<PAGE>
Annual
Report
SEPTEMBER 30, 1999
[TIP FUNDS LOGO OMITTED]
- -------------------------------------------------------------------------------
TIP Target Select Equity Fund
- -------------------------------------------------------------------------------
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
2 Total Returns and Fund Investment Objective
3 Letter to Shareholders
7 Schedule of Investments
13 Notes to Financial Statements
16 Report of Independent Auditors
17 Notice to Shareholders
TIP FUNDS
- --------------------------------------------------------------------------------
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,
ill manage the portion of the fund's assets entrusted to Clover. As of
September 30, 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
- --------------------------------------------------------------------------------
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*
- --------------------------------------------------------------------------------
Periods ended September 30, 1999
<TABLE>
<CAPTION>
Annualized
One-Year Inception
Return to Date**
-------- ----------
<S> <C> <C>
TIP Target Select Equity Fund 80.04% 42.77%
S&P 500 Composite Index 27.80 18.95
Lipper Multi-Cap Growth Funds Classification 41.46 23.48
</TABLE>
*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
- --------------------------------------------------------------------------------
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:
- --------------------------------------------------------------------------------
The fiscal year ended September 30, 1999 was a very good one for the TIP Target
Select Equity Fund, which produced a total return of 80.04%. By comparison, the
S&P 500 Index recorded a total return of 27.80%. All three components of the
fund performed well, led by the growth-oriented style of Turner Investment
Partners.
The fiscal year began with a crisis in the global markets, as currency
meltdowns in several emerging nations threatened to spread to the economies of
their larger trading partners. However, strong and timely action by the Federal
Reserve Board helped restore confidence to the domestic markets - which in turn
helped to calm the waters globally.
By December, 1998, the U.S. equity markets had regained much of what they
had lost during the fall. However, many large-cap issues continued to suffer
from the realities of lower earnings due to declines in key international
markets.
Partly because of these realities, market leadership shifted somewhat over
the course of the year. For a brief time, cyclical industries such as basic
materials, enjoyed their day in the sun after years of neglect. This contrarian
rally was inspired by modest rises in the prices of certain commodities, and by
price-earnings ratios that appeared positively quaint in today's environment.
However, most of these stocks soon moved back into the shade after investors
recognized that growth, not value, would remain the theme of this historic era.
The year also witnessed a more convincing rally among many smaller-cap
growth issues, whose attributes had too long been ignored. Many of these issues
share the characteristics of their larger counterparts, including dynamic
earnings growth, innovative products/services, and solid franchises. And since
the small- and mid-cap growth sectors represent a large component of our fund,
we are pleased to note that the resurgence in these issues has continued to
build.
Seeking the "best of the best."
Through the multi-manager approach of the TIP Target Select Equity Fund, we
benefit from the perspectives and skills of three outstanding investment firms:
Turner Investment Partners, Chartwell Investment Partners, and Penn Capital
Management Company.
3
<PAGE>
Each firm is asked to select the most promising securities on their respective
radar screens for inclusion in the portfolio, in an effort to represent the
"best of the best" in each style. The following are brief summaries of our
managers' accomplishments for the year:
Turner Investment Partners
Turner Investment Partners continued to focus on growth stocks, with
particular concentration on technology-oriented issues. The Turner portfolio is
eclectic in nature, with a broad mixture of sectors and capitalization levels,
and turns over frequently in response to market conditions.
Turner's performance was enhanced by timely moves into Internet-related
issues near the bottom of a mid-year cycle. From that bottom, these issues,
which included America Online and Yahoo, appreciated substantially for the
remainder of the fiscal year. Turner also took advantage of the increased market
interest in telecommunications issues such as Qwest Communications, Level 3
Communications, and several telecom equipment providers.
Chartwell Investment Partners
Chartwell continued to employ a strategy of investing in companies that can
generate predictable earnings growth over the next 12 months; that can realize
improvements in their fundamentals through new management, product innovation,
turnaround strategies, or accelerated growth; and that can produce good returns
on capital.
