<PAGE>
UNITED STATES FILE NO. 33-73248
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 FILE NO. 811-8228
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. _______ [_]
Post Effective Amendment No. 5 [X]
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 6 [X]
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THE TIMOTHY PLAN
(Exact name of Registrant as Specified in Charter)
1304 West Fairbanks Avenue
Winter Park, Florida 32789
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code 407-644-1986
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Arthur D. Ally, President
The Timothy Plan
1304 West Fairbanks Avenue
Winter Park, FL 32789
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(Name and Address of Agent for Service)
COPIES TO: Joseph V. Del Raso, Esq.
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICAL AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IT IS PROPOSED THAT THIS FILING BECOME EFFECTIVE:
[_] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) OF RULE 485.
[_] ON (DATE), PURSUANT TO PARAGRAPH (B).
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[X] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1).
[_] ON (DATE) PURSUANT TO PARAGRAPH (A) OF RULE 485.
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[_] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(II).
[_] ON (DATE) PURSUANT TO PARAGRAPH (A)(II) OF RULE 485.
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IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[_] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
Registrant has previously registered an indefinite number of shares of
common stock of The Timothy Plan under the Securities Act of 1933 pursuant
to Rule 24f-2 of the Investment Company Act of 1940, as amended.
Registrant filed a Notice pursuant to Rule 24f-2 for the fiscal year ended
December 31, 1996 on February 24, 1997.
As filed with the U.S. Securities and Exchange Commission on February 28,
1997
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
Part A
Item No. Prospectus Caption
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<S> <C>
1. Cover Page................................... Cover Page
2. Synopsis..................................... Expenses of the Fund
3. Financial Highlights......................... Financial Highlights
4. General Description of Registrant............ Prospectus Cover, Investment
Objective and Policies, Risk
Factors and Investment Restrictions
5. Management of the Fund....................... Board of Trustees, Investment Adviser,
Investment Manager, Historical Performance of
the Investment Manager, Underwriter, Administrator,
Custodian, Transfer Agent, Fund Accounting/Pricing
Agent, Distribution of Shares, and Expenses
6. Capital Stock and Other Securities........... Shares of Beneficial Interest, Dividends,
Distributions and Taxes
7. Purchase of Shares Being Offered............. Determination of Net Asset Value, How to Purchase
Shares, Retirement Plans
8. Redemption or Repurchase..................... How to Redeem Fund Shares
9. Pending Legal Proceedings.................... Inapplicable
<CAPTION>
PART B STATEMENT OF ADDITIONAL
ITEM NO. INFORMATION CAPTION
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<S> <C>
10. Cover Page................................... Cover Page
11. Table of Contents............................ Table of Contents
12. General Information and History.............. N/A
13. Investment Objective and Policies............ Cover, The Timothy Plan- Investments, Investment
Restrictions
14. Management of the Fund....................... Officers an Trustees of the Fund
15. Control Persons and Principal
Holders of Securities........................ Miscellaneous
16. Investment Advisory and Other
Services..................................... Investment Advisor, Investment Manager,
Underwriter and Administrator
17. Brokerage Allocation......................... Allocation of Portfolio Brokerage
18. Capital Stock and Other Securities........... N/A
19. Purchase, Redemption and Pricing
of Securities Being Offered.................. Purchase of Shares
20. Tax Status................................... N/A
21. Underwriters................................. Underwriters, Purchase of Shares, Distribution
Plan
22. Calculation of Performance Data.............. Performance Calculations
23. Financial Statements......................... Audited Financial Statements
</TABLE>
PART C
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Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Post-Effective Amendment
No.5 to the Registration Statement.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
Part A
Item No. Prospectus Caption
- ---------------------------------------------------------------------
<S> <C>
1. Cover Page................................... Cover Page
2. Synopsis..................................... Expenses of the Fund
3. Financial Highlights......................... Financial Highlights
4. General Description of Registrant............ Prospectus Cover, Investment
Objective and Policies, Risk
Factors and Investment Restrictions
5. Management of the Fund....................... Board of Trustees, Investment Adviser,
Investment Manager, Historical Performance of
the Investment Manager, Underwriter, Administrator,
Custodian, Transfer Agent, Fund Accounting/Pricing
Agent, Distribution of Shares, and Expenses
6. Capital Stock and Other Securities........... Shares of Beneficial Interest, Dividends,
Distributions and Taxes
7. Purchase of Shares Being Offered............. Determination of Net Asset Value, How to Purchase
Shares, Retirement Plans
8. Redemption or Repurchase..................... How to Redeem Fund Shares
9. Pending Legal Proceedings.................... Inapplicable
<CAPTION>
PART B STATEMENT OF ADDITIONAL
ITEM NO. INFORMATION CAPTION
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<S> <C>
10. Cover Page................................... Cover Page
11. Table of Contents............................ Table of Contents
12. General Information and History.............. N/A
13. Investment Objective and Policies............ Cover, The Timothy Plan- Investments, Investment
Restrictions
14. Management of the Fund....................... Officers an Trustees of the Fund
15. Control Persons and Principal
Holders of Securities........................ Miscellaneous
16. Investment Advisory and Other
Services..................................... Investment Advisor, Investment Manager,
Underwriter and Administrator
17. Brokerage Allocation......................... Allocation of Portfolio Brokerage
18. Capital Stock and Other Securities........... N/A
19. Purchase, Redemption and Pricing
of Securities Being Offered.................. Purchase of Shares
20. Tax Status................................... N/A
21. Underwriters................................. Underwriters, Purchase of Shares, Distribution
Plan
22. Calculation of Performance Data.............. Performance Calculations
23. Financial Statements......................... Audited Financial Statements
</TABLE>
PART C
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Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Post-Effective Amendment
No.5 to the Registration Statement.
<PAGE>
PROSPECTUS FOR
THE TIMOTHY PLAN INSTITUTIONAL CLASS
APRIL 29, 1997
________________________________________________________________________________
Distributed By:
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
(800) 441-6580
________________________________________________________________________________
The Timothy Plan (the "Fund") is an open-end diversified management investment
company. It was organized as a series Delaware business trust and currently
offers shares of one series, which has a specific investment objectives. There
is no assurance that the Fund's objectives will be achieved.
The objective of the Fund is long-term capital growth and its secondary
objective is current income. The Fund seeks to achieve its objectives by
investing in securities issued by companies which, in the opinion of the Fund's
advisor, conduct business in accordance with the stated philosophy and
principles of the Fund (See "Investment Objectives and Policies").
The Fund currently offers two classes of shares: Institutional Class and Retail
Class. This Prospectus pertains only to the Fund's Institutional Class shares.
The Institutional Class shares have no sales charge but are subject to annual
12b-1 Plan expenses. Retail Class shares have a front-end sales charge and are
also subject to annual 12b-1 Plan expenses. The Retail Class is offered in a
separate prospectus which can be obtained by calling (800) TIM-PLAN.
The shares of the Fund may be purchased or redeemed at any time. Purchases and
redemptions will be effected at the net asset value next determined following
receipt of the investor's request. (See "Determination of Net Asset Value,"
"How to Purchase Shares," and "How to Redeem Shares").
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read and
retain this Prospectus for future reference.
More information about the Fund and classes of shares of the Fund has been filed
with the U.S. Securities and Exchange Commission, and is contained in the
"Statement of Additional Information," dated April 29, 1997 which is available
at no charge upon request to the Fund. The Fund's Statement of Additional
Information is incorporated herein by reference. The Statement of Additional
Information, material incorporated by reference into this Prospectus, and other
information regarding the Fund are maintained electronically with the U.S.
Securities and Exchange Commission at its Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Expenses of the Fund ............................................
Financial Highlights ............................................
The Fund ........................................................
Investment Objectives and Policies ..............................
Risk Factors ....................................................
Investment Restrictions .........................................
Shares of Beneficial Interest ...................................
Management of the Fund ..........................................
Board of Trustees ..............................................
Investment Advisor .............................................
Investment Manager .............................................
Historical Performance of the Investment Manager ...............
Underwriter ....................................................
Plan of Distribution ...........................................
Administrator ..................................................
Custodian, Transfer Agent and Fund Accounting/Pricing Agent ....
Expenses .......................................................
Dividends, Distributions and Taxes ..............................
Determination of Net Asset Value ................................
How to Purchase Shares ..........................................
How to Redeem Shares ............................................
Retirement Plans ................................................
Performance .....................................................
Investment Application ..........................................
Automatic Investment Plan Application ...........................
Application to Request to Transfer to The Timothy Plan ..........
</TABLE>
This Prospectus is not an offering of the securities herein described in any
jurisdiction or to any person to whom it is unlawful for the Fund to make such
an offer or solicitation. No sales representative, dealer, or other person is
authorized to give any information or make any representation other than those
contained in this Prospectus.
<PAGE>
EXPENSES OF THE FUND
The following table illustrates all expenses and fees that a shareholder of the
Fund's Institutional Class will incur.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases............................ none
Maximum Sales Load Imposed on Reinvested Dividends................. none
Redemption Fees.................................................... none /1/
</TABLE>
ANNUAL OPERATING EXPENSES OF THE INSTITUTIONAL CLASS *
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management and Advisory Expenses After Expense Reimbursements...... 0.00%
12b-1 Fees......................................................... 0.25% /2/
Other Expenses After Expense Reimbursements........................ 1.35%
----
Total Operating Costs After Expense Reimbursements................. 1.60%
====
</TABLE>
The purpose of this table is to assist the investor in understanding the various
expenses that an investor in the Institutional Class will bear directly or
indirectly. The Advisor has voluntarily agreed to waive its fees, so that the
Institutional Class' total annual operating expenses will never exceed 1.60% of
the daily average net assets. Further, the Advisor has agreed to reimburse the
Institutional Class for its other expenses so that the Institutional Class'
total annual expenses will never exceed 1.60%. Absent the fee waiver and expense
reimbursements, "Management and Advisory Expenses" and "Other Expenses" would
have been 0.85% and 2.85%, respectively.
The following example illustrates the expenses that you would pay on a $1,000
investment over various time periods assuming (1) a 5% annual rate of return and
(2) redemption at the end of each time period. As noted in the table above, the
Fund charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
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<S> <C> <C> <C>
$16 $50 $87 $190
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
The Fund issues two classes of shares that invest in the same portfolio of
securities. Shareholders of Retail Class shares are subject to a sales charge
and each class is subject to a different 12b-1 Plan, therefore, expenses and
performance figures will vary between the classes. Further information about
Retail Class shares may be obtained by calling (800) TIM-PLAN.
- --------------------------------------------------------------------------------
/1/ United Missouri Bank KC NA charges $9.00 per redemption for redemptions
payable by wire.
/2/ The Board of Trustees has adopted a Plan of Distribution pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended for the Fund's
Institutional Class. With the Plan of Distribution in place, long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge consistent with rules of the National Association of
Securities Dealers, Inc. Given the maximum rate permitted under the Fund's
Plan of Distribution, it is anticipated that it would take a substantial
number of years to reach such maximum.
* The table reflects the expenses the Fund's Institutional Class incurred
during the fiscal year ended December 31, 1996.
Page 3
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FINANCIAL HIGHLIGHTS
The following financial highlights were derived from the Fund's financial
statements related to the Institutional Class which were audited by Tait, Weller
& Baker, independent auditors, whose unqualified report thereon is incorporated
by reference into the Statement of Additional Information. The Fund's Statement
of Additional Information may be obtained by shareholders without charge and is
incorporated by reference into this Prospectus. The table sets forth financial
data for a share of capital stock outstanding throughout the periods
presented.
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
-----------------------------------------
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 *
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<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 10.07 $ 9.66 $ 10.00
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Income From Investment Operations:
Net investment income.............................. 0.10 0.11 0.06
Net gains (losses) on securities (both realized
and unrealized).................................. 1.17 0.66 (0.34)
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Total from investment
operations..................................... 1.27 0.77 (0.28)
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Less Distributions
Distributions from net investment income:
Institutional Shares............................. (0.10) (0.11) (0.06)
Retail Shares.................................... 0.00 0.00 0.00
Distributions from net capital gains:
Institutional Shares............................. 0.00 (0.25) 0.00
Retail Shares.................................... 0.00 0.00 0.00
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Total distributions.............................. (0.10) (0.36) (0.06)
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NET ASSET VALUE, END OF PERIOD........................ $ 11.24 $10.07 $ 9.66
======= ====== =======
TOTAL RETURN.......................................... 12.59% 7.93% (2.84%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s).................. $ 7,760 $6,133 $ 2,217
Ratio of expenses to average net
assets:
Before expense reimbursement....................... 3.70% 5.84% 18.62% /1/
After expense reimbursement........................ 1.60% 1.60% 1.60% /1/
Ratio of net investment income to
average net assets:
Before expense reimbursement....................... (1.05%) (2.96%) (15.49%)/1/
After expense reimbursement........................ 1.05% 1.28% 1.53% /1/
Portfolio turnover rate.............................. 93.08% 34.12% 8.31%
Average commission rate paid......................... $0.0593 N/R /2/ N/R /2/
</TABLE>
* The Institutional Shares commenced investment operations on March 21, 1994.
/1/ Annualized.
/2/ Not Required.
Page 4
<PAGE>
THE FUND
The Timothy Plan (the "Fund") is an open-end diversified management investment
company commonly known as a mutual fund. The Fund was established as a series
Delaware business trust on December 16, 1993. The Fund currently offers one
series with two classes of shares: Institutional Class and Retail Class. This
Prospectus pertains only to Institutional Class shares.
INVESTMENT OBJECTIVES AND POLICIES
Set forth below are the investment objectives and policies of the Fund. The
investment objectives of the Fund are a fundamental policy and may not be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities. There can be no assurance that the Fund will
achieve its objectives.
The Fund's objective is long-term capital growth, with a secondary objective of
current income. The Fund shall seek to achieve its objectives while abiding by
ethical standards established for investments by the Fund. Those standards
preclude the investment in securities of companies involved in the businesses of
alcohol production, tobacco production, or casino gambling, or which are
directly or indirectly involved in pornography or abortion. The securities in
which the Fund shall be precluded from investing, by virtue of the Fund's
ethical standards, are referred to as the "Excluded Securities."
The Fund will invest most of its assets in common stocks and American Depository
Receipts ("ADRs"), although it may also invest in other types of securities
including securities convertible into common stocks and common stock equivalents
(including rights and warrants), preferred stocks, short-term U.S. Government
securities, and/or other high-quality, short-term debt securities (commercial
paper, repurchase agreements, bankers' acceptances, certificates of deposit and
other fixed income securities (non-convertible and convertible bonds, debentures
and notes issued by U.S. corporations and certain bank obligations and
participations). High-quality debt securities are those that are rated Aa or
better by Moody's, or AA or better by Standard & Poor's, or that are of
comparable quality. See "Risk Factors" herein, and the Statement of Additional
Information for information relating to these securities. While it is the
Fund's policy to seek long-term investments, changes will be made whenever
management believes that such changes will strengthen the Fund's investments and
realization of its objectives. The Fund will pursue its objectives by investing
a major portion of its assets in securities of companies which offer prospects
for growth of capital in accordance with the portfolio investment techniques
described below.
The Fund seeks to achieve its investment objectives by investing primarily in
common stocks and ADRs, while foregoing investments in the Excluded Securities.
Awad & Associates (the "Investment Manager"), a division of Raymond James &
Associates, Inc., as sub-investment advisor to Timothy Partners, Ltd. (the
"Advisor"), will select the investments for the Fund, but will not invest in
securities which the Advisor will determine are Excluded Securities. The Advisor
has instructed the Investment Manager to avoid investment in any company
directly involved in the business of alcohol production, tobacco production, or
casino gambling. In addition, the Advisor will compile and maintain a list of
companies that it determines, by using information collected by and published by
three Christian ministries, participate directly or indirectly in either
pornography or abortion. The Advisor will use its best judgement in determining
which companies, through their corporate practices in either of these two areas,
need to be placed on the Excluded Securities list. The Advisor also reserves the
right to exercise its best judgement to exclude investment in other companies
whose corporate practices may not fall within the exclusions described above,
but nevertheless could be found offensive to basic traditional Judeo Christian
values.
The three Christian ministries that publish information that the Advisor will
utilize in identifying companies directly or indirectly involved in pornography
or abortion are as follows: (1) The American Family Association (to identify
companies engaged in pornography); (2) Pro Vita Advisors (to identify companies
that directly and indirectly participate in abortion); and (3) Life Decisions
International (to identify companies that indirectly support abortion causes
through corporate funding programs). The Advisor retains the right to change
the ministries whose information it reviews, at its discretion.
Page 5
<PAGE>
After eliminating the Excluded Securities, the Investment Manager will construct
a portfolio of investments to produce the highest possible risk-adjusted return
on investment as is consistent with the Fund's objectives and policies.
The Fund will invest primarily in a diversified portfolio of equity securities
of companies whose market capitalizations exceed $200 million, and whose
securities trade on the New York Stock Exchange, the American Stock Exchange and
the NASDAQ National Market System. Since the Fund is an equity fund, the
Investment Manager seeks investments that show the greatest potential for
growth, with income as a secondary factor. Therefore, these companies may or
may not pay dividends.
Potential equity investment candidates will be analyzed to determine their
ability to repay all fixed debt obligations (including certain "off balance
sheet debts" such as operating lease obligations and unfunded pension
liabilities) from their historical level of net investment income within a
reasonable time period, generally less than five years. Securities are typically
sold when an appreciation objective is met. The Fund may invest up to 30% of its
assets in cash or debt securities. Although the Investment Manager does not
utilize a market timing strategy, if market conditions are viewed to require
that the Fund take a temporary defensive position, the Fund may invest up to
100% of its assets in (i) debt securities issued by the U.S. Government, its
agencies or instrumentalities, (ii) commercial paper, or (iii) certificates of
deposit and bankers' acceptances with respect to any of the foregoing
investments. The Fund may also invest in such securities pending the investment
of the proceeds of certain sales of portfolio securities and at such other times
when suitable equity securities are not available. It is impossible to predict
whether, or for how long, the Fund will use any of such temporary defensive
strategies.
The Advisor will attempt to monitor and respond to changes in business policies
within the companies selected for investment. It is possible that securities in
which the Fund has invested may become Excluded Securities. In such event, the
Fund will sell its position in those securities subject to general market
considerations.
RISK FACTORS
INVESTMENT RESTRICTIONS OF THE FUND. The ethical standards established for
investments by the Fund limit the pool of securities from which investment
securities may be selected by the Investment Manager. Although the Advisor
believes the Fund's investment objective of long-term capital growth can be
achieved notwithstanding the effect of the Fund's ethical standards, this
objective may be affected by the limitations imposed by the Advisor, in
eliminating the Excluded Securities as potential investments.
ADVISOR AND INVESTMENT MANAGER. The principals of the managing general partner
of the Advisor have been engaged in various aspects of the retail brokerage and
financial advisory business. The Investment Manager has advised individuals,
pension funds, trusts and institutions. Awad & Associates, a division of Raymond
James & Associates, Inc., currently manages approximately $575 million in these
accounts. The Investment Manager currently serves as co-investment advisor to
one other investment company: Heritage Small Cap Fund. The Advisor has served as
investment advisor exclusively to the Fund since the Fund's commencement of
operations (March 21, 1994) but has not previously served as investment advisor
to any other investment company.
PORTFOLIO TURNOVER. It is anticipated that the annualized portfolio turnover
rate for the Fund generally will not exceed a range of 50% to 75%, and may be
lower than 50%, during most periods. High portfolio turnover involves
additional
Page 6
<PAGE>
transaction costs (such as brokerage commissions) which are borne by the Fund,
and might involve adverse tax effects. (See "Dividends, Distributions and
Taxes").
RISKS OF CERTAIN FIXED INCOME SECURITIES
INTEREST BEARING DEBT INSTRUMENTS. The market value of interest-bearing debt
securities, if and when held by the Fund, is affected by changes in interest
rates. There is normally an inverse relationship between the market value of
securities sensitive to prevailing interest rates and actual changes in interest
rates; i.e., a decline in interest rates produces an increase in market value,
while an increase in rates produces a decrease in market value. Moreover, the
longer the remaining maturity of a security, the greater the effect of interest
rate changes on the market value of such a security. In addition, changes in an
issuer's ability to make payments of interest and principal and in the market's
perception of an issuer's creditworthiness also affect the market value of the
debt securities of that issuer.
MONEY MARKET SECURITIES. The Fund will select money market securities for
investment when such securities offer a current market rate of return which the
Fund considers reasonable in relation to the risk of the investment, and the
issuer can satisfy suitable standards of credit-worthiness set by the Fund. The
money market securities in which the Fund may invest are repurchase agreements,
certificates of deposit, U.S. Government securities, commercial paper and
securities of money market mutual funds.
Although the Fund intends to invest primarily in common stocks, common stock
equivalents, and ADRs, the Fund may invest up to 30% of its assets directly in
money market securities whenever deemed appropriate to achieve the Fund's
investment objectives. It may invest without limitation in such securities on a
temporary basis for defensive purposes.
Securities issued or guaranteed as to principal and interest by the U.S.
Government ("Government Securities") include a variety of Treasury securities,
which differ in their interest rates, maturities and date of issue. Treasury
bills have a maturity of one year or less; Treasury notes have maturities of one
to ten years; Treasury bonds generally have a maturity of greater than five
years. The Fund will only acquire Government Securities which are supported by
the "full faith and credit" of the United States. Securities which are backed
by the full faith and credit of the United States include Treasury bills,
Treasury notes, Treasury bonds and obligations of: the Government National
Mortgage Association, the Farmers Home Administration and the Export-Import
Bank. The Fund's direct investments in money market securities will generally
favor securities with shorter maturities (maturities of less than 60 days) which
are less affected by price fluctuations than are those with longer maturities.
Certificates of deposit are certificates issued against funds deposited in a
commercial bank or a savings and loan association for a definite period of time
and earning a specified return. Bankers' acceptances are negotiable drafts or
bills of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Investments in bank certificates of deposit and bankers' acceptances are
generally limited to domestic banks and savings and loan associations that are
members of the Federal Deposit Insurance Corporation or Federal Savings and Loan
Insurance Corporation having a net worth of at least $100 million dollars
("Domestic Banks") and domestic branches of foreign banks (limited to
institutions having total assets not less than $1 billion or its equivalent).
Investments in prime commercial paper may be made in notes, drafts, or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace, or any renewal thereof
payable on demand or having a maturity likewise limited.
REPURCHASE AGREEMENTS Under a repurchase agreement the Fund acquires a debt
instrument for a relatively short period (usually not more than one week)
subject to the obligation of the seller to repurchase and the Fund to resell
such debt instrument at a fixed price. The Fund will enter into repurchase
agreements only with banks which are members of the Federal Reserve System, or
securities dealers who are members of a national securities exchange or are
market makers in government securities and report to the Market Reports Division
of the Federal Reserve Bank of New York and, in either case, only where the debt
instrument collateralizing the repurchase agreement is a U.S. Treasury or agency
obligation supported by the full faith and credit of the United States. A
repurchase agreement may also be viewed as
Page 7
<PAGE>
the loan of money by the Fund to the seller. The resale price specified is
normally in excess of the purchase price, reflecting an agreed upon interest
rate. The rate is effective for the period of time the Fund is invested in the
agreement and may not be related to the coupon rate on the underlying security.
The term of these repurchase agreements will usually be short (from overnight to
one week). At no time will the Fund invest in repurchase agreements of more than
sixty days. The securities which are collateral for the repurchase agreements,
however, may have maturity dates in excess of sixty days from the effective date
of the repurchase agreement. The Fund will always receive, as collateral,
securities whose market value, including accrued interest, will at least equal
102% of the dollar amount to be paid to the Fund under each agreement at its
maturity, and the Fund will make payment for such securities only upon physical
delivery or evidence of book entry transfer to the account of the Custodian. If
the seller defaults, the Fund might incur a loss if the value of the collateral
securing the repurchase agreement declines, and might incur disposition costs in
connection with liquidation of the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, collection
of the collateral by the Fund may be delayed or limited. The Fund also may not
be able to substantiate its interests in the underlying securities. While
management of the Fund acknowledges these risks, it is expected that such risks
can be controlled through stringent security selection and careful monitoring
procedures. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 10% of the market value of the
Fund's net assets would be invested in such repurchase agreements and any other
illiquid assets. For purposes of the diversification test for qualification as a
regulated investment company under the Internal Revenue Code, Repurchase
Agreements are not counted as cash, cash items or receivables, but rather as
securities issued by the counter-party to the Repurchase Agreements.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below have been adopted by the Fund as
fundamental policies, to limit certain risks that may result from investment in
specific types of securities or from engaging in certain kinds of transactions
addressed by such restrictions. They may not be changed without the affirmative
vote of the holders of a majority of the outstanding voting securities of the
Fund. Certain of these policies are detailed below, while other policies are
set forth in the Statement of Additional Information. Changes in values of
particular Fund assets or the assets of the Fund as a whole will not cause a
violation of the investment restrictions so long as percentage restrictions are
observed by the Fund at the time it purchases any security.
The investment restrictions specifically provide that the Fund will not:
(a) as to 75% of the Fund's total assets, invest more than 5% of its total
assets in the securities of any one issuer. (This limitation does not
apply to cash and cash items, or obligations issued or guaranteed by the
United States Government, its agencies or instrumentalities);
(b) purchase more than 10% of the voting securities, or more than 10% of
any class of securities, of another investment company. For purposes of
this restriction, all outstanding fixed income securities of an issuer are
considered as one class;
(c) purchase or sell commodities or commodity futures contracts, other
than those related to stock indexes as previously outlined in "Investment
Objectives and Policies;"
(d) purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations;
(e) make loans of money or securities, except (i) by the purchase of fixed
income obligations in which the Fund may invest consistent with its
investment objectives and policies; or (ii) by investment in repurchase
agreements (see "Investment Objectives and Policies");
(f) invest in securities of any company if, any officer or trustee of the
Fund or the Advisor owns more than 0.5% of the outstanding securities of
such company and such officers and trustees (who own more than 0.5%) in the
aggregate own more than 5% of the outstanding securities of such company;
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(g) borrow money, except the Fund may borrow from banks (i) for temporary
or emergency purposes in an amount not exceeding 5% of the Fund's assets or
(ii) to meet redemption requests that might otherwise require the untimely
disposition of portfolio securities, in an amount up to 33 1/3% of the
value of the Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing was made. While borrowing exceeds 5% of the value of the Fund's
total assets, the Fund will not purchase securities. Interest paid on
borrowing will reduce net income;
(h) pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 33 1/3% of the value of its net assets but only to
secure borrowing for temporary or emergency purposes, such as to effect
redemptions; or
(i) purchase the securities of any issuer, if, as a result, more than 10%
of the value of a Fund's net assets would be invested in securities that
are subject to legal or contractual restrictions on resale ("restricted
securities"), in securities for which there are no readily available market
quotations, or in repurchase agreements maturing in more than seven days,
if all such securities would constitute more than 10% of the Fund's net
assets.
SHARES OF BENEFICIAL INTEREST
The beneficial interest of the Fund is divided into an unlimited number of
shares ("Shares") with a par value of $0.001 each. Each Share has equal
dividend, voting, liquidation and redemption rights. If a matter to be voted on
does not affect the interests of all classes, then only the shareholders of the
affected class shall be entitled to vote on the matter. There are no conversion
or preemptive rights. Shares, when issued, will be fully paid and
nonassessable. Fractional shares have proportional voting rights. Shares of
the Fund do not have cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of trustees can elect all of
the trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any person to the Board of Trustees.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
- -----------------
The members of the Fund's Board of Trustees are fiduciaries for the Fund's
shareholders and are governed by the laws of the State of Delaware in this
regard. They establish policy for the operation of the Fund and appoint the
officers who conduct the daily business of the Fund. The Statement of
Additional Information contains more information regarding Officers and
Trustees.
INVESTMENT ADVISOR
- ------------------
Timothy Partners, Ltd. (the "Advisor") is a Florida limited partnership
organized on December 6, 1993. The Advisor supervises the investment of the
assets of the Fund in accordance with the objectives, policies and restrictions
of the Fund. The Advisor approves the portfolio of securities selected by the
Investment Manager (See "Investment Manager" below). To determine which
securities are Excluded Securities with respect to abortion and pornography, the
Advisor consults with three Christian ministries on these issues: The American
Family Association (pornography), Pro Vita Advisors (direct and indirect
participation and involvement in abortion) and Life Decisions International
(indirect participation in abortion through corporate funding programs). The
Advisor retains the right to change the ministries whose information it reviews,
at its discretion.
For its services, the Advisor is paid an annual fee equal to 0.85% of the Fund's
average daily net assets. This fee is subject to certain voluntary reductions in
fees paid by the Fund. A portion of the advisory fee is paid by the Advisor to:
(i) the Investment Manager for assisting in the selection of portfolio
securities for the Fund and (ii) Covenant
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Financial Management ("CFM") as reimbursement for certain expenses related to
the daily operations of the Fund performed by CFM. In addition, this fee also
covers the cost of postage, materials and handling of the fulfillment function
of processing Prospectus requests as well as other sundry marketing and general
administration expenses. The fee payable to and services provided by the
Investment Manager are described under the heading "Investment Manager" below.
The fee payable to and services provided by CFM are described at the end of this
section. The Advisor's fee is higher than that charged by other funds, but is
comparable to fees charged by funds with similar investment objectives. The
Advisor has offices located at 1304 West Fairbanks Avenue, Winter Park, FL
32789.
Arthur D. Ally, the President, Chairman and Trustee of the Fund, is President
and a 70% shareholder of Covenant Funds, Inc. ("Covenant"), located at 1304 West
Fairbanks Avenue, Winter Park, FL 32789, which is the managing general partner
of the Advisor. Mr. Ally is also an individual general partner of the Advisor.
Neither the Advisor nor its managing general partners previously has served as
an advisor to any other registered investment company but the Advisor has served
as investment advisor exclusively to the Fund since the Fund's commencement of
operations (March 21, 1994). Prior thereto, Mr. Ally, had extensive securities
industry experience having served as either financial consultant or branch
manager for three securities firms over the previous seventeen years: Prudential
Bache, Shearson Lehman Brothers and Investment Management & Research. Some or
all of these firms may be used by the Investment Manager to execute portfolio
trades for the Fund. Neither Mr. Ally nor any affiliated person to the Fund will
receive any benefit from any of these transactions.
The Advisor and CFM have entered into an agreement dated February 23, 1994, as
amended April 23, 1996, whereby the Advisor pays CFM for certain overhead
expenses related to the daily operations of the Fund that CFM carries out. These
expenses include: salary of administrative personnel, cost of preparation of
shareholder fulfillment kits, cost of phone lines and office space, and cost of
postage and supplies. The annual fee is an amount to cover CFM's costs in
providing services to the Advisor, payable by the Advisor on a monthly basis.
Both parties have agreed that no profits will accrue to CFM as a result of this
agreement. Arthur D. Ally is President and 100% shareholder of CFM.
INVESTMENT MANAGER
Effective January 1, 1997 the Fund engaged a new investment manager Awad &
Associates (the "Investment Manager"), a division of Raymond James & Associates,
Inc., pursuant to a new sub-investment advisory agreement among the Fund,
Timothy Partners, Ltd. and Awad & Associates, which was approved by the Board of
Trustees at a meeting held on November 29, 1996 and by shareholders of record on
November 14, 1996 at a Special Meeting of Shareholders held on January 31,
1997.
The Investment Manager has offices at 477 Madison Avenue, New York, New York
10022. The Investment Manager is a joint venture between James Awad, a twenty-
six year veteran of the investment management business, and Raymond James
Financial, a New York Stock Exchange member firm. The Investment Manager has
been retained by the Advisor pursuant to a sub-advisory agreement to assist in
the selection and management of the Fund's investment securities and prepare the
portfolio of securities of selected issuers with business practices that meet
the objectives and policies of the Fund. The Advisor reviews the portfolio to
insure compliance with the Fund's ethical standards.
The Investment Manager's investment policy committee, comprised of James Awad,
Dan Veru and Carol Egan, is responsible for the day-to-day management of the
Fund's portfolio. James Awad is the senior investment officer of the Investment
Manager. Mr. Awad has been in the investment business since 1965, focusing on
research and portfolio management. Prior to forming Awad & Associates, he was
President of BMI Capital, a successful money management firm he founded. In
addition, Mr. Awad managed assets at Neuberger & Berman, Channing Management and
First Investment Corp. The Investment Manager managed approximately $575
million in assets at December 31, 1996 for clients on a separate account basis
utilizing the same investment methodology that it will employ for the Fund.
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The Investment Manager places portfolio transactions for the Fund. In this
regard, the Investment Manager will be governed by the policies set forth under
"Investment Objectives and Policies".
For its services, the Investment Manager is paid an annual fee by the Advisor
equal to 0.42% of the average daily net assets of the Fund with respect to the
first $10 million in assets; 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.
Awad & Associates currently serves as co-investment advisor to one other
investment company: Heritage Small Cap Fund. At January 1, 1996, Awad &
Associates managed $70 million in net assets of Heritage Small Cap Fund and
received an advisory fee of 0.50% of its average daily net assets with respect
to the first $50 million in assets and 37.5% thereafter.
INVESTMENT MANAGER'S HISTORICAL PERFORMANCE
- -------------------------------------------
Set forth below are certain performance data provided by the Investment Manager
relating to the composite of separately managed equity accounts of clients of
the Investment Manager. These accounts have substantially similar investment
objectives and policies as the Fund's and they are managed using substantially
similar investment strategies and techniques as those contemplated by the Fund.
It is important to note that these returns do not take into account the effects
of the Fund's moral screening restrictions, which the Advisor estimates would
eliminate about 2.85% of the Investment Manager's current core portfolio.
These figures are net of assumed management fees and commissions, and are a
time-weighted average for the entire period, all of which would not be
duplicated in any individual account, and would not result in the same return
for an investor. Further, the separately managed accounts are not subject to
investment limitations, diversification requirements, and other restrictions
imposed by the Investment Company Act of 1940, as amended and Internal Revenue
Code; such conditions, if applicable, may have lowered the returns for the
separately managed accounts. The composites shown include accounts carried over
from a previous firm, BMI Capital. The performance presented does not
represent the historical performance of the Fund and is not indicative of the
Fund's future performance.
<TABLE>
<CAPTION>
YEAR COMPOSITE PAST PERFORMANCE OF PAST PERFORMANCE OF
AWAD & ASSOCIATES AND BMI CAPITAL S&P 500
<S> <C> <C>
1996 20.0% 23.0%
1995 48.5% 37.6%
1994 4.8% 1.3%
1993 12.3% 10.1%
1992 14.5% 7.6%
1991 39.7% 30.6%
1990 (13.2%) (3.2%)
1989 9.6% 31.6%
1988 26.1% 16.8%
1987 (5.4%) 5.2%
1986 17.5% 18.4%
1985 17.3% 32.0%
1984 (2.3%) 6.3%
1983 20.9% 22.6%
1982 54.2% 21.5%
One Year * 20.0% 23.0%
Three Year 20.3% 19.7%
Five Year 17.1% 15.2%
Ten Year 13.3% 15.3%
</TABLE>
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<PAGE>
* One year ended December 31, 1996
NOTE 1: The results presented from October 1, 1992 forward represent only
those accounts managed by Awad & Associates through Raymond James
Financial.
UNDERWRITER
- -----------
FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, King of Prussia, PA
19406-0903 was engaged pursuant to an agreement dated January 19, 1994, as
amended February 23, 1996. The purpose of acting as underwriter is to facilitate
the registration of shares of the Fund under state securities laws and to assist
in the sale of shares. The fee for such services is borne by the Advisor.
PLAN OF DISTRIBUTION
- --------------------
The Fund has adopted a plan pursuant to Rule 12b-1 (the "12b-1 Plan") under the
Investment Company Act of 1940, as amended, whereby it may reimburse FPSB or
others for expenses actually incurred by FPSB or others in the promotion and
distribution of the Fund's Institutional Class shares. These expenses include,
but are not limited to, the printing of prospectuses and reports used for sales
purposes, the preparation of sales literature and related expenses,
advertisements, and other distribution-related expenses, including payments to
securities dealers and others participating in the sale and servicing of
Institutional Class shares, including payment for providing personal services
and/or maintaining shareholder accounts. The maximum amount which the Fund may
pay to FPSB and others (and which FPSB may re-allow to securities dealers and
others participating in the sale of shares) for such distribution expenses is
0.25% per annum of the Fund's average daily net assets payable on a monthly
basis. All expenses of distribution and marketing in excess of 0.25% per annum
will be borne by the Advisor. The 12b-1 Plan also covers any payments made by
the Fund, the Advisor, the Investment Manager, FPSB, or other parties on behalf
of the Fund, the Advisor, the Investment Manager, or FPSB, to the extent such
payments are deemed to be for the financing of any activity primarily intended
to result in the sale of shares issued by the Fund within the context of Rule
12b-1.
