0001193125-13-187725.txt : 20131024 0001193125-13-187725.hdr.sgml : 20131024 20130430170035 ACCESSION NUMBER: 0001193125-13-187725 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 18 FILED AS OF DATE: 20130430 DATE AS OF CHANGE: 20130430 EFFECTIVENESS DATE: 20130430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIMOTHY PLAN CENTRAL INDEX KEY: 0000916490 IRS NUMBER: 597016828 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08228 FILM NUMBER: 13798595 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 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-73248 FILM NUMBER: 13798596 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 S000011344 Timothy Conservative Variable C000031436 Timothy Conservative Variable 0000916490 S000011345 Timothy Strategic Variable C000031437 Timothy Strategic Variable 485BPOS 1 d503137d485bpos.htm THE TIMOTHY PLAN The TImothy Plan

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON 04/30/2013

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.          [54]   

and

REGISTRATION STATEMENT

UNDER

      THE INVESTMENT COMPANY ACT OF 1940      x   
  Amendment No.          [55]   

(Check appropriate box or boxes.)

 

 

THE TIMOTHY PLAN

(Exact name of Registrant as Specified in Charter)

 

 

1055 MAITLAND CENTER COMMONS

MAITLAND, FL 32751

(Address of Principal Executive Office)

407-644-1986

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

ARTHUR D. ALLY, 1055 MAITLAND CENTER COMMONS

MAITLAND, FL 32751

(Name and Address of Agent for Service)

Please send copy of communications to:

DAVID D. JONES, ESQUIRE

422 Fleming Street, Suite 7

Key West, FL 33040

 

 

Approximate Date of Proposed Public Offering: As soon as practicable following effective date.

It is proposed that this filing will become effective (check appropriate box):

 

x immediately upon filing pursuant to paragraph (b)
¨ on (date) pursuant to paragraph (b)
¨ 60 days after filing pursuant to paragraph (a)(1)
¨ on (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, 2012 was filed on March 20, 2013.

 

 

 


 

LOGO

 

PROSPECTUS

 

April 30, 2013

 

TIMOTHY PLAN VARIABLE SERIES

 

 
   

Strategic Growth

 

Conservative Growth                        

 
 

 

The Timothy Plan Strategic Growth Portfolio Variable Series (“Strategic Growth Portfolio”) and the Timothy Plan Conservative Growth Portfolio Variable Series (“Conservative Growth Portfolio”) (each a “Portfolio” and, collectively, the “Portfolios”) are offered only to separate accounts (the “Separate Accounts”) established by various insurance companies (collectively, the “Insurance Companies”) and to certain eligible qualified retirement plans (“Qualified Plans”). The Portfolios are intended to serve as investment vehicles for variable life insurance, variable annuity and group annuity products of Insurance Companies or for Qualified Plans. The general public may not directly purchase shares of the Portfolios.

 

The Portfolios invest in the Timothy Plan Traditional Funds. The Timothy Plan believes that it has a responsibility to invest in a moral and ethical manner. Accordingly, none of the Traditional Funds invest in any company that is involved in the production or wholesale distribution of alcohol, tobacco, or gambling equipment, gambling enterprises, 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 Portfolios’ 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 Traditional Funds. Timothy Partners, Ltd. (“TPL”) is investment advisor to the Traditional Funds and to the Portfolios, 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 exclusion 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 Traditional Funds is discovered to have changed its policies and is engaging in a prohibited practice, that security will be sold as soon as is reasonably practicable.

 

Because none of our Traditional 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 Portfolios can achieve their investment objectives within the parameters of ethical investing, eliminating Excluded Securities as investments in the Traditional Funds may have an adverse effect on a Portfolio’s performance and ongoing expenses.

 

THE PORTFOLIOS ARE DISTRIBUTED THROUGH:

Timothy Partners, Ltd., 1055 Maitland Center Commons, Maitland, Florida 32751

 

 

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 


Table of Contents

 

Section 1 | Portfolio Summaries  
 

This section sets forth a general description of important information you should know about each of our Portfolios.

 

 
  Strategic Growth Portfolio    2  
 

Conservative Growth Portfolio

 

   6  
Section 2 | Additional Information  
  This section addresses defensive positions that may be taken, and the Board’s action in the event of a conflict of interest between contract owners and Qualified Plans.  
    10  

 

Section 3 | How You Can Buy and Sell Shares

 
 

This section provides the information you need to move money into or out of your account.

 

 
  How to Buy Shares   11  
  How to Sell Shares   11  

 

Section 4  | General Information

 
 

This section summarizes the Portfolios’ distribution policies and other general Portfolio information.

 

 
  Dividends, Distributions and Taxes   12  
  Fair Value Pricing   12  
  Investment Advisor   12  
  Principal Underwriter   13  
  Privacy Policy   13  
  Customer Identification Program   13  

 

Section 5  | Financial Highlights

 
  This section provides the Portfolios’ financial performance for the past five fiscal periods.  
    14  

 

Section 6  | For More Information

 
  This section tells you how to obtain additional information relating to the Portfolios.  
    16  

 

1  |  P a g e


Section 1  |  Portfolio Summaries

Strategic Growth Portfolio

INVESTMENT OBJECTIVE

This Portfolio seeks to achieve medium to high levels of long-term capital growth.

FEES AND EXPENSES

Investors using a Portfolio to fund a Separate Account will pay certain fees and expenses in connection with the Portfolio, which are estimated in the table below. Each Portfolio 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 any Insurance Company or Qualified Plan. Separate Account Owners and Plan Participants should refer to the Insurance Company’s prospectus or plan document, as applicable, for information on those fees or charges.

Annual Portfolio Operating Expenses (1)

(Expenses that you pay each year as a percentage of the value of your investment.)

 

          

   Management Fee (2)

       0.10%            

   Distribution/Service(12b-1 Fees)

       0.00%            

   Other Expenses (including administrative fees, transfer agency fees, and all other ordinary operating expenses not listed above) (3)

       0.34%            

   Fees and Expenses of Acquired Portfolios (4)

       1.66%            

   Total Annual Portfolio Operating Expenses

       2.10%            

 

(1) The annual operating expenses of the Portfolio as shown in the table above are as of the Portfolio’s fiscal year ended December 31, 2012.
(2) Management Fees are 0.10% of the average daily net assets of the Portfolio which is paid to the Portfolio’s Advisor, Timothy Partners. Ltd.
(3) Other Expenses include administration fees.
(4) Fees and expenses of Acquired Funds represent the pro rata expense indirectly incurred by the Portfolio as a result of investing in the Timothy Plan Traditional Funds that have their own expenses. The fees and expenses are not used to calculate the Portfolio’s net asset values and do not correlate to the ratio of Expenses to Average Net Assets found in the Financial Highlights sections of this prospectus.

Example:

This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio 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 Portfolio’s operating expenses remain the same. The example does not reflect any insurance product fees or any additional expenses that participants in a qualified plan may bear relating to the operations of their plan. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

 

      

   1 Year

   $213        

   3 Years

   $658        

   5 Years

   $1,129            

   10 Years

   $2,431            

 

P a g e  |  2


PRINCIPAL INVESTMENT STRATEGIES

This Portfolio normally will invest at least 75% of its assets in the following Timothy Funds according to the following approximate range of percentages:

 

  Timothy Plan Traditional Fund   

% of Fund’s Net Assets

Invested in Traditional Fund

   Small Cap Value Fund

   5 - 10%

   Large/Mid Cap Value Fund

   15 - 25%

   Large/Mid Cap Growth Fund

   15 - 25%

   Aggressive Growth Fund

   5 - 10%

   High Yield Bond Fund

   5 - 15%

   International Fund

   20 - 30%

   Israel Common Values Fund

   5 - 10%

   Emerging Markets Fund

   5 - 10%

   Defensive Strategies Fund

   5 - 15%

The Strategic Growth Portfolio normally will invest its remaining cash, if any, in the Fidelity Select Money Market Portfolio.

The Advisor determines the specific asset allocation program. On each day that the Portfolio is open for business, the Advisor reviews the asset allocation program and reallocates, as necessary, for any new moneys invested in the Portfolio. In order to achieve its investment objective, the Portfolio typically allocates its assets within the predetermined percentage ranges. Even so, the Portfolio may temporarily exceed one or more of the applicable percentage limits for short periods. The percentages reflect the extent to which the Portfolio 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 the Portfolio’s investments in those market segments and their corresponding Traditional Funds. The Advisor may alter these percentage ranges when it deems appropriate. The assets of the Portfolio will be allocated among the Traditional Funds in accordance with its investment objective, the Advisor’s outlook for the economy and the financial markets, and the relative market valuations of the Traditional Funds. The Advisor also reallocates the Portfolio’s investments in the Traditional Funds at the end of each fiscal quarter to maintain the asset allocation program.

PRINCIPAL RISKS

 

1. General Risk  |  As with most other mutual funds, you can lose money by investing in the Strategic Growth Portfolio. 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 Portfolio is indirectly subject to the following risks that are inherent in the Traditional Funds in which the Portfolio invests:

 

   

Stock Market Risk:  The Portfolio 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.

 

   

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.

 

   

Mid-size Company Investing Risk:  Investing in mid-sized companies often involves greater risk than investing in larger companies. Mid-sized companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of mid-sized companies, therefore, tend to be more volatile than the securities of larger, more established companies. Mid-sized company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a Portfolio wants to sell a large quantity of a mid-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.

 

   

Small 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 Portfolio 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.

 

   

Excluded Security Risk:  Because the Traditional Funds do not invest in Excluded Securities, and will divest themselves of securities that are subsequently discovered to be ineligible, the Portfolio may be riskier than other Funds that invest in a broader array of securities.

 

   

Growth Risk:  The Traditional Funds often invest in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the Funds’ managers’ perception of a company’s growth potential is not realized, the securities purchased may not perform as expected, ultimately reducing the Portfolio’s return. In addition, because different types of stocks tend to shift in and out of favor depending on market and economic conditions, “growth” stocks may perform differently from the market as a whole and other types of securities.

 

3  |  P a g e


   

Value Investing Risk:  Because different types of stocks tend to shift in and out of favor depending on market and economic conditions, “value” stocks may perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time. It is also possible that a value stock may never appreciate to the extent expected.

 

   

Sector Risk:  If certain industry sectors or types of securities don’t perform as well as the Fund Managers expect, the Portfolio’s performance could ultimately suffer.

 

   

Foreign Risk:  The Funds’ 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 the securities markets of many foreign countries are relatively small, with a limited number of companies representing a smaller 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 Portfolio’s investments in a foreign country.

 

   

Israel Risk:  Investments in the securities of Israel may experience more rapid and extreme changes in value than funds with investments solely in securities of U.S. companies or funds that invest across a larger spectrum of the foreign market. This is because the securities market in Israel is relatively small, with a limited number of companies representing a smaller number of industries. Israeli 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.

 

   

Emerging Market Risk:  The Emerging Markets Fund invests in emerging markets, which expose the Portfolio to additional risks due to the lack of historical or regulatory controls, possible more rapid and extreme changes in value than domestic securities, and possible nationalization, expropriation or confiscatory taxation or political changes.

 

   

Currency Risk:  Because the securities represented by ADRs are foreign stocks denominated in non-U.S. currency, 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 Funds’ investments in foreign securities.

 

   

High Yield Security Risk:  Investments in fixed-income securities that are rated below investment grade (“high yield securities”) by one or more Nationally Recognized Statistical Rating Organizations (NRSROs) may be subject to greater risk of loss of principal and interest than investments in higher-rated fixed-income securities. High yield securities are also generally considered to be subject to greater market risk than higher-rated securities. The capacity of issuers of high yield securities to pay interest and repay principal is more likely to weaken than is that of issuers of higher-rated securities in times of deteriorating economic conditions or rising interest rates. In addition, high yield securities may be more susceptible to real or perceived adverse economic conditions than higher-rated securities. The market for high yield securities may be less liquid than the market for higher-rated securities. This can adversely affect the Fund’s ability to buy or sell optimal quantities of high yield securities at desired prices.

 

   

Interest Rate Risk:  To the extent that the Portfolio invests in the High Yield Bond Fund, the Portfolio will be exposed to interest rate risk. When interest rates rise, bond prices fall; the higher the High Yield Bond 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 Portfolio is to interest rate risk.

 

   

Credit Risk:  To the extent that the Portfolio invests in the High Yield Bond Fund, the Portfolio will be exposed to credit risk. The Portfolio could lose money if any bonds owned by the High Yield bond Fund are downgraded in credit rating or go into default.

 

   

Real Estate Investment Trust (“REITs”) Risk:  The Portfolio invests in the Defensive Strategies Fund and through it, in REITs. The Fund is subject to the risks experienced in real estate ownership, real estate financing, or both. As the economy is subjected to a period of economic deflation or interest rate increases, the demand for real estate may fall, causing a decline in the value of real estate owned. Also, as interest rates increase, the values of existing mortgages fall. The higher the duration (a calculation reflecting time risk, taking into account the average maturity of the mortgages) of the mortgages held in REITs owned by the Fund, the more sensitive the Fund is to interest rate risks. The Fund is also subject to credit risk; the Fund could lose money if mortgagors default on mortgages held in the REITs.

 

   

Commodities-based Exchange Traded Funds (“Commodity ETFs”) and Commodity-Based Equities Risk:  The Portfolio invests in the Defensive Strategies Fund and through it, in Commodity ETFs and commodities-based equities without regard to their capitalization. Commodity ETFs invest in Physical Commodities and/or Commodity Futures Contracts, which contracts are highly leveraged investment vehicles, and therefore generally considered to be high risk. By investing in Commodity ETFs, the Fund assumes portions of that risk. ETFs may only purchase commodities futures contracts (the buy side), therefore the Fund’s risk includes missing opportunities to realize gains by shorting futures contracts (the sell side) in deflationary economic periods. It is possible the Fund’s entire ETF investment could be lost. Commodities are defined to include, but not be limited to, many basic products used in manufacturing, certain financial instruments, and precious metals.

 

   

Treasury-Inflation Protected Securities (“TIPS”) Risk:  The Portfolio invests in the Defensive Strategies Fund and through it, in TIPS. Because the real rate of return offered by TIPS, which represents the growth of your purchasing power, is guaranteed by the Federal Government, TIPS may offer a lower return than other fixed income instruments that do not have such guarantees. Other conventional bond issues may offer higher yields, and the Fund may invest in such bond issues if deemed advantageous by the Advisor and Investment Managers.

 

P a g e  |  4


   

Non-Diversification Risk:  Because the Portfolio may invest in a smaller number of securities (the Traditional Funds), adverse changes to a single Fund will have a more pronounced negative effect on the Portfolio than if the Portfolio’s investments were more widely distributed.

 

3. Who Should Buy This Portfolio  |  The Strategic Growth Portfolio is most appropriate for investors who understand the risks of investing in moderately- to aggressively-oriented equity and bond funds and who wish to allocate their investments among multiple funds with a single investment.

PAST PERFORMANCE

Although past performance of the Portfolio is no guarantee of how it will perform in the future, historical performance may give you some indication of the risk of investing in the Portfolio because it demonstrates how the Portfolio’s returns have varied over time. The bar chart shows changes in the Portfolio’s returns since its inception. The performance table shows how the Portfolio’s average annual total returns compare over time to the returns of a broad-based securities market index. 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. Past performance is no guarantee of future performance.

Year-by-year Annual Total Returns for Portfolio Shares

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

 

LOGO

The Portfolio’s total return for the most recent quarter ended March 31, 2013 was 6.54%.

 

Best

Quarter

  

Worst

Quarter

 

Jun-09

   Dec-08

 

16.67%

   -24.48%

Average Annual Total Returns

(for periods ending on December 31, 2012(1))

 

 Strategic Growth Portfolio     
    

 

1 Year  

   5 Year      10 Year 

  Return before taxes

   11.42%      (0.63)%      5.31%  

  Return after taxes on distributions (1)

   10.86%      (1.47)%      4.66%  

  Return after taxes on distributions and sale of shares (1)

   7.42%      (0.92)%      4.39%  

  DJ Global Moderately Aggressive Portfolio Index (2) (reflects no deduction for fees, expenses or taxes)

   13.96%      2.58%      9.19%  

 

(1) Strategic Growth Portfolio commenced investment operations on May 1, 2002.
(2) The Dow Jones Global Moderately Aggressive Portfolio Index is a widely recognized measure of portfolios with similar levels of risk. The Dow Jones Portfolio Index is rebalanced monthly to the appropriate percentage of risk experienced by the all stock Portfolio Index over the previous thirty-six months.

 

5  |  P a g e


Conservative Growth Portfolio

INVESTMENT OBJECTIVE

This Portfolio seeks to achieve moderate levels of long-term capital growth.

FEES AND EXPENSES

Investors using a Portfolio to fund a Separate Account will pay certain fees and expenses in connection with the Portfolio, which are estimated in the table below. Each Portfolio 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 any Insurance Company or Qualified Plan. Separate Account Owners and Plan Participants should refer to the Insurance Company’s prospectus or plan document, as applicable, for information on those fees or charges.

Annual Portfolio Operating Expenses(1)

(Expenses that you pay each year as a percentage of the value of your investment.)

 

          

   Management Fee(2)

       0.10%            

   Distribution/Service(12b-1 Fees)

       0.00%            

   Other Expenses (including administrative fees, transfer agency fees, and all other ordinary operating expenses not listed above)(3)

       0.32%            

   Fees and Expenses of Acquired Portfolios(4)

       1.15%            

   Total Annual Portfolio Operating Expenses

       1.57%            

 

(1) The annual operating expenses of the Portfolio as shown in the table above are as of the Portfolio’s fiscal year ended December 31, 2012.
(2) Management Fees are 0.10% of the average daily net assets of the Portfolio which is paid to the Portfolio’s Advisor, Timothy Partners, Ltd.
(3) Other Expenses include administration fees.
(4) Fees and expenses of Acquired Funds represent the pro rata expense indirectly incurred by the Portfolio as a result of investing in the Timothy Plan Traditional Funds that have their own expenses. The fees and expenses are not used to calculate the Portfolio’s net asset value and do not correlate to the ratio of Expenses to Average Net Assets found in the Financial Highlights sections of this prospectus.

Example:

This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Portfolio 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 Portfolio’s operating expenses remain the same. The example does not reflect any insurance product fees or any additional expenses that participants in a qualified plan may bear relating to the operations of their plan. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

 

      

   1 Year

   $159        

   3 Years

   $495        

   5 Years

   $854            

   10 Years

   $1,867                                             

 

P a g e  |  6


PRINCIPAL INVESTMENT STRATEGIES

The Conservative Growth Portfolio normally will invest at least 75% of its total assets in the following Timothy Funds according to the following approximate range of percentages:

 

  Timothy Plan Traditional Fund   

% of Fund’s Net Assets

Invested in Traditional Fund

   Small Cap Value Fund

   0 - 10%

   Large/Mid Cap Value Fund

   10 - 20%

   Large/Mid Cap Growth Fund

   5 - 15%

   Aggressive Growth Fund

   0 - 5%

   High Yield Bond Fund

   5 - 15%

   Fixed Income Fund

   20 - 40%

   International Fund

   5 - 15%

   Israel Common Values Fund

   0 - 5%

   Emerging Markets Fund

   0 - 5%

   Defensive Strategies Fund

   10 - 30%

The Conservative Growth Portfolio normally will invest its remaining cash, if any, in the Fidelity Select Money Market Portfolio.

The Advisor determines the specific asset allocation program. On each day that the Portfolio is open for business, the Advisor reviews the asset allocation program and reallocates, as necessary, for any new moneys invested in the Portfolio. In order to achieve its investment objective, the Portfolio typically allocates its assets within the predetermined percentage ranges. Even so, the Portfolio may temporarily exceed one or more of the applicable percentage limits for short periods. The percentages reflect the extent to which the Portfolio 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 the Portfolio’s investments in those market segments and their corresponding Traditional Funds. The Advisor may alter these percentage ranges when it deems appropriate. The assets of the Portfolio will be allocated among the Traditional Funds in accordance with its investment objective, the Advisor’s outlook for the economy and the financial markets, and the relative market valuations of the Traditional Funds. The Advisor also reallocates the Portfolio’s investments in the Traditional Funds at the end of each fiscal quarter to maintain the asset allocation program.

PRINCIPAL RISKS

 

1. General Risk | As with most other mutual funds, you can lose money by investing in the Conservative Growth Portfolio. 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 Portfolio is indirectly subject to the following risks that are inherent in the Traditional Funds in which the Portfolio invests:

 

   

Stock Market Risk:  The Portfolio 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.

 

   

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.

 

   

Mid-size Company Investing Risk:  Investing in mid-sized companies often involves greater risk than investing in larger companies. Mid-sized companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of mid-sized companies, therefore, tend to be more volatile than the securities of larger, more established companies. Mid-sized company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a Portfolio wants to sell a large quantity of a mid-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.