In fiscal 1999, this strategy led Chartwell to invest in value-oriented
issues within the financial services, basic materials, and capital goods
sectors. Its best-performing stocks for the year included Canadian
telecommunications holding company BCE, Midwestern utility company Illinova,
specialty retailer The Limited, and medical instruments and supplies
manufacturer Baxter International.
Penn Capital Management Company
While Penn Capital Management Company employs a value-style investment
approach, it has managed to find companies that are not only undervalued, but
also fast-growing. As a result, the firm recorded outstanding results for the
fiscal year.
For example, Penn Capital identified two overlooked Canadian cell phone
companies, Clearnet Communications and Microcell Telecommunications, that
delivered huge gains for the year. In addition, their investment in Pegasus
Communication, a leading provider of DirectTV satellite broadcast services to
rural markets, performed extremely well.
4
<PAGE>
Penn Capital also benefited from takeovers of two portfolio holdings,
International Comfort Products and Unilab Corporation. And it even enjoyed
strong gains in more traditional value sectors such as energy, thanks to a
substantial increase in oil prices during 1999.
Beyond Y2K, a healthy outlook.
Looking ahead, we believe that the long-term bull market is still solidly
intact, and that growth issues will continue to lead the way in the new
millennium. In fact, we expect a resurgence of many technology issues once
concerns over the so-called "Y2K" bug have become history. Over the past few
years, companies have had to invest billions of dollars in repairing old
software, drawing capital away from more forward-looking technology
expenditures.
We believe the TIP Target Select Fund is well positioned to take advantage
of the market's future direction, with solid representation by both growth- and
value- oriented issues.
Further, we believe we have an outstanding group of investment teams to
identify some of the best opportunities from the various segments of the market.
Our teams are excited to be part of a fund with so many strong assets - both
financial and human - and to be involved in a market of such historic
dimensions. And we feel privileged to be employing our skills on behalf of you,
our growing family of investors. We thank you for your continued confidence, and
will do all we can to continue earning that confidence in the years ahead.
/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
5
<PAGE>
Comparison of Change in the Value of a $10,000 Investment in the
TIP Target Select Equity Fund, versus the
S&P 500 Composite Index, and the Russell 3000 Index
In the printed version of the document, a line graph
appears which depicts the following plot points:
Target S&P Russell
12/31/97 10000 10000 10000
Sep 98 10350 10603 10222
Sep 99 18634 13550 12912
One Annualized
Year Inception to
Return Date
80.04% 42.77%(1)
These figures represent past performance. Past performance is no guarantee of
future results.The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost.
(1) The TIP Target Select Equity Fund began operations on January 1, 1998.
6
<PAGE>
Schedule of Investments TIP Funds
September 30, 1999
Market
TIP TARGET SELECT Value
EQUITY FUND Shares (000)
- ---------------------------------------------------------
Common Stocks (97.9%)
Aerospace & Defense (1.4%)
BE Aerospace* 2,195 $ 26
-------
Apparel/Textiles (3.5%)
Dan River, Cl A* 6,970 45
Pillowtex 2,660 20
-------
65
-------
Automotive & Truck Parts (1.4%)
Exide 2,600 25
-------
Banks (2.0%)
Seacoast Banking of Florida, Cl A 500 15
U.S. Bancorp 370 11
Wells Fargo 280 11
-------
37
-------
Broadcasting, Newspapers &
Advertising (2.8%)
Pegasus Communications* 1,125 51
-------
Casinos & Gaming (0.5%)
Starwood Hotels and Resorts
Worldwide 440 10
-------
Chemicals (0.7%)
Rohm & Haas 330 12
-------
Communications Equipment (8.0%)
Ciena* 1,150 42
Nokia 525 47
Scientific-Atlanta 1,180 58
-------
147
-------
Computers & Services (2.5%)
Cisco Systems* 665 46
-------
Drugs (1.3%)
Rexall Sundown* 850 10
Warner Lambert 210 14
-------
24
-------
Electrical Services (1.3%)
Illinova 445 12
Montana Power 405 12
-------
24
-------
Electronics (5.1%)
Atmel* 1,200 41
Micron Technology 790 53
-------
94
-------
Entertainment (1.2%)
Argosy Gaming* 1,680 22
-------
Environmental Services (1.1%)
Safety-Kleen* 1,710 21
-------
Financial Services (0.7%)
Fannie Mae 215 13
-------
Food, Beverage & Tobacco (4.2%)
Anheuser Busch 675 47
Dr. Pepper Bottling Holdings,
Cl A* 1,050 31
-------
78
-------
Gas/Natural Gas (4.1%)
Enron 1,100 45
Sonat 400 16
Williams 365 14
-------
75
-------
Insurance (0.4%)
Hartford Financial Services 190 8
-------
Internet Services (14.8%)
America Online* 575 60
Internap Network Services* 1,160 52
Netzero* 2,100 55
Priceline.com* 800 52
Yahoo* 300 54
-------
273
-------
Machinery (0.7%)
Eaton 145 12
-------
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Schedule of Investments TIP Funds
