-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EAIxrA9B3IMusBD9Kx5z6V+iQNOABD7xErxf9u+yezcN9eOPLjDyBCh+/cL2GRzA GNmo7SN7iCpEaaIA47N9Fg== 0001193125-06-091108.txt : 20060427 0001193125-06-091108.hdr.sgml : 20060427 20060427163913 ACCESSION NUMBER: 0001193125-06-091108 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 30 FILED AS OF DATE: 20060427 DATE AS OF CHANGE: 20060427 EFFECTIVENESS DATE: 20060501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIMOTHY PLAN CENTRAL INDEX KEY: 0000916490 IRS NUMBER: 597016828 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-73248 FILM NUMBER: 06785780 BUSINESS ADDRESS: STREET 1: 1055 MAITLAND CENTER COMMONS CITY: MAITLAND STATE: FL ZIP: 32759 BUSINESS PHONE: 4076441986 MAIL ADDRESS: STREET 1: 1055 MAITLAND CENTER COMMONS CITY: MAITLAND STATE: FL ZIP: 32759 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIMOTHY PLAN CENTRAL INDEX KEY: 0000916490 IRS NUMBER: 597016828 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08228 FILM NUMBER: 06785781 BUSINESS ADDRESS: STREET 1: 1055 MAITLAND CENTER COMMONS CITY: MAITLAND STATE: FL ZIP: 32759 BUSINESS PHONE: 4076441986 MAIL ADDRESS: STREET 1: 1055 MAITLAND CENTER COMMONS CITY: MAITLAND STATE: FL ZIP: 32759 0000916490 S000004479 Timothy Small-Cap Value Fund C000012330 Timothy Small-Cap Value Fund Class A TPLNX C000012331 Timothy Small-Cap Value Fund Class B TIMBX C000012332 Timothy Small-Cap Value Fund Class C TSVCX 0000916490 S000004480 Timothy Large/Mip-Cap Value Fund C000012333 Timothy Large/Mip-Cap Value Fund Class A TLVAX C000012334 Timothy Large/Mip-Cap Value Fund Class B TLVBX C000012335 Timothy Large/Mip-Cap Value Fund Class C TLVCX 0000916490 S000004481 Timothy Fixed Income Fund C000012336 Timothy Fixed Income Fund Class A TFIAX C000012337 Timothy Fixed Income Fund Class B TFIBX C000012338 Timothy Fixed Income Fund Class C TFICX 0000916490 S000004482 Timothy Aggressive Growth Fund C000012339 Timothy Aggressive Growth Fund Class A TAAGX C000012340 Timothy Aggressive Growth Fund Class B TBAGX C000012341 Timothy Aggressive Growth Fund Class C TCAGX 0000916490 S000004483 Timothy Large/Mip-Cap Growth Fund C000012342 Timothy Large/Mip-Cap Growth Fund Class A TLGAX C000012343 Timothy Large/Mip-Cap Growth Fund Class B TLGBX C000012344 Timothy Large/Mip-Cap Growth Fund Class C TLGCX 0000916490 S000004484 Timothy Strategic Growth Fund C000012345 Timothy Strategic Growth Fund Class A TSGAX C000012346 Timothy Strategic Growth Fund Class B TSGBX C000012347 Timothy Strategic Growth Fund Class C TSGCX 0000916490 S000004485 Timothy Conservative Growth Fund C000012348 Timothy Conservative Growth Fund Class A TCGAX C000012349 Timothy Conservative Growth Fund Class B TCGBX C000012350 Timothy Conservative Growth Fund Class C TCVCX 0000916490 S000004486 Timothy Money Market Fund C000012351 Timothy Money Market Fund TPMXX 0000916490 S000004487 Timothy Patriot Fund C000012352 Timothy Patriot Fund Class A TPFAX C000012353 Timothy Patriot Fund Class C TPFCX 0000916490 S000011343 Timothy Small Cap Variable C000031435 Timothy Small Cap Variable 485BPOS 1 d485bpos.htm THE TIMOTHY PLAN FAMILY OF FUNDS PROSPECTUS The Timothy Plan Family of Funds Prospectus
Table of Contents

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON 04/27/2006

FILE NOS: 811-08228

33-73248

 


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.    [25]
and   
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940    x
Amendment No.    [26]
(Check appropriate box or boxes.)   

THE TIMOTHY PLAN

(Exact name of Registrant as Specified in Charter)

1055 Maitland Center Commons

Maitland, FL 32759

(Address of Principal Executive Office)

407-644-1986

(Registrant’s Telephone Number, including Area Code:)

ARTHUR D. ALLY, 1055 Maitland Center Commons

Maitland, FL 32759

(Name and Address of Agent for Service)

Please send copy of communications to:

DAVID D. JONES, ESQUIRE

395 Sawdust Road, #2148

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):

 

¨ immediately upon filing pursuant to paragraph (b)

 

x on May 1, 2006 pursuant to paragraph (b)

 

¨ 60 days after filing pursuant to paragraph (a)(1)

 

¨ on (date),pursuant to paragraph (a)(3)

 

¨ 75 days after filing pursuant to paragraph (a)(2)

 

¨ on                      pursuant to paragraph (a)(2) of rule 485

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 Trust’s fiscal year ended December 31, 2005 was filed on March 22, 2006.

 



Table of Contents

LOGO

Prospectus

MAY 01, 2006

Timothy Plan Family of Funds:

Aggressive Growth Fund

Large/Mid-Cap Growth Fund

Small-Cap Value Fund

Large/Mid-Cap Value Fund

Patriot Fund

Fixed-Income Fund

Money Market Fund

Strategic Growth Fund

Conservative Growth Fund


Table of Contents

(This page is not part of the prospectus.)


Table of Contents

Contents

 

4    The Basics About the Traditional Funds
4    Aggressive Growth Fund
6    Large/Mid-Cap Growth Fund
9    Small-Cap Value Fund
11    Large/Mid-Cap Value Fund
13    Patriot Fund
17    Fixed-Income Fund
19    Money Market Fund
21    Fees and Expenses
22    The Basics About the Asset Allocation Funds
23    Strategic Growth Fund
25    Conservative Growth Fund
27    Fees and Expenses
28    Additional Information
28    Interest Rate Risk
28    Credit Risk
28    Additional Expense & Tax Implications
28    Investing in the Funds
28    Determining Share Prices
29    Fair Value Pricing
29    Choosing the Class of Shares that is Best for You
29    Class A Shares
31    Class C Shares
31    Distribution Fees
32    Opening and Adding to Your Account
32    To Open an Account by Mail
33    Purchasing Shares by Wire Transfer
34    Purchases through Financial Service Organizations
34    Purchasing Shares by Automatic Investment Plan
34    Retirement Plans
34    Other Purchase Information
35    How to Sell (Redeem) Shares
37    Dividends and Distributions
38    Investment Adviser
38    Investment Managers
38    Aggressive Growth Fund
40    Large/Mid-Cap Growth Fund
40    Patriot Fund
40    Large/Mid-Cap Value Fund & Small-Cap Value Fund
41    Fixed-Income & Money Market Fund
41    Principal Underwriter
42    Federal Taxes
42    General Information
43    Financial Highlights
60    Privacy Policy
60    Customer Identification Program
60    For More Information
   Applications
   New Account Application
   Account Transfer Form

Timothy Plan

Family of Funds

(the “Trust”)

Prospectus May 01, 2006

This Prospectus offers the following series of the Trust (the “Traditional Funds”):

Timothy Plan Aggressive Growth Fund

Timothy Plan Large/Mid-Cap Growth Fund

Timothy Plan Small-Cap Value Fund

Timothy Plan Large/Mid-Cap Value Fund

Timothy Plan Patriot Fund

Timothy Plan Fixed-Income Fund

Timothy Plan Money Market Fund

And the following series of the Trust that invest in certain Traditional Funds (collectively, the “Asset Allocation Funds”):

Timothy Plan Strategic Growth Fund

Timothy Plan Conservative Growth 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 according to its own distinct investment objective. However, all the Funds have one thing in common: they employ a zero-tolerance policy against investing in any company that is involved in the business of alcohol production, tobacco production or casino gambling, or which is involved, either directly or indirectly, in abortion or pornography, or promoting anti-family entertainment or alternative lifestyles. Each Asset Allocation Fund invests the majority of its assets in a distinct group of Traditional Funds to provide a convenient way to allocate your investment among the Traditional Funds.

The Funds are distributed through Timothy Partners, Ltd.

1055 Maitland Center Commons, Suite 100, Maitland, Florida 32751.

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.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        3


Table of Contents

THE BASICS ABOUT THE TRADITIONAL FUNDS

The Timothy Plan believes that it has a responsibility to invest in a moral and ethical manner. Accordingly, none of our Funds invest in any company that is involved in the business of alcohol production, tobacco production, or casino gambling, or which is involved, either directly or indirectly, in abortion or pornography, or promoting anti-family entertainment or alternative lifestyles. Securities issued by companies engaged in these prohibited activities are excluded from the Funds’ portfolios and are referred to throughout this Prospectus as “Excluded Securities.” Under a zero-tolerance policy, 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 securities that are Excluded Securities, and reserves the right to exclude investments, in its best judgment, in other companies whose practices may not fall within the exclusions described above, but nevertheless could be found offensive to basic, traditional Judeo-Christian values. Further, if a company whose securities are being held by one of our Funds is discovered to be engaging in a prohibited practice, that security will be immediately sold.

Because none of our Funds will invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, each Fund’s pool of eligible investments may be limited to a certain degree. Although TPL believes that the Funds can achieve their investment objectives within the parameters of ethical investing, eliminating Excluded Securities as investments may have an adverse effect on a Fund’s performance and ongoing expenses. However, “total return” is more than just numbers. It is also investing in a way that supports and reflects your beliefs and ideals. All of our Funds strive to maximize both kinds of total return.

 

          Class A    Class C
   cusip number:    887432813    887432698
   ticker symbol:    TAAGX    TCAGX

TIMOTHY PLAN AGGRESSIVE GROWTH FUND

        

Investment objective

Long-term growth of capital.

Primary investment strategies

 

    Normally investing at least 80% of the Fund’s total assets in U.S. common stocks;

 

    Investing in securities of companies without regard to market capitalizations; and

 

    Investing its assets in the securities of a limited number of companies which the Fund’s investment manager believes show a high probability for superior growth.

Primary risks

 

1. General Risk- As 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. Larger Company Investing Risk- Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion.

 

4. Smaller Company Investing Risk- Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a Fund wants to sell a large quantity of a small-sized company’s stock, it may have to sell at a lower price than would otherwise be indicated, or it may have to sell in smaller than desired quantities over an increased time period.

 

5. Excluded Security Risk- Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other Funds that invest in a broader array of securities.

 

6. Growth Risks- The Fund invests in companies that appear to be growth-oriented companies. Growth companies are companies that the Fund’s investment manager believes will have revenue and earnings that grow faster than the economy as a whole, offering above-average prospects for capital appreciation and little or no emphasis on dividend income. If the investment manager’s perceptions of a company’s growth potential are wrong, the securities purchased may not perform as expected, reducing the Fund’s return.

 

7. Portfolio Turnover- The Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. As a result, the Fund may experience high portfolio turnover. Increased portfolio turnover may result in higher costs for brokerage commissions and other transaction costs and may also result in taxable capital gains.

 

4       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

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 significant amounts of volatility and risk.

Past performance

The following bar chart and table help show the risks of investing in shares of 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 Mid-Cap Growth Index during each period. You should be aware that the Fund’s past performance before and after taxes is not necessarily an indication of how the Fund will perform in the future. Also, performance figures do not reflect the effects of sales charges. If they did, returns would be lower.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        5


Table of Contents
          Class A    Class C
   cusip number:    887432813    887432698
   ticker symbol:    TAAGX    TCAGX

TIMOTHY PLAN AGGRESSIVE GROWTH FUND

        

Performance

Chart and Table (bar graph does not reflect the effect of sales charges.)

Year-by-year Annual Total Returns for Class A Shares

(for calendar years ending on December 31(1))

LOGO

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was 11.92%.

 

Best

Quarter

   Worst
Quarter
 

Jun-03

   Sep-01  

20.22%

   -26.86 %

Average Annual Total Returns

(for periods ending on December 31, 2005(1))

 

     Class A (1)  
     1 Year     3 Year     5 Year     10 Year    Since
Inception
 

Return without sales load and before taxes

   8.73 %   18.34 %   -1.98 %   N/A    -5.21 %

Return after taxes on distributions (2)

   2.60 %   16.12 %   -3.09 %   N/A    -6.23 %

Return after taxes on distributions and sale of shares (2)

   2.41 %   14.10 %   -2.54 %   N/A    -5.13 %

Russell Mid Cap Growth Index (3) (reflects no deduction for fees, expenses or taxes)

   12.10 %   22.70 %   1.38 %   N/A    -2.46 %

 

(1) Class A shares commenced investment operations on October 5, 2000. Returns do not reflect the effect of sales charges. If sales charges were included, the returns would be lower.

 

(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns displayed are for class A shares only, and after-tax returns for other classes will vary.

 

(3) The Russell Mid Cap Growth Index is a widely recognized, unmanaged index of mid-capitalization growth 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.

 

6       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents
          Class A    Class C
   cusip number:    887432789    887432680
   ticker symbol:    TLGAX    TLGCX

TIMOTHY PLAN LARGE/MID-CAP GROWTH FUND

        

Investment objective

Long-term growth of capital. Current income is not a significant investment consideration and any such income realized will be considered incidental to the Fund’s investment objective.

Primary investment strategies

 

    Primarily investing in equity securities with market capitalization in excess of $2 billion;

 

    Normally investing at least 80% of the Fund’s assets in a portfolio of securities which includes a broadly diversified number of U.S. equity securities that the Fund’s investment manager believes show a high probability of superior prospects for above average growth. The Fund’s investment manager chooses these securities using a “bottoms up” approach of extensively analyzing the financial, management, and overall economic conditions of each potential investment.

Primary risks

 

1. General Risk- As 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. Excluded Security Risk- Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other Funds that invest in a broader array of securities.

 

4. Growth Risks- The Fund invests in companies that appear to be growth-oriented companies. Growth companies are companies that the Fund’s investment manager believes will have revenue and earnings that grow faster than the economy as a whole, offering above-average prospects for capital appreciation and little or no emphasis on dividend income. If the Fund’s investment manager’s perceptions of a company’s growth potential are wrong, the securities purchased may not perform as expected, reducing the Fund’s return.

 

5. Larger Company Investing Risk- Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion.

 

6. Mid-Sized Company Investing Risk- Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a Fund wants to sell a large quantity of a small-sized company’s stock, it may have to sell at a lower price than would otherwise be indicated, or it may have to sell in smaller than desired quantities over an increased time period.

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.

Past performance

The following bar chart and table help show the risks of investing in shares of 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 1000 Growth Index during each period. You should be aware that the Fund’s past performance before and after taxes is not necessarily an indication of how the Fund will perform in the future. Also, performance figures do not reflect the effects of sales charges. If they did, returns would be lower.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        7


Table of Contents
          Class A    Class C
   cusip number:    887432789    887432680
   ticker symbol:    TLGAX    TLGCX

TIMOTHY PLAN LARGE/MID-CAP GROWTH FUND

        

Performance

Chart and Table (bar graph does not reflect the effect of sales charges.)

Year-by-year Annual Total Returns for Class A Shares

(for calendar years ending on December 31(1))

LOGO

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was 4.34%.

 

Best

Quarter

   Worst
Quarter
 

Dec-01

   Mar-01  

16.48%

   -24.07 %

Average Annual Total Returns

(for periods ending on December 31, 2005(1))

 

     Class A (1)  
     1 Year     3 Year     5 Year     10 Year    Since
Inception
 

Return without sales load and before taxes

   3.44 %   10.42 %   -6.00 %   N/A    -6.78 %

Return after taxes on distributions (2)

   -1.98 %   8.48 %   -7.01 %   N/A    -7.73 %

Return after taxes on distributions and sale of shares (2)

   -1.29 %   7.30 %   -5.81 %   N/A    -6.39 %

Russell 1000 Growth Index (3) (reflects no deduction for fees, expenses or taxes)

   5.26 %   13.23 %   -3.58 %   N/A    -7.39 %

 

(1) Class A shares commenced investment operations on October 5, 2000. Returns do not reflect the effect of sales charges. If sales charges were included, the returns would be lower.

 

(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns displayed are for class A shares only, and after-tax returns for other classes will vary.

 

(3) The Russell 1000 Growth Index is a widely recognized, unmanaged index of 1000 large-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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Table of Contents
          Class A    Class C
   cusip number:    887432409    887432839
   ticker symbol:    TPLNX    TSVCX

TIMOTHY PLAN SMALL-CAP VALUE FUND

        

Investment objective

Long-term capital growth, with a secondary objective of current income.

Primary investment strategies

 

    The Fund seeks to achieve its objectives by primarily investing at least 80% in U.S. small-cap stocks. Small-Cap stocks refer to the common stock of smaller companies-companies whose total market capitalization is generally less than $2 billion.

 

    In determining whether to invest in a particular company, the Fund’s investment manager focuses on a number of different attributes of the company, including the company’s market expertise, balance sheet, improving return on equity, price to earnings ratios, industry position and strength, management and a number of other factors. Analyzing companies in this manner is known as a “bottoms up” approach to investing.

 

    The Fund may invest in equity securities of foreign issuers in the form of American Depositary Receipts (“ADRs”). ADRs are certificates held in trust by a U.S. bank or trust company evidencing ownership of shares of foreign-based issuers, and are an alternative to purchasing foreign securities in their national market and currency.

Primary risks

 

1. General Risk- As 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. Smaller Company Investing Risk- Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a Fund wants to sell a large quantity of a small-sized company’s stock, it may have to sell at a lower price than would otherwise be indicated, or it may have to sell in smaller than desired quantities over an increased time period.

 

4. Excluded Security Risk- Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other Funds that invest in a broader array of securities.

 

5. Foreign Risk- The Fund’s investments in foreign securities may experience more rapid and extreme changes in value than funds with investments solely in securities of U.S. companies. This is because of the securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Foreign issuers are not subject to the same degree of regulation as U.S. issuers. Also, nationalization, expropriation or confiscatory taxation or political changes could adversely affect the Fund’s investments in a foreign country. There is a risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the Fund’s investments in foreign securities.

 

6. “Value” Investing Risk- The Fund invests in companies that appear to be value-oriented companies. If a Portfolio’s perceptions of a company’s inherent value are wrong, the securities purchased may not perform as expected, reducing the Portfolio’s return. Further, “value” stocks, in general, may lose favor in the market and under perform other types of securities.

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.

Past performance

The following bar chart and table help show the risks of investing in shares of 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 before and after taxes is not necessarily an indication of how the Fund will perform in the future. Also, performance figures do not reflect the effects of sales charges. If they did, returns would be lower.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        9


Table of Contents
          Class A    Class C
   cusip number:    887432409    887432839
   ticker symbol:    TPLNX    TSVCX

TIMOTHY PLAN SMALL-CAP VALUE FUND

        

Performance

Chart and Table (bar graph does not reflect the effect of sales charges.)

Year-by-year Annual Total Returns for Class A Shares

(for calendar years ending on December 31(1))

LOGO

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was 11.53%.

 

Best

Quarter

   Worst
Quarter
 

Jun-03

   Sep-98  

20.35%

   -23.18 %

Average Annual Total Returns

(for periods ending on December 31, 2005(1))

 

     Class A (1)  
     1 Year     3 Year     5 Year     10 Year  

Return without sales load and before taxes

   -1.01 %   15.32 %   6.31 %   7.60 %

Return after taxes on distributions (2)

   -6.34 %   12.52 %   4.74 %   6.34 %

Return after taxes on distributions and sale of shares (2)

   -3.83 %   11.34 %   4.37 %   5.91 %

Russell 2000 Index (3) (reflects no deduction for fees, expenses or taxes)

   4.55 %   22.13 %   8.22 %   9.25 %

 

(1) Class A shares commenced investment operations on March 24, 1994. Returns do not reflect the effect of sales charges. If sales charges were included, the returns would be lower.

 

(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns displayed are for class A shares only, and after-tax returns for other classes will vary.

 

(3) 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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Table of Contents
          Class A    Class C
   cusip number:    887432607    887432805
   ticker symbol:    TLVAX    TLVCX

TIMOTHY PLAN LARGE/MID-CAP VALUE FUND

        

Investment objective

Long-term capital growth, with a secondary objective of current income.

Primary investment strategies

 

    The Fund seeks to achieve its objectives by primarily investing in U.S. common stocks. The Fund will normally invest at least 80% of its assets in companies whose total market capitalization exceeds $2 billion.

 

    In determining whether to invest in a particular company, the Fund’s investment manager focuses on a number of different attributes of the company, including the company’s market expertise, balance sheet, improving return on equity, price to earnings ratios, industry position and strength, management, and a number of other factors. Analyzing companies in this manner is known as a “bottoms up” approach to investing.

Primary risks

 

1. General Risk- As 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. Larger Company Investing Risk- Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion.

 

4. Mid-Sized Company Investing Risk- Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a Fund wants to sell a large quantity of a small-sized company’s stock, it may have to sell at a lower price than would otherwise be indicated, or it may have to sell in smaller than desired quantities over an increased time period.

 

5. Excluded Security Risk- Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other Funds that invest in a broader array of securities.

 

6. “Value” Investing Risk- The Fund invests in companies that appear to be value-oriented companies. If a Portfolio’s perceptions of a company’s inherent value are wrong, the securities purchased may not perform as expected, reducing the Portfolio’s return. Further, “value” stocks, in general, may lose favor in the market and under perform other types of securities.

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.

Past performance

The following bar chart and table help show the risks of investing in shares of 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 S&P 500 Index during each period. You should be aware that the Fund’s past performance before and after taxes is not necessarily an indication of how the Fund will perform in the future. Also, performance figures do not reflect the effects of sales charges. If they did, returns would be lower.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        11


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          Class A    Class C
   cusip number:    887432607    887432805
   ticker symbol:    TLVAX    TLVCX

TIMOTHY PLAN LARGE/MID-CAP VALUE FUND

        

Performance

Chart and Table (bar graph does not reflect the effect of sales charges.)

Year-by-year Annual Total Returns for Class A Shares

(for calendar years ending on December 31(1))

LOGO

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was 8.01%.

 

Best

Quarter

   Worst
Quarter
 

Jun-03

   Sep-02  

17.72%

   -18.73 %

Average Annual Total Returns

(for periods ending on December 31, 2005(1))

 

     Class A (1)  
     1 Year     3 Year     5 Year     10 Year    Since
Inception
 

Return without sales load and before taxes

   19.42 %   18.46 %   7.00 %   N/A    6.82 %

Return after taxes on distributions (2)

   10.76 %   15.53 %   5.37 %   N/A    5.52 %

Return after taxes on distributions and sale of shares (2)

   11.78 %   14.20 %   5.04 %   N/A    5.11 %

S&P 500 Index (3) (reflects no deduction for fees, expenses or taxes)

   4.91 %   14.39 %   0.54 %   N/A    -0.20 %

 

(1) Class A shares commenced investment operations on July 14, 1999. Returns do not reflect the effect of sales charges. If sales charges were included, the returns would be lower.

 

(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns displayed are for class A shares only, and after-tax returns for other classes will vary.

 

(3) The S&P 500 Index is a widely recognized, unmanaged index of common stock prices. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses.

 

12       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents
          Class A    Class C
   cusip number:    887432656    887432649
   ticker symbol:    TPFAX    TPFCX

THE TIMOTHY PLAN PATRIOT FUND

        

Investment objective

Long-term capital growth.

Primary investment strategies

The primary strategy of this Fund is to seek out and invest in companies whose products and services represent the core strengths of America’s economy and are critical to the long term economic well being of the country. Knowing full well that such a strategy is inherently broad and subject to varying interpretations, the Fund’s Advisor and Investment Manager have designated the following industries (“core industries”) as having the most continuing and critical impact on the overall well being of America:

Agriculture: This industry feeds not only America but a large portion of the rest of the world;

Defense: This industry equips our armed forces;

Energy: Energy companies fuel America, and support of their efforts to make America less dependent on foreign energy sources enhances America.

Financial Services: This industry enables the free flow of capital to build America’s economy.

Health Care: This industry supplies medical products and services that enhance and protect the physical and mental health of all Americans;

Manufacturing: This industry provides durable goods that benefit all Americans; and

Technology: This industry supplies computers, software, telecommunications and software, assisting this country to be among the most economically productive in the world;

The Fund will limit its investments to US domestic companies that are involved in one or more of the above-described core industries and their related industries (for example, the pharmaceutical industry would be considered a related industry of Health Care). Also, investment preference will be given to companies within a given core industry that supply products and/or services to the United States Government under a direct contractual relationship.

The Fund will also:

Always refrain from investing in Excluded Securities;

 

    Normally invest at least 80% of the Fund’s total assets in the common stocks of U.S. domestic companies that operate within one or more target industries;

 

    Normally invest in securities of companies without regard to market capitalizations;

 

    Limit investments in any one target industry or groups of related industries to not more than 25% of the Fund’s total assets.

 

    Normally invest its assets in the securities of companies within target industries which the Fund’s investment manager believes show a high probability for superior growth.

 

    In determining whether to invest in a particular company, the Fund’s investment manager focuses on a number of different attributes of the company, including the company’s market expertise, balance sheet, improving return on equity, price to earnings ratios, industry position and strength, management and a number of other factors. Analyzing companies in this manner is known as a “bottoms up” approach to investing. Portfolio holdings will be sold when valuations change or when price appreciation targets are achieved.

The Fund’s investment objective and primary investment strategies are not fundamental and may be changed by the Board upon sixty (60) days notice to shareholders.

Primary risks

 

1. General Risk- As 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- Although the Patriot Fund is not limited to a particular capitalization sector, Awad Asset Management, Inc. has historically focused on investments in small-cap 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.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        13


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4. Large/Mid Cap Risk- Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion.

 

5. Management Risk- The risk that poor securities selection will cause the fund Io under perform other funds with similar objectives.

 

6. Excluded Security Risk- Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other Funds that invest in a broader array of securities.

 

7. Portfolio Turnover- The Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. As a result, the Fund may experience high portfolio turnover. Increased portfolio turnover may result in higher costs for brokerage commissions and other transaction costs and may also result in taxable capital gains.

 

8. Focused Portfolio Risk- Because this Fund limits the scope of its investments to a relatively few industries, the Fund may be riskier and more susceptible to loss than a fund that invests in a more diversified manner.

 

14       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents
          Class A    Class C
   cusip number:    887432656    887432649
   ticker symbol:    TPFAX    TPFCX

THE TIMOTHY PLAN PATRIOT FUND

        

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 significant amounts of volatility and risk.

Past performance

The following bar chart and table help show the risks of investing in shares of 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 S&P 500 Index during each period. You should be aware that the Fund’s past performance before and after taxes is not necessarily an indication of how the Fund will perform in the future. Also, performance figures do not reflect the effects of sales charges. If they did, returns would be lower.

LOGO

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was 9.53%.

 

Best

Quarter

   Worst
Quarter
 

Sep-05

   Mar-05  

3.17%

   -6.27 %

Average Annual Total Returns

 

     Class A (1)  
     1 Year     3 Year    5 Year    10 Year    Since
Inception
 

Return without sales load and before taxes

   0.66 %   N/A    N/A    N/A    3.57 %

Return after taxes on distributions (2)

   -4.59 %   N/A    N/A    N/A    0.29 %

Return after taxes on distributions and sale of shares (2)

   -2.98 %   N/A    N/A    N/A    0.24 %

S&P 500 Index (3) (reflects no deduction for fees, expenses or taxes)

   4.91 %   N/A    N/A    N/A    13.04 %

 

(1) Class A shares commenced investment operations on May 05, 2004. Returns do not reflect the effect of sales charges. If sales charges were included, the returns would be lower.

 

(2)

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        15


Table of Contents
 

who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns displayed are for class A shares only, and after-tax returns for other classes will vary.

 

(3) The S&P 500 Index is a widely recognized, unmanaged index of common stock prices. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses.

 

16       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents
          Class A    Class C
   cusip number:    887432888    887432862
   ticker symbol:    TFIAX    TFICX

TIMOTHY PLAN FIXED INCOME FUND

        

Investment objective

To generate a high level of current income consistent with prudent investment risk.

Primary investment strategies

 

    To achieve its goal, the Fund normally invests in a diversified portfolio of debt securities. These include corporate bonds, U.S. government and agency securities, convertible securities and preferred securities. The investment manager will only purchase securities for the Fund that are investment grade, with a rating of at least “BBB” as rated by Standard & Poor’s 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. The Fund has adopted a non-fundamental investment policy that under normal circumstances will invest at least 80% of its assets in fixed income securities. This policy may not be changed without at least 60 days prior written notice to Fund shareholders.

 

    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- As 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. The degree of risk for a particular security may be reflected in its credit rating. Bonds rated at the time of purchase BBB by Standard & Poor’s or, unrated, but determined to be of comparable quality by the investment manager, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities.

 

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.

 

5. Excluded Security Risk- Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier that other Funds that invest in a broader array of securities.

Who should buy this Fund

This Fund is appropriate for investors who want a high level of current income and are willing to accept a minor degree of volatility and risk.

Past performance

The following bar chart and table help show the risks of investing in shares of 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 Dow Jones Bond and the Salomon BIG Index during each period. You should be aware that the Fund’s past performance before and after taxes is not necessarily an indication of how the Fund will perform in the future. Also, performance figures do not reflect the effects of sales charges. If they did, returns would be lower.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        17


Table of Contents
          Class A    Class C
   cusip number:    887432888    887432862
   ticker symbol:    TFIAX    TFICX

TIMOTHY PLAN FIXED INCOME FUND

        

Performance

Chart and Table (bar graph does not reflect the effect of sales charges.)

LOGO

Year-by-year Annual Total Returns for Class A Shares

(for calendar years ending on December 31(1))

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was -0.65%.

 

Best

Quarter

   Worst
Quarter
 

Sep-02

   Mar-00  

5.98%

   -1.25 %

Average Annual Total Returns

(for periods ending on December 31, 2005(1))

 

     Class A (1)  
     1 Year     3 Year     5 Year     10 Year    Since
Inception
 

Return without sales load and before taxes

   1.11 %   3.40 %   5.34 %   N/A    4.38 %

Return after taxes on distributions (2)

   -4.37 %   0.86 %   3.09 %   N/A    2.24 %

Return after taxes on distributions and sale of shares (2)

   -2.03 %   1.17 %   3.06 %   N/A    2.31 %

Salomon Brother BIG Index (3) (indices reflect no deduction for fees, expenses or taxes)

   2.57 %   3.74 %   5.93 %   N/A    6.54 %

 

(1) Class A shares commenced investment operations on July 14, 1999. Returns do not reflect the effect of sales charges. If sales charges were included, the returns would be lower.

 

(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns displayed are for class A shares only, and after-tax returns for other classes will vary.

 

(3) The Salomon Brothers BIG Index is a widely recognized index comprised of corporate, mortgage-backed, and asset-based bonds. 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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          No-Load
   cusip number:    887432821
   ticker symbol:    TPMXX

TIMOTHY PLAN MONEY MARKET FUND

     

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.

Primary investment strategies

 

    The Fund invests primarily in short-term debt 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 that have a rating of at least “AA” by Standard & Poor’s 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

 

1. 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.

 

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 its holdings are downgraded in credit rating or go into default. Accordingly, the Fund will only invest in investment-grade bonds.

 

4. Excluded Security Risk- Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier that other Funds that invest in a broader array of securities.

Who should buy this Fund

The Fund is appropriate for investors who are seeking a high level of current income and preservation of capital.

Past performance

The following bar chart and table help show the risks of investing in shares of the Fund by showing changes in the Fund’s yearly performance over the lifetime of the Fund. Of course, the Fund’s past performance is not necessarily an indication of its future performance.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        19


Table of Contents
          No-Load
   cusip number:    887432821
   ticker symbol:    TPMXX

TIMOTHY PLAN MONEY MARKET FUND

     

Performance

Chart and Table (bar graph does not reflect the effect of sales charges)

Year-by-year Annual Total Returns for No-load Shares

(for calendar years ending on December 31(1))

LOGO

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was 0.87%.

Average Annual Total Returns

(for periods ending on December 31, 2005 (1))

 

     1 Year     3 Year     5 Year     10 Year    Since
Inception
 

Return without sales load and before taxes

   2.48 %   1.34 %   1.63 %   N/A    2.35 %

Return with sales load

   N/A     N/A     N/A     N/A    N/A  

Return after taxes on distributions (2)

   1.60 %   0.91 %   1.05 %   N/A    1.47 %

Return after taxes on distributions and sale of shares (2)

   1.60 %   0.91 %   1.05 %   N/A    1.47 %

 

(1) Money Market Fund commenced investment operations on July 12, 1999.

 

(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

To obtain the Fund’s current 7-day yield, call the Fund toll-free at 1-800-662-0201.

An investment in the Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government 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.

 

20       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


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FEES AND EXPENSES

The tables that follow describe the fees and expenses you may pay if you buy and hold Class A or Class C shares of the Timothy Plan Small-Cap Value Fund (“Small”), Timothy Plan Large/Mid-Cap Value Fund (“Mid”), Timothy Plan Aggressive Growth Fund (“Aggr”), Timothy Plan Large/Mid-Cap Growth Fund (“Large”), The Timothy Plan Patriot Fund (“Patriot”), and Timothy Plan Fixed-Income Fund (“Fixed”). The Timothy Plan Money Market Fund (“MM”) offers only No-Load shares.

 

Shareholder Transaction Expenses

(fees paid directly from your
investment)

   Class A     Class C    

No-Load

MM

   Small     Mid     Aggr     Large     Patriot     Fixed     Small     Mid     Aggr     Large     Patriot     Fixed    

Maximum sales charge (load) on purchases (as percentage of offering price)

   5.25 %   5.25 %   5.25 %   5.25 %   5.25 %   4.25 %   None     None     None     None     None     None     None

Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds)

   None     None     None     None     None     None     1.00 %   1.00 %   1.00 %   1.00 %   1.00 %   1.00 %   None

Redemption Fees (1)

   None     None     None     None     None     None     None     None     None     None     None     None     None

Exchange Fees

   None     None     None     None     None     None     None     None     None     None     None     None     None

 

* Other Expenses are estimated in good faith for the Fund’s first year of operations.

 

Annual Fund Operating Expenses

(expenses that are deducted from fund
assets)

   Class A     Class C    

No-Load

MM

 
   Small     Mid     Aggr     Large     Patriot     Fixed     Small     Mid     Aggr     Large     Patriot     Fixed    

Management fees

   0.85 %   0.85 %   0.85 %   0.85 %   0.85 %   0.60 %   0.85 %   0.85 %   0.85 %   0.85 %   0.85 %   0.60 %   0.60 %

Service & distribution (12b-1) fees

   0.25 %   0.25 %   0.25 %   0.25 %   0.25 %   0.25 %   1.00 %   1.00 %   1.00 %   1.00 %   1.00 %   1.00 %   0.00 %

Other expenses (2)

   0.46 %   0.45 %   0.49 %   0.50 %   0.72 %   0.46 %   0.46 %   0.45 %   0.49 %   0.50 %   0.72 %   0.47 %   0.53 %
                                                                              

Total fund operating expenses

   1.56 %   1.55 %   1.59 %   1.60 %   1.82 %   1.31 %   2.31 %   2.30 %   2.34 %   2.35 %   2.57 %   2.07 %   1.13 %
                                                                              

(before reimbursement by TPL)

                          

(Reimbursement)/Recoupment

   0.00 %   0.00 %   0.01 %   0.00 %   -0.22 %   0.04 %   0.00 %   0.00 %   0.01 %   0.00 %   -0.22 %   0.03 %   -0.47 %
                                                                              

Total annual fund operating expenses (after (reimbursement)/recoupment by TPL)

   1.56 %   1.55 %   1.60 %   1.60 %   1.60 %   1.35 %   2.31 %   2.30 %   2.35 %   2.35 %   2.35 %   2.10 %   0.66 %
                                                                              

 

(1) US Bank, the Funds’ Custodian, charges a fee on redemptions paid by wire transfer, which currently is $9.

 

(2) The Funds’ Adviser, TPL, has contractually agreed to waive fees and/or reimburse fund expenses for the Aggressive Growth Fund through April 30, 2006 to maintain total annual operating expenses at 1.60% of the Fund’s Class A shares’ average daily net assets, and at 2.35% of the Fund’s Class C shares’ average daily net assets. These Fund classes have agreed to repay these expenses in the first, second and third fiscal years following the year ending December 31, 2005, to the extent the total expenses of the applicable Fund class for any such year or years does not exceed the applicable average daily net asset percentage set forth above or any lower expense limitation or limitations to which the Fund’s Adviser may otherwise agree. The Fund’s Adviser has contractually agreed to waive fees and/or reimburse fund expenses for the Money Market Fund through April 30, 2006 to maintain total annual operating expenses at no more than 0.85% of the Fund’s average daily net assets. The Money Market Fund has agreed to repay these expenses in the first, second and third fiscal years following the year ending December 31, 2006, to the extent the total expenses of the Fund for any such year or years do not exceed 0.85% of the Fund’s average daily net assets or any lower expense limitation or limitations to which the Fund’s adviser may otherwise agree. TPL has contractually agreed to waive fees and/or reimburse fund expenses for the Patriot Fund through April 30, 2007 to maintain total annual operating expenses at 1.60% for Class A shares and 2.35% for Class C shares. The Fund has agreed to repay these expenses in the first, second and third fiscal years following the year ending December 31, 2006.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        21


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Example:

The following examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Costs in table below should be based on revised table above.

 

     Class A   

No-Load

MM

     Small    Mid    Aggr    Large    Patriot    Fixed   

One year

   $ 675    $ 674    $ 679    $ 679    $ 679    $ 557    $ 87

Three years

   $ 992    $ 989    $ 1,003    $ 1,003    $ 1,047    $ 834    $ 331

Five years

   $ 1,330    $ 1,325    $ 1,348    $ 1,350    $ 1,439    $ 1,124    $ 595

Ten years

   $ 2,284    $ 2,274    $ 2,318    $ 2,325    $ 2,533    $ 1,947    $ 1,350

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 5.25% is included in the expense calculations of all except the Fixed Income Fund which has a sales charge included at 4.25%, and the Money Market Fund, which is no load.

 

     Class C (with Redemption)
     Small    Mid    Aggr    Large    Patriot    Fixed

One year

   $ 334    $ 333    $ 338    $ 338    $ 338    $ 313

Three years

   $ 721    $ 718    $ 733    $ 733    $ 779    $ 658

Five years

   $ 1,235    $ 1,230    $ 1,253    $ 1,255    $ 1,346    $ 1,120

Ten years

   $ 2,646    $ 2,636    $ 2,678    $ 2,686    $ 2,889    $ 2,400

The $9 fee that you would have to pay if you redeemed your shares by wire transfer is not included in these figures. The maximum contingent deferred sales charge for each period is included in the figures showing redemption expenses.

THE BASICS ABOUT THE ASSET ALLOCATION FUNDS

In addition to the Traditional Funds described above, the Timothy Plan offers two Asset Allocation Funds: the Timothy Plan Conservative Growth Fund and the Timothy Plan Strategic Growth Fund. Each Asset Allocation Fund attempts to achieve its investment objective by investing the majority of its assets in certain Traditional Funds. The Asset Allocation Funds offer you the opportunity to pursue one of two specially constructed asset allocation strategies. The Asset Allocation Funds are designed for long-term investors seeking total return for tax-advantaged retirement plans and other long-term investment or savings accounts.

 

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Table of Contents
          Class A    Class C
   cusip number:    887432763    887432672
   ticker symbol:    TSGAX    TSGCX

TIMOTHY PLAN STRATEGIC GROWTH FUND

        

Investment objective

Medium to high levels of long-term capital growth. Current income is a consideration only to the extent that the Traditional Funds in which the Strategic Growth Fund invests seek current income.

Primary investment strategies

The Strategic Growth Fund normally will invest at least 75% of its assets in the following Traditional Funds according to the following approximate range of percentages:

 

Timothy Fund

   % of Fund’s Net Assets Invested in Traditional Fund  

Small Cap Value Fund

   15-20 %

Large/Mid Cap Value Fund

   20-25 %

Large/Mid Cap Growth Fund

   30-35 %

Aggressive Growth Fund

   15-20 %

The Strategic Growth Fund normally will invest its remaining cash, if any, in U.S. government securities and short-term paper.

The Adviser will determine the specific asset allocation program. On each day that the Strategic Growth Fund is open for business, the Adviser will review the asset allocation program and reallocate, as necessary, for any new funds invested in the Fund. TPL also will reallocate the Strategic Growth Fund’s investments in the Traditional Funds at the end of each fiscal quarter to maintain the asset allocation program.

Primary risks

 

1. General Risk- As with most other mutual funds, you can lose money by investing in the 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. Portfolio Risk- The Fund is subject to all of the risks that are inherent in the Traditional Funds in which the Fund invests.

Who should buy this Fund

The Strategic Growth Fund is appropriate for investors who understand the risks of investing in moderately- to aggressively-oriented equity funds and who wish to allocate their investments among multiple funds with a single investment.

Past performance

The following bar chart and table help show the risks of investing in shares of 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 S&P 500 Index during each period. You should be aware that the Fund’s past performance before and after taxes is not necessarily an indication of how the Fund will perform in the future. Also, performance figures do not reflect the effects of sales charges. If they did, returns would be lower.

 

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Table of Contents
          Class A    Class C
   cusip number:    887432763    887432672
   ticker symbol:    TSGAX    TSGCX

TIMOTHY PLAN STRATEGIC GROWTH FUND

        

Performance

Chart and Table (bar graph does not reflect the effect of sales charges.)

Year-by-year Annual Total Returns for Class A Shares (for calendar years ending on December 31(1))

LOGO

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was 7.73%.

 

Best

Quarter

   Worst
Quarter
 

Dec-01

   Sep-02  

16.19%

   -17.65 %

Average Annual Total Returns

(for periods ending on December 31, 2005(1))

 

     Class A (1)  
     1 Year     3 Year     5 Year     10 Year    Since
Inception
 

Return without sales load and before taxes

   6.25 %   13.70 %   -0.61 %   N/A    -1.34 %

Return after taxes on distributions (2)

   0.66 %   11.60 %   -1.72 %   N/A    -2.39 %

Return after taxes on distributions and sale of shares (2)

   0.43 %   10.07 %   -1.42 %   N/A    -1.98 %

S&P 500 Index (3) (reflects no deduction for fees, expenses or taxes)

   4.91 %   14.39 %   0.54 %   N/A    -1.04 %

 

(1) Class A shares commenced investment operations on October 5, 2000. Returns do not reflect the effect of sales charges. If sales charges were included, the returns would be lower.

 

(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns displayed are for class A shares only, and after-tax returns for other classes will vary.

 

(3) The S&P 500 Index is a widely recognized, unmanaged index of common stock prices. 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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Table of Contents
          Class A    Class C
   cusip number:    887432730    887432664
   ticker symbol:    TCGAX    TCVCX

TIMOTHY PLAN CONSERVATIVE GROWTH FUND

        

Investment objective

Moderate levels of long-term capital growth. Current income is a secondary objective.

Primary investment strategies

The Conservative Growth Fund normally will invest at least 75% of its assets in the following Traditional Funds according to the following approximated range of percentages:

 

Timothy Fund

   % of Fund’s Net Assets Invested in Traditional Fund  

Small Cap Value Fund

   15-20 %

Large/Mid Cap Value Fund

   25-30 %

Large/Mid Cap Growth Fund

   15-20 %

Fixed Income Fund

   25-30 %

The Conservative Growth Fund normally will invest its remaining cash, if any, in U.S. government securities and short-term paper.

TPL will determine the specific asset allocation program. On each day that the Conservative Growth Fund is open for business, TPL will review the asset allocation program and reallocate, as necessary, for any new funds invested in the Fund. The Adviser also will reallocate the Conservative Growth Fund’s investments in the Traditional Funds at the end of each fiscal quarter to maintain the asset allocation program.

Primary risks

 

1. General Risk- As with most other mutual funds, you can lose money by investing in the 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. Portfolio Risk- The Fund is subject to all of the risks that are inherent in the Traditional Funds in which the Fund invests.

 

3. Interest Rate Risk- To the extent that the Fund invests in the Fixed-Income Fund and other fixed income securities, the Fund will be exposed to 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.

 

4. Credit Risk- To the extent that the Fund invests in the Fixed-Income Fund and other fixed income securities, the Fund will be exposed to 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 Fixed-Income Fund will only invest in investment grade bonds.

Who should buy this Fund

The Fund is appropriate for investors who understand the risks of investing in moderately risk oriented equity funds, but who also wish to realize current income and allocate their investments among multiple funds with a single investment.

Past performance

The following bar chart and table help show the risks of investing in shares of 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 S&P 500 Index during each period. You should be aware that the Fund’s past performance before and after taxes is not necessarily an indication of how the Fund will perform in the future. Also, performance figures do not reflect the effects of sales charges. If they did, returns would be lower.

 

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Table of Contents
          Class A    Class C
   cusip number:    887432730    887432664
   ticker symbol:    TCGAX    TCVCX

TIMOTHY PLAN CONSERVATIVE GROWTH FUND

        

Performance

Chart and Table (bar graph does not reflect the effect of sales charges.)

Year-by-year Annual Total Returns for Class A Shares

(for calendar years ending on December 31(1))

LOGO

The Fund’s Year-to-Date Return through the Quarter Ended March 31, 2006 was 4.80%.

 

Best

Quarter

   Worst
Quarter
 

Jun-03

   Sep-02  

12.18%

   -11.10 %

Average Annual Total Returns

(for periods ending on December 31, 2005 (1))

 

     Class A (1)  
     1 Year     3 Year     5 Year     10 Year    Since
Inception
 

Return without sales load and before taxes

   5.56 %   10.53 %   2.14 %   N/A    1.99 %

Return after taxes on distributions (2)

   0.00 %   8.46 %   0.98 %   N/A    0.88 %

Return after taxes on distributions and sale of shares (2)

   0.00 %   7.36 %   0.89 %   N/A    0.80 %

S&P 500 Index (3) (reflects no deduction for fees, expenses or taxes)

   4.91 %   14.39 %   0.54 %   N/A    -1.04 %

 

(1) Class A shares commenced investment operations on October 5, 2000. Returns do not reflect the effect of sales charges. If sales charges were included, the returns would be lower.

 

(2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns displayed are for class A shares only, and after-tax returns for other classes will vary.

 

(3) The S&P 500 Index is a widely recognized, unmanaged index of common stock prices. 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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FEES AND EXPENSES

The tables that follow describe the fees and expenses you may pay if you buy and hold shares of the Asset Allocation Funds.

 

Shareholder Transaction Expenses    Class A     Class C  

(fees paid directly from your investment)

   Strat     Cons     Strat     Cons  

Maximum sales charge (load) on purchases (as percentage of offering price)

   5.25 %   5.25 %   None     None  

Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds)

   None     None     1.00 %   1.00 %

Redemption Fees (1)

   None     None     None     None  

Exchange Fees

   None     None     None     None  
Annual Fund Operating Expenses*    Class A     Class C  

(expenses that are deducted from fund assets)

   Strat     Cons     Strat     Cons  

Management fees (2)

   1.46 %   1.39 %   1.46 %   1.39 %

Service & distribution (12b-1) fees

   0.00 %   0.00 %   0.75 %   0.75 %

Other expenses (3)

   1.20 %   1.19 %   1.20 %   1.19 %
                        

Total fund operating expenses

(before reimbursement by TPL)

   2.66 %   2.58 %   3.41 %   3.33 %
                        

(Reimbursement)/Recoupment

   0.04 %   0.03 %   0.04 %   0.03 %
                        

Total annual fund operating expenses

(after (reimbursement)/recoupment by TPL)

   2.70 %   2.61 %   3.45 %   3.36 %
                        

 

* Figures noted in the table reflect changes in management fee structure as approved by the Funds’ shareholders’ at a shareholder meeting held on December 5, 2003.

 

(1) US Bank, the Funds’ Custodian, charges a fee on redemptions paid by wire transfer, which is currently $9.

 

(2) Management Fees include an annual fee of 0.65% of the average daily net assets of each Fund which is paid to the Funds’ Adviser, Timothy Partners. Ltd., which is in addition to the aggregate management fees paid by the underlying Funds in which each Asset Allocation Fund invests.

 

(3) Other Expenses include administration fees, transfer agency fees and all other ordinary operating expenses of the Asset Allocation Funds not listed above.

Example:

The following examples are intended to help you compare the cost of investing in the Asset Allocation Funds with the cost of investing in other mutual funds. The following tables set forth the estimated aggregate expenses of the Asset Allocation Funds, including expenses of the underlying Traditional Funds in which they invest, based upon the expense tables for the Asset Allocation Funds set out above. These estimates assume a constant allocation by each Asset Allocation Fund of its assets in the Traditional Funds as described in the “Basics About the Asset Allocation Funds” section. Actual expenses of the Asset Allocation Funds may be higher or lower than this example. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class as set forth above. Although your actual costs may be higher or lower, based on these assumptions your costs would be:*

 

     Class A
     Strategic    Conservative

One year

   $ 784    $ 775

Three years

   $ 1,319    $ 1,294

Five years

   $ 1,872    $ 1,831

Ten years

   $ 3,370    $ 3,293

 

     Class C (with Redemption)    Class C (without Redemption)
     Strategic    Conservative    Strategic    Conservative

One year

   $ 448    $ 439    $ 348    $ 339

Three years

   $ 1,059    $ 1,033    $ 1,059    $ 1,033

Five years

   $ 1,785    $ 1,744    $ 1,785    $ 1,744

Ten years

   $ 3,702    $ 3,628    $ 3,702    $ 3,628

 

*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 5.25% for the Class A Shares of each Asset Allocation Fund is included in the expense calculations. The expenses shown above reflect estimated Total Annual Operating Expenses for the underlying Traditional Funds. See the footnotes to the “Annual Fund Operating Expenses” table for the Traditional Funds.

 

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ADDITIONAL INFORMATION

Each Traditional and Asset Allocation Fund may, for temporary defensive purposes, invest up to 100% of its assets in money market instruments, including repurchase agreements. 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 than if it had invested strictly according to its objectives. A discussion of the Trust’s policies for disclosing Fund portfolio holdings may be found in the statement of additional information (“SAI”) relating to the Funds, dated May 01, 2006.

In order to achieve its investment objective, each Asset Allocation Fund typically allocates its assets, within predetermined percentage ranges, among certain of the Traditional Funds. Even so, the Asset Allocation Funds may temporarily exceed one or more of the applicable percentage limits for short periods. The percentages reflect the extent to which each Asset Allocation Fund will normally invest in the particular market segment represented by each underlying Traditional Fund, and the varying degrees of potential investment risk and reward represented by each Asset Allocation Fund’s investments in those market segments and their corresponding Traditional Funds. The Funds’ adviser may alter these percentage ranges when it deems appropriate. The assets of each Asset Allocation Fund will be allocated among the Traditional Funds in accordance with its investment objective, the Funds’ adviser’s outlook for the economy and the financial markets, and the relative market valuations of the Traditional Funds.

At the time an Asset Allocation Fund invests in any commercial paper or repurchase agreements, the issuer must have outstanding debt rated “A” or higher by Moody’s or S&P; the issuer’s parent corporation, if any, must have outstanding commercial paper rated Prime-1 by Moody’s or A-1 by S&P; or, if no such ratings are available, the investment must be of comparable quality in the opinion of the Funds’ adviser.

INTEREST RATE RISK

To the extent that a Traditional Fund invests in fixed income securities, the Traditional Fund will be exposed to interest rate risk. When interest rates rise, bond prices fall; the higher the Traditional Fund’s duration (a calculation reflecting time risk, taking into account both the average maturity of the Traditional Fund’s portfolio and its average coupon return), the more sensitive the Traditional Fund is to interest rate risk.

CREDIT RISK

To the extent that a Traditional Fund invests in fixed income securities, the Traditional Fund will be exposed to credit risk. A Traditional Fund could lose money if any bonds it owns are downgraded in credit rating or go into default. For this reason, the Traditional Funds will only invest in investment grade bonds.

ADDITIONAL EXPENSE AND TAX IMPLICATIONS

Investing in the Asset Allocation Funds involve certain additional expenses and tax results that would not be present in a direct investment in the Traditional Funds. See “Dividends and Distributions” and “Federal Taxes” in this Prospectus.

INVESTING IN THE FUNDS

DETERMINING SHARE PRICES

Shares of each Class of each Fund are offered at the public offering price for each Class. The public offering price is each class’s next calculated net asset value (“NAV”), plus the applicable sales charge, if any. NAV per share of each Class is calculated by adding the value of Fund investments, cash and other assets, subtracting liabilities of the Class, and then dividing the result by the number of shares of the Class outstanding. Each Fund generally determines the total value of each Class 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 investment manager, in conformity with guidelines adopted by and subject to the review and supervision of the Board of Trustees. Each Fund’s per share NAV of each Class 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 NYSE, currently 4:00 p.m. Eastern time. In the event that the NYSE closes early, the NAV will be determined as of the time of closing.

The Timothy Plan Money Market Fund will use the amortized cost method to compute its NAV. 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 Money Market Fund will not sell securities prior to maturity date except to satisfy redemption requests.

 

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FAIR VALUE PRICING

The Board of Trustees has delegated to the Advisor and/or Sub-Advisors responsibility for determining the value of Fund portfolio securities under certain circumstances. Under such circumstances, the Advisor or Sub-Advisor will use its best efforts to arrive at the fair value of a security held by the Fund under all reasonably ascertainable facts and circumstances. The Advisor must prepare a report for the Board not less than quarterly containing a complete listing of any securities for which fair value pricing was employed and detailing the specific reasons for such fair value pricing. The Trust has adopted written policies and procedures to guide the Advisor and Sub-Advisors with respect to the circumstances under which, and the methods to be used, in fair valuing securities.

The Funds generally invest the vast majority of their assets in frequently traded exchange listed securities of domestic issuers with relatively liquid markets and calculate their NAV as of the time those exchanges close. The Funds typically do not invest in securities on foreign exchanges or in illiquid or restricted securities. Accordingly, there may be very limited circumstances under which any Fund would hold securities that would need to be fair value priced. Examples of when it would be likely that a Fund security would require fair value pricing include but are not limited to: if the exchange on which a portfolio security traded were to close early; if trading in a particular security were to be halted on an exchange and did not resume trading prior to calculation of NAV; if a significant event that materially affected the value of a security were to occur after the securities’ exchange had closed but before the Fund’s NAV had been calculated; and if a security that had a significant exposure to foreign operations was subject to a material event or occurrence in a foreign jurisdiction in which the company had significant operations, or in the event that the Fixed Income Fund were to invest in certain types of bonds that had limited marketability, such as “Church bonds”.

When a security is fair value priced, it means that the Advisor or Sub-Advisor is calculating the value of that security on a day and under circumstances where reliable pricing information from normal sources is not available or is otherwise limited. Accordingly, there is always the possibility that the Advisor’s or Sub-Advisor’s calculations concerning security value could be wrong, and as a result, the Fund’s NAV on that day could be higher or lower, depending on how the security was valued, than would otherwise be the case.

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 classes in which to invest. The main differences between each Class are sales charges and ongoing fees. Each Share Class in any Fund represents 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 C 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 lower ongoing expense ratio on Class A shares.

