Filed On 1/5/06 3:01pm ET · SEC File 33-73248 · Accession Number 1144204-6-515
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
1/05/06 Timothy Plan 497 1/05/06 1:9 1144204
Definitive Material · Rule 497
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To
Timothy
Plan Prospectus
The
following amendment is being made to the Prospectus of the Timothy Plan, dated
May1, 2005. All portions of the Prospectus not specifically amended by this
Supplement shall remain in full force and effect.
The
Section of the Prospectus entitled “INVESTMENT MANAGERS”, beginning on page 32
of the Prospectus, is amended as follows:
The
Subsection of the INVESTMENT MANAGERS Section entitled “Small-Cap Value Fund and
Patriot Fund”, on page 33 of the prospectus, is amended as follows:
“PATRIOT
FUND
Awad
Asset Management, Inc. (“Awad”), a wholly-owned subsidiary of Raymond James
Financial, Inc., a diversified financial services firm traded on the New York
Stock Exchange, is the investment manager for the Patriot Fund. Awad has offices
at 250 Park Avenue, New York, New York 10177. Awad selects the investments
for
the Patriot Fund’s portfolio, subject to the investment restrictions of the
Trust and under the supervision of TPL.
James
Awad is the President and Senior Investment Officer of the investment manager,
and is responsible for managing the day-to-day investments for the Fund. Prior
to forming Awad, Mr. Awad was founder and president of BMI Capital. He also
managed assets at Neuberger & Berman, Channing Management and First
Investment Corp. Mr. Awad has been involved either full or part-time in the
investment industry since 1965.
Awad
has
served as investment manager to the Patriot Fund since the Fund's inception
on
May 1, 2004. In addition to the Patriot Fund and the Timothy Plan Small Cap
Variable Series, Awad also serves as investment adviser or co-adviser to two
other investment companies: Calvert New Vision Small-Cap Fund and Heritage
Small-Cap Stock Fund. As of December 31, 2004, Awad managed in approximately
of
$1.53 billion in assets.”
A
new
Subsection, entitled “Small Cap Value Fund”, is inserted immediately preceding
the amended Subsection described above. The new Subsection states as
follows:
“SMALL-CAP
VALUE FUND
On
December 19, 2006, the shareholders of the Small-Cap Value Fund approved
Westwood Management Corp., 200 Crescent Court, Suite 1200, Dallas, TX
75201(Westwood), as the investment manager of the Small-Cap Value Fund,
effective January 3, 2006. Westwood succeeds Awad, which previously served
as
the Fund's investment manager from the Fund's inception in 1997 through December
31, 2005.
Westwood
was established in 1983 as a New York corporation and is registered with the
Securities and Exchange Commission as an investment advisory firm under the
Investment Advisers Act of 1940, as amended. As of September 30, 2005, Westwood
managed approximately $4.2 billion in client assets.
Westwood
Holdings Group, Inc., a public company listed on the New York Stock Exchange
(“WHG”), is the parent company of Westwood. Susan Byrne founded Westwood and
currently serves as the firm's Chief Investment Officer. Ms. Byrne also serves
as Chief Executive Officer and Chairman of the board of Directors of WHG. Ms.
Byrne has been an investment professional for over 35 years. Ms. Byrne entered
the financial services industry in 1970 where she worked for major wire houses
until 1978. From 1978 until she founded Westwood, Mrs. Byrne served Bankers
Trust as a portfolio manager in the employee benefits department, and GAF Corp.
as a portfolio manager and assistant treasurer.
Westwood
utilizes a team of investment professionals to manage their Small-Cap Value
portfolio clients' assets. The portfolio team members include: Scot Lawson,
CFA,
Vice President and Research Analyst; C.J. McDonald, CFA, Vice President and
Research Group Head; Todd Williams, CFA, Vice President and Research Analyst;
Lisa Dong, CFA, Vice President and Research Analyst; and Philip Robert,
Assistant Vice President and Research Analyst. Each team member has a number
of
other Westwood professionals supporting their efforts. The members of the
Westwood investment team average in excess of 14 years experience in the
investment field.
To
Timothy
Plan Statement of Additional information
The
following amendment is being made to the Statement of Additional Information
of
the Timothy Plan, dated April 29, 2005 (the “SAI”). All portions of the SAI not
specifically amended by this Supplement shall remain in full force and
effect.
