<PAGE>
Annual
Report
September 30, 1999
Clover Funds [LOGO]
Portfolios of The TIP Funds
------------------------------------------------
Clover Small Cap Value Fund
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Clover Equity Value Fund
------------------------------------------------
Clover Max Cap Value Fund
------------------------------------------------
Clover Fixed Income Fund
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<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
2 Investment Review 24 Financial Highlights
10 Statement of Net Assets 25 Notes to Financial Statements
21 Statement of Operations 28 Report of Independent Auditors
22 Statement of Changes in Net Assets
CLOVER FUNDS
- --------------------------------------------------------------------------------
The TIP Funds offer a series of 19 no-load mutual funds to institutional
investors. The minimum initial investment in a TIP Fund is $2,500.
Clover Capital Management, Inc., based in Pittsford, NY, serves as the
investment advisor to four of the TIP Funds. The firm, founded in 1984, manages
approximately $1.5 billion of assets for individuals, employee benefits plans,
endowments and foundations. Clover Capital Management, Inc. advises the Clover
Small Cap Value Fund, Clover Equity Value Fund, Clover Max Cap Value Fund and
the Clover Fixed Income Fund. Separate investment firms manage the other mutual
funds in the TIP Funds family.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
TIP Funds shareholders receive annual and semiannual reports and quarterly
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.
1
<PAGE>
INVESTMENT REVIEW
CLOVER SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
The Clover Small Cap Value Fund seeks attractive returns through investment in a
diversified portfolio of stocks. The Fund's focus is on relatively unknown
companies whose market capitalizations fall in the small and micro-cap
categories. Within this sector we isolate and invest in companies that trade at
attractive values relative to a firm's book value, cash flow, debt commitment,
peers, and company specific historical valuation. It is our belief that within
this sector of small, inexpensive, and relatively obscure stocks, rewarding
investment gains can be realized.
For the fiscal year ended September 30, 1999 the Clover Small Cap Value
Fund gained 21.82%, compared with a gain of 19.07% to the benchmark Frank
Russell 2000 Index. Fund performance was aided by the appreciation of stocks
from a broad variety of sectors. Investment efforts were focused on small,
undervalued and relatively obscure companies with reasonable prospects for share
price appreciation. Although no industry sectors were specifically targeted for
investment, depressed valuations in several sectors led to emphasis in those
areas. Sectors that made significant contributions to Fund performance included
the technology, energy and utility sectors. Fund performance was also aided by a
significant amount of merger and acquisition activity involving Fund holdings.
Looking ahead, the Fund will continue to consistently apply its core
investment methodology. This involves isolation of individual companies with
inexpensive share prices relative to their fundamental statistics and future
operating potential. We believe that there is no value gained by attempting to
forecast broad market movements, interest rates or macroeconomic changes, and
therefore intend to keep levels of cash reasonably low at all times. Despite
volatile equity markets in the past year, we were able to opportunistically
purchase the shares of undervalued companies, and anticipate additional
opportunities in the months ahead.
2
<PAGE>
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
CLOVER SMALL CAP VALUE FUND, VERSUS THE FRANK RUSSELL 2000 INDEX
One Annualized Annualized
Year 3 Year Inception to
Return Return Date(1)
21.82% 12.69% 13.02%
[In the printed version there appears a line graph
depicting the following plot points.]
Clover Small Cap Value Frank Russell 2000 Index
2/28/96 10,000 10,000
9/30/96 10,838 10,752
9/30/97 16,169 14,320
9/30/98 12,733 11,596
9/30/99 15,511 13,808
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 Clover Small Cap Value Fund began operations on February 28, 1996.
3
<PAGE>
INVESTMENT REVIEW
CLOVER EQUITY VALUE FUND
- --------------------------------------------------------------------------------
The Clover Equity Value Fund utilizes a research-driven, value-oriented approach
to equity investing. The Fund invests in equity and convertible securities that
possess favorable valuation attributes relative to the stock market averages or
the valuation characteristics of the company's stock in past years. Valuations
are measured by a stock's price relative to the company's per share cash flows,
revenues, book value, earnings and its liquidation value on the private market.
Earnings and cash flow are normalized in the case of companies where profit
margins are temporarily depressed and improvements are anticipated.
For this fiscal year ended September 30, 1999 the Equity Value Fund posted
a total return of 6.13% versus a total return for the S&P 400 Mid-Cap Value
Index of 10.00% and a return of 25.49% for the S&P 400 Mid-Cap Index. Value
strategies have over time provided solid performance. However, the Fund and
other value managers endured significant underperformance relative to growth
stocks during 1998 and into the first quarter of 1999. During this period,
growth strategies and technology growth stocks in particular dominated
performance. While the media has continued to focus attention on these areas,
value strategies, have since the spring of 1999, staged a quiet comeback. Value
resurgence is unlikely to go forward unabated, but the table has been set for an
extended period of outperformance. Many high quality, well-known companies now
trade at absolute levels not seen in years and at significant discounts to
growth sector valuations in terms of price/earnings, price/book value and
price/cash flow. These are great values in any market and while we continue to
proceed cautiously, we are taking advantage of current conditions aggressively.
4
<PAGE>
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
CLOVER EQUITY VALUE FUND, VERSUS S&P 400 MID-CAP INDEX AND THE
S&P 400 MID-CAP VALUE INDEX
One Annualized Annualized Annualized
Year 3 Year 5 Year Inception to
Return Return Return Date(1)
6.13% 8.05% 11.93% 12.51%
[In the printed version there appears a line graph
depicting the following plot points.]
S&P S&P
Clover 400 Mid-Cap 400 Mid-Cap
Equity Value Index Value Index
Dec 91 10,000 10,000 10,000
Sep 92 10,014 10,017 10,622
Sep 93 11,145 12,420 13,139
Sep 94 13,471 12,615 13,458
Sep 95 16,892 15,868 16,759
Sep 96 18,759 18,088 19,218
Sep 97 23,717 25,159 26,690
Sep 98 22,294 23,572 25,535
Sep 99 23,660 29,580 28,087
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 Clover Equity Value Fund began operations on December 6, 1991.
5
<PAGE>
INVESTMENT REVIEW
CLOVER MAX CAP VALUE FUND
- --------------------------------------------------------------------------------
The Clover Max Cap Value Fund utilizes a value-driven selection process to
construct a portfolio of large, high-quality equities with low valuations based
on price/book value and price/cash flow. For the fiscal year ended September 30,
1999 the Fund posted a total return of 26.17%, well ahead of the S&P 500 Value
Index return of 21.48% and in line with the S&P 500 Composite Index return of
27.80%
The fiscal year saw the outlook for interest rates; the economy, corporate
earnings and the stock market vacillate widely. Interest rate reductions early
in the fiscal year resulting from global economic currency crises propelled the
market upward. However, by early summer, concerns regarding inflation caused a
Federal Reserve reversal that dampened earnings outlooks sending the market into
a trading range. Uncertainty regarding the future direction of interest rates
continues to create a significant amount of volatility in the performance of the
market averages.
Value strategies have for the better part of the year produced positive
results versus growth strategies and while the resurgence is unlikely to go
unabated, it is, if history is a guide, likely to go on for an extended period.
Many high-quality, well-known companies now trade at absolute levels not seen in
years and at significant discounts to growth stocks. These are great values in
any market environment and the Fund has collected and will continue to collect a
broadly diversified portfolio of these high-quality, highly liquid companies.
