------------------------------------------------
Total from Investment Operations 2.01 0.38
---- ----
- --------------------------------------------------------------------------------
Less Distributions:
Dividends from Realized Gains 0.00 0.00
Dividends from Net Investment Income (0.02) 0.00
---- ----
Total Distribution (0.02) 0.00
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.37 $ 10.38
- --------------------------------------------------------------------------------
TOTAL RETURN 19.17% 3.80%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $ 1,136,655 $ 301,308
- --------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets
Before Expense Reimbursements 2.65% 2.88%(1)
After Expense Reimbursements 1.20% 1.20%(1)
- --------------------------------------------------------------------------------
Ratio of Net Investment Income (loss)
to Average Net Assets
Before Expense Reimbursements (1.50)% 0.98%(1)
After Expense Reimbursements (0.05)% 2.66%(1)
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 64.40% 3.00%
- --------------------------------------------------------------------------------
* For Period May 22, 1998 (Commencement of Operations) through 12/31/98.
(1) Annualized.
37
<PAGE>
FOR MORE INFORMATION
Additional information about the Trust is available in the Trust's annual report
to shareholders, dated December 31, 1999 and its semi-annual report to
shareholders, dated June 31, 1999. In the Trust's annual and semi-annual
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Trust's performance during its last
year of operations.
STATEMENT OF ADDITIONAL BY MAIL:
INFORMATION (SAI)
The Timothy Plan.
The SAI contains more detailed c/o Unified Fund Services, Inc.
Information on all aspects of the 431 North Pennsylvania Street
Trust. A current SAI, dated May 1, Indianapolis, Indiana 46204
2000, has been filed with the SEC
and is incorporated by reference BY PHONE: 1-800-626-0201
into this prospectus.
ON THE INTERNET:
www.timothyplan.com
To request a free copy of the SAI,
or the Trust's latest annual or semi- Or you may view or obtain these
annual reports, please contact the Trust. documents from the SEC.
IN PERSON: at the SEC's Public
Reference Room in Washington,
D.C.
BY PHONE: 1-800-SEC-0330
BY MAIL: Public Reference
Section, Securities and Exchange
Commission, Washington, D.C.
20549-6009
(duplicating fee required)
ON THE INTERNET:
www.sec.gov
The Timothy Plan
Investment Company Act No.
811-08228
38
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE TIMOTHY PLAN
A Delaware Business Trust and registered investment
management company offering the following series:
THE TIMOTHY PLAN-SMALL-CAP FUND
THE TIMOTHY PLAN MID-CAP FUND
THE TIMOTHY PLAN FIXED-INCOME FUND
THE TIMOTHY PLAN MONEY MARKET FUND
AND
THE TIMOTHY PLAN SMALL-CAP VARIABLE SERIES
THE TIMOTHY PLAN MID-CAP VARIABLE SERIES
THE TIMOTHY PLAN FIXED-INCOME VARIABLE SERIES
MAY 1, 2000
- --------------------------------------------------------------------------------
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 seven separate investment series, The Timothy Plan Small-Cap Value Fund, The
Timothy Plan Large/Mid-Cap Value Fund, The Timothy Plan Fixed-Income Fund, the
Timothy Plan Money Market Fund, The Timothy Plan Small-Cap Variable Series, The
Timothy Plan Large/Mid-Cap Variable Series, and The Timothy Plan Fixed-Income
Variable Series.
THE TIMOTHY PLAN (the "Trust") is registered with the Securities and Exchange
Commission as an open-end management investment company, and currently has
registered and offers seven series of shares to the public:
The Timothy Plan Small-Cap Value Fund, The Timothy Plan Large/Mid-Cap Value
Fund, and The Timothy Plan Fixed-Income Fund (referred to herein as the "Timothy
Funds") currently each offers two classes of shares: Class A, and Class B.
The Timothy Plan Money Market Fund (referred to herein as the "Money Market
Fund") offers a single class of shares of the Trust without any sales charges.
The Timothy Plan Small-Cap Variable Series, The Timothy Plan Mid-Cap Variable
Series, and The Timothy Plan Fixed-Income Variable Series (referred to herein as
the "Timothy Variable Funds") offer a single class of shares of the Trust
without any sales charges or ongoing sales or distribution fees. The Timothy
Variable Funds' shares are only offered to insurance companies for the purpose
of funding variable annuity contracts ("VA Contracts"). Presently the Timothy
Variable Funds are only offered through offered through separate accounts of the
Annuity Investors Life Insurance Company (the "Insurance Company"). The Trust
has filed an Application for Exemptive Order with the Securities and Exchange
Commission, which, when approved, will allow the Timothy Variable Funds to be
offered through the separate accounts of multiple insurance companies.
- --------------------------------------------------------------------------------
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
THE TIMOTHY PLAN......................................................
THE TIMOTHY PLAN - INVESTMENTS........................................
INVESTMENT RESTRICTIONS...............................................
INVESTMENT ADVISER....................................................
INVESTMENT MANAGERS...................................................
PRINCIPAL 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..................................................
<PAGE>
THE TIMOTHY PLAN
The Timothy Plan ("Trust") was organized as a Delaware business trust, and is a
mutual fund company of the type known as an open-end management investment
company. It is authorized to create an unlimited number of series of shares
(each a "Fund") and an unlimited number of share classes within each series. A
mutual fund permits an investor to pool his or her assets with those of others
in order to achieve economies of scale, take advantage of professional money
managers and enjoy other advantages traditionally reserved for large investors.
The Trust currently offers seven series: The Timothy Plan Small-Cap Value Fund,
the Timothy Plan Large/Mid-Cap Value Fund, The Timothy Plan Fixed-Income Fund,
The Timothy Plan Money Market Fund, Timothy Plan Small-Cap Variable Series, the
Timothy Plan Large/Mid-Cap Variable Series, and The Timothy Plan Fixed-Income
Variable Series. The Funds shares are fully paid and non-assessable. They are
entitled to such dividends and distributions as may be paid with respect to the
shares and shall be entitled to such sums on liquidation of the Fund as shall be
determined. Other than these rights, they have no preference as to conversion,
exchange, dividends, retirement or other features and have no preemption rights.
There are three Classes of shares offered by the Trust; Class A shares are
offered with a front-end sales charge and ongoing service/distribution fees
(Timothy Plan Small-Cap Value Fund, the Timothy Plan Large/Mid-Cap Value Fund,
The Timothy Plan Fixed-Income Fund only); Class B shares are offered with a
contingent deferred sales charge that declines over a period of years and
ongoing service and distribution fees(Timothy Plan Small-Cap Value Fund, the
Timothy Plan Large/Mid-Cap Value Fund, The Timothy Plan Fixed-Income Fund only);
and; No-Load shares are offered without sales charges or ongoing
service/distribution fees (Timothy Plan Money Market Fund, Timothy Plan
Small-Cap Variable Series, the Timothy Plan Large/Mid-Cap Variable Series, and
The Timothy Plan Fixed-Income Variable Series only).
Shareholder meetings will not be held unless required by Federal or State law or
in connection with an undertaking given by the Fund (See Statement of Additional
Information).
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 FUNDS issue 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 MONEY MARKET FUND offers a single class of shares, the No-load
class.
THE TIMOTHY VARIABLE FUNDS issue only one class of shares and are intended to be
funding vehicles for variable annuity contracts ("VA Contracts") offered through
separate accounts of Annuity Investors Life Insurance Company and other
Participating Insurance Companies, if allowed (the "Insurance Companies").
Each Fund has its own investment objectives and policies, and each invests in
its own portfolio of securities. Each Fund s seeks to achieve its stated
objectives by investing in securities issued by companies which, in the opinion
of the Funds' Adviser, 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.
1
<PAGE>
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 A warrant is an instrument issued by a corporation which gives the
holder the right to subscribe to a specified amount of the issuer's capital
stock at a set price for a specified period of time.
AMERICAN DEPOSITORY RECEIPTS ("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 any 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. The portfolio turnover rate for
each Fund is set forth in the table below:
- --------------------------------------------------------------------------------
FUND 1996 1997 1998 1999
- --------------------------------------------------------------------------------
Small-Cap Value 93.08% 136.36% 69.42% 78.79%
- --------------------------------------------------------------------------------
Large/Mid Cap Value N/A N/A N/A 8.02%
- --------------------------------------------------------------------------------
Fixed Income Fund N/A N/A N/A 21.25%
- --------------------------------------------------------------------------------
Money Market Fund N/A N/A N/A N/A
- --------------------------------------------------------------------------------
Small-Cap Variable N/A N/A 3.00% 64.40%
- --------------------------------------------------------------------------------
Large/Mid-Cap Variable N/A N/A N/A N/A
- --------------------------------------------------------------------------------
Fixed Income Variable N/A N/A N/A N/A
- --------------------------------------------------------------------------------
The Timothy Plan Large/Mid-Cap Value Fund, the Timothy Plan Fixed-Income Fund,
and The Timothy Plan Money Market Fund commenced investment operations in 1999.
The Timothy Plan Large/Mid-Cap Variable Series, and The Timothy Plan
Fixed-Income Variable Series had not commenced operations as of December 31,
1999 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.)
2
<PAGE>
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 the Small-Cap
Value Fund, the Large/Mid-Cap Value Fund, the Small-Cap Variable Series and
the Large/Mid-Cap Variable Series may each 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 Small-Cap Value Fund,
the Large/Mid-Cap Value Fund, the Small-Cap Variable Series and the
Large/Mid-Cap Variable Series may each invest in the securities of
companies which invest in or sponsor such programs;
(6) invest more than 25% of the value of the Fund's total assets in one
particular industry, except for temporary defensive purposes;
(7) make purchases of securities on "margin", or make short sales of
securities, provided that each 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 each
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. But in no event may a Fund 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 a single class.
3
<PAGE>
(9) as to 75% of a Fund's total assets, invest more than 5% of its 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)
(10) purchase or sell commodities or commodity futures contracts, other than
those related to stock indexes.
(11) make loans of money or securities, except (I) by purchase of fixed income
securities in which a Fund may invest consistent with its investment
objectives and policies; or (ii) by investment in repurchase agreements.