The
Section of the SAI entitled “INVESTMENT MANAGERS” is amended as
follows:
The
first
Subsection, entitled, “Awad Asset Management”, is replaced with the
following:
“AWAD
ASSET MANAGEMENT
Pursuant
to an Investment Sub-Advisory Agreement between TPL, the Trust and Awad Asset
Management ("Awad"), dated January 1, 1997, as amended May 1, 1998 (the "Awad
Sub-Advisory Agreement"), and further amended on January 02, 2004, Awad provides
advice and assistance to TPL in the selection of appropriate investments for
the
Small-Cap Variable Series, subject to the supervision and direction of TPL
and
the Funds' Board of Trustees. Awad also provides similar services to the Patriot
Fund pursuant to a Sub-Advisory Agreement dated May 1, 2004. Each sub-advisory
agreement was approved by the shareholders of the applicable Fund. As
compensation for its services for the Small Cap Variable Series, Awad receives
from TPL an annual fee at a rate equal to 0.42% of the first $10 million in
assets of the Fund; 0.40% of the next $5 million in assets; 0.35% of the next
$10 million in assets; and 0.25% of assets over $25 million. As compensation
for
its services for
the
Patriot Fund, Awad
receives
an
annual fee at a rate equal to 0.37% for the first
$10
million in assets of the Fund; 0.35% of the next $5 million in assets; 0.30%
of
the next $10 million in assets; and 0.25% of assets over $25 million.
The
Small
Cap Variable Series and the Patriot Fund are managed by James Awad, founder
and
CEO of Awad Asset Management, a wholly owned subsidiary of Raymond James
Investments. Mr. Awad has been in the securities industry for over forty years,
and has been the CEO of Awad and Associates since it was founded in 1992. Mr.
Awad also serves as the Chief Investment Officer for his firm. He has been
responsible for the day-to -day management of the Small Cap Variable Series
and
the Patriot Fund since their inceptions. Awad also served as investment manager
to the Small-Cap Value Fund from January, 1997 through December 31,
2005.
Like
the
Advisory Agreement between the Trust and TPL described above, the Awad
Sub-Advisory Agreement had an initial term of two years and became renewable
annually thereafter under the same criteria as the Advisory Agreement. The
Awad
Sub-Advisory Agreement was
last
renewed by the Board at a meeting held for that purpose, among others, on
February 25, 2005. The Board considered the following factors in arriving at
its
conclusions to renew the Awad Sub-Advisory Agreement for an additional year.
First,
the Board considered the fees charged by Awad in light of the services provided
by Awad. After full and careful consideration, the Board, with the independent
trustees separately concurring, agreed that the fees charged by Awad and paid
out of the fees received by TPL were fair and reasonable in light of the
services provided by Awad. In reaching that determination, the Board relied
on
reports describing the fees paid to Awad and comparing those fees against fees
paid to other investment advisers operating under similar circumstances. The
Board also received a report from an independent consulting firm which had
conducted its own analysis of fee structures for the Trust. Finally, the Board
also heard reports from TPL with respect to its ongoing experiences with
recruiting experienced sub-advisers and the fees required to successfully
recruit such persons. Next, the Board discussed the nature, extent and quality
of Awad’s services to the Fund, including the investment performance of the
Funds under Awad's investment management. The Board generally approved of Awad’s
performance, noting that the Funds managed by Awad invested in a manner that
did
not rely exclusively on investment performance. Further, the Board noted with
approval that Awad did not succumb to “style drift” in its management of each
Fund’s assets, and that Awad was committed to maintain its investment mandate,
even if that meant underperformance during periods when that style was out
of
favor. The Board noted with approval Awad’s ongoing efforts to maintain such
consistent investment discipline. Next, the Board considered whether Awad's
current fee structure would allow the Funds to realize economies of scale as
they grow. The Board decided that this particular factor was moot with respect
to the Awad Sub-Advisory Agreement because Awad was paid out of the fees paid
to
TPL.
After
careful discussion and consideration, the Board of Trustees, including the
independent Trustees who unanimously cast an affirmative vote, determined that
the renewal of the Awad Sub-Advisory Agreement for another one-year period
would
be in the best interests of the Fund's shareholders. In approving the renewal
of
the Awad Sub-Advisory Agreement for an additional one year period, the Board
did
not place specific emphasis on any one factor discussed above, but considered
all factors in equal light. Further, the Board had available and availed itself
of the assistance of legal counsel at all times during its consideration of
the
Awad Sub-Advisory Agreement renewal.
