STATUTORY PROSPECTUS
January 28, 2015
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A & C: THIS PROSPECTUS OFFERS CLASS A & CLASS C SHARES ONLY OF THE ABOVE FUNDS.
The Timothy Plan believes that it has a responsibility to invest in a moral and ethical manner. Accordingly, none of our Funds invest in any company that is involved in the 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 Funds portfolios and are referred to throughout this Prospectus as Excluded Securities. Under a zero-tolerance policy, Excluded Securities will not be purchased by any of our Funds. Timothy Partners, Ltd. (TPL) is Investment Advisor to the Funds and is responsible for determining those securities that are Excluded Securities, and reserves the right to exclude investments, in its best judgment, in other companies whose practices may not fall within the exclusions described above, but nevertheless could be found offensive to basic, traditional Judeo-Christian values. Further, if a company whose securities are being held by one of our Funds is subsequently discovered to be engaged in a prohibited practice, that security will be sold as soon as is reasonably practicable.
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.
Section 1 | Fund Summaries | |||||
This section provides you with an overview of the Funds, including investment objectives, fees and expenses, and historical performance information. | ||||||
Aggressive Growth Fund | 2 | |||||
International Fund | 6 | |||||
Large/Mid Cap Growth Fund | 10 | |||||
Small Cap Value Fund | 14 | |||||
Large/Mid Cap Value Fund | 18 | |||||
Fixed Income Fund | 22 | |||||
High Yield Bond Fund | 26 | |||||
Israel Common Values Fund | 30 | |||||
Defensive Strategies Fund | 34 | |||||
Emerging Markets Fund | 38 | |||||
Growth & Income Fund | 42 | |||||
Strategic Growth Fund | 47 | |||||
Conservative Growth Fund | 53 | |||||
Section 2 | Description of Our Funds | |||||
This section sets forth a general description of important information you should know about each of our Funds. | ||||||
Traditional Funds | 59 | |||||
Asset Allocation Funds | 71 | |||||
Section 3 | Who Manages Your Money | |||||
This section gives you a detailed discussion of our Investment Advisor and Investment Managers. |
| |||||
The Investment Advisor | 77 | |||||
The Investment Managers | 77 | |||||
Section 4 | How You Can Buy and Sell Shares | |||||
This section provides the information you need to move money into or out of your account. | ||||||
What Share Classes We Offer | 82 | |||||
How to Reduce Your Sales Charge | 83 | |||||
How to Buy Shares | 84 | |||||
How to Sell Shares | 86 | |||||
Section 5 | General Information | |||||
This section summarizes the Funds distribution policies and other general Fund information. | ||||||
Dividends, Distributions and Taxes | 88 | |||||
Net Asset Value | 88 | |||||
Fair Value Pricing | 88 | |||||
Frequent Trading | 89 | |||||
Distribution and Service Plans | 89 | |||||
Fund Service Providers | 89 | |||||
Privacy Policy | 90 | |||||
Customer Identification Program | 90 | |||||
Section 6 | Financial Highlights | |||||
This section provides the Funds financial performance for the past five fiscal periods. | ||||||
91 | ||||||
Section 7 | For More Information | |||||
This section tells you how to obtain additional information relating to the Funds. | ||||||
117 | ||||||
Appendix A | Applications | |||||
This appendix is not part of the prospectus; it contains the Funds investment applications. | ||||||
New Account Application | Form A | |||||
Request for Transfer | Form B |
1 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TAAGX | CLASS C: TCAGX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to provide you with long-term growth of capital.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||||||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||||||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||||||
Redemption fees |
None | None | ||||||
Exchange fees |
None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.85% | 0.85% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.64% | 0.64% | ||||||
Acquired Funds Fees and Expenses |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.75% | 2.50% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 2 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$718 | $353 | $253 | |||
3 Years |
$1,071 | $779 | $779 | |||
5 Years |
$1,447 | $1,331 | $1,331 | |||
10 Years |
$2,499 | $2,836 | $2,836 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 91% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | This Fund seeks to achieve its investment strategy by normally investing at least 80% of the Funds total assets in U.S. common stocks without regard to market capitalizations. |
¡ | This Fund invests using a growth investing style. Growth funds generally focus on stocks of companies believed to have above-average potential for growth in revenue, earnings, cash flow, or other similar criteria. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | The Fund invests its assets in the securities of a limited number of companies, which the Funds Investment Manager believes show a high probability for superior growth. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Larger Company Investing Risk | Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion. |
4. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys 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. |
3 | Page |
5. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
6. | Growth Risk | The Fund often invests in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
7. | Investing In Other Funds Risk | The Fund invests in the securities of other investment companies. To the extent that the Fund invests in other mutual funds, exchange traded funds and other commingled funds, it will indirectly bear the expenses of those funds, which will cause the Funds return to be lower. |
8. | High Portfolio Turnover Risk | The Fund has a history of high (greater than 100%) portfolio turnover. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept significant amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up-to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Sept-10 |
Dec-08 | |
15.57% |
-28.84% |
Page | 4 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Aggressive Growth | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | 10 Year | 1 Year | 5 Year | 10 Year | |||||||
Return before taxes | 0.06% | 15.00% | 6.10% | 4.30% | 15.41% | 5.92% | ||||||
Return after taxes on distributions (1) | (2.76)% | 14.03% | 5.26% | 0.94% | 14.31% | 5.01% | ||||||
Return after taxes on distributions and sale of shares (1) | 1.98% | 12.03% | 4.91% | 4.75% | 12.37% | 4.78% | ||||||
Russell Mid Cap Growth Index (2) (reflects no deduction for fees, expenses or taxes) |
11.90% | 16.94% | 9.43% | 11.90% | 16.94% | 9.43% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The Russell Mid Cap Growth Index is a widely recognized, unmanaged index of Mid Capitalization growth companies in the United States. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Chartwell Investment Partners serves as Investment Manager to the Fund.
Portfolio Managers
Edward Antoian, Managing Partner, Chief Investment Officer; and John Heffern, Managing Partner, Senior Portfolio Manager; of Chartwell, have served the Fund since January 1, 2008. Peter M. Schofield, CFA, Principal and Senior Portfolio Manager, has been serving the Fund since 2010.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
5 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TPIAX | CLASS C: TPICX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to provide you with long-term growth of capital.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||
Maximum sales charge (load) on purchases (as % of offering price) |
5.50% | None | ||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||
Redemption fees | None | None | ||
Exchange fees | None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
1.00% | 1.00% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.44% | 0.44% | ||||||
Fees and Expenses of Acquired Funds |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.70% | 2.45% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 6 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$713 | $348 | $248 | |||
3 Years |
$1,056 | $764 | $764 | |||
5 Years |
$1,422 | $1,306 | $1,306 | |||
10 Years |
$2,448 | $2,786 | $2,786 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 31% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | This Fund seeks to achieve its investment objectives by normally investing at least 80% of the Funds total assets in the securities of foreign companies (companies domiciled in countries other than the United States) through the purchase of American Depositary Receipts (ADRs), without regard to market capitalizations. |
¡ | This Fund invests using a growth investing style. Growth funds generally focus on stocks of companies believed to have above-average potential for growth in revenue, earnings, cash flow, or other similar criteria. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | The Fund invests its assets in the ADRs of companies which the Funds Investment Manager believes show a high probability for superior growth. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund allocates investments across countries and regions at the Managers discretion. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | 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 Funds investments in a foreign country. The Fund may invest in emerging markets. Emerging markets expose the Fund to additional risks due to the lack of historical or regulatory controls. |
4. | Issuer-Specific Risk | The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
7 | Page |
5. | 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. |
6. | 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. |
7. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys 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. |
8. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
9. | Growth Risk | The Fund often invests in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the international stock markets and who are willing to accept significant amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up-to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Jun-09 |
Dec-08 | |
19.29% |
-24.53% |
Page | 8 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
International | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | Since Inception (4) |
1 Year | 5 Year | Since Inception (4) | |||||||
Return before taxes | (10.05)% | 2.57% | (1.16)% | (6.37)% | 2.98% | (1.18)% | ||||||
Return after taxes on distributions (1) | (10.05)% | 2.09% | (1.60)% | (6.37)% | 2.64% | (1.49)% | ||||||
Return after taxes on distributions and sale of shares (1) | (5.69)% | 1.79% | (1.05)% | (3.60)% | 2.15% | (1.02)% | ||||||
MSCI EAFE Index (2) (reflects no deduction for fees, expenses or taxes) |
(7.35)% | 2.34% | (2.97)% | (7.35)% | 2.34% | (2.97)% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of 21 developed markets, excluding the U.S. and Canada. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
(4) | The Fund commenced investment operations on May 3, 2007. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Eagle Global Advisors serves as Investment Manager to the Fund.
Portfolio Managers
Edward Allen III, Senior Partner; Thomas Hunt III, Senior Partner; Steven Russo, Team Member; and John Gualy, Partner, of Eagle, have served the Fund since May 1, 2007.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
9 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TLGAX | CLASS C: TLGCX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to provide you with long-term growth of capital.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||
Maximum sales charge (load) on purchases (as % of offering price) |
5.50% | None | ||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||
Redemption fees | None | None | ||
Exchange fees | None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.85% | 0.85% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.47% | 0.47% | ||||||
Fees and Expenses of Acquired Funds |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.58% | 2.33% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 10 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$702 | $336 | $236 | |||
3 Years |
$1,021 | $727 | $727 | |||
5 Years |
$1,363 | $1,245 | $1,245 | |||
10 Years |
$2,325 | $2,666 | $2,666 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 61% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | The Fund seeks to achieve its investment objective by primarily investing at least 80% of the Funds total assets in larger U.S. stocks. Larger stocks refer to the common stock of companies whose total market capitalization is generally greater than $2 billion. Current income is not a significant investment consideration and any such income realized will be considered incidental to the Funds investment objective. |
¡ | This Fund invests using a growth investing style. Growth funds generally focus on stocks of companies believed to have above-average potential for growth in revenue, earnings, cash flow, or other similar criteria. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | The Fund normally invests in a portfolio of securities which includes a broadly diversified number of common stocks that the Funds Investment Manager believes show a high probability of superior prospects for above average growth. The Funds Investment Manager chooses these securities using a bottom up approach of extensively analyzing the financial, management and overall economic conditions of each potential investment. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
4. | Growth Risk | The Fund often invests in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
11 | Page |
5. | Larger Company Investing Risk | Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion. |
6. | Mid-Sized Company Investing Risk | Investing in 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 fund wants to sell a large quantity of a mid-sized companys 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. |
7. | High Portfolio Turnover Risk | The Fund has a history of high (greater than 100%) portfolio turnover. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the domestic stock markets and who are willing to accept moderate amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up-to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Mar-12 |
Dec-08 | |
14.84% |
-21.49% |
Page | 12 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Large/Mid Cap Growth | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | 10 Year | 1 Year | 5 Year | 10 Year | |||||||
Return before taxes | 4.29% | 12.74% | 5.71% | 8.59% | 13.20% | 5.48% | ||||||
Return after taxes on distributions (1) | 1.33% | 10.91% | 4.66% | 5.04% | 11.13% | 4.33% | ||||||
Return after taxes on distributions and sale of shares (1) | 4.10% | 9.79% | 4.37% | 6.87% | 10.12% | 4.17% | ||||||
Russell 1000 Growth Index (2) (reflects no deduction for fees, expenses or taxes) |
13.05% | 15.81% | 8.49% | 13.05% | 15.81% | 8.49% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The Russell 1000 Growth Index is a widely recognized, unmanaged index of 1000 large-capitalization companies in the United States. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Chartwell Investment Partners serves as Investment Manager to the Fund.
Portfolio Managers
Edward Antoian, Managing Partner, Chief Investment Officer; and John Heffern, Managing Partner, Senior Portfolio Manager; of Chartwell, have served the Fund since January 1, 2008. Peter M. Schofield, CFA, Principal and Senior Portfolio Manager, has been serving the Fund since 2010.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
13 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TPLNX | CLASS C: TSVCX |
The investment objective of this Fund is to provide you with long-term growth of capital, with a secondary objective of current income.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||||||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||||||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||||||
Redemption fees |
None | None | ||||||
Exchange fees |
None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.85% | 0.85% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.43% | 0.43% | ||||||
Fees and Expenses of Acquired Funds |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.54% | 2.29% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 14 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$699 | $333 | $233 | |||
3 Years |
$1,011 | $717 | $717 | |||
5 Years |
$1,346 | $1,228 | $1,228 | |||
10 Years |
$2,289 | $2,630 | $2,630 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 71% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | The Fund seeks to achieve its investment objective by primarily investing at least 80% of the Funds total assets in U.S. Small Cap stocks. Small Cap stocks refer to the common stock of smaller companies companies whose total market capitalization is less than $2 billion. This Fund invests using a value investing style. Value funds typically emphasize stocks whose prices are below average in relation to such measures as earnings and book value; these stocks often have above-average dividend yields. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | In determining whether to invest in a particular company, the Funds Investment Manager focuses on a number of different attributes of the company, including the companys market expertise, balance sheet, improving return on equity, price to earnings ratios, industry position and strength, management and a number of other factors. Analyzing companies in this manner is known as a bottom up approach to investing. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may invest in equity securities of foreign issuers in the form of American Depositary Receipts (ADRs). ADRs are certificates held in trust by a U.S. bank or trust company evidencing ownership of shares of foreign-based issuers, and are an alternative to purchasing foreign securities in their national market and currency. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys 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. |
15 | Page |
4. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
5. | Foreign Risk | The 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 Funds investments in a foreign country. There is a risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the Funds investments in foreign securities. |
6. | 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. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept moderate amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up- to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Dec-11 |
Dec-08 | |
19.04% |
-26.99% |
Page | 16 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Small Cap Value | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | 10 Year | 1 Year | 5 Year | 10 Year | |||||||
Return before taxes | (0.82)% | 15.98% | 7.56% | 3.32% | 16.41% | 7.36% | ||||||
Return after taxes on distributions (1) | (5.53)% | 14.15% | 5.84% | (2.64)% | 14.23% | 5.45% | ||||||
Return after taxes on distributions and sale of shares (1) | 1.71% | 12.46% | 5.61% | 4.64% | 12.74% | 5.42% | ||||||
Russell 2000 Index (2) (reflects no deduction for fees, expenses or taxes) |
4.89% | 15.55% | 7.77% | 4.89% | 15.55% | 7.77% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The Russell 2000 Index is a widely recognized, unmanaged index of 2000 Small Capitalization companies in the United States. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Westwood Management Corp. serves as Investment Manager to the Fund.
Portfolio Managers
William Costello, CFA has served the Fund since 2010, and Frederic Rowsey has served the Fund since 2013.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
17 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TLVAX | CLASS C: TLVCX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to provide you with long-term growth of capital, with a secondary objective of current income.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||
Redemption fees | None | None | ||
Exchange fees | None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.85% | 0.85% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.40% | 0.40% | ||||||
Fees and Expenses of Acquired Funds |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.51% | 2.26% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 18 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$695 | $329 | $229 | |||
3 Years |
$1,001 | $706 | $706 | |||
5 Years |
$1,328 | $1,210 | $1,210 | |||
10 Years |
$2,252 | $2,595 | $2,595 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 37% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | The Fund seeks to achieve its investment objective by primarily investing in U.S. common stocks. The Fund will normally invest at least 80% of the Funds total assets in companies whose total market capitalization exceeds $2 billion. This Fund invests using a value investing style. Value funds typically emphasize stocks whose prices are below average in relation to such measures as earnings and book value; these stocks often have above-average dividend yields. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | In determining whether to invest in a particular company, the Funds Investment Manager focuses on a number of different attributes of the company, including the companys market expertise, balance sheet, improving return on equity, price to earnings ratios, industry position and strength, management, and a number of other factors. Analyzing companies in this manner is known as a bottom up approach to investing. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Larger Company Investing Risk | Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion. |
4. | Mid-Sized Company Investing Risk | Investing in 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 fund wants to sell a large quantity of a mid-sized companys 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. |
19 | Page |
5. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
6. | Value Investing Risk | 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. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept moderate amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up- to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Sep-09 |
Dec-08 | |
15.27% |
-23.81% |
Page | 20 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Large/Mid Cap Value | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | 10 Year | 1 Year | 5 Year | 10 Year | |||||||
Return before taxes | 4.93% | 13.68% | 8.69% | 9.21% | 14.12% | 8.50% | ||||||
Return after taxes on distributions (1) | 2.61% | 12.73% | 7.57% | 6.43% | 13.11% | 7.37% | ||||||
Return after taxes on distributions and sale of shares (1) | 4.42% | 10.88% | 6.91% | 7.17% | 11.27% | 6.80% | ||||||
S&P 500 Index (2) (reflects no deduction for fees, expenses or taxes) |
13.69% | 15.45% | 7.67% | 13.69% | 15.45% | 7.67% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The S&P 500 Index is a widely recognized, unmanaged index of common stock prices. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Westwood Management Corp. serves as Investment Manager to the Fund.
Portfolio Managers
Mark Freeman, CFA; have served the Fund since 2005. Scott Lawson; Lisa Dong, CFA has served the Fund since 2008; Matthew R. Lockridge has served the Fund since 2012; and Barun V. Singh, PHD, CFA has served the Fund since 2013.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
21 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TFIAX | CLASS C: TFICX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to generate a high level of current income consistent with prudent investment risk.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||||||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
4.50% | None | ||||||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||||||
Redemption fees |
None | None | ||||||
Exchange fees |
None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.60% | 0.60% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.45% | 0.45% | ||||||
Fees and Expenses of Acquired Funds |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.31% | 2.06% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 0.50% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $4 million, and 0.25% on all mounts in excess of $4 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 22 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$577 | $309 | $209 | |||
3 Years |
$847 | $646 | $646 | |||
5 Years |
$1,136 | $1,108 | $1,108 | |||
10 Years |
$1,958 | $2,390 | $2,390 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 18% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | To achieve its goal, the Fund normally invests at least 80% of its assets in a diversified portfolio of corporate bonds, U.S. government and agency securities, convertible securities and preferred securities. The Investment Manager will only purchase securities for the Fund that are investment grade, with a rating of at least BBB as rated by Standard & Poors or a comparable rating by another nationally recognized rating agency. The Fund may also invest in debt securities that have not been rated by one of the major rating agencies, so long as the Funds Investment Manager has determined that the security is of comparable credit quality to similar rated securities. |
¡ | In managing its portfolio, the Funds Investment Manager concentrates on sector analysis, industry allocation and securities selection, deciding which types of bonds and industries to emphasize at a given time, and then which individual bonds to buy. The Fund attempts to anticipate shifts in the business cycle in determining types of bonds and industry sectors to target. In choosing individual securities, the Fund seeks out securities that appear to be undervalued within the emphasized industry sector. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
23 | Page |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Interest Rate Risk | When interest rates rise, bond prices fall; the higher the Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the Fund is to interest rate risk. Currently, interest rates are at historical lows. A change in the economic environment that causes interest rates to rise back to more historically normal levels could have a pronounced negative effect on the Fund. |
3. | Credit Risk | The Fund could lose money if any bonds it owns are downgraded in credit rating or go into default. For this reason, the Fund will only invest in investment-grade bonds. The degree of risk for a particular security may not be reflected in its credit rating. Bonds rated at the time of purchase BBB by Standard & Poors or, unrated, but determined to be of comparable quality by the Investment Manager, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
4. | Sector Risk | If certain industry sectors or types of securities dont perform as well as the Fund expects, the Funds performance could suffer. |
5. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier that other Funds that invest in a broader array of securities. |
Who Should Buy This Fund
The Fund is most appropriate for investors who want a high level of current income and are willing to accept a minor degree of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up- to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Sep-11 |
Jun-13 | |
3.43% |
-2.96% |
Page | 24 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Fixed Income | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | 10 Year | 1 Year | 5 Year | 10 Year | |||||||
Return before taxes | (0.39)% | 2.22% | 2.88% | 2.56% | 2.41% | 2.60% | ||||||
Return after taxes on distributions (1) | (1.28)% | 1.31% | 1.71% | 1.94% | 1.76% | 1.68% | ||||||
Return after taxes on distributions and sale of shares (1) | (0.19)% | 1.35% | 1.77% | 1.49% | 1.61% | 1.67% | ||||||
Barclays Capital U.S. Aggregate Bond Index (2) (reflects no deduction for fees, expenses or taxes) | 5.97% | 4.45% | 4.71% | 5.97% | 4.45% | 4.71% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | Barclays Capital U.S. Aggregate Bond Index (formerly Lehman Brothers US Aggregate Bond Index) is a benchmark index composed of US Securities in Treasury, Government-Related, Corporate, and Securitized sectors. It includes securities that are of investment-grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $250 million. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Barrow, Hanley, Mewhinney and Strauss serves as Investment Manager to the Fund.
Portfolio Managers
John Williams, CFA; Mark Luchsinger, CFA; David Hardin; Scott McDonald, CFA; Deborah Petruzzelli, of BHMS, have served the Fund since July 1, 2004.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
25 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TPHAX | CLASS C: TPHCX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to generate a high level of current income.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||||||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
4.50% | None | ||||||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||||||
Redemption fees |
None | None | ||||||
Exchange fees |
None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.60% | 0.60% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.43% | 0.43% | ||||||
Fees and Expenses of Acquired Funds |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.29% | 2.04% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 0.50% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $4 million, and 0.25% on all mounts in excess of $4 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 26 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A | Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$575 | $307 | $207 | |||
3 Years |
$841 | $640 | $640 | |||
5 Years |
$1,126 | $1,098 | $1,098 | |||
10 Years |
$1,936 | $2,369 | $2,369 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 53% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | To achieve its goal, the Fund normally invests at least 80% of its total assets in a diversified portfolio of high yield fixed income securities. These include corporate bonds, convertible securities and preferred securities. The Investment Manager will generally purchase securities for the Fund that are not investment grade (junk bonds), meaning securities with a rating of BB or lower as rated by Standard & Poors or a comparable rating by another nationally recognized rating agency. The Fund may also invest in debt securities that have not been rated by one of the major rating agencies, so long as the Funds Investment Manager has determined that the security is of comparable credit quality to similar rated securities. |
¡ | In managing its portfolio, the Funds Investment Manager concentrates on sector analysis, industry allocation and securities selection, deciding which types of bonds and industries to emphasize at a given time, and then which individual bonds to buy. The Fund attempts to anticipate shifts in the business cycle in determining types of bonds and industry sectors to target. In choosing individual securities, the Fund seeks out securities that appear to be undervalued within the emphasized industry sector. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
27 | Page |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | 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 Funds ability to buy or sell optimal quantities of high yield securities at desired prices. |
3. | Interest Rate Risk | When interest rates rise, bond prices fall; the higher the Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the Fund is to interest rate risk. Currently, interest rates are at historical lows. A change in the economic environment that causes interest rates to rise back to more historically normal levels could have a pronounced negative effect on the Fund. |
4. | Credit Risk | High Yield securities (junk bonds) are subject to greater risk of loss than investment grade securities. The degree of risk for a particular security may not be reflected in its credit rating, and high yield securities may be particularly subject to this risk. Bonds rated, at the time of purchase, BB or lower by Standard & Poors (junk bonds) or, unrated, but determined to be of comparable quality by the Investment Manager, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
5. | Sector Risk | If certain industry sectors or types of securities dont perform as well as the Fund expects, the Funds performance could suffer. |
6. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier that other Funds that invest in a broader array of securities. |
Who Should Buy
This Fund The Fund is most appropriate for investors who want a high level of current income and are willing to accept a significant degree of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up- to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Jun-09 |
Dec-08 | |
27.25% |
-21.55% |
Page | 28 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
High Yield Bond | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | Since Inception (4) |
1 Year | 5 Year | Since Inception (4) | |||||||
Return before taxes | (5.21)% | 5.31% | 4.31% | (2.52)% | 5.48% | 4.15% | ||||||
Return after taxes on distributions (1) | (7.01)% | 3.15% | 2.00% | (4.06)% | 3.63% | 2.17% | ||||||
Return after taxes on distributions and sale of shares (1) | (2.92)% | 3.24% | 2.35% | (1.40)% | 3.51% | 2.38% | ||||||
Barclays Capital U.S. Corporate High-Yield Bond Index (2) (reflects no deduction for fees, expenses or taxes) |
2.45% | 9.03% | 7.32% | 2.45% | 9.03% | 7.32% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | Barclays Capital U.S. Corporate High Yield Bond Index is an unmanaged index that measures the performance of intermediate (1 to 10 year) U.S. high yield issues. It includes fixed-rate, noninvestment grade debt issues rated Ba1 or lower by Moodys, BB+ or lower by S&P, below investment grade by Fitch Investors Service or if unrated, previously held a high yield rating or have been associated with a high yield issuer, and must trade accordingly. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
(4) | The Fund commenced investment operations on October 1, 2013. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Barrow, Hanley, Mewhinney and Strauss serves as Investment Manager to the Fund.
Portfolio Manager
John Williams, CFA; Mark Luchsinger, CFA; David Hardin; Scott McDonald, CFA; Deborah Petruzzelli, of BHMS, have served the Fund since May 1, 2007.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
29 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TPAIX | CLASS C: TPCIX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to provide you with long-term growth of capital.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||
Redemption fees | None | None | ||
Exchange fees | None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
1.00% | 1.00% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, and all other ordinary operating expenses not listed above) |
0.73% | 0.74% | ||||||
Acquired Funds Fees and Expenses |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.99% | 2.75% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 30 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$741 | $378 | $278 | |||
3 Years |
$1,140 | $853 | $853 | |||
5 Years |
$1,564 | $1,454 | $1,454 | |||
10 Years |
$2,739 | $3,080 | $3,080 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 11% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | This Fund seeks to achieve its investment objectives by normally investing at least 80% of the Funds total assets in the common stock of companies domiciled and/or headquartered in Israel through the purchase of American Depositary Receipts (ADRs) and direct investments in such companies on foreign stock exchanges, without regard to market capitalizations. |
¡ | This Fund invests using a growth investing style. Growth funds generally focus on stocks of companies believed to have above-average potential for growth in revenue, earnings, cash flow, or other similar criteria. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | The Fund invests its assets in companies which the Funds Investment Manager believes show a high probability for superior growth. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Issuer-Specific Risk | The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
4. | Country-Specific Risk | The Fund invests in Israeli securities, and Israel is subject to unique political and economic risks. As a result, Israeli securities can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. The Funds 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 Funds investments in a foreign country. |
5. | 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. |
31 | Page |
6. | 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. |
7. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys 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. |
8. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
9. | Growth Risk | The Fund often invests in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept significant amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up- to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Mar-12 |
Jun-12 | |
10.12% |
-9.83% |
Page | 32 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Israel Common Values | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | Since Inception (4) |
1 Year | 5 Year |
Since Inception (4) | |||||||
Return before taxes | (17.41)% | N/A | 3.57% | (14.14)% | N/A | 4.58% | ||||||
Return after taxes on distributions (1) | (17.41)% | N/A | 2.92% | (14.14)% | N/A | 3.88% | ||||||
Return after taxes on distributions and sale of shares (1) | (9.86)% | N/A | 2.52% | (8.00)% | N/A | 3.23% | ||||||
Israel TA 100 Index (2) (reflects no deduction for fees, expenses or taxes) |
6.73% | N/A | 8.84% | 6.73% | N/A | 8.84% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | Israel TA 100 Index is an unmanaged index that measures the performance of 100 Israeli issues. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
(4) | The Fund commenced investment operations on October 12, 2011. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Eagle Global Advisors serves as the Investment Manager to the Fund.
Portfolio Managers
Edward Allen, Senior Partner; Thomas Hunt, Senior Partner; Steven Russo, Team Member; and John Gualy, Partner, of Eagle, have served the Fund since its inception on October 12, 2011.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
33 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TPDAX | CLASS C: TPDCX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is the protection of principal through aggressive, proactive reactions to prevailing economic conditions.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||||||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||||||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||||||
Redemption fees |
None | None | ||||||
Exchange fees |
None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.60% | 0.60% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.43% | 0.44% | ||||||
Fees and Expenses of Acquired Funds |
0.08% | 0.08% | ||||||
Total Annual Fund Operating Expenses (2) |
1.36% | 2.12% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 34 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$681 | $315 | $215 | |||
3 Years |
$957 | $664 | $664 | |||
5 Years |
$1,254 | $1,139 | $1,139 | |||
10 Years |
$2,095 | $2,452 | $2,452 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 24% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
To achieve its goal, the Fund will invest varying percentages of the Funds total assets in the investment sectors set forth below:
¡ | Real Estate Investment Trusts (REITs), that invest in different kinds of real estate or real estate related assets, including shopping centers, office buildings, hotels, and mortgages secured by real estate, all of which are historically sensitive to both inflation and deflation. |
¡ | Commodities-based Exchange Traded Funds (ETFs), which trade like stocks, yet provide the opportunity to invest in inflation sensitive physical commodities and/or commodities futures markets. Commodity ETFs invest in Physical Commodities and/or Commodity Futures Contracts, which Contracts are highly leveraged investment vehicles. |
¡ | Treasury-Inflation Protected Securities (TIPS), which coupon payments and underlying principal are automatically increased to compensate for inflation as measured by the consumer price index (CPI). |
¡ | Cash and cash equivalents. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies by taking large, small, or even no position in any one or more of the Asset Classes in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
¡ | Current income is not a significant investment consideration and any such income realized will be considered incidental to the Funds investment objective. To allow for optimal flexibility, the Fund is classified as a non-diversified fund, and, as such, the Funds portfolio may include the securities of a smaller total number of issuers than if the Fund were classified as diversified. |
¡ | The Funds Adviser determines how to invest the Funds assets, and the percentages of each investment sleeve to hold in the portfolio, based on fundamental research and with the constant goal of protection of principal through aggressive, proactive reactions to prevailing economic conditions. |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Real Estate Investment Trust Risk | 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. |
35 | Page |
3. | Commodities-based Exchange Traded Funds Risk | 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 Funds risk includes missing opportunities to realize gains by shorting futures contracts (the sell side) in deflationary economic periods. It is possible the Funds entire ETF investment could be lost. Also, ETFs have expenses associated with them, which are indirectly borne by the Fund. These expenses may cause the Funds return to be lower. |
4. | Treasury-Inflation Protected Securities Risk | 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. |
5. | Interest Rate Risk | When interest rates rise, bond prices fall; the higher the Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the Fund is to interest rate risk. |
6. | Credit Risk | The Fund could lose money if any bonds it owns are downgraded in credit rating or go into default. The degree of risk for a particular security may be reflected in its credit rating. Bonds rated at the time of purchase BBB by Standard & Poors, or unrated, but determined to be of comparable quality by the investment manager, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
7. | Sector Risk | If certain industry sectors or types of securities dont perform as well as the Fund expects, the Funds performance could suffer. |
8. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities (including certain REITs), and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other Funds that invest in a broader array of securities. |
9. | Non-Diversification Risk | Because the Fund may invest in a smaller number of securities, adverse changes to a single security might have a more pronounced negative effect on the Fund than if the Funds investments were more widely distributed. |
Who Should Buy This Fund
The Fund is most appropriate for investors who seek a hedge against inflation; understand the risks of investing in each of the various asset classes, and who are willing to accept moderate amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up-to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Dec-11 |
Jun-13 | |
8.42% |
-7.07% |
Page | 36 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Defensive Strategies | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | Since Inception (4) |
1 Year | 5 Year | Since Inception (4) | |||||||
Return before taxes | (1.90)% | 3.06% | 3.67% | 2.03% | 3.46% | 4.04% | ||||||
Return after taxes on distributions (1) | (2.37)% | 2.30% | 2.93% | 1.88% | 2.87% | 3.41% | ||||||
Return after taxes on distributions and sale of shares (1) | (1.05)% | 2.20% | 2.68% | 1.17% | 2.60% | 3.04% | ||||||
DJ Moderately Conservative US Portfolio Index (2) (reflects no deduction for fees, expenses or taxes) |
9.08% | 11.69% | 12.42% | 9.08% | 11.69% | 12.42% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The DJ Moderately Conservative US Portfolio Index is rebalanced monthly to the appropriate percentage of the risk experienced by the all stock Portfolio Index over the previous 36 months. It reflects a portfolio in which the equities represent 40% of the portfolio, and provides an evaluation of the return on investment considering the amount of risk taken. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
(4) | The Fund commenced investment operations on November 4, 2009. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisors
Barrow, Hanley, Mewhinney and Strauss serves as Investment Manager of the Debt Instrument Sector of the Fund.
Delaware Management Company serves as Investment Manager of the REITs portion of the Fund.
CoreCommodity Management, LLC serves as Investment Manager of the Commodity portion of the Fund.
Portfolio Managers
Arthur D. Ally, President of Timothy Partners, Ltd., has served the Fund since November 1, 2009.
John Williams, of Barrow Hanley, Mewhinney and Strauss, has served the Fund since November 1, 2009, and manages the Debt Instrument Sector of the Fund.
Babak Zenouzi and Damon Andres, of Delaware Management Company, have served the Fund since August 6, 2010, and manage the REIT portion of the Fund.
Adam C. De Chiara, of CoreCommodity Management, has served the Fund since September 27, 2011, and manages the Commodity portion of the Fund.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
37 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TPEMX | CLASS C: TPECX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to provide you with long-term growth of capital.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||||||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||||||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||||||
Redemption fees |
None | None | ||||||
Exchange fees |
None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
1.20% | 1.20% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
1.10% | 1.05% | ||||||
Fees and Expenses of Acquired Funds |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
2.56% | 3.26% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
Page | 38 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A | Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$795 | $429 | $329 | |||
3 Years |
$1,303 | $1,004 | $1,004 | |||
5 Years |
$1,836 | $1,702 | $1,702 | |||
10 Years |
$3,286 | $3,558 | $3,558 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 39% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | This Fund seeks to achieve its investment objectives by normally investing at least 80% of the Funds total assets in equity securities of companies that are either located in emerging markets or that have at least more than 50% of their assets or revenue derived from emerging markets. These companies may have market capitalizations of any size. Equity securities include common and preferred stocks, American Depositary receipts (ADRs), warrants and rights. Emerging markets include 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 Investment Manager 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 Investment Manager, is generally considered to be an emerging market country by the international financial community. |
¡ | The Fund uses the principles of value investing to analyze and select equity securities for the Funds investment portfolio. When buying equity securities, the Investment Manager assesses the estimated intrinsic value of a company based on data such as a companys earnings power, cash flow generation, and/or asset value of the underlying business. By choosing securities that are selling at a discount to the Investment Managers estimates of their share of the companys intrinsic business value, the Investment Manager seeks to establish an opportunity for long-term capital appreciation. The Investment Manager may sell a security when its price reaches a target set by the Investment Manager, if the Investment Manager believes that other investments are more attractive, or for other reasons. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | This Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Emerging Market Risk | The Funds investments in the securities of emerging countries 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 markets in some emerging countries are relatively small, with a limited number of companies representing a smaller number of industries. Issuers in emerging countries are frequently 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 Funds investments in emerging foreign countries. |
4. | Issuer-Specific Changes | The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
39 | Page |
5. | Currency Risk | Because the securities being purchased by this Fund are frequently 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. |
6. | 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. |
7. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys 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. |
8. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
9. | Value Risk | This Fund invests in companies after assessing their value potential. Securities of value companies may be more volatile than other stocks. If the Investment Managers perception of a companys value potential is not realized, the securities purchased may not perform as expected, reducing the Funds return. In addition, 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 whole and other types of securities. |
Who Should Buy This Fund
This Fund is most appropriate for investors who understand the risks of investing in the international stock markets and who are willing to accept significant amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up-to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
June-14 |
Dec-14 | |
10.52% |
-11.43% |
Page | 40 |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Emerging Markets | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | Since Inception (4) |
1 Year | 5 Year |
Since Inception (4) | |||||||
Return before taxes | (16.64)% | N/A | (5.61)% | (13.20)% | N/A | (3.69)% | ||||||
Return after taxes on distributions (1) | (18.18)% | N/A | (7.13)% | (14.66)% | N/A | (5.16)% | ||||||
Return after taxes on distributions and sale of shares (1) | (8.64)% | N/A | (4.66)% | (6.64)% | N/A | (3.19)% | ||||||
MSCI Emerging Markets Index (2) (reflects no deduction for fees, expenses or taxes) |
(4.63)% | N/A | (2.49)% | (4.63)% | N/A | (2.49)% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 21 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
(4) | The Fund commenced investment operations on December 3, 2012. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
Brandes Investment Partners, LP serves as the Investment Manager to the Fund.
Portfolio Managers
Douglas Edman, Director, Investments; Christopher Garrett, Institutional Portfolio Manager; Louis Lau, Director, Investments; Gregory Rippel, Senior Analyst; and Gerardo Zamorano, Director, Investments. Each portfolio manager has served the Fund since its inception on December 3, 2012.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
41 | Page |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TGIAX | CLASS C: TGCIX |
INVESTMENT OBJECTIVE
The investment objective of this Fund is to provide total return through a combination of growth and income and preservation of capital in declining markets.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||||||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||||||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||||||
Redemption fees |
None | None | ||||||
Exchange fees |
None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.85% | 0.85% | ||||||
Distribution/Service(12b-1 Fees) |
0.25% | 1.00% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.58% | 0.35% | ||||||
Fees and Expenses of Acquired Funds |
0.01% | 0.01% | ||||||
Total Annual Fund Operating Expenses (2) |
1.69% | 2.21% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. |
Page | 42 |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$713 | $325 | $225 | |||
3 Years |
$1,055 | $693 | $693 | |||
5 Years |
$1,420 | $1,187 | $1,187 | |||
10 Years |
$2,443 | $2,549 | $2,549 |
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 21% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
¡ | To achieve its goals, the Fund primarily invests in equity securities of foreign and domestic companies that the Advisor believes are undervalued, and in fixed income securities. The Fund will normally hold both equity securities and fixed income securities, with at least 25% of its assets in equity securities and at least 25% of its assets in fixed income securities. |
¡ | This Fund principally invests in common stocks, preferred stocks and exchange traded funds (ETFs) that invest primarily in equity securities. Some or all of the equity portion of the Fund may be invested in small and micro capitalization companies. Fixed income securities that the Fund principally invests in are U.S. government securities, corporate bonds, municipal bonds and/or sovereign bonds of any maturity, as well as ETFs that invest primarily in such securities. Any non-US government securities in the Funds portfolio consist primarily of issues rated Baa2 or better by Moodys Investors Service, Inc. (Moodys) or BBB or better by Standard & Poors Ratings Group (S&P) and unrated securities determined by the Advisor to be of equivalent quality, as well as high quality money market instruments. The Fund attempts to provide a total return in excess of the rate of inflation over the long term (3 to 5 years). |
¡ | The Funds Investment Manager reviews the various sectors looking for historical patterns of undervalue or overvalue in an effort to identify appropriate fixed income securities to purchase. The Investment Manager also analyzes interest rate risk in the bond market and makes adjustments in the maturities of bonds to adjust for this risk. Lastly, if a bond is being downgraded, or the company has other issues that may affect the bond, the Investment Manager reviews it to see if the bond should be sold. |
¡ | The Funds portfolios duration is adjusted based on a regularly conducted analysis of the interest rate risk. Typically, the duration of the Funds bond portfolio runs between 1 and 8 years. The Investment Manager shortens portfolio durations when its research indicates a rising interest rate environment to preserve capital and may increase exposure to callable bonds. The Investment Manager also monitors spreads between U.S. Treasury securities and corporate and sovereign bonds, and adjusts the Funds mix of securities in response to changes in those spreads. |
¡ | The Funds equity securities are sold when such considerations as valuation, earnings and relative price strength are determined to warrant a sale. The Investment Manager reviews a stock if there is a major change in its corporate structure or management. |
¡ | This Fund may purchase ETFs or ADRs of countries or companies that are emerging. Since the Fund is limited to investment grade bonds, it rarely invests in emerging market fixed income securities. |
¡ | The Fund purchases ETFs in order to gain exposure in certain foreign markets or to purchase securities not represented in a direct manner on the stock exchanges. Index ETFs are utilized to gain exposure to a desirable market that is less liquid than the U.S. markets or where individual stocks are illiquid. |
¡ | The Funds ETF valuations are based on the Investment Managers determination of risk in the areas they represent. If the Investment Manager determines that an area is undervalued and has lower risk characteristics, then it may conclude that the representative ETF is likely to be undervalued and appropriate for the Fund. The Investment Manager analyzes current market Price Earnings ratios, Price to Book ratios and other ratios compared to historic ratios, as well as trends in economic activity, stability of governments and global developments to determine if an ETF is appropriate for the Fund. Only ETFs that are trading close to NAV are selected for purchase. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
43 | Page |
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Equity Market Risk | Overall stock market risks may affect the value of the Fund. Factors such as domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets. When the value of the Funds investments goes down, your investment in the Fund decreases in value and you could lose money. |
3. | Fixed Income Risk | The Fund invests in fixed income securities. These securities will increase or decrease in value based on changes in interest rates. If rates increase, the value of the Funds fixed income securities generally will decline, and those securities with longer terms generally will decline more. Your investment will decline in value if the value of the Funds investments decreases. There is a risk that issuers and counterparties will not make payments on fixed income securities and repurchase agreements held by the Fund. Such defaults could result in losses to the Fund. Securities with lower credit quality have a greater risk of default. In addition, the credit quality of securities held by the Fund may be lowered if an issuers financial condition changes. Lower credit quality may lead to greater volatility in the price of a security and in shares of the Fund. Lower credit quality also may affect liquidity and make it difficult for the Fund to sell the security. |
4. | Management Risk | The Advisors judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security in which the Fund invests may prove to be incorrect. The Fund may experience losses regardless of the overall performance of the market. |
5. | Small Cap Company Risk | Smaller capitalization companies may experience higher failure rates than do larger capitalization companies. In addition, smaller companies may be more vulnerable to economic, market and industry changes. As a result, share price changes may be more sudden or erratic than the prices of other equity securities, especially over the short term. Such companies may have limited product lines, markets or financial resources and may lack management depth. The trading volume of securities of smaller capitalization companies is normally less than that of larger capitalization companies, and therefore may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger capitalization companies. Some small capitalization stocks may be illiquid. These risks may be enhanced for micro-cap securities. Many micro-cap companies tend to be new and have no proven track record. Some of these companies have no assets or operations, while others have products and services that are still in development or have yet to be tested in the market. Because micro-cap stocks trade in low volumes, any size of trade can have a large percentage impact on the price of the stock. |
6. | Foreign Investment Risk | Foreign investing involves risks not typically associated with U.S. investments. These risks include, among others, adverse fluctuations in foreign currency values as well as adverse political, social and economic developments affecting a foreign country. In addition, foreign investing involves less publicly available information, and more volatile or less liquid securities markets. Investments in foreign countries could be affected by factors not present in the U.S., such as restrictions on receiving the investment proceeds from a foreign country, foreign tax laws, and potential difficulties in enforcing contractual obligations. Foreign accounting may be less transparent than U.S. accounting practices and foreign regulation may be inadequate or irregular. Owning foreign securities could cause the Funds performance to fluctuate more than if it held only U.S. securities. |
7. | Municipal Securities Risk | The power or ability of an issuer to make principal and interest payments on municipal securities may be materially adversely affected by economic conditions, litigation or other factors. The Funds right to receive principal and interest payments may be subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, as well as laws, if any, which may be enacted by Congress or state legislatures extending the time for payment of principal and/or interest or imposing other constraints upon the enforcement of such obligations. In addition, substantial changes in federal income tax laws could cause municipal security prices to decline because the demand for municipal securities is strongly influenced by the value of tax exempt income to investors. |
8. | Sovereign Debt Risk | The Fund may invest in sovereign debt obligations. Investment in sovereign debt obligations involves special risks not present in corporate debt obligations. The issuer of the sovereign debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited recourse in the event of a default. During periods of economic uncertainty, the market prices of sovereign debt, and the Funds net asset value, may be more volatile than prices of U.S. debt obligations. |
9. | Exchange Traded Fund Risk | An ETF may trade at a discount to its net asset value. Investors in the Fund will indirectly bear fees and expenses charged by the underlying ETFs in which the Fund invests, in addition to the Funds direct fees and expenses. The Fund will also incur brokerage costs when it purchases shares of ETFs. In addition, the Fund will be affected by losses of the underlying ETF and the level of risk arising from the investment practices of the underlying ETF. |
10. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
Page | 44 |
Who Should Buy This Fund
This Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept moderate amounts of volatility and risk.
