AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1997
File No. 333-00641
File No. 811-07527
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 10
and
REGISTRATION STATEMENT UNDER
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 11
TIP FUNDS
(formerly, Turner Funds)
(Exact Name of Registrant as Specified in Charter)
c/o The CT Corporation System
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (610) 251-0268
(Name and Address of Agent for Service)
STEPHEN KNEELEY
TURNER INVESTMENT PARTNERS, INC.
1235 WESTLAKES DR., SUITE 350
BERWYN, PENNSYLVANIA 19312-2414
Copies to:
JAMES W. JENNINGS, ESQUIRE JOHN H. GRADY, JR., ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE 1800 M STREET, NW
PHILADELPHIA, PENNSYLVANIA 19103 WASHINGTON, DC 20036
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It is proposed that this filing become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
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on [date] pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)
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on [date] pursuant to paragraph (a) of Rule 485
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X 75 days after filing pursuant to paragraph (a)(2)
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<PAGE>
TIP FUNDS
CROSS REFERENCE SHEET
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N-1A ITEM NO. LOCATION
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PART A -
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Expense Summary
Item 3. Condensed Financial Information N/A
Item 4. General Description of Registrant The Trust and the Funds; Investment Objectives; Invest-
ment Policies; Risk Factors; Investment Limitations;
General Information - The Trust
Item 5. Management of the Fund General Information - Trustees of the Trust; The Adviser;
The Administrator; The Transfer Agent; The Distributor;
Portfolio Transactions; Expense Summary
Item 5A. Management's Discussion of Fund *
Performance
Item 6. Capital Stock and Other Securities General Information - Voting Rights; General Infor-
mation - Shareholder Inquiries; General Information - Divi-
dends and Distributions; Taxes
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
PART B -
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Policies Investment Objectives (Prospectus); Investment Poli-
cies (Prospectus); Investment Limitations
Item 14. Management of the Registrant General Information - Trustees of the Trust (Prospec-
tus); Trustees and Officers of the Trust; The Admin-
istrator
Item 15. Control Persons and Principal Trustees and Officers of the Trust;
Holders of Securities 5% Shareholders
Item 16. Investment Advisory and Other The Adviser (Prospectus and Statement of Additional
Services Information); The Administrator (Prospectus and
Statement of Additional Information); The
Distributor (Prospectus and Statement of Additional
Information); The Transfer Agent (Prospectus);
General Information - Counsel and Independent Public
Accountants (Prospectus); Experts; General
Information - Custodian (Prospectus)
Item 17. Brokerage Allocation Portfolio Transactions (Prospectus); Portfolio Trans-
actions
Item 18. Capital Stock and Other Securities Description of Shares
Item 19. Purchase, Redemption, and Pricing Purchase and Redemption of Shares
of Securities Being Offered (Prospectus); Purchase and Redemption of Shares; Deter-
mination of Net Asset Value
Item 20. Tax Status Taxes (Prospectus); Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Performance Data Computation of Yield and Total Return
Item 23. Financial Statements Financial Information
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Part C -
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration
Statement.
* Included in Registrant's Annual Report to Shareholders
iii
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TIP FUNDS
Investment Adviser:
TURNER INVESTMENT PARTNERS, INC.
TIP Funds (the "Trust") provides a convenient and economical means of investing
in professionally managed portfolios of securities. This Prospectus offers
shares of the following mutual fund (the "Fund"), which is a separate series of
the Trust:
TIP TARGET SELECT EQUITY FUND
This Prospectus concisely sets forth the information about the Trust and the
Fund that a prospective investor should know before investing. Investors are
advised to read this Prospectus and retain it for future reference. A Statement
of Additional Information dated January 1, 1998, has been filed with the
Securities and Exchange Commission, and is available without charge by calling
1-800-224-6312. The Statement of Additional Information is incorporated into
this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
January 1, 1998
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TABLE OF CONTENTS
Summary .............................................................. 3
Expense Summary........................................................ 5
The Trust and the Fund................................................. 6
Investment Objective................................................... 6
Investment Policies.................................................... 6
Risk Factors........................................................... 7
Investment Limitations................................................. 7
Special Considerations Regarding the Multi-Adviser Approach............ 8
The Adviser............................................................ 8
The Sub-Advisers....................................................... 9
The Administrator...................................................... 9
The Transfer Agent..................................................... 10
The Distributor........................................................ 10
Portfolio Transactions................................................. 10
Purchase and Redemption of Shares...................................... 11
Performance............................................................ 14
Taxes.................................................................. 15
General Information.................................................... 17
Description of Permitted Investments and Risk Factors.................. 18
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SUMMARY
The following provides basic information about the TIP Target Select Equity Fund
(the "Target Select Fund" or the "Fund"). The Fund is one of thirteen mutual
funds comprising the TIP Funds (the "Trust"). The other portfolios of the TIP
Funds are described in separate prospectuses, which are available by calling
1-800-224-6312. This summary is qualified in its entirety by reference to the
more detailed information provided elsewhere in this Prospectus and in the
Statement of Additional Information.
What are the Fund's investment objective and primary policies? The Target Select
Fund is an equity fund that seeks to increase the value of your investment over
the long term by using the combined talents and favorite stock picking ideas of
four highly regarded portfolio managers.
What are the risks involved with investing in the Fund? The investment policies
of the Fund entail certain risks and considerations of which investors should be
aware. The Fund invests in securities that fluctuate in value, and investors
should expect the Fund's net asset value per share to fluctuate in value. The
value of equity securities may be affected by the financial markets, as well as
by developments impacting specific issuers. The Fund may enter into futures and
options transactions, although it has no present intention to do so. The Fund
also may purchase securities of foreign issuers. Investments in these securities
involve certain other risks.
For more information about the Fund, see "Investment Objective," "Investment
Policies," "Risk Factors," and "Description of Permitted Investments and Risk
Factors."
Who is the Adviser? Turner Investment Partners, Inc. (the "Adviser") serves as
the investment adviser to the Fund. As Adviser, Turner oversees the Fund's
Sub-Advisers, and also provides investment advisory services for a portion of
the assets of the Fund. See "Expense Summary" and "The Adviser."
Who are the Sub-Advisers? Clover Capital Management, Inc. ("Clover Capital"),
Penn Capital Management Company, Inc. ("Penn Capital"), and Chartwell Investment
Partners ("Chartwell") (each a "Sub-Adviser" and collectively, the
"Sub-Advisers") serve as the investment sub-advisers to the Fund and provide
investment advisory services for a portion of the assets of the Fund. See
"Expense Summary" and "The Sub-Advisers".
Who is the Administrator? SEI Fund Resources (the "Administrator") serves as the
administrator and shareholder servicing agent for the Fund. See "Expense
Summary" and "The Administrator."
Who is the Distributor? SEI Investments Distribution Co. (the "Distributor")
serves as the distributor of the Fund's shares. See "The Distributor."
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Who is the Transfer Agent? DST Systems, Inc. serves as the transfer agent and
dividend disbursing agent for the Trust. See "The Transfer Agent."
Is there a sales load? No, shares of the Fund are offered on a no-load basis.
Is there a minimum investment? The Fund requires a minimum initial investment of
$2,500 ($2,000 for IRAs), which the Distributor may waive at its discretion.
How do I purchase and redeem shares? Purchases and redemptions may be made
through the Transfer Agent on each day that the New York Stock Exchange is open
for business (a "Business Day"). A purchase order will be effective as of the
Business Day received by the Transfer Agent if the Transfer Agent (or its
authorized agent) receives the order and payment, by check or in readily
available funds, prior to 4:00 p.m. Eastern time. Redemption orders received by
the Transfer Agent prior to 4:00 p.m. Eastern time on any Business Day will be
effective that day. The purchase and redemption price for shares is the net
asset value per share determined as of the end of the day the order is
effective. See "Purchase and Redemption of Shares."
How are distributions paid? The Fund distributes substantially all of its net
investment income (exclusive of capital gains) in the form of quarterly
dividends. Any capital gain is distributed at least annually. Distributions are
paid in additional shares unless the shareholder elects to take the payment in
cash. See "Dividends and Distributions."
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EXPENSE SUMMARY
Target Select
SHAREHOLDER TRANSACTION EXPENSES Equity Fund
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Sales Load Imposed on Purchases............................................None
Sales Load Imposed on Reinvested Dividends.................................None
Deferred Sales Load........................................................None
Redemption Fees (1)........................................................None
Exchange Fees..............................................................None
(1) A wire redemption charge, currently $10.00, is deducted from the amount
of a Federal Reserve wire redemption payment made at the request of a
shareholder.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
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Advisory Fees(1) 1.05%
12b-1 Fees None
Other Expenses .25%
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Total Operating Expenses (after fee waivers)(2) 1.30%
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(1) [The Adviser has, on a voluntary basis, agreed to waive a portion of
its fee for the Fund and to reimburse certain Fund expenses in order to
limit total operating expenses of the Fund to an annual rate of not
more than 1.30%, of average daily net assets. The Adviser reserves the
right, in its sole discretion, to terminate its voluntary fee waiver
and any reimbursement at any time. The advisory fee shown reflects the
voluntary waivers and reimbursements. Absent such waivers and
reimbursements, advisory fees for the Fund would be 1.05%. See "The
Adviser." Other Expenses have been estimated for the current fiscal
year.]
(2) [Absent fee waivers and reimbursements by the Adviser, Total Operating
Expenses for the Fund are estimated to be 1.67% based on current
expectations and assumptions.]
EXAMPLE
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You would pay the following expenses on a $1,000 investment in the Fund
assuming (1) a 5% annual return and (2) redemption at the end of each time
period.
1 year 3 years
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Target Select Equity Fund $13 $40
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THE EXAMPLE IS BASED UPON TOTAL OPERATING EXPENSES OF THE FUND AFTER WAIVERS, IF
ANY, AS SHOWN IN THE EXPENSE TABLE. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. The purpose of the expense table and example is to assist
the investor in understanding the various costs and expenses that may be
directly or indirectly borne by shareholders of the Fund. Additional information
may be found under "The Adviser" and "The Administrator."
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THE TRUST AND THE FUND
TIP Funds (the "Trust") offers shares in thirteen separately-managed mutual
funds, each of which is a separate series of the Trust. Each share of each
mutual fund represents an undivided, proportionate interest in that mutual fund.
This Prospectus offers shares of the Trust's TIP Target Select Equity Fund (the
"Target Select Fund" or the "Fund").
INVESTMENT OBJECTIVE
Target Select Equity Fund -- The Target Select Fund seeks long term growth of
capital primarily from investment in U.S. equity securities.
There can be no assurance that the Fund will achieve its investment objective.
INVESTMENT POLICIES
Target Select Equity Fund
The Adviser and Sub-Advisers of the Fund will each invest in a maximum of 20
stocks (hence the Target Select Equity Fund designation) and as few as 10 stocks
that they believe have the greatest return potential. Such a concentrated
stock-selection process permits the manager to act on only the investment ideas
that they think are their strongest ones. The intent is to avoid diluting
performance by owning too many stocks, so that the positive contributions of
winning investments will prove substantial.
In the process, the Fund provides two benefits:
One, focused stock selection. By bringing together each manager's favorite
investment ideas, the fund's overall portfolio will contain a total of 40-80
stocks.
And two, differing investment styles. The managers will apply their own unique
stock-picking styles. Their differing styles may help to smooth the fund's
overall return. Ideally, when one style is out of favor, the other styles will
offer a counterbalancing influence.
The Fund is designed to provide an investment that combines the investment
expertise and best investment ideas of four outstanding money-management firms.
The Adviser and Sub-Advisers will manage a portion of the Fund's portfolio on a
day-to-day basis. Assets for investment will be allocated to each manager by the
Fund' Board of Trustees, based on the recommendation of the Adviser. The
expectation is that the allocations will result in a diversified equity
portfolio invested in a variety of securities with differing capitalizations and
valuations, chosen by differing investment strategies.
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The Fund intends to invest primarily in stocks of companies that are
headquartered in the United States or do business both in the United States and
abroad. Those stocks, however, will be traded principally in the United States
equity market. Selection of stocks will not be restricted by market
capitalization, and the Fund's Adviser and Sub-Advisers will employ their own
proprietary investment processes in managing assets.
[During periods when, or under circumstances where, the Adviser believes that
the return on such securities may equal or exceed the return on equity
securities, the Fund may invest up to 25% of its net assets in non-convertible
fixed income securities consisting of corporate debt securities and obligations
issued or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities. The Fund may invest in such securities without
regard to their term or rating and may, from time to time, invest in corporate
debt securities rated below investment grade, i.e., rated lower than BBB by
Standard & Poor's Corporation ("S&P"), and/or Baa by Moody's Investor Service,
Inc. ("Moody's"), or in unrated securities of comparable quality as determined
by the Adviser. Such high-yield, high-risk securities are also known as "junk
bonds."]
Under normal circumstances, up to 25% of the Fund's assets may be invested in
the Money Market Instruments described below in order to maintain liquidity, or
if securities meeting the Fund's investment objective and policies are not
otherwise reasonably available for purchase. For temporary defensive purposes
during periods when the Adviser determines that market conditions warrant, the
Fund may invest up to 100% of its assets in Money Market Instruments and in
cash.
The Fund may purchase securities on a when-issued basis, and may enter into
futures and options transactions, purchase securities of foreign issuers, invest
in shares of other investment companies, invest up to 15% of its net assets in
illiquid securities, and purchase convertible securities.
For a further description of these types of instruments see "Description of
Permitted Investments and Risk Factors" in the Statement of Additional
Information.
RISK FACTORS
Equity Securities -- Equity securities include common stocks, preferred stocks,
warrants, rights to acquire common or preferred stocks, and securities
convertible into or exchangeable for common stocks. Investments in equity
securities in general are subject to market risks that may cause their prices to
fluctuate over time. The value of securities convertible into equity securities,
such as warrants or convertible debt, is also affected by prevailing interest
rates, the credit quality of the issuer and any call provision. Fluctuations in
the value of equity securities in which the fund invests will cause the net
asset value of the Fund to fluctuate. An investment in such funds may be more
suitable for long-term investors who can bear the risk of short-term principal
fluctuations.
Non-Diversification -- The Fund is a non-diversified company, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), which means that a
relatively high percentage
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of assets of the Fund may be invested in the obligations of a limited number of
issuers. Although the Adviser and the Sub-Advisers do not intend to invest more
than 5% of the Fund's assets in any single issuer (with the exception of
securities which are issued or guaranteed by a national government), the value
of the shares of the Fund may be more susceptible to any single economic,
political or regulatory occurrence than the shares of a diversified investment
company would be. The Fund intends to satisfy the diversification requirements
necessary to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), which requires that the Fund be
diversified (i.e., not invest more than 5% of its assets in the securities in
any one issuer) as to 50% of its assets.
Portfolio Turnover -- The Fund's annual portfolio turnover rate is expected to
exceed 100%. An annual portfolio turnover rate in excess of 100% may result from
the securities selection processes employed by the Adviser and the Sub-Advisers.
Portfolio turnover rates in excess of 100% may result in higher transaction
costs, including increased brokerage commissions, and higher levels of taxable
capital gain.
INVESTMENT LIMITATIONS
The investment objective of the Fund and certain of the investment limitations
set forth here and in the Statement of Additional Information are fundamental
policies of the Fund. Fundamental policies cannot be changed with respect to the
Fund without the consent of the holders of a majority of the Fund's outstanding
shares.
1. The Fund may not (i) purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its agencies or
instrumentalities and repurchase agreements involving such securities) if, as a
result, more than 5% of the total assets of the Fund would be invested in the
securities of such issuer; or (ii) acquire more than 10% of the outstanding
voting securities of any one issuer. This restriction applies to 50% of the
Fund's total assets.
2. The Fund may not purchase any securities which would cause 25% or more of the
total assets of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities and
repurchase agreements involving such securities.
The foregoing percentages will apply at the time of the purchase of a security.