Other
Information Relating to Awad Asset Management
The
table
below presents information relating to the persons responsible for managing
Fund
assets, the number and types of other accounts managed by such persons, and
how
such persons are compensated for managing such accounts.
|
Portfolio
Manager
|
Types,
Asset Amounts and No. of Accounts Managed
|
Types,
Asset Amounts and No. of Accounts Managed Where Compensation is
Performance Based
|
| |
Registered
Investment Companies
|
Other
Pooled
Investment Vehicles
|
Other
Accounts
|
Registered
Investment
Companies
|
Other
Pooled
Investment Vehicles
|
Other
Accounts
|
| |
No.
of Accts
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
|
J.
Awad
|
6
|
$563.6
|
1
|
$9.2
|
1788
|
$967.1
|
2
|
$189.1
|
1
|
$9.2
|
0
|
NA
|
Mr.
Awad’s compensation is comprised of a base salary, combined with a
performance-based bonus pool.
The
Subsection entitled, “Westwood Holding Corp.”, is replaced with the
following:
“WESTWOOD
MANGEMENT CORP
Pursuant
to an Investment Sub-Advisory Agreement between TPL, the Trust and Westwood
Holdings Group, (“Westwood”) dated May 01, 2005, Westwood provides advice and
assistance to TPL in the selection of appropriate investments for the
Large/Mid-Cap Value Fund, subject to the supervision and direction of the Funds'
Board of Trustees. As compensation for its services, Westwood receives from
TPL
an annual fee at a rate equal to 0.42% of the first $10 million in assets of
the
Fund; 0.40% of the next $5 million in assets; 0.35% of the next $10 million
in
assets; and 0.25% of assets over $25 million.
Westwood
utilizes the team management approach to portfolio management, with team members
supporting each Westwood product and client. The team members share
responsibilities equally and carry equal voting authority.
The
five
management team members that provide management services to the Large/Mid Cap
Value Fund include the founder and Chief Investment Officer of Westwood, Ms.
Susan Byrne. She founded the company in 1982, and has served the firm
continuously since then.
Ms.
Kellie Stark joined Westwood in 1991. In addition to serving on the investment
team, she is Senior Vice President and Research Group Head.
Team
member Mr. Christopher McDonald, Vice President and Research Group Head, became
a member of the Westwood Group in 1993.
Mr.
Jay
Singharnia, a former Bank of America Equity Analyst, moved to Westwood in 2000.
He serves in the capacities of Vice President and Research Analyst.
Ragen
Stienke, Asst. Vice President and Research Analyst, joined Westwood in 2003.
He
was an Investment Strategist with UBS (formerly Paine Webber) for several years
prior to his move to Westwood.
|
Portfolio
Manager
|
Types,
Asset Amounts and No. of Accounts Managed by Team Members
|
Types,
Asset Amounts and No. of Accounts Managed by Team Members Where
Compensation is Performance Based
|
| |
Registered
Investment Companies
|
Other
Pooled Investment Vehicles
|
Other
Accounts
|
Registered
Investment Companies
|
Other
Pooled Investment Vehicles
|
Other
Accounts
|
| |
No.
of Accts
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
|
Team
|
3
|
$469
|
5
|
$627
|
36
|
$1.753
|
0
|
NA
|
0
|
NA
|
0
|
NA
|
Westwood
combines three elements to each member’s total compensation: base salary, cash
bonus and restricted company stock. Base salary is reviewed on an annual basis
and can be adjusted based on the employee’s performance. For Salary and
Restricted Stock grants, Westwood utilizes a performance measurement process
that incorporates both qualitative and quantitative measures. The results
contribute to decisions for the cash bonus and restricted stock grants.
Restricted stock is granted on an annual basis and carries a 4-year rolling
vesting schedule.
On
November 18, 2005, the Fund's Board of Trustees held a regular Quarterly meeting
to consider, among its stated business, a new sub-investment adviser for the
Small-Cap Value Fund, and after full deliberation, selected Westwood Management
Corp., 200 Crescent Court, Suite 1200, Dallas, TX 75201(Westwood) to serve
in
that capacity. On December 19, 2005, the Fund's shareholders approved the
engagement of Westwood at a special shareholders meeting.