(12) invest in securities of any company if any officer of trustee of the Funds
or TPL owns more than 0.5% of the outstanding securities of such company
and such officers and trustees, in the aggregate, own more than 5% of the
outstanding securities of such company.
(13) borrow money, except that each Fund may borrow from banks (I) for temporary
or emergency purposes in an amount not exceeding of the Fund's assets or
(ii) to meet redemption requests that might otherwise require the untimely
disposition of portfolio securities, in an amount not to exceed 33% of the
value of the Fund's total assets (including the amount borrowed) at the
time the total assets, the Fund will not purchase securities. Interest paid
on borrowing will reduce net income.
(14) pledge, mortgage hypothecate, or otherwise encumber its assets, except in
an mount up to 33% of the value of its net assets, but only to secure
borrowing for temporary or emergency purposes, such as to effect
redemptions, or
(15) 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 is no readily available market
quotations, or in repurchase agreements maturing in more than 7 days, if
all such securities would constitute more than 10% of a Fund's net assets.
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.
4
<PAGE>
INVESTMENT ADVISER
The Trust has entered into an advisory agreement with Timothy Partners,
Ltd.(TPL), effective January 19, 1994, as amended August 28, 1995, September 1,
1997, and May 1, 1999,for the provision of investment advisory services on
behalf of the Trust to each Fund, subject to the supervision and direction of
the Trust's Board of Trustees. 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.
TPL further has voluntarily undertaken to waive its advisory fee and reimburse
expenses on behalf of each Fund to the extent normal operating expenses
(including investment advisory fees but excluding interest, taxes, brokerage
fees, commissions and extraordinary charges) exceed certain percentages for each
Fund. The percentages for each Fund are set forth in the Funds' Prospectus. TPL
may terminate its undertaking at any time by written notice to the Board. You
will be notified if TPL exercises such a right.
The Investment Advisory Agreement is initially effective for two years. The
Investment Advisory Agreement may be renewed after its initial term only so long
as such renewal and continuance are specifically approved at least annually by
the Board of Trustees or by vote of a majority of the outstanding voting
securities of the 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.
The table below sets forth the investment advisory fees payable to TPL for the
last three years for each of the Trust's Funds. The table also sets forth the
amounts reimbursed to each Fund by TPL pursuant to its voluntary commitment to
limit Fund expenses.
- --------------------------------------------------------------------------------
FUND 1997 1998 1999
- --------------------------------------------------------------------------------
SMALL-CAP VALUE FUND
IA Fees Payable to TPL $142,990 $215,187 $220,068
Amount Reimbursed by TPL ($193,945) ($124,004) ($129,595)
- --------------------------------------------------------------------------------
LARGE/MID-CAP VALUE FUND
IA Fees Payable to TPL N/A N/A $3,228
Amount Reimbursed by TPL N/A N/A ($12,527)
- --------------------------------------------------------------------------------
FIXED INCOME FUND
IA Fees Payable to TPL N/A N/A $689
Amount Reimbursed by TPL N/A N/A ($14,206)
- --------------------------------------------------------------------------------
MONEY MARKET FUND
IA Fees Payable to TPL N/A N/A $973
Amount Reimbursed by TPL N/A N/A ($8,025)
- --------------------------------------------------------------------------------
SMALL-CAP VARIABLE SERIES
IA Fees Payable to TPL N/A $ 876 $-------
Amount Reimbursed by TPL N/A ($ 1,487) ($--------)
- --------------------------------------------------------------------------------
The Mid-Cap Variable Series and the Fixed-Income Variable Series had not
commenced operations prior to December 31, 1999, so no advisory fees were
payable to TPL.
5
<PAGE>
INVESTMENT MANAGERS
Pursuant to an agreement between TPL, the Trust and Awad & Associates ("Awad"),
dated January 1, 1997, as amended May 1, 1998 (the "Sub-Investment Advisory
Agreement"), Awad provides advice and assistance to TPL in the selection of
appropriate investments for Small-Cap Value Fund and the Small-Cap Variable
Series, subject to the supervision and direction of the Funds' Board of
Trustees. As compensation for its services, with respect to each Fund, Awad
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.
Pursuant to an agreement between TPL, the Trust and Carr & Associates, Inc.
("Carr"), dated May 1, 1999 (the "Sub-Investment Advisory Agreement"), Carr
provides advice and assistance to TPL in the selection of appropriate
investments for Fixed-Income Fund, Money Market Fund and the Fixed-Income
Variable Series, subject to the supervision and direction of the Funds' Board of
Trustees. As compensation for its services, with respect to the Fixed-Income
Fund and Fixed-Income Variable series, Carr receives from TPL an annual fee at a
rate equal to 0.20% of the average net assets of each Fund. As compensation for
its services with respect to the Money Market Fund, Carr receives from TPL an
annual fee at a rate equal to 0.08% of the average net assets of the Fund.
Pursuant to an agreement between TPL, the Trust and Fox Asset Management, Inc.
("Fox"), dated May 1, 1999 (the "Sub-Investment Advisory Agreement"), Fox
provides advice and assistance to TPL in the selection of appropriate
investments for the Large/Mid-Cap Value Fund and the Large/Mid-Cap Variable
Series, subject to the supervision and direction of the Funds' Board of
Trustees. As compensation for its services, with respect to each Fund, Fox
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 Agreements are each initially effective for two
years. The Agreements may be renewed by the parties after their initial terms
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 Agreements will terminate automatically in the event of their
assignment.
PRINCIPAL 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'
and the Timothy Variable 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
Unified Financial Services, Inc., 431 North Pennsylvania Street, Indianapolis,
IN 46204 ("Unified"), provides Transfer Agent, Fund Accounting and certain
Administrative services to the Trust pursuant to an Administrative Services
Agreement dated July 1, 1999.
6
<PAGE>
Under the Administrative Services Agreement, Unified: (1) coordinates with the
Custodian and performs Transfer Agent services 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) 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 (8) takes such other action with respect to the Funds as may be necessary in
the opinion of Unified to perform its duties under the agreement.
Prior to July 1, 1999, Declaration Service Company, 555 North Lane, Suite 6160,
Conshohoken, PA 19428, served as the Administrator. For the Trust's fiscal years
ended December 31, 1997, 1998, and 1999, the Trust paid $ 65,386, $113,738, and
$146,604 respectively, for Administration fees.
ALLOCATION OF PORTFOLIO BROKERAGE
The Adviser and/or 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.
TPL, through the Investment Managers, 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 another or Variable 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.
On occasions when TPL or an Investment Manager deems the purchase or sale of a
security to be in the best interests of one Fund or more Funds 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 an 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 Managers on behalf of the Funds, and reviews the
prices and commissions, if any, paid by the Funds to determine if they were
reasonable.
7
<PAGE>
The Investment Managers 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 Funds. In addition, the Investment
Managers may place portfolio trades for both Funds with affiliated brokers. 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 FUNDS
The shares of the Timothy Funds 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 FUNDS ONLY)
Shares of the Timothy Funds 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 Funds sponsor 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 Funds' IRA.
Your rollover contribution is not subject to the limits on annual IRA
contributions. You can continue to defer Federal income taxes on your
contribution and on any income that is earned on that contribution.
The Timothy Funds also sponsor 403(b)(7) Retirement Plans. The Funds offer 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 Funds also offer 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 Funds at (800) TIM-PLAN (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.
8
<PAGE>
TIMOTHY VARIABLE FUNDS
The Timothy Variable Funds currently only offer their shares to the Annuity
Investors Life Insurance Company, but may, in the future, offer their shares to
other insurance company separate accounts. The Trust has filed an Application
For Exemptive Order with the Securities and Exchange Commission seeking an order
from the Commission allowing the Timothy Variable Funds to be offered to
multiple insurance company separate accounts. The separate accounts invest in
shares of the Timothy Variable Funds in accordance with the allocation
instructions received from holders of the VA contracts. Shares of the Timothy
Variable Funds are sold at net asset value as described in each 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 Funds may be redeemed through certain brokers, financial institutions or
service organizations, banks and bank trust departments who may charge 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 Funds.
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, on the sale or other
disposition of the securities received from the Funds.
In-kind payments need not constitute a cross-section of a Fund's' portfolio.
Where a shareholder has requested redemption of all or a part of the
shareholder's investment, and where a Fund completes such redemption in-kind,
that Fund will not recognize gain or loss for federal tax purposes, on the
securities used to complete the redemption. The shareholder will recognize gain
or loss equal to the difference between the fair market value of the securities
received and the shareholder's basis in the Fund shares redeemed.
OFFICERS AND TRUSTEES OF THE TRUST
The Trustees and principal executive officers and their principal occupations
for the past five years are listed below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
DATE PERSON BECAME A
TRUSTEE & TRUST OFFICES PRINCIPAL OCCUPATION
NAME, ADDRESS & AGE HELD, IF ANY DURING PAST 5 YEARS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Arthur D. Ally (58)* Trustee since January, President and controlling shareholder of
1304 West Fairbanks Avenue 1994. Currently serves as Covenant Funds, Inc.("CFI"), a holding
Winter Park, FL President of the Trust and company. President and general partner of
Chairman of the Board of Timothy Partners, Ltd.("TPL"), the
Trustees. investment adviser and principal
underwriter to each Fund. CFI is also the
managing general partner of TPL.
- ----------------------------------------------------------------------------------------------------------
Joseph E. Boatwright (68)** Trustee since April, Retired Minister. Currently serves as a
1410 Hyde Park Drive 1995. Currently serves as consultant to the Greater Orlando Baptist
Winter Park, FL Secretary to the Trust. Association. Served as Senior Pastor to
the Aloma Baptist Church from 1970-1996.
- ----------------------------------------------------------------------------------------------------------
Wesley W. Pennington (68) Trustee since January, President, Westwind Holdings, Inc., a
442 Raymond Avenue 1994. Currently serves as development company, since 1997. President
Longwood, FL Treasurer to the Trust. and controlling shareholder, Weston, Inc.,
a fabric treatment company, form 1979-1997.
- ----------------------------------------------------------------------------------------------------------
Jock M. Sneddon (51)** Trustee since January, Physician, Florida Hospital Center.