 

   

Small 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 Portfolio 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.

 

   

Excluded Security Risk:  Because the Traditional Funds do not invest in Excluded Securities, and will divest themselves of securities that are subsequently discovered to be ineligible, the Portfolio may be riskier than other Funds that invest in a broader array of securities.

 

   

Growth Risk:  The Traditional Funds often invest in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the Funds’ managers’ perception of a company’s growth potential is not realized, the securities purchased may not perform as expected, reducing the Portfolio’s return. In addition, because different types of stocks tend to shift in and out of favor depending on market and economic conditions, “growth” stocks may perform differently from the market as a whole and other types of securities.

 

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Value Investing Risk:  Because different types of stocks tend to shift in and out of favor depending on market and economic conditions, “value” stocks may perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time. It is also possible that a value stock may never appreciate to the extent expected.

 

   

Sector Risk:  If certain industry sectors or types of securities don’t perform as well as the Fund Managers expect, the Portfolio’s performance could suffer.

 

   

Foreign Risk:  The Funds’ 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 the securities markets of many foreign countries are relatively small, with a limited number of companies representing a smaller 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 Portfolio’s investments in a foreign country.

 

   

Israel Risk:  Investments in the securities of Israel may experience more rapid and extreme changes in value than funds with investments solely in securities of U.S. companies or funds that invest across a larger spectrum of the foreign market. This is because the securities market in Israel is relatively small, with a limited number of companies representing a smaller number of industries. Israeli 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.

 

   

Emerging Market Risk:  The Emerging Markets Fund invests in emerging markets, which expose the Portfolio to additional risks due to the lack of historical or regulatory controls, possible more rapid and extreme changes in value than domestic securities, and possible nationalization, expropriation or confiscatory taxation or political changes.

 

   

Currency Risk:  Because the securities represented by ADRs are foreign stocks denominated in non-U.S. currency, 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 Portfolio’s investments in foreign securities.

 

   

High Yield Security Risk:  Investments in fixed-income securities that are rated below investment grade (“high yield securities”) by one or more Nationally Recognized Statistical Rating Organizations (NRSROs) may be subject to greater risk of loss of principal and interest than investments in higher-rated fixed-income securities. High yield securities are also generally considered to be subject to greater market risk than higher-rated securities. The capacity of issuers of high yield securities to pay interest and repay principal is more likely to weaken than is that of issuers of higher-rated securities in times of deteriorating economic conditions or rising interest rates. In addition, high yield securities may be more susceptible to real or perceived adverse economic conditions than higher-rated securities. The market for high yield securities may be less liquid than the market for higher-rated securities. This can adversely affect the Fund’s ability to buy or sell optimal quantities of high yield securities at desired prices.

 

   

Interest Rate Risk:  To the extent that the Portfolio invests in the High Yield Bond Fund, and other fixed income securities, the Portfolio will be exposed to interest rate risk. When interest rates rise, bond prices fall; the higher the High Yield Bond 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 Portfolio is to interest rate risk.

 

   

Credit Risk:  To the extent that the Portfolio invests in the High Yield Bond Fund, and other fixed income securities, the Portfolio will be exposed to credit risk. The Portfolio could lose money if any bonds owned by the High Yield Bond Fund are downgraded in credit rating or go into default.

 

   

Real Estate Investment Trust (“REITS”) Risk:  The Portfolio invests in the Defensive Strategies Fund and through it, in REITs. The Fund is subject to the risks experienced in real estate ownership, real estate financing, or both. As the economy is subjected to a period of economic deflation or interest rate increases, the demand for real estate may fall, causing a decline in the value of real estate owned. Also, as interest rates increase, the values of existing mortgages fall. The higher the duration (a calculation reflecting time risk, taking into account the average maturity of the mortgages) of the mortgages held in REITs owned by the Fund, the more sensitive the Fund is to interest rate risks. The Fund is also subject to credit risk; the Fund could lose money if mortgagors default on mortgages held in the REITs.

 

   

Commodities-based Exchange Traded Funds (“Commodity ETFs”) and Commodity-Based Equities Risk:  The Portfolio invests in the Defensive Strategies Fund and through it, in Commodity ETFs and commodities-based equities without regard to their capitalization. Commodity ETFs invest in Physical Commodities and/or Commodity Futures Contracts, which contracts are highly leveraged investment vehicles, and therefore generally considered to be high risk. By investing in Commodity ETFs, the Fund assumes portions of that risk. ETFs may only purchase commodities futures contracts (the buy side), therefore the Fund’s risk includes missing opportunities to realize gains by shorting futures contracts (the sell side) in deflationary economic periods. It is possible the Fund’s entire ETF investment could be lost. Commodities are defined to include, but not be limited to, many basic products used in manufacturing, certain financial instruments, and precious metals.

 

   

Treasury-Inflation Protected Securities (“TIPS”) Risk:  The Portfolio invests in the Defensive Strategies Fund and through it, in TIPS. Because the real rate of return offered by TIPS, which represents the growth of your purchasing power, is guaranteed by the Federal Government, TIPS may offer a lower return than other fixed income instruments that do not have such guarantees. Other conventional bond issues may offer higher yields, and the Fund may invest in such bond issues if deemed advantageous by the Advisor and Investment Managers.

 

   

Non-Diversification Risk:  Because the Portfolio may invest in a smaller number of securities (the Traditional Funds), adverse changes to a single Fund will have a more pronounced negative effect on the Portfolio than if the Portfolio’s investments were more widely distributed.

 

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3. Who Should Buy This Portfolio  |  The Conservative Growth Portfolio is most appropriate for investors who understand the risks of investing in moderately risk-oriented equity and bond funds, but who also wish to realize current income and allocate their investments among multiple funds with a single investment.

PAST PERFORMANCE

Although past performance of the Portfolio is no guarantee of how it will perform in the future, historical performance may give you some indication of the risk of investing in the Portfolio because it demonstrates how the Portfolio’s returns have varied over time. The bar chart shows changes in the Portfolio’s returns since its inception. The performance table shows how the Portfolio’s average annual total returns compare over time to the returns of a broad-based securities market index. 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. Past performance is no guarantee of future performance.

Year-by-year Annual Total Returns for Portfolio Shares

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

 

LOGO

The Portfolio’s total return for the most recent quarter ended March 31, 2013 was 4.31%.

 

Best

Quarter

  

Worst

Quarter

 

Jun-09

   Dec-08

 

12.68%

   -16.93%

Average Annual Total Returns

(for period ending on December 31, 2012(1))

 

 Conservative Growth Portfolio     
    

 

1 Year  

   5 Year      10 Year 

  Return before taxes

   7.79%      1.61%      5.38%  

  Return after taxes on distributions (1)

   7.11%      0.67%      4.71%  

  Return after taxes on distributions and sale of shares (1)

   5.07%      0.88%      4.37%  

  Dow Jones Global Moderate Portfolio Index (2) (reflects no deduction for fees, expenses or taxes)

   11.24%      3.44%      8.25%  

 

(1) Conservative Growth Portfolio commenced investment operations on May 1, 2002.
(2) The Dow Jones Global Moderate Portfolio Index is a widely recognized measure of portfolios with similar levels of risk. The Dow Jones Portfolio Index is rebalanced monthly to the appropriate percentage of risk experienced by the all stock Portfolio Index over the previous thirty-six months.

 

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Section 2  |  Additional Information

Each Portfolio may, for temporary defensive purposes, invest up to 100% of its assets in obligations of the U.S. government, its agencies and instrumentalities, commercial paper, and certificates of deposit and banker’s acceptances. When a Portfolio takes a temporary defensive position, it will not be investing according to its investment objective, and at such times, the performance of the Portfolio will be different than if it had invested strictly according to its objectives. A discussion of the Trust’s policies for disclosing a Portfolio’s securities holdings may be found in the Statement of Additional Information (“SAI”), relating to the Portfolios dated April 30, 2013.

The Portfolios may be offered to Separate Accounts of both variable annuity and variable life insurance contracts sponsored by Insurance Companies and to Qualified Plans. Due to differences in tax treatment and other considerations, the interests of various contract owners participating in a Portfolio and the interests of Qualified Plans investing in such Portfolio may conflict. The Trust’s Board of Trustees will monitor events in order to identify the existence of any material irreconcilable conflicts and to determine what action, if any, should be taken in response to any conflict.

 

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Section 3  |  How You Can Buy and Sell Shares

Purchases and redemptions of shares in any of the Portfolios may be made only by an insurance company for its separate accounts at the direction of Variable Contract owners or by a Qualified Plan on behalf of its participants. Please refer to the Prospectus of your Separate Account or Plan Document, as applicable, for information on how to direct investments in, or redemptions from, the Portfolios and any fees that may apply. Generally, the Insurance Company or Qualified Plan places orders for shares based on payments and withdrawal requests received from Separate Account owners or Plan Participants 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 during which a payment or withdrawal request is received by the Insurance Company or Qualified Plan. There are no sales or redemption charges. However, certain sales or deferred sales charges and other charges may apply to your Separate Account or Plan Account. Those charges are disclosed in the Separate Account offering prospectus or plan document. The Trust reserves the right to suspend the offering of any of the Portfolios’ shares, or to reject any purchase order.

How To Buy Shares

Purchase orders for shares of a Portfolio, which are received by the Portfolios’ 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 Portfolios calculate their net asset value, are priced according to the net asset value determined on that day. Purchase orders for shares of a Portfolio 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.

OTHER PURCHASE INFORMATION

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

The public offering price for a Portfolio is based upon its net asset value per share. Net asset value per share of a Portfolio is calculated by adding the value of the Portfolio’s investments, cash and other assets, subtracting the Portfolio’s liabilities, and then dividing the result by the number of shares outstanding. The assets of each Portfolio are valued at market value or, if market quotes cannot be readily obtained, fair value is used as determined by the Board of Trustees. The net asset value of each Portfolio’s shares is computed on each day 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.

Each Portfolio purchases Class A Shares of the Timothy Funds at net asset value without any sales charges. With respect to securities owned by the Timothy Funds, 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 Advisor 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 a Timothy Fund or a Portfolio will be valued on an amortized cost basis, excluding unrealized gains or losses thereon from the valuation. This is accomplished by valuing the security at cost and then assuming a constant amortization to maturity of any premium or discount. If a Timothy Fund or a Portfolio 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.

How To Sell Shares

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

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.

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

 

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Section 4  |  General Information

Dividends, Distributions and Taxes

Dividends paid by a Portfolio are derived from its net investment income. Net investment income will be distributed at least annually. A Portfolio’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.

A Portfolio realizes capital gains when it receives such a distribution from a Timothy Fund or sells shares of a Timothy Fund for more than it paid for it. A Portfolio may make distributions of its net realized capital gains (after any reductions for capital loss carry forwards), generally once a year.

Under current tax law, dividends or capital gains distributions from a Portfolio are not currently taxable when left to accumulate within a Variable Contract. Depending on the Separate Account, withdrawals from the Account may be subject to ordinary income tax, and an additional penalty of 10% on withdrawals before age 59 1/2.

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 a 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 or evaluated pricing were employed and detailing the specific reasons for utilizing the applicable pricing mechanism. 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 and evaluated pricing of 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 either fair value priced or utilize evaluated pricing. Examples of when it would be likely that a Fund security would require either fair value pricing or evaluated 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; if an ADR in the International Fund representing an underlying issue or an Emerging Markets Fund security is difficult to price; 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 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.

When a security is evaluated priced, it means the Advisor and Sub-Advisor are relying on a nationally recognized company that provides daily pricing of international and domestic securities. Accordingly, there is the possibility that the pricing firm’s calculations or pricing techniques 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.

Investment Advisor

Timothy Partners, Ltd. (“TPL” or the “Advisor”), 1055 Maitland Center Commons, Maitland, FL 32751 is a Florida limited partnership organized in December 1993. TPL is registered with the U.S. Securities and Exchange Commission as an investment advisor and a broker-dealer. TPL supervises the investment of the assets of each Portfolio in accordance with the objectives, policies and restrictions of the Portfolio. 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 discretion. Covenant Funds, Inc., a Florida corporation, is the managing partner of TPL. For its services as investment advisor to each Portfolio, TPL receives an annual fee of 0.10% of the average daily net assets of each Portfolio.

PORTFOLIO MANAGER

Arthur D. Ally is primarily responsible for the day-to-day management of the Portfolios. Mr. Ally is President and Chairman of the Trust, as well as President and 75% shareholder of Covenant Funds. Mr. Ally founded and has provided his services to the Timothy Plan continuously since 1994, drawing from over thirty years’ experience in the investment industry as an employee of Prudential Bache, Shearson Lehman Brothers and Investment Management & Research. Mr. Ally is not compensated for his activities as the investment advisor for the Portfolios, nor does he provide daily investment management services for any other accounts of any type. Neither he nor any employee of the Funds or the underwriter may purchase securities held in any of the Timothy Plan Funds.

 

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A discussion of the considerations employed by the Board of Trustees in 2012 of their approval of TPL as Advisor to the Trust, and each Sub-Advisor as manager of the Funds is available in the Funds’ semi-annual report dated June 30, 2012.

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

Principal Underwriter

Timothy Partners, Ltd. also acts as principal underwriter for the Trust. As underwriter, TPL facilitates the registration of each Portfolio’s shares under state securities laws and offers its shares for sale. TPL does not receive any compensation for serving as underwriter of the Trust.

The Board of Trustees of the Trust has approved Codes of Ethics for the Funds, the Portfolios, 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 and/or Portfolios, require that they file regular reports concerning their personal securities transactions, and prohibit activities that might result in harm to the Funds and/or Portfolios. 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 duplication fee, by electronic request (publicinvest@sec.gov) or by writing the SEC’s Public Relations Section, Washington DC 20549-0102. The Board of Trustees also has 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.

Privacy Policy

The following is a description of the Portfolios’ policies regarding disclosure of nonpublic personal information that you provide to the Portfolios or that the Portfolios collect from other sources. In the event that you hold shares of a Portfolio 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 PORTFOLIOS COLLECT

The Portfolios collect the following nonpublic personal information about you:

 

1. Information the Portfolios 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

 

2. Information about your transactions with the Portfolios, 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 PORTFOLIOS DISCLOSE

The Portfolios 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 Portfolios are permitted by law to disclose all of the information they collect, as described above, to their service providers (such as the Portfolios’ custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.

CONFIDENTIALITY AND SECURITY

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

Customer Identification Program

The Board of Trustees 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 for separate accounts falls to the insurance company offering the investment vehicle.

 

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Section  5  |  Financial Highlights

STRATEGIC GROWTH PORTFOLIO

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

The Financial Highlights Table is intended to help you understand the Portfolio’s financial performance for the past five years. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent that rate that an investor would have earned (or lost) on an investment in the Portfolio (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods below has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Portfolio’s financial statements, are included in the annual report, which is available upon request.

 

    

For the Year

 

ended

 

12/31/12

   

For the Year

 

ended

 

12/31/11

   

For the Year

 

ended

 

12/31/10

   

For the Year

 

ended

 

12/31/09

   

For the Year

 

ended

 

12/31/08

 

 

  Net asset value, beginning of period

    $ 9.05          $ 9.45          $ 8.25          $ 6.41          $ 12.83     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  INCOME (LOSS) FROM INVESTMENT OPERATIONS:

         

 

  Net investment income

    0.09   (A)      0.12   (A)      0.05   (A)      0.06          0.07   (A) 

 

  Net realized and unrealized gain (loss) on investments

    0.94          (0.47)         1.22          1.83          (5.19)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  Total from investment operations

    1.03          (0.35)         1.27          1.89          (5.12)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  LESS DISTRIBUTIONS:

         

 

  From net investment income

    (0.14)         (0.05)         (0.07)         (0.05)         (0.15)    

 

  From net realized gains on investments

    -              -              -              -              (1.15)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  Total distributions

    (0.14)         (0.05)         (0.07)         (0.05)         (1.30)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  Net asset value, end of year

    $ 9.94          $ 9.05          $ 9.45          $ 8.25          $ 6.41     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  Total return (B)

    11.42%         (3.70)%         15.37%         29.48%         (39.55)%    

 

  RATIOS/SUPPLEMENTAL DATA:

         

 

  Net assets, end of year (in 000’s)

    $     18,253          $     20,021          $     19,090          $     18,895          $     14,750     

 

  Expenses, net waiver and reimbursement (C)

    0.44%         0.40%         0.42%         0.50%         0.65%    

 

  Net investment income, net waiver and reimbursement (C)(D)

    0.82%         1.23%         0.61%         0.82%         0.69%    

 

  Portfolio turnover rate

 

   

 

30% 

 

  

 

   

 

32% 

 

  

 

   

 

8% 

 

  

 

   

 

22% 

 

  

 

   

 

9% 

 

  

 

                                         
(A) Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period.
(B) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Portfolio assuming reinvestment of dividends.
(C) These ratios exclude the impact of expenses of the underlying security holdings as represented in the Schedule of Investments.
(D) Recognition of net investment income (loss) by the Portfolio is affected by the timing of the declaration of dividends by the underlying investment companies in which the Portfolio invests.

 

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Financial Highlights

CONSERVATIVE GROWTH PORTFOLIO

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

The Financial Highlights Table is intended to help you understand the Portfolio’s financial performance for the past five years. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent that rate that an investor would have earned (or lost) on an investment in the Portfolio (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods below has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Portfolio’s financial statements, are included in the annual report, which is available upon request.

 

 

    

For the Year

 

ended

 

12/31/12

   

For the Year

 

ended

 

12/31/11

   

For the Year

 

ended

 

12/31/10

   

For the Year

 

ended

 

12/31/09

   

For the Year

 

ended

 

12/31/08

 

 

  Net asset value, beginning of period

    $ 10.97          $ 10.94          $ 9.86          $ 8.16          $ 12.97     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  INCOME (LOSS) FROM INVESTMENT OPERATIONS:

         

 

  Net investment income

    0.11   (A)      0.20   (A)      0.14   (A)      0.12          0.22   (A) 

 

  Net realized and unrealized gain (loss) on investments

    0.75          0.01          1.09          1.74          (3.95)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  Total from investment operations

    0.86          0.21          1.23          1.86          (3.73)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  LESS DISTRIBUTIONS:

         

 

  From net investment income

    (0.22)         (0.18)         (0.15)         (0.16)         (0.26)    

 

  From net realized gains on investments

    -              -              -              -              (0.82)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  Total distributions

    (0.22)         (0.18)         (0.15)         (0.16)         (1.08)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  Net asset value, end of year

    $ 11.61          $ 10.97          $ 10.94          $ 9.86          $ 8.16     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  Total return (B)

    7.79%         1.90%         12.45%         22.80%         (28.59)%    

 

  RATIOS/SUPPLEMENTAL DATA:

         

 

  Net assets, end of period (in 000’s)

    $     38,558          $     37,007          $     43,172          $     42,537          $     32,454     

 

  Expenses, net waiver and reimbursement (C)

    0.42%         0.41%         0.41%         0.50%         0.64%    

 

  Net investment income, net waiver and reimbursement (C)(D)

    0.90%         1.77%         1.41%         1.56%         1.88%    

 

  Portfolio turnover rate

 

   

 

33% 

 

  

 

   

 

30% 

 

  

 

   

 

9% 

 

  

 

   

 

35% 

 

  

 

   

 

20% 

 

  

 

                                         
(A) Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period.
(B) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Portfolio assuming reinvestment of dividends.
(C) These ratios exclude the impact of expenses of the underlying security holdings as represented in the Schedule of Investments.
(D) Recognition of net investment income (loss) by the Portfolio is affected by the timing of the declaration of dividends by the underlying investment companies in which the Portfolio invests.

 

15  |  P a g e


Section  6  |  For More Information

Additional information about the Portfolios is available in the Portfolios’ Statement of Additional Information (SAI). The SAI contains more detailed information on all aspects of the Portfolios. A current SAI, dated April 30, 2013 has been filed with the SEC and is incorporated by reference into (is legally a part of) this prospectus. Additional information about each Portfolio’s investments is also available in the Portfolios’ audited annual report, dated December 31, 2012. In the Portfolios’ annual report, you will find a discussion of the market conditions and investment strategies that significantly affected each Portfolio’s performance during its last fiscal year.

The Portfolios’ SAI, annual report and semi-annual report are available, without charge upon request. To receive a copy of any of these documents or to make other types of inquiries to the Portfolios, please contact the Trust.

 

 

     Trust*   Securities and Exchange Commission

 

  By Phone:

 

 

(800) 846-7526

 

 

(202) 942-8090

  By Mail:

 

The Trust

c/o Timothy Partners, Ltd.

1055 Maitland Center Commons

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.