6
<PAGE>
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
CLOVER MAX CAP VALUE FUND, VERSUS THE S&P 500 COMPOSITE INDEX AND
THE S&P 500 VALUE INDEX
One Annualized
Year Inception to
Return Date(1)
26.17% 9.00%
[In the printed version there appears a line graph
depicting the following plot points.]
Clover S&P 500 S&P 500
Max Cap Value Composite
Index Index Index
Oct 97 10,000 10,000 10,000
Oct 98 9,347 10,362 11,284
Sep 99 11,793 12,587 14,421
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 Clover Max Cap Value Fund began operations on October 31, 1997.
7
<PAGE>
INVESTMENT REVIEW
CLOVER FIXED INCOME FUND
- -------------------------------------------------------------------------------
The Clover Fixed Income Fund produced a total rate of return for the fiscal year
ended September 30, 1999 of -1.78%, modestly underperforming the -0.39% total
rate of return recorded by the Merrill Lynch U.S. Domestic Master Index, the
benchmark performance index for the Fund.
Interest rates on U.S. Treasury issues increased sharply during the year,
reversing nearly all of the decline in rates that occurred in the prior fiscal
year. The bond market's focus shifted from a global economic and currency crisis
to strong domestic growth, high labor and plant utilization, increases in the
price of oil and the announced change in policy bias towards a tighter monetary
policy by the Federal Reserve. All of these have contributed to the rising rate
environment. The table below profiles the change in interest rates for selected
maturities of various U.S. Treasury debt issues over the twelve-month period
ended September 30, 1999.
- ----------------------------------------------------
9/30/98 9/30/99
- ----------------------------------------------------
6-month Bills 4.47% 4.96%
1-year Bills 4.39% 5.18%
3-year Notes 4.38% 5.70%
5-year Notes 4.22% 5.76%
10-year Notes 4.41% 5.88%
30-year Bonds 4.97% 6.05%
The Federal Reserve changed its target for the overnight bank lending rate
(Fed Funds rate) 4 times during the fiscal year. Twice in the quarter ended
December 31, 1998 the Fed decreased rates by 1/4 percentage points and twice
since then they have made offsetting increases. These actions left the Fed Funds
rate (5.25%) the same at the end of the Fund's fiscal year as it was at the
beginning. In each case the Fed has followed the bond market with its actions,
not led it. In fact, the lowest level of interest rates in the bond market
occurred last fall before the Fed decreased rates and most of the increase in
interest rates occurred before they tightened in 1999.
Looking forward, we believe the bond market will continue to take the lead
over Fed policy actions. The direction in rates will depend on the trend in
monthly economic data in such key areas as labor and inflation. Real economic
growth above 3 1/2% will produce increases in interest rates until higher
interest rates produce the desired moderation in growth. However, with real
interest rates at very attractive levels, the bond market should once again gain
investor support somewhere down the road.
The Fund's investment performance for the fiscal year was competitive, yet
below the result of the benchmark index. The primary factors behind the
shortfall were the very strong relative performance of mortgage-backed
securities and corporate bonds relative to government bonds. Although the Fund
also invests in the mortgage and corporate bond sectors, the Fund was
underweighted to them on a duration-weighted basis. The impact is clear when you
look at the divergence of the three primary components of the Merrill Lynch U.S.
Domestic Master Index:
- -----------------------------------------------------------------
Total Return
10/1/98 - 9/30/99
- -----------------------------------------------------------------
Merrill Lynch U.S. Domestic Master -0.39%
- -----------------------------------------------------------------
Merrill Lynch Government Master -1.65%
- -----------------------------------------------------------------
Merrill Lynch U.S. Corporate Master -1.03%
- -----------------------------------------------------------------
Merrill Lynch U.S. Mortgage Master 2.24%
- -----------------------------------------------------------------
Since inception on December 6, 1991, the Fund has earned a net (after all
fees) annualized return of 7.06%, nearly equal to the 7.11% return of the
benchmark index.
8
<PAGE>
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
CLOVER FIXED INCOME FUND, VERSUS THE MERRILL LYNCH U.S. DOMESTIC MASTER INDEX
One Annualized Annualized Annualized
Year 3 Year 5 Year Inception to
Return Return Return Date(1)
-1.78% 6.23% 7.49% 7.06%
[In the printed version there appears a line graph
depicting the following plot points.]
Merrill Lynch
Clover U.S.Domestic
Fixed Income Master Bond
Fund Index
12/31/91 10,000 10,000
9/92 10,741 10,731
9/93 11,929 11,822
9/94 11,607 11,449
9/95 13,211 13,064
9/96 13,897 13,702
9/97 15,235 15,040
9/98 16,960 16,785
9/99 16,658 16,711
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 Clover Fixed Income Fund began operations on December 6, 1991.
9
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
Value
CLOVER SMALL CAP VALUE FUND Shares (000)
- -----------------------------------------------------------
Common Stocks (94.3%)
Air Transportation (1.2%)
Mesa Air Group* 31,000 $ 190
------
Apparel/Textiles (1.0%)
Angelica 7,500 86
Cone Mills* 9,000 44
Conso International* 6,000 31
------
161
------
Automotive (2.5%)
Jason* 14,000 110
Keystone Automotive
Industries* 13,220 145
TBC* 22,000 152
------
407
------
Banks (1.2%)
Business Bank of California* 3,750 37
Clovis Community Bank/CA 2,750 45
First Federal Savings & Loan
of Alpena 3,000 30
First Place Financial 400 28
National Bankshare/VA 196 4
Ridgestone Financial Services* 2,625 23
Wake Forest Bancshares 2,000 28
------
195
------
Beauty Products (1.7%)
Allou Health & Beauty, Cl A* 17,100 92
Inter Parfums* 19,500 185
------
277
------
Broadcasting, Newspapers &
Advertising (5.7%)
Four Media* 30,500 160
Spectrian* 12,000 261
Valuevision International* 20,000 520
------
941
------
Chemicals (1.7%)
CPAC 33,000 194
Hanna (M.A.) 7,000 80
Terra Industries 5,000 8
------
282
------
Value
Shares (000)
- -----------------------------------------------------------
Communications Equipment (2.6%)
Cobra Electronics* 35,000 $ 112
Performance Technologies* 12,600 284
TII Industries* 21,500 32
------
428
------
Computers & Services (12.2%)
Bell & Howell* 2,500 92
Computer Horizons* 15,000 174
Data General* 13,500 284
GT Interative Software* 32,000 93
Informix* 8,500 67
Intelligroup* 28,000 205
InterVoice-Brite* 12,100 134
MAPICS* 32,700 284
Metatec* 10,000 32
Microtouch Systems* 5,500 93
Rainbow Technology* 15,000 197
Syntel* 10,500 93
Technology Solutions* 12,000 170
Transaction Systems Architects* 3,300 89
------
2,007
------
Consumer Products (6.2%)
Vans* 85,000 1,020
------
Electrical Services (2.4%)
Calpine* 4,000 340
Nstar 1,489 58
------
398
------
Electronics (1.5%)
American Technical Ceramics* 7,500 58
Checkpoint Systems* 15,700 146
IEC Electronics* 15,000 39
------
243
------
Entertainment (4.2%)
Ascent Entertainment Group* 35,000 481
Aztar* 20,000 205
------
686
------
Environmental Services (1.0%)
Calgon Carbon 25,000 170
------
The accompanying notes are an integral part
of the financial statements.
