UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08228
The Timothy Plan
(Exact name of registrant as specified in charter)
1304 West Fairbanks Avenue Winter Park, FL | 32789 | |
| (Address of principal executive offices) | (Zip code) |
Citco Mutual Fund Services
83 General Warren Blvd., Suite 200
Malvern, PA 19355
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-800-846-7526
Date of fiscal year end: 12/31/2004
Date of reporting period: 12/31/2004
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
| ITEM 1. | The Annual Report to Shareholders for the period ended December 31, 2004 pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended, (the “1940 Act”) C17 CFR 270.30e-1 is filed herewith. |
THE TIMOTHY PLAN
conservative growth portfolio variable series
Annual Report
December 31, 2004
LETTER FROM THE PRESIDENT
December 31, 2004
ARTHUR D. ALLY
Dear Timothy Plan Conservative Growth Portfolio Variable Series Shareholder:
I remember my dad once telling me that, as you get older, time speeds up. Although logic would explain that there are still 24 hours in a day and 365 days in a year, I’m beginning to think that dad was right. Even though the year 2004 was a leap year with 366 days, it seemed a lot shorter than 2003 which seemed a lot shorter than 2002, etc.
As you know, the Conservative Growth Portfolio Variable Series is comprised of a specific fixed asset allocation that is invested in five of our underlying funds. From my perspective, our overall performance in 2004 was respectable, especially in view of the uncertainty created by a presidential election and a continuing war in Iraq. Although performance was not as good as 2003, it was a whole lot better than 2002 – the year the market experienced some serious correction. And, for what it’s worth, I have a feeling that 2005 – even with its rough start – will prove to be mildly positive. Of course, in this industry, we cannot (and must not) ever make any guarantees of that fact.
We continue to have confidence in our various sub-advisors although we do plan to recommend one manager change in 2005. While performance will vary from year to year, we believe that good money managers will produce competitive returns over full market cycles. Our commitment to our shareholders continues to be that we take our role as managers of our managers very seriously.
In another vein, I am pleased to report that our mission continues to be on track. The Biblical Stewardship Seminar Series that we launched last year is beginning to have an impact. We have trained nearly 200 Christian financial planners and 50 ministry leaders to date and have certified them to teach this program in the churches and ministries in their respective communities or circles of influence. Once again, if any of you have an interest in having this seminar series presented to your church or ministry, please call us at 1-800-846-7526 or email us at invest@timothyplan.com.
Thanks again for being part of the Timothy Plan family.
Sincerely, |
 |
Arthur D. Ally, President |
RETURNS FOR THE YEAR ENDED
December 31, 2004
TIMOTHY PLAN CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
Fund/Index | 1 Year | Average Annual Total Return Since Inception May 1, 2002 | ||||
Timothy Plan Conservative Growth Portfolio Variable Series | 5.97 | % | 4.41 | % | ||
S&P 500 Index | 10.88 | % | 6.04 | % | ||
The chart shows the value of a hypothetical initial investment of $10,000 in the Fund, and the S&P 500 Index on May 1, 2002 and held through December 31, 2004. The S&P 500 Index is widely recognized, unmanaged index of common stock prices. Performance figures include the change in value of the stocks in the index and the reinvestment of dividends. The index returns do not reflect expenses, which have been deducted from the Fund’s return. The returns shown do not reflect deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. THE FUND’S RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS.