September 30, 1999
Market
TIP TARGET SELECT Shares Value
EQUITY FUND (Concluded) (000) (000)
- ------------------------------------------------------
Medical Products & Services (8.8%)
Bausch & Lomb 550 $ 36
Caremark Rx* 5,825 33
Johnson & Johnson 500 46
Kensey Nash* 1,260 20
Laboratory of America
Holdings* 9,300 26
-------
161
-------
Miscellaneous Business
Services (5.3%)
Automatic Data Processing 1,065 48
Pitney Bowes 210 13
Telespectrum Worldwide* 4,675 28
Wackenhut 635 9
-------
98
-------
Office Automation Equipment (0.7%)
Xerox 315 13
-------
Oil Field Services (2.6%)
Baker Hughes 1,625 47
-------
Petroleum & Fuel Products (6.2%)
Patterson Energy* 1,975 30
Pool Energy Services* 2,945 72
USX-Marathon Group 399 12
-------
114
-------
Petroleum Refining (0.7%)
Conoco* 485 13
-------
Retail (0.7%)
The Limited 335 13
Too* 4 --
-------
13
-------
Semi-Conductors/Instruments (5.3%)
JDS Uniphase* 425 48
Lam Research* 800 49
-------
97
-------
Software & Programming (2.6%)
Microsoft* 520 47
-------
Shares/Face Market
TIP TARGET SELECT Amount Value
EQUITY FUND (Concluded) (000) (000)
- ------------------------------------------------------
Steel & Steel Works (1.3%)
AK Steel Holding 1,315 $ 24
-------
Telephones &
Telecommunications (6.0%)
AT&T 225 10
BCE 250 12
Clearnet, Cl A* 2,520 46
Microcell Telecommunications* 3,315 43
-------
111
-------
Total Common Stocks
(Cost $1,745) 1,801
-------
Repurchase Agreement (1.9%)
Morgan Stanley,
5.00%, dated 09/30/99, matures
10/01/99, repurchase price
$34,960 (collateralized by
U.S. Treasury Note, par value
$33,702, 7.25%, 08/15/04,
market value $35,771) 35 35
-------
Total Repurchase Agreement
(Cost $35) 35
-------
Total Investments (99.8% )
(Cost $1,780) 1,836
-------
Other Assets and Liabilities, Net (0.2%) 3
-------
Total Net Assets (100.0%) $ 1,839
=======
*Non-income producing security
Cl -- Class
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Assets and Liabilities (000) TIP Funds
September 30, 1999
<TABLE>
<CAPTION>
TIP Target
Select Equity
Fund
- ---------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investment Securities at Value (Cost $1,780)................................ $1,836
Receivable for Investment Securities Sold .................................. 157
Other Assets ............................................................... 11
- ---------------------------------------------------------------------------------------------
Total Assets ............................................................ 2,004
- ---------------------------------------------------------------------------------------------
Liabilities:
Payable for Investment Securities Purchased ............................... 165
- ---------------------------------------------------------------------------------------------
Total Liabilities ......................................................... 165
- ---------------------------------------------------------------------------------------------
Net Assets:
Portfolio shares (unlimited authorization--no par value) based on
107,088 outstanding shares of beneficial interest ....................... 1,201
Distributions in Excess of Net Investment Income............................ (3)
Accumulated Net Realized Gain on Investments .............................. 585
Net Unrealized Appreciation of Investments ................................ 56
- ---------------------------------------------------------------------------------------------
Total Net Assets ........................................................ $1,839
=============================================================================================
Net Asset Value, Offering Price, and Redemption Price Per Share .............. $17.17
=============================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Operations (000) TIP Funds
September 30, 1999
TIP Target Select
Equity Fund
-----------------
Investment Income:
Dividends ........................................................ $ 9
Interest ......................................................... 1
- -----------------------------------------------------------------------------
Total Investment Income......................................... 10
- -----------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ......................................... 14
Investment Advisory Fee Waiver ................................... (14)
Administrator Fees ............................................... 85
Custodian Fees ................................................... 5
Transfer Agent Fees .............................................. 6
Professional Fees ................................................ --
Trustee Fees ..................................................... 2
Registration Fees ................................................ 1
Pricing Fees ..................................................... --
Printing Fees .................................................... 17
Amortization of Deferred Organizational Costs .................... 5
