TIMOTHY PLAN
SAI
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 1, 2011
TIMOTHY PLAN FAMILY OF FUNDS
TIMOTHY PLAN ISRAEL SHARED VALES FUND
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SHARE CLASS
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TICKER SYMBOL
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CUSIP NUMBER
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CLASS A
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CLASS C
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THE FUND IS DISTRIBUTED THROUGH: TIMOTHY PARTNERS, LTD., 1055 MAITLAND CENTER COMMONS, MAITLAND, FLORIDA 32751
This Statement of Additional Information (“SAI”) is not a prospectus. It is an additional disclosure document filed in addition to and supplementing The Timothy Plan Israel Shared Values Fund Prospectus, dated October 1, 2011, which contains information concerning the Timothy Plan Israel Shared Values Fund (the “Fund”), which should be read with this Statement of Additional Information.
The Timothy Plan (the “Trust”) is registered with the Securities and Exchange Commission as an open-end management investment company.
COPIES OF THIS SAI AND/OR THE PROSPECTUS TO WHICH IT RELATES MAY BE OBTAINED FROM THE TRUST WITHOUT CHARGE BY WRITING THE TRUST AT 1055 MAITLAND CENTER COMMONS, MAITLAND, FL 32751 OR BY CALLING THE TRUST AT (800) 846-7526. RETAIN THIS SAI FOR FUTURE REFERENCE.
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Section 1. General Information
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Fund History
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Section 2. Investments and Risks
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Investment Strategies and Risks
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Fund Policies
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Portfolio Turnover
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Disclosure of Portfolio Turnover
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Section 3. Management of the Fund
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Investment Advisor
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Investment Manager
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Officers and Trustees of the Trust
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Compensation
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Code of Ethics
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Proxy Voting Policies
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Section 4. Control Persons and Principal Holders of Securities
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Holders of More than 5% of the Fund's Shares
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Section 5. Investment Advisory and Other Services
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Principal Underwriter
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Rule 12b-1 Plans
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Other Service Providers
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Service Agreements
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Section 6. Bokerage Allocation
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Brokerage Transactions
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Commissions
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Section 7. Purchase, Redemption and Pricing of Shares
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Purchase of Shares
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Redemption of Shares
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Section 8. Taxation of the Fund
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Taxation
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Section 9. Calculation of Performance Data
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Performance
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Section 10. Financial Statements
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Appendix A. Proxy Voting Policy
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Proxy Voting Policy
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Section 1. General Information
The Timothy Plan (“Trust”) was organized as a Delaware business trust on December 16, 1993, and is a mutual fund company of the type known as, and registered with the Securities and Exchange Commission as, an open-end management investment company. It is authorized to create an unlimited number of series of shares (each a “Fund”) and an unlimited number of share classes within each series. A mutual fund permits an investor to pool his or her assets with those of others in order to achieve economies of scale, take advantage of professional money managers and enjoy other advantages traditionally reserved for large investors. This SAI pertains only to the following series of the Trust:
Timothy Plan Israel Shared Value Fund
Shares of the Fund 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 two Classes of shares currently offered by the Fund: 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.
Shareholder meetings will not be held unless required by federal or state law.
Section 2. Investments and Risks
Investment Strategies and Risks
The Fund seeks to achieve its objectives by making investments selected in accordance with the Fund’s investment restrictions and policies as described in the Fund's prospectus. The Fund will vary its investment strategy as described in its prospectus to achieve its objectives. This SAI contains further information concerning the techniques and operations of the Fund, the securities in which it may invest, and the policies it will follow.
The Fund issues two classes of shares (Class A and Class C) 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.
COMMON STOCK
Common stock is defined as shares of a corporation that entitle the holder to a pro rata share of the profits of the corporation, if any, without a preference over any other shareholder or class of shareholders, including holders of the corporation’s preferred stock and other senior equity. Common stock usually carries with it the right to vote, and frequently, an exclusive right to do so. Holders of common stock also have the right to participate in the remaining assets of the corporation after all other claims, including those of debt securities and preferred stock, are paid.
PREFERRED STOCK
Generally, preferred stock receives dividends prior to distributions on common stock and usually has a priority of claim over common stockholders if the issuer of the stock is liquidated. Unlike common stock, preferred stock does not usually have voting rights; preferred stock, in some instances, is convertible into common stock. In order to be payable, dividends on preferred stock must be declared by the issuer’s Board of Directors. Dividends on the typical preferred stock are cumulative, causing dividends to accrue even if not declared by the Board of Directors. There is, however, no assurance that dividends will be declared by the Board of Directors of issuers of the preferred stocks in which the Fund 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 Fund may be required to pay for a convertible security an amount in excess of the value of the underlying common stock. Common stock acquired by the Fund upon conversion of a convertible security will generally be held for so long as the Fund’s Advisor or the Fund’s investment manager anticipates such stock will provide the Fund with opportunities that are consistent with the Fund’s investment objectives and policies.
INVESTMENT GRADE BONDS
Investment Grade Bonds are public and private issued debt securities that are rated above high yield (“junk” bonds). They generally carry a rating of BBB and above by Standard & Poor’s. Because they are considered investment grade, they generally carry lower coupon rates than high yield bonds.
WARRANTS
A warrant is an instrument issued by a corporation which gives the holder the right to subscribe to a specified amount of the issuer’s capital stock at a set price for a specified period of time.
AMERICAN DEPOSITORY RECEIPTS
American Depository Receipts (“ADRs”) are receipts typically issued by a U.S. bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. The Fund 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. Unless the Fund invests 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. Investing in a commodity ETF is one of the easiest ways to participate in the commodity markets.
HIGH YIELD BONDS
High Yield Bonds are public and private issue debt securities that are rated below investment grade (such as “BB” or lower by Standard & Poor’s Ratings Services and/or Ba or lower by Moody’s Investors Services, Inc.) or deemed to be below investment grade by the Investment Advisor. These types of securities are commonly referred to as “junk” bonds. Because these securities are below investment grade, they carry higher coupon rates and are subject to greater credit risk.
TEMPORARY DEFENSIVE MEASURES
The Fund's Investment Manager may take temporary defensive actions when it is determined to be in the best interests of the shareholders. Such defensive actions may include, but not be limited to, increasing the percentage of the Fund invested in cash and cash equivalents, investing more heavily in a particular sector, and investing without regard to capitalization rates. When the Fund takes a temporary defensive position, it will not be investing according to its investment objective, and at such times, the performance of the Fund will be different that it would have been if it had invested strictly according to its objectives.