SPECIAL CONSIDERATIONS REGARDING THE MULTI-ADVISER APPROACH
Turner Investment Partners, Inc. (the "Adviser"), the manager of the Fund,
oversees the portfolio management services provided to each Fund by each of its
three Sub-Advisers, and acts as investment adviser to a portion of the assets
of the Fund. Subject to the review of TIP Funds' Board of Trustees, the
Adviser monitors each Sub-Adviser to assure that the Sub-Adviser is managing
its segment of the Fund consistently with the Fund's investment objective and
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restrictions and applicable laws and guidelines, including, but not limited to,
compliance with the diversification requirements set forth in Subchapter M of
the Code. The Adviser also provides each Fund with certain administrative
services, including maintenance of certain Fund records and assistance in the
preparation of the Fund's registration statement under federal and state laws.
Because each Sub-Adviser will be managing its segment of a Fund independently
from the other Sub-Advisers, the same security may be held in two different
segments of a Fund, or may be acquired for one segment of a Fund at a time when
the Sub-Adviser of another segment deems it appropriate to dispose of the
security from that other segment. Similarly, under some market conditions, the
Adviser or one or more of the Sub-Advisers may believe that temporary, defensive
investments in short-term instruments or cash are appropriate when the Adviser
or another Sub-Adviser believes continued exposure to the equity markets is
appropriate for their segments of the Fund. Because the Adviser and each
Sub-Adviser directs the trading for its own segment of the Fund, and does not
aggregate its transactions with those of the Adviser or the other Sub-Advisers,
the Fund may incur higher brokerage costs than would be the case if a single
Adviser were managing the entire Fund.
On a daily basis, capital activity will be allocated equally by the Adviser
among the segments of the Fund. However, the Adviser may, subject to review by
TIP Funds' Board of Trustees, allocate new investment capital differently among
the Sub-Advisers. This action may be necessary, if, for example, the Adviser or
a Sub-Adviser determines that it desires no additional investment capital. Also,
because each segment of the portfolio will perform differently from the other
segments depending upon the investments it holds and changing market conditions,
one segment may be larger or smaller at various times than the other segments.
Although it reserves the right to do so, subject to the review of the TIP Funds'
Board of Trustees, the Adviser does not intend to reallocate assets of the Fund
among the segments to reduce these differences in size.
Manager of Managers Option
The Fund may, in the future, seek to achieve its investment objective by using a
"manager of managers" structure. Under a manager of managers structure, Turner
Investment Partners would act as investment adviser in much the same way as is
currently contemplated. However, as manager of managers, Turner would be
permitted, subject to direction from and oversight by the Board of Trustees, to
allocate and reallocate the Fund's assets among sub-advisers, and to recommend
that the Board of Trustees hire, terminate or replace sub-advisers without
shareholder approval. By reducing the number of shareholder meetings that may
have to be held to approve new or additional sub-advisers for the Fund, the Fund
anticipates that there will be substantial potential cost savings, as well as
the opportunity to achieve certain management efficiencies.
Before it can operate using a manager of managers structure, the Fund and Turner
will have to obtain exemptive relief from the Securities and Exchange Commission
("SEC") to permit such an
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arrangement. The initial shareholder of the Fund voted to vest authority to
implement a manager of managers structure with the Trustees, and such a
structure may be adopted without shareholder approval. However, shareholders of
the Fund will be given at least [30] days' prior written notice of any such
change, and any such change would only be made if the Trustees determine that it
would be in the best interests of the Fund and its shareholders. In making that
determination, the Trustees will consider, among other factors, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies.
THE ADVISER
Turner Investment Partners, Inc., is a professional investment management firm
founded in March, 1990. Robert E. Turner is the Chairman and controlling
shareholder of the Adviser. As of ______, 1997, the Adviser had discretionary
management authority with respect to approximately $___ billion of assets. The
Adviser has provided investment advisory services to investment companies since
1992. The principal business address of the Adviser is 1235 Westlakes Drive,
Suite 350, Berwyn, Pennsylvania 19312.
The Adviser serves as the investment adviser for the Fund under an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser continuously reviews, supervises and administers the Fund's investment
program, subject to the supervision of, and policies established by, the
Trustees of the Trust. The Adviser makes recommendations to the Trustees with
respect to the appropriate allocation of assets to each of the Fund's
Sub-Advisers, and directly manages assets of the Fund not allocated to the
Sub-Advisers.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of 1.05% of the average daily net assets of
the Fund. The Adviser (not the Fund) pays each of the Sub-Advisers out of this
fee, a sub-advisory fee equal to .80% of the average daily net assets of the
Fund allocated to each Sub-Adviser. [The Adviser has voluntarily agreed to waive
all or a portion of its fee and to reimburse expenses of the Fund in order to
limit its total operating expenses (as a percentage of average daily net assets
on an annualized basis) to not more than 1.30%. The Adviser reserves the right,
in its sole discretion, to terminate these voluntary fee waivers and
reimbursements at any time.]
Robert E. Turner is a Trustee of the Trust and will be responsible for
monitoring the day-to-day activity of the investment managers. In addition, Mr.
Turner will act as portfolio manager of the portion of the assets of the Fund
managed by Turner Investment Partners. Mr. Turner is also Chairman and Chief
Investment Officer of Turner Investment Partners, Inc. He has held this position
since the founding of Turner Investment Partners, Inc. in 1990. He has been in
the investment business since 1982.
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THE SUB-ADVISERS
The Fund currently has three Sub-Advisers -- Clover Capital Management, Inc.,
Penn Capital Management Company, Inc. and Chartwell Investment Partners (each a
"Sub-Adviser" and collectively, the "Sub-Advisers"). Each Sub-Adviser manages a
portion of the Fund's assets, which allocation is determined by the Trustees
upon the recommendation of the Adviser. Each Sub-Adviser makes the investment
decisions for the assets of the Fund allocated to it and continuously reviews,
supervises and administers a separate investment program, subject to the
supervision of, and policies established by, the Trustees of the Trust. For its
services, each of the Sub-Advisers is entitled to receive a fee from Turner
Investment Partners, which is calculated daily and paid monthly, at an annual
rate of .80% of the average daily net assets of the Fund allocated to it.
Currently, the Adviser and each Sub-Adviser has been allocated assets in the
range of 15-30% of the Fund's total assets.
Clover Capital Management, Inc. ("Clover Capital"), is a professional investment
management firm founded in 1984 by Michael Edward Jones, CFA, and Geoffrey
Harold Rosenberger, CFA, who are Managing Directors of Clover Capital and who
control all of the Clover Capital's outstanding voting stock. ____________,
Managing Director of Clover Capital, is the portfolio manager of the portion of
the Fund's assets managed by Clover Capital. As of ________, 1997, the Clover
Capital had discretionary management authority with respect to approximately
$___ billion of assets. In addition to sub-advising the Fund and the Clover
Funds, separate investment portfolios of the Trust, Clover provides advisory
services to pension plans, religious and educational endowments, corporations,
401(k) plans, profit sharing plans, individual investors and trusts and estates.
The principal business address of Clover Capital is 11 Tobey Village Office
Park, Pittsford, New York 14534.
Penn Capital Management Company, Inc. ("Penn Capital"), 52 Haddonfield-Berlin
Road, Suite 1000, Cherry Hill, New Jersey 08034, is a professional investment
management firm founded in 1987 and registered as an investment adviser under
the Investment Advisers Act. Richard A. Hocker is a founding partner and Chief
Investment Officer of Penn Capital and portfolio manager of the portion of the
assets of the Fund managed by Penn Capital, an investment management firm that
manages the investment portfolios of institutions and high net worth
individuals. Penn Capital currently has assets under management of approximately
$____ million. Penn Capital employs a staff of 17 and manages monies in a
variety of investment styles through either separate account management or one
of its private investment funds. In addition, Penn Capital serves as investment
adviser to the Penn Capital Funds, three separate portfolios of the Trust.
Chartwell Investment Partners ("Chartwell"), 1235 Westlakes Drive, Suite 330,
Berwyn, Pennsylvania 19312, is a professional investment management firm founded
in 1997 and registered as an investment adviser under the Investment Advisers
Act. Chartwell was founded by a team of experienced investment professionals who
had been employees of Delaware Management Company of Philadelphia, Pennsylvania.
The portion of the assets of the Fund managed by Chartwell will be managed by a
team of investment professionals with extensive investment experience.
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Chartwell currently manages approximately $1.1 billion in assets for
institutional clients.
THE ADMINISTRATOR
SEI Fund Resources (the "Administrator") provides the Trust with administrative
services, including regulatory reporting and all necessary office space,
equipment, personnel, and facilities.
For these administrative services, the Administrator is entitled to a fee from
the Fund, which is calculated daily and paid monthly, at an annual rate of __%
of the Fund's average daily net assets up to $__ million, __% on the next $__
million of such assets, __% on the next $__ million of such assets, __% of the
next $__ million of such assets, and __% of such assets in excess of $__
million. The Fund is subject to a minimum annual administration fee of
[$75,000].
The Administrator also serves as shareholder servicing agent for the Trust under
a shareholder servicing agreement with the Trust.
THE TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Avenue, Kansas City, Missouri 64105 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent for
the Trust under a transfer agency agreement with the Trust.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania 19456,
a wholly-owned subsidiary of SEI Investments Company, acts as the Trust's
distributor pursuant to a distribution agreement (the "Distribution Agreement").
No compensation is paid to the Distributor for its distribution services.
PORTFOLIO TRANSACTIONS
The Adviser and each Sub-Adviser will select brokers on the basis of the
research, statistical and pricing services they provide to the Fund. A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that such
commissions are in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that the commission is
reasonable in terms of either the transaction or the overall responsibility of
the Adviser to the Fund and the Adviser's other clients.
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Since shares of the Fund are not marketed through intermediary broker-dealers,
the Fund does not have a practice of allocating brokerage or effecting principal
transactions with broker-dealers on the basis of sales of shares which may be
made through such firms. However, the Adviser and each Sub-Adviser may place
orders for the Fund with qualified broker-dealers who refer clients to the Fund.
Some securities considered for investment by the Fund may also be appropriate
for other accounts and/or clients served by the Adviser or any Sub-Adviser. If
the purchase or sale of securities consistent with the investment policies of
the Fund and another of the Adviser's or Sub-Adviser's accounts and/or clients
are considered at or about the same time, transactions in such securities will
be allocated among the Fund and the other accounts and/or clients in a manner
deemed equitable by the Adviser or the Sub-Adviser.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent (or its
authorized agent) on each day that the New York Stock Exchange is open for
business (a "Business Day"). Investors may purchase and redeem shares of the
Fund directly through the Transfer Agent at: TIP Funds, P.O. Box 419805, Kansas
City, Missouri 64141-6805, by mail or wire transfer. All shareholders may place
orders by telephone; when market conditions are extremely busy, it is possible
that investors may experience difficulties placing orders by telephone and may
wish to place orders by mail. Purchases and redemptions of shares of the Fund
may be made on any Business Day. Certain brokers assist their clients in the
purchase or redemption of shares and charge a fee for this service in addition
to the Fund's public offering price.
The minimum initial investment in the Fund is $2,500 ($2,000 for IRAs), and
subsequent purchases must be at least $500. The Distributor may waive these
minimums at its discretion. No minimum applies to subsequent purchases effected
by dividend reinvestment.
Minimum Account Size - Due to the relatively high cost of maintaining smaller
accounts, the Fund reserves the right to redeem shares in any account if, as the
result of redemptions, the value of that account drops below $2,500. You will be
allowed at least 60 days, after notice by the Fund, to make an additional
investment to bring your account value up to at least $2,500 before the
redemption is processed.
Purchases by Mail
An account may be opened by mailing a check or other negotiable bank draft
(payable to the Fund) for $2,500 ($2,000 or more for IRAs) or more, together
with a completed Account Application to: TIP Funds, P.O. Box 419805, Kansas
City, Missouri 64141-6805. Third-Party checks, credit cards, credit card checks
and cash will not be accepted. When purchases are made by check (including
certified or cashier's checks), redemption proceeds will not be forwarded until
the check providing
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for the investment being redeemed has cleared (which may take up to 15 days).
Subsequent investments may also be mailed directly to the Transfer Agent.
Purchases by Wire Transfer
Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Fund by requesting their bank
to transmit funds by wire to: United Missouri Bank of Kansas, N.A.; ABA
#10-10-00695; for Account Number 98-7060-116-8; Further Credit: [TIP Funds
Target Select Equity Fund]. The shareholder's name and account number must be
specified in the wire.
Initial Purchases: Before making an initial investment by wire, an investor must
first telephone 1-800-224-6312 to be assigned an account number. The investor's
name, account number, taxpayer identification number or Social Security number,
and address must be specified in the wire. In addition, an Account Application
should be promptly forwarded to: TIP Funds, P.O. Box 419805, Kansas City,
Missouri 64141-6805.
Subsequent Purchases: Additional investments may be made at any time through the
wire procedures described above, which must include a shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.
Subsequent purchases may also be made by wire through the Automated Clearing
House ("ACH").
General Information Regarding Purchases
A purchase request will be effective as of the day received if the Transfer
Agent (or its authorized agent) receives the purchase request in good order and
payment before 4:00 p.m., Eastern time. A purchase request is in good order if
it is complete and accompanied by the appropriate documentation, including an
Account Application and any additional documentation required. Purchase requests
in good order received after 4:00 p.m., Eastern time, will be effective the next
Business Day. Payment may be made by check or readily available funds. The
purchase price of shares of the Fund is the Fund's net asset value per share
next determined after a purchase order is effective. Purchases will be made in
full and fractional shares of the Fund calculated to three decimal places. The
Trust will not issue certificates representing shares of the Fund.
If a check received for the purchase of shares does not clear, the purchase will
be canceled, and the investor could be liable for any losses or fees incurred.
The Trust reserves the right to reject a purchase order when the Trust
determines that it is not in the best interest of the Trust or its shareholders
to accept such order.
Shares of the Fund may be purchased in exchange for securities to be included in
the Fund, subject to the Adviser's or Administrator's determination that these
securities are acceptable. Securities accepted in such an exchange will be
valued at their market value. All accrued interest and subscription or other
rights that are reflected in the market price of accepted securities at the time
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of valuation become the property of the Fund and must be delivered by the
shareholder to the Fund upon receipt from the issuer.
The Adviser or Administrator will not accept securities in exchange for Fund
shares unless (1) such securities are appropriate for the Fund at the time of
the exchange; (2) the shareholder represents and agrees that all securities
offered to the Fund are not subject to any restrictions upon their sale by the
Fund under the Securities Act of 1933, as amended, or otherwise; and (3) prices
are available from an independent pricing service approved by the Trust's Board
of Trustees.
Systematic Investment Plan - A shareholder may also arrange for periodic
additional investments in the Fund through automatic deductions by Automated
Clearing House ("ACH") transactions from a checking or savings account by
completing the Systematic Investment Plan form. This Systematic Investment Plan
is subject to account minimum initial purchase amounts and a minimum
pre-authorized investment amount of $100 per month. An application form for the
Systematic Investment Plan may be obtained by calling 1-800-224-6312.
Exchanges
Shareholders of the Fund may exchange their shares for shares of the other TIP
Funds that are then offering their shares to the public. Exchanges are made at
net asset value. An exchange is considered a sale of shares and may result in
capital gain or loss for federal income tax purposes. The shareholder must have
received a current prospectus for the new Fund before any exchange will be
effected. If the Transfer Agent (or its authorized agent) receives exchange
instructions in writing or by telephone (an "Exchange Request") in good order by
4:00 p.m., Eastern time, on any Business Day, the exchange will be effected that
day. The liability of the Fund or the Transfer Agent for fraudulent or
unauthorized telephone instructions may be limited as described below. The Trust
reserves the right to modify or terminate this exchange offer on 60 days'
notice.