PAST PERFORMANCE
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up-to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
March-14 |
Sept-14 | |
2.91% |
-2.23% |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Growth & Income | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | Since Inception |
1 Year | 5 Year | Since Inception (4) | |||||||
Return before taxes | (2.22)% | N/A | 3.24% | 1.63% | N/A | 7.22% | ||||||
Return after taxes on distributions (1) | (2.22)% | N/A | 3.24% | 1.63% | N/A | 7.22% | ||||||
Return after taxes on distributions and sale of shares (1) | (1.26)% | N/A | 2.47% | 0.92% | N/A | 5.51% | ||||||
DJ Global Moderately Aggressive Portfolio Index (2) (reflects no deduction for fees, expenses or taxes) |
5.90% | N/A | 11.34% | 5.90% | N/A | 11.34% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The Dow Jones Moderately Aggressive Portfolio Index tracks three composite major asset classes (stocks, bonds, cash) which are rebalanced monthly based on the current risk level of the stock class. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
(4) | The Fund commenced investment operations on October 1, 2013. |
45 | Page |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Sub-Advisor
James Investment Research, Inc. serves as the Investment Manager to the Fund.
Portfolio Managers
The Fund is managed by an investment committee of the Sub-Advisor consisting of the following seven members:
Dr. Frank James, PhD, Barry R. James, CFA, CIC, Ann M. Shaw, CFP, Thomas L. Mangan, CMFC, David W. James, CFA, R. Brian Culpepper, CMFC, and Brian Shepardson, CFA, CFC, CMFC have all served as Portfolio Managers since the Funds inception on October 1, 2013.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
Page | 46 |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TSGAX | CLASS C: TSGCX |
The investment objective of the Fund is to generate medium to high levels of long-term capital growth.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||||||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||||||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||||||
Redemption fees |
None | None | ||||||
Exchange fees |
None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.65% | 0.65% | ||||||
Distribution/Service(12b-1 Fees) |
0.00% | 0.75% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.42% | 0.42% | ||||||
Fees and Expenses of Acquired Funds |
1.66% | 1.66% | ||||||
Total Annual Fund Operating Expenses (2) |
2.73% | 3.48% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
47 | Page |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$811 | $451 | $351 | |||
3 Years |
$1,351 | $1,068 | $1,068 | |||
5 Years |
$1,915 | $1,807 | $1,807 | |||
10 Years |
$3,442 | $3,756 | $3,756 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 14% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund normally will invest at least 75% of its total assets in the following Traditional Funds according to the following approximate range of percentages:
Timothy Plan Traditional Fund | % of Funds Net Assets Invested in Traditional Fund | |
Small Cap Value Fund |
2 - 10% | |
Large/Mid Cap Value Fund |
10 - 20% | |
Large/Mid Cap Growth Fund |
10 - 20% | |
Aggressive Growth Fund |
2 - 10% | |
High Yield Bond Fund |
6 - 18% | |
International Fund |
10 - 20% | |
Israel Common Values Fund |
0 - 10% | |
Emerging Markets Fund |
0 - 10% | |
Defensive Strategies Fund |
10 - 30% | |
Growth & Income Fund |
5 - 20% |
Timothy Partners, Ltd. (TPL) will determine the specific asset allocation program on a continuous basis, based on its forecast of the overall market. On each day that the Fund is open for business, TPL will review the asset allocation program and reallocate, as necessary, for any new funds invested in the Fund. The Advisor also will reallocate the Funds investments in the Traditional Funds at the end of each fiscal quarter to maintain the asset allocation program.
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in the Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Portfolio Risk | The Fund is indirectly subject to the following risks that are inherent in the Traditional Funds in which the Fund invests: |
¡ | Commodities-based Exchange Traded Funds Risk: 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 underlying funds holding Commodity ETFs, the Fund assumes portions of that risk. ETFs may only purchase commodities futures contracts (the buy side), therefore the risks include missing opportunities to realize gains by shorting futures contracts (the sell side) in deflationary economic periods. It is possible an underlying Funds entire ETF investment could be lost. Also, ETFs have expenses associated with them, and although indirect, these expenses may cause the Funds return to be lower. |
Page | 48 |
¡ | Country-Specific Risk: One underlying fund invests in Israeli securities, and Israel is subject to unique political and economic risks. As a result, Israeli securities can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. The 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 Funds investments in a foreign country. |
¡ | Credit Risk: If investment grade bonds are downgraded in credit rating or go into default, the result could be a loss of value, and the Fund could lose money. The degree of risk for a particular security may or may not be reflected in its credit rating. Bonds that are unrated, or rated BBB by Standard & Poors at the time of purchase, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. High yield securities (junk bonds) are subject to greater risk of loss than investment grade securities. Unrated bonds or bonds rated BB or lower by Standard & Poors at the time of purchase, (junk bonds) are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
¡ | Currency Risk: Securities represented by ADRs are foreign stocks denominated in non-U.S. currency, and 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 investments in foreign securities. For securities that 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 investments in foreign securities. |
¡ | Emerging Market Risk: Investments in the securities of emerging countries may experience more rapid and extreme changes in value than investments solely in securities of U.S. companies and investments in a larger spectrum of the foreign market. This is because the securities markets in some emerging countries are relatively small, with a limited number of companies representing a smaller number of industries. Issuers in emerging countries are frequently not subject to the same degree of regulation as U.S. issuers. Also, nationalization, expropriation or confiscatory taxation or political changes could adversely affect investments in emerging foreign countries. |
¡ | Equity Market Risk: Overall, stock market risks may affect the value of the Fund. Factors such as domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets. When the value of the Funds investments goes down, your investment in the Fund decreases in value and you could lose money. |
¡ | Exchange Traded Fund Risk: An ETF may trade at a discount to its net asset value. Investors indirectly bear fees and expenses charged by the underlying ETFs in addition to the Funds direct fees and expenses. There are also brokerage costs incurred when purchasing ETFs. In addition, losses of the underlying ETF and the level of risk arising from the investment practices of an underlying ETF may impact returns. |
¡ | Excluded Security Risk: Because the underlying Funds do not invest in Excluded Securities (including certain REITs) , and will divest themselves of securities that are subsequently discovered to be ineligible, the Fund may be riskier than similar funds that invest in underlying funds that invest in broader arrays of securities. |
¡ | Fixed Income Risk: Fixed income securities will increase or decrease in value based on changes in interest rates. If rates increase, fixed income securities generally will decline, and those securities with longer terms generally will decline more. Your investment will decline in value if the value of fixed income securities decrease. There is a risk that issuers and counterparties will not make payments on fixed income securities and repurchase agreements. Such defaults could result in losses to the Fund. |
¡ | Foreign Investment Risk: Foreign investing involves risks not typically associated with U.S. investments and may experience more rapid and extreme changes in value than investments solely in securities of U.S. companies. These risks include, among others, adverse fluctuations in foreign currency values as well as adverse political, social and economic developments affecting a foreign country. In addition, foreign investing involves less publicly available information, and more volatile or less liquid securities markets. Investments in foreign countries could be affected by factors not present in the U.S., such as restrictions on receiving the investment proceeds from a foreign country, foreign tax laws, and potential difficulties in enforcing contractual obligations. Foreign accounting may be less transparent than U.S. accounting practices and foreign regulation may be inadequate or irregular. Underlying Funds owning foreign securities could cause the Funds performance to fluctuate more than if it held only U.S. securities. |
¡ | General Risk: As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
¡ | Growth Risk: Some underlying Funds invest in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If a portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
¡ | High Portfolio Turnover Risk: Higher portfolio turnover rates may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. |
¡ | 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 |
49 | Page |
for high yield securities may be less liquid than the market for higher-rated securities. This can adversely affect an underlying Funds ability to buy or sell optimal quantities of high yield securities at desired prices. |
¡ | Interest Rate Risk: When interest rates rise, bond prices fall; the higher an underlying Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the underlying Fund is to interest rate risk. |
¡ | Investing In Other Funds Risk: The Fund invests in the securities of other investment companies. To the extent that the Fund invests in other mutual funds, exchange traded funds and other commingled funds, it will indirectly bear the expenses of those funds, which will cause the Funds return to be lower. |
¡ | Issuer-Specific Risk: The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
¡ | 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. |
¡ | Management Risk: An Advisors judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security in which an underlying Fund invests may prove to be incorrect. The Fund may experience losses regardless of the overall performance of the market. |
¡ | Mid-Sized 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 fund wants to sell a large quantity of a mid-sized companys 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. |
¡ | Municipal Securities Risk: The power or ability of an issuer to make principal and interest payments on municipal securities may be materially adversely affected by economic conditions, litigation or other factors. An underlying Funds right to receive principal and interest payments may be subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, as well as laws, if any, which may be enacted by Congress or state legislatures extending the time for payment of principal and/or interest or imposing other constraints upon the enforcement of such obligations. In addition, substantial changes in federal income tax laws could cause municipal security prices to decline because the demand for municipal securities is strongly influenced by the value of tax exempt income to investors. |
¡ | Non-Diversification Risk: Because the underlying Funds may invest in a smaller number of securities, adverse changes to a single security might have a more pronounced negative effect on a Fund than if the Funds investments were more widely distributed. |
¡ | Real Estate Investment Trust Risk: To the extent underlying Funds invest in real estate investment trusts, the Fund is subject to 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 underlying Funds, the more sensitive the Fund is to interest rate risks. The underlying Funds are also subject to credit risk; the Fund could lose money if mortgagors default on mortgages held in the REITs. |
¡ | Sector Risk: If certain industry sectors or types of securities dont perform as well as the managers of the underlying Funds expect, the Funds performance could suffer. |
¡ | Small Cap Company Risk: Smaller capitalization companies may experience higher failure rates than do larger capitalization companies. In addition, smaller companies may be more vulnerable to economic, market and industry changes. As a result, share price changes may be more sudden or erratic than the prices of other equity securities, especially over the short term. Such companies may have limited product lines, markets or financial resources and may lack management depth. The trading volume of securities of smaller capitalization companies is normally less than that of larger capitalization companies, and therefore may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger capitalization companies. Some small capitalization stocks may be illiquid. These risks may be enhanced for micro-cap securities. Many micro-cap companies tend to be new and have no proven track record. Some of these companies have no assets or operations, while others have products and services that are still in development or have yet to be tested in the market. Because micro-cap stocks trade in low volumes, any size of trade can have a large percentage impact on the price of the stock. |
¡ | Sovereign Debt Risk: The underlying Funds may invest in sovereign debt obligations. Investment in sovereign debt obligations involves special risks not present in corporate debt obligations. The issuer of the sovereign debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited recourse in the event of a default. During periods of economic uncertainty, the market prices of sovereign debt, and the underlying Funds net asset values, may be more volatile than prices of U.S. debt obligations. |
¡ | Stock Market Risk: The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
Page | 50 |
¡ | Treasury-Inflation Protected Securities Risk: Because the real rate of return offered by TIPS, which represents the growth of 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. |
¡ | 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. |
Who Should Buy This Fund
The Fund 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
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up- to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Jun-09 |
Dec-08 | |
16.44% |
-24.40% |
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Average Annual Total Returns
(for periods ending on December 31, 2014)
Strategic Growth | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | 10 Year | 1 Year | 5 Year | 10 Year | |||||||
Return before taxes | (4.47)% | 6.32% | 3.12% | (0.70)% | 6.68% | 2.90% | ||||||
Return after taxes on distributions (1) | (5.00)% | 6.15% | 2.48% | (0.99)% | 6.62% | 2.38% | ||||||
Return after taxes on distributions and sale of shares (1) | (2.53)% | 4.88% | 2.47% | (0.39)% | 5.21% | 2.38% | ||||||
DJ Global Moderately Aggressive Portfolio Index (2) (reflects no deduction for fees, expenses or taxes) |
5.90% | 10.60% | 7.14% | 5.90% | 10.60% | 7.14% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | DJ Global Moderately Aggressive Portfolio Index is a widely recognized measure of portfolios with similar levels of risk. The Index assumes reinvestment of all dividends and distributions and does not reflect any asset-based charges for investment management or other expenses. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Portfolio Manager
Arthur D. Ally, President of Timothy Partners, Ltd., has served the Fund since October 1, 2000.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
Page | 52 |
FUND SUMMARY
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A: TCGAX | CLASS C: TCVCX |
INVESTMENT OBJECTIVE
The investment objective of the Fund is to generate moderate levels of long-term capital growth.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Timothy Plan Funds. More information about these and other discounts is available from your financial professional and in How to Reduce Your Sales Charge on page 83 of the prospectus and Purchase, Redemption, and Pricing of Shares on page 40 of the Funds Statement of Additional Information.
Shareholder Fees
(fees paid directly from your investment)
Class A | Class C | |||
Maximum sales charge (load) imposed on purchases (as % of offering price) |
5.50% | None | ||
Maximum deferred sales charges (load) (as a percentage of the lesser of original purchase price or redemption proceeds) (1) |
None | 1.00% | ||
Redemption fees | None | None | ||
Exchange fees | None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class A | Class C | |||||||
Management Fee |
0.65% | 0.65% | ||||||
Distribution/Service(12b-1 Fees) |
0.00% | 0.75% | ||||||
Other Expenses (including administrative fees, transfer agency fees, sub-transfer agency fees, and all other ordinary operating expenses not listed above) |
0.40% | 0.39% | ||||||
Fees and Expenses of Acquired Funds |
1.44% | 1.44% | ||||||
Total Annual Fund Operating Expenses (2) |
2.49% | 3.23% |
(1) | A one percent (1%) contingent deferred sales charge is imposed on any Class C shares sold within the first thirteen months after purchase. The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(2) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies. Total Annual Fund Operating Expenses do not correlate to the ratio of average net assets in the Financial Highlights Table, which reflects the operating expenses of the Fund and does not include Acquired Fund fees and expenses. |
53 | Page |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. For each share class offered, the Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and annual Fund operating expenses remain the same for each share class. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Class A |
Class C (with redemption) |
Class C (without redemption) | ||||
1 Year |
$788 | $426 | $326 | |||
3 Years |
$1,283 | $995 | $995 | |||
5 Years |
$1,803 | $1,688 | $1,688 | |||
10 Years |
$3,221 | $3,531 | $3,531 |
The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. During the Funds most recent fiscal year, the Funds portfolio turnover rate was 19% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund normally will invest at least 75% of its total assets in the following Traditional Funds according to the following approximate range of percentages:
Timothy Plan Traditional Fund | % of Funds Net Assets Invested in Traditional Fund | |
Small Cap Value Fund |
2 - 10% | |
Large/Mid Cap Value Fund |
5 - 15% | |
Large/Mid Cap Growth Fund |
5 - 15% | |
Aggressive Growth Fund |
2 - 5% | |
High Yield Bond Fund |
6 - 15% | |
Fixed Income Fund |
20 - 40% | |
International Fund |
0 - 10% | |
Israel Common Values Fund |
0 - 10% | |
Emerging Markets Fund |
0 - 10% | |
Defensive Strategies Fund |
10 - 30% | |
Growth & Income Fund |
5 - 20% |
Timothy Partners, Ltd. (TPL) will determine the specific asset allocation program on a continuous basis, based on its forecast of the overall market. On each day that the Fund is open for business, TPL will review the asset allocation program and reallocate, as necessary, for any new funds invested in the Fund. The Advisor also will reallocate the Funds investments in the Traditional Funds at the end of each fiscal quarter to maintain the asset allocation program.
PRINCIPAL RISKS
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund.
1. | General Risk | As with most other mutual funds, you can lose money by investing in the Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Portfolio Risk | The Fund is indirectly subject to the following risks that are inherent in the Traditional Funds in which the Fund invests: |
¡ | Commodities-based Exchange Traded Funds Risk: 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 underlying funds holding Commodity ETFs, the Fund assumes portions of that risk. ETFs may only purchase commodities futures contracts (the buy |
Page | 54 |
side), therefore the risks include missing opportunities to realize gains by shorting futures contracts (the sell side) in deflationary economic periods. It is possible an underlying Funds entire ETF investment could be lost. Also, ETFs have expenses associated with them, and although indirect, these expenses may cause the Funds return to be lower. |
¡ | Country-Specific Risk: One underlying fund invests in Israeli securities, and Israel is subject to unique political and economic risks. As a result, Israeli securities can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. The 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 Funds investments in a foreign country. |
¡ | Credit Risk: If investment grade bonds are downgraded in credit rating or go into default, the result could be a loss of value, and the Fund could lose money. The degree of risk for a particular security may or may not be reflected in its credit rating. Bonds that are unrated, or rated BBB by Standard & Poors at the time of purchase, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. High yield securities (junk bonds) are subject to greater risk of loss than investment grade securities. Unrated bonds or bonds rated BB or lower by Standard & Poors at the time of purchase, (junk bonds) are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
¡ | Currency Risk: Securities represented by ADRs are foreign stocks denominated in non-U.S. currency, and 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 investments in foreign securities. For securities that 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 investments in foreign securities. |
¡ | Emerging Market Risk: Investments in the securities of emerging countries may experience more rapid and extreme changes in value than investments solely in securities of U.S. companies and investments in a larger spectrum of the foreign market. This is because the securities markets in some emerging countries are relatively small, with a limited number of companies representing a smaller number of industries. Issuers in emerging countries are frequently not subject to the same degree of regulation as U.S. issuers. Also, nationalization, expropriation or confiscatory taxation or political changes could adversely affect investments in emerging foreign countries. |
¡ | Equity Market Risk: Overall, stock market risks may affect the value of the Fund. Factors such as domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets. When the value of the Funds investments goes down, your investment in the Fund decreases in value and you could lose money. |
¡ | Exchange Traded Fund Risk: An ETF may trade at a discount to its net asset value. Investors indirectly bear fees and expenses charged by the underlying ETFs in addition to the Funds direct fees and expenses. There are also brokerage costs incurred when purchasing ETFs. In addition, losses of the underlying ETF and the level of risk arising from the investment practices of an underlying ETF may impact returns. |
¡ | Excluded Security Risk: Because the underlying Funds do not invest in Excluded Securities (including certain REITs) , and will divest themselves of securities that are subsequently discovered to be ineligible, the Fund may be riskier than similar funds that invest in underlying funds that invest in broader arrays of securities. |
¡ | Fixed Income Risk: Fixed income securities will increase or decrease in value based on changes in interest rates. If rates increase, fixed income securities generally will decline, and those securities with longer terms generally will decline more. Your investment will decline in value if the value of fixed income securities decrease. There is a risk that issuers and counterparties will not make payments on fixed income securities and repurchase agreements. Such defaults could result in losses to the Fund. |
¡ | Foreign Investment Risk: Foreign investing involves risks not typically associated with U.S. investments and may experience more rapid and extreme changes in value than investments solely in securities of U.S. companies. These risks include, among others, adverse fluctuations in foreign currency values as well as adverse political, social and economic developments affecting a foreign country. In addition, foreign investing involves less publicly available information, and more volatile or less liquid securities markets. Investments in foreign countries could be affected by factors not present in the U.S., such as restrictions on receiving the investment proceeds from a foreign country, foreign tax laws, and potential difficulties in enforcing contractual obligations. Foreign accounting may be less transparent than U.S. accounting practices and foreign regulation may be inadequate or irregular. Underlying Funds owning foreign securities could cause the Funds performance to fluctuate more than if it held only U.S. securities. |
¡ | General Risk: As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
¡ | Growth Risk: Some underlying Funds invest in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If a portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
¡ | High Portfolio Turnover Risk: Higher portfolio turnover rates may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. |
¡ | 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 |
55 | Page |
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 an underlying Funds ability to buy or sell optimal quantities of high yield securities at desired prices. |
¡ | Interest Rate Risk: When interest rates rise, bond prices fall; the higher an underlying Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the underlying Fund is to interest rate risk. |
¡ | Investing In Other Funds Risk: The Fund invests in the securities of other investment companies. To the extent that the Fund invests in other mutual funds, exchange traded funds and other commingled funds, it will indirectly bear the expenses of those funds, which will cause the Funds return to be lower. |
¡ | Issuer-Specific Risk: The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
¡ | 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. |
¡ | Management Risk: An Advisors judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security in which an underlying Fund invests may prove to be incorrect. The Fund may experience losses regardless of the overall performance of the market. |
¡ | Mid-Sized 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 fund wants to sell a large quantity of a mid-sized companys 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. |
¡ | Municipal Securities Risk: The power or ability of an issuer to make principal and interest payments on municipal securities may be materially adversely affected by economic conditions, litigation or other factors. An underlying Funds right to receive principal and interest payments may be subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, as well as laws, if any, which may be enacted by Congress or state legislatures extending the time for payment of principal and/or interest or imposing other constraints upon the enforcement of such obligations. In addition, substantial changes in federal income tax laws could cause municipal security prices to decline because the demand for municipal securities is strongly influenced by the value of tax exempt income to investors. |
¡ | Non-Diversification Risk: Because the underlying Funds may invest in a smaller number of securities, adverse changes to a single security might have a more pronounced negative effect on a Fund than if the Funds investments were more widely distributed. |
¡ | Real Estate Investment Trust Risk: To the extent underlying Funds invest in real estate investment trusts, the Fund is subject to 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 underlying Funds, the more sensitive the Fund is to interest rate risks. The underlying Funds are also subject to credit risk; the Fund could lose money if mortgagors default on mortgages held in the REITs. |
¡ | Sector Risk: If certain industry sectors or types of securities dont perform as well as the managers of the underlying Funds expect, the Funds performance could suffer. |
¡ | Small Cap Company Risk: Smaller capitalization companies may experience higher failure rates than do larger capitalization companies. In addition, smaller companies may be more vulnerable to economic, market and industry changes. As a result, share price changes may be more sudden or erratic than the prices of other equity securities, especially over the short term. Such companies may have limited product lines, markets or financial resources and may lack management depth. The trading volume of securities of smaller capitalization companies is normally less than that of larger capitalization companies, and therefore may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger capitalization companies. Some small capitalization stocks may be illiquid. These risks may be enhanced for micro-cap securities. Many micro-cap companies tend to be new and have no proven track record. Some of these companies have no assets or operations, while others have products and services that are still in development or have yet to be tested in the market. Because micro-cap stocks trade in low volumes, any size of trade can have a large percentage impact on the price of the stock. |
¡ | Sovereign Debt Risk: The underlying Funds may invest in sovereign debt obligations. Investment in sovereign debt obligations involves special risks not present in corporate debt obligations. The issuer of the sovereign debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited recourse in the event of a default. During periods of economic uncertainty, the market prices of sovereign debt, and the underlying Funds net asset values, may be more volatile than prices of U.S. debt obligations. |
Page | 56 |
¡ | Stock Market Risk: The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
¡ | Treasury-Inflation Protected Securities Risk: Because the real rate of return offered by TIPS, which represents the growth of 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. |
¡ | 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. |
Who Should Buy This Fund
The Fund 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
The following bar chart and table provide some indication of the risks of investing in the Fund by showing the variability of the Funds performance from year to year and by comparing the Funds performance to a broad based index. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up- to-date returns are available on the Funds website at www.timothyplan.com, or by calling the Fund at (800) 846-7526.
The bar chart does not reflect sales charges. If these charges were reflected, the returns would be less than those shown.
Year-by-year Annual Total Returns for Class A Shares
(for calendar years ending on December 31)
Best Quarter |
Worst Quarter | |
Jun-09 |
Dec-08 | |
12.63% |
-17.02% |
57 | Page |
Average Annual Total Returns
(for periods ending on December 31, 2014)
Conservative Growth | Class A (3) | Class C | ||||||||||
1 Year | 5 Year | 10 Year | 1 Year | 5 Year |
10 Year | |||||||
Return before taxes | (3.67)% | 4.94% | 3.40% | 0.15% | 5.34% | 3.21% | ||||||
Return after taxes on distributions (1) | (4.55)% | 4.59% | 2.64% | (0.61)% | 5.13% | 2.59% | ||||||
Return after taxes on distributions and sale of shares (1) | (1.52)% | 3.76% | 2.62% | 0.72% | 4.15% | 2.56% | ||||||
Dow Jones Global Moderate Portfolio Index (2) (reflects no deduction for fees, expenses or taxes) |
5.35% | 8.92% | 6.35% | 5.35% | 8.92% | 6.35% |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. |
(2) | The DJ Global Moderate Portfolio Index is a widely recognized, measure of portfolios with similar levels of risk. The Portfolio Index is rebalanced monthly to the appropriate percentage of risk experienced by the all stock Portfolio Index over the previous thirty-six months. |
(3) | Class A share returns reflect the assessment of the maximum front-end sales load on the first business day of the year. |
MANAGEMENT
Investment Advisor
Timothy Partners, Ltd.
Portfolio Manager
Arthur D. Ally, President of Timothy Partners, Ltd., has served the Fund since October 1, 2000.
PURCHASE AND SALE OF FUND SHARES
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Fund either through a financial advisor or directly from the Fund. The minimum initial purchase or exchange into the Fund is $1,000, or $50 through monthly systematic investment plan accounts. There is no minimum subsequent investment amount. There are no minimums for purchases or exchanges through employer-sponsored retirement plans, IRAs, or other qualified plans. The Fund shares are redeemable on any business day by contacting your financial advisor, or by written request to the Fund, by telephone, or by wire transfer.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its distributor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your sales person to recommend the Fund over another investment. Ask your sales person or visit your financial intermediarys website for more information.
Page | 58 |
Section 2 | Description of Our Funds
AGGRESSIVE GROWTH FUND
The investment objective of this Fund is to provide you with long-term growth of capital. The Fund attempts to achieve its investment objective by:
¡ | This Fund seeks to achieve its investment strategy by normally investing at least 80% of the Funds total assets in U.S. common stocks without regard to market capitalizations. |
¡ | This Fund invests using a growth investing style. Growth funds generally focus on stocks of companies believed to have above-average potential for growth in revenue, earnings, cash flow, or other similar criteria. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | The Fund invests its assets in the securities of a limited number of companies, which the Funds Investment Manager believes show a high probability for superior growth. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Larger Company Investing Risk | Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion. |
4. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys stock, it may have to sell at a lower price than would otherwise be indicated, or it may have to sell in smaller than desired quantities over an increased time period. |
5. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
6. | Growth Risk | The Fund often invests in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
7. | Investing In Other Funds Risk | The Fund invests in the securities of other investment companies. To the extent that the Fund invests in other mutual funds, exchange traded funds and other commingled funds, it will indirectly bear the expenses of those funds, which will cause the Funds return to be lower. |
8. | High Portfolio Turnover Risk | The Fund has a history of high (greater than 100%) portfolio turnover. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept significant amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
59 | Page |
INTERNATIONAL FUND
The investment objective of this Fund is to provide you with long-term growth of capital. The Fund attempts to achieve it investment objective by:
¡ | This Fund seeks to achieve its investment objectives by normally investing at least 80% of the Funds total assets in the securities of foreign companies (companies domiciled in countries other than the United States) through the purchase of American Depositary Receipts (ADRs), without regard to market capitalizations. |
¡ | This Fund invests using a growth investing style. Growth funds generally focus on stocks of companies believed to have above-average potential for growth in revenue, earnings, cash flow, or other similar criteria. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | The Fund invests its assets in the ADRs of companies which the Funds Investment Manager believes show a high probability for superior growth. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund allocates investments across countries and regions at the Managers discretion. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | 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 Funds investments in a foreign country. The Fund may invest in emerging markets. Emerging markets expose the Fund to additional risks due to the lack of historical or regulatory controls. |
4. | Issuer-Specific Risk | The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
5. | 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. |
6. | 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. |
7. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys 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. |
8. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
9. | Growth Risk | The Fund often invests in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the international stock markets and who are willing to accept significant amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
Page | 60 |
LARGE/MID CAP GROWTH FUND
The investment objective of this Fund is to provide you with long-term growth of capital. The Fund seeks to achieve its investment objective by:
¡ | The Fund seeks to achieve its investment objective by primarily investing at least 80% of the Funds total assets in larger U.S. stocks. Larger stocks refer to the common stock of companies whose total market capitalization is generally greater than $2 billion. Current income is not a significant investment consideration and any such income realized will be considered incidental to the Funds investment objective. |
¡ | This Fund invests using a growth investing style. Growth funds generally focus on stocks of companies believed to have above-average potential for growth in revenue, earnings, cash flow, or other similar criteria. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | The Fund normally invests in a portfolio of securities which includes a broadly diversified number of common stocks that the Funds Investment Manager believes show a high probability of superior prospects for above average growth. The Funds Investment Manager chooses these securities using a bottom up approach of extensively analyzing the financial, management and overall economic conditions of each potential investment. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
4. | Growth Risk | The Fund often invests in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
5. | Larger Company Investing Risk | Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion. |
6. | Mid-Sized Company Investing Risk | Investing in 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 fund wants to sell a large quantity of a mid-sized companys 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. |
7. | High Portfolio Turnover Risk | The Fund has a history of high (greater than 100%) portfolio turnover. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the domestic stock markets and who are willing to accept moderate amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
61 | Page |
SMALL CAP VALUE FUND
The investment objective of this Fund is to provide you with long-term growth of capital, with a secondary objective of current income. The Fund seeks to achieve its investment objective by:
¡ | The Fund seeks to achieve its investment objective by primarily investing at least 80% of the Funds total assets in U.S. Small Cap stocks. Small Cap stocks refer to the common stock of smaller companies companies whose total market capitalization is less than $2 billion. This Fund invests using a value investing style. Value funds typically emphasize stocks whose prices are below average in relation to such measures as earnings and book value; these stocks often have above-average dividend yields. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | In determining whether to invest in a particular company, the Funds Investment Manager focuses on a number of different attributes of the company, including the companys market expertise, balance sheet, improving return on equity, price to earnings ratios, industry position and strength, management and a number of other factors. Analyzing companies in this manner is known as a bottom up approach to investing. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may invest in equity securities of foreign issuers in the form of American Depositary Receipts (ADRs). ADRs are certificates held in trust by a U.S. bank or trust company evidencing ownership of shares of foreign-based issuers, and are an alternative to purchasing foreign securities in their national market and currency. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys stock, it may have to sell at a lower price than would otherwise be indicated, or it may have to sell in smaller than desired quantities over an increased time period. |
4. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
5. | Foreign Risk | The 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 Funds investments in a foreign country. There is a risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the Funds investments in foreign securities. |
6. | 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. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept moderate amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
Page | 62 |
LARGE/MID CAP VALUE FUND
The investment objective of this Fund is to provide you with long-term growth of capital, with a secondary objective of current income. The Fund seeks to achieve its investment objective by:
¡ | The Fund seeks to achieve its investment objective by primarily investing in U.S. common stocks. The Fund will normally invest at least 80% of the Funds total assets in companies whose total market capitalization exceeds $2 billion. This Fund invests using a value investing style. Value funds typically emphasize stocks whose prices are below average in relation to such measures as earnings and book value; these stocks often have above-average dividend yields. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | In determining whether to invest in a particular company, the Funds Investment Manager focuses on a number of different attributes of the company, including the companys market expertise, balance sheet, improving return on equity, price to earnings ratios, industry position and strength, management, and a number of other factors. Analyzing companies in this manner is known as a bottom up approach to investing. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Larger Company Investing Risk | Larger, more established companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. Also, larger companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion. |
4. | Mid-Sized Company Investing Risk | Investing in 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 fund wants to sell a large quantity of a mid-sized companys stock, it may have to sell at a lower price than would otherwise be indicated, or it may have to sell in smaller than desired quantities over an increased time period. |
5. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
6. | Value Investing Risk | 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. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept moderate amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
63 | Page |
FIXED INCOME FUND
The investment objective of this Fund is to generate a high level of current income consistent with prudent investment risk. The Fund attempts to achieve its investment objective by:
¡ | To achieve its goal, the Fund normally invests at least 80% of its assets in a diversified portfolio of corporate bonds, U.S. government and agency securities, convertible securities and preferred securities. The Investment Manager will only purchase securities for the Fund that are investment grade, with a rating of at least BBB as rated by Standard & Poors or a comparable rating by another nationally recognized rating agency. The Fund may also invest in debt securities that have not been rated by one of the major rating agencies, so long as the Funds Investment Manager has determined that the security is of comparable credit quality to similar rated securities. |
¡ | In managing its portfolio, the Funds Investment Manager concentrates on sector analysis, industry allocation and securities selection, deciding which types of bonds and industries to emphasize at a given time, and then which individual bonds to buy. The Fund attempts to anticipate shifts in the business cycle in determining types of bonds and industry sectors to target. In choosing individual securities, the Fund seeks out securities that appear to be undervalued within the emphasized industry sector. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Interest Rate Risk | When interest rates rise, bond prices fall; the higher the Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the Fund is to interest rate risk. Currently, interest rates are at historical lows. A change in the economic environment that causes interest rates to rise back to more historically normal levels could have a pronounced negative effect on the Fund. |
3. | Credit Risk | The Fund could lose money if any bonds it owns are downgraded in credit rating or go into default. For this reason, the Fund will only invest in investment-grade bonds. The degree of risk for a particular security may not be reflected in its credit rating. Bonds rated at the time of purchase BBB by Standard & Poors or, unrated, but determined to be of comparable quality by the Investment Manager, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
4. | Sector Risk | If certain industry sectors or types of securities dont perform as well as the Fund expects, the Funds performance could suffer. |
5. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier that other Funds that invest in a broader array of securities. |
Who Should Buy This Fund
The Fund is most appropriate for investors who want a high level of current income and are willing to accept a minor degree of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
Page | 64 |
HIGH YIELD BOND FUND
The investment objective of this Fund is to generate a high level of current income. The Fund attempts to achieve its investment objective by:
¡ | To achieve its goal, the Fund normally invests at least 80% of its total assets in a diversified portfolio of high yield fixed income securities. These include corporate bonds, convertible securities and preferred securities. The Investment Manager will generally purchase securities for the Fund that are not investment grade (junk bonds), meaning securities with a rating of BB or lower as rated by Standard & Poors or a comparable rating by another nationally recognized rating agency. The Fund may also invest in debt securities that have not been rated by one of the major rating agencies, so long as the Funds Investment Manager has determined that the security is of comparable credit quality to similar rated securities. |
¡ | In managing its portfolio, the Funds Investment Manager concentrates on sector analysis, industry allocation and securities selection, deciding which types of bonds and industries to emphasize at a given time, and then which individual bonds to buy. The Fund attempts to anticipate shifts in the business cycle in determining types of bonds and industry sectors to target. In choosing individual securities, the Fund seeks out securities that appear to be undervalued within the emphasized industry sector. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | 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 Funds ability to buy or sell optimal quantities of high yield securities at desired prices. |
3. | Interest Rate Risk | When interest rates rise, bond prices fall; the higher the Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the Fund is to interest rate risk. Currently, interest rates are at historical lows. A change in the economic environment that causes interest rates to rise back to more historically normal levels could have a pronounced negative effect on the Fund. |
4. | Credit Risk | High Yield securities (junk bonds) are subject to greater risk of loss than investment grade securities. The degree of risk for a particular security may not be reflected in its credit rating, and high yield securities may be particularly subject to this risk. Bonds rated, at the time of purchase, BB or lower by Standard & Poors (junk bonds) or, unrated, but determined to be of comparable quality by the Investment Manager, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
5. | Sector Risk | If certain industry sectors or types of securities dont perform as well as the Fund expects, the Funds performance could suffer. |
6. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier that other Funds that invest in a broader array of securities. |
Who Should Buy This Fund
The Fund is most appropriate for investors who want a high level of current income and are willing to accept a significant degree of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
65 | Page |
ISRAEL COMMON VALUES FUND
The investment objective of this Fund is to provide you with long-term growth of capital. The Fund seeks to achieve its investment objective by:
¡ | This Fund seeks to achieve its investment objectives by normally investing at least 80% of the Funds total assets in the common stock of companies domiciled and/or headquartered in Israel through the purchase of American Depositary Receipts (ADRs) and direct investments in such companies on foreign stock exchanges, without regard to market capitalizations. |
¡ | This Fund invests using a growth investing style. Growth funds generally focus on stocks of companies believed to have above-average potential for growth in revenue, earnings, cash flow, or other similar criteria. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value. Growth and value stocks have historically produced similar long-term returns, though each category has periods when it outperforms the other. |
¡ | The Fund invests its assets in companies which the Funds Investment Manager believes show a high probability for superior growth. Companies that meet or exceed specific criteria established by the Manager in the selection process are purchased. Securities are sold when they reach internally determined pricing targets or no longer qualify under the Managers investment criteria. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Issuer-Specific Risk | The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
4. | Country-Specific Risk | The Fund invests in Israeli securities, and Israel is subject to unique political and economic risks. As a result, Israeli securities can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. The Funds 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 Funds investments in a foreign country. |
5. | 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. |
6. | 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. |
7. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys 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. |
8. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
9. | Growth Risk | The Fund often invests in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If the portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
Who Should Buy This Fund
The Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept significant amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
Page | 66 |
DEFENSIVE STRATEGIES FUND
The Funds investment objective is the protection of principal through aggressive, proactive reactions to prevailing economic conditions. The Fund attempts to achieve its investment objective by investing varying percentages of the Funds total assets in the investment sectors set forth below:
¡ | Real Estate Investment Trusts (REITs), that invest in different kinds of real estate or real estate related assets, including shopping centers, office buildings, hotels, and mortgages secured by real estate, all of which are historically sensitive to both inflation and deflation. |
¡ | Commodities-based Exchange Traded Funds (ETFs), which trade like stocks, yet provide the opportunity to invest in inflation sensitive physical commodities and/or commodities futures markets. Commodity ETFs invest in Physical Commodities and/or Commodity Futures Contracts, which Contracts are highly leveraged investment vehicles. |
¡ | Treasury-Inflation Protected Securities (TIPS), which coupon payments and underlying principal are automatically increased to compensate for inflation as measured by the consumer price index (CPI). |
¡ | Cash and cash equivalents. |
¡ | The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Funds principal investment strategies by taking large, small, or even no position in any one or more of the Asset Classes in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Funds assets will be held in cash and/or cash equivalents. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
¡ | Current income is not a significant investment consideration and any such income realized will be considered incidental to the Funds investment objective. To allow for optimal flexibility, the Fund is classified as a non-diversified fund, and, as such, the Funds portfolio may include the securities of a smaller total number of issuers than if the Fund were classified as diversified. |
¡ | The Funds Advisor determines how to invest the Funds assets, and the percentages of each investment sleeve to hold in the portfolio, based on fundamental research and with the constant goal of protection of principal through aggressive, proactive reactions to prevailing economic conditions. |
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Real Estate Investment Trust Risk | 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. |
3. | Commodities-based Exchange Traded Funds Risk | 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 Funds risk includes missing opportunities to realize gains by shorting futures contracts (the sell side) in deflationary economic periods. It is possible the Funds entire ETF investment could be lost. Also, ETFs have expenses associated with them, which are indirectly borne by the Fund. These expenses may cause the Funds return to be lower. |
4. | Treasury-Inflation Protected Securities Risk | 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. |
5. | Interest Rate Risk | When interest rates rise, bond prices fall; the higher the Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the Fund is to interest rate risk. |
6. | Credit Risk | The Fund could lose money if any bonds it owns are downgraded in credit rating or go into default. The degree of risk for a particular security may be reflected in its credit rating. Bonds rated at the time of purchase BBB by Standard & Poors, or unrated, but determined to be of comparable quality by the investment manager, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
7. | Sector Risk | If certain industry sectors or types of securities dont perform as well as the Fund expects, the Funds performance could suffer. |
8. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities (including certain REITs), and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other Funds that invest in a broader array of securities. |
9. | Non-Diversification Risk | Because the Fund may invest in a smaller number of securities, adverse changes to a single security might have a more pronounced negative effect on the Fund than if the Funds investments were more widely distributed. |
Who Should Buy This Fund
The Fund is most appropriate for investors who seek a hedge against inflation, understand the risks of investing in each of the various asset classes, and who are willing to accept moderate amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
67 | Page |
EMERGING MARKETS FUND
The investment objective of this Fund is to provide you with long-term growth of capital. The Fund seeks to achieve its investment objective by:
¡ | This Fund seeks to achieve its investment objectives by normally investing at least 80% of the Funds total assets in equity securities of companies that are either located in emerging markets or that have at least more than 50% of their assets or revenue derived from emerging markets. These companies may have market capitalizations of any size. Equity securities include common and preferred stocks, American Depositary receipts (ADRs), warrants and rights. Emerging markets include 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 Investment Manager 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 Investment Manager, is generally considered to be an emerging market country by the international financial community. |
¡ | The Fund uses the principles of value investing to analyze and select equity securities for the Funds investment portfolio. When buying equity securities, the Investment Manager assesses the estimated intrinsic value of a company based on data such as a companys earnings power, cash flow generation, and/or asset value of the underlying business. By choosing securities that are selling at a discount to the Investment Managers estimates of their share of the companys intrinsic business value, the Investment Manager seeks to establish an opportunity for long-term capital appreciation. The Investment Manager may sell a security when its price reaches a target set by the Investment Manager, if the Investment Manager believes that other investments are more attractive, or for other reasons. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Stock Market Risk | This Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
3. | Emerging Market Risk | The Funds investments in the securities of emerging countries 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 markets in some emerging countries are relatively small, with a limited number of companies representing a smaller number of industries. Issuers in emerging countries are frequently 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 Funds investments in emerging foreign countries. |
4. | Issuer-Specific Changes | The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
5. | Currency Risk | Because the securities being purchased by this Fund are frequently 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. |
6. | 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. |
7. | Smaller Company Investing Risk | Investing in smaller companies often involves greater risk than investing in larger companies. Smaller companies may not have the management experience, financial resources, product diversification and competitive strengths of larger companies. The securities of smaller companies, therefore, tend to be more volatile than the securities of larger, more established companies. Smaller company stocks tend to be bought and sold less often and in smaller amounts than larger company stocks. Because of this, if a fund wants to sell a large quantity of a small-sized companys 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. |
8. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
9. | Value Risk | This Fund invests in companies after assessing their value potential. Securities of value companies may be more volatile than other stocks. If the Investment Managers perception of a companys value potential is not realized, the securities purchased may not perform as expected, reducing the Funds return. In addition, 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 whole and other types of securities. |
Who Should Buy This Fund
This Fund is most appropriate for investors who understand the risks of investing in the international stock markets and who are willing to accept significant amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
Page | 68 |
GROWTH & INCOME FUND
The investment objective of this Fund is to provide total return through a combination of growth and income and preservation of capital in declining markets.