In addition to those set forth in the current the Fund's prospectus, the Fund has adopted the investment restrictions set forth below, which are fundamental policies of the Fund, and which cannot be changed without the approval of a majority of the outstanding voting securities of the 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:
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issue senior securities;
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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;
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purchase or sell real estate or interests therein, although the Fund may each purchase debt instruments or securities of issuers which engage in real estate operations;
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invest for the purpose of exercising control or management of another company;
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purchase oil, gas or other mineral leases, rights or royalty contracts or exploration or development programs, except that the Fund may each invest in the debt instruments or securities of companies which invest in or sponsor such programs;
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invest more than 25% of the value of the Fund’s total assets in one particular industry, except for temporary defensive purposes;
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make purchases of securities on “margin”, or make short sales of securities, provided that the Fund may enter into futures contracts and related options and make initial and variation margin deposits in connection therewith; and
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invest in securities of any open-end investment company, except that the Fund may purchase securities of money market mutual funds, but such investments in money market mutual funds may be made only in accordance with the limitations imposed by the 1940 Act and the rules thereunder, as amended. But in no event may the 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.
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(Except for the Defensive Strategies Fund) as to 75% of the Fund’s total assets, invest more than 5% of its assets in the securities of any one issuer. (This limitation does not apply to cash and cash items, or obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities.)
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purchase or sell commodities or commodity futures contracts, other than those related to stock indexes.
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make loans of money or securities, except (I) by purchase of fixed income securities in which the Fund may invest consistent with its investment objective and policies; or (ii) by investment in repurchase agreements.
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invest in securities of any company if any officer or trustee of the Fund or the Fund’ 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.
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borrow money, except that the Fund may borrow from banks (I) for temporary or emergency purposes in an amount not exceeding the Fund’s assets or (ii) to meet redemption requests that might otherwise require the untimely disposition of portfolio securities, in an amount not to exceed 33% of the value of the Fund’s total assets (including the amount borrowed) at the time the borrowing is made; and whenever borrowings by the Fund, including reverse repurchase agreements, exceed 5% of the value of the Fund’s total assets, the Fund will not purchase any securities. Interest paid on borrowing will reduce net income.
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pledge, mortgage, hypothecate, or otherwise encumber its assets, except in an amount up to 33% of the value of its net assets, but only to secure borrowing for temporary or emergency purposes, such as to effect redemptions, or
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purchase the securities of any issuer, if, as a result, more than 10% of the value of the Fund’s net assets would be invested in securities that are subject to legal or contractual restrictions on resale (“restricted securities”), in securities for which there is no readily available market quotations, or in repurchase agreements maturing in more than 7 days, if all such securities would constitute more than 10% of the Fund’s net assets.
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So long as percentage restrictions are observed by the Fund at the time it purchases any security, changes in values of the Fund's assets or the assets of the Fund as a whole will not cause a violation of any of the foregoing restrictions.
Portfolio Turnover
It is not the policy of the Fund to purchase or sell securities for short-term trading purposes, but the Fund may sell securities to recognize gains or avoid potential for loss. The 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. Since this is a new Fund without an operating history, portfolio turnover information is not yet available. The Fund's Investment Manager does not expect the Fund to experience portfolio turnover in excess of 100% during the Fund's first year of operarations.
High portfolio turnover rates (annual rates in excess of 100%) involve additional transaction costs (such as brokerage commissions) which are borne by the Fund, and may result in adverse tax effects to Fund shareholders. (See “Dividends and Distributions” in the the Fund's prospectus.)
Disclosure of Portfolio Holdings
The following discussion sets forth the Trust’s policies and procedures with respect to the disclosure of Fund portfolio holdings.
FUND SERVICE PROVIDERS
Fund service providers include the following: Fund Accounting Agent, Independent Registered Public Accountants, Compliance Consulting Firm and Custodian. The Trust has entered into arrangements with certain third party service providers for services that require these groups to have access to the Fund’s portfolio on a real time basis. For example, the Trust’s Fund accounting agent is responsible for maintaining the accounting records of the Fund, which includes maintaining a current portfolio on behalf of the Fund. The Trust also undergoes an annual audit which requires the Trust’s independent registered public accountants to review the Fund’s portfolio. In addition to the Fund accounting agent, the Trust’s custodian also maintains an up-to-date list of the Fund’s holdings. The Trust’s compliance consulting firm must also have access to the Fund’s 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 Fund’s portfolio with any third party unless specifically authorized by the Trust’s President, Secretary or Treasurer.
The Board of Trustees monitors the services provided by each of the listed service providers to ensure each is complying with the contractual terms or expectation of the arrangement. If the Board of Trustees is unsatisfied with any of these service providers, the Board may terminate them accordingly. Each of the entities discussed above has adopted a code of ethics which requires that any person associated with such entity (1) maintains the confidentiality of all Trust information obtained by such person, and (2) does not use such person’s knowledge of Trust activities for their own personal benefit. The Trust relies on the compliance departments of each entity to enforce its code.
RATING AND RANKING ORGANIZATIONS
The Trust may from time to time provide its entire portfolio holdings of the Fund to various rating and ranking organizations, such as Morningstar, Inc., Lipper, Inc., Standard & Poor’s Ratings Group, Bloomberg L.P., and Thomson Financial Research. The Trust has obtained assurances from all such parties that any information provided to them will be held in confidence and that such information shall not be used for the personal benefit of the recipient.
The Trust’s management has determined that these groups provide investors 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 the 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 the 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 Trust’s web site, as discussed above. The Trust further prohibits any person affiliated with the Trust from entering into any ongoing arrangement with any person other than described above to receive portfolio holdings information relating to the Fund.
REVIEW
The Board of Trustees reviews these policies not less than annually and receives periodic attestations from affiliated persons that these policies are being adhered to. The Trust’s President, Secretary and Treasurer are authorized, subject to Board review, to make exceptions to the above-described policies.
Section 3. Management of the Fund
The Trust has entered into an advisory agreement with Timothy Partners, Ltd. (“TPL” or the “Advisor”), for the provision of investment advisory services on behalf of the Trust to the Fund (the “Advisory Agreement”), subject to the supervision and direction of the Trust’s Board of Trustees. More complete factors considered by the Trust’s Board of Trustees in approving the Advisory Agreementwill be available in the Trust's annual report dated September 30, 2011.
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. Each investment advisory agreement will terminate automatically in the event of its assignment.
INVESTMENT ADVISORY FEES
For its services to the Fund, the Advisor will receive a fee computed daily and paid monthly in arrears, at a rate equal to 1% annually of the average daily net assets of the Fund.
EAGLE GLOBAL ADVISORS, LLC
Pursuant to an Investment Sub-Advisory Agreement between TPL, the Trust and Eagle Global Advisors, LLC (“Eagle”), Eagle provides advice and assistance to TPL in the selection of appropriate investments for the Fund, subject to the supervision and direction of the Fund’s Board of Trustees. As compensation for its services, Eagle receives from TPL an annual fee at a rate equal to 0.60%.