CLASS A SHARES

Class A shares are offered at their public offering price, which is net asset value per Class A 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 all Funds except the Fixed-Income Fund and the Money Market Fund, the following sales charges(1) apply:

 

Amount Invested

  

As a % of

Offering Price

    As a % of Amount Invested     Dealer Concession as a
Percentage of Offering Price
 

up to $50,000

   5.25 %   5.54 %   5.00 %

$50,000 to 100,000

   4.25 %   4.44 %   4.00 %

$100,000 to 250,000

   3.25 %   3.34 %   3.00 %

$250,000 to 500,000

   2.00 %   2.04 %   1.75 %

$500,000 to 1,000,000

   1.00 %   1.01 %   0.75 %

$1,000,000 and up

   0.00 %   0.00 %   0.00 %

The following sales charges(1) apply to the Fixed-Income Fund:

 

Amount Invested

  

As a % of

Offering Price

    As a % of Amount Invested     Dealer Concession as a
Percentage of Offering Price
 

up to $50,000

   4.25 %   4.44 %   4.00 %

$50,000 to $100,000

   3.50 %   3.63 %   3.25 %

$100,000 to $250,000

   2.50 %   2.56 %   2.25 %

$250,000 to $500,000

   1.50 %   1.52 %   1.25 %

$500,000 to 1,000,000

   0.75 %   0.76 %   0.50 %

$1,000,000

   0.00 %   0.00 %   0.00 %

 

(1) There are no sales charges on exchanges of A class shares of a Timothy Plan Fund for Class A shares of any other Timothy Plan Fund. There are no sales charges for the Money Market Fund.

 

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The Trust’s 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 90% or more 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 Fund, including exchanges. Also, the Trust will waive sales charges on purchases of Class A Shares of any Timothy Fund by:

 

1. fee-based registered investment advisers for their clients,

 

2. broker/dealers with wrap fee accounts,

 

3. registered investment advisers, and registered representatives and employees of broker/dealers that are members of the Master Selling Group for their own accounts, or family members of their household,

 

4. trustees, directors, officers, agents, employees, and employee-related accounts of the Trust or 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.

 

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The Trust may also, in its sole discretion, waive sales charges on purchases of Class A Shares:

 

1. by churches for their own accounts,

 

2. by religious-based charitable organizations and foundations for themselves ,

 

3. by 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, in its sole discretion, may lower these minimums,

 

4. by subscribers of Timothy Plan Funds that are making direct exchanges from load shares of other U.S. registered mutual funds, or have liquidated funds’ shares within 90 days of the purchase of Timothy Plan funds, and/or

 

5. under circumstances in which the waiving of such charges are deemed by the Trust to be in the best interests of the Trust and its shareholders.

For purchasers that qualify for sales load waivers, Class A shares will be purchased at net asset value.

Reduced sales charges

You may qualify for a reduced sales charge by aggregating the higher of the original purchase or the most recent net asset values of all the load shares you and your related accounts previously purchased and currently hold in any Fund with the dollar amount of shares to be purchased. For example, if you and your related accounts already owned Class A or Class C shares in one or more of the Funds with aggregate purchases or current value of $950,000 at the close of business on the day your order to purchase is received, and you decided to purchase an additional $60,000 of Class A shares of any load Fund, there would be no sales charge on that purchase because with the additional purchase, you will have accumulated more than $1,000,000 in all load Funds of the Trust. Related accounts include and are limited to accounts established by or for you, your parents, in-laws, spouse, children, or grandchildren, including trust, beneficiary and grantor accounts. Related accounts also include participants in their individual employer-sponsored retirement programs. It may be necessary to notify the Fund of related accounts providing the account numbers of the related accounts, or the name of the retirement plan if applicable, to be certain you receive the appropriate break point discount.

Reinstatements

Reinstatement (the repurchase of Fund shares after having liquidated them earlier) within ninety days of the liquidation of Fund shares are at NAV up to the dollar amount liquidated. Reinstatement purchases are available for any Fund repurchased, except the Money Market Fund which is no-load, regardless of which Fund was liquidated.

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 or elimination. 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 C SHARES

Class C Shares are sold at net asset value without an initial sales charge. This means that 100% of your initial investment is placed into shares of the Fund of your choice. However, Class C shares of the Traditional Funds pay an annual 12b-1 shareholder servicing fee of 0.25% of average daily net assets and an additional distribution fee of 0.75% per annum of average daily net assets. Class C shares of the Asset Allocation Funds pay an annual 12b-1 distribution fee of 0.75% of average daily net assets. Class C shares of the Asset Allocation Funds also indirectly incur an additional shareholder servicing fee of 0.25% per annum of average daily net assets resulting from the underlying Traditional Funds in which the Asset Allocation Funds invest.

In order to recover commissions paid to dealers on investments in Class C Shares, you will be charged a contingent deferred sales charge (“CDSC”) of 1.00% of the value of your redemption if you redeem your shares within thirteen months from the date of purchase. No CDSC is charged on reinvested dividends or capital gains, amounts purchased more than thirteen months prior to the redemption, increases in the value of the shares owned, on any redemption in an amount of ten percent (10%) or less of the initial purchase, or upon the event of the death of the shareholder (unless the account is held in joint name and the survivor liquidates the shares).

DISTRIBUTION FEES

The Trust has adopted distribution and shareholder servicing plans, pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the “1940 Act”), for each Class of Shares, of each Fund (the “Distribution Plans”). The Distribution

 

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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 and the servicing of shareholder accounts.

Under the Class A Distribution Plan, the Class A shares of each Traditional 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. Class A shares of the Asset Allocation Fund do not impose a service fee.

Under the Class C Distribution Plan, the Class C Shares of each Traditional Fund compensates 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 C shares. The Class C Shares of each Asset Allocation Fund assess a 0.75% distribution fee, but do not assess a 0.25% service fee since a 0.25% service fee is derived from the underlying Class A shares in which the Asset Allocation Funds invest. Amounts paid under the Class C Distribution Plan are paid to TPL and others to compensate them for services provided and expenses incurred in the distribution of Class C shares, including the paying of commissions for sales of Class C shares. The Class C Distribution Plan is designed to allow investors to purchase Class C shares without incurring a front-end sales load and to permit the distributor to compensate authorized dealers for selling such shares. Accordingly, the Class C Distribution Plan combined with the CDSC for Class C shares is to provide for the financing of the distribution of Class C shares.

Because 12b-1 fees are paid out of each Fund’s assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

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 Fund through an automatic payment plan. Any questions you may have can be answered by calling 1-800-662-0201.

Payments for Fund shares must 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. Timothy Plan accepts personal checks made payable to the Timothy Plan. Unless pre-authorized by the Fund at the Fund’s sole discretion, the Timothy Plan will not accept third party checks. The minimum initial investment amount for each Fund, in any Class of shares, is set forth below:

 

Type of Investment Account

  

Minimum Initial

Purchase Amount

  

Minimum Subsequent

Purchase Amount

Regular Accounts

   $ 1,000      None

Qualified Retirement Plans and Coverdell Education Accounts

     None      None

Automatic Investment Accounts

   $ 50    $ 50/month

TO OPEN AN ACCOUNT BY MAIL

To make your initial investment in a Fund, 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 Citco Mutual Fund Services, Inc.

P.O. Box C1100

Southeastern, PA 19398-1100

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 account number on the check.

Your purchase order, if accompanied by payment, will be processed upon receipt by Citco Mutual Fund Services, Inc., the Fund’s transfer agent (the “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 applicable Fund’s public offering price calculated at the close of regular trading on that day. Otherwise, your shares will be purchased at the public offering price determined as of the close of regular trading on the next business day. When you make your initial purchase of Fund shares, be sure to indicate which Class of shares you wish to purchase. If you do not select a share class, Class A shares will be

 

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purchased for you. For subsequent purchases, additional shares of your currently owned share class will be purchased unless you indicate otherwise on your purchase order.

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 (610-935-3775) an Account Registration Form 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:

 

US Bank

  

Cinti/Trust, ABA #

   0420-0001-3

Credit:

   The Timothy Plan

Account #:

   130100788681

For further credit to:  

   (Your Name and Account #)

 

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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 Account Registration Form to the Transfer Agent as a convenience for the investor. However, if you fax your Form 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 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 applicable 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.

PURCHASING SHARES BY AUTOMATIC INVESTMENT PLAN (excluding the Money Market Fund)

You may purchase shares of the Funds through an Automatic Investment Plan (the “AIP”) with the exception of the Money Market Fund. The AIP provides a convenient way for you to have money deducted directly from your checking, savings, or other accounts for investment in shares of the Fund. You can take advantage of the AIP by filling out the AIP 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 AIP. The Trust may alter, modify, amend or terminate the AIP 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 Trust 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, a 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. Unless requested to the contrary, the Annual and Semi-Annual Reports will be householded, which means that only one Report will be sent to an address in which multiple investors reside or declare as their address of record.

 

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Each Fund reserves the right to reject applications for shares under circumstances or in amounts considered disadvantageous to shareholders. At the discretion of the Fund, Applications may not be accepted unless they are accompanied by payment in U.S. funds. If required, Payment must be made by wire transfer, check, or money order drawn on a U.S. bank, savings & loan, or credit union. The custodian will charge a $20.00 fee against your account, in addition to any loss sustained by a Fund, for any payment check returned to the custodian for insufficient funds.

If you place an order for Fund shares through a securities broker, and you place your order in proper form before 4:00 p.m. East Coast time on any business day in accordance with their procedures, your purchase will be processed at the public offering price calculated at 4:00 p.m. on that day, if the securities broker then transmits your order to the Transfer Agent before the end of its business day (which is usually 5:00 p.m. East Coast time). The securities broker must send to the Transfer Agent immediately available funds in the amount of the purchase price within three business days for the order.

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

Redemption requests should be mailed via U.S. mail to:

The Timothy Plan

c/o Citco Mutual Fund Services, Inc.

P.O. Box C1100

Southeastern, PA 19398-1100

or by overnight courier service to:

The Timothy Plan

c/o Citco Mutual Fund Services, Inc.

83 General Warren Blvd., Suite 200

Malvern, PA 19355

The selling price for No-Load and Class A shares being redeemed will be the applicable Fund’s per share net asset value next calculated after receipt of all required documents in “good order.” The selling price for Class C 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 fifth 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.

If you are not certain of the requirements for a redemption, please call customer service at 1-800-662-0201. Redemptions specifying a certain date or share price cannot be accepted and will be returned. You will be mailed the proceeds on or before the fifth business day following the redemption. However, payment for redemption made against shares purchased by check will be made only after the check has been collected, which normally may take up to fifteen calendar days. Also, when the New York Stock Exchange is closed (or when trading is restricted) for any reason other than its customary weekend or holiday closing, or under any emergency circumstances, as determined by the Securities and Exchange Commission, the Funds may suspend redemptions or postpone payment dates.

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.

 

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Any portfolio securities paid or distributed in-kind would be valued as described in the applicable 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.

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 the Transfer Agent within 30 days previous to the request for redemption.

(for joint accounts, all signatures must be guaranteed, if required as above)

In addition, signature guarantees are required for all redemptions of $25,000 or more from any Fund shareholder account. At the discretion of the Trust or Citco Mutual Fund Services, Inc., you may be required to furnish additional legal documents to insure proper authorization. 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 “Gold Medallion Signature Guarantee.” Please call customer service at 1-800-662-0201 if you have questions.

BY TELEPHONE

You may redeem your shares in the Fund(s) 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 4:00 p.m. Eastern 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.

TRADING RESTRICTIONS

For the protection of its shareholders, the Board of Trustees has adopted a policy prohibiting frequent purchases and sales of Fund shares. The Board extended the policy to be inclusive of all accounts including accounts transacted by registered investment advisors, broker/dealer representatives, transfer agents, third party administrators and insurance companies, and further includes omnibus accounts. The Fund will reject any transactions the Fund believes in good faith constitutes frequent trading, including market timing and late transactions, except that the Fund does not impose restrictions on exchanges from the Fixed income Fund to any other Fund, nor does it restrict immediate sales of shares upon the event of the death or disability of the shareholder. For the purpose cited here, the Fund has determined that purchase and sale transactions in excess of three times per calendar quarter in a single or related accounts imply frequent trading, and shall result in the appropriate actions being taken which may include the restricting of the account and notification to the proper authorities.

Upon the discovery of trades transacted or an attempt to be transacted in violation of Rule 10b (Manipulative and Deceptive Contrivances), or Rule 22c-1 (Pricing), such activity shall be immediately reported to the appropriate regulatory agencies and authorities, and the Fund shall fully comply with such agencies during any ensuing investigation.

REDEMPTION AT THE OPTION OF THE TRUST

If the value of the shares in your account falls to less than $1,000 due to redemptions, the Trust may notify you that, unless your account is increased to $1,000 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

 

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sixty days after notice to bring the account up to $1,000 before any action is taken. This minimum balance requirement does not apply to Coverdell Savings Accounts, IRAs and other tax-sheltered investment accounts. This right of redemption shall not apply if the value of your account drops below $1,000 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 each Fund are derived from its net investment income. Net investment income will be distributed at least annually. The Funds’ 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 the Fund’s portfolio.

Each Fund realizes capital gains when it sells a security for more than it paid for it. A 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 applicable Fund. You may change the manner in which your dividends are paid at any time by writing to The Timothy Plan, c/o Citco Mutual Fund Services, Inc., 83 General Warren Blvd., Suite 200, Malvern, PA 19355.

Receiving distributions (whether reinvested or taken in cash) may be taxable events as ordinary income and capital gains (which may be taxable at different rates, depending on the length of time the Fund holds its assets). Any tax liabilities generated by receiving distributions are your responsibility.

 

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THE INVESTMENT ADVISER

Timothy Partners, Ltd., 1055 Maitland Center Commons Blvd., Maitland, FL 32751, 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 had 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, 0.85% on the Aggressive Growth Fund, 0.85% on the Large/Mid-Cap Growth Fund, 0.85% on the Patriot Fund, 0.60% on the Fixed-Income Fund, 0.60% on the Money Market Fund, and 0.65% on each of the Strategic Growth Fund and the Conservative Growth Fund.

TPL, with the Trust’s consent, has engaged the services of the investment managers described below to provide day-to-day investment advisory services to certain of the Funds. TPL pays all fees charged by the investment managers for such services.

A discussion of the considerations employed by the Board of Trustees in their approval of TPL as Advisor to the Trust, and each sub-advisor as manager of the Funds is available in the Funds’ annual report dated December 31, 2005, that provides financial information for the period January 01, 2005 through December 31, 2005.

The Statement of Additional Information for the Trust (“SAI”), dated May 01, 2006, contains additional information about the compensation paid to the portfolio managers, other accounts and account types managed by the Adviser, and ownership of Fund shares. The SAI is available upon request at no charge. To receive an SAI you may request one by calling the Fund at 1-800-846-7526.

INVESTMENT MANAGERS

AGGRESSIVE GROWTH FUND

Provident Investment Counsel, Inc. (“Provident”), 300 North Lake Avenue, Penthouse Suite, Pasadena, CA 91103, serves as investment manager to the Aggressive Growth Fund under a written agreement with TPL. Provident selects the investments for the Fund’s portfolio, subject to the investment restrictions of the Trust and under the supervision of TPL.

Provident was founded in 1951 and as of December 31, 2005, managed assets in excess of $4.4 billion. Provident is a wholly owned subsidiary of Old Mutual plc. Provident is registered with the Securities and Exchange Commission as an investment adviser and the firm’s primary business is providing investment management services to institutions, corporations, religious organizations, foundations and endowments, and high net worth individuals.

Provident’s growth equity investment philosophy is based on the belief that, over the long term, a company’s earnings per share growth is the most significant determinant of long-term stock price appreciation. In light of this, Provident seeks out companies with catalysts for growth. Provident employs a team approach to portfolio management under the joint direction of John Yoon and Richard Campagna, portfolio managers, who are primarily responsible for the day-to-day investment of the Fund’s assets.

John Yoon – Senior Vice President Mr. Yoon holds an AB in Economics from Harvard University, and an MBA in Finance from UCLA. He is also a member of the Association for Investment Management and Research. Mr. Yoon entered the investment industry in 1989. Prior to joining Provident Investment Counsel, he served as a financial analyst and associate in corporate finance at Salomon Brothers, Inc.

Richard S. Campagna – Senior Vice President Mr. Campagna has been in the investment industry since 1989, and joined Provident Investment Counsel in 2005. He serves as a mid cap portfolio manager with generalist research responsibilities for mid cap growth stocks. Prior to joining Provident, he spent four years at Shaker Investments, LLC where he was a portfolio manager, managing director and head of research. Prior to that he held positions as a senior analyst with Manning & Napier Advisors, Inc., a principal with McKinley Capital Partners, LTD., and a financial analyst with Morgan Stanley & Co. Inc.

 

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Mr. Campagna holds a BS degree from Duke University and an MBA from Harvard Graduate School of Business Administration. He is a Chartered Financial Analyst and a member of the CFA Institute.

The SAI contains additional information about the compensation paid to the portfolio managers, other accounts and account types managed by the Investment Adviser.

 

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LARGE/MID-CAP GROWTH FUND

Rittenhouse Financial Services, Inc. (“Rittenhouse”), One Radnor Corporate Center, Radnor, PA 19087, serves as investment manager to the Large/Mid-Cap Growth Fund under a written agreement with TPL. Rittenhouse selects the investments for the Fund’s portfolio, subject to the investment restrictions of the Trust and under the supervision of TPL.

Rittenhouse is a registered investment adviser and wholly-owned subsidiary of The John Nuveen Company. Established in 1979, Rittenhouse provides equity, fixed income and balanced portfolio management to corporations, hospitals, Taft-Hartley plans, public funds, endowments and foundations, and high-net-worth individuals.

As of December 31, 2005, Rittenhouse managed approximately $6.1 billion in assets for programs such as Merrill Lynch, PaineWebber and Salomon Smith Barney and accounts such as the Society of the Holy Child Jesus (MD) and the United Food & Commercial Workers (OH). Rittenhouse is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940.

Rittenhouse’s Investment Committee makes firm-wide investment recommendations, while the Institutional Group is responsible for managing institutional accounts. William L. Conrad, Managing Director, is responsible for the day-to-day investing of the Fund’s assets.

Mr. William L. Conrad, Managing Director/Institutional Group, joined Rittenhouse in 1991. He has over 20 years experience in the investment industry, is a member of the firm’s Investment Committee, and has a B.A. degree in Political Science/International Relations from Georgetown University in Washington, D.C.

The SAI contains additional information about the compensation paid to the portfolio managers, other accounts and account types managed by the Investment Adviser.

PATRIOT 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 Patriot Fund. Awad has offices at 250 Park Avenue, New York, New York 10177. Awad selects the investments for the Patriot Fund’s portfolio, subject to the investment restrictions of the Trust and under the supervision of TPL.

James Awad is the President and Senior Investment Officer of the investment manager, and is responsible for managing the day-to-day investments for the Fund. Prior to forming Awad, 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 industry since 1965.

Awad has served as investment manager to the Patriot Fund since the Fund’s inception on May 1, 2004. In addition to the Patriot Fund and the Timothy Plan Small Cap Variable Series, Awad also serves as investment adviser or co-adviser to two other investment companies: Calvert New Vision Small-Cap Fund and Heritage Small-Cap Stock Fund. As of December 31, 2005, Awad managed in approximately of $1.1 billion in assets.

The SAI contains additional information about the compensation paid to the portfolio managers, other accounts and account types managed by the Investment Adviser.

LARGE/MID-CAP VALUE FUND and SMALL-CAP VALUE FUND

Westwood Management Corp (“Westwood”), 200 Crescent Ct., Suite 1200, Dallas, TX 75201 is responsible for the day-to-day activities of the Large Mid-Cap Value and Small Cap Value Funds’ assets. Westwood Holdings Group, Inc., a public company listed on the New York Stock Exchange (“WHG”), is the parent company of Westwood. Susan Byrne founded Westwood and currently serves as the firm’s Chief Investment Officer. Ms. Byrne also serves as Chief Executive Officer and Chairman of the board of Directors of WHG. Ms. Byrne has been an investment professional for over 35 years, and is a member of the team that is responsible for the day-to-day recommendations regarding the investment of the Funds’ portfolios. Ms. Byrne entered the financial services industry in 1970 where she worked for major wire houses until 1978. From 1978 until she founded Westwood, Mrs. Byrne served Bankers Trust as a portfolio manager in the employee benefits department, and GAF Corp. as a portfolio manager and assistant treasurer. Westwood has offered investment advice and services to individuals, institutions, trusts, charities and regulated investment companies continuously since it was organized by Ms. Susan Byrne in 1982. Westwood was established in 1983 as a New York corporation and is registered with the Securities and Exchange Commission as an investment advisory firm under the Investment Advisers Act of 1940, as amended. As of December 31, 2005, Westwood managed approximately $4.6 billion in client assets.

 

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Westwood utilizes a team of investment professionals who are responsible for the day-to-day recommendations regarding the investment of the Large/Mid-Cap Fund’s portfolio. In addition to Ms. Byrne, team members include Ms. Kellie R. Stark, CFA, who has served Westwood as a Senior Vice President and Research Head since 2004, and as a Vice President from 1997 to 2004. Ms. Stark has more than 17 years of investment experience, and joined Westwood in 1992. Mr. Jay K. Singhania, CFA, has served Westwood as Vice President and Research Analyst since July 2004, after serving as an Assistant Vice President since joining the firm in March 2001. Mr. Singhania has more than 8 years of investment experience. Mr. Ragen Stienke, CFA has served as Assistant Vice President and Research Analyst for Westwood since joining the firm in 2005. Before joining Westwood, he worked at UBS Investment Bank as a software analyst in their research department from 2000 to 2003 and as a U.S. Equity Strategist from 2003 to 2005. Mr. Stienke has more than 10 years of investment experience.

On December 19, 2006, the shareholders of the Small-Cap Value Fund approved Westwood Management Corp. as the investment manager of the Small-Cap Value Fund, effective January 3, 2006. Westwood succeeded Awad Asset Management, which previously served as the Fund’s investment manager, from July, 1997 through December 31, 2005.

The SAI contains additional information about the compensation paid to the portfolio managers, other accounts and account types managed by the Investment Adviser.

Westwood utilizes a team of investment professionals to manage the Small-Cap Value portfolio clients’ assets. In addition to Ms. Susan Byrnes, the portfolio team members include: Scot Lawson, CFA, Vice President and Research Analyst; C.J. McDonald, CFA, Vice President and Research Group Head; Todd Williams, CFA, Vice President and Research Analyst; Lisa Dong, CFA, Vice President and Research Analyst; Mr. John Vandermosten, Assistant Vice President and Research Analyst; and Philip Robert, Assistant Vice President and Research Analyst. Each team member has a number of other Westwood professionals supporting their efforts. The members of the Westwood investment team average in excess of 14 years experience in the investment field.

The SAI contains additional information about the compensation paid to the portfolio managers, other accounts and account types managed by the Investment Adviser.

FIXED-INCOME FUND AND MONEY MARKET FUND

Barrow, Hanley, Mewhinney and Strauss (“BHMS”), 2200 Ross Avenue, 31st Floor, Dallas, TX 75201, serves as investment manager to the Fixed-Income and Money Market Funds. BHMS was founded in 1979 as a registered investment advisor, and has provided investment advisory services to institutional and individual investors since that time. BHMS is a wholly owned subsidiary of Old Mutual Asset Managers, LLC, a subsidiary of Old Mutual plc, an international financial services group located in London, England.

Mr. John Williams, CFA, Chief Investment Officer of fixed securities for the firm, is the head of the team responsible for the day-to-day recommendations regarding the investment of the Funds’ portfolios. Immediately prior to joining the firm in 1983, Mr. Williams was an investment officer for Southland Life Insurance Company where he accepted employment after serving as a portfolio manager and securities analyst for InterFirst Bank Dallas. Mr. Williams joined BHMS as a principal, assuming the responsibility for launching the BHMS fixed income management department.

As of December 31, 2005, BHMS managed total assets of $55.4 billion.

The SAI contains additional information about the compensation paid to the portfolio managers, other accounts and account types managed by the Investment Adviser.

A more comprehensive discussion of each manager’s activities may be found in the Statement of Additional Information (“SAI”) dated May 01, 2006. The SAI is available upon request at no charge. To receive an SAI you may request one by calling the fund at 1-800-846-7526.

PRINCIPAL UNDERWRITER

Timothy Partners Ltd. acts as principal underwriter for the Trust. The purpose of acting as an underwriter is to facilitate the notice filing 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 serving as underwriter of the Trust.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        41


Table of Contents

FEDERAL TAXES

Each Fund intends to qualify and maintain its qualification as a “regulated investment company” under the Internal Revenue Code (the “Code”), meaning that to the extent a Fund’s earnings are passed on to shareholders as required by the Code, the Fund 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 Funds’ distributions, whether received in cash or reinvested in additional shares of the Fund, may be subject to Federal income tax. 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.

Exchanges of Fund shares for shares of another Fund will be treated as a sale of the Fund’s shares, and any gain on the transaction may be subject to federal income tax. Because your state and local taxes may be different than the federal taxes described above, you should see your tax adviser regarding these taxes. The tax considerations described in this section do not apply to tax-deferred accounts or other non-taxable entities.

GENERAL INFORMATION

The Funds will not issue stock certificates evidencing shares. Instead, your account will be credited with the number of shares purchased, relieving you of responsibility for safekeeping of certificates and the need to deliver them upon redemption. Written confirmations are issued for all purchases of shares.

In reports, other communications to investors, or advertising material, the Funds may describe general economic and market conditions affecting their performance and may compare their performance with other mutual funds as listed in the rankings prepared by Lipper Analytical Services, Inc. or similar nationally recognized rating services and financial publications that monitor mutual fund performance. The Funds may also, from time to time, compare their performance to one or more appropriate indices.

According to the law of Delaware under which the Trust is organized, and the Trust’s Agreement and Declaration of Trust and by-laws, the Trust is not required to hold an annual meeting of shareholders unless required to do so under the Investment Company Act of 1940. Accordingly, the Trust will not hold annual shareholder meetings unless required to do so under the Act. Shareholders do have the right to call a meeting of shareholders for the purpose of voting to remove directors. The Trust will render assistance to shareholders in connection with their efforts to arrange a shareholder meeting as required under Section 16(c) of the Investment Company Act of 1940, as amended.

The Board of Trustees of the Trust has approved Codes of Ethics (the “Code”) for the Funds, Investment Advisor, Sub-Advisors, and Principal Underwriter. These Codes govern the personal activities of persons who may have knowledge of the investment activities of the Funds, requires that they file regular reports concerning their personal securities transactions, and prohibits activities that might result in harm to the Funds. The Board is responsible for overseeing the implementation of the Codes. The Trust has filed copies of each Code with the Securities and Exchange Commission. Copies of the Codes of Ethics may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. The Codes are also available on the SEC’s EDGAR database at the SEC’s web site (www.sec.gov). Copies of this information can be obtained, after paying a duplicating fee, by electronic request (publicinvest@sec.gov), or by writing the SEC’s Public Reference Section, Washington, DC 20549-0102. The Board of Trustees has also approved anti-money laundering procedures which it believes are reasonably designed to detect and prevent attempts to utilize the Portfolios for illegal purposes. Day to day responsibility for the monitoring of such activities has been delegated to the Transfer Agent, subject to Board oversight and periodic independent audit.

 

42       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

AGGRESSIVE GROWTH FUND - CLASS A SHARES

 

      year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value at Beginning of Year

   $ 6.95     $ 6.34     $ 4.56     $ 6.61     $ 8.35  
                                        

Income from Investment Operations:

          

Net Investment Loss(A)

     (0.09 )     (0.07 )     (0.06 )     (0.05 )     (0.05 )

Net Realized and Unrealized Gain (Loss) on Investments

     0.70       0.68       1.84       (2.00 )     (1.69 )
                                        

Total from Investment Operations

     0.61       0.61       1.78       (2.05 )     (1.74 )
                                        

Less Distributions:

          

Dividends from Realized Gains

     (0.18 )     —         —         —         —    

Dividends from Net Investment Income

     —         —         —         —         —    
                                        

Total Distributions

     (0.18 )     —         —         —         —    
                                        

Net Asset Value at End of Year

   $ 7.38     $ 6.95     $ 6.34     $ 4.56     $ 6.61  
                                        

Total Return(B)(C)

     8.73 %     9.62 %     39.04 %     (31.01 )%     (20.84 )%

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 18,403     $ 16,453     $ 9,920     $ 4,878     $ 3,510  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.59 %     1.66 %     1.85 %     2.64 %     3.87 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.60 %     1.60 %     1.60 %     1.60 %     1.60 %

Ratio of Net Investment Income (Loss) to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (1.32 )%     (1.38 )%     (1.60 )%     (2.44 )%     (3.53 )%

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (1.33 )%     (1.32 )%     (1.35 )%     (1.40 )%     (1.26 )%

Portfolio Turnover

     102.63 %     102.46 %     119.33 %     134.34 %     113.39 %

 

(A) Per share amounts calculated using average shares method.

 

(B) Total return calculation does not reflect sales load.

 

(C) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        43


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

AGGRESSIVE GROWTH FUND - CLASS C SHARES

 

     year
ended
12/31/05
    period
ended
12/31/04(A)
 

Per Share Operating Performance:

    

Net Asset Value at Beginning of Period

   $ 6.75     $ 6.24  
                

Income from Investment Operations:

    

Net Investment Loss(B)

     (0.14 )     (0.06 )

Net Realized and Unrealized Gain on Investments

     0.68       0.57  
                

Total from Investment Operations

     0.54       0.51  
                

Less Distributions:

    

Dividends from Realized Gains

     (0.18 )     —    

Dividends from Net Investment Income

     —         —    
                

Total Distributions

     (0.18 )     —    
                

Net Asset Value at End of Period

   $ 7.11     $ 6.75  
                

Total Return(C)(D)

     7.96 %     8.17 %(E)

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 1,358     $ 690  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.34 %     2.41 %(F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.35 %     2.35 %(F)

Ratio of Net Investment Income (Loss) to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (2.07 )%     (2.13 )%(F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (2.08 )%     (2.07 )%(F)

Portfolio Turnover

     102.63 %     102.46 %

 

(A) For the period February 3, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect redemption fee.

 

(D) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(E) For periods of less than one full year, total return is not annualized.

 

(F) Annualized.

 

44       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

LARGE MID CAP GROWTH FUND - CLASS SHARES

 

      year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value at Beginning of Year

   $ 6.69     $ 6.17     $ 5.14     $ 7.28     $ 9.43  
                                        

Income from Investment Operations:

          

Net Investment Loss(A)

     (0.05 )     (0.05 )     (0.05 )     (0.04 )     (0.04 )

Net Realized and Unrealized Gain (Loss) on Investments

     0.28       0.57       1.08       (2.10 )     (2.11 )
                                        

Total from Investment Operations

     0.23       0.52       1.03       (2.14 )     (2.15 )
                                        

Net Asset Value at End of Year

   $ 6.92     $ 6.69     $ 6.17     $ 5.14     $ 7.28  
                                        

Total Return(B)(C)

     3.44 %     8.43 %     20.04 %     (29.40 )%     (22.80 )%

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 53,901     $ 36,869     $ 23,407     $ 13,044     $ 8,854  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.60 %     1.55 %     1.62 %     1.80 %     2.32 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.60 %     1.60 %     1.60 %     1.60 %     1.60 %

Ratio of Net Investment Income (Loss) to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (0.80 )%     (0.95 )%     (1.05 )%     (1.21 )%     (1.72 )%

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (0.80 )%     (1.00 )%     (1.03 )%     (1.01 )%     (1.00 )%

Portfolio Turnover

     38.61 %     60.25 %     53.43 %     52.28 %     20.47 %

 

(A) Per share amounts calculated using average shares method.

 

(B) Total return calculation does not reflect sales load.

 

(C) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        45


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

LARGE/MID CAP GROWTH FUND - CLASS C SHARES

 

     year
ended
12/31/05
    period
ended
12/31/04 (A)
 

Per Share Operating Performance:

    

Net Asset Value at Beginning of Period

   $ 6.52     $ 6.22  
                

Income from Investment Operations:

    

Net Investment Loss (B)

     (0.08 )     (0.05 )

Net Realized and Unrealized Gain (Loss) on Investments

     0.25       0.35  
                

Total from Investment Operations

     0.17       0.30  
                

Net Asset Value at End of Period

   $ 6.69     $ 6.52  
                

Total Return(C)(D)

     2.61 %     4.82 % (E)

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 1,496     $ 967  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.35 %     2.30 % (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.35 %     2.35 % (F)

Ratio of Net Investment Income (Loss) to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (1.55 )%     (1.70 )% (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (1.55 )%     (1.75 )% (F)

Portfolio Turnover

     38.61 %     60.25 %

 

(A) For the period February 3, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect redemption fee.

 

(D) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(E) For periods of less than one full year, total return is not annualized.

 

(F) Annualized.

 

46       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

SMALL-CAP VALUE FUND - CLASS A SHARES

 

     year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value at Beginning of Year

   $ 15.59     $ 15.45     $ 11.13     $ 13.79     $ 12.61  
                                        

Income from Investment Operations:

          

Net Investment Income (Loss) (A)

     0.01       (0.04 )     (0.07 )     (0.05 )     (0.09 )

Net Realized and Unrealized Gain (Loss) on Investments

     (0.17 )     1.83       4.39       (2.60 )     1.30  
                                        

Total from Investment Operations

     (0.16 )     1.79       4.32       (2.65 )     1.21  
                                        

Less Distributions:

          

Dividends from Realized Gains

     (0.16 )     (1.65 )     —         (0.01 )     (0.03 )

Dividends from Net Investment Income

     —         —         —         —         —    
                                        

Total Distributions

     (0.16 )     (1.65 )     —         (0.01 )     (0.03 )
                                        

Net Asset Value at End of Year

   $ 15.27     $ 15.59     $ 15.45     $ 11.13     $ 13.79  
                                        

Total Return (B)(C)

     (1.01 )%     11.60 %     38.81 %     (19.25 )%     9.66 %

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 49,008     $ 42,542     $ 34,185     $ 22,603     $ 21,632  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.56 %     1.48 %     1.71 %     1.75 %     1.89 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.56 %     1.48 %     1.71 %     1.75 %     1.89 %

Ratio of Net Investment Income (Loss) to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     0.05 %     (0.30 )%     (0.55 )%     (0.46 )%     (0.80 )%

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     0.05 %     (0.30 )%     (0.55 )%     (0.46 )%     (0.80 )%

Portfolio Turnover

     44.24 %     57.59 %     47.99 %     66.95 %     61.41 %

 

(A) Per share amounts calculated using average shares method.

 

(B) Total return calculation does not reflect sales load.

 

(C) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        47


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

SMALL-CAP VALUE FUND - CLASS C SHARES

 

     year
ended
12/31/05
    period
ended
12/31/04 (A)
 

Per Share Operating Performance:

    

Net Asset Value at Beginning of Period

   $ 14.55     $ 15.00  
                

Income from Investment Operations:

    

Net Investment Loss (B)

     (0.10 )     (0.05 )

Net Realized and Unrealized Gain (Loss) on Investments

     (0.17 )     1.25  
                

Total from Investment Operations

     (0.27 )     1.20  
                

Less Distributions:

    

Dividends from Realized Gains

     (0.16 )     (1.65 )

Dividends from Net Investment Income

     —         —    
                

Total Distributions

     (0.16 )     (1.65 )
                

Net Asset Value at End of Period

   $ 14.12     $ 14.55  
                

Total Return (C)(D)

     (1.84 )%     8.02 %

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 2,258     $ 1,442  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.31 %     2.23 % (E)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.31 %     2.23 % (E)

Ratio of Net Investment Income to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (0.70 )%     (1.05 )% (E)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (0.70 )%     (1.05 )% (E)

Portfolio Turnover

     44.24 %     57.59 %

 

(A) For the period February 3, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect redemption fee.

 

(D) For periods of less than one full year, total return is not annualized.

 

(E) Annualized.

 

48       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

LARGE/MID-CAP VALUE FUND - CLASS A SHARES

 

     year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value at Beginning of Year

   $ 12.68     $ 11.66     $ 9.11     $ 10.83     $ 10.83  
                                        

Income from Investment Operations:

          

Net Investment Income (Loss) (A)

     0.02       (0.01 )     0.01       0.01       (0.02 )

Net Realized and Unrealized Gain (Loss) on Investments

     2.44       1.03       2.54       (1.73 )     0.06  
                                        

Total from Investment Operations

     2.46       1.02       2.55       (1.72 )     0.04  
                                        

Less Distributions:

          

Dividends from Realized Gains

     (2.15 )     —         —         —         (0.04 )

Dividends from Net Investment Income

     0.00 *     —         —         —         —    
                                        

Total Distributions

     (2.15 )     —         —         —         (0.04 )
                                        

Net Asset Value at End of Year

   $ 12.99     $ 12.68     $ 11.66     $ 9.11     $ 10.83  
                                        

Total Return (B)(C)

     19.42 %     8.75 %     27.99 %     (15.88 )%     0.33 %

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 51,753     $ 43,120     $ 29,374     $ 17,856     $ 13,858  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.55 %     1.52 %     1.64 %     1.76 %     1.70 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.55 %     1.52 %     1.64 %     1.76 %     1.70 %

Ratio of Net Investment Income (Loss) to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     0.15 %     (0.11 )%     0.10 %     0.11 %     (0.20 )%

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     0.15 %     (0.11 )%     0.10 %     0.11 %     (0.20 )%

Portfolio Turnover

     129.22 %     29.09 %     39.44 %     36.79 %     26.44 %

 

* Amount Distributed less than 0.01 per share

 

(A) Per share amounts calculated using average shares method.

 

(B) Total return calculation does not reflect sales load.

 

(C) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        49


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

LARGE/MID-CAP VALUE FUND - CLASS C SHARES

 

      year
ended
12/31/05
    period
ended
12/31/04 (A)
 

Per Share Operating Performance:

    

Net Asset Value at Beginning of Period

   $ 12.04     $ 11.05  
                

Income from Investment Operations:

    

Net Investment Loss (B)

     (0.08 )     (0.04 )

Net Realized and Unrealized Gain on Investments

     2.31       1.03  
                

Total from Investment Operations

     2.23       0.99  
                

Less Distributions:

    

Dividends from Realized Gains

     (2.15 )     —    

Dividends from Net Investment Income

     —         —    
                

Total Distributions

     (2.15 )     —    
                

Net Asset Value at End of Period

   $ 12.12     $ 12.04  
                

Total Return (C)(D)

     18.53 %     8.96 (E)

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 2,774     $ 1,174  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.30 %     2.27 (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.30 %     2.27 (F)

Ratio of Net Investment Income to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (0.60 )%     (0.86 )% (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (0.60 )%     (0.86 )% (F)

Portfolio Turnover

     129.22 %     29.09 %

 

(A) For the period February 3, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect redemption fee.

 

(D) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(E) For periods of less than one full year, total return is not annualized.

 

(F) Annualized.

 

50       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

PATRIOT FUND - CLASS A SHARES

 

      year
ended
12/31/05
    period
ended
12/31/04 (A)
 

Per Share Operating Performance:

    

Net Asset Value at Beginning of Period

   $ 10.53     $ 10.00  
                

Income from Investment Operations:

    

Net Investment Loss (B)

     (0.04 )     (0.03 )

Net Realized and Unrealized Gain on Investments

     0.11       0.56  
                

Total from Investment Operations

     0.07       0.53  
                

Net Asset Value at End of Period

   $ 10.60     $ 10.53  
                

Total Return (C)(D)

     0.66 %     5.30 (E)

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 1,437     $ 683  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.82 %     5.00 (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.60 %     1.60 (F)

Ratio of Net Investment Income (Loss) to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (0.58 )%     (4.11 )% (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (0.36 )%     (0.71 )% (F)

Portfolio Turnover

     52.18 %     20.76 %

 

(A) For the period May 5, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect sales load.

 

(D) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(E) For periods of less than one full year, total return is not annualized.

 

(F) Annualized.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        51


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

PATRIOT FUND - CLASS C SHARES

 

      year
ended
12/31/05
    period
ended
12/31/04 (A)
 

Per Share Operating Performance:

    

Net Asset Value at Beginning of Period

   $ 10.49     $ 10.00  
                

Income from Investment Operations:

    

Net Investment Loss (B)

     (0.11 )     (0.05 )

Net Realized and Unrealized Gain on Investments

     0.10       0.54  
                

Total from Investment Operations

     (0.01 )     0.49  
                

Net Asset Value at End of Period

   $ 10.48     $ 10.49  
                

Total Return (C)(D)

     (0.10 )%     4.90 (E)

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 584     $ 280  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.57 %     5.75 (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.35 %     2.35 (F)

Ratio of Net Investment Income (Loss) to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (1.33 )%     (4.86 )% (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     (1.11 )%     (1.46 )% (F)

Portfolio Turnover

     52.18 %     20.76 %

 

(A) For the period May 5, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect redemption fee.

 

(D) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(E) For periods of less than one full year, total return is not annualized.

 

(F) Annualized.

 

52       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

FIXED INCOME FUND - CLASS A SHARES

 

     year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value, Beginning of Year

   $ 10.32     $ 10.31     $ 10.25     $ 9.73     $ 9.53  
                                        

Income from Investment Operations:

          

Net Investment Income (A)

     0.34       0.34       0.37       0.45       0.40  

Net Realized and Unrealized Gain (Loss) on Investments

     (0.23 )     0.01       0.21       0.53       0.20  
                                        

Total from Investment Operations

     0.11       0.35       0.58       0.98       0.60  
                                        

Less Distributions:

          

Dividends from Net Investment Income

     (0.34 )     (0.34 )     (0.37 )     (0.44 )     (0.40 )

Dividends from Net Realized Gain

     (0.03 )     —         (0.15 )     (0.02 )     —    
                                        

Total Distributions

     (0.37 )     (0.34 )     (0.52 )     (0.46 )     (0.40 )
                                        

Net Asset Value at End of Year

   $ 10.06     $ 10.32     $ 10.31     $ 10.25     $ 9.73  
                                        

Total Return (B)(C)

     1.11 %     3.44 %     5.70 %     10.32 %     6.37 %

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 29,402     $ 23,131     $ 16,313     $ 10,374     $ 4,773  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.31 %     1.31 %     1.43 %     1.74 %     2.44 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.35 %     1.35 %     1.35 %     1.35 %     1.35 %

Ratio of Net Investment Income to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     3.33 %     3.49 %     3.61 %     4.49 %     3.91 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     3.29 %     3.45 %     3.69 %     4.88 %     5.00 %

Portfolio Turnover

     39.46 %     35.95 %     62.06 %     18.10 %     20.28 %

 

(A) Per share amounts calculated using average shares method.

 

(B) Total return calculation does not reflect sales load.

 

(C) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        53


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

FIXED INCOME FUND - CLASS C SHARES

 

     year
ended
12/31/05
    period
ended
12/31/04 (A)
 

Per Share Operating Performance:

    

Net Asset Value, Beginning of Period

   $ 10.04     $ 10.15  
                

Income from Investment Operations:

    

Net Investment Income (B)

     0.25       0.26  

Net Realized and Unrealized Gain (Loss) on Investments

     (0.20 )     (0.05 )
                

Total from Investment Operations

     0.05       0.21  
                

Less Distributions:

    

Dividends from Net Investment Income

     (0.28 )     (0.32 )

Dividends from Net Realized Gain

     (0.03 )     —    
                

Total Distributions

     (0.31 )     (0.32 )
                

Net Asset Value at End of Period

   $ 9.78     $ 10.04  
                

Total Return (C)(D)

     0.47 %     2.12 %(E)

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 1,927     $ 907  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.07 %     2.06 %(F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.10 %     2.10 %(F)

Ratio of Net Investment Income to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.57 %     2.74 %(F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.54 %     2.70 %(F)

Portfolio Turnover

     39.46 %     35.95 %

 

(A) For the period February 3, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect redemption fee.

 

(D) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(E) For periods of less than one full year, total return is not annualized.

 

(F) Annualized.

 

54       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

MONEY MARKET FUND

 

     year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value at Beginning of Year

   $ 1.00     $ 1.00     $ 1.00     $ 1.00     $ 1.00  
                                        

Income from Investment Operations:

          

Net Investment Income (A)

     0.03       0.01       0.01       0.01       0.03  
                                        

Total from Investment Operations

     0.03       0.01       0.01       0.01       0.03  
                                        

Less Distributions:

          

Dividends from Realized Gains

     (0.00 )*     —         —         —         —    

Dividends from Net Investment Income

     (0.03 )     (0.01 )     (0.01 )     (0.01 )     (0.03 )
                                        

Total Distributions

     (0.03 )     (0.01 )     (0.01 )     (0.01 )     (0.03 )
                                        

Net Asset Value at End of Year

   $ 1.00     $ 1.00     $ 1.00     $ 1.00     $ 1.00  
                                        

Total Return (B)

     2.48 %     0.97 %     0.59 %     0.80 %     3.34 %

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 5,195     $ 3,698     $ 3,554     $ 3,544     $ 2,774  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     1.13 %     1.20 %     1.40 %     1.85 %     2.33 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     0.66 %     0.25 %     0.48 %     0.85 %     0.73 %

Ratio of Net Investment Income to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.03 %     0.07 %     (0.36 )%     (0.22 )%     1.45 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser

     2.50 %     1.02 %     0.56 %     0.78 %     3.05 %

 

* Distribution was less than $0.01 per share

 

(A) Per share amounts calculated using average shares.

 

(B) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        55


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

STRATEGIC GROWTH FUND - CLASS A SHARES

 

     year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value at Beginning of Year

   $ 8.64     $ 8.10     $ 6.33     $ 8.47     $ 9.61  
                                        

Income from Investment Operations:

          

Net Investment Loss(A)

     (0.10 )     (0.05 )     (0.07 )     (0.07 )     (0.05 )

Net Realized and Unrealized Gain (Loss) on Investments

     0.64       0.71       1.84       (2.07 )     (1.08 )
                                        

Total from Investment Operations

     0.54       0.66       1.77       (2.14 )     (1.13 )
                                        

Less Distributions:

          

Dividends from Realized Gains

     —   *     (0.12 )     —         —   *     (0.01 )

Dividends from Net Investment Income

     —         —         —         —         —    
                                        

Total Distributions

     —         (0.12 )     —         —         (0.01 )
                                        

Net Asset Value at End of Year

   $ 9.18     $ 8.64     $ 8.10     $ 6.33     $ 8.47  
                                        

Total Return(B)(C)

     6.25 %     8.09 %     27.96 %     (25.26 )%     (11.72 )%

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 26,451     $ 21,019     $ 12,948     $ 7,430     $ 4,675  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser(D)

     1.11 %     1.13 %     1.17 %     1.34 %     1.68 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser(D)

     1.15 %     1.15 %     1.15 %     1.25 %     1.25 %

Ratio of Net Investment Income (Loss) to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser(D)(E)

     (1.10 )%     (0.74 )%     (1.17 )%     (1.34 )%     (1.61 )%

After Reimbursement and Waiver/Recoupment of Expenses by Adviser(D)(E)

     (1.14 )%     (0.76 )%     (1.15 )%     (1.25 )%     (1.18 )%

Portfolio Turnover

     1.61 %     0.46 %     0.53 %     0.67 %     0.15 %

 

* Distribution was less than $0.01 per share

 

(A) Per share amounts calculated using average shares method.

 

(B) Total return calculation does not reflect sales load.

 

(C) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(D) These ratios exclude the impact of expenses of the underlying security holdings as represented in the schedule of investments.

 

(E) Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

56       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


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FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

STRATEGIC GROWTH FUND - CLASS C SHARES

 

     year
ended
12/31/05
    period
ended
12/31/04 (A)
 

Per Share Operating Performance:

    

Net Asset Value at Beginning of Period

   $ 8.39     $ 8.03  
                

Income from Investment Operations:

    

Net Investment Loss(B)

     (0.16 )     (0.05 )

Net Realized and Unrealized Gain (Loss) on Investments

     0.63       0.53  
                

Total from Investment Operations

     0.47       0.48  
                

Less Distributions:

    

Dividends from Realized Gains

     —   *     (0.12 )

Dividends from Net Investment Income

     —         —    
                

Total Distributions

     —         (0.12 )
                

Net Asset Value at End of Period

   $ 8.86     $ 8.39  
                

Total Return(C)(D)

     5.61 %     5.92 (E)

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 5,462     $ 2,204  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser(G)

     1.86 %     1.88 (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser(G)

     1.90 %     1.90 (F)

Ratio of Net Investment Loss to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser(G)(H)

     (1.85 )%     (1.49 )% (F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser(G)(H)

     (1.89 )%     (1.51 )% (F)

Portfolio Turnover

     1.61 %     0.46 %

 

* Distribution was less than $0.01 per share

 

(A) For the period February 3, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect redemption fee.

 

(D) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(E) For periods of less than one full year, total return is not annualized.

 

(F) Annualized.

 

(G) These ratios exclude the impact of expenses of the underlying security holdings as represented in the schedule of investments.

 

(H) Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        57


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

CONSERVATIVE GROWTH FUND - CLASS A SHARES

 

     year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value at Beginning of Year

   $ 10.26     $ 9.85     $ 8.20     $ 9.43     $ 9.98  
                                        

Income from Investment Operations:

          

Net Investment Income (Loss)(B)

     (0.01 )     0.02       —         0.02       (0.01 )

Net Realized and Unrealized Gain (Loss) on Investments

     0.58       0.61       1.66       (1.25 )     (0.53 )
                                        

Total from Investment Operations

     0.57       0.63       1.66       (1.23 )     (0.54 )
                                        

Less Distributions:

          

Dividends from Realized Gains

     —         (0.19 )     (0.01 )     —         (0.01 )

Dividends from Net Investment Income

     —         —         —         —   *     —   *

Distributions from Paid-in-Capital

     —         (0.03 )     —         —         —    
                                        

Total Distributions

     —         (0.22 )     (0.01 )     —         (0.01 )
                                        

Net Asset Value at End of Year

   $ 10.83     $ 10.26     $ 9.85     $ 8.20     $ 9.43  
                                        

Total Return(A)(C)

     5.56 %     6.41 %     20.22 %     (13.03 )%     (5.41 )%

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 27,765     $ 23,241     $ 15,765     $ 9,573     $ 5,787  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser(D)

     1.13 %     1.14 %     1.18 %     1.38 %     1.74 %

After Reimbursement and Waiver/Recoupment of Expenses by Adviser(D)

     1.15 %     1.15 %     1.15 %     1.20 %     1.20 %

Ratio of Net Investment Income (Loss) to Average Net Assets:

          

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser(D)(E)

     (0.11 )%     0.27 %     0.02 %     0.06 %     (0.17 )%

After Reimbursement and Waiver/Recoupment of Expenses by Adviser(D)(E)

     (0.13 )%     0.26 %     0.05 %     0.24 %     0.37 %

Portfolio Turnover

     3.61 %     0.00 %     2.51 %     0.00 %     4.03 %

 

* Distribution was less than $0.01 per share

 

(A) Total return calculation does not reflect sales load.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(D) These ratios exclude the impact of expenses of the underlying security holdings as represented in the schedule of investments.

 

(E) Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

58       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

FINANCIAL HIGHLIGHTS

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

The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 years (or, if shorter, the period of the Fund’s 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 the Fund (assuming reinvestment of all dividends and distributions). This information for the year ended December 31, 2005 has been audited by Cohen McCurdy, Ltd., whose report, along with the Fund’s financial statements, are included in the annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

CONSERVATIVE GROWTH FUND - CLASS C SHARES

 

     year
ended
12/31/05
    period
ended
12/31/04(A)
 

Per Share Operating Performance:

    

Net Asset Value at Beginning of Period

   $ 9.97     $ 9.69  
                

Income from Investment Operations:

    

Net Investment Loss(B)

     (0.09 )     (0.02 )

Net Realized and Unrealized Gain on Investments

     0.56       0.49  
                

Total from Investment Operations

     0.47       0.47  
                

Less Distributions:

    

Dividends from Realized Gains

     —         (0.19 )

Dividends from Net Investment Income

     —         —    
                

Total Distributions

     —         (0.19 )
                

Net Asset Value at End of Period

   $ 10.44     $ 9.97  
                

Total Return(C)(D)

     4.71 %     4.84 %(E)

Ratios/Supplemental Data:

    

Net Assets, End of Period (in 000s)

   $ 4,361     $ 2,638  

Ratio of Expenses to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser(G)

     1.88 %     1.89 %(F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser(G)

     1.90 %     1.90 %(F)

Ratio of Net Investment Income (Loss) to Average Net Assets:

    

Before Reimbursement and Waiver/Recoupment of Expenses by Adviser(G)(H)

     (0.86 )%     (0.48 )%(F)

After Reimbursement and Waiver/Recoupment of Expenses by Adviser(G)(H)

     (0.88 )%     (0.49 )%(F)

Portfolio Turnover

     3.61 %     0.00 %

 

(A) For the period February 3, 2004 (Commencement of Operations) to December 31, 2004.

 

(B) Per share amounts calculated using average shares method.

 

(C) Total return calculation does not reflect redemption fee.

 

(D) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

(E) For periods of less than one full year, total return is not annualized.

 

(F) Annualized.

 

(G) These ratios exclude the impact of expenses of the underlying security holdings as represented in the schedule of investments.

 

(H) Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        59


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PRIVACY POLICY

The following is a description of the Funds’ policies regarding disclosure of nonpublic personal information that you provide to the Funds or that the Funds collect from other sources. In the event that you hold shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.

Categories of Information the Funds Collect.

The Funds collect the following nonpublic personal information about you:

 

    Information the Funds receive from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, assets, income and date of birth); and

 

    Information about your transactions with the Funds, their affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information).

Categories of Information the Funds Disclose.

The Funds do not disclose any nonpublic personal information about their current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Funds are permitted by law to disclose all of the information they collect, as described above, to their service providers (such as the Funds’ custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.

Confidentiality and Security.

The Funds restrict access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Funds maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

CUSTOMER IDENTIFICATION PROGRAM

The Board of Directors of the Trust has approved procedures designed to prevent and detect attempts to launder money as required under the USA PATRIOT Act. The day-to-day responsibility for monitoring and reporting any such activities has been delegated to the transfer agent, subject to the oversight and supervision of the Board.

FOR MORE INFORMATION

Additional information about the Funds is available in the Trust’s annual report to shareholders, dated December 31, 2005, and its semi-annual report to shareholders, dated June 30, 2005. In addition to other information, in the Fund’s Annual Report you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year.

Statement of Additional Information (SAI)

The SAI contains more detailed information on all aspects of the Trust. A current SAI, dated May 01, 2006, has been filed with the SEC and is incorporated by reference into this prospectus.

To request a free copy of the SAI, or the Trust’s latest annual or semi-annual report, or for other information or inquiries, please contact the Trust.

 

    

Timothy Plan*

  

Securities and Exchange Commission

By Phone:    1-800-846-7526    1-202-942-8090
By Mail:   

The Timothy Plan

c/o Timothy Partners, Ltd.

1055 Maitland Center Commons Center Blvd.

Maitland, FL 32751

  

Public Reference Section

Securities and Exchange Commission

Washington, D.C. 20549-0102

(a duplicating fee required)

By E-mail:    invest@timothyplan.com   

Publicinvest@sec.gov

(a duplicating fee required)

By Internet:    http://www.timothyplan.com    http://www.sec.gov
In Person:      

Public Reference Room

Securities and Exchange Commission,

Washington, D.C.

 

* A copy of your requested document(s) will be mailed to you within three days of your request.

 

60       PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


Table of Contents

Information about the Funds (including the SAI) can also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information concerning the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Information about the Fund is also available on the SEC’s EDGAR database at the SEC’s web site (www.sec.gov). Copies of this information can be obtained, after paying a duplicating fee, by electronic request (publicinvest@sec.gov), or by writing the SEC’s Public Reference Section, Washington, DC 20549-0102.

The Timothy Plan

Investment Company Act No. 811-08228

 

PROSPECTUS FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006        61


Table of Contents

The following documents, which are not part of this prospectus,

are provided for your convenience.