Information about the Portfolios (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 (202) 942-8090. Information about the Portfolio 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.

 

 

 

Investment Company Act File No. 811-08228

 

P a g e  |  16


 

 

[INTENTIALLY LEFT BLANK]


 

 

 

 

LOGO

1055 Maitland Center Commons

Maitland, FL 32751

 

Online        www.timothyplan.com
E-mail   |   invest@timothyplan.com
Phone   |   (800) 846-7526


LOGO

SAI

 

STATEMENT OF ADDITIONAL INFORMATION

 

April 30, 2013

 

TIMOTHY PLAN VARIABLE SERIES

  

 

    

Strategic Growth Portfolio

 

Conservative Growth Portfolio

 

 

 

THE FUNDS ARE DISTRIBUTED THROUGH: Timothy Partners, Ltd., 1055 Maitland Center Commons, Maitland, Florida 32751

 

This Statement of Additional Information (“SAI”) is not a prospectus. It is an additional disclosure document filed in addition to and supplementing The Timothy Plan Variable Series Prospectus, dated April 30, 2013, which contains information concerning the Timothy Plan Strategic Growth Portfolio Variable Series (“Strategic Growth Portfolio”) and the Timothy Plan Conservative Growth Portfolio Variable Series (“Conservative Growth Portfolio”), which should be read with this Statement of Additional Information.

 

The Timothy Plan (the “Trust”) is registered with the U.S. Securities and Exchange Commission (the “SEC”) as an open-end management investment company.

 

 

 

COPIES OF THIS SAI AND/OR THE PROSPECTUS TO WHICH IT RELATES MAY BE OBTAINED FROM THE TRUST WITHOUT CHARGE BY WRITING THE TRUST AT 1055 MAITLAND CENTER COMMONS, MAITLAND, FL 32751 OR BY CALLING THE TRUST AT (800) 846-7526. RETAIN THIS SAI FOR FUTURE REFERENCE.

     


Table of Contents

 

Section 1  |  General Information    
 

 

Portfolio History

    3    

 

Section 2  |  Investments and Risks

   
 

 

Investment Strategies and Risks

    4    
 

Portfolio Policies

    6    
 

Portfolio Turnover

    7    
 

Disclosure of Portfolio Holdings

    8    

 

Section 3  |  Management of the Trust

   
 

 

Officers and Trustees of the Trust

    9    
 

Additional Information About the Trustees

    12    
 

Compensation

    15    
 

Code of Ethics

    15    
 

Proxy Voting Policies

    15    
 

Voting Rights

    15    

 

Section 4  |  Control Persons and Principal Holders of Securities

 

 

Holders of More than 5%

    17    

 

Section 5  |  Investment Advisory and Other Services

 

 

Investment Advisor

    18    
 

Principal Underwriter

    19    
 

Other Service Providers

    19    

 

Section 6  |  Brokerage Allocation

   
 

 

Brokerage Transactions

    21    

 

Section 7  |  Purchase, Redemption, and Pricing of Shares

 

 

Purchase of Shares

    22    
 

Redemption of Shares

    22    

 

Section 8  |  Taxation of the Portfolio

   
 

 

Taxation

    23    

 

Section 9  |  Calculation of Performance Data

   
 

 

Performance

    24    

 

Section 10  | Financial Statements

   
      26    

 

Appendix A  | Proxy Voting Policy

   
 

 

Preface

    27    
 

Key Proxy Voting Issues

    27    
 

Proxy Voting Procedures

    29    
 

Record Keeping

    30    
 

Summary

    30    

 

2   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Section 1 | General Information

Portfolio History

The Timothy Plan (the “Trust”) was organized as a Delaware business trust on December 16, 1993. The Trust is registered with the SEC as an open-end management investment company, and is authorized to create an unlimited number of series of shares (each a “Fund”) and an unlimited number of share classes within each series. A mutual fund permits an investor to pool his or her assets with those of others in order to achieve economies of scale, take advantage of professional money managers and enjoy other advantages traditionally reserved for large investors.

The Trust currently offers several portfolios of shares, two of which are the Timothy Plan Conservative Growth Portfolio Variable Series (“Conservative Growth Portfolio”) and the Timothy Plan Strategic Growth Portfolio Variable Series (“Strategic Growth Portfolio”), each a “Portfolio” and collectively the “Portfolios.” This SAI applies to the Portfolios only. Each Portfolio offers a single class of shares without any sales charges or ongoing sales or distribution fees. The Portfolios are offered only to separate accounts (the “Separate Accounts”) established by various insurance companies (collectively, the “Insurance Companies”) and to certain eligible qualified retirement plans (“Qualified Plans”). The Portfolios are intended to serve as investment vehicles for variable life insurance, variable annuity and group annuity products of these Insurance Companies or under Qualified Plans. The general public may not directly purchase shares of the Portfolios. The Trust has also filed an SAI, dated January 29, 2013, relating to its other Fund offerings and providing information about the Timothy Funds in which the Portfolios invest. That SAI is incorporated herein by reference for all purposes.

The Portfolios’ shares are fully paid and non-assessable. They are entitled to such dividends and distributions as may be paid with respect to the shares and shall be entitled to such sums on liquidation of each Portfolio 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.

Shareholder meetings will not be held unless required by federal or state law or in connection with an undertaking given by a Portfolio.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   3


Section 2 | Investments and Risks

Investment Strategies and Risks

Each Portfolio seeks to achieve its objective by making investments selected in accordance with that Portfolio’s investment restrictions and policies. Each Portfolio invests primarily in Class A Shares of other portfolios of the Trust (the “Timothy Funds” or “Traditional Funds”) as described in the Portfolios’ Prospectus, without sales charges. Each Portfolio will vary its investment strategy as described in the prospectus to achieve its objectives. This Statement of Additional Information contains further information concerning the techniques and operations of the Portfolios, the securities in which they or the underlying Timothy Funds may invest, and the policies they will follow.

Each Portfolio has its own investment objective and policies, and each invests in its own portfolio of securities. Each Portfolio seeks to achieve its stated objective by diversified investing primarily in the Timothy Funds. The Timothy Funds invest in securities issued by companies which, in the opinion of the Advisor, Timothy Partners, Ltd., conduct business in accordance with the stated philosophy and principles of the Timothy Funds. The following information supplements the information provided in the prospectus. The Portfolios may each invest in the following securities directly, or indirectly by investing in the Timothy Funds.

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 Portfolios or the Timothy 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, a Portfolio or Fund may be required to pay for a convertible security an amount in excess of the value of the underlying common stock. Common stock acquired by a Timothy Fund upon conversion of a convertible security will generally be held for so long as the Advisor anticipates such stock will provide the Timothy Fund with opportunities which are consistent with its investment objectives and policies.

INVESTMENT GRADE BONDS

Investment grade bonds are public and private issued debt securities that are rated above high yield (“junk” bonds). They generally carry a rating of BBB and above by Standard & Poor’s. Because they are considered investment grade, they generally carry lower coupon rates than high yield bonds.

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.

 

4   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


AMERICAN DEPOSITORY RECEIPTS

American Depository Receipts (“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 Timothy Funds may purchase ADRs whether they are “sponsored” or “unsponsored.” “Sponsored” ADRs are issued jointly by the issuer of the underlying security and a depository. “Unsponsored” ADRs are issued without participation of the issuer of the deposited security. The Portfolios or Funds do not consider any ADRs purchased to be foreign. Holders of unsponsored ADRs generally bear all the costs of such facilities. The depository of an unsponsored ADR 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. Except for the International Fund which is comprised of ADRs, each Timothy Fund will not invest more than 50% of the value of its total assets in stock or securities issued by foreign corporations, and therefore will be unable to pass through the foreign taxes those Funds pay (or are deemed to pay) to shareholders under the Internal Revenue Code of 1986, as amended (the “Code”).

EMERGING MARKETS INVESTMENTS

Emerging markets investments include equity securities offered by companies in some or all of the countries located in each of the following regions: Asia, Europe, Central and South America, Africa and the Middle East. The Advisor of the Emerging Markets Fund considers an emerging market country to be any country which is in the Morgan Stanley Capital International Emerging Markets Index (“MSCI EM Index”) or that, in the opinion of the Advisor, is generally considered to be an emerging market country by the international financial community. Equity securities include common and preferred stocks, warrants and rights. Equity securities issued in the emerging markets countries may be subjected to a withholding tax by the foreign country of source which will have the effect of reducing the income distributable to shareholders.

REAL ESTATE INVESTMENT TRUSTS

Real Estate Investment Trusts (“REITs”) are liquid, dividend-paying means of participating in the real estate market. REITs invest in different kinds of real estate or real estate related assets, including shopping centers, office buildings, and hotels, or mortgages secured by real estate. Some REITs are hybrid, investing in both the actual real estate and real estate-backed mortgages.

COMMODITY EXCHANGE TRADED FUNDS

Commodity Exchange Traded Funds (“ETFs”) are very similar to mutual funds, but have very little management. A Commodity ETF has a set plan for investment in a group of commodities that may be readjusted periodically by the fund manager. Most Commodity ETFs were created to mirror the returns of commodities by investing in the commodity futures markets. They are all buy-side futures contracts based on the amount of funds they receive from investors. Some commodity ETFs focus on commodity sectors and only buy futures contracts in that area – oil, agriculture or gold. Some focus on a more diversified basket of commodities. ETFs trade like stocks, can be purchased or sold at any time during market hours, and, unlike futures contracts which are highly leveraged, ETFs cannot lose more than the initial investment. Investing in a Commodity ETF is one of the easiest ways to participate in the commodity markets.

TREASURY INFLATION-PROTECTED SECURITIES

Treasury Inflation-Protected Securities (“TIPS”) are special types of Treasury notes or bonds that offer protection from inflation. Like other Treasuries, TIPS pay interest every six months and pay the principal when the security matures. Unlike conventional governments, TIPS coupon payments and underlying principal are automatically increased to compensate for inflation as measured by the consumer price index (“CPI”). When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation. Consequently, the real rate of return, which represents the growth of purchasing power, is guaranteed. Because of the safety, TIPS offer a low return.

HIGH YIELD BONDS

High yield bonds are public and private issue debt securities that are rated below investment grade (such as BB or lower by Standard & Poor’s Ratings Services and/or Ba or lower by Moody’s Investors Service, Inc.) or deemed to be below investment grade by the investment advisor. These types of securities are commonly referred to as “junk bonds”. Because these securities are below investment grade, they carry higher coupon rates and are subject to greater credit risk.

THE DEFENSIVE STRATEGIES FUND

The Defensive Strategies Fund, one of the Traditional Funds in which the Portfolios invest, is not a diversified fund as defined by the Investment Company Act of 1940, as amended (the “1940 Act”). The Defensive Strategies Fund is a non-diversified fund, and therefore may invest up to 25% of the total assets under management in any single issue, and up to 50% of the assets under management in two issues. The remaining 50% must adhere to the diversification requirements required of the Timothy Plan Traditional Funds. Under the rules, the Fund will not diversify up to 50% of its assets under management, however of the non-diversified 50%, not over 25% will be held in any one investment offering. The remaining 50% will be diversified, meaning not over 5% will be invested in any one company’s shares or issuer’s units of ownership. During periods of economic deflation, the Defensive Strategies Fund may elect to liquidate its entire portfolio of REITs.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   5


TEMPORARY DEFENSIVE MEASURES

Investment Managers of each Traditional Fund may take temporary defensive actions when it is determined to be in the best interests of the shareholders. Such defensive actions may include, but not be limited to, increasing the percentage of the Fund invested in cash and cash equivalents, investing more heavily in a particular sector, and investing without regard to capitalization rates. When a Fund takes a temporary defensive position, it will not be investing according to its investment objective, and at such times, the performance of the Fund will be different that it would have been if it had invested strictly according to its objectives.

Portfolio Policies

In addition to those set forth in the Portfolios’ current prospectus, the Portfolios have adopted the investment restrictions set forth below, which are fundamental policies of each Portfolio, and which cannot be changed without the approval of a majority of the outstanding voting securities of each Portfolio. As provided in 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 Portfolio 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, as amended (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;

 

  8. purchase or sell commodities or commodity futures contracts, other than those related to stock indexes;

 

  9. 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;

 

  10. invest in securities of any company if any officer or trustee of the Funds or the Funds’ Advisor 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;

 

  11. 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;

 

  12. 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

 

  13. 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 Portfolio at the time it purchases a security, changes in values of a particular Portfolio’s assets or the assets of the Portfolio as a whole will not cause a violation of any of the foregoing restrictions.

 

6   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Each of the Portfolios 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 issuer;

 

  5. issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC;

 

  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;

 

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

 

  9. concentrate its investments in any one sector or industry.

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 Sub-Advisor 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 Portfolios invest the majority of their assets in certain of the Traditional Funds and attempt to maintain target investment ratios which are determined by the Investment Advisor. The investments among the Traditional Funds are adjusted as necessary in order to re-balance to the target ratio. As a result, portfolio turnover for the Portfolios could be substantial and could cause the Traditional Funds to also experience additional turnover problems. The portfolio turnover rate for the Portfolios is set forth in the table below:

 

      2010       2011       2012        

Strategic Growth Portfolio

   8%   32%   30%

Conservative Growth Portfolio

   9%   30%   33%

High portfolio turnover would involve additional transaction costs (such as brokerage commissions) which are borne by the Traditional Funds, or adverse tax effects. (See “Dividends and Distributions” in the applicable prospectus.)

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   7


Disclosure of Portfolio Holdings

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

 CUSTODIAN, ADMINISTRATOR AND TRANSFER AGENT

Portfolio Service Provider includes the following: Fund Accounting Agent, Independent Registered Public Accounting Firm, 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 Portfolio, which includes maintaining a current portfolio on behalf of each Portfolio. The Trust also undergoes an annual audit which requires the Trust’s independent registered public accounting firm to review each portfolio. In addition to the fund accounting agent, the Trust’s custodian also maintains an up-to-date list of each Portfolio’s holdings. The Trust’s compliance consulting firm must also have access to each portfolio in order to verify compliance with the Federal Securities laws. Each of these parties is contractually and/or ethically prohibited from sharing any 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 with 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.

RATING AND RANKING ORGANIZATIONS

The Trust may from time to time provide its entire portfolio holdings of each Portfolio 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 from 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 a valuable service and, therefore, is 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.

DISCLOSURE TO OTHER PARTIES

The Trust has adopted a policy of posting the portfolio holdings of each Traditional 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 Traditional Fund with the SEC 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 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 Traditional 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.

 

8   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Section 3 | Management of the Trust

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 as follows:

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*

1055 Maitland Center Commons

Maitland, FL

 

Born: 1942

 

Chairman and

President

  Indefinite; Trustee and President since 1994   14
  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 Advisor 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**

1055 Maitland Center Commons

Maitland, FL

 

Born: 1930

 

  Trustee, Secretary   Indefinite; Trustee and Secretary since 1995   14
  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**

1055 Maitland Center Commons

Maitland, FL

 

Born: 1956

  Trustee   Indefinite; Trustee since 2000   14
  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.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   9


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

Kenneth Blackwell

1055 Maitland Center Commons

Maitland, FL

 

Born: 1948

  Trustee   Indefinite; Trustee since 2011   14
  Principal Occupation During Past 5 Years  

 

Other Directorships

Held by Trustee

  Secretary of State for the State of Ohio. Currently serving as an independent consultant or Fellow with the Family Research Council and the American Civil Rights Union, and is a Visiting Professor at Liberty University, Lynchburg, VA.   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

Richard W. Copeland

1055 Maitland Center Commons

Maitland, FL

 

Born: 1947

  Trustee   Indefinite; Trustee since 2005   14
  Principal Occupation During Past 5 Years  

 

Other Directorships

Held by Trustee

  Principal of Copeland & Covert, Attorneys at Law; specializing in tax and estate planning. B.A. from Mississippi College, JD from University of Florida and LLM Taxation from University of Miami. Associate Professor Stetson University for past 35 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

Deborah Honeycutt

1055 Maitland Center Commons

Maitland, FL

 

Born: 1947

  Trustee   Indefinite; Trustee since 2010   14
  Principal Occupation During Past 5 Years  

 

Other Directorships

Held by Trustee

  Dr. Honeycutt is a licensed physician currently serving as Medical Director of Clayton State University Health Services in Morrow, GA, CEO of Minority Health Services in Atlanta, and as a volunteer at Good Shepherd Clinic. Dr. Honeycutt received her B.A. and M.D. at the University of Illinois.   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

1055 Maitland Center Commons

Maitland, FL

 

Born: 1946

  Trustee   Indefinite; Trustee since 2005   14
  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

 

10   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


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

1055 Maitland Center Commons

Maitland, FL

 

Born: 1950

  Trustee   Indefinite; Trustee since 2005   14
  Principal Occupation During Past 5 Years  

 

Other Directorships

Held by Trustee

  President of WaterStone (formerly the 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

 

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

1055 Maitland Center Commons

Maitland, FL

 

Born: 1934

  Trustee   Indefinite; Trustee since 2000   14
  Principal Occupation During Past 5 Years  

 

Other Directorships Held by Trustee

  Certified Public Accountant, semi-retired. Former non-profit industry accounting officer. Former financial executive with commercial bank. Former partner national accounting firm.   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.

1055 Maitland Center Commons

Maitland, FL

 

Born: 1960

  Trustee   Indefinite; Trustee since 2004   14
  Principal Occupation During Past 5 Years  

 

Other Directorships Held by Trustee

  Chairman of Stewardship Studies at Southwestern Baptist Theological Seminary, Ft. Worth, TX. Also serves as Founder and Chairman of the International Center for Biblical Stewardship. Previously, President and CEO of Christian Stewardship Association where he was affiliated for 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

1055 Maitland Center Commons

Maitland, FL

 

Born: 1951

  Trustee, Vice Chairman   Indefinite; Trustee since 2004   14
  Principal Occupation During Past 5 Years  

 

Other Directorships Held by Trustee

  Founder and CEO of Corporate Development Institute which he founded in 2000. 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

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   11


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

Patrice Tsague

1055 Maitland Center Commons

Maitland, FL

 

Born: 1973

  Trustee   Indefinite; Trustee since 2011   14
  Principal Occupation During Past 5 Years  

 

Other Directorships

Held by Trustee

  President and Chief Servant Officer of the Nehemiah Project International Ministries Inc. since 1999.   None

 

   

The officers conduct and supervise the daily business operations of the Funds, while the Trustees, in addition to functions set forth under “Investment Advisor,” “Investment Manager,” and “Principal 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 Funds. The Timothy Plan Funds pay compensation to the Independent Trustees at the rate of $750 per meeting attended.

 

Additional Information About the Trustees

The Board of Trustees believes that each Trustee’s experience, qualifications, attributes or skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that the Trustees possess the requisite experience, qualifications, attributes and skills to serve on the Board. The Board of Trustees believes that the Trustees’ ability to review critically, evaluate, question and discuss information provided to them; to interact effectively with the Advisor, other service providers, legal counsel and independent public accountants; and to exercise effective business judgment in the performance of their duties as Trustees, support this conclusion. The Board of Trustees has also considered the contributions that each Trustee can make to the Board and the Trust.

As described in the table above, the Independent Trustees have served as such for a considerable period of time which has provided them with knowledge of the business and operation of the Funds and the Trust. In addition, the following specific experience, qualifications, attributes and/or skills apply as to each Trustee:

Arthur Ally served as a financial professional for nearly twenty years prior to establishing Timothy Partners, Ltd, the Advisor and distributor of the Timothy Plan Funds. Mr. Ally has a degree in accounting and economics and has earned numerous professional designations.

Joseph Boatwright served as senior pastor of Aloma Baptist Church in Winter Park, Florida, for over twenty-five years. Pastor Boatwright brings a unique understanding of the scriptures to the Board, which serves well in the attempt to oversee the moral agenda of the Funds.

Mat Staver is the Dean of Liberty University School of Law and the founder and chairperson of Liberty Counsel. Mr. Staver has argued before the United States Supreme Court and brings his extensive legal background to the Board.

Kenneth Blackwell, brings vast experience and unique perspectives gained as the former mayor of Cincinnati, Ohio, overseas ambassador, author, and celebrated business entrepreneur.

Richard Copeland is an attorney who specializes in estate planning and probate. Mr. Copeland received an LLM in taxation from the University of Miami, and has extensive experience in the taxation arena. He is also a professor in the College of Business Administration at Stetson University.

Deborah Honeycutt is a physician practicing in the Atlanta, GA area. Dr. Honeycutt has experience in managing and directing health clinics and as a family medical practitioner.

Bill Johnson has been in the ministry front lines in the fight against pornography. Mr. Johnson brings a keen knowledge of the various forms of pornography, as well as hands-on experience running a non-profit organization.