Eagle utilizes the team approach to portfolio management for the Fund. Team members have specific regional and sector responsibilities but have an equal vote in the investment decision-making process. The team is led by Mr. Edward R. Allen, as Chairman of the International Equity Committee. The other members of the team are Thomas N. Hunt, Steven S. Russo and John Gualy. 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 June 30, 2011.
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Number of Other Accounts Managed
And Assets by Account Type
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Number of Accounts and Assets for Which
Advisory Fee is Performance-Based
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Name of Sub-Advisor and
Portfolio Manager
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Registered
Investment
Companies
($mils)
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Other Pooled
Investment
Vehicles
($mils)
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Other
Accounts
($mils)
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Registered
Investment
Companies
($mils)
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Other Pooled
Investment
Vehicles
($mils)
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Other
Accounts
($mils)
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Eagle Global Advisors, LLC:
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Edward R. Allen, III
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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Thomas N. Hunt, III
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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Steven S. Russo
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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John Gualy
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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--- ($---)
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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 Eagle's partners are comparatively fixed, profit participation may fluctuate substantially from year to year, based on changes in financial performance of the firm.
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
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Name, Age and Address
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Position(s)
Held With Trust
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Term of Office
and Length of Time Served
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Number of Portfolios
in Fund Complex
Overseen by Trustee
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Arthur D. Ally*
1055 Maitland Center
Commons
Maitland, FL
Born: 1942
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Chairman and President
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Indefinite; Trustee and President since 1994
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13
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Principal Occupation During Past 5 Years
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Other Directorships
Held by Trustee
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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.
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None
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Name, Age and Address
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Position(s)
Held With Trust
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Term of Office
and Length of Time Served
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Number of Portfolios
in Fund Complex
Overseen by Trustee
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Joseph E. Boatwright**
1410 Hyde Park Drive
Winter Park, FL
Born: 1930
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Trustee, Secretary
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Indefinite; Trustee and Secretary since 1995
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13
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Principal Occupation During Past 5 Years
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Other Directorships Held by Trustee
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Retired Minister. Currently serves as a consultant to the Greater Orlando Baptist Association. Served as Senior Pastor to Aloma Baptist Church from 1970-1996.
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None
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Name, Age and Address
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Position(s)
Held With Trust
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Term of Office
and Length of Time Served
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Number of Portfolios
in Fund Complex
Overseen by Trustee
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Mathew D. Staver**
1055 Maitland Center
Commons
Maitland , FL
Born: 1956
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Trustee
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Indefinite; Trustee since 2000
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13
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Principal Occupation During Past 5 Years
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Other Directorships Held by Trustee
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Dean of Liberty University School of Law since 2007. 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.
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None
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*
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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.
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**
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Messrs. Boatwright and Staver are "interested" Trustees, as that term is defined in the 1940 Act, because each has a limited partnership intereset in TPL.
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INDEPENDENT TRUSTEES
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Name, Age and Address
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Position(s)
Held With Trust
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Term of Office
and Length of Time Served
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Number of Portfolios
in Fund Complex
Overseen by Trustee
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Richard W. Copeland
1112 Glen Falls Road
DeLand, FL
Born: 1947
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Trustee
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Indefinite; Trustee since 2005
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13
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Principal Occupation During Past 5 Years
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Other Directorships Held by Trustee
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Principal of Copeland & Covert, Attorneys at Law since 1992, 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 since 1975.
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None
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Name, Age and Address
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Position(s)
Held With Trust
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Term of Office
and Length of Time Served
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Number of Portfolios
in Fund Complex
Overseen by Trustee
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Deborah Honeycutt
160 Deer Forest Trail
Fayetteville, GA
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Trustee
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Indefinite; Trustee since 2010
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13
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Principal Occupation During Past 5 Years
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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.
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Name, Age and Address
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Position(s)
Held With Trust
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Term of Office
and Length of Time Served
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Number of Portfolios
in Fund Complex
Overseen by Trustee
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Bill Johnson
203 E. Main Street
Fremont, MI
Born: 1946
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Trustee
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Indefinite; Trustee since 2005
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13
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Principal Occupation During Past 5 Years
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Other Directorships
Held by Trustee
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|
President (and Founder) of American Decency Association, Freemont, MI since 1999. Previously served as Michigan State Director for American Family Association (1987-1999). Previously a public school teacher for 18 years. B.S. from Michigan State University and a Masters of Religious Education from Grand Rapids Baptist Seminary.
|
|
None
|
|
|
|
|
|
|
|
Name, Age and Address
|
|
Position(s)
Held With Trust
|
|
Term of Office
and Length of Time Served
|
|
Number of Portfolios
in Fund Complex
Overseen by Trustee
|
|
John C. Mulder
2925 Professional Place
Colorado Springs, CO
Born: 1950
|
|
Trustee
|
|
Indefinite; Trustee since 2005
|
|
13
|
|
|
Principal Occupation During Past 5 Years
|
|
Other Directorships
Held by Trustee
|
|
|
President of WaterStone (formerly the Christian Community Foundation and National Foundation) since 2001. Prior: 22 years of executive experience for a group of banks and a trust company. B.A. in Economics from Wheaton College and MBA from University of Chicago.
|
|
None
|
|
|
|
|
|
|
|
Name, Age and Address
|
|
Position(s)
Held With Trust
|
|
Term of Office
and Length of Time Served
|
|
Number of Portfolios
in Fund Complex
Overseen by Trustee
|
|
Charles E. Nelson
1145 Cross Creek Circle
Altamonte Springs, FL
Born: 1934
|
|
Trustee
|
|
Indefinite; Trustee since 2000
|
|
13
|
|
|
Principal Occupation During Past 5 Years
|
|
Other Directorships
Held by Trustee
|
|
|
Certified Public Accountant, semi-retired. Former non-profit industry accounting officer. Former financial executive with commercial bank. Former partner national accounting firm.
|
|
None
|
|
Name, Age and Address
|
|
Position(s)
Held With Trust
|
|
Term of Office
and Length of Time Served
|
|
Number of Portfolios
in Fund Complex
Overseen by Trustee
|
|
Scott Preissler, Ph.D.