Table of Contents

(This page is not part of the prospectus.)


Table of Contents

LOGO

The Timothy Plan

1055 Maitland Center Commons, Suite

100

Maitland, FL 32751

www.timothyplan.com

E-mail invest@timothyplan.com

Tel (800) 846-7526


Table of Contents

LOGO

Prospectus

May 01, 2006

Timothy Plan

Portfolio Variable Series:

Small-Cap


Table of Contents

(This page is not part of the prospectus.)


Table of Contents

Contents

 

4    Risk/Return Summary
4    Small-Cap Variable Series
6    Fees & Expenses
7    Purchases & Redemptions
8    Dividends & Distributions
8    Investment Adviser & Investment Manager
9    Principal Underwriter
9    General Information
10    Financial Highlights
11    Privacy Policy
11    For More Information

Timothy Plan

Family of Funds

(the “Trust”)

Prospectus May 01, 2006

This Prospectus offers the following Trust Portfolio (the “Fund”):

The Timothy Plan Small-Cap Variable Series

The Fund is intended to be a funding vehicle for Variable Annuity Contracts (“VA Contracts”) offered through existing separate accounts of the Annuity Investors Life Insurance Company (the “Insurance Company”). Effective May 1, 2002 the Board of Trustees determined that this Fund would be closed to new investors.

The Timothy Plan was established to provide an investment alternative for people who want to invest according to certain ethical standards. The Funds established by the Trust invest in a different market segment, and each Fund has its own investment objectives. However, all the Funds have one thing in common. They employ a zero-tolerance policy and 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 abortion or pornography, or promoting anti-family entertainment or alternative lifestyles.

The Funds are distributed through Timothy Partners, Ltd.

1055 Maitland Center Commons Blvd., Maitland, FL 31751

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.

 

PROSPECTUS FOR THE TIMOTHY PLAN SMALL CAP VARIABLE SHRIES    May 1, 2006        3


Table of Contents

RISK/RETURN SUMMARY

The Timothy Plan believes that it has a responsibility to invest in a moral and ethical manner, and employs a zero tolerance philosophy in the selection of companies for its portfolios. Accordingly, as a matter of fundamental policy, none of the Funds established by the Trust invests in any company that is involved in the business of alcohol production, tobacco production, or casino gambling, or which is involved, either directly or indirectly, in abortion or pornography, or promoting anti-family entertainment or alternative lifestyles. Further, if a company whose securities are being held by one of our Funds is discovered to be engaging in a prohibited practice, that security will immediately be sold. 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 the investment adviser to the Fund, and is responsible for determining those companies that are Excluded Securities, and reserves the right to exclude investments, in its best judgment, in other companies when practices may not fall within the exclusions described above, but could otherwise be found offensive to basic, traditional Judeo-Christian values.

Because none of our Funds will invest in Excluded Securities, and will divest itself securities that are subsequently discovered to be ineligible, 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 and ongoing expenses. 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.

TIMOTHY PLAN SMALL-CAP VARIABLE SERIES

Investment objective

Long-term capital growth, with a secondary objective of current income.

Primary investment strategies

 

    The Fund seeks to achieve its objectives by primarily investing in US small-cap stocks and American Depositary 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 $2 Billion. ADRs are certificates issued by United States banks to evidence an ownership interest in an underlying non-United States 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 the 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, and will divest itself securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities.

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.

 

4       PROSPECTUS FOR THE TIMOTHY PLAN SMALL CAP VARIABLE SERIES    May 1, 2006


Table of Contents

Past Performance

The bar chart and table below 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. The performance information in this prospectus does not reflect charges associated with the Separate Accounts, variable contracts, or Qualified Plans that an investor in the Portfolio may pay. You should be aware that the Fund’s past performance may not be an indication of how the Fund will perform in the future.

 

PROSPECTUS FOR THE TIMOTHY PLAN SMALL CAP VARIABLE SHRIES    May 1, 2006        65


Table of Contents

Performance Bar Chart and Table

Year-by-Year Total Returns for calendar years ending on 12/31

LOGO

The total return for the most recent quarter ended March 31, 2006 was -0.66%.

 

Best

Quarter

   Worst
Quarter
 

Jun-99

   Sep-02  

22.32%

   -17.83 %

Average Annual Total Returns

(for periods ending on December 31, 2005(1))

 

     Class A (1)  
     1 Year     3 Year     5 Year     10 Year    Since
Inception
 

Return without sales load

   -0.66 %   16.04 %   7.55 %   N/A    8.93 %

Russell 2000 Index (2)

           

(reflects no deduction for fees, expenses or taxes)

   4.55 %   22.13 %   8.22 %   N/A    6.62 %

 

(1) Commenced investment operations on May 22, 1998.

 

(2) 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.

Additional Investment Information

The 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 the 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.

 

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FEES AND EXPENSES

Investors using this Fund to fund a VA Contract will pay certain fees and expenses in connection with the Fund, which are estimated in the table below. The Fund pays annual operating expenses from its assets, so their effect is included in the Portfolio’s share price. These figures do not reflect any fees or charges imposed by the Insurance Company under its VA Contract. Owners of VA Contracts should refer to the Insurance Company’s prospectus for information on those fees or charges.

 

     Variable Series  
Annual Fund Operating Expenses    Small Cap  

(expenses that are deducted from fund assets)

      

Management fee

   1.00 %

Other expenses (1)

   0.69 %
      

Total annual fund operating expenses

(before reimbursement by Adviser)

   1.69 %
      

(Reimbursement) (2)

   -0.49 %
      

Net annual fund operating expenses

(after reimbursement by Adviser) (2)

   1.20 %
      

 

(1) The Trust and the TPL have entered into an agreement with the participating Life Insurance Company, pursuant to which the Insurance Company maintains the records related to the Fund’s shares in the Insurance Company Separate Accounts, processes all purchases and redemptions within the accounts, and provides other administrative and shareholder services for an administrative services fee of 0.20% of the Fund’s assets. The remaining expenses in this category pay for fund services such as transfer agency, fund accounting, legal, auditing and other related expenses.

 

(2) The Adviser contractually has agreed to waive all or a portion of its advisory fees and/or reimburse expenses in order to keep the Fund’s total annual operating expenses at 1.20% through the life of the fund. Any waiver or reimbursement by the Adviser is subject to repayment by the Fund within the following three fiscal years if the Fund is able to make the repayment without exceeding its current expense limitation.

Example:

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in a Fund for the time periods indicated, reinvest dividends and distributions, and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

     Small Cap Variable

One year

   $ 122

Three years

   $ 381

Five years

   $ 660

Ten years

   $ 1,455

The $9 fee that you would have to pay if you redeemed your shares by wire transfer is not included in these figures.

 

PROSPECTUS FOR THE TIMOTHY PLAN SMALL CAP VARIABLE SHRIES    May 1, 2006        7


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PURCHASES AND REDEMPTIONS OF SHARES

Purchases and Redemptions of Shares in the Fund may be made only by the 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 or 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 the Fund’s shares, or to reject any purchase order.

Purchase orders for shares of the Fund 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 Fund calculates its net asset value, are priced according to the net asset value determined on that day. Purchase orders for shares of the Fund received after the close of the NYSE on a particular day are priced as of the time the net asset value per share is next determined.

Redemption proceeds will normally be wired to the Insurance Company on the next business day after receipt of the redemption instructions by the Fund, but in no event later than 7 days following receipt of instructions. The Fund may suspend redemptions or postpone payments when the New York Stock Exchange 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.

The Trust has adopted policies and procedures designed to prevent and protect frequent purchases and redemptions of Portfolio shares (“market timing”). Those policies apply to all the Timothy Funds in which each Portfolio invests. However, since purchases and redemptions of shares in the Portfolios may be made only by an insurance company or by a qualified plan on behalf of its participants, the Board of Trustees has exempted the Portfolios from those policies and procedures.

Other Purchase Information

If the Trustees determine that it would be detrimental to the best interests of the remaining shareholders of the Fund to make payments in cash, the Fund may pay the redemption price, in whole or in part by distribution in-kind of readily marketable securities, from the Fund, within certain limits prescribed by the 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.

For economy and convenience, share certificates will not be issued.

The public offering price for the Fund is based upon the Fund’s net asset value per share. Net asset value per share is calculated by adding the value of the Fund’s investments, cash and other assets, subtracting the Fund’s liabilities, and then dividing the result by the number of shares outstanding. The assets of the Fund are valued at market value or, if market quotes cannot be readily obtained, fair value is determined pursuant to the Fair Value Pricing policies (see below) adopted 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. Eastern 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 Fund’s Fair Value Pricing (below), in conformity with guidelines adopted by and subject to the review of the Board of Trustees. Money market securities with less than 60 days remaining to maturity when acquired by the Fund will be valued on an amortized cost basis by the Fund, excluding

 

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unrealized gains or losses thereon from the valuation. This is accomplished by valuing the security at cost and then assuming a constant amortization to maturity of any premium or discount. If the Fund acquires a money market security with more than 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.

FAIR VALUE PRICING

The Board of Trustees has delegated to the Advisor and/or Sub-Advisors responsibility for determining the value of Portfolio securities holdings under certain conditions. Under such circumstances, the Advisor or Sub-Advisor will use its best efforts to arrive at the fair value of a security held by the Portfolio under all reasonably ascertainable facts and circumstances. The Advisor must prepare a report for the Board not less than quarterly containing a complete listing of any securities for which fair value pricing was employed and detailing the specific reasons for such fair value pricing. The Trust has adopted written policies and procedures to guide the Advisor and Sub-Advisors with respect to the circumstances under which, and the methods to be used, in fair value pricing.

The Portfolios typically do not invest in securities on foreign exchanges or illiquid or restricted securities. Accordingly, there may be very limited circumstances under which any Portfolio would hold securities that would need to be fair value priced. Examples of when it would be likely that a Portfolio security would require fair value pricing include but are not limited to: if the exchange on which a Portfolio security traded were to close early; if trading in a particular were to be halted on the exchange and did not resume trading prior to calculation of NAV; if a significant event that materially affected the value of a security were to occur after the securities’ exchange had closed but before the Portfolio’s NAV had been calculated; and if a security that had a significant exposure to foreign operations was subject to a material event or occurrence in a foreign jurisdiction in which the company had significant operations, or in the event that the Fixed Income Fund were to invest in certain types of bonds that had limited marketability, such as “church bonds”.

When a security is fair value priced, it means that the Advisor or Sub-Advisor is calculating the value of that security on a day and under circumstances where reliable pricing information from normal sources is not available or is otherwise limited. Accordingly, there is always the possibility that the Advisor’s or Sub-Advisor’s calculations concerning security value could be wrong, and as a result, the Fund’s NAV on that day could be higher or lower, depending on haw the security was valued, than would otherwise be the case.

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 the security. 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 the 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.

INVESTMENT ADVISER AND INVESTMENT MANAGER

INVESTMENT ADVISER

Timothy Partners Ltd., (“ TPL”), 1055 Maitland Center Commons, Blvd., Maitland, FL 32751 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 the Fund in accordance with the objectives, policies and restrictions of the Trust. TPL approves the portfolio of securities selected by the

 

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investment manager. 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 which it acquires its information, at its sole discretion. TPL has been the Adviser to the Fund since its inception.

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 had 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 the Fund. Neither Mr. Ally nor any affiliated person of the Trust will receive any benefit from such transactions.

A discussion of the considerations employed by the Board of Trustees in their approval of TPL as Advisor to the Trust, the sub-advisor as manager of the Fund is available in the Fund’s annual report dated December 31, 2005, that provides financial information for the period January 01, 2005 through December 31, 2005.

The SAI also contains additional information about the compensation paid to each Fund’s portfolio managers, other accounts and account types managed by the Adviser and each Fund’s Investment Manager, and other relevant information.

INVESTMENT MANAGER

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 also the investment manager for the Timothy Plan Patriot Fund. Awad has offices at 250 Park Avenue, New York, New York 10177. Awad selects the investments for both Funds’ portfolios, subject to the investment restrictions of the Trust and under the supervision of TPL.

James Awad is the President and Senior Investment Officer of the investment manager, and is responsible for managing the day-to-day investments for the Funds. Prior to forming Awad, 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 industry since 1965.

Awad has served as investment manager to the Fund since its inception. In addition to this Fund and the Timothy Plan Patriot Fund, Awad also serves as investment adviser or co-adviser to two other investment companies: Calvert New Vision Small-Cap Fund and Heritage Small-Cap Stock Fund. As of December 31, 2005, Awad managed approximately of $1.1billion in assets.

For its services as investment manager to the Fund, Awad is paid an annual fee by TPL equal to 0.25% of average daily net assets of the Fund.

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 Fund’s shares under state securities laws and to assist in the sale of Fund 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 Fund 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 the 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.

 

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FINANCIAL HIGHLIGHTS

The financial highlights table set forth below is intended to help you understand the Fund’s financial performance for the last five years. Certain information reflects financial results for a single Fund share. Total return in the table represents the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The total return information does not reflect expenses associated with Separate Accounts, variable contracts or Qualified Plans that an investor in the Portfolio may pay. Inclusion of these charges would reduce the total return figures for the all period shown. The information for the year ended December 31, 2005 presented in these tables has been audited by Cohen McCurdy Ltd., whose report, along with the Portfolio’s financial statements, are included in the Trust’s annual report, dated December 31, 2005, which is available upon request. The information for prior years was audited by another independent accounting firm.

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

SMALL-CAP VARIABLE SERIES

 

     year
ended
12/31/05
    year
ended
12/31/04
    year
ended
12/31/03
    year
ended
12/31/02
    year
ended
12/31/01
 

Per Share Operating Performance:

          

Net Asset Value, Beginning of Year

   $ 16.83     $ 15.10     $ 10.70     $ 13.05     $ 12.29  
                                        

Income from Investment Operations:

          

Net Investment Income (Loss) (A)

     0.01       (0.01 )     (0.03 )     (0.01 )     (0.02 )

Net Realized and Unrealized Gain (Loss) on Investments

     (0.12 )     1.74       4.43       (2.26 )     1.42  
                                        

Total from Investment Operations

     (0.11 )     1.73       4.40       (2.27 )     1.40  
                                        

Less Distributions:

          

Distributions from Net Investment Income

     —         —         —         —         —    

Distributions from Realized Gains

     (1.28 )     —         —         —         (0.64 )

Return of Capital

     —         —         —         (0.08 )     —    
                                        

Total Distributions

     (1.28 )     —         —         (0.08 )     (0.64 )
                                        

Net Asset Value at End of Year

   $ 15.44     $ 16.83     $ 15.10     $ 10.70     $ 13.05  
                                        

Total Return (B)

     (0.66 %)     11.46 %     41.12 %     (17.38 %)     11.48 %

Ratios/Supplemental Data:

          

Net Assets, End of Year (in 000s)

   $ 4,885     $ 5,563     $ 5,300     $ 4,839     $ 5,114  

Ratio of Expenses to Average Net Assets:

          

Before Reimbursement and Waiver of Expenses by Adviser

     1.69 %     1.63 %     1.56 %     1.82 %     2.00 %

After Reimbursement and Waiver of Expenses by Adviser

     1.20 %     1.20 %     1.20 %     1.20 %     1.20 %

Ratio of Net Investment Income (Loss) to Average Net Assets:

          

Before Reimbursement and Waiver of Expenses by Adviser

     (0.43 )%     (0.52 )%     (0.55 )%     (0.73 )%     (0.94 %)

After Reimbursement and Waiver of Expenses by Adviser

     0.06 %     (0.09 )%     (0.19 )%     (0.11 )%     (0.14 %)

Portfolio Turnover

     59.82 %     63.35 %     51.95 %     69.14 %     67.40 %

 

(A) Per share amounts calculated using average shares.

 

(B) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived.

 

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PRIVACY POLICY

The following is a description of the Fund’s policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.

Categories of Information the Fund Collects.

The Fund collects the following nonpublic personal information about you:

 

    Information the Fund receives from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, assets, income and date of birth); and

 

    Information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information).

Categories of Information the Fund Discloses.

The Fund does not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.

Confidentiality and Security.

The Fund restricts access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Fund maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

FOR MORE INFORMATION

Additional information about the Trust is available in the Trust’s annual report and semi-annual report to shareholders in which 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 INFORMATION (SAI)

The SAI contains more detailed information on all aspects of the Trust. A current SAI, dated May 01, 2005, has been filed with the SEC and is incorporated by reference into this prospectus.

To request a free copy of the SAI, or the Trust’s latest annual or semi-annual report, please contact the Trust.

 

    

Timothy Plan*

  

Securities and Exchange Commission

By Phone:    1-800-846-7526    1-202-942-8090
By Mail:   

The Timothy Plan

c/o Timothy Partners, Ltd.

1055 Maitland Center Commons Blvd.

Maitland, FL 32751

  

Public Reference Section

Securities and Exchange Commission

Washington, D.C. 20549-0102

(a duplicating fee required)

By E-mail:    invest@timothyplan.com   

Publicinvest@sec.gov

(a duplicating fee required)

By Internet:    http://www.timothyplan.com    http://www.sec.gov
In Person:      

Public Reference Room

Securities and Exchange Commission,

Washington, D.C.

 

* A copy of your requested document(s) will be mailed to you within three days of our receiving your request.

Information about the Funds (including the SAI) can also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information concerning the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Information about the Fund is also available on the SEC’s EDGAR database at the SEC’s web site (www.sec.gov). Copies of this information can be

 

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obtained, after paying a duplicating fee, by electronic request (publicinvest@sec.gov), or by writing the SEC’s Public Reference Section, Washington, DC 20549-0102.

The Timothy Plan

Investment Company Act No. 811-08228

 

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LOGO

The Timothy Plan

1055 Maitland Center Commons Blvd.

Maitland, FL 32751

www.timothyplan.com

E-mail invest@timothyplan.com


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LOGO

SAI

Statement of Additional Information

May 01, 2006

 

     Timothy Plan Family of Funds:
    

Aggressive Growth Fund

Large/Mid-Cap Growth Fund

Small-Cap Value Fund

Large/Mid-Cap Value Fund

Patriot Fund

Fixed-Income Fund

Money Market Fund

Strategic Growth Fund

Conservative Growth Fund

Small-Cap Variable Series


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(This page intentionally left blank.)

 

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Contents

 

5    The Timothy Plan
5    The Timothy Plan Investments
5    The Traditional Funds
5    Money Market Fund and the Small-Cap Variable Series
5    Common Stock
5    Preferred Stock
5    Convertible Securities
6    Warrants
6    American Depository Receipts
6    Portfolio Turnover
6    Disclosure of Portfolio Holdings
8    Investment Restrictions
9    Additional Considerations
9    Investment Adviser
10    Investment Managers
17    Proxy Voting Procedures
17    Principal Underwriter
17    Custodian
17    Accountants
18    Administrator
18    Allocation of Portfolio Brokerage
19    Code of Ethics
19    Purchase of Shares
19    Tax-Deferred Retirement Plans
20    Tax-Deferred Variable Annuity Series
20    Redemptions
21    Dealer Transaction Fees
22    Officers and Trustees of the Trust
26    Distribution Plans
27    Taxation
29    General Information
   Audits and Reports
29    Miscellaneous
29    Holders of More Than 5% of Each Funds’ Shares
30    Performance
33    Comparisons and Advertisements
33    Financial Statements

Statement of

Additional Information

The Timothy Plan

A Delaware Business Trust and registered investment management company offering the following series:

Timothy Plan Aggressive Growth Fund

Timothy Plan Large/Mid-Cap Growth Fund

Timothy Plan Small-Cap Value Fund

Timothy Plan Large/Mid-Cap Value Fund

Timothy Plan Patriot Fund

Timothy Plan Fixed-Income Fund

Timothy Plan Money Market Fund

Timothy Plan Small-Cap Variable Series

AND

Timothy Plan Strategic Growth Fund

Timothy Plan Conservative Growth Fund

May 01, 2006

Distributed by:

Timothy Partners, Ltd.

1055 Maitland Commons Center Blvd.

Maitland, FL 32751

(800) 846-7526

This Statement of Additional Information (“SAI”) is not a prospectus. It is an additional disclosure document filed in addition to and supplementing the following prospectuses of The Timothy Plan (the “Trust:”),Prospectus of The Timothy Plan Aggressive Growth Fund, the Timothy Plan Large/Mid-Cap Growth Fund, the Timothy Plan Small-Cap Value Fund, the Timothy Plan Large/Mid-Cap Value Fund, the Timothy Plan Patriot Fund, the Timothy Plan Fixed-Income Fund, the Timothy Plan Money Market Fund (collectively, the “Traditional Funds”), dated May 01, 2006; Prospectus of the Timothy Plan Strategic Growth Fund, and the Timothy Plan Conservative Growth Fund (collectively, the “Asset Allocation Funds, dated May 01, 2006; Prospectus of”). the Timothy Plan Strategic Growth Fund, and the Timothy Plan Conservative Growth Fund, limited to the states of New Hampshire and Oklahoma, and the District of Columbia, dated May 01, 2006; and Prospectus of the Timothy Plan Small-Cap Variable Series, dated May 01, 2006.

THE TIMOTHY PLAN (the “Trust”) is registered with the Securities and Exchange Commission as an open-end management investment company.

Traditional Funds (except the Money Market Fund) currently offer two classes of shares: Class A and Class C. The Timothy Plan Money Market Fund and the Timothy Plan Small-Cap Variable Series offer a single class of shares without any sales charges.

Each of the Asset Allocation Funds currently offers two classes of shares: Class A and Class C.

 

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Copies of this SAI and/or the Prospectuses to which it relates may be obtained from the Trust without charge by writing the Trust at 1055 Maitland Commons Center Blvd., Maitland, FL 32751 or by calling the Trust at (800) 846-7526. Retain this SAI for future reference.

 

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THE TIMOTHY PLAN

The Timothy Plan (“Trust”) was organized as a Delaware business trust on December 16, 1993, and is a mutual fund company of the type known as, and registered with the Securities and Exchange Commission 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. This SAI pertains to the following ten series of the Trust: the Timothy Plan Aggressive Growth Fund, the Timothy Plan Large/Mid-Cap Growth Fund, the Timothy Plan Small-Cap Value Fund, the Timothy Plan Large/Mid-Cap Value Fund, the Timothy Plan Patriot Fund, the Timothy Plan Fixed-Income Fund, the Timothy Plan Money Market Fund, (collectively the “Traditional Funds”“) and the Timothy Plan Strategic Growth Fund, and the Timothy Plan Conservative Growth Fund (collectively, the “Asset Allocation Funds”“), and the Timothy Plan Small-Cap Variable Series. The shares of each series 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 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 currently offered by the Trust; Class A shares are offered with a front-end sales charge and ongoing service/distribution fees; Class C shares are offered with a contingent deferred sales charge that ends after the first year and ongoing service and distribution fees; No-Load shares are offered without sales charges or ongoing service/distribution fees (the Timothy Plan Money Market Fund and the Timothy Plan Small-Cap Variable Series only). The Trust previously has offered Class B shares to the public, which contain a contingent deferred sales charge that declines to zero over a period of years and are subject to an ongoing service/distribution fee. Sales of Class B shares to new shareholders were suspended by the Board of Trustees during their meeting on February 27, 2004, with the suspension effective May 01, 2004.

Shareholder meetings will not be held unless required by federal or state law.

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 the applicable prospectus to achieve its objectives. This SAI 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 TRADITIONAL FUNDS issue two classes of shares (Class A and Class C) that invest in the same portfolio of securities, except that Money Market Fund and Small-Cap Variable Series issue one class with no sales charge. Class A and Class C shares differ with respect to sales structure and 12b-1 Plan expenses.

THE MONEY MARKET FUND AND THE SMALL-CAP VARIABLE SERIES offer a single class of shares, the No-Load class.

Each Fund has its own investment objectives and policies, and each invests in its own portfolio of securities. Each Fund 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 the prospectuses.

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 Directors. Dividends on the typical preferred stock are cumulative, causing dividends to accrue even if not declared by the Board of Directors. There is, however, no assurance that dividends will be declared by the Board of Directors of issuers of the preferred stocks in which the Funds invest.

CONVERTIBLE SECURITIES Traditional convertible securities include corporate bonds, notes and preferred stocks that may be converted into or exchanged for common stock, and other securities that also provide an opportunity for equity participation. These securities are generally convertible either at a stated price or a stated rate (that is, for a specific number of shares of common stock or other security). As with other fixed income securities, the price of a convertible security to some extent varies inversely with interest rates. While providing a fixed income stream (generally higher in yield than the income derivable from a common stock but lower than that afforded by a non-convertible debt security), a convertible security also affords the investor an opportunity, through its conversion feature, to participate in the capital appreciation of the common stock into which it is convertible. As the market price of the underlying common stock declines, convertible securities tend to trade increasingly on a yield basis and so may not experience market value declines to the same extent as the underlying common stock. When the market price of the underlying common stock increases, the price of a convertible security tends to rise as a reflection of the value of the underlying common stock. To obtain such a higher yield, the Funds may be required to pay for a convertible security an amount in excess of the value of the underlying common stock. Common stock acquired by a Fund upon conversion of a convertible security will generally be held for so long as the Funds’ adviser or the Fund’s investment manager anticipates such stock will provide the Fund with opportunities which are consistent with the Fund’s investment objectives and policies.

 

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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. 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 the Fund pays (or is deemed to pay) to shareholders under the Internal Revenue Code of 1986, as amended (the “Code”).

PORTFOLIO TURNOVER It is not the policy of 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. A Fund will, however, sell any portfolio security (without regard to the time it has been held) when the investment manager believes that market conditions, credit-worthiness factors or general economic conditions warrant such a step. The Asset Allocation Funds invest the majority of their assets in certain of the Traditional Funds, and are required to maintain certain investment ratios, which are adjusted at least quarterly. As a result, portfolio turnover for the Asset Allocation Funds could be substantial and could cause the Traditional Funds to also experience higher portfolio turnover. The portfolio turnover rates for each Fund for fiscal years ended December 31 of each period is set forth in the table below:

 

Fund

   2003     2004     2005  

Aggressive Growth Fund

   119.33 %   102.46 %   102.63 %

Large/Mid-Cap Growth Fund

   53.43 %   60.25 %   38.61 %

Small-Cap Value Fund

   47.99 %   57.59 %   44.24 %

Large/Mid Cap Value Fund

   39.44 %   29.09 %   129.22 %

Patriot Fund

   NA     20.76 %   52.18 %

Fixed-Income Fund

   62.06 %   35.95 %   39.46 %

Money Market Fund

   N/A     N/A     N/A  

Strategic Growth Fund

   0.53 %   0.46 %   1.61 %

Conservative Growth Fund

   2.51 %   0.00 %   3.61 %

Small-Cap Variable Series

   51.95 %   63.35 %   59.82 %

High portfolio turnover rates (annual rates in excess of 100%) involve additional transaction costs (such as brokerage commissions) which are borne by the Funds, and may result in adverse tax effects to Fund shareholders. (See “Dividends and Distributions” in the applicable prospectus.)

DISCLOSURE OF PORTFOLIO HOLDINGS. The following discussion sets forth the Trust’s policies and procedures with respect to the disclosure of Fund portfolio holdings.

Fund Service Providers - Fund Accounting Agent, Independent Auditor, Compliance Consulting Firm and Custodian- The Trust has entered into arrangements with certain third party service providers for services that require these groups to have access to each Fund’s portfolio on a real time basis. For example, the Trust’s fund accounting agent is responsible for maintaining the accounting records of each Fund, which includes maintaining a current portfolio on behalf of each Fund. The Trust also undergoes an annual audit which requires the Trust’s independent auditor to review each Fund’s portfolio. In addition to the fund accounting agent, the Trust’s custodian also maintains an up-to-date list of each Fund’s holdings. The Trust’s Compliance Consulting Service must also have access to each Fund’s portfolio in order to verify compliance with the Federal Securities laws. Each of these parties is contractually and/or ethically prohibited from sharing any Fund’s portfolio with any third party unless specifically authorized by the Trust’s President, Secretary or Treasurer.

The Board of Trustees monitors the services provided by each of the listed service providers to ensure each is complying the contractual terms or expectation of the arrangement. If the Board of Trustees is unsatisfied with any of these service providers the Board may terminate them accordingly. Each of the entities discussed above has adopted a code of ethics which requires that any person associated with such entity (1) maintains the confidentiality of all Trust information obtained by such person, and (2) does not use such person’s knowledge of Trust activities for their own personal benefit. The Trust relies on the compliance departments of each entity to enforce its code.

 

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Rating and Ranking Organizations - The Trust may from time to time provide its entire portfolio holdings of each Fund to various rating and ranking organizations, such as Morningstar, Inc., Lipper, Inc., Standard & Poor’s Ratings Group, Bloomberg L.P., and Thomson Financial Research. The Trust has obtained assurances form all such parties that any information provided to them will be held in confidence and that such information shall not be used for the personal benefit of the recipient.

The Trust’s management has determined that these groups provide investors with a valuable service and, therefore, are willing to provide them with portfolio information. You should be aware that the Trust does not pay them or receive any compensation from them for providing this information.

 

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Disclosure to Other Parties - The Trust has adopted a policy of posting the portfolio holdings of each Fund on its web site not later than seven (7) calendar days after the end of each fiscal quarter. The Trust is also required under law to file a listing of the portfolio holdings of each Fund with the Securities and Exchange Commission on a quarterly basis. The Trust prohibits the disclosure of portfolio information to any third party other than those described above until and unless such information has been filed with the Commission or posted to the the Trust’s web site, as discussed above. The Trust further prohibits any person affiliated with the Trust from entering into any ongoing arrangement with any person other than described above to receive portfolio holdings information relating to a Fund.

Review - The Board of Trustees reviews these policies not less than annually and receives periodic attestations from affiliated persons that these policies are being adhered to. The Trust’s President, Secretary and Treasurer are authorized, subject to Board review, to make exceptions to the above-described policies.

INVESTMENT RESTRICTIONS

In addition to those set forth in the current applicable prospectus, the Traditional Funds, and Small-Cap Variable Series 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 Traditional Fund and Small-Cap Variable Series 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 (the “1933 Act”) in disposing of a portfolio security;

 

  3. purchase or sell real estate or interests therein, although the Funds may each purchase debt instruments or 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 Funds may each invest in the debt instruments or 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.

 

  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 objective and policies; or (ii) by investment in repurchase agreements.

 

  12. invest in securities of any company if any officer or trustee of the Funds or the Funds’ adviser 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 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 borrowing is made; and whenever borrowings by a fund, including reverse repurchase agreements, exceed 5% of the value of a fund’s total assets, the Fund will not purchase any securities. Interest paid on borrowing will reduce net income.

 

  14. pledge, mortgage hypothecate, or otherwise encumber its assets, except in an amount 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

 

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  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.

The investment restrictions set forth below have been adopted by the Asset Allocation Funds as fundamental policies.

Each of the Asset Allocation Funds may not:

 

  (1) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (except this shall not prevent the Fund from purchasing or selling options or futures contracts or from investing in securities or other instruments backed by physical commodities);

 

  (2) purchase or sell real estate including limited partnership interests, although it may purchase and sell securities of companies that deal in real estate and may purchase and sell securities that are secured by interests in real estate;

 

  (3) make loans to any person, except loans of portfolio securities to the extent that no more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or repurchase agreements;

 

  (4) purchase more than 10% of any class of the outstanding voting securities of any issuer (except other investment companies as defined in the 1940 Act), and purchase securities of an issuer (except obligations of the U.S. government and its agencies and instrumentalities and securities of other investment companies as defined in the 1940 Act) if, as a result, with respect to 75% of its total assets, more than 5% of the Fund’s total assets, at market value, would be invested in the securities of such issuer.

 

  (5) issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the Securities and Exchange Commission;

 

  (6) borrow, except from banks for temporary or emergency (not leveraging) purposes including the meeting of redemption requests that might otherwise require the untimely disposition of securities in an aggregate amount not exceeding 30% of the value of the Fund’s total assets (including the amount borrowed) at the time the borrowing is made; and whenever borrowings by a Fund, including reverse repurchase agreements, exceed 5% of the value of a Fund’s total assets, the Fund will not purchase any securities;

 

  (7) underwrite securities issued by others, except to the extent that the Fund may be considered an underwriter within the meaning of the 1933 Act in the disposition of restricted securities; and

 

  (8) write or acquire options or interests in oil, gas or other mineral exploration or development programs.

ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE ASSET ALLOCATION FUNDS

An Asset Allocation Fund will not be able to offset gains realized by one Traditional Fund in which such Asset Allocation Fund invests against losses realized by another Fund in which such Asset Allocation Fund invests. An Asset Allocation Fund’s use of a fund-of-funds structure could therefore affect the amount, timing and character of distributions to shareholders.

Depending on an Asset Allocation Fund’s percentage ownership in an underlying Traditional Fund both before and after a redemption, an Asset Allocation Fund’s redemption of shares of such Traditional Fund may cause the Asset Allocation Fund to be treated as not receiving capital gain income on the amount by which the distribution exceeds the Asset Allocation Fund’s tax basis in the shares of the underlying Traditional Fund, but instead to be treated as receiving a dividend taxable as ordinary income on the full amounts of the distribution. This could cause shareholders of the Asset Allocation Fund to recognize higher amounts of ordinary income than if the shareholders had held the shares of the underlying Traditional Funds directly.

INVESTMENT ADVISER

The Trust has entered into advisory agreements with Timothy Partners, Ltd. (“TPL” or the “Adviser”), for the provision of investment advisory services on behalf of the Trust to each Fund (collectively referred to as the “Advisory Agreement”), subject to the supervision and direction of the Trust’s Board of Trustees. The latest continuance of the Advisory Agreement with Timothy Partners, Ltd. was approved by the Trustees, including a majority of the Trustees who are not interested persons of the Trust or any person who is a party to the Agreement, at an in-person meeting held on February 24, 2006. More complete factors considered by the Trust’s Board of Trustees are available in the Trust’s annual report dated December 31, 2005.

Each investment advisory agreement may be renewed after its initial two year 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 applicable Fund, 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. Each investment advisory agreement will terminate automatically in the event of its assignment.

 

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As a result of a vote taken at a shareholders’ meeting held on the 5th day of December, 2003, at the unanimous recommendation by the Board of Trustees, the management fee paid to Timothy Partners, Ltd. for management services rendered to the Asset Allocation Funds was increased from 0.15% per annum to 0.65% per annum. The table below sets forth the investment advisory fees payable to TPL for the last three years by each Fund.

 

Fund

   2003     2004     2005  

Aggressive Growth Fund

      

IA Fees Payable to TPL

   $ 64,226     $ 126,665     $ 158,317  

Amount (Reimbursed)/Recouped by TPL

     ($18,414 )     ($8,098 )   $ 2023  

Large/Mid-Cap Growth Fund

      

IA Fees Payable to TPL

   $ 158,566     $ 271,702     $ 411,085  

Amount (Reimbursed)/Recouped by TPL

     ($4,937 )   $ 17,009       ($965 )

Small-Cap Value Fund

      

IA Fees Payable to TPL

   $ 358,203     $ 492,033     $ 539,455  

Amount (Reimbursed)/Recouped by TPL

     0       0       0  

Large/Mid-Cap Value Fund

      

IA Fees Payable to TPL

   $ 220,308     $ 353,446     $ 482,437  

Amount (Reimbursed)/Recouped by TPL

     0       0       0  

Patriot Fund

      

IA Fees Payable to TPL

     NA     $ 2,796     $ 13,634  

Amount (Reimbursed)/Recouped by TPL

       ($11,253 )     ($3479 )

Fixed-Income Fund

      

IA Fees Payable to TPL

   $ 104,105     $ 144,879     $ 181,172  

Amount (Reimbursed)/Recouped by TPL

     ($14,224 )   $ 9,735     $ 10,627  

Money Market Fund

      

IA Fees Payable to TPL

   $ 22,066     $ 21,033     $ 27,715  

Amount (Reimbursed)/Recouped by TPL

     ($33,904 )     (33,178 )     ($21,956 )

Strategic Growth Fund

      

IA Fees Payable to TPL

   $ 32,473     $ 229,088     $ 283,929  

Amount (Reimbursed)/Recouped by TPL

     ($4,281 )   $ 7,465     $ 16,066  

Conservative Growth Fund

      

IA Fees Payable to TPL

   $ 31,909     $ 213,655     $ 266,998  

Amount (Reimbursed)/Recouped by TPL

     ($7,081 )   $ 4,890     $ 9673  

Small-Cap Variable Series

      

IA Fees Payable to TPL

   $ 47,226     $ 53,974     $ 49,512  

Amount (Reimbursed)/Recouped by TPL

     ($17,225 )     ($23,105 )     ($24,326 )

INVESTMENT MANAGERS

AWAD ASSET MANAGEMENT

Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Awad Asset Management (“Awad”), dated January 1, 1997, as amended May 1, 1998 (the “Awad Sub-Advisory Agreement”), and further amended on January 02, 2004, Awad provides advice and assistance to TPL in the selection of appropriate investments for the Small-Cap Variable Series, subject to the supervision and direction of TPL and the Funds’ Board of Trustees. Awad also provides similar services to the Patriot Fund pursuant to a Sub-Advisory Agreement dated May 1, 2004. Each sub-advisory agreement was approved by the shareholders of the applicable Fund. As compensation for its services for the Small Cap Variable Series, 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. As compensation for its services for the Patriot Fund,

 

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Awad receives from TPL an annual fee at a rate equal to 0.37% for the first $10 million in assets of the Fund; 0.35% of the next $5 million in assets; 0.30% of the next $10 million in assets; and 0.25% of assets over $25 million.

The Small Cap Variable Series and the Patriot Fund are managed by James Awad, founder and CEO of Awad Asset Management, a wholly owned subsidiary of Raymond James Investments. Mr. Awad has been in the securities industry for over forty years, and has been the CEO of Awad and Associates since it was founded in 1992. Mr. Awad also serves as the Chief Investment Officer for his firm. He has been responsible for the day-to -day management of the Small Cap Variable Series and the Patriot Fund since their inceptions. Awad also served as investment manager to the Small-Cap Value Fund from January, 1997 through December 31, 2005.

Like the Advisory Agreement between the Trust and TPL described above, the Awad Sub-Advisory Agreement had an initial term of two years and became renewable annually thereafter under the same criteria as the Advisory Agreement. The Awad Sub-Advisory Agreement was last renewed by the Board at a meeting held for that purpose, among others, on February 24, 2006. A more complete discussion of the Board’s considerations is available in the Trust’s annual report dated December 31, 2005.

 

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Other Information Relating to Awad Asset Management

The table below presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts.

 

(1) Identify
portfolio
manager(s) of
the Adviser to
be named in
the Fund
prospectus

   (2) For each person identified in column (1), provide the total number of
accounts (including this Fund Family) managed by the person within each
category below and the total assets in the accounts managed within each
category below
   (3) For each of the categories in column (2), provide number of
accounts and the total assets in the accounts with respect to which
the advisory fee is based on the performance of the account
    

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

   Other Accounts    Registered
Investment
Companies
  

Other Pooled
Investment

Vehicles

   Other Accounts
     Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
assets
   Number of
Accounts
   Total
Assets
   Number of
Accounts
   Total
Assets

Jim Awad

   3    $ 188.72    0    0    17
Institutional
Accounts
   $ 451.62                2    $ 191.07
               16 Wrap
Relationships
   $ 407.49                  

Mr. Awad’s compensation is comprised of a base salary, combined with a performance-based bonus pool.

BARROW, HANLEY, MEWHINNEY AND STRAUSS, INC.

Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Barrow, Hanley, Mewhinney and Strauss, Inc. (“ BHMS”), dated July 01, 2004 (the “BHMS Sub-Advisory Agreement”), BHMS provides advice and assistance to TPL in the selection of appropriate investments for the Fixed-Income Fund, and the Money Market Fund, subject to the supervision and direction of the Funds’ Board of Trustees. As compensation for its services, with respect to the Fixed-Income Fund, BHMS receives from TPL an annual fee at a rate equal to 0.25% of the average net assets of the Fund. As compensation for its services with respect to the Money Market Fund, BHMS receives from TPL an annual fee at a rate equal to 0.08% of the average net assets of the Fund.

The BHMS Sub-Advisory Agreement had an initial term of two years and may be renewed annually thereafter. On February 24, 2006 the Board met to consider, among other matters, retaining Barrow Hanley as sub-investment advisor for the Fixed Income Fund. A complete discussion of the Board’s considerations may be found in the Trust’s annual report dated December 31, 2005.

BHMS employs a team concept in the management of the Timothy Plan funds. Team members are assigned specific sector responsibilities but enjoy equal responsibilities in the investment process. The members have equal say in the actual management under the guidance of John Williams who serves BHMS as the Chief Investment Officer for fixed income strategies. The other members of the team are David Hardin, Mark Luchsinger, J. Scott McDonald, and Deborah Petruzzelli.

Mr. Williams, who joined BHMS in 1983 is the senior member of the team, and has served as a portfolio manager for nineteen years at BHMS. In addition to serving as CIO for the fund, he also specializes as an analyst in the energy and utility industries.

David Hardin also has nineteen years as a portfolio manager. He joined BHMS in 1987, and currently serves the firm as the director of credit research specializing in the high yield sector, and manages the municipal portfolios.

J. Scott McDonald joined BHMS in 1995. He is a portfolio manager specializing in corporate and government bonds, and is an analyst of the finance sector, including banks and the sovereign sector. Mark Luchsinger joined BHMS in 1997, and currently specializes in investment grade and high yield corporate bond strategies, and is analyst for basic materials, consumer and technology industries.

Ms. Deborah Petruzzelli joined BHMS in 2003. She specializes in the mortgage-backed, asset-backed and structured product securities sectors. During her nineteen year financial services career she has served as a managing director and senior portfolio manager.

 

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As demonstrated in the table below, BHMS provides management services for two registered investment companies in addition to Timothy Plan.

 

     

Number of Other Accounts Managed

And Assets by Account Type1

  

Number of Accounts and Assets for

Which Advisory Fee is Performance-

Based1

Name of Sub-

Adviser and

Portfolio Manager

  

Registered
Investment
Companies

($mils)

  

Other Pooled
Investment
Vehicles

($mils)

  

Other

Accounts

($mils)

  

Registered
Investment
Companies

($mils)

  

Other

Pooled
Investment
Vehicles

($mils)

  

Other

Accounts

($mils)

Barrow, Hanley, Mewhinney & Strauss, Inc.:

John S. Williams

   8 ($195.6 mil)    3 ($153.1 mil)    98 ($4.0 bil)    N/A    N/A    1 ($565.2m)

David R. Hardin

   8 ($195.6 mil)    3 ($153.1 mil)    98 ($4.0 bil)    N/A    N/A    1 ($565.2m)

J. Scott McDonald

   8 ($195.6 mil)    3 ($153.1 mil)    98 ($4.0 bil)    N/A    N/A    1 ($565.2m)

Mark C. Luchsinger

   8 ($195.6 mil)    3 ($153.1 mil)    98 ($4.0 bil)    N/A    N/A    1 ($565.2m)

Deborah A. Petruzzelli

   8 ($195.6 mil)    3 ($153.1 mil)    98 ($4.0 bil)    N/A    N/A    1 ($565.2m)

Team members can earn bonuses that can exceed their salary based on an evaluation of their contribution to the portfolio performance results and satisfaction of our clients. Generally, the performance bonus, if maximized, will be the largest component of compensation for team members.

WESTWOOD MANAGEMENT CORP

Pursuant to Investment Sub-Advisory Agreements between TPL, the Trust and Westwood Holdings Group, (“Westwood”) dated May 01, 2005, and January 03, 2006, Westwood provides advice and assistance to TPL in the selection of appropriate investments for the Large/Mid-Cap Value Fund and the Small Cap Value Fund respectively, subject to the supervision and direction of the Funds’ Board of Trustees. As compensation for its services, Westwood 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 factors considered by the Board of Trustees when considering retaining Westwood as a sub-advisor is available in the Trust’s annual report dated December 31, 2006.

Westwood utilizes the team management approach to portfolio management, with team members supporting each Westwood product and client. The team members share responsibilities equally and carry equal voting authority.

The five management team members that provide management services to the Large/Mid Cap Value Fund includes the founder and Chief Investment Officer of Westwood, Ms. Susan Byrne. She founded the company in 1982, and has served the firm continuously since then. Ms. Kellie Stark joined Westwood in 1991. In addition to serving on the investment team, she is Senior Vice President and Research Group Head.

Team member Mr. Christopher McDonald, Vice President and Research Group Head, became a member of the Westwood Group in 1993.

Mr. Jay Singharnia, a former Bank of America Equity Analyst, moved to Westwood in 2000. He serves in the capacities of Vice President and Research Analyst. Ragen Stienke, Asst. Vice President and Research Analyst, joined Westwood in 2003. He was an Investment Strategist with UBS (formerly Paine Webber) for several years prior to his move to Westwood.

Ms. Byrne and Mr. MacDonald also serve on the team managing the Small Cap Value Fund. The other Small Cap team members include the following: Mr. Scott Lawson, a former Bank of America Assistant Portfolio Manager, joined Westwood in the fall of 2003, bringing over 15 years of investment experience. He serves in the capacities of Vice President and Senior Research Analyst. Ms. Lisa Dong joined Westwood in December 2000. In addition to serving on the investment team, she is Vice President and Research Analyst. Mr. Todd Williams, Vice President and Research Analyst, joined Westwood in 2002. Mostly recently, he was a Portfolio Manager and analyst with AMR Investments, Inc. Mr. Philip Robert joined Westwood in 2005 as Assistant Vice President and Research Analyst. He comes to Westwood with 13 years of investment experience. Mr. John Vandermosten, Assistant Vice President and Research Analyst, joined Westwood in 2005. Prior to joining Westwood, he served in the U.S. Navy for 11 years and was an Investment Analyst with the Teacher Retirement System of Texas.

Westwood combines three elements to each member’s total compensation: base salary, cash bonus and restricted company stock. Base salary is reviewed on an annual basis and can be adjusted based on the employee’s performance. For Salary and Restricted Stock grants, Westwood utilizes a performance measurement process that incorporates both qualitative and quantitative measures. The results contribute to decisions for the cash bonus and restricted stock grants. Restricted stock is granted on an annual basis and carries a 4-year rolling vesting schedule. Westwood does not currently have any clients where portfolio manager compensation is based, either in whole or in part, on client investment portfolio performance.

 

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(1) Identify portfolio
manager(s) of the
Adviser to be named
in the Fund
prospectus

  (2) For each person identified in column (1), provide the total number
of accounts (including this Fund Family) managed by the person
within each category below and the total assets in the accounts
managed within each category below
  (3) For each of the categories in column (2), provide number
of accounts and the total assets in the accounts with respect to
which the advisory fee is based on the performance of the
account
  Registered
Investment
Companies
  Other Pooled
Investment Vehicles
  Other Accounts   Registered
Investment
Companies
  Other Pooled
Investment
Vehicles
  Other Accounts
  Number of
Accounts
  Total
Assets
(mil)
  Number of
Accounts
  Total
Assets
(mil)
  Number of
Accounts
  Total
Assets
(mil)
  Number of
Accounts
  Total
assets
  Number of
Accounts
  Total
Assets
  Number of
Accounts
  Total
Assets

Susan M. Byrne1

  4   $ 591.1   4   $ 710.3   43   $ 1,830.9   0   0   0   0   0   0

Kellie R. Stark1

  4   $ 591.1   4   $ 710.3   43   $ 1,830.9   0   0   0   0   0   0

Jay K. Singhania1

  4   $ 591.1   4   $ 710.3   43   $ 1,830.9   0   0   0   0   0   0

Ragen Stienke1

  4   $ 591.1   4   $ 710.3   43   $ 1,830.9   0   0   0   0   0   0

Christopher J. MacDonald1, 2

  5   $ 600.5   6   $ 738.9   43   $ 1,830.9   0   0   0   0   0   0

Scott Lawson2

  1   $ 9.4   2   $ 28.6   0   $ 0.00   0   0   0   0   0   0

Todd L. Williams2

  1   $ 9.4   2   $ 28.6   0   $ 0.00   0   0   0   0   0   0

Lisa Dong2

  1   $ 9.4   2   $ 28.6   0   $ 0.00   0   0   0   0   0   0

Philip Robert2

  1   $ 9.4   2   $ 28.6   0   $ 0.00   0   0   0   0   0   0

RITTENHOUSE FINANCIAL SERVICES, INC.

Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Rittenhouse Financial Services, Inc. (“Rittenhouse”), dated October 2, 2000, Rittenhouse, a wholly-owned subsidiary of the John Nuveen Company, provides advice and assistance to TPL in the selection of appropriate investments for the Large/Mid-Cap Growth Fund, subject to the supervision and direction of the Funds’ Board of Trustees. As compensation for its services, Rittenhouse receives from TPL an annual fee at a rate equal to 0.35% of the first $50 million in assets of the Fund; and 0.25% of assets over $50 million.

Rittenhouse utilizes a team management approach for the Fund. The team is led by John Waterman, Chief Investment Officer at Rittenhouse. Jame Jolinger, Leonard McCandless, and William Conrad serve as portfolio managers for the team. Their management of the Fund employs strategies that are formulated on, and are in concert with input from both fundamental and quantitative research staff members. Messrs. Waterman, MCCandless, and Conrad have served the Fund since its inception. John Waterman, CFA, holds an MBA from Wharton. He joined Rittenhouse in 1993, after serving Howard Lawson & Co. as Sr. Vice President and Director of Advisor Services. Mr. Waterman assumed the responsibility as Chief Investment Officer for Rittenhouse in 2000. Leonard McCandless, CFA, joined Rittenhouse in 1989 as a Research and Investment team member. Mr. McCondless serves on the Rittenhouse Trust Company Board of Directors, and Rittenhouse Asset Management Company as a Vice President and Portfolio Manager. Mr. McCandless has devoted his career to the financial services industry. Willian Conrad, CFA, began as a registered representative with Rittenhouse Financial Securities in 1991. Mr. Conrad has served as Managing Director and Executive Committee member of Rittenhouse Asset Management since 1997. He moved to Rittnehouse from Oppenheimer Capital, LLP, where he served as an analyst and Vice President for seven years. James Jolinger, CFA, came to Rittenhouse in 2004 after serving Morgan Stanley Investment Management in various management capacities since 1994, and Oppenheimer Capital LLP for seven years prior to that. He joined Rittenhouse as a Managing Director and Portfolio Manager. Mr. Jollinger earned an MBA from Stern School of Business in 1992.

Rittenhouse Asset Management, Inc. hired Nancy M. Crouse as a Managing Director/Portfolio Manager in April 2005. She has 22 years experience, earned a BA in International Affairs from Lafayette College and an MBA in Finance from the University of Pittsburgh and is a CFA charterholder.

 

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1) Identify portfolio
manager(s) of the
Adviser to be named
in the Fund
prospectus

   (2) For each person identified in column (1), provide the total
number of accounts (including this Fund Family) managed by the
person within each category below and the total assets in the
accounts managed within each category below
   (3) For each of the categories in column (2), provide number of
accounts and the total assets in the accounts with respect to
which the advisory fee is based on the performance of the
account
   Registered
Investment
Companies
   Other Pooled
Investment
Vehicles
   Other Accounts    Registered
Investment
Companies
   Other Pooled
Investment
Vehicles
   Other Accounts
   Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
assets
   Number of
Accounts
   Total
Assets
   Number of
Accounts
   Total
Assets

Rittenhouse Asset Management, Inc.

William L. Conrad

   4    $ 265    11    $ 175    24,041    $ 5,646                  

Nancy M. Crouse

   4    $ 265    11    $ 175    24,041    $ 5,646                  

James J. Jolinger

   4    $ 265    11    $ 175    24,041    $ 5,646                  

Leonard H. McCandless

   4    $ 265    11    $ 175    24,041    $ 5,646                  

Daniel C. Roarty

   4    $ 265    11    $ 175    24,041    $ 5,646                  

John P. Waterman

   4    $ 265    11    $ 175    24,041    $ 5,646                  

Rittenhouse compensates team members by offering a combination package that includes a salary, bonuses and a benefits package. Bonuses are awarded based on a combination of qualitative and quantitative factors. Nuveen, Rittenhouse’s parent company, offers incentive and stock option programs, and deferred income programs.

PROVIDENT INVESTMENT COUNSEL

Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Provident Investment Counsel (“Provident”), dated October 2, 2000, Provident provides advice and assistance to TPL in the selection of appropriate investments for the Aggressive Growth Fund, subject to the supervision and direction of the Funds’ Board of Trustees. As compensation for its services, Provident 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 management organization employed by Provident for the Fund is a team management approach. The team is co-led by Mr. John Yoon and Mr. Richard Campagna. Mr. Yoon, Senior Vice President, has been a member of the financial services industry since 1987. He joined Provident in 1995, and has served as the Aggressive Growth co-manager since its inception. Richard S. Campagna joined PIC’s mid cap team in September 2005. He is a senior vice president and a mid cap portfolio manager with generalist research responsibilities for mid cap growth stocks. He has been in the investment industry since 1989. Mr. John Landreth joined Provident in 1993, and is a Senior Vice President. He entered the financial industry in 1990, and has also served as a member of the team since inception of the Fund. Ms. Lapham, a Managing Director at Provident, entered the financial industry in 1981, joined Provident in 1997, and has served the Aggressive Growth Fund since its inception.

 

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The Provident team manages assets for eight investment companies in addition to the Aggressive Growth Fund.

 

(1) Identify

portfolio

manager(s) of

the Adviser to

be named in the

Fund prospectus

   (2) For each person identified in column (1), provide the total
number of accounts (including this Fund Family) managed by the
person within each category below and the total assets in the
accounts managed within each category below
   (3) For each of the categories in column (2), provide number of
accounts and the total assets in the accounts with respect to which
the advisory fee is based on the performance of the account
   Registered
Investment
Companies
   Other Pooled
Investment Vehicles
   Other Accounts    Registered
Investment
Companies
   Other Pooled
Investment Vehicles
   Other Accounts
   Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
Assets
(mil)
   Number of
Accounts
   Total
assets
   Number of
Accounts
   Total
Assets
   Number of
Accounts
   Total
Assets

Richard S. Campagna

   9    $ 914    1    $ 2    12    $ 641    1    $ 620    0    0    0    0

James M. Landreth

   9    $ 914    1    $ 2    12    $ 641    1    $ 620    0    0    0    0

Evelyn D. Lapham

   9    $ 914    1    $ 2    12    $ 641    1    $ 620    0    0    0    0

John J. Yoon

   9    $ 914    1    $ 2    12    $ 641    1    $ 620    0    0    0    0

Response to column (a)(2): As our firm (PIC) utilizes team management (inclusive of the portfolio managers identified in column (1)) which is responsible for the day-to-day management of our accounts in this product, the “Fund(s)” have been included in the information provided in column (2).

There are four distinct elements to Provident’s employee compensation system: salary, incentive bonus compensation, point-holder bonus, and long term incentive plan. Team members earn a salary based on objective evaluation of their contribution to the performance results achieved in our clients’ portfolios. Incentive bonuses are based solely on the investment performance of the client portfolio and each analyst relative to industry peers, on a short term and long term basis. Generally, the performance bonus, if maximized, will be the largest component of compensation for team members. Officers are eligible to receive point-holder status, similar to that of a partnership, which enables them to participate in the sharing of the net profits of the firm.

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 applicable Fund, 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.

A more complete description of the considerations made by the Trust’s Board is available in the Trust’s annual report dated December 31, 2005.

The following table sets forth the fees paid to each sub-adviser by TPL for the fiscal years ended December 31 of each period set forth below.

