SCHEDULE 14A (RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/ Filed by a party other than the registrant / / Check
the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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(Name of Registrant as Specified in Its Charter)
THE TIMOTHY PLAN
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
NOT APPLICABLE
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE
TIMOTHY PLAN CONSERVATIVE GROWTH FUND & TIMOTHY PLAN STRATEGIC GROWTH FUND
1304 West Fairbanks Avenue
Winter Park, FL 32789
Toll Free 800-662-0201
The Timothy Plan (the "Trust") is holding a special meeting of the
shareholders of the Timothy Plan Conservative Growth Fund and the Timothy Plan
Strategic Growth Fund (the "Special Meeting") on Friday, October 17, 2003 at
10:00 a.m., Eastern Time. The Special Meeting will be held at the offices of the
Trust's Administrator, Citco-Quaker Fund Services, Inc., located at 1288 Valley
Forge Road, Suite 88, Valley Forge, PA 19482.
The Trust is a Delaware business trust, operating as a registered
management investment company. The Trust has authorized the division of its
shares into various series (each a "Fund" and together the "Funds")and currently
offers shares of eight Funds to the public. The Trust further has authorized the
division of its shares into various classes, each with different sales charges
and/or ongoing fees. Each Fund offers Class A Shares, which are offered to the
public with a front-end sales charge, and Class B shares, which are offered with
a contingent deferred sales charge which declines to zero over a period of
years.
The items for consideration at the Special Meeting apply only to the
Timothy Plan Conservative Growth Fund and the Timothy Plan Strategic Growth
Fund. The Special Meeting will be held to consider the following items of
business:
1. Approval of an increase in the investment advisory fee paid to Timothy
Partners, Ltd. for its services to the Timothy Plan Conservative
Growth Fund;
2. Approval of an increase in the investment advisory fee paid to Timothy
Partners, Ltd. for its services to the Timothy Plan Strategic Growth
Fund; and
3. Such other business as may properly come before the shareholders of
the Trust.
Please note that the proposed increase in investment advisory fees will NOT
result in an increase in each Fund's overall expense structure. The Trust is
seeking to increase each Fund's investment advisory fee as part of a
comprehensive restructuring of each Fund's fee arrangements. Although investment
advisory fees are being increased, other expenses and fees are being reduced
and/or eliminated, and as a result, each Fund's overall expense ratio will stay
the same. The details of this restructuring are contained in the proxy
materials, and we encourage you to read them carefully.
You may vote at the Special Meeting if you are the record owner of shares
of Timothy Plan Conservative Growth Fund and/or the Timothy Plan Strategic
Growth Fund as of the close of business on August 15, 2003. If you attend the
Special Meeting, you may vote your shares in person. If you expect to attend the
Special Meeting, please call the Trust at 1-800-662-0201 to inform them.
Your vote on these proposals is very important. If you own shares in more
than one account of the Trust, you will receive more than one proxy statement
and proxy card and will need to vote the shares you hold for each account.
Whether or not you plan to attend the Special Meeting, please fill in, date,
sign and return the proxy card in the enclosed, postage paid envelope. You may
also return your completed proxy card by faxing it to the Trust at 610-935-3775.
PLEASE VOTE NOW TO HELP SAVE THE COST OF ADDITIONAL SOLICITATIONS.
As always, we thank you for your confidence and support.
By Order of the Board of Trustees,
Arthur Ally
Chairman
August __, 2003
THE TIMOTHY PLAN
SPECIAL MEETING OF THE SHAREHOLDERS OF
OF THE
TIMOTHY PLAN CONSERVATIVE GROWTH FUND & TIMOTHY PLAN STRATEGIC GROWTH FUND
1304 West Fairbanks Avenue
Winter Park, FL 32789
Toll Free: 800-662-0201
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PROXY STATEMENT
DATED AUGUST 25, 2003
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 17, 2003
INTRODUCTION
The Board of Trustees (the "Board") of the Timothy Plan (the "Trust") has
voted to call a special meeting of all shareholders of Timothy Plan
Conservative Growth Fund and/or the Timothy Plan Strategic Growth Fund
(each a "Fund" and together the "Funds"), in order to seek shareholder
approval of one proposal relating to each Fund. The Special Meeting will be
held at the offices of Citco-Quaker Fund Services, Inc. ("CQFS"), located
at 1288 Valley Forge Road, Suite 88, Valley Forge, PA 19482, at 10:00 a.m.,
Eastern Time, on Friday, October 17, 2003. CQFS serves as Administrator to
the Trust. If you expect to attend the Special Meeting in person, please
call the Trust at 1-800-662-0201 to inform them of your intentions. This
proxy was first mailed to eligible shareholders on or about September 8,
2003.
ITEMS FOR CONSIDERATION
The Special Meeting will be held to consider the following items of
business:
1. Approval of an increase in the investment advisory fee paid to Timothy
Partners, Ltd. for its services to the Timothy Plan Conservative
Growth Fund;
2. Approval of an increase in the investment advisory fee paid to Timothy
Partners, Ltd. for its services to the Timothy Plan Strategic Growth
Fund; and
3. Such other business as may properly come before the shareholders of
the Trust.
WHO VOTES ON WHICH PROPOSALS
The table below summarizes each proposal to be presented at the Special
Meeting and shows the Funds whose shareholders may vote for each proposal.
PROPOSAL WHICH SHAREHOLDERS MAY VOTE
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1. Approval of an increase in the The shareholders of record (as of
investment advisory fee paid to August 15, 2003) of the Timothy
Timothy Partners, Ltd. for its Plan Conservative Growth Fund only.
services to the Timothy Plan
Conservative Growth Fund.
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2. Approval of an increase in the The shareholders of record (as of
investment advisory fee paid to August 15, 2003) of the Timothy
Timothy Partners, Ltd. for its Plan Strategic Growth Fund only.
services to the Timothy Plan
Strategic Growth Fund.
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WHO IS ELIGIBLE TO VOTE
If you were the record owner of any shares of the Timothy Plan Conservative
Growth Fund and/or the Timothy Plan Strategic Growth Fund as of the close
of business on August 15, 2003 (the "Record Date"), then you are eligible
to vote on one or more of the proposals (See the table in the preceding
paragraph to find out which proposals apply to you). The number of shares
outstanding for each of the above-listed Funds as of the Record Date is
listed in Exhibit A to this proxy statement. Each share counts as one vote,
and fractional shares count as fractional votes.
VOTING BY PROXY
The simplest and quickest way for you to vote is to complete, sign and date
the enclosed proxy card and mail it back to the Trust in the envelope
provided. The Board urges you to fill out and return your proxy card even
if you plan to attend the Special Meeting. Returning your proxy card will
not affect your right to attend the Special Meeting and vote.