Insurance and Other Fees ......................................... --
- -----------------------------------------------------------------------------
Total Expenses ................................................. 121
- -----------------------------------------------------------------------------
Less: Reimbursements by Adviser................................... (104)
- -----------------------------------------------------------------------------
Total Net Expenses ............................................. 17
- -----------------------------------------------------------------------------
Net Investment Loss ........................................ (7)
- -----------------------------------------------------------------------------
Net Realized Gain From Securities Sold ........................... 603
Net Unrealized Appreciation of Investment Securities ............. 158
- -----------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments .................. 761
- -----------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations ............. $ 754
- -----------------------------------------------------------------------------
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Changes in Net Assets (000) TIP Funds
<TABLE>
<CAPTION>
TIP Target
Select Equity Fund
-------------------------
10/1/98 1/1/98
thru 9/30/99 thru 9/30/98(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Loss ................................................ $ (7) $ --
Net Realized Gain on Securities Sold .............................. 603 70
Net Unrealized Appreciation (Depreciation) of Investment Securities 158 (102)
- ----------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations 754 (32)
- ----------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ............................................. -- (1)
Realized Capital Gain ............................................. (83) --
- ----------------------------------------------------------------------------------------------------------
Total Distributions ............................................. (83) (1)
- ----------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued ....................................... 473 1,272
Proceeds from Shares Issued in Lieu of Cash Distributions ......... 83 1
Cost of Shares Redeemed ........................................... (354) (274)
- ----------------------------------------------------------------------------------------------------------
Increase in Net Assets From Capital Share Transactions .......... 202 999
- ----------------------------------------------------------------------------------------------------------
Total Increase in Net Assets .................................... 873 966
- ----------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ............................................. 966 --
- ----------------------------------------------------------------------------------------------------------
End of Period(2) ................................................ $1,839 $ 966
==========================================================================================================
Shares Issued and Redeemed:
Issued ............................................................ 33 115
Issued in Lieu of Cash Distributions .............................. 8 --
Redeemed .......................................................... (27) (22)
- ----------------------------------------------------------------------------------------------------------
Net Increase in Share Transactions ............................... 14 93
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commenced operations on January 1, 1998.
(2) Includes distributions in excess of net investment income of $(3) and $(1)
as of September 30, 1999, and September 30, 1998, respectively.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Financial Highlights TIP Funds
For a Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Ratio of Net
Net Net Net Investment
Asset Net Realized and Distributions Distributions Asset Assets Ratio Income
Value Investment Unrealized from Net from Value End of Expenses (Loss)
Beginning Income Gains on Investment Capital End of Period to Average to Average
of Period (Loss) Investments Income Gains of Period Total Return(1) (000) Net Assets Net Assets
--------- ---------- ------------ ------------- ------------- --------- --------------- --------- ----------- -----------
- -----------------------------
TIP Target Select Equity Fund
- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $10.34 (0.07) 7.80 -- (0.90) $17.17 80.04% $1,839 1.30% (0.56)%
1998(2) $10.00 -- 0.35 (0.01) -- $10.34 3.50% $ 966 1.30%* 0.02%*
</TABLE>
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses Income (Loss)
to Average to Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
----------- ------------- ---------
<S> <C> <C> <C>
1999 10.19% (9.45)% 1,279.40%
1998(2) 18.76%* (17.44)%* 803.02%
</TABLE>
* Annualized
(1) Returns are for the period indicated and have not been annualized.