John Mulder is the executive director of Waterstone, a charitable remainder trust custodian that serves persons across the United States. Mr. Mulder brings proficiency in taxation as well as the skills he has acquired in managing a national organization.

Charles Nelson is a former audit partner in a national accounting firm. Mr. Nelson holds an MBA and is a Certified Public Accountant. He is a former college instructor, and brings a combination of business, financial, and accounting skills to the Board.

Scott Preissler, PhD is a former executive director of a worldwide ministry, and currently serves as chairperson of the stewardship department at Southwestern Baptist Theological Seminary. Dr. Preissler brings extensive organizational and public service experience to the Board.

 

12   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Alan Ross is an entrepreneur specializing in corporate turn-around ventures. Mr. Ross offers the Board the wealth of knowledge he has gained in his experiences as a manager/owner of numerous companies.

Patrice Tsague, brings a unique combined perspective from his career that includes counseling for international entrepreneurship and development of organizational techniques and avenues for businesses.

References to the experience, qualifications, attributes or skills of the Trustees are pursuant to requirements of the SEC and do not constitute indications that the Lead Independent Trustee, the Board, or any Trustee has special expertise or experience, and shall not impose any greater responsibility or liability on any such Trustee or on the Board by reason thereof.

 

BOARD STRUCTURE

The Board of Trustees is responsible for overseeing the management and operations of the Trust and the Funds. The Board consists of nine Independent Trustees and three Trustees who are interested persons of the Trust. Arthur D. Ally, who is an interested person of the Trust, serves as Chair of the Board and Mr. Charlie Nelson serves as the Lead Independent Trustee. Mr. Nelson works with Mr. Ally to set the agendas for the Board and Committee meetings, chairs meetings of the Independent Trustees, and generally serves as a liaison between the Independent Trustees and the Trust’s management between Board meetings.

The Board of Trustees has one standing committee: the Audit Committee. The Audit Committee is chaired by an Independent Trustee. The Audit Committee consists of Messrs. Nelson, Copeland and Mulder. Mr. Nelson assumes the responsibility of Chairperson. The members of the Audit Committee are not “interested” persons of the Trust (as defined in the 1940 Act). The primary responsibilities of the Trust’s Audit Committee are, as set forth in its charter, to make recommendations to the Board as to: the engagement or discharge of the Trust’s independent auditors (including the audit fees charged by auditors); the supervision of investigations into matters relating to audit matters; the review with the independent auditors of the results of audits; and addressing any other matters regarding audits. The Audit Committee met two times during the last fiscal year.

The Board holds four regular meetings each year to consider and act upon matters involving the Trust and the Funds. The Board also may hold special meetings to address matters arising between regular meetings. The Independent Trustees also regularly meet outside the presence of management and are advised by legal counsel. These meetings may take place in person or by telephone. Through the Audit Committee, the Independent Trustees consider and address important matters involving the Funds, including those presenting conflicts or potential conflicts of interest for Trust management. The Board of Trustees has determined that its committee structure helps ensure that the Funds have effective and independent governance and oversight. Given the Advisor’s sponsorship of the Trust, that investors have selected the Advisor to provide overall management to the Funds, and Mr. Ally’s senior leadership role within the Advisor, the Board elected him Chairman. The Board reviews its structure regularly and believes that its leadership structure, including the Independent Trustees comprising three fourths of the total number of Trustees, coupled with the responsibilities undertaken by Mr. Ally as Chair, and the Board’s Lead Independent Trustee, is appropriate and in the best interests of the Trust, given its specific characteristics. The Board of Trustees also believes its leadership structure facilitates the orderly and efficient flow of information to the Independent Trustees from Fund management.

 

BOARD OVERSIGHT OF RISK

An integral part of the Board’s overall responsibility for overseeing the management and operations of the Trust is the Board’s oversight of the risk management of the Trust’s investment programs and business affairs. The Funds are subject to a number of risks, such as investment risk, credit risk, valuation risk, operational risk, and legal, compliance and regulatory risk. The Trust, the Advisor and the other service providers have implemented various processes, procedures and controls to identify risks to the Funds, to lessen the probability of their occurrence and to mitigate any adverse effect should they occur. Different processes, procedures and controls are employed with respect to different types of risks. These systems include those that are embedded in the conduct of the regular operations of the Board and in the regular responsibilities of the officers of the Trust and the other service providers.

The Board of Trustees exercises oversight of the risk management process through the Board itself and through the Audit Committee. In addition to adopting, and periodically reviewing, policies and procedures designed to address risks to the Funds, the Board of Trustees requires management of the Advisor and the Trust, including the Trust’s Chief Compliance Officer (“CCO”), to report to the Board and the Audit Committee on a variety of matters, including matters relating to risk management, at regular and special meetings. The Board and the Audit Committee receive regular reports from the Trust’s independent public accounting firm on internal control and financial reporting matters. On at least an annual basis, the Independent Trustees meet separately with the Funds’ CCO outside the presence of management, to discuss issues related to compliance. Furthermore, the Board receives a quarterly report from the Funds’ CCO regarding the operation of the compliance policies and procedures of the Trust and its primary service providers. The Board also receives quarterly reports from the Advisor on the investments and securities trading of the Funds, including their investment performance, as well as reports regarding the valuation of the Funds’ securities. In addition, in its annual review of the Funds’ advisory agreements, the Board reviews information provided by the Advisor relating to its operational capabilities, financial condition and resources. The Board also conducts an annual self-evaluation that includes a review of its effectiveness in overseeing the number of funds in the Trust and the effectiveness of its committee structure.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   13


The Board recognizes that it is not possible to identify all of the risks that may affect a Fund or to develop processes, procedures and controls to eliminate or mitigate every occurrence or effect. The Board may, at any time and in its discretion, change the manner in which it conducts its risk oversight role.

 

TRUSTEE OWNERSHIP

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 Funds, may purchase Class A shares at Net Asset Value; commissions normally charged on A share purchases are waived. As of December 31, 2012, the Trustees owned the following dollar ranges of Fund shares.

 

Name of Person   

Dollar Range of Equity

Securities each Fund

   

Aggregate Dollar Range of Equity Securities

in all Funds overseen by Director in the
Timothy Plan Family of Funds

Interested Trustees

                             

Arthur D. Ally

                $1     $10,000    
     Aggressive Growth      $1 - $10,000                   
     Conservative Growth      $1 - $10,000                   
     Defensive Strategies      $1 - $10,000                   
     Emerging Markets      $1 - $10,000                   
     Fixed Income      $1 - $10,000                   
     Israel Common Values      $1 - $10,000                   
     Large/Mid Cap Growth      $1 - $10,000                   
     Large/Mid Cap Value      $1 - $10,000                   
     Small Cap Value      $1 - $10,000                   
     Strategic Growth      $1 - $10,000                   

Joseph E. Boatwright

                    Over   $100,000    
     Conservative Growth      $50,001 - $100,000                   
     Fixed Income      $10,001 - $50,000                   
     Large/Mid Cap Value      $50,001 - $100,000                   
     Small Cap Value      $10,001 - $50,000                   
     Strategic Growth      $50,001 - $100,000                   

Mathew D. Staver

                    Over   $100,000    
     Israel Common Values      $1 - $10,000                   
     Small Cap Value      Over $100,000                   
     Strategic Growth      $10,001 - $50,000                   
                               

Independent Trustees

                             

Kenneth Blackwell

   None                    None    

Richard W. Copeland

   None                    None    

Deborah Honeycutt

   None                    None    

Bill Johnson

                $10,001     $50,000    
     Conservative Growth      $10,001 - $50,000                   
     Defensive Strategies      $1 - $10,000                   
     High Yield Bond      $1 - $10,000                   

John C. Mulder

   None                    None    

Charles E. Nelson

   None                    None    

Scott Preissler, Ph.D.

   None                    None    

Alan M. Ross

   None                    None    

Patrice Tsague

                $10,001     $50,000    
     International      $1 - $10,000                   
     Large/Mid Cap Value      $1 - $10,000                   
     Strategic Growth      $1 - $10,000                   

 

14   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Compensation

Interested Trustees receive no compensation for their services. Independent Trustees are currently compensated at the rate of $750 per meeting attended. 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

  $0   $0   $0   $0

 Independent Trustees

               

 Kenneth Blackwell

  $2,250   $0   $0   $2,250

 Richard W. Copeland

  $3,000   $0   $0   $3,000

 Deborah Honeycutt

  $3,000   $0   $0   $3,000

 Bill Johnson

  $2,250   $0   $0   $2,250

 John C. Mulder

  $2,250   $0   $0   $2,250

 Charles E. Nelson

  $3,000   $0   $0   $3,000

 Scott Preissler, Ph.D.

  $3,000   $0   $0   $3,000

 Alan M. Ross

  $2,250   $0   $0   $2,250

 Patrice Tsague

  $3,000   $0   $0   $3,000

Code of Ethics

The Trust, the Advisor, 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 Advisor’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 SEC. 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, TPL, and each Sub-Advisor, have each been reviewed and ratified by the Board of Trustees.

 

Proxy Voting Policies

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 Funds. Records of the Funds’ 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 SEC, 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 Gemini Fund Services, LLC. (“Gemini”), 17605 Wright Street, Suite 2, Omaha, NE 68130, 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 A.

 

Voting Rights

Each Insurance Company is the legal owner of shares attributable to variable life insurance and variable annuity contracts issued by its separate accounts, and has the right to vote those shares. Pursuant to the current view of the SEC staff, each Insurance Company will vote the shares held in each separate account registered with the SEC in accordance with instructions received from owners of variable life insurance and variable annuity contracts issued by that separate account. To the extent voting privileges are granted by the issuing Insurance Company to unregistered separate accounts, shares for which no timely instructions are received will be voted for, voted against, or withheld from voting on any proposition in the same proportion as the shares held in that separate account for all contracts for which voting instructions are received. All Portfolio shares held by the general investment account (or any unregistered separate account for which voting privileges are not extended) of each Insurance Company will be voted by that Insurance Company in the same proportion as the aggregate of (i) the shares for which voting instructions are received and (ii) the shares that are voted in proportion to such voting instructions are received. Shares held by Qualified Plans will vote directly and will not be voted in the same proportion as shares held by the Insurance Companies in their separate accounts registered as unit investment trusts.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   15


RESOLVING MATERIAL CONFLICTS

Currently, shares in the Portfolios are available only to separate accounts established by American United Life Insurance Company, Indianapolis, IN, and Jefferson National Life Insurance Company, Louisville, KY. In the future, shares may be offered to other Insurance Companies independent from AUL, Jefferson National, and certain eligible qualified retirement plans (“Qualified Plans”), and as an investment vehicle for variable life insurance or variable annuity products sponsored by other Insurance Companies.

A potential for certain conflicts of interest exists between the interests of variable life insurance contract owners and variable annuity contract owners. Pursuant to conditions imposed in connection with related regulatory relief granted by the SEC, the Board of Trustees has an obligation to monitor events to identify conflicts that may arise from the sale of shares to both variable life insurance and variable annuity separate accounts or to separate accounts of Insurance Companies of unaffiliated Insurance Companies. Such events might include changes in state insurance law or federal income tax law, changes in investment management of any Timothy Plan Fund in which the Portfolios invest or differences between voting instructions given by variable life insurance and variable annuity contract owners. Through its Participation Agreement with the Trust, each Insurance Company investing in the Portfolios is responsible for monitoring and reporting any such conflicts to the Trust and for proposing and executing any necessary remedial action. The Board of Trustees has an obligation to determine whether such proposed action adequately remedies any such conflicts.

 

16   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Section 4 | Control Persons and

                  Principal Holders of Securities

A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the outstanding shares of the Fund. A control person is one who owns either directly or indirectly, more than 25% of the voting securities of a fund or acknowledges the existence of such control. As of April 1, 2013, the following persons of record owned 5% or more of the outstanding shares of the Strategic Growth Portfolio and the Conservative Growth Portfolio of Class A shares of a Portfolio or of the total outstanding shares of a Portfolio.

HOLDERS OF MORE THAN 5% OF EACH PORTFOLIO’S SHARES

 

 Name of Shareholder  

Name of Portfolio in which

Shares Held

       % Ownership
of Share Class
 

    

               

 Annuity Investors Life Insurance Co.

  Strategic Growth Portfolio Variable       14.63%   

 One American Square

     

 Indianapolis, IN 46206-0368

               

 AUL American Individual Variable

  Strategic Growth Portfolio Variable       80.09%   

 One American Square

     

 Indianapolis, IN 46206-0368

               

 Annuity Investors Life Insurance Co.

  Conservative Growth Portfolio Variable       7.18%   

 One American Square

     

 Indianapolis, IN 46206-0368

               

 AUL American Individual Variable

  Conservative Growth Portfolio Variable       86.38%   

 One American Square

     

 Indianapolis, IN 46206-0368

               

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.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   17


Section 5 | Investment Advisory and Other

                   Services

Investment Advisor

The Trust has entered into advisory agreements with Timothy Partners, Ltd. (“TPL” or the “Advisor”), for the provision of investment advisory services on behalf of the Trust to each Fund, subject to the supervision and direction of the Trust’s Board of Trustees. The 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 22, 2013. A discussion of the material factors considered in 2012 by the Board in renewing the Advisory Agreement can be found in the Trust’s Semi-Annual Financial Report to Shareholders dated June 30, 2012. A discussion of the Board’s considerations in renewing the agreement in 2013 will be provided in the Trust’s semi-annual report, which will be dated June 30, 2013. You may obtain a free copy of the Semi-Annual Report by calling the Trust.

The investment advisory agreement and each sub-advisory agreement for the underlying funds 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 Portfolio, and only if the terms of the renewal thereof have been approved by the vote of a majority of the Trustees of the Trust who are not parties thereto or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. The investment advisory agreement and each sub-advisory agreement will terminate automatically in the event of its assignment.

Pursuant to the investment advisory agreement with TPL, the Trust shall conduct its own business and affairs and shall bear the expenses and salaries necessary and incidental thereto, including, but not limited to: the maintenance of its corporate existence; the maintenance of its own books, records and procedures; dealing with its own shareholders; the payment of dividends; transfer of stock, including issuance, redemption and repurchase of shares; preparation of share certificates; reports and notices to shareholders; calling and holding of shareholders’ meetings; miscellaneous office expenses; brokerage commissions; custodian fees; legal and accounting fees; and taxes.

For its services, TPL is paid an annual fee equal to 0.10% of the average daily net assets of each Portfolio. The table below sets forth the investment advisory fees payable to TPL for the last three years for each of the Portfolios.

The sole manager managing the Strategic and Conservative Portfolios is as follows:

Arthur D. Ally, is President, Chairman and Trustee of the Trust. Mr. Ally is also President of Timothy Partners, Ltd. Mr. Ally had nearly twenty years’ experience in the investment industry prior to becoming president of the 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.

Other Information Relating to Management of the Strategic and Conservative Portfolios

The following table presents information relating to the person responsible for managing Portfolio assets, the number and types of other accounts managed by such person, and how such person is compensated for managing such accounts. The information is current as of December 31, 2012.

 

     

Number of Other Accounts Managed

And Assets by Account Type

   Number of Accounts and Assets for Which
Advisory Fee is Performance-Based
Name of Sub-
Advisor 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)

  Strategic and Conservative Portfolios:

   Arthur D. Ally

   0 ($0)    0 ($0)    0 ($0)    N/A    N/A    N/A

Mr. Ally receives no compensation for his activities as manager of the Portfolios.

As of December 31, 2012, the Portfolio Managers listed below held a beneficial interest in the following Timothy Plan Funds:

 

Name of Person           

Dollar Range

of Equity Securities in each Fund

  

Aggregate Dollar Range of Equity Securities in all

Funds Held By Portfolio Manager

           

   Arthur D. Ally

   None    None

 

18   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


INVESTMENT ADVISORY FEES

The following table sets forth the investment advisory fees paid to TPL for the last three years by each Portfolio.

 

          2010                       2011                        2012                     

Strategic Growth Portfolio

           

Fees Payable to TPL

         $ 17,895                         $21,521                         $18,857                  

Conservative Growth Portfolio

           

Fees Payable to TPL

         $ 41,659                         $39,598                         $39,015                    

Principal Underwriter

Timothy Partners, Ltd., 1055 Maitland Center Commons, 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 SEC and is a member in good standing of the Financial Industry Regulatory Authority.

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 nearly twenty years’ experience in the investment industry prior to becoming president of the 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.

Other Service Providers

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The firm of Cohen Fund Audit Services, Ltd., 1350 Euclid Avenue, Suite 800, Cleveland, OH 44115, (“Cohen”) has been selected as the independent registered public accounting firm for the Portfolios for the fiscal year ending December 31,2013. Cohen performs an annual audit of the Portfolios’ financial statements and provides financial, tax and accounting consulting services as requested.

CUSTODIAN

US Bank, 425 Walnut Street, Cincinnati, Ohio 45202, is custodian of the Portfolios’ investments. The custodian acts as the Portfolios’ depository, safe-keeps their portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Portfolios’ 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 Portfolio 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 assets over $175 million per Portfolio.

ADMINISTRATOR/TRANSFER AGENT

Gemini Fund Services, LLC (successor to Huntington Asset Services, Inc.), 450 Wireless Boulevard, Hauppauge, NY 11788 (previously defined as Gemini), provides transfer agent, portfolio accounting and certain administrative services to the Trust pursuant to a Fund Services Agreement dated April 18, 2011.

Under the Fund Services Agreement, provides facilitating administrative services, including: (i) providing services of persons competent to perform such administrative and clerical functions as are necessary to provide effective administration of the Portfolios; (ii) facilitating the performance of administrative and professional services to the Portfolios by others, including the Portfolios’ Custodian; (iii) preparing, but not paying for, the periodic updating of the Portfolios’ Registration Statement, Prospectuses and Statement of Additional Information in conjunction with counsel, including the printing of such documents for the purposes of filings with the SEC and stated securities administrators, and preparing reports to the Portfolios’ shareholders and the SEC; (iv) preparing in conjunction with counsel, but not paying for, all filings under the securities or “Blue Sky” laws of such states or countries as are designated by the Distributor, which may be required to register or qualify, or continue the registration or qualification, of each Portfolio and/or its shares under such laws; (v) preparing notices and agendas for meetings of the Board and minutes of such

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   19


meetings in all matters required by the 1940 Act to be acted upon by the Board; (vi) overseeing the calculation of performance data; (vii) preparing and maintaining the Portfolios’ operating expense budget; (viii) coordinating the Portfolios’ annual audit; and (ix) monitoring daily and periodic compliance with respect to all requirements and restrictions of the Investment Company Act of 1940, as amended (the “1940 Act”), the Internal Revenue Code and the Prospectus.

Under the Fund Services Agreement, also serves as transfer, dividend disbursing, and shareholder servicing agent for the Portfolio. Under the agreement, is responsible for administering and performing transfer agent functions, dividend distribution, shareholder administration, and maintaining necessary records in accordance with applicable rules and regulations. transfer agency operations are located at 17605 Wright Street, Suite 2, Omaha, NE 68130.

For such administrative, accounting and transfer agency services, receives from the Portfolios 0.25% on the first $200 million of net assets under management; 0.15% on the next $200 million of net assets; 0.08% on the next $600 million of net assets; and 0.06% on net assets greater than $1 billion dollars, plus out-of- pocket expenses.

During the fiscal year ended December 31, 2012 the Trust paid Gemini $90,884 for administrative services for the Conservative Growth Portfolio. During the fiscal year ended December 31, 2011 the Trust paid Gemini $28,231 for administrative services, $46,675 for accounting services and $7,214 for transfer agency services for the Conservative Growth Portfolio. During the fiscal year ended December 31, 2012 the Trust paid Gemini $31,774 for administrative services for the Strategic Growth Portfolio. During the fiscal year ended December 31, 2011 the Trust paid Gemini $14,896 for administrative services, $24,626 for accounting services and $4,534 for transfer agency services for the Strategic Growth Portfolio.

The applicable insurance company provides certain additional administrative services with respect to shares of the Portfolios purchased to fund variable annuity contracts and held in the insurance company’s separate accounts. These administrative services are provided pursuant to a Participation Agreement which became effective and is renewed as of May 1 each year among the insurance company, the Trust and TPL.

Under the Participation Agreement, the insurance company maintains the records related to each Portfolio’s shares held in the company’s separate accounts, processes all purchases and redemptions of Portfolio shares within the accounts, and provides other administrative and shareholder services. For its services, the insurance company receives an annual fee from the Underwriter equal to 0.25% of the average daily net assets of the Portfolio held in the insurance company separate accounts. In the future the Underwriter may enter into Participation Agreements with other Insurance Companies, which will be independent of existing Agreements.