The Board has named Theresa McNamee and Joseph Carlin as proxies, and their
names appear on your proxy card(s). By signing your proxy card and
returning it, you are appointing those persons to vote for you at the
Special Meeting. If you properly fill in your proxy card and return it to
the Trust in time to vote, one of the appointed proxies will vote your
shares as you have directed. If you sign and return your proxy card, but do
not make specific choices, one of the appointed proxies will vote your
shares on each proposal as recommended by the Board.
If an additional matter is presented for vote at the Special Meeting, one
of the appointed proxies will vote in accordance with his/her best
judgment. At the time this proxy statement was printed, the Board was not
aware of any other matter that needed to be acted upon at the Special
Meeting other than the two proposals discussed in this proxy statement.
If you appoint a proxy by signing and returning your proxy card, you can
revoke that appointment at any time before it is exercised. You can revoke
your proxy by sending in another proxy with a later date, or by notifying
the Trust's Secretary in writing, that you have revoked your proxy prior to
the Special Meeting, at the following address: Mr. Terry Covert, The
Timothy Plan, 1304 West Fairbanks Avenue, Winter Park, FL 32789.
VOTING IN PERSON
If you attend the meeting and wish to vote in person, you will be given a
ballot when you arrive. If you have already voted by proxy and wish to vote
in person instead, you will be given an opportunity to do so during the
Special Meeting. If you attend the Special Meeting, but your shares are
held in the name of your broker, bank or other nominee, you must bring with
you a letter from that nominee stating that you are the beneficial owner of
the shares on the Record Date and authorizing you to vote.
BOARD RECOMMENDATION
The proxy is solicited by the Board of Trustees of the Trust which
recommends a vote "FOR" all matters.
REQUIREMENT OF A QUORUM
A quorum is the number of outstanding shares, as of the Record Date, that
must be present, in person or by proxy, in order for the Trust to hold a
valid shareholder meeting. The Trust cannot hold a valid shareholder
meeting unless there is a quorum of shareholders present in person or by
proxy. The table below sets forth the quorum required for each proposal to
be voted at the Special Meeting:
PROPOSAL NUMBER OF SHARES REQUIRED FOR QUORUM
================================================================================
1. Approval of an increase in the A majority of the shareholders of
investment advisory fee paid to record (as of August 15, 2003) of
Timothy Partners, Ltd. for its the Timothy Plan Conservative
services to the Timothy Plan Growth Fund only.
Conservative Growth Fund.
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2. Approval of an increase in the A majority of the shareholders of
investment advisory fee paid to record (as of August 15, 2003) of
Timothy Partners, Ltd. for its the Timothy Plan Strategic Growth
services to the Timothy Plan Fund only.
Strategic Growth Fund.
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Under rules applicable to broker-dealers, if your broker holds your shares
in its name, the broker is not allowed to vote your shares on any of the
Proposals unless it has received voting instructions from you. If your
broker does not vote your shares on one or more Proposals because it has
not received instructions from you, those shares will be considered broker
non-votes.
Broker non-votes and abstentions with respect to a proposal count as
present for purposes of establishing a quorum, and count as votes cast
against each Proposal.
The following table describes the votes needed to approve each Proposal:
PROPOSAL NUMBER OF SHARES REQUIRED TO APPROVE
================================================================================
1. Approval of an increase in the The affirmative vote of a
investment advisory fee paid to "majority" of the shares entitled
Timothy Partners, Ltd. for its to vote of record (as of August 15,
services to the Timothy Plan 2003) of the Timothy Plan
Conservative Growth Fund. Conservative Growth Fund only.
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2. Approval of an increase in the The affirmative vote of a
investment advisory fee paid to "majority" of the shares entitled
Timothy Partners, Ltd. for its to vote of record (as of August 15,
services to the Timothy Plan 2003) of the Timothy Plan Strategic
Strategic Growth Fund. Growth Fund only.
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The Investment Company Act of 1940, as amended (the "1940 Act") defines a
"majority" of the outstanding voting securities of a Fund as the lesser of
(a) the vote of holders of at least 67% of the voting securities of the
Fund present in person or by proxy, if more than 50% of such shares are
present in person or by proxy; or (b) the vote of holders of more than 50%
of the outstanding voting securities of the Fund.
Broker non-votes will not count as votes cast and will have the effect of
votes against each Proposal.
ADJOURNMENTS
The appointed proxies may propose to adjourn the Special Meeting, either in
order to solicit additional proxies or for other purposes. If there is a
proposal to adjourn the Special Meeting, the affirmative vote of a majority
of the shares present at the Special Meeting, in person or by proxy, is
required to approve such proposal.
COST OF THE SHAREHOLDER MEETING AND PROXY SOLICITATION
Timothy Partners, Ltd.is paying the costs of the shareholder meeting and
certain of its employees will be conducting proxy solicitations.
WHO TO CALL WITH QUESTIONS
Please call the Trust at 1-800-662-0201 with any questions you may have
relating to this proxy statement. Also, at your request, the Trust will
send you a free copy of its most recent unaudited semi-annual report, dated
June 30, 2003, and audited annual report, dated December 31, 2002. Simply
call the Trust to request a copy of either report.
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PROPOSAL # 1. APPROVAL OF INCREASE IN ADVISORY FEE TO TIMOTHY PARTNERS, LTD.
FOR SERVICES TO THE TIMOTHY PLAN CONSERVATIVE GROWTH FUND
WHICH SHAREHOLDERS ARE ELIGIBLE TO VOTE ON THIS PROPOSAL
Shareholders of record (as of August 15, 2003) of the Timothy Plan
Conservative Growth Fund only.
INTRODUCTION
The Timothy Plan Conservative Growth Fund (the "Fund") is an asset
allocation fund that invests exclusively in a number of other Timothy Plan
Funds with the objective of providing moderate long term growth with some
current income potential. The Fund offers both Class A and Class B shares.
Class A shares of the Fund commenced investment operations on October 5,
2000, and Class B shares commenced investment operations on October 9,
2000. Timothy Partners, Ltd., 1304 West Fairbanks Avenue, Winter Park, FL
32789 ("TPL"), serves as investment adviser to the Fund under a written
Investment Advisory Agreement (the "IA Agreement") between the Trust and
TPL. A copy
of the IA Agreement between the Trust and TPL is attached to this proxy as
Exhibit B and is incorporated herein for all purposes.
TPL is a Florida limited partnership organized on December 6, 1993, and is
registered with the Securities and Exchange Commission ("SEC") as an
investment adviser. TPL supervises the investment of the assets of the Fund
in accordance with the objectives, policies and restrictions of the Fund
and the Trust. TPL has been the adviser to the Fund since its inception.
Mr. Arthur D. Ally is President of TPL and is responsible for the
day-to-day activities of TPL. Covenant Funds, Inc., a Florida corporation
("CFI"), is the managing general partner of TPL. Mr. Ally also is President
and 70% shareholder of CFI. Mr. Ally had over eighteen years experience in
the investment industry prior to founding TPL, having worked for Prudential
Bache, Shearson Lehman Brothers and Investment Management & Research.