ADMINISTRATOR
- -------------
FPS Services, Inc. ("FPS"), 3200 Horizon Drive, King of Prussia, PA 19406-0903
is the Fund's administrator pursuant to an Administration Services Agreement
(the "Agreement") with the Fund dated January 19, 1994, as amended February 23,
1996. Under the Agreement, FPS receives a fee at the annual rate of 0.15% of the
first $50 million in average net assets of the Fund, 0.10% of the next $50
million in average net assets and 0.05% of average net assets over $100 million.
There is a minimum fee of $50,000 per year for the initial series/class issued
by the Fund and $12, 000 per year for each additional series or class of
shares.
The services FPS provides to the Fund include: considering and monitoring of any
third parties furnishing services to the Fund; providing the necessary office
space, equipment and personnel to perform administrative and clerical functions
for the Fund; preparing, filing and distributing proxy materials, periodic
reports to shareholders, registration statements, and other documents; and
responding to shareholder inquiries.
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT
- -----------------------------------------------------------
The Bank of New York, 48 Wall Street, New York, New York 10286, is custodian for
the securities and cash of the Fund.
FPS serves as the Fund's transfer agent. As transfer agent, it maintains the
records of each shareholder's account, answers shareholder inquiries concerning
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent, and performs other shareholder
service functions. Shareholder inquiries should be directed to the transfer
agent at (800) 662-0201.
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<PAGE>
FPS also performs certain accounting and pricing services for the Fund. This
includes the daily calculation of the Fund's net asset value.
EXPENSES
- --------
Except as indicated above, the Fund is responsible for the payment of its
expenses, other than those borne by the Advisor. These expenses may include,
but are not limited to: (a) management fees; (b) the charges and expenses of
the Fund's legal counsel and independent accountants; (c) brokers' commissions,
mark-ups and mark-downs and any issue or transfer taxes chargeable to the Fund
in connection with its securities transactions; (d) all taxes and corporate fees
payable by the Fund to governmental agencies; (e) the fees of any trade
association of which the Fund is a member; (f) the cost of stock certificates,
if any, representing shares of the Fund; (g) amortization and reimbursements of
the organization expenses of the Fund and the fees and expenses involved in
registering and maintaining registration of the Fund and its shares with the
U.S. Securities and Exchange Commission, and the preparation and printing of the
Fund's registration statements and prospectuses for such purposes; (h) allocable
communications expenses with respect to investor services and all expenses of
shareholders and trustee meetings and of preparing, printing and mailing
prospectuses and reports to shareholders; (i) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business; (j) state filing fees; and (k) compensation for employees
of the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund will declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the year
from its investments, and the Fund will distribute net realized capital gains,
if any, once with respect to each year. Expenses of the Fund, including the
advisory fee, are accrued each day. Reinvestments of dividends and
distributions in additional shares of the Fund will be made at the net asset
value determined on the ex date of the dividend or distribution unless the
shareholder has elected in writing to receive dividends or distributions in
cash. An election may be changed by notifying FPS in writing thirty days prior
to record date.
Dividends paid by the Fund with respect to its Institutional Class and Retail
Class shares are calculated in the same manner and at the same time. Both
Institutional Class and Retail Class shares of the Fund will share
proportionately in the investment income and expenses of the Fund, except that
the per share dividends of Retail Class shares will differ from the per share
dividends of Institutional Class shares as a result of additional distribution
expenses charged to Retail Class shares.
As the sole series of The Timothy Plan, the Fund has qualified, and intends to
continue to qualify, as a regulated investment company under Subchapter M of the
Internal Revenue Code (the "Code"). As such, the Fund will not be subject to
federal income tax, or to any excise tax, to the extent its earnings are
distributed in accordance with the timing requirements imposed by the Code and
by meeting certain other requirements relating to the sources of its income and
diversification of its assets.
The Fund intends to distribute substantially all of its net investment income
and net capital gains. Dividends from net investment income or net short-term
capital gains will be taxable to you as ordinary income, whether received in
cash or in additional shares. Dividends from net investment income will
generally qualify, in part, for the 70% corporate dividends received deduction,
subject to certain holding period and debt financing restrictions imposed under
the Code on the corporate investor claiming the deduction. The portion of the
dividends so qualified depends on the aggregate qualifying dividend income
received by the Fund from domestic (U.S.) sources.
Distributions paid by the Fund from long-term capital gains, whether received in
cash or in additional shares, are taxable to those investors who are subject to
income tax as long-term capital gains, regardless of the length of time an
investor has owned shares in the Fund. The Fund does not seek to realize any
particular amount of capital gains during a year; rather, realized gains are a
byproduct of Fund management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year. Also, for
those investors subject to tax, if purchases of shares in the Fund are made
shortly before the record date for a dividend or capital gains distribution, a
portion of the investment will
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<PAGE>
be returned as a taxable distribution.
Dividends which are declared in October, November or December to shareholders of
record in such a month but which, for operational reasons, may not be paid to
the shareholder until the following January, will be treated for tax purposes as
if paid by the Fund and received by the shareholder on December 31 of the
calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
two mutual funds (or two series of a mutual fund). Any loss incurred on sale or
exchange of the Fund's shares, held for six months or less, will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares.
In addition to federal taxes, shareholders may be subject to state and local
taxes on distributions. Each year, the Fund will mail you information on the
tax status of the Fund's dividends and distributions. Of course, shareholders
who are not subject to tax on their income would not be required to pay tax on
amounts distributed to them by the Fund.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value per Fund share is determined by the Fund as of the close of
regular trading on each day that the New York Stock Exchange (the "NYSE") is
open for unrestricted trading from Monday through Friday and on which there is a
purchase or redemption of the Fund's share. The net asset value is determined
by the Fund by dividing the value of the Fund's securities, plus any cash and
other assets, less all liabilities, by the number of shares outstanding.
Expenses and fees of the Fund, including the advisory and the distributor fees,
are accrued daily and taken into account for the purpose of determining the net
asset value.
Fund securities listed or traded on a securities exchange for which
representative market quotations are available will be valued at the last quoted
sales price on the security's principal exchange on that day. Listed securities
not traded on an exchange that day, and other securities which are traded in the
over-the-counter market, will be valued at the last reported bid price in the
market on that day, if any. Securities for which market quotations are not
readily available and all other assets will be valued at their respective fair
market value as determined in good faith by, or under procedures established by,
the Board of Trustees. In determining fair value, the Trustees may employ an
independent pricing service.
Money market securities with less than sixty days remaining to maturity when
acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
money market security with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity, and
will then be valued on an amortized cost basis based upon the value on such date
unless the Trustees determine during such 60 day period that this amortized cost
value does not represent fair market value.
Net asset value is calculated separately for each class of the Fund based on
expenses applicable to the particular class. Although the methodology and
procedures for determining net asset value are identical for the Fund's classes,
the net asset value of the classes may differ because of the different fees and
expenses charged to each class.
Page 14
<PAGE>
HOW TO PURCHASE SHARES
Shares of the Fund may be purchased directly from the Fund at the net asset
value next determined after receipt of the order in proper form by the transfer
agent. There is no sales load in connection with the purchase of shares. The
Fund reserves the right to reject any purchase order and to suspend the offering
of shares of the Fund. The Fund will not accept a check endorsed over by a
third-party. The minimum initial investment is $25,000, with no minimum
subsequent investment. The Fund reserves the right to vary the initial
investment minimum and minimums for additional investments at any time. There
is no minimum investment requirement for qualified retirement plans.
At the discretion of the Fund, investors may be permitted to purchase Fund
shares by transferring securities to the Fund that meet the Fund's investment
objectives and policies. Securities transferred to the Fund will be valued in
accordance with the same procedures used to determine the Fund's net asset value
at the time of the next determination of net asset value after such acceptance.
Shares issued by the Fund in exchange for securities will be issued at net asset
value determined as of the same time. All dividends, interest, subscription, or
other rights pertaining to such securities shall become the property of the Fund
and must be delivered to the Fund by the investor upon receipt from the issuer.
Investors who are permitted to transfer such securities will be required to
recognize a gain or loss on such transfer, and pay tax thereon, if applicable,
measured by the difference between the fair market value of the securities and
the investors' basis therein. Securities will not be accepted in exchange for
shares of the Fund unless: (l) such securities are, at the time of the exchange,
eligible to be included in the Fund and current market quotations are readily
available for such securities; (2) the investor represents and warrants that all
securities offered to be exchanged are not subject to any restrictions upon
their sale by the Fund under the Securities Act of 1933 or under the laws of the
country in which the principal market for such securities exists, or otherwise
and (3) the value of any such security (except U.S. Government securities) being
exchanged together with other securities of the same issuer owned by the Fund,
will not exceed 5% of the Fund's net assets immediately after the transaction.
Purchase orders for shares of the Fund which are received by the transfer agent
in proper form prior to the close of regular trading hours on the NYSE
(currently 4:00 p.m. Eastern time) on any day that the Fund calculates its net
asset value, are priced according to the net asset value determined on that day.
Purchase orders for shares of the Fund received after the close of the NYSE on a
particular day are priced as of the time the net asset value per share is next
determined.
Purchases may be made in one of the following ways:
PURCHASES BY MAIL
Shares may be purchased initially by completing the Investment Application on
pages XX and XX of this Prospectus and mailing it to the transfer agent,
together with a check payable to The Timothy Plan, c/o FPS Services, Inc., 3200
Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903. All checks for
purchase of shares must be drawn on U.S. banks and payable in U.S. dollars.
Subsequent investments in an existing account in the Fund may be made at any
time by sending a check payable to The Timothy Plan, c/o United Missouri Bank
KC, NA, P.O. Box 412797, Kansas City, MO 64141-2797. Please enclose the stub
of your account statement along with the amount of the investment and the name
of the account for which the investment is to be made and the account number.
Please note: A $20 fee will be charged to your account for any payment check
returned to the custodian.
The Fund may accept telephone orders from broker-dealers or service
organizations which have been previously approved by the Fund. It is the
responsibility of such broker-dealers or service organizations to promptly
forward purchase orders and payments for the same to the Fund. Shares of the
Fund may be purchased through broker-dealers, banks and bank trust departments
who may charge the investor a transaction fee or other fee for their services at
the time of purchase. Such fees would not otherwise be charged if the shares
were purchased directly from the Fund.
Page 15
<PAGE>
PURCHASES BY WIRE
To order shares for purchase by wiring federal funds, the transfer agent must
first be notified by calling (800) 662-0201 to request an account number and
furnish the Fund with your tax identification number. Following notification to
the transfer agent, federal funds and registration instructions should be wired
through the Federal Reserve System to:
UNITED MISSOURI BANK KC NA
ABA #10-10-00695
-----------
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
-------------
FBO "THE TIMOTHY PLAN - INSTITUTIONAL CLASS"
ACCOUNT OF (exact name(s) of account registration)
---------------------------------------
SHAREHOLDER ACCOUNT # _______________
A completed application with signature(s) of registrant(s) must be filed with
the transfer agent immediately subsequent to the initial wire. Investors should
be aware that some banks may impose a wire service fee. Shareholders may be
subject to 31% withholding if original application is not received.
AUTOMATIC INVESTMENT PLAN
Shares of the Fund may be purchased through an Automatic Investment Plan (the
"Plan"). The Plan provides a convenient method by which investors may have
monies deducted directly from their checking, savings or bank money market
accounts for investment in the Fund. The minimum investment pursuant to this
Plan is $100 per month. If you desire to take advantage of this Plan simply
complete and remit the Automatic Investment Plan application on pages XX and XX.
The account designated will be debited in the specified amount, on the date
indicated, and Fund shares will be purchased. Only an account maintained at a
domestic financial institution which is an ACH member may be so designated. The
Fund may alter, modify or terminate this Plan at any time. For information about
participating in the Automatic Investment Plan, call FPS at (800) 662-0201.
HOW TO REDEEM SHARES
Shareholders may redeem their shares of the Fund without charge on any business
day that the NYSE is open (see "Determination of Net Asset Value"). Redemptions
will be effective at the net asset value per share next determined after the
receipt by the transfer agent of a redemption request meeting the requirements
described below. The Fund normally sends redemption proceeds on the next
business day, but in any event redemption proceeds are sent within seven
calendar days of receipt of a redemption request in proper form. Payment may
also be made by wire directly to any bank previously designated by the
shareholder in a shareholder account application. There is a $9.00 charge for
redemptions by wire. Please note that the shareholder's bank also may impose a
fee for wire service. The Fund will honor redemption requests of shareholders
who recently purchased shares by check, but will not mail the proceeds until it
is reasonably satisfied that the purchase check has cleared, which may take up
to fifteen days from the purchase date, at which time the redemption proceeds
will be mailed to the shareholder. To avoid delays of this kind, you may wish
to purchase by wire if you are planning on redeeming your shares in the near
future.
Except as noted below, redemption requests received in proper form by the
transfer agent prior to the close of regular trading hours on the NYSE on any
business day that the Fund calculates its per share net asset value are
effective that day.
Redemption requests received after the close of the NYSE are effective as of the
time the net asset value per share is next determined.
The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Advisor or
the Board of Trustees, result in the necessity of the Fund selling assets under
disadvantageous conditions and to the detriment of the remaining shareholders of
the Fund.
Page 16
<PAGE>
Pursuant to the Fund's Agreement and Declaration of Trust, payment for shares
redeemed may be made either in cash or in-kind, or partly in cash and partly in-
kind. However, the Fund has elected, pursuant to Rule 18f-1 under the Act, to
redeem its shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund, during any 90 day period for any one shareholder.
Payments in excess of this limit will also be made wholly in cash unless the
Board of Trustees believes that economic conditions exist which would make such
a practice detrimental to the best interests of the Fund. Any portfolio
securities paid or distributed in-kind would be valued as described under
"Determination of Net Asset Value." In the event that an in-kind distribution
is made, a shareholder may incur additional expenses, such as the payment of
brokerage commissions, on the sale or other disposition of the securities
received from the Fund. In-kind payments need not constitute a cross-section of
the Fund's portfolio. Where a shareholder has requested redemption of all or a
part of the shareholder's investment, and where the Fund completes such
redemption in-kind, the Fund will not recognize gain or loss for federal tax
purposes, on the securities used to complete the redemption but the shareholder
will recognize gain or loss equal to the difference between the fair market
value of the securities received and the shareholder's basis in the Fund shares
redeemed. Shares may be redeemed in one of the following ways:
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to the
transfer agent at 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-
0903.
A written redemption request to the transfer agent must: (i) identify the
shareholder's account number, (ii) state the number of shares or dollars to be
redeemed and (iii) be signed by each registered owner exactly as the shares are
registered. A redemption request for amounts above $25,000, or redemption
requests for which proceeds are to be mailed somewhere other than the address of
record, must be accompanied by signature guarantees. Signatures must be
guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
Broker-dealers guaranteeing signatures must be members of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. The transfer agent may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees and
guardians.
A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. Questions with
respect to the proper form for redemption requests should be directed to the
transfer agent at (800) 662-0201.
REDEMPTION BY TELEPHONE
Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by instructing the transfer
agent by telephone. In order to arrange for redemption by wire or telephone
after an account has been opened, or to change the bank or account designated to
receive redemption proceeds, a written request must be sent to the transfer
agent at the address listed above.
Neither the Fund nor any of its service contractors will be liable for any loss
or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions
are genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, his or her banking
institution, bank account number and the name in which his or her bank account
is registered. To the extent that the Fund fails to use reasonable procedures
to verify the genuineness of telephone instructions, it and/or its service
contractors may be liable for any such instructions that prove to be fraudulent
or unauthorized.
The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time by the Fund.
Page 17
<PAGE>
SYSTEMATIC CASH WITHDRAWAL PLAN
The Fund offers a Systematic Cash Withdrawal Plan as another option which may be
utilized by an investor who wishes to withdraw funds from his or her account on
a regular basis. To participate in this option, an investor must either own or
purchase shares having a value of $25,000 or more. Automatic payments by check
will be mailed to the investor on either a monthly, quarterly, semi-annual or
annual basis in amounts of $100 or more. All withdrawals are processed on the
25th of the month or, if such day is not a business day, on the next business
day and paid promptly thereafter. Please complete the appropriate section on
the Investment Application enclosed within this Prospectus, indicating the
amount of the distribution and the desired frequency.
ADDITIONAL INFORMATION
The Fund also reserves the right to involuntarily redeem an investor's account
where the account is worth less than the minimum initial investment required
when the account is established, presently $25,000. (Any redemption of shares
from an inactive account established with a minimum investment may reduce the
account below the minimum initial investment, and could subject the account to
redemption initiated by the Fund.) The Fund will advise the shareholder of such
intention in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares in
any amount necessary to bring the account back to $25,000.
If the Trustees determine that it would be detrimental to the best interest of
the remaining shareholders of the Fund to make payment in cash, the Fund may pay
the redemption price in whole or in part by distribution in kind of readily
marketable securities, from the Fund, within certain limits prescribed by the
United States Securities and Exchange Commission. Such securities will be
valued on the basis of the procedures used to determine the net asset value at
the time of the redemption. If shares are redeemed in kind, the redeeming
shareholder will incur brokerage costs in converting the assets into cash.
RETIREMENT PLANS
The Fund offers its shares for use in certain Tax Deferred (such as IRA, defined
contribution, 401(k) and 403(b)(7) plans) Retirement Plans. The Fund sponsors
IRA and 403(b)(7) plans. Information on these Plans is available from FPS or by
reviewing the Statement of Additional Information.
PERFORMANCE
Total return data may from time to time be included in advertisements about the
Fund. The Fund's total return may be calculated on an annualized and aggregate
basis for various periods (which periods will be stated in the advertisement).
Average annual return reflects the average percentage change per year in value
of an investment in the Fund. Aggregate total return reflects the total
percentage change over the stated period.
The Fund may compare its investment performance with appropriate market indices
such as the S&P Index and to appropriate mutual fund indices; and the Fund may
advertise its ranking compared to other similar mutual funds as reported by
industry analysts such as Lipper Analytical Services, Inc.
All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of the investments in
the Fund, and the Fund's operating expenses. Investment performance also often
reflects the risk associated with the Fund's investment objectives and policies.
These factors should be considered when comparing the Fund to other mutual funds
and other investment vehicles.
The performance of the Institutional Class shares will normally be higher than
the Retail Class shares because of the sales charge (when applicable) and
additional distribution expenses charged to the Retail Class shares.
Further information about the performance of the Fund is included in the Fund's
Annual Report, dated December 31,
Page 18
<PAGE>
1996, which may be obtained without charge by contacting the Fund at (800) TIM-
PLAN.
Page 19
<PAGE>
__________________________________
BROKER DEALER:____________________
THE TIMOTHY PLAN(R) REGISTERED REP:___________________
INSTITUTIONAL CLASS BRANCH #:_________ REP #:_______
INVESTMENT APPLICATION BRANCH NAME:______________________
BRANCH ADDRESS:___________________
MAIL TO: PHONE NUMBER:( ) - Ext:
FPS Services, Inc., P.O. Box 61503, __________________________________
King of Prussia, PA 19406-0903
1. INITIAL INVESTMENT ($25,000 minimum)
FORM OF PAYMENT
<TABLE>
<S> <C>
[_] Check for $__________________ enclosed (make payable to "The Timothy Plan")
[_] By Wire*1 An initial purchase of $_____________________ was wired on by
Date
_________________________________________________ to account # ______________________________
Name of your Bank or Broker Number assigned by F/P/S
2. REGISTRATION (Please Print) No certificate will be issued unless requested in writing.
INDIVIDUAL Must complete items 1, 3, 4 and 8 (you may choose options 5, 6 or 7).
____________________________________________________________________________________________ ____________________________
First Name Middle Name Last Name Social Security Number
____________________________________________________________________________________________ ____________________________
Joint Owner First Name*2 Middle Name Last Name Social Security Number
Citizen of: [ ] United States [ ] Other (Please Indicate)
_______________________________
GIFT TO MINORS Must complete items 1, 3, 4 and 8 (you may choose options 5, 6, or 7).
_______________________________________________________________________________
Name of Custodian (Name one only) As Custodian For (Name one only)
Under the ____________________________ Uniform Gift to Minors Act _____________________________
State Security Number
CORPORATIONS, PARTNERSHIPS, TRUSTS AND OTHERS Must complete items 1, 3, 4, 9 and 10 (you may choose options 5, 6, or 7).
_____________________________________________________________ ______________________________________________________________
Name of Corporation, Partnership, Trust or Other
____ ____________________________ __________________________________________________ _______ _________ _______
Tax ID # Name of Trustee(s) Date of Trust
3. MAILING ADDRESS OF RECORD AND TELEPHONE NUMBER(S)
________________________________________________________________________________________________________________________________
Street Address and Apartment Number
____________________________________________ ________________________________ ________________ ______________________
City State Zip Code Zip Extend
___________ _____________________________ __________ _________________________________
(Area Code) Daytime Telephone Number (Area Code) Evening Telephone Number
4. DISTRIBUTION OPTIONS (Please indicate one) See page XX of the Prospectus for more detail.
Income Dividends (check one box/line only) [_] reinvested [_] paid in cash
Capital Gains Distributions (check one box/line only) [_] reinvested [_] paid in cash
</TABLE>
.
*1 Before making an initial investment by wire, you must be assigned an account
number by calling (800) 662-0201. Then have your local bank wire your funds
to: United Missouri Bank, N.A., ABA # 10-10-00695 for credit to FPS
Services, Inc., AC # 98-7037-071-9 (The Timothy Plan). Be sure to include
your name and account number on the wire.
*2 (Joint ownership with rights of survivorship unless otherwise noted).
Page 20
<PAGE>
5. SYSTEMATIC WITHDRAWAL PLAN ($25,000 minimum necessary) See page XX of the
Prospectus for more detail.
A check in the amount of $______________________ (minimum $100.00) will be
sent to you at your address of record unless otherwise noted.
Please select desired frequency: [_] Monthly
[_] Quarterly, in the months of
_________, __________, __________,
and __________.
[_] Semi-Annual or Annual, in the month(s)
of __________, __________, or
__________.
6. TELEPHONE PRIVILEGES See page XX of the Prospectus for more detail.
[_] REDEEM SHARES BY TELEPHONE
I (we) authorize FPS Services, Inc., to honor telephone instructions for my
(our) account which I (we) understand the proceeds of which will be mailed
only to the address of record or wired to the bank specified below. Neither
the Fund nor FPS Services, Inc., will be liable for properly acting upon
telephone instructions believed to be genuine. Please attach a voided check
on your account if the bank option is chosen.
<TABLE>
<S> <C> <C> <C>
____________________________________________________________________________________________________________
Name of Bank City State
____________________________________________________________________________________________________________
Bank Routing Number Account Number [_] Checking [_] Savings
</TABLE>
7. AUTOMATIC INVESTMENT PLAN (For this option - please complete and send in
form on pages XX and XX of the Prospectus).
8. SIGNATURE AND CERTIFICATION (This Section must be completed by INDIVIDUAL,
----
JOINT and CUSTODIAL accounts).
THE FOLLOWING IS REQUIRED BY FEDERAL TAX LAW TO AVOID 31% BACKUP
WITHHOLDING; "BY SIGNING BELOW, I CERTIFY UNDER PENALTIES OF PERJURY THAT
THE SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER ENTERED ABOVE IS
CORRECT (OR I AM WAITING FOR A NUMBER TO BE ISSUED TO ME), AND THAT I HAVE
NOT BEEN NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP WITHHOLDING UNLESS
I HAVE CHECKED THE BOX." IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING, CHECK BOX [ ]. THE IRS DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATION
REQUIRED TO AVOID BACKUP WITHHOLDING. RECEIPT OF CURRENT PROSPECTUS IS
HEREBY ACKNOWLEDGED.
<TABLE>
<S> <C> <C> <C> <C>
_______________________________________________________________________________________ ____________________________________
Signature [_] Owner [_] Custodian [_] Trustee Date
_______________________________________________________________________________________ _________ _________ _________
Signature of Joint Owner (if applicable) Date
</TABLE>
9. RESOLUTIONS (This Section must be completed by CORPORATIONS, PARTNERSHIPS,
----
TRUSTS and OTHER ORGANIZATIONS).
RESOLVED: That this corporation or organization become a shareholder of The
Timothy Plan (the "Fund) and that__________________________________________
_____________________________________ is (are) authorized to complete and
execute the Application on behalf of the corporation or organization and
take any action for it as may be necessary or appropriate with respect to
its shareholders account(s) with the Fund, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to
sign any documents necessary or appropriate to appoint FPS Services, Inc. as
redemption agent of the corporation for shares of the Fund, to establish or
acknowledge terms and conditions governing the redemption of said shares or
to otherwise implement the privileges elected on the application.
10. CERTIFICATE (This Section must be completed by CORPORATIONS, PARTNERSHIPS,
----
TRUSTS and OTHER ORGANIZATIONS).
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the:
__________________________________________ incorporated or formed under the
(Name of Corporation)
laws of _______________ and were adopted at a meeting of the Board of
(State)
Directors or Trustees of the organization or corporation duly called and
held on ________________ at which a quorum was preset and acting throughout,
and that the same are now in full force and effect.
I further certify that the following is (are) the duly elected officer(s) of
the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
NAME TITLE
___________________________________ _______________________
___________________________________ _______________________
___________________________________ _______________________
Witness my hand and the seal of the corporation or organization this
_________ day of _______________________, 19 ______.
_______________________________ _________________________________________
*Secretary-Clerk Other Authorized Officer (if required)
* If the Secretary or other recording officer is authorized to act by the
above resolutions, this certificate must also be signed by another
officer.
Page 21
<PAGE>
AUTOMATIC INVESTMENT PLAN APPLICATION
- --------------------------------------------------------------------------------
HOW DOES IT WORK?
1. FPS Services, Inc., through our bank, United Missouri Bank KC NA, draws an
automatic clearing house (ACH) debit electronically against your personal
checking account each month, according to your instructions.
2. Choose any amount ($100 or more) that you would like to invest regularly and
your debit for this amount will be processed by FPS Services, Inc. as if you
had written a check yourself.
3. Shares will be purchased and a confirmation sent to you.
HOW DO I SET IT UP?
1. Complete the forms and the Fund Application Form if you do not already have
an existing account.
2. Mark one of your personal checks or deposit slips VOID, attach it to the
forms below and mail to FPS Services, Inc., P.O. Box 61503, King of Prussia,
PA 19406-0903.
3. As soon as your bank accepts your authorization, debits will be generated
and your Automatic Investment Plan started. In order for you to have ACH
debits from your account, your bank must be able to accept ACH transactions
and/or be a member of an ACH association. Your branch manager should be able
to tell you your bank's capabilities. We cannot guarantee acceptance by your
bank.
4. Please allow one month for processing of your Automatic Investment Plan
before the first debit occurs.
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN APPLICATION
TO: FPS Services, Inc.
P.O. Box 61503
King of Prussia, PA 19406-0903
Please start an Automatic Investment Plan for me and invest___________________.
($100 or more)
on the [_] 10th [_] 15th [_] 20th of each month, in shares of THE TIMOTHY PLAN -
INSTITUTIONAL CLASS.
Check one:
[_] I am in the process of establishing an account.
or
[_] My account number is: _____________________________________________________
________________________________________________________________________________
Name as account is registered
________________________________________________________________________________
Street
________________________________________________________________________________
City State Zip + ext.
I understand that my ACH debit will be dated on the day of each month as
indicated above or as specified by written request. I agree that if such debit
is not honored upon presentation, FPS Services, Inc. may discontinue this
service and any share purchase made upon deposit of such debit may be canceled.
I further agree that if the net asset value of the shares purchased with such
debit is less when said purchase is canceled than when the purchase was made,
FPS Services, Inc. shall be authorized to liquidate other shares or fractions
thereof held in my account to make up the deficiency. This Automatic Investment
Plan may be discontinued by FPS Services, Inc. upon 30-days written notice or at
any time by the investor by written notice to FPS Services, Inc. which is
received not later than 5 business days prior to the above designed investment
date.
Signature(s): _______________________________________________
_______________________________________________
Page 22
<PAGE>
AUTOMATIC INVESTMENT PLAN APPLICATION
- --------------------------------------------------------------------------------
BANK REQUEST AND AUTHORIZATION
TO:
_____________________________ ____________________________
Name of Your Bank Bank Checking Account Number
___________________________________________________________________________
Address of Bank or Branch Where Account is Maintained
As a convenience to me, please honor ACH debits on my account drawn by FPS
Services, Inc., United Missouri Bank KC NA and payable to "THE TIMOTHY PLAN".
I agree that your rights with respect to such debit shall be the same as if it
were a check drawn upon you and signed personally by me. This authority shall
remain in effect until you receive written notice from me changing its terms or
revoking it, and until you actually receive such notice, I agree that you shall
be fully protected in honoring such debit.
I further agree that if any debit is dishonored, whether with or without cause
or whether intentionally or inadvertently, you shall be under no liability
whatsoever.
DEPOSITOR'S _______________________________________________________________
Signature of Bank Depositor(s) as shown on bank records.
NOTE: Your bank must be able to accept ACH transactions and/or be a member of
an ACH association in order for you to use this service.
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
TO: The bank named above
So that you may comply with your Depositor's request and authorization, THE
TIMOTHY PLAN agrees as follows:
1. To indemnify and hold you harmless from any loss you may suffer arising
from or in connection with the payment by you of a debit drawn by FPS
Services, Inc. to the order of THE TIMOTHY PLAN designated on the account
of your depositor(s) executing the authorization including any costs or
expenses reasonably incurred in connection with such loss. THE TIMOTHY PLAN
will not, however, indemnify you against any loss due to your payment of
any debit generated against insufficient funds.
2. To refund to you any amount erroneously paid by you to FPS Services, Inc.,
on any such debit if claim for the amount of such erroneous payment is made
by you within 3 months of the date of such debit on which erroneous payment
was made.
Page 23
<PAGE>
__________________________________
BROKER DEALER:____________________
THE TIMOTHY PLAN(R) REGISTERED REP:___________________
INSTITUTIONAL CLASS BRANCH #:_________ REP #:_______
INVESTMENT APPLICATION BRANCH NAME:______________________
BRANCH ADDRESS:___________________
MAIL TO: PHONE NUMBER:( ) - Ext:
FPS Services, Inc., P.O. Box 61503, __________________________________
King of Prussia, PA 19406-0903
1. INVESTOR INFORMATION
____________________________________________________________________________
First Name Middle Initial Last Name
____________________________________________________________________________
Street Address
_______________________________________________ ______ ________ __________
City State Zip Code Zip Extend
_________________________ _________________ _____________
Social Security Number Date of Birth (Area Code)
__________________________ ________________ __________________________
Residence Telephone Number (Area Code) Business Telephone Number
2. PREVIOUS INVESTMENT FIRM
____________________________________________________________________________
Name of Previous Firm
____________________________________________________________________________
Address
____________________________________________________________________________
Investor's Name Account Number
Type of Account: [_] Individual [_] Joint [_] UGMA [_] Trust
Type of Assets: [_] Mutual Fund [_] Money Market
[_] CD (Immediately/At Maturity) [_] Securities
3. AMOUNT TO BE TRANSFERRED TO THE TIMOTHY PLAN
[_] Liquidate all assets from the above account and transfer the proceeds.
[_] Liquidate $_____________________________________ from the above account
and transfer the proceeds
4. TRANSFER INSTRUCTIONS
Make check payable to: The Timothy Plan
Mail to: Post Office Box 61503, King of Prussia, PA 19406-0903
5. INVESTOR'S AUTHORIZATION
________________________________ ___________ _________________________
Signature of Participant Date Signature Guarantee
Page 24
<PAGE>
INVESTMENT ADVISOR
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789
INVESTMENT MANAGER
Awad & Associates
477 Madison Avenue
New York, New York 10022
UNDERWRITER
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Tait, Weller & Baker
Two Penn Center
Suite 700
Philadelphia, PA 19102-1707
For Additional Information About The Timothy Plan, Please Call:
(800) TIM-PLAN
<PAGE>
PROSPECTUS FOR
THE TIMOTHY PLAN
RETAIL CLASS
APRIL 29, 1997
- --------------------------------------------------------------------------------
Distributed By:
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
(800) 441-6580
- --------------------------------------------------------------------------------
The Timothy Plan (the "Fund") is a low level load, open-end diversified
management investment company. It was organized as a series Delaware business
trust and currently offers shares of one series, which has a specific investment
objectives. There is no assurance that the Fund's objectives will be achieved.
The objective of the Fund is long-term capital growth and its secondary
objective is current income. The Fund seeks to achieve its objectives by
investing in securities issued by companies which, in the opinion of the Fund's
advisor, conduct business in accordance with the stated philosophy and
principles of the Fund (See "Investment Objectives and Policies").
The Fund currently offers two classes of shares: Institutional Class and Retail
Class. This Prospectus pertains only to the Fund's Retail Class shares which
have a front-end sales charge and are subject to annual 12b-1 Plan expenses.
Shareholders, who purchase larger amounts than the initial investment
requirement, may qualify for a reduced sales charge at the time of purchase.
(See "How to Purchase Shares"). The Institutional Class is offered in a separate
prospectus which can be obtained by calling (800) TIM-PLAN.
The shares of the Fund may be purchased or redeemed at any time. Purchases will
be effected at the net asset value, plus the applicable sales charge, next
determined following receipt of the investor's request. (See "Determination of
Net Asset Value," "How to Purchase Shares," and "How to Redeem Shares").
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read and
retain this Prospectus for future reference.
More information about the Fund and classes of shares of the Fund has been filed
with the U.S. Securities and Exchange Commission, and is contained in the
"Statement of Additional Information," dated April 29, 1997, which is available
at no charge upon request to the Fund. The Fund's Statement of Additional
Information is incorporated herein by reference. The Statement of Additional
Information, material incorporated by reference into this Prospectus, and other
information regarding the Fund are maintained electronically with the U.S.
Securities and Exchange Commission at its Internet Web site (http:
//www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Expenses of the Fund.......................................................
Financial Highlights.......................................................
The Fund...................................................................
Investment Objectives and Policies.........................................
Risk Factors...............................................................
Investment Restrictions....................................................
Shares of Beneficial Interest..............................................
Management of the Fund.....................................................
Board of Trustees.........................................................
Investment Advisor........................................................
Investment Manager........................................................
Historical Performance of the Investment Manager..........................
Underwriter...............................................................
Plan of Distribution......................................................
Administrator.............................................................
Custodian, Transfer Agent and Fund Accounting/Pricing Agent...............
Expenses..................................................................
Dividends, Distributions and Taxes.........................................
Determination of Net Asset Value...........................................
How to Purchase Shares.....................................................
How to Redeem Shares.......................................................
Retirement Plans...........................................................
Performance................................................................
Investment Application.....................................................
Automatic Investment Plan Application......................................
Application to Request to Transfer to The Timothy Plan.....................
</TABLE>
This Prospectus is not an offering of the securities herein described in any
jurisdiction or to any person to whom it is unlawful for the Fund to make such
an offer or solicitation. No sales representative, dealer, or other person is
authorized to give any information or make any representation other than those
contained in this Prospectus.
Page 2
<PAGE>
EXPENSES OF THE FUND
The following table illustrates all estimated expenses and fees that a
shareholder of the Fund's Retail Class will incur.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).................. 1.75%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)....... none
Redemption Fees.............................................................................. none /1/
</TABLE>
ANNUAL OPERATING EXPENSES OF THE RETAIL CLASS*
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management and Advisory Expenses After Expense Reimbursements................................ 0.00%
12b-1 Fees................................................................................... 0.85% /2/
Other Expenses After Expense Reimbursements.................................................. 1.35%
----
Total Operating Costs After Expense Reimbursements........................................... 2.20%
====
</TABLE>
The purpose of this table is to assist the investor in understanding the various
expenses that an investor in the Retail Class will bear directly or indirectly.