 

20   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Section 6 | Brokerage Allocation

Brokerage Transactions

The Advisor and each Sub-Advisor to the Timothy Funds, when effecting the purchases and sales of securities on behalf of the Portfolios or the Funds as applicable, 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 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 to the Timothy Funds may use research and services provided to it by brokers and dealers in servicing all its clients, however, not all such services will be used by the Advisor in connection with the Portfolios or the Funds, as applicable. The Advisor and each Sub-Advisor are prohibited from considering brokerage allocation to dealers in consideration of a dealer’s 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.

Timothy Partners, Ltd., through the investment managers providing services for the underlying Funds, is responsible for making the Funds’ portfolio decisions subject to instructions described in the applicable prospectus. Securities held by one Fund may also be held by another Fund or other accounts for which the Advisor serves as an advisor. If purchases or sales of securities for a Fund or other entities for which they act as investment advisor or for their advisory clients arise for consideration at or about the same time, transactions in such securities will be made, insofar as feasible, for the respective entities and clients in a manner deemed equitable to all. To the extent that transactions on behalf of more than one client of the Advisor 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 the Advisor deems the purchase or sale of a security to be in the best interests of one or more Portfolios or other accounts, it 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 Portfolio with those to be sold or purchased for the other Portfolio or accounts in order to obtain favorable execution and lower brokerage commissions. In that event, allocation of the securities purchased or sold, as well as the expenses incurred in the transaction, will be made by the Advisor in the manner it considers to be most equitable and consistent with its fiduciary obligations to the Portfolio and to such other accounts. In some cases this procedure may adversely affect the size of the position obtainable for a Portfolio.

The Board of Trustees periodically reviews the brokerage placement practices of the Advisor and reviews the prices and commissions, if any, paid by the Portfolios, to determine if they were reasonable.

The Advisor also may consider sales of the variable annuity contracts by a broker-dealer as a factor in the selection of broker-dealers to execute transactions for the Portfolios. In addition, the Advisor may place portfolio trades for both Portfolios, or the Funds as applicable, with affiliated brokers. As stated above, any such placement of trades will be subject to the ability of the affiliated broker-dealer to provide best execution, the Trust’s procedures governing such affiliated trades, and FINRA Conduct Rules.

The Portfolios purchase only shares of the Timothy Funds at NAV, therefore no brokerage commissions are paid by the Portfolios.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   21


Section 7 | Purchase, Redemption, and Pricing

                   of Shares

Purchase of Shares

The Portfolios currently offer their shares only to Separate Accounts established by various Insurance Companies and to certain Qualified Plans. The Portfolios are intended to serve as investment vehicles for variable life insurance, variable annuity and group annuity products of these Insurance Companies or under Qualified Plans. The general public may not directly purchase shares of the Portfolios. The Trust has received an order from the SEC exempting the Portfolios from certain provisions of the Investment Company Act, which permits the Portfolios to offer their shares to multiple Investment Companies and Qualified Plans. The Separate Accounts and Qualified Plans will invest in the Portfolios in accordance with the instructions received from Separate Account owners or Plan participants, as applicable. Shares of the Portfolios are sold at net asset value as described in the prospectus.

Redemption of Shares

The redemption price will be based upon the net asset value per share of a Portfolio next determined after receipt of the redemption request, provided it has been submitted in the manner described below. The redemption price may be more or less than your cost, depending upon the net asset value per share at the time of redemption.

Payment for shares tendered for redemption is made by check within seven days after tender in proper form, except that each Portfolio reserves the right to suspend the right of redemption, or to postpone the date of payment upon redemption beyond seven days: (i) for any period during which the New York Stock Exchange is restricted, (ii) for any period during which an emergency exists as determined by the SEC as a result of which disposal of securities owned by a Portfolio is not reasonably predictable or it is not reasonably practicable for the Portfolio fairly to determine the value of its net assets, or (iii) for such other periods as the SEC may by order permit for the protection of shareholders of the Portfolios.

Pursuant to the Trust’s Agreement and Declaration of Trust, payment for shares redeemed may be made either in cash or in-kind, or partly in cash and partly in- kind. However, the Trust has elected, pursuant to Rule 18f-1 under the 1940 Act, to redeem its shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of the Trust, during any 90-day period for any one shareholder. Payments in excess of this limit will also be made wholly in cash unless the Board of Trustees believes that economic conditions exist which would make such a practice detrimental to the best interests of the Trust. Any Portfolio securities paid or distributed in-kind would be valued as described under “Other Purchase Information” in the 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 a Portfolio.

In-kind payments need not constitute a cross-section of a Portfolio’s portfolio. Where a shareholder has requested redemption of all or a part of the shareholder’s investment, and where a Portfolio completes such redemption in- kind, that Portfolio will not recognize a gain or loss for federal tax purposes, on the securities used to complete the redemption. The shareholder will recognize a gain or loss equal to the difference between the fair market value of the securities received and the shareholder’s basis in the Portfolio shares redeemed.

 

22   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Section 8 | Taxation of the Portfolio

Taxation

The Portfolios 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 Portfolio 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 Portfolio’s total assets and 10% of the outstanding voting securities of such issuer, and with no more than 25% of its assets invested in the securities (other than those of the government or other regulated investment companies) of any one issuer or of two or more issuers which the Portfolio controls and which are engaged in the same, similar or related trades and businesses.

To the extent each Portfolio 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.

In addition to the diversification requirements applicable to all registered investment companies (“RICs”), Section 817(h) of the Internal Revenue Code imposes certain diversification requirements on the assets underlying variable annuity and variable life contracts including, as described herein, when those assets are shares in a RIC. The Portfolios intend to comply with these diversification regulations. By meeting these and other requirements, participating Insurance Companies, rather than the holders of variable annuity contracts and variable life policies, should be subject to tax on distributions received with respect to shares of the Portfolios. For further information concerning federal income tax consequences for the holders of variable annuity contracts and variable life policies, such holders should consult the prospectus used in connection with the issuance of their particular contracts or policies. Participating Insurance Companies should consult their own tax advisors as to whether such distributions are subject to federal income tax if they are retained as part of policy reserves.

An excise tax at the rate of 4% will be imposed on the excess, if any, of a Portfolio’s “required distributions” over actual distributions in any calendar year. Generally, the “required distribution” is 98% of a Portfolio’s ordinary income for the calendar year plus 98.2% of its capital gain net income recognized during the one-year period ending on December 31 plus undistributed amounts from prior years. Each Portfolio intends to make distributions sufficient to avoid imposition of the excise tax.

The following discussion is only relevant to the extent that the applicable Portfolio’s shares are held by an entity that is not exempt from federal income taxes or is subject to the tax on unrelated business taxable income:

Distributions declared by a Portfolio during October, November or December to shareholders of record during such month and paid by January 31 of the following year will be taxable to shareholders in the calendar year in which they are declared, rather than the calendar year in which they are received. Shareholders will be subject to federal income taxes on distributions made by a Portfolio whether received in cash or additional shares of the Portfolio. 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 a Portfolio. A loss on the sale of shares held for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain dividend paid to the shareholder with respect to such shares. Dividends eligible for designation under the dividends received deduction and paid by a Portfolio 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.

A Portfolio will notify shareholders each year of the amount of dividends and distributions, including the amount of any distribution of long-term capital gains, and the portion of its dividends which may qualify for the 70% deduction.

The foregoing is a general and abbreviated summary of the applicable provisions of the Code and Treasury regulations currently in effect. For the complete provisions, reference should be made to the pertinent Code sections and regulations. The Code and regulations are subject to change by legislative or administrative action at any time, and retroactively.

Dividends and distributions also may be subject to state and local taxes. Certain individuals, trusts and estates may be subject to a Medicare tax of 3.8% (in addition to the regular income tax). The Medicare tax is imposed on the lesser of: (i) the taxpayer’s investment income, net of deductions properly allocable to such income; or (ii) the amount by which the taxpayer’s modified adjusted gross income exceeds certain thresholds ($250,000 for married individuals filing jointly, $200,000 for unmarried individuals and $125,000 for married individuals filing separately). The Fund’s distributions are includable in a shareholder’s investment income for purposes of this Medicare tax. In addition, any capital gain realized by a shareholder upon the sale or redemption of Fund shares is includable in such shareholder’s investment income for purposes of this Medicare tax.

Shareholders are urged to consult their tax advisors regarding specific questions as to federal, state and local taxes.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   23


Section 9 | Calculation of Performance Data

Performance

Performance information for the shares of the Portfolios will vary due to the effect of expense ratios on the performance calculations. TOTAL RETURNS AND YIELDS QUOTED FOR THE PORTFOLIOS INCLUDE THE PORTFOLIOS’ EXPENSES, BUT DO NOT INCLUDE CHARGES AND EXPENSES ATTRIBUTABLE TO ANY PARTICULAR INSURANCE PRODUCT OR QUALIFIED PLAN.

BECAUSE SHARES OF THE PORTFOLIOS MAY BE PURCHASED ONLY THROUGH THE INSURANCE COMPANIES OR QUALIFIED PLANS, YOU SHOULD CAREFULLY REVIEW THE PROSPECTUS OF YOUR INSURANCE CONTRACT OR PLAN DOCUMENT FOR INFORMATION ON RELEVANT CHARGES AND EXPENSES. Excluding these charges from quotations of the Portfolios’ performance has the effect of increasing the performance quoted. You should bear in mind the effect of these charges when comparing the Portfolios’ performance to that of other mutual funds.

Current yield and total return may be quoted in advertisements, shareholder reports or other communications to shareholders. Yield is the ratio of income per share derived from the Portfolios’ investments to a current maximum offering price expressed in terms of percent. The yield is quoted on the basis of earnings after expenses have been deducted. Total return is the total of all income and capital gains paid to shareholders, assuming reinvestment of all distributions, plus (or minus) the change in the value of the original investment, expressed as a percentage of the purchase price. Occasionally, the Portfolios may include their distribution rates in advertisements. The distribution rate is the amount of distributions per share made by the Portfolios over a 12-month period divided by the current maximum offering price.

The SEC rules require the use of standardized performance quotations or, alternatively, that every non-standardized performance quotation furnished by a Portfolio be accompanied by certain standardized performance information computed as required by the Commission. Current yield and total return quotations used by the Portfolios are based on the standardized methods of computing performance mandated by the Commission. An explanation of those and other methods used by the Portfolios to compute or express performance follows.

AVERAGE ANNUAL TOTAL RETURN QUOTATION

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

 

 

24   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


After Taxes on Distributions and Redemptions

 

     

    P(1+T)n - ATVDR

 

WHERE:   P       =       a hypothetical initial payment of $1,000.
  T  

 

=

 

 

average annual return (after taxes on distributions or after taxes on distributions and redemptions as applicable.

  n  

 

=

 

 

number of years.

 

 

ATV

 

 

=

 

 

ending value of a hypothetical $1,000 payment made at the beginning of the one, five or ten-year periods at the end of the one, five or ten-year periods (or fractional portion), after taxes on redemption.

 

 

ATVDR 

 

 

=

 

 

ending value of a hypothetical $1,000 payment made at the beginning of the one, five or ten-year periods at the end of the one, five or ten-year periods (or financial portion) after taxes on fund distributions and redemption.

Based on these formulas, annualized total returns were as follows for the periods and Portfolios indicated:

 

     

Average Annual Returns

(as of 12/31/2012)

 
      1-Year              5-Year              10-Year              Inception
Date
 

Strategic Growth Portfolio

                                   

Pre-Tax

     11.42%             (0.63)%         5.31%         May 1, 02   

Pre-Liquidation After-Tax

     10.86%             (1.47)%         4.66%         May 1, 02   

Post-Liquidation After-Tax

     7.42%             (0.92)%         4.39%         May 1, 02   

Conservative Growth Portfolio

                                   

Pre-Tax

     7.79%             1.61%         5.38%         May 1, 02   

Pre-Liquidation After-Tax

     7.11%             0.67%         4.71%         May 1, 02   

Post-Liquidation After-Tax

     5.07%             0.88%         4.37%         May 1, 02   

YIELD QUOTATION

A “yield” is determined in accordance with the method defined by the SEC. 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 is 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.

 

  STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013   25


Section 10 | Financial Statements

Each Portfolio’s financial statements and independent registered public accounting firm’s report, including the notes thereto, for the fiscal year ended December 31, 2012, are hereby incorporated by reference from the Portfolios’ 2012 Annual Report to Shareholders.

 

26   STATEMENT OF ADDITIONAL INFORMATION FOR THE TIMOTHY PLAN VARIABLE PORTFOLIOS   April 30, 2013  


Appendix A | Proxy Voting Policy

Preface

Timothy Partners, Ltd. (“Advisor”) is registered with the SEC as an investment advisor under the Investment Advisors Act of 1940, as amended (“Advisors 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 advisor 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 Advisors 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 Trustees

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 who 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:

 

  1. 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.

 

  2. Whether the slate of director nominees promotes a majority of independent directors on the full board – Advisor believes that it is in the best interests of all company shareholders to have, as a majority, directors that are independent of management.

 

  3. 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.

 

  4. 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 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 a few insiders.

 

  1. 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.

 

  iv. 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;

 

   

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.

 

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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:

 

  1. an Advisory Entity has a business or personal relationship with the participant of a proxy contest such as members of the issuer’s management or the soliciting shareholder(s);

 

  2. an Advisory Entity provides advisory, brokerage, underwriting, insurance or banking or other services to the issuer whose management is soliciting proxies;

 

  3. an Advisory Entity has a personal or business relationship with a candidate for directorship; or

 

  4. 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 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 his 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 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 SEC 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.

 

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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:

 

  1. copies of 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;

 

  2. a reconciliation of the proxy solicitations received and number of shares held by the Fund in the company;

 

  3. the analysis undertaken to ensure that the vote cast is consistent with this Policy;

 

  4. copies, if any, of all waivers request submitted to the Board and the Board’s final determination relating thereto;

 

  5. copies, if any, of all documents submitted to the Board relating to conflict of interest transactions and the Board’s final determination relating thereto;

 

  6. copies of any other documents created or used by the Proxy Voting Officer in determining how to vote the proxy;

 

  7. copies of all votes cast;

 

  8. copies of all quarterly summaries presented to the Board; and

 

  9. 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 Advisors Act. Copies shall be provided promptly upon request.

Summary

Timothy Partners, Ltd. (“Advisor”) is registered with the SEC as an investment advisor under the Investment Advisors Act of 1940, as amended (“Advisors 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 advisor 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 Advisors 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

1055 Maitland Center Commons

Maitland, FL 32751

 

Online      |     www.timothyplan.com
E-mail   |    invest@timothyplan.com
Phone   |    (800) 846-7526

 

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PART C. OTHER INFORMATION

 

Item 28. 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 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.

 

  (2) 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.

 

  (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 to the Investment Advisory Agreement dated May 1, 1998 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. 8, is hereby incorporated by reference.

 

  (5) 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.

 

  (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 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, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 25, is hereby incorporated by reference.

 

  (9) 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, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 25, is hereby incorporated by reference.

 

  (10) Registrant’s Form of Sub-Investment Advisory Agreement dated July 1, 2004 with Timothy Partners, Ltd. and Barrow, Hanley, Mewhinney & Strauss, on behalf of the Timothy Plan Fixed Income and Money Market Funds, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 19, is hereby incorporated by reference.

 

  (11) Registrant’s Form of Sub-Investment Advisory Agreement dated May 1, 2007 with Timothy Partners, Ltd. and Barrow, Hanley & Mewhinney, on behalf of the Timothy Plan High Yield Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 28, is hereby incorporated by reference.

 

  (12) Registrant’s Form of Amendment to the Investment Advisory Agreement dated May 1, 2007 with Timothy Partners, Ltd on behalf of the Timothy Plan High Yield Fund and Timothy Plan International Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 28, is hereby incorporated by reference.

 

  (13) Registrant’s Form of Sub-Investment Advisory Agreement dated May 1, 2007 with Timothy Partners, Ltd. and Eagle Global Advisors, on behalf of the Timothy Plan International Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 28, is hereby incorporated by reference.

 

  (14) Registrant’s Form of Sub-Investment Advisory Agreement dated January 1, 2008 with Timothy Partners, Ltd. and Chartwell Investment Partners, on behalf of the Timothy Plan Aggressive Growth Fund, which was filed as an Exhibit to Registrant’s Definitive Proxy on Form N-14 on November 6, 2007, is hereby incorporated by reference.

 

  (15) Registrant’s Form of Sub-Investment Advisory Agreement dated January 1, 2008 with Timothy Partners, Ltd. and Chartwell Investment Partners, on behalf of the Timothy Plan Large/Mid Cap Growth Fund, which was filed as an Exhibit to Registrant’s Definitive Proxy on Form N-14 on November 6, 2007, is hereby incorporated by reference.

 

  (16) Registrant’s Form of Investment Advisory Agreement dated August 6, 2009 with Timothy Partners, Ltd. on behalf of the Timothy Plan Defensive Strategies Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 32, is hereby incorporated by reference.


  (17) Registrant’s Form of Sub-Investment Advisory Agreement dated January 1, 2008 with Timothy Partners, Ltd. and Delaware Management Business Trust, on behalf of the Timothy Plan Defensive Strategies Fund, which was filed as an Exhibit to Registrant’s Definitive Proxy on Form N-14 on June 22, 2010, is hereby incorporated by reference.

 

  (18) Registrant’s Form of Amendment to the Investment Advisory Agreement dated October 11, 2011 with Timothy Partners, Ltd., on behalf of the Timothy Plan Israel Common Values Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 42 on October 11, 2011, is hereby incorporated by reference.

 

  (19) Registrant’s Form of Investment Sub-Advisory Agreement dated October 11, 2011, with Eagle Global Advisors, on behalf of the Timothy Plan Israel Common Values Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 42 on October 11, 2011, is hereby incorporated by reference.

 

  (20) Registrant’s Form of Amendment to the Investment Advisory Agreement dated November 18, 2012 with Timothy Partners, Ltd on behalf of the Timothy Plan Emerging Markets Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 49 on November 30, 2012, is hereby incorporated by reference.

 

  (21) Registrant’s Form of Sub-Advisory Agreement, dated November 30, 2012, with Brandes Investment Partners, LP, on behalf of the Timothy Plan Emerging Markets Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 49 on November 30, 2012, is hereby incorporated by reference.

 

e. Underwriting Contracts

 

  (1) Form of 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.

 

  (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, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 19 on March 5, 2004, is hereby incorporated by reference.

 

  (3) Form of Registrant’s Amendment to Underwriting Agreement dated October 11, 2011 with Timothy Partners Ltd. on behalf of the Timothy Plan Israel Common Values Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 42 on October 11, 2011, is hereby incorporated by reference.


  (4) Form of Registrant’s Amendment to Underwriting Agreement dated October 31, 2012 with Timothy Partners Ltd. on behalf of the Timothy Plan Emerging Markets Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 49 on November 30, 2012, 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.

 

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.

 

  (5) Powers of Attorney, which were filed as an Exhibit to Registrant’s Post-Effective Amendment No. 20, are hereby incorporated by reference.

 

  (6) Form of Registrant’s Mutual Fund Services Agreement with Unified Fund Services, Inc., dated December 4, 2006, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 28, is hereby incorporated by reference.

 

  (7) Form of Registrant’s Mutual Fund Services Agreement with Gemini Fund Services, Inc., dated August 5, 2011, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 44 on January 31, 2012, is hereby incorporated by reference.

 

  (8) Form of Registrant’s Fund Services Agreement with Gemini Fund Services, dated             , 2013, is filed herein as Exhibit 99H-8.

 

i. Opinion and Consent of Counsel – Opinion and Consent of David Jones, Esq.,- is filed herein as Exhibit 99I.


j. Other Opinions- Consent of Independent Registered Public Accounting Firm,- is filed herein as Exhibit 99J.

 

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.

 

  (3) Registrant’s Plan of Distribution for Class C shares, which was filed as an Exhibit to Registrant’s Post-effective Amendment No. 18, is hereby incorporated herein by reference.

 

  (5) Registrant’s Amendment to Plan of Distribution for Class A Shares, adding the Timothy Plan High Yield Fund and Timothy Plan International Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 28, is hereby incorporated by reference.

 

  (6) Registrant’s Amendment to Plan of Distribution for Class C Shares, adding the Timothy Plan High Yield Fund and Timothy Plan International Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 28, is hereby incorporated by reference.

 

  (4) Registrant’s Amendment to Plan of Distribution for Class A Shares, adding the Timothy Plan Defensive Strategies Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 32, is hereby incorporated by reference.

 

  (5) Registrant’s Amendment to Plan of Distribution for Class C Shares, adding the Timothy Plan Defensive Strategies Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 32, is hereby incorporated by reference.

 

  (6) Registrant’s amended Plan of Distribution for Class C shares, adding the Timothy Plan Israel Common Values Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 42 on October 11, 2011, is hereby incorporated by reference.