6001 Vineland Drive 1997.
Orlando, FL
- ----------------------------------------------------------------------------------------------------------
9
<PAGE>
- ----------------------------------------------------------------------------------------------------------
W. Thomas Fyler, Jr. (42) Trustee since December, President, controlling shareholder of W.T.
90 West Street, Suite 1820 1998 Fyler, Jr./Ephesus, Inc., a New York State
New York, NY 10006 registered investment advisory firm.
Founding member of the National Association
of Christian Financial Consultants.
- ----------------------------------------------------------------------------------------------------------
Randy R. Brunson (43) Nominated for shareholder Founder and Principal of Brunson Financial
4500 Hugh Howell Rd, approval at shareholder Management, Inc., a financial planning and
Suite 750 meeting to be held on May investment advisory firm located in
Tucker, GA 30084 31, 2000. Has not Atlanta, Georgia. Member, Institute of
previously served as Certified Financial Planners, the Institute
Trustee of the Trust. for Investment Management Consulting, and
the Atlanta Health Care Alliance, among
others.
- ----------------------------------------------------------------------------------------------------------
Mathew D. Staver (43)** Nominated for shareholder Attorney specializing in free speech,
210 East Palmetto Ave. approval at shareholder appellate practice and religious liberty
Longwood, FL 32750 meeting to be held on May constitutional law. Founder of Liberty
31, 2000. Has not Counsel, a religious civil liberties
previously served as education and legal defense organization.
Trustee of the Trust. Host of two radio programs devoted to
religious freedom issues. Editor of a
monthly newsletter devoted to religious
liberty topics. Mr. Staver has argued
before the United States Supreme Court and
has published numerous legal articles.
- ----------------------------------------------------------------------------------------------------------
Charles E. Nelson (65) Nominated for shareholder Director of Finance, Hospice of the
1145 Cross Creek approval at shareholder Comforter, Inc., a non-profit
Altamonte Springs, FL meeting to be held on May organization. Formerly Comptroller,
31, 2000. Has not Florida United Methodist Children's Home,
previously served as Inc. Formerly Credit Specialist with the
Trustee of the Trust. Resolution Trust Corporation and Senior
Executive Vice President, Barnett Bank of
Central Florida, N.A. Formerly managing
partner, Arthur Anderson, CPA firm, Florida
branch.
- ----------------------------------------------------------------------------------------------------------
Mark A. Minnella (44) Nominated for shareholder Principal and co-founder of The Financial
1215 Fern Ridge Parkway, Suite approval at shareholder Engineering Center, Inc. a registered
110 meeting to be held on May investment advisory firm. Co-founder,
Creve Coeur, MO 31, 2000. Has not treasurer and director of the National
previously served as Association of Christian Financial
Trustee of the Trust. Consultants. Mr. Minnella is a Registered
Investment Principal (NASD Series 24), and
a registered investment adviser (NASD Series
65). Host of a weekly radio program in St.
Louis devoted to financial planning. Frequent
lecturer, teacher and author of a variety of
financial software products.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Mr. Ally is an "interested" Trustee, as that term is defined in the 1940 Act,
because of his positions with and financial interests in CFI and TPL.
** Messrs. Boatwright, Sneddon and Staver are "interested" Trustees, as that
term is defined in the 1940 Act, because each has a limited partnership interest
in TPL.
10
<PAGE>
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, 1999, the Timothy Funds 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, 1999. As of December 31, 1999, the Timothy Variable Funds did not pay
compensation to any of its trustees.
DISTRIBUTION PLANS (APPLICABLE ONLY TO THE TIMOTHY FUNDS)
As noted in the Timothy Funds' Prospectus, each Class of the Timothy Funds 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 paid a fee 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 each Timothy Fund) for expenses incurred in the
distribution and promotion of the Timothy Funds' 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 additional payments by the Timothy Fund. You should
be aware that it is possible that Plan accruals will exceed the actual
expenditures by TPL for eligible services. Accordingly, such fees are not
strictly tied to the provision of such services.
Effective July 1, 1997, Timothy Partners, Ltd. (TPL), began serving as the
Timothy Funds' sole underwriter. For the period July 1, 1997 to December 31,
1997, the Small-Cap Value Fund reimbursed TPL $58,563 for distribution-related
expenses as follows: $12,917 compensation to dealers for Class A shares and $34,
074 compensation to dealers for Class B shares and $10,572 for servicing the
Class B shareholder accounts. As of December 31, 1998, the Small-Cap Value Fund
reimbursed TPL $63,290 for distribution-related expenses as follows: $30,886
compensation to dealers for Class A shares and $32,404 compensation to dealers
for Class B shares and for servicing the Class B shareholder accounts. As of
December 31, 1999, the Small-Cap Value Fund reimbursed TPL $164,988 for
distribution and service-related expenses Class A shares and $2,035 compensation
to dealers for Class B shares and for servicing the Class B shareholder
accounts.
The Plans also provide that to the extent that the Timothy Funds, TPL, the
Investment Managers, or other parties on behalf of the Funds, TPL, or the
Investment Managers make payments that are deemed to be payments for the
financing of any activity primarily intended to result in the sale of shares
issued by the Fund within the context of Rule 12b-1, such payments shall be
deemed to be made pursuant to the Plans. In no event shall the payments made
under the Plans, plus any other payments deemed to be made pursuant to the
Plans, exceed the amount permitted to be paid pursuant to the 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 have moneys 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.
11
<PAGE>
The Plans have been approved by the Funds' 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 Board of Trustees, including a majority of
the Trustees who are non-interested persons of the Funds 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 Timothy Funds and the Timothy Variable 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 Funds 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 Funds' 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 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.
12
<PAGE>
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 Funds 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 April 14, 2000, the following person owned 5% or more of a Class of shares
of a Fund or of the total outstanding shares of a Fund.
HOLDERS OF MORE THAN
5% OF EACH FUND'S SHARES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
% OWNERSHIP OF TOTAL
NAME OF FUND IN SHARE NUMBER OF OUTSTANDING FUND
NAME OF SHAREHOLDER WHICH SHARES HELD CLASS SHARES OWNED % OWNERSHIP OF SHARES, ALL CLASSES
OWNED SHARE CLASS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Annuity Investors Life, Timothy Plan
FBO annuity investors Small-Cap Variable No-Load
Series 144,655 100% 100%
- -------------------------------------------------------------------------------------------------------------------------
13
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
Liberty Counsel, Inc. Timothy Plan Money
FBO, beneficiaries Market Fund No Load
116,147 10.50% 10.50%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Money
Sneddon, JM Market Fund No Load
103,276 9.34% 9.34%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Money
Kerchner, DM Market Fund No Load
88,896 8.04% 8.04%
- -------------------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin & Timothy Plan
Jenrette, FBO customer Small-Cap Value Fund
accts. Class A 61,292 5.65% 2.65%
- -------------------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin & Timothy Plan
Jenrette, FBO customer Small-Cap Value Fund
accts. Class A 59,470 5.48% 2.57%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Davis, D Small-Cap Value Fund
Class A 55,823 5.14% 2.41%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Demunnick, B Small-Cap Value Fund
Class B 93,932 7.81% 4.06%
- -------------------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin & Timothy Plan
Jenrette, FBO customer Small-Cap Value Fund
accts. Class C 22,395 87.80% 0.97%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Wuertz, DR Large/Mid-Cap Value
Fund Class A 13,503 5.98% 3.78%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
RigidPly Rafters, Inc. Large/Mid-Cap Value
Fund Class A 65,527 29.02% 18.37%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Mylod, R Large/Mid-Cap Value
Fund Class A 37,644 16.67% 10.55%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Wuertz, DR Large/Mid-Cap Value
Fund Class A 13,503 5.98% 3.78%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Zawaki, IRA Large/Mid-Cap Value
Fund Class A 12,615 5.59% 3.54%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Kelly, E. Large/Mid-Cap Value
Fund Class A 12,152 5.38% 3.40%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
NFCS FBO customer accts. Large/Mid-Cap Value
Fund Class B 31,822 28.17% 8.92%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Walker, DM Large/Mid-Cap Value
Fund Class B 8,081 7.15% 2.23%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Lammers, JD Large/Mid-Cap Value
Fund Class B 6,703 5.93% 1.88%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Murphy, CM Large/Mid-Cap Value
Fund Class B 6,302 5.58% 1.77%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
St. Josaphats Large/Mid-Cap Value
Fund Class C 1,043 5.80% 0.29%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Bernard, RT Large/Mid-Cap Value
Fund Class C 4,034 22.44% 1.13%
- -------------------------------------------------------------------------------------------------------------------------
14
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan
Fox Asset Management, Large/Mid-Cap Value
Inc. Fund Class C 10,044 55.87% 2.82%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
NFCS FBO customer accts. Income Fund
Class A 1,013 5.62% 1.74%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Breil, R. Income Fund
Class A 1,024 5.68% 1.76%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Benes, B. Income Fund
Class A 3,407 18.91% 5.84%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Kluck, MP Income Fund
Class A 1,310 7.27% 2.25%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Meekhof, D Income Fund
Class A 1,227 6.81% 2.10%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Glasscock, J Income Fund
Class A 1,197 6.64% 2.05%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Carrie, CH Income Fund
Class A 4,399 24.41% 7.55%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
George, C Income Fund
Class B 3,115 9.36% 5.34%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Geier, MJ Income Fund
Class B 3,434 10.32% 5.89%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Murphy, CM Income Fund
Class B 5,623 16.90% 9.65%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Graybill, DM Income Fund
Class B 5,133 15.43% 8.81%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
NFCS FBO customer accts. Income Fund
Class C 5,225 74.68% 8.96%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Jocelyne, V IRA Income Fund
Class C 908 12.98% 1.56%
- -------------------------------------------------------------------------------------------------------------------------
Timothy Plan Fixed
Zollman, VJ Income Fund
Class C 376 5.38% 0.64%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE
Performance information for the shares of the Timothy Funds and the Timothy
Small-Cap Variable Fund will vary due to the effect of expense ratios on the
performance calculations. TOTAL RETURNS AND YIELDS QUOTED FOR THE TIMOTHY
SMALL-CAP VARIABLE FUND INCLUDE THE FUND'S EXPENSES, BUT MAY NOT INCLUDE CHARGES
AND EXPENSES ATTRIBUTABLE TO ANY PARTICULAR INSURANCE PRODUCT.
