SEMIANNUAL
REPORT
MARCH 31, 1999
(Unaudited)
[LOGO OMITTED]
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TIP Target Select Equity Fund
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<PAGE>
CONTENTS
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2 Total Returns and Fund Investment Objective
3 Letter to Shareholders
7 Financial Statements
12 Notes to Financial Statements
TIP FUNDS
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The TIP Funds offer the TIP Target Select Equity Fund, a no-load mutual
fund for individual and institutional investors. The minimum initial investment
in the TIP Target Select Equity Fund for regular accounts is $2,500 and $2,000
for individual retirement accounts. The minimum amount for subsequent
investments is $500.
TURNER INVESTMENT PARTNERS, INC., based in Berwyn, Pennsylvania, serves as
the investment adviser to the fund. The firm, founded in 1990, invests in
equity, fixed-income, and balanced portfolios on behalf of individuals and
institutions.
Along with Turner, CHARTWELL INVESTMENT PARTNERS, CLOVER CAPITAL MANAGEMENT
COMPANY, INC., and PENN CAPITAL MANAGEMENT COMPANY, INC. currently serve as
subadvisers to the TIP Target Select Equity Fund.
CHARTWELL INVESTMENT PARTNERS, based in Berwyn, Pennsylvania, was founded
in 1997. A team of investment professionals manages the portion of the fund's
assets allocated to Chartwell.
CLOVER CAPITAL MANAGEMENT, based in Pittsford, New York, was founded in
1984. Michael Edward Jones, managing director and one of the firm's founders,
will manage the portion of the fund's assets entrusted to Clover. As of March
31, 1999, Clover is not managing any assets of the fund.
PENN CAPITAL MANAGEMENT COMPANY, based in Cherry Hill, New Jersey, was
founded in 1987. The firm was founded by Richard A. Hocker, who is the chief
investment officer and the portfolio manager of the portion of the fund's assets
managed by Penn Capital.
SHAREHOLDER SERVICES
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The TIP Funds shareholders receive annual and semiannual reports and
monthly account statements. Shareholders who have questions about their accounts
may call a toll-free telephone number, 1-800-224-6312. Or they may write to TIP
Funds, P.O. Box 419805, Kansas City, Missouri 64141.
<PAGE>
TOTAL RETURNS*
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Period ended March 31, 1999
ANNUALIZED
SIX-MONTH ONE-YEAR INCEPTION
RETURN RETURN TO DATE**
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TIP TARGET SELECT EQUITY FUND 41.04% 23.16% 35.44%
S&P 500 Index 27.34 18.46 27.14
Lipper Growth Funds Average 28.23 13.56 22.34
* Past performance cannot guarantee future results. The investment return and
principal value of an investment will fluctuate, so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
**The inception date for the TIP Target Select Equity Fund is January 1, 1998.
FUND INVESTMENT OBJECTIVE
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THE TIP TARGET SELECT EQUITY FUND seeks long-term growth of capital. It
invests primarily in U.S. stocks. Each investment firm chosen to manage assets
in the fund invests in a maximum of 20 stocks and as few as 10 stocks that it
believes have the greatest return potential. Such a focused stock-selection
process permits the firms to act on only the investment ideas that they think
are the strongest. In the process, the fund provides two levels of
diversification: diversification in total holdings and diversification in
investment styles.
2
<PAGE>
TO OUR SHAREHOLDERS:
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A strong stock market, especially in large-company shares, and positive returns
by the three investment managers -- Turner Investment Partners, Chartwell
Investment Partners, and Penn Capital Management Company -- enabled the TIP
Target Select Equity Fund to return 41.04% for the six-month period ended March
31.
Target Select's strong showing represented a performance advantage of 13.70
percentage points over the S&P 500 Index's 27.34% gain and 12.81 percentage
points over the Lipper Growth Funds Average's 28.23% result. And it earned the
fund a favorable rating for investment performance among its peers. In rankings
of growth funds compiled by Lipper Inc., Target Select was rated 113th out of
1,105 competing funds, or in the 10th percentile, for the past six months and
rated 249th out of 1,022 competing funds, or in the 24th percentile, for the
past year.