OFFICERS AND TRUSTEES OF THE TRUST
As of December 31, 2004
TIMOTHY PLAN FAMILY OF FUNDS
Name, Age and Address | Position(s) Held With Trust | Term of Office | Number of Portfolios in Fund | |||
Arthur D. Ally* 1304 W Fairbanks Avenue Winter Park, FL | Chairman and President | Indefinite; Trustee and President since 1994 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1942 | President and controlling shareholder of Covenant Funds, Inc. (“CFI”), a holding company. President and general partner of Timothy Partners, Ltd. (“TPL”), the investment adviser and principal underwriter to each Fund. CFI is also the managing general partner of TPL. | None | ||||
Name, Age and Address | Position(s) Held With Trust | Term of Office and Length of Time Served | Number of Portfolios in Fund | |||
Joseph E. Boatwright** 1410 Hyde Park Drive Winter Park, FL | Trustee, Secretary | Indefinite; Trustee and Secretary since 1995 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1930 | Retired Minister. Currently serves as a consultant to the Greater Orlando Baptist Association. Served as Senior Pastor to Aloma Baptist Church from 1970-1996. | None | ||||
Name, Age and Address | Position(s) Held With Trust | Term of Office | Number of Portfolios in Fund | |||
Mathew D. Staver** 210 East Palmetto Avenue Longwood, FL 32750 | Trustee | Indefinite; Trustee since 2000 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1956 | Attorney specializing in free speech, appellate practice and religious liberty constitutional law. Founder of Liberty Counsel, a religious civil liberties education and legal defense organization. Host of two radio programs devoted to religious freedom issues. Editor of a monthly newsletter devoted to religious liberty topics. Mr. Staver has argued before the United States Supreme Court and has published numerous legal articles. | None | ||||
OFFICERS AND TRUSTEES OF THE TRUST
As of December 31, 2004
TIMOTHY PLAN FAMILY OF FUNDS
Name, Age and Address | Position(s) Held With Trust | Term of Office | Number of Portfolios in Fund | |||
Richard W. Copeland 631 Palm Springs Drive Altamonte Springs, FL 32701 | Trustee | Trustee from 2005, new as of 2/25/2005 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1947 | Principal of Richard W. Copeland, Attorney at Law for 31 years specializing in tax and estate planning. B.A. from Mississippi College, JD and LLM Taxation from University of Miami. Associate Professor Stetson University for past 29 years. | None | ||||
Name, Age and Address | Position(s) Held With Trust | Term of Office and Length of Time Served | Number of Portfolios in Fund | |||
Bill Johnson 903 S. Stewart Street Fremont, MI 48412 | Trustee | Trustee from 2005, new as of 2/25/2005 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1946 | President (and Founder) of American Decency Association, Freemont, MI since 1999. Previously served as Michigan State Director for American Family Association (1987-1999). Previously a public school teacher for 18 years. B.S. from Michigan State University and a Masters of Religious Education from Grand Rapids Baptist Seminary. | None | ||||
Name, Age and Address | Position(s) Held With Trust | Term of Office | Number of Portfolios in Fund | |||
Kathryn Tindal Martinez 4398 New Broad Street Orlando, FL 32814 | Trustee | Trustee from 2005, new as of 2/25/2005 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1949 | Served on board of directors from 1991 to present, including House of Hope, B.E.T.A., Childrens’ Home Society, and Susan B. Anthony List. Previously a private school teacher and insurance adjuster. B.A. received from Florida State University State University and MAT from Rollins College, FL. | None | ||||
OFFICERS AND TRUSTEES OF THE TRUST
As of December 31, 2004
TIMOTHY PLAN FAMILY OF FUNDS
Name, Age and Address | Position(s) Held With Trust | Term of Office | Number of Portfolios in Fund | |||
John C. Mulder 2925 Professional Place Colorado Springs, CO 80904 | Trustee | Trustee from 2005, new as of 2/25/2005 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1950 | President Christian Community Foundation and National Foundation since 2001. Prior: 22 years of executive experience for a group of banks and a trust company. B.A. in Economics from Wheaton College and MBA from University of Chicago. | None | ||||