 

Sub-adviser

   Fees paid in
2003
   Fees paid in
2004
   Fees paid in
2005

Awad Asset Management

   $ 151,869    $ 194,288    $ 226,706

Fox Asset Management, LLC*

   $ 97,968    $ 138,546    $ 39,168

Provident Investment Counsel

   $ 31,687    $ 61,296    $ 73,736

Rittenhouse Financial Advisers

   $ 65,337    $ 111,877    $ 138,577

Barrow, Hanley, Mehwinney & Strauss

     N/A    $ 32,250    $ 79,062

Carr & Associates

   $ 35,662    $ 22,493      0

Westwood Asset Management

     0      0    $ 133,442

 

* Under an agreement entered into in July, 2004, Barrow Hanley Mawhinney & Strauss assumed the responsibility replacing Carr & Associates for the day-to-day management of the Fixed Income Fund and the Money Market Fund. Under an agreement entered into in February, 2005, Westwood assumed the responsibility replacing Fox Asset Management for the day-to-day management of the Large/Mid-Cap Value Fund.

 

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PROXY VOTING PROCEDURES

The Board of Trustees of the Trust has approved proxy voting procedures for the Trust. These procedures set forth guidelines and procedures for the voting of proxies relating to securities held by the Fund. Records of the Fund proxy voting records are maintained and are available for inspection. The Board is responsible for overseeing the implementation of the procedures. Copies of the proxy voting procedures have been filed with the Securities and Exchange Commission, which may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. The procedures are also available on the SEC’s EDGAR database at the SEC’s web site (www.sec.gov). Copies of the procedures can be obtained, after paying a duplicating fee, by electronic request (publicinvest@sec.gov) or by writing the SEC’s Public Reference Section, Washington, DC 20549-0102. A copy will also be sent to you, free of charge, at your request by writing to the Trust at P.O. Box C1100, Southeastern, PA 19398-1100, or calling toll free at 1-800-662-0201. A summary of the Trust’s Proxy Voting Procedures is also attached to this SAI as Appendix 1.

PRINCIPAL UNDERWRITER

Timothy Partners, Ltd., 1055 Maitland Commons Center Blvd., Maitland, FL 32751, acts as the principal underwriter (the “Underwriter”) of the Funds’ shares for the purpose of facilitating the notice filing of shares of the Funds under state securities laws and to assist in sales of shares pursuant to a written underwriting agreement (the “Underwriting Agreement”) approved by the Funds’ Trustees. TPL is not compensated for serving as principal underwriter 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 notice filings 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 notice filing 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.

Arthur D. Ally is President, Chairman and Trustee of the Trust. Mr. Ally is also President of Timothy Partners, Ltd. Mr. Ally had over eighteen years experience in the investment industry prior to becoming president of Timothy Plan, 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.

The Board of Trustees, during a regularly scheduled meeting on the 21st day of November, 2003, amended the Distribution Agreement with Timothy Partners, Ltd. to include distribution of the Timothy Plan Patriot Fund. In considering Timothy Partners, Ltd as distributor for the Patriot Fund, the Board considered the facts that TPL has served satisfactorily as the distributor for the other funds offered by the Trust and that TPL performs the distribution function at no expense to the Trust or the Trust’s shareholders.

CUSTODIAN

US Bank, 425 Walnut Street, Cincinnati, Ohio 45202, is custodian of the Funds’ investments. The custodian acts as the Funds’ depository, safe-keeps its portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Funds’ request and maintains records in connection with its duties. For its custodial services the bank receives, in addition to certain per transaction fees, the greater of $225 per month per fund or (annualized) 1.20 basis points (.000120) for the first $75 million in assets, 1.0 basis point (.00010) on the next $100 million in assets, and 0.75 basis point (.000075) on all amounts over $175 million in assets.

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

The firm of Cohen McCurdy, Ltd., 800 Westpoint Pkwy, Ste 1100, Westlake, OH 44145 has been selected as independent registered public accountants for the Funds for the fiscal year ending December 31, 2006. Cohen McCurdy performs an annual audit of the Funds’ financial statements and provides financial, tax and accounting consulting services as requested.

 

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ADMINISTRATOR

Citco Mutual Fund Services, Inc., 83 General Warren Blvd., Suite 200, Malvern, PA 19355, (Citco), formerly known as Citco-Quaker Fund Services, Inc, whose offices were formerly located at 1288 Valley Forge Road, Suite 87, Valley Forge, PA 19482, provides transfer agent, portfolio accounting and certain administrative services to the Trust pursuant to an Administrative Services Agreement dated May 01, 2003.

Under the Administrative Services Agreement, Citco: (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 Fund for their approval invoices or other requests for payment of the Funds’ expenses and instructs the custodian to issue checks in payment thereof; and (8) takes such other action with respect to the Funds as may be necessary in the opinion of Citco to perform its duties under the agreement. Pursuant to the Agreement, for all series except the Patriot Fund, Citco received a fee of $350,000 during the first twelve months of the agreement. Subsequent to the first twelve months, Citco shall receive the greater of $350,000, or 0.35% on the first $100 million in assets under management, 0.25% of the next $100 million in assets, 0.15% of the next $200 million in assets, and 0.10% for all over $400 million in assets. Such fees are inclusive of up to 800 transactions per month (100 trades per portfolio per month); additional transactions are $5.00 each and shall be charged against the portfolios exceeding 100 trades per month.

Effective January 02, 2004, the Trust and Citco amended the agreement to include a provision for the services necessary for the Class C shares at a rate of $5000 per month per series. Subsequent to April 30, 2004, the fees associated with the Class C shares were incorporated into the agreement set forth in the preceding paragraph above. During the year ending December 31, 2004, the Trust paid Citco $583,099.

During the year ending December 31, 2005, the Trust paid Citco $785,406.

Annuity Investors Life Insurance Company, 250 East Fifth Street, Cincinnati, Ohio 45202 (“AILIC”) provides certain additional administrative services with respect to shares of the Small-Cap Variable Series purchased to fund variable annuity contracts and held in the AILIC separate accounts. These administrative services are provided pursuant to a Participation Agreement effective as of May 1, 2005 among AILIC, the Trust and TPL.

Under the Participation Agreement, AILIC maintains the records related to Small-Cap Variable Series shares held in the AILIC separate accounts, processes all purchases and redemptions of shares within the accounts, and provides other administrative and shareholder services. For its services, AILIC receives an annual fee from Small-Cap Variable Series equal to 0.25% of the average daily net assets of the Series held in the AILIC separate accounts.

ALLOCATION OF PORTFOLIO BROKERAGE

The Funds’ Adviser and/or investment sub-adviser, when effecting the purchases and sales of portfolio securities for the account of a Fund, will seek execution of trades either (i) at the most favorable and competitive rate of commission charged by any broker, dealer or member of an exchange, or (ii) at a higher rate of commission charges if reasonable in relation to brokerage and research services provided to the Fund or the investment manager by such member, broker, or dealer. Such services may include, but are not limited to, any one or more of the following: information on the availability of securities for purchase or sale, statistical or factual information, or opinions pertaining to investments. The Advisor and each sub-advisor are prohibited from considering brokerage allocation to dealers in consideration of a dealers’ distribution efforts of Portfolio or Fund shares. The Trust has adopted policies and procedures to detect and prohibit brokerage allocation based on broker/dealer fund share sales.

TPL, through the investment managers, is responsible for making the Funds’ portfolio decisions subject to instructions described in the applicable prospectus. TPL has entered into a soft dollar arrangement with UBS Financial Services pursuant to which Prime Consultants, a wholly-owned subsidiary of UBS, prepares and provides certain quarterly research reports to TPL and the Board of Trustees, and provides manager research reports as needed. In exchange, TPL has directed the Funds’ investment sub-advisers to transact a portion of their purchases and sales of securities through UBS Financial Services for so long as and only so long as the service provided and the transactions affected are at commission rates that are competitive with the services and rates charged by other broker/dealers performing the same or similar transactions. The Board of Trustees may, however, impose limitations on the allocation of portfolio brokerage. In exchange for the research, during the most recent fiscal year the sub-advisers executed 170 transactions with UBS for a total amount of brokerage of $68,291.25.

 

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Securities held by one Fund may also be held by another Fund or other accounts for which TPL or the investment manager serves as an adviser, 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 adviser 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 the 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.

Awad and Associates is a wholly owned subsidiary of Raymond James Financial. Total commissions paid to Raymond James in 2005 were $16,193. Neither Awad, TPL, nor any affiliate of the Fund receives any compensation or other financial benefit from the commissions paid to Raymond James.

The Board of Trustees of the Trust regularly; 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.

The chart below shows the brokerage fees and commissions paid by the Funds for the fiscal years ended December 31 of each period set forth below.

 

Fund

   2002    2003    2004    2005

Small-Cap Value Fund

   $ 122,794    $ 122,245    $ 141,000    $ 160,985

Large/Mid-Cap Value Fund

   $ 40,754    $ 41,809    $ 58,965    $ 162,377

Small-Cap Variable Series

   $ 14,649    $ 14,029    $ 13,865    $ 17,308

Aggressive Growth Fund

   $ 25,599    $ 31,896    $ 56,571    $ 48,745

Large/Mid-Cap Growth Fund

   $ 43,893    $ 36,433    $ 57,996    $ 47,537

Patriot Fund

         $ 1,908    $ 8322

CODE OF ETHICS

The Trust, the Adviser, the investment managers and the Funds’ underwriter have each adopted a Code of Ethics under Rule 17j-1 of the Investment Company Act of 1940. The personnel subject to the Code are permitted to invest in securities, however, the Adviser’s, Trust’s and underwriter’s employees are prohibited from purchasing securities that are held by the Funds. You may obtain a copy of the Code of Ethics from the Securities and Exchange Commission. Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, the Trustees amended the Codes of Ethics to accommodate the requirements of Section 406. The amended Codes of Ethics adopted by the Trust, and each sub-adviser, have each been reviewed and ratified by the Board of Trustees.

PURCHASE OF SHARES

The shares of the Timothy Plan 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 (based upon valuation procedures described in the prospectuses), plus the applicable sales load for Class A shares, as of the close of business of the business day on which the completed order is received, normally 4 p.m. Eastern time. Completed orders received by the Funds after 4 p.m. will be confirmed at the next business day’s price.

TAX-DEFERRED RETIREMENT PLANS

Shares of the Timothy Plan Funds are available to all types of tax-deferred retirement plans such as individual retirement accounts (“IRAs”), 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 Plan Funds sponsor IRAs. Subject to certain

 

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income restrictions, individuals, who are active participants in an employer maintained retirement plan are eligible to contribute on a deductible basis to an IRA account. 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-IRAs (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 a Timothy Plan Fund 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 Plan 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 Plan Funds 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, are excludable from the gross income of the employee for federal income tax purposes.

The Timothy Plan Funds also offer Roth IRAs. 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 in 2006 is $4,000 annually ($8,000 for joint returns) in aggregate with contributions to traditional IRAs. Certain catch-up provisions and income phase-outs 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 Plan 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, US Bank acts as the plan custodian and charges $10.00 per social security number and account type in connection with plan establishment and maintenance, of which $5.00 is remitted to the fund underwriter, Timothy Partners, Ltd. These fees are detailed in the plan documents. You should consult with your attorney or other tax adviser for specific advice prior to establishing a plan.

TAX-DEFERRED VARIABLE ANNUITY SERIES

The Timothy Plan Small-Cap Variable Series currently only offers its shares to the Annuity Investors Life Insurance Company. 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 Variable Series are sold only to existing account holders at net asset value as described in that Fund’s Prospectus.

REDEMPTIONS

The redemption price will be based upon the net asset value per share (subject to any applicable CDSC for Class C 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 Class at the time of redemption. Shares of the Timothy Plan 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 Plan 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 New York Stock Exchange 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 in the applicable 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.

 

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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.

DEALER TRANSACTION FEES

Dealers may charge their customers a processing or service fee in connection with the purchase or redemption of fund shares. The amount and applicability of such a fee is determined and disclosed to its customers by each individual dealer. Processing or service fees typically are in addition to the sales and other charges described in the prospectus and this statement of additional information. Your dealer will provide you with specific information about any processing or service fees you will be charged.

 

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OFFICERS AND TRUSTEES OF THE TRUST

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

INTERESTED TRUSTEES

 

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Arthur D. Ally*

1304 W Fairbanks Avenue

Winter Park, FL

 

Born: 1942

   Chairman and President    Indefinite; Trustee and President since 1994    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   President and controlling shareholder of Covenant Funds, Inc. (“CFI”), a holding company. President and general partner of Timothy Partners, Ltd. (“TPL”), the investment adviser and principal underwriter to each Fund. CFI is also the managing general partner of TPL.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Joseph E. Boatwright**

1410 Hyde Park Drive

Winter Park, FL

 

Born: 1930

   Trustee, Secretary    Indefinite; Trustee and Secretary since 1995    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   Retired Minister. Currently serves as a consultant to the Greater Orlando Baptist Association. Served as Senior Pastor to Aloma Baptist Church from 1970-1996.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Mathew D. Staver**

210 East Palmetto Avenue Longwood, FL 32750

 

Born: 1956

   Trustee    Indefinite; Trustee since 2000    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   Attorney specializing in free speech, appellate practice and religious liberty constitutional law. Founder of Liberty Counsel, a religious civil liberties education and legal defense organization. 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.    None

 

* 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, and Staver are “interested” Trustees, as that term is defined in the 1940 Act, because each has a limited partnership interest in TPL.

 

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INDEPENDENT TRUSTEES

 

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Richard W. Copeland

631 Palm Springs Drive

Altamonte Springs, FL

32701

 

Born: 1947

   Trustee    Trustee from 2005, new as of 2/25/2005    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   Principal of Richard W. Copeland, Attoney at Law for 31 years specializing in tax and estate planning. B.A. from Mississippi College, JD and LLM Taxation from University of Miami. Associate Professor Stetson University for past 29 years.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Bill Johnson

903 S. Stewart Street

Fremont, MI 48412

 

Born: 1946

   Trustee    Trustee from 2005, new as of 2/25/2005    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   President (and Founder) of American Decency Association, Freemont, MI since 1999. Previously served as Michigan State Director for American Family Association (1987-1999). Previously a public school teacher for 18 years. B.S. from Michigan State University and a Masters of Religious Education from Grand Rapids Baptist Seminary.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Kathryn Tindal Martinez

4398 New Broad Street

Orlando, FL 32814

 

Born: 1949

   Trustee    Trustee from 2005, new as of 2/25/2005    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   Served on board of directors from 1991 to present, including House of Hope, B.E.T.A., Childrens' Home Society, and Susan B. Anthony List. Previously a private school teacher and insurance adjuster. B.A. received from Florida State University State University and MAT from Rollins College, FL.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

John C. Mulder

2925 Professional Place

Colorado Springs, CO

80904

 

Born: 1950

   Trustee    Trustee from 2005, new as of 2/25/2005    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   President Christian Community Foundation and National Foundation since 2001. Prior: 22 years of executive experience for a group of banks and a trust company. B.A. in Economics from Wheaton College and MBA from University of Chicago.    None

 

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Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Charles E. Nelson

1145 Cross Creek Circle

Altamonte Springs, FL

 

Born: 1934

   Trustee    Indefinite; Trustee since 2000    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   Certified Public Accountant. Director of Operations, National Multiple Sclerosis Society Mid Florida Chapter. Formerly Director of Finance, Hospice of the Comforter, Inc. Formerly Comptroller, Florida United Methodist Children’s Home, Inc. Formerly Credit Specialist with the Resolution Trust Corporation and Senior Executive Vice President, Barnett Bank of Central Florida, N.A. Formerly managing partner, Arthur Andersen, CPA firm, Orlando, Florida branch.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Wesley W. Pennington

442 Raymond Avenue

Longwood, FL

 

Born: 1930

   Trustee    Indefinite; Trustee since 1994    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   Retired Air Force Officer. Past President, Westwind Holdings, Inc., a development company, since 1997. Past President and controlling shareholder, Weston, Inc., a fabric treatment company, form 1979-1997. President, Designer Services Group 1980-1988.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Scott Preissler, Ph.D.

P O Box 50434

Indianapolis, IN 46250

 

Born: 1960

   Trustee    Indefinite; New as of 1/1/04    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   President and CEO of Christian Stewardship Association where he has been affiliated for the past 14 years.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Alan M. Ross

11210 West Road

Roswell, Ga 30075

 

Born: 1951

   Trustee    Indefinite; New as of 1/1/04    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   Founder and CEO of Corporate Development Institute which he founded five years ago. Previously he served as President and CEO of Fellowship of Companies for Christ and has authored three books: Beyond World Class, Unconditional Excellence, Breaking Through to Prosperity.    None

Name, Age and Address

  

Position(s)

Held With Trust

  

Term of Office

and Length of Time Served

  

Number of Portfolios
in Fund Complex
Overseen by Trustee

Dr. David J. Tolliver

4000 E. Maplewood Drive

Excelsior Springs, MO

 

Born: 1951

   Trustee    Trustee from 2005, new as of 2/25/2005    12
  

Principal Occupation During Past 5 Years

  

 

Other Directorships
Held by Trustee

   Senior Pastor Pisgah Baptist Church, Excelsior Springs, MO since 1999. Previously pastored three churches in St. Louis, MO area (1986-1999). Currently serves on Board of Trustees Midwestern Baptist Theological Seminary. Past President Missouri Baptist Convention (2003-2004)    None

 

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The officers conduct and supervise the daily business operations of the Funds, while the Trustees, in addition to functions set forth under “Investment Adviser,” “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. Beginning with the August meeting and during the remainder of the fiscal year ended December 31, 2005, the Timothy Plan Funds paid compensation at the rate of $500 per meeting attended to its Independent Trustees.

The Trust has an Audit Committee that is composed of three of the independent Trustees listed below. Pursuant to Section 407 of the Sarbanes-Oxley Act of 2002, Mr. Nelson serves on the audit committee in the capacity of audit committee financial expert as that term is defined in the Act, and Mr. Pennington serves as the Chair of the committee. The Audit Committee, which was comprised of every independent Trustee in 2005, met one time during the fiscal year ended December 31, 2005. The function of the Audit Committee is to oversee the Trust’s accounting and financial reporting policies, practices and internal controls.

The following table sets forth information about the Trustees and the dollar range of shares of the Timothy Plan Family of Funds owned by each Trustee:

Trustees, for their services to the Fund, may purchase class A shares at Net Asset Value; commissions normally charged on A share purchases are waived.

 

Name of Person

  

Dollar Range of Equity

Securities each Fund

        Funds overseen by Director in the Timothy Plan
Family of Funds

Interested Trustees

              

Arthur D. Ally

         $ 1       $ 10,000
   Small Cap Value Fund    $1 - $10,000         
   Conservative Growth Fund    $1 - $10,000         
   Fixed Income Fund    $1 - $10,000         
   Large / Mid Cap Value Fund    $1 - $10,000         
   Strategic Growth Fund    $1 - $10,000         
   Large / Mid Cap Growth Fund    $1 - $10,000         
   Aggressive Growth    $1 - $10,000         

Joseph E. Boatwright

            Over    $ 100,000
   Small Cap Value Fund    $50,000 -$100,000         
   Large / Mid Cap Value Fund    $50,000 -$100,000         
   Money Market Fund    $50,000 -$100,000         
   Fixed Income Fund    $50,000 -$100,000         
   Conservative Growth Fund    $50,000 -$100,000         
   Strategic Growth Fund    $50,000 -$100,000         

Mathew D. Staver

         $ 50,000       $ 100,000
   Small Cap Value Fund    Over $100,000         
   Strategic Growth Fund    Over $100,000         
   Conservative Growth Fund    Over $100,000         

Independent Trustees

              

Richard W. Copeland

   None               None

Bill Johnson

   None               None

Kathryn Tindal Martinez

   None               None

John C. Mulder

   None               None

Dr. David J. Tolliver

         $ 10,001       $ 50,000
   Small Cap Value Fund    $10,000 - $50,000         

Charles E. Nelson

   None               None

Wesley W. Pennington

         $ 10,001       $ 50,000
   Small Cap Value Fund    $10,000 - $50,000         
   Large / Mid Cap Value Fund    $10,000 - $50,000         

Scott Preissler, Ph.D.

   None               None

Alan M. Ross

   None               None

 

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Interested Trustees receive no compensation for their services. Compensation for the Independent Trustees was initiated by the Trust for the first time in June, 2005. Independent Trustees were compensated at the rate of $500 per meeting attended subsequent to June. Trustee remuneration during the past calendar year is set forth in the following table.

 

Name of Person, Position

   Aggregate
Compensation
from Funds
   Pension or Retirement
Benefits Accrued As
Part of Funds Expenses
   Estimated Annual
Benefits Upon
Retirement
   Total Compensation
From Fund and Fund
Complex Paid to
Directors

Interested Trustees

           

Arthur D. Ally, Chairman

   0    0    0    0

Joseph E. Boatwright, Secretary

   0    0    0    0

Mathew D. Staver, Trustee

   0    0    0    0

Independent Trustees

           

Richard W. Copeland

   1,000    0    0    1,000

Bill Johnson

   1,000    0    0    1,000

Kathryn Tindal Martinez

   1,000    0    0    1,000

John C. Mulder

   500    0    0    500

Dr. David J. Tolliver

   1,000    0    0    1,000

Charles E. Nelson, Trustee

   1,000    0    0    1,000

Wesley W. Pennington, Trustee

   1,000    0    0    1,000

Scott Preissler, Ph.D.

   1,000    0    0    1,000

Alan M. Ross

   1,000    0    0    1,000

DISTRIBUTION PLANS

The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (collectively, the “Plans”) for each Class offered by a Fund (other than the Money Market Fund and the Small-Cap Variable Series) 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 C 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 Plan Funds’ shares. The fees are paid on a monthly basis, based on a 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 C shares per annum of average net assets of each Timothy Plan Fund) for expenses incurred in the distribution and promotion of the 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 C shares per annum will be borne by TPL without any additional payments by the Traditional Funds. 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.

The Trustees, pursuant to Rule 12b-1 under the 1940 Act, after considering the purpose and success of the distribution fees for the Funds, voted unanimously to amend the existing distribution plan to include the Patriot Fund. As amended, the Funds will pay TPL a 12b-1 fee each month, as underwriter of the Patriot Fund at the maximum rate allowed, which is 0.25% per annum on Class A shares, and 1.00% per annum on Class C shares.

Class A shares of the Asset Allocation Funds have adopted a Rule 12b-1 Plan that permits the Funds to pay a 12b-1 service fee of up to 0.25% per annum of the net assets of the Class A shares, however, as a result of the Board’s recommendation, the Trust presented the shareholders a proxy authorizing the Class A 12b-1 fee to be reduced from 0.25% to 0.0%, which the shareholders approved at a shareholders’ meeting held on the 5th day of December, 2003. Class B shares, which are no longer offered by the Trust, and Class C shares of the Asset Allocation Funds have adopted Rule 12b-1 Plans that permit the Funds to pay 12b-1 distribution and service fees of up to 1.00% per annum of the net assets of the Class C shares. By shareholder vote on the 5th day of December, 2003, the Class B 12b-1 fee was reduced from 1.00% to 0.75%.

 

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For the fiscal year ended December 31, 2005, TPL was compensated for distribution-related expenses by the Funds as follows:

 

Name of Fund

   Class A    Class B(1)    Class C(2)

Aggressive Growth Fund

   $ 40,726    $ 13,513    $ 9,839

Large/Mid-Cap Growth Fund

   $ 111,989    $ 23,541    $ 12,133

Small-Cap Value Fund

   $ 112,382    $ 166,549    $ 18,574

Large/Mid-Cap Value Fund

   $ 121,885    $ 59,975    $ 20,056

Patriot Fund

   $ 2,915      N/A    $ 4,378

Fixed-Income Fund

   $ 63,317    $ 34,586    $ 14,098

Strategic Growth Fund

     N/A    $ 131,070    $ 26,933

Conservative Growth Fund

     N/A    $ 90,471    $ 28,706

 

* Class C Shares were not offered prior to December 31, 2003. Class B shares are included for purposes of properly disclosing fees paid, but Class B shares are no longer offered to the public.

 

(1) Includes .25% service fee.

The Plans also provide that to the extent that the 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 Funds within the context of Rule 12b-1, such payments shall be deemed to be made pursuant to the Plans.

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 Funds to have moneys available for the direct distribution activities of TPL in promoting the sale of the Funds’ shares, and to avoid any uncertainties as to whether other payments constitute distribution expenses on behalf of the Funds. The Trustees, including the non-interested Trustees, have 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 Funds and their shareholders.

The Plans have been approved by the 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 a Fund’s outstanding shares, on 60 days’ written notice, and 4) automatically by any act that terminates the Underwriting Agreement with TPL. TPL 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 a 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.

TPL is required to report in writing to the Board of Trustees of the Funds, 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 Plan 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

 

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investment companies) of any one issuer or of two or more issuers which a 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.

An excise tax at the rate of 4% will be imposed on the excess, if any, of each Fund’s “required distributions” over actual distributions in any calendar year. Generally, the “required distribution” is 98% of a Fund’s ordinary income for the calendar year plus 98% of its capital gain net income recognized during the one-year period ending on October 31 plus undistributed amounts from prior years. Each Fund intends to make distributions sufficient to avoid imposition of the excise tax. Distributions declared by a Fund during October, November or December to shareholders of record during such month and paid by January 31 of the following year will be taxable to shareholders in the calendar year in which they are declared, rather than the calendar year in which they are received.

If shares of a Fund are purchased within 30 days before or after redeeming other shares of the Fund at a loss, all or a portion of that loss will not be deductible and will increase the basis of the newly purchased shares.

Shareholders will be subject to federal income taxes on distributions made by a Fund whether received in cash or additional shares of the Fund. Distributions of net investment income and net short-term capital gains, if any, will be taxable to shareholders as ordinary income. Distributions of net long-term capital gains, if any, will be taxable to shareholders as long-term capital gains, without regard to how long a shareholder has held shares of the Fund. A loss on the sale of shares held for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain dividend paid to the shareholder with respect to such shares. A redemption of a Fund’s shares will result in a taxable gain or loss to the redeeming shareholder, depending on whether the redemption proceeds are more or less than the shareholder’s adjusted basis for the redeemed shares (which normally includes any sales charge paid on Class A shares). An exchange of shares of any Fund for shares of another Fund generally will have similar tax consequences. However, special rules apply when a shareholder disposes of Class A shares of a Fund through a redemption or exchange within 90 days after purchase thereof and subsequently reacquires Class A shares of that Fund or of another Timothy Plan Fund without paying a sales charge due to the 90-day reinstatement or exchange privileges. In these cases, any gain on the disposition of the original Class A shares will be increased, or loss decreased, by the amount of the sales charge paid when those shares were acquired, and that amount will increase the basis of the shares subsequently acquired. In addition, if shares of a Fund are purchased (whether pursuant to the reinstatement privilege or otherwise) within 30 days before or after redeeming other shares of that Fund (regardless of class) at a loss, all or a portion of that loss will not be deductible and will increase the basis of the newly purchased shares. Dividends eligible for designation under the dividends received deduction and paid by a Fund may qualify in part for the 70% dividends received deduction for corporations provided, however, that those shares have been held for at least 45 days.

The Trust 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.

By law, each Fund must withhold a percentage (30% during calendar year 2004) of your taxable distributions and proceeds (“backup withholding”) if you do not provide your correct social security or taxpayer identification number, or if the IRS instructs the Fund to do so. The withholding provision generally does not apply to nonresident aliens. Ordinarily, distributions and redemption proceeds earned by a Fund’s Shareholders are not subject to withholding of federal income tax. However, if a shareholder fails to furnish a tax identification number or social security number, or certify under penalties of perjury that such number is correct, the Fund may required to withhold federal income tax from all dividend, capital gain and/or redemption payments to such shareholder. Dividends and capital gain distributions may also be subject to back-up withholding if a shareholder fails to certify under penalties of perjury that such shareholder is not subject to back withholding due to the underreporting of certain income. These certifications are contained in the purchase application enclosed with the Prospectus.

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 Plan 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 advisers regarding specific questions as to federal, state and local taxes.

 

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GENERAL INFORMATION

MISCELLANEOUS

As of March 31, 2006, the following persons 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

 

Name of Shareholder

  

Name of Fund

in which Shares Held

  

Share
Class
Owned

  

Number of

Shares Owned

   % Ownership of
Share Class
 

NFS LLC FEBO

   Timothy Plan Aggressive Growth Fund    Class A    1,637,002.3530    61.42 %

NFS LLC FEBO

   Timothy Plan Fixed Income Fund    Class A    1,954,678.4430    62.07 %

NFSC

   Timothy Plan Fixed Income Fund    Class B    23,449.4080    7.49 %

Minogue/NFSA

   Timothy Plan Fixed Income Fund    Class B    23,567.5030    7.53 %

S&K Products Company

   Timothy Plan Fixed Income Fund    Class C    15,505.2410    7.46 %

H.R. Stachler Construction

   Timothy Plan Fixed Income Fund    Class C    17,584.4150    8.47 %

NFS LLC FEBO

   Timothy Plan Large/Mid Cap Growth Fund    Class A    4,966,195.2680    60.28 %

NFS LLC FEBO

   Timothy Plan Large/Mid-Cap Value Fund    Class A    2,517,929.9510    53.84 %

Jonathan Byrd

   Timothy Plan Patriot Fund    Class A    10,000.0000    7.38 %

Jack L Dewitt Retain

   Timothy Plan Patriot Fund    Class A    20,618.5570    15.21 %

Altgelt Joan

   Timothy Plan Patriot Fund    Class C    7,778.9150    12.30 %

Capinco

   Timothy Plan Money Market Fund    No-Load    1,616,957.1300    29.14 %

Mitchell Family Irrevocable Trust

   Timothy Plan Money Market Fund    No-Load    491,205.1900    8.85 %

NFS LLC FEBO

   Timothy Plan Small-Cap Value Fund    Class A    1,519,754.1970    46.70 %

S & K Products

   Timothy Plan Small-Cap Value Fund    Class C    9,617.2560    5.23 %

H.R. Stachler Construction

   Timothy Plan Small-Cap Value Fund    Class C    15,000.4060    8.16 %

Annuity Investors Life, FBO Annuity Investors

   Timothy Plan Small-Cap Variable Series    No-Load    293,858.9430    100.00 %

For the purposes of ownership, “control” means the beneficial ownership, either directly or through one or more controlled companies, of more than 25% of the voting securities of a company. A controlling ownership may be detrimental to the other shareholders of the company.

Class B shares are no longer offered for sale by the Trust.

 

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PERFORMANCE

Performance information for the shares of the Timothy Plan Funds will vary due to the effect of expense ratios on the performance calculations.

Current yield and total return may be quoted in advertisements, shareholder reports or other communications to shareholders. Yield is the ratio of income per share derived from a Fund’s investments to a current maximum offering price expressed in terms of percent. The yield is quoted on the basis of earnings after expenses have been deducted. Total return is the total of all income and capital gains paid to shareholders, assuming reinvestment of all distributions, plus (or minus) the change in the value of the original investment, expressed as a percentage of the purchase price. Occasionally, a Fund 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 a Fund be accompanied by certain standardized performance information computed as required by the Commission. Current yield and total return quotations used by a Fund 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).

The advertised after-tax returns for a class of a fund are calculated by equaling an initial amount invested in a class of a fund to the ending value, according to the following formulas :

After taxes on Distributions:                     P(1+T)n = ATVD

After Taxes on Distributions and Redemption:                     P(1+T)n    ATVDR

 

Where:

   P    =    a hypothetical initial payment of $1000
   T    =    average annual return (after taxes on distributions or after taxes on distributions and redemptions as applicable
   n    =    number of years
   ATVD    =    ending value of a hypothetical $1000 payment made at the beginning of the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year periods (or fractional portion), after taxes on redemption.
   ATVDR    =    ending value of a hypothetical $1000 payment made at the beginning of the 1-, 5-, 10-year periods at the end of the 1-, 5-, 10—year periods (or financial portion) after taxes on fund distributions and redemption.

 

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Based on these formulas, annualized total returns were as follows for the periods and Funds indicated:

 

    

Average Annual Returns

(as of 12/31/2005)

     1-Year     3-Year     5-Year     10-Year    Since Inception     Inception Date

Timothy Aggressive Growth - Class A

             

Pre-Tax

   8.73 %   18.34 %   -1.98 %   N/A    -5.21 %   Oct 5, 00

Pre-Liquidation After-Tax

   2.60 %   16.12 %   -3.09 %   N/A    -6.23 %   Oct 5, 00

Post-Liquidation After-Tax

   2.41 %   14.10 %   -2.54 %   N/A    -5.13 %   Oct 5, 00

Timothy Aggressive Growth - Class B

             

Pre-Tax

   7.82 %   17.50 %   -2.72 %   N/A    -5.89 %   Oct 9, 00

Pre-Liquidation After-Tax

   2.43 %   16.62 %   -2.98 %   N/A    -5.95 %   Oct 9, 00

Post-Liquidation After-Tax

   2.36 %   14.56 %   -2.45 %   N/A    -4.90 %   Oct 9, 00

Timothy Aggressive Growth - Class C

             

Pre-Tax

   7.96 %   N/A     N/A     N/A    8.36 %   Feb 3, 04

Pre-Liquidation After-Tax

   6.56 %   N/A     N/A     N/A    8.15 %   Feb 3, 04

Post-Liquidation After-Tax

   5.05 %   N/A     N/A     N/A    7.14 %   Feb 3, 04

Timothy Conservative Growth - Class A

             

Pre-Tax

   5.56 %   10.53 %   2.14 %   N/A    1.99 %   Oct 5, 00

Pre-Liquidation After-Tax

   0.00 %   8.46 %   0.98 %   N/A    0.88 %   Oct 5, 00

Post-Liquidation After-Tax

   0.00 %   7.36 %   0.89 %   N/A    0.80 %   Oct 5, 00

Timothy Conservative Growth - Class B

             

Pre-Tax

   4.72 %   9.69 %   1.35 %   N/A    1.26 %   Oct 9, 00

Pre-Liquidation After-Tax

   -0.28 %   8.74 %   1.09 %   N/A    1.19 %   Oct 9, 00

Post-Liquidation After-Tax

   -0.18 %   7.60 %   0.98 %   N/A    1.06 %   Oct 9, 00

Timothy Conservative Growth - Class C

             

Pre-Tax

   4.71 %   N/A     N/A     N/A    5.00 %   Feb 3, 04

Pre-Liquidation After-Tax

   3.71 %   N/A     N/A     N/A    4.85 %   Feb 3, 04

Post-Liquidation After-Tax

   2.41 %   N/A     N/A     N/A    4.25 %   Feb 3, 04

Timothy Fixed Income - Class A

             

Pre-Tax

   1.11 %   3.40 %   5.34 %   N/A    4.38 %   Jul 14, 99

Pre-Liquidation After-Tax

   -4.37 %   0.86 %   3.09 %   N/A    2.24 %   Jul 14, 99

Post-Liquidation After-Tax

   -2.03 %   1.17 %   3.06 %   N/A    2.31 %   Jul 14, 99

Timothy Fixed Income - Class B

             

Pre-Tax

   0.47 %   2.64 %   4.28 %   N/A    3.72 %   Aug 5, 99

Pre-Liquidation After-Tax

   -5.39 %   0.79 %   2.90 %   N/A    2.35 %   Aug 5, 99

Post-Liquidation After-Tax

   -2.81 %   1.05 %   2.86 %   N/A    2.39 %   Aug 5, 99

Timothy Fixed Income - Class C

             

Pre-Tax

   0.47 %   N/A     N/A     N/A    1.35 %   Feb 3, 04

Pre-Liquidation After-Tax

   -1.53 %   N/A     N/A     N/A    0.23 %   Feb 3, 04

Post-Liquidation After-Tax

   -0.27 %   N/A     N/A     N/A    0.52 %   Feb 3, 04

Timothy Lg Mid Cap Growth - Class A

             

Pre-Tax

   3.44 %   10.42 %   -6.00 %   N/A    -6.78 %   Oct 5, 00

Pre-Liquidation After-Tax

   -1.98 %   8.48 %   -7.01 %   N/A    -7.73 %   Oct 5, 00

Post-Liquidation After-Tax

   -1.29 %   7.30 %   -5.81 %   N/A    -6.39 %   Oct 5, 00

Timothy Lg Mid Cap Growth - Class B

             

Pre-Tax

   2.77 %   9.63 %   -6.62 %   N/A    -7.40 %   Oct 9, 00

Pre-Liquidation After-Tax

   -2.23 %   8.79 %   -6.81 %   N/A    -7.41 %   Oct 9, 00

Post-Liquidation After-Tax

   -1.45 %   7.56 %   -5.66 %   N/A    -6.13 %   Oct 9, 00

Timothy Lg Mid Cap Growth - Class C

             

Pre-Tax

   2.61 %   N/A     N/A     N/A    N/A     3-Feb-04

Pre-Liquidation After-Tax

   1.61 %   N/A     N/A     N/A    N/A     3-Feb-04

Post-Liquidation After-Tax

   1.04 %   N/A     N/A     N/A    N/A     3-Feb-04

Timothy Lg Mid Cap Value - Class A

             

Pre-Tax

   19.42 %   18.46 %   7.00 %   N/A    6.82 %   Jul 14, 99

Pre-Liquidation After-Tax

   10.76 %   15.53 %   5.37 %   N/A    5.52 %   Jul 14, 99

Post-Liquidation After-Tax

   11.78 %   14.20 %   5.04 %   N/A    5.11 %   Jul 14, 99

Timothy Lg Mid Cap Value - Class B

             

Pre-Tax

   18.56 %   17.56 %   6.17 %   N/A    6.01 %   Jul 15, 99

Pre-Liquidation After-Tax

   10.78 %   15.93 %   5.50 %   N/A    5.58 %   Jul 15, 99

Post-Liquidation After-Tax

   12.32 %   14.62 %   5.17 %   N/A    5.17 %   Jul 15, 99

Timothy Lg Mid Cap Value - Class C

             

Pre-Tax

   18.53 %   N/A     N/A     N/A    N/A     Feb 3, 04

Pre-Liquidation After-Tax

   14.85 %   N/A     N/A     N/A    N/A     Feb 3, 04

Post-Liquidation After-Tax

   14.96 %   N/A     N/A     N/A    N/A     Feb 3, 04

Class C shares commenced operations and were first offered to the investing public on the 2nd day of January, 2004.

 

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Average Annual Returns

(as of 12/31/2005)

     1-Year     3-Year     5-Year     10-Year     Since Inception     Inception Date

Timothy Plan Annuity Shares Class A

            

Pre-Tax

   -0.66 %   16.04 %   7.55 %   N/A     8.93 %   May 28, 98

Pre-Liquidation After-Tax

   1.09 %   13.91 %   6.33 %   N/A     7.62 %   May 28, 98

Post-Liquidation After-Tax

   4.55 %   22.13 %   8.22 %   N/A     6.62 %   May 28, 98

Timothy Small Cap Value - Class A

            

Pre-Tax

   -1.01 %   15.32 %   6.31 %   7.60 %   6.85 %   Mar 24, 94

Pre-Liquidation After-Tax

   -6.34 %   12.52 %   4.74 %   6.34 %   5.68 %   Mar 24, 94

Post-Liquidation After-Tax

   -3.83 %   11.34 %   4.37 %   5.91 %   5.32 %   Mar 24, 94

Timothy Small Cap Value - Class B

            

Pre-Tax

   -1.77 %   14.45 %   5.50 %   7.20 %   6.92 %   Aug 25, 95

Pre-Liquidation After-Tax

   -6.74 %   12.88 %   4.87 %   6.52 %   6.13 %   Aug 25, 95

Post-Liquidation After-Tax

   -4.05 %   11.70 %   4.51 %   6.08 %   5.74 %   Aug 25, 95

Timothy Small Cap Value - Class C

            

Pre-Tax

   -1.84 %   N/A     N/A     N/A     3.11 %   Feb 3, 04

Pre-Liquidation After-Tax

   -2.91 %   N/A     N/A     N/A     2.00 %   Feb 3, 04

Post-Liquidation After-Tax

   -1.56 %   N/A     N/A     N/A     2.50 %   Feb 3, 04

Timothy Strategic Growth - Class A

            

Pre-Tax

   6.25 %   13.70 %   -0.61 %   N/A     -1.34 %   Oct 5, 00

Pre-Liquidation After-Tax

   0.66 %   11.60 %   -1.72 %   N/A     -2.39 %   Oct 5, 00

Post-Liquidation After-Tax

   0.43 %   10.07 %   -1.42 %   N/A     -1.98 %   Oct 5, 00

Timothy Strategic Growth - Class B

            

Pre-Tax

   5.49 %   12.81 %   -1.33 %   N/A     -2.02 %   Oct 9, 00

Pre-Liquidation After-Tax

   0.49 %   11.94 %   -1.57 %   N/A     -2.06 %   Oct 9, 00

Post-Liquidation After-Tax

   0.32 %   10.37 %   -1.30 %   N/A     -1.71 %   Oct 9, 00

Timothy Strategic Growth - Class C

            

Pre-Tax

   5.61 %   N/A     N/A     N/A     6.04 %   Feb 3, 04

Pre-Liquidation After-Tax

   4.60 %   N/A     N/A     N/A     5.92 %   Feb 3, 04

Post-Liquidation After-Tax

   2.99 %   N/A     N/A     N/A     5.14 %   Feb 3, 04

Timothy Money Market Shares Class A

            

Pre-Tax

   2.48 %   1.34 %   1.63 %   N/A     2.35 %   Jul 9, 99

Pre-Liquidation After-Tax

   1.60 %   0.91 %   1.05 %   N/A     1.47 %   Jul 9, 99

Post-Liquidation After-Tax

   1.60 %   0.91 %   1.05 %   N/A     1.47 %   Jul 9, 99

Timothy Plan Patriot Fund - Class A

            

Pre-Tax

   0.66 %   N/A     N/A     N/A     3.57 %   May 1, 04

Pre-Liquidation After-Tax

   -4.59 %   N/A     N/A     N/A     0.29 %   May 1, 04

Post-Liquidation After-Tax

   -2.98 %   N/A     N/A     N/A     0.24 %   May 1, 04

Timothy Plan Patriot Fund - Class C

            

Pre-Tax

   -0.10 %   N/A     N/A     N/A     2.86 %   May 1, 04

Pre-Liquidation After-Tax

   -1.09 %   N/A     N/A     N/A     2.86 %   May 1, 04

Post-Liquidation After-Tax

   -0.71 %   N/A     N/A     N/A     2.44 %   May 1, 04

A fund’s “yield” is determined in accordance with the method defined by the Securities and Exchange Commission. A yield quotation is based on a 30 day (or one month) period and is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period, according to the following formula:

 

         Yield = 2[(a-b/cd+1)6 – 1]

Where:

   a    =    dividends and interest earned during the period
   b    =    expenses accrued for the period (net of reimbursements)
   c    =    the average daily number of shares outstanding during the period that were entitled to receive dividends
   d    =    the maximum offering price per share on the last day of the period

Solely for the purpose of computing yield, dividend income recognized by accruing 1/360 of the stated dividend rate of the security each day that a fund owns the security. Generally, interest earned (for the purpose of “a” above) on debt obligations is computed by reference to the yield to maturity of each obligation held based on the market value of the obligation (including actual accrued interest) at the close of business on the last business day prior to the start of the 30-day (or one month) period for which yield is being calculated, or, with respect to obligations purchased during the month, the purchase price (plus actual accrued interest). With respect to the treatment of discount and premium on mortgage or other receivable-backed obligations which are expected to be subject to monthly paydowns of principal and interest, gain or loss attributable to actual monthly paydowns is accounted for as an increase or decrease to interest income during the period and discount or premium on the remaining security is not amortized.

 

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COMPARISONS AND ADVERTISEMENTS

To help investors better evaluate how an investment in a Fund might satisfy their investment objective, advertisements regarding the Fund may discuss total return for the Fund 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, a Fund 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 Funds as consistent with their philosophy of investment.

FINANCIAL STATEMENTS

The Trust’s financial statements and the independent auditor’s report, including the notes thereto, for the fiscal year ended December 31, 2005, are hereby incorporated by reference from the Timothy Plan’s 2005 Annual Report to Shareholders.

 

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APENDIX 1

PROXY VOTING POLICY

PREFACE

Timothy Partners, Ltd. (“Advisor”) is registered with the Securities and Exchange Commission as an investment advisor under the Investment Advisers Act of 1940, as amended (“Advisers Act”). Pursuant to an advisory agreement between Advisor and The Timothy Plan (the “Trust”), Advisor manages the assets of the Timothy Plan Funds (the “Funds”). As the investment adviser to the Funds, Advisor is responsible for voting all proxies related to securities held in the Funds’ investment portfolios. Because the Fund sub-advisors, under the close scrutiny of the Advisor, perform economic and management analyses of the companies in which the Funds are invested, Advisor looks to the Fund sub-advisors to vote proxies, and each sub-advisors’ proxy policies and procedures are incorporated herein by specific reference.

Advisor, consistent with its fiduciary duties and pursuant to Rule 206(4)-6 under the Advisers Act, has designed this proxy voting policy (the “Policy”) to reflect its commitment to vote all proxies, when called upon to vote by a sub-advisor who perceives a potential conflict or for any other reason, in a manner consistent with the best interests of the Funds’ shareholders. Sub-advisors, and Advisor, consistent with their duty of care, will monitor corporate actions for those issuers whose securities are called upon to vote. Consistent with its duty of loyalty, Advisor will, in all cases, vote, or cause sub-advisors to vote, to promote the Funds’ shareholders’ best interests. In determining how to vote proxies, Advisor and sub-advisors shall initially review each Proxy subject to perform an analysis of the impact each issue may have pursuant to the moral considerations set forth in the Prospectus, and shall vote in a manner not inconsistent with those moral considerations. Further, Advisor and sub-advisors will not subordinate the economic interest of the Funds’ shareholders to their own interests or to that of any other entity or interested party.

KEY PROXY VOTING ISSUES

All votes shall initially be reviewed subject to an analysis of the impact each issue may have pursuant to the moral considerations set forth in the Prospectus. Subsequent to the moral analysis, all votes shall be on a company-by-company basis, and each issue shall be considered in the context of the company under review, and the various economic impacts such issues may have on the Funds’ stated investment objectives. Advisor will give great weight to the views of management if and only if the issues involved will not have a negative impact on Funds’ shareholder values. In all other cases, Advisor will engage in an independent analysis of the impact that the proposed action will have on shareholder values.

 

1. Board of Directors

Electing directors is one of the most important rights of stock ownership that company shareholders can exercise. Advisor believes that company directors should act in the long-term interests of the company’s shareholders and the company as a whole. Generally, subsequent to the moral considerations addressed above, when called upon by a sub-advisor to vote, Advisor will vote in favor of director nominees that have expressed and/or demonstrated a commitment to the interest of the company’s shareholders. Advisor will consider the following factors in deciding how to vote proxies relating to director elections:

 

    In re-electing incumbent directors, the long-term performance of the company relative to its peers – Advisor will not vote to re-elect a board if the company has had consistent poor performance relative to its peers in the industry, unless the board has taken or is attempting to take steps to improve the company’s performance.

 

    Whether the slate of director nominees promotes a majority of independent directors on the full board – Advisor believes that it is in the best interest of all company shareholders to have, as a majority, directors that are independent of management.

 

    A director nominee’s attendance at less than 75% of required meetings – frequent non-attendance at board meetings will be grounds for voting against re-election.

 

    Existence of any prior SEC violations and/or other criminal offenses – Advisor will not vote in favor of a director nominee who, to Advisor’s actual knowledge, is the subject of SEC or other criminal enforcement actions.

Advisor believes that it is in the shareholders’ best interests to have bright and experienced directors serving on a company’s board. To this end, Advisor believes that companies should be allowed to establish director compensation packages that attract and retain desirable directors. Advisor will consider whether proposals relating to director

 

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compensation are reasonable in relation to the company’s performance and resources. Advisor will vote in favor of proposals that seek to impose reasonable limits on director compensation.

In all other issues that may arise relating to the Board of Directors, Advisor will vote against all proposals that benefit directors at the expense of shareholders, and in favor of all proposals that do not unreasonably abrogate the rights of shareholders. As previously stated, each issue will be analyzed on an issue-by-issue basis.

 

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2. Corporate Governance

Corporate governance issues may include, but are not limited to, the following: (i) corporate defenses, (ii) corporate restructuring proposals, (iii) proposals affecting the capital structure of a company, (iv) proposals regarding executive compensation, or (v) proposals regarding the independent auditors of the company. When called upon by a sub-advisor to vote:

i. Corporate Defenses. Although Advisor will review each proposal on a case-by-case basis, Advisor will generally vote against management proposals that (a) seek to insulate management from all threats of change in control, (b) provide the board with veto power against all takeover bids, (c) allow management or the board of the company to buy shares from particular shareholders at a premium at the expense of the majority of shareholders, or (d) allow management to increase or decrease the size of the board at its own discretion. Advisor will only vote in favor of those proposals that do not unreasonably discriminate against a majority of shareholders, or greatly alter the balance of power between shareholders, on one side, and management and the board, on the other.

ii. Corporate Restructuring. These may include mergers and acquisitions, spin-offs, asset sales, leveraged buy-outs and/or liquidations. In determining the vote on these types of proposals, Advisor will consider the following factors: (a) whether the proposed action represents the best means of enhancing shareholder values, (b) whether the company’s long-term prospects will be positively affected by the proposal, (c) how the proposed action will impact corporate governance and/or shareholder rights, (d) how the proposed deal was negotiated, (e) whether all shareholders receive equal/fair treatment under the terms of the proposed action, and/or (f) whether shareholders could realize greater value through alternative means.

iii. Capital Structure. Proposals affecting the capital structure of a company may have significant impact on shareholder value, particularly when they involve the issuance of additional stock. As such, Advisor will vote in favor of proposals to increase the authorized or outstanding stock of the company only when management provides persuasive business justification for the increase, such as to fund acquisitions, recapitalization or debt restructuring. Advisor will vote against proposals that unreasonably dilute shareholder value or create classes of stock with unequal voting rights if, over time, such action may lead to a concentration of voting power in the hands of few insiders.

iv. Executive Compensation. Advisor believes executives should be compensated at a reasonable rate and that companies should be free to offer attractive compensation packages that encourage high performance in executives because, over time, it will increase shareholder values. Advisor also believes however, that executive compensation should, to some extent, be tied to the performance of the company. Therefore, Advisor will vote in favor of proposals that provide challenging performance objectives to company executives, and which serve to motivate executives to better performance. Advisor will vote against all proposals that offer unreasonable benefits to executives whose past performance has been less than satisfactory.

Advisor will vote against shareholder proposals that summarily restrict executive compensation without regard to the company’s performance, and in favor of shareholder proposals that seek additional disclosures on executive compensation.

v. Independent Auditors. The engagement, retention and termination of a company’s independent auditors must be approved by the company’s audit committee, which typically includes only those independent directors who are not affiliated with or compensated by the company, except for directors’ fees. In reliance on the audit committee’s recommendation, Advisor generally will vote to ratify the employment or retention of a company’s independent auditors unless Advisor is aware that the auditor is not independent or that the auditor has, in the past, rendered an opinion that was neither accurate nor indicative of the company’s financial position.

 

3. Shareholder Rights

State law provides shareholders of a company with various rights, including, but not limited to, cumulative voting, appraisal rights, the ability to call special meetings, the ability to vote by written consent and the ability to amend the charter or bylaws of the company. When called upon by a sub-advisor to vote, Advisor will carefully analyze all proposals relating to shareholder rights and will vote against proposals that seek to eliminate existing shareholder rights or restrict the ability of shareholders to act in a reasonable manner to protect their interest in the company. In all cases, Advisor will vote in favor of proposals that best represent the long-term financial interest of Fund shareholders.

 

4. Social and Environmental Issues

When called upon by a sub-advisor to vote, in determining how to vote proxies in this category, Advisor will consider the following factors:

 

    Whether the proposal creates a stated position that could affect the company’s reputation and/or operations, or leave it vulnerable to boycotts and other negative consumer responses;

 

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    The percentage of assets of the company that will be devoted to implementing the proposal;

 

    Whether the issue is more properly dealt with through other means, such as through governmental action;

 

    Whether the company has already dealt with the issue in some other appropriate way; and

 

    What other companies have done in response to the issue.

While Advisor generally supports shareholder proposals that seek to create good corporate citizenship, Advisor will vote against proposals that would tie up a large percentage of the assets of the company. Advisor believes that such proposals are inconsistent with its duty to seek long-term value for Fund shareholders. Advisor will also evaluate all proposals seeking to bring to an end certain corporate actions to determine whether the proposals adversely affect the ability of the company to remain profitable. Advisor will vote in favor of proposals that enhance or do not negatively impact long-term shareholder values.

PROXY VOTING PROCEDURES

 

1. The Proxy Voting Officer

Advisor hereby appoints Terry Covert as the person responsible for voting all proxies relating to securities held in the Funds’ accounts (the “Proxy Voting Officer”) when called upon by a sub-advisor to vote. The Proxy Voting Officer shall take all reasonable efforts to monitor corporate actions, obtain all information sufficient to allow an informed vote on the matter, and ensure that all proxy votes are cast in a timely fashion and in a manner consistent with this Policy.

If, in the Proxy Voting Officer’s reasonable belief, it is in the best interest of the Fund shareholders to cast a particular vote in a manner that is contrary to this policy, the Advisor shall submit a request for a waiver to the Board of Trustees of the Trust (the “Board”), stating the facts and reasons for the Proxy Voting Officer’s belief. The Proxy Voting Officer shall proceed to vote the proxy in accordance with the decision of the Board.

In addition, if, in the Proxy Voting Officer’s reasonable belief, it is in the best interest of the Fund shareholders to abstain from voting on a particular proxy solicitation, the Proxy Voting Officer shall make a record summarizing the reasons for the Proxy Voting Officer’s belief and shall present this summary to the Board along with other reports required in Section 3 below.

 

2. Conflict of Interest Transactions

The Proxy Voting Officer shall submit to the Trust’s Board of Trustees all proxies solicitations that, in the Proxy Voting Officer’s reasonable belief, present a conflict between the interests of the Fund shareholders on one hand, and those of an Advisor or any of its affiliated persons/entities (each, an “Advisory Entity”). Conflict of interest transactions include, but are not limited to, situations where:

 

    an Advisory Entity has a business or personal relationship with the participant of a proxy contest such as members of the issuers management or the soliciting shareholder(s);

 

    an Advisory Entity provides advisory, brokerage, underwriting, insurance or banking or other services to the issuer whose management is soliciting proxies;

 

    an Advisory Entity has a personal or business relationship with a candidate for directorship; or

 

    an Advisory Entity manages a pension plan or administers an employee benefit plan, or intends to pursue an opportunity to do so.

In all such cases, the materials submitted to the Board shall include the name of the affiliated party whose interests in the transaction are believed to be contrary to the interests of the Funds, a brief description of the conflict, and any other information in the Proxy Voting Officer’s possession that would to enable the Board to make an informed decision on the matter. The Proxy Voting Officer shall vote the proxy in accordance with the direction of the Board.

 

3. Report to the Board of Trustees

The Proxy Voting Officer shall, from reports received from sub-advisors and votes cast when called upon by a sub-advisor to vote, compile and present to the Board of Trustees an annual report of all proxy solicitations received by the Funds, including for each proxy solicitation, (i) the name of the issuer, (ii) the exchange ticker symbol for the security, (iii) the CUSIP number, (iv) the shareholder meeting date; (iv) a brief identification of the matter voted on, (v) whether the matter was proposed by the management or by a security holder; (vi) whether the Proxy Voting Officer cast its vote on the matter and if not, an explanation of why no vote was cast; (vii) how the vote was cast (i.e., for or against the proposal); (viii) whether the vote was cast for or against management; and (ix) whether the vote was consistent with

 

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this Policy, and if inconsistent, an explanation of why the vote was cast in such manner. The report shall also include a summary of all transactions which, in the Proxy Voting Officer’s reasonable opinion, presented a potential conflict of interest, and a brief explanation of how each conflict was resolved.