STOCKS SURGE
In the wake of the sudden, sharp downturn that wiped out more than $2.4
trillion of value from the stock market last summer, we offered this advice in
the fund's annual report six months ago: maintain your current commitment to
stocks. It was rewarding advice, in light of the S&P 500's subsequent double-
digit gain. Catalysts for that surge included the following:
[bullet] Continued economic expansion. The U.S. economy kept rolling along
smoothly, recording its eighth consecutive year of growth, the longest such
streak in the nation's peacetime history.
[bullet] American corporations' global profit leadership. Due to its
surpassing proficiency at production, management, and marketing, corporate
America is accounting for a growing share of the global business community's
profitability. According to Lehman Brothers data, in 1990 the U.S. share of
global profits was 36%; in 1998, it grew to 44%. We think that fact goes a long
way toward explaining why the S&P 500 Index has done so well in the past six
months and has more than doubled since November 1995.
[bullet] Low inflation. The inflation rate remained in an annualized range
of 1.4-1.7% -- markedly below the historical average of 3.1% and the lowest
level since 1986. Net-net, low inflation increased the value of corporate
earnings.
[bullet] Interest-rate cuts. Early in the period the Federal Reserve Board
made a series of three reductions in rates, which helped revitalize the market;
lower rates, it was widely believed, would help sustain corporate earnings and
stave off the threat of a recession. Although interest rates subsequently
increased, they stayed at relatively low levels by historical standards.
[bullet] A spate of acquisitions, which reduced the supply of shares.
According to THE NEW YORK TIMES, in the first half of the period, for example,
the total shares outstanding in the stock market decreased by $178 billion.
Among the takeovers were Netscape Communications by America Online, AMP by Tyco
International, Union Camp by International Paper, and Bankers Trust by Deutsche
Bank.
BIG NEWS: SMALL STOCKS REBOUND?
Perhaps in retrospect the most noteworthy event of the period will prove to
be the growing vitality of small-cap stocks. After falling to a two-year low
last fall, the small-cap Russell 2000 Index jumped more than 20% to finish
October with a 4.08% increase. For the entire six months,
3
<PAGE>
WHATEVER THE MARKET MAY DO IN THE SHORT TERM, WE ONCE AGAIN EXPRESS THE
CONVICTION THAT YOUR LONG-TERM FINANCIAL INTEREST IS BEST SERVED BY STAYING IN
STOCKS. THAT CONVICTION IS BASED ON RESEARCH SHOWING THAT EFFORTS TO "TIME" THE
MARKET -- TO INVEST IN STOCKS WHEN MARKET CONDITIONS APPEAR PROMISING AND TO
AVOID STOCKS WHEN CIRCUMSTANCES SEEM ADVERSE -- HAVE TYPICALLY PROVEN TO BE
COUNTERPRODUCTIVE.
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the Russell 2000 was up 10.00%. To be sure, small stocks have a lot of
catching up yet to do: they have underperformed large stocks for the past six
consecutive quarters.
As for large stocks, the largest of the large stocks did best, with the
Russell Top 200 Growth Index posting the best return of any capitalization-based
index: 35.71%. As a result of large caps' continuing vigor, the market is
sharply divided in terms of valuations: a select group of gargantuan growth
stocks like Cisco Systems, Lucent Technologies, and General Electric sell at
more than 40 times earnings, contrasting with the vast majority of smaller
stocks selling at a price/earnings multiple of less than 15 (which is about the
median historical valuation). Value stocks, after lagging significantly for the
past two years, did better. For instance, the Russell 1000 Growth Index returned
21.56% to outperform the Russell 1000 Value Index by 3.28 percentage points, a
margin of outperformance smaller than it had been recently.