Name, Age and Address | Position(s) Held With Trust | Term of Office | Number of Portfolios in Fund | |||
Charles E. Nelson 1145 Cross Creek Circle Altamonte Springs, FL | Trustee | Indefinite; Trustee since 2000 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1934 | Certified Public Accountant. Director of Operations, National Multiple Sclerosis Society Mid Florida Chapter. Formerly Director of Finance, Hospice of the Comforter, Inc. Formerly Comptroller, Florida United Methodist Children’s Home, Inc. Formerly Credit Specialist with the Resolution Trust Corporation and Senior Executive Vice President, Barnett Bank of Central Florida, N.A. Formerly managing partner, Arthur Andersen, CPA firm, Orlando, Florida branch. | None | ||||
Name, Age and Address | Position(s) Held With Trust | Term of Office | Number of Portfolios in Fund | |||
Wesley W. Pennington 442 Raymond Avenue Longwood, FL | Trustee | Indefinite; Trustee since 1994 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
Born: 1930 | Retired Air Force Officer. Past President, Westwind Holdings, Inc., a development company, since 1997. Past President and controlling shareholder, Weston, Inc., a fabric treatment company, form 1979-1997. President, Designer Services Group 1980-1988. | None | ||||
OFFICERS AND TRUSTEES OF THE TRUST
As of December 31, 2004
TIMOTHY PLAN FAMILY OF FUNDS
Name, Age and Address | Position(s) Held With Trust | Term of Office and | Number of Portfolios in Fund | |||
Scott Preissler, Ph.D. P O Box 50434 Indianapolis, IN 46250 | Trustee | Indefinite; New as of 1/1/04 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
| Born: 1960 | President and CEO of Christian Stewardship Association where he has been affiliated for the past 14 years. | None | ||||
Name, Age and Address | Position(s) Held With Trust | Term of Office and | Number of Portfolios in Fund | |||
Alan M. Ross 11210 West Road Roswell, Ga 30075 | Trustee | Indefinite; New as of 1/1/04 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
| Born: 1951 | Founder and CEO of Corporate Development Institute which he founded five years ago. Previously he served as President and CEO of Fellowship of Companies for Christ and has authored three books: Beyond World Class, Unconditional Excellence, Breaking Through to Prosperity. | None | ||||
Name, Age and Address | Position(s) Held With Trust | Term of Office and | Number of Portfolios in Fund | |||
Dr. David J. Tolliver 4000 E. Maplewood Drive Excelsior Springs, MO 64024 | Trustee | Trustee from 2005, new as of 2/25/2005 | 11 | |||
Principal Occupation During Past 5 Years | Other Directorships Held by Trustee | |||||
| Born: 1951 | Senior Pastor Pisgah Baptist Church, Excelsior Springs, MO since 1999. Previously pastored three churches in St. Louis, MO area (1986-1999). Currently serves on Board of Trustees Midwestern Baptist Theological Seminary. Past President Missouri Baptist Convention (2003-2004) | None | ||||
INDUSTRIES/EXPENSE EXAMPLE
December 31, 2004
TIMOTHY PLAN CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
FUND PROFILE:
Industries
(% of Net Assets)
Mid & Large Cap Value | 27.50 | % | |
Fixed Income | 27.05 | % | |
Mid & Large Cap Growth | 19.94 | % | |
Small Cap Value | 13.61 | % | |
Money Market | 9.88 | % | |
Cash & Equivalents | 2.02 | % | |
| 100.00 | % | ||
EXPENSE EXAMPLE:
As a shareholder of the Fund, you incur two types of costs: direct costs, such as wire fees and low balance fees; and indirect costs, including management fees, and other Fund operating expenses. This example is intended to help you understand your indirect costs, also referred to as “ongoing costs,” (in dollars) of investing in the Fund, and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period of July 1, 2004, through December 31, 2004.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested at the beginning of the period, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
INDUSTRIES/EXPENSE EXAMPLE
December 31, 2004
TIMOTHY PLAN CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
Hypothetical example for comparison purposes
The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any direct costs, such as wire fees or low balance fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these direct costs were included, your costs would be higher.