Redemptions
Redemption requests in good order received by the Transfer Agent (or its
authorized agent) prior to 4:00 p.m., Eastern time on any Business Day will be
effective that day. To redeem shares of the Fund, shareholders must place their
redemption orders with the Transfer Agent (or its authorized agent) prior to
4:00 p.m., Eastern time, on any Business Day. The redemption price of shares of
the Fund is the net asset value per share of the Fund next determined after the
redemption order is effective. Payment of redemption proceeds will be made as
promptly as possible and, in any event, within seven days after the redemption
order is received, provided, however, that redemption proceeds for shares
purchased by check (including certified or cashier's checks) will be forwarded
only upon collection of payment for such shares; collection of payment may take
up to 15 days. Shareholders may not close their accounts by telephone.
Redemption requests from IRA accounts must be made in writing.
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Shareholders may receive redemption payments in the form of a check or by
Federal Reserve or ACH wire transfer. There is no charge for having a check for
redemption proceeds mailed. The Custodian will deduct a wire charge, currently
$10.00, from the amount of a Federal Reserve wire redemption payment made at the
request of a shareholder. Shareholders cannot redeem shares of a Fund by Federal
Reserve wire on Federal holidays on which wire transfers are restricted. The
Fund does not charge for ACH wire transactions; however, such transactions will
not be posted to a shareholder's bank account until the second Business Day
following the release of redemption proceeds.
Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of instructions received by telephone if they reasonably believe
those instructions to be genuine. The Trust and the Transfer Agent will each
employ reasonable procedures to confirm that telephone instructions are genuine.
Such procedures may include the taping of telephone conversations.
The right of redemption may be suspended or the date of payment of redemption
proceeds postponed during certain periods as set forth more fully in the
Statement of Additional Information.
A signature guarantee is a widely accepted way to protect shareholders by
verifying the signature on certain redemption requests. The Trust requires
signature guarantees to be provided in the following circumstances: (1) written
requests for redemptions in excess of $50,000; (2) all written requests to wire
redemption proceeds to a bank other than the bank previously designated on the
account application; and (3) redemption requests that provide that the
redemption proceeds should be sent to an address other than the address of
record or to a person other than the registered shareholder(s) for the account.
Signature guarantees can be obtained from any of the following institutions: a
national or state bank, a trust company, a federal savings and loan association,
or a broker-dealer that is a member of a national securities exchange. The Trust
does not accept guarantees from notaries public or from organizations that do
not provide reimbursement in the case of fraud.
Systematic Withdrawal Plan - The Fund offers a Systematic Withdrawal Plan
("SWP") for shareholders who wish to receive regular distributions from their
account. Upon commencement of the SWP, the account must have a current value of
$2,500 or more. Shareholders may elect to receive automatic payments via ACH
wire transfers of $100 or more on a monthly, quarterly, semi-annual or annual
basis. An application form for SWP may be obtained by calling 1-800-224-6312.
Shareholders should realize that if withdrawals exceed income dividends, their
invested principal in the account will be depleted. Thus, depending on the
frequency and amounts of the withdrawal payments and/or any fluctuations in the
net asset value per share, their original investment could be exhausted
entirely. To participate in the SWP, shareholders must have their dividends
automatically reinvested. Shareholders may change or cancel the SWP at any time,
upon written notice to the Transfer Agent.
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Valuation of Shares
The net asset value per share of the Fund is determined by dividing the total
market value of the Fund's investments and other assets, less any liabilities,
by the total number of outstanding shares of the Fund. Net asset value per share
is determined daily as of the close of business of the New York Stock Exchange
(currently, 4:00 p.m., Eastern time) on any Business Day.
PERFORMANCE
From time to time, the Fund may advertise its yield and total return. These
figures will be based on historical earnings and are not intended to indicate
future performance. No representation can be made regarding actual future yields
or returns. The yield of the Fund refers to the annualized income generated by
an investment in the Fund over a specified 30-day period. The yield is
calculated by assuming that the same amount of income generated by the
investment during that period is generated in each 30-day period over one year
and is shown as a percentage of the investment.
The total return of the Fund refers to the average compounded rate of return on
a hypothetical investment, for designated time periods (including but not
limited to the period from which the Fund commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period and assuming the reinvestment of all dividend and capital gain
distributions.
The Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Services,
Inc.), financial and business publications and periodicals, broad groups of
comparable mutual funds, unmanaged indices, which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs, or other investment alternatives. The Fund may quote
Morningstar, Inc., a service that ranks mutual funds on the basis of
risk-adjusted performance, and Ibbotson Associates of Chicago, Illinois, which
provides historical returns of the capital markets in the U.S. The Fund may also
quote the Frank Russell Company or Wilshire Associates, consulting firms that
compile financial characteristics of common stocks and fixed income securities,
regarding non-performance-related attributes of the Fund's portfolio. The Fund
may use long term performance of these capital markets to demonstrate general
long-term risk versus reward scenarios and could include the value of a
hypothetical investment in any of the capital market. The Fund may also quote
financial and business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques.
The Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
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TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal income tax treatment of the Fund or its shareholders.
Shareholders are urged to consult their tax advisors regarding specific
questions as to federal, state and local income taxes. Further information
concerning taxes is set forth in the Statement of Additional Information.
Tax Status of the Fund:
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other portfolios. The Fund intends to qualify or
to continue to qualify for the special tax treatment afforded regulated
investment companies as defined under Subchapter M of the Internal Revenue Code
of 1986, as amended. So long as the Fund qualifies for this special tax
treatment, it will be relieved of federal income tax on that part of its net
investment income and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) which it distributes to shareholders.
Tax Status of Distributions:
The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from the Fund's
net investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Distributions from net investment
income will qualify for the dividends-received deduction for corporate
shareholders only to the extent such distributions are derived from dividends
paid by domestic corporations; however, such distributions which do qualify for
the dividends-received deduction may be subject to the corporate alternative
minimum tax. Any net capital gains will be distributed annually and will be
taxed to shareholders as gain from the sale or exchange of a capital asset held
for more than one year, regardless of how long the shareholder has held shares.
The Fund will make annual reports to shareholders of the federal income tax
status of all distributions, including the amount of dividends eligible for the
dividends-received deduction.
Certain securities purchased by the Fund are sold with original issue discount
and thus do not make periodic cash interest payments. The Fund will be required
to include as part of its current income the accrued discount on such
obligations even though the Fund has not received any interest payments on such
obligations during that period. Because the Fund distributes all of its net
investment income to its shareholders, the Fund may have to sell portfolio
securities to distribute such accrued income, which may occur at a time when the
Adviser would not have chosen to sell such securities and which may result in a
taxable gain or loss.
Dividends declared by the Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the
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Fund and received by the shareholders on December 31 in the year declared, if
paid by the Fund at any time during the following January. The Fund intends to
make sufficient distributions prior to the end of each calendar year to avoid
liability for the federal excise tax applicable to regulated investment
companies.
Income received on direct U.S. obligations is exempt from income tax at the
state level when received directly by the Fund and may be exempt, depending on
the state, when received by a shareholder from the Fund provided certain
state-specific conditions are satisfied. The Fund will inform shareholders
annually of the percentage of income and distributions derived from direct U.S.
obligations. Shareholders should consult their tax advisers to determine whether
any portion of the income dividends received from the Fund is considered tax
exempt in their particular state. Income derived by the Fund from securities of
foreign issuers may be subject to foreign withholding taxes. The Fund will not
be able to elect to treat shareholders as having paid their proportionate share
of such foreign taxes.
Each sale, exchange or redemption of the Fund's shares is a taxable event to the
shareholder.
GENERAL INFORMATION
The Trust
The Trust, an open-end management investment company, was organized under
Massachusetts law as a business trust under a Declaration of Trust dated January
26, 1996, and amended on February 21, 1997. The Declaration of Trust permits the
Trust to offer separate series ("Funds") of shares. All consideration received
by the Trust for shares of any Fund and all assets of such Fund belong to that
Fund and would be subject to liabilities related thereto. The Trust reserves the
right to create and issue shares of additional Funds.
The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services and
registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
Trustees of the Trust
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management
services to the Trust.
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Voting Rights
Each share held entitles the Shareholder of record to one vote for each dollar
invested. In other words, each shareholder of record is entitled to one vote for
each dollar of net asset value of the shares held on the record date for the
meeting. Shareholders of each Fund will vote separately on matters pertaining
solely to that Fund. As a Massachusetts business trust, the Trust is not
required to hold annual meetings of Shareholders, but approval will be sought
for certain changes in the operation of the Trust and for the election of
Trustees under certain circumstances.
In addition, a Trustee may be removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.
Reporting
The Trust issues unaudited financial information semiannually and audited
financial statements annually for the Fund. The Trust also furnishes periodic
reports and, as necessary, proxy statements to shareholders of record.
Shareholder Inquiries
Shareholder inquiries should be directed to TIP Funds, P.O. Box 419805, Kansas
City, Missouri 64141-6805, or to 1-800-224-6312. Purchases, exchanges and
redemptions of shares should be made through the Transfer Agent by calling
1-800-224-6312.
Dividends and Distributions
Substantially all of the net investment income (excluding capital gain) of the
Fund is distributed in the form of dividends to shareholders of record on the
second to last Business Day of each quarter. Capital gains, if any, are
distributed to shareholders at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares, unless the shareholder has elected to take
such payment in cash. Shareholders may change their election by providing
written notice to the Transfer Agent at least 15 days prior to the distribution.
Shareholders may receive payments for cash distributions in the form of a check
or by Federal Reserve or ACH wire transfer.
Dividends and other distributions of the Fund are paid on a per share basis. The
value of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a distribution of ordinary income
or capital gains, a shareholder will pay the full price for the shares and
receive some portion of the price back as a taxable distribution or dividend.
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Counsel and Independent Public Accountants
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Ernst & Young LLP
serves as the independent public accountants for the Trust.
Custodian
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101, acts as the custodian (the "Custodian") of the Trust. The
Custodian holds cash, securities and other assets of the Trust as required by
the Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of permitted investments for the Fund:
AMERICAN DEPOSITARY RECEIPTS ("ADRs") -- ADRs are securities, typically issued
by a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation by
the issuer of the underlying security. Holders of unsponsored depositary
receipts generally bear all the costs of the unsponsored facility. The
depositary 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, to the holders of the receipts, voting rights with
respect to the deposited securities.
CONVERTIBLE SECURITIES -- Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics of both fixed income and
equity securities. Because of the conversion feature, the market value of a
convertible security tends to move with the market value of the underlying
stock. The value of a convertible security is also affected by prevailing
interest rates, the credit quality of the issuer and any call provisions.
DERIVATIVES -- Derivatives are securities that derive their value from other
securities, financial instruments or indices. The following are considered
derivative securities: options on futures, futures, options (e.g., puts and
calls), swap agreements, mortgage-backed securities (e.g., CMOs, REMICs, IOs and
POs), when issued securities and forward commitments, floating and variable rate
securities, convertible securities, "stripped" U.S. Treasury securities (e.g.,
Receipts and STRIPs), privately issued stripped securities (e.g., TGRs, TRs, and
CATs). See elsewhere in the "Description of Permitted Investments and Risk
Factors" and in the Statement of Additional Information for discussions of these
various instruments.
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EQUITY SECURITIES -- Equity securities represent ownership interests in a
company or corporation, and include common stock, preferred stock, and warrants
and other rights to acquire such instruments.
FUTURES AND OPTIONS ON FUTURES -- Futures contracts provide for the future sale
by one party and purchase by another party of a specified amount of a specific
security at a specified future time and at a specified price. An option on a
futures contract gives the purchaser the right, in exchange for a premium, to
assume a position in a futures contract at a specified exercise price during the
term of the option. A Fund may use futures contracts and related options for
bona fide hedging purposes, to offset changes in the value of securities held or
expected to be acquired or be disposed of, to minimize fluctuations in foreign
currencies, or to gain exposure to a particular market or instrument.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates, (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures, (3) there may not be a liquid secondary market
for a futures contract or option, (4) trading restrictions or limitations may be
imposed by an exchange, and (5) government regulations may restrict trading in
futures contracts and options on futures.
ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's books. Illiquid securities include demand
instruments with demand notice periods exceeding seven days, securities for
which there is no active secondary market, and repurchase agreements with
durations or maturities over 7 days in length.
MONEY MARKET SECURITIES -- Money market securities are high-quality, dollar-
denominated, short-term debt instruments. They consist of: (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued by the agencies and instrumentalities of the U.S.
Government; (iii) high-quality commercial paper issued by U.S. and foreign
corporations; (iv) debt obligations with a maturity of one year or less issued
by corporations that issue high-quality commercial paper; and (v) repurchase
agreements involving any of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
OPTIONS -- A put option gives the purchaser of the option the right to sell, and
the writer of the option the obligation to buy, the underlying security at any
time during the option period. A call option gives the purchaser of the option
the right to buy, and the writer of the option the obligation to sell, the
underlying security at any time during the option period. The premium paid to
the writer is the consideration for undertaking the obligations under the option
contract. The initial purchase (sale) of an option contract is an "opening
transaction." In order to close out an option position, a Fund may enter into a
"closing transaction," which is simply the sale (purchase) of an option contract
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on the same security with the same exercise price and expiration date as the
option contract originally opened. If a Fund is unable to effect a closing
purchase transaction with respect to an option it has written, it will not be
able to sell the underlying security until the option expires or the Fund
delivers the security upon exercise.
Risk Factors: Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.
RECEIPTS -- Receipts are sold as zero coupon securities, which means that they
are sold at a substantial discount and redeemed at face value at their maturity
date without interim cash payments of interest or principal. This discount is
accreted over the life of the security, and such accretion will constitute the
income earned on a security for both accounting and tax purposes. Because of
these features, such securities may be subject to greater interest rate
volatility than interest paying Permitted Investments. See also "Taxes."
REITS -- REITs are trusts that invest primarily in commercial real estate or
real estate-related loans. The value of interests in REITs may be affected by
the value of the property owned or the quality of the mortgages held by the
trust.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements are considered loans under the 1940 Act.
SECURITIES LENDING -- In order to generate additional income, a Fund may lend
its securities pursuant to agreements that require that the loan be continuously
secured by collateral consisting of cash or securities of the U.S. Government or
its agencies equal to at least 100% of the market value of the loaned
securities. A Fund continues to receive interest on the loaned securities while
simultaneously earning interest on the investment of cash collateral. Collateral
is marked to market daily. There may be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially or become insolvent.
SECURITIES OF FOREIGN ISSUERS -- Investments in the securities of foreign
issuers may subject the Fund to investment risks that differ in some respects
from those related to investments in securities of U.S. issuers. Such risks
include future adverse political and economic developments, possible imposition
of withholding taxes on income, possible seizure, nationalization or
expropriation of foreign deposits, possible establishment of exchange controls
or taxation at the source or greater fluctuation in value due to changes in
exchange rates. Foreign issuers of securities
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often engage in business practices different from those of domestic issuers of
similar securities, and there may be less information publicly available about
foreign issuers. In addition, foreign issuers are, generally speaking, subject
to less government supervision and regulation than are those in the United
States. Investments in securities of foreign issuers are frequently denominated
in foreign currencies and the value of the Fund's assets measured in U.S.
dollars may be affected favorably or unfavorably by changes in currency rates
and in exchange control regulations, and the Fund may incur costs in connection
with conversions between various currencies.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain obligations may carry variable
or floating rates of interest, and may involve a conditional or unconditional
demand feature. Such instruments bear interest at rates which are not fixed, but
which vary with changes in specified market rates or indices. The interest rates
on these securities may be reset daily, weekly, quarterly or some other reset
period, and may have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand notice
exceeding seven days may be considered illiquid if there is no secondary market
for such security.