The Advisor has voluntarily agreed to waive its fees, so that the Retail Class'
total annual operating expenses will never exceed 2.20% of the daily average net
assets. Further, the Advisor has agreed to reimburse the Retail Class for its
other expenses so that the Retail Class' total annual expenses will never exceed
2.20%. Absent the fee waiver and expense reimbursements, "Management and
Advisory Expenses After Expense Reimbursements" would have been 0.85% and "Other
Expenses After Expense Reimbursements" would have been 3.45% for the fiscal year
ended December 31, 1996.
The following example illustrates the expenses that you would pay on a $1,000
investment over various time periods assuming (1) a 5% annual rate of return and
(2) redemption at the end of each time period. As noted in the table above, the
Fund charges no redemption fees of any kind.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$39 $85 $133 $266
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
The Fund issues two classes of shares that invest in the same portfolio of
securities. Shareholders of Retail Class shares are subject to a sales charge
and each class is subject to a different 12b-1 Plan, therefore, expenses and
performance figures will vary between the classes. The information set forth in
the foregoing tables and example relates only to the Retail Class shares. The
rules of the U.S. Securities and Exchange Commission require that the maximum
sales charge be reflected in the above table. However, certain investors may
qualify for a reduced sales charge. See "How to Purchase Shares." Further
information about Institutional Class shares may be obtained by calling (800)
TIM-PLAN.
- --------------------------------------------------------------------------------
/1/ United Missouri Bank KC NA charges $9.00 per redemption for redemptions
payable by wire.
/2/ For purposes of this table, "12b-1 Fees" are comprised of an asset-based
12b-1 fee up to a maximum of 0.85% of average daily net assets, of which,
up to 0.25% may be service fees to be paid to FPS Broker Services, Inc.,
dealers and others, for providing personal service and/or maintaining
shareholder accounts. Long-term holders of Retail Class shares may
eventually pay more than the economic equivalent of the maximum front-end
sales charges otherwise permitted by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
* The table reflects the expenses the Fund's Retail Class incurred during the
fiscal year ended December 31, 1996.
Page 3
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were derived from the Fund's financial
statements, which were audited by Tait, Weller & Baker, independent auditors,
whose unqualified report thereon is incorporated by reference into the Statement
of Additional Information. The Fund's Statement of Additional Information may be
obtained by shareholders without charge and is incorporated by reference into
this Prospectus. The table sets forth financial data for a share of capital
stock outstanding throughout the periods presented.
<TABLE>
<CAPTION>
RETAIL SHARES
-----------------------------
FOR THE YEAR FOR THE PERIOD
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995 *
------------ --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $ 10.08 $ 10.49
------- -------
Income From Investment Operations:
Net investment income.................... 0.07 0.11
Net gains (losses) on securities
(both realized and unrealized)......... 1.14 (0.16)
------- -------
Total from investment
operations........................... 1.21 (0.05)
------- -------
Less Distributions
Distributions from net
investment income:
Institutional Shares.................... 0.00 0.00
Retail Shares........................... (0.07) (0.11)
Distributions from net capital gains:
Institutional Shares.................... 0.00 0.00
Retail Shares........................... 0.00 (0.25)
------- -------
Total distributions..................... (0.07) (0.36)
------- -------
NET ASSET VALUE, END OF PERIOD............. $ 11.22 $ 10.08
======= =======
TOTAL RETURN............................... 11.98% /1/ (0.46%)/1/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)....... $ 3,929 $ 620
Ratio of expenses to average net assets:
Before expense reimbursement............. 4.30% 6.44% /2/
After expense reimbursement.............. 2.20% 2.20% /2/
Ratio of net investment income
to average net assets:
Before expense reimbursement............. (1.65%) (3.56%)/2/
After expense reimbursement.............. 0.45% 0.68% /2/
Portfolio turnover rate................... 93.08% 34.12%
Average commission rate paid.............. $0.0593 N/R /3/
</TABLE>
* The Retail Shares commenced investment operations on August 25, 1995.
/1/ Total return calculation does not reflect sales load.
/2/ Annualized.
/3/ Not Required.
Page 4
<PAGE>
THE FUND
The Timothy Plan (the "Fund") is a low level load, open-end, diversified
management investment company commonly known as a mutual fund. The Fund was
established as a series Delaware business trust on December 16, 1993. The Fund
currently offers one series with two classes of shares: Institutional Class and
Retail Class. This Prospectus pertains only to Retail Class shares.
INVESTMENT OBJECTIVES AND POLICIES
Set forth below are the investment objectives and policies of the Fund. The
investment objectives of the Fund are a fundamental policy and may not be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities. There can be no assurance that the Fund will
achieve its objectives.
The Fund's objective is long-term capital growth, with a secondary objective of
current income. The Fund shall seek to achieve its objectives while abiding by
ethical standards established for investments by the Fund. Those standards
preclude the investment in securities of companies involved in the businesses of
alcohol production, tobacco production, or casino gambling, or which are
directly or indirectly involved in pornography or abortion. The securities in
which the Fund shall be precluded from investing, by virtue of the Fund's
ethical standards, are referred to as the "Excluded Securities."
The Fund will invest most of its assets in common stocks and American Depository
Receipts ("ADRs"), although it may also invest in other types of securities
including securities convertible into common stocks and common stock equivalents
(including rights and warrants), preferred stocks, short-term U.S. Government
securities, and/or other high-quality, short-term debt securities (commercial
paper, repurchase agreements, bankers' acceptances, certificates of deposit and
other fixed income securities (non-convertible and convertible bonds, debentures
and notes issued by U.S. corporations and certain bank obligations and
participations). High-quality debt securities are those that are rated Aa or
better by Moody's, or AA or better by Standard & Poor's, or that are of
comparable quality. See "Risk Factors" herein, and the Statement of Additional
Information for information relating to these securities. While it is the
Fund's policy to seek long-term investments, changes will be made whenever
management believes that such changes will strengthen the Fund's investments and
realization of its objectives. The Fund will pursue its objectives by investing
a major portion of its assets in securities of companies which offer prospects
for growth of capital in accordance with the portfolio investment techniques
described below.
The Fund seeks to achieve its investment objectives by investing primarily in
common stocks and ADRs, while foregoing investments in the Excluded Securities.
Awad & Associates (the "Investment Manager"), a division of Raymond James &
Associates, Inc., as sub-investment advisor to Timothy Partners, Ltd. (the
"Advisor"), will select the investments for the Fund, but will not invest in
securities which the Advisor will determine are Excluded Securities. The
Advisor has instructed the Investment Manager to avoid investment in any company
directly involved in the business of alcohol production, tobacco production, or
casino gambling. In addition, the Advisor will compile and maintain a list of
companies that it determines, by using information collected by and published by
three Christian ministries, participate directly or indirectly in either
pornography or abortion. The Advisor will use its best judgement in determining
which companies, through their corporate practices in either of these two areas,
need to be placed on the Excluded Securities list. The Advisor also reserves the
right to exercise its best judgement to exclude investment in other companies
whose corporate practices may not fall within the exclusions described above,
but nevertheless could be found offensive to basic traditional Judeo Christian
values.
The three Christian ministries that publish information that the Advisor will
utilize in identifying companies directly or indirectly involved in pornography
or abortion are as follows: (1) The American Family Association (to identify
companies engaged in pornography); (2) Pro Vita Advisors (to identify companies
that directly and indirectly participate in abortion); and (3) Life Decisions
International (to identify companies that indirectly support abortion causes
through corporate funding programs). The Advisor retains the right to change
the ministries whose information it reviews, at its discretion.
Page 5
<PAGE>
After eliminating the Excluded Securities, the Investment Manager will construct
a portfolio of investments to produce the highest possible risk-adjusted return
on investment as is consistent with the Fund's objectives and policies.
The Fund will invest primarily in a diversified portfolio of equity securities
of companies whose market capitalizations exceed $200 million, and whose
securities trade on the New York Stock Exchange, the American Stock Exchange and
the NASDAQ National Market System. Since the Fund is an equity fund, the
Investment Manager seeks investments that show the greatest potential for
growth, with income as a secondary factor. Therefore, these companies may or
may not pay dividends.
Potential equity investment candidates will be analyzed to determine their
ability to repay all fixed debt obligations (including certain "off balance
sheet debts" such as operating lease obligations and unfunded pension
liabilities) from their historical level of net investment income within a
reasonable time period, generally less than five years. Securities are typically
sold when an appreciation objective is met. The Fund may invest up to 30% of its
assets in cash or debt securities. Although the Investment Manager does not
utilize a market timing strategy, if market conditions are viewed to require
that the Fund take a temporary defensive position, the Fund may invest up to
100% of its assets in (i) debt securities issued by the U.S. Government, its
agencies or instrumentalities, (ii) commercial paper, or (iii) certificates of
deposit and bankers' acceptances or with respect to any of the foregoing
investments. The Fund may also invest in such securities pending the investment
of the proceeds of certain sales of portfolio securities and at such other times
when suitable equity securities are not available. It is impossible to predict
whether, or for how long, the Fund will use any of such temporary defensive
strategies.
The Advisor will attempt to monitor and respond to changes in business policies
within the companies selected for investment. It is possible that securities in
which the Fund has invested may become Excluded Securities. In such event, the
Fund will sell its position in those securities subject to general market
considerations.
RISK FACTORS
INVESTMENT RESTRICTIONS OF THE FUND. The ethical standards established for
investments by the Fund limit the pool of securities from which investment
securities may be selected by the Investment Manager. Although the Advisor
believes the Fund's investment objective of long-term capital growth can be
achieved notwithstanding the effect of the Fund's ethical standards, this
objective may be affected by the limitations imposed by the Advisor, in
eliminating the Excluded Securities as potential investments.
ADVISOR AND INVESTMENT MANAGER. The principals of the managing general partner
of the Advisor have been engaged in various aspects of the retail brokerage and
financial advisory business. The Investment Manager has advised individuals,
pension funds, trusts and institutions. Awad & Associates, a division of Raymond
James & Associates, Inc., currently manages approximately $575 million in these
accounts. The Investment Manager currently serves as co-investment advisor to
one other investment company: Heritage Small Cap Fund. The Advisor has served as
investment advisor exclusively to the Fund since the Fund's commencement of
operations (March 21, 1994) but has not previously served as investment advisor
to any other investment company.
PORTFOLIO TURNOVER. It is anticipated that the annualized portfolio turnover
rate for the Fund generally will not exceed
Page 6
<PAGE>
a range of 50% to 75%, and may be lower than 50%, during most periods. High
portfolio turnover involves additional transaction costs (such as brokerage
commissions) which are borne by the Fund, and might involve adverse tax effects.
(See "Dividends, Distributions and Taxes").
RISKS OF CERTAIN FIXED INCOME SECURITIES
INTEREST BEARING DEBT INSTRUMENTS. The market value of interest-bearing debt
securities, if and when held by the Fund, is affected by changes in interest
rates. There is normally an inverse relationship between the market value of
securities sensitive to prevailing interest rates and actual changes in interest
rates; i.e., a decline in interest rates produces an increase in market value,
while an increase in rates produces a decrease in market value. Moreover, the
longer the remaining maturity of a security, the greater the effect of interest
rate changes on the market value of such a security. In addition, changes in an
issuer's ability to make payments of interest and principal and in the market's
perception of an issuer's creditworthiness also affect the market value of the
debt securities of that issuer.
MONEY MARKET SECURITIES. The Fund will select money market securities for
investment when such securities offer a current market rate of return which the
Fund considers reasonable in relation to the risk of the investment, and the
issuer can satisfy suitable standards of credit-worthiness set by the Fund. The
money market securities in which the Fund may invest are repurchase agreements,
certificates of deposit, U.S. Government securities, commercial paper and
securities of money market mutual funds.
Although the Fund intends to invest primarily in common stocks, common stock
equivalents, and ADRs, the Fund may invest up to 30% of its assets directly in
money market securities whenever deemed appropriate to achieve the Fund's
investment objectives. It may invest without limitation in such securities on a
temporary basis for defensive purposes.
Securities issued or guaranteed as to principal and interest by the U.S.
Government ("Government Securities") include a variety of Treasury securities,
which differ in their interest rates, maturities and date of issue. Treasury
bills have a maturity of one year or less; Treasury notes have maturities of one
to ten years; Treasury bonds generally have a maturity of greater than five
years. The Fund will only acquire Government Securities which are supported by
the "full faith and credit" of the United States. Securities which are backed
by the full faith and credit of the United States include Treasury bills,
Treasury notes, Treasury bonds and obligations of: the Government National
Mortgage Association, the Farmers Home Administration and the Export-Import
Bank. The Fund's direct investments in money market securities will generally
favor securities with shorter maturities (maturities of less than 60 days) which
are less affected by price fluctuations than are those with longer maturities.
Certificates of deposit are certificates issued against funds deposited in a
commercial bank or a savings and loan association for a definite period of time
and earning a specified return. Bankers' acceptances are negotiable drafts or
bills of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Investments in bank certificates of deposit and bankers' acceptances are
generally limited to domestic banks and savings and loan associations that are
members of the Federal Deposit Insurance Corporation or Federal Savings and Loan
Insurance Corporation having a net worth of at least $100 million dollars
("Domestic Banks") and domestic branches of foreign banks (limited to
institutions having total assets not less than $1 billion or its equivalent).
Investments in prime commercial paper may be made in notes, drafts, or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace, or any renewal thereof
payable on demand or having a maturity likewise limited.
REPURCHASE AGREEMENTS Under a repurchase agreement the Fund acquires a debt
instrument for a relatively short period (usually not more than one week)
subject to the obligation of the seller to repurchase and the Fund to resell
such debt instrument at a fixed price. The Fund will enter into repurchase
agreements only with banks which are members of the Federal Reserve System, or
securities dealers who are members of a national securities exchange or are
market makers in government securities and report to the Market Reports Division
of the Federal Reserve Bank of New York and, in either case, only where the debt
instrument collateralizing the repurchase agreement is a U.S. Treasury or agency
Page 7
<PAGE>
obligation supported by the full faith and credit of the United States. A
repurchase agreement may also be viewed as the loan of money by the Fund to the
seller. The resale price specified is normally in excess of the purchase price,
reflecting an agreed upon interest rate. The rate is effective for the period
of time the Fund is invested in the agreement and may not be related to the
coupon rate on the underlying security. The term of these repurchase agreements
will usually be short (from overnight to one week). At no time will the Fund
invest in repurchase agreements of more than sixty days. The securities which
are collateral for the repurchase agreements, however, may have maturity dates
in excess of sixty days from the effective date of the repurchase agreement. The
Fund will always receive, as collateral, securities whose market value,
including accrued interest, will at least equal 102% of the dollar amount to be
paid to the Fund under each agreement at its maturity, and the Fund will make
payment for such securities only upon physical delivery or evidence of book
entry transfer to the account of the Custodian. If the seller defaults, the
Fund might incur a loss if the value of the collateral securing the repurchase
agreement declines, and might incur disposition costs in connection with
liquidation of the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, collection of the
collateral by the Fund may be delayed or limited. The Fund also may not be able
to substantiate its interests in the underlying securities. While management of
the Fund acknowledges these risks, it is expected that such risks can be
controlled through stringent security selection and careful monitoring
procedures. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 10% of the market value of the
Fund's net assets would be invested in such repurchase agreements and any other
illiquid assets. For purposes of the diversification test for qualification as
a regulated investment company under the Internal Revenue Code, Repurchase
Agreements are not counted as cash, cash items or receivables, but rather as
securities issued by the counter-party to the Repurchase Agreements.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below have been adopted by the Fund as
fundamental policies, to limit certain risks that may result from investment in
specific types of securities or from engaging in certain kinds of transactions
addressed by such restrictions. They may not be changed without the affirmative
vote of the holders of a majority of the outstanding voting securities of the
Fund. Certain of these policies are detailed below, while other policies are
set forth in the Statement of Additional Information. Changes in values of
particular Fund assets or the assets of the Fund as a whole will not cause a
violation of the investment restrictions so long as percentage restrictions are
observed by the Fund at the time it purchases any security.
The investment restrictions specifically provide that the Fund will not:
(a) as to 75% of the Fund's total assets, invest more than 5% of its total
assets in the securities of any one issuer. (This limitation does not
apply to cash and cash items, or obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities);
(b) purchase more than 10% of the voting securities, or more than 10% of
any class of securities, of another investment company. For purposes of
this restriction, all outstanding fixed income securities of an issuer are
considered as one class;
(c) purchase or sell commodities or commodity futures contracts, other
than those related to stock indexes as previously outlined in "Investment
Objectives and Policies;"
(d) purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations;
(e) make loans of money or securities, except (i) by the purchase of fixed
income obligations in which the Fund may invest consistent with its
investment objectives and policies; or (ii) by investment in repurchase
agreements (see "Investment Objectives and Policies");
(f) invest in securities of any company if, any officer or trustee of the
Fund or the Advisor owns more than 0.5% of the outstanding securities of
such company and such officers and trustees (who own
Page 8
<PAGE>
more than 0.5%) in the aggregate own more than 5% of the outstanding
securities of such company;
(g) borrow money, except the Fund may borrow from banks (i) for temporary
or emergency purposes in an amount not exceeding 5% of the Fund's assets or
(ii) to meet redemption requests that might otherwise require the untimely
disposition of portfolio securities, in an amount up to 33 1/3% of the
value of the Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing was made. While borrowing exceeds 5% of the value of the Fund's
total assets, the Fund will not purchase securities. Interest paid on
borrowing will reduce net income;
(h) pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 33 1/3% of the value of its net assets but only to
secure borrowing for temporary or emergency purposes, such as to effect
redemptions; or
(i) purchase the securities of any issuer, if, as a result, more than 10%
of the value of a Fund's net assets would be invested in securities that
are subject to legal or contractual restrictions on resale ("restricted
securities"), in securities for which there are no readily available market
quotations, or in repurchase agreements maturing in more than seven days,
if all such securities would constitute more than 10% of the Fund's net
assets.
SHARES OF BENEFICIAL INTEREST
The beneficial interest of the Fund is divided into an unlimited number of
shares ("Shares") with a par value of $0.001 each. Each Share has equal
dividend, voting, liquidation and redemption rights. If a matter to be voted on
does not affect the interests of all classes, then only the shareholders of the
affected class shall be entitled to vote on the matter. There are no conversion
or preemptive rights. Shares, when issued, will be fully paid and
nonassessable. Fractional shares have proportional voting rights. Shares of
the Fund do not have cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of trustees can elect all of
the trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any person to the Board of Trustees.
Currently, there are two classes of shares issued by the Fund.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
- -----------------
The members of the Fund's Board of Trustees are fiduciaries for the Fund's
shareholders and are governed by the laws of the State of Delaware in this
regard. They establish policy for the operation of the Fund and appoint the
officers who conduct the daily business of the Fund. The Statement of
Additional Information contains more information regarding Officers and
Trustees.
INVESTMENT ADVISOR
- ------------------
Timothy Partners, Ltd. (the "Advisor") is a Florida limited partnership
organized on December 6, 1993. The Advisor supervises the investment of the
assets of the Fund in accordance with the objectives, policies and restrictions
of the Fund. The Advisor approves the portfolio of securities selected by the
Investment Manager (See "Investment Manager" below). To determine which
securities are Excluded Securities with respect to abortion and pornography, the
Advisor consults with three Christian ministries on these issues: The American
Family Association (pornography), Pro Vita Advisors (direct and indirect
participation and involvement in abortion) and Life Decisions International
(indirect participation in abortion through corporate funding programs). The
Advisor retains the right to change the ministries whose information it reviews,
at its discretion.
For its services, the Advisor is paid an annual fee equal to 0.85% of the Fund's
average daily net assets. This fee is subject to certain voluntary reductions in
fees paid by the Fund. A portion of the advisory fee is paid by the Advisor to:
(i) the Investment Manager for assisting in the selection of portfolio
securities for the Fund and (ii) Covenant
Page 9
<PAGE>
Financial Management ("CFM") as reimbursement for certain expenses related to
the daily operations of the Fund performed by CFM. In addition, this fee also
covers the cost of postage, materials and handling of the fulfillment function
of processing Prospectus requests as well as other sundry marketing and general
administration expenses. The fee payable to and services provided by the
Investment Manager are described under the heading "Investment Manager" below.
The fee payable to and services provided by CFM are described at the end of this
section. The Advisor's fee is higher than that charged by other funds, but is
comparable to fees charged by funds with similar investment objectives. The
Advisor has offices located at 1304 West Fairbanks Avenue, Winter Park, FL
32789.
Arthur D. Ally, the President, Chairman and Trustee of the Fund, is President
and a 70% shareholder of Covenant Funds, Inc. ("Covenant"), located at 1304 West
Fairbanks Avenue, Winter Park, FL 32789, which is the managing general partner
of the Advisor. Mr. Ally is also an individual general partner of the Advisor.
Neither the Advisor nor its managing general partners previously has served as
an advisor to any other registered investment company but the Advisor has served
as investment advisor exclusively to the Fund since the Fund's commencement of
operations (March 21, 1994). Prior thereto, Mr. Ally, has had extensive
securities industry experience having served as either financial consultant or
branch manager for three securities firms over the previous seventeen years:
Prudential Bache, Shearson Lehman Brothers and Investment Management & Research.
Some or all of these firms may be used by the Investment Manager to execute
portfolio trades for the Fund. Neither Mr. Ally nor any affiliated person to the
Fund will receive any benefit from any of these transactions.
The Advisor and CFM have entered into an agreement dated February 23, 1994, as
amended April 23, 1996, whereby the Advisor pays CFM for certain overhead
expenses related to the daily operations of the Fund that CFM carries out. These
expenses include: salary of administrative personnel, cost of preparation of
shareholder fulfillment kits, cost of phone lines and office space, and cost of
postage and supplies. The annual fee is an amount to cover CFM's costs in
providing services to the Advisor, payable by the Advisor on a monthly basis.
Both parties have agreed that no profits will accrue to CFM as a result of this
agreement. Arthur D. Ally is President and 100% shareholder of CFM.
INVESTMENT MANAGER
- ------------------
Effective January 1, 1997 the Fund engaged a new investment manager Awad &
Associates (the "Investment Manager"), a division of Raymond James & Associates,
Inc., pursuant to a new sub-investment advisory agreement among the Fund,
Timothy Partners, Ltd. and Awad & Associates, which was approved by the Board of
Trustees at a meeting held on November 29, 1996 and by shareholders of record on
November 14, 1996 at a Special Meeting of Shareholders held on January 31,
1997.
The Investment Manager has offices at 477 Madison Avenue, New York, New York
10022. The Investment Manager is a joint venture between James Awad, a twenty-
six year veteran of the investment management business, and Raymond James
Financial, a New York Stock Exchange member firm. The Investment Manager has
been retained by the Advisor pursuant to a sub-advisory agreement to assist in
the selection and management of the Fund's investment securities and prepare the
portfolio of securities of selected issuers with business practices that meet
the objectives and policies of the Fund. The Advisor reviews the portfolio to
insure compliance with the Fund's ethical standards.
The Investment Manager's investment policy committee, comprised of James Awad,
Dan Veru and Carol Egan, is responsible for the day-to-day management of the
Fund's portfolio. James Awad is the senior investment officer of the Investment
Manager. Mr. Awad has been in the investment business since 1965, focusing on
research and portfolio management. Prior to forming Awad & Associates, he was
President of BMI Capital, a successful money management firm he founded. In
addition, Mr. Awad managed assets at Neuberger & Berman, Channing Management and
First Investment Corp. The Investment Manager managed approximately $575
million in assets at December 31, 1996 for clients on a separate account basis
utilizing the same investment methodology that it will employ for the Fund.
Page 10
<PAGE>
The Investment Manager places portfolio transactions for the Fund. In this
regard, the Investment Manager will be governed by the policies set forth under
"Investment Objectives and Policies".
For its services, the Investment Manager is paid an annual fee by the Advisor
equal to 0.42% of the average daily net assets of the Fund with respect to the
first $10 million in assets; 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.
Awad & Associates currently serves as co-investment advisor to one other
investment company: Heritage Small Cap Fund. At January 1, 1996, Awad &
Associates managed $70 million in net assets of Heritage Small Cap Fund and
received an advisory fee of 0.50% of its average daily net assets with respect
to the first $50 million in assets and 37.5% thereafter.
INVESTMENT MANAGER'S HISTORICAL PERFORMANCE
- -------------------------------------------
Set forth below are certain performance data provided by the Investment Manager
relating to the composite of separately managed equity accounts of clients of
the Investment Manager. These accounts have substantially similar investment
objectives and policies as the Fund's and they are managed using substantially
similar investment strategies and techniques as those contemplated by the Fund.
It is important to note that these returns do not take into account the effects
of the Fund's moral screening restrictions, which the Advisor estimates would
eliminate about 2.85% of the Investment Manager's current core portfolio.
These figures are net of assumed management fees and commissions, and are a
time-weighted average for the entire period, all of which would not be
duplicated in any individual account, and would not result in the same return
for an investor. Further, the separately managed accounts are not subject to
investment limitations, diversification requirements, and other restrictions
imposed by the Investment Company Act of 1940, as amended and Internal Revenue
Code; such conditions, if applicable, may have lowered the returns for the
separately managed accounts. The composites shown include accounts carried over
from a previous firm, BMI Capital. The performance presented does not
represent the historical performance of the Fund and is not indicative of the
Fund's future performance.
<TABLE>
<CAPTION>
YEAR COMPOSITE PAST PERFORMANCE OF PAST PERFORMANCE OF
AWAD & ASSOCIATES AND BMI CAPITAL S&P 500
<S> <C> <C>
1996 20.0% 23.0%
1995 48.5% 37.6%
1994 4.8% 1.3%
1993 12.3% 10.1%
1992 14.5% 7.6%
1991 39.7% 30.6%
1990 (13.2%) (3.2%)
1989 9.6% 31.6%
1988 26.1% 16.8%
1987 (5.4%) 5.2%
1986 17.5% 18.4%
1985 17.3% 32.0%
1984 (2.3%) 6.3%
1983 20.9% 22.6%
1982 54.2% 21.5%
One Year * 20.0% 23.0%
Three Year 20.3% 19.7%
Five Year 17.1% 15.2%
Ten Year 13.3% 15.3%
</TABLE>
Page 11
<PAGE>
* One year ended December 31, 1996
NOTE 1: The results presented from October 1, 1992 forward represent only
those accounts managed by Awad & Associates through Raymond James
Financial.
UNDERWRITER
- -----------
FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, King of Prussia, PA
19406-0903, was engaged pursuant to an agreement dated January 19, 1994, as
amended February 23, 1996. The purpose of acting as underwriter is to
facilitate the registration of shares of the Fund under state securities laws
and to assist in the sale of shares. The fee for such services is borne by the
Advisor.
PLAN OF DISTRIBUTION
- --------------------
The Fund has adopted a plan pursuant to Rule 12b-1 (the "12b-1 Plan") under the
Investment Company Act of 1940, as amended, whereby it may reimburse FPSB or
others for expenses actually incurred by FPSB or others in the promotion and
distribution of the Fund's Retail Class shares. These expenses include, but are
not limited to, the printing of prospectuses and reports used for sales
purposes, the preparation of sales literature and related expenses,
advertisements, and other distribution-related expenses, including payments to
securities dealers and others participating in the sale and servicing of Retail
Class shares. The maximum amount which the Fund may pay to FPSB and others (and
which FPSB may re-allow to securities dealers and others participating in the
sale of shares) for such distribution expenses is 0.85% per annum of the Fund's
average daily net assets, of which, up to 0.25% may be service fees to be paid
to FPSB, dealers and others, for providing personal services and/or maintaining
shareholder accounts, payable on a monthly basis. All expenses of distribution
and marketing in excess of 0.85% per annum will be borne by the Advisor and any
amounts paid for the above services will be paid pursuant to a servicing or
other agreement. The 12b-1 Plan also covers any payments made by the Fund, the
Advisor, the Investment Manager, FPSB, or other parties on behalf of the Fund,
the Advisor, the Investment Manager, or FPSB, to the extent such payments are
deemed to be for the financing of any activity primarily intended to result in
the sale of shares issued by the Fund within the context of Rule 12b-1.
ADMINISTRATOR
- -------------
FPS Services, Inc. ("FPS"), 3200 Horizon Drive, King of Prussia, PA 19406-0903,
is the Fund's administrator pursuant to an Administration Services Agreement
(the "Agreement") with the Fund dated January 19, 1994, as amended February 23,
1996. Under the Agreement, FPS receives a fee at the annual rate of 0.15% of
the first $50 million in average net assets of the Fund, 0.10% of the next $50
million in average net assets and 0.05% of average net assets over $100 million.
There is a minimum fee of $50,000 per year for the initial series/class issued
by the Fund and $12,000 per year for each additional series or class of
shares.
The services FPS provides to the Fund include: considering and monitoring of any
third parties furnishing services to the Fund; providing the necessary office
space, equipment and personnel to perform administrative and clerical functions
for the Fund; preparing, filing and distributing proxy materials, periodic
reports to shareholders, registration statements, and other documents; and
responding to shareholder inquiries.
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT
- -----------------------------------------------------------
The Bank of New York, 48 Wall Street, New York, New York 10286, is custodian for
the securities and cash of the Fund.
FPS serves as the Fund's transfer agent. As transfer agent, it maintains the
records of each shareholder's account, answers shareholder inquiries concerning
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent, and performs other shareholder
service functions. Shareholder inquiries should be directed to the transfer
agent at (800) 662-0201.
FPS also performs certain accounting and pricing services for the Fund. This
includes the daily calculation of the Fund's net asset value.
Page 12
<PAGE>
EXPENSES
- --------
Except as indicated above, the Fund is responsible for the payment of its
expenses, other than those borne by the Advisor. These expenses may include,
but are not limited to: (a) management fees; (b) the charges and expenses of
the Fund's legal counsel and independent accountants; (c) brokers' commissions,
mark-ups and mark-downs and any issue or transfer taxes chargeable to the Fund
in connection with its securities transactions; (d) all taxes and corporate fees
payable by the Fund to governmental agencies; (e) the fees of any trade
association of which the Fund is a member; (f) the cost of stock certificates,
if any, representing shares of the Fund; (g) amortization and reimbursements of
the organization expenses of the Fund and the fees and expenses involved in
registering and maintaining registration of the Fund and its shares with the
Securities and Exchange Commission, and the preparation and printing of the
Fund's registration statements and prospectuses for such purposes; (h) allocable
communications expenses with respect to investor services and all expenses of
shareholders and trustee meetings and of preparing, printing and mailing
prospectuses and reports to shareholders; (i) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business; (j) state filing fees and (k) compensation for employees of
the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund will declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the year
from its investments, and the Fund will distribute net realized capital gains,
if any, once with respect to each year. Expenses of the Fund, including the
advisory fee, are accrued each day. Reinvestments of dividends and
distributions in additional shares of the Fund will be made at the net asset
value determined on the ex date of the dividend or distribution unless the
shareholder has elected in writing to receive dividends or distributions in
cash. An election may be changed by notifying FPS in writing thirty days prior
to record date.
Dividends paid by the Fund with respect to its Institutional Class and Retail
Class shares are calculated in the same manner and at the same time. Both
Institutional Class and Retail Class shares of the Fund will share
proportionately in the investment income and expenses of the Fund, except that
the per share dividends of Retail Class shares will differ from the per share
dividends of Institutional Class shares as a result of additional distribution
expenses charged to Retail Class shares.
As the sole series of The Timothy Plan, the Fund has qualified, and intends to
continue to qualify, as a regulated investment company under Subchapter M of the
Internal Revenue Code (the "Code"). As such, the Fund will not be subject to
federal income tax, or to any excise tax, to the extent its earnings are
distributed in accordance with the timing requirements imposed by the Code and
by meeting certain other requirements relating to the sources of its income and
diversification of its assets.
The Fund intends to distribute substantially all of its net investment income
and net capital gains. Dividends from net investment income or net short-term
capital gains will be taxable to you as ordinary income, whether received in
cash or in additional shares. Dividends from net investment income will
generally qualify, in part, for the 70% corporate dividends received deduction,
subject to certain holding period and debt financing restrictions imposed under
the Code on the corporate investor claiming the deduction. The portion of the
dividends so qualified depends on the aggregate qualifying dividend income
received by the Fund from domestic (U.S.) sources.
Distributions paid by the Fund from long-term capital gains, whether received in
cash or in additional shares, are taxable to those investors who are subject to
income tax as long-term capital gains, regardless of the length of time an
investor has owned shares in the Fund. The Fund does not seek to realize any
particular amount of capital gains during a year; rather, realized gains are a
byproduct of Fund management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year. Also, for
those investors subject to tax, if purchases of shares in the Fund are made
shortly before the record date for a dividend or capital gains distribution, a
portion of the investment will be returned as a taxable distribution.
Dividends which are declared in October, November or December to shareholders of
record in such a month but which, for operational reasons, may not be paid to
the shareholder until the following January, will be treated for tax purposes
Page 13
<PAGE>
as if paid by the Fund and received by the shareholder on December 31 of the
calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
two mutual funds (or two series of a mutual fund). Any loss incurred on sale or
exchange of the Fund's shares, held for six months or less, will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares. All or a portion of the sales charge incurred in
purchasing the Fund's shares will not be included in the federal tax basis of
any of such shares sold or exchanged within ninety (90) days of their purchase
(for purposes of determining gain or loss upon sale of such shares) if the sale
proceeds are reinvested in the Fund or in another fund and a sales charge that
would otherwise apply to the reinvestment is reduced or eliminated. Any portion
of such sales charge excluded from the tax basis of the shares sold will be
added to the tax basis of the shares acquired in the reinvestment.
In addition to federal taxes, shareholders may be subject to state and local
taxes on distributions. Each year, the Fund will mail you information on the
tax status of the Fund's dividends and distributions. Of course, shareholders
who are not subject to tax on their income would not be required to pay tax on
amounts distributed to them by the Fund.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value per Fund share is determined by the Fund as of the close of
regular trading on each day that the New York Stock Exchange (NYSE) is open for
unrestricted trading from Monday through Friday and on which there is a purchase
or redemption of the Fund's share. The net asset value is determined by the
Fund by dividing the value of the Fund's securities, plus any cash and other
assets, less all liabilities, by the number of shares outstanding. Expenses and
fees of the Fund, including the advisory and the distributor fees, are accrued
daily and taken into account for the purpose of determining the net asset value.
Fund securities listed or traded on a securities exchange for which
representative market quotations are available will be valued at the last quoted
sales price on the security's principal exchange on that day. Listed securities
not traded on an exchange that day, and other securities which are traded in the
over-the-counter market, will be valued at the last reported bid price in the
market on that day, if any. Securities for which market quotations are not
readily available and all other assets will be valued at their respective fair
market value as determined in good faith by, or under procedures established by,
the Board of Trustees. In determining fair value, the Trustees may employ an
independent pricing service.
Money market securities with less than sixty days remaining to maturity when
acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
money market security with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity, and
will then be valued on an amortized cost basis based upon the value on such date
unless the Trustees determine during such 60 day period that this amortized cost
value does not represent fair market value.
Net asset value is calculated separately for each class of the Fund based on
expenses applicable to the particular class. Although the methodology and
procedures for determining net asset value are identical for the Fund's classes,
the net asset value of the classes may differ because of the different fees and
expenses charged to each class.
Page 14
<PAGE>
HOW TO PURCHASE SHARES
Shares of the Fund may be purchased directly from the Fund at the net asset
value per share, plus the applicable sales load, next determined after receipt
of the order in proper form by the transfer agent. There is a sales load in
connection with the purchase of shares which is reduced on purchases involving
large amounts and which may be eliminated in certain circumstances described
under "Reduced Sales Charges". The Fund reserves the right to reject any
purchase order and to suspend the offering of shares of the Fund. The Fund will
not accept a check endorsed over by a third-party. The minimum initial
investment is $1,000, with no minimum subsequent investment. The Fund reserves
the right to vary the initial investment minimum and minimums for additional
investments at any time. There is no minimum investment requirement for
qualified retirement plans.
At the discretion of the Fund, investors may be permitted to purchase Fund
shares by transferring securities to the Fund that meet the Fund's investment
objectives and policies. Securities transferred to the Fund will be valued in
accordance with the same procedures used to determine the Fund's net asset value
at the time of the next determination of net asset value after such acceptance.