 

4. Responding to Fund Shareholders’ Request for Proxy Voting Disclosure

Consistent with this Policy, Advisors shall submit to Timothy Partners, Ltd. a complete proxy voting record to be filed with the Securities and Exchange Commission on an annual basis for each period ending June 30th on SEC Form N-PX. In addition, the Proxy Voting Officer shall make the Fund’s proxy voting record available to any Fund shareholder who may wish to review such record through The Timothy Plan website. The Timothy Plan website shall notify shareholders of the Fund that the Fund’s proxy voting record and a copy of this Policy is available, without charge, to the shareholders by calling the Trust’s toll-free number as listed in its current prospectus. Timothy Partners shall respond to all shareholder requests for records within three business days of such request by first-class mail or other means designed to ensure prompt delivery.

 

38       STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN FAMILY OF FUNDS    May 1, 2006


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RECORD KEEPING

In connection with this Policy, the Proxy Voting Officer, when called upon by a sub-advisor to vote, shall maintain a record of the following:

 

    copies all proxies solicitations received by the Fund, including a brief summary of the name of the issuer of the portfolio security, the exchange ticker symbol for the security, the CUSIP number, and the shareholder meeting date;

 

    a reconciliation of the proxy solicitations received and number of shares held by the Fund in the company;

 

    the analysis undertaken to ensure that the vote cast is consistent with this Policy;

 

    copies, if any, of all waiver request submitted to the Board and the Board’s final determination relating thereto;

 

    copies, if any, of all documents submitted to the Board relating to conflict of interest transactions and the Board’s final determination relating thereto;

 

    copies of any other documents created or used by the Proxy Voting Officer in determining how to vote the proxy;

 

    copies of all votes cast;

 

    copies of all quarterly summaries presented to the Board; and

 

    copies of all shareholder requests for the Fund’s proxy voting record and responses thereto.

All records required to be maintained under this Policy shall be maintained in the manner and for such period as is consistent with other records required to be maintained by Advisor pursuant to Rule 204-2 of the Advisers Act. Copies shall be provided to Timothy Partners promptly upon request.

PROXY VOTING POLICY

SUMMARY

Timothy Partners, Ltd. (“Advisor”) is registered with the Securities and Exchange Commission as an investment advisor under the Investment Advisers Act of 1940, as amended (“Advisers Act”). Pursuant to an advisory agreement between Advisor and The Timothy Plan (the “Trust”), Advisor manages the assets of The Timothy Plan Family of Funds (the “Funds”). As the investment adviser to the Funds, Advisor is responsible for voting all proxies related to securities held in their investment portfolios. With the approval of the Board of Trustees of the Trust (the “Board”), the Advisor has delegated day-to-day money management responsibilities for certain of the Funds to sub-advisors. Because a Fund’s sub-advisor, under the close scrutiny of the Advisor, monitors and reviews the companies in which the Fund invests, the Advisor has delegated its authority to vote proxies to the Fund’s sub-advisor. Each sub-advisor’s proxy voting policies and procedures have been reviewed by the Advisor and the Board.

Advisor, consistent with its fiduciary duties and pursuant to Rule 206(4)-6 under the Advisers Act, will vote, or cause the Funds’ sub-advisors to vote, proxies in a manner that promotes the shareholders’ best interests. In determining how to vote proxies, Advisor and the sub-advisors shall review each proxy proposal, analyze the impact each proposal may have on the moral considerations set forth in the Funds’ Prospectus, and shall vote in a manner not inconsistent with those moral considerations. Advisor and the sub-advisors will not subordinate the economic interests of the Funds’ shareholders to their own interests or to that of any other entity or interested party. In the event that a conflict of interest arises between Advisor or a sub-advisor and Fund, a complete description of the conflict will be presented to the Board, and the proxy will be voted as directed by the Board.

A copy of Advisor’s Proxy Voting Policies and Procedures may be obtained by calling The Timothy Plan at 1-800-846-7526 or may be viewed on line at www.timothyplan.com. A copy also may be obtained from Fund documents filed with the SEC at its website www.sec.gov. A record of the actual proxy votes cast by each Fund also is available upon request made to The Timothy Plan either by phone or by contacting us on our website.

 

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LOGO

The Timothy Plan

1055 Maitland Center Commons Blvd.

Winter Park, FL 32751

www.timothyplan.com

E-mail invest@timothyplan.com

Tel (800) 846-7526


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PART C. OTHER INFORMATION

 

Item 23. Exhibits.

 

(a) Articles of Incorporation - Agreement and Declaration of Trust, filed as an Exhibit to Registrant’s Post-Effective Amendment No. 4, is hereby incorporated by reference.

 

(b) By-Laws - filed as an Exhibit to Registrant’s Post-Effective Amendment No. 4, is hereby incorporated by reference.

 

(c) Instruments Defining Rights of Security Holders – See Declaration of Trust, filed as an Exhibit to Registrant’s Post-Effective Amendment No. 4, and incorporated herein by reference.

 

(d) Investment Advisory Contracts.

 

  (1) Registrant’s Form of Amendment to the Investment Advisory Agreement dated May 1, 1999 with Timothy Partners, Ltd., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 9, is hereby incorporated by reference.

 

  (2) Registrant’s Form of Amendment to the Investment Advisory Agreement dated May 1, 1998 with Timothy Partners, Ltd., which was filed as an Exhibit to Registrant’s Post-Effective No. 8, is hereby incorporated by reference.

 

  (3) Registrant’s Form of Amendment dated March 12, 1997 to the Investment Advisory Agreement dated January 19, 1994 with Timothy Partners, Ltd., which was filed as an Exhibit to Registrant’s Post-Effective No. 6, is hereby incorporated by reference.

 

  (4) Registrant’s Form of Amendment dated August 28, 1995 to the Investment Advisory Agreement dated January 19, 1994 with Timothy Partners, Ltd., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 4, is hereby incorporated by reference.

 

  (5) Registrant’s Form of Investment Advisory Agreement dated January 19, 1994 with Timothy Partners, Ltd., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 4, is hereby incorporated by reference.

 

  (6) Registrant’s Form of Investment Advisory Agreement dated April 27, 2001 with Timothy Partners, Ltd. on behalf of the Strategic Growth Portfolio Variable Series, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 13 on May 1, 2001, is hereby incorporated by reference.

 

  (7) Registrant’s Form of Investment Advisory Agreement dated April 27, 2001 with Timothy Partners, Ltd. on behalf of the Conservative Growth Portfolio Variable Series, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 13 on May 1, 2001, is hereby incorporated by reference.

 

  (8) Registrant’s Form of Amendment to Sub-Investment Advisory Agreement dated May 1, 1998 with Timothy Partners, Ltd. and Awad & Associates, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 8, is hereby incorporated by reference.


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  (9) Registrant’s Form of Sub-Advisory Agreement dated January 1, 1997 with Timothy Partners, Ltd. and Awad & Associates, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 5, is hereby incorporated by reference.

 

  (10) Registrant’s Form of Sub-Advisory Agreement dated October 1, 2000 with Timothy Partners, Ltd. and Provident Investment Counselors, Inc., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 11 on August 17, 2000, is hereby incorporated by reference.

 

  (11) Registrant’s Form of Sub-Advisory Agreement dated October 1, 2000 with Timothy Partners, Ltd. and Rittenhouse Financial Services, Inc., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 11 on August 17, 2001, is hereby incorporated by reference.

 

  (12) Registrant’s Form of Amendment to the Investment Advisory Agreement dated May 1, 2004 with Timothy Partners, Ltd on behalf of the Timothy Plan US Patriot Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 19 on March 5, 2004, is hereby incorporated by reference.

 

  (13) Registrant’s Form of Sub-Investment Advisory Agreement dated May 1, 2004 with Timothy Partners, Ltd. and Awad & Associates on behalf of the Timothy Plan Patriot Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 19 on March 5, 2004, is hereby incorporated by reference.

 

  (14) Registrant’s Form of Sub-Investment Advisory Agreement dated March 1, 2005 with Timothy Partners, Ltd. and Westwood Management Group, on behalf of the Timothy Plan Large/Mid-Cap Value Fund- filed herein as Exhibit 99-d(14).

 

  (15) Registrant’s Form of Sub-Advisory Agreement dated October 1, 2000 with Timothy Partners, Ltd. and Rittenhouse Financial Services, Inc, on behalf of the Timothy Plan Large/Mid-Cap Growth Fund- filed herein as Exhibit 99-d(15).

 

  (16) Registrant’s Form of Sub-Investment Advisory Agreement dated January 1, 2006 with Timothy Partners, Ltd. and Westwood Management Group, on behalf of the Timothy Plan Small-Cap Value Fund- filed herein as Exhibit 99-d(15).

 

e. Underwriting Contracts

 

  (1) Registrant’s Underwriting Agreement dated July 1, 1997 with Timothy Partners, Ltd., which was filed as an Exhibit to Registrant’s Post-Effective No. 6, is hereby incorporated by reference.

 

f. Bonus or Profit Sharing Contracts - Not Applicable

 

g. Custodian Agreements

 

  (1) Form of Custodian Agreement - which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 15, is hereby incorporated by reference.

 

  (2)

Form of Registrant’s Amendment to Underwriting Agreement dated May 1, 2004 with Timothy Partners Ltd. on behalf of the Timothy Plan US Patriot Fund,


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which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 19 on March 5, 2004, is hereby incorporated by reference.

 

h. Other Material Contracts

 

  (1) Form of Registrant’s Amendment dated May 1, 1996 to Registrant’s Administrative Agreement dated January 19, 1994 with Covenant Financial Management, Inc., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 4, is hereby incorporated by reference.

 

  (2) Form of Registrant’s Administrative Agreement dated January 19, 1994 with Covenant Financial Management, Inc., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 4, is hereby incorporated by reference.

 

  (3) Form of Registrant’s Form of Participation Agreement dated May 1, 1998 on behalf of The Timothy Plan Variable Series with Annuity Investors Life Insurance Company and Timothy Partners, Ltd., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 9, is hereby incorporated by reference.

 

  (4) Form of Registrant’s Mutual Fund Services Agreement with Citco-Quaker Fund Services, Inc., dated May 1, 2003, which was filed as an Exhibit to Registrant’s Post-effective Amendment No. 17, is hereby incorporated by reference.

 

  (5) Powers of Attorney, which were filed as an Exhibit to Registrant’s Post-Effective Amendment No. 20, are hereby incorporated by reference.

 

i. Opinion and Consent of Counsel – Form of Opinion and Consent of David Jones & Assoc., P.C.- filed herein as Exhibit 99-i.

 

j. Consent of Independent Auditors – Opinion and Consent of Cohen McCurdy, Ltd.- filed herein as Exhibit 99-j.

 

k. Omitted Financial Statements - None

 

l. Initial Capital Agreements -

 

  (1) Investment letters between the Registrant and its initial shareholders, which were filed as an Exhibit to Registrant’s Post-Effective Amendment No. 4, are hereby incorporated by reference.

 

m. Rule 12b-1 Plans

 

  (1) Registrant’s Plan of Distribution for Class A Shares, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 9, is hereby incorporated by reference.

 

  (2) Registrant’s Plan of Distribution for Class B Shares, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 9, is hereby incorporated by reference.


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  (3) Registrant’s Plan of Distribution for Class C shares, which was filed as an Exhibit to Registrant’s Post-effective Amendment # 18 on December 4, 2003, is hereby incorporated herein by reference.

 

  (4) Registrant’s Amendment to Plan of Distribution for Class A Shares, adding the Timothy Plan Patriot Fund, , which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 19 on March 5, 2004, is hereby incorporated by reference.

 

  (5) Registrant’s amended Plan of Distribution for Class C shares, adding the Timothy Plan US Patriot Fund, , which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 19 on March 5, 2004, is hereby incorporated by reference.

 

n. Rule 18f-3 Plan

 

  (1) Registrant’s Multiple Class Plan, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 6, is hereby incorporated by reference.

 

o. Reserved

 

p. Code of Ethics

 

  (1) Form of Code of Ethics for the Timothy Plan and Timothy Partners Ltd., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 11 on August 17, 2001, is hereby incorporated by reference.

 

  (2) Form of Code of Ethics of Awad Asset Management – filed herein as Exhibit 99-p(2).

 

  (3) Form of Code of Ethics of Provident Investment Counsel – filed herein as Exhibit 99-p(3).

 

  (4) Form of Code of Ethics of Barrow, Hanley, Mewhinney & Strauss – filed herein as Exhibit 99-p(4).

 

  (5) Form of Code of Ethics of Westwood Management Group – filed herein as Exhibit 99-p(5).

 

  (6) Form of Code of Ethics of Rittenhouse Financial Services, Inc. – filed herein as Exhibit 99-p(4).

 

Item 24. Persons Controlled by or Under Common Control with Registrant.

See “General Information - Holders of more than 5% of Each Fund’s Shares” in the Statement of Additional Information dated May 1, 2006.

 

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 Trust shall have any liability to the


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Trust 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 responsible or liable in any event for any neglect or wrong-doing of any officer, agent, employee, manager or principal underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, and, subject to the provisions of the By-Laws, the Trust out of its assets may indemnify and hold harmless each and every officer and Trustee of the Trust from and against any and all claims, demands, costs, losses, expenses, and damages whatsoever arising out of or related to such Trustee’s performance of his or her duties as a officer or Trustee of the Trust; provided that nothing contained in the Agreement and Declaration of Trust shall indemnify, hold harmless or protect any officer or Trustee from or against any liability to the Trust or any shareholder to which he or she 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 or her office.

The By-Laws provide indemnification for an officer or Trustee who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Trust), by reason of the fact that such person is or was an agent of the Trust, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if it is determined that such person acted in good faith and reasonably believed: (a) in the case of conduct in his official capacity as an agent of the Trust, that his conduct was in the Trust’s best interests and (b) in all other cases, that his conduct was at least not opposed to the Trust’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.

The termination of any proceeding by judgment, order or settlement shall not of itself create a presumption that the person did not meet the requisite standard of conduct set forth above. The termination of any proceeding by conviction, or a plea of nolo contendere or its equivalent, or any entry of an order of probation prior to judgment, shall create a rebuttable presumption that the person did not meet the requisite standard of conduct set forth above.

The By-Laws further provide indemnification for an officer or Trustee who was or is a party or is threatened to be made a party to any proceeding by or in the right of the Trust to procure a judgment in its favor by reason of the fact that the person is or was an agent of the Trust, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of that action if that person acted in good faith, in a manner that person believed to be in the best interests of the Trust and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

The By-Laws provide no right to 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 an officer’s or Trustee’s office with the Trust. Further no indemnification shall be made:

(a) In respect of any proceeding as to which an officer or Trustee 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


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(b) In respect of any proceeding as to which an officer or Trustee shall have been adjudged to be liable in the performance of that person’s duty to the Trust, 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 Trust 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 approval as set forth below is obtained.

The By-Laws provide to the extent that an officer or Trustee has been successful, on the merits or otherwise, in the defense of any proceeding as set forth above before a court or other body before whom a proceeding was brought, the officer or Trustee shall be indemnified against expenses actually and reasonably incurred by the officer or Trustee in connection therewith, provided that the Board of Trustees, including a majority who are disinterested, non-party Trustees, also determines that based upon a review of the facts, the officer or Trustee was not liable by reason of the disabling conduct also as set forth above.

Except as provided for in the preceding paragraph, the By-Laws provide that any indemnification provided therein shall be made by the Trust only if authorized in the specific case on a determination that indemnification of the officer or Trustee is proper in the circumstances because the officer or Trustee has met the applicable standard of conduct as set forth above and is not prohibited from indemnification because of the disabling conduct also as set forth above, by:

(a) A majority vote of a quorum consisting of Trustees who are not parties to the proceeding and are not interested persons of the Trust (as defined in the Investment Company Act of 1940);

(b) A written opinion by an independent legal counsel; or

(c) The shareholders; however, shares held by an officer or Trustee who is a party to the proceeding may not be voted on the subject matter.

The By-Laws permit expenses incurred in defending any proceeding as set forth above to be advanced by the Trust before the final disposition of the proceeding if (a) receipt of a written affirmation by the officer or Trustee of his good faith belief that he has met the standard of conduct necessary for indemnification as set forth therein and a written undertaking by or on behalf of the officer or Trustee, such undertaking being an unlimited general obligation to repay the amount of the advance if it is ultimately determined that he has not me those requirements, and (b) a determination would not preclude indemnification as set forth therein. Determinations and authorizations of payments must be made in the manner specified above for determining that the indemnification is permissible.


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No indemnification or advance is permitted under the By-Laws, with limited exceptions as set forth therein, in any circumstances where it appears:

(a) That it would be inconsistent with a provision of the Agreement and Declaration of Trust of the Trust, a resolution of the shareholders, or an agreement in effect at the time of accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid which prohibits or otherwise limits indemnification; or

(b) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

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

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to the Trustees, the 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.

 

Item 26. Business and Other Connections of the Investment Manager

Timothy Partners, Ltd. (“TPL”) serves as investment adviser of the Trust. Form ADV Part I of TPL as filed with the Securities and Exchange Commission via the NASDR’s IARD system is hereby incorporated by reference.

Covenant Financial Management, Inc. is a marketing/consulting firm owned by Arthur D. 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 Trust because of its investment objectives and criteria.

 

Item 27. Principal Underwriter.

(a) Timothy Partners, Ltd. (“TPL”) is the principal underwriter for the Trust and currently acts as underwriter only for the Trust.


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(b) The table below sets forth certain information as to the Underwriter’s directors, officers and control persons:

 

Name and Principal

Business Address

  

Positions and Offices

with the Underwriter

  

Positions and Offices

with the Trust

Arthur D. Ally

1304 West Fairbanks Avenue

Winter Park, FL 32789

   President of TPL    Chairman, President and Treasurer

(c) None

 

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 Trust at 1304 West Fairbanks Avenue, Winter Park, Florida 32789, except for those maintained by the Trust’s custodian, US Bank, N.A., 425 Vine Street, Cincinnati, Ohio, 45202, and the Registrant’s administrator, transfer, redemption and dividend disbursing agent and accounting services agent, Citgo Quaker Fund Services, Inc., 1288 Valley Forge Road, Suite 88, Valley Forge, PA 19482.

 

Item 29. Management Services.

All substantive provisions of any management-related service contract are discussed in Parts A and B of this Registration Statement.

 

Item 30. Undertakings.

Registrant hereby undertakes, if requested by the holders of at least 10% of the Registrant’s outstanding shares, to call a meeting of shareholders for the purpose of voting upon the question of removal of a director(s) and to assist in communications with other shareholders in accordance with Section 16(c) of the 1940 Act, as though Section 16(c) applied.

Registrant hereby undertakes to furnish each person to whom a prospectus is delivered with a copy of its latest annual report to shareholders, upon request and without charge.

Registrant hereby undertakes to carry out all indemnification provisions of its Agreement and Declaration of Trust and By-Laws in accordance with Investment Company Act Release No. 11330 (Sept. 4, 1980) and successor releases.

Insofar as indemnifications for liability arising under the Securities Act of 1933, as amended (“1933 Act”), may be permitted to directors, officers and controlling person of the Registrant pursuant to the provision under Item 27 herein, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the 1933 Act and is, therefor, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication.


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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, The Timothy Plan (the “Trust”) hereby certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 25 to its Registration Statement on Form N-1A to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Winter Park and the State of Florida on April 26, 2006.

 

THE TIMOTHY PLAN

By:

 

/s/ Arthur D. Ally

ARTHUR D. ALLY

Chairman, President and Treasurer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Post-Effective Amendment No. 25 to the Registration Statement has been signed below by the following persons in the capacities and on the date indicated.

 

Signature

  

Title

 

Date

/s/ Arthur D. Ally

ARTHUR D. ALLY

  

Chairman, President & Treasurer- Trustee

  April 26, 2006

/s/ Joseph E. Boatwright*

JOSEPH E. BOATWRIGHT

  

Trustee, Secretary

  April 26, 2006

/s/ Matthew D. Staver*

MATHEW D. STAVER

  

Trustee

  April 26, 2006

/s/ Wesley W. Pennington*

WESLEY W. PENNINGTON

  

Trustee

  April 26, 2006

/s/ Charles E. Nelson*

CHARLES E. NELSON

  

Trustee

  April 26, 2006

/s/ Scott Preissler, Ph.D.*

SCOTT PREISSLER, Ph.D.

  

Trustee

  April 26, 2006

/s/ Alan M. Ross*

ALAN M. ROSS

  

Trustee

  April 26, 2006

/s/ Kathryn T. Martinez*

KATHRYN T. MARTINEZ

  

Trustee

  April 26, 2006

/s/ Richard W. Copeland*

RICHARD W. COPELAND

  

Trustee

  April 26, 2006


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/s/ William W. Johnson*

WILLAM W. JOHNSON

   Trustee   April 26, 2006

/s/ John C. Mulder*

JOHN C. MULDER

   Trustee   April 26, 2006

/s/ David J. Tolliver*

DAVID J. TOLLIVER

   Trustee   April 26, 2006

 

* By Arthur D. Ally, Attorney-In-Fact under Powers of Attorney


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INDEX TO EXHIBITS

 

Exhibit Number   

Description

Exhibit 99-d(14)    Form of Sub-Investment Advisory Agreement dated February 28, 2005 with Timothy Partners, Ltd. and Westwood Management Group, on behalf of the Timothy Plan Large/Mid-Cap Value Fund.
Exhibit 99-d(15)    Form of Sub-Advisory Agreement dated September 13, 2005 with Timothy Partners, Ltd. and Rittenhouse Financial Services, Inc, on behalf of the Timothy Plan Large/Mid-Cap Growth Fund.
Exhibit 99-d(16)    Form of Sub-Investment Advisory Agreement dated January 1, 2006 with Timothy Partners, Ltd. and Westwood Management Group, on behalf of the Small-Cap Value Fund.
Exhibit 99-i    Form of Opinion and Consent of David Jones & Assoc., P.C.
EX.99-j    Form of Opinion & Consent of Cohen McCurdy, Ltd.
Exhibit 99-p(2)    Form of Code of Ethics of Awad Asset Management.
Exhibit 99-p(3)    Form of Code of Ethics of Provident Investment Counsel.
Exhibit 99-p(4)    Form of Code of Ethics of Barrow, Hanley, Mewhinney & Strauss.
Exhibit 99-p(5)    Form of Code of Ethics of Westwood Management Group.
Exhibit 99-p(6)    Form of Code of Ethics of Rittenhouse Financial Services, Inc.
EX-99.D14 2 dex99d14.htm SUB-INVESTMENT ADVISORY AGREEMENT WITH WESTWOOD MGMNT. GROUP FOR LG./MID-CAP VAL Sub-Investment Advisory Agreement with Westwood Mgmnt. Group for Lg./Mid-Cap Val

Exhibit 99. D14

Sub-Advisory Agreement

The Timothy Plan

THIS AGREEMENT is made and entered into as of the 28th day of February, 2005, by and between The Timothy Plan, a Delaware business trust (the “Trust”), Timothy Partners, Ltd., a Florida Limited Partnership (the “Adviser”), and Westwood Management Corp, a New York corporation (the “Investment Manager”).

WHEREAS, the Trust is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the “Act”) and authorized to issue an indefinite number of series of shares representing interests in separate investment portfolios (each referred to as a “Fund”); and

WHEREAS, the Trust presently issues shares of the following Funds:

The Timothy Plan Aggressive Growth Fund

The Timothy Plan Small-Cap Value Fund (formerly the Timothy Plan)

The Timothy Plan Large/Mid-Cap Value Fund

The Timothy Plan Large/Mid-Cap Growth Fund

The Timothy Plan Fixed-Income Fund

The Timothy Plan Money Market Fund

The Timothy Plan Strategic Growth Portfolio

The Timothy Plan Conservative Growth Portfolio

The Timothy Plan Patriot Fund

The Timothy Plan Small-Cap Variable Series (formerly the Timothy Plan Variable Series)

The Timothy Plan Conservative Growth Portfolio Variable Fund

The Timothy Plan Strategic Growth Portfolio Variable Fund; and

WHEREAS, Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, and engages in the business of asset management; and

WHEREAS, Investment Manager is registered as an investment adviser under the Investment Advisers Act of 1940, and engages in the business of asset management; and

WHEREAS, the Trust has engaged Adviser to provide investment management services to the Funds listed above; and

WHEREAS, the Adviser desires to retain Investment Manager to render certain investment management services to the Timothy Plan Large/Mid Cap Value Fund (the “Portfolio”), and Investment Manager is willing to render such services; and

WHEREAS, the Trust consents to the engagement of Investment Manager by Adviser.

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

 

1. Obligations of Investment Manager

 

  (a) Services. Investment Manager agrees to perform the following services (the “Services”) for the Portfolio:

 

  (1) manage the day-to-day investment and reinvestment of the Portfolio’s assets;

 

  (2) continuously review, supervise, and administer the investment program of the Portfolio;

 

  (3) determine, in its discretion, the securities to be purchased, retained or sold (and implement those decisions) by and for the Portfolio having due regard for any restrictions on such investments as set forth from time to time by the Adviser;

 

  (4) provide the Adviser with records concerning Investment Manager’s activities which the Trust is required to maintain; and

 

  (5) render regular reports to the Trust’s and/or Adviser’s officers and directors concerning Investment Manager’s discharge of the foregoing responsibilities.


Investment Manager shall discharge the foregoing responsibilities subject to the overall control of the officers, directors, and trustees of the Adviser, in compliance with such policies as the Board of Trustees of the Trust may from time to time establish, in compliance with the objectives, policies, and limitations of the Portfolio as set forth in the Trust’s prospectus and statement of additional information, as amended from time to time, and with all applicable laws and regulations. The Adviser will provide Investment Manager with a copy of each registration statement relating to the Portfolio promptly after it has been filed with the Securities and Exchange Commission. All Services to be furnished by Investment Manager under this Agreement may be furnished through the medium of any directors, officers or employees of Investment Manager or through such other parties as Investment Manager may determine from time to time.

Investment Manager agrees, at its own expense or at the expense of one or more of its affiliates, to render the Services and to provide the office space, furnishings, equipment and personnel in sufficient amounts and manner to perform the Services on the terms and for the compensation provided herein. Investment Manager may authorize and permit any of its officers, directors and employees to be elected as trustees or officers of the Trust and to serve in the capacities in which they are elected.

Unless expressly assumed under this Agreement by Investment Manager, the Trust and/or Adviser shall pay all costs and expenses normally incurred by the Portfolio in connection with the Trust’s operation and organization. To the extent Investment Manager incurs any cost by assuming expenses which are an obligation of the Adviser or Trust, the Adviser or Trust shall promptly reimburse Investment Manager for such costs and expenses.

(b) Books and Records. All books and records prepared and maintained by Investment Manager for the benefit of the Trust under this Agreement shall be the property of the Trust and, upon request therefor, Investment Manager shall surrender to the Trust copies of such of the books and records so requested. The Trust acknowledges that Investment Manager is required to maintain books and records of its activities under the Investment Advisers Act of 1940, as amended, and agrees to allow Investment Manager to retain copies of such records of the Trust as required under federal law. Investment Manager agrees not to use any records of the Trust for any purpose other than for the provision of the Services to the Trust. However, Investment Manager may disclose the investment performance of the Portfolio, provided that such disclosure does not reveal the identity of Adviser, the Portfolio or the Trust. Investment Manager may disclose that Adviser, the Portfolio and the Trust are its clients.

 

2. Portfolio Transactions. Investment Manager is authorized to select the brokers or dealers that will execute purchases and sales of securities for the Portfolio and is directed to use commercially reasonable efforts to obtain the best net results as described in the Trust’s currently effective prospectus and statement of additional information. When Investment Manager deems the purchase or sale of a security to be in the best interest of the Portfolio as well as other clients of Investment Manager, Investment Manager, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities to be sold or purchased in order to obtain the best net results of lower brokerage commissions and efficient execution. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, shall be made by Investment Manager in the manner Investment Manager considers to be the most equitable and consistent with its fiduciary obligations to the Portfolio and to such other clients. Further, the Trust has adopted procedures pursuant to Rules 17(a) and 17(e) under the Investment Company Act of 1940 relating to transactions among a Portfolio and affiliated person thereof (Rule 17(a)), and transactions between a Portfolio and an affiliated broker or dealer (Rule 17(e)). Investment Manager shall at all times conduct its activities in compliance with such procedures. Investment Manager shall prepare a report at the end of each fiscal quarter reporting on Investment Manager’s compliance with such procedures and setting forth in reasonable detail any transactions which were in violation of such procedures. Investment Manager will promptly communicate to the officers and the directors of the Adviser and Trust such other information relating to Portfolio transactions as they may reasonably request.

 

3. Compensation of Investment Manager. For its services rendered to the Portfolio, Adviser will pay to Investment Manager a fee at an annual rate equal to 0.42% of the Portfolio’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.

The fees described above shall be computed daily based upon the net asset value of the Portfolio as determined by a valuation made in accordance with the Trust’s procedures for calculating Portfolio net asset


value as described in the Trust’s currently effective Prospectus and/or Statement of Additional Information. During any period when the determination of the Portfolio’s net asset value is suspended by the trustees of the Trust, the net asset value of a share of the Portfolio as of the last business day prior to such suspension shall, for the purpose of this Paragraph 3, be deemed to be net asset value at the close of each succeeding business day until it is again determined.

The fees described above are annual fees, payable 1/12th monthly. Fees for Services rendered during any month will be paid within five (5) business days after the end of the month in which such Services were rendered. In the event that this Agreement is terminated prior to the end of a month in which Investment Manager is providing Services, Adviser shall pay to Investment Manager fees accumulated during that month to the date of termination within five (5) business days after the end of the month in which such Services were rendered. Investment Manager shall have no right to obtain compensation directly from the Portfolio or the Trust for Services provided hereunder and agrees to look solely to the Adviser for payment of fees due.

 

4. Status of Investment Manager. The services of Investment Manager to the Trust are not to be deemed exclusive, and Investment Manager shall be free to render similar services to others.

The Trust and Adviser agree that Investment Manager may give advice or exercise investment responsibility and take other action with respect to accounts of other clients which may differ from advice given or the timing or nature of action taken with respect to the Portfolio; provided that Investment Manager acts in good faith, and provided further that it is Investment Manager’s policy to allocate, within its reasonable discretion, investment opportunities to the Portfolio over a period of time on a fair and equitable basis relative to other client accounts, taking into account the investment objectives and policies of the Portfolio and any specific instructions applicable thereto.

In order to assist Investment Manager in performing the Services to the Portfolio, the Trust and/or Adviser may from time to time provide Investment Manager with information, documents, research or writings designated as proprietary by the Trust or the Adviser. Investment Manager agrees that, upon being informed that such information, documents, research or writings provided to it are deemed proprietary by the Trust and/or the Adviser, Investment Manager shall use such proprietary documents only to assist it in performing the Services to the Portfolio, and further agrees not to use, distribute, or publish, for its own benefit or for the benefit of others, information, documents, research or writings designated as proprietary by the Trust or the Adviser.

In rendering its Services to the Portfolio, Investment Manager shall be deemed to be an independent contractor. Unless expressly authorized or requested by the Trust, Investment Manager shall have no authority to act for or represent the Trust in any way other than as an independent contractor providing the Services described in this Agreement. The parties to this Agreement acknowledge and agree that the Trust may, from time to time, authorize Investment Manager to act for or represent the Trust under limited circumstance. In such circumstances, Investment Manager may be deemed to be an agent of the Trust. Except for those circumstances in which the Trust has specifically authorized Investment Manager to act for or represent the Trust, Investment Manager shall in no way be deemed an agent of the Trust.

Nothing in this Agreement shall limit or restrict the right of any director, officer or employee of Investment Manager to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business.

It is understood that the name “Westwood Management Corp.” and any derivatives associated with that name are the valuable property of the Investment Manager. Westwood understands and agrees that the Trust may use such name(s) in the Portfolio’s Prospectus, Statement of Additional Information and other documents comprising the Registration Statement in order to satisfy the Trust’s disclosure requirements under federal law. The Trust and Adviser each understands and agrees that in sales literature and reports prepared for dissemination to shareholders of and prospective investors in the Portfolio, the Adviser and/or the Trust shall not make public any material containing such name(s) without first obtaining the written consent of the Investment Manager, which consent shall not unreasonably be withheld. Upon the termination of this Agreement, the Trust and/or Adviser shall forthwith cease to use such name(s).

 

5. Permissible Interests. Trustees, agents, and stockholders of the Trust are or may be interested in Investment Manager (or any successor thereof) as directors, partners, officers, stockholders or otherwise, and directors, partners, officers, agents, and stockholders of Investment Manager are or may be interested in the Trust as trustees, stockholders or otherwise; and Adviser (or any successor) is or may be interested in the Trust as a stockholder or otherwise.


6. Liability of Investment Manager. Investment Manager assumes no responsibility under this Agreement other than to render the Services called for hereunder in good faith. Investment Manager shall not be liable for any error of judgment or for any loss suffered by the Trust in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of, or from reckless disregard by it of its obligations and duties under, this Agreement.

Adviser and the Trust agree to indemnify and defend Investment Manager, its officers, directors, and employees for any loss or expense (including reasonable attorney’s fees) arising out of or in connection with any action, suit or proceeding relating to any actual or alleged material misstatement or omission in the Fund’s registration statement, any proxy statement, or any communication to current or prospective investors in the Portfolio (other than any material misstatement or omission made in reliance upon and in conformity with written information furnished by Investment Manager to Adviser or the Portfolio).

 

7. Representations of the Adviser and Investment Manager. Adviser represents that (a) a copy of the Trust’s Master Trust Agreement, together with all amendments thereto, is on file in the office of the Secretary of the State of Delaware; (b) a copy of the Trust’s currently effective prospectus and statement of additional information has been delivered to Investment Manager; (c) Adviser has acted and will continue to act in conformity with the Act and other applicable laws; (d) the appointment of Investment Manager has been duly authorized; and (d) Adviser is authorized to enter into this Agreement.

Investment Manager represents that (a) a copy of the Trust’s currently effective prospectus and statement of additional information has been delivered to Investment Manager; (b) Investment Manager has acted and will continue to act in conformity with the Act and other applicable laws; and (c) Investment Manager is authorized to enter into this Agreement and to perform the Services described herein.

 

8. Term. This Agreement shall remain in effect until February 28, 2007, and from year to year thereafter provided that such continuance is approved at least annually by (1) the vote of a majority of the Board of Trustees of the Trust or (2) a vote of a “majority” (as that term is defined in the Investment Company Act of 1940) of the Portfolio’s outstanding securities, provided that in either event the continuance is also approved by the vote of a majority of the trustees of the Trust who are not parties to this Agreement or “interested persons” (as defined in the Act) of any such party, which vote must be cast in person at meeting called for the purpose of voting on such approval; provided, however, that;

 

  (a) the Trust or Adviser may, at any time and without the payment of any penalty, terminate this Agreement upon 60 days written notice to Investment Manager;

 

  (b) the Agreement shall immediately terminate in the event of its assignment (within the meaning of the Act and the Rules thereunder); and

 

  (c) Investment Manager may terminate this Agreement without payment of penalty on 60 days written notice to the Trust; and

 

  (d) the terms of paragraph 6 of this Agreement shall survive the termination of this Agreement.

 

9. Notices. Except as otherwise provided in this Agreement, any notice or other communication required by or permitted to be given in connection with this Agreement will be in writing and will be delivered in person or sent by first class mail, postage prepaid or by prepaid overnight delivery service to the respective parties as follows:

 

If to the Trust:    If to the Adviser:    If to the Investment Manager

The Timothy Plan

  

Timothy Partners, Ltd.

  

Westwood Management Corp.

1304 West Fairbanks Avenue

  

1304 West Fairbanks Avenue

  

200 Crescent Ct.

Winter Park, FL 32789

  

Winter Park, FL 32789

  

Suite 200

Arthur D. Ally

  

By: Covenant Funds, Inc.

  

Dallas, TX 75201

President

  

Managing General Partner Attn: ___________________

Arthur D. Ally, President

  

Title: ___________________

  

 

10. Amendments; Entire Agreement. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective until approved by vote of the holders of a majority of the Fund’s outstanding voting securities. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter contained herein and supersedes any prior agreement or understanding, whether written or oral.


11. Code of Ethics. Pursuant to Rule 17j-1 under the Act, Investment Manager warrants, covenants and agrees that it shall have submitted its Code of Ethics to the Board of Trustees of the Trust and obtained Board approval of such Code of Ethics prior to rendering any Services to the Portfolio. Investment Manager shall submit any material changes to such Code of Ethics to the Board of Trustees for its approval within six months of making such material change. Investment Manager further warrants, covenants and agrees to comply with all applicable reporting requirements mandated by Rule 17j-1 with respect to Codes of Ethics. A copy of Investment Manager’s current Code of Ethics is attached to this Agreement as Appendix 1 and incorporated herein for all purposes.

 

12. Proxy Voting. Except as specifically instructed by the Board of Trustees of the Trust or by the Adviser, Investment Manager shall exercise or procure the exercise of any voting rights attaching to investments of the Portfolio on behalf of the Portfolio.

 

13. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Florida without regard to any laws of conflict of such jurisdiction.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and the year first written above.

 

The Timothy Plan

   Timothy Partners, Ltd.    Westwood Management Corp.

 

_________________

  

______________________

  

___________________________

Arthur D. Ally

  

Covenant Funds, Inc.

  

By: ________________________

President

  

Managing General

  

Its: ________________________

  

Partner, Arthur D.

  
  

Ally, President

  
EX-99.D15 3 dex99d15.htm SUB-ADVISORY AGREEMENT WITH RITTENHOUSE FINANCIAL SVCS, INC. FOR LG/MID-CAP GROW Sub-Advisory Agreement with Rittenhouse Financial Svcs, Inc. for Lg/Mid-Cap Grow

Exhibit 99.D15

INVESTMENT SUB-ADVISORY AGREEMENT

THE TIMOTHY PLAN

THIS AGREEMENT is made and entered into as of the 13th day of September, 2005, by and between The Timothy Plan, a Delaware business trust (the “Trust”), Timothy Partners, Ltd., a Florida Limited Partnership (the “Manager”), and Rittenhouse Financial Services, Inc., a Delaware corporation and a registered investment adviser (the “Sub-Adviser”).

WHEREAS, the Trust is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the “Act”) and authorized to issue an indefinite number of series of shares representing interests in separate investment portfolios; and

WHEREAS, the Trust presently issues shares of the following Funds:

The Timothy Plan Aggressive Growth Fund

The Timothy Plan Small-Cap Value Fund (formerly the Timothy Plan)

The Timothy Plan Large/Mid-Cap Value Fund

The Timothy Plan Large/Mid-Cap Growth Fund

The Timothy Plan Fixed-Income Fund

The Timothy Plan Money Market Fund

The Timothy Plan Strategic Growth Portfolio

The Timothy Plan Conservative Growth Portfolio

The Timothy Plan Patriot Fund

The Timothy Plan Small-Cap Variable Series (formerly the Timothy Plan Variable Series)

The Timothy Plan Conservative Growth Portfolio Variable Fund

The Timothy Plan Strategic Growth Portfolio Variable Fund; (each a “Fund” and together the “Funds”) and

WHEREAS, Manager is registered as an investment adviser under the Investment Advisers Act of 1940, and engages in the business of asset management; and

WHEREAS, the Fund has engaged Manager to provide investment management services to the Funds listed above; and

WHEREAS, Sub-Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, and engages in the business of asset management; and

WHEREAS, Manager desires to retain Sub-Adviser to render certain investment management services to the Timothy Plan Large/Mid-Cap Growth Fund (the “Portfolio”), and Investment Manager is willing to render such services; and

WHEREAS, the Trust consents to the engagement of Sub-Adviser by Manager.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

 

1. Appointment. Manager, with the express consent of the Trust, hereby appoints Sub-Adviser to provide certain sub-investment advisory services to the Portfolio for the period and on the terms set forth in this Agreement. Sub-Adviser accepts such appointment and agrees to furnish the services herein set forth for the compensation herein provided.

 

2. Additional Portfolios. In the event that the Fund establishes one or more additional portfolios other than the Portfolio with respect to which the Manager desires to engage the Sub-Adviser to render investment advisory services hereunder, the Manager shall notify the Sub-Adviser of such desire. If the Sub-Adviser is willing to render such services, it shall notify the Manager in writing whereupon such portfolio or portfolios shall become a Portfolio hereunder.

 

3.

Services to be Performed. Subject always to the supervision of Trust’s Board of Trustees and the Manager, Sub-Adviser will furnish an investment program in respect of, make investment decisions for, and place all orders for the purchase and sale of securities for the Portfolio, all on behalf of the Portfolio. In the performance of its duties, Sub-Adviser will satisfy its fiduciary duties to the Fund (as set forth in Section 7, below), and will monitor the Portfolio’s investments, and will comply with the provisions of Fund’s Declaration of Trust and By-laws, as amended from time to time, and the stated investment objectives, policies and restrictions of the Portfolio. Manager will provide Sub-Adviser with current copies of the Fund’s


 

Declaration of Trust, By-laws, prospectus and any amendments thereto, and any objectives, policies or limitations not appearing therein as they may be relevant to Sub-Adviser’s performance under this Agreement. Sub-Adviser and Manager will each make its officers and employees available to the other from time to time at reasonable times to review investment policies of the Portfolio and to consult with each other regarding the investment affairs of the Portfolio. Sub-Adviser will report to the Board of Trustees and to Manager with respect to the implementation of such program.

Sub-Adviser is authorized to select the brokers or dealers that will execute the purchases and sales of portfolio securities for the Portfolio, and is directed to use its best efforts to obtain best execution, which includes most favorable net results and execution of the Fund’s orders, taking into account all appropriate factors, including price, dealer spread or commission, size and difficulty of the transaction and research or other services provided. It is understood that the Sub-Adviser will not be deemed to have acted unlawfully, or to have breached a fiduciary duty to the Fund or the Portfolio, or be in breach of any obligation owing to the Fund or the Portfolio under this Agreement, or otherwise, solely by reason of its having caused the Fund to pay a member of a securities exchange, a broker or a dealer a commission for effecting a securities transaction for the Fund in excess of the amount of commission another member of an exchange, broker or dealer would have charged if the Sub-Adviser determined in good faith that the commission paid was reasonable in relation to the brokerage or research services provided by such member, broker or dealer, viewed in terms of that particular transaction or the Sub-Adviser’s overall responsibilities with respect to its accounts, including the Fund, as to which it exercises investment discretion. In addition, if in the judgment of the Sub-Adviser, the Portfolio would be benefited by supplemental services, the Sub-Adviser is authorized to pay spreads or commissions to brokers or dealers furnishing such services in excess of spreads or commissions which another broker or dealer may charge for the same transaction, provided that the Sub-Adviser determined in good faith that the commission or spread paid was reasonable in relation to the services provided. The Sub-Adviser will properly communicate to the officers and trustees of the Fund such information relating to transactions for any Portfolio as they may reasonably request. In no instance will portfolio securities be purchased from or sold to the Manager, Sub-Adviser or any affiliated person of either the Fund, Manager, or Sub-Adviser, except as may be permitted under the 1940 Act;

Sub-Adviser further agrees that it:

 

  (a) will use the same degree of skill and care in providing such services as it uses in providing services to fiduciary accounts for which it has investment responsibilities;

 

  (b) will conform to all applicable Rules and Regulations of the Securities and Exchange Commission in all material respects and in addition will conduct its activities under this Agreement in accordance with any applicable regulations of any governmental authority pertaining to its investment advisory activities;

 

  (c) will report regularly to Manager and to the Board of Trustees and will make appropriate persons available for the purpose of reviewing with representatives of Manager and the Board of Trustees on a regular basis at reasonable times the management of the Portfolios, including, without limitation, review of the general investment strategies of the Portfolio, the performance of the Portfolio in relation to standard industry indices and general conditions affecting the marketplace and will provide various other reports from time to time as reasonably requested by Manager; and

 

  (d) will prepare such books and records with respect to the Portfolio’s securities transactions as requested by the Manager and will furnish Manager and Fund’s Board of Trustees such periodic and special reports as the Board or Manager may reasonably request.

 

4. Expenses. During the term of this Agreement, Sub-Adviser will pay all expenses incurred by it in connection with its activities under this Agreement other than the cost of securities (including brokerage commission, if any) purchased for the Fund.


5. Compensation. For the services provided and the expenses assumed pursuant to this Agreement, Manager will pay the Sub-Adviser, and the Sub- Adviser agrees to accept as full compensation therefor, a portfolio management fee based on daily net assets at the annual rate as set forth below:

 

Daily Net Assets

   Rate of Fee  

For the first $50 million

   .35 of 1 %

For assets over $50 million

   .25 of 1 %

The management fee shall accrue on each calendar day, and shall be payable monthly on the first business day of the next succeeding calendar month. The daily fee accrual shall be computed by multiplying the fraction of one divided by the number of days in the calendar year by the applicable annual rate of fee, and multiplying this product by the net assets of the Fund, determined in the manner established by the Board of Trustees, as of the close of business on the last preceding business day on which the Fund’s net asset value was determined.

 

6. Services to Others. Manager understands, and has advised Fund’s Board of Trustees, that Sub-Adviser now acts, or may in the future act, as an investment adviser to fiduciary and other managed accounts, and as investment adviser or sub-investment adviser to other investment companies, provided that whenever the Portfolio and one or more other investment advisory clients of Sub-Adviser have available funds for investment, investments suitable and appropriate for each will be allocated in a manner believed by Sub- Adviser to be equitable to each. Manager recognizes, and has advised Fund’s Board of Trustees, that in some cases this procedure may adversely affect the size of the position that the Portfolio may obtain in a particular security. It is further agreed that, on occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interests of the Portfolio as well as other accounts, it may, to the extent permitted by applicable law, but will not be obligated to, aggregate the securities to be so sold or purchased for the Portfolio with those to be sold or purchased for other accounts in order to obtain favorable execution and lower brokerage commissions. In addition, Manager understands, and has advised Fund’s Board of Trustees, that the persons employed by Sub-Adviser to assist in Sub-Adviser’s duties under this Agreement will not devote their full attention to such service and nothing contained in this Agreement will be deemed to limit or restrict the right of Sub-Adviser or any of its affiliates to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. It is also agreed that the Sub-Adviser may use any supplemental research obtained for the benefit of the Fund in providing investment advice to its other investment advisory accounts or for managing its own accounts.

 

7. Limitation of Liability. Manager will not take any action against Sub- Adviser to hold Sub-Adviser liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the performance of Sub- Adviser’s duties under this Agreement, except for a loss resulting from Sub- Adviser’s willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

 

8. Term; Termination; Amendment. This Agreement shall become effective with respect to the Portfolio on the date first written above, provided that it has been approved by a vote of a majority of the outstanding voting securities of the Portfolio in accordance with the requirements of the 1940 Act, and shall remain in full force until March 31, 2006 unless sooner terminated as hereinafter provided. This Agreement shall continue in force from year to year thereafter with respect to the Portfolio, but only as long as such continuance is specifically approved for the Portfolio at least annually in the manner required by the 1940 Act and the rules and regulations thereunder; provided, however, that if the continuation of this Agreement is not approved for the Portfolio, the Sub-Adviser may continue to serve in such capacity for such Portfolio in the manner and to the extent permitted by the 1940 Act and the rules and regulations thereunder.

This Agreement shall automatically terminate in the event of its assignment and may be terminated at any time without the payment of any penalty by the Manager on sixty (60) days’ written notice to the Sub-Adviser. This Agreement may also be terminated by the Fund with respect to a Portfolio by action of the Board of Trustees or by a vote of a majority of the outstanding voting securities of such Portfolio on sixty (60) days’ written notice to the Sub- Adviser by the Fund.

This Agreement may be terminated with respect to a Portfolio at any time without the payment of any penalty by the Manager, the Board of Trustees or by vote of a majority of the outstanding voting securities of such Portfolio in the event that it shall have been established by a court of competent jurisdiction that the Sub-Adviser or any officer or director of the Sub-Adviser has taken any action which results in a breach of the covenants of the Sub-Adviser set forth herein.

The terms “assignment” and “vote of a majority of the outstanding voting securities” shall have the meanings set forth in the 1940 Act and the rules and regulations thereunder.


Termination of this Agreement shall not affect the right of the Sub-Adviser to receive payments on any unpaid balance of the compensation described in Section 5 earned prior to such termination. This Agreement shall automatically terminate in the event the Investment Management Agreement between the Manager and the Fund is terminated, assigned or not renewed.

 

9. Notice. Any notice under this Agreement shall be in writing, addressed and delivered or mailed, postage prepaid, to the other party at such address as such other party may designate for the receipt of such notice.

 

10. Limitations on Liability. All parties hereto are expressly put on notice of the Fund’s Agreement and Declaration of Trust and all amendments thereto, all of which are on file with the Secretary of Massachusetts, and the limitation of shareholder and trustee liability contained therein. The obligations of the Fund entered in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually but only in such capacities and are not binding upon any of the Trustees, officers, or shareholders of the Fund individually but are binding upon only the assets and property of the Fund, and persons dealing with the Fund must look solely to the assets of the Fund and those assets belonging to the subject Portfolio, for the enforcement of any claims.

 

11. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement is held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement will not be affected thereby. This Agreement will be binding upon and shall inure to the benefit of the parties hereto and their respective successors.

 

12. Applicable Law. This Agreement shall be construed in accordance with applicable federal law and (except as to Section 11 hereof which shall be construed in accordance with the laws of Massachusetts) the laws of the State of Illinois.

IN WITNESS WHEREOF, the Fund, Manager and the Sub-Adviser have caused this Agreement to be executed as of the day and year first above written.

 

The Timothy Plan

   Timothy Partners, Ltd.    Rittenhouse Financial Services, Inc.

_________________

   ______________________    _______________________________

Arthur D. Ally

  

Covenant Funds, Inc.

  

By: ________________________

President

  

Managing General

  

Its: ________________________

  

Partner, Arthur D.

  
  

Ally, President

  
EX-99.D16 4 dex99d16.htm SUB-INVESTMENT ADVISORY AGREEMENT WITH WESTWOOD MGMNT. GROUP FOR SMALL-CAP VALUE Sub-Investment Advisory Agreement with Westwood Mgmnt. Group for Small-Cap Value

Exhibit 99.D16

Sub-Advisory Agreement

The Timothy Plan

THIS AGREEMENT is made and entered into as of the 1st day of January, 2006, by and between The Timothy Plan, a Delaware business trust (the “Trust”), Timothy Partners, Ltd., a Florida Limited Partnership (the “Adviser”), and Westwood Management Corp, a New York corporation (the “Investment Manager”).

WHEREAS, the Trust is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the “Act”) and authorized to issue an indefinite number of series of shares representing interests in separate investment portfolios (each referred to as a “Fund”); and

WHEREAS, the Trust presently issues shares of the following Funds:

The Timothy Plan Aggressive Growth Fund

The Timothy Plan Small-Cap Value Fund (formerly the Timothy Plan)

The Timothy Plan Large/Mid-Cap Value Fund

The Timothy Plan Large/Mid-Cap Growth Fund

The Timothy Plan Fixed-Income Fund

The Timothy Plan Money Market Fund

The Timothy Plan Strategic Growth Portfolio

The Timothy Plan Conservative Growth Portfolio

The Timothy Plan Patriot Fund

The Timothy Plan Small-Cap Variable Series (formerly the Timothy Plan Variable Series)

The Timothy Plan Conservative Growth Portfolio Variable Fund

The Timothy Plan Strategic Growth Portfolio Variable Fund; and

WHEREAS, Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, and engages in the business of asset management; and

WHEREAS, Investment Manager is registered as an investment adviser under the Investment Advisers Act of 1940, and engages in the business of asset management; and

WHEREAS, the Trust has engaged Adviser to provide investment management services to the Funds listed above; and

WHEREAS, the Adviser desires to retain Investment Manager to render certain investment management services to the Timothy Plan Small-Cap Value Fund (the “Portfolio”), and Investment Manager is willing to render such services; and

WHEREAS, the Trust consents to the engagement of Investment Manager by Adviser.

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

 

1. Obligations of Investment Manager

 

  (a) Services. Investment Manager agrees to perform the following services (the “Services”) for the Portfolio:

 

  (1) manage the day-to-day investment and reinvestment of the Portfolio’s assets;

 

  (2) continuously review, supervise, and administer the investment program of the Portfolio;

 

  (3) determine, in its discretion, the securities to be purchased, retained or sold (and implement those decisions) by and for the Portfolio having due regard for any restrictions on such investments as set forth from time to time by the Adviser;

 

  (4) provide the Adviser with records concerning Investment Manager’s activities which the Trust is required to maintain; and

 

  (5) render regular reports to the Trust’s and/or Adviser’s officers and directors concerning Investment Manager’s discharge of the foregoing responsibilities.


Investment Manager shall discharge the foregoing responsibilities subject to the overall control of the officers, directors, and trustees of the Adviser, in compliance with such policies as the Board of Trustees of the Trust may from time to time establish, in compliance with the objectives, policies, and limitations of the Portfolio as set forth in the Trust’s prospectus and statement of additional information, as amended from time to time, and with all applicable laws and regulations. The Adviser will provide Investment Manager with a copy of each registration statement relating to the Portfolio promptly after it has been filed with the Securities and Exchange Commission. All Services to be furnished by Investment Manager under this Agreement may be furnished through the medium of any directors, officers or employees of Investment Manager or through such other parties as Investment Manager may determine from time to time.

Investment Manager agrees, at its own expense or at the expense of one or more of its affiliates, to render the Services and to provide the office space, furnishings, equipment and personnel in sufficient amounts and manner to perform the Services on the terms and for the compensation provided herein. Investment Manager may authorize and permit any of its officers, directors and employees to be elected as trustees or officers of the Trust and to serve in the capacities in which they are elected.

Unless expressly assumed under this Agreement by Investment Manager, the Trust and/or Adviser shall pay all costs and expenses normally incurred by the Portfolio in connection with the Trust’s operation and organization. To the extent Investment Manager incurs any cost by assuming expenses which are an obligation of the Adviser or Trust, the Adviser or Trust shall promptly reimburse Investment Manager for such costs and expenses.

 

  (b) Books and Records. All books and records prepared and maintained by Investment Manager for the benefit of the Trust under this Agreement shall be the property of the Trust and, upon request therefor, Investment Manager shall surrender to the Trust copies of such of the books and records so requested. The Trust acknowledges that Investment Manager is required to maintain books and records of its activities under the Investment Advisers Act of 1940, as amended, and agrees to allow Investment Manager to retain copies of such records of the Trust as required under federal law. Investment Manager agrees not to use any records of the Trust for any purpose other than for the provision of the Services to the Trust. However, Investment Manager may disclose the investment performance of the Portfolio, provided that such disclosure does not reveal the identity of Adviser, the Portfolio or the Trust. Investment Manager may disclose that Adviser, the Portfolio and the Trust are its clients.

 

2. Portfolio Transactions. Investment Manager is authorized to select the brokers or dealers that will execute purchases and sales of securities for the Portfolio and is directed to use commercially reasonable efforts to obtain the best net results as described in the Trust’s currently effective prospectus and statement of additional information. When Investment Manager deems the purchase or sale of a security to be in the best interest of the Portfolio as well as other clients of Investment Manager, Investment Manager, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities to be sold or purchased in order to obtain the best net results of lower brokerage commissions and efficient execution. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, shall be made by Investment Manager in the manner Investment Manager considers to be the most equitable and consistent with its fiduciary obligations to the Portfolio and to such other clients. Further, the Trust has adopted procedures pursuant to Rules 17(a) and 17(e) under the Investment Company Act of 1940 relating to transactions among a Portfolio and affiliated person thereof (Rule 17(a)), and transactions between a Portfolio and an affiliated broker or dealer (Rule 17(e)). Investment Manager shall at all times conduct its activities in compliance with such procedures. Investment Manager shall prepare a report at the end of each fiscal quarter reporting on Investment Manager’s compliance with such procedures and setting forth in reasonable detail any transactions which were in violation of such procedures. Investment Manager will promptly communicate to the officers and the directors of the Adviser and Trust such other information relating to Portfolio transactions as they may reasonably request.