15
<PAGE>
BECAUSE SHARES OF THE TIMOTHY VARIABLE FUNDS MAY BE PURCHASED ONLY THROUGH
VARIABLE ANNUITY 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 Timothy Variable Fund's performance has the
effect of increasing the performance quoted. You should bear in mind the effect
of these charges when comparing the Timothy Variable Funds' performance to that
of other mutual funds.
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).
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.
16
<PAGE>
FINANCIAL STATEMENTS
The Timothy Funds' Financial Statements, including the notes thereto, dated
December 31, 1999, which have been audited by Tait, Weller & Baker, are
incorporated by reference from the Timothy Fund's 1999 Annual Report to
Shareholders. The Timothy Plan Small-Cap Variable Series Financial Statements,
including the notes thereto, dated December 31, 1999, which have been audited by
Tait, Weller & Baker, are incorporated by reference from the Timothy Fund's 1999
Annual Report to Shareholders.
PART C. OTHER INFORMATION.
ITEM 23. EXHIBITS.
- -------------------
(A) Agreement and Declaration of Trust is incorporated herein by reference to
Post Effective Amendment No. 4, electronically filed on April 26, 1996.
(B) By-Laws of Registrant dated January 19, 1994 is incorporated herein by
reference to Post Effective Amendment No. 4, electronically filed on April
26, 1996.
(C) None
(D) Investment Advisory Agreements:
(a)(i) Form of Amendment to Investment Advisory Agreement dated May 1,
1999 between the Registrant and Timothy Partners, Ltd. is
incorporated herein by reference to Post Effective Amendment No.
9, electronically filed on March 17, 1999.
(a)(ii) Form of Amendment to Investment Advisory Agreement dated May 1,
1998 between the Registrant and Timothy Partners, Ltd. is
incorporated herein by reference to Post-Effective No. 8,
electronically filed on April 16, 1998.
(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,
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, electronically filed on April 26, 1996.
(a)(v) Investment Advisory Agreement dated January 19, 1994 between
Registrant and Timothy Partners, Ltd. is incorporated herein by
reference to Post-Effective Amendment No. 4, electronically filed
on April 26, 1996.
(b)(i) Sub-Investment Advisory Agreement dated May 1, 1999 between
Timothy Partners, Ltd., Carr & Associates and the Registrant is
incorporated herein by reference to Post Effective Amendment No.
9, electronically filed on March 17, 1999..
(b)(ii) Sub-Investment Advisory Agreement dated May 1, 1999 between
Timothy Partners, Ltd., Fox Asset Management and the Registrant
is incorporated herein by reference to Post Effective Amendment
No. 9, electronically filed on March 17, 1999..
(b)(iii) Form of Amendment to Sub-Investment Advisory Agreement dated May
1, 1998 between Timothy Partners, Ltd., Awad & Associates and the
Registrant is incorporated herein by reference to Post-Effective
Amendment No. 8 as electronically filed on April 16, 1998.
(b)(iv) 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
electronically filed on _____________.
<PAGE>
(E) DISTRIBUTION AGREEMENTS:
Underwriting Agreement dated July 1, 1997 between the Registrant and
Timothy Partners, Ltd. is incorporated herein by reference to
Post-Effective No. 6, electronically filed on July 18, 1997.
(F) None
(G) CUSTODIAN AGREEMENT
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, electronically filed on ___________.
(H) OTHER MATERIAL CONTRACTS:
(a)(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 electronically filed on April 26,
1996.
(a)(ii) Administrative Agreement dated January 19, 1994 between
Registrant and Covenant Financial Management, Inc. is
incorporated herein by reference to Post Effective Amendment No.
4, as electronically filed on April 26, 1996.
(b)(i) Form of Participation Agreement dated May 1, 1998 among the
Registrant on behalf of The Timothy Plan Variable Series, Annuity
Investors Life Insurance Company and Timothy Partners, Ltd. is
incorporated herein by reference to Post Effective Amendment No.
9, electronically filed on March 17, 1999.
(c)(i) Mutual Fund Services Agreement among the Registrant and Unified
Financial Services, Inc. is filed herewith electronically as
Exhibit H(c)(i).
(I) OPINION AND CONSENT OF COUNSEL AS TO THE LEGALITY OF THE SECURITIES TO BE
ISSUED:
(a) Opinion and Consent of David Jones & Assoc., P.C., counsel to the
Trust, is filed herewith electronically as Exhibit I.
(J) CONSENTS
(a) Consent of Tait, Weller & Baker is incorporated by reference from
the Timothy Fund's 1999 Annual Report to Shareholders.
(K) None.
(L) LETTERS OF UNDERSTANDING RELATING TO INITIAL CAPITAL:
(a) Investment letters between the Registrant and Phillis B. Crosby,
Michael J. Demaray, Thomas J. Snyder, William R. Cadle, Bernice I.
Cradle, Mary A. Gibson, Delbert E. Rich, Gwynn M. Reel, Charles E.
Davis, Gregory Tighe and Frank Salerno are incorporated herein by
reference to Post Effective Amendment No. 4, electronically filed on
April 26, 1996.
(M) PLANS UNDER 12b-1:
(a) Distribution Plan dated May 1, 1999 on behalf of Class A Shares for
the Large/Mid-Cap Value and Fixed-Income Funds is incorporated
herein by reference to Post Effective Amendment No. 9,
electronically filed on March 17, 1999.
<PAGE>
(b) Distribution Plan dated May 1, 1999 on behalf of Class B Shares for
the Large/Mid-Cap Value and Fixed-Income Funds is incorporated
herein by reference to Post Effective Amendment No. 9,
electronically filed on March 17, 1999
(N) Not Applicable
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
- -----------------------------------------------------------------------
None.
ITEM 25. INDEMNIFICATION.
- --------------------------
Under the terms of the Delaware Business Trust Act and the Registrant's
Agreement and Declaration of Trust and By-Laws, no officer or Trustee of the
Fund shall have any liability to the Fund or its shareholders for damages,
except to the extent such limitation of liability is precluded by Delaware law,
the Agreement and Declaration of Trust, or the By-Laws.
The Delaware Business Trust Act, section 3817, permits a business trust to
indemnify any Trustee, beneficial owner, or other person from and against any
claims and demands whatsoever. Section 3803 protects a Trustee, when acting in
such capacity, from liability to any person other than the business trust or
beneficial owner for any act, omission, or obligation of the business trust or
any Trustee thereof, except as otherwise provided in the Agreement and
Declaration of Trust.
The Agreement and Declaration of Trust provides that the Trustees shall not be
liable for any neglect or wrong-doing of any officer, agent, employee, manager
or underwriter of the Fund, nor shall any Trustee be responsible for the act or
By-Laws, the Fund may indemnify to the fullest extent each Trustee and officer
of the Fund acting in such capacity, except each Trustee and officer of the Fund
acting in such capacity, except as otherwise provided in the Agreement and
Declaration of Trust.
The Agreement and Declaration of Trust provides that the Trustees shall not be
liable for any neglect or wrong-doing of any officer, agent, employee, manager
or underwriter of the Fund, nor shall any Trustee be responsible for the act or
omission of any other Trustee. Subject to the provisions of; the By-Laws, the
Fund may indemnify to the fullest extent each Trustee and officer of the Fund
acting in such capacity, except that no provision in the Agreement and
Declaration of Trust shall be effective to protect or purport to protect and
indemnify any Trustee or officer of the Fund from or against any liability to
the Fund or any shareholder to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The By-Laws provide indemnification for each Trustee and officer who is a party
or is threatened to be made a party to any proceeding, by reason of service in
such capacity, to the fullest extent, if it is determined that Trustee or
officer acted in good faith and reasonably believed: (a) in the case of conduct
in his official capacity as an agent of the Fund, that his conduct was in the
Fund's best interests and (b) in all other cases, that his conduct was at least
not opposed to the Fund's best interests and (c) in the case of a criminal
proceeding, that he had no reasonable cause to believe the conduct of that
person was unlawful. However, there shall be no indemnification for any
liability arising by reason of willful misfeasance, bad faith, gross negligence,
or the reckless disregard of the duties involved in the conduct of the Trustee's
or officer's office. Further, no indemnification shall be made:
<PAGE>
(a) In respect of any proceeding as to which any Trustee or officer of the Fund
shall have been adjudged to be liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from an action
taken in the person's official capacity; or
(b) In respect of any proceeding as to which any Trustee or officer of the Fund
shall have been adjudged to be liable in the performance of that person's duty
to the Fund, unless and only to the extent that the court in which that action
was brought shall determine upon application that in view of all the relevant
circumstances of the case, that person is fairly and reasonably entitled to
indemnity for the expenses which the court shall determine; however, in such
case, indemnification with respect to any proceeding by or in the right of the
Fund or in which liability shall have been adjudged by reason of the disabling
conduct set forth in the preceding paragraph shall be limited to expenses; or
(c) Of amounts paid in settling or otherwise disposing of a proceeding, with or
without court approval, or of expenses incurred in defending a proceeding which
is settled or otherwise disposed of without court approval, unless the required
court approval set forth in the By-Laws is obtained.
In any event, the Fund shall indemnify each officer and Trustee against
reasonable expenses incurred in connection with the successful defense of any
proceeding to which each such officer or Trustee is a party by reason of service
in such Capacity, provided that the Board of Trustees, including a majority who
are disinterested, non-party Trustees, also determines that such officer or
Trustee was not liable by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his or her duties or office. The Fundshall
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 26. 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.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Positions and Offices with Positions and Offices with the
Name and Business Address Timothy Partners, Ltd. Registrant
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Arthur D. Ally President of Covenant Funds, President and Trustee
1304 West Fairbanks Avenue Inc., Managing General Partner of
Winter Park Florida 32789 Timothy Partners, Ltd., and
Individual General Partner of
Timothy Partners, Ltd.
- -------------------------------------------------------------------------------------------------------
</TABLE>
Covenant Financial Management, Inc. is a marketing/consulting firm owned by
Arthur Ally that renders consulting advice 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.
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITER.