Shares issued by the Fund in exchange for securities will be issued at net asset
value determined as of the same time. All dividends, interest, subscription, or
other rights pertaining to such securities shall become the property of the Fund
and must be delivered to the Fund by the investor upon receipt from the issuer.
Investors who are permitted to transfer such securities will be required to
recognize a gain or loss on such transfer, and pay tax thereon, if applicable,
measured by the difference between the fair market value of the securities and
the investors' basis therein. Securities will not be accepted in exchange for
shares of the Fund unless: (l) such securities are, at the time of the exchange,
eligible to be included in the Fund and current market quotations are readily
available for such securities; (2) the investor represents and warrants that all
securities offered to be exchanged are not subject to any restrictions upon
their sale by the Fund under the Securities Act of 1933 or under the laws of the
country in which the principal market for such securities exists, or otherwise
and (3) the value of any such security (except U.S. Government securities) being
exchanged together with other securities of the same issuer owned by the Fund,
will not exceed 5% of the Fund's net assets immediately after the transaction.
Purchase orders for shares of the Fund which are received by the transfer agent
in proper form prior to the close of regular trading hours on the NYSE
(currently 4:00 p.m. Eastern time) on any day that the Fund calculates its net
asset value, are priced according to the net asset value determined on that day.
Purchase orders for shares of the Fund received after the close of the NYSE on a
particular day are priced as of the time the net asset value per share is next
determined.
Purchases may be made in one of the following ways:
PURCHASES BY MAIL
Shares may be purchased initially by completing the Investment Application on
pages XX and XX of this Prospectus and mailing it to the transfer agent,
together with a check payable to The Timothy Plan, c/o FPS Services, Inc., 3200
Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903. All checks for
purchase of shares must be drawn on U.S. banks and payable in U.S. dollars.
Subsequent investments in an existing account in the Fund may be made at any
time by sending a check payable to The Timothy Plan, c/o United Missouri Bank
KC, NA, P.O. Box 412797, Kansas City, MO 64141-2797. Please enclose the stub
of your account statement along with the amount of the investment and the name
of the account for which the investment is to be made and the account number.
Please note: A $20 fee will be charged to your account for any payment check
returned to the custodian.
PURCHASES THROUGH BROKER/DEALERS
The Fund may accept telephone orders from broker-dealers or service
organizations which have been previously approved by the Fund. It is the
responsibility of such broker-dealers or service organizations to promptly
forward purchase orders and payments for the same to the Fund. Shares of the
Fund may be purchased through broker-dealers,
banks and bank trust departments who may charge the investor a transaction fee
or other fee for their services at the time
Page 15
<PAGE>
of purchase.
Wire orders for shares of the Fund received by FPS prior to 4:00 p.m., Eastern
time, are confirmed at that day's public offering price. Orders received by
dealers after 4:00 p.m., Eastern time, are confirmed at the public offering
price on the following business day.
APPLICABLE SALES CHARGES
Shares of the Fund are offered at the public offering price which is the net
asset value per share, plus any applicable sales charge. The sales charge is a
variable percentage of the offering price depending upon the amount of the sale.
No sales charge will be assessed on the reinvestment of distributions. The
sales charge will be assessed as follows:
- -------------------------------------------------------------------------------
TOTAL SALES CHARGE
AS A % OF AS A % OF DEALER CONCESSION
OFFERING NET AMOUNT AS A PERCENTAGE OF
AMOUNT OF YOUR INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------- ---------- ----------- -------------------
$1,000 but under $10,000.... 1.75% 1.78% 1.50%
$10,000 but under $25,000... 1.50% 1.52% 1.25%
$25,000 but under $50,000... 1.25% 1.27% 1.00%
$50,000 but under $100,000.. 1.00% 1.01% 0.75%
$100,000 or over............ 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------
Shares purchased through of the Fund may be purchased at the net asset value per
share next determined after receipt of the order without a sales charge by
403(b)(7) participants. At the discretion of the Fund, investors may be
permitted to purchase Fund shares without a sales charge by transferring
securities to the Fund that meet the Fund's investment objectives and
policies.
The distributor will pay the appropriate dealer concession to those selected
dealers who have entered into an agreement with the distributor. The dealer's
concession may be changed from time to time. The distributor may from time to
time offer incentive compensation to dealers (which sell shares of the Fund
subject to sales charges) allowing such dealers to retain an additional portion
of the sales load. A dealer who receives all of the sales load may be
considered an "underwriter" under the Securities Act of 1933, as amended. All
such sales charges are paid to the securities dealer involved in the trade, if
any. The foregoing schedule of sales charges applies to single purchases and to
purchases made under a Letter of Intent and pursuant to the Rights of
Accumulation, both of which are described below.
REDUCED SALES CHARGES
The sales charge for purchases of shares of the Fund may be reduced through
Rights of Accumulation or Letter of Intent. To qualify for a reduced sales
charge, an investor must so notify his or her distributor at the time of each
purchase of shares which qualifies for the reduction.
RIGHTS OF ACCUMULATION
A shareholder may qualify for a reduced sales charge by aggregating the net
asset values of shares requiring the payment of an initial sales charge,
previously purchased and currently owned with the dollar amount of shares to be
purchased.
LETTER OF INTENT
An investor may qualify for a reduced sales charge immediately by signing a non-
binding Letter of Intent stating the investor's intention to invest during the
next 13 months a specified amount which, if made at one time, would qualify for
a reduced sales charge. The first investment cannot be made more than 90 days
prior to the date of the Letter of Intent. Any redemptions made during the 13
month period will be subtracted from the amount of purchases in determining
whether the Letter of Intent has been completed. During the term of a Letter of
Intent, the transfer agent will hold shares representing 1.75% of the indicated
amount in escrow for payment of a higher sales load if the full
Page 16
<PAGE>
amount indicated in the Letter of Intent is not purchased. The escrowed shares
will be released when the full amount indicated has been purchased. If the full
amount indicated is not purchased within the 13 month period, an investor's
escrowed shares will be redeemed in an amount equal to the difference in the
dollar amount of sales charge actually paid and the amount of sales charge the
investor would have had to pay on his or her aggregate purchases if the total of
such purchases had been made at a single time.
PURCHASES BY WIRE
To order shares for purchase by wiring federal funds, the transfer agent must
first be notified by calling (800) 662-0201 to request an account number and
furnish the Fund with your tax identification number. Following notification to
the transfer agent, federal funds and registration instructions should be wired
through the Federal Reserve System to:
UNITED MISSOURI BANK KC NA
ABA #10-10-00695
-----------
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
-------------
FBO "THE TIMOTHY PLAN - RETAIL CLASS"
ACCOUNT OF (exact name(s) of account registration)
---------------------------------------
SHAREHOLDER ACCOUNT # _______________
A completed application with signature(s) of registrant(s) must be filed with
the transfer agent immediately subsequent to the initial wire. Investors should
be aware that some banks may impose a wire service fee. Shareholders may be
subject to 31% withholding if original application is not received.
AUTOMATIC INVESTMENT PLAN
Shares of the Fund may be purchased through an Automatic Investment Plan (the
"Plan"). The Plan provides a convenient method by which investors may have
monies deducted directly from their checking, savings or bank money market
accounts for investment in the Fund. The minimum investment pursuant to this
Plan is $100 per month. If you desire to take advantage of this Plan simply
complete and remit the Automatic Investment Plan Application on pages XX and XX.
The account designated will be debited in the specified amount, on the date
indicated, and Fund shares will be purchased. Only an account maintained at a
domestic financial institution which is an ACH member may be so designated. The
Fund may alter, modify or terminate this Plan at any time. For information
about participating in the Automatic Investment Plan, call FPS Services, Inc. at
(800) 662-0201.
HOW TO REDEEM SHARES
Shareholders may redeem their shares of the Fund without charge on any business
day that the NYSE is open (see "Determination of Net Asset Value"). Redemptions
will be effective at the net asset value per share next determined after the
receipt by the transfer agent of a redemption request meeting the requirements
described below. The Fund normally sends redemption proceeds on the next
business day, but in any event redemption proceeds are sent within seven
calendar days of receipt of a redemption request in proper form. Payment may
also be made by wire directly to any bank previously designated by the
shareholder in a shareholder account application. There is a $9.00 charge for
redemptions by wire. Please note that the shareholder's bank also may impose a
fee for wire service. The Fund will honor redemption requests of shareholders
who recently purchased shares by check, but will not mail the proceeds until it
is reasonably satisfied that the purchase check has cleared, which may take up
to fifteen days from the purchase date, at which time the redemption proceeds
will be mailed to the shareholder. To avoid delays of this kind, you may wish
to purchase by wire if you are planning on redeeming your shares in the near
future.
Except as noted below, redemption requests received in proper form by the
transfer agent prior to the close of regular trading hours on the NYSE on any
business day that the Fund calculates its per share net asset value are
effective that day.
Redemption requests received after the close of the NYSE are effective as of the
time the net asset value per share is next determined.
Page 17
<PAGE>
Retail Class shares of the Fund may be redeemed through certain brokers,
financial institutions or service organizations, banks and bank trust
departments who may charge the investor a transaction fee or other fee for their
services at the time of redemption. Such fees would not otherwise be charged if
the shares were directly redeemed from the Fund.
The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Advisor or
the Board of Trustees, result in the necessity of the Fund selling assets under
disadvantageous conditions and to the detriment of the remaining shareholders of
the Fund.
Pursuant to the Fund's Agreement and Declaration of Trust, payment for shares
redeemed may be made either in cash or in-kind, or partly in cash and partly in-
kind. However, the Fund has elected, pursuant to Rule 18f-1 under the Act, to
redeem its shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund, during any 90 day period for any one shareholder.
Payments in excess of this limit will also be made wholly in cash unless the
Board of Trustees believes that economic conditions exist which would make such
a practice detrimental to the best interests of the Fund. Any portfolio
securities paid or distributed in-kind would be valued as described under
"Determination of Net Asset Value." In the event that an in-kind distribution
is made, a shareholder may incur additional expenses, such as the payment of
brokerage commissions, on the sale or other disposition of the securities
received from the Fund. In-kind payments need not constitute a cross-section of
the Fund's portfolio. Where a shareholder has requested redemption of all or a
part of the shareholder's investment, and where the Fund completes such
redemption in-kind, the Fund will not recognize gain or loss for federal tax
purposes, on the securities used to complete the redemption but the shareholder
will recognize gain or loss equal to the difference between the fair market
value of the securities received and the shareholder's basis in the Fund shares
redeemed. Shares may be redeemed in one of the following ways:
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to the
transfer agent at 3200 Horizon Dirve, P.O. Box 61503, King of Prussia, PA 19406-
0903.
A written redemption request to the transfer agent must: (i) identify the
shareholder's account number, (ii) state the number of shares or dollars to be
redeemed and (iii) be signed by each registered owner exactly as the shares are
registered. A redemption request for amounts above $25,000, or redemption
requests for which proceeds are to be mailed somewhere other than the address of
record, must be accompanied by signature guarantees. Signatures must be
guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
Broker-dealers guaranteeing signatures must be members of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. The transfer agent may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees and
guardians.
A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. Questions with
respect to the proper form for redemption requests should be directed to the
transfer agent at (800) 662-0201.
REDEMPTION BY TELEPHONE
Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by instructing the transfer
agent by telephone. In order to arrange for redemption by wire or telephone
after an account has been opened, or to change the bank or account designated to
receive redemption proceeds, a written request must be sent to the transfer
agent at the address listed above.
Neither the Fund nor any of its service contractors will be liable for any loss
or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions
are genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, his or her banking
institution, bank account number and the name in which his or her bank account
is registered. To the extent that the Fund fails to use
Page 18
<PAGE>
reasonable procedures to verify the genuineness of telephone instructions, it
and/or its service contractors may be liable for any such instructions that
prove to be fraudulent or unauthorized.
The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time by the Fund.
SYSTEMATIC CASH WITHDRAWAL PLAN
The Fund offers a Systematic Cash Withdrawal Plan as another option which may be
utilized by an investor who wishes to withdraw funds from his or her account on
a regular basis. To participate in this option, an investor must either own or
purchase shares having a value of $10,000 or more. Automatic payments by check
will be mailed to the investor on either a monthly, quarterly, semi-annual or
annual basis in amounts of $100 or more. All withdrawals are processed on the
25th of the month or, if such day is not a business day, on the next business
day and paid promptly thereafter. Please complete the appropriate section on the
Investment Application enclosed within this Prospectus, indicating the amount of
the distribution and the desired frequency.
ADDITIONAL INFORMATION
The Fund also reserves the right to involuntarily redeem an investor's account
where the account is worth less than the minimum initial investment required
when the account is established, presently $1,000. (Any redemption of shares
from an inactive account established with a minimum investment may reduce the
account below the minimum initial investment, and could subject the account to
redemption initiated by the Fund.) The Fund will advise the shareholder of such
intention in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares in
any amount necessary to bring the account back to $1,000.
If the Trustees determine that it would be detrimental to the best interest of
the remaining shareholders of the Fund to make payment in cash, the Fund may pay
the redemption price in whole or in part by distribution in kind of readily
marketable securities, from the Fund, within certain limits prescribed by the
U.S. Securities and Exchange Commission. Such securities will be valued on the
basis of the procedures used to determine the net asset value at the time of the
redemption. If shares are redeemed in kind, the redeeming shareholder will
incur brokerage costs in converting the assets into cash.
RETIREMENT PLANS
The Fund offers its shares for use in certain Tax Deferred (such as IRA, defined
contribution, 401(k) and 403(b)(7) plans) Retirement Plans. The Fund sponsors
IRA and 403(b)(7) plans. Information on these Plans is available from FPS or by
reviewing the Statement of Additional Information.
PERFORMANCE
Total return data may from time to time be included in advertisements about the
Fund. The Fund's total return may be calculated on an annualized and aggregate
basis for various periods (which periods will be stated in the advertisement).
Average annual return reflects the average percentage change per year in value
of an investment in the Fund. Aggregate total return reflects the total
percentage change over the stated period. Any fees charged by banks or their
institutional investors directly to their customer accounts in connections with
investments in the Retail Class shares of the Fund will not be included in the
Fund's calculations of total returns.
The Fund may compare its investment performance with appropriate market indices
such as the S&P Index and to appropriate mutual fund indices; and the Fund may
advertise its ranking compared to other similar mutual funds as reported by
industry analysts such as Lipper Analytical Services, Inc.
All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of the investments in
the Fund, and the Fund's operating expenses. Investment performance also often
reflects the risk associated with the Fund's investment objectives and policies.
These factors should be considered when comparing the Fund to other
Page 19
<PAGE>
mutual funds and other investment vehicles.
The performance of the Institutional Class shares will normally be higher than
the Retail Class shares because of the sales charge (when applicable) and
additional distribution expenses charged to the Retail Class shares.
Shareholders may obtain current performance information about the Fund by
calling (800) TIM-PLAN.
Further information about the performance of the Fund is included in the Fund's
Annual Report, dated December 31, 1996, which may be obtained without charge
by contacting the Fund at (800) TIM-PLAN.
Page 20
<PAGE>
--------------------------------------------
BROKER DEALER: ____________________________
REGISTERED REP: ___________________________
BRANCH #:__________________ REP #:_________
BRANCH NAME: ______________________________
BRANCH ADDRESS: ___________________________
PHONE NUMBER: ( ) - Ext:
--------------------------------------------
THE TIMOTHY PLAN(R)
RETAIL CLASS
INVESTMENT APPLICATION
MAIL TO:
FPS Services, Inc., P.O. Box 61503, King of Prussia, PA 19406-4902
1. INITIAL INVESTMENT ($1,000 minimum)
FORM OF PAYMENT
[_] Check for $__________________ enclosed (make payable to "The
Timothy Plan")
[_] By Wire*1 An initial purchase of $_____________________ was wired on
______________ by ________________________________ to account #
Date Name of your Bank or Broker
________________________________
Number assigned by F/P/S
2. REGISTRATION (Please Print) No certificate will be issued unless requested
in writing.
INDIVIDUAL Must complete items 1, 3, 4 and 8 (you may choose options 5, 6
or 7).
__________________________________________________________________________
First Name Middle Name Last Name
____________________________
Social Security Number
__________________________________________________________________________
Joint Owner First Name*2 Middle Name Last Name
_____________________________
Social Security Number
Citizen of: [_] United States [_] Other (Please Indicate) ____________
GIFT TO MINORS Must complete items 1, 3, 4 and 8 (you may choose options 5,
6, or 7).
__________________________________________________________________________
Name of Custodian (Name one only) As Custodian For (Name one only)
Under the _____________________________ Uniform Gift to Minors Act
State
___________________________________
Security Number
CORPORATIONS, PARTNERSHIPS, TRUSTS AND OTHERS Must complete items 1, 3, 4,
9 and 10 (you may choose options 5, 6, or 7).
__________________________________________________________________________
Name of Corporation, Partnership, Trust or Other
______________ ________________________________ _____________
Tax ID # Name of Trustee(s) Date of Trust
3. MAILING ADDRESS OF RECORD AND TELEPHONE NUMBER(S)
_______________________________________________________________________________
Street Address and Apartment Number
________________________________________________________________________________
City State Zip Code Zip Extend
______________ ________________________ ____________ ___________________________
(Area Code) Daytime Telephone Number (Area Code) Evening Telephone Number
4. DISTRIBUTION OPTIONS (Please indicate one) See page XX of the Prospectus
for more detail.
Income Dividends (check one box/line only) [_] reinvested
[_] paid in cash
Capital Gains
Distributions (check one box/line only) [_] reinvested
[_] paid in cash
*1 Before making an initial investment by wire, you must be assigned an
account number by calling (800) 662-0201. Then have your local bank wire
your funds to: United Missouri Bank, N.A., ABA # 10-10-00695 for credit to
FPS Services, Inc. AC # 98-7037-071-9 (The Timothy Plan). Be sure to
include your name and account number on the wire.
*2 (Joint ownership with rights of survivorship unless otherwise noted).
Page 21
<PAGE>
5. SYSTEMATIC WITHDRAWAL PLAN ($10,000 minimum necessary) See page XX of the
Prospectus for more detail.
A check in the amount of $______________________ (minimum $100.00) will be
sent to you at your address of record unless otherwise noted.
Please select desired frequency: [_] Monthly
[_] Quarterly, in the months of _______,
________,__________, and __________.
[_] Semi-Annual or Annual, in the
month(s) of __________, __________,
or __________.
6. TELEPHONE PRIVILEGES See page XX of the Prospectus for more detail.
[_] REDEEM SHARES BY TELEPHONE
I (we) authorize FPS Services to honor telephone instructions for my (our)
account which I (we) understand the proceeds of which will be mailed only
to the address of record or wired to the bank specified below. Neither the
Fund nor FPS Services, Inc. will be liable for properly acting upon
telephone instructions believed to be genuine. Please attach a voided check
on your account if the bank option is chosen.
___________________________________________________________________________
Name of Bank City State
___________________________________________________________________________
Bank Routing Number Account Number [_]Checking [_]Savings
7. AUTOMATIC INVESTMENT PLAN (For this option - please complete and send in
form on pages XX and XX of the Prospectus).
8. SIGNATURE AND CERTIFICATION (This Section must be completed by INDIVIDUAL,
----
JOINT and CUSTODIAL accounts).
THE FOLLOWING IS REQUIRED BY FEDERAL TAX LAW TO AVOID 31% BACKUP
WITHHOLDING; "BY SIGNING BELOW, I CERTIFY UNDER PENALTIES OF PERJURY THAT
THE SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER ENTERED ABOVE IS
CORRECT (OR I AM WAITING FOR A NUMBER TO BE ISSUED TO ME), AND THAT I HAVE
NOT BEEN NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP WITHHOLDING UNLESS
I HAVE CHECKED THE BOX." IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING, CHECK BOX [_]. THE INTERNAL REVENUE SERVICE
DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN
THE CERTIFICATION REQUIRED TO AVOID BACKUP WITHHOLDING. RECEIPT OF CURRENT
PROSPECTUS IS HEREBY ACKNOWLEDGED.
___________________________________________________________________________
Signature [_] Owner [_] Custodian [_] Trustee [_] Date
___________________________________________________________________________
Signature of Joint Owner (if applicable) Date
9. RESOLUTIONS (This Section must be completed by CORPORATIONS, PARTNERSHIPS,
----
TRUSTS and OTHER ORGANIZATIONS).
RESOLVED: That this corporation or organization become a shareholder of the
Timothy Plan (the "Fund") and that ______________________________________
_________________________________________ is (are) authorized to complete
and execute the Application on behalf of the corporation or organization
and take any action for it as may be necessary or appropriate with respect
to its shareholders account(s) with the Fund, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to
sign any documents necessary or appropriate to appoint FPS Services, Inc.
as redemption agent of the corporation for shares of the Fund, to establish
or acknowledge terms and conditions governing the redemption of said shares
or to otherwise implement the privileges elected on the application.
10. CERTIFICATE (This Section must be completed by CORPORATIONS, PARTNERSHIPS,
----
TRUSTS and OTHER ORGANIZATIONS).
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the:
_________________________________________________________________________
(Name of Corporation)
incorporated or formed under the laws of _______________ and were adopted
(State)
at a meeting of the Board of Directors or Trustees of the organization or
corporation duly called and held on ________________ at which a quorum was
preset and acting throughout, and that the same are now in full force and
effect.
I further certify that the following is (are) the duly elected officer(s)
of the corporation or organization, authorized to act in accordance with
the foregoing resolutions.
NAME TITLE
_________________________________________ ____________________________
_________________________________________ ____________________________
_________________________________________ ____________________________
Witness my hand and the seal of the corporation or organization this
___________ day of _______________________, 19 ______.
____________________ _________________________________________________
*Secretary-Clerk Other Authorized Officer (if required)
* If the Secretary or other recording officer is authorized to act by the
above resolutions, this certificate must also be signed by another officer.
Page 22
<PAGE>
AUTOMATIC INVESTMENT PLAN APPLICATION
- --------------------------------------------------------------------------------
HOW DOES IT WORK?
1. FPS Services, Inc., through our bank, United Missouri Bank KC NA, draws an
automatic clearing house (ACH) debit electronically against your personal
checking account each month, according to your instructions.
2. Choose any amount ($100 or more) that you would like to invest regularly
and your debit for this amount will be processed by FPS Services, Inc. as
if you had written a check yourself.
3. Shares will be purchased and a confirmation sent to you.
HOW DO I SET IT UP?
1. Complete the forms and the Fund Application Form if you do not already have
an existing account.
2. Mark one of your personal checks or deposit slips VOID, attach it to the
forms below and mail to FPS Services, Inc., P.O. Box 61503, King of
Prussia, PA 19406-0903
3. As soon as your bank accepts your authorization, debits will be generated
and your Automatic Investment Plan started. In order for you to have ACH
debits from your account, your bank must be able to accept ACH transactions
and/or be a member of an ACH association. Your branch manager should be
able to tell you your bank's capabilities. We cannot guarantee acceptance
by your bank.
4. Please allow one month for processing of your Automatic Investment Plan
before the first debit occurs.
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN APPLICATION
TO: FPS Services, Inc.
P.O. Box 61503
King of Prussia, PA 19406-0903
Please start an Automatic Investment Plan for me and invest __________________.
($100 or more)
on the [_] 10th [_] 15th [_] 20th of each month, in shares of THE TIMOTHY
PLAN - RETAIL CLASS.
Check one:
[_] I am in the process of establishing an account.
or
[_] My account number is: ________________________________________________
____________________________________________________________________________
Name as account is registered
____________________________________________________________________________
Street
____________________________________________________________________________
City State Zip + ext.
I understand that my ACH debit will be dated on the day of each month as
indicated above or as specified by written request. I agree that if such debit
is not honored upon presentation, FPS Services, Inc. may discontinue this
service and any share purchase made upon deposit of such debit may be canceled.
I further agree that if the net asset value of the shares purchased with such
debit is less when said purchase is canceled than when the purchase was made,
FPS Services, Inc. shall be authorized to liquidate other shares or fractions
thereof held in my account to make up the deficiency. This Automatic Investment
Plan may be discontinued by FPS Services, Inc. upon 30-days written notice or at
any time by the investor by written notice to FPS Services, Inc. which is
received not later than 5 business days prior to the above designed investment
date.
Signature(s): _________________________________________
_________________________________________
Page 23
<PAGE>
AUTOMATIC INVESTMENT PLAN APPLICATION
- -------------------------------------------------------------------------------
BANK REQUEST AND AUTHORIZATION
TO: _____________________________________ _____________________________
Name of Your Bank Bank Checking Account Number
_______________________________________________________________________
Address of Bank or Branch Where Account is Maintained
As a convenience to me, please honor ACH debits on my account drawn by FPS
Services, Inc., United Missouri Bank KC NA and payable to "THE TIMOTHY PLAN".
I agree that your rights with respect to such debit shall be the same as if it
were a check drawn upon you and signed personally by me. This authority shall
remain in effect until you receive written notice from me changing its terms or
revoking it, and until you actually receive such notice, I agree that you shall
be fully protected in honoring such debit.
I further agree that if any debit is dishonored, whether with or without cause
or whether intentionally or inadvertently, you shall be under no liability
whatsoever.
DEPOSITOR'S __________________________________________________________________
Signature of Bank Depositor(s) as shown on bank records.
NOTE: Your bank must be able to accept ACH transactions and/or be a member of
an ACH association in order for you to use this service.
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
TO: The bank named above
So that you may comply with your Depositor's request and authorization, THE
TIMOTHY PLAN agrees as follows:
1. To indemnify and hold you harmless from any loss you may suffer arising
from or in connection with the payment by you of a debit drawn by FPS
Services, Inc. to the order of THE TIMOTHY PLAN designated on the account
of your depositor(s) executing the authorization including any costs or
expenses reasonably incurred in connection with such loss. THE TIMOTHY
PLAN will not, however, indemnify you against any loss due to your payment
of any debit generated against insufficient funds.
2. To refund to you any amount erroneously paid by you to FPS Services, Inc.
on any such debit if claim for the amount of such erroneous payment is made
by you within 3 months of the date of such debit on which erroneous payment
was made.
Page 24
<PAGE>
--------------------------------------------
BROKER DEALER: ____________________________
REGISTERED REP: ___________________________
BRANCH #:__________________ REP #:_________
BRANCH NAME: ______________________________
BRANCH ADDRESS: ___________________________
PHONE NUMBER: ( ) - Ext:
--------------------------------------------
THE TIMOTHY PLAN(R)
RETAIL CLASS
REQUEST FOR TRANSFER
MAIL TO:
FPS Services, Inc., P.O. Box 61503, King of Prussia, PA 19406-4902
1. INVESTOR INFORMATION
___________________________________________________________________________
First Name Middle Initial Last Name
___________________________________________________________________________
Street Address
___________________________ _______________ _____________ __________
City State Zip Code Zip Extend
_______________________ ________________ _____________
Social Security Number Date of Birth (Area Code)
_________________________ ___________ _________________________
Residence Telephone Number (Area Code) Business Telephone Number
2. PREVIOUS INVESTMENT FIRM
___________________________________________________________________________
Name of Previous Firm
___________________________________________________________________________
Address
___________________________________________________________________________
Investor's Name Account Number
Type of Account: [_] Individual [_] Joint [_] UGMA [_] Trust
Type of Assets: [_] Mutual Fund [_] Money Market [_] CD (Immediately/At
Maturity) [_] Securities
3. AMOUNT TO BE TRANSFERRED TO THE TIMOTHY PLAN
[_] Liquidate all assets from the above account and transfer the proceeds.
[_] Liquidate $_____________________________________ from the above account
and transfer the proceeds
4. TRANSFER INSTRUCTIONS
Make check payable to: The Timothy Plan
Mail to: Post Office Box 61503, King of Prussia, PA 19406-0903
5. INVESTOR'S AUTHORIZATION
___________________________________________________________________________
Signature of Participant Date Signature Guarantee
Page 25
<PAGE>
INVESTMENT ADVISOR
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789
INVESTMENT MANAGER
Awad & Associates
477 Madison Avenue
New York, NY 10022
UNDERWRITER
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Tait, Weller & Baker
Two Penn Center
Suite 700
Philadelphia, PA 19102-1707
For Additional Information About The Timothy Plan, Please Call:
(800) TIM-PLAN
<PAGE>
THE TIMOTHY PLAN
STATEMENT OF ADDITIONAL INFORMATION
April 29, 1997
- --------------------------------------------------------------------------------
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
(800) 441-6580
- --------------------------------------------------------------------------------
A copy of the Prospectus of The Timothy Plan (the "Fund") is available without
charge upon request to the Fund.
The Fund is an open-end diversified investment company, currently offering one
series of shares. The series currently offers two classes of shares:
Institutional Class and Retail Class. The shares of the Fund may be purchased
or redeemed at any time. Purchases and redemptions will be effected at the net
asset value next computed after receipt of the order in proper form by the
transfer agent.
The objective of the Fund is long-term capital growth and its secondary
objective is current income. The Fund will use a variety of investment
strategies in an effort to balance Fund risks. There can be no assurance that
the objectives of the Fund will be achieved.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONNECTION WITH THE FUND'S PROSPECTUS DATED APRIL 29, 1997 RETAIN THIS
STATEMENT OF ADDITIONAL INFORMATION FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
THE TIMOTHY PLAN - INVESTMENTS.............................................
INVESTMENT RESTRICTIONS....................................................
INVESTMENT ADVISOR.........................................................
INVESTMENT MANAGER.........................................................
UNDERWRITER................................................................
ADMINISTRATOR..............................................................
ALLOCATION OF PORTFOLIO BROKERAGE..........................................
PURCHASE OF SHARES.........................................................
Tax-Deferred Retirement Plans.........................................
REDEMPTIONS................................................................
OFFICERS AND TRUSTEES OF THE FUND..........................................
DISTRIBUTION PLAN..........................................................
TAXATION...................................................................
GENERAL INFORMATION........................................................
Audits and Reports....................................................
Miscellaneous.........................................................
PERFORMANCE................................................................
Comparisons and Advertisements........................................
FINANCIAL STATEMENTS.......................................................
</TABLE>
Page 2
<PAGE>
THE TIMOTHY PLAN - INVESTMENTS
The Fund seeks to achieve its objective by making investments selected in
accordance with the Fund's investment restrictions and policies. The Fund will
vary its investment strategy as described in the Fund's prospectus to achieve
its objective. This Statement of Additional Information contains further
information concerning the techniques and operations of the Fund, the securities
in which it will invest, and the policies it will follow. The Fund issues two
classes of shares (Institutional Class and Retail Class) that invest in the same
portfolio of securities. Shareholders of Retail Class shares are subject to a
sales charge and each class is subject to different 12b-1 Plan expenses.
COMMON STOCK Common stock is defined as shares of a corporation that entitle
the holder to a pro rata share of the profits of the corporation, if any,
without a preference over any other shareholder or class of shareholders,
including holders of the corporation's preferred stock and other senior equity.
Common stock usually carries with it the right to vote, and frequently, an
exclusive right to do so. Holders of common stock also have the right to
participate in the remaining assets of the corporation after all other claims,
including those of debt securities and preferred stock, are paid.
PREFERRED STOCK Generally, preferred stock receives dividends prior to
distributions on common stock and usually has a priority of claim over common
stockholders if the issuer of the stock is liquidated. Unlike common stock,
preferred stock does not usually have voting rights; preferred stock, in some
instances, is convertible into common stock. In order to be payable, dividends
on preferred stock must be declared by the issuer's Board of Trustees.
Dividends on the typical preferred stock are cumulative, causing dividends to
accrue even if not declared by the Board of Trustees. There is, however, no
assurance that dividends will be declared by the Board of Trustees of issuers of
the preferred stocks in which the Fund invests.
CONVERTIBLE SECURITIES Traditional convertible securities include corporate
bonds, notes and preferred stocks that may be converted into or exchanged for
common stock, and other securities that also provide an opportunity for equity
participation. These securities are generally convertible either at a stated
price or a stated rate (that is, for a specific number of shares of common stock
or other security). As with other fixed income securities, the price of a
convertible security to some extent varies inversely with interest rates. While
providing a fixed-income stream (generally higher in yield than the income
derivable from a common stock but lower than that afforded by a non-convertible
debt security), a convertible security also affords the investor an opportunity,
through its conversion feature, to participate in the capital appreciation of
the common stock into which it is convertible. As the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis and so may not experience market value declines to
the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the price of a convertible security tends to
rise as a reflection of the value of the underlying common stock. To obtain
such a higher yield, the Fund may be required to pay for a convertible security
an amount in excess of the value of the underlying common stock. Common stock
acquired by the Fund upon conversion of a convertible security will generally be
held for so long as the Advisor or Investment Manager anticipates such stock
will provide the Fund with opportunities which are consistent with the Fund's
investment objectives and policies.
WARRANTS The Fund may invest in warrants, in addition to warrants acquired in
units or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the issuer's capital stock at a set price for a specified period of time.
AMERICAN DEPOSITORY RECEIPTS The Fund may make foreign investments through the
purchase and sale of sponsored or unsponsored American Depository Receipts
("ADRs"). ADRs are receipts typically issued by a U.S. bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. The Fund may purchase ADRs whether they are "sponsored" or
"unsponsored". "Sponsored" ADRs are issued jointly by the issuer of the
underlying security and a depository. "Unsponsored" ADRs are issued without
participation of the issuer of the deposited security. The Fund does not
consider any ADRs purchased to be foreign. Holders of unsponsored ADRs
generally bear all
Page 3
<PAGE>
the costs of such facilities. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect to the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR. ADRs may
result in a withholding tax by the foreign country of source which will have the
effect of reducing the income distributable to shareholders. Because the Fund
will not invest more than 50% of the value of its total assets in stock or
securities issued by foreign corporations, it will be unable to pass through the
foreign taxes the Fund pays (or is deemed to pay) to shareholders under the
Internal Revenue Code of 1986, as amended (the "Code").
PORTFOLIO TURNOVER It is not the policy of the Fund to purchase or sell
securities for short-term trading purposes, but the Fund may sell securities to
recognize gains or avoid potential for loss. The Fund will, however, sell any
portfolio security (without regard to the time it has been held) when the
investment advisor believes that market conditions, credit-worthiness factors or
general economic conditions warrant such a step. The Fund presently estimates
that the annualized portfolio turnover rate generally will not exceed a range of
50% to 75%, and may be lower than 50%, during most periods. The annualized
portfolio turnover rate for the period March 21, 1994 (commencement of
operations) through December 31, 1994 and the portfolio turnover rate for the
fiscal years ended December 31, 1995 and 1996, were 8.31%, 34.12% and 93.08%,
respectively. High portfolio turnover would involve additional transaction
costs (such as brokerage commissions) which are borne by the Fund, or adverse
tax effects. (See "Dividends, Distributions and Taxes" in the Prospectus.)
INVESTMENT RESTRICTIONS
In addition to those set forth in the Fund's current Prospectus, the Fund has
adopted the Investment Restrictions set forth below, which are fundamental
policies of the Fund, and which cannot be changed without the approval of a
majority of the outstanding voting securities. As provided in the Investment
Company Act of 1940, as amended (the "1940 Act"), a "vote of a majority of the
outstanding voting securities" means the affirmative vote of the lesser of (i)
more than 50% of the outstanding shares, or (ii) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares are represented
at the meeting in person or by proxy. These investment restrictions provide
that each Fund will not:
(1) issue senior securities;
(2) engage in the underwriting of securities except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security;
(3) purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations;
(4) invest for the purpose of exercising control or management of another
company;
(5) purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may
invest in the securities of companies which invest in or sponsor such
programs;
(6) invest more than 25% of the value of the Fund's total assets in one
particular industry, except for temporary defensive purposes;
(7) make purchases of securities on "margin", or make short sales of
securities, provided that the Fund may enter into futures contracts
and related options and make initial and variation margin deposits in
connection therewith; and
(8) invest in securities of any open-end investment company, except that
the Fund may
Page 4
<PAGE>
purchase securities of money market mutual funds, but such investments
in money market mutual funds may be made only in accordance with the
limitations imposed by the 1940 Act and the rules thereunder, as
amended.
So long as percentage restrictions are observed by the Fund at the time it
purchases any security, changes in values of particular Fund assets or the
assets of the Fund as a whole will not cause a violation of any of the foregoing
restrictions.