Performance by sector was widely disparate. Two growth sectors, technology
and consumer discretionary/services, gained the most. In the Russell 1000 Index,
the technology sector soared 49.01%; the consumer-discretionary/services sector,
energized by strong consumer spending, rose 45.26%. Those two outsized returns
eclipsed the performance of the next-best-performing sector, financial services,
by more than 19 percentage points. Still, all sectors produced positive returns.
TECH AND CONSUMER STOCKS EXCEL
In essence, the ideal stock fund in this period would have held large-cap
technology and consumer-discretionary stocks. In fact, Target Select did have
significant representation in those two groups, in stocks like Cisco Systems,
EMC, Intel, Texas Instruments, America Online, Home Depot, and Time Warner. At
the same time, Target Select, as always, was diversified both by style (with
growth and value strategies) and by capitalization segment (with positions in
large, mid-cap, and small stocks). Such diversification of course is sensible
because the performance of different types of stocks tends to wax and wane in
the long term: when one type is underperforming, another is outperforming.
Happily, diversification helped Target Select cope with all the market
crosscurrents swirling during the period. The differing investment styles of the
three firms that manage Target Select's assets -- Turner, Chartwell, and Penn
Capital -meshed well. The combined holdings of growth and value stocks
represented each firm's 20 best investment ideas; they performed distinctly
differently at different times, thereby providing favorable counterbalancing
influences.
Turner's investment style focuses on growth stocks of companies with
earnings that meet or exceed Wall Street's consensus expectations. Good stock
selection and an overweighting in strong-performing big stocks characterized the
Turner holdings. About 70% of those holdings were concentrated in three sectors:
technology, consumer discretionary/services, and producer durables, which
accounted for most of Turner's performance advantage. The highest returns were
recorded in technology stocks like At Home, Mercury Interactive, Intel, and
Micron Technology; consumer-discretionary/services
4
<PAGE>
stocks like Amazon.com, America Online, Gap, Home Depot, and Time Warner; and
producer-durables stocks like Applied Materials and KLA-Tencor.
VITAL: AVOIDING BIG LOSERS
Another factor enhancing performance: Turner was able to avoid the
significant number of growth stocks that declined sharply, an ability it
considers critical to investment success, as critical as the ability to pick
winning stocks. The Turner investment team thinks its use of numerous
quantitative, fundamental, and technical indicators and nimbleness in
eliminating underperforming individual positions should be especially useful
now, as the market remains volatile and punishes the stocks of companies with
earnings problems.
Chartwell's value style involves investing in stocks of companies paying
above-average dividends and offering above-average earnings power. About 35% of
Chartwell's current holdings are concentrated in financial-services and
telecommunications stocks. Financial-services shares, such as BankAmerica, U.S.
Bancorp, and the Federal National Mortgage Association, have been Chartwell
favorites for some time. The main reasons: they sell at a 30% discount to the
average market price/earnings ratio, pay dividends that are twice as high as the
average, and are likely to benefit from any broadening of market leadership.
Indeed, late in the period there were signs that the market leadership was
changing; previously out-of-favor cyclical stocks like Caterpillar and Alcoa
rallied. For its part, Chartwell is looking to snap up selective cyclical stocks
in the chemical, paper, and capital-goods industries to capitalize on any
further manifestations of that trend.
Chartwell's best-performing stocks for the period were Xerox, Pitney Bowes,
American Home Products, and Bristol-Myers Squibb, all of which rose more than
30%. Its current positions offer attractive values: namely, a price/earnings
ratio of 25, based on trailing 12-month earnings (versus 34 for the S&P 500) and
a dividend yield of 2.1% (versus 1.3% for the S&P 500).
HOLDINGS OFFER APPEALING VALUE
The investments of Penn Capital, whose investing style emphasizes small-cap
value stocks, also have appealing valuations: a forward price/earnings multiple
of less than 10 and a price/book-value ratio of 1.7. (Like many small stocks,
they pay no dividend.) In all cases, the companies owned have growth rates
exceeding the price/earnings ratios of their shares -- evidence of compelling
return potential, in Penn Capital's view. Having especially compelling potential
now are positions in health-care and telecommunications stocks, which grew as
previously significant positions in oil-services stocks were reduced.