| Beginning Account Value 7/1/04 | Ending Account Value 12/31/04 | Expenses Paid During Period* July 1, 2004 Through 12/31/04 | |||||||
Actual | $ | 1,000.00 | $ | 1,031.40 | $ | 4.34 | |||
Hypothetical - (5% return before expenses) | 1,000.00 | 1,020.86 | 4.32 | ||||||
| * | Expenses are equal to the Fund’s annualized expense ratio of 0.85%, which is net of any expenses paid indirectly, multiplied by the average account value over the period, multiplied by 184 days/366 days (to reflect the one-half year period). The Fund’s ending account value on the first line in the table is based on its actual total return of 3.14% for the six-month period of July 1, 2004, to December 31, 2004. |
CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
SCHEDULE OF INVESTMENTS
As of December 31, 2004
MUTUAL FUNDS - 97.98%
number of shares | market value | |||||||
167,650 | Timothy Fixed Income Fund - Class A | $ | 1,730,150 | 27.05 | % | |||
190,608 | Timothy Large Mid Cap Growth Fund - Class A* | 1,275,169 | 19.94 | % | ||||
138,686 | Timothy Large Mid Cap Value Fund - Class A* | 1,758,544 | 27.49 | % | ||||
632,193 | Timothy Plan Money Market Fund | 632,193 | 9.88 | % | ||||
55,843 | Timothy Small Cap Value Fund - Class A | 870,599 | 13.61 | % | ||||
| Total Mutual Funds (cost $5,779,732) | 6,266,655 | 97.98 | % | |||||
SHORT TERM INVESTMENTS - 0.35% | ||||||||
number of shares | market value | |||||||
22,125 | Federated Cash Trust Series II Treasury Fund (cost $22,125) | 22,125 | 0.3459 | % | ||||
| Total Investments - 98.33% (identified cost $5,801,857) | 6,288,780 | 98.3252 | % | |||||
| OTHER ASSETS LESS LIABILITIES, NET—1.67% | 107,118 | 1.6748 | % | |||||
| Net Assets - 100.00% | $ | 6,395,898 | 100.0000 | % | ||||
| 100.00 | % | |||||||
| * | Non-income producing |
The accompanying notes are an integral part of these financial statements.
CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 2004
| ASSETS | |||
| amount | |||
Investments in Securities at Value (identified cost $5,801,857) [NOTE 1] | $ | 6,288,780 | |
Receivables: | |||
Fund Shares Sold | 8,549 | ||
Interest | 149 | ||
Dividends | 105,999 | ||
Total Assets | 6,403,477 | ||
| LIABILITIES | |||
| amount | |||
Accrued Advisory Fees | $ | 3,871 | |
Accrued Expenses | 3,708 | ||
Total Liabilities | 7,579 | ||
| NET ASSETS | |||
| amount | |||
Net Assets | $ | 6,395,898 | |
| SOURCES OF NET ASSETS | |||
| amount | |||
At December 31, 2004, Net Assets Consisted of: | |||
Paid-in Capital | $ | 5,891,882 | |
Accumulated Net Realized Gain on Investments | 5,311 | ||
Undistributed Net Investment Income | 11,782 | ||
Net Unrealized Appreciation in Value of Investments | 486,923 | ||
Net Assets | $ | 6,395,898 | |
Shares of Capital Stock Outstanding (No Par Value, Unlimited Shares Authorized) | $ | 572,318 | |
Net Asset Value, Offering and Redemption Price Per Share ($6,395,898 / 572,318 Shares) | $ | 11.18 | |
The accompanying notes are an integral part of these financial statements.
CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2004
| INVESTMENT INCOME | |||
| amount | |||
Interest | $ | 4,522 | |
Dividends | 62,031 | ||
Total Investment Income | 66,553 | ||
| EXPENSES | |||
| amount | |||
Investment Advisory Fees [Note 3] | 4,791 | ||
Fund Accounting, Transfer Agency, & Administration Fees | 11,053 | ||
Custodian Fees | 2,702 | ||
Participation Fees | 7,634 | ||
Printing Fees | 724 | ||
Audit Fees | 174 | ||
Legal Fees | 912 | ||
Insurance Fees | 394 | ||
Registration Fees | 227 | ||
Miscellaneous Expense | 2,254 | ||
Total Expenses | 30,865 | ||
Expenses Recouped by Advisor [NOTE 3] | 9,862 | ||
Total Net Expenses | 40,727 | ||
Net Investment Income | 25,826 | ||
| REALIZED AND UNREALIZED GAIN ON INVESTMENTS | |||
| amount | |||
Net Realized Gain on Investments | 9,239 | ||
Capital Gain Distributions from other Investment Companies | 76,315 | ||
Change in Unrealized Appreciation of Investments | 197,528 | ||
Net Realized and Unrealized Gain on Investments | 283,082 | ||
Increase in Net Assets Resulting from Operations | $ | 308,908 | |
The accompanying notes are an integral part of these financial statements.
CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
STATEMENTS OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
| year ended 12/31/04 | year ended 12/31/03 | |||||||
Operations: | ||||||||
Net Investment Income | $ | 25,826 | $ | 8,586 | ||||
Net Realized Gain(Loss) on Investments | 9,239 | (2,775 | ) | |||||
Capital Gain Distributions from Other Investment Companies | 76,315 | 11,035 | ||||||
Net Change in Unrealized Appreciation of Investments | 197,528 | 397,398 | ||||||
Increase in Net Assets (resulting from operations) | 308,908 | 414,244 | ||||||
Distributions to Shareholders: | ||||||||
Net Income | — | — | ||||||
Net Realized Gains | — | — | ||||||
Total Distributions to Shareholders | — | — | ||||||
Capital Share Transactions: | ||||||||
Proceeds from Shares Sold | 2,746,844 | 2,026,042 | ||||||
Dividends Reinvested | — | — | ||||||
Cost of Shares Redeemed | (342,439 | ) | (262,984 | ) | ||||
Increase in Net Assets (resulting from capital share transactions) | 2,404,405 | 1,763,058 | ||||||
Total Increase in Net Assets | 2,713,313 | 2,177,302 | ||||||
Net Assets: | ||||||||
Beginning of Year | 3,682,585 | 1,505,283 | ||||||
End of Year [Including undistributed net investment income of $11,782, and $10,008, respectively] | $ | 6,395,898 | $ | 3,682,585 | ||||
Shares of Capital Stock of the Fund Sold and Redeemed: | ||||||||
Shares Sold | 255,216 | 210,216 | ||||||
Shares Reinvested | — | — | ||||||
Shares Redeemed | (32,059 | ) | (28,866 | ) | ||||
Net Increase in Number of Shares Outstanding | 223,157 | 181,350 | ||||||
The accompanying notes are an integral part of these financial statements.
CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
FINANCIAL HIGHLIGHTS
The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
| year ended 12/31/04 | year ended 12/31/03 | period ended 12/31/02 (C) | ||||||||||
Per Share Operating Performance: | ||||||||||||
Net Asset Value, Beginning of Period | $ | 10.55 | $ | 8.97 | $ | 10.00 | ||||||
Income from Investment Operations: | ||||||||||||
Net Investment Income | 0.03 | 0.02 | 0.07 | |||||||||
Net Realized and Unrealized Gain (Loss) on Investments | 0.60 | 1.56 | (1.07 | ) | ||||||||
Total from Investment Operations | 0.63 | 1.58 | (1.00 | ) | ||||||||
Less Distributions: | ||||||||||||
Dividends from Net Investment Income | — | — | (0.03 | ) | ||||||||
Dividends from Realized Gains | — | — | — | |||||||||
Total Distributions | — | — | (0.03 | ) | ||||||||
Net Asset Value at End of Period | $ | 11.18 | $ | 10.55 | $ | 8.97 | ||||||
Total Return (A) | 5.97 | % | 17.61 | % | (10.00 | )% | ||||||
Ratios/Supplemental Data: | ||||||||||||
Net Assets, End of Period (in 000s) | $ | 6,396 | $ | 3,683 | $ | 1,505 | ||||||
Ratio of Expenses to Average Net Assets: | ||||||||||||
Before Reimbursement and Waiver/Recoupment of Expenses by Advisor | 0.65 | % | 0.85 | % | 3.09 | %(B) | ||||||