 

  (7) Registrant’s Amendment to Plan of Distribution for Class A Shares, adding the Timothy Plan Israel Common Values Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 42 on October 11, 2011, is hereby incorporated by reference.

 

  (8) Registrant’s amended Plan of Distribution for Class C shares, adding the Timothy Plan Emerging Markets Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 49 on November 30, 2012, is hereby incorporated by reference.


  (9) Registrant’s Amendment to Plan of Distribution for Class A Shares, adding the Timothy Plan Emerging Markets Fund, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 49 on November 30, 2012, 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 Barrow, Hanley, Mewhinney & Strauss, LLC, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 44 on January 31, 2012, is hereby incorporated by reference.

 

  (3) Form of Code of Ethics of Chartwell Investment Partners, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 44 on January 31, 2012, is hereby incorporated by reference.

 

  (4) Form of Code of Ethics of Delaware Management Company, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 44 on January 31, 2012, is hereby incorporated by reference.

 

  (5) Form of Code of Ethics of Eagle Global Advisors, LLC, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 44 on January 31, 2012, is hereby incorporated by reference.

 

  (6) Form of Code of Ethics of Jefferies Asset Management Company, LLC, which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 44 on January 31, 2012, is hereby incorporated by reference.

 

  (7) Form of Code of Ethics of Westwood Management Corp., which was filed as an Exhibit to Registrant’s Post-Effective Amendment No. 44 on January 31, 2012, is hereby incorporated by reference.

 

  (8) Form of Code of Ethics of Brandes Investment Partners, LP, will be filed by amendment.


Item 29. 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 April 30, 2013.

 

Item 30. 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 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

(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.

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 31. 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 FINRA’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 32. Principal Underwriter.

(a) Timothy Partners, Ltd. (“TPL”) is the principal underwriter for the Trust and currently acts as underwriter only for the Trust.

(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

1055 Mailtand Center Commons

Maitland, FL 32751

  President of TPL   Chairman, President and Treasurer

 

(c) None


Item 33. 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 1055 Maitland Center Commons, Maitland, Florida 32751, 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, Gemini Fund Services, Inc., 4020 South 147th Street, Omaha, Nebraska 68137.

 

Item 34. Management Services.

All substantive provisions of any management-related service contract are discussed in Parts A and B of this Registration Statement.

 

Item 35. 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.


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. 54 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 30, 2013.

 

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. 54 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 30, 2013  

/s/ Joseph E. Boatwright*

JOSEPH E. BOATWRIGHT

      Trustee, Secretary   April 30, 2013  

/s/ Matthew D. Staver*

MATHEW D. STAVER

      Trustee   April 30, 2013  

/s/ Deborah Honneycutt*

DEBORAH HONEYCUTT

      Trustee   April 30, 2013  

/s/ Charles E. Nelson*

CHARLES E. NELSON

      Trustee   April 30, 2013  

/s/ Scott Preissler, Ph.D.*

SCOTT PREISSLER, Ph.D.

      Trustee   April 30, 2013  

/s/ Alan M. Ross*

ALAN M. ROSS

      Trustee   April 30, 2013  

/s/ Richard W. Copeland*

RICHARD W. COPELAND

      Trustee   April 30, 2013  


/s/ Kenneth Blackwell*

KENNETH BLACKWELL

      Trustee   April 30, 2013  

/s/ William W. Johnson*

WILLAM W. JOHNSON

      Trustee   April 30, 2013  

/s/ John C. Mulder*

JOHN C. MULDER

      Trustee   April 30, 2013  

/s/ Patrice Tsague*

PATRICE TSAGUE

      Trustee   April 30, 2013  

 

* By Arthur D. Ally, Attorney-In-Fact under Powers of Attorney

 

Exhibit List     

Exhibit 99H-8

   Form of Fund Services Agreement with Gemini Fund Services

Exhibit 99I

   Form of Legal Opinion of David Jones & Assoc., P.C.

Exhibit 99J

   Form of Consent of Cohen Fund Audit Services, Ltd.
EX-99.H(8) 2 d503137dex99h8.htm FORM OF FUND'S SERVICE AGREEMENT WITH REGISTRANT WITH GEMINI SERVICES Form of Fund's Service Agreement with Registrant with Gemini Services

FUND SERVICES AGREEMENT

between

THE TIMOTHY PLAN

and

 

LOGO


 
INDEX

 

1.

  APPOINTMENT AND DELIVERY OF DOCUMENTS      1   

2.

  DUTIES OF GFS      2   

3.

  FEES AND EXPENSES      3   

4.

  STANDARD OF CARE, INDEMNIFICATION AND RELIANCE      4   

5.

  LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY      6   

6.

  EXPENSES ASSUMED BY THE TRUST      6   

7.

  REPRESENTATIONS AND WARRANTIES      7   

8.

  CONFIDENTIALITY      8   

9.

  PROPRIETARY INFORMATION      8   

10.

  ADDITIONAL FUNDS AND CLASSES      9   

11.

  ASSIGNMENT AND SUBCONTRACTING      9   

12.

  EFFECTIVE DATE, TERM AND TERMINATION      9   

13.

  LIAISON WITH ACCOUNTANTS/ATTORNEYS      10   

14.

  MISCELLANEOUS      11   

APPENDIX I

     14   

APPENDIX II

     16   

APPENDIX III

     18   

APPENDIX IV

     18   


THE TIMOTHY PLAN

FUND SERVICES AGREEMENT

THIS FUND SERVICES AGREEMENT (the “Agreement”) made effective as of the 18th day of April, 2011, by and between THE TIMOTHY PLAN, a Delaware business trust, having its principal office and place of business at 1055 Maitland Center Commons, Maitland, Florida 32751 (the “Trust”) and GEMINI FUND SERVICES, LLC, a Nebraska limited liability company having its principal office and place of business at 17605 Wright Street, Suite 2, Omaha, Nebraska 68130 (“GFS”). This Agreement replaces and supersedes all prior understandings and agreements between the parties hereto for the services described below.

WHEREAS, the Trust is an open-end management investment company registered with the United States Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”); and

WHEREAS, the Trust is authorized to issue shares (“Shares”) in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and

WHEREAS, the Trust offers shares in the series as set forth on Appendix IV attached hereto (each such series, together with all other series subsequently established by the Trust and made subject to this Agreement in accordance with Section 10, being herein referred to as a “Fund,” and collectively as the “Funds”); and

WHEREAS, the Trust desires that GFS perform the services selected on Appendix IV (collectively the “Services”) for the Funds and GFS is willing to provide those services on the terms and conditions set forth in this Agreement;

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, the Trust and GFS hereby agree as follows:

 

1.

APPOINTMENT AND DELIVERY OF DOCUMENTS

 

  (a)

The Trust, on behalf of each Fund listed in Appendix IV attached hereto, hereby appoints GFS to provide the Services to the Trust as selected in Appendix IV attached hereto, for the period and on the terms set forth in this Agreement. GFS accepts such appointment and agrees to furnish the services herein set forth in return for the compensation as provided in Section 3 and Appendix IV of this Agreement. A description of all the services offered by GFS is set forth on Appendices I – III.

 

  (b)

In connection therewith the Trust has delivered to GFS copies of:

 

  (i)

the Trust’s Agreement, Declaration of Trust and Bylaws (collectively, the “Organizational Documents”);

 

  (ii)

the Trust’s Registration Statement on Form N-1A and all amendments thereto filed with the SEC pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and the 1940 Act (the “Registration Statement”);

 

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  (iii)

the Trust’s notification of registration under the 1940 Act on Form N-8A as filed with the SEC;

 

  (iv)

the Trust’s current Prospectus and Statement of Additional Information for each Fund (collectively, as currently in effect and as amended or supplemented, the “Prospectus”);

 

  (v)

each Fund’s current plan of distribution adopted by the Trust under Rule 12b-1 under the 1940 Act (the “Plan”);

 

  (vi)

each Fund’s investment advisory agreement;

 

  (vii)

each Fund’s underwriting agreement;

 

  (viii)

contact information for each Fund’s service providers, including but not limited to, the Fund’s administrator, custodian, transfer agent, independent auditors, legal counsel, underwriter and chief compliance officer; and

 

  (ix)

procedures adopted by the Trust in accordance with Rule 17a-7 under the 1940 Act with respect to affiliated transactions.

 

  (c)

The Trust shall promptly furnish GFS with all amendments of or supplements to the items listed in Section 1(b) above, and shall deliver to GFS a copy of the resolution of the Board of Trustees of the Trust (the “Board”) appointing GFS and authorizing the execution and delivery of this Agreement.

 

2.

DUTIES OF GFS

GFS’s duties with respect to Fund Accounting, Fund Administration and Transfer Agency services are detailed in Appendices I, II and III to this Agreement.

 

  (a)

In order for GFS to perform the Services, the Trust (i) shall cause all service providers to the Funds of the Trust to furnish any and all information to GFS, and assist GFS as may be required and (ii) shall ensure that GFS has access to all records and documents maintained by the Trust or any service provider to the Trust or a Fund of the Trust.

 

  (b)

GFS shall, for all purposes herein, be deemed to be an independent contractor and shall, unless otherwise expressly provided or authorized, have no authority to act for or represent the Trust in any way or otherwise be deemed an agent of the Trust.

 

  (c)

Whenever, in the course of performing its duties under this Agreement, GFS determines, on the basis of information supplied to GFS by the Trust, that a violation of applicable law has occurred, or that, to its knowledge, a possible violation of applicable law may have occurred, or with the passage of time could occur, GFS shall promptly notify the Trust and its legal counsel of such violation.

 

Page  |  2


3.

FEES AND EXPENSES

 

  (a)

Fees. As compensation for the Services provided by GFS to the Trust pursuant to this Agreement, the Trust, on behalf of each Fund, agrees to pay GFS the fees set forth in Appendix IV attached hereto. Fees will begin to accrue for each Fund on the latter of the date of this Agreement or the date GFS begins providing services to a Fund. For the purpose of determining fees calculated as a function of a Fund’s assets, the value of the Fund’s assets and net assets shall be computed as required by its currently effective Prospectus, generally accepted accounting principles, and resolutions of the Board. GFS will render, after the close of each month in which services have been furnished, a statement reflecting all of the charges for such month. Services provided for partial months shall be subject to pro ration.

 

  (b)

Expenses. GFS will bear its own expenses, in connection with the performance of the Services under this Agreement, except as provided herein or as agreed to by the parties. In addition to the fees paid under Section 3(a), the Trust agrees to reimburse GFS for all reasonable out-of-pocket expenses or advances incurred by GFS to perform the Services or otherwise incurred by GFS at the request or with the consent of the Trust. For reports, analyses and services requested in writing by the Trust and provided by GFS, not in the ordinary course, GFS shall charge hourly fees specified in Appendix IV attached hereto.

 

  (c)

Fee Changes. On each anniversary date of this Agreement (determined from the “Effective Date” for each Fund as set forth on Appendix IV), the base and/or minimum fees enumerated in Appendix IV attached hereto, may be increased by the change in the Consumer Price Index for the Northeast region (the “CPI”) for the twelve-month period ending with the month preceding such annual anniversary date. Any CPI increases not charged in any given year may be included in prospective CPI fee increases in future years. GFS Agrees to provide the Board prior written notice of any CPI increase.

 

  (d)

Due Date. All fees contemplated under Section 3(a) above and reimbursement for all expenses contemplated under Section 3(b) above are due and payable within ten (10) days of receipt of an invoice provided by GFS. Any fees or reimbursements due hereunder not received by its due date may be assessed interest at the maximum amount permitted by law.

 

  (e)

Books and Records. The accounts, books, records and other documents (the “Records”) maintained by GFS shall be the property of the Funds, and shall be surrendered to the Funds, at the expense of the Funds, promptly upon request by the Funds in the form in which such Records have been maintained or preserved, provided that all service fees and expenses charged by GFS in the performance of its duties hereunder have been fully paid to the satisfaction of GFS. GFS agrees to maintain a back up set of Records of the Funds (which back-up set shall be updated on at least a weekly basis) at a location other than that where the original Records are stored. GFS shall assist the Funds’ independent auditors, or, upon approval of the Funds, any regulatory body, in any requested review of the Funds’ Records. GFS shall preserve the Records, as they are required to be maintained and preserved by Rule 31a-1 under the 1940 Act.

 

Page  |  3


  (f)

De-Conversion Fees. Upon termination of this Agreement, GFS will charge a “De-Conversion” fee to compensate GFS for providing to the Fund’s new service providers, all material records, history and data maintained by GFS under this Agreement. The amount of the De-Conversion fees are specified in Appendix IV attached hereto. In addition, GFS reserves the right to charge for out-of-pocket expenses associated with the De-Conversion, as specified in Section 12(d) of this Agreement.

 

  (g)

Post-Engagement Audit Support Fees. After a De-Conversion, GFS is often called upon to provide support to a Fund’s service provider and assist with a Fund’s annual audit. Services provided by GFS to accommodate a Fund’s request following termination of this Agreement shall be subject to GFS’s standard hourly rates existing at the time of the request. The Fund agrees to compensate GFS, at GFS’s standard hourly rates, for accommodating a Fund’s request following termination of this Agreement.

 

4.

STANDARD OF CARE, INDEMNIFICATION AND RELIANCE

 

  (a)

Indemnification of GFS. The Trust shall, on behalf of each applicable Fund, indemnify and hold GFS harmless from and against any and all losses, damages, costs, charges, reasonable attorney or consultant fees, payments, expenses and liability arising out of or attributable to the Trust’s refusal or failure to comply with the terms of this Agreement, breach of any representation or warranty made by the Trust contained in this Agreement, or which arise out of the Trust’s lack of good faith, gross negligence or willful misconduct with respect to the Trust’s performance under or in connection with this Agreement. The Trust shall hold GFS harmless and GFS shall not be liable for and shall be entitled to rely upon and may act upon information, advice, records, reports and requests generated by the Funds, the Fund’s legal counsel and the Fund’s independent accountants. GFS shall be without liability for any action reasonably taken or omitted pursuant to this Agreement.

 

  (b)

Indemnification of the Trust. GFS shall indemnify and hold the Trust and each applicable Fund harmless from and against any and all losses, damages, costs, charges, reasonable attorney or consultant fees, payments, expenses and liability arising out of or attributable to GFS’s refusal or failure to comply with the terms of this Agreement, breach of any representation or warranty made by GFS contained in this Agreement or which arise out of GFS’s lack of good faith, gross negligence, willful misconduct or reckless disregard of its duties with respect to GFS’s performance under or in connection with this Agreement.

 

  (c)

Reliance. Except to the extent that GFS may be liable pursuant to Sections 4(a) and 4(b) above, GFS shall not be liable for any action taken or failure to act in good faith in reliance upon:

 

  (i)

advice of the Trust, its officers, independent auditors or counsel to the Trust;

 

  (ii)

any oral instruction which it receives and which it reasonably believes in good faith was transmitted by the person or persons authorized by the Board to give such oral instruction pursuant to the parties standard operating practices;

 

Page  |  4


  (iii)

any written instruction or certified copy of any resolution of the Board, and GFS may rely upon the genuineness of any such document, copy or facsimile thereof reasonably believed in good faith by GFS to have been validly executed;

 

  (iv)

any signature, instruction, request, letter of transmittal, certificate, opinion of counsel, statement, instrument, report, notice, consent, order, or other document reasonably believed in good faith by GFS to be genuine and to have been signed or presented by the Trust or other proper party or parties;

 

  (v)

any instruction, information, data, records or documents provided to GFS or its agents or subcontractors furnished (pursuant to procedures mutually agreed to by GFS and the Trust’s service providers) by machine readable input, data entry, email, facsimile or other similar means authorized by the Trust;

 

  (vi)

any authorization, instruction, approval, item or set of data, or information of any kind transmitted to GFS in person or by telephone, email, facsimile or other electronic means, furnished and reasonably believed by GFS to be genuine and to have been given by the proper person or persons. GFS shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Trust.

GFS shall not be under any duty or obligation to inquire into the validity or invalidity or authority or lack of authority of any statement, oral or written instruction, resolution, signature, request, letter of transmittal, certificate, opinion of counsel, instrument, report, notice, consent, order, or any other document or instrument which GFS reasonably believes in good faith to be genuine.

At any time, GFS may apply to any officer of the Trust for instructions, and may consult with legal counsel to the Trust with respect to any matter arising in connection with the routine services to be performed by GFS under this Agreement, and GFS and its agents or subcontractors shall not be liable and shall be indemnified by the Trust on behalf of the applicable Fund for any action taken or omitted by it in reasonable reliance upon such instructions or upon the advice of such counsel. GFS agrees to consult first with a Fund’s adviser before engaging in any non-routine legal consultation that may result in additional legal costs to the Fund.

 

  (d)

Errors of Others. GFS shall not be liable for the errors of other service providers to the Trust, including the errors of pricing services (other than to pursue all reasonable claims against the pricing service based on the pricing services’ standard contracts entered into by GFS) and errors in information provided by an investment adviser (including prices and pricing formulas and the untimely transmission of trade information) or custodian to the Trust; except or unless any GFS action or inaction is a direct cause of the error.

 

  (e)

Reliance on Electronic Instructions. If the Trust has the ability to originate electronic instructions to GFS in order to (i) effect the transfer or movement of cash or Shares or (ii) transmit Shareholder information or other information, then in such event GFS shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established and agreed upon by GFS and the Fund’s investment adviser.

 

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  (f)

Notification of Claims. In order that the indemnification provisions contained in this Section shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim or to defend against said claim in its own name or in the name of the other party. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party’s prior written consent.

 

  (g)

Notwithstanding any other provision of this Agreement, GFS’s maximum liability to a Fund arising out of the transactions contemplated hereby, whether arising in contract, tort (including, without limitation, negligence) or otherwise, shall not exceed the direct loss to such Fund. IN NO EVENT SHALL GFS BE LIABLE FOR TRADING LOSSES, LOST REVENUES, SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES OR LOST PROFITS, WHETHER OR NOT SUCH DAMAGES WERE FORESEEABLE OR GFS WAS ADVISED OF THE POSSIBILITY THEREOF. THE PARTIES ACKNOWLEDGE THAT THE OTHER PARTS OF THIS AGREEMENT ARE PREMISED UPON THE LIMITATION STATED IN THIS SECTION.

 

5.

LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Board and the shareholders of each Fund shall not be liable for any obligations of the Trust or of the Funds under this Agreement, and GFS agrees that, in asserting any rights or claims under this Agreement, it shall look only to the assets and property of the Fund (or Funds) to which GFS’s rights or claims relate in settlement of such rights or claims, and not to the Board or the shareholders of the Funds. It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but bind only the trust property of the Trust, as provided in the Declaration of Trust of the Trust. The execution and delivery of this Agreement have been authorized by the Board of the Trust and signed by the officers of the Trust, acting as such, and neither such authorization by the Board and shareholders nor such execution and delivery by such officers shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the property of the Trust as provided in its Declaration of Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of Delaware.

 

6.

EXPENSES ASSUMED BY THE TRUST

Except as otherwise specifically stated in this Agreement, GFS shall pay all expenses incurred by it in performing the Services under this Agreement. Each Fund of the Trust will bear out-of-pocket expenses incurred by GFS under this Agreement and all other expenses incurred in the operation of the Fund (other than those borne by the investment adviser to the Fund) including, but not limited to:

 

  (a)

taxes;

  (b)

interest;

  (c)

brokerage fees and commissions, if any;

 

Page  |  6


  (d)

fees for Trustees who are not officers, directors, partners, employees or holders of five percent (5%) or more of the outstanding voting securities of the investment adviser or GFS;

  (e)

Securities and Exchange Commission fees (including EDGAR filing fees);

  (f)

state blue sky registration or qualification fees;

  (g)

advisory fees;

  (h)

charges of custodians;

  (i)

transfer and dividend disbursing agents’ fees;

  (j)

insurance premiums;

  (k)

outside auditing and legal expenses;

  (l)

costs of maintaining trust existence;

  (m)

costs attributable to shareholder services, including without limitation telephone and personnel expenses;

  (n)

costs of preparing and printing prospectuses for regulatory purposes;

  (o)

costs of shareholders’ reports, Trust meetings and related expenses;

  (p)

Trust legal fees; and

  (q)

any extraordinary expenses.

 

7.

REPRESENTATIONS AND WARRANTIES

 

  (a)

Representations of GFS. GFS represents and warrants to the Trust that:

 

  (i)

it is a limited liability company duly organized and existing and in good standing under the laws of the State of Nebraska;

 

  (ii)

it is empowered under applicable laws and by its organizational documents to enter into this Agreement and perform its duties under this Agreement;

 

  (iii)

it has access to the necessary facilities, equipment, and personnel to perform its duties and obligations under this Agreement; and

 

  (iv)

it is registered as a transfer agent under Section 17A of the Securities Exchange Act of 1934 and shall continue to be registered throughout the remainder of this Agreement.