608 Pintail Place
Flower Mound, TX
Born: 1960
|
|
Trustee
|
|
Indefinite; Trustee since 2004
|
|
13
|
|
|
Principal Occupation During Past 5 Years
|
|
Other Directorships
Held by Trustee
|
|
|
Chairman of Stewardship Studies at Southwestern Baptist Theological Seminary, Ft. Worth, TX. Also serves as Founder and Chairman of the International Center for Biblical Stewardship. Previously, President and CEO of Christian Stewardship Association where he was affiliated for 14 years.
|
|
None
|
|
|
|
|
|
|
|
|
|
Position(s)Held With Trust
|
|
and Length of Time Served
|
|
Number of Portfolios
in Fund Complex
|
Alan M. Ross
11210 West Road
Roswell, GA
Born: 1951
|
|
Trustee
|
|
Indefinite; Trustee since 2004
|
|
13
|
|
|
Principal Occupation During Past 5 Years
|
|
|
|
|
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.
|
|
|
ADDITIONAL INFORMATION ABOUT THE TRUSTEES
The Board of Trustees believes that each Trustee's experience, qualifications, attributes or skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that the Trustees possess the requisite experience, qualifications, attributes and skills to serve on the Board. The Board of Trustees believes that the Trustees' ability to review critically, evaluate, question and discuss information provided to them; to interact effectively with the Advisor, other service providers, legal counsel and independent public accountants; and to exercise effective business judgment in the performance of their duties as Trustees, support this conclusion. The Board of Trustees has also considered the contributions that each Trustee can make to the Board and the Trust.
As described in the table above, the Independent Trustees have served as such for a considerable period of time which has provided them with knowledge of the business and operation of the Fund 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 Fund.
Mat Staver is the Dean of Liberty University School of Law and the founder and chairperson of Liberty Counsel. Mr. Staver has argued before the United States Supreme Court and brings his extensive legal background to the Board.
Richard Copeland is an attorney that specializes in estate planning and probate. Mr. Copeland received an LLM in taxation from the University of Miami, and has extensive experience in the taxation arena. He is also a professor in the College of Business Administration at Stetson University.
Deborah Honeycutt is a physician practicing in the Atlanta, GA area. Dr. Honeycutt has experience in managing and directing health clinics and as a family medical practitioner.
Bill Johnson has been in the ministry front lines in the fight against pornography. Mr. Johnson brings a keen knowledge of the various forms of pornography, as well as hands-on experience running a non-profit organization.
John Mulder is the executive director of Waterstone, a charitable remainder trust custodian that serves persons across the United States. Mr. Mulder brings proficiency in taxation as well as the skills he has acquired in managing a national organization.
Charles Nelson is a former audit partner in a national accounting firm. Mr. Nelson holds an MBA and is a Certified Public Accountant. He is a former college instructor, and brings a combination of business, financial, and accounting skills to the Board.
Scott Preissler, PhD is a former executive director of a worldwide ministry, and currently serves as chairperson of the stewardship department at Southwestern Baptist Theological Seminary. Dr. Preissler brings extensive organizational and public service experience to the Board.
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.
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 Fund. The Board consists of seven Independent Trustees and three Trustees who are interested persons of the Trust. Arthur D. Ally, who is an interested person of the Trust , serves as Chair of the Board and Mr. Wesley Pennington served as the Lead Independent Trustee until his death on December 25, 2010. Mr. Pennington worked with Mr. Ally to set the agendas for the Board and Committee meetings, chaired meetings of the Independent Trustees, and generally served as a liaison between the Independent Trustees and the Trust’s management between Board meetings. The Board will be a lead independent trustee to succeed Mr. Pennington.
The Board of Trustees has one standing committee: the Audit Committee. The Audit Committee is chaired by an Independent Trustee. The Audit Committee consists of Messrs. Nelson, Mulder and Copeland. Mr. Pennington served on the Audit Committee and was its Chairman until his passing, and Mr. Nelson has assumed the responsibility. The members of the Audit Committee are not “interested” persons of the Trust (as defined in the 1940 Act). The primary responsibilities of the Trust’s Audit Committee are, as set forth in its charter, to make recommendations to the Board as to: the engagement or discharge of the Trust’s independent auditors (including the audit fees charged by auditors); the supervision of investigations into matters relating to audit matters; the review with the independent auditors of the results of audits; and addressing any other matters regarding audits. The Audit Committee met two times during the last fiscal year.
The Board holds four regular meetings each year to consider and act upon matters involving the Trust and the Fund. 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 Fund, 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 Fund have effective and independent governance and oversight. Given the Advisor’s sponsorship of the Trust, that investors have selected the Advisor to provide overall management to the Fund, and Mr. Ally’s senior leadership role within the Advisor, the Board elected him Chairman. The Board reviews its structure regularly and believes that its leadership structure, including having at least two thirds Independent Trustees, coupled with the responsibilities undertaken by Mr. Ally as Chair and the Board’s Lead Independent Trustee, is appropriate and in the best interests of the Trust, given its specific characteristics. The Board of Trustees also believes its leadership structure facilitates the orderly and efficient flow of information to the Independent Trustees from Fund management.
BOARD OVERSIGHT OF RISK
An integral part of the Board’s overall responsibility for overseeing the management and operations of the Trust is the Board’s oversight of the risk management of the Trust's investment programs and business affairs. the Fund 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 Fund, 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 Fund, the Board of Trustees requires management of the Advisor and the Trust, including the Trust's Chief Compliance Officer (“CCO”), to report to the Board and the Audit Committee on a variety of matters, including matters relating to risk management, at regular and special meetings. The Board and the Audit Committee receive regular reports from the Trust’s independent public accountants on internal control and financial reporting matters. On at least an annual basis, the Independent Directors meet separately with the Fund’ CCO outside the presence of management, to discuss issues related to compliance. Furthermore, the Board receives a quarterly report from the Fund’ 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 Fund, including their investment performance, as well as reports regarding the valuation of the Fund's securities. In addition, in its annual review of the Fund's 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 the Fund or to develop processes, procedures and controls to eliminate or mitigate every occurrence or effect. The Board may, at any time and in its discretion, change the manner in which it conducts its risk oversight role.