In addition to his positions as President of TPL and CFI, Mr. Ally also
serves as President and Chairman of the Board of Trustees of the Trust. Mr.
Ally does not receive any compensation for his services to the Trust as an
officer or Trustee of the Trust, but he may receive compensation from TPL
as a result of his ownership interest in TPL and service as an officer and
director of TPL.
Under the current IA agreement, TPL receives a fee at an annual rate of
0.15% of the daily net assets of the Fund, computed daily and paid monthly.
The current IA agreement with TPL was originally dated January 19, 1994 and
was last approved by the Trust's shareholders on October 04, 2000. The IA
agreement was amended to include services to the Fund by the Trust's Board
of Trustees on or about October 01, 2000 and was approved by the Fund's
shareholders immediately prior to the Fund's commencement of operations.
DISCUSSION
The Fund operates under an arrangement commonly known as a "Fund of Funds".
Under normal market conditions, the Fund invests at least 75% of its assets
in the following Timothy Plan Funds ("Traditional Funds") according to the
following approximated range of percentages:
% of Fund's Net
Assets Invested in
Timothy Fund Traditional Fund
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Small Cap Value Fund 15-20%
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Large/Mid Cap Value Fund 25-30%
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Large/Mid Cap Growth Fund 15-20%
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Fixed Income Fund 25-30%
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The Fund normally invests its remaining cash, if any, in U.S. government
securities and short-term paper.
TPL determines the specific asset allocation program for the Fund. On each
day that the Fund is open for business, TPL reviews the asset allocation
program and reallocates, as necessary, for any new moneys invested in the
Fund. TPL also reallocates the Fund's investments in the Traditional Funds
at the end of each fiscal quarter to maintain the asset allocation program.
Since the Fund commenced operations, TPL has been responsible for the
investment of the Fund's assets, maintaining the investment compliance of
the Fund, creating regulatory reporting for the Board relating to the Fund,
and is primarily responsible for investment advisory oversight and
reporting to the Board. Further, the Fund has experienced rapid growth,
which creates the need for near constant readjusting of the Fund's
investment mix. Because the fund invests exclusively in other Timothy Plan
Funds, calculating ongoing Fund expenses is more intricate than is the case
with traditional Timothy Plan Funds. Managing those Fund expenses is one of
TPL's responsibilities.
After nearly three years of operations, it has become apparent to TPL and
the Trust that the manner in which the various services provided to the
Fund by TPL were conceived and constructed have not achieved the desired
result of an efficiently managed Fund, but have achieved exactly the
opposite result. Under the Fund's current contractual structure, TPL is
paid an investment advisory fee equal to an annual rate of 0.15% of the
average daily net assets of the
Fund pursuant to the IA Agreement described above. For administrative and
related services to the Fund, TPL is also paid an operating services fee
equal to an annual rate of 0.25% of the average daily net assets of the
Fund pursuant to a separate written agreement for such services. Lastly,
the Fund charges a 12b-1 fee of 0.25% of the average daily net assets of
the Fund on Class A shares, and 1.00% of the average daily net assets of
the Fund for Class B shares. Because a significant factor in the Fund's
long term success is the control of overall Fund expenses, and TPL is the
entity most able to control such expenses through fee waivers and expense
reimbursements, it has become clear that the current contractual scheme
needs to be redrawn in a more efficient manner.
After researching various management options and thoughtful deliberation
with the Board, TPL proposed the following:
1. The fee paid to TPL under the IA Agreement be increased from 0.15% to
0.65 and the IA Agreement be amended to reflect such changes;
2. The operating service fee of 0.25% currently paid to TPL be
terminated;
3. The 12b-1 fee for Class A shares be lowered from 0.25% to 0.00%; and
4. The 12b-1 fee for Class B shares be lowered from 1.00% to 0.75%.
In support of the proposal TPL argued to the Board that under the proposal,
the overall fees charged to the Fund would remain unchanged, but the
structure of those fees would allow TPL to better control Fund expenses,
would more accurately convey to Fund shareholders what fees were being paid
to whom and for what services, and would provide TPL additional moneys with
which to better administer the Fund's affairs
BOARD CONSIDERATION
On June 20, 2003, the Fund's Board of Trustees met to consider, among other
things, the proposal from TPL to increase the management fee charged to the
Fund from 0.15% to 0.65%. TPL presented comparative data to the Board
showing how its proposed management fee compared against management fees
charged by other similar funds. TPL also presented data to the Board
comparing the overall fee structure of the Fund under its proposed fee to
the overall expense structure of similar funds. TPL then presented
information to the Board relating to the services provided to the Fund by
TPL, the expenses associated with those services, and the fees earned by
TPL to provide those services.
The Board then discussed TPL's proposal at length. The Board gave
significant weight to TPL's presented data that indicated that the
increased advisory fee would still fall within the range of advisory fees
charged by other advisors for similar funds. The Board also noted with
approval that the effect of the proposed fee increase on the overall
expense ratio of the Fund would still not negatively affect the overall
expenses charged by the Fund. The Board reviewed the activities of TPL on
behalf of the Fund and noted that those activities were comprehensive and
necessary to the proper management of the Fund and its future success. The
Board also noted that TPL was the adviser to each other Timothy Fund, and
its services to those funds over time had been excellent.
BOARD CONCLUSION
After full and complete discussion, the Board of Trustees unanimously
agreed to approve an increase in the investment advisory fee payable to TPL
from the Fund from 0.15% to 0.65%, to recommend to the Fund's shareholders
that the increase be approved, and to implement the remaining points of
TPL's proposal at such time as the Fund's shareholders approve the
investment advisory fee increase.
FINANCIAL EFFECT OF FEE CHANGE
If the Fund's shareholders approve the fee increase, the expenses you pay
to hold shares of the Fund will remain the same, but the manner in which
those expenses are shown will change. The table below shows an example of
the fees and expenses currently paid by the Fund and to be paid under the
increased IA Agreement fee.
NOTE: In a "Fund of Funds" arrangement, certain fees paid by the underlying
funds in which the Fund invests must also be included in the expense table.
Those aggregated fees are included in the example below, so please take
special note of the footnotes accompanying the expense table.
-------------------------------------
CLASS A CLASS B
-------------------------------------
CURRENT PROPOSED CURRENT PROPOSED
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Management Fee (1) 0.95% 1.45% 0.95% 1.45%
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Service & Distribution (12b-1) Fees 0.25% 0.00% 1.00% 0.75%
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Other Expenses (2) 1.78% 1.53% 1.78% 1.53%
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Total Annual Operating Expenses
(before reimbursement by Advisor) 2.98% 2.98% 3.73% 3.73%
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Reimbursement by Advisor 0.28% 0.28% 0.28% 0.28%
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Total Annual Operating Expenses
(after reimbursement by Advisor) (3) 2.70% 2.70% 3.45% 3.45%
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(1) Management Fees include the current and proposed annual fee of 0.15%
and 0.65%, respectively of the average daily net assets of each Fund
which is paid to the Funds' Adviser, Timothy Partners. Ltd., and the
aggregate management fees paid by the underlying Funds in which the
Fund invests.