The biggest winners for Penn Capital were Unilab, which provides diagnostic
medical tests; Clearnet Communications, a Canadian wireless-communications
company whose share valuation is markedly less than the average of U.S.
competitors; Pegasus Communications, a direct-satellite TV broadcasting company
that markets to a prime audience of rural consumers; and AK Steel, a low-cost
producer that earns more profit per ton of steel than anyone in the industry.
All generated double-digit returns in the period and hold potential for
additional gains, in the firm's analysis.
As for the stock market's potential, we think as long as earnings hold up
reasonably well (and we think they generally will), this remarkable bull of a
market should continue raging. Also, we think above-average market volatility
will continue to be in evidence and any corrections will be concentrated and
followed by the market
5
<PAGE>
HAPPILY, DIVERSIFICATION HELPED TARGET SELECT COPE WITH ALL THE MARKET
CROSSCURRENTS SWIRLING DURING THE PERIOD. THE DIFFERING INVESTMENT STYLES OF
THE THREE FIRMS THAT MANAGE TARGET SELECT'S ASSETS -- TURNER, CHARTWELL, AND
PENN CAPITAL - MESHED WELL.
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regaining its momentum. Also, we anticipate that smaller stocks should do
relatively well over the next 12 months.
A VERITY: STAY THE COURSE
No one of course is smart enough to know how small stocks or the market as
a whole will in fact fare. The market is still awash in crosscurrents, such as
weakness in certain pockets of the tech sector, gyrations in energy prices, and
sporadic strength in cyclical stocks. Indeed, one reason for the Russell 2000
Index's recent strength is that it has a relatively high number of cyclical
stocks. Whatever the market may do in the short term, we once again express the
conviction that your long-term financial interest is best served by staying in
stocks. That conviction is based on research showing that efforts to "time" the
market -- to invest in stocks when market conditions appear promising and to
avoid stocks when circumstances seem adverse -- have typically proven to be
counterproductive.
For instance, had you gotten out of stocks in the wake of the sharp market
drop last summer, your market-timing would have cost you dearly: you would have
missed the 41.04% gain that Target Select generated over the past six months --
a gain more than three times larger than the long-term 11.2% average return
large-cap stocks have generated for an entire YEAR, as measured by Ibbotson
Associates. Although it's easy to scorn the familiar principle of "stay the
course in stock investing," we nevertheless think it's one of the soundest
verities in life, along with "honesty is the best policy," "eat to live, and not
live to eat," and "keep your eyes wide open before marriage, half shut
afterwards."
We are pleased with our investment results over the past six months and
pledge to work diligently at increasing over time the wealth you have entrusted
to us. We thank you for keeping faith with us, and we thank our staff members
whose individual and collective efforts have contributed so much to our strength
and record of accomplishment. As always, we remain committed to our mission of
delivering superior investment returns and service to you. And as always, we
welcome your questions or comments.
/s/ signature omitted
Robert E. Turner
CHAIRMAN AND CHIEF INVESTMENT OFFICER
TURNER INVESTMENT PARTNERS, INC.
/s/ signature omitted
Richard A. Hocker
PORTFOLIO MANAGER
PENN CAPITAL MANAGEMENT COMPANY, INC.