INVESTMENT ADVISOR
The Fund has entered into an advisory agreement with Timothy Partners, Ltd. (the
"Advisor"), effective January 19, 1994 (the "Investment Advisory Agreement"), as
amended August 28, 1995, for the provision of investment advisory services,
subject to the supervision and direction of the Fund's Board of Trustees.
Pursuant to the Investment Advisory Agreement, the Fund is obligated to pay the
Advisor a monthly fee equal to an annual rate of 0.85% of the Fund's average
daily net assets. This fee is higher than that charged by some funds, but is
comparable to fees charged by funds with similar investment objectives. The
Investment Advisory Agreement specifies that the advisory fee will be reduced 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. The most stringent
current state restriction limits a fund's allowable aggregate operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary expenses
such as litigation costs) in any fiscal year to 2.5% of the first $30 million of
net assets of the Fund, 2% of the next $70 million of net assets of the Fund,
and 1.5% of average annual net assets of the Fund in excess of $100 million.
For the period March 21, 1994 (commencement of operations) through December 31,
1994 and for the years ended December 31, 1995 and 1996, advisory fees of
$7,938, $41,257 and $78,848 respectively, were paid to the Advisor and the
Advisor reimbursed the Fund $135,114, and $189,534 and $194,967
respectively.
The Investment Advisory Agreement is initially effective for two years. The
Investment Advisory Agreement may be renewed after its initial term only so long
as such renewal and continuance are specifically approved at least annually by
the Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund, and only if the terms of the renewal thereof have been
approved by the vote of a majority of the Trustees of the Fund who are not
parties thereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. The Investment
Advisory Agreement will terminate automatically in the event of its assignment.
INVESTMENT MANAGER
Pursuant to an agreement between the Advisor and Awad & Associates (the
"Investment Manager"), a division of Raymond James & Associates, Inc., effective
January 1, 1997 (the "Sub-Investment Advisory Agreement"), the Investment
Manager provides advice and assistance to the Advisor in the selection of
appropriate investments for the Fund, subject to the supervision and direction
of the Fund's Board of Trustees. As compensation for its services, the
Investment Manager receives from the Advisor 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.
The Sub-Investment Advisory Agreement is initially effective for two years. The
Agreement may be renewed by the parties after its initial term only so long as
such renewal and continuance are specifically approved at least annually by the
Board of Trustees or by vote of a majority of the outstanding voting
Page 5
<PAGE>
securities of the Fund, and only if the terms of renewal thereof have been
approved by the vote of a majority of the Trustees of the Fund who are not
parties thereto or interested persons of any such party, cast in person at the
meeting called for the purpose of voting on such approval. The Sub-Investment
Advisory Agreement will terminate automatically in the event of its assignment.
Prior to January 1, 1997, the Advisor paid Systematic Financial Management, L.P.
for advice and assistance in the selection of appropriate investments for the
Fund. For the period March 21, 1994 (commencement of operations) through
December 31, 1994 and for the fiscal years ended December 31, 1995 and 1996, the
Advisor paid Systematic Financial Management, L.P. sub-advisory fees of $3,969,
and $20,628 and $46,381, respectively.
UNDERWRITER
FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, King of Prussia, PA
19406, acts as an underwriter of the Fund shares for the purpose of facilitating
the registration of shares of the Fund under state securities laws and to assist
in sales of shares pursuant to an underwriting agreement (the "Underwriting
Agreement") approved by the Fund's Trustees.
In that regard, FPSB has agreed at its own expense to qualify as a broker-dealer
under all applicable federal or state laws in those states which the Fund shall
from time to time identify to FPSB as states in which it wishes to offer its
shares for sale, in order that state registrations may be maintained by the
Fund.
FPSB is a broker-dealer registered with the U.S. Securities and Exchange
Commission and is a member in good standing of the National Association of
Securities Dealers, Inc.
For the services to be provided under the Underwriting Agreement, FPSB is
entitled to receive an annual fixed fee of $15,000, for one series, plus $2,500
for each additional operational series or class, payable in advance. This fee
is fixed for a one (1) year period from the date of the agreement and may be
increased or decreased in future years by an amendment signed by both the Fund
and FPSB. The fees for such services are borne entirely by the Advisor. The
Fund does not impose any sales loads or redemption fees. The Fund shall
continue to bear the expense of all filing or registration fees incurred in
connection with the registration of shares under state securities laws.
The Underwriting Agreement may be terminated by either party upon 60 days prior
written notice to the other party, and if so terminated, the pro-rata portion of
the unearned fee will be returned to the Fund.
ADMINISTRATOR
FPS Services, Inc., 3200 Horizon Drive, King of Prussia, PA 19406, (the
"Administrator"), provides certain administrative services to the Fund pursuant
to an Administrative Services Agreement.
Under the Administrative Services Agreement, the Administrator: (1) coordinates
with the Custodian and Transfer Agent and monitors the services they provide to
the Fund; (2) coordinates with, and monitors, any third parties furnishing
services to the Fund; (3) provides the Fund with necessary office space,
telephones and other communications facilities and personnel competent to
perform administrative and clerical functions; (4) supervises the maintenance by
third parties of such books and records of the Fund as may be required by
applicable federal or state law; (5) prepares or supervises the preparation by
third parties of all federal, state and local tax returns and reports of the
Fund required by applicable law; (6) prepares and, after approval by the Fund,
files and arranges for the distribution of proxy materials and periodic reports
to shareholders of the Fund as required by applicable law; (7) prepares and,
after approval by the Fund, arranges for the filing of such registration
statements and other documents with the Securities and Exchange Commission and
other federal and state regulatory authorities as may be required by applicable
law; (8) reviews and submits to the officers of the Fund for their approval
invoices
Page 6
<PAGE>
or other requests for payment of the Funds expenses and instructs the Custodian
to issue checks in payment thereof; and (9) takes such other action with respect
to the Fund as may be necessary in the opinion of the Administrator to perform
its duties under the agreement.
As compensation for services performed under the Administrative Services
Agreement, the Administrator receives a fee payable monthly at an annual rate of
0.15% of the first $50 million in average net assets of the Fund; 0.10% of the
next $50 million in average net assets; and 0.05% of average net assets over
$100 million. There is a minimum fee of $50,000 per year for the initial
series/class of shares issued by the Fund and $12,000 per year for each
additional separate series/class of shares. For the period March 21, 1994
(commencement of operations) through December 31, 1994 and for the fiscal years
ended December 31, 1995 and 1996, the Fund paid $39,583,and $54,297 and $62,581
respectively, for Administration fees.
ALLOCATION OF PORTFOLIO BROKERAGE
The Investment Manager, when effecting the purchases and sales of portfolio
securities for the account of the Fund, will seek execution of trades either (i)
at the most favorable and competitive rate of commission charged by any broker,
dealer or member of an exchange, or (ii) at a higher rate of commission charges
if reasonable in relation to brokerage and research services provided to the
Fund or the Investment Manager by such member, broker, or dealer. Such services
may include, but are not limited to, any one or more of the following:
information on the availability of securities for purchase or sale, statistical
or factual information, or opinions pertaining to investments. The Fund's
Investment Manager may use research and services provided to it by brokers and
dealers in servicing all its clients, however, not all such services will be
used by the Investment Manager in connection with the Fund. Brokerage may also
be allocated to dealers in consideration of the Fund's share distribution but
only when execution and price are comparable to that offered by other brokers.
The Fund incurred brokerage commissions of $7,631 for the period March 21, 1994
(commencement of operations) through December 31, 1994 and for the fiscal years
ended December 31, 1995 and 1996, the Fund incurred brokerage commissions of
$13,704 and $32,684, respectively.
The Advisor, through the Investment Manager, is responsible for making the
Fund's portfolio decisions subject to instructions described in the prospectus.
The Board of Trustees may however impose limitations on the allocation of
portfolio brokerage.
PURCHASE OF SHARES
The shares of the Fund are continuously offered by the Distributor. Orders will
not be considered complete until receipt by the Distributor of a completed
account application form, and receipt by the Custodian of payment for the shares
purchased. Once both are received, such orders will be confirmed at the next
determined net asset value per share, plus the applicable sales load for Retail
Class shares (based upon valuation procedures described in the Prospectus), as
of the close of business of the business day on which the completed order is
received, normally 4 o'clock p.m. Eastern Time. Completed orders received by
the Fund after 4 o'clock p.m. will be confirmed at the next day's price.
TAX-DEFERRED RETIREMENT PLANS
- -----------------------------
Shares of the Fund are available to all types of tax-deferred retirement plans
such as IRA's, employer-sponsored defined contribution plans (including 401(k)
plans) and tax-sheltered custodial accounts described in Section 403(b)(7) of
the Internal Revenue Code. Qualified investors benefit from the tax-free
compounding of income dividends and capital gains distributions. The Fund
sponsors an Individual Retirement Accounts (IRA). Individuals, who are not
active participants (and, when a joint return is filed, who do not have a spouse
who is an active participant) in an employer maintained retirement plan are
eligible to contribute on a deductible basis to an IRA account. The IRA
deduction is also retained for individual taxpayers and married couples with
adjusted gross incomes not in excess of certain specified limits. All
individuals who have earned income may make nondeductible IRA contributions to
the extent
Page 7
<PAGE>
that they are not eligible for a deductible contribution. Income earned by an
IRA account will continue to be tax deferred.
A special IRA program is available for employers under which the employers may
establish IRA accounts for their employees in lieu of establishing tax qualified
retirement plans. Known as SEP-IRA's (Simplified Employee Pension-IRA), they
free the employer of many of the record keeping requirements of establishing and
maintaining a tax qualified retirement plan trust.
If you are entitled to receive a distribution from a qualified retirement plan,
you may rollover all or part of that distribution into the Fund's IRA. Your
rollover contribution is not subject to the limits on annual IRA contributions.
You can continue to defer Federal income taxes on your contribution and on any
income that is earned on that contribution.
The Fund also sponsors 403(b)(7) Retirement Plans. The Fund offers a plan for
use by schools, hospitals, and certain other tax-exempt organizations or
associations who wish to use shares of the Fund as a funding medium for a
retirement plan for their employees (the "403(b)(7) Plan"). Contributions are
made to the 403(b)(7) Plan as a reduction to the employee's regular
compensation. Such contributions, to the extent they do not exceed applicable
limitations (including a generally applicable limitation of $9,500 per year),
are excludable from the gross income of the employee for Federal Income tax
purposes.
In all these Plans, distributions of net investment income and capital gains
will be automatically reinvested.
All the foregoing retirement plan options require special plan documents.
Please call the Fund at (800) TIM-PLAN (or (800) 846-7526) to obtain information
regarding the establishment of retirement plan accounts. In the case of IRAs
and 403(b)(7) Plans, Semper Trust Company acts as the plan custodian and charges
$12.00 per account in connection with plan establishment and maintenance. These
fees are detailed in the plan documents. You should consult with your attorney
or other tax advisor for specific advice prior to establishing a plan.
REDEMPTIONS
Under normal circumstances you may redeem your shares at any time without a fee.
The redemption price will be based upon the net asset value per share next
determined after receipt of the redemption request, provided it has been
submitted in the manner described below. The redemption price may be more or
less than your cost, depending upon the net asset value per share at the time of
redemption. Retail Class shares of the Fund may be redeemed through certain
brokers, financial institutions or service organizations, banks and bank trust
departments who may charge the investor a transaction fee or other fee for their
services at the time of redemption. Such fees would not otherwise be charged if
the shares were purchased directly from the Fund.
Payment for shares tendered for redemption is made by check within seven days
after tender in proper form, except that the Fund reserves the right to suspend
the right of redemption, or to postpone the date of payment upon redemption
beyond seven days: (i) for any period during which the NYSE is restricted, (ii)
for any period during which an emergency exists as determined by the U.S.
Securities and Exchange Commission as a result of which disposal of securities
owned by the Fund is not reasonably predictable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or
(iii) for such other periods as the U.S Securities and Exchange Commission may
by order permit for the protection of shareholders of the Fund.
Pursuant to the Fund's Agreement and Declaration of Trust, payment for shares
redeemed may be made either in cash or in-kind, or partly in cash and partly in-
kind. However, the Fund has elected, pursuant to Rule 18f-1 under the 1940 Act,
to redeem its shares solely in cash up to the lesser of $250,000 or 1% of the
net asset value of the Fund, during any 90-day period for any one shareholder.
Payments in excess of this limit will also be made wholly in cash unless the
Board of Trustees believes that economic conditions exist which would make such
a practice detrimental to the best interests of the Fund. Any portfolio
Page 8
<PAGE>
securities paid or distributed in-kind would be valued as described under
"Determination of Net Asset Value" in the Fund's prospectus. In the event that
an in-kind distribution is made, a shareholder may incur additional expenses,
such as the payment of brokerage commissions, on the sale or other disposition
of the securities received from the Fund. In-kind payments need not constitute a
cross-section of the Fund's portfolio. Where a shareholder has requested
redemption of all or a part of the shareholder's investment, and where the Fund
completes such redemption in-kind, the Fund will not recognize gain or loss for
federal tax purposes, on the securities used to complete the redemption. The
shareholder will recognize gain or loss equal to the difference between the fair
market value of the securities received and the shareholder's basis in the Fund
shares redeemed.
OFFICERS AND TRUSTEES OF THE FUND
The trustees and principal executive officers and their principal occupations
for the past five years are listed below.
<TABLE>
<CAPTION>
POSITION AND
OFFICE HELD WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE THE REGISTRANT DURING THE PAST FIVE YEARS
- ---------------- --- -------------- --------------------------
<S> <C> <C> <C>
Arthur D. Ally * 55 President and President, Covenant Financial
1304 West Fairbanks Ave Trustee Management, Inc. (1990-present)
Winter Park, Florida
Joseph E. Boatwright * 65 Secretary and Retired; prior thereto Senior Pastor;
1410 Hyde Park Drive Trustee Aloma Baptist Church, (1970-1996)
Winter Park, Florida
Wesley W. Pennington 66 Trustee Secretary/Treasurer, American Call to
442 Raymond Ave. Greatness (publishing); President & Sole
Longwood, Florida Shareholder, Weston, Inc. (fabric treatment)
(1979-present); President & Sole Shareholder,
Designer Services Group, Inc. (furniture
storage & delivery) (1981-1991)
Mark Schweizer 64 Trustee Retired; prior thereto Architect/Engineer,
1000 Bent Tree Lane President of Schweizer, Inc. (1960-1996)
Columbia, S.C.
Jock M. Sneddon * 49 Trustee Physician, Florida Hospital
6001 Vineland Drive Center (present); prior thereto
Orlando, Florida President and Director of Sneddon &
Helmers M.D. P. A. (1976-1993)
Philip B. Crosby * 70 Trustee Owner and Founder; Career IV
P.O. Box 1927 (1991-current); prior thereto
Winter Park, Florida Founder, Philip Crosby,
Associates, Inc. (1979-retired 1991).
Daniel D. Busby, CPA 55 Trustee CFO, International Center of Wesleyan
P.O. Box 50188 Church (1986-present); and Partner,
Indianapolis, IN Busby, Keller & Co.
</TABLE>
* These trustees and officers are considered "interested persons" of the Funds
within the meaning of
Page 9
<PAGE>
Section 2(a)(19) of the 1940 Act. The trustees and officers considered
"interested persons" are so deemed by reason of their affiliation with the
Fund's investment advisor and as a result of being a trustee and/or officer of
the Fund.
The officers conduct and supervise the daily business operations of the Fund,
while the trustees, in addition to functions set forth under "Investment
Advisor," "Investment Manager," and "Underwriter," review such actions and
decide on general policy. Compensation to officers and trustees of the Fund who
are affiliated with the Advisor is paid by the Advisor, and not by the Fund.
For the fiscal year ended December 31, 1996, the Fund did not pay compensation
to any of its trustees. In addition, no trustee served on the Board of
Directors of another investment company managed by the Advisor for the calendar
year ended December 31, 1996.
DISTRIBUTION PLAN
As noted in the Fund's Prospectuses, each Class of the Fund has adopted a Plan
pursuant to Rule 12b-1 under the 1940 Act (the "Plan") whereby the Fund may pay
up to a maximum of 0.25% for Institutional Class shares and up to a maximum of
0.85% for Retail Class shares (of which, up to 0.25% may be service fees to be
paid by each respective class of shares to FPBS, dealers and others, for
providing personal service and/or maintaining shareholder accounts) per annum of
its average daily net assets for expenses incurred by the Underwriter in the
distribution of the Fund's shares. The fees are paid on a monthly basis, based
on the Fund's average daily net assets.
Pursuant to the Plan, the Underwriter is entitled to a reimbursement each month
(up to the maximum of 0.25% for Institutional Class shares and 0.85% for Retail
Class shares per annum of average net assets of the Fund) for the actual
expenses incurred in the distribution and promotion of the Fund's shares,
including but not limited to, printing of prospectuses and reports used for
sales purposes, preparation and printing of sales literature and related
expenses, advertisements, and other distribution-related expenses as well as any
distribution or service fees paid to securities dealers or others who have
executed a dealer agreement with the Underwriter. Any expense of distribution
in excess of 0.25% for Institutional Class shares or 0.85% for Retail Class
shares per annum will be borne by the Advisor without any reimbursement or
payment by the Fund.
For the period ended December 31, 1994 and fiscal year ended December 31, 1995,
the Fund reimbursed the Underwriter $1,985 and $11,606, respectively, for
distribution costs incurred by the Fund. For the fiscal year ended December 31,
1996, the Fund reimbursed the Underwriter $36,568 for distribution costs
incurred as follows: $ 7,063 for printing; $18,465 compensation to underwriters
and distribution services; $11,040 compensation to dealers for the Retail Class
shares.
The Plan also provides that to the extent that the Fund, the Advisor, the
Investment Manager, the Underwriter, or other parties on behalf of the Fund, the
Advisor, the Investment Manager, or the Underwriter make payments that are
deemed to be payments for the financing of any activity primarily intended to
result in the sale of shares issued by the Fund within the context of Rule 12b-
1, such payments shall be deemed to be made pursuant to the Plan. In no event
shall the payments made under the Plan, plus any other payments deemed to be
made pursuant to the Plan, exceed the amount permitted to be paid pursuant to
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., Article III, Section 26(d)(4).
The Board of Trustees has determined that a consistent cash flow resulting from
the sale of new shares is necessary and appropriate to meet redemptions and to
take advantage of buying opportunities without having to make unwarranted
liquidations of portfolio securities. The Board therefore believes that it will
likely benefit the Fund to have monies available for the direct distribution
activities of the Underwriter in promoting the sale of the Fund's shares, and to
avoid any uncertainties as to whether other payments constitute distribution
expenses on behalf of the Fund. The Board of Trustees, including the
non-interested
Page 10
<PAGE>
trustees, has concluded that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. The Plan
has been approved by the Fund's Board of Trustees, including all of the trustees
who are non-interested persons as defined in the 1940 Act. The Plan must be
renewed annually by the Fund's Board of Trustees, including a majority of the
trustees who are non-interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan. The votes must be cast
in person at a meeting called for that purpose. It is also required that the
selection and nomination of such trustees be done by the non-interested
trustees. The Plan and any related agreements may be terminated at any time,
without any penalty: 1) by vote of a majority of the non-interested trustees on
not more than 60 days' written notice, 2) by the Underwriter on not more than 60
days' written notice, 3) by vote of a majority of the Fund's outstanding shares,
on 60 days' written notice, and 4) automatically by any act that terminates the
Underwriting Agreement with the Underwriter. The Underwriter or any dealer or
other firm may also terminate their respective agreements at any time upon
written notice.
The Plan and any related agreement may not be amended to increase materially the
amounts to be spent for distribution expenses without approval by a majority of
the Fund's outstanding shares, and all material amendments to the Plan or any
related agreements shall be approved by a vote of the non-interested trustees,
cast in person at a meeting called for the purpose of voting on any such
amendment.
The Underwriter is required to report in writing to the Board of Trustees of the
Fund, at least quarterly, on the amounts and purpose of any payment made under
the Plan, as well as to furnish the Board with such other information as may
reasonably be requested in order to enable the Board to make an informed
determination of whether the Plan should be continued.
TAXATION
The Fund intends to qualify each year as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
In order to so qualify, a fund must, among other things (i) derive at least 90%
of its gross income from dividends, interest, payments with respect to certain
securities loans, gains from the sale of securities or foreign currencies, or
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies; (ii) derive less than 30% of its gross income
from the sale or other disposition of stock or securities or certain futures and
options thereon held for less than three months ("short-short gains"); (iii)
distribute at least 90% of its dividends, interest and certain other taxable
income each year; and (iv) at the end of each fiscal quarter maintain at least
50% of the value of its total assets in cash, government securities, securities
of other regulated investment companies, and other securities of issuers which
represent, with respect to each issuer, no more than 5% of the value of a fund's
total assets and 10% of the outstanding voting securities of such issuer, and
with no more than 25% of its assets invested in the securities (other than those
of the government or other regulated investment companies) of any one issuer or
of two or more issuers which the Fund controls and which are engaged in the
same, similar or related trades and businesses.
To the extent the Fund qualifies for treatment as a regulated investment
company, it will not be subject to federal income tax on income and net capital
gains paid to shareholders in the form of dividends or capital gains
distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of the
Fund's "required distributions" over actual distributions in any calendar year.
Generally, the "required distribution" is 98% of a fund's ordinary income for
the calendar year plus 98% of its capital gain net income recognized during the
one-year period ending on December 31 plus undistributed amounts from prior
years. The Fund intends to make distributions sufficient to avoid imposition of
the excise tax. Distributions declared by the Fund during October, November or
December to shareholders of record during such month and paid by January 31 of
the following year will be taxable to shareholders in the calendar year in which
they are
Page 11
<PAGE>
declared, rather than the calendar year in which they are received.
Shareholders will be subject to federal income taxes on distributions made by
the Fund whether received in cash or additional shares of the Fund.
Distributions of net investment income and net short-term capital gains, if any,
will be taxable to shareholders as ordinary income. Distributions of net long-
term capital gains, if any, will be taxable to shareholders as long-term capital
gains, without regard to how long a shareholder has held shares of the Fund. A
loss on the sale of shares held for six months or less will be treated as a
long-term capital loss to the extent of any long-term capital gain dividend paid
to the shareholder with respect to such shares. Dividends eligible for
designation under the dividends received deduction and paid by the Fund may
qualify in part for the 70% dividends received deduction for corporations
provided, however, that those shares have been held for at least 45 days.
The Fund will notify shareholders each year of the amount of dividends and
distributions, including the amount of any distribution of long-term capital
gains, and the portion of its dividends which may qualify for the 70% deduction.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action at any time, and retroactively.
Each Class of shares of a Fund will share proportionately in the investment
income and expenses of that Fund, except that each Fund will incur different
distributions expenses.
Dividends and distributions also may be subject to state and local taxes.
Shareholders are urged to consult their tax advisors regarding specific
questions as to federal, state and local taxes.
GENERAL INFORMATION
AUDITS AND REPORTS
- ------------------
The accounts of the Fund are audited each year by Tait, Weller & Baker of
Philadelphia, PA, independent certified public accountants whose selection must
be ratified annually by the Board of Trustees.
Shareholders receive semi-annual and annual reports of the Fund including the
annual audited financial statements and a list of securities owned.
MISCELLANEOUS
- -------------
As of February 10, 1997, Mr. Boatwright owned benefically more than 1% of the
outstanding shares of the Institutional Class, however the Trustees and officers
of the Fund individually and as a group owned beneficially less than 1.00% of
the outstanding shares of the Fund.
As of February 10, 1997, the following persons owned of record or exercised
voting control over 5% of the outstanding shares of the Retail Class shares of
the Fund:
Name & Address of Beneficial Owners Percentage
- ----------------------------------- ----------
Southwest Securities Inc. 7.28%
Dallas, TX
Page 12
<PAGE>
PERFORMANCE
Performance information for the Institutional Class and Retail Class shares of
the Fund will vary due to the effect of expense ratios on the performance
calculations.
Current yield and total return may be quoted in advertisements, shareholder
reports or other communications to shareholders. Yield is the ratio of income
per share derived from the Fund's investments to a current maximum offering
price expressed in terms of percent. The yield is quoted on the basis of
earnings after expenses have been deducted. Total return is the total of all
income and capital gains paid to shareholders, assuming reinvestment of all
distributions, plus (or minus) the change in the value of the original
investment, expressed as a percentage of the purchase price. Occasionally, the
Fund may include its distribution rate in advertisements. The distribution rate
is the amount of distributions per share made by the Fund over a 12-month period
divided by the current maximum offering price.
U.S. Securities and Exchange Commission rules require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by the Fund be accompanied by certain
standardized performance information computed as required by the Commission.
Current yield and total return quotations used by the Fund are based on the
standardized methods of computing performance mandated by the Commission. An
explanation of those and other methods used by the Fund to compute or express
performance follows.
As the following formula indicates, the average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period less any fees charged to all shareholder accounts and
annualizing the result. The calculation assumes the maximum sales load is
deducted from the initial $1,000 purchase order and that all dividends and
distributions are reinvested at the net asset value on the reinvestment dates
during the period. The quotation assumes the account was completely redeemed at
the end of each one, five and ten-year period and assumes the deduction of all
applicable charges and fees. According to the SEC formula:
P(1+T)/n /= ERV
where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the one, five or ten-year periods, determined at the end
of the one, five or ten-year periods (or fractional portion thereof).
Based on the foregoing calculations, the average annual total return for
Institutional Class shares, for the period March 21, 1994 (commencement of
operations) through December 31, 1996, and for the one year period ended 1996,
was 6.16% and 12.59%, respectively. The average annual total return for Retail
Class Shares, for the period August 25, 1995
Page 13
<PAGE>
(commencement of operations) through December 31, 1996 and for the one year
period ended December 31, 1996 was 6.83% and 10.00%, respectively. Regardless of
the method used, past performance is not necessarily indicative of future
results, but is an indication of the return to shareholders only for the limited
historical period used.
COMPARISONS AND ADVERTISEMENTS
- ------------------------------
To help investors better evaluate how an investment in the Fund might satisfy
their investment objective, advertisements regarding the Fund may discuss yield
or total return for the Fund as reported by various financial publications.
Advertisements may also compare yield or total return to yield or total return
as reported by other investments, indices, and averages. The following
publications, indices, and averages may be used:
Lipper Mutual Fund Performance Analysis;
Lipper Mutual Fund Indices;
CDA Weisenberger; and
Morningstar
From time to time, the Fund may also include in sales literature and advertising
(including press releases) the Advisors comments on current news items,
organizations which violate the Fund's philosophy (and are screened out as
unacceptable portfolio holdings), channels of distribution and organizations
which endorse the Fund as consistent with their philosophy of investment.
FINANCIAL STATEMENTS
The Fund's Financial Statements, including the notes thereto, dated December 31,
1996, which have been audited by Tait, Weller & Baker, are incorporated by
reference from the Fund's 1996 Annual Report to Shareholder's.
Page 14
<PAGE>
INVESTMENT ADVISOR
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789
INVESTMENT MANAGER
Awad & Associates
477 Madison Avenue
New York, New York 10022
UNDERWRITER
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Tait, Weller & Baker
Two Penn Center
Suite 700
Philadelphia, PA 19102-1707
<PAGE>
FILE NAME PART C
POST EFFECTIVE AMENDMENT NO. 5 4
=
TO REGISTRATION STATEMENT NO. 33-73248
ON FORM N-1A
PART C. OTHER INFORMATION.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
- --------------------------------------------
(A) Financial Statements:
(1) The Financial Highlights are included in Part A of this Registration
Statement on Form N-1A. The following audited Financial Statements
are incorporated by reference in Part B of this Registration
Statement on Form N1-A for the period ended December 31, 1996:
(i) Schedule of Investments at December 31, 1996.
(ii) Statement of Assets and Liabilities at December 31,
1996.
(iii) Statement of Operations for the period ended December 31,
1996
(iv) Statement of Changes in Net Assets for the year ended
December 31, 1996.
(v) Notes to Financial Statements.
(vi) Financial Highlights.
(vii) Report of Independent Accountants
(2) All required financial statements are included or incorporated by
reference in Parts A and B hereof. All other financial statements
and schedules are inapplicable.
(B) Exhibits:
(1) Agreement and Declaration of Trust is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No. 99 (1) to
Item 24 as electronically filed on April 26, 1996.
(2) By-Laws of Registrant dated January 19, 1994 is incorporated herein
by reference to Post Effective Amendment No. 4 as Exhibit No. 99 (2)
to Item 24 as electronically filed on April 26, 1996.
(3) None
(4) Specimen Copy of each security to be issued by the registrant:
Registrant proposes to maintain investments as non-certificated book
entry shares.
(5) Investment Advisory Agreements:
(a)(i) Amendment dated August 28, 1995 to Investment Advisory
Agreement dated January 19, 1994 between Registrant and
Timothy Partners, Ltd. is incorporated herein by reference
to Post Effective Amendment No. 4 as Exhibit No. 99
(5)(a)(i) to Item 24 as electronically filed on April 26,
1996.
(a)(ii) Investment Advisory Agreement dated January 19, 1994 between
Registrant and Timothy Partners, Ltd. is incorporated herein
by reference to Post-Effective Amendment No. 4 as Exhibit
No. 99 (5)(a)(ii) to Item 24 as electronically filed on
April 26, 1996.
(b)(ii) Sub-Investment Advisory Agreement dated January 1, 1997
between Timothy Partners, Ltd., Awad & Associates and the
Registrant is filed herewith electronically.
<PAGE>
(6) (a) DISTRIBUTION AGREEMENTS:
(a)(i) Amendment dated February 23, 1996, to the Underwriting
Agreement dated January 19, 1994 between Registrant and FPS
Broker Services, Inc. is incorporated herein by reference to
Post Effective Amendment No. 4 as Exhibit No. 99 (6)(a)(i)
to Item 24 as electronically filed on April 26, 1996.
(a)(ii) Underwriting Agreement dated January 19, 1994 between
Registrant and Fund/Plan FPS Broker Services, Inc. is
incorporated herein by reference to Post Effective Amendment
No. 4 as Exhibit No. 99 (6)(a)(ii) to Item 24 as
electronically filed on April 26, 1996.
(b) None
(7) None
(8) CUSTODIAN AGREEMENT
(a) Custodian Agreement between Registrant and The Bank of New
York, dated November 11, 1994 is filed herewith
electronically.
(9) OTHER MATERIAL CONTRACTS:
(a)(i) Amendment dated February 23, 1996, to Shareholder Services
Agreement dated January 19, 1994 between Registrant and FPS
Services, Inc. is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (9)(a)(i) to
Item 24 as electronically filed on April 26, 1996.
(a)(ii) Shareholder Services Agreement dated January 19, 1994
between Registrant and FPS Services, Inc. is
incorporated herein by reference to Post Effective Amendment
No. 4 as Exhibit No. 99 (9)(a)(ii) to Item 24 as
electronically filed on April 26, 1997.
(b)(i) Amendment dated February 23, 1996, to Administration
Agreement dated January 19, 1994 between Registrant and FPS
Services, Inc. is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (9)(b)(i) to
Item 24 as electronically filed on April 26, 1996.
(b)(ii) Administration Agreement dated January 19, 1994 between
Registrant and FPS Services, Inc. is filed
incorporated herein by reference to Post Effective Amendment
No. 4 as Exhibit No. 99 (9)(b)(ii) to Item 24 as
electronically filed on April 26, 1996.
(c) Accounting Services Agreement dated February 23, 1996
between Registrant and FPS Services, Inc. is incorporated
herein by reference to Post Effective Amendment No. 4 as
Exhibit No. 99 (9)(c) to Item 24 as electronically filed on
April 26, 1996.
(d)(i) Amendment dated May 1, 1996 to Administrative Agreement
dated January 19, 1994 between Registrant and Covenant
Financial Management, Inc. is incorporated herein by
<PAGE>
reference to Post Effective Amendment No. 4 as Exhibit No.
99 (9)(d)(i) to Item 24 as electronically filed on April 26,
1996.
(d)(ii) Administrative Agreement dated January 19, 1994 between
Registrant and Covenant Financial Management, Inc. is
incorporated herein by reference to Post Effective Amendment
No. 4 as Exhibit No. 99 (9)(d)(ii) to Item 24 as
electronically filed on April 26, 1996.
(10) OPINION AND CONSENT OF COUNSEL AS TO THE LEGALITY OF THE SECURITIES
TO BE ISSUED:
(a) To be filed by the Registrant on a yearly basis along with
its Rule 24f-2 Notice.
(11) CONSENTS
(a) Consent of Tait, Weller & Baker is filed herewith
electronically.
(12) None.
(13) LETTERS OF UNDERSTANDING RELATING TO INITIAL CAPITAL:
(a) Investment letters between the Registrant and Phillis B.
Crosby, Michael J. Demaray, Thomas J. Snyder, William R.
Cadle, Bernice I. Cradle, Mary A. Gibson, Delbert E. Rich,
Gwynn M. Reel, Charles E. Davis, Gregory Tighe and Frank
Salerno are incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (13) to Item 24
as electronically filed on April 26, 1996.
(14) MODEL PLANS:
(a) Form of 403(b)(7) Retirement Plan is filed herewith
electronically, previously filed as exhibit (14)(a) of
Post-Effective No. 1 of the Registrant's Registration
Statement on Form N-1A, filed on September 21, 1994.
(b) Form of Individual Retirement Account (I.R.A.) is
incorporated herein by reference to Post Effective Amendment
No. 4 as Exhibit No. 99 (14)(b) to Item 24 as electronically
filed on April 26, 1996.
(15) PLANS UNDER 12b-1:
(a) Distribution Plan dated February 10, 1996, on behalf of
Institutional Class shares is incorporated herein by
reference to Post Effective Amendment No. 4 as Exhibit No.
99 (15)(a) to Item 24 as electronically filed on April 26,
1996.
(b) Distribution Plan dated February 10, 1996, on behalf of the
Retail shares is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (15)(b) to Item
24 as electronically filed on April 26, 1996.
(c) Shareholder Services Agreement dated January 1, 1996 between
Timothy Partners, Ltd. and FPS Broker Services, Inc. on
behalf of the Institutional Class shares is incorporated
herein by reference to Post Effective Amendment No. 4 as
Exhibit No. 99 (15)(c) to Item 24 as electronically filed on
April 26, 1996.
(d) Shareholder Services Agreement dated January 1, 1996 between
Timothy Partners, Ltd. and FPS Broker Services,
Inc. on behalf of the Retail Class shares is incorporated
herein by reference to Post Effective Amendment No. 4 as
Exhibit No. 99
<PAGE>
(15)(d) to Item 24 as electronically filed on April 26,
1996.
(16) Schedule of Computations of Performance Quotations herewith
electronically incorporated herein by reference to Post Effective
Amendment No. 4 as Exhibit No. 99 (16) to Item 24 as electronically
filed on April 26, 1996..
(18) Multiple Class plan is incorporated herein by reference to Post
Effective Amendment No. 4 as Exhibit No. 99 (18) to Item 24 as
electronically filed on April 26, 1996.
(19) Powers of Attorney are filed herewith electronically.
(27) Financial Data Schedule is filed herewith electronically.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
- -----------------------------------------------------------------------
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
- -----------------------------------------
<TABLE>
<CAPTION>
Number of Record Holders
TITLE OF CLASS as of February 10, 1997
--------------
<S> <C>
Institutional Class Common Stock, 1151
par value $0.001 per share
Retail Class Common Stock, 586
par value $0.001 per share
</TABLE>
ITEM 27. INDEMNIFICATION.
- --------------------------
Under the terms of the Delaware Business Trust Act and the Registrant's
Agreement and Declaration of Trust and By-Laws, no officer or Trustee of the
Fund shall have any liability to the Fund or its shareholders for damages,
except to the extent such limitation of liability is precluded by Delaware law,
the Agreement and Declaration of Trust, or the By-Laws.
The Delaware Business Trust Act, section 3817, permits a business trust to
indemnify any Trustee, beneficial owner, or other person from and against any
claims and demands whatsoever. Section 3803 protects a Trustee, when acting in
such capacity, from liability to any person other than the business trust or
beneficial owner for any act, omission, or obligation of the business trust or
any Trustee thereof, except as otherwise provided in the Agreement and
Declaration of Trust.