TRUSTEE OWNERSHIP
The following table sets forth information about the Trustees and the dollar range of shares of the Timothy Plan Family of Funds owned by each Trustee: Trustees, for their services to the Fund, may purchase Class A shares at Net Asset Value; commissions normally charged on A share purchases are waived. As of June 30, 2011, 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
|
|
|
|
|
|
|
| |
|
Aggressive Growth Fund
|
|
$1 - $10,000
|
|
|
| |
|
Conservative Growth Fund
|
|
$1 - $10,000
|
|
|
| |
|
Fixed Income Fund
|
|
$1 - $10,000
|
|
|
| |
|
Large/Mid Cap Growth Fund
|
|
$1 - $10,000
|
|
|
| |
|
Large/Mid Cap Value Fund
|
|
$1 - $10,000
|
|
|
| |
|
Small Cap Value Fund
|
|
$1 - $10,000
|
|
|
| |
|
Strategic Growth Fund
|
|
$1 - $10,000
|
|
|
|
Joseph E. Boatwright
|
|
|
|
|
|
Over $100,000
|
| |
|
Conservative Growth Fund
|
|
$50,001 - $100,000
|
|
|
| |
|
Fixed Income Fund
|
|
$50,001 - $100,000
|
|
|
| |
|
Large/Mid Cap Value Fund
|
|
$50,001 - $100,000
|
|
|
| |
|
Money Market Fund
|
|
$1 - $10,000
|
|
|
| |
|
Small Cap Value Fund
|
|
$10,001 - $50,000
|
|
|
| |
|
Strategic Growth Fund
|
|
$50,001 - $100,000
|
|
|
|
Mathew D. Staver
|
|
|
|
|
|
| |
|
Money Market Fund
|
|
$10,001 - $50,000
|
|
| |
|
Small Cap Value Fund
|
|
Over $100,000
|
|
| |
|
Strategic Growth Fund
|
|
$50,001 - $100,000
|
|
|
|
|
|
|
|
|
|
Independent Trustees
|
|
|
|
|
|
|
Richard W. Copeland
|
|
None
|
|
|
None |
|
Bill Johnson
|
|
|
|
|
|
| |
|
Conservative Growth Fund
|
|
$10,001 - $50,000
|
|
| |
|
Defensive Strategies Fund
|
|
$1 - $10,000
|
|
| |
|
Fixed Income Fund
|
|
$1 - $10,000
|
|
| |
|
High Yield Bond Fund
|
|
$1 - $10,000
|
|
|
Dr. Deborah Honeycutt
|
|
None
|
|
|
None |
|
John C. Mulder
|
|
None
|
|
|
None |
|
Dr. David J. Tolliver
|
|
|
|
|
|
| |
|
Small Cap Value Fund
|
|
$10,001 - $50,000
|
|
|
Charles E. Nelson
|
|
|
|
|
|
| |
|
International Fund
|
|
$1 - $10,000
|
|
| |
|
Small Cap Value Fund
|
|
$1 - $10,000
|
|
|
Scott Preissler, Ph.D.
|
|
None
|
|
|
None |
|
Alan M. Ross
|
|
None
|
|
|
None |
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
|
|
|
|
|
|
|
|
|
|
Richard W. Copeland
|
|
2,250
|
|
0
|
|
0
|
|
2,250
|
|
Kathryn Martinez (1)
|
|
750
|
|
0
|
|
0
|
|
750
|
|
Debrorah Honeycutt (2)
|
|
2,250
|
|
0
|
|
0
|
|
2,250
|
|
Bill Johnson
|
|
3,000
|
|
0
|
|
0
|
|
3,000
|
|
John C. Mulder
|
|
1,500
|
|
0
|
|
0
|
|
1,500
|
|
Dr. David J. Tolliver (3)
|
|
3,000
|
|
0
|
|
0
|
|
3,000
|
|
Charles E. Nelson
|
|
3,000
|
|
0
|
|
0
|
|
3,000
|
|
Wesley W. Pennington (4)
|
|
3,000
|
|
0
|
|
0
|
|
3,000
|
|
Scott Preissler, Ph.D.
|
|
3,000
|
|
0
|
|
0
|
|
3,000
|
|
Alan M. Ross
|
|
1,500
|
|
0
|
|
0
|
|
1,500
|
|
1.
|
Ms. Martinez resigned from the Board effective November 20, 2009.
|
| |
|
|
2.
|
Dr. Honeycutt succeeded Ms. Martinez as a Trustee effective February 26, 2010.
|
| |
|
|
3.
|
Dr. Tolliver tendered his resignation effective January 11, 2011.
|
| |
|
|
4.
|
Mr. Pennington passed away on December 25, 2010.
|
The Trust, the Advisor, the investment managers and the Fund’ underwriter have each adopted a Code of Ethics under Rule 17j-1 of the Investment Company Act of 1940. The personnel subject to the Code are permitted to invest in securities; however, the Advisor's, Trust's and underwriter's employees are prohibited from purchasing securities that are held by the Fund. 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 Fund. Records of the Fund's proxy voting records are maintained and are available for inspection. The Board is responsible for overseeing the implementation of the procedures. Copies of the proxy voting procedures have been filed with the Securities and Exchange Commission, which may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. The procedures are also available on the SEC's EDGAR database at the SEC's web site (www.sec.gov). Copies of the procedures can be obtained, after paying a duplicating fee, by electronic request (publicinvest@sec.gov) or by writing the SEC's Public Reference Section, Washington, DC 20549-0102. A copy will also be sent to you, free of charge, at your request by writing to the Trust at Huntington Asset Services, 2960 North Meridian Street, Suite 300, Indianapolis, IN 46208, or calling toll free at 1-800-662-0201. A summary of the Trust's Proxy Voting Procedures is also attached to this SAI as Appendix A.
Section 4. Control Persons and Principal Holders of Securities
At the effective date of the Fund, the Advisor intends to purchase shares of the Fund and will be deemed to control the Fund at that time.
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.
Section 5. Investment Advisory and Other Services
Timothy Partners, Ltd., 1055 Maitland Center Commons, Maitland, FL 32751, acts as the principal underwriter (the “Underwriter”) of the Fund’ shares for the purpose of facilitating the notice filing of shares of the Fund under state securities laws and to assist in sales of shares pursuant to a written underwriting agreement (the “Underwriting Agreement”) approved by the Fund’ Trustees. TPL is not compensated for serving as principal underwriter to the Fund.
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 Fund 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 Fund.
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 Fund shall continue to bear the expense of all filing or registration fees incurred in connection with the notice filing of shares under state securities laws.
The Underwriting Agreement may be terminated by either party upon 60 days’ prior written notice to the other party.
Arthur D. Ally is President, Chairman and Trustee of the Trust. Mr. Ally is also President of Timothy Partners, Ltd. Mr. Ally had over eighteen years experience in the investment industry prior to becoming president of Timothy Plan, having worked for Prudential Bache, Shearson Lehman Brothers and Investment Management & Research. Some or all of these firms may be utilized by an investment manager to execute portfolio trades for the Fund. Neither Mr. Ally nor any affiliated person of the Trust will receive any benefit from such transactions.
DISTRIBUTION PLANS
The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act (collectively, the “Plans”) for each Share Class offered by the 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 Fund's shares. The fees are paid on a monthly basis, based on the Fund’s average daily net assets attributable to such class of shares.