¡ | To achieve its goals, the Fund primarily invests in equity securities of foreign and domestic companies that the Advisor believes are undervalued, and in fixed income securities. The Fund will normally hold both equity securities and fixed income securities, with at least 25% of its assets in equity securities and at least 25% of its assets in fixed income securities. |
¡ | This Fund principally invests in common stocks, preferred stocks and exchange traded funds (ETFs) that invest primarily in equity securities. Some or all of the equity portion of the Fund may be invested in small and micro capitalization companies. Fixed income securities that the Fund principally invests in are U.S. government securities, corporate bonds, municipal bonds and/or sovereign bonds of any maturity, as well as ETFs that invest primarily in such securities. Any non-US government securities in the Funds portfolio consist primarily of issues rated Baa2 or better by Moodys Investors Service, Inc. (Moodys) or BBB or better by Standard & Poors Ratings Group (S&P) and unrated securities determined by the Advisor to be of equivalent quality, as well as high quality money market instruments. The Fund attempts to provide a total return in excess of the rate of inflation over the long term (3 to 5 years). |
¡ | The Funds Investment Manager reviews the various sectors looking for historical patterns of undervalue or overvalue in an effort to identify appropriate fixed income securities to purchase. The Investment Manager also analyzes interest rate risk in the bond market and makes adjustments in the maturities of bonds to adjust for this risk. Lastly, if a bond is being downgraded, or the company has other issues that may affect the bond, the Investment Manager reviews it to see if the bond should be sold. |
¡ | The Funds portfolios duration is adjusted based on a regularly conducted analysis of the interest rate risk. Typically, the duration of the Funds bond portfolio runs between 1 and 8 years. The Investment Manager shortens portfolio durations when its research indicates a rising interest rate environment to preserve capital and may increase exposure to callable bonds. The Investment Manager also monitors spreads between U.S. Treasury securities and corporate and sovereign bonds, and adjusts the Funds mix of securities in response to changes in those spreads. |
¡ | The Funds equity securities are sold when such considerations as valuation, earnings and relative price strength are determined to warrant a sale. The Investment Manager reviews a stock if there is a major change in its corporate structure or management. |
¡ | This Fund may purchase ETFs or ADRs of countries or companies that are emerging. Since the Fund is limited to investment grade bonds, it rarely invests in emerging market fixed income securities. |
¡ | The Fund purchases ETFs in order to gain exposure in certain foreign markets or to purchase securities not represented in a direct manner on the stock exchanges. Index ETFs are utilized to gain exposure to a desirable market that is less liquid than the U.S. markets or where individual stocks are illiquid. |
¡ | The Funds ETF valuations are based on the Investment Managers determination of risk in the areas they represent. If the Investment Manager determines that an area is undervalued and has lower risk characteristics, then it may conclude that the representative ETF is likely to be undervalued and appropriate for the Fund. The Investment Manager analyzes current market Price Earnings ratios, Price to Book ratios and other ratios compared to historic ratios, as well as trends in economic activity, stability of governments and global developments to determine if an ETF is appropriate for the Fund. Only ETFs that are trading close to NAV are selected for purchase. |
¡ | The Fund will not invest in Excluded Securities. Excluded Securities are securities issued by 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. |
The Fund is subject to the following Principal risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Equity Market Risk | Overall stock market risks may affect the value of the Fund. Factors such as domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets. When the value of the Funds investments goes down, your investment in the Fund decreases in value and you could lose money. |
3. | Fixed Income Risk | The Fund invests in fixed income securities. These securities will increase or decrease in value based on changes in interest rates. If rates increase, the value of the Funds fixed income securities generally will decline, and those securities with longer terms generally will decline more. Your investment will decline in value if the value of the Funds investments decreases. There is a risk that issuers and counterparties will not make payments on fixed income securities and repurchase agreements held by the Fund. Such defaults could result in losses to the Fund. Securities with lower credit quality have a greater risk of default. In addition, the credit quality of securities held by the Fund may be lowered if an issuers financial condition changes. Lower credit quality may lead to greater volatility in the price of a security and in shares of the Fund. Lower credit quality also may affect liquidity and make it difficult for the Fund to sell the security. |
4. | Management Risk | The Advisors judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security in which the Fund invests may prove to be incorrect. The Fund may experience losses regardless of the overall performance of the market. |
5. | Small Cap Company Risk | Smaller capitalization companies may experience higher failure rates than do larger capitalization companies. In addition, smaller companies may be more vulnerable to economic, market and industry changes. As a result, share price changes may be |
69 | Page |
more sudden or erratic than the prices of other equity securities, especially over the short term. Such companies may have limited product lines, markets or financial resources and may lack management depth. The trading volume of securities of smaller capitalization companies is normally less than that of larger capitalization companies, and therefore may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger capitalization companies. Some small capitalization stocks may be illiquid. These risks may be enhanced for micro-cap securities. Many micro-cap companies tend to be new and have no proven track record. Some of these companies have no assets or operations, while others have products and services that are still in development or have yet to be tested in the market. Because micro-cap stocks trade in low volumes, any size of trade can have a large percentage impact on the price of the stock. |
6. | Foreign Investment Risk | Foreign investing involves risks not typically associated with U.S. investments. These risks include, among others, adverse fluctuations in foreign currency values as well as adverse political, social and economic developments affecting a foreign country. In addition, foreign investing involves less publicly available information, and more volatile or less liquid securities markets. Investments in foreign countries could be affected by factors not present in the U.S., such as restrictions on receiving the investment proceeds from a foreign country, foreign tax laws, and potential difficulties in enforcing contractual obligations. Foreign accounting may be less transparent than U.S. accounting practices and foreign regulation may be inadequate or irregular. Owning foreign securities could cause the Funds performance to fluctuate more than if it held only U.S. securities. |
7. | Municipal Securities Risk | The power or ability of an issuer to make principal and interest payments on municipal securities may be materially adversely affected by economic conditions, litigation or other factors. The Funds right to receive principal and interest payments may be subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, as well as laws, if any, which may be enacted by Congress or state legislatures extending the time for payment of principal and/or interest or imposing other constraints upon the enforcement of such obligations. In addition, substantial changes in federal income tax laws could cause municipal security prices to decline because the demand for municipal securities is strongly influenced by the value of tax exempt income to investors. |
8. | Sovereign Debt Risk | The Fund may invest in sovereign debt obligations. Investment in sovereign debt obligations involves special risks not present in corporate debt obligations. The issuer of the sovereign debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited recourse in the event of a default. During periods of economic uncertainty, the market prices of sovereign debt, and the Funds net asset value, may be more volatile than prices of U.S. debt obligations. |
9. | Exchange Traded Fund Risk | An ETF may trade at a discount to its net asset value. Investors in the Fund will indirectly bear fees and expenses charged by the underlying ETFs in which the Fund invests, in addition to the Funds direct fees and expenses. The Fund will also incur brokerage costs when it purchases shares of ETFs. In addition, the Fund will be affected by losses of the underlying ETF and the level of risk arising from the investment practices of the underlying ETF. |
10. | Excluded Security Risk | Because the Fund does not invest in Excluded Securities, and will divest itself of securities that are subsequently discovered to be ineligible, the Fund may be riskier than other funds that invest in a broader array of securities. |
Who Should Buy This Fund
This Fund is most appropriate for investors who understand the risks of investing in the stock market and who are willing to accept moderate amounts of volatility and risk.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares. It is also available on the Funds website, www.timothyplan.com.
Page | 70 |
STRATEGIC GROWTH FUND
The Funds investment objective is to generate medium to high levels of long-term capital growth. The Fund attempts to achieve its investment strategy by normally investing at least 75% of its total assets in the following Traditional Funds according to the following approximate range of percentages:
Timothy Plan Traditional Fund | % of Funds Net Assets Invested in Traditional Fund | |
Small Cap Value Fund |
2 - 10% | |
Large/Mid Cap Value Fund |
10 - 20% | |
Large/Mid Cap Growth Fund |
10 - 20% | |
Aggressive Growth Fund |
2 - 10% | |
High Yield Bond Fund |
6 - 18% | |
International Fund |
10 - 20% | |
Israel Common Values Fund |
0 - 10% | |
Emerging Markets Fund |
0 - 10% | |
Defensive Strategies Fund |
10 - 30% | |
Growth & Income Fund |
5 - 20% |
Timothy Partners, Ltd. (TPL) will determine the specific asset allocation program on a continuous basis, based on its forecast of the overall market. On each day that the Fund is open for business, TPL will review the asset allocation program and reallocate, as necessary, for any new funds invested in the Fund. The Advisor also will reallocate the Funds investments in the Traditional Funds at the end of each fiscal quarter to maintain the asset allocation program.
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in the Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Portfolio Risk | The Fund is indirectly subject to the following risks that are inherent in the Traditional Funds in which the Fund invests: |
¡ | Commodities-based Exchange Traded Funds Risk: 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 underlying funds holding Commodity ETFs, the Fund assumes portions of that risk. ETFs may only purchase commodities futures contracts (the buy side), therefore the risks include missing opportunities to realize gains by shorting futures contracts (the sell side) in deflationary economic periods. It is possible an underlying Funds entire ETF investment could be lost. Also, ETFs have expenses associated with them, and although indirect, these expenses may cause the Funds return to be lower. |
¡ | Country-Specific Risk: One underlying fund invests in Israeli securities, and Israel is subject to unique political and economic risks. As a result, Israeli securities can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. The 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 Funds investments in a foreign country. |
¡ | Credit Risk: If investment grade bonds are downgraded in credit rating or go into default, the result could be a loss of value, and the Fund could lose money. The degree of risk for a particular security may or may not be reflected in its credit rating. Bonds that are unrated, or rated BBB by Standard & Poors at the time of purchase, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. High yield securities (junk bonds) are subject to greater risk of loss than investment grade securities. Unrated bonds or bonds rated BB or lower by Standard & Poors at the time of purchase, (junk bonds) are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
¡ | Currency Risk: Securities represented by ADRs are foreign stocks denominated in non-U.S. currency, and 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 investments in foreign securities. For securities that 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 investments in foreign securities. |
¡ | Emerging Market Risk: Investments in the securities of emerging countries may experience more rapid and extreme changes in value than investments solely in securities of U.S. companies and investments in a larger spectrum of the foreign market. This is because the securities markets in some emerging countries are relatively small, with a limited number of companies representing a smaller number of industries. Issuers in emerging countries are frequently not subject to the same degree of regulation as U.S. issuers. Also, nationalization, expropriation or confiscatory taxation or political changes could adversely affect investments in emerging foreign countries. |
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¡ | Equity Market Risk: Overall, stock market risks may affect the value of the Fund. Factors such as domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets. When the value of the Funds investments goes down, your investment in the Fund decreases in value and you could lose money. |
¡ | Exchange Traded Fund Risk: An ETF may trade at a discount to its net asset value. Investors indirectly bear fees and expenses charged by the underlying ETFs in addition to the Funds direct fees and expenses. There are also brokerage costs incurred when purchasing ETFs. In addition, losses of the underlying ETF and the level of risk arising from the investment practices of an underlying ETF may impact returns. |
¡ | Excluded Security Risk: Because the underlying Funds do not invest in Excluded Securities (including certain REITs) , and will divest themselves of securities that are subsequently discovered to be ineligible, the Fund may be riskier than similar funds that invest in underlying funds that invest in broader arrays of securities. |
¡ | Fixed Income Risk: Fixed income securities will increase or decrease in value based on changes in interest rates. If rates increase, fixed income securities generally will decline, and those securities with longer terms generally will decline more. Your investment will decline in value if the value of fixed income securities decrease. There is a risk that issuers and counterparties will not make payments on fixed income securities and repurchase agreements. Such defaults could result in losses to the Fund. |
¡ | Foreign Investment Risk: Foreign investing involves risks not typically associated with U.S. investments and may experience more rapid and extreme changes in value than investments solely in securities of U.S. companies. These risks include, among others, adverse fluctuations in foreign currency values as well as adverse political, social and economic developments affecting a foreign country. In addition, foreign investing involves less publicly available information, and more volatile or less liquid securities markets. Investments in foreign countries could be affected by factors not present in the U.S., such as restrictions on receiving the investment proceeds from a foreign country, foreign tax laws, and potential difficulties in enforcing contractual obligations. Foreign accounting may be less transparent than U.S. accounting practices and foreign regulation may be inadequate or irregular. Underlying Funds owning foreign securities could cause the Funds performance to fluctuate more than if it held only U.S. securities. |
¡ | General Risk: As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
¡ | Growth Risk: Some underlying Funds invest in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If a portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
¡ | High Portfolio Turnover Risk: Higher portfolio turnover rates may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. |
¡ | 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 an underlying Funds ability to buy or sell optimal quantities of high yield securities at desired prices. |
¡ | Interest Rate Risk: When interest rates rise, bond prices fall; the higher an underlying Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the underlying Fund is to interest rate risk. |
¡ | Investing In Other Funds Risk: The Fund invests in the securities of other investment companies. To the extent that the Fund invests in other mutual funds, exchange traded funds and other commingled funds, it will indirectly bear the expenses of those funds, which will cause the Funds return to be lower. |
¡ | Issuer-Specific Risk: The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
¡ | 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. |
¡ | Management Risk: An Advisors judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security in which an underlying Fund invests may prove to be incorrect. The Fund may experience losses regardless of the overall performance of the market. |
¡ | Mid-Sized 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 fund wants to sell a large quantity of a mid-sized companys 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. |
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¡ | Municipal Securities Risk: The power or ability of an issuer to make principal and interest payments on municipal securities may be materially adversely affected by economic conditions, litigation or other factors. An underlying Funds right to receive principal and interest payments may be subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, as wells as laws, if any, which may be enacted by Congress or state legislatures extending the time for payment of principal and/or interest or imposing other constraints upon the enforcement of such obligations. In addition, substantial changes in federal income tax laws could cause municipal security prices to decline because the demand for municipal securities is strongly influenced by the value of tax exempt income to investors. |
¡ | Non-Diversification Risk: Because the underlying Funds may invest in a smaller number of securities, adverse changes to a single security might have a more pronounced negative effect on a Fund than if the Funds investments were more widely distributed. |
¡ | Real Estate Investment Trust Risk: To the extent underlying Funds invest in real estate investment trusts, the Fund is subject to 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 underlying Funds, the more sensitive the Fund is to interest rate risks. The underlying Funds are also subject to credit risk; the Fund could lose money if mortgagors default on mortgages held in the REITs. |
¡ | Sector Risk: If certain industry sectors or types of securities dont perform as well as the managers of the underlying Funds expect, the Funds performance could suffer. |
¡ | Small Cap Company Risk: Smaller capitalization companies may experience higher failure rates than do larger capitalization companies. In addition, smaller companies may be more vulnerable to economic, market and industry changes. As a result, share price changes may be more sudden or erratic than the prices of other equity securities, especially over the short term. Such companies may have limited product lines, markets or financial resources and may lack management depth. The trading volume of securities of smaller capitalization companies is normally less than that of larger capitalization companies, and therefore may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger capitalization companies. Some small capitalization stocks may be illiquid. These risks may be enhanced for micro-cap securities. Many micro-cap companies tend to be new and have no proven track record. Some of these companies have no assets or operations, while others have products and services that are still in development or have yet to be tested in the market. Because micro-cap stocks trade in low volumes, any size of trade can have a large percentage impact on the price of the stock. |
¡ | Sovereign Debt Risk: The underlying Funds may invest in sovereign debt obligations. Investment in sovereign debt obligations involves special risks not present in corporate debt obligations. The issuer of the sovereign debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited recourse in the event of a default. During periods of economic uncertainty, the market prices of sovereign debt, and the underlying Funds net asset values, may be more volatile than prices of U.S. debt obligations. |
¡ | Stock Market Risk: The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
¡ | Treasury-Inflation Protected Securities Risk: Because the real rate of return offered by TIPS, which represents the growth of 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. |
¡ | 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. |
Who Should Buy This Fund
The Fund 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.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
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CONSERVATIVE GROWTH FUND
The Funds investment objective is to generate moderate levels of long-term capital growth. The Fund attempts to achieve its investment objective by normally investing at least 75% of its total assets in the following Traditional Funds according to the following approximate range of percentages:
Timothy Plan Traditional Fund | % of Funds Net Assets Invested in Traditional Fund | |
Small Cap Value Fund |
2 - 10% | |
Large/Mid Cap Value Fund |
5 - 15% | |
Large/Mid Cap Growth Fund |
5 - 15% | |
Aggressive Growth Fund |
2 - 5% | |
High Yield Bond Fund |
6 - 15% | |
Fixed Income Fund |
20 - 40% | |
International Fund |
0 - 10% | |
Israel Common Values Fund |
0 - 10% | |
Emerging Markets Fund |
0 - 10% | |
Defensive Strategies Fund |
10 - 30% | |
Growth & Income Fund |
5 - 20% |
Timothy Partners, Ltd. (TPL) will determine the specific asset allocation program on a continuous basis, based on its forecast of the overall market. On each day that the Fund is open for business, TPL will review the asset allocation program and reallocate, as necessary, for any new funds invested in the Fund. The Advisor also will reallocate the Funds investments in the Traditional Funds at the end of each fiscal quarter to maintain the asset allocation program.
The Fund is subject to the following Principal Risks:
1. | General Risk | As with most other mutual funds, you can lose money by investing in the Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
2. | Portfolio Risk | The Fund is indirectly subject to the following risks that are inherent in the Traditional Funds in which the Fund invests: |
¡ | Commodities-based Exchange Traded Funds Risk: 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 underlying funds holding Commodity ETFs, the Fund assumes portions of that risk. ETFs may only purchase commodities futures contracts (the buy side), therefore the risks include missing opportunities to realize gains by shorting futures contracts (the sell side) in deflationary economic periods. It is possible an underlying Funds entire ETF investment could be lost. Also, ETFs have expenses associated with them, and although indirect, these expenses may cause the Funds return to be lower. |
¡ | Country-Specific Risk: One underlying fund invests in Israeli securities, and Israel is subject to unique political and economic risks. As a result, Israeli securities can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. The 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 Funds investments in a foreign country. |
¡ | Credit Risk: If investment grade bonds are downgraded in credit rating or go into default, the result could be a loss of value, and the Fund could lose money. The degree of risk for a particular security may or may not be reflected in its credit rating. Bonds that are unrated, or rated BBB by Standard & Poors at the time of purchase, are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. High yield securities (junk bonds) are subject to greater risk of loss than investment grade securities. Unrated bonds or bonds rated BB or lower by Standard & Poors at the time of purchase, (junk bonds) are subject to greater market risk and credit risk, or loss of principal and interest, than higher-rated securities. |
¡ | Currency Risk: Securities represented by ADRs are foreign stocks denominated in non-U.S. currency, and 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 investments in foreign securities. For securities that 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 investments in foreign securities. |
¡ | Emerging Market Risk: Investments in the securities of emerging countries may experience more rapid and extreme changes in value than investments solely in securities of U.S. companies and investments in a larger spectrum of the foreign market. This is because the securities markets in some emerging countries are relatively small, with a limited number of companies representing a smaller number of industries. Issuers in emerging countries are frequently not subject to the same degree of regulation as U.S. issuers. Also, nationalization, expropriation or confiscatory taxation or political changes could adversely affect investments in emerging foreign countries. |
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¡ | Equity Market Risk: Overall, stock market risks may affect the value of the Fund. Factors such as domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets. When the value of the Funds investments goes down, your investment in the Fund decreases in value and you could lose money. |
¡ | Exchange Traded Fund Risk: An ETF may trade at a discount to its net asset value. Investors indirectly bear fees and expenses charged by the underlying ETFs in addition to the Funds direct fees and expenses. There are also brokerage costs incurred when purchasing ETFs. In addition, losses of the underlying ETF and the level of risk arising from the investment practices of an underlying ETF may impact returns. |
¡ | Excluded Security Risk: Because the underlying Funds do not invest in Excluded Securities (including certain REITs) , and will divest themselves of securities that are subsequently discovered to be ineligible, the Fund may be riskier than similar funds that invest in underlying funds that invest in broader arrays of securities. |
¡ | Fixed Income Risk: Fixed income securities will increase or decrease in value based on changes in interest rates. If rates increase, fixed income securities generally will decline, and those securities with longer terms generally will decline more. Your investment will decline in value if the value of fixed income securities decrease. There is a risk that issuers and counterparties will not make payments on fixed income securities and repurchase agreements. Such defaults could result in losses to the Fund. |
¡ | Foreign Investment Risk: Foreign investing involves risks not typically associated with U.S. investments and may experience more rapid and extreme changes in value than investments solely in securities of U.S. companies. These risks include, among others, adverse fluctuations in foreign currency values as well as adverse political, social and economic developments affecting a foreign country. In addition, foreign investing involves less publicly available information, and more volatile or less liquid securities markets. Investments in foreign countries could be affected by factors not present in the U.S., such as restrictions on receiving the investment proceeds from a foreign country, foreign tax laws, and potential difficulties in enforcing contractual obligations. Foreign accounting may be less transparent than U.S. accounting practices and foreign regulation may be inadequate or irregular. Underlying Funds owning foreign securities could cause the Funds performance to fluctuate more than if it held only U.S. securities. |
¡ | General Risk: As with most other mutual funds, you can lose money by investing in this Fund. Share prices fluctuate from day to day, and when you sell your shares, they may be worth less than you paid for them. |
¡ | Growth Risk: Some underlying Funds invest in companies after assessing their growth potential. Securities of growth companies may be more volatile than other stocks. If a portfolio managers perception of a companys growth potential is not realized, the securities purchased may not perform as expected, reducing the Funds 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. |
¡ | High Portfolio Turnover Risk: Higher portfolio turnover rates may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Funds performance. |
¡ | 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 an underlying Funds ability to buy or sell optimal quantities of high yield securities at desired prices. |
¡ | Interest Rate Risk: When interest rates rise, bond prices fall; the higher an underlying Funds duration (a calculation reflecting time risk, taking into account both the average maturity of the Funds portfolio and its average coupon return), the more sensitive the underlying Fund is to interest rate risk. |
¡ | Investing In Other Funds Risk: The Fund invests in the securities of other investment companies. To the extent that the Fund invests in other mutual funds, exchange traded funds and other commingled funds, it will indirectly bear the expenses of those funds, which will cause the Funds return to be lower. |
¡ | Issuer-Specific Risk: The value of an individual security or a particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. |
¡ | 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. |
¡ | Management Risk: An Advisors judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security in which an underlying Fund invests may prove to be incorrect. The Fund may experience losses regardless of the overall performance of the market. |
¡ | Mid-Sized 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 fund wants to sell a large quantity of a mid-sized companys 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. |
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¡ | Municipal Securities Risk: The power or ability of an issuer to make principal and interest payments on municipal securities may be materially adversely affected by economic conditions, litigation or other factors. An underlying Funds right to receive principal and interest payments may be subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, as wells as laws, if any, which may be enacted by Congress or state legislatures extending the time for payment of principal and/or interest or imposing other constraints upon the enforcement of such obligations. In addition, substantial changes in federal income tax laws could cause municipal security prices to decline because the demand for municipal securities is strongly influenced by the value of tax exempt income to investors. |
¡ | Non-Diversification Risk: Because the underlying Funds may invest in a smaller number of securities, adverse changes to a single security might have a more pronounced negative effect on a Fund than if the Funds investments were more widely distributed. |
¡ | Real Estate Investment Trust Risk: To the extent underlying Funds invest in real estate investment trusts, the Fund is subject to 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 underlying Funds, the more sensitive the Fund is to interest rate risks. The underlying Funds are also subject to credit risk; the Fund could lose money if mortgagors default on mortgages held in the REITs. |
¡ | Sector Risk: If certain industry sectors or types of securities dont perform as well as the managers of the underlying Funds expect, the Funds performance could suffer. |
¡ | Small Cap Company Risk: Smaller capitalization companies may experience higher failure rates than do larger capitalization companies. In addition, smaller companies may be more vulnerable to economic, market and industry changes. As a result, share price changes may be more sudden or erratic than the prices of other equity securities, especially over the short term. Such companies may have limited product lines, markets or financial resources and may lack management depth. The trading volume of securities of smaller capitalization companies is normally less than that of larger capitalization companies, and therefore may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger capitalization companies. Some small capitalization stocks may be illiquid. These risks may be enhanced for micro-cap securities. Many micro-cap companies tend to be new and have no proven track record. Some of these companies have no assets or operations, while others have products and services that are still in development or have yet to be tested in the market. Because micro-cap stocks trade in low volumes, any size of trade can have a large percentage impact on the price of the stock. |
¡ | Sovereign Debt Risk: The underlying Funds may invest in sovereign debt obligations. Investment in sovereign debt obligations involves special risks not present in corporate debt obligations. The issuer of the sovereign debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited recourse in the event of a default. During periods of economic uncertainty, the market prices of sovereign debt, and the underlying Funds net asset values, may be more volatile than prices of U.S. debt obligations. |
¡ | Stock Market Risk: The Fund is an equity fund, so it is subject to the risks inherent in the stock market in general. The stock market is cyclical, with prices generally rising and falling over periods of time. Some of these price cycles can be pronounced and last for a long time. |
¡ | Treasury-Inflation Protected Securities Risk: Because the real rate of return offered by TIPS, which represents the growth of 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. |
¡ | 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. |
Who Should Buy This Fund
The Fund 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.
A description of the Funds policies and procedures with respect to the disclosure of the Funds portfolio securities is available in the Funds SAI for Class A and Class C shares.
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Section 3 | Who Manages Your Money
To help you understand how the Funds assets are managed, this section includes a detailed discussion of the Funds Investment Advisor and each Investment Manager. For a more complete discussion of these matters, please consult the Statement of Additional Information, which is available by calling (800) 846-7526 or by visiting Timothy Plans website at www.timothyplan.com.
TIMOTHY PARTNERS, LTD.
Timothy Partners, Ltd. (TPL), 1055 Maitland Center Commons Boulevard,, Maitland, FL 32751, is a Florida limited partnership organized on December 6, 1993, and is registered with the Securities and Exchange Commission as an investment advisor. TPL supervises the investment of the assets of each Fund in accordance with the objectives, policies and restrictions of the Trust. TPL approves the portfolio of securities selected by the Investment Managers. To determine which securities are Excluded Securities, TPL conducts its own research and consults a number of Christian ministries on these issues. TPL retains the right to change the sources from whom it acquires its information, at its discretion. TPL has been the advisor to the Funds since their inceptions.
COVENANT FUNDS, INC.
Covenant Funds, Inc., a Florida corporation (CFI), is the managing general partner of TPL. Arthur D. Ally is President, Chairman and Trustee of the Trust, as well as President and 75% shareholder of CFI. Mr. Ally had over eighteen years of experience in the investment industry prior to founding TPL, having worked for Prudential Bache, Shearson Lehman Brothers and Investment Management & Research. Some or all of these firms may be utilized by an Investment Manager to execute portfolio trades for a Fund. Neither Mr. Ally nor any affiliated person of the Trust will receive any benefit from such transactions.
For its services, TPL is paid an annual fee equal to 0.85% on the Small Cap Value Fund, 0.85% on the Large/Mid Cap Value Fund, 0.85% on the Aggressive Growth Fund, 0.85% on the Large/Mid Cap Growth Fund, 1.00% on the International Fund, 0.60% on the Fixed Income Fund, 0.60% on the High Yield Bond Fund, 1.00% on the Israel Common Values Fund, 1.20% on the Emerging Markets Fund, 0.60% on the Defensive Strategies Fund, 0.85% on the Growth & Income Fund and 0.65% on both the Strategic Growth Fund and the Conservative Growth Fund.
TPL, with the Trusts consent, has engaged the services of the Investment Managers described below to provide day-to-day investment advisory services to certain of the Funds. TPL pays all fees charged by the Investment Managers for such services.
A discussion of the considerations employed by the Board of Trustees in their approval of TPL as Advisor to the Trust, and each Investment Manager as manager of the Funds in 2014, is available in the Funds audited annual report dated September 30, 2014.
The Statement of Additional Information for the Trusts Class A and Class C Shares (SAI), dated January 28, 2015, contains additional information about the compensation paid to the portfolio managers, other accounts and account types managed by the Advisor and Investment Managers, and ownership of Fund shares. The SAI is available upon request at no charge. To receive an SAI you may request one by calling the Funds at (800) 846-7526.
CHARTWELL INVESTMENT PARTNERS
Chartwell Investment Partners (Chartwell), 1235 Westlakes Drive, Suite 400, Berwyn, PA 19312, serves as Investment Manager to the Aggressive Growth Fund and the Large/Mid Cap Growth Fund. Chartwell is an employee-owned investment firm that was organized by nine founding partners in 1997, headed by Timothy J. Riddle serving as CEO, who has continuously served in that position.
The Large/Mid Cap Growth Fund and Aggressive Growth Fund is team managed by Edward N. Antoian, John A. Heffern, and Peter M. Schofield each of whom participate in the investment decision process during meetings in which the team determines the allocation of securities held in the portfolio. Each has authority to direct trading activity in the Fund.
Mr. Edward N. Antoian is a Managing Partner and Chief Investment Officer for the Fund and has been in the investments arena since 1984.
Mr. John A. Heffern has been in portfolio management positions since 1997, most recently with Chartwell since 2005.
Mr. Peter M. Schofield, CFA, is a Principal and Senior Portfolio Manager to the Fund and has been in the investment arena since 1996.
As of December 31, 2014, Chartwell managed approximately $7.7 billion in client assets.
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EAGLE GLOBAL ADVISORS
Eagle Global Advisors (Eagle), 5847 San Filipe, Suite 930, Houston, TX 77057 is the Investment Manager for the International Fund and the Israel Common Values Fund. Eagle was founded in 1996 and is owned by its employees. The senior members discussed below have worked together since 1992. Eagle has provided investment management services and advice in the international sector since its founding.
The International Fund is team managed, with each member of the team assuming responsibility for a geographic area of the globe, and specific market sectors within that geographic area. The senior and founding partners of the firm sit on the team responsible for the Funds management.
Mr. Edward Allen, III, PhD., a senior partner, is the chairman of the International Equity Committee, with a primary focus on the Asian community. He earned his undergraduate degree at Princeton, and a PhD in economics at the University of Chicago. Mr. Allen has been with Eagle since 1996.
Mr. Thomas Hunt, III, CPA, a senior partner, sits on the International Equity Committee and focuses on the European markets, with an emphasis on health care, consumer non-durables and technology. Mr. Hunt is a graduate of the University of Texas and the Harvard Business School where he earned his MBA. Mr. Hunt has been with Eagle since 1996.
Mr. Steven Russo, a graduate of the University of Texas and a recipient of an MBA from Rice University, is a senior partner at Eagle. Mr. Russo sits on the International Equity Committee where his geographic focus is the European markets with emphasis on consumer services, capital goods, and transportation. Mr. Russo has been with Eagle since 1996.
Mr. John Gualy is a partner and member of the International Equity Committee. Mr. Gualys research responsibilities are the emerging markets, focusing on telecommunications, utilities and energy. He graduated from the University of Texas (Austin) and received an MBA from Rice University. Mr. Gualy has been with Eagle since 1996.
The Israel Common Values Fund is team managed, with each member of the team assuming responsibility for a specific market sector. The senior and founding partners of the firm sit on the team responsible for the Funds management.
Mr. Edward Allen, III, PhD., a senior partner, is the chairman of the International Equity Committee, with a primary focus on the Asian community. He earned his undergraduate degree at Princeton, and a PhD in economics at the University of Chicago. Mr. Allen has been with Eagle since 1996.
Mr. Thomas Hunt, III, CPA, a senior partner, sits on the International Equity Committee and focuses on the European markets, with an emphasis on health care, consumer non-durables and technology. Mr. Hunt is a graduate of the University of Texas and the Harvard Business School where he earned his MBA. Mr. Hunt has been with Eagle since 1996.
Mr. Steven Russo, a graduate of the University of Texas and a recipient of an MBA from Rice University, is a senior partner at Eagle. Mr. Russo sits on the International Equity Committee where his geographic focus is the European markets with emphasis on consumer services, capital goods, and transportation. Mr. Russo has been with Eagle since 1996.
Mr. John Gualy is a partner and member of the International Equity Committee. Mr. Gualys research responsibilities are the emerging markets, focusing on telecommunications, utilities and energy. He graduated from the University of Texas (Austin) and received an MBA from Rice University. Mr. Gualy has been with Eagle since 1996.
Mr. Russo, Mr. Allen, Mr. Gualy and Mr. Hunt all sat on the team responsible for the development of the Eagle security ranking model.
As of December 31, 2014, Eagle managed approximately $4.9 billion in client assets.
WESTWOOD MANAGEMENT CORP.
Westwood Management Corp. (Westwood), 200 Crescent Court, Suite 1200, Dallas, TX 75201, is responsible for the day-to-day activities of the Large/Mid Cap Value and Small Cap Value Funds assets. Westwood Holdings Group, Inc., a public company listed on the New York Stock Exchange (WHG), is the parent company of Westwood. Susan Byrne founded Westwood and currently serves as the firms Chief Investment Officer. Ms. Byrne also serves as Chairman of the Board of Directors of WHG.
The Large/Mid Cap Value Fund utilizes a team of investment professionals who are responsible for the day-to-day recommendations regarding the investment of the Large/Mid Cap Funds portfolio. Team members include Mr. Mark Freeman, Mr. Scott Lawson, Mr. Jay Singhania, Ms. Lisa Dong, Mr. Todd Williams, and Dr. Varun Singh.
Mr. Mark Freeman, CFA, has served Westwood as Senior Vice President, Portfolio Manager since 2006. Prior to this appointment, he served as Vice President, Portfolio Manager from 2000 through 2006.
Mr. Scott D. Lawson, CFA has served Westwood as a Vice President and Senior Research Analyst since 2003. His career with Westwood began in 2000.
Ms. Lisa Dong, CFA, has served as Vice President and Research Group Head for Westwood since 2008. Prior to this appointment, she served as Vice President and Research Analyst for Westwood from 2005 through 2008, as Assistant Vice President and Research Analyst from 2001 to 2005, and as Assistant Research Analyst from 2000 to 2001.
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Mr. Matthew R. Lockridge has served as Vice President and Research Analyst since joining Westwood in May 2010, and has served on the portfolio team for the Small Cap Value Fund since December 2010.
Dr. Varun V. Singh, PhD, CFA has served as Vice President and Research Analyst since joining Westwood in February 2012. Dr. Singh has served on the portfolio team for the Timothy Plan Large/Mid Cap Value Fund since April 2013.
The Small Cap Value Fund utilizes a team of investment professionals who are responsible for the day-to-day recommendations regarding the investment of the Small Cap Value Funds portfolio. In addition to Ms. Lisa Dong and Mr. Matthew R. Lockridge listed above, other team members include Mr. William Costello, and Mr. Frederic Rowsey.
Mr. William E. Costello, CFA, has served as Senior Vice President and Research Analyst since joining Westwood in July, 2010, and began serving the Small Cap Value Fund in December, 2010.
Mr. Frederic G. Rowsey, CFA has served as Research Analyst for Westwood since December 2013. Prior to this appointment, he served Westwood as a Research Associate from 2010 to 2013. Mr. Rowsey has served on the portfolio team for the Timothy Plan Small Cap Value Fund since December 2013.
As of December 31, 2014, Westwood managed approximately $19.0 billion in client assets.
DELAWARE MANAGEMENT COMPANY
Delaware Management Company (Delaware), 2005 Market Street, Philadelphia, PA 19103, serves as investment advisor to the REIT sleeve of the Defensive Strategies Fund. The company was founded in 1929, and became a member of the Macquarie Group in 2010. The Macquarie Group is an Australian bank holding company, Macquarie Group Limited.
The Defensive Strategies Fund REIT sleeve is managed by two team members who are responsible for the day-to-day recommendations regarding the investment of the Sleeves assets.
Babak Bob Zenouzi joined Delaware in 2006 as senior portfolio manager and head of real estate securities.
Damon J. Andres, CFA, joined Delaware Investments in 1994 as an analyst and currently serves as a portfolio manager for REIT investments and convertibles.
Scott P. Hastings, CFA, CPA is an analyst for the firms real estate securities and income solutions (RESIS) group, performing fundamental bottom-up stock research across several subsectors of the domestic REIT universe, and focusing on opportunities in Canada, Europe, the United Kingdom, and Australia for the firms global REIT effort. Prior to joining Delaware Investments in 2004, he was a senior auditor with Deloitte & Touche. Hastings earned a bachelors degree from Providence College and an MBA from Vanderbilt University. He is a member of the American Institute of Certified Public Accountants and the CFA Society of Philadelphia.
As of December 31, 2014, Delaware managed approximately $185.5 billion in client assets.
CORECOMMODITY MANAGEMENT, LLC
CoreCommodity Management, LLC, formerly Jefferies Asset Management, LLC (CORE), One Station Place, Three North, Stamford, CT 06902, serves as investment advisor to the Commodities sleeve of the Defensive Strategies Fund. The company was founded in 2003, as a wholly owned subsidiary of Jefferies Group, Inc. (NYSE: JEF). In April 2009, COREs Commodity Division began live trading of third party assets in its Jefferies Commodity Programs. In 2013, CoreCommodity Management, LLC was purchased by its key employees.