The Agreement and Declaration of Trust provides that the Trustees shall not be
liable for any neglect or wrong-doing of any officer, agent, employee, manager
or underwriter of the Fund, nor shall any Trustee be responsible for the act or
By-Laws, the Fund may indemnify to the fullest extent each Trustee and officer
of the Fund acting in such capacity, except each Trustee and officer of the Fund
acting in such capacity, except as otherwise provided in the Agreement and
Declaration of Trust.
The Agreement and Declaration of Trust provides that the Trustees shall not be
liable for any neglect or wrong-doing of any officer, agent, employee, manager
or underwriter of the Fund, nor shall any Trustee be responsible for the act or
omission of any other Trustee. Subject to the provisions of ;the By-Laws, the
Fund may indemnify to the fullest extent each Trustee and officer of the Fund
acting in such capacity, except that no provision in the Agreement and
Declaration of Trust shall be effective to protect or purport to protect and
indemnify any Trustee or officer of the Fund from or against any liability to
the Fund or any shareholder to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The By-Laws provide indemnification for each Trustee and officer who is a party
or is threatened to be made a party to any proceeding, by reason of service in
such capacity, to the fullest extent, if it is determined that Trustee or
officer acted in good faith and reasonably believed: (a) in the case of conduct
in his official capacity as an agent of
<PAGE>
the Fund, that his conduct was in the Fund's best interests and (b) in all other
cases, that his conduct was at least not opposed to the Fund's best interests
and (c) in the case of a criminal proceeding, that he had no reasonable cause to
believe the conduct of that person was unlawful. However, there shall be no
indemnification for any liability arising by reason of willful misfeasance, bad
faith, gross negligence, or the reckless disregard of the duties involved in the
conduct of the Trustee's or officer's office. Further, no indemnification shall
be made:
(a) In respect of any proceeding as to which any Trustee or officer of the Fund
shall have been adjudged to be liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted from an
action taken in the person's official capacity; or
(b) In respect of any proceeding as to which any Trustee or officer of the Fund
shall have been adjudged to be liable in the performance of that person's
duty to the Fund, unless and only to the extent that the court in which
that action was brought shall determine upon application that in view of
all the relevant circumstances of the case, that person is fairly and
reasonably entitled to indemnity for the expenses which the court shall
determine; however, in such case, indemnification with respect to any
proceeding by or in the right of the Fund or in which liability shall have
been adjudged by reason of the disabling conduct set forth in the preceding
paragraph shall be limited to expenses; or
(c) Of amounts paid in settling or otherwise disposing of a proceeding, with or
without court approval, or of expenses incurred in defending a proceeding
which is settled or otherwise disposed of without court approval, unless
the required court approval set forth in the By-Laws is obtained.
In any event, the Fund shall indemnify each officer and Trustee against
reasonable expenses incurred in connection with the successful defense of any
proceeding to which each such officer or Trustee is a party by reason of service
in such Capacity, provided that the Board of Trustees, including a majority who
are disinterested, non-party Trustees, also determines that such officer or
Trustee was not liable by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his or her duties or office. The Fund
shall advance to each officer and Trustee who is made a party to the proceeding
by reason of service in such capacity the expenses incurred by such person in
connection therewith, if (a) the officer or Trustee affirms in writing that his
good faith belief that he has met the standard of conduct necessary for
indemnification, and gives a written undertaking to repay the amount of advance
if it is ultimately determined that he has not met those requirements, and (b) a
determination that the facts then known to those making the determination would
not preclude indemnification.
The Trustees and officers of the Fund are entitled and empowered under the
Declaration of Trust and By-Laws, to the fullest extent permitted by law, to
purchase errors and omissions liability insurance with assets of the Fund,
whether or not the fund would have the power to indemnify him against such
liability under the Declaration of Trust or By-Laws.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers, the underwriter or control persons
of the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable. See also Item 32.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF ADVISOR.
- ----------------------------------------------------
Timothy Partners, Ltd. ("Advisor") serves as investment advisor of the Fund.
The following persons serving as directors or officers of the Advisor have held
the following positions with the Advisor for the past two years.
<TABLE>
<CAPTION>
Position and Positions with
Name and Offices with Offices with
Business Address Timothy Partners, Ltd. the Registrant
---------------- ---------------------- --------------
<S> <C> <C>
Arthur D. Ally President of Covenant President and
Fund, Inc.; Managing Trustee
General Partner of
Timothy Partners, Ltd.
and Individual General
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Partner of Timothy Partners, Ltd.
</TABLE>
Covenant Financial Management, Inc. is a marketing/consulting firm owned by
Arthur Ally that will render consulting advise to the Advisor with regard to
marketing plans to be employed to target potential investor groups that might be
interested in investing in the Fund because of its investment objectives and
criteria.
ITEM 29. PRINCIPAL UNDERWRITER.
- -------------------------------
(a) Fund/Plan FPS Broker Services, Inc. ("FPSB"), the principal
underwriter for the Registrant's securities, currently acts as
principal underwriter for the following entities:
Bjurman Funds
CT&T Funds
Farrell Alpha Strategies
Focus Trust, Inc.
IAA Trust Mutual Funds
Matthews International
McM Funds
Polynous Trust
Sage\Tso Trust
Smith Breeden Series Fund
Smith Breeden Short Duration U.S. Government Fund
Smith Breeden Trust
The Stratton Funds, Inc.
Stratton Growth Fund, Inc.
Stratton Monthly Dividend Shares, Inc.
Trainer, Wortham First Mutual Funds
(b) The table below sets forth certain information as to the
Underwriter's Directors, Officers and Control Persons:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address with Underwriter with Registrant
- ------------------ -------------------- --------------------
<S> <C> <C>
Kenneth J. Kempf Director and None
3200 Horizon Drive President
King of Prussia, PA 19406-0903
Conshohocken, PA 19428-0874
Lynne Cannon Senior Vice None Director
3200 Horizon Drive President and Principal
King of Prussia, PA 19406-0903
Conshohocken, PA 19428-0874
Rocco J. Cavalieri Director and None
3200 Horizon Drive Vice President
King of Prussia, PA 19406-0903
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Gerald J. Holland Director, and None
3200 Horizon Drive Senior Vice President
King of Prussia, PA 19406-0903 and Principal
Joseph M. O'Donnell, Esq. Director and None
3200 Horizon Drive Vice President
King of Prussia, PA 19406-0903
Sandra L. Adams Assistant Vice President None
3200 Horizon Drive and Principal
King of Prussia, PA 19406-0903
John H. Leven Treasurer None
3200 Horizon Drive
King of Prussia, PA 19406-0903
Mary P. Efstration Secretary None
3200 Horizon Drive
King of Prussia, PA 19406-0903
Bruno DiStefano Principal None
3200 Horizon Drive
King of Prussia, PA 19406-0903
</TABLE>
James W. Stratton may be considered a control person of the Underwriter due to
his direct or indirect ownership of FPS Services, Inc., the parent of the
Underwriter.
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
- -------------------------------------------
Each account, book or other document required to be maintained by Section 31(a)
of the 1940 Act and Rules 17 CFR 270.31a-1 to 31a-3 promulgated thereunder, is
maintained by the Fund at 1304 West Fairbanks Avenue, Winter Park, Florida
32789, except for those maintained by the Fund's Custodian, The Bank of New
York, 48 Wall Street, New York, New York 10286, and the Fund's Administrator,
Transfer, Redemption and Dividend Disbursing Agent and Accounting Services
Agent, FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of
Prussia, PA 19406-0903.
ITEM 31. MANAGEMENT SERVICES.
- ------------------------------
Not applicable.
ITEM 32. UNDERTAKINGS.
- -----------------------
(a) Inapplicable.
(b) Inapplicable.
(c) The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the
<PAGE>
respective latest annual report to shareholders, upon request and without
charge.
(d) The Registrant hereby undertakes to promptly call a meeting of shareholders
for the purpose of voting upon the question of removal of any Trustee when
requested in writing to do so by the record holders of not less than 10 percent
of the Registrant's outstanding shares and to assist its shareholders in
accordance with the requirements of Section 16(c) of the Investment Company Act
of 1940, as amended relating to shareholder communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant hereby certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No. 5
to its Registration Statement pursuant to Rule 485(a) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment No. 4 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in Winter Park, State of Florida, on the 26th day of February
1997 6.
THE TIMOTHY PLAN
By: /s/ Arthur D. Ally
--------------------------------------
Arthur D. Ally, President & Trustee
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 5 to the Registrant's Registration Statement has been signed below
by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Arthur D. Ally* President and Trustee February 26, 1997
- -------------------
/s/ Joseph E. Boatwright* Secretary and Trustee February 26, 1997
- -------------------------
/s/ Wesley Pennington* Treasurer and Trustee February 26, 1997
/s/ Mark Schweizer* Trustee February 26, 1997
- -------------------
/s/ Jock M. Sneddon* Trustee February 26, 1997
/s/ Philip B. Crosby* Trustee February 26, 1997
/s/ Daniel D. Busby* Trustee February 26, 1997
</TABLE>
*By: /s/ Gretchen B. Zepernick
-------------------------
Gretchen B. Zepernick, as Attorney-in-Fact & Agent, pursuant to Power of
Attorney
<PAGE>
INDEX TO EXHIBITS ON FORM N-1A
EXHIBIT
99B5(b)(ii) Sub-Investment Advisory Agreement
99B8(a) Custody Agreement
99B11(a) Auditors Consent
99B14(a) Form of 403(b)(7) Retirement Plan
99B19 Powers of Attorney
99B27(a) Financial Data Schedule-Institutional Class
99B27(b) Financial Data Schedule-Retail Class
<PAGE>
EXHIBIT 99B5(II)
SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN
TIMOTHY PARTNERS, LTD.
AND
AWAD & ASSOCIATES
SUB-INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this 1st day of
January , 1997, by and between TIMOTHY PARTNERS, LTD. (hereinafter referred to
as the "Investment Adviser") and AWAD & ASSOCIATES, a division of Raymond James
& Associates (hereinafter referred to as the "Investment Manager"), which
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute but one
instrument.
WITNESSETH:
----------
WHEREAS, the General Partners (the "Partners") of the Investment Adviser
wish to enter into a contract with the Investment Manager to render the
Investment Adviser the following services:
To furnish research, analysis, advice and recommendations with respect to
the purchase and sale of securities and the making of investment commitments by
the Investment Adviser regarding assets of The Timothy Plan (hereinafter
-----------------
referred to as the "Fund") subject to oversight by the Board of Trustees of the
Fund and the supervision of the Investment Adviser.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and intending to be bound, the parties agree as follows:
1. As compensation for the services enumerated above, the Investment
Adviser will pay the Investment Manager an annual fee, which fee shall be
payable monthly.
The amount of such fee shall equal 0.42% of the average daily net
assets of the Fund with respect to 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.
2. This Agreement shall become effective as of the date first above
written, subject to the approval of the shareholders of the Fund in accordance
with the provisions of the Investment Company Act of 1940 (the "Act").
3. This Agreement shall continue for a period ending two years from
its effective date. It may be renewed thereafter by the Investment Adviser and
the Investment Manager for successive periods not exceeding one year only so
long as such renewal and continuance is specifically approved at least annually
by the Fund's Board of Trustees or by a vote of the majority of the outstanding
voting securities of the Fund as prescribed by the Act and
<PAGE>
provided further that such continuance is approved at least annually thereafter
by a vote of a majority of the Fund's Trustees, who are not parties to such
Agreement or interested persons of such a party, cast in person at a meeting
called for the purpose of voting on such approval. This Agreement will terminate
automatically without the payment of any penalty upon termination of the
Investment Advisory Agreement or upon sixty days' written notice by the Fund to
the Investment Manager that the Trustees or the shareholders by vote of a
majority of the outstanding voting securities of the Fund, as provided by the
Act, has terminated the Investment Advisory Agreement. This Agreement may also
be terminated by the Investment Manager without penalty upon sixty days' written
notice to the Fund.
This Agreement shall terminate automatically in the event of its
assignment or the assignment of the Investment Advisory Agreement.
4. Subject to the supervision of the Board of Trustees of the Fund
and the Investment Adviser, the Investment Manager will provide recommendations
for a continuous investment program for the Fund, including investment research
and management with respect to securities and investments, including cash and
cash equivalents in the Fund. The Investment Manager will recommend to the
Investment Adviser from time to time what securities and other investments
should be purchased, retained or sold by the Fund. The Investment Manager will
provide the services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the Prospectus. The
Investment Manager further agrees that it:
a. will conform with all applicable Rules and Regulations of
the SEC and will, in addition, conduct its activities under this Agreement in
accordance with regulations of any other Federal or State agencies which now has
or in the future will have jurisdiction over its activities;
b. will recommend placement of orders pursuant to its
investment determinations for the Fund either directly with any broker or
dealer, or with the issuer. In recommending placement of orders with brokers or
dealers, the Investment Manager will attempt to assist the Investment Adviser to
obtain the best net price and the most favorable execution of its orders.
Consistent with this obligation, when the execution and price offered by two or
more brokers or dealers are comparable, the Investment Manager has been advised
that the Fund has authorized the Investment Adviser, in its discretion, to
purchase and sell securities to and from brokers and dealers who promote the
sale of Fund shares. In no instance will securities be purchased from or sold to
the Investment Manager or any affiliated person of the Investment Manager as
principal. Notwithstanding the foregoing sentence, the Investment Manager may
arrange for the execution of brokered transactions through an affiliated broker
dealer in conformity with policies and procedures for such purpose if, when, and
as established by the Trustees of the Fund.
c. will provide, at its own cost, all office space and
facilities necessary to furnish the foregoing services to be provided by the
Investment Manager of the Fund.
<PAGE>
5. It is expressly understood and agreed that the services to be
rendered by the Investment Manager to the Investment Adviser under the
provisions of this Agreement are not to be deemed to be exclusive, and the
Investment Manager 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 materially impaired thereby, and provided further that
the services to be rendered by the Investment Manager to the Investment Adviser
under this Agreement and the compensation provided for in Paragraph 1 hereof
shall be limited solely to services with reference to the Fund.
6. The Investment Adviser agrees that it will furnish currently to
the Investment Manager all information reasonably necessary to permit the
Investment Manager to give the advice called for under this Agreement and such
information with reference to the Fund that is reasonably necessary to permit
the Investment Manager to carry out its responsibilities under this Agreement,
and the parties agree that they will from time to time consult and make
appropriate arrangements as to specific information that is required under this
paragraph and the frequency and manner with which it shall be supplied.
7. The Investment Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Investment Adviser or
the Fund in connection with any matters to which this Agreement relates except
that nothing herein contained shall be construed to protect the Investment
Manager against any liability by reason of the Investment Manager's willful
misfeasance, bad faith, or gross negligence in the performance of its duties or
by reckless disregard of its obligations or duties under this Agreement.
8. In compliance with the provisions of the Investment Advisory
Agreement between the Fund and the Investment Adviser, the Investment Manager
agrees with the Investment Adviser that, subject to the terms and conditions of
this Paragraph 9, the Fund may use the name "Timothy" in, or as a portion of,
its name so long as the Investment Adviser, or any successor in interest,
continues as the Investment Adviser. Should the Fund terminate the Investment
Adviser or any successor in interest, or if the Investment Adviser shall give
notice of termination of the Investment Advisory Agreement, then the Investment
Adviser may elect to notify the Fund in writing that permission to use the name
"Timothy" has been withdrawn. It is understood that the Fund has, in its
Investment Advisory Agreement, expressly agreed that it, its Officers, Trustees
and Shareholders upon receipt of such notice, will take all necessary action and
proceed expeditiously to change the name of the Fund and not use any other name
or take any action which would indicate the Fund's continued association with
the Investment Adviser. If the use of the name "Timothy" is so withdrawn as
aforesaid, it is understood and agreed that there shall be no limitation with
respect to the future use of the name "Timothy" by the Investment Adviser or its
successor in interest.
9. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
applying the principles of conflicts of law thereunder.
<PAGE>
10. Any notice to be given hereunder may be given by personal
notification or by first class mail, postage prepaid, to the party specified at
the address stated below:
a. To the Investment Adviser at:
----------------------------
Timothy Partners, Ltd.
1304 West Fairbanks Avenue
Winter Park, FL 32789
Attn: Arthur D. Ally
b. To the Investment Manager at:
----------------------------
Awad and Associates
477 Madison Ave 16th Floor
New York, NY 10022
Attn: James Awad
c. To the Fund at:
--------------
The Timothy Plan
1304 West Fairbanks Avenue
Winter Park, FL 32789
Attn: Arthur D. Ally
d. With copies to:
--------------
Joseph V. Del Raso, Esquire
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
ATTEST: THE TIMOTHY PLAN
_________________________ By:__________________________
ATTEST: TIMOTHY PARTNERS, LTD.
By: COVENANT FUNDS, INC.
Managing General Partner
_________________________ By:__________________________
ATTEST: AWAD & ASSOCIATES
_________________________ By:__________________________
<PAGE>
EXHIBIT 99.B.8.A
CUSTODY AGREEMENT
Agreement made as of this day of , 199 ,
between The Timothy Plan, a Delaware business trust organized and existing under
the laws of the State of Delaware, having its principal office and place of
business at 1304 West Fairbanks Avenue, Winter Park Florida 32789 (hereinafter
called the "Fund"), and THE BANK OF NEW YORK, a New York corporation authorized
to do a banking business, having its principal office and place of business at
48 Wall Street, New York, New York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H :
WHEREAS, the Fund represents that pursuant to the Custody
Administration and Agency Agreement between Fund/Plan Services, Inc.
("Fund/Plan") and the Fund, Fund/Plan (a) has agreed to perform certain
administrative functions which may include the functions of administrator,
transfer agent and accounting services agent and (b) has been appointed by the
Fund to act as its agent in respect of certain transactions contemplated in this
Agreement; and
WHEREAS, the Fund represents that (a) Fund/Plan has agreed to act as
Fund's agent in respect of certain transactions contemplated in this Agreement
and (b) the Bank is authorized and directed to rely upon and follow Certificates
and instructions given by Fund/Plan, the Fund's agent, in respect of
transactions contemplated in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Administrator" shall mean Fund/Plan Services, Inc. and such
successors or permitted assigns as may succeed and perform its duties under the
Administration Agreement.
2. "Administration Agreement" shall mean that certain separate
agreement entitled "Custody Administration and Agency Agreement" dated as of
_______________, 199 between the Fund and the Fund/Plan Services, Inc.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
4. "Call Option" shall mean an exchange traded option with respect
to Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
5. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian which is actually received by the Custodian and signed on behalf
of the Fund by any two Officers, and the term Certificate shall also include
instructions communicated to the Custodian by the Administrator by Terminal
Link.
6. "Clearing Member" shall mean a registered broker-dealer which is
a clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment company,
or any broker-dealer reasonably believed by the Custodian to be such a clearing
member.
<PAGE>
7. "Collateral Account" shall mean a segregated accountso
denominated which is specifically allocated to a Series and pledged to the
Custodian as security for, and in of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII herein.
8. "Covered Call Option" shall mean an exchange traded option
entitling the holder, upon timely exercise and payment of the exercise price, as
specified therein, to purchase from the writer thereof the specified underlying
Securities (excluding Futures Contracts) which are owned by the writer thereof
and subject to appropriate restrictions.
9. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities andExchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board of Trustees specifically approving deposits therein by the
Custodian.
10. "Financial Futures Contract" shall mean the firm commitment to
buy or sell fixed income securities including, without limitation, U.S. Treasury
Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of
deposit, and Eurodollar certificates of deposit, during a specified month at an
agreed upon price.
11. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
12. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
13. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.
14. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United States
or agencies or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority, commercial
paper, certificates of deposit and bankers' acceptances, repurchase agreements
with respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale.
15. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
16. "Officers" shall be deemed to include the President any Vice
President, the Secretary, the Clerk, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Clerk, any Assistant Treasurer, and any other
person or persons, including officers or employees of the Administrator, whether
or not any such other person is an officer of the Fund, duly authorized by the
Board of Trustees of the Fund to execute any Certificate, instruction, notice or
other instrument on behalf of the Fund and listed in the Certificate annexed
hereto as Appendix A or such other Certificate as may be received by the
Custodian from time to time.
<PAGE>
17. "Option" shall mean a Call Option, Covered Call Option, Stock
Index Option and/or a Put Option.
18. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Officer or from a person reasonably believed
by the Custodian to be an Officer.
19. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
20. "Reverse Repurchase Agreement" shall mean an agreement pursuant
to which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
21. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements,
common stocks and other securities having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities, (including, without limitation, general
obligation bonds, revenue bonds, industrial bonds and industrial development
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or assets.
22. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.
23. "Series" shall mean the various portfolios, if any, of the Fund
as described from time to time in the current and effective prospectus for the
Fund and listed on Appendix B hereto as amended from time to time.
24. "Shares" shall mean the shares of beneficial interest of the
Fund, each of which is, in the case of a Fund having Series, allocated to a
particular Series.
25. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
26. "Stock Index Option" shall mean an exchange traded option
entitling the holder, upon timely exercise, to receive an amount of cash
determined by reference to the difference between the exercise price and the
value of the index on the date of exercise.
26. "Terminal Link" shall mean an electronic data transmission link
between the Administrator on behalf of the Fund and the Custodian requiring in
connection with each use of the Terminal Link by or on behalf of the
Administrator on behalf of the Fund use of an authorization code provided by the
Custodian and at least two access codes established by the Administrator on
behalf of the Fund.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at
<PAGE>
any time owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all moneys owned by it, at any time during the period of this
Agreement, and shall specify with respect to such Securities and money the
Series to which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate and apart. The
Custodian will not be responsible for any Securities and moneys not actually
received by it. The Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously made and moneys are
not finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the Custodian on a
continuous and on-going basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities and deliveries and returns of Securities collateral. Prior
to a deposit of Securities specifically allocated to a Series in the Depository,
the Fund shall deliver to the Custodian a certified resolution of the Board of
Trustees of the Fund, substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities specifically allocated to
such Series eligible for deposit therein, and to utilize the Depository to the
extent possible with respect to such Securities in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys deposited
in either the Book-Entry System or the Depository will be represented in
accounts which include only assets held by the Custodian for customers,
including, but not limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity and will be specifically allocated on the
Custodian's books to the separate account for the applicable Series. Prior to
the Custodian's accepting, utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options for a Series as provided
in this Agreement, the Custodian shall have received a certified resolution of
the Fund's Board of Trustees, substantially in the form of Exhibit C hereto,
approving, authorizing and instructing the Custodian on a continuous and on-
going basis, until instructed to the contrary by a Certificate actually received
by the Custodian, to accept, utilize and act in accordance with such
confirmations as provided in this Agreement with respect to such Series.
2. The Custodian shall establish and maintain separate accounts, in
the name of each Series, and shall credit to the separate account for each
Series all moneys received by it for the account of the Fund with respect to
such Series. Money credited to a separate account for a Series shall be
disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and address
of the person to whom the payment is to be made, the Series account from which
payment is to be made and the purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the expenses
and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Administrator with confirmations and a summary, on a per
Series basis, of all transfers to or from the account of the Fund for a Series,
either hereunder or with any co-custodian or sub-custodian appointed in
accordance with this Agreement
<PAGE>
during said day. Where Securities are transferred to the account of the Fund for
a Series, the Custodian shall also by book-entry or otherwise identify as
belonging to such Series a quantity of Securities in a fundian (or its nominee)
or shown on the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian shall furnish
the Administrator with a detailed statement, on a per Series basis, of the
Securities and moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are held in
the Book-Entry System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the Fund, in the name
of any duly appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or nominees. The
Fund agrees to furnish or cause to be furnished to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee or in the name of
the Book-Entry System or the Depository any Securities which it may hold
hereunder and which may from time to time be registered in the name of the Fund.
The Custodian shall hold all such Securities specifically allocated to a Series
which are not held in the Book-Entry System or in the Depository in a separate
account in the name of such Series physically segregated at all times from those
of any other person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by itself,
or through the use of the Book-Entry System or the Depository with respect to
Securities held hereunder and therein deposited, shall with respect to all
Securities held for the Fund hereunder in accordance with preceding paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may beamended at
any time by the Custodian without the prior notification or consent of the Fund;
(c) Present for payment and collect the amount payable upon all
Securities which mature;
(d) Surrender Securities in temporary form for definitive
Securities;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of a
Series, all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities held by the
Custodian hereunder for the Series specified in such Certificate may be
exercised;
(b) Deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities received in
exchange;
<PAGE>
(c) Deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold hereunder specifically allocated to such
Series such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Series
specified in such Certificate, and take such other steps as shall be stated in
such Certificate to be for the purpose of effectuating any duly authorized plan
of liquidation, reorganization, merger, consolidation or recapitalization of the
Fund; and
(e) Present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a Certificate no later
than the business day preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall comply with Section
17(f) of the Investment Company Act of 1940, as amended, in connection with the
purchase, sale, settlement, closing out or writing of Futures Contracts,
Options, or Futures Contract Options by making payments or deliveries specified
in Certificates received by the Custodian in connection with any such purchase,
sale, writing, settlement or closing out upon its receipt from a broker, dealer,
or futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures Contracts,
Options, or Futures Contract Options, as the case may be, confirming that such
Security is held by such broker, dealer or futures commission merchant, in book-
entry form or otherwise, in the name of the Custodian (or any nominee of the
Custodian) as custodian for the Fund, provided, however, that notwithstanding
the foregoing, payments to or deliveries from the Margin Account and payments
with respect to Securities to which a Margin Account relates, shall be made in
accordance with the terms and conditions of the Margin Account Agreement.
Whenever any such instruments or certificates are available, the Custodian
shall, notwithstanding any provision in this Agreement to the contrary, make
payment for any Futures Contract, Option, or Futures Contract Option for which
such instruments or such certificates are available only against the delivery to
the Custodian of such instrument or such certificate, and deliver any Futures
Contract, Option or Futures Contract Option for which such instruments or such
certificates are available only against receipt by the Custodian of payment
therefor. Any such instrument or certificate delivered to the Custodian shall be
held by the Custodian hereunder in accordance with, and subject to, the
provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other
than a purchase of an Option, a Futures Contract, or a Futures Contract Option,
the Fund shall deliver or cause the Administrator to deliver to the Custodian
(i) with respect to each purchase of Securities which are not Money Market
Securities, a Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate or Oral Instructions, specifying with respect
to each such purchase: (a) the Series to which such Securities are to be
specifically allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount purchased and
accrued interest, if any; (d) the date of purchase and settlement; (e) the
purchase price per unit; (f) the total amount payable upon such purchase; (g)
the name of the person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (h) the name of the
broker to whom payment is to be made. The Custodian shall, upon receipt of
Securities purchased by or for the Fund, pay to the broker specified in the
Certificate out of the moneys held for the account of such Series the total
amount payable upon such purchase, provided that the same conforms to the total
amount payable as set forth in
<PAGE>
such Certificate or Oral Instructions.
2. Promptly after each sale of Securities by the Fund, other than a
sale of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver or cause the Administrator to
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, a Certificate, and (ii) with respect to each sale
of Money Market Securities, a Certificate or Oral Instructions, specifying with
respect to each such sale: (a) the Series to which such Securities were
specifically allocated; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold, and accrued
interest, if any; (d) the date of sale; (e) the sale price per unit; (f) the
total amount payable to the Fund upon such sale; (g) the name of the broker
through whom or the person to whom the sale was made, and the name of the
clearing broker, if any; and (h) the name of the broker to whom the Securities
are to be delivered. The Custodian shall deliver the Securities specifically
allocated to such Series to the broker specified in the Certificate against
payment upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate or Oral Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to each Option purchased: (a) the Series to
which such Option is specifically allocated; (b) the type of Option (put or
call); (c) the name of the issuer and the title and number of shares subject to
such Option or, in the case of a Stock Index Option, the stock index to which
such Option relates and the number of Stock Index Options purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the total amount payable by the Fund in connection with such
purchase; (h) the name of the Clearing Member through whom such Option was
purchased; and (i) the name of the broker to whom payment is to be made. The
Custodian shall pay, upon receipt of a Clearing Member's statement confirming
the purchase of such Option held by such Clearing Member for the account of the
Custodian (or any duly appointed and registered nominee of the Custodian) as
custodian for the Fund, out of moneys held for the account of the Series to
which such Option is to be specifically allocated, the total amount payable upon
such purchase to the Clearing Member through whom the purchase was made,
provided that the same conforms to the total amount payable as set forth in such
Certificate.
2. Promptly after the sale of any Option purchased by the Fund
pursuant to paragraph 1 hereof, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to each such sale: (a) the Series to which such Option was specifically
allocated; (b) the type of Option (put or call); (c) the name of the issuer and
the title and number of shares subject to such Option or, in the case of a Stock
Index Option, the stock index to which such Option relates and the number of
Stock Index Options sold; (d) the date of sale; (e) the sale price; (f) the date
of settlement; (g) the total amount payable to the Fund upon such sale; and (h)
the name of the Clearing Member through whom the sale was made. The Custodian
shall consent to the delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding paragraph 1 of this
Article with respect to such Option against payment to the Custodian of the
total amount payable to the Fund, provided that the same conforms to the total
amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Call Option: (a) the Series to which such Call Option was
specifically allocated; (b) the name of the issuer and the title and number of
shares subject to the Call Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total amount
to be paid by the Fund upon such exercise; and (g) the name of the Clearing
Member through whom such Call Option was exercised. The Custodian shall, upon
receipt of the Securities underlying the Call Option which was exercised, pay
out of the moneys held for the account of the Series to which such Call Option
was specifically allocated the total amount payable to the Clearing Member
through whom the Call Option was exercised, provided that the same conforms to
the total amount payable as set forth in such Certificate.
<PAGE>
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series to which such Put Option was
specifically allocated; (b) the name of the issuer and the title and number of
shares subject to the Put Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total amount
to be paid to the Fund upon such exercise; and (g) the name of the Clearing
Member through whom such Put Option was exercised. The Custodian shall, upon
receipt of the amount payable upon the exercise of the Put Option, deliver or
direct the Depository to deliver the Securities specifically allocated to such
Series, provided the same conforms to the amount payable to the Fund as set
forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series to which such Stock
Index Option was specifically allocated; (b) the type of Stock Index Option (put
or call); (c) the number of Options being exercised; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the exercise price; (g)
the total amount to be received by the Fund in connection with such exercise;
and (h) the Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the Series for which
such Covered Call Option was written; (b) the name of the issuer and the title
and number of shares for which the Covered Call Option was written and which
underlie the same; (c) the expiration date; (d) the exercise price; (e) the
premium to be received by the Fund; (f) the date such Covered Call Option was
written; and (g) the name of the Clearing Member through whom the premium is to
be received. The Custodian shall deliver or cause to be delivered, in exchange
for receipt of the premium specified in the Certificate with respect to such
Covered Call Option, such receipts as are required in accordance with the
customs prevailing among Clearing Members dealing in Covered Call Options and
shall impose, or direct the Depository to impose, upon the underlying Securities
specified in the Certificate specifically allocated to such Series such
restrictions as may be required by such receipts. Notwithstanding the foregoing,
the Custodian has the right, upon prior written notification to the Fund, at any
time to refuse to issue any receipts for Securities in the possession of the
Custodian and not deposited with the Depository underlying a Covered Call
Option.