10
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
CLOVER SMALL CAP VALUE FUND Value
(Continued) Shares (000)
- -----------------------------------------------------------
Food, Beverage & Tobacco (1.3%)
Imperial Sugar 11,000 $ 67
M&F Worldwide* 19,000 152
------
219
------
Gas/Natural Gas (4.1%)
Cascade Natural Gas 8,000 143
CTG Resources 2,000 71
HS Resources* 7,500 123
Madison Gas & Electric 6,000 119
MCN Energy 10,000 172
Valley Resources 4,000 54
------
682
------
Insurance (2.2%)
LaSalle Re Holdings 8,000 111
MIIX Group 5,900 100
Selective Insurance Group 5,000 94
Standard Management* 10,000 59
------
364
------
Leisure Products (3.4%)
Arctic Cat 22,000 210
Huffy 9,000 89
K2 8,000 71
Riddell Sports* 21,500 63
The North Face* 22,500 134
------
567
------
Machinery (1.7%)
Brown & Sharpe Manufacturing,
Cl A 33,800 80
Daw Technologies* 35,000 25
Speedfam-Ipec* 6,500 78
Transpro 19,500 96
------
279
------
Marine Transportation (0.3%)
Maritrans 8,300 43
------
Measuring Devices (0.1%)
Thermedics* 2,300 17
------
Value
Shares (000)
- -----------------------------------------------------------
Medical Products & Services (4.0%)
Bio-Rad Labs, Cl A* 3,500 $ 96
Block Drug, Cl A 4,120 148
Laserscope* 25,000 26
Matria Healthcare* 35,000 206
Raytel Medical* 28,000 76
Trigon Healthcare* 3,600 104
------
656
------
Metals & Mining (0.4%)
Kinross Gold* 25,000 72
------
Paper & Paper Products (1.0%)
Rock-Tenn, Cl A 12,000 173
------
Petroleum & Fuel Products (7.8%)
Cabot Oil & Gas, Cl A 12,500 216
Grey Wolf* 90,000 270
Key Energy Services* 150,000 741
Tesoro Petroleum* 3,300 54
------
1,281
------
Precious Metals (0.2%)
Golden Star Resources* 48,000 36
------
Professional Services (3.5%)
ICT Group* 45,200 328
Personnel Group of America* 10,000 63
Right Management Consultants* 17,000 191
------
582
------
Real Estate Investment Trusts (4.3%)
Eastgroup Properties 6,000 109
Entertainment Properties Trust 10,000 146
Home Properties of New York 12,600 336
National Golf Properties 5,000 113
------
704
------
Retail (8.3%)
Cache* 23,800 83
Catherine's Stores* 9,900 130
DAMARK International, Cl A* 30,000 302
Duckwall-ALCO Stores* 11,000 91
Elder-Berman* 25,500 163
Homebase* 14,000 55
The accompanying notes are an integral part
of the financial statements.
11
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
CLOVER SMALL CAP VALUE FUND Value
(Concluded) Shares (000)
- -----------------------------------------------------------
Jacobson Stores* 20,100 $ 97
Tandycrafts* 104,700 334
West Marine* 15,000 120
------
1,375
------
Semi-Conductors/Instruments (1.7%)
Exar* 3,000 112
Interphase* 6,000 140
Tegal* 12,700 37
------
289
------
Telephones & Telecommunications (2.6%)
CoreComm* 6,000 198
Datum Inc* 12,000 81
Primus Telecommunications
Group* 7,000 147
------
426
------
Transporation Services (0.2%)
Rural/Metro* 5,000 33
------
Trucking (1.2%)
Celadon Group* 15,900 121
Old Dominion Freight Line* 5,000 74
------
195
------
Wholesale (0.9%)
Patrick Industries 6,000 76
PrimeSource 12,000 70
------
146
------
Total Common Stocks
(Cost $15,476) 15,544
------
Face
Amount Value
(000) (000)
- -----------------------------------------------------------
Repurchase Agreements (6.2%)
Morgan Stanley,
5.00%, dated 09/30/99, matures
10/01/99, repurchase price
$1,027,107 (collateralized
by U.S. Treasury Note, par
value $990,149, 7.25%, matures
08/15/04: market value
$1,050,936) $1,027 $ 1,027
-------
Total Repurchase Agreements
(Cost $1,027) 1,027
-------
Total Investments (100.5%)
(Cost $16,503) 16,571
-------
Other Assets and Liabilities, Net (-0.5%) (77)
-------
Net Assets:
Portfolio Shares (unlimited
authorization -- no par value)
based on 1,202,969 outstanding
shares of beneficial interest 15,055
Accumulated net realized gain
on investments 1,371
Net unrealized appreciation
on investments 68
-------
Total Net Assets (100.0%) $16,494
=======
Net Asset Value, Offering and
Redemption Price Per Share $13.71
=======
* Non-Income producing security
Cl--Class
The accompanying notes are an integral part
of the financial statements.
12
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
Value
CLOVER EQUITY VALUE FUND Shares (000)
- -----------------------------------------------------------
Common Stocks (93.9%)
Aerospace & Defense (4.2%)
Cordant Technologies 25,000 $ 761
GenCorp 50,000 916
Litton Industries* 15,000 821
-------
2,498
-------
Apparel/Textiles (0.5%)
Jones Apparel Group* 10,044 289
-------
Banks (3.3%)
People's Heritage Financial 60,000 997
Wells Fargo 25,000 991
-------
1,988
-------
Chemicals (4.3%)
Agrium 76,000 755
IMC Global 40,000 582
OM Group 31,500 1,209
-------
2,546
-------
Computers & Services (12.2%)
Cabletron Systems* 35,000 549
Convergys* 75,000 1,486
Informix* 140,000 1,111
MAPICS* 81,500 708
Oracle* 30,000 1,365
Policy Management Systems* 30,000 949
Reynolds & Reynolds, Cl A 55,000 1,121
-------
7,289
-------
Consumer Products (3.0%)
Department 56* 30,000 718
Harman International 25,000 1,052
-------
1,770
-------
Electrical Services (2.3%)
Sierra Pacific Resources 60,000 1,335
-------
Entertainment (2.0%)
Ascent Entertainment Group* 85,000 1,169
-------
Food, Beverage, and Tobacco (1.1%)
Universal 25,000 653
-------
Value
Shares (000)
- -----------------------------------------------------------
Gas/Natural Gas (12.6%)
AGL Resources 95,000 $ 1,544
Eastern Enterprises 35,000 1,625
MCN Energy 90,000 1,547
Northwest Natural Gas 60,000 1,549
Schlumberger 20,000 1,246
-------
7,511
-------
Insurance (4.9%)
MGIC Investment 20,000 955
The PMI Group 48,000 1,962
-------
2,917
-------
Machinery (1.2%)
Lincoln Electric Holdings 35,000 731
-------
Medical Products & Services (1.6%)
Becton Dickinson 35,000 982
-------
Metals & Mining (0.9%)
De Beers Consolidated Mines
ADR 20,000 540
-------
Paper & Paper Products (1.4%)
Potlatch 20,000 824
-------
Petroleum & Fuel Products (14.6%)
Burlington Resources 30,000 1,102
Pioneer Natural Resources 175,000 1,859
Renaissance Energy* 90,000 1,286
Santa Fe International 50,000 1,078
Santa Fe Snyder* 250,000 2,250
Union Pacific Resources Group 72,000 1,156
-------
8,731
-------
Real Estate Investment Trusts (4.3%)
Chateau Communities 35,000 910
Manufactured Home
Communities 30,000 701
Meditrust 110,000 935
-------
2,546
-------
The accompanying notes are an integral part
of the financial statements.