(2) Other Expenses include administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above, as
well as the payment of a 0.25% operating service fee under "Current"
and without such fee under "Proposed".
(3) Timothy Partners, Ltd. is contractually obligated to waive its fees
and/or reimburse the Fund to the extent necessary to maintain certain
overall expense caps for each Class. The figures in the above table
include the expenses attributable to the Fund and the underlying
Traditional Funds in which it invests. Not including the expenses
attributable to the underlying Funds, the expense cap of the Fund is
as follows: For Class A shares, the expense cap is 1.15%. For Class B
shares of the Fund, the expense cap is 1.90%
The following example is intended to help you compare the cost of investing
in this Fund versus the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods.
The example also assumes that your investment has a 5% annual return each
year and that the Fund's operating expenses remain the same each year.
Although your actual costs may be higher or lower, based on these
assumptions, your costs under the current fee structure and proposed fee
structure would be:
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One Year Three Years Five Years Ten Years
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Current Proposed Current Proposed Current Proposed Current Proposed
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Class A $ 636 $ 636 $ 871 $ 871 $1,125 $1,125 $1,849 $1,849
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Class B $ 193 $ 193 $ 597 $ 597 $1,026 $1,026 $2,222 $2,222
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If you did not redeem your shares, your costs would be:
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One Year Three Years Five Years Ten Years
- -------------------------------------------------------------------------------------------------
Current Proposed Current Proposed Current Proposed Current Proposed
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Class A $ 636 $ 636 $ 871 $ 871 $1,125 $1,125 $1,849 $1,849
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Class B $ 693 $ 693 $ 897 $ 897 $1,126 $1,126 $2,222 $2,222
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The following table shows the aggregate investment advisory fees paid to
TPL under its current fee structure for the Fund's fiscal year ended June
30, 2003, the fees that would have been paid to TPL under the proposed fee
structure during that same period, and the difference between the two, both
in absolute and percentage increase terms.
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Current Fees Paid Pro Forma Fees for fiscal Additional Pro Forma Change in Fee
for fiscal year year ended 06/30/03 under Fees For fiscal as a percentage
ended 06/30/03. proposed fee structure. year ended 06/30/03. of Original Fee
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$25,358 $109,885 $84,527 333% increase
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If the Fund's shareholders do not approve this Proposal, the Trust will
consider other alternatives.
HOW DOES THE BOARD RECOMMEND THAT I VOTE ON PROPOSAL # 1?
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THE FUND'S BOARD OF TRUSTEES , INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL # 1.
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PROPOSAL # 2. APPROVAL OF INCREASE IN ADVISORY FEE TO TIMOTHY PARTNERS, LTD.
FOR SERVICES TO THE TIMOTHY PLAN STRATEGIC GROWTH FUND
WHICH SHAREHOLDERS ARE ELIGIBLE TO VOTE ON THIS PROPOSAL
Shareholders of record (as of August 15, 2003) of the Timothy Plan
Strategic Growth Fund only.
INTRODUCTION
The Timothy Plan Strategic Growth Fund (the "Fund") is an asset allocation
fund that invests exclusively in a number of other Timothy Plan Funds with
the objective of providing medium to high levels of long term growth with
some current income potential. The Fund offers both Class A and Class B
shares. Class A shares of the Fund commenced investment operations on
October 5, 2000, and Class B shares commenced investment operations on
October 9, 2000. Timothy Partners, Ltd., 1304 West Fairbanks Avenue, Winter
Park, FL 32789 ("TPL"), serves as investment adviser to the Fund under a
written Investment Advisory Agreement (the "IA Agreement") between the
Trust and TPL. A copy of the IA Agreement between the Trust and TPL is
attached to this proxy as Exhibit B and is incorporated herein for all
purposes.
TPL is a Florida limited partnership organized on December 6, 1993, and is
registered with the Securities and Exchange Commission ("SEC") as an
investment adviser. TPL supervises the investment of the assets of the Fund
in accordance with the objectives, policies and restrictions of the Fund
and the Trust. TPL has been the adviser to the Fund since its inception.
Mr. Arthur D. Ally is President of TPL and is responsible for the
day-to-day activities of TPL. Covenant Funds, Inc., a Florida corporation
("CFI"), is the managing general partner of TPL. Mr. Ally also is President
and 70% shareholder of CFI. Mr. Ally had over eighteen years experience in
the investment industry prior to founding TPL, having worked for Prudential
Bache, Shearson Lehman Brothers and Investment Management & Research.
In addition to his positions as President of TPL and CFI, Mr. Ally also
serves as President and Chairman of the Board of Trustees of the Trust. Mr.
Ally does not receive any compensation for his services to the Trust as an
officer or Trustee of the Trust, but he may receive compensation from TPL
as a result of his ownership interest in TPL and service as an officer and
director of TPL.
Under the current IA agreement, TPL receives a fee at an annual rate of
0.15% of the daily net assets of the Fund, computed daily and paid monthly.
The current IA agreement with TPL was originally dated January 17, 1994 and
was last approved by the Trust's shareholders on October 04, 2000. The IA
agreement was amended to include services to the Fund by the Trust's Board
of Trustees on or about October 01, 2000 and was approved by the Fund's
shareholders immediately prior to the Fund's commencement of operations.
DISCUSSION
The Fund operates under an arrangement commonly known as a "Fund of Funds".
Under normal market conditions, the Fund invests at least 75% of its assets
in the following Timothy Plan Funds ("Traditional Funds") according to the
following approximated range of percentages:
% of Fund's Net
Assets Invested in
Timothy Fund Traditional Fund
- --------------------------------------------------------------------------------
Small Cap Value Fund 15-20%
- --------------------------------------------------------------------------------
Large/Mid Cap Value Fund 20-25%
- --------------------------------------------------------------------------------
Large/Mid Cap Growth Fund 30-35%
- --------------------------------------------------------------------------------
Aggressive Growth Fund 15-20%
- --------------------------------------------------------------------------------
The Fund normally invests its remaining cash, if any, in U.S. government
securities and short-term paper.
TPL determines the specific asset allocation program for the Fund. On each
day that the Fund is open for business, TPL reviews the asset allocation
program and reallocates, as necessary, for any new moneys invested in the
Fund. TPL also reallocates the Fund's investments in the Traditional Funds
at the end of each fiscal quarter to maintain the asset allocation program.