The Defensive Strategies Fund commodities sleeve is managed by:
Adam De Chiara co-founded the commodities group at Jefferies in 2003, and is responsible for all investment decisions for the commodities sleeve.
As of December 31, 2014, CORE managed approximately $17.7 million in client assets (measured at agreed upon notional amount for managed accounts, net asset value for pooled vehicles and does not include anticipated subscriptions or redemptions in a subsequent period).
BARROW, HANLEY, MEWHINNEY & STRAUSS, LLC
Barrow, Hanley, Mewhinney and Strauss (BHMS), 2200 Ross Avenue, 31st Floor, Dallas, TX 75201, serves as Investment Manager to the Fixed Income and High Yield Bond Funds. BHMS also serves as TIPS advisor to the Defensive Strategies Fund. BHMS was founded in 1979 as a registered investment advisor, and has provided investment advisory services to institutional and individual investors since that time. BHMS is a wholly owned subsidiary of Old Mutual Asset Managers, LLC, a subsidiary of Old Mutual plc, an international financial services group located in London, England.
The Fixed Income Fund and High Yield Bond Fund utilize a team of investment professionals who are responsible for the day-to-day recommendations regarding the investment of these Funds portfolios.
Mr. John S. Williams, CFA, who joined BHMS in 1983, is the senior member of the team, and has served as a portfolio manager for over 30 years at BHMS. Currently, he serves as the Chief Investment Officer for all fixed income strategies. In addition to developing portfolio strategy, he is responsible for risk management and assists on MBS sector management.
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Mr. David R. Hardin also has over 25 years as a portfolio manager. He joined BHMS in 1987, and is a generalist in investment grade credit and manages the municipal portfolios.
Mr. Scott McDonald, CFA joined BHMS in 1995. He currently serves as the lead portfolio manager for our Long Duration strategies, specializing in corporate and government bonds. He is also a generalist in investment grade fixed income credit research.
Mr. Mark C. Luchsinger, CFA joined BHMS in 1997. He currently serves as a portfolio manager, specializing in investment grade and high yield corporate bond strategies and is the lead portfolio manager for our Core and Core Plus strategies. He is also a generalist in investment grade and high yield credit research.
Ms. Deborah A. Petruzzelli joined BHMS in 2003. She serves as our structured securities portfolio manager for mortgage-backed, asset-backed, and commercial mortgage-backed securities.
Mr. Erik A. Olson joined BHMS in 2001. He serves as a co-portfolio manager on our high yield strategies and as a senior analyst in credit research.
The Defensive Strategies Fund relies on Barrow Hanley to manage the Debt Instrument Sector.
Mr. John S. Williams, CFA, who joined BHMS in 1983, is the portfolio manager for the Debt Instrument Sector of the Defensive Strategies Fund.
As of December 31, 2014, BHMS managed approximately $99.7 billion in client assets.
BRANDES INVESTMENT PARTNERS, LP
Brandes Investment Partners, LP (Brandes), 11988 El Camino Real, Ste 600, San Diego, CA 92130, is the Investment Manager for the Emerging Markets Fund. Brandes was founded in 1974, and is privately held. Brandes has provided investment management services and advice since its founding.
The Emerging Markets Fund is team managed, with each member of the team assuming specific responsibilities. Two partners of the firm sit on the team responsible for the Funds management. Investment decisions are ultimately made by the lead portfolio manager in consultation with the investment committee.
Mr. Douglas C. Edman, CFA, MBA, serves as Director, Investments, is a voting member of the Emerging Markets Investment Committee, and is a limited partner in the firms parent company. Mr. Edman performs research in the oil & gas industry. He has been with Brandes since 1995.
Mr. Christopher J. Garrett, CFA, MBA, serves as an Institutional Portfolio Manager, and is a voting member of the Emerging Markets Investment Committee. Mr. Garrett is a Product Coordinator for the firms emerging market portfolios. He has been with Brandes since 2000.
Mr. Louis Y. Lau, CFA, MBA, serves as a Director, Investments, is a voting member of the Emerging Markets Investment Committee, and is a limited partner in the firms parent company. Mr. Lau is a Product Coordinator for the firms emerging market portfolios. He has been with Brandes since 2004.
Mr. Gregory Rippel, CFA, CPA, MBA, serves as a Senior Analyst on the Consumer Products Team, and is a voting member of the Emerging Markets Investment Committee. He has been with Brandes since 2001.
Mr. Gerardo Zamorano, CFA, MBA, serves as a Director, Investments, and is a voting member of the Emerging Markets Investment Committee, and is a limited partner in the firms parent company. Mr. Zamorano leads the firms research efforts in the telecommunications sector. He has been with Brandes since 1999.
As of December 31, 2014, Brandes managed approximately $26.4 billion in client assets.
JAMES INVESTMENT RESEARCH, INC.
James Investment Research, Inc. (the Investment Manager), P.O. Box 8, Alpha, Ohio 45301, subject to the oversight of the Advisor, manages the day-to-day investment decisions of the Growth & Income Fund and continuously reviews, supervises and administers the Funds investment program. The Investment Manager was established in 1972 and provides advice to institutional as well as individual clients.
The Growth & Income Fund is managed by an investment committee of the Investment Manager, which consists of seven members. The investment committee makes the investment decisions for the Fund and is primarily responsible for the day-to-day management of the Funds portfolio of securities. The members of the investment committee are listed below. Each member of the investment committee has held his or her position with the Investment Manager for at least five years unless otherwise indicated.
Dr. Frank James, PhD, is the Founder and Chairman of the Investment Manager and team leader of the investment committee. Dr. James earned his Ph.D. from Rensselaer Polytechnic Institute in 1967. Dr. James was formerly in charge of the graduate management program and a professor of Management and Statistics at the Air Force Institute of Technology. His current responsibilities include overseeing the Advisors investment management and research.
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Mr. Barry R. James, CFA, CIC is President of the Investment Manager and a portfolio manager. Prior to September 2007, Mr. James was Executive Vice president of the Investment Manager. He received his undergraduate degree from The United States Air Force Academy and his Masters Degree from Boston University. He joined the Investment Manager in its beginning years before a tour of duty as an officer with the United States Air Force. He returned to the Investment Manager in 1986. Mr. James currently oversees the management of the Investment Manager.
Ms. Ann M. Shaw, CFP, joined the Investment Manager in 1978 and is the Chief Operating Officer and a portfolio manager. She is involved in security analysis and client service. Ms. Shaw received her Bachelors Degree from Capital University.
Mr. Thomas L. Mangan, CMFC joined the Investment Manager in 1994 and is a Senior Vice President and a portfolio manager. Prior to September 2006, Mr. Mangan was Vice President of the Investment Manager. He is a graduate of The Ohio State University and earned his MBA from The University of Notre Dame in 1974. Mr. Mangan has over 35 years of experience in trading and portfolio management including positions in New York, London and Chicago. He is a Chartered Mutual Fund Counsel (CMFC) and has been an adjunct professor in the Finance Department at Wright State University since 2000.
Mr. David W. James, CFA, joined the Investment Manager in 1981 and is a Senior Vice President of Research and a portfolio manager. Prior to September 2006, Mr. James was Vice President of the Investment Manager. His responsibilities include research projects and statistical analysis. Mr. James studied computer science and statistics at Florida State University and Wright State University.
Mr. R. Brian Culpepper, CMFC joined the Investment Manager in 1995, and is a portfolio manager. Mr. Culpepper is involved in equity research. He is a graduate of Wright State University in Dayton, Ohio where he earned a double Bachelor of Science degree in Management Information Systems and Management in 1995 and an MBA in 2005 and is a CMFC.
Mr. Brian Shepardson, CFA, CFC, CMFC joined the Investment Manager in 1999. He is a portfolio manager and is involved in equity and fixed income research. Mr. Shepardson obtained his BBA from the University of Cincinnati in 1996 and holds a CFA charter and is a CMFC.
Trent D. Dysert joined James Investment Research, Inc. in 2006 and is a portfolio manager. Mr. Dysert is involved in market and equity research. He is a graduate of the University of Dayton and earned a Bachelor of Science degree in Finance. Prior to joining James Investment Research, Inc., Mr. Dysert worked at Ameriprise Financial.
Matthew G. Watson, CPA joined James Investment Research, Inc. in 2007 and is a portfolio manager. Mr. Watson supports the accounting, compliance and research functions. In 2007 he graduated Magna Cum Laude from Wright State University in Dayton, Ohio where he earned a double Bachelor of Science degree in Accounting and Finance. Mr. Watson also completed The Master of Accountancy program at Wright State University.
Portfolio managers rotate through various positions to ensure depth of skills and familiarity with the investment process. Portfolio managers are limited by the objectives and constraints of the Fund and by the strategies adopted by the investment committee of the Sub-Advisor.
As of December 31, 2014, James managed approximately $6.0 billion in client assets.
A MORE COMPREHENSIVE DISCUSSION OF THE ADVISORS AND EACH INVESTMENT MANAGERS ACTIVITIES, COMPENSATION, AND OTHER ACCOUNTS AND ACCOUNT TYPES MANAGED BY THE INVESTMENT MANAGERS MAY BE FOUND IN THE STATEMENT OF ADDITIONAL INFORMATION (SAI) DATED JANUARY 29, 2014. THE SAI IS AVAILABLE UPON REQUEST AT NO CHARGE BY CALLING THE FUND AT (800) 846-7526.
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Section 4 | How You Can Buy and Sell Shares
Each Fund offers you a choice of three different classes in which to invest. The main differences between each Class are sales charges and ongoing fees. Each Share Class in any Fund represents interests in the same portfolio of investments in that Fund. When deciding which Class of shares to purchase, you should consider your investment goals, present and future amounts you may invest in the Fund(s), and the length of time you intend to hold your shares. You should consider, given the length of time you may hold your shares, whether the ongoing expenses of Class C shares will be greater than the front-end sales charge of Class A shares, and to what extent such differences may be offset by the lower ongoing expense ratio on Class A shares. This prospectus offers Class A and Class C shares only. Another share class is offered via a different prospectus. Not all share classes may be available for purchase in all states. Not all share classes are registered in New Hampshire and Nebraska. For more information regarding the purchase of shares, contact the Trust at 1-800-846-7526.
CLASS A SHARES
Class A shares are offered at their public offering price, which is net asset value per Class A share plus the applicable sales charge. The sales charge varies, depending on which Fund you choose and how much you invest. There are no sales charges on reinvested distributions. For all Funds except the Fixed Income Fund and High Yield Bond Fund, the following sales charges(1) apply:
Amount Invested | As a % of Offering Price |
As a % of Amount Invested |
Dealer Concession as a Percentage of Offering Price | |||
up to $50,000 |
5.50% | 5.82% | 5.00% | |||
$50,000 to 99,999 |
4.50% | 4.71% | 4.00% | |||
$100,000 to 249,999 |
3.50% | 3.63% | 3.00% | |||
$250,000 to 499,999 |
2.50% | 2.56% | 2.00% | |||
$500,000 to 999,999 |
1.50% | 1.52% | 1.00% | |||
$1,000,000 and up (2) |
0.00% | 0.00% | 0.00% |
The following sales charges(1) apply to the Fixed Income Fund and High Yield Bond Fund:
Amount Invested | As a % of Offering Price |
As a % of Amount Invested |
Dealer Concession as a Percentage of Offering Price | |||
up to $50,000 |
4.50% | 4.71% | 4.00% | |||
$50,000 to 99,999 |
3.75% | 3.90% | 3.25% | |||
$100,000 to 249,999 |
2.75% | 2.83% | 2.25% | |||
$250,000 to 499,999 |
2.00% | 2.56% | 1.50% | |||
$500,000 to 749,999 |
1.25% | 1.27% | 0.75% | |||
$750,000 to 999,999 |
1.00% | 1.01% | 0.50% | |||
$1,000,000 and up (3) |
0.00% | 0.00% | 0.00% |
(1) | There are no sales charges on exchanges of Class A shares of a Timothy Plan Fund for Class A shares of any other Timothy Plan Fund. |
(2) | The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 1% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $2 million, 0.75% on the next $1 million, 0.50% on the next $2 million, and 0.25% on all amounts in excess of $5 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
(3) | The Trusts Distributor, Timothy Partners, Ltd., will pay a finders fee of 0.50% of the proceeds invested to brokers that purchase shares of the Funds in amounts from $1 million to $4 million, and 0.25% on all amounts in excess of $4 million. In such cases, those purchases will be subject to a contingent deferred sales charge of 1% for 18 months after the date of purchase. |
The Trusts distributor will pay the appropriate dealer concession to those selected dealers who have entered into an agreement with the distributor to sell shares of the Funds. The dealers concession may be changed from time to time. The distributor may from time to time offer incentive compensation to dealers who sell shares of the Funds subject to sales charges, allowing such dealers to retain an additional portion of the sales load. A dealer who receives 90% or more of the sales load may be deemed to be an underwriter under the Securities Act of 1933, as amended.
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CLASS C SHARES
Class C shares are sold at net asset value without an initial sales charge. This means that 100% of your initial investment is placed into shares of the Fund of your choice. However, Class C shares of the Traditional Funds pay an annual shareholder servicing fee of 0.25% of average daily net assets and an additional 12b-1 distribution fee of 0.75% per annum of average daily net assets. Class C shares of the Asset Allocation Funds pay an annual 12b-1 distribution fee of 0.75% of average daily net assets. Class C shares of the Asset Allocation Funds also indirectly incur an additional shareholder servicing fee of 0.25% per annum of average daily net assets resulting from the underlying Traditional Funds in which the Asset Allocation Funds invest.
In order to recover commissions paid to dealers on investments in Class C shares, you will be charged a contingent deferred sales charge (CDSC) of 1.00% of up to the total value of your redemption if you redeem your shares within thirteen months from the date of purchase. No CDSC is charged on reinvested dividends or capital gains, amounts purchased more than thirteen months prior to the redemption, increases in the value of the shares owned, on any redemption in an amount of ten percent (10%) or less of the initial purchase, upon the event of the death of the shareholder (unless the account is held in joint name and the survivor liquidates the shares) or shares placed in qualified plans employing a third party administrator.
How To Reduce Your Sales Charge
EXEMPTIONS FROM SALES CHARGES
Accounts that purchased Class A shares on or before September 22, 1997 are not subject to sales charges in those original accounts on any future purchases of Class A shares of any Timothy Fund, including exchanges. The exemption for these accounts applies only so long as the original account is not altered, amended, transferred, conveyed or closed.
The Trust will also waive sales charges on purchases of Class A shares of any Timothy Fund by:
1. | fee-based registered investment advisors for their clients, |
2. | broker/dealers with wrap fee accounts, |
3. | registered investment advisors, and registered representatives and employees of broker/dealers that are members of the Master Selling Group for their own accounts, or family members of their household, |
4. | trustees, directors, officers, agents, employees, and employee-related accounts of the Trust or any entity which provides services to the Timothy Plan pursuant to a written agreement for such services approved by the Board of Trustees of the Timothy Plan, |
5. | financial intermediaries who have entered into an agreement with the Funds distributor to offer shares to self-directed investment brokerage accounts that may or may not charge a transaction fee to its customers. |
The Trust may also, in its sole discretion, waive sales charges on purchases of Class A shares:
1. | by churches purchasing directly from the Fund(s) for their own accounts, |
2. | by religious-based charitable organizations and foundations purchasing directly from the Fund(s) for themselves, for an organizations retirement plan that places either (i) 200 or more participants or (ii) $300,000 or more of combined participant initial assets into the Funds (the Trust, in its sole discretion, may lower these minimums), |
3. | by shareholders of Timothy Plan Funds who have liquidated shares and are repurchasing shares in any Timothy Plan Fund within 90 days of the liquidation, |
4. | under circumstances in which the waiving of such charges are deemed by the Trust to be in the best interests of the Trust and its shareholders. |
For purchasers that qualify for sales load waivers, Class A shares will be purchased at net asset value.
REDUCED SALES CHARGES
You may qualify for a reduced sales charge by aggregating the higher of the original purchase or the most recent net asset values of all the load shares you and your related accounts previously purchased and currently hold in any Fund with the dollar amount of shares to be purchased. For example, if you and your related accounts already owned Class A or Class C shares in one or more of the Funds with aggregate purchases or current value of $950,000 at the close of business on the day your order to purchase is received, and you decided to purchase an additional $60,000 of Class A shares of any load Fund, there would be no sales charge on that purchase because with the additional purchase, you will have accumulated more than $1,000,000 in all load Funds of the Trust. Related accounts include and are limited to accounts established by or for you, your parents, in-laws, spouse, children, or grandchildren, including trust, beneficiary and grantor accounts. Related accounts also include participants in their individual employer-sponsored retirement programs. It may be necessary to notify the Fund of related accounts providing the account numbers of the related accounts, or the name of the retirement plan if applicable, to be certain you receive the appropriate break point discount. To ensure the charges assessed against your account are at the appropriate breakpoint level, you should retain any records necessary to substantiate historical costs because the Fund, its transfer agent, and financial intermediaries may not maintain this information.
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REINSTATEMENTS
You may request reinstatement (the repurchase of Fund shares after having liquidated them earlier) within ninety days of the liquidation of Class A Fund shares. Reinstatements are at NAV up to the dollar amount liquidated. Reinstatement purchases are available for any Fund repurchased, regardless of which Fund was liquidated. Reinstatement purchases may be affected for the same or any related account.
LETTER OF INTENT
You can immediately qualify for a reduced or eliminated sales charge by signing a non-binding letter of intent stating your intention to buy an amount of shares in the Fund(s) during the next thirteen (13) months sufficient to qualify for the reduction or elimination. Your letter will not reduce charges assessed on purchases made more than 90 days prior to the letter, however, those purchases will aggregate with future purchases. During the term of your letter of intent, the transfer agent will hold in escrow shares representing the highest applicable sales load for the Fund(s) in which you have purchased shares, each time you make a purchase. Any shares you redeem during that period will count against your commitment. If, by the end of your commitment term, you have purchased all the shares you committed to purchase, the escrowed shares will be released to you. If you have not purchased the full amount of your commitment, your escrowed shares will be redeemed in an amount equal to the sales charge that would apply if you had purchased the actual amount in your account(s) all at once. Any escrowed shares not needed to satisfy that charge would be released to you.
OPENING AND ADDING TO YOUR ACCOUNT
You can invest directly in the Fund by mail, by wire transfer, or through broker-dealers or other financial organizations. Simply choose the one that is most convenient for you. You may also invest in the Fund through an automatic payment plan. Any questions you may have can be answered by calling (800) 662-0201.
Payments for Fund shares must be in U.S. dollars, and in order to avoid fees and delays, should be drawn on a U.S. bank. Please remember that the Trust reserves the right to reject any purchase order for Fund shares. Timothy Plan accepts personal checks made payable to the Timothy Plan. Unless pre-authorized by the Fund at the Funds sole discretion, the Timothy Plan will not accept third party checks. The minimum initial investment amount for the Fund, in any Class of shares, is set forth below:
Type of Investment Account | Minimum Initial Purchase Amount |
Minimum Subsequent Purchase Amount | ||
Regular Accounts | $1,000 | None | ||
Qualified Retirement Plans and Coverdell Education Accounts | None | None | ||
Automatic Investment Accounts | $50 | $50/month | ||
Broker Wrap-Fee Accounts | None | None |
TO OPEN AN ACCOUNT BY MAIL
To make your initial investment in a Fund, simply complete the Account Registration Form included with this Prospectus, make a check payable to the Fund of your choice, and mail the Form and check to:
The Timothy Plan
c/o Gemini Fund Services LLC
17605 Wright Street, Suite 2
Omaha, NE 68130
To make subsequent purchases, simply make a check payable to the Fund of your choice and mail the check to the above-mentioned address. Be sure to note your account number on the check.
Your purchase order, if accompanied by payment, will be processed upon receipt by Gemini Fund Services, each Funds transfer agent (the Transfer Agent). If the Transfer Agent receives your order and payment by the close of regular trading on the NYSE (currently 4:00 p.m. Eastern time), your shares will be purchased at the applicable Funds public offering price calculated at the close of regular trading on that day. Otherwise, your shares will be purchased at the public offering price determined as of the close of regular trading on the next business day. When you make your initial purchase of Fund shares, be sure to indicate which Class of shares you wish to purchase. If you do not select a share class, Class A shares will be purchased for you. For subsequent purchases, additional shares of your currently owned share class will be purchased unless you indicate otherwise on your purchase order.
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PURCHASING SHARES BY WIRE TRANSFER
To make an initial purchase of shares by wire transfer, you need to take the following steps:
1. | Fill out and mail or fax (402-963-9094) an Account Registration Form to the Transfer Agent. |
2. | Call (800) 662-0201 to inform us that a wire is being sent. |
3. | Obtain an account number from the Transfer Agent. |
4. | Ask your bank to wire funds to the account of: |
First National Bank of Omaha | ||
Cinti/Trust, ABA # |
104000016 | |
Credit: |
The Timothy Plan | |
Account #: |
110333337 | |
For further credit to: |
(Your Name and Account #) |
Include your name(s), address and taxpayer identification number or Social Security number on the wire transfer instructions. The wire should state that you are opening a new Fund account.
The Trust allows investors to fax an Account Registration Form to the Transfer Agent as a convenience for the investor. However, if you fax your Form to the Transfer Agent, you must also mail the original to the Transfer Agent for the Trusts permanent files.
To make subsequent purchases by wire, ask your bank to wire funds using the instructions listed above, and be sure to include your account number on the wire transfer instructions.
If you purchase Fund shares by wire, you must complete and file an Account Registration Form with the Transfer Agent before any of the shares purchased can be redeemed. Either fill out and mail the Form included with this prospectus, or call the Transfer Agent and they will send you an application. You should contact your bank (which will need to be a commercial bank that is a member of the Federal Reserve System) for information on sending funds by wire, including any charges that your bank may make for these services.
PURCHASES THROUGH FINANCIAL SERVICE ORGANIZATIONS
You may purchase shares of the Funds through participating brokers, dealers, and other financial professionals. Simply call your investment professional to make your purchase. If you are a client of a securities broker or other financial organization, such organizations may charge a separate fee for administrative services, ticket fees, redemption fees, and other fees in connection with investments in Fund shares and may impose account minimums and other requirements. These fees and requirements would be in addition to those imposed by the applicable Fund. If you are investing through a securities broker or other financial organization, please refer to its program materials for any additional special provisions or conditions that may be different from those described in this Prospectus (for example, some or all of the services and privileges described may not be available to you). Securities brokers and other financial organizations have the responsibility of transmitting purchase orders and funds, and of crediting their customers accounts following redemptions, in a timely manner in accordance with their customer agreements and this Prospectus.
PURCHASING SHARES BY AUTOMATIC INVESTMENT PLAN
You may purchase shares of the Funds through an Automatic Investment Plan (the AIP). The AIP provides a convenient way for you to have money deducted directly from your checking, savings, or other accounts for investment in shares of the Fund. You can take advantage of the AIP by filling out the AIP application, included with this Prospectus. You may only select this option if you have an account maintained at a domestic financial institution which is an Automated Clearing House member for automatic withdrawals under the AIP. The Trust may alter, modify, amend or terminate the AIP at any time, and will notify you at least 30 days in advance if it does so. For more information, call the Transfer Agent at (800) 662-0201.
RETIREMENT PLANS
Retirement plans may provide you with a method of investing for your retirement by allowing you to exclude from your taxable income, subject to certain limitations, the initial and subsequent investments in your plan and also allowing such investments to grow without the burden of current income tax until moneys are withdrawn from the plan. Contact your investment professional or call the Trust at 1-800 TIM-PLAN to receive information concerning your options.
85 | Page |
OTHER PURCHASE INFORMATION
Federal regulations require that you provide a certified taxpayer identification number whenever you open or reopen an account. Congress has mandated that if any shareholder fails to provide and certify to the accuracy of the shareholders social security number or other taxpayer identification number, a company will be required to withhold a percentage, of all dividends, distributions and payments, including redemption proceeds, to such shareholder as a backup withholding procedure.
For economy and convenience, share certificates will not be issued.
The Timothy Plan wants you to be kept current regarding the status of your account in our Fund(s). To assist you, the following statements and reports will be sent to you, or at your election made available to you on a secure website:
Confirmation Statements
After every transaction that affects your account balance or your account registration.
Account Statements
Quarterly.
Financial Reports
Semi-annually. To reduce Fund expenses, only one copy of the Fund report will be mailed to each taxpayer identification number even if you have more than one account in the Fund. Unless requested to the contrary, the Annual and Semi-Annual Reports will be householded, which means that only one Report will be sent to an address in which multiple investors reside or declare as their address of record.
The Fund reserves the right to reject applications for shares under circumstances or in amounts considered disadvantageous to shareholders. At the discretion of the Fund, applications may not be accepted unless they are accompanied by payment in U.S. funds. If required, payment must be made by wire transfer, check, or money order drawn on a U.S. bank, savings & loan, or credit union. The custodian will charge a $20.00 fee against your account, in addition to any loss sustained by a Fund, for any payment check returned to the custodian for insufficient funds.
If you place an order for Fund shares through a securities broker, and you place your order in proper form before 4:00 p.m. Eastern Time on any business day in accordance with their procedures, your purchase will be processed at the public offering price calculated at 4:00 p.m. on that day, if the securities broker then transmits your order to the Transfer Agent before the end of its business day (which is usually 5:00 p.m. Eastern Time). The securities broker must send to the Transfer Agent immediately available funds in the amount of the purchase price within three business days for the order.
Information about how to purchase shares and possible tax consequences resulting from sales and exchanges of shares are also available on line at www.timothyplan.com.
You may sell (redeem) your shares at any time. You may request the sale of your shares either by mail, by telephone or by wire.
BY MAIL
Redemption requests should be mailed via U.S. mail or overnight delivery to:
The Timothy Plan
c/o Gemini Fund Services LLC
17605 Wright Street, Suite 2
Omaha, NE 68130
The selling price for No-Load and Class A shares being redeemed will be the applicable Funds per share net asset value next calculated after receipt of all required documents in good order. The selling price for Class C shares being redeemed will be the Funds per share net asset value next calculated after receipt of all required documents in good order, less any applicable CDSC. Payment of redemption proceeds will be made no later than the fifth business day after the valuation date unless otherwise expressly agreed by the parties at the time of the transaction.
Good order means that the request must include:
1. | Your account number. |
2. | The number of shares to be sold (redeemed) or the dollar value of the amount to be redeemed. |
3. | The signatures of all account owners exactly as they are registered on the account. |
4. | Any required signature guarantees. |
5. | Any supporting legal documentation that is required in the case of estates, trusts, corporations or partnerships and certain other types of accounts. |
Page | 86 |
If you are not certain of the requirements for a redemption, please call customer service at (800) 662-0201. Redemptions specifying a certain date or share price cannot be accepted and will be returned. You will be mailed the proceeds on or before the fifth business day following the redemption. However, payment for redemption made against shares purchased by check will be made only after the check has been collected, which normally may take up to fifteen calendar days. Also, when the New York Stock Exchange is closed (or when trading is restricted) for any reason other than its customary weekend or holiday closing, or under any emergency circumstances, as determined by the Securities and Exchange Commission, the Funds may suspend redemptions or postpone payment dates.
Pursuant to the Trusts Agreement and Declaration of Trust, payment for shares redeemed may be made either in cash or in-kind, or partly in cash and partly in-kind. However, the Trust has elected, pursuant to Rule 18f-1 under the 1940 Act, to redeem its shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of the Trust, during any 90-day period for any one shareholder. Payments in excess of this limit will also be made wholly in cash unless the Board of Trustees believes that economic conditions exist which would make such a practice detrimental to the best interests of the Trust. Any portfolio securities paid or distributed in-kind would be valued as described in the applicable prospectus. In the event that an in-kind distribution is made, a shareholder may incur additional expenses, such as the payment of brokerage commissions, on the sale or other disposition of the securities received from the Funds.
SIGNATURE GUARANTEES
A signature guarantee of each owner is required to redeem shares in the following situations, for all size transactions:
1. | if you change the ownership on your account; |
2. | when you want the redemption proceeds sent to a different address than is registered on the account; |
3. | if the proceeds are to be made payable to someone other than the accounts owner(s); |
4. | any redemption transmitted by federal wire transfer to your bank; and |
5. | if a change of address request has been received by the Trust or the Transfer Agent within 30 days previous to the request for redemption. |
6. | (for joint accounts, all signatures must be guaranteed, if required as above). |
In addition, signature guarantees are required for all redemptions of $25,000 or more from any Fund shareholder account. At the discretion of the Trust or Gemini Fund Services, you may be required to furnish additional legal documents, or alternative assurances to insure proper authorization. A redemption will not be processed until the signature guarantee, if required, is received in good order.
Signature guarantees are designed to protect both you and the Trust from fraud. To obtain a signature guarantee, you should visit a bank, trust company, member of a national securities exchange or other broker-dealer, or other eligible guarantor institution. (Notaries public cannot provide signature guarantees.) Guarantees must be signed by an authorized person at one of these institutions, and be accompanied by the words New Technology Medallion Signature Guarantee. Please call customer service at (800) 662-0201 if you have questions.
BY TELEPHONE
You may redeem your shares in the Fund(s) by calling the Transfer Agent at (800) 662-0201 if you elected to use telephone redemption on your account application when you initially purchased shares. Redemption proceeds must be transmitted directly to you or to your pre-designated account at a domestic bank.
Shares purchased by check for which a redemption request has been received will not be redeemed until the check or payment received for investment has cleared.
BY AUTOMATED CLEARING HOUSE (ACH)
You may request that the redemption proceeds be transferred to your designated bank if it is a member bank or a correspondent of a member bank of the ACH system. There is no fee charged by the Trust. ACH redemption requests must be received by the Transfer Agent before 4:00 p.m. Eastern Time to receive that days closing net assets value. ACH redemptions will be sent on the day following your redemption request. ACH redemption funds are normally available two days after the redemption has been processed.
REDEMPTION AT THE OPTION OF THE TRUST
If the value of the shares in your account falls to less than $1,000 due to redemptions, the Trust may notify you that, unless your account is increased to $1,000 in value, it will redeem all your shares and close the account by paying you the redemption proceeds and any dividends and distributions declared and unpaid at the date of redemption. You will have sixty days after notice to bring the account up to $1,000 before any action is taken. This minimum balance requirement does not apply to Coverdell Savings Accounts, IRAs and other tax-sheltered investment accounts. This right of redemption shall not apply if the value of your account drops below $1,000 as the result of market action. The Trust reserves this right because of the expense to the Fund of maintaining very small accounts.
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Section 5 | General Information
Dividends, Distributions and Taxes
Dividends paid by each Fund are derived from its net investment income. Net investment income will be distributed at least annually. The Funds net investment income is made up of dividends received from the stocks it holds, as well as interest accrued and paid on any other obligations that might be held in the Funds portfolio.
Each Fund realizes capital gains when it sells a security for more than it paid for it. A Fund may make distributions of its net realized capital gains (after any reductions for capital loss carry forwards), generally, once a year.
Unless you elect to have your distributions paid in cash, your distributions will be reinvested in additional shares of the applicable Fund. You may change the manner in which your dividends are paid at any time by writing to The Timothy Plan, c/o Gemini Fund Services LLC, 17605 Wright Street, Suite 2, Omaha, NE 68130.
The Funds intend to qualify and maintain their qualification as a regulated investment company under the Internal Revenue Code (the Code), meaning that to the extent a Funds earnings are passed on to shareholders as required by the Code, the Fund itself is not required to pay federal income taxes on the earnings. Accordingly, the Fund will pay dividends and make such distributions as are necessary to maintain its qualification as a regulated investment company under the Code.
Before you purchase shares of any Fund, you should consider the effect of both dividends and capital gain distributions that are expected to be declared or that have been declared but not yet paid. When the Fund makes these payments, its share price will be reduced by the amount of the payment, so that you will in effect have paid full price for the shares and then received a portion of your price back as a taxable dividend distribution.
The Funds distributions, whether received in cash or reinvested in additional shares of the Fund, may be subject to federal income tax. The Trust will notify you annually as to the tax status of dividend and capital gains distributions paid by the Funds. Such dividends and capital gains may also be subject to state and local taxes.
Exchanges of Fund shares for shares of another Fund will be treated as a sale of the Funds shares, and any gain on the transaction may be subject to federal income tax. Because your state and local taxes may be different than the federal taxes described above, you should see your tax advisor regarding these taxes. The tax considerations described in this section do not apply to tax-deferred accounts or other non-taxable entities.
Shares of each Class of the Funds are offered at the public offering price for each Class. The public offering price is each classs next calculated net asset value (NAV), plus the applicable sales charge, if any. NAV per share of each Class is calculated by adding the value of each Funds investments, cash and other assets, subtracting liabilities of the Class, and then dividing the result by the number of shares of the Class outstanding. Each Fund generally determines the total value of each Class of its shares by using market prices for the securities comprising its portfolio. Securities for which quotations are not available and any other assets are valued at fair market value as determined in good faith by the Funds Investment Manager, in conformity with guidelines adopted by and subject to the review and supervision of the Board of Trustees. Each Funds per share NAV of each Class and public offering price is computed on all days on which the New York Stock Exchange (NYSE) is open for business, at the close of regular trading hours on the NYSE, currently 4:00 p.m. Eastern Time. In the event that the NYSE closes early, the NAV will be determined as of the time of closing.
The Board of Trustees has delegated to the Advisor and/or Investment Managers, under the oversight of the Board of Trustees Pricing Committee, responsibility for determining the value of Fund portfolio securities under certain circumstances. Under such circumstances and under the Pricing Committees oversight, the Advisor or Investment Manager will use its best efforts to arrive at the fair value of a security held by the Fund under all reasonably ascertainable facts and circumstances. The Advisor must prepare a report for the Board not less than quarterly containing a complete listing of any securities for which fair value pricing was employed and detailing the specific reasons for such fair value pricing. The Trust has adopted written policies and procedures to guide the Pricing Committee, Advisor and Investment Managers with respect to the circumstances under which, and the methods to be used, in fair valuing securities.
Except for the Israel Common Values and Emerging Markets Funds, which have a higher probability of Fair Value Pricing, 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. Except for the Israel Common Values and Emerging Markets Funds, the Funds typically do not invest in securities on foreign exchanges or in illiquid or restricted securities. Accordingly, except for those Funds, there may be very limited circumstances under which any Fund would hold securities that would need to be fair value priced. Examples of when it would be likely that a Fund security would require fair value pricing include but are not limited to: if the exchange on which a portfolio security traded were to close early; if trading in a particular security were to be halted on an exchange and did not resume trading prior to calculation of NAV; if a significant event that materially
Page | 88 |
affected the value of a security were to occur after the securities exchange had closed but before the Funds NAV had been calculated; and if a security that had a significant exposure to foreign operations was subject to a material event or occurrence in a foreign jurisdiction in which the company had significant operations; or in the event that the Fixed Income or High Yield Bond Funds 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 Investment Manager 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 Advisors or Investment Managers calculations concerning security value could be wrong, and as a result, the Funds 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 Investment Manager are relying on a nationally recognized company that provides daily pricing of international and domestic securities. Accordingly, there is the possibility that the pricing firms calculations or pricing techniques could be wrong, and as a result the Funds NAV on that day could be higher or lower, depending on how the security was valued, than would otherwise be the case.
For the protection of its shareholders, the Board of Trustees has adopted a policy prohibiting frequent purchases and sales of Fund shares. The Board extended the policy to be inclusive of all accounts including accounts transacted by registered investment advisors, broker/dealer representatives, transfer agents, third party administrators and insurance companies, and further includes omnibus accounts. The Funds will reject any transactions the Funds believe in good faith constitute frequent trading, including market timing and late transactions, except that the Fund does not impose restrictions on exchanges from the Fixed Income Fund to any other Fund, nor does it restrict immediate sales of shares upon the event of the death or disability of the shareholder. For the purpose cited here, the Fund has determined that purchase and sale transactions in excess of three times per calendar quarter in a single or related accounts imply frequent trading, and shall result in the appropriate actions being taken which may include the restricting of the account and notification to the proper authorities.
Upon the discovery of trades transacted or an attempt to be transacted in violation of Rule 10b (Manipulative and Deceptive Contrivances), or Rule 22c-1 (Pricing), such activity shall be immediately reported to the appropriate regulatory agencies and authorities, and the Fund shall fully comply with such agencies during any ensuing investigation.
Distribution and Service Plans
The Trust has adopted distribution and shareholder servicing plans, pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the 1940 Act), for Class A and Class C Shares of the Funds (the Distribution Plans). The Distribution Plans provide for fees to be deducted from the average net assets of the Funds in order to compensate TPL or others for expenses relating to the promotion and sale of shares of the Funds and the servicing of shareholder accounts.
Under the Class A Distribution Plan, the Class A shares of the Funds compensate TPL for distribution and service fees at an annual rate of 0.25% (all of which may be classified as a service fee), payable on a monthly basis, of the Funds average daily net assets attributable to Class A shares. Amounts paid under the Class A Distribution Plan are paid to TPL and others to compensate them for services provided and expenses incurred in the distribution of Class A shares, including the paying of commissions for sales of Class A shares.
Under the Class C Distribution Plan, the Class C shares of the Funds compensates TPL for distribution and service fees at an annual rate of 1.00% (0.25% of which is a service fee), payable on a monthly basis, of the Funds average daily net assets attributable to Class C shares of the Traditional Funds and 0.75% of the average daily net assets attributable to Class C shares of the Asset Allocation Funds. Amounts paid under the Class C Distribution Plan are paid to TPL and others to compensate them for services provided and expenses incurred in the distribution of Class C shares, including the paying of commissions for sales of Class C shares. The Class C Distribution Plan is designed to allow investors to purchase Class C shares without incurring a front-end sales load and to permit the distributor to compensate authorized dealers for selling such shares. Accordingly, the Class C Distribution Plan combined with the CDSC for Class C shares is to provide for the financing of the distribution of Class C shares.
Because 12b-1 fees are paid out of the Funds assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Principal Underwriter
Timothy Partners Ltd. acts as principal underwriter for the Trust. The purpose of acting as an underwriter is to facilitate the notice filing of the Funds shares under state securities laws and to assist in the sale of shares. TPL also acts as Investment Advisor to the Trust. TPL is not compensated for serving as underwriter of the Trust.
89 | Page |
The following is a description of the Funds policies regarding disclosure of nonpublic personal information that you provide to the Funds or that the Funds collect from other sources. In the event that you hold shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.
CATEGORIES OF INFORMATION THE FUNDS COLLECT
The Funds collect the following nonpublic personal information about you:
1. | Information the Funds receive from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, assets, income and date of birth); and |
2. | Information about your transactions with the Funds, their affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information). |
CATEGORIES OF INFORMATION THE FUNDS DISCLOSE
The Funds do not disclose any nonpublic personal information about their current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Funds are permitted by law to disclose all of the information they collect, as described above, to their service providers (such as the Funds custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.
CONFIDENTIALITY AND SECURITY
The Funds restrict access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Funds maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Customer Identification Program
The Board of 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 has been delegated to the transfer agent, subject to the oversight and supervision of the Board.