(2) Commenced operations on January 1, 1998.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Notes to Financial Statements TIP Funds
September 30, 1999
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 19 portfolios. The financial statements 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.
13
<PAGE>
Notes to Financial Statements (Continued) TIP Funds
September 30, 1999
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. Certain 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 28, 1996. The Distributor receives no fees for its distribution services
under this agreement.
14
<PAGE>
Notes to Financial Statements (Concluded) TIP Funds
September 30, 1999
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
September 30, 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 September 30, 1999, are as
follows (000):
TIP Target
Select Equity Fund
------------------
Purchases ........................ $16,945
Sales ............................ 16,914
At September 30, 1999, the total cost of securities for Federal income tax
purposes was $1,800,566. The aggregate gross unrealized appreciation and
depreciation for securities held by the Fund at September 30, 1999, is as
follows (000):
TIP Target
Select Equity Fund
------------------
Aggregate gross unrealized appreciation $152
Aggregate gross unrealized depreciation (139)
----
Net unrealized appreciation ........ $ 13
====
7. Line of Credit:
Pursuant to a credit agreement dated May 21, 1997, First Union National Bank
provides an uncommitted line of credit to the Turner Funds, Portfolios of the
TIP Funds, for short-term or emergency purposes, such as funding shareholder
redemptions. These loans are for the respective benefit of and repayable from
the respective assets of the Turner Funds. The aggregate principal amount of all
borrowings may not exceed 10% of the Turner Funds, net assets and the maximum
principal amount that the Bank will loan is $10,000,000. Borrowings under the
line of credit are charged interest based on the federal funds rate determined
at the date of borrowing and are secured by investment securities of the
borrowing portfolio. Each Turner Fund is individually, and not jointly, liable
for its particular advances under the line. There is no commitment fee on the
unused portion of the line of credit. There were no borrowings under the line of
credit during the period ended September 30, 1999.
15
<PAGE>
Report of Independent Auditors TIP Funds
To the Shareholders and Board of Trustees
TIP Funds -- TIP Target Select Equity Fund
We have audited the accompanying statement of assets and liabilities of the
TIP Funds - TIP Target Select Equity Fund, including the schedule of
investments, as of September 30, 1999, and the related statement of operations
and the statements of changes in net assets and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
TIP Funds - TIP Target Select Equity Fund at September 30, 1999, the results of
its operations and the changes in its net assets and its financial highlights
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
/s/ signature omitted
---------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
November 8, 1999
16
<PAGE>
Notice to Shareholders
of
TIP Target Select Funds
(Unaudited)
For shareholders that do not have a September 30, 1999 tax year end, this notice
is for informational purposes only. For shareholders with a September 30, 1999,
please consult your tax advisor as to the pertinence of this notice. For the
fiscal year ended September 30, 1999, each portfolio is designating the
following items with regard to distributions paid during the year.
<TABLE>
<CAPTION>
Long Term
(20% Rate) Ordinary
Capital Gain Income Tax Exempt
Portfolio Distributions Distributions Interest
---------- ------------- ------------- ----------
<S> <C> <C> <C>
TIP Target Select Equity Fund .......... 0.00% 100.00% 0.00%
</TABLE>
Total Qualifying
Portfolio Distributions Dividends (1)
--------- ------------- -------------
TIP Target Select Equity Fund .......... 100.00% 3.65%
- ----------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributors".
17
<PAGE>
NOTES
<PAGE>
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
[TURNER LOGO OMITTED]
TURNER
-------------------------
INVESTMENT PARTNERS, INC.
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 Prospectus,
which contains detailed information.
TIP-F-007-02