WARRANTS -- Warrants are instruments giving holders the right, but not the
obligation, to buy equity or fixed income securities of a company at a given
price during a specified period.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
transactions involve the purchase of an instrument with payment and delivery
taking place in the future. Delivery of and payment for these securities may
occur a month or more after the date of the purchase commitment. The Fund will
maintain with the Custodian a separate account with liquid securities or cash in
an amount at least equal to these commitments. The interest rate realized on
these securities is fixed as of the purchase date, and no interest accrues to
the Fund before settlement.
-24-
<PAGE>
Trust:
TIP FUNDS
Fund:
TIP TARGET SELECT EQUITY FUND
Adviser:
TURNER INVESTMENT PARTNERS, INC.
Sub-Advisers:
CLOVER CAPITAL MANAGEMENT, INC.
PENN CAPITAL MANAGEMENT COMPANY, INC.
CHARTWELL INVESTMENT PARTNERS
Distributor:
SEI INVESTMENTS DISTRIBUTION CO.
Administrator:
SEI FUND RESOURCES
Legal Counsel:
MORGAN, LEWIS & BOCKIUS LLP
Independent Auditors:
ERNST & YOUNG LLP
January 1, 1998
<PAGE>
TIP FUNDS
TIP TARGET SELECT EQUITY FUND
Investment Adviser:
TURNER INVESTMENT, INC.
This Statement of Additional Information is not a prospectus and relates only to
the TIP Target Select Equity Fund (the "Target Select Equity Fund"). It is
intended to provide additional information regarding the activities and
operations of the TIP Funds (formerly, Turner Funds) (the "Trust") and should be
read in conjunction with the Fund's Prospectus dated January 1, 1998. The
Prospectus may be obtained without charge by calling 1-800-224-6312.
TABLE OF CONTENTS
THE TRUST.................................................................. S-2
DESCRIPTION OF PERMITTED INVESTMENTS....................................... S-2
INVESTMENT LIMITATIONS..................................................... S-7
THE ADVISER................................................................ S-9
THE SUB-ADVISERS........................................................... S-9
THE ADMINISTRATOR..........................................................S-10
THE DISTRIBUTOR............................................................S-10
TRUSTEES AND OFFICERS OF THE TRUST.........................................S-11
COMPUTATION OF YIELD AND TOTAL RETURN......................................S-13
PURCHASE AND REDEMPTION OF SHARES..........................................S-14
DETERMINATION OF NET ASSET VALUE...........................................S-15
TAXES ..................................................................S-15
PORTFOLIO TRANSACTIONS.....................................................S-17
DESCRIPTION OF SHARES......................................................S-19
SHAREHOLDER LIABILITY......................................................S-19
LIMITATION OF TRUSTEES' LIABILITY..........................................S-20
FINANCIAL INFORMATION......................................................S-20
APPENDIX .................................................................. A-1
January 1, 1998
<PAGE>
THE TRUST
This Statement of Additional Information relates only to the TIP Target Select
Equity Fund (the "Fund"). The Fund is a separate series of the TIP Funds
(formerly, Turner Funds) (the "Trust"), a diversified, open-end management
investment company established as a Massachusetts business trust under a
Declaration of Trust dated January 26, 1996, and amended on February 21, 1997.
The Declaration of Trust permits the Trust to offer separate series
("portfolios") of shares of beneficial interest ("shares"). The fund is a
separate mutual fund, and each share of the fund represents an equal
proportionate interest in the fund. See "Description of Shares." Capitalized
terms not defined herein are defined in the Prospectus offering shares of the
Fund.
DESCRIPTION OF PERMITTED INVESTMENTS
Futures Contracts and Options on Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the term of the option.
The Fund may use futures contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired or be disposed of, to minimize fluctuations in foreign currencies, or
to gain exposure to a particular market or instrument. The Fund will minimize
the risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges. In
addition, the Fund will only sell covered futures contracts and options on
futures contracts.
Stock and bond index futures are futures contracts for various stock and bond
indices that are traded on registered securities exchanges. Stock and bond index
futures contracts obligate the seller to deliver (and the purchaser to take) an
amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock or bond index at the close of the last trading day
of the contract and the price at which the agreement is made.
Stock and bond index futures contracts are bilateral agreements pursuant to
which two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock or bond index
value at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the stocks or bonds
comprising the Index is made; generally contracts are closed out prior to the
expiration date of the contracts.
No price is paid upon entering into futures contracts. Instead, the Fund would
be required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known
S-2
<PAGE>
as "marking to market"). The margin is in the nature of a performance bond or
good-faith deposit on a futures contract.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.
The Fund may enter into futures contracts and options on futures contracts
traded on an exchange regulated by the Commodities Futures Trading Commission
("CFTC"), as long as, to the extent that such transactions are not for "bona
fide hedging purposes," the aggregate initial margin and premiums on such
positions (excluding the amount by which such options are in the money) do not
exceed 5% of the Fund's net assets. The Fund may buy and sell futures contracts
and related options to manage its exposure to changing interest rates and
securities prices. Some strategies reduce the Fund's exposure to price
fluctuations, while others tend to increase its market exposure. Futures and
options on futures can be volatile instruments and involve certain risks that
could negatively impact the Fund's return.
In order to avoid leveraging and related risks, when the Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid securities, equal to the market value of the futures positions held, less
margin deposits, in a segregated account with its custodian. Collateral equal to
the current market value of the futures position will be marked to market on a
daily basis.
Investment Company Shares
The Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. The Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, the Fund is prohibited from acquiring
the securities of another investment company if, as a result of such
acquisition: (1) the Fund owns more than 3% of the total voting stock of the
other company; (2) securities issued by any one investment company represent
more than 5% of the Fund's total assets; or (3) securities (other than treasury
stock) issued by all investment companies represent more than 10% of the total
assets of the Fund. See also "Investment Limitations."
S-3
<PAGE>
Obligations of Supranational Agencies
The Fund may purchase obligations of supranational agencies. Currently, the Fund
only intends to invest in obligations issued or guaranteed by the Asian
Development Bank, Inter-American Development Bank, International Bank for
Reconstruction and Development (World Bank), African Development Bank, European
Coal and Steel Community, European Economic Community, European Investment Bank
or Nordic Investment Bank.
Options
A put option on a security gives the purchaser of the option the right to sell,
and the writer of the option the obligation to buy, the underlying security at
any time during the option period. A call option on a security gives the
purchaser of the option the right to buy, and the writer of the option the
obligation to sell, the underlying security at any time during the option
period. The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The initial purchase (sale) of an option
contract is an "opening transaction." In order to close out an option position,
the Fund may enter into a "closing transaction," which is simply the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened. If the Fund
is unable to effect a closing purchase transaction with respect to an option it
has written, it will not be able to sell the underlying security until the
option expires or the Fund delivers the security upon exercise.
The Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to anticipate an increase in
the market value of securities that the Fund may seek to purchase in the future.
The Fund purchasing put and call options pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for the Fund, loss of the premium paid may be offset by
an increase in the value of the Fund's securities or by a decrease in the cost
of acquisition of securities by the Fund.
The Fund may write covered call options as a means of increasing the yield on
its portfolio and as a means of providing limited protection against decreases
in its market value. When the fund sells an option, if the underlying securities
do not increase or decrease to a price level that would make the exercise of the
option profitable to the holder thereof, the option generally will expire
without being exercised and the Fund will realize as profit the premium
received for such option. When a call option written by the Fund is exercised,
the Fund will be required to sell the underlying securities to the option holder
at the strike price, and will not participate in any increase in the price of
such securities above the strike price. When a put option written by the Fund is
exercised, the Fund will be required to purchase the underlying securities at
the strike price, which may be in excess of the market value of such securities.
The Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several
S-4
<PAGE>
respects. They are transacted directly with dealers and not with a clearing
corporation, and therefore entail the risk of non-performance by the dealer. OTC
options are available for a greater variety of securities and for a wider range
of expiration dates and exercise prices than are available for exchange-traded
options. Because OTC options are not traded on an exchange, pricing is done
normally by reference to information from a market maker. It is the position of
the SEC that OTC options are generally illiquid.
The Fund may purchase and write put and call options on foreign currencies
(traded on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by the Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by the Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid securities in an amount equal to the
amount the Fund would be required to pay upon exercise of the put.
The Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. The Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of the Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.
All options written on securities or indices must be covered. When the Fund
writes an option on an index or a security, it will establish a segregated
account containing cash or liquid securities with its custodian in an amount at
least equal to the market value of the option and will maintain the account
while the option is open or will otherwise cover the transaction.
Risk Factors: Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while the Fund will receive a
premium when it writes covered call options, it may not participate fully in a
rise in the market value of the underlying security.
S-5
<PAGE>
Repurchase Agreements
Repurchase agreements are agreements by which the Fund obtains a security and
simultaneously commits to return the security to the seller (a member bank of
the Federal Reserve System or primary securities dealer as recognized by the
Federal Reserve Bank of New York) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.
Repurchase agreements are considered to be loans by the Fund for purposes of its
investment limitations. The repurchase agreements entered into by the Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Adviser monitors
compliance with this requirement). Under all repurchase agreements entered into
by the Fund, the Trust's Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale, including accrued interest, are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, the Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and is required to
return the underlying security to the seller's estate.
Variable or Floating Rate Instruments
The Fund may invest in variable or floating rate instruments which may involve a
demand feature and may include variable amount master demand notes which may or
may not be backed by bank letters of credit. The holder of an instrument with a
demand feature may tender the instrument back to the issuer at par prior to
maturity. A variable amount master demand note is issued pursuant to a written
agreement between the issuer and the holder, its amount may be increased by the
holder or decreased by the holder or issuer, it is payable on demand, and the
rate of interest varies based upon an agreed formula. The quality of the
underlying credit must, in the opinion of the Adviser, be equivalent to the
long-term bond or commercial paper ratings applicable to permitted investments
for the Fund. The Adviser will monitor on an ongoing basis the earnings power,
cash flow and liquidity ratios of the issuers of such instruments and will
similarly monitor the ability of an issuer of a demand instrument to pay
principal and interest on demand.
When-Issued and Delayed Delivery Securities
S-6
<PAGE>
When-issued or delayed delivery securities are subject to market fluctuations
due to changes in market interest rates and it is possible that the market value
at the time of settlement could be higher or lower than the purchase price if
the general level of interest rates has changed. Although the Fund generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its investment portfolio, the
Fund may dispose of a when-issued security or forward commitment prior to
settlement if it deems appropriate.
INVESTMENT LIMITATIONS
Fundamental Policies
The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of the Fund which cannot be changed with respect to the
Fund without the consent of the holders of a majority of the Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of the Fund's shares present at a meeting, if more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (ii) more
than 50% of the Fund's outstanding shares, whichever is less.
The Fund may not:
1. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate fund to purchase securities or require
the Fund to segregate assets are not considered to be borrowings. Asset
coverage of a least 300% is required for all borrowings, except where
the Fund has borrowed money for temporary purposes in amounts not
exceeding 5% of its total assets. The Fund will not purchase securities
while its borrowings exceed 5% of its total assets.
2. Make loans if, as a result, more than 33 1/3% of its total assets would
be lent to other parties, except that the Fund may (i) purchase or hold
debt instruments in accordance with its investment objective and
policies; (ii) enter into repurchase agreements; and (iii) lend its
securities.
3. Purchase or sell real estate, physical commodities, or commodities
contracts, except that the Fund may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and
(ii) commodities contracts relating to financial instruments, such as
financial futures contracts and options on such contracts.
4. Issue senior securities (as defined in the Investment Company Act of
1940 (the "1940 Act")) except as permitted by rule, regulation or order
of the Securities and Exchange Commission (the "SEC").
S-7
<PAGE>
5. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.
6. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.
The foregoing percentages (except with respect to the limitation on borrowing)
will apply at the time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs immediately after or as a result
of a purchase of such security.
Non-Fundamental Policies
The following investment limitations are non-fundamental policies of the Fund
and may be changed with respect to the Fund by the Board of Trustees.
The Fund may not:
1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that the
Fund may (i) obtain short-term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin
payments in connection with transactions involving futures contracts
and options on such contracts; and (iii) make short sales "against the
box" or in compliance with the SEC's position regarding the asset
segregation requirements imposed by Section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.
5. Purchase or hold illiquid securities, i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing
in more than seven days) if, in the aggregate, more than 15% of its net
assets would be invested in illiquid securities.
In addition, the Fund will invest no more than 5% of its net assets in short
sales, unregistered securities, futures contracts, options and investment
company securities. Unregistered securities sold in reliance on the exemption
from registration in Section 4(2) of the 1933 Act and securities exempt from
registration on re-sale pursuant to Rule 144A of the 1933 Act may be treated as
liquid securities under procedures adopted by the Board of Trustees.
S-8
<PAGE>
THE ADVISER
The Trust and Turner Investment Partners, Inc. (the "Adviser") have entered into
an advisory agreement (the "Advisory Agreement"). The Advisory Agreement
provides that the Adviser shall not be protected against any liability to the
Trust or its shareholders by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard of its obligations or duties thereunder.
The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of the Fund (including amounts payable to the Adviser but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by any state in which the shares of the Fund are
registered, the Adviser will bear the amount of such excess. The Adviser will
not be required to bear expenses of the Fund to an extent which would result in
the Fund's inability to qualify as a regulated investment company under
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
The continuance of the Advisory Agreement as to the Fund after the first two
years must be specifically approved at least annually (i) by the vote of the
Trustees or by a vote of the shareholders of the Fund, and (ii) by the vote of a
majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the Trust or, with respect to the Fund,
by a majority of the outstanding shares of the Fund, on not less than 30 days'
nor more than 60 days' written notice to the Adviser, or by the Adviser on 90
days' written notice to the Trust.
THE SUB-ADVISERS
The Adviser has entered into separate sub-advisory agreements (each a
"Sub-Advisory Agreement") with Clover Capital Management, Inc., Penn Capital
Management Company, Inc. and Chartwell Investment Partners (each a "Sub-Adviser"
and together, the "Sub-Advisers"), relating to the Fund. Each Sub-Advisory
Agreement provides that the Sub-Adviser shall not be protected against any
liability to the Trust or its shareholders by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard of its obligations or duties thereunder.
The continuance of each Sub-Advisory Agreement as to the Fund after the first
two years must be specifically approved at least annually (i) by the vote of the
Trustees or by a vote of the shareholders of the Fund, and (ii) by the vote of a
majority of the Trustees who are not parties to the Sub-Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. Each Sub-Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the Trust
S-9
<PAGE>
or, with respect to the Fund, by a majority of the outstanding shares of the
Fund, on not less than 30 days' nor more than 60 days' written notice to the
Sub-Adviser, or by the Sub-Adviser on 90 days' written notice to the Trust.
THE ADMINISTRATOR
The Trust and SEI Fund Resources (the "Administrator") have entered into an
administration agreement (the "Administration Agreement"). The Administration
Agreement provides that the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which the Administration Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Administrator in the performance of its duties or from reckless disregard by
it of its duties and obligations thereunder. The Administration Agreement shall
remain in effect for a period of three (3) years after the effective date of the
agreement and shall continue in effect for successive periods of one (1) year
unless terminated by either party on not less than 90 days' prior written notice
to the other party.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI"), is the owner of all
beneficial interests in the Administrator. SEI Investments and its subsidiaries
and affiliates, including the Administrator, are leading providers of funds
evaluation services, trust accounting systems, and brokerage and information
services to financial institutions, institutional investors and money managers.
The Administrator and its affiliates also serve as administrator to the
following other mutual funds: The Achievement Funds Trust, The Advisors' Inner
Circle Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, Boston 1784
Funds(R), CoreFunds, Inc., CrestFunds, Inc., CUFUND, The Expedition Funds, FMB
Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Marquis Funds(R), Monitor Funds,
Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series
Fund, Inc., The Pillar Funds, Profit Funds Investment Trust, Rembrandt Funds(R),
Santa Barbara Group of Mutual Funds, Inc., SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI International Trust, SEI Liquid Asset Trust,
SEI Tax Exempt Trust, STI Classic Funds and STI Classic Variable Trust.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI, and the Trust are parties to a distribution agreement (the "Distribution
Agreement") with respect to shares of the Fund. The Distributor receives no
compensation for distribution of shares of the Fund.