Page | 90 |
Section 6 | Financial Highlights
AGGRESSIVE GROWTH FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
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Net asset value, beginning of year |
$ | 9.00 | $ | 7.10 | $ | 5.57 | $ | 5.42 | $ | 4.51 | ||||||||||
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INCOME FROM INVESTMENT |
||||||||||||||||||||
Net investment loss |
(0.11 | ) (A) | (0.09 | ) (A) | (0.12 | ) (A) | (0.10 | ) (A) | (0.09 | ) | ||||||||||
Net realized and unrealized gain on investments |
0.84 | 1.99 | 1.65 | 0.25 | 1.00 | |||||||||||||||
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Total from investment operations |
0.73 | 1.90 | 1.53 | 0.15 | 0.91 | |||||||||||||||
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LESS DISTRIBUTIONS: |
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From net realized gains on investments |
(0.55 | ) | - | - | - | - | ||||||||||||||
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Total distributions |
(0.55 | ) | - | - | - | - | ||||||||||||||
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Net asset value, end of year |
$ | 9.18 | $ | 9.00 | $ | 7.10 | $ | 5.57 | $ | 5.42 | ||||||||||
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Total return (B)(C) |
8.22% | 26.76% | 27.47% | 2.77% | 20.18% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
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Net assets, end of year (in 000s) |
$ | 19,268 | $ | 17,727 | $ | 14,398 | $ | 12,259 | $ | 13,247 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
1.74% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
1.73% | 1.86% | 2.12% | 1.81% | 1.88% | |||||||||||||||
Net investment loss, before waiver and reimbursement |
(1.19)% | - | - | - | - | |||||||||||||||
Net investment loss, net waiver and reimbursement |
(1.18)% | (1.20)% | (1.78)% | (1.52)% | (1.61)% | |||||||||||||||
Portfolio turnover rate |
91% | 120% | 147% | 201% | 89% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
91 | Page |
Financial Highlights
AGGRESSIVE GROWTH FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
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Net asset value, beginning of year |
$ | 8.09 | $ | 6.43 | $ | 5.06 | $ | 4.98 | $ | 4.18 | ||||||||||
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INCOME FROM INVESTMENT |
||||||||||||||||||||
Net investment loss |
(0.16 | ) (A) | (0.14 | ) (A) | (0.16 | ) (A) | (0.13 | ) (A) | (0.11 | ) | ||||||||||
Net realized and unrealized gain on investments |
0.75 | 1.80 | 1.53 | 0.21 | 0.91 | |||||||||||||||
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Total from investment operations |
0.59 | 1.66 | 1.37 | 0.08 | 0.80 | |||||||||||||||
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LESS DISTRIBUTIONS: |
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From net realized gains on investments |
(0.55 | ) | - | - | - | - | ||||||||||||||
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Total distributions |
(0.55 | ) | - | - | - | - | ||||||||||||||
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Net asset value, end of year |
$ | 8.13 | $ | 8.09 | $ | 6.43 | $ | 5.06 | $ | 4.98 | ||||||||||
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Total return (B)(C) |
7.37% | 25.82% | 27.08% | 1.61% | 19.14% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 3,458 | $ | 2,892 | $ | 2,201 | $ | 1,766 | $ | 1,670 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
2.49% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
2.48% | 2.60% | 2.87% | 2.57% | 2.63% | |||||||||||||||
Net investment loss, before waiver and reimbursement |
(1.94)% | - | - | - | - | |||||||||||||||
Net investment loss, net waiver and reimbursement |
(1.93)% | (1.94)% | (2.53)% | (2.28)% | (2.35)% | |||||||||||||||
Portfolio turnover rate |
91% | 120% | 147% | 201% | 89% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
Page | 92 |
Financial Highlights
INTERNATIONAL FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 8.65 | $ | 7.31 | $ | 6.54 | $ | 7.71 | $ | 7.52 | ||||||||||
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INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income |
0.05 | (A) | 0.06 | (A) | 0.03 | (A) | 0.20 | (A) | 0.04 | |||||||||||
Net realized and unrealized gain (loss) on investments |
0.36 | 1.34 | 0.97 | (1.33 | ) | 0.26 | ||||||||||||||
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Total from investment operations |
0.41 | 1.40 | 1.00 | (1.13 | ) | 0.30 | ||||||||||||||
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LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.17 | ) | (0.06 | ) | (0.23 | ) | (0.04 | ) | (0.11 | ) | ||||||||||
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|||||||||||
Total distributions |
(0.17 | ) | (0.06 | ) | (0.23 | ) | (0.04 | ) | (0.11 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 8.89 | $ | 8.65 | $ | 7.31 | $ | 6.54 | $ | 7.71 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
4.74% | 19.25% | 15.73% | (14.72)% | 3.93% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 54,709 | $ | 38,432 | $ | 29,794 | $ | 28,423 | $ | 35,206 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
1.69% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
1.68% | 1.73% | 1.82% | 1.70% | 1.74% | |||||||||||||||
Net investment income, before waiver and reimbursement |
0.52% | - | - | - | - | |||||||||||||||
Net investment income, net waiver and reimbursement |
0.52% | 0.70% | 0.38% | 2.45% | 0.58% | |||||||||||||||
Portfolio turnover rate |
31% | 29% | 34% | 62% | 41% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
93 | Page |
Financial Highlights
INTERNATIONAL FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 8.46 | $ | 7.15 | $ | 6.39 | $ | 7.58 | $ | 7.41 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income (loss) |
(0.02 | ) (A) | - * (A) | (0.02 | ) (A) | 0.13 | (A) | (0.01 | ) | |||||||||||
Net realized and unrealized gain (loss) on investments |
0.35 | (D) | 1.31 | 0.95 | (1.29 | ) | 0.25 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.33 | 1.31 | 0.93 | (1.16 | ) | 0.24 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.12 | ) | - | (0.17 | ) | (0.03 | ) | (0.07 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.12 | ) | - | (0.17 | ) | (0.03 | ) | (0.07 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 8.67 | $ | 8.46 | $ | 7.15 | $ | 6.39 | $ | 7.58 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
3.87% | 18.32% | 14.88% | (15.40)% | 3.27% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 3,336 | $ | 2,446 | $ | 1,617 | $ | 1,427 | $ | 1,941 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
2.44% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
2.44% | 2.47% | 2.57% | 2.45% | 2.49% | |||||||||||||||
Net investment income (loss), before waiver and reimbursement |
(0.21)% | - | - | - | - | |||||||||||||||
Net investment income (loss), net waiver and reimbursement |
(0.20)% | (0.01)% | (0.32)% | 1.58% | (0.15)% | |||||||||||||||
Portfolio turnover rate |
31% | 29% | 34% | 62% | 41% |
*Amount is less than $0.005 per share.
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(D) | Realized and unrealized gains per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Statements of Operations due to share transactions for the period. |
Page | 94 |
Financial Highlights
LARGE/MID CAP GROWTH FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 8.36 | $ | 7.30 | $ | 6.05 | $ | 5.99 | $ | 5.37 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME FROM INVESTMENT |
||||||||||||||||||||
Net investment loss |
(0.01 | ) (A) | (0.02 | ) (A) | (0.04 | ) (A) | (0.04 | ) (A) | (0.04 | ) | ||||||||||
Net realized and unrealized gain on investments |
1.15 | 1.51 | 1.61 | 0.10 | 0.66 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
1.14 | 1.49 | 1.57 | 0.06 | 0.62 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net realized gains on investments |
(0.84 | ) | (0.43 | ) | (0.32 | ) | - | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.84 | ) | (0.43 | ) | (0.32 | ) | - | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 8.66 | $ | 8.36 | $ | 7.30 | $ | 6.05 | $ | 5.99 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
14.70% | 21.62% | 26.61% | 1.00% | 11.55% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 56,073 | $ | 48,411 | $ | 41,446 | $ | 34,252 | $ | 38,865 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
1.57% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
1.57% | 1.59% | 1.68% | 1.60% | 1.66% | |||||||||||||||
Net investment loss, before waiver and reimbursement |
(0.18)% | - | - | - | - | |||||||||||||||
Net investment loss, net waiver and reimbursement |
(0.17)% | (0.24)% | (0.63)% | (0.64)% | (0.74)% | |||||||||||||||
Portfolio turnover rate |
61% | 91% | 127% | 150% | 78% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
95 | Page |
Financial Highlights
LARGE/MID CAP GROWTH FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 7.49 | $ | 6.63 | $ | 5.57 | $ | 5.55 | $ | 5.01 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment loss |
(0.07 | ) (A) | (0.07 | ) (A) | (0.09 | ) (A) | (0.09 | ) (A) | (0.08 | ) | ||||||||||
Net realized and unrealized gain on investments |
1.02 | 1.36 | 1.47 | 0.11 | 0.62 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.95 | 1.29 | 1.38 | 0.02 | 0.54 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net realized gains on investments |
(0.84 | ) | (0.43 | ) | (0.32 | ) | - | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.84 | ) | (0.43 | ) | (0.32 | ) | - | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 7.60 | $ | 7.49 | $ | 6.63 | $ | 5.57 | $ | 5.55 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
13.84% | 20.74% | 25.47% | 0.36% | 10.78% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 5,929 | $ | 5,041 | $ | 4,483 | $ | 2,726 | $ | 2,523 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
2.32% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
2.32% | 2.34% | 2.44% | 2.35% | 2.41% | |||||||||||||||
Net investment loss, before waiver and reimbursement |
(0.93)% | - | - | - | - | |||||||||||||||
Net investment loss, net waiver and reimbursement |
(0.93)% | (0.99)% | (1.38)% | (1.38)% | (1.49)% | |||||||||||||||
Portfolio turnover rate |
61% | 91% | 127% | 150% | 78% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
Page | 96 |
Financial Highlights
SMALL CAP VALUE FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 20.30 | $ | 14.74 | $ | 10.82 | $ | 11.28 | $ | 10.25 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income (loss) |
(0.04 | ) (A) | 0.02 | (A) | 0.03 | (A) | (0.05 | ) (A) | (0.06 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments |
1.57 | 5.57 | 3.89 | (0.41 | ) (B) | 1.09 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
1.53 | 5.59 | 3.92 | (0.46 | ) | 1.03 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
- | (0.03 | ) | - | - | - | ||||||||||||||
From net realized gains on investments |
(2.04 | ) | - | - | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(2.04 | ) | (0.03 | ) | - | - | - | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 19.79 | $ | 20.30 | $ | 14.74 | $ | 10.82 | $ | 11.28 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (C)(D) |
7.61% | 37.97% | 36.23% | (4.08)% | 10.05% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 71,997 | $ | 64,972 | $ | 47,976 | $ | 39,145 | $ | 40,482 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
1.53% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
1.52% | 1.55% | 1.59% | 1.53% | 1.59% | |||||||||||||||
Net investment income (loss), before waiver and reimbursement |
(0.25)% | - | - | - | - | |||||||||||||||
Net investment income (loss), net waiver and reimbursement |
(0.25)% | 0.11% | 0.19% | (0.36)% | (0.51)% | |||||||||||||||
Portfolio turnover rate |
71% | 73% | 65% | 102% | 64% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not agree to the aggregate gains and losses in the Statement of Operations due to the fluctuations in share transactions. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
97 | Page |
Financial Highlights
SMALL CAP VALUE FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 17.30 | $ | 12.63 | $ | 9.35 | $ | 9.82 | $ | 8.99 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment loss |
(0.17 | ) (A) | (0.10 | ) (A) | (0.06 | ) (A) | (0.13 | ) (A) | (0.12 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments |
1.36 | 4.77 | 3.34 | (0.34 | ) (B) | 0.95 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
1.19 | 4.67 | 3.28 | (0.47 | ) | 0.83 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net realized gains on investments |
(2.04 | ) | - | - | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(2.04 | ) | - | - | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 16.45 | $ | 17.30 | $ | 12.63 | $ | 9.35 | $ | 9.82 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (C)(D) |
6.96% | 36.98% | 35.08% | (4.79)% | 9.23% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 8,135 | $ | 7,539 | $ | 4,937 | $ | 3,809 | $ | 4,186 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
2.28% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
2.27% | 2.30% | 2.34% | 2.28% | 2.34% | |||||||||||||||
Net investment loss, before waiver and reimbursement |
(1.01)% | - | - | - | - | |||||||||||||||
Net investment loss, net waiver and reimbursement |
(1.01)% | (0.65)% | (0.55)% | (1.12)% | (1.26)% | |||||||||||||||
Portfolio turnover rate |
71% | 73% | 65% | 102% | 64% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not agree to the aggregate gains and losses in the Statement of Operations due to the fluctuations in share transactions. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
Page | 98 |
Financial Highlights
LARGE/MID CAP VALUE FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 18.14 | $ | 14.80 | $ | 11.83 | $ | 11.84 | $ | 10.72 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income (loss) |
(0.01 | ) (A) | 0.09 | (A) | 0.06 | (A) | 0.04 | (A) | 0.05 | |||||||||||
Net realized and unrealized gain (loss) on investments |
2.83 | 3.30 | 2.94 | (0.01 | ) (B) | 1.12 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
2.82 | 3.39 | 3.00 | 0.03 | 1.17 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.09 | ) | (0.05 | ) | (0.03 | ) | (0.04 | ) | (0.05 | ) | ||||||||||
From net realized gains on investments |
(1.26 | ) | - | - | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(1.35 | ) | (0.05 | ) | (0.03 | ) | (0.04 | ) | (0.05 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 19.61 | $ | 18.14 | $ | 14.80 | $ | 11.83 | $ | 11.84 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (C)(D) |
16.13% | 23.00% | 25.39% | 0.20% | 10.94% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 138,821 | $ | 114,657 | $ | 100,632 | $ | 78,255 | $ | 80,700 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
1.50% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
1.49% | 1.49% | 1.57% | 1.51% | 1.58% | |||||||||||||||
Net investment loss, before waiver and reimbursement |
(0.03)% | - | - | - | - | |||||||||||||||
Net investment income (loss), net waiver and reimbursement |
(0.03)% | 0.55% | 0.42% | 0.33% | 0.39% | |||||||||||||||
Portfolio turnover rate |
37% | 64% | 7% | 19% | 38% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not agree to the aggregate gains and losses in the Statement of Operations due to the fluctuations in share transactions. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
99 | Page |
Financial Highlights
LARGE/MID CAP VALUE FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 16.12 | $ | 13.20 | $ | 10.61 | $ | 10.68 | $ | 9.73 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment loss |
(0.13 | ) (A) | (0.03 | ) (A) | (0.04 | ) (A) | (0.05 | ) (A) | (0.05 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments |
2.49 | 2.95 | 2.63 | - | *(B) | 1.03 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
2.36 | 2.92 | 2.59 | (0.05 | ) | 0.98 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.03 | ) | - | - | (0.02 | ) | (0.03 | ) | ||||||||||||
From net realized gains on investments |
(1.26 | ) | - | - | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(1.29 | ) | - | - | (0.02 | ) | (0.03 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 17.19 | $ | 16.12 | $ | 13.20 | $ | 10.61 | $ | 10.68 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (C)(D) |
15.21% | 22.12% | 24.41% | (0.52)% | 10.12% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 16,778 | $ | 13,649 | $ | 10,669 | $ | 8,903 | $ | 9,484 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
2.25% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
2.24% | 2.23% | 2.32% | 2.26% | 2.33% | |||||||||||||||
Net investment loss, before waiver and reimbursement |
(0.78)% | - | - | - | - | |||||||||||||||
Net investment loss, net waiver and reimbursement |
(0.77)% | (0.19)% | (0.32)% | (0.43)% | (0.35)% | |||||||||||||||
Portfolio turnover rate |
37% | 64% | 7% | 19% | 38% |
*Amount is less than $0.005 per share.
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(B) | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not agree to the aggregate gains and losses in the Statement of Operations due to the fluctuations in share transactions. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
Page | 100 |
Financial Highlights
FIXED INCOME FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 10.43 | $ | 10.87 | $ | 10.72 | $ | 10.56 | $ | 10.14 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income (A) |
0.18 | 0.18 | 0.22 | 0.28 | 0.29 | |||||||||||||||
Net realized and unrealized gain (loss) on investments |
0.09 | (0.49 | ) | 0.18 | 0.18 | 0.42 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.27 | (0.31 | ) | 0.40 | 0.46 | 0.71 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.25 | ) | (0.13 | ) | (0.22 | ) | (0.30 | ) | (0.29 | ) | ||||||||||
From net realized gains on investments |
(0.03 | ) | - | - | - | - | ||||||||||||||
From return of capital |
- | - | (0.03 | ) | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.28 | ) | (0.13 | ) | (0.25 | ) | (0.30 | ) | (0.29 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 10.43 | $ | 10.43 | $ | 10.87 | $ | 10.72 | $ | 10.56 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
2.64% | (2.82)% | 3.73% | 4.42% | 7.07% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 68,274 | $ | 67,558 | $ | 74,685 | $ | 59,405 | $ | 58,831 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
1.30% | 1.27% | 1.31% | 1.27% | 1.36% | |||||||||||||||
Expenses, net waiver and reimbursement |
1.14% | 1.12% | 1.16% | 1.15% | 1.21% | |||||||||||||||
Net investment income, before waiver and reimbursement |
1.60% | 1.54% | 1.86% | 2.58% | 2.63% | |||||||||||||||
Net investment income, net waiver and reimbursement |
1.75% | 1.69% | 2.01% | 2.71% | 2.78% | |||||||||||||||
Portfolio turnover rate |
18% | 25% | 19% | 22% | 26% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
101 | Page |
Financial Highlights
FIXED INCOME FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 10.07 | $ | 10.51 | $ | 10.38 | $ | 10.22 | $ | 9.82 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income |
0.10 | (A) | 0.10 | (A) | 0.13 | (A) | 0.20 | (A) | 0.21 | |||||||||||
Net realized and unrealized gain (loss) on investments |
0.11 | (0.48 | ) | 0.17 | 0.17 | 0.41 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.21 | (0.38 | ) | 0.30 | 0.37 | 0.62 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.18 | ) | (0.06 | ) | (0.14 | ) | (0.21 | ) | (0.22 | ) | ||||||||||
From net realized gains on investments |
(0.03 | ) | - | - | - | - | ||||||||||||||
From return of capital |
- | - | (0.03 | ) | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.21 | ) | (0.06 | ) | (0.17 | ) | (0.21 | ) | (0.22 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 10.07 | $ | 10.07 | $ | 10.51 | $ | 10.38 | $ | 10.22 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
2.02% | (3.57)% | 2.88% | 3.68% | 6.36% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 7,120 | $ | 7,958 | $ | 8,997 | $ | 8,265 | $ | 8,438 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
2.05% | 2.03% | 2.06% | 2.23% | 2.12% | |||||||||||||||
Expenses, net waiver and reimbursement |
1.90% | 1.88% | 1.91% | 1.90% | 1.97% | |||||||||||||||
Net investment income, before waiver and reimbursement |
0.85% | 0.79% | 1.12% | 1.61% | 1.88% | |||||||||||||||
Net investment income, net waiver and reimbursement |
1.00% | 0.94% | 1.27% | 1.95% | 2.03% | |||||||||||||||
Portfolio turnover rate |
18% | 25% | 19% | 22% | 26% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
Page | 102 |
Financial Highlights
HIGH YIELD BOND FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, , has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 9.40 | $ | 9.46 | $ | 8.71 | $ | 9.10 | $ | 8.46 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income |
0.44 | (A) | 0.49 | (A) | 0.54 | (A) | 0.54 | (A) | 0.60 | |||||||||||
Net realized and unrealized gain (loss) on investments |
0.09 | (0.08 | ) | 0.76 | (0.39 | ) | 0.63 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.53 | 0.41 | 1.30 | 0.15 | 1.23 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.44 | ) | (0.47 | ) | (0.53 | ) | (0.54 | ) | (0.59 | ) | ||||||||||
From return of capital |
- | - | (0.02 | ) | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.44 | ) | (0.47 | ) | (0.55 | ) | (0.54 | ) | (0.59 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 9.49 | $ | 9.40 | $ | 9.46 | $ | 8.71 | $ | 9.10 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
5.71% | 4.42% | 15.17% | 1.48% | 14.98% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 41,038 | $ | 35,578 | $ | 33,392 | $ | 23,110 | $ | 21,617 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
1.28% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
1.28% | 1.33% | 1.39% | 1.30% | 1.43% | |||||||||||||||
Net investment income, before waiver and reimbursement |
4.53% | - | - | - | - | |||||||||||||||
Net investment income, net waiver and reimbursement |
4.53% | 5.13% | 5.84% | 5.81% | 6.72% | |||||||||||||||
Portfolio turnover rate |
53% | 56% | 24% | 60% | 40% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
103 | Page |
Financial Highlights
HIGH YIELD BOND FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 9.48 | $ | 9.55 | $ | 8.79 | $ | 9.17 | $ | 8.51 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income |
0.37 | (A) | 0.43 | (A) | 0.47 | (A) | 0.47 | (A) | 0.53 | (A) | ||||||||||
Net realized and unrealized gain (loss) on investments |
0.09 | (0.09 | ) | 0.77 | (0.39 | ) | 0.66 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.46 | 0.34 | 1.24 | 0.08 | 1.19 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.37 | ) | (0.41 | ) | (0.46 | ) | (0.46 | ) | (0.53 | ) | ||||||||||
From return of capital |
- | - | (0.02 | ) | - | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.37 | ) | (0.41 | ) | (0.48 | ) | (0.46 | ) | (0.53 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 9.57 | $ | 9.48 | $ | 9.55 | $ | 8.79 | $ | 9.17 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
4.89% | 3.54% | 14.33% | 0.72% | 14.36% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 2,771 | $ | 2,236 | $ | 1,683 | $ | 1,194 | $ | 1,039 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
2.03% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
2.03% | 2.07% | 2.14% | 2.05% | 2.18% | |||||||||||||||
Net investment income, before waiver and reimbursement |
3.78% | - | - | - | - | |||||||||||||||
Net investment income, net waiver and reimbursement |
3.79% | 4.39% | 5.08% | 5.06% | 5.99% | |||||||||||||||
Portfolio turnover rate |
53% | 56% | 24% | 60% | 40% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
Page | 104 |
Financial Highlights
ISRAEL COMMON VALUES FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Period ended September 30, 2012 (A) |
||||||||||
Net asset value, beginning of period |
$ | 12.69 | $ | 10.17 | $ | 10.00 | ||||||
|
|
|
|
|
|
|||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||
Net investment loss (B) |
(0.08 | ) | (0.06 | ) | (0.15 | ) | ||||||
Net realized and unrealized gain on investments |
0.37 | 2.58 | 0.32 | |||||||||
|
|
|
|
|
|
|||||||
Total from investment operations |
0.29 | 2.52 | 0.17 | |||||||||
|
|
|
|
|
|
|||||||
LESS DISTRIBUTIONS: |
||||||||||||
From net investment income |
(0.67 | ) | - | - | ||||||||
|
|
|
|
|
|
|||||||
Total distributions |
(0.67 | ) | - | - | ||||||||
|
|
|
|
|
|
|||||||
Net asset value, end of period |
$ | 12.31 | $ | 12.69 | $ | 10.17 | ||||||
|
|
|
|
|
|
|||||||
Total return (C)(D) |
2.21% | 24.78% | 1.80% (E) | |||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||
Net assets, end of period (in 000s) |
$ | 13,792 | $ | 10,295 | $ | 7,983 | ||||||
Ratio of expenses to average net assets |
1.98% | 2.24% | 2.82% | (F) | ||||||||
Ratio of net investment loss to average net assets |
(0.64)% | (0.57)% | (1.48)% (F) | |||||||||
Portfolio turnover rate |
11% | 30% | 37% (E) |
(A) | For the period October 12, 2011 (Commencement of Operations) to September 30, 2012. |
(B) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
(E) | For periods of less than one full year, total return and turnover are not annualized. |
(F) | Annualized. |
105 | Page |
Financial Highlights
ISRAEL COMMON VALUES FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent that rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2012, 2013 and 2014 has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Period ended September 30, 2012 (A) |
||||||||||
Net asset value, beginning of period |
$ | 12.50 | $ | 10.09 | $ | 10.00 | ||||||
|
|
|
|
|
|
|||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||
Net investment loss (B) |
(0.18 | ) | (0.13 | ) | (0.22 | ) | ||||||
Net realized and unrealized gain on investments |
0.37 | 2.54 | 0.31 | |||||||||
|
|
|
|
|
|
|||||||
Total from investment operations |
0.19 | 2.41 | 0.09 | |||||||||
|
|
|
|
|
|
|||||||
LESS DISTRIBUTIONS: |
||||||||||||
From net investment income |
(0.64 | ) | - | - | ||||||||
|
|
|
|
|
|
|||||||
Total distributions |
(0.64 | ) | - | - | ||||||||
|
|
|
|
|
|
|||||||
Net asset value, end of period |
$ | 12.05 | $ | 12.50 | $ | 10.09 | ||||||
|
|
|
|
|
|
|||||||
Total return (C)(D) |
1.40% | 23.89% | 1.00% (E) | |||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||
Net assets, end of period (in 000s) |
$ | 2,342 | $ | 943 | $ | 217 | ||||||
Ratio of expenses to average net assets |
2.74% | 2.99% | 3.53% (F) | |||||||||
Ratio of net investment loss to average net assets |
(1.38)% | (1.32)% | (2.21)% (F) | |||||||||
Portfolio turnover rate |
11% | 30% | 37% (E) |
(A) | For the period October 12, 2011 (Commencement of Operations) to September 30, 2012. |
(B) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
(E) | For periods of less than one full year, total return and turnover are not annualized. |
(F) | Annualized. |
Page | 106 |
Financial Highlights
DEFENSIVE STRATEGIES FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, have been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Period ended September 30, 2010 (A) |
||||||||||||||||
Net asset value, beginning of period |
$ | 11.12 | $ | 12.12 | $ | 11.28 | $ | 10.70 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income |
0.09 | (B) | 0.06 | (B) | 0.02 | (B) | 0.09 | (B) | 0.02 | |||||||||||
Net realized and unrealized gain (loss) on investments |
0.25 | (1.04 | ) | 1.62 | 0.54 | 1.08 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.34 | (0.98 | ) | 1.64 | 0.63 | 1.10 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.05 | ) | - | (0.10 | ) | - | - | |||||||||||||
From net realized gains on investments |
(0.03 | ) | (0.02 | ) | (0.66 | ) | (0.05 | ) | (0.21 | ) | ||||||||||
From return of capital |
- | - | (0.04 | ) | - | (0.19 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.08 | ) | (0.02 | ) | (0.80 | ) | (0.05 | ) | (0.40 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of period |
$ | 11.38 | $ | 11.12 | $ | 12.12 | $ | 11.28 | $ | 10.70 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (C)(D) |
3.06% | (8.09)% | 14.87% | 5.88% | 10.97% (E) | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of period (in 000s) |
$ | 54,054 | $ | 51,859 | $ | 52,529 | $ | 43,670 | $ | 23,360 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
1.28% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
1.28% | 1.26% | 1.33% | 1.29% | 1.51% (F) | |||||||||||||||
Net investment income, before waiver and reimbursement |
0.78% | - | - | - | - | |||||||||||||||
Net investment income, net waiver and reimbursement |
0.78% | 0.52% | 0.20% | 0.75% | 0.13% (F) | |||||||||||||||
Portfolio turnover rate |
24% | 56% | 247% | 64% | 41% (E) |
(A) | For the period November 4, 2009 (Commencement of Operations) to September 30, 2010. |
(B) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(E) | For periods of less than one full year, total return and turnover are not annualized. |
(F) | Annualized. |
107 | Page |
Financial Highlights
DEFENSIVE STRATEGIES FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, have been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Period ended September 30, 2010 (A) |
||||||||||||||||
Net asset value, beginning of period |
$ | 10.82 | $ | 11.88 | $ | 11.09 | $ | 10.58 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income (loss) |
- | *(B) | (0.03 | ) (B) | (0.07 | ) (B) | 0.02 | (B) | (0.06 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments |
0.25 | (1.01 | ) | 1.58 | 0.54 | 1.08 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.25 | (1.04 | ) | 1.51 | 0.56 | 1.02 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
- | - | (0.02 | ) | - | - | ||||||||||||||
From net realized gains on investments |
(0.03 | ) | (0.02 | ) | (0.66 | ) | (0.05 | ) | (0.21 | ) | ||||||||||
From return of capital |
- | - | (0.04 | ) | - | (0.23 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.03 | ) | (0.02 | ) | (0.72 | ) | (0.05 | ) | (0.44 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of period |
$ | 11.04 | $ | 10.82 | $ | 11.88 | $ | 11.09 | $ | 10.58 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (C)(D) |
2.27% | (8.75)% | 13.91% | 5.28% | 10.18% (E) | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of period (in 000s) |
$ | 14,461 | $ | 16,718 | $ | 18,801 | $ | 13,100 | $ | 5,527 | ||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses, before waiver and reimbursement |
2.04% | - | - | - | - | |||||||||||||||
Expenses, net waiver and reimbursement |
2.03% | 2.02% | 2.09% | 2.03% | 2.28% (F) | |||||||||||||||
Net investment loss, before waiver and reimbursement |
(0.02)% | - | - | - | - | |||||||||||||||
Net investment income (loss), net waiver and reimbursement |
(0.01)% | (0.25)% | (0.60)% | 0.15% | (0.64)% (F) | |||||||||||||||
Portfolio turnover rate |
24% | 56% | 247% | 64% | 41% (E) |
*Amount | is less than $0.005 per share. |
(A) | For the period November 4, 2009 (Commencement of Operations) to September 30, 2010. |
(B) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(E) | For periods of less than one full year, total return and turnover are not annualized. |
(F) | Annualized. |
Page | 108 |
Financial Highlights
EMERGING MARKETS FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the table for the periods ended September 30, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Period ended September 30, 2013 (A) |
|||||||
Net asset value, beginning of period |
$ | 10.53 | $ | 10.00 | ||||
|
|
|
|
|||||
INCOME (LOSS) FROM INVESTMENT |
||||||||
Net investment loss (B) |
(0.02 | ) | (0.08 | ) | ||||
Net realized and unrealized gain (loss) on investments |
0.08 | 0.61 | ||||||
|
|
|
|
|||||
Total from investment operations |
0.06 | 0.53 | ||||||
|
|
|
|
|||||
LESS DISTRIBUTIONS: |
||||||||
From net investment income |
- | - | ||||||
From net realized gains on investments |
(0.36 | ) | - | |||||
|
|
|
|
|||||
Total distributions |
(0.36 | ) | - | |||||
|
|
|
|
|||||
Net asset value, end of period |
$ | 10.23 | $ | 10.53 | ||||
|
|
|
|
|||||
Total return (C)(D) |
0.61% | 5.30% (E) | ||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||
Net assets, end of period (in 000s) |
$ | 10,803 | $ | 8,675 | ||||
Ratios to average net assets |
||||||||
Expenses, before waiver and reimbursement |
2.55% | - | ||||||
Expenses, net waiver and reimbursement |
2.55% | 3.03% (F) | ||||||
Net investment loss, before waiver and reimbursement |
(0.19)% | - | ||||||
Net investment loss, net waiver and reimbursement |
(0.19)% | (0.95)% (F) | ||||||
Portfolio turnover rate |
39% | 19% (E) |
(A) | For the period December 3, 2012 (Commencement of Operations) to September 30, 2013. |
(B) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(E) | For periods of less than one full year, total return and turnover are not annualized. |
(F) | Annualized. |
109 | Page |
Financial Highlights
EMERGING MARKETS FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the table for the period ended September 30, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Period ended September 30, 2013 (A) |
|||||||
Net asset value, beginning of period |
$ | 10.48 | $ | 10.00 | ||||
|
|
|
|
|||||
INCOME (LOSS) FROM INVESTMENT |
||||||||
Net investment loss (B) |
(0.09 | ) | (0.12 | ) | ||||
Net realized and unrealized gain (loss) on investments |
0.06 | 0.60 | ||||||
|
|
|
|
|||||
Total from investment operations |
(0.03 | ) | 0.48 | |||||
|
|
|
|
|||||
LESS DISTRIBUTIONS: |
||||||||
From net investment income |
- | - | ||||||
From net realized gains on investments |
(0.36 | ) | - | |||||
|
|
|
|
|||||
Total distributions |
(0.36 | ) | - | |||||
|
|
|
|
|||||
Net asset value, end of period |
$ | 10.09 | $ | 10.48 | ||||
|
|
|
|
|||||
Total return (C)(D) |
(0.27)% | 4.80% (E) | ||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||
Net assets, end of period (in 000s) |
$ | 883 | $ | 291 | ||||
Ratios to average net assets |
||||||||
Expenses, before waiver and reimbursement |
3.25% | - | ||||||
Expenses, net waiver and reimbursement |
3.25% | 3.76% (F) | ||||||
Net investment loss, before waiver and reimbursement |
(0.83)% | - | ||||||
Net investment loss, net waiver and reimbursement |
(0.83)% | (1.39)% (F) | ||||||
Portfolio turnover rate |
39% | 19% (E) |
(A) | For the period December 3, 2012 (Commencement of Operations) to September 30, 2013. |
(B) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(C) | Total return calculation does not reflect redemption fee. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(E) | For periods of less than one full year, total return and turnover are not annualized. |
(F) | Annualized. |
Page | 110 |
Financial Highlights
GROWTH & INCOME FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the period ended September 30, 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Period ended September 30, 2014 (A) |
||||
Net asset value, beginning of period |
$ | 10.00 | ||
|
|
|||
INCOME (LOSS) FROM INVESTMENT |
||||
Net investment loss (B) |
(0.02 | ) | ||
Net realized and unrealized gain on investments |
0.97 | |||
|
|
|||
Total from investment operations |
0.95 | |||
|
|
|||
Net asset value, end of period |
$ | 10.95 | ||
|
|
|||
Total return (C)(D) |
9.50% (E) | |||
RATIOS/SUPPLEMENTAL DATA: |
||||
Net assets, end of period (in 000s) |
$ | 24,272 | ||
Ratios to average net assets |
||||
Expenses, before waiver and reimbursement |
1.68% (F) | |||
Expenses, net waiver and reimbursement |
1.67% (F) | |||
Net investment loss, before waiver and reimbursement |
(0.21)% (F) | |||
Net investment loss, net waiver and reimbursement |
(0.21)% (F) | |||
Portfolio turnover rate |
21% (E) |
(A) | For the period October 1, 2013 (Commencement of Operations) to September 30, 2014. |
(B) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
(E) | For periods of less than one full year, total return and turnover are not annualized. |
(F) | Annualized. |
111 | Page |
Financial Highlights
GROWTH & INCOME FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the period ended September 30, 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Period ended September 30, 2014 (A) |
||||
Net asset value, beginning of period |
$ | 10.00 | ||
|
|
|||
INCOME (LOSS) FROM INVESTMENT |
||||
Net investment loss (B) |
(0.08 | ) | ||
Net realized and unrealized gain on investments |
0.95 | |||
|
|
|||
Total from investment operations |
0.87 | |||
|
|
|||
Net asset value, end of period |
$ | 10.87 | ||
|
|
|||
Total return (C)(D) |
8.70% (E) | |||
RATIOS/SUPPLEMENTAL DATA: |
||||
Net assets, end of period (in 000s) |
$ | 2,081 | ||
Ratios to average net assets |
||||
Expenses, before waiver and reimbursement |
2.20% (F) | |||
Expenses, net waiver and reimbursement |
2.19% (F) | |||
Net investment loss, before waiver and reimbursement |
(0.72)% (F) | |||
Net investment loss, net waiver and reimbursement |
(0.70)% (F) | |||
Portfolio turnover rate |
21% (E) |
(A) | For the period October 1, 2013 (Commencement of Operations) to September 30, 2014. |
(B) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the period. |
(C) | Total return calculation does not reflect sales load. |
(D) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
(E) | For periods of less than one full year, total return and turnover are not annualized. |
(F) | Annualized. |
Page | 112 |
Financial Highlights
STRATEGIC GROWTH FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 8.34 | $ | 7.44 | $ | 6.27 | $ | 6.49 | $ | 5.97 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income (loss) |
0.12 | (A) | 0.02 | (A) | 0.04 | (A) | (0.02 | ) (A) | 0.02 | |||||||||||
Net realized and unrealized gain (loss) on investments |
0.45 | 0.93 | 1.13 | (0.19 | ) | 0.50 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.57 | 0.95 | 1.17 | (0.21 | ) | 0.52 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.01 | ) | (0.05 | ) | - | - | - | |||||||||||||
From return of capital |
- | - | - | (0.01 | ) | - | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(0.01 | ) | (0.05 | ) | - | (0.01 | ) | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 8.90 | $ | 8.34 | $ | 7.44 | $ | 6.27 | $ | 6.49 | ||||||||||
|
|
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|
|
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|
|
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Total return (B)(C) |
6.82% | 12.78% | 18.66% | (3.29)% | 8.71% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 36,951 | $ | 34,466 | $ | 32,250 | $ | 31,269 | $ | 34,098 | ||||||||||
Ratio of expenses to average net assets (D) |
1.07% | 1.08% | 1.15% | 1.05% | 1.11% | |||||||||||||||
Ratio of net investment income (loss), to average net assets (D)(E) |
1.34% | 0.24% | (0.60)% | (0.23)% | 0.30% | |||||||||||||||
Portfolio turnover rate |
14% | 19% | 33% | 22% | 25% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(D) | These ratios exclude the impact of expenses of the underlying security holdings as represented in the Schedule of Investments. |
(E) | Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
113 | Page |
Financial Highlights
STRATEGIC GROWTH FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 7.69 | $ | 6.87 | $ | 5.82 | $ | 6.09 | $ | 5.64 | ||||||||||
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|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income (loss) |
0.03 | (A) | (0.04 | ) (A) | (0.01 | ) (A) | (0.07 | ) (A) | (0.03 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments |
0.43 | 0.86 | 1.06 | (0.20 | ) | 0.48 | ||||||||||||||
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|
|
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Total from investment operations |
0.46 | 0.82 | 1.05 | (0.27 | ) | 0.45 | ||||||||||||||
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|
|
|
|||||||||||
Net asset value, end of year |
$ | 8.15 | $ | 7.69 | $ | 6.87 | $ | 5.82 | $ | 6.09 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
5.98% | 11.94% | 18.04% | (4.43)% | 7.98% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 8,842 | $ | 7,668 | $ | 6,836 | $ | 6,446 | $ | 6,950 | ||||||||||
Ratio of expenses to average net assets (D) |
1.82% | 1.83% | 1.90% | 1.82% | 1.86% | |||||||||||||||
Ratio of net investment income (loss), to average net assets (D)(E) |
0.50% | (0.52)% | (0.22)% | (1.00)% | (0.46)% | |||||||||||||||
Portfolio turnover rate |
14% | 19% | 33% | 22% | 25% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect redemption fees. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(D) | These ratios exclude the impact of expenses of the underlying security holdings as represented in the Schedule of Investments. |
(E) | Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
Page | 114 |
Financial Highlights
CONSERVATIVE GROWTH FUND (CLASS A)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 10.51 | $ | 9.95 | $ | 8.80 | $ | 8.83 | $ | 8.25 | ||||||||||
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|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income |
0.14 | (A) | 0.03 | (A) | 0.07 | (A) | 0.04 | (A) | 0.09 | |||||||||||
Net realized and unrealized gain on investments |
0.41 | 0.61 | 1.09 | 0.01 | 0.60 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
0.55 | 0.64 | 1.16 | 0.05 | 0.69 | |||||||||||||||
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|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
(0.05 | ) | (0.08 | ) | (0.01 | ) | (0.08 | ) | (0.11 | ) | ||||||||||
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|
|
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|
|
|||||||||||
Total distributions |
(0.05 | ) | (0.08 | ) | (0.01 | ) | (0.08 | ) | (0.11 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 11.01 | $ | 10.51 | $ | 9.95 | $ | 8.80 | $ | 8.83 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
5.23% | 6.44% | 13.22% | 0.50% | 8.47% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 47,543 | $ | 44,238 | $ | 40,042 | $ | 35,331 | $ | 35,031 | ||||||||||
Ratio of expenses to average net assets (D) |
1.05% | 1.05% | 1.11% | 1.05% | 1.13% | |||||||||||||||
Ratio of net investment income to average net assets (D)(E) |
1.26% | 0.25% | 0.71% | 0.48% | 1.07% | |||||||||||||||
Portfolio turnover rate |
19% | 22% | 32% | 23% | 31% |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(D) | These ratios exclude the impact of expenses of the underlying security holdings as represented in the Schedule of Investments. |
(E) | Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
115 | Page |
Financial Highlights
CONSERVATIVE GROWTH FUND (CLASS C)
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 Funds financial performance for the past five periods (or, if shorter, the periods since the Funds inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information contained in the tables for the periods ended September 30, 2010, 2011, 2012, 2013 and 2014, has been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, whose report, along with the Funds financial statements, are included in the annual report, which is available upon request.
For the Year ended September 30, 2014 |
For the Year ended September 30, 2013 |
For the Year ended September 30, 2012 |
For the Year ended September 30, 2011 |
For the Year ended September 30, 2010 |
||||||||||||||||
Net asset value, beginning of year |
$ | 9.79 | $ | 9.27 | $ | 8.24 | $ | 8.32 | $ | 7.83 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
INCOME (LOSS) FROM INVESTMENT |
||||||||||||||||||||
Net investment income (loss) |
0.03 | (A) | (0.05 | ) (A) | (0.01 | ) (A) | (0.02 | ) (A) | 0.02 | |||||||||||
Net realized and unrealized gain (loss) on investments |
0.40 | 0.57 | 1.04 | - | * | 0.57 | ||||||||||||||
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|
|
|
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|
|
|
|||||||||||
Total from investment operations |
0.43 | 0.52 | 1.03 | (0.02 | ) | 0.59 | ||||||||||||||
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|
|
|
|
|
|
|||||||||||
LESS DISTRIBUTIONS: |
||||||||||||||||||||
From net investment income |
- | - | - | (0.06 | ) | (0.10 | ) | |||||||||||||
|
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|
|
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|
|
|||||||||||
Total distributions |
- | - | - | (0.06 | ) | (0.10 | ) | |||||||||||||
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|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 10.22 | $ | 9.79 | $ | 9.27 | $ | 8.24 | $ | 8.32 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return (B)(C) |
4.39% | 5.61% | 12.50% | (0.25)% | 7.57% | |||||||||||||||
RATIOS/SUPPLEMENTAL DATA: |
||||||||||||||||||||
Net assets, end of year (in 000s) |
$ | 12,359 | $ | 10,419 | $ | 9,191 | $ | 7,963 | $ | 7,365 | ||||||||||
Ratio of expenses to average net assets (D) |
1.79% | 1.80% | 1.86% | 1.80% | 1.88% | |||||||||||||||
Ratio of net investment income (loss), to average net assets (D)(E) |
0.41% | (0.50)% | (0.06)% | (0.27)% | 0.29% | |||||||||||||||
Portfolio turnover rate |
19% | 22% | 32% | 23% | 31% |
* | Amount is less than $0.005 per share. |
(A) | Per share amounts calculated using average shares method, which more appropriately presents the per share data for the year. |
(B) | Total return calculation does not reflect sales load. . |
(C) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. |
Total return would have been higher or lower if certain expenses had not been reimbursed, waived or recouped. |
(D) | These ratios exclude the impact of expenses of the underlying security holdings as represented in the Schedule of Investments. |
(E) | Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
Page | 116 |
Section 7 | For More Information
Additional information about the Funds is available in the Funds Class A and C Statement of Additional Information (SAI). The SAI contains more detailed information on all aspects of the Funds. A current SAI, dated January 28, 2015, has been filed with the SEC and is incorporated by reference into (is legally a part of) this prospectus. Additional information about each Funds investments is also available in the Funds semi-annual report, dated June 30, 2014, and audited annual report, dated September 30, 2014. In the Funds annual report, you will find a discussion of the market conditions and investment strategies that significantly affected each Funds performance during its last fiscal year.