 

  (b)

Representations of the Trust. The Fund represents and warrants to GFS that:

 

  (i)

it is a Trust duly organized and existing and in good standing under the laws of the State of Delaware;

 

  (ii)

it is empowered under applicable laws and by its Organizational Documents to enter into and perform this Agreement;

 

  (iii)

all proceedings required by said Organizational Documents have been taken to authorize it to enter into and perform this Agreement;

 

  (iv)

it is an open-end management investment company registered under the 1940 Act and will operate in conformance with the 1940 Act and all rules and regulations promulgated thereunder during the term of this Agreement;

 

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  (v)

a registration statement under the Securities Act of 1933 is currently effective and will remain effective, and appropriate state securities law filings as required, have been or will be made and will continue to be made, with respect to all Shares of the Fund being offered for sale; and

 

  (vi)

Each Fund’s Organizational Documents, Registration Statement and Prospectus are true and accurate and will remain true and accurate at all times during the term of this Agreement in conformance with applicable federal and state securities laws.

 

8.

CONFIDENTIALITY

GFS and the Trust agree that all books, records, information, and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except that GFS may:

 

  (a)

prepare or assist in the preparation of periodic reports to shareholders and regulatory bodies such as the SEC;

 

  (b)

provide information typically supplied in the investment company industry to companies that track or report price, performance or other information regarding investment companies; and

 

  (c)

release such information as permitted or required by law or approved in writing by the Trust, which approval shall not be unreasonably withheld and may not be withheld where GFS may be exposed to civil or criminal liability or proceedings for failure to release the information, when requested to divulge such information by duly constituted authorities or when so requested by the Trust and the Advisers.

Except as provided above, in accordance with Title 17, Chapter II, part 248 of the Code of Federal Regulations (17 CFR 248.1 – 248.30) (“Reg S-P”), GFS will not directly, or indirectly through an affiliate, disclose any non-public personal information as defined in Reg S-P, received from a Fund to any person that is not affiliated with the Fund or with GFS and provided that any such information disclosed to an affiliate of GFS shall be under the same limitations on non-disclosure.

Both parties agree to communicate sensitive information via secured communication channels (i.e. encrypted format).

 

9.

PROPRIETARY INFORMATION

 

  (a)

Proprietary Information of GFS. The Trust acknowledges that the databases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals maintained by GFS on databases under the control and ownership of GFS or a third party constitute copyrighted, trade secret, or other proprietary information (collectively, “GFS Proprietary Information”) of substantial value to GFS or the third party. The Trust agrees to treat all GFS Proprietary Information as proprietary to GFS and further agrees that it shall not divulge any GFS Proprietary Information to any person or organization except as may be provided under this Agreement.

 

Page | 8


  (b)

Proprietary Information of the Trust. GFS acknowledges that the Shareholder list and all information related to shareholders furnished to GFS by the Trust or by a shareholder in connection with this Agreement (collectively, “Customer Data”) all information regarding the Trust portfolios, arrangements with brokerage firms, compensation paid to or by the Trust, trading strategies and all such related information (collectively, Trust Proprietary Information”) constitute proprietary information of substantial value to the Trust. In no event shall GFS Proprietary Information be deemed Trust Proprietary Information or Customer Data. GFS agrees to treat all Trust Proprietary Information and Customer Data as proprietary to the Trust and further agrees that it shall not divulge any Trust Proprietary Information or Customer Data to any person or organization except as may be provided under this Agreement or as may be directed by the Trust or as may be duly requested by regulatory authorities.

 

  (c)

Each party shall take reasonable efforts to advise its employees of their obligations pursuant to this Section 9. The obligations of this section shall survive any earlier termination of this Agreement.

 

10.

ADDITIONAL FUNDS AND CLASSES

In the event that the Trust establishes one or more series of Shares or one or more classes of Shares after the effectiveness of this Agreement, such series of Shares or classes of Shares, as the case may be, shall become Funds and classes under this Agreement with necessary changes made to Appendix IV; however, either GFS or the Trust may elect not to make any such series or classes subject to this Agreement.

 

11.

ASSIGNMENT AND SUBCONTRACTING

This Agreement shall extend to and shall be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Trust without the prior written consent of GFS. GFS may subcontract any or all of its responsibilities pursuant to this Agreement to one or more companies, trusts, firms, individuals or associations, which may or may not be affiliated persons of GFS and which agree to comply with the terms of this Agreement; provided, however, that any such subcontracting shall not relieve GFS of its responsibilities hereunder. GFS may pay such persons for their services, but no such payment will increase fees due from the Trust hereunder.

 

12.

EFFECTIVE DATE, TERM AND TERMINATION

 

  (a)

Effective Date. This Agreement shall become effective on the date first above written and the effective date with respect to each Fund is set forth on the applicable Appendix IV attached hereto.

 

  (b)

Term. This Agreement shall remain in effect for a period of two (2) years from the applicable Fund(s) effective date and shall continue in effect for successive twelve-month periods provided that such continuance is specifically approved at least annually by a majority of the Board.

 

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  (c)

Termination. This Agreement can be terminated at the end of the initial term or subsequent renewal period upon ninety (90) days’ prior written notice by either party. Upon termination of this Agreement, GFS shall have no further obligation to provide Services to the terminating Fund(s) and all outstanding payments due from such Fund(s) under this Agreement shall become immediately due and payable to GFS, including any unpaid fees earned through the date of termination and the balance of all future minimum fees due under the remaining term of this Agreement. In the event of termination, GFS agrees that it will cooperate to facilitate the smooth transition of services and to minimize disruption to a Fund and its shareholders. Notwithstanding the foregoing, either party may terminate this agreement upon thirty (30) days’ written notice in the event of a breach. The parties have a right to attempt to cure a breach within the thirty-day notice period. If the breach is not cured within said period, then the parties hereto will submit to arbitration, in accordance with Section 14(g), below. In any event, this Agreement can be terminated at any time upon thirty (30) days’ prior written notice if the Board makes a determination to liquidate the Fund.

 

  (d)

Reimbursement of GFS’s Expenses. If this Agreement is terminated with respect to a Fund or Funds, GFS shall be entitled to collect from the Fund or Funds, in addition to the compensation described under Section 3 of this Agreement, the amount of all of GFS’s reasonable labor charges and cash disbursements for services in connection with GFS’s activities in effecting such termination, including without limitation, the labor costs and expenses associated with the de-conversion of the Trusts records of each Fund from its computer systems, and the delivery to the Trust and/or its designees of the Trust’s property, records, instruments and documents, or any copies thereof. Subsequent to such termination, for a reasonable fee, GFS will provide the Trust with reasonable access to all Trust documents or records, if any, remaining in its possession.

 

  (e)

Survival of Certain Obligations. The obligations of Sections 3, 4, 8, 9, 12 and 13 shall survive any termination of this Agreement.

 

13.

LIAISON WITH ACCOUNTANTS/ATTORNEYS

 

  (a)

GFS shall act as liaison with each Fund’s independent public accountants and shall provide account analyses, fiscal year summaries, and other audit-related schedules with respect to each Fund. GFS shall take reasonable actions in the performance of its duties under this Agreement to ensure that the necessary information is made available to such accountants for the expression of their opinion, as required by the Fund.

 

  (b)

GFS shall act as liaison with each Fund’s legal counsel and shall take reasonable actions to ensure that necessary Fund information is made available to the Fund’s legal counsel.

 

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14.

MISCELLANEOUS

 

  (a)

Amendments. This Agreement may not be amended, or any provision hereof waived, except in writing signed by the party against which the enforcement of such amendment or waiver is sought.

 

  (b)

Governing Law. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York.

 

  (c)

Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.

 

  (d)

Counterparts. The parties may execute this Agreement on any number of counterparts, and all of the counterparts taken together shall be deemed to constitute one and the same instrument.

 

  (e)

Severability. If any part, term or provision of this Agreement is held to be illegal, in conflict with any law or otherwise invalid, the remaining portion or portions shall be considered severable and not be affected by such determination, and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular part, term or provision held to be illegal or invalid.

 

  (f)

Force Majeure. Neither party shall be liable for failure to perform if the failure results from a cause beyond its control, including, without limitation, fire, electrical, mechanical, or equipment breakdowns, delays by third party vendors and/or communications carriers, civil disturbances or disorders, terrorist acts, strikes, acts of governmental authority or new governmental restrictions, or acts of God.

 

  (g)

Arbitration. The parties understand and agree that, to the extent permitted by law, all claims arising out of this Agreement will be resolved through final and binding arbitration pursuant to the terms hereof. In this regard, the parties acknowledge and agree that: (i) such arbitration will be final and binding on the parties; (ii) the parties are hereby waiving their rights to seek remedies in court, including the right to a jury trial; (iii) pre-arbitration discovery is generally more limited than and different from discovery conducted in connection with litigation; (iv) the arbitrator’s award is not required to include factual findings or legal reasoning; and (v) a party’s right to appeal or seek modification of rulings by the arbitrator will be strictly limited.

Such arbitration will be conducted in New York according to the securities arbitration rules then in effect of the American Arbitration Association. Both parties understand that the other party may initiate arbitration by serving or mailing a written notice to the other party hereto by certified mail, return receipt requested. Any award the arbitration panel makes will be final, and judgment on it may be entered in any court having jurisdiction.

This arbitration provision shall be enforced and interpreted exclusively in accordance with applicable Federal law, including the Federal Arbitration Act. Any costs, fees, or taxes

 

Page  |  11


involved in enforcing the award shall be fully assessed against and paid by the party resisting enforcement of said award. The prevailing party shall also be entitled to an award of reasonable attorneys fees and costs incurred in connection with the enforcement of this Agreement. No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action who is a member of a putative class action until:

 

   

The class certification is denied;

   

The class is decertified; or

   

The person is excluded from the class by the court.

Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Agreement except to the extent stated herein.

 

  (h)

Headings. Section and paragraph headings in this Agreement are included for convenience only and are not to be used to construe or interpret this Agreement.

 

  (i)

Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered by hand or by overnight, registered or certified mail, postage prepaid, or by facsimile to each party at the address set forth below or at such new address designated by such party by notice given pursuant to this Section.

 

 

To the Trust:

  

To GFS:

 

Arthur D. Ally

  

Andrew B. Rogers

 

President

  

Chief Executive Officer

 

The Timothy Plan

  

Gemini Fund Services, LLC

 

1055 Maitland Center Commons

  

80 Arkay Drive, Suite 110

 

Maitland, Florida

  

Hauppauge, NY 11788

 

Telephone: 800-846-7526

  

Telephone: (631) 470-2616

 

Email: artally@timothyplan.com

  

andrewr@geminifund.com

 

 

With a copy to:

  

With a copy to:

 

David D. Jones, Esq.

  

Brian Nielsen, Esq.

 

David Jones & Assoc., P.C.

  

Gemini Fund Services, LLC

 

395 Sawdust, #2148

  

17605 Wright Street, Suite 2

 

The Woodlands, Texas 77380

  

Omaha, Nebraska 68130

 

  (j)

Safekeeping. GFS shall establish and maintain facilities and procedures reasonably acceptable to the Trust for the safekeeping and control of records maintained by GFS under this Agreement including the preparation and use of check forms, facsimile, email or other electronic signature imprinting devices.

 

  (k)

Distinction of Funds. Notwithstanding any other provision of this Agreement, the parties agree that the assets and liabilities of each Fund of the Trust are separate and distinct from the assets and liabilities of each other Fund and that no Fund shall be liable or shall be charged for any debt, obligation or liability of any other Fund, whether arising under this Agreement or otherwise.

 

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  (l)

Representation of Signatories. Each of the undersigned expressly warrants and represents that they have full power and authority to sign this Agreement on behalf of the party indicated and that their signature will bind the party indicated to the terms hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized persons, effective as of the day and year first above written.

 

 

THE TIMOTHY PLAN

          

GEMINI FUND SERVICES, LLC

 

By:

 

 

       

By:

  

 

 
 

Arthur D. Ally

          

Andrew B. Rogers

 

President

          

Chief Executive Officer

 

 

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APPENDIX I

Fund Accounting Services

With respect to each Fund electing Fund Accounting Services, GFS shall provide the following services subject to, and in compliance with, the objectives, policies and limitations set forth in the Trust’s Registration Statement, the Trust’s Agreement and Declaration of Trust, Bylaws, applicable laws and regulations, and resolutions and policies established by the Trust’s Board:

 

  1)

Timely calculate the net asset value per share with the frequency prescribed in each Fund’s then-current Prospectus, transmit the Fund’s net asset value to NASDAQ, and communicate such net asset value to the Trust and its transfer agent;

 

  2)

Calculate each item of income, expense, deduction, credit, gain and loss, if any, as required by the Trust and in conformance with generally accepted accounting principles (“GAAP”), SEC Regulation S-X (or any successor regulation) and the Internal Revenue Code of 1986, as amended (or any successor laws)(the “Code”);

 

  3)

Prepare and maintain on behalf of the Trust, books and records of each Fund, as required by Rule 31a-1 under the 1940 Act, and as such rule or any successor rule, may be amended from time to time, that are applicable to the fulfillment of GFS’s Fund Accounting Services, as well as any other documents necessary or advisable for compliance with applicable regulations as may be mutually agreed to between the Trust and GFS. Without limiting the generality of the foregoing, GFS will prepare and maintain the following records upon receipt of information in proper form from the Fund or its authorized agents:

  a.

Cash receipts journal

  b.

Cash disbursements journal

  c.

Dividend record

  d.

Purchase and sales - portfolio securities journals

  e.

Subscription and redemption journals

  f.

Security ledgers

  g.

Broker ledger

  h.

General ledger

  i.

Daily expense accruals

  j.

Daily income accruals

  k.

Securities and monies borrowed or loaned and collateral therefore

  l.

Foreign currency journals

  m.

Trial balances

 

  4)

Make such adjustments over such periods as the Trust’s administrator deems necessary, and communicates to GFS in writing, to reflect over-accruals or under-accruals of estimated expenses or income;

 

  5)

Provide the Trust and, each investment adviser serving as an investment adviser for a Fund with daily portfolio valuation, net asset value calculation and other standard operational reports as requested from time to time;

 

  6)

Provide all raw data available from its mutual fund accounting system for the Fund’s investment adviser or the administrator to assist in preparation of the following:

 

Page  |  14


  a.

Semi-annual financial statements;

  b.

Semi-annual form N-SAR and annual tax returns;

  c.

Financial data necessary to update form N-1A; and

  d.

Annual proxy statement.

 

  7)

Provide facilities to accommodate an annual audit by each Fund’s independent accountants and, upon approval of the Trust, any audits or examinations conducted by the SEC or any other governmental or quasi-governmental entities with jurisdiction;

 

  8)

Transmit to and receive from each Fund’s transfer agent appropriate data on a daily basis and daily reconcile Shares outstanding and other data with the transfer agent;

 

  9)

Periodically reconcile all appropriate data with each Fund’s custodian; and

 

  10)

Perform such other record keeping, reporting and other tasks as may be specified from time to time in the procedures adopted by the Board pursuant to mutually acceptable timelines and compensation agreements.

Fund Accounting Records.

Maintenance of and Access to Records. GFS shall maintain records relating to its services, such as journals, ledger accounts and other records, as are required to be maintained under the 1940 Act and, specifically, Rule 31a-1 thereunder. The books and records pertaining to the Trust that are in possession of GFS shall be the property of the Trust. The Trust, or the Trust’s authorized representatives, shall have access to such books and records at all times during GFS’s normal business hours. Upon the reasonable request of the Trust, copies of any such books and records shall be provided promptly by GFS to the Trust or the Trust’s authorized representatives. In the event the Trust designates a successor that assumes any of GFS’s obligations hereunder, GFS shall, at the expense and direction of the Trust, transfer to such successor all relevant books, records and other data established or maintained by GFS under this Agreement.

Inspection of Records. In case of any requests or demands for the inspection of the records of the Trust maintained by GFS, GFS will endeavor to notify the Trust and to secure instructions from an authorized officer of the Trust as to such inspection. GFS shall abide by the Trust’s instructions for granting or denying the inspection; provided, however, that GFS may grant the inspection without instructions from the Trust if GFS is advised to disclose by its legal counsel.

All out-of-pocket expenses will be billed as set forth on Appendix IV. GFS may from time to time adopt new procedures, or modify existing procedures, in order to carry out its Fund Accounting Services. Any modification of the Fund Accounting Services provided by GFS as set forth in this Appendix I shall be delivered to the Trust in writing.

 

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APPENDIX II

Fund Administrative Services

With respect to each Fund electing Fund Administrative Services, GFS shall provide the following services subject to, and in compliance with the objectives, policies and limitations set forth in the Trust’s Registration Statement, the Trust’s Agreement and Declaration of Trust Bylaws, applicable laws and regulations, and resolutions and policies established by the Trust’s Board:

 

  1)

Monitor the performance of administrative and professional services rendered to the Trust by others, including its custodian, transfer agent, fund accountant and dividend disbursing agent as well as legal, auditing, shareholder servicing and other services performed for the Trust;

 

  2)

Monitor Fund holdings and operations for post-trade compliance with the Prospectus and Statement of Additional Information, SEC statutes, rules, regulations and policies and pursuant to advice from the Fund’s independent public accountants and Trust counsel, monitor Fund holdings for compliance with IRS taxation limitations and restrictions and applicable Federal Accounting Standards Board rules, statements and interpretations; provide periodic compliance reports to each investment adviser or sub-adviser to the Trust, and assist the Trust, the Adviser and each sub-adviser to the Trust (collectively referred to as “Advisers”) in preparation of periodic compliance reports to the Trust, as applicable;

 

  3)

Prepare and coordinate the printing of semi-annual and annual financial statements;

 

  4)

Prepare selected management reports for performance and compliance analyses agreed upon by the Trust and GFS from time to time;

 

  5)

In consultation with legal counsel to the Trust, the investment adviser, officers of the Trust and other relevant parties, prepare and disseminate materials for meetings of the Board, including agendas and selected financial information as agreed upon by the Trust and GFS from time to time; attend and participate in Board meetings to the extent requested by the Board; and prepare or cause to be prepared minutes of the meetings of the Board;

 

  6)

Determine income and capital gains available for distribution and calculate distributions required to meet regulatory, income, and excise tax requirements, to be reviewed by the Trust’s independent public accountants;

 

  7)

Review the Trust’s federal, state, and local tax returns as prepared and signed by the Trust’s independent public accountants;

 

  8)

Prepare and maintain the Trust’s operating expense budget to determine proper expense accruals to be charged to each Fund in order to calculate its daily net asset value;

 

  9)

In consultation with legal counsel for the Trust, assist in and monitor the preparation, filing, printing and where applicable, dissemination to shareholders of the following:

  a.

amendments to the Trust’s Registration Statement on Form N-1A;

  b.

periodic reports to the Trustees, shareholders and the SEC, including but not limited to annual reports and semi-annual reports;

  c.

notices pursuant to Rule 24f-2;

 

Page  |  16


  d.

proxy materials; and

  e.

reports to the SEC on Forms N-SAR, N-CSR, N-Q and N-PX.

 

  10)

Coordinate the Trust’s audits and examinations by:

  a.

assisting each Fund’s independent public accountants, or, upon approval of the Trust, any regulatory body, in any requested review of a Fund’s accounts and records;

  b.

providing appropriate financial schedules (as requested by a Fund’s independent public accountants or SEC examiners); and

  c.

providing office facilities as may be required.

 

  11)

Determine, after consultation with legal counsel for the Trust and the Fund’s investment adviser, the jurisdictions in which Shares of the Trust shall be registered or qualified for sale; facilitate, register, or prepare applicable notice or other filings with respect to, the Shares with the various state and territories of the United States and other securities commissions, provided that all fees for the registration of Shares or for qualifying or continuing the qualification of the Trust shall be paid by the Trust;

 

  12)

Monitor sales of Shares and ensure that the Shares are properly and duly registered with the SEC;

 

  13)

Monitor the calculation of performance data for dissemination to information services covering the investment company industry, for sales literature of the Trust and other appropriate purposes;

 

  14)

Prepare, or cause to be prepared, expense and financial reports, including Fund budgets, expense reports, pro-forma financial statements, expense and profit/loss projections and fee waiver/expense reimbursement projections on a periodic basis;

 

  15)

Prepare authorization for the payment of Trust expenses and pay, from Trust assets, all bills of the Trust;

 

  16)

Provide information typically supplied in the investment company industry to companies that track or report price, performance or other information with respect to investment companies;

 

  17)

Upon request, assist each Fund in the evaluation and selection of other service providers, such as independent public accountants, printers, EDGAR providers and proxy solicitors (such parties may be affiliates of GFS);

 

  18)

Perform other services, recordkeeping and assistance relating to the affairs of the Trust as the Trust may, from time to time, reasonably request pursuant to mutually acceptable timelines and compensation agreements.