13
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
Shares/
CLOVER EQUITY VALUE FUND Face Amount Value
(Concluded) (000) (000)
- -----------------------------------------------------------
Retail (3.6%)
CBRL Group 25,000 $ 388
Kroger* 35,000 772
Taco Cabana, Cl A* 100,000 969
-------
2,129
-------
Specialty Machinery (1.8%)
York International 30,000 1,078
-------
Steel & Steel Works (6.7%)
UCAR International* 176,000 4,015
-------
Telephones & Telecommunications (5.3%)
Citizens Utilities, Cl B 190,000 2,149
Global Crossing* 20,500 543
US West 8,000 457
-------
3,149
-------
Trucking (2.1%)
Yellow* 75,000 1,242
-------
Total Common Stocks
(Cost $53,883) 55,932
-------
Convertible Bond (0.9%)
Meditrust, Convertible to
33.2114 Shares
7.500%, 03/01/01 600 564
-------
Total Convertible Bond
(Cost $596) 564
-------
Repurchase Agreement (7.4%)
Morgan Stanley,
5.00%, dated 09/30/99,
matures 10/01/99,
repurchase price
$4,418,636
(collateralized by U.S.
Treasury Notes, par value
$4,259,645, 7.25%,
matures 08/15/04: market
value $4,521,148) $4,419 4,419
-------
Total Repurchase Agreement
(Cost $4,419) 4,419
-------
Value
(000)
- -----------------------------------------------------------
Total Investments (102.2%)
(Cost $58,898) $60,915
-------
Other Assets and Liabilities, Net (-2.2%) (1,313)
-------
Net Assets:
Portfolio Shares (unlimited
authorization -- no par value)
based on 3,743,397 outstanding
shares of beneficial interest 46,340
Undistributed net investment income 80
Accumulated net realized gain
on investments 11,165
Net unrealized appreciation
on investments 2,017
-------
Total Net Assets (100.0%) $59,602
=======
Net Asset Value, Offering and
Redemption Price Per Share $15.92
=======
* Non-income producing security
ADR--American Depository Receipt
Cl--Class
The accompanying notes are an integral part
of the financial statements.
14
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
Value
CLOVER MAX CAP VALUE FUND Shares (000)
- -----------------------------------------------------------
Common Stocks (100.0%)
Aerospace & Defense (3.3%)
Boeing 650 $ 28
Litton Industries* 300 16
Lockheed Martin 650 21
Northrop Grumman 375 24
-------
89
-------
Auto Parts (1.0%)
Cummins Engine 500 25
Delphi Automotive Systems 209 3
-------
28
-------
Automotive (1.1%)
Autonation* 800 10
General Motors 300 19
-------
29
-------
Banks (5.9%)
Bank of America 350 19
Bank One 250 9
Chase Manhattan 375 28
First Union 500 18
PNC Bank 375 20
Union Planters 450 18
Washington Mutual 600 18
Wells Fargo 750 30
-------
160
-------
Beauty Products (0.4%)
International Flavors & Fragrances 350 12
-------
Broadcasting, Newspapers & Advertising (1.2%)
Chris-Craft Industries* 500 28
RH Donnelley 140 3
-------
31
-------
Communications Equipment (1.1%)
ADC Telecommunications* 450 19
Harris 450 12
-------
31
-------
Computers & Services (13.7%)
3Com* 600 17
Computer Associates 500 31
Electronic Data Systems 400 21
Value
Shares (000)
- -----------------------------------------------------------
Hewlett-Packard 225 $ 21
J.D. Edwards & Company* 750 16
Keane* 1,100 25
Microsoft* 700 63
NCR* 250 8
Newbridge Networks* 1,000 26
Oracle* 600 27
Parametric Technology* 1,000 13
SAP AG ADR 1,500 57
Seagate Technology* 600 18
Sterling Commerce* 1,025 19
Transaction Systems Architects* 400 11
-------
373
-------
Consumer Products (3.2%)
Fortune Brands 300 10
General Mills 200 16
HJ Heinz 600 26
Johnson & Johnson 250 23
Playtex Products* 900 13
-------
88
-------
Drugs (4.5%)
Abbott Laboratories 550 20
American Home Products 425 18
Bristol-Myers Squibb 400 27
Eli Lilly 275 18
Merck 300 19
Mylan Laboratories 1,100 20
-------
122
-------
Electrical Equipment (0.4%)
Hubbell, Cl B 300 10
-------
Electric Products (2.6%)
General Electric 600 71
-------
Electrical Utilities (1.5%)
Duke Energy 375 21
FPL Group 375 19
-------
40
-------
Entertainment (3.0%)
Mattel 3,650 69
Walt Disney 500 13
-------
82
-------
The accompanying notes are an integral part
of the financial statements.
15
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
CLOVER MAX CAP VALUE FUND Value
(Continued) Shares (000)
- -----------------------------------------------------------
Financial Services (1.4%)
The Charles Schwab 375 $ 13
Citigroup 600 26
-------
39
-------
Food, Beverage & Tobacco (5.7%)
Bestfoods 500 24
Campbell Soup 425 17
ConAgra 450 10
Interstate Bakeries 1,400 32
McCormick 900 30
Rexall Sundown* 1,200 15
Sara Lee 1,200 28
-------
156
-------
Gas/Natural Gas (6.9%)
AGL Resources 5,500 89
Eastern Enterprises 1,700 79
National Fuel Gas 400 19
-------
187
-------
Household Products (1.3%)
Alberto-Culver, Cl B 850 20
Allergan 125 14
-------
34
-------
Insurance (1.0%)
Allstate 700 17
SAFECO 400 11
-------
28
-------
Machinery (0.8%)
Black & Decker 450 21
-------
Medical Products & Services (4.0%)
Baxter International 250 15
Becton Dickinson 350 10
Columbia/HCA Healthcare 1,000 21
Henry Schein* 500 7
McKesson HBOC 1,400 41
Pall 700 16
-------
110
-------
Value
Shares (000)
- -----------------------------------------------------------
Metals & Mining (0.3%)
Newmont Mining 350 $ 9
-------
Miscellaneous Business Services (0.5%)
Fluor 350 14
-------
Networking Products (1.0%)
Adaptec* 700 28
-------
Paper & Paper Products (3.3%)
Fort James 800 21
International Paper 275 13
Louisiana-Pacific 1,350 21
Smurfit-Stone Container* 1,000 22
Temple-Inland 225 14
-------
91
-------
Petroleum & Fuel Products (5.8%)
Baker Hughes 800 23
Conoco, Cl A 500 14
Exxon 350 27
Halliburton 600 25
Occidental Petroleum 1,400 32
Schlumberger 400 25
Unocal 325 12
-------
158
-------
Petroleum Refining (3.5%)
Ashland 300 10
BP Amoco Plc-Spons ADR 132 15
Chevron 300 27
Diamond Offshore Drilling 800 27
Global Marine* 900 15
-------
94
-------
Photographic Equipment & Supplies (1.1%)
Xerox 750 31
-------
Professional Services (0.4%)
Dun & Bradstreet 350 10
-------
Real Estate Investment Trusts (4.4%)
Camden Property Trust 800 21
Equity Office Properties Trust 800 19
Equity Residential Properties Trust 650 28
First Industrial Realty Trust 1,100 27
The accompanying notes are an integral part
of the financial statements.