 

3. Compensation of Investment Manager. For its services rendered to the Portfolio, Adviser will pay to Investment Manager a fee at an annual rate equal to 0.42% of the Portfolio’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.

The fees described above shall be computed daily based upon the net asset value of the Portfolio as determined by a valuation made in accordance with the Trust’s procedures for calculating Portfolio net asset


value as described in the Trust’s currently effective Prospectus and/or Statement of Additional Information. During any period when the determination of the Portfolio’s net asset value is suspended by the trustees of the Trust, the net asset value of a share of the Portfolio as of the last business day prior to such suspension shall, for the purpose of this Paragraph 3, be deemed to be net asset value at the close of each succeeding business day until it is again determined.

The fees described above are annual fees, payable 1/12th monthly. Fees for Services rendered during any month will be paid within five (5) business days after the end of the month in which such Services were rendered. In the event that this Agreement is terminated prior to the end of a month in which Investment Manager is providing Services, Adviser shall pay to Investment Manager fees accumulated during that month to the date of termination within five (5) business days after the end of the month in which such Services were rendered. Investment Manager shall have no right to obtain compensation directly from the Portfolio or the Trust for Services provided hereunder and agrees to look solely to the Adviser for payment of fees due.

 

4. Status of Investment Manager. The services of Investment Manager to the Trust are not to be deemed exclusive, and Investment Manager shall be free to render similar services to others.

The Trust and Adviser agree that Investment Manager may give advice or exercise investment responsibility and take other action with respect to accounts of other clients which may differ from advice given or the timing or nature of action taken with respect to the Portfolio; provided that Investment Manager acts in good faith, and provided further that it is Investment Manager’s policy to allocate, within its reasonable discretion, investment opportunities to the Portfolio over a period of time on a fair and equitable basis relative to other client accounts, taking into account the investment objectives and policies of the Portfolio and any specific instructions applicable thereto.

In order to assist Investment Manager in performing the Services to the Portfolio, the Trust and/or Adviser may from time to time provide Investment Manager with information, documents, research or writings designated as proprietary by the Trust or the Adviser. Investment Manager agrees that, upon being informed that such information, documents, research or writings provided to it are deemed proprietary by the Trust and/or the Adviser, Investment Manager shall use such proprietary documents only to assist it in performing the Services to the Portfolio, and further agrees not to use, distribute, or publish, for its own benefit or for the benefit of others, information, documents, research or writings designated as proprietary by the Trust or the Adviser.

In rendering its Services to the Portfolio, Investment Manager shall be deemed to be an independent contractor. Unless expressly authorized or requested by the Trust, Investment Manager shall have no authority to act for or represent the Trust in any way other than as an independent contractor providing the Services described in this Agreement. The parties to this Agreement acknowledge and agree that the Trust may, from time to time, authorize Investment Manager to act for or represent the Trust under limited circumstance. In such circumstances, Investment Manager may be deemed to be an agent of the Trust. Except for those circumstances in which the Trust has specifically authorized Investment Manager to act for or represent the Trust, Investment Manager shall in no way be deemed an agent of the Trust.

Nothing in this Agreement shall limit or restrict the right of any director, officer or employee of Investment Manager to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business.

It is understood that the name “Westwood Management Corp.” and any derivatives associated with that name are the valuable property of the Investment Manager. Westwood understands and agrees that the Trust may use such name(s) in the Portfolio’s Prospectus, Statement of Additional Information and other documents comprising the Registration Statement in order to satisfy the Trust’s disclosure requirements under federal law. The Trust and Adviser each understands and agrees that in sales literature and reports prepared for dissemination to shareholders of and prospective investors in the Portfolio, the Adviser and/or the Trust shall not make public any material containing such name(s) without first obtaining the written consent of the Investment Manager, which consent shall not unreasonably be withheld. Upon the termination of this Agreement, the Trust and/or Adviser shall forthwith cease to use such name(s).

 

5. Permissible Interests. Trustees, agents, and stockholders of the Trust are or may be interested in Investment Manager (or any successor thereof) as directors, partners, officers, stockholders or otherwise, and directors, partners, officers, agents, and stockholders of Investment Manager are or may be interested in the Trust as trustees, stockholders or otherwise; and Adviser (or any successor) is or may be interested in the Trust as a stockholder or otherwise.


6. Liability of Investment Manager. Investment Manager assumes no responsibility under this Agreement other than to render the Services called for hereunder in good faith. Investment Manager shall not be liable for any error of judgment or for any loss suffered by the Trust in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of, or from reckless disregard by it of its obligations and duties under, this Agreement.

Adviser and the Trust agree to indemnify and defend Investment Manager, its officers, directors, and employees for any loss or expense (including reasonable attorney’s fees) arising out of or in connection with any action, suit or proceeding relating to any actual or alleged material misstatement or omission in the Fund’s registration statement, any proxy statement, or any communication to current or prospective investors in the Portfolio (other than any material misstatement or omission made in reliance upon and in conformity with written information furnished by Investment Manager to Adviser or the Portfolio).

 

7. Representations of the Adviser and Investment Manager. Adviser represents that (a) a copy of the Trust’s Master Trust Agreement, together with all amendments thereto, is on file in the office of the Secretary of the State of Delaware; (b) a copy of the Trust’s currently effective prospectus and statement of additional information has been delivered to Investment Manager; (c) Adviser has acted and will continue to act in conformity with the Act and other applicable laws; (d) the appointment of Investment Manager has been duly authorized; and (d) Adviser is authorized to enter into this Agreement.

Investment Manager represents that (a) a copy of the Trust’s currently effective prospectus and statement of additional information has been delivered to Investment Manager; (b) Investment Manager has acted and will continue to act in conformity with the Act and other applicable laws; and (c) Investment Manager is authorized to enter into this Agreement and to perform the Services described herein.

 

8. Term. This Agreement shall remain in effect until February 28, 2007, and from year to year thereafter provided that such continuance is approved at least annually by (1) the vote of a majority of the Board of Trustees of the Trust or (2) a vote of a “majority” (as that term is defined in the Investment Company Act of 1940) of the Portfolio’s outstanding securities, provided that in either event the continuance is also approved by the vote of a majority of the trustees of the Trust who are not parties to this Agreement or “interested persons” (as defined in the Act) of any such party, which vote must be cast in person at meeting called for the purpose of voting on such approval; provided, however, that;

 

  (a) the Trust or Adviser may, at any time and without the payment of any penalty, terminate this Agreement upon 60 days written notice to Investment Manager;

 

  (b) the Agreement shall immediately terminate in the event of its assignment (within the meaning of the Act and the Rules thereunder); and

 

  (c) Investment Manager may terminate this Agreement without payment of penalty on 60 days written notice to the Trust; and

 

  (d) the terms of paragraph 6 of this Agreement shall survive the termination of this Agreement.

 

9. Notices. Except as otherwise provided in this Agreement, any notice or other communication required by or permitted to be given in connection with this Agreement will be in writing and will be delivered in person or sent by first class mail, postage prepaid or by prepaid overnight delivery service to the respective parties as follows:

 

If to the Trust:

  

If to the Adviser:

  

If to the Investment Manager

The Timothy Plan    Timothy Partners, Ltd.    Westwood Management Corp.
1304 West Fairbanks Avenue    1304 West Fairbanks Avenue    200 Crescent Ct.
Winter Park, FL 32789    Winter Park, FL 32789    Suite 200
Arthur D. Ally    Arthur D. Ally    Dallas, TX 75201
President    President    Attn: ___________________
      Title: ___________________

 

10. Amendments; Entire Agreement. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective until approved by vote of the holders of a majority of the Fund’s outstanding voting securities. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter contained herein and supersedes any prior agreement or understanding, whether written or oral.


11. Code of Ethics. Pursuant to Rule 17j-1 under the Act, Investment Manager warrants, covenants and agrees that it shall have submitted its Code of Ethics to the Board of Trustees of the Trust and obtained Board approval of such Code of Ethics prior to rendering any Services to the Portfolio. Investment Manager shall submit any material changes to such Code of Ethics to the Board of Trustees for its approval within six months of making such material change. Investment Manager further warrants, covenants and agrees to comply with all applicable reporting requirements mandated by Rule 17j-1 with respect to Codes of Ethics. A copy of Investment Manager’s current Code of Ethics is attached to this Agreement as Appendix 1 and incorporated herein for all purposes.

 

12. Proxy Voting. Except as specifically instructed by the Board of Trustees of the Trust or by the Adviser, Investment Manager shall exercise or procure the exercise of any voting rights attaching to investments of the Portfolio on behalf of the Portfolio.

 

13. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Florida without regard to any laws of conflict of such jurisdiction.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and the year first written above.

 

The Timothy Plan     Timothy Partners, Ltd.     Westwood Management Corp.
                

Arthur D. Ally

   

Covenant Funds, Inc.

 

By:

    

President

   

Managing General

 

Its:

    
   

Partner, Arthur D.

   
   

Ally, President

   
EX-99.I 5 dex99i.htm CONSENT OF COUNSEL Consent of Counsel

Exhibit 99.I

DAVID JONES & ASSOC., P.C.

Law Firm

 

395 Sawdust, # 2148

The Woodlands, TX 77380

   LOGO   

F (281) 419-0564

P (281) 419-0584

djones@40actlaw.com

      sdrake@40actlaw.com

April 26, 2006

The Timothy Plan

1304 West Fairbanks Avenue

Winter Park, Florida 32789

Ladies and Gentlemen:

I have been asked by The Timothy Plan (the “Trust”), a business trust organized under the laws of the State of Delaware, 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 following series of the Trust (each a “Fund” and together the “Funds”):

The Timothy Plan Aggressive Growth Fund;

The Timothy Plan Small-Cap Value Fund;

The Timothy Plan Large/Mid-Cap Value Fund;

The Timothy Plan Large/Mid-Cap Growth Fund;

The Timothy Plan Fixed Income Fund;

The Timothy Plan Conservative Growth Fund;

The Timothy Plan Strategic Growth Fund;

The Timothy Plan Money Market Fund; and

The Timothy Plan Small-Cap 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 applicable Prospectus and Statement of Additional Information of the Funds, as contained in the Trust’s post effective amendment # 25 to its Registration Statement on Form N-1A (“PEA#25”).

I have examined the Trust’s Declaration of Trust, By-Laws, the Prospectuses and Statements of Additional Information and such other documents, records and certificates, including the full contents of PEA # 25, as deemed necessary for the purposes of this opinion. All documents reviewed by us that were provided to us as copies, and not in original form, have been presumed by us to be genuine, and we did not conduct any independent inquiry to determine the authenticity of any such document.

Based on the foregoing, I am of the opinion that the Shares of each Fund, when issued, delivered and paid for in accordance with the terms of the then current 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 PEA # 25.

 

Very Truly Yours,

/s/ David D. Jones

David D. Jones

Attorney & Counselor at Law

EX-99.J 6 dex99j.htm CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Consent of Independent Public Accountants

Exhibit 99.J

 

LOGO    Cohen McCurdy, Ltd.   

440.835.8500

   800 Westpoint Pkwy., Suite 1100   

440.835.1093 fax

   Westlake, OH 44145-1524   
   www. cohenmccurdy.com   

Consent of Independent Registered Public Accounting Firm

As independent registered public accountants, we hereby consent to the use of our report incorporated by reference herein dated February 27, 2006 on the financial statements of the Timothy Plan (comprising the Timothy Plan Small Cap Value Fund, Timothy Plan Large/Mid Cap Value Fund, Timothy Plan Fixed Income Fund, Timothy Plan Aggressive Growth Fund, Timothy Plan Large/Mid Cap Growth Fund, Timothy Plan Strategic Growth Fund, Timothy Plan Conservative Growth Fund, Timothy Plan Money Market Fund, Timothy Plan Patriot Fund, Timothy Plan Small-Cap Variable Series, Timothy Plan Strategic Growth Portfolio Variable Series and Timothy Plan Conservative Growth Portfolio Variable Series), dated as of December 31, 2005 and for the periods indicated therein and to the references to our firm in the Prospectuses and the Statements of Additional Information in this Post-Effective Amendment to the Registration Statement on Form N-1A of the Timothy Plan (SEC File No. 033-73248 and 811-08228).

 

LOGO

Cohen McCurdy, Ltd.

Westlake, Ohio

April 24, 2006

 

LOGO    Registered with the public Company Accounting Oversight Board    LOGO
EX-99.P2 7 dex99p2.htm CODE OF ETHICS OF AWAD ASSET MANAGEMENT Code of Ethics of Awad Asset Management

Exhibit 99.P2

AWAD ASSET MANAGEMENT, INC.

CODE OF ETHICS

 

I. STATEMENT OF GENERAL POLICY

Awad Asset Management (“Awad”, “we” or “us”) is a registered investment adviser and acts as investment manager or adviser to clients including registered investment companies. In this capacity, we serve as fiduciaries and owe our Clients an undivided duty of loyalty. We must avoid even the appearance of a conflict that may compromise the trust Clients have placed in us and must insist on strict adherence to fiduciary standards and compliance with all applicable federal and state securities laws.

The specific provisions and reporting requirements of this Code of Ethics governs the personal securities trading of Awad employees. The purpose of these guidelines is to ensure that Employees of Awad will not benefit improperly from advance knowledge of actual or probable Awad activity in a security. The guidelines are based on the general principle that Employees must conduct their personal trading activities in a manner which avoids both actual and potential conflicts of interest with clients of Awad.

 

II. DEFINTIONS

Access Person. The term “access person” means any director, officer, or advisory person of Awad Asset Management, Inc. (“Awad”).

Advisory Person. The term “advisory person” of Awad means (a) any employee of Awad (or of any company in a control relationship to Awad) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security in a client account, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (b) any natural person in a control relationship to Awad who obtains information concerning recommendations made to a client with regard to the purchase or sale of a security. “Advisory Person” includes any investment person of Awad.

Beneficial Ownership. “Beneficial ownership” shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder. “Beneficial ownership” includes accounts of a spouse, child, parent, sibling resident in the access person’s home, as well as accounts of another person if by reason of any contract, understanding, relationship, agreement or other arrangement the access person obtains therefrom benefits substantially equivalent to those of ownership. Access person should contact the designated compliance officer regarding any questions they have concerning what constitutes beneficial ownership.

Buy or Sell Program. A “buy or sell program” is a planned program for the purchase or sale of a security for at least 10% of accounts in a particular Awad objective. Buy or sell programs may be completed in one day, or they may extend for two or more days.

 

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Control. The term “control shall have the same meaning as that set forth in Section 2(a)(9) of the Investment Company Act of 1940. A natural person shall be presumed not to be a “control person for this purpose, unless a contrary determination is made by the SEC.

Controlled Account. A “controlled account” is a brokerage account in which an employee has a beneficial ownership interest, or for which an employee has discretionary authority (e.g., trustee of a trust account).

Convertible Security. For purposes of these Guidelines, a “convertible security” e.g., convertible bond, convertible preferred stock, shall include the underlying common stock to which it can be converted.

Designated Compliance Officer. The term “designated compliance officer” shall mean the Awad officer(s) designated by Awad’s President as being responsible for receiving reports or notices and performing such other duties as required by this Code of Ethics.

Employee Security Transaction. An “employee security transaction” is any purchase or sale of securities for (1) a “Controlled Account” or (2) a “Family Member Account”.

Family Member. A “family member” is an employee’s immediate family - spouse, child, parent, sibling - sharing the same household.

Immediate Family Member Account. A “family member account” is a brokerage account of a member of an employee’s immediate family - spouse, child, parent, sibling - sharing the same household.

Investment Company. The term “investment company” means a company registered as such under the Investment Company Act of 1940 and for which Awad is the investment adviser.

Investment Person. An “investment person” is any portfolio manager, research analyst, securities trader, or portfolio reviewer of Awad.

Large Order. A “large order” is either a single order or a block (aggregated) order for the purchase or sale of a security amounting to 5,000 or more shares of a stock or 1,000 bonds.

Private Placement. Private Placement” means a limited offering exempt from registration pursuant to Rules 504, 505 or 506 or under Section 4(2) or 4(6) of the Securities Act of 1933.

Purchase or Sale of a Security. “Purchase or sale of a security” includes, inter alia, the writing of an option to purchase or sell a security.

Security. “Security” includes stock, notes, bonds, debentures, private placement securities and other evidences of indebtedness (including loan participations and assignments), limited partnership interests, registered open-end investment companies (mutual funds), investment contracts, and all derivative instruments, such as options and warrants. Security also includes futures and options on futures Any questions as to whether a particular investment constitutes a “security” should be referred to the designated compliance officer.

 

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III. PROHIBITED ACTS

 

A. All Employees

1. Disclosure of confidential information. Employees are prohibited from revealing information relating to the investment intentions, activities or portfolios of Advisory Clients except to persons whose responsibilities require knowledge of the information or to regulatory authorities who have appropriate jurisdiction with respect to such matters.

2. Receiving or offering of Gifts. Employees are prohibited from soliciting, accepting or giving of gifts or gratuities, except for gifts of a nominal value (i.e., gifts whose reasonable value is no more than $100 a year) and customary business lunches, dinners, entertainment (e.g., sporting events), and promotional items (e.g., pens, mugs, T-shirts). If a Person receives any gift that might be prohibited under this Code, that person promptly must inform the Compliance Officer.

3. Taking Advantage of Corporate Opportunities. Employees are prohibited from taking personal advantage of any opportunity properly belonging to the Advisory Clients. This includes, but is not limited to, acquiring Securities for one’s own account that would otherwise be acquired for Advisory Clients.

4. Using Position or Influence for Personal Benefit at Expense of Clients. Employees are prohibited from causing or attempting to cause an Advisory Client to purchase, sell or hold any Security in a manner calculated to create any personal benefit to the Awad Employee.

5. Outside Business Activities. Outside business activities must be disclosed to the Compliance Officer. These include, but are not limited to, being appointed an officer or director of a public or private company, any activity where compensation is received, or the making of a private investment. Written approval will be required to satisfy regulatory requirements.

6. Hedge Funds, Investment Partnerships, Investment Clubs. No employee shall participate in an investment partnership without first being approved by the Compliance Officer. If approval is granted the employee must arrange to have periodic statements sent to compliance.

7. Personal Security Transactions (Including Immediate Family Members)

 

(a) No Employee shall conduct a transaction while in possession of “inside” material nonpublic information regarding the Security or the issuer of the Security;

 

(b) No Employee shall purchase any securities in an initial public offering (other than a new offering of a registered open-end investment company).

 

(c) No Employee shall enter into a transaction intended to raise, lower, or maintain the price of any Security or to create a false appearance of active trading.

 

(d)

No Access Person may buy any “Security” on any day for which Awad (i) either has a buy program in place or is actively considering a buy program or (ii) is executing a large purchase order. The restriction on employee purchases of such securities shall continue through the end of

 

3


 

the day when the buy program is completed, discontinued, or dropped from active consideration; or when the large purchase order is executed.

 

(e) No Access Person may sell any “Security” on any day for which Awad (i) either has a sell program in place or is actively considering a sell program or (ii) is executing a large sale order. The restriction on employee sales of such securities shall continue through the end of the day when the sell program is completed, discontinued, or dropped from active consideration, or when the large order is executed.

 

(f) No Access Person may purchase a Security within 60 calendar days of the sale of that Security (or an Equivalent Security), and any sale of a Security within 60 calendar days of the purchase of the Security (or an Equivalent Security), unless the person agrees to give up all profits on the transaction to a charitable organization designated by Awad. (* Does not apply to transactions involving RJF Stock)

 

(g) No Employee may purchase and redeem shares of the same Mutual Fund within 60 calendar days.

 

(h) No Employee may purchase any security that is included in Awad client portfolios.

 

(i) No Employee may purchase small cap securities without prior approval from Awad’s president.

 

(j) Any other transaction deemed by the Pre-Clearance Officer to involve a conflict of interest, possible diversion of corporate opportunity, or an appearance of impropriety.

 

B. Investment Personnel

1. IPO Allocation Policy Portfolio Managers and traders must comply with the Statement of General Policy Regarding IPO Allocations, which is attached as Appendix A to this Code. In general, the policy prohibits improper actions taken in order to obtain greater access to Initial Public Offerings (“IPO’s”). Portfolio managers and traders should not purchase or commit to purchase from certain brokers additional shares of an IPO in the immediate after-market trading in order to obtain larger IPO allocations. Portfolio managers and traders should not engage in excessive trading or increase portfolio turnover in order to obtain larger IPO allocations by generating more commission business for brokers that provide access to IPOs.

2. Servicing as a Director In addition to the disclosure requirements detailed in Section III A. 5 above, Investment Persons may not serve on the board of directors of a publicly-traded company not affiliated with Awad absent prior written approval by the Compliance Officer. This approval rarely will be granted and, if granted, normally will require that the relevant Investment Person be isolated, through “Chinese Wall” or other procedures, from those making investment decisions related to the issuer on whose board the Investment Person sits.

 

C. Portfolio Manager

1. Seven Day Black- Out Period. A Portfolio Manager may not purchase or sell a security for his/her personal account or controlled account within seven calendar days, either preceding or

 

4


subsequent thereto, of a purchase or sale program, or a large order, for the same security initiated by the Portfolio Manager. For example, if the Portfolio Manager initiates and completes a buy program for his or her advisory accounts on June 1, June 9 is the first day the Portfolio Manager may trade that security for a personal or controlled account.

2. Contrary Trades. Portfolio managers who trade contrary to his Awad buy or sell program activity in a security within seven calendar days before or after the conclusion of Awad’s activity must submit a memo to Awad’s Compliance Officer or his designee explaining the decision to buy/sell contrary to Awad activity.

 

IV. PRE-CLEARANCE:

A. Transactions Requiring Pre-clearance:

I. All Employees: (Including Immediate Family Members)

Any transaction involving an open end registered investment company (mutual fund) unless done as part of a periodic investment (including 401k plans) or redemption plan (i.e. systematic withdrawal). Allocations for these periodic investments or redemptions must have initial pre-clearance. Any allocation changes or transactions outside of a previously approved periodic investment or redemption plan must also receive pre-clearance. Pre-clearance is not necessary for transactions involving a Money Market mutual fund.

II. Access Persons and Investment Persons: (Including Immediate Family Members)

In addition to the pre-clearance requirement above, and subject to the exemptions below, each person shall pre-clear trades in all other securities (see definition of “Securities” in Section II) *Please note that hedge funds, private placements and limited partnerships are included in the definition of security. If unsure whether an instrument is considered a security contact the compliance officer for guidance.

 

B. Transactions Exempt from Pre-clearance:

 

  (1) Purchases or sales in any account over which the access person has no direct or indirect influence or control.

 

  (2) Purchases or sales which are non-volitional on the part of either the access person or an investment company.

 

  (3) Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities to the extent such rights were acquired from such issuer, and sales of such rights so acquired.

 

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  (4) Any acquisition of Securities through stock dividends, dividend reinvestments, stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions generally applicable to all holders of the same class of securities.

 

  (5) Options on a broad-based, publicly traded market basket or index of stocks (the S&P 500 index); covered-call options on underlying securities presently held in employee personal accounts; repurchase agreements and U.S. Government Securities; Raymond James Financial stock; securities purchased as part of an automatic dividend reinvestment plan; certificates of deposit; and other securities determined to be “riskless” by Compliance.

 

C. Pre-clearance Procedures:

A trade preclearance request will be submitted via a preclearance request form (see Appendix I) or via email to the compliance officer. Decisions will be logged and initialed by the Compliance Officer, or designee, in the preclearance log book. The compliance officer will respond via email or phone to the person making the request with the approval or denial. Employees can not enter a trade order until approval is granted.

Access Persons and Investment Persons must preclear all personal “Security” transactions for both Controlled Accounts and Family Member Accounts. If a restriction applies, the proposed transaction will not be allowed. If no restriction applies, the transaction will be approved. Trade preclearance approvals are only valid for that day in which approval is granted.

 

  (a) If a purchase transaction is approved, as described above, and Awad subsequently initiates a buy program, or executes a large purchase order, for the same security on the same day, the employee must immediately sell the security in question. Any pretax profit from the subsequent sale transaction will be paid into Awad’s error account, and any loss will be borne by the employee.

 

  (b) If a sale transaction is approved, as described above, and Awad subsequently initiates a sale program, or executes a large sale order, for the same security on the same day, the employee must immediately buy back the security in question. Any pretax profit from the subsequent purchase transaction will be paid into Awad’s error account, and any loss will be borne by the employee.

 

  (c) Amounts paid into Awad’s error account under (a) and (b) above will be contributed annually to a charity selected by Awad.

 

6


V. REPORTS.

 

  A. Non-Employee Directors:

Non-employee directors of Awad are not subject to the restrictions and preclearance requirements of the Code, provided they have no knowledge of pending or current Awad program trading activity in the securities they are trading. Such directors must provide an annual certification that with respect to all employee security transactions during the preceding year, the director was not aware of any Awad program activity relating to the security in question when the transaction was effected.

 

  B. Employees, Access Persons and Investment Persons: (Including Immediate Family Members)

Aside from the Exemptions outlined in Section VI below, the following reporting requirements apply to Employees, Access Persons and Investment Persons.

1. Initial Holdings Report Any person who becomes an Employee, Access Person or Investment Person of Awad must submit, within 10 days of becoming such designation, an Initial Holdings Report (see Appendix K) listing all securities that he or she holds in an investment account. The Report will be sent by (and should be returned to) the Pre-Clearance Officer.

2. Quarterly Transaction Reports Every Employee, Access Person and Investment Person must arrange for the Compliance Officer to receive directly from the broker, dealer, mutual fund company or bank in question, duplicate copies of each confirmation and periodic statement for any Securities Transaction during the quarter in an investment account. All copies must be received no later than 10 days after the end of the calendar quarter.

Each confirmation or statement must disclose the following information:

 

  1. the date of the transaction;

 

  2. the title (and interest rate and maturity date, if applicable);

 

  3. the number of shares and principal amount;

 

  4. the nature of the transaction (e.g., purchase, sale);

 

  5. the price of the Security; and

 

  6. the name of the broker, dealer, fund company or bank through which the trade was effected.

If an Employee is not able to arrange for duplicate confirmations and statements to be sent that contain the information required above, the Employee promptly must submit Quarterly Transaction Reports within 10 days after the completion of each calendar quarter to the Compliance Officer. In accordance with Raymond James Financial corporate policy, all employee brokerage accounts must be maintained with Raymond James Brokerage. All persons opening or maintaining a brokerage account outside of Raymond James must receive written permission from the Compliance Officer.

 

7


3. Annual Holdings Report Each Employee, Access Person and Investment Person must submit an Annual Holdings Report (see Appendix K) listing all securities in an investment Account. The information in the Annual Holdings Report must be current as of a date no more than 30 days before the report is submitted. The annual holdings report must contain the following information:

 

  (i) The title, number of shares and principal amount of each security in which the access person had any direct or indirect beneficial ownership;

 

  (ii) The name of any broker, dealer, mutual fund company or bank with whom the access person maintains an account in which any securities are held for the direct or indirect benefit of the access person; and

 

  (iii) The date that the report is submitted by the access person.

 

VI. EXEMPTION, DISCLAIMERS, AND AVAILABILITY OF REPORTS

 

  A. Exemptions from Reporting Requirements

1. Securities Transactions involving the following circumstances or Securities are exempt from Section IV and V reporting requirements: (1) neither the Access Person nor an Immediate Family Member had any direct or indirect influence or control over the transaction; (2) Securities directly issued by the U.S. Government; (3) bank certificates of deposits; (4) other Securities as may from time to time be designated in writing by the Code of Ethics Review Committee based on a determination that the risk of abuse is minimal or non-existent.

2 Notwithstanding the provisions of Section V-B2. above, no Employee shall be required to make a Quarterly Transaction Report where such report would duplicate information recorded by Awad pursuant to Rule 204-2(a) of the Investment Advisers Act of 1940.

 

  B. Disclaimers

Any report of a Securities Transaction for the benefit of a person other than the individual in whose account the transaction is placed may contain a statement that the report should not be construed as an admission by the person making the report that he or she has any direct or indirect beneficial ownership in the Security to which the Report relates.

 

  C. Availability of Reports

All information supplied pursuant to this Code may be available for inspection by the President of Awad, the Code of Ethics Review Committee, the Compliance Officer, the Pre-Clearance Officer, the Access Person’s department manager (or designee), any party to which any investigation is referred by any of the foregoing, the Securities and Exchange Commission, any self-regulatory organization of which Awad is a member, and any state securities commission with appropriate jurisdiction.

 

8


VII. CODE OF ETHICS REVIEW COMMITTEE

The Code of Ethics Review Committee shall investigate material Code violations or suspected violations of the Code and, as appropriate, take such actions as necessary or prescribed in the personal trading violation sanctions guidelines. The Committee also shall review the Code at least once a year, in light of legal and business developments and experience in implementing the Code. Members of the Committee consist of Awad’s President, Corporate Counsel, Treasurer and Chief Compliance Officer.

Employees who either willfully or negligently violate the provisions of the Code may be subject to any or all of the following sanctions: Formal Written Warning and Written Reprimand (with copy to supervisor and personnel file), Bans on Personal Trading, Monetary Penalty, Disgorgement of Trading Profits, Suspension or Termination. The Code of Ethics Review Committee is charged with the responsibility of conducting informational hearings, assessing mitigating factors, and imposing sanctions consistent with the Code’s Sanction Guidelines.

Awad Code of Ethics Personal Trading Violation Sanctions Matrix

 

Sanctions applicable to Employees:   
VIOLATION    SANCTION GUIDELINE+ *
*Commission of a Prohibited Act not otherwise specifically addressed in this Code section    1st Offense or more: Monetary penalty, freeze trading accounts for 30-90 days and/or suspension or termination
No broker statements or confirms on file or no evidence that duplicate statements have been requested   

1st Offense: Written warning

2nd Offense: (after 30 days of no action) Written reprimand and/or monetary penalty

3rd Offense: (after 60 days of no action) Monetary penalty, freeze trading accounts for 30-90 days and/or suspension or termination

*Trading without receiving appropriate pre-clearance or trading outside the approval period   

1st Offense: Written warning

2nd Offense: Written reprimand and/or monetary penalty

3rd Offense (or more): Monetary penalty, freeze trading accounts for 30-90 days and/or suspension or termination

*Trading after being denied approval    1st Offense or more: Monetary penalty, freeze trading accounts for 30-90 days and/or suspension or termination

Failure to file an Initial or Annual Holdings Report

 

Failure to file an Annual Code Acknowledgement and Certification Form

  

1st Offense: (not filed within 10 days) Written warning

2nd Offense:(not filed within 10 days on more than one occasion or not filed within 30 days) Written reprimand and/or monetary penalty

3rd Offense:(not filed within 10 days on more than two occasions or not filed within 60 days) Monetary penalty, freeze trading accounts for 30-90 days and/or suspension/ termination

 

9


Sanctions applicable to Access Persons (in addition to all sanctions applicable to Employees):
VIOLATION    SANCTION GUIDELINE+ *
*Purchasing a security within 60 days of a sale of the same security or selling a security within 60 days of the purchase of the same security   

1st offense: Written Reprimand and/or Monetary Penalty

2nd or more offenses: Monetary Penalty, Freeze Trading accounts for 30-90 days and/or Suspension / Termination

Serving on the Board of a publicly-traded company without prior written consent   

1st offense: Written Reprimand and/or Monetary Penalty

2nd or more offenses: Monetary Penalty, Freeze Trading accounts for 30-90 days and/or Suspension / Termination

Sanctions applicable to Portfolio Managers (in addition to all sanctions applicable to Employees and Access Persons):
VIOLATION    SANCTION GUIDELINE+ *
* Trading within the 7 day blackout period    1st offense or more offenses: Monetary Penalty, Freeze Trading accounts for 30-90 days and/or Suspension / Termination

 

* Includes Disgorgement of Trading Profits

 

+ The Code of Ethics Review Committee will take into consideration any mitigating circumstances when applying sanctions

The Compliance Administrator will arrange for a meeting of the Code of Ethics Review Committee in cases where a violation has occurred and the guidelines suggest a monetary penalty, written reprimand or more serious action.

The following schedule details the monetary penalties that may be applied for each offense.

 

AVP and Staff    -$100-$500    Senior Vice President    - $1,000-$2,500
Vice President    - $500-$1,000    Managing Director and above    - $2,500-$5,000 +

 

VIII. OTHER GUIDELINES

As employees of Raymond James Financial, Inc., Awad employees are expected to comply with all guidelines set forward by Raymond James Financial, Inc. in regard to personal transactions.

 

IX. COMPLIANCE

In order to facilitate compliance with these guidelines, all access persons must supply a copy of the confirm (or have duplicate confirms sent) on ALL trades to the Chief Compliance Officer or his designee within one business day, or as soon as may be practical, after the trade date of such transaction. All employees must also arrange to have duplicate confirms of Mutual Fund transactions forwarded to the Chief Compliance Officer. If an employee opens a new brokerage account, either at Raymond James & Associates, Inc. or an unaffiliated firm, he or she must immediately advise the Chief Compliance Officer or his designee.

 

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Appendix I

TRADE AUTHORIZATION REQUEST

 

(1) Name of person requesting authorization:                                                             

 

(2) Name                                                                   of                                                                                        security:                                                                                                       

 

(3) Maximum # of shares or units to be purchased or sold or amount of bond:                                                                                                       

 

(4) Check if applicable: ¨ Purchase ¨ Sale

 

(5) Do you possess material nonpublic information regarding the security or the issuer of the security? ¨ Yes      ¨ No

 

(6) To your knowledge, are the securities (or equivalent securities) being considered for purchase or sale by any Advisory Client? ¨  Yes      ¨ No

 

(7) Are the securities being acquired in an Initial Public Offering? ¨ Yes      ¨ No

 

(8) Are the securities being acquired in a Private Placement? ¨ Yes      ¨ No

 

(9) If you are a Portfolio Manager, has any account you managed purchased or sold these securities (or equivalent securities) within the past seven calendar days or do you expect the account to purchase or sell these securities (or equivalent securities) within seven calendar days after your purchase or sale? ¨ Yes      ¨ No

 

(10) Have you or any account covered by the Code’s pre-authorization provisions purchased or sold these securities (or equivalent securities) in the prior 60 days? ¨ Yes      ¨ No

I have read the currently effective Code of Ethics, and believe that the proposed trade complies fully with the requirements of the Code.

 

   
Signature

 

   
Print Name

 

Authorized:

    

Date:

    

 

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Appendix J

Update on employee brokerage accounts

The compliance Department is updating its records for monitoring employee trading.

Please fill out the following and return.

Do you, personally or as a trustee of an account, or any family members, as described in the Awad Code of Ethics, have any outside brokerage accounts?

Yes ¨ No ¨

If yes, please list the name of the brokerage house, name on the account, your relationship to the account and account number for each.





Do you, personally, as trustee or as beneficiary of an account, or any family members, as described in the Awad Code of Ethics, have any Raymond James accounts?

 

Yes ¨ No ¨

If yes, please list all account numbers, name on the account, your relationship to the account and approximate date each account was opened.

Account #         Name(s) on Account                                                               Relationship








 

               

Name (Please Print)

   
             

Signature

   

Date

 

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___________________________

 

Appendix K    REPORT OF SECURITIES HOLDINGS   

 

Person:                                                 Initial or Annual Report? (Circle one)

As required by Rule 17j-1 and Awad’s Code of Ethics, the following is my statement of securities holdings for which I may have a direct or indirect beneficial interest. As described in the Awad Code of Ethics, this includes the securities holdings of myself, family members (spouse, minor child, or related adult living in the same household as myself) and the securities holdings of a Trust in which I am Trustee or in which I have a beneficial interest.

 

1) For securities holdings that are held in brokerage accounts, please list the name of the brokerage house, the name on the account, relationship to you, and the account number for each.

Please attach the most recent monthly statement for each account.

 

Brokerage Firm

  

Name of Account

   Relationship    Account Number
                
                
                
                
                
                

 

2) For securities holdings that are not held in brokerage accounts which are held in physical form, including Hedge Funds and Private Placements please list:

 

Shares

  

Name of Issuer / Fund

   Registered in the name of:    Relationship
                
                
                
                
                
                

Please attach additional sheets, if necessary.

 

3) I              do/             do not have any securities holdings that I am required to report pursuant to the requirements as stated above.

 

Signature:                                                                                       Date:                                 

 

13


AWAD ASSET MANAGEMENT, INC.

POLICY AND PROCEDURES ON INSIDER TRADING

 

SECTION  I. POLICY STATEMENT ON INSIDER TRADING

 

A. Policy Statement on Insider Trading

Awad Asset Management, Inc. forbids any employee from trading, either personally or on behalf of others (such as, mutual funds and private accounts managed by Awad Asset Management, Inc.), based on material nonpublic information or communicating material nonpublic information to others in violation of the law. This conduct is frequently referred to as “insider trading.” Awad Asset Management’s policy applies to every employee and extends to activities within and outside their duties at Awad Asset Management, Inc. Every employee must read and retain this policy statement. Any questions regarding Awad Asset Management’s policy and procedures should be referred to the Compliance Administrator.

The term “insider trading” is not defined in the federal securities laws, but generally is used to refer to the use of material nonpublic information to trade in securities (whether or not one is an “insider”) or to communications of material nonpublic information to others.

While the law concerning insider trading is not static, it is generally understood that the law prohibits:

 

  1) trading by an insider while in possession of material nonpublic information, or

 

  2) trading by a non-insider, while in possession of material nonpublic information where the information either was disclosed to the non-insider in violation of an insider’s duty to keep it confidential or was misappropriated, or

 

  3) communicating material nonpublic information to others.

The elements of insider trading and the penalties for such unlawful conduct are discussed below. If, after reviewing this policy statement, you have any questions you should consult the Compliance Administrator.

 

1. Who is an Insider?

The concept of “insider” is broad. It includes officers, directors and employees of a company. In addition, a person can be a “temporary insider” if he or she enters into a special confidential relationship in the conduct of a company’s affairs and as a result is given access to information solely

 

14


for the company’s purposes. A temporary insider can include, among others, a company’s attorneys, accountants, consultants, bank lending officers, and the employees of such organizations. In addition, Awad Asset Management, Inc. may become a temporary insider of a company it advises or for which it performs other services. According to the Supreme Court, the company must expect the outsider to keep the disclosed nonpublic information confidential and the relationship must at least imply such a duty before the outsider will be considered an insider.

 

2. What is Material Information?

Trading on inside information is not a basis for liability unless the information is material. “Material information” generally is defined as information for which there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions, or information that is reasonably certain to have a substantial effect on the price of a company’s securities. Information that employees should consider material includes, but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments.

Material information need not be derived directly from the company whose securities are at issue. For example, in Carpenter v. U.S., 108 U.S. 316 (1987), the Supreme Court considered as material certain information about the contents of a forthcoming newspaper column that was expected to affect the market price of a security. In that case, a Wall Street Journal reporter was found criminally liable for disclosing to others the dates that reports on various companies would appear in the Journal and whether those reports would be favorable or not.

 

3. What is Nonpublic Information?

Information is nonpublic until it has been effectively communicated to the market place. One must be able to point to some fact to show that the information is generally public. For example, information found in a report filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or other publications of general circulation would be considered public.

 

4. Bases for Liability

 

  i. Fiduciary Duty Theory

In 1980, the Supreme Court found that there is no general duty to disclose before trading on material nonpublic information, but that such a duty arises only where there is a fiduciary relationship. That is, there must be a relationship between the parties to the transaction such that one party has a right to expect that the other party will disclose any material nonpublic information or refrain from trading. Chiarella v. U.S., 445 U.S. 22 (1980).

 

15


In Dirks v. SEC, 463 U.S. 646 (1983), the Supreme Court stated alternate theories under which non-insiders can acquire the fiduciary duties of insiders: they can enter into a confidential relationship with the company through which they gain information (e.g., attorneys, accountants), or they can acquire a fiduciary duty to the company’s shareholders as “tippees” if they are aware or should have been aware that they have been given confidential information by an insider who has violated his fiduciary duty to the company’s shareholders.

However, in the “tippee” situation, a breach of duty occurs only if the insider personally benefits, directly or indirectly, from the disclosure. The benefit does not have to be pecuniary, but can be a gift, a reputational benefit that will translate into future earnings, or even evidence of a relationship that suggests a quid pro quo.

 

  ii. Misappropriation Theory

Another basis for insider trading liability is the “misappropriation” theory, where liability is established when trading occurs on material nonpublic information that was stolen or misappropriated from any other person. In U.S. v. Carpenter, supra, the Court found, in 1987, a columnist defrauded The Wall Street Journal when he stole information from the Journal and used it for trading in the securities markets. It should be noted that the misappropriation theory can be used to reach a variety of individuals not previously thought to be encompassed under the fiduciary duty theory. (Misappropriated—properly come into contact with insider information and then improperly use information)

 

5. Penalties for Insider Trading

Penalties for trading on or communicating material nonpublic information are severe, both for individuals involved in such lawful conduct and their employers. A person can be subject to some or all of the penalties below even if he or she does not personally benefit from the violation. Penalties include:

 

    civil injunctions

 

    treble damages

 

    disgorgement of profits

 

    jail sentences of up to ten years and related fines of up to $2,500,000

 

    fines for the person who committed the violation of up to three times the profit gained or loss avoided, whether or not the person actually benefitted,

 

    civil fines for the employer or other controlling person of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided, and

 

    suspension or bar from the securities business.

 

16


    suspended or barred from working in securities industry.

In addition, any violation of this policy statement can be expected to result in serious sanctions by Awad Asset Management, Inc., including dismissal of the persons involved.

* * *

 

SECTION  II. PROCEDURES TO IMPLEMENT AWAD ASSET MANAGEMENT, INC. INVESTMENT ADVISER’S POLICY

 

A. Procedures to Implement Awad Asset Management, Inc. Investment Adviser’s Policy Against Insider Trading

The following procedures have been established to aid the employees of Awad Asset Management, Inc. in avoiding insider trading, and to aid Awad Asset Management, Inc. in preventing, detecting and imposing sanctions against insider trading. Every officer, director and employee of Awad Asset Management, Inc. must follow these procedures or risk serious sanctions, including dismissal, substantial personal liability and criminal penalties. If you have any questions about these procedures you should consult the Compliance Administrator.

 

1. Identifying Inside Information

Before trading for yourself or others, including investment companies or private accounts managed by Awad Asset Management, Inc., in the securities of a company about which you may have potential inside information, ask yourself the following questions:

 

  i. Is the information material? Is this information that an investor would consider important in making his or her investment decisions? Is this information that would substantially affect the market price of the securities if generally disclosed?

 

  ii. Is the information nonpublic? How did you obtain it? To whom has this information been provided? Has the information been effectively communicated to the marketplace by being published in Reuters, The Wall Street Journal or other publications of general circulation?

If, after consideration of the above, you believe that the information is material and nonpublic, or if you have questions as to whether the information is material and nonpublic, you should take the following steps.

 

  i. Report the matter immediately to the Chief Compliance Officer.

 

17


  ii. Do not purchase or sell the securities on behalf of yourself or others, including investment companies or private accounts managed by Awad Asset Management, Inc..

 

  iii. Do not communicate the information inside or outside Awad Asset Management, Inc., other than to the Chief Compliance Officer.

 

  iv. After the Chief Compliance Officer, has reviewed the issue, you will be instructed to continue the prohibitions against trading and communication, or you will be allowed to trade and communicate the information.

 

2. Personal Securities Trading

All employees of Awad Asset Management, Inc. shall be in compliance with the Awad Code of Ethics Transaction Guidelines and shall submit to the Compliance Administrator, a report of every securities transaction in which they, their families (including the spouse, minor children and adults living in the same household as the employee), and trusts of which they are trustees or in which they have a beneficial interest, have participated within one business day after the trade date of such transaction. This report shall include the name of the security, date of the transaction, quantity, price, and broker-dealer through which the transaction was effected. The requirement may be satisfied by sending duplicate confirmations of such trades to the Compliance Administrator. At the Compliance Administrator’s discretion, he may request that the broker-dealer send the duplicate confirms.

 

3. Restricting Access to Material Nonpublic Information

Information in your possession that you identify as material and nonpublic may not be communicated to anyone, including persons within Awad Asset Management, Inc., except as provided in paragraph 1 above. In addition, care should be taken so that such information is secure. For example, files containing material nonpublic information should be sealed; access to computer files containing material nonpublic information should be restricted.

 

4. Resolving Issues Concerning Insider Trading

If, after consideration of the items set forth in paragraph 1, doubt remains as to whether information is material or nonpublic, or if there is any unresolved question as to the applicability or interpretation of the foregoing procedures, or as to the propriety of any action, it must be discussed with the Chief Compliance Officer before trading or communicating the information to anyone.

 

  Note:   If the Chief Compliance Officer is unavailable, questions can be directed to Awad’s Corporate Counsel.

 

18


(Supervisors Only)

* * *

 

SECTION III. SUPERVISORY PROCEDURES

 

A. Supervisory Procedures

The role of Chief Compliance Officer, is critical to the implementation and maintenance of Awad Asset Management’s policy and procedures against insider trading. Supervisory Procedures can be divided into two classifications—prevention of insider trading and detection of insider trading.

 

1. Prevention of Insider Trading

To prevent insider trading, Chief Compliance Officer or his designee, should:

 

  i. provide, on a regular basis, communications to familiarize employees of Awad Asset Management’s policy and procedures,

 

  ii. answer questions regarding Awad Asset Management’s policy and procedures,

 

  iii. resolve issues of whether information received by an employee of Awad Asset Management, Inc. is material and nonpublic,

 

  iv. review on a regular basis and update as necessary Awad Asset Management’s policy and procedures, [and]

 

  v. when it has been determined that an employee of Awad Asset Management, Inc. has material nonpublic information,

1. implement measures to prevent dissemination of such information, and

2. if necessary, restrict officers, directors and employees from trading the securities, [and

 

  vi. promptly review, and either approve or disapprove, in writing, each request of an employee for clearance to trade in specified securities.]

 

2. Detection of Insider Trading

To detect insider trading, Chief Compliance Officer or his designee, should:

 

  i. review the trading activity reports filed by each employee,

 

19


  ii. review the trading activity of mutual funds and private accounts managed by Awad Asset Management, Inc.,

 

  iii. review trading activity of Awad Asset Management’s own account, and

 

  iv. coordinate the review of such reports with other appropriate employees of Awad Asset Management, Inc.

 

3. Special Reports to Management

Promptly, upon learning of a potential violation of Awad Asset Management’s Policy and Procedures to Detect and Prevent Insider Trading, the Chief Compliance Officer or his designee, should prepare a written report to management providing full details and recommendations for further action.

 

4. Annual Reports to Management

On an annual basis, the Chief Compliance Officer or his designee, should prepare a written report to the management of Awad Asset Management, Inc. setting forth the following:

 

  i. a summary of existing procedures to detect and prevent insider trading,

 

  ii. full details of any investigation, either internal or by a regulatory agency, of any suspected insider trading and the results of such investigation,

 

  iii. an evaluation of the current procedures and any recommendations for improvement, and

 

  iv. a description of Awad Asset Management’s internal communications regarding insider trading, including the dates of such communications since the last report to management.

 

20


AWAD

Asset Management, Inc.

INITIAL / ANNUAL CERTIFCATION

I hereby acknowledge receipt of the Awad Code of Ethics and the Policy and Procedures On Insider Trading. I certify that I have thoroughly reviewed these instructions and understand the policies and regulations therein. I have been offered an opportunity to ask questions about any provisions which are unclear. To the best of my knowledge, I have complied with the provisions of these documents during the past year, or since the beginning of my employment if later, and I agree to continue to abide by the provisions of these documents.

 

           
Name:        
             
Sign      

Date 

 

21


AWAD ASSET MANAGEMENT, INC.    Appendix A
Statement of General Policy Regarding IPO Allocations   

 

    Portfolio managers and traders should not take any improper action in order to obtain greater access to IPOs.

 

    Portfolio managers and traders should not engage in excessive trading or increase portfolio turnover in order to obtain larger IPO allocations by generating more commission business for brokers that provide access to IPOs.

 

    Portfolio managers and traders should not purchase or commit to purchase from certain brokers additional shares of an IPO in the immediate after-market trading in order to obtain larger IPO allocations, i.e., portfolio managers and traders should not explicitly or implicitly engage in a quid pro quo between the initial IPO allocation and the subsequent after-market purchases by Awad. (However, absent such an explicit or implicit quid pro quo, portfolio managers and traders properly can determine to fill an unfilled IPO order with purchases in the secondary market from the same broker from whom they acquired the IPO shares.)

 

    Portfolio managers and traders should not pay commissions to certain brokers in excess of customary and reasonable commissions in order to obtain larger IPO allocations. (However, subject to best execution standards and appropriate disclosures in Awad’s Form ADV registration statement and any applicable mutual fund registration statements, portfolio managers and traders may consider access to IPOs as one factor, among others, in selecting broker-dealers with whom they trade.)

 

    Portfolio managers and traders should not make IPO allocation decisions regarding client accounts based upon subsequent market movements or based upon any factors or guidelines not articulated in Awad’s compliance policies and applicable disclosures.

 

    Allocations should be fair and equitable to all clients to the extent practicable.

 

    Allocations should comply with information disclosed to clients in, as applicable, the advisory contracts, Awads’ Form ADV registration statement, and any applicable mutual fund registration statement.

 

    Allocations should be pro rata to applicable groups of clients where feasible. If not pro rata, allocations should comply with applicable policies and procedures and should be consistent with information disclosed to clients.

 

    Allocations should not continually favor particular accounts unless such practice has been disclosed to clients.

 

    Hot IPOs generally should not be allocated to accounts where Awad, its principals or its affiliates maintain an ownership interest.

 

22

EX-99.P3 8 dex99p3.htm CODE OF ETHICS OF PROVIDENT INVESTMENT COUNSEL Code of Ethics of Provident Investment Counsel

Exhibit 99.P3

PROVIDENT INVESTMENT COUNSEL, INC.

CODE OF ETHICS

PERSONAL TRADING/CONFIDENTIAL INFORMATION

POLICY STATEMENT AND COMPLIANCE PROCEDURES

Effective - January 19, 2005

Rule 204A-1 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), requires SEC registered investment advisers such as Provident Investment Counsel, Inc. (the “Company”) to establish, maintain and enforce a written code of ethics that, at a minimum, sets the standard of business conduct that the Company requires of its “Employees,”1 requires Employees to comply with applicable federal securities laws,2 and set forth provisions regarding personal securities transactions by Employees.

Under Rule 204A of the Advisers Act, the Company must establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material, non-public information. Accordingly, the Company and each of its Employees are prohibited from purchasing or selling any publicly traded stock, bond, option or other security on the basis of material, nonpublic information (i.e., Insider Trading). In addition, the Company and each of its Employees has a fiduciary obligation to the Company’s clients to protect the confidentiality of all proprietary, sensitive or other confidential information communicated to the Company or such Employees by its clients. Finally, because the Company and each of its Employees is a fiduciary to the Company’s clients, the Company and such Employees must also maintain the highest ethical standards and refrain from engaging in activities that may create actual or apparent conflicts of interest between the interests of the Company or such Employees and the interests of the Company’s clients.

 


1 The term “employee” as used in these Procedures includes all officers, directors and regular full-time and regular part-time employees of the Company as well as spouses, domestic partners and dependents. “Employee” does not include long-term temporaries or on-site consultants. “Non-Resident Director” means any director of the Company who (a) is not an officer, employee or shareholder of the Company, (b) does not maintain a business address at the Company and (c) does not, in the ordinary course of his business, receive or have access to current information regarding the purchase or sale of securities by the Company, information regarding recommendations concerning the purchase or sale of securities by the Company or information regarding securities being considered for purchase or sale by the Company.

 

2 “Federal securities laws” means the Securities Act of 1933 (the “1933 Act”), the Securities Exchange Act of 1934 (the “1934 Act”), the Investment Company Act of 1940 (the “Investment Company Act”), the Advisers Act, Title V of Gramm-Leach-Bliley Act (“GLB Act”), any rules adopted by the SEC under these statutes, the Bank Secrecy Act as it applies to investment companies and investment advisers, and any rules adopted thereunder by the SEC of the Department of the Treasury.

 

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To ensure that federal securities laws are not violated, that client confidences are maintained, and that conflicts of interest are avoided, the Company has adopted the policies and procedures set forth in this Code. The policies and procedures set forth herein are intended to articulate the Company’s policies, educate the Employees about the issues and these policies, establish procedures for complying with these policies, monitor compliance with such policies and procedures, and ensure, to the extent feasible, that the Company satisfies its obligations in this area. By doing so, the Company hopes that the highest ethical standards are maintained and that the reputation of the Company is sustained.

In addition, Rule 17j-1 of the Investment Company Act of 1940, as amended (the “Investment Company Act”) requires that every investment adviser to an investment company adopt a written code of ethics. Because the Company is the investment advisor or investment sub-advisor to several registered investment companies (“PIC Advised Mutual Funds”), the Company has adopted such requirements in this Code. The Company is required to report to the Board of Trustees of each PIC Advised Mutual Funds regarding any material compliance violations of this Code by Access Persons.3

As a fiduciary to Company Clients (as defined below), each Employee must avoid actual and apparent conflicts of interest with such Company Clients. Such conflicts of interest could arise if securities are bought or sold for personal accounts in a manner that would significantly compete with the purchase or sale of securities for client accounts, or if securities are bought or sold for client accounts in a manner that is advantageous to such personal accounts. Also, the SEC has determined that it is a conflict of interest for an investment adviser’s employees to personally take advantage of a limited investment opportunity without first considering whether the investment is appropriate for any Company Client. If so, Employees are first obligated to make such limited opportunity available to Company Clients. More information describing such conflicts of interest and the compliance procedures for avoiding such conflicts of interest are set forth below.

Fraudulent activities by Employees are prohibited. Specifically, no Employee may:

 

  a) Employ any device, scheme or artifice to defraud Company Clients;

 

  b) Make any untrue statement of a material fact to Company Clients or omit to state a material fact necessary in order to make the statements made to Company Clients, in light of the circumstances under which they are made, not misleading;

 

  c) Engage in any act, practice or course of business that operates or would operate as a fraud or deceit on Company Clients; or

 


3 “Access Person” means any Employee (or other person who provides investment advise on behalf of the Company and is subject to the supervision and control of the investment adviser) who has access to nonpublic information regarding any Company Client’s purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any PIC-Advised Mutual Fund or any other fund whose investment adviser controls or is under common control with the Company. For purposes of the foregoing, all officers and directors (including Non-Resident Directors) are presumed to be “Access Persons.”

 

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  d) Engage in any manipulative practice with respect to Company Clients.

If you have any questions regarding this Code, please contact the Chief Compliance Officer.

 

I. INSIDER TRADING

It is unlawful to engage in “insider trading.” This means, in general, that no “insider” may (i) purchase or sell a security on the basis of material, nonpublic information, or (ii) communicate material, nonpublic information to another where the communication leads to, or is intended to lead to, a purchase or sale of securities. Insider trading prohibitions extend to the activities of each Employee. Because the Company does not have an investment banking division or affiliate it is anticipated that such Employees will not routinely receive “inside information” except insofar as they may have material nonpublic information about a publicly traded closed-end investment company for which the Company serves as investment advisor. However, to educate Employees, more information describing “insider trading” and the penalties for such trading are set forth below. Compliance procedures regarding the use of inside information by the Employees are also described just in case an Employee receives inside information.