/s/ signature omitted
Harold A. Ofstie
PORTFOLIO MANAGER
CHARTWELL INVESTMENT PARTNERS
6
<PAGE>
STATEMENT OF NET ASSETS TIP FUNDS
March 31, 1999 (Unaudited)
TIP TARGET SELECT Value
EQUITY FUND Shares (000)
- ------------------------------------------------------
COMMON STOCKS (97.5%)
AIRCRAFT (1.4%)
BE Aerospace* 1,185 $ 18
----
APPAREL/TEXTILES (1.4%)
Dan River, Cl A* 1,330 11
Pillowtex 465 7
----
18
----
AUTOMOTIVE (1.0%)
Avis Rent A Car* 465 13
----
BANKS (5.2%)
BankAmerica 650 46
Seacoast Banking of Florida 500 13
U.S. Bancorp 305 10
----
69
----
BROADCASTING, NEWSPAPERS &
ADVERTISING (4.8%)
AT&T Corp-Liberty Media, Cl A* 665 35
Pegasus Communications* 650 18
True North Communications 370 10
----
63
----
BUILDING & CONSTRUCTION SUPPLIES (1.5%)
International Comfort Products* 2,525 20
----
COMPUTERS & SERVICES (7.1%)
Cisco Systems* 500 55
Microsoft* 420 38
----
93
----
DRUGS (7.3%)
American Home Products 265 17
Bristol-Myers Squibb 165 11
Merck 400 32
Rexall Sundown* 1,000 19
Zeneca Group, ADR 370 17
----
96
----
ELECTRICAL SERVICES (1.1%)
Illinova 720 15
----
ELECTRONICS (5.6%)
Motorola 550 40
Xilinx* 825 33
----
73
----
Value
Shares (000)
- ------------------------------------------------------
ENTERTAINMENT (3.5%)
Players International* 1,150 $ 7
Time Warner 550 39
----
46
----
ENVIRONMENTAL SERVICES (1.0%)
Safety-Kleen* 975 13
----
FINANCIAL SERVICES (4.0%)
Fannie Mae 245 17
Freddie Mac 625 36
----
53
----
FOOD, BEVERAGE & TOBACCO (1.5%)
Dr. Pepper Bottling Holdings, Cl A* 300 9
Universal Foods 535 11
----
20
----
GAS/NATURAL GAS (1.3%)
Enron 260 17
----
MACHINERY (3.0%)
Applied Materials* 625 39
----
MEDICAL PRODUCTS & SERVICES (7.8%)
Baxter International 260 17
Guidant* 565 34
Kensey Nash* 1,200 10
Unilab* 12,700 41
----
102
----
MISCELLANEOUS BUSINESS SERVICES (6.9%)
CSG Systems International* 900 35
Network Solutions, Cl A* 290 31
Pitney Bowes 280 18
Wackenhut 435 7
----
91
----
MISCELLANEOUS MANUFACTURING (2.7%)
Tyco International Limited 500 36
----
OIL SERVICES (1.3%)
Bayard Drilling Technologies* 2,685 17
----
PAPER & PAPER PRODUCTS (0.5%)
Drypers* 3,250 7
----
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF NET ASSETS TIP FUNDS
March 31, 1999 (Unaudited)
TIP TARGET SELECT Value
EQUITY FUND (Concluded) Shares (000)
- ------------------------------------------------------
PETROLEUM & FUEL PRODUCTS (0.8%)
USX-Marathon Group 350 $ 10
----
PHOTOGRAPHIC EQUIPMENT
& SUPPLIES (1.3%)
Xerox 320 17
----
PRINTING & PUBLISHING (0.8%)
McGraw-Hill 210 11
----
PROFESSIONAL SERVICES (1.4%)
ServiceMaster 925 19
----
RETAIL (6.9%)
Best Buy* 715 37
Finlay Enterprises* 1,225 13
General Nutrition* 325 5
McDonald's 800 36
----
91
----
SEMICONDUCTORS/INSTRUMENTS (2.0%)
Intel 220 26
----
SPECIALTY CONSTRUCTION (1.2%)
Masco 580 16
----
STEEL & STEEL WORKS (1.1%)
AK Steel Holding 675 15
----
TELEPHONES &
TELECOMMUNICATION (11.2%)
AT&T 140 11
Bell Atlantic 675 35
BCE 465 21
Cable & Wireless, ADR 325 12
Clearnet, Cl A* 2,375 31
Metromedia Fiber Network,
Cl A* 710 37
----
147
----
TRANSPORT SERVICES (0.9%)
Coach USA* 425 12
----
TOTAL COMMON STOCKS
(Cost $1,222) 1,283
----
Face
Amount Value
(000) (000)
- ------------------------------------------------------
REPURCHASE AGREEMENT (1.9%)
Morgan Stanley
4.50%, dated 03/31/99,
matures 04/01/99,
repurchase price $25,131
(collateralized by
U.S. Treasury Note,
par value $25,049, 5.625%,
10/31/99 market value $25,759) $ 25 $ 25
-----
TOTAL REPURCHASE AGREEMENT
(Cost $25) 25
-----
TOTAL INVESTMENTS (99.4%)
(Cost $1,247) 1,308
-----
OTHER ASSETS AND LIABILITIES, NET (0.6%) 8
-----
NET ASSETS:
Portfolio Shares (unlimited
authorization--no par value)
based on 97,824 outstanding
shares of beneficial interest 1,054
Accumulated net investment loss (3)
Accumulated net realized gain
on investments 204
Net unrealized appreciation
on investments 61
------
TOTAL NET ASSETS (100.0%) $1,316
======
Net Asset Value, Offering and
Redemption Price Per Share $13.45
======
*Non-income producing security
ADR--American Depository Receipt
Cl--Class
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENT OF OPERATIONS (000) TIP FUNDS
(Unaudited)
TIP TARGET SELECT
EQUITY FUND
-----------------
10/1/98 THRU
3/31/99
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Investment Income:
Dividends .................................................. $ 4
Interest ................................................... 1