During
its deliberations at the November 18, 2005 Board Meeting, the Board reviewed
the
qualifications of Westwood and heard a presentation by representatives of UBS
PRIME Consultant and TPL relating to Westwood. Mr. Ally reminded the Board
that
Westwood currently serves as sub-adviser to another Timothy Plan Fund, the
Large/Mid-Cap Value Fund, and that the Board previously approved Westwood for
that position in February of 2005, and the shareholders of the Large/Mid-Cap
Fund had approved Westwood in March, 2005. Mr. Ally next reported that in
October, 2005 he had traveled to Westwood's offices in Dallas, Texas to conduct
due diligence on the firm, to hear a formal presentation from the firm with
respect to managing the Fund, and to assure himself that no material negative
matters had transpired since the Board's last inspection of Westwood. Mr. Ally
expressed his continued confidence and praise for the firm and in the firm’s
ability to serve the Fund.
The
Board
then received written information relating to the experience, strengths, other
clients and past investment performance of Westwood and noted with approval
the
firm’s consistently above-average investment performance, its size and level of
expertise, and quality of clientele. The Board noted with further approval
that
no officer or trustee of the Fund or Trust was affiliated with Westwood, and
that no compensation was to be paid to Westwood other than advisory fees under
the agreement. The Board also reviewed the financial condition of Westwood
and
questioned both TPL and UBS at length to assure themselves that Westwood was
financially capable of undertaking the responsibilities of serving the Fund.
The
Board
then turned its attention to the terms of the proposed sub-advisory agreement.
Under the terms of the proposed sub-advisory agreement with Westwood, Westwood
would be responsible for providing day-to-day investment advice and choosing
the
securities in which the Fund invests. Westwood would report directly to TPL,
and
TPL would be responsible to report to the Board for any errors or omissions
made
by Westwood. Westwood would not be responsible for mistakes or errors of
judgment in its management of the investments of the Fund unless those mistakes
or errors of judgment resulted from gross negligence, willful misfeasance or
intentional wrongdoing. The proposed sub-advisory agreement would have an
initial term of two years, and could be renewed annually thereafter by
affirmative vote of a majority of the Board of Trustees and a separate
concurring majority vote of the Trust’s independent Trustees. The proposed
sub-advisory agreement may be terminated by any party at any time, without
penalty, upon sixty (60) days written notice. The proposed sub-advisory
agreement would become effective immediately upon receipt of shareholder
approval. A copy of the proposed sub-advisory agreement with Westwood is
included as Exhibit B to this proxy, which is incorporated by reference into
this discussion as if fully set forth herein.
The
Board
then discussed the proposed fees payable to Westwood for its services to the
Fund. Since those fees would be paid to Westwood by TPL out of the fees it
received from the Fund, the Board sought TPL’s opinion concerning the
reasonableness of the proposed fee structure. TPL reported to the Board that
Westwood was at least as competitive as the other candidates it had interviewed
with respect to its proposed fees. TPL further reported that because Westwood’s
proposed fees were so reasonable, TPL would be able to maintain its current
level of service to the Funds without the need to seek an overall fee
increase.
Based
on
the Board’s review and UBS and TPL’s recommendation, the Board unanimously voted
to approve Westwood as sub-adviser to the Fund and to seek shareholder approval
of their choice.
The
information presented below (current as of September 30, 2005) is designed
to
provide additional information about Westwood, the team members of Westwood
responsible for the Small-Cap Value Fund's investments, and the means by which
such persons are compensated for their services.
|
Portfolio
Manager
|
Types,
Asset Amounts and No. of Accounts Managed by Team Members
|
Types,
Asset Amounts and No. of Accounts Managed by Team Members Where
Compensation is Performance Based
|
| |
Registered
Investment Companies
|
Other
Pooled Investment Vehicles
|
Other
Accounts
|
Registered
Investment Companies
|
Other
Pooled Investment Vehicles
|
Other
Accounts
|
| |
No.
of Accts
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
No.
of Accts.
|
Total
Assets (mil)
|
|
Team
|
8
|
$761
|
16
|
$1.157
|
60
|
$2.367
|
0
|
NA
|
0
|
NA
|
0
|
NA
|
Westwood
combines three elements to each member’s total compensation: base salary, cash
bonus and restricted company stock. Base salary is reviewed on an annual basis
and can be adjusted based on the employee’s performance. For Salary and
Restricted Stock grants, Westwood utilizes a performance measurement process
that incorporates both qualitative and quantitative measures. The results
contribute to decisions for the cash bonus and restricted stock grants.
Restricted stock is granted on an annual basis and carries a 4-year rolling
vesting schedule. Westwood does not currently have any clients where portfolio
manager compensation is based, either in whole or in part, on client investment
portfolio performance.”
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