 

A. Insider Trading Defined

The term “insider trading” is generally used to refer to (i) a person’s use of material, nonpublic information in connection with transactions in securities, and (ii) certain communications of material, nonpublic information.

The laws concerning insider trading generally prohibit:

 

    The purchase or sale of securities by an insider, on the basis of material, nonpublic information;

 

    The purchase or sale of securities by a non-insider, on the basis of material, nonpublic information where the information was disclosed to the non-insider in violation of an insider’s duty to keep the information confidential or was misappropriated; or

 

    The communication of material, nonpublic information in violation of a confidentiality obligation where the information leads to a purchase or sale of securities.

 

  1.

Who is an Insider? The concept of “insider” is broad. It includes the officers, directors, employees and majority shareholders of a company. In addition, a person can be considered a “temporary insider” of a company if he or she enters into a confidential relationship in the conduct of the company’s affairs and, as a result, is given access to company information that is intended to be used solely for company purposes. A temporary insider can include, among others, a company’s attorneys, accountants, consultants, investment bankers, commercial bankers and the employees of such organizations. In order for a person to be considered a temporary insider of a particular company, the company must expect

 

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that the person receiving the information keep the information confidential and the relationship between the company and the person must at least imply such a duty. Analysts are usually not considered insiders of the companies that they follow, although if an analyst is given confidential information by a company’s representative in a manner in which the analyst knows or should know to be a breach of that representative’s duties to the company, the analyst may become a temporary insider.

 

  2. What is Material Information? Trading on inside information is not a basis for liability unless the information is “material.” “Material” information is generally defined as information that a reasonable investor would likely consider important in making his or her investment decision, or information that is reasonably certain to have a substantial effect on the price of a company’s securities. Information that should be considered material includes, but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidity problems and extraordinary management developments. Material information does not have to relate to a company’s business; it can be significant (but as yet not widely known) market information. For example, a reporter for The Wall Street Journal was found criminally liable for disclosing to others the dates on which reports on various companies would appear in The Wall Street Journal and whether or not those reports would be favorable.

 

  3. What is Nonpublic Information? Information is nonpublic unless it has been effectively communicated to the market place. For information to be considered public, one must be able to point to some fact to show that the information has been generally disseminated to the public. For example, information found in a report filed with the SEC or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or another publication of general circulation is considered public. Market rumors are not considered public information.

 

  4. Not Certain if You Have “Inside” Information? If you have any doubts about whether you are in possession of material nonpublic information, consult with the Company’s Compliance Officer.

 

B. Penalties for Insider Trading

Penalties for trading on or communicating material, nonpublic information are severe, both for the individuals involved in the unlawful conduct and for their employers. A person can be subject to some or all of the penalties set forth below even if he or she does not personally benefit from the violation. Penalties include:

 

    Administrative penalties;

 

    Civil injunctions;

 

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    Disgorgement of profits;

 

    Jail sentences;

 

    Fines for the person who committed the violation of up to three times the profit gained or loss avoided (per violation, or illegal trade), whether or not the person actually benefited from the violation; and fines for the employer or other controlling person of the person who committed the violation of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided (per violation, or illegal trade).

In addition, any violation of the procedures set forth in this Code of Ethics can be expected to result in serious sanctions by the Company, including dismissal of the persons involved.

 

C. Policy Statement Regarding Insider Trading

The Company expects that each Employee will obey the law and not trade on the basis of material, nonpublic information. In addition, the Company discourages its Employees from seeking or knowingly obtaining material nonpublic information. The Company requires approval for each of its Employees, other than Non-Resident Directors, to serve as an officer or director of a company having Publicly-Traded Securities.

 

D. Procedures to Prevent Insider Trading

As indicated above, because the Company does not have an investment banking division or affiliate and because the Company prohibits its Employees, other than Non-Resident Directors, from serving as an officer or director of a company having Publicly-Traded Securities, the Company does not anticipate its Employees routinely being in receipt of material, nonpublic information except with respect to closed-end investment companies advised by the Company. However, Employees may from time to time receive such information. If any such person receives any information which may constitute such material, nonpublic information, such person (i) should not buy or sell any securities (including options or other securities convertible into or exchangeable for such securities) for a personal account or a client account, (ii) should not communicate such information to any other person (other than the Compliance Department), and (iii) should discuss promptly such information with the Compliance Department. The Compliance Department is defined as the Chief Compliance Officer, the Compliance Manager, and any other person specifically assigned to undertake Compliance Department tasks by the Chief Compliance Officer. Under no circumstances should such information be shared with any persons not employed by the Company, including family members and friends. It is recommended that each employee contacting an issuer or analyst (i) identify himself as associated with the Company, (ii) identify the Company as an investment management firm, and, (iii) after the conversation, make a memorandum memorializing the conversation with the issuer or analyst (including the beginning of the conversation where the employee identified himself as associated with the Company).

 

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II. OTHER CONFIDENTIAL INFORMATION

 

A. Confidential Information Defined

As noted above, even if the Company and Employees do not receive material, nonpublic information (i.e., “inside” information), the Company or Employees may receive other confidential or sensitive information from or about the Company’s parent holding company and Company Clients, and Employees may receive confidential or sensitive information about the Company’s affairs. Such confidential or sensitive information may include, among other things:

 

    The name of the client. The Company is obligated by law not to divulge or use its clients’ names without their consent.

 

    Financial or other information about the client, such as the client’s financial condition or the specific securities held in a specific client’s portfolio (including the securities held by any PIC-Advised Mutual Funds).

 

    The names of the securities on the Company’s various buy and sell lists.

 

    The name of any security under consideration for placement on any buy or sell list.

 

    Any information privately given to an Employee, that if publicly known, would be likely to (i) affect the price of any security in the portfolio of any client of the Company, and/or (ii) embarrass or harm the client or the Company, or any of the Company’s affiliates.

Given the breadth of the above, all information that an Employee obtains through his or her association with the Company should be considered confidential unless that information is specifically available to the public.

 

B. Policy Statement Regarding Use and Treatment of Confidential Information

All confidential information, whatever the source, may be used only in the discharge of an Employee’s duties with the Company. Confidential information may not be used for any personal purpose, including the purchase or sale of securities for a personal account. Confidential information with regards to any Company Client (including any PIC-Advised Mutual Funds) may not be used for the benefit of any other client.

 

C. Procedures Regarding Use and Treatment of Confidential Information

The Company encourages each Employee to be aware of, and sensitive to, such Employee’s treatment of confidential information. Each Employee is encouraged not to discuss such information unless necessary as part of his or her duties and responsibilities with the Company, not to store confidential information in plain view in public areas of the Company’s facilities where anyone entering the room may see it, and to remove confidential information from conference rooms, reception areas or other areas where third parties may inadvertently see it. Particular care should be exercised if confidential information must be discussed in public places, such as elevators, taxicabs, trains or airplanes, where such information may be overheard. Under no circumstances may confidential information be shared with any person, including any spouse or other family member, who is not an employee of the Company.

 

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III. CONFLICTS OF INTEREST INVOLVING PERSONAL SECURITIES ACCOUNTS

 

A. Fiduciary Duty to Avoid Conflicts of Interest Between Client Accounts and Personal Accounts

As noted above, because the Company and each of its Employees is a fiduciary to the Company Clients, the Company and such persons must avoid actual and apparent conflicts of interest with the Company Clients. In any situation where the potential for conflict exists, the client’s interest must take precedence over personal interests. This includes situations where a client may be eligible for a “limited availability” investment opportunity offered to an employee. Employees are not to make a trade if the employee has reason to believe that a reasonable person may believe that the trade should first be offered to the Company Clients. However, the Company recognizes that there may be situations in which investment in securities with an apparent conflict of interest does not raise the type of conflict that these rules are designed to address. If there is any doubt, resolve the matter in the client’s favor and confer with the Compliance Department.

If both an Employee and a client of the Company are engaging in transactions involving a Publicly-Traded Security (defined below) or a “Company Name” (defined below), an actual or apparent conflict of interest could arise. In those cases, transactions for client accounts must take precedence over transactions for Personal Accounts (as hereinafter defined) and personal transactions that create an actual or apparent conflict must be avoided.

 

B. Key Definitions

 

  1. Personal Account. The “Personal Account” of an Employee shall include each and every account (other than an account for the benefit of any Company Client) for which such Employee influences or controls investment decisions. Personal Account includes self-directed retirement and employer benefit accounts. An account for the benefit of any of the following will be presumed to be a “personal account” unless the Company agrees in writing with the employee otherwise:

 

    An employee (regular full-time and regular part-time).

 

    The spouse or domestic partner of an employee.

 

    Any child under the age of 22 of an employee, whether or not residing with the employee.

 

    Any other dependent of an employee residing in the same household with the employee.

 

    Any other account in which an employee has a beneficial interest. For example, an account for a trust, estate, partnership or closely held corporation in which the employee has a beneficial interest.

Exemption. If an employee certifies in writing to the Chief Compliance Officer (or, in the case of the Chief Compliance Officer, to a resident Managing Director) that (i) the certifying employee does not directly or indirectly influence the

 

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investment decisions for any specified account of such spouse, domestic partners, child or dependent person, and (ii) the person or persons making the investment decisions for such account do not make such decisions, in whole or in part, upon information that the certifying employee has provided, the Chief Compliance Officer (or resident Managing Director) may, in his or her discretion, determine that such an account is not an employee’s “personal account.”

 

  2. Reportable Securities. “Reportable Securities” are those securities for which quarterly transactions reports must be filed. Reportable Securities include any (a) equity or debt instrument traded on an exchange, through NASDAQ or through the “pink sheets,” over-the-counter or on any public market, (b) options to purchase or sell such equity or debt instrument, (c) warrants and rights with respect to such securities, (d) municipal bonds, (e) index stock or bond group options that include such equity or debt instrument, (f) futures contracts on stock or bond groups that include such equity or debt instrument, (g) any option on such futures contracts, (h) securities issued by mutual funds and closed-end funds (including PIC-Advised Mutual Funds) and (i) any private placement securities approved during a quarter; provided that Reportable Securities shall not include certificates of deposit, commercial paper and other high quality short-term debt instruments, U.S. treasury bills and other U.S. government-issued debt instruments.

 

  3. Pre-Clearance Securities. “Pre-Clearance Securities” are those securities – chiefly equity securities – which must be pre-approved by the Trading Desk prior to being traded. Pre-Clearance Securities include all publicly traded equity securities (including options, warrants, rights and unregistered interests in publicly traded securities index options and market derivatives); and all fixed income securities of the type eligible for investment by Company Clients. Pre- Clearance Securities do not include exchange traded funds (ETF), mutual fund shares (other than shares of PIC-Advised Mutual Funds), U.S. government securities, commodities or municipal securities. No pre-clearance is required on shares of PIC Advised Mutual Funds if they are being purchased pursuant to a pre-authorized automatic investment plan. But note, municipal securities transactions must still be reported on a quarterly basis. All employees who have self-directed PIC 401k plans must follow the procedure for obtaining pre-authorization for all trading done in their accounts. It is not necessary for the Compliance Department to receive duplicate statements for these accounts.

 

  4. Company Clients. “Company Clients” are any separate account, institutional or mutual fund portfolios that are under the management of the Company. This excludes portfolios of any sponsor wrap programs due to their small and constant cash flows which trigger frequent de minimus trades.

 

  5.

Company Names. “Company Names” [or “PIC Client Holdings”] include those securities and options, warrants, rights or other securities related to such Publicly Traded Securities that are currently held in any Company Client’s portfolio. Company Names also include the following securities specifically: Old Mutual

 

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stock and options, closed-end investment companies advised by the Company. A list of Company Names is available in the research library. In order to find out if a stock is a Company Name, the Compliance Department should be contacted. If an employee of the Company currently owns stock that becomes a PIC Client Holding at some point in the future, the employee is subject to the 60 day holding period restriction effective the day the stock becomes a PIC Client Holding.

 

  6. PIC-Advised Mutual Funds. “PIC-Advised Mutual Funds” are any registered investment companies for which PIC acts as an investment advisor or investment sub-advisor.

 

C. Policy Statement Regarding Trading for Personal Accounts

The Company does not wish to prohibit or even discourage responsible personal investing by its employees. The Company believes that personal investing can sharpen the investment acumen of employees to the ultimate benefit of clients. However, the Company recognizes that the personal investment transactions of its employees demand the application of a strict code of ethics and must be appropriately circumscribed so as to not create a high level of distraction. The Company requires that all personal investment transactions be carried out in a manner that does not endanger the interest of any client or create any apparent or actual conflict of interest between the Company or the employee, on the one hand, and the client, on the other hand. At the same time, the Company believes that if investment goals are similar for clients and employees, it is logical and even desirable that there be common ownership of some securities. As well, the Company recognizes that there may be occasions when investment in securities which appear to raise a conflict of interest do not raise the type of conflict that these rules are designed to address. Therefore, the Company has adopted the procedures set forth below.

 

D. Procedures Regarding Trading for Personal Accounts by Employees other than Non-Resident Directors

 

  1. Trading Procedures. The following procedures must be followed by all Employees, other than Non-Resident Directors, before buying or selling securities for a Personal Account.

 

  (i) Confirm that the Employee is not in receipt of Inside Information.

Each employee wishing to buy or sell a security for a Personal Account should first confirm that he or she is not in receipt of any material, nonpublic information (i.e., “inside information”) that would affect the price of that security.

 

  (ii) Confirm that the trade is not an opportunity that should be offered to Company Clients.

Employees are not to make a trade if the Employee has reason to believe that the trade should first be offered to Company Clients, such as the situation where a client may be eligible for a “limited availability” investment opportunity offered to an employee. If you have any doubt, resolve the matter in the client’s favor and confer with the Compliance Department.

 

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  (iii) Seek Pre-Approval of all trades made in “Pre-Clearance Securities,” including “Company Names.”

An Employee wishing to buy or sell any publicly traded equity security or fixed income security that is eligible for client investment (see definition above) for any Personal Account shall request approval to buy or sell such Security. Approval can be obtained by completing and submitting to the Trading Desk an “Intention to Execute Employee Personal Trades” form (a sample form is attached) or submitting a request via personal trading software. Employees are not permitted to call into the Trading Desk for pre-approval of Personal Trading Transactions. All Employees, other than Non-Resident Directors, are required to complete the “Intention to Trade Form/Employee Personal Trades” and hand carry the form into the Trading Department for approval. Please be certain that the top portion of the form is completed (stock price is not necessary) before it is submitted to Trading. In return, an Officer of Trading will execute the bottom copy of the form and return it to you to retain for the quarterly reporting. When using personal trading software, an employee must follow the procedures built into the software program.

If you are traveling, you must have your assistant complete the top portion of the form and hand carry it to the Trading Department for approval. From that point, the above procedure will apply.

 

  (iv) Blackout Period.

Employees, other than Non-Resident Directors, may not buy or sell a security, other than mutual fund shares, within 7 calendar days either before or after a purchase or sale of the same security by a Company Client. Personal trades for Employees, however, shall have no effect on a Company Client’s ability to trade. For example, if within the seven-day period following a personal trade, a decision is made to purchase or sell the same security for a Company Client, the trade should be done for the Company Client and an explanation of the circumstances must be reviewed by the Compliance Department.

 

  (v) No Open Orders for Clients; No Company Client Trades.

Prior to approving all personal trading transactions, the authorized Officer of Trading will conduct a search of all portfolios to see if the stock is a Company Name. Even if the stock is held in only 1 portfolio, the stock will be treated as a Company Name. However, if it is determined by the Compliance Department that the stock held in such portfolio is “restricted” or “frozen”, the Compliance Department may make an exception and treat

 

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the stock as a non-Company Name. Once an authorized Officer of Trading has determined the security is a Company Name, a search will be conducted to determine if any Company Clients traded in the same security in the prior 7 calendar days. If there are no trades, a search will be done to identify any open orders for Company Clients. The Officer of Trading will be responsible for printing an open blotter to verify that there are no open orders on the desk at the time which the trade was submitted. If no trades were executed for Company Clients in the previous 7 calendar days and there are no open orders to buy or sell the same security at the time the trade was submitted, the approval will be given. A request to trade a Pre-Clearance Security will be approved automatically if the security is not a Company Name.

 

  (vi) Prompt Execution; No Limit Orders; No Option Writing.

All approved trades must be executed promptly. For Pre-Clearance Securities that are Company Names, this means before the close of business on the day the approval is given. For Pre-Clearance Securities that are not Company Names, this means before the close of trading on the third business day after the day approval is given. If the trade is not executed promptly within these limits, another “Intention To Execute Employee Personal Trades” form must be submitted. No Pre-Clearance Security may be the subject of an open limit order or stop loss order that continues in effect beyond the limited execution periods specified above. Employees may not write options, or do shorts or covers on a Pre-Clearance Security that is a Company Name.

 

  (vii) Contrary Positions: Trading in the Opposite Direction from Company Clients.

Trades for Personal Accounts should be consistent with recent trades that the Company has placed in the same security on behalf of clients. Therefore, an Employee generally should not take a position in a Company Name contrary to the position taken by the Company for its clients. A trade that is not consistent with client activity should be based on specific need and should be accomplished in a manner that will likely have no material impact on the market price of the Company Name because of the size of the proposed trade, the daily trading volume of the Company Name, or other factors. If a trade is a contrary trade, that fact should be noted on the “Intention To Execute Employee Personal Trades” form. Contrary positions will be allowed if they are taken to met a personal financial necessity (please specify the necessity). Contrary positions will not be allowed to facilitate an investment strategy decision or strictly for financial gain. Gains taken for tax benefit will not be permitted. However, contrary positions will be allowed if the position is liquidated at a loss regardless of whether the position was held for 60 days or less.

 

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  2. Prohibition on New Issue Purchases. Employees, other than Non-Resident Directors, are prohibited from buying new issues (initial or secondary, “hot” or not). Note: this prohibition does not apply to fixed income securities such as municipal bonds. New issues may be purchased on the second business day after they begin trading in the secondary market. Should any person participate in a new issue through a separate investment vehicle (i.e., the person owns an interest in a limited partnership that purchases new issues), the person shall notify the Chief Compliance Officer of that vehicle’s purchase of a new issue immediately upon becoming aware of its purchase.

A Non-Resident Director wishing to buy any new issue for any Personal Account shall request approval from the Chief Compliance Officer to buy such security.

 

  3. Restrictions on the Acquisition of Private Placements. Employees who purchase private placements (i.e., restricted or unregistered securities) may do so subject to the following restrictions. Each and every private placement must be approved in advance by the Chief Compliance Officer. The investment will be disallowed if it represents a present or future conflict for the Company. The private placement must be acquired on terms that are similar to the terms offered to other private investors. If the acquiring Employee has any specific knowledge of an imminent public offering or has any other material nonpublic information about the issuer that is not available to other similarly situated private investors, the private placement should not be acquired. Any Employee wishing to dispose of a private placement that has subsequently become registered or converted into a freely tradable security must also obtain prior approval from the Compliance Department. Any Employee owning a private placement is prohibited from contributing analysis or recommendations regarding such security or its issuer to the Company’s Investment Committee. Private placements include investments in private investment partnerships, but do not include the portfolio securities of such partnerships (for example, a distribution from a venture capital partnership of a stock that has gone public can be sold immediately).

 

  4. Ban on Short-Term Trading Profits. Employees, other than Non-Resident Directors, are expected to refrain from trading for short term profits. To discourage such trading, all profits realized from Company Names or shares of PIC-Advised Mutual Funds, within a period of sixty (60) days from the date of such an Employee’s most recent opening transaction in that security (e.g., the most recent acquisition in the case of a sale, the opening of a short position in the case of a cover transaction), shall be disgorged to the Company or to a charitable organization at the Company’s direction. If the position is being sold at a loss, the 60 day holding period will be waived. Day Trading (buying and selling in the same security on the same business day) on Company Names and Non-Company names is strictly prohibited.

 

  5.

Exceptions and Waivers. In appropriate circumstances (e.g., financial need, extreme market conditions, unexpected corporate developments, discovery of inadvertent violation, sale of shares of PIC Advised Mutual Funds purchased

 

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within the last 60 days pursuant to an automatic investment plan), the Compliance Department may grant an exception or waiver to permit specifically requested trading. A memorandum describing the scope of circumstances of any such waiver/exception shall be created and maintained in the Employee’s files and part of the Company’s books and records.

 

E. Reports of Personal Transactions and Securities Ownership

 

  1. Submission of Reports. In order for the Company to monitor compliance with its insider trading and conflict of interest policies and procedures, each Employee shall submit:

 

  (i) a signed “Quarterly Personal Transaction Report” (a form of which is attached) for all trades in Reportable Securities in each of his or her Personal Accounts. The report shall be submitted to the Compliance Department within ten (10) calendar days following the end of each calendar quarter regardless of whether any trading activity took place in that account during the quarter and shall include the date of the transaction, the title of the security, the exchange ticker symbol or CUSIP number of the securities, the interest rate and maturity date (if applicable), the number of shares of each Reportable Security involved, the nature of the transaction (i.e. purchase, sale), the price of the Reportable Security at which the transaction was effected, the name of the broker, dealer or bank with or through which the transaction was effected, and the date that the report is submitted by the Employee; and

 

  (ii) a signed “Initial Holdings Report” (a form of which is attached) for all securities in each of his or her Personal Accounts. The report shall be submitted to the Compliance Department within ten (10) calendar days following the first day of employment with the Company, shall be current within 45 days of the first day of employment, and shall include the title, and as applicable the exchange ticker symbol or CUSIP number, the number of shares of each security in which the Employee had any direct or indirect beneficial ownership when the person became an employee, the name of any broker, dealer, or bank with whom the employee maintained an account in which any securities were held for the direct or indirect benefit of the employee as of the date the person became an employee, and the date that the report is submitted by the employee; and

 

  (iii)

a signed “Annual Holdings Report” (a form of which is attached) for all securities in each of his or her Personal Accounts. The report shall be as of the end of the annual period and shall be submitted to the Compliance Department within thirty (30) calendar days following the end of the annual period. The report shall include the title, and as applicable the exchange ticker symbol or CUSIP number, the number of shares of each security in which the employee had any direct or indirect beneficial ownership, the name of the broker, dealer or bank with whom the

 

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employee maintains an account in which any securities are held for the direct or indirect benefit of the employee, and the date that the report is submitted by the employee.

Instead and in lieu of the reports called for by this Section III.E.1, an Employee may direct his or her brokers to provide the Company with copies of all trade confirmations and account statements in his or her Personal Accounts as long as such confirmations and statements are received within the time periods set forth above.

If the tenth or thirtieth day is not a work-day, then the report must be submitted earlier. The Employee should sign and submit the report certifying the completeness of the information included therein and certifying certain other matters. The reports contain important acknowledgments.

 

  2. Review of Reports. The Compliance Department shall promptly review each Quarterly, Initial and Annual Personal Transaction Reports. With respect to the quarterly report, the Compliance Department will compare the transactions reported in Pre-Clearance Securities and Company Names against the lists of Company Names and the Pre-Clearance Forms that were prepared during the quarter to determine whether any violations of the Company’s policies or of the applicable securities laws took place. If the Compliance Department is aware that any individual’s Quarterly Initial and Annual Personal Transaction Report fails to contain all required information, the Compliance Department shall promptly contact such individual to obtain the missing information.

 

F. Additional Restrictions

 

  1. Directorships Require Approval. Employees, other than Non-Resident Directors, should discuss with the Compliance Department any invitations to serve on the board of directors for any private or public operating company (non- profits, excepted). Care in this area is necessary because of the potential conflict of interest involved and the potential impediment created for accounts managed by the Company in situations where employees serving on boards obtain material nonpublic information in connection with their directorship, thereby effectively precluding the investment freedom that otherwise would be available to clients of the Company. Each Employee should advise the Compliance Department annually of any operating company directorship held by that Employee.

 

  2. No Special Favors. No Employee may purchase or sell securities pursuant to any reciprocal arrangement arising from the allocation of brokerage or any other business dealings with a third party. Accepting information on or access to personal investments as an inducement to doing business with a specific broker on behalf of clients of the Company – regardless of the form the favor takes – is strictly prohibited. Personal transactions which create the appearance of special favoritism should be avoided.

 

14


  3. Restrictions on Gifts. From time to time the Company and/or Employees may receive gifts from third parties. Any gift received that has a value in excess of a de minimis amount should not be accepted. Generally, a gift of more than $500 would not considered de minimus. Each Employee is responsible for determining the value of gifts received from third parties and whether a particular gift has de minimis value in the circumstances. However, Employees are reminded that the perception of a gift’s value by others is as important as the assessment of the gift’s value in the Employee’s judgment. The restrictions on the receipt of gifts shall not be applicable to Non-Resident Directors to the extent such gifts are received other than in connection with the Company.

 

IV. SANCTIONS

 

A. Procedural Noncompliance

Noncompliance with the procedural requirements of this Code of Ethics (e.g., failure to submit quarterly reports in a timely manner) shall be noted. Repeated noncompliance (i.e., three similar failures to comply with procedural requirements within a one year period) will be considered a violation and may result in disciplinary action.

 

B. Violations and Trading Noncompliance

Failure to comply with the preapproval requirements and/or substantive prohibitions of this Code of Ethics with respect to trading activity may result in immediate disciplinary action even for “first-time offenses.” In this regard, the Company believes that trading activity which creates an actual or apparent conflict of interest constitutes a clear violation and will generally always result in disciplinary action absent highly extenuating circumstances.

 

C. Extenuating Circumstances

The Company recognizes that instances of inadvertent noncompliance or violation may occur or that extenuating circumstances may apply to specific instances of noncompliance or violation. In such an event, the Employee shall immediately notify the Compliance Department which shall have discretion to determine appropriate remedial action.

 

D. Disciplinary Actions

The Company may take one or more of the following disciplinary actions: issuing a disciplinary memorandum; issuing a violation report; issuing a letter of reprimand; requiring disgorgement of profits; requiring trade to be broken at Employee’s expense; requiring corrective action; suspension of trading privileges; requiring Employee to have broker send the Company duplicate account statements; requiring the consolidation of Employee accounts with certain brokers; monetary fines; suspension, dismissal and reporting the violation to the appropriate regulatory authorities. Absent special circumstances, the disciplinary actions set forth on the attached Schedule of Disciplinary Actions will be applied.

 

15


E. Trading Department Sanctions

If any Officer of Trading fails to fully comply with the procedures for approving personal trades, the Officer will be personally subject to the sanctions as stated in this policy. Where the Employee has requested the approval of a trade that violates these policies, the Employee is also subject to the sanctions as stated in this policy.

 

V. RESPONSIBILITIES OF COMPLIANCE DEPARTMENT

 

A. Making Compliance Manageable

The Compliance Department will do everything it can to make compliance with the Company’s Code of Ethics easy. Among the things that the Compliance Department will do are the following:

 

  1. Be Available. The Compliance Department will consist of enough individuals so that there is always access to a representative of the Compliance Department.

 

  2. Keep Company Lists Current. The Compliance Department will make sure that Employees have access through the research library to current Company Lists so that Company Names can be readily identified.

 

  3. Update Forms and Assist in Reporting. The Compliance Department will make sure that all Employees have access to the forms necessary to report personal securities transactions. The Compliance Department will assist Employees in making arrangements to accommodate vacation and travel schedules that might interfere with timely pre-clearance, execution and/or report submission.

 

  4. Respect Confidentiality. The Compliance Department understands the sensitivity of personal financial information and will maintain all information in a confidential manner that respects each individual Employee’s privacy.

 

VI. SUMMARY

 

A. Importance of Adherence to Procedures

It is very important that all Employees adhere strictly to this Code of Ethics. Any violations of such policies and procedures may result in serious sanctions, including dismissal from the Company.

 

B. Reporting of Violation of the Code

All Employees should report promptly to the Chief Compliance Officer any violation of this Code of Ethics. All such reports will be treated confidentially to the extent permitted by law and the Company shall not retaliate against any individual who report a violation of this code.

 

16


C. Annual Review of Code by Board of Directors of the Company

This Code of Ethics shall be reviewed and re-approved by the Board of Directors of the Company at least annually.

 

D. Annual Acknowledgment of Procedures

Each Employee shall submit an annual acknowledgment that the Employee has received a copy of the current version of this Code of Ethics and is familiar with such Code of Ethics. It shall be the responsibility of the Compliance Department to ensure that a copy of the current Code of Ethics is circulated to each Employee on an annual basis and/or as it is amended and that the receipt of any amendment is acknowledged by each such Employee.

 

E. Retention of Records

The Company shall retain all documents produced by the Chief Compliance Officer as required by this Code and all documents required to be submitted by Employees under this Code, including, all duplicate confirmations and any documents referred to or incorporated therein, as part of the books and records required by the Advisers Act, as amended, and the rules thereunder.

 

F. Questions

Any questions regarding the Company’s policies or procedures regarding insider trading, confidential information and conflicts of interest should be referred to the Compliance Department.

 

17


Schedule of Disciplinary Action – Non-Executive Employees

Set forth below are the typical disciplinary actions that will be taken in the event of noncompliance with, or violation of, this Code of Ethics by a Non-Executive Employee. “Non-Executive Employees” are any Employees of Provident Investment Counsel other than those Employees with a status of Vice President or above.

Provident Investment Counsel is an “at will” employer and reserves the right to impose different penalties at any time, including immediate dismissal. Only certain types of events are listed; other events of noncompliance (also referred to as procedural non-compliance) or violations will be dealt with on a case-by-case basis. Exceptional circumstances may warrant more lenient or severe action, and this Schedule may be overridden by the Compliance Officer with the consent of a majority of the Managing Directors. All fines on disgorgement amounts will be contributed by the Company to a non-profit organization of the Company’s choosing. The Schedule of Disciplinary Action is to be strictly construed except in exceptional circumstances, such as: personal or family illness, death in family, sequestered jury service, or any other involuntary emergency absences.

1. Examples of Procedural Noncompliance

 

*Event

 

1st Occurrence

 

2nd Occurrence*

 

3rd Occurrence*

 

Subsequent*

Late report (pre-clearance or quarterly   Disciplinary memorandum   Disciplinary memo and $50 fine   Disciplinary memo and $100 fine   Violation report and $500 fine
Failure to submit report or submission of incomplete report (pre-clearance or quarterly)   Disciplinary memo and must complete form   Disciplinary memo and $50 fine; must complete form   Disciplinary memo and $100 fine; must complete form   Disciplinary memo and $500 fine; must complete form
Report submitted with missing trades:        

Non-Company

Names

  Disciplinary memorandum   Disciplinary memo and $100 fine   Disciplinary memo and $200   Violation report and $500 fine

Company

Names

 

Violation report and

$500 fine

 

Violation report and

$1,000 fine

 

Violation report and

$2,500 fine

  Violation report and $5,000 fine
Unauthorized short-term trading   Disciplinary memo and disgorgement  

Disciplinary memo, disgorgement and

$500 fine

  Violation report, disgorgement and $1,000 fine   Violation report, disgorgement and $2,500 fine
  2. Examples of Violations  
Late execution on pre-cleared trade   Disciplinary memo and $100 fine   Disciplinary memo and $200 fine   Violation report and $500 fine   Violation report and $1,000 fine
Failure to pre-clear   Disciplinary memo and $200 fine   Violation report and $500 fine   Violation report and $1,000 fine   Termination

 

* Within any period of 4 consecutive reporting periods

 

18


Schedule of Disciplinary Action – Executive Employees

Set forth below are the typical disciplinary actions that will be taken in the event of noncompliance with, or violation of, this Code of Ethics by an “Executive Employee.” “Executive Employees” are all Employees of Provident Investment Counsel with a status of Vice President or above (including any Non-Resident Directors).

Provident Investment Counsel is an “at will” employer and reserves the right to impose different penalties at any time, including immediate dismissal. Only certain types of events are listed; other events of noncompliance (also referred to as procedural non-compliance) or violations will be dealt with on a case-by-case basis. Exceptional circumstances may warrant more lenient or severe action, and this Schedule may be overridden by the Compliance Officer with the consent of a majority of the Managing Directors. All fines on disgorgement amounts will be contributed by the Company to a non-profit organization of the Company’s choosing. The Schedule of Disciplinary Action is to be strictly construed except in exceptional circumstances, such as: personal or family illness, death in family, sequestered jury service, or any other involuntary emergency absences.

1. Examples of Procedural Noncompliance

 

*Event

 

Ist Occurrence

 

2nd Occurrence*

 

3rd Occurrence*

 

Subsequent*

Late report (pre-clearance or quarterly   Disciplinary memorandum   Disciplinary memo and $50 fine   Disciplinary memo and $100 fine   Violation report and $500 fine
Failure to submit report or submission of incomplete report (pre-clearance or quarterly)   Disciplinary memo and must complete form   Disciplinary memo and $50 fine; must complete form   Disciplinary memo and $100 fine; must complete form   Disciplinary memo and $500 fine; must complete form

Report submitted

with missing trades:

       

Non-Company

Names

  Disciplinary memorandum   Disciplinary memo and $100 fine   Disciplinary memo and $200   Violation report and $500 fine

Company

Names

  Violation report and $500 fine   Violation report and $1,000 fine   Violation report and $2,500 fine   Violation report and $5,000 fine
Unauthorized short-term trading  

Disciplinary memo

and disgorgement

  Disciplinary memo, disgorgement and $500 fine   Violation report, disgorgement and $1,000 fine   Violation report, disgorgement and $2,500 fine
  2. Examples of Violations  

Late execution on

pre-cleared trade

  Disciplinary memo and $1,000 fine   Disciplinary memo and $2,500 fine   Violation report and $5,000 fine   Violation report and $10,000 fine
Failure to pre-clear   Disciplinary memo and $2,500 fine   Violation report and $5,000 fine   Violation report and $10,000 fine   Termination

 

* Within any period of 4 consecutive reporting periods

 

19


PROVIDENT INVESTMENT COUNSEL, INC.

ANNUAL SECURITIES OWNERSHIP REPORT

 

1. I hereby acknowledge that I have read and understand the Code of Ethics (the “Code”) for Provident Investment Counsel, Inc. and recognize that I am subject to the Code.

 

2. I hereby certify that, during the year ended December 31, 200_, I have complied with the requirements of the Code and I have reported all securities transactions required to be reported pursuant to the Code.

 

3. Except as noted below, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Fund, such as any economic relationship between my transactions and securities held or to be acquired by the Fund or any of its portfolios.

 

4. As of December 31, 200_, I had a direct or indirect beneficial ownership in the securities listed below. You do not need to report transactions in direct obligations of the U.S. government, bankers’ acceptances, bank certificates of deposit, commercial paper, high quality short-term debt instruments and registered open-end investment companies (mutual funds).

Please check this box if an addendum is attached listing additional securities    ¨

 

SECURITY

(include interest rate and maturity date, if applicable)

   TICKER    NO. OF
SHARES
  

PRINCIPAL
AMOUNT

(Market
Value)

   TYPE OF
HOLDING
(Direct or Indirect)
   BROKER, DEALER
OR BANK WHERE HELD
              
              
              

This report (i) excludes transactions with respect to which I had no direct or indirect influence or control; and (ii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.

 

5. As of the date below I maintain accounts with the brokers, dealers or banks listed below to hold securities for my direct or indirect benefit.

Please check this box if an addendum is attached listing additional accounts ¨

 

BROKER, DEALER OR BANK THROUGH WHOM EFFECTED

   BENEFICIAL
OWNER OF
ACCOUNT
   ACCOUNT NUMBER    DATE
ACCOUNT
OPENED
        
        
        
        

 

Signature:      
 

Employee

Name:      
Date:      
 

(No later than 30 days after year-end)

 

20


PROVIDENT INVESTMENT COUNSEL, INC.

ADDENDUM TO THE

ANNUAL HOLDINGS REPORT

 

SECURITY

(include interest rate and maturity date, if applicable)

   TICKER    NO. OF
SHARES
   PRINCIPAL
AMOUNT
(Market
Value)
  

TYPE OF
HOLDING

(Direct or
Indirect)

   BROKER, DEALER
OR BANK WHERE
HELD
              
              
              
              
              
              
              
              
              

This report (i) excludes transactions with respect to which I had no direct or indirect influence or control; and (ii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.

 

BROKER, DEALER OR BANK THROUGH WHOM EFFECTED

   BENEFICIAL
OWNER OF
ACCOUNT
   ACCOUNT
NUMBER
   DATE
ACCOUNT
OPENED
        
        
        
        
        

 

Signature:      
 

Employee

Name:      
Date:      
 

(No later than 30 days after year-end)

 

21


PROVIDENT INVESTMENT COUNSEL, INC.

INITIAL HOLDINGS REPORT

 

1. I hereby acknowledge that (i) I received of a copy of the Code of Ethics (the “Code”) for Provident Investment Counsel, Inc.; (ii) I have read and understand the Code; (iii) and I recognize that I am subject to the Code.

 

2. Except as noted below, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Fund, such as any economic relationship between my transactions and securities held or to be acquired by the Fund or any of its portfolios.

 

3. As of the date below I had a direct or indirect beneficial ownership in the following securities. You do not need to report transactions in direct obligations of the U.S. government, bankers’ acceptances, bank certificates of deposit, commercial paper, high quality short-term debt instruments and registered open-end investment companies (mutual funds).

Please check this box if an addendum is attached listing additional securities ¨

 

SECURITY

(include interest rate and maturity date, if applicable)

   TICKER    NO. OF
SHARES
   PRINCIPAL
AMOUNT
(Market
Value)
  

TYPE OF
HOLDING

(Direct or
Indirect)

   BROKER, DEALER
OR BANK WHERE
HELD
              
              
              
              
              
              

This report (i) excludes transactions with respect to which I had no direct or indirect influence or control; and (ii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.

 

4. As of the date below I maintain accounts with the brokers, dealers or banks listed below to hold securities for my direct or indirect benefit.

Please check this box if an addendum is attached listing additional accounts ¨

 

BROKER, DEALER OR BANK THROUGH WHOM EFFECTED

   BENEFICIAL
OWNER OF
ACCOUNT
   ACCOUNT NUMBER    DATE
ACCOUNT
OPENED
        
        
        
        
        

 

Signature:      
 

Employee

Name:      
Date:      

 

22


PROVIDENT INVESTMENT COUNSEL, INC.

ADDENDUM TO THE

INITIAL HOLDINGS REPORT

 

SECURITY

(include interest rate and maturity

date, if applicable)

   TICKER   

NO. OF

SHARES

  

PRINCIPAL

AMOUNT

(Market Value)

  

TYPE OF

HOLDING

(Direct or

Indirect)

  

BROKER, DEALER OR BANK

WHERE HELD

              
              
              
              
              
              
              
              
              
              
              

This report (i) excludes transactions with respect to which I had no direct or indirect influence or control; and (ii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.

 

BROKER, DEALER OR

BANK THROUGH WHOM

EFFECTED

  

BENEFICIAL OWNER

OF ACCOUNT

  

ACCOUNT NUMBER

  

DATE ACCOUNT

OPENED

        
        
        
        
        

 

Signature:     
  Employee
Name:     
Date:     

 

23


PROVIDENT INVESTMENT COUNSEL

QUARTERLY REPORT OF SECURITIES TRANSACTIONS

 

         
    Name of Employee     For the quarter ending

 

Date of

Trade

  

Buy/

Sell

  

PIC

Stock

(ü)

  

Number of

Shares or

Amount

  

Security Name (include

interest rates and

maturity

date, if applicable)

   Symbol   

Name of Broker, Dealer

or Bank through

Whom Effected

  

Price

per

Share

                    
                    
                    
                    
                    
                    
                    

The transactions listed above are all the transactions in securities I have effected for every account in my name, my spouse’s name and the name of each of my minor children, every account for which I act as trustee or executor, and every other account I control including client accounts in which I have or acquire any direct or indirect beneficial ownership, except (1) any such account where I have no direct or indirect influence or control over investments and for which I have provided no information used by others to make investment decisions and (2) transactions in securities which are direct obligations of the United States.

 

           
Employee Signature       Date

List any brokerage accounts opened during the quarter over which you have direct (your personal account) or indirect (any account over which you have a beneficial interest) control

 

BROKER, DEALER OR

BANK THROUGH

WHOM EFFECTED

  

BENEFICIAL OWNER

OF ACCOUNT

  

ACCOUNT NUMBER

  

DATE ACCOUNT

OPENED

        
        
        
        

Directions:

A report on this form is required from every employee by Rule 204-2(a)12 of the Investment Advisers Act of 1940. It is to be filed quarterly within ten (10) days after the end of each quarter. If no securities transactions have been effected during the quarter, you should submit a report for the quarter indicating “no transactions”

 

24


PROVIDENT INVESTMENT COUNSEL

INTENTION TO TRADE FORM/EMPLOYEE PERSONAL TRADES

Employee Name: ____________________________________________

 

Date

   Buy or Sell    PIC Name   

Shares Or

Amount

  

Security

Name

   Symbol    Broker    Price
                    
                    
                    
                    

 

¨ Trade involves taking a contrary position to clients

 

Explanation of contrary position:________________________

    Employee Signature:______________________________
                               Date: ______________________________

GUIDELINES

Who should submit this form?

 

¨ All regular and long-term temporary PIC employees.

When should this form be submitted?

 

¨ Before the trade is placed. If traveling, refer to travel policy outlined in Code of Ethics.

Whose trades are covered?

 

¨ PIC employees and any account over which employee controls investment decisions.

How is approval granted?

 

¨ Approval is automatic for non-PIC Names and PIC-advised mutual funds. For PIC Names, approval will be granted if a Company Client has not traded in the same security in the prior 7 calendar days and there are no open orders at time of submission.

How long is approval valid?

 

¨ The trade must be executed on the day approval is given for PIC names, or within 3 business days for non-PIC names and PIC- advised mutual funds.

Who grants the approval?

 

¨ Trading Department officers.

What trades require approval?

 

¨ Stocks, options, OEX options, warrants and PIC-advised Mutual Funds.

What trades do not require approval?

 

¨ CDs, commercial paper, open-end mutual funds (other than PIC-Advised Mutual Funds), exchange traded funds (ETF), banker acceptances, U.S. government bonds and municipal bonds.

Are short term trades acceptable?

 

¨ Employees may not trade for short-term profits in PIC names or PIC-advised mutual funds. Gains on any short-term trades (60 days or less) in PIC names or PIC-advised mutual funds will be forfeited. Day trading (buying or selling in the same security in the same business day) in any securities is strictly prohibited.

Are contrary positions acceptable?

 

¨ Yes, but only in accordance with procedures outlined in Code of Ethics and must be explained above.

Are Initial Public Offerings (IPOs) and secondaries allowed?

 

¨ Employees are prhinbited form buying new issues (initial or secondary, hot or not). New issues may be purchased on the second business day after they begin trading on the secondary market.

The PIC Trading Policy is designed to avoid the actual or apparent conflicts of interest between the interests of PIC or its employees and the interests of PIC’s clients. The guidelines presented above address the most commonly asked questions. Please refer to the PIC Trading Policy for a complete explanation of these and other issues, or contact the Compliance Department directly.

TRADING DEPARTMENT APPROVAL

APPROVAL HAS BEEN GRANTED FOR THE ABOVE TRANSACTION(S) IN ACCORDANCE WITH THE CURRENT PIC PERSONAL TRADING POLICY AND COMPLIANCE PROCEDURES AS INDICATED BELOW:

 

¨ Securities are not PIC Names (approval is automatic); trades must be completed by close of business on third business day after date on this form.

 

¨ Securities are PIC advised mutual funds (approval is automatic); trades must be completed by close of business on third business day after date on this form.

 

¨ Securities are PIC Names and no Company Client has traded in the same security(ies) in the prior 7 calendar day and there are no open orders for PIC clients to buy or sell the above security(ies) at the time reviewed (see time stamp).

Notes (e.g., explain any unusual detail):___________________________________________________________________________

                                                                                                                                                                                                                                                                       

 

           
Vice President of Trading Signature     Date and Time Stamp

 

25

EX-99.P4 9 dex99p4.htm CODE OF ETHICS OF BARROW, HANLEY, MEWHINNEY & STRAUSS Code of Ethics of Barrow, Hanley, Mewhinney & Strauss

Exhibit 99.P4

Nuveen Investments, Inc.

Code of Business Conduct and Ethics

 

A. Purpose

Nuveen Investments, Inc. (the “Company”) strives to meet the highest standards of conduct in all of its business activities. The Company has built a reputation for honesty and integrity. Continuing to act in a manner consistent with our reputation is essential to the best interests of the Company and its employees, as well as in the best interests of the Company’s investors and customers and of society in general. The reputation and integrity of the Company can be maintained only if employees, officers and directors take care to act within the highest standards of conduct and avoid situations which are, or which may appear to be, improper. No employee will be asked or expected to compromise these high standards of conduct. Employees are encouraged to contact the Company’s Ethics Officer with any questions on topics covered by this Code. For purposes of this Code, the “Ethics Officer” shall be the Company’s General Counsel or other officer of the Company designated from time to time by the Company’s Chief Executive Officer or General Counsel and identified to employees as such. In addition, employees may contact the Company’s Director of Compliance at any time regarding these topics.

 

B. Provisions Applicable to all Employees, Officers and Directors

 

  1. Compliance with Laws and Company Policies

The Company operates in a highly regulated business environment, and has adopted many legal and compliance policies and procedures applicable to employees, officers and directors of the Company, as set forth in the Company’s Compliance Manual. These policies and procedures change from time to time to take account of changes in laws or regulations, changes in our business activities and experience under the prior policies and procedures.

All employees, officers and directors of the Company must respect and comply with all of the laws, rules and regulations which are applicable to the Company in the conduct of its business, including laws of the United States, other countries, and the states, counties, cities and other jurisdictions in which the Company conducts its business. All employees, officers and directors must also respect and comply with the various policies and procedures adopted by the Company.

Such legal compliance should include, without limitation, compliance with the “insider trading” prohibitions applicable to the Company and its employees, officers and directors. Generally, employees, officers and directors who possess or otherwise have knowledge of material, non-public information about the Company are not permitted to buy, sell or otherwise trade in the Company’s

 

(As last revised May 2004)


securities, whether or not they are using or relying upon that information. This restriction extends to sharing or tipping others about such information, especially since the individuals receiving such information might utilize such information to trade in the Company’s securities. The Company has implemented trading restrictions to reduce the risk of insider trading. Company employees, officers and directors are directed to the Company’s Insider Trading Policy or to the Company’s Legal Department if they have questions regarding the applicability of such insider trading prohibitions. The Company has also implemented a Codes of Ethics pursuant to the Investment Company Act of 1940 and the Investment Advisers Act of 1940 which, among other things, restrict trading by certain employees in securities that are being or may be purchased or sold in client accounts.

This Code of Business Conduct and Ethics does not summarize all laws, rules and regulations applicable to the Company and its employees, officers and directors. For additional information, please consult the Company’s Compliance Manual and the various guidelines which the Company has prepared on specific laws, rules and regulations.

 

  2. Conflicts of Interest

All employees, officers and directors of the Company should be scrupulous in avoiding a conflict of interest with regard to the Company’s interests. A “conflict of interest” exists whenever an individual’s private interests interfere or conflict in any way (or even appear to interfere or conflict) with the interests of the Company. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company, whether received from the Company or a third party. Employees, officers and directors are required to disclose to the Company’s Ethics Officer any significant interest they or any of their family members have in any transaction or other matter known by the employee, officer or director to be under consideration by the Company. Loans to, or guarantees of obligations of, employees, officers and directors and their respective family members may create conflicts of interest. Federal law prohibits most loans to directors and executive officers.

Conflicts of interest are prohibited as a matter of Company policy, unless approved by the Board of Directors or the Nominating & Governance Committee of the Board or pursuant to guidelines approved by the Board or the Nominating & Governance Committee. Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with the Company’s Ethics Officer. Any employee, officer or director who becomes aware of a conflict of interest or potential conflict should bring it to the attention of a supervisor or manager, the Company’s Ethics Officer or the Company’s General Counsel.

 

 

2

  

Code of Business Conduct and Ethics

(As last revised May 2004)


  3. Corporate Opportunity

All employees, officers and directors are prohibited from (a) taking for themselves personally opportunities that properly belong to the Company or are discovered through the use of corporate property, information or position; (b) using corporate property, information or position for personal gain; and (c) competing with the Company. Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

 

  4. Confidentiality

All employees, officers and directors of the Company must maintain the confidentiality of proprietary or confidential information entrusted to them by the Company or its suppliers or customers, except when disclosure is authorized by the Legal Department or required by laws, regulations or legal proceedings. Whenever feasible, employees, officers and directors should consult with the Company’s Ethics Officer if they believe they have an obligation to disclose confidential information. Confidential information includes all non-public information that might be of use to competitors of the Company, or harmful to the Company or its customers if disclosed.

 

  5. Fair Dealing

Each employee, officer and director should endeavor to deal fairly with the Company’s customers, suppliers, competitors, officers and employees. None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice. We seek to outperform our competitors fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. Possessing proprietary or trade secret information of others that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies, is prohibited.

 

  6. Protection and Proper Use of Company Assets

All employees, officers and directors should protect the Company’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company’s profitability. All Company assets should be used for legitimate business purposes.

 

  7. Business Records

All of the Company’s books and records shall be maintained in reasonable detail and in a manner that accurately reflects the true nature of all business transactions.

 

 

3

   Code of Business Conduct and Ethics
     (As last revised May 2004)


Records should always be retained or destroyed only in accordance with the Company’s record retention policies. In the event of litigation or governmental investigation implicating our business records, employees will receive a notice from the Company’s Legal department, and in that circumstance employees must maintain all related books and records until notified otherwise by the Company’s Legal department.

 

  8. Payments to Government Officials and Political Contributions

No payment can be made directly or indirectly to any employee, official or representative of any governmental agency or any party or candidate for the purposes of influencing any act or decision on behalf of the Company. Employees, officers and directors are free to participate as individuals in political activities, but are prohibited from engaging in such activities as a representative of the Company and from using the name or credibility of the Company in connection with political activities. The Company will not reimburse any employee, officer or director for any political contributions or similar expenses.

 

  9. Accounting Complaints

The Company’s policy is to comply with all financial reporting and accounting regulations applicable to the Company. If any employee, officer or director of the Company has concerns or complaints regarding questionable accounting or auditing matters of the Company, then he or she is encouraged to submit those concerns or complaints (anonymously or otherwise) to the Audit Committee of the Board of Directors. Such submissions may be directed to the attention of the Audit Committee, through the office of the Corporate Secretary, at the principal executive offices of the Company or through any “hotline” or similar reporting service provided by the Company for such purpose. The current, toll-free, confidential employee hotline number for such purpose is 1-877-209-3663.

 

  10. Public Company Reporting

As a public company, it is of critical importance that the Company’s filings with the Securities and Exchange Commission be accurate and timely. Depending on his or her position with the Company, an employee, officer or director may be called upon to provide necessary information to assure that the Company’s public reports are complete, fair and understandable. The Company expects employees, officers and directors to take this responsibility very seriously and to provide prompt accurate answers to inquiries related to the Company’s public disclosure requirements.

 

  11. Reporting Any Illegal or Unethical Behavior

Employees are encouraged to talk to their supervisors or managers, or to the Company’s Ethics Officer about any legal or ethical concern they may have.

 

 

4

   Code of Business Conduct and Ethics
     (As last revised May 2004)


Employees who believe that a violation of this Code or other illegal or unethical conduct by an employee, officer or director of the Company has occurred or will occur must promptly contact the Company’s Ethics Officer with such information. If they are unable, or do not believe it appropriate, to contact the Company’s Ethics Officer, then they should contact the General Counsel or the Audit Committee or Nominating & Governance Committee of the Board of Directors of the Company.

 

C. Provisions Applicable to Designated Senior Officers

 

  1. Background

The Company’s Chief Executive Officer, President, Chief Financial Officer, Controller, Treasurer, General Counsel and any other officer designated as the Company’s principal executive, financial or accounting officer in the Company’s periodic filings with the Securities and Exchange Commission or designated by the Company’s Board as reporting persons under Section 16 of the Securities Exchange Act of 1934 (collectively, the “Designated Officers”), are subject to the provisions set forth above relating to ethical conduct, conflicts of law and compliance with law, among other things. In addition, the Designated Officers are subject to the following additional specific responsibilities, as contemplated by Section 406 of The Sarbanes-Oxley Act of 2002.

 

  2. Reporting and Disclosure

The Designated Officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports to be filed by the Company with the Securities and Exchange Commission. Accordingly, it is the responsibility of each Designated Officer to promptly bring to the attention of the Disclosure Committee any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings and otherwise assist the Disclosure Committee in fulfilling its responsibilities as provided in the Company’s Disclosure Controls and Procedures as in effect from time to time.

 

  3. Internal Controls and Fraudulent Conduct

Each Designated Officer shall promptly bring to the attention of the Disclosure Committee and the Audit Committee any information he or she may have concerning (a) deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data, or (b) any fraud, whether or not material, that involves management of other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.

 

 

5

   Code of Business Conduct and Ethics
     (As last revised May 2004)


  4. Violations of this Code or of Laws or Regulations

Each Designated Officer shall promptly bring to the attention of the Company’s General Counsel and of the Audit Committee any information he or she may have concerning (a) any violation of this Code of Business Conduct and Ethics, including conflicts of interest involving management or other employees who have a significant role in the Company’s financial reporting, disclosures of internal controls, or (b) any violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business by the Company or any agent thereof.

 

D. General Provisions

 

  1. Retaliation

The Company will not permit retaliation of any kind by or on behalf of the Company and its employees, officers and directors against good faith reports or complaints of violations of this Code or other illegal or unethical conduct.

 

  2. Enforcement of this Code and Waivers

The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code by Designated Officer or Directors of the Company. Any waivers of the provisions of this Code for Designated Officers or Directors shall be made only by the Board of Directors or the Nominating & Governance Committee of the Board and shall be reported as required under the rules of the New York Stock Exchange, and any waivers from the provisions of Section C of this Code shall be made only by the Board of Directors or the Nominating & Governance Committee and shall be reported as required under the Securities Exchange Act of 1934 and the rules thereunder. The Disclosure Committee, as constituted under the Company’s Disclosure Controls and Procedures as in effect from time to time, or such other person or persons as may be designated by the Board of Directors, shall determine appropriate actions to be taken in the event of violations of this Code by employees who are not executive officers or directors of the Company. Any such actions taken by the Board of Directors, its designee or the Disclosure Committee, as the case may be, shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code, and shall include without limitation written notices to the individual who has been determined to be in violation of the Code, censure, demotion or re-assignment of the individual involved, suspension with or without pay or benefits and termination of employment. In determining what action is appropriate in a particular case, the Board of Directors, its designee or the Disclosure Committee, as the case may be, shall take into account all information it deems relevant in its business judgment, including the nature and severity of the violation, whether the violation was a single occurrence or series of occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been

 

 

6

   Code of Business Conduct and Ethics
     (As last revised May 2004)


advised prior to the violation as to the proper course of action, and whether or not the individual had committed other violations of this Code in the past.

 

  3. Amendment, Modification and Waiver

This Code may be amended or modified by the Board of Directors, and waivers may be granted as provided above, subject to the disclosure and other provisions of the Securities Exchange Act of 1934, and the rules thereunder and the applicable rules of the New York Stock Exchange.

 

 

7

   Code of Business Conduct and Ethics
     (As last revised May 2004)
EX-99.P5 10 dex99p5.htm CODE OF ETHICS OF WESTWOOD MANAGEMENT GROUP Code of Ethics of Westwood Management Group

Exhibit 99.P5

CODE OF ETHICS

(Adopted February 1, 2005)

Westwood Management Corporation

Westwood Trust

Westwood Holdings Group, Inc.