Since the Fund commenced operations, TPL has been responsible for the
investment of the Fund's assets, maintaining the investment compliance of
the Fund, creating regulatory reporting for the Board relating to the Fund,
and is primarily responsible for investment advisory oversight and
reporting to the Board. Further, the Fund has experienced rapid growth,
which creates the need for near constant readjusting of the Fund's
investment mix. Because the Fund invests exclusively in other Timothy Plan
Funds, calculating ongoing Fund expenses is more intricate than is the case
with traditional Timothy Plan Funds. Managing those Fund expenses is one of
TPL's responsibilities.
After nearly three years of operations, it has become apparent to TPL and
the Trust that the manner in which the various services provided to the
Fund by TPL were conceived and constructed have not achieved the desired
result of an efficiently managed Fund, but have achieved exactly the
opposite result. Under the Fund's current contractual structure, TPL is
paid an investment advisory fee equal to an annual rate of 0.15% of the
average daily net assets of the Fund pursuant to the IA Agreement described
above. For administrative and related services to the Fund, TPL is also
paid an operating services fee equal to an annual rate of 0.25% of the
average daily net assets of the Fund pursuant to a separate written
agreement for such services. Lastly, the Fund charges a 12b-1 fee of 0.25%
of the average daily net assets of the Fund on Class A shares, and 1.00% of
the average daily net assets of the Fund for Class B shares. Because a
significant factor in the Fund's long term success is the control of
overall Fund expenses, and TPL is the entity most able to control such
expenses through fee waivers and expense reimbursements, it has become
clear that the current contractual scheme needs to be redrawn in a more
efficient manner.
After researching various management options and thoughtful deliberation
with the Board, TPL proposed the following:
5. The fee paid to TPL under the IA Agreement be increased from 0.15% to
0.65 and the IA Agreement be amended to reflect such changes;
6. The operating service fee of 0.25% currently paid to TPL be
terminated;
7. The 12b-1 fee for Class A shares be lowered from 0.25% to 0.00%; and
8. The 12b-1 fee for Class B shares be lowered from 1.00% to 0.75%.
In support of the proposal TPL argued to the Board that under the proposal,
the overall fees charged to the Fund would remain unchanged, but the
structure of those fees would allow TPL to better control Fund expenses,
would more accurately convey to Fund shareholders what fees were being paid
to whom and for what services, and would provide TPL additional moneys with
which to better administer the Fund's affairs
BOARD CONSIDERATION
On June 20, 2003, the Fund's Board of Trustees met to consider, among other
things, the proposal from TPL to increase the management fee charged to the
Fund from 0.15% to 0.65%. TPL presented comparative data to the Board
showing how its proposed management fee compared against management fees
charged by other similar funds. TPL also presented data to the Board
comparing the overall fee structure of the Fund under its proposed fee to
the overall expense structure of similar funds. TPL then presented
information to the Board relating to the services provided to the Fund by
TPL, the expenses associated with those services, and the fees earned by
TPL to provide those services.
The Board then discussed TPL's proposal at length. The Board gave
significant weight to TPL's presented data that indicated that the
increased advisory fee would still fall within the range of advisory fees
charged by other advisors for similar funds. The Board also noted with
approval that the effect of the proposed fee increase on the overall
expense ratio of the Fund would still not negatively affect the overall
expenses charged by the Fund. The Board reviewed the activities of TPL on
behalf of the Fund and noted that those activities were comprehensive and
necessary to the proper management of the Fund and its future success. The
Board also noted that TPL was the adviser to each other Timothy Fund, and
its services to those funds over time had been excellent.
BOARD CONCLUSION
After full and complete discussion, the Board of Trustees unanimously
agreed to approve an increase in the investment advisory fee payable to TPL
from the Fund from 0.15% to 0.65%, to recommend to the Fund's shareholders
that the increase be approved, and to implement the remaining points of
TPL's proposal at such time as the Fund's shareholders approve the
investment advisory fee increase.
FINANCIAL EFFECT OF FEE CHANGE
If the Fund's shareholders approve the fee increase, the expenses you pay
to hold shares of the Fund will remain the same, but the manner in which
those expenses are shown will change. The table below shows an example of
the fees and expenses currently paid by the Fund and to be paid under the
increased IA Agreement fee.
NOTE: In a "Fund of Funds" arrangement, certain fees paid by the underlying
funds in which the Fund invests must also be included in the expense table.
Those aggregated fees are included in the example below, so please take
special note of the footnotes accompanying the expense table.
-------------------------------------
CLASS A CLASS B
-------------------------------------
CURRENT PROPOSED CURRENT PROPOSED
- --------------------------------------------------------------------------------
Management Fee 1.00% 1.50% 1.00% 1.50%
- --------------------------------------------------------------------------------
Service & Distribution (12b-1) Fees 0.25% 0.00% 1.00% 0.75%
- --------------------------------------------------------------------------------
Other Expenses 1.69% 1.44% 1.70% 1.45%
- --------------------------------------------------------------------------------
Total Annual Operating Expenses
(before reimbursement by Advisor) 2.94% 2.94% 3.70% 3.70%
- --------------------------------------------------------------------------------
Reimbursement by Advisor 0.19% 0.19% 0.20% 0.20%
- --------------------------------------------------------------------------------
Total Annual Operating Expenses
(after reimbursement by Advisor) 2.75% 2.75% 3.50% 3.50%
- --------------------------------------------------------------------------------
(1) Management Fees include the current and proposed annual fee of 0.15%
and 0.65%, respectively of the average daily net assets of each Fund
which is paid to the Funds' Adviser, Timothy Partners. Ltd., and the
aggregate management fees paid by the underlying Funds in which the
Fund invests.
(2) Other Expenses include administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above, as
well as the payment of a 0.25% operating service fee under "Current"
and without such fee under "Proposed".
(3) Timothy Partners, Ltd. is contractually obligated to waive its fees
and/or reimburse the Fund to the extent necessary to maintain certain
overall expense caps for each Class. The figures in the above table
include the expenses attributable to the Fund and the underlying
Traditional Funds in which it invests. Not including the expenses
attributable to the underlying Funds, the expense cap of the Fund is
as follows: For Class A shares, the expense cap is 1.15%. For Class B
shares of the Fund, the expense cap is 1.90%
The following example is intended to help you compare the cost of investing
in this Fund versus the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods.
The example also assumes that your investment has a 5% annual return each
year and that the Fund's operating expenses remain the same each year.