The Funds 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 Funds, please contact the Funds.
Timothy Plan* | Securities and Exchange Commission | |||
By Phone: |
(800) 846-7526 | (202) 942-8090 | ||
By Mail: |
The Timothy Plan 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 business days of receipt of your request, by first class mail or other means designed to ensure equally prompt delivery.
Information about the Funds (including the SAI) can also be reviewed and copied at the SECs 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 Funds are also available on the SECs EDGAR database at the SECs 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 SECs Public Reference Section, Washington, DC 20549-0102.
The Timothy Plan
Investment Company Act No. 811-08228
117 | Page |
1055 Maitland Center Commons
Maitland, FL 32751
Online |
www.timothyplan.com | |||
|
invest@timothyplan.com | |||
Phone |
(800) 846-7526 | |||
SAI
STATEMENT OF ADDITIONAL INFORMATION
January 28, 2015
TIMOTHY PLAN FAMILY OF FUNDS
CLASS A & C: THIS SAI OFFERS CLASS A & CLASS C SHARES ONLY OF THE ABOVE FUNDS.
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 supplementing The Timothy Plan Prospectus, which contains information concerning the Timothy Plan Aggressive Growth Fund (Aggressive Growth Fund), the Timothy Plan Large/Mid Cap Growth Fund (Large/Mid Cap Growth Fund), the Timothy Plan Small Cap Value Fund (Small Cap Value Fund), the Timothy Plan Large/Mid Cap Value Fund (Large/Mid Cap Value Fund), the Timothy Plan International Fund (International Fund), the Timothy Plan Fixed Income Fund (Fixed Income Fund), the Timothy Plan High Yield Bond Fund (High Yield Bond Fund), the Timothy Plan Defensive Strategies Fund (Defensive Strategies Fund), the Timothy Plan Israel Common Values Fund (Israel Common Values Fund), the Timothy Plan Emerging Markets Fund (Emerging Markets Fund) and the Timothy Plan Growth & Income Fund (Growth & Income Fund) (collectively, the Traditional Funds), dated January 28, 2015; as well as the Timothy Plan Strategic Growth Fund (Strategic Growth Fund) and the Timothy Plan Conservative Growth Fund (Conservative Growth Fund) (collectively, the Asset Allocation Funds), dated January 28, 2015.
The Timothy Plan (the Trust) is registered with the Securities and Exchange Commission as an open-end management investment company.
Each of the Traditional Funds currently offers three classes of shares: Class A, Class C and Class I. Each of the Asset Allocation Funds currently offers two classes of shares: Class A and Class C. This SAI offers only Class A and Class C shares of the above funds. Class I shares are disclosed in a separate SAI.
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. |
Section 1 | | | |||||||
3 | ||||||||
Section 2 | | | |||||||
4 | ||||||||
6 | ||||||||
7 | ||||||||
8 | ||||||||
Section 3 | | | |||||||
9 | ||||||||
10 | ||||||||
26 | ||||||||
32 | ||||||||
32 | ||||||||
32 | ||||||||
Section 4 | | | |||||||
33 | ||||||||
Section 5 | | | |||||||
36 | ||||||||
36 | ||||||||
36 | ||||||||
38 | ||||||||
38 | ||||||||
Section 6 | | | |||||||
39 | ||||||||
39 | ||||||||
Section 7 | | | |||||||
40 | ||||||||
41 | ||||||||
41 | ||||||||
41 | ||||||||
Section 8 | | | |||||||
43 | ||||||||
Section 9 | | | |||||||
44 |
Section 10 | | | |||||||
48 | ||||||||
Appendix A | | | |||||||
49 | ||||||||
49 | ||||||||
51 | ||||||||
52 | ||||||||
52 |
2
Section 1 | General Information
The Timothy Plan (the Trust) was organized as a Delaware business trust on December 16, 1993, and is a mutual fund company of the type known as, and registered with the Securities and Exchange Commission as, an open-end management investment company. It is authorized to create an unlimited number of series of shares (each a Fund) and an unlimited number of share classes within each series. A mutual fund permits an investor to pool his or her assets with those of others in order to achieve economies of scale, take advantage of professional money managers and enjoy other advantages traditionally reserved for large investors. This SAI pertains to the following thirteen series of the Trust:
Aggressive Growth Fund,
Large/Mid Cap Growth Fund,
Small Cap Value Fund,
Large/Mid Cap Value Fund,
International Fund,
Fixed Income Fund,
High Yield Bond Fund,
Defensive Strategies Fund,
Israel Common Values Fund,
Emerging Markets Fund, and
Growth & Income Fund
(collectively, the Traditional Funds), and
Strategic Growth Fund, and
Conservative Growth Fund
(collectively, the Asset Allocation Funds).
The shares of each series are fully paid and non-assessable. They are entitled to such dividends and distributions as may be paid with respect to the shares and shall be entitled to such sums on liquidation as shall be determined. Other than these rights, they have no preference as to conversion, exchange, dividends, retirement or other features and have no preemption rights. There are three classes of shares currently offered by the Trust: Class A shares are offered with a front-end sales charge and ongoing service/distribution fees; Class C shares are offered with a contingent deferred sales charge that ends after the first year and ongoing service and distribution fees and Class I shares, which are offered without any sales charges or ongoing service/distribution fees. This SAI relates only to Class A and Class C shares of the Funds. Class I shares are offered in a different prospectus and SAI.
Shareholder meetings will not be held unless required by federal or state law.
3
Section 2 | Investments and Risks
Investment Strategies and Risks
Each Fund seeks to achieve its objectives by making investments selected in accordance with that Funds investment restrictions and policies. Each Fund will vary its investment strategy as described in the applicable prospectus to achieve its objectives. Each Funds particular investment strategies and risks are described in the prospectus, and those discussions are incorporated herein by reference. This SAI contains further information concerning the techniques and operations of the Funds, the securities in which they may invest, and the policies they will follow.
TRADITIONAL FUNDS
The Traditional Funds offer three classes of shares (Class A, Class C and Class I) that invest in the same portfolio of securities. Class A and Class C shares differ with respect to sales structure and 12b-1 Plan expenses. This SAI offers only Class A and Class C shares of the funds.
Each Fund has its own investment objectives and policies, and each invests in its own portfolio of securities. Each Fund seeks to achieve its stated objectives by investing in securities issued by companies which, in the opinion of the Funds Investment Managers, conduct business in accordance with the stated philosophy and principles of the Funds. The following information supplements the information provided in the prospectus.
COMMON STOCK
Common stock is defined as shares of a corporation that entitle the holder to a pro rata share of the profits of the corporation, if any, without a preference over any other shareholder or class of shareholders, including holders of the corporations 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 issuers Board of Directors. Dividends on the typical preferred stock are cumulative, causing dividends to accrue even if not declared by the Board of Directors. There is, however, no assurance that dividends will be declared by the Board of Directors of issuers of the preferred stocks in which the Funds invest.
CONVERTIBLE SECURITIES
Traditional convertible securities include corporate bonds, notes and preferred stocks that may be converted into or exchanged for common stock, and other securities that also provide an opportunity for equity participation. These securities are generally convertible either at a stated price or a stated rate (that is, for a specific number of shares of common stock or other security). As with other fixed income securities, the price of a convertible security to some extent varies inversely with interest rates. While providing a fixed income stream (generally higher in yield than the income derivable from a common stock but lower than that afforded by a non-convertible debt security), a convertible security also affords the investor an opportunity, through its conversion feature, to participate in the capital appreciation of the common stock into which it is convertible. As the market price of the underlying common stock declines, convertible securities tend to trade increasingly on a yield basis and so may not experience market value declines to the same extent as the underlying common stock. When the market price of the underlying common stock increases, the price of a convertible security tends to rise as a reflection of the value of the underlying common stock. To obtain such a higher yield, the Funds may be required to pay for a convertible security an amount in excess of the value of the underlying common stock. Common stock acquired by a Fund upon conversion of a convertible security will generally be held for so long as the Funds Advisor or the Funds Investment Manager anticipates such stock will provide the Fund with opportunities that are consistent with the Funds investment objectives and policies.
INVESTMENT GRADE BONDS
Investment Grade Bonds are public and privately issued debt securities that generally carry a rating of BBB and above by Standard & Poors, or similar ratings by other recognized rating agencies. Because they are considered investment grade, they generally carry lower coupon rates than non-investment grade (high yield or junk) 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 issuers capital stock at a set price for a specified period of time.
4
AMERICAN DEPOSITARY RECEIPTS
American Depositary 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 Funds may purchase ADRs whether they are sponsored or unsponsored. Sponsored ADRs are issued jointly by the issuer of the underlying security and a depository. Unsponsored ADRs are issued without participation of the issuer of the deposited security. Holders of unsponsored ADRs generally bear all the costs of such facilities. The depository of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the issuer of the deposited security or to pass through voting rights to the holders of such receipts in respect to the deposited securities. Therefore, there may not be a correlation between information concerning the issuer of the security and the market value of an unsponsored ADR. ADRs may result in a withholding tax by the foreign country of source, which will have the effect of reducing the income distributable to shareholders. Because each Fund, except the International Fund, Israel Common Values Fund, and Emerging Markets Fund some of which are heavily invested in ADRs, will not invest more than 50% of the value of its total assets in stock or securities issued by foreign corporations, it will be unable to pass through the foreign taxes that the Fund pays (or is deemed to pay) to shareholders under the Internal Revenue Code of 1986, as amended (the Code).
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 a mutual fund, 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.
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 their safety, TIPS offer a low return.
HIGH YIELD BONDS
High Yield Bonds are public and privately issued debt securities that are rated below investment grade (such as BB or lower by Standard & Poors Ratings Services and/or Ba or lower by Moodys Investors Services, Inc.) or deemed to be below investment grade by the Funds Investment Manager. 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.
TEMPORARY DEFENSIVE MEASURES
The Investment Manager(s) of each Traditional and Asset Allocation Fund may take temporary defensive actions when it is determined to be in the best interests of the applicable Funds 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 than it would have been if it had invested strictly according to its objectives.
ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS
OF THE DEFENSIVE STRATEGIES FUND
The Defensive Strategies Fund is not a diversified fund as defined by the Investment Company Act of 1940. The Defensive Strategies Fund is a non-diversified fund. As a non-diversified fund, the Defensive Strategies Fund may invest up to 25% of its total assets under management in any single issue, and up to 50% of its assets under management in just two issues. However, the remaining fifty percent of the Funds assets must adhere to the diversification requirements of the other Timothy Plan Traditional Funds, meaning that the remaining 50% of the Funds assets will be diversified, meaning not over 5% will be invested in any one companys shares or issuers units of ownership.
5
ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS
OF THE ASSET ALLOCATION FUNDS
Depending on an Asset Allocation Funds percentage ownership in an underlying Traditional Fund both before and after a redemption, an Asset Allocation Funds redemption of shares of such Traditional Fund may cause the Asset Allocation Fund to be treated as not receiving capital gain income on the amount by which the distribution exceeds the Asset Allocation Funds tax basis in the shares of the underlying Traditional Fund, but instead to be treated as receiving a dividend taxable as ordinary income on the full amounts of the distribution. This could cause shareholders of the Asset Allocation Fund to recognize higher amounts of ordinary income than if the shareholders had held the shares of the underlying Traditional Funds directly.
In addition to those set forth in the current applicable prospectus, the Traditional Funds have adopted the investment restrictions set forth below, which are fundamental policies of each Fund, and which cannot be changed without the approval of a majority of the outstanding voting securities of each Fund. As provided in the Investment Company Act of 1940, as amended (the 1940 Act), a vote of a majority of the outstanding voting securities means the affirmative vote of the lesser of (i) more than 50% of the outstanding shares, or (ii) 67% or more of the shares present at a meeting if more than 50% of the outstanding shares are represented at the meeting in person or by proxy.
These investment restrictions provide that each Traditional Fund will not:
1. | issue senior securities; |
2. | engage in the underwriting of securities except insofar as the Fund may be deemed an underwriter under the Securities Act of 1933 (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 Funds 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. | invest in securities of any open-end investment company, except that each Fund may purchase securities of money market mutual funds, but such investments in money market mutual funds may be made only in accordance with the limitations imposed by the 1940 Act and the rules thereunder, as amended. But in no event may a Fund purchase more than 10% of the voting securities, or more than 10% of any class of securities, of another investment company. For purposes of this restriction, all outstanding fixed income securities of an issuer are considered a single class. (The Asset Allocation Funds are not subject to this restriction.); |
9. | except for the Defensive Strategies Fund, as to 75% of a Funds total assets, invest more than 5% of its assets in the securities of any one issuer. (This limitation does not apply to cash and cash items, or obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities.); |
10. | purchase or sell commodities or commodity futures contracts, other than those related to stock indexes; |
11. | make loans of money or securities, except (i) by purchase of fixed income securities in which a Fund may invest consistent with its investment objective and policies; or (ii) by investment in repurchase agreements; |
12. | invest in securities of any company if any officer or trustee of the Funds or the Funds 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; |
13. | borrow money, except that each Fund may borrow from banks (i) for temporary or emergency purposes in an amount not exceeding the Funds 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 Funds 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 Funds total assets, the Fund will not purchase any securities. Interest paid on borrowing will reduce net income; |
14. | pledge, mortgage, hypothecate, or otherwise encumber its assets, except in an amount up to 33% of the value of its net assets, but only to secure borrowing for temporary or emergency purposes, such as to effect redemptions; or |
15. | purchase the securities of any issuer, if, as a result, more than 10% of the value of a Funds 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 (illiquid securities), or in repurchase agreements maturing in more than 7 days, if all such securities would constitute more than 10% of a Funds net assets. |
Except for the restriction on investing in illiquid securities, which applies under all circumstances, so long as percentage restrictions are observed by a Fund at the time it purchases any security, changes in values of particular Fund assets or the assets of the Fund as a whole will not cause a violation of any of the foregoing restrictions.
6
The additional investment restrictions set forth below have been adopted by the Asset Allocation Funds as fundamental policies.
Each of the Asset Allocation Funds may not:
1. | purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (except this shall not prevent the Fund from purchasing or selling options or futures contracts or from investing in securities or other instruments backed by physical commodities); |
2. | purchase or sell real estate including limited partnership interests, although it may purchase and sell securities of companies that deal in real estate and may purchase and sell securities that are secured by interests in real estate; |
3. | make loans to any person, except loans of portfolio securities to the extent that no more than 33 1/3% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or repurchase agreements; |
4. | purchase more than 10% of any class of the outstanding voting securities of any issuer (except other investment companies as defined in the 1940 Act), and purchase securities of an issuer (except obligations of the U.S. government and its agencies and instrumentalities and securities of other investment companies as defined in the 1940 Act) if, as a result, with respect to 75% of its total assets, more than 5% of the Funds 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 Securities and Exchange Commission; |
6. | borrow, except from banks for temporary or emergency (not leveraging) purposes including the meeting of redemption requests that might otherwise require the untimely disposition of securities in an aggregate amount not exceeding 30% of the value of the Funds 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 Funds 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; and |
9. | concentrate its investments in any one sector or industry. |
It is not the policy of any of the Funds to purchase or sell securities for short-term trading purposes, but the Funds may sell securities to recognize gains or avoid potential for loss. A Fund will, however, sell any portfolio security (without regard to the time it has been held) when the Investment Manager believes that market conditions, credit-worthiness factors or general economic conditions warrant such a step. The Asset Allocation Funds invest the majority of their assets in certain of the Traditional Funds, and adjust the ratio of such investments regularly. As a result, portfolio turnover for the Asset Allocation Funds could be substantial and could cause the Traditional Funds to also experience higher portfolio turnover. The portfolio turnover rates for each Fund for the fiscal periods ended September 30, 2012, 2013 and 2014 are set forth in the table below:
2012 | 2013 | 2014 | ||||||||
Aggressive Growth Fund |
147% | 120% | 91% | |||||||
International Fund |
34% | 29% | 31% | |||||||
Large/Mid Cap Growth Fund |
127% | 91% | 61% | |||||||
Small Cap Value Fund |
65% | 73% | 71% | |||||||
Large/Mid Cap Value Fund |
7% | 64% | 37% | |||||||
Fixed Income Fund |
19% | 25% | 18% | |||||||
High Yield Bond Fund |
24% | 56% | 53% | |||||||
Defensive Strategies Fund |
247% | 56% | 24% | |||||||
Israel Common Values Fund |
37% | 30% | 11% | |||||||
Emerging Markets Fund (1) |
N/A | 19% | 39% | |||||||
Growth & Income Fund (2) |
N/A | N/A | 21% | |||||||
Strategic Growth Fund |
33% | 19% | 14% | |||||||
Conservative Growth Fund |
32% | 22% | 19% |
(1) | The Emerging Markets Fund commenced investment operations on December 3, 2012. |
(2) | The Growth & Income Fund commenced investment operations on October 1, 2013. |
High portfolio turnover rates (annual rates in excess of 100%) involve additional transaction costs (such as brokerage commissions) which are borne by the Funds, and may result in adverse tax effects to Fund shareholders. (See Dividends, Distributions and Taxes in the applicable prospectus.)
7
Disclosure of Portfolio Holdings
The following discussion sets forth the Trusts policies and procedures with respect to the disclosure of Fund portfolio holdings.
FUND SERVICE PROVIDERS
Fund service providers include the following: Fund Transfer and Accounting Agent, Fund Administrator, Independent Registered Public Accounting firm, Compliance Consulting Firm, Principal Underwriter 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 Funds portfolio on a real time basis. For example, the Trusts fund accounting agent is responsible for maintaining the accounting records of each Fund, which includes maintaining a current record of the portfolio holdings of each Fund. The Trust also undergoes an annual audit which requires the Trusts independent registered public accounting firm to review each Funds portfolio. In addition to the fund accounting agent, the Trusts custodian also maintains an up-to-date list of each Funds portfolio holdings. The Trusts compliance consulting firm must also have access to each Funds portfolio information in order to verify compliance with the Federal Securities laws. Each of these parties is contractually and/or ethically prohibited from sharing any Funds portfolio holdings information with any third party unless specifically authorized by the Trusts President, Secretary or Treasurer.
The Board of Trustees monitors the services provided by each of the 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 which provide one or more of the services 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 persons 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 the entire portfolio holdings of each Fund to various rating and ranking organizations, such as Morningstar, Inc., Lipper, Inc., Standard & Poors 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 strict confidence and that such information shall not be used for the personal benefit of the recipient.
The Trusts management has determined that these groups provide investors with a valuable service and, therefore, are willing to provide them with portfolio information. You should be aware that the Trust does not pay them or receive any compensation from them for providing this information.
DISCLOSURE TO OTHER PARTIES
The Trust has adopted a policy of posting the portfolio holdings of each Fund on its web site not later than seven (7) calendar days after the end of each fiscal quarter. The Trust is also required under law to file a listing of the portfolio holdings of each Fund with the Securities and Exchange Commission on a quarterly basis. The Trust prohibits the disclosure of portfolio information to any third party other than those described above until and unless such information has been filed with the Commission or posted to the Trusts web site, as discussed above. The Trust further prohibits any person affiliated with the Trust from entering into any ongoing arrangement with any person other than described above to receive portfolio holdings information relating to a Fund.
REVIEW
The Board of Trustees reviews these policies not less than annually and receives periodic attestations from affiliated persons that these policies are being adhered to. The Trusts President, Secretary and Treasurer are authorized, subject to subsequent Board review, to make exceptions to the above-described policies.
8
Section 3 | Management of the Fund
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 (collectively referred to as the Advisory Agreement), subject to the supervision and direction of the Trusts Board of Trustees. The latest continuance of the Advisory Agreement with Timothy Partners, Ltd. was approved by the Trustees, including a majority of the Trustees who are not interested persons of the Trust or any person who is a party to the Agreement, at an in-person meeting held on February 28, 2014. More complete factors considered by the Trusts Board of Trustees in renewing the investment advisory agreement are available in the Trusts audited annual report dated September 30, 2014.
The Advisory Agreement may be renewed after its initial two year term only so long as such renewal and continuance are specifically approved at least annually by the Board of Trustees or by vote of a majority of the outstanding voting securities of the applicable Fund, and only if the terms of the renewal thereof have been approved by the vote of a majority of the Trustees of the Trust who are not parties thereto or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. The Advisory Agreement will terminate automatically in the event of its assignment.
INVESTMENT ADVISORY FEES
The following table sets forth the investment advisory fees paid to TPL for the fiscal periods ended September 30, 2012, 2013 and 2014:
2012 | 2013 | 2014 | ||||||||
Aggressive Growth Fund |
||||||||||
Fees Payable to TPL |
$135,500 | $147,753 | $190,679 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | $(2,076) | |||||||
International Fund |
||||||||||
Fees Payable to TPL |
$309,274 | $348,337 | $503,579 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | $(2,607) | |||||||
Large/Mid Cap Growth Fund |
||||||||||
Fees Payable to TPL |
$351,787 | $417,861 | $500,518 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | $(2,794) | |||||||
Small Cap Value Fund |
||||||||||
Fees Payable to TPL |
$431,057 | $511,069 | $682,180 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | $(3,669) | |||||||
Large/Mid Cap Value Fund |
||||||||||
Fees Payable to TPL |
$876,340 | $1,051,390 | $1,250,651 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | $(7,079) | |||||||
Fixed Income Fund |
||||||||||
Fees Payable to TPL |
$450,567 | $491,347 | $439,299 | |||||||
Amount Waived by TPL |
$(112,642) | $(122,837) | $(113,094) | |||||||
High Yield Bond Fund |
||||||||||
Fees Payable to TPL |
$178,462 | $231,475 | $253,560 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | $(1,964) | |||||||
Defensive Strategies Fund |
||||||||||
Fees Payable to TPL |
$442,293 | $445,578 | $402,264 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | $(3,066) | |||||||
Israel Common Values Fund |
||||||||||
Fees Payable to TPL |
$73,221 | $88,903 | $143,113 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | - | |||||||
Emerging Markets Fund (1) |
||||||||||
Fees Payable to TPL |
N/A | $73,220 | $127,053 | |||||||
Amount (Reimbursed) Recouped by TPL |
N/A | - | $(541) | |||||||
Growth & Income Fund (2) |
||||||||||
Fees Payable to TPL |
N/A | N/A | $161,937 | |||||||
Amount (Reimbursed) Recouped by TPL |
N/A | N/A | $(1,200) | |||||||
Strategic Growth Fund |
||||||||||
Fees Payable to TPL |
$258,482 | $257,086 | $295,758 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | - | |||||||
Conservative Growth Fund |
||||||||||
Fees Payable to TPL |
$310,375 | $334,749 | $380,680 | |||||||
Amount (Reimbursed) Recouped by TPL |
- | - | - |
(2) The Fund commenced investment operations on October 1, 2013. | ||
(1) The Fund commenced investment operations on December 3, 2012. |
9
TPL, with the prior approval of the Board of Trustees and shareholders of the applicable Fund, may engage the services of other investment advisory firms (Investment Managers) to provide portfolio management services to a Fund. The following section provides information relating to the Funds current Investment Managers.
CHARTWELL INVESTMENT PARTNERS
Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Chartwell Investment Partners, (Chartwell) dated January 1, 2008, Chartwell serves as Investment Manager to the Large/Mid Cap Growth Fund and the Aggressive Growth Fund. As Investment Manager, Chartwell provides advice and assistance to TPL in the selection of appropriate investments for the Large/Mid Cap Growth Fund and the Aggressive Growth Fund respectively, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services, Chartwell receives from TPL an annual fee at a rate equal to 0.42% of the first $10 million in assets of each Fund; 0.40% of the next $5 million in assets; 0.35% of the next $10 million in assets; and 0.25% of assets over $25 million. As of December 31, 2014, Chartwell managed approximately $7.7 billion in client assets.
On February 28, 2014 the Board met to consider, among other matters, retaining Chartwell as Investment Manager for the Large/Mid Cap Growth Fund and Aggressive Growth Fund and after full consideration, renewed the Agreement for an additional year. A discussion of the Boards considerations in renewing the agreement is provided in the Trusts audited annual report, dated September 30, 2014.
Large/Mid Cap Growth Fund &
Aggressive Growth Fund
The following members of Chartwell make up the portfolio management team for the Large/Mid Cap Growth Fund and Aggressive Growth Fund:
Mr. Edward N. Antoian, CPA, CFA, is a dual employee of Chartwell Investment Partners and Zeke Capital Advisors, LLC. He has been with Chartwell since its inception in 1997 and is currently a Managing Partner and Senior Portfolio Manager. He serves as Chief Investment Officer for Zeke Capital Advisors, LLC. Mr. Antoian earned a Bachelor of Science degree from the State University of New York, and an MBA from the University of Pennsylvanias Wharton School. He is a Certified Public Accountant and holds the Chartered Financial Analyst designation. In addition, he is the General Partner of Zeke, LP, a privately offered long-short equity hedge fund. From 1984 to 1997, Mr. Antoian was a Senior Portfolio Manager at Delaware Investment Advisers, managing institutional assets in small and mid-cap growth styles as well as the Trend and DelCap Funds. Prior to joining Delaware, Mr. Antoian was employed by E.F. Hutton in the institutional equity division. Mr. Antoian is a member of the CFA Institute and the CFA Society of Philadelphia. Mr. Antoian participates in the investment decision process during meetings in which the team determines the allocation of securities held in the portfolio. He has authority to direct trading activity on the Fund, and he is also responsible for representing the Fund to investors.
Mr. John A. Heffern is a Managing Partner and Senior Portfolio Manager. Mr. Heffern earned a Bachelors degree in Economics and an MBA in Finance from the University of North Carolina at Chapel Hill. From 1997 to 2005, he was a Senior Vice President and Senior Portfolio Manager with the Growth Investing Group at Delaware Investment Advisors. From 1994 to 1997, he was a Senior Vice President, Equity Research at NatWest Markets, responsible for specialty financial services equity research. Prior to NatWest, he was a Principal and Senior Regional Bank Analyst at Alex Brown & Sons. Mr. Heffern participates in the investment decision process during meetings in which the team determines the allocation of securities held in the portfolio. He has authority to direct trading activity on the Fund, and he is also responsible for representing the Fund to investors.
Mr. Peter M. Schofield, CFA, is a Senior Portfolio Manager. Mr. Schofield earned a bachelors degree in History from the University of Pennsylvania. He holds the Chartered Financial Analyst designation. From 2005 to 2010, he was Co-Chief Investment Officer at Knott Capital. From 1996 to 2005 he was a Portfolio Manager at Sovereign Asset Management. Prior to Sovereign Asset Management, he was a portfolio manager at Geewax, Terker & Company. Mr. Schofield is a member of the CFA Institute and the CFA Society of Philadelphia. Mr. Schofield serves as a Senior Portfolio Manager on Chartwells Large Cap Value Investing Team.
Each team member has a number of other Chartwell professionals supporting their efforts. The members of the Chartwell investment teams average in excess of 20 years experience in the investment field.
10
Other Information Relating to Chartwell
The following table presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts. The information is current as of December 31, 2014.
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) | ||||||
Chartwell Investment Partners: |
||||||||||||
Peter M. Schofield |
2 ($402) | 1 ($.599) | 6 ($256) | N/A | N/A | N/A | ||||||
John A. Heffern |
2 ($2,582) | 1 ($1) | 13 ($577) | 2 ($2,582) | N/A | 1 ($35) | ||||||
Edward N. Antoian1 |
2 ($2,582) | 4 ($73) | 13 ($577) | 2 ($2,582) | 1 ($46) | 1 ($35) |
The compensation paid to a Chartwell portfolio manager and analyst consists of base salary, annual bonus, and an annual profit-sharing contribution to the firms retirement plan.
A portfolio managers and analysts base salary is determined by Chartwells Compensation Committee and is reviewed at least annually. A portfolio managers and analysts experience, historical performance, and role in firm or product team management are the primary considerations in determining the base salary. Industry benchmarking is utilized by the Compensation Committee on an annual basis.
Annual bonuses are determined by the Compensation Committee based on a number of factors. The primary factor is a performance-based compensation schedule that is applied to all accounts managed by a portfolio manager within a particular investment product, and is not specific to any one account. The bonus is calibrated based on the gross composite performance of such accounts versus the appropriate benchmark and peer group rankings. Portfolio construction, sector and security weighting, and performance are reviewed by the Compliance Committee and Compensation Committee to prevent a manager from taking undue risks. Additional factors used to determine the annual bonus include the portfolio managers contribution as an analyst, product team management, and contribution to the strategic planning and development of the investment group as well as the firm.
Ownership distributions are paid to a portfolio manager and analyst based on the portfolio managers and analysts level and type of ownership interest(s). There are currently three types of equity: (1) straight limited partnership interests, (2) Class B share interests, and (3) phantom stock interests. In all cases, the annual ownership distributions are paid to employees based on their respective percentage equity interest(s) multiplied by total net cash distributions paid during the year.
Chartwell also provides a profit sharing and 401(k) plan for all employees. The annual profit sharing contribution from Chartwell is discretionary and is determined by the Compensation Committee.
As of December 31, 2014, 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 | ||
Peter M. Schofield |
None | None | ||
John A. Heffern |
None | None | ||
Edward N. Antoian1 |
None | None |
(1) | Edward N. Antoian also serves as Managing Member, Chief Investment Officer of Zeke Capital Advisors, LLC, an affiliate of Chartwell Investment Partners as further described in Chartwells Form ADV II. |
EAGLE GLOBAL ADVISERS, LLC
Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Eagle Global Advisers, LLC (Eagle), dated April 18, 2007, Eagle serves as Investment Manager to the International Fund. As such, Eagle provides advice and assistance to TPL in the selection of appropriate investments for the International Fund, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services, Eagle receives from TPL an annual fee at a rate equal to 0.60% of the first $100 million in assets of the Fund; and 0.50% of assets over $100 million. As of December 31, 2014, Eagle managed approximately $4.9 billion in client assets.
11
Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Eagle Global Advisers, LLC (Eagle), dated October 27, 2011, Eagle serves as Investment Manager to the Israel Common Values Fund. As such, Eagle provides advice and assistance to TPL in the selection of appropriate investments for the Israel Common Values Fund, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services, Eagle receives from TPL an annual fee at a rate equal to 0.60% of the first $50 million in assets of the Fund; and 0.50% of assets over $50 million.
On February 28, 2014 the Board met to consider, among other matters, retaining Eagle as Investment Manager for the International Fund and Israel Common Values Fund and after full consideration, renewed the agreements for an additional year. A discussion of the Boards considerations in ratifying the agreements are provided in the Trusts audited annual report, dated September 30, 2014.
International Fund &
Israel Common Values Fund
Eagle utilizes the team approach to portfolio management for the International Fund and the Israel Common Values Fund. Team members have specific regional and sector responsibilities but have an equal vote in the investment decision-making process. The Eagle Team Members for each fund are:
Edward R. Allen III, Ph.D., CFA, Senior Partner. Mr. Allen serves as chairman of the International investment committee, and is also a member of the firms other investment committees. Prior to founding Eagle, Mr. Allen was employed by Eagle Management & Trust Company. Before entering the investment advisory business, he served as an assistant professor of economics at the University of Houston. He earned a Bachelors degree in engineering from Princeton University and a Ph.D. in economics from the University of Chicago. Mr. Allen holds the Chartered Financial Analyst designation and is also a member of the American Finance Association, the CFA Institute, and the FA Society of Houston.
Thomas N. Hunt III, CFA, CPA, Senior Partner. Mr. Hunt serves as Chairman of the Domestic investment committee, and is also a member of the firms other investment committees. Prior to founding Eagle, Mr. Hunt was employed by Eagle Management & Trust Company. Mr. Hunt also worked for the public accounting firm of Ernst & Young. He earned a Bachelors degree in accounting from the University of Texas and an MBA from the Harvard Business School. Mr. Hunt holds the Chartered Financial Analyst and Certified Public Accountant designations and is also a member of the CFA Institute, the CFA Society of Houston, and the Texas Society of Certified Public Accountants.
Steven S. Russo, Senior Partner. Mr. Russo serves as Director of Client Service, and is also a member of the firms investment committees. Prior to founding Eagle, Mr. Russo was employed by Eagle Management & Trust Company and Criterion Investment Management Company. Mr. Russo earned a Bachelors degree in finance from the University of Texas and an MBA from Rice University. Mr. Russo also serves as a Board Member of the M.A. Wright Fund at Rice Universitys Jones School of Management.
John F. Gualy, CFA, Partner. Mr. Gualy serves as a portfolio manager and oversees Eagles trading operations, and is also a member of the firms investment committees. Prior to founding Eagle, Mr. Gualy was employed by Eagle Management & Trust Company and as director of research for Continental Intervest. He earned a Bachelors degree in economics from the University of Texas and an MBA from Rice University. Mr. Gualy holds the Chartered Financial Analyst designation, is a member of the CFA Institute and is a former President and Director of the CFA Society of Houston. He also serves as an Adjunct Professor at Rice Universitys Jones Graduate School of Business teaching an MBA class on Stock Analysis. Mr. Gualy is a native of Colombia and is fluent in Spanish.
Each of the team members is a founding partner of the company and has been with the firm since its inception in 1996.
Other Information Relating to Eagle
The following table presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts. The information is current as of December 31, 2014.
12
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) | ||||||
Eagle Global Advisors, LLC: |
||||||||||||
Edward R. Allen, III |
3 ($953.2) | 0 ($0) | 451 ($891.6) | N/A | 1 ($22.6) | 0($0) | ||||||
Thomas N. Hunt, III |
3 ($953.2) | 0 ($0) | 451 ($891.6) | N/A | 1 ($22.6) | 0($0) | ||||||
Steven S. Russo |
3 ($953.2) | 0 ($0) | 451 ($891.6) | N/A | 1 ($22.6) | 0($0) | ||||||
John Gualy |
2 ($74.4) | 0 ($0) | 451 ($891.6) | N/A | 1 ($22.6) | 0($0) |
Each team member is a partner and an equity owner of the firm. Compensation of Eagle partners has two primary components: (1) a base salary and (2) profit participation based on firm ownership. Compensation of Eagle Partners is reviewed primarily on an annual basis. Profit participations are typically paid near or just after year-end.
Eagle compensates its partners based primarily on the scale and complexity of their portfolio responsibilities. The performance of portfolio managers is evaluated primarily based on success in achieving portfolio objectives for managed funds and accounts. Eagle seeks to compensate partners commensurate with their responsibilities and performance competitively with other firms within the investment management industry. This is reflected in partners salaries. Salaries and profit participation are also influenced by the operating performance of Eagle. While the salaries of Eagles partners are comparatively fixed, profit participation may fluctuate substantially from year to year, based on changes in financial performance of the firm.
As of December 31, 2014, 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 | ||
Edward R. Allen, III |
None | None | ||
Thomas N. Hunt, III |
None | None | ||
Steven S. Russo |
None | None | ||
John F. Gualy |
None | None |
WESTWOOD MANAGEMENT CORP.
Pursuant to Investment Sub-Advisory Agreements between TPL, the Trust and Westwood Management Corp., (Westwood) dated May 1, 2005, and January 3, 2006, Westwood serves as Investment Manager to the Large/Mid Cap Value Fund and the Small Cap Value Fund. As such Westwood provides advice and assistance to TPL in the selection of appropriate investments for the Large/Mid Cap Value Fund and the Small Cap Value Fund respectively, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services, Westwood receives from TPL an annual fee at a rate equal to 0.42% of the first $10 million in assets of each Fund; 0.40% of the next $5 million in assets; 0.35% of the next $10 million in assets; and 0.25% of assets over $25 million. As of December 31, 2014, Westwood managed approximately $19.0 billion in client assets.
On February 28, 2014, the Board met to consider, among other matters, retaining Westwood as sub-investment Advisor for the Large/Mid Cap Value Fund and the Small Cap Value Fund, and after full consideration, renewed the agreements for an additional year. A discussion of the Boards considerations in renewing the agreements is available in the Trusts audited annual report dated September 30, 2014.
Large/Mid Cap Value Fund &
Small Cap Value Fund
Westwood utilizes a team of investment professionals who are responsible for the day-to-day recommendations regarding the investment of the Large/Mid Cap Funds portfolio.
Mr. Mark R. Freeman, CFA has served as Chief Investment Officer and Senior Portfolio Manager for Westwood since February 2012. Prior to this appointment, he served Westwood as Executive Vice President and Co-Chief Investment Officer from 2010 to February 2012, Senior Vice President and Portfolio Manager from 2006 to 2010, and as Vice President and Portfolio Manager from 2000 to 2006. Prior to joining Westwood, Mr. Freeman was with First American National Bank as a Fixed Income Strategist/Senior Economist. He has served on the portfolio team for the Timothy Plan Large/Mid Cap Value Fund since Westwood assumed responsibility for its management. Mr. Freeman participates in the investment decision process during meetings in which the team determines the allocation of securities held in the portfolio. He has authority to direct trading activity on the Fund, and he is also responsible for representing the Fund to investors. Mr. Freeman has more than 25 years of investment experience.
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Mr. Scott D. Lawson, CFA has served as Vice President and Senior Research Analyst for Westwood since 2003, when he joined the firm. Before joining Westwood, Mr. Lawson was an Assistant Portfolio Manager with Bank of America from 2000 to 2003. Mr. Lawson has served on the portfolio team for the Timothy Plan Large/Mid Cap Value Fund since 2008. He participates in the investment decision process during meetings in which the team determines the allocation of securities held in the portfolio. He has authority to direct trading activity on the Fund, and he is also responsible for representing the Fund to investors. Mr. Lawson has more than 24 years of investment experience.
Ms. Lisa Dong, CFA has served as Senior Vice President and Director of Equity Research for Westwood since May 2014. Prior to this appointment, she served Westwood as Senior Vice President and Senior Research Analyst from 2010 to 2014, as Vice President and Research Analyst from 2005 to 2010, as Assistant Vice President and Research Analyst from 2001 to 2005, and as Assistant Research Analyst from 2000 to 2001. Ms. Dong has served on the portfolio team for the Timothy Plan Large/Mid Cap Value Fund since 2008 and on the Timothy Plan Small Cap Value Fund since Westwood assumed responsibility for its management. She participates in the investment decision process during meetings in which the team determines the allocation of securities held in the portfolio. She has authority to direct trading activity on the Fund, and she is also responsible for representing the Fund to investors. Ms. Dong has more than 16 years of investment experience.
Mr. Matthew R. Lockridge has served as Vice President and Research Analyst since joining Westwood in May 2010. Prior to joining Westwood, Mr. Lockridge was a Managing Director at Dearborn Partners, L.L.C. from 2004 to 2010, where he was a member of the firms investment committee and oversaw all investments in the consumer and industrial sectors. Prior to this, he was a Senior Consultant with Deloitte Consulting, L.L.P. from 2001 to 2004, where he assisted clients with various corporate finance and accounting issues. Mr. Lockridge has served on the portfolio team for the Timothy Plan Large/Mid Cap Value Fund since December 2012 and on the Timothy Plan Small Cap Value Fund since December 2010. He participates in the investment decision process during meetings in which the team determines the allocation of securities held in the portfolio. He has authority to direct trading activity on the Fund, and he is also responsible for representing the Fund to investors. Mr. Lockridge has more than 12 years of investment experience.
Dr. Varun V. Singh, PhD, CFA has served as Vice President and Research Analyst since joining Westwood in February 2012. Prior to joining Westwood, Dr. Singh was a Vice President and Equity Analyst at Wellington Management Company, L.L.P. from 2005 to 2012. Prior to this, he was an Equity Analyst at Robert W. Baird & Co. from 2003 to 2005. Dr. Singh has served on the portfolio team for the Timothy Plan Large/Mid Cap Value Fund since April 2013. He participates in the investment decision process during meetings in which the team determines the allocation of securities held in the portfolio. He has authority to direct trading activity on the Fund, and he is also responsible for representing the Fund to investors. Dr. Singh has more than 11 years of investment experience.
14
Small Cap Value Fund
Other members of the Small Cap Value Fund, in addition to Ms. Lisa Dong and Mr. Matthew Lockridge, are Mr. William Costello, and Mr. Frederic Rowsey.
Mr. William E. Costello, CFA has served as Senior Vice President and Research Analyst since joining Westwood in July 2010. Prior to joining Westwood, he was a Portfolio Manager and Director of Research at the Boston Company, where he worked from 1997 to 2010, and he worked at Delphi Management as a generalist equity analyst from 1992 until 1997. Mr. Costello has served on the portfolio team for the Timothy Plan Small Cap Value Fund since December 2010. He participates in the investment decision process during the portfolio team meetings in which the team determines the allocation of securities held in the portfolio. He has authority to direct trading activity on the Fund, and he is also responsible for representing the Fund to investors. Mr. Costello has more than 26 years of investment experience.