16
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
CLOVER MAX CAP VALUE FUND Value
(Concluded) Shares (000)
- -----------------------------------------------------------
Mack-Cali Realty 375 $ 10
Meditrust 800 7
Post Properties 200 8
-------
120
-------
Restaurants (1.1%)
McDonald's 350 15
Wendy's International 600 16
-------
31
-------
Retail (1.5%)
JC Penney 400 14
Sears Roebuck 525 16
Toys "R" Us* 800 12
-------
42
-------
Retail - Food (0.7%)
Albertson's 500 20
-------
Semi-Conductors/Instruments (3.3%)
Analog Devices* 325 17
Applied Materials* 150 12
Intel 400 30
LSI Logic* 375 19
Micron Technology 175 12
-------
90
-------
Telecommunication Equipment (1.5%)
ECI Telecom 400 10
Lucent Technologies 500 32
-------
42
-------
Telephones & Telecommunications (7.4%)
ALLTEL 275 19
Ameritech 450 30
AT&T 225 10
Bell Atlantic 225 15
BellSouth 300 13
SBC Communications 500 25
Telephone & Data Systems 275 24
US West 1,150 66
-------
202
-------
Shares
Face/Amount Value
(000) (000)
- -----------------------------------------------------------
Transportation Services (0.2%)
Ryder System 200 $ 4
-------
Total Common Stocks
(Cost $2,778) 2,727
-------
Repurchase Agreement (3.9%)
Morgan Stanley,
5.00%, dated 09/30/99,
matures 10/01/99,
repurchase price $105,986
(collateralized by U.S.
Treasury Note, par value
$102,169, 7.25%, matures
08/15/04: market value
$108,445) $106 106
-------
Total Repurchase Agreement
(Cost $106) 106
-------
Total Investments (103.9%)
(Cost $2,884) 2,833
-------
Other Assets and Liabilities, Net (-3.9%) (108)
-------
Net Assets:
Portfolio Shares (unlimited
authorization -- no par value)
based on 238,415 outstanding
shares of beneficial interest 2,510
Undistributed net investment income 104
Accumulated net realized gain on
investments 162
Net unrealized depreciation on
investments (51)
-------
Total Net Assets (100.0%) 2,725
=======
Net Asset Value, Offering and
Redemption Price Per Share $11.43
=======
* Non-income producing security
ADR--American Depository Receipt
Cl--Class
The accompanying notes are an integral part
of the financial statements.
17
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
Face
Amount Value
CLOVER FIXED INCOME FUND (000) (000)
- --------------------------------------------------------------
Corporate Obligations (38.8%)
Building & Construction Products (0.6%)
Masco
6.125%, 09/15/03 $ 200 $ 197
-------
Entertainment (3.4%)
Mattel
6.750%, 05/15/00 350 352
Walt Disney
6.375%, 03/30/01 750 751
-------
1,103
-------
Financial Services (1.5%)
Pitney Bowes Credit
5.650%, 01/15/03 500 490
-------
Food, Beverage & Tobacco (6.1%)
Anheuser Busch
6.750%, 08/01/03 750 755
Canandaigua Brands
8.750%, 12/15/03 1,250 1,231
-------
1,986
-------
Gas/Natural Gas (9.2%)
Amoco Canada
6.750%, 02/15/05 1,500 1,498
Columbia Gas Systems
6.610%, 11/28/02 1,000 991
Texaco Capital
7.420%, 07/15/02 500 512
-------
3,001
-------
Medical Products & Services (6.6%)
Abbott Laboratories
5.600%, 10/01/03 700 682
Eli Lilly
8.125%, 12/01/01 250 259
6.250%, 03/15/03 750 743
Zeneca Wilmington
6.300%, 06/15/03 500 494
-------
2,178
-------
Printing & Publishing (1.2%)
Knight-Ridder
8.500%, 09/01/01 377 383
-------
Face
Amount Value
(000) (000)
- -------------------------------------------------------------
Retail (1.3%)
Wal-Mart Stores
8.625%, 04/01/01 $ 400 $ 413
-------
Utilities (8.9%)
Detroit Edison
6.560%, 05/01/01 500 501
Northern Illinois Gas
6.750%, 06/01/02 1,000 1,009
Northern States Power
7.875%, 10/01/01 650 669
5.875%, 03/01/03 750 735
-------
2,914
-------
Total Corporate Obligations
(Cost $12,743) 12,665
-------
U.S. Government Mortgage-Backed Bonds (16.8%)
FHLMC, CMO/REMIC, Ser 1561, Cl H
6.500%, 05/15/08 750 741
FHLMC, Pool # 252641
8.000%, 07/01/07 9 10
FHLMC, Pool # 277449
8.500%, 09/01/09 7 7
FHLMC, REMIC, Ser 1546, Cl H
7.000%, 12/15/22 390 381
FNMA, Pool # 369214
5.000%, 04/01/09 318 292
FNMA, REMIC, Ser 1993-118, Cl G
6.500%, 11/25/06 1,000 997
FNMA, REMIC, Ser 1993-95, Cl PE
6.500%, 10/25/07 750 748
FNMA, REMIC, Ser 1994-17, Cl H
6.000%, 02/25/09 750 722
FNMA, REMIC, Ser G93-21, Cl VE
6.600%, 11/25/07 184 179
GNMA, Pool # 013125
8.000%, 10/15/06 27 28
GNMA, Pool # 187899
8.000%, 05/15/17 124 127
GNMA, Pool # 196477
10.000%, 04/15/10 60 63
GNMA, Pool # 202886
8.000%, 03/15/17 135 138
The accompanying notes are an integral part
of the financial statements.