Although your actual costs may be higher or lower, based on these
assumptions, your costs under the current fee structure and proposed fee
structure would be:
- -------------------------------------------------------------------------------------------------
One Year Three Years Five Years Ten Years
- -------------------------------------------------------------------------------------------------
Current Proposed Current Proposed Current Proposed Current Proposed
- -------------------------------------------------------------------------------------------------
Class A $ 636 $ 636 $ 871 $ 871 $1,125 $1,125 $1,849 $1,849
- -------------------------------------------------------------------------------------------------
Class B $ 193 $ 193 $ 597 $ 597 $1,026 $1,026 $2,222 $2,222
- -------------------------------------------------------------------------------------------------
If you did not redeem your shares, your costs would be:
- -------------------------------------------------------------------------------------------------
One Year Three Years Five Years Ten Years
- -------------------------------------------------------------------------------------------------
Current Proposed Current Proposed Current Proposed Current Proposed
- -------------------------------------------------------------------------------------------------
Class A $ 636 $ 636 $ 871 $ 871 $1,125 $1,125 $1,849 $1,849
- -------------------------------------------------------------------------------------------------
Class B $ 693 $ 693 $ 897 $ 897 $1,126 $1,126 $2,222 $2,222
- -------------------------------------------------------------------------------------------------
The following table shows the aggregate investment advisory fees paid to
TPL under its current fee structure for the Fund's fiscal year ended June
30, 2003, the fees that would have been paid to TPL under the proposed fee
structure during that same period, and the difference between the two, both
in absolute and percentage increase terms.
- --------------------------------------------------------------------------------------------
Current Fees Paid Pro Forma Fees for fiscal Additional Pro Forma Change in Fee
for fiscal year year ended 06/30/03 under Fees For fiscal as a percentage
ended 06/30/03. proposed fee structure. year ended 06/30/03. of Original Fee
- --------------------------------------------------------------------------------------------
$25,110 $108,810 $83,700 333% increase
- --------------------------------------------------------------------------------------------
If the Fund's shareholders do not approve this Proposal, the Trust will
consider other alternatives.
HOW DOES THE BOARD RECOMMEND THAT I VOTE ON PROPOSAL # 2?
- --------------------------------------------------------------------------------
The Fund's Board of Trustees , including the independent Trustees,
unanimously recommends that you vote "For" Proposal # 2.
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------
OTHER INFORMATION
UNDERWRITER
Timothy Partners, Ltd. ("TPL") 1304 West Fairbanks Avenue, Winter Park, FL
32789, in addition to serving as investment adviser to the Funds, also
serves as principal underwriter to the Trust's shares. TPL is a
broker/dealer registered as such with the Securities and Exchange
Commission and is a member in good standing of the National Association of
Securities Dealers.
TPL is not directly compensated by the Trust for its distribution services.
However, TPL generally retains dealer concessions on sales of Class A Fund
shares as set forth in the Trust's prospectus and may retain some or all of
the fees paid by the Fund's pursuant to 12b-1 Plans of Distribution. With
respect to Class A shares, TPL may pay some or all of the dealer concession
to selling brokers and dealers from time to time, at its discretion. A
broker or dealer who receives more than 90% of a selling commission may be
considered an "underwriter" under federal law. With respect to both Class A
and Class B shares, TPL may pay some or all of the collected 12b-1 fees to
selling brokers and dealers from time to time, at its discretion
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTING
Citco-Quaker Fund Services, Inc., 1288 Valley Forge Road, Suite 88, Valley
Forge, PA 19482, provides administrative, transfer agent, and accounting
services to each Fund pursuant to a written agreement with the Trust, dated
May 01, 2003.
PROPOSALS OF SHAREHOLDERS
As a Delaware Business Trust, the Trust is not required to hold annual
shareholder meetings, but will hold special meetings as required or deemed
desirable. Since the Trust does not hold regular meetings of shareholders,
the anticipated date of the next shareholders meeting cannot be provided.
Any shareholder proposal that may properly be included in the proxy
solicitation material for a special shareholder meeting must be received by
the Trust no later than four months prior to the date when proxy statements
are mailed to shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board is not aware of any matters that will be presented for action at
the meeting other than the matters set forth herein. Should any other
matters requiring a vote of shareholders arise, the proxy in the
accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote
the shares as to any such other matters in accordance with their best
judgment in the interest of the Trust.
FINANCIAL STATEMENTS
The financial statements for each Fund and the Trust are incorporated
herein by reference to the Trust's unaudited semi-annual financial report,
dated June 30, 2003, and the Trust's audited annual financial report, dated
December 31, 2002.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
EXHIBIT A
TOTAL OUTSTANDING SHARES
OF EACH FUND, BY CLASS AND TOTAL,
AS OF AUGUST 15, 2003
- --------------------------------------------------------------------------------
NAME OF TIMOTHY PLAN FUND CLASS A CLASS B TOTAL
- --------------------------------------------------------------------------------
Conservative Growth Fund 1,415,812 1,165,060 2,580,872
- --------------------------------------------------------------------------------
Strategic Growth Fund 1,378,944 1,871,708 3,250,652
- --------------------------------------------------------------------------------
HOLDERS OF MORE THAN
5% OF EACH FUND'S SHARES
AS OF AUGUST 15, 2003
- --------------------------------------------------------------------------------
SHARE % OWNERSHIP
NAME OF FUND IN CLASS NUMBER OF OF TOTAL
NAME OF SHAREHOLDER WHICH SHARES HELD OWNED SHARES OWNED FUND SHARES
- --------------------------------------------------------------------------------
None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TIMOTHY PLAN OFFICER/DIRECTOR OWNERSHIP OF FUND SHARES
AS OF AUGUST 15, 2003
- --------------------------------------------------------------------------------
SHARE % OWNERSHIP
NAME OF FUND IN CLASS NUMBER OF OF TOTAL
NAME OF SHAREHOLDER WHICH SHARES HELD OWNED SHARES OWNED FUND SHARES
- --------------------------------------------------------------------------------
Joe Boatwright Strategic Growth A 21,142.345 1.55%
- --------------------------------------------------------------------------------
Joe Boatwright Conservative Growth A 9720.160 0.71%
- --------------------------------------------------------------------------------
Mark Minnella Strategic Growth A 104.141 0.01%
- --------------------------------------------------------------------------------
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
THE TIMOTHY PLAN AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated April, 27, 2001 by and between THE TIMOTHY PLAN, a
Delaware business trust (hereinafter called the "Trust"), on behalf of the
Timothy Plan Conservative Growth Fund (the "Fund"), and TIMOTHY PARTNERS, LTD.,
a Florida limited partnership (hereinafter called "Investment Adviser").
WITNESSETH:
WHEREAS, the Trust has been organized and operates as an investment company
registered under the Investment Company Act of 1940 (the "1940 Act") and engages
in the business of investing and reinvesting its assets in securities, and the
Investment Adviser is a registered Investment Adviser under the Investment
Advisers Act of 1940 (the "Advisers Act") and engages in the business of
providing investment management services; and
WHEREAS, the Trust and the Investment Adviser entered into an agreement
dated January 19, 1994, as subsequently amended, wherein the Investment Adviser
agreed to provide investment advisory services to the Trust (the "Original
Agreement"); and
WHEREAS, the Board of Trustees has determined that a separate advisory
agreement for each series of the Trust would clarify the contractual
arrangements with the Investment Adviser; and
WHEREAS, this Amended and Restated Investment Advisory Agreement does not
revise the substantive provisions of the Original Agreement, as amended;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Trust hereby employs the Investment Adviser to manage the investment
and reinvestment of the Fund's assets and to administer its affairs, subject to
the direction of the Board of Trustees and officers of the Trust for the period
and on the terms hereinafter set forth. The Investment Adviser hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Investment Adviser shall for all purposes herein, be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or to represent the Trust in any way, or in any way be
deemed an agent of the Trust. The Investment Adviser shall regularly make
decisions as to what securities to purchase and sell on behalf of the Fund and
shall record and implement such decisions and shall furnish the Board of
Trustees of the Trust with such information and reports regarding the Fund's
investments as the Investment Adviser deems appropriate or as the Trustees of
the Trust may reasonably request. Subject to compliance with the requirements of
the 1940 Act, the Investment Adviser may retain as a sub-adviser to the Fund, at
the Investment Adviser's own expense, any investment adviser registered under
the Advisers Act.