Mr. Frederic G. Rowsey, CFA has served as Research Analyst for Westwood since December 2013. Prior to this appointment, he served Westwood as a Research Associate from 2010 to 2013. Mr. Rowsey has served on the portfolio team for the Timothy Plan Small Cap Value Fund since December 2013. He participates in the investment decision process during the portfolio team meetings in which the team determines the allocation of securities held in the portfolio. He has authority to direct trading activity on the Fund, and he is also responsible for representing the Fund to investors. Mr. Rowsey has more than 4 years of investment experience.
Other Information Relating to Westwood
The following table presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts. The information is current as of December 31, 2014.
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) | ||||||
Westwood Management: |
||||||||||||
Mark R. Freeman, CFA |
9 ($4,397.74) | 15 ($1,386.49) | 66 ($3,142.14) | N/A | N/A | N/A | ||||||
Lisa Dong, CFA |
8 ($1,976.10) | 9 ($762.80) | 50 ($2,118.22) | N/A | N/A | N/A | ||||||
Scott D. Lawson, CFA |
8 ($1,866.45) | 6 ($697.06) | 49 ($1,992.56) | N/A | N/A | N/A | ||||||
Matthew R. Lockridge |
9 ($2,059.37) | 12 ($956.10) | 63 ($2,554.66) | N/A | N/A | N/A | ||||||
Varun V. Singh, PhD, CFA |
8 ($1,866.45) | 6 ($697.06) | 38 ($1,989.52) | N/A | N/A | N/A | ||||||
William E. Costello, CFA |
1 ($109.65) | 3 ($65.75) | 13 ($126.88) | N/A | N/A | N/A | ||||||
Frederic G. Rowsey, CFA |
1 ($109.65) | 3 ($65.75) | 10 ($125.78) | N/A | N/A | N/A |
Westwoods compensation package includes base salary, cash bonus, and equity-based incentive compensation as well as a full benefits package for all employees, including those involved in the product. Westwood annually reviews all forms of compensation for all employees of the company. Base salary levels are maintained at levels that the compensation committee deems to be commensurate with similar companies in the asset management industry. In determining incentive compensation and annual merit-based salary increases, components of this evaluation are based in major part upon the portfolio performance, individual stock recommendations, and individual buy and sell recommendations.
As of December 31, 2014, 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 | ||
Mark R. Freeman, CFA |
None | None | ||
Lisa Dong, CFA |
None | None | ||
Scott D. Lawson, CFA |
None | None | ||
Matthew R. Lockridge |
None | None | ||
Varun V. Singh, PhD, CFA |
None | None | ||
William E. Costello, CFA |
None | None | ||
Frederic G. Rowsey |
None | None |
15
DELAWARE MANAGEMENT COMPANY
Pursuant to the Investment Sub-Advisory Agreement between TPL, the Trust and Delaware Management Company (Delaware) dated August 6, 2010, Delaware assumed responsibility as the Investment Manager to the REIT sleeve of the Defensive Strategies Fund. As Investment Manager, Delaware provides advice and assistance to TPL in the selection of appropriate investments for the Funds REIT sleeve, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services, Delaware receives from TPL an annual fee at a rate equal to 0.42% of the first $10 million in assets in the REITs portion of the Fund; 0.40% of the next $5 million in assets; 0.35% of the next $10 million in assets; and 0.25% of assets over $25 million. As of December 31, 2014, Delaware managed approximately $185.5 billion in client assets.
On February 28, 2014, the Board met to consider, among other matters, retaining Delaware as sub-investment Advisor for the REIT Sleeve of the Defensive Strategies Fund, and after full consideration, renewed the agreement for an additional year. A discussion of the Boards considerations in renewing the agreement is available in the Trusts audited annual report dated September 30, 2014.
Defensive Strategies | REIT Sleeve
The Team members managing the REIT sleeve are as follows:
Babak Bob Zenouzi
Senior Vice President, Chief Investment Officer Real Estate Securities and Income Solutions (RESIS)
Bob Zenouzi is the lead manager for the real estate securities and income solutions (RESIS) group at Delaware Investments, which includes the team, its process, and its institutional and retail products, which he created during his prior time with the firm. He also focuses on opportunities in Japan, Singapore, and Malaysia for the firms global REIT product. Additionally, he serves as lead portfolio manager for the firms Dividend Income products, which he helped to create in the 1990s. He is also a member of the firms asset allocation committee, which is responsible for building and managing multi-asset class portfolios. He rejoined Delaware Investments in May 2006 as senior portfolio manager and head of real estate securities. In his first term with the firm, he spent seven years as an analyst and portfolio manager, leaving in 1999 to work at Chartwell Investment Partners, where from 1999 to 2006 he was a partner and senior portfolio manager on Chartwells Small-Cap Value portfolio. He began his career with The Boston Company, where he held several positions in accounting and financial analysis. Zenouzi earned a masters degree in finance from Boston College and a bachelors degree in finance from Babson College. He is a member of the National Association of Real Estate Investment Trusts and the Urban Land Institute.
Damon J. Andres, CFA
Vice President, Senior Portfolio Manager
Damon J. Andres, who joined Delaware Investments in 1994 as an analyst, currently serves as a portfolio manager for the firms real estate securities and income solutions (RESIS) group. He also serves as a portfolio manager for the firms Dividend Income products. From 1991 to 1994, he performed investment-consulting services as a consulting associate with Cambridge Associates. Andres earned a bachelors degree in business administration with an emphasis in finance and accounting from the University of Richmond.
Scott P. Hastings, CFA, CPA
Vice President, Senior Equity Analyst
Scott P. Hastings is an analyst for the firms real estate securities and income solutions (RESIS) group, performing fundamental bottom-up stock research across several subsectors of the domestic REIT universe, and focusing on opportunities in Canada, Europe, the United Kingdom, and Australia for the firms global REIT effort. Prior to joining Delaware Investments in 2004, he was a senior auditor with Deloitte & Touche. Hastings earned a bachelors degree from Providence College and an MBA from Vanderbilt University. He is a member of the American Institute of Certified Public Accountants and the CFA Society of Philadelphia.
16
Other Information Relating to Delaware Management Company
The following table presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts. The information is current as of December 31, 2014.
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) | ||||||
Delaware Management Company: |
||||||||||||
Babak Zenouzi |
14 ($3,781) | 2 ($86.6) | 9 ($657.9) | N/A | 1 (17.0) | N/A | ||||||
Damon Andres |
8 ($2,596) | 1 ($69.5) | 8 ($657.9) | N/A | N/A | N/A | ||||||
Scott Hastings |
0 ($0) | 1 ($17.0) | 0 ($0) | N/A | N/A | N/A |
Investment professionals are compensated with a combination of a base salary, a short-term incentive bonus (which may include various objective and subjective components), and long-term equity. Key operating principles of the total compensation plan are to compensate professionals in direct relation to performance in their respective realms of responsibility and the overall business success of the team and to reflect total cash compensation that is closely aligned to the competitive market.
As of December 31, 2014, 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 | ||
Babak Zenouzi |
None | None | ||
Damon Andres |
None | None | ||
Scott Hastings |
None | None |
CORECOMMODITY MANAGEMENT, LLC
Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and CoreCommodity Management, LLC (CORE), (formerly Jefferies Asset Management, LLC), dated September 27, 2011, CORE assumed responsibility as the Investment Manager to the commodities-based sleeve of the Defensive Strategies Fund. As Investment Manager, CORE provides advice and assistance to TPL in the selection of appropriate investments for the Funds commodities-based sleeve, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services to the Fund, CORE receives from TPL an annual fee at a rate equal to 0.40% of the Funds average daily assets up to $25 million, and 0.35% of average daily net assets over $25 million. As of December 31, 2014, CORE managed approximately $17.7 million in client assets (measured at agreed upon notional amount for managed accounts, net asset value for pooled vehicles and does not include anticipated subscriptions or redemptions in a subsequent period).
Defensive Strategies | Commodities Sleeve
Mr. Adam C. De Chiara serves as the Funds commodities-based Portfolio Manager and is responsible for all investment decisions for the Fund.
Adam De Chiara is a Co-President of CORE and the Portfolio Manager of the CORE Commodity Programs. Mr. De Chiara began his commodity career in 1991 at Goldman Sachs where he was responsible for trading the Goldman Sachs Commodity Index (GSCI). In 1994, Mr. De Chiara founded the commodity index group at AIG, where he designed and launched the Dow Jones - AIG Commodity Index. In 2003, Mr. De Chiara co-founded the commodities group at Jefferies. Mr. De Chiara received a BA from Harvard University and a JD from Harvard Law School. Prior to 2011, Mr. De Chiara also served as Co-President of Jefferies Financial Products, LLC (JFP).
17
Other Information Relating to CoreCommodity Management, LLC
The following table presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts. The information is current as of December 31, 2014.
Number of Other Accounts Managed And Assets by Account Type |
Number of Accounts and Assets for Which Advisory Fee is Performance-Based | |||||||||||
Name of Sub-Advisor and Portfolio Manager |
Registered Investment Companies ($mils) |
Other Pooled Investment Vehicles ($mils) |
Other Accounts ($mils) |
Registered Investment Companies ($mils) |
Other Pooled Investment Vehicles ($mils) |
Other Accounts ($mils) | ||||||
CoreCommodity Management, LLC: |
||||||||||||
Adam De Chiara |
4 ($412) | 4 ($1,763) | 16 ($2,368) | N/A | 3 ($1,583) | 7 ($1,014) |
The portfolio managers total compensation consists of base salary and cash bonus. The portfolio manager is eligible to receive bonuses, which may be significantly more than his base salary, upon attaining certain performance objectives based on measures of individual, group or department success. These goals are specific to the portfolio manager. Achievement of these goals is an important, but not exclusive, element of the bonus decision process, and, absent a contractual agreement, bonuses are determined at the discretion of CORE. Likewise, while the portfolio manager may manage accounts that have a performance or outperformance fee component, absent a contractual arrangement, bonuses are determined at the discretion of CORE. Certain portfolio managers may also have employment contracts, which may guarantee severance payments in the event of involuntary termination. However, given that Mr. De Chiara also serves as a co-President of CORE, his compensation is heavily influenced by the overall performance and reputation of CORE rather than being triggered by the performance of any one program or client account.
As of December 31, 2014, 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 | ||
Adam De Chiara |
None | None |
BARROW, HANLEY, MEWHINNEY AND STRAUSS, LLC
Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Barrow, Hanley, Mewhinney and Strauss, LLC (BHMS), dated July 1, 2004 (the BHMS Sub-Advisory Agreement), BHMS provides advice and assistance to TPL in the selection of appropriate investments for the Fixed-Income Fund. Pursuant to amendments to the Agreement dated May 1, 2007, and November 1, 2009, BHMS provides such advice to the High Yield Bond Fund and to the Debt Instrument Sector of the Defensive Strategies Fund, respectively, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services with respect to the Fixed-Income Fund and High Yield Bond Fund, BHMS receives from TPL an annual fee at a rate equal to 0.25% of the average net assets of each Fund. As compensation for its services with respect to the Defensive Strategies Fund, BHMS receives from TPL an annual fee at a rate equal to 0.15% of the average net assets in the Debt Instrument Sector of the Fund. As of December 31, 2014, BHMS managed approximately $99.7 billion in client assets.
On February 28, 2014, the Board met to consider, among other matters, retaining BHMS as sub-investment Advisor for the Fixed Income Fund, High Yield Bond Fund, and Defensive Strategies Fund Debt Instrument Sector and after full consideration, renewed the agreement for an additional year. A discussion of the Boards considerations in renewing the agreement is available in the Trusts audited annual report dated September 30, 2014.
Fixed Income Fund &
High Yield Bond Fund
BHMS employs a team concept in the management of the Timothy Plan Funds. Team members are assigned specific sector responsibilities, but enjoy equal responsibilities in the investment process. The members have equal say in the actual management under the guidance of John S. Williams who serves BHMS as the Chief Investment Officer for fixed income strategies. The other members of the team are David R. Hardin, Mark C. Luchsinger, Scott McDonald, Deborah A. Petruzzelli and Erik A. Olson.
18
Mr. John S. Williams, CFA, who joined BHMS in 1983, is the senior member of the team, and has served as a portfolio manager for over 30 years at BHMS. Currently, he serves as the Chief Investment Officer for all fixed income strategies. In addition to developing portfolio strategy, he is responsible for risk management and assists on MBS sector management.
Mr. David R. Hardin also has over 25 years as a portfolio manager. He joined BHMS in 1987, and is a generalist in investment grade credit and manages the municipal portfolios.
Mr. Scott McDonald, CFA, joined BHMS in 1995. He currently serves as the lead portfolio manager for our Long Duration strategies, specializing in corporate and government bonds. He is also a generalist in investment grade fixed income credit research.
Mr. Mark C. Luchsinger, CFA, joined BHMS in 1997. He currently serves as a portfolio manager, specializing in investment grade and high yield corporate bond strategies and is the lead portfolio manager for our Core and Core Plus strategies. He is also a generalist in investment grade and high yield credit research.
Ms. Deborah A. Petruzzelli joined BHMS in 2003. She serves as our structured securities portfolio manager for mortgage-backed, asset-backed, and commercial mortgage-backed securities.
Mr. Erik A. Olson joined BHMS in 2001. He serves as a co-portfolio manager on our high yield strategies and as a senior analyst in credit research.
Defensive Strategies | Debt Instrument Sector
Mr. John S. Williams, who joined BHMS in 1983, is the portfolio manager for the Debt Instrument Sector of the Defensive Strategies Fund.
19
Other Information Relating to BHMS
The following table presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts. The information is current as of December 31, 2014.
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) | ||||||
Barrow, Hanley, Mewhinney & Strauss, LLC: |
||||||||||||
John S. Williams |
3 ($693.6) | 2 ($362.3) | 148 ($12,387.9) | N/A | N/A | 1 ($904.7) | ||||||
David R. Hardin |
3 ($693.6) | 2 ($362.3) | 148 ($12,387.9) | N/A | N/A | 1 ($904.7) | ||||||
J. Scott McDonald |
3 ($693.6) | 2 ($362.3) | 148 ($12,387.9) | N/A | N/A | 1 ($904.7) | ||||||
Mark C. Luchsinger |
3 ($693.6) | 2 ($362.3) | 148 ($12,387.9) | N/A | N/A | 1 ($904.7) | ||||||
Deborah A. Petruzzelli |
3 ($693.6) | 2 ($362.3) | 148 ($12,387.9) | N/A | N/A | 1 ($904.7) | ||||||
Erik A. Olson |
1 ($43.0) | 1 ($189.4) | N/A | N/A | 1 ($904.7) |
In addition to base salary, all portfolio managers and analysts share in a bonus pool that is distributed semi-annually. Analysts and portfolio managers are rated on their value added to the team-oriented investment process. Overall compensation applies with respect to all accounts managed and compensation does not differ with respect to distinct accounts managed by a portfolio manager. Compensation is not tied to a published or private benchmark. It is important to understand that contributions to the overall investment process may include not recommending securities in an analysts sector if there are no compelling opportunities in the industries covered by that analyst.
The compensation of portfolio managers is not directly tied to fund performance or growth in assets for any fund or other account managed by a portfolio manager, and portfolio managers are not compensated for bringing in new business. Of course, growth in assets from the appreciation of existing assets and/or growth in new assets will increase revenues and profit. The consistent, long-term growth in assets at any investment firm is, to a great extent, dependent upon the success of the portfolio management team. The compensation of the portfolio management team at the Sub-Advisor will increase over time, if and when assets continue to grow through competitive performance. Lastly, many of our key investment personnel have a long-term incentive compensation plan in the form of an equity interest in BHMS.
As of December 31, 2014, 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 | ||
John S. Williams |
None | None | ||
David R. Hardin |
None | None | ||
J. Scott McDonald |
None | None | ||
Mark C. Luchsinger |
None | None | ||
Deborah A. Petruzzelli |
None | None |
BRANDES INVESTMENT PARTNERS, LP
Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Brandes Investment Partners, LP (Brandes) dated November 30, 2012, Brandes serves as Investment Manager to the Emerging Markets Fund. As Investment Manager, Brandes provides advice and assistance to TPL in the selection of appropriate investments for the Emerging Markets Fund, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services, Brandes receives from TPL an annual fee at a rate equal to 0.75% of assets of the Fund. As of December 31, 2014, Brandes managed approximately $26.4 billion in client assets.
On February 28, 2014, the Board met to consider, among other matters, retaining Brandes as Investment Manager for the Emerging Markets Fund and after full consideration, directed the Advisor to proceed with an initial Management Agreement for two years. A discussion of the Boards considerations in renewing the agreement is available in the Trusts audited annual report, dated September 30, 2014.
20
The following members of Brandes make up the portfolio management team for the Emerging Markets Fund:
Douglas C. Edman, CFA a limited partner of the firms parent company, is a Senior Analyst and a voting member of the Emerging Markets Investment Committee. He performs research in the oil and gas industry. Before joining Brandes, Mr. Edman worked for Goldman Sachs as a Credit Analyst where he managed the credit rating agency relationships and commercial paper programs for clients in the energy and telecommunications industries. He also worked for Chevron as a Project Engineer and was responsible for the design and construction of oil field processing facilities. Mr. Edman earned his MBA in finance from the Wharton Business School at the University of Pennsylvania. He graduated from the University of Southern California with a BS in chemical engineering. Mr. Edman is a member of the CFA Society of San Diego and has over 20 years of investment experience.
Christopher J. Garrett, CFA is an Institutional Portfolio Manager and a member of the firms Emerging Markets Investment Committee. He also serves as a Product Coordinator for the Emerging Markets Portfolio. Before joining Brandes, Mr. Garrett worked as a Portfolio Manager/Analyst for Dupont Capital Management and a Corporate Loan Officer for both First Interstate Bank of California and City National Bank. He earned his MBA from Columbia Universitys Columbia Business School and his BS in finance from Arizona State University. Mr. Garrett has over 20 years of finance and investment experience.
Louis Y. Lau, CFA a limited partner of the firms parent company is a Senior Analyst on the Financial Institutions Research Team. In addition, he is a voting member of the Emerging Markets Investment Committee. Before joining Brandes, Mr. Lau worked in investment banking and equity capital markets for Goldman Sachs. He earned his MBA with honors in finance and accounting from the Wharton School at the University of Pennsylvania. He served as Director of Research and Portfolio Manager of the Wharton Investment Management Fund, a U.S. small-cap value fund. Mr. Lau earned his BBA in finance with merit from the National University of Singapore and attended the University of Michigan (Ann Arbor) and New York University. He has 17 years of finance and investment experience.
Gregory Rippel, CFA, CPA is a Senior Analyst on the Consumer Products Team and is responsible for fundamental research on companies in several consumer-related industries. He is also a voting member of the firms Emerging Markets Investment Committee. Before joining Brandes, Mr. Rippel worked as an Underwriter at Greyrock Capital, a subsidiary of Bank of America and as a Senior Associate for Coopers & Lybrand. He earned his MBA from the McCombs School of Business at the University of Texas at Austin and his BA in business economics from the University of California, Santa Barbara. Mr. Rippel is a Certified Public Accountant and has 20 years of accounting, finance and investment experience.
Gerardo Zamorano, CFA a limited partner of the firms parent company, leads the firms research efforts in the telecommunications sector. He is also a member of the Emerging Markets Investment Committee. Before joining Brandes, Mr. Zamorano worked for the International Finance Corporation, part of the World Bank Group, as an Assistant Investment Officer in the Latin America Department. He graduated magna cum laude, earning his BSE from the Wharton School of Business of the University of Pennsylvania and his MBA from the Kellogg Graduate School of Management of Northwestern University. He has 19 years of investment experience.
Other Information Relating to Brandes
The following table presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts. The information is current as of December 31, 2014.
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) | ||||||
Brandes Investment Partners, L.P.: |
||||||||||||
Doug Edman, CFA |
4 ($1,390) | 6 ($894) | 528 ($1,593) | N/A | N/A | 1 ($66) | ||||||
Chris Garrett, CFA |
4 ($1,390) | 6 ($894) | 528 ($1,593) | N/A | N/A | 1 ($66) | ||||||
Louis Lau, CFA |
4 ($1,390) | 6 ($894) | 528 ($1,593) | N/A | N/A | 1 ($66) | ||||||
Greg Rippel, CFA |
4 ($1,390) | 6 ($894) | 528 ($1,593) | N/A | N/A | 1 ($66) | ||||||
Gerardo Zamorano, CFA |
4 ($1,390) | 8 ($1,043) | 528 ($1,593) | N/A | N/A | 1 ($66) |
21
Brandes Investment Partners complements competitive base compensation with participation in a discretionary annual bonus program. Portfolio managers/analysts are eligible to participate in the bonus program and any individual award is linked to a number of qualitative and quantitative evaluation criteria. The criteria include research productivity, quality and productivity of work done by portfolio management and research professionals, the attainment of client service goals, and the firms business results. In addition, all employees are eligible for participation in the companys profit sharing plan.
Another key element of the firms compensation structure is the opportunity for participation in the firms equity through partnership or phantom equity.
In summary, the firms total compensation structure has been designed to enhance positive performance on behalf of portfolio managers/analysts, and to reward contributing investment professionals.
As of December 31, 2014, the Investment Committee Members 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 | ||
Doug Edman, CFA |
None | None | ||
Chris Garrett, CFA |
None | None | ||
Louis Lau, CFA |
None | None | ||
Greg Rippel, CFA |
None | None | ||
Gerardo Zamorano, CFA |
None | None |
JAMES INVESTMENT RESEARCH, INC.
Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and James Investment Research, Inc., (James) dated October 1, 2013; James serves as Investment Manager to the Growth & Income Fund. As Investment Manager, James provides advice and assistance to TPL in the selection of appropriate investments for the Fund, subject to the supervision and direction of the Funds Board of Trustees. As compensation for its services, James receives from TPL an annual fee at a rate equal to 0.42% of the first $10 million in assets of the Fund; 0.40% of the next $5 million in assets; 0.35% of the next $10 million in assets; and 0.25% of assets over $25 million. As of December 31, 2014, James managed approximately $6.0 billion in client assets.
On May 24, 2013 the Board met to consider, among other matters, retaining James as Investment Manager for the Fund and after full consideration, approved the Agreement for an initial two year term. A discussion of the Boards considerations in entering into the agreement is provided in the Trusts semi-annual report, dated March 31, 2014.
Growth & Income Fund
The following members of James make up the portfolio management team for the Growth & Income Fund:
Dr. Frank James, PhD, is the Founder and Chairman of James Investment Research, Inc. and team leader of the investment committee. Dr. James earned his Ph.D. from Rensselaer Polytechnic Institute in 1967. Dr. James was formerly in charge of the graduate management program and a professor of Management and Statistics at the Air Force Institute of Technology. His current responsibilities include overseeing Jamess investment management and research.
Barry R. James, CFA, CIC, is President of James Investment Research, Inc. and a portfolio manager. Prior to September 2007, Mr. James was Executive Vice president of James. He is a principal officer of the James Advantage Funds. He received his undergraduate degree from The United States Air Force Academy and his Masters Degree from Boston University. He joined James in its beginning years before a tour of duty as an officer with the United States Air Force. He returned to James in 1986. Mr. James currently oversees the management of James Investment Research, Inc.
Ann M. Shaw, CFP, joined James Investment Research, Inc. in 1978 and is the Chief Operating Officer and a portfolio manager. She is involved in security analysis and client service. Ms. Shaw received her Bachelors Degree from Capital University.
Thomas L. Mangan joined James Investment Research, Inc. in 1994 and is a Senior Vice President and a portfolio manager. Prior to September 2006, Mr. Mangan was Vice President of James. Mr. Mangan is also a principal officer of the James Advantage Funds. He is a graduate of The Ohio State University and earned his MBA from The University of Notre Dame in 1974. Mr. Mangan has over 35 years of experience in trading and portfolio management including positions in New York, London and Chicago. He is a CMFC and has been an adjunct professor in the Finance Department at Wright State University since 2000.
22
David W. James, CFA, joined James Investment Research, Inc. in 1981 and is the Director of Research and a portfolio manager. Prior to September 2006, Mr. James was Vice President of James. His responsibilities include research projects and statistical analysis. Mr. James studied computer science and statistics at Florida State University and Wright State University.
R. Brian Culpepper joined James Investment Research, Inc. in 1995, and is a portfolio manager. Mr. Culpepper is involved in equity research. He is a graduate of Wright State University in Dayton, Ohio where he earned a double Bachelor of Science degree in Management Information Systems and Management in 1995 and an MBA in 2005 and is a CMFC.
Brian Shepardson, CFA, CIC, joined James Investment Research, Inc. in 1999. He is a portfolio manager and is involved in equity and fixed income research. Mr. Shepardson obtained his BBA from the University of Cincinnati in 1996 and holds a CFA charter.
Trent D. Dysert joined James Investment Research, Inc. in 2006 and is a portfolio manager. Mr. Dysert is involved in market and equity research. He is a graduate of the University of Dayton and earned a Bachelor of Science degree in Finance. Prior to joining James Investment Research, Inc., Mr. Dysert worked at Ameriprise Financial.
Matthew G. Watson, CPA joined James Investment Research, Inc. in 2007 and is a portfolio manager. Mr. Watson supports the accounting, compliance and research functions. In 2007 he graduated Magna Cum Laude from Wright State University in Dayton, Ohio where he earned a double Bachelor of Science degree in Accounting and Finance. Mr. Watson also completed The Master of Accountancy program at Wright State University.
Each team member has a number of other James professionals supporting their efforts. The members of the James investment team average in excess of 20 years of experience in the investment field.
Other Information Relating to James
The following table presents information relating to the persons responsible for managing Fund assets, the number and types of other accounts managed by such persons, and how such persons are compensated for managing such accounts. The information is current as of December 31, 2014.
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) | ||||||
James Investment Research, Inc.: |
||||||||||||
Dr. Frank James, Ph.D. |
5 ($3,989) | 0 ($0) | 20 ($95.6) | 0 ($0) | 0 ($0) | 0 ($0) | ||||||
David W. James, CFA |
5 ($3,989) | 0 ($0) | 41 ($103.0) | 0 ($0) | 0 ($0) | 0 ($0) | ||||||
Barry R. James, CFA, CIC |
5 ($3,989) | 0 ($0) | 66 ($685.1) | 0 ($0) | 0 ($0) | 0 ($0) | ||||||
R. Brian Culpepper, CMFC |
5 ($3,989) | 1 ($1) | 51 ($443.5) | 0 ($0) | 0 ($0) | 0 ($0) | ||||||
Ann M. Shaw, CFP |
5 ($3,989) | 0 ($0) | 57 ($186.0) | 0 ($0) | 0 ($0) | 0 ($0) | ||||||
Brian Shepardson, CFA, CIC, CMFC |
5 ($3,989) | 0 ($0) | 50 ($186.3) | 0 ($0) | 0 ($0) | 0 ($0) | ||||||
Thomas L. Mangan, CMFC |
5 ($3,989) | 0 ($0) | 78 ($700.2) | 0 ($0) | 0 ($0) | 0 ($0) | ||||||
Trent D. Dysert |
5 ($3,989) | 1 ($1) | 8 ($17.9) | 0 ($0) | 0 ($0) | 0 ($0) | ||||||
Matthew G. Watson, CPA |
5 ($3,989) | 0 ($0) | 29 ($28.3) | 0 ($0) | 0 ($0) | 0 ($0) |
23
All portfolio managers are compensated in the following manner:
Salary: Determined at employment and periodically adjusted.
Profit Sharing: The net, pre-tax profits of James are shared with all its employees based on a formula. Dr. Frank James does not share in this bonus as he is the sole owner of the Advisor.
Portfolio Managers Bonus: An additional portion of the profits of James is awarded to portfolio managers. This is based on the value of the assets under management by that portfolio manager, the number of accounts managed and length of service with James; the longer the tenure, the greater the compensation.
Other Bonuses: James may give additional bonuses at its sole discretion or upon the advice of its Board of Directors.
A material conflict might arise in the management of the Fund versus the management of other accounts if the dollar value of smaller capitalization stock transactions were to grow to be so large as to cause significant price movements as portfolio managers acquire and liquidate positions. This conflict may arise because many of James individually managed portfolios follow the same strategies as the Fund and hold the same securities. James uses limits in executing larger transactions and has adopted policies and procedures, such as aggregating mutual fund trades with private client transactions and average pricing to ensure that no fund or client has an advantage over other funds or clients.
As of December 31, 2014, the Investment Committee Members 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 | ||
Dr. Frank James, Ph.D. |
$10,001 - $50,000 | $10,001 - $50,000 | ||
David W. James, CFA |
None | None | ||
Barry R. James, CFA, CIC |
$10,001 - $50,000 | $10,001 - $50,000 | ||
R. Brian Culpepper, CMFC |
None | None | ||
Ann M. Shaw, CFP |
None | None | ||
Brian Shepardson, CFA, CIC, CMFC |
None | None | ||
Thomas L. Mangan, CMFC |
None | None | ||
Trent D. Dysert |
None | None | ||
Matthew G. Watson, CPA |
None | None |
24
SUB-ADVISOR FEES
The following table sets forth the fees paid to each Sub-Advisor by TPL for the fiscal years ended September 30, 2012, 2013 and 2014:
Investment Manager | 2012 |
2013 | 2014 | |||
Chartwell Investment Partners Aggressive Growth |
$60,722 |
$70,296 | $88,015 | |||
Chartwell Investment Partners Large/Mid Cap Growth |
$147,754 |
$157,289 | $181,711 | |||
Eagle Global Advisers International |
$185,972 |
$208,873 | $302,147 | |||
Eagle Global Advisers Israel Common Values |
$49,018 |
$53,138 | $85,868 | |||
Delaware Management Company Defensive Strategies REITs Sleeve |
$47,566 |
$63,783 | $80,467 | |||
Barrow, Hanley, Mewhinney and Strauss Defensive Strategies Debt Instrument Sector |
$32,408 |
$33,136 | $30,432 | |||
Barrow, Hanley, Mewhinney and Strauss Fixed Income |
$183,013 |
$204,584 | $183,041 | |||
Barrow Hanley, Mewhinney and Strauss High Yield Bond |
$80,608 |
$96,386 | $105,650 | |||
Westwood Management Corp. Large/Mid Cap Value |
$316,999 |
$343,520 | $402,338 | |||
Westwood Management Corp. Small Cap Value |
$164,445 |
$184,702 | $235,141 | |||
Brandes Investment Partners, LP Emerging Markets (1) |
$3,236 |
$46,067 | $79,408 | |||
James Investment Research Growth & Income (2) |
N/A |
N/A | $75,400 | |||
CoreCommodity Management Defensive Strategies Commodities Sleeve |
$104,818 |
$90,429 | $66,582 |
(1) | The Fund commenced investment operations on December 3, 2012. |
(2) | The Fund commenced investment operations on October 1, 2013. |
25
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 | |||
Arthur D. Ally* | Chairman and President | Indefinite; Trustee and President since 1994 | 13 | |||
1055 Maitland Center Commons | ||||||
Maitland, FL | Other Directorships | |||||
Principal Occupation During Past 5 Years | Held by Trustee | |||||
Born: 1942 |
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 | |||
Joseph E. Boatwright** | Trustee, Secretary | Indefinite; Trustee and Secretary since 1995 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1930 |
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 | |||
Mathew D. Staver** | Trustee | Indefinite; Trustee since 2000 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1956 |
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.
26
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 | |||
Kenneth Blackwell | Trustee | Indefinite; Trustee since 2011 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1948 |
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. Former Secretary of State for the State of Ohio. | None | ||||
| ||||||
Name, Age and Address |
Position(s) Held With Trust |
Term of Office and Length of Time Served |
Number of Portfolios in Fund Complex | |||
Richard W. Copeland | Trustee | Indefinite; Trustee since 2005 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1947 |
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 37 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 | |||
Deborah Honeycutt | Trustee | Indefinite; Trustee since 2010 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1947 |
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 | |||
Bill Johnson | Trustee | Indefinite; Trustee since 2005 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1946 |
President (and Founder) of American Decency Association, Freemont, MI since 1999. Previously served as Michigan State Director for American Family Association (1987-1999). Previously a public school teacher for 18 years. B.S. from Michigan State University and a Masters of Religious Education from Grand Rapids Baptist Seminary. | None | ||||
| ||||||
Name, Age and Address |
Position(s) Held With Trust |
Term of Office and Length of Time Served |
Number of Portfolios in Fund Complex | |||
John C. Mulder | Trustee | Indefinite; Trustee since 2005 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1950 |
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 | ||||
|
27
INDEPENDENT TRUSTEES (CONTINUED)
Name, Age and Address |
Position(s) Held With Trust |
Term of Office and Length of Time Served |
Number of Portfolios in Fund Complex | |||
Charles E. Nelson | Trustee | Indefinite; Trustee since 2000 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1934 |
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 | |||
Scott Preissler, Ph.D. | Trustee | Indefinite; Trustee since 2004 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1960 |
Director of Steward Leadership and Professor in Residence at Shorter University. Former 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. | None | ||||
| ||||||
Name, Age and Address |
Position(s) Held With Trust |
Term of Office and Length of Time Served |
Number of Portfolios in Fund Complex | |||
Alan M. Ross | Trustee, Vice Chairman | Indefinite; Trustee since 2004 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1951 |
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 | ||||
| ||||||
Name, Age and Address |
Position(s) Held With Trust |
Term of Office and Length of Time Served |
Number of Portfolios in Fund Complex | |||
Patrice Tsague | Trustee | Indefinite; Trustee since 2011 | 13 | |||
1055 Maitland Center Commons | Other Directorships | |||||
Maitland, FL | Principal Occupation During Past 5 Years | Held by Trustee | ||||
Born: 1973 |
President and Chief Servant Officer of the Nehemiah Project International Ministries Inc. since 1999. | None | ||||
|
28
ADDITIONAL INFORMATION ABOUT THE TRUSTEES
The Board of Trustees believes that each Trustees 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 Served as 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.
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. She brings extensive business experience, as well as experience in the health care sector, to the Board.
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 Director of Steward Leadership and Professor in Residence at Shorter University. Dr. Preissler brings extensive organizational and public service experience to the Board.
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.
Kenneth Blackwell brings his vast experience and unique perspective gained as the former mayor of Cincinnati, Ohio, and also served as former Secretary of State for Ohio. Mr. Blackwell was an overseas ambassador, author, and celebrated business entrepreneur.
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 Securities and Exchange Commission and do not constitute indicating that the Board or any Trustee has special expertise or experience, and shall not impose any greater responsibility or liability on 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, Mr. Alan Ross serves as Vice-Chair of the Board, and Mr. Charles Nelson serves as the Lead Independent Trustee. Mr. Ross and Mr. Nelson work with Mr. Ally to set the agendas for the Board and Committee meetings, chair meetings of the Independent Trustees, and generally serve as a liaison between the Independent Trustees and the Trusts management between Board meetings.
The Board of Trustees has two standing committees: the Audit Committee and the Pricing Committee. Both Committees are chaired by an Independent Trustee, and consist of Messrs. Nelson, Mulder and Copeland, with Mr. Nelson as chair. The members of the Committees are not interested persons of the Trust (as defined in the 1940 Act). The primary responsibilities of the Trusts Audit Committee are, as set forth in its charter, to make recommendations to the Board as to: the engagement or discharge of the Trusts 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 Pricing Committee was established in November, 2013. The Committee will be called upon in the event a security requires a fair pricing analysis to establish the applicable Funds net asset value.
29
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 Advisors sponsorship of the Trust, that investors have selected the Advisor to provide overall management to the Funds, and Mr. Allys senior leadership role within the Advisor, the Board elected him Chairman. The Board reviews its structure regularly and believes that its leadership structure, including having at least two thirds Independent Trustees, coupled with the responsibilities undertaken by Mr. Ally as Chair, Mr. Ross as Vice-Chair and Mr. Nelson as the Boards 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 Boards overall responsibility for overseeing the management and operations of the Trust is the Boards oversight of the risk management of the Trusts 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 Trusts 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 Trusts independent public accountants 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.
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.
30
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, 2014, 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 | |||||||||||||||
Growth & Income | $1 - $10,000 | |||||||||||||||
High Yield Bond | $1 - $10,000 | |||||||||||||||
International | $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 | $50,001 - $100,000 | |||||||||||||||
Strategic Growth | $50,001 - $100,000 | |||||||||||||||
Mathew D. Staver |
Over | $100,000 | ||||||||||||||
Israel Common Values | $10,001 - $50,000 | |||||||||||||||
Small Cap Value | Over $100,000 | |||||||||||||||
Strategic Growth | Over $100,000 | |||||||||||||||
Independent Trustees |
||||||||||||||||
Kenneth Blackwell |
None | None | ||||||||||||||
Richard W. Copeland |
None | None | ||||||||||||||
Deborah Honeycutt |
$1 | $10,000 | ||||||||||||||
Israel Common Values |
$1 - $10,000 | |||||||||||||||
Bill Johnson |
None | |||||||||||||||
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 | $10,001 - $50,000 |
31
Compensation was paid by the Trust to the Trustees during the past calendar year as set forth in the table below.
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 |
$2,250 | $0 | $0 | $3,000 | ||||
Deborah Honeycutt |
$3,000 | $0 | $0 | $3,000 | ||||
Bill Johnson |
$3,000 | $0 | $0 | $3,000 | ||||
John C. Mulder |
$2,250 | $0 | $0 | $3,000 | ||||
Charles E. Nelson |
$3,000 | $0 | $0 | $3,000 | ||||
Scott Preissler, Ph.D. |
$3,000 | $0 | $0 | $2,250 | ||||
Alan M. Ross |
$3,000 | $0 | $0 | $1,500 | ||||
Patrice Tsague |
$3,000 | $0 | $0 | $3,000 |
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 Advisors, Trusts and underwriters employees are prohibited from purchasing securities that are held by the Funds. You may obtain a copy of the Code of Ethics from the Securities and Exchange Commission. Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, the Trustees amended the Codes of Ethics to accommodate the requirements of Section 406. The amended Codes of Ethics adopted by the Trust, TPL, and each Sub-Advisor, have each been reviewed and ratified by the Board of Trustees.
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 Securities and Exchange Commission, which may be reviewed and copied at the SECs Public Reference Room in Washington, DC. The procedures are also available on the SECs EDGAR database at the SECs 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 SECs 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, Inc., 17605 Wright Street, Suite 2, Omaha, NE 68130, or calling toll free at 1-800-662-0201. A summary of the Trusts Proxy Voting Procedures is also attached to this SAI as Appendix A.
32
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 January 14, 2015, the following persons of record owned 5% or more of the outstanding shares of a Class of a Fund, or of the total outstanding shares of a Fund.
HOLDERS OF MORE THAN 5% OF EACH FUNDS SHARES
Name of Shareholder | Name of Fund in which Shares Held |
Share Class Owned |
% Ownership of Share Class |
|||||
US Bank |
Israel Common Values Fund | Class A | 16.37 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Israel Common Values Fund | Class A | 17.87 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Israel Common Values Fund | Class A | 10.95 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Israel Common Values Fund | Class A | 9.31 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
Ameritrade, Inc. |
Israel Common Values Fund | Class C | 98.67 | % | ||||
879 Sextant Ct, San Mateo, CA 94404 |
||||||||
US Bank |
Emerging Markets Fund | Class A | 24.27 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Emerging Markets Fund | Class A | 17.07 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Emerging Markets Fund | Class A | 18.07 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Emerging Markets Fund | Class A | 8.82 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
Suzanne H. Graham |
Emerging Markets Fund | Class C | 5.07 | % | ||||
1097 Gardenshire Lane, Deland, FL 32724 |
||||||||
Peter J. Gregory |
Emerging Markets Fund | Class C | 6.88 | % | ||||
421 Smith Hill Road, Honesdale, PA 18431 |
||||||||
NFS LLC, FEBO |
Aggressive Growth Fund | Class A | 32.10 | % | ||||
1555 N RiverCenter Drive, Ste 302, Milwaukee, WI 53212 |
||||||||
Merrill Lynch Pierce Fenner |
Aggressive Growth Fund | Class C | 6.64 | % | ||||
4800 Deer Lake Dr East, Jacksonville, FL 32246 |
||||||||
US Bank |
Defensive Strategies Fund | Class A | 10.30 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Defensive Strategies Fund | Class A | 13.19 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Defensive Strategies Fund | Class A | 6.88 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Defensive Strategies Fund | Class A | 6.60 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
NFS LLC, FEBO |
Fixed Income Fund | Class A | 36.80 | % | ||||
1555 N RiverCenter Drive, Ste 302, Milwaukee, WI 53212 |
||||||||
Merrill Lynch Pierce Fenner |
Fixed Income Fund | Class C | 7.76 | % | ||||
4800 Deer Lake Dr., East, Jacksonville, FL 32246 |
||||||||
33
Name of Shareholder | Name of Fund in which Shares Held |
Share Class Owned |
% Ownership of Share Class |
|||||
US Bank |
High Yield Bond Fund | Class A | 14.01 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
High Yield Bond Fund | Class A | 12.75 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
High Yield Bond Fund | Class A | 9.69 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
High Yield Bond Fund | Class A | 6.49 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
International Fund | Class A | 12.51 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
International Fund | Class A | 10.90 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
International Fund | Class A | 8.23 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
International Fund | Class A | 5.63 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
Merrill Lynch Pierce Fenner |
International Fund | Class C | 12.46 | % | ||||
4800 Deer Lake Dr., East, Jacksonville, FL 32246 |
||||||||
NFS LLC, FEBO |
Large/Mid Cap Growth Fund | Class A | 30.90 | % | ||||
1555 N Rivercenter Dr. Ste 302, Milwaukee, WI 53212 |
||||||||
Merrill Lynch Pierce Fenner |
Large/Mid Cap Growth Fund | Class C | 11.96 | % | ||||
4800 Deer Lake Dr., East, Jacksonville, FL 32246 |
||||||||
NFS LLC, FEBO |
Large/Mid Cap Value Fund | Class A | 11.67 | % | ||||
1555 N RiverCenter Drive, Ste 302, Milwaukee, WI 53212 |
||||||||
Merrill Lynch Pierce Fenner |
Large/Mid Cap Value Fund | Class C | 11.72 | % | ||||
4800 Deer Lake Dr., East, Jacksonville, FL 32246 |
||||||||
NFS LLC, FEBO |
Small Cap Value Fund | Class A | 12.05 | % | ||||
1555 N RiverCenter Drive, Ste 302, Milwaukee, WI 53212 |
||||||||
Merrill Lynch Pierce Fenner |
Small Cap Value Fund | Class C | 6.67 | % | ||||
4800 Deer Lake Dr., East, Jacksonville, FL 32246 |
||||||||
US Bank |
Growth & Income Fund | Class A | 16.68 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Growth & Income Fund | Class A | 22.06 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Growth & Income Fund | Class A | 11.01 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
US Bank |
Growth & Income Fund | Class A | 11.28 | % | ||||
PO Box 1787, Milwaukee, WI 53201 |
||||||||
Mary Ann DiLorenzo |
Growth & Income Fund | Class C | 6.77 | % | ||||
3715 Collector Lane, Bethpage, NY 11714 |
||||||||
Merrill Lynch Pierce Fenner |
Strategic Growth Fund | Class C | 5.77 | % | ||||
4800 Deer Lake Dr East, Jacksonville, FL 32246 |
34
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.