7. Whenever a Covered Call Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall deliver
or cause the Administrator to deliver to the Custodian a Certificate instructing
the Custodian to deliver, or to direct the Depository to deliver, the Securities
subject to such Covered Call Option and specifying: (a) the Series for which
such Covered Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the Clearing Member
to whom the underlying Securities are to be delivered; and (d) the total amount
payable to the Fund upon such delivery. Upon the return and/or cancellation of
any receipts delivered pursuant to paragraph 6 of this Article, the Custodian
shall deliver, or direct the Depository to deliver, the underlying Securities as
specified in the Certificate against payment of the amount to be received as set
forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series for which such Put Option was
written; (b) the name of the issuer and the title and number of shares for which
the Put Option is written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f) the date
such Put Option is written; (g) the name of the Clearing Member through whom the
premium is to be received and to whom a Put Option guarantee letter is to be
delivered; (h) the amount of cash, and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; and (i) the amount of cash and/or the amount
and kind of Securities specifically allocated to such Series to be deposited
into the Collateral Account for such Series. The Custodian shall, after making
the deposits into the Collateral Account specified in the Certificate, issue a
Put Option guarantee letter substantially in the form utilized by the Custodian
on the date hereof, and deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium
<PAGE>
specified in said Certificate. Notwithstanding the foregoing, the Custodian
shall be under no obligation to issue any Put Option guarantee letter or similar
document if it is unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying: (a) the
Series to which such Put Option was written; (b) the name of the issuer and
title and number of shares subject to the Put Option; (c) the Clearing Member
from whom the underlying Securities are to be received; (d) the total amount
payable by the Fund upon such delivery; (e) the amount of cash and/or the amount
and kind of Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of cash and/or
the amount and kind of Securities, specifically allocated to such Series, if
any, to be withdrawn from the Senior Security Account. Upon the return and/or
cancellation of any Put Option guarantee letter or similar document issued by
the Custodian in connection with such Put Option, the Custodian shall pay out of
the moneys held for the account of the Series to which such Put Option was
specifically allocated the total amount payable to the Clearing Member specified
in the Certificate as set forth in such Certificate against delivery of such
Securities, and shall make the withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the Series for which
such Stock Index Option was written; (b) whether such Stock Index Option is a
put or a call; (c) the number of options written; (d) the stock index to which
such Option relates; (e) the expiration date; (f) the exercise price; (g) the
Clearing Member through whom such Option was written; (h) the premium to be
received by the Fund; (i) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be deposited in the
Senior Security Account for such Series; (j) the amount of cash and/or the
amount and kind of Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and (k) the amount of
cash and/or the amount and kind of Securities, if any, specifically allocated to
such Series to be deposited in a Margin Account, and the name in which such
account is to be or has been established. The Custodian shall, upon receipt of
the premium specified in the Certificate, make the deposits, if any, into the
Senior Security Account specified in the Certificate, and either (1) deliver
such receipts, if any, which the Custodian has specifically agreed to issue,
which are in accordance with the customs prevailing among Clearing Members in
Stock Index Options and make the deposits into the Collateral Account specified
in the Certificate, or (2) make the deposits into the Margin Account specified
in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall deliver
or cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series for which such Stock
Index Option was written; (b) such information as may be necessary to identify
the Stock Index Option being exercised; (c) the Clearing Member through whom
such Stock Index Option is being exercised; (d) the total amount payable upon
such exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Margin Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account for such
Series; and the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Collateral Account for such Series. Upon the return
and/or cancellation of the receipt, if any, delivered pursuant to the preceding
paragraph of this Article, the Custodian shall pay out of the moneys held for
the account of the Series to which such Stock Index Option was specifically
allocated to the Clearing Member specified in the Certificate the total amount
payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to a previously
written Option described in paragraphs, 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall deliver or cause
the Administrator to deliver to the Custodian a Certificate specifying with
respect to the Option being purchased: (a) that the transaction is a Closing
Purchase Transaction; (b) the Series for which the Option was written; (c) the
name of the issuer and the title and number of shares subject to the Option, or,
in the case of a Stock Index Option, the stock index to which such Option
relates and the number of Options held; (d) the exercise price; (e) the premium
to be paid by
<PAGE>
the Fund; (f) the expiration date; (g) the type of Option (put or call); (h) the
date of such purchase; (i) the name of the Clearing Member to whom the premium
is to be paid; and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account, a specified
Margin Account, or the Senior Security Account for such Series. Upon the
Custodian's payment of the premium and the return and/or cancellation of any
receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with respect to
the Option being liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove, the previously
imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to any Option purchased or written by the Fund
and described in this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 Article III herein, and
upon the return and/or cancellation of any receipts issued by the Custodian,
shall make such withdrawals from the Collateral Account, and the Margin Account
and/or the Senior Security Account as may be specified in a Certificate received
in connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to such Futures Contract, (or with respect
to any number of identical Futures Contract(s)): (a) the Series for which the
Futures Contract is being entered; (b) the category of Futures Contract (the
name of the underlying stock index or financial instrument); (c) the number of
identical Futures Contracts entered into; (d) the delivery or settlement date of
the Futures Contract(s); (e) the date the Futures Contract(s) was (were) entered
into and the maturity date; (f) whether the Fund is buying (going long) or
selling (going short) on such Futures Contract(s); (g) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in the Senior
Security Account for such Series; (h) the name of the broker, dealer, or futures
commission merchant through whom the Futures Contract was entered into; and (i)
the amount of fee or commission, if any, to be paid and the name of the broker,
dealer, or futures commission merchant to whom such amount is to be paid. The
Custodian shall make the deposits, if any, to the Margin Account in accordance
with the terms and conditions of the Margin Account Agreement. The Custodian
shall make payment out of the moneys specifically allocated to such Series of
the fee or commission, if any, specified in the Certificate and deposit in the
Senior Security Account for such Series the amount of cash and/or the amount and
kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment required to
be made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a
broker, dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract, shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver or cause the Administrator to deliver to the
Custodian a Certificate specifying: (a) the Futures Contract and the Series to
which the same relates; (b) with respect to a Stock Index Futures Contract, the
total cash settlement amount to be paid or received, and with respect to a
Financial Futures Contract, the Securities and/or amount of cash to be delivered
or received; (c) the broker, dealer, or futures commission merchant to or from
whom payment or delivery is to be made or received; and (d) the amount of cash
and/or Securities to be withdrawn from the Senior Security Account for such
Series. The Custodian shall make the payment or delivery specified in the
Certificate, and delete such Futures Contract from the statements delivered to
the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate
<PAGE>
specifying: (a) the items of information required in a Certificate described in
paragraph 1 of this Article, and (b) the Futures Contract being offset. The
Custodian shall make payment out of the money specifically allocated to such
Series of the fee or commission, if any, specified in the Certificate and delete
the Futures Contract being offset from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein, and make such withdrawals from
the Senior Security Account for such Series as may be specified in such
Certificate. The withdrawals, if any, to be made from the Margin Account shall
be made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the
Fund, the Fund shall deliver or cause the Administrator to deliver to the
Custodian a Certificate specifying with respect to such Futures Contract Option:
(a) the Series to which such Option is specifically allocated; (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Contract and such
other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option purchased; (d) the expiration date; (e)
the exercise price; (f) the dates of purchase and settlement; (g) the amount of
premium to be paid by the Fund upon such purchase; (h) the name of the broker or
futures commission merchant through whom such option was purchased; and (i) the
name of the broker, or futures commission merchant, to whom payment is to be
made. The Custodian shall pay out of the moneys specifically allocated to such
Series, the total amount to be paid upon such purchase to the broker or futures
commissions merchant through whom the purchase was made, provided that the same
conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to each such sale: (a) Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract Option (put or call);
(c) the type of Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract Option; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g) the total
amount payable to the Fund upon such sale; and (h) the name of the broker of
futures commission merchant through whom the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being closed against
payment to the Custodian of the total amount payable to the Fund, provided the
same conforms to the total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant
to paragraph 1 is exercised by the Fund, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying: (a) the
Series to which such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option (put or call) being exercised; (c) the type
of Futures Contract underlying the Futures Contract Option; (d) the date of
exercise; (e) the name of the broker or futures commission merchant through whom
the Futures Contract Option is exercised; (f) the net total amount, if any,
payable by the Fund; (g) the amount, if any, to be received by the Fund; and (h)
the amount of cash and/or the amount and kind of Securities to be deposited in
the Senior Security Account for such Series. The Custodian shall make, out of
the moneys and Securities specifically allocated to such Series, the payments,
if any, and the deposits, if any, into the Senior Security Account as specified
in the Certificate. The deposits, if any, to be made to the Margin Account shall
be made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to such Futures Contract Option: (a) the
Series for which such Futures Contract Option was written; (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Contract and such
other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund; (g) the name of the
broker or futures commission merchant through whom the premium is to be
received; and (h) the amount of cash and/or the amount and kind of Securities,
if any, to be deposited in the Senior Security Account for such Series. The
Custodian shall, upon receipt of the premium
<PAGE>
specified in the Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security Account, if any,
as specified in the Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a
call is exercised, the Fund shall deliver or cause the Administrator to deliver
to the Custodian a Certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount of
cash and/or the amount and kind of Securities to be deposited in the Senior
Security Account for such Series. The Custodian shall, upon its receipt of the
net total amount payable to the Fund, if any, specified in such Certificate make
the payments, if any, and the deposits, if any, cate. The deposits, if any, to
be made to the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund
and which is a put is exercised, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying: (a) the
Series to which such Option was specifically allocated; (b) the particular
Futures Contract Option exercised; (c) the type of Futures Contract underlying
such Futures Contract Option; (d) the name of the broker or futures commission
merchant through whom such Futures Contract Option is exercised; (e) the net
total amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount and
kind of Securities and/or cash to be withdrawn from or deposited in, the Senior
Security Account for such Series, if any. The Custodian shall, upon its receipt
of the net total amount payable to the Fund, if any, specified in the
Certificate, make out of the moneys and Securities specifically allocated to
such Series, the payments, if any, and the deposits, if any, into the Senior
Security Account as specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical
to a previously written Futures Contract Option described in this Article in
order to liquidate its position as a writer of such Futures Contract Option, the
Fund shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to the Futures Contract Option being
purchased: (a) the Series to which such Option is specifically allocated; (b)
that the transaction is a closing transaction; (c) the type of Future Contract
and such other information as may be necessary to identify the Futures Contract
underlying the Futures Option Contract; (d) the exercise price; (e) the premium
to be paid by the Fund; (f) the expiration date; (g) the name of the broker or
futures commission merchant to whom the premium is to be paid; and (h) the
amount of cash and/or the amount and kind of Securities, if any, to be withdrawn
from the Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased by
the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals from the Margin
Acwith the terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article VI
hereof.
<PAGE>
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the
Fund shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale was made; (b)
the name of the issuer and the title of the Security; (c) the number of shares
or principal amount sold, and accrued interest or dividends, if any; (d) the
dates of the sale and settlement; (e) the sale price per unit; (f) the total
amount credited to the Fund upon such sale, if any, (g) the amount of cash
and/or the amount and kind of Securities, if any, which are to be deposited in a
Margin Account and the name in which such Margin Account has been or is to be
established; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in a Senior Security Account, and (i) the name of the
broker through whom such short sale was made. The Custodian shall upon its
receipt of a statement from such broker confirming such sale and that the total
amount credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or any
nominee of the Custodian) as custodian of the Fund, issue a receipt or make the
deposits into the Margin Account and the Senior Security Account specified in
the Certificate.
2. In connection with the closing-out of any short sale, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to each such closing out: (a) the Series for
which such transaction is being made; (b) the name of the issuer and the title
of the Security; (c) the number of shares or the principal amount, and accrued
interest or dividends, if any, required to effect such closing-out to be
delivered to the broker; (d) the dates of closing-out and settlement; (e) the
purchase price per unit; (f) the net total amount payable to the Fund upon such
closing-out; (g) the net total amount payable to the broker upon such closing-
out; (h) the amount of cash and the amount and kind of Securities to be
withdrawn, if any, from the Margin Account; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the Senior Security
Account; and (j) the name of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount payable
to the Fund upon such closing-out, and the return and/or cancellation of the
receipts, if any, issued by the Custodian with respect to the short sale being
closed-out, pay out of the moneys held for the account of the Fund to the broker
the net total amount payable to the broker, and make the withdrawals from the
Margin Account and the Senior Security Account, as the same are specified in the
Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement
with respect to Securities and money held by the Custodian hereunder, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate, or in the event such Reverse Repurchase Agreement is a Money Market
Security, a Certificate or Oral Instructions specifying: (a) the Series for
which the Reverse Repurchase Agreement is entered; (b) the total amount payable
to the Fund in connection with such Reverse Repurchase Agreement and
specifically allocated to such Series; (c) the broker or dealer through or with
whom the Reverse Repurchase Agreement is entered; (d) the amount and kind of
Securities to be delivered by the Fund to such broker or dealer; (e) the date of
such Reverse Repurchase Agreement; and (f) the amount of cash and/or the amount
and kind of Securities, if any, specifically allocated to such Series to be
deposited in a Senior Security Account for such Series in connection with such
Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total
amount payable to the Fund specified in the Certificate or Oral Instructions
make the delivery to the broker or dealer, and the deposits, if any, to the
Senior Security Account, specified in such Certificate or Oral Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described
in preceding paragraph 1 of this Article, the Fund shall deliver or cause the
Administrator to deliver a Certificate or, in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate or Oral Instructions to the
Custodian specifying: (a) the Reverse Repurchase Agreement being terminated and
the Series for which same was entered; (b) the total amount payable by the Fund
in connection with such termination; (c) the amount and kind of Securities to be
received by the Fund and specifically allocated to such Series in connection
with such termination; (d) the date of termination; (e) the name of the broker
or dealer with or through whom the Reverse Repurchase Agreement is to
<PAGE>
be terminated; and (f) the amount of cash and/or the amount and kind of
Securities to be withdrawn from the Senior Securities Account for such Series.
The Custodian shall, upon receipt of the amount and kind of Securities to be
received by the Fund specified in the Certificate or Oral Instructions, make the
payment to the broker or dealer, and the withdrawals, if any, from the Senior
Security Account, specified in such Certificate or Oral Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to each such loan: (a) the Series to which the loaned Securities
are specifically allocated; (b) the name of the issuer and the title of the
Securities, (c) the number of shares or the principal amount loaned, (d) the
date of loan and delivery, (e) the total amount to be delivered to the Custodian
against the loan of the Securities, including the amount of cash collateral and
the premium, if any, separately identified, and (f) the name of the broker,
dealer, or financial institution to which the loan was made. The Custodian shall
deliver the Securities thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the total amount
designated as to be delivered against the loan of Securities. The Custodian may
accept payment in connection with a delivery otherwise than through the Book-
Entry System or Depository only in the form of a certified or bank cashier's
check payable to the order of the Fund or the Custodian drawn on New York
Clearing House funds and may deliver Securities in accordance with the customs
prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the
Fund, the Fund shall deliver or cause the Administrator to deliver to the
Custodian a Certificate specifying with respect to each such loan termination
and return of Securities: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities to be returned, (c) the number of shares or the principal amount to
be returned, (d) the date of termination, (e) the total amount to be delivered
by the Custodian (including the cash collateral for such Securities minus any
offsetting credits as described in said Certificate), and (f) the name of the
broker, dealer, or financial institution from which the Securities will be
returned. The Custodian shall receive all Securities returned from the broker,
dealer, or financial institution to which such Securities were loaned and upon
receipt thereof shall pay, out of the moneys held for the account of the Fund,
the total amount payable upon such return of Securities as set forth in the
Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event the Certificate fails to specify the Series, the name of the
issuer, the title and the number of shares or the principal amount of any
particular Securities to be deposited by the Custodian into, or withdrawn from,
a Senior Securities Account, the Custodian shall be under no obligation to make
any such deposit or withdrawal and shall so notify the Administrator.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing Member in
whose name, or for whose benefit, the account was established as specified in
the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt with
in accordance with the terms and conditions of the Margin Account Agreement.
<PAGE>
4. The Custodian shall have a continuing lien and security interest
in and to any property at any time held by the Custodian in any Collateral
Account described herein. In accordance with applicable law the Custodian may
enforce its lien and realize on any such property whenever the Custodian has
made payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in
which cash and/or Securities are maintained in a Collateral Account for any
Series, the Custodian shall furnish the Administrator with a statement with
respect to such Collateral Account specifying the amount of cash and/or the
amount and kind of Securities held therein. No later than the close of business
next succeeding the delivery to the Fund of such statement, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying the then market value of the Securities described in such statement.
In the event such then market value is indicated to be less than the Custodian's
obligation with respect to any outstanding Put Option guarantee letter or
similar document, the Fund shall promptly specify or cause the Administrator to
promptly specify in a Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall deliver or cause the Administrator to deliver to
the Custodian a copy of the resolution of the Board of Trustees of the Fund,
certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant
Clerk, either (i) setting forth with respect to the Series specified therein the
date of the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein the declaration of
dividends and distributions on a daily basis and authorizing the Custodian to
rely on Oral Instructions or a Certificate setting forth the date of the
declaration of such dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall be determined,
the amount payable per Share of such Series to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution, Oral
Instructions or Certificate, as the case may be, the Custodian shall pay out of
the moneys held for the account of each Series the total amount payable to the
Dividend Agent and any sub-dividend agent or co-dividend agent of the Fund with
respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or
cause the Administrator to deliver to the Custodian a Certificate duly
specifying:
(a) The Series, the number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian for the
sale of such Shares and specifically
<PAGE>
allocated to the separate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account in the name of the Series for
which such money was received.
3. Upon issuance of any Shares of any Series described in the
foregoing provisions of this Article, the Custodian shall pay, out of the money
held for the account of such Series, all original issue or other taxes required
to be paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder in
connection with a redemption of any Shares, it shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth
the Series and number of Shares received by the Transfer Agent for redemption
and that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the Certificate delivered
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of
any Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate, shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the moneys held in
the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held by
the Custodian in the separate account for such Series shall be insufficient to
pay the total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate or Oral Instructions, or
which results in an overdraft in the separate account of such Series for some
other reason, or if the Fund is for any other reason indebted to the Custodian
with respect to a Series, including any indebtedness to The Bank of New York
under the Fund's Cash Management and Related Services Agreement, (except a
borrowing for investment or for temporary or emergency purposes using Securities
as collateral pursuant to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund for such Series payable on demand
and shall bear interest from the date incurred at a rate per annum (based on a
360-day year for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time to time, such rate
to be adjusted on the effective date of any change in such prime commercial
lending rate but in no event to be less than 6% per annum. In addition, the Fund
hereby agrees that the Custodian shall have a continuing lien and security
interest in and to any property specifically allocated to such Series at any
time held by it for the benefit of such Series or in which the Fund may have an
interest which is then in the Custodian's possession or control or in possession
or control of any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against any balance
of account standing to such Series' credit on the Custodian's books. In
addition, the Fund hereby covenants that on each Business Day on which either it
intends to enter a Reverse Repurchase Agreement and/or otherwise borrow from a
third party, or which next succeeds a Business Day on which at the close of
business the Fund had outstanding a Reverse Repur-chase Agreement or such a
borrowing, it shall prior to 9 a.m., New York City time, advise the Custodian,
in writing, of each such borrowing,
<PAGE>
shall specify the Series to which the same relates, and shall not incur any
indebtedness not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XV
TERMINAL LINK
1. At no time and under no circumstances shall the Administrator on
behalf of the Fund be obligated to have or utilize the Terminal Link, and the
provisions of this Article shall apply if, but only if, the Fund in its sole and
absolute discretion directs the Administrator to utilize the Terminal Link to
transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized by the Administrator on
behalf of the Fund only for the purpose of providing Certificates to the
Custodian with respect to transactions involving Securities or for the transfer
of money to be applied to the payment of dividends, distributions or redemptions
of Fund Shares, and shall be utilized by the Custodian only for the purpose of
providing notices to the Administrator. Such use shall commence only after the
Fund shall have delivered or caused the Administrator to have delivered to the
Custodian a Certificate substantially in the form of Exhibit D and shall have
established access codes. Each use of the Terminal Link by the Administrator
shall constitute a representation and warranty that the Terminal Link is being
used only for the purposes permitted hereby, that at least two Officers have
each utilized an access code, that such safekeeping procedures have been
established, and that such use does not contravene the Investment Company Act of
1940, as amended, or the rules or regulations thereunder.
3. The Administrator shall obtain and maintain at its own cost and
expense all equipment and services, including, but not limited to communications
services, necessary for it to utilize the Terminal Link, and the Custodian shall
not be responsible for the reliability or availability of any such equipment or
services.
4. The Fund and the Administrator each acknowledge that any data
bases made available as part of, or through the Terminal Link and any
proprietary data, software, processes, information and documentation (other
<PAGE>
than any such which are or become part of the public domain or are legally
required to be made available to the public) (collectively, the "Information"),
are the exclusive and confidential property of the Custodian. The Fund and the
Administrator shall, and shall cause others to which either discloses the
Information, to keep the Information confidential by using the same care and
discretion it uses with respect to its own confidential property and trade
secrets, and shall neither make nor permit any disclosure without the express
prior written consent of the Custodian.
5. Upon termination of this Agreement for any reason, the Fund and
the Administrator shall return to the Custodian any and all copies of the
Information which are in its respective possession or under its respective
control, or which either distributed to third parties. The provisions of this
Article shall not affect the copyright status of any of the Information which
may be copyrighted and shall apply to all Information whether or not
copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from
time to time without notice to the Fund or the Administrator except that the
Custodian shall give the Administrator notice not less than 75 days in advance
of any modification which would materially adversely affect the Administrator's
operation, and the Administrator agrees that the it shall not modify or attempt
to modify the Terminal Link without the Custodian's prior written consent. The
Fund acknowledges that any software or procedures provided the Fund as part of
the Terminal Link are the property of the Custodian and, accordingly, the
Administrator agrees that any modifications to the Terminal Link, whether by the
Administrator, or by the Custodian and whether with or without the Custodian's
consent, shall become the property of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it
utilizes or the Fund utilizes in connection with the Terminal Link makes any
warranties or representations, express or implied, in fact or in law, including
but not limited to warranties of merchantability and fitness for a particular
purpose.
8. The Administrator will cause its officers and employees to treat
the authorization codes and the access codes applicable to Terminal Link with
extreme care, and the Fund and the Administrator irrevocably authorizes the
Custodian to act in accordance with and rely on Certificates received by it
through the Terminal Link. The Fund acknowledges that it is the Administrator's
responsibility to assure that only Officers use the Terminal Link, and that
Custodian shall notbe responsible nor liable for use of the Terminal Link by
persons other than such persons or Officers, or by only a single Officer, nor
for any alteration, omission, or failure to promptly forward.
9(a). Except as otherwise specifically provided in Section 9(b) of
this Article, the Custodian shall have no liability for any losses, damages,
injuries, claims, costs or expenses arising out of or in connection with any
failure, malfunction or other problem relating to the Terminal Link except for
money damages suffered as the direct result of the negligence of the Custodian
in an amount not exceeding for any incident $100,000 provided, however, that the
Custodian shall have no liability under this Section 9 if the Administrator
fails to comply with the provisions of Section 11.
9(b). The Custodian's liability for its negligence in executing or
failing to execute in accordance with a Certificate received through Terminal
Link shall be only with respect to a transfer of funds which is not made in
accordance with such Certificate after such Certificate shall have been duly
acknowledged by the Custodian, and shall be contingent upon the Administrator
complying with the provisions of Section 12 of this Article, and shall be
limited to (i) restoration of the principal amount mistransferred, if and to the
extent that the Custodian would be required to make such restoration under
applicable law, and (ii) the lesser of (A) the Fund's actual pecuniary loss
incurred by reason of its loss of use of the mistransferred funds or the funds
which were not transferred, as the case may be, or (B) compensation for the loss
of the use of the mistransferred funds or the funds which were not transferred,
as the case may be, at a rate per annum equal to the average federal funds rate
as computed from the Federal Reserve Bank of New York's daily determination of
the effective rate for federal funds, for the period during which a Fund has
lost use of such funds. In no event shall the Custodian have any liability for
failing to execute in accordance with a Certificate a transfer of funds where
the Certificate is received by the Custodian through Terminal Link other than
through the applicable transfer module for the particular instructions
<PAGE>
contained in such Certificate.
10. Without limiting the generality of the foregoing, in no event
shall the Custodian or any manufacturer or supplier of its computer equipment,
software or services relating to the Terminal Link be responsible for any
special, indirect, incidental or consequential damages which the Fund or the
Administrator may incur or experience by reason of its use of the Terminal Link
even if the Custodian or any manufacturer or supplier has been advised of the
possibility of such damages, nor with respect to the use of the Terminal Link
shall the Custodian or any such manufacturer or supplier be liable for acts of
God, or with respect to the following to the extent beyond such person's
reasonable control: machine or computerbreakdown or malfunction, interruption or
malfunction of communication facilities, labor difficulties or any other similar
or dissimilar cause.
11. The Fund shall cause the Administrator to notify the Custodian of
any errors, omissions or interruptions in, or delay or unavailability of, the
Terminal Link as promptly as practicable, and in any event within 24 hours after
the earliest of (i) discovery thereof, (ii) the Business Day on which discovery
should have occurred through the exercise of reasonable care and (iii) in the
case of any error, the date of actual receipt of the earliest notice which
reflects such error, it being agreed that discovery and receipt of notice may
only occur on a business day. The Custodian shall promptly advise the Fund
whenever the Custodian learns of any errors, omissions or interruption in, or
delay or unavailability of, the Terminal Link.
12. The Custodian shall verify to the Administrator, by use of the
Terminal Link, receipt of each Certificate the Custodian receives through the
Terminal Link, and in the absence of such verification the Custodian shall not
be liable for any failure to act in accordance with such Certificate and neither
the Fund nor the Administrator may claim that such Certificate was received by
the Custodian. Such verification, which may occur after the Custodian has acted
upon such Certificate, shall be accomplished on the same day on which such
Certificate is received.
ARTICLE XVI
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to employ, as sub-
custodian for each Series' Foreign Securities (as such term is defined in
paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of 1940, as
amended) and other assets, the foreign banking institutions and foreign
securities depositories and clearing agencies designated on Schedule I hereto
("Foreign Sub-Custodians") to carry out their respective responsibilities in
accordance with the terms of the sub-custodian agreement between each such
Foreign Sub-Custodian and the Custodian, copies of which have been previously
delivered to the Fund and receipt of which is hereby acknowledged (each such
agreement, a "Foreign Sub- Custodian Agreement"). Upon receipt of a Certificate,
together with a certified resolution substantially in the form attached as
Exhibit E of the Fund's Board of Trustees, the Fund may designate any additional
foreign sub-custodian with which the Custodian has an agreement for such entity
to act as the Custodian's agent, as its sub-custodian and any such additional
foreign sub-custodian shall be deemed added to Schedule I. Upon receipt of a
Certificate from the Fund, the Custodian shall cease the employment of any one
or more Foreign Sub-Custodians for maintaining custody of the Fund's assets and
such Foreign Sub-Custodian shall be deemed deleted from Schedule I.
2. Each Foreign Sub-Custodian Agreement shall be substantially in
the form previously delivered to the Fund and will not be amended in a way that
materially adversely affects the Fund without the Fund's prior written consent.
3. The Custodian shall identify on its books as belonging to each
Series of the Fund the Foreign Securities of such Series held by each Foreign
Sub-Custodian. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims by the Fund
or any Series against a Foreign Sub-Custodian as a consequence of any loss,
damage, cost, expense, liability or claim sustained or incurred by the Fund or
any Series if and to the extent that the Fund or such Series has not been made
whole for any such loss, damage, cost, expense, liability or claim.
<PAGE>
4. Upon request of the Fund, the Custodian will, consistent with the
terms of the applicable Foreign Sub-Custodian Agreement, use reasonable efforts
to arrange for the independent accountants of the Fund to be afforded access to
the books and records of any Foreign Sub-Custodian insofar as such books and
records relate to the performance of such Foreign Sub-Custodian under its
agreement with the Custodian on behalf of the Fund.
5. The Custodian will supply to the Fund from time to time, as
mutually agreed upon, statements in respect of the securities and other assets
of each Series held by Foreign Sub-Custodians, including but not limited to, an
identification of entities having possession of each Series' Foreign Securities
and other assets, and advices or notifications of any transfers of Foreign
Securities to or from each custodial account maintained by a Foreign Sub-
Custodian for the Custodian on behalf of the Series.
6. The Custodian shall furnish annually to the Fund, as mutually
agreed upon, information concerning the Foreign Sub- Custodians employed by the
Custodian. Such information shall be similar in kind and scope to that furnished
to the Fund in connection with the Fund's initial approval of such Foreign Sub-
Custodians and, in any event, shall include information pertaining to (i) the
Foreign Custodians' financial strength, general reputation and standing in the
countries in which they are located and their ability to provide the custodial
services required, and (ii) whether the Foreign Sub-Custodians would provide a
level of safeguards for safekeeping and custody of securities not materially
different form those prevailing in the United States. The Custodian shall
monitor the general operating performance of each Foreign Sub-Custodian. The
Custodian agrees that it will use reasonable care in monitoring compliance by
each Foreign Sub-Custodian with the terms of the relevant Foreign Sub-Custodian
Agreement and that if it learns of any breach of such Foreign Sub-Custodian
Agreement believed by the Custodian to have a material adverse effect on the
Fund or any Series it will promptly notify the Fund of such breach. The
Custodian also agrees to use reasonable and diligent efforts to enforce its
rights under the relevant Foreign Sub-Custodian Agreement.
7. The Custodian shall transmit promptly to the Fund all notices,
reports or other written information received pertaining to the Fund's Foreign
Securities, including without limitation, notices of corporate action, proxies
and proxy solicitation materials.
8. Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for securities received for the account of any Series and
delivery of securities maintained for the account of such Series may be effected
in accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer.
9. Notwithstanding any other provision in this Agreement to the
contrary, with respect to any losses or damages arising out of or relating to
any actions or omissions of any Foreign Sub-Custodian the sole responsibility
and liability of the Custodian shall be to take appropriate action at the Fund's
expense to recover such loss or damage from the Foreign Sub-Custodian. It is
expressly understood and agreed that the Custodian's sole responsibility and
liability shall be limited to amounts so recovered from the Foreign Sub-
Custodian.
ARTICLE XVII
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in Article XVI
neither the Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agreement, except for
any such loss or damage arising out of its own negligence, willful misconduct,
lack of good faith, or reckless disregard of its duties. The Custodian agrees to
indemnify and hold harmless the Trust and Trust's Trustees and officers to the
extent described above (including reasonable counsel fees) incurred or assessed
against any of them as a result of any
<PAGE>
breach or violation of this Agreement by the Custodian or its officers,
employees and agents or its nominees, resulting from their negligence, willful
misconduct, lack of good faith, or reckless disregard of its duties. The
Custodian may, with respect to questions of law arising hereunder or under any
Margin Account Agreement, apply for and obtain the advice and opinion of counsel
to the Fund or of its own counsel, at the expense of the Fund, and shall be
fully protected with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall be liable to the
Fund for any loss or damage resulting from the use of the Book-Entry System or
any Depository arising by reason of any negligence, willful misconduct, lack of
good faith, or reckless disregard of its duties on the part of the Custodian or
any of its employees or agents. Notwithstanding the foregoing, or any other
provision contained in this Agreement, in no event shall the Custodian be liable
to the Trust, its Trustees or officers, or any third party, for special,
indirect or consequential damages, or lost profits or loss of business, arising
under or in connection with this Agreement, even if previously informed of the
possibility of such damages and regardless of the form of action.
2. Without limiting the generality of the foregoing the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchase, sold,
or written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor;
(c) The legality of the declaration or payment of any dividend
by the Fund;
(d) The legality of any borrowing by the Fund using Securities
as collateral;
(e) The legality of any loan of portfolio Securities, nor shall
the Custodian be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer, or financial institution or held
by it at any time as a result of such loan of portfolio Securities of the Fund
is adequate collateral for the Fund against any loss it might sustain as a
result of such loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check or notify the
Fund is sufficient collateral for the Fund, but such duty or obligation shall be
the sole responsibility of the Fund. In addition, the Custodian shall be under
no duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of the Fund are lent pursuant to Article XIV of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or (f) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Senior Security Account or
Collateral Account in connection with transactions by the Fund. In addition, the
Custodian shall be under no duty or obligation to see that any broker, dealer,
futures commission merchant or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund may be entitled to
receive from such broker, dealer, futures commission merchant or Clearing
Member, to see that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's receipt or non-
receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest at the Book-
Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be
liable for ascertaining or acting upon any calls, conversions, exchange offers,
tenders, interest rate changes or similar matters relating to Securities held in
<PAGE>
the Depository, unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
the Fund of an overdue amount on Securities held in the Depository the Custodian
shall make a claim against the Depository on behalf of the Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or defend
any action suit or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may in addition to the employment of Foreign
Sub-Custodians pursuant to Article XVI appoint one or more banking institutions
as Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as
Co-Custodian or Co-Custodians including, but not limited to, banking
institutions located in foreign countries, of Securities and moneys at any time
owned by the Fund, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the Custodian, the Fund and
the appointed institution.
8. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it or by
any Foreign Sub-Custodian, for the account of the Fund and specifically
allocated to a Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus, or (b) to ascertain
whether any transactions by the Fund, whether or not involving the Custodian,
are such transactions as may properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Fund
represents that the Administrator has agreed to pay such compensation and
expenses promptly upon receipt of statements therefor, and hereby directs the
Custodian to (i) send all statements for compensation to its attention care of
Fund/Plan at the following address: Fund/Plan Services, Inc., 2 W. Elm Street,
Conshohocken, PA 19428, Attention: Mr. Elmer Gardner, Senior Vice President, and
(ii) accept all payments made by Fund/Plan in the Fund's name as if such
payments were made directly by the Fund. The Fund shall pay to Fund/Plan fees
for services (including custodian services provided by the Custodian) in
accordance with the Administration Agreement. The Custodian's compensation for
services rendered hereunder is set forth in a separate agreement between the
Custodian and Fund/Plan. Should Fund/Plan fail to pay or remit such compensation
to the Custodian within 20 days of the date the same is due and payable,
Custodian shall notify the Fund. If such payment or remittance is not received
from Fund/Plan within 15 days of such notice, then the Custodian will be
entitled to debit the Custody Account directly for such compensation. The
Custodian may charge compensation with respect to which it has properly sent a
notice to the Fund, as provided in the preceding sentence, and any expenses with
respect to a Series incurred by the Custodian in the performance of its duties
pursuant to such agreement against any money specifically allocated to such
Series. Unless and until the Fund or the Administrator instructs the Custodian
by a Certificate to apportion any loss, damage, liability or expense among the
Series in a specified manner, the Custodian shall also be entitled to charge
against any money held by it for the account of a Series such Series' pro rata
share (based on such Series net asset value at the time of the charge to the
aggregate net asset value of all Series at that time) of the amount of any loss,
damage, liability or expense, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this
<PAGE>
Agreement. The expenses for which the Custodian shall be entitled to
reimbursement hereunder shall include, but are not limited to, the expenses of
sub-custodians and foreign branches of the Custodian incurred in settling
outside of New York City transactions involving the purchase and sale of
Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions actually received by the Custodian. The Fund
agrees to forward or cause the Administrator to forward to the Custodian a
Certificate or facsimile thereof confirming such Oral Instructions in such
manner so that such Certificate or facsimile thereof is received by the
Custodian, whether by hand delivery, telecopier or other similar device, or
otherwise, by the close of business of the same day that such Oral Instructions
are given to the Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such instructions reasonably
appear to have been received from an Officer.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its expenses of
providing such copies. Upon reasonable request of the Fund, the Custodian shall
provide in hard copy or on microfilm, whichever the Custodian elects, any
records included in any such delivery which are maintained by the Custodian on a
computer disc, or are similarly maintained, and the Fund shall reimburse the
Custodian for its expenses of providing such hard copy or microfilm.
13. The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System, the Depository or O.C.C., and with such reports on its own systems of
internal accounting control as the Fund may reasonably request from time to
time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with this Agreement, including the Custodian's payment or non-payment
of checks pursuant to paragraph 6 of Article XIII as part of any check
redemption privilege program of the Fund, except for any such liability, claim,
loss and demand arising out of the Custodian's own negligence, willful
misconduct, lack of good faith, or reckless disregard of its duties. For any
legal proceeding giving rise to the indemnification set forth above in this
paragraph, the Fund shall be entitled to defend or prosecute any claim in the
name of the Custodian at its own expense and through counsel of its own choosing
reasonably acceptable to the Custodian if it gives written notice to the
Custodian within ten (10) Business days of receiving notice of such claim.
Notwithstanding the foregoing, the Custodian may participate in the litigation
at its own expense and with counsel of its own choosing.
15. Subject to the foregoing provisions of this Agreement, including,
without limitation, those contained in Article XVI the Custodian may deliver and
receive Securities, and receipts with respect to such Securities, and arrange
for payments to be made and received by the Custodian in accordance with the
customs prevailing from time to time among brokers or dealers in such
Securities. When the Custodian is instructed to deliver Securities
<PAGE>
against payment, delivery of such Securities and receipt of payment therefor may
not be completed simultaneously. The Fund assumes all responsibility and
liability for all credit risks involved in connection with the Custodian's
delivery of Securities pursuant to Certificates or instructions of the Fund or
the Administrator which responsibility and liability shall continue until final
payment in full has been received by the Custodian.
16. In the event the Custodian is advised by the Fund that the Fund
is no longer utilizing the services of the Administrator, then the Custodian
shall furnish or give to the Fund the statements or notices described above as
to be furnished or given to the Administrator.
17. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian. Without limiting the generality of the foregoing, the
Custodian shall have no duties or responsibilities by reason of any terms or
provisions in the Administration Agreement, and if such Administration Agreement
shall cease to be in effect the Custodian shall have no additional duties
hereunder.
ARTICLE XVIII
TERMINATION
1. Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
giving of such notice, provided, however, that if such notice is sent by the
Fund and recites that it is being given contemporaneously with a termination of
the Custody Administration any Agency Agreement with Fund/Plan, such notice may
specify any date of termination selected by the Fund. In the event such notice
is given by the Fund, it shall be accompanied by a copy of a resolution of the
Board of Trustees of the Fund, certified by the Secretary, the Clerk, any
Assistant Secretary or any Assistant Clerk, electing to terminate this Agreement
and designating a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. In the event such notice is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the Custodian a copy
of a resolution of the Board of Trustees of the Fund, certified by the
Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk,
designating a successor custodian or custodians. In the absence of such
designation by the Fund, the Custodian may designate a successor custodian which
shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. Upon the date set forth in such notice
this Agreement shall terminate, and the Custodian shall upon receipt of a notice
of acceptance by the successor custodian on that date deliver directly to the
successor custodian all Securities and moneys then owned by the Fund and held by
it as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Fund be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such Securities hereunder in accordance
with this Agreement.
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Officers. The Fund agrees to furnish to the Custodian
a new Certificate in similar form in the event that any such present Officer
ceases to be an Officer or in the event that other or additional Officers are
elected or appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon Oral Instructions or
<PAGE>
signatures of the present Officers as set forth in the last delivered
Certificate.
2. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other place as the
Custodian may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its office at the address
for the Fund first above written, or at such other place as the Fund may from
time to time designate in writing, and any notice or other instrument in writing
authorized or required to be given to the Administrator shall be sufficiently
given if addressed to the Administrator at such address as the Administrator may
from time to time designate in writing.
4. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the same formality
as this Agreement and approved by a resolution of the Board of Trustees of the
Fund.
5. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of the Fund's Board of Trustees.
6. This Agreement shall be construed in accordance with the laws of
the State of New York without giving effect to conflict of laws principles
thereof. Each party hereby consents to the jurisdiction of a state or federal
court situated in New York City, New York in connection with any dispute arising
hereunder and hereby waives its right to trial by jury.
7. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective Officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
The Timothy Plan
[SEAL] By:_______________________
Attest:
_______________________
THE BANK OF NEW YORK
[SEAL] By:_______________________
Attest:
_______________________
<PAGE>
APPENDIX A
I, , President and I, , of
The Timothy Plan, a Delaware business trust (the
"Fund"), do hereby certify that:
The following individuals including officers and
employees of the Administrator have been duly
authorized by the Board of Trustees of the Fund in
conformity with the Fund's Declaration of Trust and
By-Laws to give Certificates or Oral Instructions on
behalf of the Fund, and the signatures set forth
opposite their respective names are their true and
correct signatures:
Name Signature
_____________________ _________________________
<PAGE>
APPENDIX B
SERIES
The Timothy Plan
<PAGE>
APPENDIX C
I, Vincent Blazewicz, a Vice President with THE
BANK OF NEW YORK do hereby designate the following
publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, , hereby certifies
that he or she is the duly elected and acting of The
Timothy Plan, a Delaware business trust (the "Fund"),
and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a
meeting duly held on , 199 , at which a
quorum was at all times present and that such
resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as
Custodian pursuant to a Custody Agreement between
The Bank of New York and the Fund dated as of
, 199 , (the "Custody Agreement") is
authorized and instructed on a continuous and
ongoing basis to deposit in the Book-Entry System,
as defined in the Custody Agreement, all
securities eligible for deposit therein,
regardless of the Series to which the same are
specifically allocated, and to utilize the
Book-Entry System to the extent possible in
connection with its performance thereunder,
including, without limitation, in connection with
settlements of purchases and sales of securities,
loans of securities, and deliveries and returns
of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand
and the seal of McM FUNDS, as of the day of ,
199 .