2. The Trust shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; and taxes. Partners and employees of
the Investment Adviser may be trustees, officers and employees of the funds of
which Timothy Partners, Ltd. is Investment Adviser. Partners and employees of
the Investment Adviser who are trustees, officers and/or employees of the Trust
shall not
receive any compensation from the Trust for acting in such dual capacity. In the
conduct of the respective businesses of the parties hereto and in the
performance of this Agreement, the Trust and investment Adviser may share
facilities common to each, with appropriate proration of expenses between them.
3. (a) The Investment Adviser shall place and execute Fund orders for the
purchase and sale of portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the
Investment Adviser will place orders for the purchase and sale of portfolio
securities for the Fund with such broker/dealers as it may select from time to
time, including brokers who provide statistical, factual and financial
information and services to the Trust, to the Investment Adviser, or to any
other fund for which the Investment Adviser provides investment advisory
services and/or with broker/dealers who sell shares of the Fund or who sell
shares of any other fund for which the Investment Adviser provides investment
advisory services. Broker/dealers who sell shares of the funds of which Timothy
Partners, Ltd. is Investment Adviser, shall only receive orders for the purchase
or sale of portfolio securities to the extent that the placing of such orders is
in compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject
to such policies and procedures as may be adopted by the Board of Trustees and
officers of the Trust, the Investment Adviser may ask the Trust and the Trust
may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Investment
Adviser have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Adviser's overall responsibilities with
respect to the Trust and to other funds for which the Investment Adviser
exercises investment discretion.
4. As compensation for the services to be rendered to the Trust by the
Investment Adviser under the provisions of this Agreement, the Trust shall pay
to the Investment Adviser from the Fund's assets an annual fee equal to 0.15% of
the daily average net assets of the Fund, payable on a monthly basis, subject to
reduction to the extent necessary to comply with the most stringent limits
prescribed by any state in which the Fund's shares are offered for sale. If this
Agreement is terminated prior to the end of any calendar month, the management
fee shall be prorated for the portion of any month in which this Agreement is in
effect according to the proportion which the number of calendar days, during
which the Agreement is in effect, bears to the number of calendar days in the
month, and shall be payable within 10 days after the date of termination.
5. The services to be rendered by the Investment Adviser to the Trust under
the provisions of this Agreement are not to be deemed to be exclusive, and the
Investment Adviser shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
6. The Investment Adviser, its partners, employees, and agents may engage in
other businesses, may render investment advisory services to other investment
companies, or to any other corporation, association, firm or individual, and may
render underwriting services to the Trust or to any other investment company,
corporation, association, firm or individual.
7. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of duties of the Investment Adviser to the
Trust, the Investment Adviser shall not be subject to liabilities to the Trust
or to any shareholder of the Trust for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
8. The Trust agrees that, in the event that the Investment Adviser ceases to
be the Fund's investment adviser for any reason, the Trust will (unless the
Investment Adviser otherwise agrees in writing) promptly
take all necessary steps to propose to the shareholders at the next regular
meeting that the Fund change to a name not including the word "Timothy." The
Trust agrees that the word "Timothy" in its name is derived from the name of the
Investment Adviser and is the property of the Investment Adviser for copyright
and all other purposes and that therefore such word may be freely used by the
Investment Adviser as to other investment activities or other investment
products.
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for a period of one year and
may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund and only if the terms
and the renewal hereof have been approved by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. No amendment to this Agreement shall be effective unless the terms
thereof have been approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of Trustees of the Trust
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Trust at
any time, without the payment of a penalty, on sixty days' written notice to the
Investment Adviser of the Trust's intention to do so, pursuant to action by the
Board of Trustees of the Trust or pursuant to a vote of a majority of the
outstanding voting securities of the Fund. The Investment Adviser may terminate
this Agreement at any time, without the payment of penalty on sixty days'
written notice to the Trust of its intention to do so. Upon termination of this
Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such termination, and
except for the obligation of the Trust to pay to the Investment Adviser the fee
provided in Paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of the
outstanding voting securities"; "interested persons"; and "assignment" shall
have the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers the 11th day of June, 2001.
THE TIMOTHY PLAN BY:
TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.
MANAGING GENERAL PARTNER
By:
Arthur D. Ally, President
16347 6/4/01 3:31 PM
THE TIMOTHY PLAN AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated April, 27, 2001 by and between THE TIMOTHY PLAN, a
Delaware business trust (hereinafter called the "Trust"), on behalf of the
Timothy Plan Strategic Growth Fund (the "Fund"), and TIMOTHY PARTNERS, LTD., a
Florida limited partnership (hereinafter called "Investment Adviser").
WITNESSETH:
WHEREAS, the Trust has been organized and operates as an investment company
registered under the Investment Company Act of 1940 (the "1940 Act") and engages
in the business of investing and reinvesting its assets in securities, and the
Investment Adviser is a registered Investment Adviser under the Investment
Advisers Act of 1940 (the "Advisers Act") and engages in the business of
providing investment management services; and
WHEREAS, the Trust and the Investment Adviser entered into an agreement
dated January 19, 1994, as subsequently amended, wherein the Investment Adviser
agreed to provide investment advisory services to the Trust (the "Original
Agreement"); and
WHEREAS, the Board of Trustees has determined that a separate advisory
agreement for each series of the Trust would clarify the contractual
arrangements with the Investment Adviser; and
WHEREAS, this Amended and Restated Investment Advisory Agreement does not
revise the substantive provisions of the Original Agreement, as amended;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Trust hereby employs the Investment Adviser to manage the investment
and reinvestment of the Fund's assets and to administer its affairs, subject to
the direction of the Board of Trustees and officers of the Trust for the period
and on the terms hereinafter set forth. The Investment Adviser hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Investment Adviser shall for all purposes herein, be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or to represent the Trust in any way, or in any way be
deemed an agent of the Trust. The Investment Adviser shall regularly make
decisions as to what securities to purchase and sell on behalf of the Fund and
shall record and implement such decisions and shall furnish the Board of
Trustees of the Trust with such information and reports regarding the Fund's
investments as the Investment Adviser deems appropriate or as the Trustees of
the Trust may reasonably request. Subject to compliance with the requirements of
the 1940 Act, the Investment Adviser may retain as a sub-adviser to the Fund, at
the Investment Adviser's own expense, any investment adviser registered under
the Advisers Act.