- -------------------------------
(a) Timothy Partners, Ltd. (TPL) is the principal underwriter for the
Registrant's securities and currently acts as underwriter for the Registrant
only.
(b) The table below sets forth certain information as to the Underwriter's
Directors, Officers and Control Persons:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Positions and Offices with the Positions and Offices with the
Name and Business Address Underwriter. Registrant
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Arthur D. Ally President of Covenant Funds, President and Trustee
1304 West Fairbanks Avenue Inc., Managing General Partner of
Winter Park Florida 32789 Timothy Partners, Ltd., and
Individual General Partner of
Timothy Partners, Ltd.
- -------------------------------------------------------------------------------------------------------
</TABLE>
(c) Not applicable.
ITEM 28. 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, Star Bank, N.A.
Cincinatti, Ohio, and the Fund's Administrator, Transfer, Redemption and
Dividend Disbursing Agent and Accounting Services Agent, Unified Financial
Services, Inc., 431 North Pennsylvania Street, Indianapolis, IN 46204.
ITEM 29. MANAGEMENT SERVICES.
- ------------------------------
Not applicable.
ITEM 30. UNDERTAKINGS.
- -----------------------
(a) Inapplicable.
<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.
10 to its Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Post-Effective Amendment No. 10 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in Winter Park, State of Florida, on the 1st day of May, 2000.
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. 9 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 May 1, 2000
- ---------------------------
ARTHUR D. ALLY
/s/ Joseph E. Boatwright Secretary and Trustee May 1, 2000
- ------------------------
JOSEPH E. BOATWRIGHT
/s/ Wesley Pennington Treasurer and Trustee May 1, 2000
- ---------------------------
WESLEY PENNINGTON
/s/ W.T. Fyler Trustee May 1, 2000
- ---------------------------
W.T. FYLER
/s/ Jock M. Sneddon Trustee May 1, 2000
- ---------------------------
JOCK M. SNEDDON
<PAGE>
EXHIBITS
24(H)(c)(i) Form of Mutual Fund Services Agreement
24(I) Opinion and Consent of David Jones & Assoc., P.C.
EXHIBIT 24(H)(C)(I)
MUTUAL FUND SERVICES AGREEMENT
Fund Administration Services
Fund Accounting Services
Transfer Agency Services
between
THE TIMOTHY PLAN
and
UNIFIED FUND SERVICES, INC.
JULY 1, 1999
Exhibit A - Portfolio Listing
Exhibit B - Fund Administration Services Description
Exhibit C - Fund Accounting Services Description
Exhibit D - Transfer Agency Services Description
Exhibit E - Fees and Expenses
<PAGE>
MUTUAL FUND SERVICES AGREEMENT
AGREEMENT (this "Agreement"), dated as of July 1, 1999, between the Timothy
Plan, a Delaware business trust (the "Fund"), and Unified Fund Services, Inc.,
an Indiana corporation ("Unified").
WITNESSTH:
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain Unified to provide transfer agent, fund
accounting and certain administration services with respect to the Fund, and
Unified is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
SECTION 1. Appointment. The Fund hereby appoints Unified to provide
transfer agent, fund accounting and fund administration services for the Fund,
subject to the supervision of the Board of Trustees of the Fund (the "Board"),
for the period and on the terms set forth in this Agreement. Unified accepts
such appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Section 6 and Exhibit E to this Agreement.
The Fund will initially consist of the portfolios, funds and/or classes of
shares (each a "Portfolio"; collectively the "Portfolios") listed on Exhibit A.
The Fund shall notify Unified in writing of each additional Portfolio
established by the Fund. Each new Portfolio shall be subject to the provisions
of this Agreement, except to the extent that the provisions (including those
relating to the compensation and expenses payable by the Fund and its
Portfolios) may be modified with respect to each new Portfolio in writing by the
Fund and Unified at the time of the addition of the new Portfolio.
SECTION 2. Representations and Warranties of Unified. Unified represents
and warrants to the Fund that:
(a) Unified is a corporation duly organized and existing under the laws of
the State of Indiana;
(b) Unified is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement, and all
requisite corporate proceedings have been taken by Unified to authorize Unified
to enter into and perform this Agreement;
(c) Unified has, and will continue to have, access to the facilities,
personnel and equipment required to fully perform its duties and obligations
hereunder;
(d) no legal or administrative proceedings have been instituted or
threatened against Unified that would impair its ability to perform its duties
and obligations under this Agreement; and
(e) Unified's entrance into this Agreement will not cause a material breach
or be in material conflict with any other agreement or obligation of Unified or
any law or regulation applicable to Unified.
<PAGE>
SECTION 3. Representations and Warranties of the Fund. The Fund represents
and warrants to Unified that:
(a) the Fund is a business trust duly organized and existing under the laws
of the State of Delaware;
(b) the Fund is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement, and the Fund has
taken all requisite proceedings to authorize the Fund to enter into and perform
this Agreement;
(c) the Fund is an investment company properly registered under the 1940
Act; a registration statement under the Securities Act of 1933, as amended
("1933 Act") and the 1940 Act on Form N-lA has been filed and will be effective
and will remain effective during the term of this Agreement, and all necessary
filings under the laws of the states will have been made and will be current
during the term of this Agreement;
(d) no legal or administrative proceedings have been instituted or
threatened against the Fund that would impair its ability to perform its duties
and obligations under this Agreement; and
(e) the Fund's entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement or obligation of the
Fund or any law or regulation applicable to it.
SECTION 4. Delivery of Documents. The Fund will promptly furnish to Unified
such copies, properly certified or authenticated, of contracts, documents and
other related information that Unified may request or requires to properly
discharge its duties. Such documents may include but are not limited to the
following:
(a) Resolutions of the Board authorizing the appointment of Unified to
provide certain transfer agency, fund accounting and administration services to
the Fund and approving this Agreement;
(b) The Fund's Declaration of Trust;
(c) The Fund's By-Laws;
(d) The Fund's currently effective registration statement including
exhibits, as amended, on Form N-1A (the "Registration Statement") under the 1933
Act and the 1940 Act, as filed with the SEC;
(e) Copies of the Management Agreement between the Fund and its investment
adviser (the "Advisory Agreement");
(f) Opinions of counsel and auditors reports;
(g) The Fund's Prospectus and Statement of Additional Information relating
to all Portfolios and all amendments and supplements thereto (such Prospectus
and Statement of Additional Information and supplements thereto, as presently in
effect and as from time to time hereafter amended and supplemented, herein
called the "Prospectuses"); and
(h) Such other agreements as the Fund may enter into from time to time
including securities lending agreements, futures and commodities account
agreements, brokerage agreements, and options agreements.
<PAGE>
SECTION 5. Services Provided by Unified.
(a) Unified will provide the following services subject to the control,
direction and supervision of the Board and in compliance with the objectives,
policies and limitations set forth in the Fund's Registration Statement,
Declaration of Trust and By-Laws; applicable laws and regulations; and all
resolutions and policies implemented by the Board:
(i) Fund Administration, as described on Exhibit B to this Agreement.
(ii) Fund Accounting, as described on Exhibit C to this Agreement.
(iii) Transfer Agency, as described on Exhibit D to this Agreement.
(iv) Dividend Disbursing. Unified will serve as the Fund's dividend
disbursing agent. Unified will prepare and mail checks, place wire transfers or
reinvest income and capital gain payments to shareholders. The Fund will advise
Unified in advance of the declaration of any dividend or distribution and the
record and payable date thereof. Unified will, on or before the payment date of
any such dividend or distribution, notify the Fund's Custodian of the estimated
amount required to pay any portion of such dividend or distribution payable in
cash, and on or before the payment date of such distribution, the Fund will
instruct its Custodian to make available to Unified sufficient funds for the
cash amount to be paid out. If a shareholder is entitled to receive additional
shares by virtue of any such distribution or dividend, Unified will make the
appropriate credits to each shareholder's account. A shareholder will receive a
confirmation from Unified indicating the number of shares credited to his/her
account.
(b) Unified will also:
(i) provide office facilities with respect to the provision of the services
contemplated herein (which may be in the offices of Unified or a corporate
affiliate of Unified);
(ii) provide or otherwise obtain personnel sufficient, in Unified's sole
discretion, for provision of the services contemplated herein;
(iii) furnish equipment and other materials, which Unified, in its sole
discretion, believes are necessary or desirable for provision of the services
contemplated herein; and
(iv) keep records relating to the services provided hereunder in such form
and manner as set forth on Exhibits B, C and D and as Unified may otherwise deem
appropriate or advisable, all in accordance with the 1940 Act. To the extent
required by Section 31 of the 1940 Act and the rules thereunder, Unified agrees
that all such records prepared or maintained by Unified relating to the services
provided hereunder are the property of the Fund and will be preserved for the
periods prescribed under Rule 31a-2 under the 1940 Act, maintained at the Fund's
expense, and made available in accordance with such Section and rules. Unified
further agrees to surrender promptly to the Fund upon its request and cease to
retain in its records and files those records and documents created and
maintained by Unified pursuant to this Agreement.
SECTION 6. Fees: Expenses: Expense Reimbursement.
(a) As compensation for the services rendered to the Fund pursuant to this
Agreement the Fund shall pay Unified monthly fees determined as set forth on
Exhibit E to this Agreement. Such fees are to be billed monthly and shall be due
and payable upon receipt of the invoice. Upon any termination of this Agreement
and before the end of any month, the fee for the part of the month before such
termination shall be equal to the fee normally due for the full monthly period
and shall be payable upon the date of termination of this Agreement.
(b) For the purpose of determining fees calculated as a function of a
Portfolio's net assets, the value of the Portfolio's net assets shall be
computed as required by the Prospectus, generally accepted accounting
principles, and resolutions of the Board.
<PAGE>
(c) Unified will from time to time employ or associate with such person or
persons as may be appropriate to assist Unified in the performance of this
Agreement. Such person or persons may be officers and employees who are employed
or designated as officers by both Unified and the Fund. The compensation of such
person or persons for such employment shall be paid by Unified and no obligation
will be incurred by or on behalf of the Fund in such respect.