Pursuant to the Plans, TPL, as underwriter, is paid a fee each month (up to the maximum of 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 Fund. You should be aware that it is possible that Plan accruals will exceed the actual expenditures by TPL for eligible services. Accordingly, such fees are not strictly tied to the provision of such services.
The Plans also provide that to the extent that the Fund, TPL, the investment managers, or other parties on behalf of the Fund, TPL, or the investment managers make payments that are deemed to be payments for the financing of any activity primarily intended to result in the sale of shares issued by the Fund within the context of Rule 12b-1, such payments shall be deemed to be made pursuant to the Plans.
The Board of Trustees has determined that a consistent cash flow resulting from the sale of new shares is necessary and appropriate to meet redemptions and to take advantage of buying opportunities without having to make unwarranted liquidations of portfolio securities. The Board therefore believes that it will likely benefit the Fund to have moneys available for the direct distribution activities of TPL in promoting the sale of the Fund's shares, and to avoid any uncertainties as to whether other payments constitute distribution expenses on behalf of the Fund. The 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 Fund 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 Fund and who have no direct or indirect financial interest in the operation of the Plans. The votes must be cast in person at a meeting called for that purpose. It is also required that the selection and nomination of such Trustees be done by the non-interested Trustees. The Plans and any related agreements may be terminated at any time, without any penalty: 1) by vote of a majority of the non-interested Trustees on not more than 60 days’ written notice, 2) by the Underwriter on not more than 60 days’ written notice, 3) by vote of a majority of the Fund’s outstanding shares, on 60 days’ written notice, and 4) automatically by any act that terminates the Underwriting Agreement with 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 the Fund's outstanding shares, and all material amendments to the Plans or any related agreements shall be approved by a vote of the non-interested Trustees, cast in person at a meeting called for the purpose of voting on any such amendment.
TPL is required to report in writing to the Board of Trustees of the Fund, at least quarterly, on the amounts and purpose of any payment made under the Plans, as well as to furnish the Board with such other information as may reasonably be requested in order to enable the Board to make an informed determination of whether the Plans should be continued.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Cohen Fund Audit Services, Ltd., 800 Westpoint Parkway, Suite 1100, Westlake, OH 44145, has been selected as the independent registered public accounting firm for the Fund for the fiscal year ending September 30, 2011. Cohen Fund Audit Services, Ltd. performs an annual audit of the Fund’ 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 Fund’s investments. The custodian acts as the Fund’s depository, safe-keeps its portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Fund’s 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.
Section 6. Brokerage Allocation
The Fund’s Advisor and/or Investment Manager, when effecting the purchases and sales of portfolio securities for the account of the 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 Investment Manager 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 Manager, is responsible for making the Fund’s portfolio decisions subject to instructions described in the the Fund's prospectus. The Board of Trustees may, however, impose limitations on the allocation of portfolio brokerage.
Securities held by one Fund may also be held by another 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 the 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 Fund and to such other accounts. In some cases this procedure may adversely affect the size of the position obtainable for the Fund.
The Board of Trustees of the Trust regularly reviews the brokerage placement practices of the investment manager on behalf of the Fund, and reviews the prices and commissions, if any, paid by the Fund to determine if they were reasonable.
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 Fund after 4 p.m. will be confirmed at the next business day’s price.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Timothy Plan Funds are available to all types of tax-deferred retirement plans such as individual retirement accounts (“IRAs”), employer-sponsored defined contribution plans (including 401(k) plans) and tax-sheltered custodial accounts described in Section 403(b) 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 shareholder’s taxable income. The contribution limit in 2010 is $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, Unified Financial Securities, Inc. acts as the plan custodian. The Fund custodian, US Bank, 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 employer’s 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.
The Fund's 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 Fund 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 Fund.
Payment for shares tendered for redemption is made by check within seven days after tender in proper form, except that the Fund 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 Fund is not reasonably predictable or it is not reasonably practicable for the Fund 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 Fund.
Pursuant to the Trust's Agreement and Declaration of Trust, payment for shares redeemed may be made either in cash or in-kind, or partly in cash and partly in-kind. However, the Trust has elected, pursuant to Rule 18f-1 under the 1940 Act, to redeem its shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of the 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 in the the Fund's prospectus. In the event that an in-kind distribution is made, a shareholder may incur additional expenses, such as the payment of brokerage commissions, on the sale or other disposition of the securities received from the Fund.
In-kind payments need not constitute a cross-section of the Fund's portfolio. Where a shareholder has requested redemption of all or a part of the shareholder's investment, and where the Fund completes such redemption in-kind, the Fund will not recognize gain or loss for federal tax purposes, on the securities used to complete the redemption. The shareholder will recognize gain or loss equal to the difference between the fair market value of the securities received and the shareholder's basis in the Fund shares redeemed.
Section 8. Taxation of the Fund
The Fund intends 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, the Fund must, among other things, (I) derive at least 90% of its gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale of securities or foreign currencies, or other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies; (ii) distribute at least 90% of its dividends, interest and certain other taxable income each year; and (iii) at the end of each fiscal quarter maintain at least 50% of the value of its total assets in cash, government securities, securities of other regulated investment companies, and other securities of issuers which represent, with respect to each issuer, no more than 5% of the value of the Fund’s total assets and 10% of the outstanding voting securities of such issuer, and with no more than 25% of its assets invested in the securities (other than those of the government or other regulated investment companies) of any one issuer or of two or more issuers which the Fund controls and which are engaged in the same, similar or related trades and businesses.
To the extent the 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 the Fund’s “required distributions” over actual distributions in any calendar year. Generally, the “required distribution” is 98% of the Fund’s ordinary income for the calendar year plus 98% of its capital gain net income recognized during the one-year period ending on October 31 plus undistributed amounts from prior years. the Fund intends to make distributions sufficient to avoid imposition of the excise tax. Distributions declared by the 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 the 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 the 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 the Fund’s shares will result in a taxable gain or loss to the redeeming shareholder, depending on whether the redemption proceeds are more or less than the shareholder’s adjusted basis for the redeemed shares (which normally includes any sales charge paid on Class A shares). An exchange of shares of any Fund for shares of another Fund generally will have similar tax consequences. However, special rules apply when a shareholder disposes of Class A shares of the Fund through a redemption or exchange within 90 days after purchase thereof and subsequently reacquires Class A shares of the 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 the Fund are purchased (whether pursuant to the reinstatement privilege or otherwise) within 30 days before or after redeeming other shares of the 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 the 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, the Fund must withhold a percentage (30% during calendar year 2011) 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 the Fund’s Shareholders are not subject to withholding of federal income tax. However, if a shareholder fails to furnish a tax identification number or social security number, or certify under penalties of perjury that such number is correct, the Fund may required to withhold federal income tax from all dividend, capital gain and/or redemption payments to such shareholder. Dividends and capital gain distributions may also be subject to back-up withholding if a shareholder fails to certify under penalties of perjury that such shareholder is not subject to back-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 the 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.