[SEAL]
<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, , hereby
certifies that he or she is the duly elected and acting
of The Timothy Plan, a Delaware business trust (the
"Fund"), and further certifies that the following
resolution was adopted by the Board of Trustees of the
Fund at a meeting duly held on , 199 , at which a
quorum was at all times present and that such
resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as
Custodian pursuant to a Custody Agreement between
The Bank of New York and the Fund dated as of
, 199 , (the "Custody Agreement") is
authorized and instructed on a continuous and
ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement,
to the contrary to deposit in the Depository, as
defined in the Custody Agreement, all securities
eligible for deposit therein, regardless of the
Series to which the same are specifically
allocated, and to utilize the Depository to the
extent possible in connection with its performance
thereunder, including, without limitation, in
connection with settlements of purchases and sales
of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand
and the seal of McM FUNDS, as of the day of
, 199.
[SEAL]
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, , hereby
certifies that he or she is the duly elected and acting
of The Timothy Plan, a Delaware business trust (the
"Fund"), and further certifies that the following
resolution was adopted by the Board of Trustees of the
Fund at a meeting duly held on , 199 , at
which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as
Custodian pursuant to a Custody Agreement between
The Bank of New York and the Fund dated as of
, 199 , (the "Custody Agreement")
is authorized and instructed on a continuous and
ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement,
to the contrary to deposit in the Participants
Trust Company as Depository, as defined in the
Custody Agreement, all securities eligible for
deposit therein, regardless of the Series to which
the same are specifically allocated, and to
utilize the Participants Trust Company to the
extent possible in connection with its performance
thereunder, including, without limitation, in
connection with settlements of purchases and sales
of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my and
the seal of The Timothy Plan, as of the day of
, 199 .
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, , hereby certifies
that he or she is the duly elected and acting of The
Timothy Plan, a Delaware business trust (the "Fund"),
and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a
meeting duly held on , 199 , at which a quorum
was at all times present and that such resolution has
not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as
Custodian pursuant to a Custody Agreement between
The Bank of New York and the Fund dated as of
, 199 , (the "Custody Agreement") is
authorized and instructed on a continuous and
ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement,
to the contrary, to accept, utilize and act with
respect to Clearing Member confirmations for
Options and transaction in Options, regardless of
the Series to which the same are specifically
allocated, as such terms are defined in the
Custody Agreement, as provided in the Custody
Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand
and the seal of The Timothy Plan, as of the day of
, 199 .
[SEAL]
<PAGE>
EXHIBIT D
The undersigned, , hereby
certifies that he or she is the duly elected and acting of
The Timothy Plan, a Delaware business trust (the
"Fund"), further certifies that the following
resolutions were adopted by the Board of Trustees of
the Fund at a meeting duly held on , 199 , at which a
quorum was at all times present and that such
resolutions have not been modified or rescinded and are
in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to the Custody Agreement between The Bank of
New York and the Fund dated as of , 199
(the "Cusotdy Agreement") is authorized and instructed
on a continuous and ongoing basis to act in accordance
with, and to rely on Certificates (as defined in the
Custody Agreement) given by to the 199 (the "Custody
Agreement Custodian by a Terminal Link (as defined in
the Custody Agreement).
RESOLVED, that the Fund shall establish access
codes and grant us of such access codes only to
Officers of the fund as defined in the Custody
Agreement, shall establish internal safekeeping
procedures to safeguard and protect the confidentiality
and availability of such access codes, shall limit its
use of the Terminal Link to those purposes permitted by
the Custody Agreement, shall require at least two such
Officers to utilize their respective access codes in
connection with each such Certificate, and shall use
the Terminal Link only in a manner that does not
contravene the Investment Company Act of 1940, as
amended, or the rules and regulations thereunder.
RESOLVED, that Officers of the Fund shall,
following the establishment of such access codes and
such internal safekeeping procedures, advise the
Custodian that the same have been established by
delivering a Certificate, as defined in the Custody
Agreement, and the Custodian shall be entitled to rely
upon such advice.
IN WITNESS WHEREOF, I have hereunto set my hand
and the seal of McM FUNDS, as of the day of ,
199 .
[SEAL]
<PAGE>
EXHIBIT E
The undersigned, , hereby certifies that he or she is the
duly elected and acting of The Timothy Plan, a Delaware business trust (the
"Fund"), further certifies that the following resolutions were adopted by the
Board of Trustees of the Fund at a meeting duly held on , 199 , at
which a quorum was at all times present and that such resolutions have not been
modified or rescinded and are in full force and effect as of the date hereof.
RESOLVED, that the maintenance of the Fund's assets in each country
listed in Schedule I hereto be, and hereby is, approved by the Board of Trustees
as consistent with the best interests of the Fund and its shareholders; and
further
RESOLVED, that the maintenance of the Fund's assets with the foreign
branches of The Bank of New York (the "Bank") listed in Schedule I located in
the countries specified therein, and with the foreign subcustodians and
depositories listed in Schedule I located in the countries specified therein be,
and hereby is, approved by the Board of Trustees as consistent with the best
interest of the Fund and its shareholders; and further
RESOLVED, that the Subcustodian Agreements presented to this meeting
between the Bank and each of the foreign subcustodians and depositories listed
in Schedule I providing for the maintenance of the Fund's assets with the
applicable entity, be and hereby are, approved by the Board of Trustees as
consistent with the best interests of the Fund and its shareholders; and further
RESOLVED, that the appropriate officers of the Fund are hereby
authorized to place assets of the Fund with the aforementioned foreign branches
and foreign subcustodians and depositories as hereinabove provided; and further
RESOLVED, that the appropriate officers of the Fund, or any of them,
are authorized to do any and all other acts, in the name of the Fund and on its
behalf, as they, or any of them, may determine to be necessary or desirable and
proper in connection with or in furtherance of the foregoing resolutions.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of The
Timothy Plan, as of the day of , 199 .
[SEAL]
<PAGE>
EXHIBIT 99B11
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our firm in Post-Effective Amendment No. 5
to the Registration Statement of Form N-1A of The Timothy Plan and to the use of
our report dated January 17, 1997 on the financial statements and financial
highlights. Such financial statements and financial highlights are incorporated
by reference in the Statement of Additional Information, which is part of such
Registration Statement.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 17, 1997
<PAGE>
EXHIBIT 99.14A
THE TIMOTHY PLAN
SECTION 403(b)(7)' CUSTODIAL ACCOUNT AGREEMENT
Section 1. Introduction
The Custodial Account established hereby is created pursuant to Section
403(b)(7) of the Code in order to provide a retirement benefit for the Employee
named in the Application, which is made a part of this Agreement, through
investment in the securities of one or more Funds.
Section 2. Definitions
The following terms shall have the following meanings unless the context clearly
indicates otherwise:
(a) Agreement. This Agreement, as amended from time to time, including the
Application, which is incorporated herein by reference.
(b) Application. The Custodial Account application form made available by the
Custodian for the purpose of establishing an account described in Section
403(b)(7) of the Code that permits investments in shares of one or more of the
Funds.
(c) Beneficiary. The person(s) designated as such by the Employee in the
Application, or in such other manner permitted by this Agreement.
(d) Church. A "church" or a "qualified church-controlled organization" within
the meaning of Section 3121(w)(3)(A) or (B), of the Code respectively.
(e) Code. The Internal Revenue Code of 1986, as amended.
(f) Custodial Account. The custodial account established by this Agreement.
(g) Custodian. National Westminster Bank NJ, or any successor thereto who
accepts appointment pursuant to the terms of this Agreement.
(h) Elective Deferrals. With respect to any calendar year, the sum of --
(i) employer contributions under a qualified cash or deferred arrangement
(as defined in Section 401(k) of the Code), to the extent not includible in
gross income under Section 402(a)(8) of. the Code,
(ii) employer contributions to a simplified employee pension (as defined in
- Section 408(k) of the Code), to the extent not includible in gross income
under Section 402(h)(i)(B) of the Code, and
(iii) employer contributions to an annuity or custodial account described
in Section 403(b) of the Code pursuant to a salary reduction agreement
(within the meaning of Section 3121(a)(5)(D) of the Code), other than a
contribution made pursuant to a one-time irrevocable election made by the
Employee at the time of initial eligibility to enter into such an
agreement, or pursuant to a similar arrangement involving a one-time
irrevocable election specified in regulations, rulings or other
administrative pronouncements issued by the Department of the Treasury.
(i) Eligible Employee. Each Employee of the Employer other than
(i) nonresident aliens described in Section 410(b)(3)(C) of the Code,
(ii) students performing services described in Section 3121(b)(10) of the
Code,
(iii) employees who normally work less than 20 hours per week,
(iv) employees who are participants in an eligible deferred compensation
plan described in Section 457 of the Code, or a cash or deferred
arrangement described in Section 401(k) of the Code, maintained by the
Employer, or who are eligible to contribute to another custodial account or
to an annuity described in Section 403(b) of the Code established pursuant
to a plan maintained by the Employer, and
(v) such other classes of employees which may be excluded for purposes of
Section 403(b)(12)(A)(ii) of the
<PAGE>
Code pursuant to regulations, rulings or other administrative
pronouncements issued by the Department of the Treasury.
(j) Eligible Retirement Plan. An individual retirement account or individual
retirement annuity described in Section 408(a) or (b) of the Code, respectively,
or an annuity or custodial account described in Section 403(b) of the Code.
(k) Eligible Rollover Distribution. Any distribution from the Custodial Account
on or after January 1, 1993, to the Employee, the Employee's surviving spouse,
or a spouse or former spouse of the Employee who is an alternate payee (within
the meaning of Section 414(p)(8) of the Code) with respect to the Custodial
Account, other than -
(i) any distribution which is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Employee, the Employee's surviving spouse or such
alternate payee, the joint lives (or joint life expectancies) of the
Employee and the Employee's designated Beneficiary, or for a specified
period of 10 years or more,
(ii) any distribution to the extent such distribution is required under
Section 403(b)(10) of the Code,
(iii) any distribution that is not includible in gross income (without
regard to Section 403(b)(8) of the Code), and
(iv) any other distribution that is not an "eligible rollover distribution"
within the meaning of regulations under Section 402(c)(4) of the Code.
(1) Employee. The individual identified as such in the Application.
(m) Employer. The entity identified as such in the Application, which must be -
(i) a State, a political subdivision of a State, or an agency or
instrumentality of one or more of the foregoing, but only if the Employee
performs services for an educational organization described in Section
170(b)(1)(A)(ii) as an employee of such State or other entity, or
(ii) an entity described in Section 501(c)(3) of the Code and exempt from
tax under Section 501(a) of the Code.
(n) ERISA. The Employee Retirement Income Security Act of 1974, as amended.
(o) Fund. The Timothy Plan or any other regulated investment company within the
meaning of Section 851(a) of the Code for which Timothy Partners, Ltd. or
Covenant Funds, Inc. serves as the investment adviser and which the Custodian
has agreed to hold pursuant to this Agreement.,
(p) Qualified Organization. Any educational organization, hospital, home health
service agency, health and welfare service agency, church, convention or
association of churches, or an organization described in Section
414(e)(3)(B)(ii) of the Code.
(q) Required Beginning Date. April 1 of the calendar year following the calendar
year in which the Employee attains age 70 1/2; except that if the Employee
attained age 70 1/2 before January 1, 1988, or in the case of a Custodial
Account established pursuant to a governmental plan or a plan maintained by a
Church, the Required Beginning Date shall be April 1 of the calendar year
following the later of the calendar year in which the Employee attains age 70
1/2 or the calendar year in which he or she retires.
(r) Year of Service. Each full year during which the Employee was a full-time
employee of the Employer and a fraction of a year (determined in accordance with
regulations, rulings or other administrative pronouncements issued by the
Department of the Treasury) for each full year during which the Employee was a
part-time employee of the Employer and for each part of a year during which the
Employee was a full-time or part-time employee of the Employer. For this
purpose, all Years of Service by a duly ordained, commissioned, or licensed
minister of a church, or a lay person, as an employee of a church, a convention
or association of churches, or an organization described in Section
414(e)(3)(B)(ii) of the Code, shall be considered as Years of Service with one
employer.
<PAGE>
Section 3. Contributions
(a) Contributions to the Custodial Account may be made by the Employer as a
benefit in addition to cash compensation and mar also be made by the Employee
through the Employer pursuant to a salary reduction agreement. All contributions
must be made in cash.
(b) The Custodian shall have no obligation to compel the Employer or the
Employee to make any contribution, nor shall the Custodian be required to notify
the Employer or Employee if any contribution made exceeds the limitations of
Section 402(g), Section 403(b)(2) or Section 415 of the Code.
(c) (i) Elective Deferrals to the Custodial Account in any calendar year shall
not exceed the greater of $7,000 (as adjusted by the Secretary of the
Treasury for years after 1987) or $9,500; provided, however, if the
Employer is a Qualified Organization, and the Employee has completed at
least 15 Years of Service, this limitation shall be increased by the lesser
of the following amounts:
(1) $3,000,
(2) $15,000 reduced by the total amount of increases pursuant to this
clause for all previous years, or
(3) the excess of $5,000 multiplied by the number of such Years of
Service over the Elective Deferrals made by the Employer on behalf of
the Employee in prior years.
(ii) Elective Deferrals to the Custodial Account in any calendar year, when
combined with other Elective Deferrals made on behalf of the Employee under
all plans, contracts or arrangements of the Employer, may not exceed $7,000
(as adjusted by the Secretary of the Treasury for years after 1987),
increased by the amount of Elective Deferrals made to the Custodial Account
and any other annuities or custodial accounts described in Section 403(b)
of the Code on behalf of the Employee under a plan maintained by the
Employer, but not to an amount in excess of the limitation set forth in
subparagraph (i), above.
(d) A transfer of cash from an existing annuity or custodial account described
in Section 403(b) of the Code may be made to the Custodial Account, provided
that the terms of such annuity or custodial account permit such transfer. Any
cash transferred hereunder shall be invested by the Custodian in accordance with
written instructions received from the Employee; provided, however, that the
amount transferred may be invested only in securities of one or more Funds.
Written instructions accompanying any such transfer shall state that the amount
being transferred is a transfer from an annuity or custodial account described
in Section 403(b) of the Code and shall set forth the name, title or other
designation of such custodial account or annuity, as the case may be.
(e) The Employee may make a rollover contribution (including a direct rollover)
to the Custodial Account of all or a portion of the cash proceeds of any
distribution from -
(i) another annuity or custodial account described in Section 403(b) of the
Code, provided the amount of such contribution would not be included in the
Employee's gross income pursuant to Section 403(b)(8) of the Code as a
result of such rollover contribution, or
(ii) an individual retirement account or annuity described in Section 408
of the Code, provided the amount of such contribution would not be included
in the Employee's gross income pursuant to Section 408(d)(3) of the Code as
a result of such rollover contribution. Any cash contributed hereunder
shall be invested by the Custodian in accordance with written instructions
received from the Employee; provided, however, that the amount contributed
may be invested only in securities of one or more Funds.
(f) Unless the Employer is a Church --
(i) the Employer must permit each Eligible Employee to elect to make
contributions of more than $200 pursuant to a salary reduction agreement to
one or more annuities or custodial accounts described in Section 403(b) of
the Code, and
(ii) with respect to contributions to this Custodial Account and other
annuities and custodial accounts described in Section 403(b) of the Code,
other than contributions made pursuant to salary reduction agreements, the
Employer's plan pursuant to which this Custodial Account is established
must meet the requirements of Sections 401(a)(4), (5), (17) and (26),
Section 401(m) and Section 410(b) of the Code in the same manner as if such
plan were a plan described in Section 401(a) of the Code, in accordance
with Section 403(b)(12)(A) of the Code.
<PAGE>
For purposes of this subsection (f), a contribution to an annuity or a custodial
account shall be treated as not made pursuant to a salary reduction agreement if
it is made pursuant to a one-time irrevocable election made by the Employee at
the time of initial eligibility to participate in the plan of which such annuity
or custodial account is a part or is made pursuant to a similar arrangement
involving a one-time irrevocable election specified in regulations, rulings or
other administrative pronouncements issued by the Department of the Treasury.
Section 4. The Custodial Account
(a) The Custodian shall maintain or cause to have maintained a record of the
Custodial Account. The interest of the Employee in the Custodial Account shall
at all times be nonforfeitable and the assets therein shall not be commingled
with the property of others; provided, however, that investment in securities of
a Fund shall not be considered commingling. Contributions to the Custodial
Account, and the income thereon, may not be used for or diverted to purposes
other than the exclusive benefit of the Employee and his or her Beneficiary.
(b) If the Custodial Account is determined to constitute part of a plan subject
to Title I of ERISA, the Employer shall be responsible for ensuring that such
plan complies at all 1 times with the applicable requirements of ERISA. Neither
a Fund, its investment advisor or distributor, the Custodian, nor any of their
affiliates shall be the "administrator" (as defined in Section (16)(A) of ERISA)
of such plan.
Section 5. Investments
(a) The Custodian shall invest all contributions less unpaid custodial fees in
the securities of the Fund(s) specified in the Application. The Custodian or its
nominee shall be the holder of record and the Employee shall be the beneficial
owner of all such securities and any other property in the Custodial Account.
The Custodian shall have no investment responsibility or discretion with respect
to this Custodial Account. The selection of Funds with respect to both the
investment of contributions previously made and those to be made in the future
may be changed upon receipt by the Custodian of written instructions from the
Employee (or the Beneficiary following the death of the Employee), requesting
such change, subject to the requirement that the minimum investment in any Fund
shall not be smaller than the minimum amount, if any, required for investment in
the securities of any selected Fund. Investments may be divided between or among
two or more Funds.
(b) All cash dividends and capital gain distributions received upon assets in
the Custodial Account shall be reinvested bathe securities of the issuing Fund
and credited to the Custodial Account. In the event that, with respect to any
such dividends and distributions, the Custodian as holder of record may elect to
receive such dividend or distribution in either additional shares, cash or other
property, the Custodian shall elect to receive such distribution in additional
shares. Sales and other charges attributable to the acquisition of securities
shall be charged to the Custodial Account.
(c) The Custodian shall deliver or cause to be delivered to the Employee all
notices, prospectuses, financial statements, proxies, voting instruction cards,
and proxy soliciting requests relating to securities held in the Custodial
Account. The Custodian in its capacity as such shall not vote any shares of the
Fund held hereunder except in accordance with the written instructions of the
Employee.
(d) Whenever the Custodian requires cash for any purpose provided in this
Agreement, it is authorized to redeem proportionately shares held in the Funds
in an amount sufficient to provide the required cash.
Section 6. Distributions from the Custodial Account
(a) The Custodian will, upon receiving written notice from the Employee (or from
the Beneficiary following the Employee's death) of the Employee's, attainment of
age 59-1/2, disability (as defined in Section 72(m)(7) of the Code), separation
from service from the Employer, financial hardship (determined in accordance
with Section 403(b)(7) of the Code and any regulations issued thereunder) or
death, distribute all or a portion of the assets of the Custodial Account in
cash in the manner and at the time specified in such written notice; provided,
however, that the Employee (or Beneficiary following the Employee's death) shall
provide substantiation of such event
<PAGE>
in such form and manner as required by the Custodian.
(b) Distributions on account of financial hardship will be permitted only from
the balance of the Custodial Account as of December 31, 1988, and from salary
reduction contributions made subsequent to that date, but not earnings or other
contributions subsequent thereto.
(c) The Employee shall have the right, prior to completion of distribution of
the entire Custodial Account, by written notice signed by the Employee and
delivered to the Custodian, to designate, revoke or change a designation of a
Beneficiary. Except as ordered by a court of competent jurisdiction, if a
designation of Beneficiary is in effect at the time of the Employee's death, the
balance in the Custodial Account will be distributed to such Beneficiary in
accordance with a method described in Section 7 below, as selected by the
Beneficiary, upon receipt of the Custodian of proof of death of the Employee. If
prior to completion of such distribution the Beneficiary dies, any remaining
balance in the Custodial Account shall be distributed to the Beneficiary's
estate. If no such Beneficiary is designated in accordance herewith or if such
Beneficiary dies before the Employee dies, the Employee's Beneficiary shall be
his or her estate.
(d) If the distributed of any Eligible Rollover Distribution from the Custodial
Account elects to have such distribution paid directly to an Eligible Retirement
Plan and specifies the Eligible Retirement Plan to which such distribution is to
be paid (in such form and manner as the Custodian may prescribe), such
distribution shall be made in the form of a direct rollover by the Custodian to
the Eligible Retirement Plan so specified, in any manner permitted by
regulations, rulings and other administrative pronouncements issued by the
Department of the Treasury.
Section 7. Minimum Distributions to Employee
(a) The entire value of the Custodial Account shall be distributed or commence
to be distributed, no later than the Employee's Required Beginning Date, over
(i) the life of the Employee, or the lives of the Employee and his or her
designated Beneficiary, or
(ii) a period certain not extending beyond the life expectancy of the
Employee, or the joint and last survivor expectancy of the Employee and his
or her designated Beneficiary.
(b) The amount to be distributed each year, beginning with the calendar year
prior to the year in which the Employee attains the Required Beginning Date and
for each succeeding calendar year, shall not be less than the quotient obtained
by dividing the Employee's Custodial Account balance at the beginning of such
year by the lesser of -
(i) the life expectancy of the Employee (or the joint life expectancy of
the Employee and his or her designated Beneficiary, if applicable), or
(ii) if the Employee's spouse is not the designated Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations. Distributions after
the death of the Employee shall be distributed using the applicable life
expectancy as the relevant divisor without regard to Section 1.401(a)(9)-2
of the Proposed Income Tax Regulations.
(c) Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the Employee by the time distributions are required to
begin, life expectancies shall be recalculated annually. Such election shall be
irrevocable by the Employee and shall apply to all subsequent years. The life
expectancy of a non-spouse Beneficiary may not be recalculated. Instead, life
expectancy will be calculated using the attained age of such Beneficiary during
the calendar year prior to the year in which the Employee attains the Required
Beginning Date, and payments for subsequent years shall be calculated based on
such life expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.
Section 8. Minimum Distributions Upon Death of Employee
(a) If the Employee dies on or after his or her Required Beginning Date, the
remaining portion of such interest shall continue to be distributed at least as
rapidly as under the method of distribution being used prior to the Employee's
death. If the Employee dies before his or her Required Beginning Date,
distribution of the
<PAGE>
Employee's entire interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Employee's death except to the
extent that an election is made by the Employee's designated Beneficiary to
receive distributions in accordance with (i) or (ii) below:
(i) If the Employee's interest is payable to a designated Beneficiary, then
the entire interest of the Employee may be distributed over a certain
period not greater than the life expectancy of the designated Beneficiary,
commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Employee died.
(ii) If the designated Beneficiary is the Employee's surviving spouse, the
date distributions are required to begin in accordance with (i) above shall
not be earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the Employee died or (2)
December 31 of the calendar year in which the Employee would have attained
age 70 1/2.
(c) The amount to be distributed each year pursuant to paragraph (b), above,
shall be not less than the quotient obtained by dividing the Employee's
Custodial Account balance at the beginning of such year by the life expectancy
of the designated Beneficiary.
(d) Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. For purposes of
distributions beginning after the Employee's death, and if the Employee's
surviving spouse is the designated Beneficiary, unless otherwise elected by the
surviving spouse by the time distributions are required to begin, the surviving
spouse's life expectancy shall be recalculated annually. Such election shall be
irrevocable by the surviving spouse and shall apply to all subsequent years. In
the case of any other designated Beneficiary, or in the case of a surviving
spouse who does makes such an election, life expectancies shall be calculated
using the attained age of such Beneficiary during the calendar year in which
distributions are required to begin pursuant to this Section, and payments for
any subsequent calendar year shall be calculated based on such life expectancy
reduced by one for each calendar year which has elapsed since the calendar year
life expectancy was first calculated.
(d) If the designated Beneficiary is the Employee's surviving spouse, the
surviving spouse may elect to treat the Custodial Account as his or her own for
purposes of Section 7 and this Section Section 9. Resignation or Removal of the
Custodian
(a) The Custodian may resign at any time after the expiration of 30 days from
the date of mailing written notice of resignation to The Timothy Plan and the
Employee. The Custodian may be removed by The Timothy Plan at any time after the
expiration of 30 days from the date of mailing of written notice of removal to
the Custodian and the Employee. Any notice hereunder shall specify the effective
date of such resignation or removal.
(b) Upon receipt of notice of resignation or removal a successor custodian may
be appointed by The Timothy Plan, which successor shall be a bank or other
qualified person within the meaning of Section 401(f)(2) of the Code. If no such
successor custodian is appointed prior to the effective date of the Custodian's
resignation or removal, the Custodian may, but shall not be required to, appoint
a qualified successor custodian. If a qualified successor custodian is appointed
the Custodian shall pay over to such successor the assets of the Custodial
Account and all records pertaining thereto and notify the Employer and Employee
of such appointment and the transfer of assets and records. In connection with
such transfer, however, the Custodian is authorized to reserve such sum of money
as is necessary for the payment of its accrued fees.
(c) The Custodian shall terminate the Custodial Account if no qualified
successor custodian has been appointed prior to the effective date of its
resignation or removal. Termination of the Custodial Account shall be effected
by distributing the assets of the Custodial Account by a single sum payment in
cash. Upon completion of such distribution, the Custodian shall be relieved from
all further liability with respect to all amounts so distributed.
Section 10. Fees and Charges
(a) The fees of the Custodian as set forth in the Application shall be paid when
due. Such
<PAGE>
fees may be revised by the Custodian after 60 days written notice thereof to The
Timothy Plan and the Employee (or the Beneficiary following the death of the
Employee).
(b) Any taxes levied or assessed upon or in respect of the Custodial Account,
including any transfer taxes incurred in the investment or reinvestment of the
assets of the Custodial Account, and any custodial fees shall be paid from the
assets of the Custodial Account from available cash and in the absence thereof
the Custodian shall liquidate such securities held in the Custodial Account as
are necessary to pay any such taxes and fees in full.
(c) All other administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian and the compensation to the Custodian, shall constitute a charge upon
the assets of the Custodial Account. Custodian is hereby authorized to redeem or
liquidate sufficient assets of the Custodial Account to pay any of the foregoing
items.
Section 11. Amendment
The Employee and the Custodian hereby delegate to The Timothy Plan the right to
amend this Agreement by submitting a copy of any such amendment to the Employer,
the Employee and the Custodian; provided, however, the duties and
responsibilities of the Custodian shall not be changed without its prior
consent.
Section 12. Miscellaneous
(a) Except as provided by law or by a qualified domestic relations order as
defined in Section 414(p) of the Code, any right or benefit hereunder shall not
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any such right or benefit shall
not in any way be subject to the debts, contracts, liabilities, engagements or
torts of the person who is entitled to such right or benefit, nor shall such
right or benefit be subject to attachment or legal process for or against such
person. Except as otherwise provided by law, the assets held in the Custodial
Account are not subject to the claims of the Employer's creditors.
(b) The Custodian has appointed Fund/Plan Services, Inc. as its agent for
receiving contributions to the Custodial Account and for receiving all written
notices required to be forwarded to the Custodian pursuant to this Agreement.
(c) The Custodian shall be fully protected in acting upon any written order,
Beneficiary designation or-other instrument of the Employee or the Employer
believed by the Custodian to be genuine and to have been properly executed and
upon which it acts in good faith in taking or omitting to take any action.
(d) Upon the expiration of a 30-day period after furnishing to the Employee
written confirmation of a transaction or transactions, the Custodian shall be
released and discharged from all liability and accountability to the Employee or
any third party with respect to such transaction or transactions, except with
respect to a transaction or transactions concerning which the Employee files
written objections with the Custodian within such 30-day period.
(e) Notwithstanding any other provision hereof, the Custodian shall have no
responsibility for
(i) the initial or continued qualification of the Custodial Account under
Section 403(b)(7) of the Code;
(ii) determining the amount of or collecting any contribution;
(iii) determining the amount, character, or timing of any distribution to
the Employee or the Beneficiary other than as instructed pursuant to
Sections 6, 7 and 8 of this Agreement;
(iv) determining the amount of any limitation applicable to the Employee
under Section 402(g), Section 403(b)(2) or Section 415 of the Code; or
(v) determining whether any person or persons other than the Employee's
designated Beneficiary may be entitled, under applicable law, to receive
amounts from the Custodial Account on account of the death of the Employee.
(f) The Custodian shall not be responsible for any liability arising out of this
Agreement except such liability as is
<PAGE>
occasioned by the Custodian's own negligence or willful misconduct. The
Custodian shall not be responsible for any action or non-action taken in
accordance with written instructions or notice received pursuant this Agreement
and may rely upon and shall be protected in acting upon any written order from
the Employer or Employee or any other notice, request, consent, certificate,
Beneficiary designation or other instrument reasonably believed by the Custodian
to be genuine and to have been properly executed hereunder.
(g) The Custodian shall not be obligated to defend or engage in any suit with
respect to the Custodial Account unless the Custodian shall first have agreed in
writing to do so and shall have been fully indemnified to the satisfaction of
the Custodian.
(h) The Custodian will submit reports to the Internal Revenue Service and to the
Employer or Employee in such manner and containing such information as may be
prescribed by the Internal Revenue Service.
(i) This Agreement shall be construed under the laws of the Commonwealth of
Pennsylvania except to the extent any such law is superseded by laws of the
United States.
(j) If any provision of this Agreement is held invalid or unenforceable, its
invalidity or unenforceability shall not affect any other provision of this
Agreement, and this Agreement shall be construed and enforced as if such
provision had not been included.
(k) This Agreement shall become effective upon the effective date set forth in
the Application when the Application is countersigned by or on behalf of the
Custodian.
<PAGE>
EXHIBIT 99B19
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints Joseph M. O'Donnell, Gerald J. Holland, William J. Baltrus and
Gretchen B. Zepernick and each of them, with full power to act without the
other, as a true and lawful attorney-in-fact and agent, with full and several
power of substitution, to sign any and all Amendments to Registration Statement
No. 33-73248 of The Timothy Plan (the "Trust") to be filed with the U.S.
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended; and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the U.S.
Securities and Exchange Commission and to take any appropriate action to qualify
or register all or part of the securities of the Trust for sale in various
states; granting to such attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act requisite and necessary
to be done in connection therewith, as fully as that person might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or any substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the
29th day of November, 1996.
______________________
JOCK SNEDDON
TRUSTEE
ACKNOWLEDGMENT
--------------
State of Florida )
) ss:
County of Orange )
The foregoing instrument was acknowledged before me this 29th day of November,
1996, by JOCK SNEDDON, TRUSTEE of The Timothy Plan.
__________________________
Notary Public
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints Joseph M. O'Donnell, Gerald J. Holland, William J. Baltrus and
Gretchen B. Zepernick and each of them, with full power to act without the
other, as a true and lawful attorney-in-fact and agent, with full and several
power of substitution, to sign any and all Amendments to Registration Statement
No. 33-73248 of The Timothy Plan (the "Trust") to be filed with the U.S.
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended; and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the U.S.
Securities and Exchange Commission and to take any appropriate action to qualify
or register all or part of the securities of the Trust for sale in various
states; granting to such attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act requisite and necessary
to be done in connection therewith, as fully as that person might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or any substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the
29th day of November, 1996.
________________________
PHILIP B. CROSBY
TRUSTEE
ACKNOWLEDGMENT
--------------
State of Florida )
) ss:
County of Orange )
The foregoing instrument was acknowledged before me this 29th day of November,
1996, by PHILIP B. CROSBY, TRUSTEE of The Timothy Plan.
_____________________________
Notary Public
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints Joseph M. O'Donnell, Gerald J. Holland, William J. Baltrus and
Gretchen B. Zepernick and each of them, with full power to act without the
other, as a true and lawful attorney-in-fact and agent, with full and several
power of substitution, to sign any and all Amendments to Registration Statement
No. 33-73248 of The Timothy Plan (the "Trust") to be filed with the U.S.
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended; and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the U.S.
Securities and Exchange Commission and to take any appropriate action to qualify
or register all or part of the securities of the Trust for sale in various
states; granting to such attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act requisite and necessary
to be done in connection therewith, as fully as that person might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or any substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the
29th day of November, 1996.
__________________________
DANIEL D. BUSBY
TRUSTEE
ACKNOWLEDGMENT
--------------
State of Florida )
) ss:
County of Orange )
The foregoing instrument was acknowledged before me this 29th day of November,
1996, by DANIEL D. BUSBY, TRUSTEE of The Timothy Plan.
_________________________________
Notary Public
<PAGE>
[ARTICLE] 6
[CIK] 0000916490
[NAME] THE TIMOTHY PLAN
[SERIES]
[NUMBER] 1
[NAME] INSTITUTIONAL CLASS
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-START] JAN-01-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 10,727,008
[INVESTMENTS-AT-VALUE] 11,646,681
[RECEIVABLES] 26,800
[ASSETS-OTHER] 356
[OTHER-ITEMS-ASSETS] 60,658
[TOTAL-ASSETS] 11,734,495
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 45,303
[TOTAL-LIABILITIES] 45,303
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 10,610,777
[SHARES-COMMON-STOCK] 690,247
[SHARES-COMMON-PRIOR] 609,122
[ACCUMULATED-NII-CURRENT] (5,680)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 164,422
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 919,673
[NET-ASSETS] 11,689,192
[DIVIDEND-INCOME] 190,723
[INTEREST-INCOME] 55,616
[OTHER-INCOME] 0
[EXPENSES-NET] 161,797
[NET-INVESTMENT-INCOME] 84,542
[REALIZED-GAINS-CURRENT] 164,422
[APPREC-INCREASE-CURRENT] 903,008
[NET-CHANGE-FROM-OPS] 1,151,972
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 66,939
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 201,664
[NUMBER-OF-SHARES-REDEEMED] 126,226
[SHARES-REINVESTED] 5,687
[NET-CHANGE-IN-ASSETS] 4,935,758
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 78,848
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 356,764
[AVERAGE-NET-ASSETS] 9,275,969
[PER-SHARE-NAV-BEGIN] 10.07
[PER-SHARE-NII] .10
[PER-SHARE-GAIN-APPREC] 1.17
[PER-SHARE-DIVIDEND] .10
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.24
[EXPENSE-RATIO] 1.60
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000916490
[NAME] THE TIMOTHY PLAN
[SERIES]
[NUMBER] 2
[NAME] RETAIL CLASS
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-START] JAN-01-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 10,727,008
[INVESTMENTS-AT-VALUE] 11,646,681
[RECEIVABLES] 26,800
[ASSETS-OTHER] 356
[OTHER-ITEMS-ASSETS] 60,658
[TOTAL-ASSETS] 11,734,495
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 45,303
[TOTAL-LIABILITIES] 45,303
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 10,610,777
[SHARES-COMMON-STOCK] 350,224
[SHARES-COMMON-PRIOR] 61,522
[ACCUMULATED-NII-CURRENT] (5,680)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 164,422
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 919,673
[NET-ASSETS] 11,689,192
[DIVIDEND-INCOME] 190,723
[INTEREST-INCOME] 55,616
[OTHER-INCOME] 0
[EXPENSES-NET] 161,797
[NET-INVESTMENT-INCOME] 84,542
[REALIZED-GAINS-CURRENT] 164,422
[APPREC-INCREASE-CURRENT] 903,008
[NET-CHANGE-FROM-OPS] 1,151,972
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 23,283
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 314,924
[NUMBER-OF-SHARES-REDEEMED] 28,244
[SHARES-REINVESTED] 2,022
[NET-CHANGE-IN-ASSETS] 4,935,758
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 78,848
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 356,764
[AVERAGE-NET-ASSETS] 9,275,969
[PER-SHARE-NAV-BEGIN] 10.08
[PER-SHARE-NII] .07
[PER-SHARE-GAIN-APPREC] 1.14
[PER-SHARE-DIVIDEND] .07
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.22
[EXPENSE-RATIO] 2.20
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