(d) Unified will bear all of its own expenses in connection with the
performance of the services under this Agreement except as otherwise expressly
provided herein. The Fund agrees to promptly reimburse Unified for any equipment
and supplies specially ordered by or for the Fund through Unified and for any
other expenses not contemplated by this Agreement that Unified may incur on the
Fund's behalf at the Fund's request or as consented to by the Fund. Such other
expenses to be incurred in the operation of the Fund and to be borne by the
Fund, include, but are not limited to: taxes; interest; brokerage fees and
commissions; salaries and fees of officers and directors who are not officers,
directors, shareholders or employees of Unified, or the Fund's investment
adviser or distributor; SEC and state Blue Sky registration and qualification
fees, levies, fines and other charges; advisory fees; charges and expenses of
custodians; insurance premiums including fidelity bond premiums; auditing and
legal expenses; costs of maintenance of corporate existence; expenses of
typesetting and printing of prospectuses and for distribution to current
shareholders of the Fund; expenses of printing and production cost of
shareholders' reports and proxy statements and materials; costs and expense of
Fund stationery and forms; costs and expenses of special telephone and data
lines and devices; costs associated with corporate, shareholder, and Board
meetings; and any extraordinary expenses and other customary Fund expenses. In
addition, Unified may utilize one or more independent pricing services, approved
from time to time by the Board, to obtain securities prices and to act as backup
to the primary pricing services, in connection with determining the net asset
values of the Fund, and the Fund will reimburse Unified for the Fund's share of
the cost of such services based upon the actual usage, or a pro-rata estimate of
the use, of the services for the benefit of the Fund.
(e) The Fund may request additional services, additional processing, or
special reports. Such requests may be provided by Unified at additional charges.
In this event, the Fund shall submit such requests in writing together with such
specifications as may be reasonably required by Unified, and Unified shall
respond to such requests in the form of a price quotation. The Fund's written
acceptance of the quotation must be received prior to implementation of such
request. Additional services will be charged at Unified's standard rates.
(f) All fees, out-of-pocket expenses, or additional charges of Unified
shall be billed on a monthly basis and shall be due and payable upon receipt of
the invoice.
Unified will render, after the close of each month in which services have
been furnished, a statement reflecting all of the charges for such month.
Charges remaining unpaid after thirty (30) days shall bear interest in finance
charges equivalent to, in the aggregate, the Prime Rate (as publicly announced
by Firstar Bank, N.A., from time to time) plus 2.00% per year and all costs and
expenses of effecting collection of any such sums, including reasonable
attorney's fees, shall be paid by the Fund to Unified.
In the event that the Fund is more than sixty (60) days delinquent in its
payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty (30) days' written notice to the
Fund by Unified. The Fund must notify Unified in writing of any contested
amounts within thirty (30) days of receipt of a billing for such amounts.
Disputed amounts are not due and payable until resolved pursuant to the terms of
this Agreement.
<PAGE>
SECTION 7. Proprietary and Confidential Information. Unified agrees on
behalf of itself and its employees to treat confidentially and as proprietary
information of the Fund, all records and other information relative to the
Fund's prior, present or potential shareholders, and to not use such records and
information for any purpose other than performance of Unified's responsibilities
and duties hereunder. Unified may seek a waiver of such confidentiality
provisions by furnishing reasonable prior notice to the Fund and obtaining
approval in writing from the Fund, which approval shall not be unreasonably
withheld and may not be withheld where Unified may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities. Waivers of confidentiality are
automatically effective without further action by Unified with respect to
Internal Revenue Service levies, subpoenas and similar actions, or with respect
to any request by the Fund.
SECTION 8. Duties, Responsibilities and Limitations of Liability.
(a) In the performance of its duties hereunder, Unified shall be obligated
to exercise due care and diligence, and to act in good faith in performing the
services provided for under this Agreement. In performing its services
hereunder, Unified shall be entitled to rely on any oral or written
instructions, notices or other communications from the Fund and its custodian,
officers and trustees, investors, agents and other service providers which
Unified reasonably believes to be genuine, valid and authorized. Unified shall
also be entitled to consult with and rely on the advice and opinions of outside
legal counsel retained by the Fund, as necessary or appropriate.
(b) Unified shall not be liable for any error of judgment or mistake of law
or for any loss or expense suffered by the Fund, in connection with the matters
to which this Agreement relates, except for a loss or expense caused by or
resulting from, in whole or in part, willful misfeasance, bad faith or
negligence on Unified's part in the performance of its duties or from reckless
disregard by Unified of its obligations and duties under this Agreement. Any
person, even though also an officer, director, partner, employee or agent of
Unified, who may be or become an officer, director, partner, employee or agent
of the Fund, shall be deemed when rendering services to the Fund or acting on
any business of the Fund (other than services or business in connection with
Unified's duties hereunder) to be rendering such services to or acting solely
for the Fund and not as an officer, director, partner, employee or agent or
person under the control or direction of Unified even though paid by Unified.
(c) Except for a loss or expense solely caused by or resulting from willful
misfeasance, bad faith or negligence on Unified's part in the performance of its
duties or from reckless disregard by Unified of its obligations and duties under
this Agreement, Unified shall not be responsible for, and the Fund shall
indemnify and hold Unified harmless from and against, any and all losses,
damages, costs, reasonable attorneys' fees and expenses, payments, expenses and
liabilities arising out of or attributable to:
(i) all actions of Unified or its officers or agents required to be taken
pursuant to this Agreement;
(ii) the reliance on or use by Unified or its officers or agents of
information, records, or documents which are received by Unified or its officers
or agents and furnished to it or them by or on behalf of the Fund, and which
have been prepared or maintained by the Fund or any third party on behalf of the
Fund;
(iii) the Fund's refusal or failure to comply with the terms of this
Agreement or the Fund's lack of good faith, or its actions, or lack thereof
involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of the Fund hereunder;
(v) the taping or other form of recording of telephone conversations or
other forms of electronic communications with investors and shareholders, or
reliance by Unified on telephone or other electronic instructions of any person
acting on behalf of a shareholder or shareholder account for which telephone or
other electronic services have been authorized;
<PAGE>
(vi) any delays, inaccuracies, errors in or omissions from data provided to
Unified by data and pricing services;
(vii) the offer or sale of shares by the Fund in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any state, or in violation of any stop order or other
determination or ruling by any federal agency or any state agency with respect
to the offer or sale of such shares in such state (1) resulting from activities,
actions, or omissions by the Fund or its other service providers and agents, or
(2) existing or arising out of activities, actions or omissions by or on behalf
of the Fund prior to the effective date of this Agreement; and
(viii) the compliance by the Fund, its investment adviser, and its
distributor with applicable securities, tax, commodities and other laws, rules
and regulations.
SECTION 9. Terms. This Agreement shall become effective on the date first
herein above written. This Agreement may be modified or amended from time to
time by mutual agreement between the parties hereto. This Agreement shall
continue in effect unless terminated by either party on at least ninety (90)
days' prior written notice. Upon termination of this Agreement, the Fund shall
pay to Unified such compensation and any reimbursable expenses as may be due
under the terms hereof as of the date of termination or the date that the
provision of services ceases, whichever is sooner.
Should the Fund exercise its right to terminate this Agreement, the Fund
agrees to pay a termination/conversion fee, simultaneous with the transfer of
all Fund records to the successor mutual fund service provider(s), in an amount
equal to the total compensation under this agreement for the 30 day period
immediately preceding the termination notice date. In addition, the Fund agrees
to pay for all conversion tape set-up fees, test conversion preparation and
processing fees and final conversion fees.
Such compensation to Unified shall be for the expenses incurred in
connection with the retrieval, compilation and movement of books, records and
materials relative to the deconversion or conversion of Fund records to the
successor mutual fund service provider as directed by the Fund. Notwithstanding
the foregoing, any amount owed by the Fund to Unified prior to the
termination/conversion shall still be due and payable under the terms of this
Agreement. No such compensation shall be due to Unified if Unified terminates
this Agreement for reasons other than a default by the Fund.
Upon the termination of the Agreement for any reason, Unified agrees to
provide the Fund with complete and accurate transfer agency, fund accounting and
administration records and to assist the Fund in the orderly transfer of
accounts and records. Without limiting the generality of the foregoing, Unified
agrees upon termination of this Agreement:
(a) to deliver to the successor mutual fund service provider(s), computer
tapes containing the Fund's accounts and records together with such record
layouts and additional information as may be necessary to enable the successor
mutual fund service provider(s) to utilize the information therein;
(b) to cooperate with the successor mutual fund service provider(s) in the
interpretation of the Fund's account and records;
(c) to forward all shareholder calls, mail and correspondence to the new
mutual fund service provider(s) upon de-conversion; and
(d) to act in good faith, to make the conversion as smooth as possible for
the successor mutual fund service provider(s) and the Fund.
SECTION 10. Notices. Any notice required or permitted hereunder shall be in
writing and shall be deemed to have been given when delivered in person or by
certified mail, return receipt requested, to the parties at the following
address (or such other address as a party may specify by notice to the other):
<PAGE>
(a) If to the Fund, to:
The Timothy Plan
1304 W. Fairbanks Avenue
Winter Park, Florida 32789
Attention: President
(b) If to Unified, to:
Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
Attention: President
Notice shall be effective upon receipt if by mail, on the date of personal
delivery (by private messenger, courier service or otherwise) or upon confirmed
receipt of telex or facsimile, whichever occurs first.
SECTION 11. Assignability. This Agreement shall not be assigned by either
party hereto without the prior written consent of the other party.
SECTION 12. Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver
nor shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
SECTION 13. Force Majeure. Unified shall not be responsible or liable for
any failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including without limitations, acts of God, earthquake, fires, floods,
wars, acts of civil or military authorities, or governmental actions, nor shall
any such failure or delay give the Fund the right to terminate this Agreement.
SECTION 14. Use of Name. The Fund and Unified agree not to use the other's
name nor the names of such other's affiliates, designees, or assignees in any
prospectus, sales literature, or other printed material written in a manner not
previously, expressly approved in writing by the other or such other's
affiliates, designees, or assignees except where required by the SEC or any
state agency responsible for securities regulation.