- --------------------------------------------------------------------------------
Total Investment Income................................... 5
- --------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ................................... 6
Investment Advisory Fee Waiver ............................. (6)
Administrator Fees ......................................... 35
Custodian Fees ............................................. --
Transfer Agent Fees ........................................ --
Professional Fees .......................................... 6
Trustee Fees ............................................... 1
Registration Fees .......................................... --
Pricing Fees ............................................... --
Printing Fees .............................................. 4
Amortization of Deferred Organizational Costs .............. 2
Insurance and Other Fees ................................... --
- --------------------------------------------------------------------------------
Total Expenses ........................................... 48
- --------------------------------------------------------------------------------
Less: Reimbursements by Adviser............................. (41)
- --------------------------------------------------------------------------------
Total Net Expenses ....................................... 7
- --------------------------------------------------------------------------------
Net Investment Loss .................................. (2)
- --------------------------------------------------------------------------------
Net Realized Gain From Securities Sold ..................... 217
Net Unrealized Appreciation of Investment Securities ....... 163
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments ............ 380
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations ....... $378
- --------------------------------------------------------------------------------
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000) TIP FUNDS
(Unaudited
<TABLE>
<CAPTION>
TIP TARGET
SELECT EQUITY FUND
------------------------------
10/1/98 1/1/98
THRU 3/31/99 THRU 9/30/98(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income (Loss) ................................ $ (2) $--
Net Realized Gain on Securities Sold ........................ 217 70
Net Unrealized Appreciation
(Depreciation) of Investment Securities ................... 163 (102)
- -----------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 378 (32)
- -----------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ....................................... -- (1)
Realized Capital Gain ....................................... (83) --
- -----------------------------------------------------------------------------------------------
Total Distributions ....................................... (83) (1)
- -----------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued ................................. 149 1,272
Proceeds from Shares Issued in Lieu of
Cash Distributions ......... 83 1
Cost of Shares Redeemed ..................................... (177) (274)
- -----------------------------------------------------------------------------------------------
Increase in Net Assets From Capital Share Transactions .... 55 999
- -----------------------------------------------------------------------------------------------
Total Increase in Net Assets .............................. 350 966
- -----------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ....................................... 966 --
- -----------------------------------------------------------------------------------------------
End of Period(2) .......................................... $1,316 $ 966
===============================================================================================
Shares Issued and Redeemed:
Issued ...................................................... 12 115
Issued in Lieu of Cash Distributions ........................ 8 --
Redeemed .................................................... (15) (22)
- -----------------------------------------------------------------------------------------------
Net Increase in Share Transactions ........................ 5 93
===============================================================================================
<FN>
(1) Commenced operations on January 1, 1998.