All out-of-pocket expenses will be billed as set forth on Appendix IV. GFS may from time to time adopt new procedures, or modify existing procedures, in order to carry out its Fund Administrative Services. Any modification of the Fund Administrative Services provided by GFS as set forth in this Appendix II shall be delivered to the Trust in writing.

 

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APPENDIX III

Transfer Agency Services

With respect to each Fund electing Transfer Agency Services, GFS shall provide the following services subject to, and in compliance with the objectives, policies and limitations set forth in the Trust’s Registration Statement, the Trust’s Agreement and Declaration of Trust Bylaws, applicable laws and regulations, and resolutions and policies established by the Trust’s Board:

 

  1)

Provide the services of a transfer agent, dividend disbursing agent and, as relevant, agent in connection with accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program) that are customary for open-end management investment companies including:

 

  a.

maintaining all Shareholder accounts;

  b.

preparing Shareholder meeting lists;

  c.

preparing and certifying direct Shareholder lists in conjunction with proxy solicitations;

  d.

preparing periodic mailing of year-end tax and statement information;

  e.

mailing Shareholder reports and prospectuses to current Shareholders;

  f.

withholding taxes on U.S. resident and non-resident alien accounts;

  g.

preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required by federal authorities with respect to distributions for Shareholders;

  h.

preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts; and

  i.

providing account information in response to inquiries from Shareholders.

 

  2)

Receiving for acceptance, orders for the purchase of Shares, and promptly delivering payment and appropriate documentation therefore to the Custodian of the Fund authorized by the Board (the “Custodian”); or, in the case of a Fund operating in a master-feeder or fund of funds structure, to the transfer agent or interest-holder record keeper for the master portfolios in which the Fund invests;

 

  3)

Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account;

 

  4)

Receiving for acceptance, redemption requests and redemption directions and delivering the appropriate documentation therefore to the Custodian or, in the case of Fund operating in a master-feeder or fund of funds structure, to the transfer agent or interest-holder record keeper for the master portfolios in which the Fund invests;

 

  5)

As and when the Fund receives monies paid to it by the Custodian with respect to any redemption, paying over or cause to be paid over the redemption proceeds as required by the Prospectus pursuant to which the redeemed Shares were offered and as instructed by the redeeming Shareholders;

 

Page  |  18


  6)

Effecting transfers of Shares upon receipt of appropriate instructions from Shareholders;

 

  7)

Monitoring and making appropriate filings with respect to the escheatment laws of the various states and territories of the United States;

 

  8)

Preparing and transmitting to Shareholders (or crediting the appropriate Shareholder accounts) payments for all distributions and dividends declared by the Trust with respect to Shares of each Fund;

 

  9)

Receiving from Shareholders and/or debiting Shareholder accounts for sales commissions, including contingent deferred, deferred and other sales charges, and service fees (i.e., wire redemption charges) and prepare and transmit payments to underwriters, selected dealers and others for commissions and service fees received and provide necessary tracking reports to the Fund’s and/or the Fund’s principal underwriter;

 

  10)

Recording the issuance of shares of a Fund and maintaining pursuant to SEC Rule 17Ad-10(e) a record of the total number of shares of the Fund which are authorized, based upon data provided to it by the Fund, issued and outstanding; and

 

  11)

Providing the Trust on a regular basis with each Fund’s total number of shares that are authorized and issued and outstanding.

Issuance of Shares.

GFS, in its capacity as transfer agent, shall make original issues of Shares of each Fund in accordance with the Fund’s Prospectus, only upon receipt of:

 

  a.

instructions requesting the issuance,

  b.

a copy of a resolution of the Board authorizing the issuance,

  c.

necessary funds for the payment of any original issue tax applicable to such Shares, and

  d.

an opinion of the Trust’s legal counsel as to the legality and validity of the issuance, which opinion may provide that it is contingent upon the filing by the Trust of an appropriate notice with the SEC, as required by Section 24 of the 1940 Act or the rules thereunder. If such opinion is contingent upon a filing under Section 24 of the 1940 Act, the Trust shall indemnify GFS for any liability arising from the failure of the Trust to comply with such section or the rules thereunder.

The responsibility of GFS for each Fund’s state registration status is solely limited to the reporting of transactions to the Trust, and GFS shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Fund, its distributor or other agent.

 

Page  |  19


Transfer of Shares.

Transfers of Shares of each Fund shall be registered on the Shareholder records maintained by GFS. In registering transfers of Shares, GFS may rely upon the Uniform Commercial Code as in effect in the State of Nebraska or any other statutes that, in the opinion of GFS’s legal counsel, protect GFS and the Trust from liability arising from:

 

  a.

not requiring complete documentation;

  b.

registering a transfer without an adverse claim inquiry;

  c.

delaying registration for purposes of such inquiry; or

  d.

refusing registration whenever an adverse claim requires such refusal.

As transfer agent, GFS will be responsible for delivery to the transferor and transferee of such documentation as is required by the Uniform Commercial Code.

Purchase Orders.

Shares shall be issued in accordance with the terms of the Prospectus after GFS or its agent receives either:

  a.

an instruction directing investment in a Fund, a check (other than a third party check) or a wire or other electronic payment in the amount designated in the instruction and in the case of an initial purchase, a completed account application; or

  b.

the information required for purchases pursuant to a selected dealer agreement, processing organization agreement, or a similar contract with a financial intermediary.

Distribution Eligibility.

Shares issued in a Fund after receipt of a completed purchase order shall be eligible to receive distributions of the Fund at the time specified in the prospectus pursuant to which the Shares are offered.

Determination of Federal Funds.

Shareholder payments shall be considered “Federal Funds” no later than on the day indicated below unless other times are noted in the Prospectus:

 

  a.

for a wire received, at the time of the receipt of the wire;

  b.

for a check drawn on a member bank of the Federal Reserve System, on the second Fund Business Day following receipt of the check; and

  c.

for a check drawn on an institution that is not a member of the Federal Reserve System, at such time as GFS is credited with Federal Funds with respect to that check.

Lost Shareholders.

GFS shall perform such services as are required in order to comply with Rules 17a-24 and 17Ad-17 (the “Lost Shareholder Rules”) of the Securities Exchange Act of 1934, including, but not limited to, those set forth below. GFS may, in its sole discretion, use the services of a third party to perform some of or all such services.

 

Page  |  20


  a.

documentation of search policies and procedures;

  b.

execution of required searches;

  c.

tracking results and maintaining data sufficient to comply with the Lost Shareholder Rules; and

  d.

preparation and submission of data required under the Lost Shareholder Rules.

Anti-Money Laundering (“AML”) Delegation.

The Trust hereby delegates to GFS certain AML duties under this Agreement, as permitted by law and in accordance with the Trust’s Anti-Money Laundering Policies and Procedures as may be amended from time to time. Such duties delegated to GFS include procedures reasonably designed to prevent and detect money laundering activities and to ensure that each Fund can have a reasonable belief that it knows the identity of each person or entity opening an account with the Fund. GFS’s procedures will include, as appropriate, procedures to assist the Fund(s) to:

 

 

detect and report suspicious activities;

 

 

comply with “know your customer” requirements;

 

 

monitor high-risk accounts; and

 

 

maintain required records.

GFS shall provide for proper supervision and training of its personnel. With respect to assisting the Trust with its Customer Identification Program (“CIP”) designed to ensure the identity of any person opening a new account with a Fund (a “Customer”), GFS will assist the Fund(s) through the use of the following:

 

 

risk-based procedures to verify the identity of each Customer to the extent reasonable and practicable, such that the Fund may have a reasonable belief that it knows the true identity of each Customer;

 

 

before opening an account, obtain a Customer’s name, date of birth (for an individual), address, and identification number1;

 

 

procedures to verify the identity of a Customer within a reasonable time after the account is opened;

 

 

procedures for maintenance of records relating to Customer identification and supporting the verification; and

 

 

procedures to determine whether the Customer’s name appears on any list of known or suspected terrorists or terrorist organizations issued by any federal government agency and designated as such by the Department of the Treasury in consultation with the federal functional regulators, within a reasonable period of time after the account is opened.

 

 

1 An identification number may be, a taxpayer identification number, passport number and country of issuance, alien identification card number, or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

 

Page  |  21


For purposes of verifying the identity of a Customer, GFS may rely on documents, so long as, based on that information, GFS can form a reasonable belief that it knows the identity of the Customer, including:

 

 

an individual’s unexpired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard, (such as a driver’s license or passport); or

 

 

documents showing the existence of an entity, such as articles of incorporation, a government-issued business license, a partnership agreement, or trust instrument.

To the extent that the Customer’s identity cannot be verified by relying on documents, other methods may be used by GFS, including, (i) contacting a Customer; (ii) independently verifying the Customer’s identity through the comparison of information provided by the Customer with information obtained from a consumer reporting agency, public database, or other source; (iii) checking references with other financial institutions; and (iv) obtaining a financial statement.

In the event that GFS is not able to verify the identity of a Customer sufficiently that it can form a reasonable belief that it knows the true identity of a Customer, then GFS may, as appropriate:

 

 

not open an account for the Customer;

 

 

apply limited terms under which a Customer may use an account until the Customer’s identity is verified;

 

 

close an account, after attempts to verify a Customer’s identity have failed; or

 

 

assist the Fund in filing a Suspicious Activity Report in accordance with applicable law and regulation, regarding the Customer.

Each Fund represents and agrees that it will provide Customers with adequate notice that the Fund is requesting information to verify their identities. The notice will be included in the application or the prospectus, or a document accompanying the application or prospectus provided it is reasonably designed to ensure that the customer views or otherwise receives the notice before opening the account.

In consideration of the performance of the duties by GFS pursuant to this Section, the Trust agrees to pay GFS for the reasonable administrative expenses that may be associated with such additional duties.

Anti-Identity Theft Delegation.

To the extent that a Fund has covered accounts that allow redemption proceeds to go to third parties, GFS will assume Anti-Identity Theft monitoring duties for the Fund under this Agreement, pursuant to legal requirements, beginning August 1, 2009. Any out of pocket expenses occurred in this regard are due and payable by the Fund.

Rule 22c-2 Compliance.

Rule 22c-2 under the 1940 Act requires that a fund’s principal underwriter or transfer agent enter into a shareholder information agreement with any financial intermediary or its agent where, through itself or its agent, purchases or redeems shares directly from a fund, its principal underwriter or transfer agent, or through a registered clearing agency. Each Fund shall ensure that its principal underwriter enters into such agreements, which permits GFS as transfer agent to request information from such financial intermediaries to insure that the

 

Page  |  22


Trust’s procedures are being followed with respect to market timing and, where applicable, early redemption fees. The Trust’s procedures in this regard would trigger the information requests, under certain conditions, with respect to said financial intermediaries’ omnibus accounts in the respective Fund.

Processing through the National Securities Clearing Corporation (the “NSCC”).

GFS will: (i) process accounts through Networking and the purchase, redemption, transfer and exchange of shares in such accounts through Fund/SERV (Networking and Fund/SERV being programs operated by the NSCC on behalf of NSCC’s participants, including the Trust), in accordance with, instructions transmitted to and received by GFS by transmission from NSCC on behalf of broker-dealers and banks which have been established by, or in accordance with the instructions of authorized persons, as hereinafter defined on the dealer file maintained by GFS; (ii) issue instructions to each Fund’s Custodian for the settlement of transactions between the Fund and NSCC (acting on behalf of its broker-dealer and bank participants); (iii) provide account and transaction information from the affected Trust’s records on an appropriate computer system in accordance with NSCC’s Networking and Fund/SERV rules for those broker-dealers; and (iv) maintain Shareholder accounts through Networking.

Transfer Agency Records.

GFS shall maintain the following shareholder account information:

 

 

name, address and United States Tax Identification or Social Security number;

 

number of Shares held and number of Shares for which certificates, if any, have been issued, including certificate numbers and denominations;

 

historical information regarding the account of each Shareholder, including dividends and distributions paid and the date and price for all transactions on a Shareholder’s account;

 

any stop or restraining order placed against a Shareholder’s account;

 

any correspondence relating to the current maintenance of a Shareholder’s account;

 

information with respect to withholdings; and

 

any information required in order for GFS to perform any calculations by this Agreement.

All out-of-pocket expenses will be billed as set forth on Appendix IV. GFS may from time to time adopt new procedures, or modify existing procedures, in order to carry out its Transfer Agency Services. Any modification of the Transfer Agency Services provided by GFS as set forth in this Appendix III shall be delivered to the Trust in writing.

 

Page  |  23


APPENDIX IV

LIST OF FUNDS

SERVICES & FEES

This Appendix IV is part of the Fund Services Agreement between The Timothy Plan and Gemini Fund Services, LLC. Set forth below are the Services elected by the Fund(s) identified on this Appendix IV along with the associated Fees.

EFFECTIVE DATE

The Effective Date for Israel Common Values Fund and Emerging Markets Fund shall be upon commencement of operations. The Effective Date for the remaining Funds set forth on this Appendix IV shall be July 1, 2011.

COVERED FUNDS*

The Funds to be covered under this Agreement include:

 

Fund Name

  

Board Approval Date

Aggressive Growth Fund

   May 20, 2011

International Fund

   May 20, 2011

Large/Mid Cap Growth Fund

   May 20, 2011

Small Cap Value Fund

   May 20, 2011

Large/Mid Cap Value Fund

   May 20, 2011

Fixed Income Fund

   May 20, 2011

High Yield Bond Fund

   May 20, 2011

    

    

Defensive Strategies Fund

   May 20, 2011

Strategic Growth Fund

   May 20, 2011

Conservative Growth Fund

   May 20, 2011

Strategic Growth Variable

   May 20, 2011

Conservative Growth Variable

   May 20, 2011

Israel Common Values Fund

   August 26, 2011

Emerging Markets Fund

   November 16, 2012
*The

Funds are collectively referred to as the “Fund Complex”.

(Signatures on next page)

 

Page  |  24


The parties hereto agree to the Services and associated fees as set forth above, effective as of the 18th day of April 2011.

 

THE TIMOTHY PLAN

       

GEMINI FUND SERVICES, LLC

 

By:

 

 

        By:   

 

 
 

Arthur D. Ally

          

Andrew B. Rogers

 

President

          

Chief Executive Officer

The undersigned investment adviser hereby acknowledges and agrees to the terms of this Fund Services Agreement.

Timothy Partners, Ltd.

1055 Maitland Center Commons, Maitland, Florida 32751

By: Covenant Funds, Inc., as General Partner

 

By:

 

 

Name: Arthur D. Ally

Title: President

 

 

 

Page  |  25


SHAREHOLDER DESKTOP WEB PACKAGE

Proprietary Secure Web-Based Direct Interface With Transfer Agent Data

Supports Five Levels of Access

 

  LOGO

Fund Administrator

 

  LOGO

Broker/Dealer

 

  LOGO

Broker/Dealer Branch

 

  LOGO

Registered Representative

 

  LOGO

Shareholder

Customizable Look And Feel (Logo And Color Scheme)

Account Inquiry

 

  LOGO

Portfolio Summary

 

  LOGO

Account Position

 

  LOGO

Transaction History

 

  LOGO

General Account Information

Online Transactions (Must have this reflected in the prospectus to offer this functionality)

 

  LOGO

Exchanges

 

  LOGO

Purchases

 

  LOGO

Redemptions

 

  LOGO

Prospectus and SAI Access

Account Maintenance

 

  LOGO

Change of Shareholder Information

 

  o

Address

 

  o

Phone Number

 

  o

Email Address

Online Statement Access

 

  LOGO

Quarterly Statements and Confirms

 

  LOGO

Electronic Delivery (Should have this reflected in the prospectus and application to offer this functionality)

 

  o

Statements

 

  o

Confirms

 

  o

Regulatory Mailings

 

 

SHAREHOLDER DESKTOP ONLINE NEW ACCOUNTS

 

  LOGO

Allows clients the ability to set up a new account online if they provide valid ACH information and agree to all disclaimers and agreements on site.

 

  LOGO

E-Signature capability

 

 

 

Page  |  26


FUND DATA WEB PACKAGE

Performance Web Page

 

 

Comprehensive performance report hosted by GFS

  o

Fund performance updated nightly

  o

Up to 20 indexes available

  o

Data provided in simple format to be encapsulated into Fund’s own website to provide a custom look and feel

  o

Growth of $10,000 graph available

Holdings web page

 

Fund holding updated periodically to meet fund disclosure rules hosted by GFS

  o

Fund holding updated periodically to meet fund disclosure rules

  o

Top ten report available

  o

Data provided in simple format to be encapsulated into Fund’s own website to provide a custom look and feel

Historical NAV web page

 

Provides historical NAV information for a specified period of time and for a specified fund

  o

Data provided in simple format to be encapsulated into Fund’s own website to provide a custom look and feel

Fulfillment web page

 

Provides an online request form for shareholders who wish to request a hard copy of the fulfillment material mailed to them

  o

Request is automatically routed online to the Shareholder Services Team at GFS for processing

  o

Reporting of Fulfillment requests made online or via phone available via GFS Reporting Services Tool.

GFS reporting utilizes the next generation secure web-based report delivery vehicle which allows for direct request or subscription based delivery reports available in multiple formats (PDF, Excel, XML, CSV)

 

 

 

Page  |  27

EX-99.I 3 d503137dex99i.htm OPINION AND CONSENT OF COUNSEL Opinion and Consent of Counsel

DAVID JONES & ASSOC., P.C.

Law Firm

 

422 Fleming Street, Suite 7

Key West, Fl 33040

   LOGO   

F (281) 702-2137

P (877) 639-0675

April 30, 2013

The Timothy Plan

1055 Maitland Commons Blvd.

Maitland, Florida 32751

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 ( the “Funds”):

Timothy Plan Strategic Growth Portfolio Variable Series; and

Timothy Plan Conservative Growth Portfolio Variable Series

The Shares of the Funds are each a 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 each Fund, as contained in the Trust’s post-effective amendment # 54 to its Registration Statement on Form N-1A (“PEA#54”).

I have examined forms of 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 # 54, as deemed necessary for the purposes of this opinion. All documents reviewed by me that were provided as copies, and not in original form, have been presumed by me to be genuine, and I 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 # 54.

 

Very Truly Yours,  

/s/ David D. Jones

 
David D. Jones  
Attorney & Counselor at Law
EX-99.J 4 d503137dex99j.htm CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Consent of Independent Registered Public Accounting Firm

 

LOGO

 

 

 

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 14, 2013, on the financial statements of Timothy Plan Conservative Growth Portfolio Variable Series and Timothy Plan Strategic Growth Portfolio Variable Series (the “Funds”), two of the series constituting The Timothy Plan, as of December 31, 2012, and for the periods indicated therein and to the references to our firm in the Prospectus and the Statement of Additional Information in this Post-Effective Amendment to the Funds’ Registration Statement on Form N-1A.

 

LOGO

Cohen Fund Audit Services, Ltd.

Cleveland, Ohio

April 24, 2013

 

Registered with the Public Company Accounting Oversight Board   LOGO
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    LOGO

    April 30, 2013

     

    Securities and Exchange Commission    VIA EDGAR   
    450 Fifth Street, N.W.      
    Judiciary Plaza      
    Washington, D.C. 20548      

    Attn: Division of Investment Management

    Re: Timothy Plan., File Nos. 811-08228 and 033-73248, Post-Effective Amendment # 54 (“PEA#54”) to Registration Statement on Form N-1A under the Investment Company Act of 1940 and Amendment # 55 under the Securities Act of 1933.

    Ladies and Gentlemen:

    Pursuant to the requirements of Rule 485(b) promulgated under the Securities Act of 1993, as amended we are, on behalf of the Timothy Plan (the “Trust”), filing Post-Effective Amendment # 54 (“PEA#54”) to Registration Statement on Form N-1A under the Securities Act of 1933 and the Investment Company Act of 1940. This transmission contains conformed signature pages, the manually signed originals of which are maintained at the offices of the Trust.

    This PEA#54 is being filed to update financial information relating to the following series of the Trust:

    Timothy Plan Strategic Growth Portfolio Variable Series; and

    Timothy Plan Conservative Growth Portfolio Variable Series

    On behalf of the Trust, we represent that this PEA # 54 is being filed solely for one or more of the purposes enumerated in Rule 485(b) and that no material event requiring disclosure in the prospectus has occurred requiring filing under another applicable Rule. Accordingly, this PEA # 54 qualifies for immediate effectiveness under Rule 485(b).

    Please direct all comments concerning this filing to me at the below-listed address and/or phone number. Thank you for your consideration.

    Sincerely,

    DAVID JONES & ASSOC., P.C.

     

    /s/ David D. Jones, Esq.

    DAVID D. JONES, ESQ.