18
<PAGE>
Statement of Net Assets Clover Funds
September 30, 1999
Face
CLOVER FIXED INCOME FUND Amount Value
(Concluded) (000) (000)
- --------------------------------------------------------------
GNMA, Pool # 221235
8.500%, 07/15/17 $ 69 $ 71
GNMA, Pool # 331786
8.000%, 08/15/22 155 158
GNMA, Pool # 376400
6.500%, 02/15/24 873 834
-------
Total U.S. Government Mortgage-Backed Bonds
(Cost $5,578) 5,496
-------
U.S. Treasury Obligations (32.1%)
U.S. Treasury Bonds
7.250%, 05/15/16 2,000 2,162
7.500%, 11/15/16 1,000 1,107
8.125%, 05/15/21 750 895
7.250%, 08/15/22 1,500 1,647
U.S. Treasury Notes
6.625%, 04/30/02 600 613
7.250%, 05/15/04 150 158
5.625%, 02/15/06 1,500 1,470
6.500%, 10/15/06 1,500 1,534
U.S. Treasury STRIPS*
0.000%, 05/15/20 3,500 925
-------
Total U.S. Treasury Obligations
(Cost $11,137) 10,511
-------
U.S. Government Agency Obligations (2.5%)
FNMA, MTN
6.920%, 03/19/07 555 564
Private Export Funding
6.620%, 10/01/05 250 249
-------
Total U.S. Government Agency Obligations
(Cost $860) 813
-------
Convertible Bonds (2.7%)
Iomega, Convertible
to 202.5316 Shares
6.750%, 03/15/01 400 360
Meditrust, Convertible
to 33.2114 Shares
7.500%, 03/01/01 570 536
Face
Amount Value
(000) (000)
- --------------------------------------------------------------
Total Convertible Bonds
(Cost $943) $ 896
-------
Repurchase Agreement (4.5%)
Morgan Stanley,
5.00%, dated 09/30/99, matures
10/01/99, repurchase price
$1,485,716 (collateralized by
U.S. Treasury Note, par value
$1,432,256, 7.25%, matures
08/15/04: market value
$1,520,184) $1,486 1,486
-------
Total Repurchase Agreement
(Cost $1,486) 1,486
-------
Total Investments (97.4%)
(Cost $32,747) 31,867
-------
Other Assets and Liabilities, Net (2.6%) 862
-------
Net Assets:
Portfolio Shares (unlimited
authorization -- no par value)
based on 3,443,525 outstanding
shares of beneficial interest 33,765
Undistributed net investment income 7
Accumulated net realized loss
on investments (163)
Net unrealized depreciation on
investments (880)
-------
Total Net Assets (100.0%) $32,729
=======
Net Asset Value, Offering and
Redemption Price Per Share $9.50
=======
*Non-income producing security
Cl--Class
CMO--Collateralized Mortgage Obligation
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
MTN--Medium Term Note
REMIC--Real Estate Mortgage Investment Conduit
Ser--Series
STRIPS--Separately Traded and Registered Interest and Principal Securities
The accompanying notes are an integral part
of the financial statements.
19
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
20
<PAGE>
Statement of Operations (000) Clover Funds
September 30, 1999
<TABLE>
<CAPTION>
Clover Clover Clover Clover
Small Cap Equity Max Cap Fixed
Value Value Value Income
Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Dividends ....................................... $ 180 $ 1,297 $ 50 $ --
Interest ........................................ 26 356 4 2,058
- -----------------------------------------------------------------------------------------------------------------
Total Investment Income........................ 206 1,653 54 2,058
- -----------------------------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ........................ 135 567 19 151
Investment Advisory Fee Waiver .................. (51) -- (19) (72)
Administrator Fees .............................. 67 77 67 67
Custodian Fees .................................. 3 7 -- 3
Transfer Agent Fees ............................. 25 5 4 31
Professional Fees ............................... 17 17 -- 27
Trustee Fees .................................... 2 4 4 4
Registration Fees ............................... 13 14 -- 19
Pricing Fees .................................... 2 -- -- 3
Printing Expense ................................ 6 25 -- 14
Amortization of Deferred Organizational Costs ... 3 3 10 3
Insurance and Other Fees ........................ 1 6 -- 1
- -----------------------------------------------------------------------------------------------------------------
Total Expenses ................................ 223 725 85 251
- -----------------------------------------------------------------------------------------------------------------
Less: Reimbursements by Adviser.................. -- -- (61) --
- -----------------------------------------------------------------------------------------------------------------
Total Net Expenses ............................ 223 725 24 251
- -----------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) .............. (17) 928 30 1,807
- -----------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) From Securities Sold ... 1,818 14,773 278 (138)
Net Unrealized Appreciation (Depreciation)
of Investment Securities ...................... 1,161 (10,436) 158 (2,256)
- -----------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments .............................. 2,979 4,337 436 (2,394)
- -----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Operations .............................. $2,962 $ 5,265 $466 $ (587)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Statements of Changes in Net Assets (000)
<TABLE>
<CAPTION>
Clover Small Cap Clover Equity
Value Fund Value Fund
--------------------- --------------------------
For the For the
Year Year Year Year
Ended Ended Ended Ended
9/30/99 9/30/98 9/30/99 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Activities:
Net Investment Income (Loss) ................................. $ (17) $ (82) $ 928 $ 957
Net Realized Gain (Loss) on Securities Sold .................. 1,818 175 14,773 195
Net Unrealized Appreciation (Depreciation) of
Investment Securities ...................................... 1,161 (4,059) (10,436) (5,217)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations .......................................... 2,962 (3,966) 5,265 (4,065)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ........................................ -- -- (927) (954)
Realized Capital Gain ........................................ (327) (1,235) (3,802) (12,613)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions ........................................ (327) (1,235) (4,729) (13,567)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued .................................. 3,059 7,247 21,142 27,976
Proceeds from Shares Issued in Lieu of
Cash Distributions ......................................... 323 1,219 4,641 13,258
Cost of Shares Redeemed ...................................... (5,185) (2,882) (57,523) (50,655)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Capital Share Transactions ............................... (1,803) 5,584 (31,740) (9,421)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets..................... 832 383 (31,204) (27,053)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ........................................ 15,662 15,279 90,806 117,859
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period(1) ........................................... $16,494 $15,662 $59,602 $ 90,806
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued ....................................................... 240 523 1,323 1,547
Issued in Lieu of Cash Distributions ......................... 27 96 295 763
Redeemed ..................................................... (427) (214) (3,603) (2,789)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Share Transactions .............. (160) 405 (1,985) (479)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
Clover Max Cap
Value Fund
-------------------------------------------
For the
Year Period
Ended 10/31/97 thru
9/30/99 9/30/98(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income (Loss) ................................. $ 30 $ 23
Net Realized Gain (Loss) on Securities Sold .................. 278 --
Net Unrealized Appreciation (Depreciation) of
Investment Securities ...................................... 158 (209)
- ------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations .......................................... 466 (186)
- ------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ........................................ (30) (23)
Realized Capital Gain ........................................ (12) --
- ------------------------------------------------------------------------------------------------------------------
Total Distributions ........................................ (42) (23)
- ------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued .................................. 1,117 1,986
Proceeds from Shares Issued in Lieu of
Cash Distributions ......................................... 51 22
Cost of Shares Redeemed ...................................... (643) (23)
- ------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Capital Share Transactions ............................... 525 1,985
- ------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets..................... 949 1,776
- ------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ........................................ 1,776 --
- ------------------------------------------------------------------------------------------------------------------
End of Period(1) ........................................... $2,725 $ 1,776
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued ....................................................... 97 193
Issued in Lieu of Cash Distributions ......................... 5 2
Redeemed ..................................................... (57) (2)
- ------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Share Transactions .............. 45 193
- ------------------------------------------------------------------------------------------------------------------
Clover Funds
<CAPTION>
Clover Fixed
Income Fund
-------------------------------------------
For the
Year Year
Ended Ended
9/30/99 9/30/98
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income (Loss) ................................. $ 1,807 $ 1,655
Net Realized Gain (Loss) on Securities Sold .................. (138) 634
Net Unrealized Appreciation (Depreciation) of
Investment Securities ...................................... (2,256) 861
- -----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations .......................................... (587) 3,150
- -----------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ........................................ (1,807) (1,661)
Realized Capital Gain ........................................ (653) (53)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions ........................................ (2,460) (1,714)
- -----------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued .................................. 11,824 14,420
Proceeds from Shares Issued in Lieu of
Cash Distributions ......................................... 2,316 1,625
Cost of Shares Redeemed ...................................... (11,739) (7,783)
- -----------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Capital Share Transactions ............................... 2,401 8,262
- -----------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets..................... (646) 9,698
- -----------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ........................................ 33,375 23,677
- -----------------------------------------------------------------------------------------------------------------
End of Period(1) ........................................... $32,729 $33,375
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued ....................................................... 1,204 1,431
Issued in Lieu of Cash Distributions ......................... 235 161
Redeemed ..................................................... (1,202) (772)
- -----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Share Transactions .............. 237 820
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes undistributed net investment income of $80 and $41 for the Clover
Equity Value Fund, $7 and $12 for the Clover Fixed Income Fund, as of
September 30, 1999, and September 30, 1998, respectively.