SECTION 15. Amendments. This Agreement may be modified or amended from time
to time by mutual written agreement between the parties. No provision of this
Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
SECTION 16. Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
SECTION 17. Governing Law. This Agreement shall be governed by the laws of
the State of Indiana.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Mutual Fund Services
Agreement to be signed by their respective duly authorized officers as of the
day and year first above written.
THE TIMOTHY PLAN
By: Date________________
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Attest:
----------------------------------
UNIFIED FUND SERVICES, INC.
By: Date________________
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Attest:
---------------------------------
By: Date________________
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Attest:
---------------------------------
<PAGE>
EXHIBIT A
to
Mutual Fund Services Agreement
List of Portfolios
Timothy Plan Small-Cap Value Fund, Class A
Timothy Plan Small-Cap Value Fund, Class B
Timothy Plan Small-Cap Value Fund, Class C
Timothy Plan Large/Mid-Cap Value Fund, Class A
Timothy Plan Large/Mid-Cap Value Fund, Class B
Timothy Plan Large/Mid-Cap Value Fund, Class C
Timothy Plan Fixed-Income Fund, Class A
Timothy Plan Fixed-Income Fund, Class B
Timothy Plan Fixed-Income Fund, Class C
Timothy Plan Money Market Fund
Timothy Plan Small-Cap Variable Series
<PAGE>
EXHIBIT B
to
Mutual Fund Services Agreement
General Description of Fund Administration Services
---------------------------------------------------
I. Financial and Tax Reporting
---------------------------
A. Report Fund performance to outside services as directed by Fund management.
B. Prepare and file Fund's Form N-SAR with the SEC.
C. In conjunction with transfer agent, notify shareholders as to what portion,
if any, of the distributions made by the Fund during the prior fiscal year
were exempt-interest dividends under Section 852(b)(5)(A) of the Code.
D. Provide Form 1099-MISC to persons other than corporations (i.e., Trustees)
to whom the Fund paid more than $600 during the year.
II. Portfolio Compliance
--------------------
A. Assist with monitoring each Portfolio's compliance with investment
restrictions (e.g., issuer or industry diversification, etc.) listed in the
current Prospectus and Statement of Additional Information.
B. Assist with monitoring each Portfolio's compliance with the requirements of
Section 851 of the Code for qualification as a RIC (i.e., 90% Income and
Diversification Tests).
III. Regulatory Affairs and Corporate Governance
-------------------------------------------
A. Assist Fund counsel in the preparation and filing of post-effective
amendments to the Fund's registration statement on Form N-lA and
supplements as needed.
B. Prepare and file Rule 24f-2 Notices.
C. Assist with the review and monitoring of fidelity bond and errors and
omissions insurance coverage and make any related regulatory filings.
D. File copies of financial reports to shareholders with the SEC under Rule
30b2-1.
IV. General Administration
----------------------
A. For new Portfolios obtain Employer Identification Number and CUSIP numbers.
Estimate organizational costs and expenses and monitor against actual
disbursements.
B. Coordinate all communications and data collection with regard to any
regulatory examinations and yearly audits by independent accountants.
<PAGE>
EXHIBIT C
to
Mutual Fund Services Agreement
Description of Fund Accounting Services
---------------------------------------
I. General Description
-------------------
Unified shall provide the following accounting services to the Fund:
A. Calculate dividend and capital gain distributions in accordance with
distribution policies detailed in the Fund's Prospectus. Assist Fund
management in making final determinations of distribution amounts.
B. Estimate and recommend year-end dividend and capital gain distributions
necessary to establish Fund's status as a regulated investment company
("RIC") under Section 4982 of the Internal revenue Code of 1986, as amended
(the "Code") regarding minimum distribution requirements.
C. Assist the Fund's public accountants or other professionals in preparing
and file Fund's Federal tax return on Form 1120-RIC along with all state
and local tax returns where applicable. Also assist in Preparing and filing
Federal Excise Tax Return (Form 8613).
D. Maintain the books and records and accounting controls for the Fund's
assets, including records of all securities transactions.
E. Calculate each Portfolio's net asset value in accordance with the
Prospectus and (once the Portfolio meets eligibility requirements) transmit
to NASDAQ and to such other entities as directed by the Fund.
F. Account for dividends and interest received and distributions made by the
Fund.
G. Prepare Fund or Portfolio expense projections, establish accruals and
review on a periodic basis, including expenses based on a percentage of
Fund's average daily net assets (advisory and administrative fees) and
expenses based on actual charges annualized and accrued daily (audit fees,
registration fees, directors' fees, etc.).
H. Produce transaction data, financial reports and such other periodic and
special reports as the Board may reasonably request.
I. Liaison with the Fund's independent auditors.
J. Monitor and administer arrangements with the Fund's Custodian and
depository banks.
K. A listing of reports that will be available to the Fund is included below.
II. Daily Reports
-------------
A. General Ledger Reports
1. Trial Balance Report
2. General Ledger Activity Report
<PAGE>
B. Portfolio Reports
1. Portfolio Report
2. Cost Lot Report
3. Purchase Journal
4. Sell/Maturity Journal
5. Amortization/Accretion Report
6. Maturity Projection Report
C. Pricing Reports
1. Pricing Report
2. Pricing Report by Market Value
3. Pricing Variance by % Change
4. NAV Report
5. NAV Proof Report
6. Money Market Pricing Report
D. Accounts Receivable/Payable Reports
1. Accounts Receivable for Investments Report
2. Accounts Payable for Investments Report
3. Interest Accrual Report
4. Dividend Accrual Report
E. Other Reports
1. Dividend Computation Report
2. Cash Availability Report
3. Settlement Journal
III. Monthly Reports
---------------
Standard Reports
1. Cost Proof Report
2. Transaction History Report
3. Realized Gain/Loss Report
4. Interest Record Report
5. Dividend Record Report
6. Broker Commission Totals
7. Broker Principal Trades
8. Shareholder Activity Report
9. Fund Performance Report
10. SEC Yield Calculation Work Sheet (fixed-income funds only)
<PAGE>
EXHIBIT D
to
Mutual Fund Services Agreement
Description of Transfer Agency Services
---------------------------------------
The following is a general description of the transfer agency services
Unified shall provide to the Fund.
A. Shareholder Recordkeeping. Maintain records showing for each Fund
shareholder the following: (i) name, address and tax identifying number;
(ii) number of shares of each Portfolio; (iii) historical information
including, but not limited to, dividends paid and date and price of all
transactions including individual purchases and redemptions; and (iv) any
dividend reinvestment order, application, dividend address and
correspondence relating to the current maintenance of the account.
B. Shareholder Issuance. Record the issuance of shares of each Portfolio.
Except as specifically agreed in writing between Unified and the Fund,
Unified shall have no obligation when countersigning and issuing and/or
crediting shares to take cognizance of any other laws relating to the issue
and sale of such shares except insofar as policies and procedures of the
Stock Transfer Association recognize such laws.
C. Purchase Orders. Process all orders for the purchase of shares of the Fund
in accordance with the Fund's current registration statement. Upon receipt
of any check or other payment for purchase of shares of the Fund from an
investor, Unified will (i) stamp the envelope with the date of receipt,
(ii) forthwith process the same for collection, (iii) determine the amounts
thereof due the Fund, and notify the Fund of such determination and
deposit, such notification to be given on a daily basis of the total
amounts determined and deposited to the Fund's custodian bank account
during such day. Unified shall then credit the share account of the
investor with the number of Portfolio shares to be purchased made on the
date such payment is received by Unified, as set forth in the Fund's
current prospectus and shall promptly mail a confirmation of said purchase
to the investor, all subject to any instructions which the Fund may give to
Unified with respect to the timing or manner of acceptance of orders for
shares relating to payments so received by it.
D. Redemption Orders. Receive and stamp with the date of receipt all requests
for redemptions or repurchase of shares held in certificate or
non-certificate form, and process redemptions and repurchase requests as
follows: (i) if such certificate or redemption request complies with the
applicable standards approved by the Fund, Unified shall on each business
day notify the Fund of the total number of shares presented and covered by
such requests received by Unified on such day; (ii) on or prior to the
seventh calendar day succeeding any such requests received by Unified,
Unified shall notify the Custodian, subject to instructions from the Fund,
to transfer monies to such account as designated by Unified for such
payment to the redeeming shareholder of the applicable redemption or
repurchase price; (iii) if any such certificate or request for redemption
or repurchase does not comply with applicable standards, Unified shall
promptly notify the investor of such fact, together with the reason
therefor, and shall effect such redemption at the Fund's price next
determined after receipt of documents complying with said standards, or, at
such other time as the Fund shall so direct.
E. Telephone Orders. Process redemptions, exchanges and transfers of Fund
shares upon telephone instructions from qualified shareholders in
accordance with the procedures set forth in the Fund's current Prospectus.
Unified shall be permitted to redeem, exchange and/or transfer Fund shares
from any account for which such services have been authorized.
<PAGE>
F. Transfer of Shares. Upon receipt by Unified of documentation in proper form
to effect a transfer of shares, including in the case of shares for which
certificates have been issued the share certificates in proper form for
transfer, Unified will register such transfer on the Fund's shareholder
records maintained by Unified pursuant to instructions received from the
transferor, cancel the certificates representing such shares, if any, and
if so requested, countersign, register, issue and mail by first class mail
new certificates for the same or a smaller whole number of shares.
G. Shareholder Communications and Meetings. Address and mail all
communications by the Fund to its shareholders promptly following the
delivery by the Fund of the material to be mailed. Prepare shareholder
lists, mail and certify as to the mailing of proxy materials, receive the
tabulated proxy cards, render periodic reports to the Fund on the progress
of such tabulation, and provide the Fund with inspectors of election at any
meeting of shareholders.
H. Returned checks. In the event that any check or other order for the payment
of money is returned unpaid for any reason, Unified will take such steps,
including redepositing the check for collection or returning the check to
the investor, as Unified may, at its discretion, deem appropriate and
notify the Fund of such action, or as the Fund may instruct.
I. Shareholder Correspondence. Acknowledge all correspondence from
shareholders relating to their share accounts and undertake such other
shareholder correspondence as may from time to time be mutually agreed
upon.
<PAGE>
EXHIBIT E
to
MUTUAL FUND SERVICES AGREEMENT
TRANSFER AGENCY FEE SCHEDULE
- ----------------------------
The prices contained herein are effective for twelve months from the
execution date of the Transfer Agency contract.