Directors, Officers and Managers of the Trust own 100% of the class I shares of the Aggressive, High Yield Bond and Fixed Income Funds, and 64% of the Growth & Income Fund, which are offered under a separate prospectus.
35
Section 5 | Investment Advisory and Other Services
Timothy Partners, Ltd. (TPL), 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 U.S. Securities and Exchange Commission 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 over eighteen years of experience in the investment industry prior to becoming president of Timothy Plan, having worked for Prudential Bache, Shearson Lehman Brothers and Investment Management & Research. Some or all of these firms may be utilized by an investment manager to execute portfolio trades for a Fund. Neither Mr. Ally nor any affiliated person of the Trust will receive any benefit from such transactions.
Transfer/Fund Accounting Agent/Administrator
Gemini Fund Services, Inc., 17605 Wright Street, Suite 2, Omaha, NE 68130 serves as transfer agent, fund accounting agent and administrator to the Trust pursuant to a written agreement dated August 8, 2011. Prior to the engagement of Gemini Fund Services, Inc., Huntington Asset Services, Inc. had provided transfer agent, fund accounting and administrative services to the Trust. For the services rendered to the Funds by the Administrator, the Funds pay the Administrator the greater of an annual minimum fee or an asset based fee, which scales downward based upon net assets for fund administration, fund accounting and transfer agency services.
For the 13 Funds of the Trust for the fiscal periods ended September 30, 2012, 2013 and 2014, the Funds paid the following fees for transfer agency, fund accounting and administration:
Service | 2012 |
2013 | 2014 | |||||||
Administration Fees |
$1,201,887 | $1,164,217 | $1,458,590 |
DISTRIBUTION PLANS
The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (collectively, the Plans) for each Class offered by a Fund up to a maximum of 1.00% for Class C shares and 0.25% for Class A shares (of which, up to 0.25% may be service fees to be paid by each respective class of shares to TPL, dealers and others, for providing personal service and/or maintaining shareholder accounts) per annum of its average daily net assets for expenses incurred by the Underwriter in the distribution of the Timothy Plan Funds shares. The fees are paid on a monthly basis, based on a Funds average daily net assets attributable to such class of shares.
Pursuant to the Plans, TPL, as underwriter, is paid a fee each month (up to the maximum of 1.00% for Class C shares per annum of average net assets of each Timothy Plan Fund) for expenses incurred in the distribution and promotion of the shares, including but not limited to, printing of prospectuses and reports used for sales purposes, preparation and printing of sales literature and related expenses, advertisements, and other distribution-related expenses as well as any distribution or service fees paid to securities dealers or others who have executed a dealer agreement with the underwriter. Any expense of distribution in excess of 1.00% for Class C shares per annum will be borne by TPL without any additional payments by the Funds. You should be aware that it is possible that Plan accruals will exceed the actual expenditures by TPL for eligible services. Accordingly, such fees are not strictly tied to the provision of such services.
The Plans also provide that to the extent that the Funds, TPL, the investment managers, or other parties on behalf of the Funds, TPL, or the investment managers make payments that are deemed to be payments for the financing of any activity primarily intended to result in the sale of shares issued by the Funds within the context of Rule 12b-1, such payments shall be deemed to be made pursuant to the Plans.
36
The Board of Trustees has determined that a consistent cash flow resulting from the sale of new shares is necessary and appropriate to meet redemptions and to take advantage of buying opportunities without having to make unwarranted liquidations of portfolio securities. The Board therefore believes that it will likely benefit the Funds to have moneys available for the direct distribution activities of TPL in promoting the sale of the Funds shares, and to avoid any uncertainties as to whether other payments constitute distribution expenses on behalf of the Funds. The Trustees, including the non-interested Trustees, have concluded that in the exercise of their reasonable business judgment and in light of their fiduciary duties, there is a reasonable likelihood that the Plans will benefit the Funds and their shareholders.
The Plans have been approved by the Board of Trustees, including all of the Trustees who are non-interested persons as defined in the 1940 Act. The Plans must be renewed annually by the Board of Trustees, including a majority of the Trustees who are non-interested persons of the Funds and who have no direct or indirect financial interest in the operation of the Plans. The votes must be cast in person at a meeting called for that purpose. It is also required that the selection and nomination of such Trustees be done by the non-interested Trustees. The Plans and any related agreements may be terminated at any time, without any penalty: 1) by vote of a majority of the non-interested Trustees on not more than 60 days written notice, 2) by the Underwriter on not more than 60 days written notice, 3) by vote of a majority of a Funds outstanding shares, on 60 days written notice, and 4) automatically by any act that terminates the Underwriting Agreement with TPL. TPL or any dealer or other firm may also terminate their respective agreements at any time upon written notice.
The Plans and any related agreement may not be amended to increase materially the amounts to be spent for distribution expenses without approval by a majority of a Funds outstanding shares, and all material amendments to the Plans or any related agreements shall be approved by a vote of the non-interested Trustees, cast in person at a meeting called for the purpose of voting on any such amendment.
TPL is required to report in writing to the Board of Trustees of the Funds, at least quarterly, on the amounts and purpose of any payment made under the Plans, as well as to furnish the Board with such other information as may reasonably be requested in order to enable the Board to make an informed determination of whether the Plans should be continued.
The following are the principal types of activities for which payments were made, and the amounts for each, for fiscal year ended September 30, 2014.
Expense Type | Amount Paid | |||||
Advertising |
$152,130 | |||||
Printing and Postage |
$45,961 | |||||
Compensation to Broker-Dealers |
$1,919,695 | |||||
Other Expenses |
$363,716 |
For the fiscal year ended September 30, 2014, TPL was compensated for distribution and service-related expenses by the Funds as follows:
Class A | Class C | |||||||||
Aggressive Growth Fund |
$47,679 | $33,318 | ||||||||
International Fund |
$117,669 | $30,930 | ||||||||
Large/Mid Cap Growth Fund |
$132,932 | $56,020 | ||||||||
Small Cap Value Fund |
$179,532 | $81,234 | ||||||||
Large/Mid Cap Value Fund |
$326,700 | $156,461 | ||||||||
Fixed Income Fund |
$164,725 | $73,234 | ||||||||
High Yield Bond Fund |
$98,933 | $26,073 | ||||||||
Israel Common Values Fund |
$31,005 | $19,008 | ||||||||
Defensive Strategies Fund |
$129,329 | $152,936 | ||||||||
Emerging Markets Fund |
$24,693 | $5,233 | ||||||||
Growth & Income Fund |
$44,859 | $6,551 | ||||||||
Strategic Growth Fund |
$0 | $64,014 | ||||||||
Conservative Growth Fund |
$0 | $85,548 |
37
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Cohen Fund Audit Services, Ltd., 1350 Euclid Avenue, Suite 800, Cleveland, OH 44115, has been selected as the independent registered public accounting firm for the Funds for the fiscal year ending September 30, 2015. Cohen Fund Audit Services, Ltd. performs an annual audit of the Funds 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 Funds investments. The custodian acts as the Funds depository, safe-keeps its portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Funds request and maintains records in connection with its duties. For its custodial services the bank receives, in addition to certain per transaction fees, the greater of $225 per month per fund or (annualized) 1.20 basis points (.00012) for the first $75 million in assets, 1.0 basis point (.00010) on the next $100 million in assets, and 0.75 basis point (.000075) on all amounts over $175 million in assets.
38
Section 6 | Brokerage Allocation
The Funds Advisor and/or investment Sub-Advisors, when effecting the purchases and sales of portfolio securities for the account of a Fund, will seek execution of trades either (i) at the most favorable and competitive rate of commission charged by any broker, dealer or member of an exchange, or (ii) at a higher rate of commission charges if reasonable in relation to brokerage and research services provided to the Fund or the investment manager by such member, broker, or dealer. Such services may include, but are not limited to, any one or more of the following: information on the availability of securities for purchase or sale, statistical or factual information, or opinions pertaining to investments. The Advisor and each Sub-Advisor are prohibited from considering brokerage allocation to dealers in consideration of a dealers distribution efforts of Portfolio or Fund shares. The Trust has adopted policies and procedures to detect and prohibit brokerage allocation based on broker/dealer Fund share sales.
TPL, through the investment managers, is responsible for making the Funds portfolio decisions subject to instructions described in the applicable prospectus. The Board of Trustees may, however, impose limitations on the allocation of portfolio brokerage.
Securities held by one Fund may also be held by another Fund or other accounts for which TPL or the investment manager serves as an Advisor, or held by TPL or the investment manager for their own accounts. If purchases or sales of securities for a Fund or other entities for which they act as investment Advisor or for their advisory clients arise for consideration at or about the same time, transactions in such securities will be made, insofar as feasible, for the respective entities and clients in a manner deemed equitable to all. To the extent that transactions on behalf of more than one client of TPL or the investment manager during the same period may increase the demand for securities being purchased or the supply of securities being sold, there may be an adverse effect on price.
On occasions when TPL or an investment manager deems the purchase or sale of a security to be in the best interests of one or more Funds or other accounts, they may to the extent permitted by applicable laws and regulations, but will not be obligated to, aggregate the securities to be sold or purchased for the Fund with those to be sold or purchased for the other Fund or accounts in order to obtain favorable execution and lower brokerage commissions. In that event, allocation of the securities purchased or sold, as well as the expenses incurred in the transaction, will be made by an investment manager in the manner it considers to be most equitable and consistent with its fiduciary obligations to the Funds and to such other accounts. In some cases this procedure may adversely affect the size of the position obtainable for a Fund.
The Board of Trustees of the Trust regularly reviews the brokerage placement practices of the investment managers on behalf of the Funds, and reviews the prices and commissions, if any, paid by the Funds to determine if they were reasonable.
The chart below shows the brokerage fees and commissions paid by the Funds for the fiscal years ending September 30, 2012, 2013 and 2014.
2012 |
2013 | 2014 | ||||
Aggressive Growth Fund |
$61,139 | $56,093 | $38,968 | |||
International Fund |
$40,730 | $47,676 | $35,470 | |||
Large/Mid Cap Growth Fund |
$94,405 | $78,676 | $49,717 | |||
Small Cap Value Fund |
$74,460 | $70,924 | $46,014 | |||
Large/Mid Cap Value Fund |
$6,992 | $46,750 | $16,529 | |||
Fixed Income Fund |
N/A | N/A | N/A | |||
High Yield Bond Fund |
N/A | N/A | N/A | |||
Defensive Strategies Fund |
$104,740 | $18,464 | $5,965 | |||
Israel Common Values Fund 1 |
$36,320 | $19,695 | $12,992 | |||
Emerging Markets Fund 2 |
N/A | $14,577 | $13,165 | |||
Growth & Income 3 |
N/A | $ | $21,083 | |||
Strategic Growth Fund |
$0 | $0 | N/A | |||
Conservative Growth Fund |
$0 | $0 | N/A |
1. | The Fund commenced investment operations on October 12, 2011. |
2. | The Fund commenced investment operations on December 3, 2012. |
3. | The Fund commenced investment operations on October 1, 2013. |
39
Section 7 | Purchase, Redemption, and Pricing of
Shares
The shares of the Timothy Plan Funds are continuously offered by the distributor. Orders will not be considered complete until receipt by the distributor of a completed account application form, and receipt by the custodian of payment for the shares purchased. Once both are received, such orders will be confirmed at the next determined net asset value per share (based upon valuation procedures described in the prospectus), plus the applicable sales load for Class A shares, as of the close of business of the business day on which the completed order is received, normally 4 p.m. Eastern time. Completed orders received by the Funds after 4 p.m. will be confirmed at the next business days price.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Timothy Plan Funds are available to all types of tax-deferred retirement plans such as individual retirement accounts (IRAs), employer-sponsored defined contribution plans (including 401(k) plans) and tax-sheltered custodial accounts described in Section 403(b) of the Internal Revenue Code. Qualified investors benefit from the tax-free compounding of income dividends and capital gains distributions. The Timothy Plan Funds sponsor IRAs. Subject to certain income restrictions, individuals, who are active participants in an employer maintained retirement plan, are eligible to contribute on a deductible basis to an IRA account. All individuals who have earned income may make nondeductible IRA contributions to the extent that they are not eligible for a deductible contribution. Income earned by an IRA account will continue to be tax deferred.
A special IRA program is available for employers under which the employers may establish IRA accounts for their employees in lieu of establishing tax qualified retirement plans. Known as SEP-IRAs (Simplified Employee Pension-IRA), they free the employer of many of the record keeping requirements of establishing and maintaining a tax qualified retirement plan trust.
If you are entitled to receive a distribution from a qualified retirement plan, you may rollover all or part of that distribution into a Timothy Plan Fund IRA. Your rollover contribution is not subject to the limits on annual IRA contributions. You can continue to defer federal income taxes on your contribution and on any income that is earned on that contribution.
The Timothy Plan Funds may be utilized as investment vehicles for employer sponsored and administered 403(b) retirement plans, by schools, hospitals, and certain other tax-exempt organizations or associations. 403(b) contributions, to the extent they satisfy the Plan Document requirements and do not exceed applicable limitations, are excludable from the gross income of the employee for federal income tax purposes.
The Timothy Plan Funds also offer Roth IRAs. While contributions to a Roth IRA are not currently deductible, the amounts within the accounts accumulate tax-free and qualified distributions will not be included in a shareholders taxable income. The contribution limit in 2014 was $5,000 annually ($10,000 for joint returns) in aggregate with contributions to traditional IRAs. Certain catch-up provisions and income phase-outs apply.
In all these plans, distributions of net investment income and capital gains will be automatically reinvested.
All the foregoing retirement plan options require special plan documents. Please call the Timothy Plan at (800) TIM-PLAN (800-846-7526) to obtain information regarding the establishment of retirement plan accounts. In the case of IRAs and 403(b) Plans, Constellation Trust acts as the plan custodian. The Fund custodian, Constellation Trust, charges $10.00 per social security number and account type in connection with plan establishment and maintenance, of which $5.00 is remitted to the Fund underwriter, Timothy Partners, Ltd. These IRA fees are detailed in the plan documents; you should consult your employers plan document for details of the expenses incurred by 403(b) accounts. You should consult with your attorney or other tax advisor for specific advice prior to establishing a plan.
DEALER TRANSACTION FEES
Dealers may charge their customers a processing or service fee in connection with the purchase or redemption of Fund shares. The amount and applicability of such a fee is determined and disclosed to its customers by each individual dealer. Processing or service fees typically are in addition to the sales and other charges described in the prospectus and this statement of additional information. Your dealer will provide you with specific information about any processing or service fees you will be charged.
40
The redemption price will be based upon the net asset value per share (subject to any applicable CDSC for Class C shares) next determined after receipt of the redemption request, provided it has been submitted in the manner described below. The redemption price may be more or less than your cost, depending upon the net asset value per Class at the time of redemption. Shares of the Timothy Plan Funds may be redeemed through certain brokers, financial institutions or service organizations, banks and bank trust departments, who may charge a transaction fee or other fee for their services at the time of redemption. Such fees would not otherwise be charged if the shares were purchased directly from the Timothy Plan Funds.
Payment for shares tendered for redemption is made by check within seven days after tender in proper form, except that the Funds reserve the right to suspend the right of redemption, or to postpone the date of payment upon redemption beyond seven days: (i) for any period during which the New York Stock Exchange is restricted, (ii) for any period during which an emergency exists as determined by the U.S. Securities and Exchange Commission as a result of which disposal of securities owned by the Funds is not reasonably predictable or it is not reasonably practicable for the Funds fairly to determine the value of its net assets, or (iii) for such other periods as the U.S. Securities and Exchange Commission may by order permit for the protection of shareholders of the Funds.
Pursuant to the Trusts 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 Fund, during any 90-day period for any one shareholder. Payments in excess of this limit will also be made wholly in cash unless the Board of Trustees believes that economic conditions exist which would make such a practice detrimental to the best interests of the Fund. Any portfolio securities paid or distributed in-kind would be valued as described under Other Purchase Information in the applicable prospectus. In the event that an in-kind distribution is made, a shareholder may incur additional expenses, such as the payment of brokerage commissions, on the sale or other disposition of the securities received from the Funds.
In-kind payments need not constitute a cross-section of a Funds portfolio. Where a shareholder has requested redemption of all or a part of the shareholders investment, and where a Fund completes such redemption in-kind, that Fund will not recognize gain or loss for federal tax purposes, on the securities used to complete the redemption. The shareholder will recognize gain or loss equal to the difference between the fair market value of the securities received and the shareholders basis in the Fund shares redeemed.
Shares of each Class of the Funds are offered at the public offering price for each Class. The public offering price is each classs next calculated net asset value (NAV), plus the applicable sales charge, if any. NAV per share of each Class is calculated by adding the value of each Funds investments, cash and other assets, subtracting liabilities of the Class, and then dividing the result by the number of shares of the Class outstanding. Each Fund generally determines the total value of each Class of its shares by using market prices for the securities comprising its portfolio. Securities for which quotations are not available and any other assets are valued at fair market value as determined in good faith by the Funds Investment Manager, in conformity with guidelines adopted by and subject to the review and supervision of the Board of Trustees. Each Funds per share NAV of each Class and public offering price is computed on all days on which the New York Stock Exchange (NYSE) is open for business, at the close of regular trading hours on the NYSE, currently 4:00 p.m. Eastern Time. In the event that the NYSE closes early, the NAV will be determined as of the time of closing.
The Board of Trustees has delegated to the Advisor and/or Investment Managers, under the oversight of the Board of Trustees Pricing Committee, responsibility for determining the value of Fund portfolio securities under certain circumstances. Under such circumstances and under the Pricing Committees oversight, the Advisor or Investment Manager will use its best efforts to arrive at the fair value of a security held by the Fund under all reasonably ascertainable facts and circumstances. The Advisor must prepare a report for the Board not less than quarterly containing a complete listing of any securities for which fair value pricing was employed and detailing the specific reasons for such fair value pricing. The Trust has adopted written policies and procedures to guide the Pricing Committee, Advisor and Investment Managers with respect to the circumstances under which, and the methods to be used, in fair valuing securities.
Except for the Israel Common Values and Emerging Markets Funds, which have a higher probability of Fair Value Pricing, 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. Except for the Israel Common Values and Emerging Markets Funds, the Funds typically do not invest in securities on foreign exchanges or in illiquid or restricted securities. Accordingly, except for those Funds, there may be very limited circumstances under which any Fund would hold securities that would need to be fair value priced. Examples of when it would be likely that a Fund security would require fair value pricing include but are not limited to: if the exchange on which a portfolio security traded were to close early; if trading in a particular security were to be halted on an exchange and did not resume trading prior to calculation of NAV; if a significant event that materially affected the value of a security were to occur after the securities exchange had closed but before the Funds NAV had been calculated; and if a security that had a significant exposure to foreign operations was subject to a material event or occurrence in a foreign jurisdiction in which the company had significant operations; or in the event that the Fixed Income or High Yield Bond Funds were to invest in certain types of bonds that had limited marketability, such as church bonds.
41
When a security is fair value priced, it means that the Advisor or Investment Manager 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 Advisors or Investment Managers calculations concerning security value could be wrong, and as a result, the Funds 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 Investment Manager are relying on a nationally recognized company that provides daily pricing of international and domestic securities. Accordingly, there is the possibility that the pricing firms calculations or pricing techniques could be wrong, and as a result the Funds NAV on that day could be higher or lower, depending on how the security was valued, than would otherwise be the case.
42
Section 8 | Taxation of the Fund
The Timothy Plan Funds intend to qualify each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code).
In order to so qualify, a Fund must, among other things, (i) derive at least 90% of its gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale of securities or foreign currencies, or other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies; (ii) distribute at least 98.2% 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 Funds 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 a Fund controls and which are engaged in the same, similar or related trades and businesses.
To the extent each Fund qualifies for treatment as a regulated investment company, it will not be subject to federal income tax on income and net capital gains paid to shareholders in the form of dividends or capital gains distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of each Funds required distributions over actual distributions in any calendar year. Generally, the required distribution is 98% of a Funds ordinary income for the calendar year plus 98.2% of its capital gain net income recognized during the one-year period ending on October 31 plus undistributed amounts from prior years. Each Fund intends to make distributions sufficient to avoid imposition of the excise tax. Distributions declared by a Fund during October, November or December to shareholders of record during such month and paid by January 31 of the following year will be taxable to shareholders in the calendar year in which they are declared, rather than the calendar year in which they are received.
If shares of a Fund are purchased within 30 days before or after redeeming other shares of the Fund at a loss, all or a portion of that loss will not be deductible and will increase the basis of the newly purchased shares.
Shareholders will be subject to federal income taxes on distributions made by a Fund whether received in cash or additional shares of the Fund. Distributions of net investment income and net short-term capital gains, if any, will be taxable to shareholders as ordinary income. Distributions of net long-term capital gains, if any, will be taxable to shareholders as long-term capital gains, without regard to how long a shareholder has held shares of the Fund. A loss on the sale of shares held for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain dividend paid to the shareholder with respect to such shares. A redemption of a Funds shares will result in a taxable gain or loss to the redeeming shareholder, depending on whether the redemption proceeds are more or less than the shareholders adjusted basis for the redeemed shares (which normally includes any sales charge paid on Class A shares). An exchange of shares of any Fund for shares of another Fund generally will have similar tax consequences. However, special rules apply when a shareholder disposes of Class A shares of a Fund through a redemption or exchange within 90 days after purchase thereof and subsequently reacquires Class A shares of that Fund or of another Timothy Plan Fund without paying a sales charge due to the 90-day reinstatement or exchange privileges. In these cases, any gain on the disposition of the original Class A shares will be increased, or loss decreased, by the amount of the sales charge paid when those shares were acquired, and that amount will increase the basis of the shares subsequently acquired. In addition, if shares of a Fund are purchased (whether pursuant to the reinstatement privilege or otherwise) within 30 days before or after redeeming other shares of that Fund (regardless of class) at a loss, all or a portion of that loss will not be deductible and will increase the basis of the newly purchased shares. Dividends eligible for designation under the dividends received deduction and paid by a Fund may qualify in part for the 70% dividends received deduction for corporations provided, however, that those shares have been held for at least 45 days.
The Trust will notify shareholders each year of the amount of dividends and distributions, including the amount of any distribution of long-term capital gains, and the portion of its dividends which may qualify for the 70% deduction.
By law, each Fund must withhold a percentage of your taxable distributions and proceeds (back-up withholding) if you do not provide your correct social security or taxpayer identification number, or if the IRS instructs the Fund to do so. The withholding provision generally does not apply to nonresident aliens. Ordinarily, distributions and redemption proceeds earned by a Funds shareholders are not subject to withholding of federal income tax. However, if a shareholder fails to furnish a tax identification number or social security number, or certify under penalties of perjury that such number is correct, the Fund may be required to withhold federal income tax from all dividend, capital gain and/or redemption payments to such shareholder. Dividends and capital gain distributions may also be subject to back-up withholding if a shareholder fails to certify under penalties of perjury that such shareholder is not subject to back-up withholding due to the underreporting of certain income. These certifications are contained in the purchase application enclosed with the Prospectus.
The foregoing is a general and abbreviated summary of the applicable provisions of the Code and Treasury regulations currently in effect. For the complete provisions, reference should be made to the pertinent Code sections and regulations. The Code and regulations are subject to change by legislative or administrative action at any time, and retroactively.
Each class of shares of the Timothy Plan Funds will share proportionately in the investment income and expenses of that Fund, except that each class will incur different distribution expenses.
Dividends and distributions also may be subject to state and local taxes.
Shareholders are urged to consult their tax advisors regarding specific questions as to federal, state and local taxes.
43
Section 9 | Calculation of Performance Data
Performance information for the shares of the Timothy Plan Funds will vary due to the effect of expense ratios on the performance calculations.
Current yield and total return may be quoted in advertisements, shareholder reports or other communications to shareholders. Yield is the ratio of income per share derived from a Funds investments to a current maximum offering price expressed in terms of percent. The yield is quoted on the basis of earnings after expenses have been deducted. Total return is the total of all income and capital gains paid to shareholders, assuming reinvestment of all distributions, plus (or minus) the change in the value of the original investment, expressed as a percentage of the purchase price. Occasionally, a Fund may include their distribution rates in advertisements. The distribution rate is the amount of distributions per share made by a Fund over a 12-month period divided by the current maximum offering price.
U.S. Securities and Exchange Commission (Commission) rules require the use of standardized performance quotations or, alternatively, that every non-standardized performance quotation furnished by a Fund be accompanied by certain standardized performance information computed as required by the Commission. Current yield and total return quotations used by a Fund are based on the standardized methods of computing performance mandated by the Commission. An explanation of those and other methods used by the Funds to compute or express performance follows.
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
W H E R E : | P | = | a hypothetical initial payment of $1,000.
| |||||
T | = | average annual total return.
| ||||||
n | = | number of years.
| ||||||
ERV | = | ending redeemable value of a hypothetical $1,000 payment made at the beginning of the one, five or ten-year periods, determined at the end of the one, five or ten-year periods (or fractional portion thereof). |
The advertised after-tax returns for a class of a fund are calculated by equaling an initial amount invested in a class of a fund to the ending value, according to the following formulas:
After Taxes on Distributions
P(1+T)n = ATVD
After Taxes on Distributions and Redemptions
P(1+T)n - ATVDR
W H E R E : | 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.
| ||||||
ATVD | = | 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. |
44
Based on these formulas, annualized total returns were as follows for the periods and Funds indicated:
Average Annual Returns
(as of 12/31/2014) |
||||||||||||||||||||
1-Year | 5-Year | 10-Year | Since Inception | Inception Date | ||||||||||||||||
Aggressive Growth - Class A |
Oct 05, 00 | |||||||||||||||||||
Pre-Tax |
0.06% | 15.00% | 6.10% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
-2.76% | 14.03% | 5.26% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
1.98% | 12.03% | 4.91% | N/A | ||||||||||||||||
Aggressive Growth - Class C |
Feb 03, 04 | |||||||||||||||||||
Pre-Tax |
4.30% | 15.41% | 5.92% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
0.94% | 14.31% | 5.01% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
4.75% | 12.37% | 4.78% | N/A | ||||||||||||||||
International - Class A |
May 03, 07 | |||||||||||||||||||
Pre-Tax |
-10.05% | 2.57% | N/A | -1.16% | ||||||||||||||||
Pre-Liquidation After-Tax |
-10.05% | 2.09% | N/A | -1.60% | ||||||||||||||||
Post-Liquidation After-Tax |
-5.69% | 1.79% | N/A | -1.05% | ||||||||||||||||
International - Class C |
May 03, 07 | |||||||||||||||||||
Pre-Tax |
-6.37% | 2.98% | N/A | -1.18% | ||||||||||||||||
Pre-Liquidation After-Tax |
-6.37% | 2.64% | N/A | -1.49% | ||||||||||||||||
Post-Liquidation After-Tax |
-3.60% | 2.15% | N/A | -1.02% | ||||||||||||||||
Large/Mid Cap Growth - Class A |
Oct 05, 00 | |||||||||||||||||||
Pre-Tax |
4.29% | 12.74% | 5.71% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
1.33% | 10.91% | 4.66% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
4.10% | 9.79% | 4.37% | N/A | ||||||||||||||||
Large/Mid Cap Growth - Class C |
Feb 03, 04 | |||||||||||||||||||
Pre-Tax |
8.59% | 13.20% | 5.48% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
5.04% | 11.13% | 4.33% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
6.87% | 10.12% | 4.17% | N/A | ||||||||||||||||
Small Cap Value - Class A |
Mar 24, 94 | |||||||||||||||||||
Pre-Tax |
-0.82% | 15.98% | 7.56% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
-5.53% | 14.15% | 5.84% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
1.71% | 12.46% | 5.61% | N/A | ||||||||||||||||
Small Cap Value - Class C |
Feb 02, 04 | |||||||||||||||||||
Pre-Tax |
3.32% | 16.41% | 7.36% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
-2.64% | 14.23% | 5.45% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
4.64% | 12.74% | 5.42% | N/A | ||||||||||||||||
Large/Mid Cap Value - Class A |
Jul 14, 99 | |||||||||||||||||||
Pre-Tax |
4.93% | 13.68% | 8.69% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
2.61% | 12.73% | 7.57% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
4.42% | 10.88% | 6.91% | N/A | ||||||||||||||||
Large/Mid Cap Value - Class C |
Feb 03, 04 | |||||||||||||||||||
Pre-Tax |
9.21% | 14.12% | 8.50% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
6.43% | 13.11% | 7.37% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
7.17% | 11.27% | 6.80% | N/A | ||||||||||||||||
Fixed Income - Class A |
Jul 14, 99 | |||||||||||||||||||
Pre-Tax |
-0.39% | 2.22% | 2.88% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
-1.28% | 1.31% | 1.71% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
-0.19% | 1.35% | 1.77% | N/A | ||||||||||||||||
Fixed Income - Class C |
Feb 03, 04 | |||||||||||||||||||
Pre-Tax |
2.56% | 2.41% | 2.60% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
1.94% | 1.76% | 1.68% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
1.49% | 1.61% | 1.67% | N/A | ||||||||||||||||
High Yield Bond - Class A |
May 07, 07 | |||||||||||||||||||
Pre-Tax |
-5.21% | 5.31% | N/A | 4.31% | ||||||||||||||||
Pre-Liquidation After-Tax |
-7.01% | 3.15% | N/A | 2.00% | ||||||||||||||||
Post-Liquidation After-Tax |
-2.92% | 3.24% | N/A | 2.35% | ||||||||||||||||
High Yield Bond - Class C |
May 07, 07 | |||||||||||||||||||
Pre-Tax |
-2.52% | 5.48% | N/A | 4.15% | ||||||||||||||||
Pre-Liquidation After-Tax |
-4.06% | 3.63% | N/A | 2.17% | ||||||||||||||||
Post-Liquidation After-Tax |
-1.40% | 3.51% | N/A | 2.38% |
45
Average Annual Returns
(as of 12/31/2014) |
||||||||||||||||||||
1-Year | 5-Year | 10-Year | Since Inception | Inception Date | ||||||||||||||||
Defensive Strategies - Class A |
Nov 04, 09 | |||||||||||||||||||
Pre-Tax |
-1.90% | 3.06% | N/A | 3.67% | ||||||||||||||||
Pre-Liquidation After-Tax |
-2.37% | 2.30% | N/A | 2.93% | ||||||||||||||||
Post-Liquidation After-Tax |
-1.05% | 2.20% | N/A | 2.68% | ||||||||||||||||
Defensive Strategies - Class C |
Nov 04, 09 | |||||||||||||||||||
Pre-Tax |
2.03% | 3.46% | N/A | 4.04% | ||||||||||||||||
Pre-Liquidation After-Tax |
1.88% | 2.87% | N/A | 3.41% | ||||||||||||||||
Post-Liquidation After-Tax |
1.17% | 2.60% | N/A | 3.04% | ||||||||||||||||
Israel Common Values - Class A |
Oct 11, 11 | |||||||||||||||||||
Pre-Tax |
-17.41% | N/A | N/A | 3.57% | ||||||||||||||||
Pre-Liquidation After-Tax |
-17.41% | N/A | N/A | 2.92% | ||||||||||||||||
Post-Liquidation After-Tax |
-9.86% | N/A | N/A | 2.52% | ||||||||||||||||
Israel Common Values - Class C |
Oct 11, 11 | |||||||||||||||||||
Pre-Tax |
-14.14% | N/A | N/A | 4.58% | ||||||||||||||||
Pre-Liquidation After-Tax |
-14.14% | N/A | N/A | 3.88% | ||||||||||||||||
Post-Liquidation After-Tax |
-8.00% | N/A | N/A | 3.23% | ||||||||||||||||
Emerging Markets - Class A |
Dec 03, 12 | |||||||||||||||||||
Pre-Tax |
-16.64% | N/A | N/A | -5.61% | ||||||||||||||||
Pre-Liquidation After-Tax |
-18.18% | N/A | N/A | -7.13% | ||||||||||||||||
Post-Liquidation After-Tax |
-8.64% | N/A | N/A | -4.66% | ||||||||||||||||
Emerging Markets - Class C |
Dec 03, 12 | |||||||||||||||||||
Pre-Tax |
-13.20% | N/A | N/A | -3.69% | ||||||||||||||||
Pre-Liquidation After-Tax |
-14.66% | N/A | N/A | -5.16% | ||||||||||||||||
Post-Liquidation After-Tax |
-6.64% | N/A | N/A | -3.19% | ||||||||||||||||
Growth & Income - Class A |
Oct 01, 13 | |||||||||||||||||||
Pre-Tax |
-2.22% | N/A | N/A | 3.24% | ||||||||||||||||
Pre-Liquidation After-Tax |
-2.22% | N/A | N/A | 3.24% | ||||||||||||||||
Post-Liquidation After-Tax |
-1.26% | N/A | N/A | 2.47% | ||||||||||||||||
Growth & Income - Class C |
Oct 01, 13 | |||||||||||||||||||
Pre-Tax |
1.63% | N/A | N/A | 7.22% | ||||||||||||||||
Pre-Liquidation After-Tax |
1.63% | N/A | N/A | 7.22% | ||||||||||||||||
Post-Liquidation After-Tax |
0.92% | N/A | N/A | 5.51% | ||||||||||||||||
Strategic Growth - Class A |
Oct 05, 00 | |||||||||||||||||||
Pre-Tax |
-4.47% | 6.32% | 3.12% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
-5.00% | 6.15% | 2.48% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
-2.53% | 4.88% | 2.47% | N/A | ||||||||||||||||
Strategic Growth - Class C |
Feb 03, 04 | |||||||||||||||||||
Pre-Tax |
-0.70% | 6.68% | 2.90% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
-0.99% | 6.62% | 2.38% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
-0.39% | 5.21% | 2.38% | N/A | ||||||||||||||||
Conservative Growth - Class A |
Oct 05, 00 | |||||||||||||||||||
Pre-Tax |
-3.67% | 4.94% | 3.40% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
-4.55% | 4.59% | 2.64% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
-1.52% | 3.76% | 2.62% | N/A | ||||||||||||||||
Conservative Growth - Class C |
Feb 03, 04 | |||||||||||||||||||
Pre-Tax |
0.15% | 5.34% | 3.21% | N/A | ||||||||||||||||
Pre-Liquidation After-Tax |
-0.61% | 5.13% | 2.59% | N/A | ||||||||||||||||
Post-Liquidation After-Tax |
0.72% | 4.15% | 2.56% | N/A |
46
YIELD QUOTATION
A funds yield is determined in accordance with the method defined by the Securities and Exchange Commission. A yield quotation is based on a 30 day (or one month) period and is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period, according to the following formula:
Yield = 2[(a-b/cd+1)6 1]
W H E R E : | 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.
47
Section 10 | Financial Statements
The Trusts financial statements, including the notes thereto, dated September 30, 2014, which have been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, are incorporated by reference from the Timothy Plans 2014 Annual Reports to Shareholders.
48
Appendix A | Proxy Voting Policy
Timothy Partners, Ltd. (Advisor) is registered with the Securities and Exchange Commission 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 Funds 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 Funds 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.
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 the 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 best interests of the companys shareholders and the company as a whole. Generally, subsequent to the moral considerations addressed above, when called upon by a Sub-Advisor to vote, Advisor will vote in favor of director nominees that have expressed and/or demonstrated a commitment to the interest of the companys shareholders. Advisor will consider the following factors in deciding how to vote proxies relating to director elections:
i. | 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 companys performance. |
ii. | Whether the slate of director nominees promotes a majority of independent directors on the full board Advisor believes that it is in the best interest of all company shareholders to have, as a majority, directors that are independent of management. |
iii. | A director nominees attendance at less than 75% of required meetings Frequent non-attendance at board meetings will be grounds for voting against re-election. |
iv. | Existence of any prior SEC violations and/or other criminal offenses Advisor will not vote in favor of a director nominee who, to Advisors 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 companys 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 companys 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 companys long-term prospects will be positively affected by the proposal, (c) how the proposed action will impact corporate governance and/or shareholder rights, (d) how the proposed deal was negotiated, (e) whether all shareholders receive equal/fair treatment under the terms of the proposed action, and/or (f) whether shareholders could realize greater value through alternative means. |
iii. | Capital Structure | Proposals affecting the capital structure of a company may have significant impact on shareholder value, particularly when they involve the issuance of additional stock. As such, Advisor will vote in favor of proposals to increase the authorized or outstanding stock of the company only when management provides persuasive business justification for the increase, such as to fund acquisitions, recapitalization or debt restructuring. Advisor will vote against proposals that unreasonably dilute shareholder value or create classes of stock with unequal voting rights if, over time, such action may lead to a concentration of voting power in the hands of few insiders. |
iv. | Executive Compensation | Advisor believes executives should be compensated at a reasonable rate and that companies should be free to offer attractive compensation packages that encourage high performance in executives because, over time, it will increase shareholder values. Advisor also believes however, that executive compensation should, to some extent, be tied to the performance of the company. Therefore, Advisor will vote in favor of proposals that provide challenging performance objectives to company executives, and which serve to motivate executives to better performance. Advisor will vote against all proposals that offer unreasonable benefits to executives whose past performance has been less than satisfactory. |
Advisor will vote against shareholder proposals that summarily restrict executive compensation without regard to the companys performance, and in favor of shareholder proposals that seek additional disclosures on executive compensation.
v. | Independent Registered Public Accountants | The engagement, retention and termination of a Companys independent auditors must be approved by the Companys 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 committees recommendation, Advisor generally will vote to ratify the employment or retention of a Companys 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 Companys 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 companys 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.
1. The Proxy Voting Officer
Advisor hereby appoints Mr. 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 Officers 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 Officers 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 Officers 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 Officers 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 Trusts Board of Trustees all proxies solicitations that, in the Proxy Voting Officers 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 issuers 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 Officers 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 its vote on the matter and if not, an explanation of why no vote was cast; (vii) how the vote was cast (i.e., for or against the proposal); (viii) whether the vote was cast for or against management; and (ix) whether the vote was consistent with 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 Officers 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, Sub-Advisors shall submit to Timothy Partners, Ltd. a complete proxy voting record to be filed with the Securities and Exchange Commission on an annual basis for each period ending June 30th on SEC Form N-PX. In addition, the Proxy Voting Officer shall make the Funds 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 Funds proxy voting record and a copy of this Policy is available, without charge, to the shareholders by calling the Trusts 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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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 proxy 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 waiver requests submitted to the Board and the Boards final determination relating thereto; |
5. | copies, if any, of all documents submitted to the Board relating to conflict of interest transactions and the Boards 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 Funds 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 to Timothy Partners, Ltd. promptly upon request.
Timothy Partners, Ltd. (the Advisor) is registered with the Securities and Exchange Commission as an Investment Advisor under the Investment Advisors Act of 1940, as amended (the Advisors Act). Pursuant to an advisory agreement between Advisor and The Timothy Plan (the Trust), the 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 Funds 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 Funds Sub-Advisor. Each Sub-Advisors 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 a 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 Advisors 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 Timothy Plan on its website.
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1055 Maitland Center Commons
Maitland, FL 32751
Online | www.timothyplan.com
E-mail | invest@timothyplan.com
Phone | (800) 846-7526
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