(2) Includes net investment loss and/or distributions in excess of net
investment income (000) of $(3) and $(1) as of March 31, 1999, and
September 30, 1998, respectively.
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
FINANCIAL HIGHLIGHTS TIP FUNDS
For a Share Outstanding Throughout the Period (Unaudited)
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Distributions Distributions Asset Assets Ratio
Value Net Unrealized from Net from Value End of Expenses
Beginning Investment Gains on Investment Capital End of Period to Average
of Period Income Investments Income Gains of Period Total Return(1) (000) Net Assets
--------- ---------- ------------ ------------- ------------- --------- --------------- --------- -----------
- -----------------------------
TIP TARGET SELECT EQUITY FUND
- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999[dagger] $10.34 (0.02) 4.03 -- (0.90) $13.45 41.04% $1,316 1.30%*
1998(2) $10.00 -- 0.35 (0.01) -- $10.34 3.50% $ 966 1.30%*
Ratio of Net
Ratio of Investment
Ratio of Net Expenses Income to
Investment to Average Average
Income Net Assets Net Assets Portfolio
to Average (Excluding (Excluding Turnover
Net Assets Waivers) Waivers) Rate
------------ ---------- ------------ ---------
- -----------------------------
TIP TARGET SELECT EQUITY FUND
- -----------------------------
<S> <C> <C> <C> <C>
1999[dagger] (0.40)%* 9.91%* (9.01)%* 664.04%
1998(2) 0.02%* 18.76%* (17.44)%* 803.02%
<FN>
* Annualized
+ For the six-month period period ended March 31.
(1) Returns are for the period indicated and have not been annualized.
(2) The TIP Target Select Equity Fund began operations on January 1, 1998.
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS TIP FUNDS
March 31, 1999 (Unaudited)
1. ORGANIZATION:
TIP FUNDS (the "Trust") a Massachusetts business trust, is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end management
investment company with 14 funds (the "Funds"). The financial statement included
herein is for the TIP Target Select Equity Fund (the "Target Select Equity
Fund") (the "Fund"). The financial statements of the remaining portfolios are
presented separately. The assets of each fund are segregated, and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund's prospectus provides a description of the Fund's investment objectives,
policies, and strategies. The Fund is non-diversified, and may therefore be
invested in equity securities of a limited number of issues.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Fund.
SECURITY VALUATION -- Investments in equity securities which are traded on
a national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price.
FEDERAL INCOME TAXES -- It is the Fund's intention to qualify as a
regulated investment company by complying with the appropriate provisions
of the Internal Revenue Code of 1986, as amended. Accordingly, no
provision for Federal income taxes is required.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date, and interest income
is recognized on the accrual basis. Costs used in determining realized
gains and losses on the sales of investment securities are those of the
specific securities sold during the respective holding period.
NET ASSET VALUE PER SHARE -- The net asset value per share of the Fund is
calculated on each business day, by dividing the total value of the Fund's
assets, less liabilities, by the number of shares outstanding.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market
value of the collateral, including accrued interest thereon, is sufficient
in the event of default of the counterparty. If the counterparty defaults
and the value of the collateral declines or if the counterparty enters an
insolvency proceeding, realization of the collateral by the Fund may be
delayed or limited.
EXPENSES -- Expenses that are directly related to the Fund are charged to
the Fund. Other operating expenses of the Trust are prorated to the funds
on the basis of relative daily net assets.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued) TIP FUNDS
March 31, 1999 (Unaudited)
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared and paid to Shareholders on a quarterly basis. Any net
realized capital gains on sales of securities are distributed to
Shareholders at least annually. Dividends from net investment income and
distributions from net realized capital gains are determined in accordance
with U.S. Federal income tax regulations, which may differ from those
amounts determined under generally accepted accounting principles. These
book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, they are charged or credited to
paid-in-capital or accumulated net realized gain, as appropriate, in the
period that the differences arise.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of income and
expenses during the reported period. Actual results could differ from those
estimates.