I CONVERSION FEE: Manual conversion/new fund establishment - fee not to exceed
- ----------------
$1,500 per portfolio. Electronic conversions - $2.00 per shareholder
account with a $5,000 minimum fee.
II STANDARD BASE FEE FOR STANDARD BASE SERVICES
- -----------------------------------------------
The Base Fee1 is $16.00 for money market funds and $14.00 for equity/bond
funds per active Shareholder Account per year with a minimum fee of
$15,0002 per initial portfolio and/or share classes per year plus $9,0002
per year for each additional portfolio/share class. An Active Shareholder
Account is any Shareholder Account existing on Transfer Agent's
computerized files with a non-zero Share balance. There is a $.40 per
account charge for any account with a zero share balance for the current
month, as determined on the last day of each month. The base fee will be
billed on a monthly basis.
1 The Base Fee does not include: forms design and printing, statement
production, envelope design and printing, postage and handling,
shipping, statement microfiche copies and 800 number access to
Unified's shareholder services group.
2 Discount based on total assets per portfolio and/or share class:
$0 - 2 Million 50%
$2 - 5 Million 25%
$5 Plus Million 0%
Unified will provide lost account search services in connection of SEC
Rules 17Ad-17 and 17a-24 at a cost of $2.50 per account searched. These
"Electronic Data Search Services" will be performed on a semi-annual basis.
This service will apply to only Active Shareholder Accounts maintained on
the transfer agency system coded as RPO accounts.
In addition to the above fees, there will be a $500.00 minimum fee/rerun
charge when the nightly processing has be repeated due to incorrect NAV or
dividend information received from the Fund Accountant/Portfolio Pricing
Agent as a result of incorrect information provided by the Fund's
Investment Adviser or Investment Managers.
III STANDARD SERVICES PROVIDED
- -------------------------------
-Open new accounts
-Maintain Shareholder accounts
INCLUDING:
-Change addresses
-Prepare daily reports on number of Shares, accounts
-Prepare Shareholder federal tax information
-Withhold taxes on U.S. resident and non-resident alien accounts
-Reply to Shareholder calls and correspondence other than that for
Fund information and related inquiries
-Process purchase of Shares
-Process partial and complete redemptions
-Process regular and legal transfer of accounts
-Mail semi-annual and annual reports
-Process dividends and distributions
-Prepare Shareholder meeting lists
<PAGE>
-Process one proxy per year per fund. Tabulation is limited to three.
-Receive and tabulate proxies
-Confirm all transactions as provided by the terms of each Shareholder's
account
-Provide a system which will enable Fund to monitor the total number of
Shares sold in each state. System has capability to halt sales and warn of
potential oversell. (Blue Sky Reports)
-Determine/Identify lost Shareholder accounts
IV STANDARD REPORTS AVAILABLE
- -----------------------------
Unified Fund Services, Inc.
-12b-1 Disbursement Report
-12b-1 Disbursement Summary
-Dealer Commission Report
-Dealer Commission Summary Report
-Exchange Activity Report
-Fees Paid Summary Report
-Fund Accrual Details
-Holdings by Account Type
-Posting Details
-Posting Summary
-Settlement Summary
-Tax Register
-Transactions Journal
<TABLE>
<CAPTION>
V NSCC INTERFACES
- ------------------
<S> <C>
-Fund/Serv and/or Networking set-up $1,000
-Fund/Serv processing $100 per month
-Networking processing $150 per month
-Fund/Serv transactions $0.35 per trade
-Direct Networking expenses
Per item $0.025 Monthly dividend fund
Per item $0.015 Non-monthly dividend fund
VI ADDITIONAL FEES FOR SERVICES OUTSIDE THE STANDARD BASE
- ----------------------------------------------------------
-Interactive Voice Response System Set-up Pass through
-Archiving of old records/storage of aged records Pass through
-Off-line Shareholder research $25/hour (Billed to customer account)
-Check copies $3/each (Billed to customer account)
-Statement copies $5/each (Billed to customer account)
-Mutual Fund fulfillment/prospect file maintenance $1.00/item
-Shareholder communications charges (Faxes) Pass through
-Leased line/equipment on TA's computer system Pass through
-Dial-up access to TA's computer system Pass through
-Labels $.05 ea/$100 minimum
-Monthly Director's Reports $25/mo/portfolio
-AD-HOC REPORTWRITER Report Generation $50.00 per report
-Bank Reconciliation Service $50.00 monthly maintenance fee per bank account
$1.50 per bank item
-Systems Programming Labor Charges:
Programmers or Consultants $125.00/hour
Officers $150.00/hour
-Additional Proxy Processing:
Each processing $225.00 fixed charge per processing
Preparation and Tabulation $0.145/proxy issued
(includes 3 tabulations, sixteen
propositions)
Each Extra Tabulation $23.00 fixed charge per processing
$0.02 per proxy tabulated
</TABLE>
<PAGE>
FUND ACCOUNTING FEE SCHEDULE
STANDARD FEE
- ------------
0.05% for the first $50 million in total fund assets;
0.04% from $50 million to $100 million in total fund assets;
0.03% over $100 million in total fund assets.
Out of Pocket Fees: Fees charged for outside pricing services and all
accompanying administrative expenditures.
Subject to a $18,0001 annual minimum per portfolio (one share class) plus
$7,5001 per additional share class. Fees are billed on a monthly basis.
1 Discount based on assets per portfolio and/or share class:
$0 - 2 Million 50%
$2 - 5 Million 25%
$5 Million Plus 0%
<TABLE>
<CAPTION>
OPTIONAL SERVICES AVAILABLE - INITIAL (FOR DESIRED SERVICES)
- ------------------------------------------------------------
<S> <C> <C>
__________ -Additional portfolio sub-adviser fee $10,000/portfolio
__________ -Multiple custodian fee $5,000/fund group
__________ -GNMA securities fee $2,500/portfolio
__________ -Quarterly financial statement preparation fee $5,000/portfolio
__________ -Creation of semi-annual and annual reports $3,000/fund group
__________ -Statistical reporting fee (ICI, Lipper, Donoghue, etc.) $100/report
__________ -Quarterly tax and compliance checklist $4,000/portfolio
__________ -Accrual calculations $2,500/fund group
__________ -S.E.C. audit requirements pass through
__________ -Processing of backup withholding $1,500/portfolio
</TABLE>
SPECIAL REPORT GENERATION FEES
- ------------------------------
AD-HOC Report Generation $75.00 per report
Reruns $75.00 per run
Extract Tapes $110.00 plus
SYSTEMS PROGRAMMING LABOR CHARGES
- ---------------------------------
System Support Representatives $100.00/hour
Programmers, Consultants or
Department Heads $125.00/hour
Officers $150.00/hour
DE-CONVERSION FEES
- ------------------
De-Conversion fees will be subject to additional charges commensurate with
particular circumstances and dependent upon scope of problems.
<PAGE>
FUND ADMINISTRATION SERVICES FEE SCHEDULE
STANDARD FEE
- ------------
0.03% in total fund assets*
*Subject to a $7,5001 annual minimum per portfolio (one share class) plus
$4,5001 per additional share class. Fees are billed on a monthly basis.
1 Discount based on assets per portfolio and/or share class:
$0 - 2 Million 50%
$2 - 5 Million 25%
$5 Million Plus 0%
<TABLE>
<CAPTION>
ADDITIONAL SERVICES AND FEES
- ----------------------------
<S> <C>
1. Assistance in preparation and filing for an exemptive order
or no action letter from the Securities and Exchange Commission $1,500 minimum
2. Assist in the preparation and filing of additional Fund's
Registration Statement on Form N1-A or any replacement thereof $500 minimum
3. Assistance in preparation, filing and vote compilation of
Proxy Statement for Special Shareholders Meeting. $10,000 minimum per Special Meeting
4. Assistance in Dissolution and Deregistration of the Fund
(including related Proxy Statement) $15,000 minimum
5. Reorganization/Merger of the Fund or portfolios (including
proxy statement and excluding tax opinion) $17,000 minimum
6. Such other duties related to the administration of the
Fund as agreed to by Unified Negotiable
</TABLE>
EXHIBIT 24(I)
DAVID JONES & ASSOC., P.C.
4747 Research Forest Drive,
Suite 180, # 303
The Woodlands, TX 77381
281-367-8409 (phone)
281-367-8401 (facsimile)
[email protected] (email)
The Timothy Plan April 27, 2000
1304 West Fairbanks Avenue
Winter Park, Florida 32789
Dear Sirs:
As counsel to The Timothy Plan, Inc. (the "Trust"), a business trust organized
under the laws of the State of Delaware, I have been asked to render my opinion
with respect to the issuance of an indefinite number of shares of beneficial
interest of the Trust (the "Shares") representing proportionate interests in the
the following series of the Trust (each a "Fund" and together the "Funds"):
The Timothy Plan Small-Cap Value Fund
The Timothy Plan Large/Mid-Cap Value Fund
The Timothy Plan Fixed Income Fund
The Timothy Plan Money Market Fund
The Timothy Plan Small-Cap Variable Series
The Timothy Plan Large/Mid-Cap Variable Series
The Timothy Plan Fixed Income Variable Series
The Shares of the Funds are separate series of the Trust consisting of one or
more classes of shares, all as more fully described in the Prospectus and
Statement of Additional Information contained in the Post-Effective Amendment #
10 to Registration Statement on Form N-1A, to which this opinion is an exhibit,
to be filed with the Securities and Exchange Commission.
I have examined the Trust's Declaration of Trust, By-Laws, the Prospectus and
Statement of Additional Information contained in the Post-Effective Amendment #
10 to Registration Statement, and such other documents, records and certificates
as deemed necessary for the purposes of this opinion.
Based on the foregoing, I am of the opinion that the Shares, when issued,
delivered and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, will be legally issued, fully paid, and
non-assessable by the Trust.
Further, I give my permission to include this opinion as an exhibit to the
Trust's Post-Effective Amendment # 10 to Registration Statement on Form N-1A.
Very Truly Yours,
David D. Jones
Attorney & Counselor at Law