Section 9. Calculation of Performance Data
Performance information for the shares of the Fund will vary due to the effect of expense ratios on the performance calculations.
Current yield and total return may be quoted in advertisements, shareholder reports or other communications to shareholders. Yield is the ratio of income per share derived from the Fund’s investments to a current maximum offering price expressed in terms of percent. The yield is quoted on the basis of earnings after expenses have been deducted. Total return is the total of all income and capital gains paid to shareholders, assuming reinvestment of all distributions, plus (or minus) the change in the value of the original investment, expressed as a percentage of the purchase price. Occasionally, the Fund may include their distribution rates in advertisements. The distribution rate is the amount of distributions per share made by the Fund over a 12-month period divided by the current maximum offering price.
U.S. Securities and Exchange Commission (“Commission”) rules require the use of standardized performance quotations or, alternatively, that every non-standardized performance quotation furnished by the Fund be accompanied by certain standardized performance information computed as required by the Commission. Current yield and total return quotations used by the Fund are based on the standardized methods of computing performance mandated by the Commission. An explanation of those and other methods used by the Fund 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
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WHERE:
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P
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=
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a hypothetical initial payment of $1,000.
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T
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=
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average annual total return.
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n
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=
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number of years.
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ERV
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=
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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).
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The advertised after-tax returns for a class of the Fund are calculated by equaling an initial amount invested in a class of the 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
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WHERE:
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P
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=
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a hypothetical initial payment of $1,000.
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T
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=
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average annual return (after taxes on distributions or after taxes on distributions and redemptions as applicable,
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n
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=
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number of years.
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ATVD
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=
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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.
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ATVDR
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=
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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.
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YIELD QUOTATION
The Fund's “yield” is determined in accordance with the method defined by the Securities and Exchange Commission. A yield quotation is based on a 30 day (or one month) period and is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period, according to the following formula:
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Yield = 2[(a-b/cd+1)6 – 1]
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WHERE:
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a
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=
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dividends and interest earned during the period
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b
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=
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expenses accrued for the period (net of reimbursements)
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c
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=
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the average daily number of shares outstanding during the period that were entitled to receive dividends
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d
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=
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the maximum offering price per share on the last day of the period
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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 the 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.
Section 10. Financial Statements
The Trust's financial statements, including the notes thereto, dated September 30, 2010, which have been audited by Cohen Fund Audit Services, Ltd., Independent Registered Public Accounting Firm, are incorporated by reference from the Timothy Plan's 2010 Annual Reports to Shareholders. The Trust's unaudited financial statements for the semi-annual period ended March 31, 2011 are also incorporated by reference herein.
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 Fund, Advisor is responsible for voting all proxies related to securities held in the Fund’ investment portfolios. Because the Fund sub-Advisors, under the close scrutiny of the Advisor, perform economic and management analyses of the companies in which the Fund are invested, Advisor looks to the Fund sub-Advisors to vote proxies, and each sub-Advisors’ proxy policies and procedures are incorporated herein by specific reference.
Advisor, consistent with its fiduciary duties and pursuant to Rule 206(4)-6 under the Advisors Act, has designed this proxy voting policy (the “Policy”) to reflect its commitment to vote all proxies, when called upon to vote by a sub-Advisor who perceives a potential conflict or for any other reason, in a manner consistent with the best interests of the Fund’ 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 Fund’ 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 Fund’ shareholders to their own interests or to that of any other entity or interested party.
Key Proxy Voting Issues
All votes shall initially be reviewed subject to an analysis of the impact each issue may have pursuant to the moral considerations set forth in the Prospectus. Subsequent to the moral analysis, all votes shall be on a company-by-company basis, and each issue shall be considered in the context of the company under review, and the various economic impacts such issues may have on the Fund’ stated investment objectives. Advisor will give great weight to the views of management if and only if the issues involved will not have a negative impact on Funds’ shareholder values. In all other cases, Advisor will engage in an independent analysis of the impact that the proposed action will have on shareholder values.
Electing directors is one of the most important rights of stock ownership that company shareholders can exercise. Advisor believes that company directors should act in the long-term interests of the company’s shareholders and the company as a whole. Generally, subsequent to the moral considerations addressed above, when called upon by a sub-Advisor to vote, Advisor will vote in favor of director nominees that have expressed and/or demonstrated a commitment to the interest of the company’s shareholders. Advisor will consider the following factors in deciding how to vote proxies relating to director elections:
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1.
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In re-electing incumbent directors, the long-term performance of the company relative to its peers – Advisor will not vote to re-elect a board if the company has had consistent poor performance relative to its peers in the industry, unless the board has taken or is attempting to take steps to improve the company’s performance.
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2.
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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.
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3.
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A director nominee’s attendance at less than 75% of required meetings – frequent non-attendance at board meetings will be grounds for voting against re-election.
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4.
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Existence of any prior SEC violations and/or other criminal offenses – Advisor will not vote in favor of a director nominee who, to Advisor’s actual knowledge, is the subject of SEC or other criminal enforcement actions.
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Advisor believes that it is in the shareholders’ best interests to have bright and experienced directors serving on a company’s board. To this end, Advisor believes that companies should be allowed to establish director compensation packages that attract and retain desirable directors. Advisor will consider whether proposals relating to director compensation are reasonable in relation to the company’s performance and resources. Advisor will vote in favor of proposals that seek to impose reasonable limits on director compensation.
In all other issues that may arise relating to the Board of Directors, Advisor will vote against all proposals that benefit directors at the expense of shareholders, and in favor of all proposals that do not unreasonably abrogate the rights of shareholders. As previously stated, each issue will be analyzed on an issue-by-issue basis.
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:
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i.
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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.
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ii.
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Corporate Restructuring | These may include mergers and acquisitions, spin-offs, asset sales, leveraged buy-outs and/or liquidations. In determining the vote on these types of proposals, Advisor will consider the following factors: (a) whether the proposed action represents the best means of enhancing shareholder values, (b) whether the company’s long-term prospects will be positively affected by the proposal, (c) how the proposed action will impact corporate governance and/or shareholder rights, (d) how the proposed deal was negotiated, (e) whether all shareholders receive equal/fair treatment under the terms of the proposed action, and/or (f) whether shareholders could realize greater value through alternative means.
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iii.
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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.
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1.
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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.
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Advisor will vote against shareholder proposals that summarily restrict executive compensation without regard to the company's performance, and in favor of shareholder proposals that seek additional disclosures on executive compensation.