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES:
Organization costs have been capitalized by the Fund and are being amortized
over a period of sixty months. In the event any of the initial shares of a Fund
are redeemed by any holder thereof during the period that such Fund is
amortizing its organizational costs, the redemption proceeds payable to the
holder thereof by the Fund will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares outstanding at the time
of redemption.
Certain officers of the Trust are also officers of SEI Investments Mutual Funds
Services (the "Administrator") and/or SEI Investments Distribution Co. (the
"Distributor"). Such officers are paid no fees by the Trust for serving as
officers and trustees of the Trust.
4. ADMINISTRATION, SHAREHOLDER SERVICING, AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator are parties to an agreement under which the
Administrator provides management and administrative services for an annual fee
of 0.09% of the average daily net assets of the Trust up to $250 million, 0.07%
on the next $250 million, 0.06% on the next $250 million, 0.05% on the next
$1.25 billion, and 0.04% of such assets in excess on $2 billion. There is a
minimum annual fee of $65,000 per Fund payable to the Administrator for services
rendered to the Fund under the Administration Agreement. The Administrator may,
at its sole discretion waive all or a portion of its fees.
DST Systems, Inc., (the "Transfer Agent"), serves as the transfer agent and
dividend disbursing agent for the Fund under a transfer agency agreement with
the Trust.
The Trust and the Distributor are parties to a Distribution Agreement dated
April 30, 1996. The Distributor receives no fees for its distribution services
under this agreement.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Concluded) TIP FUNDS
March 31, 1999 (Unaudited)
5. INVESTMENT ADVISORY AGREEMENT:
The Trust and Turner Investment Partners, Inc. (the "Adviser") are parties to an
Investment Advisory Agreement dated April 30, 1996, under which the Adviser
receives an annual fee equal to 1.05% of the average daily net assets of the
Target Select Equity Fund. The Fund currently has three Sub-Advisers--Chartwell
Investment Partners, Clover Capital Management, Inc., and Penn Capital
Management, Inc. (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. As of March
31, 1999, Clover Capital Management did not manage any assets of the Fund. 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 them. The
Adviser has voluntarily agreed to waive all or a portion of its fees and to
reimburse expenses of the Target Select Equity 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%. Fee waivers and expense reimbursements are
voluntary and may be terminated at any time.
6. INVESTMENT TRANSACTIONS:
The total cost of security purchases and the proceeds from security sales, other
than short-term investments, for the period
ended March 31, 1999, are as follows (000):
TIP TARGET
SELECT EQUITY FUND
------------------
Purchases ...................... $7,314
Sales .......................... 7,422
At March 31, 1999, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at March 31, 1999, is as follows (000):
TIP TARGET
SELECT EQUITY FUND
------------------
Aggregate gross unrealized appreciation $ 98
Aggregate gross unrealized depreciation (37)
------
Net unrealized appreciation ..... $ 61
======
14
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TRUST
TIP Funds
P.O. Box 419805
Kansas City, MO 64141-6805
INVESTMENT ADVISER
Turner Investment Partners, Inc.
SUBADVISERS
Chartwell Investment Partners
Clover Capital Management, Inc.
Penn Capital Management Company, Inc.
DISTRIBUTOR
SEI Investments Distribution Co.
ADMINISTRATOR
SEI Investments Mutual Funds Services
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
INDEPENDENT AUDITORS
Ernst & Young LLP
[LOGO OMITTED]
To open an account, receive account information, make inquiries, or request
literature:
1-800-224-6312
THIS REPORT WAS PREPARED FOR SHAREHOLDERS IN THE TIP TARGET SELECT EQUITY FUND.
IT MAY BE DISTRIBUTED TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A TIP FUNDS
PROSPECTUS, WHICH CONTAINS DETAILED INFORMATION.
TIP-F-008-01