The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority vote
of the Trustees who are not
S-10
<PAGE>
interested persons and have no financial interest in the Distribution Agreement
or by a majority vote of the outstanding securities of the Trust upon not more
than 60 days' written notice by either party or upon assignment by the
Distributor.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees and executive officers
of the Trust and their principal occupations for the last five years are set
forth below. Each may have held other positions with the named companies during
that period. The Trust pays the fees for unaffiliated Trustees.
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Bishop Street Funds, Boston 1784 Funds(R), CoreFunds, Inc.,
CrestFunds, Inc., CUFUND, The Expedition Funds, FMB Funds, Inc., First American
Funds, Inc., First American Investment Funds, Inc., First American Strategy
Funds, Inc, HighMark Funds, Marquis Funds(R), Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The
Pillar Funds, Profit Funds Investment Trust, Rembrandt Funds(R), Santa Barbara
Group of Mutual Funds, Inc., SEI Asset Allocation Trust, SEI Daily Income Trust,
SEI Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Funds, and STI Classic Variable Trust, each of which is an open-end
management investment company managed by SEI Fund Resources or its affiliates
and, except for Profit Funds Investment Trust, Rembrandt Funds(R), and Santa
Barbara Group of Mutual Funds, Inc., are distributed by SEI Investments
Distribution Co.
ROBERT E. TURNER (DOB 11/26/56) - Trustee* - Chairman and Chief Investment
Officer of Turner Investment Partners, Inc. (the Adviser) since 1990.
RICHARD A. HOCKER (DOB 07/21/46) - Trustee* - CEO and Chairman of the Board of
Covenant Bank, 1988-1997. Director of Bedminister Bioconversion Corporation,
since 1988. Chief Investment Officer and Senior Vice President of Penn Capital
Management Co., Inc., since 1987.
MICHAEL E. JONES (DOB 12/24/54) - Trustee* - Senior Vice President, Investment
Adviser and Portfolio Manager with Clover Capital Management Inc., since 1984.
Principal of CCM Securities Inc.
ALFRED C. SALVATO (DOB 01/09/58) - Trustee** - Treasurer, Thomas Jefferson
University Health Care Pension Fund, since 1995, and Assistant Treasurer,
1988-1995.
S-11
<PAGE>
JOHN T. WHOLIHAN (DOB 12/12/37) - Trustee** - Professor, Loyola Marymount
University, since 1984.
JANET F. SANSONE (DOB 08/11/45) - Trustee** - Corporate Vice President of Human
Resources of Frontier Corporation, since 1993. Director of Education at General
Electric Corporation, 1982-1993.
STEPHEN J. KNEELEY (DOB 02/09/63) - President and Chief Executive Officer -
Chief Operating Officer of Turner Investment Partners, Inc., since 1990.
JANET RADER ROTE (DOB 08/24/60) - Vice President and Assistant Secretary -
Director of Compliance of Turner Investment Partners, Inc., since 1992.
TODD B. CIPPERMAN (DOB 02/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the administrator and distributor
since 1995. Associate, Dewey Ballantine (law firm), 1994-1995. Associate,
Winston and Strawn (law firm), 1991-1994.
SANDRA K. ORLOW (DOB 10/18/53) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.
KEVIN P. ROBINS (DOB 04/15/61) - Vice President, Assistant Secretary - Senior
Vice President, General Counsel and Assistant Secretary of SEI, Senior Vice
President, General Counsel and Secretary of the Administrator and Distributor
since 1994. Vice President and Assistant Secretary of SEI, the Administrator and
Distributor 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1988-1992.
KATHRYN L. STANTON (DOB 11/19/58) - Vice President and Assistant Secretary,
Deputy General Counsel, Vice President and Assistant Secretary of SEI, Vice
President and Assistant Secretary of the Administrator and Distributor, since
1994. Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.
ROBERT DELLACROCE (DOB 12/17/63) - Controller and Chief Accounting Officer -
Director, Funds Administration and Accounting - Director, Funds Administration
and Accounting of SEI since 1994. Senior Audit Manager, Arthur Andersen LLP,
1986-1994.
BARBARA A. NUGENT (DOB 06/18/56) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate, Drinker, Biddle & Reath (law firm) (1994-1996). Assistant
Vice President - Operations of Delaware Service Company, Inc. (1988-1993)
MARC H. CAHN (DOB 06/19/57) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate General Counsel, Barclays Bank PLC (1995-1996). ERISA
counsel, First Fidelity Bancorporation (1994-1995), Associate, Morgan, Lewis &
Bockius LLP (1989-1994).
S-12
<PAGE>
JAMES W. JENNINGS (DOB 01/15/37) - Secretary - Partner, Morgan, Lewis & Bockius
LLP (law firm), counsel to the Trust, the Adviser, the Administrator and
Distributor.
JOHN H. GRADY, JR. (DOB 06/01/61) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Partner, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, Adviser, Administrator and Distributor.
EDWARD B. BAER (DOB 09/27/68) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Associate, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, Adviser, Administrator and Distributor, since 1995. Attorney, Aquila
Management Corporation, 1994. Rutgers University School of Law - Newark,
1991-1994.
The following table exhibits Trustee compensation for the fiscal year ended
September 30, 1997.
<TABLE>
<CAPTION>
Total
Compensation
Aggregate From Registrant
Compensation Pension or and Fund
From Registrant Retirement Estimated Complex Paid to
for the Fiscal Year Benefits Accrued Annual Benefits Trustees for the
Name of Person, Ended September as Part of Fund Upon Fiscal Year Ended
Position 30, 1997 Expenses Retirement September 30, 1997
- --------------- ------------------- ---------------- --------------- ------------------
<S> <C> <C> <C> <C>
Robert E. Turner* $0 N/A N/A $0
Richard A. Hocker* $0 N/A N/A $0
Michael E. Jones* $0 N/A N/A $0
Alfred C. Salvato** N/A N/A
John T. Wholihan** N/A N/A
Janet F. Sansone** N/A N/A
</TABLE>
* Messrs. Robert Turner, Richard Hocker and Michael Jones are Trustees who
may be deemed to be "interested persons" of the Trust as the term is
defined in the 1940 Act.
** Member of the Audit Committee.
The Trustees and Officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays fees only to the Trustees who are not
interested persons of the Trust. Compensation of Officers and interested
Trustees of the Trust is paid by the Adviser, the Sub-Adviser or the
Administrator.
S-13
<PAGE>
COMPUTATION OF YIELD AND TOTAL RETURN
From time to time the Trust may advertise yield and total return of the Funds.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of the Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:
Yield = 2[((a-b)/cd + 1)6 - 1] where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c = the
current daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.
The total return of the Fund refers to the average compounded rate of return to
a hypothetical investment for designated time periods (including but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula: P (1 + T)n = ERV, where P = a hypothetical initial payment of
$1,000; T = average annual total return; n = number of years; and ERV = ending
redeemable value, as of the end of the designated time period, of a hypothetical
$1,000 payment made at the beginning of the designated time period.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on days when
the New York Stock Exchange is open for business. Currently, the weekdays on
which the Fund is closed for business are: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Shares of the Fund are offered on a
continuous basis.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by the Fund in
lieu of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or valuation of the Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Trust also
reserves the right to suspend sales of shares of
S-14
<PAGE>
the Fund for any period during which the New York Stock Exchange, the Adviser,
the Administrator, the Transfer Agent and/or the Custodian are not open for
business.
DETERMINATION OF NET ASSET VALUE
The securities of the Fund are valued by the Administrator. The Administrator
may use an independent pricing service to obtain valuations of securities. The
pricing service relies primarily on prices of actual market transactions as well
as on trade quotations obtained from third parties. The procedures of the
pricing service and its valuations are reviewed by the officers of the Trust
under the general supervision of the Trustees.
TAXES
The following is only a summary of certain tax considerations generally
affecting the Fund and its shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisors with
specific reference to their own tax situations, including their state and local
tax liabilities.
Federal Income Tax
The following is only a summary of certain additional federal tax considerations
generally affecting the Funds and their shareholders that are not discussed in
the Funds' Prospectus. No attempt is made to present a detailed explanation of
the federal, state or local tax treatment of the Funds or their shareholders and
the discussion here and in the Funds' Prospectus is not intended as a substitute
for careful tax planning.
The discussion of federal income tax consequences is based on the Code and the
regulations issued thereunder as in effect on the date of this Statement of
Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
The Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, the Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.
In order to qualify for treatment as a RIC under the Code, the Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus the excess, if any, of net
short-term capital gain net long-term capital losses) ("Distribution
Requirement") and also must meet several additional requirements. Among these
requirements are the following: (i) at least 90% of the Fund's gross income each
taxable year must be derived from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock or
securities, or certain other income (including gains from options, futures or
forward contracts); (ii) at the close of each quarter of the Fund's taxable
year, at least
S-15
<PAGE>
50% of the value of its total assets must be represented by cash and cash items,
U.S. Government securities, securities of other RICs and other securities, with
such other securities limited, in respect to any one issuer, to an amount that
does not exceed 5% of the value of the Fund's assets and that does not represent
more than 10% of the outstanding voting securities of such issuer; and (iii) at
the close of each quarter of the Fund's taxable year, not more than 25% of the
value of its assets may be invested in securities (other than U.S. Government
securities or the securities of other RICs) of any one issuer, or of two or more
issuers which are engaged in the same, similar or related trades or business if
the Fund owns at least 20% of the voting power of such issuer.
Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), the
Fund will be subject to a nondeductible 4% federal excise tax to the extent it
fails to distribute by the end of any calendar year 98% of its ordinary income
for that year and 98% of its capital gain net income (the excess of short- and
long-term capital gains over short-and long-term capital losses) for the
one-year period ending on October 31 of that year, plus certain other amounts.
Each Fund intends to make sufficient distributions to avoid liability for the
federal excise tax. A Fund may in certain circumstances be required to liquidate
Fund investments in order to make sufficient distributions to avoid federal
excise tax liability at a time when the investment advisor might not otherwise
have chosen to do so, and liquidation of investments in such circumstances may
affect the ability of a Fund to satisfy the requirements for qualification as a
RIC.
Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than eighteen months, mid-term capital gain if
the share have been held for more than twelve months but not more than eighteen
months, and otherwise will be treated as short-term capital gain or loss.
However, if shares on which a shareholder has received a net capital gain
distribution are subsequently sold, exchanged or redeemed and such shares have
been held for six months or less, any loss recognized will be treated as a
long-term capital loss to the extent of the net capital gain distribution.
Long-term capital gains are currently taxed at a maximum rate of 20%, mid-term
capital gains are currently taxed at a maximum rate of 28%, and short-term
capital gains are currently taxed at ordinary income tax rates.
In certain cases, the Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
that Fund that such shareholder is not subject to backup withholding.
S-16
<PAGE>
If the Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, and such
distributions may generally be eligible for the corporate dividends-received
deduction.
The Fund may, in certain circumstances involving tax-free reorganizations,
accept securities that are appropriate investments as payment for Fund shares
(an "In-Kind Purchase"). An In-Kind Purchase may result in adverse tax
consequences under certain circumstances to either the investors transferring
securities for shares (an "In-Kind Investors") or to investors who acquire
shares of the Fund after a transfer ("new shareholders"). As a result of an
In-Kind Purchase, the Fund may acquire securities that have appreciated in value
or depreciated in value from the date they were acquired. If appreciated
securities were to be sold after an In-Kind Purchase, the amount of the gain
would be taxable to new shareholders as well as to In-Kind Investors. The effect
of this for new shareholders would be to tax them on a distribution that
represents a return of the purchase price of their shares rather than an
increase in the value of their investment. The effect on In-Kind Investors would
be to reduce their potential liability for tax on capital gains by spreading it
over a larger asset base. The opposite may occur if the Fund acquires securities
having an unrealized capital loss. In that case, In-Kind Investors will be
unable to utilize the loss to offset gains, but, because an In-Kind Purchase
will not result in any gains, the inability of In-Kind Investors to utilize
unrealized losses will have no immediate tax effect. For new shareholders, to
the extent that unrealized losses are realized by the Fund, new shareholders may
benefit by any reduction in net tax liability attributable to the losses. The
Adviser cannot predict whether securities acquired in any In-Kind Purchase will
have unrealized gains or losses on the date of the In-Kind Purchase. Consistent
with its duties as investment adviser, the Adviser will, however, take tax
consequences to investors into account when making decisions to sell portfolio
assets, including the impact of realized capital gains on shareholders of the
Fund.
State Taxes
The Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by the Fund to
shareholders and the ownership of shares may be subject to state and local
taxes.
PORTFOLIO TRANSACTIONS
The Adviser and each Sub-Adviser are authorized to select brokers and dealers to
effect securities transactions for the Fund as to the assets allocated to or
managed by it. The Adviser and each Sub-Adviser will seek to obtain the most
favorable net results by taking into account various factors, including price,
commission, if any, size of the transactions and difficulty of executions, the
firm's general execution and operational facilities and the firm's risk in
positioning the securities involved. While the Adviser and each Sub-Adviser
generally seek reasonably competitive spreads or commissions, the Fund will not
necessarily be paying the lowest spread or commission available. The
S-17
<PAGE>
Adviser and each Sub-Adviser seeks to select brokers or dealers that offer the
Fund best price and execution or other services which are of benefit to the
Fund.
The Fund has no obligation to deal with any broker-dealer or group of
broker-dealers in the execution of transactions in portfolio securities. Subject
to policies established by the Trustees of the Fund, the Adviser and each
Sub-Adviser are responsible for placing the orders to execute transactions for
the Fund as to the assets allocated to or managed by it. In placing orders, it
is the policy of the Fund to seek to obtain the best net results taking into
account such factors as price (including the applicable dealer spread), the
size, type and difficulty of the transaction involved, the firm's general
execution and operational facilities and the firm's risk in positioning the
securities involved. While the Adviser and each Sub-Adviser generally seek
reasonably competitive spreads or commissions, the Fund will not necessarily be
paying the lowest spread or commission available.
The money market instruments in which the Fund invests are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
and each Sub-Adviser will deal directly with the dealers who make a market in
the securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. Money market instruments are generally traded on a net basis and do
not normally involve either brokerage commissions or transfer taxes. The cost of
executing portfolio securities transactions of the Fund will primarily consist
of dealer spreads and underwriting commissions.
The Adviser and each Sub-Adviser may, consistent with the interests of the Fund,
select brokers on the basis of the research services they provide. Such services
may include analyses of the business or prospects of a company, industry or
economic sector, or statistical and pricing services. Information so received by
the Adviser or any Sub-Adviser will be in addition to and not in lieu of the
services required to be performed by the Adviser (or Sub-Adviser) under the
respective Advisory and, Sub-Advisory Agreements. If, in the judgment of the
Adviser (or Sub-Adviser), the Fund or other accounts managed by the Adviser (or
Sub-Adviser) will be benefitted by supplemental research services, the Adviser
(or Sub-Adviser) is authorized to pay brokerage commissions to a broker
furnishing such services which are in excess of commissions which another broker
may have charged for effecting the same transaction. These research services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting in
determining portfolio strategy; providing computer software used in security
analyses; and providing portfolio performance evaluation and technical market
analyses. The expenses of the Adviser (or Sub-Adviser) will not necessarily be
reduced as a result of the receipt of such supplemental information, such
services may not be used
S-18
<PAGE>
exclusively, or at all, with respect to the Fund or account generating the
brokerage, and there can be no guarantee that the Adviser (or Sub-Adviser) will
find all of such services of value in advising the Fund.
It is not expected that the Fund will execute brokerage or other agency
transactions through the Distributor, which is a registered broker-dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934
and rules promulgated by the SEC. Commissions paid to the Distributor by the
Fund for exchange transactions must not exceed "usual and customary" brokerage
commissions. The rules define "usual and customary" commissions to include
amounts which are "reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time." The Trustees,
including those who are not "interested persons" of the Trust, have adopted
procedures for evaluating the reasonableness of commissions paid to the
Distributor and will review these procedures periodically.