After Reimbursement and Waiver/Recoupment of Expenses by Advisor | 0.85 | % | 0.85 | % | 0.85 | %(B) | ||||||
Ratio of Net Investment Income (Loss) to Average Net Assets: | ||||||||||||
Before Reimbursement and Waiver/Recoupment of Expenses by Advisor | 0.74 | % | 0.36 | % | (1.45 | )(B) | ||||||
After Reimbursement and Waiver/Recoupment of Expenses by Advisor | 0.54 | % | 0.36 | % | 0.79 | %(B) | ||||||
Portfolio Turnover | 2.26 | % | 2.30 | % | 6.48 | % | ||||||
| (A) | For Periods of Less Than One Full Year, Total Returns Are Not Annualized. |
| (B) | Annualized. |
| (C) | For the period May 1, 2002 (commencement of operations) to December 31, 2002. |
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
TIMOTHY PLAN CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
Note 1 – Significant Accounting Policies
The Timothy Plan Conservative Growth Portfolio Variable Series (“Fund”) was organized as a diversified series of The Timothy Plan (the “Trust”). The Trust is an open-ended investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated December 14, 1993 (the “Trust Agreement”). The Fund’s primary objective is moderate long-term capital growth, with a secondary objective of current income only to the extent that the Timothy Funds in which the Fund invests seek current income. The Fund seeks to achieve its investment objectives by investing primarily in the following Timothy Funds: Small Cap Value Fund, Large/Mid Cap Value Fund, Large/Mid Cap Growth Fund, Fixed Income Fund and the Money Market Fund. The Fund is one of one series of funds currently authorized by the Board of Trustees. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America for investment companies. The Fund began operations May 1, 2002.
A. Security Valuation.
The Fund purchases Class A Shares of the Timothy Funds at net asset value without any sales charges. With respect to securities owned by the Timothy Funds, 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 markets, 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 values as determined by the Adviser in conformity with guidelines adopted by and subject to the review of the Board of Trustees. Short-term obligations with remaining maturities of 60 days or less are valued at cost plus accrued interest, which approximates market value.
B. Investment Income and Securities Transactions.
Security transactions are accounted for on the date the securities are purchased or sold (trade date). Cost is determined and gains and losses are based on the identified cost basis for both financial statement and federal income tax purposes. Dividend income and distributions to shareholders are reported on the ex-dividend date. Interest income and expenses are accrued daily.
C. Net Asset Value Per Share.
Net asset value per share of the capital stock of each Fund is determined daily as of the close of trading on the New York Stock Exchange by dividing the value of its net assets by the number of Fund shares outstanding.
D. Federal Income Taxes.
It is the policy of the Fund to comply with all requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. See Note 7 regarding the Fund’s tax status.
E. Use of Estimates.
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Note 2 – Purchases and Sales of Securities
The following is a summary of the cost of purchases and proceeds from the sale of securities, other than short-term investments, for the year ended December 31, 2004:
fund | purchases | sales | ||||
Conservative Growth Portfolio | $ | 2,262,243 | $ | 98,095 | ||
Strategic Growth Portfolio | $ | 3,220,000 | $ | 485,000 | ||
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
TIMOTHY PLAN CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
Note 3 – Investment Management Fee and Other Transactions with Affiliates
Timothy Partners, LTD., (“TPL”) is the Investment Advisor for the Fund pursuant to an Amended and Restated Investment Advisory Agreement (the “Agreement”) effective February 27, 2004. Under the terms of the Agreement, TPL receives a fee, accrued daily and paid monthly, at an annual rate of 0.10% of the average daily net assets of each Fund.