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iv.
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Independent Registered Public Accountants | The engagement, retention and termination of a Trust’s independent auditors must be approved by the Trust’s audit committee, which typically includes only those independent directors who are not affiliated with or compensated by the Trust, except for directors’ fees. In reliance on the audit committee’s recommendation, Advisor generally will vote to ratify the employment or retention of a Trust’s independent auditors unless Advisor is aware that the auditor is not independent or that the auditor has, in the past, rendered an opinion that was neither accurate nor indicative of the Trust’s financial position.
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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.
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4.
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Social and Environmental Issues
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When called upon by a sub-Advisor to vote, in determining how to vote proxies in this category, Advisor will consider the following factors:
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•
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Whether the proposal creates a stated position that could affect the company’s reputation and/or operations, or leave it vulnerable to boycotts and other negative consumer responses;
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•
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The percentage of assets of the company that will be devoted to implementing the proposal;
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•
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Whether the issue is more properly dealt with through other means, such as through governmental action;
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•
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Whether the company has already dealt with the issue in some other appropriate way; and
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•
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What other companies have done in response to the issue.
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While Advisor generally supports shareholder proposals that seek to create good corporate citizenship, Advisor will vote against proposals that would tie up a large percentage of the assets of the company. Advisor believes that such proposals are inconsistent with its duty to seek long-term value for Fund shareholders. Advisor will also evaluate all proposals seeking to bring to an end certain corporate actions to determine whether the proposals adversely affect the ability of the company to remain profitable. Advisor will vote in favor of proposals that enhance or do not negatively impact long-term shareholder values.
Proxy Voting Procedures
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1.
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The Proxy Voting Officer
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Advisor hereby appoints Terry Covert as the person responsible for voting all proxies relating to securities held in the Fund's accounts (the “Proxy Voting Officer”) when called upon by a sub-Advisor to vote. The Proxy Voting Officer shall take all reasonable efforts to monitor corporate actions, obtain all information sufficient to allow an informed vote on the matter, and ensure that all proxy votes are cast in a timely fashion and in a manner consistent with this Policy.
If, in the Proxy Voting Officer’s reasonable belief, it is in the best interest of the Fund shareholders to cast a particular vote in a manner that is contrary to this policy, the Advisor shall submit a request for a waiver to the Board of Trustees of the Trust (the “Board”), stating the facts and reasons for the Proxy Voting Officer’s belief. The Proxy Voting Officer shall proceed to vote the proxy in accordance with the decision of the Board.
In addition, if, in the Proxy Voting Officer’s reasonable belief, it is in the best interest of the Fund shareholders to abstain from voting on a particular proxy solicitation, the Proxy Voting Officer shall make a record summarizing the reasons for the Proxy Voting Officer’s belief and shall present this summary to the Board along with other reports required in Section 3 below.
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2.
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Conflict of Interest Transactions
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The Proxy Voting Officer shall submit to the Trust’s Board of Trustees all proxies solicitations that, in the Proxy Voting Officer’s reasonable belief, present a conflict between the interests of the Fund shareholders on one hand, and those of an Advisor or any of its affiliated persons/entities (each, an “Advisory Entity”). Conflict of interest transactions include, but are not limited to, situations where:
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1.
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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);
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2.
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an Advisory Entity provides advisory, brokerage, underwriting, insurance or banking or other services to the issuer whose management is soliciting proxies;
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3.
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an Advisory Entity has a personal or business relationship with a candidate for directorship; or
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4.
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an Advisory Entity manages a pension plan or administers an employee benefit plan, or intends to pursue an opportunity to do so.
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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 Fund, a brief description of the conflict, and any other information in the Proxy Voting Officer’s possession that would enable the Board to make an informed decision on the matter. The Proxy Voting Officer shall vote the proxy in accordance with the direction of the Board.
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3.
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Report to the Board of Trustees
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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 Fund, 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 Officer’s reasonable opinion, presented a potential conflict of interest, and a brief explanation of how each conflict was resolved.
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4.
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Responding to Fund Shareholders’ Request for Proxy Voting Disclosure
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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 Fund’s proxy voting record available to any Fund shareholder who may wish to review such record through The Timothy Plan website. The Timothy Plan website shall notify shareholders of the Fund that the Fund’s proxy voting record and a copy of this Policy is available, without charge, to the shareholders by calling the Trust’s toll-free number as listed in its current prospectus. Timothy Partners shall respond to all shareholder requests for records within three business days of such request by first-class mail or other means designed to ensure prompt delivery.
Record Keeping
In connection with this Policy, the Proxy Voting Officer, when called upon by a sub-Advisor to vote, shall maintain a record of the following:
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1.
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copies all proxies solicitations received by the Fund, including a brief summary of the name of the issuer of the portfolio security, the exchange ticker symbol for the security, the CUSIP number, and the shareholder meeting date;
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2.
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a reconciliation of the proxy solicitations received and number of shares held by the Fund in the company;
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the analysis undertaken to ensure that the vote cast is consistent with this Policy;
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4.
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copies, if any, of all waiver request submitted to the Board and the Board’s final determination relating thereto;
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5.
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copies, if any, of all documents submitted to the Board relating to conflict of interest transactions and the Board’s final determination relating thereto;
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6.
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copies of any other documents created or used by the Proxy Voting Officer in determining how to vote the proxy;
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7.
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copies of all votes cast;
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8.
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copies of all quarterly summaries presented to the Board; and
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9.
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copies of all shareholder requests for the Fund’s proxy voting record and responses thereto.
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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 promptly upon request.
Summary
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 Fund, 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 Fund to sub-Advisors. Because the Fund’s sub-Advisor, under the close scrutiny of the Advisor, monitors and reviews the companies in which the Fund invests, the Advisor has delegated its authority to vote proxies to the Fund’s sub-Advisor. Each sub-Advisor’s proxy voting policies and procedures have been reviewed by the Advisor and the Board.
Advisor, consistent with its fiduciary duties and pursuant to Rule 206(4)-6 under the Advisors Act, will vote, or cause the Fund’ 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 Fund’ 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 Fund’ shareholders to their own interests or to that of any other entity or interested party. In the event that a conflict of interest arises between Advisor or a sub-Advisor and Fund, a complete description of the conflict will be presented to the Board, and the proxy will be voted as directed by the Board.
A copy of Advisor’s Proxy Voting Policies and Procedures may be obtained by calling The Timothy Plan at 1-800-846-7526 or may be viewed on line at www.timothyplan.com. A copy also may be obtained from Fund documents filed with the SEC at its website www.sec.gov. A record of the actual proxy votes cast by the Fund also is available upon request made to The Timothy Plan either by phone or by contacting us on our website.