Because the Fund does not market its shares through intermediary brokers or
dealers, it is not the Fund's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the Adviser or any Sub-Adviser may place portfolio orders with
qualified broker-dealers who recommend the Fund's shares to clients, and may,
when a number of brokers and dealers can provide best net results on a
particular transaction, consider such recommendations by a broker or dealer in
selecting among broker-dealers.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of the fund. Each share of the fund represents an equal
proportionate interest in the fund with each other share. Shares are entitled
upon liquidation to a pro rata share in the net assets of the fund. Shareholders
have no preemptive rights. All consideration received by the Trust for shares of
any portfolio and all assets in which such consideration is invested would
belong to that portfolio and would be subject to the liabilities related
thereto. Share certificates representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the Trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for obligations of the Trust, and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for
S-19
<PAGE>
indemnification out of the Trust property for any shareholder held personally
liable for the obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisers, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
FINANCIAL INFORMATION
Ernst & Young LLP has been selected to serve as the Funds independent public
accountants.
S-20
<PAGE>
APPENDIX
The following descriptions are summaries of published ratings.
DESCRIPTION OF CORPORATE BOND RATINGS
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA by S&P also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from AAA issues only in
small degree. Debt rated A by S&P has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
Bonds rated BBB by S&P are considered as medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Debt rated BB, B, CCC, CC and C is regarded as having predominately speculative
characteristics with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the least degree of
speculation and C the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed by large
uncertainties of major risk exposures to adverse conditions.
The rating CI is reserved for income bonds on which no interest is being paid.
Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
Bonds rated Aaa by Moody's are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged". Interest payments are protected by a large, or an exceptionally stable,
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Bonds rated Aa by Moody's are
judged by Moody's to be of high quality by all standards. Together with bonds
rated Aaa, they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than in Aaa securities.
Bonds rated A by Moody's possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal
A-1
<PAGE>
and interest are considered adequate, but elements may be present which suggest
a susceptibility to impairment sometime in the future. Debt rated Baa by Moody's
is regarded as having an adequate capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
higher rated categories.
Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Fitch uses plus and minus signs with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the AAA category. Bonds rated AAA by Fitch are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. Bonds rated AA by
Fitch are considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+. Bonds rated A by Fitch
are considered to be investment grade and of high credit quality. The obligor's
ability to pay interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and circumstances
than bonds with higher ratings. Bonds rated BBB by Fitch are considered to be
investment grade and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more likely to have
adverse impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings.
A-2
<PAGE>
Bonds rated AAA by Duff are judged by Duff to be of the highest credit quality,
with negligible risk factors being only slightly more than for risk-free U.S.
Treasury debt. Bonds rated AA by Duff are judged by Duff to be of high credit
quality with strong protection factors and risk that is modest but that may vary
slightly from time to time because of economic conditions. Bonds rated A by Duff
are judged by Duff to have average but adequate protection factors. However,
risk factors are more variable and greater in periods of economic stress. Bonds
rated BBB by Duff are judged by Duff as having below average protection factors
but still considered sufficient for prudent investment, with considerable
variability in risk during economic cycles.
Obligations rated AAA by IBCA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly. Obligations for which there is a very
low expectation of investment risk are rated AA by IBCA. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk albeit not very
significantly. Obligations for which there is a low expectation on investment
risk are rated A by IBCA. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk. Obligations for which there is
currently a low expectation of investment risk are rated BBB by IBCA. Capacity
for timely repayment of principal and interest is adequate, although adverse
changes in business, economic or financial conditions are more likely to lead to
increased investment risk than for obligations in higher categories.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Commercial paper rated A by Standard & Poor's Corporation ("S&P") is regarded by
S&P as having the greatest capacity for timely payment. Issues rated A are
further refined by use of the numbers 1, 1+, and 2 to indicate the relative
degree of safety. Issues rated A-1+ are those with an "overwhelming degree" of
credit protection. Those rated A-1, the highest rating category, reflect a "very
strong" degree of safety regarding timely payment. Those rated A-2, the second
highest rating category, reflect a satisfactory degree of safety regarding
timely payment but not as high as A-1.
Commercial paper issues rated Prime-1 or Prime-2 by Moody's Investors Service,
Inc. ("Moody's") are judged by Moody's to be of "superior" quality and "strong"
quality respectively on the basis of relative repayment capacity.
F-1+ (Exceptionally Strong) is the highest commercial paper rating Fitch
assigns; paper rated F-1+ is regarded as having the strongest degree of
assurance for timely payment. Paper rated F-1 (Very Strong) reflects an
assurance of timely payment only slightly less in degree than paper rated F-1+.
The rating F-2 (Good) reflects a satisfactory degree
A-3
<PAGE>
of assurance for timely payment, but the margin of safety is not as great as for
issues rated F-1+ or F-1.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by good fundamental protection
factors. Risk factors are minor. Duff has incorporated gradations of 1+ and 1-
to assist investors in recognizing quality differences within this highest tier.
Paper rated Duff-1+ has the highest certainty of timely payment, with
outstanding short-term liquidity and safety just below risk-free U.S. Treasury
short-term obligations. Paper rated Duff-1- has high certainty of timely payment
with strong liquidity factors which are supported by good fundamental protection
factors. Risk factors are very small. Paper rated Duff-2 is regarded as having
good certainty of timely payment, good access to capital markets (although
ongoing funding may enlarge total financing requirements) and sound liquidity
factors and company fundamentals. Risk factors are small.
The designation A1, the highest rating by IBCA, indicates that the obligation is
supported by a strong capacity for timely repayment. Those obligations rated A1+
are supported by the highest capacity for timely repayment. Obligations rated
A2, the second highest rating, are supported by a satisfactory capacity for
timely repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.
A-4
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
<TABLE>
<S> <C> <C>
(a) Financial Statements
Part A - Not Applicable
Part B - Not Applicable
(b) Additional Exhibits
1 Agreement and Declaration of Trust of the Registrant, dated January 26,
1996 (incorporated herein by reference to Registration Statement filed
on February 1, 1996).
1(a) Amendment dated March 28, 1997, to the Agreement and Declaration of
Trust of the Registrant, dated January 26, 1996 (incorporated herein
by reference to Post-Effective Amendment No. 5 filed on April 10, 1997).
2 By-Laws of the Registrant (incorporated herein by reference to Registration
Statement filed on February 1, 1996).
5(a) Investment Advisory Agreement between the Registrant and Turner Investment
Partners, Inc., (incorporated herein by reference to Post-Effective Amendment No.
4 filed on January 28, 1997).
5(b) Investment Advisory Agreement between the Registrant and Clover Capital
Management, Inc., is filed herewith.
5(c) Form of Investment Advisory Agreement between the Registrant and Penn Capital
Management Company, Inc., (incorporated by reference to Post-Effective
Amendment No. 6 filed on July 15, 1997).
5(d) Form of Investment Advisory Agreement between Registrant and Turner Investment
Partners, Inc., is filed herewith.
5(e) Form of Investment Sub-Advisory Agreement between Turner Investment Partners,
Inc., and Clover Capital Management, Inc., is filed herewith.
5(f) Form of Investment Sub-Advisory Agreement between Turner Investment Partners,
Inc., and Penn Capital Management, Inc., is filed herewith.
5(g) Form of Investment Sub-Advisory Agreement between Turner Investment Partners,
Inc., and Chartwell Investment Partners, is filed herewith.
6(a) Distribution Agreement between the Registrant and SEI Investments Distribution
Co. (formerly, SEI Financial Services Company), (incorporated herein by reference
to Post-Effective Amendment No. 4 filed on January 28, 1997).
6(b) Form of Distribution Agreement between the Registrant and CCM Securities Inc.,
(incorporated herein by reference to Post-Effective Amendment No. 7 filed on
August 15, 1997).
8(a) Custodian Agreement between the Registrant and CoreStates Bank, N.A.,
(incorporated herein by reference to Post-Effective Amendment No. 4 filed on
January 28, 1997).
9(a) Administration Agreement between the Registrant and SEI Investments
Management Corporation (formerly, SEI Financial Management Corporation),
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C> <C>
(incorporated herein by reference to Post-Effective Amendment No. 4 filed on
January 28, 1997).
9(b) Form of Transfer Agency Agreement between the Registrant and DST Systems, Inc.,
(incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registration Statement filed on April 19, 1996).
10 Opinion and Consent of Counsel, (incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registration Statement filed on April 19, 1996).
16 Performance Calculations, (incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registration Statement filed on April 19, 1996).
24 Powers of Attorney for Robert E. Turner, Richard A. Hocker, Michael E. Jones,
Alfred C. Salvato, John T. Wholihan, Stephen J. Kneeley, Janet F. Sansone, and
Robert DellaCroce (incorporated herein by reference to Post-Effective Amendment
No. 8 filed on October 7, 1997).
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant:
See the Prospectus and the Statement of Additional Information
regarding the Registrant's control relationships. SEI Investments Management
Corporation (formerly, SEI Financial Management Corporation) is the owner of all
beneficial interest in the Administrator and is a subsidiary of SEI Investments
Company, which also controls the distributor of the Registrant, SEI Investments
Distribution Co. (formerly, SEI Financial Services Company), as well as to other
corporations engaged in providing various financial and record keeping services,
primarily to bank trust departments, pension plan sponsors, and investment
managers.
Item 26. Number of Holders of Securities, as of August 1, 1997:
Turner Ultra Large Cap Growth Fund 27
----
Turner Growth Equity Fund 127
----
Turner Midcap Growth Fund 55
----
Turner Small Cap Growth Fund 873
----
Turner Fixed Income Fund 0
----
Clover Equity Value Fund 1792
----
Clover Small Cap Value Fund 417
----
Clover Max Cap Value Fund 0
----
Clover Fixed Income Fund 315
----
Penn Capital Select Financial Services Fund 0
----
Penn Capital Strategic High Yield Bond Fund 0
----
Penn Capital Value Plus Fund 0
----
Item 27. Indemnification:
Article VIII of the Agreement of Declaration of Trust filed as Exhibit
1 to the Registration Statement is incorporated by reference. Insofar as
indemnification for liability arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Declaration of Trust or otherwise, the Registrant is aware that
in the opinion of the Securities and
C-2
<PAGE>
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of Investment Advisers:
ADVISERS
Turner Investment Partners, Inc.
Turner Investment Partners, Inc. ("Turner") is the investment adviser for the
Turner Ultra Large Cap Growth, Turner Growth Equity, Turner Midcap Growth,
Turner Small Cap Growth, Turner Fixed Income and TIP Target 20 Equity Funds. The
principal address of Turner is 1235 Westlakes Drive, Suite 350, Berwyn, PA
19312. Turner is an investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Turner, together
with information as to any other business profession, vocation or employment of
substantial nature engaged in by such officers and directors during the past two
years is incorporated by reference to Schedules A and D of Form ADV filed by
Turner pursuant to the Advisers Act (SEC File No. 801-36220).
Clover Capital Management, Inc.
Clover Capital Management, Inc. is the investment adviser for the Clover Max Cap
Value, Clover Capital Equity Value, Clover Capital Fixed Income and Clover
Capital Small Cap Value Funds. Clover Capital Management, Inc. is the
sub-adviser for the TIP Target 20 Equity Fund. The principal address of Clover
Capital Management, Inc. is 11 Tobey Village Office Park, Pittsford, NY 14534.
The list required by this Item 28 of officers and directors of Clover Capital
Management, Inc., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Clover Capital Management, Inc. under the Advisers
Act of 1940 (SEC File No. 801-27041).
Penn Capital Management Company, Inc.
Penn Capital Management Company, Inc. is the investment adviser for the Penn
Capital Select Financial Services, Penn Capital Strategic High Yield Bond and
Penn Capital Value Plus Funds. Penn Capital Management Company, Inc. is the
sub-adviser for the TIP Target 20 Equity Fund. The principal address of Penn
Capital Management Company, Inc., is 52 Haddonfield-Berlin Road, Suite 1000,
Cherry Hill, NJ 08034.
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<PAGE>
The list required by this Item 28 of officers and directors of Penn Capital
Management Company, Inc., together with information as to any other business
profession, vocation, or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference to
Schedules A and D of Form ADV filed by Penn Capital Management Company, Inc.
under the Advisers Act of 1940 (SEC File No. 801-31452).
Chartwell Investment Partners
Chartwell Investment Partners is the sub-adviser for the TIP Target 20 Equity
Fund. The principal address of Chartwell Investment Partners is 1235 Westlakes
Drive, Suite 330, Berwyn, PA 19312.
The list required by Item 28 of officers and directors of Chartwell Investment
Partners together with information as to any other business profession,
vacation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Chartwell Investment Partners under the Advisers Act
of 1940 (SEC File No. 801-54124).
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the
securities of the Registrant also acts as a principal underwriter,
distributor or investment adviser.
Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds(R) June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
C-4
<PAGE>
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
SEI Investments provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These
services include portfolio evaluation, performance measurement and
consulting services ("Funds Evaluation") and automated execution,
clearing and settlement of securities transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named
in the answer to Item 21 of Part B. Unless otherwise noted, the
business address of each director or officer is Oaks, PA 19456.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & President-Investment --
Advisory Group
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, President- --
Investment Services Division
Dennis J. McGonigle Executive Vice President --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
David G. Lee Senior Vice President --
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Vice President,
Secretary Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Secretary Vice President,
Assistant Secretary
Gordon W. Carpenter Vice President --
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
<S> <C> <C>
Todd Cipperman Vice President & Assistant Secretary Vice President,
Assistant Secretary
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President & Treasurer --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Joanne Nelson Vice President --
Barbara A. Nugent Vice President & Assistant Secretary Vice President,
Assistant Secretary
Sandra K. Orlow Vice President & Assistant Secretary Vice President,
Assistant Secretary
Donald Pepin Vice President & Managing Director --
Kim Rainey Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President,
Assistant Secretary
Wayne M. Withrow Vice President & Managing Director --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated
thereunder, are maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records will be
maintained at the offices of Registrant's Custodian:
CoreStates Bank, N.A.
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, Pennsylvania 19101
C-6
<PAGE>
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required
books and records are maintained at the offices of Registrant's
Administrator:
SEI Fund Resources
Oaks, Pennsylvania 19456
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f),
the required books and records are maintained at the principal offices
of the Registrant's Advisers:
Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
Clover Capital Management, Inc.
11 Tobey Village Office Park
Pittsford, New York 14534
Penn Capital Management Company, Inc.
52 Haddonfield-Berlin Road
Suite 1000
Cherry Hill, New Jersey 08034
Chartwell Investment Partners
1235 Westlakes Drive
Suite 330
Berwyn, PA 19312
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with shareholders of the Trust,
the Trustees will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.
Registrant hereby undertakes to call a meeting of Shareholders for
the purpose of voting upon the question of removal of a Trustee(s) when
requested in writing to do so by the holders of at least 10% of Registrant's
outstanding shares and in connection with such meetings to comply with the
provisions of Section 16(c) of the Investment Company Act of 1940.
Registrant hereby undertakes to furnish each prospective person to
whom a prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, when such annual
C-7
<PAGE>
report is issued containing information called for by Item 5A of Form N-1A, upon
request and without charge.
Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be certified for the Penn Capital
Select Financial Services, Penn Capital Strategic High Yield Bond and Penn
Capital Value Plus Funds within 4-6 months from the effective date of the
Registrant's Post-Effective Amendment No. 6.
Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be certified for the Clover
Capital Max Cap Value Fund within 4-6 months from the effective date of the
Registrant's Post-Effective Amendment No. 7.
Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be certified for the TIP Target
Select Equity Fund within 4-6 months from the effective date of the Registrant's
Post-Effective Amendment No. 10.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 10 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Oaks, Commonwealth of Pennsylvania on
the 13th day of October 1997.
TIP FUNDS
By: *
--------------------------------
Stephen J. Kneeley
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacity on the
dates indicated.
<TABLE>
<S> <C> <C>
* Trustee October 13, 1997
---------------------------
Robert E. Turner
* Trustee October 13, 1997
---------------------------
Richard A. Hocker
* Trustee October 13, 1997
---------------------------
Michael E. Jones
* Trustee October 13, 1997
---------------------------
Janet F. Sansone
* Trustee October 13, 1997
---------------------------
Alfred C. Salvato
* Trustee October 13, 1997
---------------------------
John T. Wholihan
* President and Chief October 13, 1997
--------------------------- Executive Officer
Stephen J. Kneeley
* Controller and October 13, 1997
--------------------------- Chief Financial
Robert DellaCroce Officer
By: /s/ John H. Grady, Jr. October 13, 1997
---------------------------
John H. Grady, Jr.
Attorney-in-Fact
</TABLE>
C-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Name Exhibit
- ---- -------
<S> <C>
Agreement and Declaration of Trust of the Registrant, Ex-99.B1
dated January 26, 1996, (incorporated herein by reference to
Registration Statement filed on February 1, 1996).
Amendment dated March 28, 1997, to the Agreement and Ex-99.B1(a)
Declaration of Trust of the Registrant, dated January 26,
1996, (incorporated herein by reference to Post-Effective
Amendment No. 5 filed on April 10, 1997).
By-Laws of the Registrant, (incorporated herein Ex-99.B2
by reference to Registration Statement
filed on February 1, 1996).
Investment Advisory Agreement between Ex-99.B5(a)
the Registrant and Turner Investment Partners, Inc.
(incorporated herein by reference to Post-Effective
Amendment No. 4 filed on January 28, 1997).
Investment Advisory Agreement between Ex-99.B5(b)
the Registrant and Clover Capital Management, Inc.,
is filed herewith.
Form of Investment Advisory Agreement between Ex-99.B5(c)
the Registrant and Penn Capital Management
Company, Inc., (incorporated herein by reference
to Post-Effective Amendment No. 6 filed on July 15, 1997).
Form of Investment Advisory Agreement between Ex-99.B5(d)
the Registrant and Turner Investment Partners, Inc.,
is filed herewith.
Form of Investment Sub-Advisory Agreement between Ex-99.B5(e)
Turner Investment Partners, Inc. and Clover Capital
Management, Inc., is filed herewith.
Form of Investment Sub-Advisory Agreement between Turner Ex-99.B5(f)
Investment Partners, Inc. and Penn Capital Management,
Inc., is filed herewith.
Form of Investment Sub-Advisory Agreement between Turner Ex-99.B5(g)
Investment Partners, Inc. and Chartwell Investment Partners,
is filed herewith.
</TABLE>
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<TABLE>
<S> <C>
Distribution Agreement between the Ex-99.B6(a)
Registrant and SEI Investments Distribution Co.
(formerly, SEI Financial Services Company)
(incorporated herein by reference to Post-Effective
Amendment No. 4 filed on January 28, 1997).
Distribution Agreement between the Registrant Ex-99.B6(b)
and CCM Securities, Inc., (incorporated herein by
reference to Post-Effective Amendment No. 7 filed
on August 15, 1997).
Custodian Agreement between the Registrant Ex-99.B8(a)
and CoreStates Bank, N.A. (incorporated herein
by reference to Post-Effective Amendment No. 4
filed on January 28, 1997).
Administration Agreement between the Ex-99.B9(a)
Registrant and SEI Investments Management Corporation
(formerly, SEI Financial Management Corporation)
(incorporated herein by reference to Post-Effective
Amendment No. 4 filed on January 28, 1997).
Form of Transfer Agency Agreement between the Registrant and Ex-99.B9(b)
DST Systems, Inc. (incorporated herein by reference
to Pre-Effective Amendment No. 1 to Registration
Statement filed on April 19, 1996).
Opinion and Consent of Counsel Ex-99.B10
(incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registration Statement filed on
April 19, 1996).
Performance Calculations Ex-99.B16
(incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registration Statement filed on
April 19, 1996).
Powers of Attorney for Robert E. Turner, Ex-99.B24
Richard A. Hocker, Michael E. Jones, Alfred C. Salvato,
John T. Wholihan, Stephen J. Kneeley, Janet F. Sansone
and Robert DellaCroce (incorporated herein by reference
to Post-Effective Amendment No. 8 filed on October 7, 1997).
</TABLE>
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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of ________, 1997, by and between TIP Funds, a
Massachusetts business trust (the "Trust"), and Turner Investment Partners, Inc.
(the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended,
consisting of several series of shares, each having its own investment policies;
and
WHEREAS, the Trust has retained SEI Fund Resources (the "Administrator") to
provide administration of the Trust's operations, subject to the control of the
Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to the TIP Target Select Equity Fund (the
"Fund") and such other portfolios as the Trust and the Adviser may agree upon
(each a "Fund") and as are set forth in the attached schedule, and the Adviser
is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. Duties of Adviser. The Trust employs the Adviser to manage the
investment and reinvestment of the assets of the Fund, and to hire
(subject to the approval of the Trust's Board of Trustees and, except
as otherwise permitted under the terms of any exemptive relief
obtained in the future by the Adviser from the Securities and
Exchange Commission, or by rule or regulation, a majority of the
outstanding voting securities of the Fund(s)) and thereafter
supervise the investment activities of one or more sub-advisers
deemed necessary to carry out the investment program of the Fund and
to continuously review, supervise and (where appropriate) administer
the investment program of the Fund(s), to determine in its
discretion (where appropriate) the securities to be purchased or
sold, to provide the Administrator and the Trust with records
concerning the Adviser's activities which the Trust is required to
maintain, and to render regular reports to the Administrator and to
the Trust's officers and Trustees concerning the Adviser's discharge
of the foregoing responsibilities. The retention of a sub-adviser by
the Adviser shall not relieve the Adviser of its responsibilities
under this Agreement.
<PAGE>
The Adviser shall discharge the foregoing responsibilities subject
to the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Portfolio's prospectus and
statement of additional information as amended from time to time, and
applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own
expense, to render the services and to provide the office space,
furnishings and equipment and the personnel (including any
sub-advisers) required by it to perform the services on the terms and
for the compensation provided herein. The Adviser will not, however,
pay for the cost of securities, commodities, and other investments
(including brokerage commissions and other transaction charges, if
any) purchased or sold for the Trust.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and is directed to use its
best efforts to obtain the best net results as described from time to
time in the Portfolios' Prospectuses and Statement of Additional
Information. The Adviser will promptly communicate to the
Administrator and to the officers and the Trustees of the Trust such
information relating to portfolio transactions as they may reasonably
request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, by reason of its having directed a securities transaction
on behalf of the Trust to a broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934 or
as described from time to time by the Portfolios' Prospectuses and
Statement of Additional Information.
3. Compensation of the Adviser. For the services to be rendered by
the Adviser as provided in Sections 1 and 2 of this Agreement, the
Trust shall pay to the Adviser compensation at the rate specified in
the Schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end
of each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net assets for
the month involved (less any assets of such Portfolios held in
non-interest bearing special deposits with a Federal Reserve Bank).
The Adviser may, in its discretion and from time to time, waive a
portion of its fee.
<PAGE>
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the termination of
this Agreement.
4. Other Expenses. The Adviser shall pay all expenses of printing and
mailing reports, prospectuses, statements of additional information,
and sales literature relating to the solicitation of prospective
clients. The Trust shall pay all expenses relating to mailing to
existing shareholders prospectuses, statements of additional
information, proxy solicitation material and shareholder reports.
5. Excess Expenses. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but
excluding interest, taxes, brokerage costs, litigation, and other
extraordinary costs) as calculated every business day would exceed the
expense limitations imposed on investment companies by any applicable
statute or regulatory authority of any jurisdiction in which shares of
a Portfolio are qualified for offer and sale, the Adviser shall bear
such excess cost.
However, the Adviser will not bear expenses of any Portfolio which
would result in the Portfolio's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code.
Payment of expenses by the Adviser pursuant to this Section 5 shall be
settled on a monthly basis (subject to fiscal year end reconciliation)
by a reduction in the fee payable to the Adviser for such month
pursuant to Section 3(a) or 3(b) and, if such reduction shall be
insufficient to offset such expenses, by reimbursing the Trust.
6. Reports. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
7. Status of Adviser. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not
impaired thereby. The Adviser shall be deemed
<PAGE>
to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the
Trust in any way or otherwise be deemed an agent of the Trust.
8. Certain Records. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the Investment Company Act of 1940 which are prepared or
maintained by the Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the Trust on request.
9. Limitation of Liability of Adviser. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Adviser hereunder. The
Adviser shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law or Federal securities law
which cannot be waived or modified hereby. (As used in this Paragraph
9, the term "Adviser" shall include directors, officers, employees and
other corporate agents of the Adviser as well as that corporation
itself).
10. Permissible Interests. Trustees, agents, and shareholders of the Trust
are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the Adviser
are or may be interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be interested
in the Trust as a shareholder or otherwise. In addition, brokerage
transactions for the Trust may be effected through affiliates of the
Adviser if approved by the Board of Trustees, subject to the rules and
regulations of the Securities and Exchange Commission.
11. License of Adviser's Name. The Adviser hereby agrees to grant a
license to the Trust for use of its name in the names of the
Portfolios for the term of this Agreement and such license shall
terminate upon termination of this Agreement.
12. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on
<PAGE>
such approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the
Investment Company Act of 1940 and rules and regulations thereunder.
The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940 and the
rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately terminate
in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postpaid, to
the other party at any office of such party.
As used in this Section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the
Investment Company Act of 1940 and the rules and regulations
thereunder; subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
13. Notice. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at One Freedom Valley Drive,
Oaks, PA 19456, and if to the Adviser at 1235 Westlakes Drive, Suite
350, Berwyn, PA 19312.
14. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
15. Governing Law. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of
the Commonwealth of Massachusetts, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter
shall control.
<PAGE>
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees, and
are not binding upon any of the Trustees, officers, or shareholders of the Trust
individually but binding only upon the assets and property of the Trust.
Further, the obligations of the Trust with respect to any one Portfolio shall
not be binding upon any other Portfolio.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
TIP FUNDS
By:_____________________________
Attest:_________________________
TURNER INVESTMENT PARTNERS, INC.
By:_____________________________
Attest:_________________________
<PAGE>
Schedule A dated _________, 1997
to the
Investment Advisory Agreement
dated _________, 1997
between
TIP Funds
and
Turner Investment Partners, Inc.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an
annual rate as follows:
Portfolio Fee (in basis points)
- ----------------------------- ---------------------------------------
TIP Target Select Equity Fund 1.05% of the average daily net assets of
the Fund
INVESTMENT SUB-ADVISORY AGREEMENT
TIP FUNDS
AGREEMENT made this __th day of _____, 1997, between Turner Investment
Partners, Inc. (the "Adviser") and Clover Capital Management, Inc. (the
"Sub-Adviser").
WHEREAS, TIP Funds, a Massachusetts business trust (the "Trust") is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated ___________, 1997 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the TIP Target Equity Fund
(the "Fund"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Fund, and the Sub-Adviser is willing to
render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties of the Sub-Adviser. Subject to supervision by the Adviser and
the Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the
Assets, in accordance with the Fund's investment objectives, policies
and restrictions as stated in the Fund's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the
direction of the Adviser, determine from time to time what Assets will
be purchased, retained or sold by the Fund, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Trust's
Declaration of Trust (as defined herein) and the Prospectus and with
the instructions and directions of the Adviser and of the Board of
Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986, and
all other applicable federal and state laws and regulations, as each is
amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold
by the Fund as provided in subparagraph (a) and will place orders with
or through such persons, brokers or dealers to carry out the policy
with respect to brokerage set forth in the Fund's Registration
Statement (as defined herein) and Prospectus or as the Board of
Trustees or the Adviser may direct from time to time, in conformity
with federal securities laws. In executing Fund transactions and
selecting brokers or dealers, the Sub-Adviser will use its best efforts
to seek on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any transaction, the
Sub-Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services provided (as those
terms are defined in Section 28(e) of the
<PAGE>
Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Trustees of the Trust, the Sub-Adviser is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a fund transaction for the
Fund which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer -- viewed in terms of that
particular transaction or terms of the overall responsibilities of the
Sub-Adviser to the Fund. In addition, the Sub-Adviser is authorized to
allocate purchase and sale orders for securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser,
Sub-Adviser or the Trust's principal underwriter) to take into account
the sale of shares of the Trust if the Sub-Adviser believes that the
quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will
the Fund's Assets be purchased from or sold to the Adviser,
Sub-Adviser, the Trust's principal underwriter, or any affiliated
person of either the Trust, Adviser, the Sub-Adviser or the principal
underwriter, acting as principal in the transaction, except to the
extent permitted by the Securities and Exchange Commission ("SEC") and
the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect
to transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. The Sub-Adviser shall provide to the Adviser or the Board of
Trustees such periodic and special reports, balance sheets or financial
information, and such other information with regard to its affairs as
the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and
shall timely furnish to the Adviser all information relating to the
Sub-Adviser's services under this Agreement needed by the Adviser to
keep the other books and records of the Fund required by Rule 31a-1
under the 1940 Act. The Sub-Adviser shall also furnish to the Adviser
any other information relating to the Assets that is required to be
filed by the Adviser or the Trust with the SEC or sent to shareholders
under the 1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the Trust obtains from
the SEC. The Sub-Adviser agrees that all records that it maintains on
behalf of the Fund are property of the Fund and the Sub-Adviser will
surrender promptly to the Fund any of such records upon the Fund's
request; provided, however, that the Sub-Adviser may retain a copy of
such records. In addition, for the duration of this Agreement, the
Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained by
it pursuant to this Agreement, and shall transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if
there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Fund's custodian on each business
day with information relating to all transactions concerning the Fund's
Assets and shall provide the Adviser with such information upon request
of the Adviser.
(f) The investment management services provided by the Sub-Adviser
under this Agreement are not to be deemed exclusive and the Sub-Adviser
shall be free to render similar services to others, as long as such
services do not impair the services rendered to the Adviser or the
Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill
its commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and
be responsible for voting and handling all proxies in relation to the
Assets. The Adviser shall instruct the custodian and other parties
providing services to the Fund to promptly forward misdirected proxies
to the Sub-Adviser.
2
<PAGE>
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
2. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to
the Advisory Agreement and shall oversee and review the Sub-Adviser's
performance of its duties under this Agreement; provided, however, that
in connection with its management of the Assets, nothing herein shall
be construed to relieve the Sub-Adviser of responsibility for
compliance with the Trust's Declaration of Trust (as defined herein),
the Prospectus, the instructions and directions of the Board of
Trustees of the Trust, the requirements of the 1940 Act, the Internal
Revenue Code of 1986, and all other applicable federal and state laws
and regulations, as each is amended from time to time.
3. Delivery of Documents. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement
and Declaration of Trust, as in effect on the date of this Agreement
and as amended from time to time, herein called the "Declaration of
Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of
this Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Fund.
4. Compensation to the Sub-Adviser. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s)
which is attached hereto and made part of this Agreement. The fee will
be calculated based on the average monthly market value of the Assets
under the Sub-Adviser's management and will be paid to the Sub-Adviser
monthly. Except as may otherwise be prohibited by law or regulation
(including any then current SEC staff interpretation), the Sub-Adviser
may, in its discretion and from time to time, waive a portion of its
fee.