(2) The Clover Max Cap Value Fund commenced operations October 31, 1997.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
Financial Highlights Clover Funds
For a Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Net Realized and Net Net
Asset Net Unrealized Distributions Distributions Asset Assets Ratio
Value Investment Gains or from Net from Value End of Expenses
Beginning Income (Losses) on Investment Capital End Total of Period to Average
of Period (Loss) Investments Income Gains of Period Return+ (000) Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Clover Small Cap Value Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $11.49 (0.01) 2.48 -- (0.25) $13.71 21.82% $ 16,494 1.40%
1998 $15.94 (0.06) (3.22) -- (1.17) $11.49 (21.25)% $ 15,662 1.40%
1997(1) $10.87 (0.04) 5.24 -- (0.13) $15.94 48.23% $ 15,279 1.40%*
1996(2) $10.00 0.02 0.88 (0.03) -- $10.87 8.97% $ 4,495 1.40%*
- ------------------------------------------------------------------------------------------------------------------------------------
Clover Equity Value Fund
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $15.85 0.21 0.74 (0.21) (0.67) $15.92 6.13% $ 59,602 0.95%
1998 $18.99 0.15 (1.12) (0.15) (2.02) $15.85 (6.00)% $ 90,806 1.10%
1997(1) $16.20 0.18 3.54 (0.18) (0.75) $18.99 23.86% $117,859 1.10%*
1996 $15.29 0.19 2.15 (0.22) (1.21) $16.20 16.47% $ 85,050 1.10%
1995 $13.74 0.24 2.46 (0.22) (0.93) $15.29 21.25% $ 51,647 1.10%
1994 $11.94 0.08 2.01 (0.08) (0.21) $13.74 17.80% $ 25,249 1.14%
- ------------------------------------------------------------------------------------------------------------------------------------
Clover Max Cap Value Fund
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $ 9.21 0.13 2.27 (0.13) (0.05) $11.43 26.17% $ 2,725 0.95%
1998(3) $10.00 0.15 (0.79) (0.15) -- $ 9.21 (6.52)% $ 1,776 0.95%*
- ------------------------------------------------------------------------------------------------------------------------------------
Clover Fixed Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $10.41 0.53 (0.71) (0.53) (0.20) $ 9.50 (1.78)% $ 32,729 0.75%
1998 $ 9.92 0.57 0.51 (0.57) (0.02) $10.41 11.32% $ 33,375 0.75%
1997(1) $ 9.85 0.54 0.16 (0.54) (0.09) $ 9.92 7.43% $ 23,677 0.75%*
1996 $ 9.89 0.59 0.01 (0.59) (0.05) $ 9.85 6.26% $ 19,731 0.80%
1995 $ 9.14 0.58 0.77 (0.58) (0.02) $ 9.89 15.27% $ 14,685 0.80%
1994 $10.85 0.57 (0.92) (0.57) (0.79) $ 9.14 (3.54)% $ 9,762 0.80%
<CAPTION>
Ratio of Net
Ratio of Investment
Ratio of Net Expenses Income (Loss)
Investment to Average to Average
Income Net Assets Net Assets
or (Loss) (Excluding (Excluding Portfolio
to Average Waivers and Waivers and Turnover
Net Assets Reimbursements) Reimbursements) Rate
- ----------------------------------------------------------------------
Clover Small Cap Value Fund
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 (0.10)% 1.72% (0.42)% 79.93%
1998 (0.50)% 1.84% (0.94)% 70.02%
1997(1) (0.64)%* 2.43%* (1.67)%* 59.03%
1996(2) (0.03)%* 5.29%* (3.92)%* 14.17%
- ----------------------------------------------------------------------
Clover Equity Value Fund
- ----------------------------------------------------------------------
1999 1.21% 0.95% 1.21% 98.85%
1998 0.82% 1.12% 0.80% 42.10%
1997(1) 1.18%* 1.15%* 1.13%* 51.64%
1996 1.32% 1.21% 1.21% 51.36%
1995 1.82% 1.20% 1.72% 84.76%
1994 0.71% 1.30% 0.55% 58.44%
- ----------------------------------------------------------------------
Clover Max Cap Value Fund
- ----------------------------------------------------------------------
1999 1.20% 4.13% (1.98)% 92.26%
1998(3) 1.82%* 11.40%* (8.63)%* 62.71%
- ----------------------------------------------------------------------
Clover Fixed Income Fund
- ----------------------------------------------------------------------
1999 5.40% 0.97% 5.18% 28.47%
1998 5.67% 0.99% 5.43% 27.07%
1997(1) 6.03%* 1.02%* 5.76%* 11.83%
1996 6.00% 1.11% 5.69% 24.52%
1995 6.13% 1.40% 5.53% 35.84%
1994 5.88% 1.46% 5.22% 11.11%
</TABLE>
* Annualized
+ Returns are for the periods indicated and have not been annualized.
(1) On June 25, 1997 the Board of Trustees of TIP Funds approved a change in
the Clover Funds' fiscal year end from October 31 to September 30,
effective September 30, 1997.
(2) The Clover Small Cap Value Fund commenced operations on February 28, 1996.
(3) The Clover Max Cap Value Fund commenced operations on October 31, 1997.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
Notes to Financial Statements Clover Funds
September 30, 1999
1. Organization:
TIP Funds (the "Trust") is organized as a Massachusetts business trust. The
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 are those of the Clover Small Cap Value
Fund, the Clover Equity Value Fund, the Clover Max Cap Value Fund and the Clover
Fixed Income Fund (the "Funds"). The financial statements of the remaining
portfolios are presented separately. The assets of each portfolio are
segregated, and a Shareholder's interest is limited to the portfolio in which
shares are held. the Funds' prospectus provides a description of each Fund's
investment objectives, policies and strategies.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Funds.
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. Debt
obligations exceeding sixty days to maturity for which market quotations
are readily available are valued at the most recently quoted bid price.
Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost, which approximates market value.
Federal Income Taxes -- It is each 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
provisions for Federal income taxes are 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 adjusted for the accretion and amortization of
purchase discounts and premiums during the respective holding period.
Purchase discounts and premiums on securities held by the Funds are
accreted and amortized to maturity using the scientific interest method,
which approximates the effective interest method.
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 the 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 funds
may be delayed or limited.
Net Asset Value Per Share -- The net asset value per share of each Fund is
calculated on each business day by dividing the total value of each Fund's
assets, less liabilities, by the number of shares outstanding.
Expenses -- Expenses that are directly related to one of the Funds are
charged to that Fund. Other operating expenses of the Trust are prorated to
the Funds on the basis of relative daily net assets.