Each Registered Investment Company or series thereof (each of which is considered to be a Company for this purpose) for which the company listed above presently or hereafter provides investment advisory services, other than a money market fund or a fund that does not invest in Securities.

 

I. Introduction

The purpose of this Code of Ethics is to promote honest and ethical conduct, focus the Board of Directors and management of Westwood Holdings Group, Inc. on areas of ethical risk, provide guidance to directors, officers and employees to help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct and help to preserve the culture of honesty and accountability at the Company.

This Code of Ethics establishes rules of conduct for persons who are associated with the companies named above or with the registered investment companies for which such companies provide investment advisory or principal underwriter services. The Code governs their personal investment and other investment-related activities.

The basic rule is very simple: put the client’s interests first. The rest of the rules elaborate this principle. This Code is intended to assist the companies in fulfilling their obligations under the law. Article I lays out who the Code applies to, Article II deals with personal investment activities, Article III deals with other sensitive business practices, and subsequent parts deal with reporting and administrative procedures.

The Code is very important to the companies and their employees. Violations can not only cause the companies embarrassment, loss of business, legal restrictions, fines and other punishments, but for employees can lead to demotion, suspension, firing, ejection from the securities business, and very large fines.

 

II. Applicability

 

  (A) The Code applies to each of the following:

 

  1.

The Companies named or described at the top of page one of the Code and all entities that are under common management with


 

these Companies or otherwise agree to be subject to the Code (“Affiliates”). A listing of the Affiliates, which is periodically updated, is attached as Exhibit A.

 

  2. Any officer, director or employee of any Company, Affiliate or Fund Client (as defined below).

 

  3. With respect to all of the Companies, Affiliates and Fund Clients except Westwood Management Corporation, any natural person who controls any of the Companies, Affiliates or Fund Clients and who obtains information regarding the Company’s or the Affiliates’ investment recommendations or decisions. However, a person whose control arises only as a result of his official position with such entity is excluded. Disinterested directors of Fund Clients and independent directors of the Companies (excluding Westwood Management Corporation) for example, are excluded from coverage under this item.

 

  4. Any director, officer, general partner or person performing a similar function even if he has no knowledge of and is not involved in the investment process. Disinterested directors of Fund Clients and independent directors of the Companies (excluding Westwood Management Corporation) are included in coverage under this item.

 

  5. As an exception, the Code does not apply to any director, officer or employee of any fund Client (such as certain of The Gabelli Westwood Funds) with respect to which the Companies’ services do not involve the formulation or making of investment recommendations or decisions or the execution of portfolio transactions if that person is also a director, officer or employee of any entity that does perform such services (such as Westwood Management Corp.). These individuals are covered by codes of ethics adopted by such entities.

 

  (B) Definitions

 

  1. Access Persons. The Companies and the persons described in items (A)2 and (A)3 above other than those excluded by item (A)5 above.

 

  2.

Access Person Account. Includes all advisory, brokerage, trust or other accounts or forms of direct beneficial ownership in which one or more Access Person and/or one or more members of an Access Person’s immediate family have a substantial proportionate economic interest. Immediate family includes an Access Person’s

 

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spouse and minor children and any family member living in the same household as the Access Person. A substantial proportionate economic interest will generally be 10% of the equity in the account in the case of an Access Person and 25% of the equity in the account in the case of all Access Persons in the aggregate whichever is first applicable. Investment partnerships and similar indirect means of ownership other than registered open-end investment companies are also treated as accounts.

As an exception, accounts in which one or more Access Persons and/or their immediate family have a substantial proportionate interest which are maintained with persons who have no affiliation with the companies and with respect to which no Access Person has, in the judgment of the Compliance Officer after reviewing the terms and circumstances, any direct or indirect influence or control over the investment or portfolio execution process are not Access Person Accounts.

As a further exception, subject to the provisions of Article III(I)6, bona fide market making accounts of Gabelli & Company are not Access Person Accounts.

As a further exception, subject to the provisions of Article III(I)6, bona fide error accounts of the Companies and the Affiliates are not Access Person Accounts.

 

  3. Clients. Investment advisory accounts maintained with any of the Companies or Affiliates by any person, other than Access Person Accounts. However, Fund Clients covered by item (A)5 above are considered Client accounts only with respect to employees specifically identified by the Compliance Officer as having regular information regarding investment recommendations or decisions or portfolio transactions for such Fund Clients.

 

  4. Companies. The companies named or described at the top of page one of the Code.

 

  5. Compliance Officer. The person designated as Westwood’s Chief Compliance Officer.

 

  6. Covered Persons. The Companies, the Access Persons and the persons described in item (A)4 above.

 

  7. Executive Manager. The CEO or President of Westwood Management Corp.

 

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  8. Fund Clients. Clients that are registered investment companies or series thereof.

 

  9. Portfolio Managers. Access Persons who are principally responsible for investment decisions with respect to any Client accounts.

 

  10. Security. Any financial instruments treated as a security for investment purposes and any related instruments such as futures, forward or swap contracts entered into with respect to one or more securities. However, the term security does not include securities issued by the Government of the United States, bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements, or units of bank regulated commingled funds.

 

III. Restrictions on Personal Investing Activities

 

  (A) Basic Restriction on Investing Activities

If a Security is owned in any Client account, such Security or any related Security (such as an option, warrant or convertible security) may not be purchased or sold for any Access Person Account subject to the previously owned related Security exception set forth in paragraph (B) below. If an Access Person owns a Security that is subsequently purchased in any Client account, the Access Person may not sell such Security until it is sold out of all Client accounts. If a purchase or sale order is pending for any Client account by any Company or Affiliate, any request to purchase or sell such Security or any related Security (such as an option, warrant or convertible security) for an Access Person Account will be denied. If a Security is under active consideration for purchase in any Client account by any Company or Affiliate, any request to purchase or sell such Security or any related Security (such as an option, warrant or convertible security) for an Access Person Account may be denied at the discretion of the Compliance Officer and the Executive Manager.

 

  (B) Investments owned prior to employment.

If a Security is owned by an Access Person when such person becomes a new employee, such Access Person will not be asked to sell their position in the Security, but all future transactions in such Security will be subject to paragraph A.

In the case of a related Security (such as an option, warrant or convertible security) that is owned by an Access Person when such person becomes a new employee, the Access Person may not exercise/convert such related

 

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Security if a purchase or sale order is pending for any Client account by any Company or Affiliate. If the Security is under active consideration for purchase or sale in any Client account, any request to exercise/convert a related Security may be denied at the discretion of the Compliance Officer and the Executive Manager.

 

  (C) Initial Public Offerings

No Security or related Security may be acquired in an initial public offering for any Access Person Account.

 

  (D) Blackout Period

No Security or related Security may be bought, sold or exercised for any Access Person Account during the period commencing seven (7) calendar days prior to and ending seven (7) calendar days after the purchase or sale (or entry of an order for the purchase or sale) of that Security or any related Security for the account of any Client.

 

  (E) Short-term Trading

No Security or related Security may, within a 60-day period, be bought and sold or sold and bought at a profit for any Access Person Account.

 

  (F) Exempt Transactions

Participation on an ongoing basis in an automatic investment plan including an issuer’s dividend reinvestment or stock purchase plan, participation in any transaction over which no Access Person had any direct or indirect influence or control, involuntary transactions (such as mergers, inheritances, gifts, etc.), exchange traded funds that are based on a broad-based securities index, shares of registered open-end investment companies other than shares of investment companies advised by the firm or its affiliates or subadvised by the firm, and securities transactions processed for an Access Person Account which has been formed for the sole purpose of product development are exempt from the restrictions set forth in paragraphs (A), (B) and (D) above without case by case preclearance under paragraph (H) below.

 

  (G) Permitted Exceptions

Purchases and sales of the following Securities for Access Person Accounts are exempt from the restrictions set forth in paragraphs A, C and D above if such purchases and sales comply with the preclearance requirements of paragraph (H) below:

 

  1. Non-convertible fixed income Securities rated at least “A”; and

 

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  2. Municipal Securities.

In addition, the exercise of rights that were received pro rata with other security holders is exempt if the preclearance procedures are satisfied.

 

  (H) Pre-Clearance of Personal Securities Transactions

No Security or related Security (such as an option, warrant or convertible security) may be bought, sold or exercised for an Access Person Account unless (i) the Access Person obtains prior approval from an Executive Manager and the Compliance Officer, or in the absence of the Compliance Officer, from a designee of the Compliance Officer; (ii) the approved transaction is completed on the same day approval is received; and (iii) the Compliance Officer or an Executive Manager does not rescind such approval prior to execution of the transaction. (See paragraph J below for details of the Pre-Clearance Process.)

 

  (I) Private Placements

The purchases or sale of Securities that are not publicly traded will not be approved unless the Access Person provides full details of the proposed transaction (including written certification that the investment opportunity did not arise by virtue of such person’s activities on behalf of any Client) and the Compliance Officer and an Executive Manager conclude, after consultation with one or more of the relevant Portfolio Managers, that the Companies would have no foreseeable interest in investing in such Security or any related Security for the account of any Client.

 

  (J) Pre-Clearance Process

 

  1. No Security may be purchased or sold for any Access Person Account unless the particular transaction has been approved in writing by an Executive Manager and the Compliance Officer, or in the absence of the Compliance Officer, a designee of the Compliance Officer. The Compliance Officer shall review, not less frequently than weekly, confirmations from brokers to assure that all transactions effected for Access Person Accounts are effected in compliance with this Code.

 

  2. Access Persons must direct brokerage and other firms with which they have Access Person Accounts to furnish to the Compliance Officer on a timely basis duplicate copies of confirmations of, and account statements concerning, all personal Securities transactions.

 

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  3. A Trading Approval Form, attached as Exhibit B, must be completed and submitted to the Compliance Officer for approval by the Compliance Officer and an Executive Manager prior to entry of an order.

 

  4. After reviewing the proposed trade and the level of potential investment interest on behalf of Clients in the Security in question, the Compliance Officer and an Executive Manager shall approve (or disapprove) a trading order on behalf of an Access Person as expeditiously as possible. Transactions described in paragraph (G) above will generally be approved unless it is believed for any reason that the Access Person Account should not trade in such Security at such time.

 

  5. Once an Access Person’s Trading Approval Form is approved, the transaction must be executed on the same day. If the Access Person’s trading order request is not approved, or is not executed on the same day it is approved, the clearance lapses although such trading order request may be resubmitted at a later date.

 

  6. Trading approval for the Compliance Officer must be obtained from the CEO or President of Westwood Management Corp., and trading approval for the CEO and the President must be obtained from the Compliance Officer.

 

  7. The Compliance Officer shall review all Trading Approval Forms, all initial, quarterly and annual disclosure certifications and the trading activities on behalf of all Client accounts with a view to ensuring that all Covered Persons are complying with the spirit as well as the detailed requirements of this Code.

 

IV. Other Investment-Related Restrictions

 

  (A) Conflicts of Interest

Access Persons are prohibited from engaging in any activity, practice, or act which conflicts with, or appears to conflict with, the interests of the companies, its customers, or vendors. Covered Persons are required to fully disclose any potential conflict of interest to your supervisor/manager.

A conflict of interest exists when you, knowingly or unknowingly, engage in any activity that may compromise you, another employee, or the company in its relationship with a customer, vendor, or competitor.

 

  1.

Gifts. Potential conflicts of interest with a customer, vendor, or competitor may include soliciting business for personal gain,

 

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accepting gifts other than those of nominal value (not more than $100), or requesting favors, discounts, or services.

No Access Person shall accept any gift or other item of more than $100 in value from any person or entity that does business with or on behalf of any Client. If you are offered, receive, or anticipate receiving something of value from a customer/vendor beyond what is expressly authorized in this policy, you must disclose the matter to your supervisor/manager.

 

  2. Service as a Director. No Access Person shall commence service on the Board of Directors of a publicly traded company or any company in which any Client account has an interest without prior authorization from the Compliance Officer based upon a determination that the Board service would not be inconsistent with the interests of the Clients

 

  (B) Disclosure of Conflicts

Full disclosure to your supervisor/manager of any potential conflict of interest is required as soon as such potential conflict is discovered. If you believe that unusual circumstances justify your engaging in an activity that may result in a conflict of interest, you may request in writing that your supervisor/manager or Compliance Department review the situation and grant an exception.

 

V. Reports and Additional Compliance Procedures

 

  (A) Quarterly Transaction Reports

Every Covered Person, except independent directors of Affiliates of the Companies, must submit a Transaction Report (Exhibit C) containing the information set forth in paragraph (C) below with respect to transactions in any Security in which such Covered Person has or by reason of such transactions acquires, any direct or indirect beneficial ownership (as defined in Exhibit D) in the Security; and with respect to any account established by the Covered Person in which any Securities were held for the direct or indirect benefit of the Covered Person subject to the exceptions listed below in paragraph (B).

 

  1. The Transaction Report must be submitted to the Compliance Officer no later than 10 days after the end of the calendar quarter in which the transaction or account to which the report relates was effected or established, and the report must contain the date that the report is submitted.

 

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  2. A Transaction report must contain the following information:

 

  a. The date of the transaction, the title and number of shares and the principal amount of each Security involved;

 

  b. The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

 

  c. The price at which the transaction was effected; and

 

  d. The name of the broker, dealer or bank with or through whom the transaction was effected.

 

  3. This report must contain the following information with respect to accounts established:

 

  a. The name of the broker, dealer or bank with whom the account was established; and

 

  b. The date the account was established.

 

  (B) Transaction Report Exceptions

A Covered Person is not required to submit a report in the following instances:

 

  1. A Covered Person who is required to make reports only because he is a director of one of the Fund Clients and who is a “disinterested” director thereof need not make a report with respect to any transactions other than those where he knew or should have known in the course of his duties as a director that any Fund Client of which he is a director has made or makes a purchase or sale of the same or a related Security within 15 days before or after the purchase or sale of such Security or related Security by such director.

 

  2. A Covered Person need not make a report with respect to any transactions effected for, and Securities held in, any account over which such person does not have any direct or indirect influence or control; and

 

  3. A Covered Person need not make a report with respect to any transactions effected pursuant to an automatic investment plan (this includes dividend reinvestment plans),

 

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  (C) Ownership Admission

Any report submitted to comply with the requirements of this Article V may contain a statement that the report shall not be construed as an admission by the person making such report that he has any direct or indirect benefit ownership in the Security to which the report relates. A person need not make any report under this Article V with respect to transaction effected for, and Securities held in, any account over which the person has no direct or indirect influence or control.

 

  (D) Initial Holdings Report

No later than 10 days after beginning employment with any of the Companies or Affiliates or otherwise becoming a Covered Person, each Covered Person (except for a “disinterested” director of the Fund Client or an “independent” director of the Companies (other than Westwood Management Corporation) who is required to submit reports solely by reason of being such a director) must submit an Initial Holdings Report (Exhibit E) containing the following information:

 

  1. The title, number of shares and principal amount of each Security in which the Covered Person had any direct or indirect beneficial ownership when the person became a Covered Person;

 

  2. The name of any broker, dealer or bank with whom the Covered Person maintained an account in which any Securities were held for the direct or indirect benefit of the Covered Person as of the date the person became a Covered Person; and

 

  3. The date that the report is submitted.

 

  (E) Annual Certification

Annually each Covered Person must certify that he has read and understood the Code and recognizes that he is subject to such Code. In addition, annually each Covered Person must certify that he has disclosed or reported all personal Securities transactions required to be disclosed or reported under the Code and that he is not subject to any regulatory disability described in the annual certification form. Furthermore, each Covered Person (except for a “disinterested” director of the Fund Client or an “independent” director of any of the companies (other than Westwood Management Corporation) who is required to submit reports solely by reason of being such a director) annually must submit a report containing the following information (which information must be current as of a date no more than 30 days before the report is submitted):

 

  1. The title, number of shares and principal amount of each Security in which the Covered Person had any direct or indirect beneficial ownership;

 

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  2. The name of any broker, dealer or bank with whom the Covered Person maintains an account in which any Securities are held for the direct or indirect benefit of the Covered Person; and

 

  3. The date that the report is submitted.

The form of such certification and report is attached as Exhibit F.

 

  (F) Duplicate Brokerage Statements in lieu of Reports

A Covered Person will be deemed to have complied with the quarterly transaction report and annual holdings report requirements of this Article V insofar as the Compliance Officer receives in a timely fashion duplicate monthly or quarterly brokerage statements on which all transactions required to be reported hereunder are described.

 

  (G) Board Report

At least annually (or quarterly in the case of Items 4 and 5 below), each of the Companies that has a Fund Client or that provides principal underwriting services for a Fund Client shall, together with each Fund Client, furnish a written report to the Board of Directors of the Fund Client that:

 

  1. Describes any issues arising under the Code since the last report.

 

  2. Certifies that Companies have developed procedures concerning Covered Persons’ personal trading activities and reporting requirements relevant to such Fund Clients that are reasonably necessary to prevent violations of the Code;

 

  3. Recommends changes, if any, to the Fund Clients’ or the Companies’ Codes of Ethics or procedures;

 

  4. Provided a summary of any material or substantive violations of this Code by Covered Persons with respect to such Fund Clients which occurred during the past quarter and the nature of any remedial action taken; and

 

  5. Describes any material or significant exceptions to any provisions of this code of Ethics as determined under Article VI below.

 

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The Compliance Officer shall notify each employee of any of the Companies or Affiliates as to whether such person is considered to be an Access Person or Covered Person and shall notify each other that is considered to be an Access Person or Covered Person.

 

VI. Sanctions

Upon discovering that a Covered Person has not complied with the requirements of this Code, the Board of Directors of the relevant Company or of the relevant Fund Client, whichever is most appropriate under the circumstances, may impose on that person whatever sanctions the Board deems appropriate, including, among other things, disgorgement of profit, censure, suspension or termination of employment. Material violations of requirements of this Code by employees of Covered Persons and any sanctions imposed in connection therewith shall be reported not less frequently than quarterly to the Board of Directors of any relevant Company or Fund Client, as applicable.

 

VII. Exceptions

The Compliance Committee of the Companies reserves the right to decide, on a case-by-case basis, exceptions to any provisions under this Code. Any exceptions made hereunder will be maintained in writing by the Compliance Committee and presented to the Board of Directors of any relevant Fund Client at its next scheduled meeting.

 

VIII. Preservation of Documents

This Code, a copy of each report by a Covered Person, any written report made hereunder by the Companies or the Compliance Officer, lists of all persons required to make reports, a list of any exceptions, and the reasons therefore, with respect to Article II.C, and any records under Article II.H with respect to purchases pursuant to Article II.I above, shall be preserved with the records of the relevant Company and any relevant Fund Client for the period required by Rule 17j-l.

 

IX. Other Laws, Rules and Statements of Policy

Nothing contained in this Code shall be interpreted as relieving any Covered Person from acting in accordance with the provision of any applicable law, rule or regulation or any other statement of policy or procedure governing the conduct of such person adopted by the Companies, the Affiliates or the Fund Clients.

All activities of the company must be conducted in full compliance with all applicable laws and regulations. Senior management should be informed regarding all matters pertinent to the company’s position regarding such laws and regulations. The company expects all employees to follow the spirit as well as the letter of the law. In addition, Covered Persons are expected to fully comply with

 

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the company’s Amended and Restated Insider Trading Policy that prohibits illegal insider trading and the use of material non-public information. All employees are expected to cooperate fully with the company’s internal and outside auditors, attorneys, and regulatory examiners

 

X. Future Information

If any person has any question with regard to the applicability of the provisions of this Code generally or with regard to any Securities transaction or transactions, he should consult the Chief Compliance Officer.

 

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Exhibit A

LIST OF AFFILIATES OF THE COMPANIES

Westwood Holdings Group, Inc.

Westwood Trust

Gabelli Westwood Equity Fund

Gabelli Westwood Balanced Fund

Gabelli Westwood Intermediate Bond Fund

Gabelli Westwood SmallCap Fund

Gabelli Westwood Realty Fund


Exhibit B

PRE-CLEARANCE TRADING APPROVAL FORM

I,                                                                                   (name), am an Access Person or authorized officer thereof and seek pre-clearance to engage in the transaction described below; for the benefit of myself or another access person:

Acquisition or Disposition (circle one)

 

Name of Account:     
Account Number:     
Date of Request:     
Security:     
Amount or # of Shares:     
Broker:     

If the transaction involves a Security that is not publicly traded, a description of proposed transaction, source of investment opportunity and any potential conflicts of interest:

I hereby certify that, to the best of my knowledge, the transaction described herein is not prohibited by the Code of Ethics and that the opportunity to engage in the transaction did not arise by virtue of my activities on behalf of any Client.

 

Signature:          Print Name:     

Approved or Disapproved (circle one)

Date of Approval                                                              

 

Signature:          Print Name:     

Compliance Officer Approval:                                                             


Exhibit C

TRANSACTION REPORT

 

Report Submitted by:         
   Print Your Name   

This transaction report (the “Report”) is submitted pursuant to Section IV(B) of the Code of Ethics of the Companies and supplies information with respect to transactions in any Security in which you may be deemed to have, or by reason of such transaction acquire, any direct or indirect beneficial ownership interest, and with respect to accounts established by you in which any Securities were held for your direct or indirect benefit, for the period specified below. If you were not employed by or affiliated with us during this entire period, amend the dates specified below to cover your period of employment.

Unless the context otherwise requires, all terms used in the Report shall have the same meaning as set forth in the Code of Ethics.

If you have no reportable transactions or new accounts, sign and return this page only. If you have reportable transactions or new accounts, complete, sign and return page 2 and any attachments.

I HAD NO REPORTABLE SECURITIES TRANSACTIONS DURING THE PERIOD                      THROUGH                     . I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT TO THE BEST OF MY KNOWLEDGE THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT.

 

Signature:     
Position:     
Date:     


Page 2

TRANSACTION REPORT

 

Report Submitted by:         
   Print Your Name   

The following tables supply the information required by Section IV(B) of the Code of Ethics for the period specified below. Transactions reported on brokerage statements or duplicate confirmations actually received by the Compliance Officer do not have to be listed although it is your responsibility to make sure that such statements or confirmations are complete and have been received in a timely fashion.

TRANSACTIONS

 

Securities

(Name and

Symbol)

  

Date of

Transaction

  

Whether

Purchase, Sale,

Short Sale, or

Other Type of

Disposition or

Acquisition

  

Quantity of

Securities

  

Price Per

Share or

Other Unit

  

Name of the

Broker/Dealer

with or through

whom the

Transaction

was Effected

  

Nature of

Ownership of

Securities

                 
                 
                 
                 
                 
                 

NEW ACCOUNTS ESTABLISHED

 

Name of Broker, Dealer or Bank

  

Account Number

  

Date Account Established

     
     
     
     
     

To the extent specified above, I hereby disclaim beneficial ownership of any security listed in this Report or in brokerage statements or transaction confirmations provided by me.

I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT TO THE BEST OF MY KNOWLEDGE THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT FOR THE PERIOD OF                              THROUGH                             .

 

Signature:          Date:     
Position:           


Exhibit D

BENEFICIAL OWNERSHIP

For purposes of the attached Code of Ethics, “beneficial ownership” shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder, except the determination of direct or indirect beneficial ownership shall apply to all securities that a Covered Person has or acquires. The term “beneficial ownership” of securities would include not only ownership of securities held by a Covered Person for his own benefit, whether in bearer form or registered in his name or otherwise, but also ownership of securities held for his benefit by other (regardless of whether or how they are registered) such as custodians, brokers, executors, administrators, or trustees (including trusts in which he has only a remainder interest), and securities held for his account by pledges, securities owned by a partnership in which he is a member if he may exercise a controlling influence over the purchase, sale or voting of such securities, and securities owned by any corporation or similar entity in which he owns securities if the shareholder is a controlling shareholder of the entity and has or shares investment control over the entity’s portfolio.

Ordinarily, this term would not include securities held by executors or administrators of estates in which a Covered Person is a legatee or beneficiary unless there is a specified legacy to such person of such securities or such person is the sole legatee or beneficiary and there are other assets in the estate sufficient to pay debts ranking ahead of such legacy, or the securities are held in the estate more than a year after the decedent’s death.

Securities held in the name of another should be considered as “beneficially” owned by a Covered Person where such person enjoys “financial benefits substantially equivalent to ownership.” The Securities and Exchange Commission has said that although the final determination of beneficial ownership is a question to be determined in the light of the facts of the particular case, generally a person is regarded as the beneficial owner of securities held in the name of his or her spouse and their minor children. Absent special circumstances such relationship ordinarily results in such person obtaining financial benefits substantially equivalent to ownership, e.q., application of the income derived from such securities to maintain a common home, or to meet expenses that such person otherwise would meet from other sources, or the ability to exercises a controlling influence over the purchase, sale or voting of such securities.

A Covered Person also may be regarded as the beneficial owner of securities held in the name of another person, if by reason of any contract, understanding, relationship, agreement, or other agreement, he obtains therefrom financial benefits substantially equivalent to those of ownership.

A Covered Person also may be regarded as the beneficial owner of securities held in the name of a spouse, minor children or other person, even though he does not obtain therefrom the aforementioned benefits of ownership, if he can vest or revest title in himself at once or at some future time.


Exhibit E

INITIAL HOLDINGS REPORT

 

Report Submitted by:         
   Print Name   

This initial holdings report (the “Report”) is submitted pursuant to Section IV (D) of the Code of Ethics of the Companies and supplies information with respect to any Security in which you may be deemed to have any direct or indirect beneficial ownership interest and any accounts established by you in which any Securities were held for your direct or indirect benefit, as of the date you became subject to the Code of Ethics.

Unless the context otherwise requires, all terms used in the Report shall have the same meaning as set forth in the Code of Ethics.

If you have no reportable Securities or accounts, sign and return this page only. If you have reportable Securities or accounts, complete, sign and return Page 2 and any attachments.

I HAVE NO REPORTABLE SECURITIES OR ACCOUNTS AS OF                         . I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST OF MY KNOWLEDGE, THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT.

 

Signature:     
Position:     
Date:     


Page 2

INITIAL HOLDINGS REPORT

 

Report Submitted by:         
   Print Name   

The Following tables supply the information required by Section IV (D) of the Code of Ethics as of the date you became subject to the Code.

SECURITIES HOLDINGS

 

Securities (Name and Symbol)

  

Quantity of Securities

  

Name of Broker/Dealer Where

Securities Are Held

  

Nature of Ownership of

Securities

        
        
        
        
        

ACCOUNTS

 

Name of Broker, Dealer or Bank

  

Account Number

        
        
        

I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST OF MYKNOWLEDGE, THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT AS OF                         .

 

Signature:     
Position:     
Date:     


Exhibit F

ANNUAL CERTIFICATION OF CODE OF ETHICS

 

A. I (a Covered Person) hereby certify that I have read and understand the firm’s Code of Ethics, and recognize that I am subject to its provisions. In addition, I hereby certify that I have disclosed or reported all personal Securities transactions required to be disclosed or reported under the Code of Ethics;

 

B. Within the last ten years there have been no complaints or disciplinary actions filed against me by any regulated securities or commodities exchange, any self-regulatory securities or commodities organization, any attorney general, or any governmental office or agency regulating insurance securities, commodities or financial transactions in the United States, in any state of the United States, or in any other country;

 

C. I have not within the last ten years been convicted of or acknowledged commission of any felony or misdemeanor arising out of my conduct as an employee, salesperson, officer, director, insurance agent, broker, dealer, underwriter, investment manager or investment advisor; and

 

D. I have not been denied permission or otherwise enjoined by order, judgment or decree of any court of competent jurisdiction, regulated securities or commodities exchange, self-regulatory securities or commodities organization or other federal or state regulatory authority from acting as an investment advisor, securities or commodities broker or dealer, commodity pool operator or trading advisor, or as an affiliated person or employee of any investment company, bank, insurance company or commodity broker, dealer, pool operator or trading advisor, or from engaging in or continuing any conduct or practice in connection with any such activity or the purchase or sale of any security.

 

E. Unless I am exempt from filing an Annual Holdings Report (as a “disinterested” director of a Fund Client or an independent director of an Affiliate, or because I have provided or directed my broker to provide duplicate brokerage statements for all of my Access Accounts to the firm’s CCO), I have attached a completed Annual Holdings Report which is accurate as of a date no more than 30 days ago.

 

Signature:      
Print Name:      
Date:      
EX-99.P6 11 dex99p6.htm CODE OF ETHICS OF RITTENHOUSE FINANCIAL SERVICES, INC. Code of Ethics of Rittenhouse Financial Services, Inc.

Exhibit 99.P6

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

CODE OF ETHICS

INTRODUCTION

Barrow, Hanley, Mewhinney & Strauss, Inc. (the “Firm”) has adopted this Code of Ethics (“Code”) in compliance with the requirements of Sections 204A-1 of the Investment Advisers Act of 1940 (the “Advisers Act”) and Section 17j of the Investment Company Act of 1940. This Code was adopted on November 28, 1983 and last amended on December 30, 2005. The Code of Ethics requires the Firm’s supervised Persons to comply with the federal securities laws, sets forth standards of conduct expected of the Firm’s supervised Persons and addresses conflicts that arise from personal trading by Access Persons. The policies and procedures outlined in the Code of Ethics are intended to promote compliance with fiduciary standards by the Firm and its supervised Persons. As a fiduciary, the Firm has the responsibility to render professional, continuous and unbiased investment advice, owes its clients a duty of honesty, good faith and fair dealing, must act at all times in the best interests of clients and must avoid or disclose conflicts of interest.

This Code Of Ethics Is Designed To:

 

    Protect the Firm’s clients by deterring misconduct;

 

    Educate our employees regarding the Firm’s expectations and the laws governing their conduct;

 

    Remind employees that they are in a position of trust and must act with complete propriety at all times;

 

    Protect the reputation of the Firm;

 

    Guard against violations of the securities laws; and

 

    Establish procedures for employees to follow so that the Firm may determine whether employees are complying with its ethical principals.

This Code of Ethics is based upon the principle that the directors, officers and other employees of the Firm owe a fiduciary duty to, among others, the clients of the Firm to conduct their affairs, including their personal Securities transactions, in such a manner as to avoid: (i) serving their own personal interests ahead of clients; (ii) taking inappropriate advantage of their position with the Firm; and (iii) any actual or potential conflicts of interest or any abuse of their position of trust and responsibility. This fiduciary duty includes the duty of the Chief Compliance Officer of the Firm to report violations of this Code of Ethics to the Firm’s Board of Directors and any U.S. registered investment company client for which the Firm acts as adviser or sub-adviser.

This Code contains provisions reasonably necessary to prevent Persons from engaging in acts in violation of the above standards, and procedures reasonably necessary to prevent violations of the Code. Each employee at the commencement of their employment and as an Access Person

 

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must certify, by their signature on Exhibit A, they have read and understand the Code’s requirements and their acknowledgement to abide by all of the Code’s provisions. Each employee must re-certify understanding and acknowledgement of the Code any time the Code is amended.

 

A. DEFINITIONS

 

  (1) “Access Person” means any director, officer, general partner, advisory person, investment personnel, portfolio manager, or employee of the firm.

 

  (2) “Advisory Person” means any natural person in a control relationship to the Firm who obtains information concerning recommendations made to the Firm with regard to the purchase or sale of a Security by the Firm.

 

  (3) “Affiliated Company” means a company which is an affiliate of the Firm through the Old Mutual U.S. Holdings, Inc. relationship.

 

  (4) A security is “Being Considered for Purchase or Sale” or is “Being Purchased or Sold” when a recommendation to purchase or sell the security has been made and communicated, which includes when the Firm has a pending “buy” or “sell” order with respect to a Security, and, with respect to the person making the recommendation, when such person seriously considers making such a recommendation. “Purchase or Sale of a Security” includes the writing of an option to purchase or sell a Security.

 

  (5) “Beneficial Ownership” shall be as defined in, and interpreted in the same manner as it would be in determining whether a person is subject to the provisions of, Section 16 of the Securities Exchange Act of 1934 and the rules and regulations hereunder which, generally speaking, encompasses those situations where the beneficial owner has the right to enjoy some economic benefit from the ownership of the Security. An Access Person is presumed to be the beneficial owner of Securities held by his/her immediate family member sharing the same household.

 

  (6) “Control” means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. Any Person who owns beneficially, either directly or through one or more controlled companies, more than 25 per centum of the voting securities of a company shall be presumed to control such company. Any Person who does not so own more than 25 per centum of the voting securities of any company shall be presumed not to control such company. A natural Person shall be presumed not to be a controlled Person.

 

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  (7) “Investment Personnel” means: (a) any Portfolio Manager of the Firm as defined in (10) below; and (b) securities analysts, traders and other personnel who provide information and advice to the Portfolio Manager or who help execute the Portfolio Manager’s decisions.

 

  (8) “Nonresident Director” means any director of the Firm who: (a) is not an officer, employee or shareholder of the Firm; (b) does not maintain a business address at the Firm and (c) who does not, in the ordinary course of his business, receive or have access to current information regarding the purchase or sale of Securities by the Firm, information regarding recommendations concerning the purchase or sale of Securities by the Firm or information regarding Securities being considered for purchase or sale by the Firm.

 

  (9) “Person” means any natural Person or a company.

 

  (10) “Portfolio Manager” means an employee of the Firm entrusted with the direct responsibility and authority to make investment decisions.

 

  (11) “Reportable Fund” means any Fund for which the Firm serves as an Investment Adviser or Sub-Adviser.

 

  (12) “Security” means any note, stock, treasury stock, bond, debenture, unit trust-ETFs, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a Security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any Security (including a certificate of deposit) or on any group or index of Securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national Securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a Security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. Security shall not include: direct obligations of the Government of the United States, high quality short-term debt instruments, bankers’ acceptances, bank certificates of deposit, commercial paper, repurchase agreements, and shares of registered open-end investment companies, other than shares of Reportable Funds, open-end ETFs, and UITs that are invested exclusively in one or more open-end fund (none of which are Reportable Funds.)

 

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B. POLICY STATEMENT ON INSIDER TRADING

Section 204A of the Advisers Act requires every investment adviser to establish, maintain and enforce written policies and procedures reasonably designed, taking into consideration the nature of such investment adviser’s business, to prevent the misuse of material, nonpublic information by such investment adviser or any person associated with such investment adviser. The Firm forbids any officer, director or employee from trading, either personally or on behalf of others, including accounts managed by the Firm, on material nonpublic information or communicating material nonpublic information to others in violation of the law. This conduct is frequently referred to as “insider trading.” The Firm’s policy applies to every officer, director and employee and extends to activities within and outside their duties at the Firm. BHMS’ Insider Trading Policy applies to all of its employees and any questions regarding this policy and procedures should be referred to the Firm’s Chief Compliance Officer.

The term “insider trading” is not defined in the federal securities laws, but generally is used to refer to the use of material nonpublic information to trade in Securities (whether or not one is an “insider”) or to communications of material nonpublic information to others. While the law concerning insider trading is not static, it is generally understood that the law prohibits:

 

  (1) Trading by an insider, while in possession of material nonpublic information; or

 

  (2) Trading by a non-insider, while in possession of material nonpublic information, where the information either was disclosed to the non-insider in violation of an insider’s duty to keep it confidential or was misappropriated; or

 

  (3) Communicating material nonpublic information to others in a breach of fiduciary duty.

Trading on inside information is not a basis for liability unless the information is material. “Material information” generally is defined as information for which there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions, or information that is reasonably certain to have a substantial effect on the price of a company’s Securities. Information that officers, directors and employees should consider material includes, but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, debt service and liquidation problems, extraordinary management developments, write-downs or write-offs of assets, additions to reserves for bad debts, new product/services announcements, criminal, civil and government investigations and indictments. Material information does not have to relate to a company’s business. For example, material information about the contents of any upcoming newspaper column may affect the price of a Security, and therefore be considered material. Disclosure of a registered investment company client’s holdings or any client’s holdings that

 

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are not publicly available are considered material information and therefore must be kept confidential. All employees of BHMS are subject to the Duty of Confidentiality, Item C of this Code.

Information is nonpublic until it has been effectively communicated to the market place. One must be able to point to some fact to show that the information is generally public. For example, information found in a report filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or other publications of general circulation would be considered public. You should be particularly careful with information received from client contacts at public companies.

Before trading for yourself or others in the Securities of a company about which you may have potential inside information, ask yourself the following questions:

 

  (i) Is the information material? Is this information that an investor would consider important in making his or her investment decisions? Is this information that would substantially effect the market price of the Securities if generally disclosed?

 

  (ii) Is the information nonpublic? To whom has this information been provided? Has the information been effectively communicated to the marketplace?

The role of the Firm’s Chief Compliance Officer is critical to the implementation and maintenance of the Firm’s policy and procedures against insider trading. If, after consideration of the above, you believe that the information is material and nonpublic, or if you have questions as to whether the information is material and nonpublic, you should take the following steps:

 

  (i) Report the matter immediately to the Firm’s Chief Compliance Officer.

 

  (ii) Do not purchase or sell the Securities on behalf of yourself or others.

 

  (iii) Do not communicate the information inside or outside the Firm, other than to the Firm’s Chief Compliance Officer.

 

  (iv) After the Firm’s Chief Compliance Officer has reviewed the issue, you will be instructed to continue the prohibitions against trading and communication, or you will be allowed to trade and communicate the information.

Information in your possession that you identify as material and nonpublic may not be communicated to anyone, including persons within the Firm, except as provided above. In addition, care should be taken so that such information is secure. For example, files containing material nonpublic information should be sealed; access to computer files containing material nonpublic information should be restricted.

 

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C. DUTY OF CONFIDENTIALITY

Employees of the Firm must keep confidential at all times any nonpublic information they may obtain in the course of their employment at the Firm. This information includes but is not limited to:

 

  (1) Information on the clients accounts, including account holdings, recent or impending Securities transactions by the clients and recommendations or activities of the Portfolio Managers for the clients’ accounts;

 

  (2) Information on the Firm’s clients and prospective clients investments and account transactions;

 

  (3) Information on other Firm personnel, including their pay, benefits, position level and performance rating; and

 

  (4) Information on the Firm’s business activities, including new services, products, technologies and business initiatives.

The Firm’s personnel have the highest fiduciary obligation not to reveal confidential company information to any party that does not have a clear and compelling need to know such information and to safeguard all client information.

 

D. RESTRICTIONS FOR ACCESS PERSONS

 

  (1) General Restrictions for Access Persons. Access Persons are subject to the following restrictions with respect to their personal transactions:

 

  (a) Prohibition on accepting gifts of more than de minimis value.

Access Persons are prohibited from accepting any gift or other items of more than de minimis value from any Person or entity that does business with or on behalf of the Firm; for the purpose of this Code de minimis shall be considered to be the annual receipt of gifts from the same source valued at $250 or less per individual recipient, when the gifts are in relation to the conduct of the Firm’s business. A gift does not include participation in lunches, dinners, cocktail parties, sporting activities or similar gatherings conducted for business purposes.

 

  (b) Prohibition on service as a director or public official.

Investment Personnel are prohibited from serving on the board of directors of any publicly traded company without prior authorization of the President or other duly authorized officer of the Firm. Any such authorization shall be based upon a determination that the board service would be consistent with the interests of the Firm’s clients. Authorization of board service shall

 

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be subject to the implementation by the Firm of a “Chinese Wall” or other procedures to isolate such Investment Personnel from making decisions about trading in that company’s securities.

 

  (c) Prohibition on initial public offerings. Access Persons, who are not Nonresident Directors, are prohibited from acquiring Securities in an initial public offering. Nonresident Directors must receive pre-clearance to purchase Securities in an initial public offering.

 

  (d) Prohibition on private placements. Access Persons are prohibited from acquiring Securities in a private placement without prior approval from the Firm’s Chief Compliance Officer. In the event an Access Person receives approval to purchase Securities in a private placement, the Access Person must disclose that investment if he or she plays any part in the Firm’s later consideration of an investment in the issuer.

 

  (e) Prohibition on options. Access Persons, who are not Nonresident Directors, are prohibited from acquiring or selling any option on any Security.

 

  (f) Prohibition on short-selling. Access Persons, who are not Nonresident Directors, are prohibited from selling any Security that the Access Person does not own or otherwise engaging in “short-selling” activities.

 

  (g) Prohibition on short-term trading profits. Access Persons, who are not Nonresident Directors, are prohibited from profiting in the purchase and sale, or sale and purchase, of the same (or related) securities within sixty (60) calendar days. Trades made in violation of this prohibition should be unwound, if possible. Otherwise, any profits realized on such short-term trades shall be subject to disgorgement.

 

  (h) Prohibition on short-term trading of Reportable funds. Access Persons, who are not Nonresident Directors, are prohibited from short-term trading of any Reportable Fund shares. “Short-term trading” defined as a purchase and redemption/sell of a fund’s shares within a 30-day period. This prohibition does not cover purchases and redemptions/sales: (i) into or out of money market funds or short term bond funds; or (ii) purchases effected on a regular periodic basis by automated means, such as 401(k) purchases.

 

  (2)

Blackout Restrictions for Access Persons. All Access Persons, who are not Nonresident Directors, are subject to the following restrictions when

 

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their purchases and sales of Securities coincide with trades by any client of the Firm:

 

  (a) Purchases and sales within three days following a trade by a client. Access Persons are prohibited from purchasing or selling any Security within three calendar days after any client has traded in the same (or a related) Security. In the event that an Access Person makes a prohibited purchase or sale within the three-day period, the access Person must unwind the transaction and relinquish to the Firm any gain from the transaction.

 

  (b) Purchases within seven days before a purchase by a client. Any Access Person who purchases a Security within seven calendar days before any client purchases the same (or a related) Security is prohibited from selling the Security for a period of six months following the client’s trade. In the event that an Access Person makes a prohibited sale within the six-month period, the Access Person must relinquish to the Firm any gain from the transaction.

 

  (c) Sales within seven days before a sale by a client. Any Access Person who sells a Security within seven days before any client sells the same (or a related) Security must relinquish to the Firm the difference between the Access Person’s sale price and the client portfolio(s) sale price (assuming the Access Person’s sale price is higher).

 

  (d) Disgorgement. A charity shall be selected by the Firm to receive any disgorged or relinquished amounts due to personal trading violations.

 

E. EXEMPTED TRANSACTIONS

The prohibitions of Sections D(1)(f) and (g) and D(2)(a),(b) and (c) shall not apply to:

 

  (1) Purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control; an Access Person is presumed to be a beneficial owner of Securities that are held by his/her immediate family members sharing the Access Person’s household;

 

  (2) Purchases or sales which are non-volitional on the part of either the Access Person or the Firm;

 

  (3) Purchases which are part of an automatic dividend reinvestment plan or an automatic investment plan, such as 401(k) purchases; and

 

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  (4) Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its Securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired.

 

F. COMPLIANCE PROCEDURES

 

  (1) Records of Securities transactions. All Access Persons must notify the Firm’s Chief Compliance Officer if they have opened or intend to open a brokerage or Securities account. Access Persons must direct their brokers to supply the Firm’s Chief Compliance Officer with duplicate brokerage confirmations of their Securities transactions and duplicate statements of their Securities account(s).

 

  (2) Pre-clearance of Securities transactions. All Access Persons, who are not Nonresident Directors, shall receive prior written approval from the Firm’s Chief Compliance Officer, or other officer designated by the Board of Directors, before purchasing or selling Securities or any Reportable Fund. Pre-clearance for Securities owned or traded by the Firm is valid for that trading day. Pre-clearance for Securities not owned or traded by the Firm and any Reportable Fund is valid for five concurrent trading sessions. The personal Securities transactions pre-clearance form is attached as Exhibit D.

 

  (3) Pre-clearance of any transaction in a Reportable fund. All Access Persons, who are not Nonresident Directors, shall receive prior written approval from the Firm’s Chief Compliance Officer, or other officer designated by the Board of Directors, before purchasing or selling any Reportable Fund. Pre-clearance for Reportable Funds is valid for that trading day. This prohibition does not cover purchases and redemptions/sales: (a) into or out of money market funds or short term bond funds; or (b) effected on a regular periodic basis by automated means, such as 401(k) purchases.

 

  (4) Disclosure of Personal Holdings, and Certification of Compliance with the Code of Ethics. All Access Persons shall disclose to the Firm’s Chief Compliance Officer all personal Securities holdings and all Reportable Funds holdings upon the later of commencement of employment or adoption of this Code and thereafter on an annual basis as of December 31. Every Access Person shall certify by their signature:

 

  (a) They have read and understand the Code and recognize that they are subject to all provisions of the Code and they have reported all personal Securities and Reportable Funds holdings, on Exhibit A, Initial Report of Access Persons, upon employment with the Firm;

 

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  (b) They have read and understand the Code and recognize they are subject to all provisions of the Code, at any time the Code is amended;

 

  (c) They have complied with the requirements of the Code and reported all personal Securities and Reportable Funds holdings on Exhibit B, Annual Report of Access Persons, annually; and

 

  (d) They have reported all personal Securities and Reportable Funds transactions, and any Securities account(s) opened during the quarter on Exhibit C, Quarterly Report of Access Persons, quarterly.

 

  (e) These reports shall be made within 10 business days of hire, quarter-end and year-end, on the forms attached as Exhibits, as identified above, and delivered to the Firm’s Chief Compliance Officer.

 

  (5) Reporting Requirements

 

  (a) The Chief Compliance Officer of the Firm shall notify each Access Person that he or she is subject to these reporting requirements, and shall deliver a copy of this Code to each such person upon their date of employment and upon such time as any amendment is made to this Code.

 

  (b) Reports submitted to the Chief Compliance Officer of the Firm pursuant to this Code shall be confidential and shall be provided only to the officers and directors of the Firm, Firm counsel or regulatory authorities upon appropriate request.

 

  (c) Every Access Person shall report to the Chief Compliance Officer of the Firm the information described in, Sub-paragraph (4)(d) of this Section with respect to transactions in any security or Reportable Fund in which such person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership in the Security; an Access Person is presumed to be a beneficial owner of Securities that are held by his/her immediate family members sharing the Access Person’s household.

 

  (d) Reports required to be made under this Paragraph (5) shall be made not later than 10 business days after the end of the calendar quarter in which the transaction to which the report relates was effected. Every Access Person and Nonresident Director shall be required to submit a report for all periods, including those periods in which no Securities transactions were effected. A report shall be made on the form attached hereto as Exhibit C or on any other form containing the following information:

 

  (i) The date of the transaction, the Security name and cusip, the number of shares, and the principal amount of each Security transacted;

 

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  (ii) The nature of the transaction (i.e., purchase or sale);

 

  (iii) The price at which the transaction was effected; and

 

  (iv) The name of the broker, dealer or bank with or through whom the transaction was effected. Duplicate copies of the Securities transaction confirmation of all personal transactions and copies of periodic statements for all Securities accounts may be appended to Exhibit C to fulfill the reporting requirement.

 

  (e) Any such report may contain a statement that the report shall not be construed as an admission by the Person making such report that he or she has any direct or indirect beneficial ownership in the Security to which the report relates.

 

  (6) Conflict of Interest

Every Access Person shall notify the Chief Compliance Officer of the Firm of any personal conflict of interest relationship which may involve the Firm’s clients, such as the existence of any economic relationship between their transactions and Securities held or to be acquired by any portfolio of the Firm. Such notification shall occur in the pre-clearance process.

 

G. REPORTING OF VIOLATIONS

 

  (1) Any employee of the Firm who becomes aware of a violation of the Code must promptly report such violation to the Chief Compliance Officer.

 

  (2) The Firm’s Chief Compliance Officer shall promptly report to the Board of Directors and to the any Investment Company client’s Compliance Officer all material violations of this Code and the reporting requirements there-under.

 

  (3) When the Firm’s Chief Compliance Officer finds that a transaction otherwise reportable to the Board of Directors under Paragraph (2) of this Section could not reasonably be found to have resulted in a fraud, deceit or manipulative practice in violation of Section 206 of the Advisers Act or Rule 17j-1 of the ‘40 Act, he may, in his discretion, lodge a written memorandum of such finding and the reasons therefore with the reports made pursuant to this Code, in lieu of reporting the transaction to the Board of Directors.

 

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  (4) The Board of Directors, or a Committee of Directors created by the Board of Directors for that purpose, shall consider reports made to the Board of Directors hereunder and shall determine whether or not this Code has been violated and what sanctions, if any, should be imposed.

 

H. ANNUAL REPORTING TO THE BOARD OF DIRECTORS

The Firm’s Chief Compliance Officer shall prepare an annual report relating to this Code to the Board of Directors. Such annual report shall:

 

  (1) Summarize existing procedures concerning personal investing and any changes in the procedures made during the past year;

 

  (2) Identify any violations requiring significant remedial action during the past year; and

 

  (3) Identify any recommended changes in the existing restrictions or procedures based upon the Firm’s experience under its Code, evolving industry practices or developments in applicable laws or regulations.

 

I. SANCTIONS

Upon discovering a violation of this Code, the Board of Directors may impose such sanctions as they deem appropriate, including, among other things, a letter of censure or suspension or termination of the employment of the violator.

 

J. RETENTION OF RECORDS

This Code, a list of all Persons required to make reports hereunder from time to time, as shall be updated by the Firm’s Chief Compliance Officer, a copy of each report made by an Access Person hereunder, each memorandum made by the Firm’s Chief Compliance Officer hereunder and a record of any violation hereof and any action taken as a result of such violation, shall be maintained by the Firm.

 

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Exhibit A

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

CODE OF ETHICS

INITIAL REPORT OF ACCESS PERSONS

To the Chief Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:

1. I hereby acknowledge receipt of a copy of the Code of Ethics for Barrow, Hanley, Mewhinney & Strauss, Inc. (the “Firm”).

2. I have read and understand the Code and recognize that I am subject thereto in the capacity of Access Persons.

3. Except as noted below, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Firm, such as any economic relationship between my transactions and Securities held or to be acquired by the Firm or any of its portfolios.

4. As of the date below I had a direct or indirect beneficial ownership in the following Securities:

 

SECURITY NAME/TYPE/TICKER INTEREST RATE & MATURITY

  

NUMBER OF

SHARES

   PRINCIPAL VALUE   

TYPE OF

INTEREST

(DIRECT OR

INDIRECT)

        
        
        
        
        
        
        
        
        

5. I hereby certify I have the following brokerage accounts open and have directed the firm to send duplicate confirms to Barrow, Hanley, Mewhinney and Strauss.

 

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NAME OF FIRM

   TYPE OF INTEREST
(DIRECT OR INDIRECT)
  
  
  
  
  
  
  
  
  

NOTE: Do not report transactions in U.S. Government securities, bankers’ acceptances, bank certificates of deposit, commercial paper and unaffiliated registered open-end investment companies (non-Reportable Funds).

 

Date:          Signature:      
  (First date of investment personnel status)      
      Print Name:      
      Title:      
      Employer:    Barrow, Hanley, Mewhinney & Strauss, Inc.
Date:          Signature:      
        Firm’s Chief Compliance Officer

 

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Exhibit B

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

CODE OF ETHICS

ANNUAL REPORT OF ACCESS PERSONS

To the Chief Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:

1. I have read and understand the Code of Ethics and recognize that I am subject thereto in the capacity of an Access Person.

2. I hereby certify that, during the year ended December 31, 20    , I have complied with the requirements of the Code and I have reported all Securities transactions required to be reported pursuant to the Code.

3. I hereby certify that I have not disclosed pending “buy” or “sell” orders for a Client’s portfolio of the Firm to any employees of any other OMUSH affiliate, except where the disclosure occurred subsequent to the execution or withdrawal of an order.

4. Except as noted below, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Firm, such as any economic relationship between my transactions and securities held or to be acquired by the Firm or any of its portfolios.

5. As of December 31, 20    , I had a direct or indirect beneficial ownership in the following Securities:

 

SECURITY NAME/TYPE/TICKER INTEREST RATE & MATURITY

   NUMBER OF SHARES   

TYPE OF INTEREST

(DIRECT OR

INDIRECT)

     
     
     
     
     
     
     
     
     

6. I hereby certify I have the following brokerage accounts open and have directed the firm to send duplicate confirms to Barrow, Hanley, Mewhinney and Strauss.

 

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NAME OF FIRM

   TYPE OF INTEREST
(
DIRECT OR INDIRECT)
  
  
  
  
  
  
  
  
  

NOTE: Do not report transactions in U.S. Government securities, bankers’ acceptances, bank certificates of deposit, commercial paper and unaffiliated registered open-end investment companies (non-Reportable Funds).

 

Date:          Signature:     
  (First date of investment personnel status)      
     

Print Name:

    
     

Title:

    
     

Employer:

 

Barrow, Hanley, Mewhinney & Strauss, Inc.

Date:

        

Signature:

    
       

Firm’s Chief Compliance Officer

 

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Exhibit C

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

QUARTERLY REPORT OF ACCESS PERSONS

Securities Transactions Report for the Calendar Quarter Ended:                                     

To the Chief Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:

During the quarter referred to above, the following transactions were effected in Securities of which I had, or by reason of such transaction acquired, direct or indirect beneficial ownership, and which are required to be reported pursuant to the Code adopted by the Firm.

 

SECURITY NAME/TYPE

TICKER

INTEREST RATE & MATURITY

   DATE OF
TRANSACTION
   NO. OF
SHARES
   DOLLAR
AMOUNT OF
TRANSACTION
  

NATURE OF
TRANSACTION

(Purch., Sale,
Other)

   PRICE   

BROKER/
DEALER
OR
BANK

NAME

                 
                 
                 
                 
                 
                 
                 
                 
                 

During the quarter referred to above, the following brokerage accounts were opened with direct or indirect beneficial ownership, and which are required to be reported pursuant to the Code adopted by the Firm.

 

NAME OF FIRM

   TYPE OF INTEREST
(
DIRECT OR INDIRECT)
   DATE ACCOUNT
OPENED
     
     
     
     
     
     
     

 

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This report (i) excludes transactions with respect to which I had no direct or indirect influence or control, (ii) excludes other transactions not required to be reported, and (iii) is not an admission that I have or had any direct or indirect beneficial ownership in the Securities listed above.

Except as noted on the reverse side of this report, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Firm, such as the existence of any economic relationship between my transactions and Securities held or to be acquired by Firm clients or any related portfolios.

NOTE: Do not report transactions in U.S. Government securities, bankers’ acceptances, bank certificates of deposit, commercial paper and unaffiliated registered open-end investment companies (non-Reportable Funds).

 

Date:          Signature:     
  (First date of investment personnel status)      
     

Print Name:

    
     

Title:

    
     

Employer:

 

Barrow, Hanley, Mewhinney & Strauss, Inc.

Date:

        

Signature:

    
       

Firm’s Chief Compliance Officer

 

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   Barrow, Hanley, Mewhinney & Strauss, Inc.


Exhibit D

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

ACCESS PERSONS

Personal Securities Transactions Pre-clearance Form

(See Section D(2), Code of Ethics)

To the Chief Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:

I hereby request pre-clearance of the following proposed transactions:

 

SECURITY NAME/TYPE/

TICKER

INTEREST RATE & MATURITY

   NO. OF
SHARES
   DOLLAR
AMOUNT OF
TRANSACTION
  

NATURE OF
TRANSACTION

(Purch., Sale,
Other)

  

PRICE

(OR
PROPOSED
PRICE)

   BROKER/
DEALER
OR BANK
THROUGH
WHOM
EFFECTED
   AUTHORIZED
                  YES    NO
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    

 

Date:          Signature:     
  (First date of investment personnel status)      
     

Print Name:

    
     

Title:

    
     

Employer:

 

Barrow, Hanley, Mewhinney & Strauss, Inc.

Date:

        

Signature:

    
       

Firm’s Chief Compliance Officer

 

Code of Ethics 12/30/05

 

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   Barrow, Hanley, Mewhinney & Strauss, Inc.
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