2. The Trust shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; and taxes. Partners and employees of
the Investment Adviser may be trustees, officers and employees of the funds of
which Timothy Partners, Ltd. is Investment Adviser. Partners and employees of
the Investment Adviser who are trustees, officers and/or employees of the Trust
shall not receive any compensation from the Trust for acting in such dual
capacity. In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Trust and investment Adviser may share
facilities common to each, with appropriate proration of expenses between them.
3. (a) The Investment Adviser shall place and execute Fund orders for the
purchase and sale of portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the
Investment Adviser will place orders for the purchase and sale of portfolio
securities for the Fund with such broker/dealers as it may select from time to
time, including brokers who provide statistical, factual and financial
information and services to the Trust, to the Investment Adviser, or to any
other fund for which the Investment Adviser provides investment advisory
services and/or with broker/dealers who sell shares of the Fund or who sell
shares of any other fund for which the Investment Adviser provides investment
advisory services. Broker/dealers who sell shares of the funds of which Timothy
Partners, Ltd. is Investment Adviser, shall only receive orders for the purchase
or sale of portfolio securities to the extent that the placing of such orders is
in compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject
to such policies and procedures as may be adopted by the Board of Trustees and
officers of the Trust, the Investment Adviser may ask the Trust and the Trust
may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Investment
Adviser have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Adviser's overall responsibilities with
respect to the Trust and to other funds for which the Investment Adviser
exercises investment discretion.
4. As compensation for the services to be rendered to the Trust by the
Investment Adviser under the provisions of this Agreement, the Trust shall pay
to the Investment Adviser from the Fund's assets an annual fee equal to 0.15% of
the daily average net assets of the Fund, payable on a monthly basis, subject to
reduction to the extent necessary to comply with the most stringent limits
prescribed by any state in which the Fund's shares are offered for sale. If this
Agreement is terminated prior to the end of any calendar month, the management
fee shall be prorated for the portion of any month in which this Agreement is in
effect according to the proportion which the number of calendar days, during
which the Agreement is in effect, bears to the number of calendar days in the
month, and shall be payable within 10 days after the date of termination.
5. The services to be rendered by the Investment Adviser to the Trust under
the provisions of this Agreement are not to be deemed to be exclusive, and the
Investment Adviser shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
6. The Investment Adviser, its partners, employees, and agents may engage in
other businesses, may render investment advisory services to other investment
companies, or to any other corporation, association, firm or individual, and may
render underwriting services to the Trust or to any other investment company,
corporation, association, firm or individual.
7. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of duties of the Investment Adviser to the
Trust, the Investment Adviser shall not be subject to liabilities to the Trust
or to any shareholder of the Trust for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
8. The Trust agrees that, in the event that the Investment Adviser ceases to
be the Fund's investment adviser for any reason, the Trust will (unless the
Investment Adviser otherwise agrees in writing) promptly take all necessary
steps to propose to the shareholders at the next regular meeting that the Fund
change to a name not including the word "Timothy." The Trust agrees that the
word "Timothy" in its name is derived from the name of the Investment Adviser
and is the property of the Investment Adviser for copyright and all other
purposes and that therefore such word may be freely used by the Investment
Adviser as to other investment activities or other investment products.
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for a period of one year and
may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund and only if the terms
and the renewal hereof have been approved by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. No amendment to this Agreement shall be effective unless the terms
thereof have been approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of Trustees of the Trust
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Trust at
any time, without the payment of a penalty, on sixty days' written notice to the
Investment Adviser of the Trust's intention to do so, pursuant to action by the
Board of Trustees of the Trust or pursuant to a vote of a majority of the
outstanding voting securities of the Fund. The Investment Adviser may terminate
this Agreement at any time, without the payment of penalty on sixty days'
written notice to the Trust of its intention to do so. Upon termination of this
Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such termination, and
except for the obligation of the Trust to pay to the Investment Adviser the fee
provided in Paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of the
outstanding voting securities"; "interested persons"; and "assignment" shall
have the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers the 11th day of June, 2001.
THE TIMOTHY PLAN BY:
TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.
Managing General Partner
By:
Arthur D. Ally, President
16347 6/4/01 3:31 PM
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BALLOT
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TIMOTHY PLAN CONSERVATIVE GROWTH FUND SHAREHOLDERS ONLY!
PROPOSAL # 1. APPROVE AN INCREASE IN INVESTMENT ADVISORY FEES PAID TO TIMOTHY
PARTNERS, LTD. FOR ITS SERVICES TO THE TIMOTHY PLAN CONSERVATIVE
GROWTH FUND
FOR AGAINST ABSTAIN
/ / / / / /
TIMOTHY PLAN STRATEGIC GROWTH FUND SHAREHOLDERS ONLY!
PROPOSAL # 1. APPROVE AN INCREASE IN INVESTMENT ADVISORY FEES PAID TO TIMOTHY
PARTNERS, LTD. FOR ITS SERVICES TO THE TIMOTHY PLAN STRATEGIC
GROWTH FUND
FOR AGAINST ABSTAIN
/ / / / / /
Signature(s) (All registered owners of accounts shown to the left must sign. If
signing for a corporation, estate or trust, please indicate your capacity or
title.)
X
- --------------------------------------------------------------------------------
Signature Date
X
- --------------------------------------------------------------------------------
Signature Date
PLEASE VOTE TODAY!
Please vote all issues shown on your ballot.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each ballot. On all Items, mark -- For, Against or
Abstain. Then sign, date and return your ballot in the accompanying postage-paid
envelope. All registered owners of an account, as shown in the address on the
ballot, must sign the ballot. If you are signing for a corporation, trust or
estate, please indicate your title or position.
THANK YOU FOR MAILING YOUR BALLOT PROMPTLY!
Your vote is needed! Please vote on the reverse side of this form and sign in
the space provided. Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for your other accounts with the Trust. These
are not duplicates; you should sign and return each proxy card in order for your
votes to be counted. Please return them as soon as possible to help save the
cost of additional mailings.
The signers of this proxy hereby appoint Theresa McNamee and Joseph Carlin, and
each of them, attorneys and proxies, with power of substitution in each, to vote
all shares for the signers at the special meeting of shareholders to be held
October 17, 2003, and at any adjournments thereof, as specified herein, and in
accordance with their best judgment, on any other business that may properly
come before this meeting. Your shares will be voted in accordance with your
designations on this proxy. If no specification is made herein, all shares will
be voted "FOR" the proposals set forth on this proxy. The proxy is solicited by
the Board of Trustees of the Trust which recommends a vote "FOR" all matters.