The Advisor has contractually agreed to reduce fees payable to it by the Fund and reimburse other expenses to the extent necessary to limit the Fund’s aggregate annual operating expenses, excluding brokerage commissions and other portfolio transaction expenses, interest, taxes, capital expenditures and extraordinary expenses, to 0.85% of average daily net assets through May 1, 2005.
For the year ended December 31, 2004, TPL recouped previously waived and reimbursed expenses in the amount of $9,862.
The Fund has agreed to repay waived and formerly reimbursed expenses within the following three years provided the Fund is able to effect such reimbursements and remain in compliance with applicable limitations.
At December 31, 2004, the cumulative amounts available for reimbursement that has been paid and/or waived by the Advisor on behalf of the Funds are as follows:
fund | |||
Conservative Growth Portfolio | $ | 7,270 | |
Strategic Growth Portfolio | $ | 7,465 | |
At December 31, 2004, the Advisor may recapture a portion of the above amounts no later than the dates as stated below:
| December 31, | |||||||||
fund | 2005 | 2006 | 2007 | ||||||
Conservative Growth Fund | $ | 7,270 | $ | — | $ | — | |||
Strategic Growth Fund | $ | — | $ | — | $ | 7,465 | |||
Note 4 – Unrealized Appreciation (Depreciation)
At December 31, 2004, the cost for federal income tax purposes is and the composition of gross unrealized appreciation (depreciation) of investment securities is as follows:
fund | cost | app | dep | net app. /dep. | |||||||||
Conservative Growth | $ | 5,807,581 | $ | 481,199 | $ | — | $ | 481,199 | |||||
Strategic Growth | $ | 6,446,887 | $ | 831,397 | $ | (3,398 | ) | $ | 827,999 | ||||
Note 5 – Distributions to Shareholders
No cash distributions were paid for the years ended December 31, 2004 and 2003.
A capital gain consent dividend of $84,192, equivalent to $0.15 per share, and an ordinary income dividend of $25,826, equivalent to $0.05 per share, was deemed to be paid on December 31, 2004.
As of December 31, 2004, the components of distributable earnings on a tax basis were as follows:
Conservative Growth Portfolio | |||
Undistributed Ordinary Income | $ | 11,782 | |
Undistributed Long-term Capital Gains | 11,035 | ||
Unrealized Appreciation* | 481,199 | ||
| $ | 504,016 | ||
| * | The difference between book-basis and tax-basis unrealized appreciation are attributable to deferral treatments of wash sales. |
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
TIMOTHY PLAN CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
Note 6 – Reclassifications
Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. Federal tax regulations, which may differ from those amounts determined under accounting principles generally accepted in the United States of America. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain, as appropriate, in the period that the differences arise. Accordingly, the following permanent differences as of December 31, 2004 primarily attributable to the consent dividend payment, were reclassified to the following accounts:
fund | Income | Gains | Paid-in- Capital | ||||||||
Conservative Growth Portfolio | $ | (24,052 | ) | $ | (87,004 | ) | $ | 111,056 | |||
Note 7 – Subsequent Event
Required dividends for the Fund’s 2002 and 2003 taxable years were not properly paid. To ensure that the Fund was in compliance with all Internal Revenue Service (“IRS”) regulations as a regulated investment company, the Fund sought an agreement with the IRS with respect to payment of the dividends. The Fund anticipates that the IRS will approve a resolution favorable to the Fund and its shareholders. Further, the Fund has received assurances from certain parties that the Fund will be fully indemnified and reimbursed for any penalties, interest and legal expenses resulting from the failure to pay said dividends.
Note 8 – N–Q Disclosure & Proxy Procedures
The SEC has adopted the requirement that all Funds file a complete schedule of investments with the SEC for their first and third fiscal quarters on Form N-Q for fiscal quarters ending after July 9, 2004. For the Timothy Plan Funds this would be for the fiscal quarters ending March 31 and September 30. The Form N-Q filing must be made within 60 days of the end of the quarter. The Timothy Plan Funds’ Forms N-Q will be available on the SEC’s website at http://sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room).