25
<PAGE>
Notes to Financial Statements (Continued) Clover Funds
September 30, 1999
Distributions to Shareholders -- Distributions from net investment income
are declared and paid quarterly to Shareholders for the Clover Small Cap
Value Fund, the Clover Equity Value Fund, and the Clover Max Cap Value Fund
and declared daily and paid monthly for the Clover Fixed Income Fund. Any
net realized capital gains on sales of securities are distributed to
Shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with the 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 in the period that the differences arise. These
classifications have no effect on net assets or net asset value.
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 amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
3. Organization Costs and Transactions with Affiliates:
Organization costs have been capitalized by the Funds and are being amortized
over 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 being redeemed bears to 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"). Such officers are paid no fees by the Trust for
serving as officers 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 .09% of the average daily net assets of the Trust up to $250 million, .07% on
the next $250 million, .06% on the next $250 million, .05% on the next $1.25
billion and .04% of such assets in excess of $2 billion. There is a minimum
annual fee of $65,000 per Fund payable to the Administrator for services
rendered to the Funds 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 distributing agent for the Funds under a transfer agency agreement with
the Trust.
The Trust and the Distributor (CCM Securities, Inc.) are parties to a
Distribution Agreement dated June 25, 1997. The Distributor receives no fees for
its distribution services under this agreement.
5. Investment Advisory Agreement:
The Trust and Clover Capital Management, Inc. (the "Adviser") are parties to an
Investment Advisory Agreement under which the Adviser receives an annual fee
equal to .85% of the average daily net assets of the Clover Small Cap Value
Fund, .74% of the average daily net assets of the
26
<PAGE>
Notes to Financial Statements (Concluded) Clover Funds
September 30, 1999
Clover Equity Value Fund and the Clover Max Cap Value Fund, and .45% of the
average daily net assets of the Clover Fixed Income Fund. The Adviser has
voluntarily agreed to waive all or a portion of its fees (and to reimburse the
expenses of the funds) in order to limit operating expenses to not more than
1.20% of the average daily net assets for net assets below $20 million and to
not more than 1.10% for net assets of $20 million or more for the Clover Equity
Value Fund. Operating expenses for the Clover Fixed Income Fund are limited to
not more than .80% of the average daily net assets for net assets below $20
million and to not more than .75% for net assets of $20 million or more.
Operating expenses for the Clover Small Cap Value Fund and the Clover Max Cap
Value Fund are limited to 1.40% and .95%, respectively, of the Portfolio's
average daily net assets. Fee waivers and expense reimbursements are voluntary
and may be terminated at any time.
6. Investment Transactions:
The 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):
Clover Clover Clover Clover
Small Cap Equity Max Cap Fixed
Value Value Value Income
Fund Fund Fund Fund
--------- ------- ------- --------
Purchases
Government $ -- $ -- $ -- $6,703
Other 12,286 71,115 2,808 2,500
Sales
Government $ -- $ -- $ -- $4,492
Other 14,552 100,502 2,239 4,280
At September 30, 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 Funds
at September 30, 1999, is as follows (000):
Clover Clover Clover Clover
Small Cap Equity Max Cap Fixed
Value Value Value Income
Fund Fund Fund Fund
-------- -------- ------- -------
Aggregate
gross
unrealized
appreciation $ 2,888 $ 5,839 $ 251 $ 65
Aggregate
gross
unrealized
depreciation (2,820) (3,822) (302) (945)
------- ------- ------- -------
Net unrealized
appreciation
(depreciation) $ 68 $ 2,017 $ (51) $ (880)
======= ======= ======= =======
7. Concentration of Credit Risk:
The Clover Fixed Income Fund invests primarily in fixed income securities which
are rated in the top four rating categories by either Moody's Investors
Services, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"), or if not
rated, determined by the Adviser to be of comparable quality. The ability of the
issuers of the securities held by the Fund to meet their obligations may be
affected by economic developments in a specific industry, state or region.
The summary of credit quality rating for securities held by the Fund at
September 30, 1999, is as follows:
S&P Moody's
-------------- -------------
Bonds: AAA 61.76% AAA 56.69%
AA 15.10% AA 21.94%
A 9.26% A 12.37%
BBB 4.79% BAA --
BB -- BA 1.68%
B 3.86% B 3.86%
NR 5.23% NR 3.46%
------ ------
100.00% 100.00%
27
<PAGE>
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
TIP FUNDS -- CLOVER SMALL CAP VALUE FUND, CLOVER EQUITY VALUE FUND, CLOVER MAX
CAP VALUE FUND, AND THE CLOVER FIXED INCOME FUND
We have audited the accompanying statements of net assets of the TIP Funds
- - Clover Small Cap Value Fund, Clover Equity Value Fund, Clover Max Cap Value
Fund, and the Clover Fixed Income Fund as of September 30, 1999, and the related
statement of operations for the year then ended, the statements of changes in
net assets for the periods ended September 30, 1999 and September 30, 1998 and
the financial highlights for the periods ended September 30, 1997 through
September 30, 1999 presented therein. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for the periods ended October 31,
1994 through October 31, 1996 for the Clover Equity Value Fund, the Clover Small
Cap Value Fund, and the Clover Fixed Income Fund were audited by other auditors
whose report dated December 6, 1996 expressed an unqualified opinion on those
statements and financial highlights.
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 - Clover Small Cap Value Fund, Clover Equity Value Fund, Clover Max
Cap Value Fund, and Clover Fixed Income Fund of at September 30, 1999, the
results of their operations for the year then ended, the changes in their net
assets for the periods ended September 30, 1999 and September 30, 1998, and
their financial highlights for the periods ended September 30, 1997 through
September 30, 1999 presented therein in conformity with generally accepted
accounting principles.
/s/ signature omitted
Philadelphia, Pennsylvania
November 8, 1999
28
<PAGE>
NOTICE TO SHAREHOLDERS
OF
CLOVER FUNDS
(UAUDITED)
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.
LONG TERM
(20% RATE) ORDINARY
CAPITAL GAIN INCOME TAX EXEMPT
PORTFOLIO DISTRIBUTIONS DISTRIBUTIONS INTEREST
--------- ------------- ------------- ----------
Clover Small Cap Value Fund ....... 99.93% 0.07% 0.00%
Clover Equity Value Fund .......... 77.38% 22.62% 0.00%
Clover Max Cap Value Fund ......... 0.00% 100.00% 0.00%
Clover Fixed Income Fund .......... 24.97% 75.03% 0.00%
TOTAL QUALIFYING
PORTFOLIO DISTRIBUTIONS DIVIDENDS (1)
--------- ------------- -------------
Clover Small Cap Value Fund ....... 100.00% 65.73%
Clover Equity Value Fund .......... 100.00% 100.00%
Clover Max Cap Value Fund ......... 100.00% 40.33%
Clover Fixed Income Fund .......... 100.00% 0.00%
- --------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributors".
<PAGE>
NOTES
Trust
TIP Funds
P.O. Box 419805
Kansas City, MO 64141-6805
Investment Adviser
Clover Capital Management, Inc.
Distributor
CCM Securities, Inc.
Administrator
SEI Investments Mutual Funds Services
Legal Counsel
Morgan, Lewis & Bockius LLP
Independent Auditors
Ernst & Young LLP
To open an account, receive account information, make inquiries, or request
literature simply call 1-800-224-6312
This report was prepared for shareholders in the Clover Funds. It may be
distributed to others only if preceded or accompanied by a Prospectus, which
contains detailed information.