5. Indemnification. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or
damages (including reasonable attorney's fees and other related
expenses) howsoever arising from or in connection with the performance
of the Sub-Adviser's obligations under this Agreement; provided,
however, that the Sub-Adviser's obligation under this Section 5 shall
be reduced to the extent that the claim against, or the loss, liability
or damage experienced by the Adviser, is caused by or is otherwise
directly related to the Adviser's own, or any other sub-adviser's,
willful misfeasance, bad faith or negligence, or to the reckless
disregard of its duties under this Agreement.
6. Duration and Termination. This Agreement shall become effective upon
its approval by the Trust's Board of Trustees and by the vote of a
majority of the outstanding voting securities of the Fund. This
Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically
approved at least annually in conformance with the 1940 Act; provided,
however, that this Agreement may be terminated with respect to the Fund
(a) by the Fund at any time, without the payment of any penalty, by the
vote of a majority of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund, (b) by the
Adviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the
3
<PAGE>
Sub-Adviser, or (c) by the Sub-Adviser at any time, without the
payment of any penalty, on 90 days' written notice to the Adviser. This
Agreement shall terminate automatically and immediately in the event of
its assignment, or in the event of a termination of the Adviser's
agreement with the Trust. As used in this Section 6, the terms
"assignment" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
7. Governing Law. This Agreement shall be governed by the internal laws of
the Commonwealth of Pennsylvania, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed
as being inconsistent with the 1940 Act.
8. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
9. Notice. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by
registered, certified or overnight mail, postage prepaid addressed by
the party giving notice to the other party at the last address
furnished by the other party:
To the Adviser at: Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
To the Sub-Adviser at: Clover Capital Management, Inc.
11 Tobey Village Office Park
Pittsford, New York 14534
10. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject
matter. 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.
A copy of the Declaration of Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Fund or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
Turner Investment Partners, Inc. Clover Capital Management, Inc.
By: By:
----------------------------- ----------------------------
4
<PAGE>
Name: Name:
--------------------------- --------------------------
Title: Title:
-------------------------- -------------------------
4
<PAGE>
Schedule A
to the
Sub-Advisory Agreement
between
Turner Investment Partners, Inc.
and
Clover Capital Management, Inc.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
TIP Target Equity Fund .80%
INVESTMENT SUB-ADVISORY AGREEMENT
TIP FUNDS
AGREEMENT made this __th day of _____, 1997, between Turner Investment
Partners, Inc. (the "Adviser") and Penn Capital Management Company, Inc. (the
"Sub-Adviser").
WHEREAS, TIP Funds, a Massachusetts business trust (the "Trust") is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated ___________, 1997 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the TIP Target Equity Fund
(the "Fund"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Fund, and the Sub-Adviser is willing to
render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties of the Sub-Adviser. Subject to supervision by the Adviser and
the Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the
Assets, in accordance with the Fund's investment objectives, policies
and restrictions as stated in the Fund's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the
direction of the Adviser, determine from time to time what Assets will
be purchased, retained or sold by the Fund, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Trust's
Declaration of Trust (as defined herein) and the Prospectus and with
the instructions and directions of the Adviser and of the Board of
Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986, and
all other applicable federal and state laws and regulations, as each is
amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold
by the Fund as provided in subparagraph (a) and will place orders with
or through such persons, brokers or dealers to carry out the policy
with respect to brokerage set forth in the Fund's Registration
Statement (as defined herein) and Prospectus or as the Board of
Trustees or the Adviser may direct from time to time, in conformity
with federal securities laws. In executing Fund transactions and
selecting brokers or dealers, the Sub-Adviser will use its best efforts
to seek on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any transaction, the
Sub-Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services provided (as those
terms are defined in Section 28(e) of the
<PAGE>
Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Trustees of the Trust, the Sub-Adviser is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a fund transaction for the
Fund which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer -- viewed in terms of that
particular transaction or terms of the overall responsibilities of the
Sub-Adviser to the Fund. In addition, the Sub-Adviser is authorized to
allocate purchase and sale orders for securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser,
Sub-Adviser or the Trust's principal underwriter) to take into account
the sale of shares of the Trust if the Sub-Adviser believes that the
quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will
the Fund's Assets be purchased from or sold to the Adviser,
Sub-Adviser, the Trust's principal underwriter, or any affiliated
person of either the Trust, Adviser, the Sub-Adviser or the principal
underwriter, acting as principal in the transaction, except to the
extent permitted by the Securities and Exchange Commission ("SEC") and
the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect
to transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. The Sub-Adviser shall provide to the Adviser or the Board of
Trustees such periodic and special reports, balance sheets or financial
information, and such other information with regard to its affairs as
the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and
shall timely furnish to the Adviser all information relating to the
Sub-Adviser's services under this Agreement needed by the Adviser to
keep the other books and records of the Fund required by Rule 31a-1
under the 1940 Act. The Sub-Adviser shall also furnish to the Adviser
any other information relating to the Assets that is required to be
filed by the Adviser or the Trust with the SEC or sent to shareholders
under the 1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the Trust obtains from
the SEC. The Sub-Adviser agrees that all records that it maintains on
behalf of the Fund are property of the Fund and the Sub-Adviser will
surrender promptly to the Fund any of such records upon the Fund's
request; provided, however, that the Sub-Adviser may retain a copy of
such records. In addition, for the duration of this Agreement, the
Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained by
it pursuant to this Agreement, and shall transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if
there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Fund's custodian on each business
day with information relating to all transactions concerning the Fund's
Assets and shall provide the Adviser with such information upon request
of the Adviser.
(f) The investment management services provided by the Sub-Adviser
under this Agreement are not to be deemed exclusive and the Sub-Adviser
shall be free to render similar services to others, as long as such
services do not impair the services rendered to the Adviser or the
Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill
its commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and
be responsible for voting and handling all proxies in relation to the
Assets. The Adviser shall instruct the custodian and other parties
providing services to the Fund to promptly forward misdirected proxies
to the Sub-Adviser.
2
<PAGE>
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
2. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to
the Advisory Agreement and shall oversee and review the Sub-Adviser's
performance of its duties under this Agreement; provided, however, that
in connection with its management of the Assets, nothing herein shall
be construed to relieve the Sub-Adviser of responsibility for
compliance with the Trust's Declaration of Trust (as defined herein),
the Prospectus, the instructions and directions of the Board of
Trustees of the Trust, the requirements of the 1940 Act, the Internal
Revenue Code of 1986, and all other applicable federal and state laws
and regulations, as each is amended from time to time.
3. Delivery of Documents. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement
and Declaration of Trust, as in effect on the date of this Agreement
and as amended from time to time, herein called the "Declaration of
Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of
this Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Fund.
4. Compensation to the Sub-Adviser. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s)
which is attached hereto and made part of this Agreement. The fee will
be calculated based on the average monthly market value of the Assets
under the Sub-Adviser's management and will be paid to the Sub-Adviser
monthly. Except as may otherwise be prohibited by law or regulation
(including any then current SEC staff interpretation), the Sub-Adviser
may, in its discretion and from time to time, waive a portion of its
fee.
5. Indemnification. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or
damages (including reasonable attorney's fees and other related
expenses) howsoever arising from or in connection with the performance
of the Sub-Adviser's obligations under this Agreement; provided,
however, that the Sub-Adviser's obligation under this Section 5 shall
be reduced to the extent that the claim against, or the loss, liability
or damage experienced by the Adviser, is caused by or is otherwise
directly related to the Adviser's own, or any other sub-adviser's,
willful misfeasance, bad faith or negligence, or to the reckless
disregard of its duties under this Agreement.
6. Duration and Termination. This Agreement shall become effective upon
its approval by the Trust's Board of Trustees and by the vote of a
majority of the outstanding voting securities of the Fund. This
Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically
approved at least annually in conformance with the 1940 Act; provided,
however, that this Agreement may be terminated with respect to the Fund
(a) by the Fund at any time, without the payment of any penalty, by the
vote of a majority of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund, (b) by the
Adviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the
3
<PAGE>
Sub-Adviser, or (c) by the Sub-Adviser at any time, without the
payment of any penalty, on 90 days' written notice to the Adviser. This
Agreement shall terminate automatically and immediately in the event of
its assignment, or in the event of a termination of the Adviser's
agreement with the Trust. As used in this Section 6, the terms
"assignment" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
7. Governing Law. This Agreement shall be governed by the internal laws of
the Commonwealth of Pennsylvania, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed
as being inconsistent with the 1940 Act.
8. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
9. Notice. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by
registered, certified or overnight mail, postage prepaid addressed by
the party giving notice to the other party at the last address
furnished by the other party:
To the Adviser at: Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
To the Sub-Adviser at: Penn Capital Management Company, Inc.
52 Haddonfield-Berlin Road, Suite 1000
Cherry Hill, New Jersey 08034
10. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject
matter. 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.
A copy of the Declaration of Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Fund or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
Turner Investment Partners, Inc. Penn Capital Management Company, Inc.
By: By:
----------------------------- ----------------------------------
3
<PAGE>
Name: Name:
--------------------------- --------------------------------
Title: Title:
-------------------------- -------------------------------
4
<PAGE>
Schedule A
to the
Sub-Advisory Agreement
between
Turner Investment Partners, Inc.
and
Penn Capital Management Company, Inc.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
TIP Target Equity Fund .80%
INVESTMENT SUB-ADVISORY AGREEMENT
TIP FUNDS
AGREEMENT made this __th day of _____, 1997, between Turner Investment
Partners, Inc. (the "Adviser") and Chartwell Investment Partners (the
"Sub-Adviser").
WHEREAS, TIP Funds, a Massachusetts business trust (the "Trust") is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated ___________, 1997 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the TIP Target Equity Fund
(the "Fund"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Fund, and the Sub-Adviser is willing to
render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties of the Sub-Adviser. Subject to supervision by the Adviser and
the Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the
Assets, in accordance with the Fund's investment objectives, policies
and restrictions as stated in the Fund's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the
direction of the Adviser, determine from time to time what Assets will
be purchased, retained or sold by the Fund, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Trust's
Declaration of Trust (as defined herein) and the Prospectus and with
the instructions and directions of the Adviser and of the Board of
Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986, and
all other applicable federal and state laws and regulations, as each is
amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold
by the Fund as provided in subparagraph (a) and will place orders with
or through such persons, brokers or dealers to carry out the policy
with respect to brokerage set forth in the Fund's Registration
Statement (as defined herein) and Prospectus or as the Board of
Trustees or the Adviser may direct from time to time, in conformity
with federal securities laws. In executing Fund transactions and
selecting brokers or dealers, the Sub-Adviser will use its best efforts
to seek on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any transaction, the
Sub-Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services provided (as those
terms are defined in Section 28(e) of the
<PAGE>
Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Trustees of the Trust, the Sub-Adviser is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a fund transaction for the
Fund which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer -- viewed in terms of that
particular transaction or terms of the overall responsibilities of the
Sub-Adviser to the Fund. In addition, the Sub-Adviser is authorized to
allocate purchase and sale orders for securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser,
Sub-Adviser or the Trust's principal underwriter) to take into account
the sale of shares of the Trust if the Sub-Adviser believes that the
quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will
the Fund's Assets be purchased from or sold to the Adviser,
Sub-Adviser, the Trust's principal underwriter, or any affiliated
person of either the Trust, Adviser, the Sub-Adviser or the principal
underwriter, acting as principal in the transaction, except to the
extent permitted by the Securities and Exchange Commission ("SEC") and
the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect
to transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. The Sub-Adviser shall provide to the Adviser or the Board of
Trustees such periodic and special reports, balance sheets or financial
information, and such other information with regard to its affairs as
the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and
shall timely furnish to the Adviser all information relating to the
Sub-Adviser's services under this Agreement needed by the Adviser to
keep the other books and records of the Fund required by Rule 31a-1
under the 1940 Act. The Sub-Adviser shall also furnish to the Adviser
any other information relating to the Assets that is required to be
filed by the Adviser or the Trust with the SEC or sent to shareholders
under the 1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the Trust obtains from
the SEC. The Sub-Adviser agrees that all records that it maintains on
behalf of the Fund are property of the Fund and the Sub-Adviser will
surrender promptly to the Fund any of such records upon the Fund's
request; provided, however, that the Sub-Adviser may retain a copy of
such records. In addition, for the duration of this Agreement, the
Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained by
it pursuant to this Agreement, and shall transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if
there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Fund's custodian on each business
day with information relating to all transactions concerning the Fund's
Assets and shall provide the Adviser with such information upon request
of the Adviser.
(f) The investment management services provided by the Sub-Adviser
under this Agreement are not to be deemed exclusive and the Sub-Adviser
shall be free to render similar services to others, as long as such
services do not impair the services rendered to the Adviser or the
Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill
its commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and
be responsible for voting and handling all proxies in relation to the
Assets. The Adviser shall instruct the custodian and other parties
providing services to the Fund to promptly forward misdirected proxies
to the Sub-Adviser.
2
<PAGE>
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
2. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to
the Advisory Agreement and shall oversee and review the Sub-Adviser's
performance of its duties under this Agreement; provided, however, that
in connection with its management of the Assets, nothing herein shall
be construed to relieve the Sub-Adviser of responsibility for
compliance with the Trust's Declaration of Trust (as defined herein),
the Prospectus, the instructions and directions of the Board of
Trustees of the Trust, the requirements of the 1940 Act, the Internal
Revenue Code of 1986, and all other applicable federal and state laws
and regulations, as each is amended from time to time.
3. Delivery of Documents. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement
and Declaration of Trust, as in effect on the date of this Agreement
and as amended from time to time, herein called the "Declaration of
Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of
this Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Fund.
4. Compensation to the Sub-Adviser. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s)
which is attached hereto and made part of this Agreement. The fee will
be calculated based on the average monthly market value of the Assets
under the Sub-Adviser's management and will be paid to the Sub-Adviser
monthly. Except as may otherwise be prohibited by law or regulation
(including any then current SEC staff interpretation), the Sub-Adviser
may, in its discretion and from time to time, waive a portion of its
fee.
5. Indemnification. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or
damages (including reasonable attorney's fees and other related
expenses) howsoever arising from or in connection with the performance
of the Sub-Adviser's obligations under this Agreement; provided,
however, that the Sub-Adviser's obligation under this Section 5 shall
be reduced to the extent that the claim against, or the loss, liability
or damage experienced by the Adviser, is caused by or is otherwise
directly related to the Adviser's own, or any other sub-adviser's,
willful misfeasance, bad faith or negligence, or to the reckless
disregard of its duties under this Agreement.
6. Duration and Termination. This Agreement shall become effective upon
its approval by the Trust's Board of Trustees and by the vote of a
majority of the outstanding voting securities of the Fund. This
Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically
approved at least annually in conformance with the 1940 Act; provided,
however, that this Agreement may be terminated with respect to the Fund
(a) by the Fund at any time, without the payment of any penalty, by the
vote of a majority of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund, (b) by the
Adviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the
3
<PAGE>
Sub-Adviser, or (c) by the Sub-Adviser at any time, without the
payment of any penalty, on 90 days' written notice to the Adviser. This
Agreement shall terminate automatically and immediately in the event of
its assignment, or in the event of a termination of the Adviser's
agreement with the Trust. As used in this Section 6, the terms
"assignment" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
7. Governing Law. This Agreement shall be governed by the internal laws of
the Commonwealth of Pennsylvania, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed
as being inconsistent with the 1940 Act.
8. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
9. Notice. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by
registered, certified or overnight mail, postage prepaid addressed by
the party giving notice to the other party at the last address
furnished by the other party:
To the Adviser at: Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
To the Sub-Adviser at: Chartwell Investment Partners
10. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject
matter. 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.
A copy of the Declaration of Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Fund or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
Turner Investment Partners, Inc. Chartwell Investment Partners
By: By:
---------------------------- --------------------------
3
<PAGE>
Name: Name:
------------------------- ------------------------
Title: Title:
------------------------ -----------------------
4
<PAGE>
Schedule A
to the
Sub-Advisory Agreement
between
Turner Investment Partners, Inc.
and
Chartwell Investment Partners
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
TIP Target Equity Fund .80%
