Q:  What is the history and philosophy of the fund? A : The Timothy Plan first started over fifteen years ago because nobody else was doing what we felt a large segment of the investing public was interested in; screening investments from a moral perspective. Back in 1994 there were many “social screens” but there were no moral screens. All of our research is done in-house in our headquarters near Orlando, Florida. We research from a moral perspective, looking at what companies do in a structured way. We have researched every company listed on major stock exchanges and we look for companies that meet our moral screens. There is a growing national movement of morally conservative investors and financial planners who seek to keep their money out of the hands of companies whose practices are destroying families and traditional values. These investors avoid investing in companies that promote nontraditional married lifestyles and profit from or support abortion, pornography, antifamily entertainment, alcohol, tobacco and gambling. The movement is not a boycott, nor should it be construed as censorship. Rather, it is a way for conservatives to exercise their rights as investors to avoid capitalizing companies whose products and/or policies are inconsistent with their moral convictions. The most effective way to influence company policy is not from the “inside,” as majority owners, but from the “outside,” as potential investors. Now, with Morally Responsible Investing (“MRI”) becoming more popular, concerned investors have tools to avoid such companies without sacrificing investment return opportunities. The eVALUEator® software screens the portfolios of around 24,000 mutual funds and identifies those that invest their shareholder’s money in companies that promote or profit from pornography, abortion, non-marriage lifestyles, anti-family entertainment, alcohol, tobacco and gambling. Morally-conservative investors have much to gain by engaging in MRI. Social liberals have proven the effectiveness of using “social capital” to influence corporate behavior. Homosexuals, for instance, have used their investment dollars to fight for “gay rights.” We research whether companies fail our basic moral screens that are laid out in our prospectus and our commitment to our shareholders. We check if they are involved in abortion, pornography, non-traditional family lifestyles, anti-family entertainment or the production of alcohol, tobacco, or casino gambling. We apply these screens and develop a list of companies that we will not own. We have always been very passive by nature and prepare a list of companies that do not meet our moral screens and only provide this to our fund managers or sub-advisors. We do not dictate investment strategy for each fund but we restrict the fund holdings to a preapproved list. Fund managers make the investment case and decide when to buy and sell stocks. We apply the moral research so the money managers don’t have to, giving them the freedom to apply their economic research. Q:  What kind of investors do your funds attract? A : Historically, the three most important topics for the industry have been, until recently, performance, performance and performance. If you stand in an investor’s shoes, it is more than that. Performance is important but it is not the top priority in our approach. The number one priority for our shareholders is the moral perspective. Our investors want to know where their money is invested, and whether it conflicts with their basic moral belief system. Their second most important thing is “don’t lose my money.” We are a niche fund, however the market niche is huge. it is just now starting to awaken because relatively few investors have ever thought in terms of where is my money being invested. The industry is finally coming to grips with the fact that you can align the way you invest money with your moral belief system. If an investor is pro-life, how much money do you think he wants invested in companies promoting abortions? We are conservative in all our funds and in our large and in large mid-cap growth fund as well. Growth sounds more aggressive but we are conservative. Capital preservation is job number one and then we’d like our managers to outperform their benchmark indexes, the relevant index for the market cycle which we consider about fi ve years. We don’t panic if results in a year, quarter or a month are down or up as long as these managers continue to adhere to their respective investment disciplines. Our whole team is focused on researching moral issues and company’s conduct. Jason is one of the various lead managers from one of the various firms we work with because all of our funds are sub-advised by outside top-tier money management firms. every year our asset growth is better than the industry as a whole. In years of decline, which there have only been a couple, it’s less than the industry as a whole. We are a piece of the puzzle where we can help people invest and still achieve their moral objectives. It has a lot to do with the sub advisors we select. We don’t manage the funds, they do from an economic perspective. Q:  What is your investment research process? A : The moral screens only dwindle down the universe of 8,000 companies to 7,500. Our sub-advisory services focus on selecting the best companies from this list. We focus our efforts on dissecting earnings and drivers of earnings. We are looking for companies where profit margins can grow and lift total earnings. We are looking to understand company’s product portfolio and new product cycles. To us a company with growing product portfolio and rising profit margin is a sign of stability that can reward shareholders over a long period of time. We are a ‘bottoms up’ firm that focuses on analyzing companies within their industry. Very little of our process, strategy or philosophy is driven by any top down sector analysis although that’s becoming an important factor in this current environment. In times of crises, all correlations go to one, but we are sticking to our strategy, which is to analyze and research companies and look for companies that have organic growth. in the Large Mid-Cap Fund we invest in companies that are as large as Microsoft or ExxonMobil and as small as market cap of one billion. At the end of the first quarter, our weighted average market cap was around $32 billion with about 75 names in the portfolio. Our focus, despite the current economic downturn, is to look for companies that can produce big returns once we return to more normalized operating environment. As in this downturn, companies that had a higher multiple because they had higher growth tend to have been the most penalized. We think that this creates opportunity as we move into a more normal environment in the future. The companies that have better growth profiles will be rewarded in their valuation. We don’t chase short-term such as fads or trends. We just stay true to the investment principles. We buy value. Even in our growth funds, we buy companies we want to own. One of the characteristics we most value is we firmly believe that if you stick to your discipline and continue to invest in that way, you will be rewarded as an investor. That’s one of the hallmarks of our investment style and philosophy. For example, we added O’Reilly Automotives in the fourth quarter of last year. They sell to the do-it-yourself market and the professional mechanics market, independent auto mechanic shops. It’s about a 50:50 split in business between the two, which is a nice balance. As new car sales have slumped, more drivers are keeping their older cars on the road. Whether they choose to replace their broken alternator themselves and buy it off the shelf or whether they take it to a mechanic to get it fixed, O’Reilly sells them the part. They acquired last year CSK Auto that expanded the geographic footprint in the West Coast. They are adding to the retail stores modern distribution centers, which is, in our view, critical for this type of business. It has a large number of items for different product types. They have a tremendous track record of integrating prior acquisitions and expanding their footprint geographically and driving new business through existing retail footprints and they are primarily able to do it as the market leader in selling to the professional installers. Q:  What is your portfolio discipline? A : I have 76 companies ranging in market cap anywhere from mid-tolarge. Bottoms up, we do look at sector allocation and make sure we are not exceeding some stated risk tolerances. Those that are we do not go more than double or 10% greater than any of the sector benchmark weightings does. Our benchmark is the Russell 1000 growth for the large mid-cap fund. We have sector allocation weightings and as a risk control we have limits on name counts. We target between 60 and 90 names in the portfolio spread out across all the sectors. In the large cap names that we own, we have a valuation discipline where we do not buy or hold securities that are trading at more than a 25% premium to the market on forward earnings multiple. We have grown in the belief that extremely rapid earnings growth is unsustainable in the large cap space over long-term. When we have a stock that is trading at more than 25% premium to the market on forward earnings, we take that as our valuation limit and we use that as our sale trigger. Q:  What are your views in managing portfolio risks and how do you try to control it? A : There are two risks that we focus on and worry about. We are constantly evaluating change in industry dynamics and our views of future earnings growth at the company. Since we rely on the management to execute their business strategy, we also look for any change in direction. If there is a management change in a company, that is a significant risk. We are in frequent touch with management of companies that we invest. We spend a lot of time analyzing and deciding if we think that change is in our best interest. Sometimes it is and sometimes it’s an indicator of shift in strategy away from where we had originally targeted that company.