The Trust has adopted Portfolio Proxy Voting Policies and Procedures under which the Portfolio’s vote proxies related to securities (‘portfolio proxies”) held by the Portfolios. A description of the Trust’s Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Company toll-free at 800-846-7526 and (ii) on the SEC’s website at www.sec.govn addition, the fund will be required to file new Form N-PX, with its complete voting record for the 12 months ended June 30th, no later than August 31st of each year. The first such filing was due August 31, 2004. Once filed, the Trusts’s Form N-PX will be available (i) without charge, upon request, by calling the Company toll-free at 800-846-7526 and (ii) on the SEC’s website at www.sec.gov.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TIMOTHY PLAN CONSERVATIVE GROWTH PORTFOLIO VARIABLE SERIES
To the Shareholders and Board of Trustees
The Timothy Plan
Winter Park, Florida
We have audited the accompanying statement of assets and liabilities of The Timothy Plan Conservative Growth Portfolio Variable Series (“the Fund”), a series of shares of The Timothy Plan, including the portfolio of investments, as of December 31, 2004, the related statements of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and the period ended December 31, 2002. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (US). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2004, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Timothy Plan Conservative Growth Portfolio Variable Series as of December 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.
 |
| TAIT, WELLER & BAKER |
Philadelphia, Pennsylvania |
February 18, 2005, except for |
Note 7, as to which the date is |
April 18, 2005 |
1304 West Fairbanks Avenue
Winter Park, FL 32789
(800) TIM-PLAN
(800) 846-7526
Visit the Timothy Plan web site on the internet at:
www.timothyplan.com
This report is submitted for the general information of the shareholders of the Fund. It is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus which includes details regarding the Fund’s objectives, policies, expenses and other information. Distributed by Timothy Partners, Ltd.
| ITEM 2. | CODE OF ETHICS. |
(a) The registrant has, as of the end of the period covered by this report, adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
(b) During the period covered by this report, there were no amendments to any provision of the code of ethics.
(c) During the period covered by this report, there were no waivers or implicit waivers of a provision of the code of ethics.
(d) The registrant’s code of ethics is filed herewith.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The registrant’s Board of Trustees has determined that Charles Nelson, a member of the registrant’s Board of Trustees and Audit Committee, qualifies as an audit committee financial expert. Mr. Nelson is “independent” as that term is defined in paragraph (a)(2) of this item’s instructions.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
The aggregate audit fees billed to The Timothy Plan. for the last two fiscal years by the principal accountant were $79,500. and $73,000, respectively.
Audit-Related Fees. There were no audit related fees, other than those noted under “Audit Fees” Disclosure, billed to The Timothy Plan for the last two fiscal years by the principal accountant.
Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance were $24,000. and $22,000., respectively.
All Other Fees. There were no aggregate fees billed in the last two fiscal years for products and services provided by the registrant’s principal accountant, other than the services reported in paragraphs (a) through (c) of this Item.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
| ITEM 6. | SCHEDULE OF INVESTMENTS |
Included in the Annual Report to Shareholders filed under Item 1 of this form.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANY |
Not Applicable
| ITEM 9. | PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
There has been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
| ITEM 11. | CONTROLS AND PROCEDURES |
| a. | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended. |
| b. | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
ITEM 12. EXHIBITS.
| (a | )(1) | Code of Ethics required to be disclosed under item 2 is attached hereto. | |
| (a | )(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |
| (b | ) | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto. | |
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Timothy Plan. | ||
| By | /s/ ARTHUR D. ALLY | |
| Arthur D. Ally, PRESIDENT | ||
Date 4/21/2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By | /s/ ARTHUR D. ALLY | |
| Arthur D. Ally, PRESIDENT | ||
Date 4/21/2005
| By | /s/ ARTHUR D. ALLY | |
| Arthur D. Ally, TREASURER | ||
Date 4/21/2005
| * | Print the name and title of each signing officer under his or her signature. |